Press release

Brightcove Announces Financial Results for First Quarter Fiscal Year 2021

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Brightcove Inc. (Nasdaq: BCOV), the global leader in video for business, today announced financial results for the first quarter ended March 31, 2021.

“Brightcove’s performance in the first quarter further demonstrates that our strategy is working, highlighted by double-digit subscription revenue growth and our best-ever adjusted EBITDA margin,” said Jeff Ray, Brightcove’s Chief Executive Officer. “The proliferation of video is changing the way enterprises, media organizations, and content creators work. Customers choose Brightcove because our video platform provides the reliability, scalability, and security they need to meet multiple critical business challenges. Our investments in innovation and go-to-market are creating greater value for customers and positioning us to deliver on our long-term financial targets.”

First Quarter 2021 Financial Highlights:

  • Revenue for the first quarter of 2021 was $54.8 million, an increase of 18% compared to $46.7 million for the first quarter of 2020. Subscription and support revenue was $50.8 million, an increase of 14% compared to $44.7 million for the first quarter of 2020.
  • Gross profit for the first quarter of 2021 was $35.6 million, representing a gross margin of 65% compared to a gross profit of $28.0 million and 60% for the first quarter of 2020. Non-GAAP gross profit for the first quarter of 2021 was $36.2 million, representing a non-GAAP gross margin of 66%, compared to a non-GAAP gross profit of $28.8 million and 62% for the first quarter of 2020. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense and the amortization of acquired intangible assets.
  • Income from operations was $6.1 million for the first quarter of 2021, compared to a loss of $7.1 million for the first quarter of 2020. Non-GAAP operating income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets, merger-related expense and other (benefit) expense, was $7.2 million for the first quarter of 2021, compared to non-GAAP operating income of $2.3 million during the first quarter of 2020.
  • Net income was $5.1 million, or $0.12 per diluted share, for the first quarter of 2021. This compares to a net loss of $7.9 million, or a loss of $0.20 per diluted share, for the first quarter of 2020. Non-GAAP net income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets, merger-related expense and other (benefit) expense, was $6.2 million for the first quarter of 2021, or $0.15 per diluted share, compared to non-GAAP net income of $1.5 million for the first quarter of 2020, or $0.04 per diluted share.
  • Adjusted EBITDA was $8.6 million for the first quarter of 2021, compared to adjusted EBITDA of $3.7 million for the first quarter of 2020. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, other (benefit) expense, restructuring, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
  • Cash flow used by operations was $604,000 for the first quarter for 2021, compared to cash flow provided by operations of $2.4 million for the first quarter of 2020.
  • Free cash flow was negative $2.1 million after the company invested $1.5 million in capital expenditures and capitalization of internal-use software during the first quarter of 2021. Free cash flow was negative $252,000 for the first quarter of 2020.
  • Cash and cash equivalents were $35.2 million as of March 31, 2021 compared to $37.5 million on December 31, 2020.

A Reconciliation of GAAP to Non-GAAP results has been provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Other First Quarter and Recent Highlights:

  • Average annual subscription revenue per premium customer was $97,000 in the first quarter of 2021, excluding starter customers who had average annualized revenue of $4,300 per customer. This compares to $84,600 in the comparable period in 2020.
  • Recurring dollar retention rate was 85% in the first quarter of 2021, versus our historical target of the low to mid-90 percent range.
  • Ended the quarter with 3,312 customers, of which 2,273 were premium.
  • New customers and customers who expanded their relationship during the first quarter include: Box, Inc., Giants Enterprises, LLC, Convenii, Outside Magazine, Akamai Technologies, GEDI Digital, Hagerty, Little League Baseball Incorporated, EMC Corp., Tver, Forbes, Entercom Communications and Kraft Heinz.
  • Launched Brightcove Virtual Events for Business, an intuitive, easy-to-use virtual event solution for highly repeatable, mid-sized events. Virtual Events for Business is a virtual event creation, marketing, and delivery platform designed to easily service the rapidly expanding number of events hosted by organizations. Many enterprises are planning for life after COVID and want to continue to maximize the extended reach they have achieved with virtual events over the past year and a half. Brightcove Virtual Events for Business makes it simple for enterprises to hold high volume, repeatable events to connect with audiences across all aspects of their organization.
  • Announced a partnership with L2, a solution provider for arts and cultural institutions. L2 will integrate Brightcove with Tessitura and Stripe to provide a seamless interface that enables cultural organizations to allow viewers to purchase and stream performances instantly.

Business Outlook

Based on information as of today, April 28, 2021, the Company is issuing the following financial guidance.

Second Quarter 2021:

  • Revenue is expected to be in the range of $49.5 million to $50.5 million, including approximately $2.7 million of professional services revenue.
  • Non-GAAP income from operations is expected to be in the range of $1.0 million to $2.0 million, which excludes stock-based compensation of approximately $2.0 million and the amortization of acquired intangible assets of approximately $0.7 million.
  • Adjusted EBITDA is expected to be in the range of $2.4 million to $3.4 million, which excludes stock-based compensation of approximately $2.0 million, the amortization of acquired intangible assets of approximately $0.7 million, depreciation expense of approximately $1.3 million, and other income/expense and the provision for income taxes of approximately $0.3 million.
  • Non-GAAP net income per diluted share is expected to be $0.02 to $0.04, which excludes stock-based compensation of approximately $2.0 million, the amortization of acquired intangible assets of approximately $0.7 million, and assumes approximately 42.9 million weighted-average shares outstanding.

Full Year 2021:

  • Revenue is expected to be in the range of $211.0 million to $217.0 million, including approximately $12.5 million of professional services revenue.
  • Non-GAAP income from operations is expected to be in the range of $20.0 million to $25.0 million, which excludes stock-based compensation of approximately $9.2 million, the amortization of acquired intangible assets of approximately $3.0 million and other (benefit) expense of ($2.0) million.
  • Adjusted EBITDA is expected to be in the range of $25.5 million to $30.5 million, which excludes stock-based compensation of approximately $9.2 million, the amortization of acquired intangible assets of approximately $3.0 million, depreciation expense of approximately $5.3 million, other (benefit) expense of approximately ($2.0) million, and other income/expense and the provision for income taxes of approximately $1.7 million.
  • Non-GAAP earnings per diluted share is expected to be $0.43 to $0.54, which excludes stock-based compensation of approximately $9.2 million, the amortization of acquired intangible assets of approximately $3.0 million, other (benefit) expense of ($2.0) million and assumes approximately 43.1 million weighted-average shares outstanding.

Conference Call Information

Brightcove will host a conference call today, April 28, 2021, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results and current business outlook. A live webcast of the call will be available at the “Investors” page of the Company’s website, http://investor.brightcove.com. To access the call, dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of this conference call will be available for a limited time at 844-512-2921 (domestic) or 412-317-6671 (international). The replay conference ID is 13718674. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.

About Brightcove Inc. (NASDAQ: BCOV)

When video is done right, it can have a powerful and lasting effect. Hearts open. Minds change. Creativity thrives. Since 2004, Brightcove has been helping customers discover and experience the incredible power of video through its award-winning technology, empowering organizations in more than 70 countries across the globe to touch audiences in bold and innovative ways.

Brightcove achieves this by developing technologies once thought impossible, providing customer support without parallel or excuses, and leveraging the expertise and resources of a global infrastructure. Video is the world’s most compelling, exciting medium. Visit www.brightcove.com. Video That Means Business.™

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for the second fiscal quarter and full year 2021, our position to execute on our growth strategy, and our ability to expand our leadership position and market opportunity. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: the effect of the COVID-19 pandemic, including our business operations, as well as its impact on the general economic and financial market conditions; our ability to retain existing customers and acquire new ones; our history of losses; the timing and successful integration of the Ooyala acquisition; expectations regarding the widespread adoption of customer demand for our products; the effects of increased competition and commoditization of services we offer, including data delivery and storage; keeping up with the rapid technological change required to remain competitive in our industry; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; the price volatility of our common stock; and other risks set forth under the caption “Risk Factors” in our most recently filed Annual Report on Form 10-K. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

Brightcove has provided in this release the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss), adjusted EBITDA and non-GAAP diluted net income (loss) per share. Brightcove uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Brightcove’s ongoing operational performance. Brightcove believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Brightcove’s industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above of non-GAAP gross profit, non-GAAP gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share exclude stock-based compensation expense, amortization of acquired intangible assets, merger-related expenses, restructuring and other (benefit) expense. The non-GAAP financial results discussed above of adjusted EBITDA is defined as consolidated net income (loss), plus other income/expense, including interest expense and interest income, the provision for income taxes, depreciation expense, the amortization of acquired intangible assets, stock-based compensation expense, merger-related expenses, restructuring and other (benefit) expense. Merger-related expenses include fees incurred in connection with an acquisition. Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. The Company’s earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company’s web site at http://www.brightcove.com.

Brightcove Inc.
Condensed Consolidated Balance Sheets
(in thousands)
 
March 31, 2021 December 31, 2020
Assets
Current assets:
Cash and cash equivalents

$

35,152

 

$

37,472

 

Accounts receivable, net of allowance

 

30,594

 

 

29,305

 

Prepaid expenses and other current assets

 

22,668

 

 

18,738

 

Total current assets

 

88,414

 

 

85,515

 

Property and equipment, net

 

16,188

 

 

15,968

 

Operating lease right-of-use asset

 

7,722

 

 

8,699

 

Intangible assets, net

 

9,699

 

 

10,465

 

Goodwill

 

60,902

 

 

60,902

 

Other assets

 

6,143

 

 

5,254

 

Total assets

$

189,068

 

$

186,803

 

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable

$

11,556

 

$

10,456

 

Accrued expenses

 

21,119

 

 

25,397

 

Operating lease liability

 

3,615

 

 

4,346

 

Deferred revenue

 

58,889

 

 

58,741

 

Total current liabilities

 

95,179

 

 

98,940

 

Operating lease liability, net of current portion

 

4,625

 

 

5,498

 

Other liabilities

 

1,397

 

 

2,763

 

Total liabilities

 

101,201

 

 

107,201

 

 
Stockholders’ equity:
Common stock

 

40

 

 

40

 

Additional paid-in capital

 

290,403

 

 

287,059

 

Treasury stock, at cost

 

(871

)

 

(871

)

Accumulated other comprehensive loss

 

(397

)

 

(188

)

Accumulated deficit

 

(201,308

)

 

(206,438

)

Total stockholders’ equity

 

87,867

 

 

79,602

 

Total liabilities and stockholders’ equity

$

189,068

 

$

186,803

 

 
Brightcove Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
 

Three Months Ended March 31,

 

2021

 

 

 

2020

 

Revenue:
Subscription and support revenue

$

50,839

 

$

44,658

 

Professional services and other revenue

 

3,978

 

 

1,995

 

Total revenue

 

54,817

 

 

46,653

 

Cost of revenue: (1) (2)
Cost of subscription and support revenue

 

15,678

 

 

16,748

 

Cost of professional services and other revenue

 

3,490

 

 

1,894

 

Total cost of revenue

 

19,168

 

 

18,642

 

Gross profit

 

35,649

 

 

28,011

 

Operating expenses: (1) (2)
Research and development

 

8,284

 

 

8,853

 

Sales and marketing

 

16,149

 

 

14,174

 

General and administrative

 

7,059

 

 

6,532

 

Merger-related

 

 

 

5,509

 

Other (benefit) expense

 

(1,965

)

 

 

Total operating expenses

 

29,527

 

 

35,068

 

Income (loss) from operations

 

6,122

 

 

(7,057

)

Other (expense) income, net

 

(735

)

 

(468

)

Income (loss) before income taxes

 

5,387

 

 

(7,525

)

Provision for income taxes

 

257

 

 

328

 

Net income (loss) before income taxes

$

5,130

 

$

(7,853

)

 
Net (loss) income per share—basic and diluted
Basic

$

0.13

 

$

(0.20

)

Diluted

 

0.12

 

 

(0.20

)

 
Weighted-average shares—basic and diluted
Basic

 

40,154

 

 

38,981

 

Diluted

 

42,480

 

 

38,981

 

 
(1) Stock-based compensation included in above line items:
Cost of subscription and support revenue

$

157

 

$

190

 

Cost of professional services and other revenue

 

68

 

 

80

 

Research and development

 

322

 

 

440

 

Sales and marketing

 

737

 

 

911

 

General and administrative

 

1,008

 

 

997

 

 
 
(2) Amortization of acquired intangible assets included in the above line items:
Cost of subscription and support revenue

$

335

 

$

495

 

Sales and marketing

 

431

 

 

477

 

 
Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 

Three Months Ended March 31,

Operating activities

 

2021

 

 

 

2020

 

Net income (loss)

$

5,130

 

$

(7,853

)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization

 

2,163

 

 

2,408

 

Stock-based compensation

 

2,292

 

 

2,618

 

Provision for reserves on accounts receivable

 

71

 

 

275

 

Changes in assets and liabilities:
Accounts receivable

 

(1,585

)

 

3,607

 

Prepaid expenses and other current assets

 

(1,390

)

 

(1,843

)

Other assets

 

(919

)

 

195

 

Accounts payable

 

(425

)

 

2,364

 

Accrued expenses

 

(5,797

)

 

(2,264

)

Operating leases

 

(626

)

 

(34

)

Deferred revenue

 

482

 

 

2,968

 

Net cash (used in) provided by operating activities

 

(604

)

 

2,441

 

 
Investing activities
Purchases of property and equipment, net of returns

 

(468

)

 

(720

)

Capitalization of internal-use software costs

 

(1,054

)

 

(1,973

)

Net cash used in investing activities

 

(1,522

)

 

(2,693

)

 
Financing activities
Proceeds from exercise of stock options

 

1,095

 

 

36

 

Deferred acquisition payments

 

(475

)

 

 

Proceeds from debt

 

 

 

10,000

 

Other financing activities

 

(87

)

 

(26

)

Net cash provided by financing activities

 

533

 

 

10,010

 

 
Effect of exchange rate changes on cash and cash equivalents

 

(727

)

 

(428

)

 
Net (decrease) increase in cash and cash equivalents

 

(2,320

)

 

9,330

 

Cash and cash equivalents at beginning of period

 

37,472

 

 

22,759

 

Cash and cash equivalents at end of period

$

35,152

 

$

32,089

 

 
Brightcove Inc.
Reconciliation of GAAP Gross Profit, GAAP Loss From Operations, GAAP Net Loss and GAAP Net Loss Per Share to
Non-GAAP Gross Profit, Non-GAAP Income From Operations, Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Share
(in thousands, except per share amounts)
 

Three Months Ended March 31,

 

2021

 

 

 

2020

 

GROSS PROFIT:
GAAP gross profit

$

35,649

 

$

28,011

 

Stock-based compensation expense

 

225

 

 

270

 

Amortization of acquired intangible assets

 

335

 

 

495

 

Non-GAAP gross profit

$

36,209

 

$

28,776

 

INCOME (LOSS) FROM OPERATIONS:
GAAP income (loss) from operations

$

6,122

 

$

(7,057

)

Stock-based compensation expense

 

2,292

 

 

2,618

 

Amortization of acquired intangible assets

 

766

 

 

972

 

Merger-related

 

 

 

5,509

 

Restructuring

 

 

 

229

 

Other (benefit) expense

 

(1,965

)

 

 

Non-GAAP income from operations

$

7,215

 

$

2,271

 

NET INCOME (LOSS):
GAAP net income (loss)

$

5,130

 

$

(7,853

)

Stock-based compensation expense

 

2,292

 

 

2,618

 

Amortization of acquired intangible assets

 

766

 

 

972

 

Merger-related

 

 

 

5,509

 

Restructuring

 

 

 

229

 

Other (benefit) expense

 

(1,965

)

 

 

Non-GAAP net income

$

6,223

 

$

1,475

 

GAAP diluted net income (loss) per share

$

0.12

 

$

(0.20

)

Non-GAAP diluted net income per share

$

0.15

 

$

0.04

 

 
Shares used in computing GAAP diluted net income (loss) per share

 

40,154

 

 

38,981

 

Shares used in computing Non-GAAP diluted net income (loss) per share

 

42,480

 

 

39,449

 

 
Brightcove Inc.
Calculation of Adjusted EBITDA
(in thousands)
 

Three Months Ended March 31,

 

2021

 

 

 

2020

 

Net income (loss)

$

5,130

 

$

(7,853

)

Other expense, net

 

735

 

 

468

 

Provision for income taxes

 

257

 

 

328

 

Depreciation and amortization

 

2,163

 

 

2,408

 

Stock-based compensation expense

 

2,292

 

 

2,618

 

Merger-related

 

 

 

5,509

 

Restructuring

 

 

 

229

 

Other (benefit) expense

 

(1,965

)

 

 

Adjusted EBITDA

$

8,612

 

$

3,707