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Brightcove Announces Financial Results for Third Quarter Fiscal Year 2022

Brightcove Inc. (Nasdaq: BCOV), the trusted leader in streaming technology, today announced financial results for the third quarter ended September 30, 2022.

“In the third quarter Brightcove made significant progress on each of our strategic priorities while also delivering revenue and profitability that exceeded the high end of our guidance range. The innovation investments we are making to broaden our solution and services offering will make Brightcove an essential partner for any company, brand or creator that wants to own their digital future,” said Marc DeBevoise, Brightcove’s Chief Executive Officer.

DeBevoise added, “We are confident that as we execute on our strategy we will deliver greater value for customers and position Brightcove to deliver faster, more consistent and meaningful revenue growth and profitability in the years ahead.”

Third Quarter 2022 Financial Highlights:

Revenue for the third quarter of 2022 was $53.9 million, an increase of 3% compared to $52.2 million for the third quarter of 2021. Subscription and support revenue was $51.8 million, an increase of 5% compared to $49.2 million for the third quarter of 2021.

Gross profit for the third quarter of 2022 was $33.9 million, representing a gross margin of 63%, compared to a gross profit of $33.5 million, representing a gross margin of 64% for the third quarter of 2021. Non-GAAP gross profit for the third quarter of 2022 was $34.5 million, representing a non-GAAP gross margin of 64%, compared to a non-GAAP gross profit of $34.1 million, representing a non-GAAP gross margin of 65% for the third quarter of 2021. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense and the amortization of acquired intangible assets.

Loss from operations was $821 thousand for the third quarter of 2022, compared to loss from operations of $233 thousand for the third quarter of 2021. Non-GAAP operating income, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and other (benefit) expense, was $2.8 million for the third quarter of 2022, compared to non-GAAP operating income of $2.9 million during the third quarter of 2021.

Net loss was $1.7 million, or a loss of $0.04 per diluted share, for the third quarter of 2022. This compares to a net loss of $1.0 million, or $0.02 per diluted share, for the third quarter of 2021. Non-GAAP net income, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and other (benefit) expense, was $2.0 million for the third quarter of 2022, or $0.05 per diluted share, compared to non-GAAP net income of $2.1 million for the third quarter of 2021, or $0.05 per diluted share.

Adjusted EBITDA was $4.9 million for the third quarter of 2022, compared to adjusted EBITDA of $4.2 million for the third quarter of 2021. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, other (benefit) expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.

Cash flow provided by operations was $10.5 million for the third quarter for 2022, compared to cash flow provided by operations of $7.4 million for the third quarter of 2021.

Free cash flow was $4.5 million after the company invested $6.0 million in capital expenditures and capitalization of internal-use software during the third quarter of 2022. Free cash flow was $4.9 for the third quarter of 2021.

Cash and cash equivalents were $31.3 million as of September 30, 2022 compared to $45.7 million on December 31, 2021.

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 Third Quarter and Recent Highlights:

● Average annual subscription revenue per premium customer was $95,900 in the third quarter of 2022, excluding starter customers who had average annualized revenue of $3,800 per customer. The average annual subscription revenue per premium customer compares to $93,400 in the third quarter of 2021.

● Recurring dollar retention rate was 95% in the third quarter of 2022, versus our historical target of the low to mid-90 percent range.

● Net revenue retention in the quarter was 93%, which compares to 95% in the second quarter of 2022 and 95% in the third quarter of 2021.

● Ended the third quarter of 2022 with 2,900 customers, of which 2,271 were premium.

● New customers and customers who expanded their relationship during the third quarter of 2022 include: Coupang, Television New Zealand, This Old House Ventures, Sky Mexico, Gladius Global and Nexus Multimedia amongst others.

● Announced an expanded partnership with Evergent, the customer management and monetization leader for streaming and digital subscription businesses. The new integration will see the introduction of Evergent’s agile monetization solution to Brightcove Beacon for over-the-top video streaming, making it possible for Brightcove customers to test and implement flexible monetization approaches within the platform.

Business Outlook

Based on information as of today, November 2, 2022, the Company is issuing the following financial guidance.

Third Quarter 2022:

Revenue is expected to be in the range of $49.2 million to $50.2 million, including approximately $1.8 million of professional services revenue.

Non-GAAP income/(loss) from operations is expected to be in the range of ($0.8) million to $0.2 million, which excludes stock-based compensation of approximately $4.0 million and the amortization of acquired intangible assets of approximately $0.8 million.

Adjusted EBITDA is expected to be in the range of $1.3 million to $2.3 million, which excludes stock-based compensation of approximately $4.0 million, the amortization of acquired intangible assets of approximately $0.8 million, depreciation expense of approximately $2.1 million, and other income/expense and the provision for income taxes of approximately $0.3 million.

Non-GAAP net loss per diluted share is expected to be ($0.03) to $0.00, which excludes stock-based compensation of approximately $4.0 million, the amortization of acquired intangible assets of approximately $0.8 million, and assumes approximately 42.2 million weighted-average shares outstanding.

Full Year 2022:

Revenue is expected to be in the range of $211.0 million to $212.0 million, including approximately $7.1 million of professional services revenue.

Non-GAAP income from operations is expected to be in the range of $11.1 million to $12.1 million, which excludes stock-based compensation of approximately $13.7 million, the amortization of acquired intangible assets of approximately $3.2 million, merger-related expense of approximately $0.7 million, and other expenses of $1.1 million.

Adjusted EBITDA is expected to be in the range of $18.0 million to $19.0 million, which excludes stock-based compensation of approximately $13.7 million, merger-related expense of approximately $0.7 million, other expenses of $1.1 million, the amortization of acquired intangible assets of approximately $3.2 million, depreciation expense of approximately $6.9 million, and other income/expense and the provision for income taxes of approximately $1.8 million.

Non-GAAP earnings per diluted share is expected to be $0.22 to $0.24, which excludes stock-based compensation of approximately $13.7 million, the amortization of acquired intangible assets of approximately $3.2 million, merger-related expense of approximately $0.7 million, other expenses of $1.1 million and assumes approximately 42.1 million weighted-average shares outstanding.

Earnings Stream Information

Brightcove earnings will be streamed on November 2, 2022, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results and current business outlook. To access the live stream, visit the “Investors” page of the Company’s website, http://investor.brightcove.com. Once the live stream concludes, an on-demand recording will be available on Brightcove’s Investor page for a limited time at http://investor.brightcove.com.

About Brightcove Inc. (NASDAQ: BCOV)

Brightcove creates the world’s most reliable, scalable, and secure streaming technology solutions to build a greater connection between companies and their audiences, no matter where they are or on which devices they consume content. In more than 80 countries, Brightcove’s intelligent video platform enables businesses to sell to customers more effectively, media leaders to stream and monetize content more reliably, and every organization to communicate with team members more powerfully. With two Technology and Engineering Emmy® Awards for innovation, uptime that consistently leads the industry, and unmatched scalability, we continuously push the boundaries of what video can do. Follow Brightcove on Twitter, LinkedIn, and Facebook. Visit www.brightcove.com.

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 2022, 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 on our business operations and broader conditions, 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; 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 and similar disclosures in our subsequent filings with the SEC. 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, 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, 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)
 
September 30, 2022 December 31, 2021
Assets
Current assets:
Cash and cash equivalents

$

31,348

 

$

45,739

 

Accounts receivable, net of allowance

 

31,891

 

 

29,866

 

Prepaid expenses and other current assets

 

19,314

 

 

18,625

 

Total current assets

 

82,553

 

 

94,230

 

Property and equipment, net

 

36,579

 

 

20,514

 

Operating lease right-of-use asset

 

19,387

 

 

24,891

 

Intangible assets, net

 

11,296

 

 

9,276

 

Goodwill

 

74,859

 

 

60,902

 

Other assets

 

6,564

 

 

6,655

 

Total assets

$

231,238

 

$

216,468

 

Liabilities and stockholders' equity
Current liabilities:
Accounts payable

$

13,060

 

$

11,039

 

Accrued expenses

 

23,730

 

 

20,925

 

Operating lease liability

 

4,028

 

 

2,600

 

Deferred revenue

 

65,067

 

 

62,057

 

Total current liabilities

 

105,885

 

 

96,621

 

Operating lease liability, net of current portion

 

21,073

 

 

22,801

 

Other liabilities

 

963

 

 

786

 

Total liabilities

 

127,921

 

 

120,208

 

 
Stockholders' equity:
Common stock

 

42

 

 

41

 

Additional paid-in capital

 

311,283

 

 

298,793

 

Treasury stock, at cost

 

(871

)

 

(871

)

Accumulated other comprehensive loss

 

(2,478

)

 

(662

)

Accumulated deficit

 

(204,659

)

 

(201,041

)

Total stockholders’ equity

 

103,317

 

 

96,260

 

Total liabilities and stockholders' equity

$

231,238

 

$

216,468

 

Brightcove Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
 
 
Three Months Ended September 30, Nine Months Ended September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue:
Subscription and support revenue

$

51,814

 

$

49,226

 

$

156,403

 

$

148,667

 

Professional services and other revenue

 

2,130

 

 

2,937

 

 

5,367

 

 

9,785

 

Total revenue

 

53,944

 

 

52,163

 

 

161,770

 

 

158,452

 

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

 

18,247

 

 

16,406

 

 

52,172

 

 

46,840

 

Cost of professional services and other revenue

 

1,816

 

 

2,247

 

 

5,575

 

 

8,205

 

Total cost of revenue

 

20,063

 

 

18,653

 

 

57,747

 

 

55,045

 

Gross profit

 

33,881

 

 

33,510

 

 

104,023

 

 

103,407

 

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

 

7,931

 

 

7,902

 

 

24,540

 

 

24,041

 

Sales and marketing

 

19,023

 

 

18,451

 

 

55,272

 

 

52,730

 

General and administrative

 

7,748

 

 

7,345

 

 

24,391

 

 

21,822

 

Merger-related

 

-

 

 

45

 

 

747

 

 

300

 

Other expense (benefit)

 

-

 

 

-

 

 

1,149

 

 

(1,965

)

Total operating expenses

 

34,702

 

 

33,743

 

 

106,099

 

 

96,928

 

(Loss) income from operations

 

(821

)

 

(233

)

 

(2,076

)

 

6,479

 

Other (expense) income, net

 

(668

)

 

(319

)

 

(1,880

)

 

(937

)

(Loss) income before income taxes

 

(1,489

)

 

(552

)

 

(3,956

)

 

5,542

 

Loss (benefit) from provision for income taxes

 

191

 

 

468

 

 

(338

)

 

562

 

Net (loss) income

$

(1,680

)

$

(1,020

)

$

(3,618

)

$

4,980

 

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

$

(0.04

)

$

(0.02

)

$

(0.09

)

$

0.12

 

Diluted

 

(0.04

)

 

(0.02

)

 

(0.09

)

 

0.12

 

 
Weighted-average shares—basic and diluted
Basic

 

41,972

 

 

40,935

 

 

41,712

 

 

40,571

 

Diluted

 

41,972

 

 

40,935

 

 

41,712

 

 

42,237

 

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

$

132

 

$

157

 

$

385

 

$

501

 

Cost of professional services and other revenue

 

76

 

 

113

 

 

334

 

 

299

 

Research and development

 

378

 

 

408

 

 

2,035

 

 

1,261

 

Sales and marketing

 

1,015

 

 

583

 

 

2,857

 

 

2,082

 

General and administrative

 

1,245

 

 

1,072

 

 

4,109

 

 

3,091

 

Other expense (benefit)

 

-

 

 

-

 

 

249

 

 

-

 

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

$

376

 

$

335

 

$

1,156

 

$

1,006

 

Sales and marketing

 

417

 

 

407

 

 

1,246

 

 

1,245

 

Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
Nine Months Ended September 30,
Operating activities

 

2022

 

 

2021

 

Net (loss) income

$

(3,618

)

$

4,980

 

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

 

7,141

 

 

6,284

 

Stock-based compensation

 

9,969

 

 

7,234

 

Provision for reserves on accounts receivable

 

166

 

 

246

 

Changes in assets and liabilities:
Accounts receivable

 

(1,871

)

 

710

 

Prepaid expenses and other current assets

 

(1,351

)

 

(914

)

Other assets

 

38

 

 

(1,273

)

Accounts payable

 

863

 

 

79

 

Accrued expenses

 

(242

)

 

(4,402

)

Operating leases

 

5,202

 

 

(903

)

Deferred revenue

 

3,452

 

 

2,707

 

Net cash provided by operating activities

 

19,749

 

 

14,748

 

 
Investing activities
Cash paid for acquisition, net of cash acquired

 

(13,215

)

 

-

 

Purchases of property and equipment, net of returns

 

(8,617

)

 

(1,625

)

Capitalization of internal-use software costs

 

(9,678

)

 

(4,657

)

Net cash used in investing activities

 

(31,510

)

 

(6,282

)

 
Financing activities
Proceeds from exercise of stock options

 

142

 

 

2,200

 

Deferred acquisition payments

 

-

 

 

(475

)

Other financing activities

 

(50

)

 

(1,375

)

Net cash provided by financing activities

 

92

 

 

350

 

 
Effect of exchange rate changes on cash and cash equivalents

 

(2,722

)

 

(1,003

)

 
Net (decrease) increase in cash and cash equivalents

 

(14,391

)

 

7,813

 

Cash and cash equivalents at beginning of period

 

45,739

 

 

37,472

 

Cash and cash equivalents at end of period

$

31,348

 

$

45,285

 

Brightcove Inc.
Reconciliation of GAAP Gross Profit, GAAP Income (Loss) From Operations, GAAP Net (Loss) Income and GAAP Net (Loss) Income Per Share to
Non-GAAP Gross Profit, Non-GAAP Income From Operations, Non-GAAP Net Income and Non-GAAP Net Income Per Share
(in thousands, except per share amounts)
 
 
Three Months Ended September 30, Nine Months Ended September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

GROSS PROFIT:
GAAP gross profit

$

33,881

 

$

33,510

 

$

104,023

 

$

103,407

 

Stock-based compensation expense

 

208

 

 

270

 

 

719

 

 

800

 

Amortization of acquired intangible assets

 

376

 

 

335

 

 

1,156

 

 

1,006

 

Non-GAAP gross profit

$

34,465

 

$

34,115

 

$

105,898

 

$

105,213

 

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

$

(821

)

$

(233

)

$

(2,076

)

$

6,479

 

Stock-based compensation expense

 

2,846

 

 

2,333

 

 

9,720

 

 

7,234

 

Amortization of acquired intangible assets

 

793

 

 

742

 

 

2,402

 

 

2,251

 

Merger-related

 

-

 

 

45

 

 

747

 

 

300

 

Other expense (benefit)

 

-

 

 

-

 

 

1,149

 

 

(1,965

)

Non-GAAP income from operations

$

2,818

 

$

2,887

 

$

11,942

 

$

14,299

 

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

$

(1,680

)

$

(1,020

)

$

(3,618

)

$

4,980

 

Stock-based compensation expense

 

2,846

 

 

2,333

 

 

9,720

 

 

7,234

 

Amortization of acquired intangible assets

 

793

 

 

742

 

 

2,402

 

 

2,251

 

Merger-related

 

-

 

 

45

 

 

747

 

 

300

 

Other expense (benefit)

 

-

 

 

-

 

 

1,149

 

 

(1,965

)

Non-GAAP net income

$

1,959

 

$

2,100

 

$

10,400

 

$

12,800

 

GAAP diluted net (loss) income per share

$

(0.04

)

$

(0.02

)

$

(0.09

)

$

0.12

 

Non-GAAP diluted net income per share

$

0.05

 

$

0.05

 

$

0.25

 

$

0.30

 

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

 

41,972

 

 

40,935

 

 

41,712

 

 

42,237

 

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

 

42,148

 

 

41,736

 

 

42,080

 

 

42,237

 

Brightcove Inc.
Calculation of Adjusted EBITDA
(in thousands)
 
 
Three Months Ended September 30, Nine Months Ended September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net (loss) income

$

(1,680

)

$

(1,020

)

$

(3,618

)

$

4,980

 

Other expense, net

 

668

 

 

319

 

 

1,880

 

 

937

 

Loss (benefit) from income taxes

 

191

 

 

468

 

 

(338

)

 

562

 

Depreciation and amortization

 

2,914

 

 

2,006

 

 

7,141

 

 

6,248

 

Stock-based compensation expense

 

2,846

 

 

2,333

 

 

9,720

 

 

7,234

 

Merger-related

 

-

 

 

45

 

 

747

 

 

300

 

Other expense (benefit)

 

-

 

 

-

 

 

1,149

 

 

(1,965

)

Adjusted EBITDA

$

4,939

 

$

4,151

 

$

16,681

 

$

18,296

 

 

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