July 31, 2015 Last Updated 9:51 am

Video service Brightcove reports higher revenue, narrower losses in Q2 earnings report

BOSTON, Mass – July 31, 2015 — Brightcove Inc. a leading global provider of cloud services for video, today announced financial results for the quarter ended June 30, 2015.

“Brightcove reported second quarter results that were in-line with our profitability expectations, while revenue was slightly below expectations due to the timing of certain customer renewals,” said David Mendels, Chief Executive Officer of Brightcove. “We are delivering positive performance in many areas of the company, especially in North America and Japan, though we have seen some softness in our European business. We have taken steps to improve our execution in Europe and believe they will improve results going forward.”

Mendels continued, “From a demand perspective, our digital marketing business is gaining traction, reflecting the significant opportunity for video as part of the cloud marketing automation stack. We are also seeing early interest from Media companies in our ad yield optimization solution that combines Brightcove Perform and Brightcove Once to significantly improve content monetization. We remain confident our strategy can deliver consistent double-digit growth in the future, while also generating strong shareholder value.”

Second Quarter 2015 Financial Highlights:

  • Revenue for the second quarter of 2015 was $32.8 million, an increase of 6% compared to $31.0 million for the second quarter of 2014. Subscription and support revenue was $31.9 million, an increase of 7% compared with $29.9 million for the second quarter of 2014.
  • Gross profit for the second quarter of 2015 was $21.3 million, compared to $20.6 million for the second quarter of 2014, representing a gross margin of 65% for the second quarter of 2015. Non-GAAP gross profit for the second quarter of 2015 was $21.9 million, representing a year-over-year increase of 3% and a non-GAAP gross margin of 67%. 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 $3.2 million for the second quarter of 2015, compared to a loss from operations of $4.0 million for the second quarter of 2014. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $964,000 for the second quarter of 2015, an improvement compared to a non-GAAP loss from operations of $1.1 million during the second quarter of 2014.
  • Net loss was $3.6 million, or $0.11 per diluted share, for the second quarter of 2015. This compares to a net loss of $4.3 million, or $0.13 per diluted share, for the second quarter of 2014. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $1.5 million for the second quarter of 2015, or $0.04 per diluted share, compared to a non-GAAP net loss of $1.4 million for the second quarter of 2014, or $0.04 per diluted share.
  • Adjusted EBITDA was $620,000 for the second quarter of 2015, compared to $173,000 for the second quarter of 2014. Adjusted EBITDA excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expenses, depreciation expense, other income/expense and the provision for income taxes.
  • Cash flow from operations was $385,000, compared to $724,000 for the second quarter of 2014.
    Free cash flow was negative $1.6 million after the company invested $2.0 million in capital expenditures and capitalization of internal-use software during the second quarter of 2015. Free cash flow was negative $861,000 for the second quarter of 2014.
  • Cash and cash equivalents were $21.2 million as of June 30, 2015 compared to $21.9 million at March 31, 2015.

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 Second Quarter and Recent Highlights:

  • Ended the quarter with 5,404 customers, of which 1,847 were premium.
    New media customers and media customers who expanded their relationship during the quarter included: Barstool Sports, Canadian Football League, Forecast Communication Inc., Manchester City Football Club, News Corp Australia, Quebecor Media Inc., Rogers Media Inc., The Food Channel, Time, Inc., Vox Media and Yelp, among others.
  • New digital marketing customers and digital marketing customers who expanded their relationship during the quarter included: Aon, BassMasters, Blue Jeans Network, Bryant University, GoNoodle, Ingram Micro, Janssen Pharmaceuticals, Morningstar, Skillshare, Sotheby’s and Udemy, among others.
  • Introduced a Brightcove-specific Amazon Fire TV web app kit that helps content owners optimize the delivery of their content from Brightcove Video Cloud directly to Amazon Fire TV. This latest integration leverages the Brightcove Player so that publishers can run ads against their content on Amazon Fire TV using the Google IMA3 advertising plugin and view analytics related to video consumption on Amazon Fire TV in Brightcove Video Cloud.
  • Announced the general availability of the new Brightcove Video Cloud, which includes updates such as a new HTML5 user interface and faster upload and playback time. The latest release also includes a set of new features including mobile and social publishing, a custom report builder that enables advanced video analytics, and integrations with leading content management systems such as Drupal, Adobe Experience Manager, WordPress, and SharePoint.
  • Announced general availability of Brightcove Audience. Part of Brightcove’s Video Marketing Suite, Audience allows marketers to feed video engagement data directly into marketing automation platforms such as Oracle Eloqua and Marketo to capture leads and to convert video engagement data into contact tracking, lead scoring, and customer segmentation.
  • Average revenue per premium customer was $64,000 in the second quarter of 2015. This is an increase of 6.7% from $60,000 in the comparable period in 2014.
  • Recurring dollar retention rate was 88% in the second quarter of 2015, which was below our historical target in the low to mid 90% range. Foreign currency affected our retention rate by 200 basis points and late renewals affected our retention rate by 300 basis points in the quarter.

Business Outlook

Based on information as of today, July 30, 2015, the Company is issuing the following financial guidance:

Third Quarter 2015:

  • Revenue is expected to be in the range of $32.9 million to $33.4 million.
  • Non-GAAP loss from operations is expected to be in the range of $0 to $500,000, which excludes stock-based compensation, the amortization of acquired intangible assets and merger-related expenses totaling approximately $2.4 million.
  • Adjusted EBITDA is expected to be in the range of $1.1 million to $1.6 million, which excludes stock-based compensation, the amortization of acquired intangible assets, merger-related expenses, depreciation expense, other income/expense and taxes totaling approximately $4.0 million.
  • Non-GAAP net loss per diluted share is expected to be $0.01 to $0.03, assuming approximately 32.6 million shares outstanding.

Full Year 2015:

  • Revenue is expected to be in the range of $132.5 million to $133.5 million. Full year revenue is being impacted by $4.2 million due to foreign exchange rate fluctuations. We anticipate professional services will be approximately $1 million per quarter for the remainder of the year.
  • Non-GAAP loss from operations is expected to be in the range of $500,000 to $1.5 million, which excludes stock-based compensation, the amortization of acquired intangible assets and merger-related expenses totaling approximately $9.2 million to $9.6 million.
  • Adjusted EBITDA is expected to be in the range of $5.0 to $6.0 million, which excludes stock-based compensation, the amortization of acquired intangible assets, merger-related expenses, depreciation, other income/expense and taxes totaling approximately $16.5 million to $16.9 million.
  • Non-GAAP net loss per diluted share is expected to be $0.06 to $0.09, assuming approximately 32.6 million shares outstanding.

Brightcover-q2-2015

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