Brightcove Announces Financial Results for Third Quarter Fiscal Year 2021

BOSTON--(BUSINESS WIRE)--October 27, 2021-- 

Brightcove Inc. (Nasdaq: BCOV), the global leader in video for business, today announced financial results for the third quarter ended September 30, 2021.

"Brightcove made progress across a number of our strategic priorities during the third quarter, in particular on product innovation and retention," said Jeff Ray, Brightcove's Chief Executive Officer. "We continue to enhance the value proposition of the Brightcove platform and enable our customers to improve their business performance with video every day."

"While our revenue and profitability performance in the quarter were ahead of expectations, we did experience sales challenges in certain regions," Ray continued, "We have seen success with our go-to-market strategy in North America and have an aggressive plan to leverage these strategies across all of our go-to-market teams. We remain confident in Brightcove's long-term ability to deliver significantly faster revenue growth and higher levels of profitability."

Update on Executive Leadership:

Jeff Ray, Brightcove's Chief Executive Officer, has informed the Company's Board of Directors that he intends to retire from Brightcove at the end of 2022 and will step down as CEO and Board Director when his successor is hired. Mr. Ray will continue to lead Brightcove until that time, with a focus on executing on the Company's growth plans and ensuring a smooth and orderly transition to the next CEO.

Mr. Ray commented, "I am incredibly proud of what we have accomplished in my time at Brightcove, in particular the significant acceleration in our product innovation and our relentless focus on customer success. I strongly believe in the transformational power of video and Brightcove's unique ability to help customers be successful with their video strategies. I am confident we have laid the foundation for Brightcove to deliver greater value for our customers and achieve the company's long-term financial targets."

Deb Besemer, Chairperson of the Board of Brightcove, said, "Under Jeff's leadership, Brightcove has made significant progress on our strategic priorities that build upon the company's rich history as the world's leading online video platform. On behalf of the Brightcove Board of Directors and all of our employees, I want to thank Jeff for his exceptional contributions to the company. The timing of Jeff's retirement provides the company the time to find the right successor and ensure a smooth and effective transition to the next CEO."

Third Quarter 2021 Financial Highlights:

   -- Revenue for the third quarter of 2021 was $52.2 million, an increase of 
      6% compared to $49.1 million for the third quarter of 2020. Subscription 
      and support revenue was $49.2 million, an increase of 6% compared to 
      $46.3 million for the third quarter of 2020. 
   -- Gross profit for the third quarter of 2021 was $33.5 million, 
      representing a gross margin of 64% compared to a gross profit of $31.0 
      million and 63% for the third quarter of 2020. Non-GAAP gross profit for 
      the third quarter of 2021 was $34.1 million, representing a non-GAAP 
      gross margin of 65%, compared to a non-GAAP gross profit of $31.5 million 
      and 64% for the third quarter of 2020. 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 $233 thousand for the third quarter of 2021, 
      compared to an income of $1.3 million for the third 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 $2.9 million for 
      the third quarter of 2021, compared to non-GAAP operating income of $4.5 
      million during the third quarter of 2020. 
   -- Net loss was $1.0 million, or a loss of $0.02 per diluted share, for the 
      third quarter of 2021. This compares to a net income of $1.3 million, or 
      $0.03 per diluted share, for the third 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 $2.1 million for the third quarter of 
      2021, or $0.05 per diluted share, compared to non-GAAP net income of $4.6 
      million for the third quarter of 2020, or $0.11 per diluted share. 
   -- Adjusted EBITDA was $4.2 million for the third quarter of 2021, compared 
      to adjusted EBITDA of $5.9 million for the third 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 provided by operations was $7.4 million for the third quarter 
      for 2021, compared to cash flow provided by operations of $3.6 million 
      for the third quarter of 2020. 
   -- Free cash flow was $4.9 million after the company invested $2.5 million 
      in capital expenditures and capitalization of internal-use software 
      during the third quarter of 2021. Free cash flow was $1.4 million for the 
      third quarter of 2020. 
   -- Cash and cash equivalents were $45.3 million as of September 30, 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 Third Quarter and Recent Highlights:

   -- Average annual subscription revenue per premium customer was $93,400 in 
      the third quarter of 2021, excluding starter customers who had average 
      annualized revenue of $4,400 per customer. This compares to $89,000 in 
      the comparable period in 2020. 
   -- Recurring dollar retention rate was 93% in the third quarter of 2021, 
      within our historical target of the low to mid-90 percent range. 
   -- Net revenue retention rate was 95% in the third quarter of 2021. 
   -- Ended the quarter with 3,205 customers, of which 2,265 were premium. 
   -- New customers and customers who expanded their relationship during the 
      third quarter include: Football Co, Mars Information Services, ITV, 
      GameStop, Funny or Die, and Nikkei Visual Images. 
   -- Announced the acquisition of HapYak technology from Newsela, a leading 
      K-12 instructional content platform, to help advance video interactivity. 
      With the integration of the HapYak technology, Brightcove users can 
      quickly and easily incorporate interactivity into virtually any video, 
      including clickable hotspots, quizzes, shopping cart purchases, 
      personalization, choose-your-own adventure paths, and a variety of calls 
      to action. The technology will also enable marketers, HR, corporate 
      training departments, and sales teams to track viewer actions and 
      sentiment and to personalize customer journeys in entirely new ways. 
   -- Announced Brightcove Marketing Studio, a new solution that gives 
      marketers access to easily find, use, and repurpose video assets, which 
      are costly to create and underutilized across marketing teams. Brightcove 
      Marketing Studio provides role-based access to video assets through a 
      team's preferred social platforms, marketing automation, digital asset 
      management, and content management tools. 
   -- Announced Brightcove CorpTV, a solution designed for companies to think 
      and act like media brands. Brightcove CorpTV enables organizations to 
      create channels similar to Netflix or Hulu that stream content to 
      customers and employees and other target audiences, each with their own, 
      audience-specific, content. 

Business Outlook

Based on information as of today, October 27, 2021, the Company is issuing the following financial guidance.

Fourth Quarter 2021:

   -- Revenue is expected to be in the range of $51.0 million to $52.0 million, 
      including approximately $2.2 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 $2.6 million and the amortization of acquired intangible 
      assets of approximately $0.7 million. 
   -- Adjusted EBITDA is expected to be in the range of $2.2 million to $3.2 
      million, which excludes stock-based compensation of approximately $2.6 
      million, the amortization of acquired intangible assets of approximately 
      $0.7 million, depreciation expense of approximately $1.2 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 $2.6 million, 
      the amortization of acquired intangible assets of approximately $0.7 
      million, and assumes approximately 41.9 million weighted-average shares 
      outstanding.