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BOSTON, Mass. (July 26, 2012) – Brightcove Inc. (Nasdaq: BCOV), a leading global provider of cloud-based solutions for publishing and distributing professional digital media, today announced financial results for the second quarter ended June 30, 2012. The company also announced the signing of a definitive agreement to acquire privately-held Zencoder, a leading provider of cloud-based video encoding service and creator of the popular Video.js HTML5 video player (see separate release).
“We are pleased with our second quarter results, which exceeded our guidance on both the top and bottom line,” said Jeremy Allaire, Chairman and Chief Executive Officer of Brightcove. “Brightcove is benefitting from growing demand as companies across a wide range of industries and size are embracing online digital content as a way to deliver more compelling experiences to their customers. Brightcove is the pioneer of this market, and we continue to extend our technology leadership and ability to meet market demand based on the innovations we are delivering across our Video Cloud and App Cloud platforms.”
Allaire added, “The acquisition of Zencoder not only strengthens our Video Cloud online video platform in a key technology area, but it also signals our expansion into standalone cloud services that developers can use as building blocks for custom systems. In addition, Zencoder is also the developer of Video.js, a fast-growing, free HTML5 video player that provides an excellent starting point for organizations that could potentially upgrade to our Video Cloud Express offering. We welcome the Zencoder team, customers, and developer communities and look forward to developing these positive synergies.”
Second Quarter 2012 Financial Highlights:
Revenue: Total revenue for the second quarter of 2012 was $21.6 million, an increase of 41% compared to $15.3 million for the second quarter of 2011. Subscription and support revenue was $20.7 million, an increase of 43% compared with $14.5 million for the second quarter of 2011. Professional services and other revenue was $902,000, an increase of 12% compared to $802,000 for the second quarter of 2011.
Gross Profit: Gross profit for the second quarter of 2012 was $15.2 million, compared to $10.3 million for the second quarter of 2011. Non-GAAP gross profit for the second quarter of 2012 was $15.2 million, representing a year-over-year increase of 47% and a non-GAAP gross margin of 70%.
Operating Loss: Loss from operations was $3.9 million for the second quarter of 2012, compared to a loss of $5.1 million for the second quarter of 2011. Non-GAAP loss from operations, which excludes stock-based compensation expense and merger-related costs, was $2.1 million for the second quarter of 2012, an improvement compared to a non-GAAP loss of $4.0 million during the second quarter of 2011.
Net Loss: Net loss attributable to common stockholders was $4.3 million, or $0.16 per basic and diluted share, for the second quarter of 2012. This compares to a net loss attributable to common stockholders of $6.9 million, or $1.42 per basic and diluted share, for the second quarter of 2011.
Non-GAAP net loss attributable to common stockholders, which excludes stock-based compensation expense, the accretion of dividends on redeemable convertible preferred stock, and merger-related costs, was $2.6 million for the second quarter of 2012, or $0.10 per basic and diluted share, compared to a non-GAAP net loss of $4.4 million for the second quarter of 2011, or $0.91 per basic and diluted share.
Balance Sheet and Cash Flow: As of June 30, 2012, Brightcove had $58.6 million of cash, cash equivalents and investments, a decrease from $60.6 million at March 31, 2012. Subsequent to the end of the quarter, we expect to use approximately $30 million for the acquisition of Zencoder.
Brightcove used $1.1 million in cash from operations and invested $927,000 in capital expenditures, leading to free cash flow of ($2.1) million for the second quarter of 2012. Free cash flow was ($1.5) million for the second quarter of 2011.
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
Based on information as of today, July 26, 2012, the Company is issuing the following financial guidance:
Full Year 2012: The Company expects revenue to be $85.3 million to $86.0 million, and non-GAAP operating loss to be $10.5 million to $9.5 million. Assuming approximately 24.5 million shares outstanding, Brightcove expects its non-GAAP net loss per basic and diluted share to be $0.47 to $0.44.
Third Quarter 2012: The Company expects revenue to be $21.1 million to $21.6 million, and non-GAAP operating loss to be $3.1 million to $2.8 million. Assuming approximately 27.4 million shares outstanding, Brightcove expects its non-GAAP net loss per basic and diluted share to be $0.12 to $0.11.
With respect to the Company's expectations under “Business Outlook" above, the Company has not reconciled non-GAAP loss from operations or non-GAAP loss per share to GAAP loss from operations and GAAP loss per share because at this time the Company is unable to forecast the amortization of intangible assets related to the recent acquisition of Zencoder, which is a reconciling item between those Non-GAAP and GAAP measures. Accordingly, a reconciliation to GAAP loss from operations and GAAP loss per share is not available at this time.
Conference Call Information
Brightcove will host a conference call today, July 26, 2012, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results and current business outlook. 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 877-870-5176 (domestic) or 858-384-5517 (international). The replay conference ID is 397340. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.
Brightcove Inc. (NASDAQ: BCOV), a leading global provider of cloud content services, provides a family of products used to publish and distribute the world’s professional digital media. The company’s products include Brightcove Video Cloud, the market-leading online video platform, and Brightcove App Cloud, a pioneering content app platform. More than 4,650 customers in over 50 countries rely on Video Cloud to build and operate media experiences across PCs, smartphones, tablets and connected TVs. For more information, visit http://www.brightcove.com.
_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 third fiscal quarter of 2012 and the full year of 2012, our position to execute on our growth strategy, the closing and successful integration of the Zencoder acquisition, and our ability to expand our leadership position. 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, risks associated with our history of losses, our limited operating history; expectations regarding the widespread adoption of customer demand for our Video Cloud and App Cloud products; our ability to expand the sales of our products to customers located outside the U.S., keeping up with the rapid technological change required to remain competitive in our industry, our ability to retain existing customers; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; and the price volatility of our common stock, and other risks set forth under the caption "Risk Factors" in the Company’s final prospectus related to its initial public offering filed pursuant to Rule 424b under the Securities Act with the Securities and Exchange Commission on February 17, 2012, as updated by our subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings . 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 loss from operations, non-GAAP net loss and non-GAAP basic and diluted net 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 exclude stock-based compensation expense, the accretion of dividends on redeemable convertible preferred stock and merger-related costs.
_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.
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