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Brightcove Announces Financial Results for Fourth Quarter and Fiscal Year 2018
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BOSTON, MA (February 13, 2019) – Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the fourth quarter and fiscal year ended December 31, 2018.
“In the fourth quarter Brightcove continued to execute on the strategic priorities it has targeted to generate stronger, more consistent revenue growth and profitability. The Company has accomplished much in 2018 and is in a far stronger position to achieve its long-term objectives than when we entered the year,” said Jeff Ray, Brightcove’s chief executive officer.
Ray added, “Brightcove enters 2019 with a clear market focus, a robust product development pipeline and a new go-to-market strategy focused on driving faster sales velocity. Our clear leadership in a dynamic, fast-growing, multi-billion dollar marketplace provides ample opportunity for the company to be successful.”
Fourth Quarter 2018 Financial Highlights:
Revenue for the fourth quarter of 2018 was $40.9 million, an increase of 2% compared to $40.1 million for the fourth quarter of 2017. Subscription and support revenue was $37.8 million, an increase of 2% compared to $36.9 million for the fourth quarter of 2017.
Gross profit for the fourth quarter of 2018 was $24.4 million, representing a gross margin of 60% compared to a gross profit of $23.8 million for the fourth quarter of 2017. Non-GAAP gross profit for the fourth quarter of 2018 was $24.8 million, representing a non-GAAP gross margin of 61%, compared to a non-GAAP gross profit of $24.5 million for the fourth quarter of 2017. 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 $2.5 million for the fourth quarter of 2018, compared to a loss from operations of $1.3 million for the fourth quarter of 2017. Non-GAAP operating income, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expense, was $237,000 for the fourth quarter of 2018, compared to non-GAAP operating income of $1.3 million during the fourth quarter of 2017.
Net loss was $2.6 million, or $0.07 per diluted share, for the fourth quarter of 2018. This compares to a net loss of $1.4 million, or $0.04 per diluted share, for the fourth quarter of 2017. Non-GAAP net income, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expense, was $147,000 for the fourth quarter of 2018, or $0.00 per diluted share, compared to non-GAAP net income of $1.3 million for the fourth quarter of 2017, or $0.04 per diluted share.
Adjusted EBITDA was $1.4 million for the fourth quarter of 2018, compared to adjusted EBITDA of $2.3 million for the fourth quarter of 2017. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
Cash flow from operations was $2.8 million for the fourth quarter for 2018, compared to $5.2 million for the fourth quarter of 2017.
Free cash flow was $2.1 million after the company invested $682,000 in capital expenditures and capitalization of internal-use software during the fourth quarter of 2018. Free cash flow was $4.2 million for the fourth quarter of 2017.
Cash and cash equivalents were $29.3 million as of December 31, 2018 compared $26.9 million at September 30, 2018.
Full Year 2018 Financial Highlights:
Revenue for the full year 2018 was $164.8 million, an increase of 6% compared to $155.9 million for 2017. Subscription and support revenue for 2018 was $150.9 million, an increase of 5% compared to $143.2 million for 2017.
Gross profit was $98.2 million for 2018, representing a gross margin of 60%, compared to $91.3 million for 2017. Non-GAAP gross profit was $100.6 million for 2018, representing a non-GAAP gross margin of 61%, compared to $94.0 million for 2017. 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 $13.1 million for 2018, compared to a loss from operations of $19.7 million for 2017. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets, executive severance and merger-related expense, was $2.2 million for 2018, compared to non-GAAP loss from operations of $9.0 million for 2017.
Net loss was $14.0 million, or $0.39 per diluted share, for 2018. This compares to a net loss of $19.5 million, or $0.57 per diluted share, for 2017. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets, executive severance and merger-related expense, was $3.1 million for 2018, or $0.09 per diluted share, compared to non-GAAP net loss of $8.8 million for 2017, or $0.26 per diluted share.
Adjusted EBITDA was $2.3 million for 2018, compared to an adjusted EBITDA loss of $4.5 million for 2017. Adjusted EBITDA excludes stock-based compensation expense, executive severance, merger-related expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
Cash flow from operations was $2.6 million for 2018, compared to cash flow used in operations of $6.4 million for 2017.
Free cash flow was negative $2.0 million after the company invested $4.5 million in capital expenditures and capitalization of internal-use software during 2018. Free cash flow was negative $10.6 million for 2017.
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 Fourth Quarter and Recent Highlights:
Average annual subscription revenue per premium customer was $75,000 in the fourth quarter of 2018, excluding starter customers who had average annualized revenue of $4,500 per customer. This compares to $73,000 in the comparable period in 2017.
Recurring dollar retention rate was 104% in the fourth quarter of 2018, which was well above our historical target of the low to mid-90 percent range.
Ended the quarter with 3,783 customers, of which 2,226 were premium.
New customers and customers who expanded their relationship during the fourth quarter include: HOOQ, McCormick and Co., Reelz, Adobe, AMC Entertainment, Forbes Media, MVMNT TV, Ascension Health, Bibel TV, TaTatu, Rajasthan Patrika Private Limited, DNV GL, among others.
Brightcove was named, for a second consecutive time, a Leader in Gartner’s Magic Quadrant for Enterprise Video Content Management. Brightcove was positioned highest on the ability to execute axis within the entire Magic Quadrant.
Rick Hanson joined Brightcove as Chief Revenue Officer, a new role for the company. Hanson will oversee the global sales organization including all customer facing direct sales, channel sales, and professional services organizations. He joins the company after previous sales management roles at CA Technologies, HP, RSA and Skyport Systems.
Business Outlook
Based on information as of today, February 13, 2019, the Company is issuing the following financial guidance. Please note that this guidance does not incorporate the recently announced acquisition of the Ooyala OVP business.
First Quarter 2019:
Revenue is expected to be in the range of $40.0 million to $40.5 million, including approximately $2.7 million of professional services revenue.
Non-GAAP loss from operations is expected to be in the range of $900,000 to $1.4 million, which excludes stock-based compensation of approximately $1.6 million and the amortization of acquired intangible assets of approximately $400,000.
Adjusted EBITDA is expected to be in the range of an Adjusted EBITDA loss of $200,000 to generating Adjusted EBITDA of $300,000, which excludes stock-based compensation of approximately $1.6 million, the amortization of acquired intangible assets of approximately $400,000, depreciation expense of approximately $1.2 million and other income/expense and the provision for income taxes of approximately $300,000.
Non-GAAP net loss per diluted share is expected to be $0.03 to $0.05, which excludes stock-based compensation of approximately $1.6 million and the amortization of acquired intangible assets of approximately $400,000, and assumes approximately 36.7 million weighted-average shares outstanding.
Full Year 2019:
Revenue is expected to be in the range of $168.0 million to $172.0 million, including approximately $11.1 million of professional services revenue.
Non-GAAP income from operations is expected to be in the range of breakeven to $3.0 million, which excludes stock-based compensation of approximately $6.9 million and the amortization of acquired intangible assets of approximately $1.6 million.
Adjusted EBITDA is expected to be in the range of $5.2 million to $8.2 million, which excludes stock-based compensation of approximately $6.9 million, the amortization of acquired intangible assets of approximately $1.6 million, depreciation expense of approximately $5.2 million and other income/expense and the provision for income taxes of approximately $1.1 million.
Non-GAAP net income/loss per diluted share is expected to be a loss of $0.03 to income of $0.05, which excludes stock-based compensation of approximately $6.9 million and the amortization of acquired intangible assets of approximately $1.6 million, and assumes approximately 38.6 million weighted-average shares outstanding.
Conference Call Information
Brightcove will host a conference call today, February 13, 2019, 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 13686457. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.
About Brightcove
Brightcove Inc. (NASDAQ:BCOV) is the leading global provider of powerful cloud solutions for managing, delivering, and monetizing video experiences on every screen. A pioneering force in the world of online video since the company’s founding in 2004, Brightcove’s award-winning technology, unparalleled services, extensive partner ecosystem, and proven global scale have helped thousands of companies in over 70 countries achieve better business results with video. To learn more, 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 fourth fiscal quarter of 2018 and full year 2018, 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: our history of losses; our limited operating history; 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; 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; 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, 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 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, the amortization of acquired intangible assets, executive severance and merger-related expenses. The non-GAAP financial results discussed above of adjusted EBITDA is defined as consolidated net income (loss), plus stock-based compensation expense, the amortization of acquired intangible assets, executive severance, merger-related expenses, depreciation expense, other income/expense, including interest expense and interest income, and the provision for income taxes. Executive severance represents severance paid to the former interim CEO of the company as well as former key executives. 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.
Investors:
ICR for Brightcove
Brian Denyeau, 646-277-1251
brian.denyeau@icrinc.com
or
Media:
Brightcove
Meredith Duhaime
mduhaime@brightcove.com