Brightcove Announces Financial Results for First Quarter 2013

  Brightcove Announces Financial Results for First Quarter 2013

Business Wire

BOSTON -- April 30, 2013

Brightcove Inc. (Nasdaq: BCOV), a leading global provider of cloud content
services, today announced financial results for the quarter ended March 31,
2013.

“We are pleased that Brightcove delivered first quarter revenue and
profitability that exceeded our guidance,” said David Mendels, Chief Executive
Officer of Brightcove. “The rapid shift of consumers watching digital content
across a growing array of devices is forcing companies across a wide range of
industries to think more strategically about their digital content delivery
needs. We believe Brightcove is uniquely positioned to benefit from this
long-term trend, and our focus is on continuing to drive the pace of
innovation in the multi-billion dollar online video platform market.”

First Quarter 2013 Financial Highlights:

Revenue: Total revenue for the first quarter of 2013 was $24.7 million, an
increase of 24% compared to $19.9 million for the first quarter of 2012.
Subscription and support revenue was $23.8 million, an increase of 26%
compared with $18.8 million for the first quarter of 2012. Professional
services and other revenue was $944,000, compared to $1.1 million for the
first quarter of 2012.

Gross Profit: Gross profit for the first quarter of 2013 was $16.3 million,
compared to $13.6 million for the first quarter of 2012, and gross margin was
66% for the first quarter of 2013. Non-GAAP gross profit for the first quarter
of 2013 was $16.7 million, representing a year-over-year increase of 22% and a
non-GAAP gross margin of 67%.

Operating Loss: Loss from operations was $3.9 million for the first quarter of
2013, compared to a loss of $3.2 million for the first quarter of 2012.
Non-GAAP loss from operations, which excludes stock-based compensation
expense, the amortization of acquired intangible assets and merger-related
expenses, was $1.2 million for the first quarter of 2013, an improvement
compared to a non-GAAP loss of $2.3 million during the first quarter of 2012.

Net Loss: Net loss attributable to common stockholders was $4.2 million, or
$0.15 per basic and diluted share, for the first quarter of 2013. This
compares to a net loss attributable to common stockholders of $4.3 million, or
$0.27 per basic and diluted share, for the first quarter of 2012.

Non-GAAP net loss attributable to common stockholders, which excludes
stock-based compensation expense, the amortization of acquired intangible
assets, merger-related expenses, and the accretion of dividends on redeemable
convertible preferred stock, was $1.6 million for the first quarter of 2013,
or $0.06 per basic and diluted share, compared to a non-GAAP net loss
attributable to common stockholders of $2.6 million for the first quarter of
2012, or $0.17 per basic and diluted share.

Balance Sheet and Cash Flow: As of March 31, 2013, Brightcove had $28.6
million of cash, cash equivalents and investments, compared to $33.0 million
at December 31, 2012. Brightcove used $2.8 million in cash from operations and
invested $126,000 in capital expenditures, leading to free cash flow of ($2.9)
million for the first quarter of 2013. Free cash flow was ($6.5) million for
the first quarter of 2012.

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 First Quarter and Recent Highlights

  *Ended the quarter with 6,321 customers, which included a net increase of
    65 premium customers. New customers added during the quarter included:
    Network Ten, the Wall Street Journal, Ford Direct, Wesleyan University,
    and Shutterfly.
  *Announced the general availability of a comprehensive monetization
    solution for HTML5 video, which includes support for VAST-compliant pre-,
    mid- and post roll advertising, a new HTML5 video player API that enables
    dynamic changes to ad policy settings, and HTML5 video plug-in support for
    leading ad servers from FreeWheel, Google, Videoplaza, and YuMe.
  *Introduced new native player software development kits (SDKs) for Apple
    iOS and Google Android devices that are integrated with industry leading
    advertising, analytics and digital rights management providers to provide
    for improved content performance and successful video monetization.
  *Announced the general availability of Zencoder Live Cloud Transcoding, an
    open API that enables live video encoding in the cloud and allows content
    providers to instantly scale live encoding resources without having to
    invest in on-premise hardware.
  *Rovio Entertainment, the Finland based entertainment media company known
    for its creation of the Angry Birds franchise, selected Brightcove Video
    Cloud to support the launch of its Angry Birds Toons animated series.
    Angry Birds fans will now be able to watch the on-demand series on their
    smart TVs, smartphones and tablets.
  *Announced enhanced support for TV Everywhere authentication through robust
    integrations with Adobe Pass and Akamai’s Sola Vision Identity Services.
    This will enable cross-device authenticated video experiences for both web
    and native mobile applications, making it easier for broadcasters to
    provide greater access to premium video programming.

Business Outlook

Based on information as of today, April 30, 2013, the Company is issuing the
following financial guidance:

Second Quarter 2013*: The Company expects revenue to be $25.7 million to $26.2
million, and non-GAAP loss from operations to be $1.4 million to $1.7 million.
Assuming approximately 28.2 million shares outstanding, Brightcove expects its
non-GAAP net loss per basic and diluted share attributable to common
stockholders to be $0.06 to $0.07.

Full Year 2013*: The Company is raising its 2013 financial guidance for
revenue and non-GAAP loss from operations. Revenue is expected to be $104
million to $106 million, and non-GAAP loss from operations is expected to be
$3.3 million to $4.8 million. Assuming approximately 28.4 million shares
outstanding, Brightcove expects its non-GAAP net loss per basic and diluted
share attributable to common stockholders to be $0.15 to $0.22.

*With respect to the Company’s expectations under “Business Outlook” above,
the Company has not reconciled non-GAAP loss from operations or non-GAAP net
loss per share attributable to common stockholders to GAAP loss from
operations and GAAP net loss per share attributable to common stockholders,
respectively, because the Company does not provide guidance for stock-based
compensation expense, merger-related expenses, or amortization of acquired
intangible assets, which are reconciling items between those Non-GAAP and GAAP
measures. As the items that impact GAAP loss from operations and GAAP net loss
per share attributable to common stockholders are out of the Company’s control
and/or cannot be reasonably predicted, the Company is unable to provide such
guidance. Accordingly, a reconciliation to GAAP loss from operations and GAAP
net loss per share attributable to common stockholders is not available
without unreasonable effort.

Conference Call Information

Brightcove will host a conference call today, April 30, 2013, at 5:00 p.m.
(Eastern Time) to discuss the Company's financial results and current business
outlook. To access the call, dial 877-705-6003 (domestic) or 201-493-6725
(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 411142. A replay of the webcast will also be available
for a limited time at http://investor.brightcove.com.

About Brightcove

Brightcove Inc. (NASDAQ: BCOV), a leading global provider of cloud content
services, offers a family of products used to publish and distribute the
world's professional digital media. The company's products include Video
Cloud, the market-leading online video platform and Zencoder, a leading
cloud-based media processing service and HTML5 video player technology
provider. Brightcove has more than 6,300 customers in over 60 countries that
rely on Brightcove cloud content services to build and operate media
experiences across PCs, smartphones, tablets and connected TVs. For more
information, visit http://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 of
2013 and the full year of 2013, our position to execute on our growth
strategy, 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 Zencoder 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 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 loss from operations,
non-GAAP net loss attributable to common stockholders and non-GAAP basic and
diluted net loss per share attributable to common stockholders. 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 amortization of acquired
intangible assets, merger-related expenses, and the accretion of dividends on
redeemable convertible preferred stock.

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)
(unaudited)
                                                             
                                          March 31, 2013     December 31, 2012
Assets
Current assets:
Cash and cash equivalents                 $  20,093          $   21,708
Short-term investments                       6,838               8,264
Restricted cash                              42                  102
Accounts receivable, net of allowance        21,555              18,956
Prepaid expenses and other current           4,628               2,987
assets
Deferred tax asset                          171               187        
Total current assets                         53,327              52,204
Long-term investments                        1,661               3,069
Property and equipment, net                  7,665               8,400
Intangible assets, net                       9,957               10,387
Goodwill                                     22,018              22,018
Restricted cash                              201                 201
Other assets                                704               714        
Total assets                              $  95,533         $   96,993     
Liabilities, redeemable convertible
preferred stock and
stockholders' equity
Current liabilities:
Accounts payable                          $  1,918           $   619
Accrued expenses                             9,688               11,639
Deferred revenue                            22,157            19,103     
Total current liabilities                    33,763              31,361
Deferred revenue, net of current             77                  113
portion
Other liabilities                           1,236             1,027      
Total liabilities                            35,076              32,501
                                                             
Stockholders' Equity:
Common stock                                 28                  28
Additional-paid-in-capital                   170,505             167,912
Accumulated other comprehensive              15                  572
income
Accumulated deficit                         (110,091  )        (105,862   )
Total stockholders’ equity                   60,457              62,650
attributable to Brightcove Inc.
Non-controlling interest in                 -                 1,842      
consolidated subsidiary
Total stockholders’ equity                   60,457              64,492
Total liabilities, redeemable
convertible preferred stock and           $  95,533          $   96,993
stockholders' equity

                                                               
Brightcove Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                                                    
                                                  Three Months Ended March 31,
                                                    2013           2012   
Revenue:
Subscription and support revenue                  $  23,777         $ 18,836
Professional services and other revenue             944            1,108  
Total revenue                                        24,721           19,944
Cost of revenue: (1) (2)
Cost of subscription and support revenue             6,747            5,195
Cost of professional services and other             1,667          1,169  
revenue
Total cost of revenue                               8,414          6,364  
Gross profit                                        16,307         13,580 
Operating expenses: (1) (2)
Research and development                             5,061            4,177
Sales and marketing                                  9,947            9,008
General and administrative                           4,626            3,637
Merger-related                                      545            -      
Total operating expenses                            20,179         16,822 
Loss from operations                                 (3,872  )        (3,242 )
Other expense, net                                  (299    )       (263   )
Loss before income taxes and non-controlling
interest in                                          (4,171  )        (3,505 )
consolidated subsidiary
Provision for income taxes                          38             29     
Consolidated net loss                                (4,209  )        (3,534 )
Net income attributable to noncontrolling
interest in                                          (20     )        (52    )

consolidated subsidiary
Net loss attributable to Brightcove Inc.             (4,229  )        (3,586 )
Accretion of dividends on redeemable                -              (733   )
convertible preferred stock
Net loss attributable to common stockholders      $  (4,229  )      $ (4,319 )
                                                                    
Net loss per share attributable to common
stockholders—basic                                $  (0.15   )      $ (0.27  )
and diluted
                                                                    
Weighted-average shares —basic and diluted           28,024           15,843
                                                                    
(1) Stock-based compensation included in
above line items:
Cost of subscription and support revenue          $  68             $ 20
Cost of professional services and other              51               22
revenue
Research and development                             320              81
Sales and marketing                                  575              252
General and administrative                           685              572
                                                                    
                                                                    
(2) Amortization of acquired intangible
assets included in the above line items:
Cost of subscription and support revenue          $  253            $ -
Research and development                             10               -
Sales and marketing                                  167              -

                                                               
Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                                    
                                                  Three Months Ended March 31,
Operating activities                                2013           2012   
Net loss                                          $  (4,209  )      $ (3,534 )
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization                        1,535            824
Stock-based compensation                             1,699            947
Change in fair value of warrants                     -                (28    )
Provision for reserves on accounts receivable        27               67
Amortization of premium on investments               34               -
Amortization of deferred financing costs             -                44
Loss on disposal of equipment                        1                83
Changes in assets and liabilities:
Accounts receivable                                  (2,717  )        (1,377 )
Prepaid expenses and other current assets            (1,168  )        (599   )
Other assets                                         20               299
Accounts payable                                     819              (636   )
Accrued expenses                                     (1,958  )        135
Deferred revenue                                    3,103          1,006  
Net cash used in operating activities               (2,814  )       (2,769 )
                                                                    
Investing activities
Maturities of investments                            2,800            -
Purchases of property and equipment                  (126    )        (3,742 )
Capitalization of internal-use software costs        -                (24    )
Decrease in restricted cash                         60             -      
Net cash provided by (used in) investing            2,734          (3,766 )
activities
                                                                    
Financing activities
Proceeds from exercise of stock options              108              181
Purchase of non-controlling interest in              (1,084  )        -
consolidated subsidiary
Proceeds from issuance of common stock in
connection with initial public offering, net         -                56,923
of offering costs
Repayments under term loan                          -              (7,000 )
Net cash (used in) provided by financing            (976    )       50,104 
activities
                                                                    
Effect of exchange rate changes on cash             (559    )       (149   )
                                                                    
Net (decrease) increase in cash and cash             (1,615  )        43,420
equivalents
Cash and cash equivalents at beginning of           21,708         17,227 
period
Cash and cash equivalents at end of period        $  20,093        $ 60,647 


Brightcove Inc.
Reconciliation of GAAP Gross Profit, GAAP Loss From Operations, GAAP Net Loss
and GAAP Net Loss Per Share to
Non-GAAP Gross Profit, Non-GAAP Loss From Operations, Non-GAAP Net Loss and
Non-GAAP Net Loss Per Share
(in thousands, except per share amounts)
(unaudited)
                                                               
                                                  Three Months Ended March 31,
                                                    2013           2012   
GROSS PROFIT:
GAAP gross profit                                 $  16,307         $ 13,580
Stock-based compensation expense                     119              42
Amortization of acquired intangible assets          253            -      
Non-GAAP gross profit                             $  16,679        $ 13,622 
LOSS FROM OPERATIONS:
GAAP loss from operations                         $  (3,872  )      $ (3,242 )
Stock-based compensation expense                     1,699            947
Merger-related expenses                              545              -
Amortization of acquired intangible assets          430            -      
Non-GAAP loss from operations                     $  (1,198  )      $ (2,295 )
NET LOSS:
GAAP net loss attributable to common              $  (4,229  )      $ (4,319 )
stockholders
Stock-based compensation expense                     1,699            947
Merger-related expenses                              545              -
Accretion of dividends on redeemable                 -                733
convertible preferred stock
Amortization of acquired intangible assets          430            -      
Non-GAAP net loss attributable to common          $  (1,555  )      $ (2,639 )
stockholders
GAAP basic and diluted net loss per share         $  (0.15   )      $ (0.27  )
attributable to common stockholders
Non-GAAP basic and diluted net loss per share     $  (0.06   )      $ (0.17  )
attributable to common stockholders
Shares used in computing GAAP and Non-GAAP
basic and diluted net loss per share                 28,024           15,843
attributable to common stockholders

Contact:

Investor Contact:
ICR for Brightcove
Brian Denyeau, 646-277-1251
brian.denyeau@icrinc.com
or
Media Contact:
Brightcove Inc.
Kristin Leighton, 617-245-5094
kleighton@brightcove.com
 
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