Brightcove Announces Financial Results for Second Quarter 2013

  Brightcove Announces Financial Results for Second Quarter 2013

Business Wire

BOSTON -- July 25, 2013

Brightcove Inc. (NASDAQ: BCOV), a leading global provider of cloud content
services, today announced financial results for the quarter ended June 30,
2013.

“Brightcove delivered strong second quarter results highlighted by revenue and
profitability that exceeded the high end of our guidance,” said David Mendels,
Chief Executive Officer of Brightcove. “We are seeing strong demand across a
wide variety of industries as our customers embrace the use of digital content
as a way to drive deeper levels of engagement with their customers. During the
quarter we delivered exciting new technology to the market that enhances our
market leadership position and strengthens our ability to penetrate the
multi-billion dollar online video platform market.”

Second Quarter 2013 Financial Highlights:

Revenue: Total revenue for the second quarter of 2013 was $26.9 million, an
increase of 24% compared to $21.6 million for the second quarter of 2012.
Subscription and support revenue was $25.6 million, an increase of 23%
compared with $20.7 million for the second quarter of 2012. Professional
services and other revenue was $1.3 million, compared to $902,000 for the
second quarter of 2012.

Gross Profit: Gross profit for the second quarter of 2013 was $17.7 million,
compared to $15.2 million for the second quarter of 2012, and gross margin was
66% for the second quarter of 2013. Non-GAAP gross profit for the second
quarter of 2013 was $18.1 million, representing a year-over-year increase of
18% 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: Loss from operations was $3.3 million for the second
quarter of 2013, compared to a loss of $3.9 million for the second 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 $874,000 for the second quarter of 2013, compared to a non-GAAP
loss from operations of $2.1 million during the second quarter of 2012.

Net Loss: Net loss attributable to common stockholders was $3.5 million, or
$0.12 per basic and diluted share, for the second quarter of 2013. This
compares to a net loss attributable to common stockholders of $4.3 million, or
$0.16 per basic and diluted share, for the second 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 $1.1 million for the second quarter of 2013,
or $0.04 per basic and diluted share, compared to a non-GAAP net loss
attributable to common stockholders of $2.6 million for the second quarter of
2012, or $0.10 per basic and diluted share.

Balance Sheet and Cash Flow: As of June 30, 2013, Brightcove had $30.5 million
of cash, cash equivalents and investments, compared to $28.6 million at March
31, 2013. Brightcove generated $2.8 million in cash from operations and
invested $802,000 in capital expenditures, leading to free cash flow of $2.0
million for the second quarter of 2013. Free cash flow was ($2.1) million for
the second 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 Second Quarter and Recent Highlights

  *Yahoo!7, a leading online destination for Australian consumers and
    advertisers, chose Brightcove to support their current and future online
    video initiatives, including their catch-up TV service, Plus7, and their
    breaking news services. Yahoo!7 is a joint venture between Seven Network
    Limited and Yahoo! Inc., which combines the online assets, television
    content and magazine properties of the Seven Network with the strength of
    Yahoo!’s global Internet platform.
  *Launched Brightcove Video Cloud Live, an add-on product  that provides an
    easy-to-use dashboard for live video events and delivering multi-bitrate
    streams to multiple devices.
  *Asahi Shimbun, one of the top newspapers in Japan, adopted Video Cloud to
    publish video of the National High School Baseball Championship of Japan,
    one of that country’s most popular sporting events.
  *Ended the quarter with 6,386 customers, which included a net increase of
    16 premium customers during the quarter. New customers added during the
    quarter included Campbell Soup Company, IBM and All State Insurance.

Business Outlook

Based on information as of today, July 25, 2013, the Company is issuing the
following financial guidance:

Third Quarter 2013: The Company expects revenue to be $26.8 million to $27.3
million, and non-GAAP loss from operations to be $900,000 to $1.2 million.
Assuming approximately 28.3 million shares outstanding, Brightcove  expects
its net loss per basic and diluted share attributable to common stockholders
to be $0.14 to $0.15, which includes estimates for stock-based compensation
expense of $1.6 million, merger-related expenses of $375,000 and amortization
of acquired intangible assets of $430,000. Brightcove expects its non-GAAP net
loss per basic and diluted share attributable to common stockholders to be
$0.05 to $0.06, which excludes the estimated expenses referenced in the
previous sentence.

Full Year 2013:

The Company is raising its 2013 financial guidance for revenue and non-GAAP
loss from operations. Revenue is expected to be $106.3 million to $107.5
million, and non-GAAP loss from operations is expected to be $3.0 million to
$4.0 million. Assuming approximately 28.4 million shares outstanding,
Brightcove  expects its net loss per basic and diluted share attributable to
common stockholders to be $0.48 to $0.53, which includes estimates for
stock-based compensation expense of $6.6 million, merger-related expenses of
$1.6 million and amortization of acquired intangible assets of $1.7 million.
Brightcove expects its non-GAAP net loss per basic and diluted share
attributable to common stockholders to be $0.13 to $0.18, which excludes the
estimated expenses referenced in the previous sentence.

Conference Call Information

Brightcove will host a conference call today, July 25, 2013, at 5:00 p.m.
(Eastern Time) to discuss the Company's financial results and current business
outlook. To access the call, dial 877-407-3982 (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 416473. 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 65 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 third fiscal quarter of
2013 and the full year of 2013, our position to execute on our growth
strategy, and our ability to penetrate our market and 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, 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)
                                                      
                                                    June 30,     December 31,
                                                    2013         2012
Assets
Current assets:
Cash and cash equivalents                           $ 25,495     $ 21,708
Short-term investments                              4,958        8,264
Restricted cash                                     42           102
Accounts receivable, net of allowance               18,922       18,956
Prepaid expenses and other current assets           4,402        2,987
Deferred tax asset                                  163          187
Total current assets                                53,982       52,204
Long-term investments                               -            3,069
Property and equipment, net                         7,115        8,400
Intangible assets, net                              9,528        10,387
Goodwill                                            22,018       22,018
Restricted cash                                     201          201
Other assets                                        732          714
Total assets                                        $ 93,576     $ 96,993
Liabilities, redeemable convertible preferred
stock and stockholders' equity
Current liabilities:
Accounts payable                                    $ 911        $ 619
Accrued expenses                                    10,556       11,639
Deferred revenue                                    22,501       19,103
Total current liabilities                           33,968       31,361
Deferred revenue, net of current portion            99           113
Other liabilities                                   1,267        1,027
Total liabilities                                   35,334       32,501
                                                                 
Stockholders' Equity:
Common stock                                        28           28
Additional-paid-in-capital                          172,069      167,912
Accumulated other comprehensive income              (242)        572
Accumulated deficit                                 (113,613)    (105,862)
Total stockholders’ equity attributable to          58,242       62,650
Brightcove Inc.
Non-controlling interest in consolidated            -            1,842
subsidiary
Total stockholders’ equity                          58,242       64,492
Total liabilities, redeemable convertible           $ 93,576     $ 96,993
preferred stock and stockholders' equity



Brightcove Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                                            
                          Three Months Ended June      Six Months Ended June
                          30,                          30,
                            2013       2012         2013       2012   
Revenue:
Subscription and          $  25,575     $ 20,718       $ 49,352     $ 39,554
support revenue
Professional
services and other          1,326      902          2,270      2,010  
revenue
Total revenue                26,901       21,620         51,622       41,564
Cost of revenue:
(1) (2)
Cost of
subscription and             7,647        5,233          14,394       10,428
support revenue
Cost of
professional                1,525      1,211        3,192      2,380  
services and other
revenue
Total cost of               9,172      6,444        17,586     12,808 
revenue
Gross profit                17,729     15,176       34,036     28,756 
Operating expenses:
(1) (2)
Research and                 4,982        4,564          10,043       8,741
development
Sales and marketing          10,749       9,745          20,696       18,753
General and                  4,754        4,274          9,380        7,911
administrative
Merger-related              546        479          1,091      479    
Total operating             21,031     19,062       41,210     35,884 
expenses
Loss from                    (3,302 )     (3,886 )       (7,174 )     (7,128 )
operations
Other expense, net          (164   )    (273   )      (463   )    (536   )
Loss before income
taxes and
non-controlling              (3,466 )     (4,159 )       (7,637 )     (7,664 )
interest in
consolidated
subsidiary
Provision for               56         29           94         58     
income taxes
Consolidated net             (3,522 )     (4,188 )       (7,731 )     (7,722 )
loss
Net income
attributable to
noncontrolling                            (150   )       (20    )     (202   )
interest in
consolidated
subsidiary
Net loss
attributable to              (3,522 )     (4,338 )       (7,751 )     (7,924 )
Brightcove Inc.
Accretion of
dividends on
redeemable                  -                        -          (733   )
convertible
preferred stock
Net loss
attributable to           $  (3,522 )   $ (4,338 )     $ (7,751 )   $ (8,657 )
common stockholders
                                                                    
Net loss per share
attributable to
common                    $  (0.12  )   $ (0.16  )     $ (0.28  )   $ (0.40  )
stockholders—basic
and diluted
                                                                    
Weighted-average
shares —basic and            28,181       27,256         28,103       21,550
diluted
                                                                    
(1) Stock-based
compensation
included in above
line items: Cost of       $  57         $ 35           $ 125        $ 55
subscription and
support revenue
Cost of                      13           25             64           47
professional
services and other           228          136            548          217
revenue Research
and development              509          363            1,084        615
Sales and marketing
General and                  645          704            1,330        1,276
administrative
                                                                    
(2) Amortization of
acquired intangible
assets included in
the above line            $  253        $ -            $ 506        $ -
items: Cost of
subscription and
support revenue              10           -              20           -
Research and
development Sales            167          -              334          -
and marketing
                                                                             

                                                                 
Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                 
                                                     Six Months Ended June 30,
Operating activities                                   2013       2012    
Net loss                                             $  (7,731 )   $ (7,722  )
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization                           3,069        1,821
Stock-based compensation                                3,151        2,210
Change in fair value of warrants                        -            (28     )
Provision for reserves on accounts receivable           321          247
Amortization of premium on investments                  55           45
Amortization of deferred financing costs                -            44
Loss on disposal of equipment                           -            83
Changes in assets and liabilities:
Accounts receivable                                     (411   )     (3,048  )
Prepaid expenses and other current assets               (1,484 )     (345    )
Other assets                                            (29    )     362
Accounts payable                                        294          (453    )
Accrued expenses                                        (750   )     415
Deferred revenue                                       3,509      2,473   
Net cash used in operating activities                  (6     )    (3,896  )
                                                                   
Investing activities
Purchases of investments                                -            (14,067 )
Maturities of investments                               6,320        -
Purchases of property and equipment                     (928   )     (4,669  )
Capitalization of internal-use software costs           -            (24     )
Decrease in restricted cash                            60         -       
Net cash provided by (used in) investing               5,452      (18,760 )
activities
                                                                   
Financing activities
Proceeds from exercise of stock options                 220          343
Purchase of non-controlling interest in                 (1,084 )     -
consolidated subsidiary
Proceeds from issuance of common stock in
connection with initial public offering, net            -            56,762
of offering costs
Repayments under term loan                             -          (7,000  )
Net cash (used in) provided by financing               (864   )    50,105  
activities
                                                                   
Effect of exchange rate changes on cash                (795   )    (69     )
                                                                   
Net increase in cash and cash equivalents               3,787        27,380
Cash and cash equivalents at beginning of              21,708     17,227  
period
Cash and cash equivalents at end of period           $  25,495    $ 44,607  
                                                                   


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 June       Six Months Ended June
                         30,                           30,
                           2013        2012         2013       2012   
GROSS PROFIT:
GAAP gross               $  17,729      $ 15,176       $ 34,036     $ 28,756
profit
Stock-based
compensation                70            60             189          102
expense
Amortization of
acquired                   253         -            506        -      
intangible
assets
Non-GAAP gross           $  18,052     $ 15,236      $ 34,731    $ 28,858 
profit
LOSS FROM
OPERATIONS:
GAAP loss from           $  (3,302  )   $ (3,886 )     $ (7,174 )   $ (7,128 )
operations
Stock-based
compensation                1,452         1,263          3,151        2,210
expense
Merger-related              546           479            1,091        479
expenses
Amortization of
acquired                   430         -            860        -      
intangible
assets
Non-GAAP loss            $  (874    )   $ (2,144 )     $ (2,072 )   $ (4,439 )
from operations
NET LOSS:
GAAP net loss
attributable to          $  (3,522  )   $ (4,338 )     $ (7,751 )   $ (8,657 )
common
stockholders
Stock-based
compensation                1,452         1,263          3,151        2,210
expense
Merger-related              546           479            1,091        479
expenses
Accretion of
dividends on
redeemable                  -             -              -            733
convertible
preferred stock
Amortization of
acquired                   430         -            860        -      
intangible
assets
Non-GAAP net
loss
attributable to          $  (1,094  )   $ (2,596 )     $ (2,649 )   $ (5,235 )
common
stockholders
GAAP basic and
diluted net
loss per share           $  (0.12   )   $ (0.16  )     $ (0.28  )   $ (0.40  )
attributable to
common
stockholders
Non-GAAP basic
and diluted net
loss per share           $  (0.04   )   $ (0.10  )     $ (0.09  )   $ (0.24  )
attributable to
common
stockholders
Shares used in
computing GAAP
and Non-GAAP
basic and
diluted net                 28,181        27,256         28,103       21,550
loss per share
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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