Brightcove Announces Financial Results for Second Quarter 06

Brightcove Announces Financial Results for Second Quarter 2016 July 28, 2016 / Brightcove Press Release

Company reports second quarter revenue of $37.0 million, up 13% year-over-year

BOSTON, MA (July 28, 2016) Brightcove Inc. (NASDAQ: BCOV), a leading global provider of cloud services for video, today announced financial results for the quarter ended June 30, 2016.

Brightcove delivered strong second quarter results that met or exceeded our expectations from both a revenue and profitability perspective, said David Mendels, Chief Executive Officer of Brightcove. We are excited by the positive momentum we are seeing across our business, highlighted by the signing of multi-year, multi-million dollar contracts with two media customers, including our first 8 figure contract.

Mendels continued, During the second quarter, we demonstrated our commitment to innovation by introducing many exciting new product announcements that address some of the biggest trends in video, including OTT, expanding media delivery across more devices, and social distribution. The product innovation we have brought to market in recent quarters is putting Brightcove in a great position to help customers utilize their video assets to generate better business performance. We are confident that our strategy will drive more revenue growth and profitability over time while generating significant value for our shareholders.

Second Quarter 2016 Financial Highlights:

Revenue for the second quarter of 2016 was $37.0 million, an increase of 13% compared to $32.8 million for the second quarter of 2015. Subscription and support revenue was $35.1 million, an increase of 10% compared with $31.9 million for the second quarter of 2015.

Gross profit for the second quarter of 2016 was $23.5 million, compared to $21.3 million for the second quarter of 2015, representing a gross margin of 64% for the second quarter of 2016. Non-GAAP gross profit for the second quarter of 2016 was $24.1 million, representing a year-over-year increase of 10% and a non-GAAP gross margin of 65%. 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 $2.2 million for the second quarter of 2016, compared to a loss of $3.2 million for the second quarter of 2015. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $302,000 for the second quarter of 2016, an improvement compared to a non-GAAP loss of $964,000 during the second quarter of 2015.

Net loss was $2.4 million, or $0.07 per diluted share, for the second quarter of 2016. This compares to a net loss of $3.6 million, or $0.11 per diluted share, for the second quarter of 2015. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $489,000 for the second quarter of 2016, or $0.01 per diluted share, compared to a non-GAAP net loss of $1.5 million for the second quarter of 2015, or $0.04 per diluted share.

Adjusted EBITDA was $885,000 for the second quarter of 2016, compared to $620,000 for the second quarter of 2015. Adjusted EBITDA excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expenses, depreciation expense, other income/expense and the provision for income taxes.

Cash flow from operations was $2.0 million for the second quarter of 2016, compared to cash flow from operations of $385,000 for the second quarter of 2015.

Free cash flow was $1.0 million after the company invested $1.0 million in capital expenditures and capitalization of internal-use software during the second quarter of 2016. Free cash flow was negative $1.6 million for the second quarter of 2015.

Cash and cash equivalents were $30.2 million as of June 30, 2016 compared to $29.3 million at March 31, 2016.

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:

Average revenue per premium customer was $69,000 in the second quarter of 2016. This is an increase of 8% from $64,000 in the comparable period in 2015.

Recurring dollar retention rate was 95% in the second quarter of 2016, which was within our historical target in the low to mid 90% range.

Ended the quarter with 4,774 customers, of which 1,926 were premium.

New media customers and media customers who expanded their relationship during the quarter included: AMC, BounceTV, Box Plus, Express Newspapers, Le Parisien, Pluto TV, Ringier AG, TV Dorama, TV5Monde Asia, Woven Digital and Yelp, among others.

New digital marketing customers and digital marketing customers who expanded their relationship during the quarter included: Angie's List, Comodo, Jardine Matheson, Keurig Green Mountain, Lush Cosmetics, Morningstar, Omron, Rolls Royce, SAS Institute, TUI Travel Group, and Xero, among others.

Launched a video content marketplace powered by Vemba, a next generation video distribution and content discovery platform for premium publishers. The Vemba marketplace is integrated with Brightcove's Video Cloud, which helps expand content libraries and create new revenue opportunities for media companies.

Partnered with IRIS.TV to license its Adaptive Stream technology, which will enable Brightcove customers to provide personalized programming to their viewers through content discovery and recommendations.

Business Outlook

Based on information as of today, July 28, 2016, the Company is issuing the following financial guidance:

Third Quarter 2016:

Revenue is expected to be

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