Brightcove Signs Definitive Agreement to Acquire Unicorn Media January 6, 2014 / Brightcove Press Release Expands technology leadership with the addition of next generation ad insertion technology;
Announces preliminary fourth quarter results that exceed guidance
BOSTON, Mass. (January 6, 2014) Brightcove Inc. (NASDAQ: BCOV), a leading global provider of cloud services for video, today announced it has entered into a definitive agreement to acquire substantially all the assets of Unicorn Media, a leading provider of cloud video ad insertion technology. Based on a $14.00 price per share of Brightcove common stock as specified in the purchase agreement, the transaction is valued at approximately $49 million. Under the terms of the agreement, the purchase price consists of approximately 2.9 million shares of Brightcove stock and approximately $9.0 million of cash used to pay transaction and other expenses of Unicorn Media.
"We believe that online video has the potential to surpass traditional TV by offering mass personalization, superior ad targeting, and frictionless distribution to more screens in more locations," said David Mendels, Chief Executive Officer of Brightcove. "However, media companies are struggling to effectively deliver ad-supported video content to a fragmented landscape of platforms, including mobile devices, set top boxes, connected living room devices, and a growing number of PCs that have ad-blockers installed. Through the acquisition of Unicorn Media, Brightcove will empower media companies to address these challenges by offering the most comprehensive suite of cloud services for delivering and monetizing online video content to the broadest range of devices."
Accustream Media estimates that the online video advertising market represented $10.4 billion U.S. dollars in worldwide spending in 2013, with spending expected to grow to $16.8 billion by 2015. However, the troubling rise of PC ad-blocking technology has become a material loss of revenue for many properties and represents a threat to future growth. Additionally, video viewership continues to shift to mobile devices and consumer electronics platforms where traditional online video advertising technology either does not function at all, or is only partially-supported. These challenges increasingly prevent media companies from fully monetizing their potential audience and negatively impact the overall video advertising industry growth.
Unicorn Media has pioneered an innovative cloud-based ad insertion and video stitching service called Once which addresses the limitations of traditional online video ad technology. The Once service reduces or eliminates the need for platform-specific ad technology and makes it possible for digital media companies to reliably deliver live or on-demand video with dynamically customized programming and targeted advertising to the maximum range of devices.
Leading digital media organizations, including ESPN, NBC News and The Weather Channel rely on Once to take advantage of monetization opportunities across a wide range of devices and screens and deliver a smooth end user experience that rivals or surpasses traditional television. In addition, a number of leading media companies are already using both Brightcove and Unicorn Media services in a complementary fashion. The combined company will be able to offer top media properties unmatched audience reach, monetization potential, and consumer experience for their online video initiatives.
As evidence of Unicorn Medias pioneering innovation, the company has been awarded 14 U.S. patents, 7 of which have also been issued internationally, and has 20 patent applications pending for the technologies that are the foundation of the Once product line and other related domains. These patents and inventions will become part of the Brightcove intellectual property portfolio following the closing of the transaction.
Brightcove will rebrand the Unicorn Media product line as Brightcove Once and will continue to develop, operate and support the service while also integrating the technology with other Brightcove services. Unicorn Medias headquarters in Tempe, Arizona will become the Brightcove Southwest R&D Center, joining similar centers in Boston, San Francisco and Seattle.
Preliminary Fourth Quarter Results
Based on information as of today, January 6, 2014, the Company is issuing the following preliminary fourth quarter results:
Brightcove expects fourth quarter 2013 revenue to be $29.7 million to $30.0 million, which is above prior guidance of $28.0 million to $28.5 million. The company currently expects fourth quarter 2013 non-GAAP income from operations to be $1.0 million to $1.3 million, which is above prior guidance of $350,000 to $650,000. Results are preliminary in nature and subject to the completion of the quarter close process.
Business Outlook
Based on information as of today, January 6, 2014, the Company is issuing the following preliminary financial guidance:
Full Year 2014: Revenue is expected to be $126 million to $130 million, including $8 million to $9 million of contribution from Unicorn Media. Non-GAAP loss from operations is expected to be $9 million to $12 million, which includes a loss attributable to Unicorn Media of $11 million to $12 million. Non-GAAP income from operations excludes stock-based compensation expense, amortization of intangibles associated with acquisitions, as well as non-recurring acquisition costs.
With respect to the Companys expectations under Preliminary Fourth Quarter Results and Business Outlook above, the Company has not reconciled non-GAAP income from operations for the fourth quarter because it has not yet completed its quarter closing procedures or non-GAAP earnings for the full year 2014 to GAAP income from operations and GAAP earnings because at this time the Company is unab
