-- BOSTON, MA (October 23, 2019) Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the third quarter ended September 30, 2019.In the third quarter Brightcove continued to execute on its strategic plan that is focused on getting the company to breakout growth and profitability over time. We are attracting terrific new talent to the company and are encouraged by some key customer wins during the quarter, particularly in Europe and North American media, said Jeff Ray, Chief Executive Officer, Brightcove.
Ray continued, We achieved an important milestone in the quarter with the introduction of Brightcove Beacon, our new SaaS OTT platform. Brightcove Beacon is the first of the purpose-built applications we will launch in the coming months that are targeted at our core market segments. We are confident these new solutions will quickly deliver tremendous value for customers and drive faster growth for Brightcove.
Third Quarter 2019 Financial Highlights:
Revenue for the third quarter of 2019 was $47.4 million, an increase of 15% compared to $41.1 million for the third quarter of 2018. Subscription and support revenue was $45.4 million, an increase of 21% compared to $37.4 million for the third quarter of 2018.
Gross profit for the third quarter of 2019 was $29.1 million, representing a gross margin of 61% compared to a gross profit of $24.8 million for the third quarter of 2018. Non-GAAP gross profit for the third quarter of 2019 was $29.8 million, representing a non-GAAP gross margin of 63%, compared to a non-GAAP gross profit of $25.4 million for the third quarter of 2018. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense, executive severance and restructuring expense and the amortization of acquired intangible assets.
Loss from operations was $2.4 million for the third quarter of 2019, compared to a loss from operations of $3.1 million for the third quarter of 2018. Non-GAAP operating income, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $2.8 million for the third quarter of 2019, compared to non-GAAP operating loss of $607,000 during the third quarter of 2018.
Net loss was $3.0 million, or $0.08 per diluted share, for the third quarter of 2019. This compares to a net loss of $3.5 million, or $0.10 per diluted share, for the third quarter of 2018. Non-GAAP net income, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $2.2 million for the third quarter of 2019, or $0.06 per diluted share, compared to non-GAAP net loss of $968,000 for the third quarter of 2018, or $0.03 per diluted share.
Adjusted EBITDA was $4.1 million for the third quarter of 2019, compared to adjusted EBITDA of $575,000 for the third quarter of 2018. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, executive severance and restructuring expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
Cash flow provided in operations was $4.5 million for the third quarter for 2019, compared to cash flow used in operations of $488,000 for the third quarter of 2018.
Free cash flow was $2.4 million after the company invested $2.1 million in capital expenditures and capitalization of internal-use software during the third quarter of 2019. Free cash flow was negative $1.6 million for the third quarter of 2018.
Cash and cash equivalents were $22.6 million as of September 30, 2019 compared to $21.2 million at June 30, 2019.
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 Third Quarter and Recent Highlights:
Average annual subscription revenue per premium customer was $84,500 in the third quarter of 2019, excluding starter customers who had average annualized revenue of $4,800 per customer. This compares to $74,000 in the comparable period in 2018.
Recurring dollar retention rate was 85% in the third quarter of 2019, which was below our historical target of the low to mid-90 percent range.
Ended the quarter with 3,720 customers, of which 2,362 were premium.
New and existing customers who expanded their relationships during the third quarter include: Seven Network Limited, Radio New Zealand, The Christian Broadcasting Network, OONA International, Fremantle, National Basketball League, Myanma Post and Telecommunication, and Cloudera, among others.
Announced Brightcove Beacon, a new SaaS-based OTT platform. Brightcove Beacon enables companies to deliver and launch premium video experiences quickly and cost effectively across mobile, web, smart TVs, and connected TVs, all with the flexibility of multiple monetization models, backed by the power of Brightcove.
The Technology Services Industry Association recognized Brightcove as a Certified Staff Support Excellence Center for the 6th year in a row. This award recognizes Brightcove's ability to deeply understand its customers' needs throughout the lifecycle of a support case, and its efficiency in resolving those cases with just one interaction.
Business Outlook
Based on information as of today, October 23, 2019, the Company is issuing the following financial guidance.
Fourth Quarter 2019:
Revenue is expected to be in the range of $47.6 million to $48.1 million, including approximately $2.3 million of professional services revenue.
Non-GAAP inco
