BOSTON, MA (May 4, 2017) - Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the first quarter ended March 31, 2017.
Brightcove reported mixed first quarter financial results with revenue in line with expectations but non-GAAP EPS below guidance primarily due to a revenue mix shift and unanticipated one-time costs associated with a large client's impending OTT service launch, said David Mendels, Chief Executive Officer of Brightcove. In addition, while we had strong year-over-year bookings performance in the quarter, we experienced a significant and unanticipated decrease in our revenue retention rate, among media customers, primarily due to changes in the market for the non-software elements of content delivery and storage.
Mendels added, Despite this challenge, we are optimistic that we will return to double-digit revenue growth in 2018, as we benefit from the positive impact from our bookings momentum and execute on a multi-faceted product and pricing strategy that will improve our revenue retention rate. We believe we are at the early stages of a multi-billion market opportunity with media and digital marketing and enterprise customers who are finding new and innovative ways to leverage their digital assets to improve business performance. We remain confident in our ability to achieve our long-term financial objectives, which we believe will create significant value for long-term shareholders.
First Quarter 2017 Financial Highlights:
Revenue for the first quarter of 2017 was $37.6 million, an increase of 4% compared to $36.3 million for the first quarter of 2016. Subscription and support revenue was $34.2 million, compared to $34.7 million for the first quarter of 2016.
Gross profit for the first quarter of 2017 was $22.4 million, representing a gross margin of 59%, compared to a gross profit of $23.0 million for the first quarter of 2016. Non-GAAP gross profit for the first quarter of 2017 was $23.0 million, representing a non-GAAP gross margin of 61%, compared to a non-GAAP gross profit of $23.6 million for the first quarter of 2016. 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 $5.1 million for the first quarter of 2017, compared to a loss from operations of $1.5 million for the first quarter of 2016. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $2.6 million for the first quarter of 2017, compared to non-GAAP income from operations of $714,000 during the first quarter of 2016.
Net loss was $5.1 million, or $0.15 per diluted share, for the first quarter of 2017. This compares to a net loss of $1.6 million, or $0.05 per diluted share, for the first quarter of 2016. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $2.6 million for the first quarter of 2017, or $0.08 per diluted share, compared to non-GAAP net income of $638,000 for the first quarter of 2016, or $0.02 per diluted share.
Adjusted EBITDA loss was $1.6 million for the first quarter of 2017, compared to adjusted EBITDA of $2.0 million for the first quarter of 2016. 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 used in operations was $6.6 million for the first quarter for 2017, compared to cash flow from operations of $3.0 million for the first quarter of 2016.
Free cash flow was negative $7.6 million after the company invested $1.0 million in capital expenditures and capitalization of internal-use software during the first quarter of 2017. Free cash flow was $1.3 million for the first quarter of 2016.
Cash and cash equivalents were $29.2 million as of March 31, 2017 compared to $36.8 million at December 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 First Quarter and Recent Highlights:
Average annual subscription revenue per premium customer was $67,000 in the first quarter of 2017, excluding starter customers who had average annualized revenue of $4,800 per customer. This compares to $69,000 in the comparable period in 2016.
Recurring dollar retention rate was 85% in the first quarter of 2017, which was below our historical target of the low to mid 90% range.
Ended the quarter with 4,411 customers, of which 2,021 were premium.
New digital marketing customers and digital marketing customers who expanded their relationship during the quarter included: Allianz Global Investors, Daimler Trucks North America, Hitachi High-Tech Solutions Corporation, Kyocera Document Solutions, Macy's Inc., Morningstar Inc., Salomon, and TD Bank, among others.
New media customers and media customers who expanded their relationship during the quarter included: Conde Nast Japan, Discovery Network Asia, News UK, New York Post, Total Sports Asia, TV Tokyo Communications Corporation, and Young Hollywood, among others.
Launched Brightcove Live, an API-driven platform that augments scalable live streaming with server-side ad insertion, cloud DVR, content encryption, on-the-fly clipping and seamless VOD asset creation. Brightcove Live benefits media companies by allowing them to deliver and monetize broadcast-like experiences for live events and 24/7 channels while reducing the cost and complexity of live streaming.
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BOSTON, MA (May 4, 2017) - Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the first quarter ended March 31, 2017.
