BOSTON, MA (October 26, 2017) Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the third quarter ended September 30, 2017.Brightcove is pleased to deliver strong third quarter results that exceeded expectations from both a financial and operational perspective. Over the last few months we have made significant progress executing on our go-to-market strategy and improving the efficiency of our day-to-day operations, said Andrew Feinberg, Acting Chief Executive Officer of Brightcove.
Feinberg added, We are seeing exciting customer interest in our latest products, such as Dynamic Delivery, Context Aware Encoding and our new Enterprise Video Suite. Customers are using these products to solve some of the most mission-critical issues facing their businesses and they are quickly realizing the significant value Brightcove can deliver. We believe the strength of our product portfolio and our enhanced go-to-market strategy puts Brightcove in a strong position to capitalize on our market opportunities.
Third Quarter 2017 Financial Highlights:
Revenue for the third quarter of 2017 was $39.5 million, an increase from $38.4 million for the third quarter of 2016. Subscription and support revenue was $36.5 million, compared to $36.2 million for the third quarter of 2016.
Gross profit for the third quarter of 2017 was $23.0 million, representing a gross margin of 58%, compared to a gross profit of $24.6 million for the third quarter of 2016. Non-GAAP gross profit for the third quarter of 2017 was $23.7 million, representing a non-GAAP gross margin of 60%, compared to a non-GAAP gross profit of $25.3 million for the third 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 $5.3 million for the third quarter of 2017, compared to a loss from operations of $1.6 million for the third quarter of 2016. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets, executive severance and merger-related expenses, was $2.2 million for the third quarter of 2017, compared to non-GAAP operating income of $913,000 during the third quarter of 2016.
Net loss was $5.4 million, or $0.16 per diluted share, for the third quarter of 2017. This compares to a net loss of $1.6 million, or $0.05 per diluted share, for the third quarter of 2016. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets, executive severance and merger-related expenses, was $2.2 million for the third quarter of 2017, or $0.06 per diluted share, compared to non-GAAP net income of $847,000 for the third quarter of 2016, or $0.02 per diluted share.
Adjusted EBITDA loss was $889,000 for the third quarter of 2017, compared to adjusted EBITDA of $2.0 million for the third quarter of 2016. Adjusted EBITDA excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expenses, depreciation expense, executive severance, other income/expense, and the provision for income taxes.
Cash flow used in operations was $4.9 million for the third quarter for 2017, compared to cash flow from operations of $2.6 million for the third quarter of 2016.
Free cash flow was negative $6.2 million after the company invested $1.3 million in capital expenditures and capitalization of internal-use software during the third quarter of 2017. Free cash flow was $1.2 million for the third quarter of 2016.
Cash and cash equivalents were $22.1 million as of September 30, 2017 compared to $28.4 million at June 30, 2017.
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 $73,000 in the third quarter of 2017, excluding starter customers who had average annualized revenue of $5,000 per customer. This compares to $70,000 in the comparable period in 2016.
Recurring dollar retention rate was 95% in the third quarter of 2017, which was in-line with our historical target of the low to mid 90% range.
Ended the quarter with 4,210 customers, of which 2,113 were premium.
New enterprise customers and enterprise customers who expanded their relationship during the quarter included: American Express Global Business Travel, Bristol-Myers Squibb, Edmunds.com, GameStop, Hallmark Cards, Mary Kay Cosmetics, NetApp, among others.
New media customers and media customers who expanded their relationship during the quarter included: BBC Worldwide, Lionsgate, McClatchy, Premier League Football, Prometheus Global, the publisher of Billboard and Hollywood Reporter, Reelz Channel, UK TV, and Young Hollywood, among others.
Foxtel partnered with Brightcove to livestream the Floyd Mayweather vs. Conor McGregor fight on August 27, 2017.
Business Outlook
Based on information as of today, October 26, 2017, the Company is issuing the following financial guidance:
Fourth Quarter 2017:
Revenue is expected to be in the range of $39.3 million to $39.8 million, including approximately $2.8 million of professional services revenue.
Non-GAAP loss from operations is expected to be in the range of $600,000 to $1.1 million, which excludes stock-based compensation of approximately $1.8 million and the amortization of acquired intangible assets of approximately $700,000.
Adjusted EBITDA is expected to be in the range of breakeven to $500,000, which excludes stock-based compensation of approximately $1.8 million, the amortization of acquired intangibl
