Brightcove Announces Financial Results for Third Quarter 2012

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Brightcove Announces Financial Results for Third Quarter 2012

  • Revenue of $22.1 million, up 32% year-over-year

BOSTON--(BUSINESS WIRE)-- Brightcove Inc. (NAS: BCOV) , a leading global provider of cloud-based solutions for publishing and distributing professional digital media, today announced financial results for the third quarter ended September 30, 2012.

"We are pleased with our strong third quarter results, which once again exceeded our revenue and profitability guidance," said Jeremy Allaire, Chairman and Chief Executive Officer of Brightcove. "After pioneering the online video platform market, Brightcove has continued to push the pace of innovation with our expanding suite of cloud-based solutions, including Video Cloud, App Cloud and Zencoder. We believe that we are in the very early stages of a fundamental shift in how digital content is being delivered and consumed. We view this as a significant market opportunity, and Brightcove is focused on leveraging our first mover advantage into continued, long-term market leadership."


Third Quarter 2012 Financial Highlights:

Revenue: Total revenue for the third quarter of 2012 was $22.1 million, an increase of 32% compared to $16.7 million for the third quarter of 2011. Subscription and support revenue was $21.5 million, an increase of 35% compared with $15.9 million for the third quarter of 2011. Professional services and other revenue was $0.6 million, a decrease compared to $0.8 million for the third quarter of 2011.

Gross Profit: Gross profit for the third quarter of 2012 was $15.1 million, compared to $11.4 million for the third quarter of 2011. Non-GAAP gross profit for the third quarter of 2012 was $15.3 million, representing a year-over-year increase of 34% and a non-GAAP gross margin of 69%.

Operating Loss: Loss from operations was $3.7 million for the third quarter of 2012, compared to a loss of $3.3 million for the third quarter of 2011. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangibles and merger-related expenses, was $1.3 million for the third quarter of 2012, an improvement compared to a non-GAAP loss from operations of $2.2 million during the third quarter of 2011.

Net Loss: Net loss attributable to common stockholders was $0.6 million, or $0.02 per basic and diluted share, for the third quarter of 2012. This compares to a net loss attributable to common stockholders of $5.4 million, or $1.09 per basic and diluted share, for the third quarter of 2011.

Non-GAAP net loss attributable to common stockholders, which excludes stock-based compensation expense, the amortization of acquired intangibles, merger-related expenses, merger-related income tax adjustments and the accretion of dividends on redeemable convertible preferred stock, was $1.5 million for the third quarter of 2012, or $0.05 per basic and diluted share, compared to a non-GAAP net loss attributable to common stockholders of $2.9 million for the third quarter of 2011, or $0.59 per basic and diluted share.

Balance Sheet and Cash Flow: As of September 30, 2012, Brightcove had $30.8 million of cash, cash equivalents and investments, a decrease from $58.6 million at June 30, 2012. The decrease in cash was driven primarily by the $27.2 million used for the acquisition of Zencoder.

Brightcove used $5 thousand in cash from operations and invested $1.4 million in capital expenditures, leading to the use of free cash flow of $1.4 million for the third quarter of 2012. Free cash flow was ($5.5) million for the third quarter of 2011.

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

  • Closed the acquisition of Zencoder, the market-leading cloud based video encoding service and the developer of the Video.js free HTML5 video player.
  • Added 1,370 volume customers, including approximately 1,120 related to Zencoder, and 76 premium customers, including approximately 10 related to Zencoder. New customers added during the quarter include All Nippon Air, Exact Target, Nikon and Yves St. Laurent.
  • Viacom adopted Brightcove cloud services for digital content delivery across platforms and consumer devices and will be using Brightcove player technology across multiple properties for Web and mobile distribution.
  • Announced the introduction of Zencoder Instant Play, which enables on-demand video playback to start just seconds after the file upload process begins, and Live Video Transcoding, which allows content providers to encode a single live stream and have it automatically packaged into a high quality user experience across any form factor, bitrate or internet connection.
  • Announced that Discovery Networks International has selected the Brightcove App Cloud mobile app platform to develop and manage dual-screen catch-up TV services.
  • Recently released a completely new video player for the iOS platform, which delivers unmatched video quality with state of the art advertising, content protection and analytics technology.

Business Outlook

Based on information as of today, November 1, 2012, the Company is issuing the following financial guidance:

Fourth Quarter 2012*: The Company expects revenue to be $22.8 million to $23.3 million, and non-GAAP operating loss to be $1.9 million to $2.2 million. Assuming approximately 27.9 million shares outstanding, Brightcove expects its non-GAAP net loss per basic and diluted share to be $0.07 to $0.08.

Full Year 2012*: The Company expects revenue to be $86.5 million to $87 million, and non-GAAP operating loss to be $7.5 million to $7.8 million. Assuming approximately 24.6 million shares outstanding, Brightcove expects its non-GAAP net loss per basic and diluted share to be $0.35 to $0.36.

*With respect to the Company's expectations under "Business Outlook" above, the Company has not reconciled non-GAAP loss from operations or non-GAAP net loss per share to GAAP loss from operations and GAAP net loss per share because at this time the Company has not finalized the purchase accounting relating to the acquisition of Zencoder, which could impact the amortization of acquired intangible assets and the merger-related income tax adjustments, which arereconciling items between those Non-GAAP and GAAP measures. Accordingly, a reconciliation to GAAP loss from operations and GAAP net loss per share is not available at this time.

Conference Call Information

Brightcove will host a conference call today, November 1, 2012, at 8:00 a.m. (Eastern Time) to discuss the Company's financial results and current business outlook. To access the call, dial 877-705-6003 (domestic) or 201-493-6725 (international). A replay of this conference call will be available for a limited time at 877-870-5176 (domestic) or 858-384-5517 (international). The replay conference ID is 401417. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.

About Brightcove

Brightcove Inc. (NAS: BCOV) , a leading global provider of cloud content services, offers a family of products used to publish and distribute the world's professional digital media. The company's products include Video Cloud, the market-leading online video platform, App Cloud, a pioneering content app platform, and Zencoder, a leading cloud-based media processing service and HTML5 video player technology provider. Brightcove has more than 6,100 customers in over 60 countries that rely on Brightcove cloud content services to build and operate media experiences across PCs, smartphones, tablets and connected TVs. For more information, visit http://www.brightcove.com.

Forward-Looking Statements

This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for the fourth fiscal quarter of 2012 and the full year of 2012, our position to execute on our growth strategy, and our ability to expand our leadership position and market opportunity. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks associated with our history of losses, our limited operating history; expectations regarding the widespread adoption of customer demand for our Video Cloud, App Cloud and Zencoder products; our ability to expand the sales of our products to customers located outside the U.S., keeping up with the rapid technological change required to remain competitive in our industry, our ability to retain existing customers; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; and the price volatility of our common stock, and other risks set forth under the caption "Risk Factors" in the Company's final prospectus related to its initial public offering filed pursuant to Rule 424b under the Securities Act with the Securities and Exchange Commission on February 17, 2012, as updated by our subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

Brightcove has provided in this release the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss attributable to common stockholders and non-GAAP basic and diluted net loss per share attributable to common stockholders. Brightcove uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Brightcove's ongoing operational performance. Brightcove believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Brightcove's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above exclude stock-based compensation expense, the accretion of dividends on redeemable convertible preferred stock, amortization of acquired intangible assets, merger-related costs and merger-related income tax adjustments. Merger-related costs include fees incurred in connection with closing an acquisition in addition to fees associated with the retention of key employees. Merger-related income tax adjustments include one-time charges or benefits that are incurred in connection with an acquisition. Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. The Company's earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company's web site at http://www.brightcove.com.

Brightcove Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
      
September 30, 2012December 31, 2011
Assets
Current assets:
Cash and cash equivalents$16,940$17,227
Short-term investments9,778-
Restricted cash70-
Accounts receivable, net of allowance19,39214,693
Prepaid expenses and other current assets 3,986  3,334 
Total current assets50,16635,254
Long-term investments4,033-
Property and equipment, net9,2826,079
Intangible assets, net10,816-
Goodwill21,9242,372
Deferred initial public offering costs-2,544
Restricted cash233233
Other assets 493  856 
Total assets$96,947 $47,338 
Liabilities, Redeemable Convertible Preferred Stock and
Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable$882$2,026
Accrued expenses9,3168,773
Current portion of long-term debt-833
Deferred revenue 18,998  13,418 
Total current liabilities29,19625,050
Deferred revenue, net of current portion198354
Long-term debt-6,167
Other liabilities71377
Redeemable convertible preferred stock warrants -  424 
Total liabilities30,10732,072
 
Redeemable convertible preferred stock-120,351
 
 
Stockholders' Equity (Deficit):
Common stock285
Additional-paid-in-capital165,411-
Accumulated other comprehensive income1,0841,056
Accumulated deficit (101,213) (107,254)
Total stockholders' equity (deficit) attributable to Brightcove Inc.65,310(106,193)
Non-controlling interest in consolidated subsidiary 1,530  1,108 
Total stockholders' equity (deficit)66,840(105,085)
Total liabilities, redeemable convertible preferred stock and
stockholders' equity (deficit)$96,947 $47,338 
 
Brightcove Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
    
Three Months Ended September 30,Nine Months Ended September 30,
2012201120122011
Revenue:
Subscription and support revenue$21,503$15,906$61,057$42,876
Professional services and other revenue 568  767  2,578  2,151 
Total revenue22,07116,67363,63545,027
Cost of revenue: (1) (2)
Cost of subscription and support revenue5,8224,03816,25011,077
Cost of professional services and other revenue 1,151  1,237  3,531  3,510 
Total cost of revenue 6,973  5,275  19,781  14,587 
Gross profit 15,098  11,398  43,854  30,440 
Operating expenses: (1) (2)
Research and development4,7713,98113,51211,179
Sales and marketing9,4297,45328,18222,825
General and administrative3,8553,26111,7669,239
Merger-related 756  -  1,235  - 
Total operating expenses 18,811  14,695  54,695  43,243 
Loss from operations(3,713)(3,297)(10,841)(12,803)
Other income (expense), net 42  (583) (494) (722)
Loss before income taxes and non-controlling interest in
consolidated subsidiary(3,671)(3,880)(11,335)(13,525)
(Benefit from) provision for income taxes (3,280) 11  (3,222) 94 
Consolidated net loss(391)(3,891)(8,113)(13,619)
Net income attributable to noncontrolling interest in
consolidated subsidiary (220) (87) (422) (232)
Net loss attributable to Brightcove Inc.(611)(3,978)(8,535)(13,851)
Accretion of dividends on redeemable convertible preferred stock -  (1,410) (733) (4,229)
Net loss attributable to common stockholders$(611)$(5,388)$(9,268)$(18,080)
 
Net loss per share attributable to common stockholders—basic
and diluted$(0.02)$(1.09)$(0.39)$(3.73)
 
Weighted-average shares —basic and diluted27,4794,93923,5404,844
 
(1) Stock-based compensation included in above line items:
Cost of subscription and support revenue31178640
Cost of professional services and other revenue32297988
Research and development191110408287
Sales and marketing4352381,050793
General and administrative769
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