Brightcove Announces Financial Results for Fourth Quarter and Fiscal Year 2020

BOSTON–(BUSINESS WIRE)–Brightcove Inc. (NASDAQ: BCOV) the global leader in video for business, today announced financial results for the fourth quarter and fiscal year ended December 31, 2020.

“Brightcove’s fourth quarter performance was a great finish to an excellent 2020, highlighted by our fastest organic revenue growth quarter in several years and the strongest free cash flow quarter in our history,” said Jeff Ray, Brightcove’s Chief Executive Officer.

Ray added, “2020 was video’s evolutionary moment and its value has never been more apparent. Brightcove is helping drive the proliferation of video, enabling enterprises to better engage with their customers and employees, and empowering content creators to monetize their content globally. Brightcove’s clear market leadership puts Brightcove in a great position to deliver strong, sustainable, and profitable growth for years to come.”

Fourth Quarter 2020 Financial Highlights:

  • Revenue for the fourth quarter of 2020 was $53.7 million, an increase of 13% compared to $47.6 million for the fourth quarter of 2019. Subscription and support revenue was $50.7 million, an increase of 14% compared to $44.6 million for the fourth quarter of 2019.
  • Gross profit for the fourth quarter of 2020 was $34.2 million, representing a gross margin of 64% compared to a gross profit of $28.8 million for the fourth quarter of 2019. Non-GAAP gross profit for the fourth quarter of 2020 was $34.8 million, representing a non-GAAP gross margin of 65%, compared to a non-GAAP gross profit of $29.7 million for the fourth quarter of 2019. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense and the amortization of acquired intangible assets.
  • Income from operations was $1.6 million for the fourth quarter of 2020, compared to a loss of $6.9 million for the fourth quarter of 2019. Non-GAAP operating income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets and merger-related expense, was $5.4 million for the fourth quarter of 2020, compared to non-GAAP operating income of $2.2 million during the fourth quarter of 2019.
  • Net income was $2.0 million, or $0.05 per basic and diluted share, for the fourth quarter of 2020. This compares to a net loss of $6.7 million, or a loss of $0.17 per diluted share, for the fourth quarter of 2019. Non-GAAP net income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets and merger-related expense, was $5.8 million for the fourth quarter of 2020, or $0.14 per diluted share, compared to non-GAAP net income of $2.4 million for the fourth quarter of 2019, or $0.06 per diluted share.
  • Adjusted EBITDA was $6.8 million for the fourth quarter of 2020, compared to adjusted EBITDA of $3.5 million for the fourth quarter of 2019. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, restructuring, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
  • Cash flow provided by operations was $12.4 million for the fourth quarter for 2020, compared to $2.1 million for the fourth quarter of 2019.
  • Free cash flow was $10.9 million after the company invested $1.5 million in capital expenditures and capitalization of internal-use software during the fourth quarter of 2020. Free cash flow was negative $336,000 for the fourth quarter of 2019.
  • Cash and cash equivalents were $37.5 million as of December 31, 2020 compared to $30.3 million as of September 30, 2020.

Full Year 2020 Financial Highlights:

  • Revenue for the full year 2020 was $197.4 million, an increase of 7% compared to $184.5 million for 2019. Subscription and support revenue for 2020 was $187.3 million, an increase of 8% compared to $173.8 million for 2019.
  • Gross profit was $121.3 million for 2020, representing a gross margin of 61%, compared to $109.0 million for 2019. Non-GAAP gross profit was $123.7 million for 2020, representing a non-GAAP gross margin of 63%, compared to $111.9 million for 2019. 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 2020, compared to a loss from operations of $21.1 million for 2019. Non-GAAP income from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $15.2 million for 2020, compared to non-GAAP income from operations of $3.6 million for 2019.
  • Net loss was $5.8 million, or $0.15 per diluted share, for 2020. This compares to a net loss of $21.9 million, or $0.58 per diluted share, for 2019. 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 $14.7 million for 2020, or $0.36 per diluted share, compared to non-GAAP net income of $2.8 million for 2019, or $0.07 per diluted share.
  • Adjusted EBITDA was $20.5 million for 2020, compared to an adjusted EBITDA of $8.8 million for 2019. 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 by operations was $21.3 million for 2020, compared to cash flow from operations of $2.7 million for 2019.
  • Free cash flow was $12.6 million after the company invested $8.7 million in capital expenditures and capitalization of internal-use software during 2020. Free cash flow was negative $4.6 million for 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 Fourth Quarter and Recent Highlights:

  • Average annual subscription revenue per premium customer was $97,200 in the fourth quarter of 2020, excluding starter customers who had average annualized revenue of $4,400 per customer. This compares to $83,400 in the comparable period in 2019.
  • Recurring dollar retention rate was 91% in the fourth quarter of 2020, which was in-line with our historical target of the low to mid-90 percent range.
  • Ended the quarter with 3,330 customers, of which 2,279 were premium.
  • New customers and customers who expanded their relationship during the fourth quarter include: BioFire Diagnostics, Keller Williams Realty, DK Rights, Intel Corporation, Rainbow Media Holdings, and Meredith Corporation, among others.
  • Recipient of two Technology and Engineering Emmy® Awards, awarded by the National Academy of Television Arts & Sciences (NATAS) for excellence in engineering innovation. Brightcove’s Context Aware Encoding technology was recognized for excellence and engineering creativity in the Development of Perceptual Metrics for Video Encoding Optimization category. The technology enables customers to distribute videos encoded at high visual quality while minimizing network bandwidth and storage costs.
  • Chosen by South by Southwest® (SXSW®) Conference and Festivals to be the official video partner for the all-digital SXSW Online SXSW EDU Online events. Through Brightcove’s award-winning, highly-scalable, and flexible digital video platform, SXSW Online will span five different channels, emulating iconic SXSW stages from years past, and give attendees the unique ability to switch channels for different content in real-time, one major benefit of at-home streaming.
  • Announced that SEEK, one of the largest and most-established employment marketplace in Australia, is using Brightcove’s video technology to build a stronger brand and create more human connection between job seekers and organizations. Since implementing Brightcove, SEEK has seen a 55% higher brand impact overall across its channels.
  • Announced that Jennifer Smith has joined the company as Chief Marketing Officer (CMO). Smith is an international marketing executive who brings more than 20 years of experience in global technology companies to Brightcove. She is recognized for her leadership skills in go-to-market strategy and has a proven track record of making improvements across product, sales and marketing for public and private companies. Most recently, she served as CMO at Alfresco Software (recently acquired by Hyland), where she led the transformation of the company’s positioning from technology vendor to platform solution provider, managing all aspects of marketing.

Business Outlook

Based on information as of today, February 17, 2021, the Company is issuing the following financial guidance.

First Quarter 2021:

  • Revenue is expected to be in the range of $53.0 million to $54.0 million, including approximately $3.7 million of professional services revenue.
  • Non-GAAP income from operations is expected to be in the range of $4.0 million to $5.0 million, which excludes stock-based compensation of approximately $2.0 million, the amortization of acquired intangible assets of approximately $0.8 million and restructuring of approximately $0.3 million.
  • Adjusted EBITDA is expected to be in the range of $5.4 million to $6.4 million, which excludes stock-based compensation of approximately $2.0 million, the amortization of acquired intangible assets of approximately $0.8 million, restructuring of approximately $0.3 million, depreciation expense of approximately $1.4 million and other income/expense and the provision for income taxes of approximately $0.3 million.
  • Non-GAAP net income per diluted share is expected to be $0.09 to $0.11, which excludes stock-based compensation of approximately $2.0 million, the amortization of acquired intangible assets of approximately $0.8 million, restructuring of approximately $0.3 million, and assumes approximately 41.9 million weighted-average shares outstanding.

Full Year 2021:

  • Revenue is expected to be in the range of $211.0 million to $217.0 million, including approximately $12.5 million of professional services revenue.
  • Non-GAAP income from operations is expected to be in the range of $20.0 million to $25.0 million, which excludes stock-based compensation of approximately $9.1 million, the amortization of acquired intangible assets of approximately $3.0 million, restructuring of approximately $0.3 million.
  • Adjusted EBITDA is expected to be in the range of $25.5 million to $30.5 million, which excludes stock-based compensation of approximately $9.1 million, the amortization of acquired intangible assets of approximately $3.0 million, restructuring of approximately $0.3 million, depreciation expense of approximately $5.5 million and other income/expense and the provision for income taxes of approximately $1.2 million.
  • Non-GAAP earnings per diluted share is expected to be $0.44 to $0.56, which excludes stock-based compensation of approximately $9.1 million, the amortization of acquired intangible assets of approximately $3.0 million, restructuring of approximately $0.3 million and assumes approximately 42.2 million weighted-average shares outstanding.

Conference Call Information

Brightcove will host a conference call today, February 17, 2021, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results and current business outlook. A live webcast of the call will be available at the “Investors” page of the Company’s website, http://investor.brightcove.com. To access the call, dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of this conference call will be available for a limited time at 844-512-2921 (domestic) or 412-317-6671 (international). The replay conference ID is 13716183. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.

About Brightcove

When video is done right, it can have a powerful and lasting effect. Hearts open. Minds change. Creativity thrives. Since 2004, Brightcove has been helping customers discover and experience the incredible power of video through its award-winning technology, empowering organizations in more than 70 countries across the globe to touch audiences in bold and innovative ways.

Brightcove achieves this by developing technologies once thought impossible, providing customer support without parallel or excuses, and leveraging the expertise and resources of a global infrastructure. Video is the world’s most compelling, exciting medium. Visit www.brightcove.com for more information. Video That Means Business.™

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 first fiscal quarter and full year 2021, 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: the effect of the COVID-19 pandemic, including our business operations, as well as its impact on the general economic and financial market conditions; our ability to retain existing customers and acquire new ones; our history of losses; the timing and successful integration of the Ooyala acquisition; expectations regarding the widespread adoption of customer demand for our products; the effects of increased competition and commoditization of services we offer, including data delivery and storage; keeping up with the rapid technological change required to remain competitive in our industry; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; the price volatility of our common stock; and other risks set forth under the caption “Risk Factors” in our most recently filed Annual Report on Form 10-K, 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 income (loss) from operations, non-GAAP net income (loss), adjusted EBITDA and non-GAAP diluted net income (loss) per share. 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 of non-GAAP gross profit, non-GAAP gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share exclude stock-based compensation expense, the amortization of acquired intangible assets, restructuring and merger-related expenses. The non-GAAP financial results discussed above of adjusted EBITDA is defined as consolidated net income (loss), plus stock-based compensation expense, the amortization of acquired intangible assets, merger-related expenses, restructuring, depreciation expense, other income/expense, including interest expense and interest income, and the provision for income taxes. Merger-related expenses include fees 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)
   
     
  December 31, 2020   December 31, 2019
Assets    
Current assets:    
Cash and cash equivalents  

$

37,472

 

 

$

22,759

 

Accounts receivable, net of allowance  

 

29,305

 

 

 

31,181

 

Prepaid expenses and other current assets  

 

18,738

 

 

 

11,884

 

Total current assets  

 

85,515

 

 

 

65,824

 

Property and equipment, net  

 

15,968

 

 

 

12,086

 

Operating lease right-of-use asset  

 

8,699

 

 

 

16,912

 

Intangible assets, net  

 

10,465

 

 

 

13,875

 

Goodwill  

 

60,902

 

 

 

60,902

 

Other assets  

 

5,254

 

 

 

3,268

 

Total assets  

$

186,803

 

 

$

172,867

 

Liabilities and stockholders’ equity    
Current liabilities:    
Accounts payable  

$

10,456

 

 

$

9,917

 

Accrued expenses  

 

25,397

 

 

 

20,925

 

Operating lease liability  

 

4,346

 

 

 

6,174

 

Deferred revenue  

 

58,741

 

 

 

49,260

 

Total current liabilities  

 

98,940

 

 

 

86,276

 

Operating lease liability, net of current portion  

 

5,498

 

 

 

11,701

 

Other liabilities  

 

2,763

 

 

 

767

 

Total liabilities  

 

107,201

 

 

 

98,744

 

     
Stockholders’ equity:    
Common stock  

 

40

 

 

 

39

 

Additional paid-in capital  

 

287,059

 

 

 

276,365

 

Treasury stock, at cost  

 

(871

)

 

 

(871

)

Accumulated other comprehensive loss  

 

(188

)

 

 

(785

)

Accumulated deficit  

 

(206,438

)

 

 

(200,625

)

Total stockholders’ equity  

 

79,602

 

 

 

74,123

 

Total liabilities and stockholders’ equity  

$

186,803

 

 

$

172,867

 

     

Brightcove Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 
   
 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2020

 

2019

 

2020

 

2019

Revenue:  
Subscription and support revenue  

$

50,728

$

44,626

 

$

187,341

 

$

173,818

 

Professional services and other revenue  

 

2,962

 

2,977

 

 

10,012

 

 

10,637

 

Total revenue  

 

53,690

 

47,603

 

 

197,353

 

 

184,455

 

Cost of revenue: (1) (2)  
Cost of subscription and support revenue  

 

16,834

 

16,827

 

 

67,124

 

 

67,064

 

Cost of professional services and other revenue  

 

2,624

 

1,973

 

 

8,973

 

 

8,405

 

Total cost of revenue  

 

19,458

 

18,800

 

 

76,097

 

 

75,469

 

Gross profit  

 

34,232

 

28,803

 

 

121,256

 

 

108,986

 

Operating expenses: (1) (2)  
Research and development  

 

7,779

 

9,385

 

 

33,978

 

 

32,535

 

Sales and marketing  

 

17,442

 

14,725

 

 

59,812

 

 

60,375

 

General and administrative  

 

7,388

 

8,207

 

 

27,021

 

 

25,692

 

Merger-related  

 

 

3,356

 

 

5,768

 

 

11,447

 

Total operating expenses  

 

32,609

 

35,673

 

 

126,579

 

 

130,049

 

Income (loss) from operations  

 

1,623

 

(6,870

)

 

(5,323

)

 

(21,063

)

Other income (expense), net  

 

419

 

197

 

 

128

 

 

(280

)

Net income (loss) before income taxes  

 

2,042

 

(6,673

)

 

(5,195

)

 

(21,343

)

Provision for income taxes  

 

21

 

39

 

 

618

 

 

560

 

Net income (loss)  

$

2,021

$

(6,712

)

$

(5,813

)

$

(21,903

)

   
Net income (loss) per share—basic and diluted  
Basic  

$

0.05

$

(0.17

)

$

(0.15

)

$

(0.58

)

Diluted  

 

0.05

 

(0.17

)

 

(0.15

)

 

(0.58

)

   
Weighted-average shares—basic and diluted  
Basic  

 

39,932

 

38,891

 

 

39,473

 

 

38,028

 

Diluted  

 

41,646

 

38,891

 

 

39,473

 

 

38,028

 

   
(1) Stock-based compensation included in above line items:  
Cost of subscription and support revenue  

$

140

$

342

 

$

592

 

$

683

 

Cost of professional services and other revenue  

 

81

 

66

 

 

314

 

 

289

 

Research and development  

 

239

 

589

 

 

1,078

 

 

1,444

 

Sales and marketing  

 

699

 

1,302

 

 

3,139

 

 

2,713

 

General and administrative  

 

902

 

2,456

 

 

3,662

 

 

4,130

 

   
   
(2) Amortization of acquired intangible assets included in the above line items:  
Cost of subscription and support revenue  

$

335

$

495

 

$

1,501

 

$

1,621

 

Sales and marketing  

 

477

 

468

 

 

1,909

 

 

1,584

 

Brightcove Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

   
 

Twelve Months Ended December 31,

Operating activities  

2020

 

2019

Net loss  

$

(5,813

)

$

(21,903

)

Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization  

 

8,695

 

 

8,422

 

Stock-based compensation  

 

8,785

 

 

9,259

 

Provision for reserves on accounts receivable  

 

648

 

 

1,137

 

Changes in assets and liabilities:  
Accounts receivable  

 

1,358

 

 

(5,537

)

Prepaid expenses and other current assets  

 

(6,918

)

 

1,213

 

Other assets  

 

(1,937

)

 

(758

)

Accounts payable  

 

1,014

 

 

1,682

 

Accrued expenses  

 

5,600

 

 

6,749

 

Operating leases  

 

182

 

 

(302

)

Deferred revenue  

 

9,698

 

 

2,746

 

Net cash provided by operating activities  

 

21,312

 

 

2,708

 

   
Investing activities  
Cash paid for acquisition, net of cash acquired  

 

 

 

(5,339

)

Purchases of property and equipment, net of returns  

 

(2,362

)

 

(1,047

)

Capitalization of internal-use software costs  

 

(6,362

)

 

(6,232

)

Net cash used in investing activities  

 

(8,724

)

 

(12,618

)

   
Financing activities  
Proceeds from exercise of stock options  

 

2,216

 

 

3,473

 

Proceeds from debt  

 

10,000

 

 

 

Debt paydown  

 

(10,000

)

 

 

Other financing activities  

 

(631

)

 

(296

)

Net cash provided by financing activities  

 

1,585

 

 

3,177

 

   
Effect of exchange rate changes on cash and cash equivalents  

 

540

 

 

186

 

   
Net increase (decrease) in cash and cash equivalents  

 

14,713

 

 

(6,547

)

Cash and cash equivalents at beginning of period  

 

22,759

 

 

29,306

 

Cash and cash equivalents at end of period  

$

37,472

 

$

22,759

 

   
Brightcove Inc.    
Reconciliation of GAAP Gross Profit, GAAP Income (Loss) From Operations, GAAP Net Income (Loss) and GAAP Net Income (Loss) Per Share to    
Non-GAAP Gross Profit, Non-GAAP Income From Operations, Non-GAAP Net Income and Non-GAAP Net Income Per Share    
(in thousands, except per share amounts)    
     
         
 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2020

 

2019

 

2020

 

2019

GROSS PROFIT:        
GAAP gross profit  

$

34,232

 

$

28,803

 

 

$

121,256

 

 

$

108,986

 

Stock-based compensation expense  

 

221

 

 

408

 

 

 

906

 

 

 

972

 

Amortization of acquired intangible assets  

 

335

 

 

495

 

 

 

1,501

 

 

 

1,621

 

Restructuring  

 

 

 

 

 

 

51

 

 

 

292

 

Non-GAAP gross profit  

$

34,788

 

$

29,706

 

 

$

123,714

 

 

$

111,871

 

INCOME (LOSS) FROM OPERATIONS:        
GAAP income (loss) from operations  

$

1,623

 

$

(6,870

)

 

$

(5,323

)

 

$

(21,063

)

Stock-based compensation expense  

 

2,061

 

 

4,755

 

 

 

8,785

 

 

 

9,259

 

Amortization of acquired intangible assets  

 

812

 

 

963

 

 

 

3,410

 

 

 

3,205

 

Merger-related  

 

 

 

3,356

 

 

 

5,768

 

 

 

11,447

 

Restructuring  

 

873

 

 

 

 

 

2,583

 

 

 

752

 

Non-GAAP income from operations  

$

5,369

 

$

2,204

 

 

$

15,223

 

 

$

3,600

 

NET INCOME (LOSS):        
GAAP net income (loss)  

$

2,021

 

$

(6,712

)

 

$

(5,813

)

 

$

(21,903

)

Stock-based compensation expense  

 

2,061

 

 

4,755

 

 

 

8,785

 

 

 

9,259

 

Amortization of acquired intangible assets  

 

812

 

 

963

 

 

 

3,410

 

 

 

3,205

 

Merger-related  

 

 

 

3,356

 

 

 

5,768

 

 

 

11,447

 

Restructuring  

 

873

 

 

 

 

 

2,583

 

 

 

752

 

Non-GAAP net income  

$

5,767

 

$

2,362

 

 

$

14,733

 

 

$

2,760

 

GAAP diluted net income (loss) per share  

$

0.05

 

$

(0.17

)

 

$

(0.15

)

 

$

(0.58

)

Non-GAAP diluted net income per share  

$

0.14

 

$

0.06

 

 

$

0.36

 

 

$

0.07

 

         
Shares used in computing GAAP diluted net income (loss) per share  

 

39,932

 

 

38,891

 

 

 

39,473

 

 

 

37,739

 

Shares used in computing Non-GAAP diluted net income per share  

 

41,646

 

 

39,691

 

 

 

40,449

 

 

 

39,104

 

Contacts

Investors:
ICR for Brightcove

Brian Denyeau, 646-277-1251

brian.denyeau@icrinc.com
or

Media:
Brightcove

Meredith Duhaime

mduhaime@brightcove.com

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