UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2017~~

March 31, 2022

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period fromto

Commission File Number:

001-35429

BRIGHTCOVE INC.

(Exact name of registrant as specified in its charter)


Delaware		20-1579162
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~290 Congress~~

281 Summer Street

Boston, MA 02210

(Address of principal executive offices)

(888)

882-1880

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	BCOV	The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~☒No~~☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation

S-T (§

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the

Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

		Emerging growth company ☒		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐

No ☒

As of ~~October 23, 2017~~April 25

, 2022, there were ~~34,632,678~~41,552,088 shares of the registrant’s common stock, $0.001 par value per share, outstanding.

~~BRIGHTCOVE INC.~~

Table of Contents

BRIGHTCOVE INC.

Table of Contents


	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021		34
Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021		4
~~Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016~~		5
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2022 and 2021		6
Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021		7
Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021		68
Notes to Condensed Consolidated Financial Statements		79

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1417

Item 3. Quantitative and Qualitative Disclosures About Market Risk		28

Item 4. Controls and Procedures		29

PART II. OTHER INFORMATION		29

Item 1. Legal Proceedings		29

Item 1A. Risk Factors		29

Item 5. Other Information		30

Item ~~4. Controls and Procedures~~6. Exhibits		31

Signatures		32

~~PART II. OTHER INFORMATION~~		32
~~Item 1. Legal Proceedings~~		32
~~Item 1A. Risk Factors~~		33
~~Item 5. Other Information~~		33
~~Item 6. Exhibits~~		34
~~Signatures~~		35

Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form
10-Q
contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form
10-Q
that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; factors that may affect our operating results; statements related to adding employees; statements related to potential benefits of acquisitions; statements related to future capital expenditures; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part I of this Quarterly Report on Form
10-Q,
and the risks discussed in our other Securities and Exchange Commission, or SEC, filings. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Forward-looking statements in this Quarterly Report on Form
10-Q
may include statements about:
our ability to achieve profitability;
our competitive position and the effect of competition in our industry;
our ability to retain and attract new customers;
our ability to penetrate existing markets and develop new markets for our services;
our ability to retain or hire qualified accounting and other personnel;
our ability to successfully integrate acquired businesses;
our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
our ability to maintain the security and reliability of our systems;
our estimates with regard to our future performance and total potential market opportunity;
our estimates regarding our anticipated results of operations, future revenue, bookings growth, capital requirements and our needs for additional financing; and
our goals and strategies, including those related to revenue and bookings growth.
3
Table of Contents

Brightcove Inc.

Condensed Consolidated Statements of Operations

(unaudited)

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2017 2016 2017 2016
   (in thousands, except share and per share data)
Revenue:

Subscription and support revenue
   $ 36,496 $ 36,203 $ 106,266 $ 105,936
Professional services and other revenue
   2,991 2,186 9,546 5,705


Total revenue
   39,487 38,389 115,812 111,641
Cost of revenue: (1) (2)

Cost of subscription and support revenue
   12,924 11,691 38,180 35,041
Cost of professional services and other revenue
   3,580 2,086 10,120 5,453


Total cost of revenue
   16,504 13,777 48,300 40,494


Gross profit
   22,983 24,612 67,512 71,147
Operating expenses: (1) (2)

Research and development
   7,820 7,704 24,293 22,385
Sales and marketing
   14,551 13,334 44,356 39,845
General and administrative
   5,961 5,126 17,228 14,190
Merger-related
   —   —   —   21


Total operating expenses
   28,332 26,164 85,877 76,441


Loss from operations
   (5,349 ) (1,552 ) (18,365 ) (5,294 )
Other income (expense), net
   71 (5 ) 523 (127 )


Loss before income taxes
   (5,278 ) (1,557 ) (17,842 ) (5,421 )
Provision for income taxes
   118 61 305 202


Net loss
   $ (5,396 ) $ (1,618 ) $ (18,147 ) $ (5,623 )


Net loss per share - basic and diluted
   $ (0.16 ) $ (0.05 ) $ (0.53 ) $ (0.17 )


Weighted-average number of common shares used in computing net loss per share
   34,500,868 33,345,161 34,269,639 32,956,186


(1)    Stock-based compensation included in above line items:

Cost of subscription and support revenue
   $ 117 $ 94 $ 308 $ 204
Cost of professional services and other revenue
   70 69 189 158
Research and development
   384 372 1,132 942
Sales and marketing
   690 651 1,953 1,630
General and administrative
   557 495 1,712 1,331
(2)    Amortization of acquired intangible assets included in above line items:

Cost of subscription and support revenue
   $ 508 $ 507 $ 1,523 $ 1,523
Research and development
   —   32 11 95
Sales and marketing
   166 245 525 715

Three Months Ended March 31,


2022

2021



(in thousands, except share and per share data)

Revenue:

Subscription and support revenue    $ 51,601 $ 50,839
Professional services and other revenue    1,778 3,978

Total revenue    53,379 54,817
Cost of revenue:
Cost of subscription and support revenue    16,982 15,678
Cost of professional services and other revenue    1,998 3,490

Total cost of revenue    18,980 19,168

Gross profit    34,399 35,649
Operating expenses:
Research and development    8,237 8,284
Sales and marketing    18,288 16,149
General and administrative    8,089 7,059
Merger-related    594 0
Other
expense (benefit)
   1,149 (1,965 )

Total operating expenses    36,357 29,527

(Loss) income from operations    (1,958 ) 6,122
Other (expense), net

   (387 ) (735 )

(Loss) income before income taxes    (2,345 ) 5,387
(Benefit) provision for income taxes    (708 ) 257

Net (loss) income    $ (1,637 ) $ 5,130
Net (loss) income per share—basic and diluted
Basic    $ (0.04 ) $ 0.13
Diluted    $ (0.04 ) $ 0.12
Weighted-average shares—basic and diluted
Basic    41,436 40,154
Diluted    41,436 42,480

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Brightcove Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data, unless otherwise noted)

1. Business Description and Basis of Presentation

Business Description

Brightcove Inc. (the ~~Company)~~“Company”) is a leading global provider of cloud services for video which enable its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner.

The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on August 24, 2004. At September 30, 2017, the Company had nine wholly-owned subsidiaries: Brightcove UK Ltd, Brightcove Singapore Pte. Ltd., Brightcove Korea, Brightcove Australia Pty Ltd, Brightcove Holdings, Inc., Brightcove Kabushiki Kaisha (Brightcove KK), Zencoder Inc. (Zencoder), Brightcove~~FZ-LLC,~~ ~~and Cacti Acquisition LLC.~~

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited. These condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and related notes, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2016.~~

2021.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements and notes have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, ~~2016~~2021 contained in the Company’s Annual Report on Form

10-K

and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016.~~2021. These interim periods are not necessarily indicative of the results to be expected for any other interim period or the full year.

2. Quarterly Update to Significant Accounting Policies

Allowance for Doubtful Accounts

The following details the changes in the Company’s reserve allowance for estimated credit losses for accounts receivable for the period:

Table of Contents


	Allowance for Credit Losses
	(in thousands)
Balance as of December 31, 2021	$	353
Current provision for credit losses		106
Write-offs against allowance		(80	)
Recoveries		0—

Balance as of March 31, 2022	$	379

Estimated credit losses for unbilled trade accounts receivable were not material.

Other Expense (Benefit)

Other expense (benefit), reflects other operating costs (or benefits) that do not directly relate to research and development, sales and marketing, general and administrative, and merger related.

On March 28, 2022 the CEO of the Company retired. Pursuant to a Transition Agreement that was entered into by the CEO and the Company in October 2021, the Company recorded $1.1 million of expense reflecting both wages and stock compensation in the first quarter of 2022.

On March 27, 2020, in response to the

COVID-19

pandemic, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act which was amended by the Consolidated Appropriations Act in December of 2020 (the “CARES Act”). The CARES Act provides numerous tax provisions and other stimulus measures, including the creation of certain refundable employee retention credits. In the first quarter of 2021, the Company recognized a benefit of $2.0

million from the CARES Act related to employee retention credits. The Company ~~considers events~~recognizes such government relief when it is reasonably assured that it qualifies for the relief, the underlying expense has been incurred and it is probable that the Company will receive it. Credits associated with government relief are recognized in profit or ~~transactions that occur after~~loss on a systematic basis over the ~~balance sheet date but prior~~periods in which the Company recognizes as expense the related costs for which the relief is intended to compensate.

Recently Issued and Adopted Accounting Pronouncements

In November 2021, the ~~issuance~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10,

Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance

which improves the transparency of government assistance received by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on an entity’s financial ~~statements~~statements. The guidance is effective for annual periods beginning after December 15, 2021, with early adoption permitted. Effective January 1, 2022, the Company early adopted ASU 2021-10 on a prospective basis. Please see

Other Expense (Benefit)

section of these Notes to ~~provide additional evidence~~Condensed Consolidated Financial Statements for ~~certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required.~~government assistance received by the Company in 2021.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. Under ASU 2021-08, an acquirer must recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Effective January 1, 2022, the Company ~~has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than those disclosed in~~early adopted ASU 2021-08 on a prospective basis. The impact of adoption of this ~~Report~~standard on ~~Form10-Q.~~

~~The accompanying condensed~~the Company’s consolidated financial statements ~~reflect~~was not material.

3. Revenue from Contracts with Customers

The Company primarily derives revenue from the ~~application~~sale of ~~certain significant accounting policies~~its online video platform, which enables its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Revenue is derived from three primary sources: (1) the subscription to its technology and related support; (2) hosting, bandwidth and encoding services; and (3) professional services, which

include initiation, set-up and customization

services.

The following summarizes the opening and closing balances of receivables, contract assets and contract liabilities from contracts with

customers.


	Accounts Receivable, net		Contract Assets (current)		Deferred Revenue (current)		Deferred Revenue (non- current)		Total Deferred Revenue
Balance at December 31, 2021	$	29,866	$	2,375	$	62,057	$	114	$	62,171
Balance at March 31, 2022		34,037		2,498		64,110		299		64,409

Table of Contents

Revenue recognized for the three months ended March 31, 2022 from amounts included in deferred revenue at the beginning of the period was approximately $32.8 million. Revenue recognized during the three months ended March 31, 2021 from amounts included in deferred revenue at the beginning of the period was approximately $31.2 million. During the three months ended March 31, 2022, the Company did not recognize a material amount of revenue from performance obligations satisfied or partially satisfied in previous periods.

The assets recognized for costs to obtain a contract were $12.3 million as ~~described below~~of March 31, 2022 and ~~elsewhere in these notes~~$12.2 million as of December 31, 2021. Amortization expense recognized for the three months ended March 31, 2022 related to costs to obtain a contract was $2.5 million. Amortization expense recognized for the three months ended March 31, 2021 related to costs to obtain a contract was $3.1 million.

Transaction Price Allocated to Future Performance Obligations

As of March 31, 2022, the total aggregate transaction price allocated to the ~~condensed consolidated financial statements. As~~unsatisfied performance obligations for subscription and support contracts was approximately $159.2 million, of ~~September 30, 2017,~~which approximately $128.7 million is expected to be recognized over the ~~Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form10-K~~ ~~for the year ended December 31, 2016, have not changed, except for the adoption of Accounting Standards Update (ASU)No. 2016-09,~~~~Compensation – Stock Compensation~~~~, which is discussed further in Note 7.~~

~~2. Concentration of Credit Risk~~

next 12 months. The Company ~~has no significantoff-balance~~ ~~sheet risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Financial instruments that potentially expose~~expects to recognize substantially all of the Company to concentrations of credit risk consist primarily of cash, cash equivalents and trade accounts receivable. The Company maintains its cash and cash equivalents principally with accredited financial institutions of high credit standing. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. The Company routinely assesses the creditworthiness of its customers. The Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believedremaining unsatisfied performance obligations by ~~management to be probable in the Company’s accounts receivable.~~

~~At September 30, 2017 and~~ December 31, 2016, no individual customer accounted for 10% or more of net accounts receivable. For the three and nine months ended September 30, 2017 and 2016, no individual customer accounted for 10% or more of total revenue.

~~3. Concentration of Other Risks~~

~~The Company is dependent on certain content delivery network providers who provide digital media delivery functionality enabling the Company’son-demand~~ ~~application service to function as intended for the Company’s customers and ultimateend-users.~~ ~~The disruption of these services could have a material adverse effect on the Company’s business, financial position, and results of operations.~~

2024.

4. Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Management determines the appropriate classification of investments at the time of purchase, and~~re-evaluates~~ ~~such determination at each balance sheet date. The Company did not have any short-term or long-term investments at September 30, 2017 or December 31, 2016.~~

Cash and cash equivalents primarily consist of cash on deposit with banks and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair market value.

Cash and cash equivalents as of ~~September 30, 2017~~March 31, 2022 consist of the following:

   September 30, 2017
Description
   Contracted
Maturity    Amortized
Cost    Fair Market
Value    Balance Per
Balance Sheet
Cash
   Demand    $ 13,916    $ 13,916    $ 13,916
Money market funds
   Demand    8,140    8,140    8,140






Total cash and cash equivalents
      $ 22,056    $ 22,056    $ 22,056


	March 31, 2022
Description	Contracted Maturity		Cost		Fair Market Value
Cash		Demand	$	26,664	$	26,664
Money market funds		Demand		41		41

Total cash and cash equivalents			$	26,705	$	26,705

Cash and cash equivalents as of December 31, ~~2016~~2021 consist of the following:

   December 31, 2016
Description
   Contracted
Maturity    Amortized
Cost    Fair Market
Value    Balance Per
Balance Sheet
Cash
   Demand    $ 23,942    $ 23,942    $ 23,942
Money market funds
   Demand    12,871    12,871    12,871






Total cash and cash equivalents
      $ 36,813    $ 36,813    $ 36,813


	December 31, 2021
Description	Contracted Maturity		Cost		Fair Market Value
Cash		Demand	$	45,698	$	45,698
Money market funds		Demand		41		41

Total cash and cash equivalents			$	45,739	$	45,739

5. Net ~~Loss~~(Loss) Income per Share

The Company calculates basic and diluted (loss) earnings per common share by dividing the (loss) earnings amount by the number of common shares outstanding during the period. The calculation of diluted earnings per common share includes the effects of the assumed exercise of any outstanding stock options and the assumed vesting of shares of restricted stock awards, where dilutive.

The following ~~potentially dilutive~~table set forth the computations of basic and diluted (loss) earnings per


	Three Months Ended March 31,
(in thousands)	2022			2021
Net (loss) income	$	(1,637	)	$	5,130

Weighted average shares used in computing basic earnings per share		41,436			40,154
Effect of weighted average dilutive stock-based awards		0			2,326

Weighted average shares used in computing diluted earnings per share		41,436			42,480
Net (loss) income per share—basic and diluted
Basic	$	(0.04	)	$	0.13
Diluted	$	(0.04	)	$	0.12

Table of Contents

The following outstanding common ~~stock equivalent~~ shares have been excluded from the computation of ~~weighted-average shares outstanding as their effect would have been anti-dilutive (in thousands):~~

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2017    2016    2017    2016
Options outstanding
   4,106    4,152    4,134    4,419
Restricted stock units outstanding
   2,111    1,752    1,945    1,604
Warrants
   —      21    —      26

~~6. Fair Value of Financial Instruments~~

~~The following tables set forth the Company’s financial instruments carried at fair value using the lowest level of input~~dilutive (loss) earnings per share as of ~~September 30, 2017 and December 31, 2016:~~

   September 30, 2017
   Quoted Prices in
Active Markets
for Identical
Items (Level 1)    Significant Other
Observable Inputs
(Level 2)    Significant
Unobservable Inputs
(Level 3)    Total
Assets:

Money market funds
   $ 8,140    $ —      $ —      $ 8,140








Total assets
   $ 8,140    $ —      $ —      $ 8,140








   December 31, 2016
   Quoted Prices in
Active Markets
for Identical
Items (Level 1)    Significant Other
Observable Inputs
(Level 2)    Significant
Unobservable Inputs
(Level 3)    Total
Assets:

Money market funds
   $ 12,871    $ —      $ —      $ 12,871








Total assets
   $ 12,871    $ —      $ —      $ 12,871

7.the periods indicated because such securities are anti-

dilutive:


	Three Months Ended March 31,
(shares in thousands)	2022		2021
Options outstanding		1,607		34
Restricted stock units outstanding		4,589		68

6. Stock-based Compensation

The weighted-average assumptions utilized to determine the weighted-average fair value of ~~stock~~ options ~~granted was estimated at the date of grant using~~are presented in the following ~~weighted-average assumptions:~~

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2017 2016 2017 2016
Expected life in years
   6.2 6.2 6.1 6.1
Risk-free interest rate
   2.11 % 1.35 % 2.08 % 1.41 %
Volatility
   42 % 45 % 42 % 45 %
Dividend yield
   —   —   —   —
Weighted-average fair value of stock options granted
   $ 3.03 $ 4.98 $ 3.07 $ 4.17

The Company recorded stock-based compensation expense of $1,818 and $1,681 for the three months ended September 30, 2017 and 2016, respectively, and $5,294 and $4,265 for the nine months ended September 30, 2017 and 2016, respectively. In July 2017, the Company entered into a separation agreement with its former Chief Executive Officer (“CEO”), which accelerated the vesting schedule of certain existing stock-based awards held by the CEO. The incremental stock-based compensation expense as a result of the modification of these stock-based awards was $186 for the three months ended September 30, 2017. Further, the vesting schedule of certain other stock-based awards held by the CEO accelerates upon a change in control of the Company on or prior to December 31, 2017, which would result in an additional $220 of stock-based compensation expense upon such change in control.

table:


	Three Months Ended March 31,
	2022		2021

Weighted-average fair value of options granted during the period	$	0	$	10.55
Risk-free interest rate		0		1.00	%
Expected volatility		0		47	%
Expected life (in years)		—		6.3
Expected dividend yield		0		0

As of ~~September 30, 2017,~~March 31, 2022, there was ~~$20,389~~

39 million of unrecognized stock-based compensation expense related to stock-based awards that is expected to be recognized over a weighted-average period of ~~2.26~~2.80 years.

~~On January 1, 2017, the Company adopted ASUNo. 2016-09.~~ ~~ASU2016-09~~ identifies areas for simplification involving several aspects of accounting for share based payments, including income tax consequences, classification of awards as either equity or liabilities, an option to make a policy election to recognize gross share based The following table summarizes stock-based compensation expense ~~with actual forfeitures recognized~~ as ~~they occur as well as certain classification changes on~~included in the consolidated statement of cash flows. In connection with the adoption of this standard, the Company changed its accounting policy to record actual forfeitures as they occur, rather than estimating forfeitures by applying a forfeiture rate. As this policy change was applied prospectively, prior periods have not been adjusted. The Company recorded a cumulative effect adjustment inoperations for the three months ended March 31, ~~2017, which increased accumulated deficit~~2022 and ~~additionalpaid-in-capital~~ ~~by $197.~~

2021:


	Three Months Ended March 31,
	2022		2021
Stock-based compensation:		(in thou sands)
Cost of subscription and support revenue	$	109	$	157
Cost of professional services and other revenue		119		68
Research and development		722		322
Sales and marketing		943		737
General and administrative		1,337		1,008
Other expense (benefit)		249		—

	$	3,479	$	2,292

The following is a summary of the ~~status of the Company’s stock options as of September 30, 2017 and the~~ stock option activity during the ~~nine~~three months ended ~~September 30, 2017.~~

   Number of
Shares    Weighted-Average
Exercise Price    Weighted-
Average
Remaining
Contractual
Term (In Years)    Aggregate
Intrinsic
Value (1)
Outstanding at December 31, 2016
   4,150,584    $ 7.17
Granted
   472,727    7.00
Exercised
   (198,555 )    1.91       $ 1,159
Canceled
   (270,498 )    8.42



Outstanding at September 30, 2017
   4,154,258    $ 7.32    6.48    $ 4,182



Exercisable at September 30, 2017
   2,275,052    $ 7.22    4.93    $ 3,212

March 31, 2022.


	Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value (1)
Outstanding at December 31, 2021		1,681,477		$	9.59
Granted		0			0
Exercised		(15,900	)		6.31			$	33,483
Canceled		(58,236	)		11.78

Outstanding at March 31, 2022		1,607,341		$	9.54		5.72	$	461,756

Exercisable at March 31, 2022		1,195,855		$	9.05		5.14	$	456,686

Table of Contents

(1)	The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on ~~September 30, 2017~~March 31, 2022 of ~~$7.20~~$7.80 per share, or the date of exercise, as appropriate, and the exercise price of the underlying options.

The following table summarizes the restricted stock unit activity for our service-based awards

(“S-RSU”)

and our performance-based awards

(“P-RSU”)

during ~~the nine months ended September 30, 2017:~~

   Shares    Weighted
Average Grant
Date Fair Value
Unvested by December 31, 2016
   1,902,577    $ 7.84
Granted
   1,154,473    6.91
Vested and issued
   (415,586 )    7.64
Canceled
   (229,030 )    8.02




Unvested by September 30, 2017
   2,412,434    $ 7.40

~~8. Income Taxes~~

~~For~~ the three months ended September 30, 2017 and 2016, the Company recorded income tax expense of $118 and $61, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded income tax expense of $305 and $202, respectively. March 31, 2022:


	S-RSU Shares			Weighted Average Grant Date Fair Value		P-RSU Shares			Weighted Average Grant Date Fair Value		Total RSU Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2021		2,915,720		$	11.66		1,021,172		$	11.04		3,936,892		$	11.50
Granted		1,943,905			7.24		—			—		1,943,905			7.24
Vested and issued		(72,113	)		10.33		—			—		(72,113	)		10.33
Canceled		(198,389	)		10.62		(188,732	)		12.96		(387,121	)		11.76

Unvested at March 31, 2022		4,589,123		$	8.34		832,440		$	10.61		5,421,563		$	9.97

7. Income Taxes

The income tax expense relates principally to the Company’s foreign operations.

The Company is required to compute income tax expense in each jurisdiction in which it operates. This process requires the Company to project its current tax liability and estimate its deferred tax assets and liabilities, including net operating loss (“NOL”) and tax credit carry-forwards. In assessing the ability to realize the net deferred tax assets, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

The Company has ~~evaluated the positive and negative evidence bearing upon the realizability of~~provided a valuation allowance against its ~~U.S. net deferred tax assets. As required by the provisions of Accounting Standards Codification (ASC) 740,~~~~Income Taxes~~~~, management has determined that it ismore-likely-than-not~~ ~~that the Company will not utilize the benefits of federal and state~~remaining U.S. net deferred tax assets ~~for financial reporting purposes. Accordingly,~~as of March 31, 2022 and December 31, 2021, based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are ~~subject to a valuation allowance~~deductible, at ~~September 30, 2017 and~~

~~December 31, 2016. Based on the level of historical income in Japan and future projections, the Company~~this time, management believes it is ~~probable it~~more likely than not that the Company will not realize the benefits of ~~its future~~these deductible differences. ~~As such,~~

During the three months ended March 31, 2022, the Company ~~has not~~ recorded a benefit of $1.0 million in the U.S. for the release of a portion of the Company’s valuation allowance. This release of the valuation allowance ~~against its net~~is related to the Wicket Acquisition completed in February 2022 and the creation of deferred tax ~~assets~~liabilities in ~~Japan~~purchase accounting that serve as a source of ~~September 30, 2017 and December 31, 2016. The~~income for the Company’s ~~income~~pre-existing deferred tax return reporting periods since December 31, 2012 are open to income tax audit examination by the federal and state tax authorities. In addition, because the Company has net operating loss carryforwards, the Internal Revenue Service is permitted to audit earlier years and propose adjustments up to the amount of net operating losses generated in those years. There are currently no federal, state or foreign audits in progress.

9.assets.

8. Commitments and Contingencies

Legal Matters

The Company, from time to time, is party to litigation arising in the ordinary course of business. Management does not believe that the outcome of these claims will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company based on the status of proceedings at this time.

On May 22, 2017, a lawsuit was filed against Brightcove and two individuals by Ooyala, Inc. (“Ooyala”) and Ooyala Mexico S. de R.L. de C.V. (“Ooyala Mexico”). The lawsuit, which was filed in the United States District Court for the District of Massachusetts, concerns allegations that the two individuals, who are former employees of Ooyala Mexico, misappropriated customer information and other trade secrets and used that information in working for Brightcove. The complaint was amended on June 1, 2017 to remove claims against the two former employees of Ooyala Mexico. The remaining claims against Brightcove are for violation of the Defend Trade Secrets Act of 2016 (18 U.S.C. §1836), violation of the Massachusetts trade secret statute (M.G.L. c. 93, §42), violation of Massachusetts Chapter 93A (M.G.L. c. 93A, §11), and tortious interference with advantageous business relationships. Ooyala and Ooyala Mexico also filed a motion for preliminary injunction (amended at the same time the complaint was amended), seeking to enjoin Brightcove from using any of the allegedly misappropriated information or communicating with customers whose information was allegedly taken, and seeking the return of any information that was taken. On June 16, 2017, Brightcove filed an opposition to the motion for preliminary injunction, and also moved to dismiss the lawsuit. Brightcove’s motion to dismiss was denied on September 6, 2017. The court has not ruled on Ooyala’s motion for preliminary injunction. On October 18, 2017, the court granted the parties’ motion to stay the litigation, and the litigation is currently stayed. The Company cannot yet determine whether it is probable that a loss will be incurred in connection with this complaint, nor can the Company reasonably estimate the potential loss, if any.

Guarantees and Indemnification Obligations

The Company typically enters into indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses and costs incurred by the indemnified party, generally the Company’s customers, in connection with patent, copyright, trade secret, or other intellectual property or personal right infringement ~~claim~~claims by third parties with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual after execution of the agreement. Based on when customers first subscribe for the Company’s service, the maximum potential amount of future payments the Company could be required to make under certain of these indemnification agreements is unlimited, however, more recently the Company has typically limited the maximum potential value of such potential future payments in relation to the value of the contract. Based on historical experience and information known as of ~~September 30, 2017,~~March 31, 2022, the Company has not incurred any costs for the above guarantees and indemnities. The Company has received requests for indemnification from customers in connection with patent infringement suits brought against the customer by a third party. To date, the Company has not agreed that the requested indemnification is required by the Company’s contract with any such customer.

In certain circumstances, the Company warrants that its products and services will perform in all material respects in accordance with its standard published specification documentation in effect at the time of delivery of the licensed products and services to the customer for the warranty period of the product or service. To date, the Company has not incurred significant expense under its warranties and, as a result, the Company believes the estimated fair value of these agreements is immaterial.

~~10.~~

Table of Contents

9. Debt

On ~~November 19, 2015,~~December 28, 2020, the Company entered into an amended and restated loan and security agreement with a lender (the “Loan Agreement”) providing for up to a ~~$20.0~~$30.0 million ~~asset based~~asset-based line of credit (the “Line of Credit”). ~~Under the Line of Credit, the Company can borrow up to $20.0 million.~~ Borrowings under the Line of Credit are secured by substantially all of the Company’s assets, excluding ~~our~~its intellectual property. Outstanding amounts under the Line of Credit accrue interest at a rate ~~equal to~~as follows: (i) for prime rate advances, the greater of (A) the prime rate orand (B) 4%, and (ii) for LIBOR advances, the greater of (A) the LIBOR rate plus ~~2.5%~~225 basis points and (B) 4%. Under the Loan Agreement, the Company must comply with certain financial covenants, including maintaining a minimum asset coverage ratio. If the outstanding principal during any month is at least $15.0 million, the Company must also maintain a minimum net income threshold based on

non-GAAP

operating measures. Failure to comply with these

covenants, or the occurrence of an event of default, could permit the ~~lender~~lenders under the Line of Credit to declare all amounts borrowed under the Line of Credit, together with accrued interest and fees, to be immediately due and payable. The Line of Credit agreement will expire on December 28, 2023.

The Company was in compliance with all applicable covenants under the Line of Credit as of ~~September 30, 2017. As the Company has not drawn on the Line of Credit,~~March 31, 2022 and there ~~are no amounts~~were

0 borrowings outstanding as of ~~September 30, 2017.~~

~~On December~~March 31, 2015, the Company entered into an equipment financing agreement with a lender (the “December 2015 Equipment Financing Agreement”) to finance the purchase of $604 in computer equipment. In February 2016, the Company drew down $604 under the December 2015 Equipment Financing Agreement, and the liability was recorded at fair value using a market interest rate. The Company is repaying its obligation over a two year period through January 2018, and the amount outstanding was $104 as of September 30, 2017.

~~11.~~2022.

10. Segment Information

Geographic Data

Total revenue from unaffiliated customers by geographic area, based on the location of the customer, was as

follows:

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2017    2016    2017    2016
Revenue:

North America
   $ 22,726    $ 23,246    $ 68,205    $ 68,913
Europe
   6,097    6,412    18,177    18,843
Japan
   4,129    4,243    12,416    11,447
Asia Pacific
   6,363    4,136    16,490    11,495
Other
   172    352    524    943








Total revenue
   $ 39,487    $ 38,389    $ 115,812    $ 111,641


	Three Months Ended March 31,
	2022		2021
Revenue:
North America	$	29,461	$	30,386
Europe		9,105		8,923
Japan		7,261		7,708
Asia Pacific		7,436		7,659
Other		116		141

Total revenue	$	53,379	$	54,817

North America is comprised of revenue from the United States, Canada and Mexico. Revenue from customers located in the United States was ~~$21,131~~$27.7 million and ~~$21,793 during~~$28.5 million for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016, respectively, and $63,744 and $64,615 during the nine months ended September 30, 2017 and 2016,~~2021, respectively.

Other than the United States and Japan, no other country contributed more than 10% of the Company’s total revenue during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016.~~

2021.

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, property and equipment at locations outside the U.S. was not material.

~~12. Recently Issued~~

. Business Combinations

Other Business Combinations

On February 1, 2022, the Company acquired 100% of the outstanding shares of Wicket Labs, Inc. (“Wicket Labs”) a provider of subscriber and ~~Adopted Accounting Standards~~

~~In May 2014, the Financial Accounting Standards Board (FASB) issued ASUNo. 2014-09,~~~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU2014-09”),~~ ~~which modifies how all entities recognize revenue, and consolidates into one ASC Topic (ASC Topic 606,~~~~Revenue from Contracts with Customers~~~~) the current guidance found in ASC Topic 605~~, ~~and various other revenue accounting standards for specialized transactions and industries. ASU2014-09~~ outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitledcontent insights, in exchange for ~~those goods~~common stock of the Company and cash, (“Wicket Acquisition”). At the closing, the Company issued 212,507

unregistered shares of common stock of the Company valued at approximately

$2.0 million and approximately $13.2 million in cash. Pursuant to the merger agreement, approximately $1.8 million of the cash consideration was held back to secure payment of any claims of indemnification for breaches or ~~services. ASU2014-09~~ ~~may be applied~~inaccuracies in the sellers’ representations and warranties, covenants and agreements.

The Wicket Acquisition was accounted for using ~~either a full retrospective approach, under which all years~~the purchase method of accounting in accordance with Accounting Standards Codification 805

—

Business Combinations

. Accordingly, the results of operations of the acquired company have been included in the accompanying condensed consolidated financial statements will be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative~~catch-up~~ ~~adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity at~~since the date of ~~adoption.~~

~~In August 2015,~~acquisition. The purchase price has been allocated to the ~~FASB issued ASU2015-14,~~~~Revenue~~tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value as of the date of the Wicket Acquisition, and using assumptions that the Company’s management believes are reasonable given the information currently available. The Company is in the process of completing its valuation of its intangible assets, accounts receivable, deferred revenue and the valuation of the acquired deferred tax assets and liabilities. The final allocations of the purchase price to intangible assets, accounts receivable, deferred revenue, goodwill and any deferred tax assets and liabilities may differ materially from ~~Contracts with Customers (Topic 606): Deferral~~the information presented in these unaudited condensed consolidated financial statements.

Table of ~~Effective Date~~~~, which defers~~Contents

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(in thousands, except share and per share data, unless otherwise noted)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form
10-Q
and our Annual Report on Form
10-K
for the year ended December 31, ~~2016.~~

~~Forward-Looking Statements~~

~~This Quarterly Report on Form10-Q~~ contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form~~10-Q~~ that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; factors that may affect our operating results; statements related to adding employees; statements related to future capital expenditures; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form~~10-Q,~~ ~~our Annual Report on Form10-K~~ for the year ended December 31, 2016 and the risks discussed in our other SEC filings. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

2021.

Company Overview

We are a leading global provider of cloud-based services for video. We were incorporated in Delaware in August ~~2004~~2004. With our Emmy

-winning technology and award-winning services, we help our ~~headquarters are in Boston, Massachusetts. Our~~customers realize the potential of video to address business-critical challenges. Customers rely on our suite of products, services, and ~~services~~expertise to reduce the cost and complexity associated with publishing, distributing, measuring and monetizing video across devices.

~~Brightcove Video Cloud, or~~

We sell five core video products that help our customers use video to further their businesses in meaningful ways: (1) Video Cloud, our flagship product ~~released in 2006, is~~and the world’s leading online video ~~platform. Video Cloud~~platform, enables our customers to ~~publish~~quickly and easily distribute high-quality video to Internet-connected devices; (2) Brightcove Live, our industry-leading solution for live streaming, delivers high-quality viewer experiences at scale; (3) Brightcove Beacon, a purpose-built application that enables companies to launch premium OTT video experiences quickly and cost effectively, across devices ~~quickly, easily~~ and inwith the flexibility of multiple monetization models; (4) Brightcove Player, an exceptionally fast, cloud-based technology for creating and managing video experiences; and (5) Zencoder, a ~~cost-effective and high-quality manner. Brightcove Zencoder, or Zencoder, is a~~powerful, cloud-based video encoding ~~service. Brightcove Once, or Once, is an~~technology.

Customers can complement their use of our core products with modular technologies that provide enhanced capabilities such as (1) innovative ~~cloud-based~~ ad insertion and video stitching ~~service that addresses the limitations~~through Brightcove SSAI; (2) efficient publication of ~~traditional online video ad insertion technology.~~videos to Facebook, Twitter, and YouTube through Brightcove ~~Perform, or Perform, is a cloud-based service~~Social; (3) an app for creating marketing campaigns with insightful data and ~~managing~~industry benchmarks through Brightcove Campaign; and (4) create branded video ~~player experiences.~~experience by accessing templates

with built-in

best practices through Brightcove Gallery.

We have also brought to market several video solutions, which are comprised of a suite of video technologies that address specific

customer use-cases

and needs: (1) Virtual Events Experience helps brands to transform events into customized virtual experiences; (2) Brightcove Video Marketing Suite, ~~or Video Marketing Suite, is a comprehensive suite of video technologies designed to address the needs of~~enables marketers to use video to drive brand awareness, engagement and ~~conversion. Brightcove Lift, or Lift, is a solution designed to defeat ad blockers, optimize ad delivery and deliver a premiumTV-like~~ ~~viewing experience across connected platforms. Brightcove OTT Flow, powered by Accedo, or OTT Flow, is a service for media companies and content owners to rapidly deploy high-quality,direct-to-consumer,~~ ~~live andon-demand~~ ~~video services across platforms.~~conversion; (3) Brightcove Enterprise Video Suite, ~~or Enterprise Video Suite, is~~provides an enterprise-class platform for internal communications, employee training, live streaming, marketing and ecommerce ~~videos.~~

videos; and (4) Brightcove CorpTV

™

, provides a new way to deliver marketing videos, product announcements, training programs, and other live and

on-demand

content in a branded experience for companies.

Our philosophy for the next few years will continue to be to invest in our product strategy and development,

sales, andgo-to-market activities

to support our long-term revenue growth. We believe these investments will help us address some of the challenges facing our business such as demand for our products by existing and potential customers, rapid technological change in our industry, increased competition and resulting price sensitivity. These investments include support for the expansion of our infrastructure within our hosting facilities, the hiring of additional technical and sales personnel, the innovation of new features for existing products and the development of new products. We believe this strategy will help us retain our existing customers, increase our average annual subscription revenue per premium customer and lead to the acquisition of new customers. Additionally, we believe customer growth will enable us to achieve economies of scale which will reduce our cost of goods sold, research and development and general and administrative expenses as a percentage of total revenue.

As of ~~September 30, 2017,~~March 31, 2022 and 2021 we had ~~506~~678 and 652 employees, and 4,210 customers, of which 2,097 used our volume offerings and 2,113 used our premium offerings. As of September 30, 2016, we had 471 employees and 4,647 customers, of which 2,666 used our volume offerings and 1,981 used our premium offerings.

respectively.

We generate revenue by offering our products to customers on a subscription-based, software as a service, or SaaS, model. Our revenue ~~grew~~decreased from ~~$111.6~~$54.8 million in the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2021 to ~~$115.8~~$53.4 million in the ~~nine~~three months ended ~~September 30, 2017, primarily related~~March 31, 2022, due to ~~an increase~~a decrease in ~~revenue from~~ professional services ~~engagements~~ and ~~to a lesser extent our subscription-based software as a service. Our consolidated net loss was $18.1 million and $5.6 million for the nine months ended September 30, 2017 and 2016, respectively.~~ other revenue.

Included in the consolidated net loss for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 was stock-based compensation expense and amortization of acquired intangible assets of ~~$5.3~~$3.5 million and ~~$2.1 million,~~$817, respectively. Included in the consolidated net ~~loss~~income for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2021 was stock-based compensation expense and amortization of acquired intangible assets of ~~$4.3~~$2.3 million and ~~$2.3 million,~~$766, respectively.

For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, our revenue derived from customers located outside North America was ~~41%~~45% and ~~38%~~44%, respectively. We expect the percentage of total net revenue derived from outside North America to increase in future periods as we continue to expand our international operations.

Key Metrics

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

The following table includes our key metrics for the periods presented:


	Three Months Ended March 31,
	2022			2021
Customers (at period end)
Premium		2,299			2,273
Volume		832			1,039

Total customers (at period end)		3,131			3,312

Net revenue retention rate		97.8	%		98.8	%
Recurring dollar retention rate		91	%		85	%
Average annual subscription revenue per premium customer, excluding Starter edition customers (in thousands)	$	96.5		$	97.0
Average annual subscription revenue per premium customer for Starter edition customers only (in thousands)	$	4.6		$	4.3
Total backlog, excluding professional services engagements (in millions)	$	159.2		$	147.6
Total backlog to be recognized over next 12 months, excluding professional services engagements (in millions)	$	128.7		$	117.1

•

~~Number of Customers~~. We define our number of customers at the end of a particular quarter as the number of customers generating subscription revenue at the end of the quarter. We believe the number of customers is a key indicator of our market penetration, the productivity of our sales organization and the value that our products bring to our customers. We classify our customers by including them in either premium or volume offerings. Our premium offerings include our premium Video Cloud customers (Enterprise and Pro editions), our Zencoder customers (other than Zencoder customers on~~month-to-month~~ ~~contracts andpay-as-you-go~~ ~~contracts), our Once customers, our Perform~~

Number of Customers

. We define our number of customers at the end of a particular quarter as the number of customers generating subscription revenue at the end of the quarter. We believe the number of customers is a key indicator of our market penetration, the productivity of our sales organization and the value that our products bring to our customers. We classify our customers by including them in either premium or volume offerings. Our premium offerings include our premium Video Cloud customers (Enterprise and Pro editions), our Zencoder customers (other than Zencoder customers on

month-to-month

contracts and

pay-as-you-go

contracts), our SSAI customers, our Player customers, our OTT Flow customers (OTT Flow is our partner-based OTT platform, which preceded Brightcove Beacon), our Virtual Event Experience customers, our Video Marketing Suite customers, ~~our Lift customers, our OTT Flow customers and~~ our Enterprise Video Suite customers, our Brightcove Beacon customers, our Brightcove Engage customers, our Brightcove CorpTV

™

customers, and our Brightcove Campaign customers. Our ~~volume offerings include our Video Cloud Express customers and our Zencoder customers onmonth-to-month~~ ~~contracts andpay-as-you-go~~ ~~contracts.~~

~~As of September 30, 2017, we had 4,210 customers, of which 2,097 used our~~ volume offerings include our Video Cloud Express customers and ~~2,113 used~~ our ~~premium offerings. As of September 30, 2016, we had 4,647~~Zencoder customers ~~of which 2,666 used our volume offerings~~on

month-to-month

contracts and ~~1,981 used our premium offerings. During 2013, we shifted our~~

pay-as-you-go

contracts.

Our

go-to-market

focus and growth strategy is to ~~expanding~~expand our premium customer base, as we believe our premium customers represent a greater opportunity for our solutions. Premium customers decreased compared to the prior period due to some customers deciding to switch to

in-house

solutions or other third-party solutions and some customers acquired in the Ooyala acquisition deciding not to switch to our solution. Volume customers decreased ~~since 2013~~in recent periods primarily due to our discontinuation of the promotional Video Cloud Express offering. As a result, we have experienced attrition of this base level offering without a corresponding addition of customers. We expect customers using our volume offerings to continue to decrease in ~~2017~~2022 and beyond as we continue to focus on the market for our premium ~~solutions~~solutions.

Net Revenue Retention Rate

. We assess our ability to retain and ~~adjust Video Cloud Express price levels.~~

•

~~Recurring Dollar Retention Rate~~. expand customers using a metric we refer to as our net revenue retention rate. We calculate the net revenue retention rate by dividing: (a) the current annualized recurring revenue for premium customers that existed twelve months prior by (b) the annualized recurring revenue for all premium customers that existed twelve months prior. We define annualized recurring revenue for premium customers as the aggregate annualized contract value from our premium customer base, measured as of the end of a given period. We typically calculate our net revenue retention rate on a quarterly basis. For annual periods, we report net revenue retention rate as the average of the net revenue retention rate for all fiscal quarters included in the period. By dividing the retained recurring revenue by the base recurring revenue, we measure our success in retaining and growing installed revenue from the specific cohort of customers we served at the beginning of the period.

Table of Contents

ecurring Dollar Retention Rate.

We assess our ability to retain customers using a metric we refer to as our recurring dollar retention rate. We calculate the recurring dollar retention rate by dividing the retained recurring value of subscription revenue for a period by the previous recurring value of subscription revenue for the same period. We define retained recurring value of subscription revenue as the committed subscription fees for all contracts that renew in a given period, including any increase or decrease in contract value. We define previous recurring value of subscription revenue as the recurring value from committed subscription fees for all contracts that expire in that same period. We typically calculate our recurring dollar retention rate on a monthly basis. Recurring dollar retention rate provides visibility into our ongoing revenue. The recurring dollar retention rate decreased from 97% during the nine months ended September 30, 2016 to 90% during the nine months ended September 30, 2017. The decrease is primarily due to the loss of certain customers as well as a reduction in contract value, based on certain commodity elements being repriced within our media market.

•

~~Average Annual Subscription Revenue Per Premium Customer~~. We define average annual subscription revenue per premium customer as the total subscription revenue from premium customers for an annual period, excluding professional services revenue, divided by the average number of premium customers for that period. We believe that this metric is important in understanding subscription revenue for our premium offerings in addition to the relative size of premium customer arrangements. We began selling our Starter edition to customers in the second quarter of 2016. We consider Starter to be a premium offering and thus include Starter customers as premium customers. Our Starter edition has a price point of $199 or $499 per month, and as of the first quarter of 2017, sales of our Starter edition have reached such a level that we have determined that the overall average annual subscription revenue per premium customer is a more meaningful metric if we exclude revenue from Starter edition customers. As such, we now disclose the average annual subscription revenue per premium customer separately for Starter edition customers and all other premium customers.

~~The following table includes our key metrics~~ for the ~~periods presented:~~

   Nine Months Ended
September 30,
   2017 2016
Customers (at period end)

Volume
   2,097 2,666
Premium
   2,113 1,981


Total customers (at period end)
   4,210 4,647


Recurring dollar retention rate
   90 % 97 %
Average annual subscription revenue per premium customer, excluding Starter edition customers (in thousands)
   $ 70.0 $ 70.0
Average annual subscription revenue per premium customer for Starter edition customers only (in thousands)
   $ 5.0 $ 4.0

same period. We define retained recurring value of subscription revenue as the committed subscription fees for all contracts that renew in a given period, including any increase or decrease in contract value. We define previous recurring value of subscription revenue as the recurring value from committed subscription fees for all contracts that expire in that same period. We typically calculate our recurring dollar retention rate on a monthly basis. Recurring dollar retention rate provides visibility into our ongoing revenue.

Average Annual Subscription Revenue Per Premium Customer

. We define average annual subscription revenue per premium customer as the total subscription revenue from premium customers for an annual period, excluding professional services revenue, divided by the average number of premium customers for that period. We believe that this metric is important in understanding subscription revenue for our premium offerings in addition to the relative size of premium customer arrangements. As our Starter edition has a price point of $199 or $499 per month, we disclose the average annual subscription revenue per premium customer separately for Starter edition customers and all other premium customers.

Backlog

. We define backlog as the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied, excluding professional service engagements. We believe that this metric is important in understanding future business performance.

COVID-19

and Geopolitical Events

While the future trends of

the COVID-19 pandemic

remain uncertain, we have not experienced a significant disruption during the pandemic. We will continue to monitor

COVID-19’s

effect on our employees, customers, vendors and the regions we operate in.

In late February 2022, Russian military forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is likely. Subsequent to the invasion, the U.S. and other countries imposed economic sanctions against officials, individuals, regions, and industries in Russia, Ukraine and Belarus. We do not have operations or customers in Russia or Ukraine and none of our material vendors source their services to us from Russia or Ukraine. We will continue to monitor the situation and comply with any sanctions and restrictions imposed by the U.S. government.

Components of Consolidated Statements of Operations

Revenue

Subscription and Support Revenue

— We generate subscription and support revenue from the sale of our products.

Video Cloud is offered in two product lines. The first product line is comprised of our premium product ~~editions, Pro and Enterprise.~~editions. All ~~Pro and Enterprise~~premium editions include functionality to publish and distribute video to Internet-connected ~~devices. The Enterprise edition provides~~devices, with higher levels of premium editions providing additional features and ~~functionality such as a multi-account environment andIP-restricted~~ ~~players.~~functionality. Customer arrangements are typically ~~one year~~

one-year

contracts, which include a subscription to Video Cloud, basic support

and a pre-determined

amount of video streams, bandwidth, transcoding and ~~managed content (which includes storage).~~storage. We also offer gold, ~~support or~~ platinum and platinum plus support to our premium customers for an additional ~~fee, which includes extended phone support.~~fee. The pricing for our premium editions is based on the value of our software, as well as the number of users, accounts and usage, which is comprised of video streams, bandwidth, transcoding and ~~managed content.~~storage. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements. We believe that our bundled pricing approach has made it easier for our customers to purchase all of the elements required to manage, store and deliver their video assets to their viewers. Pricing for some of the~~non-software~~ elements of our products, however—such as bandwidth and managed content (primarily storage)—has been subject to moderate but consistent pricing pressure as a result of competition among bandwidth and cloud infrastructure providers. This pricing pressure has not historically had a meaningful impact on our results of operations. During the nine months ended September 30, 2017, we experienced an unexpected, significant increase in the impact of the price competition among bandwidth and cloud infrastructure providers in the markets for these increasingly commoditized~~non-software~~ services. As a result, our recurring dollar retention rate decreased in the nine months ended September 30, 2017. We have taken steps to reduce the portion of our revenue that is subject to such pricing pressure by bringing new solutions, such as Dynamic Delivery (formerly known as Bolt), to market. We believe that these new solutions increase the value of our software platform to customers and allow us to retain a larger portion of the customers’ total contract value while reducing the revenue related to~~non-software~~ ~~elements. However, as a result of the impact of the commoditization of thenon-software~~ ~~elements, we now expect that our subscription revenue growth rate will be impacted through the first quarter of 2018.~~

The second product line is comprised of our volume product ~~edition, which we refer to as our Express~~ edition. Our ~~Express edition targets~~ volume editions target

small andmedium-sized businesses, or

SMBs. The ~~Express edition provides~~volume editions provide customers with the same basic functionality that is offered in our premium product editions but ~~has~~have been designed for customers who have lower usage requirements and do not typically ~~seek~~require advanced features and functionality. We discontinued the lower level pricing options for the Express edition of our volume offering and expect the total number of customers using the Express edition to continue to decrease. Customers who purchase the ~~Express edition~~volume editions generally

enter intomonth-to-month agreements. ~~Express~~

Volume customers are generally billed on a monthly basis and pay via a credit card.

Virtual Events Experience, Brightcove Live and Brightcove Player are offered to customers on a subscription basis. Customer arrangements are

typically one-year contracts,

which include a subscription to Virtual Events Experience, Brightcove Live or the Brightcove Player, basic support and

a pre-determined amount

of video streams, bandwidth, transcoding, and storage and only video streams for Brightcove Player. We also offer gold, platinum, and platinum plus support to our Virtual Events Experience, Brightcove Live and Brightcove Player customers for an additional fee. The pricing for these products is based on the value of our software, as well as, the number of users, accounts and usage. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements.

Zencoder is offered to customers on a subscription basis, with either committed contracts or

pay-as-you-go

contracts. The pricing is based on usage, which is comprised of minutes of video processed. The committed contracts include a fixed number of minutes of video processed. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements. Zencoder customers are considered premium customers other than Zencoder customers

onmonth-to-month contracts

orpay-as-you-go contracts,

which are considered volume customers.

~~Once is~~

Brightcove Beacon and Brightcove Campaign are each offered to customers on a subscription basis, with varying levels of functionality, usage entitlements and support based on the size and complexity of a customer’s needs.

~~Perform is offered to customers on a subscription basis.~~ Customer arrangements are typically

one-year ~~contracts, which include a subscription to Perform, basic support and apre-determined~~ ~~amount~~

contracts.

Sales and Marketing

. Sales and marketing expenses consist primarily of personnel and related expenses for our sales and marketing staff, including salaries, benefits, incentive compensation, commissions, stock-based compensation and travel costs, amortization of acquired intangible assets, in addition to costs associated with marketing and promotional events, corporate communications, advertising, other brand building and product marketing expenses and allocated overhead. Our sales and marketing expenses have increased in absolute dollars in each of the last three years. We intend to continue to invest in sales and marketing and ~~increase the number of sales representatives to add new customers and~~ expand the sale of our product offerings within our existing customer base, build brand awareness and sponsor additional marketing events. Accordingly, ~~in future periods~~ we expect sales and marketing expense to ~~increase in absolute dollars and~~ continue to be our most significant operating ~~expense.~~expense in future periods. Over the long term, we believe that sales and marketing expense as a percentage of revenue will decrease, but will vary depending upon the mix of revenue from new and existing customers and from

small,medium-sized and

enterprise customers, as well as changes in the productivity of our sales and marketing programs.

General and Administrative

. General and administrative expenses consist primarily of personnel and related expenses for executive, legal, finance, information technology and human resources functions, including salaries, benefits, incentive compensation and stock-based ~~compensation, in addition to~~compensation. General and administrative expenses also include the costs associated with professional fees, insurance premiums, other corporate expenses and allocated overhead. In future periods we expect general and administrative expenses to increase in absolute dollars as we continue to incur additional personnel and professional services costs in order to support the growth of our business. Over the long term, we believe that general and administrative expenses as a percentage of revenue will decrease.

Merger-related

. Merger-related costs ~~consisted~~consist of ~~transaction~~ expenses incurred as part of the acquisition of substantially all of the assets of Unicorn Media, Inc. and certain of its subsidiaries, or Unicorn, as well as costs associated with the retention of key employees of Unicorn. Approximately $1.5 million was required to be paid to retain certain key employees from the Unicorn acquisition. The period in which these services were performed varies by employee. Given that the retention amount was related to ~~a future service requirement,~~mergers and acquisitions, integration costs and general corporate development activities.

Other Expense

(Benefit)

. Reflects other operating benefits, costs that do not directly relate to the ~~related expense was recorded as merger-related compensation expense in the consolidated statements of operations over the expected service period.~~

operating activities listed above.

Other ~~Expense~~

(Expense) Income, net

Other ~~expense~~(expense) income consists primarily of interest income earned on our cash, cash equivalents, and foreign exchange gains and ~~losses and interest expense payable on our debt.~~

losses.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of the jurisdictions in which we operate. We account for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. In addition, this method requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We have provided a valuation allowance against our existing U.S. net deferred tax assets at ~~September 30, 2017, with~~December 31, 2021. We maintain net deferred tax liabilities for temporary differences related to our Japanese subsidiary.

During the ~~exception~~three months ended March 31, 2022, we recorded a non-recurring benefit of $1.0 million in the U.S. for the release of a portion of our valuation allowance. This release of the valuation allowance is related to the Wicket Acquisition completed in February 2022 and the creation of deferred tax ~~assets related to Brightcove KK.~~

liabilities in purchase accounting that serve as a source of income for our pre-existing deferred tax assets.

Stock-Based Compensation Expense

Our cost of revenue, research and development, sales and marketing, and general and administrative expenses include stock-based compensation expense. Stock-based compensation expense represents the grant date fair value of outstanding stock options and restricted stock awards, which is recognized as expense over the respective stock option and restricted stock award service periods. For the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, we recorded ~~$1.8~~$3.5 million and ~~$1.7 million, respectively, of stock-based compensation expense. For the nine months ended September 30, 2017 and 2016, we recorded $5.3 million and $4.3~~$2.3 million, respectively, of stock-based compensation expense. We expect stock-based compensation expense to increase in absolute dollars in future periods.

Foreign Currency Translation

With regard to our international operations, we frequently enter into transactions in currencies other than the U.S. dollar. As a result, our revenue, expenses and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the euro, British pound, Australian dollar, and Japanese yen. For the three months ended September 30, 2017 and 2016, 46% and 43%, respectively, of our revenue was generated in locations outside the United States. For the nine months ended September 30, 2017 and 2016, 45% and 42%, respectively, of our revenue was generated in locations outside the United States. During the three months ended September 30, 2017 and 2016, 28% and 29%, respectively, of our revenue was in currencies other than the U.S. dollar, as were some of the associated expenses. During each of the nine months ended September 30, 2017 and 2016, 28% of our revenue was in currencies other than the U.S. dollar, as were some of the associated expenses. In periods when the U.S. dollar declines in value as compared to the foreign currencies in which we conduct business, our foreign currency-based revenue and expenses generally increase in value when translated into U.S. dollars. We expect ~~our foreign currency-based~~the percentage of total net revenue derived from outside North America to increase in ~~absolute dollars and~~future periods as ~~a percentage of total revenue.~~

we continue to expand our international operations.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

We consider the assumptions and estimates associated with revenue recognition, ~~allowance for doubtful accounts, software development costs,~~ income taxes, business combinations, intangible assets ~~goodwill~~ and ~~stock-based compensation~~goodwill to be our critical accounting policies and estimates. ~~There have been no material changes to our critical accounting policies since December 31, 2016.~~

For a detailed explanation of the judgments made in these areas, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form

10-K

for the year ended December 31, ~~2016,~~2021, which we filed with the Securities and Exchange Commission on February ~~21, 2017.~~

~~We believe that our significant accounting policies, which are more fully described in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form10-Q,~~ ~~have not materially changed from those described in the notes to our audited consolidated financial statements included in our Annual Report on Form10-K~~ ~~for the year ended December 31, 2016.~~

18, 2022.

Results of Operations

The following tables set forth our results of operations for the periods presented. The data has been derived from the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form

10-Q

which, in the opinion of our management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for the interim periods presented. The

period-to-period

comparison of financial results is not necessarily indicative of future results. This information should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form

10-K

for the year ended December 31, ~~2016.~~

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2017 2016 2017 2016
   (in thousands, except share and per share data)
Revenue:

Subscription and support revenue
   $ 36,496 $ 36,203 $ 106,266 $ 105,936
Professional services and other revenue
   2,991 2,186 9,546 5,705


Total revenue
   39,487 38,389 115,812 111,641
Cost of revenue:

Cost of subscription and support revenue
   12,924 11,691 38,180 35,041
Cost of professional services and other revenue
   3,580 2,086 10,120 5,453


Total cost of revenue
   16,504 13,777 48,300 40,494


Gross profit
   22,983 24,612 67,512 71,147
Operating expenses:

Research and development
   7,820 7,704 24,293 22,385
Sales and marketing
   14,551 13,334 44,356 39,845
General and administrative
   5,961 5,126 17,228 14,190
Merger-related
   —   —   —   21


Total operating expenses
   28,332 26,164 85,877 76,441


Loss from operations
   (5,349 ) (1,552 ) (18,365 ) (5,294 )
Other income (expense), net
   71 (5 ) 523 (127 )


Loss before income taxes
   (5,278 ) (1,557 ) (17,842 ) (5,421 )
Provision for income taxes
   118 61 305 202


Net loss
   $ (5,396 ) $ (1,618 ) $ (18,147 ) $ (5,623 )


Net loss per share - basic and diluted
   $ (0.16 ) $ (0.05 ) $ (0.53 ) $ (0.17 )


Weighted-average number of common shares used in computing net loss per share
   34,500,868 33,345,161 34,269,639 32,956,186

2021.


	Three Months Ended March 31,
	2022			2021

	(in thousands, except share and per share data)
Revenue:
Subscription and support revenue	$	51,601		$	50,839
Professional services and other revenue		1,778			3,978

Total revenue		53,379			54,817
Cost of revenue:
Cost of subscription and support revenue		16,982			15,678
Cost of professional services and other revenue		1,998			3,490

Total cost of revenue		18,980			19,168

Gross profit		34,399			35,649
Operating expenses:
Research and development		8,237			8,284
Sales and marketing		18,288			16,149
General and administrative		8,089			7,059
Merger-related		594			—
Other (benefit) expense		1,149			(1,965	)

Total operating expenses		36,357			29,527

(Loss) income from operations		(1,958	)		6,122
Other (expense), net		(387	)		(735	)

(Loss) income before income taxes		(2,345	)		5,386
(Benefit) provision for income		(708	)		257

Net (loss) income	$	(1,637	)	$	5,130
Net (loss) income per share—basic and diluted
Basic	$	(0.04	)	$	0.13
Diluted	$	(0.04	)	$	0.12
Weighted-average shares—basic and diluted
Basic		41,436			40,154
Diluted		41,436			42,480

Overview of Results of Operations for the Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~

2021

Total revenue ~~increased~~decreased by ~~$1.1~~3%, or $1.4 million, in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to a decrease in professional services and other revenue by 55% or $2.2 million. Professional services and other revenue will vary from period to period depending on the number of implementations and other projects that are in process.

Subscription and support revenue remained relatively unchanged. Our revenue from premium offerings decreased by $1.3 million, or 3%2%, in the three months ended ~~September 30, 2017~~March 31, 2022 compared to the three months ended September 30, 2016 due to an increase in professional services and other revenue of 37%, or $805,000, and an increase in subscription and support revenue of 1%, or $293,000. The increase in professional services revenue was primarily related to the size and number of professional services engagements during the three months ended September 30, 2017 compared to the corresponding quarter in the prior year. The increase in subscription and support revenue was primarily related to the continued growth of our customer base for our premium offerings including sales to both new and existing customers. The increases are offset by the loss of a major customer, during the first quarter of 2017, and a $556,000 reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016. In addition, our revenue from premium offerings grew by $1.6 million, or 4%, in the three months ended September 30, 2017, compared to the three months ended September 30, 2016.March 31, 2021. Our ability to continue to provide the product functionality and performance that our customers require will be a major factor in our ability to continue to increase revenue.

The U.S. dollar has strengthened against the Japanese Yen and the Euro when compared against exchange rates during the prior year period of comparison. In constant currency, our total revenue for the three months ended March 31, 2022 would have been approximately $54.6 million. The majority of the effect of revenue in constant currency was in revenues denominated in Japanese Yen of $0.7 million and Euro of $0.3 million. Constant currency is calculated as translating current period revenue denominated in foreign currencies at the exchange rates of the prior period of comparison.

Our gross profit decreased by ~~$1.6~~$1.3 million, or 7%4%, in the three months ended ~~September 30, 2017~~March 31, 2022 compared to the three months ended ~~September 30, 2016,~~March 31, 2021, primarily due to ~~increases~~a decrease in revenue and an increase in the cost of subscription and support ~~revenue and the cost of professional services revenue without corresponding increases in~~ revenue. Cost of professional services revenue increased due to a higher level of contractor costs and project hours during the three months ended September 30, 2017 compared to that of the three months ended September 30, 2016. Our ability to ~~improve~~continue to maintain our overall gross profit will depend primarily on our ability to continue controlling our

costs of delivery.

Loss from operations was ~~$5.3~~$2.0 million in the three months ended ~~September 30, 2017~~March 31, 2022 compared to ~~$1.6~~a net income from operations of $6.1 million in the three months ended ~~September 30, 2016. Loss from operations~~March 31, 2021. This is primarily due to a decrease in revenue of $1.4 million, the decrease in gross profit of $1.7 million and an increase in operating expenses in the three months ended ~~September 30, 2017 included stock-based compensation expense and amortization of acquired intangible assets of $1.8 million and $674,000, respectively. Loss from operations in~~March 31, 2022 compared to the three months ended September 30, 2016 included stock-based compensation expense and amortization of acquired intangible assets of $1.7 million and $784,000, respectively. In future periods, we expect operating income to improve from increased sales to both new and existing customers and from improved efficiencies throughout our organization as we continue to grow and scale our operations.

~~As of September 30, 2017, we had $22.1 million of unrestricted cash and cash equivalents, a decrease of $14.7 million from $36.8 million at December~~March 31, ~~2016, due primarily to $11.7 million of cash used~~2021. The increase in operating ~~activities, $2.1~~expenses is primarily the result of the current period’s merger-related and other expenses, in aggregate, of $1.3 million as compared to a benefit of approximately $2.0 million in ~~capitalizedinternal-use~~ software costs, and $990,000 in capital expenditures. There were also cash outflows of $383,000 in payments under capital lease obligations, $229,000 for payments on equipment financing and $175,000 in payments of withholding tax on RSU vesting.

the prior year.

Revenue

   Three Months Ended September 30,
   2017 2016 Change
Revenue by Product Line
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
Premium
   $ 38,149    97 % $ 36,518    95 % $ 1,631 4 %
Volume
   1,338    3 1,871    5 (533 ) (28 )






Total
   $ 39,487    100 % $ 38,389    100 % $ 1,098 3 %


	Three Months Ended March 31,
	2022					2021					Change
Revenue by Product Line	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%

	(in thousands, except percentages)
Premium	$	52,772		99	%	$	54,022		99	%	$	(1,250	)		(2	)%
Volume		607		1			795		1			(188	)		(24	)

Total	$	53,379		100	%	$	54,817		100	%	$	(1,438	)		(3	)%

During the three months ended ~~September 30, 2017,~~March 31, 2022, revenue ~~increased~~decreased by ~~$1.1~~$1.4 million, or 3%, compared to the three months ended ~~September 30, 2016,~~March 31, 2021, primarily due to ~~an increase~~a decrease in revenue from our premium ~~offerings, which consists~~offerings. The decrease in premium revenue of ~~subscription and support revenue, as well as~~$1.3 million, or 2%, is primarily the result of a 55% decrease in professional services and other revenue. The increase in premium revenue of $1.6 million, or 4%, is partially the result of a 7% increase in the number of premium customers from 1,981 at September 30, 2016 to 2,113 at September 30, 2017, in addition to an $805,000, or 37%, increase in professional services revenue. The increases are offset in part by the loss of a major customer and a $556,000 reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016. In the three months ended ~~September 30, 2017,~~March 31, 2022, volume revenue decreased by ~~$533,000,~~$188, or ~~28%~~24%, compared to the three months ended ~~September 30, 2016,~~March 31, 2021, as we continue to focus on the market for our premium solutions.

   Three Months Ended September 30,
   2017 2016 Change
Revenue by Type
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Subscription and support
   $ 36,496    92 % $ 36,203    94 % $ 293    1 %
Professional services and other
   2,991    8 2,186    6 805    37








Total
   $ 39,487    100 % $ 38,389    100 % $ 1,098    3 %


	Three Months Ended March 31,
	2022					2021					Change
Revenue by Type	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%

	(in thousands, except percentages)
Subscription and support	$	51,601		97	%	$	50,839		93	%	$	762			1	%
Professional services and other		1,778		3			3,978		7			(2,200	)		(55	)

Total	$	53,379		100	%	$	54,817		100	%	$	(1,438	)		-3	%

During the three months ended ~~September 30, 2017,~~March 31, 2022, subscription and support revenue ~~increased by $293,000, or 1%,~~remained relatively unchanged compared to the three months ended September 30, 2016. The increase was primarily related to the continued growth of our customer base for our premium offerings including sales to both new and existing customers. These increases are offset in part by the loss of a major customer and a $556,000 reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016.March 31, 2021. In addition, professional services and other revenue ~~increased~~decreased by ~~$805,000,~~$2.2 million, or ~~37%~~55%, ~~primarily related to the size and number of professional services engagements during the three months ended September 30, 2017~~ compared to the corresponding quarter in the prior year. ~~During the three months ended September 30, 2017, the increase in professional services revenue was primarily related to an increase in OTT application development projects.~~ Professional services and other revenue will vary from period to period depending on the number of implementations and other projects that are in process.

   Three Months Ended September 30,
   2017 2016 Change
Revenue by Geography
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
North America
   $ 22,726    58 % $ 23,246    61 % $ (520 ) (2 )%






Europe
   6,097    15 6,412    16 (315 ) (5 )
Japan
   4,129    11 4,243    11 (114 ) (3 )
Asia Pacific
   6,363    16 4,136    11 2,227 54
Other
   172    —   352    1 (180 ) (51 )






International subtotal
   16,761    42 15,143    39 1,618 11






Total
   $ 39,487    100 % $ 38,389    100 % $ 1,098 3 %


	Three Months Ended March 31,
	2022					2021					Change
Revenue by Geography	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
North America	$	29,461		55	%	$	30,386		56	%	$	(925	)		(3	)%

Europe		9,105		17			8,923		16			182			2
Japan		7,261		14			7,708		14			(447	)		(6	)
Asia Pacific		7,436		14			7,659		14			(223	)		(3	)
Other		116		—			141		—			(25	)		(18	)

International subtotal		23,918		45			24,431		44			(513	)		(2	)

Total	$	53,379		100	%	$	54,817		100	%	$	(1,438	)		(3	)%

For purposes of this section, we designate revenue by geographic regions based upon the locations of our customers. North America is comprised of revenue from the United States, Canada and Mexico. International is comprised of revenue from locations outside of North America. Depending on the timing of new customer contracts, revenue mix from a geographic region can vary from period to period.

During the three months ended ~~September 30, 2017,~~March 31, 2022, total revenue for North America decreased ~~$520,000,~~$925, or 3%, compared to the three months ended March 31, 2021. In the three months ended March 31, 2022, total revenue outside of North America decreased $513, or 2%, compared to the three months ended ~~September 30, 2016.~~March 31, 2021. The reduction in revenue for North America is primarily related to the loss of a major customer in the first quarter of 2017 partially offset by increases in sales to new and existing customers. In the three months ended September 30, 2017, total revenue outside of North America increased $1.6 million, or 11%, compared to the three months ended September 30, 2016. The increasedecrease in revenue from international regions is primarily related to ~~an increase~~decrease in revenue in Asia Pacific. The increase in revenue from Asia Pacific is primarily related to an increase in revenue from professional services engagements related to OTT application development projects. These increases were partially offset by a $556,000 reduction in revenueJapan which was due to unfavorable changes in ~~foreign~~ exchange rates as compared to the ~~exchange rates that were in effect during the three months ended September 30, 2016.~~

prior year period of comparison.

Cost of Revenue

   Three Months Ended September 30,
   2017 2016 Change
Cost of Revenue
   Amount    Percentage of
Related
Revenue Amount    Percentage of
Related
Revenue Amount    %
   (in thousands, except percentages)
Subscription and support
   $ 12,924    35 % $ 11,691    32 % $ 1,233    11 %
Professional services and other
   3,580    120 2,086    95 1,494    72








Total
   $ 16,504    42 % $ 13,777    36 % $ 2,727    20 %


	Three Months Ended March 31,
	2022					2021					Change
Cost of Revenue	Amount		Percentage of Related Revenue			Amount		Percentage of Related Revenue			Amount			%

	(in thousands, except percentages)
Subscription and support	$	16,982		33	%	$	15,678		31	%	$	1,304			8	%
Professional services and other		1,998		112			3,490		88			(1,492	)		(43	)

Total	$	18,980		36	%	$	19,168		35	%	$	(188	)		(1	)%

In the three months ended ~~September 30, 2017,~~March 31, 2022, cost of subscription and support revenue increased ~~$1.2~~by $1.3 million, or ~~11%~~8%, compared to the three months ended ~~September 30, 2016.~~March 31, 2021. The increase resulted primarily from ~~increases~~an increase in content delivery network ~~hosting services, amortization,~~ and ~~partner commission expenses of $509,000, $350,000, and $248,000, respectively. There were also increases in maintenance expense, employee-related expense, and costs associated with~~ third-party software ~~integrated with our service offering of $174,000, $106,000, and $105,000, respectively. These increases were partially offset by decreases in depreciation expense and bandwidth costs~~expenses compared in the ~~amounts of $162,000 and $127,000, respectively.~~

three months ended March 31, 2022 compared to the three months ended March 31, 2021. In the three months ended ~~September 30, 2017,~~March 31, 2022, cost of professional services and other revenue ~~increased~~decreased by $1.5 million, or ~~72%~~43%, compared to the three months ended ~~September 30, 2016.~~March 31, 2021. This ~~increase~~decrease corresponds to the ~~increase in~~55% decrease professional services and other revenue ~~and resulted primarily from increases~~ in ~~contractor and employee-related expenses of $1.2 million and $258,000, respectively.~~

the three months ended March 31, 2022, compared to the three months ended March 31, 2021.

Gross Profit

   Three Months Ended September 30,
   2017 2016 Change
Gross Profit
   Amount Percentage of
Related
Revenue Amount    Percentage of
Related
Revenue Amount %
   (in thousands, except percentages)
Subscription and support
   $ 23,572 65 % $ 24,512    68 % $ (940 ) (4 )%
Professional services and other
   (589 ) (20 ) 100    5 (689 ) (689 )




Total
   $ 22,983 58 % $ 24,612    64 % $ (1,629 ) (7 )%


	Three Months Ended March 31,
	2022						2021					Change
Gross Profit	Amount			Percentage of Related Revenue			Amount		Percentage of Related Revenue			Amount			%

	(in thousands, except percentages)
Subscription and support	$	34,619			67	%	$	35,161		69	%	$	(542	)		(2	)%
Professional services and other		(220	)		(12	)		488		12			(708	)		(145	)%

Total	$	34,399			64	%	$	35,649		65	%	$	(1,250	)		(4	)%

The overall gross profit percentage was ~~58% and~~ 64% for the three months ended ~~September 30, 2017 and 2016, respectively. The decrease is primarily due~~March 31, 2022 compared to ~~a shift in~~65% for the ~~mix of revenue as there was an increase in revenue from professional services engagements, which has a lower gross margin than subscription and support revenue.~~three months ended March 31, 2021. Subscription and support gross profit remained relatively unchanged compared to the three months ended March 31, 2021. Professional services and other gross profit decreased ~~$940,000,~~$708, or 4%145%. The decrease in gross profit dollars for professional services and other revenue was due to the 55% decrease in professional services and other revenue.

Operating Expenses


	Three Months Ended March 31,
	2022					2021						Change
Operating Expenses	Amount		Percentage of Revenue			Amount			Percentage of Revenue			Amount			%

	(in thousands, except percentages)
Research and development	$	8,237		15	%	$	8,284			15	%	$	(47	)		(1	)%
Sales and marketing		18,288		34			16,149			29			2,139			13
General and administrative		8,089		15			7,059			13			1,030			15
Merger-related		594		1			—			—			594			N/A
Other (benefit) expense		1,149		2			(1,965	)		(4	)		3,114			(158	)

Total	$	36,357		68	%	$	29,527			54	%	$	6,830			23	%

Research and Development

In the three months ended March 31, 2022, research and development remained relatively unchanged compared to the three months ended March 31, 2021. We expect our research and development expense as a percentage of revenue to remain relatively unchanged.

Sales and Marketing

In the three months ended March 31, 2022, sales and marketing expense increased by $2.1 million, or 13%, compared to the three months ended September 30, 2016 due to the loss of a major customer. Professional services and other gross profit decreased $689,000, or 689% compared to the three months ended September 30, 2016 due to the increase in mix of contractor expenses versus internal expenses in order to support various professional services projects. It is likely that gross profit, as a percentage of revenue, will fluctuate quarter by quarter due to the timing and mix of subscription and support revenue and professional services and other revenue, and the type, timing and duration of service required in delivering certain projects.

~~Operating Expenses~~

   Three Months Ended September 30,
   2017 2016 Change
Operating Expenses
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Research and development
   $ 7,820    20 % $ 7,704    20 % $ 116    2 %
Sales and marketing
   14,551    37 13,334    35 1,217    9
General and administrative
   5,961    15 5,126    13 835    16








Total
   $ 28,332    72 % $ 26,164    68 % $ 2,168    8 %

~~Research and Development~~. ~~In the three months ended September 30, 2017, research and development expense increased by $116,000, or 2%, compared to the three months ended September 30, 2016~~March 31, 2021, primarily due to ~~increases~~an increase in ~~computer maintenance~~employee-related, contractor, and ~~support and employee-related~~rent expenses of ~~$146,000~~$1.5 million, $282, and ~~$141,000,~~$305, respectively. In future periods, we expect that our research and development expense will increase in absolute dollars as we continue to add employees, develop new features and functionality for our products, introduce additional software solutions and expand our product and service offerings.

~~Sales and Marketing~~. In the three months ended September 30, 2017, sales and marketing expense increased by $1.2 million, or 9%, compared to the three months ended September 30, 2016 primarily due to employee-related expense, marketing programs, commission expense, and computer maintenance and support expenses of $865,000, $296,000, $108,000 and $106,000, respectively. These increases were partially offset by a decrease in recruiting and relocation expense of $154,000. We expect that our sales and marketing expense will increase in absolute dollars ~~along with our revenue,~~for the remainder of 2022 as compared to the prior period as we will continue to ~~expand sales coverage and build brand awareness through what we believe are cost-effective channels. We expect that such increases may fluctuate from period~~invest in these activities to ~~period, however, due to the timing of marketing programs.~~

support revenue growth.

General and Administrative

In the three months ended ~~September 30, 2017,~~March 31, 2022, general and administrative expense increased by ~~$835,000,~~$1.0 million, or ~~16%~~15%, compared to the three months ended ~~September 30, 2016~~March 31, 2021, primarily due to increases in agency, employee-related, ~~expense~~ and ~~outside legal fees of $836,000 and $185,000 respectively. These increases were offset by decreases in contractor and recruiting and relocation~~stock-based compensation expenses of ~~$137,000~~$212, $285, and ~~$115,000~~$330, respectively. The remaining increase was due to various other expenses that, in aggregate, increased by approximately $200. In future periods, we expect general and administrative expense to remain relatively unchanged.

~~Other Income (Expense), Net~~

   Three Months Ended September 30,
   2017 2016 Change
Other Income (Expense)
   Amount Percentage of
Revenue Amount Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Interest income, net
   $ 30 —   % $ 24 —   % $ 6    25 %
Interest expense
   (6 ) —   (15 ) —   9    (60 )
Other income (expense), net
   47 —   (14 ) —   61    (436 )




Total
   $ 71 —   % $ (5 ) —   % $ 76    (1520 )%

Merger-Related

In the three months ended ~~September 30, 2017, interest income, net,~~March 31, 2022, merger-related expense increased by ~~$6,000, or 25%, compared~~$594 primarily due to the ~~corresponding period of the prior year.~~

~~The interest~~Wicket Acquisition. There was no merger-related expense ~~during~~in the three months ended ~~September 30, 2017~~March 31, 2021.

Other expense (benefit).

On March 28, 2022 our CEO retired. Pursuant to a Transition Agreement that was entered into by the previous CEO and the Company in October 2021, the CEO, upon retirement, would be paid his annual base compensation through December 31, 2022 and his 2022 annual bonus, the bonus amount to be determined by the Company’s 2022 performance. In accordance with generally accepted accounting principles we determined that the remaining base compensation and the current estimate of the 2022 annual bonus should be accrued and the expense recognized as of March 28, 2022. The total of $1.1 million is ~~primarily comprised~~reflected in Accrued Expenses on the Company’s

Condensed Consolidated Balance Sheets

. The $1.1 million in expense also reflects $0.2 million of ~~interest paid on capital leases~~stock-based compensation expense as a result of the modification of certain awards pursuant to the Transition Agreement.

On March 27, 2020, in response to the

COVID-19

pandemic, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act, which was amended by the Consolidated Appropriations Act in December of 2020 (the “CARES Act”). The CARES Act provides numerous tax provisions and other stimulus measures, including the creation of certain employee retention credits. In the first quarter of 2021, we recognized a benefit of $2.0 million from the CARES Act related to employee retention credits. The benefit was recorded as Other (benefit) expense.

(Benefit) Provision for Income Taxes.

We recorded an ~~equipment financing. The increase~~income tax benefit of $708 in ~~other income (expense), net during~~ the three months ended ~~September 30, 2017 was primarily due to foreign currency exchange gains recorded during the three months ended September 30, 2017 upon collection of foreign denominated accounts receivable,~~March 31, 2022 as compared to ~~losses recorded in the corresponding period of the prior year.~~

~~Provision for Income Taxes~~

   Three Months Ended September 30,
   2017 2016 Change
Provision for Income Taxes
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
      (in thousands, except percentages)
Provision for income taxes
   $ 118    —   % $ 61    —   % $ 57    93 %

~~In the three months ended September 30, 2017 and 2016, the provision for income taxes was primarily comprised of~~ income tax ~~expenses related to foreign jurisdictions.~~

~~Overview~~expense of ~~Results of Operations for the Nine Months Ended September 30, 2017 and 2016~~

Total revenue increased by $4.2 million, or 4%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 due to an increase in professional services and other revenue of 67%, or $3.8 million. The increase in professional services revenue was primarily related to the size and number of professional services engagements during the nine months ended September 30, 2017, compared to the corresponding period$257 in the prior year. Subscription and support revenue remained relatively unchanged during the nine months ended September 30, 2017, compared to the corresponding period in the prior year. In addition, our revenue from premium offerings grew by $5.6 million, or 5%, in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016 primarily due to an 7% increase in the number of premium customers from 1,981 at September 30, 2016 to 2,113 at September 30, 2017. These increases are offset by a $1.9 million reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the nine months ended September 30, 2016.

Our gross profit decreased by $3.6 million, or 5%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, primarily due to increases in the cost of subscription and support revenue and the cost of professional services revenue without corresponding increases in revenue. Cost of subscription and support revenue increased due to additional costs incurred in order to support the launch of a major customer during the second quarter of 2017. Cost of professional services revenue increased due to a higher level of contractor costs and project hours during the nine months ended September 30, 2017 compared to that of the nine months ended September 30, 2016. Our ability to improve our overall gross profit will depend primarily on our ability to continue controlling our costs of delivery. Loss from operations was $18.4 million in the nine months ended September 30, 2017 compared to $5.3 million in the nine months ended September 30, 2016. Loss from operations in the nine months ended September 30, 2017 included stock-based compensation expense and amortization of acquired intangible assets of $5.3 million and $2.1 million, respectively. Loss from operations in the nine months ended September 30, 2016 included stock-based compensation expense and amortization of acquired intangible assets of $4.3 million and $2.3 million, respectively.

~~Revenue~~

   Nine Months Ended September 30,
   2017 2016 Change
Revenue by Product Line
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
Premium
   $ 111,505    96 % $ 105,899    95 % $ 5,606 5 %
Volume
   4,307    4 5,742    5 (1,435 ) (25 )






Total
   $ 115,812    100 % $ 111,641    100 % $ 4,171 4 %

During the nine months ended September 30, 2017, revenue increased by $4.2 million, or 4%, compared to the nine months ended September 30, 2016, primarily due to an increase in revenue from our premium offerings, which consists of subscription and support revenue, as well as professional services and other revenue.period. The ~~increase in premium revenue of $5.6 million, or 5%,~~benefit is partially the result of a 7% increase in the number of premium customers from 1,981 at September 30, 2016 to 2,113 at September 30, 2017, in addition to a $3.8 million, or 67%, increase in professional services revenue. The increases are offset by the loss of a major customer and a $1.9 million reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the nine months ended September 30, 2016. In the nine months ended September 30, 2017, volume revenue decreased by $1.4 million, or 25%, compared to the nine months ended September 30, 2016, as we continue to focus on the market for our premium solutions.

   Nine Months Ended September 30,
   2017 2016 Change
Revenue by Type
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Subscription and support
   $ 106,266    92 % $ 105,936    95 % $ 330    0 %
Professional services and other
   9,546    8 5,705    5 3,841    67








Total
   $ 115,812    100 % $ 111,641    100 % $ 4,171    4 %

In the nine months ended September 30, 2017, subscription and support revenue was relatively unchanged compared to the nine months ended September 30, 2016. In addition, professional services and other revenue increased by $3.8 million, or 67%, primarily related to the size and number of professional services engagements during the nine months ended September 30, 2017 compared to the corresponding quarter in the prior year. During the nine months ended September 30, 2017, the increase in professional services revenue was primarily related to an increase in OTT application development projects.

   Nine Months Ended September 30,
   2017 2016 Change
Revenue by Geography
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
North America
   $ 68,205    59 % $ 68,913    62 % $ (708 ) (1 )%






Europe
   18,177    16 18,843    17 (666 ) (4 )
Japan
   12,416    11 11,447    10 969 8
Asia Pacific
   16,490    14 11,495    10 4,995 43
Other
   524    —   943    1 (419 ) (44 )






International subtotal
   47,607    41 42,728    38 4,879 11






Total
   $ 115,812    100 % $ 111,641    100 % $ 4,171 4 %

In the nine months ended September 30, 2017, total revenue for North America decreased $708,000, compared to the nine months ended September 30, 2016. The reduction in revenue for North America is primarily related to the loss of a major customer in the first quarter of 2017 partially offset by increases in sales to new and existing customers. In the nine months ended September 30, 2017, total revenue outside of North America increased $4.9 million, or 11%, compared to the nine months ended September 30, 2016. The increase in revenue from international regions is primarily related to an increase in revenue in Asia Pacific and Japan. The increase in revenue from Asia Pacific and Japan is primarily related to an increase in revenue from professional services engagements related to OTT application development projects. These increases were partially offset by a $1.9 million reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the nine months ended September 30, 2016.

~~Cost of Revenue~~

   Nine Months Ended September 30,
   2017 2016 Change
Cost of Revenue
   Amount    Percentage of
Related
Revenue Amount    Percentage of
Related
Revenue Amount    %
   (in thousands, except percentages)
Subscription and support
   $ 38,180    36 % $ 35,041    33 % $ 3,139    9 %
Professional services and other
   10,120    106 5,453    96 4,667    86








Total
   $ 48,300    42 % $ 40,494    36 % $ 7,806    19 %

In the nine months ended September 30, 2017, cost of subscription and support revenue increased $3.1 million, or 9%, compared to the nine months ended September 30, 2016. The increase resulted primarily from increases in content delivery network, network hosting, and amortization expenses related to internal-use software of $929,000, $864,000, and $851,000, respectively. There were also increases in partner commission, maintenance, and employee-related expenses of $519,000, $378,000, and $296,000, respectively, as well as increases in costs associated with third-party software integrated with our service offering, contractor expense, and stock-based compensation expenses of $135,000, $117,000 and $104,000, respectively. These increases were partially offset by decreases in depreciation and bandwidth expenses of $814,000 and $244,000, respectively.

In the nine months ended September 30, 2017, cost of professional services and other revenue increased $4.7 million, or 86%, compared to the nine months ended September 30, 2016. This increase corresponds to the increase in professional services revenue and resulted primarily from increases in contractor, employee-related and travel expenses of $3.3 million, $1.0 million, and $123,000, respectively.

~~Gross Profit~~

   Nine Months Ended September 30,
   2017 2016 Change
Gross Profit
   Amount Percentage of
Related
Revenue Amount    Percentage of
Related
Revenue Amount %
   (in thousands, except percentages)
Subscription and support
   $ 68,086 64 % $ 70,895    67 % $ (2,809 ) (4 )%
Professional services and other
   (574 ) (6 ) 252    4 (826 ) (328 )




Total
   $ 67,512 58 % $ 71,147    64 % $ (3,635 ) (5 )%

The overall gross profit percentage was 58% and 64% for the nine months ended September 30, 2017 and 2016, respectively. The decrease is primarily due to a shift in the mix of revenue as there was an increase in revenue from professional services engagements, which has a lower gross margin than subscription and support revenue. Subscription and support gross profit decreased $2.8 million, or 4%, compared to the nine months ended September 30, 2016 due to additional costs incurred in order to support the launch of a major customer during the second quarter of 2017. In addition, professional services and other gross profit decreased $826,000, or 328% compared to the nine months ended September 30, 2016 due to the ~~increase in mix~~release of ~~contractor expenses versus internal expenses in order to support various professional services projects.~~

~~Operating Expenses~~

   Nine Months Ended September 30,
   2017 2016 Change
Operating Expenses
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
Research and development
   $ 24,293    21 % $ 22,385    20 % $ 1,908 9 %
Sales and marketing
   44,356    38 39,845    36 4,511 11
General and administrative
   17,228    15 14,190    13 3,038 21
Merger-related
   —      —   21    —   (21 ) (100 )






Total
   $ 85,877    74 % $ 76,441    68 % $ 9,436 12 %

~~Research and Development~~. In$1.0 million of our valuation allowance as a result of deferred tax liabilities resulting from the ~~nine months ended September 30, 2017, research and development expense increased by $1.9~~Wicket Acquisition, which was a

non-tax

deductible transaction. The benefit of $1.0 million or 9%, compared to the nine months ended September 30, 2016 primarily due to increases in employee-related, computer maintenance and support, contractor, and stock-based compensation expenses of $1.7 million, $291,000, $290,000, and $190,000, respectively. These increases were partiallywas offset by ~~a decrease in recruiting~~state and foreign tax expense ~~of $294,000.~~

~~Sales and Marketing~~. In the nine months ended September 30, 2017, sales and marketing expense increased by $4.5 million, or 11%, compared to the nine months ended September 30, 2016 primarily due to employee-related expense, marketing programs, and commission expense of $2.6 million, $899,000 and $502,000, respectively. There were also increases in computer maintenance and support, travel, and stock-based compensation expenses of $367,000, $339,000, and $323,000, respectively. These increases were partially offset by decreases in recruiting and relocation, contractor, and intangible amortization expenses of $258,000, $201,000, and $190,000, respectively.

~~General and Administrative~~. In the nine months ended September 30, 2017, general and administrative expense increased by $3.0 million, or 21%, compared to the nine months ended September 30, 2016 primarily due to increases in employee-related expense, outside legal fees, and stock-based compensation expense of $1.5 million, $990,000 and $381,000, respectively. There were also increases in~~tax-related,~~ commission, travel, and computer maintenance and support expenses of $263,000, $184,000, $142,000 and $122,000 respectively. These expenses were partially offset by decreases in recruiting and relocation and contractor expenses of $206,000 and $203,000 respectively.

~~Merger-related~~. In the nine months ended September 30, 2016, merger-related expenses of $21,000 related to costs associated with the retention of certain employees of Unicorn. No such expense was incurred during the nine months ended September 30, 2017.

~~Other Income (Expense), Net~~

   Nine Months Ended September 30,
   2017 2016 Change
Other Income (Expense)
   Amount Percentage of
Revenue Amount Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Interest income, net
   $ 92 —   % $ 74 —   % $ 18    24 %
Interest expense
   (22 ) —   (51 ) —   29    (57 )
Other income (expense), net
   453 —   (150 ) —   603    (402 )




Total
   $ 523 —   % $ (127 ) —   % $ 650    (512 )%

In the nine months ended September 30, 2017, interest income, net, increased by $18,000, or 24%, compared to the corresponding period of the prior year. The increase is primarily due to a higher average cash balance as interest income is generated from the investment of our cash balances, less related bank fees.

The interest expense during the nine months ended September 30, 2017 is primarily comprised of interest paid on capital leases and an equipment financing. The increase in other income (expense), net during the nine months ended September 30, 2017 was primarily due to foreign currency exchange gains recorded during the nine months ended September 30, 2017 upon collection of foreign denominated accounts receivable, compared to losses recorded in the corresponding period of the prior year.

~~Provision for Income Taxes~~

   Nine Months Ended September 30,
   2017 2016 Change
Provision for Income Taxes
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Provision for income taxes
   $ 305    —   % $ 202    —   % $ 103    51 %

~~In the nine months ended September 30, 2017 and 2016, the provision for income taxes was primarily comprised of income tax expenses related to foreign jurisdictions.~~

provisions.

Liquidity and Capital Resources

In connection with our initial public offering in February 2012, we received aggregate proceeds of approximately $58.8 million, including the proceeds from the underwriters’ exercise of their overallotment option, net of underwriters’ discounts and commissions, but before deducting offering expenses of approximately $4.3 million. Prior to our initial public offering, we funded our operations primarily through private placements of preferred and common stock, as well as through borrowings of $7.0 million under our bank credit facilities. In February 2012, we repaid the $7.0 million balance under our bank credit facilities. All of the preferred stock was converted into shares of our common stock in connection with our initial public offering.

   Nine Months Ended
September 30,
Condensed Consolidated Statements of Cash Flow Data
   2017 2016
   (in thousands)
Purchases of property and equipment
   $ (990 ) $ (1,194 )
Depreciation and amortization
   5,607 5,901
Cash flows (used in) provided by operating activities
   (11,652 ) 7,629
Cash flows used in investing activities
   (3,081 ) (4,434 )
Cash flows (used in) provided by financing activities
   (408 ) 3,902

Cash and cash equivalents.

Our cash and cash equivalents at ~~September 30, 2017~~March 31, 2022 were held for working capital purposes and were invested primarily in ~~money market funds.~~cash. We do not enter into investments for trading or speculative purposes. At ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, we had ~~$6.9~~$13.0 million and ~~$5.9~~$13.8 million, respectively, of cash and cash equivalents held by subsidiaries in international locations, including subsidiaries located in Japan and the United Kingdom. ~~It is~~These earnings can be repatriated to the United

States tax-free but

could still be

subject to foreign withholding taxes. On February 1, 2022, we acquired 100% of the outstanding shares of Wicket Labs, in exchange for 212,507 unregistered shares of our ~~current intention~~common stock valued at approximately $2 million and approximately $13.2 million in cash. Approximately $1.8 million of the cash consideration was held back to ~~permanently reinvest unremitted earnings~~secure payment of any claims of indemnification for breaches or inaccuracies in ~~such subsidiaries or to repatriate~~ the ~~earnings only when tax effective.~~Sellers’ representations and warranties, covenants and agreements. We believe that our existing cash and cash equivalents will be sufficient to meet our anticipated working capital and capital expenditure needs over at least the next 12 months.

Three Months Ended March 31,

Condensed Consolidated Statements of Cash Flow Data

2022

2021



(in thousands)

Cash flows used in operating activities
   $ (690 )    $ (604 )
Cash flows used in investing activities
   $ (17,942 )    $ (1,522 )
Cash flows provided by financing activities
   $ 100    $ 533

Accounts receivable, net.

Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. The fluctuations vary depending on the timing of our billing activity, cash collections, and changes to our allowance for doubtful accounts. In many instances we receive cash payment from a customer prior to the time we are able to recognize revenue on a transaction. We record these payments as deferred revenue, which has a positive effect on our accounts receivable balances. We use days’ sales outstanding, or DSO, calculated on a quarterly basis, as a measurement of the quality and status of our receivables. We define DSO as (a) accounts receivable, net of allowance for doubtful accounts, divided by total revenue for the most recent quarter, multiplied by (b) the number of days in that quarter. DSO was 61 days at September 30, 2017 and 53 days at December 31, 2016.

Cash flows ~~(used in)~~ provided by operating activities.

Cash ~~(used in)~~ provided by operating activities consists primarily of net ~~loss~~income adjusted for

certainnon-cash items

including depreciation and amortization, stock-based compensation expense, the provision for bad debts and the effect of changes in working capital and other activities. Cash used in operating activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 was ~~$11.7 million.~~$690. The cash ~~flow~~ used in operating activities primarily resulted from net ~~losses~~loss of ~~$18.1~~$1.6 million and net changes in our operating assets and liabilities of ~~$4.6~~$4.7 million, ~~partially~~ offset by net

non-cash

charges of ~~$11.0~~$5.6 million. ~~Uses~~Net

non-cash

expenses mainly consisted of ~~cash included increases~~$2.1 million for depreciation and amortization and $3.5 million for stock-based compensation. Cash outflows resulting from changes in our operating assets and liabilities consisted primarily of an increase in accounts receivable of $3.8 million, and increase in prepaid expenses and other current assets of ~~$4.8 million and~~ $1.6 million, ~~respectively~~ and a decrease in accrued ~~expense~~expenses of ~~$2.9 million. These outflows were~~$2.0 million, offset ~~in part~~ by ~~increases~~an increase in deferred revenue of $1.5 million, an increase in operating leases of $705, and an increase in accounts payable of ~~$2.7 million~~$347. In summary, cash used in operating activities has increased when compared to the prior period due to a net loss, and ~~$2.0 million, respectively. Netnon-cash~~ ~~expenses consisted primarily of $5.6 million for depreciation and amortization expense and $5.3 million for stock-based compensation expense.~~

decreases in working capital.

Cash flows used in investing activities.

Cash used in investing activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 was ~~$3.1~~$17.9 million, consisting primarily of ~~$2.1~~$13.2 million for cash paid for the acquisition of Wicket Labs, $2.9 million for the capitalization of

internal-use

software costs and ~~$990,000~~$1.9 million in capital expenditures to support the business.

Cash flows ~~(used in)~~ provided by financing activities.

Cash ~~(used in)~~ provided by financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 was ~~$408,000,~~$100, consisting of ~~payments under capital lease obligation, equipment financing and withholding tax on RSU vesting of $383,000, $229,000 and $175,000, respectively, offset in part by the~~ proceeds ~~received on~~from the exercise of ~~common~~ stock ~~options of $379,000.~~

options.

Credit ~~facility borrowings.~~

facility.

On ~~November 19, 2015,~~December 28, 2020, we entered into an amended and restated loan and security agreement with a lender (the “Loan Agreement”) providing for up to a ~~$20.0~~$30.0 million ~~asset based~~asset-based line of credit (the “Line of Credit”). ~~Under the Line of Credit, we can borrow up to $20.0 million.~~ Borrowings under the Line of Credit are secured by substantially all of our assets, excluding our intellectual property. Outstanding amounts under the Line of Credit accrue interest at a rate equal to the prime rate or the LIBOR rate plus 2.5%. Under the Loan Agreement, we must comply with certain financial covenants, including maintaining a minimum asset coverage ratio. If the outstanding principal during any month is at least $15.0 million, the Company must also maintain a minimum net income threshold based on~~non-GAAP~~ operating measures. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the Line of Credit to declare all amounts borrowed under the Line of Credit, together with accrued interest and fees, to be immediately due and payable. We were in compliance with all covenants under the Line of Credit as of ~~September 30, 2017.~~

~~On December~~March 31, ~~2015,~~2022. As we have not drawn on the ~~Company entered into an equipment financing agreement with a lender (the “December 2015 Equipment Financing Agreement”) to finance the purchase~~Line of $604,000 in computer equipment. In February 2016, the Company drew down $604,000 under the December 2015 Equipment Financing Agreement, and the liability was recorded at fair value using a market interest rate. The Company is repaying its obligation over a two year period through January 2018, and the amountCredit, there are no amounts outstanding ~~was $104,000~~ as of ~~September 30, 2017.~~

March 31, 2022.

Net operating loss carryforwards.

As of December 31, ~~2016,~~2021, we had federal and state net operating losses of approximately ~~$155.5~~$161.8 million and ~~$57.4~~$89.2 million, respectively, which are available to offset future taxable income, if any, through ~~2035. Included in the~~2037 and 2041, respectively. We had federal and state net operating losses ~~are deductions attributable to excess tax benefits from the exercise ofnon-qualified~~ ~~stock options~~ of ~~$16.9~~approximately $37.6 million and ~~$10.2~~$3.1 million, ~~respectively. The tax benefits attributable~~respectively, which are available to ~~these net operating losses are credited directly to additionalpaid-in~~ ~~capital when realized. The Company has not realized~~offset future taxable income, if any, ~~such tax benefits through December 31, 2016.~~indefinitely. We had federal and state research and development tax credits of ~~$5.4~~$9.0 million and ~~$3.5~~$5.5 million, respectively, which expire in various amounts through ~~2035.~~2041. Our net operating loss and tax credit amounts are subject to annual limitations under Section 382 change of ownership rules of the U.S. Internal Revenue Code of 1986, as amended. We completed an assessment to determine whether there may have been a Section 382 ownership change and determined that it is more likely than not that our net operating and tax credit amounts as disclosed are not subject to any material Section 382 limitations.

foreign currency exchange rates would have decreased revenues by ~~$3.3~~$1.6 million, decreased expenses by ~~$2.0 million~~$900 and decreased operating income by ~~$1.3 million.~~$700. The estimates used assume that all currencies move in the same direction at the same time and the ratio

ofnon-U.S. dollar

denominated revenue and expenses to U.S. dollar denominated revenue and expenses does not change from current levels. Since a portion of our revenue is deferred revenue that is recorded at different foreign currency exchange rates, the impact to revenue of a change in foreign currency exchange rates is recognized over time, and the impact to expenses is more immediate, as expenses are recognized at the current foreign currency exchange rate in effect at the time the expense is incurred. All of the potential changes noted above are based on sensitivity analyses performed on our financial results as of ~~September 30, 2017 and 2016.~~

March 31, 2022.

Interest rate risk

We had ~~unrestricted~~ cash and cash equivalents totaling ~~$22.1~~$26.7 million at ~~September 30, 2017.~~March 31, 2022. Cash and cash equivalents were invested primarily in ~~money market funds~~cash and are held for working capital purposes. We do not use derivative financial instruments in our investment portfolio. Declines in interest rates, however, would reduce future interest income. We ~~incurred $6,000 and $15,000 of~~did not incur interest expense ~~during~~in the three months ended ~~September 30, 2017 and 2016, respectively, and $22,000 and $51,000~~March 31, 2022. An unfavorable movement of interest expense during the nine months ended September 30, 2017 and 2016, respectively, related to interest paid on capital leases and an equipment financing. While we continue to incur interest expense10% in ~~connection with our capital leases and equipment financing,~~ the interest ~~expense is fixed and~~rate on the Line of Credit would not ~~subject to changes in market~~have had a material effect on interest rates. In the event that we borrow under our line of credit, which bears interest at the prime rate or the LIBOR rate plus the LIBOR rate margin, the related interest expense recorded would be subject to changes in the rate of interest.

expense.

Inflation ~~risk~~

Risk

We do not believe that inflation has had a material effect on our ~~business, financial condition or results of operations. If~~business. However, if our costs, in particular personnel, sales and marketing and hosting costs, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial ~~condition and results of operations.~~

condition.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2017,~~March 31, 2022, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures defined in Rules

13a-15(e)

and

15d-15(e)

under the Exchange Act. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2017,~~March 31, 2022, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required

by Rule13a-15(d) and15d-15(d) of

the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

On May 22, 2017, a lawsuit was filed against us and two individuals by Ooyala, Inc. (“Ooyala”) and Ooyala Mexico S. de R.L. de C.V. (“Ooyala Mexico”). The lawsuit, which was filed in the United States District Court for the District of Massachusetts, concerns allegations that the two individuals, who are former employees of Ooyala Mexico, misappropriated customer information and other trade secrets and used that information in working for Brightcove. The complaint was amended on June 1, 2017 to remove claims against the two former employees of Ooyala Mexico. The remaining claims against us are for violation of the Defend Trade Secrets Act of 2016 (18 U.S.C. §1836), violation of the Massachusetts trade secret statute (M.G.L. c. 93, §42), violation of Massachusetts Chapter 93A (M.G.L. c. 93A, §11), and tortious interference with advantageous business relationships. Ooyala and Ooyala Mexico also filed a motion for preliminary injunction (amended at the same time the complaint was amended), seeking to enjoin us from using any of the allegedly misappropriated information or communicating with customers whose information was taken, and seeking the return of any information that was allegedly taken. On June 16, 2017, we filed an opposition to the motion for preliminary injunction, and also moved to dismiss the lawsuit. Brightcove’s motion to dismiss was denied on September 6, 2017. The court has not ruled on Ooyala’s motion for preliminary injunction. On October 18, 2017, the court granted the parties’ motion to stay the litigation, and the litigation is currently stayed.

ITEM 1. LEGAL PROCEEDINGS

We, ~~cannot yet determine whether it is probable that a loss will be incurred in connection with this complaint, nor can we reasonably estimate the potential loss, if any.~~

~~In addition, we are,~~ from time to time, are party to litigation arising in the ordinary course of ~~our~~ business. Management does not believe that the outcome of these claims will have a material adverse effect on our consolidated financial position, results of operations or cash flows based on the status of proceedings at this time.

~~ITEM 1A.~~

~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

You should carefully consider the risks described in our ~~Quarterly Report~~annual report on Form~~10-Q~~
10-K
for the ~~quarter~~fiscal year ended ~~March~~December 31, ~~2017,~~2021, under the heading “Part III — Item 1A. Risk Factors,” together with the additional risk factor included below and all of the other information in this Quarterly Report on Form
10-Q.
Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. If any of such risks and uncertainties actually occurs, our business, financial condition or operating results could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our other public filings. The trading price of our common stock could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

~~There~~

Weakened global economic conditions may harm our industry, business and results of operations.

Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated to us or the software industry may harm us. The U.S. and other key international economies have been ~~no material changes~~affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, inflation and overall uncertainty with respect to the ~~information set forth~~economy, including with respect to tariff and trade issues. In particular, the economies of countries in ~~Part I. Item 1A. “Risk Factors”~~Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking sector, uncertainty over the future of the Euro zone and volatility in the value of the pound sterling and the Euro, including instability surrounding Brexit, and instability resulting from the ongoing conflict between Russia and Ukraine. The effect of the conflict between Russia and Ukraine, including any resulting sanctions, export controls or other restrictive actions that may be imposed against governmental or other entities in, for example, Russia, have in the past contributed and may in the future contribute to disruption, instability and volatility in the global markets. We have operations, as well as current and potential new customers in Europe. If economic conditions in Europe and other key markets for our platform continue to remain uncertain or deteriorate further, it could adversely affect our customers’ ability or willingness to subscribe to our platform, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscriptions or affect renewal rates, all of which could harm our operating results.

More recently, inflation rates in the U.S. have increased to levels not seen in several years, which may result in decreased demand for our products and services, increases in our ~~Quarterly Report on Form10-Q~~ ~~for~~operating costs including our labor costs, constrained credit and liquidity, reduced government spending and volatility in financial markets. The Federal Reserve has raised, and may again raise, interest rates in response to concerns over inflation risk. There continues to be uncertainty in the ~~quarter ended March 31, 2017, except for~~changing market and economic conditions, including the possibility of additional ~~risk factor set forth below:~~

~~If we do not successfully manage the transition associated with the resignation of our former Chief Executive Officer (“CEO”) and the appointment of a new CEO, it~~measures that could be ~~viewed negatively~~taken by ~~our customers~~the Federal Reserve and ~~shareholders~~other government agencies, related to the COVID-19 pandemic and concerns over inflation risk. A sharp rise in interest rates could have an adverse impact on the fair market value of certain securities in our ~~business.~~

David Mendels resigned from his position as the Company’s CEO and resigned from the Board effective July 24, 2017. Andrew Feinberg, the Company’s President and Chief Operations Officer, is serving as the Company’s acting CEO. The Board has an active search process underway to select the next CEO from internal and external candidates. Such leadership transitions can be inherently difficult to manage, and an inadequate transition of our CEO may cause disruption to our business, including to our relationships with customers and employees. In addition, if we are unable to attract and retain a qualified candidate to become our permanent CEO in a timely manner, our ability to meetportfolio, which could adversely affect our financial ~~and operational goals and strategic plans may be adversely impacted, as well as our financial performance. It may also make it more difficult to retain other key employees.~~

results.


	September 30, 2017			December 31, 2016
	(in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents	$	22,056		$	36,813
Accounts receivable, net of allowance of $134 and $154 at September 30, 2017 and December 31, 2016, respectively		26,296			21,575
Prepaid expenses		4,174			3,729
Other current assets		2,938			2,168

Total current assets		55,464			64,285
Property and equipment, net		9,005			9,264
Intangible assets, net		8,910			10,970
Goodwill		50,776			50,776
Deferred tax asset		123			121
Other assets		931			1,008

Total assets	$	125,209		$	136,424

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,635		$	5,327
Accrued expenses		13,319			15,705
Capital lease liability		334			489
Equipment financing		104			307
Deferred revenue		37,376			34,665

Total current liabilities		57,768			56,493
Deferred revenue, net of current portion		166			91
Other liabilities		1,253			1,644

Total liabilities		59,187			58,228
Commitments and contingencies(Note 9)
Stockholders’ equity:
Undesignated preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 34,757,289 and 34,143,148 shares issued at September 30, 2017 and December 31, 2016, respectively		35			34
Additionalpaid-in capital		236,628			230,788
Treasury stock, at cost; 135,000 shares		(871	)		(871	)
Accumulated other comprehensive loss		(843	)		(1,172	)
Accumulated deficit		(168,927	)		(150,583	)

Total stockholders’ equity		66,022			78,196

Total liabilities and stockholders’ equity	$	125,209		$	136,424


	March 31, 2022			December 31, 2021

	(in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents	$	26,705		$	45,739
Accounts receivable, net of allowance of $379 and $353 at March 31, 2022 and December 31, 2021, respectively		34,037			29,866
Prepaid expenses		10,740			7,792
Other current assets		11,099			10,833

Total current assets		82,581			94,230
Property and equipment, net		26,317			20,514
Operating lease right-of-use asset		23,655			24,891
Intangible assets, net		12,881			9,276
Goodwill		74,838			60,902
Other assets		6,612			6,655

Total assets	$	226,884		$	216,468

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	14,027		$	11,039
Accrued expenses		22,851			20,925
Operating lease liability		2,950			2,600
Deferred revenue		64,110			62,057

Total current liabilities		103,938			96,621
Operating lease liability, net of current portion		21,920			22,801
Other liabilities		932			786

Total liabilities	$	126,790			120,208
Commitments and contingencies (Note 8)		0			0
Stockholders’ equity:
Undesignated preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued		0—			0—
Common stock, $0.001 par value; 100,000,000 shares authorized; 41,685,163 and 41,384,643 shares issued at March 31, 2022 and December 31, 2021, respectively		42			41
Additional paid-in capital		304,506			298,793
Treasury stock, at cost; 135,000 shares		(871	)		(871	)
Accumulated other comprehensive loss		(905	)		(662	)
Accumulated deficit		(202,678	)		(201,041	)

Total stockholders’ equity		100,094			96,260

Total liabilities and stockholders’ equity	$	226,884		$	216,468


	Nine Months Ended September 30,
	2017			2016
	(in thousands)
Operating activities
Net loss	$	(18,147	)	$	(5,623	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		5,607			5,901
Stock-based compensation		5,294			4,265
Provision for reserves on accounts receivable		152			233
Changes in assets and liabilities:
Accounts receivable		(4,816	)		(1,441	)
Prepaid expenses and other current assets		(1,660	)		(1,720	)
Other assets		94			(200	)
Accounts payable		2,021			(17	)
Accrued expenses		(2,874	)		1,953
Deferred revenue		2,677			4,278

Net cash (used in) provided by operating activities		(11,652	)		7,629
Investing activities
Cash paid for purchase of intangible asset		—			(300	)
Purchases of property and equipment, net of returns		(990	)		(1,194	)
Capitalizedinternal-use software costs		(2,091	)		(2,940	)

Net cash used in investing activities		(3,081	)		(4,434	)
Financing activities
Proceeds from exercise of stock options		379			4,392
Payments of withholding tax on RSU vesting		(175	)		(216	)
Proceeds from equipment financing		—			604
Payments on equipment financing		(229	)		(196	)
Payments under capital lease obligation		(383	)		(682	)

Net cash (used in) provided by financing activities		(408	)		3,902
Effect of exchange rate changes on cash and cash equivalents		384			458

Net (decrease) increase in cash and cash equivalents		(14,757	)		7,555
Cash and cash equivalents at beginning of period		36,813			27,637

Cash and cash equivalents at end of period	$	22,056		$	35,192


	Three Months Ended March 31,
	2022			2021

	(in thousands, except share data)
Shares of common stock issued
Balance, beginning of period		41,384,643			40,152,021
Issuance of common stock upon exercise of stock options and pursuant to restricted stock units		300,520			260,556

Balance, end of period		41,685,163			40,412,577

Shares of treasury stock
Balance, beginning of period		(135,000	)		(135,000	)

Balance, end of period		(135,000	)		(135,000	)

Par value of common stock issued
Balance, beginning of period	$	41		$	40
Issuance of common stock upon exercise of stock options and pursuant to restricted stock units		0			0—
Common stock issued upon acquisition		1			0

Balance, end of period	$	42		$	40

Value of treasury stock
Balance, beginning of period	$	(871	)	$	(871	)

Balance, end of period	$	(871	)	$	(871	)

Additional paid-in capital
Balance, beginning of period	$	298,793		$	287,059
Issuance of common stock upon exercise of stock options and pursuant to restricted stock units, net of tax		100			1,008
Stock-based compensation expense		3,627			2,336
Common stock issued upon acquisition		1,986			0

Balance, end of period	$	304,506		$	290,403

Accumulated deficit
Balance, beginning of period	$	(201,041	)	$	(206,438	)
Net (loss) income		(1,637	)		5,130

Balance, end of period	$	(202,678	)	$	(201,308	)

Accumulated other comprehensive loss
Balance, beginning of period	$	(662	)	$	(188	)
Foreign currency translation adjustment		(243	)		(209	)

Balance, end of period	$	(905	)	$	(397	)

Total stockholders’ equity	$	100,094		$	87,867


	Three Months Ended March 31,
	2022			2021

	(in thousands)
Operating activities
Net (loss) income	$	(1,637	)	$	5,130
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,061			2,163
Stock-based compensation		3,479			2,292
Provision for reserves on accounts receivable		106			71
Changes in assets and liabilities:
Accounts receivable		(3,802	)		(1,585	)
Prepaid expenses and other current assets		(1,550	)		(1,390	)
Other assets		54			(919	)
Accounts payable		347			(425	)
Accrued expenses		(1,980	)		(5,797	)
Operating leases		705			(626	)
Deferred revenue		1,527			482

Net cash used in operating activities		(690	)		(604	)
Investing activities
Cash paid for acquisition, net of cash acquired		(13,176	)		0
Purchases of property and equipment		(1,884	)		(468	)
Capitalized internal-use software costs		(2,882	)		(1,054	)

Net cash used in investing activities		(17,942	)		(1,522	)
Financing activities
Proceeds from exercise of stock options		100			1,095
Deferred acquisition payments		0			(475	)
Other financing activities		0			(87	)

Net cash provided by financing activities		100			533
Effect of exchange rate changes on cash and cash equivalents		(502	)		(727	)

Net decrease in cash and cash equivalents		(19,034	)		(2,320	)
Cash and cash equivalents at beginning of period		45,739			37,472

Cash and cash equivalents at end of period	$	26,705		$	35,152

Supplemental disclosure of cash flow information
Cash paid for operating lease liabilities	$	796		$	1,477
Cash paid for income taxes	$	216		$	314


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands, except share and per share data)
Revenue:
Subscription and support revenue	$	36,496		$	36,203		$	106,266		$	105,936
Professional services and other revenue		2,991			2,186			9,546			5,705

Total revenue		39,487			38,389			115,812			111,641
Cost of revenue: (1) (2)
Cost of subscription and support revenue		12,924			11,691			38,180			35,041
Cost of professional services and other revenue		3,580			2,086			10,120			5,453

Total cost of revenue		16,504			13,777			48,300			40,494

Gross profit		22,983			24,612			67,512			71,147
Operating expenses: (1) (2)
Research and development		7,820			7,704			24,293			22,385
Sales and marketing		14,551			13,334			44,356			39,845
General and administrative		5,961			5,126			17,228			14,190
Merger-related		—			—			—			21

Total operating expenses		28,332			26,164			85,877			76,441

Loss from operations		(5,349	)		(1,552	)		(18,365	)		(5,294	)
Other income (expense), net		71			(5	)		523			(127	)

Loss before income taxes		(5,278	)		(1,557	)		(17,842	)		(5,421	)
Provision for income taxes		118			61			305			202

Net loss	$	(5,396	)	$	(1,618	)	$	(18,147	)	$	(5,623	)

Net loss per share - basic and diluted	$	(0.16	)	$	(0.05	)	$	(0.53	)	$	(0.17	)

Weighted-average number of common shares used in computing net loss per share		34,500,868			33,345,161			34,269,639			32,956,186

(1) Stock-based compensation included in above line items:
Cost of subscription and support revenue	$	117		$	94		$	308		$	204
Cost of professional services and other revenue		70			69			189			158
Research and development		384			372			1,132			942
Sales and marketing		690			651			1,953			1,630
General and administrative		557			495			1,712			1,331
(2) Amortization of acquired intangible assets included in above line items:
Cost of subscription and support revenue	$	508		$	507		$	1,523		$	1,523
Research and development		—			32			11			95
Sales and marketing		166			245			525			715


	September 30, 2017
Description	Contracted Maturity		Amortized Cost		Fair Market Value		Balance Per Balance Sheet
Cash		Demand	$	13,916	$	13,916	$	13,916
Money market funds		Demand		8,140		8,140		8,140

Total cash and cash equivalents			$	22,056	$	22,056	$	22,056


	December 31, 2016
Description	Contracted Maturity	Amortized Cost		Fair Market Value		Balance Per Balance Sheet
Cash	Demand	$	23,942	$	23,942	$	23,942
Money market funds	Demand		12,871		12,871		12,871

Total cash and cash equivalents		$	36,813	$	36,813	$	36,813


	September 30, 2017
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	8,140	$	—	$	—	$	8,140

Total assets	$	8,140	$	—	$	—	$	8,140


	December 31, 2016
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	12,871	$	—	$	—	$	12,871

Total assets	$	12,871	$	—	$	—	$	12,871


	Number of Shares			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value (1)
Outstanding at December 31, 2016		4,150,584		$	7.17
Granted		472,727			7.00
Exercised		(198,555	)		1.91			$	1,159
Canceled		(270,498	)		8.42

Outstanding at September 30, 2017		4,154,258		$	7.32		6.48	$	4,182

Exercisable at September 30, 2017		2,275,052		$	7.22		4.93	$	3,212


	Shares			Weighted Average Grant Date Fair Value
Unvested by December 31, 2016		1,902,577		$	7.84
Granted		1,154,473			6.91
Vested and issued		(415,586	)		7.64
Canceled		(229,030	)		8.02

Unvested by September 30, 2017		2,412,434		$	7.40

Cash	$	53
Accounts receivable and other assets		782
Identifiable intangible assets		4,382
Goodwill		13,936
Deferred revenue		(1,033	)
Deferred tax liabilities		(1,009	)
Other liabilities		(96	)

Total estimated purchase price	$	17,015


	Amount		Useful Life
Developed technology	$	4,200		6
Customer relationships		182		5

Total	$	4,382


Year Ending December 31,	Amount
2022	$	614
2023		736
2024		736
2025		736
2026		736
2027 and thereafter		824

Total	$	4,382


Balance as of January 1, 2022	$	60,902
Wicket acquisition		13,936

Balance as of March 31, 2022	$	74,838


	Three Months Ended September 30,
	2017					2016					Change
Revenue by Product Line	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
Premium	$	38,149		97	%	$	36,518		95	%	$	1,631			4	%
Volume		1,338		3			1,871		5			(533	)		(28	)

Total	$	39,487		100	%	$	38,389		100	%	$	1,098			3	%


	Nine Months Ended September 30,
	2017					2016					Change
Revenue by Product Line	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
Premium	$	111,505		96	%	$	105,899		95	%	$	5,606			5	%
Volume		4,307		4			5,742		5			(1,435	)		(25	)

Total	$	115,812		100	%	$	111,641		100	%	$	4,171			4	%


	Nine Months Ended September 30,
Condensed Consolidated Statements of Cash Flow Data	2017			2016
	(in thousands)
Purchases of property and equipment	$	(990	) $		(1,194	)
Depreciation and amortization		5,607			5,901
Cash flows (used in) provided by operating activities		(11,652	)		7,629
Cash flows used in investing activities		(3,081	)		(4,434	)
Cash flows (used in) provided by financing activities		(408	)		3,902


	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016
	Revenues			Expenses			Revenues			Expenses
Euro		6	%		2	%		7	%		2	%
British pound		7			6			7			6
Japanese Yen		10			3			11			5
Other		5			4			4			4
Total		28	%		15	%		29	%		17	%

	Nine Months Ended September 30, 2017						Nine Months Ended September 30, 2016
	Revenues			Expenses			Revenues			Expenses
Euro		6	%		1	%		7	%		2	%
British pound		7			6			7			6
Japanese Yen		10			4			10			4
Other		5			4			4			4
Total		28	%		15	%		28	%		16	%


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	Revenues			Expenses			Revenues			Expenses
Euro		7	%		0	%		7	%		0	%
British pound		5			6			6			6
Japanese Yen		14			2			14			3
Other		3			8			2			8

Total		29	%		16	%		29	%		17	%


Exhibits

3.1 (1)		Eleventh Amended and Restated Certificate of Incorporation.

3.2 (2)		Amended and RestatedBy-Laws.

4.1 (3)		Form of Common Stock certificate of the Registrant.

10.1**10.1 (4)		Employment Agreement, dated ~~September 20, 2017~~February 8, 2022 by and between the ~~Registrant~~Company and ~~David Plotkin.~~Marc DeBevoise

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1^		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

104*		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)


		BRIGHTCOVE INC. ~~(Registrant)~~
		(Registrant)

Date: ~~October 26, 2017~~April 27, 2022		By:	~~/s/ Andrew Feinberg~~

		~~Andrew Feinberg~~
	/s/ Marc DeBevoise

			Marc DeBevoise
			Chief Executive Officer
			(Principal Executive Officer)

Date: ~~October 26, 2017~~April 27, 2022		By:	~~/s/ Kevin R. Rhodes~~

		~~Kevin R. Rhodes~~
	/s/ Robert Noreck

			Robert Noreck
			Chief Financial Officer
			(Principal Financial Officer)