☒ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
March 31, 2022
☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
290 Congress
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 |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||
Emerging growth company | ☐ |
☐
BRIGHTCOVE INC.
34 4 5 6 7 68 79 1417 28 29 29 29 29 30 31 32 323233333435
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 | ||||||
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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 | ||||||
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Total assets | $ | 125,209 | $ | 136,424 | ||||
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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 | ||||||
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Total current liabilities | 57,768 | 56,493 | ||||||
Deferred revenue, net of current portion | 166 | 91 | ||||||
Other liabilities | 1,253 | 1,644 | ||||||
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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 | ) | ||||
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Total stockholders’ equity | 66,022 | 78,196 | ||||||
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Total liabilities and stockholders’ equity | $ | 125,209 | $ | 136,424 | ||||
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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 | 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 | ||||
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 | ||||||||||||
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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 | ||||||||||||
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Total cost of revenue | 16,504 | 13,777 | 48,300 | 40,494 | ||||||||||||
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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 | ||||||||||||
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Total operating expenses | 28,332 | 26,164 | 85,877 | 76,441 | ||||||||||||
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Loss from operations | (5,349 | ) | (1,552 | ) | (18,365 | ) | (5,294 | ) | ||||||||
Other income (expense), net | 71 | (5 | ) | 523 | (127 | ) | ||||||||||
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Loss before income taxes | (5,278 | ) | (1,557 | ) | (17,842 | ) | (5,421 | ) | ||||||||
Provision for income taxes | 118 | 61 | 305 | 202 | ||||||||||||
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Net loss | $ | (5,396 | ) | $ | (1,618 | ) | $ | (18,147 | ) | $ | (5,623 | ) | ||||
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Net loss per share - basic and diluted | $ | (0.16 | ) | $ | (0.05 | ) | $ | (0.53 | ) | $ | (0.17 | ) | ||||
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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 | ||||||||||||
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(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 |
(Loss) Income
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Net loss | $ | (5,396 | ) | $ | (1,618 | ) | $ | (18,147 | ) | $ | (5,623 | ) | ||||
Other comprehensive income: | ||||||||||||||||
Foreign currency translation adjustments | 72 | (13 | ) | 329 | (244 | ) | ||||||||||
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Comprehensive loss | $ | (5,324 | ) | $ | (1,631 | ) | $ | (17,818 | ) | $ | (5,867 | ) | ||||
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Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Net (loss) income | $ | (1,637 | ) | $ | 5,130 | |||
Other comprehensive income: | ||||||||
Foreign currency translation adjustments | (243 | ) | (209 | ) | ||||
Comprehensive (loss) income | $ | (1,880 | ) | $ | 4,921 | |||
Stockholders’ Equity
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 | ||||||
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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 | ) | ||||
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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 | ) | ||||
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Net cash (used in) provided by financing activities | (408 | ) | 3,902 | |||||
Effect of exchange rate changes on cash and cash equivalents | 384 | 458 | ||||||
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Net (decrease) increase in cash and cash equivalents | (14,757 | ) | 7,555 | |||||
Cash and cash equivalents at beginning of period | 36,813 | 27,637 | ||||||
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Cash and cash equivalents at end of period | $ | 22,056 | $ | 35,192 | ||||
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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 |
2021.
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 | ||
The accompanying condensedthe Company’s consolidated financial statements reflectwas not material.
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 |
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 exposeexpects 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.
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, andre-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.
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 | ||||||||||||
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Total cash and cash equivalents | $ | 22,056 | $ | 22,056 | $ | 22,056 | ||||||||||
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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 | ||||||||
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 | ||||||||||
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Total cash and cash equivalents | $ | 36,813 | $ | 36,813 | $ | 36,813 | ||||||||
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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 | ||||||||
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 |
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 inputdilutive (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 | ||||||||
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Total assets | $ | 8,140 | $ | — | $ | — | $ | 8,140 | ||||||||
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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 | ||||||||
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Total assets | $ | 12,871 | $ | — | $ | — | $ | 12,871 | ||||||||
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7.the periods indicated because such securities are anti-
Three Months Ended March 31, | ||||||||
(shares in thousands) | 2022 | 2021 | ||||||
Options outstanding | 1,607 | 34 | ||||||
Restricted stock units outstanding | 4,589 | 68 |
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.
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 |
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 onincluded 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 deficit2022 and additionalpaid-in-capital by $197.
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 | |||||
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 | ||||||||||
|
|
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 | ||||||||||
(1) | The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on |
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 | |||||||||||||||
December 31, 2016. Based on the level of historical income in Japan and future projections, the Companythis time, management believes it is probable itmore likely than not that the Company will not realize the benefits of its futurethese deductible differences. As such,
9.assets.
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.
10.
covenants, or the occurrence of an event of default, could permit the lenderlenders 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.
On DecemberMarch 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.
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 | ||||
2021.
12. Recently Issued
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 goodscommon stock of the Company and cash, (“Wicket Acquisition”). At the closing, the Company issued 212,507
In August 2015,acquisition. The purchase price has been allocated to the FASB issued ASU2015-14,Revenuetangible 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): Deferralthe information presented in these unaudited condensed consolidated financial statements.
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 | ||
The Company intends to adopt ASU2014-09 on January 1, 2018. The Company has elected to apply the modified retrospective method of adoption.
In February 2016, the FASB issued ASU2016-02,Leases (Topic 842), Amendments to the FASB Accounting Standards Codification, which replaces the existing guidance for leases. ASU2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, lease arrangements exceeding a twelve month term must now be recognized as assets and liabilities on the balance sheeteffect of the lessee. Under ASU2016-02, aright-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. This guidance is effective for annual and interim periods beginning after December 15, 2018 and requires retrospective application. The Company is currently assessing the impact that adopting ASU2016-02 will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU2016-15,Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which reduces the diversity in how certain transactions are classified in the statement of cash flows. ASU2016-15 is effective for public companies for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The guidance requires application using a retrospective transition method. The adoption of ASU2016-15acquisition is not expectedmaterial to have a material effect on the Company’s consolidated financial statements or disclosures.
In November 2016,results. Revenue and earnings attributable to acquired operations since the FASB issued ASU2016-18,Statementdate of Cash Flows (Topic 230): Restricted Cash, which requires an entity to reconcile and explain the period-over-period changeacquisition are included in total cash, cash equivalents and restricted cash within its statement of cash flows. ASU2016-18 is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. A reporting entity must apply the amendments in ASU2016-18 using a full retrospective approach. The adoption of ASU2016-18 is not expected to have a material effect on the Company’s consolidated financial statements or disclosures.
of operations.
Balance as of January 1, 2022 | $ | 60,902 | ||
Wicket acquisition | 13,936 | |||
Balance as of March 31, 2022 | $ | 74,838 | ||
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 Form10-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 Form10-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.
Brightcove Video Cloud, or
videos; and (4) Brightcove CorpTV
respectively.
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 |
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 4,647Zencoder customers of which 2,666 used our volume offeringson
18 R ecurring Dollar Retention Rate. |
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.
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
Once is
Perform is offered to customers on a subscription basis. Customer arrangements are typically contracts, which include a subscription to Perform, basic support and apre-determined amount
Lift is offered to customers on a subscription basis. Customer arrangements are typically one year contracts, which include a subscription to Lift, basic support and apre-determined amount of video streams. We also offer gold support or platinum support to our Lift customers for an additional fee, which includes extended phone support. The pricing for Lift is based on the number of users, accounts and usage, which is comprised of video streams. 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.
All Once, Perform,Brightcove Campaign, Brightcove Live, SSAI, Player, Virtual Events Experience, Video Marketing Suite, and Enterprise Video Suite Lift and OTT Flow customers are considered premium customers.
operating activities listed above.
(Expense) Income, net
losses.
liabilities in purchase accounting that serve as a source of income for our pre-existing deferred tax assets.
we continue to expand our international operations.
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.
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 |
2021
costs of delivery.
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 DecemberMarch 31, 2016, due primarily to $11.7 million of cash used2021. The increase in operating activities, $2.1expenses 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.
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 | )% | |||||||||||
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 | % | ||||||||||||
|
|
|
|
|
|
|
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In
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 | % | |||||||||||
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 | )% | |||||||||||
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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 | ) | ||||||||||||||||
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International subtotal | 16,761 | 42 | 15,143 | 39 | 1,618 | 11 | ||||||||||||||||||
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Total | $ | 39,487 | 100 | % | $ | 38,389 | 100 | % | $ | 1,098 | 3 | % | ||||||||||||
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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 | )% | |||||||||||
In
prior year period of comparison.
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 | ||||||||||||||||||
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Total | $ | 16,504 | 42 | % | $ | 13,777 | 36 | % | $ | 2,727 | 20 | % | ||||||||||||
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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 | )% | |||||||||||
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 increaseddecreased by $1.5 million, or 72%43%, compared to the three months ended September 30, 2016.March 31, 2021. This increasedecrease corresponds to the increase in55% 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.
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 | ) | ||||||||||||||
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Total | $ | 22,983 | 58 | % | $ | 24,612 | 64 | % | $ | (1,629 | ) | (7 | )% | |||||||||||
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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 | )% | |||||||||||
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 | % | ||||||||||||
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 | ||||||||||||||||||
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Total | $ | 28,332 | 72 | % | $ | 26,164 | 68 | % | $ | 2,168 | 8 | % | ||||||||||||
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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, 2016March 31, 2021, primarily due to increasesan increase in computer maintenanceemployee-related, contractor, and support and employee-relatedrent 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 periodinvest in these activities to period, however, due to the timing of marketing programs.
support revenue growth.
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 | ) | ||||||||||||||||
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Total | $ | 71 | — | % | $ | (5 | ) | — | % | $ | 76 | (1520 | )% | |||||||||||
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The interestWicket Acquisition. There was no merger-related expense duringin the three months ended September 30, 2017March 31, 2021.
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.
Overviewexpense 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 | ) | ||||||||||||||||
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Total | $ | 115,812 | 100 | % | $ | 111,641 | 100 | % | $ | 4,171 | 4 | % | ||||||||||||
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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 | ||||||||||||||||||
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Total | $ | 115,812 | 100 | % | $ | 111,641 | 100 | % | $ | 4,171 | 4 | % | ||||||||||||
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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 | )% | |||||||||||
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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 | ) | ||||||||||||||||
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International subtotal | 47,607 | 41 | 42,728 | 38 | 4,879 | 11 | ||||||||||||||||||
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Total | $ | 115,812 | 100 | % | $ | 111,641 | 100 | % | $ | 4,171 | 4 | % | ||||||||||||
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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.
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 | ||||||||||||||||||
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Total | $ | 48,300 | 42 | % | $ | 40,494 | 36 | % | $ | 7,806 | 19 | % | ||||||||||||
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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 | ) | ||||||||||||||
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Total | $ | 67,512 | 58 | % | $ | 71,147 | 64 | % | $ | (3,635 | ) | (5 | )% | |||||||||||
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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 mixrelease 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 | ) | ||||||||||||||||
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Total | $ | 85,877 | 74 | % | $ | 76,441 | 68 | % | $ | 9,436 | 12 | % | ||||||||||||
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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 $1.9Wicket Acquisition, which was a
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 intax-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 | ) | ||||||||||||||||
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Total | $ | 523 | — | % | $ | (127 | ) | — | % | $ | 650 | (512 | )% | |||||||||||
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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 | % | ||||||||||||
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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.
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 |
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 |
decreases in working capital.
options.
facility.
On DecemberMarch 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 purchaseLine 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.
2021.
In July 2017, we entered into an agreement with anon-cancelable commitment effective July 1, 2017, primarily for content delivery and network storage service, with obligations of $2.5 million through September 30, 2018. In September 2017, we amended this agreement effective September 1, 2017 with total obligations of $2.6 million through January 31, 2019. As of September 30, 2017, our obligation was $2.6 million in connection with this agreement.
In August 2017, we entered into an agreement to lease a new office space in London with anon-cancelable commitment with obligations of $7.0 million through December 31, 2024.
2021.
Quantitative Market volatility resulting from the
when needed.
Three Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Revenues generated in locations outside the United States | 46 | % | 43 | % | ||||
Revenues in currencies other than the United States dollar (1) | 28 | % | 29 | % | ||||
Expenses in currencies other than the United States dollar (1) | 15 | % | 17 | % | ||||
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Revenues generated in locations outside the United States | 45 | % | 42 | % | ||||
Revenues in currencies other than the United States dollar (1) | 28 | % | 28 | % | ||||
Expenses in currencies other than the United States dollar (1) | 15 | % | 16 | % |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenues generated in locations outside the United States | 48 | % | 48 | % | ||||
Revenues in currencies other than the United States dollar (1) | 29 | % | 29 | % | ||||
Expenses in currencies other than the United States dollar (1) | 16 | % | 17 | % |
(1) | Percentage of revenues and expenses denominated in foreign currency for the three ended March 31, 2022 and |
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 | % |
investment.
March 31, 2022.
expense.
Risk
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.
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.
There
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, itmeasures that could be viewed negativelytaken by our customersthe Federal Reserve and shareholdersother 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.
(1) | Filed as Exhibit 3.2 to Amendment No. 5 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference. |
(2) | Filed as Exhibit 3.3 to Amendment No. 5 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference. |
(3) | Filed as Exhibit 4.1 to Amendment No. 5 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference. |
(4) | Filed as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 9, 2022, and incorporated herein by reference. |
^ | Furnished herewith. |
BRIGHTCOVE INC.
| ||||||
(Registrant) | ||||||
Date: | By: | |||||
/s/ Marc DeBevoise | ||||||
Marc DeBevoise | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: | By: | |||||
/s/ Robert Noreck | ||||||
Robert Noreck | ||||||
Chief Financial Officer | ||||||
(Principal Financial Officer) |
35