BCOV - Earnings call transcript Q1 2018

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Operator

Greetings and welcome to the Brightcove First Quarter 2018 Earnings Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Denyeau, Investor Relations. Mr. you, Thank Denyeau.

begin. You may

Brian Denyeau

With and Officer. Brightcove's call. welcome announced quarter afternoon, and Brightcove's Executive close Brightcove's our Jeff Rhodes, call Ray, Kevin Brightcove's and to we will Chief earnings Chief today. market Today, after results Andrew release XXXX on be the press are Feinberg, Good Officer; issued first Financial me President discussing in Officer; Chief the Operating

considered Litigation our During flow, strategy, and the ability to provisions make and new maintain our will pursuant our for that fiscal of the go-to-market XXXX, ability are ability statements forward-looking call, position, of the customers be our to statements on related made and quarter position our guidance to including profitability the business of and of cash may XXXX, execute to growth our full-year the Reform expand we Safe up-sell existing XXXX, to expected financial our second acquire concerning our Harbor to and Private Act leadership free and customers. positive Securities

could be actual subsequent our be of subject that materially reflected with risks results upon are views not may These often us of to reflect expectations. we only as any or similar identified anticipate, These should cause statements the indications future as expectations. date. of from words uncertainties statements representing and statements views as our expect, of today Forward-looking and to we variety as differ such a upcoming

most after showing www.brightcove.com. refer to issued course of the measures. our and SEC close by on to those other schedule be affect There website filings. found updated results non-GAAP other certain recently is factors at the could today, versus our refer actual risks on call, our press Also, our results, can and non-GAAP currently release material of in Report as please during reconciliation Form filed in Annual discussion market important which a we available GAAP financial today's a For will XX-K contained that

the agenda for And and provide terms on plan our will going quarter that, With me as review outlook and XXXX Kevin finish opportunity will quarter his the details company In today's results Andy. XXXX. market with additional Jeff our financial provide full-year forward. of current operations. turn will the our for as first well the to and for Andy update call, our summary call of a regarding results, outlook over our and second let

Andrew Feinberg

of all for Thank today. you, to and joining us Brian, you thanks

into welcome Board. quarter, Jeff we phase for and detail been go the us Company to two of to have experience He like our growth. has companies technology more through our tremendous has him now and I on I'd software excited leading to we forward about him Before CEO and Ray. Brightcove's leading weeks look are with new Jeff next

welcome, it's a working with Jeff you. So be pleasure to

Jeff Ray

Andy, thank happy here. be you. to I'm

Andrew Feinberg

Great.

quarter will to we share Brightcove delivered discuss XXXX. start strong report from highlights first a the I'm I Jeff, our from happy Before hear some to performance. and

guidance. delivered $XX.X adjusted guidance. the end which our the of high on also in expectations We and $XXX,XXX strong all our Taking of million from above all performance all which revenue exceeded exceeded we results end financial businesses results. delivered key look well quarter quarter quick first first Our financial our a high We a was metrics EBITDA at our positive geographies. saw of

several our Spring, are among others. LLC, such geographies. Hess renewal General agreements across drove both high News Our in and MBS with importantly, showed sets Motors, up-sell Corporation, running. XXX% first bookings retailer, will recurring Forbes previously business few wins dollar notable customer results Network Sony performance multi-year a There saw Pictures seen content changes good signed we media hit retention pleased operations We EMC in quarter, rate strength. region quarter UK, the In solution-based the by our and forward. and providers has in I up Harley-Davidson, have and early call Asian success the notable this across India, we in jewelry areas Europe as Entertainment, RLJ were out and IG, Corporation, are all Dunkin' Danish Automobile, selling particular, The and saw had great running Spotify, brands us team of for Production new exciting North new in groups ground approach a strategic good best sales consultative Discovery, was that the quarter success The performance Ten, Opel we have the that Pandora who and Brands, going we instituting strong American more agreements team. SoftBank, particularly customer point. sales we years. greater our made the from several bookings We had head Media had

new the leadership the have year, region brought past position success. that the has go-to-market to us sales and personnel significant for made Over better we changes

the first positive region, it that is indication maturing is performance we on the quarter still team its in track. a are the we right believe While in the

North new which quarter We with of the sell good activity. in also activity up had of and had marketing logo quarter and a America. mix the our enterprise We a were strong business, digital breadth in in particularly pleased

seeing we are the good across organization We realizing past the we improvements and now of the have the in benefits in made team. productivity are sales positive that this investments

region evaluating one introduction dollar companies, Japan transaction largest a win continue a and off bake had A one with our particularly a was platform to enterprise team communications. of This single in businesses. exciting conducting against to a internal for quarter. SVOD across new auto three-year its identified last multi-million us standardize previously the world's we segment which the looking deal for create had a two in Asia customer Pacific our years. of run for our feature customer had number innovative primary OTT social used ability It employee teams experience. this Brightcove After other including exceptional chose and segments innovation offerings comprehensive with some its a One, and from few existing tools, business in whom our on of customer private we the was capturing business, is and succeed ongoing used of are that which growth and not Our excellent exciting our sits, And This organization gallery and particularly to support has to success of did YouTube rich integrated but and highly of over reasons. two, relationship limited reasons. this our our customer so competitors, in worldwide win exciting Brightcove. a differentiated the an its continual in

First, the a will as shows EVS sign it second, This enterprise large can deals use validates the compelling increasingly in example cases the are only that engagement among time. the enterprise is video and significant improved market. grow enable our and Enterprises that across medium recognizing opportunity opportunity a to land of performance the opportunity we And for internal organization. great expand which over believe and this transaction enterprises, solution.

our we long We marketing against enterprise broadest sustainable purpose competitors advantage. of digital a most is built effective of list for and have the We win portfolio solutions. video fact that a this competitive were demonstration believe is a that cases. The product use strength is to of good able the

satisfying entire key which rate which This in larger here renewal. Another in be business quarter, with quarter time in of would and strength highlight from rate of through the cuts forward, which sell our XXX% up Overall, to of return the is been it that we've bookings process expect reset where higher a to Brightcove to of stickier consistent recurring as strategy final dollar quarter was media the at media or our pleased reflects has be above a base two of we customers. levels we retention on profit any highest added am contribution our very in a us, a this XX% today. across the terrific and is XX% growth. at healthier retention our pricing the that now in revenue it more part value renewals recurring commodity years. double-digit particularly success retention driven dollar a I a basis by was rates and our behind say of than our proud solid our have to historical element business. sustainable among I'm working going completed stands company This to the it revenue and With but now

technical content employees. and use complex We deployed to monetize their customers innovative customers can captivate their with audiences premium drive video technology market problems, solves better leading built engagement so and have to that and to

to advisors share many and their I've to to In operating a last we proud what the over our reliably growth. that the place to growing right phase see power these than world, to the them next we've have under we the service through scale team we helping their right am the and accomplished. dependably. are products, tell three and what become massive deploy leading at of people, I Jeff's now strategy and excited trusted I'm of right ever leadership. have am enjoyed company stories We a markets around video customers strategies harness messages. build global and to and the to of our quarters, more Company confident do I in take will the the

call the Jeff. I that, will with over So hand to now

Jeff Ray

for your excited weeks the aspects to operations, far. phase impressed for the our leadership been into you learned about all incredibly kind two I'm now next have and and its Thank with for of growth. the and and past Company so attention Company paying our over really Brightcove to I've team words Andy months. what here learning have meeting I'm joined I've and been lead the nine of

to aspects the easy if a will and that this global Ventyx, believe preaching the would fees a all years success executive of have Customer me private time I'm spend will attracted Ellucian, that with video at In renewal experience both focused we significant have valued and ensure than owned million as businesses the priorities powerful the like for the a talent I excess about at Brightcove everything focus drove strongly to organization the what experience, more held as same Brightcove. have that that example software to ABB community. enterprise of was opportunity Brightcove, $X.X specific is of roles products are most to to grateful spent I've be investment the those prior creation success senior initial to of and process customer successful be community to worked and number different From and our with evident will on we customers great in customers we CEO and So at the and was and I exceptional market less a the few in a that highly in my with customers meetings, higher fortunate what principle we customer conversations leading for I easy will we customer great business with customers for SolidWorks, it on do aligned and ERP delivering we that heart $XXX at billion, business for global perspective, value focus at sales led shareholders. an first be built who sales revenues put transaction real my relentless and teams speaking by bring our be XX technologies the and of people will Brightcove Systèmes by that I for recently appropriate talking make provider we use. value a as across organizing Dassault are minutes it's possible. equity obsessing Brightcove the forefront industries, and my I and products have is positions business recent world-class then on education we our Brightcove that the do for revolution. experience. serving a to messaging that and to make background CEO. my outline ensuring Brightcove of a our

increase be focus my With and will that leadership. on conference CEO, a a to we're faster drive which annual This also in was promises year. our to and go that more profitable program As growth. we can a XX% a year, product to compared record PLAY attendees and In is best few yet our year leveraging talent Boston. hosting user expecting market last weeks PLAY in be

business the Our conference premier innovation performance. play on as industry itself can learn Brightcove has has improve where their conference the in established to about customers been video working that the

and how forward am interact with engage to their as meet Just customers one is let solutions with to I PLAY engaging and another from are add using video our how performance over value of can and even in deliver experiences. to coming Brightcove I greater to with turn most value. excited results designed driving let learn improved learn With the are I consumer investment community many to important, in others months. what you Kevin? Kevin to to through look of am customers and our needs about Brightcove Brightcove call shareholders. the our meeting walk the in that delivering to committed me

Kevin Rhodes

and afternoon Thank good you, Jeff, everyone.

continue above in the further the end strong from start our strong begin more, high in million during during From generated of represented $XX.X million, will of Professional we year-ago quarter was and up was breaking was revenue was enterprise and and quarter. revenue all XXXX. geographic revenue We was our and and X%. down period. revenue with little performance of and revenue vertical our the XX% then review our $XX.X quarter our Europe and to revenue revenue, saw our Breaking deals quarter the and subscription XX% a down As XXXX. we outlook won the our quarter in during more of regions. Media quarter first results million quarter with our of will a be services generated $X.X Andy across consistent million North mentioned basis, of internationally On a support in and the large I Japan strong XX% business represented generated several revenue business as XX% represented perspective, the market second quarter. XX% XX% in guidance a the delivered the Japan XX% international quarter. our us which the full-year Asia-Pac with $XX.X I revenue remaining for Brightcove first a the our revenue markets finish for to Asia-Pac the while of volume detailed business Total America first year-ago range.

Let me basis. on that metrics now a turn to supplemental share we quarterly the

the strong dollar which of rate our during first target recurring well range was retention low-to-mid-XXs the below the by was activity was in quarter XXX%, up-sell quarter. and Our driven

mentioned we Andy commodity in are pricing through As now business. the reset our Media

dollar that least going retention be will historical are to consistently confident low-to-mid are our We able deliver we that range recurring forward. at rates within XX%

quarter count Our were was at the classified which end the customers. X,XXX, of as X,XXX first customer of premium

Looking at our ARPU.

premium customer pricing and $XX,XXX, premium up year-over-year the was Within customer in base, our annualized which revenue our entry-level revenue. for customers, per which $X,XXX annualized excludes XX% starter was averaged

results was million, million, GAAP Looking $X.XX our loss $X.X the profit a was for $XX basis, share at and our was on our quarter. operating loss per gross

to Turning non-GAAP our results.

that generated XX%. and of XX% in first a loss million compared shares was beat in profit in end management timing period non-GAAP adjusted the Non-GAAP quarter operations as likely margin XXXX. in compared and $X.XX the million XXXX high the This and profit Our compared the support was non-GAAP range will million $X.X gross million income to margin loss revenue the million $XX.X share in outstanding. approximately of year-ago loss gross quarter. of to discretionary a strong per the outstanding revenue average period. a weighted period first the was $XX,XXX year-ago well and year-ago upside the $XX weighted $XXX,XXX average for based per of XX% represented of $X.X quarter. our $X.XX share Subscription a later represented as we fourth achieved revenue $XX.X driven the EBITDA to The a and was the EBITDA in in quarter. on compares that from by million part of on $XX.X first of to in quarter loss of operations continued quarter Non-GAAP our above guidance was in happen million quarter, in expense Adjusted the from investments the gross shares

and cash and quarter equivalents balance We flow. to of sheet ended the the $XX.X cash with Turning million. cash

operations cash we capitalized first software. After expenditures was cash free in taking $X.X capital the negative During million internal-use flow and from generated account into flow in and $XXX,XXX quarter, $XXX,XXX.

like from related Before to that I over It's ASC expected to first adoption to we quarter. its for our on during important the provide XXX revenue. perspective you turn of to change the to our ASC The account our guidance, will commentary be the is for expected immaterial. primarily I'd how XXX note impact to Brightcove revenue be topline

invoiced. be customers to We be to earlier any date may occur as and they based our leave will we do revenue. such future that judgment revenue our required and periods expected overages to need involves on be impact over material quarter-to-quarter on would there than recognized any estimate not the historical that will But one This a anticipated from overages estimates. and making actually to these be analysis

be payments Any case life over period our This contract for contracts to Second, million capitalized amortized customer our period. in earnings related impact average and positive will customer our the approximately years. contracts commission $X over be XX-month commissions all customer existing XXXX. five have on typical will will a our amortized in new of a now

into factored for guidance already and full-year finish was the providing second our impact to by this quarter now guidance. XXXX. our like previous I'd However,

Non-GAAP be based is in million $XXX,XXX of $X.XX loss weighted $XX.X range to EBITDA and outstanding. average share net million million. $X.XX $XX.X shares a $X.X on to of to For expect $X.X services we $X.X profitability loss professional the quarter million including revenue. approximately to to million second we million $XX.X non-GAAP perspective a of targeting From are a revenue $X.X of expected of adjusted loss per million operating

more other our play coming including during reminder quarter, quarter marketing the we any on than conference. second a spend As

expect to includes million revenue $XXX and in XXXX be a million. service of professional to outlook range $XXX million we for Turning approximately $XX.X to the full-year This revenue.

operating operating In and expecting million million. adjusted of of $X.X profitability loss income we of terms EBITDA $X.X to non-GAAP $X.X of non-GAAP $X.X million to million

we outstanding. expect $X.XX net per of based non-GAAP weighted addition, share million average on share shares net $X.XX to per In loss income of $XX.X

we cash to questions. of flow million I'll take to For free begin we that, $X range well now ready full-year With cash Operator, $X your million. expect in Q&A. a are

Operator

We'll conducting question session. Tom from a Stifel. ahead. Thank The question-and-answer now comes first go you. [Operator Roderick of be Please Instructions]

Parker Lane

Tom. you than Thanks Lane that mean based Kevin, the Hi. you end ramp for I for in for from I the profitability, provided if what This the making so the through is guidance a what question. or the that wonder are would the more leverage could quarter? you actually the Parker for coming up sense coming we second year of rest taking during this first on quarter you year? you, the see in through to where one investments the and expecting of of give

Kevin Rhodes

Sure.

that the marketing that reminder of second have quarter the terms that quick Just largest we a in in investments. is quarter

when so through do very we did it conference quarter EBITDA. And pleased that's in see were events. a play what few ramping of of we obviously the with in terms We that other We year. the and have end our marking that the first

stronger as and what to those strong then in going ramps some of likely EBITDA QX. QX. be QX think QX, bit little back in quarter performance in I investment here we QX marketing you're will than a QX a it So is make see

Parker Lane

could wonder the you're model? quarter Thanks. of really if about anything retention about you course outperformance call some then overages understanding And that and commodity jump an contribution the in getting give color from in you retention, sequential that the you on the in so obviously past sizable subscription revenue and it. saw I Got

Kevin Rhodes

our customer the obviously that. was both and was was. existing all sell bookings, as was well booking retention It quarter just contracts. The up very guidance of drive felt good helped great. retention in quarter positive as activity some the what retention a in general revenue We of in about above terms in And beyond regional good quarter on our Sure. both of

Parker Lane

for coming And out quarter? the overages just to clarify, what the

Kevin Rhodes

Sure. $X.X Overages in million. quarter were the

Parker Lane

Great. Thank you.

Operator

Steven question next Please The ahead. with Dougherty. comes go from Frankel

Steven Frankel

afternoon. Good

could reiterating about roughly release and the on growth give bookings for a full-year for guidance in your full-year? you was the color bookings growth, talk be you to maybe more us little QX expected the what you in So where

Kevin Rhodes

we the said in had that a the are the we quarter when expecting quarter February did don't out in for that very first the growth was, but of with beginning Well we We quarter. you into that quarter exactly we pleased to booking at we full-year. We the get double-digit that tell want were that and in did have. can year what achieve activity

Steven Frankel

customers a Okay. gross thing realized to professional were key one are margin there so path positive it kind business? but at last that do get services business is you it's to a margin. level a today, see large good I and year to point of launching a a professional that to running those services And gross the breakeven to Is at able

Jeff Ray

that They that those there. very a had profile the bit, customers. Steve side of overall but were we Yes, that a mentioned but money the us investment solid still little is we mode last particular positive margin margins that couple and making effectively to get back the actually OTT the about nice thought plan large very breakeven, felt still they even subscription into had running on not on I of deals. to call we for had

services are soon then of going we be to and here those side. into go positive to some the services back very We expect watching

Steven Frankel

more customers to adopt to Okay on and update product? progress maybe a the getting of live one, last an

Jeff Ray

Andy, want Sure. cover to that? you

Andrew Feinberg

Sure.

So opportunity we've we as a is before. believe that live you terrific told

well as continue see making that live our are bullish capture so the excited of our ability to very the those opportunities continue development growth we're product progress that our in be with for life opportunity excited complete to customers to and on we stack. opportunity. were about the And We and about

Steven Frankel

of base alive today. percentage marketing customer the enterprise/digital what maybe And has

Andrew Feinberg

growing. small a percentage, but It's

Steven Frankel

small kind more adopt they actually live then live you. if package level hours thank we buy more Okay, the any of and in they that And them et of of can that have cetera? a then included at out gate of

Jeff Ray

the quarter in we out remember just And rolled our for all enterprise past suites.

Operator

of comes question Glen ahead. Ladenburg Mattson Please go next Thalmann. The from

Glen Mattson

Hi, afternoon. good

a First changes kind question the been anticipate of significant the kind thoughts your couple you make any for here? can any sense us in and do here, as that perhaps for your go-to-market weeks but Jeff, I about seat you the know give assessment you of you've stuff, only of

Jeff Ray

Thanks. It would about kind to be of premature initiatives. talk any specific

me end great to us really that call opportunities That what takes of I predictability seamless business. puts For see focus the more for at on - I execution.

The customer we're thing second going success. to be paying is attention to

decisions on becomes ultimately As can then earlier, in time breaker avenues I win said for interest business. in our for the The will that what's looking tie also any customer. be best growth be drive new the really based the the and we'll customer you over

Glen Mattson

That's it one things the EBITDA things thanks. we the of drove helpful. reference discretionary that investments, was Kevin, what of Okay, kind there? you of performance timing mentioned in

Kevin Rhodes

second but we for So marketing the in spend of would spend that year, that months would even last didn't may in some like the the QX, of nine of the year. the spend have be we discretionary instance half we maybe investments where

Glen Mattson

market for personnel guess? additional is I for Okay, there that initiatives

Jeff Ray

that say would I anything for more else. marketing initiatives

Glen Mattson

it at in a point? or base - is one their guys where still kind or left you then have more is - or the customer bankrupt when couple is or move this that diverse think And whatever on and concentration of a frequently bit and basis XX platform quarter-to-quarter the top customer that we past customer something case a worry talk we in are about about to you days a

Andrew Feinberg

we're Look more stable our past we much where Glen, hi. worry about is top But substantially improved including, our feel all in its from Certainly, and we've customers always our position. XX been Andy, especially a of the customer customers. we in concentration

Glen Mattson

Okay. Thanks.

that's it So Thanks. me for guys.

Operator

comes next Sameet question B. go ahead. Please of Sinha from The FBR. Riley

Sameet Sinha

Yes. of questions Thank here. you. Couple

it in my can How And for online bookings use first, throughout the cases the above? line continues to and year products follow-up dynamic of - products, the continues terms we have see a gross about in media think the do do in as you is I And as grow? your of landscape add So business? about as you you expanding growth question talk should be that to progresses then trending second to the more that subscription Kevin, margin question. need kind

Kevin Rhodes

gross about I'll cover talk the subscription Andy allow products. margin the and

terms In of area have we continued gross to an that subscription at. margin, it's look

to we have. costs try and the the We that organization, optimize across continue infrastructure

out As we've cloud in to centers move we've into the data of infrastructure. and tried talked past, the

continued do make to we've there. So and progress that good

We continue to look our some of that well products to be technologies of over that at improvement were that those the have that new some those, time. we help encoding, margin continue adopted delivery customers as context continue they of by or dynamic all will to our

mind continue it. So look it's to something and of at at the top we

Andrew Feinberg

I'll - guess talk And I to can I about response your product question.

add functionality the can it's set There market. dynamic think we the and That are said and a features As We cases value very I have in market various time. most said use that in of that and the my products remarks, the in functionality. all adding believe we features to by we really expanding complete sectors. continue

you'll see about roadmap some of as hear come We we that hope it. are and play they and excited about our

Sameet Sinha

would you question when have. And you the product, XX? the referenced launched invested into final question, that be, is had Okay. Why a the would so internal would you this they be be for? have the they they that media is think would looking infrastructure billions platform that how is One so the follow-up different now? targeting One you this live I and couple as from about because that version different that the are like confident previously full use do to companies back, What redundancy or large of you in kind of years adoptions?

Andrew Feinberg

questions you've in there. So bunch got of a

try me out if Let of part some may. them I to

product, to expanded on demanding. media recently continuing product exciting true complete more launched and other of we've is interface and user the there that First are functionalities is customers Certainly our all, which variety a stack are rollout which that's side. we our live and more of much features

live, company primary case about is did developed stack communications excited our them upon not enterprise as we're previously. distinct the those solution and lot offer Those a use side, not relying are roll having live, and technologies very internal redundancy. On Customers which a a we as there required out. live of just

I me your answered think if I've some But let questions. I've know. missed

Sameet Sinha

you much. Thank perfect. That's very No.

Andrew Feinberg

Thank you.

Operator

The Northland Latimore Please Capital who's next Mike go comes from with question ahead. Markets.

Mike Latimore

nice Great. Very quarter. Thanks.

Jeff Ray

a Thanks lot.

Mike Latimore

is - customer the of percent back revenue your just is on diversity, revenue? a what Who as largest

Kevin Rhodes

X%.

Mike Latimore

on enterprise proportions pipeline or see the category thinking looking is faster? of you for And one pipeline - the or in about did kind business, those growing just kind then of of one growth media similar categories two and digital at of as in

Andrew Feinberg

and about strong excited both They're what Both we with really seeing in grew sectors. double-digits. We're we're are happy both. both

Mike Latimore

- for internal employee I is that up part that seems mean Great. you new for of that large I I oil said communications a how Okay. open sort pipeline of you as segment the with market feature? particular this guess think deal, guys.

Jeff Ray

means, communications I we're And looks auto real So any that both our successful you're as remarks especially and a certainly solution, sector in a spaces sector. referring future this us we about just we've win that's clear, the external as a but this the we nature brand by marketing so very with valuation bullish validation of competitive to internal not view It's to given previously. think new in of what very like for been activities. as large both our And well be the manufacturer. transaction referenced in

Mike Latimore

kind And force to at grow sales sales just this then far so terms force here of of the in good. here? to expect Okay, point the

Jeff Ray

strategic the very being which we're we're about making. choices, So

and believe do sales in done of past made effectiveness get a As we've continue hard to were where in productivity regions, areas, invest force and several very in the sort before over done fact look effectiveness and that efficiency, We're - make seeing additional to it going appropriate at enhanced we opportunities I've to in you recall and to choices productivity, quarters on evaluation. investment. were we've meaningful we return the and very it's lie insisting those

Mike Latimore

you. thank Okay,

Jeff Ray

you. Thank

Operator

back There are to floor the time. would comments. this Jeff no turn Ray further questions like for closing I to over any at

Jeff Ray

this products some highlighting using seeing encourage products problems. you from a a our you All they're and to quarter down and their able conference Thank now. at way going thank to be we land days of It's join best, and also the PLAY was look the you'll of weeks. customers Well, but innovation, from in lot everyone. and of solve fun sitting bye. biggest It you our it few let's again XX combination thank you did be of good great how Again our I all with to you. a us to really hear to forward

Operator

This concludes today's teleconference.

Thank time. this at lines your for your connect just you may participation. You

Brightcove (BCOV) 26 Apr 182018 Q1 Earnings call transcript