BCOV - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to the Brightcove Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Brian Denyeau. you. Thank

begin. may You

Brian Denyeau

the welcome Financial be second in discussing after Rob me release and Chief Ray, call. Officer; Executive our XXXX Today, issued and on With close. we'll the Brightcove's market are to afternoon, Jeff quarter Brightcove's Chief Brightcove's Noreck, earnings press call Officer. Good results announced

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

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

other as in results, report our most and annual material refer discussion recently a SEC by factors and filings. could contained updated Form our risks of important our XX-K on please For that affect to those other actual filed

today, results to versus can today's financial be in call, Also, reconciliation There's website available release market our non-GAAP our found during certain press non-GAAP in schedule close www.brightcove.com. after measures. showing issued the we at will which a of refer GAAP currently course

operations second XXXX and agenda will outlook additional financial of strategy. our an a Jeff the well of our Rob for regarding as will as our review XXXX. of finish today's results, quarter a our update results, summary quarter terms our review third on of year call, the with and In full the provide for details

me that, over to the Jeff. let With call turn

Jeff Ray

of today our Brian. results. progress joining made And you pleased to the for our discuss all with second I'm strategic us to thanks during quarter quarter on Thanks, initiatives. the

we're more are to actions There's taking enable strategy the in pursuing do, that will in profitability successful. consistent validated be we're will future. to sustainable We deliver Brightcove confident that revenue work growth but clearly increasingly XXXX and significant, and the the we're

of financial end results the Let's up high start above guidance. million, year-over-year of briefly by guidance, our was above and high and adjusted EBITDA million, revenue of second delivered was reviewing We X.X negative our end XX% the which for quarter. $XX.X the quarter our

moments a video I'd well detail as on providing the initiatives, online more business. strategic made Ooyala's like the spend progress as update of to the about our acquisition we've few platform on an

shared with We're generation. selling target our teams. that we on that encouraged have and by sales and retention customers. As is you discussed call, teams, a another one a the focus response new on model Last exclusive key specialized can focus sales with from building we positive business introduced effectively all an predictable on quarter, prior customers

example base. larger A activity into transactions, progress quarter great the is as which Europe, a materially, as its six install primarily by well we grew size a our overall figure number best in material saw we're of a And years. increase the quarter, healthy result, wins. second mix of of in making upsell had land the in including in As the driven transactions, deal

focused opportunity to sales change sales this strategies. into has these new, more talent more recent the of is while midst such talent provided implement team. attracted business. to implementing a have This credit deliver in in changes sales the the To of strong an results With our leadership, the we quickly

an will discuss also streamed and significant where Best more show. had a we Besides had NAB at in We the XXXX eventful the a received eighth in and award from I NAB Conference Annual for that productive presence at detail, NAB Show our presented Live hosting technology year the we of quarter. play, the live Brightcove show row, User future TV

ROI support we account growth. completed segmentation breakout more marketing a our high to to In analysis addition, support targeted, program

for had the team Working Sara would Vice with Chief of a we consistent increasing Ensuring Marketing. new strategy of of new Vanstone-Booth an every outside in Officer brand be Americas. deliver and important quality awareness high closely the demand our International broad growth with of a our part Emma Finally, marketing the to President as Marketing our growth. is great driving responsible process to addition talent region based generation pipeline Emma Larsen,

from have Media publisher the second we that company the momentum I media reflect range the and a is highlight largest broadcast to wins great within of its market. operation. in would quarter positive Egypt's now with like brands Egyptian Group some

Egypt's sports stream its of During that events, OTP channels, Nations provide films. quarter, for It reliability desktop, audiences of a to and of is first live to the programs tune earlier on devices the access enables and iOS Africa it place like The on-demand Egyptian service Egyptian positive broadcast and took Cup our available live will also integrator. range the platform a as Brightcove linear selected users launched media dedicated service. in Android from to recommendation system's due Watch It, this well as month. and

Cato replace tech Tanks, use Drupal. video conjunction in to of and world's stack The chose Think with existing the its their largest one consolidate Institute, of

largest due on the a website to as fashion of its Salesforce.com. Brightcove as and and produce and of its into with selected their players. will the Drupal that performance This Brightcove from and competitive Brightcove fashion and workflow this competitive will world. displacement, superior variety various a to for on consolidated the Cato has houses product around player landing live our seamless HubSpot, Mara, integration standardize video part be other a tight process, customer provide As of ability displaced Max Greatland stack as Europe, will in This integrate content. one live shows videos, well power online of video page using platform. This streaming to was to

Brightcove FanCode their platform And over mobile a for tech with new order in a content, video of and cloud in avid space us wide the FanCode power offering million of online app. FanCode multi-sport fan on Live commerce is house for the the sports registered engagement. sports community a spectrum selected great fantasy video, win DreamXX, Brightcove aggregator biggest from sports platform India's XX users. and to is

to combination The low I broadband handset a driving and rapid recently in reliable population interest citizens we than spent more an video than investments. Brightcove of India for costs, more India was connectivity increases accounts making are are key of in from Nielsen, region a prospective seeing and video tremendous is streaming on area for phone. mobile consumption. XX% X we According in additional where of customers. time billion is a

we and annual our industry quarter User leading the and where Conference, was PLAY of customers, prospects hosted largest ninth partners, highlight sponsors. The

and of growth. more helping video and role strategies. PLAY the their with customer and customers, is cases cutting to their emphasizing stronger video with a our from at the target boards. learn their product months. heard companies vision, video into leader connections the aspects value increasingly than targeting their online the be derive business, will we space. businesses, to key not their demonstrating developing take technology This their the the of were from facing Brightcove's was customers. how engagement that position demonstrates quality and XX their that critical experience, the and the personal helping we purpose reestablished incorporating we about has we At been roadmap invoke pace value been use issues provide maintaining our in The critical Customers and and in made the generating are drive own and video consistent Brightcove clearly our theme us, over recognize we have has built most PLAY, that edge our what video extraordinarily developing including innovation platform. conference with technology next to The drives XX advisory Customer change and entire new of business advance has specifically delivery content in positive they feedback to most reviewed as higher introducing One the theme applications, exciting breakthrough, audiences risks engaging presentations ROI by relationship that the value

second is our in version A innovation most shift product, the great live quarter. of which our example the recent of

release enables this directly Brightcove for Live to to platform include winning users of content Included by via QX. and the which to Social Social features award will the in Facebook in innovation streaming solution. this to a viewers functionality Some release live in feature, be new social new Live, audiences our new and to enables Live streaming in Brightcove communities. live and to retain for customers is grow existing stream live YouTube available

our the to we enhance deliver develop roadmap the that customers greatly proud very Overall, execute value will we to and work I'm of have can on product done a business.

the portfolio are will we this built products to of By the powerful committed We coming deepest, purpose roadmap quarters. history. in most our delivering on XXXX, have early in

second acquisition, customers to on these at like which would in strong Ooyala beginning update the acquired from the comprehensive platform. and off interest and I up, reliable quarter. positive We've wrap seeing early gotten I are Before provide a to an Brightcove's start of closed our

quality enhancing quality and We depth team is pleased also of functional employees, the continue all acquired with be of the our to which our newly areas. across

year, enhance through experience be of these to customer the the through them acquired platform, will migrating move Brightcove second access which give onto new the capabilities customers we available only will Brightcove. focus half As and on the our

us impact that the am by to faster, we exciting business Summarize, the top to We're Brightcove that delivers Brightcove driving the progress all fully across will for and predictable our quarter, confident of line from changes these aspects positive stage for we see in will of is made start setting and for change consistent the value growth. second more This I substantial increase the an XXXX. end customers. time the deliver

that, numbers. With Rob? walk the over to you turn me to through call let Rob the

Rob Noreck

finish third our And then with will XXXX. year Jeff. and everyone. good full I begin of you, the our Thank for a with I quarter outlook afternoon, the quarter detailed and review second will

quarter. earnings increasing are of Revenue the our two driven we strength target the be was $XX.X $X.X Total overage we our in saw to range. quarter was of above due million high which quarters, The for end $X.X which million of noted first XXXX $X.XX second Overages we was but per second was last guidance call. our overages on above by variable, the revenue continue forecast overage outperformance in million, to half on the to quarter the the million,

further, XX% down in revenue was backlog month the was our revenue XX believe our backlog, Breaking This next services as we million. amount is which million million. aggregate future subscription $XX.X and obligations subscription and on to for a related performance months represents defined year-over-year performance investors increase. of revenue committed track We the XX professional was to strategic support metric XX $XXX.X month initiatives. $X.X a useful revenue

On a during XX% revenue we more, generated revenue international XX% Japan of of little Pacific Asia revenue XX% America of geographic during and in quarter down the our our the basis, quarter. Europe generated revenue generated internationally. and and a North Breaking XX%

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

dollar recurring the low to in our than XX%, typical upsell the in mid retention time of lower range reflects of the target at which quarter rate Recurring rate renewal. below dollar Our XXs. was quarter was second retention

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

Looking pricing premium level at our averaged was Ooyala customer the our revenue customers, for annualized excludes ARPU at within annualized transaction. base, $XX,XXX, up note metrics year-over-year, our which XX% starter these our impact was $X,XXX customer in and premium which include per Please revenue. the entry from

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

to non-GAAP our Turning results.

the in year period the second XX%. of to $XX.X for represented million and profit compared margin $XX.X gross quarter non-GAAP Our million, was a ago gross

a primarily generated to and represented quarter in to XXXX. which the a customers the profile Brightcove. The Brightcove our lower It migrate margin half on revenue gross the intention quarter gross XX% platform year. the support gross compared that off platform Subscription to at of approximately due Ooyala operated the in and acquisition, of margin of margin is margin second in declining and revenue XX% to our total a gross XX% than Ooyala the this is second of

second is Adjusted was transition second we second from loss million the revenue. range million loss would $XXX,XXX in profitability for year quarter historical a and our outperform return non-GAAP guidance that levels. compared the a XXXX. above ago of in of quarter, of driven $XXX,XXX than of operations expect in to $X.X was the complete, loss $X.X of the EBITDA was to operations to period Once the to the overage the primarily The by Non-GAAP high expected quarter. compared loss the gross better from quarter in margins end

per Non-GAAP per based in average XX.X average of period. This outstanding. $X.XX the net share to weighted year was on $X.XX, ago share million loss XX loss million on shares shares weighted compares outstanding

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

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

like and our providing guidance for quarter XXXX. full third to now finish year the by I’d

revenue we adjusted million the professional of to we a and $X.X million $X.X third million to $X.X of million. For profitability quarter, a EBITDA services expect million are $XX.X including $XX approximately to million operating perspective, of income From million, of targeting non-GAAP $X.X revenue. $X.X

to Non-GAAP shares is income be XX.X on the outstanding. net $X.XX, expected per based of weighted million range $X.XX average to share in

outlook for our to full Turning year the XXXX.

our million to million. to range updating revenue are We of guidance $XXX $XXX a

of quarter year, overage or increased approximately Given the of remainder QX million the and per revenues revenue QX, overage million have strong forecast year. for the for $X.X the to we overage our $X.X in

to year of profitability, our $X.X full million. of terms now million increasing $XX.X operating million In income $X.X to We are and adjusted expect outlook. we of non-GAAP million EBITDA $X.X

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

breakeven. free flow, of to we expect cash in full a year to flow $X For range continue cash million

good to profitability. improve Summarize, our our strategic on progress we goals of initiatives made and growth reach breakout

taking will more the predictable profitable confident and shareholders. are are for growth steps significant We overtime and we produce faster, value

are Q&A. now With ready we to will we that, take Operator, question. your begin

Operator

thank Great, question Steven Dougherty Our is ahead. Please you. and here [Operator Frankel from Company. go Instructions] first from

Steven Frankel

Good Jeff. afternoon,

quarters to on customer? or is in whether from of significant First was ARPU Could per premium me bump two you large come of thing and I’d is bigger deals starting that been better like one into a the last preaching the at for start getting you’ve couple the things of number of that focus more across as very for or characterize deals kind play spectrum? to the you’re this executing

Robert Noreck

Hey, over a then increase ARPU our in But Steve, the side well had Jeff this quarter. the our deal And increase organic Rob, take customers. as customers brought the the in on a growth the ARPU But the the as side. script, from execution is that is we on is than the a in actually the higher new piece we we saw two saw question we Ooyala second as that from side had acquisition of what Jeff. combination One good on in I’ll it’s size mentioned things.

Steven Frankel

tell Okay. how you us over? brought Could customers Ooyala you many

Robert Noreck

over That brought of the we in neighborhood XXX.

Steven Frankel

guidance to gross trying your pressure the should kick half? operating margin in back just down guess the from a that And Ooyala, little I we the bit square expenses assume with

Robert Noreck

as down. come the Historically, that marketing Yeah, we working half those margin see customers back and in we we’re year. in gross you we’re down that’s improvement pretty as as those migrate And get spend and overplay, that assume also the that true. off, variable kick of seeing pretty, to we know,

Steven Frankel

about us sales update possible. an out a sales of as many to where on open of Could that racks? number trying positions about you are give talked force as at Okay, how you kind lot and change you PLAY, rapidly

Jeff Ray

Jeff. Steve, lot we’ve Hey, changing the very sales team. a it’s Yeah, made out very, progress on of significant

had and was that We yet of quarter. about, talent I working think the of fantastic there. EMEA a really the go-to-market I greatest a plan of talked significant as outs is example trade did EMEA, lot

North also. the behind done essentially changes, in in but America those America changes now are doing is slightly North EMEA

and we’re rates with our company. had that. So, close who were even the have by those just We sales activity very, that encouraged the joined the pleased also very people

North it’s hopeful seeing So of is that and is we’re paying the and work also. work off already about off. EMEA, done, America, signs showing done the start pay

Steven Frankel

backlog Okay. And a XX you committed or ago? Rob, the could month number give us year

Robert Noreck

Yeah. XXXX, already That in little XX. was XXX it XX was million

Steven Frankel

Okay, great. for questions That’s all my now.

Let somebody else Thank turn. have you. a

Robert Noreck

Thank you.

Operator

Riley ahead. Company. Next and question Lee B. Krowl from go is from Please

Krowl -Lee Q

guys. my for taking Thanks Great. question,

a opening get guys but with at XX kind more progress kind the bit upsell, some good rate different then, of on detail obviously the of a In to the want story. you on retention down. Just talked dip retention comments, little totally obviously about rate,

maybe So would detail more on be that just bit a helpful? front little

Robert Noreck

Yeah, rate sure, at those upsell surely, includes time of happened that only renewal. retention The this is Rob.

So, retention we the have and at number saw the but growth in in rate. time typically the impact had size, growth same the not that that some of deal we the renewals upsell upsells we did

while in it kind was that retention that we’ve seen retention rate growth wasn’t So, in same our strength the of showing rate line, was quarters. prior net

Lee Krowl

quarter Okay, more and trend it’s just then level of phenomenon? to up multi kind or the to of is kind the back normalized expectation

Robert Noreck

Yeah, to expect expect in our as the retention to improve team that place, take starts but we’ve to the for to months’ timeframe. in got team of the in we numbers kind the XX really we change six hold, fit

Lee Krowl

of it. months, on little over you’ve for then timeline. kind maybe three just, just update a Got And the heard now

discovered to the that it’s you two indicative just million just maybe from but for last you’ve – integration. of the to went incremental the some as $X.X million. know is costs combine to months deal that businesses? begun of noticed Also, related that kind call, XX on small, think, full front, I about costs $X.X XX I it on was

Jeff Ray

Hey, and let go Lee, cost I’ll the it’s Rob Jeff, up wrap I’ll then it first side. on

had Ooyala session They our the are with the for – see to during the functionality. pleased we’ve legacy We the got from breakout features them feedback that a quarter, our at was customers. We’re event it PLAY products, attended. well gotten the

the I I’d get when is customers up said, think are what who stood and saying available. wanted now the former literally to you was employee most a was I for up I had Brightcove while product all Ooyala can now he a telling say had when deliver Ooyala we started. And coming things

So, adoption. it’s is more we the reliable, also best think which more to think we’re more We our moving We to in platform, the customers’ can up move quickly. of timeline interest more get performance. stable,

And going be to in install so, we’re more migrating aggressive that base.

Robert Noreck

your the to And million from saw question, get mistake are the X.X to dug we it’s million increase at cost looking over, we and to into of take just what little as those customers in a we the X.X to started a Yeah. that. bit

Lee Krowl

you force, a guys then, the ROI seeing it. new Got hires. obviously these from or you’re with of making quick And some are it’s that progress the ROI, clear with quick sales fairly

speed, go marketing they and As get also of to out associated tackling to as there is incremental attract blocking up kind guys expense with more deals? these an try and

Jeff Ray

flows I the to build see and rate models, is and disciplines. market month them Early and The hires. our and less segmentation, says And marketing the team, that kinds increase and are to don’t recruiting company, we new those the ROI Normally that through introduced, driven. will segmentation, the in of account up the get to onboarding customer a they’re of effort XX good. in picking reps correlation I I for people really things of will we when think and coming that the that that can market having these you indications and I spend. expect you sales don’t sales tied more really the marketing all into kind are ramp about – at productive hopeful mean, Those spend of segmentation we year. time. ebbs any beginning It’s look disciplines six out. the handle are this

Lee Krowl

guys. question, my taking for Thanks it. Got

Robert Noreck

you. Thank

Operator

Ray [Operator Instructions] back over any I to closing further comments. And for there floor as like to questions, are Mr. the no turn

Jeff Ray

who very much dialed Thank you in. Thank you you. those for of

feeling I new headed. sense and this we level As about where we a of good and we’re bringing particularly high excitement, be where shared, with in excitement we’re products the the later are think company to we a and of will year. market There’s energy

plan and For commitment that we’ve that that us, we summer. execution have renew you shared And it’s all you. all, with plan. about to Thank to a the great

Operator

This concludes today’s teleconference.

for at may your You disconnect this again lines your you time. Thank participation.

Brightcove (BCOV) 24 Jul 192019 Q2 Earnings call transcript