Brightcove Announces Financial Results for Fourth Quarter and Fiscal Year 2021

Brightcove Inc. (NASDAQ: BCOV) the global leader in video for business, today announced financial results for the fourth quarter and fiscal year ended December 31, 2021.

“Brightcove’s fourth quarter performance was highlighted by the introduction of two important new solutions, Brightcove Marketing Studio and Brightcove Corp TV. These products will enhance our customer’s ability to monetize content, sell products and engage with internal audiences and represent exciting new growth opportunities for Brightcove,” said Jeff Ray, Brightcove’s Chief Executive Officer.

Ray added, “The recent announcement of Marc DeBevoise to be my successor as Brightcove’s CEO is a compelling choice to lead the company through its next phase of growth. His extensive experience in technology, media, direct-to-consumer and streaming gives him a unique perspective on the power of video to connect with audiences and inspire them to take action.”

Fourth Quarter 2021 Financial Highlights:

• Revenue for the fourth quarter of 2021 was $52.6 million, a decrease of 2% compared to $53.7 million for the fourth quarter of 2020. Subscription and support revenue was $50.3 million, a decrease of 1% compared to $50.7 million for the fourth quarter of 2020.
• Gross profit for the fourth quarter of 2021 was $34.7 million, representing a gross margin of 66% compared to a gross profit of $34.2 million for the fourth quarter of 2020. Non-GAAP gross profit for the fourth quarter of 2021 was $35.3 million, representing a non-GAAP gross margin of 67%, compared to a non-GAAP gross profit of $34.8 million for the fourth quarter of 2020. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense and the amortization of acquired intangible assets.
• Income from operations was $1.1 million for the fourth quarter of 2021, compared to an income of $1.6 million for the fourth quarter of 2020. Non-GAAP operating income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets and merger-related expense, was $4.7 million for the fourth quarter of 2021, compared to non-GAAP operating income of $5.4 million during the fourth quarter of 2020.
• Net income was $417,000, or $0.01 per diluted share, for the fourth quarter of 2021. This compares to a net income of $2.0 million, or $0.05 per diluted share, for the fourth quarter of 2020. Non-GAAP net income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets and merger-related expense, was $4.0 million for the fourth quarter of 2021, or $0.10 per diluted share, compared to non-GAAP net income of $5.8 million for the fourth quarter of 2020, or $0.14 per diluted share.
• Adjusted EBITDA was $5.9 million for the fourth quarter of 2021, compared to adjusted EBITDA of $6.8 million for the fourth quarter of 2020. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, restructuring, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
• Cash flow provided by operations was $4.8 million for the fourth quarter for 2021, compared to $12.4 million for the fourth quarter of 2020.
• Free cash flow was $2.3 million after the company invested $2.6 million in capital expenditures and capitalization of internal-use software during the fourth quarter of 2021. Free cash flow was $10.9 million for the fourth quarter of 2020.
• Cash and cash equivalents were $45.7 million as of December 31, 2021 compared to $45.3 million as of September 30, 2021.

Full Year 2021 Financial Highlights:

• Revenue for the full year 2021 was $211.1 million, an increase of 7% compared to $197.4 million for 2020. Subscription and support revenue for 2021 was $198.9 million, an increase of 6% compared to $187.3 million for 2020.
• Gross profit was $138.1 million for 2021, representing a gross margin of 65%, compared to $121.3 million for 2020. Non-GAAP gross profit was $140.5 million for 2021, representing a non-GAAP gross margin of 67%, compared to $123.7 million for 2020. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense and the amortization of acquired intangible assets.
• Income from operations was $7.6 million for 2021, compared to a loss from operations of $5.3 million for 2020. Non-GAAP income from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $18.9 million for 2021, compared to non-GAAP income from operations of $15.2 million for 2020.
• Net income was $5.4 million, or $0.13 per diluted share, for 2021. This compares to a net loss of $5.8 million, or $0.15 per diluted share, for 2020. Non-GAAP net income, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $16.8 million for 2021, or $0.40 per diluted share, compared to non-GAAP net income of $14.7 million for 2020, or $0.36 per diluted share.
• Adjusted EBITDA was $24.2 million for 2021, compared to an adjusted EBITDA of $20.5 million for 2020. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, executive severance and restructuring expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
• Cash flow provided by operations was $19.6 million for 2021, compared to cash flow from operations of $21.3 million for 2020.
• Free cash flow was $10.7 million after the company invested $8.8 million in capital expenditures and capitalization of internal-use software during 2021. Free cash flow was $12.6 million for 2020.

A Reconciliation of GAAP to Non-GAAP results has been provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Other Fourth Quarter and Recent Highlights:

• Average annual subscription revenue per premium customer was $95,360 in the fourth quarter of 2021, excluding starter customers who had average annualized revenue of $4,100 per customer. This compares to $97,220 in the comparable period in 2020. Our ARPU was down YoY from $97,220 to $95,360, due to the impact of one time events in Japan last Q4. Excluding these events, our 4th quarter 2020 ARPU was $92,262, and we are up 3% year-over-year.
• Recurring dollar retention rate was 94% in the fourth quarter of 2021, which was in-line with our historical target of the low to mid-90 percent range.
• Ended the quarter with 3,135 customers, of which 2,227 were premium.
• New customers and customers who expanded their relationship during the fourth quarter include: For Us By US Network (FUBU), Blue Buffalo, Verasity, Dallas Black Dance Theatre, and Reelz, Ford Motor Company, among others.
• Appointed Marc DeBevoise as Chief Executive Officer and Board Director. DeBevoise brings over 20 years of experience in technology, media, direct-to-consumer, and streaming to Brightcove. He previously served as the Chief Digital Officer of ViacomCBS, CEO & President of CBS Interactive, and held leadership roles at Starz and NBCUniversal. As the architect of CBS’s digital strategy, DeBevoise positioned the company as a leading multi-platform content company with a top 10 consumer Internet portfolio and a leadership position in ad-supported and subscription direct-to-consumer streaming.
• Acquired Wicket Labs, an audience insights company that gives users visibility into content and subscriber analytics. Brightcove customers will have access to content and subscriber insights to make data-driven decisions to improve subscriber acquisition, conversions, engagement, and retention. These insights will provide organizations greater understanding of audience dynamics, sources of new subscribers, the subscriber journey, and how to increase subscription revenue through data visualizations and dashboards

Business Outlook

Based on information as of today, February 16, 2022, the Company is issuing the following financial guidance.

First Quarter 2022:

• Revenue is expected to be in the range of $50.5 million to $51.5 million, including approximately $2.0 million of professional services revenue.
• Non-GAAP income from operations is expected to be in the range of $1.0 million to $2.0 million, which excludes stock-based compensation of approximately $2.5 million, and the amortization of acquired intangible assets of approximately $0.6.
• Adjusted EBITDA is expected to be in the range of $2.3 million to $3.3 million, which excludes stock-based compensation of approximately $2.5 million, the amortization of acquired intangible assets of approximately $0.6 million, depreciation expense of approximately $1.3 million and other income/expense and the provision for income taxes of approximately $0.3 million.
• Non-GAAP net income per diluted share is expected to be $0.02 to $0.04, which excludes stock-based compensation of approximately $2.5 million, the amortization of acquired intangible assets of approximately $0.6 million, and assumes approximately 42.0 million weighted-average shares outstanding.

Full Year 2022:

• Revenue is expected to be in the range of $207 million to $215 million, including approximately $9.3 million of professional services revenue.
• Non-GAAP income from operations is expected to be in the range of $7.0 million to $11.0 million, which excludes stock-based compensation of approximately $11.1 million, the amortization of acquired intangible assets of approximately $2.1 million.
• Adjusted EBITDA is expected to be in the range of $15.0 million to $19.0 million, which excludes stock-based compensation of approximately $11.1 million, the amortization of acquired intangible assets of approximately $2.1 million, depreciation expense of approximately $7.9 million and other income/expense and the provision for income taxes of approximately $1.2 million.
• Non-GAAP earnings per diluted share is expected to be $0.14 to $0.23, which excludes stock-based compensation of approximately $11.1 million, the amortization of acquired intangible assets of approximately $2.1 million and assumes approximately 42.6 million weighted-average shares outstanding.

Conference Call Information

Brightcove will host a conference call today, February 16, 2022, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results and current business outlook. A live webcast of the call will be available at the “Investors” page of the Company’s website, http://investor.brightcove.com. To access the call, dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of this conference call will be available for a limited time at 844-512-2921 (domestic) or 412-317-6671 (international). The replay conference ID is 13726883. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.

About Brightcove

Brightcove creates the world’s most reliable, scalable, and secure video technology solutions to build a greater connection between companies and their audiences, no matter where they are or on which devices they consume content. In more than 80 countries, Brightcove’s intelligent video platform enables businesses to sell to customers more effectively, media leaders to stream and monetize content more reliably, and every organization to communicate with team members more powerfully. With two Technology and Engineering Emmy® Awards for innovation, uptime that consistently leads the industry, and unmatched scalability, we continuously push the boundaries of what video can do. Follow Brightcove on Twitter, LinkedIn, and Facebook.

Visit www.brightcove.com. Brightcove. Video that means business™

Forward-Looking Statements

This press release includes certain “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for the first fiscal quarter and full year 2022, our position to execute on our growth strategy, and our ability to expand our leadership position and market opportunity. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: the effect of the COVID-19 pandemic, including our business operations, as well as its impact on the general economic and financial market conditions; our ability to retain existing customers and acquire new ones; our history of losses; the timing and successful integration of the Ooyala acquisition; expectations regarding the widespread adoption of customer demand for our products; the effects of increased competition and commoditization of services we offer, including data delivery and storage; keeping up with the rapid technological change required to remain competitive in our industry; our ability to manage our growth effectively and successfully recruit additional highly-qualified personnel; the price volatility of our common stock; and other risks set forth under the caption "Risk Factors" in our most recently filed Annual Report on Form 10-K, as updated by our subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

Brightcove has provided in this release the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss), adjusted EBITDA and non-GAAP diluted net income (loss) per share. Brightcove uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Brightcove's ongoing operational performance. Brightcove believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Brightcove’s industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above of non-GAAP gross profit, non-GAAP gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share exclude stock-based compensation expense, the amortization of acquired intangible assets, restructuring and merger-related expenses. The non-GAAP financial results discussed above of adjusted EBITDA is defined as consolidated net income (loss), plus stock-based compensation expense, the amortization of acquired intangible assets, merger-related expenses, restructuring, depreciation expense, other income/expense, including interest expense and interest income, and the provision for income taxes. Merger-related expenses include fees incurred in connection with an acquisition. Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. The Company’s earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company’s web site at http://www.brightcove.com.

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