Brightcove Revenue Up 15% in Q2 2014, But Soft Guidance Crushes Stock

Posted by Joe Zaller
Jul 25 2014

Online video delivery specialist Brightcove announced  its revenue for the second quarter of 2014 was $31 million, up 15% from the same period a year ago, and down slightly versus the previous quarter.

Although Brightcove’s top-line results were better than the upper end of the company’s previous guidance, it posted a Q2 net loss of $4.3 million, versus a net loss of $3.5 million last year and a net loss of $4.8 million during Q1.

The company also revised down its guidance for the full year, due in part to the loss of Rovio, the company behind the Angry Birds franchise and one of Brightcove’s largest European customers.  During the first half of 2014, Rovio represented 3.8% of Brightcove’s total revenue and a little less than 15% of its total video stream volume.

Investors were quick to react to the revised forecasts, driving the company’s stock down almost 40% to less than $6.50.  Brightcove had traded as high as $24.80 shortly after its IPO in early 2012.

On a positive note, the company said its revenue from media customers grew at 31% on a year-over-year basis.  “While we continue to see a broad market opportunity and strong demand for our products across a number of industries, we are seeing positive results from our increased focus on the media vertical,” said Brightcove CFO Chris Menard.

Brightcove also said it experienced a 7% year-on-year increase in “premium customers” in the quarter. Brightcove defines premium customers as those who are on annual subscription contracts for the enterprise and pro versions of its “Video Cloud,” “Once,” and “Zencoder” product offerings.

Revenue from premium customers during Q2 was $28.4, up 18% versus the same period a year ago, and flatversus the previous quarter.  The company said it had 1,833 premium customers, or 30.6% of its total customer base, at the end of the second quarter.  This represents an increase of 7% versus the same period ago, and an increase of 0.5% versus the previous quarter.

Subscription and support revenue in the quarter was $29.9 million, or 97% of total revenue, up 17% versus last year, and up approximately 2% versus last quarter.

Professional services revenue was $1 million, down 19% versus last year, and down 41% versus last quarter.

 

On a geographic basis:

  • North America accounted for $18.5 million, or 60% of total revenue in the quarter, compared to $15.8 million, or 59% of revenue last year, and $18 million, or 58% of total revenue last quarter

 

  • Europe contributed $7.7 million or 25% of total revenue in the quarter, compared to $6.5 million, or 24% of revenue last year, and $8.6 million, or 27% of total revenue last quarter

 

  • Japan contributed $2 million, or 6% of total revenue in the quarter, compared to $1.5 million, or 6% of revenue last year, and $1.9 million, or 6% of total revenue last quarter

 

  • Asia Pacific (excluding Japan) contributed $2.5 million, or 8% of total revenue in the quarter, compared to $2.9 million, o or 11% of revenue last year, and $2.3 million, or 7% of total revenue last quarter

 

 

On a segment basis:

  • Digital marketing and enterprise customers was $17.7 million, or 57% of total revenue in the quarter, compared to $16.7 million, or 62% of revenue last year, and $18.3 million, or 59% of total revenue last quarter. The company said that revenue from digital marketing and enterprise customers grew 6% on a year-over-year basis

 

  • Media revenue was $13.3 million, or 43% of total revenue in the quarter, compared to $10.2 million, or 38% of revenue last year, and $12.7 million, or 41% of total revenue last quarter. The company said that revenue from media customers grew 31% on a year-over-year basis

 

Gross margins for the quarter were 66%, flat on a percentage basis versus the same period a year ago and up from the 64%recordedduring the previous quarter.  On a non-GAAP basis (excluding stock-based compensation and amortization of acquired intangible assets) gross margins for the quarter were 68%.

Brightcove ended the quarter with 401 employees (a decrease of 10 employees from the preceding quarter), a total customer base of 5,995 (a decrease of 131 versus the preceding quarter), and cash and cash equivalents of $20.8m, down from $21.4m at the end of the first quarter of 2014.

 

Guidance Lowered for Full Year 2014

Brightcove now says it expects it to post a full year 2014 non-GAAP operating loss in the range of $6.5m to $7.5m on revenue in the range of $122m to $123.5m.  The Company had previously projected full year revenue in the range of $126m to $130m, and a non-GAAP operating loss in the range of $5m to $7m.

The company says its losses are likely to continue through the fourth quarter of next year, when it expects to achieve positive non-GAAP operating income.

“While we delivered solid financial results relative to our guidance, we also faced headwinds that have negatively impacted our outlook for the second half of 2014”, said Brightcove CEO David Mendels.

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Related Content:

Press Release: Brightcove Announces Financial Results for Second Quarter 2014

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