Brightcove Inc (BCOV) Q1 2024 Earnings Call Transcript Highlights: Navigating Market Challenges ...

• Total Revenue: $50.5 million, up 3% year-over-year.

• Revenue Excluding Overages: $49.4 million, up 3.6% year-over-year.

• Adjusted EBITDA: $5 million, maintaining double-digit margin.

• Cash and Cash Equivalents: Ended the quarter with $22.9 million, up $4.3 million sequentially.

• Patent Portfolio Monetization: Generated $6 million from the sale of a portion of the patent portfolio.

• Market Capitalization Concerns: Highlighted a disconnect between market cap and intrinsic value, citing undervaluation.

• Backlog: Record high total backlog of $185.4 million, up 2.3% year-over-year.

• Net Income: Reported at $1.6 million for the quarter.

• Earnings Per Share (EPS): GAAP net income per share was $0.04.

• Free Cash Flow: Negative $1 million for the quarter, excluding proceeds from patent sale.

• Warning! GuruFocus has detected 3 Warning Signs with BCOV.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Brightcove Inc (NASDAQ:BCOV) reported Q1 revenue of $50.5 million, exceeding the high end of their guidance and showing a 3% year-over-year growth.

• Adjusted EBITDA reached $5 million, maintaining double-digit margins for the third consecutive quarter, reflecting strong profitability.

• The company successfully monetized a portion of its patent portfolio, adding $6 million to its cash reserves and enhancing shareholder value.

• Brightcove Inc (NASDAQ:BCOV) achieved a record backlog of over $185 million, indicating strong future revenue potential and customer commitment.

• The company is actively expanding its AI capabilities, aiming to optimize customer businesses and improve operational efficiencies.

Negative Points

• Brightcove Inc (NASDAQ:BCOV) experienced a decline in recurring dollar retention rate to 85%, down from 94% the previous quarter, due to significant customer churn.

• Net revenue retention also decreased to 92%, impacted by lower add-on sales performance compared to the previous year.

• The company anticipates a revenue decline in Q2 due to the loss of a large media customer and other factors like unfavorable FX rates.

• Despite efforts, the add-on business has not fully recovered, and its growth remains uncertain and challenging.

• Brightcove Inc (NASDAQ:BCOV) faces ongoing challenges in achieving consistent revenue growth, with fluctuating quarterly performance expected.

Q & A Highlights

Q: Despite a better than expected performance in Q1, you're guiding for revenue declines in the second quarter. Does this decline a function of the lost customer you discussed in the 4Q call or have you seen additional customer churn? A: (John Wagner - CFO, Treasurer) The decline is primarily due to the large media customer that churned in Q1 related to their own M&A. Additionally, there's about $700,000 less in professional services in Q2, and we're seeing headwinds within FX as well as lower overages.

Q: Can you provide an update on the company's larger deal pipeline, particularly in media? A: (Marc DeBevoise - CEO) We feel very good about the pipeline, which includes high-value deals and potentially seven-figure deals in the upcoming quarters. The challenge is the timing of these deals, which isn't always within our control.

Q: What will it take to get the business to a point where it can consistently grow revenue? A: (Marc DeBevoise - CEO) Key to consistent revenue growth is getting the add-on business back to historical levels. We're building our sales team's capability to sell existing products to our customer base, which should help achieve this growth.

Q: Have you seen any green shoots in add-on or usage business in Q1 or April? A: (Marc DeBevoise - CEO) We've seen success in upgrading our enterprise customer base from existing video cloud accounts to marketing studio, and we're rolling out com studio as an upgrade potential. This should enhance our add-on business.

Q: Can you compare and contrast the demand environment in your pipeline between media accounts and your traditional enterprise accounts? A: (Marc DeBevoise - CEO) In media, the demand is very big deal-driven. In enterprise, it's more volume-based with a focus on building add-ons into the business. We're working on increasing throughput and matching the performance of our North American operations internationally.

Q: You rolled through a 5% reduction of force in the first quarter, are you done with cost cuts or is there still fine tuning to the cost structure to be done? A: (John Wagner - CFO, Treasurer) We have no plans for further reductions similar to those in Q1. We're seeing the benefit of those actions in our adjusted EBITDA. We will continue to be judicious about resources and manage operational expenses, possibly optimizing our technology spend within cost of goods sold.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.