Table of Contents
ne
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 27, 2023, there were
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BRIGHTCOVE INC.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; factors that may affect our operating results; statements related to adding employees; statements related to potential benefits of acquisitions; statements related to future capital expenditures; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form 10-Q, and the risks discussed in our other Securities and Exchange Commission, or SEC, filings. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. However, any further disclosures made on related subjects in our subsequent reports filed with the
SEC should be consulted. Forward-looking statements in this Quarterly Report on Form 10-Q may include statements about:
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Brightcove Inc.
Condensed Consolidated Balance Sheets
(unaudited)
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March 31, 2023 |
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December 31, 2022 |
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(in thousands, except share |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance of $ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use asset |
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Intangible assets, net |
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Goodwill |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Operating lease liability |
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Deferred revenue |
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Total current liabilities |
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Operating lease liability, net of current portion |
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Other liabilities |
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Total liabilities |
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$ |
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(Note 8) |
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Stockholders’ equity: |
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Undesignated preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock, at cost; |
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( |
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Accumulated other comprehensive loss |
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( |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Brightcove Inc.
Condensed Consolidated Statements of Operations
(unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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(in thousands, except share and per share data) |
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Revenue: |
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Subscription and support revenue |
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$ |
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$ |
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Professional services and other revenue |
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Total revenue |
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Cost of revenue: |
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Cost of subscription and support revenue |
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Cost of professional services and other revenue |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Merger-related |
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Other expense |
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Total operating expenses |
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Loss from operations |
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( |
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Other expense, net |
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( |
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( |
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Loss before income taxes |
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( |
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Provision (benefit) for income taxes |
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( |
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Net loss |
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$ |
( |
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$ |
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Net loss per share—basic and diluted |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted-average shares—basic and diluted |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Brightcove Inc.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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(in thousands) |
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Net loss |
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$ |
( |
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$ |
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Other comprehensive income: |
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Foreign currency translation adjustments |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Brightcove Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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(in thousands, except share data) |
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Shares of common stock issued |
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Balance, beginning of period |
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Issuance of common stock upon exercise of stock options and vesting of restricted stock units |
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Balance, end of period |
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Shares of treasury stock |
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Balance, beginning of period |
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( |
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Balance, end of period |
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( |
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Par value of common stock issued |
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Balance, beginning of period |
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$ |
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$ |
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Issuance of common stock upon exercise of stock options and vesting of restricted stock units |
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— |
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Common stock issued upon acquisition |
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— |
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Balance, end of period |
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$ |
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$ |
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Value of treasury stock |
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Balance, beginning of period |
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$ |
( |
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$ |
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Balance, end of period |
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$ |
( |
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$ |
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Additional paid-in capital |
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Balance, beginning of period |
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$ |
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$ |
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Issuance of common stock upon exercise of stock options and vesting of restricted stock units, net of tax |
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Stock-based compensation expense |
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Common stock issued upon acquisition |
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Balance, end of period |
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$ |
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$ |
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Accumulated deficit |
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Balance, beginning of period |
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$ |
( |
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$ |
( |
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Net loss |
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( |
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( |
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Balance, end of period |
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$ |
( |
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$ |
( |
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Accumulated other comprehensive loss |
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Balance, beginning of period |
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$ |
( |
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$ |
( |
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Foreign currency translation adjustment |
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( |
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Balance, end of period |
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$ |
( |
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$ |
( |
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Total stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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(in thousands) |
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Operating activities |
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Net loss |
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$ |
( |
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$ |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Provision for reserves on accounts receivable |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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Prepaid expenses and other current assets |
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( |
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Other assets |
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Accounts payable |
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Accrued expenses |
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( |
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Operating leases |
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Deferred revenue |
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Net cash used in operating activities |
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Investing activities |
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Cash paid for acquisition, net of cash acquired |
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( |
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Purchases of property and equipment |
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( |
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Capitalized internal-use software costs |
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( |
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( |
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Net cash used in investing activities |
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Financing activities |
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Proceeds from exercise of stock options |
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Deferred acquisition payments |
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( |
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Other financing activities |
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( |
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Net cash (used in) provided by financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net decrease in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information |
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Cash paid for operating lease liabilities |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
Brightcove Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in thousands, except share and per share data, unless otherwise noted)
1. Business Description and Basis of Presentation
Business Description
Brightcove Inc. (the “Company”) is a leading global provider of cloud services for video which enable its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner.
The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on August 24, 2004.
Basis of Presentation
The accompanying interim condensed consolidated financial statements are unaudited. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements and notes have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2022 contained in the Company’s Annual Report on Form 10-K and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations for the three months ended March 31, 2023 and 2022. These interim periods are not necessarily indicative of the results to be expected for any other interim period or the full year.
2. Quarterly Update to Significant Accounting Policies
Allowance for Doubtful Accounts
The following details the changes in the Company’s reserve allowance for estimated credit losses for accounts receivable for the period:
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Allowance for Credit Losses |
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(in thousands) |
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Balance as of December 31, 2022 |
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$ |
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Current provision for credit losses |
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Write-offs against allowance |
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Balance as of March 31, 2023 |
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$ |
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Estimated credit losses for unbilled trade accounts receivable were not material.
Other Expense.
Other expense, reflects other operating costs that do not directly relate to research and development, sales and marketing, general and administrative, and merger related. The Company did not incur expenses of this nature during the quarter ended March 31, 2023.
On March 28, 2022, the Chief Executive Officer (“CEO”) of the Company retired. Pursuant to a Transition Agreement that was entered into by the CEO and the Company in October 2021, the Company recorded $
Recently Issued and Adopted Accounting Pronouncements
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In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, Leases (Topic 842): Common Control Arrangements, which amends Accounting Standards Codification ("ASC") 842 with respect to arrangements between related parties under common control. The guidance is effective for interim and annual periods beginning after December 25, 2023, with early adoption permitted. The Company does not expect the impact of the adoption of this standard on the Company’s consolidated financial statements to be material.
3. Revenue from Contracts with Customers
The Company primarily derives revenue from the sale of its online video platform, which enables its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Revenue is derived from three primary sources: (1) the subscription to its technology and related support; (2) hosting, bandwidth and encoding services; and (3) professional services, which include initiation, set-up and customization services.
The following summarizes the opening and closing balances of receivables, contract assets and contract liabilities from contracts with customers.
(in thousands) |
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Accounts Receivable, net |
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Contract Assets (current) |
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Deferred Revenue (current) |
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Deferred Revenue (non-current) |
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Total Deferred Revenue |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance at March 31, 2023 |
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Revenue recognized for the three months ended March 31, 2023 from amounts included in deferred revenue at the beginning of the period was approximately $
The assets recognized for costs to obtain a contract were $
Transaction Price Allocated to Future Performance Obligations
As of March 31, 2023, the total aggregate transaction price allocated to the unsatisfied performance obligations for subscription and support contracts was approximately $
4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2023 consist of the following:
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March 31, 2023 |
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Description |
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Contracted |
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Cost |
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Fair Market |
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(in thousands) |
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Cash |
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Demand |
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$ |
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$ |
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Money market funds |
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Demand |
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Total cash and cash equivalents |
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$ |
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$ |
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Cash and cash equivalents as of December 31, 2022 consist of the following:
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December 31, 2022 |
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Description |
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Contracted |
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Cost |
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Fair Market |
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(in thousands) |
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Cash |
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Demand |
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$ |
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$ |
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Money market funds |
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Demand |
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Total cash and cash equivalents |
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$ |
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$ |
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5. Net Loss per Share
The Company calculates basic and diluted net loss per common share by dividing the net loss by the number of common shares outstanding during the period. The Company has excluded other potentially dilutive shares, which include outstanding common stock options and unvested restricted stock units, from the number of common shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses incurred.
The following outstanding common shares have been excluded from the computation of dilutive net loss per share as of the periods indicated:
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Three Months Ended March 31, |
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(shares in thousands) |
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2023 |
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2022 |
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Options outstanding |
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Restricted stock units outstanding |
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6. Stock-based Compensation
In 2022, the Company adopted the 2022 Inducement Plan (“2022 Plan”). The 2022 Plan provides for the grant of “employment inducement awards” within the meaning of NASDAQ Listing Rule 5635(c)(4). In connection with the commencement of his employment, the Company granted
For restricted stock units with market-based performance conditions, the cost of the awards is recognized as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units. The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility, expected dividends and the correlation coefficient.
On March 20, 2023, the Company granted
The weighted-average assumptions utilized to determine the weighted-average fair value of options are presented in the following table:
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Three Months Ended March 31, |
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2023 |
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2022 |
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Weighted-average fair value of options granted during the period |
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$ |
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$ |
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Risk-free interest rate |
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Expected volatility |
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Expected dividend yield |
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11
Table of Contents
As of March 31, 2023, there was $
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Three Months Ended March 31, |
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2023 |
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2022 |
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(in thousands) |
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Stock-based compensation: |
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Cost of subscription and support revenue |
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$ |
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$ |
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Cost of professional services and other revenue |
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Research and development |
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Sales and marketing |
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General and administrative |
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Other expense |
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$ |
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$ |
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The following is a summary of the stock option activity during the three months ended March 31, 2023.
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Number of |
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Weighted-Average |
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Weighted-Average |
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Aggregate |
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Outstanding at December 31, 2022 |
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$ |
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$ |
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Granted |
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