Brightcove, Inc (BCOV) broke even in the fourth quarter of 2013, better than the Zacks Consensus Estimate of a loss of 3 cents per share.
Revenues
Revenues surged 22.2% on a year over year basis to $29.7 million in the reported quarter, beating the Zacks Consensus Estimate of $29.0 million. Revenues were higher than the management’s guided range of $28.0 million to $28.5 million.
This year over year rise in revenues was mainly on account of higher-than-expected rise in Subscription & Support revenues and Professional Services and other revenues which increased 17.4% & and 121.2%, respectively.
Premium Offerings contributed $27.2 million to total revenue, representing a 24.0% hike on a year over year basis. Volume offering, on the other hand, generated $2.6 million in revenues, which marked a 3.0% rise on a year-over-year basis.
Non-media customers represented 58% of the total revenue and grew 17% on a year-over-year basis, while media customers represented 42% of revenue and rose 30% on a year-over-year basis.
During the quarter, Brightcove’s product was chosen by new customers such as, Boston Globe Media Partners, Dick Clark Productions and TVN SA, the largest commercial broadcaster in Poland.
From a geographic perspective, 57.0% of revenues came from America (up 12% on a y/y basis) while Europe chipped in with 28.0% of revenue (up 44% on a y/y basis). Japan and Asia-Pacific, on the other hand, generated 15% of revenue (up 34% on a y/y basis)
Margins
Gross margin declined on a year-over-year basis from 69.8% to 67.0% in the reported quarter.
Operating expenses as percentage of revenues were 69.9%, much lower than 87.7% reported in the year-ago quarter. Research & development, sales & marketing and general & administrative expenses as percentage of revenues declined 320 bps, 920 bps and 482 bps, respectively.
Income from operations (including stock-based compensation) was $0.035 million, better than loss of $3.5 million reported in the year-ago quarter. Net loss (including stock based compensation) was $0.08 million or 0 cents per share.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Brightcove had cash, cash equivalents and investments of $36.1 million, up from $34.1 million reported in the prior quarter. Brightcove’s cash flow from operations was $2.5 million in the fourth quarter compared with $4.8 million in the prior quarter. Free cash flow was $1.0 million in the reported quarter versus $2.8 million in the prior quarter.
Outlook
For the first quarter of fiscal 2014, Brightcove expects revenues in the range of $28.8 million to $29.5 million. Non-GAAP operating income is expected to be $2.5 million to $2.9 million. Non-GAAP loss is expected in the range of 9 cents to 10 cents per share.
For fiscal 2014, Brightcove raised its revenue outlook. Currently, revenues are expected to be in the range of $126.0 million to $130.0 million. Non-GAAP operating loss is expected to be in the range of $9.0 million to $12.0 million. Net loss is expected in the range of 31 cents to 40 cents per share.
Recommendation
We believe that the continuously growing portfolio of video-based technologies will help the company to register robust growth and enhance its profitability going forward. Moreover, strategic acquisitions are also believed to be a tailwind in the long term.
However, macro economic slumps and fierce competition from the likes of Akamai Technologies (AKAM), Shutterfly Inc (SFLY) and Limelight Networks Inc (LLNW) appear to be the major headwinds in the near term.
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