Core Insights - Bending Spoons, an Italian app developer, has agreed to acquire AOL from Apollo Global Management, marking a significant expansion into aging American internet brands [2][3] - The acquisition is valued at over $1.4 billion, with Bending Spoons raising $2.8 billion in debt to finance the deal and future acquisitions [3][5] - AOL continues to have a substantial user base, with over 30 million monthly users and expected annual revenue of $400 million [5][6] Company Overview - Bending Spoons has previously acquired other American internet brands such as Evernote, Meetup, and Brightcove, indicating a strategic focus on revitalizing older digital properties [2][3] - The company aims to enhance AOL's email platform and homepage, which remains one of the most visited websites in the U.S. [3][4] - Bending Spoons is also expanding its user base, which currently stands at 300 million monthly users, and anticipates revenue of $1.2 billion this year [7] Historical Context - AOL was originally launched in 1989 and became widely known for its dial-up service and the iconic "You've Got Mail" jingle [6] - Apollo acquired AOL in 2021 as part of a $5 billion deal that included Yahoo, highlighting the brand's long history and previous ownership changes [5][6] - The acquisition by Bending Spoons represents a continuation of AOL's complex history in the tech industry, including a disastrous merger with Time Warner in 2001 [6] Financial Aspects - Bending Spoons has raised approximately $4 billion in debt and $155 million in equity this year, indicating strong financial backing for its acquisition strategy [8] - The company is valued at over $4.9 billion, making it Italy's most valuable tech startup, as noted by a significant investment increase from Scottish fund manager Baillie Gifford [8]

Core Viewpoint - 180 Degree Capital Corp. announces that its portfolio company, Brightcove, Inc., has entered into a definitive agreement to be acquired by Bending Spoons for approximately $233 million, or $4.45 per share, validating the belief that Brightcove was undervalued [1][2] Group 1: Company Acquisition - Brightcove, Inc. has agreed to be acquired by Bending Spoons for about $233 million, translating to $4.45 per share [1] - Prior to the acquisition announcement, 180 Degree Capital owned approximately 1.35 million shares of Brightcove [1] Group 2: Management Commentary - Kevin M. Rendino, CEO of 180 Degree Capital, expressed congratulations to the Brightcove team and highlighted the investment strategy that led to the acquisition, emphasizing the belief in Brightcove's strong balance sheet and recurring revenue [2] - Daniel B. Wolfe, President of 180 Degree Capital, noted that Brightcove exemplifies the type of companies the firm seeks to invest in, with a strong management team and potential for significant value appreciation [2] Group 3: Investment Strategy - 180 Degree Capital focuses on investing in substantially undervalued small publicly traded companies with turnaround potential, aiming for a reversal in share price through constructive activism [3] - The firm aims to build a concentrated portfolio of core positions in companies that can lead to outsized returns within a typical investment horizon of one to three years [2][3]

Core Insights - Monteverde & Associates PC is investigating Brightcove Inc. regarding its proposed merger with Bending Spoons, where Brightcove shareholders will receive $4.45 per share in cash for their common stock [1] Group 1: Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm by ISS Securities Class Action Services Report and has recovered millions for shareholders [1] - The firm is headquartered in the Empire State Building, New York City, and specializes in class action securities litigation [3] Group 2: Merger Details - Under the terms of the merger agreement, Brightcove shareholders will receive $4.45 per share in cash for each share of Brightcove common stock they own [1]

Revenue Performance - Revenue decreased from $151.0 million in the nine months ended September 30, 2023 to $149.7 million in the nine months ended September 30, 2024, primarily due to a decrease in subscription and support revenue[61]. - Total revenue decreased by 2%, or $1.0 million, to $49.95 million for the three months ended September 30, 2024, compared to $50.98 million for the same period in 2023[90]. - Subscription and support revenue decreased by 1%, or $0.6 million, primarily due to a decrease in revenue from premium offerings, which fell by $1.0 million, or 2%[90]. - Total revenue for the nine months ended September 30, 2024, was approximately $149.678 million, a decrease of $1.353 million, or 1%, compared to the same period in 2023[108]. - Total revenue for North America increased by $1.1 million, or 1%, while revenue outside North America decreased by $2.4 million, or 4% for the nine months ended September 30, 2024[112]. Customer Metrics - Total customers decreased from 2,618 in September 2023 to 2,392 in September 2024, with premium customers declining from 2,077 to 1,923[64]. - Average annual subscription revenue per premium customer increased from $95.9 thousand in September 2023 to $101.4 thousand in September 2024[65]. - Revenue from premium offerings decreased by $1.3 million, or 1%, for the nine months ended September 30, 2024, due to a decrease in the number of customers and average revenue per premium customer[107]. Financial Ratios and Retention - Net revenue retention rate for the three months ended September 30, 2024 was 93.6%, up from 92.7% in the same period of 2023[65]. - Gross profit for subscription and support remained stable at 65%, while total gross profit percentage was 62% for the nine months ended September 30, 2024[115]. Operating Expenses - Total operating expenses increased by $0.4 million to $34.38 million in the three months ended September 30, 2024, compared to $34.01 million in the same period in 2023[92]. - Research and development expenses remained consistent at $8.742 million, or 18% of revenue, for the three months ended September 30, 2024[100]. - Sales and marketing expenses decreased by $0.8 million, or 5%, for the three months ended September 30, 2024, primarily due to a decrease in employee-related expenses[101]. - General and administrative expenses increased by $1.3 million, or 16%, for the three months ended September 30, 2024, primarily due to increases in employee-related costs[102]. Cash Flow and Liquidity - Cash provided by operating activities was $9.5 million, with a net loss of $6.6 million adjusted for non-cash items[123]. - Cash flows used in investing activities totaled $1.0 million, primarily due to $6.0 million gain from the sale of assets[124]. - As of September 30, 2024, the company had $14.0 million in cash and cash equivalents held by subsidiaries in international locations[120]. - The company believes existing cash and cash equivalents will be sufficient to meet working capital and capital expenditures for at least the next 12 months[133]. International Revenue - Revenue derived from customers outside North America was 40% for the three months ended September 30, 2024, compared to 39% in the same period of 2023[63]. - The company expects the percentage of total net revenue derived from outside North America to increase in future periods as it continues to expand international operations[82]. - Revenues generated in locations outside the United States accounted for 45% for the three months ended September 30, 2024, compared to 44% in the same period of 2023[137]. Currency and Inflation Impact - A 20% unfavorable movement in foreign currency exchange rates could have decreased revenues by $7.1 million and operating income by $1.7 million for the nine months ended September 30, 2024[141]. - The U.S. dollar strengthened by approximately 3% against the British pound and weakened by approximately 8.5% against the Japanese Yen during the nine months ended September 30, 2024[141]. - The company does not believe inflation has had a material effect on its business but acknowledges potential risks if costs rise significantly[143].

Core Insights - Brightcove Inc. (NASDAQ: BCOV) reported Q3 2024 earnings with no significant changes in results, indicating stagnation in revenues, gross profits, and earnings for over a year following the moderation of post-pandemic cancellations [1] Financial Performance - The company's revenues, gross profits, and earnings have remained stagnant, reflecting a lack of growth in operational performance [1] Investment Perspective - The analysis emphasizes a long-only investment approach, focusing on operational aspects and long-term earnings power rather than market-driven dynamics [1] - The investment strategy suggests that most companies will be rated as holds, with only a small fraction deemed suitable for buying at any given time [1]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $49.9 million, exceeding the high end of guidance and showing a 1% sequential growth [8][10] - Adjusted EBITDA was $5.1 million, significantly above guidance and up nearly 35% quarter-over-quarter, representing a 10% adjusted EBITDA margin [9][54] - Free cash flow generated was $1.6 million, increasing the cash balance to $27 million, up $8 million since the beginning of the year [9][56] - Full-year revenue guidance was raised to $197.7 million to $198.7 million, reflecting better-than-expected performance [58] Business Line Data and Key Metrics Changes - New business in Q3 was up over 50% quarter-over-quarter and up 20% versus the trailing four quarters average [18] - Average annual contract values for new business increased nearly 50% year-over-year and over 90% quarter-over-quarter [18] - Add-on sales performance was up modestly about 5% year-over-year [19] Market Data and Key Metrics Changes - 60% of revenue was generated in North America, with 40% from international markets; Europe contributed 16% and Japan and Asia Pacific contributed 24% [47] - The recurring dollar retention rate was 80%, down from 83% in the previous quarter, impacted by entitlement reductions [48] Company Strategy and Development Direction - The company is focused on improving efficiency and profitability, with a commitment to delivering meaningful profitability in any revenue scenario [12] - The introduction of the Brightcove AI Suite is expected to drive future revenue growth and enhance customer engagement [28][30] - The strategy includes a focus on longer-term deals and moving upmarket to secure larger, multi-year commitments [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the durability of business performance and the potential for improved retention in 2025 [69] - The company anticipates that the pressure from entitlement downgrades will subside in 2025, contributing to better retention rates [50] - The outlook for Q4 is crucial for shaping the 2025 guidance, with expectations of continued strong performance [73] Other Important Information - The company ended the quarter with a gross margin of 63%, an increase from previous quarters, benefiting from improvements in cost architecture [52] - Non-GAAP diluted net income per share was $0.02, compared to $0.05 in the year-ago period [55] - The company remains debt-free and expects to end the year with at least $30 million in cash [60] Q&A Session Summary Question: How repeatable is the Q3 performance? - Management believes the Q3 performance is durable, stemming from previous quarters' efforts and cost structure changes [64] Question: How will the new Salesforce product impact ARPU? - The new product is expected to enhance ARPU on the enterprise side, as it is purpose-built for a large sales team [67][68] Question: Are there inorganic growth opportunities being considered? - The company is open to inorganic opportunities but has no specific targets at this time [72] Question: How has new business trended into Q4? - Management feels optimistic about Q4 execution and believes it will be influential for 2025 guidance [73]

Financial Performance - Total revenue for Q3 2024 was $49.9 million, a decrease of 2% year-over-year[4, 20] - Adjusted EBITDA for Q3 2024 was $5.1 million, representing 10% of revenue[4, 25, 26] - The company reported a GAAP net loss of $3.0 million for Q3 2024, with an EPS of ($0.07)[4, 24, 26] - Free cash flow for Q3 2024 was $1.6 million[4, 29] - Cash and cash equivalents totaled $27.0 million[4, 27] - Subscription backlog reached $183.2 million, a 5% increase year-over-year, with >12 months backlog at $60.8 million, up 15% year-over-year[22] Guidance - Revised revenue guidance for FY24 is $197.7 million to $198.7 million[5, 30] - Revised adjusted EBITDA guidance for FY24 is $16.8 million to $17.8 million[5, 30] Business Highlights - New business increased by 50%[7] - New business contract values increased by approximately 90% quarter-over-quarter versus the trailing 4 quarters average[8] - Add-on business increased by 5% year-over-year versus the trailing 4 quarters average[8]

Revenue Performance - Revenue for Q3 2024 was $49.9 million, a decrease of 2% from $51.0 million in Q3 2023[3] - Subscription and support revenue was $48.0 million, down 1% from $48.6 million in Q3 2023[3] - Total revenue for the three months ended September 30, 2024, was $49,950, a decrease of 2.02% compared to $50,980 for the same period in 2023[16] - Subscription and support revenue for the three months ended September 30, 2024, was $47,963, down from $48,571 in the prior year, representing a decline of 1.25%[16] - Total revenue for the nine months ended September 30, 2024, was $149,678[20] Profitability Metrics - Adjusted EBITDA was $5.1 million, representing a margin of 10%, compared to $5.5 million in Q3 2023[4] - Non-GAAP net income for Q3 2024 was $707,000, or $0.02 per diluted share, down from $2.1 million, or $0.05 per diluted share in Q3 2023[3] - GAAP net loss for Q3 2024 was $(2,957), compared to $(2,421) in Q3 2023[18] - Non-GAAP net income for Q3 2024 was $707, down from $2,133 in Q3 2023[18] - Non-GAAP income from operations for Q3 2024 was $860, compared to $2,263 in Q3 2023[18] Cash and Liquidity - Cash and cash equivalents were $27.0 million as of September 30, 2024, compared to $18.6 million on December 31, 2023[4] - Cash and cash equivalents increased to $26,965 as of September 30, 2024, from $18,615 at December 31, 2023, reflecting a growth of 45%[15] - The company reported a net cash provided by operating activities of $3,405 for the three months ended September 30, 2024, compared to $2,128 in the same period of 2023, an increase of 60%[17] Backlog and Guidance - The 12-month backlog increased by 1% year-over-year to $122.4 million, while total backlog rose 5% to $183.2 million[6] - The company expects Q4 2024 revenue to be between $48.0 million and $49.0 million, including $2.0 million from professional services[7] - Full year 2024 revenue guidance is raised to a range of $197.7 million to $198.7 million, up from previous guidance of $195.5 million to $198.0 million[9] Operating Expenses - Operating expenses for the three months ended September 30, 2024, were $34,376, slightly up from $34,010 in the same period last year, an increase of 1.08%[16] - Research and development expenses for the three months ended September 30, 2024, were $8,742, compared to $8,730 in the prior year, showing a marginal increase[16] New Initiatives - The Brightcove AI Suite was launched, featuring five new solutions aimed at enhancing customer growth and efficiency[5] Deferred Revenue and Liabilities - Deferred revenue as of September 30, 2024, was $63,213, down from $68,155 at December 31, 2023, a decrease of 7.2%[15] - Total liabilities decreased to $115,096 as of September 30, 2024, from $122,194 at December 31, 2023, a reduction of 5.8%[15] Assets - Total assets decreased to $210,538 as of September 30, 2024, from $216,107 at December 31, 2023, a decline of 2.6%[15]

Revenue Performance - Revenue decreased from $100.1 million in the six months ended June 30, 2023, to $99.7 million in the same period of 2024, primarily due to a decrease in subscription and support revenue [73]. - Total revenue decreased by 3%, or $1.7 million, to $49.247 million for the three months ended June 30, 2024, compared to $50.988 million for the same period in 2023 [102]. - Subscription and support revenue decreased by 3%, or $1.616 million, to $47.397 million for the three months ended June 30, 2024, primarily due to a decrease in revenue from premium offerings [105]. - Total revenue for North America decreased by $0.4 million, or 1%, while total revenue outside of North America decreased by $1.3 million, or 6% for the three months ended June 30, 2024 compared to the same period in 2023 [107]. - Total revenue for North America increased by $1.4 million, or 2%, while total revenue outside of North America decreased by $1.7 million, or 4% for the six months ended June 30, 2024 compared to the same period in 2023 [122]. Customer Metrics - Premium customers decreased from 2,131 to 1,958, while total customers declined from 2,691 to 2,444 during the same period [78]. - Net revenue retention rate fell from 94.5% in 2023 to 92.7% in 2024, indicating a decline in customer retention [78]. - Average annual subscription revenue per premium customer increased from $92.1 thousand to $98.5 thousand, reflecting improved revenue per customer [78]. Profitability and Expenses - Gross profit decreased by $2.6 million, or 8%, to $29.840 million for the three months ended June 30, 2024, compared to $32.487 million for the same period in 2023 [103]. - Loss from operations improved to $5.037 million for the three months ended June 30, 2024, compared to a loss of $6.342 million for the same period in 2023 [103]. - The overall loss from operations was $3.0 million for the six months ended June 30, 2024, a significant improvement from a loss of $17.1 million in the same period in 2023 [117]. - Total operating expenses decreased by $14.6 million, or 19%, with significant reductions in research and development, sales and marketing, and general and administrative expenses [127][128][129]. Cash Flow and Financial Position - Cash provided by operating activities was $6.0 million for the six months ended June 30, 2024, compared to a cash outflow of $1.8 million in the prior period [132][134]. - The company reported a gain on the sale of assets amounting to $6.0 million during the six months ended June 30, 2024 [130][135]. - As of June 30, 2024, the company had $12.2 million in cash and cash equivalents held by international subsidiaries, which can be repatriated tax-free [131]. - The company believes its existing cash and cash equivalents, along with its credit facility, will be sufficient to meet working capital and capital expenditures for at least the next 12 months [143]. - As of June 30, 2024, the company had $24.2 million in cash and cash equivalents, primarily held for working capital purposes [155]. International Revenue and Currency Risks - Revenue derived from customers outside North America was 38% for the six months ended June 30, 2024, down from 40% in 2023 [74]. - Revenues generated outside the United States accounted for 44% for the three months ended June 30, 2024, consistent with the same period in 2023 [150]. - A 20% unfavorable movement in foreign currency exchange rates could decrease revenues by $4.7 million and operating income by $1.0 million for the six months ended June 30, 2024 [154]. - The company is exposed to foreign currency exchange risks, particularly with the euro, British pound, and Japanese yen [149]. Future Outlook and Strategic Plans - The company plans to continue investing in product strategy, sales, and market activities to support long-term revenue growth [72]. - The company expects to achieve economies of scale that will reduce costs as the customer base grows [72]. - Geopolitical events and macroeconomic conditions may impact future spending on software products and demand for video services [81]. - The company expects stock-based compensation expense to increase in absolute dollars in future periods [94]. - The company expects general and administrative expenses to increase modestly during the remainder of 2024 [115]. - The company may need to raise additional funds for future activities or acquisitions if cash flow from operations is insufficient [145]. - Market volatility and rising interest rates could adversely impact the company's ability to access capital [145].

Revenue Performance - Revenue for Q2 2024 was $49.2 million, a decrease of 3% compared to $51.0 million in Q2 2023[2] - Total revenue for Q2 2024 was $49,247,000, a decrease of 3.4% compared to $50,988,000 in Q2 2023[19] - Subscription and support revenue was $47.4 million, down 3% from $49.0 million in Q2 2023[2] - Subscription and support revenue for Q2 2024 was $47,397,000, down 3.3% from $49,013,000 in Q2 2023[19] - Revenue guidance for Q3 2024 is expected to be between $48.0 million and $49.0 million[8] - Full year 2024 revenue is expected to be in the range of $195.5 million to $198.0 million, an increase from previous guidance[10] Profitability Metrics - Gross profit for Q2 2024 was $29.8 million, with a gross margin of 61%, compared to $32.5 million and 64% in Q2 2023[2] - Gross profit for Q2 2024 was $29,840,000, a decline of 8.1% from $32,487,000 in Q2 2023[19] - Non-GAAP gross profit for the three months ended June 30, 2024, was $30,574,000, which is 62% of revenue, compared to $33,407,000 or 66% of revenue for the same period in 2023[22] - Adjusted EBITDA was $3.8 million for Q2 2024, representing an adjusted EBITDA margin of 8%, compared to $3.6 million in Q2 2023[2] - Adjusted EBITDA for the three months ended June 30, 2024, was $3,768,000, with a constant currency adjustment of $258,000, resulting in an adjusted EBITDA of $4,026,000 on a constant currency basis[24] Cash Flow and Assets - Cash flow provided by operations was $4.0 million in Q2 2024, down from $10.8 million in Q2 2023[4] - The company experienced a net cash provided by operating activities of $4,021,000 for the three months ended June 30, 2024, compared to $10,810,000 for the same period in 2023[20] - Free cash flow was $1.8 million in Q2 2024, compared to $7.1 million in Q2 2023[4] - Total current assets increased to $72,157,000 as of June 30, 2024, from $70,399,000 at the end of 2023[17] - The company reported a net cash increase of $1,301,000 for the three months ended June 30, 2024, compared to a net cash increase of $6,615,000 for the same period in 2023[20] Expenses - Research and development expenses for Q2 2024 were $8,975,000, a decrease of 13.2% from $10,345,000 in Q2 2023[19] - Sales and marketing expenses for Q2 2024 were $17,080,000, down 10.3% from $19,034,000 in Q2 2023[19] - Stock-based compensation expense for the three months ended June 30, 2024, was $3,159,000, down from $3,487,000 in the same period of 2023[22] Net Loss and Improvement - Net loss for Q2 2024 was $5,245,000, compared to a net loss of $6,237,000 in Q2 2023, showing an improvement[19] - Brightcove Inc. reported a GAAP net loss of $5,245,000 for the three months ended June 30, 2024, compared to a net loss of $6,237,000 for the same period in 2023, representing a 15.9% improvement[20] - The GAAP diluted net loss per share for the three months ended June 30, 2024, was $(0.12), compared to $(0.14) for the same period in 2023[22] - Non-GAAP net loss income for the three months ended June 30, 2024, was $(685,000), compared to a net income of $642,000 for the same period in 2023[22] Backlog and Customer Metrics - 12-month backlog was $123.3 million, a 1% decrease year-over-year from $124.8 million[6] - Average annual subscription revenue per premium customer reached $99,000, a 4% increase from $94,800 in Q2 2023[6]