Brightcove(US:BCOV)2024-05-09 07:04Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $50.5 million, representing a 3% year-over-year growth and exceeding the high end of guidance [4] - Revenue excluding overages was $49.4 million, growing at 3.6% year-over-year [4] - Adjusted EBITDA was $5 million, maintaining a double-digit adjusted EBITDA margin for the third consecutive quarter [4][10] - Cash and cash equivalents at the end of the quarter were $22.9 million, up $4.3 million sequentially [4][34] - Gross profit was $30.9 million, with a gross margin of 61.1%, an improvement from 58.7% in Q1 2023 [32] Business Line Data and Key Metrics Changes - Subscription and support revenue was $48 million, up 2% year-over-year, while professional services revenue was $2.5 million, up 28% year-over-year [28] - The 12-month backlog was $127.3 million, flat quarter-over-quarter and down 1.6% year-over-year, while total backlog reached $185.4 million, up 2.3% year-over-year [28] - Recurring dollar retention rate decreased to 85% from 94% in the previous quarter, primarily due to the loss of a large media customer [29] - Net revenue retention was 92%, down from 95% in the previous quarter [30] Market Data and Key Metrics Changes - North America accounted for 61% of total revenue, while international revenue made up 39%, with Europe contributing 16% and Japan and Asia Pacific 23% [28] - The company signed new business add-on and renewal transactions across various industries, including media and enterprise sectors [14][15] Company Strategy and Development Direction - The company aims to drive consistent revenue growth, particularly in recurring subscription revenue, and is focused on improving productivity and efficiency [10][11] - A strategic transaction to monetize a portion of the patent portfolio for $6 million was executed, enhancing cash on the balance sheet while retaining a perpetual license for all patents [5][6] - The company is making a larger push into AI, focusing on optimization and efficiency to help customers grow revenue and reduce costs [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong growth in profitability and cash generation, despite a forecasted revenue decline in Q2 [25][38] - The company believes its current market valuation is disconnected from its intrinsic value, presenting a compelling investment opportunity [8][54] - Management highlighted the importance of returning the add-on business to historical growth levels and building a robust pipeline of larger deals [45][46] Other Important Information - The company is focused on developing purpose-built solutions to provide customers with multiple upgrade paths, which is seen as a more sustainable approach than traditional add-on business [13] - New product announcements included partnerships with Google Ad Manager and enhancements to existing services, aimed at expanding customer value [17][18] Q&A Session Summary Question: Despite a better-than-expected performance in Q1, is the revenue decline in Q2 due to the lost customer discussed in the 4Q call? - The revenue decline is primarily due to the loss of a large media customer related to M&A, a decrease in professional services revenue, and headwinds from foreign exchange and lower overages [40] Question: Can you provide an update on the company’s large deal pipeline, particularly in media? - The pipeline is building well, with several high-value deals expected in the coming quarters, although the timing of closing these deals can be unpredictable [42][43] Question: What will it take to get the business to a point where it can consistently grow revenue? - The focus is on restoring add-on business to historical levels and increasing the frequency of larger deals to achieve consistent growth [45] Question: Have you seen any green shoots in add-on or usage business in 2024? - Some success has been noted in upgrading enterprise customers, but the entitlement business has not yet returned to previous levels [47] Question: Can you compare the demand environment in your pipeline between media accounts and traditional enterprise accounts? - Media demand is driven by large deals, while enterprise accounts are more volume-based, with efforts focused on building add-ons into the existing customer base [49] Question: Are there still fine-tuning cost structure actions to be done after the recent reduction in force? - No further major actions are planned, but the company will continue to manage operational expenses judiciously [51][52]