Q1 2024 Brightcove Inc Earnings Call
Operator: Michael Latimore, Robert Noreck, Michael Latimore, Eric Martinuzzi, Brightcove Inc. For discussion on material risks and other important factors that could affect our actual results, please refer to those contained in our most recently filed annual report on Form 10-K and as updated by our other SEC filings. Also, during the course of today's presentation, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued after market close today, which can be found on our website at www.brightcove.gov.
It could cause actual results to differ materially from expectations, including the effect of macroeconomic conditions currently affecting the global economy.
Operator: For a discussion on material risks and other important factors that could affect our actual results. Please refer to those contained in our most recently filed annual report on Form 10-K, and as updated by our other SEC filings.
Operator: Also during the course of today's presentation, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued after market close today, which can be found on our website at www Dot Brightcove dotcom.
Operator: Thank you all for joining today to discuss our first quarter results I'm, Marc Debevoise break of CEO and with me today as <unk>, New CFO John Wagner.
Marc Debevoise: Thank you all for joining me today to discuss our first quarter results. I'm Marc DeBevoise, Brightcove CEO, and with me today is Brightcove's new CFO, John Wagner. First, I'd like to say we're thrilled to welcome John to Brightcove. He's a seasoned executive with more than two decades of experience in the technology industry, most recently as the CFO of online insurance marketplace Evercraft. Before that, John held senior leadership roles at Carbonite, Constant Contact, NuoDB, and Salesforce.
Speaker Change: First I'd like to say, we're thrilled to welcome John to Brightcove. He is a seasoned executive with more than two decades of experience in the technology industry. Most recently as the CFO of online insurance marketplace ever quote.
Marc Debevoise: Before that John held senior leadership roles at Carbonite constant contact new ODB and sales net.
Marc Debevoise: John has an impressive track record of delivering improvements in growth and profitability, and I'm excited to add his expertise to our list. You'll hear more on the numbers from John in a few moments, but I'll begin with a quick overview of our high-level financial results for Q1. Total revenue for Q1 was $50.5 million, which exceeded the high end of our guidance range and represents 3% year-over-year revenue growth. Revenue excluding overages, which we believe is the most helpful way for investors to evaluate our performance, was $49.4 million and grew even faster at $3.5 million.
Marc Debevoise: China has an impressive track record delivering improvements in growth and profitability and I'm excited to have add his expertise to our leadership team.
Marc Debevoise: You'll hear more on the numbers from John in a few moments, but I'll begin with a quick overview of our high level financial results for Q1.
Marc Debevoise: Total revenue for Q1 was $50 5 million, which exceeded the high end of our guidance range and represents 3% year over year revenue growth.
Marc Debevoise: Revenue, excluding Overages, which we believe is the most helpful way for investors to evaluate our performance was $49 4 million and grew even faster at three 6%.
Marc Debevoise: Adjusted EBITDA was $5 million, at the high end of our guidance, and delivered the third consecutive quarter of double-digit Adjusted EBITDA. And finally, we ended the quarter with $22.9 million in cash and cash equivalents, up $4.3 million from the previous quarter.
Marc Debevoise: Adjusted EBITDA was $5 million at the high end of our guidance and delivered the third consecutive quarter of double digit adjusted EBITDA margin.
Marc Debevoise: And finally, we ended the quarter with $22 9 million in cash and cash equivalents up $4.3 million sequentially.
Marc Debevoise: This reflects better-than-expected operating cash flow performance in our typically seasonally lowest quarter and the proceeds from a strategic decision to monetize a portion of our patent portfolio. Going a little deeper on this strategic transaction, during the quarter, we successfully monetized a portion of our patent portfolio with a leading publicly traded firm for $6 million. This included approximately 40% of our 150 plus patents and approximately 30% of our patent family. We believe this was a meaningful, value-enhancing transaction for several reasons.
Marc Debevoise: This reflects better than expected operating cash flow performance and our typically seasonally lowest quarter and the proceeds from our strategic decision to monetize a portion of our patent portfolio.
Marc Debevoise: Going a little deeper on the strategic transactions during the quarter, we successfully monetized a portion of our patent portfolio with a leading publicly traded firm for $6 million.
Marc Debevoise: This included approximately 40% of our 150, plus patents and approximately 30% of our patent families.
Marc Debevoise: We believe this was a meaningful value enhancing transaction for several reasons.
Marc Debevoise: First, by monetizing this portion of our patent portfolio, we meaningfully increase the amount of cash on our balance sheet, an attractive way for us to realize previously unrealized and typically unrealisable value. Second, we received a perpetual license back to all of our patents as part of the deal. This enables us to continue using all of the technology covered by these patents in our products for all of our current and future customers. There will be no changes in terms of the benefits we receive from owning these patents, and no changes to our product capabilities or the value we deliver to and for our customers.
Marc Debevoise: First by monetizing this portion of our patent portfolio, we meaningfully increased the amount of cash on our balance sheet and attractive way for us to realize previously unrealized and typically unrealizable value.
Marc Debevoise: Second we received a perpetual license back to all of our patents as part of the deal.
Marc Debevoise: It's enabled.
Marc Debevoise: As to continue using all of the technology covered by these patents in our products for all of our current and future customers. So no changes in terms of the benefits. We received from owning these patents and no changes to our product capabilities or the value, we deliver to and for our customers.
Marc Debevoise: Third, by executing this transaction, we will benefit from the acquirer potentially pursuing licensing and or enforcement activities in the market with our competitors and or non-Brightcove users, which, like most companies in our position, we have not historically pursued. So this transaction effectively serves as a way to realize the value of a portion of our patent portfolio up front, while also potentially providing the benefits of patent enforcement in the marketplace that we would not otherwise.
Marc Debevoise: Third by executing this transaction, we will benefit from the acquirer potentially pursuing licensing and enforcement activities in the market with our competitors.
Marc Debevoise: <unk> non brightcove users, which like most companies in our position we have not previously pursued historically.
Marc Debevoise: So this transaction effectively serves as a way to realize the value of a portion of our patent portfolio upfront, while also potentially providing the benefits of patent enforcement in the marketplace that we would not otherwise pursue.
Marc Debevoise: Finally, we continue to have an extensive remaining patent portfolio and an R&D team that generates new products and patents, all of which we believe continue to differentiate us, can generate additional business opportunities, help defend our recurring revenue base, and may deliver us more capital and return on investment. We believe this transaction is a great example of how we will pursue creative opportunities to unlock value for shareholders while also strengthening our business. We also believe it is yet another factor in demonstrating the continued irrationality of our current market value. With the stock currently trading at less than 0.4 times enterprise value to forward revenue and below four times enterprise value to forward adjusted EBITDA, we believe our market capitalization is completely disconnected from our intrinsic value.
Marc Debevoise: Finally, we continue to have an extensive remaining patent portfolio and an R&D team that generates new products and patents all that we believe continue to differentiate us can generate additional business opportunities helped defend our recurring revenue base and may deliver us more capital.
Marc Debevoise: Return on investment in the future.
Marc Debevoise: We believe this transaction is a great example of how we will pursue creative opportunities to unlock value for shareholders. While also strengthening our business.
Marc Debevoise: We also believe it is yet another factor and demonstrating the continued irrationality of our current market valuation.
Marc Debevoise: With the stock currently trading at less than four times enterprise value to forward revenue and below four times enterprise value to forward adjusted EBITDA, We believe our market capitalization, our capitalization is completely disconnected from our intrinsic value.
Marc Debevoise: We believe the core asset value of our intellectual property, our customer base, and our software alone exceeds our current market value. And add to that our nearly $200 million of annual revenue, the overwhelming majority of it recurring, a record backlog of over $185 million, and an efficient and profitable business model, and this disconnect becomes even more apparent. With a resilient operating plan that we expect will deliver on our profitability targets for 2024 in any conceivable scenario, we continue to strongly believe our shares reflect a very compelling investment.
Marc Debevoise: We believe the core asset value of our intellectual property, our customer base and our software alone exceeds our current market value and add to that our nearly $200 million of annual revenue. The overwhelming majority of it recurring a record backlog of over $185 million in an efficient and profitable business model and this disconnect becomes even more apparent.
Marc Debevoise: With a resilient operating plan that we expect will deliver on our profitability targets for 2024 in any conceivable scenario. We continue to strongly believe our shares reflecting a very compelling investment opportunity.
Marc Debevoise: Turning to our performance in the quarter, we had strong financial performance while also seeing a continuation of some of the business trends we saw throughout much of 2020. First, we had a relatively strong revenue quarter. We topped the high end of our guidance on revenue and saw 3% growth in overall revenue and 3.6% growth in revenue excluding.
Marc Debevoise: Turning to our performance in the quarter, we had strong financial performance, while also seeing a continuation of some of the business trends we saw throughout much of 2023.
Marc Debevoise: First we had a relatively strong revenue quarter, we topped the high end of our guidance on revenue and saw 3% growth in overall revenue and three 6% growth in revenue excluding purchase.
Marc Debevoise: The recurring revenue portion of our business has strengthened as we've continued to see overages at their lower than historically typical levels, and our backlog hit a record high. While we don't expect to maintain this type of revenue growth in each quarter this year, our goal remains to drive more consistent revenue growth in the future, especially with regard to recurring subscription revenue. We also had another strong profitability quarter. We hit 10% adjusted EBITDA margins for the third straight quarter.
Marc Debevoise: The recurring revenue portion of our business has strengthened as we've continued to see overages that theyre lower than historically typical levels and our backlog hit a record high.
Marc Debevoise: While we don't expect to maintain this type of revenue growth in each quarter. This year. Our goal remains to drive more consistent revenue growth in the future, especially with regards to the recurring subscription revenue we drive.
Marc Debevoise: We also had another strong profitability quarter, we hit 10% adjusted EBITDA margins for the third straight quarter.
Marc Debevoise: Maintaining cost discipline across our business while continuing to opportunistically invest in our key growth initiatives is our top priority. We will continue to look for ways to improve productivity and efficiency in all aspects of our operations. We are pleased with the results so far and believe we are well on track to deliver our goal of 25% or greater adjusted EBITDA growth and 40 to 50% free cash flow conversion of that adjusted EBITDA in 2020.
Marc Debevoise: Entailing cost discipline across our business, while continuing to opportunistically invest in our key growth initiatives is our top priority this year.
Marc Debevoise: We will continue to look for ways to improve productivity and efficiency in all aspects of our operations I am pleased with the results. So far and believe we are well on track to deliver our goal of 25% or greater adjusted EBITDA.
Marc Debevoise: And 40% to 50% free cash flow conversion of that adjusted EBITDA in 2024.
Marc Debevoise: We also had a solid new business quarter, with quality new logo wins with both media and enterprise customers. New business tracked above the average of the last three quarters, and we saw continued improvement in overall deal value and average deal sizes versus last. North America remains our best-performing region, and we continue to work on driving similar results globally. We continue to grow and expand our large deal pipeline with an impressive cross-section of traditional media, large and mid-size streaming services, and large enterprises as well.
Marc Debevoise: We also had a solid new business quarter with quality, new logo wins with both media and enterprise customers new business tracked above the average of the last three quarters and we saw continued improvement in overall deal value and average deal sizes versus last quarter.
Marc Debevoise: With America remains our best performing region, and we continue to work on driving similar results globally.
Marc Debevoise: We continue to grow and expand our large deal pipeline with an impressive cross section of traditional media.
Marc Debevoise: Large and midsized streaming services in large enterprises as well our new CRO, Jim Norton is laser focused on its shepherding. These types of larger opportunities through our pipeline over the course of 2024 on that last point, we had a meaningful six figure win in the quarter in enterprise and are focused on the on a number of others on the horizon in this area.
Marc Debevoise: Our new CRO, Jim Norton, is laser-focused on shepherding these types of larger opportunities through our pipeline over the course of 2020. On that last point, we had a meaningful six-figure win in enterprise and are focused on a number of others on the horizon in the city. On the media side, we continue to believe larger entities outsourcing at least a part of their streaming technology stack to us is a compelling operational and financial investment, but we also continue to see these sales cycles be generally longer and less predictable in their view. However, our retention and add-on business remained a drag to growth due to the same dynamics that we experienced over the course of 2020.
Marc Debevoise: ESI, we continue to believe larger entities outsourcing at least a part of their streaming technology stack to us as a compelling operational and financial investment, but also continue to see these sales cycles be generally longer and less predictable in their nature.
Marc Debevoise: However, our retention and add on business remained a drag to growth due to the same dynamics that we experienced over the course of 2023.
Marc Debevoise: As we mentioned last quarter, we had meaningful customer churn in Japan in Q1, as expected due to an M&A event and subsequent platform consolidation on the acquirer's do-it-yourself platform. We also saw a continued historically muted ad on demand with our existing... As we have discussed previously, an important part of our strategy is to develop a number of purpose-built solutions that will provide customers multiple upgrade paths to expand their spend with Bright This is a more sustainable and value-added approach than our traditional entitlement-based add-ons.
Marc Debevoise: As we mentioned last quarter, we had a meaningful customer in Japan churn in Q1 as expected due to an M&A event and subsequent platform consolidation on the acquirers do it yourself streaming stack.
Marc Debevoise: We also saw continued historically needed add on demand with our existing customers.
Marc Debevoise: As we've discussed previously an important part of our strategy is to develop a number of purpose built solutions that will provide customers multiple upgrade paths to expand their spend with brightcove.
Marc Debevoise: This is a more sustainable and value added approach than our traditional entitlement based add on business.
Marc Debevoise: We continue to see positive signs of customer interest in Marketing Studio, where more existing Video Cloud Enterprise customers are upgrading each quarter. And we still have more work to do to develop a consistent demand and flywheel for marketing and communication studio, but we believe we're headed in the right direction.
Marc Debevoise: We continue to see positive signs of customer interest in marketing studio, where more of our existing video cloud enterprise customers are upgrading each quarter.
Marc Debevoise: And we still have more work to do to develop a consistent demand and fly wheel for marketing and communication studio, but we believe we're headed in the right direction.
Marc Debevoise: It is still too early to predict the timing of sustained improvement in our add-on business, but returning it to growth remains a key priority. On the customer front, we signed a number of new business, add-on, and renewal transactions in Q1 across a wide range of industries and geographies. This included media companies like Ampass, the home of the Oscars, Acune Media, a leading Turkish media company, Watchit, a leading streamer in Egypt, and CNET Media Group, as well as meaningful add-on business with leading streaming services in Japan, Korea with Coupang, Mexico with Sky Mexico, New Zealand with Sky New Zealand, and Brazil with SBCC. We also closed deals with sports organizations like Ironman, Netball Australia, and Little League Baseball and added more to our deals with the NHL, MLF, and Moto America.
Marc Debevoise: It is still too early to predict the timing of sustained improvement in our add on business, but returning it to growth remains a key priority.
Marc Debevoise: On the customer front, we signed a number of new business add on and renewal transactions in Q1 across a wide range of industries and geographies.
Marc Debevoise: This included media companies like and pass the home of the Oscars acute media, a leading Turkish media company watch at a leading streamer and Egypt and CNET Media group.
Marc Debevoise: As well as meaningful add on business with leading streaming services in Japan Korea, with Couponing, Mexico with Sky, Mexico, New Zealand with Sky, New Zealand, and Brazil with SPT.
Marc Debevoise: We also closed deals with sports organizations like Iron Man, Netball, Australia, and literally baseball and added more toward deals with the NHL MLS and Moto America.
Marc Debevoise: On the enterprise side, we close deals with finance, healthcare, auto, and consulting companies like Apollo, AARP, Booz Allen, Cigna, Franklin Templeton, General Motors, HSBC, McKinsey, Mizzouho, Navy Federal Credit Union, PIMCO, Prudential Life Insurance, TD Bank, and United Healthcare; and also with technology companies like Dell, Intel, Motorola, and Swiss. We also had a meaningful six-figure win in the quarter with a leading media group in Japan and AIPAC that expanded their engagement with Brightcove in preparation for this summer's Olympics.
Marc Debevoise: On the enterprise side, we closed deals with finance healthcare auto and consulting companies like Apollo AARP Booz Allen Cigna Franklin Templeton General Motors, HSBC, Mckinsey Mizuho Navy Federal credit Union, Pimco, Prudential life insurance, TD Bank and United Healthcare.
Marc Debevoise: Also.
Marc Debevoise: Technology companies like Dell, Intel Motorola and Swisscom.
Marc Debevoise: We also had a meaningful six figure win in the quarter with a leading media group in Japan, and APAC and expanded their engagement with Brightcove in preparation for this Summer's Olympics.
Marc Debevoise: We are set to support numerous company streaming needs for the Olympics, and we believe this is a great indication of the opportunity for live content on our platform. It showcases our ability to scale reliably and in mission-critical situations, and we will look to translate this success into other sports and life-centric opportunities. On the product side, we had a highly productive quarter in terms of partnerships and innovation.
Marc Debevoise: We are set to support numerous companies stream means needs for the Olympics. This year and we believe this is a great indication of the opportunity for <unk> content on our platform and.
Marc Debevoise: And showcases our ability to scale reliably and in mission critical situations and we will look to translate the success into other sports and live centric opportunities.
Marc Debevoise: On the product side, we had a highly productive quarter in terms of partnerships and innovation.
Marc Debevoise: Each of these things expands the value we can deliver to customers and our growth opportunities. Accelerating the pace of innovation is a core priority for us, and this quarter's announcements are a strong indication that we are delivering on that goal. Our recent product announcements included a new strategic partnership with Google Ad Manager to enhance our ad modernization. Through this partnership, Brightcove's customers will be able to utilize Google Ad Manager as their ad management platform, fully integrated as part of Brightcove, as well as generate demand from Google's ads.
Marc Debevoise: Each of these things expand the value, we can deliver to customers and our growth opportunities.
Marc Debevoise: Accelerating the pace of innovation is a core priority for us and this quarter's announcements are a strong indication we are delivering on that goal.
Marc Debevoise: Our recent product announcements included a new strategic partnership with Google AD manager to enhance our AD monetization service.
Marc Debevoise: Through this partnership Brightcove customers will be able to utilize Google AD manager as their AD management platform fully integrated as part of Brightcove as well as generate demand from Google's ad products.
Marc Debevoise: The combination will make it easier for customers to monetize content, expand the number of impressions Brightcove can serve on behalf of our customers, and ultimately increase competition in the value delivered for our customers. We also launched Publisher Insights, which expands upon our audience insights offering to provide real-time analytics for news organizations and other content providers focused on real-time driven This is a great example of delivering purpose-built solutions that address the specific, high-value needs of certain customers.
Marc Debevoise: The combination will make it easier for customers Mr. Mike monetize content expand the number of impressions brightcove conserve on behalf of our customers and ultimately increased competition and the value delivered for our customers inventory.
Marc Debevoise: We also launched publisher insights, which expands upon our audience insights offering to provide real time analytics for news organizations and other content providers focused on real time driven content.
Marc Debevoise: This is a great example of delivering purpose built solutions that address the specific high value needs of certain customers.
Marc Debevoise: We launched Cloud Playout 2.0 as well, which enhances customers' ability to build new fastlight channels in minutes with their existing content catalog and livestream portfolio. Building upon the initial success of Cloud Playout, version 2.0 will help media companies be even better at extending their reach and engagement, monetizing their content more efficiently, managing their linear VOD and live event playoffs, and better assessing viewing habits and content. And finally, we added cloud-based video editing capabilities to our platform.
Marc Debevoise: We launched cloud play out to point out as well, which enhances customers ability to build new fast like channels in minutes with their existing content catalog and livestream portfolio.
Marc Debevoise: Building upon the initial success of cloud play out version two point out will help media companies be even better at extending their reach and engagement monetizing their content more efficiently managing their linear bard and live event playoffs, and better assess viewing habits and content performance.
Marc Debevoise: And finally, we added cloud based video editing capabilities to our platform. This new functionality significantly simplifies content creation on our platform, including concepts like repurposing existing long form video content into snacking content for specific audiences, making it simple to create and package employee generated content and E and the development of promotional video content.
Marc Debevoise: This new functionality significantly simplifies content creation on our platform, including concepts like repurposing existing long-form video content into snackable content for a specific audience, making it simple to create and package employee-generated content and easing the development of promotional video content for sales and marketing. We have a number of initiatives underway that are specifically focused on additional new solutions and expanded use cases in the enterprise space and on the continued development of our live VOD, OTT, and monetization solutions for media. We're also making a larger push into AI.
Marc Debevoise: For sales and marketing campaigns.
Marc Debevoise: We have a number of initiatives underway that are specifically focused on additional new solutions and expanded use cases in the enterprise space and on the continued development of our alive, Bod OTT and monetization solutions for media customers.
Marc Debevoise: We're also making a larger push into AI.
Marc Debevoise: Our overall strategy continues to focus on how we can help our customers grow revenue, reduce costs, and connect better with more audiences, both internally and externally. We do that today with the most scaled, trusted, and insightful platform that recommends actions you can take with your content to improve your business. With Gen AI, we are ramping up that strategy, evolving from inferring actions to automating them and making our systems truly intelligent, seeking to exponentially drive customer value. Our AI strategy focuses on two core concepts: optimization and efficiency. First, our goal is to transform the products and solutions we deliver to optimize our customers' businesses. Think driving more revenue, more audience, or more content.
Marc Debevoise: Our overall strategy continues.
Marc Debevoise: Focus on how we can help our customers grow revenue reduce costs and connect better with more audiences, both internally and externally.
Marc Debevoise: We do that today with the most scaled trusted and insightful platform that infers actions you can take with your content to improve your business.
Marc Debevoise: But with <unk>, we are ramping up that strategy evolving from inferring actions to automating them and making our systems truly intelligent seeking to exponentially drive customer value.
Marc Debevoise: Our AI strategy focuses on two core concepts optimization and efficiency.
Marc Debevoise: First our goal is to transform the products and solutions, we deliver to optimize our customers' businesses think driving more revenue more audience or more content and we also want to find the right tools and solutions to optimize our own business.
Marc Debevoise: And we also want to find the right tools and solutions to optimize our own business. Second, we are focused on delivering meaningful efficiencies for our customers through our solutions. Think reducing costs on content delivery, or maximizing the quality of that delivery, or minimizing downtime. And we want to find the right tools and solutions to achieve both cost savings and time efficiency, and our own business as well. Our intention is not to build AI engines.
Marc Debevoise: Second we are focused on delivering meaningful efficiencies for our customers through our solutions think reducing costs on content delivery or Mexico, and quality of that delivery or minimizing downtime and we want to find the right tools and solutions to find both cost savings and time efficiencies in our own business as well.
Marc Debevoise: Our intention is not to build AI engines that market has demonstrated to us that there are hundreds out there and more coming every day.
Marc Debevoise: The market has demonstrated to us that there are hundreds out there and more coming every day. Our strategy is rather to partner with the best-in-class AI engines and apply them to support our strategy. Our differentiators will be first in how we strategically include our data and our customers' data and content securely and responsibly in those AI engines and build solutions that give our customers control over what data goes into those AI models and when.
Marc Debevoise: Our strategy is rather a partner with the best in class AI engines and apply them to support our strategy.
Marc Debevoise: Our differentiators will be first and how we can be strategically include our data and our customers' data and content securely and responsibly in those AI engines and build solutions that give our customers control about what data goes into those AI models and win.
Marc Debevoise: We believe the data and content managed in our systems will continuously inform and improve our AI-enabled solutions to make them more unique and specialized for our customers' businesses over time. Second, we will not just be delivering insights that enable our customers to take the right actions but ultimately automate those actions as our systems continually learn, delivering an effectively intelligent platform to drive efficiency in our own business, including having recently announced advancements to our knowledge base, utilizing Amazon's Q technology.
Marc Debevoise: We believe the data and content manage and our systems will continuously inform and improve our AI enabled solutions to make them more unique and specialized for our customers businesses over time.
Marc Debevoise: Second we will not just be delivering insights that enable our customers to take the right actions, but ultimately automate those actions as our systems continually learn delivering and effectively intelligent platform of efficiency in our own business.
Marc Debevoise: Having recently announced advancements to our knowledge base utilizing Amazon's Q technology.
Marc Debevoise: As Amazon CEO Andy Jassy mentioned in his release last week, we partnered with AWS to evolve our award-winning customer service to deliver answers about our solutions using this AI engine. We can now respond to customer needs even faster, making our teams more responsive, productive, and efficient. We believe AI will make our products and overall capabilities meaningfully better and ultimately have the potential to be transformative for our customers. We believe AI can be a game changer for our customers in terms of delivering solutions around things like content generation and creation, monetization, search and discovery, audience engagement, recommendations, and more.
Marc Debevoise: As Amazon CEO, Andy Jass. He mentioned in his release last week, we partnered with AWS to evolve our award winning customer service to deliver answers about our solutions using this AI engine and can now respond to customer needs, even faster, making our teams more responsive productive and efficient.
Marc Debevoise: We believe AI will make our products and overall capabilities meaningfully better and ultimately has the potential to be transformative for our business.
Marc Debevoise: We believe AI can be a game changer for our customers in terms of delivering solutions around things like content generation and creation monetization search and discovery audience engagement recommendations and more.
Marc Debevoise: We also believe it can be a game changer for the optimization of our business, too. I'm very excited about our strategy here, and with numerous pilots currently underway, you should expect to hear more and more from us here going forward. Before I turn things over to John, let me wrap up by reiterating that we are off to a solid start in 2024. In Q1, we grew revenue, we delivered meaningful adjusted EBITDA margins, and we added millions in cash to our balance.
Marc Debevoise: We also believe it can be a game changer for the optimization of our business too.
Marc Debevoise: I'm very excited about our strategy here and with numerous pilots currently underway you should expect to hear more and more from us here going forward.
Speaker Change: Before I turn things over to John Let me wrap up by reiterating that we are off to a solid start in 2024 and Q1. We grew revenue we delivered meaningful adjusted EBITDA margins and added millions in cash to our balance sheet.
Marc Debevoise: We are executing with operational rigor around expenses and are confident in our ability to deliver strong growth in profitability and real cash. We are working diligently to build a more predictable and consistent go-to-market engine, and we have a market-leading product suite and a clear vision of where we need to take it to deliver for our customers, especially in an AI-driven future. We believe these steps will deliver improved financial results over time and that at our current valuation, we continue to believe Brightcove represents an incredibly attractive investment.
Marc Debevoise: We are executing with operational rigor around expenses and are confident in our ability to deliver strong growth and profitability in real cash generation.
Marc Debevoise: We are working diligently to build a more predictable and consistent go to market engine, and we have market, leading product suite and a clear vision of where we need to take it to deliver for our customers, especially in an AI driven future.
Marc Debevoise: We believe these steps will deliver improved financial results over time.
Marc Debevoise: And at our current valuation we continue to believe Brightcove represents an incredibly attractive investment opportunity.
Marc Debevoise: Finally, with the addition of John, we have completed the build out of our new management team, and I've been incredibly pleased with the passion and purpose this team is instilling across the company and where we believe we can take it together. I'm also personally excited to partner specifically with John and believe he is an excellent addition to this team. So with that, let me turn things over to him to introduce himself, walk through the financials, and our guidance in a little bit more detail. John. Thank you, Marc.
Marc Debevoise: Finally, with the addition of John we have completed the build out of our new management team and I have been incredibly pleased with the passion and purpose. This team is instilling across the company and where we believe we can take it together.
Marc Debevoise: I'm also personally excited to partner specifically with John and believe he is an excellent addition to this team.
Marc Debevoise: So with that let me turn things over to him to introduce himself walk through the financials and our guidance in a little bit more detail John.
John Wagner: Thank you, Marc, and let me start by saying I am thrilled to be joining Brightcove. As I considered opportunities for my next role, Brightcove checked each of the boxes I was most focused on.
John: Marc and let me start by saying I am thrilled to be joining brightcove as I considered opportunities for my next role Brightcove checked each of the boxes I was most focused on.
John Wagner: As a recognized leader in the streaming industry, Brightcove is well positioned in a large and growing market with two decades of technical innovation and an incredible roster of media and enterprise customers. I strongly believe Brightcove is in a great position to build upon this history with a management team that is now laser focused on a strategy to deliver better operational and financial results. And as a new shareholder myself, I see substantial value and upside in our stock at these levels.
John Wagner: As a recognized leader in the streaming industry Brightcove is well positioned in a large and growing market with two decades of technical innovation and an incredible roster of media and enterprise customers.
John Wagner: I strongly believe Brightcove is in a great position to build upon this history with a management team that is now laser focused on our strategy to deliver better operational and financial results and as a new shareholder myself I see substantial value and upside in our stock at these levels.
John Wagner: I'd now like to provide a detailed review of our first quarter results and then finish with our outlook for the second quarter and full year 2025. Total revenue in the first quarter was $50.5 million, above the high end of our guidance range and up 3% year over year. Breaking revenue down further, if we exclude overages of $1.1 million in the quarter, revenue was $49.4 million, up 3.6% year over year. Subscription and support revenue, which includes overages, was $48 million.
John Wagner: I'd now like to provide a detailed review of our first quarter results and then finish with our outlook for the second quarter and full year 2024.
John Wagner: And professional services revenue was $2.5 million, up 2% and 28% year-over-year respectively. The 12-month backlog, which we define as the aggregate amount of committed subscription revenue related to future performance obligations in the next 12 months, was $127.3 million, flat over the prior quarter and a decrease of 1.6% year-over-year. Total backlog was $185.4 million, up 2.3% year-over-year and our highest total backlog ever.
John Wagner: Total revenue in the first quarter was $50 $5 million above the high end of our guidance range and up 3% year over year.
John Wagner: Breaking revenue down further if we exclude overages of $1 1 million in the quarter revenue was $49 4 million up three 6% year over year.
John Wagner: Subscription and support revenue, which includes Overages was $48 million and professional services revenue was $2 5 million up 2% and 28% year over year, respectively.
John Wagner: 12 month backlog, which we define as the aggregate amount of committed subscription revenue related to future performance obligations. In the next 12 months was $127 $3 million flat over the prior quarter and a decrease of one 6% year over year.
John Wagner: Total backlog was $185 4 million up two 3% year over year, and our highest total backlog ever.
John Wagner: Our record backlog reflects our success capturing multi-year commitments from our customers, which in turn improves our customer retention in future periods and the predictability and visibility of our business. On a geographic basis, we generate 61% of our revenue in North America in a quarter, while 39% is from international.
John Wagner: Our record backlog reflects our success, capturing multiyear commitments from our customers, which in turn improves our customer retention in the future periods and the predictability and visibility of our business.
John Wagner: On a geographic basis, we generated 61% of our revenue in North America in the quarter and 39% internationally.
John Wagner: Breaking down international revenue a bit more, Europe generated 16% of our revenue, and Japan and Asia-Pacific generated 23% of revenue in the quarter. Let me now turn to the supplemental metrics we share on a quarterly basis. Recurring dollar retention rate in the first quarter was 85%, which was down from 94% in the previous quarter due primarily to the loss of a large media customer as a result of their company's acquisition that we previewed last quarter.
John Wagner: Breaking down international revenue a bit more Europe generated 16% of our revenue and Japan and Asia Pacific generated 23% of revenue in the quarter.
John Wagner: Let me now turn to the supplemental metrics, we share on a quarterly basis.
John Wagner: Recurring dollar retention rate in the first quarter was 85%, which was down from 94% in the previous quarter due primarily to the loss of a large media customers as a result of there.
John Wagner: The company's acquisition that we previewed last quarter.
John Wagner: As a reminder, this metric only captures renewals in the quarter and upsells at the time of renewal, and does not factor in the impact of add-ons during the contract term or multi-year agreements, both of which meaningfully improve our dollar retail. Net revenue retention in the quarter was 92%, compared to 95% in the previous quarter and 94% in the first quarter of 2023. This decline was primarily due to the previously mentioned acquisition-related loss of a large customer, as well as lower add-on sales performance in the prior year.
John Wagner: As a reminder, this metric only captures renewals in the quarter and Upsells at the time of renewal and does not factor in the impact of add ons during the contract term or multiyear agreements both of which meaningfully improve our dollar retention.
John Wagner: Net revenue retention in the quarter was 92%, which compares to 95% in the previous quarter and 94% in the first quarter of 2023.
John Wagner: This decline was primarily due to the previously mentioned acquisition related loss of a large customer.
John Wagner: As well as lower add on sales performance in the prior year.
John Wagner: Net revenue retention did benefit from a growing number of multi-year customer commitments, essentially locking in renewals at each contract anniversary. Our customer count at the end of the first quarter was 2,502, of which 1,992 were classified as premium customers.
John Wagner: Net revenue retention did benefit from a growing number of multiyear customer commitments essentially locking in renewals at each contract anniversary.
John Wagner: Our customer count at the end of first quarter was 2000, and 502 of which 1992 were classified as premium customers.
John Wagner: Looking at our ARPU within our premium customer base, our annualized revenue per premium customer was $98,000, and this excludes our entry-level pricing for starter customers, which averaged $4,300 in annualized revenue. This represented growth of 2% over the previous quarter and 10% compared to the first quarter of 2023 and tied an all-time quarterly record. The strong growth in ARPU reflects a combination of our strategy to focus on super-serving larger customers and that attrition is mostly concentrated amongst lower ARPU customers.
John Wagner: Looking at our <unk> within our premium customer base, our annualized revenue per premium customer was $98000 and excludes our entry level pricing for starter customers, which averaged $4300 in annualized revenue.
John Wagner: This represented growth of 2% over the previous quarter, and 10% compared to the first quarter of 2023 and tied an all time quarterly record the strong growth in <unk> reflects a combination of our strategy to focus on super serving larger customers and that attrition is mostly concentrated amongst lower.
John Wagner: Our <unk> customers.
John Wagner: Looking at our results on a gap basis, our gross profit was $30.9 million for the quarter, giving us a gross margin of 61.1%, which is an improvement over 58.7% in the first quarter of 2023. Operating and net income were both positive for the quarter, at $2 million and $1.6 million, respectively, as we benefited from a $6 million gain on operations from the sale of patents that Marc detailed earlier. That income per share was $0.04 for the quarter based on 44.1 million weighted average shares outstanding. Now, turning to our non-GAAP results, which exclude the positive impact of our patent sale in addition to our traditional advertising.
John Wagner: Looking at our results on a GAAP basis, our gross profit was $30 $9 million for the quarter, giving us a gross margin of 61, 1%, which is an improvement over 58, 7% in the first quarter of 2023.
John Wagner: Operating and net income were both positive for the quarter at $2 million and $1 $6 million, respectively. As we benefited from a $6 million gain in operations from the sale of patents that Mark detailed earlier.
John Wagner: Net income per share was four cents for the quarter based on $44 1 million weighted average shares outstanding.
John Wagner: Turning to our non-GAAP results, which exclude the positive impact of our patent sale. In addition to our traditional add backs our non-GAAP gross profit in the quarter was $31 7 million compared to $29 $6 million in the first quarter of 2023 and represented a gross margin of 63% compare.
John Wagner: Our non-GAAP gross profit in the quarter was $31.7 million, compared to $29.6 million in the first quarter of 2023, and represented a gross margin of 63% compared to 60% in the year-ago period. Non-GAAP operating income was $1 million in the first quarter compared to a non-GAAP operating loss of $5.6 million in the first quarter of 2023. Adjusted EBITDA was $5 million, representing an adjusted EBITDA margin of 10% at the high end of our guidance range provided last quarter.
John Wagner: To 60% in the year ago period.
John Wagner: non-GAAP operating income was $1 million in the first quarter compared to non-GAAP operating loss of $5 6 million in the first quarter of 2023.
John Wagner: Adjusted EBITDA was $5 million, representing adjusted EBITDA margin of 10% at the high end of our guidance range provided last quarter.
John Wagner: This is our third consecutive quarter of double-digit Adjusted EBITDA marketing. The ongoing strength in Adjusted Evita reflects our continued benefit, prior cost savings actions, and our ongoing expense dis- Profitability in the quarter was stronger than a typical first quarter, due in part to shifting our annual employee merit pay increase to Q2 this year. Non-GAAP diluted net income per share was 1 cent based on 44.1 million weighted average shares outstanding
John Wagner: This is our third consecutive quarter of double digit adjusted EBITDA margins.
John Wagner: The ongoing strength in adjusted EBITDA reflects our continued benefit.
John Wagner: Of prior cost savings actions and our ongoing expense discipline.
John Wagner: <unk> ability in the quarter was stronger than a typical first quarter two in part to shifting our annual employee Merit pay increased Q2 this year.
John Wagner: non-GAAP diluted net income per share was <unk> <unk> based on $44 1 million weighted average shares outstanding.
John Wagner: This compares to a net loss per share of $0.15 based on 42.5 million weighted average shares outstanding in the year-ago period. Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $22.9 million, which is up from $18.6 million at December 31st, reflecting a net increase in cash of $4.3 million in the quarter, driven by $6 million of proceeds from our patent sale. Pre-cash flow for the quarter was negative $1 million after taking into account $3 million in capital expenditures and capitalized internal use software and excludes the proceeds from our patent.
John Wagner: This compares to net loss per share of <unk> 15 cents based on $42 5 million weighted average shares outstanding in the year ago period.
John Wagner: Turning to the balance sheet and cash flow.
John Wagner: We ended the quarter with cash and cash equivalents of $22 $9 million, which is up from $18 $6 million at December 31, reflecting a net increase of cash of $4 $3 million in the quarter driven by $6 million of proceeds from our patent sale.
John Wagner: Free cash flow for the quarter was negative $1 million after taking into account $3 million in capital expenditures and capitalized internal use software and excludes the proceeds from our patent sale.
John Wagner: This free cash flow performance was better than expected, and we would have generated positive free cash flow if you excluded the portion of our restructuring expense paid in the quarter. I'd like to finish by providing our guidance for the second quarter and the full year 2025. For the second quarter, we are targeting revenue of between $47.5 and $48.5 million, including approximately $800,000 of overages and approximately $1.8 million of professional services revenue.
John Wagner: This free cash flow performance was better than expected and we would have generated positive free cash flow. If you exclude the portion of our restructuring expense paid in the quarter.
John Wagner: I'd like to finish by providing our guidance for the second quarter and the full year of 2024.
John Wagner: For the second quarter, we are targeting revenue of between 47.5, and $48 5 million, including approximately $800000 of Overages and approximately $1 $8 million of professional services revenue.
John Wagner: From a profitability perspective, we expect the non-GAAP operating loss to be between two and one million dollars, and positive adjusted EBITDA to be between two and three million dollars. Non-GAAP net income per share is expected to be in the range of a loss of five cents to three cents based on 44.6 million weighted average shares. For the full year, we are maintaining our revenue guidance we provided last quarter of $195 to $198 million, which includes an estimate of $3.5 million of overage revenue and approximately $8 million of professional services revenue.
John Wagner: From a profitability perspective, we expect non-GAAP operating loss to be between two and $1 million and positive adjusted EBITDA to be between two and $3 million non.
John Wagner: non-GAAP net income per share is expected to be in the range of a loss of five <unk> to three <unk>.
John Wagner: Based on $44 6 million weighted average shares outstanding.
John Wagner: For the full year, we are maintaining our revenue guidance, we provided last quarter of $195 million to $198 million, which includes an estimate of $3 $5 million of overage revenue approximately $8 million of professional services revenue.
John Wagner: We are also maintaining our full-year guidance from a profitability perspective and expect non-GAAP operating losses to be between $3 and $1 million and positive adjusted EBITDA to be between $14 and $16 million. Non-GAAP net loss per share is expected to be in the range of $0.10 to $0.05 based on 44.6 million weighted average shares outstanding. Lastly, we are maintaining our full-year free cash flow guidance, which is expected to be between $5.6 and $8 million. We note this does not include the additional $6 million we received this year.
John Wagner: We are also maintaining our full year guidance from a profitability perspective, and expect non-GAAP operating loss to be between three and $1 million and positive adjusted EBITDA to be between 14 and $16 million.
John Wagner: non-GAAP net loss per share is expected to be in the range of 10 cents to five.
John Wagner: Based on 44.6 million weighted average shares outstanding.
John Wagner: Lastly, we are maintaining our full year free cash flow guidance, which is expected to be between five six and $8 million and we note. This does not include the additional $6 million. We received this year. In addition, we expect to be free cash flow positive for each of the remaining quarters of the year.
John Wagner: In addition, we expect to be free cash flow positive for each of the remaining quarters of the year, building modestly in Q2 and Q3, and further improving in Q4. Here are a few things to keep in mind as you think about our guide. First, foreign exchange rates have moved against us since the beginning of the year. On a constant currency basis, our revenue and adjusted EBITDA guidance would both have been more than $1 million higher for the full year.
John Wagner: Building modestly in Q2, and Q3 and further improving in Q4.
John Wagner: A few things to keep in mind as you think about our guidance first foreign exchange rates have moved against us since the beginning of the year.
John Wagner: On a constant currency basis, our revenue and adjusted EBITDA guidance would have both been more than $1 million higher for the full year.
John Wagner: Second, there are a couple of points I would like to make specifically as it relates to Q2. The sequential decline in quarterly revenue is driven by a few factors, including lower subscription revenue due to the Q1 M&A-related customer loss referenced earlier, a $700,000 decrease in professional services revenue, and headwinds from unfavorable FX and lower revenue overages, both of which are expected to be several hundred thousand dollars. In terms of Q2 profitability, the sequential decline from Q1 is driven by a combination of lower revenue as well as an increase in expenses related to the timing of our annual employee merit pay increase.
John Wagner: Second there are a couple of points I would like to make specifically as it relates to Q2.
John Wagner: The sequential decline in quarterly revenue is driven by a few factors, including lower subscription revenue due to the Q1 M&A related customer loss referenced earlier.
John Wagner: $700000 decrease in professional services revenue.
John Wagner: And headwinds from unfavorable FX and lower revenue Overages, both of which are expected to be several hundred thousand dollars.
John Wagner: In terms of Q2 profitability. The sequential decline from Q1 is driven by a combination of lower revenue as well as an increase in expenses related to the timing of our annual employee Merit pay increase.
Operator: To wrap up, we had a solid start to the year in Q1. We delivered revenue growth, double-digit adjusted EBITDA margins, and we strengthened our balance sheet with additional cash. We are focused on executing on our key strategic priorities that we expect will result in consistent revenue growth in the future. We're off to a strong start against our profitability and free cash flow targets. And we are confident we will deliver significant improvement in both these metrics for the full year 2024, as outlined in our guidance. Please give us a moment to transition to Q&A. We'll be back to discuss our results further. But we are now going to take questions.
John Wagner: To wrap up we had a solid start to the year in Q1.
John Wagner: We delivered revenue growth double digit adjusted EBITDA margins, and we strengthened our balance sheet with additional cash.
Operator: We're focused on executing on our key strategic priorities that we expect will result in consistent revenue growth in the future.
Operator: We're off to a strong start against our profitability and free cash flow targets and we are confident we will deliver significant improvement. Both these metrics for the full year 2024 as outlined in our guidance.
Operator: Please give us a moment to transition to Q&A, we will be back to discuss our results further.
Speaker Change: We're now going to take questions compiled from our analysts.
Operator: Great, we'll take our first set of questions from Steve Frankel of Rosenblatt Securities. Despite a better than expected performance in Q1, you're guiding for revenue declines in the second quarter. Does this decline reflect the lost customer you discussed in the forqueue call, or have you seen additional customer returns?
Operator: Great. We will take our first set of questions from Steve Frankel of Rosenblatt Securities.
Speaker Change: Despite our better than expected performance in Q1, Youre guiding for revenue declines in the second quarter.
Operator: This decline a function of the lost customer you discussed in the fourth you call or have you seen additional customer churn.
Marc Debevoise: So I guess I'd start by saying we had a strong revenue quarter in Q1. We were pleased with the fact that we were able to deliver some upside against our guidance.
Steven Bruce Frankel: So I guess I'd start by saying, we had a strong revenue quarter. In Q1, we were pleased with the fact that we were able to deliver some upside against our guidance.
Marc Debevoise: As you look at Q2, we are guiding for a sequential decline in revenue. I think you've got the first major piece of that if we walk through from Q1 to Q2. The first component is that large media customer that churned in Q1 related to their own M&A. I'd say the second component is within professional services. Our guide implies about $700,000 less in professional services in Q2. And then lastly, I would mention two components, which would be the headwinds we're seeing within FX, as well as lower overages. Q1 was a relatively strong quarter for overage, but we expect a few hundred thousand dollars less in Q2.
Steven Bruce Frankel: As you look at Q2, we are guiding for a sequential decline in revenue I think you've got the first major piece of that if we walked through the from Q1 to Q2 first component is that large media customers that churned in Q1 related to their own M&A I'd say the second component is within professional services.
Marc Debevoise: Our guide implies about $700000 lesson professional services in Q2, and then lastly, I would mention two components, which would be the <unk>.
Marc Debevoise: Headwinds, we're seeing within FX.
Marc Debevoise: As well as lower Overages Q1 was a relatively strong quarter for overage, we expect a few hundred thousand dollars loss in Q2.
Marc Debevoise: Steve's next question is, can you provide an update on the company's larger deal pipeline, particularly in media?
Marc Debevoise: Steve's next question is can you provide an update on the company's large deal pipeline, particularly in media.
Marc Debevoise: Yeah, I think we feel very good about the pipeline and how it's been building over time. We certainly, you know, closed the number of what I would call high-hundred thousand annual value deals in Q1. I think we will see more of those coming down the pike. I think we will also see numerous, let's call them seven-figure plus, you know, millions of dollars types of deals in each of the next, you know, potentially few quarters.
Speaker Change: Yeah, I think we feel very good about the pipeline and how it has been building over time, we certainly you know closed the number of what I would call high 100000 annual value deals.
Marc Debevoise: In Q1, I think we see more of those coming down the Pike I think we also see numerous let's call them seven figure plus you have millions of dollars types of deals and each of the next potentially few quarters as I've always said the challenge is knowing exactly when we can bring those deals to conclusion, because it's not always unison effectively within our control the same.
Marc Debevoise: As we've always said, the challenge is knowing exactly when we can bring those deals to conclusion because it's not always, you know, effectively within our control the same way sort of smaller deals can be. We feel really good about how that's been building. I think you'll hear more from us in from Q2 and into Q3 and in Q4 for the rest of the year, and that's going to be really the upside potential we see to our guidance if we can land more of those in those sequential quarters.
Marc Debevoise: He sort of smaller deals can be we feel really good about how that's been building I think you'll hear more from us and from Q2 and into Q3 and in Q4 for the rest of the year and that's going to be a really the upside potential we see to our guidance. If we can land more of those and those sequential quarters.
Marc Debevoise: And Steve's final question is, what will it take to get the business to a point where it can consistently grow revenue?
Marc Debevoise: And final question is what will it take to get the business to a point, where it can consistently grow revenue.
Marc Debevoise: Yeah, I believe in getting that add-on business back to sort of the historical levels we've seen. And we're doing a lot of things, as we said on the call, to go after that, right? That's about, you know, building our muscle and our enablement with our sales team to go sell those existing products up and into our existing customer base rather than, you know, the entitlement-fueled growth we had over the previous years.
Speaker Change: Yeah I believe.
Marc Debevoise: Getting that add on business back to sort of the historical levels, we've seen and we're doing a lot of things as we said on the call to to go after that right. That's about building, our muscle and our enablement with our sales team to go sell those existing products up and into our existing customer base, rather than you know the entitlement fueled growth we had over those previous years.
Marc Debevoise: And then if that entitlement growth does come back, you'll really start to see that growth kick in. But we believe we're doing the right things on the add-on side to bring that back. I feel pretty confident in the new business side.
Marc Debevoise: And then if that entitlement growth does come back you'll really start to see that growth kick in but we believe we're doing the right things on the add on side to bring that back feel pretty confident in the new business side I think we're doing well there I think if those big deals also can come in more than one or two a quarter, but really starting to cook.
Marc Debevoise: I think we're doing well there. I think if those big deals can come in more than one or two a quarter but really start to cook at a higher rate, you know, per quarter, I think we will start to see some really consistent growth there. So that is our goal, to get back to that consistent growth. You've seen us do a couple of quarters here of three-ish percent. Obviously, we're going to take that back here in a quarter. But I believe the goal here is to get back to that type of growth, if not greater, by the end of the year.
Marc Debevoise: At a higher rate per quarter, I think we start to see some really consistent growth. There. So that is our goal to get back to that consistent growth.
Marc Debevoise: You've seen us do a couple of quarters here of three ish percent.
Marc Debevoise: And again, we're going to take that back here in a quarter, but I believe the goal here is to to get to that back to that type of growth if not greater by the end of the year.
Marc Debevoise: We'll take our next set of questions from Eric Martinuzzi of Lake Street Capital Markets. Your prior outlook did not anticipate any recovery and add-on or usage business in 2024. Have you seen any revenue shoots either in Q1 or in the month of April?
Speaker Change: We'll take our next set of questions from Eric Martin Newsy of Lake Street capital markets.
Marc Debevoise: Your prior outlook does not anticipate any recovery in add on or usage business in 2024.
Eric Martinuzzi: Are you seeing any green shoots either in Q1 or in the month of April.
Marc Debevoise: I think we have seen some. I think, as we've said, you know, sort of that entitlement business has not come, you know, rolling back, and we've sort of said that from the beginning, and that was implied in our guidance for 24. We have seen some meaningful success in upgrading our enterprise customer base from what I would call existing video cloud accounts into marketing studio, and now that we have comm studio fully complete, we are rolling that out as an upgrade potential for many of our customers, and I think we're going to see more there.
Eric Martinuzzi: I think we have seen some I think as we've said you know sort of that entitlement business has not come roaring back and we've sort of said that from the beginning and that was implied in our guidance for 24 weeks.
Marc Debevoise: <unk> has seen some some meaningful success in upgrading our enterprise customer base.
Marc Debevoise: From what I would call existing video cloud accounts into marketing studio and now that we have calm studio fully complete rolling that out as an upgrade potential for many of our customers and I think we're gonna see more there nothing we want to sort of let out at this point you know we're sort of early days in terms of the number of quarters. We've had to go in and sell that to our existing customer base, but I do believe there's going to be a greater off.
Marc Debevoise: Nothing we want to sort of let out at this point. You know, we're sort of early days in terms of the number of cores we've had to go in and sell that to our existing customer base, but I do believe there's going to be a greater opportunity to up that add-on business with those products on the enterprise side, and then on the media side, it's going to be about those existing pitches of total cost of ownership, and really the excellence we deliver from a quality perspective to try to grow those add-ons with our existing customer base.
Marc Debevoise: <unk> to up that add on business with those products on the enterprise side and then on the media side, it's going to be about those existing pitches, a total cost of ownership and really the excellence, we deliver from a quality perspective to try to grow those add ons with our existing customer base on that front.
Marc Debevoise: Eric's next question: can you compare and contrast the demand environment in your pipeline between media accounts and your traditional enterprise accounts?
Marc Debevoise: Eric next question can you compare and contrast, the demand environment in your pipeline between media accounts and your traditional enterprise accounts.
Marc Debevoise: Yeah, I think the demand environment in media is very big deal-driven for us. You know, we have a decent number of customers in the space, especially on a global stage, but it's really going to be about which big ones can we really upsell, either on big, you know, new things they're doing or on big new customers we can bring on, so that's where that big deal pipeline that was asked about earlier really comes into play.
Marc Debevoise: Yeah, I think the demand environment and media is very big deal driven for us.
Marc Debevoise: Have a decent number of customers in this space, especially on a global stage.
Marc Debevoise: But it's really going to be about which big ones can be really upsell them either in big new things, they're doing or in big new customers. We can bring on so that's where that big deal pipeline that was asked about earlier really comes into play on the enterprise side.
Marc Debevoise: On the enterprise side, you know, much more volume-based, we have a great customer base, you know, over 1,500 enterprise customers. We're really trying to figure out how we can build those add-ons into that business. And so, like I talked about earlier, as we built these products to be those upsell use cases, you know, can we get customers into those, and I think that'll build from there. Again, from a new business perspective on enterprise, I think we feel relatively, you know, good.
Marc Debevoise: Much more volume base, we have a great customer base, you know 1500 enterprise customers.
Marc Debevoise: Trying to figure out how we can build those those add ons into that business and so like I talked about earlier as we built these products to be those upsell use cases, how can we get customers into those and I think that will build from there again from a new business perspective on enterprise I think we feel relatively good we've got some decent throughput on volume, we've always loved to see more.
Marc Debevoise: We've got some decent throughput on volume; we'd always love to see more. If I were critiquing one area, it would be North America, you know, relatively. That's when you'll start to see that growth come, and that's how those pipelines will build even more.
Marc Debevoise: Our critiquing one area, it's really that North America is doing relatively well for us and as soon as we can get international up to that sort of same speed, which I believe we can that's when you'll start to see that gross common that others those pipelines will build even more.
John Wagner: And Eric's final question is, you went through a 5% reduction in force in the first quarter. Are you done with cost cuts, or are there still fine tuning of the cost structure to be done?
Marc Debevoise: And then final question is you rolled through a 5% reduction in force in the first quarter.
Marc Debevoise: Are you done with cost cuts or there is still fine tuning to the cost structure to be done.
John Wagner: I'd say we have no plans to take further actions like we did in Q1 of this year or Q1 of last year. But I would say I think we are seeing the benefit of those actions, both in our adjusted EBITDA this quarter, at 10%, as well as our guidance for a 25% year-over-year improvement in adjusted EBITDA. But I think we feel pretty confident where we are in terms of the business and making sure that we're resourced and right-sized for both our strategy and our go-to-market. So I think you wouldn't see anything such as that.
Speaker Change: I'd say, we have no plans to make further take further actions like we did in Q1 of this year or Q1 of last year.
John Wagner: I would say I think we are seeing the benefit of those actions both in our adjusted EBITDA This quarter at 10% as well as our our guidance for 25% year over year improvement in adjusted EBITDA, but I think we feel pretty confident where we are in terms of the business and making sure that we're resource and right sized for both our <unk>.
John Wagner: Strategy in our go to market. So I think you wouldnt see anything.
John Wagner: But I think you would continue to see us be very judicious about resources in the business, continue to be very disciplined about the way we manage operational expenses. If there was one area that we would call out, it would probably be our technology spend within cost of goods sold, where we've made progress in the past. We think there's probably more impact that we can have in that area, so that would be an area that we will probably try to optimize further. But generally, I think we feel pretty good about where we are in the business and our ability to meet our financial targets that we've laid out this year.
John Wagner: Such as that but I think you would continue to see us.
John Wagner: Be very judicious about resources in the business.
John Wagner: Continue to be very disciplined about the way we manage operational expenses.
John Wagner: If there was one area that we would call out it would probably be our.
John Wagner: Our technology spend within cost of goods sold where we've made progress in the past we think there's there's probably more impact that we can have in that area that would be an area that we would probably try to optimize further.
John Wagner: But generally I think we feel pretty good about where we are in the business and our ability to meet.
John Wagner: Our financial targets that we've laid out this year.
Marc Debevoise: Great. Well said, John. So, with that, I don't think we have any further questions.
Speaker Change: Great well said John.
Speaker Change: So with that I don't think we have any further questions.
Marc Debevoise: First, I want to thank you all for joining us. We hope the takeaways we're leaving you with today are that we had a strong start to 2024, growing revenue in EBITDA, meeting or beating the high end of our guidance and strengthening our debt-free balance sheet all through Q1, that our recurring revenue model is secure as ever with the highest backlog in our history at the end of the quarter, that we are reiterating our full year guidance and commitment to executing with operational rigor and delivering strong growth and profitability and real cash generation each quarter going forward, and that we have a market leading product suite and a clear innovation path for an AI driven future that we believe can deliver more consistent growth going forward.
Speaker Change: First I want to thank you all for joining us we hope the takeaways were leaving you with today that we had a strong start to 2020 for growing revenue and EBITDA meeting or beating the high end of our guidance and strengthening our debt free balance sheet all through Q1.
Marc Debevoise: And lastly, that we believe our current market capitalization is disconnected from the fundamentals and intrinsic value and believe Brightcove represents an incredibly attractive investment opportunity at this level. With that, I'll thank my partner John here for closing out his first earnings call with us here at Brightcove, and with that, we'll both look forward to speaking with you next quarter.
Marc Debevoise: On a recurring revenue model as secure as ever with the highest backlog in our history at the end of the quarter that we are reiterating our full year guidance and commitment to executing with operational rigor and delivering strong growth and profitability and real cash generation each quarter going forward and.
John Wagner: And then we have a market leading product suite and a clear innovation path for an AI driven future that we believe can deliver more consistent growth going forward.
John Wagner: And lastly, we believe our current market capitalization.
Marc Debevoise: Disconnected from the fundamentals and intrinsic value and believe Brightcove represents an incredibly attractive investment opportunity at this level.
Marc Debevoise: With that I'll. Thank my partner John here for closing out his first earnings call with US here at Brightcove and with that we'll both look forward to speaking with you next quarter.