Brightcove Inc. (NASDAQ:BCOV) Q1 2024 Earnings Call Transcript

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 snackable content for specific audiences, making it simple to create and package employee-generated content and easy [Technical Difficulty] the development of promotional video content for sales and marketing campaigns. 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 customers. We’re also making a larger push into AI. 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 infers actions you can take with your content to improve your business. But with GenAI, 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. 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 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. Our intention is not to build AI engines. 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 about what data goes into those AI models and when. 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 [Technical Difficulty] have efficiency in our own business, including having recently announced advancements to our knowledge base, utilizing Amazon’s Q technology. As Amazon’s 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 and 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, has the potential to be transformative for our business.

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. 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 added millions in cash to our balance sheet. We are executing with operational rigor around expenses and are confident in our ability to deliver strong growth in profitability and real cash generation.

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 at our current valuation, we continue to believe Brightcove represents an incredibly attractive investment opportunity. 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?

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. 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. 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.

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, and professional services revenue was $2.5 million, up 2% and 28% year-over-year, respectively. 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.