Brightcove Q3 2021 Earnings Call Transcript

Quartr
Provided by Quartr
October 26, 2021

There are 6 speakers on the call.

Operator

Greetings. Welcome to Brightcove Third Quarter 2021 Earnings Call. Please note this conference is being recorded. I will now turn the conference conference over to Brian Danieux from ICR. Thank you.

Operator

You may begin.

Speaker 1

Good afternoon, and welcome to Brightcove's 3rd Quarter 2021 Earnings Call. Today, we will discuss the results announced in our press release issued after market close. With me on the call are Jeff Wright, Brightcove's Chief Executive Officer and Rob Norek, Raiklau's Chief Financial Officer. During the call, we will make statements related to our business that may be considered forward looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial names for the 4th fiscal quarter of 2021 and the full year of 2021, expected profitability and positive free cash flow, Forward looking statements may often be identified with words such as we expect, we anticipate, upcoming or similar indications to the questions of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date.

Speaker 1

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations, including the effect of the COVID-nineteen pandemic on our business operations as well as an impact on general economic and financial market conditions. For For a discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recent filed annual report Form 10 ks and as updated by our other SEC filings. Also during the course of today's call, 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 In terms of the agenda for today's call, Jeff will provide a summary review of our financial results, an update on our operations and a review of our strategy. Rob will finish with additional details regarding our Q3 2021 results

Speaker 2

Thanks, Brian, and thank you everyone for joining today. I hope you and your families are well. We had a very productive third quarter. We prepared for and executed our annual virtual user conference, PLAY 2021, enhanced video interactivity. PLAY 2021 was a resounding success as our largest user event to date, with almost 6,000 registrants from 100 countries.

Speaker 2

In a testament to the power of virtual events, we grew the event by nearly 3 times that of PLAY 2020, attracting new companies to witness the power of Brightcove, with half of the registrations being new to our community. During our primary promotion time in the 6 weeks leading up to play, we saw a 4,000 percent increase in viewing volume of Brightcove Videos, Driving massive growth in awareness and new contacts for Brightcove. Over 2 days, we served up 60 plus sessions, 35 of them by customers and partners, including AMC Network, Akamai, South by Southwest, Academy of Motion Picture Arts and Sciences HubSpot New South Wales Department of Education Tennis Australia LPGA, Reverie and the Metropolitan Opera. We're thankful to all of our customer speakers for sharing their success stories. If you couldn't attend PLAY Live, you can tune into Brightcove PLAY TV, our very own corporate TV channel to view all the content.

Speaker 2

So with that, let's start with an overview of our results. For the Q3, revenue was $52,200,000 up 6.3 year over year and above the high end of our guidance of $51,500,000 Adjusted EBITDA was $4,200,000 ahead of the high and of our guidance. While we had a solid performance relative to our guidance, our sales performance in the quarter was below expectations. In particular, our Asia Pacific and Japan regions underperformed, and we saw lower than anticipated levels of upselling activity across our customer base. As a result, we're adjusting our full year revenue guidance, which Rob will provide more detail on later.

Speaker 2

We've made several changes to address the challenges from the quarter, including making sales leadership changes in Asia Pacific and doubling down on the positive sales execution and enablement strategies, such as value selling methodology, standardized proposal formats We're moving quickly to implement the proven and successful sales tactics for North America, not just in Asia Pacific, but globally. It will take several quarters for these changes to impact our results fully. Additionally, we continue to work on our renewals business and made good progress in the quarter. We remain confident our product and go to market strategy will generate the revenue growth we know this business can deliver. I would like to spend a few minutes highlighting the significant progress in our strategic focus areas, innovation, only.

Speaker 2

Let me give you some detail on each of these areas. 1st, innovation. We have heavily invested in R and D, and it is paying off with innovative products coming to market. This quarter, We have multiple product announcements that add considerable value to our customers and help them better engage with their audiences, Let's start with Brightcove Marketing Studio, a new video communication solution that allows marketers to drive more significant results from their digital campaign using video across all communication mediums. Typically, marketing professionals search multiple systems to find ideal videos for their initiatives, often lacking insight into which videos perform best Brightcove Marketing Studio provides role based access to video assets through a team's preferred social platforms, marketing automation, digital asset management and content management tools.

Speaker 2

Brightcove Marketing Studio will be available early next year and current video marketing suite customers can automatically be upgraded to Marketing Studio. We also announced Brightcove Corp. TV, a solution designed for companies to serve content to their audiences Brightcove Corp. TV enables organizations to create channels similar to Netflix or Hulu that stream content to customers and employees, each with their own audience specific branded content. This dynamic engaging solution empowers companies using video to forge stronger connections with their customers, partners and employees.

Speaker 2

We're proud to be serving NetApp, a global cloud led data centric software company with this solution. NetApp launched its Corp. TV channel, NetApp TV, at its Insights Virtual Conference on October 22. James Whitemore, EVP and CMO of NetApp said, There's no denying the ever increasing popularity of streaming content to entertain, educate and influence audiences, even in a B2B world. It's why we recently launched NetApp TV, A new always on video channel powered by Brightcove.

Speaker 2

With NetApp TV, we're providing customers, Partners and employees with a rich seamless experience when accessing the content they want, when and where and how they want, 365 days of the year. We keep them thinking of NetApp all year. Brightcove Corp. TV has enabled us to Another exciting announcement highlights our open platform, extensive technology integrations and use of APIs. From the Brightcove platform without the need to go to other third party sites.

Speaker 2

We launched the Brightcove marketplace with over 40 technology solutions, and this ecosystem will continue to grow. And last, we recently announced our intent to acquire a significant portion of the assets of Hapjack, including its existing global customer base, commercial interactive video technology, IP, brand and marketing assets. HappyAct is a leader in the video interactivity market and was a long time partner of Brightcove. With the integration of the HappyAct technology, Brightcove customers can quickly and easily incorporate interactivity into any video. Our team has successfully sold Hapjack for years, and it's a natural fit to bring the technology into our portfolio.

Speaker 2

We expect this deal to close before the end of the year. We also continue to focus on bringing added value specifically to our media customers, from last quarter. For retention, let's move on to these efforts. Retention has always been a critical focus for us, as you know, and I'm delighted that we are making excellent progress in improving the customer experience. Some highlights from the past quarter include: Brightcove continues to have an award winning 20 fourseven in house support team.

Speaker 2

This month, the TSIA recognized the team for support staff excellence for the 8th consecutive year. Our support has long been and continues to be a true differentiator for Brightcove. Our revamped onboarding program includes free and paid onboarding options, ensuring that all customers have a successful launch on Brightcove. And we recently implemented our roadmap initiative to engage with our customers regularly and solicit their feedback We still have more work to do, but we're clearly on the right path. An example of our retention progress is 7 Network, media customer we've had a close strategic relationship with since 2015.

Speaker 2

During the recent renewal, We were at risk of losing 7 for a do it yourself and competitive solution. Throughout the renewal process, we demonstrated the value of the Brightcove platform Our VOD business with 7 as it signed a new agreement. Turning to our go to market highlights. We're proud that customers worldwide select Brightcove as their video provider of choice for our reputation in reliability, Scalability, security, innovation and the return on investment we can deliver to them. Let's look at a few examples from this past next quarter to demonstrate how we are helping customers succeed with video.

Speaker 2

Football Cove is a new Brightcove customer, serving a global audience 400,000,000 people across their digital destinations and syndication partners. The organization will use Brightcove to our video on demand soccer content on its owned and operated websites, including gold.com, one of the world's most popular digital football destinations and its syndication partners. Football Co. Will increase its flexibility By leveraging Brightcove's unrivaled ability to allow content creators to distribute and monetize content at scale on a global level. Mars is a new customer that selected Brightcove as its video platform to host, manage and deliver Mars video content Brightcove will be used by Mars Associates, Agency Partners and Content Managers to organize, approve and manage Mars owned content with support from multiple languages, regions and formats.

Speaker 2

Mars came to Brightcove for our unrivaled security when its previous vendor couldn't meet Mars demanding security requirements. A long time Brightcove customer, ITV is a broadcaster creates, owns and distributes high quality content on multiple platforms globally. Brightcove powers ITV's short form websites and apps for shows, including Good Morning Britain, Love Island, News and Sports Content. ITV renewed and grew its contract with Brightcove to continue to deliver flawless video to its millions of viewers. GameStop is a video game, consumer electronics and gaming merchandise retailer The organization uses Brightcove Video across its primary web properties and recently renewed its engagement with us.

Speaker 2

GameStop continues to use Brightcove to engage with its customers and deliver a seamless video experience across its digital properties. And EMEA to expand our geographical reach. These partners add value for our customers using Brightcove's world class streaming technology. Our referral partner program and master license program allow Brightcove to fit into our partners' business models, enabling us to expand our reach through our partners' existing customer bases. Several of these partners shifted from competing platforms A video player and streaming service can make or break an event.

Speaker 2

We integrated Brightcove's broadcast quality video capabilities into our hybrid event marketing platform to guarantee our clients' reliability, high fidelity and a scalable video solution. We know video drives business and we know our customers benefit from deploying Brightcove Video. To better help our sales organization To show Brightcove's total economic benefits, we commissioned Forrester Consulting to conduct 2 total economic impact or TEI studies, 1 focused on media organizations and the other on enterprise companies. For the enterprise study, the decision maker interviews Financial analysis found that a composite enterprise organization using Brightcove technology experiences an ROI of 225% over 3 years. The interviewed decision makers shared that in their organization's legacy state, They have limited visibility and control over their video content.

Speaker 2

Organizations struggle to syndicate video for consumption on multiple platforms in a timely manner. And it took several weeks to process the content, and they could not transcode fast enough. These decision makers now use Brightcove as an asset in their customer journey to drive increased sales and additional revenue. Turning to the media study, the composite media organization using Brightcove Technology experiences an ROI of 2 20 8% over 3 years. Interviewees shared that their organizations expanded their delivery to new markets and new devices using Brightcove.

Speaker 2

Brightcove allowed these organizations to quickly dub content to reach expanded geographies, offering their services to entirely new audiences. Legacy Solutions did not provide an easy path to entering new markets. We know we have Before I hand it off to Rob to cover the financials in-depth, I want to reiterate that we made progress this quarter, even though we are not satisfied with Sales execution challenges we experienced. We hosted our best play ever, ramped up innovation with the announcement of multiple new products, increased our retention rates and signed many new partners worldwide. We continue to make progress on our key focus areas and are quickly addressing the areas that need additional improvement.

Speaker 2

I'm confident in the team we have in place and our strategy And we will achieve our long term financial goals. I'd also like to take a moment to address the other news we released today relating to my eventual retirement from Brightcove. I came out of retirement to join Brightcove in 2018 to facilitate the transformation of Brightcove and to put the right team in place to lead the company to the next chapter in its growth. While we are not fully satisfied with our current results and we know we have more work to do, I have every confidence on our strategy and the great team we have built. My plan, as announced today, is to retire from Brightcove.

Speaker 2

I will serve as CEO until a successor is on board and thereafter will remain in an advisory capacity with the company until the end of 2022. This approach ensures that our Board will have enough time to find the right leader to continue and build upon this company's amazing opportunity. This approach gives the company the ability to continue to focus on execution and deliver the expected results to our shareholders, while also having the time to find the ideal next CEO for Brightcove. The Board has retained an executive search firm and has launched the search process for the new CEO. With that, let me turn the call over to Rob to walk you through the numbers.

Speaker 2

Rob? Thanks, Jeff. As you mentioned, we still have a lot of work to do and now more than ever, we need to focus on execution. So with that, I'd like to begin with a detailed review of our Q3 and then I will finish with our outlook for the Q4 and the full year 2021. Total revenue in the Q3 was $52,200,000 which was above our guidance range.

Speaker 2

Breaking revenue down further, subscription and support revenue was $49,200,000 and professional services revenue was $2,900,000 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 $115,000,000 This represents 5% year over year increase. On a geographic basis, we generated 56% of our revenue in North America during the quarter and 44% internationally. Breaking down international revenue a little more, Europe generated 19% of our revenue and Japan and Asia Pacific generated 25 percent of revenue during the quarter. Let me now turn to the supplemental metrics we share on a quarterly basis. Recurring dollar retention rate in the 3rd quarter was 92.8%, which was within our target range of low to mid-90s.

Speaker 2

While we are pleased by the improvement over the first half performance, we would like to see a few quarters in a row in our target range before we are satisfied. Net revenue retention in the quarter was 95%, which compares to 98% in the Q2 of 2021 98% in the Q3 of 2020. Since the beginning of 2019, net revenue retention has ranged from 92% to 100%. As a reminder, we introduced net revenue retention last quarter To better align our reporting with most leading SaaS companies, we calculate net revenue retention by comparing the current annualized recurring revenue As Jeff mentioned, we have made significant progress in our effort to rebuild our renewals business. We saw clear signs of improvement in the Q3 and are confident we are on the right track.

Speaker 2

Since net revenue retention is calculated on a trailing 12 month basis, there will be a natural lag before the improvements we are making will be reflected in this metric. We expect that as we continue to make improvements in our renewals business, this metric will consistently be over 100% over time. Our customer count at the end of the 3rd quarter was 3,205, of which 2,265 were classified as premium customers. Looking at our ARPU within our premium customer base, our annualized revenue per premium customer was $93,000 which was up 5% year over year and excludes our entry level pricing for starter customers, which averaged $4,400 in annualized revenue. Looking at our results on a GAAP basis, our gross profit was $33,500,000 Operating loss was $233,000 and net income per share was a loss of $0.02 for the quarter.

Speaker 2

Turning to our non GAAP results. Our non GAAP gross profit in the 3rd quarter was $34,100,000 compared to $31,500,000 in the year ago period and represented a gross margin of 65%, which is up from 64% in the Q3 of 2020. Subscription and support revenue represented approximately 94% of our total revenue and generated a 68% gross margin in the quarter compared to a 67% gross margin in the Q3 of 2020. The improvement in gross margin throughout this year has been an area of strength for the business. Through the 1st 9 months of the year, we have grown subscription revenue by $12,000,000 while reducing the cost of subscription revenue by $103,000,000 Reducing our COGS has been one of our areas of focus for our R and D organization in 2021.

Speaker 2

The success we have had scaling subscription gross margin is providing additional resources to invest in our growth initiatives in the near term and will drive greater improvement in profitability as revenue and growth accelerates in the future. Non GAAP income from operations was $2,900,000 in the 3rd quarter compared to $4,500,000 in the Q3 of 2020. Adjusted EBITDA was $4,200,000 in the 3rd quarter compared to $5,900,000 in the year ago period and above the high end of our guidance range. Adjusted EBITDA margin was 8% in the quarter. Non GAAP diluted net income per share was $0.05 based on 41,700,000 weighted average shares outstanding.

Speaker 2

This compares to net income per share of $0.11 on 40,600,000 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 $45,300,000 We generated $7,400,000 in cash flow from operations and free cash flow was $4,900,000 After taking into account $2,500,000 in capital expenditures and capitalized internal use software, I would like to finish by providing our guidance for the Q4 and the full year 2021. For the Q4, we are targeting revenue of $51,000,000 to $52,000,000 including $1,600,000 of overages and approximately $2,200,000 of professional services revenue. From a profitability perspective, we expect non GAAP operating income to be $1,000,000 to $2,000,000 and adjusted EBITDA to be between $2,200,000 $3,200,000 Non GAAP net income per share is expected to be in the range of $0.02 to $0.04 based on 41,900,000 weighted average shares outstanding. For the full year, we are revising our full year outlook.

Speaker 2

We are now targeting revenue of $209,500,000 to $210,500,000 including $7,700,000 of overages and approximately $12,000,000 of professional services revenue. This is down from our previous guidance of $211,000,000 to $213,000,000 From a profitability perspective, we expect non GAAP operating income of $15,300,000 to $16,300,000 and adjusted EBITDA to be between $20,500,000 $21,500,000 These are both within our previously provided guidance of $14,000,000 to $17,000,000 for non GAAP operating income and $19,100,000 to $22,100,000 for adjusted EBITDA. Non GAAP net income per share is expected to be in the range of $0.32 to $0.35 based on 42,000,000 weighted average shares outstanding. For the full year, we are now targeting free cash flow of $6,500,000 to $7,500,000 down from our previous guidance of $7,000,000 to $10,000,000 To wrap up, we made progress in many of our key focus areas in the Q3, but more work is to be done. We are addressing the sales challenges that occurred and are confident we will begin to see positive impact of those changes in the coming quarters.

Speaker 2

Our belief in the long term opportunity has not changed. We are committed to delivering better top and bottom line performance for our shareholders. With that, we will now take your questions. Operator, we are ready to begin Q and A.

Operator

Our first question is from Steve Frankel with Colliers. Please proceed.

Speaker 3

Good afternoon. Jeff, I'd like to dig in a little bit in the lower expectations for Q4. So how much

Speaker 2

of that

Speaker 3

was sales disappointment in Q3 versus higher churn? And then on the sales front, maybe you could define for us, is this a new account issue? Is this an upsell, cross sell issue?

Speaker 2

Thanks, Steve. Good to hear from you. Looking at all the aspects of this, I think you've hit it, that that which impacted us the most this quarter was sales. As Rob noted, we are progressing with the renewals business in the right direction, and I feel good about the progress that, that team is making and the nature of the kinds of deals that we're renewing. I'm also thrilled that we have a lot more insight downstream on the renewals business.

Speaker 2

So That is on demand. The big challenge with sales is, I know it oversimplifies it, but it's consistent, Predictable execution. It's one of the key reasons why I'm happy that we promoted Brian Froiling, who ran Americas sales Into the global job. He is introducing that same rigor and discipline into Asia Pac As he crawled through the pipeline and interviewed and spent time with literally each sales rep And looked at every deal. He just discovered that we weren't demonstrating the same rigor and discipline That we are in Americas.

Speaker 2

So in his words, it's a problem, but it is imminently fixable. I think the other thing I'm encouraged by The team there is really embracing this. They also want to see the business grow and succeed. And so we're not really getting any pushback From the Asia Pac sales teams in getting this done. So that's the most important one.

Speaker 2

Certainly, we can improve around the world and And you know me, I'm never satisfied, but we've got a real disciplinarian now running sales, And we are doing a much, much deeper level of investigation and inspection of deals. We've also introduced some new technology that literally lets us track the number of customer touches and prospect touches. And so we know, we have the data that demonstrates that if you to win that deal. The other thing he did was he inspected every proposal that has been delivered in the last 6 months, Every proposal that went out, and he sees great opportunity for changing the dynamic of how we're delivering proposals. So it's consistent and predictable execution on the sales side.

Speaker 2

That will drive expansion, but it will also drive new logo acquisitions.

Speaker 3

And in North America, are you satisfied with your ability to upsell and cross sell on the enterprise side of the business or is there still a lot of work in HD done there?

Speaker 2

Yes. Again, I'm never satisfied, But I feel that the Americas team is in pretty good control of their destiny. The predictability, The insight, the hard data that we have to support that puts us in a much, much better position. Yes. And Steve, just to add to that.

Speaker 2

Steve, this is Rob. Just to add to that real quick. We mentioned in the script that the challenges really came on the upsell side. We actually Had a really strong quarter on the new business acquisition. So while you don't necessarily see it roll through the customer count from a dollar perspective, We had really strong new business in the quarter.

Speaker 2

Okay.

Speaker 3

That's good. And walk us through the divergence between the 2 retention metrics. I kind of would have thought they would Directionally go the same way, but they diverged this quarter. So help us understand that.

Speaker 2

Yes. I think Steve, the big difference There is the calculation in the 2. If you recall, the recurring dollar retention rate that came in at the 93, that is actually for those contracts that happened in the quarter, Right. Those contracts that were up for renewal and what happened in the quarter. The second metric, that net revenue retention rate looks at The ACV of every customer that is that was a customer 12 months ago and what the retention of that is.

Speaker 2

So it includes upsells throughout the time, of course, the contract, any deals that upsold or downgraded throughout. So that net revenue retention rate will catch up. It's just a lagging indicator. It'll take a couple of quarters to catch up.

Speaker 3

Okay. Jeff, do you fundamentally still believe this is a business that can grow double digits?

Speaker 2

Absolutely. I've never felt better about it. I don't like the performance right now any better than anyone else. When you look at the underlying strength of the business and the work that we've done, especially in the last 6 months to reconfirm Revalidate that we have the right target market, that it's a sizable target market and that we're bringing really new innovative products to that market. I feel great about it.

Speaker 2

I also just see it in the energy and excitement of the core staff, that team that works directly for me. We are putting more products out, more innovation out than ever before. Obviously, we would love to be able to ship everything tomorrow. It will take a little while to get those out the door, but everything that we see says that we're heading in the right direction. I'll give you just one example Why I feel good about that?

Speaker 2

We noted NetApp and their launch of NetApp TV. And what they're doing is not unlike What Salesforce did with their TV. In this case, NetApp took a true OTT approach. So it will send videos to any device anywhere. So it's much more robust and open than what Salesforce is doing.

Speaker 2

But they get it. They understand that Future of connections is video, that the days of people sitting and reading static screens or looking at graphics or images Are fast going behind, and they get it. And so when they first approached us about this back in the spring, it was a perfect time for us to talk because we were well underway in developing Corp. TV. So it's a great affirmation that this is the way companies will communicate.

Speaker 2

There are certainly a lot of challenges. Probably the biggest challenge is the ability to capture and use interesting sticky content, but that problem will get solved. We don't we're not worried about that whatsoever. We also are thrilled with the work that we've been done That has been done for our marketing studio product, because it Literally was built up from scratch by watching how users who are not video experts try to get their job done. And this will be a sea change because up until this point, everyone who's out there, no matter what they say about ease of use, basically Companies go to the video expert to get help to do things.

Speaker 2

And what we're doing with Marketing Studio will make it easy for anyone Who needs to deploy video to do marketing campaigns and communication to be able to do that. It will no longer be in the hands of the video expert. And then certainly, we announced prior to Play TV, the developers' marketplace. And I was Just I was so encouraged by the fact that we had 40 developers around the world sign up on day 1 to be participants in that marketplace. So, great traction came out of Play TV.

Speaker 2

Also, the numbers were dramatically up. So I've never felt better. I am not satisfied with our performance at this moment, but I've never felt more confident about the future.

Speaker 3

Okay, great. And then one last quick one for Rob. What were overages The quarter?

Speaker 2

Yes, overages were about $1,700,000

Speaker 3

Okay, great. Thank only.

Operator

Our next question is from Eric Martinuzzi with Lake Street Capital Markets. Please proceed.

Speaker 4

Yes. I wanted to focus on the Q4 outlook here. If I had this right, it looks like the subscription business relatively flat given the services guidance. And I would have expected that given your color there, Rob, on the new sales going up, Help me understand why the subscription line would be relatively flat at the midpoint between the 2 quarters?

Speaker 2

Yes. Eric, there's 2 pieces there. 1 is a small headwind on overages. We're bringing that down to $1,600,000 And the second piece is, my comment around new business was net new customers and selling the net new logos, where we were challenged in the quarter is on the upsell side. So From a dollar perspective, it was the upsells that gave us the challenge in

Speaker 1

the quarter.

Speaker 4

Okay. As I look at your the premium customer Count though, I've got that actually and I guess it is a net number, but I see that declining sequentially. I guess it's just a question of not all customers created equal. Is that the color here?

Speaker 2

Yes, that's 100% right. When you think about it And you put it in conjunction with our ARPU. We continue to drive stronger customers and the ability to grow our customers. So you see that growth happening on the ARPU side. Again, customer count is not something we focused on.

Speaker 2

We understand that it's critical over time to get that number moving in the right direction, But we're really focused on maximizing dollars and share of wallet from our existing customers and from those customers that do come on.

Speaker 4

Okay. And then, Jeff, you talked a little bit about your kind of moving on here at the end of the year and Test driving retirement again. I can't remember if it was golfing or fishing that you did or didn't do, but I know you got to relieve leaving with some regrets given what you saw the potential as you came aboard back a little over 3 years ago. But just kind of if If you could get retrospect a little bit introspective for a moment, 1 or 2 things that maybe you would have focused on more intently or or done differently. You've been in the seat now for 3.5 years.

Speaker 4

What is it that's kind of kept This company from realizing that full potential that you talked about coming out of play 2021?

Speaker 2

It's a great question. Thanks. I try not to spend too much time looking over my shoulder. It's kind of dangerous to do. And I live in Florida.

Speaker 2

And quite frankly, when you go out with people around here, they spend a lot of time talking about the past. And it's a freaky place to be. I'll just stay with what I shared in the last quarter, and that is I should have jumped on the renewals Much more aggressively the day I walked in the door. More than anything else, that has been, I think, a real source of frustration. That being said, awesome team running it.

Speaker 2

Like I said, just TSIA recognized again great insight into the underlying health of the relationships with our customers that we just didn't have before. I sit in on a lot of those reviews with customers, And I feel very good about that, and I'm just kicking myself because I should have just been much more aggressive. I was paying attention to it, but I think I was a little too trusting, and I just didn't move fast enough on the renewals business. On innovation, I feel great about it. We've dramatically grown the R and D engineering headcount around the world, And we're putting out more innovation each quarter than I would challenge that we did in a year's time before I arrived.

Speaker 2

And you certainly saw the evidence of that with what we delivered at Play TV. Sorry, this is the joy of doing this at home. We have a dog that barks at everyone who walks in the door. So I feel great about that. Sales execution, consistency, I think, is the biggest and we'll see that deliver the kind of results we need.

Speaker 2

And I'm not going anywhere. I've given the world's longest notice period please tell me the Board it's 4 to 4 months.

Speaker 4

Yes. And you're going to be a consultant for all of 2022. So I definitely picked up on that. Lastly, the shares are weak here after hours. It looks like they're a little below $10 Does the balance sheet is there is the Board talking at all about perhaps using the balance sheet on a buyback more aggressively?

Speaker 4

I I can't recall. I think you have one in place, but what's the thinking on use of cash for the money that you've got on the balance sheet?

Speaker 2

It never comes up. Rob, let me go first, man. Yes, go ahead. Sorry. Rob was coming up.

Speaker 2

They may answer either on that one. No, it does not come up, period. And we just had our Board meeting yesterday. It does not come up. We are now in a position where we're in an enviable position where we're EBITDA positive, cash flow positive, Generating cash, building a bigger war chest.

Speaker 2

I want to see the equity go up, of course, Because that's the gear effect for the war chest that lets us do a lot more M and A. But no, that is absolutely not in the cards whatsoever. We want to invest in the things that will grow the business, not just taking shares off the street. And I just want to clarify, you said That I'll be on the sidelines in 2022. I want to make sure that we all understand.

Speaker 2

I will stay in this role through the end of 2022. Sometime between now and then, if and when the new CEO is appointed, I will step out of this role. I'll be reporting to the CEO in whatever capacity I can help that person, and I'll continue to be an employee of the business through the end of 2022. This gives the Board all the time in the world to get exactly the right Okay. Rob, do you want to jump in and correct anything I said?

Speaker 2

No, you said it all, Jeff. That's a first.

Operator

Our next question is from from Sharon Tribula with Northland Capital. Please proceed.

Speaker 5

Hi. I'm Sharon on behalf of Mike Latimore. Well, I have two questions for you today. One, how is the demand for events relative to the last 9 or 12 months ago. And is the media segment the main focus of your revenue retention effort?

Speaker 2

Great. I'll start with that. Rob, feel free to break in. So the first is where is the evolution of events, Especially as we're thankfully finally starting to wind down from COVID and where is that going, I'll be happy to comment on that. And the second is media in terms of its priority in retention.

Speaker 2

Did I cover that correctly?

Speaker 5

Yes, that's right.

Speaker 2

Great. Thanks. And please give Mike our best. Events, A year ago, and we were discussing this in last year's earnings calls, COVID compressed the adoption cycle. And so we saw things happening in a fraction of the time that we normally saw it.

Speaker 2

And certainly, we benefited from that. We saw significant improvement in growth in events. We were careful to make sure that the kind of events business that we were doing would give us an opportunity to have an ongoing relationship with customers as we come out of COVID, and that has not changed one bit. Certainly, the events activity has calmed down quite a lot, But we've got a much, much larger set of candidates now and prospects for going back into and building more relationships. And that's one of the reasons why I'm so excited about the new products that we'll be bringing to market early next year.

Speaker 2

The second, on media and retention, quite frankly, we focus on both media and enterprise. We don't play favorites. We know that our customers, be they media or enterprise, every day count on video to help them grow their business, do a better job of engaging. That's mission critical for them. And we enjoy the fact that we are kind of on that high end of when it really has to be perfect and flawless And broadcast quality, we're the ones to do business with.

Speaker 2

So we take that very seriously for both media and enterprise. What I love about the media market is it does there is no tolerance for anything less than perfection. There is no tolerance for anything less Perfect security, scalability, reliability. Those things are great because by building technology

Speaker 5

Okay. Thank you. And my next question is On the churn rate. So I believe sometimes media customers give you a full warning in 3rd quarters about whether they will churn in the next year. Did you get any notable ones this year?

Speaker 2

No. I haven't seen anything notable If it changes anything, again, I feel good about the fact that we have more insight than we've ever had before and that it's earlier insight, So that we can act preemptively. And certainly, we saw that with the renewal of 7 Network. That was a great example of a really, really big renewal. They signed up for 2 years instead of the traditional one.

Speaker 2

And ITV, which was another really big renewal that was very, very competitive. So I feel very, very good about Progress we've made there. Again, we need to do a lap so that we know that we're back in control of the recurring revenue business. We're not there

Speaker 3

yet. Okay.

Speaker 5

Thank you.

Operator

We have reached the end of our question and answer session. I would like to turn the conference back over to Jeff Ray for closing comments.

Speaker 2

Thank you, operator. Thank you, everyone, for joining us. Again, I'm grateful that you're safe and sound. As I said, The job is not done. If there's anything you should take away from the announcement of my departure in 14 months, it is that We will act with even greater urgency at driving top line growth, improving our renewals business and getting these exciting new products to market.

Remove Ads
Powered by Quartr
Earnings Conference Call
Brightcove Q3 2021
00:00 / 00:00
Remove Ads