Brightcove Inc.

Greetings. Welcome to the Brightcove second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Brian Daniel from ICR. You may begin.

Good afternoon, and welcome to Brightcove second 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 Ray, Brightcoast's Chief Executive Officer, and Rob Norick, Brightcoast'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 Privacy and Security Litigation Reform Act of 1995, including statements concerning our financial guidance for the third fiscal quarter of 2021 and the full year of 2021, expected profitability and positive free cash flow, our position to execute on our go-to-market and growth strategy, our ability to expand our leadership position, our ability to maintain and upsell existing customers, as well as our ability to acquire new customers. Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming, or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views of any subsequent date. 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-19 pandemic on our business operations, as well as the impact on general economic and financial market conditions. For discussion of the 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 call, we 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 closed today, which can be found on our website at www.brightcove.com. In terms of the agenda for today's call, Jeff will provide our 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 second quarter 2021 results, as well as our outlook for the third quarter and full year of 2021. With that, let me turn the call over to Jeff.

Thanks, Brian, and thank you to everyone for joining today. I hope you and your families are enjoying a safe and healthy summer. Our customers continue to demonstrate that video remains the most powerful medium to connect with their audiences. As many global organizations begin to plan for hybrid working environments, we see the opportunity to empower them to communicate, educate, motivate, and inspire their teams across a variety of industry sectors. We are also ready to serve the needs of marketers as they are presented with the challenge to optimize all video content across a variety of activities, both in person and virtual. And we are so proud to continue to deliver solutions to media companies that are enabling greater reach and monetization of content across various engagement models. So with that, let's get to our results. For the second quarter, revenue was $51.5 million, up 7% year-over-year, and adjusted EBITDA was $5.6 million, up 33% year-over-year. We delivered a solid financial performance this quarter and exceeded the high end of guidance. As we have discussed in previous earnings calls, we continue to focus on four strategic areas to drive the business forward. First and foremost, customer success and retention. Second, our continued investment in innovation to satisfy the growing demand for video, delivering comprehensive video solutions for use cases across multiple industries. Third, leveraging the success we have seen in our direct sales effort. And fourth, accelerating the growth of our indirect channel. Each of these focus areas has a dedicated, experienced team with clear execution goals. We are ahead of our plan in implementing all the necessary changes to our renewals business with people, processes, and systems now in place. It will take the next two to three quarters to fully realize the benefit of these changes. With our particular focus on increasing retention, with our media customers. We know we have in place all the elements needed to deliver on our long-term financial targets of 20% revenue growth and 20% plus adjusted EBITDA margins. We have the best video platform in the world and a product development team that is innovating better and more quickly than ever before. We have 64% more engineering headcount than we did three years ago and are reallocating these resources to deliver new products at record pace. Our go-to-market team is making progress winning business and expanding existing customers. For example, our Asia Pacific and Japan regions had amazing year-on-year growth of 30% and 50% respectively. To continue this momentum and realize our full go-to-market potential, We will also be making significant investments in sales and marketing in the second half. These investments will put us in the best possible position to further accelerate growth as we complete our retention improvement efforts. Let me take a moment to describe what we did in the last quarter for each of our growth strategy areas, starting with renewals and customer success. TVNZ is a New Zealand state-owned commercially funded broadcaster, and has been a Brightcove customer for 10 years. As their renewal approached, we knew we needed to express to TVNZ the importance of their business and our commitment to media organizations. Using our new customer retention approach, TVNZ signed a renewal for two years, a first for this customer. I could not be more proud of the actions we took and the end result. We rolled out a new comprehensive customer onboarding program, including new training tools, education modules, and direct access to expert resources. We have received overwhelmingly positive feedback from customers on the program. As an example, the Scottish courts and tribunals shared feedback on its recent onboarding experience, stating that, quote, Brightco's onboarding program has been excellent. The level of service, Responsiveness and attention to detail is first class. Please keep up the good work, end quote. We invested in new tools allowing us to better track customer activity and health. With this data, we can ensure all customers are positioned to succeed. In addition, we've hired new employees dedicated to customer success and have plans to add additional headcount throughout 2021. Within the quarter, we've seen a number of customer renewals with major revenue growth, which we believe are early indicators that our customer success efforts are working. SoftBank is a Japanese multinational conglomerate that has deeply ingrained Brightco powered video communication in its strategy. Under our recently expanded relationship, we will now work together to live stream professional Japanese baseball games to fans. Hydro does for rowers what Peloton does for indoor cyclists, provide inspirational, athlete-led live and on-demand classes. Hydro came to Bright Cove a couple of years ago when their business was just starting out. As you can imagine, the business is taking off, and we're committed to supporting every stage of their growth. Their recent renewal indicates the success that they have experienced working with our team and technology. Of course, none of this is possible without our continued platform innovation. We have the most intelligent, open platform that offers limitless scale, world-class security, and powerful integrations. In Q2, we introduced several new product innovations, including China delivery. Through our partnership with Alibaba, Brightcove became the first online video platform to deliver business video into China. helping enterprises and retailers expand their audiences and increase revenue opportunities. There is a lot of excitement around China delivery, as China is projected to host $2.8 trillion in e-commerce this year, and corporate communications divisions continue to engage employees with more video. We have customers already using the feature, including Graph, a multinational jeweler based in London, and Voice Group, a global technology company that sets standards in the markets of energy, oil and gas, paper, raw materials, and transport and automotive. We also introduced playback restrictions. Our most advanced security offer enables customers to protect their content from being watched by unauthorized users. Playback restrictions include options to restrict assets, manage viewer access and permissions, and prevent content piracy. Although only released this quarter, we have a number of customers using this feature, including regional and national broadcasters such as Egyptian Media Group, Stadium, and large event companies, major retailers, and sports leagues. We launched Virtual Events for Business, an easy-to-use virtual event solution for highly repeatable, mid-sized events like employee town halls, large group training, and product unveiling. We announced this solution prior to our last earnings call and are seeing great traction. An early example is Nisei Life Insurance in Japan, which will use virtual events for business to reach its audiences quickly, easily, and securely. And we rolled out Brightcove Live updates to scale our live streaming in preparation for large sporting events, like the USGA's US Open, where any viewer on the U.S. Open website could follow any player on every hole, view the holes from different camera angles, and interact with live polling and stats. This breakthrough experience empowers leagues, federations, and sporting organizations to broadcast to millions. Now, let's turn to our go-to-market execution and the customers leveraging video to achieve real business results. We had several significant wins and renewals this quarter, including Black News Channel, a new independent network that describes itself as the nation's only provider of 24-7 cable news programming created by people of color for people of color, specifically black Americans. Black News Channel launched in February 2020 and turned to Brightcove to bring to life its vision for truth across apps, the web, smartphones, tablets, and connected devices. Sparrow Live is a new artist-founded business democratizing access to the arts by connecting musicians directly with audiences through interactive, creative experiences, all streamed using Brightcove. Daltile Corporation is the leading manufacturer and distributor of porcelain tile, ceramic tile, and natural stone in the U.S., Daltile will use Brightco to host, manage, and publish brand-building videos across all of its public-facing digital properties. All of these innovators saw a need, civic, artist, or commercial, that wasn't being met. They recognized the secure, reliable, and scalable video experiences we've delivered for other customers and are now discovering what we can do for them using our powerful platform. In the second quarter, we welcomed many other new customers, including the Edinburgh Fringe Festival, one of the world's largest arts festivals, Rooster Teeth Productions, a community-built entertainment company, and SMBC, one of the largest banks in Japan. We're also proud to have been chosen as the live streaming partner for the Dana-Farber Cancer Institute's Defy Cancer launch event, which showcased how donor support is needed to change the impact of cancer in our lifetime. And Brightcove was also selected to be the streaming provider for SAP's flagship global user conference, Sapphire. Now let's move to our channel strategy. We launched the Brightcove Partner Program 12 months ago, and within the first year, we have more than 150 partners globally and continue to see great momentum. We're pleased with our channel performance and are on track to hit our target for 20% of bookings coming through our partner channel in 2021 and expect that to grow to 30% to 50%. Last quarter, we announced a new partner, L2, offering great value for performing arts organizations to reach new audiences virtually. To date, we have signed five customers through the partnership. Lyric Opera, one of the leading opera companies in the United States based in Chicago, is an example of a new customer that came to us through L2 to provide their patrons the option of a digital experience during the 2021 to 2022 season. We also continue to add new partners like UVU, who specialize in technology for publishers, and RWS to assist us with translations. Our most significant partner-related expansion this quarter was in Asia Pacific, where we enlisted 12 new partners that will continue to drive growth in booking. We're thrilled with the progress and growth of our partner ecosystem, and it remains a strategic focus area in 2021. I'm also pleased to note that we will host our annual Play customer conference on October 5th and 6th. During this two-day virtual conference, we will announce exciting news about our product innovation for customers and partners across multiple use cases. At play, you will see how the investments we are making in our innovation are truly coming to life. We will be showcasing a new way for companies to communicate with internal and external audiences with an always-on channel, corporate TV. an intuitive digital video marketing solution that enables entire marketing teams to be able to access, utilize, and distribute video content directly from the marketing platforms these teams live in every day. AI and ML innovation that will empower our media and enterprise customers to find, reveal, and monetize the value from their video content. This will, for the first time ever, allow our customers to tap into the rich intelligence generated by our vast video repository. A brand-new Brightcove Marketplace, which will provide a new ecosystem for development partners and customers to connect. Developers will be able to promote and sell their applications, and customers will be able to discover and provision apps that solve their immediate business needs. With over 60 sessions across three time zones, Customers and partners will share their experiences and knowledge with our community and will be joined by other industry influencers and keynote session hosts. Finally, I want to share a change in our executive leadership team. Rick Hansen, Chief Revenue Officer, is leaving Brightcove at the end of July. Over his two and a half years at Brightcove, he transformed the sales organization and hired a sales leadership team that's taken us to the next level. We're thankful for Rick's contribution to our growth and wish him the best as he takes some time with his family. We're excited to promote Brian Freuling to the role of Executive Vice President, Head of Global Sales. Brian joined Brightcove in August of 2019 to lead the America's sales team. During his tenure, the team has seen tremendous bookings growth and executed at a high level. Prior to Brightcove, Froiling held leadership positions at CA Technologies, Pivotal Software, and Symantec Technologies. In addition, given the importance of the renewals business and the early signs of success, Deb Richards, who joined us in the first quarter as Senior Vice President of Customer Success to lead our global customer success and renewals business, now reports directly to me. I'm also delighted to announce that Patrick Wagstrom has joined Brightcove as the company's first chief data officer. He will spearhead an advanced R&D organization that integrates machine learning capabilities into Brightcove's solution, bringing advanced opportunities for customers and viewers. Prior to Brightcove, Wagstrom led the emerging technology group at Verizon, was part of Capital One's cloud transformation and led the development of the machine learning platform for their credit card business, and was also a founding member of the IBM Watson Group. I am so proud of every one of our employees and the hard work they put in daily to make our customers successful. Without them, we would not be in the strong position we are in today. We are executing against each of our focus areas and performing well. Let me be clear, the work is not done but we know we are on the right path. We will use new products and services on top of the best video platform in the industry to solve the big problems that others cannot. We are in a position to accelerate revenue growth, expand margins, and generate value for shareholders by creating value for our customers. We have the right team and strategy in place to achieve our target to be a Rule of 40 company. With that, Let me turn the call over to Rob to walk you through the numbers.