The following dialogue and evaluation of our monetary situation and outcomes of
operations needs to be learn along side the monetary statements and
associated notes showing elsewhere on this Annual Report on
Form 10-Ok.
The following dialogue accommodates forward-looking statements that mirror our
plans, estimates, and beliefs. Our precise outcomes may differ materially from
these mentioned within the forward-looking statements. Factors that might trigger or
contribute to those variations embody these mentioned under and elsewhere in
this Annual Report on Form
10-Ok,
significantly in “Risk Factors.”
Overview
We are a number one international supplier of cloud-based providers for video. We had been
integrated in Delaware in August 2004. With our Emmy
®
-winning expertise and award-winning providers, we assist our clients understand
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the potential of video to handle business-critical challenges. Customers rely
on our suite of merchandise, providers, and experience to cut back the associated fee and
complexity related to publishing, distributing, measuring and monetizing
video throughout gadgets.
We promote 5 core video merchandise that assist our clients use video to additional
their companies in significant methods: (1) Video Cloud, our flagship product and
the world’s main on-line video platform, allows our clients to rapidly and
simply distribute high-quality video to Internet-connected gadgets;
(2) Brightcove Live, our industry-leading answer for reside streaming, delivers
high-quality viewer experiences at scale; (3) Brightcove Beacon, a purpose-built
software that allows firms to launch premium OTT video experiences
rapidly and cheaply, throughout gadgets and with the pliability of
a number of monetization fashions; (4) Brightcove Player, an exceptionally quick,
cloud-based expertise for creating and managing video experiences; and
(5) Zencoder, a strong, cloud-based video encoding expertise.
Customers can complement their use of our core merchandise with modular
applied sciences that present enhanced capabilities similar to (1) modern advert
insertion and video stitching by way of Brightcove SSAI; (2) environment friendly publication
of movies to Facebook, Twitter, and YouTube by way of Brightcove Social; (3) an
app for creating advertising campaigns with insightful information and {industry}
benchmarks by way of Brightcove Campaign; and (4) create branded video expertise
by accessing templates with
built-in
greatest practices by way of Brightcove Gallery.
We have additionally delivered to market a number of video options, that are comprised of a
suite of video applied sciences that deal with particular buyer
use-cases
and wants: (1) Virtual Events Experience helps manufacturers to rework occasions into
custom-made digital experiences; (2) Brightcove Video Marketing Suite, allows
entrepreneurs to make use of video to drive model consciousness, engagement and conversion; and
(3) Brightcove Enterprise Video Suite, supplies an enterprise-class platform for
inner communications, worker coaching, reside streaming, advertising and
ecommerce movies; and (4)
Brightcove CorpTV
™
,
supplies a brand new technique to ship advertising movies, product bulletins, coaching
packages, and different reside and on-demand content material in a branded expertise for
firms.
Our philosophy for the following few years will proceed to be to put money into our
product technique and growth, gross sales,
and go-to-market actions
to help our long-term income progress. We imagine these investments will assist
us deal with some of the challenges going through our enterprise similar to demand for our
merchandise by current and potential clients, fast technological change in our
{industry}, elevated competitors and ensuing worth sensitivity. These
investments embody help for the enlargement of our infrastructure inside our
internet hosting amenities, the hiring of extra technical and gross sales personnel, the
innovation of new options for current merchandise and the event of new
merchandise. We imagine this technique will assist us retain our current clients,
improve our common annual subscription income per premium buyer and lead
to the acquisition of new clients. Additionally, we imagine buyer progress
will allow us to attain economies of scale which can scale back our value of items
bought, analysis and growth and common and administrative bills as a
share of complete income.
As of December 31, 2021, and 2020 we had 687 and 623 staff, respectively.
We generate income by providing our merchandise to clients on a
subscription-based, software program as a service, or SaaS, mannequin. Our income grew from
$197.4 million within the yr ended December 31, 2020 to $211.1 million within the yr
ended December 31, 2021, primarily associated to a rise in income from our
subscription-based SaaS. Our consolidated internet earnings was $5.4 million for the
yr ended December 31, 2021, and our consolidated internet loss was $5.8 million for
the yr ended December 31, 2020. Included in consolidated internet earnings for the
yr ended December 31, 2021 was merger-related expense, stock-based
compensation expense and amortization of acquired intangible property of $300,000,
$10.0 million and $3.1 million, respectively. Included in consolidated internet loss
for the yr ended December 31, 2020 was merger-related bills, stock-based
compensation expense and amortization of acquired intangible property of
$5.8 million, $8.8 million, and $3.4 million, respectively.
For the years ended December 31, 2021 and 2020, our income derived from
clients positioned outdoors North America was 44% and 45%, respectively. We anticipate
the proportion of complete internet income derived from outdoors North America to
improve in future durations as we proceed to broaden our worldwide
operations.
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Key Metrics
We usually evaluate a quantity of metrics, together with the next key metrics, to
consider our enterprise, measure our efficiency, determine tendencies affecting our
enterprise, formulate monetary projections and make strategic selections.
The following desk contains our key metrics for the durations offered:
Year Ended December 31,
2021 2020
Customers (at interval finish)
Premium 2,227 2,279
Volume 908 1,051
Total clients (at interval finish) 3,135
3,330
Net income retention charge 97 % 95 %
Recurring greenback retention charge 90 % 89 %
Average annual subscription income per premium
buyer, excluding Starter version clients (in
1000’s) $ 94.1 $ 89.5
Average annual subscription income per premium
buyer for Starter version clients solely (in
1000’s) $ 5.1 $ 4.7
Total backlog, excluding skilled providers
engagements (in hundreds of thousands) $ 156.2 $ 148.0
Total backlog to be acknowledged over subsequent 12 months,
excluding skilled providers engagements (in
hundreds of thousands) $ 121.2 $ 114.7
• Number of Customers
. We outline our quantity of clients on the finish of a selected quarter as
the quantity of clients producing subscription income on the finish of the
quarter. We imagine the quantity of clients is a key indicator of our
market penetration, the productiveness of our gross sales group and the
worth that our merchandise carry to our clients. We classify our clients
by together with them in both premium or quantity choices. Our premium
choices embody our premium Video Cloud clients (Enterprise and Pro
editions), our Zencoder clients (apart from Zencoder clients on
month-to-month
contracts and
pay-as-you-go
contracts), our SSAI clients, our Player clients, our OTT Flow
clients (OTT Flow is our partner-based OTT platform, which preceded
Brightcove Beacon), our Virtual Event Experience clients, our Video
Marketing Suite clients, our Enterprise Video Suite clients, our
Brightcove Beacon clients, our Brightcove Engage clients, our
Brightcove CorpTV
™
clients, and our Brightcove Campaign clients. Our quantity choices
embody our Video Cloud Express clients and our Zencoder clients on
month-to-month
contracts and
pay-as-you-go
contracts.
Our
go-to-market
focus and progress technique is to broaden our premium buyer base, as we imagine
our premium clients symbolize a larger alternative for our options. Premium
clients decreased in comparison with the prior interval as a result of some clients deciding
to modify to
in-house
options or different third-party options and some clients acquired within the
Ooyala acquisition deciding to not change to our answer. Volume clients
decreased in latest durations primarily as a result of our discontinuation of the
promotional Video Cloud Express providing. As a outcome, we’ve skilled
attrition of this base degree providing and not using a corresponding addition of
clients. We anticipate clients utilizing our quantity choices to proceed to
lower in 2021 and past as we proceed to focus available on the market for our
premium options.
• Net Revenue Retention Rate
. We assess our skill to retain and broaden clients utilizing a metric we
consult with as our internet income retention charge. We calculate the web income
retention charge by dividing: (a) the present annualized recurring income
for premium clients that existed twelve months prior by (b) the
annualized recurring income for all premium clients that existed
twelve months prior. We outline annualized recurring income for premium
clients as the mixture annualized contract worth from our premium
buyer base, measured as of the tip of a given interval. We usually
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calculate our internet income retention charge on a quarterly foundation. For annual
durations, we report internet income retention charge as the common of the web
income retention charge for all fiscal quarters included within the interval. By
dividing the retained recurring income by the bottom recurring income, we
measure our success in retaining and rising put in income from the
particular cohort of clients we served initially of the interval.
The recurring greenback retention charge focuses on contracts up for renewal
in a given quarter and solely captures enlargement/upsells at time of
renewal, and is extra inclined to swings than the web income retention
charge. Accordingly, and as beforehand disclosed, we plan to proceed to
report the web income retention charge and discontinue reporting recurring
greenback retention charge after this Annual Report on Form
10-Ok
for the yr ended December 31, 2021.
• Recurring Dollar Retention Rate
. We assess our skill to retain clients utilizing a metric we consult with as
our recurring greenback retention charge. We calculate the recurring greenback
retention charge by dividing the retained recurring worth of subscription
income for a interval by the earlier recurring worth of subscription
income for a similar interval. We outline retained recurring worth of
subscription income because the dedicated subscription charges for all contracts
that renew in a given interval, together with any improve or lower in
contract worth. We outline earlier recurring worth of subscription
income because the recurring worth from dedicated subscription charges for all
contracts that expire in that very same interval. We usually calculate our
recurring greenback retention charge on a month-to-month foundation. Recurring greenback
retention charge supplies visibility into our ongoing income.
• Average Annual Subscription Revenue Per Premium Customer
. We outline common annual subscription income per premium buyer as
the full subscription income from premium clients for an annual
interval, excluding skilled providers income, divided by the common
quantity of premium clients for that interval. We imagine that this metric
is vital in understanding subscription income for our premium
choices along with the relative dimension of premium buyer
preparations. As our Starter version has a worth level of $199 or $499
per 30 days, we disclose the common annual subscription income per
premium buyer individually for Starter version clients and all different
premium clients.
• Backlog
. We outline backlog as the mixture quantity of transaction worth that’s
allotted to efficiency obligations that haven’t but been glad,
excluding skilled service engagements. We imagine that this metric
is vital in understanding future enterprise efficiency.
COVID-19
Update
While the implications of
the COVID-19 pandemic
stay unsure, we plan to proceed to make investments to help enterprise
progress. We imagine that the expansion of our enterprise depends on many components,
together with our skill to broaden our buyer base, improve adoption of our
product choices inside current clients, develop new merchandise and
purposes to increase the performance of our merchandise and present a excessive
degree of customer support. We anticipate to put money into gross sales and advertising to help
buyer progress. We additionally anticipate to put money into analysis and growth as we
proceed to introduce new merchandise and purposes to increase the performance
of our merchandise. We intend to take care of a excessive degree of customer support and
help which we take into account vital for our continued success. We additionally anticipate to
proceed to incur common and administrative bills to help our enterprise
and to take care of the infrastructure required to be a public firm. We anticipate to
use our money movement from operations and, if mandatory, our credit score facility to fund
operations.
See the part titled “Risk Factors” included underneath Item 1A for additional
dialogue of the attainable affect of
the COVID-19 pandemic
on our enterprise.
Components of Consolidated Statements of Operations
Revenue
Subscription and Support Revenue
– We generate subscription and help income from the sale of our merchandise.
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Video Cloud is obtainable in two product strains. The first product line is comprised
of our premium product editions. All premium editions embody performance to
publish and distribute video to Internet-connected gadgets, with larger ranges
of premium editions offering extra options and performance. Customer
preparations are usually
one-year
contracts, which embody a subscription to Video Cloud, fundamental help
and a pre-determined
quantity of video streams, bandwidth, transcoding and storage. We additionally provide gold,
platinum and platinum plus help to our premium clients for an extra
payment. The pricing for our premium editions relies on the worth of our software program,
in addition to the quantity of customers, accounts and utilization, which is comprised of video
streams, bandwidth, transcoding and storage. Should a buyer’s utilization exceed
the contractual entitlements, the contract will present the speed at which the
buyer should pay for precise utilization above the contractual entitlements. The
second product line is comprised of our quantity product version. Our quantity
editions goal
small and medium-sized companies, or
SMBs. The quantity editions present clients with the identical fundamental performance
that’s supplied in our premium product editions however have been designed for
clients who’ve decrease utilization necessities and don’t usually require
superior options and performance. We discontinued the decrease degree pricing
choices for the Express version of our quantity providing and anticipate the full
quantity of clients utilizing the Express version to proceed to lower. Customers
who buy the amount editions usually
enter into month-to-month agreements.
Volume clients are usually billed on a month-to-month foundation and pay through a credit score
card.
Virtual Events Experience, Brightcove Live and Brightcove Player are supplied to
clients on a subscription foundation. Customer preparations are
usually one-year contracts,
which embody a subscription to Virtual Events Experience, Brightcove Live or
the Brightcove Player, fundamental help and
a pre-determined quantity
of video streams, bandwidth, transcoding, and storage and solely video streams for
Brightcove Player. We additionally provide gold, platinum, and platinum plus help to
our Virtual Events Experience, Brightcove Live and Brightcove Player clients
for an extra payment. The pricing for these merchandise relies on the worth of
our software program, in addition to, the quantity of customers, accounts and utilization. Should a
buyer’s utilization exceed the contractual entitlements, the contract will present
the speed at which the shopper should pay for precise utilization above the contractual
entitlements.
Zencoder is obtainable to clients on a subscription foundation, with both dedicated
contracts or
pay-as-you-go
contracts. The pricing relies on utilization, which is comprised of minutes of video
processed. The dedicated contracts embody a set quantity of minutes of video
processed. Should a buyer’s utilization exceed the contractual entitlements, the
contract will present the speed at which the shopper should pay for precise utilization
above the contractual entitlements. Zencoder clients are thought-about premium
clients apart from Zencoder clients
on month-to-month contracts
or pay-as-you-go contracts,
that are thought-about quantity clients.
Brightcove Beacon and Brightcove Campaign are every supplied to clients on a
subscription foundation, with various ranges of performance, utilization entitlements and
help based mostly on the dimensions and complexity of a buyer’s wants. Customer
preparations are usually
one-year
contracts.
Video Marketing Suite and Enterprise Video Suite are supplied to clients on a
subscription foundation in Starter, Pro and Enterprise editions. The Pro and
Enterprise buyer preparations are usually
one-year
contracts, which usually embody a subscription to Video Cloud, Gallery,
Brightcove Social (for Video Marketing Suite clients) or Brightcove Live (for
Enterprise Video Suite clients), fundamental help and a
pre-determined
quantity of video streams or performs (for Video Marketing Suite clients), viewers
(for Enterprise Video Suite clients), bandwidth and storage or movies. We additionally
usually provide gold help or platinum help to those clients for an
extra payment, which incorporates prolonged telephone help. The pricing for our Pro
and Enterprise editions relies on the quantity of customers, accounts and utilization,
which is comprised of video streams or performs, viewers, bandwidth and storage or
movies. Should a buyer’s utilization exceed the contractual entitlements, the
contract will present the speed at which the shopper should pay for precise utilization
above the contractual entitlements, or would require the shopper to improve its
bundle upon renewal. The Starter version supplies clients with the identical fundamental
performance that’s supplied in our Pro and Enterprise editions however has been
designed for patrons who’ve decrease utilization necessities and don’t usually
search superior options and
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performance. Customers who buy the Starter version could enter into
one-year
agreements or
month-to-month
agreements. Starter clients with
month-to-month
agreements are usually billed on a month-to-month foundation and pay through a bank card.
All Brightcove Beacon, Brightcove CorpTV
™
, OTT Flow, Brightcove Campaign, Brightcove Live, SSAI, Player, Virtual Events
Experience, Video Marketing Suite,
and Enterprise Video Suite clients are thought-about premium clients.
Professional Services and Other Revenue
– Professional providers and different income consists of providers similar to
implementation, software program customizations and mission administration for patrons who
subscribe to our premium editions. These preparations are priced both on a
mounted payment foundation with a portion due upon contract signing and the rest due
when the associated providers have been accomplished, or on a time and supplies foundation.
Cost of Revenue
Cost of subscription, help and skilled providers income primarily
consists of prices associated to supporting and internet hosting our product choices and
delivering our skilled providers. These prices embody salaries, advantages,
incentive compensation and stock-based compensation expense associated to the
administration of our information facilities, our buyer help crew and our skilled
providers employees. In addition to those bills, we incur third-party service
supplier prices similar to information middle and content material supply community, or CDN,
bills, allotted overhead, depreciation expense and amortization of
capitalized
internal-use
software program growth prices and acquired intangible property. We allocate overhead
prices similar to lease, utilities and provides to all departments based mostly on relative
headcount. As such, common overhead bills are mirrored in value of income
along with every working expense class. The prices related to
offering skilled providers are considerably larger as a share of
associated income than the prices related to delivering our subscription and
help providers because of the labor prices of offering skilled providers.
Cost of income decreased in absolute {dollars} from 2020 to 2021. In future
durations we anticipate our value of income will improve in absolute {dollars} as our
income will increase. Cost of income as a share of income may fluctuate
from interval to interval relying on the quantity of our skilled providers
engagements and any related prices regarding the supply of subscription
providers and the timing of important expenditures. To the extent that our
buyer base grows, we intend to proceed to speculate extra sources in
increasing the supply functionality of our merchandise and different providers. The timing
of these extra bills may have an effect on our value of income, each in phrases of
absolute {dollars} and as a share of income, in any specific quarterly or
annual interval.
Operating Expenses
We classify our working bills as follows:
Research and Development
. Research and growth bills consist primarily of personnel and associated
bills for our analysis and growth employees, together with salaries, advantages,
incentive compensation and stock-based compensation, along with the prices
related to contractors and allotted overhead. We have targeted our analysis
and growth efforts on increasing the performance and scalability of our
merchandise and enhancing their ease of use, in addition to creating new product
choices. We anticipate analysis and growth bills to extend in absolute
{dollars} as we intend to proceed to periodically launch new options and
performance, broaden our product choices, proceed the localization of our
merchandise in varied languages, improve and prolong our service choices, and
develop new applied sciences. Over the long run, we imagine that analysis and
growth bills as a share of income will lower, however will differ
relying upon the combo of income from new and current merchandise, options and
performance, in addition to adjustments within the expertise that our merchandise should
help, similar to new working techniques or new Internet-connected gadgets.
Sales and Marketing
. Sales and advertising bills consist primarily of personnel and associated
bills for our gross sales and advertising employees, together with salaries, advantages,
incentive compensation, commissions, stock-based
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compensation and journey prices, amortization of acquired intangible property, in
addition to prices related to advertising and promotional occasions, company
communications, promoting, different model constructing and product advertising bills
and allotted overhead. Our gross sales and advertising bills have elevated in
absolute {dollars} in every of the final three years. We intend to proceed to
put money into gross sales and advertising and broaden the sale of our product choices
inside our current buyer base, construct model consciousness and sponsor extra
advertising occasions. Accordingly, we anticipate gross sales and advertising expense to proceed
to be our most important working expense in future durations. Over the lengthy
time period, we imagine that gross sales and advertising expense as a share of income
will lower, however will differ relying upon the combo of income from new and
current clients
and from small, medium-sized and enterprise clients,
in addition to adjustments within the productiveness of our gross sales and advertising packages.
General and Administrative
. General and administrative bills consist primarily of personnel and associated
bills for government, authorized, finance, data expertise and human
sources features, together with salaries, advantages, incentive compensation and
stock-based compensation. General and administrative bills additionally embody the
prices related to skilled charges, insurance coverage premiums, different company
bills and allotted overhead. Over the long run, we imagine that common and
administrative bills as a share of income will lower.
Merger-related
. Merger-related prices consist of bills associated to mergers and acquisitions,
integration prices and common company growth actions.
Other Expense
Other expense consists primarily of curiosity earnings earned on our money, money
equivalents, overseas change beneficial properties and losses.
Income Taxes
As half of the method of making ready our consolidated monetary statements, we
are required to estimate our taxes in every of the jurisdictions wherein we
function. We account for earnings taxes in accordance with the asset and legal responsibility
technique. Under this technique, deferred tax property and liabilities are acknowledged
based mostly on momentary variations between the monetary reporting and earnings tax
bases of property and liabilities utilizing statutory charges. In addition, this technique
requires a valuation allowance towards internet deferred tax property if, based mostly upon
the accessible proof, it’s extra possible than not that some or all of the
deferred tax property is not going to be realized. We have supplied a valuation allowance
towards our current U.S. internet deferred tax property and deferred tax property of
sure overseas subsidiaries at December 31, 2021. We preserve internet deferred tax
liabilities for momentary variations associated to our Japanese and Portuguese
subsidiaries.
Stock-Based Compensation Expense
Our value of income, analysis and growth, gross sales and advertising, and common
and administrative bills embody stock-based compensation expense.
Stock-based compensation expense represents the truthful worth of excellent inventory
choices and restricted inventory awards, which is acknowledged as expense over the
respective inventory choice and restricted inventory award service durations. For the
years ended December 31, 2021, 2020 and 2019, we recorded stock-based
compensation expense of $10.0 million, $8.8 million, and $9.3 million,
respectively. We anticipate stock-based compensation expense to extend in absolute
{dollars} in future durations.
Foreign Currency Translation
With regard to our worldwide operations, we steadily enter into
transactions in currencies apart from the U.S. greenback. As a outcome, our income,
bills and money flows are topic to fluctuations as a result of adjustments in overseas
foreign money change charges, significantly adjustments within the euro, British pound,
Australian greenback, and Japanese yen. In durations when the U.S. greenback declines in
worth as in comparison with the foreign currency echange wherein we conduct
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enterprise, our overseas currency-based income and bills usually improve in
worth when translated into U.S. {dollars}. We anticipate the proportion of complete internet
income derived from outdoors North America to extend in future durations as we
proceed to broaden our worldwide operations.
Critical Accounting Policies and Estimates
Our consolidated monetary statements are ready in accordance with accounting
rules usually accepted within the United States. The preparation of these
monetary statements requires us to make estimates and assumptions that have an effect on
the reported quantities of property and liabilities and the disclosure of contingent
property and liabilities on the date of the monetary statements and the reported
quantities of income and bills in the course of the reporting durations. We base our
estimates on historic expertise and on varied different assumptions which are
believed to be affordable underneath the circumstances, the outcomes of which type the
foundation for making judgments concerning the carrying values of property and liabilities
that aren’t readily obvious from different sources. Our precise outcomes could differ
from these estimates underneath completely different assumptions or circumstances.
We imagine that the next important accounting insurance policies, that are extra
absolutely described within the notes to our consolidated monetary statements included
elsewhere on this Annual Report on Form
10-Ok,
contain a larger diploma of judgment and complexity. Accordingly, these are the
insurance policies we imagine are probably the most vital to assist in absolutely understanding and
evaluating our monetary situation and outcomes of operations.
Revenue Recognition
We primarily derive income from the sale of our on-line video platform, which
allows our clients to publish and distribute video to Internet-connected
gadgets rapidly, simply and in a cheap and high-quality method. Revenue
is derived from three main sources: (1) the subscription to our expertise
and associated help; (2) internet hosting, bandwidth and encoding providers; and
(3) skilled providers, which embody customization providers.
Under ASC 606, when the transaction worth features a variable quantity of
consideration, an entity is required to estimate the consideration that’s
anticipated to be acquired for a selected buyer association. We consider
variable consideration for usage-based charges at contract
inception and re-evaluate quarterly over
the course of the contract. Specifically, we estimate the income pertaining to
a buyer’s utilization that’s anticipated to exceed the annual entitlement allowance
and allocate such income to the distinct service throughout the associated contract
that provides rise to the variable cost. Estimates of variable consideration
embody analyzing buyer utilization towards the relevant entitlement restrict on the
finish of every reporting interval and estimating the quantity and timing of extra
quantities to be invoiced in reference to projected utilization. Estimates of variable
consideration regarding buyer utilization don’t embody quantities for which it’s
possible {that a} important reversal will happen. Determining the quantity of
variable consideration to acknowledge as income entails important judgment on
the half of administration and it’s attainable that precise income will deviate from
estimates over the course of a buyer’s dedicated contract time period.
We periodically enter into multiple-element service preparations that embody
platform subscription charges, help charges, and, in sure instances, different
skilled providers. These contracts embody a number of guarantees that we
consider to find out if the guarantees are separate efficiency obligations.
Performance obligations are recognized based mostly on providers to be transferred to a
buyer which are each succesful of being distinct and are distinct throughout the
context of the contract. Once we decide the efficiency obligations, we
decide the transaction worth, which incorporates estimating the quantity of
variable consideration to be included within the transaction worth, if any. We then
allocate the transaction worth to every efficiency obligation within the contract
based mostly on a relative stand-alone promoting worth technique. The transaction worth put up
allocation is acknowledged as income because the associated efficiency obligation is
glad.
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Income Taxes
We are topic to earnings taxes in each the United States and worldwide
jurisdictions, and we use estimates in figuring out our provision for earnings
taxes. We account for earnings taxes underneath the asset and legal responsibility technique for
accounting and reporting for earnings taxes. Deferred tax property and liabilities
are acknowledged based mostly on momentary variations between the monetary reporting
and earnings tax foundation of property and liabilities utilizing statutory charges. This
course of requires us to mission our present tax legal responsibility and estimate our
deferred tax property and liabilities, together with internet working losses and tax
credit score carryforwards. In assessing the necessity for a valuation allowance, we
thought-about our latest working outcomes, future taxable earnings projections and
possible tax planning methods. We have supplied a valuation allowance towards
considerably all of our internet U.S. deferred tax property and deferred tax property of
sure overseas subsidiaries at December 31, 2021. We acknowledged a deferred tax
legal responsibility within the U.S. for a portion of our indefinite lived intangibles and
different deferred tax liabilities that might not be offset towards deferred tax
property. We preserve internet deferred tax liabilities for momentary variations
associated to our Japanese and Portuguese subsidiaries. Due to the evolving nature
and complexity of tax rules mixed with the quantity of jurisdictions in
which we function, it’s attainable that our estimates of our tax legal responsibility may
change sooner or later, which can lead to extra tax liabilities and
adversely have an effect on our outcomes of operations, monetary situation and money flows.
As of December 31, 2021 and 2020, we had no materials unrecognized tax advantages.
Business Combinations
We document tangible and intangible property acquired and liabilities assumed in
enterprise combos underneath the acquisition technique of accounting. Amounts paid for
every acquisition are allotted to the property acquired and liabilities assumed
based mostly on their truthful values on the date of acquisition. We then allocate the
buy worth in extra of internet tangible property acquired to identifiable
intangible property based mostly on detailed valuations that use data and
assumptions supplied by administration. We allocate any extra buy worth over
the truthful worth of the web tangible and intangible property acquired and
liabilities assumed to goodwill.
Significant administration judgments and assumptions are required in figuring out the
truthful worth of acquired property and liabilities, significantly acquired intangible
property. The valuation of bought intangible property relies upon estimates of
the longer term efficiency and money flows from the acquired enterprise. Each asset is
measured at truthful worth from the angle of a market participant. Critical
estimates in valuing bought expertise and buyer lists embody future money
flows that we anticipate to generate from the acquired property. If the next
precise outcomes and up to date projections of the underlying enterprise exercise
change in contrast with the assumptions and projections used to develop these
values, we may expertise impairment fees which could possibly be materials. In
addition, we’ve estimated the financial lives of sure acquired property and
these lives are used to calculate depreciation and amortization expense. If our
estimates of the financial lives change, depreciation or amortization bills
could possibly be accelerated or slowed.
If completely different assumptions are used, it may materially affect the acquisition worth
allocation and adversely have an effect on our outcomes of operations, monetary situation
and money flows.
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Results of Operations
The following tables set forth our outcomes of operations for the durations
offered.
Year Ended December 31,
2021 2020 2019
(in 1000’s, besides share and per share
information)
Revenue:
Subscription and help income $ 198,929 $ 187,341 $ 173,818
Professional providers and different income 12,164 10,012 10,637
Total income 211,093 197,353 184,455
Cost of income:
Cost of subscription and help income 62,773 67,124 67,064
Cost of skilled providers and different
income 10,255 8,973 8,405
Total value of income 73,028 76,097 75,469
Gross revenue 138,065 121,256 108,986
Operating bills:
Research and growth 31,718 33,978 32,535
Sales and advertising 71,177 59,812 60,375
General and administrative 29,261 27,021 25,692
Merger-related 300 5,768 11,447
Other (profit) expense (1,965 ) – –
Total working bills 130,491 126,579 130,049
Income (loss) from operations 7,574 (5,323 ) (21,063 )
Other earnings (expense), internet (1,375 ) 128 (280 )
Income (loss) earlier than earnings taxes 6,199 (5,195 ) (21,343 )
Provision for earnings taxes 802 618 560
Net earnings (loss) $ 5,397 $ (5,813 ) $ (21,903 )
Net earnings (loss) per share
Basic $ 0.13 $ (0.15 ) $ (0.58 )
Diluted $ 0.13 $ (0.15 ) $ (0.58 )
Weighted-average quantity of frequent shares used
in computing internet earnings (loss) per share
Basic 40,717 39,473 38,028
Diluted 42,200 39,473 38,028
Overview of Results of Operations for the Years Ended December 31, 2021 and 2020
Total income elevated by 7%, or $13.7 million, in 2021 in comparison with 2020 as a result of
a rise in subscription and help income of 6%, or $11.6 million,
primarily associated to the continued progress of our buyer base for our premium
choices together with gross sales to each new and current clients. The improve in
skilled providers and different income of 21%, or $2.2 million, was primarily
associated to the dimensions and quantity of skilled providers engagements in 2021
in comparison with 2020. Professional providers and different income will differ from interval
to interval relying on the quantity of implementations and different initiatives which are
in course of. In addition, our income from premium choices grew by
$14.5 million, or 7%, in 2021 in comparison with 2020. Our skill to proceed to
present the product performance and efficiency that our clients require
might be a significant component in our skill to proceed to extend income.
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Our gross revenue elevated by $16.8 million, or 14%, in 2021 in comparison with 2020,
primarily as a result of a lower in the associated fee of subscription and help income and
our transition of acquired Ooyala clients to our expertise throughout 2020. Our
skill to proceed to take care of our general gross revenue will rely primarily
on our skill to proceed controlling our prices of supply.
Income from operations was $7.6 million in 2021 in comparison with a loss from
operations of $5.3 million in 2020. Our skill to proceed experiencing
working earnings will rely totally on larger income from each new and
current clients and from improved efficiencies.
Revenue
Year Ended December 31,
2021 2020 Change
Percentage of Percentage of
Revenue by Product Line Amount Revenue Amount
Revenue Amount %
(in 1000’s, besides percentages)
Premium $ 208,183 99 % $ 193,695 98 % $ 14,488 7 %
Volume 2,910 1 3,658 2 (748 ) (20 )
Total $ 211,093 100 % $ 197,353 100 % $ 13,740 7 %
During 2021, income elevated by $13.7 million, or 7%, in comparison with 2020,
primarily as a result of a rise in income from our premium choices, which
consist of subscription and help income, in addition to skilled providers
and different income. The improve in premium income of $14.5 million, or 7%, is
primarily the outcome of a 5% improve in common income per premium buyer.
During 2021, quantity income decreased by $748,000, or 20%, in comparison with 2020,
pushed by a lower in clients as we proceed to focus available on the market for our
premium options.
Year Ended December 31,
2021 2020 Change
Percentage of Percentage of
Revenue by Type Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and help $ 198,929 94 % $ 187,341 95 % $ 11,588 6 %
Professional providers and different 12,164 6 10,012 5 2,152 21
Total $ 211,093 100 % $ 197,353 100 % $ 13,740 7 %
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During 2021, subscription and help income elevated by $11.6 million, or 6%,
in comparison with 2020. The improve was primarily associated to a 5% improve in common
income per premium buyer in the course of the yr ended December 31, 2021. In
addition, skilled providers and different income elevated by $2.2 million, or
21%, in comparison with the prior yr. Professional providers and different income will
differ from interval to interval relying on the quantity of implementations and different
initiatives which are in course of.
Year Ended December 31,
2021 2020 Change
Percentage of Percentage of
Revenue by Geography Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
North America $ 119,079 56 % $ 107,686 55 % $ 11,393 11 %
Europe 37,947 18 34,001 17 3,946 12
Japan 25,272 13 25,745 13 (473 ) (2 )
Asia Pacific 28,261 13 28,984 15 (723 ) (2 )
Other 534 – 937 – (403 ) (43 )
International subtotal 92,014 44 89,667 45 2,347 3
Total $ 211,093 100 % $ 197,353 100 % $ 13,740 7 %
For functions of this part, we designate income by geographic areas based mostly
upon the areas of our clients. North America is comprised of income from
the United States, Canada and Mexico. International is comprised of income from
areas outdoors of North America. Depending on the timing of new buyer
contracts, income combine from a geographic area can differ from interval to interval.
During 2021, complete income for North America elevated $11.4 million, or 11%,
in comparison with 2020. During 2021, complete income outdoors of North America elevated
$2.3 million, or 3%, in comparison with 2020. The improve in income from
worldwide areas is primarily associated to will increase in income in Europe.
This improve is primarily as a result of a rise in common income per premium
buyer as mentioned above.
Cost of Revenue
Year Ended December 31,
2021 2020 Change
Percentage of Percentage of
Related Related
Cost of Revenue Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and help $ 62,773 32 % $ 67,124 36 % $ (4,351 ) (6 )%
Professional providers and different 10,255 84 8,973 90 1,282 14
Total $ 73,028 35 % $ 76,097 39 % $ (3,069 ) (4 )%
During 2021, value of subscription and help income decreased $4.4 million, or
6%, in comparison with 2020. This lower corresponds to a lower in our content material
supply community, third-party software program integration, and companion commissions
bills of $3.1 million, $841,000 and $437,000, respectively. Our transition of
acquired Ooyala clients to our expertise throughout 2020 additionally resulted in decreased
prices within the present yr.
During 2021, value of skilled providers and different income elevated
$1.3 million, or 14%, in comparison with 2020. This improve corresponds to will increase
in contractor bills of $1.2 million as a result of larger ranges of implementation
and skilled providers supplied, in addition to will increase in employee-related
prices of $300,000. These will increase had been offset partially by decreases in pc
and upkeep help bills of $166,000.
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Gross Profit
Year Ended December 31,
2021 2020 Change
Percentage of Percentage of
Related Related
Gross Profit Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and help $ 136,156 68 % $ 120,217 64 % $ 15,939 13 %
Professional providers and different 1,909 16 1,039 10 870 84
Total $ 138,065 65 % $ 121,256 61 % $ 16,809 14 %
The general gross revenue share was 65% and 61% for the years ended
December 31, 2021 and 2020, respectively. Subscription and help gross revenue
elevated $15.9 million, or 13%, in comparison with 2020. In addition, skilled
providers and different gross revenue elevated $870,000, or 84%, in comparison with 2020. It
is probably going that gross revenue, as a share of income, will fluctuate quarter
by quarter because of the timing and combine of subscription and help income and
skilled providers and different income, and the sort, timing and length of
service required in delivering sure initiatives.
Operating Expenses
Year Ended December 31,
2021 2020 Change
Percentage of Percentage of
Operating Expenses Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Research and growth $ 31,718 15 % $ 33,978 17 % $ (2,260 ) (7 )%
Sales and advertising 71,177 34 % 59,812 30 % 11,365 19 %
General and administrative 29,261 14 % 27,021 14 % 2,240 8 %
Merger-related 300 – 5,768 3 % (5,468 ) (95 )%
Other (1,965 ) (1 )% – – (1,965 ) –
Total $ 130,491 62 % $ 126,579 64 % $ 3,912 3 %
Research and Development
.
During 2021, analysis and growth expense decreased by $2.3 million, or 7%,
in comparison with 2020. This lower was primarily as a result of decreases in
employee-related, lease, contractor, and journey bills of $1.7 million,
$1.1 million, $156,000, and $196,000, respectively. These decreases had been offset
by will increase in stock-based compensation expense and amortization of capitalized
inner use software program of $599,000 and $335,000, respectively. We anticipate our
analysis and growth expense, as share of income, to stay comparatively
unchanged in future durations.
Sales and Marketing
.
During 2021, gross sales and advertising expense elevated by $11.4 million, or 19%,
in comparison with 2020 primarily as a result of will increase in employee-related, commissions,
and advertising program bills of $5.1 million, $4.5 million, and $4.1 million,
respectively. These will increase had been partially offset by decreases in lease,
contractor, and intangible amortization bills of $1.2 million, $701,000, and
$256,000, respectively. We anticipate that our gross sales and advertising expense will
improve in absolute {dollars} together with our income, as we proceed to broaden
gross sales protection and construct model consciousness by way of what we imagine are
cost-effective channels.
General and Administrative
.
During 2021, common and administrative expense elevated by $2.2 million, or
8%, in comparison with 2020 primarily as a result of will increase in outdoors accounting and authorized
payment, employee-related, and stock-based compensation bills of $1.2 million,
$873,000, and $643,000, respectively. These will increase had been offset by decreases
in lease bills of $266,000. In future durations, we anticipate common and
administrative expense, as a share of income, to stay comparatively
unchanged.
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Merger-Related
.
During 2021, merger-related expense decreased by $5.5 million, or 95%, in contrast
to 2020 primarily as a result of prices incurred in reference to common merger and
associated actions in 2020 which didn’t recur within the present interval.
Other (profit) expense.
On March 27, 2020, in response to
the COVID-19
pandemic, the U.S. authorities enacted the Coronavirus Aid, Relief, and Economic
Security Act, which was amended by the Consolidated Appropriations Act in
December of 2020 (the “CARES Act”). The CARES Act supplies quite a few tax
provisions and different stimulus measures, together with the creation of sure
worker retention credit. In the primary quarter of 2021, we acknowledged a
profit of $2.0 million from the CARES Act associated to worker retention
credit. The profit was recorded as Other (profit) expense.
Overview of Results of Operations for the Years Ended December 31, 2020 and 2019
Please see our Form
10-Ok
for the yr ended December 31, 2020 for an outline of outcomes of operations
for the years ended December 31, 2020 and 2019.
Liquidity and Capital Resources
Cash and money equivalents.
Our money and money equivalents at December 31, 2021 had been held for working capital
functions and had been invested primarily in cash market funds. We don’t enter into
investments for buying and selling or speculative functions. At December 31, 2021 and 2020,
we had $13.8 million and $17.1 million, respectively, of money and money
equivalents held by subsidiaries in worldwide areas, together with
subsidiaries positioned in Japan and the United Kingdom. As a outcome of adjustments in
tax legislation, these earnings might be repatriated to the United States
tax-free
however may nonetheless be topic to overseas withholding taxes. On November 1, 2021, we
accomplished the acquisition of video interactivity expertise property that had been
supplied by a 3
rd
social gathering companion for $2.0 million in money. We imagine that our current money and
money equivalents might be ample to satisfy our anticipated working capital and
capital expenditure wants over at the least the following 12 months.
Year Ended December 31,
Condensed Consolidated Statements of Cash Flow Data 2021 2020
2019
(in
1000’s)
Cash flows supplied by working actions 19,563 21,312 2,708
Cash flows utilized in investing actions (10,842 ) (8,724 ) (12,618 )
Cash flows supplied by financing actions 702 1,585 3,177
Accounts receivable, internet.
Our accounts receivable stability fluctuates from interval to interval, which impacts
our money movement from working actions. The fluctuations differ relying on the
timing of our billing exercise, money collections, and adjustments to our allowance
for uncertain accounts. In many cases we obtain money cost from a buyer
previous to the time we’re in a position to acknowledge income on a transaction. We document
these funds as deferred income, which has a constructive impact on our accounts
receivable balances.
Cash flows supplied by working actions.
Cash supplied by working actions consists primarily of internet earnings adjusted
for sure
non-cash
objects together with depreciation and amortization, stock-based compensation expense,
the availability for unhealthy money owed and the impact of adjustments in working capital and
different actions. Cash supplied by working actions in the course of the yr ended
December 31, 2021 was $19.6 million. The money movement supplied by working
actions primarily resulted from
internet non-cash fees
of $18.4 million and internet earnings of $5.4 million, partially offset by adjustments in
our
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working property and liabilities of $4.3 million.
Net non-cash bills
consisted of $10.0 million for stock-based compensation, $8.3 million for
depreciation and amortization, and $159,000 for provision for reserves on
accounts receivable. Cash outflows from adjustments in our working property and
liabilities consisted primarily of a lower in accrued bills of
$5.2 million, a rise in different property of $1.4 million, a rise in
accounts receivable of $846,000, and a lower in accounts payable of $683,000.
These outflows had been offset partially by a lower in deferred income of
$3.2 million.
Cash flows utilized in investing actions.
Cash utilized in investing actions in the course of the yr ended December 31, 2021
was $10.8 million, consisting primarily of $6.6 million for the capitalization
of
internal-use
software program prices, $2.2 million in capital expenditures to help the enterprise,
and $2.0 million for the acquisition of a expertise asset of an organization on
November 1, 2021.
Cash flows supplied by financing actions.
Cash supplied by financing actions for the yr ended December 31, 2021 was
$702,000, consisting of proceeds acquired on the train of frequent inventory
choices of $2.8 million, offset by different exercise of $2.1 million.
Credit facility.
On December 28, 2020, the Company entered into an amended and restated mortgage and
safety settlement with a lender (the “Loan Agreement”) offering for as much as a
$30.0 million asset-based line of credit score (the “Line of Credit”). Borrowings
underneath the Line of Credit are secured by considerably all of our property,
excluding our mental property. We had been in compliance with all covenants
underneath the Line of Credit as of December 31, 2021. As we’ve not drawn on the
Line of Credit, there aren’t any quantities excellent as of December 31, 2021.
We assessed the impact we
imagine COVID-19 would possibly
have on our liquidity and imagine that our current money and money equivalents
and the capital accessible underneath our credit score facility might be ample to satisfy
our anticipated working capital and capital expenditure wants over at the least the
subsequent 12 months. On March 25, 2020, we borrowed $10.0 million on our line of
credit score in anticipation of any working money wants in mild
of COVID-19. The
$10 million borrowed was absolutely repaid by December 31, 2020. The efficient
rate of interest for the quantities borrowed throughout 2020 was 4%.
Net working loss carryforwards.
As of December 31, 2021, the Company had federal internet working losses of
roughly $199.4 million, of which $161.8 million can be found to offset
future taxable earnings, if any, by way of 2037 and $37.6 million that are
accessible to offset future taxable earnings indefinitely. As of December 31, 2021,
the Company had state internet working losses of roughly $92.3 million, of
which $89.2 million can be found to offset future taxable earnings, if any,
by way of 2041 and $3.1 million which can be found to offset future taxable
earnings indefinitely. The Company additionally had federal and state analysis and
growth tax credit of $9.0 million and $5.5 million, respectively, which
expire in varied quantities by way of 2041. The internet working loss and tax credit score
quantities are topic to annual limitations underneath Section 382 change of possession
guidelines underneath the U.S. Internal Revenue Code of 1986, as amended.
In assessing our skill to make the most of our internet deferred tax property, we thought-about
whether or not it’s extra possible than not that some portion or all of our internet deferred
tax property is not going to be realized. Based upon the extent of our historic U.S.
losses and future projections over the interval wherein the web deferred tax
property are deductible, presently, we imagine it’s extra possible than not that
we is not going to understand the advantages of these deductible variations. Accordingly,
we’ve supplied a valuation allowance towards our U.S. deferred tax property as
of December 31, 2021 and 2020.
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Contractual Obligations and Commitments
Our principal commitments consist primarily of obligations underneath our leases for
our workplace area and contractual commitments for content material supply community
providers, internet hosting and different help providers. As of December 31, 2021, we had
working lease obligations of $25,401, with $2,425 payable inside 12 months. As
of December 31, 2021, we had excellent buy obligations of $16,006, with
$15,775 payable inside 12 months. Other than these lease obligations and
contractual commitments, we do not need industrial commitments underneath strains of
credit score, standby repurchase obligations or different such debt preparations. The
following desk summarizes these contractual obligations at December 31, 2021:
Payment Due by Period
Less than 1 More than 1
(in 1000’s) Total Year Year
Operating lease obligations $ 25,401 $ 2,425 $ 22,976
Outstanding buy obligations 16,006
15,775 231
Total $ 41,407 $ 18,200 $ 23,207
Anticipated Cash Flows
We anticipate to incur important working prices, significantly associated to providers
supply prices, gross sales and advertising and analysis and growth, for the
foreseeable future as a way to execute our marketing strategy. We anticipate that
such working prices, in addition to deliberate capital expenditures will represent a
materials use of our money sources. As a outcome, our internet money flows will rely
closely on the extent of future gross sales, adjustments in deferred income and our
skill to handle infrastructure prices.
We imagine our current money and money equivalents might be ample to satisfy our
working capital and capital expenditures for at the least the following 12 months. Our
future working capital necessities will rely on many components, together with the
charge of our income progress, our introduction of new merchandise and enhancements,
and our enlargement of gross sales and advertising and product growth actions. To
the extent that our money and money equivalents, and money movement from working
actions are inadequate to fund our future actions, we might have to lift
extra funds by way of financial institution credit score preparations or public or non-public fairness or
debt financings. We additionally might have to lift extra funds within the occasion we
decide sooner or later to amass companies, applied sciences and merchandise that
will complement our current operations. In the occasion funding is required, we
could not be capable to acquire financial institution credit score preparations or fairness or debt financing
on phrases acceptable to us or in any respect.
Other
On February 9, 2022, we introduced that the Board of Directors appointed Marc
DeBevoise as Chief Executive Officer of the Company and a Class II director of
the Board of Directors, efficient as of Mr. DeBevoise’s employment begin date,
anticipated to be on March 28, 2022. Mr. DeBevoise will fill the emptiness created by
Mr. Ray’s resignation on the Board, efficient as of Mr. DeBevoise’s employment
begin date. The time period of the Company’s Class II administrators, together with Mr.
DeBevoise, expires on the annual assembly of stockholders to be held in 2023 or
upon the election and qualification of successor administrators. Mr. DeBevoise, has
served as Vice Chairman of the Board and President of Argus Capital Corporation,
a tech-driven-media targeted particular objective acquisition company (ARGU), as
Chief Executive Officer and President of ViacomCBS Digital (beforehand referred to as
CBS Interactive) and as Chief Digital Officer of ViacomCBS, and as President and
Chief Operating Officer of CBS Interactive. Mr. DeBevoise has additionally served as a
member of the board of administrators at Limelight Networks (LLNW), a supplier of
edge cloud, content material supply and safety computing providers. Mr. DeBevoise
earned his B.A. in Economics and Computer Science from Tufts University and
earned his M.B.A. with distinction in Entertainment, Media & Technology and
Finance from NYU’s Stern School of Business. Mr. DeBevoise was chosen to serve
on our Board of Directors because of the perspective and expertise he brings because the
appointed Chief Executive Officer and his prior expertise as an government in
media, expertise and digital and
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streaming industries. Mr. DeBevoise’s employment settlement with the Company can
be present in Exhibit 99.1 to the our Current Report on Form 8-Ok filed with the
Securities and Exchange Commission on February 9, 2022.
Recent Accounting Pronouncements
For data on latest accounting pronouncements, see Recently Issued and
Adopted Accounting Standards within the notes to the consolidated monetary
statements showing elsewhere on this Annual Report on Form
10-Ok.© Edgar Online, supply Glimpses
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