The following dialogue and evaluation of our monetary situation and outcomes of
operations needs to be learn at the side of our condensed consolidated
monetary statements and associated notes showing elsewhere on this Quarterly
Report on Form 10-Q and our Annual Report on Form 10-Ok for the 12 months ended
December 31, 2021.
Company Overview
We are a number one international supplier of cloud-based companies for video. We have been
integrated in Delaware in August 2004. With our Emmy®-winning expertise and
award-winning companies, we assist our clients notice the potential of video to
handle business-critical challenges. Customers depend on our suite of merchandise,
companies, and experience to scale back the price and complexity related to
publishing, distributing, measuring and monetizing video throughout units.
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, permits our clients to shortly and
simply distribute high-quality video to Internet-connected units; (2)
Brightcove Live, our industry-leading resolution for stay streaming, delivers
high-quality viewer experiences at scale; (3) Brightcove Beacon, a purpose-built
utility that permits firms to launch premium OTT video experiences
shortly and affordably, throughout units and with the flexibleness 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 equivalent to (1) progressive advert
insertion and video stitching by means of Brightcove SSAI; (2) environment friendly publication
of movies to Facebook, Twitter, and YouTube by means of Brightcove Social; (3) an
app for creating advertising campaigns with insightful information and {industry}
benchmarks by means of Brightcove Campaign; and (4) create branded video expertise
by accessing templates with built-in finest practices by means of Brightcove Gallery.
We have additionally dropped at market a number of video options, that are comprised of a
suite of video applied sciences that handle 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, permits entrepreneurs to
use video to drive model consciousness, engagement and conversion; (3) Brightcove
Enterprise Video Suite, supplies an enterprise-class platform for inside
communications, worker coaching, stay streaming, advertising and ecommerce
movies; and (4) Brightcove CorpTV™, supplies a brand new technique to ship advertising
movies, product bulletins, coaching applications, and different stay and on-demand
content material in a branded expertise for firms.
Our philosophy for the following few years will proceed to be to spend money on our
product technique and improvement, gross sales, and go-to-market actions to help
our long-term income progress. We consider these investments will assist us handle
a number of the challenges dealing with our enterprise equivalent to demand for our merchandise by
present and potential clients, fast technological change in our {industry},
elevated competitors and ensuing worth sensitivity. These investments embrace
help for the growth of our infrastructure inside our internet hosting services,
the hiring of extra technical and gross sales personnel, the innovation of latest
options for present merchandise and the event of latest merchandise. We consider
this technique will assist us retain our present clients, improve our common
annual subscription income per premium buyer and result in the acquisition of
new clients. Additionally, we consider buyer progress will allow us to
obtain economies of scale which is able to cut back our value of products offered, analysis
and improvement and normal and administrative bills as a proportion of complete
income.
As of June 30, 2022 and 2021 we had 703 and 670 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 elevated
from $106.3 within the six months ended June 30, 2021 to $107.8 within the six months
ended June 30, 2022, on account of a rise in subscription and help income.
This improve was on account of a rise within the common annual subscription income
per premium buyer throughout the six months ended June 30, 2022 as in comparison with
the prior interval and a rise in usage-based charges throughout the three months
ended June 30, 2022 as in comparison with the prior interval.
Included within the consolidated web loss for the six months ended June 30, 2022 was
stock-based compensation expense and amortization of acquired intangible property
of $7.1 million and $1.6 million, respectively. Included within the consolidated web
earnings for the six months ended June 30, 2021 was merger-related expense,
stock-based compensation expense and amortization of acquired intangible property
of $0.3 million, $4.9 million and $1.5 million, respectively.
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For the three and six months ended June 30, 2022 and 2021, our income derived
from clients situated outdoors North America was 45% and 44%, and 43% and 43%,
respectively. We anticipate the proportion of complete web income derived from outdoors
North America to extend in future durations as we proceed to broaden our
worldwide operations.
Key Metrics
We usually overview quite a lot of metrics, together with the next key metrics, to
consider our enterprise, measure our efficiency, determine traits affecting our
enterprise, formulate monetary projections and make strategic selections.
The following desk consists of our key metrics for the durations offered:
Six Months Ended June 30,
2022 2021
Customers (at interval finish)
Premium 2,301 2,280
Volume 636 983
Total clients (at interval finish) 2,937
3,263
Net income retention price 96.4 % 98.2 %
Recurring greenback retention price 87.5 % 86.0 %
Average annual subscription income per premium
buyer,
excluding Starter version clients (in hundreds) $ 96.6 $ 94.4
Average annual subscription income per premium
buyer
for Starter version clients solely (in hundreds) $ 4.2 $ 4.5
Total backlog, excluding skilled companies
engagements (in hundreds of thousands) $ 151.9
$ 152.8
Total backlog to be acknowledged over subsequent 12 months,
excluding
skilled companies engagements (in hundreds of thousands) $ 121.6 $ 119.8
•
Number of Customers. We outline our variety of clients on the finish of a
explicit quarter because the variety of clients producing subscription income at
the tip of the quarter. We consider the variety of clients is a key indicator of
our market penetration, the productiveness of our gross sales group and the worth
that our merchandise convey to our clients. We classify our clients by together with
them in both premium or quantity choices. Our premium choices embrace 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 embrace 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 consider our premium clients characterize a better alternative for
our options. Premium clients decreased in comparison with the prior interval on account 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 resolution. Volume clients decreased in latest durations primarily
on account of our discontinuation of the promotional Video Cloud Express providing. As a
end result, we have now skilled attrition of this base stage providing with out a
corresponding addition of consumers. We anticipate clients utilizing our quantity
choices to proceed to lower in 2022 and past as we proceed to concentrate on
the marketplace 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 web income retention price. We calculate the
web income retention price 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 combination annualized contract worth from our premium buyer base, measured
as of the tip of a given interval. We usually calculate our web income
retention price on a quarterly foundation. For annual durations, we report web income
retention price as the common of the online income retention price 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 consumers we served on the
starting of the interval.
•
Recurring Dollar Retention Rate. We assess our skill to retain clients utilizing
a metric we consult with as our recurring greenback retention price. We calculate the
recurring greenback retention price by dividing the retained recurring worth of
subscription income
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for a interval by the earlier recurring worth of subscription income for the
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 price on a month-to-month foundation.
Recurring greenback retention price supplies visibility into our ongoing income.
•
Average Annual Subscription Revenue Per Premium Customer. We outline common
annual subscription income per premium buyer as the entire subscription
income from premium clients for an annual interval, excluding skilled
companies income, divided by the common variety of premium clients for that
interval. We consider that this metric is vital in understanding subscription
income for our premium choices along with the relative measurement of premium
buyer preparations. As our Starter version has a worth level of $199 or $499
per month, 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 combination quantity of transaction worth that’s
allotted to efficiency obligations that haven’t but been happy, excluding
skilled service engagements. We consider that this metric is vital in
understanding future enterprise efficiency.
COVID-19 and Geopolitical Events
While the longer term traits of the COVID-19 pandemic stay unsure, we have now not
skilled a big disruption throughout the pandemic. We will proceed to
monitor COVID-19’s impact on our staff, clients, distributors and the areas
we function in.
In late February 2022, Russian army forces launched vital army
motion in opposition to Ukraine, and sustained battle and disruption within the area is
possible. Subsequent to the invasion, the U.S. and different nations imposed
financial sanctions in opposition to officers, people, areas, and industries in
Russia, Ukraine and Belarus. We shouldn’t have operations or clients in Russia or
Ukraine and none of our materials distributors supply their companies to us from Russia
or Ukraine. We will proceed to watch the state of affairs and adjust to any
sanctions and restrictions imposed by the U.S. authorities.
Components of Consolidated Statements of Operations
Revenue
Subscription and Support Revenue – We generate subscription and help income
from the sale of our merchandise.
Video Cloud is obtainable in two product traces. The first product line is comprised
of our premium product editions. All premium editions embrace performance to
publish and distribute video to Internet-connected units, with greater ranges
of premium editions offering extra options and performance. Customer
preparations are usually one-year contracts, which embrace 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 charge. The pricing for our
premium editions relies on the worth of our software program, in addition to the variety 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 shopper 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
similar fundamental performance that’s provided in our premium product editions however
have been designed for purchasers who’ve decrease utilization necessities and don’t
usually require superior options and performance. We discontinued the decrease
stage pricing choices for the Express version of our quantity providing and anticipate
the entire variety of clients utilizing the Express version to proceed to lower.
Customers who buy the quantity editions typically enter into month-to-month
agreements. Volume clients are typically billed on a month-to-month foundation and pay through
a bank card.
Virtual Events Experience, Brightcove Live and Brightcove Player are provided to
clients on a subscription foundation. Customer preparations are usually one-year
contracts, which embrace 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 charge. The pricing for these merchandise relies on the worth of
our software program, in addition to, the variety 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 embrace a hard and fast
variety of minutes of video processed. 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. Zencoder
clients are thought of premium clients apart from Zencoder clients on
month-to-month contracts or pay-as-you-go contracts, that are thought of quantity
clients.
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Brightcove Beacon and Brightcove Campaign are every provided to clients on a
subscription foundation, with various ranges of performance, utilization entitlements and
help primarily based on the scale and complexity of a buyer’s wants. Customer
preparations are usually one-year contracts.
Video Marketing Suite and Enterprise Video Suite are provided 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 embrace 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 typically provide gold
help or platinum help to those clients for an extra charge, which
consists of prolonged telephone help. The pricing for our Pro and Enterprise editions
relies on the variety 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 provided in
our Pro and Enterprise editions however has been designed for purchasers who’ve
decrease utilization necessities and don’t usually search superior options and
performance. Customers who buy the Starter version might enter into
one-year agreements or month-to-month agreements. Starter clients with
month-to-month agreements are typically 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 of premium clients.
Professional Services and Other Revenue – Professional companies and different
income consists of companies equivalent to implementation, software program customizations and
mission administration for purchasers who subscribe to our premium editions. These
preparations are priced both on a hard and fast charge foundation with a portion due upon
contract signing and the rest due when the associated companies have been
accomplished, or on a time and supplies foundation.
Cost of Revenue
Cost of subscription, help and skilled companies income primarily
consists of prices associated to supporting and internet hosting our product choices and
delivering our skilled companies. These prices embrace salaries, advantages,
incentive compensation and stock-based compensation expense associated to the
administration of our information facilities, our buyer help workforce and our skilled
companies employees. In addition to those bills, we incur third-party service
supplier prices equivalent to information heart and content material supply community, or CDN,
bills, allotted overhead, depreciation expense and amortization of
capitalized internal-use software program improvement prices and acquired intangible
property. We allocate overhead prices equivalent to lease, utilities and provides to all
departments primarily based on relative headcount. As such, normal overhead bills are
mirrored in value of income along with every working expense class. The
prices related to offering skilled companies are considerably greater
as a proportion of associated income than the prices related to delivering our
subscription and help companies because of the labor prices of offering
skilled companies.
Cost of income elevated in absolute {dollars} from the primary six months of 2021
to the primary six months of 2022. In future durations we anticipate our value of income
will improve in absolute {dollars} as our income will increase. Cost of income as a
proportion of income may fluctuate from interval to interval relying on the
variety of our skilled companies engagements and any related prices
regarding the supply of subscription companies and the timing of serious
expenditures. To the extent that our buyer base grows, we intend to proceed
to take a position extra assets in increasing the supply functionality of our
merchandise and different companies. The timing of those extra bills may
have an effect on our value of income, each when it comes to absolute {dollars} and as a
proportion of income, in any explicit quarterly or annual interval.
Operating Expenses
We classify our working bills as follows:
Research and Development. Research and improvement bills consist primarily of
personnel and associated bills for our analysis and improvement employees, together with
salaries, advantages, incentive compensation and stock-based compensation, in
addition to the prices related to contractors and allotted overhead. We
have targeted our analysis and improvement 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 improvement bills to
improve 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 numerous languages, improve and lengthen our
service choices, and develop new applied sciences. Over the long run, we consider
that analysis and improvement bills as a proportion of income will lower,
however will fluctuate relying upon the combination of income from new and present merchandise,
options and
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performance, in addition to adjustments within the expertise that our merchandise should
help, equivalent to new working methods or new Internet-connected units.
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 compensation and
journey prices, amortization of acquired intangible property, along with 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 spend money on gross sales and
advertising and broaden the sale of our product choices inside our present
buyer base, construct model consciousness and sponsor extra advertising occasions.
Accordingly, we anticipate gross sales and advertising expense to proceed to be our most
vital working expense in future durations. Over the long run, we consider
that gross sales and advertising expense as a proportion of income will lower, however
will fluctuate relying upon the combination of income from new and present clients and
from small, medium-sized and enterprise clients, in addition to adjustments within the
productiveness of our gross sales and advertising applications.
General and Administrative. General and administrative bills consist
primarily of personnel and associated bills for government, authorized, finance,
info expertise and human assets features, together with salaries,
advantages, incentive compensation and stock-based compensation. General and
administrative bills additionally embrace the prices related to skilled
charges, insurance coverage premiums, different company bills and allotted overhead. Over
the long run, we consider that normal and administrative bills as a
proportion of income will lower.
Merger-related. Merger-related prices include bills associated to mergers and
acquisitions, integration prices and normal company improvement actions.
Other Expense (Benefit). Reflects different working advantages, prices that don’t
instantly relate to the working actions listed above.
Other (Expense) Income, web
Other (expense) earnings consists primarily of curiosity earnings earned on our money,
money equivalents, and overseas trade features and losses.
Income Taxes
As a part 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
methodology. Under this methodology, deferred tax property and liabilities are acknowledged
primarily based on short-term variations between the monetary reporting and earnings tax
bases of property and liabilities utilizing statutory charges. In addition, this methodology
requires a valuation allowance in opposition to web deferred tax property if, primarily based upon
the obtainable proof, it’s extra possible than not that some or all the
deferred tax property is not going to be realized. We have supplied a valuation allowance
in opposition to our present U.S. web deferred tax property at December 31, 2021. We
keep web deferred tax liabilities for short-term variations associated to our
Japanese subsidiary.
During the six months ended June 30, 2022, we recorded a non-recurring profit
of $1.0 million within the U.S. for the discharge of a portion of our valuation
allowance. This launch of the valuation allowance is said to the Wicket
Acquisition accomplished in February 2022 and the creation of deferred tax
liabilities in buy accounting that function a supply of earnings for our
pre-existing deferred tax property.
Stock-Based Compensation Expense
Our value of income, analysis and improvement, gross sales and advertising, and normal
and administrative bills embrace stock-based compensation expense.
Stock-based compensation expense represents the grant date honest 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 three months ended June 30, 2022 and 2021, we recorded $3.6
million and $2.6 million, respectively, of stock-based compensation expense. We
anticipate stock-based compensation expense to extend in absolute {dollars} in
future durations.
Foreign Currency Translation
With regard to our worldwide operations, we incessantly enter into
transactions in currencies apart from the U.S. greenback. As a end result, our income,
bills and money flows are topic to fluctuations on account of adjustments in overseas
foreign money trade 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 contrast
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to the foreign exchange wherein we conduct enterprise, our overseas
currency-based income and bills typically improve in worth when translated
into U.S. {dollars}. During the six months ended June 30, 2022, the U.S. greenback
elevated in worth as in comparison with the foreign exchange wherein we conduct
enterprise, and our overseas currency-based revenues decreased in worth when
translated into U.S. {dollars}. We anticipate the proportion of complete web income
derived from outdoors North America to extend in future durations as we proceed
to broaden our worldwide operations. Should the U.S. greenback proceed to
improve in worth, our future proportion of complete web income derived from
outdoors North America might stay comparatively unchanged or lower.
Critical Accounting Policies and Estimates
Our consolidated monetary statements are ready in accordance with accounting
ideas typically accepted within the United States. The preparation of those
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 throughout the reporting durations. We base our
estimates on historic expertise and on numerous different assumptions which are
believed to be affordable beneath 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 might differ
from these estimates beneath completely different assumptions or circumstances.
We take into account the assumptions and estimates related to income recognition,
earnings taxes, enterprise combos, intangible property and goodwill to be our
essential accounting insurance policies and estimates. We focus on any assumptions and
estimates that might have a fabric impact on the outcomes of operations within the
relevant part of this dialogue and evaluation of the monetary situation
and outcomes of operations.
For an in depth clarification of the judgments made in these areas, consult with
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form 10-Ok for the 12 months ended December 31,
2021, which we filed with the Securities and Exchange Commission on February 18,
2022.
Results of Operations
The following tables set forth our outcomes of operations for the durations
offered. The information has been derived from the unaudited condensed consolidated
monetary statements contained on this Quarterly Report on Form 10-Q which, in
the opinion of our administration, mirror all changes, consisting solely of
regular recurring changes, essential to current pretty the monetary place
and outcomes of operations for the interim durations offered. The
period-to-period comparability of monetary outcomes just isn’t essentially
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indicative of future outcomes. This info needs to be learn in conjunction
with the consolidated monetary statements and notes thereto included in our
Annual Report on Form 10-Ok for the 12 months ended December 31, 2021.
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
(in hundreds, except share and per share information)
Revenue:
Subscription and help income $ 52,988 $ 48,602 $ 104,589 $ 99,441
Professional companies and different
income 1,459 2,870 3,237 6,848
Total income 54,447 51,472 107,826 106,289
Cost of income:
Cost of subscription and help
income 16,943 14,756 33,925 30,434
Cost {of professional} companies and
different income 1,761 2,468 3,759 5,958
Total value of income 18,704 17,224 37,684 36,392
Gross revenue 35,743 34,248 70,142 69,897
Operating bills:
Research and improvement 8,372 7,855 16,609 16,139
Sales and advertising 17,961 18,130 36,249 34,279
General and administrative 8,554 7,418 16,643 14,477
Merger-related 153 255 747 255
Other expense (profit) – – 1,149 (1,965 )
Total working bills 35,040 33,658 71,397 63,185
Income (loss) from operations 703 590 (1,255 ) 6,712
Other (expense) earnings, web (825 ) 117 (1,212 ) (618 )
(Loss) earnings earlier than earnings taxes (122 ) 707 (2,467 ) 6,094
Provision (profit) for earnings
taxes 179 (163 ) (529 ) 94
Net (loss) earnings $ (301 ) $ 870 $ (1,938 ) $ 6,000
Net (loss) earnings per share-basic
and diluted
Basic $ (0.01 ) $ 0.02 $ (0.05 ) $ 0.15
Diluted $ (0.01 ) $ 0.02 $ (0.05 ) $ 0.14
Weighted-average shares-basic and
diluted
Basic 41,723 40,615 41,580 40,386
Diluted 41,723 42,209 41,580 42,391
Overview of Results of Operations for the Three Months Ended June 30, 2022 and
2021
Total income elevated by 6%, or $3.0 million, within the three months ended June
30, 2022 in comparison with the three months ended June 30, 2021 on account of a rise in
subscription and help income of 9% or $4.4 million, primarily on account of an
improve in income from our premium choices. The improve in income from our
premium choices was on account of a rise within the common annual subscription
income per premium buyer and a rise in usage-based charges. Professional
companies and different income decreased by 49% or $1.4 million within the three months
ended June 30, 2022 in comparison with the three months ended June 30, 2021.
Professional companies and different income will fluctuate from interval to interval
relying on the variety of implementations and different tasks which are in
course of. Our income from premium choices elevated by $3.3 million, or 7%, in
the three months ended June 30, 2022 in comparison with the three months ended June 30,
2021. Our skill to proceed to supply the product performance and
efficiency that our clients require shall be a significant factor in our skill to
proceed to extend income.
The U.S. greenback has strengthened in opposition to the Japanese Yen and the Euro when
in contrast in opposition to trade charges throughout the prior 12 months interval of comparability. In
fixed foreign money, our complete income for the three months ended June 30, 2022
would have been roughly $56.2 million. The majority of the impact of
income in fixed foreign money was in revenues denominated in Japanese Yen of $634
and Euro of $687. Constant foreign money is calculated as translating present interval
income denominated in foreign exchange on the trade charges of the prior
interval of comparability.
Our gross revenue elevated by $1.5 million, or 4%, within the three months ended
June 30, 2022 in comparison with the three months ended June 30, 2021, primarily on account of
a rise in subscription and help income. Our skill to proceed to
keep our general gross revenue will rely totally on our skill to
proceed controlling our prices of supply.
Income from operations was $0.7 million within the three months ended June 30, 2022
in comparison with earnings from operations of $0.6 million within the three months ended
June 30, 2021. This is primarily on account of a rise in income of $3.0 million
and an enchancment
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of gross revenue on subscription and help income within the three months ended
June 30, 2022 in comparison with the three months ended June 30, 2021.
Revenue
Three Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Revenue by Product Line Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Premium $ 53,998 99 % $ 50,694 99 % $ 3,304 7 %
Volume 449 1 778 1 (329 ) (42 )
Total $ 54,447 100 % $ 51,472 100 % $ 2,975 6 %
During the three months ended June 30, 2022, income elevated by $3.0 million,
or 6%, in comparison with the three months ended June 30, 2021, primarily on account of an
improve in income from our premium choices. The improve in premium income
of $3.3 million, or 7%, is the results of the rise in common annual
subscription income per premium buyer and a rise in usage-based charges.
In the three months ended June 30, 2022, quantity income decreased by $329, or
42%, in comparison with the three months ended June 30, 2021, as we proceed to focus
in the marketplace for our premium options.
Three Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Revenue by Type Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Subscription and help $ 52,988 97 % $ 48,602 94 % $ 4,386 9 %
Professional companies and
different 1,459 3 2,870 6 % (1,411 ) (49 )
Total $ 54,447 100 % $ 51,472 100 % $ 2,975 6 %
During the three months ended June 30, 2022, subscription and help income
elevated in comparison with the three months ended June 30, 2021. Professional
companies and different income decreased by $1.4 million, or 49%, in comparison with the
corresponding quarter within the prior 12 months. Professional companies and different income
will fluctuate from interval to interval relying on the variety of implementations and
different tasks which are in course of.
Three Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Revenue by Geography Amount Revenue Amount
Revenue Amount %
(in hundreds, except percentages)
North America $ 30,019 55 % $ 29,398 57 % $ 621 2 %
Europe 10,128 19 9,547 19 581 6
Japan 5,077 9 5,370 10 (293 ) (5 )
Asia Pacific 9,060 17 7,016 14 2,044 29
Other 163 – 141 – 22 16
International subtotal 24,428 45 22,074 43 2,354 11
Total $ 54,447 100 % $ 51,472 100 % $ 2,975 6 %
For functions of this part, we designate income by geographic areas primarily based
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 latest buyer
contracts, income combine from a geographic area can fluctuate from interval to interval.
During the three months ended June 30, 2022, complete income for North America
elevated by $621, or 2%, in comparison with the three months ended June 30, 2021. In
the three months ended June 30, 2022, complete income outdoors of North America
elevated by $ 2.35 million, or 11%, in comparison with the three months ended June 30,
2021. The improve in income from worldwide areas is primarily associated to
a rise in usage-based income in Asia Pacific.
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Cost of Revenue
Three Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Related Related
Cost of Revenue Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Subscription and help $ 16,943 32 % $ 14,756 30 % $ 2,187 15 %
Professional companies and different 1,761 121 2,468 86 (707 ) (29 )
Total $ 18,704 34 % $ 17,224 33 % $ 1,480 9 %
In the three months ended June 30, 2022, value of subscription and help
income elevated by $ 2.2 million, or 15%, in comparison with the three months ended
June 30, 2021. The improve resulted primarily from a rise in content material
supply community and community internet hosting companies bills within the three months ended
June 30, 2022 in comparison with the three months ended June 30, 2021. In the three
months ended June 30, 2022, value {of professional} companies and different income
decreased by$ 0.7 million, or 29%, in comparison with the three months ended June 30,
2021. This lower corresponds to the 49% lower skilled companies and
different income within the three months ended June 30, 2022, in comparison with the three
months ended June 30, 2021.
Gross Profit
Three Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Related Related
Gross Profit Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Subscription and help $ 36,045 68 % $ 33,846 70 % $ 2,199 6 %
Professional companies and different (302 ) (21 ) 402 14 (704 ) (175 )%
Total $ 35,743 66 % $ 34,248 67 % $ 1,495 4 %
The general gross revenue proportion was 66% for the three months ended June 30,
2022 in comparison with 67% for the three months ended June 30, 2021. Subscription and
help gross revenue elevated $2.2 million within the three months ended June 30,
2022 in comparison with the three months ended June 30, 2021. The improve in gross
revenue {dollars} for subscription and help income was because of the 9% improve
in subscription and help income. Professional companies and different gross
revenue decreased $704, or 175%. The lower in gross revenue {dollars} for
skilled companies and different income was because of the 49% lower in
skilled companies and different income.
Operating Expenses
Three Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Operating Expenses Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Research and improvement $ 8,372 15 % $ 7,855 15 % $ 517 7 %
Sales and advertising 17,961 33 18,130 35 (169 ) (1 )
General and administrative 8,554 16 7,418 14 1,136 15
Merger-related 153 – 255 – (102 ) (40 )
Other expense (profit) – – – – – NM
Total $ 35,040 64 % $ 33,658 65 % $ 1,382 4 %
Research and Development. In the three months ended June 30, 2022, analysis and
improvement elevated by $517 or 7% in comparison with the three months ended June 30,
2021, primarily on account of a rise in stock-based compensation expense of $404.
The remaining improve was on account of numerous different bills that, in mixture,
elevated by roughly $113. We anticipate our analysis and improvement expense
as a proportion of income to stay comparatively unchanged.
Sales and Marketing. In the three months ended June 30, 2022, gross sales and
advertising expense decreased by $169, or 1%, in comparison with the three months ended
June 30, 2021, primarily on account of a lower in advertising program bills of $1.0
million, offset
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by a rise in employee-related bills of $816. We anticipate that our gross sales
and advertising expense will improve in absolute {dollars} for the rest of
2022 as in comparison with the prior interval as we’ll proceed to spend money on these
actions to help income progress.
General and Administrative. In the three months ended June 30, 2022, normal and
administrative expense elevated by $1.1 million, or 15%, in comparison with the three
months ended June 30, 2021, primarily on account of will increase in employee-related and
stock-based compensation bills of $707 and $515, respectively. These
will increase have been offset by numerous different bills that, in mixture, decreased by
roughly $86. In future durations, we anticipate normal and administrative
expense to stay comparatively unchanged.
Merger-Related. In the three months ended June 30, 2022, merger-related expense
remained comparatively unchanged in comparison with the three months ended June 30, 2021.
Provision (profit) for Income taxes. In the three months ended June 30, 2022,
provision (profit) for earnings taxes expense remained comparatively unchanged
in comparison with the three months ended June 30, 2021.
Overview of Results of Operations for the Six Months Ended June 30, 2022 and
2021
Total income elevated by 1%, or $1.5 million, within the six months ended June 30,
2022 in comparison with the six months ended June 30, 2021 on account of a rise in
subscription and help income of 5%, or $5.1 million, primarily on account of an
improve in income from our premium choices throughout the three months ended
June 30, 2022 as described within the outcomes of operations for that interval.
Professional companies and different income decreased by 53%, or $3.6 million,
in comparison with the corresponding interval within the prior 12 months. Professional companies
and different income will fluctuate from interval to interval relying on the variety of
implementations and different tasks which are in course of. Our income from premium
choices grew by $2.1 million, or 2%, within the six months ended June 30, 2022
in comparison with the six months ended June 30, 2021. Our skill to proceed to
present the product performance and efficiency that our clients require
shall be a significant factor in our skill to proceed to extend income.
The U.S. greenback has strengthened in opposition to the Japanese Yen and the Euro when
in contrast in opposition to trade charges throughout the prior 12 months interval of comparability. In
fixed foreign money, our complete income for the six months ended June 30, 2022
would have been roughly $110.8 million. The majority of the impact of
income in fixed foreign money was in revenues denominated in Japanese Yen of $1.3
million and Euro of $982. Constant foreign money is calculated as translating present
interval income denominated in foreign exchange on the trade charges of the
prior interval of comparability.
Our gross revenue elevated remained comparatively unchanged within the six months ended
June 30, 2022 in comparison with the six months ended June 30, 2021. Our skill to
proceed to keep up our general gross revenue will rely totally on our
skill to proceed controlling our prices of supply.
Loss from operations was $1.3 million within the six months ended June 30, 2022
in comparison with earnings from operations of $6.7 million within the six months ended June
30, 2021. This is primarily on account of a rise in working bills of $8.2
million within the six months ended June 30, 2022 in comparison with the six months ended
June 30, 2021.
Revenue
Six Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Revenue by Product Line Amount Revenue Amount
Revenue Amount %
(in hundreds, except percentages)
Premium $ 106,770 99 % $ 104,716 99 % $ 2,054 2 %
Volume 1,056 1 1,573 1 (517 ) (33 )
Total $ 107,826 100 % $ 106,289 100 % $ 1,537 1 %
During the six months ended June 30, 2022, income elevated by $1.5 million, or
1%, in comparison with the six months ended June 30, 2021, primarily on account of a rise
in income from our premium choices, which consists of subscription and
help income in addition to skilled companies. The improve in premium
income of $2.1 million, or 2%, is primarily the results of an 2% improve in
common annual subscription income per premium buyer throughout the six months
ended June 30, 2022 in comparison with the six months ended June 30, 2021. This
improve in common annual subscription income per premium buyer is
primarily on account of premium clients ordering extra of our merchandise.
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During the six months ended June 30, 2022, quantity income decreased by $517 or
33%, in comparison with the six months ended June 30, 2021, as we proceed to concentrate on
the marketplace for our premium options.
Six Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Revenue by Type Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Subscription and help $ 104,589 97 % $ 99,441 94 % $ 5,148 5 %
Professional companies and different 3,237 3 6,848 6 (3,611 ) (53 )
Total $ 107,826 100 % $ 106,289 100 % $ 1,537 1 %
During the six months ended June 30, 2022, subscription and help income
elevated by $5.1 million, or 5%, in comparison with the six months ended June 30,
2021. The improve was associated to a 2% improve in common annual subscription
income per premium buyer and a rise in usage-based charges.
In addition, skilled companies and different income decreased by $3.6 million,
or 53%, in comparison with the corresponding interval within the prior 12 months. Professional
companies and different income will fluctuate from interval to interval relying on the
variety of implementations and different tasks which are in course of.
Six Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Revenue by Geography Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
North America $ 59,480 56 % $ 59,784 56 % $ (304 ) (1 )%
Europe 19,233 18 18,470 17 763 4
Japan 12,338 11 13,078 12 (740 ) (6 )
Asia Pacific 16,496 15 14,675 14 1,821 12
Other 279 – 282 – (3 ) (1 )
International subtotal 48,346 44 46,505 43 1,841 4
Total $ 107,826 100 % $ 106,289 100 % $ 1,537 1 %
During the six months ended June 30, 2022, complete income for North America
remained comparatively unchanged in comparison with the six months ended June 30, 2021.
During the six months ended June 30, 2022, complete income outdoors of North
America elevated $1.8 million, or 4%, in comparison with the six months ended June 30,
2021. The improve in income from worldwide areas is primarily associated to
a rise in usage-based income in Asia Pacific.
Cost of Revenue
Six Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Related Related
Cost of Revenue Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Subscription and help $ 33,925 32 % $ 30,434 31 % $ 3,491 11 %
Professional companies and different 3,759 116 5,958 87 (2,199 ) (37 )
Total $ 37,684 35 % $ 36,392 34 % $ 1,292 4 %
In the six months ended June 30, 2022, value of subscription and help income
elevated $3.5 million, or 11%, in comparison with the six months ended June 30, 2021.
The improve resulted primarily from a rise in content material supply community,
community internet hosting companies, and third-party software program integration bills of $1.7
million, $1.5 million, and $1.0 million, respectively. These will increase have been
offset by a lower in accomplice commissions of $807. The remaining improve was
on account of numerous different bills that, in mixture, elevated by roughly
$70.
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In the six months ended June 30, 2022, value {of professional} companies and different
income decreased $2.2 million, or 37%, in comparison with the six months ended June
30, 2021. This lower corresponds to a lower in contractor bills of $2.2
million within the six months ended June 30, 2022 in comparison with the six months ended
June 30, 2021.
Gross Profit
Six Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Related Related
Gross Profit Amount Revenue Amount Revenue Amount %
(in hundreds, except percentages)
Subscription and help $ 70,664 68 % $ 69,007 69 % $ 1,657 2 %
Professional companies and different (522 ) (16 ) 890 13 (1,412 ) (159 )
Total $ 70,142 65 % $ 69,897 66 % $ 245 0 %
The general gross revenue proportion was 65% and 66% for the six months ended
June 30, 2022 and 2021, respectively. Subscription and help gross revenue
elevated $1.7 million, or 2%, in comparison with the six months ended June 30, 2021.
Professional companies and different gross revenue decreased by $1.4 million, or 159%,
in comparison with the six months ended June 30, 2021. It is probably going that gross revenue,
as a proportion of income, will fluctuate quarter by quarter because of the timing
and mixture of subscription and help income and skilled companies and different
income, and the kind, timing and period of service required in delivering
sure tasks.
Operating Expenses
Six Months Ended June 30,
2022 2021 Change
Percentage of Percentage of
Operating Expenses Amount Revenue Amount
Revenue Amount %
(in hundreds, except percentages)
Research and improvement $ 16,609 15 % $ 16,139 15 % $ 470 3 %
Sales and advertising 36,249 34 34,279 32 1,970 6
General and administrative 16,643 15 14,477 14 2,166 15
Merger-related 747 1 255 – 492 193
Other (profit) expense 1,149 1 (1,965 ) (2 ) 3,114 (158 )
Research and Development. In the six months ended June 30, 2022, analysis and
improvement expense elevated by $470 , or 3%, in comparison with the six months ended
June 30, 2021 primarily on account of a rise in stock-based compensation expense
of $804, offset by a lower in employee-related bills of $422. The
remaining improve was on account of numerous different bills that, in mixture,
elevated by roughly $89.
Sales and Marketing. In the six months ended June 30, 2022, gross sales and advertising
expense elevated by $2.0 million, or 6%, in comparison with the six months ended June
30, 2021 primarily on account of a rise in contractor, lease, stock-based
compensation, journey, pc upkeep and help of $580, $489, $343,
$263, and $241, respectively. The remaining improve was on account of numerous different
bills that, in mixture, elevated by roughly $50.
General and Administrative. In the six months ended June 30, 2022, normal and
administrative elevated by $2.2 million or 15%, in comparison with the six months
ended June 30, 2021 primarily on account of will increase in employee-related, stock-based
compensation, and recruiting and relocation bills of $991, $845,and $231,
respectively. The remaining improve was on account of numerous different bills that, in
mixture, elevated by roughly $100.
Merger-Related. In the six months ended June 30, 2022, merger-related bills
elevated $492.0 on account of prices incurred in reference to the Wicket Acquisition
in 2022.
Other (profit) expense. On March 28, 2022 our CEO retired. Pursuant to a
Transition Agreement that was entered into by the earlier CEO and the Company
in October 2021, the CEO, upon retirement, could be paid his annual base
compensation by means of
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December 31, 2022 and his 2022 annual bonus, the bonus quantity to be decided
by the Company’s 2022 efficiency. In accordance with typically accepted
accounting ideas we decided that the remaining base compensation and the
present estimate of the 2022 annual bonus needs to be accrued and the expense
acknowledged as of March 28, 2022. The complete expense of $1.1 million additionally displays
$0.2 million of stock-based compensation expense because of the modification
of sure awards pursuant to the Transition Agreement. Of the entire annual base
compensation and bonus accrued, $0.8 million stays unpaid as of June 30, 2022
and is mirrored in Accrued Expenses on the Company’s Condensed Consolidated
Balance Sheets.
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
first quarter of 2021, we acknowledged a good thing about $1,965 from the CARES Act
associated to worker retention credit. The profit was recorded as Other
(profit) expense.
Liquidity and Capital Resources
Cash and money equivalents.
Our money and money equivalents at June 30, 2022 have been held for working capital
functions and have been invested primarily in money. We don’t enter into investments
for buying and selling or speculative functions. At June 30, 2022 and December 31, 2021, we
had $13.0 million and $13.8 million, respectively, of money and money equivalents
held by subsidiaries in worldwide areas, together with subsidiaries situated
in Japan and the United Kingdom. These earnings might be repatriated to the United
States tax-free however may nonetheless be topic to overseas withholding taxes. On
February 1, 2022, we acquired 100% of the excellent shares of Wicket Labs, in
trade for 212,507 unregistered shares of our frequent inventory valued at
roughly $2 million and roughly $13.2 million in money. Approximately
$1.8 million of the money consideration was held again to safe cost of any
claims of indemnification for breaches or inaccuracies within the Sellers’
representations and warranties, covenants and agreements. We consider that our
present money and money equivalents shall be adequate to satisfy our anticipated
working capital and capital expenditure wants over not less than the following 12 months.
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