(in 1000’s, besides share and per share knowledge, until in any other case famous)
The following dialogue and evaluation of our monetary situation and outcomes of
operations needs to be learn along side 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 yr ended December 31, 2020.
Company Overview
We are a number one world supplier of cloud-based providers for video. We have been
included in Delaware in August 2004. With our Emmy
®
-winning expertise and award-winning providers, we assist our clients understand
the potential of video to handle business-critical challenges. Customers rely
on our suite of merchandise, providers, and experience to cut back the fee 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 rapidly and
simply distribute high-quality video to Internet-connected units;
(2) Brightcove Live, our industry-leading answer for dwell streaming, delivers
high-quality viewer experiences at scale; (3) Brightcove Beacon, a purpose-built
software that permits firms to launch premium OTT video experiences
rapidly and cheaply, 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 robust, cloud-based video encoding expertise.
Customers can complement their use of our core merchandise with modular
applied sciences that present enhanced capabilities resembling (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 and marketing campaigns with insightful knowledge and {industry}
benchmarks by means of Brightcove Campaign; (4) easy streaming of video
communications to an app by means of Brightcove Engage; and (5) 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 deal with particular buyer
use-cases
and wishes: (1) Virtual Events Experience helps manufacturers to remodel occasions into
personalized digital experiences; (2) Brightcove Video Marketing Suite, permits
entrepreneurs to make use of video to drive model consciousness, engagement and conversion; and
(3) Brightcove Enterprise Video Suite, offers an enterprise-class platform for
inner communications, worker coaching, dwell streaming, advertising and marketing and
ecommerce movies.
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 assist our long-term income progress. We imagine these investments will assist
us deal with a number of the challenges dealing with our enterprise resembling demand for our
merchandise by current and potential clients, fast technological change in our
{industry}, elevated competitors and ensuing worth sensitivity. These
investments embody assist for the growth of our infrastructure inside our
internet hosting amenities, the hiring of further technical and gross sales personnel, the
innovation of latest options for current merchandise and the event of latest
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 latest clients. Additionally, we imagine buyer progress
will allow us to realize economies of scale which can cut back our price of products
offered, analysis and growth and basic and administrative bills as a
share of complete income.
As of September 30, 2021 and 2020 we had 693 and 616 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
$143.7 million within the 9 months ended September 30, 2020 to $158.5 million in
the 9 months ended September 30, 2021, attributable to a rise within the common
annual subscription income per premium buyer.
Included within the consolidated web revenue for the 9 months ended September 30,
2021 was stock-based compensation expense and amortization of acquired
intangible property of $7.2 million, and $2.3 million, respectively. Included in
the consolidated web loss for the 9 months ended September 30, 2020 was
merger-related expense, stock-based compensation expense, and amortization of
acquired intangible property of $5.8 million, $6.7 million, and $2.6 million,
respectively.
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For the 9 months ended September 30, 2021 and 2020, our income derived from
clients situated exterior North America was 44% and 45%, respectively. We count on
the proportion of complete web income derived from exterior North America to
improve in future intervals as we proceed to develop our worldwide
operations.
Key Metrics
We commonly evaluation various 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 choices.
The following desk contains our key metrics for the intervals offered:
Nine Months Ended September 30,
2021 2020
Customers (at interval finish)
Premium 2,265 2,267
Volume 940 1,114
Total clients (at interval finish) 3,205 3,381
Net income retention charge 97.1 % 93.8 %
Recurring greenback retention charge 88 % 88 %
Average annual subscription income per
premium buyer,
excluding Starter version clients (in
1000’s) $ 93.9 $ 87.3
Average annual subscription income per
premium buyer
for Starter version clients solely (in
1000’s) $ 4.6 $ 4.5
Total backlog, excluding skilled
providers engagements (in tens of millions) $ 148.6 $ 144.2
Total backlog to be acknowledged over subsequent 12
months, excluding
skilled providers engagements (in
tens of millions) $ 115.0 $ 109.6
• Number of Customers
. We outline our variety of clients on the finish of a specific quarter because the
variety of clients producing subscription income on the finish of the
quarter. We imagine 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 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, Brightcove Engage 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 develop our premium buyer base, as we imagine
our premium clients characterize a larger alternative for our options. Premium
clients decreased in comparison with the prior interval attributable to some clients deciding
to modify to
in-house
options or different third-party options and a few clients acquired within the
Ooyala acquisition deciding to not change to our answer. Volume clients
decreased in latest intervals primarily attributable to our discontinuation of the
promotional Video Cloud Express providing. As a consequence, now we have skilled
attrition of this base degree providing and not using a corresponding addition of
clients. We count on clients utilizing our quantity choices to proceed to
lower in 2021 and past as we proceed to focus in the marketplace for our
premium options.
• Net Revenue Retention Rate
. We assess our capability to retain and develop clients utilizing a metric we
check with as our web income retention charge. We calculate the online 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 combination
annualized contract worth from our premium buyer base, measured as of the
finish of a given interval. We usually calculate our web income retention charge
on a quarterly foundation. For annual intervals, we report web income retention
charge as the typical of the online income retention charge for all fiscal quarters
included within the interval. By dividing the retained recurring income by the
base recurring income, we measure our success in retaining and rising
put in income from the precise cohort of shoppers we served on the
starting of the interval. The recurring greenback retention charge focuses on
contracts up for renewal in a given quarter and solely captures
growth/upsells at time of renewal, and is extra inclined to swings than
the online income retention charge. Accordingly, we plan to proceed to report
the online income retention charge and discontinue reporting recurring greenback
retention charge after December 31, 2021.
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• Recurring Dollar Retention Rate
. We assess our capability to retain clients utilizing a metric we check 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 offers visibility into our ongoing income.
• Average Annual Subscription Revenue Per Premium Customer
. We outline common annual subscription income per premium buyer because the
complete subscription income from premium clients for an annual interval,
excluding skilled providers income, divided by the typical variety of
premium clients for that interval. We imagine that this metric is necessary
in understanding subscription income for our premium choices as well as
to the relative measurement of premium buyer preparations. As our Starter version
has a worth level of $199 or $499 monthly, we disclose the typical 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 imagine that this metric is
necessary 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 assist enterprise
progress. We imagine that the expansion of our enterprise relies on many elements,
together with our capability to develop our buyer base, improve adoption of our
product choices inside current clients, develop new merchandise and
functions to increase the performance of our merchandise and supply a excessive
degree of customer support. We count on to put money into gross sales and advertising and marketing to assist
buyer progress. We additionally count on to put money into analysis and growth as we
proceed to introduce new merchandise and functions to increase the performance
of our merchandise. We intend to take care of a excessive degree of customer support and
assist which we contemplate crucial for our continued success. We additionally count on to
proceed to incur basic and administrative bills to assist our enterprise
and to take care of the infrastructure required to be a public firm. We count on to
use our money movement from operations and, if essential, our credit score facility to fund
operations.
Components of Consolidated Statements of Operations
Revenue
Subscription and Support Revenue
– We generate subscription and assist 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 embody performance to
publish and distribute video to Internet-connected units, with larger ranges
of premium editions offering further options and performance. Customer
preparations are usually
one-year
contracts, which embody a subscription to Video Cloud, fundamental assist
and a pre-determined
quantity of video streams, bandwidth, transcoding and storage. We additionally supply gold,
platinum and platinum plus assist 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 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
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 count on the whole
variety of clients utilizing the Express version to proceed to lower. Customers
who buy the quantity 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 assist and
a pre-determined quantity
of video streams, bandwidth, transcoding, and storage and solely video streams for
Brightcove Player. We additionally supply gold, platinum, and platinum plus assist 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 variety of customers, accounts and utilization. Should a
buyer’s utilization exceed the contractual entitlements, the contract will present
the speed at which the client should pay for precise utilization above the contractual
entitlements.
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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 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 client 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.
Brightcove Beacon and Brightcove Campaign are every supplied to clients on a
subscription foundation, with various ranges of performance, utilization entitlements and
assist 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 generally embody a subscription to Video Cloud, Gallery,
Brightcove Social (for Video Marketing Suite clients) or Brightcove Live (for
Enterprise Video Suite clients), fundamental assist 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 supply gold assist or platinum assist to those clients for an
further payment, which incorporates prolonged cellphone assist. 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 client should pay for precise utilization
above the contractual entitlements, or would require the client to improve its
bundle upon renewal. The Starter version offers clients with the identical fundamental
performance that’s supplied 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 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, 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 providers and different income consists of providers resembling
implementation, software program customizations and challenge administration for purchasers 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, assist {and professional} 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 knowledge facilities, our buyer assist crew and our skilled
providers workers. In addition to those bills, we incur third-party service
supplier prices resembling knowledge middle and content material supply community, or CDN,
bills, allotted overhead, depreciation expense and amortization of
capitalized internal-use software program
growth prices and purchased intangible property. We allocate overhead prices
resembling hire, utilities and provides to all departments based mostly on relative
headcount. As such, basic overhead bills are mirrored in price 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
assist providers as a result of labor prices of offering skilled providers.
Cost of income elevated in absolute {dollars} from the primary 9 months of 2020
to the primary 9 months of 2021. In future intervals we count on our price 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 variety of our skilled providers engagements and any
related prices referring to the supply of subscription providers and the
timing of serious expenditures. To the extent that our buyer base grows,
we intend to proceed to take a position further sources in increasing the supply
functionality of our merchandise and different providers. The timing of those further
bills may have an effect on our price of income, each by way of absolute {dollars} and
as a share of income, in any explicit 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 workers, 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
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performance and scalability of our merchandise and enhancing their ease of use,
in addition to creating new product choices. We count on analysis and growth
bills to extend in absolute {dollars} as we intend to proceed to
periodically launch new options and performance, develop 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 assist, resembling new working methods or new
Internet-connected units.
Sales and Marketing
. Sales and advertising and marketing bills consist primarily of personnel and associated
bills for our gross sales and advertising and marketing workers, 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 marketing and promotional occasions, company communications, promoting, different
model constructing and product advertising and marketing bills and allotted overhead. Our gross sales
and advertising and marketing 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 marketing and develop
the sale of our product choices inside our current buyer base, construct model
consciousness and sponsor further advertising and marketing occasions. Accordingly, we count on gross sales
and advertising and marketing expense to proceed to be our most vital working expense
in future intervals. Over the long run, we imagine that gross sales and advertising and marketing
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 and marketing packages.
General and Administrative
. General and administrative bills consist primarily of personnel and associated
bills for government, authorized, finance, info expertise and human
sources capabilities, 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 basic and
administrative bills as a share of income will lower.
Merger-related
. Merger-related prices encompass bills associated to mergers and acquisitions,
integration prices and basic company growth actions.
Other (Benefit) Expense
. Reflects different working advantages, prices that don’t immediately relate to the
working actions listed above.
Other Income (Expense), web
Other revenue (expense) consists primarily of curiosity revenue earned on our money,
money equivalents, and overseas alternate positive factors and losses.
Income Taxes
As a part of the method of getting ready our consolidated monetary statements, we
are required to estimate our taxes in every of the jurisdictions during which we
function. We account for revenue taxes in accordance with the asset and legal responsibility
methodology. Under this methodology, deferred tax property and liabilities are acknowledged
based mostly on momentary variations between the monetary reporting and revenue tax
bases of property and liabilities utilizing statutory charges. In addition, this methodology
requires a valuation allowance towards web deferred tax property if, based mostly upon
the out there proof, it’s extra doubtless than not that some or the entire
deferred tax property is not going to be realized. We have offered a valuation allowance
towards our current U.S. web deferred tax property at December 31, 2020. We
keep web deferred tax liabilities for momentary variations associated to our
Japanese subsidiary.
Stock-Based Compensation Expense
Our price of income, analysis and growth, gross sales and advertising and marketing, and basic
and administrative bills embody 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 possibility and restricted inventory award service
intervals. For the three months ended September 30, 2021 and 2020, we recorded
$2.3 million and $2.0 million, respectively, of stock-based compensation
expense. We count on stock-based compensation expense to extend in absolute
{dollars} in future intervals.
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Foreign Currency Translation
With regard to our worldwide operations, we ceaselessly enter into
transactions in currencies apart from the U.S. greenback. As a consequence, our income,
bills and money flows are topic to fluctuations attributable to adjustments in overseas
forex alternate charges, notably adjustments within the euro, British pound,
Australian greenback, and Japanese yen. In intervals when the U.S. greenback declines in
worth as in comparison with the foreign exchange during which we conduct enterprise, our
overseas currency-based income and bills usually improve in worth when
translated into U.S. {dollars}. We count on the proportion of complete web income
derived from exterior North America to extend in future intervals as we proceed
to develop our worldwide operations.
Critical Accounting Policies and Estimates
Our consolidated monetary statements are ready in accordance with accounting
ideas usually 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 intervals. 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 contemplate the assumptions and estimates related to income recognition,
revenue taxes, enterprise combos, intangible property and goodwill to be our
crucial accounting insurance policies and estimates.
For an in depth rationalization of the judgments made in these areas, check with
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form
10-Ok
for the yr ended December 31, 2020, which we filed with the Securities and
Exchange Commission on February 24, 2021.
Results of Operations
The following tables set forth our outcomes of operations for the intervals
offered. The knowledge has been derived from the unaudited condensed consolidated
monetary statements contained on this Quarterly Report on Form
10-Q
which, within the opinion of our administration, replicate all changes, consisting
solely of regular recurring changes, essential to current pretty the monetary
place and outcomes of operations for the interim intervals offered. The
period-to-period
comparability of monetary outcomes just isn’t essentially indicative of future outcomes.
This info needs to be learn along side the consolidated monetary
statements and notes thereto included in our Annual Report on Form
10-Ok
for the yr ended December 31, 2020.
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Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in 1000’s, besides share and per share knowledge)
Revenue:
Subscription and assist
income $ 49,226 $ 46,338 $ 148,667 $ 136,613
Professional providers and
different income 2,937 2,746 9,785 7,050
Total income 52,163 49,084 158,452 143,663
Cost of income:
Cost of subscription and
assist income 16,406 15,735 46,840 50,290
Cost {of professional} providers
and different income 2,247 2,363 8,205 6,349
Total price of income 18,653 18,098 55,045 56,639
Gross revenue 33,510 30,986 103,407 87,024
Operating bills:
Research and growth 7,902 8,215 24,041 26,199
Sales and advertising and marketing 18,451 14,813 52,730 42,370
General and administrative 7,345 6,694 21,822 19,633
Merger-related 45 – 300 5,768
Other (profit) expense – – (1,965 ) –
Total working bills 33,743 29,722 96,928 93,970
(Loss) revenue from operations (233 ) 1,264 6,479 (6,946 )
Other (expense) revenue, web (319 ) 204 (937 ) (291 )
(Loss) revenue earlier than revenue
taxes (552 ) 1,468 5,542 (7,237 )
Provision for revenue taxes 468 154 562 597
Net (loss) revenue $ (1,020 ) $ 1,314 $ 4,980 $ (7,834 )
Net (loss) revenue per
share-basic and diluted
Basic $ (0.02 ) $ 0.03 $ 0.12 $ (0.20 )
Diluted $ (0.02 ) $ 0.03 $ 0.12 $ (0.20 )
Weighted-average shares-basic
and diluted
Basic 40,934,689 39,682,337 40,570,817 39,319,703
Diluted 40,934,689 40,645,982 42,237,438 39,319,703
Overview of Results of Operations for the Three Months Ended September 30, 2021
and 2020
Total income elevated by 6%, or $3.1 million, within the three months ended
September 30, 2021 in comparison with the three months ended September 30, 2020 attributable to
a rise in subscription and assist income of 6%, or $2.9 million,
primarily attributable to a rise in common income per premium buyer of 6.9%.
Professional providers and different income additionally elevated by 7% or $191.
Professional providers and different income will differ from interval to interval
relying on the variety of implementations and different tasks which are in
course of. In addition, our income from premium choices grew by $3.3 million,
or 7%, within the three months ended September 30, 2021 in comparison with the three months
ended September 30, 2020. Our capability to proceed to supply the product
performance and efficiency that our clients require will probably be a significant component
in our capability to proceed to extend income.
Our gross revenue elevated by $2.5 million, or 8%, within the three months ended
September 30, 2021 in comparison with the three months ended September 30, 2020,
primarily attributable to a rise in income and our transition of acquired Ooyala
clients to our expertise throughout 2020, which resulted in decreased prices. Our
capability to proceed to take care of our total gross revenue will rely primarily
on our capability to proceed controlling our prices of supply.
Loss from operations was $0.2 million within the three months ended September 30,
2021 in comparison with a loss from operations of $1.3 million within the three months
ended September 30, 2020. This is primarily attributable to a rise in income of
$3.1 million and the advance of gross revenue on subscription and assist
income within the three months ended September 30, 2021 in comparison with the three
months ended September 30, 2020.
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Revenue
Three Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Revenue by Product Line Amount Revenue
Amount Revenue Amount %
(in 1000’s, besides percentages)
Premium $ 51,466 99 % $ 48,175 98 % $ 3,291 7 %
Volume 697 1 909 2 (212 ) (23 )
Total $ 52,163 100 % $ 49,084 100 % $ 3,079 6 %
During the three months ended September 30, 2021, income elevated by
$3.1 million, or 6%, in comparison with the three months ended September 30, 2020,
primarily attributable to a rise in income from our premium choices. The improve
in premium income of $3.3 million, or 7%, is primarily the results of elevated
premium subscription choices to our clients as the typical annual
subscription income per premium buyer elevated 6.9% in comparison with the prior
interval. In the three months ended September 30, 2021, quantity income decreased
by $212, or 23%, in comparison with the three months ended September 30, 2020, as we
proceed to focus in the marketplace for our premium options.
Three Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Revenue by Type Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and assist $ 49,226 94 % $ 46,338 96 % $ 2,888 6 %
Professional providers and different 2,937 6 2,746 4 191 7
Total $ 52,163 100 % $ 49,084 100 % $ 3,079 6 %
During the three months ended September 30, 2021, subscription and assist
income elevated by $2.9 million, or 6%, in comparison with the three months ended
September 30, 2020. The improve was primarily associated to a rise within the
common annual subscription income per premium buyer of 6.9% throughout the
three months ended September 30, 2021 in comparison with the three months ended
September 30, 2020. In addition, skilled providers and different income
elevated by $191, or 7%, in comparison with the corresponding quarter within the prior
yr. Professional providers and different income will differ from interval to interval
relying on the variety of implementations and different tasks which are in
course of.
Three Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Revenue by Geography Amount Revenue
Amount Revenue Amount %
(in 1000’s, besides percentages)
North America $ 29,420 56 % $ 27,515 56 % $ 1,905 7 %
Europe 9,689 19 8,435 17 1,254 15
Japan 6,185 12 5,688 12 497 9
Asia Pacific 6,746 13 7,211 15 (465 ) (6 )
Other 123 – 235 – (112 ) (48 )
International subtotal 22,743 44 21,569 44 1,174 5
Total $ 52,163 100 % $ 49,084 100 % $ 3,079 6 %
For functions of this part, we designate income by geographic areas based mostly
upon the places of our clients. North America is comprised of income from
the United States, Canada and Mexico. International is comprised of income from
places exterior of North America. Depending on the timing of latest buyer
contracts, income combine from a geographic area can differ from interval to interval.
During the three months ended September 30, 2021, complete income for North
America elevated $1.9 million, or 7%, in comparison with the three months ended
September 30, 2020. In the three months ended September 30, 2021, complete income
exterior of North America elevated $1.2 million, or 5%, in comparison with the three
months ended September 30, 2020. The improve in income from worldwide
areas is primarily associated to will increase in income in Europe.
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Cost of Revenue
Three Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Related Related
Cost of Revenue Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and assist $ 16,406 33 % $ 15,735 34 % $ 671 4 %
Professional providers and different 2,247 77 2,363 86 (116 ) (5 )
Total $ 18,653 36 % $ 18,098 37 % $ 555 3 %
In the three months ended September 30, 2021, price of subscription and assist
income elevated by $671, or 4%, in comparison with the three months ended
September 30, 2020. The improve resulted primarily from the 6% improve in
subscription and assist income within the three months ended September 30, 2021
in comparison with the three months ended September 30, 2020. In the three months ended
September 30, 2021, price {of professional} providers and different income decreased by
$116, or 5%, in comparison with the three months ended September 30, 2020. This
lower corresponds to a lower in contractor bills of $216 within the three
months ended September 30, 2021, in comparison with the three months ended
September 30, 2020.
Gross Profit
Three Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Related Related
Gross Profit Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and assist $ 32,820 67 % $ 30,603 66 % $ 2,217 7 %
Professional providers and different 690 23 383 14 307 80 %
Total $ 33,510 64 % $ 30,986 63 % $ 2,524 8 %
The total gross revenue share was 64% for the three months ended
September 30, 2021 in comparison with 63% for the three months ended September 30,
2020. Subscription and assist gross revenue elevated $2.2 million, or 7%,
in comparison with the three months ended September 30, 2020. The improve in gross
revenue {dollars} for subscription and assist income was attributable to incremental prices
from the acquisition of Ooyala within the three months ended September 30, 2020
which didn’t recur within the three months ended September 30, 2021.
Operating Expenses
Three Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Operating Expenses Amount Revenue
Amount Revenue Amount %
(in 1000’s, besides percentages)
Research and growth $ 7,902 15 % $ 8,215 17 % $ (313 ) (4 )%
Sales and advertising and marketing 18,451 35 14,813 30 3,638 25
General and administrative 7,345 14 6,694 14 651 10
Merger-related 45 – – – 45 N/A
Total $ 33,743 65 % $ 29,722 61 % $ 4,021 14 %
Research and Development
.
In the three months ended September 30, 2021, analysis and growth expense
decreased by $313 or 4%, in comparison with the three months ended September 30, 2020
primarily attributable to a lower in hire and contractor bills of $315 and $292
respectively. These decreases have been offset by a rise in stock-based
compensation of $267, in addition to varied different bills that, within the combination,
elevated by roughly $27. We count on our analysis and growth expense
as a share of income to stay comparatively unchanged.
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Sales and Marketing
.
In the three months ended September 30, 2021, gross sales and advertising and marketing expense
elevated by $3.6 million, or 25%, in comparison with the three months ended
September 30, 2020, primarily attributable to a rise in advertising and marketing campaigns,
employee-related, and fee bills of $1.8 million, $1.6 million, and
$1.2 million, respectively. These will increase have been offset by a lower in hire
and contractor bills of $435 and $627, respectively. The remaining lower
was attributable to varied different bills that, in combination, decreased by roughly
$46. We count on that our gross sales and advertising and marketing expense will improve in absolute
{dollars} for the rest of 2021 as in comparison with the prior interval as we’ll
proceed to put money into these actions to assist income progress.
General and Administrative
.
In the three months ended September 30, 2021, basic and administrative expense
elevated by $651, or 10%, in comparison with the three months ended September 30,
2020, primarily attributable to will increase in exterior skilled providers, employee-
associated, and stock-based compensation bills of $244, $193, and $176,
respectively. The remaining improve was attributable to varied different bills that, in
combination, elevated by roughly $38. In future intervals, we count on basic
and administrative expense to stay comparatively unchanged.
Merger-Related
.
In the three months ended September 30, 2021, merger-related bills remained
comparatively unchanged, in comparison with the three months ended September 30, 2020.
Overview of Results of Operations for the Nine Months Ended September 30, 2021
and 2020
Total income elevated by 10%, or $14.8 million, within the 9 months ended
September 30, 2021 in comparison with the 9 months ended September 30, 2020 attributable to
a rise in subscription and assist income of 9%, or $12.1 million,
primarily attributable to a rise in income from our premium choices. Professional
providers and different income additionally elevated by 39%, or $2.7 million, in comparison with
the corresponding interval within the prior yr. Professional providers and different
income will differ 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 $15.3 million, or 11%, within the 9 months ended September 30,
2021 in comparison with the 9 months ended September 30, 2020. Our capability to
proceed to supply the product performance and efficiency that our clients
require will probably be a significant component in our capability to proceed to extend income.
Our gross revenue elevated by $16.4 million, or 19%, within the 9 months ended
September 30, 2021 in comparison with the 9 months ended September 30, 2020, attributable to
a rise in income and an enchancment in subscription and assist gross
revenue. The improve in income is because of a rise in our common income per
premium buyer. The enchancment in subscription and assist gross revenue was
primarily attributable to transition of acquired Ooyala clients to our expertise
throughout 2020, which decreased prices. Our capability to proceed to take care of our
total gross revenue will rely totally on our capability to proceed
controlling our prices of supply.
Income from operations was $6.5 million within the 9 months ended September 30,
2021 in comparison with a loss from operations of $6.9 million within the 9 months ended
September 30, 2020. This is primarily as a result of aforementioned improve in
income of $14.8 million and reduces in prices of income of $1.6 million in
the 9 months ended September 30, 2021 in comparison with the 9 months ended
September 30, 2020.
Revenue
Nine Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Revenue by Product Line Amount Revenue Amount
Revenue Amount %
(in 1000’s, besides percentages)
Premium $ 156,182 99 % $ 140,904 98 % $ 15,278 11 %
Volume 2,270 1 2,759 2 (489 ) (18 )
Total $ 158,452 100 % $ 143,663 100 % $ 14,789 10 %
During the 9 months ended September 30, 2021, income elevated by
$14.8 million, or 10%, in comparison with the 9 months ended September 30, 2020,
primarily attributable to a rise in income from our premium choices, which
consists of subscription and assist income in addition to skilled providers.
The improve in premium income of $15.3 million, or 11%, is primarily the
results of an 8% improve in common annual subscription income per premium
buyer throughout the 9 months ended September 30, 2021 in comparison with the 9
months ended September 30, 2020. This improve in common annual subscription
income per premium buyer is primarily attributable to premium clients ordering extra
of our merchandise.
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During the 9 months ended September 30, 2021, quantity income decreased by
$489 or 18%, in comparison with the 9 months ended September 30, 2020, as we
proceed to focus in the marketplace for our premium options.
Nine Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Revenue by Type Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and assist $ 148,667 94 % $ 136,613 95 % $ 12,054 9 %
Professional providers and different 9,785 6 7,050 5 2,735 39
Total $ 158,452 100 % $ 143,663 100 % $ 14,789 10 %
During the 9 months ended September 30, 2021, subscription and assist
income elevated by $12.1 million, or 9%, in comparison with the 9 months ended
September 30, 2020. The improve was primarily associated to an 8% improve in
common annual subscription income per premium buyer.
In addition, skilled providers and different income elevated by $2.7 million,
or 39%, in comparison with the corresponding interval within the prior yr. This improve
was pushed by one explicit challenge that was accomplished within the three months
ended March 31, 2021. Professional providers and different income will differ from
interval to interval relying on the variety of implementations and different tasks
which are in course of.
Nine Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Revenue by Geography Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
North America $ 89,204 56 % $ 78,553 55 % $ 10,651 14 %
Europe 28,159 18 25,323 18 2,836 11
Japan 19,263 12 17,344 12 1,919 11
Asia Pacific 21,421 14 21,795 15 (374 ) (2 )
Other 405 – 648 – (243 ) (38 )
International subtotal 69,248 44 65,110 45 4,138 6
Total $ 158,452 100 % $ 143,663 100 % $ 14,789 10 %
During the 9 months ended September 30, 2021, complete income for North America
elevated $10.7 million, or 14%, in comparison with the 9 months ended September 30,
2020. The improve was attributable to income from our premium choices.
During the 9 months ended September 30, 2021, complete income exterior of North
America elevated $4.1 million, or 6%, in comparison with the 9 months ended
September 30, 2020. The improve in income from worldwide areas is
primarily associated to elevated gross sales of our premium choices to current
clients in Japan and Europe.
Cost of Revenue
Nine Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Related Related
Cost of Revenue Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and assist $ 46,840 32 % $ 50,290 37 % $ (3,450 ) (7 )%
Professional providers and different 8,205 84 6,349 90 1,856 29
Total $ 55,045 35 % $ 56,639 39 % $ (1,594 ) (3 )%
In the 9 months ended September 30, 2021, price of subscription and assist
income decreased $3.5 million, or 7%, in comparison with the 9 months ended
September 30, 2020. The lower resulted primarily from incremental prices from
the acquisition of Ooyala within the 9 months ended September 30, 2020 which did
not recur within the 9 months ended September 30, 2021.
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In the 9 months ended September 30, 2021, price {of professional} providers and
different income elevated $1.9 million, or 29%, in comparison with the 9 months ended
September 30, 2020. This improve corresponds to a rise in contractor
bills of $1.7 million within the 9 months ended September 30, 2021 in comparison with
the 9 months ended September 30, 2020.
Gross Profit
Nine Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Related Related
Gross Profit Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Subscription and assist $ 101,827 68 % $ 86,323 63 % $ 15,504 18 %
Professional providers and different 1,580 16 701 10 879 125
Total $ 103,407 65 % $ 87,024 61 % $ 16,383 19 %
The total gross revenue share was 65% and 61% for the 9 months ended
September 30, 2021 and 2020, respectively. Subscription and assist gross revenue
elevated $15.5 million, or 18%, in comparison with the 9 months ended September 30,
2020. It is probably going that gross revenue, as a share of income, will fluctuate
quarter by quarter as a result of timing and mixture of subscription and assist income
{and professional} providers and different income, and the sort, timing and period
of service required in delivering sure tasks.
Operating Expenses
Nine Months Ended September 30,
2021 2020 Change
Percentage of Percentage of
Operating Expenses Amount Revenue Amount Revenue Amount %
(in 1000’s, besides percentages)
Research and growth $ 24,041 15 % $ 26,199 18 % $ (2,158 ) (8 )%
Sales and advertising and marketing 52,730 33 42,370 29 10,360 24
General and administrative 21,822 14 19,633 14 2,189 11
Merger-related 300 0 5,768 4 (5,468 ) (95 )
Other (profit) expense (1,965 ) (1 ) – – (1,965 ) N/A
Total $ 96,928 61 % $ 93,970 65 % $ 2,958 3 %
Research and Development
.
In the 9 months ended September 30, 2021, analysis and growth expense
decreased by $2.2 million, or 8%, in comparison with the 9 months ended
September 30, 2020 primarily attributable to a lower in employee-related and hire
bills of $1.6 million and $1.0 million, respectively. These decreases have been
partially offset by a rise in stock-based compensation expense of $423.
Sales and Marketing
.
In the 9 months ended September 30, 2021, gross sales and advertising and marketing expense
elevated by $10.4 million, or 24%, in comparison with the 9 months ended
September 30, 2020 primarily attributable to will increase in advertising and marketing campaigns, fee
and employee-related bills of $4.7 million, $4.1 million, and $3.8 million,
respectively. These will increase have been offset by decreases in hire, contractor and
journey bills of $1.2 million, $550 and $404, respectively.
General and Administrative
.
In the 9 months ended September 30, 2021, basic and administrative
elevated by $2.2 million or 11%, in comparison with the 9 months ended
September 30, 2020 primarily attributable to will increase in exterior accounting and authorized
charges, employee-related, stock-based compensation, and contractor bills of
$995, $669, $330 and $297, respectively.
Merger-Related
.
In the 9 months ended September 30, 2021, merger-related bills decreased
$5.5 million attributable to prices incurred in reference to basic 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 offers 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
advantage of $1,965 from the CARES Act associated to worker retention credit. The
profit was recorded as Other (profit) expense.
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Liquidity and Capital Resources
Cash and money equivalents.
Our money and money equivalents at September 30, 2021 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 September 30, 2021 and
December 31, 2020, we had $14.5 million and $17.1 million, respectively, of money
and money equivalents held by subsidiaries in worldwide places, together with
subsidiaries situated in Japan and the United Kingdom. These earnings may be
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