UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
For the transition period from to
Commission File Number: 001-35429
BRIGHTCOVE INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation)
281 Summer Street
Boston, Massachusetts
(Address of principal executive offices)
20-1579162
(I.R.S. Employer
Identification No.)
02210
(Zip Code)
(888) 882-1880
(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.001 per share
Trading Symbol(s)
BCOV
Name of Exchange on Which
Registered
The NASDAQ Global Market
Securities Registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
☒
Non-accelerated filer
Emerging growth company
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
The aggregate market value of common stock held by non-affiliates of the registrant based on the closing price of the registrant’s common stock as
reported on the NASDAQ Global Market on June 30, 2023, was $170,229,500.
As of February 16, 2024, there were 43,705,444 shares of the registrant’s common stock, $0.001 par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement relating to its 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of
this Annual Report on Form 10-K where indicated. Such Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after
the end of the fiscal year to which this report relates.
BRIGHTCOVE INC.
Table of Contents
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART I.
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Item 16.
Signatures
Exhibits and Financial Statement Schedules
Form 10-K Summary
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” that involve risks and uncertainties, as well as
assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or
implied by such forward-looking statements. The statements contained in this Annual Report on Form 10-K that are not purely
historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking
statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and
objectives of management for future operations; factors that may affect our operating results; statements related to adding
employees; statements related to potential benefits of acquisitions; statements related to future capital expenditures; statements
related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly
to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified
by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to
identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on
information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other
important factors that could cause actual results and the timing of certain events to differ materially from future results expressed
or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not
limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part I of this
Annual Report on Form 10-K, and the risks discussed in our other Securities and Exchange Commission, or SEC, filings.
Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no
obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Forward-
looking statements in this Annual Report on Form 10-K may include statements about:
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our ability to achieve profitability;
our competitive position and the effect of competition in our industry;
our ability to retain and attract new customers;
our ability to penetrate existing markets and develop new markets for our offerings;
our ability to retain and hire qualified accounting and other personnel;
our ability to successfully integrate acquired businesses;
our ability to protect our intellectual property and operate our business without infringing upon the intellectual
property rights of others;
our ability to maintain the security and reliability of our systems;
our estimates with regard to our future performance and total potential market opportunity;
our estimates regarding our anticipated results of operations, future revenue, bookings growth, capital requirements
and our needs for additional financing; and
our goals and strategies, including those related to revenue and bookings growth.
This Annual Report on Form 10-K contains statistical data, estimates, and forecasts from various sources, including independent
industry publications and other information from our internal sources. This information is based upon a number of assumptions
and limitations, and you are cautioned not to give undue weight to such information. While we believe the market and industry
data included in this prospectus are reliable and are based on reasonable assumptions, we have not independently verified any of
the data from third-party sources nor have we ascertained the underlying economic assumptions relied on therein. The industry in
which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the
section titled “Risk Factors” that could cause results to differ materially.
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SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS
Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business,
including those described in the “Risk Factors” section in Part I, Item 1A. of this Annual Report on Form 10-K. These risks and
uncertainties include, but are not limited to, the following:
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We have a history of losses, we may continue to incur losses and we may not achieve or sustain profitability in the
future.
Substantially all of our revenue has historically come from a single product, Video Cloud.
If we are unable to retain our existing customers, our revenue and results of operations will be adversely affected.
Our long-term financial targets are predicated on bookings and revenue growth and operating margin improvements
that we may fail to achieve, which could reduce our expected earnings and cause us to fail to meet the expectations of
analysts or investors and cause the price of our securities to decline.
The actual market for our products and solutions could be significantly smaller than our estimates of our total
potential market opportunity, and if customer demand for our offerings does not meet expectations, our ability to
generate revenue and meet our financial targets could be adversely affected.
Our business is substantially dependent upon the continued growth of the market for on-demand software solutions.
Our operating results may fluctuate from quarter to quarter, which could make them difficult to predict.
We operate in a rapidly developing market, which makes it difficult to evaluate our business and future prospects.
Our long-term success depends, in part, on our ability to expand the sales of our products to customers located outside
of the United States, and thus our business is susceptible to risks associated with international sales and operations.
We are impacted by constantly-evolving government and industry regulation of the Internet, data privacy, and
cybersecurity, which could directly restrict our business or indirectly affect our business by limiting the growth of our
markets.
We use cloud computing services facilities to deliver our services, and disruption of service at these facilities could
harm our business.
The summary risk factors described above should be read together with the text of the full risk factors below, in the section
entitled “Risk Factors” and in the other information set forth in this Annual Report on Form 10-K, including our financial
statements and the related notes, as well as in other documents that we file with the U.S. Securities and Exchange Commission, or
the SEC. If any such risks and uncertainties actually occur, our business, prospects, financial condition and results of operations
could be materially and adversely affected. The risks summarized above or described in full below are not the only risks that we
face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially
adversely affect our business, prospects, financial condition and results of operations.
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Item 1. Business
Overview
PART I
Brightcove Inc., or Brightcove®, is a global leader in cloud-based streaming technology and services with a vision to be the
world's most trusted streaming technology company. Brightcove’s software platform and suite of solutions include a breadth and
depth of offerings that meet the needs of media and enterprise customers in a variety of industries across the globe with their use
of streaming video, and serve as a guide in optimizing and maturing their streaming strategies. Leading companies across
industries rely on our products, solutions, services, and industry expertise to grow their streaming businesses, monetize their
content via streaming use-cases, expand and engage their audiences (both external and internal), and reduce the cost and
complexity associated with storing, publishing, delivering, distributing, measuring, and monetizing content across streaming
channels and devices.
With deep industry expertise and an understanding of how streaming video helps generate positive business outcomes, our
proven platform combines functionality designed to meet the needs and goals of our customers with the additional flexibility for
customers to customize solutions to meet their own unique requirements
As of December 31, 2023, we had 2,559 customers in over 60 countries, including many of the world’s leading media
companies, broadcasters, digital publishers, sports and entertainment companies, fashion and hospitality brands, faith-based
institutions, retail and e-commerce businesses, and technology organizations, as well as government agencies, educational
institutions and non-profit organizations.
We primarily generate revenue by offering our solutions to customers on a subscription-based, software as a service (SaaS)
model. Our revenue has decreased from $211.0 million in the year ended December 31, 2022 to $201.2 million in the year ended
December 31, 2023. Substantially all of our revenue has historically been attributable to Brightcove Video Cloud™ (Video
Cloud), which is our core video streaming platform, and we expect that revenue from our solutions leveraging Video Cloud will
continue to comprise a significant portion of our revenue.
The Brightcove Approach
We distill our approach into the following focus areas:
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Commitment to Innovation and Customer Success. We continually invest in research and development to deliver
cutting-edge technology, improve our platform and expand the use-cases we cover for customers. By staying at the
forefront of the ever-evolving streaming industry, we empower our customers to effectively engage their target
audiences with streaming technology and services to achieve their business goals. This commitment is evidenced by
Brightcove receiving, in 2023, our tenth Support Staff Excellence award from the Technology & Services Industry
Association. As we look toward the future, our focus is on driving innovation and exceeding customer expectations
while increasing our own business model flexibility and revenue opportunities.
Go-To-Market Strategy. We continue to focus on serving our existing customer base and market, while expanding our
array of dedicated resources serving customers at the higher end of the market. We believe many businesses and
brands at the higher end of the market are underserved by other vendors in the streaming technology space. We also
believe that Brightcove’s technology, broad ecosystem of partnerships, and our professional services team, present
differentiated opportunities for businesses and brands to achieve their goals and desired outcomes.
Media Focus. Our legacy of serving leading media companies and our commitment to technology innovation to serve
the changing market have resulted in Brightcove services that allow media companies to monetize their content
through a variety of strategies. These include, but are not limited to, subscription video on demand (SVOD),
transactional video on demand (TVOD), advertising-based video on demand (AVOD), and similar models supporting
the delivery of live content, such as sports, news, and events, and simulated live experiences, such as free ad-
supported streaming (FAST) channels, as well as hybrid models. Our commitment to helping media companies
achieve their objectives is also shown through some of our newer, additional offerings, such as:
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Engagement Insights, which analyzes billions of viewer interactions to identify meaningful engagement
drivers. Our customers can pinpoint the most effective ways to reach new viewers, drive audience engagement,
and retain viewers. Leveraging advanced algorithms trained by artificial intelligence (AI), and integrations with
leading marketing automation platforms (MAP) and customer relationship management (CRM) platforms, our
customers are able to correlate content performance with viewing patterns to build audience segments. Our
customers can then tailor their outreach to retain their viewers and maximize the value of their content;
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Ad Insights, which measures the impact of ad intensity on viewer engagement, providing detailed reporting on
viewer tolerance for ads across dimensions such as player, device, region, and content, and how more frequent
or longer duration ad pods are impacting audience engagement. These insights drive optimizations to help our
customers maximize ad yields, and works seamlessly with our own Ad Monetization service or any third party
ad networks;
Cloud Playout and FAST channels, which allow Brightcove customers to launch FAST channels and manage
content, programming, and monetization from the Brightcove platform;
Quality of Experience (QoE) Insights, which delivers integrated collection and analysis of critical metrics, at
scale, as they change over time. QoE Insights uses an advanced algorithm trained by AI to identify impaired
video experiences, help pinpoint root causes, measure the impacts on viewer sessions and draw correlations to
audience engagement and long-term viewer satisfaction; and
Context Aware Encoding (CAE), which is a component within Brightcove’s Zencoder encoding and
transcoding product, that uses AI to reduce the cost of storing and streaming video while improving playback
quality for viewers.
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Enterprise Focus. Our commitment to serving our enterprise customers has resulted in new, use-case-based offerings
that deliver bespoke capabilities built on our Video Cloud platform which are designed to help companies leverage
video to reach and engage their external and internal audiences, respectively, and drive specific outcomes. We also
continue to enhance our offerings and accelerate the breadth of our solutions through integrations that extend the
application of video across the enterprise technology ecosystem. Recent examples of this enterprise-focus include:
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Brightcove Marketing Studio™, which is designed to help marketers extend their video strategy by
complementing it with their own marketing technology (martech) investments. With Marketing Studio, our
customers can not only manage and publish their video using Brightcove functionality, but can also incorporate
their Brightcove-hosted video directly into their martech solution to streamline their processes and expand the
reach of their video. For example, customers using Shopify can incorporate video from Brightcove into their e-
commerce sites; and customers using Sprnklr and/or Hootsuite can publish video content managed within the
Brightcove platform to relevant social media properties. Customers can also connect their MAP or CRM
solutions to Brightcove to sync video engagement analytics to allow them to create targeted outbound
marketing campaigns.
Brightcove Communications Studio™, which provides marketers and corporate communications professionals
with a suite of tools to better engage and communicate with their audiences by streaming video through live
and on-demand experiences. Communications Studio also makes it easy for professionals to source, review, and
approve for publication, employee-generated content from teams across the company by automatically
ingesting content from Google Drive or Dropbox folders. Our customers can also use Brightcove’s Gallery
offering to provide audiences a modern live or on-demand streaming video experience while tracking viewer
engagement with analytics, insights, and interactive elements.
Enhancements to Brightcove’s analytics and insights module enables marketers and corporate communications
professionals to measure the impact of their streaming video and iterate based on data. Our Essential Insights
module enables our customers to gather reporting on usage and content trends across their video library; and
Brightcove Interactivity and its analytics capabilities highlight engagement with elements like polls, quizzes,
sentiment, and more and provide data on audience engagement and feedback.
Market Trends
Video platform technologies and services continue to impact the enterprise and media industries and bring forth evolving
ways for companies to engage and interact with their customers. We believe the following trends provide a strong opportunity for
Brightcove in the years ahead:
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Market demand for cloud-based SaaS video solutions is growing. According to data from analyst firm IDC, the
worldwide video platforms software market is expected to grow at a compound annual growth rate (CAGR) of 12.0%
for the 2022–2027 period, attaining $5.0 billion in revenue in 2027. IDC also expects that most of the market growth
over the next five years will come from public cloud-based SaaS solutions. We believe this growth will be driven by
the need to:
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Deliver more engaging customer experiences via digital channels including the web, mobile apps, connected
TVs and social networks;
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Communicate important information to employees, from executive town halls to product/sales training, skills
training, and compliance-based training; and
Deliver personalized and seamless interactive experiences to customers and partners across a variety of
platforms from eCommerce to marketing automation, websites, and video-based training platforms.
IDC also believes organizations will continue to invest in video platforms over the coming years — both for internal
use (such as workforce readiness, knowledge transfer, enterprise learning and development, course delivery, etc.) and
for commercial content that is shared via virtual events or monetized via advertising, subscription, or some other
mechanism. (Source: IDC, Worldwide Video Platforms Software Forecast, Doc # US51157923, March 14, 2023)
Monetization initiatives through data and analytics are transforming the media industry. According to IDC, compiling
an audience data set with attributes that drive content-type decisioning, production, distribution, and monetization is a
key differentiator for content creators and programmers. Data collection, management, and analysis are consistently
cited as keys to monetization as the industry moves to a direct-to-consumer business model where data is a key metric
of success. (Source: IDC, MarketScape Media and Entertainment, Doc # US49647122, June 22, 2023).
Cost optimization through technology, services, and support in the Big Media Streaming Market. According to IDC,
companies should avoid spending time stitching together and maintaining integrations with a multitude of technology
vendors. Customers are challenged to lower operating expenses while maintaining or increasing quality content
throughput more efficiently through automated processes and the creation of new or augmented revenue streams to
reach sustainable profitability goals. With many large media streaming services experiencing declining year-over-year
subscriber growth, we see an opportunity to assist these businesses in moving from an internally sourced and managed
streaming tech ecosystem to one sourced with best-in-class third-party technologies.
While certain large companies may have the funds to support internal development teams to organically integrate best-
of-breed services, others require more support and seek turnkey solutions and even complete managed services for
their cloud deployments. (Source: IDC, MarketScape Media and Entertainment, Doc # US49647122, June 22, 2023)
Opportunities In the Competitive Landscape. At Brightcove, we view the ever-changing competitive landscape of
video-sharing sites, in-house solutions, streaming platforms and a range of other technology providers as an
opportunity to constantly evaluate and assess our competitive position and the value of our products and services to
the markets we serve. In turn, we push ourselves to innovate to maintain a leading position in our categories.
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Key Benefits of Our Solutions
The following key benefits of our solutions are broadly aligned with and responsive to the market trends described above:
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Comprehensive, modular and scalable solutions. Our core products and solutions meet a range of streaming video
publishing, delivery and distribution needs, and can be integrated with modular technology to create customized
workflows that address numerous use cases across a customer’s organization. We offer end-to-end solutions built for
media companies, marketers and communicators, as well as modular solutions that customers can license on a stand-
alone basis and integrate into their existing workflows. In addition, our multi-tenant architecture enables us to deliver
each of our solutions across our customer base with a single version of our software for each product, making it easier
to scale our solutions as our customer base and their end user base expands.
Easy to use and efficient total cost of ownership. We designed our products to be intuitive and easy to use. We
provide reliable, cost-effective, on-demand solutions to our customers, relieving them of the cost, time and resources
associated with in-house solutions and enabling them to be up and running quickly after signing with us.
Open platforms and extensive ecosystem. Our open platform enables developers to easily access our public-facing
APIs and build and manage integrations with our products to meet the requirements of their tech ecosystems. With
our professional services offerings, award-winning support teams, and our extensive library of documentation, we
help our customers obtain as much value from our platform as possible. The Brightcove Marketplace™, which
launched in 2021, is a venue for our customers to discover and connect with our technology partners who specialize
in areas such as content creation, fanbase engagement, and specialized-monetization of streaming video assets. The
Brightcove Marketplace features several dozen integrations, from leading technologies like Google, Wordpress,
Oracle and Adobe, to niche emerging technologies. Our global ecosystem of partners also includes companies like
Amazon, Akamai, and Fastly, among others.
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Focus on helping customers achieve business objectives with streaming video. Our customers use our products to
achieve critical business objectives such as monetizing content, increasing conversion rates for transactions, engaging
audiences, increasing brand awareness and expanding their audiences, driving traffic, increasing viewer engagement
on their properties, internal communications, employee training and customer support. We believe our customers
view us as a strategic partner in part because our business model is not dependent on building our own audience or
generating our own revenue from consumers or end-users. We also take a consultative approach to meet our
customers' unique business needs. Our business interests align with our customers' interests, as we each benefit from
the success of our customers' streaming strategy.
Ongoing customer-driven development. Through our sales engineers, customer success and support teams, product
teams and regular outreach from senior leadership, we solicit and capture feedback from our customer base to
evaluate and incorporate as enhancements to our solutions. We regularly provide our customers with enhancements to
our products. Delivering cloud-based solutions allows us to serve additional customers with little incremental expense
and to deploy innovations and best practices quickly and efficiently to our existing customers.
Recognition
At Brightcove, we are proud of our two Technology and Engineering Emmy® Awards. Furthermore, our products and market
strategy are frequently evaluated and recognized in our industry by global industry analyst firms such as Caretta Research,
Forrester, Frost and Sullivan, Gartner, and Omdia. In 2023, Brightcove was positioned as a Leader in the IDC MarketScape:
Worldwide Media and Entertainment 2023 Vendor Assessment (Doc # US49647122, June 22, 2023), and positioned as a Leader
in the Aragon Research Globe for Enterprise Video.
Our Platform, Solutions, Products and Services
We create technology that helps our customers use streaming video to further their businesses in meaningful ways. We have
a core video streaming platform, Video Cloud, and several solutions and products that address particular customer use-cases. We
also have a host of additional services which enable Brightcove customers to generate specific outcomes and create their own
customized implementations.
Our Platform - Brightcove Video Cloud
Brightcove Video Cloud is the world’s leading online video streaming platform. It enables our customers to publish, deliver and
distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Our innovative
technology and intuitive user interface give customers control over a wide range of features and functionality needed to publish
and deliver a compelling user experience, including the ability to:
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upload videos in various formats for adaptive AI encoding solutions, which maximizes quality and minimizes file
size, and deliver videos to myriad operating systems, including web-based experiences, smartphones, tablets, media
streaming devices and connected TVs;
organize, enhance, and manage their media library by adding in metadata, creating playlists, using AI to enhance
content with automated transcription in over 25 languages, and setting rules to define where and when videos can be
viewed;
rely on fast load times, fast video starts, and easily-configured players, which include built-in support for advertising,
analytics and content protection, and provide a consistent cross-platform playback experience;
broadcast live video with multiple live streams at different quality levels and renditions that best match each viewer’s
available bandwidth, processor utilization and player size;
expand audience reach by leveraging the social network of their viewers, including sharing complete videos or video
clips through Facebook, Instagram, Pinterest, YouTube, Twitter (X), LinkedIn, Hootsuite, and other social
destinations;
grow and monetize their audience with video ad features such as tools for ad insertions and built-in ad server and
network integrations;
optimize and support online video publishing and distribution strategy through video analytics, which aggregate
analytics from owned and operated platforms and distribution platforms, and transform them into insights that drive
actionable results using our advanced AI-trained algorithms;
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customize, extend and integrate with our platform through playback, APIs and SDKs to myriad platforms including
iOS, tvOS, Android and AndroidTV, Amazon Fire TV, Roku, Samsung, LG, and beyond; and
securely stream corporate live and on-demand video communications to audiences on a multitude of devices.
Solutions & Products
With our ongoing customer-driven development, and informed by the market trends described above, we invest in solutions
and products to meet the streaming use cases representative of the industries we serve, including:
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Brightcove Marketing Studio™, is the streaming video solution designed to accelerate business growth by bridging
teams and technology to deliver premium viewing experiences, increase conversions and drive measurable marketing
outcomes by increasing brand awareness, engagement and conversion across all aspects of the customer or audience
journey;
Brightcove Communications Studio™, is for marketers and corporate communications professionals who need tools
to deliver information in an engaging, secure and scalable manner through live and on-demand content. Our
communications solution combines the power of enterprise-leading streaming technology with the interactivity and
data capabilities that modern organizations need to get the most out of their content. With this solution, teams can be
confident that audiences understand and engage with their content while tracking that engagement to do more of what
is effective;
Brightcove Media Studio™, is a comprehensive solution for over-the-top (OTT) video services, media publishers and
leading broadcasters looking to monetize their media, live stream at scale and nurture their audience lifecycle.
Leveraging programmatic content ingestion, live and VOD workflows, integrated cloud-based encoding, cost-
optimized distribution across all devices and platforms, and flexible monetization models such as SVOD, TVOD,
AVOD and hybrid, including similar monetization models supporting live content, Brightcove’s end-to-end OTT
streaming video platform and modular architecture makes it easy to quickly integrate, onboard and deploy beautiful
experiences that engage audiences;
Brightcove Audience Insights™, is a customer data platform specifically designed for video streaming businesses.
With Brightcove Audience Insights our customers have a unified view into their viewers and subscribers with various
out-of-the-box reporting and insights to better understand their viewers' and subscribers' engagement. Brightcove
Audience Insights makes it easy for our customers to take action on their video data by using audience segment
functionality to improve acquisition and service engagement, and reduce churn;
Zencoder® is a cloud-based video encoding service, providing extremely fast, high-quality, and reliable encoding of
live and on-demand video and access to highly scalable encoding power without the expense, management, and
scalability limitations of traditional hardware and software. Customers are able to integrate Zencoder with a simple
API, and manage accounts and encoding jobs from an intuitive online dashboard. Zencoder accepts files in an
extensive range of formats and codecs, supports video output to a multitude of devices, and includes tools to support
high-quality video output and to adjust and edit video. It is globally distributed and includes advanced security
features; and
Brightcove Beacon®, is a purpose-built app platform that enables our customers to launch premium OTT video
streaming experiences quickly and cost-effectively across mobile, web, smart TVs and connected TVs, with the
flexibility of multiple monetization models. It allows customers to curate and deliver content to their audience
segments, automate the curation of playlists and carousels, securely store and deliver content with DRM protection,
automate content availability windows, and configure VOD and live content offerings for any demographic changes
that occur throughout the day or week. Customers can also manage viewers with a frictionless viewer registration
experience, and offer viewer profiles to maintain watch history and preferences and manage stream concurrency and
account sharing. Through Brightcove Beacon, customers can also gather insights on viewer behavior to inform their
decisions about programming, layout, and monetization.
Services to support Brightcove customers
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Ad Monetization. Brightcove Ad Monetization is our monetization service for organizations that want to generate
revenue with an advertising strategy. Using the latest yield optimization tools, we support both live and on-demand
monetization through strategic integrations, industry expertise, and insights that combine both player and ad data. For
all VOD, live and FAST content, the flexibility of our Ad Monetization supports organizations throughout their
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advertising initiatives whether they have Brightcove take on full stack of inventory or are interested in having us
supplement unsold inventory.
Professional Services. While our products are easy for customers to use and deploy without any additional
specialized services, we offer a range of professional services for customers who seek customization of our products,
need assistance with their implementations, require assistance with the integration of our products with in-house or
third-party applications, or need managed services where we would operate streaming technology and/or content
operations on their behalf. These professional services are priced on a retainer, time and materials, or a per project
basis and include projects such as content migrations from other vendors or in-house solutions, video player
enhancements, mobile and connected TV app development, the creation of web pages optimized for streaming, and
customization of virtual event experiences.
Brightcove Marketplace. The Brightcove Marketplace™ features several dozen integrations to leading technology
providers that support the myriad use cases of our customers and prospects. Our teams continuously explore new
integration opportunities to ensure our customers have access to the latest technology tools that help them maximize
their use of the Brightcove platform by connecting it across the tools and systems they use to run their businesses.
Customer Success, Support, and Documentation. Our customer success and customer support teams are involved
from the very beginning of a customer’s journey with Brightcove, leveraging our teams’ global presence to engage
with customers through multiple touchpoints and develop close customer relationships that have led to best-in-class
CSAT scores. Our dedicated customer success team offers customized onboarding and related services to new and
existing customers to help with technology setup and adoption, and maximizing the value of our products and
services to help customers reach their business goals. This team is focused on ongoing customer success with our
platform as well as maintaining consistent, positive engagement.
Customer support from our TSIA-certified team is included for all of our products, and provides customers access to
our support team via a web portal. Customers who upgrade to premium editions of our support packages gain
additional features such as faster response times, access to a dedicated Customer Success representative, additional
contact options, dedicated live event support, live channel monitoring, and 24x7x365 support.
Customers also have access to our library of support documentation spanning our entire portfolio of products, which
is updated regularly in connection with feature enhancements, new releases, and other product updates.
Training. We offer free basic online training to registered users of our products. We also offer customized, onsite
training for customers that is priced on a per engagement basis.
Video.js and Developer Solutions. Brightcove is the corporate shepherd of the Video.js community. Video.js has been
a staple of the open-source video player technology space and has seen substantial adoption across hundreds of
thousands of websites and tens of thousands of organizations spanning the globe. With numerous APIs, SDKs and a
robust ecosystem of open-source plugins, developers can customize Video.js players to deliver the multi-platform
stability and customizability that companies and their developers rely on.
Editions
Our products are generally offered to customers on a subscription-based SaaS model, with varying levels of usage
entitlements, support and functionality that depend on the business use case of our customers. Our customers generally pay us a
monthly or annual subscription fee for access to our products. This model allows our customers to scale their level of investment
and usage based on the size and complexity of their needs.
Our Video Cloud Express edition, which targets small and medium-sized businesses (SMBs) and our Zencoder
customers on month-to-month contracts or pay-as-you-go contracts, are considered volume customers. All other customers are
considered premium customers.
Sales and Marketing
We sell our products and services primarily through our global direct sales organization. Our sales team is organized by
the following geographic regions: Americas, Europe, Asia Pacific, and Japan. In the Middle East and India, we generate sales
primarily through partner channels. We further organize our go-to-market approach by focusing our sales and marketing teams on
selling to organizations in a wide range of industries: Enterprise organizations who use video to sell their products and services
and/or engage with their employees and other stakeholders, and Media organizations who use our platform and solutions to
monetize their content.
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We also generate sales through a comprehensive channel partner program that includes: referral partners, solution
partners, managed service providers, and resellers. Our ability to grow and maintain a global, diverse set of quality channel
partners extends our market reach, which allows us to meet the specific nuances of local markets around the world, and reduces
our overall cost of sales.
Additionally, we sell some of our Zencoder products online through our website.
We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs.
Our marketing programs target executives, technology professionals and senior business leaders. Our marketing programs
typically target specific geographies and industry segments. Our principal marketing programs include:
public relations and social media;
online event marketing activities, direct email, search engine marketing and display ads and blogs;
field marketing events for customers and prospects;
participation in, and sponsorship of, user conferences, trade shows and industry events;
use of our website to provide product and organization information, as well as learning opportunities for potential
customers;
cooperative marketing efforts with partners, including joint press announcements, joint trade show activities, channel
marketing campaigns and joint seminars;
telemarketing and lead generation representatives who respond to incoming leads to convert them into new sales
opportunities; and
customer programs, including user meetings and our online customer community.
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Operations
We have relationships with a number of third-party cloud computing platforms to assist in providing our products and
services to customers. We use AWS and other third-party platforms to provide cloud-based computing and storage services to our
customers. We believe that our agreements with these platforms are based on competitive market terms and conditions, including
service level commitments. We take advantage of this geographically dispersed, third-party, cloud computing capacity to improve
the responsiveness of our service and lower network latency for our customers.
Media delivery to end users, including video, audio, images and JavaScript components, is served primarily through
content delivery network (CDN) providers, including Akamai, Fastly, and AWS Cloudfront. We believe our agreements with our
CDN providers are based on competitive market terms and conditions, including service level commitments from these CDN
providers.
Intellectual Property
With our continued investment in innovation and through the diligent work of our team members, we continue to seek
protection for our intellectual property. We rely primarily on a combination of trademark, patent, copyright and trade secret laws
in the United States and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect our
proprietary technology, confidential information, business strategies and brands. We also believe that factors such as the
technological and creative skills of our employees coupled with the creation of new features, functionality and products are
essential to establishing and maintaining a technology leadership position. We enter into confidentiality and invention assignment
agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control
access to our proprietary technology.
In the United States, we have 60 issued and/or allowed patents and 2 patent applications pending. Internationally, we
have 56 issued and/or allowed patents and we are currently pursuing 18 patent applications, including one patent application
undergoing examination at the European Patent Office. We also have a number of registered trademarks in the United States and
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certain non-U.S. jurisdictions, such as “BRIGHTCOVE”, “ZENCODER”, and our logo. We may apply for registrations of other
marks, and/or registration in additional jurisdictions, to the extent we determine such coverage is appropriate and cost-effective.
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or obtain and use our
technology to develop products with the same functionality as our solutions. Policing unauthorized use of our technology is
difficult and expensive. Our competitors could also independently develop technologies equivalent to ours, and our intellectual
property rights may not be broad enough for us to prevent competitors from selling products incorporating those technologies.
Competition
We compete with video-sharing sites, in-house solutions, other streaming technology platforms and a broad range of
other technology providers. Some of our actual and potential competitors may enjoy competitive advantages over us, such as
larger marketing budgets and larger sales teams, as well as greater financial, technical and other resources. The overall markets
for our products are fragmented, rapidly evolving and highly competitive.
We expect that the competitive landscape will change as our markets continue to consolidate and mature. We believe the
principal competitive factors in our industry include the following:
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total cost of ownership;
breadth and depth of product functionality;
ability to innovate and respond to customer needs rapidly;
level of resources and investment in sales, marketing, product and technology;
ease of deployment and use of solutions;
level of integration into existing workflows and configurability;
scalability and reliability;
customer service;
brand awareness and reputation;
ability to integrate with third-party applications and technologies;
size and scale of provider; and
size of customer base and level of user adoption.
The mix of factors relevant in any given situation varies with regard to each prospective customer. We believe we
compete favorably with respect to all of these factors.
Some of our competitors have made or may make acquisitions or enter into partnerships or other strategic relationships
to offer a more comprehensive service than we do. These combinations may make it more difficult for us to compete effectively,
including on the basis of price, sales and marketing programs, technology or service functionality. We expect these challenges to
continue as organizations attempt to strengthen or maintain their market positions.
Research and Development
We have focused our research and development efforts on maintaining a leading streaming platform that is reliable,
scalable, and open; cultivating an intelligent cloud-based platform powered by AI; and leveraging our video and audience insights
to provide value to our customers in the form of tangible solutions. We have expanded, and will continue to expand the
functionality, scalability, and security of our products and enhance their ease of use, and we continue to invest in creating new
product offerings. We continue to expand on providing business intelligence regarding our customers' content by focusing on data
strategies and insights, while also improving the processing and transcoding of media, and the efficient delivery of media to our
customers' viewers. We expect research and development expenses to increase in absolute dollars as we intend to continue to lead
in the development of new technologies, regularly release new features and functionality, expand our product offerings and
upgrade and extend our service offerings. Over the long term, we believe that research and development expenses as a percentage
of revenue will decrease, but will vary depending upon the mix of revenue from new and existing products, features and
functionality, as well as changes in the technology that our products must support.
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Human Capital Resources
Brightcove employees are a team of smart, passionate and innovative people who are revolutionizing the way organizations
stream video. As of December 31, 2023, we had 671 employees, of which 301 were located in the United States and 370 were
located outside of the United States. None of our United States employees are represented by a labor union or covered by a
collective bargaining agreement and we have not experienced any work stoppages. We have a high degree of employee
engagement, as demonstrated through participation in employee surveys, and we consider our relationship with our employees to
be good.
We have built a culture around three core values, all of which guide us in delivering at the highest level on behalf of our
customers: Execution, Innovation, and One Team. We recognize that maintaining our culture and realizing these values depends
on our ability to attract, develop, and retain talent. To that end, we offer high quality benefits, including work-from-home
flexibility and wellness initiatives, which take into account the diversity of our employees’ lifestyles and needs. Our leadership
speaks with transparency at regular all-employee town hall meetings, and we create opportunities for employee feedback,
including through engagement surveys. Leveraging the power of our own solutions, we host company-wide virtual events,
provide a comprehensive library of training videos to all employees, as well as targeted training to our leadership team.
We are committed to diversity at all levels of our organization, from our Board of Directors, where three of our directors
identify as female, to our employees. We have established hiring processes, training, and partnerships with organizations to drive
diversity and inclusion among our workforce. Programs such as our employee resource groups provide community and support
for our employees.
Government Regulations
Information about segment and geographic revenue is set forth in Note 15 of the Notes to Consolidated Financial
Statements under Item 8 of this Annual Report on Form 10-K.
We are a global company based in the U.S., and are therefore subject to foreign laws governing our foreign operations, as
well as U.S. laws that restrict trade and certain practices, such as the Foreign Corrupt Practices Act. We are also subject to
domestic and foreign laws that affect companies conducting business on the internet, including laws relating to the liability of
providers of online services.
We may also be subject to laws concerning the videos our customers publish using the Brightcove service. In the U.S., we
rely on laws that limit the liability of online providers for third-party content, including the Digital Millennium Copyright Act of
1998 (DMCA) and Section 230 of the Communications Decency Act of 1996. Countries outside the U.S. generally do not provide
protections that are as robust as those under the DMCA and Section 230.
We process a limited amount of personal information from our customers and those who view the videos they share using
our platform. As a result, we are subject to laws and regulations governing privacy and data security in the U.S. and worldwide,
such as Section 5 of the Federal Trade Commission Act, the EU’s General Data Protection Law (EU GDPR), the UK General
Data Protection Law (UK GDPR), the California Consumer Privacy Act (CCPA), as amended, and other state privacy laws.
Corporate & Available Information
We were founded in 2004, and our principal executive offices are located at 281 Summer Street, Boston, Massachusetts,
02210. Our telephone number is (888) 882-1880. Our website address is www.brightcove.com. Our Annual Reports on Form 10-
K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of
our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and
Exchange Commission. The information that is posted on or is accessible through our website is not incorporated by reference
into this Annual Report on Form 10-K and should not be considered part of this or any other report that we file with or furnish to
the SEC. Alternatively, these reports may be accessed at the SEC’s website at www.sec.gov. Inclusions of website addresses in
this Annual Report on Form 10-K are inactive textual references only.
Item 1A. Risk Factors
You should carefully review the risk factors described below and those described in other reports we file with the Securities
and Exchange Commission, as well as the other information contained in this Annual Report on Form 10-K, in evaluating our
business. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other
risks not currently known to us or that we currently consider immaterial. If any of such risks and uncertainties actually occurs,
our business, financial condition or operating results could differ materially from the plans, projections and other forward-
looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and
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Results of Operations” and elsewhere in this report and in our other public filings. The trading price of our common stock could
decline due to any of these risks, and, as a result, you may lose all or part of your investment.
Risks related to our business
We have a history of losses, we may continue to incur losses and we may not achieve or sustain profitability in the future.
We have historically incurred significant losses in each fiscal year other than for the year ended December 31, 2021,
including a consolidated net loss of $9.0 million for the year ended December 31, 2022 and a consolidated net loss of $22.9
million for the year ended December 31, 2023. These losses were due to the substantial investments we made to build our
products and services, grow and maintain our business and acquire customers. Key elements of our growth strategy include
acquiring new customers and continuing to innovate and build our brand. As a result, we expect our operating expenses to
increase in the future due to expected increased sales and marketing expenses, operations costs, research and development costs
and general and administrative costs and, therefore, our operating income may potentially decrease in the foreseeable future. In
addition, as a public company we incur significant legal, accounting and other expenses. Furthermore, to the extent that we are
successful in increasing our customer base, we will also incur increased expenses because costs associated with generating and
supporting customer agreements are generally incurred up front, while revenue is generally recognized ratably over the
committed term of the agreement. You should not rely upon our recent bookings or revenue growth as indicative of our future
performance. We cannot assure you that we will sustain profitability in the future. If we are ultimately unable to continue
generating sufficient revenue to meet our financial targets, remain profitable and have sustainable positive cash flows, investors
could lose their investment.
Substantially all of our revenue has historically come from a single product, Video Cloud.
We have historically been substantially dependent on revenue from a single product, Video Cloud, and we expect that
revenue from Video Cloud will continue to comprise a significant portion of our revenue. Our business would be harmed by a
decline in the market for Video Cloud, increased competition in the market for online video streaming platforms, or our failure or
inability to provide sufficient investment to support Video Cloud as needed to maintain or grow its competitive position,
including expanding our other solutions and products that address particular customer use-cases.
If we are unable to retain our existing customers, our revenue and results of operations will be adversely affected.
We sell our products pursuant to subscription agreements that are generally for annual terms. Our customers have no
obligation to renew their subscriptions after their subscription period expires, and we have experienced losses of customers that
elected not to renew, in some cases, for reasons beyond our control. For example, our largest customer during 2020 faced
bankruptcy and, as a result, we lost substantially all of the revenue we expected to generate from this customer in 2020. In
addition, even if subscriptions are renewed, they may not be renewed on the same or on more profitable terms. As a result, our
ability to retain our existing customers and grow depends in part on subscription renewals. We may not be able to accurately
predict future trends in customer renewals, and our customers’ renewal rates have and may continue to fluctuate because of
several factors, including their satisfaction or dissatisfaction with our services, the cost of our services and the cost of services
offered by our competitors, a customer’s ability to build a video streaming solution in-house, reductions in our customers’
spending levels or the introduction by competitors of attractive features and functionality. If our customer retention rate decreases,
we may need to increase the rate at which we add new customers in order to maintain and grow our revenue, which may require
us to incur significantly higher sales and marketing expenses than we currently anticipate, or our revenue may decline. If our
customers do not renew their subscriptions for our services, renew on less favorable terms, or do not purchase additional solutions
or subscriptions, our revenue may grow more slowly than expected or decline, and our profitability and gross margins may be
harmed or affected.
The actual market for our products and solutions could be significantly smaller than our estimates of our total potential
market opportunity, and if customer demand for our offerings does not meet expectations, our ability to generate revenue and
meet our financial targets could be adversely affected.
While we expect strong growth in the markets for our products and solutions, it is possible that the growth in some or all of
these markets may not meet our expectations, or materialize at all. The methodology on which our estimate of our total potential
market opportunity is based includes several key assumptions based on our industry knowledge and customer experience. If any
of these assumptions proves to be inaccurate, then the actual market for our solutions could be significantly smaller than our
estimates of our total potential market opportunity. If the customer demand for our offerings or the adoption rate in our target
markets does not meet our expectations, our ability to generate revenue from customers and meet our financial targets could be
adversely affected.
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Our long term financial targets are predicated on bookings and revenue growth and operating margin improvements that we
may fail to achieve, which could reduce our expected earnings and cause us to fail to meet the expectations of analysts or
investors and cause the price of our securities to decline.
We are projecting long-term bookings and revenue growth. Our projections are based on the expected growth potential in
our premium customer base, as well as the market for on-demand software solutions generally. We may not achieve the expected
bookings and revenue growth if the markets we serve do not grow at expected rates, if customers do not purchase or renew
subscriptions as we expect, and/or if we are not able to deliver products desired by customers and potential customers. Our long-
term operating margin improvement targets are predicated on operating leverage as long term revenue increases and improved
operating efficiencies from moving to additional cloud-based delivery of services, together with lower cost of goods sold,
research and development expenses and general and administrative expenses as a percentage of total revenue. If operating
margins do not improve, our earnings could be adversely affected and the price of our securities could decline.
Our business is substantially dependent upon the continued growth of the market for on-demand software solutions.
We derive, and expect to continue to derive, substantially all of our revenue from the sale of our on-demand solutions. As a
result, widespread acceptance and use of the on-demand business model is critical to our future growth and success. Under the
perpetual or periodic license model for software procurement, users of the software would typically install and operate the
applications on their hardware. Because many companies are generally predisposed to maintaining control of their information
technology, or IT, systems and infrastructure, there may be resistance to the concept of accessing software as a service provided
by a third party. In addition, the market for on-demand software solutions is still evolving, and competitive dynamics may cause
pricing levels to change as the market matures and as existing and new market participants introduce new types of solutions and
different approaches to enable organizations to address their technology needs. As a result, we may be forced to reduce the prices
we charge for our products and may be unable to renew existing customer agreements or enter into new customer agreements at
the same prices and upon the same terms that we have historically. If the market for on-demand software solutions fails to grow,
grows more slowly than we currently anticipate or evolves and forces us to reduce the prices we charge for our products, our
bookings growth, revenue, gross margin and other operating results could be materially adversely affected.
Our operating results may fluctuate from quarter to quarter, which could make them difficult to predict.
Our quarterly operating results are tied to certain financial and operational metrics that have fluctuated in the past and may
fluctuate significantly in the future. As a result, you should not rely upon our past quarterly operating results as indicators of
future performance. Our operating results depend on numerous factors, many of which are outside of our control. In addition to
the other risks described in this “Risk Factors” section, the following risks could cause our operating results to fluctuate:
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our ability to retain existing customers and attract new customers;
the rates at which our customers renew and the pricing tier at which they renew;
the amount of revenue generated from our customers’ use of our products or services in excess of their committed
contractual entitlements;
the timing and amount of costs of new and existing sales and marketing efforts;
the timing and amount of operating costs and capital expenditures relating to the expansion of our business, operations
and infrastructure;
the cost and timing of the development and introduction of new product and service offerings by us or our
competitors;
macroeconomic trends, and impacts on the national and global economies due to natural disasters, acts of terrorism,
social upheaval, governmental instability, or public health emergencies, such as the COVID-19 pandemic;
system or service failures (including service failures from third party providers on which we rely), security breaches or
network downtime.
We operate in a rapidly developing market, which makes it difficult to evaluate our business and future prospects.
The market for our products and services is rapidly developing, which makes it difficult to evaluate our business and future
prospects. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing
companies in rapidly changing industries, including those related to:
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market acceptance of our current and future products and services;
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customer renewal rates;
our ability to compete with other companies that are currently in, or may in the future enter, the market for our
products;
our ability to compete with customers or prospective customers that develop in-house solutions instead of purchasing
our products;
our ability to successfully expand our business, especially internationally;
our ability to control costs, including our operating expenses;
the amount and timing of operating expenses, particularly sales and marketing expenses, related to the maintenance
and expansion of our business, operations and infrastructure;
network outages or security breaches and any associated expenses;
foreign currency exchange rate fluctuations;
write-downs, impairment charges or unforeseen liabilities in connection with acquisitions;
our ability to successfully manage acquisitions; and
general economic and political conditions in our domestic and international markets.
If we do not manage these risks successfully, our business will be harmed.
Our long-term success depends, in part, on our ability to expand the sales of our products to customers located outside of the
United States, and thus our business is susceptible to risks associated with international sales and operations.
We currently maintain offices and have sales personnel in Australia, France, Germany, India, Japan, South Korea, Spain,
Mexico, Portugal, and the United Kingdom, and we intend to expand our international operations. Any international expansion
efforts that we may undertake may not be successful. In addition, conducting international operations subjects us to new risks that
we have not generally faced in the United States. These risks include:
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unexpected costs and errors in the localization of our products, including translation into foreign languages and
adaptation for local practices and regulatory requirements;
lack of familiarity with and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs,
and other barriers;
unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade
restrictions;
difficulties in managing systems integrators and technology partners;
differing technology standards;
longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
difficulties in managing and staffing international operations and differing employer/employee relationships;
fluctuations in exchange rates that may increase the volatility of our foreign-based revenue;
potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems and
restrictions on the repatriation of earnings;
uncertain political and economic climates, international disputes, wars (such as the conflicts between Russia and
Ukraine, and in Israel and Gaza), political instability or terrorist activities and resulting economic instability; and
reduced or varied protection for intellectual property rights in some countries.
These factors may cause our costs of doing business in these geographies to exceed our comparable domestic costs.
Operating in international markets also requires significant management attention and financial resources. Any negative impact
from our international business efforts could negatively impact our business, results of operations and financial condition as a
whole.
We must keep up with rapid technological change to remain competitive in a rapidly evolving industry.
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Our markets are characterized by rapid technological change, frequent new product and service introductions and evolving
industry standards. Our future success will depend on our ability to adapt quickly to rapidly changing technologies, to adapt our
services and products to evolving industry standards and to improve the performance and reliability of our services and products.
To achieve market acceptance for our products, we must effectively anticipate and offer products that meet changing customer
demands in a timely manner. Customers may require features and functionality that our current products do not have. If we fail to
develop products that satisfy customer preferences in a timely and cost-effective manner, our ability to renew our contracts with
existing customers and our ability to create or increase demand for our products will be harmed.
We may experience difficulties with software development, industry standards, design or marketing that could delay or
prevent our development, introduction or implementation of new products and enhancements. The introduction of new products
by competitors, the emergence of new industry standards or the development of entirely new technologies to replace existing
offerings could render our existing or future products obsolete.
If we are unable to successfully develop or acquire new features and functionality, enhance our existing products to
anticipate and meet customer requirements or sell our products into new markets, our bookings growth, revenue and results of
operations will be adversely affected.
We face significant competition and may be unsuccessful against current and future competitors. If we do not compete
effectively, our operating results and future growth could be harmed.
We compete with video sharing sites, in-house solutions, online video platforms and certain niche technology providers, as
well as larger companies that offer multiple services, including those that may be used as substitute services for our products.
Competition is already intense in these markets and, with the introduction of new technologies and market entrants, we expect
competition to further intensify in the future. In addition, some of our competitors may make acquisitions, be acquired, or enter
into strategic relationships to offer a more comprehensive service than we do. These combinations may make it more difficult for
us to compete effectively. We expect these trends to continue as competitors attempt to strengthen or maintain their market
positions.
Demand for our services is sensitive to price. Many factors, including our marketing, customer acquisition and technology
costs, commoditization of our products and services and our current and future competitors’ pricing and marketing strategies, can
significantly affect our pricing strategies. There can be no assurance that we will not be forced to engage in price-cutting
initiatives, or to increase our marketing and other expenses to attract and retain customers in response to competitive pressures,
either of which could have a material adverse effect on our revenue, operating results and resources.
We will likely encounter significant, growing competition in our business from many sources, including portals and digital
media retailers, search engines, social networking and consumer-sharing services companies, broadband media distribution
platforms, technology suppliers, direct broadcast satellite television service companies and digital and traditional cable systems.
Many of our present and likely future competitors have substantially greater financial, marketing, technological and other
resources than we do. Some of these companies may even choose to offer services competitive with ours at no cost as a strategy
to attract or retain customers of their other services. Technological and commercial developments may lead to the increasing
commoditization of our products and services, including content delivery and storage, further increasing downward pressure on
the prices we can charge. If we are unable to compete successfully with traditional and other emerging providers of competing
services, our business, financial condition and results of operations could be adversely affected.
Weakened global economic conditions may harm our industry, business and results of operations.
Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns
seemingly unrelated to us or the software industry may harm us. The U.S. and other key international economies have been
affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced
corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, inflation and overall uncertainty
with respect to the economy, including with respect to tariff and trade issues. In particular, the economies of countries in Europe
have been experiencing weakness associated with high sovereign debt levels, weakness in the banking sector, uncertainty over the
future of the Euro zone and volatility in the value of the pound sterling and the Euro, and instability resulting from the ongoing
conflicts between Russia and Ukraine and in Israel and Gaza. The effect of the conflicts between Russia and Ukraine, and in
Israel and Gaza, including any resulting sanctions, export controls or other restrictive actions that may be imposed against
governmental or other entities in, for example, Russia and the Middle East, have in the past contributed and may in the future
contribute to disruption, instability and volatility in the global markets. We have operations, as well as current and potential new
customers in Europe. If economic conditions in Europe and other key markets for our platform continue to remain uncertain or
deteriorate further, it could adversely affect our customers’ ability or willingness to subscribe to our platform, delay prospective
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customers’ purchasing decisions, reduce the value or duration of their subscriptions or affect renewal rates, all of which could
harm our operating results.
More recently, inflation rates, particularly in the U.S., have increased and may continue to remain at elevated levels or
further rise, which may result in decreased demand for our products and services, increases in our operating costs including our
labor costs, constrained credit and liquidity, reduced government spending and volatility in financial markets. Central banks
worldwide, including the Federal Reserve in the U.S., have in the past raised, and may again raise, interest rates in response to
concerns over inflation rates. There continues to be uncertainty in the changing market and economic conditions, including the
possibility of additional measures that could be taken by the Federal Reserve and other domestic and foreign government
agencies, related to concerns over inflation risk.
The effects of a pandemic, epidemic, outbreak of an infectious disease or public health crises have in the past and could again,
materially affect how we and our customers operate our respective businesses, and impact our future results of operations and
overall financial performance.
Our business could be adversely affected by health crises in regions where we operate or otherwise do business. For
example, the outbreak of the novel coronavirus disease, or COVID-19, and the policies and regulations implemented in response
thereto, had a significant impact, both directly and indirectly, on global business and commerce (including our business and that
of our customers and suppliers) such as labor disruptions and supply chain shortages that continued even after the pandemic had
subsided and restrictive policies and regulations had been lifted. Other global health concerns could also result in social,
economic and labor instability in the countries in which we or the third parties with whom we engage operate. These could
adversely affect our customers’ ability or willingness to purchase our offerings, delay prospective customers’ purchasing
decisions, increase pressure for pricing discounts, lengthen payment terms, reduce the value or duration of their subscription
contracts, increase customer attrition rates, or attend our events, all of which could adversely affect our future sales, operating
results and overall financial performance, and heighten the effects of other risk factors described herein.
Risks related to our operations
We depend on the experience and expertise of our executive officers, senior management team and key technical employees,
and the loss of any key employee could have an adverse effect on our business, financial condition and results of operations.
Our success depends upon the continued service of our executive officers, senior management team and key technical
employees, as well as our ability to continue to attract and retain additional highly qualified personnel. Each of our executive
officers, senior management team, key technical personnel and other employees could terminate his or her relationship with us at
any time. The loss of any member of our senior management team or key personnel might significantly delay or prevent the
achievement of our business objectives and could materially harm our business and our customer relationships. Robert Noreck
will step down from his position as our Chief Financial Officer (CFO) effective as of the earlier of May 31, 2024 and the
appointment of a successor CFO, and he will thereafter serve as a consultant, assisting with the transition of his responsibilities
until September 30, 2024, at which time Mr. Noreck’s services to us will terminate. The Board has an active search process
underway to select our next CFO, however, leadership transitions can be inherently difficult to manage, and if we are unable to
attract and retain a qualified candidate for the CFO position in a timely manner or we have an inadequate transition of our CFO, it
may cause disruption to our business, including to our relationships with customers, vendors and employees. In addition, because
of the nature of our business, the loss of any significant number of our existing engineering, project management and sales
personnel could have an adverse effect on our business, financial condition and results of operations.
Changes in our business and operations, as well as organizational changes, have placed, and may continue to place,
significant demands on our management and infrastructure. If we fail to manage these changes effectively and successfully
recruit additional highly-qualified employees, we may be unable to execute our business plan, maintain high levels of service
or address competitive challenges adequately.
Our business, headcount and operations have grown, both domestically and internationally, since our inception. In addition,
we have seen organizational changes during that time, including the addition of several new members to our senior leadership
team in the past several years, including our CEO. These organizational changes have placed, and will continue to place, a
significant strain on our management, administrative, operational and financial infrastructure. While we expect to continue to
grow headcount and operations over the long-term, we took an action in March 2023 to restructure certain parts of the Company
with the intent of aligning skills with the Company’s strategy and facilitating cost efficiencies and savings, which included certain
headcount reductions. Then, on April 28, 2023, we authorized a restructuring that was designed to reduce operating costs,
improve operating margins and focus on key growth and strategic priorities (the "Plan") including a reduction of the Company's
workforce by approximately 10%. In January 2024, we continued to restructure certain parts of our operations with the intent of
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aligning skills with the Company’s strategy and facilitating cost efficiencies and savings, which also resulted in more limited
headcount reductions. We may be unable to effectively manage these organizational changes, or other changes we may make in
the future, which could result in difficulty or delays in delivering our products and services to customers, declines in quality or
customer satisfaction, increases in costs, difficulties in introducing new products and services or enhancing existing products and
services, reputational harm, difficulty in attracting new talent and retaining existing employees, loss of customers, or operational
difficulties in executing sales strategies, any of which could adversely affect our business performance and operating results. Our
success will depend in part upon the ability of our senior leadership team to manage the Company effectively. To do so, we must
continue to recruit, hire, train, manage and integrate a significant number of qualified managers, technical personnel and
employees in specialized roles within our company, including in technology, sales and marketing. If our new employees perform
poorly, or if we are unsuccessful in recruiting, hiring, training, managing and integrating these new employees, or retaining these
or our existing employees, our business may suffer.
In addition, to manage the future growth of our business, headcount, operations and geographic expansion, we will need to
continue to improve our information technology infrastructure, operational, financial and management systems and procedures.
Our expected capital investments and future headcount increases will increase our costs, which will make it more difficult for us
to address any future revenue shortfalls by reducing expenses in the short term. If we fail to successfully manage organizational
changes or future growth we will be unable to successfully execute our business plan, which could have a negative impact on our
business, financial condition or results of operations.
Our restructuring efforts and associated organizational changes may not adequately reduce our operating costs or improve
operating margins, may lead to additional workforce attrition, and may cause operational disruptions.
We have incurred charges in connection with our restructuring efforts, including $2.4 million in connection with the Plan,
and our restructuring efforts may yield unintended consequences and costs, such as the loss of institutional knowledge and
expertise, employee attrition beyond our intended reduction in force, a reduction in morale among our remaining employees,
greater-than-anticipated costs incurred in connection with implementing the restructuring efforts, and the risk that we may not
achieve the benefits from the restructuring efforts to the extent or as quickly as we anticipate, all of which may have a material
adverse effect on our results of operations or financial condition. These restructuring initiatives could place substantial demands
on our management and employees, which could lead to the diversion of our management’s and employees’ attention from other
business priorities. In addition, while certain positions have been eliminated in connection with the restructuring efforts, certain
functions necessary to our reduced operations remain, and we may be unsuccessful in distributing the duties and obligations of
departed employees among our remaining employees or to external service providers, which could result in disruptions to our
operations. We may also discover that the workforce reduction and other restructuring efforts will make it difficult for us to
pursue new opportunities and initiatives and require us to hire qualified replacement personnel, which may require us to incur
additional and unanticipated costs and expenses. We may further discover that, despite the implementation of our restructuring
efforts, we may require additional capital to continue expanding our business, and we may be unable to obtain such capital on
acceptable terms, if at all. Our failure to successfully accomplish any of the above activities and goals may have a material
adverse impact on our business, financial condition, and results of operations.
Potential future acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute
stockholder value and impair our financial results.
As part of our business strategy, we may continue to consider acquisitions of companies, technologies and products that we
believe could accelerate our ability to compete in our core markets or allow us to enter new markets. Acquisitions involve
numerous risks, any of which could harm our business, including:
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difficulties in integrating the technologies, products, operations and existing contracts of a target company and
realizing the anticipated benefits of the combined businesses;
difficulties in integrating the personnel of a target company;
difficulties in supporting and transitioning customers, if any, of a target company;
diversion of financial and management resources from existing operations;
the price we pay or other resources that we devote may exceed the value we realize, or the value we could have
realized if we had allocated the purchase price or other resources to another opportunity;
risks of entering new markets in which we have limited or no experience;
potential loss of key employees, customers and strategic alliances from either our current business or a target
company’s business; and
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inability to generate sufficient revenue to offset acquisition costs.
Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential
impairments in the future that could harm our financial results. In addition, if we finance acquisitions by issuing equity securities,
our existing stockholders may be diluted. As a result, if we fail to properly evaluate acquisitions or investments, we may not
achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate. The failure to
successfully evaluate and execute acquisitions or investments or otherwise adequately address these risks could materially harm
our business and financial results.
We may experience delays in product and service development, including delays beyond our control, which could prevent us
from achieving our growth objectives and hurt our business.
Many of the problems, delays and expenses we may encounter may be beyond our control. Such problems may include, but
are not limited to, problems related to the technical development of our products and services, problems with the infrastructure for
the distribution and delivery of online media, including those from third party providers on which we rely, the competitive
environment in which we operate, marketing problems, consumer acceptance and costs and expenses that may exceed current
estimates. Problems, delays or expenses in any of these areas could have a negative impact on our business, financial conditions
or results of operations.
Delays in the timely design, development, deployment and commercial operation of our product and service offerings, and
consequently the achievement of our revenue targets and positive cash flow, could result from a variety of causes, including many
causes that are beyond our control. Such delays include, but are not limited to, delays in the integration of new offers into our
existing offering, changes to our products and services made to correct or enhance their features, performance or marketability or
in response to regulatory developments or otherwise, delays encountered in the development, integration or testing of our
products and services and the infrastructure for the distribution and delivery of online media and other systems, unsuccessful
commercial launches of new products and services, delays in our ability to obtain financing, insufficient or ineffective marketing
efforts and slower-than-anticipated consumer acceptance of our products. Delays in any of these matters could hinder or prevent
our achievement of our growth objectives and hurt our business.
Risks related to our intellectual property and third-parties
Our business may be adversely affected by third-party claims, including by governmental bodies, regarding the content and
advertising distributed through our service.
We rely on our customers to secure the rights to redistribute content over the Internet, and we do not screen the content that
is distributed through our service. There is no assurance that our customers have licensed all rights necessary for distribution,
including Internet distribution. Other parties may claim certain rights in the content of our customers.
In the event that our customers do not have the necessary distribution or publicity rights related to content, we may be
required to cease distributing such content, or we may be subject to lawsuits and claims of damages for infringement of such
rights. If these claims arise with frequency, the likelihood of our business being adversely affected would rise significantly. In
some cases, we may have rights to indemnification or claims against our customers if they do not have appropriate distribution
rights related to specific content items, however there is no assurance that we would be successful in any such claim.
We operate an “open” publishing platform and do not screen the content that is distributed through our service. Content may
be distributed through our platform that is illegal or unlawful under international, federal, state or local laws or the laws of other
countries. In the event that our customers distribute content that is deemed illegal, we would be required to cease distributing such
content. We may face lawsuits, claims or even criminal charges for such distribution, and we may be subject to civil, regulatory or
criminal sanctions and damages for such distribution. Any such claims or investigations could adversely affect our business,
financial condition and results of operations.
We could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.
In recent years, there has been significant litigation in the United States involving patents and other intellectual property
rights. Companies providing Internet-related products and services are increasingly bringing and becoming subject to suits
alleging infringement of proprietary rights, particularly patent rights. These risks have been amplified by the increase in third
parties whose sole or primary business is to assert such claims, some of whom have sent letters to and/or filed suit alleging
infringement against us and some of our customers. From time to time, third parties claim that we are infringing upon their
intellectual property rights. We could incur substantial costs in prosecuting or defending any intellectual property litigation.
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Additionally, the defense or prosecution of claims could be time-consuming, and could divert our management’s attention away
from the execution of our business plan.
Moreover, any settlement or adverse judgment resulting from a claim could require us to pay substantial amounts or obtain a
license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit our use of the technology.
There can be no assurance that we would be able to obtain a license from the third party asserting the claim on commercially
reasonable terms, if at all, that we would be able to develop alternative technology on a timely basis, if at all, or that we would be
able to obtain a license to use a suitable alternative technology to permit us to continue offering, and our customers to continue
using, our affected product or service. In addition, we may be required to indemnify our customers for third-party intellectual
property infringement claims, which would increase the cost to us. An adverse determination could also prevent us from offering
our products or services to others. Infringement claims asserted against us may have an adverse effect on our business, financial
condition and results of operations.
Our agreements with customers often include contractual obligations to indemnify them against claims that our products
infringe the intellectual property rights of third parties. The results of any intellectual property litigation to which we might
become a party, or for which we are required to provide indemnification, may force us to do one or more of the following:
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cease selling or using products or services that incorporate the challenged intellectual property;
make substantial payments for costs or damages;
obtain a license, which may not be available on reasonable terms, to sell or use the relevant technology; or
redesign those products or services to avoid infringement.
If we are required to make substantial payments or undertake any of the other actions noted above as a result of any
intellectual property infringement claims against us or any obligation to indemnify our customers for such claims, such payments
or costs could have a material adverse effect upon our business and financial results.
Failure to adequately protect our intellectual property could substantially harm our business and operating results.
Because our business depends substantially on our intellectual property, the protection of our intellectual property rights is
important to the success of our business. We rely upon a combination of trademark, patent, trade secret and copyright law and
contractual restrictions to protect our intellectual property. These afford only limited protection. Despite our efforts to protect our
property rights, unauthorized parties may attempt to copy aspects of our products, service, software and functionality or obtain
and use information that we consider proprietary. Moreover, policing our proprietary rights is difficult and may not always be
effective. In addition, we may need to enforce our rights under the laws of countries that do not protect proprietary rights to as
great an extent as do the laws of the United States.
Litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative
bodies in the United States and abroad may be necessary in the future to enforce our intellectual property rights, to protect our
patent rights, trade secrets, trademarks and domain names, and to determine the validity and scope of the proprietary rights of
others. Such litigation or proceedings may be very costly and impact our financial performance. We may also incur substantial
costs defending against frivolous litigation or be asked to indemnify our customers against the same. Our efforts to enforce or
protect our proprietary rights may prove to be ineffective and could result in substantial costs and diversion of resources and
could substantially harm our operating results.
Our exposure to risks associated with the use of intellectual property may increase as a result of acquisitions, as we have
less opportunity to have visibility into the development process with respect to acquired technology or the care taken to safeguard
against infringement risks. Third parties may make infringement and similar or related claims after we have acquired technology
that had not been asserted prior to our acquisition.
Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other
proprietary information.
We have devoted substantial resources to the development of our technology, business operations and business plans. In
order to protect our trade secrets and proprietary information, we rely in significant part on confidentiality agreements with our
employees, licensees, independent contractors, advisers and customers. These agreements may not be effective to prevent
disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of
unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary
information, and in such cases we would not be able to assert trade secret rights against such parties. To the extent that our
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employees and others with whom we do business use intellectual property owned by others in their work for us, disputes may
arise as to the rights in related or resulting know-how and inventions. Laws regarding trade secret rights in certain markets in
which we operate may afford little or no protection to our trade secrets. The loss of trade secret protection could make it easier for
third parties to compete with our products by copying functionality. In addition, any changes in, or unexpected interpretations of,
the trade secret and other intellectual property laws in any country in which we operate may compromise our ability to enforce
our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine
the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive
business position.
Our use of “open source” software could negatively affect our ability to sell our services and subject us to possible litigation.
A portion of the technology licensed by us incorporates “open source” software, and we may incorporate or use open source
software in the future. Such open source software is generally licensed by its authors or other third parties under open source
licenses. If we fail to comply with these licenses, we may be subject to certain conditions, including requirements that we offer
our services that incorporate the open source software for no cost, that we make available source code for modifications or
derivative works we create based upon, incorporating or using the open source software and that we license such modifications or
alterations under the terms of the particular open source license. If an author or other third party that distributes such open source
software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to
incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the
sale of our services that contained the open source software and required to comply with the foregoing conditions, which could
disrupt the distribution and sale of some of our services.
There is no assurance that the current cost of Internet connectivity and network access will not rise with the increasing
popularity of online media services.
We rely on third-party service providers for our principal connections to the Internet and network access, and to deliver
media to consumers. As demand for online media increases, there can be no assurance that Internet and network service providers
will continue to price their network access services on reasonable terms. The distribution of online media requires delivery of
digital content files and providers of network access and distribution may change their business models and increase their prices
significantly, which could slow the widespread adoption of such services. In order for our services to be successful, there must be
a reasonable price model in place to allow for the continuous distribution of digital media files. We have limited or no control
over the extent to which any of these circumstances may occur, and if network access or distribution prices rise, our business,
financial condition and results of operations would likely be adversely affected.
Failure of our infrastructure for the distribution and delivery of online media could adversely affect our business.
Our success as a business depends, in large part, on our ability to provide a consistently high-quality digital experience to
consumers via our relationships and infrastructure for the distribution and delivery of online media generally. There is no
guarantee that our relationships and infrastructure will not experience problems or other performance issues, which could
seriously impair the quality and reliability of our delivery of digital media to end users. For example, we primarily use three
content delivery networks, or CDNs, to deliver content to end users. If one or more of these CDNs were to experience sustained
technical failures or other significant disruptions, it could cause delays in our service and we could lose customers. If we do not
accurately predict our infrastructure capacity requirements, our customers could experience service outages or service degradation
that may subject us to financial penalties and liabilities and result in customer losses. In the past we have, on limited occasions,
suffered temporary interruptions of certain aspects of our service, including our customers’ ability to upload new content into our
system, our customers’ ability to access administrative control of their accounts, and our ability to deliver content to end users in
certain geographic locations. These service interruptions were the results of human error, hardware and software failures or
failures of third-party networks. On a limited number of occasions, these service interruptions have required us to provide service
credits to customers. We cannot guarantee that service interruptions will not occur again or predict the duration of interruptions of
our service or the impact of such interruptions on our customers. Failures and interruptions of our service may impact our
reputation, result in our payment of compensation or service credits to our customers, result in loss of customers and adversely
affect our financial results and ability to grow our business. In addition, if AWS or our hosting infrastructure capacity fails to keep
pace with increased sales or if our delivery capabilities fail, customers may experience delays as we seek to obtain additional
capacity or enable alternative delivery capability, which could harm our reputation and adversely affect our revenue growth.
We may have difficulty scaling and adapting our existing infrastructure to accommodate increased traffic and storage,
technology advances or customer requirements.
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In the future, advances in technology, increases in traffic and storage, and new customer requirements may require us to
change our infrastructure, expand our infrastructure or replace our infrastructure entirely. Scaling and adapting our infrastructure
is likely to be complex and require additional technical expertise. If we are required to make any changes to our infrastructure, we
may incur substantial costs and experience delays or interruptions in our service. These delays or interruptions may cause
customers and partners to become dissatisfied with our service and move to competing service providers. Our failure to
accommodate increased traffic and storage, increased costs, inefficiencies or failures to adapt to new technologies or customer
requirements and the associated adjustments to our infrastructure could harm our business, financial condition and results of
operations.
We rely on software and services licensed from other parties. The loss of software or services from third parties could increase
our costs and limit the features available in our products and services.
Components of our service and product offerings include various types of software and services licensed from unaffiliated
parties. If any of the software or services we license from others or functional equivalents thereof were either no longer available
to us or no longer offered on commercially reasonable terms, we would be required to either redesign our services and products to
function with software or services available from other parties or develop these components ourselves. In either case, the
transition to a new service provider or an internally-developed solution could result in increased costs and could result in delays
in our product launches and the release of new service and product offerings. Furthermore, we might be forced to temporarily
limit the features available in our current or future products and services. If we fail to maintain or renegotiate any of these
software or service licenses, we could face significant delays and diversion of resources in attempting to license and integrate
functional equivalents.
If our software products contain serious errors or defects, then we may lose revenue and market acceptance and may incur
costs to defend or settle claims.
Complex software applications such as ours often contain errors or defects, particularly when first introduced or when new
versions or enhancements are released. Despite internal testing and testing by our customers, our current and future products may
contain serious defects, which could result in lost revenue, lost customers, slower growth or a delay in market acceptance.
Since our customers use our products for critical business applications, errors, defects or other performance problems could
result in damage to our customers. They could seek significant compensation from us for the losses they suffer. Although our
customer agreements typically contain provisions designed to limit our exposure to claims, existing or future laws or unfavorable
judicial decisions could negate these limitations. Even if not successful, a claim brought against us would likely be time-
consuming and costly and could seriously damage our reputation in the marketplace, making it harder for us to sell our products.
Our internal computer systems, or those of our strategic partners, vendors or other contractors or consultants, may fail or
suffer from the unauthorized disclosure of data, unauthorized access to the service and misuse of the service, which could
result in a material disruption of our product development programs and our business.
Our internal computer systems and those of our current and any future strategic collaborators, vendors, and other contractors
or consultants are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters,
cybersecurity threats, terrorism, war and telecommunication and electrical failures, and have experienced cyber-attacks in the
past. Cyber incidents have been increasing in sophistication and frequency and can include third parties gaining access to
employee or customer data using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks,
ransomware, business email compromise, card skimming code, and other deliberate attacks and attempts to gain unauthorized
access or cause disruption. Because the techniques used by attackers who may attempt to penetrate and sabotage our network
security, infrastructure, or our website change frequently and may not be recognized until launched against a target, we may be
unable to anticipate these techniques or implement adequate preventative or mitigating measures. If an actual or perceived
security incident or breach occurs, the market perception of our security measures could be harmed and we could lose sales and
customers. Any significant violations of data privacy or security obligations or unauthorized disclosure of or access to
information could result in the loss of business, litigation and regulatory investigations and penalties that could damage our
reputation and adversely impact our results of operations and financial condition. Moreover, if a security breach or compromise
occurs with respect to another software as a service, or SaaS, provider, our customers and potential customers may lose trust in
the security of the SaaS business model generally, which could adversely impact our ability to retain existing customers or attract
new ones.
It is also possible that unauthorized access to customer or employee data or our systems or infrastructure may be obtained
through inadequate use of security controls by customers, suppliers or other vendors.
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If any such computer system failure, accident or security incident or breach were to occur and cause interruptions in our
operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss
of our trade secrets or other proprietary or protected information or other disruptions. These cyber-attacks could be carried out by
threat actors of all types (including but not limited to nation states, organized crime, other criminal enterprises, individual actors
and/or advanced persistent threat groups). In addition, we may experience intrusions on our physical premises by any of these
threat actors.
Any security breaches, unauthorized access, unauthorized usage, virus or similar security incident or disruption, or any
perceived security breach or other incident could result in loss of confidential information, personal data and customer content,
damage to our reputation, early termination of our contracts, litigation, regulatory investigations, increased costs or other
liabilities. If our security measures, or those of our partners or service providers, are breached as a result of third-party action,
employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to confidential information,
personal data or customer content, our reputation will be damaged, our business may suffer or we could incur significant liability.
If the measures we have put in place to limit or restrict access to and use of functionality, usage entitlements and support for
customers or prospective customers are breached, circumvented or ineffective as a result of third-party action, employee error,
malfeasance or otherwise and, as a result, someone obtains unauthorized access to and use of functionality, usage entitlements and
support, our business may suffer or we could incur significant liability and/or costs.
There can be no assurance that any limitations of liability provisions in our contracts for a security breach or incident would
be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular
claim. We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will
continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that
the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that
exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the
imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, financial
condition and operating results.
We use cloud computing service facilities to deliver our services. Any disruption of service at these facilities could harm our
business.
We manage our services and serve all of our customers from cloud computing services facilities, primarily Amazon Web
Services. While we control the actual computer and storage systems upon which our software runs, and deploy them to these
facilities, we do not control the operation or availability of these facilities.
The contracts with our cloud computing service providers and CDNs are for fixed terms expiring between May 2024 and
June 2025. The owners of these facilities have no obligation to renew their agreements with us on commercially reasonable terms,
or at all, and although the contracts provide for a period of service continuation after termination, transition to new providers, if
we could find suitable replacements, would require significant time and expense and could disrupt or degrade delivery of our
offerings. Further, if we are unable to renew these agreements on commercially reasonable terms, or if a provider increases
pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our
competitors, or changes or interprets its terms of service in a manner that is unfavorable with respect to us, we may be required to
transfer to new facilities, if we are able to find suitable replacements, and we may incur significant costs and possible service
interruption in connection with doing so.
Any changes in third-party service levels at these facilities or any errors, defects, disruptions or other performance
problems at or related to these facilities that affect our services could harm our reputation and may damage our customers’
businesses. Interruptions in our services might reduce our revenue, cause us to issue credits to customers, subject us to potential
liability, and cause customers to terminate their subscriptions or harm our renewal rates.
These facilities are vulnerable to damage or service interruption resulting from human error, intentional bad acts,
security breaches, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures,
telecommunications failures, global health emergencies such as the COVID-19 pandemic, and similar events. For example, on
September 18, 2014, we suffered a service disruption resulting from a distributed denial-of-service attack at third-party data
center facilities used by us. By September 20, 2014, we had restored the services impacted by the attack. We contacted federal
law enforcement authorities regarding the denial-of-service attack and cooperated with them. We also conducted an assessment of
our internet service providers and data center providers, potential future vulnerability to malicious activity, and the sufficiency of
our infrastructure to withstand and recover rapidly from such attacks. While this matter did not have a material adverse effect on
our operating results, there can be no assurance that such incidents will not occur again, and they could occur more frequently and
on a more significant scale. The occurrence of a natural disaster or an act of terrorism, or vandalism or other misconduct, or a
decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in our
services.
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Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our
confidential information, proprietary information, and personal data.
Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result
in reputational harm, liability, or other adverse consequences to our business operations. As with many technological innovations,
artificial intelligence presents risks and challenges that could impact our business. We have incorporated artificial intelligence
into our products, and we may in the future adopt and integrate generative artificial intelligence tools into our systems for specific
use cases reviewed formally on a per use case basis by legal and information security. Despite contractually requiring them to do
so, our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and
the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry
standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of
service and experience. If we, our vendors, or our third-party partners experience an actual or perceived breach or privacy or
security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and
confidential information and our reputation and the public perception of the effectiveness of our security measures could be
harmed. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to
engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual
property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and
adversely impact our business. In addition, as the regulatory framework for machine learning technology and artificial
intelligence evolves, it is possible that new laws and regulations will be adopted, or that existing laws and regulations may be
interpreted in ways that would affect our business and the ways in which we use artificial intelligence and machine learning
technology, our financial condition and our results of operations, including as a result of the cost to comply with such laws or
regulations.
Risks related to our finances
Fluctuations in the exchange rate of foreign currencies could result in currency translation losses.
We currently have foreign sales denominated in Australian dollars, British pounds sterling, Euros, Japanese yen and New
Zealand dollars and may, in the future, have sales denominated in the currencies of additional countries in which we establish or
have established sales offices. In addition, we incur a portion of our operating expenses in British pounds sterling, Mexican Pesos,
Euros, Japanese yen and, to a lesser extent, other foreign currencies. Any fluctuation in the exchange rate of these foreign
currencies may negatively impact our business, financial condition and operating results. Global economic events have and may
continue to significantly impact local economies and the foreign exchange markets, which may increase the risks associated with
sales denominated in foreign currencies. We have not previously engaged in foreign currency hedging. If we decide to hedge our
foreign currency exposure, we may not be able to hedge effectively due to lack of experience, unreasonable costs or illiquid
markets.
Failure of our customers to pay the amounts owed to us, or to pay such amounts in a timely manner, may adversely affect our
financial condition and operating results.
If any of our significant customers have insufficient liquidity, we could encounter significant delays or defaults in payments
owed to us by such customers, and we may need to extend our payment terms or restructure the receivables owed to us, which
could have a significant adverse effect on our financial condition, including impacting the timing of revenue recognition. Any
deterioration in the financial condition of our customers will increase the risk of uncollectible receivables. Global economic
uncertainty could also affect our customers’ ability to pay our receivables in a timely manner or at all or result in customers going
into bankruptcy or reorganization proceedings, which could also affect our ability to collect our receivables.
We may be required to collect sales and use taxes on the services we sell in additional jurisdictions in the future, which may
decrease sales, and we may be subject to liability for sales and use taxes and related interest and penalties on prior sales.
State and local taxing jurisdictions have differing rules and regulations governing sales and use taxes and these rules and
regulations are subject to varying interpretations that may change over time. On June 21, 2018, the United States Supreme Court
ruled in South Dakota v. Wayfair that states can impose sales and use taxes on transactions made with out-of-state sellers.
Following this ruling, certain states have enforced tax laws requiring taxation of out-of-state purchases. We have performed an
assessment of sales taxes owed under the new court ruling, determined that we need to remit sales taxes to certain states, and we
have remitted such taxes. There is a risk that states which do not currently impose taxes on out-of-state purchases will do so in
the future. We cannot assure you that we will not be subject to sales and use taxes or related penalties for past sales in states
where we presently believe sales and use taxes are not due. We reserve estimated sales and use taxes in our financial statements
but we cannot be certain that we have made sufficient reserves to cover all taxes that might be assessed.
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If one or more taxing authorities determine that taxes should have, but have not, been paid with respect to our services, we
may be liable for past taxes in addition to being required to collect sales or similar taxes in respect of our services going forward.
Liability for past taxes may also include substantial interest and penalty charges. Our client contracts typically provide that our
clients must pay all applicable sales and similar taxes. Nevertheless, clients may be reluctant to pay back taxes and may refuse
responsibility for interest or penalties associated with those taxes or we may determine that it would not be feasible to seek
reimbursement. If we are required to collect and pay back taxes and the associated interest and penalties and if our clients do not
reimburse us for all or a portion of these amounts, we will incur unplanned expenses that may be substantial. Moreover,
imposition of such taxes on our services going forward will effectively increase the cost of such services to our clients and may
adversely affect our ability to retain existing clients or to gain new clients in the areas in which such taxes are imposed.
If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
We review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may
not be recoverable. Goodwill is required to be tested for impairment at least annually. As of December 31, 2023, we carried a net
$81.2 million of goodwill and intangible assets. An adverse change in market conditions or significant changes in accounting
conclusions, particularly if such changes have the effect of changing one of our critical assumptions or estimates, could result in a
change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets. Any such
charges may adversely affect our results of operations.
Risks related to governmental regulation
Government and industry regulation of the Internet is evolving and could directly restrict our business or indirectly affect our
business by limiting the growth of our markets. Unfavorable changes in government regulation or our failure to comply with
regulations could harm our business and operating results.
Federal, state and foreign governments and agencies have adopted and could in the future adopt regulations covering issues
such as user privacy, content, and taxation of products and services. Government regulations could limit the market for our
products and services or impose burdensome requirements that render our business unprofitable. Our products enable our
customers to collect, manage and store a wide range of data. The United States and various state governments have adopted or
proposed limitations on the collection, distribution and use of personal information. Several foreign jurisdictions, including the
European Union and the United Kingdom, have adopted legislation (including directives or regulations) that increase or change
the requirements governing data collection and storage in these jurisdictions. If our privacy or data security measures fail to
comply with current or future laws and regulations, we may be subject to litigation, regulatory investigations or other liabilities,
or our customers may terminate their relationships with us.
In addition, although many regulations might not apply to our business directly, we expect that laws regulating the
solicitation, collection or processing of personal and consumer information could affect our customers’ ability to use and share
data, potentially reducing demand for our services. The Telecommunications Act of 1996 and the EU General Data Protection
Regulation 2016/679, the California Consumer Privacy Act, along with other similar laws and regulations prohibit certain types
of information and content from being transmitted over the Internet. The scope of these types of prohibitions in jurisdictions
around the world and the liability associated with a violation are evolving. In addition, although substantial portions of the
Communications Decency Act were held to be unconstitutional, we cannot be certain that similar legislation will not be enacted
and upheld in the future. Legislation like the Telecommunications Act and the Communications Decency Act could dampen the
growth in web usage and decrease its acceptance as a medium of communications and commerce. Moreover, if future laws and
regulations limit our customers’ ability to use and share consumer data or our ability to store, process and share data with our
customers over the Internet, demand for our products could decrease, our costs could increase, and our results of operations and
financial condition could be harmed.
In addition, taxation of services provided over the Internet or other charges imposed by government agencies or by private
organizations for accessing the Internet may be imposed. Any regulation imposing greater fees for Internet use or restricting
information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based
services, which could harm our business and operating results.
Our business is subject to a variety of U.S. federal and state, as well as international laws and regulations, including those
regarding privacy, data protection and information security, and our customers may be subject to regulations related to the
handling and transfer of certain types of personal, sensitive, or confidential information. Any failure to comply with
applicable laws and regulations would harm our business, results of operations and financial condition.
We and our customers may be subject to privacy and data protection-related laws and regulations that impose obligations in
connection with the collection, use, storage, transfer, dissemination, security, and/or other processing (“Processing”) of
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personally identifiable information (such personally identifiable information collectively with all information defined or described
by applicable law as “personal data,” “personal information,” “PII” or any similar term, “Personally Identifiable Information”) or
other sensitive data. Existing U.S. federal and various state and foreign privacy and data protection-related laws and regulations
are evolving and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current
or enact new laws and regulations regarding privacy and data protection-related matters. International jurisdictions in which we
have customers or employees have established data security and privacy frameworks with which we or our customers must
comply. In addition, our business may be impacted by new regulations and guidance over machine learning and automated
processing. In the United States, certain state laws may be more stringent or broader in scope, or offer greater individual rights,
with respect to sensitive and personal information than federal or other state laws, and such laws may differ from each other,
which may complicate compliance efforts. New laws, amendments to or re-interpretations of existing laws and regulations, rules
of self-regulatory bodies, industry standards and contractual obligations may impact our business and practices, and we may be
required to expend significant resources to adapt to these changes, or stop offering our products in certain countries. These
developments could adversely affect our business, results of operations and financial condition.
We may be subject to additional, more stringent privacy laws in other jurisdiction, such as the European Union’s General
Data Protection Regulation (“EU GDPR”). The EU GDPR, effective since May 25, 2018, imposes strict regulations and
establishes a series of requirements regarding the collection, transfer, storage and processing of personal data. The EU GDPR has
extra-territorial application and applies where a company, based outside the European Union, processes personal data of
individuals based in the European Union as a result of offering goods or services to individuals based in the EU and/or monitoring
their behavior. The EU GDPR governs the collection, use, disclosure, transfer or other processing of personal data of individuals
in the EEA. Among other things, the EU GDPR imposes strict requirements regarding the security of personal data and
notification of data breaches to the competent national data protection authorities, imposes limitations on retention of personal
data, imposes stringent requirements relating to the consent of data subjects or ensuring another appropriate legal basis applies to
the processing of personal data, requires us to maintain records of our processing activities and to document data protection
impact assessments where there is high risk processing, ensuring certain measures are in place with third-party processors. The
EU GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with competent
national data protection authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the
EU GDPR. Non-compliance could also result in the imposition of orders to stop data processing activities.
The EU GDPR enhances data protection obligations for businesses and provides direct legal obligations for service
providers processing personal data on behalf of customers, including with respect to cooperation with European data protection
authorities, implementation of security measures and keeping records of personal data processing activities. Moreover, the EU
GDPR requirements apply not only to third-party transactions, but also to transfers of information between us and our
subsidiaries, including employee information. Noncompliance with the EU GDPR can trigger steep fines of up to €20 million or
4% of global annual revenues, whichever is higher. In addition, further to the UK’s exit from the EU on January 31, 2020, the
GDPR ceased to apply in the UK at the end of the transition period on December 31, 2020; however, the UK’s European Union
(Withdrawal) Act 2018 incorporated the EU GDPR (as it existed on December 31, 2020 but subject to certain UK specific
amendments) into UK law, referred to as the UK GDPR. The UK GDPR and the UK Data Protection Act 2018 set out the UK’s
data protection regime, which is independent from but aligned to the EU’s data protection regime. The UK has announced plans
to reform the country’s data protection legal framework in its Data Reform Bill, which will introduce significant changes from the
EU GDPR. This may lead to additional compliance costs and could increase our overall risk exposure as we may no longer be
able to take a unified approach across the EU and the UK. Non-compliance with the UK GDPR may result in monetary penalties
of up to £17.5 million or 4% of worldwide revenue, whichever is higher. Although the UK is regarded as a third country under the
EU’s GDPR, the European Commission (“EC”) has issued a decision recognizing the UK as providing adequate protection under
the EU GDPR and, therefore, transfers of personal data originating in the EU to the UK remain unrestricted. Like the EU GDPR,
the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate
protection. The UK government has confirmed that personal data transfers from the UK to the EEA remain free flowing.
In addition to the EU GDPR, the European Union is also in the process of replacing the e-Privacy Directive (2002/58/EC)
with a new set of rules taking the form of the ePrivacy Regulation, which will be directly implemented in the laws of each
European member state, without the need for further enactment. Certain jurisdictions are actively applying the ePrivacy Directive
to enforce cookie consent and consent requirements generally under the EU GDPR. Originally planned to be adopted and
implemented at the same time as the EU GDPR, the ePrivacy Regulation is still going through the European legislative process.
Any passed Regulation would go into effect two years from the twentieth day after its publication. In the meantime, the Directive
is still in effect, and will continue to be in effect for the UK even after the Regulation has passed. Preparing for and complying
with the EU GDPR, UK GDPR and the ePrivacy Regulation (if and when it becomes effective) has required and will continue to
require us to incur substantial operational costs and may require us to change our business practices. Despite our efforts to bring
practices into compliance with the EU GDPR and before the effective date of the ePrivacy Regulation, we may not be successful
either due to internal or external factors such as resource allocation limitations and in inconsistency in interpretation of the law
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across EU regulatory bodies. Non-compliance could result in proceedings against us by governmental entities, customers, data
subjects, consumer associations or others.
The European Union has also passed regulations, such as the Digital Services Act (DSA), specific to intermediaries, cloud
service providers and hosting services, including those that permit for user-generated content. These laws provide for specific
requirements for removal of content, disclosures about the means used to generate targeted advertising and decisions made via
automated decision making, and timelines for reporting compliance metrics. Given the scope of the responsibilities and
specificity of the steps that apply respectively in different ways to portions of our business, compliance will require development
and monitoring of processes, which increases costs beyond potential fines, such as human resources, investment in technology
and potential losses from lost revenue from advertising.
To enable the transfer of personal data outside of the EEA or the UK, adequate safeguards must be implemented in
compliance with European and UK data protection laws, such as the Standard Contractual Clauses (“SCCs”) published by the
European Commission, binding corporate rules or certification to the EU-U.S. Data Privacy Framework that the European
Commission adopted on July 10, 2023. The UK is not subject to the EC’s new standard contractual clauses. The UK Information
Commissioner's Office has published a version of a UK-specific transfer mechanism (the International Data Transfer Agreement),
which came into effect on March 21, 2022, that enables transfers from the UK. The ICO has also permitted exporters to rely on
the current version of the EU SCC's by implementing a UK Addendum stating as such. Moreover, on September 21, 2023, the
UK Government adopted the Data Protection (Adequacy) Regulations 2023, also referred to as the “UK-U.S. Data Bridge”,
which will allow companies to transfer personal data from the UK to the US on the basis of the EU-U.S. Data Privacy
Framework. We have implemented safeguards when conducting restricted data transfers under the EU and UK GDPR, and
establishing and maintaining compliance will require significant effort and cost.
While we have taken steps to mitigate the impact, such as implementing the new standard contractual clauses, certifying
under the EU-US Data Privacy Framework and UK Extension and creating a risk assessment for transfers of personal information
from our customers to the US, recent decisions indicate that the longevity of these mechanisms remains uncertain and may
continue to evolve. Further action in this area could increase the risk of continued transfers or create costs for engaging a EU-
based processor or cloud-service provider. Compliance obligations could cause us to incur costs or negatively affect the
operations of our products and services in ways that harm our business.
In the United States, many state legislatures have adopted or are considering legislation that regulates how businesses
operate online, including measures relating to privacy. California enacted the California Consumer Privacy Act, or “CCPA,”
which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and
security obligations on entities handling personal data of consumers or households. The CCPA, effective since January 1, 2020,
requires covered businesses, such as our company, to provide certain disclosures to consumers about its data collection, use and
sharing practices, and to provide affected California residents with ways to opt-out of certain sales or transfers of personal
information, in particular sharing for the purposes of targeted advertising. The California Privacy Rights Act (“CPRA”), an
amendment expanding the rights of the CCPA to other types of California residents went into effect on January 1, 2023, creating a
separate agency charged with enforcement and promulgating compliance guidelines and removing the 30-day cure period for
alleged violations available under the CCPA. The CCPA provides for civil penalties for violations, as well as a private right of
action for certain data breaches that result in the loss of personal information. This private right of action may increase the
likelihood of, and risks associated with, data breach litigation. There continues to be uncertainty surrounding the enforcement and
implementation of the CCPA exemplifying the vulnerability of our business to the evolving regulatory environment related to
personal data and protected information. These penalties have been unchanged by the CPRA, but businesses no longer have a
guaranteed 30-day cure period.
Similar laws have been passed in numerous other states and other states have proposed similar new privacy laws. Such
proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk,
require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data
and could result in increased compliance costs and/or changes in business practices and policies. The existence of comprehensive
privacy laws in different states in the country would make our compliance obligations more complex and costly and may increase
the likelihood that we may be subject to enforcement actions, rely on vendors for portions of our compliance obligations or
otherwise incur liability for noncompliance. In addition, other states have proposed and/or passed legislation that regulates the
privacy and/or security of certain specific types of information like controllers of health-related information. These various
privacy and security laws may impact our business activities, including our identification of research subjects, relationships with
business partners and ultimately the marketing and distribution of our products. State laws are changing rapidly and there is
discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if
enacted.
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With respect to all of the foregoing, any failure or perceived failure by us to comply with U.S. federal or state, EU or other
foreign privacy or data security laws, policies, industry standards or legal obligations, or any security incident that results in the
unauthorized Processing of Personally Identifiable Information or other customer data may result in governmental investigations,
inquiries, enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity. Efforts to ensure that
our business arrangements will comply with applicable information privacy laws may involve substantial costs. Various
jurisdictions around the world continue to propose new laws that regulate the privacy and/or security of certain types of personal
data. Complying with these laws, if enacted, would require significant resources and leave us vulnerable to possible fines and
penalties if we are unable to comply. It is possible that governmental and enforcement authorities will conclude that our business
practices may not comply with current or future statutes, regulations or case law. If we are unable to comply, or have not fully
complied, with such laws, we could face penalties, including, without limitation, civil, criminal, and administrative penalties,
damages, fines, individual imprisonment, or restructuring of our operations.
Our business and operations may be adversely affected by variety of U.S. federal and state, as well as international laws and
regulations regarding climate change.
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital
expenditures to improve the energy efficiency of our existing office leases in order to comply with such regulations. Numerous
treaties, laws and regulations have been enacted or proposed in an effort to regulate climate change, including regulations aimed
at limiting greenhouse gas emissions and the implementation of “green” building codes. These laws and regulations may require
us or our landlords to make improvements to our existing office spaces that result in increased operating costs that we may not be
able to effectively pass on to our landlords under the terms of our leases. We may also incur costs associated with increased
regulations or investor requirements for increased environmental and social disclosures and reporting. The cost of compliance
with, or failure to comply with, such laws and regulations could impact our financial condition, and our ability to meet our lease
obligations.
Risk related to owning our common stock
Our stock price has been volatile and is likely to be volatile in the future.
The market price of our common stock has been and is likely to be highly volatile and could be subject to significant
fluctuations in response to, among other things, the risk factors described in this report and other factors beyond our control.
Market prices for securities of early stage companies have historically been particularly volatile. Some, but not all, of the factors
that may cause the market price of our common stock to fluctuate include:
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fluctuations in our quarterly or annual financial results or the quarterly or annual financial results of companies
perceived to be similar to us or relevant for our business;
changes in estimates of our financial results or recommendations by securities analysts;
failure of our products to achieve or maintain market acceptance;
changes in market valuations of similar or relevant companies;
success of competitive service offerings or technologies;
changes in our capital structure, such as the issuance of securities or the incurrence of debt;
announcements by us or by our competitors of significant services, contracts, acquisitions or strategic alliances;
regulatory developments in the United States, foreign countries, or both;
market volatility resulting from a public health emergency, such as the COVID-19 pandemic;
litigation;
additions or departures of key personnel;
investors’ general perceptions; and
changes in general economic, industry or market conditions.
In addition, if the market for technology stocks, or the stock market in general, experiences a loss of investor confidence,
the trading price of our common stock could decline for reasons unrelated to our business, financial condition, or results of
operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if
unsuccessful, could be costly to defend and a distraction to management.
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Our business and operations could be adversely affected if we are subject to stockholder activism, which could cause us to
incur significant expense and impact the market price of our common stock.
In recent years, proxy contests and other forms of stockholder activism have been directed against numerous public
companies. Stockholder activism, including potential proxy contests, could result in substantial costs and divert the attention of
our management and our board of directors and resources from our business. Activist campaigns can create perceived
uncertainties as to our future direction, strategy or leadership and may result in the loss of potential business opportunities and
harm our ability to attract new customers, employees and investors. In addition, we may be required to incur significant legal fees
and other expenses related to any activist stockholder matters. Further, the market price of our common stock could be subject to
significant fluctuation or otherwise be adversely affected by the events, risks, and uncertainties of any stockholder activism.
If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market,
or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.
The trading market for our common stock could be influenced by research and reports that industry or security analysts may
publish about us, our business, our market or our competitors. If any of the analysts who may cover us adversely change their
recommendations regarding our stock, or provide more favorable relative recommendations about our competitors, our stock
price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish
reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to
decline.
We do not expect to declare any dividends in the foreseeable future.
We do not anticipate declaring any dividends to holders of our common stock in the foreseeable future. Consequently,
investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to
realize any future gains on their investment. Investors seeking dividends should not purchase our common stock.
We may be unable to meet our future capital requirements, which could limit our ability to grow.
We believe our existing cash and cash equivalents will be sufficient to meet our anticipated working capital and capital
expenditure needs over at least the next 12 months. We may, however, need, or could elect to seek, additional funding at any time.
To the extent that existing resources are insufficient to fund our business operations, our future activities for the expansion of our
service and our product offerings, developing and sustaining our relationships and infrastructure for the distribution and delivery
of digital media online, marketing, and supporting our office facilities, we may need to raise additional funds through equity or
debt financing. Additional funds may not be available on terms favorable to us or our stockholders. Furthermore, if we issue
equity securities, our stockholders may experience additional dilution or the new equity securities may have rights, preferences
and privileges senior to those of our existing classes of stock. If we cannot raise funds on acceptable terms, we may not be able to
develop or enhance our products, take advantage of future opportunities or respond to competitive pressures or unanticipated
requirements.
Failure to maintain effective internal control over financial reporting could result in our failure to accurately report our
financial results. Any inability to report and file our financial results accurately and timely could harm our business and
adversely impact investor confidence in our company and, as a result, the value of our common stock.
We are required to evaluate our internal control over financial reporting in connection with Section 404 of the Sarbanes-
Oxley Act, and our independent registered public accounting firm is required to attest to the effectiveness of our internal control
over financial reporting. This assessment includes the disclosure of any material weaknesses in our internal control over financial
reporting identified by our management, as well as our independent registered public accounting firm’s attestation report on our
internal control over financial reporting. During the evaluation and testing process, if we identify one or more material
weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial
reporting is effective. If we are unable to assert that our internal control over financial reporting is effective, or if our independent
registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial
reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have a
material adverse effect on the price of our common stock.
Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws,
as well as provisions of Delaware law, could impair a takeover attempt.
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Our amended and restated certificate of incorporation and bylaws, and Delaware law, contain provisions that could have the
effect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors. Our corporate
governance documents include provisions:
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authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend, and other rights
superior to our common stock;
limiting the liability of, and providing indemnification to, our directors and officers;
limiting the ability of our stockholders to call and bring business before special meetings and to take action by written
consent in lieu of a meeting;
requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for
nominations of candidates for election to our board of directors;
controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;
providing our board of directors with the express power to postpone previously scheduled annual meetings and to
cancel previously scheduled special meetings;
establishing a classified board of directors so that not all members of our board are selected at one time;
limiting the determination of the number of directors on our board of directors and the filling of vacancies or newly
created seats on the board to our board of directors then in office; and
providing that directors may be removed by stockholders only for cause.
These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our
management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware
General Corporation Law, which prevents some stockholders holding more than 15% of our outstanding common stock from
engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying
or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our
common stock, and could also affect the price that some investors are willing to pay for our common stock.
We record substantial expenses related to our issuance of equity awards that may have a material adverse impact on our
operating results for the foreseeable future.
We expect our stock-based compensation expenses will continue to be significant in future periods, which will have an
adverse impact on our operating results. The model used by us to value stock options requires the input of subjective assumptions,
including the price volatility of the option’s underlying stock, the expected life of the options and the risk-free interest rate. This
model does not include RSUs. If facts and circumstances change and we employ different assumptions for estimating stock-based
compensation expense in future periods, or if we decide to use a different valuation model, the future period expenses may differ
significantly from what we have recorded in the current period and could materially affect the fair value estimate of stock-based
payments, our operating income, net income and net income per share.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Processes for Assessing, Identifying, and Managing Material Risks from Cybersecurity Threats; Board of Directors Oversight
of Risks from Cybersecurity Threats and Management’s Role and Expertise in Assessing and Managing Material Risks from
Cybersecurity Threats.
Cyber Risk Management and Strategy
Our Board and management team recognize the importance of assessing, identifying, and managing risks from
cybersecurity threats. Our process for assessing, identifying and managing risks from cybersecurity threats is informed by
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industry standards and includes internal cybersecurity risk assessments across our environment, and is supported by cybersecurity
technologies, including automated tools, designed to monitor, identify, and address cybersecurity risks. We also have a process to
assess and review the cybersecurity practices of new third-party vendors and service providers, including through established
vendor requirements and risk assessments. This process also includes an annual re-assessment of critical third-party vendors and
service providers.
This risk management program addresses, for example, risks identified by internal audits and assessments, external testing,
threat intelligence providers, internal stakeholders, vulnerability management programs, and security tools and alerting. An
internal business security team manages and maintains remediation strategies for identified risks and reports on them regularly to
senior leadership.
We also regularly monitor the systems that contain personal data for internal and external threats to ensure confidentiality,
availability, and integrity, and our incident response program contains controls to identify threats and alert us to suspicious
activity. Internally, we prioritize proactivity as a critical component of our security practices and require that Brightcove
employees participate in security training at least annually. We also distribute up-to-date information about the cybersecurity
environment to increase awareness among employees. Additionally, as a public company, we evaluate our internal control over
financial reporting in connection with Section 404 of the Sarbanes-Oxley Act, and our independent registered public accounting
firm is required to attest to the effectiveness of our internal control over financial reporting.
Although risks from cybersecurity threats have to date not materially affected, and we do not believe they are reasonably
likely to materially affect, us, our business strategy, results of operations or financial condition, we have, from time to time,
experienced threats and security incidents relating to our and our third party vendors’ information systems. For more information,
please see the section titled “Risk Factors” included under Item 1A of this Annual Report on Form 10-K.
Governance Related to Cybersecurity Risks
Brightcove’s cyber risk management program, incident response process, and related operations are directed by the Vice
President of Business Security (“VP, Business Security”). Currently, the VP, Business Security role is held by an individual who
has over ten years of experience in cybersecurity, infrastructure, and cloud security and holds CISA, CISM, CIPM, and CDPSE
certifications. The VP, Business Security reports to the Chief Legal Officer and is a member of the Brightcove Business Security
working group, which has overall responsibility for establishing and implementing Brightcove’s cybersecurity strategy. Other
members of the Brightcove Business Security working group include representatives from the product, security engineering,
information technology, enterprise architecture and legal teams, who collectively have experience in cybersecurity, risk
management, and compliance.
The Board is involved in the oversight of risks that could affect the company and receives updates at least quarterly from
senior management, and periodically from outside advisors, regarding the various risks that the company faces. The audit
committee assists the Board in its review and assessment of our cybersecurity, data privacy, and data security policies, practices,
and procedures protecting our information technology systems, data, products, and services across all business functions, and
reports its findings to the Board.
The audit committee has oversight over cybersecurity and related risks and concerns, and is responsible for interfacing with
management and discussing with management the company’s principal risk exposures and the steps management has taken to
monitor and control risk exposures, including cybersecurity and data protection policies. The audit committee is also responsible
for, and reports to the Board on, (i) obtaining and reviewing reports on data management, security initiatives, and significant
existing and emerging cybersecurity risks, including material cybersecurity incidents, (ii) assessing the impact on Brightcove and
its stakeholders of any significant cybersecurity incident, and (iii) any disclosure obligations arising from any such incidents. The
VP, Business Security reports to the audit committee to review the organizational cybersecurity program, risks, and status through
quarterly updates and biannual meetings.
Item 2.
Properties
Our corporate headquarters is located at 281 Summer Street in Boston, Massachusetts. We relocated to our current office
space in June 2022, and occupy approximately 40,000 square feet.
The initial term of the lease is for ten years. In connection with the office lease, the Company provided a security deposit, in
the form of a letter of credit, in the amount of $823,998 in January 2022. This letter of credit will be auto-renewed annually,
unless a 60 day notice is received from the landlord. An automatic extension can only be implemented through November 30,
2032. This letter of credit is irrevocable and does not have a cash requirement other than the amount already set forth. In the event
33
of a default, the landlord must provide written notice of default before drawing from the letter of credit as a security deposit, or to
remedy the amount owed.
We have sales and marketing offices in Boston, Massachusetts; London, England; Tokyo, Japan; Sydney, Australia; and
Seoul, South Korea. Our offices in Chennai, India, Guadalajara, Mexico, Funchal, Portugal and Covilha, Portugal are primarily
used for research and development. We believe our facilities are adequate for our current needs.
Item 3. Legal Proceedings
The Company, from time to time, is party to litigation arising in the ordinary course of business. Management does not
believe that the outcome of these claims will have a material adverse effect on the consolidated financial position, results of
operations or cash flows of the Company based on the status of proceedings at this time.
Item 4. Mine Safety Disclosures
Not applicable.
34
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock has been traded on the NASDAQ Global Market under the symbol “BCOV” since our initial public
offering on February 17, 2012. Prior to this time, there was no public market for our common stock.
Dividend Policy
We have never paid or declared any cash dividends on our common stock. We currently intend to retain any cash flow to
finance the growth and development of our business, and we do not expect to pay any cash dividends on our common stock in the
foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors and will depend on our
financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments
and other factors our board of directors deems relevant.
Stockholders
As of February 16, 2024, there were approximately 77 holders of record of our common stock (not including beneficial
holders of stock held in street name).
Stock Performance Graph
The graph set forth below compares the cumulative total stockholder return on our common stock for the five years ended
December 31, 2023, with the cumulative total return of (a) the NASDAQ Computer & Data Processing Index and (b) the
NASDAQ Composite Index, over the same period. This graph assumes the investment of $100 in our common stock, the
NASDAQ Computer & Data Processing Index and the NASDAQ Composite Index and assumes the reinvestment of dividends, if
any. The graph assumes our closing sales price on January 2, 2019 of $7.05 per share as the initial value of our common stock.
The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance
shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our
common stock. Information used in the graph was obtained from the NASDAQ Stock Market LLC, a financial data provider and
a source believed to be reliable. The NASDAQ Stock Market LLC is not responsible for any errors or omissions in such
information.
35
Brightcove Inc.
NASDAQ Composite Index
NASDAQ Computer & Data Processing Index
1/2/2019
12/31/2019
123.3
134.6
149.6
12/31/2020
261.0
193.3
224.4
12/31/2021
145.0
234.7
309.4
100.0
100.0
100.0
12/31/2022
12/31/202
3
36.7
225.2
330.7
74.2
157.0
198.7
Purchases of Equity Securities by the Issuer or Affiliated Purchasers
There were no repurchases of shares of common stock made during the year ended December 31, 2023.
Item 6. [Reserved]
Not applicable.
36
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction
with the financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. The following
discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences
include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors.”
Overview
We are a global leader in cloud-based streaming technology and services with a vision to be the world's most trusted
streaming technology company. Brightcove’s software platform and suite of solutions include a breadth and depth of offerings
that meet the needs of media and enterprise customers in a variety of industries across the globe with their use of streaming video,
and serve as a guide in optimizing and maturing their streaming strategies. Leading companies across industries rely on our
products, solutions, services, and industry expertise to grow their streaming businesses, monetize their content via streaming use-
cases, expand and engage their audiences (both external and internal), and reduce the cost and complexity associated with storing,
publishing, delivering, distributing, measuring, and monetizing content across streaming channels and devices.
With deep industry expertise and an understanding of how streaming video helps generate positive business outcomes, our
proven platform combines functionality designed to meet the needs and goals of our customers with the additional flexibility for
customers to customize solutions to meet their own unique requirements.
Our philosophy for the next few years will continue to be to invest in our product strategy and development, sales, and go-
to-market activities to support our long-term revenue growth. We believe these investments will help us address some of the
challenges facing our business such as demand for our products by existing and potential customers, rapid technological change
in our industry, increased competition and resulting price sensitivity. These investments include support for the expansion of our
infrastructure within our hosting facilities, the hiring of additional technical and sales personnel, the innovation of new features
for existing products and the development of new products. We believe this strategy will help us retain our existing customers,
increase our average annual subscription revenue per premium customer and lead to the acquisition of new customers.
Additionally, we believe customer growth will enable us to achieve economies of scale which will reduce our cost of goods sold,
research and development and general and administrative expenses as a percentage of total revenue.
As of December 31, 2023, and 2022 we had 671 and 725 employees, respectively.
We generate revenue by offering our products to customers on a subscription-based, software as a service, or SaaS, model.
Our revenue was $201.2 million in the year ended December 31, 2023 compared to $211.0 million in the year ended December
31, 2022. Though we increased our professional services revenue compared to the prior year, this increase was offset by a
decrease in subscription and support revenue. Our consolidated net loss was $22.9 million for the year ended December 31, 2023,
compared to $9.0 million for the year ended December 31, 2022. Included in consolidated net loss for the year ended December
31, 2023 was merger-related expenses, stock-based compensation expense and amortization of acquired intangible assets of $0.3
million, $13.9 million and $3.9 million, respectively. Included in consolidated net loss for the year ended December 31, 2022 was
merger-related expenses, stock-based compensation expense and amortization of acquired intangible assets of $0.7 million, $13.5
million, and $3.4 million, respectively.
For the years ended December 31, 2023 and 2022, our revenue derived from customers located outside North America was
41% and 44%, respectively. We expect the percentage of revenue derived from outside North America to remain relatively
unchanged or decrease in future periods due to fluctuations in exchange rates and a decrease in usage-based fees.
Key Metrics
We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our
performance, identify trends affecting our business, formulate financial projections and make strategic decisions. A discussion
regarding our key metrics for the year ended December 31, 2023 compared to 2022 is presented below. A discussion regarding
our key metrics for the year ended December 31, 2022 compared to 2021 can be found under Part II -Item 7 of our Annual Report
37
on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (SEC) on
February 23, 2023.
The following table includes our key metrics for the periods presented:
Customers (at period end)
Premium
Volume
Total customers (at period end)
Net revenue retention rate
Recurring dollar retention rate
Average annual subscription revenue
per premium customer, excluding
Starter edition customers (in thousands) $
Average annual subscription revenue
per premium customer for Starter
edition customers only (in thousands)
Total backlog, excluding professional
services engagements (in millions)
Total backlog to be recognized over
next 12 months, excluding professional
services engagements (in millions)
$
$
$
Year Ended December 31,
2023
2022
2,028
531
2,559
95 %
94 %
2,235
610
2,845
95 %
89 %
97.0 $
95.2
4.6 $
183.0 $
4.5
153.3
127.3 $
120.1
•
•
•
Number of Customers. We define our number of customers at the end of a particular quarter as the number of customers
generating subscription revenue at the end of the quarter. We believe the number of customers is a key indicator of our
market penetration, the productivity of our sales organization and the value that our products bring to our customers. We
classify our customers by including them in either premium or volume offerings. Our volume offerings include our Video
Cloud Express customers and our Zencoder customers on month-to-month contracts and pay-as-you-go contracts. All other
offerings are considered premium.
Our go-to-market focus and growth strategy is to expand our premium customer base, as we believe our premium customers
represent a greater opportunity for our solutions. Premium customers decreased compared to the prior period, which we
believe was due primarily to customer consolidation through mergers and acquisitions, customer business failures and
customers deciding to switch to in-house solutions or other third-party solutions. Volume customers decreased in recent
periods primarily due to our discontinuation of the promotional Video Cloud Express offering. As a result, we have
experienced attrition of this base level offering without a corresponding addition of customers. We expect customers using
our volume offerings to continue to decrease in 2023 and beyond as we continue to focus on the market for our premium
solutions.
Net Revenue Retention Rate. We assess our ability to retain and expand customers using a metric we refer to as our net
revenue retention rate. We calculate the net revenue retention rate by dividing: (a) the current annualized recurring revenue
for premium customers that existed twelve months prior by (b) the annualized recurring revenue for all premium customers
that existed twelve months prior. We define annualized recurring revenue for premium customers as the aggregate
annualized contract value from our premium customer base, measured as of the end of a given period. We typically
calculate our net revenue retention rate on a quarterly basis. For annual periods, we report net revenue retention rate as the
average of the net revenue retention rate for all fiscal quarters included in the period. By dividing the retained recurring
revenue by the base recurring revenue, we measure our success in retaining and growing installed revenue from the specific
cohort of customers we served at the beginning of the period. The recurring dollar retention rate focuses on contracts up for
renewal in a given quarter, and only captures expansion/upsells at time of renewal, and is more susceptible to swings than
the net revenue retention rate. Accordingly, we plan to continue to report the net revenue retention rate in addition to
reporting recurring dollar retention rate after this Annual Report on Form 10-K for the year ended December 31, 2023.
Recurring Dollar Retention Rate. We assess our ability to retain customers using a metric we refer to as our recurring dollar
retention rate. We calculate the recurring dollar retention rate by dividing the retained recurring value of subscription
revenue for a period by the previous recurring value of subscription revenue for the same period. We define retained
recurring value of subscription revenue as the committed subscription fees for all contracts that renew in a given period,
including any increase or decrease in contract value. We define previous recurring value of subscription revenue as the
recurring value from committed subscription fees for all contracts that expire in that same period. We typically calculate our
38
recurring dollar retention rate on a monthly basis. Recurring dollar retention rate provides visibility into our ongoing
revenue.
•
•
Average Annual Subscription Revenue Per Premium Customer. We define average annual subscription revenue per
premium customer as the total subscription revenue from premium customers for an annual period, excluding professional
services revenue, divided by the average number of premium customers for that period. We believe that this metric is
important in understanding subscription revenue for our premium offerings in addition to the relative size of premium
customer arrangements. As our Starter edition has a price point of $199 or $499 per month, we disclose the average annual
subscription revenue per premium customer separately for Starter edition customers and all other premium customers.
Backlog. We define backlog as the aggregate amount of transaction price that is allocated to performance obligations that
have not yet been satisfied, excluding professional service engagements. We believe that this metric is important in
understanding future business performance.
Restructuring
In March 2023, we took a restructuring action with the intent of aligning skills with the Company’s strategy and facilitating
cost efficiencies and savings. As a result, certain headcount reductions were necessary. The Company incurred approximately
$0.4 million in restructuring charges during the year ended December 31, 2023 in connection with this action. The restructuring
charges reflect post-employment benefits, and the Company does not expect to incur any additional restructuring charges related
to this action. The restructuring charges are reflected in the Condensed Consolidated Statements of Operations as follows: $0.2
million - General and Administrative; $0.1 million – Research and Development; and $0.1 million – Sales and Marketing. The
Company paid the entire amount by March 31, 2023.
On April 28, 2023, we authorized a restructuring that was designed to reduce operating costs, improve operating margins
and focus on key growth and strategic priorities (the "Plan"). The Plan included a reduction of our workforce by approximately
10%. The $2.4 million in restructuring charges recorded in the year ended December 31, 2023 reflect post-employment benefits.
The restructuring charges are reflected in the Condensed Consolidated Statements of Operations as follows: $1.2 million in Sales
and Marketing; $0.9 million in Research and Development; $0.2 million in General and Administrative and $0.1 million in Cost
of Revenue.
In January 2024, we continued to restructure certain parts of our operations with the intent of aligning skills with the
Company’s strategy and facilitating cost efficiencies and savings, which also resulted in more limited headcount reductions. We
estimate that we will incur between $1.6 million and $1.8 million in restructuring charges in the three months ended March 31,
2024 in connection with this action, which is described in further detail in the notes to the consolidated financial statements.
Geopolitical Events
Worldwide economic uncertainties and negative trends, including financial and credit market fluctuations, uncertainty in the
banking sector, rising interest rates, political unrest and social strife, such as continued Russian military action against Ukraine,
and the current armed conflict in Israel and the Gaza Strip, a potential U.S. federal government shutdown, and other impacts from
the macroeconomic environment have, and could continue to, affect our business, financial condition and results of operations.
While we have continued to invest in business growth, our business is dependent on many factors and these macroeconomic
conditions have caused and may in the future affect the rate of spending on software products and the demand for video to support
virtual events.
See the section titled “Risk Factors” included under Item 1A for further discussion of the possible impact of these
geopolitical events on our business.
Components of Consolidated Statements of Operations
Revenue
Subscription and Support Revenue — We generate subscription and support revenue from the sale of our products.
Our products are generally offered to customers on a subscription-based SaaS model, with varying levels of functionality,
support, and usage entitlements that depend on the use case of our customers. Customer arrangements are typically one-year
contracts, which include a subscription to our software, access to basic support and a pre-determined amount of usage
entitlements. The pricing is based on the value of our software, the level of support, and the amount of usage entitlements. Should
a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for
actual usage above the contractual entitlements. We also offer enhanced support packages for an additional fee.
39
Our Video Cloud Express edition, which targets SMBs, and our Zencoder customers on month-to-month contracts or pay-
as-you-go contracts, are considered volume customers. All other customers are considered premium customers.
Professional Services and Other Revenue — Professional services and other revenue consists of services such as
implementation, software customizations and project management for customers who subscribe to our premium editions. These
arrangements are priced either on a fixed fee basis with a portion due upon contract signing and the remainder due when the
related services have been completed, or on a time and materials basis.
Cost of Revenue
Cost of subscription, support and professional services revenue primarily consists of costs related to supporting and hosting
our product offerings and delivering our professional services. These costs include salaries, benefits, incentive compensation and
stock-based compensation, expenses related to the management of our data centers, our customer support team and our
professional services staff. In addition to these expenses, we incur third-party service provider costs such as data center and
content delivery network, or CDN, expenses, allocated overhead, depreciation expense and amortization of capitalized internal-
use software development costs and acquired intangible assets. We allocate overhead costs such as rent, utilities and supplies to
all departments based on relative headcount. As such, general overhead expenses are reflected in cost of revenue in addition to
each operating expense category. The costs associated with providing professional services are significantly higher as a
percentage of related revenue than the costs associated with delivering our subscription and support services due to the labor costs
of providing professional services.
Cost of revenue increased in absolute dollars from 2022 to 2023. In future periods we expect our cost of revenue will
increase in absolute dollars as our revenue increases. Cost of revenue as a percentage of revenue could fluctuate from period to
period depending on the number of our professional services engagements and any associated costs relating to the delivery of
subscription services and the timing of significant expenditures. To the extent that our customer base grows, we intend to continue
to invest additional resources in expanding the delivery capability of our products and other services. The timing of these
additional expenses could affect our cost of revenue, both in terms of absolute dollars and as a percentage of revenue, in any
particular quarterly or annual period.
Operating Expenses
We classify our operating expenses as follows:
Research and Development. Research and development expenses consist primarily of personnel and related expenses for
our research and development staff, including salaries, benefits, incentive compensation and stock-based compensation, in
addition to the costs associated with contractors and allocated overhead. We have focused our research and development efforts
on expanding the functionality and scalability of our products and enhancing their ease of use, as well as creating new product
offerings. We expect research and development expenses to increase in absolute dollars as we intend to continue to periodically
release new features and functionality, expand our product offerings, continue the localization of our products in various
languages, upgrade and extend our service offerings, and develop new technologies. Over the long term, we believe that research
and development expenses as a percentage of revenue will decrease, but will vary depending upon the mix of revenue from new
and existing products, features and functionality, as well as changes in the technology that our products must support, such as new
operating systems or new Internet-connected devices.
Sales and Marketing. Sales and marketing expenses consist primarily of personnel and related expenses for our sales and
marketing staff, including salaries, benefits, incentive compensation, commissions, stock-based compensation and travel costs,
amortization of acquired intangible assets, in addition to costs associated with marketing and promotional events, corporate
communications, advertising, other brand building and product marketing expenses and allocated overhead. Our sales and
marketing expenses decreased for the year ended December 31, 2023 compared to the prior year due to restructuring actions
taken. We intend to continue to invest in sales and marketing and expand the sale of our product offerings within our existing
customer base, build brand awareness and sponsor additional marketing events. Accordingly, we expect sales and marketing
expenses to continue to be our most significant operating expense in future periods. Over the long term, we believe that sales and
marketing expense as a percentage of revenue will decrease, but will vary depending upon the mix of revenue from new and
existing customers and from small, medium-sized and enterprise customers, as well as changes in the productivity of our sales
and marketing programs.
General and Administrative. General and administrative expenses consist primarily of personnel and related expenses for
executive, legal, finance, information technology and human resources functions, including salaries, benefits, incentive
compensation and stock-based compensation. General and administrative expenses also include the costs associated with
40
professional fees, insurance premiums, other corporate expenses and allocated overhead. Over the long term, we believe that
general and administrative expenses as a percentage of revenue will decrease.
Merger-related. Merger-related costs consist of expenses related to mergers and acquisitions, integration costs and general
corporate development activities.
Other Expense (Benefit). Reflects other operating benefits, costs that do not directly relate to the operating activities listed
above.
Other (Expense) Income, net
Other (expense) income consists primarily of interest income earned on our cash, cash equivalents, and foreign exchange
gains and losses.
Income Taxes
As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of
the jurisdictions in which we operate. We account for income taxes in accordance with the asset and liability method. Under this
method, deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and
income tax bases of assets and liabilities using statutory rates. In addition, this method requires a valuation allowance against net
deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will
not be realized. We have provided a valuation allowance against our existing U.S. and foreign net deferred tax assets and deferred
tax assets at December 31, 2023.
Stock-Based Compensation Expense
Our cost of revenue, research and development, sales and marketing, and general and administrative expenses include stock-
based compensation expense. Stock-based compensation expense represents the fair value of outstanding stock options and
restricted stock awards, which is recognized as expense over the respective stock option and restricted stock award service
periods. For the years ended December 31, 2023, 2022 and 2021, we recorded stock-based compensation expense of $13.9
million, $13.5 million, and $10.0 million, respectively. We expect stock-based compensation expense to increase in absolute
dollars in future periods.
Foreign Currency Translation
With regard to our international operations, we frequently enter into transactions in currencies other than the U.S. dollar. As
a result, our revenue, expenses and cash flows are subject to fluctuations due to changes in foreign currency exchange rates,
particularly changes in the euro, British pound, Australian dollar, and Japanese yen. In periods when the U.S. dollar declines in
value as compared to the foreign currencies in which we conduct business, our foreign currency-based revenue and expenses
generally increase in value when translated into U.S. dollars. During the year ended December 31, 2023, the U.S. dollar increased
in value as compared to the Japanese Yen, and our Japanese Yen-based revenues decreased in value when translated into U.S.
dollars. We expect the percentage of total net revenue derived from outside North America to increase in future periods as we
continue to expand our international operations. Should the U.S. dollar continue to increase in value, our future percentage of
total net revenue derived from outside North America may remain relatively unchanged or decrease.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting periods. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual
results may differ from these estimates under different assumptions or conditions.
We believe that the following significant accounting policies, which are more fully described in the notes to our
consolidated financial statements included elsewhere in this Annual Report on Form 10-K, involve a greater degree of judgment
and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating
our financial condition and results of operations.
41
Revenue Recognition
We primarily derive revenue from the sale of our online video platform, which enables our customers to publish and
distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Revenue is derived
from three primary sources: (1) the subscription to our technology and related support; (2) hosting, bandwidth and encoding
services; and (3) professional services, which include customization services.
Under ASC 606, when the transaction price includes a variable amount of consideration, an entity is required to estimate the
consideration that is expected to be received for a particular customer arrangement. We evaluate variable consideration for usage-
based fees at contract inception and re-evaluate quarterly over the course of the contract. Specifically, we estimate the revenue
pertaining to a customer’s usage that is expected to exceed the contractual entitlement allowance and allocate such revenue to the
distinct service within the related contract that gives rise to the variable payment. Estimates of variable consideration include
analyzing customer usage against the applicable entitlement limit at the end of each reporting period and estimating the amount
and timing of additional amounts to be invoiced in connection with projected usage. Estimates of variable consideration relating
to customer usage do not include amounts for which it is probable that a significant reversal will occur. Determining the amount
of variable consideration to recognize as revenue involves significant judgment on the part of management and it is possible that
actual revenue will deviate from estimates over the course of a customer’s committed contract term.
We periodically enter into multiple-element service arrangements that include platform subscription fees, support fees, and,
in certain cases, other professional services. These contracts include multiple promises that we evaluate to determine if the
promises are separate performance obligations. Performance obligations are identified based on services to be transferred to a
customer that are both capable of being distinct and are distinct within the context of the contract. Once we determine the
performance obligations, we determine the transaction price, which includes estimating the amount of variable consideration to be
included in the transaction price, if any. We then allocate the transaction price to each performance obligation in the contract
based on a relative stand-alone selling price method. The transaction price post allocation is recognized as revenue as the related
performance obligation is satisfied.
Income Taxes
We are subject to income taxes in both the United States and international jurisdictions, and we use estimates in determining
our provision for income taxes. We account for income taxes under the asset and liability method for accounting and reporting for
income taxes. Deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting
and income tax basis of assets and liabilities using statutory rates. This process requires us to project our current tax liability and
estimate our deferred tax assets and liabilities, including net operating losses and tax credit carryforwards. In assessing the need
for a valuation allowance, we considered our recent operating results, future taxable income projections and feasible tax planning
strategies. We have provided a valuation allowance against substantially all of our net U.S. and foreign deferred tax assets at
December 31, 2023. We recognized a deferred tax liability in the U.S. for a portion of our indefinite lived intangibles and other
deferred tax liabilities that would not be offset against deferred tax assets. Due to the evolving nature and complexity of tax
regulations combined with the number of jurisdictions in which we operate, it is possible that our estimates of our tax liability
could change in the future, which may result in additional tax liabilities and adversely affect our results of operations, financial
condition and cash flows.
As of December 31, 2023 and 2022, we had no material unrecognized tax benefits.
Business Combinations
We record tangible and intangible assets acquired and liabilities assumed in business combinations under the purchase
method of accounting. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on
their fair values at the date of acquisition. We then allocate the purchase price in excess of net tangible assets acquired to
identifiable intangible assets based on detailed valuations that use information and assumptions provided by management. We
allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to
goodwill.
Significant management judgments and assumptions are required in determining the fair value of acquired assets and
liabilities, particularly acquired intangible assets. The valuation of purchased intangible assets is based upon estimates of the
future performance and cash flows from the acquired business. Each asset is measured at fair value from the perspective of a
market participant. Critical estimates in valuing purchased technology and customer lists include future cash flows that we expect
to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity
change compared with the assumptions and projections used to develop these values, we could experience impairment charges
which could be material. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to
42
calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization
expenses could be accelerated or slowed.
If different assumptions are used, it could materially impact the purchase price allocation and adversely affect our results of
operations, financial condition and cash flows.
Intangible Assets and Goodwill
Intangible assets that have finite lives are amortized over their estimated useful lives based on the pattern of consumption of
the economic benefit or, if that pattern cannot be readily determined, on a straight-line basis and are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, as discussed
above.
Goodwill is not amortized, but is evaluated for impairment annually, or whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Conditions that could trigger a more frequent impairment assessment
include, but are not limited to, a significant adverse change in certain agreements, significant underperformance relative to
historical or projected future operating results, an economic downturn in customers’ industries, increased competition, a
significant reduction in our stock price for a sustained period or a reduction of our market capitalization relative to net book value.
If there is an impairment, the amount of the impairment is on the excess of a reporting unit’s carrying amount over its fair value.
We have determined, based on our organizational structure, that we have one reporting unit as of December 31, 2023 and
2022. We evaluate impairment by comparing the estimated fair value of our reporting unit to its carrying value. Please see Note 7
for a discussion of the our evaluation of impairment as of December 31, 2023
43
Results of Operations
The following tables set forth our results of operations for the periods presented.
Year Ended December 31,
2023
2021
2022
(in thousands, except share and per share data)
Revenue:
Subscription and support revenue
Professional services and other revenue
Total revenue
Cost of revenue:
Cost of subscription and support revenue
Cost of professional services and other revenue
Total cost of revenue
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Merger-related
Other expense (benefit)
Total operating expenses
(Loss) income from operations
Other expense, net
(Loss) income before income taxes
Provision (benefit) for income taxes
Net (loss) income
Net (loss) income per share
Basic
Diluted
Weighted-average number of common shares used in computing net (loss)
income per share
Basic
Diluted
$
$
$
$
192,461 $
8,726
201,187
204,091 $
6,917
211,008
68,244
9,109
77,353
123,834
37,202
72,410
35,556
307
—
145,475
(21,641 )
(80 )
(21,721 )
1,165
(22,886 ) $
69,935
7,138
77,073
133,935
33,524
73,997
32,550
747
1,149
141,967
(8,032 )
(1,035 )
(9,067 )
(52 )
(9,015 ) $
198,929
12,164
211,093
62,773
10,255
73,028
138,065
31,718
71,177
29,261
300
(1,965 )
130,491
7,574
(1,375 )
6,199
802
5,397
(0.53 ) $
(0.53 ) $
(0.22 ) $
(0.22 ) $
0.13
0.13
43,128
43,128
41,831
41,831
40,717
42,200
Overview of Results of Operations for the Years Ended December 31, 2023 and 2022
Total revenue decreased in 2023 compared to 2022 due to a decrease in subscription and support revenue of 6%, or $11.6
million, offset by an increase in professional services and other revenue of 26%, or $1.8 million. The decrease in subscription and
support revenue of 6%, or $11.6 million, was primarily related to a decrease in revenue from our premium offerings. The increase
in professional services and other revenue of 26%, or $1.8 million, was primarily related to the size and number of professional
services engagements in 2023 compared to 2022. Professional services and other revenue will vary from period to period
depending on the number of implementations and other projects that are in process. Our ability to continue to provide the product
functionality and performance that our customers require will be a major factor in our ability to continue to increase revenue.
Our gross profit decreased by $10.1 million, or 8%, in 2023 compared to 2022, primarily due to a decrease in subscription
and support revenue, as well as an increase in amortization expense related to our capitalized internal-use software. Our ability to
continue to maintain our overall gross profit will depend primarily on our ability to continue controlling our costs of delivery and
our revenue from premium offerings.
Loss from operations was $21.6 million in 2023 compared to a loss from operations of $8.0 million in 2022. This is
primarily due to an increase in operating expenses of 2%, or $3.5 million, including restructuring expenses of $2.8 million, as
well as a decrease in our gross profit of 8%, or $10.1 million.
44
Revenue
Revenue by Product Line
Amount
Year Ended December 31,
2023
2022
Change
Percentage of
Revenue
Amount
Percentage of
Revenue
Amount
%
(in thousands, except percentages)
Premium
Volume
Total
$ 199,908
1,279
$ 201,187
99 % $ 208,777
2,231
1
100 % $ 211,008
98 % $
2
100 % $
(8,869 )
(952 )
(9,821 )
(4 )%
(43 )
(5 )%
During 2023, revenue decreased by $9.8 million, or 5%, compared to 2022, primarily due to a decrease in revenue from our
premium offerings. The decrease in premium revenue of $8.9 million, or 4%, is the result of a decrease in the number of our
customers and a decrease in usage-based fees outside of North America. During 2023, volume revenue decreased by $952,000, or
43%, compared to 2022. We continue to focus on the market for our premium solutions.
Revenue by Type
Year Ended December 31,
2023
2022
Change
Amount
Percentage of
Revenue
Amount
Percentage of
Revenue
Amount
%
(in thousands, except percentages)
Subscription and support
Professional services and other
Total
$192,461
8,726
$201,187
96 % $204,091
6,917
4
100 % $ 211,008
97 % $ (11,630 )
1,809
3
100 % $ (9,821 )
(6 )%
26
(5 )%
During 2023, subscription and support revenue decreased by $11.6 million, or 6%, compared to 2022. The decrease was
due to the aforementioned decrease in revenue from premium offerings outside of North America during the year ended
December 31, 2023. Professional services and other revenue increased by $1.8 million, or 26%, compared to the prior year.
Professional services and other revenue will vary from period to period depending on the number of implementations and other
projects that are in process.
Revenue by Geography
Amount
Year Ended December 31,
2023
2022
Change
Percentage of
Revenue
Amount
Percentage of
Revenue
Amount
%
(in thousands, except percentages)
North America
Europe
Japan
Asia Pacific
Other
International subtotal
Total
$120,378
32,922
20,080
27,421
386
80,809
$201,187
60 % $ 118,755
16 36,177
11 21,988
14 33,645
—
443
41 92,253
100 % $ 211,008
1,623
56 % $
(3,255 )
18
(1,908 )
13
(6,224 )
13
—
(57 )
44 (11,444 )
100 % $ (9,821 )
1 %
(9 )
(9 )
(18 )
(13 )
(12 )
(5 )%
For purposes of this section, we designate revenue by geographic regions based upon the locations of our customers. North
America is comprised of revenue from the United States, Canada and Mexico. International is comprised of revenue from
locations outside of North America. Depending on the timing of new customer contracts, revenue mix from a geographic region
can vary from period to period.
During 2023, total revenue for North America increased by $1.6 million, or 1%, compared to 2022. During 2023, total
revenue outside of North America decreased by $11.4 million, or 12%, compared to 2022. The decrease in revenue in Japan was
primarily driven by a decrease in average revenue per premium customer as customer usage-based fees were less in the current
period and, to a lesser extent, non-recurring customer events that occurred in the prior period. The decreases in Asia Pacific and
Europe were due to a decrease in customers and a decrease in average revenue per premium customer as usage-based fees
decreased.
45
Cost of Revenue
Cost of Revenue
Amount
Year Ended December 31,
2023
Percentage of
Related
Revenue
2022
Percentage of
Related
Revenue
Amount
(in thousands, except percentages)
Change
Amount
%
Subscription and support
Professional services and other
Total
$ 68,244
9,109
$ 77,353
35 % $ 69,935
104
7,138
38 % $ 77,073
34 % $ (1,691 )
1,971
103
280
37 % $
(2 )%
28
0 %
During 2023, cost of subscription and support revenue decreased $1.7 million, or 2%, compared to 2022. This decrease
corresponds to a decrease in our network hosting services and content delivery network expenses of $1.2 million, and $5.1
million, respectively, as we continue to optimize our costs of goods sold. These decreases were offset by an increase in
amortization of capitalized internal-use software development of $4.6 million.
During 2023, cost of professional services and other revenue increased $2.0 million, or 28%, compared to 2022. This
increase corresponds to an increase in contractor expenses of $2.8 million due to higher levels of implementation and professional
services provided. This increase was offset by a decrease in employee-related expenses and rent and utilities expenses of
$647,000 and $104,000, respectively.
Gross Profit
Gross Profit
Amount
Year Ended December 31,
2023
Percentage of
Related
Revenue
Amount
2022
Percentage of
Related
Revenue
(in thousands, except percentages)
Change
Amount
%
Subscription and support
Professional services and other
Total
$124,217
(383 )
$123,834
65 % $134,156
(4 )
(221 )
62 % $133,935
66 % $ (9,939 )
(3 )
(162 )
63 % $ (10,101 )
(7 )%
(73 )
(8 )%
The overall gross profit percentage was 62% and 63% for the years ended December 31, 2023 and 2022, respectively.
Subscription and support gross profit decreased $9.9 million, or 7%, compared to 2022. In addition, professional services and
other gross profit decreased by $162,000, or 73%, compared to 2022. It is likely that gross profit, as a percentage of revenue, will
fluctuate quarter by quarter due to the timing and mix of subscription and support revenue and professional services and other
revenue, and the type, timing and duration of service required in delivering certain projects.
Operating Expenses
Operating Expenses
Research and development
Sales and marketing
General and administrative
Merger-related
Other
Total
Year Ended December 31,
2023
2022
Change
Amount
Percentage of
Revenue
Amount
Percentage of
Revenue
Amount
%
$
37,202
72,410
35,556
307
—
$ 145,475
(in thousands, except percentages)
18 % $
33,524
36 %
73,997
18 %
32,550
—
747
1,149
—
72 % $ 141,967
16 % $
35 %
15 %
—
—
66 % $
3,678
(1,587 )
3,006
(440 )
(1,149 )
3,508
11 %
(2 )%
9 %
(59 )%
(1 )
2 %
Research and Development. During 2023, research and development expense increased by $3.7 million, or 11%, compared
to 2022. This increase was primarily due to increases in employee-related expenses of $4.1 million, which included $1.1 million
of restructuring expenses. This increase was offset by a decrease in contractor expenses of $479,000. We expect our research and
development expense, as percentage of revenue, to remain relatively unchanged in future periods.
46
Sales and Marketing. During 2023, sales and marketing expense decreased by $1.6 million, or 2%, compared to 2022
primarily due to decreases in marketing programs expenses, contractor expenses and rent and utilities expenses of $2.7 million,
$745,000 and $615,000, respectively. These decreases were offset by an increase in employee-related expenses of $2.2 million,
which included $1.3 million of restructuring expenses, and various other expenses that, in aggregate, increased by $274,000. We
expect that our sales and marketing expense will decrease in absolute dollars in the short term as a result of the restructuring
actions we took in 2023 and January 2024.
General and Administrative. During 2023, general and administrative expense increased by $3.0 million, or 9%, compared
to 2022 primarily due to an increase in employee-related expenses of $1.3 million, which included $412,000 of restructuring
expenses. The remainder of the increase was due to increases in computer maintenance and support expenses, outside accounting
and legal fees, and stock based compensation expense of $799,000, $565,000 and $745,000, respectively. These increases were
offset by decreases in recruiting and relocation expenses and insurance expenses of $221,000 and $126,000, respectively, and
other various expenses that, in aggregate, decreased by approximately $112,000. In future periods, we expect general and
administrative expense, as a percentage of revenue, to remain relatively unchanged.
Merger-Related. During 2023, merger-related expense decreased by $440,000, or 59%, compared to 2022 primarily due to
costs incurred in connection with the acquisition of Wicket Labs in 2022 which did not recur in 2023.
Other expense. On March 28, 2022 our CEO retired. Pursuant to a Transition Agreement that was entered into by the
previous CEO and the Company in October 2021, the CEO, upon retirement, would be paid his annual base compensation
through December 31, 2022 and his 2022 annual bonus, the bonus amount to be determined by the Company’s 2022 performance.
In accordance with generally accepted accounting principles we determined that the remaining base compensation and the current
estimate of the 2022 annual bonus should be accrued and the expense was recognized as of March 28, 2022. The total expense of
$1.1 million reflected $0.2 million of stock-based compensation expense as a result of the modification of certain awards pursuant
to the Transition Agreement. Of the total annual base compensation and bonus accrued, the entire balance was paid as of
December 31, 2023. During the year ended December 31, 2023, we did not incur additional other expenses.
Overview of Results of Operations for the Years Ended December 31, 2022 and 2021
A discussion regarding an overview of our results of operations for the year ended December 31, 2023 compared to 2022 is
presented below. A discussion regarding an overview of our results of operations for the year ended December 31, 2022
compared to 2021 can be found under Part II -Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022,
which was filed with the SEC on February 23, 2023.
Liquidity and Capital Resources
Cash and cash equivalents.
We had cash and cash equivalents totaling $18.6 million at December 31, 2023 compared to $31.9 million at December 31,
2022. The decrease in cash in 2023 was primarily due to the decrease in net income, which was the result of the decrease in total
revenue compared to 2022. Our cash and cash equivalents at December 31, 2023 were held for working capital purposes and were
invested primarily in money market funds. We do not enter into investments for trading or speculative purposes. At December 31,
2023 and 2022, we had $8.3 million and $12.1 million, respectively, of cash and cash equivalents held by subsidiaries in
international locations, including subsidiaries located in Japan and the United Kingdom. As a result of changes in tax law, these
earnings can be repatriated to the United States tax-free but could still be subject to foreign withholding taxes. During the year
ended December 31, 2023, we paid $1.7 million of cash consideration held back to sellers for the satisfaction of certain
representations and warranties in relation to the acquisition of Wicket Labs. We believe that our existing cash and cash
equivalents will be sufficient to meet our anticipated working capital and capital expenditure needs over at least the next 12
months.
Condensed Consolidated Statements of Cash Flow Data
2023
Year Ended December 31,
2022
(in thousands)
2021
Cash flows provided by operating activities
Cash flows used in investing activities
Cash flows (used in) provided by financing activities
4,505
(15,650 )
(2,030 )
25,421
(37,767 )
(83 )
19,563
(10,842 )
702
47
Accounts receivable, net.
Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. The
fluctuations vary depending on the timing of our billing activity, cash collections, and changes to our allowance for doubtful
accounts. In many instances we receive cash payment from a customer prior to the time we are able to recognize revenue on a
transaction. We record these payments as deferred revenue, which has a positive effect on our accounts receivable balances.
Cash flows provided by operating activities.
Cash provided by operating activities consists primarily of net income adjusted for certain non-cash items including
depreciation and amortization, stock-based compensation expense, the provision for bad debts and the effect of changes in
working capital and other activities. Cash provided by operating activities during the year ended December 31, 2023 was $4.5
million. The cash flow provided by operating activities primarily resulted from net non-cash charges of $30.6 million offset by
changes in our operating assets and liabilities of $3.2 million and a net loss of $22.9 million. Net non-cash expenses consisted of
$13.9 million for stock-based compensation, $16.5 million for depreciation and amortization, and $162,000 for provision for
reserves on accounts receivable. Cash inflows from changes in our operating assets and liabilities consisted primarily of a
decrease in prepaid expenses and other current assets of $1.6 million, a decrease in other assets of $1.3 million, an increase in
accounts payable of $3.3 million, and an increase in deferred revenue of $6.7 million. These inflows were offset by an increase in
accounts receivable of $7.7 million, a decrease in accrued expenses of $8.0 million, and operating leases of $409,000. The
decrease in cash flow provided by operating activities during the year ended December 31, 2023 compared to the prior period is
primarily due to the increase in net loss.
Cash flows used in investing activities.
Cash used in investing activities during the year ended December 31, 2023 was $15.7 million, consisting primarily of $12.5
million for the capitalization of internal-use software costs and $3.1 million in capital expenditures to support the business. The
decrease in cash flows used in investing activities is primarily due to the acquisition of Wicket Labs in 2022.
Cash flows used in financing activities.
Cash used in financing activities for the year ended December 31, 2023 was $2.0 million, primarily from deferred
acquisition payments and other financing activities.
Credit facility.
On November 1, 2023, we entered into a loan modification agreement to our existing amended and restated loan and
security agreement with a lender (the “Loan Agreement”), for the extension of the maturity date of amounts due under the Second
Restated Loan Agreement until three years from the date of the Loan Agreement, providing for up to a $30.0 million asset-based
line of credit (the “Line of Credit”). Borrowings under the Line of Credit are secured by substantially all of our assets, excluding
our intellectual property. We were in compliance with all covenants under the Line of Credit as of December 31, 2023. As we
have not drawn on the Line of Credit, there are no amounts outstanding as of December 31, 2023.
Net operating loss carryforwards.
As of December 31, 2023, the Company had federal net operating losses of approximately $154.0 million, of which $108.3
million are available to offset future taxable income, if any, through 2037 and $45.7 million which are available to offset future
taxable income indefinitely. As of December 31, 2023, the Company had state net operating losses of approximately $76.5
million, of which $73.4 million are available to offset future taxable income, if any, through 2041 and $3.1 million which are
available to offset future taxable income indefinitely. The Company also had federal and state research and development tax
credits of $10.7 million and $6.3 million, respectively, which expire in various amounts through 2043. The net operating loss and
tax credit amounts are subject to annual limitations under Section 382 change of ownership rules under the U.S. Internal Revenue
Code of 1986, as amended.
In assessing our ability to utilize our net deferred tax assets, we considered whether it is more likely than not that some
portion or all of our net deferred tax assets will not be realized. Based upon the level of our historical U.S. losses and future
projections over the period in which the net deferred tax assets are deductible, at this time, we believe it is more likely than not
that we will not realize the benefits of these deductible differences. Accordingly, we have provided a valuation allowance against
our U.S. deferred tax assets as of December 31, 2023 and 2022.
48
Contractual Obligations and Commitments
Our principal commitments consist primarily of obligations under our leases for our office space and contractual
commitments for content delivery network services, hosting and other support services. During 2022 and 2023 we renewed and
amended agreements with our primary providers of content delivery network services, hosting and other support services. The
terms of the agreements comprised, respectively: 1) a minimum commitment of $93.2 million over three years and 2) a minimum
commitment of $6.6 million over two years. As of December 31, 2023, we had operating lease obligations of $21.8 million, with
$3.3 million payable within 12 months. As of December 31, 2023, we had outstanding purchase obligations of $55.2 million,
with $37.9 payable within 12 months. Other than these lease obligations and contractual commitments, we do not have
commercial commitments under lines of credit, standby repurchase obligations or other such debt arrangements. The following
table summarizes these contractual obligations at December 31, 2023:
(in thousands)
Operating lease obligations
Outstanding purchase obligations
Total
Anticipated Cash Flows
Total
Payment Due by Period
Less than 1
Year
More than 1
Year
$
$
21,844 $
55,239
77,083 $
3,302 $
37,891
41,193 $
18,542
17,348
35,890
We expect to incur significant operating costs, particularly related to services delivery costs, sales and marketing and
research and development, for the foreseeable future in order to execute our business plan. We anticipate that such operating
costs, as well as planned capital expenditures will constitute a material use of our cash resources. As a result, our net cash flows
will depend heavily on the level of future sales, changes in deferred revenue and our ability to manage infrastructure costs.
We believe our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditures for
at least the next 12 months. Our future working capital requirements will depend on many factors, including the rate of our
revenue growth, our introduction of new products and enhancements, and our expansion of sales and marketing and product
development activities. To the extent that our cash and cash equivalents, and cash flow from operating activities are insufficient to
fund our future activities, we may need to raise additional funds through bank credit arrangements or public or private equity or
debt financings. We also may need to raise additional funds in the event we determine in the future to acquire businesses,
technologies and products that will complement our existing operations. We have an existing loan and security agreement with a
lender which provides for up to a $30.0 million asset-backed line of credit which expires on November 1, 2026. In the event
funding is required, we may not be able to obtain additional bank credit arrangements or equity or debt financing on terms
acceptable to us or at all.
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see Recently Issued and Adopted Accounting Standards in the notes
to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures About Market Risk
We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary
course of our business. These risks include primarily foreign exchange risks, interest rate and inflation.
Financial instruments
Financial instruments meeting fair value disclosure requirements consist of cash equivalents, accounts receivable and
accounts payable. The fair value of these financial instruments approximates their carrying amount.
Foreign currency exchange risk
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates,
particularly changes in the euro, British pound, Australian dollar and Japanese yen. Except for revenue transactions in Japan, we
enter into transactions directly with substantially all of our foreign customers.
49
Percentage of revenues and expenses in foreign currency is as follows:
Revenues generated in locations outside the United States
Revenues in currencies other than the United States dollar (1)
Expenses in currencies other than the United States dollar (1)
Twelve Months Ended December 31,
2023
2022
45 %
25 %
17 %
47 %
27 %
16 %
(1)
Percentage of revenues and expenses denominated in foreign currency for the years ended December 31, 2023 and
2022:
Euro
British pound
Japanese Yen
Other
Total
Euro
British pound
Japanese Yen
Other
Total
Twelve Months Ended
December 31, 2023
Revenues
Expenses
6 %
6 %
10 %
3 %
25 %
Twelve Months Ended
December 31, 2022
Revenues
Expenses
8 %
6 %
10 %
3 %
27 %
1 %
6 %
2 %
8 %
17 %
1 %
5 %
2 %
8 %
16 %
As of December 31, 2023 and 2022, we had $6.6 million and $6.9 million, respectively, of receivables denominated in
currencies other than the U.S. dollar. We also maintain cash accounts denominated in currencies other than the local currency,
which exposes us to foreign exchange rate movements.
In addition, although our foreign subsidiaries have intercompany accounts that are eliminated upon consolidation, these
accounts expose us to foreign currency exchange rate fluctuations. Exchange rate fluctuations on short-term intercompany
accounts are recorded in our consolidated statements of operations under “other (expense) income, net”, while exchange rate
fluctuations on long-term intercompany accounts are recorded as a component of other comprehensive (loss) income, as they are
considered part of our net investment.
Currently, our largest foreign currency exposures are the euro and British pound primarily because our European operations
have a higher proportion of our local currency denominated expenses, in addition to the Japanese Yen as result of our ongoing
operations in Japan. Relative to foreign currency exposures existing at December 31, 2023, a 20% unfavorable movement in
foreign currency exchange rates would expose us to significant losses in earnings or cash flows or significantly diminish the fair
value of our foreign currency financial instruments. For the year ended December 31, 2023, we estimated that a 20% unfavorable
movement in foreign currency exchange rates would have decreased revenues by $9.9 million, decreased expenses by $7.7
million and increased operating losses by $2.2 million. The estimates used assume that all currencies move in the same direction
at the same time and the ratio of non-U.S. dollar denominated revenue and expenses to U.S. dollar denominated revenue and
expenses does not change from current levels. Since a portion of our revenue is deferred revenue that is recorded at different
foreign currency exchange rates, the impact to revenue of a change in foreign currency exchange rates is recognized over time,
and the impact to expenses is more immediate, as expenses are recognized at the current foreign currency exchange rate in effect
at the time the expense is incurred. All of the potential changes noted above are based on sensitivity analyses performed on our
financial results as of December 31, 2023.
Interest rate risk
We had cash and cash equivalents totaling $18.6 million at December 31, 2023. Cash and cash equivalents were invested
primarily in money market funds and are held for working capital purposes. We do not use derivative financial instruments in our
investment portfolio. Declines in interest rates, however, would reduce future interest income. In the event that we borrow under
our line of credit, the related interest expense recorded would be subject to changes in the rate of interest.
50
Item 8.
Financial Statements and Supplementary Data
Brightcove Inc.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Page No.
F-2
F-4
F-5
F-6
F-7
F-8
F-9
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Brightcove Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Brightcove Inc. (the Company) as of December 31, 2023 and
2022, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for
each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 22, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are nerot, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Variable Consideration
Description of the
Matter
As described in the footnotes of the consolidated financial statements, specifically, “Summary of
Significant Accounting Policies,” the Company’s contracts contain transaction prices with variable
amounts of consideration related to usage-based fees. The Company estimates the revenue pertaining to a
customer’s usage that is expected to exceed the contractual entitlement allowance, after consideration of
any constraints, which is recognized ratably over the service period.
Auditing the Company's measurement of variable consideration is especially challenging and subjective
because estimating customers usage involves assessing a large volume of contracts and subjective
management assumptions related to estimated future usage. Changes in assumptions of estimated future
usage can have a material effect on the amount of revenue recognized in the period.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of the
Company’s internal controls over the assessment and recording of variable consideration including the
Company’s evaluation of potential estimated future usage at the contract level including the impacts of
any constraints. We identified and tested controls used for the accumulation of the actual usage to date as
well as the assessment of the estimated forecasted usage and related impacts of any constraints.
F-2
To test variable consideration, our audit procedures included, amongst others, testing the completeness
and accuracy of the underlying data used in the Company’s calculation. This included, for a sample of
contracts, agreeing the entitlement allowances to the underlying contracts and agreeing the actual usage to
the underlying system of record. To assess management’s variable consideration assumptions, for a
sample of contracts, we tested management’s estimated usage over the contractual entitlement allowance
by comparing the entitlement and usage rates to actual customer experience, interviewed account
managers to understand the actual and expected usage, and evaluated the impacts of any related
constraints. We also tested the Company’s historical lookback analysis on a sample basis. Lastly, we
performed sensitivity analyses to evaluate how the changes in management’s assumptions of future usage
based on historical trends could affect revenue recognized.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2010.
Boston, Massachusetts
February 22, 2024
F-3
Brightcove Inc.
Consolidated Balance Sheets
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $210 and $294 at December 31,
2023 and December 31, 2022, respectively
Prepaid expenses
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use asset
Intangible assets, net
Goodwill
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses
Operating lease liability
Deferred revenue
Total current liabilities
Operating lease liability, net of current portion
Other liabilities
Total liabilities
Commitments and contingencies (Note 9)
Stockholders’ equity:
December 31,
2023
2022
(in thousands, except share
and per share data)
$
18,615 $
31,894
33,451
6,569
11,764
70,399
42,476
16,233
6,368
74,859
5,772
216,107 $
14,422 $
17,566
4,486
68,155
104,629
17,358
207
122,194
26,004
8,700
10,722
77,320
39,677
18,671
10,279
74,859
7,007
227,813
11,326
26,877
4,157
61,597
103,957
20,528
981
125,466
$
$
Undesignated preferred stock, $0.001 par value; 5,000,000 shares authorized;
no shares issued
Common stock, $0.001 par value; 100,000,000 shares authorized;
43,833,919 and 42,449,677 shares issued at December 31, 2023 and 2022,
respectively
Additional paid-in capital
Treasury stock, at cost; 135,000 shares
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
—
—
44
328,918
(871 )
(1,236 )
(232,942 )
93,913
216,107 $
42
314,825
(871 )
(1,593 )
(210,056 )
102,347
227,813
See accompanying notes.
F-4
Brightcove Inc.
Consolidated Statements of Operations
Revenue:
Subscription and support revenue
Professional services and other revenue
$
Total revenue
Cost of revenue:
Cost of subscription and support revenue
Cost of professional services and other revenue
Total cost of revenue
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Merger-related
Other expense (benefit)
Total operating expenses
(Loss) income from operations
Other (expense) income, net
Interest income
Interest expense
Other expense, net
Total other (expense) income, net
(Loss) income before income taxes
Provision (benefit) for income taxes
Net (loss) income
Net (loss) income per share
Basic
Diluted
Weighted-average number of common shares used
in computing net (loss) income per share
Basic
Diluted
$
$
$
2023
Year Ended December 31,
2022
(in thousands, except per share data)
2021
192,461 $
8,726
201,187
204,091 $
6,917
211,008
68,244
9,109
77,353
123,834
37,202
72,410
35,556
307
—
145,475
(21,641 )
176
(26 )
(230 )
(80 )
(21,721 )
1,165
(22,886 )
(0.53 )
(0.53 )
43,128
43,128
$
$
$
69,935
7,138
77,073
133,935
33,524
73,997
32,550
747
1,149
141,967
(8,032 )
103
—
(1,138 )
(1,035 )
(9,067 )
(52 )
(9,015 )
(0.22 )
(0.22 )
$
$
$
41,831
41,831
198,929
12,164
211,093
62,773
10,255
73,028
138,065
31,718
71,177
29,261
300
(1,965 )
130,491
7,574
5
—
(1,380 )
(1,375 )
6,199
802
5,397
0.13
0.13
40,717
42,200
See accompanying notes.
F-5
Brightcove Inc.
Consolidated Statements of Comprehensive (Loss) Income
Net (loss) income
Other comprehensive (loss) income:
Foreign currency translation adjustments
Comprehensive (loss) income
2023
Year Ended December 31,
2022
2021
$
(22,886 ) $
(9,015 ) $
5,397
(in thousands)
357
(22,529 ) $
(931 )
(9,946 ) $
$
(474 )
4,923
See accompanying notes.
F-6
Brightcove Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
Shares of common stock issued
Balance, beginning of period
Common stock issued upon acquisition
Issuance of common stock upon exercise of stock options and pursuant
to restricted stock units
Balance, end of period
Shares of treasury stock
Balance, beginning of period
Balance, end of period
Par value of common stock issued
Balance, beginning of period
Common stock issued upon acquisition
Issuance of common stock upon exercise of stock options and pursuant
to restricted stock units
Balance, end of period
Value of treasury stock
Balance, beginning of period
Balance, end of period
Additional paid-in capital
Balance, beginning of period
Issuance of common stock upon exercise of stock options and pursuant
to restricted stock units, net of tax
Stock-based compensation expense
Withholding tax on restricted stock
Common stock issued upon acquisition
Balance, end of period
Accumulated deficit
Balance, beginning of period
Net (loss) income
Balance, end of period
Accumulated other comprehensive loss
Balance, beginning of period
Foreign currency translation adjustment
Balance, end of period
Total stockholders’ equity
2023
Year Ended December 31,
2022
2021
(in thousands, except share data)
42,449,677
—
41,384,643
212,507
40,152,021
—
1,384,242
43,833,919
852,527
42,449,677
1,232,622
41,384,643
(135,000 )
(135,000 )
(135,000 )
(135,000 )
(135,000 )
(135,000 )
42 $
—
2
44 $
41 $
—
1
42 $
40
—
1
41
(871 ) $
(871 ) $
(871 ) $
(871 ) $
(871 )
(871 )
314,825 $
298,793 $
287,059
(1 )
14,425
(331 )
—
328,918 $
(84 )
14,129
—
1,987
314,825 $
1,175
10,559
—
—
298,793
(210,056 ) $
(22,886 )
(232,942 ) $
(201,041 ) $
(9,015 )
(210,056 ) $
(206,438 )
5,397
(201,041 )
(1,593 ) $
357
(1,236 ) $
93,913 $
(662 ) $
(931 )
(1,593 ) $
102,347 $
(188 )
(474 )
(662 )
96,260
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes.
F-7
Brightcove Inc.
Consolidated Statements of Cash Flows
2023
Year Ended December 31,
2022
(in thousands)
2021
$
(22,886 ) $
(9,015 ) $
5,397
Operating activities
Net (loss) income
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization
Stock-based compensation
Provision for reserves on accounts receivable
Changes in assets and liabilities:
Accounts receivable
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses
Operating leases
Deferred revenue
Net cash provided by operating activities
Investing activities
Cash paid for acquisition, net of cash acquired
Purchases of property and equipment
Capitalized internal-use software costs
Net cash used in investing activities
Financing activities
Proceeds from exercise of stock options
Deferred acquisitions payments
Other financing activities
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
Supplemental disclosure of cash flow information
Cash paid for operating lease liabilities
Cash paid for income taxes
Cash paid for interest
Supplemental disclosure of non-cash operating activities
Capitalization of stock-based compensation related to internal use software $
Supplemental disclosure of non-cash investing and financing activities
Unpaid internal-use software costs
Fair value of shares issued for acquisition of a business
Unpaid purchases of property and equipment
$
$
$
$
$
$
See accompanying notes.
F-8
16,536
13,899
162
(7,707 )
1,565
1,328
3,294
(7,950 )
(409 )
6,673
4,505
—
(3,120 )
(12,530 )
(15,650 )
—
(1,700 )
(330 )
(2,030 )
(104 )
(13,279 )
31,894
18,615 $
3,686 $
1,372 $
23 $
10,696
13,548
118
4,227
(1,216 )
(348 )
120
2,397
5,503
(609 )
25,421
(13,215 )
(10,727 )
(13,825 )
(37,767 )
177
—
(260 )
(83 )
(1,416 )
(13,845 )
45,739
31,894 $
1,842 $
671 $
— $
527 $
580 $
210 $
— $
714 $
1,213 $
1,987 $
267 $
8,322
9,968
159
(846 )
1,281
(1,437 )
(683 )
(5,209 )
(634 )
3,245
19,563
(2,000 )
(2,205 )
(6,637 )
(10,842 )
2,846
(475 )
(1,669 )
702
(1,156 )
8,267
37,472
45,739
4,277
737
—
593
446
—
25
Brightcove Inc.
Notes to Consolidated Financial Statements
Years Ended December 31, 2023, 2022 and 2021
(in thousands, except share and per share data, unless otherwise noted)
1.
Business Description
Brightcove Inc. (the Company) is a global provider of cloud services for video which enable its customers to publish and
distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner.
The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on August 24,
2004.
2. Summary of Significant Accounting Policies
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as
described below and elsewhere in these notes to the consolidated financial statements.
The Company believes that a significant accounting policy is one that is both important to the portrayal of the Company’s
financial condition and results, and requires management’s most difficult, subjective, or complex judgments, often as the result of
the need to make estimates about the effect of matters that are inherently uncertain.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States of America (GAAP). Any reference in these notes to applicable guidance is meant to refer to the
authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (ASC)
and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB).
Use of Estimates and Uncertainties
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts expensed during the reporting period.
Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition and
variable consideration, contingent liabilities, intangible asset valuations, and the realizability of the Company’s deferred tax
assets.
Although the Company regularly assesses these estimates, actual results could differ materially from these estimates.
Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical
experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from
management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially
accurate, even if such assumptions are reasonable when made.
The Company is subject to a number of risks and uncertainties common to companies in similar industries and stages of
development including, but not limited to, rapid technological changes, competition from substitute products and services from
larger companies, customers switching to in-house solutions, customer concentration, management of international activities,
protection of proprietary rights, patent litigation, and dependence on key individuals.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in consolidation.
Foreign Currency Translation
The reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s foreign subsidiaries is
the local currency of each subsidiary. All assets and liabilities in the balance sheets of entities whose functional currency is a
F-9
currency other than the U.S. dollar are translated into U.S. dollar equivalents at exchange rates as follows: (1) asset and liability
accounts at period-end rates, (2) income statement accounts at weighted-average exchange rates for the period, and (3)
stockholders’ equity accounts at historical exchange rates. The resulting translation adjustments are excluded from income (loss)
and reflected as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are included in net
loss for the period. The Company may periodically have certain intercompany foreign currency transactions that are deemed to be
of a long-term investment nature; exchange adjustments related to those transactions are made directly to other comprehensive
loss, a separate component of stockholders’ equity.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of
purchase to be cash equivalents. Management determines the appropriate classification of investments at the time of purchase,
and re-evaluates such determination at each balance sheet date. The Company did not have any short-term or long-term
investments at December 31, 2023 or 2022. Cash and cash equivalents primarily consist of cash on deposit with banks and
amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair
market value.
Property and Equipment
Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.
Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the related asset. Upon
retirement or sale, the cost of assets disposed of, and the related accumulated depreciation, are removed from the accounts, and
any resulting gain or loss is included in the determination of net income or loss in the period of retirement. Expenditures for
maintenance and repairs are charged to expense as incurred, whereas major improvements are capitalized as additions to property
and equipment.
The Company estimates the useful life of property and equipment as follows:
Computer equipment
Software
Furniture and fixtures
Leasehold improvements
Fair Value of Financial Instruments
Estimated Useful Life
(in Years)
3
3 - 6
5
Shorter of lease term or the estimated useful life
ASC 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for instruments measured
at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own
assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability
based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the
Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed
based on the best information available in the circumstances.
ASC 820 identifies fair value as an exit price, representing the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability.
As such, fair value is a market-based measurement that should be determined based on assumptions that market participants
would use in pricing an asset or liability. The Company uses valuation techniques to measure fair value that maximize the use of
observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:
•
•
•
Level 1: Observable inputs, such as quoted prices for identical assets or liabilities in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, such as
quoted prices for similar assets or liabilities, or market-corroborated inputs; and
Level 3: Unobservable inputs for which there is little or no market data which require the reporting entity to develop
its own assumptions about how market participants would price the assets or liabilities.
F-10
The valuation techniques that may be used to measure fair value are as follows:
A. Market approach — Uses prices and other relevant information generated by market transactions involving identical or
comparable assets or liabilities.
B. Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current
market expectations about those future amounts, including present value techniques, option-pricing models, and excess earnings
method.
C. Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset
(replacement cost).
The Company measures eligible assets and liabilities at fair value, with changes in value recognized in earnings. Fair value
treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an
event triggers a new basis of accounting. The Company did not elect to remeasure any of its existing financial assets or liabilities,
and did not elect the fair value option for any financial assets and liabilities transacted in the years ended December 31, 2023 or
2022. Realized gains and losses from sales of the Company’s investments are included in “Other (expense) income, net”.
The carrying amounts of the Company’s financial instruments, which include cash, cash equivalents, accounts receivable,
accounts payable, and accrued expenses, approximated their fair values at December 31, 2023 and 2022, due to the short-term
nature of these instruments.
The Company has evaluated the estimated fair value of financial instruments using available market information and
management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant
impact on the estimated fair value amounts.
The Company’s financial instruments carried at fair value were less than $0.1 million as of December 31, 2023 and 2022.
Revenue
ASC 606 outlines a comprehensive five-step revenue recognition model based on the principle that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services.
1) Identify the contract with a customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to performance obligations in the contract
5) Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations as discussed in further detail below. Revenue is recognized at the time the
related performance obligation is satisfied by transferring a promised service to a customer. The transaction price is the total
amount of consideration to which the Company expects to be entitled in exchange for transferring the promised services to the
customer. The Company has elected to exclude from the measurement of the transaction price all taxes assessed by a
governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by
the Company from a customer (e.g. sales and use tax).
Disaggregation of Revenue
Subscription and Support
The Company’s subscription arrangements provide customers the right to access its hosted software applications. Customers
do not have the right to take possession of the Company’s software during the hosting arrangement. Contracts for premium
customers generally have a term of one year and are non-cancellable. These contracts generally provide the customer with a
maximum contractual level of entitlement, and provide the rate at which the customer pays for actual usage above the contractual
entitlement allowance. These subscription arrangements are considered stand ready obligations that are providing a series of
distinct services that are substantially the same and are transferred with the same pattern to the customer. As such, these
F-11
subscription arrangements are treated as a single performance obligation and the related fees are recognized as revenue ratably
over the term of the underlying arrangement.
When the transaction price includes a variable amount of consideration, an entity is required to estimate the consideration
that is expected to be received for a particular customer arrangement. The Company evaluates variable consideration for usage-
based fees at contract inception and re-evaluates quarterly over the course of the contract. Specifically, the Company estimates the
revenue pertaining to a customer’s usage that is expected to exceed the contractual entitlement allowance and allocates such
revenue to the distinct service within the related contract that gives rise to the variable payment. Estimates of variable
consideration include analyzing customer usage against the applicable entitlement limit at the end of each reporting period and
estimating the amount and timing of additional amounts to be invoiced in connection with projected usage. Estimates of variable
consideration relating to customer usage do not include amounts for which it is probable that a significant reversal will occur.
Determining the amount of variable consideration to recognize as revenue involves significant judgment on the part of
management and it is possible that actual revenue will deviate from estimates over the course of a customer’s committed contract
term.
Contracts with customers that are month-to-month arrangements (volume customers) have a maximum monthly level of
usage and provide the rate at which the customer must pay for actual usage above the monthly allowable usage. The monthly
volume subscription and support and usage fees are recognized as revenue during the related period of performance. Contracts
with customers that are invoiced on a pay-as-you-go basis, where there is no monthly or annual commitment for usage, provide
the rate at which the customer must pay for actual usage for a particular period. Fees that are invoiced on a pay-as-you-go basis
are recognized as revenue during the period of performance.
Professional Services and Other Revenue
Professional services and other revenue consist of services such as implementation, software customizations and project
management for customers who subscribe to our premium editions. These arrangements are priced either on a fixed fee basis with
a portion due upon contract signing and the remainder due when the related services have been completed, or on a time and
materials basis. Professional services and other revenue is recognized on a percent complete basis based on the input method.
Professional services and other revenue sold on a stand-alone basis are recognized as the services are performed, subject to any
refund or other obligation.
Contracts with Multiple Performance Obligations
The Company periodically enters into multiple-element service arrangements that include platform subscription fees,
support fees, and, in certain cases, other professional services. These contracts include multiple promises that the Company
evaluates to determine if the promises are separate performance obligations. Performance obligations are identified based on
services to be transferred to a customer that are both capable of being distinct and are distinct within the context of the contract.
Once the Company determines the performance obligations, the Company determines the transaction price, which includes
estimating the amount of variable consideration to be included in the transaction price, if any. The Company then allocates the
transaction price to each performance obligation in the contract based on a relative stand-alone selling price method. The
transaction price post allocation is recognized as revenue as the related performance obligation is satisfied.
Costs to Obtain a Contract
Commissions are paid to internal sales representatives as compensation for obtaining contracts. Under ASC 606, Revenue
from Contracts with Customers, the Company capitalizes commissions that are incremental, as a result of costs incurred to obtain
a customer contract, if those costs are not within the scope of another topic within the accounting literature and meet the specified
criteria. Assets recognized for costs to obtain a contract are amortized over the period of performance for the underlying customer
contracts. The commission expense on contracts with new customers is recorded over the average life of a customer given the
commission amount associated with sales to new customers is not commensurate with the commission amount associated with the
contract renewal for those same customers. The commission amount associated with the renewal of a contract in addition to any
commission amount related to incremental sales are recorded as expense over the term of the renewed contract. These assets are
periodically assessed for impairment.
Cost of Revenue
Cost of revenue primarily consists of costs related to supporting and hosting the Company’s product offerings and
delivering professional services. These costs include salaries, benefits, incentive compensation and stock-based compensation
expense related to the management of the Company’s data centers, customer support team and the Company’s professional
F-12
services staff, in addition to third-party service provider costs such as data center and networking expenses, allocated overhead,
amortization of capitalized internal-use software development costs and intangible assets and depreciation expense.
Allowance for Doubtful Accounts
The Company offsets gross trade accounts receivable with an allowance for doubtful accounts. The allowance for doubtful
accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable
and is based upon historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of
loss associated with specific accounts. Account balances are charged against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. Provisions for allowances for doubtful accounts are recorded in
general and administrative expense.
Effective January 1, 2020, the Company adopted ASC 326, which requires measurement and recognition of expected credit
losses for financial assets held. Estimating credit losses based on risk characteristics requires significant judgment by the
Company. Significant judgments include, but are not limited to: assessing current economic conditions and the extent to which
they would be relevant to the existing characteristics of the Company’s financial assets, the estimated life of financial assets, and
the level of reliance on historical experience in light of economic conditions. The Company reviews and updates, when necessary,
its historical risk characteristics that are meaningful to estimating credit losses, any new risk characteristics that arise in the
natural course of business, and the estimated life of its financial assets.
The Company uses the aging method to estimate its expected credit losses on trade accounts receivable (“AR”) and unbilled
trade accounts receivable (“UAR”). As of December 31, 2023, the financial assets of the Company within the scope of the
assessment comprised AR and UAR. UAR is reflected in Other current assets on the Company’s Consolidated Balance Sheets and
was $1.8 million and $1.8 million as of December 31, 2023 and December 31, 2022, respectively. Estimated credit losses for
UAR were not material.
The information obtained from assessing historical experience, current economic conditions and reasonable and supportable
forecasts were used to identify risk characteristics that can affect future credit loss experience. The historical analysis yielded one
material risk factor, the geographical location of the customer. Specifically, historical experience showed that AR that was due
from customers in the Asia Pacific region had experienced more credit losses than the other geographic areas listed in Note 15.
Europe and Japan had significantly less credit loss experience when compared to Asia Pacific while North America’s credit loss
experience was commensurate with the proportion of total AR that North America’s AR comprised. There were no other
significant risk characteristics identified in the review of historical experience.
Below is a summary of the changes in the Company’s allowance for doubtful accounts for the years ended December 31,
2023, 2022 and 2021:
Year ended December 31, 2023
Year ended December 31, 2022
Year ended December 31, 2021
$
294 $
353
648
162 $
118
159
(246 ) $
(177 )
(454 )
Balance at
Beginning
of Period Provision
Write-
offs
Balance
at End of
Period
210
294
353
Off-Balance Sheet Risk and Concentration of Credit Risk
The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other
foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist
primarily of cash, cash equivalents and trade accounts receivable. The Company maintains its cash and cash equivalents
principally with accredited financial institutions of high credit standing. Although the Company deposits its cash with multiple
financial institutions, its deposits, at times, may exceed federally insured limits. The Company generally has not experienced any
material losses related to receivables from individual customers, or groups of customers. The Company does not require
collateral. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by
management to be probable in the Company’s accounts receivable.
For the years ended December 31, 2023, 2022 and 2021, no individual customer accounted for more than 10% of total
revenue. As of December 31, 2023 and 2022, no individual customer accounted for more than 10% of accounts receivable, net.
Concentration of Other Risks
F-13
The Company is dependent on certain content delivery network providers who provide digital media delivery functionality
enabling the Company’s on-demand application service to function as intended for the Company’s customers and ultimate end-
users. The disruption of these services could have a material adverse effect on the Company’s business, financial position, and
results of operations.
Software Development Costs
Costs incurred to develop software applications used in the Company’s on-demand application services consist of (a) certain
external direct costs of materials and services incurred in developing or obtaining internal-use computer software, and (b) payroll
and payroll-related costs for employees who are directly associated with, and who devote time to, the project. These costs
generally consist of internal labor during configuration, coding, and testing activities. Research and development costs incurred
during the preliminary project stage or costs incurred for data conversion activities, training, maintenance and general and
administrative or overhead costs are expensed as incurred. Capitalization begins when the preliminary project stage is complete,
management, with the relevant authority, authorizes and commits to the funding of the software project, it is probable the project
will be completed, the software will be used to perform the functions intended and certain functional and quality standards have
been met. Qualified costs incurred during the operating stage of the Company’s software applications relating to upgrades and
enhancements are capitalized to the extent it is probable that they will result in added functionality, while costs that cannot be
separated between maintenance of, and minor upgrades and enhancements to, internal-use software are expensed as incurred.
These capitalized costs are amortized on a straight-line basis over the expected useful life of the software, which is estimated to
be three years. Capitalized internal-use software development costs are classified as “Software” within “Property and Equipment,
net” in the accompanying consolidated balance sheets.
During the years ended December 31, 2023, 2022 and 2021, the Company capitalized $11.7 million, $15.5 million, and $7.7
million, respectively, of internal-use software development costs. The Company recorded amortization expense associated with its
capitalized internal-use software development costs of $9.9 million, $5.2 million and $3.6 million for the years ended December
31, 2023, 2022 and 2021, respectively.
Leases
Under ASC 842, a right-of-use asset and lease liability is recorded for all leases and the statement of operations reflects the
lease expense for operating leases and amortization/interest expense for financing leases. The Company does not apply the
recognition requirements in the standard to a lease that at commencement date has a lease term of twelve months or less and does
not contain a purchase option that it is reasonably certain to exercise and to not separate lease and related non-lease components.
The Company leases its facilities under non-cancelable operating leases. Right-of-use assets represent the right to use an
underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.
Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments
over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental
borrowing rate based on the information available at commencement date in determining the present value of lease payments.
Many of the Company’s lessee agreements include options to extend the lease, which are not included in the minimum lease
terms unless they are reasonably certain to be exercised.
Long-Lived Assets
The Company reviews long-lived assets and certain identifiable intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During this review, the Company
re-evaluates the significant assumptions used in determining the original cost and estimated lives of long-lived assets. Although
the assumptions may vary from asset to asset, they generally include operating results, changes in the use of the asset, cash flows,
and other indicators of value. Management then determines whether the remaining useful life continues to be appropriate, or
whether there has been an impairment of long-lived assets based primarily upon whether expected future undiscounted cash flows
are sufficient to support the assets’ recovery. If impairment exists, the Company adjusts the carrying value of the asset to fair
value, generally determined by a discounted cash flow analysis.
For the years ended December 31, 2023, 2022 and 2021, the Company has not identified any impairment of its long-lived
assets.
Business Combinations
The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the
purchase method of accounting. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed
F-14
based on their fair values at the date of acquisition. The Company then allocates the purchase price in excess of net tangible assets
acquired to identifiable intangible assets based on detailed valuations that use information and assumptions provided by
management. Any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities
assumed is allocated to goodwill. If the fair value of the assets acquired exceeds the purchase price, the excess is recognized as a
gain.
Significant management judgments and assumptions are required in determining the fair value of acquired assets and
liabilities, particularly acquired intangible assets. The valuation of purchased intangible assets is based upon estimates of the
future performance and cash flows from the acquired business. Each asset is measured at fair value from the perspective of a
market participant.
If different assumptions are used, it could materially impact the purchase price allocation and adversely affect our results of
operations, financial condition and cash flows.
For further discussion of the Company’s accounting policies related to business combinations, see Note 3.
Intangible Assets and Goodwill
Intangible assets that have finite lives are amortized over their estimated useful lives based on the pattern of consumption of
the economic benefit or, if that pattern cannot be readily determined, on a straight-line basis and are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, as discussed
above.
Goodwill is not amortized, but is evaluated for impairment annually, or whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Conditions that could trigger a more frequent impairment assessment
include, but are not limited to, a significant adverse change in certain agreements, significant underperformance relative to
historical or projected future operating results, an economic downturn in customers’ industries, increased competition, a
significant reduction in our stock price for a sustained period or a reduction of our market capitalization relative to net book value.
If there is an impairment, the amount of the impairment is on the excess of a reporting unit’s carrying amount over its fair value.
The Company has determined, based on its organizational structure, that it had one reporting unit as of December 31, 2023
and 2022. The Company evaluates impairment by comparing the estimated fair value of its reporting unit to its carrying value.
Please see Note 7 for a discussion of the Company's evaluation of impairment as of December 31, 2023
Comprehensive (Loss) Income
Comprehensive (loss) income is defined as the change in equity of a business enterprise during a period from transactions,
other events, and circumstances from non-owner sources. Accumulated other comprehensive loss is presented separately on the
consolidated balance sheets and consists entirely of cumulative foreign translation adjustments as of December 31, 2023 and
2022.
Net (Loss) Income per Share
The Company calculates basic and diluted (loss) earnings per common share by dividing the (loss) earnings amount by the
number of common shares outstanding during the period. The calculation of diluted earnings per common share includes the
F-15
effects of the assumed exercise of any outstanding stock options and the assumed vesting of shares of restricted stock awards,
where dilutive.
The following table set forth the computations of basic and diluted (loss) earnings per share:
(in thousands, except per share data)
Net (loss) income
$
2023
(22,886 ) $
Year Ended December 31,
2022
2021
(9,015 ) $
5,397
Weighted average shares used in computing basic earnings
per share
43,128
41,831
40,717
Effect of weighted average dilutive stock-based awards
-
-
1,483
Weighted average shares used in computing diluted
earnings per share
43,128
41,831
42,200
Net (loss) income per share—basic and diluted
Basic
Diluted
$
$
(0.53 ) $
(0.53 ) $
(0.22 ) $
(0.22 ) $
0.13
0.13
The following outstanding common shares have been excluded from the computation of dilutive (loss) earnings per share as
of the periods indicated because such securities are anti-dilutive:
Options outstanding
Restricted stock units outstanding
Total options and restricted stock units outstanding
Income Taxes
Year Ended December 31,
2022
2021
2023
2,248
5,620
7,868
1,420
5,212
6,632
1,681
3,937
5,618
The Company accounts for income taxes in accordance with the asset and liability method. Under this method, deferred tax
assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets
and liabilities using statutory rates. In addition, this method requires a valuation allowance against net deferred tax assets if, based
upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions recognized in the consolidated financial statements by prescribing a
more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. Interest and penalties, if applicable, related to uncertain tax positions would be recognized as a component of
income tax expense. The Company has no recorded liabilities for uncertain tax positions as of December 31, 2023 or 2022.
Stock-Based Compensation
At December 31, 2023, the Company had seven stock-based compensation plans, which are more fully described in Note
11.
The Company values its shares of common stock in connection with the issuance of stock-based equity awards using the
closing price of the Company’s shares of common stock on the NASDAQ Global Market on the date of the grant. Accounting
guidance requires stock-based payments to be accounted for under the fair value method. Under this method, the Company is
required to record compensation cost based on the estimated fair value for stock-based awards granted over the requisite service
periods for the individual awards, which generally equals the vesting periods.
For stock options issued under the Company’s stock-based compensation plans, the fair value of each option grant is
estimated on the date of grant. For service-based options, the Company recognizes compensation expense on a straight-line basis
over the requisite service period of the award.
The fair value of each service-based option grant issued under the Company’s stock-based compensation plans was
estimated using the Black-Scholes option-pricing model. The expected volatility of options granted has been determined using the
historical volatility of the Company’s own common stock. The expected life of options has been determined utilizing the
F-16
“simplified method”. The simplified method is based on the average of the vesting tranches and the contractual life of each grant.
The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options.
The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend
yield is assumed to be zero.
For premium-priced options issued under the Company's stock-based compensation plans, the fair value of each option
issued is determined using the binomial lattice model, which calculates multiple potential outcomes for option exercises and
establishes a fair value based on the most likely outcome. Key assumptions for the binomial lattice model include share price,
volatility, the early exercise multiple, risk-free rate, expected dividends, and number of time steps.
For restricted stock units issued under the Company’s stock-based compensation plans, the fair value of each grant is
calculated based on the Company’s stock price on the date of grant. For performance-based awards with service-based vesting
conditions, the Company recognizes compensation expense based upon a review of the Company’s expected achievement against
the specified targets. For performance-based awards with market-based vesting, the Company recognizes compensation expense
as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are
satisfied. The Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units.
The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the
most likely outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility,
expected dividends and the correlation coefficient.
Forfeitures are recognized as they occur.
Advertising Costs
Advertising costs are charged to operations as incurred. The Company incurred advertising costs of $2.7 million, $4.8
million and $6.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Merger-related Costs
Merger-related costs consist of expenses related to mergers and acquisitions, integration costs and general corporate
development activities. In 2022, merger-related costs incurred were primarily related to the acquisition of Wicket Labs and, to a
lesser extent, general merger and related activities. In 2023 and 2021, merger-related costs incurred were primarily related to
general merger and related activities.
Recent Accounting Pronouncements and Standards
Recently Adopted Accounting Pronouncements
ASU No. 2023-09
In December 2023, the FASB issued ASU No. 2023-09, which improves the transparency and decision usefulness of
income tax disclosures, specifically to enhance investors's ability to: (1) understand an entity’s exposure to potential changes in
jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow
forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows. This guidance will
be effective for the Company on January 1, 2025. The Company does not expect application of this guidance to have a material
impact on its consolidated financial statements.
3. Business Combinations
On February 1, 2022, the Company acquired 100% of the outstanding shares of Wicket Labs, Inc. (“Wicket Labs”) a
provider of subscriber and content insights, in exchange for common stock of the Company and cash, (“Wicket Acquisition”). At
the closing, the Company issued 212,507 unregistered shares of common stock of the Company valued at approximately $2.0
million and approximately $15.0 million in cash, of which approximately $1.8 million of the cash consideration was held back to
secure payment of any claims of indemnification for breaches or inaccuracies in the sellers’ representations and warranties,
covenants and agreements. During the year ended December 31, 2022, the Company paid $0.1 million of cash consideration held
back to the sellers for the satisfaction of certain representations and warranties. The remaining cash consideration held back was
included in Accrued Expenses at December 31, 2022 and released in full on February 8, 2023.
F-17
The Wicket Acquisition was accounted for using the purchase method of accounting in accordance with Accounting
Standards Codification 805 — Business Combinations. Accordingly, the results of operations of the acquired company have been
included in the accompanying condensed consolidated financial statements since the date of acquisition. The purchase price has
been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair
value as of the date of the Wicket Acquisition, and using assumptions that the Company’s management believes are reasonable
given the information currently available. The Company completed its valuation of its intangible assets, accounts receivable,
deferred revenue and the valuation of the acquired deferred tax assets and liabilities during the year ended December 31, 2022.
The final allocations of the purchase price to intangible assets, accounts receivable, deferred revenue, goodwill and any deferred
tax assets and liabilities are included in these consolidated financial statements.
During the year ended December 31, 2022, the Company incurred $0.7 million of merger-related costs related to the Wicket
Acquisition.
The excess of the purchase price over the estimated amounts of net assets as of the effective date of the acquisition was
allocated to goodwill in accordance with the accounting guidance. The factors contributing to the recognition of the amount of
goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Wicket Acquisition.
These benefits include the acquired workforce and opportunities to expand the Company’s offerings in target market segments
that use subscriber and content insights to make decisions. The goodwill is non-deductible for tax purposes.
The total purchase price for the Wicket Acquisition has been allocated as follows:
Cash
Accounts receivable and other assets
Identifiable intangible assets
Goodwill
Deferred revenue
Deferred tax liabilities
Other liabilities
Total estimated purchase price
$
$
53
782
4,382
13,957
(1,033 )
(1,009 )
(95 )
17,037
The following are the identifiable intangible assets acquired and their respective useful lives, as determined based on
valuations:
Developed technology
Customer relationships
Total
Amount
Useful Life
(in years)
$
$
4,200
182
4,382
6
5
The fair value of the intangible assets has been estimated using the income approach in which the after-tax cash flows are
discounted to present value. The cash flows are based on estimates used to price the transaction, and the discount rates applied
were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of
capital.
Pro forma results of operations for the Wicket Acquisition have not been presented because the effect of the acquisition is
not material to the Company's consolidated financial results. Revenue and earnings attributable to acquired operations since the
date of the acquisition are included in the Company's consolidated statements of operations.
4. Cash and Cash Equivalents
Cash and cash equivalents as of December 31, 2023 and 2022 consist of the following:
Description
Cash
Money market funds
Total cash and cash equivalents
December 31, 2023
Amortized Cost
Fair Market
Value
$
$
18,571 $
44
18,615 $
18,571
44
18,615
Contracted
Maturity
Demand
Demand
F-18
Description
Cash
Money market funds
Total cash and cash equivalents
Contracted
Maturity
Demand
Demand
December 31, 2022
Amortized Cost
Fair Market
Value
$
$
31,852 $
42
31,894 $
31,852
42
31,894
5. Property and Equipment
Property and equipment consist of the following:
Computer equipment
Software
Furniture and fixtures
Leasehold improvements
Less accumulated depreciation and amortization
December 31,
2023
2022
$
$
16,027 $
75,311
4,895
9,001
105,234
62,758
42,476 $
15,516
60,534
4,775
8,839
89,664
49,987
39,677
Depreciation and amortization expense, which includes amortization expense associated with capitalized internal-use
software development costs, for the years ended December 31, 2023, 2022 and 2021 was $12.6 million, $7.3 million and $5.3
million, respectively.
6. Revenue from Contracts with Customers
The Company primarily derives revenue from the sale of its online video platform, which enables its customers to publish
and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Revenue is
derived from three primary sources: (1) the subscription to its technology and related support; (2) hosting, bandwidth and
encoding services; and (3) professional services, which include initiation, set-up and customization services.
The following summarizes the opening and closing balances of receivables, contract assets and contract liabilities from
contracts with customers.
Balance at December 31,
2023
Balance at December 31,
2022
Balance at December 31,
2021
Balance at December 31,
2020
Accounts
Receivable,
net
Contract
Assets
(current)
Deferred
Revenue
(current)
Deferred
Revenue
(non-
current)
Total
Deferred
Revenue
33,451
1,785 68,155
185
68,340
26,004
1,786 61,597
360
61,957
29,866
2,375 62,057
114
62,171
29,305
2,078 58,741
811
59,552
Revenue recognized during the year ended December 31, 2023 from amounts included in deferred revenue at the beginning
of the period was approximately $61.0 million. During the year ended December 31, 2023, the Company did not recognize any
material revenue from performance obligations satisfied or partially satisfied in previous periods.
The assets recognized for costs to obtain a contract were $13.1 million and $12.4 million as of December 31, 2023 and
December 31, 2022, respectively. Amortization expense recognized for costs to obtain a contract was $10.9 million, $10.4 million
and $12.7 million during the years ended December 31, 2023, 2022 and 2021, respectively.
Transaction Price Allocated to Future Performance Obligations
F-19
As of December 31, 2023, the total aggregate transaction price allocated to the unsatisfied performance obligations for
subscription and support contracts was approximately $183.0 million, of which approximately $127.3 million is expected to be
recognized over the next 12 months. The Company expects to recognize substantially all of the remaining unsatisfied
performance obligations by December 2028.
7. Intangible Assets and Goodwill
Finite-lived intangible assets consist of the following as of December 31, 2023:
Description
Developed technology
Customer relationships
Non-compete agreements
Tradename
Total
Weighted
Average
Estimated
Useful Life
(in years)
Gross
Carrying
Value
6 $ 22,278 $
9 15,669
3
1,912
368
3
$ 40,227 $
Accumulated
Amortization
Net
Carrying
Value
19,663 $
11,916
1,912
368
33,859 $
2,615
3,753
—
—
6,368
Finite-lived intangible assets consist of the following as of December 31, 2022:
Description
Developed technology
Customer relationships
Non-compete agreements
Tradename
Total
Weighted
Average
Estimated
Useful Life
(in years)
Gross
Carrying
Value
6 $ 22,278 $
9 15,669
1,912
3
3
368
$ 40,227 $
Accumulated
Amortization
Net
Carrying
Value
17,393 $
10,275
1,912
368
4,885
5,394
—
—
29,948 $ 10,279
In the fourth quarter of 2022 the Company assessed the useful life of the acquired Wicket-developed technology and
changed its estimate of the expected useful life to 3 years. This change was applied prospectively as of the beginning of the fourth
quarter 2022.
The following table summarizes amortization expense related to intangible assets for the years ended December 31, 2023,
2022 and 2021:
Cost of subscription and support revenue $
Sales and marketing
$
Year Ended December 31,
2023
2022
2021
2,270 $
1,641
3,911 $
1,757 $
1,662
3,419 $
1,420
1,652
3,072
The estimated remaining amortization expense for each of the five succeeding years and thereafter is as follows:
Year Ending December 31,
2024
2025
2026
2027
2028
2029 and thereafter
Total
Amount
3,688
2,141
536
3
—
—
6,368
$
$
Goodwill was $74,859 at December 31, 2023 and 2022. There were no changes in the carrying amount of goodwill for the
year ended December 31, 2023.
F-20
The Company views its operations and manages its business as one reporting unit and tests goodwill and its definite-lived
intangible assets annually on October 31. As of October 31, 2023, the Company did not identify an impairment triggering event
and assessed impairment for goodwill and other definite-lived intangible assets using a qualitative approach and quantitative
approach, respectively.
During the two months ended December 31, 2023 the Company identified a triggering event, the decrease in its stock price
as of December 31, 2023 (the interim testing date), that may indicate impairment.
The Company reviewed its quantitative analysis for its definite-lived intangible assets as of October 31, 2023, that used
undiscounted cash flow models, and determined that the assumptions used in the undiscounted cash flow model were still
applicable as of December 31, 2023 and that there was no impairment on our definite-lived intangible assets. The Company's
significant assumptions in the undiscounted cash flow models include, but are not limited to, its revenue growth rates assumption.
As the Company has one reporting unit all of its goodwill was allocated to that unit for the purpose of testing for
impairment. To determine fair value of its one reporting unit, the Company engaged a third-party valuation expert and provided
the valuation expert with projected financial information prepared by management. The Company took the income approach and
used a discounted cash flow model as its valuation technique to measure the fair value of its reporting unit. The discounted cash
flow model used forecasted cash flows plus a terminal value based on capitalizing the last period's cash flows using a perpetual
growth rate. The Company's significant assumptions in the discounted cash flow model include, but are not limited to: the
weighted average cost of capital ("WACC", the rate at which future cash flows are discounted to present value), revenue growth
rates, including the perpetual growth rate for the terminal year, and operating margins of the reporting unit. Lastly, the Company
reconciled the aggregate of the discounted cash flows to its market capitalization, which included a reasonable control premium
based on observed market conditions. The result of the goodwill impairment test performed indicated that estimated fair value
exceeded the carrying value of the reporting unit. As such, the Company feels the reporting unit was not at risk of impairment as
of the interim testing date.
Conditions that could trigger future impairment assessment include, but are not limited to, a significant adverse change in
certain agreements, significant underperformance relative to historical or projected future operating results, an economic
downturn in customers’ industries, increased competition, a significant reduction in our stock price for a sustained period or a
reduction of our market capitalization relative to net book value. These factors could have a negative material impact to the fair
value of the Company's reporting unit and could result in a future impairment charge.
8. Leases
The Company’s corporate headquarters are located in Boston, Massachusetts, pursuant to a lease of approximately 40,000
square feet that terminates on September 30, 2032. The initial term of the lease is for ten years. The Company has the option to
extend the lease for two successive five-year terms which were not recognized in the initial liability and right-of-use asset, as the
Company does not expect to exercise the extension. The Company has a right of first offer to lease additional office space that
becomes available within the 281 Summer Street premises. In connection with the office lease, the Company provided a security
deposit, in the form of a letter of credit, in the amount of $0.8 million in January 2022. This letter of credit will be auto-renewed
annually, unless a 60 day notice is received from the landlord. An automatic extension can only be implemented through
November 30, 2032. This letter of credit is irrevocable and does not have a cash requirement other than the amount already set
forth. In the event of a default, the landlord must provide written notice of default before drawing from the letter of credit as a
security deposit, or to remedy the amount owed.
The Company leases offices in Tokyo, Japan; Sydney, Australia; Chennai, India; Seoul, South Korea; London, England;
Guadalajara, Mexico; Funchal, Portugal and Covilha, Portugal.
The Company’s rent expense was $4.1 million, $5.1 million, $4.3 million for the years ended December 31, 2023, 2022 and
2023, respectively.
The Company entered into one operating lease agreement in the current year, resulting in the recording of an initial liability
and corresponding right-of-use asset of $0.3 million.
The weighted average remaining lease terms and discount rates were as follows:
F-21
Weighted average remaining lease term (years)
Weighted average discount rate
December 31,
2023
2022
2021
7.77
5.9 %
8.27
5.8 %
8.81
5.7 %
The weighted-average remaining non-cancelable lease term for the Company’s operating leases was 7.77 years at
December 31, 2023. The weighted-average discount rate was 5.9% at December 31, 2023.
The Company’s operating leases expire at various dates through 2032. The following shows the undiscounted cash flows for
the remaining years under operating leases at December 31, 2023:
Year Ending December 31,
2024
2025
2026
2027
2028
2029 and thereafter
Total operating lease commitments
Less imputed interest
Total lease liabilities
Operating
Lease
Commitments
4,774
4,235
3,981
4,010
3,802
10,779
31,581
(9,737 )
21,844
$
$
The Company’s discounted current operating lease liability and discounted non-current lease liability at December 31, 2023
were $4.5 million and $17.4 million, respectively.
In the fourth quarter of 2020 the Company subleased 100% of one of its London offices through the remaining lease term.
For the years ended December 31, 2023, 2022 and 2021 the Company recognized rent income of $0.8 million, $0.8 million and
$0.9 million, respectively, within operating expenses. Lease income relating to variable lease payments was immaterial.
The Company’s London sublease expires in December of 2024. The undiscounted cash inflows from the London sublease
for the remaining year at December 31, 2023 was $0.9 million.
9.
Commitments and Contingencies
Legal Matters
The Company, from time to time, is party to litigation arising in the ordinary course of business. Management does not
believe that the outcome of these claims will have a material adverse effect on the consolidated financial position, results of
operations or cash flows of the Company based on the status of proceedings at this time.
Guarantees and Indemnification Obligations
The Company typically enters into indemnification agreements in the ordinary course of business. Pursuant to these
agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses and costs incurred by the
indemnified party, generally the Company’s customers, in connection with patent, copyright, trade secret, or other intellectual
property or personal right infringement claims by third parties with respect to the Company’s technology. The term of these
indemnification agreements is generally perpetual after execution of the agreement. The Company has typically limited the
maximum potential value of such potential future payments in relation to the value of the contract. The Company has received
requests for indemnification from customers in connection with patent infringement suits brought against the customer by a third
party. Based on historical experience and information known as of December 31, 2023, the Company has incurred minimal costs
for the above guarantees and indemnities.
In certain circumstances, the Company warrants that its products and services will perform in all material respects in
accordance with its standard published specification documentation in effect at the time of delivery of the licensed products and
services to the customer for the warranty period of the product or service. To date, the Company has not incurred significant
expense under its warranties and, as a result, the Company believes the estimated fair value of these agreements is immaterial.
F-22
10. Stockholders’ Equity
Common Stock
Common stockholders are entitled to one vote per share. Holders of common stock are entitled to receive dividends, when
and if declared by the Board.
Common Stock Reserved for Future Issuance
At December 31, 2023, the Company has reserved the following shares of common stock for future issuance:
Common stock options outstanding
Restricted stock unit awards outstanding
Shares available for issuance under all stock-based compensation plans
Total shares of authorized common stock reserved for future issuance
December 31,
2023
2,247,951
5,619,438
7,768,241
15,635,630
11. Stock-Based Compensation
Stock-Based Compensation Plans
At December 31, 2023, the Company had seven stock-based compensation plans:
•
•
•
•
•
•
•
On February 8, 2022, the Company adopted the Brightcove Inc. 2022 Inducement Plan (the 2022 Plan). The 2022
Plan provides for the issuance of employment inducement awards to the Company’s Chief Executive Officer
(CEO).
On March 25, 2021, the Board adopted, the Brightcove Inc. 2021 Stock Incentive Plan (the 2021 Plan) which was
approved by the shareholders on May 11, 2021. On March 15, 2023, the Board adopted an amendment to the
2021 plan to increase the aggregate number of shares of Stock reserved for issuance under the Plan by 7,000,000,
which was approved by the shareholders on May 10, 2023. The maximum number of shares of stock reserved and
available for issuance under the 2021 Plan, as amended, is 13,200,000 shares.
The 2018 Inducement Plan (the 2018 plan). Effective April 11, 2018, the Company adopted the 2018 Plan. The
2018 Plan provides for the issuance of stock options and restricted stock units to the Company’s CEO.
The Brightcove Inc. 2014 Stock Option Inducement Plan (the 2014 Stock Inducement Plan). In 2014, the
Company adopted the 2014 Stock Inducement Plan in connection with the Unicorn asset purchase agreement.
The 2012 RSU Inducement Plan (the 2012 RSU Plan). In 2012, the Company adopted the 2012 RSU Plan in
connection with the acquisition of Zencoder. The restricted stock units were settled in shares of the Company’s
common stock upon vesting.
The 2012 Stock Incentive Plan (the 2012 Plan). The 2012 Plan provided for the issuance of incentive and non-
qualified stock options, restricted stock, and other equity awards to the Company’s employees, officers, directors,
consultants and advisors. In conjunction with the effectiveness of the 2021 Plan, the Board voted that no further
stock options or other equity-based awards may be granted under the 2012 Plan.
The Amended and Restated 2004 Stock Option and Incentive Plan (the 2004 Plan). The 2004 Plan, like the 2012
Plan, provided for the issuance of incentive and non-qualified stock options, restricted stock, and other equity
awards to the Company’s employees, officers, directors, consultants and advisors. In conjunction with the
effectiveness of the 2012 Plan, the Board voted that no further stock options or other equity-based awards may be
granted under the 2004 Plan.
The following table summarizes stock-based compensation expense as included in the consolidated statement of operations
for the years ended December 31, 2023, 2022 and 2021:
F-23
Cost of subscription and support
revenue
Cost of professional services and
other revenue
Research and development
Sales and marketing
General and administrative
Other (expense) benefit
Year Ended December 31,
2023
2022
2021
$
506 $
508 $
627
375
2,453
4,197
6,368
—
13,899 $
433
2,746
3,990
5,622
249
13,548 $
401
1,677
2,957
4,306
—
9,968
$
As of December 31, 2023, there was $25.4 million of total unrecognized stock-based compensation expense related to
stock-based awards that is expected to be recognized over a weighted-average period of 2.3 years.
Stock Options
The following is a summary of the stock option activity for all stock option plans during the years ended December 31,
2023, 2022 and 2021:
Outstanding at December 31, 2020
Granted
Exercised
Cancelled
Outstanding at December 31, 2021
Granted
Exercised
Cancelled
Outstanding at December 31, 2022
Granted
Exercised
Cancelled
Outstanding at December 31, 2023
Exercisable at December 31, 2023
Number of
Shares
2,110,486 $
114,973
(333,190 )
(210,792 )
1,681,477 $
—
(28,400 )
(233,310 )
1,419,767 $
1,563,688
—
(735,504 )
2,247,951 $
815,986 $
Weighted-
Average
Exercise Price
Weighted-Average
Remaining
Contractual
Term (In Years)
Aggregate
Intrinsic
Value
9.19
14.88
8.53
10.26
9.59
—
6.24
11.11
9.39
7.00
—
9.39
7.73
8.74
$
—
$
2,999
$
1,938
$
$
$
7.11 $
3.50 $
40
4
—
—
—
(1) The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s
common stock on December 31, 2023, December 31, 2022, and December 31, 2021 of $2.59, $5.23, and $10.22 per share,
respectively, or the date of exercise, as appropriate, and the exercise price of the underlying options.
On March 20, 2023, the Company granted 1,563,688 premium-priced options to some of its employees under its 2021 Stock
Incentive Plan. The options have a strike price of $7.00 and vest in equal installments over three years following March 10, 2023.
The binomial lattice model is used to estimate the fair value of the premium-priced options. The binomial lattice model calculates
multiple potential outcomes for option exercises and establishes a fair value based on the most likely outcome. Key assumptions
for the binomial lattice model include share price, volatility, the early exercise multiple, risk-free rate, expected dividends, and
number of time steps.
Prior to 2023, the Company had only granted service-based options under its stock compensation plans. The fair value of
each option grant issued under the Company’s stock-based compensation plans prior to 2023 was estimated using the Black-
Scholes option-pricing model.
F-24
The weighted-average fair value of options granted and assumptions utilized to determine such values are presented in the
following table:
Weighted-average fair value of options granted
during the year
Risk-free interest rate
Expected volatility
Expected life (in years)
Expected dividend yield
Restricted Stock Units
Year Ended December 31,
2022
2023
2021
$
1.75 $
— $
6.98
3.4 - 4.8%
47.9 - 55.5%
—
—
—
—
—
—
1.22 %
48 %
6.2
—
The Company has entered into restricted stock unit (RSU) agreements with certain of its employees pursuant to the 2012
Plan, the 2021 Plan, and the 2022 Plan. Vesting occurs periodically at specified time intervals, ranging from three months to four
years, and in specified percentages. Upon vesting, the holder will receive one share of the Company’s common stock for each unit
vested.
Under the 2012 Plan, the Company granted restricted stock units to certain key executives, which contain both performance-
based (“P-RSU”) and service-based vesting conditions (“S-RSU”). The Company measures compensation expense for these
performance-based awards based upon a review of the Company’s expected achievement against specified financial performance
targets. Compensation cost is recognized on a ratable basis over the requisite service period for each series of grants to the extent
management has deemed that such awards are probable of vesting based upon the expected achievement against the specified
targets. On a periodic basis, management reviews the Company’s expected performance and adjusts the compensation cost, if
needed, at such time. The Company determined that the conditions for a portion of the performance-based restricted stock units
were achieved in the first quarter of 2020. As such, the Company recognized $0.2 million of stock-based compensation expense
relating to performance-based awards for the year ended December 31, 2021. The Company did not recognize stock-based
compensation expense relating to the aforementioned performance-based awards in the years ended December 31, 2022, and
2023, respectively, as the Company determined that the conditions for further portions of the performance-based restricted stock
units to vest were not achieved.
Under the 2022 Plan, the Company granted 800,000 restricted stock units to the Company's CEO, in connection with the
commencement of his employment on March 28, 2022. Of the total restricted stock units granted, 300,000 are subject solely to
service-based vesting conditions (the “RSUs”) and 500,000 are subject to both market-based and service-based vesting conditions
(the “PSUs”). The RSUs vest in equal annual installments over three years following March 28, 2022. The market-based vesting
conditions applicable to the PSUs are achieved only if the volume weighted average price of the Company’s common stock
during any 20 consecutive trading day period in the four year performance period following the CEO’s start date, March 28, 2022,
equals or exceeds stock price hurdles ranging from $12.50 to $30.00, increasing in seven increments of $2.50. The percentage of
the award that is earned upon achievement of each stock price hurdle is 10% of the PSUs for each of the first two achievement
tiers, 12.5% for each of the next four achievement tiers and 15% for each of the final two achievement tiers. The PSUs vest 50%
upon achievement of a stock price hurdle and 50% upon the earlier of the one-year anniversary of such achievement date or
March 28, 2025, subject to the CEO’s continued employment through the applicable vesting date.
For restricted stock units with market-based performance conditions, the cost of the awards is recognized as the requisite
service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The
Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units. The Monte-Carlo
simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely
outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility, expected
dividends and the correlation coefficient.
F-25
The following table summarizes the P-RSU and S-RSU activity during the year ended December 31, 2023, 2022, and 2021:
S-RSU Shares
Weighted
Average Grant
Date Fair Value P-RSU Shares
Weighted
Average Grant
Date Fair Value
Total RSU
Shares
Weighted
Average Grant
Date Fair
Value
2,000,416 $
2,269,341
(680,769 )
(673,268 )
10.30 1,587,801 $
64,011
12.24
(181,910 )
9.85
(448,730 )
11.67
10.40
12.65
8.74
9.59
3,588,217 $
2,333,352
(862,679 )
(1,121,998 )
10.35
12.25
9.62
10.84
2,915,720 $
11.66 1,021,172 $
11.04
3,936,892 $
11.50
S-RSU Shares
Weighted
Average Grant
Date Fair Value P-RSU Shares
Weighted
Average Grant
Date Fair Value
Total RSU
Shares
Weighted
Average Grant
Date Fair
Value
2,915,720 $
3,803,691
(824,127 )
(1,356,935 )
11.66 1,021,172 $
500,000
6.94
—
11.63
(848,314 )
10.09
11.04
4.06
0.00
11.06
3,936,892 $
4,303,691
(824,127 )
(2,205,249 )
11.50
6.61
11.63
10.47
4,538,349 $
8.19
672,858 $
6.54
5,211,207 $
7.88
S-RSU Shares
Weighted
Average Grant
Date Fair Value P-RSU Shares
Weighted
Average Grant
Date Fair Value
Total RSU
Shares
Weighted
Average Grant
Date Fair
Value
4,538,349 $
3,102,058
(1,384,242 )
(1,153,897 )
8.19
4.51
8.35
7.61
672,858 $
—
—
(155,688 )
6.54
0.00
0.00
10.14
5,211,207 $
3,102,058
(1,384,242 )
(1,309,585 )
5,102,268 $
6.04
517,170 $
4.54
5,619,438 $
7.88
4.51
8.35
7.91
5.90
Unvested by December 31,
2020
Granted
Vested and issued
Cancelled
Unvested by December 31,
2021
Unvested by December 31,
2021
Granted
Vested and issued
Cancelled
Unvested by December 31,
2022
Unvested by December 31,
2022
Granted
Vested and issued
Cancelled
Unvested by December 31,
2023
12. Income Taxes
Loss before the provision (benefit) for income taxes consists of the following jurisdictional (loss) income:
Year Ended December 31,
2022
2023
2021
Domestic
Foreign
Total
$ (24,613 ) $ (11,391 ) $
2,324
$ (21,721 ) $ (9,067 ) $
2,892
4,136
2,063
6,199
F-26
The provision (benefit) for income taxes in the accompanying consolidated financial statements consists of the following:
Current provision:
Federal
State
Foreign
Total current
Deferred (benefit):
Federal
State
Foreign
Total deferred
Total (benefit) provision
Year Ended December 31,
2022
2023
2021
$
$
(4 ) $
117
1,122
1,235
(5 )
2
(67 )
(70 )
1,165 $
- $
66
880
946
(834 )
(168 )
4
(998 )
(52 ) $
-
7
801
808
1
2
(9 )
(6 )
802
A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is as follows:
Tax at statutory rates
State income taxes
Change in tax rate
Permanent differences
Global intangible low-taxed income
Foreign rate differential
Research and development credits
Change in valuation allowance
Other, net
Effective tax rate
Year Ended December 31,
2022
(21.0%)
(8.8%)
(0.8%)
18.6%
19.9%
2.8%
(9.1%)
(1.4%)
(0.7%)
(0.5%)
2023
(21.0%)
(3.7%)
1.4%
11.4%
0%
1.0%
(4.2%)
19.8%
0.7%
5.4%
2021
(21.0%)
3.4%
(0.2%)
4.4%
0%
(2.6%)
7.6%
(3.4%)
(1.1%)
(12.9%)
The income tax effect of each type of temporary difference and carryforward as of December 31, 2023 and 2022 is as
follows:
Deferred tax assets:
Net operating loss carry-forwards
Tax credit carry-forwards
Stock-based compensation
Fixed Assets
Account receivable reserves
Accrued compensation
Lease Liability
Capitalized research expenditures
Other temporary differences
Total deferred tax assets
Deferred tax liabilities:
Other deferred tax liabilities
ROU Asset
Intangible assets
Total deferred tax liabilities
Valuation allowance
Net deferred tax asset (liability)
As of December 31,
2022
2023
$ 36,936 $ 41,239
14,588
2,127
134
340
1,050
5,524
6,733
829
72,564
15,691
1,853
-
140
602
4,955
13,234
1,159
74,570
(4,196 )
(4,101 )
(1,215 )
(9,512 )
(65,070 )
(12 ) $
(4,046 )
(4,578 )
(3,305 )
(11,929 )
(60,717 )
(82 )
$
The Company is required to compute income tax expense in each jurisdiction in which it operates. This process requires the
Company to project its current tax liability and estimate its deferred tax assets and liabilities, including net operating loss (NOL)
and tax credit carry-forwards. In assessing the ability to realize the net deferred tax assets, management considers whether it is
more likely than not that some portion or all of the net deferred tax assets will not be realized.
F-27
The Company has provided a valuation allowance against substantially all of its remaining U.S. net deferred tax assets as of
December 31, 2023 and December 31, 2022, as based upon the level of historical U.S. losses and future projections over the
period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the
Company will not realize the benefits of these deductible differences. The Company has provided a valuation allowance against
the net deferred tax assets of its foreign subsidiaries as of December 31, 2023 and December 31, 2022 largely based on the
significant weight of negative evidence given to the consolidated worldwide cumulative loss position for the current year and the
prior two years. The increase in the valuation allowance from 2022 to 2023 of $4.4 million principally relates to the current year
U.S. losses and generation of federal and state research and development tax credits.
As of December 31, 2023, the Company had federal net operating losses of approximately $154.0 million, of which $108.3
million are available to offset future taxable income, if any, through 2037 and $45.7 million which are available to offset future
taxable income indefinitely. As of December 31, 2023, the Company had state net operating losses of approximately $76.5
million, of which $73.4 million are available to offset future taxable income, if any, through 2041 and $3.1 million which are
available to offset future taxable income indefinitely. The Company also had federal and state research and development tax
credits of $10.7 million and $6.3 million, respectively, which expire in various amounts through 2043. The net operating loss and
tax credit amounts are subject to annual limitations under Section 382 change of ownership rules under the U.S. Internal Revenue
Code of 1986, as amended. This could limit the amount of tax attributes that can be utilized annually to offset future taxable
income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior
to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company
completed an analysis covering the tax periods from inception through December 31, 2022 and performed a high level assessment
of the period January 1, 2023 through December 31, 2023 to determine whether there may have been a Section 382 ownership
change and determined that it is more-likely-than-not that the Company’s net operating and tax credit amounts as disclosed are
not subject to any material Section 382 limitations.
Effective January 1, 2022, the Tax Cuts and Jobs Act of 2017 requires the Company to capitalize, and subsequently
amortize R&D expenses over five years for research activities conducted in the U.S. and over fifteen years for research activities
conducted outside of the U.S. As of December 31, 2023, the Company has recorded a deferred tax asset of $13.2 million related
to the capitalized R&D expenditures which is offset by a decrease in its net operating loss carryforward.
At December 31, 2023 and 2022, the Company had no recorded liabilities for uncertain tax positions, nor any accrued
interest or penalties related to uncertain tax positions.
The Company files income tax returns in the U.S. federal tax jurisdiction, various state and various foreign jurisdictions.
The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state
jurisdictions for the tax years ended 2020 through 2023. Since the Company is in a U.S. loss carryforward position, carryforward
tax attributes generated in prior years may still be adjusted upon future examination if they have or will be used in a future period.
Additionally, certain non-U.S. jurisdictions are no longer subject for income tax examinations by authorities for tax years before
2018.
No additional U.S. income taxes or foreign withholding taxes have been provided for any additional outside basis
differences inherent in the Company’s foreign entities as these amounts continue to be indefinitely reinvested in foreign
operations based on management’s current intentions. Determining the amount of unrecognized deferred tax liability related to
any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these
entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable.
13. Debt
On November 1, 2023, the Company entered into a loan modification agreement to an existing amended and restated loan
and security agreement with a lender (collectively, the “Loan Agreement”). The Loan Agreement provides for up to a $30.0
million asset-backed line of credit (the “Line of Credit”). Borrowings under the Line of Credit are secured by substantially all of
the Company’s assets, excluding its intellectual property. Outstanding amounts under the Line of Credit accrue interest at a rate as
follows: (i) for prime rate advances, the prime rate plus 225 basis points and (ii) for Secured Overnight Financing Rate ('SOFR")
advances, the greater of (A) the SOFR rate plus 225 basis points and (B) 4%. Under the Loan Agreement, the Company must
comply with certain financial covenants, including maintaining a minimum asset coverage ratio. If there is outstanding principal
during any month, the Company must also maintain a minimum net income threshold based on non-GAAP operating measures.
Failure to comply with these covenants, or the occurrence of an event of default, could permit the lenders under the Line of Credit
to declare all amounts borrowed under the Line of Credit, together with accrued interest and fees, to be immediately due and
payable. The Line of Credit agreement will expire on November 1, 2026
F-28
. The Company was in compliance with all applicable covenants under the Line of Credit as of December 31, 2023 and there were
no borrowings outstanding as of December 31, 2023.
14. Accrued Expenses
Accrued expenses consist of the following:
Accrued payroll and related benefits
Accrued sales and other taxes
Accrued professional fees and outside contractors
Accrued content delivery
Accrued other liabilities
Total
December 31,
2023
2022
$ 6,499 $ 10,082
2,601 3,098
2,163 3,057
3,528 5,684
2,775 4,956
$ 17,566 $ 26,877
15. Segment Information
Disclosure requirements about segments of an enterprise and related information establishes standards for reporting
information regarding operating segments in annual financial statements and requires selected information of those segments to
be presented in interim financial reports issued to stockholders. Operating segments are identified as components of an enterprise
about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-
making group, in making decisions on how to allocate resources and assess performance. The Company’s chief decision maker is
its chief executive officer. The Company and the chief decision maker view the Company’s operations and manage its business as
one operating segment.
Geographic Data
Total revenue to unaffiliated customers by geographic area, based on the location of the customer, was as follows:
Revenue:
North America
Europe
Japan
Asia Pacific
Other
Total revenue
Year Ended December 31,
2022
2023
2021
$
$
120,378 $
32,922
20,080
27,421
386
201,187 $
118,755 $ 119,079
37,947
36,177
25,272
21,988
28,261
33,645
534
443
211,008 $ 211,093
North America is comprised of revenue from the United States, Canada and Mexico. Revenue from customers located in the
United States was $111.7 million, $111.8 million and $111.5 million during the years ended December 31, 2023, 2022 and 2021,
respectively. Other than the United States and Japan, no country contributed more than 10% of the Company’s total revenue
during the years ended December 31, 2023, 2022, and 2021, respectively.
16. 401(k) Savings Plan
The Company maintains a defined contribution savings plan covering all eligible U.S. employees under Section 401(k) of
the Internal Revenue Code. Company contributions to the plan may be made at the discretion of the Board. During the years
ended December 31, 2023, 2022 and 2021, the Company has made contributions to the plan of $1.4 million, $0.8 million and $0.4
million, respectively.
17. Restructuring
F-29
In March 2023, the Company took an action to restructure certain parts of the Company with the intent of aligning skills with the
Company’s strategy and facilitating cost efficiencies and savings. As a result certain headcount reductions were necessary. The
Company incurred approximately $0.4 million in restructuring charges during the year ended December 31, 2023 in connection
with this action. The restructuring charges reflect post-employment benefits, and the Company does not expect to incur any
additional restructuring charges related to this action. The restructuring charges are reflected in the Condensed Consolidated
Statements of Operations as follows: $0.2 million - General and Administrative; $0.1 million – Research and Development; and
$0.1 million – Sales and Marketing. The Company paid the entire amount by March 31, 2023.
On April 28, 2023, the Company authorized a restructuring that is designed to reduce operating costs, improve operating
margins and focus on key growth and strategic priorities (the "Plan"). The Plan includes a reduction of the Company's then-
current workforce by approximately 10%. The Company incurred approximately $2.4 million in restructuring charges during the
year ended December 31, 2023 in connection with the Plan. The restructuring charges reflect post-employment benefits. The
restructuring charges are reflected in the Condensed Consolidated Statements of Operations as follows: $1.2 million in Sales and
Marketing; $0.9 million in Research and Development; $0.2 million in General and administrative and $0.1 million in Cost of
Revenue. The Company paid all $2.4 million of the restructuring charges by September 30, 2023.
18. Subsequent Events
On January 11, 2024, the Company took an action to restructure certain parts of the Company with the intent of aligning
skills with the Company’s strategy and facilitating cost efficiencies and savings. As a result certain headcount reductions were
necessary. The Company estimates it will incur between $1.6 million and $1.8 million in restructuring charges in the three months
ended March 31, 2024 in connection with this action. The restructuring charges will primarily reflect post-employment benefits
and will be reflected in the Condensed Consolidated Statements of Operations. The Company expects to pay the amounts due as a
result of the restructuring action by June 30, 2024, with the majority expected to be paid before March 31, 2024.
On February 21, 2024, Robert Noreck, the Company’s Chief Financial Officer, Principal Financial Officer and Principal
Accounting Officer (collectively, “CFO”), notified the Company of his intention to resign. The Company and Mr. Noreck entered
into a Transition and Resignation Agreement dated February 21, 2024, pursuant to which Mr. Noreck will step down as CFO
effective as of the earlier of May 31, 2024 and the appointment of a successor CFO (the “Transition Date”). Beginning on the
Transition Date, Mr. Noreck will transition into the role of a consultant through September 30, 2024, at which time Mr. Noreck’s
services to the Company will terminate. The Company has agreed that Mr. Noreck’s employment need not be exclusive to the
Company after June 1, 2024.
F-30
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Annual Report on Form 10-
K. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date,
our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 using
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its Internal Control-
Integrated Framework (2013). Based on this assessment and those criteria, management concluded that our internal control over
financial reporting was effective as of December 31, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst &
Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
F-51
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Brightcove Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Brightcove Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Brightcove Inc. (the Company) maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated
statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the
period ended December 31, 2023, and the related notes and our report dated February 22, 2024 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 22, 2024
F-52
Item 9B. Other Information
During the three month period ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of
the Securities Exchange Act of 1934, as amended) adopted, terminated or modified a Rule 10b5-1 trading arrangement or any
“non-Rule 10b5-1 trading agreement” (as defined in Item 408(c) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
F-53
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Incorporated by reference from the information in our Proxy Statement for our 2024 Annual Meeting of Stockholders,
which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.
Item 11. Executive Compensation
Incorporated by reference from the information in our Proxy Statement for our 2024 Annual Meeting of Stockholders,
which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Incorporated by reference from the information in our Proxy Statement for our 2024 Annual Meeting of Stockholders,
which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.
Item 13. Certain Relationships and Related Transactions and Director Independence
Incorporated by reference from the information in our Proxy Statement for our 2024 Annual Meeting of Stockholders,
which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.
Item 14. Principal Accountant Fees and Services
Incorporated by reference from the information in our Proxy Statement for our 2024 Annual Meeting of Stockholders,
which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.
F-54
PART IV
Item 15. Exhibits, Financial Statements and Schedules
(a)(1) Financial Statements.
The response to this portion of Item 15 is set forth under Item 8 above.
(a)(2) Financial Statement Schedules.
All schedules have been omitted because they are not required or because the required information is given in the
Consolidated Financial Statements or Notes thereto set forth under Item 8 above.
(a)(3) Exhibits.
The exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10-K.
Exhibits
2.1* (1)
2.2* (2)
3.1* (3)
3.2* (4)
4.1* (5)
4.2* (6)
4.3* (7)
4.4* (8)
4.5* (9)
4.6* (10)
4.7* (11)
4.8* (12)
10.1* (13)
10.2†* (14)
10.3†* (15)
10.4†* (16)
10.5† (17)
10.6* (18)
10.7* (19)
10.8* (20)
Agreement and Plan of Merger, dated as of July 26, 2012, by and among the Registrant, Zebra Acquisition
Corporation, Zencoder Inc. and the Securityholders’ Representative named therein.
Asset Purchase Agreement and Plan of Reorganization, dated as of January 6, 2014, by and among the
Registrant, Cacti Acquisition LLC, Unicorn Media, Inc., Unicorn Media of Arizona, Inc., U Media Limited
and the Securityholders’ Representative named therein.
Eleventh Amended and Restated Certificate of Incorporation.
Amended and Restated By-Laws.
Form of Common Stock certificate of the Registrant.
Second Amended and Restated Investor Rights Agreement dated January 17, 2007, by and among the
Registrant, the investors listed therein, and Jeremy Allaire, as amended.
Brightcove Inc. RSU Inducement Plan.
Form of Restricted Stock Unit Award Agreement under the Brightcove Inc. 2012 RSU Inducement Plan.
Brightcove Inc. 2018 Inducement Plan.
Form of Stock Option Agreement under the Brightcove Inc. 2018 Inducement Plan.
Form of Performance-Based Restricted Stock Unit Agreement under the Brightcove Inc. 2018 Inducement
Plan.
Description of Capital Stock.
Form of Indemnification Agreement between the Registrant and its directors and executive officers.
Amended and Restated 2004 Stock Option and Incentive Plan of the Registrant, together with forms of
award agreement.
2012 Stock Incentive Plan of the Registrant.
Form of Incentive Stock Option Agreement under the 2012 Stock Incentive Plan.
Form of Non-Qualified Stock Option Agreement for Company Employees under the 2012 Stock Incentive
Plan.
Loan and Security Agreement dated March 30, 2011 between Silicon Valley Bank and Brightcove Inc., as
amended.
Second Loan Modification Agreement dated April 29, 2013 between Silicon Valley Bank and Brightcove
Inc.
Third Loan Modification Agreement dated October 3, 2014 between Silicon Valley Bank and Brightcove
Inc.
10.9* (21)
10.10†* (22)
10.11†* (23)
10.12†* (24)
10.13†* (25)
Loan and Security Agreement dated November 19, 2015 between Silicon Valley Bank and Brightcove Inc.
Non-Employee Director Compensation Policy.
Senior Executive Incentive Bonus Plan.
Form of Restricted Stock Unit Award Agreement under the 2012 Stock Incentive Plan.
Form of Restricted Stock Unit Award Agreement for Company Employees under the 2012 Stock Incentive
Plan.
F-55
10.14†* (26)
10.15* (27)
10.16†* (28)
10.17†* (29)
10.18†* (30)
10.19* (31)
10.20* (32)
10.21* (33)
10.22†* (34)
10.23†* (35)
10.24†* (36)
10.25†* (37)
10.26†* (38)
10.27†* (39)
10.28†* (40)
10.29†* (41)
10.30†* (42)
10.31*+ (43)
10.32†* (44)
10.33†* (45)
10.34†* (46)
10.35*+ (47)
10.36†* (48)
10.37*+ (49)
10.38†**
21.1**
23.1**
24.1**
31.1**
31.2**
32.1**
97.1**
101.INS**
101.SCH**
101.CAL**
101.DEF**
101.LAB**
101.PRE**
104*
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the 2012 Stock
Incentive Plan.
Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the 2012 Stock
Incentive Plan.
Employment Agreement dated September 20, 2017 between the Registrant and David Plotkin.
Non-Employee Director Compensation Policy, as amended and restated on April 11, 2018.
Employment Agreement dated May 3, 2018 between the Registrant and Robert Noreck.
Second Amended and Restated Loan and Security Agreement dated December 14, 2018 between the
Registrant and Silicon Valley Bank.
First Loan Modification Agreement dated March 29, 2019 between the Registrant and Silicon Valley Bank.
Third Loan Modification Agreement dated December 28, 2020 between the Registrant and Silicon Valley
Bank.
Brightcove Inc. 2021 Stock Incentive Plan.
Form of Incentive Stock Option Agreement under the Brightcove Inc. 2021 Stock Incentive Plan.
Form of Non-Qualified Stock Option Agreement for Brightcove Employees under the Brightcove Inc. 2021
Stock Incentive Plan.
Form of Non-Qualified Stock Option Agreement for Non-U.S. Employees under the Brightcove Inc. 2021
Stock Incentive Plan.
Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Brightcove Inc.
2021 Stock Incentive Plan.
Form of Restricted Stock Unit Agreement for Brightcove Employees under the Brightcove Inc. 2021 Stock
Incentive Plan.
Form of Restricted Stock Unit Agreement for Non-U.S. Employees under the Brightcove Inc. 2021 Stock
Incentive Plan.
Form of Restricted Stock Unit Agreement for Non-Employee Directors under the Brightcove Inc. 2021
Stock Incentive Plan.
Employment Agreement, dated February 8, 2022 by and between the Registrant and Marc DeBevoise.
Lease dated November 23, 2021, between 281 Summer Street, LLC and Brightcove Inc.
Brightcove Inc. 2022 Inducement Plan.
Form of Restricted Stock Unit Award Agreement under the Brightcove Inc. 2022 Inducement Plan.
Form of Performance-Based Restricted Stock Unit Award Agreement under the Brightcove Inc. 2022
Inducement Plan.
Second Loan Modification Agreement dated July 29, 2019 between the Registrant and Silicon Valley Bank.
Amendment No. 1 to the Brightcove Inc. 2021 Stock Incentive Plan
Fourth Loan Modification Agreement, dated as of November 1, 2023, by and between the Registrant and the
Bank.
Transition and Resignation Agreement dated February 21, 2024 between the Registrant and Robert Noreck.
Subsidiaries of the Registrant.
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
Power of Attorney (included on signature page).
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Amended and Restated Policy for Recoupment of Incentive Compensation.
Inline XBRL Instance Document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension
information contained in Exhibits 101.*)
(1)
Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission (the “Commission”) on July 26, 2012.
F-56
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 6, 2014.
Filed as Exhibit 3.2 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
Filed as Exhibit 3.3 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
Filed as Exhibit 4.1 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on August 24,
2011.
Filed as Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on August 14,
2012.
Filed as Exhibit 4.5 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on August 14,
2012.
(9)
Filed as Exhibit 4.4 to Registrant’s Registration Statement on Form S-8 filed with the Commission on May 1, 2018.
(10) Filed as Exhibit 4.5 to Registrant’s Registration Statement on Form S-8 filed with the Commission on May 1, 2018.
(11) Filed as Exhibit 4.6 to Registrant’s Registration Statement on Form S-8 filed with the Commission on May 1, 2018.
(12) Filed as Exhibit 4.9 to Registrant’s Annual Report on Form 10-K filed with the Commission on February 27, 2020.
(13) Filed as Exhibit 10.1 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(14) Filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on August 24,
2011.
(15) Filed as Exhibit 10.3 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(16) Filed as Exhibit 10.4 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(17) Filed as Exhibit 10.5 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(18) Filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on August 24,
2011.
(19) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 30, 2013.
(20) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 7, 2014.
(21) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 20,
2015.
(22) Filed as Exhibit 10.14 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(23) Filed as Exhibit 10.15 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(24) Filed as Exhibit 10.16 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(25) Filed as Exhibit 10.17 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(26) Filed as Exhibit 10.18 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
(27) Filed as Exhibit 10.19 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the
Commission on February 6, 2012.
F-57
(28) Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on October 26,
2017.
(29) Filed as Exhibit 99.5 to Registrant’s Current Report on Form 8-K filed with the Commission on April 11, 2018.
(30) Filed as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2018.
(31) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 14,
2018.
(32) Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on April 24, 2019.
(33) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 29,
2020.
(34) Filed as Exhibit 99.1 to Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on May 17, 2021.
(35) Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(36) Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(37) Filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(38) Filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(39) Filed as Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(40) Filed as Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(41) Filed as Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2021.
(42) Filed as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 9, 2022.
(43) Filed as Exhibit 10.48 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 18,
2022.
(44) Filed as Exhibit 4.4 to Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 18, 2022.
(45) Filed as Exhibit 4.5 to Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 18, 2022.
(46) Filed as Exhibit 4.6 to Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 18, 2022.
(47) Filed as Exhibit 10.53 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 23,
2023.
(48) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2023.
(49) Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 1, 2023.
*
**
•
†
+
Incorporated herein by reference.
Filed herewith.
The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will
not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such
certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically
incorporates it by reference.
Indicates a management contract or any compensatory plan, contract or arrangement.
Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the Securities and
Exchange Commission.
Item 16. Form 10-K Summary
Not applicable.
F-58
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 22nd day of February, 2024.
Signatures
BRIGHTCOVE INC.
By:
/s/ Marc DeBevoise
Marc DeBevoise
Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes and appoints Marc DeBevoise, Robert Noreck
and David Plotkin, and each of them, with full power of substitution and resubstitution and full power to act without the other, as
his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on
behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and
perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or
his substitute or substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
/s/ Marc DeBevoise
Marc DeBevoise
/s/ Robert Noreck
Robert Noreck
/s/ Diane Hessan
Diane Hessan
/s/ Kristin Frank
Kristin Frank
/s/ Gary Haroian
Gary Haroian
/s/ Scott Kurnit
Scott Kurnit
/s/ Tsedal Neeley
Tsedal Neeley
/s/ Thomas E. Wheeler
Thomas E. Wheeler
Title
Chief Executive Officer (Principal Executive
Officer) and Director
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date
February 22, 2024
February 22, 2024
Chairman of the Board of Directors
February 22, 2024
Director
Director
Director
Director
Director
F-59
February 22, 2024
February 22, 2024
February 22, 2024
February 22, 2024
February 22, 2024
Exhibit 10.38
February 21, 2024
PERSONAL AND CONFIDENTIAL
Robert Noreck
Re: Transition and Resignation Agreement
Dear Rob:
This letter agreement (the “Agreement”) confirms that you will be transitioning from your roles
as Chief Financial Officer, Principal Accounting Officer, Principal Financial Officer and
Treasurer (collectively, “CFO”) with Brightcove Inc. (the “Company”) and, ultimately, resigning
from your employment with the Company. This Agreement also describes certain transition
duties you have agreed to perform and separation benefits you are eligible to receive. The
purpose of this Agreement is to establish an amicable arrangement for ending your employment
relationship, including releasing the Company and related persons or entities from any claims
and permitting you to receive separation pay and related benefits.
You and the Company agree as follows:
1. Resignation Date; Transition Period
a.Resignation Date; Transition Period. Provided you enter into, do not revoke and comply
with this Agreement, the Company will continue to employ you on an at-will basis until
September 30, 2024 (the “Resignation Date”), unless, prior to that date, the Company terminates
your employment due to (i) your breach of this Agreement (including without limitation your
failure to provide the Transitional Services) or any of the Ongoing Obligations (as defined
below); or (ii) your engaging in other behavior that justifies a for “Cause” termination (as
defined in your Employment Agreement dated May 3, 2018 (the “Employment Agreement”)) ((i)
or (ii) a “Specified Termination”). The time period between the date of this letter and the
Resignation Date shall be referred to as the “Transition Period.”
b.Transitional Services; Compensation and Benefits. Unless otherwise directed by the
Company, you will continue to perform your current job duties as CFO until the earlier of (i) the
Company’s appointment of a successor CFO and (ii) May 31, 2024, at which point you will
transition to the role of “Consultant.” As Consultant, you shall assist the Company with the
transition of your CFO responsibilities, and perform any other duties consistent with the
obligations of a transitioning Chief Financial Officer that the Company in its reasonable
discretion determines. As of April 1, 2024, you will be able to perform your duties as CFO, and
thereafter as Consultant, on less than a full-time basis. Further, as Consultant, you will work a
commercially reasonably number of hours to be mutually agreed upon by you and the Company.
Your duties during the Transition Period may continue to be performed remotely as is the case
now. The duties and responsibilities described in this Section 1.b shall be referred to as the
“Transitional Services”. During the period from the date of this Agreement to May 31, 2024,
you will remain an employee exclusively of Brightcove. During the period from June 1, 2024 to
September 30, 2024, your employment need not be exclusive to Brightcove, provided you
remain able to provide the Transitional Services during such period. During the Transition
Period, you will continue to be paid your current base salary in accordance with the Company’s
payroll practices now in effect and you will continue to be eligible for the employee benefits you
currently receive as an employee of the Company (including reimbursement of all reasonable
expenses incurred by you during the Transition Period, vacation, paid holidays, and Company
cost-sharing of employee benefits) as currently in effect, subject to the terms and conditions of
the Company’s benefit plans; provided, however, that notwithstanding anything to the contrary,
the Company shall cause you to be treated as a full-time employee for purposes of the
Company’s group health plans through the entire Transition Period. You shall be offered the
opportunity to purchase COBRA group health plan continuation coverage at your own expense
for the statutory period provided by COBRA immediately after the end of the Transition Period.
2.
Separation Pay
Provided you (i) enter into, do not revoke and comply with this Agreement, (ii) do not
experience a Specified Termination prior to September 30, 2024, and (iii) reaffirm the terms of
this Agreement including the general release in Section 4 so that it covers the period between the
date of this Agreement and the Resignation Date by signing and returning the Certificate
attached as Exhibit A hereto after the Resignation Date in accordance with the time frame
provided in such Certificate, and such Certificate becomes effective, the Company shall pay you
a pro-rated bonus for calendar year 2024 for your time served as CFO or Consultant through
May 31, 2024 (the “2024 Bonus”). The 2024 Bonus will continue to be calculated using 65% of
your annualized current base salary as the target amount, based on the Company’s actual
performance level for 2024 as determined by the Company’s Board of Directors (the “Board”) or
the Compensation Committee of the Board, as provided above and paid when the Company pays
2024 annual bonuses to other eligible employees in calendar year 2025 but in no event later than
March 30, 2025. In the event of your death prior to the completion of any payments to you under
this Agreement, any remaining unpaid amounts and employee benefits (including for avoidance
of doubt any vested equity compensation and the 2024 Bonus) shall be payable to your spouse
(or if no spouse survives you, to your estate) at the time and in the manner provided by this
Agreement.
3.
Equity
Your equity awards, including options to purchase the Company’s common stock and restricted
stock units, shall continue to be subject to the terms and conditions of the applicable Company
equity plan and any applicable stock option agreement or restricted stock unit award agreement
(collectively, the “Equity Documents”). Pursuant to the terms of the Equity Documents, all
Company equity awards held by you shall continue to vest while you remain employed by the
Company (including as Consultant) and all equity awards that are not vested as of the date that
your employment actually terminates shall terminate and be forfeited as of such date.
4. Release of Claims
2
In consideration for, among other terms, the opportunity to receive the 2024 Bonus, which you
acknowledge you would otherwise not be entitled to, you voluntarily release and forever
discharge the Company and its affiliated and related entities, their respective predecessors,
successors and assigns, its and their respective employee benefit plans and fiduciaries of such
plans, and the current and former officers, directors, managers, members, shareholders,
employees, attorneys, accountants and agents of each of the foregoing in their official and
personal capacities (collectively referred to as the “Releasees”) generally from all claims,
demands, debts, damages and liabilities of every name and nature, known or unknown
(“Claims”) that, as of the date when you sign this Agreement, you have, ever had, now claim to
have or ever claimed to have had against any or all of the Releasees. This release includes,
without limitation, all Claims:
•
•
•
•
•
•
•
•
relating to your employment by and separation from employment with the Company;
relating to your Employment Agreement;
of wrongful discharge or violation of public policy;
of breach of contract;
of retaliation or discrimination under federal, state or local law (including, without
limitation, Claims of discrimination, retaliation or otherwise under the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, and the Massachusetts Fair Employment Practices Act (M.G.L. c.
151B));
under any other federal or state statute;
for wages, bonuses, incentive compensation, commissions, stock, stock options, vacation
pay or any other compensation or benefits, whether under Massachusetts Wage Act,
M.G.L. c. 149, §§148-150C, or otherwise; and
for damages or other remedies of any sort, including, without limitation, compensatory
damages, punitive damages, injunctive relief and attorney’s fees;
provided, however, that this release shall not affect your rights under this Agreement, the Equity
Documents or under any “employee benefit plan,” as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act, 29 U.S.C. §1002(3).
You acknowledge and represent that, except as expressly provided in this Agreement, the
Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off,
premiums, leaves, severance, reimbursable expenses, commissions, stock, stock options, vesting,
and any and all other benefits and compensation due to you for service provided during the
payroll periods ending prior to the date of this Agreement.
The Company represents that as of the date of this Agreement it is not aware of any grounds for
a claim against you or any basis for a termination of your employment with the Company for
Cause.
5. Ongoing Obligations
You are subject to continuing obligations under (i) your Employee Noncompetition,
Nondisclosure and Development Agreement dated June 14, 2017 and (ii) Section 7 (Confidential
3
Information, Noncompetition and Cooperation) of the Employment Agreement ((i) and (ii), the
“Restrictive Covenant Obligations”). The Restrictive Covenant Obligations, and any other
confidentiality and restrictive covenant obligations you have to any of the Releasees, are referred
to herein as the “Ongoing Obligations” and shall remain in full force and effect.
6. Return of Property
In accordance with Section 7(c) of the Employment Agreement, you agree to return to the
Company by the Resignation Date all Company property, including, without limitation, computer
equipment, keys and access cards, credit cards and any documents (including electronic
documents as well as hard copies) containing information concerning the Company, its business
or its business relationships. You also commit to deleting and finally purging any duplicates of
files or documents that may contain Company information from any computer or other device
that remains your property after the Resignation Date. In the event that you discover that you
continue to retain any such property, you shall return it to the Company immediately.
7. Nondisparagement
Subject to Section 9 below, you agree not to make any disparaging statements, oral or written,
concerning the Company or any of its affiliates or concerning the products, services or current or
former officers, directors, shareholders, employees or agents of the Company or any of its
affiliates. You represent that during the period since this Agreement was proposed to you, you
have not made any such disparaging statements. The Company agrees that it shall instruct the
members of the Board and its executive officers who report directly to the CEO not to make any
disparaging statements, oral or written, concerning you.
8.
Indemnification and D&O Insurance
The Company will continue to indemnify you, advance legal expenses, and hold you harmless
pursuant to the Company’s charter, bylaws, and your Indemnification Agreement with the
Company, dated May 2, 2018. For a period of at least six (6) years following your Resignation
Date, the Company shall maintain its directors and officers liability insurance in accordance with
the Company’s usual and customary practices, which policy shall include customary coverage
for you with respect to your service as an officer of the Company.
9.
Protected Disclosures and Other Protected Actions
Nothing contained in this Agreement, any other agreement with the Company, or any Company
policy limits your ability, with or without notice to the Company, to: (i) file a charge or
complaint with any federal, state or local governmental agency or commission (a “Government
Agency”), including without limitation, the Equal Employment Opportunity Commission, the
National Labor Relations Board or the Securities and Exchange Commission (the “SEC”); (ii)
communicate with any Government Agency or otherwise participate in any investigation or
proceeding that may be conducted by any Government Agency, including by providing non-
privileged documents or information; (iii) exercise any rights under Section 7 of the National
Labor Relations Act, which are available to non-supervisory employees, including assisting co-
workers with or discussing any employment issue as part of engaging in concerted activities for
4
the purpose of mutual aid or protection; (iv) discuss or disclose information about unlawful acts
in the workplace, such as harassment or discrimination or any other conduct that you have reason
to believe is unlawful; or (v) testify truthfully in a legal proceeding. Any such communications
and disclosures must not violate applicable law and the information disclosed must not have been
obtained through a communication that was subject to the attorney-client privilege (unless
disclosure of that information would otherwise be permitted consistent with such privilege or
applicable law). If a Government Agency or any other third party pursues any claim on your
behalf, you waive any right to monetary or other individualized relief (either individually or as
part of any collective or class action), but the Company will not limit any right you may have to
receive an award pursuant to the whistleblower provisions of any applicable law or regulation for
providing information to the SEC or any other Government Agency.
10. Defend Trade Secrets Act
For the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, you shall
not be held criminally or civilly liable under any federal or state trade secret law for the
disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local
government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose
of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other
document filed in a lawsuit or other proceeding, if such filing is made under seal.
11. Other Provisions
a. Termination and Return of Payments; Certain Remedies. If you materially breach any
of your obligations under this Agreement, or any Ongoing Obligation, in addition to any other
legal or equitable remedies it may have for such breach, the Company shall have the right to: (i)
terminate immediately your employment and the Transition Period, and/or (ii) enforce your
return of that portion of the 2024 Bonus as determined to be reasonable and appropriate by a
court of competent jurisdiction. If the Company initiates (i) or (ii) in the preceding sentence due
to a breach, you shall continue to be subject to the Ongoing Obligations. Without limiting the
Company’s remedies hereunder, if the Company prevails in any action to enforce this
Agreement, then you shall be liable to the Company for reasonable attorneys’ fees and costs
incurred by the Company in connection with such action.
b. Enforceability. If any provision of this Agreement is held to be unenforceable, this
Agreement will be deemed amended to the extent necessary to render the otherwise
unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines
to amend this Agreement as provided herein, the invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of the remaining provisions.
c. Waiver; Absence of Reliance. No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by the waiving party. In signing this Agreement, you
are not relying upon any promises or representations made by anyone at or on behalf of the
Company.
d. Jurisdiction; Governing Law; Interpretation. You and the Company hereby agree that
the state and federal courts of Massachusetts shall have the exclusive jurisdiction to consider
5
any matters related to this Agreement. With respect to any such court action, you submit to the
jurisdiction and venue of such courts, you acknowledge that venue in such courts is proper and
you waive any right to a jury with respect to any such action. This Agreement shall be
interpreted and enforced under the laws of Massachusetts, without regard to conflict of law
principles.
e. Entire Agreement. This Agreement, the Equity Documents, and the Ongoing
Obligations, constitute the entire agreement between you and the Company and supersede any
previous agreements or understandings between you and the Company.
f. Time for Consideration; Effective Date. You acknowledge that you have knowingly
and voluntarily entered into this Agreement and that the Company advises you to consult with an
attorney before signing this Agreement. By entering into this Agreement, you acknowledge that
you have been given the opportunity to consider this Agreement and the Certificate attached as
Exhibit A for twenty-one (21) days from your receipt of this Agreement before signing the
Agreement (the “Consideration Period”). To accept this Agreement, you must return a signed
original or a signed PDF copy of this Agreement so that it is received by the undersigned at or
before the expiration of the Consideration Period. If you sign this Agreement before the end of
the Consideration Period, you acknowledge that such decision was entirely voluntary and that
you had the opportunity to consider this Agreement for the entire Consideration Period. For the
period of seven (7) days from the date when you sign this Agreement, you have the right to
revoke this Agreement by written notice to the undersigned, provided that such notice is
delivered so that it is received at or before the expiration of the seven (7) day revocation period.
This Agreement shall not become effective or enforceable during the revocation period. This
Agreement shall become effective on the first business day following the expiration of the
revocation period (the “Effective Date”).
g. Counterparts. This Agreement may be executed in separate counterparts. When all
counterparts are signed, they shall be treated together as one and the same document.
[Signature Page Follows]
6
Please indicate your agreement to the terms of this Agreement by signing and returning to the
undersigned the original or a PDF copy of this letter within the time period set forth above.
Very truly yours,
Brightcove Inc.
By: /s/ Marc DeBevoise
Marc DeBevoise
Chief Executive Officer
February 21, 2024
Date
You are advised to consult with an attorney before signing this Agreement. This is a legal
document. Your signature will commit you to its terms. By signing below, you acknowledge
that you have carefully read and fully understand all of the provisions of this Agreement and that
you are knowingly and voluntarily entering into this Agreement.
/s/ Robert Noreck
Robert Noreck
February 21, 2024
Date
EXHIBIT A
CERTIFICATE UPDATING RELEASE OF CLAIMS
I, Robert Noreck, hereby acknowledge and certify that I entered into the Transition and
Resignation Agreement with Brightcove Inc. (the “Company”) to which this Certificate is
attached (the “Agreement”). Capitalized but undefined terms in this Certificate are defined in
the Agreement. Pursuant to the Agreement, I am required to sign this “Certificate,” which
updates the release of claims in the Agreement, in order to receive the 2024 Bonus described in
the Agreement. For this Certificate to become effective and for me to receive the 2024 Bonus,
I must sign this Certificate after the Resignation Date but no later than seven (7) days after the
Resignation Date. I further agree as follows:
1.
2.
3.
4.
A copy of this Certificate was attached as an Exhibit to the Agreement.
In consideration of the benefits described in the Agreement, for which I become
eligible only if I sign this Certificate, I hereby extend the release of claims set
forth in the Agreement to any and all claims that arose after the date I signed the
Agreement through the date I signed this Certificate, subject to all other
exclusions and terms set forth in the Agreement. I also voluntarily release and
forever discharge the Releasees (as defined in the Agreement) generally from all
Claims (as defined in the Agreement), arising under the federal Age
Discrimination in Employment Act that as of the date when I sign this Certificate,
I have, ever had, now claim to have or ever claimed to have had against any or all
of the Releasees.
I have carefully read and fully understand all of the provisions of this Certificate,
I have been given the opportunity to consult with an attorney before signing this
Certificate, I knowingly and voluntarily agree to all of the terms set forth in this
Certificate, and I acknowledge that in entering into this Certificate, I am not
relying on any representation, promise or inducement made by the Company or its
officers, directors, employees, agents or other representatives with the exception
of those promises expressly contained in this Certificate and the Agreement. I
understand and acknowledge that I have been given the opportunity to consider
this Certificate for twenty-one (21) days from my receipt of this Certificate before
signing it, and that for the period of seven (7) days from the date when I sign this
Certificate, I have the right to revoke this Certificate by written notice to the Chief
Executive Officer of the Company, provided that such notice is delivered so that it
is received at or before the expiration of the seven (7) day revocation period. This
Certificate shall not become effective or enforceable during the revocation period.
This Certificate shall become effective on the first business day following the
expiration of the revocation period (the (“Certificate Effective Date”).
I also represent that I have not been subject to any retaliation or any other form of
adverse action by the released parties for any action taken by me as an employee
or resulting from my exercise of or attempt to exercise any statutory rights
recognized under federal, state or local law. I agree that I have been paid all
unpaid wages and other compensation owed to me as of the Resignation Date. I
also agree that none of my rights have been violated under any statute, common
law or Company policy, program or agreement. I represent that I have reported
any and all workplace injuries that I suffered during my employment, if any, to
the Company before executing this Certificate.
I agree that this Certificate is part of the Agreement.
5.
I acknowledge that the Company has advised me to consult with an attorney before
signing this Certificate. This is a legal document. My signature will commit me to its
terms. By signing below, I acknowledge that I have carefully read and fully understand
all of the provisions of this Agreement and that I am knowingly and voluntarily entering
into this Certificate.
Robert Noreck
Date
9
Name
Brightcove UK Ltd
Brightcove Singapore Pte. Ltd.
Brightcove K.K.
Brightcove Korea
Brightcove Australia Pty Ltd
Brightcove India Pte. Ltd.
Brightcove Holdings, Inc.
Zencoder Inc.
Brightcove FZ-LLC
Cacti Acquisition LLC
Brightcove S. de R.L. de C.V.
Othello Acquisition Corporation
TV App Agency Ltd.
TV App Agency Unipessoal Lda.
Brightcove Philippines, Inc.
Wicket Labs, Inc.
Exhibit 21.1
Subsidiaries of the Registrant
Jurisdiction of Organization
UK
Singapore
Japan
Korea
Australia
India
Delaware
Delaware
United Arab Emirates
Delaware
Mexico
Delaware
UK
Portugal
Philippines
Washington
Exhibit 23.1
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
(1) Registration Statement (Form S-8 No. 333-179966) pertaining to the Amended and Restated 2004 Stock Option and
Incentive Plan of Brightcove Inc. and the Brightcove Inc. 2012 Stock Incentive Plan,
(2) Registration Statement (Form S-8 No. 333-183315) pertaining to the Brightcove Inc. 2012 RSU Inducement Plan,
(3) Registration Statement (Form S-8 Nos. 333-187051, 333-202540, 333-209770, 333-216140, 333-223308, 333-
229775, 333-236673 and 333-253458) pertaining to the Brightcove Inc. 2012 Stock Incentive Plan,
(4) Registration Statement (Form S-8 No. 333-193701) pertaining to the Brightcove Inc. 2014 Stock Option Inducement
Plan and the Brightcove Inc. 2012 Stock Incentive Plan,
(5) Registration Statement (Form S-8 No. 333-224578) pertaining to the Brightcove Inc. 2018 Inducement Plan,
(6) Registration Statement (Form S-3 No. 333-269969) of Brightcove Inc.,
(7) Registration Statement (Form S-8 Nos. 333-256204 and 333-272008) pertaining to the Brightcove Inc. 2021 Stock
Incentive Plan,
(8) Registration Statement (Form S-8 No. 333-262874) pertaining to the Brightcove Inc. 2022 Inducement Plan,
of our reports dated February 22, 2024, with respect to the consolidated financial statements of Brightcove Inc. and the effectiveness
of internal control over financial reporting of Brightcove Inc. included in this Annual Report (Form 10-K) of Brightcove Inc. for the
year ended December 31, 2023.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 22, 2024
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Marc DeBevoise, certify that:
Exhibit 31.1
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Brightcove Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 22, 2024
By:
/s/ Marc DeBevoise
Marc DeBevoise
Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Robert Noreck, certify that:
Exhibit 31.2
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Brightcove Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 22, 2024
By:
/s/ Robert Noreck
Robert Noreck
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Brightcove Inc. for the year ended December 31, 2023 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), Marc DeBevoise, as Chief Executive Officer of Brightcove
Inc., hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,
to the best of his knowledge the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of Brightcove Inc.
Date: February 22, 2024
By:
/s/ March DeBevoise
Marc DeBevoise
Chief Executive Officer
(Principal Executive Officer)
In connection with the Annual Report on Form 10-K of Brightcove Inc. for the year ended December 31, 2023 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), Robert Noreck, as Chief Financial Officer of Brightcove Inc.,
hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to
the best of his knowledge the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of Brightcove Inc.
Date: February 22, 2024
By:
/s/ Robert Noreck
Robert Noreck
Chief Financial Officer
(Principal Financial Officer)
Exhibit 97.1
BRIGHTCOVE INC.
AMENDED AND RESTATED POLICY FOR RECOUPMENT OF INCENTIVE COMPENSATION
October 24, 2023
Brightcove Inc., a Delaware corporation (the “Company”), has adopted this Amended and Restated Policy for Recoupment of
Incentive Compensation (this “Policy”) as described below. This Policy supersedes and replaces the Company’s Policy for
Recoupment of Incentive Compensation, dated as of November 9, 2020, (the “Prior Policy”) with respect to Incentive-Based
Compensation received after the Effective Date (as defined below).
1. Overview
The Policy sets forth the circumstances and procedures under which the Company shall recover Erroneously Awarded
Compensation from Covered Persons in accordance with rules issued by the United States Securities and Exchange Commission (the
“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Nasdaq Stock Market. Capitalized
terms used and not otherwise defined herein shall have the meanings given in Section 3 below.
2. Compensation Recovery Requirement
In the event the Company is required to prepare a Financial Restatement, the Company shall recover reasonably promptly all
Erroneously Awarded Compensation with respect to such Financial Restatement.
3. Definitions
“Applicable Recovery Period” means the three completed fiscal years immediately preceding the Restatement Date for a
Financial Restatement. In addition, in the event the Company has changed its fiscal year: (i) any transition period of less than nine
months occurring within or immediately following such three completed fiscal years shall also be part of such Applicable Recovery
Period and (ii) any transition period of nine to 12 months will be deemed to be a completed fiscal year.
“Applicable Rules” means any rules or regulations adopted by the Exchange pursuant to Rule 10D-1 under the Exchange Act
and any applicable rules or regulations adopted by the SEC pursuant to Section 10D of the Exchange Act.
“Board” means the Board of Directors of the Company.
“Committee” means the Compensation Committee of the Board or, in the absence of such committee, a majority of
independent directors serving on the Board.
“Covered Person” means any Executive Officer. A person’s status as a Covered Person with respect to Erroneously Awarded
Compensation shall be determined as of the time of receipt of such Erroneously Awarded Compensation regardless of the person’s
current role or status with the Company (e.g., if a person began service as an Executive Officer after the beginning of an Applicable
Recovery Period, that person would not be considered a Covered Person with respect to Erroneously Awarded Compensation received
before the person began service as an Executive Officer, but would be considered a Covered Person with respect to Erroneously
Awarded Compensation received after the person began service as an Executive Officer where such person served as an Executive
Officer at any time during the performance period for such Erroneously Awarded Compensation).
“Effective Date” means October 2, 2023.
“Erroneously Awarded Compensation” means the amount of any Incentive-Based Compensation received by a Covered
Person on or after the Effective Date and during the Applicable Recovery Period that exceeds the amount that otherwise would have
been received by the Covered Person had such compensation been determined based on the restated amounts in the Financial
Restatement, computed without regard to any taxes paid. Calculation of Erroneously Awarded Compensation with respect to
Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded
Compensation is not subject to mathematical recalculation directly from the information in the Financial Restatement, shall be based
on a reasonable estimate of the effect of the Financial Restatement on the stock price or total shareholder return upon which the
Incentive-Based Compensation was received, and the Company shall maintain documentation of the determination of such reasonable
estimate and provide such documentation to the Exchange in accordance with the Applicable Rules. Incentive-Based Compensation is
deemed received, earned, or vested when the Financial Reporting Measure is attained, not when the actual payment, grant, or vesting
occurs.
“Exchange” means the Nasdaq Stock Market LLC.
“Executive Officer” means any person who served as an officer or employee of the Company who is subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934, as amended, at any time during the performance period applicable
to Incentive-Based Compensation such person received during service in such role.
“Financial Reporting Measures” mean measures that are determined and presented in accordance with the accounting
principles used in preparing the Company’s financial statements, any measures that are derived wholly or in part from such measures
(including, for example, a non-GAAP financial measure), and stock price and total shareholder return.
“Financial Restatement” means a restatement of previously issued financial statements of the Company due to the material
noncompliance of the Company with any financial reporting requirement under the securities laws, including any required restatement
to correct an error in previously-issued financial statements that is material to the previously-issued financial statements or that would
result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
“Incentive-Based Compensation” means any compensation provided, directly or indirectly, by the Company or any of its
subsidiaries that is granted, earned, or vested based, in whole or in part, upon the attainment of a Financial Reporting Measure and any
equity-based compensation provided by the Company or any of its subsidiaries, including, without limitation, stock options, restricted
stock awards, restricted stock units, and stock appreciation rights, regardless of whether such equity-based compensation is granted,
earned, or vested based, in whole or in part, upon the attainment of a Financial Reporting Measure.
“Restatement Date” means, with respect to a Financial Restatement, the earlier to occur of: (i) the date the Board, a
committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required
concludes, or reasonably should have concluded, that the Company is required to prepare the Financial Restatement or (ii) the date a
court, regulator, or other legally authorized body directs the Company to prepare the Financial Restatement.
4. Exception to Compensation Recovery Requirement
The Company may elect not to recover Erroneously Awarded Compensation pursuant to this Policy if the Committee
determines that recovery would be impracticable, and one or more of the following conditions, together with any further requirements
set forth in the Applicable Rules, are met: (i) the direct expense paid to a third party, including outside legal counsel, to assist in
enforcing this Policy would exceed the amount to be recovered, and the Company has made a reasonable attempt to recover such
Erroneously Awarded Compensation or (ii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to be so
qualified under applicable regulations.
5. Method of Compensation Recovery
The Committee shall determine, in its sole discretion, the method for recovering Erroneously Awarded Compensation
hereunder, which may include, without limitation, any one or more of the following:
a.
b.
c.
d.
e.
f.
requiring reimbursement of cash Incentive-Based Compensation previously paid;
seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any
equity-based awards;
cancelling or rescinding some or all outstanding vested or unvested equity-based awards;
adjusting or withholding from unpaid compensation or other offset;
cancelling or offsetting against planned future grants of equity-based awards; and/or
any other method permitted by applicable law or contract.
Notwithstanding the foregoing, a Covered Person will be deemed to have satisfied such person’s obligation to return Erroneously
Awarded Compensation to the Company if such Erroneously Awarded Compensation is returned in the exact same form in which it
was received; provided that equity withheld to satisfy tax obligations will be deemed to have been received in cash in an amount equal
to the tax withholding payment made.
6. Policy Interpretation
This Policy shall be interpreted in a manner that is consistent with the Applicable Rules and any other applicable law. The
Committee shall take into consideration any applicable interpretations and guidance of the SEC in interpreting this Policy, including,
for example, in determining whether a financial restatement qualifies as a Financial Restatement hereunder. To the extent the
Applicable Rules require recovery of Incentive-Based Compensation in additional circumstances besides those specified above,
nothing in this Policy shall be deemed to limit or restrict the right or obligation of the Company to recover Incentive-Based
Compensation to the fullest extent required by the Applicable Rules.
7. Policy Administration
This Policy shall be administered by the Committee. The Committee shall have such powers and authorities related to the
administration of this Policy as are consistent with the governing documents of the Company and applicable law. The Committee shall
have full power and authority to take, or direct the taking of, all actions and to make all determinations required or provided for under
this Policy and shall have full power and authority to take, or direct the taking of, all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of this Policy that the Committee deems to be necessary or
appropriate to the administration of this Policy. The interpretation and construction by the Committee of any provision of this Policy
and all determinations made by the Committee under this policy shall be final, binding and conclusive.
8. Compensation Recovery Repayments not Subject to Indemnification
Notwithstanding anything to the contrary set forth in any agreement with, or the organizational documents of, the Company
or any of its subsidiaries, Covered Persons are not entitled to indemnification for Erroneously Awarded Compensation or for any claim
or losses arising out of or in any way related to Erroneously Awarded Compensation recovered under this Policy.
Adopted by the Board of Directors on October 24, 2023.