Executive Summary

Q2 revenue of $49.25M, above the high end of guidance, with adjusted EBITDA of $3.77M and non-GAAP EPS of ($0.02); year-over-year revenue declined 3% due in part to entitlement downgrades and the prior-year mix, but sequential results were solid given merit pay timing and FX headwinds .
Bold beats: revenue and adjusted EBITDA exceeded the high end of guidance; management raised the low-end of FY24 guidance for revenue, non-GAAP operating income, and adjusted EBITDA, signaling confidence in second-half execution .
Add-on sales were approximately 25% above the trailing 4-quarter average; premium ARPU reached a record $99,000, and >12-month backlog hit an all-time high of $59.0M, supporting improved retention and future revenue visibility .
New business environment softened with longer sales cycles and deal push-outs; recurring dollar retention fell to 83%, while net revenue retention was 93%, reflecting continued entitlement normalization among longer-duration contracts .
Near-term catalysts: raised FY guidance, record ARPU, improved add-ons, and a broad AI suite launch expected later in Q3; these initiatives aim to stabilize add-ons, drive upsell motion, and support margin expansion through platform efficiency gains .

What Went Well and What Went Wrong

What Went Well

Exceeded expectations and the high end of guidance on both revenue and adjusted EBITDA; CEO: “We are pleased to have exceeded expectations… while generating meaningful cash flow” .
Add-on sales strength: ~25% above trailing 4-quarter average; record premium ARPU of $99,000; modestly higher overages, indicating early stabilization of entitlement trends .
Visibility improved: >12-month backlog reached a record $59.0M; total backlog $182.2M (+3% YoY), supporting predictable recurring revenue .

What Went Wrong

Year-over-year gross margin compression to 61% (from 64% in Q2’23); non-GAAP gross margin fell to 62% (from 66%), reflecting cost mix and entitlement dynamics .
New business environment more challenging with elongated sales cycles and larger deals pushing out of the quarter; management attributes this to broader SaaS spending headwinds .
Retention pressure continued: recurring dollar retention fell to 83% (from 85% in Q1 and 94% in Q4), driven by entitlement downgrades at renewal among longer-duration contracts .

Financial Results

Metric	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$50.16	$50.48	$49.25
GAAP Diluted EPS ($)	$(0.06)	$0.04	$(0.12)
Non-GAAP Diluted EPS ($)	$0.04	$0.01	$(0.02)
GAAP Gross Margin (%)	61%	61%	61%
Non-GAAP Gross Margin (%)	63%	63%	62%
Adjusted EBITDA ($USD Millions)	$5.49	$4.98	$3.77
Adjusted EBITDA Margin (%)	11%	10%	8%

Segment breakdown:

Segment Revenue ($USD Millions)	Q4 2023	Q1 2024	Q2 2024
Subscription & Support	$47.78	$47.97	$47.40
Professional Services & Other	$2.38	$2.51	$1.85
Total Revenue	$50.16	$50.48	$49.25

KPIs:

KPI	Q4 2023	Q1 2024	Q2 2024
12-month Backlog ($USD Millions)	$127.3	$127.3	$123.3
Total Backlog ($USD Millions)	$183.0	$185.4	$182.2
>12-month Backlog ($USD Millions)	—	—	$59.0
Premium ARPU ($)	$96,200	$98,000	$99,000
Customers (Total / Premium)	2,559 / 2,028	2,502 / 1,992	2,444 / 1,958
Net Revenue Retention (%)	95%	92%	93%
Recurring Dollar Retention (%)	94%	85%	83%
Revenue Overages ($USD Millions)	—	$1.1	$1.3

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	$195.0–$198.0M	$195.5–$198.0M	Raised low end
Non-GAAP Income (Loss) from Operations	FY 2024	($3.0)–($1.0)M	($2.5)–($1.0)M	Raised low end
Adjusted EBITDA	FY 2024	$14.0–$16.0M	$14.5–$16.0M	Raised low end
Non-GAAP EPS	FY 2024	($0.10)–($0.05)	($0.08)–($0.05)	Raised low end
Free Cash Flow	FY 2024	$5.6–$8.0M	$5.6–$8.0M	Maintained
Revenue	Q3 2024	—	$48.0–$49.0M (incl. ~$1.8M PS, ~$0.8M overages)	New
Non-GAAP Operating Loss	Q3 2024	—	($2.0)–($1.0)M	New
Adjusted EBITDA	Q3 2024	—	$2.5–$3.5M	New
Non-GAAP EPS	Q3 2024	—	($0.05)–($0.03)	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023)	Previous Mentions (Q1 2024)	Current Period (Q2 2024)	Trend
AI initiatives	Highlighted AI to reduce storage/bandwidth costs 25–50% and workflow simplification	Detailed AI strategy: optimization/efficiency, AWS “Q” to accelerate support; partnering with best-in-class engines	Broad AI suite announcement expected later in Q3; >12 customers piloting modules	Expanding scope and customer pilots
Add-on sales / entitlement	Continued entitlement downgrades across 2023 (context via later discussion)	Add-ons muted; focus on purpose-built upsell solutions (Marketing/Comms Studio)	Best add-on performance in >1 year; entitlement add-ons returned in some media customers; ARPU record	Improving add-ons; entitlement normalization stabilizing
New business / macro	Building pipeline; longer cycles for large media deals (context via later)	Record backlog; large deal pipeline; churn of one Japan customer due to M&A	New business more challenging with longer cycles and push-outs; still signing quality wins	Mixed; cycles lengthening
Regional trends	Global customer set; strong enterprise/media logos	61% NA, 39% international; Europe 16%, APAC/Japan 23%	61% NA; Europe 17%; APAC/Japan 22%	Stable mix
Retention metrics	NRR 95%; RDR 94% (prev. quarter reference)	NRR 92%; RDR 85% (impacted by M&A churn)	NRR 93%; RDR 83% (entitlement downgrades at renewal)	Sequential NRR improvement; RDR pressure
Backlog visibility	12-month backlog $127.3M; total $183.0M	Record total backlog $185.4M	Total backlog $182.2M; >12-month backlog record $59.0M	Strong multi-year backlog

Management Commentary

“We are delivering on our commitments to grow EBITDA substantially and generate significant free cash flow this year, all while investing in our key strategic priorities that we expect will return the business to consistent revenue growth.” — Marc DeBevoise, CEO .
“Adjusted EBITDA was $3.8 million… above the high end of our guidance range… We are clearly delivering on our commitment to disciplined expense management while continuing to invest in our key strategic priorities.” — Marc DeBevoise .
“Recurring dollar retention rate… was 83%… due in part to… reductions in entitlements at contract renewal… Net revenue retention… was 93%… benefiting from our growing mix of multiyear commitments.” — John Wagner, CFO .
“We expect to announce our broad capability AI suite later in Q3 and are in process with over a dozen customers on piloting its capabilities.” — Marc DeBevoise .
“We ended the quarter with cash and cash equivalents of $24.2 million and remained debt free.” — John Wagner .

Q&A Highlights

Pipeline and growth trajectory: Management did not disclose specific pipeline growth rates but cited a “meaningfully large” big-deal pipeline that could drive a return to growth into 2025, contingent on execution in Q3/Q4 .
Sales cycle duration: Larger media deals often take 9–12 months; add-ons can close in <30 days; Q2 saw some deals slip from Q1 into Q2, and others push out .
Entitlements and retention: Entitlement downgrades are dissipating after 3–4 quarters of declines; some international media customers increased entitlements, but normalization continues .
Strategy to return to growth: Align bookings and retention, drive upsell via purpose-built solutions (Marketing/Comms Studio and new sales use case), add AI-driven upgrade paths; address elongated cycles in a tougher software spending environment .

Estimates Context

Consensus estimates via S&P Global were unavailable for BCOV due to a Capital IQ mapping issue; therefore, we cannot provide actual vs consensus comparisons for Q2 2024 at this time. Values retrieved from S&P Global.*

Metric	Q2 2024 Actual	Q2 2024 Consensus
Revenue ($USD Millions)	$49.25	Unavailable*
Primary EPS ($)	$(0.12)	Unavailable*
Adjusted EBITDA ($USD Millions)	$3.77	Unavailable*

Key Takeaways for Investors

Execution beat: Revenue and adjusted EBITDA above guidance high end; low-end raises to FY guidance indicate management confidence despite FX and elongated sales cycles .
Early stabilization in add-ons: Best performance in over a year and ARPU record suggest upsell motion is gaining traction; entitlement normalization appears to be moderating .
Visibility: >12-month backlog record ($59.0M) and strong total backlog ($182.2M) underpin recurring revenue predictability into 2025 .
Watch retention metrics: Recurring dollar retention at 83% highlights ongoing entitlement downgrades; monitor sequential trends in Q3/Q4 for confirmation of stabilization .
Margin path: Gross margin compressed YoY; management is focusing on AI-driven efficiency and platform optimizations to support margin expansion over time .
Near-term trading setup: Raised FY guidance, upcoming AI suite launch, and improving add-ons are potential positive catalysts; risks include longer sales cycles and muted new business conversion .
Medium-term thesis: If AI-enabled product enhancements and purpose-built enterprise solutions drive consistent upsell while multi-year contracts sustain visibility, BCOV’s structural EBITDA-positive, FCF-generative profile could support re-rating as growth returns .

Notes on non-GAAP: Non-GAAP measures exclude stock-based compensation, amortization of acquired intangibles, restructuring/merger-related items, and gains on sale of assets; adjusted EBITDA further excludes taxes, other income/expense, and depreciation .

BRIGHTCOVE INC (BCOV)·Q2 2024 Earnings Summary