BRIGHTCOVE INC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (type 10-Q)


(in hundreds, besides share and per share information, until in any other case famous)

The next dialogue and evaluation of our monetary situation and outcomes of
operations needs to be learn at the side of our condensed consolidated
monetary statements and associated notes showing elsewhere on this Quarterly
Report on Kind
10-Q
and our Annual Report on Kind
10-Okay
for the 12 months ended December 31, 2021.

Firm Overview

We're a number one international supplier of cloud-based providers for video. We have been
included in Delaware in August 2004. With our Emmy
®
-winning know-how and award-winning providers, we assist our prospects notice
the potential of video to deal with business-critical challenges. Clients rely
on our suite of merchandise, providers, and experience to cut back the fee and
complexity related to publishing, distributing, measuring and monetizing
video throughout units.

We promote 5 core video merchandise that assist our prospects use video to additional
their companies in significant methods: (1) Video Cloud, our flagship product and
the world's main on-line video platform, allows our prospects to shortly and
simply distribute high-quality video to Web-connected units;
(2) Brightcove Dwell, our industry-leading resolution for dwell streaming, delivers
high-quality viewer experiences at scale; (3) Brightcove Beacon, a purpose-built
software that allows corporations to launch premium OTT video experiences
shortly and cheaply, throughout units and with the pliability of
a number of monetization fashions; (4) Brightcove Participant, an exceptionally quick,
cloud-based know-how for creating and managing video experiences; and
(5) Zencoder, a robust, cloud-based video encoding know-how.

Clients can complement their use of our core merchandise with modular
applied sciences that present enhanced capabilities comparable to (1) revolutionary advert
insertion and video stitching via Brightcove SSAI; (2) environment friendly publication
of movies to Fb, Twitter, and YouTube via Brightcove Social; (3) an
app for creating advertising and marketing campaigns with insightful information and {industry}
benchmarks via Brightcove Marketing campaign; and (4) create branded video expertise
by accessing templates
with built-in
greatest practices via Brightcove Gallery.

We have now additionally delivered to market a number of video options, that are comprised of a
suite of video applied sciences that deal with particular
buyer use-cases
and wishes: (1) Digital Occasions Expertise helps manufacturers to remodel occasions into
personalized digital experiences; (2) Brightcove Video Advertising Suite, allows
entrepreneurs to make use of video to drive model consciousness, engagement and conversion;
(3) Brightcove Enterprise Video Suite, gives an enterprise-class platform for
inner communications, worker coaching, dwell streaming, advertising and marketing and
ecommerce movies; and (4) Brightcove CorpTV
™
, gives a brand new technique to ship advertising and marketing movies, product bulletins,
coaching applications, and different dwell and
on-demand
content material in a branded expertise for corporations.

Our philosophy for the subsequent few years will proceed to be to spend money on our
product technique and improvement,
gross sales, and go-to-market actions
to assist our long-term income development. We consider these investments will assist
us deal with a few of the challenges going through our enterprise comparable to demand for our
merchandise by present and potential prospects, speedy technological change in our
{industry}, elevated competitors and ensuing value sensitivity. These
investments embrace assist for the enlargement of our infrastructure inside our
internet hosting services, the hiring of further technical and gross sales personnel, the
innovation of recent options for present merchandise and the event of recent
merchandise. We consider this technique will assist us retain our present prospects,
enhance our common annual subscription income per premium buyer and lead
to the acquisition of recent prospects. Moreover, we consider buyer development
will allow us to realize economies of scale which is able to scale back our price of products
offered, analysis and improvement and common and administrative bills as a
proportion of complete income.

As of March 31, 2022 and 2021 we had 678 and 652 workers, respectively.

We generate income by providing our merchandise to prospects on a
subscription-based, software program as a service, or SaaS, mannequin. Our income decreased
from $54.8 million within the three months ended March 31, 2021 to $53.4 million in
the three months ended March 31, 2022, as a consequence of a lower in skilled
providers and different income.

Included within the consolidated internet loss for the three months ended March 31, 2022
was stock-based compensation expense and amortization of acquired intangible
property of $3.5 million and $817, respectively. Included within the consolidated internet
revenue for the three months ended March 31, 2021 was stock-based compensation
expense and amortization of acquired intangible property of $2.3 million and $766,
respectively.

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For the three months ended March 31, 2022 and 2021, our income derived from
prospects situated exterior North America was 45% and 44%, respectively. We anticipate
the share of complete internet income derived from exterior North America to
enhance in future intervals as we proceed to broaden our worldwide
operations.

Key Metrics

We commonly evaluate plenty of metrics, together with the next key metrics, to
consider our enterprise, measure our efficiency, determine developments affecting our
enterprise, formulate monetary projections and make strategic choices.

The next desk contains our key metrics for the intervals introduced:

                                                           Three Months Ended March 31,
                                                           2022                   2021
Clients (at interval finish)
Premium                                                        2,299                  2,273
Quantity                                                           832                  1,039

Whole prospects (at interval finish)                                3,131        

3,312

Web income retention charge                                      97.8 %                 98.8 %
Recurring greenback retention charge                                   91 %                   85 %
Common annual subscription income per premium
buyer, excluding Starter version prospects (in
hundreds)                                             $        96.5          $        97.0
Common annual subscription income per premium
buyer for Starter version prospects solely (in
hundreds)                                             $         4.6          $         4.3
Whole backlog, excluding skilled providers
engagements (in hundreds of thousands)                              $       159.2          $       147.6
Whole backlog to be acknowledged over subsequent 12
months, excluding skilled providers
engagements (in hundreds of thousands)                              $       128.7          $       117.1





  •   Variety of Clients

. We outline our variety of prospects on the finish of a specific quarter because the

variety of prospects producing subscription income on the finish of the

quarter. We consider the variety of prospects is a key indicator of our market

penetration, the productiveness of our gross sales group and the worth that

our merchandise convey to our prospects. We classify our prospects by together with

them in both premium or quantity choices. Our premium choices embrace our

premium Video Cloud prospects (Enterprise and Professional editions), our Zencoder

      prospects (aside from Zencoder prospects on
      month-to-month
      contracts and
      pay-as-you-go

contracts), our SSAI prospects, our Participant prospects, our OTT Movement prospects

(OTT Movement is our partner-based OTT platform, which preceded Brightcove

Beacon), our Digital Occasion Expertise prospects, our Video Advertising Suite

prospects, our Enterprise Video Suite prospects, our Brightcove Beacon

prospects, our Brightcove Have interaction prospects, our Brightcove CorpTV

prospects, and our Brightcove Marketing campaign prospects. Our quantity choices

      embrace our Video Cloud Specific prospects and our Zencoder prospects on
      month-to-month
      contracts and
      pay-as-you-go
      contracts.


Our

go-to-market

focus and development technique is to broaden our premium buyer base, as we consider
our premium prospects signify a better alternative for our options. Premium
prospects decreased in comparison with the prior interval as a consequence of some prospects deciding
to change to
in-house
options or different third-party options and a few prospects acquired within the
Ooyala acquisition deciding to not swap to our resolution. Quantity prospects
decreased in latest intervals primarily as a consequence of our discontinuation of the
promotional Video Cloud Specific providing. Because of this, we've skilled
attrition of this base degree providing with no corresponding addition of
prospects. We anticipate prospects utilizing our quantity choices to proceed to
lower in 2022 and past as we proceed to focus available on the market for our
premium options.

• Web Income Retention Charge

. We assess our capacity to retain and broaden prospects utilizing a metric we

confer with as our internet income retention charge. We calculate the web income

retention charge by dividing: (a) the present annualized recurring income for

premium prospects that existed twelve months prior by (b) the annualized

recurring income for all premium prospects that existed twelve months prior.

We outline annualized recurring income for premium prospects as the combination

annualized contract worth from our premium buyer base, measured as of the

finish of a given interval. We sometimes calculate our internet income retention charge

on a quarterly foundation. For annual intervals, we report internet income retention

charge as the common of the web income retention charge for all fiscal quarters

included within the interval. By dividing the retained recurring income by the

base recurring income, we measure our success in retaining and rising

      put in income from the particular cohort of consumers we served on the
      starting of the interval.



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  Desk of Contents

  •   R
      ecurring Greenback Retention Charge.

We assess our capacity to retain prospects utilizing a metric we confer with as our

recurring greenback retention charge. We calculate the recurring greenback retention

charge by dividing the retained recurring worth of subscription income for a

interval by the earlier recurring worth of subscription income for a similar

interval. We outline retained recurring worth of subscription income because the

dedicated subscription charges for all contracts that renew in a given interval,

together with any enhance or lower in contract worth. We outline earlier

recurring worth of subscription income because the recurring worth from dedicated

subscription charges for all contracts that expire in that very same interval. We

sometimes calculate our recurring greenback retention charge on a month-to-month foundation.

Recurring greenback retention charge gives visibility into our ongoing income.

• Common Annual Subscription Income Per Premium Buyer

. We outline common annual subscription income per premium buyer because the

complete subscription income from premium prospects for an annual interval,

excluding skilled providers income, divided by the common variety of

premium prospects for that interval. We consider that this metric is necessary

in understanding subscription income for our premium choices as well as

to the relative dimension of premium buyer preparations. As our Starter version

has a value level of $199 or $499 monthly, we disclose the common annual

subscription income per premium buyer individually for Starter version

      prospects and all different premium prospects.



  •   Backlog

. We outline backlog as the combination quantity of transaction value that’s

allotted to efficiency obligations that haven’t but been glad,

excluding skilled service engagements. We consider that this metric is

necessary in understanding future enterprise efficiency.

COVID-19
and Geopolitical Occasions

Whereas the longer term developments of
the COVID-19 pandemic
stay unsure, we've not skilled a big disruption throughout the
pandemic. We'll proceed to observe
COVID-19's
impact on our workers, prospects, distributors and the areas we function in.

In late February 2022, Russian army forces launched important army
motion in opposition to Ukraine, and sustained battle and disruption within the area is
seemingly. Subsequent to the invasion, the U.S. and different nations imposed
financial sanctions in opposition to officers, people, areas, and industries in
Russia, Ukraine and Belarus. We would not have operations or prospects in Russia or
Ukraine and none of our materials distributors supply their providers to us from Russia
or Ukraine. We'll proceed to observe the state of affairs and adjust to any
sanctions and restrictions imposed by the U.S. authorities.

Elements of Consolidated Statements of Operations

Income

Subscription and Assist Income

– We generate subscription and assist income from the sale of our merchandise.

Video Cloud is obtainable in two product strains. The primary product line is comprised
of our premium product editions. All premium editions embrace performance to
publish and distribute video to Web-connected units, with larger ranges
of premium editions offering further options and performance. Buyer
preparations are sometimes
one-year
contracts, which embrace a subscription to Video Cloud, primary assist
and a pre-determined
quantity of video streams, bandwidth, transcoding and storage. We additionally supply gold,
platinum and platinum plus assist to our premium prospects for an extra
payment. The pricing for our premium editions relies on the worth of our software program,
in addition to the variety of customers, accounts and utilization, which is comprised of video
streams, bandwidth, transcoding and storage. Ought to a buyer's utilization exceed
the contractual entitlements, the contract will present the speed at which the
buyer should pay for precise utilization above the contractual entitlements. The
second product line is comprised of our quantity product version. Our quantity
editions goal
small and medium-sized companies, or
SMBs. The amount editions present prospects with the identical primary performance
that's provided in our premium product editions however have been designed for
prospects who've decrease utilization necessities and don't sometimes require
superior options and performance. We discontinued the decrease degree pricing
choices for the Specific version of our quantity providing and anticipate the entire
variety of prospects utilizing the Specific version to proceed to lower. Clients
who buy the amount editions usually
enter into month-to-month agreements.
Quantity prospects are usually billed on a month-to-month foundation and pay by way of a credit score
card.

Digital Occasions Expertise, Brightcove Dwell and Brightcove Participant are provided to
prospects on a subscription foundation. Buyer preparations are
sometimes one-year contracts,
which embrace a subscription to Digital Occasions Expertise, Brightcove Dwell or
the Brightcove Participant, primary assist and
a pre-determined quantity
of video streams, bandwidth, transcoding, and storage and solely video streams for
Brightcove Participant. We additionally supply gold, platinum, and platinum plus assist to
our Digital Occasions Expertise, Brightcove Dwell and Brightcove Participant prospects
for an extra payment. The pricing for these merchandise relies on the worth of
our software program, in addition to, the variety of customers, accounts and utilization. Ought to a
buyer's utilization exceed the contractual entitlements, the contract will present
the speed at which the client should pay for precise utilization above the contractual
entitlements.

Zencoder is obtainable to prospects on a subscription foundation, with both dedicated
contracts or
pay-as-you-go
contracts. The pricing relies on utilization, which is comprised of minutes of video
processed. The dedicated contracts embrace a hard and fast variety of minutes of video
processed. Ought to a buyer's utilization exceed the contractual entitlements, the
contract will present the speed at which the client should pay for precise utilization
above the contractual entitlements. Zencoder prospects are thought of premium
prospects aside from Zencoder prospects
on month-to-month contracts
or pay-as-you-go contracts,
that are thought of quantity prospects.

Brightcove Beacon and Brightcove Marketing campaign are every provided to prospects on a
subscription foundation, with various ranges of performance, utilization entitlements and
assist based mostly on the scale and complexity of a buyer's wants. Buyer
preparations are sometimes
one-year
contracts.

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Video Advertising Suite and Enterprise Video Suite are provided to prospects on a
subscription foundation in Starter, Professional and Enterprise editions. The Professional and
Enterprise buyer preparations are sometimes
one-year
contracts, which generally embrace a subscription to Video Cloud, Gallery,
Brightcove Social (for Video Advertising Suite prospects) or Brightcove Dwell (for
Enterprise Video Suite prospects), primary assist and a
pre-determined
quantity of video streams or performs (for Video Advertising Suite prospects), viewers
(for Enterprise Video Suite prospects), bandwidth and storage or movies. We additionally
usually supply gold assist or platinum assist to those prospects for an
further payment, which incorporates prolonged telephone assist. The pricing for our Professional
and Enterprise editions relies on the variety of customers, accounts and utilization,
which is comprised of video streams or performs, viewers, bandwidth and storage or
movies. Ought to a buyer's utilization exceed the contractual entitlements, the
contract will present the speed at which the client should pay for precise utilization
above the contractual entitlements, or would require the client to improve its
package deal upon renewal. The Starter version gives prospects with the identical primary
performance that's provided in our Professional and Enterprise editions however has been
designed for patrons who've decrease utilization necessities and don't sometimes
search superior options and performance. Clients who buy the Starter
version might enter into
one-year
agreements or
month-to-month
agreements. Starter prospects with
month-to-month
agreements are usually billed on a month-to-month foundation and pay by way of a bank card.

All Brightcove Beacon, Brightcove CorpTV
™
, OTT Movement, Brightcove Marketing campaign, Brightcove Dwell, SSAI, Participant, Digital Occasions
Expertise, Video Advertising Suite, and Enterprise Video Suite prospects are
thought of premium prospects.

Skilled Providers and Different Income
- Skilled providers and different income consists of providers comparable to
implementation, software program customizations and mission administration for patrons who
subscribe to our premium editions. These preparations are priced both on a
mounted payment foundation with a portion due upon contract signing and the rest due
when the associated providers have been accomplished, or on a time and supplies foundation.

Price of Income

Price of subscription, assist {and professional} providers income primarily
consists of prices associated to supporting and internet hosting our product choices and
delivering our skilled providers. These prices embrace salaries, advantages,
incentive compensation and stock-based compensation expense associated to the
administration of our information facilities, our buyer assist group and our skilled
providers employees. Along with these bills, we incur third-party service
supplier prices comparable to information heart and content material supply community, or CDN,
bills, allotted overhead, depreciation expense and amortization of
capitalized internal-use software program
improvement prices and bought intangible property. We allocate overhead prices
comparable to lease, utilities and provides to all departments based mostly on relative
headcount. As such, common overhead bills are mirrored in price of income
along with every working expense class. The prices related to
offering skilled providers are considerably larger as a proportion of
associated income than the prices related to delivering our subscription and
assist providers because of the labor prices of offering skilled providers.

Price of income elevated in absolute {dollars} from the primary three months of
2021 to the primary three months of 2022. In future intervals we anticipate our price of
income will enhance in absolute {dollars} as our income will increase. Price of
income as a proportion of income may fluctuate from interval to interval
relying on the variety of our skilled providers engagements and any
related prices referring to the supply of subscription providers and the
timing of serious expenditures. To the extent that our buyer base grows,
we intend to proceed to take a position further sources in increasing the supply
functionality of our merchandise and different providers. The timing of those further
bills may have an effect on our price of income, each by way of absolute {dollars} and
as a proportion of income, in any specific quarterly or annual interval.

Working Bills

We classify our working bills as follows:

Analysis and Growth
. Analysis and improvement bills consist primarily of personnel and associated
bills for our analysis and improvement employees, together with salaries, advantages,
incentive compensation and stock-based compensation, along with the prices
related to contractors and allotted overhead. We have now targeted our analysis
and improvement efforts on increasing the performance and scalability of our
merchandise and enhancing their ease of use, in addition to creating new product
choices. We anticipate analysis and improvement bills to extend in absolute
{dollars} as we intend to proceed to periodically launch new options and
performance, broaden our product choices, proceed the localization of our
merchandise in numerous languages, improve and prolong our service choices, and
develop new applied sciences. Over the long run, we consider that analysis and
improvement bills as a proportion of income will lower, however will differ
relying upon the combo of income from new and present merchandise, options and
performance, in addition to modifications within the know-how that our merchandise should
assist, comparable to new working techniques or new Web-connected units.

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Gross sales and Advertising
. Gross sales and advertising and marketing bills consist primarily of personnel and associated
bills for our gross sales and advertising and marketing employees, together with salaries, advantages,
incentive compensation, commissions, stock-based compensation and journey prices,
amortization of acquired intangible property, along with prices related to
advertising and marketing and promotional occasions, company communications, promoting, different
model constructing and product advertising and marketing bills and allotted overhead. Our gross sales
and advertising and marketing bills have elevated in absolute {dollars} in every of the final
three years. We intend to proceed to spend money on gross sales and advertising and marketing and broaden
the sale of our product choices inside our present buyer base, construct model
consciousness and sponsor further advertising and marketing occasions. Accordingly, we anticipate gross sales
and advertising and marketing expense to proceed to be our most vital working expense
in future intervals. Over the long run, we consider that gross sales and advertising and marketing
expense as a proportion of income will lower, however will differ relying upon
the combo of income from new and present prospects and from
small, medium-sized and
enterprise prospects, in addition to modifications within the productiveness of our gross sales and
advertising and marketing applications.

Normal and Administrative
. Normal and administrative bills consist primarily of personnel and associated
bills for government, authorized, finance, data know-how and human
sources features, together with salaries, advantages, incentive compensation and
stock-based compensation. Normal and administrative bills additionally embrace the
prices related to skilled charges, insurance coverage premiums, different company
bills and allotted overhead. Over the long run, we consider that common and
administrative bills as a proportion of income will lower.

Merger-related

. Merger-related prices encompass bills associated to mergers and acquisitions,
integration prices and common company improvement actions.

Different Expense
(Profit)
. Displays different working advantages, prices that don't immediately relate to the
working actions listed above.

Different (Expense) Revenue, internet

Different (expense) revenue consists primarily of curiosity revenue earned on our money,
money equivalents, and overseas change positive aspects and losses.

Revenue Taxes

As a part of the method of getting ready our consolidated monetary statements, we
are required to estimate our taxes in every of the jurisdictions through which we
function. We account for revenue taxes in accordance with the asset and legal responsibility
methodology. Underneath this methodology, deferred tax property and liabilities are acknowledged
based mostly on short-term variations between the monetary reporting and revenue tax
bases of property and liabilities utilizing statutory charges. As well as, this methodology
requires a valuation allowance in opposition to internet deferred tax property if, based mostly upon
the accessible proof, it's extra seemingly than not that some or all the
deferred tax property is not going to be realized. We have now offered a valuation allowance
in opposition to our present U.S. internet deferred tax property at December 31, 2021. We
keep internet deferred tax liabilities for short-term variations associated to our
Japanese subsidiary.

Through the three months ended March 31, 2022, we recorded a non-recurring
good thing about $1.0 million within the U.S. for the discharge of a portion of our
valuation allowance. This launch of the valuation allowance is said to the
Wicket Acquisition accomplished in February 2022 and the creation of deferred tax
liabilities in buy accounting that function a supply of revenue for our
pre-existing deferred tax property.

Inventory-Based mostly Compensation Expense

Our price of income, analysis and improvement, gross sales and advertising and marketing, and common
and administrative bills embrace stock-based compensation expense.
Inventory-based compensation expense represents the grant date truthful worth of
excellent inventory choices and restricted inventory awards, which is acknowledged as
expense over the respective inventory choice and restricted inventory award service
intervals. For the three months ended March 31, 2022 and 2021, we recorded
$3.5 million and $2.3 million, respectively, of stock-based compensation
expense. We anticipate stock-based compensation expense to extend in absolute
{dollars} in future intervals.

International Forex Translation

With regard to our worldwide operations, we steadily enter into
transactions in currencies aside from the U.S. greenback. Because of this, our income,
bills and money flows are topic to fluctuations as a consequence of modifications in overseas
forex change charges, notably modifications within the euro, British pound,
Australian greenback, and Japanese yen. In intervals when the U.S. greenback declines in
worth as in comparison with the foreign currency echange through which we conduct enterprise, our
overseas currency-based income and bills usually enhance in worth when
translated into U.S. {dollars}. We anticipate the share of complete internet income
derived from exterior North America to extend in future intervals as we proceed
to broaden our worldwide operations.

Essential Accounting Insurance policies and Estimates

Our consolidated monetary statements are ready in accordance with accounting
rules usually accepted in america. The preparation of those
monetary statements requires us to make estimates and assumptions that have an effect on
the reported quantities of property and liabilities and the disclosure of contingent
property and liabilities on the date of the monetary statements and the reported
quantities of income and bills throughout the reporting intervals. We base our
estimates on historic expertise and on numerous different assumptions which can be
believed to be cheap below the circumstances, the outcomes of which type the
foundation for making judgments concerning the carrying values of property and liabilities
that aren't readily obvious from different sources. Our precise outcomes might differ
from these estimates below completely different assumptions or situations.

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We take into account the assumptions and estimates related to income recognition,
revenue taxes, enterprise combos, intangible property and goodwill to be our
essential accounting insurance policies and estimates.

For an in depth rationalization of the judgments made in these areas, confer with
"Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations" in our Annual Report on Kind
10-Okay
for the 12 months ended December 31, 2021, which we filed with the Securities and
Change Fee on February 18, 2022.

Outcomes of Operations

The next tables set forth our outcomes of operations for the intervals
introduced. The information has been derived from the unaudited condensed consolidated
monetary statements contained on this Quarterly Report on Kind
10-Q
which, within the opinion of our administration, replicate all changes, consisting
solely of regular recurring changes, essential to current pretty the monetary
place and outcomes of operations for the interim intervals introduced. The
period-to-period
comparability of economic outcomes shouldn't be essentially indicative of future outcomes.
This data needs to be learn at the side of the consolidated monetary
statements and notes thereto included in our Annual Report on Kind
10-Okay
for the 12 months ended December 31, 2021.

                                                         Three Months Ended March 31,
                                                  2022                                 2021

                                               (in hundreds, besides share and per share information)
Income:
Subscription and assist income          $              51,601                $              50,839
Skilled providers and different
income                                                   1,778                                3,978

Whole income                                            53,379                               54,817
Price of income:
Price of subscription and assist
income                                                  16,982                               15,678
Price {of professional} providers and
different income                                             1,998                                3,490

Whole price of income                                    18,980                               19,168

Gross revenue                                             34,399                               35,649
Working bills:
Analysis and improvement                                  8,237                                8,284
Gross sales and advertising and marketing                                      18,288                               16,149
Normal and administrative                                8,089                                7,059
Merger-related                                              594                                   -
Different (profit) expense                                   1,149                               (1,965 )

Whole working bills                                 36,357                               29,527

(Loss) revenue from operations                            (1,958 )                              6,122
Different (expense), internet                                       (387 )                               (735 )

(Loss) revenue earlier than revenue taxes                        (2,345 )                              5,386
(Profit) provision for revenue                             (708 )                                257

Web (loss) revenue                         $              (1,637 )              $               5,130
Web (loss) revenue per share-basic
and diluted
Primary                                     $               (0.04 )              $                0.13
Diluted                                   $               (0.04 )              $                0.12
Weighted-average shares-basic and
diluted
Primary                                                    41,436                               40,154
Diluted                                                  41,436                               42,480

Overview of Outcomes of Operations for the Three Months Ended March 31, 2022 and
2021

Whole income decreased by 3%, or $1.4 million, within the three months ended
March 31, 2022 in comparison with the three months ended March 31, 2021 primarily due
to a lower in skilled providers and different income by 55% or $2.2 million.
Skilled providers and different income will differ from interval to interval
relying on the variety of implementations and different tasks which can be in
course of.

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Subscription and assist income remained comparatively unchanged. Our income from
premium choices decreased by $1.3 million, or 2%, within the three months ended
March 31, 2022 in comparison with the three months ended March 31, 2021. Our capacity to
proceed to offer the product performance and efficiency that our prospects
require might be a significant component in our capacity to proceed to extend income.

The U.S. greenback has strengthened in opposition to the Japanese Yen and the Euro when
in contrast in opposition to change charges throughout the prior 12 months interval of comparability. In
fixed forex, our complete income for the three months ended March 31, 2022
would have been roughly $54.6 million. The vast majority of the impact of
income in fixed forex was in revenues denominated in Japanese Yen of $0.7
million and Euro of $0.3 million. Fixed forex is calculated as translating
present interval income denominated in foreign currency echange on the change charges
of the prior interval of comparability.

Our gross revenue decreased by $1.3 million, or 4%, within the three months ended
March 31, 2022 in comparison with the three months ended March 31, 2021, primarily due
to a lower in income and a rise in the price of subscription and assist
income. Our capacity to proceed to keep up our general gross revenue will
rely totally on our capacity to proceed controlling our prices of supply.

Loss from operations was $2.0 million within the three months ended March 31, 2022
in comparison with a internet revenue from operations of $6.1 million within the three months
ended March 31, 2021. That is primarily as a consequence of a lower in income of
$1.4 million, the lower in gross revenue of $1.7 million and a rise in
working bills within the three months ended March 31, 2022 in comparison with the
three months ended March 31, 2021. The rise in working bills is
primarily the results of the present interval's merger-related and different bills,
in combination, of $1.3 million as in comparison with a profit of roughly $2.0
million within the prior 12 months.

Income

                                           Three Months Ended March 31,
                                      2022                              2021                        Change
                                        Proportion of                     Proportion of

Income by Product Line    Quantity          Income           Quantity        
 Income           Quantity         %

                                                    (in hundreds, besides percentages)
Premium                   $ 52,772                  99 %    $ 54,022                  99 %    $ (1,250 )       (2 )%
Quantity                         607                   1           795                   1          (188 )      (24 )

Whole                     $ 53,379                 100 %    $ 54,817                 100 %    $ (1,438 )       (3 )%



Through the three months ended March 31, 2022, income decreased by $1.4 million,
or 3%, in comparison with the three months ended March 31, 2021, primarily as a consequence of a
lower in income from our premium choices. The lower in premium income
of $1.3 million, or 2%, is primarily the results of a 55% lower in
skilled providers and different income. Within the three months ended March 31,
2022, quantity income decreased by $188, or 24%, in comparison with the three months
ended March 31, 2021, as we proceed to focus available on the market for our premium
options.

                                                        Three Months Ended March 31,
                                                   2022                              2021                        Change
                                                     Proportion of                     Proportion of

Income by Kind                         Quantity          Income           Quantity          Income           Quantity         %

                                                                 (in hundreds, besides percentages)
Subscription and assist               $ 51,601                  97 %    $ 50,839                  93 %    $    762          1 %
Skilled providers and different           1,778                   3         3,978                   7        (2,200 )      (55 )

Whole                                  $ 53,379                 100 %    $ 54,817                 100 %    $ (1,438 )       -3 %



Through the three months ended March 31, 2022, subscription and assist income
remained comparatively unchanged in comparison with the three months ended March 31, 2021.
As well as, skilled providers and different income decreased by $2.2 million,
or 55%, in comparison with the corresponding quarter within the prior 12 months. Skilled
providers and different income will differ from interval to interval relying on the
variety of implementations and different tasks which can be in course of.

                                                       Three Months Ended March 31,
                                                  2022                              2021                        Change
                                                    Proportion of                     Proportion of
Income by Geography                   Quantity          Income           Quantity          Income           Quantity         %
                                                                (in hundreds, besides percentages)
North America                         $ 29,461                  55 %    $ 30,386                  56 %    $   (925 )       (3 )%

Europe                                   9,105                  17         8,923                  16           182          2
Japan                                    7,261                  14         7,708                  14          (447 )       (6 )
Asia Pacific                             7,436                  14         7,659                  14          (223 )       (3 )
Different                                      116                  -            141                  -            (25 )      (18 )

Worldwide subtotal                  23,918                  45        24,431                  44          (513 )       (2 )

Whole                                 $ 53,379                 100 %    $ 54,817                 100 %    $ (1,438 )       (3 )%




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For functions of this part, we designate income by geographic areas based mostly
upon the areas of our prospects. North America is comprised of income from
america, Canada and Mexico. Worldwide is comprised of income from
areas exterior of North America. Relying on the timing of recent buyer
contracts, income combine from a geographic area can differ from interval to interval.

Through the three months ended March 31, 2022, complete income for North America
decreased $925, or 3%, in comparison with the three months ended March 31, 2021. Within the
three months ended March 31, 2022, complete income exterior of North America
decreased $513, or 2%, in comparison with the three months ended March 31, 2021. The
lower in income from worldwide areas is primarily associated to lower
in income in Japan which was as a consequence of unfavorable modifications in change charges as
in comparison with the prior 12 months interval of comparability.

Price of Income

                                                     Three Months Ended March 31,
                                                2022                              2021                        Change
                                                  Proportion of                     Proportion of

                                                     Associated                           Associated

Price of Income                      Quantity          Income           Quantity          Income           Quantity         %

                                                              (in hundreds, besides percentages)
Subscription and assist            $ 16,982                  33 %    $ 15,678                  31 %    $  1,304          8 %
Skilled providers and different        1,998                 112         3,490                  88        (1,492 )      (43 )

Whole                               $ 18,980                  36 %    $ 19,168                  35 %    $   (188 )       (1 )%



Within the three months ended March 31, 2022, price of subscription and assist
income elevated by $1.3 million, or 8%, in comparison with the three months ended
March 31, 2021. The rise resulted primarily from a rise in content material
supply community and third-party software program bills in contrast within the three months
ended March 31, 2022 in comparison with the three months ended March 31, 2021. Within the
three months ended March 31, 2022, price {of professional} providers and different
income decreased by $1.5 million, or 43%, in comparison with the three months ended
March 31, 2021. This lower corresponds to the 55% lower skilled
providers and different income within the three months ended March 31, 2022, in comparison with
the three months ended March 31, 2021.

Gross Revenue

                                                       Three Months Ended March 31,
                                                  2022                               2021                         Change
                                                     Proportion of                     Proportion of

                                                        Associated                           Associated

Gross Revenue                           Quantity           Income           Quantity          Income           Quantity         %

                                                                 (in hundreds, besides percentages)
Subscription and assist              $ 34,619                   67 %    $ 35,161                  69 %    $   (542 )        (2 )%
Skilled providers and different           (220 )                (12 )         488                  12          (708 )      (145 )%

Whole                                 $ 34,399                   64 %    $ 35,649                  65 %    $ (1,250 )        (4 )%



The general gross revenue proportion was 64% for the three months ended March 31,
2022 in comparison with 65% for the three months ended March 31, 2021. Subscription and
assist gross revenue remained comparatively unchanged in comparison with the three months
ended March 31, 2021. Skilled providers and different gross revenue decreased
$708, or 145%. The lower in gross revenue {dollars} for skilled providers
and different income was because of the 55% lower in skilled providers and different
income.

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Working Bills

                                                          Three Months Ended March 31,
                                                     2022                              2021                         Change
                                                       Proportion of                      Proportion of

Working Bills                        Quantity          Income           Quantity           Income          Quantity         %

                                                                    (in hundreds, besides percentages)
Analysis and improvement                 $  8,237                  15 %    $  8,284                   15 %    $   (47 )        (1 )%
Gross sales and advertising and marketing                        18,288                  34        16,149                   29        2,139          13
Normal and administrative                  8,089                  15         7,059                   13        1,030          15
Merger-related                                594                   1            -                    -           594         N/A
Different (profit) expense                     1,149                   2        (1,965 )                 (4 )      3,114        (158 )

Whole                                    $ 36,357                  68 %    $ 29,527                   54 %    $ 6,830          23 %



Analysis and Growth
.
 Within the three months ended March 31, 2022, analysis and improvement remained
comparatively unchanged in comparison with the three months ended March 31, 2021. We
anticipate our analysis and improvement expense as a proportion of income to stay
comparatively unchanged.

Gross sales and Advertising
.
Within the three months ended March 31, 2022, gross sales and advertising and marketing expense elevated
by $2.1 million, or 13%, in comparison with the three months ended March 31, 2021,
primarily as a consequence of a rise in employee-related, contractor, and lease bills
of $1.5 million, $282, and $305, respectively. We anticipate that our gross sales and
advertising and marketing expense will enhance in absolute {dollars} for the rest of 2022 as
in comparison with the prior interval as we'll proceed to spend money on these actions
to assist income development.

Normal and Administrative
.
Within the three months ended March 31, 2022, common and administrative expense
elevated by $1.0 million, or 15%, in comparison with the three months ended March 31,
2021, primarily as a consequence of will increase in company, employee-related, and stock-based
compensation bills of $212, $285, and $330, respectively. The remaining
enhance was as a consequence of numerous different bills that, in combination, elevated by
roughly $200. In future intervals, we anticipate common and administrative
expense to stay comparatively unchanged.

Merger-Associated

.

Within the three months ended March 31, 2022, merger-related expense elevated by
$594 primarily because of the Wicket Acquisition. There was no merger-related
expense within the three months ended March 31, 2021.

Different expense (profit).

 On March 28, 2022 our CEO retired. Pursuant to a Transition Settlement that was
entered into by the earlier CEO and the Firm in October 2021, the CEO, upon
retirement, can be paid his annual base compensation via December 31, 2022
and his 2022 annual bonus, the bonus quantity to be decided by the Firm's
2022 efficiency. In accordance with usually accepted accounting rules we
decided that the remaining base compensation and the present estimate of the
2022 annual bonus needs to be accrued and the expense acknowledged as of March 28,
2022. The whole of $1.1 million is mirrored in Accrued Bills on the
Firm's
Condensed Consolidated Steadiness Sheets
. The $1.1 million in expense additionally displays $0.2 million of stock-based
compensation expense because of the modification of sure awards pursuant
to the Transition Settlement.

On March 27, 2020, in response to the
COVID-19
pandemic, the U.S. authorities enacted the Coronavirus Help, Reduction, and Financial
Safety Act, which was amended by the Consolidated Appropriations Act in
December of 2020 (the "CARES Act"). The CARES Act gives quite a few tax
provisions and different stimulus measures, together with the creation of sure
worker retention credit. Within the first quarter of 2021, we acknowledged a
good thing about $2.0 million from the CARES Act associated to worker retention
credit. The profit was recorded as Different (profit) expense.

(Profit) Provision for Revenue Taxes.

 We recorded an revenue tax good thing about $708 within the three months ended March 31,
2022 as in comparison with revenue tax expense of $257 within the prior interval. The profit
is because of the launch of $1.0 million of our valuation allowance because of
deferred tax liabilities ensuing from the Wicket Acquisition, which was a
non-tax
deductible transaction. The good thing about $1.0 million was offset by state and
overseas tax expense provisions.

Liquidity and Capital Sources

Money and money equivalents.

Our money and money equivalents at March 31, 2022 have been held for working capital
functions and have been invested primarily in money. We don't enter into investments
for buying and selling or speculative functions. At March 31, 2022 and December 31, 2021, we
had $13.0 million and $13.8 million, respectively, of money and money equivalents
held by subsidiaries in worldwide areas, together with subsidiaries situated
in Japan and the United Kingdom. These earnings may be repatriated to the United
States tax-free however
may nonetheless be

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topic to overseas withholding taxes. On February 1, 2022, we acquired 100% of
the excellent shares of Wicket Labs, in change for 212,507 unregistered
shares of our widespread inventory valued at roughly $2 million and roughly
$13.2 million in money. Roughly $1.8 million of the money consideration was
held again to safe cost of any claims of indemnification for breaches or
inaccuracies within the Sellers' representations and warranties, covenants and
agreements. We consider that our present money and money equivalents might be
adequate to satisfy our anticipated working capital and capital expenditure wants
over at the very least the subsequent 12 months.

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