Brightcove Inc. (NASDAQ:BCOV) Q3 2023 Earnings Call Transcript

In order to drive more new business and improved add-on sales performance, we have made important changes to our go-to-market and product development initiatives over the course of the year. We expect to see the positive impact of these changes continue over time, especially as we wrap up 2023 and over the course of 2024. For example, from a go-to-market perspective, at the beginning of the year, we shifted our approach from individual reps focusing on both existing and new customers in a specific territory or end market to now having reps specifically dedicated to new business, and other reps specifically dedicated to renewals and add-on sales as part of our territory or end market approach. We also reallocated resources to expand our strategic sales coverage and demand generation towards strategically large customers, many in media, a market segment the company focused less on in recent years.

From a product perspective, we’ve been focused on increasing the velocity of new product introductions. We now have numerous new opportunities for our go-to-market teams to push to both new and existing customers. For our enterprise customer base, this is delivered via two use case-focused product suites, Communication Studio and Marketing Studio. We’ve received terrific feedback from customers on how the enhanced capabilities of these newer offerings can improve efficiency, effectiveness, engagement and results. We have a sizable installed base of customers who use Brightcove Video Cloud, our more general product suite, for marketing communication-specific use cases that are obvious candidates to upgrade to these newer offerings over time.

We’re seeing strong early success with customer adoption of these new products, and they represented a meaningful portion of our enterprise add-on business in Q3. For our media customer base, we focused on the rollout of our Analytics and Insights Suite, including subscription and Ad Monetization, Content and Engagement and Quality of Experience. Also, our Ad Monetization service, the cost savings, Context Aware Encoding improvements and our Playout and FAST capabilities and partners. These products are definitely helping us have the right conversations with our media customers and as they expand, we expect to grow with them in these areas. Additionally, we’ve pointed our go-to-market teams to focus on services as an additional form of potential add-on sale.

Historically, we’ve done more services selling with new customers, same customizations, new apps, those types of things. This focus has returned our services revenue to growth in 2023, with year-to-date growth at 18% and Q3 at 13% year-over-year, with an opportunity to hopefully accelerate this going forward. We have more work to do to improve our go-to-market efforts, and I am confident our approaches will deliver positive results. During the quarter, our CRO left the company. I am overseeing global sales directly while we search for a new CRO. We are actively recruiting for this role and have been pleased with the quality of initial candidates, filling this role with a world-class leader as soon as possible is a top priority. My confidence that improved sales execution will generate faster top-line growth is driven in large part by the strength of our value proposition and customer base in our two core markets: enterprise and media.

We have built a strong and resilient enterprise business with a highly differentiated value proposition that gives us the true right to win with these customers. Our two primary enterprise use cases, marketing and communications, are areas of global business being fundamentally changed by streaming. With Brightcove, enterprises using us for marketing can increase awareness, attract new customers, improve customer engagement and ultimately increase conversions and revenue. Those using us for communications can more deeply engage with employees, partners and other constituents for numerous reasons. Ultimately, streaming is at the core of these functions now. Given today’s hybrid remote and execute and deliver from anywhere world, our solutions are getting the awareness and credit they deserve now as we were named the winner of the Best Overall Marketing Campaign Management Solution in the Sixth Annual MarTech Breakthrough Awards program this quarter.