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Brightcove Inc (BCOV) Q4 2018 Earnings Conference Call Transcript

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Brightcove Inc  (NASDAQ: BCOV)
Q4 2018 Earnings Conference Call
Feb. 13, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Brightcove's Fourth Quarter and Fiscal Year 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Brian Denyeau.

Brian Denyeau -- Investor Relations

Good afternoon and welcome to Brightcove's fourth quarter and full year 2018 earnings call. Today we'll discuss the results announced in our press release issued after market close. With me on the call are Jeff Ray, Brightcove's Chief Executive Officer; and Rob Noreck, Brightcove's Chief Financial Officer.

During the call we will make statements related to our business that may be considered forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for the first fiscal quarter of 2019 and the full year 2019, expected profitability and positive free cash flow, our position to execute on our go-to-market and growth strategy, our ability to expand our leadership position, our ability to maintain and upsell existing customers as well as our ability to acquire new customers.

Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming or similar indications of our future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recently filed annual report on Form 10-K and as updated by our other SEC filings.

Also during the course of today's call we will refer to certain non-GAAP financial measures. There's a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued after market close today, which can be found in our website at www.brightcove.com. In terms of the agenda for today's call, Jeff will provide a summary review of our financial results, an update in our operations and a review of our strategy. Rob will finish with additional details -- regarding our fourth quarter 2018 results as well as our outlook for the first quarter and full year 2019.

With that, let me turn the call over to Jeff.

Jeff Ray -- Chief Executive Officer

Thank you, Brian and thank you all for joining today. During the fourth quarter, Brightcove made additional progress with its strategic initiatives to position the Company to deliver breakout growth. We remain confident that Brightcove can deliver sustainable revenue growth and profitability in excess of current levels over time, as the changes we are making take hold across the business.

A key part of our strategy and what gives me confidence that it will be successful, is the continued improvements in renewal rates we saw throughout 2018 which trended higher throughout the year. We believe this is a clear demonstration that the investments we have made in our products and services are resonating with customers and driving improved business outcomes. We are reestablishing Brightcove as the clear thought leader in the online video platform market. This was recently validated by Gartner Research which placed Brightcove in the Leader Quadrant for Enterprise Video Content Management for the second consecutive report.

Turning to our financial results briefly for the quarter, we delivered fourth quarter revenue of $40.9 million, up 2% year-over-year and slightly below our guidance. Adjusted EBITDA was positive $1.4 million, which was above the high end of our guidance and reflects our commitment to profitable growth. And our recurring dollar retention rate was 104%, well above our historical range. The modest shortfall in revenue was driven by lower than expected services revenue and the second consecutive quarter of lower overage revenue. The impact to services revenue was driven by the timing of completion for a few projects. As it relates to overages, we are seeing fewer customers move into overages at the end of their contracts, including the seasonally strong fourth quarter.

From a bookings perspective, overall our fourth quarter performance reflected many of the same trends we experienced in the third quarter. For the year, bookings were relatively flat as the solid first half was outweighed by weakness in the second half. We are now well into the process of revamping our product and go-to-market efforts to align with our new strategy. In the near-term, we remain dependent on several larger transactions each quarter until we complete this process.

Our goal is to build a higher velocity, predictable selling model that generates many more sales opportunities across every use case and market. We are in a much better position to achieve that goal entering 2019 then when I joined the Company in April. I believe it is an essential component of how Brightcove begins to deliver the financial results the Company is capable of, and that our shareholders expect.

I would like to take a few moments to provide some additional insight into the Company's strategy and the progress we have made to execute it successfully. As we talked about on our last call, we spent a significant amount of time last year, researching our total addressable market. We have finalized our product development roadmap and we'll be bringing a number of new solutions to market in 2019. We are focusing our resources on products that pass a rigorous ROI-based methodology by identifying the greatest customer needs.

This work helped us identify our total addressable market or TAM, which was $1.6 billion in 2016 and growing at a 17% CAGR to $4.2 billion by 2022 per IDC and other estimates. We targeted nine distinct customer end markets that we already serve today in the media, entertainment, marketing and enterprise spaces. This tightly aligns with our historical strength in media and our ability to leverage that strength in adjacent segments. We are initially focusing on four of these segments, which together represent about 60% of the overall TAM and have a faster growth profile.

Let me share some more color on a few of those segments. The marketing and sales segment is expected to be a $900 million market opportunity by 2022 and is growing more than 20% annually. This is a sweet spot for Brightcove, because our position as a trusted cloud provider with deep domain expertise gives us tremendous credibility with customers. We're focused on making it significantly simpler for digital marketers to choose Brightcove and then launch their digital marketing campaign in the field as quickly as possible. To drive this high velocity selling model, our products need to be incredibly simple to use. We have a targeted and detailed product roadmap that we will communicate at PLAY, our annual user conference that takes place in May.

An example of the opportunity in this market was a win we had in the fourth quarter with McCormick and Company, a Fortune 1000 Company that manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorings to the entire food industry. McCormick will use Brightcove to deliver premium video content. That is how-to recipes, to promote brand awareness and customer loyalty across its websites, social channels, branded app and other platforms. As their video library grows, their digital marketing team was looking to create a blended video strategy by leveraging the benefits of YouTube with the brand controls and deep analytics that Brightcove offers to provide an enhanced experience across its own properties.

Two of our other market segments that we will focus more deeply on, are related to OTT experiences. Together, these markets are expected to grow annually by nearly 20% and be more than a $1.1 billion market by 2022. We're seeing a rapid increase in the number of content providers who are looking to directly engage with their customers by providing a compelling OTT experience. This democratization of content is creating new business opportunities for content providers.

To capitalize on it, they needed simple, out-of-the-box OTT solution that doesn't require extensive IT support. We will be announcing a new OTT offering that leverages the early success of our OTT Flow solution this year. A great example of the opportunity in media and OTT is HOOQ, the first premium video-on-demand service to launch in Southeast Asia. HOOQ's ambition is to provide affordable entertainment by bringing the best of local and Hollywood entertainment to anyone, anytime and anywhere. HOOQ selected Brightcove because of our feature-rich product line that can be incorporated into HOOQ's owned proprietary architecture, providing the flexibility the Company needs. Our infrastructure, reliability and proven support network in the region were other key differentiators in this significant customer win.

To further our leadership in the OTT and media markets, earlier today we announced the acquisition of Ooyala's OVP technology, including Ooyala's video content management and publishing platform, Backlot, Analytics, Live and its underlying IP and associated patents. As part of the transaction, Brightcove will acquire substantial portions of Ooyala's engineering, support and sales staff, including the Company's Guadalajara, Mexico operations. Media and related markets represent some of the most attractive growth opportunities for Brightcove. And the acquisition of the Ooyala OVP business puts us in an even stronger position to gain share in this strategic vertical.

We anticipate this transaction to be accretive on an adjusted EBITDA basis in 2019. Ooyala has tremendous global customers who understand the power of video and its ability to transform business and reach new customers. This transaction accelerates our ability to deliver faster innovation and deeper support for all customers. We also will increase our market reach and further strengthen our ability to secure new business in key target markets. We look forward to welcoming Ooyala's OVP customers and ensuring a smooth transition and a world-class experience for them.

There's one other point I would like to make clear about our market segmentation strategy. Over the past 15 years, we have developed the most sophisticated online video platform in the market and it is core to all of our solutions. The initial investments we are making will strengthen our core platform and will quickly benefit all customers. We're deeply committed to online market segments we have identified and take pride in how customers have used our products to grow their businesses.

In my early days at the Company, a common concern I heard from customers was the lack of a long-term product and innovation roadmap from Brightcove. In the past quarter, I've shared details about our market-driven strategy with many customers and thought leaders around the world. I'm encouraged by their confidence in our market segmentation work. The feedback we are now hearing from customers confirms that we're working on the right things, right now. In fact, their only idea for improvement is to move even faster and we will. These new solutions will build upon our rich product heritage.

As I mentioned earlier, Gartner Research recently validated our product strength when it included us in the Leader Quadrant in its most recent Magic Quadrant for the Enterprise Video Content Management market. In particular, our global presence, the robustness of our product performance and our high customer satisfaction scores positioned us very favorably versus our competitors. This report underscores our market leadership and customer desire to spend more with us as we introduce additional solutions that generates business value and customer success.

We were also thrilled to have recently secured the production and broadcast marks within the Digital Production Partnerships, DPP committed to security program. Since its launch in the UK a decade ago, the DPP has worked to establish a program that provides a standardized industry approach to cybersecurity that helps suppliers demonstrate their commitment to security best practices. Achieving these benchmarks demonstrates Brightcove's commitment to security of the massive amounts of data associated with video.

We've also made progress setting up our go-to-market teams for success. I strongly believe that if we make the customer experience, the organizing principle for Brightcove that we will be highly successful with our customers. This principle will apply to all functions which touch customers, including sales, marketing, product and support. We added the final piece to our senior executive team in the fourth quarter, with the hiring of Rick Hanson as our new Chief Revenue Officer.

Rick oversees the global sales organization, including all customer-facing direct sales, channel sales and professional services. He is a 25-year technology veteran, who joins us from CA Technologies, where he was the GM of North America and focused on the Global and Fortune 1000 and was previously a senior sales leader at HP and at RSA Security during his early high-growth stages. Rick has extensive experience and a great track record, running large enterprise sales teams as well as time with the venture-backed start-ups. In its first few weeks, Rick has hit the ground running, bringing new expertise, energy and passion that will drive more rigor and accountability to our sales organization.

This was evident at our recent sales kickoff meeting, where we aligned the global team on our product roadmap and market strategy. Our team left with a renewed confidence and a clear understanding of our vision, strategy and precise plans on how they will achieve their 2019 goals. Our marketing organization is hyper-focused on the quality of our sales pipeline and aligning it to our recent market segmentation work. This approach is helping us accurately focus our marketing investments toward prospective customers with the greatest propensity to spend with Brightcove.

We invest significantly in sales and marketing and it is imperative we are spending these resources efficiently and wisely. I feel great about the progress in our marketing group and the rigorous processes we have put in place to ensure we have a sales pipeline that consists of high quality leads that are continually vetted throughout the sales process. We now have all the leadership pieces in place that will be responsible for executing our strategy and improving our operational and financial performance.

I am seeing collaboration that has vastly improved from when I arrived. I'm excited by the buy-in we're seeing throughout the Company and I'm encouraged by the customer response. We entered 2019 a much stronger Company. We spent 2018 identifying what needed to be fixed, creating a strategy to address those issues and putting in place the organization, leaders and processes that will make our strategy successful. In 2019, our focus is on the execution of the strategy. Our top priorities are delivering our product roadmap.

You'll begin to see significant new innovations introduced in May at our PLAY conference and an aggressive product roadmap throughout the year; significantly improving our lead generation. We have put in place a targeted marketing strategy that will increase Brightcove's brand awareness and more accurately target our products to customers in order to expand our pipeline of opportunities. Today, we are not engaging with enough customers and getting enough opportunities to drive the type of revenue growth we know we can achieve. The success of our high velocity selling model rests on our ability to generate more qualified leads than we have historically done. Building a high velocity selling model.

As Rick comes on board, we are quickly building a best-in-class model for achieving high velocity sales growth. This includes reorganizing our sales structures globally to align with our market strategy; implementation of an account segmentation methodology; improved training and enablement and expansion of our channel sales program; obsessing on customer satisfaction. This is the organizing principle for Brightcove. We know we are successful when our products deliver value and customers love working with us. The loyalty of our installed base shows we do well at this, when given the chance. As a result, we will become a predictable high-growth business with substantial profitability.

To summarize, Brightcove accomplished much in 2018. We have a committed product roadmap tightly aligned to a comprehensive market analysis, put in place the building blocks for high-velocity selling model and attracted world-class leadership talent to execute on our strategic priorities. We're confident that we will begin to see the impact of these operational changes and I look forward to sharing our progress with you throughout the year.

With that, let me turn the call over to Rob.

Robert Noreck -- Executive Vice President and Chief Financial Officer

Thank you, Jeff and good afternoon, everyone. I will begin with a detailed review of our fourth quarter and full year results, and then I will finish with our outlook for the first quarter and the full year 2019. Total revenue in the fourth quarter was $40.9 million, which was slightly below our guidance range. As Jeff mentioned, the shortfall in revenue was largely driven by lower than expected services revenue and lower than expected overages revenue. We're seeing fewer customers enter overages at the tail end of their contract cycles which is leading to less overage revenue. As we look ahead to 2019, we are taking a more conservative approach to our overage revenue forecast to account for this dynamic.

Breaking revenue down further, subscription and support revenue was $37.8 million and professional services revenue was $3.1 million. On a geographic basis, we generated 54% of our revenue in North America during the quarter and 46% internationally. Breaking down international revenue a little more, Europe generated 17% of our revenue and Japan and Asia Pacific generated 29% of revenue during the quarter. We see continued momentum in Japan and Asia-Pac, both with new customer wins and expanded engagements with existing customers. From a vertical perspective, our media business represented 52% of our revenue in the quarter and our enterprise business represented 45% of our revenue, while volume business represented the remaining 3%.

Let me now turn to the supplemental metrics we share on a quarterly basis. Our recurring dollar retention rate in the fourth quarter was a 104%, which is well above our target of low to mid-90s. The strength in the quarter was driven by both stronger gross renewals as well as a large upsell at the time of renewal. We are pleased with the performance in the quarter and the impact of our renewed focus on customer success is having on retention. We do not expect retention rate to remain at this level going forward and continue to target our historical retention rate in the low to mid 90s.

Our customer count at the end of the fourth quarter was 3,783, of which, 2,226 were classified as premium customers. Looking at our ARPU within our premium customer base, our annualized revenue per premium customer was $75,000, which was up 3% year-over-year and excludes our entry-level pricing for starter customers which averaged $5,000 in annualized revenue.

Looking at our results on a GAAP basis, our gross profit was $24.4 million, operating loss was $2.5 million and loss per share was $0.07 for the quarter. Turning to our non-GAAP results. Our non-GAAP gross profit in the fourth quarter was $24.8 million compared to $24.5 million in the year-ago period and represented a gross margin of 61%. Subscription and support revenue represented approximately 92% of our total revenue and generated a 65% gross margin in the quarter, compared to a 68% gross margin in the fourth quarter of 2017. The decrease in gross margin was driven in large part by the decline in overage revenue.

Non-GAAP income from operations was $237,000 in the fourth quarter compared to non-GAAP income from operations of $1.3 million in the fourth quarter of 2017. Adjusted EBITDA was $1.4 million in the fourth quarter compared to $2.3 million in the year-ago period and above the high end of our guidance range for the quarter. The adjusted EBITDA outperformance was driven primarily by the timing of investments. Non-GAAP net income per share was breakeven, based on 37.4 million weighted average shares outstanding. This compares to an earnings per share of $0.04 on 35.5 million weighted average shares outstanding in the year-ago period.

Looking at our full year 2018 results, total revenue was $164.8 million, up 6% year-over-year. On a GAAP basis, gross profit was $98.2 million, operating loss was $13.1 million and loss per share was $0.39 based on 35.8 million weighted average shares outstanding. On a non-GAAP basis, gross profit was $100.6 million, loss from operations was $2.2 million and adjusted EBITDA was $2.3 million and loss per share was $0. 09 based on 35.8 million weighted average shares outstanding.

Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $29.3 million. During the fourth quarter, we generated $2.8 million in cash flow from operations and free cash flow was $2.1 million, after taking into account $682,000 in capital expenditures and capitalized internal-use software.

Before I finish with guidance, I would like to provide some financial details on the acquisition of Ooyala's OVP business. The purchase price is approximately $15 million which consists of $6.25 million in cash with the remainder in Brightcove's shares. We anticipate this transaction to be accretive on an adjusted EBITDA basis in 2019. We will provide a specific revenue contribution estimate when the deal is expected to close in first half of 2019. However, from a multiple perspective, we paid less than 1 times EV to revenue for these assets.

I'd now like to finish by providing our guidance for the first quarter and full year 2019. Please note, that this guidance does not incorporate any impact from the pending acquisition of Ooyala. We will update our guidance once the transaction closes later this year. For the first quarter, we are targeting a revenue of $40 million to $40.5 million, including approximately $2.7 million of professional services revenue. From a profitability perspective, we expect a non-GAAP operating loss of $900,000 to $1.4 million and adjusted EBITDA of a loss of $200,000 to a gain of $300,000. Non-GAAP net loss per share is expected to be in the range of $0.03 to $0.05 based on 36.7 million weighted average shares outstanding.

Turning to our outlook for the full year 2019, we are targeting revenue of $168 million to $172 million. This includes approximately a $11.1 million of professional services revenue. We are also taking a more conservative approach to forecasting overage revenue. We are now anticipating approximately $1.25 million of overage revenue per quarter or $5 million for the year. This compares to $8 million in 2018. In terms of profitability, we expect non-GAAP operating income of breakeven to $3 million and adjusted EBITDA of $5.2 million to $8.2 million. In addition, we expect non-GAAP net loss per share of $0.03 to non-GAAP net income per share of $0.05 based on 38.6 million weighted average shares outstanding.

For cash flow, we expect full year free cash flow in a range of $5 million to $8 million. We will no longer be providing guidance on bookings growth, which we believe provides limited value to investors. Instead, we believe it makes more sense to focus investors on the quarterly backlog metric that we are now required to report each quarter under ASC 606. We define backlog as the aggregate amount of committed subscription revenue that is related to future performance obligation. Backlog will be the leading financial indicator that demonstrates the success we are having, executed on our strategic priorities.

To summarize, Brightcove has its 2019 better positioned to achieve our long-term financial and operational objectives. We will deliver another year of adjusted EBITDA and free cash flow profitability even as we pivot the organization toward our new go-to-market and product strategy. We have more work to do to reach our long-term objectives but we feel very confident about our strategy to achieve breakout growth.

With that, we will now take your questions. Operator, we are ready to begin the Q& A.

Questions and Answers:

Operator

At this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Sameet Sinha with B. Riley FBR. Please proceed with your question.

Sameet Sinha -- B. Riley FBR -- Analyst

Yes, thank you very much. A couple of questions. So, you spoke about overage and can you talk about the margin construct of overage revenues and also what the -- can you give us a reason why few of your customers are utilizing the overages? And second question as it relates to Ooyala, I just wanted to get a better sense of how this will help you kind of accelerate your plans? What specific assets will you be able to utilize and do they have a reseller network that you could utilize to kind of jump-start yours? And about these two technology platforms that you have right now, what are the plans that kind of emerging? Does it give you any new set of products that kind of fit into your nine subverticals that you've identified? Thank you.

Robert Noreck -- Executive Vice President and Chief Financial Officer

Yeah. Sure, Sameet. How are you doing? This is Rob. On the overage front, two points. One on the margin side as you know, not going into overages and is not having the higher overage number can impact margin, because overages and expense aren't necessarily always lined up. Customers typically go into overages at the end of their contract. And they may be running faster than their entitlement throughout the period of the contract. So the overages and expense don't necessarily lining -- line up. So we miss overages like that we -- it can have a detrimental impact on the margin.

In terms of why, there's a couple of different reasons. One, we see customers that are -- have been with us a while and they're more familiar with the amount of traffic that they're going to do. So they're not actually going into overages, they're actually buying the correct amount of entitlements. The second one is, we talked about this a little bit last quarter, but when customers early renew, they can take that overage revenue and they typically extend for a period of time but it commits that revenue over the future periods.

Jeff Ray -- Chief Executive Officer

And then -- hey, Sameet it's Jeff. I'll comment on the Ooyala acquisition. Yes, it does give us an opportunity to accelerate. First of all, it makes clear who the undisputed leader is in OVP. And as you know, when you are the market leader, customers and prospects naturally includes you in RFPs, they naturally come to you and that gives us, we think a great advantage. So we're thrilled about that.

We also have an opportunity to open up some new markets. They're -- they've got some geographies, some great well-known customers in geographies where we aren't very strong or not present at all. And we're excited about the ability to help that accelerate our global expansion. They do have a partner community. It's robust. And we're very eager to engage with those partners and fold them into our partnership strategy. And absolutely that the things that they have been doing for some of the largest media customers and users of OVP in the world are very consistent with our growth strategies. So we see nothing but create advantages in this acquisition.

Sameet Sinha -- B. Riley FBR -- Analyst

One quick follow. Ooyala was previously a part of Telstra and recently there was a management buyout and they became an independent Company. I think Telstra stayed on potentially as a reseller. Now do you have an agreement with Telstra as part of this kind of merger to continue that relationship?

Jeff Ray -- Chief Executive Officer

Yeah, we have not engaged at all with Telstra. We've been only engaging with the owners of Ooyala through the whole process. Ooyala does have a reseller agreement with Telstra and we're very, very eager to continue to support that. It's great for Telstra, it's great for the Australian market. We -- as you know we have very strong presence in ANZ. We're the clear winner already in media there. And so that just builds on a very strong local team there. And we're thrilled about having more access to Telstra and the community that Telstra serves.

Sameet Sinha -- B. Riley FBR -- Analyst

Okay. Thank you.

Jeff Ray -- Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Steven Frankel with Dougherty. Please proceed with your question.

Steven Frankel -- Dougherty & Company -- Analyst

Good afternoon. Just to follow-up on Ooyala, they obviously had their struggles under Telstra. What is their customer base look like today? And maybe give us an example of a couple of the marquee customers that you're going to be able to bring into your umbrella?

Jeff Ray -- Chief Executive Officer

Sure, be happy to. Yeah their customer base is strong and solid. We -- as you can imagine, we spent a lot of time on this and studying this and working with the Ooyala leadership and the extended team, including those principles who are responsible for supporting customers. And I'll tell you personally, I'm impressed with the loyalty and commitment that they've engendered with their customers.

They've done a great job of stabilizing that market. They demonstrated a strong commitment of support and quality and delivery. Their customers trust them in a way that's not inconsistent with ours and we're thrilled about picking that up. Obviously we have a broader set of products that we can sell into our base and we're eager to find opportunities to really expand the relationship with those customers. In terms of their customers that, I would just recommend you go to their website, you can see them. Their household names either globally or in their communities and their names that we will be very proud to have as part of the Brightcove family.

Steven Frankel -- Dougherty & Company -- Analyst

And how many customers they have in total?

Jeff Ray -- Chief Executive Officer

Yeah, we're not yet ready to share that information. We do have a good command of that and we feel very, very good about the customers that they have. We feel good about the mix in terms of size and complexity, the geographic diversity. And again, the customer satisfaction and loyalty that they have right now.

Steven Frankel -- Dougherty & Company -- Analyst

Okay. And now let's switch gears and talk about Q4 which on the one hand, had great renewals. On the other hand, this was typically a quarter where you signed a bunch of new deals and you actually had a net reduction in premium customers. Is this a close rate issue or a pipeline issue? And what specifically are you doing about it?

Jeff Ray -- Chief Executive Officer

Sure. I'll start and then Rob will pile on. It's a little bit of both. The pipeline when I joined in April, we spent a lot of time crawling through the pipeline. And quite frankly, the business was suffering from weakness in the pipeline in terms of size and quality of the pipeline and that was really the direct result of decisions that had been made a year ago to drive near-term profitable contribution through cutting, spending in marketing and demand gen activities. We've revamped those. We've redirected spend. It's very, very different this time around and that all spend for demand gen has very precise ROI objectives tied to it, a clear accountability.

In addition with the reorganization of the Company and the addition of Sara running Marketing, Charles running Engineering and product and Rick now running Global Sales, we've got very precise alignment between the product roadmap. And as we shared with you before, we have now real position in our strategy and our product roadmap, so we know what will be releasing when, to what markets. We've mapped that against very precise demand gen activities, literally down to a subregion within a geo and the timing of launching those demand gen activities and we also have a much tighter closed loop and feedback on the traction that we're getting from demand gen in ways that this Company never had before.

And then finally, we have recommitted to investing in sales enablement. That was another program that was defunded a year ago. The funding is back in place. The team is in place. We recruited very, very strong talent to run that. I think the best affirmation of it is, the recent sales kickoff. We brought in the sales people from around the world. For the first time, at least people who have been here for a long time told me, everyone got a -- had a clear understanding of the strategy.

And in fact, we actually pulled them and almost 90% of those people participating said they get it on the strategy and the roadmap and they're excited about it. They also got very precise product training based on the enablement work that we have begun. They also got their quota letters, their commission plans and their territory assignments. So when they got on the plane to go home, they had everything they needed to hit the ground running. This is a very, very different cadence and tone that has been set in the past.

Steven Frankel -- Dougherty & Company -- Analyst

And you're fully staffed now on the sales side?

Jeff Ray -- Chief Executive Officer

Yes, we are.

Steven Frankel -- Dougherty & Company -- Analyst

Okay. And one of the things Jeff you talked about last quarter was, a near-term bump in OpEx. But that wasn't going to continue into 2019. I want to know what kind of OpEx growth is factored into your guidance for 2019? Did that in fact happen? Or given that things are running a bit behind schedule, are we going to see some expense growth above trend line in at least the early part of 2019?

Jeff Ray -- Chief Executive Officer

So yeah, Steve we are consistent with what we talked about. We've got the money in what we're currently spending today to make the investments that we need and it's about reprioritizing the dollars versus spending more dollars. So built into the guidance we are -- year-over-year we're roughly flat on the operating expense side.

Steven Frankel -- Dougherty & Company -- Analyst

Okay. And, Jeff you have some pretty heady goals for the Company tied to your compensation plan. Yet, we're still sitting here with no growth in the subscription and support business. What gives you the confidence that this Company can grow anywhere near market rates? Because that's clearly been a challenge for the last several years.

Jeff Ray -- Chief Executive Officer

So that's a very fair question. First of all, it is a very new and very different Company. The timing is good. We just had our board meeting yesterday. And for the first time, all the key new leaders had an opportunity to give real clarity to the board on the strategy and the goals. What the board also saw for the first time was, an incredible alignment between sales, marketing and product. And to an individual, they noted they had never seen that before. And really the phrase that they used was, this is a new Company. So I feel very good about the people, the plans and the way that we are aligned to go-to-market.

Number two, the strategy work and again, we'll share a lot more at PLAY, precisely identifies where the traction is for the best growth. It's closest to what we already do that also gives us better than expected profit breakout opportunities for us. And then finally the whole sales execution model is set up in a profoundly different way than in the -- past. The fact that we can absorb Ooyala and fold that in and keep going, I think is an affirmation to the fact that this is a very different go-to market team. And for me, I believe that we'll see a significant impact in the second half. But I'm very, very encouraged by what I see as well as the board and the leadership team.

Steven Frankel -- Dougherty & Company -- Analyst

And last question. One of the classic problems Brightcove has had over the last couple of years is the leak in the bucket, whether it was the repricing or a couple of customers not renewing. Are there any material renewals in 2019 that could get in the way of delivering net revenue acceleration in the back half if you don't execute on those opportunities?

Jeff Ray -- Chief Executive Officer

Yeah, Steve there's nothing significant like we'd seen in the past. We've seen in the past large Companies that were the top one or two Companies in our -- from a percentage of revenue with us. And there's nothing that we see in those Companies there.

Steven Frankel -- Dougherty & Company -- Analyst

And the switch in overages, is that a function of market maturity? Customers now kind of understand and rightsize? And does that cause you to change your pricing model at all?

Jeff Ray -- Chief Executive Officer

Yeah, I don't think it's going to cause us to change our pricing model at all. We're going to continue to price the way we have been.

Steven Frankel -- Dougherty & Company -- Analyst

Okay. Thank you.

Jeff Ray -- Chief Executive Officer

Thank you, Steve.

Operator

(Operator Instructions) Our next question comes from the line of Mike Latimore with Northland Capital Markets. Please proceed with your question.

Vijay Davar -- Northland Capital Markets -- Analyst

Yeah, hi. This is Vijay here for Mike Latimore. You talked a lot about the product roadmap. I would like to hear a little more about any specific -- feature set or enhancements that you're targeting? And at the same time, how much does the acquisition of the Ooyala business that complements your product roadmap?

Jeff Ray -- Chief Executive Officer

Yeah we've shared a little bit. And again we'll be sharing a whole lot more at our PLAY event in May in Boston. So I certainly -- encourage you and others to join us there when we'll really share everything. What counts is the process. It was last summer that we made the call to build the strategy based on market needs, customer needs and being market and market segment driven instead of being product-centric. That caused the research to be done to identify the nine discrete markets. Out of those, four were highly attractive. From that, we developed very precise product roadmaps and that we engaged with the board in September to get their support and then the leadership team locked down for several days and we aligned all of our go-to-market sales, training, marketing all around product deliverables and timings.

We've also overlaid those to the geo. So we know where does the specific functionality and features will be most attractive within market segments, within geos. Focusing on the four does not mean we are abandoning the other five. There's great spillover for the other five markets. And again, the timing of Ooyala couldn't be better because when we began the discussion in earnest with Ooyala, our plans were locked down, the board was committed. We had already redirected our engineering resources and spend to these initiatives. And Ooyala's strategy and market dominance fits very, very nicely into what we're doing.

Vijay Davar -- Northland Capital Markets -- Analyst

Okay, great. And do you have a number for the CapEx for the year?

Robert Noreck -- Executive Vice President and Chief Financial Officer

Sorry, could you repeat the question?

Vijay Davar -- Northland Capital Markets -- Analyst

How much would be the CapEx for the full year?

Robert Noreck -- Executive Vice President and Chief Financial Officer

Yeah, it will be consistent with this year approximately.

Vijay Davar -- Northland Capital Markets -- Analyst

Okay, good. Thank you.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to management for closing remarks.

Jeff Ray -- Chief Executive Officer

Thank you. Again, it's a very exciting time. We made good solid progress in the fourth quarter. That being said, we're very excited about the path that we're on for growth and we are absolutely committed to our market, to our customers to demonstrate that in the new year. We're thrilled to welcome the Ooyala customer family and employees and engineers to the Brightcove family and feel that we're really positioned for a breakout performance. Thank you all and I wish you all a great day.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 47 minutes

Call participants:

Brian Denyeau -- Investor Relations

Jeff Ray -- Chief Executive Officer

Robert Noreck -- Executive Vice President and Chief Financial Officer

Sameet Sinha -- B. Riley FBR -- Analyst

Steven Frankel -- Dougherty & Company -- Analyst

Vijay Davar -- Northland Capital Markets -- Analyst

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