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Brightcove Pops 12% After Record Sales Quarter; Street Says Buy

support@smarteranalyst.com (Ben Mahaney)
·2 min read

Shares in Brightcove popped more than 12% after the online video company reported third-quarter results that outperformed Wall Street estimates as businesses are growing increasingly dependent on virtual solutions during the stay-at-home environment.

Brightcove’s (BCOV) sales in the quarter ended Sept. 30 rose 3% to $49.1 million year-on-year and beat the Street consensus by $2.8 million. Subscription and support revenue increased 2% to $46.3 million versus the same quarter last year.

The operator of a cloud video publishing and distribution platform posted non-GAAP net income of $0.11 per diluted share in the reported quarter, up from $0.06 in the year-ago period and topped analysts’ expectations by $0.13. The recurring dollar retention rate was 101% in the quarter, which is above the company’s historical target of the low to mid-90% range.

“Our sales performance, which was the strongest in our history, is evidence that the use of video as a primary tool for connecting and communicating is stronger than ever,” said Brightcove’s CEO Jeff Ray. “Event partners, media companies and enterprises all have the same goal. They all seek to deliver broadcast-grade, quality video experiences from a seamless, scalable, and trusted platform. We are confident in our vision and look forward to building on our recent successes and the momentum in the market to deliver faster, more profitable growth over time.”

Backed by the strong results, Brightcove expects sales in 4Q to be in the range of $49.5 million to $50.5 million, with operating income of $2.9 million-$3.4 million and EPS of $0.07-$0.08.

For the full-year, revenue is forecast to be in a range of $193.2 million-$194.2 million with operating income of $12.7 million-$13.2 million and EPS of $0.29-$0.30. Brightcove’s stock has been serving investors well, with shares surging 43% so far this year. For now, Wall Street analysts maintain a bullish outlook on the stock. The Strong Buy consensus is backed by 3 recent Buy ratings. What’s more, the $14.33 average analyst price target implies another 15% upside potential over the coming year.

Lake Street analyst Eric Martinuzzi recently initiated coverage on the stock with a Buy rating and a $15 price target, saying that the coronavirus pandemic is "a net positive" for the company.

Martinuzzi added that demand for video-on-demand from stay-at-home consumers is leading new media and regional broadcasters to boost their investment in OTT [over-the-top] distribution while the company is also benefiting from ample interest for live-streamed virtual customer conferences. (See BCOV stock analysis on TipRanks)

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