MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form
10-K for the year ended December 31, 2019.
We are a leading global provider of cloud-based services for video. We were incorporated in Delaware in August 2004 and our headquarters are in
Boston, Massachusetts. Our suite of products and services reduce the cost and complexity associated with publishing, distributing, measuring and monetizing video across devices.
Brightcove Video Cloud, or Video Cloud, our flagship product, is the worlds leading online video platform. Video Cloud enables our
customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Brightcove OTT Flow is a service for media companies and content owners to rapidly deploy high-quality, direct-to-consumer, live and on-demand video services across platforms. Brightcove Video Marketing
Suite, or Video Marketing Suite, is a comprehensive suite of video technologies designed to address the needs of marketers to drive awareness, engagement and conversion. Brightcove Enterprise Video Suite, or Enterprise Video Suite, is an
enterprise-class platform for internal communications, employee training, live streaming, marketing and ecommerce videos.
We also have a
number of modular solutions for customers, including Brightcove Zencoder, or Zencoder, which is a cloud-based video encoding service. Brightcove SSAI, or SSAI, is an innovative, cloud-based ad insertion and video stitching service that addresses the
limitations of traditional online video ad insertion technology. Brightcove Player, or Player, is a cloud-based service for creating and managing video player experiences.
In September 2019, we released Brightcove Beacon, which is a purpose-built app that enables companies to deliver and launch premium OTT video
experiences quickly and cost effectively across mobile, web, smart TVs and connected TVs, all with the flexibility of multiple monetization models. In January 2020, we released Brightcove Campaign, which is a purpose-built app that enables marketers
to easily create video-driven marketing campaigns that yield insightful data with the ability to compare video performance to a variety of industry benchmarks.
Our philosophy for the next few years will continue to be to invest in our product strategy and development, sales, and go-to-market activities to support our long-term revenue growth. We believe these investments will help us address some of the challenges facing our business such as demand for
our products by existing and potential customers, rapid technological change in our industry, increased competition and resulting price sensitivity. These investments include support for the expansion of our infrastructure within our hosting
facilities, the hiring of additional technical and sales personnel, the innovation of new features for existing products and the development of new products. We believe this strategy will help us retain our existing customers, increase our average
annual subscription revenue per premium customer and lead to the acquisition of new customers. Additionally, we believe customer growth will enable us to achieve economies of scale which will reduce our cost of goods sold, research and development
and general and administrative expenses as a percentage of total revenue.
As of March 31, 2020, we had 621 employees and 3,498
customers, of which 2,293 used our premium offerings and 1,205 used our volume offerings. As of March 31, 2019, we had 496 employees and 3,696 customers, of which 2,227 used our premium offerings and 1,469 used our volume offerings.
We generate revenue by offering our products to customers on a subscription-based, software as a service, or SaaS, model. Our revenue grew
from $41.8 million in the three months ended March 31, 2019 to $46.7 million in the three months ended March 31, 2020, due to incremental revenue from the Ooyala acquisition. Our consolidated net loss was $7.9 million and
$5 million for the three months ended March 31, 2020 and 2019, respectively. Included in the consolidated net loss for the three months ended March 31, 2020 was merger-related expense, stock-based compensation expense, and
amortization of acquired intangible assets of $5.5 million, $2.6 million, and $972,000, respectively. Included in consolidated net loss for the three months ended March 31, 2019 was merger-related expense, stock-based compensation
expense, and amortization of acquired intangible assets of $2.9 million, $1.4 million, and $416,000, respectively.
three months ended March 31, 2020 and 2019, our revenue derived from customers located outside North America was 46% and 48%, respectively. We expect the percentage of total net revenue derived from outside North America to increase in future
periods as we continue to expand our international operations.