Brian Denyeau David R. Mendels - Chief Executive Officer and Director Christopher Menard - Chief Financial Officer and Executive Vice President.

Brendan Barnicle - Pacific Crest Securities, Inc., Research Division Gur Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division Jennifer Swanson Lowe - Morgan Stanley, Research Division Sameet Sinha - B. Riley Caris, Research Division Steven B.

Frankel - Dougherty & Company LLC, Research Division.

Greetings, and welcome to the Brightcove First Quarter 2014 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Brian Denyeau of ICR. Thank you. You may now begin..

Good afternoon, and welcome to Brightcove's first quarter 2014 earnings call. Today, we'll be discussing the results announced in our press release issued after the market closed today. With me on the call today are David Mendels, Chief Executive Officer; and Chris Menard, 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 second fiscal quarter of 2014 and the full year of 2014, our position to execute on our growth strategy, our ability to expand our leadership position and our ability to maintain existing and acquire new customers.

Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming or similar indications of 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'll refer to certain non-GAAP financial measures.

There's a reconciliation table showing GAAP versus non-GAAP results currently available on our press release issued after the close of market today, which is located on our website at www.brightcove.com.

In terms of the agenda for today's call, David will provide a summary review of our financial results, market opportunity, as well as an update on our operations. Chris will then finish with additional details regarding our first quarter 2014 results, as well as our guidance for the second quarter and full year 2014.

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

Thanks, Brian, and thanks to all of you for joining us today on our first quarter of 2014 earnings call. We are pleased to report results that exceeded guidance from both a revenue and a profitability perspective. Total revenue for the quarter was $31.1 million, which represents 26% growth on a year-over-year basis.

In terms of profitability, our non-GAAP loss per share of $0.02 exceeded our guidance of a loss of $0.09 to $0.10. The first quarter was an important one for Brightcove as we successfully closed the acquisition of Unicorn Media. We significantly expanded our product footprint and value proposition in the media vertical.

The addition of Unicorn and its cloud-based video ad insertion service, called Once, meaningfully enhances the ability of digital content developers to effectively monetize VOD, live and linear TV experiences across all devices.

This is becoming a top-of-mind concern for digital content creators who recognize that having a Digital First and Mobile First strategy is essential in order to capitalize on the changing ways viewers are consuming content.

With the combination of Zencoder, the Video Cloud platform and the Unicorn product offering, we are now uniquely positioned in our market to deliver real business value to media companies for the digital video business. No other OVP can help these companies monetize their content like we can.

This focus on delivering a compelling, monetizable digital content experience was front and center at the recent National Association of Broadcasters conference in Las Vegas.

There were multiple panels focused on ways to transition to this new consumption paradigm that not only makes digital content available at any time, but how can it become a new substantial and profitable revenue stream.

It is becoming increasingly evident, as digital content providers are focused on ways to deploy new technologies to effectively monetize the burgeoning levels of digital content being made available to consumers. The early feedback we have received from customers on a combination of Video Cloud and Once has been extremely positive.

Customers have quickly seen the benefit of having a single vendor that can provide a best-in-class online video platform, which addresses the complexity of managing content and complex workflows, and a cloud-based ad insertion service that can deliver personalized advertisements more efficiently and in real time to any device.

We believe we are delivering a highly-differentiated product offering to solve the critical business issues facing digital content providers, and that we are well-positioned to capitalize on this fast-emerging market opportunity.

Looking at our performance in the first quarter, we continue to see positive momentum in the media vertical, including new customer wins with the Hallmark Channel; Yelp; and RLJ Entertainment, creators of Acorn TV, a leading subscription service for the best of British TV in North America; TV Tokyo; and Nippon Television Network.

Nippon Television Network is the fifth largest broadcaster in Japan. They were looking to expand their ability to offer online video ads across platforms and devices.

After conducting a competitive search process, they chose Brightcove Video Cloud as their online video platform due to our integration with a broad set of video ad platforms that are already popular in Japan. This is an important beachhead account for us that demonstrates our leadership position in the emerging Japanese online video ad market.

We also had good media upsell activity in the quarter, with expanding engagements with Dell media and Forbes [ph] media. At the same time, we're seeing strong business activity in the digital marketing and enterprise vertical, which continues to represent the majority of our business.

During the third quarter, we signed new digital marketing and enterprise customers, including Northern Trust and Molson Coors, among others. We also had good upsells with existing customers and recognizable brands like EMC, Redbox, Lenovo and Shutterfly.

We continue to see substantial opportunity in the digital marketing and enterprise vertical, and we will be introducing an exciting new product to these customers in the coming weeks at our regional PLAY user conference. From a product perspective, we introduced important enhancements to our Zencoder service.

First, we've added support for encoding formats for the next generation of web and mobile playback. We added support for HEVC; H.265, the successor to H.264; and MPEG-DASH, the HTTP streaming standard.

Zencoder is the first cloud-based encoding platform with an open API that can support these emerging standards, and we believe it represents a significant level of differentiation in the market.

Second, adding to our existing broad support for popular web and mobile encoding formats, we've added support for formats to address the diverse needs of broadcasters and other professional content providers, with support for codecs such as MPEG-2, MPEG-TS, JPEG 2000 and AVC-Intra.

These formats will enable content providers to contribute content to an extended array of endpoints, including broadcast indications, closed network, OTT, VOD and others. Lastly, I am pleased to announce that Gary Haroian will be joining our Board of Directors in the second quarter.

Gary is a highly experienced executive in the technology industry, including serving as the CFO of Bowstreet, Concord Communications and Stratus Computer, and as a member of the Board of Directors of Unica, PhaseForward and Aspen Tech, among others.

At the same time, I'm sorry to announce that Betsey Nelson will be leaving the board following our second quarter earnings results. Betsey has been a valued member to our board since 2010, and I would like to wish her well and thank her for all of her contributions to Brightcove.

In summary, the first quarter represented a strong start to 2014 for Brightcove. There is pronounced ongoing shift in the way digital content is being consumed, which is opening up exciting new opportunities for media companies and brand marketers to effectively target their customers.

This shift in consumption pattern is presenting unique challenges for digital content creators that Brightcove's cloud service solutions are well-positioned to solve.

The expansion of our services to include Unicorn's Once cloud service is a significant competitive differentiator that we believe further enhances Brightcove's ability to benefit from the increasing amount of digital content that is consumed through the cloud. With that, let me turn the call over to Chris to walk you through the numbers..

Thanks, David, and good afternoon, everyone. As David mentioned, we are pleased with our first quarter results, which exceeded our guidance on both the top and bottom line. For the first quarter, total revenue was $31.1 million, a 26% increase from $24.7 million in the first quarter of 2013 and above our guidance of $28.8 million to $29.5 million.

Subscription and support revenue of $29.4 million was up 24% year-over-year, while professional services and other revenue was $1.7 million, up 83% from the first quarter of 2013. The revenue outperformance in the quarter was a result of higher-than-expected overages, coupled with strong in-quarter revenue.

The overage revenue upside was largely due to one customer who entered into overages early in the quarter and subsequently renewed their contract. The strong in-quarter revenue performance was driven by good sales activity in the early quarter that led to revenue being recognized during the first quarter. Turning to revenue mix.

Our premium offerings generated $28.6 million of our total revenue, representing a 29% year-over-year increase, while our volume offering generated $2.5 million in revenue, essentially flat from the first quarter of 2013.

As we mentioned on the Q4 call, we have increased our focus on the premium market, where we believe the greatest opportunity for growth exists. As a result, we no longer offer the $99 and $199 tiers of our Video Cloud volume offering and have allocated the associated marketing dollars to our premium offerings.

On a geographic basis, we generated $18 million of revenue in North America during the quarter, which was up 17% year-over-year and represents 58% of our total revenue.

Europe recorded $8.6 million, a 60% increase from last year and 28% of total revenue, while Japan and Asia-Pac generated $4.5 million of revenue for the quarter, up 14% year-over-year and representing 14% of total revenue.

From a vertical perspective, digital marketing and enterprise customers represent 59% of our first quarter revenue, growing 18% on a year-over-year basis, while our media customers represent 41% of our revenue, growing at 40% on a year-over-year basis.

While we continue to see a broad market opportunity and strong demand for our products across a number of industries, we are seeing positive results from our increased focus on the media vertical. Turning to streams.

Our year-to-date average monthly video streams as of March 31 was 1.4 billion, up from 963 million at the end of the fourth quarter and up 64% year-over-year. As a reminder, video streams have not historically been a good predictor of revenue, and we do not expect them to be in the future.

Our recurring dollar retention rate was 88% in the first quarter, which reflects the impact of one large customer previously mentioned, who renewed at a lower level in 2014 compared to their 2013 run rate.

As we've said in the past, there are times when a customer will buy well ahead of their current consumption needs in anticipation of a significant ramp in utilization from their users, and will then rightsize their agreement the following year if that ramping utilization does not materialize.

We continue to feel very good about our recurring dollar retention rate. Looking at our customer count, we ended the first quarter with 6,126 customers compared to 6,321 at the end of the first quarter of 2013. Breaking this down further, we ended the quarter with 1,823 premium customers, up 61 from the end of the fourth quarter.

This includes 35 net customers that we inherited as part of the Unicorn acquisition. We had 4,303 volume customers at the end of the quarter, which was down 253 from last quarter. While net customer adds is a relevant metric, our primary focus has always been on maximizing the amount of revenue our sales force can generate.

With the increased focus on premium in the media vertical, in particular, we believe that average subscription revenue per premium customer is becoming a more relevant metric. In the first quarter, the average subscription revenue per premium customer was approximately $60,000, up 17% year-over-year. Moving down the P&L.

Our non-GAAP gross profit in the first quarter was $20.4 million, a 22% increase from a year ago, and a gross margin of 65%. Subscription and support revenue represented approximately 94% of our total revenue and had a 69% gross margin, while services revenue represented approximately 6% of our total revenue and a 2% gross margin.

Non-GAAP loss from operations was $322,000 in the first quarter, an improvement compared to a loss of $1.2 million in the first quarter of 2013 and significantly better than our guidance of a loss of $2.5 million to $2.9 million.

The earnings outperformance is largely a result of better-than-expected revenue, with flow through the P&L, in addition to solid expense management.

Non-GAAP loss per share was $0.02, based on 31 million weighted average shares outstanding, which was better than our guidance of a loss of $0.09 to $0.10 per share and compares to a per share loss of $0.06 on 28 million weighted average shares in the year-ago period.

On a GAAP basis, our gross profit was $19.8 million, operating loss was $4.7 million and our net loss per share was $0.16. Turning to the balance sheet.

We ended the quarter with cash, cash equivalents and investments of $21.4 million, down from $36.1 million on December 31, due in part to the cash used as part of the consideration paid for the acquisition of Unicorn.

From a cash flow perspective, we used $4.9 million in cash from operations and invested $777,000 in capital expenditures during the quarter, which equates to a negative free cash flow of $5.7 million for the quarter. This compares to negative $2.9 million of free cash flow in the year-ago period.

Our deferred revenue balance at quarter end was $26.8 million, up 20% year-over-year. I'd like to finish by providing our financial outlook for fiscal year 2014 and the second quarter.

For the full year 2014, we are reiterating our guidance for revenue in the range of $126 million to $130 million, which represents a year-over-year growth of 15% to 18%.

We are now forecasting a non-GAAP operating loss of $5 million to $7 million and a non-GAAP net loss per share of $0.19 to $0.25 for the full year 2014, based on 32 million weighted shares outstanding.

This compares to our previous guidance of a non-GAAP operating loss of $9 million to $12 million and a non-GAAP loss per share of $0.31 to $0.40, respectively. We are reiterating our free cash flow guidance of negative $5.5 million to $7.5 million for the full year.

As we've said in the past, the first quarter is historically the largest use of cash during the year due to the timing of bonus and year-end commission payments.

For the second quarter, we are targeting revenue of $29.7 million to $30.2 million or 10% to 12% growth on a year-over-year basis, which includes our revenue contribution of $800,000 from professional services.

We should note that on a sequential basis, we are forecasting declines of approximately $900,000 in professional services revenue and several hundred thousand dollars in revenue overage. From a profitability perspective, we expect a non-GAAP operating loss of $3.1 million to $3.4 million for the second quarter.

Non-GAAP net loss per share is expected to be in the range of $0.11 to $0.12, based on 32.1 million weighted average shares outstanding. In summary, Brightcove delivered a strong start to 2014 from both a financial and operational perspective.

We are pleased with the progress we have made with the Unicorn integration and believe we are in a strong position to capitalize on this market opportunity. With that, we will now take your questions. Operator, we are ready to begin the Q&A session..

[Operator Instructions] Our first question comes from Brendan Barnicle from Pacific Crest Securities..

David, I wanted to follow up a little bit on the Unicorn acquisition. It sounded like the integration is off to a strong start. I was wondering if you could comment a little more on who you see competitively there and how the pricing is shaping up in that market..

Sure. Thank you very much for joining us. Let me start by just thanking everyone who joined the call today. So, yes, you're correct. It is starting off very nicely. We're very excited about the acquisition. I think pretty much all of the expectations we had coming into the announcement that we made last quarter are still right on track.

We're very excited about the talent that joined the company. I'm excited about the new technology. And I'm absolutely excited about the market opportunity.

In terms of the competitive landscape, the competitive landscape overall for this space of cloud solutions around video remains fragmented, with lots of small players, as well as lots of DIY solutions. There are no big players. In fact, I think we continue to be the clear market leader across this space, without any real change.

Specifically speaking to the Once product, which is the name of the product we acquired from Unicorn, they compete with a couple of small private companies, all of which are significantly smaller than Unicorn was and adequately [ph] smaller than Brightcove is. I don't think any of them have a lot of traction yet.

I think we're in a strong position, both with our market presence, our technology base, the Brightcove brand and the infrastructure we bring to bear from both people and technology, as well as the market momentum that we already have.

But there are some small companies out there that compete in this space that I think, at this point, don't have a significant amount of traction..

Great. And with Unicorn, you've obviously built out the product suite and continuing to build out there.

What are the other pieces you see building over the next year or 2 that continue to build on what you've already got?.

Well, there's a lot of stuff that we're working on, and there's a lot of opportunities. It's a very dynamic space.

And we really see what we're doing is building not a product but a portfolio of services that companies can put together to solve problems in video delivery and monetization, whether you're a digital media company, for example, an ESPN or a CBS doing ad-supported media, or you're a digital marketer, for example, a Puma or a Bank of America doing marketing of your corporation.

And so I think there are a number of things that are coming. We have our Brightcove PLAY conference next Thursday in New York. We'll have a lot of our top customers in both the digital media sector and the digital marketing sector there. And we will be talking quite a bit about our roadmap and vision.

And we will be talking a little bit about some of the innovations we're going to make in the digital marketing space. So I'm not going to get ahead of that today, but I'm excited about it. We've spent a lot of the last 90 days talking about what we're doing in the ad-supported media space.

We think there's also a lot of opportunity for us to establish really significant leadership in that digital marketing space. And so we've got some new stuff coming out there. I think beyond that, you'll see significant improvements across the board in sort of all of the key subsystems of our products.

We talked some last year, and we're getting closer and closer to general availability of our new player service. We're really excited about this. It's extremely high-performance, flexible, versatile. We'll have a lot more to say about that over the course of this year, and you'll see more from us as well..

Great. And, Chris, just one quick one for you. You mentioned the new customer additions, so there were 61 that were net new. But you mentioned the number that had come from Unicorn.

Can you remind me what that was again?.

Yes, it was 61 total, 35 of which came from the Unicorn acquisition..

Our next question comes from Tom Roderick from Stifel..

It's Gur on for Tom.

So with regard to Unicorn, could you perhaps give us an update on the integration timetable? And then just one step further, how has the Unicorn customer base responded to the acquisition? And more importantly, do you see any sort of early opportunities for upsell into that base?.

Sure. I can start and then Chris can jump in on any more specifics I might not cover on the integration timetable. We hit the ground running fast. The nice thing about this story was this is an independent module that didn't require lots of integration for us to be able to sell it.

In fact, we know that because we already had mutual customers even before we were a single company. And so our sales team was basically equipped to start selling on day 1, and we have been out there pitching and talking about the product.

There is some interesting product integration stuff that you'll see us put together over the course of the year, but none of that sort of a gating item to sell it. In terms of our systems, our support, our operations, et cetera, I think all of that's on track. A lot of that had a 90- or a 100-day timetable, so some of that is already done.

And quite a bit of it is already done. Some of the other pieces are sliding into space -- into place. But there's nothing really significant or material to talk about there in terms of big milestones. You'll see over the course of the year, hopefully, lots of news of momentum and success.

Second question?.

Customer feedback..

Oh, customer feedback. Oh yes, thank you. So we have had some really good opportunities, right when we announced was the CES tradeshow. We've spent a lot of Q1, executives, myself, the executives from Unicorn, others from Brightcove, on the road talking to customers, both in North America and in Europe and in Australia.

And then early in April was the National Association of Broadcasters conference, which is, I think, the flagship event worldwide for this industry, the second one being IBC in Amsterdam, which will come up in September.

And so we've had a chance to get in front of every Unicorn customer, all of our premium Brightcove preexisting customers, plus a very good percentage of all our key target accounts, and the feedback has been really excellent.

I think we're telling a story that really resonates, which is we've always helped people create a great workflow and streamlined method for publishing video and getting that across devices.

Now with the Once product, we're really able to add a lot more value as that becomes a more significant part of people's business in the monetization of that and how they are able to deliver advertising across devices, how they're able to deliver ads better, even on the desktop because of ad blockers, deliver higher quality.

We've had some great engagement with some of the Unicorn customers who are doing live video and live ad insertion, as well as people starting to do really interesting things around the wholly-digital channels, where they're assembling those channels in the cloud, digitally, using our product.

So feedback from the customer base on both sides has been excellent.

The vision of being able to use the lightweight client-player technology that comes from the Brightcove side of the house with the dynamic cloud-insertion technology that comes from the Once product, together with the Zencoder transcoding, I think people really get that, that provides an incredible suite of best-of-breed solutions that come together in a compelling way..

And then another question. You're taking your EPS guidance for the year by quite a bit amount.

How much of that is being driven by early synergies and your confidence in that integration with Unicorn?.

Yes. So integration, as David said, is going really well. I think a lot of the pickup on the EPS side is due to the overachievement we saw in the first quarter. And then there's definitely some synergies and some cost improvements on -- that we're working on throughout the year, mostly in the cost of goods sold area.

And those are the 2 things that are driving the better EPS..

Our next question comes from Terry Tillman from Raymond James..

David, maybe if you could talk a little bit about -- if we look at this growth you had in the media side, I think it was up 40% year-over-year, and you did talk about some of the new wins that you've had in the quarter. And there's been a variety of wins in the past couple of quarters from the household names.

Do you feel like there's more of a tipping point going on where big media brands are increasingly shifting from a DIY or does it not feel like we've had that real inflection point yet, and it's still tough sledding, if you will, to knock off logos each quarter, but it's not necessarily something that you're seeing across the board?.

I feel like we're -- I want to be careful about the language here. I feel like we see the opportunity for a tipping point, but I wouldn't necessarily say that we're going to get -- start getting 20 big customers every quarter overnight.

What we're seeing is all of our major target accounts are struggling with how do they optimize monetization across multi-device delivery. They are looking at how do they move more of their operations into the cloud.

They are starting to do things, and we're seeing this at a lot of the big broadcasters, where they're bringing together their traditional broadcast operations team with their digital team, so they're putting the 50-year-olds and the 20-year-olds in the same room and saying, "Figure out a new model for how we're going to deliver our content." And so that is very positive for the way we're -- the problems we're trying to solve.

And so I think there's absolutely an opportunity for us to continue to win big brands and accelerate opportunity for very big deals. But I don't think there's a specific tipping point per se. But certainly, our big picture on the industry remains very bullish, that we think we're early.

We think that 95% of all ad dollars have still been going into traditional broadcast TV and only 5% is digital. And I don't know if it happens in 4 quarters or 24 quarters, but over the next few years, that flips. And so there's a very big opportunity to provide the core solutions and technologies in the platform that help our customers get there.

And so, yes, we're very bullish. It's not an overnight tipping point, but we're certainly at a point where we see a lot of opportunity. It's why we're investing. You see that in our R&D line. You see it in the acquisition of Unicorn. And we're going to continue to invest to drive for -- to accelerate growth over time..

I guess, David, in terms of on the digital marketing side, several times, you all talked -- both you and Chris talked about the digital marketing business, and you alluded to an important product release that's weeks away.

I guess you're not going to tip your hand too much, but is it just iterating on existing products either with the player or some of the other capabilities? Or are we talking both are brand-new products sets or new SKUs? Or is it just enhancing what you've already delivered in the past? And then secondly, could there be some monetization of this product set in the form of maybe improvement in premium ads as the year progresses, or it's too early to make that call?.

So I think with the new product, you want to be very careful with forecasting because unlike an existing product, you don't have a run rate, you don't have a trend line, you don't have visibility. And so everything that we expect today is already in our guidance. And so I don't want to change that today or set your expectations any different.

I will say we're excited about what we're announcing next week at Brightcove PLAY. That's next Thursday in New York City. It is, I think, a very significant new product from us, and hopefully, we'll be very well-received.

The early feedback we've had is good, and I'm not going to get into a lot of detail because we want to roll it out correctly and tell the right story. And -- but it is -- it's a nice story. We'll have a lot more to say and happy to talk to investors during the open period we have throughout the quarter about our strategy and where we're going..

Chris, I guess my last question is just related to some of the commentary earlier about how you all had -- you've evolved your go-to-market strategy over time and continued to refine it, and so the focus is really on premium and away from the volume business. And some of those SKUs obviously are just eliminated, and it freed up marketing dollars.

Did any of that help in the quarter in terms of you said in-quarter sales execution was solid or maybe it wasn't back-end-loaded? Was any of that a byproduct of some of the shift in marketing dollars?.

Terry, yes, it's hard to say exactly why we got off to the fast start [indiscernible]. I can't tell you that because we eliminated 2 SKUs in the volume business it led to a fast start in January and February. But we are making a lot of good progress in the premium business.

You heard in my prepared remarks that subscription revenue per premium customer is up to $60,000 per year, and that's up 17% year-over-year. So I think a lot of the changes we've made and modifications over the last couple of months or couple of quarters are starting to really pay off..

Our next question comes from Jennifer Lowe from Morgan Stanley..

Chris, I wanted to dig just into the revenue guidance a little bit more. And clearly, you had a good result in Q1, came in, I think, about $2 million above the midpoint of guidance. But the full year stays where it was, which would imply sort of taking down expectations a little bit for the next 9 months.

Can you just comment a little bit on potentially the increased conservatism there? And is there anything that's sort of new relative to what we talked about 3 months ago that we should be thinking about in terms of that full year outlook?.

Sure. I don't think there's anything that's different in terms of the model, the conservatism, as you put it, per se, even though I don't think we're necessarily conservative. We're just calling what we can see.

I think if you went back to the last conference call, one of the things that's different with the Unicorn Once business is you don't have the same level of visibility. And what I mean by that is it's not a contract that just unwinds into revenue, it's really more usage-based for the existing customers.

And so while we're doing a good job of forecasting and met expectations in the first quarter and it's on track to be right on target for what we expected for the full year, I'm still getting a handle on how to forecast that and make sure it's accurate as we go forward. We did have a really strong Q1. We saw really high overages.

We got off to a fast start. We generated more in-quarter revenue than we ever have before. And I'm not ready to pull those assumptions forward into the future quarters. I did also talk about in the canned [ph] remarks that pro service is going to be down about $900,000 sequentially.

So there's a bit of a headwind there as we go into the second quarter and the back half of the year..

Maybe just sort of rounding out that thought, just back of the envelope, it looks like the guidance is actually looking for subscription and support revenue to be down quarter-over-quarter at the midpoint.

Am I reading that right? And then related to that, is that really the overage component that would drive that, the lower expectations for overage in Q2 versus Q1? Or is there something related to some of the churn numbers or something else that might be driving it to be down quarter-over-quarter..

Yes. So I think there's really 3 factors. So you hit the first one. The overage is definitely a factor. I'm not projecting the same level of overage in Q2 that we saw in Q1.

That in-quarter revenue assumption -- again, Q1 was a record for in-quarter revenue, and what that means is the bookings we signed -- or the contracts we signed in the first quarter generated almost twice as much revenue than we typically see from contracts signed within a 90-day period.

We're not going to forecast at that level for Q2 because as far as I'm concerned, right now, that's still an outlier. And then the revenue retention rate, as we talked about in the canned [ph] remarks, was a little bit lower than our historical average, and so we have to make up some of that revenue that we lost last quarter as we go forward..

Okay. Great. And then just one last one for me and on a slightly different vein. I think you noted that European revenue was up 60% year-over-year. It certainly seems to continue to accelerate over the last few quarters.

Can you just talk a little bit about what you're seeing in Europe, specifically, and what is driving the strength there?.

Yes. I think we've seen some good pro-serve [ph] quarters within the Europe region. I think we've had some big customer wins over the last 12 months that are rolling through into revenue. I do want to be a little cautious, I think, as we look forward into Q2 and the back half of the year.

Some of the big wins we've had in all of our international regions over the last 12 months, we now have to find more big deals to build on top of those. We've got some tough comp quarters coming up.

And of the 2 big deals, the one in Q4 and the one in Q1 that we announced, the customers who are taking haircuts in their existing contracts, those are both also in our international regions. And so we also have to backfill some of that revenue as we move forward across the next 3 quarters..

Our next question comes from Sameet Sinha from B. Riley..

Actually, a couple of -- actually, a question on the geographic side. So, APAC, mean, that used to be a big focus area, I remember you having mentioned it a couple of times and talked about having a great leader in that segment. That seems to have slowed down.

Anything specific that we are seeing there? Secondly, when you talk about acquisitions in the space, seeing that FreeWheel was just bought. Can you talk about any change in competitive dynamics with their partner or competition? And the final question is about Live.

I haven't heard anything about that specific product, maybe I just missed, but last [indiscernible] some of that was the area of focus.

Can you elaborate on any sort of traction you're getting there?.

Thanks. I'll start off with the APAC question, and then I'll give the acquisition, FreeWheel, and Live questions over to David. It kind of builds on Jen's last question. So in the JAPAC region, there's a couple of factors.

One is we just talked about one of the large customers who downsized their contracts over the last couple of quarters was in the JAPAC region, and so that's some revenue that we need to backfill as we go into the next couple of quarters. I think part of it, too, is, remember, the APAC region is only a couple years old.

So as that number gets a little bit bigger, it's hard to keep up that significant growth rate. And then the last thing is, we had a number of really big media wins in that region last year, at the very beginning of the year.

So we had almost the full year of revenue from a couple of really big media companies, and now we have to find other big media companies to fuel that growth year-over-year. And so for that region, in particular, we have a couple of tough comp quarters coming up..

For your second question, it was about the acquisition of FreeWheel by Comcast and how does that impact us, I think. And the answer is I think it's essentially neutral. FreeWheel has been a partner of both Unicorn Media and of Brightcove. We integrate with that in terms of ad insertion.

So they are an ad-decisioning service, and we integrate with that for our customers that want to use FreeWheel and pull their ads into either the Once product or the Video Cloud product. And so there are some Venn diagram competition with FreeWheel on occasion, but for the most part, that's not changed by this acquisition.

For the most part, we view them as a partner. We have partnered successfully in many accounts. I think many, if not most, of our largest broadcast accounts in North America are doing FreeWheel-Brightcove accounts. And so that generally tends to be a positive relationship with good technical cooperation between the 2 companies.

The third question was about Live. And Live is still live. We didn't have any specific announcements in the script, but a number of the customer wins included both Live and VOD. We continue to see momentum from our customers using Live. We've talked in the past about sports like the AFC championships. We also had the Masters recently.

And so we continue to see good momentum with Live. I think in many cases, we see customer opportunities where Live is a particularly interesting problem for them because it's harder, and that's a wedge that also helps us get the video-on-demand business.

And so it won't necessarily be that every quarter we'll have specific Live announcements, but you can assume that a significant percentage of any of our customer announcements or our momentum is coming from companies using us for both Live and video-on-demand..

Our next question comes from Steven Frankel from Dougherty & Company..

Chris, could you give us a little finer detail on exactly where our overages were in the quarter?.

They were right around the $2 million mark..

Okay. And for David, maybe an update on a couple of the elephant accounts, like Viacom and NBC Universal.

What are your prospects for broadening within those accounts or any kind of announcements you can give us on the progress there?.

I can't give you any specific announcements on either company. I don't think there's anything public I can talk about. We certainly continue to engage extensively and broadly with both of those. They're both big, complex companies with lots of brands, with businesses in multiple regions of the world as well.

And we view both accounts as continuing to have a lot of opportunity and a lot of opportunity for growth.

But I don't think there's any public information about any specific news I can give you on either account, other than to say we're continuing to work with both of them and we're working very hard to continue to make that successful and to grow that..

Okay.

And then where are you in terms of the sales force today? Are you fully staffed or still adding?.

Yes, we're still adding. We have a number of reqs across -- I can't tell you it's all regions, but in many regions, ranging from inside sales to account management. They may even be 1 or 2 field positions open..

At this time, we have no further questions. I will turn the call back over to David Mendels for our closing comments..

Well, I want to thank you, all, for joining us for our first quarter conference call. We're off to a good start for the year. We have a lot to do. It's an exciting time. I think we feel as strongly as ever that there's a lot of opportunity in this market, that we're early.

By bringing together the acquisition that we announced last quarter, I think we've really solidified our position as a leader in this space. We've changed the competitive dynamic. We've created new opportunities for us in both our existing accounts and in new accounts. And so we're off to a good start and have a lot to do.

So we look forward to talking to you again at the next quarter conference call. Thank you very much..

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation..