Brian Denyeau - Investor Relations, David Mendels - President, Chief Executive Officer, Chief Operating Officer, Director Kevin Rhodes - Chief Financial Officer.

Tom Roderick - Stifel Dan Bergstrom - RBC Capital Markets Sameet Sinha - B. Riley.

Greetings, and welcome to the Brightcove's First Quarter 2015 Earnings Conference 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 of ICR. Thank you. You may begin..

Good afternoon, and welcome to Brightcove's first quarter 2015 earnings call. Today, we will 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 Kevin Rhodes, 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 2015 and the full year of 2015, expected profitability, our position to execute on our go-to-market and growth strategy, our ability to expand our leadership position, our ability to maintain and up-sell existing customers and 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 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 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 the close of market today, which is located on our website at www.brightcove.com.

In terms of the agenda for today's call, Dave will provide a summary review of our financial results, market opportunity as well as an update on our operations. Kevin will then finish with additional details regarding our first quarter 2015 results as well as our guidance for the second quarter and full year 2015.

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 2015 earnings call. We reported financial results that exceeded the high end of our guidance from both the revenue and profitability perspective.

Total revenue for the quarter was $32.9 million, topping our guidance of $31.8 million to $32.3 million and non-GAAP operating loss was $284,000, ahead of our guidance of a loss $800,000 to $1.3 million.

Our outperformance was primarily driven by customers expanding their relationship with us during the first quarter as well as securing larger than normal overages due to higher stream volumes. We were able to leverage this additional revenue in the quarter to yield better bottom-line results.

We made additional progress during the first quarter transitioning Brightcove to become an integral part of our media for digital marketers, next generation technology stack focused on creating new revenue opportunities and better business performance.

We believe this transition greatly enhances the value of Brightcove to deliver customers and ultimately creates a larger and sticker market opportunity.

We have early proof points in both businesses, where customers are choosing Brightcove to improve their ability to leverage digital content to enhance our viewers' experience and ultimately drive faster revenue growth.

We are early in the reacceleration phase, and as we move through the year, we are focused at delivering additional improvements in our product and go-to-market efforts that will create a more repeatable and higher velocity sales process.

We remain on pace to achieve our full year financials guidance and our goals of delivering accelerating revenue growth throughout the year by returning to double-digit revenue growth and non GAAP operating income profitability in the fourth quarter.

We believe combining improved revenue growth and sustainable profitability can generate long-term value for shareholders. Now, let me take a few minutes to review highlights for the first quarter and provide updates on our media and digital marketing go-to-market strategy.

The media landscape continues to evolve at a rapid pace as media companies of all sizes around the world adapt to the changing viewing preferences of their audiences.

Mobile First and OTT viewing are rapidly growing and potentially lucrative distribution channels for media companies for ones that require different technology and business model approach. We recently released Once Live 2.0, the latest generation of our cloud-based server-side ad-insertion solution.

It significantly enhances the ability for media companies to control the in-player ad experience to deliver a seamless ad-supported videos to any device.

Once 2.0 is now integrated with encoder to significantly shorten the time it takes to publish ad-supported video as well as providing APIs to customers existing workflows to make deployment even easier. Our R&D teams are working hard on exciting new product innovations that we are targeting to introduce later this year.

An early example is our recent demo; we unveiled at Facebook's F8 developer conference. In this demo, we took advantage of the new Facebook video APIs to enable a company that is delivering DRM-protected content for TV Everywhere authenticated video to enable sharing buy pushing a relevant clip that is not protected directly UBTI Facebook.

This enables social promotion of long-form content in a compelling way and enables our customers to directly leverage the new Facebook API directly from Video Cloud, much as we have done for several years with our YouTube Sync feature.

The goal to provide the potential to draw additional viewers back to a content providers' library, it also gives Facebook the ability to provide more premium digital content and potentially deliver more ads. Looking ahead, we receive increased evidence that media is a highly dynamic and growing market.

As you would expect in that type of market, we are seeing increasingly competitive landscape, which we believe validates the significant opportunity we are targeting. We have made good progress in improving our competitive position in media, so we have more work to do.

One area we are focused on right now is some turnover we experienced in our media sales organization in the first quarter. We have filled these positions and are excited about the quality of people we have brought into the organization, but it will take some time for this group to ramp up.

In the first quarter, we have signed new or expanded agreement for the number of media customers, including Legendary Pictures, Public Broadcasting Service, NASCAR Digital Media, Quebecor Media, one of the leading media conglomerates in Canada, with leading film TV and newspaper properties, Television New Zealand, New Zealand's national broadcaster, The News Lens, a fast growing Chinese language pure play digital news publisher that is similar in many ways to properties like the Huffington Post, Tokyo Broadcasting System, one of the five major broadcasters in Japan, Virgin Media and Voyager Innovations, a Philippine-based digital services provider among many others.

I would like to share a little more color on a few of these examples of our success in media, including The News Lens was an exciting customer wins in Asia-Pacific that represents our first customer in Taiwan. They have been quick to embrace video as compelling medium, including a 77-second daily digest summarizing the day's events.

After using YouTube initially, The News Lens recognized that they could deliver a more compelling user experience and have the ability to monetize their content by moving to the Brightcove platform.

Legendary Pictures is an American film production, company founded 2000 that is co-coproduced films, including Christopher Nolan's Batman Trilogy, The Hangover Trilogy, Inception, Man of Steel and Interstellar.

They selected Brightcove Video Cloud to power online video for their NASCAR Digital Media is using Brightcove's great digital experiences and programs that directly engaged millions of racing fans.

We are powering many of NASCAR's ad-supported video experiences both, online and across mobile platform, including many of their highest profile racing events. We are continuing to improve our product and go-to-market messaging and the media business and I believe we are on the right track for improved growth over time.

Turning to the digital marketing business, we had a solid first-quarter and made continued progress in our repositioning of Brightcove as the technology component of our brand's next-generation cloud marketing stack.

Customer engagement and brand affinity are top of my concerns for all brand marketers and we are increasingly recognizing as the ideal medium to generate emotional as well as informational engagement with their customers.

There's tremendous activity in the cloud marketing industry and we are aligning ourselves with best-in-class vendors, who are leading the shift towards cloud marketing automation solutions.

We recently introduced module for the video marketing suite that enables marketers to leverage to leverage video viewing analytics within Oracle Eloqua to build personalized communications, score leads more effectively and perform more detailed audience segmentation.

If you recall, last year we partnered with Oracle to launch the Brightcove cloud component for Eloqua, which combines Brightcove's next generation video capabilities with Oracle Eloqua, allowing marketers deliver Brightcove Video Cloud videos to their Eloqua landing pages and campaigns.

This latest integration built upon the success to deliver more enhanced functionality and greater insight into impact of a customer's view marketing campaigns. We unveiled this solution at the recent Oracle Modern Marketing Experience trade show, and I can tell you that attention and prospective customer interest received was very strong.

We recently further expanded our product footprint in the cloud marketing automation area with the recent announcement of a new partnership with Marketo.

We released an initial integration with Marketo that allow customers to easily track user engagement and performance video marketing campaigns for enhanced lead scoring, segmentation and content nurturing programs.

We believe there is a significant opportunity in this category and we are making the investments necessary to position the company for future success. I am very pleased with how much we accomplished from a product perspective in digital marketing in the first quarter and sense of urgency to get more great products into the hands of our customers.

During the quarter, we signed new deals or up-sells with additional marquee brands, including Allstate, Dunkin Brands, Edmunds.com, EMC, Herbalife, Lenovo, Metropolitan Opera Shutterfly and TJX Companies, the parent company of leading retailers like TJ Maxx, Marshalls, and HomeGoods among others.

Many of these customers signed on to our video markets suite this quarter. Let me highlight a few of these customer wins. Shutterfly is deploying Brightcove to inform and educate its customers on their various products. They are currently using video for tutorial and how to create custom products like photo albums and tab histories [ph].

Part of their go forward strategy around video is to provide tools to their customers through these call lines to the customer support team the questions around product creation. Herbalife was a sizable win in a competitive displacement during the quarter.

Herbalife uses video to allow their geographically distributed sales reps to have the content they need to accurately and succinctly provide product information to new and repeat customers.

They were looking for a platform that could de-centralize video publishing to allow content to be created and sync programmatically at the region level in over 30 languages. They chose Brightcove based on a robust and reliable APIs, broad features set and cost effectiveness versus their existing solutions.

Dunkin Brands has selected Brightcove as their enterprise video platform to power their message to their 1,000 of franchises. They will use Video Cloud in a variety of ways, including educational materials, press highlights and a series of guest speakers.

The breadth of industries represented in our digital marketing customer list from the first quarter reflects the variety of ways video can be deployed to deliver enhanced customer experiences and improved business performance.

We are targeting a substantial horizontal market opportunity in the digital marketing space that is only at the very early stages of adoption. In summary, Brightcove continue making progress on a market positioning in the first quarter.

We have a strong product portfolio that has helped addressing pressing needs for today's media companies and for digital marketers. We still have more work to do, but we believe we are on the right track to generate improved revenue growth and profitability in order to drive long-term shareholder value.

With that, let me turn the call over to Kevin to walk you through the numbers..

Thank you, David. Good afternoon, everyone. As David mentioned, our first quarter financial results exceeded our guidance on both the top-line and bottom-line. I will begin by reviewing our financial results for the first quarter and then finish with guidance for the second quarter and update our outlook for 2015.

Our total revenue in the first quarter was $32.9 million, up from $31.1 million in the first quarter of 2014 and ahead of our guidance of $31.8 million to $32.3 million. Subscription and support revenue of $31.8 million was up 8% year-over-year and 11% on a constant currency basis.

Our year-over-year subscription and support revenue growth was 14% and 17% on a constant currency basis, with excluding $1.5 million in revenue from Rovio in the year ago quarter. Overages were $700,000 above our historical norm during the quarter, which drove a large part of our revenue outperformance.

Now, let me add some color on our revenue mix and the impact of foreign currency changes. In the first quarter, our premium offerings generated 93% of total revenue, while our volume offerings generated 7% of total revenue. On a geographic basis, we generate 62% of our revenue in North America during the quarter.

Europe generated 21% of our revenue and Japan and Asia-Pac generated the remaining 17% of revenue during the quarter. With 38% of our revenue outside the United States, we did feel some impact on foreign exchange at volatility on our revenue growth.

The foreign exchange impact during the first quarter was a reduction of approximately $800,000 in revenue, when comparing to the exchange rates that were in effect in the year ago period. From a vertical perspective, our media business represented 48% of our revenue in the quarter.

Our growth in media is being driven by our increased focus on this vertical and the new product introductions we have made in recent quarters.

Our digital marketing business represented 52% of our revenue in the first quarter and as David highlighted, we are making good progress building out our connection points within their marketing automation ecosystem. Let me now turn to the supplemental metrics we share on a quarterly basis.

Average subscription revenue per premium customer was approximately $63,000, up 5% year-over-year. I would note that while this metric was up in the quarter, we expect it to decline modestly in the second quarter as overages return to our historical norm.

Our recurring dollar retention rate in the first quarter was 91%, which is in line with our historical range of low-to-mid 90% range. Looking at our customer count, we ended the first quarter with 5,578 customers with 1,864 of those customers being classified as premium customers.

Adding new customers is a priority for the company, but our primary goal is to drive faster revenue growth, which in any given quarter maybe skewed towards new customer addition or up-sells into our installed base.

Moving down to P&L, our non-GAAP gross profit in the first quarter was $21.9 million, up from $20.4 million in the year ago period and a gross margin of 66%. Subscription and support revenue represented approximately 97% of our total revenue and generated a gross margin of 69% in the quarter.

Non-GAAP loss from operations was $284,000 in the first quarter, which was similar to the first quarter of 2014 and better than our guidance of a loss of $800,000 to $1.3 million. The earnings outperformance in the quarter was largely a result of better than expected overages revenue combined with strong expense management.

Starting this quarter, we will also be introducing an adjusted EBITDA metric, which we believe will be useful to investors when comparing us to other SaaS companies and to understand the cash profitability of our business. In the first quarter, adjusted EBITDA was $1.4 million compared to $785,000 in the year ago period.

Non-GAAP loss per share was $0.02 based on $32.5 million weighted average shares outstanding, which was better than our guidance of a loss of $0.04 to $0.05 per share. This compares to a loss per share of $0.02 on $31 million weighted average shares in the year ago period.

On a GAAP basis, our gross profit was $21.3 million, operating loss was $2.5 million and our net loss per share was $0.09 in the quarter. Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $21.9 million, which was a $1 million decrease from 12/31/2014.

We generated $46,000 in cash flow from operations this quarter and invested $738,000 in capital expenditures and capitalized internal-use software during the quarter, which equates to negative free cash flow of $692,000 for the quarter. This compares to negative $5.7 million of free cash flow in the year ago period.

Now, I would like to finish by providing our financial outlook for the first quarter and full year 2015. For the second quarter we are targeting revenue of $33 million to $33.5 million.

From a profitability perspective, we expect the non-GAAP operating loss of $600,000 to $1.1 million for the second quarter as we expect that higher expenses in the second quarter associated with some recent hiring activity as well as the Brightcove PLAY user conference.

Non-GAAP net loss per share is expected to be in a range of $0.03 to $0.05 based on $32.6 million weighted average shares outstanding. Beginning this quarter, we will also be providing guidance on adjusted EBITDA quarterly and for the full-year. In the second quarter, adjusted EBITDA is anticipated to be in a range of $500,000 to $1 million.

For the full-year 2015, we are raising the bottom end of our guidance and now expect revenue to be in a range of $32.5 million to $34.5 million, which represents year-over-year growth of 6% to 8%. Excluding Rovio, revenue growth is expected to be in the 8% to 10% range.

We are forecasting professional services revenue will represent approximately $1 million per quarter throughout the rest of the year. Revenue growth is expected to accelerate in our remaining quarters of the year.

We are reaffirming our expectations to exit 2015 at a double-digit revenue growth rate, which assumes FX impact based on current stock [ph] rate. In terms of profitability, we reaffirm our expectation to return to operating profitability on a non-GAAP basis in the fourth quarter of 2015.

We are forecasting on a full-year non-GAAP operating loss in the range of $500,000 to $2.5 million and non-GAAP net loss per share of $0.05 to $0.12 based on $32.6 million weighted average shares outstanding, an improvement of $500,000 or $0.02 per share over our previous guidance.

Adjusted EBITDA is targeted to be in a range of $46 million for the full-year. Lastly, we are targeting free cash flow of $0 million to $2 million for the full-year, which is consistent with our prior guidance. Overall, we reported first quarter results that position us well to achieve the full-year financial objectives.

We are making progress on transforming the business to meet the needs of media companies and digital marketers who are looking to improve their top-line performance by leveraging their digital assets.

We are confident this transformation will lead to faster revenue growth and improved profitability over time and can generate significant value for shareholders. With that, we will now take your questions. Operator, we are ready to begin Q&A..

Thank you. At this time, we will be conducting a question and answer session. [Operator Instructions] Our first question is Tom Roderick of Stifel. Please go ahead, sir..

Hey, gentlemen. Good afternoon. David, let me ask you the first question. You have been talking a bit more about integrating various marketing cloud, Oracle Eloqua marketing cloud and Marketo as well.

Can you just talk a little bit more about some of the integration points? To what regard does Brightcove's analytics offering or the analytics feedback you get from your video player provide any feedback into those systems. Just sort of broader commentary about how you are interacting with - it would be great..

First of all, we are very excited about the new features and the new audience module we built for video cloud and for the new markets suite. As you point out it integrates with Oracle Eloqua product and with the Marketo product and it provides a really interesting and compelling integration for marketers who are using either one of those.

First of all, not everyone understands what marketing automation is, so I am going to step back a little bit and forgive me if this is too basic, but what market automation tools do if I would just try and summarize it. I am sorry. There is some issue on the phone here. We are having trouble with. Okay, apologies.

All right, so what market automations tools do is they provide a marketer with a set of tools to manage a set of prospects and customers, manage audio content and then use analytics and leads score and alike to put the right content in front of the right person at the right time for the purposes of marketing to move them throughout a funnel, if you will, to move them through a buying cycle, so what we do is, video obviously is a very, very important source of content for that marketer and what we have done is, we have integrated in a couple ways where the analytics from the player, from the video itself flow directly into the marketing automation tool and you get not just did this prospect view the video or not view the video, but did they watch 10 seconds or 20 seconds or 30 seconds, and then you can use that within a tool like Eloqua to drive specific campaigns.

You can say, hey, if John [ph] over here watch my video about sneakers, I am going to send him an e-mail with a special offer, but if Jane [ph] only watched 10 seconds of the video on sneakers and then cut it off, but she watch different video about handbags, I am going to send her something else, so the combination of these two things is extremely powerful, because it gives you insight into the content audience cares about and then it ties into these marketing cloud products that let you build campaigns around that and it is really the future of marketing is being able to drive these very, very personalized campaigns and videos is going to be right in the center of it..

Perfect that is great feedback. Good explanation. Thank you. One other things I wanted to follow-up on, David, is the comment you made about an increasingly landscape [ph].

You mentioned you had the sales force churn in the quarter or perhaps that was the end of last year, can you just talk about number of heads that churned out what you have done to sort of replace those? What the size that sales organization on the media sales side right now?.

Well, I do not think we break out the sales organization on the media sales side, per say, but overall sales organization roughly the same as where it has been. We did have a few people turn out and we have replaced them.

We recruited some people that we are pretty excited about from the industry, from you know sort of relevant companies in the ecosystem, who come in with domain knowledge on the media side, come in with the network, come in contacts and to use an old expression of Rolodex.

For the young people out there, it is sort of what LinkedIn is now and that's what we have got. It is a normal execution stuff. I am just trying to give people a little bit of visibility into the kind of things that we are working on and facing, but nothing out of the ordinary particularly..

Perfect. Okay. Thank you very much. Appreciate it..

Thank you, Tom..

Thanks, Tom..

Our next question is from Dan Bergstrom from RBC Capital Markets..

Yes. Thanks for taking my question..

Hi. Dan..

Hi, guys. Just curious if you have any thoughts on the recent emergence of live streaming apps such as Periscope, Meerkat, YouNow, as potential video advertising platforms and a lot of times there is a live chat window accompanying the streams, seems like it could be a wipe for video ad insertion..

Sure. Absolutely, I think it is just an exciting time.

I mean, that is one of many examples of the kinds of innovation and change we are seeing around video and the way humans are interacting, the way humans are consuming news and entertainment and sports and interacting and communicating and marketing and selling, so I think we are seeing lots of innovation where in live video conferencing and video calling apps, we are seeing innovation in products like Snapchat embedding into their product and embedding both, the shared video the user generated video as well as high-quality produced video from their partners.

We are seeing innovation in major media, if you will, the HBOs of the world, sort of breaking out of the cable bundling and operating HBO Now, so I think while I do not have anything very specific to say about Meerkat or Periscope.

I think what we are seeing is this broad of recognition of the power of video for communication and entertainment and education and the power of video combined with the open Internet creating whole new opportunities and whole new business models and I think that is really exciting and I think that the technology that we bring to the market is not going to be relevant for every use case.

We do not do two-way video calling. That is not part of our story right now, but we do a very wide range of cloud services to help companies build great video experiences and I am really excited about what a lot of our customers are doing, but also what the whole industry is doing, because it really speaks to an exciting time in our society..

Thanks. Then maybe a question for Kevin, Kevin you have been with the company for five months or so now, but you have really been out there meeting with investors at conferences et cetera.

Is there anything that has really surprised you or that has got you particularly excited?.

Well, I think David just nailed it. I think, it's a very exciting time for the entire industry in general. The adoption of video, I think, is certainly a trend favorite market.

We are excited to be at the forefront of being able to enable a lot of companies both, the digital marketer to be able to market their products or services to the consumers and be certainly part of that ecosystem.

Then the media companies, where they are trying to invigorate or reignite their business models and doing that in a way that's very unique and very different for the marketplace right now, so I am excited about that and I think that that we have got a great opportunity as a company to continue to put together some good quarters and execute the execute very well, we can be positioned for a very good next several years of growth and shareholder value..

Thank you..

Thank you..

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

Yes. Thank you. A couple of questions here, just looking at your guidance backing into third quarter and making a commentary about fourth quarter double-digit growth, it seems like you are implying a slowdown in growth in the third quarter considering that you are doing 7% in second quarter, which is the tough review [ph] comp.

Third quarter should have been easiest so, is there anything specifically that is going on over there that you wanted to highlight that we should build into our model?.

No..

Second. Okay..

No. The answer is no. I am not sure how you are arriving at that conclusion. I think the phrase we used is that we expect to see accelerating growth throughout the year, so we are not trying to imply anything specific about the third quarter other than that we expect accelerating growth throughout the year..

Okay. Great. Thanks for the clarification.

Going back to the topic about marketing automation and your integration with that, what is the go-to-market strategy? I mean, how does video cloud or video marketing services, how do these get sold as part of the package? Do you have to do some co-marketing with Marketo and Eloqua or is it up to the those sales team? Can you provide some more clarity, and now that you are integrated with them, is there like a trading path and then we should expect to see some benefit starting, let's say third, fourth quarter or '16.

Can you shed some light there?.

Sure. This is an integration both, of these companies have large ecosystem Brightcove has large ecosystem of partners who integrate with us, but it is not a re-seller deal or a channel deal, if you will, so we are sill the primary direct sales force of our own products.

We do have some re-seller partners around the world, but primarily we a direct sales company. We are partnering with both of those companies. They both have a very rich partner programs. We have engagement with their sales force, we have engagements with their leadership.

They have Oracle for example call their partner ecosystem, the App Cloud team and we were very, very engaged with them at their big conference.

It is a pretty significant industry event, the Oracle Modern Marketer experience event and similarly the Marketo event one was in Vegas and the other was a few weeks later in San Francisco, they each draw 3,000, 4,000, 5,000 people something like that and we were featured very extensively, we had a booth, we were in the product keynote of the Oracle event where they showcased.

In that case, a really nice example of how Symantec is using both Oracle and Brightcove video marketing suite together to drive their marketing, so there is a lot of co-marketing, a lot of co-selling, but in terms of actual sales the transactions were still the direct sales force. We have a great digital marketing sales team.

It is an inside outside sale team, primarily driven by an inbound marketing process, very much like what we talk about people using our product for where potential customers around the world were interested may engaged with us through webinars or through our videos or through other forms of content marketing and then we reach out from our inside team.

We also have some outside sales reps and we have a very strong account management team. That is a little bit about the go-to-market, happy to answer any further questions..

Basically, if somebody is using Eloqua, then they have the option to use maybe opt to use several OVPs and Brightcove is one of them or do you have an exclusive relationship, how would that work?.

No. We do not have an exclusive relationship, but as far as I know none of the traditional competitors that we talk about often on these calls, company likes Ooyala, Kaltura the platform for example. Have any integration like this. I think we are ahead of the industry right now and we are excited about that.

There are some small companies, a little startup that have done some work like this, but that is not kind of major focus of ours. We think we are really in fairly unique position in what we have built here and have an opportunity to create some real competitive differentiation and I think we are seeing a lot of excitement.

We are seeing excitement from the Oracle leadership from the sale team, but what is really important is that we are seeing excitement from customers who are starting to adopt the technology..

Great. Second question, at the beginning of the call you kind of mentioned something about improving a better go-to-market strategy and messaging later on in the year.

Can you elaborate on that?.

Well, I think I am building on some of the language I have been using for a little while about the transition from it has been about a year now that we have been talking this way and I just want to make sure people know it is still a major focus for us.

For example, a couple of years ago we drove a lot of our go-to-market and our in-bound selling and our sales efforts around what we call our volume product. The brand name was Express Products, it was a small medium business product.

As you know, because you have been following us for a while, we decided strategically that was not the right focus for us. It had been a decent business, but we round that down in order to really drive the focus very clearly on the premium digital marketing opportunity and the premium media opportunity. That was a pretty significant transition.

I think the metaphor I have used in this call before is a little bit like turning to big chef [ph] that you do not flip on a dime, because the tactics, the programs and the strategies we used for marketing and communications, we had to shift a little bit in terms of how we communicate, so that is still a process that is underway.

We are pleased with the progress we have made. I think, the stories we are telling, the targeting we are doing, the messages, we are taking to the market with our products are very, very focused and strong and it is a big change from where we were with more broader, small-medium business message, so that is what we are still going through.

I just I want to make sure people know that while we had a very solid quarter, we still think there is a lot of room for improvement and growth in this company..

Okay. Final question, Kevin, from your vantage point, in the professional services gross margins continue to be in the negative. What are your around it, when do you think we can see getting them back to breakeven or even positive.

Is that a key priority for you or are there other things to do before you get to that?.

No. I appreciate the question. It is a good question. Yes, we did make good progress this quarter, right? Last quarter, we had negative gross margins of $473,000. This quarter, $138,000 in negative gross margins, I think, as a target, I do want to get that to a breakeven level.

We also use professional services in some cases as a tip of the spirit to help on the sales side of things, so utilization sometimes can be a little bit lower, because they end up being a little bit part of the sales process.

They are consulting with some of their clients or potential clients, in essence, trying to get them to buy into a integration that we might do as they buy a larger integration with Brightcove, so I am pretty happy with the progress we have made this quarter.

I would like to see as the target us get to breakeven, but we are pretty close there in the quarter..

Great.

A final question, David, not to upstage anything that you are going to say next week, but in terms of new products or directions that you could go, you just spoke about the innovation and the new business models emerging, what more would you like to add to your overall portfolio of products that you have or do you think, you have enough? It is just the question of as you have been working towards becoming make them more products more modular in nature that itself issue is going to be the focus going forward?.

Well, thank you for the opportunity to plug our conference on Monday morning. We have our Brightcove PLAY global customer conference, starts Monday morning here in Boston. The weather is beautiful now. The snow has melted. You are welcome to come to Boston, so we are not going to presage the keynote here.

We do have a lot of exciting news that we are excited about.

It will be streamed live, so you can join us 9:00 am Eastern Daylight Time, and it will be available after the fact as well, so anybody on the call is interested in understanding how we are talking to our customers and seeing some of the product demonstration, is welcome to join us there and I think it should be a fun event.

It is my favorite event of the year, because I love customers. In terms of things, we are continuing to innovate. We feel like we are going through a really good time in terms of introducing new products, both new upgrades and advancements, as well as fundamental new innovations. It is an important part of what we do.

I think the work we have done around Eloqua and Oracle, Eloqua and Marketo, which we have talked about, is a big deal. I am excited about it. It is a fundamental and we will be talking a lot more on Monday about lot of other innovations.

You will see innovation from us continuously throughout the year in terms of advancements and changes in the product line..

Great. Thank you very much..

Thanks, Sameet..

[Operator Instructions].

Let me take a moment to thank everyone. This is Dave Mendels. I really appreciate those of you who join us on this for the quarter. Hope we were able to address your questions. As I mentioned, we are really excited about our upcoming event on Monday, so if you are tracking, us please do sign in for the live stream at 9:00 am or follow-up later.

It will be archived and to be playing beautifully using the Brightcove technology as you can expect. Again, thank you for your time, and I look forward to next call. Thank you very much..

Thank you. This concludes today's conference. You may disconnect your lines at this time. Have a wonderful day..