Brian Denyeau - IR David Mendels - CEO Kevin Rhodes - CFO.

Tom Roderick - Stifel Dan Bergstrom - RBC Capital Markets.

Greetings, and welcome to the Brightcove Third 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, Mr. Denyeau, you may begin..

Good afternoon, and welcome to Brightcove's third quarter 2015 earnings call. Today we'll be discussing our results announced in our press release issued after market closed today. With me on the call are David Mendels, Brightcove's 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 fourth 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 upsell 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 these 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 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 is a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued after market closed today, which can be found 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 and market opportunity, as well as an update on our operations. Kevin will then finish with additional details regarding our third quarter 2015 results, as well as our guidance for the fourth 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 third quarter 2015 earnings call. I'm pleased with our performance in the quarter, with financial performance that exceeded our estimates on both revenue and profitability.

For the quarter, total revenue was $33.8 million, up 11% on a constant currency basis and above the high end of our guidance range of $33.4 million. Adjusted EBITDA was $2.7 million with non-GAAP operating income of $1.3 million, and net income per diluted share of $0.03, both of which were well ahead of guidance.

During the quarter we re-accelerated revenue growth, this is our top priority to company and we are pleased to be delivering on that goal. We are also especially pleased to have returned to non-GAAP profitability a quarter earlier than we anticipated, which demonstrates the scalability of our business model and our disciplined approach to investing.

Overall, our third quarter performance built upon the momentum that we are seeing in parts of our business. Specifically, our digital marketing group in North America posted another strong quarter driven by good upsell performance with our Video Marketing Suite.

Our North American digital marketing business is growing in the mid-teens and we believe it is indicative of the significant growth opportunity in this market. We are also seeing growth in our media business, primarily in the North America, Japan, and Asia-Pacific regions that underscores the large market potential we are targeting.

The efforts we have made over the past 12 to 18 months to focus Brightcove around specific business value, used cases, in both of our core markets is working. Going forward we expect to expand upon these successes by increasing the velocity of our sales efforts.

As it relates to Europe, Anne Feinberg, our new President of International Operations and his team spent a quarter reviewing our operations in the region and are beginning the process of implementing necessary changes for go-to-market efforts.

I'm confident these efforts will lead to improved performance overtime, but realistically it will take a few quarters for these changes to positively impact the business. I'd now like to take a few minutes to highlight some more progress in the media and digital marketing businesses.

In the media market, during the quarter we had a significant presence at the Annual International Broadcasting Convention in Amsterdam. The premier conference for digital content creators and distributors in Europe that was attended by more than 55,000 people.

This year major theme was on how OTT services are increasingly becoming mission critical and areas of strategic investment for broadcasters and content providers.

Customer preferences continue to shift towards on-demand OTT delivery and broadcasters recognizing need a holistic approach that encompasses architecture, featured set, user experience and multiple monetization capabilities to address these market changes.

Helping media companies position themselves for this changing environment has been a major focus of our development efforts and we've brought a lot of in sighting innovation to market in recent months.

Most recently, we introduced a jumpstart offering for Apple TV, a new service to enable publishers to quickly launch video apps on the new version of Apple TV.

This new service builds on our existing capability to an Apple TV that includes our wimps as insertion solutions, DRM capabilities, content management, analytics, and players, tell publishers quickly get their content on Apple TV.

We have seen strong interest from both media companies and digital marketers in this service in the week since introduction. Another major area of focus for media customers is the increasing prevalence of ad-blocking technology, especially in the light of the recent inclusion of ad-blocking capabilities in mobile safari for the first time.

Current ad-blocking technology is estimated to disrupt 15% to 20% of digital ad deliveries. This is an ex-substantial issue for publishers with an ad-supported business model.

Earlier this week we announced the launch of Brightcove Left which combines our server-side and insertion solution with the industry's leading HTML5 player management service to deliver a TV-like ad supported experience.

AB testing by a large media customer has demonstrated up to a 50% uplift in ad delivery by deploying Brightcove Left to minimize the impact of ad-blockers. This is a terrific example of the business value or solution deliver for customers every day.

Overall, we've made significant investments across our product portfolio to update and modularize our solutions making them easier for customers to deploy and quickly drive value. We made significant progress in this process in the third quarter with the release of the new video cloud.

The new release includes a completely rebuild user interface that works on both desktop and tablet browsers, as well as numerous performance and workflow enhancements that help our customers' complete tasks faster.

The new video cloud is built on top of our latest APIs which provide richer functionality and faster time to publish than our previous generation of APIs.

We also released significant updates to our customer reporting module allowing customers to schedule distribution of recurring reports of content metrics to anyone in the organization, and a new set of capabilities in our web player that allow customers to use HTML5 based VRM to protect premium content.

In the third quarter we signed newer expanded agreements with a number of high profile media companies that include Brit + Co., Cyber Communications, Electus Digital, International Data Group, Marathon Ventures, MediaWorks New Zealand, Presentcast representing TVER, a consortium of five broadcasters in Japan, Seven Network, Scripps Network Interactive, Sunbeam Television, Time Inc., Tokyo Broadcasting, and Wenner Media.

We'd like to highlight three interesting wins that illustrate trends we've talked about previously related to new OTT services and monetization. Electus Digital is an integrated multimedia entertainment studio that unites producers, creators, advertisers and distributors to produce broadcast cable, digital and OTT content.

The company is known for the online site collegehumor.com, as well as shows such as Mob Lives, Marco Polo, Wake Up Call, Southern Justice, and Running Wild with Bear Grylls. Electus had previously built technology in-house but it's like to Brightcove to move away from homegrown solutions.

Electus chose us for the break of player which performed best in a benchmark test Electus conducted of several providers, and for a rapidly evolving capabilities around syndications and social networks such as YouTube, as well as the company's other distribution inputs.

Marathon Ventures is a company that is traditionally focused on optimizing direct response advertising and managing ad-inventory from media clients such as Fox business, Twentieth Century Fox TV, and MGM TV; and specific shows such as Paternity Core, Tennis Channel, and Anger Management.

Marathon is now moving towards offering its content via an OTT service. It selected Brightcove's as its one-stop shop for this initiative marrying the best-in-class video cloud platform as a backend to our frontend application and responsive web development services.

In the quarter we also closed a significant multi-year works agreement with MediaWorks New Zealand, the large independent broadcaster of New Zealand with an audience reach of 3.8 million viewers through its multiple broadcast radio and online properties.

Media Works, an existing video cloud customer chose wants to provide its audience with a TV like viewing experience across a broader range of platforms while mitigating the threat of ad-blockers and increasing its advertising revenue.

Turning to the digital marketing business, customers are increasingly recognizing strategic value of video as part of their digital marketing and communications initiatives. And we are pleased with the improvements we've made from a go-to-market perspective to tap into this growing area of technology spent.

An exciting proof point that demonstrates the value we are delivering to digital marketing customers is the number of upsells we had during the quarter. We are seeing a meaningful increase in the size and scope of upsells in this market which in many cases are multiple times larger than the initial sale.

This is primarily based on moving customers from video cloud to our Video Marketing Suite which includes our live event capabilities along with our gallery and audience modules.

From a product perspective, the introduction of Gallery in the Video Marketing Suite has significantly lowered the barriers to adoption and time to value digital marketing customers. In July we ship the first major release of our new audience module which we announced in Q2 Brightcove Play.

Audience allows market organization to capture lead information and viewing behavior within the Brightcove's player and easily synchronize it to marketing automation systems such as Oracle Eloqua and Marketo.

We also released important enhancements to some existing products including a New Life Template for our Gallery product and significant enhancements to our YouTube distribution tools that allow more fine grained control over when videos can be pushed to YouTube and automatically set availability and restriction dates for those videos.

During the quarter we signed new deals on upsells with a range of brands that's span all industries. Select companies include All Nippon Airways, Artnet, John Wiley & Sons, Money Map Press, MWH Global, PennWell Corporation, SAS Institute, Samsung Electronics America, and Think and Learn, the largest test prep company in India.

We would like to highlight three wins that are representative of the breadth and depth of our business. John Wiley & Sons is a publisher of award winning journals, encyclopedias, books and online products. Notably, the popular for Dummies series of tutorials and how to books.

Wiley recently upgraded to Video Marketing Suite to use the Brightcove audience module which connects video assets to market automation platforms in order to capture and score our marketing leads. Wiley found value in utilizing audience to connect video analytics for marketing campaigns into both, its marking automation platform and its CRM system.

As a result, it's sales teams have better insight into how a potential lead has engage with a video which produces higher quality conversion opportunities. We closed a significant deal with a global financial services company that is both, investment banking and consumer operations.

The company is a longtime customer that was using video cloud for one of its business divisions. And it expanded its use to an enterprise-wide deal that resulted in a more than 7X increase in annual contracts value.

The customer wanted to consolidate video players across the timeline properties in order to standardize on one platform and meet its security and compliance requirements. Last quarter we talked about Southern Bees use of the Brightcove Live module to live stream auctions, to extend its brand to new audiences.

In the time we've worked with Southern Bees, it's use of video has grown continually, and we've been impressed by the company's cutting edge use of video to build its brand. We are noting Southern Bees again this quarter as it is our first jumpstart for Apple TV customers.

In summary, we had a very good third quarter performance from an operational and financial perspective including returning to non-GAAP profitability. The hard work we've done over the past 12 to 18 months to focus the company on delivering business value is beginning to pay off.

We are still working to generate greater velocity and I'm confident the steps we are taking will continue to improve growth and generate shareholder value overtime. With that let me turn the call over to Kevin to walk you through the numbers..

Thank you, David and good afternoon, everyone. As David mentioned, we are pleased with our results for the quarter which were ahead of our guidance from both, a revenue and profitability perspective.

I will now begin by reviewing our financial results for the third quarter and then finish with guidance for both, the fourth quarter and update our outlook for 2015. Our total revenue in the third quarter was $33.8 million, up from $31.5 million in the third quarter of 2014 and above the top end of our guidance of $33.4 million.

Breaking revenue down further, our subscription and support revenue of $33.2 million was up 9% year-over-year and 13% on a constant currency basis. Professional services revenue for the quarter was $653,000. Now let me add some color around our revenue mix.

In the third quarter, our premium offerings generated 94% of total revenue while our offerings generated 6% of total revenue. On a geographic basis we generated 65% of our revenue in North America during the quarter. Europe generated 18% of our revenue, and Japan and Asia Pac generated the remaining 17% of our revenue during the quarter.

From a vertical perspective our media business generated 49% of our revenue in the quarter. Our growth in media is being driven by our increased focus on this vertical new product introductions we've made in recent quarters and a healthy demand in Japan and Asia Pacific.

Our digital marketing business represented 51% of our revenue in the third quarter. We were pleased with the progress that we've made in this market as well, and the exciting wins that we signed in the third quarter validate our strategy. Let me now turn to the supplemental metrics that we provide on a quarterly basis.

Our recurring dollar retention rate in the third quarter was 101% which compares favorably to our target range in a low to mid 90s. We had strong upsell performance during the third quarter which reflects the significant value customers are realizing from our solutions. We also had strong customer and dollar retention which aided in our performance.

Looking at our customer account, we ended the third quarter with 5,152 customers of which 1,852 were classified as premium customers. Our average revenue per premium customer continued to increase, up to $67,000 per year which is up 10% year-over-year.

Moving down the P&L, our non-GAAP gross profit in the third quarter was $22.9 million, up from $21.3 million in the year ago period and representing a gross margin of 68%. Subscription support revenue represented approximately 98% of our total revenue and generated 71% gross margins in the quarter.

Non-GAAP income from operations was $1.3 million in the third quarter compared to a loss of $134,000 in the third quarter of 2014 in ahead of our guidance of a loss of $500,000 to breakeven. Profitability was positively impacted by the revenue over performance in the quarter and our continued focus to drive leverage and our SG&A.

As David mentioned, we are pleased to have returned to non-GAAP operating profitability a quarter earlier than we anticipated. Adjusted EBITDA was $2.7 million dollars, up 122% compared to $1.2 million in the year ago period, and was above our guidance range of $1.1 million to $1.6 million.

Non-GAAP earnings per share was $0.03 based on $33.5 million weighted average shares outstanding which was well ahead of our guidance of a loss of $0.01 to $0.03 per share. This compares to a loss per share of $0.03 on $32.2 million weighted average shares outstanding in the year ago period.

I would note that there are approximately 900,000 additional shares outstanding due to achieving non-GAAP profitability in this quarter which accounts for the dilutive effect of options and restricted stock units outstanding.

On a GAAP basis, our gross profit was $22.3 million, operating loss was $1 million, and net loss per share was $0.04 in the quarter. Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $23.8 million.

We generated $3.8 million in cash flow from operations during the quarter and invested $722,000 in capital expenditures and capitalized internally used software. This equates to free cash flow of $3.1 million for the quarter and compares favorably to the $1.5 million of free cash flow in the year ago period.

I'd now like finish by providing a financial outlook for the fourth quarter and full year 2015. For the fourth quarter we are targeting revenue of $33.8 million to $34.3 million including approximately $800,000 of professional services revenue.

From a profitability perspective, we expect a non-GAAP operating income of $600,000 to $1.1 million in the fourth quarter. Non-GAAP net income per share is expected to be in the range of $0.01 to $0.02 per share based on $33.7 million weighted average shares outstanding.

In the fourth quarter adjusted EBITDA is anticipated to be in a range of $1.9 million to $2.4 million. For the full year 2015 we are increasing our revenue guidance to $133.4 million to $133.9 million which represents year-over-year growth of approximately 7%. Excluding Rovio revenue growth is expected to be 12% and 13% on a constant currency basis.

In terms of profitability, we are forecasting full year non-GAAP operating income to be in a range of $700,000 to $1.2 million. In addition, we expect non-GAAP net loss per share breakeven to $0.02 per share based on $33.6 million weighted average shares outstanding.

Adjusted EBITDA is targeted to be in a range of $6.5 million to $7 million for the full year, an increase of $1 million to $1.5 million compared to our prior guidance of $5 million to $6 million.

Lastly, we are estimating free cash flow of $2.5 million to $3.5 million for the full year which is an improvement from our prior guidance which was zero to $2 million. As you can see, we are making meaningful improvements to our guidance from both profitability and cash flow perspective.

From foreign currency perspective we are estimating the fourth quarter and full year impact of changing currency rates on our revenue to be $1 million and $3.9 million respectively which represents a 3% drag on revenue growth on a quarter and full year basis.

In summary, we are very pleased with the results in the third quarter from both a financial, as well as operational perspective. We are encouraged by the positive results we are seeing in both of our businesses, and we remain confident that our strategy that we have in place will drive improved growth and profitability overtime.

And with that we'll now take your questions. Operator, we are ready to begin Q&A..

Thank you. [Operator Instructions] Our first question comes from the line of Tom Roderick from Stifel. Please proceed with your question..

Hi, guys, good afternoon. Congratulations, especially on achieving profitability here, it's a nice job on that. I'll come back to that as my second question. First question, I wanted to go a little bit deeper on the jumpstart is offering for Apple TV.

I know it's early on that but certainly a lot of discussion around that and you've listed a number of features and capabilities that you're offering to publishers out there.

I'm sort of curious what feedback you're getting from your community of existing customers and -- potentially, particularly those in the media side of the organization where that piece of business seems to be picking up for you.

What else can you share with us from what you're hearing out there in the field? What they are doing to sort of prepare for this launch? And do you feel like you have all the pieces today or do you think there are more pieces of that puzzle that you can have in the future?.

Hi, Tom. First of all, welcome to everyone and thank you very much, nice of you to say. We are excited about Apple TV, it's a cool device, just started shipping, reviews are out today.

We've had one in-house for some time now doing testing and the like and building against that in terms of upgrading our software and building the jumpstart and some initial apps for some customers. So we're very excited.

I think I will get the Apple TV as a punctuation mark or a step function within a bigger trend that has been going on for some time which is the proliferation of these TV-based devices where the smart TV has game consults or OTT boxes that enable people to watch their choice of content entertainment on their living room device or TV.

And there has been this fundamental shift as more and more consumers move from City Now and Night in Primetime for example, and watching traditional broadcasted linear TV to using an Internet-based TV service whether it's Apple TV or Amazon TV or Chrome cast or whatever -- to watch what they want to watch, when they want to watch, where they want to watch.

And so there is nothing that is fundamentally new about Apple TV, there is no one feature that they have for example that no one else has.

Other people have done voice-based search, other people have done universal search, but they are Apple, and so Apple has a consumer brand and an ability to take a trend and an opportunity in the market and package that in a way that has proven to be incredibly compelling in the market so far, many times now with their different devices.

And I think they are on-track with this device as well.

And so I think it's a punctuation mark or it's a step function that will continue to accelerate that adoption of internet-based TV services by consumers which then of course continues the acceleration of publisher saying I have to move and shift from traditional broadcast delivery to ITA delivery, and I have to rethink my business models for Internet-based advertising business models, Internet-based subscription business models.

And so that sends us some exciting opportunity, Apple TV has been around for some time but what's new for them is the combination of the device with an open app ecosystem. Up until now there were -- I don't know exactly, 25/30 apps on the device, and several of them were already powered by Brightcove which we're proud of.

But now I think we're going to see an App Store environment with tens of thousands and eventually hundreds of thousands of Apps available for people to leverage on the TV. And it's going to create I think a lot of great experiences. So what we're hearing from customers is, this is going to be important device.

A lot of customers have gone through a process now for several years with every device of a lot of analysis -- should I go for Amazon, should I go for Chrome Cash, should I go for Xbox because each one of these has been incremental hurdle in investment until the two things we're hearing is, one is, I have to get an Apple TV.

I don't think a lot of people are spending a lot of time on analysis/paralysis, I think everyone expects it will be fairly successful.

And then the second thing is there is this continued pressure to how can I deliver to all of these devices, with all of these formats, with all of these closed caption formats, with all the security formats; how can I even do that without building this incremental technology stack over and over again for each different device; and that's where we come in and we are able to provide significant simplification of that for our customers.

So we have a significant number of customers who are interested in us helping them get on the device, take advantage of the work we've done. I think we can move very fast for our customers, deliver great experiences, and we'll see where it goes from there.

But we're excited, I think it's another key indicator in this fundamental trend that we're all a part off..

That's great color, thank you. Again, sort of turning to execution, I think you've put on a number of new sales hires early in the year, and I think the time to ramp on those hires could maybe take a little bit longer than expected but seems like you had a pretty down productive bookings in the execution quarter from the sales front.

What are you seeing out of the execution of the sales team today? And with what you're seeing out there in the marketplace, it's sort of -- make you think a little bit about hoping that investment going into next year?.

Yes, sure. So first of all, yes, we're pleased with the results, thank you. It was a pretty pleasing quarter in many regards, we're happy to have exceeded on the top line.

We're happy to see the slope of the curve in terms of growth, change directions from deceleration to acceleration, that has been the fundamental focus we've had, reaccelerated growth that we're happy to see the beginnings of that, obviously we want to do that quarter-after-quarter for some time.

We also have people who have achieved profitability ahead of schedule in a relatively meaningful way, we're pretty pleased with that result.

So on a good quarter, I think we're happy mostly with the sales teams execution, the account management teams execution; you see that in the revenue retention rate as well, as well as in the overall results, the revenue retention I think is a really strong metric.

We've -- those numbers have been fairly -- have been up and down a bit as you know but we've said for a long time we're trending -- moving average in a low to mid 90's. So that's trended up to the high part of that range and that's a good thing, and that's something we want to continue to drive. So we feel -- I feel good about the salesforce.

We still have some issues in Europe, I think we've been pretty transparent about that last quarter and this quarter. And we have work to do, we've put the new management in place and so I think that will take a couple of quarters.

But when I look at the other 80% of the world, North America, and Asia, and Japan, and the Australia region, we feel very good and I certainly see us making continued investments in sales and marketing resources as we go into next quarter and into next year..

Excellent. I'll jump back in the queue. Thank you guys very much, I appreciate it..

Thanks, Tom..

Our next question comes from the line of Eric [ph] from Raymond James. Please proceed with your question..

Thanks for taking the question, and nice jump in the quarter. Kind of following on with the last question.

This quarter like you said, you reached breakeven sooner than you expected and you implied guidance for fourth quarter, is that was above breakeven? And do you guys see that -- some of -- a line in the sand, as you move forward you talk about revenue acceleration moving forward but would you say that you'll continue to have breakeven in profitability in '14 quarter or even for the years?.

Yes..

Okay, great..

I can elaborate a little, I was just trying to make sure that they are good, that's a strong point I think. I will just elaborate a little bit which is -- we're not ready to guide 2015, we got 2016 and our January earnings call.

So I'm not going to go there today because we've got work to do, obviously we have to finish Q4, we have to finish our operating plan.

With that said, the fundamental plan we put in place and the fundamental strategy of the company that we've had for many years, really this goes all way back to the IPO, is to achieve profitability while staying focused on the best possible growth rates and growing those growth rates. So I think you're going to continue to see that from us.

We're going to continue to drive growth and work acceleration of that growth but we don't intend to go backwards on profitability..

And let me just add something on my end too -- there is two measure of the profitability, there is non-GAAP operating income and then there is EBITDA.

Within EBITDA profitable for last several quarters, and that's continuing to be a meaningful number for us generating $2.7 million this particular quarter, we feel it's a very good, also a number to keep in mind as well.

So it's a balance of the two, it's obviously balancing investments and business and growing the business which is our priority right now with the balancing or the profitability of the business but we wanted continue to stay profitable..

Okay, great, that's very helpful. On the digital marketing side, it looks like a little over half of your business is still coming from digital marketing which is great.

And you talk about several used cases of pretty advanced uses of the software and digital marketing but how much of that installed base is actually coming from more advanced solutions, whether it be tied with marking automation solutions or leveraging analytics for advanced campaigns?.

That's a really good question. I don't have a solid number for you on that because it's a little bit subjective what constitutes advance, but I think you're heading on something that's very important here. A key part of our strategy is what's often referred to as land in expand and which is -- we often get into a company or a project.

maybe it's a product launch, maybe it's a landing page, maybe it's a support portal, it can be a range of different things for which the company is looking for video. And it might be departmental, project-based, time-based.

And that's all from the starting point, those deals often have relatively small annual contract value, but it's a foot in the door. And then what we do is we grow that business and upselling it and expanding the account is the key part of what we do.

And that's where having sort of this really deep set of functionality now, the Brightcove audience module, the Brightcove gallery module, the advanced analytics and all the like really gives us more and more opportunities to upsell.

And so we're seeing multiple paths to expand within customers by going from a division to an enterprise-wide deal by going from video cloud deal to a Video Marketing Suite deal. And those are driving significant growth and that's a significant part of why you see things like revenue retention, being a little bit higher and things like that.

So the percentage of our base that has gone through that kind of transformation, I mentioned one financial services company that -- from that initial purchase a few years ago to where we are now it's an enterprise wide relationship with a 7X improvement in our group.

The percentage of our base that going to do that kind of transformation is still relatively small. We are nowhere close to saturation, we have lots and lots of room for growth and that will be a strategy and an opportunity for several years ahead.

And you can see that what David's talking about a little bit in the revenue for customer network that we have there which grew 10% to year-over-year to now 67,000..

Great, that's all I had. Thanks guys..

Thank you..

Our next question comes from the line of Sameet Sinha from B. Riley & Company. Please proceed with your question..

Hi guys, this is [indiscernible] again for Sameet today. But I just couple of questions for you.

Our first question is, strategically do you need any products to add to your portfolio or do you have most of what you want or your customers want this point?.

There is always more, we're a software company, not like a cell phone company. So there is always more, this is a fast and dynamically growing industry and there is more and more things that our customers want to do.

So we have been organically extending our product, and creating new products like a break of audience, like break of Gallery, both of which we build organically and is bigger, bigger part of our strategy. And so there is nothing that I would say we need, there is nothing that is gaining our business today.

But if you said to me three years from now are we going to have multiple additional new products that we don't have today, that answer will be absolutely. We're going to keep extending the value proposition, we're going to keep solving new problems, we're going to keep focus on providing sort of best-in-class in the industry.

But that will involve more product development in the like overtime. So it's not what we need but for today -- but it's certainly going to be part of the strategy over the next few years..

Okay, thank you very much.

And then one more question, are you seeing any benefits or traction duty or relationship with Eloqua or Marketo?.

Yes absolutely. The company Eloqua is actually an Oracle product. So we -- that product is early, so we announced break of audience in the second quarter at our conference. We shipped it early in the third quarter. What that product does is it connect our Video Marketing Suite in with market automation platforms like Oracle Eloqua and Marketo.

And we have done -- it's still early so we don't have a lot of customers yet but we have early customers, we have many, many customers evaluating.

We're getting very good feedback from customers who are using it and we're absolutely working with the partner team, the sales team, the marketing teams of both of those companies in order to create awareness and demand, participating and sponsoring their events having named at all events.

Working on salesforce training, providing training to our team about their products, sharing collateral, co-marketing on their websites and things like that. So that's absolutely a channel and a program we have in terms of how we market and communicate about our products..

Great, that was very helpful. That's all I have. Thank you..

[Operator Instructions] Our next question comes from the line of Dan Bergstrom from RBC Capital Markets. Please proceed with your question..

Hi guys, thanks for taking my questions. Cisco announced it was acquiring one mainstream this week, do you see or run into them.

Any thoughts on the announcement or any similarities or differences you have with our company?.

Sure. We have run into one mainstream a few times. But I mean that fairly literally a few times. I've talked about competition on prior conference calls and keyword I use every time it's a very pragmatic competitive landscape.

There are many players; some big, some small, some archives or smaller, whatever, as well as start up with Mainstream [ph] --while Mainstream is a small company, maybe 12 or a few dozen boys I don't know exactly. That provided a solution for companies to launch an OTT service easily.

And I think therefore value proposition was fast tagged in the market and turnkey solution. But it was a very inflexible system from my understanding and from talking to some customers. So we saw that in a couple of accounts but not very often, they are one of many competitors that we ran into, there were a major competitor we didn't see them a lot.

We haven't heard anything particularly compelling or exciting about their offering. And so I'm sure they had -- Cisco have a lot more to learn over the next couple of years. But I think it's just a continuation of that fragmentation and complexity we see in the competitive landscape..

Thanks David, that was very helpful. I think Kevin not sure I'm sure if this is something you break out. But what is your Canadian exposure -- just something we're trying to get a handle on given currency movements..

Yes, we don't have a lot of Canadian exposure at all. We have about 27% of our exposure to currency is outside the United States. But most of that is in Ammia [ph] ad then Japan and obviously other parts of Asia and New Zealand and Australia..

Perfect, thank you..

You're welcome..

There are no further questions in queue. I'd like to hand the call back over to management for closing comments..

I just want to thank everyone who joined us today on the call. I think we had a fairly positive. Quarter, a solid quarter hat we're pleased with. We're looking forward to another good quarter and talking to you again in 90 days approximately..

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day..