Brian Denyeau - ICR David Mendels - CEO Kevin Rhodes - EVP & CFO.

Brian Peterson - Raymond James Steve Frankel - Dougherty & Company Glen Mattson - Ladenburg Thalmann.

Greetings, and welcome to the Brightcove First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure, to introduce your host, Mr.

Brian Denyeau of ICR. Thank you, you may now begin..

Good afternoon, and welcome to Brightcove's first quarter 2016 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, 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 second fiscal quarter of 2016 and the full year of 2016, 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 an 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 expectation. These statements reflect our views only as of today, 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 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 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 first quarter 2016 results, as well as our guidance for the second quarter and full year 2016.

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

Thanks, Brian, and thanks to all of you for joining us today. We delivered strong first quarter results that came in at or above the high-end of our guidance range. In the first quarter, we executed well across both our target markets which reflects the positive impact of our updated product portfolio and go-to-market positioning.

Our strategy is working and we believe we are well positioned to drive further improvement across the business as we moved through 2016. On our last call we told you that we will be making additional hires to drive faster top line growth and product innovation. We got off to a strong start in this area in the first quarter.

Together with a solid first quarter sales performance, some exciting customer wins, and additional major product announcements, we continue to feel confident about our ability to achieve our mid-teens full year bookings growth target.

Looking at our results for the quarter, total revenue was $36.3 million, up 10% year-over-year and ahead of our guidance. Adjusted EBITDA was $2 million with non-GAAP income from operations of $0.7 million and net income per diluted share of $0.02, all of which were above the high-end of our guidance.

I'd like to take a few minutes to review the progress we are making across each of our target markets. We had a great quarter in media with particularly strong performances in North America, Japan and Australia.

The investments we've made in our products over the past two years, particularly, the modularization of our platform, our new player, and our server side ad solution are gaining significant traction in the market. If we continue to be in the middle of a fundamental transformation of how consumers consume entertainment, news and sports.

Our success comes from focusing on how publishers and content owners can deliver great experiences on mobile and in the living room, reduce the cost and complexity associated with the complex and fragmented device landscape, and more effectively monetize their content with advertising, subscriptions or both.

This focus has been the driving force behind our updated modular product portfolio which provides publishers and content owners the flexibility they need to adapt and thrive in this rapidly changing market.

The positive impact Brightcove is having on our customer's business is increasing the strategic value customers place on their relationship with us.

In the first quarter, we saw a new or expanded agreements with a number of media customers; notable names included about Dot.com, Readers Digest, Wenner Media, Singapore Press Holdings, Vox Media, Trafficking, Virtue Sport, and Tribune Content Agency among others.

Let me highlight a few exciting examples that demonstrate our momentum in the media market. A great example for success in media is a multi-year, multi-million dollar deal we won with one of the ten largest broadcasters in North America.

This customer choose Brightcove after an extensive nine month technical bake-off conducted by the customer and third-party evaluators who gave us a clear technical win that noted in particular our faster video delivery time and having the most developer-friendly platform.

This customer will be deploying our new performed player management service and will be broadly adopting the breakup player for the web, as well as using our native SP Case for iOS and Android applications.

This win is a great example of the positive impact our product investments are having, as we simply would not have been able to win this deal two years ago. Singapore Press Holdings is the largest print publisher in Singapore and the most influential print publisher in all of Southeast Asia.

SPH choose Brightcove over several competitors to publish and monetize news in other short-form content across 40 web properties and related iOS and Android applications. SPH's choice was based on Brightcove's functionality, our global scalability and service capabilities, and our outstanding reputation with the global publishing community.

Not only this is a great individual win with a specific customer, it's another milestone for Brightcove's rapidly growing presence across Asia. DrafKings [ph], a fantasy sports leader was looking to launch an ad supported online TV-like video experience to supplement its core business.

DrafKings turned to Brightcove to help get its video experience up and running quickly by building on top of our core video platform to our to our extensive VPIs, DrafKings was able to stand up in ad-supported channel. DK TV faster than it believed possible.

Turning to the digital marketing business, we had a solid first quarter that reinforced our excitement about the opportunity to establish Brightcove as an integral part of the next-generation digital marketing stack.

In particular, we had a very strong renewal quarter which is a great validation of the stickiness of our video marketing suite and in particular, new products like gallery and audience have with brands around the world.

Video is in the early stages of establishing itself with enterprises as a significant component of their online and mobile digital marketing investment.

We're seeing many enterprises that are still in the very early stages of adopting video and need the ability to experiment at a project level, supporting video is a core part of the marketing and demand generation strategy.

To better support enterprises at this stage of deployment, we continue to refine our go-to-market efforts to drive even greater success in the market. In the coming months, we'll be rolling out some exciting new packaging and pricing options in order drive greater enterprise sales.

These new offerings which will be priced at $1999 and $499 per month will provide a low friction way for enterprises to begin experiencing the power of Brightcove's solutions. We're optimistic these new offerings will accelerate our ability to see the enterprise market and provide significant upsell opportunities overtime.

To be clear, this is an expansion of our core go-to-market messaging for an enterprise and digital marketing needs. It is not focused on attracting small/medium business customers.

During the first quarter, we saw newer expanded deals with a range of industry leading brands in our digital marketing and enterprise business including Avnet, Edmonds, EMC, and Over Insurance, TES Corporation, Mary Kay Cosmetics, QBC Italia, Sage, Skill Share, the University of Pennsylvania, and Yale University.

Avnet is one of the world's largest global distributors of electronic components, computer and IT solutions, embedded technology and services. Avnet selected Brightcove over several other competitors for internal and external use of the video around the world. First, our global presence and scale, matched Avnet's global footprint and requirements.

Second, because a significant number of its suppliers are also Brightcove customers, Avnet could easily media share key video assets like training videos, products video, etcetera directly through the Brightcove platform, simplifying the process and saving both time and money.

TES [ph] is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas.

TES has chosen Brightcove to replace its internally developed video platform because have thought as an enterprise-ready solution and platforms that supported both, internal and external used cases, offered a simple but powerful publishing process, detailed analytics and integration with its key infrastructure investments.

Penn Medicine; the health system of the University of Pennsylvania, has responsibility for the university-run hospital, medical school, and continuing medical education programs.

Penn Medicine is a great example of a customer who began using Brightcove two years ago for a small marking project and now has expanded to a very broad range of external and internal use.

The Q1 deal represents a significant upgrade to our video-marking suite for the marking department, and an expansion from marketing to HR and Information Services Group.

In reverse of the usual process, with the functional department SIT first recommended technology solutions, here the information services group went to the marketing team to ask what they were using for video.

They set a high level performance and exceptional customer support, the marketing group strongly recommended Brightcove to both, the information services and HR groups for their internal training needs.

We are off to a very strong start in 2016 on the product development front with several exciting new product announcements increasing the cadence of our product releases as a core focus of our engineering team, and will help to increase the value Brightcove delivers for our customer's overtime.

Brightcove OTT is an innovative new turnkey OTT Flow solution for media companies and content owners that we are developing in partnership with Exceedo [ph], an industry leader in user experience and multi-platform video applications.

Media companies are struggling to create a scalable OTT offering that works across devices and operating system while enabling consistent monetization and ad support to drive additional revenue.

OTT Flow solved these problems by offering an end-to-end technology solution that dramatically lowers the barriers to entry for starting a multi-platform OTT service.

We've also structured OTT Flow with a simple and cost effective pricing structure that eliminates the need for heavy upfront investment enabling customers to have the content delivered over-the-top in weeks rather than months. We also recently announced the availability of ultra-high definition or UHD child transcoding through Zencoder.

Media companies are focused on being able to provide the same high quality viewing experience across browsers, handheld devices and other OTT devices that customers experience in traditional television. We'll be highlighting these and many product innovations at our annual play user conference in a few weeks.

This year's event which is sold out with more than double the number of attendees compared to last year is shaping up to be our best play yet. We feel terrific about the product innovation and the momentum we're seeing the market, and this event will be a great showcase of the exciting things happening in the industry and with Brightcove.

Before I turn the call over to Kevin, I wanted to comment on our earlier announcement that Gary Haroian has been named the new Chairman of the Board of Brightcove. Gary has been a valued Board member and Chair of Brightcove audit committee since joining our Board in April 2014.

He's held numerous senior executive positions throughout his career, including serving as a the Chief Financial Officer of Street, and Concord Communications; and as the Chief Executive Officer of Stratus Computer.

In addition, he currently serves on the Board of Directors of Aspen Technologies and Internoc [ph], and previously served on the Board of Directors of Unico Corporation and Face Forward among others. I'd like to congratulate Gary on this new role and I look forward to me continue to continuing to benefit from his wide council.

Our current Chairman, Jeremy Allaire, has decided to step down from the Board in order to devote greater time to his role as Founder and CEO of a privately-held digital financial service provider.

As the Founder and Former CEO of the company, Jeremy was instrumental in establishing Brightcove as a leader in the online video platform market and scaling the business to over $100 million in annual revenue.

On behalf of everyone here a Brightcove, I'd like to thank Jeremy for everything he has done to the company and wish him much success with his current venture. To summarize, Brightcove began 2016 with continued momentum across both of our target markets.

We are very pleased with the traction of our products and go-to-market efforts are generating with media and digital marketing customers, while also generating solid profitability. We're well positioned to achieve our full year growth objectives and I'm increasingly confident on our ability to generate accelerating growth and profitability overtime.

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

Thank you, David and good afternoon everyone. I'd like to begin by reviewing our first quarter results. And then I'll finish with our outlook for the second quarter and the full year. We had a great first quarter.

Our total revenue for the first quarter was $36.3 million, a10% increase from the first quarter of 2015 and above the high-end of our guidance of $35.2 million.

Breaking revenue down further by subscription and support revenue of $34.7 million was up 9% year-on-year and professional services revenue for the quarter was $1.6 million, up 53% year-over-year. Our revenue outperformance in the quarter was largely driven by higher than anticipated overage revenue. Now let me add some color around our revenue mix.

In the first quarter, our premium offerings generated 95% of our total revenue, while our volume offerings generated 5% of our total revenue. On a geographic basis, we generated 63% of our revenue in North America during the quarter. Europe generated 17% of our revenue, and Japan and Asia Pac generated the remaining 20% of revenue during the quarter.

From a vertical perspective, our media business represented 51% of our revenue in the quarter and our digital marketing business represented the remaining 49% of our revenue. Let me now turn to our supplemental metrics that we share on a quarterly basis.

Our reoccurring dollar retention rate in the first quarter was 98%, which is the third second quarter in a row that we have delivered a retention rate above our target range of the low to mid-90s. The appropriate retention rate reflects solid sales and operational execution, as well as the value Brightcove is delivering to its customers.

Looking at our customer count, we ended the first quarter with 4,915 customers of which 1,910 were classified as premium customers. Our revenue per premium customer continued to increase, upto $69,000 per year which is up 10% year-over-year.

Moving down the P&L, our non-GAAP gross profit in the first quarter was $23.6 million, up from $21.9 million in the year ago period, and represented a gross margin of 65%. Subscription and support revenue represented approximately 95% of our total revenue and generated 68% gross margin in the quarter.

Non-GAAP income from operations was $714,000 in the first quarter compared to a loss of $284,000 in the first quarter of 2015 and was ahead of our guidance of breakeven to $500,000. Adjusted EBITDA was $2 million, up 45% from the year ago period and at high-end of our guidance range.

Non-GAAP earnings per share was $0.02 based on $33.6 million weighted average shares outstanding and above the high-end of our guidance range of a loss of $0.01 to income of $0.01 per share. This compares to a loss per share of $0.02 on $32.5 million weighted average shares in the year ago period.

On a GAAP basis, our gross profit was $23 million; operating loss of $1.5 million and loss per share was $0.05 in the quarter. Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $29.3 million, an increase in cash $7.4 million compared to the prior quarter.

During the first quarter we generated $3 million in cash flow from operations. With $1.7 million in capital expenditures and capitalized internal used software, we generated free cash flow of $1.3 million in the quarter, a significant improvement from negative $692,000 of free cash flow in the year ago period.

I'd now like to finish by providing our financial outlook for the second quarter and the full year of 2016. For the second quarter, we are expecting revenue to be in a range of $35.8 million to $36.3 million, including $1.6 million of professional services revenue.

From a profitability perspective, we expect non-GAAP operating loss of breakeven to $500,000 for the second quarter. Non-GAAP net loss per share is expected to be at a range of $0.00 to $0.02 based on $34 million weighted average shares outstanding.

For the second quarter we host our Annual Play User Conference, as well as two of our largest industry conferences that we attend; NAB and Ora Course Modern marketing experience, which will increase overall sales and marketing spend during the quarter. In the second quarter, adjusted EBITDA is expected to be in a range of $800,000 to $1.3 million.

For the full year of 2016, we are raising our revenue guidance to be in a range of $145.8 million $147.8 million which represents year-over-year growth of 8% to 10%. Included in this range professional services revenue is expected to be $5.5 million to $6 million for the year.

As David mentioned earlier, we are on-track to deliver mid-teens bookings growth in 2016, delivering against our bookings plan but position us to exit the year with significant momentum that would lead to accelerating revenue growth in 2017 and beyond.

In terms of profitability, we are expecting full year non-GAAP operating income to be in a range of $2 million to $3.5 million. And adjusted EBITDA is expected to be at a range of $8 million to $9.5 million, both consistent with previous guidance.

In addition, we expect non-GAAP net income per share to be $0.02 to $0.07 based on $34.1 million weighted average shares outstanding. Lastly, we estimate free cash flow of $5 million to $7 million for the full year. In summary, we're pleased with the first quarter performance.

Our results are being driven by consistent execution and our strong continued focus on product innovation. We remain confident in our ability to expand our market leadership, top line growth, and profitability going forward. And believe we are well positioned to deliver enhanced shareholder value over the long-term.

And with that we'd now like to open up the call for 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 go ahead..

It's actually Parker Lein [ph] in for Tom Roderick, thanks for taking my questions.

The first one I had is,, obviously the nice jump in revenues in Japan during the quarter, I was wondering if you could pinpoint the most significant factors behind your success in the region during the quarter?.

Sure, first of all, hi Parker, and thank you everyone for joining us this quarter, it was a strong quarter in pretty much every regard. So thank you very much for joining us and happy to answer your questions. So Parker, you're exactly right; Japan continues to be a strong point for us.

I think we've mentioned that on several prior calls over the last year. We really seem an acceleration if I go all the way back to the founding of our Japanese business which I think it was back to seven years now.

In the early years of our business in Japan, the media business for online video was very mature and there wasn't a lot of -- there wasn't a strong ecosystem or market around online video advertising for pre-rolls or mid-rolls and video.

And the early years our business was more dominated by some of the brands that were using video for marketing and communication. In the last couple of years we started to get moniteration of the media business for Japan and the Asia Pacific region where there is a much more robust economic ecosystem for media companies.

And with that over the last two years we've just seen successive growth as we have been able to win more and more of the media companies in Japan, and then more recently in the other parts of Asia Pacific. So the business is just growing very strongly.

In Japan, for example, over the last year or two we -- the majority of the major newspaper brands, broadcast brands, and others have signed on. In the Asia Pacific region, we mentioned broadcasters in the past like SET and media companies from Thailand to Singapore, we mentioned Singapore Press Holdings on this call.

Down in the Australia, New Zealand region, we continue to have a very, very strong market leading position to continue to win business with our existing customers as well as new customers.

So it's a great region for us, we've hired new people there, we continue to expand our salesforce out of our Singapore office, our Tokyo office, and our Sydney office. And we expect it to be a growth driver for years to come..

And then hitting on the point of the salesforce, just wondering if you can give us a sense of your progress in hiring there? It looks like you added about 25 people to your headcount this quarter.

Maybe just what your targets are there for the rest of the year and how the plans are progressing there?.

The plans are progressing quite well, as you could tell, we got out of gate pretty quickly here in terms of hiring, that was our goal. And we're quite pleased with both, the hiring environment for us and the attractiveness of Brightcove right now and our ability to hire great people.

And so all those people, majority of them were in sales-related positions. There is also some key positions in innovation and engineering-related roles that we're very excited about that are going to help continue to increase the value proposition and the innovation we can bring to market. So majority of those were in sales.

We are continuing to recruit, you can see a lot of job openings on our website so you'll see a higher number of more people over the course of the year in this quarter and beyond..

Our next question comes from the line of Brian Peterson from Raymond James. Please go ahead..

So I wanted to hit on your premium customers. The net adds this quarter it's the best quarter you had in a couple years.

Just can you dive into that a little bit deeper, was that mostly related to the media segment, any particular region and what are you seeing from your customers that that's really changed from maybe the last few quarters?.

Well I think we've seen now several quarters in a row where we've been quite pleased with our results and we've talked about feeling and reality of accelerated momentum.

We've talked about the fact that we expect to bookings growth in the mid-teens for this year and we're on track for doing that and so overall I think we've turned a pretty significant corner from a period of decelerating to accelerating growth and so you see some of that over the last several quarters and certainly in this quarter's results and that's exciting.

In terms of specifically the customer adds it's was fairly widespread across the board geographically and across our two business units so good number of customers in both places.

Now I do want to say we're very pleased with that result it's a good number and I certainly expect we will continue to add many new customers over the years to come but we have tried to guide our investor community for some time that we intend our sales force to drive committed revenue not customer count.

And so we can be -- when we've had a low cost recount we've sort of discourage people from overemphasizing that because in a quarter with a low cost workout you could add a hypothetical million dollar customer and lose a hypothetical $10,000 customer and that's a win for everyone but it looks like no customers adds.

And so while we're very pleased with this result and I do think it represents it's representative of a fundamental positive trend in our business. We wouldn't want to overemphasize it or indicate that we expect necessarily this number to continue in the quarters to come.

We don't project to a customer count per se what we try and focus on is that revenue into the revenue that we can drive over time. So it's a good result but premature to says it's trend and I wouldn't overemphasize it because what matters obviously is a committed revenue.

Now that said it was good at that add number and still see growth in the average revenue for premium customers well. So that's obviously a good sign for different aspects of the business coming together in the right way at this point..

And just a follow up, can you talk about the linearity in the quarter.

I mean there has been some press out, there is the large deal activity for some software companies has pushed out a bit maybe came back in March just curious how the linearity played out versus your expectations?.

I don't think we have anything in particular there. We typically follows similar patterns of enterprise software companies where you get you know a small percent in month one, a medium percent in month two and the largest percentage of your business comes in month three towards the end of the quarter.

It is a pretty sticky pattern throughout our industry and in my experience and it continues to be our pattern here and I didn't see any particular change in Q1..

Our next question comes from the line of Steve Frankel from Dougherty and Company. Please go ahead..

So the subscription and support for us margin after several quarters of improvement slipped back some of this quarter, what's behind that and how might that change going forward?.

I will talk a little about that as you know we have a ratable revenue recognition model and so any given deal that we have we take that revenue over time. But that doesn't necessarily correspond to the usage from our customers.

Some customers can run hotter in terms of their usage of our platform and in any given quarter and as I mentioned in my prepared notes that we had higher overages this particular quarter that's in fact the case and so sometimes we take those and keep those overages tons, we move those higher usage patterns into future bookings but I'm overly concerned about the margins that we had in Q1 per se to me it's part of our business model where usage means good things for us in the long term with our customers because we can continue to help them, scale their businesses, help them grow their businesses, monetize more out of video and we're the benefactor of that..

And for David on this Top 10 network that you talked about signing, congratulations and maybe some detail on timing and again just go over what particular components in your stack there are going to be licensing at this point?.

The timing is the -- they're in the implementation phase and be rolling out over the next fairly brief periods, weeks and months and hopefully we will you know scale over time very rapidly but what we sold in this case it was our modular player service. It is a company that we've done business with before with other parts of our sack.

As you know we've made a big focus over the last couple years and really this is targeted at those Tier 1 broadcasters at making our product much more modular. So that they can adopt it and integrate it in with their systems in a way that's very specific to the way they like to do business.

And that's very important with the most sophisticated market largest Tier 1 broadcasters around the world but in particular North America where they can be larger and more sophisticated.

And so, you know in this case we went through it was a decent sales cycle probably you know at least four quarters and it was a very thorough sales cycle, we were very excited to go through this and to get a lot of validation for the work we've been doing, they get a technical break off where they actually hired a third party so that they had sort of clean no one in their company who had any bias or relationship with any other potential vendors in the market and did a head to head bake off looking at performance [indiscernible] and time to first frame, looking at the flexibility of the player, looking at the developer friendliness because they are technical organization, they wanted to build on top of our player and you know they ultimately concluded that we came out head and shoulders that's a quote from the CTO, above our competitors and so that was something we're quite proud of it and the reflected on the work we have talked about on these calls over the last three years, the work we've done to sort of rebuild the system that was from the startup years as a very modular, high performance, modern API based system and that's paying off with some of the bigger customers now and it's exciting times..

Our next question comes from the line of [indiscernible]. Please go ahead..

So, Kevin if you can give us the number over -- that will help us in calculating how we forecast this business, on that front, my question is I guess you beat revenues by a couple of million years, you reached [indiscernible], you've a new broadcast win.

How come your guidance didn't go up as much as one would have thought and I reckon I understand there is some issues forecasting overage but if you can just touch on those topics.

Secondly equipment financing seeing that in the financial statements now what is that exactly and how should we think about in terms of -- is that an offset to CapEx or any other entry that could be made for it and then I've a follow-up..

So on the overages we typically estimate about 1.5 million in any given quarter. We were about $0.5 million more than that normal overages amounts this particular quarter and so that's the answer to that. As it relates to revenue guidance for the rest of the year we did raise our guidance now $800,000 on the full year.

We were over the top end of our guidance here in Q1 by a $1 million. From our perspective the guidance is the guidance that we have and the visibility we have for the rest of the year.

We're only in Q1 so obviously we don't know what his bookings are for the rest of the year at this point but still confident enough coming out of Q1 to be able to raise for the rest of. So that's all I can comment on the guidance for the rest of the year.

In terms of the equipment financing in the first quarter we simply financed a piece of equipment for some data storage for us. This is our data storage that we're going to have outside of our cloud based infrastructure. It was two petabytes of storage that we had nothing significant there other than just having some storage on our backend..

If you can just touch on, I mean you added a major customer but guidance didn't go up I mean is it -- how should we think about it in respect to guidance, is that something you expect more in '17 sort of revenues and you had already anticipated some of these revenues when you initially gave guidance?.

So guidance to go up, I think I just want to make sure there's no confusion there. But we added many customers, we had what we saw was a fairly strong quarter and we raised our guidance..

So I guess 800,000 how is that 500,000 is [indiscernible] services? So just asking about the big broadcaster?.

So when we guided the year originally we certainly assumed we were going to win some customers and so that you know we don't break out -- when we guide we are not trying to narrow that down to a customer by customer level, that wouldn't be appropriate or good model for forecasting.

We're not a kind of company that does one or two customers a year so it's not really the right approach to think about in terms of customer by customer basis..

I might add to that David as well that in some cases where we have professional services arrangements or engagements that those sometimes lead upto a large license deal that one might have and the situation here in terms of some of the professional services that we're doing here for some of our larger customers..

One final question can you talk about some [Technical Difficulty] last fall and continues to be there especially when you talk about video CPM which are highest in most publishers and to sacrifice that definitely impact the revenue stream.

So sort of inquires you get about it, technical solution, can you compare and contrast to some of the others that are in the marketplace, is it a standalone product or is it sales with all the other products kind of an add-on?.

So our service side product is sold two ways, as break of one [ph] which is standalone service side modular product and break of lift which is a combination of our backend service and [indiscernible] and our player service and so you get sort of the best of both worlds, you get a great video player combined with the server side and sourcing and really provide the best experience possible.

It's a great solution, it's a part of the core technology we acquired when we acquired a company called Unicorn several years ago. The team around that it's just a fantastic team, we're starting to see some new opportunities outside the U.S. when we bought that company a few years, it's pretty U.S.

centric for the most part with one or two exceptions and we're starting to a much greater diversity of opportunities geographically. And we're excited about technology in the process.

It's solves some very significant problems for our customers and for prospects around the world where no media company is making incredible margins, the media business is a hard business and so if lose 5% of your viewers, 10% of your viewers that's tough and the reality is with ad blockers but also with just poor ad integrations and poor ad experiences people are losing 20%, 30%, 40%, sometimes 50% of their views and so you can imagine the economic cost of that to any publisher of any type that is doing that support business and so we're really able to make a big impact for customers and help them recapture that business and provide a better experience.

That's really what it's about, it provides a more seamless more TV like faster, smoother experience for watching that ad supported video.

I'm sure everyone in the call has that experience of -- you sent a link, you want to check out a video, you go to a page, you check out a video and you click and then you sort of wait forever and then an ad starts and then you have to sit through the ad and then there's like five seconds of black in the spinning wheel before the content starts and that's still unfortunately all too common across the internet and we're really out there that to make that completely different so that video start fast, that the ads loads directly into the content just like on TV and that you deliver a more seamless beautiful experience and that obviously is better for the publishers to monetize with.

So we're a strong position and we're going to build on it. .

[Operator Instructions]. Our next question comes from the line of Glen Mattson from Ladenburg Thalmann. Please go ahead..

On the two ventures that you guys put out the for instance the revenue per premium customer that's been growing quite nicely for some time now.

Is there a lot of headroom there and do you expects kind of a pretty steady progression of continued year-over-year growth throughout the year?.

So yes we've been very pleased with that over the last year but we don't guide it and so I want to be careful about that because it's a little bit difficult to project. I think that there is plenty of room for that to grow.

I will tell you that when I go out in the field and talk to customers in every geography both media customers and brands and enterprise users. There is an opportunity for us to grow. In just about every customer we sell to and that is a source of real excitement for our organization.

It's one of the reasons we invest a lot in our account management team and the people that we have that service our existing customers as well people that pursue new business and so I would say there are still lots of room for that to grow.

Now that said I want to caution that we are pursuing multiple go to market strategies with different parts of our business and on the digital marketing and enterprise side of our business we are and we mentioned this in the script introducing some new lower price packages that are really getting starter packages.

It's a way of getting a big enterprise that hasn't yet bought into the idea of an enterprise wide adoption of a video platform, a way to get started with the project.

And so we don't know what the impact of that will be yet on customer accounts and average revenue per premium customer in that side of our business but you know as fundamentally lots of headroom but the numbers might get a little bit blurrier if we have a lot of success with that project level thing and over time we, we will be up-selling those, it's what I would call and the what industry calls kind of a bit of jargon here but a land and expand strategy where you want to win that first opportunity where somebody doesn't yet have a big idea to use an enterprise video platform across their enterprise but they have a product to launch and they want to put up a bunch of videos and you want to get that foot in the door and then you can go wider and expand within the account.

So that might change the dynamic a bit but fundamentally if I look at the business we have today, yes there's a lot of headroom we can continue to grow there..

And then -- most of the questions have been asked but just philosophically there's has been some, there was an article in the journal last week about people cutting the cord a little less because they're finding it kind of expensive to do so and then this week I believe Comcast had a good subscriber ad number, is there any sense out there that maybe the trend is slowing down on the OTT stuff or is it just a couple of random data points that I've come across?.

Yes I think it is way too soon to try and call that a trend one way or the, keep in mind that this is happening on a global basis. We're seeing a wide range of different kinds of video services and OTT services being launched in practically every country in the world.

So I still think they're fundamentally we're in a period of expansion but I would also say that our business is not just sort of standalone subscription vod services, if you think about you know the NetFlix's of the world and alike but it's a wide range of used cases, ad supported video, marketing use cases, communication use cases etcetera so there is going to be a fluctuations in the kinds of use cases and the specific business model different companies pursue but the fundamental trend of -- are people going to watch more video over the internet or there's no doubt that that's going to continue expand and expand significantly over the next many years even if some of the standalone subscription vod services go out of business.

It that will be a small note in a much bigger wave of the growth of video on the open internet..

Thank you. Ladies and gentlemen we have no further questions in queue at this time. I would like to turn the floor back over to management for closing comments. .

So. Thank you again for joining us today.

Obviously we had a strong quarter and we're excited about the place we're in, we're excited about the momentum and velocity of our product innovation team, the engagement we have with our customers and with the market and so we're looking forward to continuing to have a great year and we look forward to speaking to you again in approximately 90 days.

So thank you very much..

Thank you ladies and gentlemen, this does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day..