Brian Denyeau - Investor Relations, ICR Jeff Ray - Chief Executive Officer Rob Noreck - Executive Vice President and Chief Financial Officer.

Parker Lane - Stifel Steven Frankel - Dougherty Sameet Sinha - B. Riley FBR Glen Mattson - Ladenburg Thalmann Mike Latimore - Northland Capital Markets.

Greetings and welcome to Brightcove Third Quarter 2018 Earnings 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.

Please go ahead..

Good afternoon and welcome to Brightcove's third quarter 2018 earnings call. Today we'll be discussing the results announced in our press release issued after market close today. With me on the call are Jeff Ray, Brightcove's Chief Executive Officer; and Rob Noreck, 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 2018, and the full year 2018.

Expected profitability and positive cash flow, our position 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 us as representing our views as of any subsequent date.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For a discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in the 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 close today, which can be found on our website at www.brightcove.com.

In terms of the agenda for today's call, Jeff will provide a summary review of our financial results and update on our operations and review of our strategy. Rob will then finish with additional details regarding our third quarter 2018 results, as well as our outlook for the fourth quarter and full-year 2018.

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

Thank you, Brian. And thanks to all of you for joining us today. During the third quarter, we made significant progress on the strategic initiatives we believe will position the company to deliver faster, sustainable and profitable growth in the future.

This is translating into positive trends, including improved renewal rates and a growing number of customers who are making long term commitments to Brightcove by signing multi-year agreements, a key indicator that customers are realizing value for Brightcove products.

I am encouraged by these trends, which indicate a healthier installed base upon which we can grow and expand. While we're pleased with the progress we have made executing on our long term strategy, our financial performance in the third quarter was not as good as we had anticipated. Looking at our financial results for the quarter.

We delivered third quarter revenue $41.1 million, which represented 4% year-over-year growth and was below our guidance. Adjusted EBITDA was positive $575,000, which well exceeded the favorable end of our guidance and reflects a strong commitment to cost discipline and our recurring dollar retention rate was 94%.

The slower growth in revenue was largely driven by lower than expected overages revenue and lower than expected bookings earlier in the quarter. We also fell short of our bookings target and now do not expect that we will achieve our double digit bookings growth target for 2018.

2018 is a year of transition for Brightcove and we are still early in the process of revamping our product and go-to-market efforts to align with our new strategy. Our goal is to build a higher velocity predictable selling motion in multiple markets across multiple use cases that yield greater diversity in deal size.

We're making good progress towards that goal. But in the third quarter, the changes to our go-to-market motion proved to be more disruptive than we had anticipated. It's important to note that our bookings performance does not reflect any change to the competitive environment or the opportunity for our products and services.

We simply need to do a more effective job of executing during this transition period. We believe making these fundamental changes across all aspects of the business are critical if we're going to achieve our long term objectives.

Simply put, the old way of doing business at Brightcove was not going to produce the results we believe this company can deliver and that our shareholders deserve.

This near term disruption is a cost we are willing to absorb to change our long term growth and profitability trajectory, which is what we believe will generate the most value for our shareholders. I think it is important to step back and look at the bigger picture, so investors can understand what we are trying to accomplish.

Over the past six months, we have a substantially new leadership team and have been instituting changes across every aspect of the organization. Through rigorous analysis of our end markets, product portfolio and go-to-market positioning, we have identified clear action plans to generate a faster, more effective and more predictable sales engine.

Our goal is to instill a deep commitment to operational excellence in all facets of our business, sales, marketing, product, customer success that enhances the value we deliver customers and results in predictable, incremental growth for Brightcove.

We will help our customers be successful by increasing the return on investments our products deliver, which will drive increased customer loyalty and improve the attention rates. I have been very encouraged by the team's embrace of these changes.

As part of these efforts, we are building up a strong legacy of customer success with customer satisfaction scores that are already higher than a typical enterprise software company. We know we can do even better if we are fully aligned to drive customer success.

One of the things I have been most encouraged by since joining Brightcove are the conversations I've had with customers. I've spoken now to more than 100 and I have heard a consistent theme. First, our customers trust us to deliver their business and increase their customer satisfaction.

Second, they view Brightcove as the experts in our field and look to us to push the boundaries of what's possible with video. And third, they very much want us to succeed and are embracing our strategy to drive growth in our business.

I'd like to spend a few moments discussing some of the things we're doing and why these changes give us the confidence that we will be able to achieve our objectives. The first thing we're doing is driving accountability across the company. I believe an engaged team who have the power to make an own decisions drives the best results.

To facilitate accountability, we have been on a path to reorganize the business to have one team responsible for product design, development and operations. One team focused on marketing lead generation and branding. And one team focused on sales and customer engagement.

Having clear lines of responsibility with a single executive in charge of each function, will be a significant improvement in our organizational structure and ultimately our performance. Transformation is well underway, under the leadership of our new Chief Product Officer, Charles Chu, we have undergone a thorough review of our end markets.

We have approached this process from a market driven perspective where our product investments will be determined by a rigorous our ally base methodology that identifies products customers will find most valuable. Through this process, we have identified the following.

We have clearly identified our total available market, which was $1.6 billion in 2016 and is growing $4.2 billion by 2022, a 17% compound annual growth rate. Within this market, there are nine distinct sub-markets across media, entertainment, digital marketing and enterprise, each of which is growing greater than 10% annually.

We are initially focusing our resources on four of these sub-markets which are growing rapidly, where we believe customers have shown the strongest demand for our products and we are strongest from a competitive perspective. Let me share two examples of those segments.

The first segment includes customers who have significant corporate IT and marketing budgets and want to grow video usage with a trusted cloud provider. There are thousands of potential customers around the world they took this profile and we think a set of purpose built solutions that address specific use cases will be well received.

This approach aligns nicely with our goal of building a higher velocity selling model that will lessen our historical dependence on large deals each quarter. We have already demonstrated an ability to capture share. We intend to accelerate that growth. Second, we are focusing on OTT experience.

Our early success with OTT flow has demonstrated the significant opportunity for a variety of content providers to deliver compelling OTT experiences for consumers. We are enhancing and expanding the OTT features and functions available with our offering to provide customers with the more intuitive out of the box OTT solution.

In the coming quarters, we will be introducing purpose built solutions for each of these and other markets with a clear focus on making Brightcove's products easy to deploy, easy to use and quick to generate value for our customers.

We know that by focusing our product development efforts in these exciting markets, we will be better position to drive significant growth and generate strong returns on our product investments.

We will talk a lot more about our plans with key stakeholders in the coming months and intend to present the entire strategy at our PLAY User Conference next spring. With the strongest engineering team in the market, we are uniquely qualified to take on these products challenges.

Our product and customer support leadership was most recently recognized in several exciting announcements. Frost & Sullivan recognized Brightcove with its 2018 Global Company of the Year Award.

Our robust platform offering, brand reputation and expanding global footprint were noted as giving Brightcove a distinct edge in the highly fragmented OVP market. Our Context Aware Encoding won a CSI Award at the recent International Broadcasters Conference for best digital processing technology.

This patent pending technology was recognized as the fastest, most innovative approach to solving the complex problem of video delivery and we beat out AWS' Elemental technology among others. The Technology Services Industry Association recognized Brightcove as a Certified Staff Support Excellence Center for the 5th year in a row.

This award recognizes our dedication to excellence and the unparalleled commitment we make to ensure a best-in-class experience for every customer, on every inquiry. These awards are validation of our technology leadership, world-class engineering team and commitment to customer success.

We are confident focusing that engineering talent on a targeted product roadmap will yield impressive results in the coming quarters. Just as we have aligned our product, engineering and operations functions into one team, so have we done the same with our marketing functions.

In the third quarter, we made significant changes to our go-to-market organization that will better align our marketing and sales efforts. We hired Sara Larsen as our new Chief Marketing Officer.

In this role, she will be responsible for all lead and demand generation, product marketing, client marketing, branding, messaging, and marketing communications, and report directly to me.

Sara has extensive marketing leadership experience with companies such as IBM and SAP and joins us from Dassault Systemes, where she was most recently Vice President Americas Marketing and Communications.

She was responsible for go-to-market activities for the Americas, directing efforts for three sales channels and 12 industry verticals in a business that is one of the company's largest markets.

We are thrilled to have a marketing leader at Sara's experience joint Brightcove and believe her multichannel enterprise marketing expertise will be critical to our go-to-market efforts.

We also consolidated our demand generation teams into a single group underneath Sara by collapsing our media business unit and digital marketing business unit into a single powerful marketing organization.

This group will be solely focused on developing Brightcove's unified marketing and demand generation strategies and we think this structure will make it easier to align with our product and sales teams and provide a more effective generation engine.

Consolidating our marketing efforts will enhance our ability to speak with one voice on the value of Brightcove, which will raise our brand awareness and enhance our ability to generate actionable, high quality sales leads. In short, we are turning global marketing into a machine for driving demand.

And finally, we are uniting the global sales organizations into one team, under one sales leader. We are well into our search process for a Chief Revenue Officer, who will be responsible for leading our global sales organization, including direct sales, channel sales and professional services organizations.

This single sales leader reporting directly to me, will be empowered to build and lead a world-class sales team. We've seen the positive impact on coordination and alignment from unified leadership under Charles and Sara and will deliver the same impact, with our new sales leader.

I'm impressed with the quality of candidates we are meeting and their level of interest in joining Brightcove. They see the same opportunity we do and are excited to be opportunity to be part of something big here. We feel very good about the changes we are instituting across the business. We are fortunate to be a leader in a trend favored market.

Video will continue to grow and transform every aspect of consumers' lives. Customers in every industry increasingly recognize, they need to incorporate video into their businesses. The changes we are making are designed to increase market awareness of our product capabilities to provide a great customer experience and fast time to value.

We have a long list of customers who look to Brightcove as a trusted advisor, who can help them turn video into a competitive advantage for their business. Our goal to achieve the same level of customer success across a much broader range of customers.

We've had several customer wins in the third quarter, which demonstrate how customers are using Brightcove's market leading technology to expand their video reach. H&M Group, selected Brightcove to deliver all video content globally, citing the features, stability and reliability of the Brightcove platform.

Digital Trends the largest independent tech media site in the world expanded their relationship beyond Video Cloud to now include OTT Flow, enabling broad video reach to mobile and connected TV platforms. ODK Media, operator of social TV platform on-demand Korea and on-demand China selected Brightcove to expand their presence in key markets.

And 3M expanded its relationship with Brightcove beyond digital marketing, they now include all internal video streaming, ensuring a consistent video presence and broad audience reach globally. To summarize, we accomplished a lot during the quarter.

We're executing against our strategic priorities and taking the steps necessary to enable Brightcove to deliver significant and consistent growth and profitability. While we recognize the need to minimize the near term impact to our financial results, we are resolved to making the fundamental changes to deliver profitable breakout growth.

Based on what we have seen so far and the progress we have made, we believe the changes we are making to the business will deliver significant value for shareholders. With that, let me turn the call over to Rob to discuss our results in more detail.

Rob?.

Thank you, Jeff, and good afternoon, everyone. I will begin with a detailed review of our third quarter results and then I will finish with our outlook for the fourth quarter and the full-year. Total revenue in the third quarter was $41.1 million, which is below our guidance range.

As Jeff mentioned, the shortfall in revenue was largely driven by lower than expected overseas revenue and lower than expected bookings early in the quarter. The shortfall in overages was driven in part by certain customers who are renewing overages, deciding to sign early multi-year renewals with us.

This is a positive for our business overall as these customers are increasing commitment to Brightcove. However, in the near term, revenue from these customers will return to recognition versus their overage is being recognized in that period incurred.

Breaking revenue down further, subscription and support revenue was $37.4 million and professional services revenue was $3.7 million. On a geographic basis, we generated 53% of our revenue in North America during the quarter and 47% internationally.

Breaking down international revenue a little more, Europe generated 18% of our revenue, and Japan and Asia Pac generated 28% of our revenue during the quarter. We see continued momentum in Japan and Asia Pac, both with new customer wins and expanded engagements with existing customers.

From a vertical perspective, our media business represented 53% of our revenue in the quarter and our enterprise business represented 44% of our revenue, while volume business represented the remaining 3%. Let me now turn to the supplemental metrics we share on a quarterly basis.

Our recurring dollar retention rate in the third quarter was 94% which was in line with our target range of low to mid-90's. We are pleased with our retention performance in the quarter which reflects the positive impact of the value we are delivering to customers. We are focused on maintaining and improving our retention rates overtime.

However, we currently continue to target our historical retention rate in the low to mid-90's. Our customer count at the end of the third quarter was 3,867, of which 2,227 were classified as premium customers.

Looking at our ARPU within our premium customer base, our annualized revenue for premium customer was $74,000, which was up 3% year-over-year and excludes our entry level pricing for starter customers which averaged $4600 and annualized revenue.

Looking at our results on a GAAP basis, our gross profit was $24.8 million, operating loss was $3.1 million and loss per share was $0.10 for the quarter. Turning to our non-GAAP results. Our non-GAAP gross profit in the third quarter was $25.4 million compared to $23.7 million in the year ago period and represented a gross margin of 62%.

The 180 basis point improvement in gross margin was largely driven by improvement in services margin, which was positive for the second quarter in a row. Video services will remain profitable going forward.

Subscription and support revenue represented approximately 91% of our total revenue and generated a 66% gross margin in the quarter consistent with the third quarter of 2017. Non-GAAP loss from operations was $607,000 in the third quarter compared to a non-GAAP loss from operations of $2.2 million in the third quarter of 2017.

Adjusted EBITDA was $575,000 in the third quarter compared to a loss of $889,000 in the year ago period and above the high end of our guidance range for the quarter. The adjusted EBITDA was driven in part by higher services gross margins, as well as the timing of investment.

Non-GAAP loss per share was $0.03 based on $36.2 million weighted average shares outstanding. This compares to a loss per share of $0.06 and $34.5 million weighted average shares outstanding in the year ago period. Turning to the balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $26.9.

During the third quarter, we used $488,000 in cash flow from operations and free cash flow is negative $1.6 million, after taking into account $1.1 million in capital expenditures and capitalized internal-use software. Now I'd like to finish by providing our guidance for the fourth quarter and full-year 2018.

For the fourth quarter, we are targeting revenue of $41 million to $41.5 million, including approximately $3.3 million of professional services revenue. From a profitability perspective, we expect a non-GAAP operating loss of $500,000 to $1 million and adjusted EBITDA up $200,000 to $700,000.

Non-GAAP net loss per share is expected to be in the range of $0.03 to $0.04 based on $36.6 million weighted average shares outstanding. Turning to our outlook for the full-year 2018. We are revising our full-year revenue outlook to $165 million to $165.5 million. This includes approximately $14 million of professional services revenue.

The reduction in our revenue outlook reflects a lower overage discussed earlier as well as the impact of lower than expected bookings. In terms of profitability, we are adjusting our outlook to non-GAAP operating loss of $2.9 to $3.4 million and adjusted EBITDA of $1 million to $1.5 million.

In addition, we now expect non-GAAP net loss per share of $0.12 to $0.13 based on $35.8 million weighted average shares outstanding. For cash flow, we expect full-year free cash outflow in arrange of $2 million to breakeven. To summarize, Brightcove's third quarter performance demonstrated significant progress against our strategic priorities.

We are on track to achieve our full-year profit and cash flow objectives despite the modest reduction in our revenue outlook. We are increasing confident the changes we are implementing across the business will result in faster and more profitable growth going forward. With that, we will now take your questions. Operator, we are ready to begin Q&A..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Tom Roderick with Stifel. Please proceed with your question..

Hi. It's actually Parker Lane on for Tom. Thanks for taking the question.

You reference, that you'll be focusing on 4 new sub markets, I'm just curious how much of these new purpose built solutions are about more aligning yourself with the market to capture new opportunities versus growing more inside of the existing customer base you have, considering that that ARPU in the premium customers has held pretty steadily around 73,000, 75,000 for the last couple quarters?.

Yeah, I think it's a combination of both, Parker. We're looking at the market and we're doing the outside in analysis in terms of what the market requires, so it's going to be a combination of both the new business and expanding within our current customers..

Yeah, this is Jeff. A good example of that is one of the markets that we see that we're already getting decent traction in would really respond favorably to an easier to use product. They don't need the full specification of what our products and offerings can do.

So it's a way to shorten the selling cycle, it's also a way to broaden the opportunity, that we can see on PLAY..

Got it. And then as far as the disruption is concerned this quarter, it looks like your North American business might have been a little weaker than it has been a couple quarters.

Is that the primary area that's been disrupted from a go to market strategy or is that really going to be throughout the entire business?.

Yeah that North America tended to get more disruptive and then the other regions..

Got it. Thanks, guys..

Thank you..

Our next question comes from the line of Steven Frankel with Dougherty. Please proceed with your question..

Good afternoon, Jeff.

Let's start with this notion of disruption and how much of that is tactical issue that with some new marching orders you can fix in a relatively short order versus well it really means getting these go to market solutions ready and that it's going to take longer?.

Yeah the go to market solutions are not disrupting, did not disrupt the third quarter. The go to market solution work was done by product management, engineering and with a lot of attention from members of the leadership team and some outside validation and then ultimately the concurrence of the board.

So that that really was done exclusive of the cells and sales process I think there's a couple of ways to answer it.

Number one is just the fact that when you are driving this much change, you're going to introduce some amount of distraction, a lot of our go to market work did require a lot of help from people who also are involved in selling, it's just part of what you have to do, the changes necessary we know that to make great progress we do have to drive that change and we accept that.

The other element is behavioral. For example, there were deals, I think in the past might have been approved, that we didn't approved. A good example is the fact that our professional services business is starting to trend towards profitability.

Some of that is execution, some of that is the nature of the kinds of engagements that we will take on from this day forward..

Okay.

And then could you tell us exactly, what overages were and then a related question is typically, if you have customers renewing early that tends to drive that recurring revenue retention rate up above normal, so where's the weak in the bucket there, did we lose a couple of customers as well?.

Yeah, this is Rob. Yes, overages came in at two, so it's a little bit lower than what we're anticipating obviously. And in terms of the renewal rate, typically when it gets over the 95% to 100% range. What we've seen is a large up sells at the time of renewal.

And in this case we're adding term and not necessarily large up selves with those earlier renewals..

Okay.

And you talk a lot about reacceleration but sounds like that's something that still several quarters away, is that the message here is be patient, we've got some things in the hopper, once we deliver on we can really reaccelerate the business, but it's kind of mid next year or we should start to anticipate that?.

We we're not being patient. So none of us are thrilled with the results but we are definitely not being patient. There is a massive amount of change going on in the business and we've highlighted some of those things for you. And it is because we know that we need to demonstrate good profitable growth as quickly as we can.

So we're moving quickly instead of going more slowly..

Okay. Thanks..

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

Yeah. Thank you very much. Couple of questions here, so Jeff you last quarter, you spoken about onetime incremental investments. But if you look at your numbers third quarter and for your fourth quarter basically flat.

So where are those onetime investments, are you finding cost saving opportunities and that's really just not seeing it in the numbers or these investments delayed into next year.

Can you talk about that? Secondly, talking about those customers who - you are signing on longer deals but not up selling or across selling, that's I think that process is moving on for a couple of quarters now.

Can you talk about how many such customers are left, just want to get a sense because it's better for the company but obviously cause some near term disruption in the business and then I have one follow-up?.

So Sameet, I'll take those. This is Rob. In terms of your first question, yes the short answer is yes. We've been able to find cost savings across the business upon those investments. And we continue to be irresponsible in terms of where we're spending our money there's been some timing difference in terms of those investments pushing between Q3 to Q4.

But we don't anticipate those falling into 2019 at all those are definitely 2018 initiatives. And then your second question around how many customers last do we have - how many customers are lap to move into multi-year deals.

And if you think about our premium customer count of over 2200 customers, we've got a long way to go before we are run out of customer support on multi-year deal..

Okay. Got it.

Now, let's talk about in terms of these near term disruptions, I think you kind of did you say that there was you see is leadership in other leadership for better or distracted by these changes that you were pushing through or was this a realignment in the stretching that was needed to get the marketing in the sea as organizations on head in the same direction?.

Yeah let me try to answer that with two pieces. Number one, we did reorganization in the quarter, that reorganization impacted marketing, specifically product marketing, where we consolidated all marketing into one cohesive team underneath our new CMO, Sara Larsen.

We just found that we had brilliant examples of marketing embedded in the BEUs but those great examples were not being shared and we did not have a high level of collaboration. And quite frankly, we were a mile wide and an inch deep.

This is now one cohesive team that took a lot of time and attention and so we're very, very excited about what that team can now do in driving better, higher quality deals and demandingly gem and doing a better job of positioning us.

So I don't think that necessarily impacted the selling, but it was an organizational change that we needed to make and I'm very, very pleased with the outcome of that change. As I talk to our employees, they're very excited to be part of one very strong marketing team and there's a high level of optimism as a result of that.

The other component is the go-to-market work, that we shared with you shortly after I joined the company that we were going to look at all aspects of how we engage with customers and look for ways to improve. Those initiatives were driven in large part by an outside consulting firm to help us.

But it also required that we need to tap into a lot of experience of our best sales leaders and that was slightly disruptive to the business. But again, we made those strategic decisions to address these things, confront them and put in place a better dynamic for growth..

And one final question.

In terms of the competitive environment, obviously things change but you end markets are improving and you kind of highlighted go at the end markets or your potential time in these and you highlighted two of them? How things changed in the competitive environment to see over the last couple of years or it's pretty much the same?.

I can't comment on the last couple of years, I'll defer to Rob, who's got more history..

Yeah, I think in terms of the competitive environment, in the pure OVP space, you've got a lot of the same companies in the marketplace, you've got the captures and the reality of the world but as we've kind of branched out and started servicing different segments and not just the media segment, we're certainly running across more competitors..

Thank you..

[Operator Instructions] Our next question comes from the line of Glen Mattson with Ladenburg Thalmann. Please proceed with your question..

Yeah. Hi. Thanks for taking the question. One comment Jeff that you made about some deals that would have been approved in the past were not approved under your leadership that sounds like kind of a negative surprise that maybe was anticipated before.

Can you talk about the magnitude of like how many deals, how large and then that's one thing even covered after 5 months, 6 months on the job here, could you talk about is there any other kind of deeply embedded structural issues at the company that you've come across now that you've had a lot more time?.

The deals were not large. But when you do something like this, it can be disruptive. You're changing the tone, you're raising the bar, you're setting a higher standard and you can't when you do something like that there are repercussions, we accept that.

And we spent a lot of time with the sales team helping them to understand why we want to book a good clean business. So I'm comfortable that we're in a better state now as we go forward, I think the teams understand that I think they're actually encouraged by the fact that we will back them up and support higher quality portfolio.

It also puts a lot of pressure on the business to do a better job of selling, that there is there is room for improvement in the quality of the way we engage with customers in how we invest in our selling skills in our sales talent. That is - that doesn't get fixed overnight.

We will make those investments in time and money and help to make sure that we're putting our best foot forward..

Okay.

And then I guess I'm curious about like what is the lever or the trigger that gets you back to better growth is it these kind of new products that have the quick turn and as far as purpose built solutions, getting those products building again into market and getting them seen conversion or is it just is this go to market, changes that you've made is like.

What's the trigger and I mean how long what's the outlook for how long we can expect to have to wait before we see better bookings and therefore better growth?.

As I've said since I walked in the door, we're looking at every part of this business. There are no sacred cows, there's nothing that soft limits and as we pursue opportunities for driving what I call breakout profitable growth.

I continue to be very, very encouraged by the feedback that we're getting, the signals that we're getting, that the work in the segmentation has been very encouraging, we're very, very excited about the affirmation that the markets that we're targeting are higher growth markets, they give us an opportunity for better profitability, they are sizable and they are very close to whatever what we already do.

They don't require that we go in a profoundly different direction and take on significant risk and spend 2 years building new products.

So I think all of those focused on long term help and the short term tactical real time things that we're doing in leadership and discipline in structure are all going to position us for good solid predictable profitable growth..

And lastly, I know there's a lot of wood to chop before we get there but you're the market leader, you say that given to fund the market is growing at 17%.

Would you expect that you'd be growing at that rate or above when you can completed all these changes and finish business plan?.

Yeah anything less than that would not we would not be very proud of that, if we kept grow at and above organic market growth rates..

Okay. Great. Thanks..

Our next question comes from the line of Mike Latimore with Northland Capital Markets. Please proceed with your question..

Okay, thanks.

Yeah in terms of bookings are a little late in the quarter and I would say there were some strategic changes, has there been much in the way of sales force turnover, have you changed out some sales people or what's what kind of change the sales headcount have you seen?.

There's been virtually none. But the sales team that we entered the quarter with a sales team that we exit in the quarter with..

And then on the overage revenues, there any general thought there I means is too sort of the new normal you think is going to lower or where [indiscernible]?.

Yeah, it's tough to tell based on one quarter, it certainly doesn't make a trend, but we have hedged it back a little bit in our Q4 guidance..

Okay. Got it.

And then Jeff, you said that I thought you said that the full strategic change would be done by PLAY, is that you said, what's supposed to be complete by the PLAY?.

Our messaging on our strategy will be ready for release, full revealed by PLAY. That doesn't mean that we aren't going to be sharing component elements of it with key stakeholders, partners, others, key customers and we will also take this opportunity to prove it out also that gives us a chance to test some things between now and PLAY.

By the time we stand up in front of the audience at PLAY, we need to stand up with 100% confidence, that the strategy is sound that the products are going to be delivered at very, very high quality on time and we're just going to do that very, very carefully..

Okay. Got it.

And then these four sub-markets you're focused on the higher growth ones, what percent of the business is in those markets today?.

I don't think I know. We're going to have to take that as it can do. We do know, we do understand the contribution of those sub-segments to the overall TAM for today and we understand where they will be by 2022. And the good news is those represent a pretty significant portion, there is the majority of the TAM..

Got it. Okay. Thank you..

I know we did the work, I just don't have it in front of me right now. I apologize, because we certainly assess the portfolio against what we're doing today, I just don't have it in front of me..

Got it. Thanks..

Ladies and gentlemen, we have reached the end of our question-and-answer session. And I would like to turn the call back over to Mr. Jeff Ray for closing remarks..

Thanks a lot, Devon, and thank you all for dialing in.

While we could have done better, we're very, very excited about the progress that we're making on our strategic initiatives on organizational changes on the addition of amazing leaders into the company, and again the affirmation that I'm hearing from our customers who believe in us, who are counting on us to be the leader and to help them grow and succeed.

I feel good about the three years strategy work that we've done. It's been confirmed with enough customers, enough experts to know that we're working on the right things. And for us, we just can't move fast enough. So I understand that the tone here is urgency and focus. Thank you all and have a good afternoon..

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