Good afternoon and welcome to Brightcove’s Fourth Quarter 2022 Earnings Presentation. Today, we’ll discuss the results announced in our press release issued after the market closed.

During today’s presentation, 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 first fiscal quarter of 2023 and the full year 2023, expected profitability and positive free cash flow, 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 as well as 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, including the effect of macroeconomic conditions currently affecting the global economy.

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 presentation, we’ll 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..

Thank you all for joining today. I am Marc DeBevoise, CEO at Brightcove and with me today is Rob Noreck, Brightcove's Chief Financial Officer. We're excited to be here to discuss our fourth quarter and full year 2022 results.

I'll also provide an update on the progress we've made on our strategy and high level overview on key areas of focus and goals for 2023. I'll begin with a quick overview of our financial results for Q4 and full year 2022.

Total revenue for Q4 was $49.2 million within, albeit at the lower end of our guidance range due to lower-than-expected overages in the quarter. Adjusted EBITDA was $1.2 million, our 14th consecutive quarter of positive adjusted EBITDA.

Adjusted EBITDA was just below our guidance of $1.3 million for the quarter due to the lower overages I mentioned and also one-time severance costs related to a team restructuring we instituted with new management coming on board. Excluding those severance costs, adjusted EBITDA would've been well within the guidance range.

Let's turn to our full year results. Just a quick reminder that the guidance Rob shared in early 2022 prior to me joining the company was $207 million to $215 million in revenue and $15 million to $19 million in adjusted EBITDA. For full year 2022, total revenue was $211 million right in the middle of the original guidance range.

On a constant currency basis, revenue was approximately $216 million, up 2% year over year and above the high end of our original guidance range. Full year 2022 adjusted EBITDA was $17.9 million above the middle of the original guidance range and on a constant currency basis was approximately $20.9 million, well ahead of the high end of the guidance.

I am pleased with these results. They demonstrate our understanding of the business and our ability to accurately guide investors.

We manage the business well in the context of significant foreign currency exchange headwinds, meaningful market uncertainty, and through the massive transformation we instituted across our business to prepare for 2023 and beyond. I joined the company in late March, 2022 in the midst of a very uncertain macroeconomic environment.

We quickly worked to install a world-class executive team that could put in place and execute on a long-term strategic plan that would enable Brightcove to consistently generate double digit revenue growth and expanding adjusted EBITDA dot margins.

I'm proud of what we've accomplished so far and that we successfully put the pieces in place to deliver on these long-term goals. This is a testament to the smart approach, hard work and focus of everyone at Brightcove, and while I'm pleased with these results, that does not mean I'm satisfied.

2023 will be the key year improving out our strategic plan and showing investors our ability to execute and that's what we're already doing and plan to do throughout 2023 and beyond. Our team transformation in 2022 has put us in position to deliver on our vision to be the most trusted streaming technology company in the world.

It is clear to us that the streaming markets are at an inflection point. On the media side of our business, we see continued user and consumption growth and increasing number of customers for us long term and also trends that are turning clients in our direction.

Specifically, the big media streamers continue to add subscribers and users, albeit at lower rates than prior years, and that means they will be under increased pressures to reduce costs including via outsourcing parts of their tech stack to trusted providers like us.

The next set of targeted streamers in the US and globally is growing in number and they are seeing continued user growth and will continue to rely on tech providers like Brightcove that increase their speed to market and lower costs.

Longer term, we believe the creator economy and certain long form TV and movie producers will launch their own services and strive to be in this next set, think super fan offerings and they will need end-to-end solutions like the ones we provide.

On the enterprise side of our business, video is now imperative for marketers, a key tool in driving improved audience experiences, pipeline generation, purchasing decisions and direct transactions, and one that needs the capabilities and depth of integrations we provide.

And with the continued hybrid working environment, it is undeniable that video is the medium for employee and other communications, again, an area we deliver on for enterprises.

Whether you want to manage, distribute, and monetize your content, communicate and engage with your audiences or market and sell your products and services, Brightcove is in an enviable position to offer solutions for all of these needs.

We provide solutions via our leading platform that make us the streaming technology partner for any company creator, business or brand.

As we've discussed previously, our revised strategy is focused on creating new and larger customer opportunities and improving retention via our solutions and better and more efficiently, capturing our adjustable market focused on how we go to market, all of the goals of driving revenue and adjusted EBITDA growth, margin and scale.

We focus on five core strategic pillars; one, delivering more end-to-end solutions and services; two, accelerating and incubating new and existing customers; three, super serving our largest and most strategic customers; four, partnering to efficiently reach the broader market, and five, allowing ourselves to pursue supplemental business models that provide revenue opportunities, in addition to our core SaaS revenue model.

I'll provide a brief update on some and some examples of the progress we've made on each of these. In the quarter, I'll begin with our solutions and services where we are making great progress, delivering innovation. During the fourth quarter, we hosted our Investor Presentation and outlined our key strategic product initiatives for you.

Customer feedback to those has been incredibly strong reflecting a clear desire for Brightcove to do and solve more for them. One of our early successes on this front is our recently announced strategic partnership with Magnite, one of the largest global sell side advertising platforms.

Under this agreement, Magnite's SpringServe ad server, via an integration will power ad delivery for our enabled customers and give them greater control, insight and transparency into available ad supply. In addition, Magnite will be our first supplier with more to come to fill unsold ad inventory for our customers.

So for the first time, Brightcove will be a true participant in the ad monetization business with and for our customers. We'll be helping those customers make money, increase fill rates and generate higher CPMs.

Customer interest and reaction has exceeded our expectations and we plan to launch our pilot customers later this quarter expanding further throughout 2023.

This is a great example of multiple parts of our strategy in execution, one being more end-to-end in our solutions, two, helping accelerate our customers' businesses, and three, doing so with a supplemental business model in this case a revenue share.

As a side note on this last point, we continue to anticipate our SaaS model will provide the overwhelming majority of our revenues, but adding supplemental business models like this, enhances our value to customers, hopefully leading to bigger, longer term relationships, higher attention and additional revenue.

Two other areas we have expanded in our solutions and services offerings recently are around expansions to our marketing studio and communication studio solutions, including some key integrations launched and customer wins in Q4.

On the marketing studio side, you'll remember that this was a key effort started prior to me joining and focused on creating a differentiated solution for marketing and com's leaders to use video more effectively across all marketing channels.

We're proud to have launched this in 2022, offering a new user interface for ease of use across multiple marketing functions and new and expanded integrations with other marketing technologies, including Hootsuite, Salesforce marketing Cloud, Adobe, [ph], Sitecore, Druple, WordPress, LinkedIn, and more.

These integration capabilities allow marketers to truly create a video-first content strategy for more personalized digital marketing. On Communication Studio, our reimagined solution for both internal and external communications use cases, we have made incredible progress.

Starting with a number of customized services deals, we've now productized our capability to launch and manage a robust internal communications solution for any company.

In Q4, we've landed some incredible customers here, including a major streaming company, a large technology company, and a major regional healthcare provider, all managing internal and/or external video communications using Brightcove.

We continue to have an aggressive product roadmap with initiatives ranging from performance enhancements to additional feature development, to major new products and services, and are now executing on multiple fronts to deliver consistent innovation going forward.

From a go-to-market perspective, super serving our largest and most strategic customers has been the first key priority, and I'm extremely encouraged by our Q4 performance here.

What we saw in the quarter was a meaningful increase in new business as a percentage of bookings over the last three quarters, a multiples increase in average new business deal size and a greater amount of value from six and seven figure deals in both new and add-on business than in recent history.

This is exactly the type of impact we were focused on as our revamp sales leadership team executes on the strategy to push larger strategic customers and engagements. As we continue to broaden and enhance our product offerings, we expect to have an even bigger opportunity to drive wins as well as cross-sell and upsell inside these larger customers.

Several of our key wins in the quarter are great examples of our strategy in action and are the types of customers we believe Brightcove can continue to win and serve.

We signed several sizable renewals and expansions with leading media streaming entities in Q4, including Sky Mexico, a leading paid TV service in Mexico and across Latin America with whom we successfully streamed the World Cup in the quarter.

They renewed and significantly expanded their agreement with us and as they look to expand their business in the coming years. AMC Network's, a leading US entertainment company and streamer behind streaming services like AMC Plus, Shutter, Acorn, All Black and more, signed an expanded multi-year renewal agreement with us in Q4.

Having recently undertaken significant cost saving initiatives, AMC recommitted to Brightcove, given the efficiency we drive and the important role we play in delivering for their D-2-C initiatives.

Other media entities that sign larger expanded renewals with us in Q4 include Rogers, Al Jazeera, Discovery New Zealand, Manchester City Football Club and Lead Day Football Professional.

Larger expanded renewals and enterprise in Q4 were also strong, and those included Marriott, Cannon, Rolls Royce Motorcars, ServiceNow, fashion and retail leaders including Gucci, Hugo Boss, Tom Shoes and NET-A-PORTER and pharma leaders like Pfizer and another major pharma company that renewed a multi-year seven figure deal.

As mentioned, we were strong in new business growth as well with some great examples in Q4 including Landing Prime Media, a leading South Africa based media and advertising group for which we're serving multiple use cases across video and audio.

Canella, a leading OTT streaming service, leveraging Brightcove in their mission targeting US Hispanics with over 20,000 hours of video content and VidCon, a division of Paramount Global, focused on the creator economy, including digital creators, platform innovators and their fans, they'll be using break hope for their video needs, supporting their community and events.

As you can see, we have some fantastic customer examples across our areas of focus.

Following me joining the company, it naturally took time to build our strategy and teams, and while it's hard to specifically draw a long-term trend, yet just a few quarters into executing the new strategy, we are seeing meaningful new business growth and larger customer deals right on track with this strategy.

The other go-to-market strategic priority for us is building more and deeper partnerships to reach the broader market. Direct sales alone cannot drive all the demand and deals we believe support long-term growth and it's also not an efficient way to drive smaller ARPU deals.

Streaming is a global market with sizable growth opportunities, especially in enterprise customers at smaller deal sizes.

We believe developing new partnerships that marry our technology and domain expertise with a partner's distribution and reach capability to drive a meaningful number of new customers will greatly benefit those customers, Brightcove and those partners.

The recent partnerships we struck with Roku and Magnite are early examples, but we're looking to do much more. We recently hired a new SVP to lead our partnership and channel efforts and expand our footprint in this area. You should expect to hear about additional partnerships from us throughout 2023. To wrap up.

I'm incredibly proud of our progress in 2022 and excited for what lies ahead in 2023 and beyond. Brightcove is an industry-defining software based technology leader, delivering excellence for our customers. We have global reach and diversified client base with significant opportunities for expansion in multiple markets and segments.

We've studied the end user and end market trends and built our strategy to capture the inherent growth. We now have a clear product and services innovation path. Our go-to-market focus is clear on aggressively targeting larger opportunities with our direct sales team and further building out our partner ecosystem to extend our reach.

We have a new expert and experience management team leading us in executing and a strong recurring SaaS revenue base, now with the freedom to utilize new revenue models to aid our growth. We have all the building blocks for improved financial performance in place. In 2023, we expect to begin delivering on that goal.

Rob will provide detailed guidance, but at a high level, our goal is to exit this year with a return to double-digit revenue growth and improving adjusted EBITDA margins.

This will put us well on our way to delivering on the long-term financial targets we outlined at our recent Investor Day of consistent 10% plus revenue growth and 20% plus adjusted EBITDA margins. I'm confident in our ability to deliver on these targets and our goals of growth, scale, diversification and excellence.

With that, I'm going to turn it over to Rob for a deeper dive on Q4 and the numbers and I'll be back for Q&A..

Thank you, Marc, and good afternoon, everyone. I will begin with a detailed review of our fourth quarter and then I'll finish with our outlook for the first quarter and the full year 2023. Total revenue in the fourth quarter was $49.2 million, which was in line with our guidance.

Breaking revenue down further, subscription and support revenue was $47.7 million and professional services revenue was $1.6 million. Overage revenue in the quarter was approximately $1.3 million, which was below our expectations. We saw fewer customers and are overages at the tail end of their contracts in the fourth quarter.

As we look ahead into 2023, we'll be taking a more conservative approach to overages in our guidance to account for this dynamic. 12 month backlog, which we define as the aggregate amount of committed subscription revenue related to future performance obligations in the next 12 months was $120.1 million.

This represents a less than 1% decrease year-over-year. On a geographic basis, we generated 60% of our revenue in North America during the quarter and 40% internationally. Breaking down international revenue a little more, Europe generated 16% of our revenue and Japan and Asia Pacific generated 24% of revenue during the quarter.

Let me now turn to the supplemental metrics we share on a quarterly basis. Net revenue retention in the quarter was 94%, which compares to 93% in the third quarter of 2022 and 93% in the fourth quarter of 2021. Since the beginning of 2019, net revenue retention has ranged from 92% to 100%.

We expect that as we continue to make improvements in our renewals business, this metric will eventually be consistently over 100% over time. Recurring dollar retention rate in the fourth quarter was 86.8%, which was below our target range of low to mid 90s.

Our customer count at the end of the fourth quarter was 2,845 of which 2,235 were classified as premium customers. Looking at our ARPU within our premium customer base, our annualized revenue per premium customer was $89,000 and excludes our entry level pricing for starter customers, which averaged $3,900 in annualized revenue.

This compares to $95,400 in the fourth quarter of 2021. Looking at our results on a GAAP basis, our gross profit was $29.9 million, operating loss was $6 million, and net loss per share was $0.13 for the quarter.

Turning to our non-GAAP results, our non-GAAP gross profit in the fourth quarter was $30.7 million compared to $35.3 million in the year ago period, and represented a gross margin of 62%, which was down from 67% in the fourth quarter of 2021.

Non-GAAP loss from operations was $1.3 million in the fourth quarter compared to positive $4.6 million in the fourth quarter of 2021. Adjusted EBITDA was $1.2 million in the fourth quarter compared to $5.9 million in the year ago period.

Excluding the severance, Marc mentioned previously, our adjusted EBITDA would've been 1.5 million in within our guidance range. Non-GAAP diluted net loss per share was $0.02 based on 42.2 million weighted average shares outstanding.

This compares to net income per share of $0.10 on 41.7 million weighted average shares outstanding in the year ago period. Looking at our full year 2022 results, total revenue was $211 million compared to $211.1 million in 2021. As Marc mentioned, on a constant currency basis, revenue of $215.8 million grew 2.2%.

On a GAAP basis, gross profit was $133.9 million, operating loss was $8 million, and net loss per share was $0.22 based on 41.8 million weighted average shares outstanding.

On a non-GAAP basis, gross profit was $136.6 million, income from operations was $10.6 million, adjusted EBITDA was $17.9 million, $20.9 million on a constant currency basis, and net income per share was $0.23 based on 42.3 million weighted average shares outstanding.

Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalence of $31.9 million. We generated $4.5 million in cash flow from operations and free cash flow was negative $584,000 after taking into account $5.1 million in capital expenditures and capitalized internal use software.

I would like to finish by providing our guidance for the first quarter and full year 2023. For the first quarter, we are targeting revenue of $49 million to $50 million, including $1.5 million in overages and approximately $2.2 million of professional services revenue.

From a profitability perspective, we expect non-GAAP operating loss to be $3 million to $2 million and adjusted EBITDA to be between breakeven and $1 million. Non-GAAP net loss per share is expected to be in the range of $0.08 to $0.05 based on $42.4 million weighted average shares outstanding.

For the full year, we are targeting revenue of $211 million to $215 million, including $6 million of overages and approximately $9.5 million of professional services revenue. From a profitability perspective, we expect non-GAAP operating income of $3 million and $6 million, an adjusted EBITDA to be between $16 million and $19 million.

Non-GAAP net income per share is expected to be in the range of $0.04 to $0.11 cents based on 43.4 million weighted average shares outstanding. For the full year, we are now targeting free cash flow of breakeven to $5 million. There are a few things I would keep in mind with regards to our guidance.

First, we expect the fourth quarter and the first quarter to be the low point for revenue and we expect revenue to steadily build over the course of 2023 as our transformation efforts begin to benefit our financial results.

Growth in the first half of the year is expected to be negative, driven largely by some of the retention dynamics we experienced in 2022 and lower year-over-year overage contributions. We expect to return to year-over-year revenue growth in the third quarter and to generate double-digit growth in the fourth quarter.

Second, as I mentioned previously, we are currently expecting overage revenue for the year of $6 million, which reflects the run rate we saw in the fourth quarter.

This is meaningfully lower than the $12.2 million we generated in 2022, which was positively impacted by elevated overages from a large strategic customer prior to them signing a contract renewal. And finally, we expect adjusted EBITDA profitability to follow our similar growth trajectory to revenue over the course of the year.

We expect modest profitability in the first quarter before steadily ramping over the year and exiting the year with double-digit adjusted EBITDA margins in the fourth corner. Our expectation is that operating expenses will see only modest growth over the year.

We will continue to make incremental investments in our strategic growth priorities, largely by reallocating existing expenses. To wrap up, we had a solid finish to an important year for Brightcove. We are successfully executing on our strategic plan and believe we are well positioned to deliver on our long-term financial objectives.

We are targeting a large and trend favored market that will provide a number of attractive growth opportunities in the coming years. With that, we'll now take your questions. Give us a moment to shift to Q&A..

Thank you everyone for joining us this afternoon. We'll begin our Q&A with questions from Steve Frankel, Rosenblatt Securities..

Good afternoon. Thanks for the opportunity. So Marc, I appreciate all the color on deal sizes and your confidence in returning to double-digit growth by the end of the year, but the ARPU was at the lowest level it's been in quite some time.

So what was the dynamic in this quarter in particular that drove down premium ARPU?.

Rob, why don't you start with that one?.

Yeah, so, Steve, as you think about our ARPU calculation, that does include the overage revenue. So as you look quarter-over-quarter, particularly from Q3 to Q4, the big driver there was the step down in overage revenue that we saw as you see our customer comments basically flat quarter-over-quarter. So that's the big step down in ARPU.

I think the number you're referring to when Marc talked about it in his portion of the script was the multiples time growth in new business deals, and that was really sales activity in the quarter.

We saw good progress on that shift up market, getting the larger deals into those larger customers, and we expect to see that revenue really start to roll off and impact the metrics in 2023..

And maybe following up on that, there's a material step up in your guidance around professional service.

How much of that is dictated by deals you have in the pipeline or deals that you have that come to revenue in the next couple of quarters versus a desire to drive up that kind of business?.

Well, why don't I start there and Rob can finish on it. Look, it's a dedicated strategy point for Dan Freud, our new CRO and his team to build in services to the deals that we're going to market with, and we find that we have a deeper customer engagement and we gain more engagement with that customer when we activate it with that services group.

So that's something that is already happening. We're seeing that pickup meaningfully in the deals that we were doing in Q4, and we're starting to see that come through and the things that we're looking at in Q1. So we're excited about where that's headed, as you can tell. And that's what layered into the guidance is that we believe that's going to be.

It has been and will be a focus as we move forward..

Yeah, you can see that, that progress there in the initial guide for Q1, we're seeing that step up start in Q1 and given the focus on it for Dan's team and the whole organization, we expect to see that continue..

And then last question, last quarter you talked about multiple seven figure deals in the pipeline. Maybe an update on what that pipeline looks like today for that size deal..

Yeah well I think as you heard us say or heard me say that we saw more six and seven figure activity than we have in a long time and certainly saw the average deal size go up on a multiple basis in Q4, and our expectation is that we'll continue, it's hard to draw trends from like a quarter or so, but we do feel like given where the pipeline is coming in and what we're seeing in the quarter and what we see projected out through the year and the types of deals we're looking at, that we feel confident that that's the type of thing we're going to be targeting throughout 2023 and beyond..

Yeah, and Steve to add to that, don't forget, one of the big changes we made on the strategic side was to split out that strategic accounts team to really go after those big deals. So we're starting to see that activity, we've got that team in place, that's their focus, and we really expect that to start paying off in 2023..

Thank you, Steve. And next we're going to go to Max Michaelis from Lake Street Capital..

Hey guys, thanks for taking my question.

Just think in regards to the Q1 guide, pretty much in line on the revenue, but about $3 million step down and adjusted EBITDA, I was wondering if you could just help us understand, is this a primarily a function of gross margin or is it a kind of balance between OpEx and gross margin?.

Yeah, it's a little bit of a balance of each. As you look at really where we were in the fourth quarter and where we're going into Q1, we've got a little bit of a step up in revenue, but we do see some natural increase in the first quarter as it's part of our merit cycle and things like that.

So it's a small, it's basically flat with last quarter as you think about that zero to one guide, and we will accelerate that as we go through the course of the year. It's kind of a step up into the 2023 expenses without, meaningful quarter-over-quarter growth as we go through the year..

Yeah, and I'll just reiterate, where we went on the guidance and the way Rob and I and the team run the business is we're very focused on both getting back to the type of growth you should expect from us over the long term and getting to those targets we laid out and also getting to those adjusted EBITDA margins.

We, view it as sort of equally important as we get out into the marketplace. And so I think you'll see that come to fruition over the course of 2023..

All right, thanks guys. And then my last question here is just on the recurring dollar rate. So that was 87%, you guys historically nineties.

Can you go layer deeper on what happened there over the quarter?.

Yeah, I'll start and Rob can, can pick up some too. Look, I think the way we think about churn and/or retention is that there's a controllable set of churn that we have in in any quarter, in any year, and we're doing a phenomenal job.

The investment we've made into the customer success department and now the split out of account management and customer success to go after clients' renewals and increases there has been fantastic and I think that's actually performing and you're seeing that year over year in the performance improvements.

I think what we have in certain cases is what we would call uncontrollable churn, whether it's an M&A where a company is acquired or a company decides it's just not going to be in that business anymore. It's predominantly on the media side of our business.

That does happen, right? And we have seen a little bit of downgrade pressure on certain companies that have had basically entitlements downgrade. Their traffic has gone down or something's happened there.

And so that's the sort of fluctuations you're going to see in those numbers on a quarter-to-quarter basis, but we're looking over the long term trend and making sure that we're hitting the right targets that we think can help us improve the business overall.

And frankly, we're a little more focused on the net revenue retention number as it sort of captures more for us in terms of how the business is actually performing..

All right, thanks guys. And then my last one actually is just going to be do you have any expectations for free cash flow this year? I know you guys were targeting breakeven to $2 million in 2022.

Any expectations for 2023?.

Yeah, we laid out in the script break even to 5 million for 2023.

Marc. Thanks guys. You might have missed, but thank you..

Thanks Max. And next questions will come from Mike Lattimore over at Northland Capital..

All right, great. Yeah, good afternoon. Thanks.

on the bookings in the quarter were they heavily skewed towards the media side or enterprise or mix there?.

It was a solid mix. I think we had really great wins on both sides. I did highlight a number of the media wins because they tend to be the ones that hit those larger deal sizes. And so, you heard me talking about those larger renewals with Sky and AMC and some of the ones on the new business side were larger wins.

So I like to keep that as to the highlights, but we felt like it was a really strong mix that you sort of both sides of the business. We don't really think of it that way.

We think of it as a go to market strategy rather than, than two different businesses, but are doing very, very well and we're seeing the strategies pay off on both sides, right? We're seeing larger deal sizes that are coming to fruition on both sides of the business. So we're excited about where that's headed.

But, you will often see some sort of larger chunk of your deals come in on the media side. So we did have some of those in a quarter. You may see that going forward..

And was there kind of a consistent message about why those media customers were you moving to you guys? Was it efficiency internally or was it launching new services or what was the driver there?.

Look, I think you heard it in my prepared remarks that we think there's multi there's a multifaceted rationale for why you would use Brightcove on the media side of this space, right? There's first and foremost, larger companies are going to be looking to be more cost efficient. There's just no question about it.

That was something we predicted over a year ago when I first started. We said, we think this is going to happen and it actually has come to fruition now, and we're starting to see that and we've seen certain wins come in specifically for that reason.

The second I would say is speed to market and sort of total product capability, right? We have the ability to do it end to end for certain customers. You'll see some of our new business wins where really we can solve the whole problem for those companies.

So that's speed to market, that's also an efficiency play, but it's a sort of different type of efficiency. And then the last thing I would say is for enterprises or for media companies, I think the, the fact that we are high quality, secure, been around, they understand they can trust that solution, that trusted partner is what we really want to be.

That's why we put that in our vision statement and we're seeing sort of all of those things play into different types of wins. We're not winning deals by being the lowest cost provider out there. That is not what we're here to do.

We're here to go after ones that we can really help either be more cost effective in how they do the, the broader series of things that they need to do or that that can really move the needle for them in speed and capability..

Yeah.

And then on the overage change, is that -- did you say that was tied mainly to one customer or was it just an expectation of bus traffic crossing customers?.

Yeah, I think as you think about it, the step down from Q3 to Q4, when we guided the fourth quarter, we talked about a step down from one customer that was the customer that renewed at the end of Q3. And then in the fourth quarter we saw a dynamic where the customers were not going into overages as they got to the end of the agreement.

That doesn't mean that usage is down, it means that those contracts are more right sized. So they're not going over what they bought from an entitlement standpoint. And we're just being conservative in our guide for 2023. As we look at the full year, we don't want to go back out with that $2 million a quarter.

We went back with that $1.5 million a quarter, which is really what we saw in that fourth quarter..

Got it. And then it looks like the strategic account team obviously has done well, I think you refined the sales group. I think it was like 10% reduction, I believe, something like that or maybe change. Maybe just an update on the sales organization changes that were occurring..

Yeah. There was no reduction specifically to the sales organization. We did do a bit of a restructuring around some other team changes that we did and we put that in the, in the script as we talked through some of the changes that we did from a severance perspective. On the sales side, we really broke the team down.

Dan's vision, you know, for the team was to make sure that we could win both an increasing amount of new business and especially on the larger side of accounts and then also be better at farming our existing customer base, right? We were sort of, I don't know, trailing off on that capability because we had everybody sort of doing everything.

So now we have, you have hunters and you have farmers, right? You have new business, reps out there trying to win new accounts and move up market. We have a strategic accounts team that are specifically focused on the top, 100 or so type of accounts that can come into a business like ours.

And then you have an account management team that is going after renewals and increasing the size of the business we have with existing customers, all supported by a customer success team once the companies are onboarded to become a customer.

So we've broken that down a bit where it used to be sort of an AE had a territory and went after all of that around a certain type of customer base. And we felt like there was a better way to go about it.

And we've implemented that change and we're seeing the beginnings of how that new engine is starting to run and we're excited to drive it this year..

Well, great. Well thank you guys, Steve, Max, Michael, appreciate the questions. As you can see, the transformation we put in place in 2022 has set us up for an improving 2023. We expect to exit the year at the type of growth and profitability that we hope you can expect from Braco over the long run.

We have supreme confidence in the team that we've put together, the guidance we've put on the table, the plan that we have in place, and we're starting to see the early fruits of that labor and how it's playing out. Again, right team is in place. We're all excited to get after it here this year in 2023.

So with that, thank you all for joining and we'll be excited to share more information as we talk to you next quarter..