Table of $1,818 and $1,681 for the three months ended September 30, 2017 and 2016, respectively, and $5,294 and $4,265 for the nine months ended September 30, 2017 and 2016, respectively. In July 2017, the Company entered into a separation agreement with its former Chief Executive Officer (“CEO”), which accelerated the vesting schedule of certain existing stock-based awards held by the CEO. The incremental stock-based compensation expense as a result of the modification of these stock-based awards was $186 for the three months ended September 30, 2017. Further, the vesting schedule of certain other stock-based awards held by the CEO accelerates upon a change in control of the Company on or prior to December 31, 2017, which would result in an additional $220 of stock-based compensation expense upon such change in control. Contents

Table of $604 in computer equipment. In February 2016, the Company drew down $604 under the December 2015 Equipment Financing Agreement, and the liability was recorded at fair value using a market interest rate. The Company is repaying its obligation over a two year period through January 2018, and the amount outstanding was $104 as of September 30, 2017.Contents

Table of adoption of ASU2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. This guidance is effective for annual and interim periods beginning after December 15, 2018 and requires retrospective application. The Company is currently assessing the impact that adopting ASU2016-02 will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU2016-15,Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which reduces the diversity in how certain transactions are classified in the statement of cash flows. ASU2016-15 is effective for public companies for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The guidance requires application using a retrospective transition method. The adoption of ASU2016-15 is not expected to have a material effect on the Company’s consolidated financial statements or disclosures.
In November 2016, the FASB issued ASU2016-18,Statement of Cash Flows (Topic 230): Restricted Cash, which requires an entity to reconcile and explain the period-over-period change in total cash, cash equivalents and restricted cash within its statement of cash flows. ASU2016-18 is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. A reporting entity must apply the amendments in ASU2016-18 using a full retrospective approach. The adoption of ASU2016-18 is not expected to have a material effect on the Company’s consolidated financial statements or disclosures.
Contents

Table of $5.6 million for depreciation and amortization expense and $5.3 million for stock-based compensation expense.
Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM10-Q~~

FORM 10-Q

(Mark One)

☒
☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2023

☐
☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period fromto

Commission File Number:001-35429

BRIGHTCOVE ~~INC.~~INC.

(Exact name of registrant as specified in its charter)

Delaware

20-1579162

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~290 Congress~~281 Summer Street

Boston, MA02210

(Address of principal executive offices)

~~(888)~~(888) 882-1880

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	BCOV	The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~☒No~~ ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 23, 2017~~July 27, 2023, there were ~~34,632,678~~43,250,780 shares of the registrant’s common stock, $0.001 par value per share, outstanding.

~~BRIGHTCOVE INC.~~

BRIGHTCOVE INC.

Table of Contents


		~~Page~~
~~PART I. FINANCIAL INFORMATION~~
		Page
PART I. FINANCIAL INFORMATION		4
Item 1. Financial Statements (Unaudited)				4
Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2023 andDecember 31, ~~2016~~2022			3	4
Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022			4	5
Condensed Consolidated Statements of Comprehensive Loss for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022			5	6
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022		7
Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022			6	8
Notes to Condensed Consolidated Financial Statements		9
	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
	30
Item 4. Controls and Procedures			32
	30

PART II. OTHER INFORMATION		31
	32
Item 1. Legal Proceedings		31
	32
Item 1A. Risk Factors		31
	33
Item 5. Other Information		32
	33
Item 6. Exhibits		34
	34
Signatures			35

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; factors that may affect our operating results; statements related to adding employees; statements related to potential benefits of acquisitions; statements related to future capital expenditures; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form 10-Q, and the risks discussed in our other Securities and Exchange Commission, or SEC, filings. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. However, any further disclosures made on related subjects in our subsequent reports filed with the

SEC should be consulted. Forward-looking statements in this Quarterly Report on Form 10-Q may include statements about:

•
our ability to achieve profitability;

•
our competitive position and the effect of competition in our industry;

•
our ability to retain and attract new customers;

•
our ability to penetrate existing markets and develop new markets for our services;

•
our ability to retain or hire qualified accounting and other personnel;

•
our ability to successfully integrate acquired businesses;

•
our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

•
our ability to maintain the security and reliability of our systems;

•
our estimates with regard to our future performance and total potential market opportunity;

•
our estimates regarding our anticipated results of operations, future revenue, bookings growth, capital requirements, our needs for additional financing and broader economic challenges, including interest rate fluctuations; and

•
our goals and strategies, including those related to revenue and bookings growth.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~ITEM��1.~~

~~FINANCIAL STATEMENTS~~

Brightcove Inc.

Condensed Consolidated Balance Sheets

(unaudited)


	September 30, 2017			December 31, 2016			June 30, 2023			December 31, 2022
	(in thousands, except share and per share data)						(in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents	$	22,056		$	36,813		$	19,093		$	31,894
Accounts receivable, net of allowance of $134 and $154 at September 30, 2017 and December 31, 2016, respectively		26,296			21,575
Accounts receivable, net of allowance of $436 and $294 at June 30, 2023 and December 31, 2022, respectively								29,850			26,004
Prepaid expenses		4,174			3,729			9,804			8,700
Other current assets		2,938			2,168			12,476			10,722

Total current assets		55,464			64,285			71,223			77,320
Property and equipment, net		9,005			9,264			42,994			39,677
Operating lease right-of-use asset								17,604			18,671
Intangible assets, net		8,910			10,970			8,244			10,279
Goodwill		50,776			50,776			74,859			74,859
Deferred tax asset		123			121
Other assets		931			1,008			6,285			7,007

Total assets	$	125,209		$	136,424		$	221,209		$	227,813

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,635		$	5,327		$	15,752		$	11,326
Accrued expenses		13,319			15,705			19,960			26,877
Capital lease liability		334			489
Equipment financing		104			307
Operating lease liability								4,384			4,157
Deferred revenue		37,376			34,665			69,615			61,597

Total current liabilities		57,768			56,493			109,711			103,957
Deferred revenue, net of current portion		166			91
Operating lease liability, net of current portion								19,060			20,528
Other liabilities		1,253			1,644			838			981

Total liabilities		59,187			58,228		$	129,609			125,466
Commitments and contingencies(Note 9)
Commitments and contingencies (Note 8)
Stockholders’ equity:
Undesignated preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 34,757,289 and 34,143,148 shares issued at September 30, 2017 and December 31, 2016, respectively		35			34
Undesignated preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued								—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 43,376,006 and 42,449,677 shares issued at June 30, 2023 and December 31, 2022, respectively								43			42
Additionalpaid-in capital		236,628			230,788			321,870			314,825
Treasury stock, at cost; 135,000 shares		(871	)		(871	)		(871	)		(871	)
Accumulated other comprehensive loss		(843	)		(1,172	)		(1,435	)		(1,593	)
Accumulated deficit		(168,927	)		(150,583	)		(228,007	)		(210,056	)

Total stockholders’ equity		66,022			78,196			91,600			102,347

Total liabilities and stockholders’ equity	$	125,209		$	136,424		$	221,209		$	227,813

The accompanying notes are an integral part of these condensed consolidated financial statements.

Brightcove Inc.

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2023			2022			2023			2022
	(in thousands, except share and per share data)												(in thousands, except share and per share data)
Revenue:
Subscription and support revenue	$	36,496		$	36,203		$	106,266		$	105,936		$	49,013		$	52,988		$	96,115		$	104,589
Professional services and other revenue		2,991			2,186			9,546			5,705			1,975			1,459			3,936			3,237

Total revenue		39,487			38,389			115,812			111,641			50,988			54,447			100,051			107,826
Cost of revenue: (1) (2)
Cost of revenue:
Cost of subscription and support revenue		12,924			11,691			38,180			35,041			16,603			16,943			34,868			33,925
Cost of professional services and other revenue		3,580			2,086			10,120			5,453			1,898			1,761			3,900			3,759

Total cost of revenue		16,504			13,777			48,300			40,494			18,501			18,704			38,768			37,684

Gross profit		22,983			24,612			67,512			71,147			32,487			35,743			61,283			70,142
Operating expenses: (1) (2)
Operating expenses:
Research and development		7,820			7,704			24,293			22,385			10,345			8,372			20,211			16,609
Sales and marketing		14,551			13,334			44,356			39,845			19,034			17,961			38,499			36,249
General and administrative		5,961			5,126			17,228			14,190			9,405			8,554			19,469			16,643
Merger-related		—			—			—			21			45			153			190			747

Other expense														—			—			—			1,149
Total operating expenses		28,332			26,164			85,877			76,441			38,829			35,040			78,369			71,397

Loss from operations		(5,349	)		(1,552	)		(18,365	)		(5,294	)
Other income (expense), net		71			(5	)		523			(127	)

(Loss) income from operations														(6,342	)		703			(17,086	)		(1,255	)
Other expense, net														422			(825	)		(121	)		(1,212	)
Loss before income taxes		(5,278	)		(1,557	)		(17,842	)		(5,421	)		(5,920	)		(122	)		(17,207	)		(2,467	)
Provision for income taxes		118			61			305			202

Provision (benefit) for income taxes														317			179			744			(529	)
Net loss	$	(5,396	)	$	(1,618	)	$	(18,147	)	$	(5,623	)	$	(6,237	)	$	(301	)	$	(17,951	)	$	(1,938	)

Net loss per share - basic and diluted	$	(0.16	)	$	(0.05	)	$	(0.53	)	$	(0.17	)

Weighted-average number of common shares used in computing net loss per share		34,500,868			33,345,161			34,269,639			32,956,186

(1) Stock-based compensation included in above line items:
Cost of subscription and support revenue	$	117		$	94		$	308		$	204
Cost of professional services and other revenue		70			69			189			158
Research and development		384			372			1,132			942
Sales and marketing		690			651			1,953			1,630
General and administrative		557			495			1,712			1,331
(2) Amortization of acquired intangible assets included in above line items:
Cost of subscription and support revenue	$	508		$	507		$	1,523		$	1,523
Research and development		—			32			11			95
Sales and marketing		166			245			525			715
Net loss per share—basic and diluted
Basic													$	(0.14	)	$	(0.01	)	$	(0.42	)	$	(0.05	)
Diluted													$	(0.14	)	$	(0.01	)	$	(0.42	)	$	(0.05	)
Weighted-average shares—basic and diluted
Basic														43,059			41,723			42,795			41,580
Diluted														43,059			41,723			42,795			41,580

The accompanying notes are an integral part of these condensed consolidated financial statements.

Brightcove Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2023			2022			2023			2022
	(in thousands)						(in thousands)						(in thousands)
Net loss	$	(5,396	)	$	(1,618	)	$	(18,147	)	$	(5,623	)	$	(6,237	)	$	(301	)	$	(17,951	)	$	(1,938	)
Other comprehensive income:
Foreign currency translation adjustments		72			(13	)		329			(244	)		(30	)		(857	)		158			(1,100	)

Comprehensive loss	$	(5,324	)	$	(1,631	)	$	(17,818	)	$	(5,867	)	$	(6,267	)	$	(1,158	)	$	(17,793	)	$	(3,038	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Brightcove Inc.

Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity

(unaudited)

   Nine Months Ended
September 30,
   2017 2016
   (in thousands)
Operating activities

Net loss
   $ (18,147 ) $ (5,623 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization
   5,607 5,901
Stock-based compensation
   5,294 4,265
Provision for reserves on accounts receivable
   152 233
Changes in assets and liabilities:

Accounts receivable
   (4,816 ) (1,441 )
Prepaid expenses and other current assets
   (1,660 ) (1,720 )
Other assets
   94 (200 )
Accounts payable
   2,021 (17 )
Accrued expenses
   (2,874 ) 1,953
Deferred revenue
   2,677 4,278


Net cash (used in) provided by operating activities
   (11,652 ) 7,629
Investing activities

Cash paid for purchase of intangible asset
   —   (300 )
Purchases of property and equipment, net of returns
   (990 ) (1,194 )
Capitalizedinternal-use software costs
   (2,091 ) (2,940 )


Net cash used in investing activities
   (3,081 ) (4,434 )
Financing activities

Proceeds from exercise of stock options
   379 4,392
Payments of withholding tax on RSU vesting
   (175 ) (216 )
Proceeds from equipment financing
   —   604
Payments on equipment financing
   (229 ) (196 )
Payments under capital lease obligation
   (383 ) (682 )


Net cash (used in) provided by financing activities
   (408 ) 3,902
Effect of exchange rate changes on cash and cash equivalents
   384 458


Net (decrease) increase in cash and cash equivalents
   (14,757 ) 7,555
Cash and cash equivalents at beginning of period
   36,813 27,637


Cash and cash equivalents at end of period
   $ 22,056 $ 35,192


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
	(in thousands, except share data)
Shares of common stock issued
Balance, beginning of period		42,992,371			41,685,163			42,449,677			41,384,643
Issuance of common stock upon exercise of stock options and vesting of restricted stock units		383,635			344,412			926,329			644,932
Balance, end of period		43,376,006			42,029,575			43,376,006			42,029,575
Shares of treasury stock
Balance, beginning of period		(135,000	)		(135,000	)		(135,000	)		(135,000	)
Balance, end of period		(135,000	)		(135,000	)		(135,000	)		(135,000	)
Par value of common stock issued
Balance, beginning of period	$	43		$	42		$	42		$	41
Issuance of common stock upon exercise of stock options and vesting of restricted stock units		—			—			1			—
Common stock issued upon acquisition		—			—			—			1
Balance, end of period	$	43		$	42		$	43		$	42
Value of treasury stock
Balance, beginning of period	$	(871	)	$	(871	)	$	(871	)	$	(871	)
Balance, end of period	$	(871	)	$	(871	)	$	(871	)	$	(871	)
Additional paid-in capital
Balance, beginning of period	$	318,293		$	304,506		$	314,825		$	298,793
Issuance of common stock upon exercise of stock options and vesting of restricted stock units, net of tax		—			(1	)		(226	)		99
Stock-based compensation expense		3,608			3,809			7,302			7,435
Withholding tax on restricted stock		(31	)		(7	)		(31	)		(7	)
Common stock issued upon acquisition		—			—			—			1,987
Balance, end of period	$	321,870		$	308,307		$	321,870		$	308,307
Accumulated deficit
Balance, beginning of period	$	(221,770	)	$	(202,678	)	$	(210,056	)	$	(201,041	)
Net loss		(6,237	)		(301	)		(17,951	)		(1,938	)
Balance, end of period	$	(228,007	)	$	(202,979	)	$	(228,007	)	$	(202,979	)
Accumulated other comprehensive loss
Balance, beginning of period	$	(1,405	)	$	(905	)	$	(1,593	)	$	(662	)
Foreign currency translation adjustment		(30	)		(857	)		158			(1,100	)
Balance, end of period	$	(1,435	)	$	(1,762	)	$	(1,435	)	$	(1,762	)
Total stockholders’ equity	$	91,600		$	102,737		$	91,600		$	102,737

The accompanying notes are an integral part of these condensed consolidated financial statements.

Brightcove Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

Six Months Ended June 30,

2023

2022

(in thousands)

Operating activities

Net loss

$
(17,951
)

$
(1,938
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

8,008

4,227

Stock-based compensation

7,030

7,123

Provision for reserves on accounts receivable

222

70

Changes in assets and liabilities:

Accounts receivable

(4,219
)

(2,394
)
Prepaid expenses and other current assets

(1,882
)

(2,612
)
Other assets

802

161

Accounts payable

3,376

(834
)
Accrued expenses

(5,474
)

(1,183
)
Operating leases

(174
)

4,007

Deferred revenue

8,440

2,630

Net cash (used in) provided by operating activities

(1,822
)

9,257

Investing activities

Cash paid for acquisition, net of cash acquired

—

(13,176
)
Purchases of property and equipment

(1,328
)

(1,884
)
Capitalized internal-use software costs

(7,233
)

(2,882
)
Net cash used in investing activities

(8,561
)

(17,942
)
Financing activities

Proceeds from exercise of stock options

—

100

Deferred acquisition payments

(1,700
)

—

Other financing activities

(256
)

(7
)
Net cash (used in) provided by financing activities

(1,956
)

93

Effect of exchange rate changes on cash and cash equivalents

(462
)

(1,800
)
Net decrease in cash and cash equivalents

(12,801
)

(10,392
)
Cash and cash equivalents at beginning of period

31,894

45,739

Cash and cash equivalents at end of period

$
19,093

$
35,347

Supplemental disclosure of cash flow information

Cash paid for operating lease liabilities

$
1,804

$
1,270

Cash received for lease inducement

—

2,772

Cash paid for income taxes

$
821

$
275

The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Table of Contents
Brightcove Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data, unless otherwise noted)

1. Business Description and Basis of Presentation

Business Description

Brightcove Inc. (the ~~Company)~~“Company”) is a leading global provider of cloud services for video which enable its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner.

The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on August 24, 2004. At September 30, 2017, the Company had nine wholly-owned subsidiaries: Brightcove UK Ltd, Brightcove Singapore Pte. Ltd., Brightcove Korea, Brightcove Australia Pty Ltd, Brightcove Holdings, Inc., Brightcove Kabushiki Kaisha (Brightcove KK), Zencoder Inc. (Zencoder), Brightcove~~FZ-LLC,~~ ~~and Cacti Acquisition LLC.~~

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and related notes ~~together with Management’s Discussion and Analysis of Financial Condition and Results of Operations,~~ contained in the Company’s Annual Report on Form10-K for the year ended December 31, ~~2016.~~2022.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements and notes have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, ~~2016~~2022 contained in the Company’s Annual Report on Form10-K and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022. These interim periods are not necessarily indicative of the results to be expected for any other interim period or the full year.

2. Quarterly Update to Significant Accounting Policies

Allowance for Doubtful Accounts

The ~~Company considers events or transactions that occur after~~following details the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than those disclosed in this Report on Form~~10-Q.~~

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements. As of September 30, 2017, the Company’s significant accounting policies and estimates, which are detailedchanges in the Company’s ~~Annual Report on Form10-K~~reserve allowance for estimated credit losses for accounts receivable for the ~~year~~period:


	Allowance for Credit Losses
	(in thousands)
Balance as of December 31, 2022	$	294
Current provision for credit losses		222
Write-offs against allowance		(80	)
Balance as of June 30, 2023	$	436

Estimated credit losses for unbilled trade accounts receivable were not material.

Other Expense.

Other expense, reflects other operating costs that do not directly relate to research and development, sales and marketing, general and administrative, and merger related. The Company did not incur expenses of this nature during the three and six months ended ~~December 31, 2016, have not changed, except for~~June 30, 2023.

On March 28, 2022, the ~~adoption~~Chief Executive Officer (“CEO”) of the Company retired. Pursuant to a Transition Agreement that was entered into by the CEO and the Company in October 2021, the Company recorded $1.1 million of expense reflecting both wages and stock compensation in the first quarter of 2022.

Recently Issued and Adopted Accounting Pronouncements

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ~~(ASU)No. 2016-09,~~~~Compensation – Stock Compensation~~(“ASU”) 2023-01, Leases (Topic 842): Common Control Arrangements, which amends Accounting Standards Codification ("ASC") 842 with respect to arrangements between related parties under common control. The guidance is ~~discussed further in Note 7.~~

~~2. Concentration of Credit Risk~~

~~The Company has no significantoff-balance~~ sheet risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalentseffective for interim and ~~trade accounts receivable. The Company maintains its cash and cash equivalents principally~~annual periods beginning after December 25, 2023, with accredited financial institutions of high credit standing. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. The Company routinely assesses the creditworthiness of its customers. The Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers.early adoption permitted. The Company does not ~~require collateral. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management~~expect the impact of the adoption of this standard on the Company’s consolidated financial statements to be ~~probable~~material.

3. Revenue from Contracts with Customers

The Company primarily derives revenue from the sale of its online video platform, which enables its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Revenue is derived from three primary sources: (1) the ~~Company’s accounts receivable.~~subscription to its technology and related support; (2) hosting, bandwidth and encoding services; and (3) professional services, which include initiation, set-up and customization services.

The following summarizes the opening and closing balances of receivables, contract assets and contract liabilities from contracts with customers.

~~At September 30, 2017 and December 31, 2016, no individual customer accounted~~


(in thousands)	Accounts Receivable, net		Contract Assets (current)		Deferred Revenue (current)		Deferred Revenue (non-current)		Total Deferred Revenue
Balance at December 31, 2022	$	26,004	$	1,786	$	61,597	$	360	$	61,957
Balance at June 30, 2023		29,850		2,266		69,615		257		69,872

Revenue recognized for ~~10% or more of net accounts receivable. For~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 from amounts included in deferred revenue at the beginning of the period was approximately $17.0 million and ~~2016, no individual customer accounted~~$47.6 million, respectively. Revenue recognized for ~~10%~~the three and six months ended June 30, 2022 from amounts included in deferred revenue at the beginning of the period was approximately $15.3 million and $48.1 million, respectively. During the three and six months ended June 30, 2023, the Company did not recognize a material amount of revenue from performance obligations satisfied or ~~more~~partially satisfied in previous periods.

The assets recognized for costs to obtain a contract were $13.2 million as of June 30, 2023 and $12.4 million as of December 31, 2022 and are recorded in other current assets and other assets. Amortization expense recognized for the three and six months ended June 30, 2023 related to costs to obtain a contract was $2.5 million and $5.0 million, respectively, and is included in operating expenses for the respective period. Amortization expense recognized for the three and six months ended June 30, 2022 related to costs to obtain a contract was $2.6 million and $5.1 million, respectively, and is included in operating expenses for the respective period.

Transaction Price Allocated to Future Performance Obligations

As of June 30, 2023, the total ~~revenue.~~

~~3. Concentration~~aggregate transaction price allocated to the unsatisfied performance obligations for subscription and support contracts was approximately $176.7 million, of ~~Other Risks~~

which approximately $124.8 million is expected to be recognized over the next 12 months. The Company ~~is dependent on certain content delivery network providers who provide digital media delivery functionality enabling~~expects to recognize substantially all of the ~~Company’son-demand~~ ~~application service to function as intended for the Company’s customers and ultimateend-users.~~ ~~The disruption of these services could have a material adverse effect on the Company’s business, financial position, and results of operations.~~remaining unsatisfied performance obligations by June 2026.

4. Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Management determines the appropriate classification of investments at the time of purchase, and~~re-evaluates~~ ~~such determination at each balance sheet date. The Company did not have any short-term or long-term investments at September 30, 2017 or December 31, 2016.~~

Cash and cash equivalents primarily consist of cash on deposit with banks and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair market value.

Cash and cash equivalents as of ~~September~~June 30, ~~2017~~2023 consist of the following:


	September 30, 2017								June 30, 2023
Description	Contracted Maturity		Amortized Cost		Fair Market Value		Balance Per Balance Sheet		Contracted Maturity	Cost		Fair Market Value
									(in thousands)
Cash		Demand	$	13,916	$	13,916	$	13,916	Demand	$	19,050	$	19,050
Money market funds		Demand		8,140		8,140		8,140	Demand		43		43

Total cash and cash equivalents			$	22,056	$	22,056	$	22,056		$	19,093	$	19,093

Cash and cash equivalents as of December 31, ~~2016~~2022 consist of the following:


	December 31, 2016							December 31, 2022
Description	Contracted Maturity	Amortized Cost		Fair Market Value		Balance Per Balance Sheet		Contracted Maturity	Cost		Fair Market Value
								(in thousands)
Cash	Demand	$	23,942	$	23,942	$	23,942	Demand	$	31,852	$	31,852
Money market funds	Demand		12,871		12,871		12,871	Demand		42		42

Total cash and cash equivalents		$	36,813	$	36,813	$	36,813		$	31,894	$	31,894

5. Net Loss per Share

The Company calculates basic and diluted net loss per common share by dividing the net loss by the number of common shares outstanding during the period. The Company has excluded other potentially dilutive shares, which include outstanding common stock options and unvested restricted stock units, from the number of common shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses incurred.

The following ~~potentially dilutive~~outstanding common ~~stock equivalent~~ shares have been excluded from the computation of ~~weighted-average shares outstanding as their effect would have been anti-dilutive (in thousands):~~

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2017    2016    2017    2016
Options outstanding
   4,106    4,152    4,134    4,419
Restricted stock units outstanding
   2,111    1,752    1,945    1,604
Warrants
   —      21    —      26

~~6. Fair Value of Financial Instruments~~

~~The following tables set forth the Company’s financial instruments carried at fair value using the lowest level of input~~dilutive net loss per share as of ~~September 30, 2017~~the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
(shares in thousands)	2023		2022		2023		2022
Options outstanding		2,939		1,548		2,939		1,548
Restricted stock units outstanding		6,198		5,892		6,198		5,892

6. Stock-based Compensation

In 2022, the Company adopted the 2022 Inducement Plan (“2022 Plan”). The 2022 Plan provides for the grant of “employment inducement awards” within the meaning of NASDAQ Listing Rule 5635(c)(4). In connection with the commencement of his employment, the Company granted 800,000 restricted stock units to the CEO under the 2022 Plan, of which 300,000 are subject solely to service-based vesting conditions (the “RSUs”) and ~~December 31, 2016:~~500,000 are subject to both market-based and service-based vesting conditions (the “PSUs”). The RSUs vest in equal annual installments over three years following March 28, 2022.

   September 30, 2017
   Quoted Prices in
Active Markets
for Identical
Items (Level 1)    Significant Other
Observable Inputs
(Level 2)    Significant
Unobservable Inputs
(Level 3)    Total
Assets:

Money market funds
   $ 8,140    $ —      $ —      $ 8,140








Total assets
   $ 8,140    $ —      $ —      $ 8,140








   December 31, 2016
   Quoted Prices in
Active Markets
for Identical
Items (Level 1)    Significant Other
Observable Inputs
(Level 2)    Significant
Unobservable Inputs
(Level 3)    Total
Assets:

Money market funds
   $ 12,871    $ —      $ —      $ 12,871








Total assets
   $ 12,871    $ —      $ —      $ 12,871

~~7. Stock-based Compensation~~

For restricted stock units with market-based performance conditions, the cost of the awards is recognized as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units. The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility, expected dividends and the correlation coefficient.

On March 20, 2023, the Company granted 1,563,688 premium-priced options ~~granted was estimated at~~to some of its employees under its 2021 Stock Incentive Plan. The options have a strike price of $7.00 and vest in equal installments over three years following March 10, 2023. The binomial lattice model is used to estimate the ~~date~~fair value of ~~grant using~~the premium-priced options. The binomial lattice model calculates multiple potential outcomes for option exercises and establishes a fair value based on the most likely outcome. Key assumptions for the binomial lattice model include share price, volatility, the early exercise multiple, risk-free rate, expected dividends, and number of time steps.

The weighted-average assumptions utilized to determine the weighted-average fair value of options are presented in the following ~~weighted-average assumptions:~~table:

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2017 2016 2017 2016
Expected life in years
   6.2 6.2 6.1 6.1
Risk-free interest rate
   2.11 % 1.35 % 2.08 % 1.41 %
Volatility
   42 % 45 % 42 % 45 %
Dividend yield
   —   —   —   —
Weighted-average fair value of stock options granted
   $ 3.03 $ 4.98 $ 3.07 $ 4.17


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Weighted-average fair value of options granted during the period	$	—	$	—	$	1.75	$	—
Risk-free interest rate		—		—	3.4 - 4.8%			—
Expected volatility		—		—	47.9 - 55.5%			—
Expected dividend yield		—		—		—		—

~~The Company recorded stock-based compensation expense~~11

As of ~~September~~June 30, ~~2017,~~2023, there was ~~$20,389~~$34.6 million of unrecognized stock-based compensation expense related to stock-based awards that is expected to be recognized over a weighted-average period of ~~2.26~~2.66 years.

~~On January 1, 2017, the Company adopted ASUNo. 2016-09.~~ ~~ASU2016-09~~ identifies areas for simplification involving several aspects of accounting for share based payments, including income tax consequences, classification of awards as either equity or liabilities, an option to make a policy election to recognize gross share basedThe following table summarizes stock-based compensation expense ~~with actual forfeitures recognized~~ as ~~they occur as well as certain classification changes on~~included in the consolidated statement of cash flows. In connection with the adoption of this standard, the Company changed its accounting policy to record actual forfeitures as they occur, rather than estimating forfeitures by applying a forfeiture rate. As this policy change was applied prospectively, prior periods have not been adjusted. The Company recorded a cumulative effect adjustment inoperations for the three and six months ended ~~March 31, 2017, which increased accumulated deficit~~June 30, 2023 and ~~additionalpaid-in-capital~~ ~~by $197.~~2022:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(in thousands)
Stock-based compensation:
Cost of subscription and support revenue	$	129	$	144	$	267	$	253
Cost of professional services and other revenue		92		139		192		258
Research and development		551		935		1,239		1,657
Sales and marketing		931		899		2,100		1,842
General and administrative		1,784		1,527		3,232		2,864
Other expense		-		—		-		249
	$	3,487	$	3,644	$	7,030	$	7,123

The following is a summary of the ~~status of the Company’s stock options as of September 30, 2017 and the~~ stock option activity during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2023.


	Number of Shares			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value (1)		Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value (1)
Outstanding at December 31, 2016		4,150,584		$	7.17
Outstanding at December 31, 2022											1,419,767		$	9.39	3.55		$	4.00
Granted		472,727			7.00						1,563,688
Exercised		(198,555	)		1.91			$	1,159		—			—				—
Canceled		(270,498	)		8.42						(44,563	)		10.72

Outstanding at September 30, 2017		4,154,258		$	7.32		6.48	$	4,182

Exercisable at September 30, 2017		2,275,052		$	7.22		4.93	$	3,212

Outstanding at June 30, 2023											2,938,892		$	8.10		6.55		—
Exercisable at June 30, 2023											1,313,886		$	9.19		2.72	$	—

~~(1)~~

The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on September 30, 2017 of $7.20 per share, or the date of exercise, as appropriate, and the exercise price of the underlying options.

(1)

The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on June 30, 2023 of $4.01 per share, or the date of exercise, as appropriate, and the exercise price of the underlying options.

The following table summarizes the restricted stock unit activity for our service-based awards (“S-RSU”) and our performance-based awards (“P-RSU”) during the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:


	Shares			Weighted Average Grant Date Fair Value		S-RSU Shares			Weighted Average Grant Date Fair Value		P-RSU Shares			Weighted Average Grant Date Fair Value		Total RSU Shares			Weighted Average Grant Date Fair Value
Unvested by December 31, 2016		1,902,577		$	7.84
Unvested at December 31, 2022							4,538,349		$	8.19		672,858		$	8.62		5,211,207		$	8.27
Granted		1,154,473			6.91		2,777,229			4.69		—			—		2,777,229			4.69
Vested and issued		(415,586	)		7.64		(932,003	)		8.32		—			—		(932,003	)		8.32
Canceled		(229,030	)		8.02		(703,107	)		8.15		(155,688	)		10.14		(858,795	)		8.51

Unvested by September 30, 2017		2,412,434		$	7.40

Unvested at June 30, 2023							5,680,468		$	6.46		517,170		$	8.45		6,197,638		$	6.63

7. Income Taxes

For the three months ended September 30, 2017 and 2016, the Company recorded income tax expense of $118 and $61, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded income tax expense of $305 and $202, respectively. The income tax expense relates principally to the Company’s foreign operations.

The Company is required to compute income tax expense in each jurisdiction in which it operates. This process requires the Company to project its current tax liability and estimate its deferred tax assets and liabilities, including net operating loss (“NOL”) and tax credit carry-forwards. In assessing the ability to realize the net deferred tax assets, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

The Company has ~~evaluated the positive and negative evidence bearing upon the realizability of~~provided a valuation allowance against its ~~U.S. net deferred tax assets. As required by the provisions of Accounting Standards Codification (ASC) 740,~~~~Income Taxes~~~~, management has determined that it ismore-likely-than-not~~ ~~that the Company will not utilize the benefits of federal and state~~remaining U.S. net deferred tax assets ~~for financial reporting purposes. Accordingly,~~as of June 30, 2023 and December 31, 2022, based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are ~~subject to a valuation allowance~~deductible, at ~~September 30, 2017 and~~

~~December 31, 2016. Based on the level of historical income in Japan and future projections, the Company~~this time, management believes it is ~~probable it~~more likely than not that the Company will not realize the benefits of ~~its future~~these deductible differences. ~~As such,~~

During the six months ended June 30, 2022, the Company ~~has not~~ recorded a benefit of $1.0 million in the U.S. for the release of a portion of the Company’s valuation allowance. This release of the valuation allowance ~~against its net~~is related to the acquisition of Wicket Labs, Inc. (“Wicket Acquisition”), completed in February 2022, and the creation of deferred tax ~~assets~~liabilities in ~~Japan~~purchase accounting that serve as a source of ~~September 30, 2017 and December 31, 2016. The~~income for the Company’s ~~income~~pre-existing deferred tax return reporting periods since December 31, 2012 are open to income tax audit examination by the federal and state tax authorities. In addition, because the Company has net operating loss carryforwards, the Internal Revenue Service is permitted to audit earlier years and propose adjustments up to the amount of net operating losses generated in those years. There are currently no federal, state or foreign audits in progress.assets.

9.8. Commitments and Contingencies

Legal Matters

The Company, from time to time, is party to litigation arising in the ordinary course of business. Management does not believe that the outcome of these claims will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company based on the status of proceedings at this time.

On May 22, 2017, a lawsuit was filed against Brightcove and two individuals by Ooyala, Inc. (“Ooyala”) and Ooyala Mexico S. de R.L. de C.V. (“Ooyala Mexico”). The lawsuit, which was filed in the United States District Court for the District of Massachusetts, concerns allegations that the two individuals, who are former employees of Ooyala Mexico, misappropriated customer information and other trade secrets and used that information in working for Brightcove. The complaint was amended on June 1, 2017 to remove claims against the two former employees of Ooyala Mexico. The remaining claims against Brightcove are for violation of the Defend Trade Secrets Act of 2016 (18 U.S.C. §1836), violation of the Massachusetts trade secret statute (M.G.L. c. 93, §42), violation of Massachusetts Chapter 93A (M.G.L. c. 93A, §11), and tortious interference with advantageous business relationships. Ooyala and Ooyala Mexico also filed a motion for preliminary injunction (amended at the same time the complaint was amended), seeking to enjoin Brightcove from using any of the allegedly misappropriated information or communicating with customers whose information was allegedly taken, and seeking the return of any information that was taken. On June 16, 2017, Brightcove filed an opposition to the motion for preliminary injunction, and also moved to dismiss the lawsuit. Brightcove’s motion to dismiss was denied on September 6, 2017. The court has not ruled on Ooyala’s motion for preliminary injunction. On October 18, 2017, the court granted the parties’ motion to stay the litigation, and the litigation is currently stayed. The Company cannot yet determine whether it is probable that a loss will be incurred in connection with this complaint, nor can the Company reasonably estimate the potential loss, if any.

Guarantees and Indemnification Obligations

The Company typically enters into indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses and costs incurred by the indemnified party, generally the Company’s customers, in connection with patent, copyright, trade secret, or other intellectual property or personal right infringement ~~claim~~claims by third parties with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual after execution of the agreement. Based on when customers first subscribe for the Company’s service, the maximum potential amount of future payments the Company could be required to make under certain of these indemnification agreements is unlimited, however, more recently the Company has typically limited the maximum potential value of such potential future payments in relation to the value of the contract. Based on historical experience and information known as of ~~September~~June 30, ~~2017,~~2023, the Company has not incurred any costs for the above guarantees and indemnities. The Company has received requests for indemnification from customers in connection with patent infringement suits brought against the customer by a third party. To date, the Company has not agreed that the requested indemnification is required by the Company’s contract with any such customer.

In certain circumstances, the Company warrants that its products and services will perform in all material respects in accordance with its standard published specification documentation in effect at the time of delivery of the licensed products and services to the customer for the warranty period of the product or service. To date, the Company has not incurred significant expense under its warranties and, as a result, the Company believes the estimated fair value of these agreements is immaterial.

9. Debt

~~10. Debt~~

On ~~November 19, 2015,~~December 28, 2020, the Company entered into an amended and restated loan and security agreement with a lender (the “Loan Agreement”) providing for up to a ~~$20.0~~$30.0 million ~~asset based~~asset-based line of credit (the “Line of Credit”). ~~Under the Line of Credit, the Company can borrow up to $20.0 million.~~ Borrowings under the Line of Credit are secured by substantially all of the Company’s assets, excluding ~~our~~its intellectual property. Outstanding amounts under the Line of Credit accrue interest at a rate ~~equal to~~as follows: (i) for prime rate advances, the greater of (A) the prime rate orand (B) 4%, and (ii) for LIBOR advances, the greater of (A) the LIBOR rate plus ~~2.5%~~225 basis points and (B) 4%. Under the Loan Agreement, the Company must comply with certain financial covenants, including maintaining a minimum asset coverage ratio. If the outstanding principal during any month is at least ~~$15.0~~$15.0 million, the Company must also maintain a minimum net income threshold based onnon-GAAP operating measures. Failure to comply with these

covenants, or the occurrence of an event of default, could permit the ~~lender~~lenders under the Line of Credit to declare all amounts borrowed under the Line of Credit, together with accrued interest and fees, to be immediately due and payable. The Line of Credit agreement will expire on December 28, 2023. The Company was in compliance with all applicable covenants under the Line of Credit as of ~~September~~June 30, ~~2017. As the Company has not drawn on the Line of Credit,~~2023 and there ~~are~~ were no ~~amounts~~ borrowings outstanding as of ~~September~~June 30, ~~2017.~~2023.

~~On December 31, 2015, the Company entered into an equipment financing agreement with a lender (the “December 2015 Equipment Financing Agreement”) to finance the purchase~~13

~~11.~~

10. Segment Information

Geographic Data

Total revenue from unaffiliated customers by geographic area, based on the location of the customer, was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2023		2022		2023		2022
Revenue:
North America	$	22,726	$	23,246	$	68,205	$	68,913	$	30,694	$	30,019	$	59,795	$	59,480
Europe		6,097		6,412		18,177		18,843		7,915		10,128		16,102		19,233
Japan		4,129		4,243		12,416		11,447		4,928		5,077		10,124		12,338
Asia Pacific		6,363		4,136		16,490		11,495		7,366		9,060		13,860		16,496
Other		172		352		524		943		85		163		170		279

Total revenue	$	39,487	$	38,389	$	115,812	$	111,641	$	50,988	$	54,447	$	100,051	$	107,826

North America is comprised of revenue from the United States, Canada and Mexico. Revenue from customers located in the United States was ~~$21,131~~$28.6 million and ~~$21,793 during~~$28.2 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016, respectively,~~2022, respectively. Revenue from customers located in the United States was $55.5 million and ~~$63,744 and $64,615 during~~$55.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

Other than the United States and Japan, no other country contributed more than ~~10%~~10% of the ~~Company’s~~Company's total revenue ~~during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~June 30, 2022.

11. Restructuring

During the three months ended March 31, 2023, the Company took an action to restructure certain parts of the Company with the intent of aligning skills with the Company’s strategy and facilitating cost efficiencies and savings. As ~~of September 30, 2017 and December 31, 2016, property and equipment at locations outside the U.S. was not material.~~

~~12. Recently Issued and Adopted Accounting Standards~~

~~In May 2014, the Financial Accounting Standards Board (FASB) issued ASUNo. 2014-09,~~~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU2014-09”),~~ ~~which modifies how all entities recognize revenue, and consolidates into one ASC Topic (ASC Topic 606,~~~~Revenue from Contracts with Customers~~~~) the current guidance found in ASC Topic 605~~, ~~and various other revenue accounting standards for specialized transactions and industries. ASU2014-09~~ ~~outlines~~ a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU~~2014-09~~ may be applied using either a full retrospective approach, under which all years included in the financial statements will be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative~~catch-up~~ ~~adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity at the date of adoption.~~

~~In August 2015, the FASB issued ASU2015-14,~~~~Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date~~~~, which defers the effective date of ASU2014-09~~ ~~by one year. ASU2014-09~~ ~~is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods.~~result certain headcount reductions were necessary. The Company has ~~developed an implementation plan to adopt this new guidance. As part of this plan,~~incurred approximately $0.4 million in restructuring charges in the Company is currently assessing the impact of the new guidance on its results of operations. Based on the Company’s procedures performed to date, nothing has come to its attention that would indicate that the adoption of ASU~~2014-09~~ ~~will have a material impact on its revenue recognition on cloud offerings; however, further analysis is required~~three months ended March 31, 2023. The restructuring charges reflect post-employment benefits, and the Company ~~will continue~~does not expect to ~~evaluate~~incur any additional restructuring charges related to this ~~assessment throughout 2017. While~~action. As of March 31, 2023, the restructuring charges are reflected in the Condensed Consolidated Statements of Operations as follows: $0.2 million - General and Administrative; $0.1 million – Research and Development; and $0.1 million – Sales and Marketing. The Company paid the entire amount by March 31, 2023.

On April 28, 2023, the Company authorized a restructuring that is ~~still evaluating~~designed to reduce operating costs, improve operating margins and focus on key growth and strategic priorities (the "Plan"). The Plan includes a reduction of the impact that this guidance will have on its financial statements and related disclosures, the Company’s preliminary assessment is that there will be an impact relating to the accounting for costs to acquire a contract. Under the standard, the Company will be required to capitalize certain costs, primarily commission expense to sales representatives, on its consolidated balance sheet and amortize such costs over the period of performance for the underlying customer contracts. The Company is still evaluating the impact of capitalizing costs to execute a contract.

~~The Company intends to adopt ASU2014-09~~ ~~on January 1, 2018.~~Company's current workforce by approximately 10%. The Company has ~~elected to apply~~incurred approximately $2.3 million in restructuring charges in the ~~modified retrospective method~~three months ended June 30, 2023 in connection with the Plan. The restructuring charges reflect post-employment benefits. For the three months ended June 30, 2023 the restructuring charges are reflected in the Condensed Consolidated Statements of ~~adoption.~~

~~In February 2016, the FASB issued ASU2016-02,~~~~Leases (Topic 842), Amendments to the FASB Accounting Standards Codification~~~~, which replaces the existing guidance for leases. ASU2016-02~~ ~~requires the identification~~Operations as follows: $1.1 million in Sales and Marketing; $0.8 million in Research and Development; $0.3 million in General and administrative and $0.1 million in Cost of ~~arrangements that should be accounted for as leases by lessees. In general, lease arrangements exceeding a twelve month term must now be recognized as assets and liabilities on the balance sheet~~Revenue. The Company has paid approximately $1.8 million of the ~~lessee. Under ASU2016-02,~~ a~~right-of-use~~ ~~asset~~restructuring charges as of June 30, 2023 and ~~lease obligation will be recorded for all leases, whether operating or financing, while~~expects to pay the ~~income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date~~remaining amounts by September 30, 2023.

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(in thousands, except share and per share data, unless otherwise noted)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form10-Q and our Annual Report on Form10-K for the year ended December 31, ~~2016.~~2022.

~~Forward-Looking Statements~~

~~This Quarterly Report on Form10-Q~~ contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form~~10-Q~~ that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; factors that may affect our operating results; statements related to adding employees; statements related to future capital expenditures; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form~~10-Q,~~ ~~our Annual Report on Form10-K~~ for the year ended December 31, 2016 and the risks discussed in our other SEC filings. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Company Overview

We are a leading global provider of cloud-based streaming services ~~for video.~~with a mission to be the most trusted streaming technology company in the world. We were incorporated in Delaware in August ~~2004~~2004. With our Emmy®-winning technology and award-winning services, we help our ~~headquarters are in Boston, Massachusetts. Our~~customers realize the potential of video to address business-critical challenges. Customers rely on our suite of products, services, and ~~services~~expertise to reduce the cost and complexity associated with publishing, distributing, measuring and monetizing video across devices.

We sell six core video products that help our customers use video to further their businesses in meaningful ways: (1) Brightcove Video ~~Cloud,~~Cloud™, or Video Cloud, our flagship product ~~released in 2006, is~~and the world’s leading online video ~~platform. Video Cloud~~streaming platform, enables our customers to ~~publish~~quickly and easily distribute high-quality video to Internet-connected devices; (2) Brightcove Live™, our industry-leading solution for live streaming, delivers high-quality viewer experiences at scale; (3) Brightcove Beacon®, a purpose-built application that enables companies to launch premium OTT video experiences quickly and cost effectively, across devices ~~quickly, easily~~ and inwith the flexibility of multiple monetization models; (4) Brightcove Player™, an exceptionally fast, cloud-based technology for creating and managing video experiences; (5) Zencoder®, a ~~cost-effective and high-quality manner. Brightcove Zencoder, or Zencoder, is a~~powerful, cloud-based video encoding ~~service.~~technology; and (6) Brightcove ~~Once, or Once, is an~~Audience Insights™, a business intelligence platform that provides actionable intelligence on viewers and subscribers.

Customers can complement their use of our core products with modular technologies that provide enhanced capabilities such as (1) innovative ~~cloud-based~~ ad insertion and video stitching ~~service that addresses~~through Brightcove SSAI™; (2) improving their ad monetization strategies to earn more revenue through the ~~limitations~~use of ~~traditional online~~the Brightcove Ad Monetization™; (3) efficiently managing their video ~~ad insertion technology.~~presence across social networks, including Facebook, Twitter, YouTube, and LinkedIn, through the use of Brightcove ~~Perform, or Perform, is a cloud-based service~~Social™; (4) an app for creating marketing campaigns with insightful data and ~~managing~~industry benchmarks through Brightcove Campaign™; (5) creating branded video ~~player experiences.~~experience by accessing templates with built-in best practices through Brightcove ~~Video Marketing Suite, or Video Marketing Suite, is~~Gallery™; and (6) providing tools that enable our customers to make their video experiences interactive for their viewers with interaction options through Brightcove Interactivity.

We have also brought to market several video solutions, which are comprised of a ~~comprehensive~~ suite of video technologies ~~designed to~~that address ~~the needs of~~specific customer use-cases and needs: (1) Brightcove Marketing Studio™, which includes Brightcove Video Marketing Suite™, enables marketers to use video to drive brand awareness, engagement and ~~conversion.~~conversion; (2) Brightcove ~~Lift, or Lift, is a solution designed to defeat ad blockers, optimize ad delivery and deliver a premiumTV-like~~ ~~viewing experience across connected platforms. Brightcove OTT Flow, powered by Accedo, or OTT Flow, is a service for media companies and content owners to rapidly deploy high-quality,direct-to-consumer,~~ ~~live andon-demand~~ ~~video services across platforms.~~Communications Studio™, which includes Brightcove Enterprise Video ~~Suite,~~Suite™, or Enterprise Video Suite, isprovides an enterprise-class platform for internal communications, employee training, live streaming, marketing and ecommerce ~~videos.~~videos; (3) Brightcove CorpTV™ provides a new way to deliver marketing videos, product announcements, training programs, and other live and on-demand content in a branded experience for companies; and (4) Brightcove Virtual Events™ helps brands transform events into bespoke virtual experiences.

Our philosophy for the next few years will continue to be to invest in our product strategy and development, sales, andgo-to-market activities to support our long-term revenue growth. We believe these investments will help us address some of the challenges facing our business such as demand for our products by existing and potential customers, rapid technological change in our industry, increased competition and resulting price sensitivity. These investments include support for the expansion of our infrastructure within our hosting facilities, the hiring of additional technical and sales personnel, the innovation of new features for existing products and the development of new products. We believe this strategy will help us retain our existing customers, increase our average annual subscription revenue per premium customer and lead to the acquisition of new customers. Additionally, we believe customer growth will enable us to achieve economies of scale which will reduce our cost of goods sold, research and development and general and administrative expenses as a percentage of total revenue.

As of ~~September~~June 30, ~~2017,~~2023 and 2022, we had ~~506~~682 and 703 employees, and 4,210 customers, of which 2,097 used our volume offerings and 2,113 used our premium offerings. As of September 30, 2016, we had 471 employees and 4,647 customers, of which 2,666 used our volume offerings and 1,981 used our premium offerings.respectively.

We generate revenue by offering our products to customers on a subscription-based, software as a service, or SaaS, model. Our revenue ~~grew~~decreased from ~~$111.6~~$107.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 to ~~$115.8~~$100.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017, primarily related to an increase in revenue from professional services engagements and~~2023, due to a ~~lesser extent our subscription-based software as~~decrease in subscription and support revenue. This decrease was due to a ~~service. Our consolidated net loss was $18.1 million and $5.6 million for~~decrease in the ~~nine~~average annual subscription revenue per premium customer during the six months ended ~~September~~June 30, ~~2017~~2023 as compared to the prior period and ~~2016, respectively.~~ a decrease in premium offering customers.

Included in the consolidated net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was merger-related expense, stock-based compensation expense, amortization of acquired intangible assets, and restructuring expense of $0.2 million, $7.0 million, $2.0 million, and $2.3 million, respectively. Included in the consolidated net loss for the six months ended June 30, 2022 was merger-related expense, stock-based compensation expense and amortization of acquired intangible assets of ~~$5.3~~$0.7 million, $7.1 million, and ~~$2.1~~$1.5 million, respectively. ~~Included in consolidated net loss for~~

For the ~~nine~~three months ended ~~September~~June 30, ~~2016 was stock-based compensation expense~~2023 and ~~amortization of acquired intangible assets of $4.3 million and $2.3 million, respectively.~~

~~For the nine months ended September 30, 2017 and 2016,~~2022, our revenue derived from customers located outside North America was ~~41%~~40% and ~~38%~~45%, respectively. For the six months ended June 30, 2023 and 2022, our revenue derived from customers located outside of North Americas was 40% and 44%, respectively. We expect the percentage of total net revenue derived from outside North America to ~~increase~~remain relatively unchanged or decrease in future periods ~~as we continue~~due to ~~expand our international operations.~~fluctuations in exchange rates and a decrease in usage-based fees.

Key Metrics

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

The following table includes our key metrics for the periods presented:

•

~~Number of Customers~~. We define our number of customers at the end of a particular quarter as the number of customers generating subscription revenue at the end of the quarter. We believe the number of customers is a key indicator of our market penetration, the productivity of our sales organization and the value that our products bring to our customers. We classify our customers by including them in either premium or volume offerings. Our premium offerings include our premium Video Cloud customers (Enterprise and Pro editions), our Zencoder customers (other than Zencoder customers on~~month-to-month~~ ~~contracts andpay-as-you-go~~ ~~contracts), our Once customers, our Perform customers, our Video Marketing Suite customers, our Lift customers, our OTT Flow customers and our Enterprise Video Suite~~


	Six Months Ended June 30,
	2023			2022
Customers (at period end)
Premium		2,131			2,301
Volume		560			636
Total customers (at period end)		2,691			2,937
Net revenue retention rate		94.5	%		96.4	%
Recurring dollar retention rate		86.3	%		87.5	%
Average annual subscription revenue per premium customer, excluding Starter edition customers (in thousands)	$	93.0		$	96.6
Average annual subscription revenue per premium customer for Starter edition customers only (in thousands)	$	4.1		$	4.2
Total backlog, excluding professional services engagements (in millions)	$	176.7		$	151.9
Total backlog to be recognized over next 12 months, excluding professional services engagements (in millions)	$	124.8		$	121.6

•

Number of Customers. We define our number of customers at the end of a particular quarter as the number of customers generating subscription revenue at the end of the quarter. We believe the number of customers is a key indicator of our market penetration, the productivity of our sales organization and the value that our products bring to our customers. We classify our customers by including them in either premium or volume offerings. Our premium offerings include our premium Video Cloud customers (Enterprise and Pro editions), our Zencoder customers (other than Zencoder customers on month-to-month contracts and pay-as-you-go contracts), our SSAI customers, our Player customers, our OTT Flow customers (OTT Flow is our partner-based OTT platform, which preceded Brightcove Beacon), our Brightcove Virtual Events customers, our Brightcove Marketing Studio customers, our Brightcove Communications Studio customers, our Brightcove Beacon customers, our Brightcove Engage™ customers, our Brightcove CorpTV, and our Brightcove Campaign™ customers. Our ~~volume offerings include our Video Cloud Express customers and our Zencoder customers onmonth-to-month~~ ~~contracts andpay-as-you-go~~ ~~contracts.~~

~~As of September 30, 2017, we had 4,210 customers, of which 2,097 used our~~ volume offerings include our Video Cloud Express customers and ~~2,113 used~~ our ~~premium offerings. As of September 30, 2016, we had 4,647~~Zencoder customers ~~of which 2,666 used our volume offerings~~on month-to-month contracts and ~~1,981 used our premium offerings. During 2013, we shifted our~~pay-as-you-go contracts.

Our go-to-market focus and growth strategy is to ~~expanding~~expand our premium customer base, as we believe our premium customers represent a greater opportunity for our solutions. Premium customers decreased in the six months ended June 30, 2023 compared to the prior period due to some customers deciding to switch to in-house solutions or other third-party solutions. Volume customers decreased ~~since 2013~~in recent periods primarily due to our discontinuation of the promotional Video Cloud Express offering. As a result, we have experienced attrition of this base level offering without a corresponding addition of customers. We expect customers using our volume offerings to continue to decrease in ~~2017~~2023 and beyond as we continue to focus on the market for our premium ~~solutions~~solutions.

•

Net Revenue Retention Rate. We assess our ability to retain and ~~adjust Video Cloud Express price levels.~~expand customers using a metric we refer to as our net revenue retention rate. We calculate the net revenue retention rate by dividing: (a) the current annualized recurring revenue for premium customers that existed twelve months prior by (b) the annualized recurring revenue for all premium customers that existed twelve months prior. We define annualized recurring revenue for premium customers as the aggregate annualized contract value from our premium customer base, measured as of the end of a given period. We typically calculate our net revenue retention rate

•

~~Recurring Dollar Retention Rate~~.

on a quarterly basis. For annual periods, we report net revenue retention rate as the average of the net revenue retention rate for all fiscal quarters included in the period. By dividing the retained recurring revenue by the base recurring revenue, we measure our success in retaining and growing installed revenue from the specific cohort of customers we served at the beginning of the period. The recurring dollar retention rate focuses on contracts up for renewal in a given quarter and only captures expansion/upsells at time of renewal, and is more susceptible to swings than the net revenue retention rate.

•

Recurring Dollar Retention Rate. We assess our ability to retain customers using a metric we refer to as our recurring dollar retention rate. We calculate the recurring dollar retention rate by dividing the retained recurring value of subscription revenue for a period by the previous recurring value of subscription revenue for the same period. We define retained recurring value of subscription revenue as the committed subscription fees for all contracts that renew in a given period, including any increase or decrease in contract value. We define previous recurring value of subscription revenue as the recurring value from committed subscription fees for all contracts that expire in that same period. We typically calculate our recurring dollar retention rate on a monthly basis. Recurring dollar retention rate provides visibility into our ongoing revenue. The recurring dollar retention rate decreased from 97% during the nine months ended September 30, 2016 to 90% during the nine months ended September 30, 2017. The decrease is primarily due to the loss of certain customers as well as a reduction in contract value, based on certain commodity elements being repriced within our media market.

•

~~Average Annual Subscription Revenue Per Premium Customer~~. We define average annual subscription revenue per premium customer as the total subscription revenue from premium customers for an annual period, excluding professional services revenue, divided by the average number of premium customers for that period. We believe that this metric is important in understanding subscription revenue for our premium offerings in addition to the relative size of premium customer arrangements. We began selling our Starter edition to customers in the second quarter of 2016. We consider Starter to be a premium offering and thus include Starter customers as premium customers. Our Starter edition has a price point of $199 or $499 per month, and as of the first quarter of 2017, sales of our Starter edition have reached such a level that we have determined that the overall average annual subscription revenue per premium customer is a more meaningful metric if we exclude revenue from Starter edition customers. As such, we now disclose the average annual subscription revenue per premium customer separately for Starter edition customers and all other premium customers.

~~The following table includes our key metrics~~ for the ~~periods presented:~~same period. We define retained recurring value of subscription revenue as the committed subscription fees for all contracts that renew in a given period, including any increase or decrease in contract value. We define previous recurring value of subscription revenue as the recurring value from committed subscription fees for all contracts that expire in that same period. We typically calculate our recurring dollar retention rate on a monthly basis. Recurring dollar retention rate provides visibility into our ongoing revenue.

•

Average Annual Subscription Revenue Per Premium Customer. We define average annual subscription revenue per premium customer as the total subscription revenue from premium customers for an annual period, excluding professional services revenue, divided by the average number of premium customers for that period. We believe that this metric is important in understanding subscription revenue for our premium offerings in addition to the relative size of premium customer arrangements. As our Starter edition has a price point of $199 or $499 per month, we disclose the average annual subscription revenue per premium customer separately for Starter edition customers and all other premium customers.

•

Backlog. We define backlog as the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied, excluding professional service engagements. We believe that this metric is important in understanding future business performance.

Restructuring

On April 28, 2023, we authorized a restructuring that was designed to reduce operating costs, improve operating margins and focus on key growth and strategic priorities (the "Plan"). The Plan included a reduction of our workforce by approximately 10%. The $2.3 million in restructuring charges recorded in the three months ended June 30, 2023 reflect post-employment benefits. The restructuring charges are reflected in the Condensed Consolidated Statements of Operations as follows: $1.1 million in Sales and Marketing; $0.8 million in Research and Development; $0.3 million in General and administrative and $0.1 million in Cost of Revenue.

   Nine Months Ended
September 30,
   2017 2016
Customers (at period end)

Volume
   2,097 2,666
Premium
   2,113 1,981


Total customers (at period end)
   4,210 4,647


Recurring dollar retention rate
   90 % 97 %
Average annual subscription revenue per premium customer, excluding Starter edition customers (in thousands)
   $ 70.0 $ 70.0
Average annual subscription revenue per premium customer for Starter edition customers only (in thousands)
   $ 5.0 $ 4.0

COVID-19 and Geopolitical Events

Worldwide economic uncertainties and negative trends, including financial and credit market fluctuations, uncertainty in the banking sector, rising interest rates, political unrest and social strife, such as continued Russian military action against Ukraine, the conditions of the COVID-19 pandemic and its aftermath, and other impacts from the macroeconomic environment have, and could continue to, affect our business, financial condition and results of operations. While we have continued to invest in business growth, our business is dependent on many factors and these macroeconomic conditions have caused and may in the future affect the rate of spending on software products and the demand for video to support virtual events.

Components of Consolidated Statements of Operations

Revenue

Subscription and Support Revenue — We generate subscription and support revenue from the sale of our products.

Video Cloud is offered in two product lines. The first product line is comprised of our premium product ~~editions, Pro and Enterprise.~~editions. All ~~Pro and Enterprise~~premium editions include functionality to publish and distribute video to Internet-connected ~~devices. The Enterprise edition provides~~devices, with higher levels of premium editions providing additional features and ~~functionality such as a multi-account environment andIP-restricted~~ ~~players.~~functionality. Customer arrangements are typically ~~one year~~one-year contracts, which include a subscription to Video Cloud, basic support and a pre-determined amount of video streams, bandwidth, transcoding and ~~managed content (which includes storage).~~storage. We also offer gold, ~~support or~~ platinum and platinum plus support to our premium customers for an additional ~~fee, which includes extended phone support.~~fee. The pricing for our premium editions is based on the value of our software, as well as the number of users, accounts and usage, which is comprised of video streams, bandwidth, transcoding and ~~managed content.~~storage. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements. We believe that our bundled pricing approach has made it easier for our customers to purchase all of the elements required to manage, store and deliver their video assets to their viewers. Pricing for some of the~~non-software~~ elements of our products, however—such as bandwidth and managed content (primarily storage)—has been subject to moderate but consistent pricing pressure as a result of competition among bandwidth and cloud infrastructure providers. This pricing pressure has not historically had a meaningful impact on our results of operations. During the nine months ended September 30, 2017, we experienced an unexpected, significant increase in the impact of the price competition among bandwidth and cloud infrastructure providers in the markets for these increasingly commoditized~~non-software~~ services. As a result, our recurring dollar retention rate decreased in the nine months ended September 30, 2017. We have taken steps to reduce the portion of our revenue that is subject to such pricing pressure by bringing new solutions, such as Dynamic Delivery (formerly known as Bolt), to market. We believe that these new solutions increase the value of our software platform to customers and allow us to retain a larger portion of the customers’ total contract value while reducing the revenue related to~~non-software~~ ~~elements. However, as a result of the impact of the commoditization of thenon-software~~ ~~elements, we now expect that our subscription revenue growth rate will be impacted through the first quarter of 2018.~~

The second product line is comprised of our volume product ~~edition, which we refer to as our Express~~ edition. Our ~~Express edition targets~~volume editions target small andmedium-sized businesses, or SMBs. The ~~Express edition provides~~volume editions provide customers with the same basic functionality that is offered in our premium product editions but ~~has~~have been designed for customers who have lower usage requirements and do not typically ~~seek~~require advanced features and functionality. We discontinued the lower level pricing options for the Express edition of our volume offering and expect the total number of customers using the Express edition to continue to decrease.

Customers who purchase the ~~Express edition~~volume editions generally enter intomonth-to-month agreements. ~~Express~~Volume customers are generally billed on a monthly basis and pay via a credit card.

Brightcove Virtual Events, Brightcove Live and Brightcove Player are offered to customers on a subscription basis. Customer arrangements are typically one-year contracts, which include a subscription to Brightcove Virtual Events, Brightcove Live or the Brightcove Player, basic support and a pre-determined amount of video streams, bandwidth, transcoding, and storage and only video streams for Brightcove Player. We also offer gold, platinum, and platinum plus support to our Brightcove Virtual Events, Brightcove Live and Brightcove Player customers for an additional fee. The pricing for these products is based on the value of our software, as well as, the number of users, accounts and usage. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements.

Zencoder is offered to customers on a subscription basis, with either committed contracts orpay-as-you-go contracts. The pricing is based on usage, which is comprised of minutes of video processed. The committed contracts include a fixed number of minutes of video processed. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements. Zencoder customers are considered premium customers other than Zencoder customers onmonth-to-month contracts orpay-as-you-go contracts, which are considered volume customers.

~~Once is~~Brightcove Beacon and Brightcove Campaign are each offered to customers on a subscription basis, with varying levels of functionality, usage entitlements and support based on the size and complexity of a customer’s needs.

~~Perform is offered to customers on a subscription basis.~~ Customer arrangements are typicallyone-year ~~contracts, which include a subscription to Perform, basic support and apre-determined~~ amount of video streams. We also offer gold support or platinum support to our Perform customers for an additional fee, which includes extended phone support. The pricing for Perform is based on the number of users, accounts and usage, which is comprised of video streams. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements. contracts.

Video Marketing Suite and Enterprise Video Suite are offered to customers on a subscription basis in Starter, Pro and Enterprise editions. The Pro and Enterprise customer arrangements are typicallyone-year contracts, which typically include a subscription to Video Cloud, Gallery, Brightcove Social (for Video Marketing Suite customers) or Brightcove Live (for Enterprise Video Suite customers), basic support and apre-determined amount of video streams or plays (for Video Marketing Suite customers), viewers (for Enterprise Video Suite customers), bandwidth and ~~managed content~~storage or videos. We also generally offer gold support or platinum support to these customers for an additional fee, which includes extended phone support. The pricing for our Pro and Enterprise editions is based on the number of users, accounts and usage, which is comprised of video streams or plays, viewers, bandwidth and ~~managed content~~storage or videos. Should a customer’s usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual ~~entitlements.~~entitlements, or will require the customer to upgrade its package upon renewal. The Starter edition provides customers with the same basic functionality that is offered in our Pro and Enterprise editions but has been designed for customers who have lower usage requirements and do not typically seek advanced features and functionality. In 2022, we also discontinued the lower pricing option for our Starter edition. Customers who purchase the Starter edition may enter intoone-year agreements ormonth-to-month agreements. Starter customers withmonth-to-month agreements are generally billed on a monthly basis and pay via a credit card.

~~Lift~~Brightcove Audience Insights is offered to customers on a subscription ~~basis.~~basis, with varying levels of functionality and entitlements. Customer arrangements are typically ~~one year~~one-year contracts, ~~which~~and include ~~a subscription to Lift,~~ basic support and a~~pre-determined~~ ~~amount~~an initial integration of ~~video streams. We also offer gold support~~the platform with third party data sources identified by the customer. Customers can choose to activate a module focusing on active viewers of their content, active subscribers to their service, or ~~platinum support to our Lift customers for an additional fee, which includes extended phone support.~~both. The pricing for ~~Lift~~Brightcove Audience Insights is based on module(s) selected and is based on the number of ~~users, accounts and usage, which is comprised of video streams.~~active viewers and/or active subscribers. Should a ~~customer’s~~customer's usage exceed the contractual entitlements, the contract will provide the rate at which the customer must pay for actual usage above the contractual entitlements.

All Brightcove Beacon, Brightcove CorpTV, OTT Flow, is offered to customers on a subscription basis, with varying levels of functionality, usage entitlements and support based on the size and complexity of a customer’s needs. Customer arrangements are typically~~one-year~~ ~~contracts.~~

~~All Once, Perform,~~Brightcove Campaign, Brightcove Live, SSAI, Player, Brightcove Audience Insights, Brightcove Virtual Events, Video Marketing Suite, and Enterprise Video Suite ~~Lift and OTT Flow~~ customers are considered premium customers.

Professional Services and Other Revenue — Professional services and other revenue consists of services such as implementation, software customizations and project management for customers who subscribe to our premium editions. These arrangements are priced either on a fixed fee basis with a portion due upon contract signing and the remainder due when the related services have been completed, or on a time and materials basis.

Cost of Revenue

Cost of subscription, support and professional services revenue primarily consists of costs related to supporting and hosting our product offerings and delivering our professional services. These costs include salaries, benefits, incentive compensation and stock-based compensation expense related to the management of our data centers, our customer support team and our professional services staff. In addition to these expenses, we incur third-party service provider costs such as data center and content delivery network, or

CDN, expenses, allocated overhead, depreciation expense and amortization of capitalizedinternal-use software development costs and acquired intangible assets. We allocate overhead costs such as rent, utilities and supplies to all departments based on relative headcount. As such, general overhead expenses are reflected in cost of revenue in addition to each operating expense category. The costs associated with providing professional services are significantly higher as a percentage of related revenue than the costs associated with delivering our subscription and support services due to the labor costs of providing professional services.

Cost of revenue increased in absolute dollars from the first ~~nine~~six months of ~~2016~~2022 to the first ~~nine~~six months of ~~2017.~~2023. In future periods we expect our cost of revenue will increase in absolute dollars as our revenue increases. ~~We also expect that cost of revenue as a percentage of revenue will decrease over time as we are able to achieve economies of scale in our business. However, cost~~Cost of revenue as a percentage of revenue could fluctuate from period to period depending on the ~~growth~~number of our professional services ~~business~~engagements and any associated costs relating to the delivery of subscription services and the timing of significant expenditures. To the extent that our customer base grows, we intend to continue to invest additional resources in expanding the delivery capability of our products and other services. The timing of these additional expenses could affect our cost of revenue, both in terms of absolute dollars and as a percentage of revenue, in any particular quarterly or annual period.

Operating Expenses

We classify our operating expenses as follows:

Research and Development. Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, incentive compensation and stock-based compensation, in addition to the costs associated with contractors and allocated overhead. We have focused our research and development efforts on expanding the functionality and scalability of our products and enhancing their ease of use, as well as creating new product offerings. We expect research and development expenses to increase in absolute dollars as we intend to continue to periodically release new features and functionality, expand our product offerings, continue the localization of our products in various languages, upgrade and extend our service offerings, and develop new technologies. Over the long term, we believe that research and development expenses as a percentage of revenue will decrease, but will vary depending upon the mix of revenue from new and existing products, features and functionality, as well as changes in the technology that our products must support, such as new operating systems or new Internet-connected devices.

Sales and Marketing. Sales and marketing expenses consist primarily of personnel and related expenses for our sales and marketing staff, including salaries, benefits, incentive compensation, commissions, stock-based compensation and travel costs, amortization of acquired intangible assets, in addition to costs associated with marketing and promotional events, corporate communications, advertising, other brand building and product marketing expenses and allocated overhead. Our sales and marketing expenses have increased in absolute dollars in each of the last three years. We intend to continue to invest in sales and marketing and ~~increase the number of sales representatives to add new customers and~~ expand the sale of our product offerings within our existing customer base, build brand awareness and sponsor additional marketing events. Accordingly, ~~in future periods~~ we expect sales and marketing expense to ~~increase in absolute dollars and~~ continue to be our most significant operating ~~expense.~~expense in future periods. Over the long term, we believe that sales and marketing expense as a percentage of revenue will decrease, but will vary depending upon the mix of revenue from new and existing customers and from small,medium-sized and enterprise customers, as well as changes in the productivity of our sales and marketing programs.

General and Administrative. General and administrative expenses consist primarily of personnel and related expenses for executive, legal, finance, information technology and human resources functions, including salaries, benefits, incentive compensation and stock-based ~~compensation, in addition to~~compensation. General and administrative expenses also include the costs associated with professional fees, insurance premiums, other corporate expenses and allocated overhead. In future periods we expect general and administrative expenses to increase in absolute dollars as we continue to incur additional personnel and professional services costs in order to support the growth of our business. Over the long term, we believe that general and administrative expenses as a percentage of revenue will decrease.

Merger-related. Merger-related costs ~~consisted~~consist of ~~transaction~~ expenses incurred as part of the acquisition of substantially all of the assets of Unicorn Media, Inc. and certain of its subsidiaries, or Unicorn, as well as costs associated with the retention of key employees of Unicorn. Approximately $1.5 million was required to be paid to retain certain key employees from the Unicorn acquisition. The period in which these services were performed varies by employee. Given that the retention amount was related to ~~a future service requirement,~~mergers and acquisitions, integration costs and general corporate development activities.

Other Expense. Reflects other operating costs that do not directly relate to the ~~related expense was recorded as merger-related compensation expense in the consolidated statements of operations over the expected service period.~~operating activities listed above.

Other Expense, net

Other expense consists primarily of interest income earned on our cash, cash equivalents, and foreign exchange gains and ~~losses and interest expense payable on our debt.~~losses.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of the jurisdictions in which we operate. We account for income taxes in accordance with the asset and liability method. Under this method,

deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. In addition, this method requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We have provided a valuation allowance against our existing U.S. net deferred tax assets at ~~September 30, 2017, with~~December 31, 2022. We maintain net deferred tax liabilities for temporary differences related to our Japanese subsidiary.

During the ~~exception~~first quarter of 2022, we recorded a non-recurring benefit of $1.0 million in the U.S. for the release of a portion of our valuation allowance. This release of the valuation allowance is related to the Wicket Acquisition completed in February 2022 and the creation of deferred tax ~~assets related to Brightcove KK.~~

liabilities in purchase accounting that serve as a source of income for our pre-existing deferred tax assets.

Stock-Based Compensation Expense

Our cost of revenue, research and development, sales and marketing, and general and administrative expenses include stock-based compensation expense. Stock-based compensation expense represents the grant date fair value of outstanding stock options and restricted stock awards, which is recognized as expense over the respective stock option and restricted stock award service periods. For the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, we recorded ~~$1.8~~$3.5 million and ~~$1.7~~$3.6 million, respectively, of stock-based compensation expense. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, we recorded ~~$5.3~~$7.0 million and ~~$4.3~~$7.1 million, respectively, of stock-based compensation expense. We expect stock-based compensation expense to increase in absolute dollars in future periods.

Foreign Currency Translation

With regard to our international operations, we frequently enter into transactions in currencies other than the U.S. dollar. As a result, our revenue, expenses and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the euro, British pound, Australian dollar, and Japanese yen. For the three months ended September 30, 2017 and 2016, 46% and 43%, respectively, of our revenue was generated in locations outside the United States. For the nine months ended September 30, 2017 and 2016, 45% and 42%, respectively, of our revenue was generated in locations outside the United States. During the three months ended September 30, 2017 and 2016, 28% and 29%, respectively, of our revenue was in currencies other than the U.S. dollar, as were some of the associated expenses. During each of the nine months ended September 30, 2017 and 2016, 28% of our revenue was in currencies other than the U.S. dollar, as were some of the associated expenses. In periods when the U.S. dollar declines in value as compared to the foreign currencies in which we conduct business, our foreign currency-based revenue and expenses generally increase in value when translated into U.S. dollars. During the six months ended June 30, 2023, the U.S. dollar increased in value as compared to the Japanese Yen, and our Japanese Yen-based revenues decreased in value when translated into U.S. dollars. We expect ~~our foreign currency-based~~the percentage of total net revenue derived from outside North America to increase in ~~absolute dollars and~~future periods as awe continue to expand our international operations. Should the U.S. dollar continue to increase in value, our future percentage of total ~~revenue.~~net revenue derived from outside North America may remain relatively unchanged or decrease.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

We consider the assumptions and estimates associated with revenue recognition, ~~allowance for doubtful accounts, software development costs,~~ income taxes, business combinations, intangible assets ~~goodwill~~ and ~~stock-based compensation~~goodwill to be our critical accounting policies and estimates. ~~There~~We discuss any assumptions and estimates that could have ~~been no~~a material ~~changes to our critical accounting policies since December 31, 2016.~~effect on the results of operations in the applicable section of this discussion and analysis of the financial condition and results of operations.

For a detailed explanation of the judgments made in these areas, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K for the year ended December 31, ~~2016,~~2022, which we filed with the Securities and Exchange Commission on February ~~21, 2017.~~23, 2023.

~~We believe that our significant accounting policies, which are more fully described in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form10-Q,~~ ~~have not materially changed from those described in the notes to our audited consolidated financial statements included in our Annual Report on Form10-K~~ ~~for the year ended December 31, 2016.~~

Results of Operations

The following tables set forth our results of operations for the periods presented. The data has been derived from the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form10-Q which, in the opinion of our management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for the interim periods presented. Theperiod-to-period comparison of financial results is not necessarily

indicative of future results. This information should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form10-K for the year ended December 31, ~~2016.~~2022.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2023			2022			2023			2022
	(in thousands, except share and per share data)												(in thousands, except share and per share data)
Revenue:
Subscription and support revenue	$	36,496		$	36,203		$	106,266		$	105,936		$	49,013		$	52,988		$	96,115		$	104,589
Professional services and other revenue		2,991			2,186			9,546			5,705			1,975			1,459			3,936			3,237

Total revenue		39,487			38,389			115,812			111,641			50,988			54,447			100,051			107,826
Cost of revenue:
Cost of subscription and support revenue		12,924			11,691			38,180			35,041			16,603			16,943			34,868			33,925
Cost of professional services and other revenue		3,580			2,086			10,120			5,453			1,898			1,761			3,900			3,759

Total cost of revenue		16,504			13,777			48,300			40,494			18,501			18,704			38,768			37,684

Gross profit		22,983			24,612			67,512			71,147			32,487			35,743			61,283			70,142
Operating expenses:
Research and development		7,820			7,704			24,293			22,385			10,345			8,372			20,211			16,609
Sales and marketing		14,551			13,334			44,356			39,845			19,034			17,961			38,499			36,249
General and administrative		5,961			5,126			17,228			14,190			9,405			8,554			19,469			16,643
Merger-related		—			—			—			21			45			153			190			747

Other expense														—			—			—			1,149
Total operating expenses		28,332			26,164			85,877			76,441			38,829			35,040			78,369			71,397

Loss from operations		(5,349	)		(1,552	)		(18,365	)		(5,294	)		(6,342	)		703			(17,086	)		(1,255	)
Other income (expense), net		71			(5	)		523			(127	)

Other expense, net														422			(825	)		(121	)		(1,212	)
Loss before income taxes		(5,278	)		(1,557	)		(17,842	)		(5,421	)		(5,920	)		(122	)		(17,207	)		(2,467	)
Provision for income taxes		118			61			305			202

Provision (benefit) for income taxes														317			179			744			(529	)
Net loss	$	(5,396	)	$	(1,618	)	$	(18,147	)	$	(5,623	)	$	(6,237	)	$	(301	)	$	(17,951	)	$	(1,938	)

Net loss per share - basic and diluted	$	(0.16	)	$	(0.05	)	$	(0.53	)	$	(0.17	)

Weighted-average number of common shares used in computing net loss per share		34,500,868			33,345,161			34,269,639			32,956,186

Net loss per share—basic and diluted
Basic													$	(0.14	)	$	(0.01	)	$	(0.42	)	$	(0.05	)
Diluted													$	(0.14	)	$	(0.01	)	$	(0.42	)	$	(0.05	)
Weighted-average shares—basic and diluted
Basic														43,059			41,723			42,795			41,580
Diluted														43,059			41,723			42,795			41,580

Overview of Results of Operations for the Three Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022

Total revenue ~~increased~~decreased by ~~$1.1~~6%, or $3.5 million, in the three months ended June 30, 2023 compared to the three months ended June 30, 2022 due to a decrease in subscription and support revenue of 8% or $4.0 million, primarily due to a decrease in revenue from our premium offerings. Our revenue from premium offerings decreased by $3.4 million, or 3%6%, in the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 due to ~~an increase~~a decrease in ~~professional~~the number of our customers, a decrease in usage-based fees outside of North America, and to a lesser extent, foreign exchange. Professional services and other revenue ~~of 37%~~increased by 35%, or $805,000, and an increase in subscription and support revenue of 1%, or $293,000. The increase in professional services revenue was primarily related to the size and number of professional services engagements during the three months ended September 30, 2017 compared to the corresponding quarter in the prior year. The increase in subscription and support revenue was primarily related to the continued growth of our customer base for our premium offerings including sales to both new and existing customers. The increases are offset by the loss of a major customer, during the first quarter of 2017, and a $556,000 reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016. In addition, our revenue from premium offerings grew by $1.6$0.5 million, ~~or 4%,~~ in the three months ended ~~September~~June 30, ~~2017,~~2023 compared to the three months ended ~~September~~June 30, ~~2016.~~2022. Professional services and other revenue will vary from period to period depending on the number of implementations and other projects that are in process. Our ability to continue to provide the product functionality and performance that our customers require will be a major factor in our ability to continue to increase revenue.

In constant currency, our total revenue for the three months ended June 30, 2023 would have been approximately $51.6 million. The majority of the effect of revenue in constant currency was in revenues denominated in Japanese Yen of $0.6 million. Constant currency is calculated as translating current period revenue denominated in foreign currencies at the exchange rates of the prior period of comparison.

Our gross profit decreased by ~~$1.6~~$3.3 million, or 7%9%, in the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016,~~2022, primarily due to ~~increases~~the decrease in ~~the cost of~~usage-based fees in subscription and support ~~revenue and the cost of professional services revenue without corresponding increases in~~ revenue. Cost of professional services revenue increased due to a higher level of contractor costs and project hours during the three months ended September 30, 2017 compared to that of the three months ended September 30, 2016. Our ability to ~~improve~~continue to maintain our overall gross profit will depend primarily on our ability to continue controlling our

costs of ~~delivery.~~ delivery and our revenue from premium offerings.

Loss from operations was ~~$5.3~~$6.3 million in the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$1.6~~a profit of $0.7 million in the three months ended ~~September~~June 30, ~~2016. Loss from operations~~2022. This is primarily due to an increase in operating expenses of $3.8 million, primarily due to restructuring charges of $2.3 million, and the aforementioned decrease in gross profit of $3.3 million in the three months ended ~~September~~June 30, ~~2017 included stock-based compensation expense and amortization of acquired intangible assets of $1.8 million and $674,000, respectively. Loss from operations in~~2023 compared to the three months ended ~~September~~June 30, 2016 included stock-based compensation expense and amortization of acquired intangible assets of $1.7 million and $784,000, respectively. In future periods, we expect operating income to improve from increased sales to both new and existing customers and from improved efficiencies throughout our organization as we continue to grow and scale our operations.2022.

As of September 30, 2017, we had $22.1 million of unrestricted cash and cash equivalents, a decrease of $14.7 million from $36.8 million at December 31, 2016, due primarily to $11.7 million of cash used in operating activities, $2.1 million in capitalized~~internal-use~~ software costs, and $990,000 in capital expenditures. There were also cash outflows of $383,000 in payments under capital lease obligations, $229,000 for payments on equipment financing and $175,000 in payments of withholding tax on RSU vesting.Revenue

~~Revenue~~


	Three Months Ended June 30,
	2023					2022					Change
Revenue by Product Line	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
Premium	$	50,643		99	%	$	53,998		99	%	$	(3,355	)		(6	)%
Volume		345		1			449		1			(104	)		(23	)
Total	$	50,988		100	%	$	54,447		100	%	$	(3,459	)		(6	)%

   Three Months Ended September 30,
   2017 2016 Change
Revenue by Product Line
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
Premium
   $ 38,149    97 % $ 36,518    95 % $ 1,631 4 %
Volume
   1,338    3 1,871    5 (533 ) (28 )






Total
   $ 39,487    100 % $ 38,389    100 % $ 1,098 3 %

During the three months ended ~~September~~June 30, ~~2017,~~2023, revenue ~~increased~~decreased by ~~$1.1~~$3.5 million, or 3%6%, compared to the three months ended ~~September~~June 30, ~~2016,~~2022, primarily due to ~~an increase~~a decrease in revenue from our premium ~~offerings, which consists of subscription and support revenue, as well as professional services and other revenue.~~offerings. The ~~increase~~decrease in premium revenue of ~~$1.6~~$3.4 million, or 4%6%, is ~~partially~~ the result of a ~~7% increase~~decrease in the number of ~~premium~~our customers, ~~from 1,981 at September 30, 2016~~a decrease in usage-based fees outside of North America, and to ~~2,113 at September 30, 2017, in addition to an $805,000, or 37%, increase in professional services revenue. The increases are offset in part by the loss of~~ a ~~major customer and a $556,000 reduction in revenue due to changes in~~lesser extent, foreign ~~exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016.~~exchange. In the three months ended ~~September~~June 30, ~~2017,~~2023, volume revenue decreased by ~~$533,000,~~$0.1 million, or ~~28%~~23%, compared to the three months ended ~~September~~June 30, ~~2016,~~2022, as we continue to focus on the market for our premium solutions.


	Three Months Ended September 30,															Three Months Ended June 30,
	2017					2016					Change					2023					2022					Change
Revenue by Type	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount		%			Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)															(in thousands, except percentages)
Subscription and support	$	36,496		92	%	$	36,203		94	%	$	293		1	%	$	49,013		96	%	$	52,988		97	%	$	(3,975	)		(8	)%
Professional services and other		2,991		8			2,186		6			805		37			1,975		4			1,459		3			516			35

Total	$	39,487		100	%	$	38,389		100	%	$	1,098		3	%	$	50,988		100	%	$	54,447		100	%	$	(3,459	)		-6	%

InDuring the three months ended ~~September~~June 30, ~~2017,~~2023, subscription and support revenue ~~increased by $293,000, or 1%,~~decreased compared to the three months ended ~~September~~June 30, ~~2016. The increase was~~2022 primarily ~~related~~due to ~~the continued growth of our customer base for~~a decrease in revenue from our premium offerings including sales to both new and existing customers. These increases are offset in part by the loss of a major customer and a $556,000 reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016. In addition, professionalas described above. Professional services and other revenue increased by ~~$805,000,~~$0.5 million, or ~~37%~~35%, ~~primarily related to the size and number of professional services engagements during the three months ended September 30, 2017~~ compared to the corresponding quarter in the prior year. ~~During the three months ended September 30, 2017, the increase in professional services revenue was primarily related to an increase in OTT application development projects.~~ Professional services and other revenue will vary from period to period depending on the number of implementations and other projects that are in process.

   Three Months Ended September 30,
   2017 2016 Change
Revenue by Geography
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
North America
   $ 22,726    58 % $ 23,246    61 % $ (520 ) (2 )%






Europe
   6,097    15 6,412    16 (315 ) (5 )
Japan
   4,129    11 4,243    11 (114 ) (3 )
Asia Pacific
   6,363    16 4,136    11 2,227 54
Other
   172    —   352    1 (180 ) (51 )






International subtotal
   16,761    42 15,143    39 1,618 11






Total
   $ 39,487    100 % $ 38,389    100 % $ 1,098 3 %


	Three Months Ended June 30,
	2023					2022					Change
Revenue by Geography	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
North America	$	30,694		60	%	$	30,019		55	%	$	675			2	%
Europe		7,915		16			10,128		19			(2,213	)		(22	)
Japan		4,928		10			5,077		9			(149	)		(3	)
Asia Pacific		7,366		14			9,060		17			(1,694	)		(19	)
Other		85		—			163		0			(78	)		(48	)
International subtotal		20,294		40			24,428		45			(4,134	)		(17	)
Total	$	50,988		100	%	$	54,447		100	%	$	(3,459	)		(6	)%

For purposes of this section, we designate revenue by geographic regions based upon the locations of our customers. North America is comprised of revenue from the United States, Canada and Mexico. International is comprised of revenue from locations outside of North America. Depending on the timing of new customer contracts, revenue mix from a geographic region can vary from period to period.

During the three months ended ~~September~~June 30, ~~2017,~~2023, total revenue for North America ~~decreased $520,000,~~increased by $0.7 million, or 2%, compared to the three months ended ~~September~~June 30, 2016. The reduction in revenue for North America is primarily related to the loss of a major customer in the first quarter of 2017 partially offset by increases in sales to new and existing customers. In2022. During the three months ended ~~September~~June 30, ~~2017,~~2023, total revenue outside of North America ~~increased $1.6~~decreased by $4.1 million, or ~~11%~~17%, compared to the three months ended ~~September~~June 30, ~~2016.~~2022. The ~~increase in revenue from international regions is primarily related to an increase~~decrease in revenue in ~~Asia Pacific.~~ Japan was primarily driven by a decrease in average revenue per premium customer as customer usage-based fees were less in the current period.

The ~~increase~~decreases in ~~revenue from~~ Asia Pacific ~~is primarily related~~and Europe were due equally to ~~an increase~~a decrease in customers and a decrease in average revenue from professional services engagements related to OTT application development projects. These increases were partially offset by a $556,000 reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the three months ended September 30, 2016.per premium customer as usage-based fees decreased.

Cost of Revenue


	Three Months Ended September 30,															Three Months Ended June 30,
	2017					2016					Change					2023					2022					Change
Cost of Revenue	Amount		Percentage of Related Revenue			Amount		Percentage of Related Revenue			Amount		%			Amount		Percentage of Related Revenue			Amount		Percentage of Related Revenue			Amount			%
	(in thousands, except percentages)															(in thousands, except percentages)
Subscription and support	$	12,924		35	%	$	11,691		32	%	$	1,233		11	%	$	16,603		34	%	$	16,943		32	%	$	(340	)		(2	)%
Professional services and other		3,580		120			2,086		95			1,494		72			1,898		96			1,761		121			137			8

Total	$	16,504		42	%	$	13,777		36	%	$	2,727		20	%	$	18,501		36	%	$	18,704		34	%	$	(203	)		(1	)%

In the three months ended ~~September~~June 30, ~~2017,~~2023, cost of subscription and support revenue ~~increased $1.2~~decreased $0.3 million, or ~~11%~~2%, compared to the three months ended ~~September~~June 30, ~~2016.~~2022. The ~~increase~~decrease resulted primarily from ~~increases~~a decrease in content delivery network ~~hosting services, amortization, and partner commission expenses~~expense of $509,000, $350,000, and $248,000, respectively. There were also increases in maintenance expense, employee-related expense, and costs associated with third-party software integrated with our service offering of $174,000, $106,000, and $105,000, respectively. These increases were partially$1.7 million, offset by ~~decreases~~an increase in ~~depreciation~~amortization expense ~~and bandwidth costs~~of $1.3 million. The remaining decrease was due to various other expenses that, in ~~the amounts of $162,000 and $127,000, respectively.~~

aggregate, decreased by approximately $60.

In the three months ended ~~September~~June 30, ~~2017,~~2023, cost of professional services and other revenue increased ~~$1.5~~$0.1 million, or ~~72%~~8%, compared to the three months ended ~~September~~June 30, ~~2016. This~~2022. The increase ~~corresponds to the increase in professional services revenue and~~ resulted primarily from ~~increases~~an increase in contractor ~~and~~expenses of $304, offset by a decrease in employee-related expenses of ~~$1.2 million and $258,000, respectively.~~$84. The remaining decrease was due to various other expenses that, in aggregate, decreased by approximately $83.

Gross Profit


	Three Months Ended September 30,																	Three Months Ended June 30,
	2017						2016					Change						2023					2022						Change
Gross Profit	Amount			Percentage of Related Revenue			Amount		Percentage of Related Revenue			Amount			%			Amount		Percentage of Related Revenue			Amount			Percentage of Related Revenue			Amount			%
	(in thousands, except percentages)																	(in thousands, except percentages)
Subscription and support	$	23,572			65	%	$	24,512		68	%	$	(940	)		(4	)%	$	32,410		66	%	$	36,045			68	%	$	(3,635	)		(10	)%
Professional services and other		(589	)		(20	)		100		5			(689	)		(689	)		77		4			(302	)		(21	)		379			125

Total	$	22,983			58	%	$	24,612		64	%	$	(1,629	)		(7	)%	$	32,487		64	%	$	35,743			66	%	$	(3,256	)		(9	)%

The overall gross profit percentage was ~~58%~~64% and ~~64%~~66% for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The decrease ~~is primarily~~in gross profit percentage was due to ~~a shift~~the aforementioned decreases in ~~the mix of revenue as there was an increase in revenue from professional services engagements, which has a lower gross margin than~~ subscription and support revenue. Subscription and support gross profit decreased ~~$940,000,~~$3.6 million, or 4%10%, compared to the three months ended ~~September~~June 30, ~~2016 due to the loss of a major customer.~~2022. Professional services and other gross profit ~~decreased $689,000,~~increased by $0.4 million, or ~~689%~~125%, compared to the three months ended ~~September~~June 30, ~~2016 due to the increase in mix of contractor expenses versus internal expenses in order to support various professional services projects.~~2022. It is likely that gross profit, as a percentage of revenue, will fluctuate quarter by quarter due to the timing and mix of subscription and support revenue and professional services and other revenue, and the type, timing and duration of service required in delivering certain projects.

Operating Expenses


	Three Months Ended September 30,															Three Months Ended June 30,
	2017					2016					Change					2023					2022					Change
Operating Expenses	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount		%			Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)															(in thousands, except percentages)
Research and development	$	7,820		20	%	$	7,704		20	%	$	116		2	%	$	10,345		20	%	$	8,372		15	%	$	1,973			24	%
Sales and marketing		14,551		37			13,334		35			1,217		9			19,034		37			17,961		33			1,073			6
General and administrative		5,961		15			5,126		13			835		16			9,405		18			8,554		16			851			10

Merger-related																	45		—			153		—			(108	)		(71	)
Total	$	28,332		72	%	$	26,164		68	%	$	2,168		8	%	$	38,829		76	%	$	35,040		64	%	$	3,789			11	%

Table of Contents

Research and Development. In the three months ended ~~September~~June 30, ~~2017,~~2023, research and development expense increased by ~~$116,000,~~$2.0 million, or 2%24%, compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~increases~~an increase in ~~computer maintenance and support and~~ employee-related expenses of ~~$146,000 and $141,000, respectively. In future periods, we~~$2.2 million, which includes $0.8 million of restructuring charges, offset by a decrease in contractor expenses of $125. The remaining increase was due to various other expenses that, in aggregate, increased by approximately $68. We expect ~~that our~~ research and development ~~expense will increase~~costs in absolute dollars ~~as we continue~~ to ~~add employees, develop new features and functionality for our products, introduce additional software solutions and expand our product and service offerings.~~decrease in the second half of 2023.

Sales and Marketing. In the three months ended ~~September~~June 30, ~~2017,~~2023, sales and marketing expense increased by ~~$1.2~~$1.1 million, or 9%6%, compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to an increase in employee-related ~~expense, marketing programs, commission expense, and computer maintenance and support~~ expenses of ~~$865,000, $296,000, $108,000 and $106,000, respectively. These increases were partially~~$1.2 million which includes $1.1 million of restructuring charges. This increase was offset by a decrease in ~~recruiting and relocation expense of $154,000.~~various other expenses that, in aggregate, decreased by approximately $100. We expect ~~that our~~ sales and marketing expense ~~will increase~~ in absolute dollars ~~along with our revenue, as we continue~~ to ~~expand sales coverage and build brand awareness through what we believe are cost-effective channels. We expect that such increases may fluctuate from period to period, however, due to~~decrease in the ~~timing~~second half of ~~marketing programs.~~2023.

General and Administrative. In the three months ended ~~September~~June 30, ~~2017,~~2023, general and administrative ~~expense~~ increased by ~~$835,000,~~$0.9 million, or ~~16%~~10%, compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to increases in employee-related expenses, stock-based compensation, dues and subscriptions expenses, and bad debt expense of $209, 258, $163, and ~~outside legal fees of $836,000 and $185,000~~$191, respectively. ~~These increases were offset~~The remaining increase was due to various other expenses that, in aggregate, increased by ~~decreases in contractor and recruiting and relocation expenses of $137,000 and $115,000 respectively. In future periods, we~~approximately $30. We expect general and administrative ~~expense~~expenses in absolute dollars to ~~remain relatively unchanged.~~

decrease in the second half of 2023.

~~Other Income (Expense), Net~~

   Three Months Ended September 30,
   2017 2016 Change
Other Income (Expense)
   Amount Percentage of
Revenue Amount Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Interest income, net
   $ 30 —   % $ 24 —   % $ 6    25 %
Interest expense
   (6 ) —   (15 ) —   9    (60 )
Other income (expense), net
   47 —   (14 ) —   61    (436 )




Total
   $ 71 —   % $ (5 ) —   % $ 76    (1520 )%

Merger-Related. In the three months ended ~~September~~June 30, ~~2017, interest income, net, increased~~2023, merger-related expenses decreased by ~~$6,000,~~$108, or ~~25%~~71%, ~~compared to the corresponding period of the prior year.~~

The interest expense during the three months ended September 30, 2017 is primarily comprised of interest paid on capital leases and an equipment financing. The increase in other income (expense), net during the three months ended September 30, 2017 was primarily due to ~~foreign currency exchange gains recorded during~~costs incurred in connection with the ~~three months ended September 30, 2017 upon collection of foreign denominated accounts receivable, compared to losses recorded~~Wicket Acquisition in ~~the corresponding period of the prior year.~~2022 which did not recur in 2023.

~~Provision for Income Taxes~~

   Three Months Ended September 30,
   2017 2016 Change
Provision for Income Taxes
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
      (in thousands, except percentages)
Provision for income taxes
   $ 118    —   % $ 61    —   % $ 57    93 %

~~In the three months ended September 30, 2017 and 2016, the provision for income taxes was primarily comprised of income tax expenses related to foreign jurisdictions.~~

Overview of Results of Operations for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022

Total revenue ~~increased~~decreased by ~~$4.2~~7%, or $7.8 million, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022 due to a decrease in subscription and support revenue of 8% or $8.5 million, primarily due to a decrease in revenue from our premium offerings. Our revenue from premium offerings decreased by $7.4 million, or 4%7%, in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016 due to an increase in professional~~2022. Professional services and other revenue ~~of 67%~~increased by 22%, or ~~$3.8 million. The increase~~$0.7 million, in ~~professional services revenue was primarily related to~~ the ~~size and number of professional services engagements during the nine~~six months ended ~~September~~June 30, ~~2017,~~2023 compared to the ~~corresponding period in the prior year. Subscription and support revenue remained relatively unchanged during the nine~~six months ended ~~September~~June 30, ~~2017, compared~~2022. Professional services and other revenue will vary from period to ~~the corresponding~~ period in the prior year. In addition, our revenue from premium offerings grew by $5.6 million, or 5%, in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016 primarily due to an 7% increase independing on the number of ~~premium~~implementations and other projects that are in process. Our ability to continue to provide the product functionality and performance that our customers ~~from 1,981 at September~~require will be a major factor in our ability to continue to increase revenue.

In constant currency, our total revenue for the six months ended June 30, ~~2016 to 2,113 at September 30, 2017. These increases are offset by a $1.9 million reduction~~2023 would have been approximately $101.9 million. The majority of the effect of revenue in constant currency was in revenues denominated in Japanese Yen of $1.3 million. Constant currency is calculated as translating current period revenue ~~due to changes~~denominated in foreign ~~exchange rates compared to~~currencies at the exchange rates ~~that were in effect during~~of the ~~nine months ended September 30, 2016.~~prior period of comparison.

Our gross profit decreased by ~~$3.6~~$8.9 million, or 5%13%, in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, primarily due to ~~increases~~a decrease in ~~the cost of~~ subscription and support revenue, ~~and the cost of professional services revenue without corresponding increases~~as well as an increase in ~~revenue. Cost of subscription and support revenue increased due~~amortization expense related to additional costs incurred in order to support the launch of a major customer during the second quarter of 2017. Cost of professional services revenue increased due to a higher level of contractor costs and project hours during the nine months ended September 30, 2017 compared to that of the nine months ended September 30, 2016.our capitalized internal-use software. Our ability to ~~improve~~continue to maintain our overall gross profit will depend primarily on our ability to continue controlling our costs of ~~delivery.~~ delivery and our revenue from premium offerings.

Loss from operations was ~~$18.4~~$17.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$5.3~~a loss from operations of $1.3 million in the ~~nine~~six months ended ~~September~~June 30, 2016. Loss from operations in the nine months ended September 30, 2017 included stock-based compensation expense and amortization of acquired intangible assets of $5.3 million and $2.1 million, respectively. Loss from operations in the nine months ended September 30, 2016 included stock-based compensation expense and amortization of acquired intangible assets of $4.3 million and $2.3 million, respectively.

~~Revenue~~

   Nine Months Ended September 30,
   2017 2016 Change
Revenue by Product Line
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
Premium
   $ 111,505    96 % $ 105,899    95 % $ 5,606 5 %
Volume
   4,307    4 5,742    5 (1,435 ) (25 )






Total
   $ 115,812    100 % $ 111,641    100 % $ 4,171 4 %

~~During the nine months ended September 30, 2017, revenue increased by $4.2 million, or 4%, compared to the nine months ended September 30, 2016,~~2022. This is primarily due to an increase in operating expenses of $7.0 million, and a decrease in gross profit of $8.9 million in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Revenue


	Six Months Ended June 30,
	2023					2022					Change
Revenue by Product Line	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
Premium	$	99,379		99	%	$	106,770		99	%	$	(7,391	)		(7	)%
Volume		672		1			1,056		1			(384	)		(36	)
Total	$	100,051		100	%	$	107,826		100	%	$	(7,775	)		(7	)%

During the six months ended June 30, 2023, revenue decreased by $7.8 million, or 7%, compared to the six months ended June 30, 2022, primarily due to a decrease in revenue from our premium ~~offerings, which consists of subscription and support revenue, as well as professional services and other revenue.~~offerings. The ~~increase~~decrease in premium revenue of ~~$5.6~~$7.4 million, or 5%7%, is ~~partially~~ the result of a ~~7% increase~~decrease in the number of our customers and in the average revenue per premium ~~customers from 1,981 at September 30, 2016 to 2,113 at September 30, 2017,~~customer. The decrease in ~~addition~~average revenue per premium customer is due to a ~~$3.8 million, or 67%, increase~~decrease in ~~professional services revenue. The increases are offset by~~usage-based fees outside of North America. In the ~~loss of a major customer and a $1.9 million reduction in revenue due to changes in foreign exchange rates compared to the exchange rates that were in effect during the nine~~six months ended ~~September~~June 30, ~~2016. In the nine months ended September 30, 2017,~~2023, volume revenue decreased by ~~$1.4~~$0.4 million, or ~~25%~~36%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, as we continue to focus on the market for our premium solutions.


	Nine Months Ended September 30,															Six Months Ended June 30,
	2017					2016					Change					2023					2022					Change
Revenue by Type	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount		%			Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)															(in thousands, except percentages)
Subscription and support	$	106,266		92	%	$	105,936		95	%	$	330		0	%	$	96,115		96	%	$	104,589		97	%	$	(8,474	)		(8	)%
Professional services and other		9,546		8			5,705		5			3,841		67			3,936		4			3,237		3			699			22

Total	$	115,812		100	%	$	111,641		100	%	$	4,171		4	%	$	100,051		100	%	$	107,826		100	%	$	(7,775	)		(7	)%

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, subscription and support revenue ~~was relatively unchanged~~decreased by $8.5 million, or 8%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016. In addition, professional~~2022, due to the aforementioned decrease in revenue premium offerings outside North America. Professional services and other revenue increased by ~~$3.8~~$0.7 million, or ~~67%~~22%, ~~primarily related to the size and number of professional services engagements during the nine months ended September 30, 2017~~ compared to the corresponding quarter in the prior year. ~~During~~Professional services and other revenue will vary from period to period depending on the ~~nine months ended September 30, 2017, the increase~~number of implementations and other projects that are in ~~professional services revenue was primarily related to an increase in OTT application development projects.~~process.

   Nine Months Ended September 30,
   2017 2016 Change
Revenue by Geography
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount %
   (in thousands, except percentages)
North America
   $ 68,205    59 % $ 68,913    62 % $ (708 ) (1 )%






Europe
   18,177    16 18,843    17 (666 ) (4 )
Japan
   12,416    11 11,447    10 969 8
Asia Pacific
   16,490    14 11,495    10 4,995 43
Other
   524    —   943    1 (419 ) (44 )






International subtotal
   47,607    41 42,728    38 4,879 11






Total
   $ 115,812    100 % $ 111,641    100 % $ 4,171 4 %


	Six Months Ended June 30,
	2023					2022					Change
Revenue by Geography	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)
North America	$	59,795		60	%	$	59,480		55	%	$	315			1	%
Europe		16,102		16			19,233		18			(3,131	)		(16	)
Japan		10,124		10			12,338		11			(2,214	)		(18	)
Asia Pacific		13,860		14			16,496		15			(2,636	)		(16	)
Other		170		—			279		0			(109	)		(39	)
International subtotal		40,256		40			48,346		44			(8,090	)		(17	)
Total	$	100,051		100	%	$	107,826		100	%	$	(7,775	)		(7	)%

InDuring the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, total revenue for North America ~~decreased $708,000,~~increased by $315, or 1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016. The reduction in revenue for North America is primarily related to~~2022. During the ~~loss of a major customer in the first quarter of 2017 partially offset by increases in sales to new and existing customers. In the nine~~six months ended ~~September~~June 30, ~~2017,~~2023, total revenue outside of North America ~~increased $4.9~~decreased by $8.1 million, or ~~11%~~17%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The ~~increase~~decrease in revenue ~~from international regions is~~in Japan was primarily ~~related~~driven by a decrease in average revenue per premium customer as customer usage-based fees were less in the current period and, to ~~an increase~~a lesser extent, non-recurring customer events that occurred in ~~revenue~~the prior period. The decreases in Asia Pacific and ~~Japan. The increase~~Europe were due equally to a decrease in customers and a decrease in average revenue from Asia Pacific and Japan is primarily related to an increase in revenue from professional services engagements related to OTT application development projects. These increases were partially offset by a $1.9 million reduction in revenue due to changes in foreign exchange rates compared toper premium customer as usage-based fees decreased.

Cost of Revenue


	Six Months Ended June 30,
	2023					2022					Change
Cost of Revenue	Amount		Percentage of Related Revenue			Amount		Percentage of Related Revenue			Amount		%
	(in thousands, except percentages)
Subscription and support	$	34,868		36	%	$	33,925		32	%	$	943		3	%
Professional services and other		3,900		99			3,759		116			141		4
Total	$	38,768		39	%	$	37,684		35	%	$	1,084		3	%

In the ~~exchange rates that were in effect during the nine~~six months ended ~~September~~June 30, ~~2016.~~

~~Cost of Revenue~~

   Nine Months Ended September 30,
   2017 2016 Change
Cost of Revenue
   Amount    Percentage of
Related
Revenue Amount    Percentage of
Related
Revenue Amount    %
   (in thousands, except percentages)
Subscription and support
   $ 38,180    36 % $ 35,041    33 % $ 3,139    9 %
Professional services and other
   10,120    106 5,453    96 4,667    86








Total
   $ 48,300    42 % $ 40,494    36 % $ 7,806    19 %

~~In the nine months ended September 30, 2017,~~2023, cost of subscription and support revenue increased ~~$3.1~~$0.9 million, or 9%3%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The increase resulted primarily from an increase in employee-related expenses, amortization of capitalized internal-use software expenses, and network hosting services of $442, $2.6 million, and $676, respectively. These increases were offset by a decrease in content delivery network network hosting, and amortization expenses related to internal-use software of $929,000, $864,000, and $851,000, respectively. There were also increases in partner commission, maintenance, and employee-related expenses of $519,000, $378,000, and $296,000, respectively, as well as increases in costs associated with third-party software integrated with our service offering, contractor expense, and stock-based compensation expenses of $135,000, $117,000 and $104,000, respectively. These increases were partially$2.6 million. The remaining increase offset by ~~decreases~~various other expenses that, in ~~depreciation and bandwidth expenses of $814,000 and $244,000, respectively.~~aggregate, increased by approximately $110.

In the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, cost of professional services and other revenue increased ~~$4.7~~$0.1 million, or ~~86%~~4%, compared to the ~~nine~~six months ended ~~September~~Jun 30, ~~2016. This~~2022. The increase ~~corresponds to the increase in professional services revenue and~~ resulted primarily from ~~increases~~an increase in contractor ~~employee-related and travel~~ expenses of ~~$3.3 million, $1.0 million, and $123,000, respectively.~~$495, offset by a decrease in employee-related expenses of $210. The remaining increase was offset by various other expenses that, in aggregate, decreased by $145.

Gross Profit


	Six Months Ended June 30,
	2023					2022						Change
Gross Profit	Amount		Percentage of Related Revenue			Amount			Percentage of Related Revenue			Amount			%
	(in thousands, except percentages)
Subscription and support	$	61,247		64	%	$	70,664			68	%	$	(9,417	)		(13	)%
Professional services and other		36		1			(522	)		(16	)		558			107
Total	$	61,283		61	%	$	70,142			65	%	$	(8,859	)		(13	)%

   Nine Months Ended September 30,
   2017 2016 Change
Gross Profit
   Amount Percentage of
Related
Revenue Amount    Percentage of
Related
Revenue Amount %
   (in thousands, except percentages)
Subscription and support
   $ 68,086 64 % $ 70,895    67 % $ (2,809 ) (4 )%
Professional services and other
   (574 ) (6 ) 252    4 (826 ) (328 )




Total
   $ 67,512 58 % $ 71,147    64 % $ (3,635 ) (5 )%

The overall gross profit percentage was ~~58%~~61% and ~~64%~~65% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The decrease ~~is primarily~~in gross profit percentage was due to ~~a shift~~the aforementioned decreases in ~~the mix of revenue as there was an increase in revenue from professional services engagements, which has a lower gross margin than~~ subscription and support revenue. Subscription and support gross profit decreased ~~$2.8~~$9.4 million, or 4%13%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016 due to additional costs incurred in order to support the launch of a major customer during the second quarter of 2017. In addition, professional~~2022. Professional services and other gross profit ~~decreased $826,000,~~increased by $0.6 million, or ~~328%~~107%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022. It is likely that gross profit, as a percentage of revenue, will fluctuate quarter by quarter due to the ~~increase in~~timing and mix of ~~contractor expenses versus internal expenses in order to~~subscription and support ~~various~~revenue and professional services and other revenue, and the type, timing and duration of service required in delivering certain projects.

Operating Expenses



	Nine Months Ended September 30,																Six Months Ended June 30,
	2017					2016					Change						2023					2022					Change
Operating Expenses	Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%			Amount		Percentage of Revenue			Amount		Percentage of Revenue			Amount			%
	(in thousands, except percentages)																(in thousands, except percentages)
Research and development	$	24,293		21	%	$	22,385		20	%	$	1,908			9	%	$	20,211		20	%	$	16,609		15	%	$	3,602			22	%
Sales and marketing		44,356		38			39,845		36			4,511			11			38,499		38			36,249		34			2,250			6
General and administrative		17,228		15			14,190		13			3,038			21			19,469		19			16,643		15			2,826			17
Merger-related		—		—			21		—			(21	)		(100	)		190		—			747		1			(557	)		(75	)

Total	$	85,877		74	%	$	76,441		68	%	$	9,436			12	%

Other expense (benefit)																		—		—			1,149		1			(1,149	)		(100	)

Research and Development. In the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, research and development expense increased by ~~$1.9~~$3.6 million, or 9%22%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to an increase in employee-related expenses of $3.6 million, which includes $1.0 million of restructuring charges. We expect research and development costs in absolute dollars to decrease in the second half of 2023.

Sales and Marketing. In the six months ended June 30, 2023, sales and marketing expense increased by $2.3 million, or 6%, compared to the six months ended June 30, 2022 primarily due to an increase in employee-related expenses, agency expenses, and travel expenses of $2.6 million, $522, and $486, respectively. The $2.6 million increase in employee-related expenses reflects $1.2 million in restructuring charges These increases were offset by a decrease in marketing program expenses of $1.1 million and various other expenses that, in aggregate, decreased by approximately $250. We expect sales and marketing expense in absolute dollars to decrease in the second half of 2023.

General and Administrative. In the six months ended June 30, 2023, general and administrative increased by $2.8 million, or 17%, compared to the six months ended June 30, 2022 primarily due to increases in employee-related ~~computer maintenance~~expenses, stock-based

compensation, travel expenses, contractor expenses, outside accounting and support, contractor, and stock-based compensation expenses of $1.7 million, $291,000, $290,000, and $190,000, respectively. These increases were partially offset by a decrease in recruiting expense of $294,000.

~~Sales and Marketing~~. In the nine months ended September 30, 2017, sales and marketing expense increased by $4.5 million, or 11%, compared to the nine months ended September 30, 2016 primarily due to employee-related expense, marketing programs, and commission expense of $2.6 million, $899,000 and $502,000, respectively. There were also increases in computer maintenance and support, travel, and stock-based compensation expenses of $367,000, $339,000, and $323,000, respectively. These increases were partially offset by decreases in recruiting and relocation, contractor, and intangible amortization expenses of $258,000, $201,000, and $190,000, respectively.

~~General and Administrative~~. In the nine months ended September 30, 2017, general and administrative expense increased by $3.0 million, or 21%, compared to the nine months ended September 30, 2016 primarily due to increases in employee-related expense, outside legal fees, ~~and stock-based compensation expense of $1.5 million, $990,000 and $381,000, respectively. There were also increases intax-related,~~ ~~commission, travel, and~~ computer maintenance and support expenses, dues and subscriptions expenses, and bad debt expense of ~~$263,000, $184,000, $142,000~~$808, $369, $198, $354, $448, $162, $161, and ~~$122,000~~152, respectively. The $808 increase in employee-related expenses reflects approximately $500 in restructuring charges. These ~~expenses~~increases were ~~partially~~ offset by ~~decreases~~various other expenses that, in ~~recruiting~~aggregate, decreased by approximately $173. We expect general and ~~relocation and contractor~~administrative expenses in absolute dollars to decrease in the second half of ~~$206,000 and $203,000 respectively.~~2023.

~~Merger-related~~Merger-Related.In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2023, merger-related expenses ~~of $21,000 related~~decreased by $557, or 75%, due to costs ~~associated~~incurred in connection with the ~~retention~~Wicket Acquisition in 2022 which did not recur in 2023.

Other expense. On March 28, 2022 our CEO retired. Pursuant to a Transition Agreement that was entered into by the previous CEO and the Company in October 2021, the CEO, upon retirement, would be paid his annual base compensation through December 31, 2022 and his 2022 annual bonus, the bonus amount to be determined by the Company’s 2022 performance. In accordance with generally accepted accounting principles we determined that the remaining base compensation and the current estimate of the 2022 annual bonus should be accrued and the expense recognized as of March 28, 2022. The total expense of $1.1 million also reflected $0.2 million of stock-based compensation expense as a result of the modification of certain ~~employees~~awards pursuant to the Transition Agreement. Of the total annual base compensation and bonus accrued, no balance remains unpaid as of ~~Unicorn. No such expense was incurred during~~June 30, 2023. In the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2023, we did not incur additional other expenses.

~~Other Income (Expense), Net~~

   Nine Months Ended September 30,
   2017 2016 Change
Other Income (Expense)
   Amount Percentage of
Revenue Amount Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Interest income, net
   $ 92 —   % $ 74 —   % $ 18    24 %
Interest expense
   (22 ) —   (51 ) —   29    (57 )
Other income (expense), net
   453 —   (150 ) —   603    (402 )




Total
   $ 523 —   % $ (127 ) —   % $ 650    (512 )%

In the nine months ended September 30, 2017, interest income, net, increased by $18,000, or 24%, compared to the corresponding period of the prior year. The increase is primarily due to a higher average cash balance as interest income is generated from the investment of our cash balances, less related bank fees.

The interest expense during the nine months ended September 30, 2017 is primarily comprised of interest paid on capital leases and an equipment financing. The increase in other income (expense), net during the nine months ended September 30, 2017 was primarily due to foreign currency exchange gains recorded during the nine months ended September 30, 2017 upon collection of foreign denominated accounts receivable, compared to losses recorded in the corresponding period of the prior year.

~~Provision for Income Taxes~~

   Nine Months Ended September 30,
   2017 2016 Change
Provision for Income Taxes
   Amount    Percentage of
Revenue Amount    Percentage of
Revenue Amount    %
   (in thousands, except percentages)
Provision for income taxes
   $ 305    —   % $ 202    —   % $ 103    51 %

~~In the nine months ended September 30, 2017 and 2016, the provision for income taxes was primarily comprised of income tax expenses related to foreign jurisdictions.~~

Liquidity and Capital Resources

In connection with our initial public offering in February 2012, we received aggregate proceeds of approximately $58.8 million, including the proceeds from the underwriters’ exercise of their overallotment option, net of underwriters’ discounts and commissions, but before deducting offering expenses of approximately $4.3 million. Prior to our initial public offering, we funded our operations primarily through private placements of preferred and common stock, as well as through borrowings of $7.0 million under our bank credit facilities. In February 2012, we repaid the $7.0 million balance under our bank credit facilities. All of the preferred stock was converted into shares of our common stock in connection with our initial public offering.

   Nine Months Ended
September 30,
Condensed Consolidated Statements of Cash Flow Data
   2017 2016
   (in thousands)
Purchases of property and equipment
   $ (990 ) $ (1,194 )
Depreciation and amortization
   5,607 5,901
Cash flows (used in) provided by operating activities
   (11,652 ) 7,629
Cash flows used in investing activities
   (3,081 ) (4,434 )
Cash flows (used in) provided by financing activities
   (408 ) 3,902

Cash and cash equivalents.

Our cash and cash equivalents at ~~September~~June 30, ~~2017~~2023 were held for working capital purposes and were invested primarily in ~~money market funds.~~cash. We do not enter into investments for trading or speculative purposes. At ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, we had ~~$6.9~~$9.0 million and ~~$5.9~~$12.1 million, respectively, of cash and cash equivalents held by subsidiaries in international locations, including subsidiaries located in Japan and the United Kingdom. ~~It is our current intention~~These earnings can be repatriated to ~~permanently reinvest unremitted earnings~~the United States tax-free but could still be subject to foreign withholding taxes. During the quarter ended March 31, 2023, we paid $1.7 million of cash consideration held back to sellers for the satisfaction of certain representations and warranties in ~~such subsidiaries or~~relation to ~~repatriate~~ the ~~earnings only when tax effective.~~Wicket Acquisition. We believe that our existing cash and cash equivalents will be sufficient to meet our anticipated working capital and capital expenditure needs over at least the next 12 months.

Six Months Ended June 30,

Condensed Consolidated Statements of Cash Flow Data

2023

2022

(in thousands)

Cash flows (used in) provided by operating activities

$
(1,822
)

$
9,257

Cash flows used in investing activities

$
(8,561
)

$
(17,942
)
Cash flows (used in) provided by financing activities

$
(1,956
)

$
93

Accounts receivable, net.

Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. The fluctuations vary depending on the timing of our billing activity, cash collections, and changes to our allowance for doubtful accounts. In many instances we receive cash payment from a customer prior to the time we are able to recognize revenue on a transaction. We record these payments as deferred revenue, which has a positive effect on our accounts receivable balances. We use days’ sales outstanding, or DSO, calculated on a quarterly basis, as a measurement of the quality and status of our receivables. We define DSO as (a) accounts receivable, net of allowance for doubtful accounts, divided by total revenue for the most recent quarter, multiplied by (b) the number of days in that quarter. DSO was 61 days at September 30, 2017 and 53 days at December 31, 2016.

Cash flows ~~(used in) provided by~~used in operating activities.

Cash ~~(used in) provided by~~used in operating activities consists primarily of net loss adjusted for certainnon-cash items including depreciation and amortization, stock-based compensation expense, the provision for bad debts and the effect of changes in working capital and other activities. Cash used in operating activities during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~$11.7~~$1.8 million. The cash ~~flow~~ used in operating activities primarily resulted from net ~~losses~~non-cash charges of ~~$18.1~~$15.3 million and net changes in our operating assets and liabilities of ~~$4.6~~$0.9 million, ~~partially offset by~~and a net~~non-cash~~ ~~charges~~ loss of ~~$11.0~~$18.0 million. ~~Uses~~Net non-cash expenses mainly consisted of ~~cash included~~$8.0 million for depreciation and amortization and $7.0 million for stock-based compensation. Cash outflows resulting from changes in our operating assets and liabilities consisted primarily of increases in accounts receivable, ~~and~~ prepaid expenses and other current assets, of ~~$4.8~~$4.2 million, ~~and $1.6~~$1.9 million, respectively, ~~and a decrease~~as well as decreases in accrued ~~expense~~expenses of ~~$2.9~~$5.5 million. These cash outflows were offset ~~in part~~ by increases in deferred revenue and accounts payable of ~~$2.7~~$8.4 million and ~~$2.0~~$3.4 million, respectively. ~~Netnon-cash~~ ~~expenses consisted~~The decrease in cash flow provided by operating activities in the six months ended June 30, 2023 compared to the prior period is primarily due to the increase in net loss.

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Cash flows used in investing activities.

Cash used in investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~$3.1~~$8.6 million, consisting primarily of ~~$2.1~~$7.2 million for the capitalization ofinternal-use software costs and ~~$990,000~~$1.3 million in capital expenditures to support the business. The decrease in cash flows used in investing activities is primarily due to the acquisition of Wicket Labs in 2022.

Cash flows ~~(used in) provided by~~used in financing activities.

Cash ~~(used in) provided by~~used in financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~$408,000, consisting of~~$1.9 million, primarily from deferred acquisition payments ~~under capital lease obligation, equipment~~and other financing ~~and withholding tax on RSU vesting of $383,000, $229,000 and $175,000, respectively, offset in part by the proceeds received on the exercise of common stock options of $379,000.~~activities.

Credit ~~facility borrowings.~~facility.

On ~~November 19, 2015,~~December 28, 2020, we entered into an amended and restated loan and security agreement with a lender (the “Loan Agreement”) providing for up to a ~~$20.0~~$30.0 million ~~asset based~~asset-based line of credit (the “Line of Credit”). ~~Under the Line of Credit, we can borrow up to $20.0 million.~~ Borrowings under the Line of Credit are secured by substantially all of our assets, excluding our intellectual property. Outstanding amounts under the Line of Credit accrue interest at a rate equal to the prime rate or the LIBOR rate plus 2.5%. Under the Loan Agreement, we must comply with certain financial covenants, including maintaining a minimum asset coverage ratio. If the outstanding principal during any month is at least $15.0 million, the Company must also maintain a minimum net income threshold based on~~non-GAAP~~ operating measures. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the Line of Credit to declare all amounts borrowed under the Line of Credit, together with accrued interest and fees, to be immediately due and payable. We were in compliance with all covenants under the Line of Credit as of ~~September~~June 30, ~~2017.~~

~~On December 31, 2015,~~2023. As we have not currently drawn on the ~~Company entered into an equipment financing agreement with a lender (the “December 2015 Equipment Financing Agreement”) to finance the purchase~~Line of $604,000 in computer equipment. In February 2016, the Company drew down $604,000 under the December 2015 Equipment Financing Agreement, and the liability was recorded at fair value using a market interest rate. The Company is repaying its obligation over a two year period through January 2018, and the amountCredit, there are no amounts outstanding ~~was $104,000~~ as of ~~September~~June 30, ~~2017.~~2023.

Net operating loss carryforwards.

As of December 31, ~~2016,~~2022, we had federal and state net operating losses of approximately ~~$155.5~~$164.0 million and ~~$57.4~~$82.8 million, respectively, which are available to offset future taxable income, if any, through ~~2035. Included in the~~2037 and 2041, respectively. We had federal and state net operating losses ~~are deductions attributable to excess tax benefits from the exercise ofnon-qualified~~ ~~stock options~~ of ~~$16.9~~approximately $45.7 million and ~~$10.2~~$3.1 million, ~~respectively. The tax benefits attributable~~respectively, which are available to ~~these net operating losses are credited directly to additionalpaid-in~~ ~~capital when realized. The Company has not realized~~offset future taxable income, if any, ~~such tax benefits through December 31, 2016.~~indefinitely. We had federal and state research and development tax credits of ~~$5.4~~$9.8 million and ~~$3.5~~$6.0 million, respectively, which expire in various amounts through ~~2035.~~2041. Our net operating loss and tax credit amounts are subject to annual limitations under Section 382 change of ownership rules of the U.S. Internal Revenue Code of 1986, as amended. We completed an assessment to determine whether there may have been a Section 382 ownership change and determined that it is more likely than not that our net operating and tax credit amounts as disclosed are not subject to any material Section 382 limitations.

In assessing our ability to utilize our net deferred tax assets, we considered whether it is more likely than not that some portion or all of our net deferred tax assets will not be realized. Based upon the level of our historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, we believe it is more likely than not that we will not realize the benefits of these deductible differences. Accordingly, we have provided a valuation allowance against our U.S. deferred tax assets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

Contractual Obligations and Commitments

Our principal commitments consist primarily of obligations under our leases for our office, ~~space and contractual commitments for capital leases and equipment financing~~ as well as content delivery network services, hosting and other support services. During the second quarter of 2022 we renewed agreements with our primary providers of content delivery network services, hosting and other support services. The terms of the two agreements comprised: 1) a minimum commitment of $90 million over three years and 2) a minimum commitment of $4.8 million over two years. Other than these lease obligations and contractual commitments, we do not have commercial commitments under lines of credit, standby repurchase obligations or other such debt arrangements, nor do we have any off-balance sheet arrangements.

Our contractual obligations as of December 31, ~~2016~~2022 are summarized in our Annual Report on Form10-K for the year ended December 31, ~~2016. In addition to the obligations outlined in our Annual Report on Form10-K,~~ ~~we entered into an agreement with anon-cancelable~~ commitment in January 2017, primarily for content delivery and network storage service, with obligations of $15.8 million through December 31, 2018. As of September 30, 2017, our obligation was $4.8 million in connection with this agreement.2022.

~~In July 2017, we entered into an agreement with anon-cancelable~~ commitment effective July 1, 2017, primarily for content delivery and network storage service, with obligations of $2.5 million through September 30, 2018. In September 2017, we amended this agreement effective September 1, 2017 with total obligations of $2.6 million through January 31, 2019. As of September 30, 2017, our obligation was $2.6 million in connection with this agreement.

~~In August 2017, we entered into an agreement to lease a new office space in London with anon-cancelable~~ ~~commitment with obligations of $7.0 million through December 31, 2024.~~

Recent Accounting Pronouncements

For information on recent accounting pronouncements, seeRecently Issued and Adopted Accounting Standards in ~~the notes~~Note 2 to the condensed consolidated financial statements ~~appearing elsewhere~~ in this Quarterly Report on Form10-Q.

~~Off-Balance~~ ~~Sheet Arrangements~~

~~We do not have any special purpose entities oroff-balance~~ ~~sheet arrangements.~~

Anticipated Cash Flows

We expect to incur significant operating costs, particularly related to ~~service~~services delivery costs, sales and marketing and research and development, for the foreseeable future in order to execute our business plan. We anticipate that such operating costs, as well as planned capital expenditures will constitute a material use of our cash resources. As a result, our net cash flows will depend heavily on the level of future sales, changes in deferred revenue and our ability to manage infrastructure costs.

We believe our existing cash and cash equivalents and credit facility will be sufficient to meet our working capital and capital expenditures for at least the next 12 months. Our future working capital requirements will depend on many factors, including the rate of our revenue growth, our introduction of new products and enhancements, and our expansion of sales and marketing and product development activities. To the extent that our cash and cash equivalents, and cash flow from operating activities are insufficient to fund our future activities, we may need to raise additional funds through bank credit arrangements or public or private equity or debt financings. We also may need to raise additional funds in the event we determine in the future to acquire businesses, technologies and products that will complement our existing operations. In the event funding is required, and especially if interest rates continue to
rise, we may not be able to obtain bank credit arrangements or equity or debt financing on terms acceptable to us or at all. Market volatility resulting from the COVID-19 coronavirus pandemic, increase foreign exchange rate fluctuations, inflationary pressures,
interest rate increases or other factors could also adversely impact our ability to access capital as and when needed.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Quantitative~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (in thousands, except share and ~~Qualitative Disclosures about Market Risk~~per share data, unless otherwise noted)

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks include primarily foreign exchange risks, interest rate and inflation.

Financial instruments

Financial instruments meeting fair value disclosure requirements consist of cash equivalents, accounts receivable and accounts payable. The fair value of these financial instruments approximates their carrying amount.

Foreign currency exchange risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the euro, British pound, and Japanese yen. Except for revenue transactions in Japan, we enter into transactions directly with substantially all of our foreign customers.

Percentage of revenues and expenses in foreign currency is as follows:


	Three Months Ended September 30,						Three Months Ended June 30,
	2017			2016			2023			2022
Revenues generated in locations outside the United States		46	%		43	%		44	%		48	%
Revenues in currencies other than the United States dollar (1)		28	%		29	%		25	%		27	%
Expenses in currencies other than the United States dollar (1)		15	%		17	%		18	%		18	%

	Nine Months Ended September 30,
	2017			2016
Revenues generated in locations outside the United States		45	%		42	%
Revenues in currencies other than the United States dollar (1)		28	%		28	%
Expenses in currencies other than the United States dollar (1)		15	%		16	%

~~(1)~~

~~Percentage of revenues and expenses denominated in foreign currency for the three and nine months ended September 30, 2017 and 2016:~~


	Six Months Ended June 30,
	2023			2022
Revenues generated in locations outside the United States		45	%		48	%
Revenues in currencies other than the United States dollar (1)		25	%		28	%
Expenses in currencies other than the United States dollar (1)		17	%		16	%

   Three Months Ended
September 30, 2017 Three Months Ended
September 30, 2016
   Revenues Expenses Revenues Expenses
Euro
   6 % 2 % 7 % 2 %
British pound
   7 6 7 6
Japanese Yen
   10 3 11 5
Other
   5 4 4 4
Total
   28 % 15 % 29 % 17 %
   Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
   Revenues Expenses Revenues Expenses
Euro
   6 % 1 % 7 % 2 %
British pound
   7 6 7 6
Japanese Yen
   10 4 10 4
Other
   5 4 4 4
Total
   28 % 15 % 28 % 16 %

(1)

Percentage of revenues and expenses denominated in foreign currency for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Revenues			Expenses			Revenues			Expenses
Euro		6	%		1	%		9	%		2	%
British pound		6			6			6			5
Japanese Yen		10			2			9			2
Other		3			9			3			9
Total		25	%		18	%		27	%		18	%


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	Revenues			Expenses			Revenues			Expenses
Euro		6	%		1	%		8	%		1	%
British pound		6			6			6			5
Japanese Yen		10			2			11			2
Other		3			8			3			8
Total		25	%		17	%		28	%		16	%

As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, we had ~~$8.4~~$6.4 million and ~~$5.6~~$6.9 million, respectively, of receivables denominated in currencies other than the U.S. dollar. We also maintain cash accounts denominated in currencies other than the local currency, which exposes us to foreign exchange rate movements.

In addition, although our foreign subsidiaries have intercompany accounts that are eliminated upon consolidation, these accounts expose us to foreign currency exchange rate fluctuations. Exchange rate fluctuations on short-term intercompany accounts are recorded in our consolidated statements of operations under “other (expense) income, ~~(expense),~~ net”, while exchange rate fluctuations on long-term intercompany accounts are recorded ~~in our consolidated balance sheets under “accumulated~~as a component of other comprehensive ~~income” in stockholders’ equity,~~loss, as they are considered part of our net ~~investment and hence do not give rise to gains or losses.~~investment.

Currently, our largest foreign currency exposures are the euro and British pound ~~and Japanese yen,~~ primarily because our European ~~and Japanese~~ operations have a higher proportion of our local currency denominated ~~expenses.~~expenses, in addition to the Japanese Yen as result of our ongoing operations in Japan. During the six months ended June 30, 2023 the U.S. dollar has strengthened approximately 5%, 1%, and 11% compared to the British pound, euro and Japanese Yen, respectively, compared to the six months ended June 30, 2022. Relative to foreign currency exposures existing at ~~September~~June 30, ~~2017,~~2023, a ~~10%~~further 20% unfavorable movement in foreign currency exchange rates would expose us to ~~significant~~ losses in earnings or cash flows or significantly diminish the fair value of our foreign currency financial instruments. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we estimated that a ~~10%~~20% unfavorable movement in foreign currency exchange rates would have decreased revenues by ~~$3.3~~$5.0 million, decreased expenses by ~~$2.0~~$4.2 million and decreased operating income by ~~$1.3~~$0.9 million. The estimates used assume that all currencies move in the same direction at the same time and the ratio ofnon-U.S. dollar denominated revenue and expenses to U.S. dollar denominated revenue and expenses does not change from current levels. Since a portion of our revenue is deferred revenue that is recorded at different foreign currency exchange rates, the impact to revenue of a change in foreign currency exchange rates is recognized over time, and the impact to expenses is more immediate, as expenses are recognized at the current foreign currency exchange rate in effect at the time the expense is incurred. All of the potential changes noted above are based on sensitivity analyses performed on our financial results as of ~~September~~June 30, ~~2017 and 2016.~~

2023.

Interest rate risk

We had ~~unrestricted~~ cash and cash equivalents totaling ~~$22.1~~$19.1 million at ~~September~~June 30, ~~2017.~~2023. Cash and cash equivalents were invested primarily in ~~money market funds~~cash and are held for working capital purposes. We do not use derivative financial instruments in our investment portfolio. Declines in interest rates, however, would reduce future interest income. We ~~incurred $6,000 and $15,000 of~~did not incur interest expense ~~during~~in the three months ended ~~September~~June 30, ~~2017 and 2016, respectively, and $22,000 and $51,000~~2023. An unfavorable movement of interest expense during the nine months ended September 30, 2017 and 2016, respectively, related to interest paid on capital leases and an equipment financing. While we continue to incur interest expense10% in ~~connection with our capital leases and equipment financing,~~ the interest ~~expense is fixed and~~rate on the Line of Credit would not ~~subject to changes in market~~have had a material effect on interest rates. In the event that we borrow under our line of credit, which bears interest at the prime rate or the LIBOR rate plus the LIBOR rate margin, the related interest expense recorded would be subject to changes in the rate of interest.expense.

Inflation ~~risk~~Risk

We do not believe that inflation has had a material effect on our ~~business, financial condition or results of operations. If~~business. However, if our costs, in particular personnel, sales and marketing and hosting costs, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial ~~condition and results of operations.~~condition.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~September~~June 30, ~~2017,~~2023, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures defined in Rules13a-15(e) and15d-15(e) under the Exchange Act. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer

concluded that, as of ~~September~~June 30, ~~2017,~~2023, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule13a-15(d) and15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

On May 22, 2017, a lawsuit was filed against us and two individuals by Ooyala, Inc. (“Ooyala”) and Ooyala Mexico S. de R.L. de C.V. (“Ooyala Mexico”). The lawsuit, which was filed in the United States District Court for the District of Massachusetts, concerns allegations that the two individuals, who are former employees of Ooyala Mexico, misappropriated customer information and other trade secrets and used that information in working for Brightcove. The complaint was amended on June 1, 2017 to remove claims against the two former employees of Ooyala Mexico. The remaining claims against us are for violation of the Defend Trade Secrets Act of 2016 (18 U.S.C. §1836), violation of the Massachusetts trade secret statute (M.G.L. c. 93, §42), violation of Massachusetts Chapter 93A (M.G.L. c. 93A, §11), and tortious interference with advantageous business relationships. Ooyala and Ooyala Mexico also filed a motion for preliminary injunction (amended at the same time the complaint was amended), seeking to enjoin us from using any of the allegedly misappropriated information or communicating with customers whose information was taken, and seeking the return of any information that was allegedly taken. On June 16, 2017, we filed an opposition to the motion for preliminary injunction, and also moved to dismiss the lawsuit. Brightcove’s motion to dismiss was denied on September 6, 2017. The court has not ruled on Ooyala’s motion for preliminary injunction. On October 18, 2017, the court granted the parties’ motion to stay the litigation, and the litigation is currently stayed. We cannot yet determine whether it is probable that a loss will be incurred in connection with this complaint, nor can we reasonably estimate the potential loss, if any.

ITEM 1. LEGAL PROCEEDINGS

~~In addition, we are,~~We, from time to time, are party to litigation arising in the ordinary course of ~~our~~ business. Management does not believe that the outcome of these claims will have a material adverse effect on our consolidated financial position, results of operations or cash flows based on the status of proceedings at this time.

~~ITEM 1A.~~

~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

You should carefully consider the risks described in our ~~Quarterly Report~~annual report on Form~~10-Q~~ 10-K for the ~~quarter~~fiscal year ended ~~March~~December 31, ~~2017,~~2022, under the heading “Part III — Item 1A. Risk Factors,” together with the additional risk factor included below and all of the other information in this Quarterly Report on Form10-Q. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. If any of such risks and uncertainties actually occurs, our business, financial condition or operating results could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our other public filings. The trading price of our common stock could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

~~There~~Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our business and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past led and may in the future lead to market-wide liquidity problems. In March and May of 2023, the Federal Deposit Insurance Corporation (“FDIC”) took control and was appointed receiver of Silicon Valley Bank (“SVB”), Signature Bank and First Republic Bank, respectively, after each bank was unable to continue its operations. We cannot predict the impact that the continued high market volatility and instability of the banking sector more broadly could have on economic activity and our business in particular. The failure of other banks and financial institutions and measures taken, or not taken, by governments, businesses and other organizations in response to these events could adversely impact our business, financial condition and results of operations.

If the financial institutions with which we do business enter receivership or become insolvent in the future, there is no guarantee that the Department of the Treasury, the Federal Reserve and the FDIC will intercede to provide us and other depositors with access to balances in excess of the $250,000 FDIC insurance limit, that we would be able to access our existing cash, cash equivalents and investments, that we would be able to maintain any required letters of credit or other credit support arrangements, or that we would be able to adequately fund our business for a prolonged period of time or at all, any of which could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition. If any of our lenders or counterparties to any such instruments were to be placed into receivership, we may be unable to access such funds. We are party to an amended and restated loan and security agreement with SVB providing for up to a $30.0 million asset-based line of credit. In addition, if any parties with which we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to us could be adversely affected, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.

Changes in our business and operations, as well as organizational changes, have placed, and may continue to place, significant demands on our management and infrastructure. If we fail to manage these changes effectively and successfully recruit additional highly-qualified employees, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

Our business, headcount and operations have grown, both domestically and internationally, since our inception. In addition, we have seen organizational changes during that time, including the addition of several new members to our senior leadership team in the past several years, including our CEO. These organizational changes have placed, and will continue to place, a significant strain on our management, administrative, operational and financial infrastructure. While we expect to continue to grow headcount and operations over the long-term, on April 28, 2023, we authorized, and on May 3, 2023, we implemented, a restructuring that was designed to reduce operating costs, improve operating margins and focus on key growth and strategic priorities (the "Plan"). The Plan includes a reduction of the Company's workforce by approximately 10%. We may be unable to effectively manage the organizational changes we are making in connection with the Plan, which could result in difficulty or delays in delivering our products and services to customers, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new products and services or enhancing existing products and services, reputational harm, difficulty in attracting new talent and retaining existing employees, loss of customers, or operational difficulties in executing sales strategies, any of which could adversely affect our business performance and operating results. Our success will depend in part upon the ability of our senior leadership team to manage the Company effectively. To do so, we must continue to recruit, hire, train, manage and integrate a significant number of qualified managers, technical personnel and employees in specialized roles within our company, including in technology, sales and marketing. If our new employees perform poorly, or if we are unsuccessful in recruiting, hiring, training, managing and integrating these new employees, or retaining these or our existing employees, our business may suffer.

In addition, to manage the future growth of our business, headcount, operations and geographic expansion, we will need to continue to improve our information technology infrastructure, operational, financial and management systems and procedures. Our expected capital investments and future headcount increases will increase our costs, which will make it more difficult for us to address any future revenue shortfalls by reducing expenses in the short term. If we fail to successfully manage organizational changes or future growth we will be unable to successfully execute our business plan, which could have a negative impact on our business, financial condition or results of operations.

Our Plan and associated organizational changes may not adequately reduce our operating costs or improve operating margins, may lead to additional workforce attrition, and may cause operational disruptions.

The Company recorded $2.3 million in restructuring changes in connection with the Plan, consisting primarily of cash expenditures related to employee severance costs.

The estimates of the charges and expenditures that we expect to incur in connection with the Plan, and timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and we may experience delays and incur costs that are greater than we currently expect in connection with the Plan.

The Plan may yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, employee attrition beyond our intended reduction in force, a reduction in morale among our remaining employees, greater-than-anticipated costs incurred in connection with implementing the Plan, and the risk that we may not achieve the benefits from the Plan to the extent or as quickly as we anticipate, all of which may have a material adverse effect on our results of operations or financial condition. These restructuring initiatives could place substantial demands on our management and employees, which could lead to the diversion of our management’s and employees’ attention from other business priorities. In addition, while certain positions have been ~~no material changes to the information set forth~~eliminated in ~~Part I. Item 1A. “Risk Factors” in our Quarterly Report on Form10-Q~~ ~~for the quarter ended March 31, 2017, except for the additional risk factor set forth below:~~

~~If we do not successfully manage the transition associated~~connection with the ~~resignation~~Plan, certain functions necessary to our reduced operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees or to external service providers, which could result in disruptions to our operations. We may also discover that the workforce reduction and other restructuring efforts will make it difficult for us to pursue new opportunities and initiatives and require us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses. We may further discover that, despite the implementation of our ~~former Chief Executive Officer (“CEO”)~~Plan, we may require additional capital to continue expanding our business, and we may be unable to obtain such capital on acceptable terms, if at all. Our failure to successfully accomplish any of the ~~appointment of~~above activities and goals may have a ~~new CEO, it could be viewed negatively by our customers and shareholders and could have an~~material adverse impact on our ~~business.~~

~~David Mendels resigned from his position as the Company’s CEO~~business, financial condition, and resigned from the Board effective July 24, 2017. Andrew Feinberg, the Company’s President and Chief Operations Officer, is serving as the Company’s acting CEO. The Board has an active search process underway to select the next CEO from internal and external candidates. Such leadership transitions can be inherently difficult to manage, and an inadequate transitionresults of our CEO may cause disruption to our business, including to our relationships with customers and employees. In addition, if we are unable to attract and retain a qualified candidate to become our permanent CEO in a timely manner, our ability to meet our financial and operational goals and strategic plans may be adversely impacted, as well as our financial performance. It may also make it more difficult to retain other key employees.operations.

~~ITEM 5.~~

~~OTHER INFORMATION~~

ITEM 5. OTHER INFORMATION

Our policy governing transactions in our securities by directors, officers and employees permits our officers, directors and certain other persons to enter into trading plans complying with Rule10b5-1 under the Exchange Act. ~~We have been advised that our acting Chief Executive Officer, Andrew Feinberg, has entered into a trading plan in accordance with Rule10b5-1~~ ~~and our policy governing transactions in our securities.~~ Generally, under these trading plans, the individual relinquishes control over the transactions once the trading plan is put into place. Accordingly, sales under these

plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our company.

On June 13, 2023, Ms. Kristin Frank, a member of the Board, terminated a trading arrangement she had previously adopted with respect to the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”). Ms. Frank’s Rule 10b5-1 Trading Plan was adopted on March 14, 2023, solely to enable her to manage the tax implications associated with the vesting of restricted stock units in 2023. Ms. Frank’s plan was set to terminate no later than June 30, 2023, and provided for the sale of 40% of the net vested shares received in connection with the vesting of restricted stock units in 2023. As of the date of termination of her Rule 10b5-1 Trading Plan, Ms. Frank had sold 8,058 shares of common stock under its terms.

We anticipate that, as permitted by Rule10b5-1 and our policy governing transactions in our securities, some or all of our officers, directors and employees may establish trading plans in the future. We intend to disclose the names of executive officers and directors who establish a trading plan in compliance with Rule10b5-1 and the requirements of our policy governing transactions in our securities in our future quarterly and annual reports on Form10-Q and10-K filed with the Securities and Exchange Commission. However, we undertake no obligation to update or revise the information provided herein, including for revision or termination of an established trading plan.

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6. EXHIBITS


Exhibits


3.1 (1)		Eleventh Amended and Restated Certificate of Incorporation.

3.2 (2)		Amended and RestatedBy-Laws.

4.1 (3)		Form of Common Stock certificate of the Registrant.

10.1** 31.1		~~Employment Agreement dated September 20, 2017 between the Registrant and David Plotkin.~~

~~31.1~~		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1^		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

~~(1)~~

~~Filed as Exhibit 3.2 to Amendment No. 5 to Registrant’s Registration Statement on FormS-1~~ ~~filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference.~~

~~(2)~~

~~Filed as Exhibit 3.3 to Amendment No. 5 to Registrant’s Registration Statement on FormS-1~~ ~~filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference.~~

~~(3)~~

~~Filed as Exhibit 4.1 to Amendment No. 5 to Registrant’s Registration Statement on FormS-1~~ ~~filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference.~~

^	~~Furnished herewith.~~

**	~~Indicates a management contract or any compensatory plan, contract or arrangement.~~

(1)

Filed as Exhibit 3.2 to Amendment No. 5 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference.

(2)

Filed as Exhibit 3.3 to Amendment No. 5 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference.

(3)

Filed as Exhibit 4.1 to Amendment No. 5 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 6, 2012, and incorporated herein by reference.

~~SIGNATURES~~^ Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BRIGHTCOVE INC. ~~(Registrant)~~
		(Registrant)
~~Date: October 26, 2017~~		~~By:~~	~~/s/ Andrew Feinberg~~
Date: August 2, 2023			~~Andrew Feinberg~~ By:
			/s/ Marc DeBevoise

	Marc DeBevoise
	Chief Executive Officer
	(Principal Executive Officer)

Date: ~~October 26, 2017~~August 2, 2023		By:	~~/s/ Kevin R. Rhodes~~
			~~Kevin R. Rhodes~~ /s/ Robert Noreck

	Robert Noreck
	Chief Financial Officer
	(Principal Financial Officer)


	September 30, 2017
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	8,140	$	—	$	—	$	8,140

Total assets	$	8,140	$	—	$	—	$	8,140


	December 31, 2016
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	12,871	$	—	$	—	$	12,871

Total assets	$	12,871	$	—	$	—	$	12,871


	Nine Months Ended September 30,
Condensed Consolidated Statements of Cash Flow Data	2017			2016
	(in thousands)
Purchases of property and equipment	$	(990	) $		(1,194	)
Depreciation and amortization		5,607			5,901
Cash flows (used in) provided by operating activities		(11,652	)		7,629
Cash flows used in investing activities		(3,081	)		(4,434	)
Cash flows (used in) provided by financing activities		(408	)		3,902


	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016
	Revenues			Expenses			Revenues			Expenses
Euro		6	%		2	%		7	%		2	%
British pound		7			6			7			6
Japanese Yen		10			3			11			5
Other		5			4			4			4
Total		28	%		15	%		29	%		17	%

	Nine Months Ended September 30, 2017						Nine Months Ended September 30, 2016
	Revenues			Expenses			Revenues			Expenses
Euro		6	%		1	%		7	%		2	%
British pound		7			6			7			6
Japanese Yen		10			4			10			4
Other		5			4			4			4
Total		28	%		15	%		28	%		16	%