Cloud Video Platform Brightcove Says Game On for IPO

Online video platform Brightcove filed for a $50 million IPO this morning. On the face of it, the startup's timing is odd, given the state of the market and the 17 companies that have postponed or cancelled their IPOs this month -- the most since December 2008.

Then again, Brightcove might be concerned about waiting too long to get the additional money, as years of investment and operational losses have eaten into the $103 million in venture capital the company raised between 2005 and 2010 and the $7 million the company borrowed from two banks last year.

Here are the consolidated statements of operations from the S-1 (click to enlarge):

Brightcove lost $17.8 million in 2010 on $40.5 million in gross revenue. In the first six months of 2011, gross revenue was 40 percent ahead of the same period last year. Net revenue (gross profit) was up by about the same percentage. At the same time, total operating expenses grew, but by only 34 percent.

Furthermore, in the first six months of 2010, total operating expenses were 104 percent of total revenue and 160 percent of net revenue. In the same period this year, operating expenses were 101 percent of gross revenue and 150 percent of net revenue. So, Brightcove is headed in the right direction.

CEO Jeremy Allaire is an executive who has seen multiple successes, from helping create Cold Fusion, a seminal Web development tool, to joining Macromedia to build Flash as a Web platform (before Adobe acquired the company). He's experienced and likely has a good handle on what it will take to make Brightcove successful. And Brightcove already has many major accounts in media, retail, technology, financial services, government, and education.

But the distance between net revenue and operating expenses is still high, so it will take more time for the company to become profitable. It has $24.6 million in cash and cash equivalents, but that's after using $3.6 million so far this year. That's why Brightcove needs to do its IPO, because even though waiting for a better market would be preferable and ultimately bring in more money, the company can't afford to be low on cash if it spots good opportunities to expand and, hopefully, continue to drive down operating expenses as a percentage of net revenue.

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