Edenbrook Capital opines Brightcove (BCOV) could yield $36.37 per share

M.Cap: $408mm | Brightcove Inc. is a provider of cloud-based services for video. 

Edenbrook Capital

• On December 27, 2017, Edenbrook Capital (5.2%) stated its belief that the company was worth at least 80-100% above its current trading price. It stated that the company was a market share leader in a secularly growing industry and had an attractive business model, with high levels of recurring revenue and an opportunity for significant operating leverage and cash generation. It added, “Despite some uneven financial performance by the company over the past year, the Reporting Persons believe that based on the strength of reported bookings growth in the past several earnings calls, the Issuer is likely on the verge of returning to double-digit revenue growth during 2018. Further, the Reporting Persons believe that this revenue growth, combined with Issuer cost controls, are likely to see the Issuer return to profitability and free cash flow generation in 2018, with the opportunity for continued, meaningful operating leverage in future years.” Source
• On May 4, 2020, Edenbrook Capital increased its stake to 7.64%.
• On August 2, 2021, Edenbrook Capital increased its stake to 10.61%.
• On November 1, 2021, Edenbrook Capital (11.2%) sent a letter to the Board expressing its concerns and suggestions namely, (i) Brightcove reports as one segment, but really has two distinct end-markets: enterprise and media. Given the strength of enterprise and recent retention issues in media, we believe that the split of the two is slightly larger than 50% for enterprise, though for simplicity, we'll say they're equally sized, with estimated revenue of $210 million in total for 2021, or $105 million for each unit, (ii) The average EV/2021 revenue multiple of Vimeo and Kaltura is 11.13. Applying that multiple to just the estimated $105 million of enterprise revenue yields a value of approximately $1.169 billion for the enterprise business, as compared to less than $400 million that the market is currently ascribing to the entirety of Brightcove, based on its market capitalization less its cash (there is no debt), (iii) Edenbrook believes the media issues are not only fixable, but are being fixed; nonetheless, let's say that division is only worthy of 1/3 of Kaltura's multiple, the lower of the two comparable companies. Applying that 3x multiple to the estimated $105 million of media revenue yields a value of approximately $315 million for the media business, (iii) The most recent Brightcove balance sheet, as of September 30, 2021, and reported on October 27, 2021, showed $45.3 million in cash and no debt, (iv) Adding the above points together yields a value of $1.528 billion, or approximately $36.37 per share, using approximately 42 million shares. That value is more than 3.7 times the average closing price for Brightcove since last Wednesday's earning release. Kindly click here, to read the full letter.

Tenzing Global Management

• On November 7, 2014, Tenzing Global Management disclosed a 5.2% active stake.
• On February 5, 2015, the company entered into an agreement with the Fund. Pursuant to the agreement, the company agreed to appoint Chet Kapoor, Co-founder of Tenzing Global, to the Board. 
• On May 8, 2017, Tenzing Global Management (4.2%) issued a statement criticizing the Board for its failure to hold CEO David Mendels accountable for the substantial destruction of value that stockholders had suffered for over five years. Tenzing Global calls on stockholders to reject the re-election of two Directors to the Board by voting to “WITHHOLD ALL” on Proposal 1 (election of Directors) on the company’s proxy card. Source
• At the AGM held on May 10, 2017, the incumbent directors were elected to the Board. Source
• On July 30, 2019, Tenzing Global Management increased its stake to 7