While Brightcove has had some big customer wins — most notably Snap, which uses the company's video technology to power Snapchat's Discover Bar — the public company has been under siege recently by one of its larger, long-term investors, Tenzing Global Management.
The investment firm's relationship with Brightcove has been deteriorating, at least publicly, since March, when the firm's managing director, Chet Kapoor, resigned from the company's board over frustration with its "disappointing" performance." Now Kapoor is leading the charge to make Brightcove CEO David Mendels resign.
"We believe this discontent will only grow."
Kapoor made his first call for Mendels' resignation on Monday, urging the company's stockholders to reject the election of Mendels and another board member, Derek Harrar, for its annual meeting on May.
Mendels and Hararr both ended up getting enough votes to serve another term on the board, receiving 50.9% and 50.8% of votes in favor, respectively. But Kapoor on Friday pointed to the election results as evidence that Mendels and Harrar have lost support from stockholders, saying that less than a majority of outstanding shares supported their re-election.
The way Kapoor framed the election results, however, can be misleading since not every eligible shareholder represented in the outstanding stock voted in the election. It would be like saying a politician could only win by receiving a majority of votes out of the entire eligible voting population, not out of those who actually voted.
"To have lost such a significant amount of support in only a couple days serves to show the level of discontent with CEO David Mendels and the Board," Kapoor said in today's press release. "We believe this discontent will only grow. We urge the Board to ask for the immediate resignation of Mr. Mendels as CEO, and to reconstitute itself with new directors who have a vested interest in creating sustainable stockholder value over the long-term.
While Brightcove beat Wall Street's expectations for revenue in Q1, it disappointed in terms of earnings per share. And even though revenue beat expectations, it still only grew by 3.5 percent year-over-year to $37.57 million. That prompted the company's stock to drop by more than 30%, from $8.7 per share last Thursday to around $5.88, where it is now.
The company declined to comment on Kapoor's latest statements. In an interview last month, Mendels said the company's own challenges parallel those in the publishing industry, where both print and digital publishers are struggling to maintain a solid stream of revenue from advertising.
