Brightcove CEO David Mendels has resigned, the Boston-based video tech company announced Wednesday.
The company said Mendels, who succeeded founder Jeremy Allaire, reached a mutual agreement with the company's board of directors to step down as CEO and board director. Andrew Feinberg, the company's president and COO, will serve as interim CEO, effective immediately.
"We are grateful to David for his dedication and commitment over the last seven years and for his leadership in creating an industry-leading product portfolio," the company said in a statement. Mendels, who was previously the company's president and COO, became COO in 2013 after Allaire stepped down. Allaire went on to start the payments startup Circle.
Mendels' resignation follows a tumultuous period for the company — and the hard times aren't over yet. In March, board member Chet Kapoor, who is the managing director of long-term Brightcove investor Tenzing Global Management, resigned in frustration with the company's poor performance and called for the board to hold Mendels "accountable for historical missteps." About two months later, Kapoor explicitly called for Mendels to resign.
At $7 per share after market close on Wednesday, Brightcove's stock price is down 15.6 percent from the beginning of the year and down 47 percent from the beginning of September 2016, when Brightcove's shares were at $13.02. That September stock price was the company's highest point since the beginning of 2014.
Phil LeClare, Brightcove's director of communications, told BostInno that Mendels' resignation was not in response to any inciting incident, referring to Kapoor's statements and a lawsuit the company's currently facing from a competitor. Instead, he said, it happened as a result of the company's stagnating stock price.
"It was decided that a change was needed in an effort to enhance shareholder value."
"Despite the company’s many amazing accomplishments and the fact that this is a great company that we all believe in deeply, the value we have created for our external and employee shareholders, as represented by the stock price, has been stagnant," LeClare said. "It was decided that a change was needed in an effort to enhance shareholder value, and David and the Board agreed that a change of CEO was appropriate."
In Brightcove's Q2 earnings released on Wednesday, the company missed Wall Street's expectations for earnings by 2 cents while beating expectations on revenue by $1.62 million. The company's Q2 revenue was $38.7 million, a 4.8 percent increase over the same period last year. Mendels was not mentioned in the Q2 press release, with the company opting to make the leadership change announcement in a separate filing.
Brightcove has 4,304 customers, which includes Boston Children's Hospital, Under Armour and Snap, which uses Brightcove to power Snapchat's Discover bar.
In an April interview, Mendels said challenges in the publishing industry were having an impact on Brightcove's business.
"There’s a segment of our customers that are really struggling, and that means we’re struggling with them," Mendels previously told BostInno. "If they can’t make money on videos, then they can’t afford to buy our services."
Besides the financial woes, Brightcove is also in the middle of a lawsuit from one of its competitors, Ooyala. The competitor filed its lawsuit in May and alleges that the company stole trade secrets when one of Ooyala's former employees left the company and joined Brightcove to work on its Latin America business.
Brightcove has said that the lawsuit is without merit. The company is looking to have the lawsuit dismissed on the grounds that it shouldn't be tried in U.S. District Court in Massachusetts because Ooyala filed an amended complaint that focuses on the actions of Ooyala's former employee and another Brightcove employee, who are both based in Mexico, despite removing them as defendants.
"Mexico is not only an adequate alternative forum, it is the only appropriate forum for this dispute," Brightcove said in a June filing.
