SeaChange International, Inc. (NASDAQ: SEAC) today reported second
quarter fiscal 2019 revenue of $11.9 million and a U.S. GAAP loss
from operations of $8.3 million, or $0.23 per basic share, compared
to second quarter fiscal 2018 revenue of $17.2 million and U.S.
GAAP loss from operations of $2.1 million, or $0.06 per basic
share.
These results are in line with the preliminary results reported
by the Company for the second quarter of fiscal 2019 on August 21,
2018.
The Company’s U.S. GAAP second quarter fiscal 2019 results
included non-GAAP charges of $1.9 million, which consisted
primarily of stock-based compensation of $0.9 million, amortization
of intangible assets from prior acquisitions of $0.4 million and
severance and other restructuring costs of $0.5 million, while
second quarter fiscal 2018 results included non-GAAP charges of
$1.1 million. The non-GAAP loss from operations in the second
quarter of fiscal 2019 was $6.4 million, or $0.18 per basic share,
compared to the second quarter of fiscal 2018 non-GAAP loss from
operations of $1.0 million, or $0.03 per basic share.
For the first six months of fiscal 2019, the Company reported
revenue of $26.8 million and a U.S. GAAP loss from operations of
$13.4 million, or $0.38 per basic share, compared to revenue of
$33.9 million and a U.S.GAAP loss from operations of $7.6 million,
or $0.22 per basic share in the same period in the prior fiscal
year. The non-GAAP loss from operations for the first six
months of fiscal 2019 was $10.2 million, or $0.29 per basic share,
compared to a non-GAAP loss from operations of $2.7 million, or
$0.08 per basic share, in the first half of fiscal 2018.
Ed Terino, Chief Executive Officer, SeaChange, said, “While we
are disappointed with the second quarter results, we believe that
our strategy of pivoting to end-to-end solutions sold on a SaaS
business model to video service providers, wireless carriers and
ISP’s, as well as broadcasters and content owners, is taking
hold. As we enter new market segments and expand geographies
through partnerships, closing transactions is taking longer to
achieve. However, we are very pleased by the market’s
reaction to our innovative, subscription-based solutions portfolio,
cFlow™, and our end-to-end cloud-based video solution, PanoramiC.
As we noted recently, several new customer transactions were
delayed in closing during the second quarter. We expect these
transactions to close in Q3. The increased interest in our new
products, combined with our expanded traction with partners,
especially in Latin and South America as well as Asia Pacific,
should position us for improved results in the remainder of this
fiscal year.”
Peter Faubert, Chief Financial Officer, SeaChange, said, “As we
recognized that our second quarter results would not meet our
expectations, we began taking steps to reduce our costs further,
including implementing a cost reduction program expected to save $6
million on an annualized basis, with the goal of returning the
Company to profitability and positive cash flow before the end of
this fiscal year. While our cash burn in the second quarter
was high due to our results of operations, unfavorable working
capital changes and one-time uses of cash during the quarter, we
expect to return to positive cash flow in the second half of the
year as our topline results improve.”
SeaChange ended the second quarter of fiscal 2019 with cash,
cash equivalents, restricted cash and marketable securities of
$35.0 million, and no debt outstanding. In addition, the
Company has completed the valuation analysis of its goodwill and
other long-lived assets as of July 31, 2018, as required, and
determined that no impairment has occurred.
OutlookSeaChange anticipates third quarter
fiscal 2019 revenue to be in the range of $16 million to $20
million, U.S. GAAP operating loss from operations of $0.15 to $0.06
per basic share, and non-GAAP operating results to be in the range
of a loss from operations of $0.05 per basic share to operating
income of $0.04 per fully diluted share.
For the full fiscal year 2019, the company now expects revenue
in the range of $70 million to $75 million, U.S. GAAP operating
loss of $0.37 to $0.26 per basic share and a non-GAAP operating
loss between $0.15 to $0.04 per basic share. Previously the company
had expected revenue between $80 to $90 million, US GAAP operating
results between a loss of $0.06 per basic share to operating income
of $0.09 per fully diluted share and non-GAAP operating income
between $0.10 to $0.25 per fully diluted share.
These GAAP estimates are subject to a number of variables that
are outside of management’s control, including the size of
restructuring expenses, which are influenced by the timing of
certain non-U.S. restructuring activities, and stock price
fluctuations.
Conference CallThe Company will host a
conference call to discuss its second quarter fiscal 2019 results
at 5:00 p.m. ET today, Wednesday, September 5, 2018. The call
may be accessed by dialing 877-407-8037 (U.S.) and 201-689-8037
(international) and via live webcast on the Events page at
investors.seachange.com. The webcast replay will be archived
the same location.
About SeaChange International For 25 years,
SeaChange (Nasdaq: SEAC) has pioneered solutions to help video
providers around the world manage and monetize their content. As
the video industry rapidly evolves to meet the “anytime, anywhere”
demands of today’s viewers, SeaChange’s comprehensive content,
business, advertising, and experience management solutions provide
a mature, network-agnostic, cloud-enabled platform of scalable core
capabilities that video service providers, broadcasters, content
owners and brand advertisers need to create the personalized,
indivisual™ experiences that drive viewer engagement and
monetization. For more information, please visit
www.seachange.com.
Safe Harbor Provision
Any statements contained in this press release that do not
describe historical facts, including regarding anticipated revenue,
income from operations, cost savings and other financial matters,
including the anticipated closing of transactions, are neither
promises nor guarantees and may constitute “forward-looking
statements” as that term is defined in the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may
include words such as “may,” “might,” “will,” “should,” “could,”
“expects,” “plans,” “anticipates,” “believes,” “seeks,” “intends,”
“estimates,” “predicts,” “potential” or “continue,” the negative of
these terms and other comparable terminology. Any such
forward-looking statements contained herein are based on current
assumptions, estimates and expectations, but are subject to a
number of known and unknown risks and significant business,
economic and competitive uncertainties that may cause actual
results to differ materially from expectations. Numerous factors
could cause actual future results to differ materially from current
expectations expressed or implied by such forward-looking
statements, including, without limitation, the following: the
continued spending by the Company’s customers on video solutions
and services and expenses we may incur in fulfilling customer
arrangements; the success of our efforts to introduce SaaS-based
multiscreen service offerings; the Company’s ability to
successfully introduce new products or enhancements to existing
products; the manner in which the multiscreen video and OTT markets
develop; the Company’s transition to being a company that primarily
provides software solutions; the Company’s ability to compete in
the marketplace; any failure by the Company to respond to changing
technology; measures taken to address the variability in the market
for our products and services; the loss of or reduction in
demand, or the return of product, by one of the Company’s large
customers or the failure of revenue acceptance criteria in a given
fiscal quarter; consolidation in the markets the Company serves;
the cancellation or deferral of purchases of the Company’s
products; the length of the Company’s sales cycles; any decline in
demand or average selling prices for our products and services;
failure to manage product transitions; failure to achieve our
financial forecasts due to inaccurate sales forecasts or other
factors, including due to expenses we may incur in fulfilling
customer arrangements; the impact of restructuring programs; the
Company’s ability to manage its growth; the risks associated with
international operations; the ability of the Company and its
intermediaries to comply with the Foreign Corrupt Practices Act;
foreign currency fluctuation; the Company’s ability to protect its
intellectual property rights and the expenses that may be incurred
by the Company to protect its intellectual property rights; an
unfavorable result of current or future litigation relating to the
Company’s intellectual property; content providers limiting the
scope of content licensed for use in the video-on-demand and OTT
market or other limitations in materials we use to provide our
products and services; the Company’s ability to realize the
benefits of completed or future acquisitions; the impact of
acquisitions, divestitures or investments made by the Company; the
Company’s ability to raise additional funds through capital markets
on favorable terms and in a timely manner; the Company’s ability to
access sufficient funding to finance desired growth and operations;
the performance of the companies in which the Company has made
equity investments; any impairment of the Company’s assets; the
impact of changes in the market on the value of our investments;
changes in the regulatory environment; the Company’s ability to
hire and retain highly skilled employees; the ability of the
Company to manage and oversee the outsourcing of engineering work;
additional tax liabilities to which the Company may be subject;
possible adjustments to estimates resulting from the new tax
legislation; any breach of the Company’s security measures and
customer data or our data being obtained unlawfully; service
interruptions or delays from our third-party data center hosting
facilities; disruptions to the Company’s information technology
systems; uncertainties of regulation of Internet and data traveling
over the Internet; the volatility of our stock; actions that may be
taken by significant stockholders; if securities analysts do not
publish favorable research or reports about our business; our use
of non-GAAP reporting; change in accounting standards; any weakness
in the Company’s internal controls over financial reporting; the
Company’s use of estimates in accounting for the Company’s
contracts; the performance of the Company’s third-party vendors;
the Company’s entry into fixed price contracts and the related risk
of cost overruns; the risks associated with purchasing material
components from sole suppliers and using a limited number of
third-party manufacturers; terrorist acts, conflicts, wars and
geopolitical uncertainties; and the Company’s Delaware
anti-takeover provisions. These risks and other risk factors that
could cause actual results to differ from those anticipated are
detailed in various publicly available documents filed by the
Company from time to time with the Securities and Exchange
Commission (SEC), which are available at www.sec.gov, including but
not limited to, such information appearing under the caption “Risk
Factors” in the Company’s Annual Report on Form 10-K filed with the
SEC on April 16, 2018. Any forward-looking statements should be
considered in light of those risk factors. The Company cautions
readers not to rely on any such forward-looking statements, which
speak only as of the date they are made. The Company disclaims any
intent or obligation to publicly update or revise any such
forward-looking statements to reflect any change in Company
expectations or future events, conditions or circumstances on which
any such forward-looking statements may be based, or that may
affect the likelihood that actual results may differ from those set
forth in such forward-looking statements.
|
SeaChange International, Inc. |
Preliminary Condensed Consolidated Balance
Sheets |
(Unaudited, amounts in thousands) |
|
|
|
|
|
|
July 31, |
|
January 31, |
|
|
2018 |
|
2018 |
|
Assets |
|
|
|
|
Cash and
cash equivalents |
$ |
24,393 |
|
$ |
43,652 |
|
Restricted cash |
|
547 |
|
|
9 |
|
Marketable securities |
|
10,018 |
|
|
8,440 |
|
Accounts
and other receivables, net |
|
11,833 |
|
|
22,537 |
|
Unbilled
receivables |
|
5,330 |
|
|
3,101 |
|
Inventories, net |
|
776 |
|
|
666 |
|
Prepaid
expenses and other current assets |
|
4,996 |
|
|
3,557 |
|
Property
and equipment, net |
|
8,954 |
|
|
9,471 |
|
Goodwill
and intangible assets, net |
|
25,433 |
|
|
26,882 |
|
Other
assets |
|
1,285 |
|
|
1,015 |
|
Total
assets |
$ |
93,565 |
|
$ |
119,330 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Accounts
payable and other current liabilities |
$ |
7,115 |
|
$ |
17,810 |
|
Deferred
revenues |
|
8,504 |
|
|
14,433 |
|
Deferred
tax liabilities and income taxes payable |
|
1,169 |
|
|
1,367 |
|
Other
long term liabilities |
|
- |
|
|
- |
|
Total
liabilities |
|
16,788 |
|
|
33,610 |
|
|
|
|
|
|
Total
stockholders’ equity |
|
76,777 |
|
|
85,720 |
|
Total
liabilities and stockholders’ equity |
$ |
93,565 |
|
$ |
119,330 |
|
|
|
|
|
|
SeaChange International, Inc. |
Preliminary Condensed Consolidated Statements
of Operations |
(Unaudited, amounts in thousands, except per
share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
July 31, |
|
July 31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
Products |
$ |
1,462 |
|
|
$ |
5,039 |
|
|
$ |
4,553 |
|
|
$ |
7,788 |
|
Services |
|
10,439 |
|
|
|
12,186 |
|
|
|
22,283 |
|
|
|
26,104 |
|
Total
revenues |
|
11,901 |
|
|
|
17,225 |
|
|
|
26,836 |
|
|
|
33,892 |
|
Cost of revenues: |
|
|
|
|
|
|
|
Products |
|
483 |
|
|
|
1,336 |
|
|
|
802 |
|
|
|
1,890 |
|
Services |
|
4,955 |
|
|
|
4,218 |
|
|
|
10,486 |
|
|
|
10,198 |
|
Amortization of intangible assets |
|
178 |
|
|
|
255 |
|
|
|
356 |
|
|
|
509 |
|
Stock-based compensation expense |
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
2 |
|
Total
cost of revenues |
|
5,615 |
|
|
|
5,809 |
|
|
|
11,644 |
|
|
|
12,599 |
|
Gross
profit |
|
6,286 |
|
|
|
11,416 |
|
|
|
15,192 |
|
|
|
21,293 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
|
5,157 |
|
|
|
6,399 |
|
|
|
10,641 |
|
|
|
11,777 |
|
Selling
and marketing |
|
3,685 |
|
|
|
2,439 |
|
|
|
7,071 |
|
|
|
5,376 |
|
General
and administrative |
|
4,021 |
|
|
|
3,084 |
|
|
|
8,015 |
|
|
|
6,727 |
|
Amortization of intangible assets |
|
233 |
|
|
|
361 |
|
|
|
459 |
|
|
|
705 |
|
Stock-based compensation expense |
|
924 |
|
|
|
653 |
|
|
|
1,802 |
|
|
|
1,528 |
|
Professional fees - other |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21 |
|
Severance
and other restructuring costs |
|
536 |
|
|
|
563 |
|
|
|
590 |
|
|
|
2,710 |
|
Total
operating expenses |
|
14,556 |
|
|
|
13,499 |
|
|
|
28,578 |
|
|
|
28,844 |
|
Loss from
operations |
|
(8,270 |
) |
|
|
(2,083 |
) |
|
|
(13,386 |
) |
|
|
(7,551 |
) |
Other (expenses)
income, net |
|
(1,962 |
) |
|
|
589 |
|
|
|
(2,811 |
) |
|
|
955 |
|
Loss before income
taxes |
|
(10,232 |
) |
|
|
(1,494 |
) |
|
|
(16,197 |
) |
|
|
(6,596 |
) |
Income tax
provision |
|
(1,152 |
) |
|
|
35 |
|
|
|
(1,646 |
) |
|
|
304 |
|
Net
loss |
$ |
(9,080 |
) |
|
$ |
(1,529 |
) |
|
$ |
(14,551 |
) |
|
$ |
(6,900 |
) |
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.26 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.20 |
) |
Diluted |
$ |
(0.26 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.20 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
35,649 |
|
|
|
35,351 |
|
|
|
35,628 |
|
|
|
35,331 |
|
Diluted |
|
35,649 |
|
|
|
35,351 |
|
|
|
35,628 |
|
|
|
35,331 |
|
|
|
|
|
|
|
|
|
SeaChange International, Inc. |
Preliminary Condensed Consolidated Statements
of Cash Flows |
(Unaudited, amounts in
thousands) |
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
July 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Cash flows from operating activities: |
|
|
|
|
|
Net loss |
$ |
(14,551 |
) |
|
$ |
(6,900 |
) |
|
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Depreciation and amortization of property and equipment |
|
737 |
|
|
|
1,198 |
|
|
|
Amortization of intangible assets |
|
815 |
|
|
|
1,214 |
|
|
|
Stock-based compensation expense |
|
1,802 |
|
|
|
1,530 |
|
|
|
Deferred
income taxes |
|
(758 |
) |
|
|
79 |
|
|
|
Other
non-cash reconciling items, net |
|
76 |
|
|
|
8 |
|
|
|
Changes
in operating assets and liabilities, excluding impact of
acquisition: |
|
|
|
|
|
Accounts
receivable |
|
10,115 |
|
|
|
4,358 |
|
|
|
Unbilled
receivables |
|
(2,335 |
) |
|
|
2,558 |
|
|
|
Inventories |
|
(165 |
) |
|
|
57 |
|
|
|
Prepaid
expenses and other assets |
|
(1,584 |
) |
|
|
8 |
|
|
|
Accounts
payable |
|
371 |
|
|
|
(2,594 |
) |
|
|
Accrued
expenses |
|
(10,640 |
) |
|
|
(3,193 |
) |
|
|
Deferred
revenues |
|
(5,729 |
) |
|
|
(870 |
) |
|
|
Other
operating activities |
|
2,430 |
|
|
|
230 |
|
|
|
Total
cash used in operating activities |
|
(19,416 |
) |
|
|
(2,317 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
Purchases of property and equipment |
|
(284 |
) |
|
|
(274 |
) |
|
|
Purchases of marketable securities |
|
(4,354 |
) |
|
|
(4,501 |
) |
|
|
Proceeds
from sale and maturity of marketable securities |
|
2,761 |
|
|
|
4,449 |
|
|
|
Other
investing activities |
|
(60 |
) |
|
|
287 |
|
|
|
Total
cash used in investing activities |
|
(1,937 |
) |
|
|
(39 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
Proceeds from issuance of common stock |
|
73 |
|
|
|
26 |
|
|
|
Payments of withholding tax on RSU vesting |
|
(34 |
) |
|
|
(36 |
) |
|
|
Total
cash provided by (used in) financing activities |
|
39 |
|
|
|
(10 |
) |
|
Effect of exchange rate changes on cash |
|
2,593 |
|
|
|
(742 |
) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
(18,721 |
) |
|
|
(3,108 |
) |
|
Cash, cash equivalents and restricted cash, beginning of
period |
|
43,661 |
|
|
|
28,411 |
|
|
Cash, cash equivalents and restricted cash, end of
period |
$ |
24,940 |
|
|
$ |
25,303 |
|
|
|
|
|
|
|
|
Non-GAAP Measures
We define non-GAAP loss from operations as U.S. GAAP operating
loss plus stock-based compensation expenses, amortization of
intangible assets, provision for loss contract, non-operating
professional fees and severance and other restructuring costs. We
discuss non-GAAP loss from operations in our quarterly earnings
releases and certain other communications as we believe non-GAAP
operating loss from operations is an important measure that is not
calculated according to U.S. GAAP. We use non-GAAP loss from
operations in internal forecasts and models when establishing
internal operating budgets, supplementing the financial results and
forecasts reported to our Board of Directors, determining a
component of bonus compensation for executive officers and other
key employees based on operating performance and evaluating
short-term and long-term operating trends in our operations. We
believe that the non-GAAP loss from operations financial measure
assists in providing an enhanced understanding of our underlying
operational measures to manage the business, to evaluate
performance compared to prior periods and the marketplace, and to
establish operational goals. We believe that the non-GAAP financial
adjustments are useful to investors because they allow investors to
evaluate the effectiveness of the methodology and information used
by management in our financial and operational decision-making.
Non-GAAP loss from operations is a non-GAAP financial measure
and should not be considered in isolation or as a substitute for
financial information provided in accordance with U.S. GAAP. This
non-GAAP financial measure may not be computed in the same manner
as similarly titled measures used by other companies. We expect to
continue to incur expenses similar to the financial adjustments
described above in arriving at non-GAAP loss from operations and
investors should not infer from our presentation of this non-GAAP
financial measure that these costs are unusual, infrequent or
non-recurring.
In managing and reviewing our business performance, we exclude a
number of items required by U.S. GAAP. Management believes that
excluding these items is useful in understanding the trends and
managing our operations. We provide these supplemental non-GAAP
measures in order to assist the investment community in seeing
SeaChange through the “eyes of management,” and therefore enhance
the understanding of SeaChange’s operating performance. Non-GAAP
financial measures should be viewed in addition to, not as an
alternative to, our reported results prepared in accordance with
U.S. GAAP. Our non-GAAP financial measures reflect adjustments
based on the following items:
Provision for Loss Contract. We entered a
fixed-price customer contract on a multi-year arrangement, which
included multiple vendors. As the system integrator on the project,
we are subject to any cost overruns or increases with these vendors
resulting in delays of acceptance by our customer. Delays of
customer acceptance on this project result in incremental
expenditures and require us to recognize a loss on this project in
the period the determination is made. As a result, we recorded an
estimated charge of $9.2 million in fiscal 2016. Subsequently,
because of changes in the scope of the project and negotiations
with the fixed-price customer, we recorded adjustments since fiscal
2016 totaling $4.7 million to reduce this estimated loss. We
believe that the exclusion of this line item amount, which is
recorded in cost of revenues – services, allows a comparison of
operating results that would otherwise impair comparability between
periods.
Amortization of Intangible Assets. We incur
amortization expense of intangible assets related to various
acquisitions that have been made in recent years. These intangible
assets are valued at the time of acquisition, are then amortized
over a period of several years after the acquisition and generally
cannot be changed or influenced by management after the
acquisition. We believe that exclusion of these expenses allows
comparisons of operating results that are consistent over time for
the Company’s newly-acquired and long-held businesses.
Stock-based Compensation Expense. We incur
expenses related to stock-based compensation included in our U.S.
GAAP presentation of cost of revenues and operating expenses.
Although stock-based compensation is an expense we incur and is
viewed as a form of compensation, the expense varies in amount from
period to period, and is affected by market forces that are
difficult to predict and are not within the control of management,
such as the market price and volatility of our shares, risk-free
interest rates and the expected term and forfeiture rates of the
awards.
Professional Fees - Other. We have excluded the
effect of legal and other professional costs associated with our
acquisitions, divestitures, litigation and strategic alternatives
because the amounts are considered significant non-operating
expenses.
Severance and Other Restructuring Costs. We
incur charges due to the restructuring of our business, including
severance charges and facility reductions resulting from our
restructuring and streamlining efforts and any changes due to
revised estimates, which we generally would not have otherwise
incurred in the periods presented as part of our continuing
operations.
The following table includes the reconciliations of our U.S.
GAAP loss from operations, the most directly comparable U.S. GAAP
financial measure, to our non-GAAP loss from operations for the
three and six months ended July 31, 2018 and 2017 (amounts in
thousands, except per share and percentage data):
|
SeaChange International, Inc. |
Preliminary Reconciliation of GAAP to
Non-GAAP |
(Unaudited, amounts in thousands, except per
share data and percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
July 31, 2018 |
|
July 31, 2017 |
|
|
GAAP |
|
|
|
|
|
GAAP |
|
|
|
|
|
|
As Reported |
|
Adjustments |
|
Non-GAAP |
|
As Reported |
|
Adjustments |
|
Non-GAAP |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
$ |
1,462 |
|
|
$ |
- |
|
|
$ |
1,462 |
|
|
$ |
5,039 |
|
|
$ |
- |
|
|
$ |
5,039 |
|
|
Services |
|
10,439 |
|
|
|
- |
|
|
|
10,439 |
|
|
|
12,186 |
|
|
|
- |
|
|
|
12,186 |
|
|
Total revenues |
|
11,901 |
|
|
|
- |
|
|
|
11,901 |
|
|
|
17,225 |
|
|
|
- |
|
|
|
17,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
483 |
|
|
|
- |
|
|
|
483 |
|
|
|
1,336 |
|
|
|
- |
|
|
|
1,336 |
|
|
Services |
|
4,955 |
|
|
|
- |
|
|
|
4,955 |
|
|
|
4,218 |
|
|
|
766 |
|
|
|
4,984 |
|
|
Amortization of intangible assets |
|
178 |
|
|
|
(178 |
) |
|
|
- |
|
|
|
255 |
|
|
|
(255 |
) |
|
|
- |
|
|
Stock-based
compensation |
|
(1 |
) |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Total cost of revenues |
|
5,615 |
|
|
|
(177 |
) |
|
|
5,438 |
|
|
|
5,809 |
|
|
|
511 |
|
|
|
6,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
6,286 |
|
|
|
177 |
|
|
|
6,463 |
|
|
|
11,416 |
|
|
|
(511 |
) |
|
|
10,905 |
|
|
Gross profit
percentage |
|
52.8 |
% |
|
|
1.5 |
% |
|
|
54.3 |
% |
|
|
66.3 |
% |
|
|
(3.0 |
%) |
|
|
63.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
5,157 |
|
|
|
- |
|
|
|
5,157 |
|
|
|
6,399 |
|
|
|
- |
|
|
|
6,399 |
|
|
Selling and
marketing |
|
3,685 |
|
|
|
- |
|
|
|
3,685 |
|
|
|
2,439 |
|
|
|
- |
|
|
|
2,439 |
|
|
General and
administrative |
|
4,021 |
|
|
|
- |
|
|
|
4,021 |
|
|
|
3,084 |
|
|
|
- |
|
|
|
3,084 |
|
|
Amortization of
intangible assets |
|
233 |
|
|
|
(233 |
) |
|
|
- |
|
|
|
361 |
|
|
|
(361 |
) |
|
|
- |
|
|
Stock-based
compensation expense |
|
924 |
|
|
|
(924 |
) |
|
|
- |
|
|
|
653 |
|
|
|
(653 |
) |
|
|
- |
|
|
Severance and other
restructuring costs |
|
536 |
|
|
|
(536 |
) |
|
|
- |
|
|
|
563 |
|
|
|
(563 |
) |
|
|
- |
|
|
Total operating expenses |
|
14,556 |
|
|
|
(1,693 |
) |
|
|
12,863 |
|
|
|
13,499 |
|
|
|
(1,577 |
) |
|
|
11,922 |
|
|
(Loss) income
from operations |
$ |
(8,270 |
) |
|
$ |
1,870 |
|
|
$ |
(6,400 |
) |
|
$ |
(2,083 |
) |
|
$ |
1,066 |
|
|
$ |
(1,017 |
) |
|
(Loss) income
from operations percentage |
|
(69.5 |
%) |
|
|
15.7 |
% |
|
|
(53.8 |
%) |
|
|
(12.1 |
%) |
|
|
6.2 |
% |
|
|
(5.9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
35,649 |
|
|
|
35,649 |
|
|
|
35,649 |
|
|
|
35,351 |
|
|
|
35,351 |
|
|
|
35,351 |
|
|
Diluted |
|
35,649 |
|
|
|
36,299 |
|
|
|
35,649 |
|
|
|
35,351 |
|
|
|
35,565 |
|
|
|
35,351 |
|
Non-GAAP operating (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.23 |
) |
|
$ |
0.05 |
|
|
$ |
(0.18 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
Diluted |
$ |
(0.23 |
) |
|
$ |
0.05 |
|
|
$ |
(0.18 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
SeaChange International, Inc. |
Preliminary Reconciliation of GAAP to
Non-GAAP |
(Unaudited, amounts in thousands, except per
share data and percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
|
|
July 31, 2018 |
|
July 31, 2017 |
|
|
GAAP |
|
|
|
|
|
GAAP |
|
|
|
|
|
|
As Reported |
|
Adjustments |
|
Non-GAAP |
|
As Reported |
|
Adjustments |
|
Non-GAAP |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
$ |
4,553 |
|
|
$ |
- |
|
|
$ |
4,553 |
|
|
$ |
7,788 |
|
|
$ |
- |
|
|
$ |
7,788 |
|
|
Services |
|
22,283 |
|
|
|
- |
|
|
|
22,283 |
|
|
|
26,104 |
|
|
|
- |
|
|
|
26,104 |
|
|
Total revenues |
|
26,836 |
|
|
|
- |
|
|
|
26,836 |
|
|
|
33,892 |
|
|
|
- |
|
|
|
33,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
802 |
|
|
|
- |
|
|
|
802 |
|
|
|
1,890 |
|
|
|
- |
|
|
|
1,890 |
|
|
Services |
|
10,486 |
|
|
|
- |
|
|
|
10,486 |
|
|
|
10,198 |
|
|
|
593 |
|
|
|
10,791 |
|
|
Amortization of intangible assets |
|
356 |
|
|
|
(356 |
) |
|
|
- |
|
|
|
509 |
|
|
|
(509 |
) |
|
|
- |
|
|
Stock-based
compensation |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2 |
|
|
|
(2 |
) |
|
|
- |
|
|
Total cost of revenues |
|
11,644 |
|
|
|
(356 |
) |
|
|
11,288 |
|
|
|
12,599 |
|
|
|
82 |
|
|
|
12,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
15,192 |
|
|
|
356 |
|
|
|
15,548 |
|
|
|
21,293 |
|
|
|
(82 |
) |
|
|
21,211 |
|
|
Gross profit
percentage |
|
56.6 |
% |
|
|
1.3 |
% |
|
|
57.9 |
% |
|
|
62.8 |
% |
|
|
(0.2 |
%) |
|
|
62.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
10,641 |
|
|
|
- |
|
|
|
10,641 |
|
|
|
11,777 |
|
|
|
- |
|
|
|
11,777 |
|
|
Selling and
marketing |
|
7,071 |
|
|
|
- |
|
|
|
7,071 |
|
|
|
5,376 |
|
|
|
- |
|
|
|
5,376 |
|
|
General and
administrative |
|
8,015 |
|
|
|
- |
|
|
|
8,015 |
|
|
|
6,727 |
|
|
|
- |
|
|
|
6,727 |
|
|
Amortization of
intangible assets |
|
459 |
|
|
|
(459 |
) |
|
|
- |
|
|
|
705 |
|
|
|
(705 |
) |
|
|
- |
|
|
Stock-based
compensation expense |
|
1,802 |
|
|
|
(1,802 |
) |
|
|
- |
|
|
|
1,528 |
|
|
|
(1,528 |
) |
|
|
- |
|
|
Professional fees - other |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21 |
|
|
|
(21 |
) |
|
|
- |
|
|
Severance and other
restructuring costs |
|
590 |
|
|
|
(590 |
) |
|
|
- |
|
|
|
2,710 |
|
|
|
(2,710 |
) |
|
|
- |
|
|
Total operating expenses |
|
28,578 |
|
|
|
(2,851 |
) |
|
|
25,727 |
|
|
|
28,844 |
|
|
|
(4,964 |
) |
|
|
23,880 |
|
|
(Loss) income
from operations |
$ |
(13,386 |
) |
|
$ |
3,207 |
|
|
$ |
(10,179 |
) |
|
$ |
(7,551 |
) |
|
$ |
4,882 |
|
|
$ |
(2,669 |
) |
|
(Loss) income
from operations percentage |
|
(49.9 |
%) |
|
|
12.0 |
% |
|
|
(37.9 |
%) |
|
|
(22.3 |
%) |
|
|
14.4 |
% |
|
|
(7.9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
35,628 |
|
|
|
35,628 |
|
|
|
35,628 |
|
|
|
35,331 |
|
|
|
35,331 |
|
|
|
35,331 |
|
|
Diluted |
|
35,628 |
|
|
|
36,187 |
|
|
|
35,628 |
|
|
|
35,331 |
|
|
|
35,485 |
|
|
|
35,331 |
|
Non-GAAP operating (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.38 |
) |
|
$ |
0.09 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.22 |
) |
|
$ |
0.14 |
|
|
$ |
(0.08 |
) |
|
Diluted |
$ |
(0.38 |
) |
|
$ |
0.09 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.22 |
) |
|
$ |
0.14 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
SeaChange International, Inc. |
Reconciliation of GAAP to Non-GAAP Gross
Margins |
(Unaudited, amounts in thousands except
percentage data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
July 31, 2018 |
|
July 31, 2018 |
|
Total |
Product |
Service |
|
Total |
Product |
Service |
|
|
|
|
|
|
|
|
Revenue |
$ |
11,901 |
|
$ |
1,462 |
|
$ |
10,439 |
|
|
$ |
26,836 |
|
$ |
4,553 |
|
$ |
22,283 |
|
|
|
|
|
|
|
|
|
GAAP gross profit |
$ |
6,286 |
|
$ |
972 |
|
$ |
5,314 |
|
|
$ |
15,192 |
|
$ |
3,737 |
|
$ |
11,455 |
|
Exclude
provision for loss contract |
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
Exclude
amortization of intangible assets |
|
178 |
|
|
7 |
|
|
171 |
|
|
|
356 |
|
|
14 |
|
|
342 |
|
Exclude
stock based compensation |
|
(1 |
) |
|
- |
|
|
(1 |
) |
|
|
- |
|
|
- |
|
|
- |
|
Non-GAAP gross
profit |
$ |
6,463 |
|
$ |
979 |
|
$ |
5,484 |
|
|
$ |
15,548 |
|
$ |
3,751 |
|
$ |
11,797 |
|
|
|
|
|
|
|
|
|
Non-GAAP gross profit,
% |
|
54.3 |
% |
|
67.0 |
% |
|
52.5 |
% |
|
|
57.9 |
% |
|
82.4 |
% |
|
52.9 |
% |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
July 31, 2017 |
|
July 31, 2017 |
|
Total |
Product |
Service |
|
Total |
Product |
Service |
|
|
|
|
|
|
|
|
Revenue |
$ |
17,225 |
|
$ |
5,039 |
|
$ |
12,186 |
|
|
$ |
33,892 |
|
$ |
7,788 |
|
$ |
26,104 |
|
|
|
|
|
|
|
|
|
GAAP gross profit |
$ |
11,416 |
|
$ |
3,677 |
|
$ |
7,739 |
|
|
$ |
21,293 |
|
$ |
5,846 |
|
$ |
15,447 |
|
Exclude
provision for loss contract |
|
(766 |
) |
|
- |
|
|
(766 |
) |
|
|
(593 |
) |
|
- |
|
|
(593 |
) |
Exclude
amortization of intangible assets |
|
255 |
|
|
26 |
|
|
229 |
|
|
|
509 |
|
|
52 |
|
|
457 |
|
Exclude
stock based compensation |
|
- |
|
|
- |
|
|
- |
|
|
|
2 |
|
|
- |
|
|
2 |
|
Non-GAAP gross
profit |
$ |
10,905 |
|
$ |
3,703 |
|
$ |
7,202 |
|
|
$ |
21,211 |
|
$ |
5,898 |
|
$ |
15,313 |
|
|
|
|
|
|
|
|
|
Non-GAAP gross profit,
% |
|
63.3 |
% |
|
73.5 |
% |
|
59.1 |
% |
|
|
62.6 |
% |
|
75.7 |
% |
|
58.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the Company’s forecasted U.S.
GAAP operating (loss) income per share to the Company’s forecasted
non-GAAP operating income per share for the Company’s third fiscal
quarter and full fiscal 2019:
|
SeaChange International, Inc. |
Reconciliation of GAAP to Non-GAAP
Guidance |
(Unaudited, amounts in thousands except per
share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
October 31, 2018 |
|
January 31, 2019 |
GAAP revenue
guidance |
$ |
16,000 |
|
to |
$ |
20,000 |
|
|
$ |
70,000 |
|
to |
$ |
75,000 |
|
GAAP loss from
operations per basic share |
$ |
(0.15 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.26 |
) |
Exclude
stock compensation expense |
|
0.02 |
|
|
|
0.02 |
|
|
|
0.08 |
|
|
|
0.08 |
|
Exclude
amortization of intangible assets |
|
0.02 |
|
|
|
0.02 |
|
|
|
0.08 |
|
|
|
0.08 |
|
Exclude
professional fees associated with divestitures |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exclude
restructuring costs |
|
0.06 |
|
|
|
0.06 |
|
|
|
0.06 |
|
|
|
0.06 |
|
Non-GAAP (loss) income
from operations per diluted or basic share |
$ |
(0.05 |
) |
|
$ |
0.04 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
SeaChange International,
Inc. |
Supplemental Schedule - Revenue
Breakout |
(Unaudited, amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
July 31, |
|
July 31, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Product revenues: |
|
|
|
|
|
|
|
|
Video
platform |
$ |
524 |
|
$ |
3,565 |
|
$ |
3,339 |
|
$ |
5,413 |
|
Advertising |
|
609 |
|
|
- |
|
|
609 |
|
|
- |
|
User
experience |
|
7 |
|
|
149 |
|
|
24 |
|
|
267 |
|
Hardware |
|
322 |
|
|
914 |
|
|
581 |
|
|
1,598 |
|
Third-party products |
|
- |
|
|
411 |
|
|
- |
|
|
510 |
|
Total
product revenues |
|
1,462 |
|
|
5,039 |
|
|
4,553 |
|
|
7,788 |
|
|
|
|
|
|
|
|
|
|
Service revenues: |
|
|
|
|
|
|
|
|
Maintenance and support |
|
7,017 |
|
|
8,718 |
|
|
14,239 |
|
|
16,982 |
|
SaaS |
|
63 |
|
|
313 |
|
|
193 |
|
|
1,707 |
|
Professional services - video platform |
|
3,359 |
|
|
2,988 |
|
|
7,730 |
|
|
7,170 |
|
User
experience |
|
- |
|
|
167 |
|
|
121 |
|
|
245 |
|
Total
service revenues |
|
10,439 |
|
|
12,186 |
|
|
22,283 |
|
|
26,104 |
|
Total
revenues |
$ |
11,901 |
|
$ |
17,225 |
|
$ |
26,836 |
|
$ |
33,892 |
|
|
|
|
|
|
|
|
|
|
Contact:
InvestorsMary T. ConwayConway
Communications1-781-772-1679marytconway@comcast.net
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