SeaChange International, Inc. (NASDAQ:SEAC) today reported 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, compared
to second quarter fiscal 2017 revenue of $18.5 million and U.S.
GAAP loss from operations of $11.7 million, or $0.33 per basic
share.
The Company’s U.S. GAAP second quarter fiscal 2018 results
included non-GAAP charges of $1.1 million, which consisted
primarily of severance and other restructuring costs of $0.6
million, stock-based compensation of $0.7 million, amortization of
intangible assets from prior acquisitions of $0.6 million and a
reduction of $0.8 million in the previously recorded provision for
loss contract, while the second quarter fiscal 2017 results
included $4.1 million of non-GAAP charges. The non-GAAP loss
from operations for the second quarter of fiscal 2018 was $1.0
million, or $0.03 per basic share, compared to the second quarter
of fiscal 2017 non-GAAP loss from operations of $7.6 million,
or $0.21 per basic share.
For the first six months of fiscal 2018, the Company reported
revenue of $33.9 million and a U.S. GAAP loss from operations of
$7.6 million, or $0.22 per basic share, compared to revenue of
$40.0 million and a U.S.GAAP loss from operations of $21.2 million,
or $0.61 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 2018 was $2.7 million, or $0.08 per basic share,
compared to a non-GAAP loss from operations of $14.4 million, or
$0.41 per basic share, in the first half of fiscal 2017.
Ed Terino, Chief Executive Officer, SeaChange, said, “In the
second quarter of fiscal 2018, we saw continued success with
existing and new customers for IP video and cloud-based
deployments, including the first sale of our new NitroX platform.
We are continuing to generate green field customer opportunities
globally for our end-to-end subscription solution, with yet another
new multi-million dollar transaction in the quarter, which provides
stronger support for revenue growth next year. Because larger
transactions are moving to a subscription model, we are narrowing
and lowering our annual revenue guidance at this point, but
improving bottom-line expectations that include achieving a return
to profitability in the second half of this fiscal year.”
Peter Faubert, Chief Financial Officer, SeaChange, said, “The
second fiscal quarter represented good progress in achieving
improved gross margins and lower operating expenses. Our revenue
came in within our guidance range, despite some pressure from the
increase in subscription model revenues, but as importantly, our
non-GAAP EPS results were at the high end of the guidance range.
Our GAAP and non-GAAP gross profit margin improved
sequentially, reaching 66 percent and 63 percent, respectively,
providing further evidence of our ability to achieve our goal of
attaining non-GAAP gross profit margins in the low 60s on a
recurring basis, especially as our revenue mix continues to
transition from perpetual licenses to a subscription or SaaS
model.”
Faubert added, “In terms of cost savings from the restructuring
initiatives we have implemented, we remain on target to achieve a
total of $38 million in cost savings on an annual run-rate basis,
including approximately $17 million to $18 million in annual
run-rate savings in fiscal 2018 alone. We remain focused on
returning the company to profitability as well as revenue growth in
the second half of fiscal 2018. Despite the top-line pressure
from the transition to subscription or SaaS-based revenue models
for more opportunities, we continue to believe this evolution will
improve both the visibility into and predictability of our revenue
growth.”
SeaChange ended the second quarter of fiscal 2018 with cash,
cash equivalents, restricted cash and marketable securities of
approximately $36 million, and no debt outstanding.
OutlookSeaChange anticipates third quarter
fiscal 2018 revenue to be in the range of $19 million to $21
million, U.S. GAAP loss from operations to be in the range of $0.04
to $0.01 per basic share, and non-GAAP income from operations to be
in the range of $0.00 to $0.03 per diluted share. For full
fiscal 2018, SeaChange has lowered and narrowed its expectations to
revenue in the range of $75 million to $80 million, U.S. GAAP loss
from operations in the range of $0.28 to $0.23 per basic share and
non-GAAP operating income in the range of a loss of $0.03 per basic
share to income of $0.02 per 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. The Company has made no provision for
restructuring expense in its outlook for the third quarter of
fiscal 2018.
Conference CallThe Company will host a
conference call to discuss its second quarter fiscal 2018 results
at 5:00 p.m. ET today, Wednesday, September 6, 2017. The
call may be accessed by dialing 877-407-8037 (U.S.) and
201-689-8037 (international) and via live webcast
at www.schange.com/IR. The webcast replay will
be archived on the investor relations section of the Company's
website at www.schange.com/IR.
About SeaChange International
Enabling our customers to deliver billions of premium video
streams across a matrix of pay-TV and OTT
platforms, SeaChange (Nasdaq:SEAC) empowers service
providers, broadcasters, content owners and brand advertisers to
entertain audiences, engage consumers and expand business
opportunities. As an Emmy winning organization with nearly 25 years
of experience, we give media businesses the content management,
delivery and monetization capabilities they need to craft an
individualized branded experience for every viewer that sets the
pace for quality and value worldwide. For more information,
please visit www.schange.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,
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,” “expects,” “plans,” “anticipates,”
“believes,” “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 systems and
services and expenses we may incur in fulfilling customer
arrangements; the continued development of the multiscreen video
and OTT market; 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 and the rate of decline in revenue attributable to our
legacy products; the Company’s transition to being a company that
primarily provides software solutions; worldwide economic cycles;
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 television service providers
industry; 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; net losses incurred by the Company and
potential reduction in its cash position; the implementation 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 obtain necessary licenses, services or
distribution rights for third-party technology; the Company’s
ability to compete in its marketplace; the Company’s ability to
respond to changing technologies; 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 taken
non-controlling equity positions; 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
availability of shares to provide adequate equity incentives to
employees of the Company; the ability of the Company to manage and
oversee the outsourcing of engineering work; additional tax
liabilities to which the Company may be subject; 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; the ability of the Company to remediate identified
material weaknesses in certain 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; compliance with conflict minerals
regulations; terrorist acts, conflicts, wars and geopolitical
uncertainties; the Company’s Delaware anti-takeover provisions; and
the effect on revenue and reported results of a change in financial
accounting standards. 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
17, 2017. 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 |
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
July 31, |
|
January 31, |
|
|
|
|
2017 |
|
2017 |
|
|
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
25,295 |
|
$ |
28,302 |
Restricted cash |
|
|
|
8 |
|
|
109 |
Marketable securities |
|
|
|
10,287 |
|
|
10,244 |
Accounts and other receivables, net |
|
|
|
22,661 |
|
|
25,985 |
Unbilled receivables |
|
|
|
4,347 |
|
|
6,553 |
Inventories, net |
|
|
|
635 |
|
|
770 |
Prepaid expenses and other current assets |
|
|
|
2,983 |
|
|
2,393 |
Property and equipment, net |
|
|
10,611 |
|
|
11,485 |
Goodwill and intangible assets, net |
|
|
26,696 |
|
|
25,890 |
Other assets |
|
|
3,414 |
|
|
4,336 |
|
Total
assets |
|
|
$ |
106,937 |
|
$ |
116,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Accounts payable and other current liabilities |
|
|
$ |
9,884 |
|
$ |
14,906 |
Deferred revenues |
|
|
|
14,454 |
|
|
14,936 |
Deferred tax liabilities and income taxes payable |
|
|
17,886 |
|
|
16,159 |
Other long term liabilities |
|
|
522 |
|
|
530 |
|
Total liabilities |
|
|
42,746 |
|
|
46,531 |
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
|
64,191 |
|
|
69,536 |
|
Total liabilities and
stockholders’ equity |
|
|
$ |
106,937 |
|
$ |
116,067 |
|
|
|
|
|
|
|
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, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
Products |
|
$ |
5,039 |
|
|
$ |
2,535 |
|
|
$ |
7,788 |
|
|
$ |
6,735 |
|
|
Services |
|
|
12,186 |
|
|
|
15,917 |
|
|
|
26,104 |
|
|
|
33,287 |
|
|
Total
revenues |
|
|
17,225 |
|
|
|
18,452 |
|
|
|
33,892 |
|
|
|
40,022 |
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
|
Products |
|
|
1,336 |
|
|
|
1,108 |
|
|
|
1,890 |
|
|
|
2,682 |
|
|
Services |
|
|
4,218 |
|
|
|
8,920 |
|
|
|
10,198 |
|
|
|
18,866 |
|
|
Amortization of intangible assets |
|
|
255 |
|
|
|
316 |
|
|
|
509 |
|
|
|
632 |
|
|
Stock-based
compensation expense |
|
|
- |
|
|
|
85 |
|
|
|
2 |
|
|
|
157 |
|
|
Total
cost of revenues |
|
|
5,809 |
|
|
|
10,429 |
|
|
|
12,599 |
|
|
|
22,337 |
|
|
Gross profit |
|
|
11,416 |
|
|
|
8,023 |
|
|
|
21,293 |
|
|
|
17,685 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
6,399 |
|
|
|
7,727 |
|
|
|
11,777 |
|
|
|
16,426 |
|
|
Selling and
marketing |
|
|
2,439 |
|
|
|
4,429 |
|
|
|
5,376 |
|
|
|
8,499 |
|
|
General and
administrative |
|
|
3,084 |
|
|
|
3,835 |
|
|
|
6,727 |
|
|
|
7,906 |
|
|
Amortization of
intangible assets |
|
|
361 |
|
|
|
582 |
|
|
|
705 |
|
|
|
1,032 |
|
|
Stock-based
compensation expense |
|
|
653 |
|
|
|
854 |
|
|
|
1,528 |
|
|
|
894 |
|
|
Earn-outs and change in
fair value of earn-outs |
|
|
- |
|
|
|
249 |
|
|
|
- |
|
|
|
249 |
|
|
Professional fees - other |
|
|
- |
|
|
|
172 |
|
|
|
21 |
|
|
|
304 |
|
|
Severance and other
restructuring costs |
|
|
563 |
|
|
|
1,843 |
|
|
|
2,710 |
|
|
|
3,618 |
|
|
Total
operating expenses |
|
|
13,499 |
|
|
|
19,691 |
|
|
|
28,844 |
|
|
|
38,928 |
|
Loss from
operations |
|
|
(2,083 |
) |
|
|
(11,668 |
) |
|
|
(7,551 |
) |
|
|
(21,243 |
) |
Other
income (expenses), net |
|
|
589 |
|
|
|
(635 |
) |
|
|
955 |
|
|
|
287 |
|
Loss before
income taxes |
|
|
(1,494 |
) |
|
|
(12,303 |
) |
|
|
(6,596 |
) |
|
|
(20,956 |
) |
Income tax
provision |
|
|
35 |
|
|
|
14,581 |
|
|
|
304 |
|
|
|
14,835 |
|
Net loss |
|
$ |
(1,529 |
) |
|
$ |
(26,884 |
) |
|
$ |
(6,900 |
) |
|
$ |
(35,791 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss
per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.05 |
) |
|
$ |
(0.77 |
) |
|
$ |
(0.20 |
) |
|
$ |
(1.03 |
) |
|
Diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.77 |
) |
|
$ |
(0.20 |
) |
|
$ |
(1.03 |
) |
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
35,351 |
|
|
|
35,115 |
|
|
|
35,331 |
|
|
|
34,739 |
|
|
Diluted |
|
|
35,351 |
|
|
|
35,115 |
|
|
|
35,331 |
|
|
|
34,739 |
|
|
|
|
|
|
|
|
|
|
|
SeaChange International, Inc. |
Preliminary Condensed Consolidated Statements
of Cash Flows |
(Unaudited, amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
July 31, |
|
|
|
|
|
2017 |
|
2016 |
Cash flows from operating activities: |
|
|
|
|
Net loss |
$ |
(6,900 |
) |
|
$ |
(35,791 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Depreciation and amortization of property and equipment |
|
1,198 |
|
|
|
1,567 |
|
|
|
Amortization of intangible assets |
|
1,214 |
|
|
|
1,664 |
|
|
|
Fair value
of acquisition-related contingent consideration |
|
- |
|
|
|
249 |
|
|
|
Stock-based
compensation expense |
|
1,530 |
|
|
|
1,051 |
|
|
|
Deferred
income taxes |
|
79 |
|
|
|
14,649 |
|
|
|
Other
non-cash reconciling items, net |
|
8 |
|
|
|
195 |
|
|
|
Changes in operating assets and liabilities, excluding impact
of acquisition: |
|
|
|
|
|
|
Accounts receivable |
|
4,358 |
|
|
|
14,023 |
|
|
|
|
Unbilled receivables |
|
2,558 |
|
|
|
(565 |
) |
|
|
|
Inventories |
|
57 |
|
|
|
19 |
|
|
|
|
Prepaid expenses and other assets |
|
8 |
|
|
|
1,053 |
|
|
|
|
Accounts payable |
|
(2,594 |
) |
|
|
(1,607 |
) |
|
|
|
Accrued expenses |
|
(3,193 |
) |
|
|
(5,307 |
) |
|
|
|
Deferred revenues |
|
(870 |
) |
|
|
(5,419 |
) |
|
|
|
Other operating activities |
|
230 |
|
|
|
122 |
|
|
|
|
|
Total
cash used in operating activities |
|
(2,317 |
) |
|
|
(14,097 |
) |
Cash flows from investing activities: |
|
|
|
|
Purchases of property and equipment |
|
(274 |
) |
|
|
(403 |
) |
|
Purchases of marketable securities |
|
(4,501 |
) |
|
|
- |
|
|
Proceeds from sale and maturity of marketable securities |
|
4,449 |
|
|
|
252 |
|
|
Acquisition of business, net of cash acquired |
|
- |
|
|
|
(5,243 |
) |
|
Other investing activities |
|
388 |
|
|
|
(83 |
) |
|
|
|
|
Total
provided by (used in) in investing activities |
|
62 |
|
|
|
(5,477 |
) |
Cash flows from financing activities: |
|
|
|
|
Proceeds from issuance of common stock |
|
26 |
|
|
|
33 |
|
|
Payments of withholding tax on RSU vesting |
|
(36 |
) |
|
|
(91 |
) |
|
Other financing activities |
|
- |
|
|
|
(4 |
) |
|
|
|
|
Total
cash used in financing activities |
|
(10 |
) |
|
|
(62 |
) |
Effect of exchange rate changes on cash |
|
(742 |
) |
|
|
(431 |
) |
Net decrease in cash and cash equivalents |
|
(3,007 |
) |
|
|
(20,067 |
) |
Cash and cash equivalents, beginning of period |
|
28,302 |
|
|
|
58,733 |
|
Cash and cash equivalents, end of period |
$ |
25,295 |
|
|
$ |
38,666 |
|
|
|
|
|
|
|
|
|
Non-GAAP Measures.
We define non-GAAP (loss) income from operations as U.S. GAAP
operating loss plus stock-based compensation expenses, amortization
of intangible assets, provision for loss contract, earn-outs and
change in fair value of earn-outs, non-operating expense
professional fees and severance and other restructuring costs. We
discuss non-GAAP (loss) income from operations in our quarterly
earnings releases and certain other communications as we believe
non-GAAP operating (loss) income from operations is an important
measure that is not calculated according to U.S. GAAP. We use
non-GAAP (loss) income 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)
income 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) income 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) income 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 provision. We believe
that the exclusion of this line item amount, which is recorded in
cost of revenues – service, 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.
Earn-outs and Change in Fair Value of
Earn-outs. Earn-outs and the change in the fair value of
earn-outs are considered by management to be non-recurring expenses
to the former shareholders of the businesses we acquire. We also
incur expenses due to changes in fair value related to contingent
consideration that we believe would otherwise impair comparability
among periods.
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) income from operations
for the three and six months ended July 31, 2017 and 2016 (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, 2017 |
|
July 31, 2016 |
|
|
|
GAAP |
|
|
|
|
|
GAAP |
|
|
|
|
|
|
|
As Reported |
|
Adjustments |
|
Non-GAAP |
|
As Reported |
|
Adjustments |
|
Non-GAAP |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
5,039 |
|
|
$ |
- |
|
|
$ |
5,039 |
|
|
$ |
2,535 |
|
|
$ |
- |
|
|
$ |
2,535 |
|
|
Services |
|
|
12,186 |
|
|
|
- |
|
|
|
12,186 |
|
|
|
15,917 |
|
|
|
- |
|
|
|
15,917 |
|
|
Total revenues |
|
|
17,225 |
|
|
|
- |
|
|
|
17,225 |
|
|
|
18,452 |
|
|
|
- |
|
|
|
18,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
|
1,336 |
|
|
|
- |
|
|
|
1,336 |
|
|
|
1,108 |
|
|
|
- |
|
|
|
1,108 |
|
|
Services |
|
|
4,218 |
|
|
|
766 |
|
|
|
4,984 |
|
|
|
8,920 |
|
|
|
- |
|
|
|
8,920 |
|
|
Amortization of intangible assets |
|
|
255 |
|
|
|
(255 |
) |
|
|
- |
|
|
|
316 |
|
|
|
(316 |
) |
|
|
- |
|
|
Stock-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
85 |
|
|
|
(85 |
) |
|
|
- |
|
|
Total cost of revenues |
|
|
5,809 |
|
|
|
511 |
|
|
|
6,320 |
|
|
|
10,429 |
|
|
|
(401 |
) |
|
|
10,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
11,416 |
|
|
|
(511 |
) |
|
|
10,905 |
|
|
|
8,023 |
|
|
|
401 |
|
|
|
8,424 |
|
|
Gross profit
percentage |
|
|
66.3 |
% |
|
|
(3.0 |
%) |
|
|
63.3 |
% |
|
|
43.5 |
% |
|
|
2.2 |
% |
|
|
45.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
6,399 |
|
|
|
- |
|
|
|
6,399 |
|
|
|
7,727 |
|
|
|
- |
|
|
|
7,727 |
|
|
Selling and
marketing |
|
|
2,439 |
|
|
|
- |
|
|
|
2,439 |
|
|
|
4,429 |
|
|
|
- |
|
|
|
4,429 |
|
|
General and
administrative |
|
|
3,084 |
|
|
|
- |
|
|
|
3,084 |
|
|
|
3,835 |
|
|
|
- |
|
|
|
3,835 |
|
|
Amortization of
intangible assets |
|
|
361 |
|
|
|
(361 |
) |
|
|
- |
|
|
|
582 |
|
|
|
(582 |
) |
|
|
- |
|
|
Stock-based
compensation expense |
|
|
653 |
|
|
|
(653 |
) |
|
|
- |
|
|
|
854 |
|
|
|
(854 |
) |
|
|
- |
|
|
Earn-outs and change in
fair value of earn-outs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
249 |
|
|
|
(249 |
) |
|
|
- |
|
|
Professional fees - other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
172 |
|
|
|
(172 |
) |
|
|
- |
|
|
Severance and other
restructuring costs |
|
|
563 |
|
|
|
(563 |
) |
|
|
- |
|
|
|
1,843 |
|
|
|
(1,843 |
) |
|
|
- |
|
|
Total operating expenses |
|
|
13,499 |
|
|
|
(1,577 |
) |
|
|
11,922 |
|
|
|
19,691 |
|
|
|
(3,700 |
) |
|
|
15,991 |
|
|
(Loss) income
from operations |
|
$ |
(2,083 |
) |
|
$ |
1,066 |
|
|
$ |
(1,017 |
) |
|
$ |
(11,668 |
) |
|
$ |
4,101 |
|
|
$ |
(7,567 |
) |
|
(Loss) income
from operations percentage |
|
|
(12.1 |
%) |
|
|
6.2 |
% |
|
|
(5.9 |
%) |
|
|
(63.2 |
%) |
|
|
22.2 |
% |
|
|
(41.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
35,351 |
|
|
|
35,351 |
|
|
|
35,351 |
|
|
|
35,115 |
|
|
|
35,115 |
|
|
|
35,115 |
|
|
Diluted |
|
|
35,351 |
|
|
|
35,565 |
|
|
|
35,351 |
|
|
|
35,115 |
|
|
|
35,171 |
|
|
|
35,115 |
|
Non-GAAP operating (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.33 |
) |
|
$ |
0.12 |
|
|
$ |
(0.21 |
) |
|
Diluted |
|
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.33 |
) |
|
$ |
0.12 |
|
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017 |
|
July 31, 2016 |
|
|
|
GAAP |
|
|
|
|
|
GAAP |
|
|
|
|
|
|
|
As Reported |
|
Adjustments |
|
Non-GAAP |
|
As Reported |
|
Adjustments |
|
Non-GAAP |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
7,788 |
|
|
$ |
- |
|
|
$ |
7,788 |
|
|
$ |
6,735 |
|
|
$ |
- |
|
|
$ |
6,735 |
|
|
Services |
|
|
26,104 |
|
|
|
- |
|
|
|
26,104 |
|
|
|
33,287 |
|
|
|
- |
|
|
|
33,287 |
|
|
Total revenues |
|
|
33,892 |
|
|
|
- |
|
|
|
33,892 |
|
|
|
40,022 |
|
|
|
- |
|
|
|
40,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
|
1,890 |
|
|
|
- |
|
|
|
1,890 |
|
|
|
2,682 |
|
|
|
- |
|
|
|
2,682 |
|
|
Services |
|
|
10,198 |
|
|
|
593 |
|
|
|
10,791 |
|
|
|
18,866 |
|
|
|
- |
|
|
|
18,866 |
|
|
Amortization of intangible assets |
|
|
509 |
|
|
|
(509 |
) |
|
|
- |
|
|
|
632 |
|
|
|
(632 |
) |
|
|
- |
|
|
Stock-based
compensation |
|
|
2 |
|
|
|
(2 |
) |
|
|
- |
|
|
|
157 |
|
|
|
(157 |
) |
|
|
- |
|
|
Total cost of revenues |
|
|
12,599 |
|
|
|
82 |
|
|
|
12,681 |
|
|
|
22,337 |
|
|
|
(789 |
) |
|
|
21,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
21,293 |
|
|
|
(82 |
) |
|
|
21,211 |
|
|
|
17,685 |
|
|
|
789 |
|
|
|
18,474 |
|
|
Gross profit
percentage |
|
|
62.8 |
% |
|
|
(0.2 |
%) |
|
|
62.6 |
% |
|
|
44.2 |
% |
|
|
2.0 |
% |
|
|
46.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
11,777 |
|
|
|
- |
|
|
|
11,777 |
|
|
|
16,426 |
|
|
|
- |
|
|
|
16,426 |
|
|
Selling and
marketing |
|
|
5,376 |
|
|
|
- |
|
|
|
5,376 |
|
|
|
8,499 |
|
|
|
- |
|
|
|
8,499 |
|
|
General and
administrative |
|
|
6,727 |
|
|
|
- |
|
|
|
6,727 |
|
|
|
7,906 |
|
|
|
- |
|
|
|
7,906 |
|
|
Amortization of
intangible assets |
|
|
705 |
|
|
|
(705 |
) |
|
|
- |
|
|
|
1,032 |
|
|
|
(1,032 |
) |
|
|
- |
|
|
Stock-based
compensation expense |
|
|
1,528 |
|
|
|
(1,528 |
) |
|
|
- |
|
|
|
894 |
|
|
|
(894 |
) |
|
|
- |
|
|
Earn-outs and change in
fair value of earn-outs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
249 |
|
|
|
(249 |
) |
|
|
- |
|
|
Professional fees - other |
|
|
21 |
|
|
|
(21 |
) |
|
|
- |
|
|
|
304 |
|
|
|
(304 |
) |
|
|
- |
|
|
Severance and other
restructuring costs |
|
|
2,710 |
|
|
|
(2,710 |
) |
|
|
- |
|
|
|
3,618 |
|
|
|
(3,618 |
) |
|
|
- |
|
|
Total operating expenses |
|
|
28,844 |
|
|
|
(4,964 |
) |
|
|
23,880 |
|
|
|
38,928 |
|
|
|
(6,097 |
) |
|
|
32,831 |
|
|
(Loss) income
from operations |
|
$ |
(7,551 |
) |
|
$ |
4,882 |
|
|
$ |
(2,669 |
) |
|
$ |
(21,243 |
) |
|
$ |
6,886 |
|
|
$ |
(14,357 |
) |
|
(Loss) income
from operations percentage |
|
|
(22.3 |
%) |
|
|
14.4 |
% |
|
|
(7.9 |
%) |
|
|
(53.1 |
%) |
|
|
17.2 |
% |
|
|
(35.9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
35,331 |
|
|
|
35,331 |
|
|
|
35,331 |
|
|
|
34,739 |
|
|
|
34,739 |
|
|
|
34,739 |
|
|
Diluted |
|
|
35,331 |
|
|
|
35,485 |
|
|
|
35,331 |
|
|
|
34,739 |
|
|
|
34,804 |
|
|
|
34,739 |
|
Non-GAAP operating (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
0.14 |
|
|
$ |
(0.08 |
) |
|
$ |
(0.61 |
) |
|
$ |
0.20 |
|
|
$ |
(0.41 |
) |
|
Diluted |
|
$ |
(0.22 |
) |
|
$ |
0.14 |
|
|
$ |
(0.08 |
) |
|
$ |
(0.61 |
) |
|
$ |
0.20 |
|
|
$ |
(0.41 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 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 loss from operations to the Company’s forecasted non-GAAP loss
from operations for the Company’s third fiscal quarter and full
fiscal 2018:
|
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, 2017 |
|
January 31, 2018 |
GAAP revenue
guidance |
$ |
19,000 |
|
to |
$ |
21,000 |
|
|
$ |
75,000 |
|
to |
$ |
80,000 |
|
GAAP loss from
operations per basic share |
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.23 |
) |
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 |
|
- |
|
|
|
- |
|
|
|
0.09 |
|
|
|
0.09 |
|
Non-GAAP income (loss)
from operations per diluted or basic share |
$ |
0.00 |
|
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
SeaChange International, Inc. |
Supplemental Schedule - Revenue
Breakout |
(Unaudited, amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
July 31, |
|
July 31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Product revenues: |
|
|
|
|
|
|
|
|
|
Video
platform |
|
|
$ |
3,565 |
|
$ |
1,785 |
|
|
$ |
5,413 |
|
$ |
4,351 |
Advertising |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
121 |
User
experience |
|
|
|
149 |
|
|
(85 |
) |
|
|
267 |
|
|
292 |
Hardware |
|
|
|
914 |
|
|
406 |
|
|
|
1,598 |
|
|
932 |
Third-party products |
|
|
|
411 |
|
|
429 |
|
|
|
510 |
|
|
1,039 |
Total
product revenues |
|
|
|
5,039 |
|
|
2,535 |
|
|
|
7,788 |
|
|
6,735 |
|
|
|
|
|
|
|
|
|
|
Service revenues: |
|
|
|
|
|
|
|
|
|
Maintenance and support |
|
|
|
8,718 |
|
|
9,076 |
|
|
|
16,982 |
|
|
18,753 |
SaaS |
|
|
|
313 |
|
|
808 |
|
|
|
1,707 |
|
|
1,795 |
Professional services - video platform |
|
|
|
2,988 |
|
|
5,653 |
|
|
|
7,170 |
|
|
10,365 |
User
experience |
|
|
|
167 |
|
|
380 |
|
|
|
245 |
|
|
2,374 |
Total
service revenues |
|
|
|
12,186 |
|
|
15,917 |
|
|
|
26,104 |
|
|
33,287 |
Total revenues |
|
$ |
17,225 |
|
$ |
18,452 |
|
|
$ |
33,892 |
|
$ |
40,022 |
|
|
|
|
|
|
|
|
|
|
Contact:
Investors
Mary T. Conway
Conway Communications
1-781-772-1679
marytconway@comcast.net
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