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8-K - FORM 8-K - SEACHANGE INTERNATIONAL INCd69879d8k.htm

Exhibit 99.1

 

LOGO

NEWS RELEASE

Contact:    Press    Investors   
   Jim Sheehan    Monica Gould   
   SeaChange    The Blueshirt Group   
   1-978-897-0100 x3064    1-212-871-3927   
   jim.sheehan@schange.com    monica@blueshirtgroup.com   

SEACHANGE INTERNATIONAL REPORTS

THIRD QUARTER FISCAL 2016 PRELIMINARY RESULTS

 

    New Product Revenue Growth Led by New Large U.S. Telco Customer

 

    Achieved Non-GAAP Operating Profit Ahead of Plan

 

    Recognized Initial Rave Revenue on OTT Launch with Leading Content Owner

 

    Adrenalin Multiscreen Platform Goes Live with Subscribers for Two Large North American Service Providers

ACTON, Mass. (Dec. 3, 2015) – SeaChange International, Inc. (NASDAQ: SEAC) today reported third quarter fiscal 2016 revenue of $28.7 million and estimated U.S. GAAP loss from operations of $11.8 million, or $0.35 per basic share, compared to third quarter fiscal 2015 revenue of $30.0 million and U.S. GAAP operating loss of $5.9 million, or $0.19 per basic share. Excluding estimated non-GAAP charges of $12.2 million, non-GAAP income from operations for the third quarter of fiscal 2016 was $0.4 million, or $0.01 per diluted share, compared to non-GAAP loss from operations of $2.1 million, or $0.07 per basic share, in the third quarter of fiscal 2015.

For the first nine months of fiscal 2016, the Company posted revenue of $79.8 million and an estimated U.S. GAAP loss from operations for the first nine months of fiscal 2016 of $26.1 million, or $0.78 per basic share, compared to revenue of $84.2 million and U.S. GAAP loss from operations of $21.2 million, or $0.65 per basic share, for the same prior period a year ago. The Company posted an estimated non-GAAP loss from operations of $7.7 million, or $0.23 per basic share, compared to non-GAAP loss from operations of $12.1 million, or $0.37 per basic share, in the same prior period.

“We’re pleased to report our first profitable quarter since the end of fiscal 2014, a positive performance that reflects the commercial progress of our Adrenalin multiscreen platform rollouts as well as the further diversification of our customer base,” said Jay Samit, Chief Executive Officer, SeaChange. “With the implementation of our OTT strategy, we have expanded the Company’s addressable market to content owners. Last month our Rave platform went live in commercial OTT service for our first content owner customer. Now, we’re looking forward to expanding in another dimension with a Rave commercial launch for U.S.-based MVNO ROK Mobile in the first half of 2016.”

 

 

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SeaChange Q3 FY16 Results/Page 2

Anthony Dias, Chief Financial Officer, SeaChange, stated, “We are pleased to report third quarter revenue at the top end of our guidance and a return to operating profitability one quarter ahead of plan. Our top-line results were driven by growth in new product revenue and new customer wins, most notably a large U.S. telco customer. Our streamlining efforts have reduced our operating expenses, lowered our break even point and enabled us to return to profitability ahead of schedule.”

The Company’s preliminary third fiscal quarter GAAP results include a one-time charge of $9.2 million related to the cost of fulfilling the Company’s obligations under its fixed price system integrator agreement. The Company is finalizing the amount of this charge, and variation in this amount is not anticipated to impact the Company’s non-GAAP results. The Company will include the final amount of this charge in its Quarterly Report on Form 10-Q for the period ended October 31, 2015.

Commenting on the Company’s outlook, Dias concluded, “As a result of our execution on our cost reduction programs and better than expected operating performance in the third quarter, we are adjusting our non-GAAP EPS guidance from a loss of $0.16 to $0.36 per basic share to a loss of $0.20 to $0.25 per basic share. For the fourth quarter of fiscal 2016, we anticipate revenue to be in the range of $28 million to $32 million and non-GAAP operating results to be in the range of a loss of $0.02 per basic share to earnings of $0.03 per fully diluted share.”

SeaChange continues to maintain a strong balance sheet, ending the third quarter of fiscal 2016 with cash, cash equivalents and marketable securities of $70.8 million and no debt outstanding.

The Company will host a conference call to discuss its third quarter fiscal 2016 results at 5:00 p.m. ET today, Thursday, Dec. 3, 2015. The call may be accessed at 877-407-8037 (U.S.) and 201-689-8037 (international) and via live webcast at www.schange.com/IR. A replay of the conference call will be available by phone through December 17, 2015 at 877-660-6853 (U.S.) or 201-612-7415 (international), conference ID 1362-4537. The webcast 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, OTT and mobile platforms, SeaChange (Nasdaq: SEAC) empowers service providers, content owners and brand advertisers to entertain audiences, engage consumers and expand business opportunities. As a three-time Emmy award-winning organization with over 20 years of experience, we give media businesses the content management, delivery, measurement and analytics 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.

 

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SeaChange Q3 FY16 Results/Page 3

Safe Harbor Provision

Any statements contained in this press release that do not describe historical facts, including without limitation statements regarding our products, the preliminary determination of our estimated one-time charge, future financial performance including expenses we may incur in the future in fulfilling customer arrangements, anticipated sales cycles, customer diversification, and developments with our customers and the industry, are neither promises nor guarantees and may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements contained herein are based on current assumptions and expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. Factors that could cause actual future results to differ materially from current expectations include 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 inability to meet revenue targets for our SaaS-based multiscreen service offering; 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 one of the Company’s large customers; 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; the timing of revenue recognition of new products due to customer integration and acceptance requirements; any decline in demand or average selling prices for our products; 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 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; 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 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 impact of acquisitions, divestitures or investments made by the Company; the impact of changes in the market on the value of our investments; any impairment of the Company’s assets; 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; the security measures of the Company are breached and customer data or our data is obtained unlawfully; service interruptions or delays from our third-party data center hosting facilities; the implementation of a restructuring program; if securities analysts do not publish favorable research or reports about our business; our use of non-GAAP reporting; the effectiveness of the Company’s disclosure controls and procedures and internal controls over financial reporting; the risks associated with purchasing material components from sole suppliers and using a limited number of third-party manufacturers; compliance with conflict minerals regulations; and the effect on revenue and reported results of a change in financial accounting standards.

Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly available documents made by the Company from time to time with the Securities and Exchange Commission, including but not limited to, those appearing under the caption “Certain Risk Factors” in the Company’s Annual Report on Form 10-K filed on April 7, 2015. Any forward-looking statements should be considered in light of those factors. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak as of the date they are made. The Company disclaims any obligation to publicly update or revise any such statements to reflect any change in Company expectations or events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results may differ from those set forth in the forward-looking statements.

 

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SeaChange Q3 FY16 Results/Page 4

SeaChange International, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

     October 31,
2015
     January 31,
2015
 
     (Unaudited)         
Assets      

Cash and cash equivalents

   $ 58,030       $ 90,019   

Marketable securities and restricted cash

     12,774         15,382   

Accounts and other receivables, net

     36,059         31,550   

Inventories, net

     2,024         2,864   

Prepaid expenses and other current assets

     3,137         3,026   

Property and equipment, net

     14,673         15,869   

Goodwill and intangible assets, net

     68,280         48,322   

Other assets

     5,732         5,319   
  

 

 

    

 

 

 

Total assets

   $ 200,709       $ 212,351   
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Accounts payable and other current liabilities

   $ 23,137       $ 17,636   

Deferred stock consideration

     4,789         —     

Deferred revenues

     16,149         19,088   

Other long term liabilities

     2,217         1,493   

Deferred tax liabilities and income taxes payable

     1,445         3,083   
  

 

 

    

 

 

 

Total liabilities

     47,737         41,300   
  

 

 

    

 

 

 

Total stockholders’ equity

     152,972         171,051   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 200,709       $ 212,351   
  

 

 

    

 

 

 

 

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SeaChange Q3 FY16 Results/Page 5

SeaChange International, Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, amounts in thousands, except per share data)

 

     Three Months Ended
October 31,
    Nine Months Ended
October 31,
 
     2015     2014     2015     2014  

Revenues:

        

Products

   $ 6,195      $ 7,311      $ 16,314      $ 21,109   

Services

     22,552        22,659        63,481        63,047   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     28,747        29,970        79,795        84,156   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Products

     1,528        2,779        4,766        6,188   

Services

     10,963        12,094        33,829        35,970   

Provision for loss contract

     9,162        —          9,162        —     

Amortization of intangible assets

     184        258        557        795   

Stock-based compensation expense

     33        46        61        132   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     21,870        15,177        48,375        43,085   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     6,877        14,793        31,420        41,071   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     8,273        9,932        26,176        31,729   

Selling and marketing

     3,965        3,447        11,263        10,509   

General and administrative

     3,648        3,841        11,446        11,895   

Amortization of intangible assets

     1,038        994        3,003        3,325   

Stock-based compensation expense

     1,104        1,136        2,943        2,447   

Earn-outs and change in fair value of earn-outs

     492        —          1,475        —     

Professional fees—other

     1        124        145        477   

Severance and other restructuring costs

     197        1,186        1,026        1,878   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     18,718        20,660        57,477        62,260   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (11,841     (5,867     (26,057     (21,189

Other income (expenses), net

     38        (676     (390     (594
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes and equity income in earnings of affiliates

     (11,803     (6,543     (26,447     (21,783

Income tax benefit

     (1,228     (348     (1,003     (415

Equity income in earnings of affiliates, net of tax

     10        —          27        19   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

     (10,565     (6,195     (25,417     (21,349
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from discontinued operations, net of tax

     —          (114     —          5   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (10,565   $ (6,309   $ (25,417   $ (21,344
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share:

        

Basic

   $ (0.31   $ (0.19   $ (0.76   $ (0.65
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.31   $ (0.19   $ (0.76   $ (0.65
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share from continuing operations:

        

Basic

   $ (0.31   $ (0.19   $ (0.76   $ (0.65
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.31   $ (0.19   $ (0.76   $ (0.65
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share from discontinued operations:

        

Basic

   $ —        $ (0.00   $ —        $ 0.00   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ —        $ (0.00   $ —        $ 0.00   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     33,636        32,628        33,440        32,805   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     33,636        32,628        33,440        32,805   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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SeaChange Q3 FY16 Results/Page 6

SeaChange International, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

     Nine Months Ended
October 31,
 
     2015     2014  
Cash flows from operating activities:     

Net loss

   $ (25,417   $ (21,344

Net income from discontinued operations

     —          (5

Adjustments to reconcile net loss to net cash used in operating activities from continuing operations:

    

Depreciation and amortization of property and equipment

     2,554        2,809   

Provision for loss contract

     9,162        —     

Amortization of intangible assets

     3,560        4,120   

Fair value of contingent consideration

     1,475        —     

Stock-based compensation expense

     3,004        2,579   

Other

     (834     342   

Changes in operating assets and liabilities, excluding impact of acquisition:

    

Accounts receivable

     895        6,640   

Unbilled receivables

     (5,743     (976

Inventories

     472        1,853   

Prepaid expenses and other assets

     (158     (465

Accounts payable

     718        (1,235

Accrued expenses

     (5,735     (1,882

Deferred revenues

     (2,770     (4,600

Other

     (625     489   
  

 

 

   

 

 

 

Net cash used in operating activities from continuing operations

     (19,442     (11,675

Net cash provided by operating activities from discontinued operations

     —          5   
  

 

 

   

 

 

 

Total cash used in operating activities

     (19,442     (11,670
  

 

 

   

 

 

 
Cash flows from investing activities:     

Purchases of property and equipment

     (1,140     (1,470

Investment in capitalized software

     (2,030     —     

Purchases of marketable securities

     (3,005     (7,160

Proceeds from sale and maturity of marketable securities

     4,503        5,633   

Proceeds from sale of equity investments

     —          235   

Proceeds from (purchase of) cost method investments, net

     453        (2,000

Cash paid for acquisition of business, net of cash acquired

     (11,686     —     
  

 

 

   

 

 

 

Total cash used in investing activities

     (12,905     (4,762
  

 

 

   

 

 

 
Cash flows from financing activities:     

Proceeds from issuance of common stock relating to stock option exercises

     88        —     

Repurchases of our common stock

     —          (5,504
  

 

 

   

 

 

 

Total cash provided by (used in) financing activities

     88        (5,504
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     270        774   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (31,989     (21,162
  

 

 

   

 

 

 

Cash and cash equivalents, beginning of period

     90,019        115,734   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 58,030      $ 94,572   
  

 

 

   

 

 

 

 

 

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SeaChange Q3 FY16 Results/Page 7

Use of Non-GAAP Financial Information

We define non-GAAP income (loss) from operations as U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) operating loss plus stock-based compensation expenses, amortization of intangible assets, earn-outs and change in fair value of earn-outs, professional fees associated with acquisitions, divestitures, litigation and strategic alternatives, severance and other restructuring costs and provision for loss contracts. We discuss non-GAAP income (loss) from operations in our quarterly earnings releases and certain other communications as we believe non-GAAP income (loss) from operations is an important measure that is not calculated according to U.S. GAAP. We use non-GAAP income (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 non-GAAP income (loss) from operations 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 these 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 income (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 non-GAAP income (loss) from operations financial adjustments described above, 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 to see 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, and 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 into a fixed priced 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 or acceptance by our customer. Delays of customer acceptance on this project require us to recognize a loss on this project in the period the determination is made. As a result, we have recorded an estimated charge of $9.2 million during the third quarter of fiscal 2016. We believe that the exclusion of these expenses allows a comparison of operating results that would otherwise impair comparability between periods. As noted previously, the Company is finalizing the amount of the charge. Variation in this amount is not anticipated to impact the Company’s non-GAAP results in the period ending October 31, 2015. The Company will include the final amount of this estimated loss in its Quarterly Report on Form 10-Q for the period ended October 31, 2015.

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 both 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 stock-based 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.

 

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SeaChange Q3 FY16 Results/Page 8

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 fees associated with our acquisitions, divestitures, litigation and strategic alternatives because the amounts are largely considered to be significant non-operating expenses.

Severance and Other Restructuring. 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 reconciles the Company’s estimated U.S. GAAP income (loss) from operations to the Company’s non-GAAP income (loss) from operations:

 

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SeaChange Q3 FY16 Results/Page 9

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Three Months Ended
October 31, 2015
    Three Months Ended
October 31, 2014
 
     Estimated
GAAP As
Reported
    Estimated
Adjustments
    Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  
Revenues:             

Products

   $ 6,195      $ —        $ 6,195      $ 7,311      $ —        $ 7,311   

Services

     22,552        —          22,552        22,659        —          22,659   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     28,747        —          28,747        29,970        —          29,970   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Cost of revenues:             

Products

     1,528        —          1,528        2,779        —          2,779   

Services

     10,963        —          10,963        12,094        —          12,094   

Provision for loss contract

     9,162        (9,162     —          —          —          —     

Amortization of intangible assets

     184        (184     —          258        (258     —     

Stock-based compensation

     33        (33     —          46        (46     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     21,870        (9,379     12,491        15,177        (304     14,873   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     6,877        9,379        16,256        14,793        304        15,097   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     23.9     32.6     56.5     49.4     1.0     50.4
Operating expenses:             

Research and development

     8,273        —          8,273        9,932        —          9,932   

Selling and marketing

     3,965        —          3,965        3,447        —          3,447   

General and administrative

     3,648        —          3,648        3,841        —          3,841   

Amortization of intangible assets

     1,038        (1,038     —          994        (994     —     

Stock-based compensation expense

     1,104        (1,104     —          1,136        (1,136     —     

Earn-outs and change in fair value of earn-outs

     492        (492     —          —          —          —     

Professional fees—other

     1        (1     —          124        (124     —     

Severance and other restructuring costs

     197        (197     —          1,186        (1,186     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     18,718        (2,832     15,886        20,660        (3,440     17,220   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (11,841   $ 12,211      $ 370      $ (5,867   $ 3,744      $ (2,123
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (41.2 %)      42.4     1.3     (19.6 %)      12.5     (7.1 %) 
Weighted average common shares outstanding:             

Basic

     33,636        33,636        33,636        32,628        32,628        32,628   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     33,636        33,835        33,835        32,628        32,854        32,628   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-GAAP operating income (loss) per share:             

Basic

   $ (0.35   $ 0.36      $ 0.01      $ (0.19   $ 0.12      $ (0.07
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.35   $ 0.36      $ 0.01      $ (0.19   $ 0.12      $ (0.07
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Adjusted EBITDA:             
Estimated loss from operations        $ (11,841       $ (5,867

Depreciation expense

         851            891   

Estimated provision for loss contract

         9,162            —     

Amortization of intangible assets

         1,222            1,252   

Stock-based compensation expense

         1,137            1,182   

Earn-outs and changes in fair value

         492            —     

Professional fees—other

         1            124   

Severance and other restructuring

         197            1,186   
      

 

 

       

 

 

 
Adjusted EBITDA        $ 1,221          $ (1,232
      

 

 

       

 

 

 
Adjusted EBITDA %          4.2.         (4.1 %) 

 

 

-more-


SeaChange Q3 FY16 Results/Page 10

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Nine Months Ended
October 31, 2015
    Nine Months Ended
October 31, 2014
 
     Estimated
GAAP

As Reported
    Estimated
Adjustments
    Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 16,314      $ —        $ 16,314      $ 21,109      $ —        $ 21,109   

Services

     63,481        —          63,481        63,047        —          63,047   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     79,795        —          79,795        84,156        —          84,156   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     4,766        —          4,766        6,188        —          6,188   

Services

     33,829        —          33,829        35,970        —          35,970   

Provision for loss contract

     9,162        (9,162     —          —          —          —     

Amortization of intangible assets

     557        (557     —          795        (795     —     

Stock-based compensation

     61        (61     —          132        (132     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     48,375        (9,780     38,595        43,085        (927     42,158   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     31,420        9,780        41,200        41,071        927        41,998   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     39.4     12.3     51.6     48.8     1.1     49.9

Operating expenses:

            

Research and development

     26,176        —          26,176        31,729        —          31,729   

Selling and marketing

     11,263        —          11,263        10,509        —          10,509   

General and administrative

     11,446        —          11,446        11,895        —          11,895   

Amortization of intangible assets

     3,003        (3,003     —          3,325        (3,325     —     

Stock-based compensation expense

     2,943        (2,943     —          2,447        (2,447     —     

Earn-outs and change in fair value of earn-outs

     1,475        (1,475     —          —          —          —     

Professional fees—other

     145        (145     —          477        (477     —     

Severance and other restructuring costs

     1,026        (1,026     —          1,878        (1,878     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     57,477        (8,592     48,885        62,260        (8,127     54,133   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (26,057   $ 18,372      $ (7,685   $ (21,189   $ 9,054      $ (12,135
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (32.7 %)      23.0     (9.6 %)      (25.2 %)      10.7     (14.4 %) 

Weighted average common shares outstanding:

            

Basic

     33,440        33,440        33,440        32,805        32,805        32,805   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     33,440        33,615        33,440        32,805        33,031        32,805   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating loss per share:

            

Basic

   $ (0.78   $ 0.55      $ (0.23   $ (0.65   $ 0.28      $ (0.37
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.78   $ 0.55      $ (0.23   $ (0.65   $ 0.28      $ (0.37
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Adjusted EBITDA:             

Estimated loss from operations

       $ (26,057       $ (21,189

Depreciation expense

         2,554            2,809   

Estimated provision for loss contract

         9,162            —     

Amortization of intangible assets

         3,560            4,120   

Stock-based compensation expense

         3,004            2,579   

Earn-outs and changes in fair value

         1,475            —     

Professional fees—other

         145            477   

Severance and other restructuring

         1,026            1,878   
      

 

 

       

 

 

 

Adjusted EBITDA

       $ (5,131       $ (9,326
      

 

 

       

 

 

 

Adjusted EBITDA %

         (6.4 %)          (11.1 %) 

—end press release and tables—