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8-K - FORM 8-K - SEACHANGE INTERNATIONAL INCd234852d8k.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

SECOND QUARTER FISCAL 2017 RESULTS

ACTON, Mass. (Sept. 1, 2016) – SeaChange International, Inc. (NASDAQ: SEAC) today reported 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, compared to second quarter fiscal 2016 revenue of $27.9 million and U.S. GAAP loss from operations of $4.8 million, or $0.14 per basic share.

The Company’s U.S. GAAP second quarter fiscal 2017 results included non-GAAP charges of $4.1 million, which consisted primarily of severance and other restructuring costs, stock-based compensation, amortization of intangible assets from prior acquisitions, and other non-operating expense professional fees, while the second quarter fiscal 2016 results included $3.5 million of similar non-GAAP charges. Non-GAAP loss from operations for the second quarter of fiscal 2017 was $7.6 million, or $0.21 per basic share, compared to the second quarter of fiscal 2016 non-GAAP loss from operations of $1.3 million, or $0.04 per basic share.

For the first six months of fiscal 2017, the Company posted revenue of $40.0 million and a U.S. GAAP loss from operations of $21.2 million, or $0.61 per basic share compared to revenue of $51.0 million and U.S.GAAP loss from operations of $14.2 million, or $0.42 per basic share in the same prior period. The Company posted a non-GAAP loss from operations for the first six months of fiscal 2016 of $14.4 million, or $0.41 per basic share compared to a non-GAAP loss from operations of $8.1 million, or $0.24 per basic share for the same period of the prior fiscal year.

 

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SeaChange Q2 FY17 Results/Page 2

 

“Although we have made significant progress in executing improvements to the Company’s operations, introducing new products, expanding our sales capability, and building a pipeline for the second half of fiscal 2017, the financial results from our actions are taking longer to achieve. We continue to make good progress on converting our legacy back office customer base to Adrenalin and upgrading our existing Adrenalin customers to our latest release, which supports ultra high definition video and offers expanded features and functionality,” said Ed Terino, Chief Executive Officer, SeaChange.

“During the second quarter, we secured a large Adrenalin upgrade deal with a North American customer, as well as two Axiom to Adrenalin migrations in the Americas, and a new Rave OTT win with an international distributor of film and television content. We are encouraged by the continued growth in our revenue pipeline for the second half of fiscal 2017 and remain confident in our ability to attain the intermediate-term targets that we introduced earlier this year.”

Peter Faubert, Chief Financial Officer, SeaChange, said, “We continue to tightly control our expenses and are in the process of finalizing additional cost reduction measures with the goal of restoring SeaChange to profitability and positive cash flow later this year. In addition, we remain focused on improving collections to reduce working capital needs and increase operating cash flow.”

SeaChange ended the second quarter of fiscal 2017 with cash, cash equivalents and marketable securities of $51 million, and no debt outstanding.

Following a review of our operations, liquidity and funding, and investment in our product roadmap, we determined that the ability to access certain amounts of foreign earnings would provide greater flexibility to meet the Company’s working capital needs. Accordingly, in the second quarter of fiscal 2017, SeaChange withdrew the permanent reinvestment assertion on $58.6 million of earnings generated by the Company’s Irish operations and recorded a deferred tax liability of $14.7 million related to the foreign income taxes on these undistributed earnings. The deferred tax liability will not result in cash taxes in the short term and SeaChange is working to try to minimize the potential cash tax impact of this move in future periods.

Outlook

SeaChange anticipates third quarter fiscal 2017 revenue to be in the range of $20 million to $23 million, U.S. GAAP loss from operations to be in the range of $0.20 to $0.25 per basic share, and non-GAAP loss from operations to be in the range of $0.15 to $0.20 per basic share. For full fiscal 2017, SeaChange now anticipates revenue to be in the range of $83 million to $88 million, U.S. GAAP loss from operations to be in the range of $0.85 to $0.95 per basic share, and non-GAAP operating loss to be in the range of $0.50 to $0.60 per basic share.

 

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SeaChange Q2 FY17 Results/Page 3

 

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 and scope of restructuring activities, and stock price fluctuations. The Company has made no provision for restructuring expense in its outlook for the third quarter of fiscal 2017.

Conference Call

The Company will host a conference call to discuss its second quarter fiscal 2017 results at 5:00 p.m. ET today, Thursday, September 1, 2016. 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 September 15, 2016 at 877-660-6853 (U.S.) or 201-612-7415 (international), conference ID 1364-3249. 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 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 a three-time Emmy award-winning organization with 23 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.

 

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SeaChange Q2 FY17 Results/Page 4

 

Safe Harbor Provision

Any statements contained in this press release that do not describe historical facts, including regarding anticipated revenue, operating loss, cost saving initiatives and related costs savings and other financial matters, 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 or reduction in demand by 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 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 Company’s ability to generate sufficient revenues to reduce its losses or regain profitability; 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 Company’s ability to access sufficient funding to finance desired growth and operations; 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;

 

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SeaChange Q2 FY17 Results/Page 5

 

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 datacenter hosting facilities; the implementation of restructuring programs; disruptions to the Company’s information technology systems; uncertainties of regulation of Internet and data traveling over the Internet; 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 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.

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 13, 2016. 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 Q2 FY17 Results/Page 6

 

SeaChange International, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

     July 31,
2016
     January 31,
2016
 
     (Unaudited)         

Assets

     

Cash and cash equivalents

   $ 38,666       $ 58,733   

Restricted cash

     185         82   

Marketable securities

     12,031         12,268   

Accounts and other receivables, net

     13,103         26,331   

Unbilled receivables

     11,592         10,680   

Inventories, net

     1,465         1,682   

Prepaid expenses and other current assets

     3,190         3,827   

Property and equipment, net

     13,096         14,129   

Goodwill and intangible assets, net

     51,886         44,301   

Other assets

     5,158         5,636   
  

 

 

    

 

 

 

Total assets

   $ 150,372       $ 177,669   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Accounts payable and other current liabilities

   $ 17,424       $ 23,546   

Deferred stock consideration

     —           3,205   

Deferred revenues

     12,149         17,410   

Deferred tax liabilities and income taxes payable

     17,051         1,389   

Other long term liabilities

     1,272         1,101   
  

 

 

    

 

 

 

Total liabilities

     47,896         46,651   
  

 

 

    

 

 

 

Total stockholders’ equity

     102,476         131,018   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 150,372       $ 177,669   
  

 

 

    

 

 

 

 

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SeaChange Q2 FY17 Results/Page 7

 

SeaChange International, Inc.

Preliminary Condensed Consolidated Statements of Operations

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

 

     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2016     2015     2016     2015  

Revenues:

        

Products

   $ 2,535      $ 6,955      $ 6,735      $ 10,119   

Services

     15,917        20,916        33,287        40,929   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     18,452        27,871        40,022        51,048   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Products

     1,108        1,561        2,682        3,238   

Services

     9,487        11,663        19,946        22,866   

Amortization of intangible assets

     316        192        632        373   

Stock-based compensation expense

     85        28        157        28   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     10,996        13,444        23,417        26,505   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     7,456        14,427        16,605        24,543   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     7,727        8,370        16,426        17,903   

Selling and marketing

     3,862        3,630        7,419        7,298   

General and administrative

     3,835        3,911        7,906        7,798   

Amortization of intangible assets

     582        1,024        1,032        1,965   

Stock-based compensation expense

     854        1,128        894        1,839   

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

     249        481        249        983   

Professional fees - other

     172        16        304        144   

Severance and other restructuring costs

     1,843        617        3,618        829   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     19,124        19,177        37,848        38,759   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (11,668     (4,750     (21,243     (14,216

Other (expenses) income, net

     (635     (199     287        (428
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes and equity income in earnings of affiliates

     (12,303     (4,949     (20,956     (14,644

Income tax provision

     14,581        78        14,835        225   

Equity income in earnings of affiliates, net of tax

     —          —          —          17   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (26,884   $ (5,027   $ (35,791   $ (14,852
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share:

        

Basic

   $ (0.77   $ (0.16   $ (1.03   $ (0.45
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.77   $ (0.16   $ (1.03   $ (0.45
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     35,115        33,350        34,739        33,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,115        33,350        34,739        33,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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SeaChange Q2 FY17 Results/Page 8

 

SeaChange International, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

     Six Months Ended
July 31,
 
     2016     2015  

Cash flows from operating activities:

    

Net loss

   $ (35,791   $ (14,852

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization of property and equipment

     1,567        1,703   

Amortization of intangible assets

     1,664        2,338   

Fair value of acquisition-related contingent consideration

     249        983   

Stock-based compensation expense

     1,051        1,867   

Deferred income taxes

     14,649        44   

Other

     195        58   

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

    

Accounts receivable

     14,023        (1,147

Unbilled receivables

     (565     (3,850

Inventories

     19        (732

Prepaid expenses and other assets

     1,053        (598

Accounts payable

     (1,607     1,875   

Accrued expenses

     (5,398     (3,127

Deferred revenues

     (5,419     (1,929

Other

     122        (832
  

 

 

   

 

 

 

Total cash used in operating activities

     (14,188     (18,199
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (403     (795

Investment in capitalized software

     —          (1,453

Purchases of marketable securities

     —          (2,002

Proceeds from sale and maturity of marketable securities

     252        4,003   

Cash paid for acquisition of business, net of cash acquired

     (5,243     (11,686

Other investing activities

     (83     —     
  

 

 

   

 

 

 

Total cash used in investing activities

     (5,477     (11,933
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock relating to stock option exercises

     33        20   

Other financing activities

     (4     —     
  

 

 

   

 

 

 

Total cash provided by financing activities

     29        20   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (431     653   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (20,067     (29,459
  

 

 

   

 

 

 

Cash and cash equivalents, beginning of period

     58,733        90,019   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 38,666      $ 60,560   
  

 

 

   

 

 

 

 

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SeaChange Q2 FY17 Results/Page 9

 

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, non-operating expense professional fees and severance and other restructuring costs. 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:

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 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.

 

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SeaChange Q2 FY17 Results/Page 10

 

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 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 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 Q2 FY17 Results/Page 11

 

SeaChange International, Inc.

Preliminary Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Three Months Ended
July 31, 2016
    Three Months Ended
July 31, 2015
 
     GAAP
As Reported
    Adjustments     Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 2,535      $ —        $ 2,535      $ 6,955      $ —        $ 6,955   

Services

     15,917        —          15,917        20,916        —          20,916   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     18,452        —          18,452        27,871        —          27,871   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     1,108        —          1,108        1,561        —          1,561   

Services

     9,487        —          9,487        11,663        —          11,663   

Amortization of intangible assets

     316        (316     —          192        (192     —     

Stock-based compensation

     85        (85     —          28        (28     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     10,996        (401     10,595        13,444        (220     13,224   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     7,456        401        7,857        14,427        220        14,647   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     40.4     2.2     42.6     51.8     0.8     52.6

Operating expenses:

            

Research and development

     7,727        —          7,727        8,370        —          8,370   

Selling and marketing

     3,862        —          3,862        3,630        —          3,630   

General and administrative

     3,835        —          3,835        3,911        —          3,911   

Amortization of intangible assets

     582        (582     —          1,024        (1,024     —     

Stock-based compensation expense

     854        (854     —          1,128        (1,128     —     

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

     249        (249     —          481        (481     —     

Professional fees - other

     172        (172     —          16        (16     —     

Severance and other restructuring costs

     1,843        (1,843     —          617        (617     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     19,124        (3,700     15,424        19,177        (3,266     15,911   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (11,668   $ 4,101      $ (7,567   $ (4,750   $ 3,486      $ (1,264
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (63.2 %)      22.2     (41.0 %)      (17.0 %)      12.5     (4.5 %) 
            

Weighted average common shares outstanding:

            

Basic

     35,115        35,115        35,115        33,350        33,350        33,350   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,115        35,171        35,115        33,350        33,546        33,350   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating (loss) income per share:

            

Basic

   $ (0.33   $ 0.12      $ (0.21   $ (0.14   $ 0.10      $ (0.04
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.33   $ 0.12      $ (0.21   $ (0.14   $ 0.10      $ (0.04
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
            

 

-more-


SeaChange Q2 FY17 Results/Page 12

 

SeaChange International, Inc.

Preliminary Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Six Months Ended
July 31, 2016
    Six Months Ended
July 31, 2015
 
     GAAP
As Reported
    Adjustments     Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 6,735      $ —        $ 6,735      $ 10,119      $ —        $ 10,119   

Services

     33,287        —          33,287        40,929        —          40,929   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     40,022        —          40,022        51,048        —          51,048   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     2,682        —          2,682        3,238        —          3,238   

Services

     19,946        —          19,946        22,866        —          22,866   

Amortization of intangible assets

     632        (632     —          373        (373     —     

Stock-based compensation

     157        (157     —          28        (28     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     23,417        (789     22,628        26,505        (401     26,104   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     16,605        789        17,394        24,543        401        24,944   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     41.5     2.0     43.5     48.1     0.8     48.9

Operating expenses:

            

Research and development

     16,426        —          16,426        17,903        —          17,903   

Selling and marketing

     7,419        —          7,419        7,298        —          7,298   

General and administrative

     7,906        —          7,906        7,798        —          7,798   

Amortization of intangible assets

     1,032        (1,032     —          1,965        (1,965     —     

Stock-based compensation expense

     894        (894     —          1,839        (1,839     —     

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

     249        (249     —          983        (983     —     

Professional fees - other

     304        (304     —          144        (144     —     

Severance and other restructuring costs

     3,618        (3,618     —          829        (829     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     37,848        (6,097     31,751        38,759        (5,760     32,999   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (21,243   $ 6,886      $ (14,357   $ (14,216   $ 6,161      $ (8,055
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (53.1 %)      17.2     (35.9 %)      (27.8 %)      12.0     (15.8 %) 
            

Weighted average common shares outstanding:

            

Basic

     34,739        34,739        34,739        33,339        33,339        33,339   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     34,739        34,804        34,739        33,339        33,512        33,339   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating (loss) income per share:

            

Basic

   $ (0.61   $ 0.20      $ (0.41   $ (0.42   $ 0.18      $ (0.24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.61   $ 0.20      $ (0.41   $ (0.42   $ 0.18      $ (0.24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

-more-


SeaChange Q2 FY17 Results/Page 13

 

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 2017:

SeaChange International, Inc.

GAAP to Non-GAAP Reconciliation of Guidance

(Unaudited, amounts in thousands)

 

     Three Months Ended
October 31, 2016
     Twelve Months Ended
January 31, 2017
 

GAAP third quarter revenue guidance:

   $ 20,000         to       $ 23,000       $ 83,000         to       $ 88,000   

GAAP loss from operations per basic share

   $ 0.25          $ 0.20       $ 0.95          $ 0.85   

Exclude stock compensation expense

     0.03            0.03         0.09            0.09   

Exclude amortization of intangible assets

     0.02            0.02         0.08            0.08   

Exclude earnouts

     —              —           0.01            0.01   

Exclude professional fees associated with divestitures

     —              —           0.01            0.01   

Exclude restructuring costs

     —              —           0.16            0.16   
  

 

 

       

 

 

    

 

 

       

 

 

 

Non-GAAP loss from operations per basic share

   $ 0.20          $ 0.15       $ 0.60          $ 0.50   
  

 

 

       

 

 

    

 

 

       

 

 

 

 

-more-


SeaChange Q2 FY17 Results/Page 14

 

SeaChange International, Inc.

Supplemental Schedule - Revenue Breakout

(Unaudited, amounts in thousands)

 

     Three Months Ended      Six Months Ended  
     July 31,      July 31,  
     2016     2015      2016      2015  

Product Revenues:

          

Video Platform

   $ 1,785      $ 3,890       $ 4,351       $ 5,171   

Advertising

     —          241         121         337   

User Experience

     (85     27         292         (115

Hardware

     406        2,240         932         3,595   

Third-party Products

     429        557         1,039         1,131   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total Product Revenues

     2,535        6,955         6,735         10,119   
  

 

 

   

 

 

    

 

 

    

 

 

 

Service Revenues:

          

Maintenance and Support

     9,076        10,151         18,753         19,565   

SaaS

     808        814         1,795         1,313   

Professional Services - Video Platform

     5,653        5,541         10,365         10,437   

User Experience

     380        4,410         2,374         9,614   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total Service Revenues

     15,917        20,916         33,287         40,929   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 18,452      $ 27,871       $ 40,022       $ 51,048   
  

 

 

   

 

 

    

 

 

    

 

 

 

— end press release and tables —