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SeaChange International Reports Fiscal Fourth Quarter 2021 Financial Results; Continued Execution of Strategic Roadmap Positions Company for Success in Fiscal 2022

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SeaChange International, Inc.
·16 min read
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SeaChange’s Bolstered Balance Sheet with More than $22 Million in Cash, Ideally Positions Company to Capitalize on the Growing Global Demand for OTT Video Streaming Services

WALTHAM, Mass., April 13, 2021 (GLOBE NEWSWIRE) -- SeaChange International Inc. (NASDAQ: SEAC), a leading provider of video delivery platforms, today reported financial and operational results for the fiscal fourth quarter and year ended January 31, 2021. The Company also provided an update on its recent operational progress on strategic initiatives that have placed the Company in a strong position for fiscal 2022.

Fiscal Fourth Quarter 2021 and Recent Operational Highlights

  • Implemented a multi-faceted strategic roadmap designed to drive scale, capture market share, and create even greater value for both our customers and shareholders.

  • Enhanced the Company’s go-to-market strategy designed to position SeaChange as the leading enabler of video streaming services to cable companies and content owners globally

  • Secured a multi-year, multi-million-dollar contract with one of the largest broadband service providers in the United States.

  • Refined the Company’s business model in an effort to more effectively monetize the value of SeaChange’s software and services and drive a greater return on investment for the Company’s customers.

  • Solidified the balance sheet with the closing of a public offering of common stock on April 1, 2021, which provided approximately $19.1 million in gross proceeds to accelerate the Company’s strategic roadmap.

  • Realized a 54% year-over-year decrease in operating expenses in the fiscal fourth quarter of 2021 due to ongoing efficiency measures.

  • Strengthened the leadership team, including appointing Chairman Robert Pons as Executive Chairman, appointing technology veteran Matthew Stecker to the board of directors, and promoting Christoph Klimmer to SVP of Global Sales and Marketing.

Management Commentary

“Over the last three months, we have been laser focused on aggressively implementing our long-term strategic roadmap, which is designed to drive scale, capture market share, and create even greater value for both our customers and shareholders,” said Robert Pons, SeaChange’s Executive Chairman. “Our execution is clearly evident by not only the sequential improvements in our top and bottom lines, but also the major customer win we recently secured, a multi-year, multi-million-dollar contract with one of the largest broadband service providers in the U.S. Our building sales momentum validates the effectiveness of our refined go-to-market strategy and our holistic approach to selling the full value of our software and services to the world’s most prominent video providers. The increasing value our technology platform is providing to video and broadband providers globally demonstrates SeaChange’s elevated value proposition and increasingly critical role in the industry. Today, SeaChange is positioned at the epicenter of the video industry’s transformation to over-the-top (OTT) video streaming services and delivery to the billions of end users globally.”

Pons continued, “While we are still in the early innings of our strategic roadmap, I can confidently say that the SeaChange of today is a much stronger and more capable organization, and that the future has never been brighter. With more than $22 million of cash on our balance sheet today, we have the resources to accelerate many key initiatives within our strategic roadmap and better capitalize on the strong secular tailwinds in the growing, multi-billion-dollar video streaming market. Over time, we expect that the successful execution of our plan will translate to sustainable growth and consistent profitability in the years ahead.”

Fiscal Fourth Quarter 2021 Financial Results

  • Total revenue was $5.1 million, an improvement compared to $5.0 million in the third quarter of fiscal 2021. Product revenue was $1.4 million (or 27% of total revenue), an improvement compared to $1.0 million (or 21% of total revenue) in the third quarter of fiscal 2021. Service revenue was $3.7 million (or 73% of total revenue) compared to $3.9 million (or 79% of total revenue) in the third quarter of fiscal 2021.

  • Revenue backlog at quarter end was $20.4 million compared to $21.9 million in the third quarter of fiscal 2021.

  • Gross profit was $2.8 million (or 55% of total revenue) compared to $2.8 million (or 56% of total revenue) in the third quarter of fiscal 2021.

  • Total operating expenses remained at $7.3 million compared to the third quarter of fiscal 2021.

  • GAAP loss from operations totaled $4.4 million, an improvement compared to a GAAP loss from operations of $4.6 million in the third quarter of fiscal 2021.

  • Non-GAAP loss from operations totaled $3.5 million, or $(0.09) per basic share, an improvement from non-GAAP loss from operations of $3.8 million, or $(0.10) per basic share, in the third quarter of fiscal 2021.

  • GAAP net loss totaled $4.4 million, or $(0.12) per basic share, an improvement from GAAP net loss $5.1 million, or $(0.14) per basic share, in the third quarter of fiscal 2021.

Conference Call
SeaChange will host a conference call today (April 13, 2021) at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss these results.

SeaChange executive management will host the call, followed by a question-and-answer period.

U.S. dial-in number: 877-407-8037
International number: 201-689-8037
Meeting Number: 13718351

Please call the conference telephone number approximately 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of SeaChange’s website.

About SeaChange International, Inc.
SeaChange International (NASDAQ: SEAC) powers hundreds of cloud and on-premises platforms with live TV and video on demand (VOD) for millions of end users worldwide. SeaChange's end-to-end solution enables operators and content owners to cost-effectively launch a direct-to-consumer video streaming service to manage, curate and monetize their linear and on demand content across all major device platforms such as Smart-TVs, mobile devices, and Set-Top-Boxes. A demonstration of SeaChange’s video streaming platform is available here. For more information on SeaChange, please visit www.seachange.com.

Safe Harbor Provision
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended to date. Forward-looking statements can be identified by words such as "may," "might," "will," "should," "could," "expects," "plans," "anticipates," "believes," "seeks," "intends," "estimates," "predicts," "potential" or "continue," the negative of these terms and other comparable terminology. Examples of forward-looking statements include, among others, statements we make regarding the Company’s ability to execute its strategic roadmap, capture additional market share and capitalize on the growing demand for over-the-top video streaming services globally; the Company’s ability to effectively monetize the value of its software and services; the Company’s ability to accelerate key initiatives and execute on its strategic plan in a manner that translates to sustainable growth and consistent profitability in the years ahead; and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations, and assumptions of the management of the Company and are subject to a number of known and unknown risks and significant business, economic and competitive uncertainties that could cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. Risks that could cause actual results to differ include, but are not limited to: the impact of COVID-19 on our business and the economies in which we operate; the continued spending by the Company's customers on video solutions and services and expenses we may incur in fulfilling customer arrangements; the manner in which the multiscreen video and over-the-top markets develop; the Company's ability to compete in the software marketplace; 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; the cancellation or deferral of purchases of the Company's products; any decline in demand or average selling prices for our products and services; failure to achieve our financial forecasts due to inaccurate sales forecasts or other factors, including due to expenses we may incur in fulfilling customer arrangements; the impact of our cost-savings and restructuring programs; the Company's ability to manage its growth; the risks associated with international operations; the ability of the Company to use its net operating losses, including the potential impact on these losses resulting from the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the impact of changes in the market on the value of our investments; changes in the regulatory environment; and other risks that are described in further detail in the Company’s reports filed 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. Any forward-looking statements should be considered in light of those risk factors. The Company cautions readers that such forward-looking statements 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 Contact:
Matt Glover
Gateway Investor Relations
949-574-3860
SEAC@gatewayir.com

SeaChange International, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)

January 31, 2021

January 31, 2020

Assets

Cash and cash equivalents

$

5,856

$

9,013

Marketable securities

252

4,617

Accounts and other receivables, net

6,050

12,127

Unbilled receivables

15,699

23,310

Prepaid expenses and other current assets

4,372

5,112

Property and equipment, net

605

554

Goodwill and intangible assets, net

11,849

12,075

Other assets

5,725

6,082

Total assets

$

50,408

$

72,890

Liabilities and Stockholders' Equity

Accounts payable and other liabilities

$

10,172

$

16,341

Deferred revenue

5,394

6,181

Deferred tax liabilities and income taxes payable

888

436

Promissory note

2,413

Total liabilities

18,867

22,958

Total stockholders' equity

31,541

49,932

Total liabilities and stockholders' equity

$

50,408

$

72,890


SeaChange International, Inc.
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share data)

For the Three Months
Ended January 31,

For the Fiscal Years
Ended January 31,

2021

2020

2021

2020

Revenue:

Product

$

1,396

$

13,243

$

6,608

$

39,914

Service

3,727

6,070

15,391

27,240

Total revenue

5,123

19,313

21,999

67,154

Cost of revenue:

Product

753

1,765

3,556

6,179

Service

1,539

3,534

8,513

17,473

Total cost of revenue

2,292

5,299

12,069

23,652

Gross profit

2,831

14,014

9,930

43,502

Operating expenses:

Research and development

3,258

3,990

13,808

16,050

Selling and marketing

930

2,505

6,420

12,179

General and administrative

2,689

3,547

9,746

15,211

Severance and restructuring costs

395

371

1,477

3,523

Loss on sale of fixed assets

5,423

5,423

Total operating expenses

7,272

15,836

31,451

52,386

Loss from operations

(4,441

)

(1,822

)

(21,521

)

(8,884

)

Other income (expense), net

154

2,041

(180

)

11

Loss before income taxes

(4,287

)

219

(21,701

)

(8,873

)

Income tax provision

(79

)

(262

)

(58

)

(48

)

Net loss

$

(4,366

)

$

(43

)

$

(21,759

)

$

(8,921

)

Net loss per share, basic

$

(0.12

)

$

$

(0.58

)

$

(0.24

)

Net loss per share, diluted

$

(0.12

)

$

$

(0.58

)

$

(0.24

)

Weighted average common shares outstanding, basic

37,575

36,974

37,471

36,699

Weighted average common shares outstanding, diluted

37,575

36,974

37,471

36,699

Comprehensive loss:

Net loss

$

(4,366

)

$

(43

)

$

(21,759

)

$

(8,921

)

Other comprehensive income, net of tax:

Foreign currency translation adjustment

616

(187

)

2,114

1,212

Unrealized (losses) gains on marketable securities

(13

)

(47

)

(50

)

44

Total other comprehensive income

603

(234

)

2,064

1,256

Comprehensive loss

$

(3,763

)

$

(277

)

$

(19,695

)

$

(7,665

)


SeaChange International, Inc.
Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)

For the Fiscal Years Ended January 31,

2021

2020

Cash flows from operating activities:

Net loss

$

(21,759

)

$

(8,921

)

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

Depreciation and amortization expense

1,667

2,016

Loss on sale of fixed assets

7

5,423

Change in allowance for doubtful accounts

(208

)

628

Stock-based compensation expense

1,247

1,151

Deferred income taxes

(203

)

Realized and unrealized foreign currency transaction loss

793

2,126

Gain on sale of investment in affiliate and other investments, net

(1,495

)

Other

(40

)

Changes in operating assets and liabilities:

Accounts receivable

6,420

7,134

Unbilled receivables

7,967

(17,840

)

Inventory

924

Prepaid expenses and other current assets and other assets

1,196

1,609

Accounts payable

(2,233

)

(1,149

)

Accrued expenses and other liabilities

(3,492

)

(170

)

Deferred revenue

(920

)

(4,565

)

Other

(1,462

)

Net cash used in operating activities

(9,355

)

(14,794

)

Cash flows from investing activities:

Purchases of property and equipment

(328

)

(281

)

Proceeds from sale of building and land

600

Cash paid for acquisitions, net

(3,838

)

Purchases of marketable securities

(790

)

Proceeds from sales and maturities of marketable securities

4,355

6,576

Proceeds from sale of investment in affiliate, net

1,495

Net cash provided by investing activities

4,027

3,762

Cash flows from financing activities:

Proceeds from stock option exercises

119

594

Proceeds from employee stock purchase plan

18

20

Repurchases of common stock

(80

)

(142

)

Proceeds from Paycheck Protection Program

2,413

Net cash provided by financing activities

2,470

472

Effect of exchange rate on cash, cash equivalents and restricted cash

(355

)

(460

)

Net decrease in cash, cash equivalents and restricted cash

(3,213

)

(11,020

)

Cash, cash equivalents and restricted cash at beginning of period

9,297

20,317

Cash, cash equivalents and restricted cash at end of period

$

6,084

$

9,297

Supplemental disclosure of cash flow information

Income taxes paid

$

327

$

463

Non-cash activities:

Right-of-use assets obtained in exchange for lease obligations

$

987

$

5,600

Fair value of common stock issued in acquisition

$

$

874

Non-GAAP Measures
We define non-GAAP (loss) income from operations as U.S. GAAP net loss plus stock-based compensation expenses, amortization of intangible assets, non-operating expense professional fees, severance and other restructuring costs, loss on sale of fixed assets, other (expense) income, net, and income tax provision. We discuss non-GAAP (loss) income from operations, including on a per share basis in our quarterly earnings releases and certain other communications, as we believe non-GAAP income (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. 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 twelve months ended January 31, 2021, including on a per share basis.

SeaChange International, Inc.
Fiscal Year Reconciliation of GAAP to Non-GAAP
(Unaudited, amounts in thousands, except per share and percentage data)

For the Three Months
Ended January 31,

For the Twelve Months
Ended January 31,

2021

2020

2021

2020

(Amounts in thousands)

(Amounts in thousands)

GAAP net loss

$

(4,366

)

$

(43

)

$

(21,759

)

$

(8,921

)

Other (expense) income, net

154

2,041

(180

)

11

Income tax provision

(79

)

(262

)

(58

)

(48

)

GAAP loss from operations

$

(4,441

)

$

(1,822

)

$

(21,521

)

$

(8,884

)

Amortization of intangible assets

319

270

1,210

1,163

Stock-based compensation

193

597

1,247

1,151

Professional fees - other

1,180

Severance and other restructuring costs

395

371

1,477

3,523

Loss on sale of fixed assets

5,423

5,423

Non-GAAP (loss) income from operations

$

(3,534

)

$

4,839

$

(17,587

)

$

3,556

Non-GAAP (loss) income from operations, basic per share

(0.09

)

0.13

(0.47

)

0.10

Non-GAAP (loss) income from operations, diluted per share

(0.09

)

0.13

(0.47

)

0.10

Weighted average common shares outstanding, basic per share

37,575

36,974

37,471

36,699

Weighted average common shares outstanding, diluted per share

37,575

38,469

37,471

37,335


SeaChange International, Inc.
Supplemental Schedule - Revenue Breakout
(Unaudited, amounts in thousands)

Three Months Ended January 31,

Twelve Months Ended January 31,

2021

2020

2021

2020

(Amounts in thousands)

(Amounts in thousands)

Product revenue:

Framework

$

432

$

11,828

$

1,765

$

33,199

OVP and other

964

883

3,370

4,197

Hardware

532

1,473

2,518

Total product revenue

1,396

13,243

6,608

39,914

Service revenue:

Maintenance and support

2,123

4,140

9,755

20,188

Framework and support services

944

694

3,864

1,428

Professional services and other

660

1,236

1,772

5,624

Total service revenue

3,727

6,070

15,391

27,240

Total revenue

$

5,123

$

19,313

$

21,999

$

67,154