SeaChange Int'l (SEAC) Prelim. Q3 Numbers Top Expectations

SeaChange Int'l (NASDAQ: SEAC) 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.

*** The Street sees Q3 revenue of $28.5 million and loss of $0.05 per share.

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."

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.

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