Form 8-K SEACHANGE INTERNATIONAL For: Dec 10

December 10, 2018 4:11 PM

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): December 10, 2018

 

 

SEACHANGE INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

DELAWARE   0-21393   04-3197974

(State or Other Jurisdiction

of Incorporation or Organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

50 Nagog Park, Acton, MA   01720
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number including area code: (978) 897-0100

No change since last report

(Former Name or Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition.

Attached as Exhibit 99.1, and incorporated by reference, is a copy of the press release issued by SeaChange International, Inc. (“SeaChange”) dated December 10, 2018, reporting SeaChange’s financial results for the fiscal quarter ended October 31, 2018.

The information contained in this Item 2.02 and Exhibit 99.1 attached and incorporated herein by reference is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. This information shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by SeaChange, whether made before or after the date hereof, regardless of any general incorporation language in such filings.

Cautionary Note Regarding Forward-Looking Statements. Any statements contained in this Current Report on Form 8-K that do not describe historical facts, including without limitation statements regarding anticipated cost savings and the manner of reporting of these expenses, including the timing of the disclosure thereof, 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. Information on factors that could cause actual results to differ from those anticipated is detailed in various publicly available documents made by SeaChange from time to time with the Securities and Exchange Commission, including but not limited to, those appearing under the caption “Risk Factors” in SeaChange’s Annual Report on Form 10-K filed on April 16, 2018. Any forward-looking statements should be considered in light of those factors. SeaChange cautions readers not to place undue reliance on any such forward-looking statements, which speak as of the date they are made. SeaChange disclaims any obligation to publicly update or revise any such statements to reflect any change in SeaChange 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.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following Exhibit is attached to this report:

 

Exhibit

No.

  

Description

99.1    Press release issued by SeaChange International, Inc. dated December 10, 2018.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    SEACHANGE INTERNATIONAL, INC.
    By:  

/s/ Edward Terino

      Edward Terino
Dated: December 10, 2018       Chief Executive Officer

Exhibit 99.1

 

LOGO

 

Contact:    

Investors

Mary T. Conway

Conway Communications

1-781-772-1679

marytconway@comcast.net

SEACHANGE INTERNATIONAL REPORTS

THIRD QUARTER FISCAL 2019 RESULTS

ACTON, Mass. (December 10, 2018) –SeaChange International, Inc. (NASDAQ: SEAC) today reported third quarter fiscal 2019 revenue of $18.6 million and a U.S. GAAP loss from operations of $2.5 million, or $0.07 per basic share, compared to third quarter fiscal 2018 revenue of $23.4 million and U.S. GAAP income from operations of $0.9 million, or $0.03 per fully diluted share.

The Company’s U.S. GAAP third quarter fiscal 2019 results included non-GAAP charges of $2.2 million, which consisted primarily of stock-based compensation of $0.8 million, amortization of intangible assets from prior acquisitions of $0.2 million and severance and other restructuring costs of $1.0 million, while third quarter fiscal 2018 results included non-GAAP charges of $2.3 million. The non-GAAP loss from operations in the third quarter of fiscal 2019 was $0.3 million, or $0.01 per basic share, compared to the third quarter of fiscal 2018 non-GAAP income from operations of $3.2 million, or $0.09 per fully diluted share.

For the first nine months of fiscal 2019, the Company reported revenue of $45.4 million and a U.S. GAAP loss from operations of $15.9 million, or $0.45 per basic share, compared to revenue of $57.3 million and a U.S. GAAP loss from operations of $6.6 million, or $0.19 per basic share, in the same period in the prior fiscal year. The non-GAAP loss from operations for the first nine months of fiscal 2019 was $10.5 million, or $0.29 per basic share, compared to non-GAAP operating income of $0.5 million, or $0.01 per fully diluted share, in the same period of fiscal 2018.

Ed Terino, Chief Executive Officer, SeaChange, said, “Our third quarter revenues were a substantial improvement over our prior two quarters of fiscal 2019. We were successful in closing several seven figure deals in Q3, as well as deals with several new companies. We are seeing good pipeline opportunities for sequential bookings growth in Q4’19, including software upgrade opportunities within our service provider customer base as well as several PanoramiC opportunities with new customers.”

He added, “As we head into FY2020, we are excited by the market’s reaction to several product innovations for cFlow and PanoramiC that we have demonstrated at recent industry trade shows and expect to launch in the first half of fiscal 2020.”


Peter Faubert, Chief Financial Officer, SeaChange, said, “In the third quarter, we completed most elements of the cost reduction program announced in September, which was designed to save approximately $6 million on an annualized basis. We are focused on the goal of returning SeaChange to operating profitability and positive cash flow in the first quarter of fiscal year 2020.”

SeaChange ended the third quarter of fiscal 2019 with cash, cash equivalents, restricted cash and marketable securities of $32.4 million, and no debt outstanding.

Outlook

SeaChange anticipates fourth quarter fiscal 2019 revenue to be in the range of $16 million to $20 million, U.S. GAAP operating loss from operations of $0.08 to $0.01 per basic share, and non-GAAP operating results between a loss of $0.05 per basic share to income of $0.02 per fully diluted share.

For the full fiscal year 2019, the Company has revised its expectations to anticipate revenue in the range of $61 million to $65 million, U.S. GAAP operating loss of $0.53 to $0.46 per basic share and a non-GAAP operating loss between $0.34 to $0.27 per basic share. Previously the Company had expected revenue in the range of $70 million to $75 million, U.S. GAAP operating loss of $0.37 to $0.26 per basic share and a non-GAAP operating loss between $0.15 to $0.04 per basic share.

These GAAP estimates are subject to a number of variables that are outside of management’s control, including the size of restructuring expenses, which are influenced by the timing of certain non-U.S. restructuring activities, and stock price fluctuations.

Conference Call

The Company will host a conference call to discuss its third quarter fiscal 2019 results at 5:00 p.m. ET today, Monday, December 10, 2018. The call may be accessed by dialing 877-407-8037 (U.S.) and 201-689-8037 (international) and via live webcast on the Events page at investors.seachange.com. The webcast replay will be archived the same location following completion of the call.


About SeaChange International

For 25 years, SeaChange (Nasdaq: SEAC) has pioneered solutions to help video providers around the world manage and monetize their content. As the video industry rapidly evolves to meet the “anytime, anywhere” demands of today’s viewers, SeaChange’s comprehensive content, business, advertising, and experience management solutions provide a mature, network-agnostic, cloud-enabled platform of scalable core capabilities that video service providers, broadcasters, content owners and brand advertisers need to create the personalized, indivisual™ experiences that drive viewer engagement and monetization. For more information, please visit www.seachange.com.

Safe Harbor Provision

Any statements contained in this press release that do not describe historical facts, including regarding anticipated revenue, income from operations, cost savings and other financial matters, including the anticipated closing of transactions, are neither promises nor guarantees and may constitute “forward-looking statements” as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include words such as “may,” “might,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “seeks,” “intends,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. Any such forward-looking statements contained herein are based on current assumptions, estimates and expectations, but are subject to a number of known and unknown risks and significant business, economic and competitive uncertainties that may cause actual results to differ materially from expectations. Numerous factors could cause actual future results to differ materially from current expectations expressed or implied by such forward-looking statements, including, without limitation, the following: the continued spending by the Company’s customers on video solutions and services and expenses we may incur in fulfilling customer arrangements; the success of our efforts to introduce SaaS-based multiscreen service offerings; the Company’s ability to successfully introduce new products or enhancements to existing products; the manner in which the multiscreen video and OTT markets develop; the Company’s transition to being a company that primarily provides software solutions; the Company’s ability to compete in the marketplace; any failure by the Company to respond to changing technology; measures taken to address the variability in the market for our products and services; the loss of or reduction in demand, or the return of product, by one of the Company’s large customers or the failure of revenue acceptance criteria in a given fiscal quarter; consolidation in the markets the Company serves; the cancellation or deferral of purchases of the Company’s products; the length of the Company’s sales cycles; any decline in demand or average selling prices for our products and services; failure to manage product transitions; failure to achieve our financial forecasts due to inaccurate sales forecasts or other factors, including due to expenses we may incur in fulfilling customer arrangements; the impact of restructuring programs; the Company’s ability to manage its growth; the risks associated with international operations; the ability of the Company and its intermediaries to comply with the Foreign Corrupt Practices Act; foreign currency fluctuation; the Company’s ability to protect its intellectual property rights and the expenses that may be incurred by the Company to protect its intellectual property rights; an unfavorable result of current or future litigation relating to the Company’s intellectual property; content providers limiting the scope of content licensed for use in the video-on-demand and OTT market or other limitations in materials we use to provide our products and services; the Company’s ability to realize the benefits of completed or future acquisitions; the impact of acquisitions, divestitures or investments made by the Company; the Company’s ability to raise additional funds through capital markets on favorable terms and in a timely manner; the Company’s ability to access sufficient funding to finance desired growth and operations; the performance of the companies in which the Company has made equity investments; any impairment of the Company’s assets; the impact of changes in the market on the value of our investments; changes in the regulatory environment; the Company’s ability to hire and retain highly skilled employees; the ability of the Company to manage and oversee the outsourcing of engineering work; additional tax liabilities to which the Company may be subject; possible adjustments to estimates resulting from the new tax legislation; any breach of the Company’s security measures and customer data or our data being obtained


unlawfully; service interruptions or delays from our third-party data center hosting facilities; disruptions to the Company’s information technology systems; uncertainties of regulation of Internet and data traveling over the Internet; the volatility of our stock; actions that may be taken by significant stockholders; if securities analysts do not publish favorable research or reports about our business; our use of non-GAAP reporting; change in accounting standards; any weakness in the Company’s 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; terrorist acts, conflicts, wars and geopolitical uncertainties; and the Company’s Delaware anti-takeover provisions. These risks and other risk factors that could cause actual results to differ from those anticipated are detailed in various publicly available documents filed by the Company from time to time with the Securities and Exchange Commission (SEC), which are available at www.sec.gov, including but not limited to, such information appearing under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2018. Any forward-looking statements should be considered in light of those risk factors. The Company cautions readers not to rely on any such forward-looking statements, which speak only as of the date they are made. The Company disclaims any intent or obligation to publicly update or revise any such forward-looking statements to reflect any change in Company expectations or future events, conditions or circumstances on which any such forward-looking statements may be based, or that may affect the likelihood that actual results may differ from those set forth in such forward-looking statements.

TABLES TO FOLLOW


SeaChange International, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands)

 

     October 31,      January 31,  
     2018      2018  

Assets

     

Cash and cash equivalents

   $ 21,554      $ 43,652  

Restricted cash

     543        9  

Marketable securities

     10,286        8,440  

Accounts and other receivables, net

     12,669        22,537  

Unbilled receivables

     7,881        3,101  

Inventories, net

     706        666  

Prepaid expenses and other current assets

     5,479        3,557  

Property and equipment, net

     8,660        9,471  

Goodwill and intangible assets, net

     24,487        26,882  

Other assets

     1,068        1,015  
  

 

 

    

 

 

 

Total assets

   $ 93,333      $ 119,330  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Accounts payable and other current liabilities

   $ 11,006      $ 17,810  

Deferred revenues

     7,074        14,433  

Deferred tax liabilities and income taxes payable

     600        1,367  

Other long term liabilities

     —          —    
  

 

 

    

 

 

 

Total liabilities

     18,680        33,610  
  

 

 

    

 

 

 

Total stockholders’ equity

     74,653        85,720  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 93,333      $ 119,330  
  

 

 

    

 

 

 


SeaChange International, Inc.

Condensed Consolidated Statements of Operations

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

 

     Three Months Ended     Nine Months Ended  
     October 31,     October 31,  
     2018     2017     2018     2017  

Revenues:

        

Products

   $ 8,268     $ 11,119     $ 12,821     $ 18,907  

Services

     10,343       12,311       32,626       38,415  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     18,611       23,430       45,447       57,322  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Products

     1,716       1,198       2,518       3,088  

Services

     5,428       5,612       15,914       15,810  

Amortization of intangible assets

     178       255       534       764  

Stock-based compensation expense

     1       1       1       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     7,323       7,066       18,967       19,665  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     11,288       16,364       26,480       37,657  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     4,836       5,634       15,477       17,411  

Selling and marketing

     3,705       3,916       10,776       9,292  

General and administrative

     3,209       3,868       11,224       10,595  

Amortization of intangible assets

     205       370       664       1,075  

Stock-based compensation expense

     768       696       2,570       2,224  

Professional fees - other

     50       —         50       21  

Severance and other restructuring costs

     1,030       960       1,620       3,670  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     13,803       15,444       42,381       44,288  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income from operations

     (2,515     920       (15,901     (6,631

Other (expenses) income, net

     (2,087     14       (4,898     969  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income before income taxes

     (4,602     934       (20,799     (5,662

Income tax (benefit) provision

     (775     1,154       (2,421     1,458  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (3,827   $ (220   $ (18,378   $ (7,120
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share:

        

Basic

   $ (0.11   $ (0.00   $ (0.52   $ (0.20
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.11   $ (0.00   $ (0.52   $ (0.20
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     35,747       35,479       35,668       35,381  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,747       35,479       35,668       35,381  
  

 

 

   

 

 

   

 

 

   

 

 

 


SeaChange International, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

     Nine Months Ended
October 31,
 
     2018     2017  

Cash flows from operating activities:

    

Net loss

   $ (18,378   $ (7,120

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

    

Depreciation and amortization of property and equipment

     1,053       1,758  

Amortization of intangible assets

     1,198       1,839  

Stock-based compensation expense

     2,571       2,227  

Deferred income taxes

     (702     102  

Other non-cash reconciling items, net

     27       76  

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

    

Accounts receivable

     9,100       (1,401

Unbilled receivables

     (4,957     3,289  

Inventories

     (43     (165

Prepaid expenses and other assets

     (2,107     62  

Accounts payable

     2,401       (3,199

Accrued expenses

     (9,152     942  

Deferred revenues

     (7,060     355  

Other operating activities

     2,424       327  
  

 

 

   

 

 

 

Total cash used in operating activities

     (23,625     (908
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (328     (386

Purchases of marketable securities

     (8,510     (7,246

Proceeds from sale and maturity of marketable securities

     6,649       7,993  

Other investing activities

     —         176  
  

 

 

   

 

 

 

Total cash (used in) provided by investing activities

     (2,189     537  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock

     81       53  

Payments of withholding tax on RSU vesting

     (43     (52
  

 

 

   

 

 

 

Total cash provided by financing activities

     38       1  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     4,213       (878
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash

     (21,563     (1,248
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, beginning of period

     43,661       28,411  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 22,097     $ 27,163  
  

 

 

   

 

 

 


Non-GAAP Measures

We define non-GAAP (loss) income from operations as U.S. GAAP operating (loss) income plus stock-based compensation expenses, amortization of intangible assets, non-operating professional fees and severance and other restructuring costs. We discuss non-GAAP (loss) income from operations in our quarterly earnings releases and certain other communications as we believe non-GAAP operating (loss) income from operations is an important measure that is not calculated according to U.S. GAAP. We use non-GAAP (loss) income from operations in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, determining a component of bonus compensation for executive officers and other key employees based on operating performance and evaluating short-term and long-term operating trends in our operations. We believe that the non-GAAP (loss) income from operations financial measure assists in providing an enhanced understanding of our underlying operational measures to manage the business, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. We believe that the non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making.

Non-GAAP (loss) income from operations is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. We expect to continue to incur expenses similar to the financial adjustments described above in arriving at non-GAAP (loss) income from operations and investors should not infer from our presentation of this non-GAAP financial measure that these costs are unusual, infrequent or non-recurring.

In managing and reviewing our business performance, we exclude a number of items required by U.S. GAAP. Management believes that excluding these items is useful in understanding the trends and managing our operations. We provide these supplemental non-GAAP measures in order to assist the investment community in seeing SeaChange through the “eyes of management,” and therefore enhance the understanding of SeaChange’s operating performance. Non-GAAP financial measures should be viewed in addition to, not as an alternative to, our reported results prepared in accordance with U.S. GAAP. Our non-GAAP financial measures reflect adjustments based on the following items:

Amortization of Intangible Assets. We incur amortization expense of intangible assets related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition. We believe that exclusion of these expenses allows comparisons of operating results that are consistent over time for the Company’s newly-acquired and long-held businesses.

Stock-based Compensation Expense. We incur expenses related to stock-based compensation included in our U.S. GAAP presentation of cost of revenues and operating expenses. Although stock-based compensation is an expense we incur and is viewed as a form of compensation, the expense varies in amount from period to period, and is affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of our shares, risk-free interest rates and the expected term and forfeiture rates of the awards.

Professional Fees - Other. We have excluded the effect of legal and other professional costs associated with our acquisitions, divestitures, litigation and strategic alternatives because the amounts are considered significant non-operating expenses.

Severance and Other Restructuring Costs. We incur charges due to the restructuring of our business, including severance charges and facility reductions resulting from our restructuring and streamlining efforts and any changes due to revised estimates, which we generally would not have otherwise incurred in the periods presented as part of our continuing operations.


The following table includes the reconciliations of our U.S. GAAP (loss) income from operations, the most directly comparable U.S. GAAP financial measure, to our non-GAAP (loss) income from operations for the three and nine months ended October 31, 2018 and 2017 (amounts in thousands, except per share and percentage data):

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

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

 

     Three Months Ended
October 31, 2018
    Three Months Ended
October 31, 2017
 
     GAAP
As Reported
    Adjustments     Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 8,268     $ —       $ 8,268     $ 11,119     $ —       $ 11,119  

Services

     10,343       —         10,343       12,311       —         12,311  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     18,611       —         18,611       23,430       —         23,430  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     1,716       —         1,716       1,198       —         1,198  

Services

     5,428       —         5,428       5,612       —         5,612  

Amortization of intangible assets

     178       (178     —         255       (255     —    

Stock-based compensation

     1       (1     —         1       (1     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     7,323       (179     7,144       7,066       (256     6,810  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     11,288       179       11,467       16,364       256       16,620  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     60.7     1.0     61.6     69.8     1.1     70.9

Operating expenses:

            

Research and development

     4,836       —         4,836       5,634       —         5,634  

Selling and marketing

     3,705       —         3,705       3,916       —         3,916  

General and administrative

     3,209       —         3,209       3,868       —         3,868  

Amortization of intangible assets

     205       (205     —         370       (370     —    

Stock-based compensation expense

     768       (768     —         696       (696     —    

Professional fees - other

     50       (50     —         —         —         —    

Severance and other restructuring costs

     1,030       (1,030     —         960       (960     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     13,803       (2,053     11,750       15,444       (2,026     13,418  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (2,515   $ 2,232     $ (283   $ 920     $ 2,282     $ 3,202  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (13.5 %)      12.0     (1.5 %)      3.9     9.7     13.7

Weighted average common shares outstanding:

            

Basic

     35,747       35,747       35,747       35,479       35,479       35,479  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,747       35,747       35,747       35,479       35,671       35,671  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating (loss) income per share:

            

Basic

   $ (0.07   $ 0.06     $ (0.01   $ 0.03     $ 0.07     $ 0.10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.07   $ 0.06     $ (0.01   $ 0.03     $ 0.06     $ 0.09  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

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

 

     Nine Months Ended
October 31, 2018
    Nine Months Ended
October 31, 2017
 
     GAAP                 GAAP              
     As Reported     Adjustments     Non-GAAP     As Reported     Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 12,821     $ —       $ 12,821     $ 18,907     $ —       $ 18,907  

Services

     32,626       —         32,626       38,415       —         38,415  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     45,447       —         45,447       57,322       —         57,322  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     2,518       —         2,518       3,088       —         3,088  

Services

     15,914       —         15,914       15,810       593       16,403  

Amortization of intangible assets

     534       (534     —         764       (764     —    

Stock-based compensation

     1       (1     —         3       (3     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     18,967       (535     18,432       19,665       (174     19,491  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     26,480       535       27,015       37,657       174       37,831  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     58.3     1.2     59.4     65.7     0.3     66.0

Operating expenses:

            

Research and development

     15,477       —         15,477       17,411       —         17,411  

Selling and marketing

     10,776       —         10,776       9,292       —         9,292  

General and administrative

     11,224       —         11,224       10,595       —         10,595  

Amortization of intangible assets

     664       (664     —         1,075       (1,075     —    

Stock-based compensation expense

     2,570       (2,570     —         2,224       (2,224     —    

Professional fees - other

     50       (50     —         21       (21     —    

Severance and other restructuring costs

     1,620       (1,620     —         3,670       (3,670     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     42,381       (4,904     37,477       44,288       (6,990     37,298  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (15,901   $ 5,439     $ (10,462   $ (6,631   $ 7,164     $ 533  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (35.0 %)      12.0     (23.0%     (11.6%)       12.5     0.9

Weighted average common shares outstanding:

            

Basic

     35,668       35,668       35,668       35,381       35,381       35,381  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,668       35,668       35,668       35,381       35,549       35,549  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating (loss) income per share:

            

Basic

   $ (0.45   $ 0.15     $ (0.29   $ (0.19   $ 0.21     $ 0.02  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.45   $ 0.15     $ (0.29   $ (0.19   $ 0.20     $ 0.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP Gross Margins

(Unaudited, amounts in thousands, except percentages)

 

     Three Months Ended
October 31, 2018
    Nine Months Ended
October 31, 2018
 
     Total     Products     Services     Total     Products     Services  

Revenues

   $ 18,611     $ 8,268     $ 10,343     $ 45,447     $ 12,821     $ 32,626  

GAAP gross profit

   $ 11,288     $ 6,545     $ 4,743     $ 26,481     $ 10,282     $ 16,199  

Exclude provision for loss contract

     —         —         —         —         —         —    

Exclude amortization of intangible assets

     178       7       171       534       21       513  

Exclude stock-based compensation

     1       —         1       —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 11,467     $ 6,552     $ 4,915     $ 27,015     $ 10,303     $ 16,712  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit, %

     61.6     79.2     47.5     59.4     80.4     51.2
     Three Months Ended
October 31, 2017
    Nine Months Ended
October 31, 2017
 
     Total     Products     Services     Total     Products     Services  

Revenue

   $ 23,430     $ 11,119     $ 12,311     $ 57,322     $ 18,907     $ 38,415  

GAAP gross profit

   $ 16,364     $ 9,894     $ 6,470     $ 37,657     $ 15,740     $ 21,917  

Exclude provision for loss contract

     —         —         —         (593     —         (593

Exclude amortization of intangible assets

     255       27       228       764       79       685  

Exclude stock based compensation

     1       —         1       3       —         3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 16,620     $ 9,921     $ 6,699     $ 37,831     $ 15,819     $ 22,012  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit, %

     70.9     89.2     54.4     66.0     83.7     57.3

The following table reconciles the Company’s forecasted U.S. GAAP operating loss per share to the Company’s forecasted non-GAAP operating (loss) income per share for the Company’s fourth fiscal quarter and full fiscal 2019:

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP Guidance

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

 

     Three Months Ended
January 31, 2019
    Twelve Months Ended
January 31, 2019
 

GAAP revenue guidance

   $ 16,000       to      $ 20,000     $ 61,000     to      $ 65,000  

GAAP loss from operations per basic share

   $ (0.08      $ (0.01   $ (0.53      $ (0.46

Exclude stock-based compensation expense

     0.02          0.02       0.10          0.10  

Exclude amortization of intangible assets

     0.01          0.01       0.04          0.04  

Exclude professional fees associated with divestitures

     —            —         —            —    

Exclude restructuring costs

     —            —         0.05          0.05  
  

 

 

      

 

 

   

 

 

      

 

 

 

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

   $ (0.05      $ 0.02     $ (0.34      $ (0.27
  

 

 

      

 

 

   

 

 

      

 

 

 


SeaChange International, Inc.

Supplemental Schedule - Revenue Breakout

(Unaudited, amounts in thousands)

 

     Three Months Ended
October 31,
     Nine Months Ended
October 31,
 
     2018      2017      2018      2017  

Product revenues:

           

Video platform

   $ 5,259      $ 10,380      $ 8,597      $ 15,527  

Advertising

     1,793        243        2,402        243  

User experience

     1        113        25        646  

Hardware

     1,162        190        1,743        1,788  

Third-party products

     54        193        54        703  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product revenues

     8,269        11,119        12,821        18,907  
  

 

 

    

 

 

    

 

 

    

 

 

 

Service revenues:

           

Maintenance and support

     7,510        8,140        21,750        25,122  

SaaS

     60        479        254        2,186  

Professional services - video platform

     2,636        3,371        10,365        10,541  

User experience

     136        321        257        566  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total service revenues

     10,342        12,311        32,626        38,415  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 18,611      $ 23,430      $ 45,447      $ 57,322  
  

 

 

    

 

 

    

 

 

    

 

 

 

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