EX-99.1 3 d279942dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

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LOGO

NEWS RELEASE

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

SEACHANGE INTERNATIONAL REPORTS

THIRD QUARTER FISCAL 2017 RESULTS

ACTON, Mass. (Dec. 6, 2016) – SeaChange International, Inc. (NASDAQ: SEAC) today reported third quarter fiscal 2017 revenue of $20.0 million and U.S. GAAP loss from operations of $8.4 million, or $0.24 per basic share, compared to third quarter fiscal 2016 revenue of $28.7 million and U.S. GAAP loss from operations of $11.8 million, or $0.35 per basic share.

The Company’s U.S. GAAP third 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 third quarter fiscal 2016 results included $12.2 million of similar non-GAAP charges as well as a provision for loss contract of $9.2 million. Non-GAAP loss from operations for the third quarter of fiscal 2017 was $4.3 million, or $0.13 per basic share, compared to the third quarter of fiscal 2016 non-GAAP income from operations of $0.4 million, or $0.01 per diluted share.

For the first nine months of fiscal 2017, the Company posted revenue of $60.0 million and a U.S. GAAP loss from operations of $29.7 million, or $0.85 per basic share compared to revenue of $79.8 million and U.S. GAAP loss from operations of $26.1 million, or $0.78 per basic share in the same prior period. The Company posted a non-GAAP loss from operations for the first nine months of fiscal 2017 of $18.7 million, or $0.54 per basic share compared to a non-GAAP loss from operations of $7.7 million, or $0.23 per basic share for the same period of the prior fiscal year.

“While we are disappointed with our year to date revenue performance, we continue to make good progress with our turnaround efforts and our initiatives to drive costs down and return to profitability and cash flow positive performance,” said Ed Terino, Chief Executive Officer, SeaChange. “During the third quarter we continued to strengthen our sales and engineering organizations, while reducing our cost structure. We remain on track to complete our cost reduction efforts by fiscal year-end that will yield approximately $30 million in annual cost savings. These efforts have already yielded results with increased sales leads, a growing revenue pipeline, and improved product quality. New business in the third quarter included a Latin American video-on-demand and


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advertising customer upgrade to our Adrenalin and Infusion platforms, as well as our content management system. In North America, we won another new customer for Adrenalin, replacing a video back office competitor in the process. In addition, we are very pleased to welcome Mark Tubinis as Senior Vice President of Engineering & Global Services, and believe that his extensive experience will enhance our ability to optimize quality and product innovation.”

Peter Faubert, Chief Financial Officer, SeaChange, said, “We made substantial progress in improving our working capital management and remain on track to be cash flow positive in the fiscal fourth quarter. Contributing to the improvements in working capital management, we reduced our unbilled receivables in the third quarter, which will provide a positive impact to our cash flow going forward.”

SeaChange ended the third quarter of fiscal 2017 with cash, cash equivalents, restricted cash and marketable securities of approximately $38 million, and no debt outstanding.

Outlook

SeaChange anticipates fourth quarter fiscal 2017 revenue to be in the range of $22 million to $24 million, U.S. GAAP loss from operations to be in the range of $0.13 to $0.18 per basic share, and non-GAAP loss from operations to be in the range of $0.05 to $0.10 per basic share. For full fiscal 2017, SeaChange now anticipates revenue to be in the range of $82 million to $84 million, U.S. GAAP loss from operations to be in the range of $0.99 to $1.04 per basic share, and non-GAAP operating loss to be in the range of $0.60 to $0.65 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 and scope of restructuring activities, and stock price fluctuations. The Company has made no provision for restructuring expense in its outlook for the fourth quarter of fiscal 2017.

Conference Call

The Company will host a conference call to discuss its third quarter fiscal 2017 results at 5:00 p.m. ET today, Tuesday, December 6, 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 through December 20, 2016 at 877-660-6853 (U.S.) or 201-612-7415 (international), conference ID 1364-9586. 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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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; 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


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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 International, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

     October 31,
2016
     January 31,
2016
 
     (Unaudited)         
Assets      

Cash and cash equivalents

   $ 27,484       $ 58,733   

Restricted cash

     108         82   

Marketable securities

     10,270         12,268   

Accounts and other receivables, net

     25,020         26,331   

Unbilled receivables

     7,913         10,680   

Inventories, net

     998         1,682   

Asset held for sale

     235         —     

Prepaid expenses and other current assets

     3,374         3,827   

Property and equipment, net

     12,089         14,129   

Goodwill and intangible assets, net

     51,074         44,301   

Other assets

     4,922         5,636   
  

 

 

    

 

 

 

Total assets

   $ 143,487       $ 177,669   
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Accounts payable and other current liabilities

   $ 17,458       $ 23,546   

Deferred stock consideration

     —           3,205   

Deferred revenues

     13,634         17,410   

Deferred tax liabilities and income taxes payable

     16,593         1,389   

Other long term liabilities

     1,255         1,101   
  

 

 

    

 

 

 

Total liabilities

     48,940         46,651   
  

 

 

    

 

 

 

Total stockholders’ equity

     94,547         131,018   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 143,487       $ 177,669   
  

 

 

    

 

 

 

 

 


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SeaChange International, Inc.

Preliminary Condensed Consolidated Statements of Operations

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

 

     Three Months Ended
October 31,
    Nine Months Ended
October 31,
 
     2016     2015     2016     2015  

Revenues:

        

Products

   $ 3,746      $ 6,195      $ 10,481      $ 16,314   

Services

     16,215        22,552        49,502        63,481   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     19,961        28,747        59,983        79,795   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Products

     1,824        1,528        4,506        4,766   

Services

     8,036        10,963        27,982        33,829   

Provision for loss contract

     —          9,162        —          9,162   

Amortization of intangible assets

     315        184        947        557   

Stock-based compensation expense

     (26     33        131        61   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     10,149        21,870        33,566        48,375   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     9,812        6,877        26,417        31,420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     7,325        8,273        23,751        26,176   

Selling and marketing

     3,422        3,965        10,841        11,263   

General and administrative

     3,673        3,648        11,579        11,446   

Amortization of intangible assets

     540        1,038        1,572        3,003   

Stock-based compensation expense

     791        1,104        1,685        2,943   

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

     —          492        249        1,475   

Professional fees—other

     24        1        328        145   

Severance and other restructuring costs

     2,373        197        5,991        1,026   

Loss on impairment of long-lived assets

     99        —          99        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     18,247        18,718        56,095        57,477   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (8,435     (11,841     (29,678     (26,057

Other (expenses) income, net

     (67     38        220        (390
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes and equity income in earnings of affiliates

     (8,502     (11,803     (29,458     (26,447

Income tax (benefit) provision

     (420     (1,228     14,415        (1,003

Equity income in earnings of affiliates, net of tax

     —          10        —          27   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (8,082   $ (10,565   $ (43,873   $ (25,417
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share:

        

Basic

   $ (0.23   $ (0.31   $ (1.26   $ (0.76
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.23   $ (0.31   $ (1.26   $ (0.76
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     35,186        33,636        34,889        33,440   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,186        33,636        34,889        33,440   
  

 

 

   

 

 

   

 

 

   

 

 

 

 


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SeaChange International, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

     Nine Months Ended
October 31,
 
     2016     2015  
Cash flows from operating activities:     

Net loss

   $ (43,873   $ (25,417

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

    

Depreciation and amortization of property and equipment

     2,289        2,554   

Provision for loss contract

     —          9,162   

Provision for inventory obsolescence

     318        65   

Amortization of intangible assets

     2,519        3,560   

Fair value of acquisition-related contingent consideration

     249        1,475   

Stock-based compensation expense

     1,816        3,004   

Deferred income taxes

     14,649        (960

Other

     113        61   

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

    

Accounts receivable

     1,987        895   

Unbilled receivables

     2,913        (5,743

Inventories

     338        (1,207

Prepaid expenses and other assets

     428        (158

Accounts payable

     (2,102     718   

Accrued expenses

     (4,942     (4,056

Deferred revenues

     (3,864     (2,770

Other

     173        (625
  

 

 

   

 

 

 

Total cash used in operating activities

     (26,989     (19,442
  

 

 

   

 

 

 
Cash flows from investing activities:     

Purchases of property and equipment

     (521     (1,140

Investment in capitalized software

     —          (2,030

Purchases of marketable securities

     (2,252     (3,005

Proceeds from sale and maturity of marketable securities

     4,249        4,503   

Cash paid for acquisition of business, net of cash acquired

     (5,243     (11,686

Other investing activities

     2        453   
  

 

 

   

 

 

 

Total cash used in investing activities

     (3,765     (12,905
  

 

 

   

 

 

 
Cash flows from financing activities:     

Proceeds from issuance of common stock relating to stock option exercises

     64        88   

Other financing activities

     (4     —     
  

 

 

   

 

 

 

Total cash provided by financing activities

     60        88   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (555     270   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (31,249     (31,989
  

 

 

   

 

 

 

Cash and cash equivalents, beginning of period

     58,733        90,019   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 27,484      $ 58,030   
  

 

 

   

 

 

 

 


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Use of Non-GAAP Financial Information

We define non-GAAP (loss) income from operations as U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) operating loss plus stock-based compensation expenses, amortization of intangible assets, provision for loss contract, 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 (loss) income from operations in our quarterly earnings releases and certain other communications as we believe non-GAAP (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 non-GAAP (loss) income 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 (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 non-GAAP (loss) income 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, not as an alternative to, our reported results prepared in accordance with U.S. GAAP. Our non-GAAP financial measures reflect adjustments based on the following items:

Provision for Loss Contract. We entered into a fixed-price customer contract on a multi-year arrangement, which included multiple vendors. As the system integrator on the project, we are subject to any costs overruns or increases with these vendors resulting in delays or acceptance by our customer. Delays of customer acceptance on this project require us to recognize a loss on this project in the period the determination is made. As a result, we recorded an estimated charge of $9.2 million in the third quarter of fiscal 2016. We believe that the exclusion of this expense allows a comparison of operating results that would otherwise impair comparability between periods.

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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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 loss from operations to the Company’s non-GAAP (loss) income from operations:

SeaChange International, Inc.

Preliminary Reconciliation of GAAP to Non-GAAP

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

 

     Three Months Ended
October 31, 2016
    Three Months Ended
October 31, 2015
 
     GAAP
As Reported
    Adjustments     Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  
Revenues:             

Products

   $ 3,746      $ —        $ 3,746      $ 6,195      $ —        $ 6,195   

Services

     16,215        —          16,215        22,552        —          22,552   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     19,961        —          19,961        28,747        —          28,747   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Cost of revenues:             

Products

     1,824        —          1,824        1,528        —          1,528   

Services

     8,036        —          8,036        10,963        —          10,963   

Provision for loss contract

     —          —          —          9,162        (9,162     —     

Amortization of intangible assets

     315        (315     —          184        (184     —     

Stock-based compensation

     (26     26        —          33        (33     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     10,149        (289     9,860        21,870        (9,379     12,491   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     9,812        289        10,101        6,877        9,379        16,256   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     49.2     1.4     50.6     23.9     32.6     56.5
Operating expenses:             

Research and development

     7,325        —          7,325        8,273        —          8,273   

Selling and marketing

     3,422        —          3,422        3,965        —          3,965   

General and administrative

     3,673        —          3,673        3,648        —          3,648   

Amortization of intangible assets

     540        (540     —          1,038        (1,038     —     

Stock-based compensation expense

     791        (791     —          1,104        (1,104     —     

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

     —          —          —          492        (492     —     

Professional fees—other

     24        (24     —          1        (1     —     

Severance and other restructuring costs

     2,373        (2,373     —          197        (197     —     

Loss on impairment of long-lived assets

     99        (99     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     18,247        (3,827     14,420        18,718        (2,832     15,886   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (8,435   $ 4,116      $ (4,319   $ (11,841   $ 12,211      $ 370   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (42.3 %)      20.7     (21.6 %)      (41.2 %)      42.5     1.3
Weighted average common shares outstanding:             

Basic

     35,186        35,186        35,186        33,636        33,636        33,636   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,186        35,209        35,186        33,636        33,835        33,835   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-GAAP operating (loss) income per share:             

Basic

   $ (0.24   $ 0.11      $ (0.13   $ (0.35   $ 0.36      $ 0.01   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.24   $ 0.11      $ (0.13   $ (0.35   $ 0.36      $ 0.01   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 


Page 10 of 12

SeaChange International, Inc.

Preliminary Reconciliation of GAAP to Non-GAAP

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

 

     Nine Months Ended
October 31, 2016
    Nine Months Ended
October 31, 2015
 
     GAAP
As Reported
    Adjustments     Non-GAAP     GAAP
As Reported
    Adjustments     Non-GAAP  
Revenues:             

Products

   $ 10,481      $ —        $ 10,481      $ 16,314      $ —        $ 16,314   

Services

     49,502        —          49,502        63,481        —          63,481   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     59,983        —          59,983        79,795        —          79,795   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Cost of revenues:             

Products

     4,506        —          4,506        4,766        —          4,766   

Services

     27,982        —          27,982        33,829        —          33,829   

Provision for loss contract

     —          —          —          9,162        (9,162     —     

Amortization of intangible assets

     947        (947     —          557        (557     —     

Stock-based compensation

     131        (131     —          61        (61     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     33,566        (1,078     32,488        48,375        (9,780     38,595   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     26,417        1,078        27,495        31,420        9,780        41,200   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     44.0     1.8     45.8     39.4     12.2     51.6
Operating expenses:             

Research and development

     23,751        —          23,751        26,176        —          26,176   

Selling and marketing

     10,841        —          10,841        11,263        —          11,263   

General and administrative

     11,579        —          11,579        11,446        —          11,446   

Amortization of intangible assets

     1,572        (1,572     —          3,003        (3,003     —     

Stock-based compensation expense

     1,685        (1,685     —          2,943        (2,943     —     

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

     249        (249     —          1,475        (1,475     —     

Professional fees—other

     328        (328     —          145        (145     —     

Severance and other restructuring costs

     5,991        (5,991     —          1,026        (1,026     —     

Loss on impairment of long-lived asset

     99        (99     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     56,095        (9,924     46,171        57,477        (8,592     48,885   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (29,678   $ 11,002      $ (18,676   $ (26,057   $ 18,372      $ (7,685
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (49.5 %)      18.4     (31.1 %)      (32.7 %)      23.1     (9.6 %) 
Weighted average common shares outstanding:             

Basic

     34,889        34,889        34,889        33,440        33,440        33,440   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     34,889        34,955        34,889        33,440        33,615        33,440   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-GAAP operating (loss) income per share:             

Basic

   $ (0.85   $ 0.31      $ (0.54   $ (0.78   $ 0.55      $ (0.23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.85   $ 0.31      $ (0.54   $ (0.78   $ 0.55      $ (0.23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 


Page 11 of 12

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 fourth fiscal quarter and full fiscal 2017:

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP Guidance

(Unaudited, amounts in thousands except per share data)

 

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

GAAP revenue guidance

   $ 22,000        to       $ 24,000      $ 82,000        to       $ 84,000   

GAAP loss from operations per basic share

   $ (0.18      $ (0.13   $ (1.04      $ (0.99

Exclude stock compensation expense

     0.03           0.03        0.08           0.08   

Exclude amortization of intangible assets

     0.02           0.02        0.09           0.09   

Exclude earnouts

     —             —          0.01           0.01   

Exclude professional fees associated with divestitures

     —             —          0.01           0.01   

Exclude restructuring costs

     0.03           0.03        0.20           0.20   
  

 

 

      

 

 

   

 

 

      

 

 

 

Non-GAAP loss from operations per basic share

   $ (0.10      $ (0.05   $ (0.65      $ (0.60
  

 

 

      

 

 

   

 

 

      

 

 

 

 


Page 12 of 12

SeaChange International, Inc.

Supplemental Schedule—Revenue Breakout

(Unaudited, amounts in thousands)

 

     Three Months Ended
October 31,
     Nine Months Ended
October 31,
 
     2016      2015      2016      2015  

Product Revenues:

           

Video Platform

   $ 1,797       $ 3,051       $ 6,148       $ 8,222   

Advertising

     98         650         219         987   

User Experience

     189         168         481         53   

Hardware

     1,209         2,146         2,141         5,741   

Third-party Products

     453         180         1,492         1,311   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Product Revenues

     3,746         6,195         10,481         16,314   
  

 

 

    

 

 

    

 

 

    

 

 

 

Service Revenues:

           

Maintenance and Support

     8,768         10,724         27,521         30,289   

SaaS

     692         1,967         2,487         3,280   

Professional Services—Video Platform

     5,206         8,063         15,571         18,500   

User Experience

     1,549         1,798         3,923         11,412   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Service Revenues

     16,215         22,552         49,502         63,481   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 19,961       $ 28,747       $ 59,983       $ 79,795