SeaChange International Reports Third Quarter and Nine Month Fiscal 2013 Results

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SeaChange International Reports Third Quarter and Nine Month Fiscal 2013 Results

  • Revenue of $39.2 Million at High End of Guidance
  • Non-GAAP EPS Exceeds High End of Guidance by 33%
  • Increases Revenue and Earnings Guidance for Full Year

ACTON, Mass.--(BUSINESS WIRE)-- SeaChange International, Inc. (NAS: SEAC) , a leading global multi-screen video software innovator, today reported revenue of $39.2 million and non-GAAP operating income of $2.9 million or $0.09 per share for the third quarter of fiscal 2013. In comparison, third quarter fiscal 2012 revenue was $42.9 million and non-GAAP operating income was $5.5 million or $0.17 per share. The Company posted U.S. GAAP net income of $0.6 million or $0.02 per share for the third quarter of fiscal 2013 compared to U.S. GAAP net income of $0.4 million or $0.01 per share for the third quarter of fiscal 2012. The Company's U.S. GAAP third quarter fiscal 2013 results include non-recurring charges which consisted primarily of severance and restructuring charges while the third quarter fiscal 2012 results had non-recurring charges related to professional fees associated with strategic alternatives and earn-out costs from acquisitions.

For the first nine months of fiscal 2013, the Company posted revenues of $112.6 million and non-GAAP operating income of $6.4 million compared to revenues of $121.5 million and non-GAAP operating income of $12.2 million in the same prior period. The Company posted a U.S. GAAP loss from operations for the first nine months of fiscal 2013 of approximately $8.9 million compared to U.S. GAAP income from operations of $0.7 million for the same prior period. Included in the nine month fiscal 2013 results are $7.8 million in charges related to inventory write-downs, professional fees related to divestitures and litigation, severance and restructuring charges and earn-out costs related to acquisitions.


"I'm very pleased with our third quarter results, which came in at the high end of our revenue guidance and significantly exceeded our non-GAAP operating income guidance," said Raghu Rau, Chief Executive Officer, SeaChange. "The outperformance was driven by increased revenue from new products and continued execution on our cost reduction efforts."

Commenting on outlook, Rau stated, "Based on the momentum we are seeing in our business, we are increasing our full year fiscal 2013 revenue and earnings guidance. We anticipate that our full year fiscal 2013 revenue will be in the range of $155 million to $159 million and our non-GAAP operating income will be in the range of $0.38 to $0.41 per share."

The Company ended the third quarter of fiscal year 2013 with cash, cash equivalents and marketable securities of $100.0 million compared to $93.8 million at the end of January 31, 2012. For the three and nine month periods ended October 31, 2012, the Company has repurchased approximately 687,000 shares and 750,000 shares, respectively, and utilized approximately $5.6 million and $6.1 million, respectively, of cash from its balance sheet under its stock repurchase plan.

The Company will host its third quarter results conference call on Wednesday, December 5, 2012 at 8:30 a.m. E.T. The U.S. dial-in number is 877-407-8037 and the international number is 201-689-8037. A live webcast can be accessed at www.schange.com/ir. Supplemental financial information and prepared remarks for the conference call will be posted to the Investor Relations section of our website simultaneously with this press release.

For those unable to listen to the live conference call, a replay will be available through December 19, 2012, and can be accessed by dialing 877-660-6853 (U.S.) or 201-612-7415 (international). Callers will be prompted for replay conference ID number 404434#. An archived version of the webcast will also be available under the investor relations section of the Company's website at www.schange.com/IR.

About SeaChange International

Ranked among the top 250 software companies in the world, SeaChange International (NAS: SEAC) enables transformative multi-screen video services through an open, cloud-based, intelligent software platform trusted by cable, IPTV and mobile operators globally. Personalized and fully monetized video experiences anytime on any device, in the home and everywhere, are the product of the Company's superior video platform, advertising and in-home offerings.

SeaChange's hundreds of customers are many of the world's most powerful media brands including all major cable operators in the Americas and Europe, and the largest telecom companies in the world. Headquartered in Acton, Massachusetts, SeaChange is TL 9000 certified and has product development, support and sales offices around the world. Visit www.schange.com.

Safe Harbor Provision

Any statements contained in this press release that do not describe historical facts, including without limitation statements regarding future financial performance, 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; the continued development of the multi-screen video market; the Company's ability to successfully introduce new products or enhancements to existing products; worldwide economic cycles; steps taken to address the variability in the market for our products and services; our transition to a pure play software company; the loss of one of the Company's large customers; 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; the Company's ability to manage its growth; the risks associated with international operations; 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 market or other limitations in materials we use to provide our products and services; the Company's ability to compete in its marketplace; the Company's ability to respond to changing technologies; the impact of acquisitions or divestitures made by the Company; changes in the regulatory environment; the Company's ability to hire and retain highly skilled employees; and the effectiveness of the Company's disclosure controls and procedures and internal controls over financial reporting.

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 10K filed on April 5, 2012. 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.

 
 
SeaChange International, Inc.
Condensed Consolidated Balance Sheets
(unaudited, amounts in thousands)
    
October 31,January 31,
20122012
Assets
Cash and marketable securities$99,969$93,780
Accounts and other receivables, net45,81746,774
Inventories, net7,60610,218
Prepaid expenses and other current assets10,1108,035
Assets held for sale465646
Property and equipment, net19,46420,162
Goodwill and intangible assets, net62,61766,846
Other assets4,1964,528
Assets related to discontinued operations - 47,863
Total assets$250,244$298,852
 
 
Liabilities and Stockholders' Equity
Accounts payable and other current liabilities$21,694$24,626
Deferred revenues29,34635,735
Other long term liabilities1,5008,464
Deferred tax liabilities and income taxes payable6,3397,545
Liabilities related to discontinued operations - 11,544
Total liabilities 58,879 87,914
 
Total stockholders' equity 191,365 210,938
Total liabilities and stockholders' equity$250,244$298,852
 
 
SeaChange International, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(unaudited, amounts in thousands, except per share data)
      
Three Months EndedNine Months Ended
October 31,October 31,
2012201120122011
Revenues:
Products$15,213$21,267$40,681$53,669
Services 24,036  21,646  71,932  67,799 
Total revenues 39,249  42,913  112,613  121,468 
Cost of revenues:
Products5,5045,18413,77114,691
Services13,80712,51239,28736,054
Amortization of intangible assets5207691,5481,886
Stock based compensation expense(85)140109380
Inventory write-down -  -  1,752  - 
Total cost of revenues 19,746  18,605  56,467  53,011 
Gross profit 19,503  24,308  56,146  68,457 
Operating expenses:
Research and development9,42310,51829,04230,436
Selling and marketing3,9055,11211,98715,802
General and administrative3,7284,11112,12612,247
Amortization of intangible assets9699482,8912,863
Stock based compensation expense8138782,9472,754
Earn-outs and change in fair value of earn-outs641,4121,6671,517

Professional fees: acquisitions, divestitures, litigation, and strategic alternatives

265971,4451,873
Severance and other restructuring costs 1,476  (6) 2,918  221 
Total operating expenses 20,404  23,570  65,023  67,713 
(Loss) income from operations(901)738(8,877)744
Other income (expense), net337(127)(92)128
Gain on sale of investment in affiliates -  -  814  - 

(Loss) income before income taxes and equity income in earnings of affiliates

(564)611(8,155)872
Income tax benefits(882)(368)(766)(583)
Equity income in earnings of affiliates, net of tax 49  129  75  215 
Income (loss) from continuing operations 367  1,108  (7,314) 1,670 
Income (loss) on sale of discontinued operations124-(14,324)-
Income (loss) from discontinued operations, net of tax 87  (700) (2,655) (859)
Net income (loss)$578 $408 $(24,293)$811 
 
Net income (loss)$578$408$(24,293)$811
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment1,4533216,6122,696
Unrealized loss on marketable securities (10) (21) (10) (74)
Comprehensive income (loss)$2,021 $708 $(17,691)$3,433 
 
Net income (loss) per share:
Basic income (loss) per share$0.02 $0.01 $(0.75)$0.03 
Diluted income (loss) per share$0.02 $0.01 $(0.75)$0.02 
Net income (loss) per share from continuing operations:
Basic income (loss) per share$0.01 $0.03 $(0.23)$0.06 
Diluted income (loss) per share$0.01 $0.03 $(0.23)$0.05 
Net income (loss) per share from discontinued operations:
Basic income (loss) per share$0.01 $(0.02)$(0.52)$(0.03)
Diluted income (loss) per share$0.01 $(0.02)$(0.52)$(0.03)
Weighted average common shares outstanding:
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