SeaChange International Reports Fourth Quarter and Full Fiscal 2013 Results

SeaChange International Reports Fourth Quarter and Full Fiscal 2013 Results

  • Q4 Fiscal 2013 Revenue of $44.6 Million Rose 14% Sequentially

  • Q4 Fiscal 2013 GAAP Operating Income of $5.4 million; 12% Operating Margin

  • Q4 Fiscal 2013 Non-GAAP Operating Income of $9.5 Million; 21% Operating Margin

ACTON, Mass.--(BUSINESS WIRE)-- SeaChange International, Inc. (NAS: SEAC) , a leading global multi-screen video software innovator, today reported fourth quarter fiscal 2013 revenue of $44.6 million and non-GAAP operating income of $9.5 million, or $0.28 per fully diluted share, from continuing operations. In comparison, fourth quarter fiscal 2012 revenue was $43.3 million and non-GAAP operating income was $5.4 million, or $0.16 per fully diluted share, from continuing operations. The Company posted U.S. GAAP operating income of $5.4 million, or $0.17 per fully diluted share, for the fourth quarter of fiscal 2013 compared to a U.S. GAAP loss from operations for the fourth quarter of fiscal 2012 of $2.4 million, or $0.07 per fully diluted share. The Company's U.S. GAAP fourth quarter fiscal 2013 results include non-GAAP charges of $1.1 million, which consisted primarily of earn-out costs from prior acquisitions, while the fourth quarter fiscal 2012 results had non-GAAP charges of $6.5 million related to inventory write-downs, severance and other restructuring costs, professional fees associated with strategic alternatives and earn-out costs from prior acquisitions.

For the fiscal year ended January 31, 2013, the Company posted revenues of $157.2 million and non-GAAP operating income of $15.9 million, or $0.48 per share on a fully diluted basis, compared to revenues of $164.8 million and non-GAAP operating income of $17.7 million, or $0.54 per share on a fully diluted basis in the same prior period. The Company posted a U.S. GAAP loss from operations for fiscal 2013 of $3.5 million compared to a $1.7 million operating loss for the same prior period. Included in the fiscal 2013 results are $8.9 million in non-GAAP charges related to inventory write-downs, professional fees related to divestitures and litigation, severance and other restructuring charges and earn-out costs, while the fiscal 2012 results included $10.1 million of similar non-GAAP charges.


"We're very pleased with our results in the quarter, led by a strong double-digit sequential increase in revenue, non-GAAP operating income of 21% and significant cash generation," said Raghu Rau, Chief Executive Officer, SeaChange. "The strong performance during the quarter and for the full year was driven by sales of our new products, increased product licensing revenues and aggressive cost reduction actions. These achievements underscore the noteworthy progress SeaChange has made across products, sales and operations since announcing our transformation strategy last year."

Commenting on the Company's outlook, Rau stated, "We continue to be encouraged by the demand for our next generation of software products from existing and new customers. As in previous years, we expect revenues in the second half of the year to be significantly higher than the first half. We anticipate that our first quarter fiscal 2014 revenue will be in the range of $34 million to $36 million and non-GAAP operating income, on a fully diluted share basis, will be in the range of $0.01 to $0.04 per share. On a full year basis for fiscal 2014, we anticipate that revenue will be in the range of $165 million to $175 million and non-GAAP operating income, on a fully diluted share basis, will be in the range of $0.53 to $0.71 per share."

The Company ended the fourth quarter of fiscal year 2013 with cash, cash equivalents and marketable securities of $120.9 million, a $20.9 million increase over the $100.0 million at the end of the third quarter on October 31, 2012. For the year ended January 31, 2013, the Company repurchased approximately 764,000 shares and utilized $6.2 million of cash from its balance sheet under its stock repurchase plan.

The Company will host its fourth quarter results conference call on Wednesday, April 10, 2013 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. The 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 the Company's website simultaneously with this press release.

For those unable to listen to the live conference call, a replay will be available through April 25, 2013, and may be accessed by dialing 877-660-6853 (U.S.) or 201-612-7415 (international). Callers will be prompted for replay conference ID number 409495. An archived version of the webcast will also be available on 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 back office platform, advertising and in-home gateway 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 including its next generation products scheduled for release in fiscal year 2014; worldwide economic cycles; steps taken to address the variability in the market for our products and services; uncertainties introduced by our prior evaluation of strategic alternatives; the Company's transition to being a company that primarily provides software solutions; 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 10-K 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)

January 31,

January 31,

2013

2012

Assets

Cash and cash equivalents

$

106,721

$

80,585

Marketable securities and restricted cash

14,211

13,195

Accounts and other receivables, net

40,103

46,774

Inventories, net

7,372

10,218

Prepaid expenses and other current assets

11,332

8,035

Assets held for sale

465

646

Property and equipment, net

19,762

20,162

Goodwill and intangible assets, net

62,617

66,846

Other assets

3,546

4,528

Assets related to discontinued operations

-

47,863

Total assets

$

266,129

$

298,852

Liabilities and Stockholders' Equity

Accounts payable and other current liabilities

$

28,287

$

24,626

Deferred revenues

30,603

35,735

Other long term liabilities

-

8,464

Deferred tax liabilities and income taxes payable

5,038

7,545

Liabilities related to discontinued operations

-

11,544

Total liabilities

63,928

87,914

Total stockholders' equity

202,201

210,938

Total liabilities and stockholders' equity

$

266,129

$

298,852

SeaChange International, Inc.

Condensed Consolidated Statements of Operations

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

Three Months Ended

Twelve Months Ended

January 31,

January 31,

2013

2012

2013

2012

Revenues:

Products

$

23,593

$

19,488

$

64,274

$

73,157

Services

20,982

23,836

92,914

91,635

Total revenues

44,575

43,324

157,188

164,792

Cost of revenues:

Products

3,855

5,596

17,626

20,287

Services

14,015

13,140

53,302

49,194

Amortization of intangible assets

881

601

2,429

2,487

Stock-based compensation expense

48

17

157

397

Inventory write-down

-

430

1,752

430

Total cost of revenues

18,799

19,784

75,266

72,795

Gross profit

25,776

23,540

81,922

91,997

Operating expenses:

Research and development

10,585

9,805

39,627

40,241

Selling and marketing

3,619

5,209

15,606

21,011

General and administrative

3,011

4,146

15,137

16,393

Amortization of intangible assets

1,075

921

3,966

3,784

Stock-based compensation expense

997

(163

)

3,944

2,591

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

768

1,795

2,435

3,312

Professional fees: acquisitions, divestitures, litigation, and

-

strategic alternatives

174

897

1,619

2,770

Severance and other restructuring costs

188

3,344

3,106

3,565

Total operating expenses

20,417

25,954

85,440

93,667

Income (loss) from operations

5,359

(2,414

)

(3,518

)

(1,670

)

Other income (expense), net

6

(122

)

(86

)

6

Gain on sale of investment in affiliates

71

-

885

-

Income (loss) before income taxes and equity income (loss) in earnings of affiliates

5,436

(2,536

)

(2,719

)

(1,664

)

Income tax (benefits) provision

(789

)

2,464

(1,555

)

1,881

Equity income (loss) in earnings of affiliates, net of tax

118

(73

)

193

142

Income (loss) from continuing operations

6,343

(5,073

)

(971

)

(3,403

)

Income (loss) on sale of discontinued operations

251

-

(14,073

)

-

Income (loss) from discontinued operations, net of tax

362

248

(2,293

)

(611

)

Net income (loss)

$

6,956

$

(4,825

)

$

(17,337

)

$

(4,014

)

Net income (loss) per share:

Basic income (loss) per share

$

0.22

$

(0.15

)

$

(0.53

)

$

(0.13

)

Diluted income (loss) per share

$

0.21

$

(0.15

)

$

(0.53

)

$

(0.13

)

Net income (loss) per share from continuing operations:

Basic income (loss) per share

$

0.20

$

(0.16

)

$

(0.03

)

$

(0.11

)

Diluted income (loss) per share