SEACHANGE INTERNATIONAL REPORTS FOURTH QUARTER AND FULL YEAR FISCAL 2017 RESULTS
ACTON, Mass. (April 10, 2017) – SeaChange International, Inc.
(NASDAQ: SEAC) today reported fourth quarter fiscal 2017 revenue of $23.8 million and U.S. GAAP loss from operations of $25.0 million, or $0.71 per basic share, compared to fourth quarter fiscal 2016 revenue of $27.2 million and U.S. GAAP loss from operations of $22.1 million, or $0.66 per basic share.
The Company’s U.S. GAAP fourth quarter fiscal 2017 results included non-GAAP charges of $22.8 million, which consisted primarily of a loss on impairment of long-lived assets of $24.2 million, severance and other restructuring costs of $1.1 million, stock-based compensation of $0.8 million, amortization of intangible assets from prior acquisitions of $0.8 million, and a reduction of $4.1 million in the previously recorded provision for a loss contract, while the fourth quarter fiscal 2016 results included $22.3 million of non-GAAP charges. Non-GAAP loss from operations for the fourth quarter of fiscal 2017 was $2.1 million, or $0.06 per basic share, compared to the fourth quarter of fiscal 2016 non-GAAP income from operations of $0.1 million, or break-even per share.
For the full fiscal year ended January 31, 2017, the Company posted revenue of $83.8 million and a U.S. GAAP loss from operations of $54.6 million, or $1.56 per basic share compared to revenue of $107.0 million and U.S. GAAP loss from operations of $48.2 million, or $1.44 per basic share in the same prior period. The Company posted a non-GAAP loss from operations for fiscal 2017 of $20.8 million, or $0.60 per basic share compared to a non-GAAP loss from operations of $7.5 million, or $0.23 per basic share for the same period of the prior fiscal year.
Ed Terino, Chief Executive Officer, SeaChange, said, “Fiscal year 2017 was a transitional year for SeaChange, capped off by strong fourth quarter performance. We made significant progress with our turnaround efforts and our initiatives to drive costs down and return to profitability and positive cash flow in fiscal 2018. Our product revenue grew substantially, driven by the deployment of a virtualized Adrenalin video platform for our largest customer and we achieved a significant milestone when a large European customer, the Quickline Group, deployed a complete SeaChange end-to-end multiscreen solution, including Adrenalin and our Nucleus RDK-based video home gateway. We also delivered Quickline TV’s OTT device apps for Android and iOS. In addition, we secured two Axiom to Adrenalin migrations, and subsequent to quarter end, we announced another North American longtime customer, Midco, is upgrading from Axiom to our next-generation Adrenalin platform. As we enter fiscal 2018, we’re excited by the opportunities we see to achieve revenue growth, profitability, and positive cash generation.”
Peter Faubert, Chief Financial Officer, SeaChange, said, “The fourth quarter was a solid end to the year for SeaChange, with revenue and non-GAAP EPS at the high end of our guidance range. Product revenue increased 106% sequentially and 38% year over year. We made significant progress on our cost reduction program. Based on actions we took in fiscal 2017 and to date in fiscal 2018, we have reduced operating costs by approximately $33 million on an annualized basis. We have reduced headcount below 400 people currently from 660 at the end of the prior fiscal year. Together with our other cost-saving actions, we believe this will enable us to achieve ongoing operating expenses of $12 million per quarter, excluding non-GAAP expenses consistent with the accompanying reconciliation and other non-recurring items that we may experience. Moreover, we delivered on our strategy to be cash flow positive in the quarter and to further reduce our unbilled receivables. We expect to complete our restructuring in the first half of the year and remain focused on prudently managing our operating expenses to return the Company to profitability in the second half of fiscal 2018.”
Faubert added, “Our customers are increasingly looking to implement end-to-end solutions using cloud based deployment models on a subscription basis. As a result, we believe that our revenue mix will transition from perpetual license to monthly recurring revenue or SaaS. This will have an impact on our top-line performance, but over the longer term, will improve our visibility and the predictability of our revenue base.”
SeaChange ended the fourth quarter of fiscal 2017 with cash, cash equivalents, restricted cash and marketable securities of approximately $39 million, and no debt outstanding.
SeaChange anticipates first quarter fiscal 2018 revenue to be in the range of $16 million to $18 million, U.S. GAAP loss from operations to be in the range of $0.19 to $0.23 per basic share, and non-GAAP loss from operations to be in the range of $0.11 to $0.15 per basic share. For full fiscal 2018, SeaChange anticipates revenue to be in the range of $80 million to $90 million, U.S. GAAP loss from operations to be in the range of $0.25 to $0.37 per basic share, and non-GAAP operating loss to be in the range of $0.10 per basic share to non-GAAP operating income of $0.02 per diluted 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 first quarter of fiscal 2018.
The Company will host a conference call to discuss its fourth quarter and full fiscal 2017 results at 5:00 p.m. ET today, Monday, April 10, 2017. 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 April 24, 2017 at 877-660-6853 (U.S.) or 201-612-7415 (international), conference ID 1365-7835. 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
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 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.
For full press release with tables, please visit: http://www.schange.com/assets/newsimages/q4fy2017earnings/seachange-press-release-q4fy17-4-10-17