SeaChange Reports Increased Revenues and Income, Driven by its Software Segment

VOD and advanced advertising technology provider, SeaChange International, has released financial results for its fiscal first quarter (2011), ended April 30th:

  • Revenues totaled $54.1 million, compared to $48.9 million for the year-ago quarter--an increase of 11%.
  • Revenues from the company's Software segment totaled $40.9 million--up $10.3 million, or 34%, from the year-ago quarter. According to the company, the segment's revenue growth was driven by "higher Axiom and VOD advertising product revenue from a large North American cable television provider, increased advertising insertion revenue and the impact of [its] eventIS and VividLogic acquisitions."
  • Revenues from the company's Servers and Storage segment, however, totaled $6.8 million--down $7.3 million from the year-ago quarter. The company ascribed the decline to "lower shipments of VOD servers to North American service providers when compared to an unusually high level of shipments in last year's first quarter."
  • Revenues from the company's Media Services segment totaled $6.4 million, up $2.2 million or 51% from the year-ago quarter and representing a company record. The segment also reported an operating margin in excess of 10% for the second consecutive quarter. The company ascribed the revenue increase to "new content services contracts from customers in France and Dubai combined with increased content processing revenues from customers in Greece and Turkey."
  • Non-GAAP net income totaled $3.1 million, or $0.10 per share, compared to $2.2 million, or $0.07 per share, for the year-ago quarter. (Note: according to the company, significant GAAP items that were excluded in calculating non-GAAP net income for its fiscal Q1 include the gain from the sale of its equity investment in Casa Systems, deferred revenue adjustments related to recent acquisitions, restructuring charges, reversal of deferred tax valuation allowance, amortization of intangible assets and stock compensation expense.)
  • GAAP net income totaled $24.6 million, or $0.78 per share, compared to $1 million, or $0.03 per share, for the year-ago quarter.
  • At the end of the quarter, the company's cash, cash-equivalents and marketable securities totaled $85.6 million and no debt, compared to $48.5 million and no debt at the end of the preceding quarter. The company says that proceeds of $34.1 million from its sale of its stake in Casa Systems and improved working capital performance driven by increased receivables collections were partially offset by its purchase of VividLogic.

"We're very pleased to report a strong first quarter in our core software business," SeaChange chairman and CEO, Bill Styslinger, said in a prepared statement. "Among the notable contributing factors was our ability to secure a highly strategic VOD backoffice win to place our Axiom software in all locations at one of our largest North American cable customers. Additionally, our VividLogic acquisition generated contract renewals and extensions with key operators. SeaChange has continued to expand its software business while reducing overall research and development costs, primarily through our ability to offshore some development and support, by introducing new market advantages from our recent acquisitions, and through the creation of a common software platform comprising interchangeable components. We've continued to evaluate our products and take aggressive action, as demonstrated most recently by the divestiture of SeaChange's minority stake in Casa Systems, which resulted in a nearly fourfold return on our investment. Our increased cash resources give us the ability to improve shareholder value through investments in our core software business and stock repurchases. Today we continue to aggressively pursue our previously stated goal of achieving 10% pre-tax margin for software by the close of fiscal 2011 and 15% pre-tax margin for fiscal 2012. SeaChange's second quarter financial outlook is for $53-55 million in revenue and non-GAAP EPS of $0.10-0.14 per share. The Company has reinstated its stock buyback program, based on its improved liquidity position, and will repurchase shares as market conditions dictate."

SeaChange's earnings announcement also stated, among other things, that:

  • the company has been selected by a "cable operator in the US" for a multiscreen trial that will use its Mobix and its Axiom software.
  • the company has closed "the first true three-screen opportunity with a major cable and communications operator in Asia Pacific," and that the customer expects to launch this service in June.
  • the company has won a "large streaming server expansion order from a major Latin American customer," and that, as part of this expansion, it has shipped the first of its FMS 2500 third-generation flash server products.
  • the company has won "a large linear advertising account with a leading US telco, which includes business through 2012."
  • the company has added advertising accounts for VOD, "specifically playlisting support for two new large operators in the United States."
  • the company's VOD product has been selected by a North American cable operator for use in hotels.


North America