SeaChange lowers guidance and growth estimates for 2014
Michelle Clancy | 27-02-2014
SeaChange International has revised its guidance downward for its fourth quarter and full fiscal year 2014, ended 31 January 2014.
The company said that it now anticipates ending the fourth quarter of fiscal 2014 with revenue in the range of $34.5 million to $35.5 million, compared to the company's prior guidance of $40 million to $45 million, and non-GAAP operating income of $0.01 to $0.02 per fully diluted share, compared to prior guidance of $0.15 to $0.20 per fully diluted share.
For the full fiscal year 2014, SeaChange anticipates revenue in the range of $145 million to $146 million.
"We are very disappointed that fourth quarter revenues came in below our guidance range," said Raghu Rau, CEO, SeaChange. "The primary reasons for this shortfall were delays in receiving anticipated orders from customers in the Americas along with continued delays in receiving some final acceptances. The magnitude of these delays was greater than expected, given our customer concentration and the timing of our sales, wherein many sales occur towards the end of a quarter."
Rau continued: "We are pleased to note, based on our progress to date, that all of the customer acceptances that were missed in the fourth quarter of fiscal 2014 are expected to be received in the first half of fiscal 2015. We also expect to receive over the course of fiscal 2015 a majority of the orders we had previously anticipated receiving in the fourth quarter."
He also said that fiscal 2015 will be a "transitional year" for SeaChange, where increased lead times in customer orders and acceptances will pair with significant declines in sales of legacy products.
So, revenue will likely grow only in the second half of fiscal 2015 and remain flat to down for the full year, relative to our anticipated fiscal 2014 performance.
"However, we are targeting higher profitability in fiscal 2015 relative to our anticipated fiscal 2014 performance through cost reductions and increases in new product revenues," Rau said. "We believe we are creating significant long-term value for our shareholders with the design wins we already have in place and those we expect with our continued investments, particularly in our Nucleus video gateway software. Our long-term target model of operating margins in the 15% range remains unchanged."
The company's new products are gaining traction however: they accounted for more than two-thirds of total product revenue in the fourth quarter.
SeaChange anticipates ending the fourth quarter of fiscal 2014 with cash, cash equivalents and marketable securities of $128.1 million and no debt outstanding, compared to $126.4 million at the end of the third quarter.