SeaChange hits choppy waters in Q3
Details
Joseph O'Halloran
| 07 December 2016

As it continues its turnaround programme, video infrastructure and services firm SeaChange has hit some headwinds during the third quarter of its 2017 financial year.

For the quarter the firm posted revenue of $20 million and a GAAP loss from operations of $8.4 million. These compared with revenue of $28.7 million and GAAP loss from operations of $11.8 million in the third quarter of fiscal 2016. SeaChange noted that the Q3 2017 results included non-GAAP charges of $4.1 million, consisting primarily of severance and other restructuring costs, stock-based compensation, amortisation of intangible assets from prior acquisitions, and other non-operating expense professional fees.

By comparison, the third quarter 2016 fiscal results included $12.2 million worth of similar non-GAAP charges as well as a provision for loss contract of $9.2 million. Non-GAAP loss from operations for the third quarter of fiscal 2017 was $4.3 million, compared with third quarter of fiscal 2016 non-GAAP income from operations of $400,000.

Highlights in the quarter included new business for a Latin American video-on-demand (VOD) and advertising customer upgrade to the core Adrenalin and Infusion platforms, as well as its content management system. In North America, SeaChange won another new customer for Adrenalin, replacing a video back office.

The Q3 performance meant that for the first nine months of fiscal 2017, the company had revenue of $60.0 million and a US GAAP loss from operations of $29.7 million, compared with of $79.8 million and $26.1 million respectively for the previous year. It also posted a non-GAAP loss from operations for the first nine months of fiscal 2017 of $18.7 million, compared with a non-GAAP loss from operations of $7.7 million.

“While we are disappointed with our year-to-date revenue performance, we continue to make good progress with our turnaround efforts and our initiatives to drive costs down and return to profitability and cash flow positive performance,” commented Ed Terino, CEO, SeaChange. “During the third quarter we continued to strengthen our sales and engineering organisations, while reducing our cost structure. We remain on track to complete our cost reduction efforts by fiscal year-end that will yield approximately $30 million in annual cost savings. These efforts have already yielded results with increased sales leads, a growing revenue pipeline, and improved product quality.”

On a brighter note, SeaChange ended the third quarter of fiscal 2017 with cash, cash equivalents, restricted cash and marketable securities of approximately $38 million, and no debt outstanding. Looking to the future, it expects fourth quarter fiscal 2017 revenue to be in the range of $22-24 million, and $82-84 million for the full fiscal 2017. The company has made no provision for restructuring expense in its outlook for Q4 2017.