Cost Cuts Coming to SeaChange

Headcount reduction to be part of cost-savings plan as multiscreen video software company pursues return to profitability
seachange logo 400 x300.jpg

A reduction in headcount will be part of a cost-reduction plan underway at video software specialist SeaChange International, the company confirmed Thursday during its fiscal Q2 earnings call.

Once fully implemented, the new cost structure "will reduce our annual non-GAAP operating EPS breakeven point to the range of $90 million to $95 million in revenue," new company CEO Ed Terino said on the call.

Those cost saving measures are “still not defined,” CFO Peter Faubert said, but acknowledged that it will be a “combination of headcount reduction and other expenses across the board. It's also a worldwide process.”

He said SeaChange is working through that process now and hopes to get the plan finalized by mid-September.

SeaChange posted a GAAP loss from operations of $11.7 million (33 cents per basic share), widened from a loss of $4.8 million (14 cents) in the year-ago quarter, on revenues of $18.5 million, down from $27.9 million.

SeaChange had already warned of an expected revenue shortfall in Q2, citing delays in the estimated time to complete some work and in closing other deals due to shifts in customer schedules.

Terino expressed confidence in the business as SeaChange debuts new products, expands its sales capability and building a pipeline for the second half of the company’s fiscal year, and return to probability and positive cash flow by the end of its fiscal year.

Of note, Terino said SeaChange has more than doubled its pipeline for Rave, the company’s OTT platform that competes with players such as Kaltura, Ooyala and Brightcove. SeaChange plans to name a new Rave customer – an international distributor of film and TV content – next week.

He said SeaChange also has been making progress in converting customers from its legacy Axiom video backoffice platform to Adrenalin, a next-gen version that recently added 4K/Ultra HD support and other enhancements.

Terino said SeaChange locked in a “large Adrenalin upgrade” with an unidentified customer in North America, along with two Axiom-to-Adrenalin migrations in the Americas.

SeaChange currently has about 40 Axiom customers, with 14 quotes outstanding for the group, he said.

SeaChange shares dropped 16 cents (5.48%) to $2.76 each Thursday.