SeaChange Revenues Drop 31% in Q3

Stock falls as company attributes drop to lower service sales
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Shares in SeaChange International were down about 9% Wednesday morning after the multiscreen video software company reported the day before that Q3 revenues dropped 31% year-over-year driven largely by lower service revenues.

Speaking on Tuesday’s call, SeaChange CEO Ed Terino said the dip was in part to customer delays tied to the deployment of video and gateway platforms and a reduction in support and maintenance revenues “related to several tier 1 operators.” SeaChange was also stymied by lower product revenues attributed to delays in decisions by several customers he said.

The Q3 results arrived amid a reorg and cost-cutting initiative aimed at helping SeaChange return to profitability. SeaChange said it has reduced its operating cost by close to $30 million so far in its fiscal 2017.

On the positive side, Terino said the company has more than 20 customers “quoted for upgrades” to Adrenalin, a multiscreen video backoffice that succeeds SeaChange’s Axiom platform. Among them, there’s a “seven-figure booking” for Adrenaline with a customer in North America that is replacing its legacy video backoffice.

He said Rave, SeaChange’s OTT platform, has about 30 opportunities in the pipeline. The company has two announced Rave customers: BBC and Filmbankmedia, an international non-theatrical distributor of films and TV shows.

RELATED: SeaChange Banks OTT Deal

Terino said SeaChange’s largest customer (believed to be Liberty Global) is working with the company to deploy a cloud-based of the Adrenalin backoffice that will enable the operator to run it in one data center for 17 different countries. But he also stressed that they have not finalized commercial terms on that deal, but noted that the expectation is that the customer would start to transition to a virtualized environment sometime in the second half of 2017.

“This project will enable our customer to maintain and upgrade all 17 countries at a significantly lower cost with far more frequency than is possible today,” he said.

SeaChange recently released NitroX, a multiplatform system that delivers a common UI across multiple devices, including set-tops that run on the Reference Design Kit (RDK), the integrated software platform for IP-connected set-tops and gateways being managed by Comcast, Liberty Global and Charter Communications, as well as Android TV-powered boxes, legacy set-tops, and smartphones and tablets. Service providers and OTT players are among the targets for NitroX.

Looking ahead, NitroX’s roadmap for the first half of fiscal 2018 will include support for Apple TV, Roku, Amazon Fire, Comcast (X1) and Samsung’s Tizen platform, Terino said.

SeaChange posted Q3 revenue of $20 million and a GAAP loss of $8.4 million, or 24 cents per basic share.

In Q4, the company expects revenues in the range of $22 million to $24 million and a GAAP loss of 13 cents to 18 cents.

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