Despite reaching the fourth year of its original three-year transition plan, SeaChange is still fighting a losing battle against a tide of red ink.
In fact, SeaChange International Inc. (Nasdaq: SEAC) is seeing its revenues plummet and its losses widen as it continues to miss Wall Street's financial targets. More than three years after launching its shift from a mostly hardware-based company to a software-centric firm, the video technology specialist is still struggling to build a strong, sustainable business with a suite of new software products and services crafted for multiscreen and OTT video delivery.
With a new fiscal year now in front of them, SeaChange executives remain optimistic that their company will begin its long-awaited turnaround in the 12 months ahead. They point to several recent new and upgrade deals with cable operators and other pay-TV providers in North America and Europe and stress that the company's balance sheet remains strong.
But the company, which cut its global workforce by about 70 people, or 10%, in its latest cost-cutting move in February, still expects further revenue declines and significant operating losses in fiscal 2016 as it continues to shed its legacy businesses and get its new products into the market. It has not projected when revenue growth and profits might be restored. (See SeaChange Cuts Staff Again.)
Looking at its latest financials, SeaChange reported Thursday that its revenues fell to $31.3 million in the quarter ending Jan. 31, down more than 12% from $35.6 million a year earlier. As a result, it rang up an operating loss of $5.3 million and a net loss of $6.1 million, much higher than its losses of $0.9 million and $1.4 million, respectively, in the prior year period.
For the full year, SeaChange posted $115.4 million in revenues, down sharply from $146.3 million in fiscal 2014. At the same time, its annual operating loss jumped to $26.5 million and its net loss to $27.5 million, well up from $1.6 million and $3.0 million, respectively, in the previous year. The fiscal 2015 results included $12.7 million in severance payments, restructuring charges and other non-GAAP expenses, up from $10.1 million in similar charges in fiscal 2014.
Trying for an upbeat tone amidst the red ink, SeaChange CEO Jay Samit emphasized in the earnings report that the company recently signed a new, large Russian cable provider for a rollout of its Adrenalin back-office product for multiscreen video. He also stressed that SeaChange began shipping Adrenalin to "upgrade another North American video-on-demand customer" for multiscreen expansion. And, he added, SeaChange began commercially deploying its Nucleus video gateway software product in Polish cable homes.
"We anticipate this success will be followed by Nucleus rollouts in other markets in Europe and the Americas this year," Samit said. He also cited the company's moves to "bring a comprehensive OTT platform" to its existing service provider customers and such new prospects as broadcasters, TV programmers, movie studios and other content owners and distributors, aided by its recent acquisition of Timeline Labs, a social media analytics specialist. (See SeaChange Completes Timeline Labs Acquisition.)
But, even with such success stories and promising prospects, Samit and other SeaChange officials do not expect to turn the tide over the next 12 months. The company projects continued revenue declines and operating losses for its fiscal first quarter and the full year, with revenues coming in at $22 million to $24 million for the quarter and $105 million to $115 million for the year.
— Alan Breznick, Cable/Video Practice Leader, Light Reading