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More Pain for SeaChange

Jeff Baumgartner
12/11/2018
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SeaChange shares slumped more than 21% Tuesday after the multiscreen video software company paired declining Q3 revenues with reduced guidance for full-year 2018 caused mostly by several deal-related delays.

SeaChange International Inc. (Nasdaq: SEAC) revenues of $18.6 million were down versus year-ago revenues of $23.4 million. While those results were in the middle of SeaChange's latest guidance, the company's Q4 revenue expectations to $16 million to $20 million has caused the company to slash full-year guidance to $61 million to $65 million, versus earlier guidance of between $70 million and $75 million. (See SeaChange Revenues Shrink to $18.6M in Q3.)

Per the Seeking Alpha transcript of SeaChange's earnings call on Monday, company CEO Ed Terino attributed the lowered guidance to a combination of things, including delays in "three fairly sizable license deals," along with other deals originally in the Q4 pipeline that will be pushed out to the point that SeaChange won't be able to recognize until next year.

Terino said a "critical transaction" anticipated in Q4 is a license purchase from one of its largest customers, Liberty Global Inc. (Nasdaq: LBTY).

Liberty Global represented about 10% of SeaChange revenues in Q3, versus about 53% a year earlier. Terino said he expects to continue to sell licensed to Liberty Global, but acknowledged that divestitures that Liberty Global has underway (involving Vodafone) "may put a dent in those numbers." (See European Cable Has Reached 'Inflection Point,' Liberty Global CEO Says and Vodafone Strikes €18.4B Deal to Buy Liberty Assets.)

As recent bookings go, Terino touted a "seven-figure" IPTV deal with a new customer -- Total Video in Russia. Total Video will be targeting tier 2/3 cable ops in Russia and other parts of Eastern Europe with SeaChange's video platform. Under that deal, SeaChange is being paid to build and deliver the platform, and Total Video will then go out and try to sell it in to various cable operators that serve a collective 15 million subscribers, Terino said.

He also said SeaChange locked down a similarly sized IPTV platform deal with an unnamed tier-1 North American service provider that also includes multi-year commitments for support and maintenance, and one with an also yet-unnamed deal in Latin America.

On the product front, Terino said SeaChange has plans to introduce a cloud data backoffice built on a micro-services architecture. (See SeaChange Wants to Make Waves.)

— Jeff Baumgartner, Senior Editor, Light Reading

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