SEAC - Earnings call transcript Q2 2020 | SeaChange International, Inc.

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Operator

Greetings, and welcome to the SeaChange Corporation Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode.

If you have not already done so, please close all other programs on your computer. [Operator Instructions]

It is now my pleasure to introduce, Mary Conway, Investor Relations. you. Thank

begin. may You

Mary Conway

the Good released and second final ended today fiscal Diego. joining quarter you us. XXXX after XXXX XX, SeaChange results July closed. afternoon, you, thank everyone for of market Thank for the

the If can release, Section our access copy investors.seachange.com. at IR you Web the press site you on a would of like of it

Chief call Chief With Chief Executive Aloni, being me Chair; Financial and will on Executive Officer; Yossi be on This Web today's section the Bonney, call Technical Marek and webcast Investor Kielczewski, Peter is of are Faubert, Officer. site. Mark archived Officer; our Relations

XX, that I'd Before subject of number results are and differ include begins, we're filed statements, annual on risks Form to actual XX-K about including uncertainties those should you discuss factors. light outlined risks of cause in that like April Any from These Mark was our expectations materially SEC filings, that forward-looking the on be information are to considered remind report based which XXXX. to a may which today in are forward-looking may statement to current expectations. the our on

contains the adjusted defined or certain SEC. presentation financial as measures this Additionally, non-GAAP by

comparable in these of to We a have press provided reconciliation the to release. the GAAP most the measures attached directly measures tables

that, with to I'd And like Mark? to over turn call Mark. the

Mark Bonney

thank and continuing your for Good interest all Mary. you SeaChange. you, afternoon Thank in

Yossi very release, been over forward. earnings effective months, Yossi. Commercial people Mary the Officer the confident President have the and announced also drive impressed As have Chief he details Officer, our SeaChange knowledge seen Yossi named the and press Yossi passion I has I we Board capability been and industry, and market. are demonstrated Congratulations, and Aloni, today. various with offerings both of five technical you've our of in leadership, in with our depth the I excellent worked side has to indicated that the past and previously Chief and and closely the of the that Executive technology his has

Chad Very is Sales, our Yossi, the well American North positioned Hassler, for Chad to sales years, to replaced forward. Commercial to Officer. Chief organization having drive growth objectives previously our Yossi worked XX Head well as together of known has going achieve

to turning our was We engines. second quarter SeaChange. important as period as strengthened for with Analytics Backoffice second known also Now, well our the our offering Orchestrator Framework our the and results, of quarter the Adrenalin, achievements addition generation as of addition a of solution, the seventh of

was was quarter by second performance financial compared year $XX.X very to Our as from was on revenue sequentially. revenue. the that year-over-year of last quarter driven increase totaled quarter, entirely delivery million, margins achieved And growth solution. a both The the improved million from end-to-end $X.X from greater prior Framework same the year and XX% than increase earlier. we impressive. the an our Gross Framework video dramatic gross Revenues margins

that until occurred we allowed $X to for force wasn't profitability note were of sales planned remarkably in our year May. Framework closed to transactions non-GAAP achieved coupled other total and important ahead launched effective margins to April, in time six these It's in the staff that Framework reduction and These us short the a operating the solution considering fully realignment We seven. place achieve quarter, deals cost our timing. a million in efforts bringing profit, with the

from of $X over ended backlog the million, or Our quarter quarter. XX% first the million $XX our increase end an at of

to deals. That our continued go cash cash balance balance at financial Framework our believe all payment a continue of business of on the metric and this burn we to primary grow that minutes. results deals on financial quarter of only now, in in burn that to was in stabilized cash will million greater cash due legacy driver the end. as and those disappointing few resulted has go that we quarter details was The with was the the will cleanup $XX.X forward. late a terms from the the of several Peter along the course collections into The

now With Aloni. call that introduction, new I Yossi? will over turn to our the CEO, Yossi

Yossi Aloni

Mark. you, Thank

for as over am I employees, look First, past Board, thank I'd forward grateful five the team. his and months, work I the continuing to Mark Chairman of to trust and in in his like Mark position. our Board their with my Executive customers, Chair and me, SeaChange, for and to to investors mentorship

new quarter, past points demonstrated proof revenues. initial the bookings, we Over wins, have and with customer

to believe as days, Earlier agreement SeaChange along wins deliver with days end-to-end finalizing we this as in validate these strategy. these additional Framework solution solution, to ability customer within are well April, our our XX We we encompass an the the all launched year, which us retention, strategy our our to improve achieve OpEx to the products. is corporate on to Framework to goal customers the and our enabling their execute previously revenues their standalone customers, savings. The customer by their increase to increase base, on allow customer of

savings content the Higher unique engagement. realized the value-based The are and customers we customer top the enabled the acquire intuitive is dynamic by application. savings user where of using enabled interface outstanding set operation. and retention interface, by user the engagement, device, Framework and customers [indiscernible] box increase targeted via the achieved is based top Framework look, for our pricing which engagement and via is increase video on OpEx predictive over speed its driven The user with ability to feel, by OpEx transactions. both announced using revenue and that predictive and more for viewer discovery, an experience to is analytics The analytics,

a large old a me few delivery a a with the standalone The sold was with solution. to organization of cable were standalone generate a strategy custom the take a often invested engine custom to to built components like components it customer's car his delivery that new for that used in several revenues go-to-market later engineering vendors and customer a customization. past Let compare approach SeaChange other sense, integrated car. and component minutes software, the own The over from component our a hardware, few years. mainly from all operators needed components engagements to and sell selling In associated acquiring video professional services and was platform. created

with we little sell the ours. Today, new both we and improve our which go-to-market, car the cost customization structure customer's with

meet completed the our wins. and needed us During of validated targets QX, and yearly to number we revenue enable terms in to pipeline of

of to provides both win revenues addition the decent solid In in number reported customer in QX meeting a year. our customer for a for QX, this confidence we QX. are This goals and engagements finalizing us wins and

Our half expectations. of the focus year in during the is our first with line

seven teams, polish customer and R&D align As initiated a QX, reminder, onboarded organization, Framework several customer engagement. the during engineering offering, we

days, In within recognized next engagement to QX, we engagement and for from the revenues deliver months, delivered XX finalized XX the the initiated customers. some needed Framework projects of this began initial

expect Framework the that year forecast We the the increase will of in annual April. with continue back-half in we line transactions in to provided

We April. the are will revenue in we guidance shared annual confident deliver that we

will to call I turn over that, Marek. Marek? With the

Marek Kielczewski

have XX Framework of days. in agreement delivered past delivery end-to-end This which engineering Good Typical an and in uptake time. Solution deployments less a rapid production from to Framework quarter teams afternoon. seen our than integration is has record-breaking now

to manage customers execute and cloud, in is to instance use All our the deployment way services prior At on and did the Thanks amount tooling. production which now significantly hosted of organization we better take today end-to-end solutions time, automation, improving in of grade onboarding significantly time time engineering than the new has one than quarters. hour. reduced all, less projects. tenant deploy takes the less needed our Our it deployment in the efficiency same managed infrastructure and team of

availability Backoffice, the leveraging and insights our allow and better by Framework promotional revenue infrastructure their delivery as of campaigns, Version into even addition, scaling using teams The capabilities modern future. deploy their significant well a deployment completed this product as the versatile analytics enable elastic migration enhance This of customers innovations during ability Backoffice of rapidly the that'll churn. X our In customers orchestration as with quarter layer. Adrenalin. the on-prem We for known the will element offer more enhanced announced improve native Solutions R&D to will Framework well of of hybrid analytics and path previous two performance of cloud our also versions providing as to ability tackle and our risk-free component flexibility as to in

which redesigned apps, past of the experience. client a more significantly modern and also next now user our quarter, During offer the we released generation much

personalize as customer's apps different product our and system, grow our to these benefits cloud app a integration in the top Backoffice change content, expected X XX of of the over from marketing content that the benefit with future. Version as the supports easily tight consumers than experiences promotional platforms client to subscribers. is their today, branding Importantly, number the which enables for management and teams well more

be product will is now showcasing other a the opposed simplifying of and making Amsterdam also starting Netherlands to among R&D in sustaining well these of overlap significant as lines. to effort our IBC apps at September. innovation product second new great as the in the We improving We're as client Show in the progress the week and roadmap by Thanks reducing applied engineering. product organization of R&D efforts, adjacent code majority architecture our deliveries, to efficiency

part the future of implement new Framework. as trend innovation this in We the expect technology as to we continue

that, me call to let Peter. With turn over the

Peter Faubert

support. the with $XX.X the Thanks, of maintenance of of total ended and Marek. fiscal results. million. everyone. a reviewing entered quarter book backlog, quarter $XX.X quarter our during by and Good second afternoon, backlog $XX,XXX,XXX in quarter We second the new with I'll start excluding million business XXXX We

$XX in this a of fiscal in valued the that revenue at total than far $XX million June. Framework seven includes million. we value told with you year, more This closed more we've about total deals deals five than So

close that for revenue and will over multiple grow engagements we we additional our to from second half will backlog framework this recurring year. become the backlog the Given continue years arrangements And as contributing of our expect multiple in revenue predictable. fiscal Framework more products

increase million, quarter year the revenue, XX% was fiscal million revenue $X.X in million quarter quarter was year. of second million was Total by a of in revenue at driven engagements Revenue the the or total in were significantly during the second second $XX.X of higher the quarter product in Total ago, delivered fiscal revenue. XX% to the that total to compared prior Framework XXXX $XX.X quarter. XX% or of compared $XX

or in customers fiscal total was year. the services or of by second primarily of XX% to million to delivered to revenue software Total arrangements. driven the $X.X second Framework million, total XX% last $XX.X revenue of Product in licenses was quarter related compared quarter revenue, revenue

to customers see related professional continue clients legacy both the We from in revenue support to and products. service

some legacy arrangements. to of transitions quarter, This successful customers new we seen have Framework

we addition, to in organization our as our to services In is fourth completed our legacy complete have customer service projects. in Of $X to organization the This professional the engineering we and quarter, professional was expected continued year transition prior total and these transition $X.X professional $X revenue quarter. the respectively. support $X.X services maintenance million million quarter in million, be and million, compared to services was

international to than revenue, compared this from or Revenue million customer, one customers the the this fiscal one total more XX% customer of a second revenue quarter year in of second customers of total year than total in in year, XX% quarter. comprised comprised XX% Framework $X.X $X.X the represented Two prior million, revenue same of of last quarter being more quarter of the our in XX%. whereas year,

the gross same year quarter to in in driven prior product Second margin XXXX quarter in XX% gross by compared this increase was compared the the Product quarter in second XX% XX% prior fiscal in last the margin to compared to quarter the was quarter, profit year. year. the XX% fiscal revenue

resulting Service have gross point, year engagements XX% this service professional in compared this At the fixed overall are in in the reducing. service that XX% the year prior process primarily decline quarter the from substantially second of revenue mentioned I've margin earlier, as are with that complete. was to in legacy quarter, I costs we

process the to expected completed are both reducing and this These in year. fixed actions professional costs a in support fiscal functions. of the end As are result, we services of by be

$XX related year. again, under approximately the Non-GAAP expenses almost were $XX quarterly million targeted prior quarter compared in in quarter XXXX the the to $XX operating the second well fiscal elimination organization. rate run million and been managing. of Once of of reflects have quarterly same of which million of million, internal to continued the $XX we decline third-party savings -- non-essential initiatives The the reduction to costs the cost throughout costs

more efficient, of we first-half progress enabled us to excellent profitability the to achieve in our than planned. this operating and front fact, earlier the In on be year had non-GAAP

year, complete resources arrangements. have been professional During caring the and to we fiscal support services legacy first-half this of

costs these completed. legacy We to related are they continue reduce projects will to once

per quarter, fiscal the share diluted second loss basis, in last per breakeven posted income This a per basic share in fully translates For of loss year. $X.XX of per operating on a basic $X.XX which compares share a we quarter of results net to $X.XX operating non-GAAP share. to the of non-GAAP

Turning deals the as the during accounts changes used result a of quarter of cash Primarily funds at and billings fiscal cash to period. decreased the of we $X.X ended $XX.X of and Framework in no $XX.X equivalents The fiscal the million. compared second with reflects for to result timing sheet, second quarter of approximately of XXXX. revenue debt our unbilled operations and executed balance approximately of million to XXXX million and the end cash receivable related

In cash to approved Board of stock XXXX. $XXX,XXX the common by also repurchase year, $XXX,XXX our in the approximately second Directors shares quarter stock used repurchase we early of of June under of this plan,

Also, in for cash as fiscal the we Xstream. acquisition quarter year, this of disclosed first in $X.X we approximately the used million of previously

January agreements of be of terms million primarily last having and Deferred in result second as revenue by quarter. the XXXX warranty better and balance million. $X.X maintenance renewal of recognized the support from post million cash visibility the quarter our and to year's revised million into driven $XX $X.X of we a during respectively, Framework year-end XX, decreased timing $XX.X have million payment revenue to As expectations of $XX

XXX Including second Sales at year, Day Day quarter excluding XX fiscal days Outstanding year. this unbilled of this last outstanding to of also the were days quarter quarter second improvement sales of significant a end receivables the compared to the of year. fiscal days improvement the fiscal compared an unbilled in in days quarter totaled second XX year, XX of second last receivables the in

$XX.X of year. quarter were The fiscal terms Framework million second $X.X unbilled is year, Our result payment timing fiscal second to compared receivables deals. of several of deals of on from this last our the due collections quarter to in million in those increase the of the

increased We're backlog pleased revenue very our customer with the to product wins and quarter. leading second in

year. the confidence go-to-market strategy and As Yossi that return leading transactions we continue, momentum of provides this this The the mentioned, to positive customers an growth expect Framework second-half to we with new in existing trend increase with to will Framework in fiscal in us with revenue fiscal XXXX.

basis that We non-GAAP to on year. fiscal sustain we are today expect capital reiterating operating profitability cash reach positive the this and in flow of a second-half

let back floor you. that, the to me Mark. hand With Thank

Mark Bonney

you, Thank Peter.

upfront, I now Yossi our As CEO. mentioned is

been and turn congratulations has executed, and to Our floor The taking to back will transition full Yossi. I yours. questions. that, again. prior faith plan board closing With Yossi, is well Yossi has call in the comments for confidence your the

Yossi Aloni

six Thank ago. months you, than Mark. a company now is was different it SeaChange

success the with along strategy and tactics vision in new and have place. We measures of

talented in Earlier platform his in the has Over engineering QX. best new and developed in products, team year, integrated market. the year, and team SeaChange Marek to products standalone in enabling in sales April. team, launch at time, our the the technology turn, record enabled Marek, CTO This the in past various by led the a this initiate NAB immediate deliver engagement Framework

our gain must diving we recognize To-date results. closing, focused the to remain confidence demonstrating In that goals by targets. we investment ability and our on meet delivering community we

questions. me Operator? let call to operator the and the that, the over begin With turn

Operator

first Our Frankel Thank question. Dougherty. Steven with you, sir. your [Operator comes question state from Instructions] Please

Steven Frankel

your congratulations elevation. afternoon and Good on Yossi

many off us might look can and seven SeaChange you [ph] we to traditional from So, deals, software for Framework opportunities are those these were of the non-traditional even Framework how SeaChange? take old terms and and in on of that kind versus maybe characterize customers finer customers of kind new greenfield of greenfield of at one, transitioning of if little the opportunities in a

Yossi Aloni

Thanks, Steven.

that of type there to it's to use and more Obviously to SeaChange will these So, have used do component, soon weekly likely three of three existing change. there -- types we and continue customers our for customers are doing will customers. now are wins, seven these a in

have second new of we customers, The and these those. type are a of customer, few

Some be them some traditional. traditional; call of them bit of may what less are you a

The used trust and product we in type is third that And customers to coming that want shows the of customers you technology. with SeaChange believe, will, in this, work now and I home. if they're our past, back

Steven Frankel

third back, category, what be you're that companies cable another coming referring solutions now that that So, that are in to? that went is would to

Yossi Aloni

SeaChange avoid higher to operators. So, used naming but cable tiers, many to to used customers, mainly of the specific In with subscribers. your prefer large cases sell we with cable operators past they to number in sell permission, to

maybe home, of back coming will. you So are those if some

Steven Frankel

three-years look this rev Okay. tell be in a that will me, recognized you rec -- value, quarter the and the what's million what's terms pipeline forward, could just of of remind and that in in so it like deal or that's you and on a basis quarterly $XX going so those in And I What's the larger like look typical of are a you're what maybe you agreements, framework terms to. referring the forgot? these deal us, tail look size, so do in like

Yossi Aloni

So, Framework are the all are we QX we most of for that the days these QX. that have agreements agreements finalizing including today five-years and

some less agreements years. see will than for we that expect five We

recognition, revenue you'll Peter, it. take value, deal of terms In

XX deal XX. of In a value, number, was which to revenue terms so we provided

number the expected also year. provided this wins to We see we that of

an between, XX, in of So is probably XX up deal I'm random you'll there use XX just number value. course and if and is over so significant wins, value even picking average a XX numbers,

are existing larger, of some operators. type are are them new operators, of Some some operators operators

Peter Faubert

of And we've we've to to XX% product then, XX% portion Steve, range. deals recognition, seven the in portion now seen allocation is of evaluated deal the of generally that delivered software the terms this revenue in we've value what that license the that quarter, these the arrangements of

tail So in the that period. the to gets XX% the XX% five ratably of the recognized for would leave that over remaining arrangement years

Steven Frankel

then, that's the XX is do now what's XX the Okay, deals coverage of XX to end how big year, deals? And XX them pipeline, the those let's your these, great, and between call helpful. to very on to

Yossi Aloni

very in shape. are We decent

targets. We our expect meet to

targets very we are are with the are advanced finalize of we meeting stage most engagement. We all very the of engaging to year, by them need end the meaning confident that target, we in our the in with of a

Steven Frankel

Okay. And a think then that? $XX is you that in you'll the so can you OpEx, run lower for you Peter, the million quarter than lower run or about of you in a think hinted release 'XX rate lower achieve

Peter Faubert

think continue going this Yes. we're half No, fiscal to reduce I year. the in to of OpEx second

fiscal exiting So, will expectation OpEx be than that the XXXX are currently. at we be lower would run a rate

Steven Frankel

great. Okay, that's will on if else anything see I my I list. have

come somebody let to the question you. I think if I'll come I'll -- I'll back and that's else for back it now. ask

Peter Faubert

Thank you.

Operator

Jaeson with next Lake comes Partners. question Schmidt Street Our from your Please state question.

Jaeson Schmidt

Hey, for guys, taking questions. my thanks

a that? Just me, be needs complete, scrubbing from still to there's if the tail is now that some clarify to couple want just scrubbed the fully backlog from or of that

Peter Faubert

and prior year to and through legacy service of completed we've of continue still portion is into That support discussed this the of beyond. for will point. declining some million So, is but business. calls, that have quarter-over-quarter of at probably maintenance the backlog the related $X this and the professional end XXXX revenue time, on period largely We as

Jaeson Schmidt

to that for Okay. expect should sales And headcount still adding then to team, grow? still the the we you are

Yossi Aloni

OpEx probably for year, believe wise no. year support next headcount to and Probably that targets this are okay. our we and I wise

R&D, will going but to some You in see increase it's be minor. the

Jaeson Schmidt

it from lot, that's me. Okay, a Thanks guys.

Yossi Aloni

Thank you.

Peter Faubert

Thank you.

Operator

be to closing appears questions for you. at Thank you. I to no There this Aloni turn it back remarks. time. further Thank will Yossi

Yossi Aloni

we forward at in in your Conference the many seeing the the of Gateway Also Amsterdam the Thank again interest SeaChange. mid-September, to IBC demonstrating Francisco, Minneapolis. Thank look Hall Dougherty look you. Conference in week in all. be We and you Conference for forward will We next speaking San you in Solution X. all to soon. Framework Thank you at

Operator

conference. great today's disconnect. parties Thank evening. you. may a This Have concludes All

SeaChange International (SEAC) 29 Aug 192020 Q2 Earnings call transcript