Earnings call transcript Q2 2022

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ConferenceCall Participants

Rommel Dionisio - Aegis Capital

Steven Frankel - Colliers

Operator

Good afternoon. And welcome to SeaChange’s Fiscal Second Quarter 2022 Conference Call for the period ended July 31, 2021. My name is Alex, and I will be your operator this afternoon.

company Prinn; Chairman, of and and Chris the Financial Pons; Global from Marketing, Michael Officer, Senior Klimmer. us is Robert Executive Chief Sales Joining Vice President

for SeaChange release, press copy www.seachange.com. of of in its today, the in available a closed is Investors market second quarter the financial After results the the which company’s fiscal a at issued section website

the that note call, of at Before like take in inherent Safe would that today. release. making today’s press uncertainties paragraph end will statements management please I the of we is Harbor This paragraph begin to everyone the the major forward-looking be included risks today’s emphasizes and

As considered are including filings, statements from are cause quarterly and on that indicated, company’s Form current may also management’s XX-Q. a XX-K expectations. factors. are results its and expectations annual be on light the to outlined differ forward-looking uncertainties These and subject actual forward-looking uncertainties on risks materially Form and reports number statements in based SEC Any to of these of risks in report should

call measures from for the provided with non-GAAP GAAP issued contains substitute financial most company’s information is these GAAP. presented earnings measures and not as in financial has that in G. non-GAAP reconciliation in by a the Additionally, a this the SEC financial defined Regulation considered today. comparable compliance directly be of should Accordingly, SeaChange financial or to Non-GAAP certain release as isolation measures measures term

in of replay via and this the is available recorded for be remind will made that everyone would link section available SeaChange’s Investor Relations to call like I website. a being

Robert please the to to call like SeaChange’s proceed. Executive would Pons. Chairman, over I turn Sir, Now

Robert Pons

over. everyone. afternoon, us you our good is company today. The and joining stabilization period for operator, for Thanks, Thank

growth now are a in We mode.

the SeaChange advanced worldwide turnkey by enablement and provide and the results. deep experience all things and ad streaming. technology of to positioned our content on tech, things second SeaChange cable managed all growth with intersection owners capitalize advertising demonstrated explosive assets streaming quarter has and well platform. technology to is services the operators in As streaming a

targeted streaming annual today with streaming counting, expected XX capabilities you and streaming growth customers which When help booming, XXX an to to compounded exceeds over XXX global million. advertising market digital the XXXX, worldwide and billion market advertising Our rate. is services grow XXX highly is total platform year worldwide. impressive this billion addressable by layer on turnkey XX% spending, from The

the of at video As this ad technologies. the industries advanced is massive advertising streaming, streaming transition coupled of technology platforms and that powers with globally, technologies epicenter SeaChange opportunity targeted the broadcast to

capitalize you will three After established QX with and the to of discuss have product before financial streaming detail positioned our on we the through our Mike some company lines will growth closing in exploding Mike. newly tech. ad performance, back I how come the and Q&A. walks Chris then comments

Mike Prinn

Thanks, Bob, everyone. good and afternoon,

X.X we to increase quarter, same company's the and million, of of financial in a marks successful results We was compared increase increase a first Total by total delivered The believe from in a driven Revenue QX year-over-year was fiscal revenue. to transition mode. stabilization slight QX fiscal sequential of to quarter in the our second service compared for and in period last of for of XXXX. year. to an revenue the compared revenue to our significant XXXX fiscal Turning increase the an quarter XX% prior XXXX product quarter the growth growth and increase revenue XX%

markets or X.X increased total international our prior million X.X in in quarter. XX% U.S. the revenue in was of to of XX% X.X compared prior to total revenue Revenue prior XXXX X.X or prior XX% quarter. quarter. X.X fiscal revenue revenue, XX% of of quarter. of QX or for or to million, of XXXX or revenue of total compares XXXX Revenue to which Product million total million, fiscal XXXX for our in total the Service compares in X.X million, market X.X million, fiscal the total fiscal QX X.X million, QX revenue to or for XX% XX% total increased or XX% from compared QX XX% revenue, total XX% which XX% revenue, revenue to or million, of revenue the in was

to total of compared margins our prior gross XX% the million, fiscal at in XX% quarter. for X.X for XXXX margin of revenue, margin or to XX% to the prior gross prior profit compared X.X XX% of quarter. XX% Service gross Product the the was QX second total revenue XX% fiscal million, was from from or Looking quarter XXXX compared was quarter.

million XX% expenses decreased also our at year. prior the operating in fiscal million quarter of Looking X.X They to X% non-GAAP compared the expenses, second of X.X quarter. last for our XXXX quarter the from decreased to second

We months. significant operating are put of with efficiencies tremendous improving the pleased effort the the which over result is direct a into reduction, last XX

operations loss XXXX improvement million, totaled of from fiscal X.X an million to the quarter. compared X.X QX prior GAAP in X.X million, for

or of Non-GAAP loss prior negative GAAP negative XX% for quarter. operations As from was X.X an million, QX operations which $X.XX loss per of in share from fiscal share compared the prior or to the XXXX million, quarter. X.X XX%, quarter totaled a fiscal basic improvement percentage a total compares XXXX loss the in revenue, of second $X.XX loss basic of to for per

X.X negative share $X.X to or XX% totaled XXXX loss income in from of quarter. per million GAAP As the a quarter, the a for net revenue, loss loan. operations non-recurring of basic percentage compares prior prior reflecting to negative fiscal loss PPP total the QX to of X.X the million, $X.XX a which of million, related forgiveness gain was XX% in compared non-GAAP

progress per of Non-GAAP or fully of net diluted share X.X in loss to gain share, we're our see basic totaled our income the prior a to of per top pleased for net both of X.X $X.XX million non-GAAP $X.XX quarter. bottom-line a the a and fiscal compared quarter. the Again, million second QX to loss of XXXX results or

puts the and cash no beyond. position a us million Having and strategy Turning end, Program. finalized cash gives sheet, received the to part as to the in sheet cash and Protection balance we $X.X of and second debt. Payroll at good million second equivalents quarter, we execute quarter XX.X us XX in sheet for In our in received we our debt year the forgiveness strong approximately on balance a and no and loan half balance the had million growth entire of in the

This completes financial summary. my

any detailed release more the refer as analysis a as to which plan results, our our For please financial to Chris? of file today's we well week. in earnings XX-Q,

Chris Klimmer

Mike, and afternoon, you, good Thank everyone.

want that initiatives momentum sales has We as and key ad well. footprint talked product and new a our growth. enhance drive financial Our our portfolio, about just reflects predictable as Mike on extend provider secure streaming marketing tech traction our seeing the we're to video that customers,

video the to XXXX talked we the primary massive markets. our our of two value and proposition capitalize the As on to base fiscal in to customer and about existing needs last a advertising opportunities in are product streaming create and our goals address better call, in

streaming tremendous our launch that new and enable goals for and product made short introduction these successful on have lines progress the key relatively of TV profitable services time, in by three a customers. We highlighted

cable one of product enable Tier-X on first existing specifically video to out our mobile SeaChange's demand turnkey, operators of platform video boxes set the enables customizable the delivery Cox VOD is of of on Verizon, merchandising the all delivery customers delivery box of full globally. The extensible yet cable platforms, the our is solution technologies is market. management designed that an and cable on companies seamless platform TV from customer featured, The that video to like with video provides for platform pay most base devices. linear to services and and TV global powerful and AT&T households and experiences for

curation is platform allows organization's fully the and end ingestion product and directly platform of the streaming enablement and the content entire platform over data operators to to to every native with lifecycle our aspect an StreamVid The new functions StreamVid. to provides streaming operators and on connect during owners audiences. supports second base delivers content well SAAS business enhances as understand the called end business user content user managed monetization. cloud full service. and control their management the of technical The range from complete rich owners and behavior and as The

consumption is offered revenues being market a SAAS true pay grow since under generating recurring StreamVid business as entry model, company. for you based the it removes barriers,

key third integration understand the existing the solution by OTT platform. particular streaming enables the business ad to of This focus as tech powered new revenues our ad well. streaming. components, advertising The we increasing a within importance ad landscape, advertising a advanced advanced put and sources we the of is models SeaChange's with and unified advertising on As tech increase and revenues broadcast ad product generate platform companies for product, protect

across served protect revenues ad linear by linear increasing is OTT, advertising streaming, ad has to higher possible same Once advanced utilizing ad and revenues experience the targeted ensuring subscriber individual subscriber base a to the creatives ensuring experience During move ongoing designed transition platforms. is is across same users SeaChange stable, more the relevant from linear for it ad the the through platform approach the By that to contextualized each subscriber to have CPM the is the as and remain transitioned, and or well. user. revenues

lines technology. our I than software dedicated heritage experienced team and among our software, product The accomplished of video years three more the engineers say of enjoys hardware, in can video the industry. and most rich advertising team behind of confidently a is XX that

been has customers especially both new Our streaming. line and received prospective alike, product well by very existing

in and procedure we iL In Screen have July, Popcornflix. launched fact, product streaming two introduced since the customers we new

subscription film premium library Screen covering which brings worldwide iL TV a fee content consumers from The reality service expats Israel Our the film and news, with to month. partnership and Israeli $XX only for powers shows. is legal and subscription-based a a and largest of Primetime, service,

today, Soul you the partnership to Entertainment for available power app, is web. As Android, may TV, and Apple the announced which the we with Soup on its Chicken Popcornflix seen new have iOS,

advanced films, exclusive series. well sales. as seamless relationships offers of range consumers with with content, and an The access side content, and app to It action, a Popcornflix user ad look advertising adventure, The branded integration entirely TV Popcornflix wide and new our supply as feel sales demand top ad also classic The programming. studio programmatic an enhanced provides quality of crime, feature provides free leverages and advertising improved Popcornflix. platform StreamVid supported sports and including streamlines original service with platforms for for experience.

built-in system's advanced its Now rules, targeting with be able Popcornflix access management. to support own viewership better enjoy business campaign data, ad the will CPM increased smart enriched to with while

StreamVid expand channel in the Popcornflix future. to international markets sponsor into allows Additionally, launch and its footprint

the audiences. which We are streaming excited pushing towards people of as based to the two well around bring The advertising today. the about premium the of services special and boundaries and partnerships, to services of industry as by reflect audience our targeted interests technology in loyal defined content forward the streaming services look adoption to major trends rise subscription-based mainstream precisely new highly streaming of a two We world.

my for prepared the turn over remarks. will remarks. Bob? now closing to concludes his call That I back Bob

Robert Pons

Thanks, Chris.

mention today's to To SeaChange in that to statistic you. over large million portion that is turn XXX for Q&A are you mentioned XX number subscribers. a calibrate platform a BXBXC company. subscribers. call, reaching to the company to might that the I cable we essentially say of point I we A I press earnings want new release. want million have Before

subscribers. touching million technology over is Our XXX

becomes recent growth as our growth. to enablement. BXBXC all and sync as our Our streaming customer recurring subscriber such video about that. on scale customers AVOD through core The is a customers concept wins, enablement revenue platform demand Think come with with The advertising tied in streaming revenues of ours.

opinion, understands beginning the my we of One the the as true will growing and technology, more my the is thing, our the streaming. take technologies of to just value. intersection how I opinion, want market and price. In stock is market market to advertising understand company, our notice of the comment are on value In our

prepared the concludes That remarks.

are the for ready Operator? open to questions. call We

Operator

Thank you.

additional like a Mr. would to like few go management please would take Robert, Before make to Robert Pons ahead. remarks. questions.

Robert Pons

said XXX total of earlier meant market, was I course, thank my the believe billion comments, the in I our referring total parts Yes, and to is when of addressable addressable you market. million my size I XXX of I

Thank can just make So Q&A And wanted with operator. our clarification. now to you. that we begin

Operator

question-and-answer your a session. will Thank you. Instructions] time, be Rommel [Operator Dionisio with At Aegis Our line Please comes with proceed question. we question the Capital. this from conducting first of

Rommel Dionisio

Good my question. afternoon, Thanks taking everyone. for

of is comments, such of the mean, also I quarter. seen quarters? just that any that congratulations, guys. a may to that's just there launch, that sort on so all, – stream. Whether product upcoming you you that This I into first just I revenues just So strong. delve Bob, have I Chris, from your I unusual in you some on in solid quarter it's mean, see one as strong revenue this side? a the the well. cable delivery would really And just heard stress was was I want not quarter highlighted Was I and want think new to recurring

Robert Pons

Yes.

progress we're the I think what is you're seeing making. is,

we're growth we our brand. terms narrative And assets. I anticipate comments, continuing. to saying. my in We've the think our highlight and a into changed said, that's doing marketing I are we're bit quite a stabilizing, in done And we with you're mode. what of As And earlier that

Rommel Dionisio

Maybe That's a Great. phenomenal. financial question. just

at of second we savings saw cost little third terms to still of full quarter realization of left come last wondered, those few know you've Thanks. that You had sort rate expense bit also a and here guys quarters. just side in a of the that progress showed here in the the restructuring of of months well. quarter? on beyond? actions And there in as is over things and Or a a I number I are you lot run

Robert Pons

Mike?

Mike Prinn

you Rommel, is messaged QX for reductions Prinn. operating say we a quarters three, now this for would the X.X over I good four significant so non-GAAP million. that Yes, Yes, we've obviously well cost Mike did expenses chunk were done more continue but for at be X.X you we've caution of everyday look that how that can I behind is efficient just see we're restructuring when million, what to formal optimize. we now and us

part, behind us see seeing most the post for plans but changes, kind most now the may So restructuring now some formal of the you is are quarter you're of that

Rommel Dionisio

Great. Look Well, forward. congratulations again, guys.

Robert Pons

Thank you for your support.

Operator

Instructions] Please with [Operator with Colliers. next your of question. line from comes a proceed Frankel question Our Steven

Steven Frankel

like to the little increase into in decrease the and revenue in a I delve more just backlog.

or business coming together? StreamVid quarter? And being framework saw we the seeing So were some prior those coming these backlog and tied recognized then was of as we what two quarter deals of revenue, in the are out new into

Mike Prinn

Hey, a little Mike. both. Steve, bit It's it's of

a StreamVid but in obviously quarter pulled business little new bit we definitely there's a So this in of backlog.

kind before upon revenue towards I some calls, think in acceptance the launch. of especially year. we of I've to half during our of mentioned be deals recognized we this some recognition that, were back sold quarters, prior There honest, had or the the COVID upon other of criteria

one with offs. well. obviously coupled there So a couple as But were new that's business

Steven Frankel

in – And line, the then your shows StreamVid now where up video in platform

Mike Prinn

release. of in it's tables Yes, the exactly. And page the Yes, press last the you're know product. talking in I about

see think we I from is going framework more just table. of think that about and kind repositioning prior just go kind to we're years, as forward, StreamVid of and of kind we

Steven Frankel

there StreamVid end today? to Okay. clear been to just StreamVid Or between that the deals And the that year? of of now other launched? you there, have live any be the the you've hope customers you and excitement two pipeline around won is win deals has Are

Mike Prinn

Yes.

to we're and really talk be obviously And what going to announced. new press deals. to upon we it's news of terms two put about, out that or continue as deals, the we've in now for releases able share two new we the want think launching I to that win winning publicly then,

Steven Frankel

Is sub-base typically of without number with selling sides sold typically are And minimum the a how you grows. a as them? these are that kind deals

Mike Prinn

Yes. Sure, go ahead.

Robert Pons

the an there's of in There's of to then is to there's you absolutely, there's cost different There do it. Steve. advertising, -- building Yes. a upfront, out those? of course of shares, shares. Chris, add subscription core And want some growth potential

Chris Klimmer

afternoon. Good Yes. Hey, Steven.

Bob create want So what our with, has a customers. customers, goes to with to of criteria back-to-back tried that it business remarks, is we business in back we for meaning earlier with back-to-back to value a therefore we of BXBXC market his our company, And go model our the be model the basically, customers. So success to we said right? also go

guarantee. have do minimum we a So

of there's So And subscription a we're for subscriber it's it's an or components. per when when committed ad variables, on per that, variables, top example, service. [indiscernible] service impression variables,

as And us. two So one, that now again, things an two, to are to that right successful want as go and is the is gives upside market them the with. for sources business Number be. in generates it number it recurring we us revenues case model that want we

Steven Frankel

Okay, great. you. Thank

Operator

At concludes our this Instructions] time, this question-and-answer [Operator session.

If team Pons at for SEAC@gatewayir.com. his taken, now please was over the remarks. Mr. I question contact closing not your call to back will SeaChange's turn IR

Robert Pons

that it'll new you understand operator, brand our seachange.com. are clear, the give what a those seconds, One, we've to you of our check couple please And we're of of different and Thank easy it'll new investors explanation been website, you, XX in new business very video. that in to value places. showing things. you our video our business. of XX out in It's for company at a second a It's give

customers very generate much revenues. our how future subscribers and growth helping Thank that's we looking from statistics start of to call. stay it press I all and both our work to you both some safe. we're the And well. And cultivate and to have, be desk if website at will, of you excited And new numbers going the today's on take to new the a lastly, encourage about that would in and the you so mentioned will that think number The slide at I of significant. to look together understand posted are release you also as were we're why presentation in the

Operator

Thank joining conference for you for SeaChange's us call. today

your disconnect may you. lines. Thank You

SeaChange International (SEAC) 14 Sep 212022 Q2 Earnings call transcript