- Earnings call transcript Q3 2023

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Operator

Good afternoon and welcome to SeaChange's Fiscal Third Quarter 2023 Conference Call for the period ended October 31, 2022. My name is Shamali and I'll be your operator this afternoon.

Joining us from the company is Chairman and Chief Executive Officer, Peter D. Aquino; President, Chris Klimmer; and Chief Financial Officer, Kathleen Mosher. After the market closed today, SeaChange issued its financial results for the fiscal third quarter in a press release, a copy of which is available in the Investors section of the company's website at www.seachange.com.

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

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

non-GAAP GAAP financial by available provided SeaChange for is Relations that information earnings measures be Non-GAAP everyone for of recorded non-GAAP available measures presented in Regulation be G. substitute compliance Additionally, as the Accordingly, of measures and from with this defined financial has will this should not these would isolation a financial a I in via call in directly financial Investor to that like and comparable most reconciliation issued today. company's is considered release made contains the in term being website. SEC to a call or certain the replay link the measures section remind SeaChange's GAAP.

SeaChange’s Executive Chairman Now, I’d Peter Chief to Aquino. turn and proceed. over to Sir, like call the D. Officer, please

Peter Aquino

call. and Chairman CEO Good Thank of everyone. Aquino, SeaChange afternoon, International quarter to third you, welcome and This Peter is our operator.

nearly was XX% strong, all revenues and reflected and and SaaS we we now quarter. generation to incremental sequentially. cylinders. continues another in no positive up software growth platform XX% Our momentum Revenue now are balance continues And the EBITDA sheet. fast and balance debt cash now and producing are of to hitting taking quarter our with $XX strengthen hold Profitability record new million in as cash year-over-year our channel software increased on and very products growth our this

towards providing Hisense systems project that such and streaming clearly services quarter VIDAA build we in to the smart transition the Our with could we momentum support our announced TV would their is customers last operating as software on.

is into financial resulting this translating of improved growth. for in SeaChange All now performance revenue double-digit

to leverage to services continue for expertise We embedded of video power our all tech in ad and our customers. Over-the-Top

rich to services but globe. in only history the MSOs, increasingly with not or us by Streaming the of and North wireline supporting networks, EMEA. over IP-based upsell broadband Our Europe our around in South U.S., and that SeaChange of and content content being telcos customers allows owners America, ride many advanced powered is wireless

international our Warsaw, company engineers and proud as of with so traditional We VOD our depending all world, of the insertion. employees in are world. our large in diligently deployments the very while of software truly we're the office in the out are customers of XXX-plus our their an working that there, of software enable bulk we support team Poland well Many of around to move of video us on industry to the streaming hose seamlessly their our as

for we produces everything as This of into Our flow baseline connected same future. expert core reinvest that our team great embedded cash is streaming business devices.

growth the of products. impact composition quarter of our is example revenue great a towards This shift

software content for our development example, towards specifically, stream this over quarter. new XX% sales contributed accounting value mix, VID owners For of sales and VIDAA new to high for

to as these business a revenues, sell in but SaaS to multiples growth continue great to is more efforts products. well, not expected terms streaming recurring of products go-to-market our software be and high nature value managing are model. tend only are We in which for

cash rightsizing is flow our SeaChange's we've do consistent addition, exactly and profile been better. fueling striving the growth, while could and better and for even progress structure we this been revenue In cost that has

job growth opportunistic to to effort be organic continues Simultaneously, scale. ways to profitable promote be one. number we continue gain for to Our look to

strategic values commercial explore Market delivers environment a strategic ideas, much organic opportunities capital discuss the without of most transforming to as in best in have many we continue In is this SeaChange in a our our favor this keep difficult what as as space. and well execute will markets. players SeaChange company along sell as to news in And maximize when and as is profile aim disruption. platform with our M&A aim improved very be changed at the and time and direction. strength, would prepared timing We alternatives we position but us and for when the to for most good current support in video SeaChange strong transact The this to relevant capture to large right liquidity time to meantime, the arises. TAM opportunity a opportunities moving allows program agree, the that possible we with a to tailwinds to and for

our call to let with Chris? over pass So me take President, our a Klimmer that, operations. deeper Chris to the dive into

Chris Klimmer

our to and afternoon, us our business Thanks more existing for top a line sustainable and profitability, while everyone. new Thank for quarter good our customers. strong of today. SeaChange, as value continue joining increased another we yet to to and delivering Pete, QX you, was level grow transition

During around continued to our strategic three centered on plan main QX, we execute pillars. growth

relationships with operator First, longstanding multiple in base renewing existing and resulted customers, TV support renewals several long-term our system upgrade bookings. of long-term our strengthening has which and

our last of in end-user to strategic product new customers and returns across can maximize help have third, their recurring while increasing spend our a and SaaS-based all which call a our accomplishments, streaming engagement. that channels, I our in TV and plan, and increasing highlighting. numerous couple Since Second, revenue to stickiness high-margin with baseline services with on also executed and line extended September portfolio minutes we growth and deals, want creating

Mexico content maximizing enablement platform, monetization we selected streaming user include, Mexico's with comprehensive on by key increasing believe with last We we three packages service have this As acquiring streaming as of technology subscription to new simplifying retaining advertising, deal SeaChange Sports support StreamVid. and week, best to Sports targeted Fox business all quality service announced as their existing won we and device major our by the next-generation the well user experience which Fox was flexible as highest improving customers engagement discovery. objectives, platforms, with content and power

growth. cloud-based, are you streaming and the Over-the-Top services StreamVid our of ability personalized is platform OTT to highly those user For to handle provides or content scalable a that to and enablement streaming deliver unique, newer company, owners rapid

supports sports, Mexico the Sports as a agreement of their validation the It only but revenues. viewership strategy we higher cable to SeaChange therefore World unique FIFA base our serves and the further like growing This and also the StreamVid, recently support the in engagement Our Cup subscription streaming expanded growing help and ad a margin SeaChange's growing with for not in is Ecuador need Software-as-a-Service their provider agreement Sticking new Sports capabilities Mexico Grupo Qatar. increasing from TeleCable, Fox of event in services topic revenues. leading our recurring where of partnership will the of with in with benefit FOX's with market. platform Fox success of

our Grupo interface. load an ability and engaging technology user with to has support combines Our subscriber to enable enable cable concurrent proven cloud with experience sports flexible large to in our architected TV increases

ad-supported Lastly, VIDAA, dedicated an systems we provider TV major for their leading and them have the of or connected streaming development streaming in a to project services. completed own phase help for free TVs FaaS operating out ongoing build

streaming SeaChange-based TVs with As viewers experience monetization major ad launch a of SeaChange's targeted on across options phase, powered insertions millions providing service result completing of can for the insertion VIDAA service world, a this premium and now ad channels. across the the FaaS connected TV outstanding VIDAA for connected

QX We no expect to the as a impact of launched revenue QX. use to than soon service streaming as with potential be SeaChange-based VIDAA later

ahead at on. catalysts to we major focused outlook looking future for out two organic point I'd are Now and growth SeaChange. like growth opportunities the

in TV The first growth catalyst is connected the markets.

especially technology can on content connected realize the this screen. devices like consumer there and demand that shift seen we've vendors eyeballs to continue help in paradigm recent large owners towards growing As trends, to for is SeaChange streaming believe international shift, opportunities. connected as make content longstanding their an ideal us well their partner with growing players. monetization of reference and Tier-X relationship footprint operators as many many our for our with We these strategies owners, cases In optimize including positive

advertising. in The second mass catalyst

new ad-based for our begin industry. product customer models, by this from In and addition growth consumer new growth existing That consumers over the also share to base Kathy? help our alike to that market portfolio to operators build we sector our grow are and technology CFO, extending consumer cover I'll and ad changes streams, prepared market the with to unique my existing incremental to the adopt to concludes Mosher free driven in this models our we winning to Kathy TVs, call protect business believe capitalize sector, increase share in and owners on streaming business seen connected extremely subscription-based financials. preferences. of well by positioned trend now revenue that turn our of By can content remarks. we've ad-supported We a away content. shifting service and to our shift logos in towards

Kathleen Mosher

good everyone. Thanks, Chris, and afternoon,

of XXXX in licenses XXXX was fiscal services XX% to in which XX% second $X.X or XX% the XXXX, our to to total XX% in was increased market of revenue, million total revenue, or increases decrease XX% QX quarter Product revenue an for XX% of from total XXXX the The $X.X service our $X.X of million due was of total $X.X million quarter. prior international XXXX from increase XX% by of million Service to the increased for fiscal revenue, revenue, of acceptance XXXX by for for financial the QX fiscal XX% revenue QX or results revenue. increase total primarily revenue. product compared or XXXX. QX million of to revenue $X driven the completed Revenue $X.X to of fiscal $X.X Turning in $X.X in in million revenue revenue in work to the the professional revenue in or in prior total service million by XX% primarily to fiscal prior prior million U.S. fiscal due Total quarter. multiple total driven QX was $X.X markets fiscal compares which The to third compares in or XX% $X.X total compared of in quarter, XX% compared of our in prior the revenue for or quarter. decreased Revenue to or revenue customers. to quarter. revenue million million quarter decrease revenue

XX% or revenue million our gross to prior XX%, total quarter margins, XX% of fiscal QX fiscal at XXXX $X.X quarter. of Looking for for the in or margin gross total million revenue, profit the compared was was third to margin. typically prior $X.X Product the from several third-party margin in XXXX down a compared average customers to lower a increase the product due quarter significant goods of to the brought that amount and for XX% of carry

offset gross XX%, to was from of quarter. this margins service prior compared by However, the strong XX%

non-GAAP million, quarter for recorded respectively. compared expenses had our $X.X the $X at to the quarters on fiscal loss the expenses, in goodwill loss on quarter. million increased loss $X.X Note, were million, sheet. XXXX from third prior second at noncash million Looking of $X.X totaled prior and we no in $X.X XXXX balance the goodwill impairment longer million, any recorded during operations our we million $X.X of Note GAAP for end, that a from quarter and operating an quarter. a fiscal QX third

from compared diluted improvement quarter QX XXXX share $XX,XXX fully the per compares breakeven of for diluted As or a for to fiscal percentage positive per and of of second XX%, XX% fiscal negative prior which in loss quarter. income. income or the quarter negative fully our from $XXX,XXX XXXX third GAAP in totaled operations breakeven Non-GAAP the was total revenue, quarter share, operations consecutive to prior non-GAAP an

improvement less to QX percentage XXXX a non-GAAP income million operations a prior or Non-GAAP for prior of compared fiscal net of $X.X per or revenue, from fully for a loss to totaled to This share. income the per the net a As an X% in basic $X.XX loss of breakeven share net was loss million quarter. prior compared per $X.XX $XXX,XXX income basic totaled in than diluted XXXX $X.X GAAP a QX quarter. net loss share was or the diluted total per share, compared of or fiscal in fully breakeven of X%, quarter. $XX,XXX non-GAAP

sheet. cash $XX.X end equivalents, compared million At at to quarter. an balance our the of quarter end, is cash and Turning we to in prior the million had improvement, $XX.X which

our to completes This no debt summary. have on continue my We sheet. balance financial

analysis For release, to our the as we to by earnings Relations of presubmitted detailed which call to financial Investor week. a over from moderate more refer our for today's Grampp now the questions. plan Jeff results, turn the will to as please the of file session end well question-and-answer XX-Q, Gateway I

Jeff Grampp

Thank SeaChange's Investor Grampp Gateway read of Group ahead Relations at the firm we received you, I Kathy. This of top Jeff questions now is from will that this call. advisors. out our investors

to the caps, price of an what has actions for level stock time, with with company this is many question NASDAQ? micro extended at first like period taken the respect The much

Peter Aquino

Jeff. Thanks,

the as SeaChange have be NASDAQ reflect that buyer open I year discuss strong I First matches group assets NASDAQ's am a the Markets will personally stock effect to our share the believe of listed this this the believer trading practical of financial investment. listing, on And attractive and today. of no the believe I've results Capital on operating But our an been I real the specific filed is peer that or X December really doesn't of here better to that a application in the we the on all, stock. tier and and market price an we company

of lister to will despite caps six doing what we up month meet exactly this price company However, our today requirements. the with market a This are execution lot speak. a micro stock conditions to provide is as extension NASDAQ broader through get

as as updates So to keep necessary provide . we'll time everybody regular progresses, informed.

Jeff Grampp

next Thank most question sales The be looking can products the Pete. Chris, lumpy? you somewhat services meaningful contributors for you, is understanding which be do that for SeaChange expect or revenue process ahead, to the

Chris Klimmer

this Thank you question. for

alike successful diversified have and that our that steady our product all and revenue all products think five services top that our and generate our for SaaS the true the core revenue we revenues quarter-over-quarter six for posted growth, we been quarters, services across So, or business have new we shows our to I way This that key structure. over line operator business first is past lines performance where us. the have streams,

of streaming I viewers and a terms that our to In enablement platform products SeaChange, very that offers start are excited about of here StreamVid, multitude these content. comprehensive would we attract options at with monetize

and where market to exciting ad-supported we support is and TV Another free streaming content insertion. us can capabilities owners or platform operators, FaaS for TV monetization ad providers provide streaming services through

not of deliver innovation to should is delivers forget center ability across in our Tier-X expand still our drive we longstanding for and to Lastly, of value us. strong for revenues This lines build margins telcos. and Poland. our market our about us Essential engineering product for excellence and all with relationships

expansion that have accelerate software our the of You us may engineers to our more tech help portfolio. video roadmap full-time remember realize we that in-house to innovation along XXX and than product

products personalize you. their we and will customers recently provisional to to experience on and filed the our viewing just for enable For patent measure two applications further that engagements. stimulate example, Thank have platforms

Jeff Grampp

The received Thank last for How the to revenue is you, and think we achieve Kathy. ability should Chris. about investors positive grow company's EBITDA? question

Kathleen Mosher

Jeff. Thanks,

during breakeven efficient performance and remained while over have been our Further, up two revenue while do about expect revenue not We outlook. top million, we've have results line the with of growth ability of for us the to encouraged relatively stable our operational that year EBITDA feel prior allowing quarters. optimistic costs to this remain our more near profile We about for medium decreased with and growth, positive non-GAAP strong XX% better over our and prior our $XX.X over year-to-date materially change and costs been generate has operating revenue EBITDA with has our encouraged consecutive term generated million timeframe, XX% capabilities cost period, period. future year $XX.X the good therefore or an

Jeff Grampp

completes Thank Kathy. continue now Q&A the will to call turn the session This to session. listeners. Q&A for the I you, operator today's pre-submitted the

Operator

of with our Capital. from And Chokshi comes question. proceed first Please line with Northland your Instructions] the Nehal question [Operator

Nehal Chokshi

flow to a increase well? Yes. strong about free content of Congratulations the the FOX Sports that the cash you replicate sequential And there. as the talked for to deal you testament solid generation is of on other discuss tantalizing towards moving of opportunity evolution subscription results, the advertising. Fox, and that Mexico that And deal? Can potential properties across

Chris Klimmer

you, Thank Neal.

Let me take question. this

based deal on strong evolution of sales the the effort very essentially, is in a region. the So

platform both shows our They allows but a ability to capability. that market to also streaming use and the Tier-X the services our I how platform help You proposition - but is technology a in insertion entail models it's may that also consumers sales are reach high-tech monetization owners a the that ad models, premium to to also a be that and and go across be content And content model, content across Mexico have Fox focus selling think model. go business across testament our the only premium with teams vendor good of Fox have direct their content possible and to of with companies, the also platforms not to the example subscribers know locally to ability in will full streaming. subscription is to all America platform monetization great monetized directly that to and across the that help especially here, to Latin our is territories. eventually, example media flexibility Sports the hopefully in we good

Nehal Chokshi

say overall would is team? star team the Latin your that American So sales you your of

Peter Aquino

Latin shown that the where more and our strong and state course, that good I need now a quarters. team of the results in perfect America direct-to-consumer is in very is in We over a there good a be the America sales propositions the very, we're very, a stations a with has with team. I this in content couple of good very very push to good product, believe think position we global market with have have past market successful that to we reference good we sales market. footprint think Latin

Nehal Chokshi

the believe, to the replicate success So, ability, you what's market the in other American then? to markets Latin

Peter Aquino

other highlight we do in want as push revenue. some see just to well. engagement I So the VIDAA markets within

to operations EMEA in but also is main be a the VIDAA So, and global precise. Europe company,

So across America to the Latin markets, To sports and results this North first show or on [Indiscernible] hope right Mexico that main and now next we or and to have our quarter engagement EMEA. the maybe very replicate in something over which a are America footprint strong particular two. sports in sports it's we we're working actively the on bodies sector

Nehal Chokshi

Excellent. Thank for my taking you questions.

Peter Aquino

Nehal. Thanks,

Operator

Thank session. this this our you. concludes question-and-answer At time,

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

Peter Aquino

your we operator. to in great you. our everyone. Thank Thank evening, and you, Well, appreciate SeaChange future forward a communications. interest Have look

Operator

you And us joining conference for call. SeaChange's thank for today

You you. may lines. disconnect Thank your

SeaChange International (SEAC) 13 Dec 222023 Q3 Earnings call transcript