Earnings call transcript Q4 2023

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Operator

Good afternoon, and welcome to SeaChange's Fiscal Fourth Quarter and Full-Year 2023 Conference Call for the period ended January 31, 2023. My name is Diego 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, Mark Szynkowski.

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

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

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

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

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

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

Peter Aquino

of and fiscal Thank International. This XXXX you, Chairman year Peter to CEO of call. SeaChange operator. our Good everyone. quarter end afternoon, Welcome Aquino, fourth and is

year SeaChange the specific achieve set The back fiscal team January goals end. at year. three XXXX, going our to of to So by fiscal beginning out leadership

report project on development improved excellence that second, first, we service in planning three to expectations VIDAA. and categories. performance; plus third, were a executing all The we with happy on key exceeded I'm categories were large that financial

fiscal highlight XXXX I'll accomplishments. now the just briefly And

fiscal flow free exit revenue meaningful to First, positive the quarter. The grow strive ‘XX line our year we financial set fourth the top by numbers tell cash accomplishments. performance and the of truly We goals. story

The $XX.X that's the ’XX, year negative EBITDA million XX beyond XX% With was period. a $XX.X adjusted and a revenue in for basis and that's quarter, million fiscal EBITDA quarter over fourth up in set versus a up year-over-year. $X.X from for $X.X cumulative that's year was breakeven fiscal million in the that's record 'XX. the on million in

the million We're fiscal continued strong to positive sales positive this for part management only firing cost and entire cylinders. team for in And a quarter due EBITDA now 'XX all in EBITDA year-over-year. in the control. $X now not swung fourth but And year. is is right our

proud the financial we're side. of So on very the accomplishments

software Second, for client we that user ultimately operations encourage aim upgrades end better experience. improvement to leads and

duty collaborate team and minimize to satellite and of and the support the wireline MSOs, customer and mobile call with providers, for disruptions. target areas beyond to ways goes leading Our looks broadband operators trouble

this longer requires both of investments and sides no none software can us on that put Sometimes implementation upgrades off.

world. these make investments who's to of invest to Throughout talent who leading managed and 'XX, as as fiscal around contributions a upgrades we these also nearly view we video software and joint as providers and and We the for dozen seamless advertising platforms expertise possible. the upgrade

Customer service improvements also and lead churn. to lower minimize this costs

core that Our to positive software team. says and something zero and customer churn support is rate our our very products close about

flying our development colors. set skills significant our software Hisense transforming test out a passed to and of team in It ‘XX. we with execute plus finally, was potentially XXX they engineering VIDAA plus fiscal and developer in And in a Warsaw deal with

nine and required by directed carved team existing in we development and manage out our joint execute an a about required that effort roadmap of entire VIDAA on hire, SeaChange months. did Poland to this VIDAA software

connected with By XXXX, millions Poland in globally, streaming to system, new a phased of to for began devices we VIDAA’s market develop hire approach their follow. hitting in the software future operating of along platform our engineers spring pool talent TV experienced to now with the

visit Costco in a will TV TV Walmart, or the Smart any on inventory display. see Best you United If Buy you on nearly Hisense marketing free States, VIDAA

Your be takeaway that should inside. is SeaChange

Their our hire, between chapter. our over work success a success SeaChange It's features the next we Development our a With years. engagement are just a a partner. company into real new value added Plus partners term for is SeaChange forward not contract long that We're our with leaps client. step as is

if just that platform summary, the we create to you scale. next gain for in a And SeaChange's look up XX is poised profitable quarters, evolution at in growing step

net be combination future. streaming, and that development to the video tailwinds focuses and any foreseeable fast in TVs on a expect channel connected We contributor tech ad accretive for over of the

to content publishers continue is new in our remain our to we to improve explore SaaS position be alternatives. operators logo and to mantra the And Our alike. opportunistic and we revenues and existing best strategic our as want recurring with

to the Klimmer. point, at call me So let Chris? our Chris this President, over turn

Chris Klimmer

joining Thanks, good today. everyone. Pete afternoon, and Thank us you for

all forth, As on end report of fiscal our ‘XX Peter laid to happy we a we substantial that And I'm generated did growth main has high already note. across KPIs.

and to more and value helping streaming growing profitability. and our continues on our that to in reflects exciting our level portfolio to a markets. dynamic their also proposition of gain rapidly video core monetize company's It traction focused is shows TV the content that performance financial and growth customers Our advertising sustainable transition distribute

three ‘XX, positive outlook Instrumental to fiscal successful are performance operational our and in success. ‘XX fiscal our drivers for our into

Warsaw XXX and XX value continue develop innovative in More developers in to hub video software by operational as TV to First, and and video by new incremental that fairly services advertising and introducing TV generate our existing our complex field than and solutions. ecosystems revenues, add R&D customers, to streaming both efficiency globally significant streaming increasing insertion and in engineers our in-house solutions new ad team. such

They deliver These to streaming across built latest ad end are video shifting monetization iterated designed Second, continuously and technology device and back insertion. and targeted experiences of especially business smart through and vast capture products premium content consumer leveraging stacks are software all along models, are arise capabilities, platforms, multi-screen the trends. types using products. our that to portfolio end front opportunities the state-of-the-art and

Third, our customer base.

We to companies of are privileged call our is operators, who global cable customers. MSOs, who the mobile and

them, of most been for solutions many now. For we providing our have years

optimizations them models and on engagement and with SeaChange of Our continuity, upgrades are software. stability deployed the continued based

out upgrades receive to can services value we With their customers continue remain extensions, to technology that their for our and subscribers. frequent the add which they and roll to-date ensure up on ecosystem,

take fourth the fiscal of to like now closer a ’XX. would at look I quarter

Pete centered had growth on As pillars. core mentioned our executed plan before, three we strategic around

remarks, and renewing and previous TV long with engagement upgrades. concentrating operator First, and line in multiple standing fortifying customers, which has our to with renewals on relationships successfully my led

revenue all Second, innovating engagement. optimize user deals. channels, our products securing margin higher and TV that as third, bolstering SaaS can new stream recurring well with returns help expanded and our and And retention by as end customers streaming across by and services enhancing

the VIDAA revenue in leveraging key supported streaming technology. of of monetization To Including designed start, maximize content the same as on announcements highlight ad TVs, connected our the Xstream, Free, well the we quarter. video of past hub VIDAA’s launch platform as Xstream like cloud-based I'd free launch to made to two advertising

commitment to signifies consumption products our consumer services SeaChange's Xstream launch and connected and provides to and maximize content that customers channels. capitalize and across all TVs The on help TV to evolution the new of returns streaming

explosion subscription consumer services of and for from shifts linear comprehensive pay TV and discovery preference to connected offerings, away from the streaming fund to consumer content As seen content and television on an aggregation and We've advertising TVs. demand

enabling wide cable trend of or independent selection launch are we the to of subscription to Xstream, demand, consumer top access address set of With a this box. content able in

add and advertisers. on content premium for While the revenue owners costs. Xstream significant by new content return stream user with channel them to and content a end maximize providing a value provides experience and providing benefits streaming to distribution to owners

tracking hand, offering customers with will The fast to in On and data conversion innovative margin with advertisers platform, advertising. recurring expanded generate the SaaS to the help Xstream improve revenue. rates being platform higher targeting released, have through we other provides SeaChange help big offering to intelligent also another and addition

of provide and to full the free ad advertising insertion accelerate by smart monetize Leveraging video from globally expansion to technology, supported ability to curate, Hisense enabling to content. VIDAA, in TVs the were jointly to was the TV which solution, smart able of other we VIDAA Free same able VIDAA powered this rolled seamlessly content also TVs streaming technology, SeaChange out the content and and now manage, addition past control develop powered Xstream on be VIDAA Xstream With a brands of on superior publish this millions and solution January. will

like launch with under VIDAA advertising The more TV validates business As primary models, and from partnerships. smart for content. subscription available are systems the becoming to gateway cable content we've advertising becomes shift models publish operating our seen consumer away the VIDAA

While going continued VIDAA role in allowing been our a growth participate play their partnership continued forward. with as increased as us expand has success. further and of strategic SeaChange to well result will meaningful partnership in VIDAA our with This innovation the from

demonstrate and markets, Speaking America, operators main more to ability our of with These strategy our quarter on deliver Latin renewals long our in TV X X renewals developments three multiple our customers, to all and geographic customers. standing closed relationships with the of further Tier operator company the America. with North existing Tier during on EMEA our fortifying including

products, as strategy for secure Continued SeaChange, a improve for existing customers. as value our system increased execution services on this professional as add top upgrades well priority remains existing we deliver

StreamVid in other Digital with Source our launched we quarter, developments platform. Continuing the recent onto

with is that their the space, innovation TV devices. be Metaverse experience a streamed can and on advertising in enable connected Sansar, true LG who driver Source partner a unique along

moments the or and web In events. September live Source Digital Metaverse with combines showcase platform metaverse Sansar. sports with we source video now experience digital Source last with alternative that as develop so-called personalized to immersive any Digital's activated user Sansar's or creates such events, platform platform jointly year, X the to across Meta The engagement partnered concerts

the purchase streamed And and these metaverse. between switching digital and streamed SeaChange's TV which back the into concerts XD and of events a through optionality experience, forth and monetized. Source LG with get Through can video merchandise events live users immerse StreamVid users, on the other platform, experience interact platform

addition a Source together Metaverse, In through SeaChange content co-sell high-margin owners more to of with revenue for solution recurring gives our platform, the can Source pre-packaged SaaS-based of us Digital adding a variety to the the launch globally.

in-app billing In StreamVid with purchases, which sees subscribers to that including company live co-launching time coming and tremendous vouchers for Source a a in track to which shift and refunds, finalizing to launch including with the and and major weeks. option SaaS-based performance, platform platform, we in the product, flow new go-live service handling, in make add flexible for all yet metrics decisions we expect value content payment support and data-driven optimize are and the media seamless onboarding key VOD, advanced analytics another our EMEA, the the users. to business to channels to customers company fast is a also addition types, This with provides linear our

out Taking play are catalysts a back, step solutions. SeaChange's demand we're seeing driving for major growth two that

connected we're First, of well owners opportunities. In connected largely as shifting the to changing larger positioned on company the and result their on trends which consumer a content been connected TV technology in help growth screens. monetization has devices, realize vendor is towards optimize seeing particularly landscape, a this strategies streaming market, behavior

as financial us owners an space. ideal Our positive presence TV growing reference Tier connected longstanding and coupled cases many partner the well operators our with for with content broadcasters as X from relationships in make players and

confident that capitalize existing us services with We solutions will continued of delivery this solutions our growing are technology allow along on innovative and to demand.

industry. content catalyst an our the protect this content grow share SeaChange, business placing build can excellent and expanding towards growth of shift owners involves sector in subscription-based to us from help second models. differentiated believe we consumer operators incremental in position and and our rapidly At the ad-supported technology free The market streams, away revenue

opportunity our our business we ad-based new these consumer customers extending in preferences. to new existing sector our this adopt changes portfolio base share and customer that service and market expand growth product harness this and By our for adding driven in maximize opportunity can by models,

streaming data-driven ads more from optimize Our and relevant the to distribution personalize ad via ad insertion more incorporate load addressability and TVs. solutions all with and across channels to the connected broadcast intelligence

the That concludes remarks. the to prepared turn now my financials. our over to call Mark I cover Mark? CFO, will Szynkowski

Mark Szynkowski

Chris, afternoon, Thanks, and good everyone.

to Total $XX.X prior revenue full XXXX fourth XX% increased quarter, XXXX. revenue million to in year XXXX. our fiscal $XX.X in million Turning to quarter $XX.X the XX% for results financial million compared from and to fiscal for increased million year while QX fiscal the $X.X

improvement material of revenue the For product related project, connected primarily QX, to development license in increases was acceptance a fee to product. driven TV software the due the by company's triggering a

While XXXX, service in revenue increases due to fiscal mainly for total was revenue. up

million Product $XX.X compared in million of to licensing revenue. XXXX QX XXXX. total revenue revenue fiscal $X.X product in or XXXX the to or for of Product revenue fiscal QX XX% or million XXXX or for XX% in increases revenue was XX% to to and increased due revenue $XX increased primarily $X.X total in both revenue XXX% to compared total revenue XX% Improvement quarter. for X% of million total prior of

in $X.X or XX% revenue or $XX.X prior in XX% compared $XX.X quarter. revenue of fiscal $X.X to to revenue Services total fiscal XXXX. million Service revenue revenue XX% revenue XXXX of was for or or of XX% million million XXXX XX% fiscal total total compared decreased the of QX for to million,

The service professional sequential accepted work in work customers. service in fiscal decrease for increase was for revenue increase driven to revenue completed after revenue revenue in by increase XXXX acceptance primarily was the multiple quarter the primarily quarterly due multiple due third completed in customers. in to services The services professional of by an an

prior in from or or total Revenue in markets which million QX XX% international $X.X was our of to $X.X compares total million revenue revenue, the XX% of fiscal XXXX quarter.

of totaled total XXXX. XXXX, fiscal total which compares revenue XX% $XX.X comprising in markets international fiscal XX% $XX.X from of to revenue, million, or million revenue For

XX% in U.S. total prior in million of total was $X.X XXXX our of for the which compares Revenue markets or revenue QX quarter. $X.X fiscal or XX% revenue, million to

million For million, fiscal to in from U.S. revenue revenue revenue of fiscal contributed XXXX. or XX% to of $XX.X XX% XXXX, our total $XX.X year compared market

or Gross million or XXXX in XX% or compared XXXX. to of in quarter. revenue revenue Gross our to million for the of fiscal prior $X.X $X.X revenue, XXXX $XX.X fiscal XX% at margin. $XX.X profit million which year fiscal total or QX million Looking total of was was XX% for profit XX% compared revenue total total

the quarter XXXX was for from compared Product fiscal of gross margin fourth XX% to quarter. prior XX%

in fiscal margin prior be margin lower for the the sequentially third-party substantial for year amount gross XXXX, in XXXX in For when sequentially the fiscal for as average goods resulting year the compared XX% in third margin in increase XXXX well of sold lower in several big as a and was compared to can customers year XX% a the explained quarter that gross growth margin margin, prior jump to full product year year. product carried a year, margin product decrease in a by product project significant a fiscal

the for margins XX% was fiscal to prior XX% quarter gross Service fourth XXXX for compared quarter.

XX% XXXX compared XXXX margin the was gross service year, to year. fiscal in For fiscal XX%

were $X.X quarter expenses the quarter. Looking of XXXX prior expenses. million, fourth from $X for million operating an our fiscal Non-GAAP at increase

down $XX.X in million from expenses the fiscal year XXXX. fiscal were XXXX, non-GAAP slightly million, While operating $XX.X

fiscal quarter. $X.X $X.X million income in the operations operations for XXXX fiscal $XX.X GAAP prior of for the million XXXX. compared totaled from from $X.X compared a operations QX to million loss GAAP year loss XXXX totaled from million to in loss prior

third and and quarter loss the any at that had year no impairment during sheet. a we recorded the respectively. second And quarters balance goodwill goodwill the during on million, $X.X recorded million $X.X longer non-cash Note, on we of end,

of XX%, negative As a prior for in percent of compares from which fiscal quarter. fourth total operations was the XX% income XXXX revenue, quarter a GAAP to

a year, year compared the loss negative negative a from in XX% of GAAP a fiscal XX% revenue, total XXXX to percentage For was prior. operations as

million fiscal positive income Non-GAAP non-GAAP $X.XX QX $X.X our million is This fully improvement $X.X compared XXXX or to operations fully from income. or prior breakeven in share an quarter of totaled diluted consecutive share, which the represents per for per quarter. third diluted the

diluted operations totaled of million from income compared or XXXX. the per Non-GAAP or share, $X.X diluted was $X.X in per million an loss to improvement fully which loss share fully fiscal fiscal $X.XX $X.XX a for XXXX

total prior X% of percentage a non-GAAP As quarter. to compared income operations XX% the in from was revenue,

X% fiscal prior from of negative XXXX non-GAAP the revenue operations in While a year year. was income for compared percentage a XX% to as

was for totaled an quarter. income basic loss was loss net basic GAAP This share. for of of million $XX.X fully $X.X compared loss prior per inclusive fiscal in improvement or million of to the loss a QX fiscal or $X.X of to GAAP XXXX. of of the per share diluted XXXX share net a million $X.X in aforementioned or fully a XXXX goodwill fiscal net loss per the $X.XX per compared of a or share $X.XX year impairment net million, loss diluted $X.XX $X.XX loss a

EBITDA fully interest, totaled or fiscal adjusted earnings QX depreciation taxes, diluted Adjusted or amortization million $X.X and XXXX before per for $X.XX share.

$X.XX adjusted loss diluted fiscal the loss For or fully totaled a XXXX an net of year, of EBITDA million share million the $X.XX $X.X per XXXX. $X.X diluted share to EBITDA adjusted compared fiscal fully or in per

our to balance Turning sheet.

As in cash had in we cash and and $XX.X $X.X XXXX, XX, marketable million of securities. January equivalents million

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

financial results, by XX-K, For as earnings plan a which release to our we more to analysis annual as please of today's well refer April detailed our 'XX. file

call the questions. I your will Gateway taking question-and-answer Cameron session for Relations Investor before questions now the to Williams to turn over Cameron? from pre-submitted moderate

Cameron Williams

questions and will Gateway of Investor now Mark. I Williams call. you, the ahead Thank Relations read SeaChange's the of top investors submitted Group, analysts This is Advisers. Cameron by

Chris. for is question First

or on is With the the deal of is connected that VIDDA you consider the jump, another partner? transformational, doing percent fourth more TV focus would landing quarter with company's what

Chris Klimmer

question, the for Cameron. Thanks

eyeballs that towards market streaming the TV models I towards especially think environment, accepted. premise connected devices are and therefore, and consumption, business now and if shifting First, here, funded advertising the video look is widely you at

how this their to with the help and a capitalize data the convinced overall target on personalize value be focused Now and and work is, in this experience. BXB publishers use clear helping platform stakeholders SeaChange space ad with question proposition, this increase provider value a to inventory like I'm consumer the successful alike paradigm. advertising that to new can to can ways best technology their on smart of stakeholders

catalyst the where us. your Sea to is a very our in right question, so product with in in as position for us regards, And the and yes, center So be the deal chain. much we want to many of it the it VIDAA is catapults services TV value transformational

As we and lot will focus R&D, develop company, grow all a continue of meaningful our market resources a to ops, and Sea departments, share to put footprint. services for publishers and increase stakeholders to our TV sales, across

Cameron Williams

Thank growth next Mark. do years is continuing of you sheet The you, After balance is profitable question that positioned Chris. for the that free flow? cash positive now three for is company's rightsizing, feel

Mark Szynkowski

Thank question. for this you

equivalents, have discussed, cash As in total our marketable our we we securities. liabilities. recent million exceeds This investments $XX.X and in including cash

We accounts have receivable and balances. unbilled strong receivable

also remained free. We debt

cost-cutting sheet Our cash in you. provide Thank recent and to the flows opportunity invest company growth to with an measures promote strong our positive and balance generate profitable areas in future.

Cameron Williams

on support last Are some Can up to you, for question we team? you is and received Chris scale commentary with Mark. again. positioned Thank The they your leadership? established technical give

Chris Klimmer

to is than provide there products top been up R&D with more set deployments more as in than a way powerhouse develop years and truly Poland. have an proud than innovate I'm lot cloud managed our sometimes people, with as of must in-house of XX now. continuously have Cameron. XXX by services. our team and SeaChange We our well This to very talent I manage team. cloud Warsaw, say Thanks, engineering which, organization very, that further the for It's even five, more

we're way map. very to in scaled product organized is organized to be road time. under team and it The development leadership, up accordance defined a a This teams value Poland adding in any in experienced at is strong can state-of-the-art, agile that way a clearly senior the

weeks few developers project. within We and only accelerate integrated a recently just the have to two VIDAA dozen seamlessly

customer tech the software. operations support second customers They Please services, note us deployments but or for term. and also that engineering understand example, operations delivery and both field help manage with who professional team, our provides better, and essentially provide we day-to-day them team, and helps also our have to this to a long our their support support services. integrate embedded be upgrade level term workflows can To short our how at within we specific

U.S. the regions. and This global team is managed across from organized

well, additional capabilities all as Here the have services. professional or for to this up, managed team provide scale example, to we

strong org an an both team, quickly leadership to and tech up that all-in-all, extremely have talent structure immense seamlessly. So allow teams us and scale

Cameron Williams

turn completes This Thank I you, the to now the pre-submitted session. will the back Q&A Chris. operator. call

Operator

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

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

Peter Aquino

all you everyone. your a and for call. Have Thank afternoon, year 'XX attention fourth great fiscal to end quarter today's of

Operator

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

may Thank disconnect you. You lines. your

SeaChange International (SEAC) 5 Apr 232023 Q4 Earnings call transcript