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SEACHANGE INTERNATIONAL INC (SEAC)·Q1 2024 Earnings Summary

Executive Summary

  • Revenue was $7.0 million, up 4% year-over-year but down 31% sequentially due to a large one-time licensing event in Q4 that did not repeat; gross margin was 59% versus 73% in Q4 and 48% in the prior-year quarter .
  • Service revenue grew 40% year-over-year to $5.5 million (78% of total), highlighting progress in the SaaS/recurring shift; product revenue fell to $1.5 million (22% of total) from $6.2 million in Q4 on normalization after the license event .
  • GAAP net loss improved sharply year-over-year to $(0.7) million (EPS $(0.28)), and adjusted EBITDA approached breakeven at $(0.239) million; cash and marketable securities totaled $15.2 million with no debt and positive operating cash flow in Q1 .
  • Management reiterated confidence in achieving profitability later in fiscal 2024 and emphasized strengthening connected TV/FAST partnerships (VIDAA, Fox Sports Mexico, Source Digital); SeaChange regained Nasdaq minimum bid price compliance during Q1, though future compliance is not assured .

What Went Well and What Went Wrong

What Went Well

  • Service revenues up 40% year-over-year (to $5.5 million), with recurring streams supported by two Tier 1 renewals and new StreamVid launches, reinforcing the SaaS transition .
  • Margin expansion year-over-year: gross margin rose to 59% from 48%, driven by higher service mix and cost controls; adjusted EBITDA loss improved by 83% vs. prior year .
  • Management tone confident: “We are well positioned for another profitable, debt-free year…we remain confident in our ability to achieve profitability later this fiscal year” — Peter D. Aquino and Mark Szynkowski .

What Went Wrong

  • Sequential revenue decline of 31% driven by the absence of the Q4 one-time licensing event; product revenue fell to $1.5 million from $6.2 million in Q4 as mix normalized toward services .
  • GAAP loss from operations of $(0.8) million and non-GAAP loss from operations of $(0.303) million reflect ongoing opex burden despite improvements; total non-GAAP opex was $4.5 million in Q1 .
  • Sustained listing risk flagged: although minimum bid price compliance was regained in Q1, the company noted it “cannot assure” continued compliance, a potential overhang .

Financial Results

Summary P&L vs Prior Quarters

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$8.3 $10.2 $7.0
Gross Profit ($USD Millions)$5.2 $7.4 $4.2
Gross Margin (%)62% 73% 59%
GAAP Net Income (Loss) ($USD Millions)$(3.684) $1.727 $(0.714)
GAAP EPS ($USD)$(0.07) $0.03 $(0.28)
Non-GAAP Income (Loss) from Operations ($USD Millions)$0.1 $1.6 $(0.303)
Adjusted EBITDA ($USD Millions)N/A$1.7 $(0.239)

Revenue Mix

MetricQ3 2023Q4 2023Q1 2024
Product Revenue ($USD Millions)$2.2 $6.2 $1.5
Service Revenue ($USD Millions)$6.1 $3.9 $5.5
Product Mix (%)26% 61% 22%
Service Mix (%)74% 39% 78%

Detailed Revenue Breakout

MetricQ3 2023Q4 2023Q1 2024
License & Subscription ($USD Thousands)$1,430 $5,917 $1,072
Hardware ($USD Thousands)$753 $300 $468
Maintenance & Support ($USD Thousands)$3,144 $2,477 $3,091
Professional Services & Other ($USD Thousands)$2,961 $1,464 $2,361

KPIs and Balance Sheet Snapshot

MetricQ3 2023Q4 2023Q1 2024
Cash & Cash Equivalents ($USD Millions)$14.498 $13.415 $13.790
Marketable Securities ($USD Millions)—$1.244 $1.409
Accounts Receivable, net ($USD Millions)$7.011 $10.382 $7.362
Unbilled Receivables ($USD Millions)$12.030 $12.801 $13.013
Deferred Revenue ($USD Millions)$2.554 $5.302 $5.179
DebtNone None None

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Profitability (company-level)FY 2024No formal numeric guidance“Adjusted EBITDA approaches breakeven…providing an expected profitable outlook for fiscal 2024”; CFO: “confident…achieve profitability later this fiscal year” Introduced qualitative profitability outlook
RevenueFY 2024None providedNone providedMaintained (no formal guidance)
MarginsFY 2024None providedNone providedMaintained (no formal guidance)
OpEx / Tax / Segments / DividendsFY 2024None providedNone providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicQ3 2023 (Prior)Q4 2023 (Prior)Q1 2024 (Current)Trend
Connected TV (CTV) and VIDAA partnershipSelected by Fox Sports Mexico; StreamVid launches; building SaaS recurring revenues Launch of Xstream; “VIDAA Free” rolled out on millions of smart TVs; multiple Tier 1/2 renewals across regions Continued VIDAA global expansion; launched two StreamVid customers; Fox Sports Mexico on Roku Strengthening
Shift to Recurring/SaaSRecurring SaaS customers added; non-GAAP profitability emerging Emphasis on higher-margin SaaS deals; three consecutive quarters of positive non-GAAP income Service revenue up 40% YoY; two major renewals; recurring streams reinforced Increasing
Cost Controls / Profitability PathCost containment; non-GAAP net income for second consecutive quarter Adjusted EBITDA positive; balance sheet strong, debt-free Adjusted EBITDA near breakeven; reiterated profitability later in FY24 Improving
Product PerformanceServices drove Q3; product normalized Product revenue jump from license acceptance Product down sequentially post one-time license; services mix up Normalizing mix to services
Regulatory/Listing——Regained Nasdaq bid price compliance; future compliance not assured Risk mitigated but persists

Management Commentary

  • “With service revenues up 40% year-over-year, our focus on generating recurring revenue streams has proven effective…We are well positioned for another profitable, debt-free year…” — Peter D. Aquino, Chairman & CEO .
  • “Operationally, we strengthened existing partnerships with key customers such as VIDAA and Fox Sports Mexico, while also successfully launching two new StreamVid customers…” — Chris Klimmer, President .
  • “Our ongoing efforts to reduce operating costs have yielded positive results…we remain confident in our ability to achieve profitability later this fiscal year.” — Mark Szynkowski, CFO .

Q&A Highlights

  • Connected TV deal “transformational”: emphasis on positioning SeaChange “in the center of the CTV value chain” and focusing resources to expand services for publishers and platform stakeholders .
  • Balance sheet positioned for profitable growth: cash exceeded total liabilities, debt-free, with strong receivables and unbilled balances supporting investment in profitable growth and positive cash flows .
  • Engineering capacity and scalability: >100 in-house developers in Warsaw and global delivery teams able to scale quickly to support major programs (e.g., VIDAA) .
  • Note: A Q1 2024 earnings call transcript was not located; themes above reflect the most recent available Q4 2023 call.

Estimates Context

  • S&P Global consensus for Q1 2024 EPS and Revenue was unavailable for SEAC in our data environment due to missing CIQ mapping; therefore, we cannot present an Actual vs. Consensus comparison for Q1 2024 [SpgiEstimatesError].
  • Where available, we default to S&P Global for consensus; in this case, consensus data was not retrievable.
MetricQ1 2024 ActualQ1 2024 Consensus
Revenue ($USD Millions)$7.0 Unavailable
GAAP EPS ($USD)$(0.28) Unavailable

Key Takeaways for Investors

  • Revenue mix is intentionally tilting toward services/recurring streams; service revenue rose 40% YoY and comprised 78% of total, supporting more stable margins over time .
  • Sequential volatility is high given the outsized impact of one-time license events (Q4), evidenced by a 31% sequential revenue decline as product normalized; monitor product pipeline/licensing cadence .
  • Margin trajectory remains constructive year-over-year (gross margin 59% vs 48% prior year) with cost controls; adjusted EBITDA neared breakeven, aligning with management’s FY24 profitability view .
  • Balance sheet is a support: $13.8 million cash and $1.4 million marketable securities, no debt, and positive operating cash flow in Q1; this underpins execution through macro uncertainty .
  • CTV/FAST tailwinds and partnerships (VIDAA, Fox Sports Mexico, Source Digital) are central to the growth thesis; watch for further customer launches and renewals as catalysts .
  • Listing risk moderated but not eliminated: Nasdaq minimum bid price compliance was regained; continue to monitor corporate actions and liquidity backdrop .
  • Near-term trading: stock may react to signals on licensing deal timing and additional SaaS wins; medium-term thesis hinges on sustaining high service mix, margin stability, and achieving FY24 profitability per management commentary .