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SeaChange International, Inc. (SEAC)
F3Q09 Earnings Call
November 25, 2008 5:00 pm ET
Martha Schaefer - Director, Investor Relations
Kevin Bisson - Chief Financial Officer
Bill Styslinger - President and Chief Executive Officer
Yvette Kanouff - Chief Strategy Officer
Tony Kelly – Managing Director ODG
Greg Mesniaeff - Needham & Company
Blair King - Avondale Partners
John [Zarrow] – BCM
Todd Cooper – Stevens Inc.
Previous Statements by SEAC
» SeaChange International, Inc. F3Q10 (Qtr End 10/31/09) Earnings Call Transcript
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» SeaChange International Inc. Q4 2009 Earnings Call Transcript
Ms. Schaefer, you may begin your conference.
Good afternoon everyone and thank you for joining us today. We'll be discussing the financial results for our third quarter of our fiscal year 2009. Our press release went out a short time and is available on our website on the Investor Relations page.
Before we begin, I would like to remind you that the information we’re about to discuss today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations but are subject to a number of risks and uncertainties that may cause actual results to differ.
These risks are outlined in our SEC filings included in our Annual Report on Form 10-K filed April 14, 2008. Any forward-looking statements should be considered in light of these factors. Any redistribution, retransmission, or rebroadcast of this presentation in any form without the express written consent of SeaChange International is prohibited.
Our format today will be as follows: Kevin Bisson, our CFO, will review our financial performance. Then Bill Styslinger, our CEO, will provide an overview of the quarter. We also have Tony [Kelly] with us today from our U.K. office. Tony will be giving you more details on our acquisition of Mobix which was announced today as well. Following our prepared remarks we will be happy to take your questions. At this point I’d like to hand the call over to you Kevin.
Thanks Martha. Good afternoon everyone. Turning to our third quarter results for fiscal 2009 revenue for the third quarter amounted to $51.8 million which was $2.8 million or 6% higher than total revenue of $49 million generated in the third quarter of last year. From an operating segment perspective, revenue from our software segment for the third quarter was $37.6 million which was $8.4 million or 29% higher than revenue of $29.2 million for the third quarter fiscal 2008. The year-over-year increase in revenue was due primarily to higher Comcast software upgrade revenue, or what we refer to as subscription revenue, derived from the completion of the VOD products and services contract extension with Comcast which extends the contract through the end of calendar 2009.
By signing the contract extension in the third quarter which was retroactive to January 1 of this year, the company was able to record revenue for work performed in the first half of this year as well as for the third quarter. In addition, software segment revenue in the third quarter benefited from higher advertising insertion revenue due to continued increases in high definition television channel requirements for several North American service providers. Software services revenue increased significantly in this year’s third quarter compared to the third quarter of last year due to the completion of several large projects from the U.S. based cable television provider that had been initiated in prior quarters.
Our service and storage segment generated $10.4 million in revenue for the third quarter which was $5.7 million lower than revenue of $16.1 million recorded in the third quarter of last year. For the first nine months of fiscal 2009 revenue in the service and storage segment was $35.9 million which was $1.2 million lower than revenue for the first nine months of fiscal 2008. As such, the decline in third quarter service and storage revenue compared to last year’s third quarter is largely a function of the timing of VOD service orders for this historically lumpy business in fiscal 2009 compared to fiscal 2008 given the comparable nine month revenue amounts between years.
Service and storage revenue for the third quarter was comprised largely of VOD server shipments to North American based MSO’s during the quarter along with related customer maintenance revenue.
The media services segment had revenue for the third quarter of $3.9 million which was $100,000 higher than revenue of $3.8 million generated in the third quarter of fiscal 2008. The increase in media services revenue between years was due mainly to revenues from recent telecom customer contract wins in Greece and Turkey as well as professional services revenue from a customer in Brazil. These revenue increases were essentially offset by the impact of the weakening British pound compared to the U.S. dollar during the third quarter of this year compared to last year’s third quarter.
At constant foreign exchange rates, year-over-year media services revenue would have increased by approximately $500,000 or 13%.
Geographically, revenue for the third quarter fiscal 2009 included 74% in North America, 19% in Europe, Middle East, and Africa, 5% in Asia Pacific and 2% in Latin America. Consistent with prior quarters, Comcast and Virgin Media were 10% or greater customers in the third quarter of fiscal 2009.
Revenue for the first nine months of fiscal 2009 amounted to $147.9 million which was $15.8 million or 12% higher than the $132.1 million of revenue generated in the first nine months of fiscal 2008. Revenue growth in the first nine months of this fiscal year was driven mainly by increased VOD and advertising insertion software license revenue from several large, U.S. based cable television customers and higher VOD software, professional services and maintenance revenue tied to increased year-over-year VOD software deployments.