SeaChange International, Inc. (SEAC)
F3Q 2013 Earnings Conference Call
December 05, 2012, 08:30 AM ET
Monica Gould – IR, The Blueshirt Group
Raghu Rau – CEO
Mike Bornak – CFO
Christopher Ferris – Noble Financial
Todd Mitchell – Brean Capital
Richard Ingrassia – ROTH Partners
Jim Roumell – Roumell Asset Management
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It is now my pleasure to introduce your host, Monica Gould, Investor Relations for SeaChange International. Thank you, Ms. Gould, you may begin.
Thank you, operator. Good morning, everyone, and thank you for joining us. SeaChange released results for the third quarter of fiscal year 2013 ended October 31, 2012 yesterday after the market closed. Attached to the press release were our prepared remarks regarding the financials. If you do not have this material, please go to www.schange.com/IR to download the document. These prepared remarks will not be read on our call today.
Raghu Rau, CEO, and Mike Bornak, CFO, are joining me today. Raghu has a short introduction and a few comments. And following his remarks, we'll be happy to take your questions. This call is being webcast and will be archived on our website in the Investor Relations section.
Before Raghu begins, I'd 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 that are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These risks are outlined in our SEC filings including our Annual Report on Form 10-K, which was filed April 05, 2012. Any forward-looking statements should be considered in light of these factors.
Additionally, this presentation contains certain non-GAAP or adjusted financial measures as defined by the SEC. Per SEC requirements, we have provided a reconciliation of these measures to the most directly comparable GAAP measures in tables attached to the press release. Any redistribution, retransmission or rebroadcast of this presentation in any form without the expressed written consent of SeaChange International is prohibited.
And with that, I'd like to turn the call over to Raghu.
Thank you, Monica. Good morning and welcome all of you to the SeaChange third quarter earnings call. Earlier this year, I presented a SeaChange transformation strategy at the ROTH Conference in California and also walk you through that strategy during the fourth quarter fiscal year 2012 earnings call.
Considering that we have a number of new analysts covering SeaChange and a significant number of new and potential new investors, it might be appropriate for me to highlight the key elements of the strategy and our progress on execution.
The first element of our strategy was to focus on our core software business and to divest non-core assets. This was largely completed in May of this year with the sale of the Broadcast Servers and Storage business and the content services business.
The second element of our strategy was to focus intensely on our core service provider customers. This has paid us significant dividends as the world's largest operators, including Comcast, Cox Communications, Cablevision, Virgin Media, Liberty Global, Charter, Rogers, Kabel Deutschland, AT&T, Verizon to name just a few continue to trust SeaChange with their business.
An important element of our strategy is to significant lower our overall cost structure while continuing to invest significantly in innovation and R&D in the next-generation back office platform, advertising and gateway software products.
For the divestures and other cost reduction actions, we are on track to reduce our operating expenses by 15 million compared to the previous year. Our investment in R&D is continuing to deliver differentiated innovation.
In the third quarter, SeaChange was recognized in the industry with a number of prestigious awards. The Telco TV Vision Award for the Best Innovation in Customer Premises Equipment was not awarded to any of the usual suspects but to SeaChange. This could have been unthinkable even just a year ago and demonstrates the power of innovative software.
Additionally, this quarter we won an Emmy Award for Achievement in Cable Advertising. We also won the Communications Technology Platinum Award for multi-screen software innovation. We have announced design wins from major operators in the Americas and in Europe for our next-generation solutions, including from service providers that had not previously deployed SeaChange products.
Our teams have been working very hard, including many nights and weekends and through the Thanksgiving holidays to ensure that we meet our commitments to our customers and shareholders. We are becoming increasingly confident about the successful execution of our transformation strategy and the ability to grow our business profitably. This confidence is due in part to bringing in significant new talent to the company and a revised organizational structure offering greater focus and accountability on global growth and profitability.
Our balance sheet continues to be strong after buying back $5.6 million of our stock in the third quarter, utilizing $3.1 million for earn-out payments related to prior acquisitions and $800,000 in cash used for severance payments. Our cash position at the end of the quarter was $100 million.
As you will have observed from our prepared remarks, revenues for the third quarter FY '13 was $39.2 million, which was at the high end of our guidance and non-GAAP operating earnings were $0.09 per share, significantly above our guidance. Based on the momentum we are seeing, we are increasing our full year fiscal 2013 revenue and earnings guidance. We expect revenue to be in the range of $155 million to $159 million and non-GAAP earnings per share to be in the range of $0.38 to $0.41.