SeaChange International, Inc. (SEAC)

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SeaChange International Inc. (SEAC)

Q4 2009 Earnings Call

March 12, 2009; 5:00 pm ET


Kevin Bisson - Chief Financial Officer

Bill Styslinger - President and Chief Executive Officer

Yvette Kanouff - Chief Strategy Officer

Martha Schaefer - Director of Investor Relations


Greg Mesniaeff - Needham & Company

Lawrence Harris - C.L. King

Blair King - Avondale Partners

Johnny Brown - Stevens



Good afternoon. My name is Philip and I will be your conference operator today. At this time I would like to welcome everyone to the SeaChange year end fourth quarter fiscal 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions)

Ms. Schaefer, you may begin your conference.

Martha Schaefer

Thank you, Philip. Good afternoon everyone and thank you for joining us today. As Philip just said we’ll be discussing the financial results for our fourth quarter and fiscal year 2009. The press release went out about an hour ago 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 materially from expectations.

These risks are outlined in our SEC filings including 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. Yvette Kanouff, our Chief Strategy Officer is joining us today with an update on our corporate strategy. Yvette will speak after Bill and she have some slides to help you walk through that strategy. The slides are available on our IR website and we will be left off along with the replay of this call for those who access it later. Following our prepared remarks we will be happy to take your questions.

At this point I’d like to hand this call over to you Kevin.

Kevin Bisson

Thanks Martha and good afternoon everyone. Turning to our fourth quarter financial results for fiscal 2009, revenue for the fourth quarter amounted to $54 million, which was $6.2 million or 13% higher and total revenue were $47.8 million recorded in the fourth quarter of fiscal 2008.

From an operating segment perspective, revenue from our Servers and Storage segment for the fourth quarter was $17.7 million, which was $5.8 million or 49% higher than revenue of $11.9 million for the fourth quarter of fiscal 2008. The increase in Servers and Storage revenue in the fourth quarter of fiscal 2009 compared to the same quarter in fiscal 2008 was driven by increased shipments of VOD servers particularly of our newer flash memory VOD servers to three of our largest North American based cable television customers, as well as VOD server revenue tied to customer acceptance received from a Russian customer during the fourth quarter.

Our software segment generated revenue of $32 million for the fourth quarter, which was $1.1 million or 4% higher than revenue of $30.9 million for the fourth quarter of fiscal 2008. The increase in software revenues between years was principally the result of higher Axiom related software licensing revenue from our largest cable television customer and from the aforementioned Russian customer as well as higher maintenance and software installation revenue partially offset by lower Comcast software subscription revenue.

The Media Services segment total revenue for the fourth quarter of $4.2 million, which was $800,000 lower than revenue of $5 million generated in the fourth quarter of fiscal 2008. The year-over-year increases in revenue from customer contracts secured in Greece and Turkey along with the initial quarter’s revenue from our fourth quarter acquisition of Mobix, where more than offset by the impact of the depreciation of the British pound compared to the U.S. dollar since the fourth quarter of fiscal 2008.

More specifically if the pound versus dollar exchange rate in the fourth quarter of fiscal 2008 had remained the same in the fourth quarter of fiscal 2009, year-over-year dollar denominated revenue would have risen to $5.7 million, which would have represented a 14% increase over the $5 million dollars of revenue generated by the Media Services business unit for the fourth quarter of fiscal 2008.

Geographically, revenue for the fourth quarter of fiscal 2009 included 66% in North America, 25% in Europe, Middle East and Africa, 7% in Asia Pacific and 2% in Latin America. Consistent with previous quarters, Comcast and Virgin Media were 10% for greater customers in the fourth quarter of fiscal 2009.

Revenue for all of fiscal 2009 amounted to $201.8 million, which was just under $22 million or 12% higher than the $179.9 million of revenue generated for all of fiscal 2008. Revenue growth in fiscal 2009 compared to fiscal 2008 derived mainly from higher VOD software licensing and advertising insertion revenue with North American based cable television and telecommunication’s companies along with significantly higher maintenance and field installation revenues tied to increases in the installed base of our VOD and advertising software.

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