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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-38828

 

SEACHANGE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

04-3197974

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

177 Huntington Ave, Ste 1703 #73480, Boston, MA

 

02115

(Address of principal executive offices)

 

(Zip Code)

(978) 897-0100

 

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Par Value

SEAC

The Nasdaq Global Select Market

Series A Participating Preferred Stock Purchase Rights

SEAC

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes      No  

 

The number of shares outstanding of the registrant’s Common Stock on September 1, 2021 was 49,040,253.

 



 

 

SEACHANGE INTERNATIONAL, INC.

Table of Contents

 

 

Page

PART I. FINANCIAL  INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets

2

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss

3

 

 

 

 

Consolidated Statements of Stockholders’ Equity

4

 

 

 

 

Consolidated Statements of Cash Flows

6

 

 

 

 

Notes to Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

 

 

 

Item 4.

Controls and Procedures

31

 

PART II. OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

32

 

 

 

Item 1A.

Risk Factors

32

 

 

 

Item 5.

Other Information

32

 

 

 

Item 6.

Exhibits

32

 

 

SIGNATURES

34

 

 

 

 

 

 

 

 


 

 

PART I – FINANCIAL INFORMATION

ITEM 1.

Financial Statements

SEACHANGE INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share data)

 

 

 

July 31,

 

 

January 31,

 

 

 

2021

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,933

 

 

$

5,856

 

Marketable securities

 

 

 

 

 

252

 

Accounts receivable, net of allowance for doubtful accounts of $748

   and $934 at July 31, 2021 and January 31, 2021, respectively

 

 

5,560

 

 

 

6,050

 

Unbilled receivables

 

 

8,344

 

 

 

9,359

 

Prepaid expenses and other current assets

 

 

4,200

 

 

 

4,372

 

Total current assets

 

 

37,037

 

 

 

25,889

 

Property and equipment, net

 

 

498

 

 

 

605

 

Operating lease right-of-use assets

 

 

2,504

 

 

 

4,968

 

Intangible assets, net

 

 

622

 

 

 

1,272

 

Goodwill

 

 

10,393

 

 

 

10,577

 

Unbilled receivables

 

 

6,079

 

 

 

6,340

 

Other assets

 

 

672

 

 

 

757

 

Total assets

 

$

57,805

 

 

$

50,408

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,284

 

 

$

1,825

 

Accrued expenses

 

 

3,663

 

 

 

4,277

 

Deferred revenue

 

 

4,133

 

 

 

4,737

 

Promissory note

 

 

 

 

 

1,340

 

Total current liabilities

 

 

9,080

 

 

 

12,179

 

Deferred revenue

 

 

146

 

 

 

657

 

Operating lease liabilities

 

 

1,797

 

 

 

4,070

 

Taxes payable

 

 

674

 

 

 

763

 

Promissory note

 

 

 

 

 

1,073

 

Other liabilities

 

 

125

 

 

 

125

 

Total liabilities

 

 

11,822

 

 

 

18,867

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 100,000,000 shares authorized at

   July 31, 2021 and January 31, 2021; 49,212,173 shares issued and

   49,040,253 shares outstanding at July 31, 2021; 37,811,224 shares

   issued and 37,639,304 shares outstanding at January 31, 2021;

 

 

492

 

 

 

378

 

Additional paid-in capital

 

 

264,972

 

 

 

246,446

 

Treasury stock, at cost; 171,920 shares at July 31, 2021 and

   January 31, 2021

 

 

(227

)

 

 

(227

)

Accumulated other comprehensive loss

 

 

(430

)

 

 

(73

)

Accumulated deficit

 

 

(218,824

)

 

 

(214,983

)

Total stockholders' equity

 

 

45,983

 

 

 

31,541

 

Total liabilities and stockholders' equity

 

$

57,805

 

 

$

50,408

 

 

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

 

2


 

 

SEACHANGE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, amounts in thousands, except per share data)

 

 

 

For the Three Months

Ended July 31,

 

 

For the Six Months

Ended July 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

2,709

 

 

$

1,066

 

 

$

4,329

 

 

$

4,164

 

Service

 

 

3,831

 

 

 

3,929

 

 

 

7,263

 

 

 

7,746

 

Total revenue

 

 

6,540

 

 

 

4,995

 

 

 

11,592

 

 

 

11,910

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

693

 

 

 

788

 

 

 

1,099

 

 

 

2,368

 

Service

 

 

1,730

 

 

 

2,393

 

 

 

3,545

 

 

 

5,219

 

Total cost of revenue

 

 

2,423

 

 

 

3,181

 

 

 

4,644

 

 

 

7,587

 

Gross profit

 

 

4,117

 

 

 

1,814

 

 

 

6,948

 

 

 

4,323

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,213

 

 

 

3,360

 

 

 

4,881

 

 

 

7,526

 

Selling and marketing

 

 

1,643

 

 

 

1,728

 

 

 

3,023

 

 

 

3,854

 

General and administrative

 

 

2,682

 

 

 

2,367

 

 

 

4,787

 

 

 

4,421

 

Severance and restructuring costs

 

 

87

 

 

 

543

 

 

 

571

 

 

 

1,029

 

Total operating expenses

 

 

6,625

 

 

 

7,998

 

 

 

13,262

 

 

 

16,830

 

Loss from operations

 

 

(2,508

)

 

 

(6,184

)

 

 

(6,314

)

 

 

(12,507

)

Other income (expense), net

 

 

212

 

 

 

373

 

 

 

(16

)

 

 

165

 

Gain on extinguishment of debt

 

 

2,440

 

 

 

 

 

 

2,440

 

 

 

 

Income (loss) before income taxes

 

 

144

 

 

 

(5,811

)

 

 

(3,890

)

 

 

(12,342

)

Income tax benefit

 

 

83

 

 

 

45

 

 

 

49

 

 

 

66

 

Net income (loss)

 

$

227

 

 

$

(5,766

)

 

$

(3,841

)

 

$

(12,276

)

Net income (loss) per share, basic

 

$

0.00

 

 

$

(0.15

)

 

$

(0.09

)

 

$

(0.33

)

Net income (loss) per share, diluted

 

$

0.00

 

 

$

(0.15

)

 

$

(0.09

)

 

$

(0.33

)

Weighted average common shares outstanding, basic

 

 

48,489

 

 

 

37,527

 

 

 

44,958

 

 

 

37,376

 

Weighted average common shares outstanding, diluted

 

 

48,727

 

 

 

37,527

 

 

 

44,958

 

 

 

37,376

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

227

 

 

$

(5,766

)

 

$

(3,841

)

 

$

(12,276

)

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(399

)

 

 

1,665

 

 

 

(358

)

 

 

1,641

 

Unrealized (losses) gains on marketable securities

 

 

 

 

 

(13

)

 

 

1

 

 

 

(4

)

Total other comprehensive (loss) income

 

 

(399

)

 

 

1,652

 

 

 

(357

)

 

 

1,637

 

Comprehensive loss

 

$

(172

)

 

$

(4,114

)

 

$

(4,198

)

 

$

(10,639

)

 

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

3


 

SEACHANGE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands except number of shares)

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Number of

Shares

 

 

Par Value

 

 

Paid-in

Capital

 

 

Treasury

Stock

 

 

Comprehensive

Loss

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balances at April 30, 2021

 

 

48,408,342

 

 

$

484

 

 

$

264,147

 

 

$

(227

)

 

$

(31

)

 

$

(219,051

)

 

$

45,322

 

Issuance of common stock pursuant to

   vesting of restricted stock units

 

 

803,831

 

 

 

8

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

833

 

 

 

 

 

 

 

 

 

 

 

 

833

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(399

)

 

 

 

 

 

(399

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

227

 

 

 

227

 

Balances at July 31, 2021

 

 

49,212,173

 

 

$

492

 

 

$

264,972

 

 

$

(227

)

 

$

(430

)

 

$

(218,824

)

 

$

45,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Number of

Shares

 

 

Par Value

 

 

Paid-in

Capital

 

 

Treasury

Stock

 

 

Comprehensive

Loss

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balances at April 30, 2020

 

 

37,661,641

 

 

$

376

 

 

$

245,558

 

 

$

(147

)

 

$

(2,152

)

 

$

(199,734

)

 

$

43,901

 

Issuance of common stock pursuant to

   vesting of restricted stock units

 

 

66,346

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

260

 

 

 

 

 

 

 

 

 

 

 

 

260

 

Repurchases of common stock

 

 

 

 

 

 

 

 

 

 

 

(80

)

 

 

 

 

 

 

 

 

(80

)

Unrealized losses on marketable

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

(13

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,665

 

 

 

 

 

 

1,665

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,766

)

 

 

(5,766

)

Balances at July 31, 2020

 

 

37,727,987

 

 

$

377

 

 

$

245,817

 

 

$

(227

)

 

$

(500

)

 

$

(205,500

)

 

$

39,967

 

 

4


 

 

SEACHANGE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands except number of shares)

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

Total

 

 

 

Number of

Shares

 

 

Par Value

 

 

Paid-in

Capital

 

 

 

 

Treasury

Stock

 

 

 

 

Comprehensive

Loss

 

 

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balances at January 31, 2021

 

 

37,811,224

 

 

$

378

 

 

$

246,446

 

 

 

 

$

(227

)

 

 

 

$

(73

)

 

 

 

$

(214,983

)

 

$

31,541

 

Issuance of common stock pursuant to

   vesting of restricted stock units

 

 

981,927

 

 

 

10

 

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to

   exercise of stock options

 

 

95,538

 

 

 

1

 

 

 

136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

137

 

Issuance of common stock, net of

   issuance costs

 

 

10,323,484

 

 

 

103

 

 

 

17,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,462

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,041

 

Unrealized gains on marketable

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

1

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(358

)

 

 

 

 

 

 

 

(358

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,841

)

 

 

(3,841

)

Balances at July 31, 2021

 

 

49,212,173

 

 

$

492

 

 

$

264,972

 

 

 

 

$

(227

)

 

 

 

$

(430

)

 

 

 

$

(218,824

)

 

$

45,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

Total

 

 

 

Number of

Shares

 

 

Par Value

 

 

Paid-in

Capital