10-Q

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 October 31, 2022

☐ 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 PMB 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 per share	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 December 9, 2022 was 50,189,458.

SEACHANGE INTERNATIONAL, INC.

Table of Contents


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets	2

	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	3

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	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	30

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

SIGNATURES		33

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	October 31,			January 31,
	2022			2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	14,498		$	17,528
Accounts receivable, net of allowance for doubtful accounts of $585 and $500 at October 31, 2022 and January 31, 2022, respectively		7,011			8,819
Unbilled receivables, net		9,350			9,160
Prepaid expenses and other current assets		2,545			2,310
Total current assets		33,404			37,817
Property and equipment, net		686			902
Operating lease right-of-use assets		1,392			2,031
Goodwill		-			9,882
Unbilled receivables, net		2,680			3,952
Other assets		404			612
Total assets	$	38,566		$	55,196
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,529		$	2,960
Accrued expenses		2,825			4,217
Deferred revenue		2,507			3,947
Total current liabilities		8,861			11,124
Deferred revenue		47			77
Operating lease liabilities		787			1,361
Taxes payable		98			110
Other liabilities		3			—
Total liabilities		9,796			12,672
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 50,361,378 shares issued and 50,189,458 shares outstanding at October 31, 2022; 49,347,604 shares issued and 49,175,684 shares outstanding at January 31, 2022		503			493
Additional paid-in capital		266,352			265,644
Treasury stock, at cost; 171,920 shares at October 31, 2022 and January 31, 2022		(227	)		(227	)
Accumulated other comprehensive loss		(2,314	)		(973	)
Accumulated deficit		(235,544	)		(222,413	)
Total stockholders' equity		28,770			42,524
Total liabilities and stockholders' equity	$	38,566		$	55,196

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(In thousands, except per share data)


	For the Three Months Ended October 31,						For the Nine Months Ended October 31,
	2022			2021			2022			2021
Revenue:
Product	$	2,183		$	3,511		$	7,995		$	7,840
Service		6,105			3,640			14,340			10,903
Total revenue		8,288			7,151			22,335			18,743
Cost of revenue:
Product		1,622			1,609			4,114			2,708
Service		1,511			1,830			5,087			5,375
Total cost of revenue		3,133			3,439			9,201			8,083
Gross profit		5,155			3,712			13,134			10,660
Operating expenses:
Research and development		2,012			2,090			5,675			6,971
Selling and marketing		1,086			1,449			3,002			4,472
General and administrative		2,085			2,110			6,479			6,897
Severance and restructuring costs		379			75			572			646
Transaction costs		5			—			1,203			—
Loss on impairment of goodwill		3,255			—			9,098			—
Total operating expenses		8,822			5,724			26,029			18,986
Loss from operations		(3,667	)		(2,012	)		(12,895	)		(8,326	)
Other expense, net		(20	)		(67	)		(243	)		(83	)
Gain on extinguishment of debt		—			—			—			2,440
Loss before income taxes		(3,687	)		(2,079	)		(13,138	)		(5,969	)
Income tax (benefit) provision		(3	)		26			(7	)		(23	)
Net loss	$	(3,684	)	$	(2,105	)	$	(13,131	)	$	(5,946	)
Net loss per share, basic and diluted	$	(0.07	)	$	(0.04	)	$	(0.26	)	$	(0.13	)
Weighted average common shares outstanding, basic and diluted		50,291			49,040			49,599			46,334
Comprehensive loss:
Net loss	$	(3,684	)	$	(2,105	)	$	(13,131	)	$	(5,946	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(290	)		(291	)		(1,341	)		(649	)
Unrealized gains on marketable securities		—			—			—			1
Total other comprehensive loss		(290	)		(291	)		(1,341	)		(648	)
Comprehensive loss	$	(3,974	)	$	(2,396	)	$	(14,472	)	$	(6,594	)

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(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 July 31, 2022		50,176,824	$	501	$	266,177		$	(227	)	$	(2,024	)	$	(231,860	)	$	32,567
Issuance of common stock pursuant to vesting of restricted stock units		184,554		2		(2	)		—			—			—			—
Stock-based compensation expense		—		—		177			—			—			—			177
Foreign currency translation adjustments		—		—		—			—			(290	)		—			(290	)
Net loss		—		—		—			—			—			(3,684	)		(3,684	)
Balances at October 31, 2022		50,361,378	$	503	$	266,352		$	(227	)	$	(2,314	)	$	(235,544	)	$	28,770

	Common Stock				Additional						Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balances at July 31, 2021		49,212,173	$	492	$	264,972		$	(227	)	$	(430	)	$	(218,824	)	$	45,983
Stock-based compensation expense		—		—		274			—			—			—			274
Foreign currency translation adjustments		—		—		—			—			(291	)		—			(291	)
Net loss		—		—		—			—			—			(2,105	)		(2,105	)
Balances at October 31, 2021		49,212,173	$	492	$	265,246		$	(227	)	$	(721	)	$	(220,929	)	$	43,861

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(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, 2022		49,347,604	$	493	$	265,644		$	(227	)	$	(973	)	$	(222,413	)	$	42,524
Issuance of common stock pursuant to vesting of restricted stock units		1,013,774		10		(10	)		—			—			—			—
Stock-based compensation expense		—		—		711			—			—			—			711
Foreign currency translation adjustments		—		—		—			—			(1,341	)		—			(1,341	)
Short swing profit settlement		—		—		7			—			—			—			7
Net loss		—		—		—			—			—			(13,131	)		(13,131	)
Balances at October 31, 2022		50,361,378	$	503	$	266,352		$	(227	)	$	(2,314	)	$	(235,544	)	$	28,770

	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			—