seac-10q_20211031.htm

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, 2021

☐	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	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 December 1, 2021 was 49,040,253.

SEACHANGE INTERNATIONAL, INC.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets (Unaudited)	2

	Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	3

	Consolidated Statements of Stockholders’ Equity (Unaudited)	4

	Consolidated Statements of Cash Flows (Unaudited)	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

SIGNATURES		35

PART I – FINANCIAL INFORMATION

ITEM 1.

Financial Statements

SEACHANGE INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share data)

	October 31,			January 31,
	2021			2021
Assets
Current assets:
Cash and cash equivalents	$	17,551		$	5,856
Marketable securities		—			252
Accounts receivable, net of allowance for doubtful accounts of $521 and $934 at October 31, 2021 and January 31, 2021, respectively		5,374			6,050
Unbilled receivables		9,708			9,359
Prepaid expenses and other current assets		2,553			4,372
Total current assets		35,186			25,889
Property and equipment, net		512			605
Operating lease right-of-use assets		2,283			4,968
Intangible assets, net		303			1,272
Goodwill		10,176			10,577
Unbilled receivables		5,438			6,340
Other assets		617			757
Total assets	$	54,515		$	50,408
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,700		$	1,825
Accrued expenses		3,571			4,277
Deferred revenue		2,944			4,737
Promissory note		—			1,340
Total current liabilities		8,215			12,179
Deferred revenue		65			657
Operating lease liabilities		1,590			4,070
Taxes payable		659			763
Promissory note		—			1,073
Other liabilities		125			125
Total liabilities		10,654			18,867
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 49,212,173 shares issued and 49,040,253 shares outstanding at October 31, 2021; 37,811,224 shares issued and 37,639,304 shares outstanding at January 31, 2021		492			378
Additional paid-in capital		265,246			246,446
Treasury stock, at cost; 171,920 shares at October 31, 2021 and January 31, 2021		(227	)		(227	)
Accumulated other comprehensive loss		(721	)		(73	)
Accumulated deficit		(220,929	)		(214,983	)
Total stockholders' equity		43,861			31,541
Total liabilities and stockholders' equity	$	54,515		$	50,408

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

SEACHANGE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

	For the Three Months Ended October 31,						For the Nine Months Ended October 31,
	2021			2020			2021			2020
Revenue:
Product	$	3,511		$	1,048		$	7,840		$	5,212
Service		3,640			3,918			10,903			11,664
Total revenue		7,151			4,966			18,743			16,876
Cost of revenue:
Product		1,609			435			2,708			2,803
Service		1,830			1,755			5,375			6,974
Total cost of revenue		3,439			2,190			8,083			9,777
Gross profit		3,712			2,776			10,660			7,099
Operating expenses:
Research and development		2,090			3,024			6,971			10,550
Selling and marketing		1,449			1,636			4,472			5,490
General and administrative		2,110			2,636			6,897			7,057
Severance and restructuring costs		75			53			646			1,082
Total operating expenses		5,724			7,349			18,986			24,179
Loss from operations		(2,012	)		(4,573	)		(8,326	)		(17,080	)
Other expense, net		(67	)		(499	)		(83	)		(334	)
Gain on extinguishment of debt		—			—			2,440			—
Loss before income taxes		(2,079	)		(5,072	)		(5,969	)		(17,414	)
Income tax provision (benefit)		26			45			(23	)		(21	)
Net loss	$	(2,105	)	$	(5,117	)	$	(5,946	)	$	(17,393	)
Net loss per share, basic	$	(0.04	)	$	(0.14	)	$	(0.13	)	$	(0.46	)
Net loss per share, diluted	$	(0.04	)	$	(0.14	)	$	(0.13	)	$	(0.46	)
Weighted average common shares outstanding, basic		49,040			37,556			46,334			37,436
Weighted average common shares outstanding, diluted		49,040			37,556			46,334			37,436
Comprehensive loss:
Net loss	$	(2,105	)	$	(5,117	)	$	(5,946	)	$	(17,393	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment		(291	)		(143	)		(649	)		1,498
Unrealized (losses) gains on marketable securities		—			(33	)		1			(37	)
Total other comprehensive (loss) income		(291	)		(176	)		(648	)		1,461
Comprehensive loss	$	(2,396	)	$	(5,293	)	$	(6,594	)	$	(15,932	)

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

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 July 31, 2021		49,212,173	$	492	$	264,972	$	(227	)	$	(430	)	$	(218,824	)	$	45,983
Stock-based compensation expense		—		—		274		—			—			—			274
Foreign currency translation adjustment		—		—		—		—			(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

	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, 2020		37,727,987	$	377	$	245,817	$	(227	)	$	(500	)	$	(205,500	)	$	39,967
Stock-based compensation expense		—		—		437		—			—			—			437
Unrealized losses on marketable securities		—		—		—		—			(33	)		—			(33	)
Foreign currency translation adjustment		—		—		—		—			(143	)		—			(143	)
Net loss		—		—		—		—			—			(5,117	)		(5,117	)
Balances at October 31, 2020		37,727,987	$	377	$	246,254	$	(227	)	$	(676	)	$	(210,617	)	$	35,111

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		—		—		1,315			—			—			—			1,315
Unrealized gains on marketable securities		—		—		—			—			1			—			1
Foreign currency translation adjustment		—		—		—			—			(649	)		—			(649	)
Net loss		—		—		—			—			—			(5,946	)		(5,946	)
Balances at October 31, 2021		49,212,173	$	492	$	265,246		$	(227	)	$	(721	)	$	(220,929	)	$	43,861

	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, 2020		37,303,952	$	373	$	245,067		$	(147	)	$	(2,137	)	$	(193,224	)	$	49,932
Issuance of common stock pursuant to vesting of restricted stock units		379,063		4		(4	)		—			—			—			—
Issuance of common stock pursuant to ESPP purchases		5,702		—		18