SeaChange International, Inc. Net Income surged on 119% while Revenue decreased on 4.2%
04/16/2018 • About SeaChange International, Inc. (
$SEAC) • By InTwits
SeaChange International, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- SeaChange International, Inc. is a company in decline: FY2018 revenue growth was -4.2%, 5 years revenue CAGR was -12.6%
- The company operates at negative EBITDA Margin: -0.9%
- SeaChange International, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -18.6% for the sames years
- SeaChange International, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $1m in FY2018, $1m in FY2017, $1m in FY2016, $2m in FY2015, $2m in FY2014
- The company has unprofitable business model: ROIC is -6.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.3x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SeaChange International, Inc.'s Revenue decreased on 4.2%. Annual revenue decline showed slowdown in FY18Q4 - revenue decreased on 3.6%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 56.3 pp from -57.2% to -0.89% in FY2018. During the last 5 years EBITDA Margin bottomed in FY2017 at -57.2%.
Gross Margin jumped on 16.9 pp from 50.3% to 67.2% in FY2018. During FY2014-FY2018 Gross Margin bottomed in FY2016 at 43.8% and was growing since that time. SG&A as a % of Revenue decreased on 2.1 pp from 36.0% to 34.0% in FY2018. SG&A as a % of Revenue grew at 3.3 pp per annum in the last 5 years.
Net Income margin jumped on 102 pp from -85.0% to 16.8% in FY2018. During the last 5 years Net Income margin bottomed in FY2017 at -85.0%.
Investments (CAPEX, working capital and M&A)
SeaChange International, Inc.'s CAPEX/Revenue was 0.66% in FY2018. CAPEX/Revenue decreased slightly on 0.97 pp from 1.6% in FY2015 to 0.66% in FY2018. Average CAPEX/Revenue for the last three years was 0.93%. CAPEX as a % of Revenue followed a declining trend at -0.27 pp per annum in FY2014-FY2018.
Return on investment
The company operates at negative ROIC (-6.9%) and low but positive ROE (17.4%). ROIC surged on 46.7 pp from -53.7% to -6.9% in FY2018. ROE surged on 88.4 pp from -71.1% to 17.4% in FY2018. During the last 5 years ROIC bottomed in FY2017 at -53.7%. During the last 5 years ROE bottomed in FY2017 at -71.1%.
Leverage (Debt)
The company has no debt. Cash jumped on 54.2%.
Management team
The company's CFO Peter Faubert has spent 3 years with the company.
Financial and operational results
FY ended 01/31/2018
SeaChange International, Inc. ($SEAC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 146.3 | 115.4 | 107.0 | 83.8 | 80.3 | -4.2% |
| Gross Profit | 79.2 | 57.1 | 46.8 | 42.2 | 53.9 | 27.9% |
| SG&A | 32.6 | 29.9 | 30.7 | 30.2 | 27.3 | -9.7% |
| EBITDA | 7.4 | -17.6 | -40.0 | -47.9 | -0.7 | |
| Net Income | -3.0 | -27.5 | -47.7 | -71.2 | 13.5 | |
Balance Sheet
|
|---|
| Cash | 115.7 | 90.0 | 58.7 | 28.3 | 43.7 | 54.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 2.3 | 1.9 | 1.4 | 0.7 | 0.5 | -23.0% |
Ratios
|
|---|
| Revenue growth | -6.9% | -21.1% | -7.3% | -21.7% | -4.2% | |
| EBITDA growth | 29.2% | -338.4% | 127.3% | 19.6% | -98.5% | |
|
|---|
| Gross Margin | 54.1% | 49.5% | 43.8% | 50.3% | 67.2% | 16.9% |
| EBITDA Margin | 5.1% | -15.3% | -37.4% | -57.2% | -0.9% | 56.3% |
| SG&A, % of revenue | 22.3% | 25.9% | 28.7% | 36.0% | 34.0% | -2.1% |
| Net Income Margin | -2.1% | -23.8% | -44.6% | -85.0% | 16.8% | 101.8% |
| CAPEX, % of revenue | 1.6% | 1.6% | 1.3% | 0.8% | 0.7% | -0.2% |
|
|---|
| ROIC | -0.8% | -14.1% | -31.8% | -53.7% | -6.9% | 46.7% |
| ROE | -1.5% | -14.6% | -31.6% | -71.1% | 17.4% | 88.4% |
| Net Debt/EBITDA | -15.7x | | | | |
SeaChange International, Inc. ($SEAC) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17 | 17 | 23 | 23 | | -22.7% | -6.6% | 17.4% | -3.6% |
| EBITDA | -4 | -1 | 2 | 2 | | | | | |
| Net Income | -5 | -2 | -0 | 21 | | | | | |
Balance Sheet
|
|---|
| Cash | 27 | 25 | 27 | 44 | | -47.9% | -34.6% | -1.2% | 54.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 59.3% | 66.3% | 69.8% | 71.0% | | 16.8% | 25.9% | 17.9% | 4.8% |
| EBITDA Margin | -25.5% | -5.2% | 9.0% | 10.1% | | 11.7% | 49.0% | 43.3% | 108.9% |
| Net Income Margin | -32.2% | -8.9% | -0.9% | 89.9% | | 9.1% | 136.8% | 39.5% | 204.8% |
Peers in Application Software
Below we provide SeaChange International, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| SeaChange International, Inc. ($SEAC) | | -21.1% | -7.3% | -21.7% | -4.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 65.3% |
|---|
| SeaChange International, Inc. ($SEAC) | 54.1% | 49.5% | 43.8% | 50.3% | 67.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.3% | -9.4% | -4.7% | -3.3% | -3.3% |
|---|
| SeaChange International, Inc. ($SEAC) | 5.1% | -15.3% | -37.4% | -57.2% | -0.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| SeaChange International, Inc. ($SEAC) | 1.6% | 1.6% | 1.3% | 0.8% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.4% | -11.2% | -9.2% | -10.2% | -9.8% |
|---|
| SeaChange International, Inc. ($SEAC) | -0.8% | -14.1% | -31.8% | -53.7% | -6.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.2x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
