SeaChange International Announces First Quarter Fiscal 2009 Results

Business Wire, May 29, 2008

* Total revenues 17% higher year-over-year

* Profitable quarter includes $2 million of shares repurchased

* Realignment of operating segments highlights strength of software

ACTON, Mass. -- SeaChange International, Inc. (NASDAQ: SEAC), a leading provider of software and hardware solutions for video-on-demand (VOD) television, announced financial results for its fiscal 2009 first quarter ended April 30, 2008. Total revenues for the quarter were $45.3 million which was $6.5 million or 17% higher than total revenues of $38.8 million for the first quarter of fiscal 2008. Net income for the first quarter was $0.3 million, or $0.01 per share, compared with a net loss of $4.6 million or, $0.16 per share, for the same period last year.

The Company ended the first quarter of fiscal 2009 with cash, cash equivalents and marketable securities of $79.0 million and no debt compared with $87.9 million and no debt at the end of the fourth quarter of fiscal 2008. Net income and non-cash expenses for depreciation, amortization and stock compensation totaling $3.5 million was more than offset by higher accounts receivable relating to the timing of product shipments during the quarter. In addition, the Company repurchased 283,000 shares of its common stock during the quarter at a cost of $2.0 million under its previously disclosed stock buyback program.

Beginning with this year's first quarter, the Company has realigned the financial reporting for its business segments to reflect the increasing importance and size of its portfolio of software products along with the growth of business and operations of the Company's U.K. subsidiary, On Demand Group Ltd. (ODG). The Company's new reporting segments are Software, which includes the Company's Advertising, VOD, Middleware and Broadcast software; Servers & Storage, which includes the Company's VOD and Broadcast server product lines; and Media Services, which includes ODG. Financial results for this year's first quarter along with comparably prepared financial results for last year's first quarter are included with this release.

On a segment basis, total revenues in the first quarter from the Company's Software segment was $30.1 million, which is $4.2 million or 16% higher than related revenues in the first quarter of last year. Year-over-year revenue growth in the Software segment was driven by increased SeaChange Axiom-related revenue for North American service providers and higher VOD software revenue for hospitality customers. The Servers and Storage segment generated $11.3 million in revenue for the first quarter of fiscal 2009, which is $2.7 million or 31% higher than revenue for the first quarter of fiscal 2008. This year-over-year increase in revenue was primarily the result of increased VOD server shipments to North American service providers, as well as higher Broadcast server revenue from Europe and Asia. Media Services revenue for this year's first quarter of $4.0 million was $0.4 million or 8% lower than the first quarter of last year due primarily to lower ODG professional services revenue from certain Latin American customers.

"We are delighted that we have begun fiscal 2009 with a profitable first quarter which marks the third consecutive quarter of profitability for SeaChange," commented Bill Styslinger, President & CEO, SeaChange International. "We are particularly encouraged by our solid top-line performance this quarter as historically the first quarter has generally been challenging. North American service provider spending for our VOD server and software products continues to be strong, driving gross margins to 50% for the quarter, the first time this level has been achieved in nearly two years."

Styslinger continued, "We have also revised our financial reporting for our business segments this quarter into three separate business units focusing ostensibly on our hardware, software and media services product offerings. We made this change primarily to allow investors to better appreciate the magnitude of our Software business and its contribution to the overall financial performance of SeaChange. With over 60% of the Company's revenue coming from our software products and services this quarter, SeaChange has clearly transformed itself into a leading software supplier to the growing digital television industry."

Commenting on guidance for the remainder of fiscal 2009, Styslinger noted, "We expect that fiscal 2009 revenue will be approximately 10% higher than fiscal 2008 and that we will be profitable for the second quarter and full year for fiscal 2009. Our confidence stems from expected continued strong spending throughout fiscal 2009 by North America-based cable television companies, as well as cost containment relative to selling, general and administrative expenses."

The Company will discuss its financial results and business outlook in more detail today during its webcast conference call at 5:00 p.m. EDT, which will be available live and archived at www.schange.com/IR/.