SeaChange International, Inc.

Good afternoon, and welcome to C-Change's Fiscal Second Quarter 2022 Conference Call for the period ended July 31, 2021. My name is Alex, and I will be your operator this afternoon. Joining us from the company is Executive Chairman Robert Pons, Chief Financial Officer Michael Prynne, and Senior Vice President of Global Sales and Marketing Chris Klimmer. After the market closed today, C-Change issued its financial results for the Fiscal Second Quarter in a press release. a copy of which is available in the Investors section of the company's website at www.cchange.com. Before we begin today's call, I would like everyone to please take note of the Safe Harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in the forward-looking statements that management will be making today. As indicated, forward-looking statements are based on management's current expectations and are subject to a number of risks and uncertainties, that may cause actual results to differ materially from expectations. These risks and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statement should be considered in light of these factors. Additionally, this call contains certain non-GAAP financial measures, as that term is defined by the SEC and Regulation G. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, C-Change has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release issued today. I would like to remind everyone that this call is being recorded and will be made available for replay via a link available in the investor relations section of C-Change's website. Now, I would like to turn the call over to C-Change's Executive Chairman, Robert Pons. Sir, please proceed.

Thanks, operator, and good afternoon, everyone. Thank you for joining us today. The stabilization period for our company is over. We are now in a growth mode, as demonstrated by our second quarter results. C-Change is well positioned to capitalize on the intersection of the explosive growth in all things ad tech and all things streaming. C-Change has the technology assets and deep experience to provide cable operators and streaming content owners worldwide with advanced advertising technology and a turnkey managed services streaming enablement platform. Our highly targeted advertising capabilities and turnkey streaming platform help customers worldwide. The worldwide streaming market is booming with over 200 streaming services and counting. which is expected to grow from 70 billion this year to 160 billion by 2024, an impressive 18% compounded annual growth rate. When you layer on global digital advertising spending, the total addressable market today exceeds 500 million. As the technology that powers streaming, targeted ad technologies, and video platforms globally, C-Change is at the epicenter of this massive opportunity of the broadcast industry's transition to streaming coupled with advanced advertising technologies. After Mike walks you through our Q2 financial performance, Chris will discuss in detail our newly established three product lines and how we have positioned the company to capitalize on the exploding growth of streaming and ad tech. I will then come back with some closing comments before the Q&A. Mike?

Thanks, Bob, and good afternoon, everyone. Turning to our financial results for the second quarter of fiscal 2022 compared to the first quarter of fiscal 2022. Total revenue for fiscal Q2 2022 was $6.5 million, an increase of 29% compared to the prior quarter, and an increase of 31% compared to the same quarter last year. The sequential and year-over-year increase in total revenue was driven by a significant increase in product revenue and a slight increase in service revenue. We believe the revenue growth we delivered in Q2 marks our company's successful transition from a period of stabilization to growth mode. Product revenue for fiscal Q2 2022 increased 67% to $2.7 million, or 41% of total revenue. compared to 1.6 million or 32% of total revenue in the prior quarter. Service revenue for fiscal Q2 2022 increased 12% to 3.8 million or 59% of total revenue compared to 3.4 million or 68% of total revenue in the prior quarter. Revenue from our international markets in fiscal Q2 2022 was 4.7 million or 71% of total revenue, which compares to $2.9 million, or 56% of total revenue in the prior quarter. Revenue in our U.S. market for fiscal Q2 2022 was $1.9 million, or 29% of total revenue, which compares to $2.2 million, or 44% of total revenue in the prior quarter. Looking at our margins, gross profit for fiscal Q2 2022 was 4.1 million or 63 percent of total revenue compared to 2.8 million or 56 percent of total revenue in the prior quarter. Product gross margin for the fiscal second quarter of 2022 was 74 percent compared to 75 percent from the prior quarter. Service gross margin was 55 percent compared to 47 percent from the prior quarter. Looking at our expenses, our non-GAAP operating expenses for the fiscal second quarter of 2022 decreased 4% to $5.4 million from $5.6 million in the prior quarter. They also decreased 21% compared to the second quarter of last year. We're pleased with this significant reduction, which is a direct result of the tremendous effort put into improving operating efficiencies over the last 12 months. Gap loss from operations for fiscal Q2 2022 totaled $2.5 million, an improvement of $1.3 million, compared to $3.8 million in the prior quarter. As a percentage of total revenue, gap loss from operations for the second quarter of fiscal 2022 was negative 38%, which compares to negative 75% in the prior quarter. Non-GAAP loss from operations for fiscal Q2 2022 totaled $1.3 million, or a loss of $0.03 per basic share, an improvement compared to $2.8 million, or a loss of $0.07 per basic share in the prior quarter. As a percentage of total revenue, non-GAAP loss from operations was negative 20% compared to negative 55% in the prior quarter. GAAP net income for fiscal Q2 2022 totaled $0.2 million, which compares to a loss of $4.1 million or a loss of $0.10 per basic share in the prior quarter, reflecting a non-recurring gain related to the forgiveness of the $2.4 million PPP loan. Non-GAAP net income for fiscal Q2 2022 totaled $1.5 million or a gain of $0.03 per fully diluted share compared to a non-GAAP net loss of $3.1 million or a loss of $0.07 per basic share in the prior quarter. Again, we're pleased to see the results of our progress in both the top and bottom line of our second quarter. Turning to the balance sheet, at quarter end, we had $18.9 million in cash and cash equivalents and no debt. In the second quarter, we finalized and received forgiveness for our entire $2.4 million loan loss. we received as part of the payroll protection program. Having no debt on the balance sheet and approximately $18 million in cash gives us a strong balance sheet and puts us in a good position to execute our growth strategy in the second half of the year and beyond. This completes my financial summary. For a more detailed analysis of our financial results, please refer to today's earnings release as well as our 10-Q, which we plan to file by the end of the week. Chris?