Greetings, and welcome to the SeaChange International Fiscal 2015 Third Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Monica Gould, Investor Relations for SeaChange. Thank you. You may begin.

Thank you, Rhea. Good afternoon, everyone, and thank you for joining us. SeaChange released results for the third quarter of fiscal 2015 ended October 31, 2014, today after the market closed. If you would like a copy of the release, you can access it on the IR section of our website at www.schange.com/ir. With me on today's call are Jay Samit, Chief Executive Officer; and Tony Dias, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website. Before Jay begins, I'd like to remind you that the information we're about to discuss today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations that are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectation. These risks are outlined in our SEC filings, including our annual report on Form 10-K, which was filed on April 4, 2014. Any forward-looking statement should be considered in light of these factors. Additionally, this presentation contains certain non-GAAP or adjusted financial measures as defined by the SEC. Per SEC requirements, we have provided a reconciliation of these measures to the most directly comparable GAAP measures in tables attached to the press release. Any redistribution, retransmission or rebroadcast of this presentation in any form without the expressed written consent of SeaChange International is prohibited. And with that, I'd like to turn the call over to Jay.

Thank you, Monica. Good afternoon, everyone, and thank you for joining SeaChange's call today. I'm delighted to be a part of SeaChange team at this exciting time for our industry. Since joining the company 6 weeks ago, I've had the opportunity to work with many of our talented employees and visit with some of our largest service provider customers around the world. Before I discuss our fiscal third quarter results, I'll share some of my early impressions from these meetings and outline our strategic priorities as we head into calendar 2015. Our customers are extremely happy with our next-generation platforms for multi-screen delivery, monetization and personalization. SeaChange solutions strengthen our customers' video service offerings, increasing their revenue by raising ARPU and lowering churn, while substantially reducing their capital expenditures and operating costs. In fact, many of our customers are pleased to recommend SeaChange to other service providers. This advocacy has been a powerful factor in our recent design wins. Earlier this week, I had the unique opportunity to open an industry conference that attracted many of our top customers and customer prospects from North America and Europe. BBC and LGI were present and happy to offer their recommendation for SeaChange to other potential customers. SeaChange's strong product portfolio and services provide a testament to the tireless efforts of my colleagues and the strength of the company's culture, which has enabled us to attract and retain top talent. Looking forward, our first strategic priority is to continue our momentum with our core service provider customer base. This means executing on our current design wins to transition these to successful commercial deployments and achieving timely acceptance for our already deployed products. Our second strategic priority for the new year is to step up our efforts to capitalize on the fast growing opportunity to serve premium OTT video, whereby content owners are making their high-value video libraries available directly to paying consumers. As part of this strategy, we are pleased to announce the SeaChange Rave Premium OTT video platform. With our market-leading Adrenalin multi-screen software at its core, Rave enables television programmers, movie studios sports leagues and other content owners to offer high-quality streaming and downloading video services while optimizing subscription and advertising revenue. We believe that our expansion into this media company segment can accelerate our top line growth, improve our visibility by increasing our recurring revenue base while reducing the volatility related to the timing of acceptances. Moreover, potentially shorter sales and implementation cycles in OTT can compress our time-to-revenue recognition. Our third strategic priority is to pursue acquisition opportunities that could bolster our presence in adjacent market segments such as OTT and new technologies to provide end-to-end solutions that enhance our growth. As a result, we do not anticipate to execute on our previously authorized buyback program. Turning to our third quarter results. I'll review our financial and operating highlights and then turn the call over to Tony, who will walk you through the financials. During the third quarter, SeaChange recorded revenue of $30 million, up slightly from the second quarter of fiscal 2015, led by growth in services and new product revenue. Due to modestly increased sales volume, we narrowed our non-GAAP operating loss to $0.07 per basic share from $0.08 in the prior quarter. In addition, we continue to make progress with respect to acceptances in new design wins. Specifically, we received acceptance of our Nucleus gateway video software for Liberty Global's launch in Poland. As anticipated, we achieved 2 new Nucleus design wins, the first with one of the Asia's largest video service providers and the second with next generation cable service provider, Layer3 TV. Both of these customers plan to deploy Nucleus in conjunction with their rollout of 4K enabled set-top boxes. In addition, our cloud-based offering continues to gain momentum. During the quarter, we were selected by BBC Worldwide to bring the BBC Store to 2 additional countries beyond the U.K. Also, Brazil's Algar Telecom significantly expanded its Cloud Service trial. Now I would like to spend a little bit of time reviewing our recent design wins. Both operators have made very substantial technology decisions that have been in the planning phase for over a year. These decisions will dictate our customers' video strategy for the next 10 years, and SeaChange has been at center of this decision-making process. Our new customer in the Asia Pacific Region is planning a substantial upgrade to their entire network in order to deliver the latest services to its customer base and future proof its network. Layer3 TV, on the other hand, is architecting a brand new network from the ground up. We're thrilled to have been selected for both of these high-profile projects, which reflect our 90%-plus win rate for next-generation video gateway software. Based on the improvement in the anticipated receipt of customer acceptances for our new products since the beginning of the year, we continue to anticipate revenue growth and improvement in our profitability in the fourth quarter. However, due to shifts in the timing of new design wins for our multiscreen products and services, we believe that our full year revenues will be lower than had previously been forecast. Tony will walk you through some of the third quarter financial details and provide more specific guidance on our outlook for the fourth quarter and full fiscal year. With that, I turn the call over to our CFO, Tony Dias. Tony, please go ahead.

Thank you, Jay. I'll start by reviewing our third quarter results before providing an outlook for the fourth quarter and full fiscal year. For the third quarter of fiscal 2015, total revenues was $30 million, reflecting our ongoing focus and success in achieving timely customer acceptances for our next generation software products. Our results were in line with guidance that we provided, despite the negative impact of the strengthening U.S. dollar had on our European business during the quarter, which decreased our European revenues by 5%. Our revenue -- our third quarter results were driven by a 7% sequential increase in service revenues to $22.7 million, which accounted for 76% of total revenue. Product revenue was $7.3 million, where new products accounting for approximately 60% of total product revenue. Total new product revenue rose 4% from the second quarter, led by an increased sales of our advertising platform. Our blended non-GAAP gross margins were 50% compared to 53% in in the second quarter. This sequential decline was primarily driven by lower product gross margins, which decreased to 62% from 79% in the second quarter as a result of a higher mix of past due third-party product revenue that was recognized in the third quarter. These third-party products relate to a customer deployment where SeaChange is the lead systems integrator and carry lower margins than our typical software margins. Gross service margin -- gross service margins increased sequentially from 42% to 47% due to the recognition of higher professional services revenue with the same cost bases. Non-GAAP operating expenses decreased to $17.2 million, with all expenses categories declining sequentially on an absolute level due to lower headcount-related costs. Our non-GAAP operating loss narrowed slightly to $0.07 per basic share compared to $0.08 per basic share in the second quarter. Total revenue in the third quarter was driven by a 29% sequential increase in sales to international customers, which accounted for 51% of total revenue in the third quarter compared to 40% in the prior year -- prior quarter, excuse me. Our balance sheet continues to be very strong. We closed the quarter with cash balance of approximately $108 million and no debt. Now I'd like to turn to our outlook for the fourth quarter and full fiscal year. While we continue to make good progress on achieving timely acceptances for deployed products, we have experienced some delays in expected new design wins for our multiscreen products and services. Specifically, some new design wins we've previously anticipated in the prior quarter are now expecting by the end of this fiscal year. Due to the shift in the timing of these associated revenue recognition from these design wins, we anticipate fourth quarter revenue to be in the range of $30 million to $34 million and non-GAAP operating results to be in the range of a loss of $0.07 per basic share and income of $0.01 per basic and diluted share. For the full year, we expect revenues to be in the range of $114 million to $118 million and non-GAAP operating loss in the range of $0.44 to $0.36 per basic share. This compares to our previous guidance in the range of $125 million to $130 million and non-GAAP operating results of a loss of $0.12 per basic share to income of $0.02 per basic and diluted share. With that, I'll hand the call back to Monica. Thank you.

Thank you, Tony. Rhea, could you please provide instructions for the Q&A session?

[Operator Instructions] Our first question comes from the line of Michael Kupinski with Noble Financial.

This is actually Juan Bejarano for Michael Kupinski. So you've revised estimates lower for the past few quarters. Last quarter, you stated that you've introduced the new CRM [ph] software that will help track revenue opportunities and likeliness of acceptance. I guess the question is what keeps happening? I mean, you continue to lower estimates. Maybe if you can discuss how that's -- what keeps happening.

So as the new sheriff in town, so to speak, let me give you my approach. I can't speak to what happened in the past. But given that we do not have control on our clients' pace of doing things, my approach is I need to be much more conservative in looking at our pipeline of what will fit within that quarter time frame. What's most significant is our shift is not that we lost any business or lost any customers. It's just that due to factors that have nothing to do with our business or our relationship with our customers, their timing changed. So my goal was to be more conservative so that we don't maintain that pattern in the future.

So do you expect a ramp in Q1? I mean, last earnings call, you stated that -- well, they stated that Q4 was going to be stronger than expected. So do you think Q1 in next year is going to have a ramp or...

We're not -- at this point, we're not present to -- to give guidance for the first quarter of next year just yet. I'll do that later on during our next earnings call.

Okay. And then, regarding business opportunities, it seems you're now really focused on the OTT market, just having launched the SeaChange Rave. Are you in active discussions with other players other than BBC and Algar Telecom?

So first let me characterize that we're not focused on OTT. Our core customer base is expanding into OTT as well as new people are going to OTT. So yes, we are in active discussions. We are commencing trials. The range of people looking at this, I don't have to tell you the headlines that you see every day, the acceleration of people exploring this. So it's a land grab, and we're trying to be -- maintain our lead in this space.

Okay. And then, just kind of discussing a little bit the relationship with Liberty Global, I just kind of wanted to find out. I mean, they accepted Poland. Do you -- are they expanding into other countries at the moment?

Yes, they have. They've announced that they're doing with us. So we have 2 territories that they've not publicly talked about in specifics. They've expanded the number of people using it in Poland. It's in the thousands now. I've had conversations with the client. And the best way I can describe the relationship is as we're now in discussions with other providers about getting wins, we've asked that they can talk to Liberty Global. And Liberty Global has been tremendous at speaking to potential clients on the quality of the product and their -- how pleased they are. So the relationship is great.

Our next question comes from the line of Steven Frankel with Dougherty & Company.

I'd like to try to dig into the guide down a little bit. So how many Adrenalin installations that initially thought were targeted for Q4 have now slipped out of that quarter?

Two, and we expect them both to close within the next 2 months, within the next 60 days.

Well, I'm talking about implementations. So these were 2 implementations that you guys are saying they were supposed to be in Q4, now they're going to be in Q1?

No, these are 2 design wins we're expecting that we were going to get the designs wins in prior quarter.

Okay. Now what about implementations?

Well, we anticipated implementing in Q4, but now it's going to be -- it'd be next year because we're not going to get the design win until later this year, this fiscal year.

We can't get to step 2 until we get to step 1.

Right. But were there other Adrenalin transactions that you've been working on that you thought would go live in Q4 that now aren't going live until some period past that? And where are we in that Adrenalin implementation backlog?

Anything that we've talked about having acceptances over this year, we've not completed.

Okay. And then, in terms of Layer3 and this Asian customer, would you anticipate any material revenue next fiscal year or really relates to their launch, which could be beyond that if we're talking about 4K set-top boxes?

No, we're anticipating meaningful revenue next year.

Okay. And then, in terms of Adrenalin, how many more deals are left in backlog?

We don't have a number specifically. There's quite a few deals that we have in backlog that we'll take revenue in Q4.

Okay. Jay, question for you. And clearly, one of the issues the company has grappled with is that it's taken far longer than anybody thought to get these Nucleus deals to acceptance. What do you anticipate changing to tighten that up, as you talk about these 2 new wins this quarter being in revenue next year? So what are you going to do differently to make that happen?

So reality makes it different, and let me explain. I wasn't here, so I can't speak to how people were estimating the first time rolling out a new product, inventing it and working with clients to make it deploy. But the first time you roll out a piece of software, it's a huge amount of guesswork. The second time you implement it, it's a shorter period of time. And the third time, it's as close to cookie-cutter as you're going to get. We're now in that third stage. So we're now going, as in the case of Liberty Global, the time it took to get Poland out versus the time it takes to get the next 2 countries up, much, much quicker. And you're going to see this even as we work with different service providers that have different integrations because of the way it was built to work with any chipset virtually in any box. Speed to market is one of the advantages of why service providers now want to go with this platform because [ph] the risk of how long we will take to implement has now been taken out of the equation. Does that answer your question?

It does. Did you -- I know you're canceling the buyback going forward, but did you buy any shares during the quarter?

No, we did not.

Okay. And since you've opened the discussion to acquisitions, could you give us any more clues as to what kinds of companies you'll be looking for to add to this model? And what kind of dilution are you willing to tolerate?

So obviously, I don't want to open the kimono [ph] and interfere with negotiations or give other people ideas that they -- I don't want them to have. But what I can say is our goal is to provide an end-to-end solution in what is a huge change in how television and the viewing of video is taking place globally. And so we're open to dilution, which is part of it. Because this is about a land grab at a moment in time that an entire industry, the broadcast industry, the cable industry, the advertising industry are fundamentally changing. And our history, our track record of having very challenging clients for decades really sets us apart from other people trying to enter this environment. And so there's pieces of the puzzle that will accelerate our ability to grab market share.

Our next question comes from the line of Hamed Khorsand with BWS Financial.

I wanted to start off with -- I'm trying to understand, have you guys deemphasized anything? Are you going into too many routes and too many different product lines? What's going to be the focus, Adrenalin, Nucleus? What's the game plan for calendar '15?

So we've built this next generation of products, and we are now rolling those out to our core customers. Those core customers are also saying their business is changing and they have new expanded needs in the OTT space. Those same products make up the core of what makes Rave work. So you still need the back office piece of it. You still need some of the other components that we have. So it's adding on what's working and listening to the market of what they're asking for.

Okay. And are you able to talk about what you're working on the Nucleus side? I mean, is there work being done on that end?

In what aspect? We're adding...

In more customers, with more customers.

Well, we have 2 more customers that we're hoping to have announced in the next 60 days.

Yes. And I mean, on the last earnings call, you guys made mention that you had -- got one new customer. Where do you guys stand with that one?

We did announce -- in our earnings call, we announced level -- sorry, Layer3 TV as a Nucleus design win, and we also talked about a new design win in Asia Pac.

No, no, this last earnings call you guys were talking about a European customer.

No, I don't recall a European customer, but we talked where we're going to do 2 design wins before the end of this year. And I think -- and these are the 2 we've talked about.

All right. I'll go back to my notes. That's it for me. I'll ask you later offline.

[Operator Instructions] Our next question comes from the line of Todd Mitchell with Brean Capital.

Can you just run through some metrics with us? First of all, on Adrenalin, you've previously given the number of customers. Can you give us some idea of the number of customers at last fiscal year end and the number of customers who have deployed it at this fiscal year end?

Oh, I could tell you it's in excess of 50 at the moment. I don't recall what the number was at the end of last fiscal period, to be truthful.

Do you have any idea of what the net adds would have been for this year?

I think it was over 40 last time, and then, maybe it's over 50 now. So it's at least a minimum of 10.

And is there an issue with monetization versus your initial expectations for the product other than the timeliness?

No. I think we've deployed and have accepted all the previous deployments. And now these customers are upgrading and adding new features to these Adrenalin rollouts. And we talked about this quarter is only we have 2 design wins we expected, and those are going to come at the end of this fiscal period.

And when you talked about these this new Rave product, I understand for a B2C model for a content company. But in terms of your existing customer base, really over the top as a managed service is kind of at the core of the TV Everywhere service profile. Is -- should we understand this as a hosted model or just an extension of the basic Adrenalin kit in terms of your core customer base?

Excellent question, Todd. What it really is, is our first time of giving greater flexibility of what that business model is with a new product, whether it's -- it moves into recurring revenue by allowing us to either price by volume and number of subs, a pay-as-you-go, a wider range because now that we have something that's built and scalable, we can work with partners in this space to craft a relationship that one size doesn't have to fit all.

Okay. And if you talk about the customer win with BBC, is Adrenalin at the core of their distribution platform for the iPlayer? Or is this an extension for ancillary markets?

They're -- as many people have learned in this space, they've gone out with something that satisfied a small subset of what could be done. And what they're realizing is the iPlayer didn't meet all the business needs that they need for their vast library and the range of models, buying special packages, buying binge-watching, all the various things that you would want to try, subscription advertising, whatever. So this is moving beyond what they had done. And that's why they went to us and are looking at this as something that can be rolled out territory-by-territory.

So from your commentary, it seems like you've gotten a couple of territories. Would you be hoping to sort of backward integrate into the core market?

Oh, you mean domestic U.K.?

Yes.

That's up to them of what their timetable is of which markets and how they're doing. My guess -- and I guess I'm not supposed to do guesses here, is the old expression, you test it in [indiscernible] before you bring it to Broadway.

Okay. And in terms of the LGI win, we knew about Poland going live in November. You said on this call that you had one -- another market. And then you also, inadvertently perhaps, said that you've won 2 markets. My understanding is that LGI has got -- beyond Poland, that they have 3 markets on the table for consideration with this. They have also publicly mentioned that they're announcing Horizon as they're branding it in the Czech Republic. Can you confirm, is that the market that you're currently looking at as a secondary market? And can you comment about the other markets that they have up for deployment, which I believe are another Eastern European market and Chile?

So out of respect to the way that they've asked us, since you brought it up, yes, I can confirm. I just wasn't in the position to bring it up.

You can confirm Czech Republic. Can you confirm beyond the second market?

And I can confirm Chile.

Brilliant, that's helpful. One last question here -- well, actually 2 more questions here. How many subs does this U.S. operator have at this point? And does that say something about the size of that deal?

Currently, they're building out their subscriber base at this point. This is a new platform they're building out.

Okay. And lastly, with the Nitro product, the advertising product, you mentioned you had 2 wins in there. Can you articulate what the core business model is in terms of selling that? Is it a subscription? Is it a subscription tied to volume? Is it a subscription tied to subs?

We talked about 2 design wins, upcoming design wins related to Nucleus. And that's based -- priced on a per sub basis with a whole bunch of service revenues and customizations that go with it.

Yes, I guess I was referring to the advertising product.

I think you mean Infusion.

Infusion?

I'm sorry. Yes, sorry.

No, that's based on the number of channels, and that's a licensing deal.

Our next question comes from the line of Brian Coyne with National Alliance Capital Markets.

I guess first of all, I'd like to build on directionally where Todd was going a little bit earlier with Rave. I know you talked a little bit about it being a land grab. But what's your margin plan in what's obviously a pretty crowded market with big competitors?

Respectfully, I don't see it crowded in competitors. In the standpoint of -- there are many people that went out with very simple apps. If you look at TMZ, you can go, click and there's 5 videos and you can watch them. But that doesn't allow you to sell, have a subscription, target advertising, multi-screen, all the various complexities that we're hearing and in discussions with. So what separates us in our go-to-market strategy is building on our decades of experience, our demanding environments, our demanding clients and looking at premium OTT as an extension of our core product as opposed to being a new thing that we're going into. And so far, that's been working very well. We're amazed.

If I'm hearing you correctly, it's almost -- maybe it's sort of a matter of, perhaps, higher-end features or other functionality that may allow for better monetization of higher entity content. Is that a fair way to describe it?

I'm not understanding. If you could rephrase the question, I apologize.

Sure. Yes. No, it's -- I guess I'm just thinking of unified platform or other OTT [indiscernible] platforms that are out there. And then just it sounds like -- I mean, I think -- if I'm hearing you properly, maybe I'm not. But what you're saying is it has a lot to do more with sort of features and benefits that allows for sort of better monetization of OTT from a service provider standpoint. Or maybe I'm wrong on that.

No, no. I think the word instead of better is more flexible. Because if you put yourself in our customers' standpoint, there is not a trailing bunch of data for them to know what model is going to work in what territory with what type of content for what audience. So if you go and you spend all your money in marketing and everything on a platform that doesn't give you that flexibility, you may have been painting the room and painting yourself into the corner. When you go with us, we're giving you that flexibility, and we're adding to that flexibility with Rave a partnership recurring revenue-type relationship so that we can grow and explore and try those things with our customers. And I think that's what made the BBC comfortable to go and expand the way that they are. And I think the success of that relationship is giving other executives comfort in an area that they may not have had the same level of expertise that some of our traditional customers would have in spec-ing a design.

Okay, great. Yes, that's helpful. And I guess, just a follow-up, I wonder if you could talk perhaps again maybe a little bit more detail about the couple of wins you've had for Nucleus that you described. And just I guess in terms of -- I know you talked about sort of a high rate of win in that product category, if you will, but perhaps talk a little bit more about sort of competitively how you're differentiating. And then also what are the prospects for extending additional offerings, I guess including Rave into that the existing Nucleus customer base.

Great question. So at the core of it is when we're going with Nucleus, Nucleus obviously is one of our products. It instantly makes it easy for us to then sell Adrenalin tied into that, to sell things around it, and if they want to get into at the core of Rave build that into it. Everybody has their own pace at which they're going into this new unexplored territory of delivering content on multiple devices in multiple business models. So we see getting in with the next generation as being on the inside track and developing that with everybody. What probably and I wasn't here, was the challenge until you get the first customer up saying, "The new model works and it's great," think of the first year of Tesla. You're going, "Wow, it sounds cool, but I don't know anybody that's driving one." And then, it's out there and Motor Trend comes out and says it's the best car that was ever built, the highest rating ever. It makes it really easy to sell out of Teslas. So we're now at that stage where LGI is a great partner to be sharing their experience with prospective clients of ours.

[Operator Instructions] Our your next question from the line of Michael Kupinski with Noble Financial.

This is actually Juan Bejarano, again. Just coming back to the acquisition strategy, I just want to get a sense of how big a financial acquisition you would consider. I know you talked about dilution. Are we thinking something in the $25 million, $50 million or $100 million, maybe even more? Would you consider adding debt to the balance sheet? And maybe if you can discuss the metrics you would base the acquisition on, revenue or cash flow?

I see no advantage of tipping my hand on what we're doing. All that I will say is that you'll see us move at an aggressive pace in this space. The goal is to grow the business in areas that we can have the greatest growth and profitability.

Would you consider adding debt to the balance sheet? Or you don't feel comfortable talking about that?

I don't have a strong opinion one way or the other. I don't want you to read anything into my answer to the question.

Thank you. We have no further questions at this time. I'd like to turn the floor back over to management for closing remarks.

Well, I want to thank everybody for joining us today and for your continued support and interest in SeaChange, and have a great evening, everybody.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.