SEAC...talked to CEO, CFO, Chairman of the Board in a Zoom conference with other shareholders this afternoon.
----They know they made a big mess in their messaging. The CEO apologized several times. They know they set shareholders up with the discussion at Needham conference and that the pr's in March implied more than they wanting them too. He also admitted in the earnings release that they didn't highlight the fact that their last 2 quarters have had 77% and 73% margins. Instead they talked about whole year margins of 60%. They didn't talk about how they got their expenses down to the lowest in a year and expect to hold them there. He said they completely missed the mark and they know it.
----Here's a big one......they didn't mention the fact that executives are so bullish on hitting $85M for the year that they are taking option compensation for 3/4s of the salaries in Q1 that pay out only if they hit that target number for the year. They actually initiated this in mid-March. I missed the price point they are doing it at. I thought it was $3.50, but it could have been $2.50. I'm not sure why there hasn't been anything out on it, but it should be in the 10Q coming.
----Their Framework system is now essentially locking out any competition going forward for their customers. I specifically asked about this as it's not been described well. In the past customers mix and matched solutions to make a whole package. Now they are providing the framework as an all encompassing package in one as a licensing fee and deal for 5 years, but the near future plan is to roll out this App-like Store that adds in modules for additional products (from them or other developers) and additional revenue for them.
----the next package on top of that is this new advertising product they started to discuss in the cc call. They didn't want to go into it too much, but they are very bullish about it. It's connected to another company it sounded like and they left it at just saying there will be a pr on it in the future that describes it all more. They see a real demand for it esp with advertising being an issue now for media companies.
---The 4 deals that were not signed in January are still being discussed. Part of the problem was that the customers are wanting all future modules for free as part of the Framework system. They said they won't do that. However, the discussions are such that they are certain they will win them. He was very confident he said from the level of discussions they are having and at what level with the organizations.
---In 90 days they will give a Zoom conference presentation for analysts and investors. They will update everything that has gone on with the company and the new products, Covid-19, and their guidance for their FY 2021.
---The pr's in March are part of their new IR campaign. They want shareholders to be certain of what is coming and happening so they will do everything they can to highlight deals and changes going forward. Expect more of them going forward on deals and products.
---Q1 is challenging they say. Covid-19 has made customers slower to respond then normal. They said that things are definitely progressing with sales and they are being aggressive in approaching companies. The real advantage they see is they are offering customers a product that has a proven record already of lowering opex expenses. The longer things go with the virus the more they expect their product to have appeal.
----Their long term goal is to go after as many customers as possible in the next few years and lock them into the Framework system. Each deal is for 5 years and after that they figure the customer will be so entrenched in their software + new modules that it'll be hard to extract them as a software supplier.
****I suggest anyone who wants to know more to reach out to their IR guy and schedule a meeting themselves. The executives were going from us to another meeting right after.
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