Shares in SeaChange International dipped more than 7%  Tuesday after the company warned of a significant revenue shortfall in Q2 due to delays in the estimated time to complete some work and delays in closing other deals due to shifts in customer schedules.

In prelim Q2 results released today, SeaChange said it expects revenues to be in the range of $18.3 million to $18.5 million, below previous guidance of $23 million to $25 million. The company also expects a Q2 loss of 19 cents to 23 cents per basic share, widened from prior guidance of a loss of 10 cents to 15 cents.

Ed Terino, the CEO of SeaChange who took over for ousted CEO Jay Samit in April, said Tuesday on a call about the prelim results that about $4 million of the shortfall is attributed to changes in the estimated time to complete work on existing deals, and about $1 million tied to delays in getting deals closed.

To a lesser extent, Q2 results were impacted by a longer than expected time to “get our expanded sales team productive,” he added.

Terino said he is positive that better days are ahead as SeaChange builds its revenue pipeline in the second half of its fiscal year, noting that it will announce an OTT win with a “major content owner in Europe” at next month’s IBC show in Amsterdam.

He also said SeaChange, as part of its plan to reach financial targets by fiscal Q2, will implement new cost-saving measures during its fiscal Q3. Terino said more info about the cost-reduction plan will be revealed on the company’s scheduled Q2 call on September 1.

Peter Faubert, SeaChange’ recently appointed CFO, said the company was making good progressing positioning its in-home software development from Milpitas, Calif., to DCC Labs, the Warsaw, Poland-based company SeaChange acquired in May for $8 million.

That group, led by DCC Labs, has reevaluated the time to complete several projects and is expected to complete that current set of work at about one-fifth the cost that could be achieved by the California-based division.

As for deals that are delayed, Terino said a handful were tied to migrations or upgrades from SeaChange’s legacy Axiom video backoffice to the new multiscreen-focused Adrenalin platform, as well as a new customer. 

SeaChange shares were down 25 cents (7.68%) to $3.07 each in mid-day trading Tuesday. 

SeaChange International has paid $8 million in cash to acquire DCC Labs, a Warsaw, Poland-based software developer and integrator for set-tops and multiscreen devices that, SeaChange said, will also strengthen its Reference Design Kit (RDK) product strategy.

SeaChange said it closed the deal on May 6 and expects DCC Labs to contribute “an additional several million dollars of revenue annually,” with an anticipated one-year payback through synergies and cost savings that SeaChange will begin to realize immediately. The transaction also includes a lock-up provision for the SeaChange stock that unwinds over a three-year period, the company said.

It said the deal will also help SeaChange to optimize the operations of its In Home business, which includes the SeaChange Nucleus home video gateway. DCC Labs has also developed a  software stack for Europe’s DVB (Digital Video Broadcasting) community and an HTML5 framework for user interfaces.

In conjunction with the acquisition, SeaChange said it has also started a workforce reduction within its In Home engineering and services organization that aims to achieve $8 million in annualized cost savings. DCC Labs CEO Marek Kielczewski, meanwhile, has joined SeaCahnge as SVP of consumer premises equipment software and will lead the SeaChange In Home division.

Shiva Patibanda, formerly CTO and GM of in-home products at SeaChange, left the company last year and recently joined Ericsson’s TV and media group.

SeaChange said DCC Labs has more than 70 engineers and has won projects supporting millions of set-tops, mobile devices and smart TVs, and has development expertise that includes Android and  Linux operating systems as well as the Reference Design Kit (RDK), the preintegrated software stack for set-tops and broadband devices that’s managed by Comcast, Time Warner Cable and Liberty Global.

SeaChange and DCC Labs have a business history, as SeaChange engaged with the Warsaw-based company last year to support a major set-top development project for a “large European cable operator” that resulted in deployment of a user interface and an RDK 2.1-based home video gateway for field trial tests within four months of the initial engagement. SeaChange said it also tapped DCC Labs to assist with improving quality and providing enhancements for another European cable operator’s deployed home video gateway.

“Through our successful collaboration in the field, SeaChange determined that DCC Labs’ experience and strengths are exceptionally well-aligned with our strategy to operate more efficiently and rapidly roll out high-value, front-end product innovations,” Ed Terino, the company’s recently named CEO, said in a statement. “SeaChange is now better positioned to serve the global RDK licensee community, as well as fulfilling service providers’ growing desire to focus on a select set of vendors to support their video infrastructure from the back-end all the way through to set-tops, mobile devices and the subscriber experience.”