- Q4 2014 revenue of $30.9 million – second highest in company
history – a 5% year-over-year increase from Q4 2013
- Delivered year-over-year quarterly revenue growth for the first
time in 2 years
- Q4 2014 adjusted EBITDA of $4.0 million – the highest in
company history – a 44% year-over-year increase from Q4 2013
- Full Year 2014 revenue of $106.6 million, beating guidance of
$100M - $103M
- Full Year 2014 adjusted EBITDA of $2.2 million, beating
guidance of ($0.5)M - $0.5M
Synacor Inc. (Nasdaq:SYNC), the trusted technology development,
multiplatform services and revenue partner for video, Internet and
communications providers and device manufacturers, today announced
record adjusted EBITDA results for the fourth quarter of 2014 and
that it beat guidance for the fiscal year ended December 31,
2014.
"We are executing well against our new strategy and are working
with a sense of urgency on both revenue growth and operating
discipline. Our strategy is delivering, and we are pleased to
report record financials for Q4, year-over-year revenue growth for
the first time in two years, the highest adjusted EBITDA in company
history, and excluding a non-cash deferred tax charge, we generated
pre-tax income of $1 million. We also beat our revenue and EBITDA
guidance for the full year 2014. We are improving user experience,
increasing monetization, growing our video capabilities, expanding
our customer relationships, and positioning ourselves for strong
performance ahead," said Synacor CEO Himesh Bhise.
Bhise continued, "While there's much work ahead, we are
motivated by the momentum we're generating. We're continuing to
grow advertising and subscription fee revenues, reducing our
dependence on desktop search. Importantly, we demonstrated in Q4
that Synacor can deliver year-over-year revenue growth and drive
EBITDA profitability."
Q4 2014 Financial Results
Revenue: For the fourth quarter of 2014, total
revenue was $30.9 million, an increase of 18% over $26.2 million in
the third quarter of 2014 and an increase of 5% over $29.4 million
in the fourth quarter of 2013.
For the quarter, search and advertising revenue was $24.9
million, an increase of 21% over $20.6 million in the third quarter
of 2014 and an increase of 4% over $24.0 million in the fourth
quarter of 2013.
Subscription fee-based revenue was $6.0 million, an increase of
7% over $5.6 million in the third quarter of 2014 and an increase
of 11% over $5.4 million in the fourth quarter of 2013.
Adjusted EBITDA: For the fourth quarter of
2014, adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA) was $4.0 million, a significant increase
compared to $0.1 million in the third quarter of 2014 and an
increase of 44% over $2.8 million in the fourth quarter of 2013. As
a percentage of revenue, adjusted EBITDA increased to 13% in the
fourth quarter of 2014 from 9% in the fourth quarter of 2013.
Net Income/Loss: For the
fourth quarter of 2014, the company recorded a non-cash deferred
tax expense related to the increase in valuation allowance against
deferred tax assets. In accordance with the guidance provided in
Financial Accounting Standards Board Topic 740, Income Taxes, the
charge is based, in part, on the existence of recent, cumulative
losses. The recording of this non-cash charge does not impact the
company's ability to realize the economic benefit of its deferred
tax assets and net operating loss carry forwards on future tax
returns. As a result, the company reported a net loss of $6.4
million, or Earnings per Share (EPS) of $0.23 per share, including
the $7.4 million deferred tax non-cash charge, or $0.27 per share.
Excluding this charge, the company generated pre-tax income of $1.0
million, or $0.04 per share on a pre-tax basis. This compares to
net income of $0.2 million in the fourth quarter of 2013, or $0.01
per share. Net loss also includes stock-based compensation expense
of $0.8 million, or $0.03 per share, in the fourth quarter of 2014,
as compared to $0.7 million, or $0.03 per share, in the fourth
quarter of 2013.
The EPS calculation for the fourth quarter of 2014 net loss is
based on 27.4 million weighted average common shares outstanding.
For the fourth quarter of 2014 pre-tax income EPS is based on 28.3
million weighted average fully-diluted common shares outstanding.
The diluted EPS calculation for the fourth quarter of 2013 was
based on 27.6 weighted average fully-diluted common shares
outstanding.
Cash: For the fourth quarter of 2014, Synacor
ended with $25.6 million in cash and cash equivalents, compared to
$24.4 million at the end of the third quarter of 2014. Cash
generated from operating activities was $3.0 million compared to a
use of $0.5 million in the third quarter.
Fiscal 2014 Financial Results
Revenue: For fiscal 2014, total revenue was
$106.6 million, compared to $111.8 million in fiscal 2013. Search
and advertising revenue was $83.9 million, compared to $90.4
million in fiscal 2013. Subscription fee-based revenue was $22.7
million, compared to $21.4 million in fiscal 2013.
Adjusted EBITDA: For fiscal 2014, adjusted
EBITDA was $2.2 million excluding one-time items, or 2% of revenue,
compared to $6.5 million, or 6% of revenue, in fiscal 2013.
Net Income/Loss: For fiscal
2014, the company recorded a non-cash deferred tax expense related
to the increase in valuation allowance against deferred tax assets.
In accordance with the guidance provided in Financial Accounting
Standards Board Topic 740, Income Taxes, the charge is based, in
part, on the existence of recent, cumulative losses. The recording
of this non-cash charge does not impact the company's ability to
realize the economic benefit of its deferred tax assets and net
operating loss carry forwards on future tax returns. The company
recorded a net loss of $12.9 million, or $0.47 per share, including
the $7.4 million deferred tax non-cash charge in the fourth
quarter, or $0.27 per share. This compares to a net loss of $1.4
million in fiscal 2013, or $0.05 per share. Net income includes
stock-based compensation expense of $3.6 million, or $0.13 per
share, in fiscal 2014, as compared to $2.6 million, or $0.09 per
share, in fiscal 2013. The EPS calculation for fiscal 2014 is based
on 27.4 million weighted average common shares outstanding and 27.3
million weighted average common shares outstanding for fiscal
2013.
Business Outlook
Bhise continued, "We're looking ahead to 2015. We're excited
about building on these early results as our new strategy continues
to deliver. We'll continue to deploy consumer experiences designed
for user engagement, we'll grow monetization, and we'll roll out
our advanced video solutions, enhanced with our recent acquisition
of NimbleTV technology."
Based on information available as of February 25, 2015, the
company is providing financial guidance for the first quarter and
fiscal 2015 as follows:
- Q1 2015 Guidance: Revenue for the first
quarter of 2015 is projected to be in the range of $24.0 million to
$26.0 million. For the first quarter of 2015, the company expects
to report adjusted EBITDA of $0 to $1 million.
- Fiscal 2015 Guidance: Revenue for the full
year of 2015 is projected to be in the range of $95.0 million to
$100.0 million. For the full year of 2015, the company expects to
report adjusted EBITDA of $1.5 million to $3.5 million.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the fourth quarter and fiscal 2014 financial results with
the investment community. The live webcast of Synacor's earnings
conference call can be accessed at
http://investor.synacor.com/events.cfm. To participate, please
login approximately ten minutes prior to the webcast. For those
without access to the Internet, the call may be accessed toll-free
via phone at (877) 837-3911, with conference ID 83440491, or
callers outside the U.S. may dial (253) 237-1167. Following
completion of the call, a recorded webcast replay will be available
on Synacor's website through March 4, 2015. To listen to the
telephone replay, call toll-free (855) 859-2056, or callers outside
the U.S. may dial (404) 537-3406. The conference ID is
83440491.
About Synacor
Synacor (Nasdaq:SYNC) is the trusted technology development,
multiplatform services and revenue partner for video, Internet and
communications providers, and device manufacturers. We deliver
modern, multiscreen experiences and advertising to their consumers
that require scale, actionable data and sophisticated
implementation. www.synacor.com
Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures in this
release. Generally, a non-GAAP financial measure is a numerical
measure of a company's performance, financial position or cash
flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with generally
accepted accounting principles (GAAP).
We report adjusted EBITDA because it is a key measure used by
our management and Board of Directors to understand and evaluate
our core operating performance and trends, to prepare and approve
our annual budget and to develop short- and long-term operational
plans. In particular, the exclusion of certain expenses in
calculating adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our core business. Accordingly, we
believe that adjusted EBITDA provides useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management and Board of
Directors.
For a reconciliation of adjusted EBITDA to net income, the most
directly comparable financial measure calculated and presented in
accordance with GAAP, please refer to the table "Reconciliation of
GAAP to Non-GAAP Measures" in this press release.
Safe Harbor Statement
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements concerning Synacor's expected financial performance
(including, without limitation, statements and information in the
Business Outlook section and the quotations from management), as
well as Synacor's strategic and operational plans. The achievement
or success of the matters covered by such forward-looking
statements involves risks, uncertainties and assumptions. If any
such risks or uncertainties materialize or if any of the
assumptions prove incorrect, the company's results could differ
materially from the results expressed or implied by the
forward-looking statements the company makes.
The risks and uncertainties referred to above include - but are
not limited to - risks associated with: execution of our plans and
strategies; the loss of a significant customer; our ability to
obtain new customers; expectations regarding consumer taste and
user adoption of applications and solutions; developments in
Internet browser software and search advertising technologies;
general economic conditions; expectations regarding the company's
ability to timely expand the breadth of services and products or
introduction of new services and products; consolidation within the
cable and telecommunications industries; changes in the competitive
dynamics in the market for online search and advertising; the risk
that security measures could be breached and unauthorized access to
subscriber data could be obtained; potential third party
intellectual property infringement claims; and the price volatility
of our common stock.
Further information on these and other factors that could affect
the company's financial results is included in filings it makes
with the Securities and Exchange Commission from time to time,
including the section entitled "Risk Factors" in the company's most
recent Form 10-Q filed with the SEC on November 14, 2014. These
documents are available on the SEC Filings section of the Investor
Information section of the company's website at
http://investor.synacor.com/. All information provided in this
release and in the attachments is available as of February 25,
2015, and Synacor undertakes no duty to update this
information.
The Synacor logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11609
Synacor,
Inc. |
Condensed Consolidated
Balance Sheets |
(In
thousands) |
(Unaudited) |
|
|
|
|
As of December
31, |
As of December
31, |
|
2013 |
2014 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 36,397 |
$ 25,600 |
Accounts receivable, net |
14,569 |
20,479 |
Prepaid expenses and other
current assets |
1,691 |
2,292 |
Deferred income taxes |
314 |
-- |
Total current assets |
52,971 |
48,371 |
Property and equipment, net |
14,085 |
15,128 |
Deferred income taxes, non-current |
4,455 |
-- |
Other long-term assets |
348 |
101 |
Goodwill |
1,565 |
1,565 |
Convertible promissory note |
1,000 |
1,000 |
Investment in equity interest |
365 |
73 |
Total Assets |
$ 74,789 |
$ 66,238 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 13,573 |
$ 12,545 |
Accrued expenses and other
current liabilities |
5,177 |
8,403 |
Current portion of capital
lease obligations |
1,946 |
1,150 |
Total current liabilities |
20,696 |
22,098 |
Long-term portion of capital lease
obligation |
885 |
1,383 |
Other long-term liabilities |
977 |
275 |
Total Liabilities |
22,558 |
23,756 |
Stockholders' Equity: |
|
|
Common stock |
277 |
279 |
Treasury stock |
(569) |
(1,142) |
Additional paid-in capital |
102,226 |
105,961 |
Accumulated deficit |
(49,705) |
(62,636) |
Accumulated other comprehensive
income |
2 |
20 |
Total stockholders' equity |
52,231 |
42,482 |
Total Liabilities and Stockholders'
Equity |
$ 74,789 |
$ 66,238 |
|
Synacor,
Inc. |
Condensed Consolidated
Statements of Operations |
(In thousands except
share and per share amounts) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
For the Year
Ended December 31, |
|
2013 |
2014 |
2013 |
2014 |
|
|
|
|
|
Revenue |
$ 29,406 |
$ 30,909 |
$ 111,807 |
$ 106,579 |
Costs and operating expenses: |
|
|
|
|
Cost of revenue (1) |
15,757 |
16,535 |
59,622 |
57,939 |
Technology and development
(1)(2) |
6,911 |
4,071 |
28,458 |
26,259 |
Sales and marketing (2) |
1,792 |
3,614 |
8,124 |
10,807 |
General and administrative
(1)(2) |
2,891 |
3,560 |
11,663 |
14,249 |
Depreciation |
1,262 |
1,818 |
4,650 |
5,126 |
Gain on sale of domain |
-- |
-- |
-- |
(1,000) |
Total costs and operating
expenses |
28,613 |
29,598 |
112,517 |
113,380 |
|
|
|
|
|
Income (loss) from operations |
793 |
1,311 |
(710) |
(6,801) |
|
|
|
|
|
Other expense |
(7) |
(29) |
(37) |
(28) |
Interest expense |
(54) |
(32) |
(193) |
(218) |
Income (loss) before income taxes and equity
interest |
732 |
1,250 |
(940) |
(7,047) |
Provision (benefit) for income taxes |
313 |
7,434 |
(134) |
4,821 |
Loss on equity interest |
(246) |
(234) |
(561) |
(1,063) |
Net income (loss) |
$ 173 |
$ (6,418) |
$ (1,367) |
$ (12,931) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
Basic |
$ 0.01 |
$ (0.23) |
$ (0.05) |
$ (0.47) |
Diluted |
$ 0.01 |
$ (0.23) |
$ (0.05) |
$ (0.47) |
|
|
|
|
|
Weighted average shares used to compute net
income (loss) per share: |
|
|
|
|
Basic |
27,345,725 |
27,385,741 |
27,306,882 |
27,389,793 |
Diluted |
27,608,561 |
27,385,741 |
27,306,882 |
27,389,793 |
|
|
|
|
|
Notes: |
|
|
|
|
(1) Exclusive of depreciation shown
separately. |
|
|
|
|
(2) Includes stock-based compensation as
follows: |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31, |
For the Year
Ended December 31, |
|
2013 |
2014 |
2013 |
2014 |
Technology and development |
$ 324 |
$ 229 |
$ 1,184 |
$ 1,621 |
Sales and marketing |
99 |
238 |
348 |
599 |
General and administrative |
276 |
375 |
1,029 |
1,375 |
|
$ 699 |
$ 842 |
$ 2,561 |
$ 3,595 |
Synacor,
Inc. |
Condensed Consolidated
Statements of Cash Flows |
(In
thousands) |
(Unaudited) |
|
|
|
|
For the Year
Ended December 31, |
|
2013 |
2014 |
Cash Flows from Operating
Activities: |
|
|
Net loss |
$ (1,367) |
$ (12,931) |
Adjustments to reconcile net
loss to net cash provided (used) |
|
|
in operating activities: |
|
|
Depreciation |
4,650 |
5,126 |
Stock-based compensation
expense |
2,561 |
3,595 |
Gain on sale of domain |
-- |
(1,000) |
Provision for deferred income
taxes |
(243) |
4,769 |
Loss in equity investment |
561 |
1,063 |
Change in assets and
liabilities net of effect of acquisition: |
|
|
Accounts receivable, net |
1,055 |
(5,910) |
Prepaid expenses and other
current assets |
189 |
(367) |
Other long-term assets |
220 |
247 |
Accounts payable |
(527) |
(359) |
Accrued expenses and other
current liabilities |
(2,205) |
2,665 |
Other long-term
liabilities |
334 |
(207) |
Net cash provided (used) in operating
activities |
5,228 |
(3,309) |
Cash Flows from Investing
Activities: |
|
|
Purchases of property and
equipment |
(5,920) |
(4,982) |
Investment in equity
interest |
(926) |
(772) |
Proceeds from sale of
domain |
-- |
1,000 |
Cash paid for business
acquisition |
(1,011) |
-- |
Purchase of convertible
promissory notes |
(1,000) |
-- |
Net cash used in investing
activities |
(8,857) |
(4,754) |
Cash Flows from Financing
Activities: |
|
|
Repayments on capital lease
obligations |
(2,121) |
(2,258) |
Proceeds from exercise of
common stock options |
195 |
68 |
Purchase of treasury stock |
-- |
(562) |
Net cash used in financing
activities |
(1,926) |
(2,752) |
Effect of exchange rate changes
on cash and cash equivalents |
8 |
18 |
Net decrease in cash and cash
equivalents |
(5,547) |
(10,797) |
Cash and cash equivalents -
beginning of year |
41,944 |
36,397 |
Cash and cash equivalents - end
of year |
$ 36,397 |
$ 25,600 |
|
Synacor,
Inc. |
Reconciliation of GAAP
to Non-GAAP Measures |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
The following table presents a
reconciliation of net income (loss) to adjusted EBITDA for each of
the periods indicated: |
|
|
|
|
|
|
Three Months
Ended December 31, |
For the Year
Ended December 31, |
|
2013 |
2014 |
2013 |
2014 |
Reconciliation of Adjusted
EBITDA: |
|
|
|
|
Net income (loss) |
$ 173 |
$ (6,418) |
$ (1,367) |
$ (12,931) |
Provision (benefit) for income
taxes |
313 |
7,434 |
(134) |
4,821 |
Interest expense |
54 |
32 |
193 |
218 |
Other expense |
7 |
29 |
37 |
28 |
Depreciation |
1,262 |
1,818 |
4,650 |
5,126 |
Stock-based compensation |
699 |
842 |
2,561 |
3,595 |
Loss on equity interest |
246 |
234 |
561 |
1,063 |
Gain on sale of domain |
-- |
-- |
-- |
(1,000) |
Reduction in workforce
severance and related costs |
-- |
-- |
-- |
1,260 |
Adjusted
EBITDA |
$ 2,754 |
$ 3,971 |
$ 6,501 |
$ 2,180 |
|
Synacor,
Inc. |
Key Business
Metrics |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
For the Year
Ended December 31, |
|
2013 |
2014 |
2013 |
2014 |
Key Business Metrics: |
|
|
|
|
Unique Visitors (1) |
19,954,367 |
19,544,339 |
19,818,670 |
18,886,889 |
Search Queries (2) |
157,765,151 |
122,825,282 |
711,992,036 |
530,933,590 |
Advertising Impressions (3) |
9,688,051,226 |
10,001,604,351 |
40,982,588,804 |
37,141,508,555 |
|
|
|
|
|
Notes: |
(1) Reflects the number of unique
visitors to our customers' websites computed on an average monthly
basis during the applicable period, as measured by comScore. |
(2) Reflects the total number of
search queries during the applicable period, as reported by
Google. |
|
(3) Reflects the total number of
advertising impressions during the applicable period, as reported
by DoubleClick and other partners. |
CONTACT: Investor Contact:
Denise Garcia, Managing Director
ICR
ir@synacor.com
716-362-3309
Press Contact:
Meredith Roth, VP, Corporate Communications
Synacor
mroth@synacor.com
716-362-3888
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