SYNC Synacor Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 8-K

 ________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: February 25, 2015

________________________________________

Synacor, Inc.

(Exact name of registrant as specified in its charter)

________________________________________

 

 

Registrant’s telephone number, including area code: (716) 853-1362

________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

 

 

 

 

---

 

 

 

Item 2.02 Results of Operations and Financial Condition.

On February 25, 2015, Synacor, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2014 and for the year ended December 31, 2014. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

 

Item 9.01 Financial Statements and Exhibits.

 

 

 

---

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

---

 

 

 

 

 

Synacor Exceeds Revenue Outlook, Reports Record Adjusted EBITDA Results

as New Strategy Begins to Deliver

 

 

 

BUFFALO, N.Y., February 25, 2015 (GLOBE NEWSWIRE) - 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:

 

 

 

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.

 

 

Contacts

 

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

 

The Synacor logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11609

 

 

---

 

Synacor, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

 

---

 

Synacor, Inc.

Condensed Consolidated Statements of Operations

(In thousands except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

---

 

Synacor, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

---

 

Synacor, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands)

(Unaudited)

 

 

 

 

 

---

 

Synacor, Inc.

Key Business Metrics

(Unaudited)

 

 

 

 

 

---