- Revenue of $26.4 million in Q3 2015 exceeds guidance range of
$23.0 to $24.0 million
- Adjusted EBITDA of $2.0 million in Q3 2015 exceeds guidance
range of $0.1 to $0.6 million
- Adjusted EBITDA of $2.0 million in Q3 2015 up from $0.1 million
in Q3 2014
- Several customer renewals; wins include email and video
solutions
Synacor Inc. (NASDAQ:SYNC), the trusted multiscreen technology and
monetization partner for video, internet and communications
providers, device manufacturers, and enterprises, today announced
its financial results for the quarter ended September 30, 2015.
"This has been a strong third quarter for Synacor. We closed the
acquisition of Zimbra, a global leader in email and messaging
software, and we are already making progress capturing cost and
revenue synergies. Advertising continues to deliver, with
year-over-year revenue up 17%. And a customer win provides early
evidence that video will be an important growth business for
Synacor," said Synacor CEO Himesh Bhise. "We continue to execute
against our strategy, delivering the results we've promised. For
the fifth consecutive quarter, Synacor has met or beat guidance on
both quarterly revenue and adjusted EBITDA. We are once again
raising guidance for full-year 2015 revenue and adjusted
EBITDA."
Q3 2015 Financial Results
Revenue: For the third quarter of 2015, total
revenue was $26.4 million, an increase of 1% compared to $26.2
million in the third quarter of 2014. Search and advertising
revenue was $19.4 million, a decrease of 6% compared to $20.6
million in the third quarter of 2014. Advertising revenue
stand-alone was $12.0 million, a 17% increase compared to $10.3
million in the third quarter of 2014. Subscription-based revenue
was $7.0 million, an increase of 23% compared to $5.7 million in
the third quarter of 2014.
For the third quarter of 2015, Synacor averaged 20.6 million
multiplatform unique visitors per month, compared to 20.7 million
in the third quarter of 2014.
Adjusted EBITDA: For the third quarter of 2015,
adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA), which excludes stock-based compensation
expense and $0.5 million in Zimbra acquisition costs, was $2.0
million, or 8% of revenue, compared to $0.1 million, which excluded
restructuring costs of $1.3 million, for the third quarter of
2014.
Net Income: For the third
quarter of 2015, net loss was $0.9 million, compared to net loss of
$2.6 million in the third quarter of 2014. Earnings per share, or
EPS, were a loss of $0.03. The net loss includes stock-based
compensation expense of $0.8 million, or $0.03 per share, in the
third quarter of 2015, as compared to $1.2 million, or $0.04 per
share, in the third quarter of 2014. The EPS calculations for the
third quarter of 2015 are based on 27.9 million weighted average
common shares outstanding. The EPS calculations for the third
quarter of 2014 are based on 27.4 million weighted average common
shares outstanding.
Cash: The Company ended the third quarter of
2015 with $15.6 million in cash and cash equivalents, compared to
$27.1 million at the end of the prior quarter. Cash generated by
operating activities was $2.0 million for the third quarter of
2015, compared to $0.5 million used in operating activities in the
same period of the prior year. Net cash increased $0.8 million
following the acquisition of Zimbra.
Sample of Q3 Highlights
- Synacor's end-to-end video solution was selected by a regional
full-service communications provider for in-home and out-of-home
multiplatform video services
- We released our Cloud ID SDK for both iOS and Android and added
mobile app-to-app single-sign-on capability, making it easier to
sell and deploy our authentication products
- We won several email engagements including MPT, the leading
service provider for Internet and mobile phones in Myanmar; Satish
Dhawan Space Centre, the national space institute for India; the
Ministry of Foreign Affairs of the Russian Federation; and the New
York State Assembly
Business Outlook
Bhise continued, "These are exciting times at Synacor. We are
participating in attractive high-growth markets, and have created a
broad customer platform—extending to roughly 120 service providers,
3500 businesses, and over 1500 reseller partners worldwide—placing
us at the center of today's most powerful digital trends including
Advertising, Multiplatform Video, and Messaging."
Based on information available as of November 11, 2015, the
company is providing financial guidance for the fourth quarter and
fiscal 2015 as follows:
- Q4 2015 Guidance: Revenue for the fourth
quarter of 2015 is projected to be in the range of $29.0 million to
$31.0 million. The company expects to report adjusted EBITDA of
$0.8 million to $1.8 million.
- Fiscal 2015 Guidance: Revenue for the full
year of 2015 is projected to be in the range of $107.0 million to
$109.0 million. For the full year of 2015, the company expects to
report adjusted EBITDA of $5.5 million to $6.5 million.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the third quarter 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
55621180, 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 November 18, 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
55621180.
About Synacor
Synacor (NASDAQ:SYNC) is the trusted technology development,
multiplatform services and revenue partner for video, internet and
communications providers, device manufacturers, and enterprises. We
deliver modern, multiscreen experiences and advertising to their
consumers that require scale, actionable data and sophisticated
implementation. www.synacor.com
The Synacor logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11609
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 display
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-K, as amended, filed with the SEC. 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 November 11,
2015, and Synacor undertakes no duty to update this
information.
|
Synacor,
Inc. |
Condensed Consolidated
Balance Sheets |
(In
thousands) |
(Unaudited) |
|
As of |
As of |
|
December 31, |
September 30, |
|
2014 |
2015 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 25,600 |
$ 15,569 |
Accounts receivable, net |
20,479 |
20,810 |
Prepaid expenses and other current
assets |
2,292 |
2,254 |
Total current assets |
48,371 |
38,633 |
Property and equipment, net |
15,128 |
14,698 |
Other long-term assets |
101 |
262 |
Goodwill |
1,565 |
14,743 |
Intangible assets |
— |
16,130 |
Investments |
1,073 |
1,016 |
Total Assets |
$ 66,238 |
$ 85,482 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 12,545 |
$ 11,625 |
Accrued expenses and other current
liabilities |
7,761 |
7,394 |
Current portion of deferred revenue |
642 |
7,652 |
Current portion of capital lease
obligations |
1,150 |
1,412 |
Total current liabilities |
22,098 |
28,083 |
Long-term portion of capital lease
obligations |
1,383 |
1,102 |
Revolving line of credit |
— |
4,940 |
Deferred revenue |
— |
2,952 |
Other long-term liabilities |
275 |
2,147 |
Total Liabilities |
23,756 |
39,224 |
Stockholders' Equity: |
|
|
Common stock |
279 |
311 |
Treasury stock |
(1,142) |
(1,232) |
Additional paid-in capital |
105,961 |
112,880 |
Accumulated deficit |
(62,636) |
(65,688) |
Accumulated other comprehensive
income |
20 |
(13) |
Total stockholders' equity |
42,482 |
46,258 |
Total Liabilities and Stockholders'
Equity |
$ 66,238 |
$ 85,482 |
|
Synacor,
Inc. |
Condensed Consolidated
Statements of Operations |
(In thousands except
share and per share amounts) |
(Unaudited) |
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
|
September
30, |
September
30, |
|
2014 |
2015 |
2014 |
2015 |
|
|
|
|
|
Revenue |
$ 26,231 |
$ 26,351 |
$ 75,670 |
$ 77,797 |
Costs and operating expenses: |
|
|
|
|
Cost of revenue (1) |
14,386 |
13,298 |
41,404 |
40,205 |
Technology and development (1)(2) |
7,577 |
4,361 |
22,188 |
12,229 |
Sales and marketing (2) |
2,601 |
4,274 |
7,194 |
11,475 |
General and administrative (1)(2) |
4,090 |
3,712 |
10,689 |
11,996 |
Depreciation and amortization |
1,133 |
1,560 |
3,308 |
4,716 |
Gain on sale of domain |
— |
— |
(1,000) |
— |
Total costs and operating expenses |
29,787 |
27,205 |
83,783 |
80,621 |
|
|
|
|
|
Loss from operations |
(3,556) |
(854) |
(8,113) |
(2,824) |
|
|
|
|
|
Other (expense) income |
(14) |
(32) |
— |
(31) |
Interest expense |
(75) |
(35) |
(186) |
(144) |
Loss before income taxes and equity
interest |
(3,645) |
(921) |
(8,299) |
(2,999) |
(Benefit) provision for income taxes |
(1,288) |
— |
(2,613) |
20 |
Loss on equity interest |
(239) |
— |
(829) |
(57) |
Net loss |
$ (2,596) |
$ (921) |
$ (6,515) |
$ (3,076) |
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
Basic |
$ (0.09) |
$ (0.03) |
$ (0.24) |
$ (0.11) |
Diluted |
$ (0.09) |
$ (0.03) |
$ (0.24) |
$ (0.11) |
|
|
|
|
|
Weighted average shares used to compute net
loss per share: |
|
|
|
|
Basic |
27,378,299 |
27,924,939 |
27,391,159 |
27,617,125 |
Diluted |
27,378,299 |
27,924,939 |
27,391,159 |
27,617,125 |
|
|
|
|
|
Notes: |
|
|
|
|
(1) Exclusive of depreciation shown
separately. |
|
|
|
|
(2) Includes stock-based compensation as
follows: |
|
|
|
|
|
Three months
ended |
Nine months
ended |
|
September
30, |
September
30, |
|
2014 |
2015 |
2014 |
2015 |
Technology and development |
$ 691 |
$ 224 |
$ 1,392 |
$ 694 |
Sales and marketing |
129 |
231 |
361 |
716 |
General and administrative |
406 |
355 |
1,001 |
942 |
|
$ 1,226 |
$ 810 |
$ 2,754 |
$ 2,352 |
|
Synacor,
Inc. |
Condensed Consolidated
Statements of Cash Flows |
(In
thousands) |
(Unaudited) |
|
|
|
|
Nine months
ended |
|
September
30, |
|
2014 |
2015 |
Cash Flows from Operating
Activities: |
|
|
Net loss |
$ (6,515) |
$ (3,076) |
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities: |
|
|
Depreciation |
3,308 |
4,716 |
Stock-based compensation expense |
2,754 |
2,352 |
Gain on sale of domain |
(1,000) |
— |
Provision for deferred income taxes |
(2,636) |
— |
Loss in equity investment |
829 |
57 |
Change in assets and liabilities net of
effect of acquisition: |
|
|
Accounts receivable, net |
(2,338) |
3,169 |
Prepaid expenses and other current
assets |
(84) |
584 |
Other long-term assets |
221 |
59 |
Accounts payable |
(2,099) |
(1,003) |
Accrued expenses and other current
liabilities |
1,714 |
(215) |
Deferred revenue |
163 |
(706) |
Other long-term liabilities |
(611) |
217 |
Net cash (used in) provided by
operating activities |
(6,294) |
6,154 |
Cash Flows from Investing
Activities: |
|
|
Purchases of property and equipment |
(3,945) |
(2,474) |
Investment in equity interest |
(605) |
— |
Proceeds from sale of domain |
1,000 |
— |
Acquisition net of cash acquired |
— |
(17,260) |
Net cash used in investing
activities |
(3,550) |
(19,734) |
Cash Flows from Financing
Activities: |
|
|
Repayments on capital lease
obligations |
(1,700) |
(975) |
Proceeds from bank financing |
— |
4,940 |
Proceeds from exercise of common stock
options |
62 |
70 |
Purchase of treasury stock |
(562) |
— |
Deferred acquisition payment |
— |
(495) |
Net cash (used in) provided by
financing activities |
(2,200) |
3,539 |
Effect of exchange rate changes on cash
and cash equivalents |
6 |
10 |
Net decrease in Cash and Cash
Equivalents |
(12,038) |
(10,031) |
Cash and Cash Equivalents at beginning of
period |
36,397 |
25,600 |
Cash and Cash Equivalents at end of
period |
$ 24,359 |
$ 15,569 |
|
Synacor,
Inc. |
Reconciliation of GAAP
to Non-GAAP Measures |
(In
thousands) |
(Unaudited) |
|
The following table presents a
reconciliation of net loss to adjusted EBITDA for each of the
periods indicated: |
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
|
September
30, |
September
30, |
|
2014 |
2015 |
2014 |
2015 |
|
|
|
|
|
Reconciliation of Adjusted
EBITDA: |
|
|
|
|
Net loss |
$ (2,596) |
$ (921) |
$ (6,515) |
$ (3,076) |
(Benefit) provision for income taxes |
(1,288) |
— |
(2,613) |
20 |
Interest expense |
75 |
35 |
186 |
144 |
Other expense (income) |
14 |
32 |
— |
31 |
Depreciation and amortization |
1,133 |
1,560 |
3,308 |
4,716 |
Stock-based compensation |
1,226 |
810 |
2,753 |
2,352 |
Loss on equity interest |
239 |
— |
829 |
57 |
Gain on sale of domain |
— |
— |
(1,000) |
— |
Reduction in workforce severance and
related costs |
1,260 |
— |
1,260 |
— |
Acquisition costs |
— |
478 |
— |
478 |
Adjusted EBITDA |
$ 63 |
$ 1,994 |
$ (1,792) |
$ 4,722 |
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
716-362-3880
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