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 March 31, 2016.
“We begin 2016 with another successful quarter for Synacor -
delivering significant year-over-year growth, expanding margins,
and achieving several important milestones,” said Synacor CEO
Himesh Bhise. “We are honored to have been selected from among the
many contenders to provide AT&T with portal services. In
addition, we continue to make strong progress in adding and
renewing customers to our portal, advertising, email, and video
platforms.”
“In less than two years, Synacor has undergone a massive
transformation that has positioned us to compete effectively in
several high-growth digital markets. Today, we have an enviable
global customer base, a compelling and broad portfolio of products,
and an advertising platform at scale. Our new contract win with
AT&T is not only validation of our transformation, but is also
an indicator and accelerator of our future growth and underpins our
confidence to achieve our new long-term financial target of $300
million in revenue and $30 million in adjusted EBITDA in 2019,”
Bhise continued.
Recent Highlights
- Signed a multi-year portal services agreement with AT&T,
which is expected to reach approximately $100 million of annual
revenues after full product deployment is achieved in
2017
- Introduced a new “Path to 3/30/300” financial plan targeting
annual revenue of $300 million and adjusted EBITDA of $30 million
in 2019
- Closed on the acquisition of digital advertising pioneer
Technorati, providing a leading programmatic advertising platform
to Synacor
- Added and renewed customers: deployed Cloud ID for a prominent
fiber ISP, executed a three-year email renewal with a major service
provider, expanded the relationship with K-Opticom, and migrated
the Markas Besar Polri, Indonesia's police force, to the Zimbra
email collaboration platform.
Q1 2016 Financial Results
Revenue: For the first quarter of 2016, total
revenue was $30.3 million, an increase of 13% compared with $26.7
million in the first quarter of 2015. Recurring and fee-based
revenue represented 43% of total Revenue, and grew 113% compared
with the first quarter of 2015.
Adjusted EBITDA: For the first quarter of 2016,
adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA), which excludes stock-based compensation
expense, was $1.5 million, or 4.9% of revenue, compared with $1.3
million, or 4.7% of revenue, for the first quarter of 2015.
Net Income: For the first
quarter of 2016, higher depreciation and amortization costs
associated with the intellectual property acquired from Zimbra and
investments in the Company’s next-generation portal resulted in net
loss of $1.6 million, compared with net loss of $1.1 million in the
first quarter of 2015. First-quarter earnings per share was a loss
of $0.05 compared with a loss of $0.04 in the same period last
year
Cash: Cash generated by operating activities
was $3.9 million for the first quarter of 2016, compared with $2.2
million generated by operating activities in the same period of the
prior year. First quarter 2016 operating cash flows funded both the
Company’s $2.5 million Technorati acquisition and the necessary
expenditures to win the AT&T portal services contract. The
Company ended the first quarter of 2016 with $15.7 million in cash
and cash equivalents, which is slightly higher than the end of the
prior quarter.
Guidance
Based on information available as of May 10, 2016, the company
is providing financial guidance for the second quarter and fiscal
2016. Adjusted EBITDA guidance for the second quarter and
fiscal year 2016 reflects a planned $10 million investment over the
next 12 months to deploy portal services for AT&T.
- Long-Term Target: The Company introduced a new
“Path to 3/30/300” financial plan targeting annual revenue of $300
million and adjusted EBITDA of $30 million in three years
(2019).
- Q2 2016 Guidance: Revenue for the second
quarter of 2016 is projected to be in the range of $29.0 million to
$31.0 million. The company expects to report adjusted EBITDA of
$0.0 million to $0.2 million, which includes investment in AT&T
portal services deployment estimated to be approximately $10
million over the next 12 months.
- Fiscal 2016 Guidance: As a result of its
updated financial forecast and incremental revenue from the
AT&T agreement, the company is raising its full year 2016
revenue guidance to be in the range of $130.0 million to $135.0
million, up from the previously provided range of $125.0 million to
$130.0 million. For full year 2016, the company is revising its
adjusted EBITDA guidance to reflect investment in AT&T portal
services deployment. Synacor will be funding the AT&T
investment entirely from operating cash and plans to continue to be
EBITDA positive for the year. It now expects to report adjusted
EBITDA of $0.5 million to $2.0 million, down from the previously
provided range of $4.0 million to $6.0 million.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the first-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
47007081, 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 May 18, 2016. 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
47007081.
About SynacorSynacor
(NASDAQ:SYNC) www.synacor.com 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. Synacor enables our
customers to better engage with their consumers.
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; our ability to integrate the assets and
personnel from acquisitions; 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 digital
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 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 May 10, 2016, and Synacor undertakes no duty to
update this information.
|
Synacor, Inc. |
Condensed Consolidated Balance
Sheets |
(In thousands) |
(Unaudited) |
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2016 |
|
|
|
2015 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
15,748 |
|
|
$ |
15,697 |
|
Accounts receivable, net |
|
22,423 |
|
|
|
24,341 |
|
Prepaid expenses and other current
assets |
|
4,350 |
|
|
|
3,290 |
|
Total current assets |
|
42,521 |
|
|
|
43,328 |
|
Property and equipment,
net |
|
13,886 |
|
|
|
14,377 |
|
Goodwill |
|
15,949 |
|
|
|
15,187 |
|
Intangible assets |
|
16,478 |
|
|
|
14,798 |
|
Investment |
|
1,000 |
|
|
|
1,000 |
|
Other long-term
assets |
|
315 |
|
|
|
336 |
|
Total
Assets |
$ |
90,149 |
|
|
$ |
89,026 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
12,108 |
|
|
$ |
9,004 |
|
Accrued expenses and other current
liabilities |
|
8,703 |
|
|
|
9,765 |
|
Current portion of deferred
revenue |
|
10,298 |
|
|
|
11,295 |
|
Current portion of capital lease
obligations |
|
1,481 |
|
|
|
1,574 |
|
Total current liabilities |
|
32,590 |
|
|
|
31,638 |
|
Long-term portion of
capital lease obligations |
|
779 |
|
|
|
1,007 |
|
Long-term debt |
|
5,000 |
|
|
|
5,000 |
|
Deferred revenue |
|
4,470 |
|
|
|
3,225 |
|
Other long-term
liabilities |
|
1,938 |
|
|
|
2,052 |
|
Total
Liabilities |
|
44,777 |
|
|
|
42,922 |
|
Stockholders'
Equity: |
|
|
|
Common stock |
|
307 |
|
|
|
306 |
|
Treasury stock |
|
(1,332 |
) |
|
|
(1,332 |
) |
Additional paid-in capital |
|
114,014 |
|
|
|
113,238 |
|
Accumulated deficit |
|
(67,675 |
) |
|
|
(66,110 |
) |
Accumulated other comprehensive
income |
|
58 |
|
|
|
2 |
|
Total stockholders’ equity |
|
45,372 |
|
|
|
46,104 |
|
Total
Liabilities and Stockholders' Equity |
$ |
90,149 |
|
|
$ |
89,026 |
|
Synacor, Inc. |
Condensed Consolidated Statements of
Operations |
(In thousands except share and per share
amounts) |
(Unaudited) |
|
|
|
|
|
Three months ended |
|
March 31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
Revenue |
$ |
30,260 |
|
|
$ |
26,730 |
|
Costs and operating
expenses: |
|
|
|
Cost of revenue (1) |
|
12,972 |
|
|
|
14,403 |
|
Technology and development
(1)(2) |
|
5,873 |
|
|
|
4,866 |
|
Sales and marketing (2) |
|
5,650 |
|
|
|
3,562 |
|
General and administrative
(1)(2) |
|
5,022 |
|
|
|
3,374 |
|
Depreciation and amortization |
|
2,098 |
|
|
|
1,496 |
|
Total costs and operating
expenses |
|
31,615 |
|
|
|
27,701 |
|
|
|
|
|
(Loss) from
operations |
|
(1,355 |
) |
|
|
(971 |
) |
|
|
|
|
Other income
(expense) |
|
2 |
|
|
|
(16 |
) |
Interest expense |
|
(68 |
) |
|
|
(50 |
) |
Loss before income
taxes and equity interest |
|
(1,421 |
) |
|
|
(1,037 |
) |
Provision for income
taxes |
|
144 |
|
|
|
4 |
|
Loss on equity
interest |
|
— |
|
|
|
(32 |
) |
Net loss |
$ |
(1,565 |
) |
|
$ |
(1,073 |
) |
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
Basic |
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
Diluted |
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
Weighted average shares
used to compute net loss per share: |
|
|
|
Basic |
|
29,992,248 |
|
|
|
27,407,147 |
|
Diluted |
|
29,992,248 |
|
|
|
27,407,147 |
|
|
|
|
|
Notes: |
|
|
|
(1) Exclusive of
depreciation shown separately. |
|
|
|
(2) Includes
stock-based compensation as follows: |
|
|
|
|
Three months ended |
|
March 31, |
|
|
2016 |
|
|
|
2015 |
|
Technology and
development |
$ |
241 |
|
|
$ |
217 |
|
Sales and
marketing |
|
223 |
|
|
|
241 |
|
General and
administrative |
|
273 |
|
|
|
284 |
|
|
$ |
737 |
|
|
$ |
742 |
|
Synacor, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(Unaudited) |
|
|
|
|
|
Three months ended, |
|
March 31, |
|
|
2016 |
|
|
|
2015 |
|
Cash Flows from
Operating Activities: |
|
|
|
Net loss |
$ |
(1,565 |
) |
|
$ |
(1,073 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
2,098 |
|
|
|
1,496 |
|
Stock-based compensation
expense |
|
737 |
|
|
|
742 |
|
Loss in equity investment |
|
— |
|
|
|
32 |
|
Change in assets and liabilities
net of effect of acquisition: |
|
|
|
Accounts receivable, net |
|
2,883 |
|
|
|
1,203 |
|
Prepaid expenses and other current
assets |
|
(1,060 |
) |
|
|
(23 |
) |
Other long-term assets |
|
21 |
|
|
|
27 |
|
Accounts payable |
|
2,252 |
|
|
|
995 |
|
Accrued expenses and other current
liabilities |
|
(1,652 |
) |
|
|
(1,186 |
) |
Deferred revenue |
|
248 |
|
|
|
— |
|
Other long-term liabilities |
|
(114 |
) |
|
|
(48 |
) |
Net cash provided by
operating activities |
|
3,848 |
|
|
|
2,165 |
|
Cash Flows from
Investing Activities: |
|
|
|
Acquisition |
|
(2,500 |
) |
|
|
— |
|
Purchases of property and
equipment |
|
(937 |
) |
|
|
(600 |
) |
Net cash used
in investing activities |
|
(3,437 |
) |
|
|
(600 |
) |
Cash Flows from
Financing Activities: |
|
|
|
Repayments on capital lease
obligations |
|
(386 |
) |
|
|
(392 |
) |
Proceeds from exercise of common
stock options |
|
10 |
|
|
|
5 |
|
Net cash used
in financing activities |
|
(376 |
) |
|
|
(387 |
) |
Effect of exchange rate changes on
cash and cash equivalents |
|
16 |
|
|
|
(28 |
) |
Net increase in Cash and Cash
Equivalents |
|
51 |
|
|
|
1,150 |
|
Cash and Cash Equivalents at
beginning of period |
|
15,697 |
|
|
|
25,600 |
|
Cash and Cash Equivalents at end of
period |
$ |
15,748 |
|
|
$ |
26,750 |
|
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 |
|
March 31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
Reconciliation
of Adjusted EBITDA: |
|
|
|
Net loss |
$ |
(1,565 |
) |
|
$ |
(1,073 |
) |
Provision for income taxes |
|
144 |
|
|
|
4 |
|
Interest expense |
|
68 |
|
|
|
50 |
|
Other (income) expense |
|
(2 |
) |
|
|
16 |
|
Depreciation and amortization |
|
2,098 |
|
|
|
1,496 |
|
Stock-based compensation
expense |
|
737 |
|
|
|
742 |
|
Loss on equity interest |
|
— |
|
|
|
32 |
|
Adjusted
EBITDA |
$ |
1,480 |
|
|
$ |
1,267 |
|
Contacts
Investor Contact:
David Calusdian, Executive Vice President & Partner
Sharon Merrill
ir@synacor.com
716-362-3309
Press Contact:
Meredith Roth, VP, Corporate Communications
Synacor
mroth@synacor.com
716-362-3880
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