- Q3 2016 revenue of $31.7 million, a 20%
year-over-year increase, exceeds the guidance range of $29.0 to
$31.0 million
- Q3 2016 net loss of $3.4 million,
reflecting the investment in product development for AT&T
- Q3 2016 adjusted EBITDA of $0.2
million, exceeds guidance range of ($2.0) to ($3.0) million
- Company launches Zimbra Open Source
Support and extends leadership in cloud-based identity
management
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, 2016.
“We delivered another solid quarter, exceeding our guidance and
achieving double-digit top-line growth, margin expansion and growth
in recurring and fee-based revenue,” said Synacor CEO Himesh Bhise.
“We are making great strides in advancing our technology and
products, in particular this quarter, with our AT&T
partnership, Zimbra Open Source and Cloud ID offerings.
“We remain well positioned in the growing digital markets that
we serve and are on track to deliver on our target of $300 million
in revenue and $30 million in adjusted EBITDA in 2019,” said
Bhise.
Recent Highlights
- Launched the beta for a new AT&T
Live 2.0 mobile app on Android that is receiving high consumer
ratings; Invested $3.0 million this quarter, as planned, and
continued to make great progress on executing the AT&T portal
contract
- Launched Zimbra Open Source Support, a
new global support program for the more than 400 million Zimbra
open source-based email and collaboration software users
- Released Zimbra Suite Plus, with add-on
features that include mobile sync, backup, storage and admin
tools
- Added several new customers, including
a major international telecommunications provider and an Indian
government institution to the growing list of Zimbra customers.
Selected by an over-the-top subscription-based video service, a
publicly traded telecommunications company, and a regional cable
provider to provide Cloud ID authentication services
- Supported the deployment of Apple’s
Single Sign-On platform that utilizes Synacor’s Cloud ID, and also
aligned with CTAM (Cable and Telecommunications Association for
Marketing) and OATC (Open Authentication Technology Committee) to
drive industry authentication standards
Q3 2016 Financial Results
Revenue: For the third quarter of 2016, revenue was $31.7
million, an increase of 20% compared with the third quarter of
2015. Recurring and fee-based revenue represented 42% of our
revenue.
Net Income: For the third quarter of 2016, net
loss was $3.4 million, compared with net loss of $0.9 million in
the third quarter of 2015, reflecting the investment to deploy and
support the AT&T portal contract. Earnings per share, or EPS,
was a loss of $0.11 compared with a loss of $0.03 in the third
quarter of 2015.
Adjusted EBITDA: For the third quarter of 2016, adjusted
earnings before interest, taxes, depreciation, and amortization
(adjusted EBITDA), which excludes stock-based compensation expense,
was $0.2 million compared with $2.0 million for the third quarter
of 2015. Adjusted EBITDA in the third quarter of 2016 reflects the
$2.3 million investment (operating expense) to support the AT&T
portal business won earlier this year.
Cash: The Company ended the third quarter of 2016 with
$15.0 million in cash and cash equivalents, compared with $16.3
million at the end of the prior quarter.
Guidance
“We are making excellent progress with our AT&T partnership.
The teams have been working hard on developing the expanded breadth
of new features and refining the deployment program. We are
planning the launch of the new AT&T desktop and mobile web
portal in the first half of 2017, rather than a limited Q4 2016
release. We continue to expect the deployment will ramp and
monetize through 2017 as previously discussed. Revenue contribution
from AT&T is now expected to begin in 2017, and we are
adjusting our financial guidance for Q4 2016 accordingly. The
combined AT&T and Synacor team feels confident in our ability
to execute against the new timeline and pleased with our progress
to date,” concluded Bhise.
Based on information available as of November 14, 2016, the
company is providing financial guidance for the fourth quarter and
fiscal 2016 as follows:
- Q4 2016 Guidance: Revenue for
the fourth quarter of 2016 is projected to be in the range of $34.0
million to $38.0 million. The company expects to report a net loss
of $2.5 million to $3.2 million and adjusted EBITDA of $0.0 million
to $1.0 million, which excludes stock-based compensation expense of
$0.7 million to $0.8 million, depreciation and amortization of $2.2
million to $2.4 million and tax, interest expense and other income
and expense of approximately $0.3 million.
- Fiscal 2016 Guidance: Revenue
for the full year of 2016 is projected to be in the range of $126.0
million to $130.0 million, in-line with our guidance of $125.0
million to $130.0 million before announcing the AT&T contract
and down from the most recently provided range of $130.0 million to
$135.0 million, which included anticipated revenue from AT&T in
Q4 now shifted to 2017. The Company expects to report a net loss in
the range of $10.2 million to $10.9 million, versus the previous
range of $10.5 million to $12.6 million. Adjusted EBITDA is now
expected in the range of $2.0 million to $3.0 million, exceeding
the previous range of $0.5 million to $2.0 million. The revised
adjusted EBITDA guidance excludes stock-based compensation expense
of $2.8 million to $2.9 million, depreciation and amortization of
$9.0 million to $9.2 million, and tax, interest expense and other
income and expense of approximately $1.1 million. Net income and
adjusted EBITDA guidance for the fourth quarter and fiscal year
2016 reflect a portion of the previously announced $10 million
investment to deploy portal services for AT&T.
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
10216750, 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. 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 10216750.
About Synacor
Known for managed portals and apps, advertising, email and
collaboration, authentication, and end-to-end advanced video
services, Synacor (Nasdaq:SYNC) is the trusted technology
development, multiplatform services and revenue partner for video,
internet and communications providers, device manufacturers, and
enterprises. Synacor delivers modern, multiscreen experiences and
advertising to their consumers that require scale, actionable data
and sophisticated implementation. Synacor enables its
customers to better engage with their consumers.
www.synacor.com
SYNC-G
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 Under the Private Securities Litigation
Reform Act of 1995
"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, its expectations related to the
AT&T contract, its fourth-quarter and fiscal year 2016 and
three-year guidance, the statements and quotations from management
and 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, including execution against our agreement with AT&T
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 or
other legal claims against Synacor; 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. 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 14, 2016, and Synacor undertakes no duty
to update this information.
Synacor, Inc. Condensed
Consolidated Balance Sheets (In thousands)
(Unaudited) September 30, December 31,
2016 2015 Assets Current assets: Cash and cash
equivalents $ 15,028 $ 15,697 Accounts receivable, net 19,993
24,341 Prepaid expenses and other current assets 4,599
3,290 Total current assets 39,620 43,328
Property and equipment, net 14,815 14,377 Goodwill 15,949 15,187
Intangible assets, net 15,376 14,798 Other long-term assets
1,303 1,336
Total Assets $
87,063 $ 89,026
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 11,905 $ 9,004 Accrued expenses and other
current liabilities 13,265 9,765 Current portion of deferred
revenue 9,946 11,295 Current portion of capital lease obligations
1,170 1,574 Total current liabilities
36,286 31,638 Long-term portion of capital lease obligations 1,151
1,007 Long-term debt 5,000 5,000 Deferred revenue 2,878 3,225 Other
long-term liabilities 486 2,052
Total Liabilities 45,801
42,922 Stockholders' Equity: Common stock 312
306 Additional paid-in capital 116,224 113,238 Accumulated deficit
(73,797 ) (66,110 ) Treasury stock (1,460 ) (1,332 ) Accumulated
other comprehensive (loss) income (17 ) 2
Total stockholders’ equity 41,262 46,104
Total Liabilities and Stockholders' Equity $
87,063 $ 89,026
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,
2016 2015 2016 2015 Revenue $
31,721 $ 26,351 $ 92,457 $ 77,797 Costs and operating expenses:
Cost of revenue (1) 14,611 13,298 41,099 40,205 Technology and
development (1)(2) 6,791 4,361 19,255 13,788 Sales and marketing
(2) 5,907 4,274 17,177 11,475 General and administrative (1)(2)
4,871 3,712 15,027 10,437 Depreciation and amortization
2,414 1,560 6,782 4,716
Total costs and operating expenses 34,594
27,205 99,340 80,621
Loss from operations (2,873 ) (854 ) (6,883 ) (2,824 )
Other (expense) income (38 ) (32 ) 206 (31 ) Interest
expense (75 ) (35 ) (227 ) (144 ) Loss
before income taxes and equity interest (2,986 ) (921 ) (6,904 )
(2,999 ) Provision for income taxes 379 10 783 30 Loss in equity
interest - - - (57
) Net loss $ (3,365 ) $ (931 ) $ (7,687 ) $ (3,086 ) Net
loss per share: Basic $ (0.11 ) $ (0.03 ) $ (0.26 ) $ (0.11 )
Diluted $ (0.11 ) $ (0.03 ) $ (0.26 ) $ (0.11 ) Weighted
average shares used to compute net loss per share: Basic
30,260,172 27,924,939 30,108,725
27,617,125 Diluted 30,260,172
27,924,939 30,108,725 27,617,125
Notes: (1) Exclusive of depreciation and amortization shown
separately. (2) Includes stock-based compensation as follows:
Three months ended Nine months ended September
30, September 30, 2016 2015 2016
2015 Technology and development $ 238 $ 224 $ 681 $ 694
Sales and marketing 173 231 604 716 General and administrative
269 355 819 942
$ 680 $ 810 $ 2,104 $ 2,352
Synacor, Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(Unaudited) Nine months ended September
30, 2016 2015 Cash Flows from Operating
Activities: Net loss $ (7,687 ) $ (3,086 ) Adjustments to
reconcile net loss to net cash provided in operating activities:
Depreciation and amortization 6,782 4,716 Stock-based compensation
expense 2,104 2,352 Reduction of estimated fair value of contingent
consideration 90 - Loss in equity interest - 57 Change in assets
and liabilities net of effect of acquisition: Accounts receivable,
net 5,313 3,169 Prepaid expenses and other assets (1,282 ) 643
Accounts payable 1,842 (1,003 ) Accrued expenses and other
liabilities 1,245 36 Deferred revenue (1,696 ) (706 )
Net cash (used in) provided by
operating activities
6,711 6,178
Cash Flows from Investing Activities: Acquisition, net of
cash acquired (2,500 ) (17,260 ) Purchases of property and
equipment (4,246 ) (2,474 )
Net cash (used in) provided by
investing activities
(6,746 ) (19,734 )
Cash Flows from Financing Activities: Repayments on capital
lease obligations (1,242 ) (975 ) Proceeds from bank financing -
4,940 Proceeds from exercise of common stock options 744 70 Payment
of minimum tax withholdings in exchange for treasury stock shares
(128 ) - Deferred acquisition payment - (495 )
Net cash (used in) provided by financing activities
(626 ) 3,540 Effect of exchange
rate changes on cash and cash equivalents (8 ) (15 ) Net decrease
in Cash and Cash Equivalents (669 ) (10,031 ) Cash and Cash
Equivalents at beginning of period 15,697
25,600 Cash and Cash Equivalents at end of period
$
15,028 $ 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,
2016 2015 2016 2015
Reconciliation of Adjusted EBITDA: Net loss $ (3,365 ) $
(931 ) $ (7,687 ) $ (3,086 ) Provision for income taxes 379 10 783
30 Interest expense 75 35 227 144 Other expense (income) 38 32 (206
) 31 Depreciation and amortization 2,414 1,560 6,782 4,716
Stock-based compensation expense 680 810 2,104 2,352 Acquisition
costs - 478 - 478 Loss on equity interest - -
- 57
Adjusted EBITDA
$ 221 $ 1,994 $
2,003 $ 4,722
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161114006520/en/
Investor Contact:Sharon Merrill AssociatesDavid Calusdian,
617-542-5300Executive Vice Presidentir@synacor.comorPress
Contact:SynacorMatt Wolfrom, 716-362-3880VP, Corporate
CommunicationsMatt.Wolfrom@synacor.com
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