- Q2 2017 revenue of $31.2 million,
exceeds the guidance range
- AT&T portal product implementation,
rollout and migration have been completed as planned; engagement
metrics look strong; monetization at a deliberate pace
- Expanded partnerships with current
customers, and added new email and Cloud ID customers
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 June 30, 2017.
“We delivered a solid quarter, exceeding our revenue and
adjusted EBITDA guidance,” said Synacor CEO Himesh Bhise. “The
AT&T portal product rollout and migration has been completed as
planned, and I am particularly pleased to see that engagement and
customer satisfaction are strong.”
“We remain well positioned in the growing digital markets that
we serve. Given the product success at AT&T and our strong
pipeline of revenue opportunities, we remain committed to our
target of $300 million in revenue and $30 million in adjusted
EBITDA in 2019,” said Bhise.
Recent Highlights…
- Successfully rolled out the new ATT.net
portal across the country and completed the migration of the
installed base of desktop, mobile, and tablet users to the new
experience
- Renewed partnerships with several
portal and email customers including Cincinnati Bell and GCI
- Expanded Advanced Cloud ID partnerships
with many operators including Dish, SlingTV, and GCI
- Enabled subscriber access to Game of
Thrones’ record-breaking seventh season premiere for HBO Go,
proving the scalable and reliable nature of our Advanced Cloud ID
solution
- Continued to add a growing list of
international enterprise and government email customers, such as
Wistron NeWeb Corporation, a Taiwanese manufacturing company;
Bluecom, a French software company; and the Indonesian Department
of Transportation
Q2 2017 Financial Results
Revenue: For the second quarter of 2017, total revenue
was $31.2 million, exceeding the Company’s financial guidance, an
increase of 18% over the first quarter of 2017, and 2% over the
second quarter of 2016.
Net Income: For the second quarter of 2017, net
loss was $3.3 million, compared with a net loss of $6.7 million in
the first quarter of 2017 and a net loss of $2.8 million in the
second quarter of 2016, reflecting some customer-driven product
development investment. Earnings per share, or EPS, was a loss of
$0.09 in the second quarter of 2017, compared with a loss of $0.21
in the first quarter of 2017 and flat with the second quarter of
2016.
Adjusted EBITDA: For the second quarter of 2017, adjusted
earnings before interest, taxes, depreciation, and amortization
(adjusted EBITDA), which excludes stock-based compensation expense,
was $0.2 million, exceeding the Company’s financial guidance,
compared with ($3.3) million in the first quarter 2017 and $0.3
million for the second quarter of 2016, reflecting some
customer-driven product development investment.
Cash: The Company ended the second quarter of 2017 with
$23.0 million in cash and cash equivalents, compared with $11.3
million at the end of the prior quarter. This includes $20
million raised in April 2017 from an equity offering, net of
underwriting costs and commissions, and the repayment of $5 million
under the Company’s line of credit.
Guidance
“The joint AT&T-Synacor team has made the strategic decision
to prioritize portal engagement right now over monetization. We are
seeing the results of this focus in deeper engagement metrics. We
are already generating revenue from this new consumer experience,
but we expect that additional monetization tactics will be turned
on at a more deliberate pace, which will result in a longer ramp to
full monetization. As a result, a significant portion of the
revenue that we were expecting in Q3 and Q4 this year is delayed to
2018, and we are adjusting our financial guidance for 2017
accordingly. We believe that this engagement-focused strategy
ultimately leads to a stronger, more sustainable business,”
concluded Bhise.
Based on information available as of August 9, 2017, the Company
is providing financial guidance for the third quarter and fiscal
2017 as follows:
- Q3 2017 Guidance: Revenue for
the third quarter of 2017 is projected to be in the range of $35.0
million to $40.0 million. The Company expects to report a net loss
of $0.7 million to $3.0 million and adjusted EBITDA of $0.5 million
to $2.5 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 $0.3 million.
- Fiscal 2017 Guidance: Revenue
for the full year of 2017 is projected to be in the range of $140
million to $150 million, adjusted from the previous range of $160
million to $170 million. The Company expects to report a net loss
in the range of $9.3 million to $13.9 million, from the previous
range of a net loss of $2.8 million to $8.0 million and adjusted
EBITDA in the range of $0.0 million to $4.0 million, from the
previous range of $6.0 million to $10.0 million, which excludes
stock-based compensation expense of $2.7 million to $2.9 million,
depreciation and amortization of $8.8 million to $9.2 million, and
tax, interest expense, capitalized software impairment, and other
income and expense of $1.8 million. Net income and adjusted EBITDA
guidance include customer-driven product development investment in
advance of revenue.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the second-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 (833) 235-2655, with conference ID
62551304, or callers outside the U.S. may dial (647) 689-4151.
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 (800) 585-8367, or callers outside the U.S. may dial
(416) 621-4642. The conference ID is 62551304.
About Synacor
Synacor (NASDAQ: SYNC) is the trusted technology development,
multiplatform services and revenue partner for video, internet and
communications providers, device manufacturers, governments and
enterprises. Synacor’s mission is to enable its customers to better
engage with their consumers. Its customers use Synacor’s technology
platforms and services to scale their businesses and extend their
subscriber relationships. Synacor delivers managed portals,
advertising solutions, email and collaboration platforms,
end-to-end video solutions and cloud-based identity management.
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 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 third-quarter and fiscal year 2017 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 pace and degree to which the AT&T portal can be monetized;
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-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 August 9, 2017, and Synacor undertakes no duty to
update this information.
Synacor, Inc.
Condensed Consolidated Balance Sheets (In thousands)
(Unaudited) June 30, December 31,
2017 2016 Assets
Current assets: Cash and cash equivalents $ 22,983 $ 14,315
Accounts receivable, net 17,775 27,386 Prepaid expenses and other
current assets 5,018 4,862 Total
current assets 45,776 46,563 Property and equipment, net 18,338
14,406 Goodwill 15,949 15,943 Intangible assets 13,766 14,837 Other
long-term assets 1,616 1,650
Total
Assets $ 95,445 $ 93,399
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $ 15,960 $ 18,769 Accrued expenses
and other current liabilities 7,080 11,684 Current portion of
deferred revenue 12,350 12,149 Current portion of capital lease
obligations 1,892 982 Total current
liabilities 37,282 43,584 Long-term portion of capital lease
obligations 2,897 1,014 Deferred revenue 2,952 3,917 Long-term debt
— 5,000 Other long-term liabilities 429 235
Total Liabilities 43,560
53,750 Stockholders' Equity: Common stock 391
316 Treasury stock (1,664 ) (1,547 ) Additional paid-in capital
139,913 117,747 Accumulated deficit (86,782 ) (76,850 ) Accumulated
other comprehensive income (loss) 27 (17 )
Total stockholders’ equity 51,885 39,649
Total Liabilities and Stockholders' Equity $
95,445 $ 93,399
Synacor, Inc. Condensed Consolidated Statements of
Operations (In thousands except share and per share
amounts) (Unaudited) Three months ended
Six months ended June 30, June 30, 2017
2016 2017 2016 Revenue $ 31,216 $
30,476 $ 57,756 $ 60,736 Costs and operating expenses: Cost of
revenue (1) 14,462 13,516 27,024 26,488 Technology and development
(1)(2) 6,904 6,591 14,202 12,464 Sales and marketing (2) 6,185
5,620 12,846 11,270 General and administrative (1)(2) 4,361 5,134
8,325 10,156 Depreciation and amortization 2,224
2,270 4,408 4,368 Total
costs and operating expenses 34,136 33,131
65,805 63,746 Loss from
operations (2,920 ) (2,655 ) (9,049 ) (4,010 ) Other income 67 242
73 244 Interest expense (114 ) (84 ) (201 )
(152 ) Loss before income taxes (2,967 ) (2,497 ) (9,177 )
(3,918 ) Income tax provision 309 260
755 404 Net loss $ (3,276 ) $ (2,757 )
$ (9,932 ) $ (4,322 ) Net loss per share: Basic $
(0.09 ) $ (0.09 ) $ (0.29 ) $ (0.14 ) Diluted $ (0.09 ) $ (0.09 ) $
(0.29 ) $ (0.14 ) Weighted average shares used to compute
net loss per share: Basic 37,284,973
30,070,759 34,228,367 30,031,286
Diluted 37,284,973 30,070,759
34,228,367 30,031,286 Notes: (1)
Exclusive of depreciation shown separately. (2) Includes
stock-based compensation as follows:
Three months ended
Six month ended June 30, June 30, 2017
2016 2017 2016 Technology and development $
206 $ 202 $ 414 $ 443 Sales and marketing 190 208 358 431 General
and administrative 280 277 551
550 $ 676 $ 687 $ 1,323 $
1,424
Synacor,
Inc. Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited) Six Months
Ended June 30, 2017 2016 Cash Flows
from Operating Activities: Net loss $ (9,932 ) $ (4,322 )
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Depreciation and amortization 4,408 4,368
Capitalized software impairment 256 — Stock-based compensation
expense 1,323 1,424 Provision for deferred income taxes 219 —
Increase in estimated value of contingent consideration 107 —
Change in operating assets and liabilities net of effect of
acquisition: Accounts receivable, net 9,611 6,254 Prepaid expenses
and other assets (136 ) (1,866 ) Accounts payable (3,132 ) 850
Accrued expenses and other liabilities (3,436 ) (15 ) Deferred
revenue (764 ) (1,031 )
Net cash (used in)
provided by operating activities (1,476 )
5,662 Cash Flows from Investing
Activities: Acquisition — (2,500 ) Purchases of property and
equipment (3,576 ) (2,004 )
Net cash used in
investing activities (3,576 )
(4,504 ) Cash Flows from Financing Activities:
Net proceeds from offering of common stock 20,046 — Repayments of
long-term debt (5,000 ) — Repayments on capital lease obligations
(701 ) (838 ) Proceeds from exercise of common stock options 786
336 Purchase of treasury stock and shares received to satisfy
minimum tax withholding liabilities (117 ) (66 ) Deferred
acquisition payment (1,300 ) —
Net cash
used in financing activities 13,714
(568 ) Effect of exchange rate changes on cash and
cash equivalents 6 8 Net (decrease)
increase in Cash and Cash Equivalents 8,668 598 Cash and Cash
Equivalents at beginning of period 14,315
15,697 Cash and Cash Equivalents at end of period
$
22,983 $ 16,295
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 Six months ended June 30, June 30,
2017 2016 2017 2016
Reconciliation of Adjusted EBITDA: Net loss $ (3,276 ) $
(2,757 ) $ (9,932 ) $ (4,322 ) Provision for income taxes 309 260
755 404 Interest expense 114 84 201 152 Other income (67 ) (242 )
(73 ) (244 ) Depreciation and amortization 2,224 2,270 4,408 4,368
Capitalized software impairment 256 — 256 — Stock-based
compensation expense 676 687
1,323 1,424
Adjusted EBITDA $
236 $ 302 $ (3,062
) $ 1,782
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170809006094/en/
Investor Contact:Sharon Merrill AssociatesMatt Roache,
617-542-5300ir@synacor.comorPress Contact:SynacorMatt Wolfrom,
716-362-3880VP, Corporate
CommunicationsMatt.Wolfrom@synacor.com
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