Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and
innovator in cloud, messaging, digital and IoT platforms and
products, today announced financial results for its first quarter
ended March 31, 2020.
Financial quarter highlights:
- Revenue for the quarter was
$77.1 million.
- GAAP net loss for the quarter was
$12.0 million.
- Synchronoss delivered $1.8 million of adjusted EBITDA
for the quarter.
- Total costs and expenses were down 12.9 percent in the
first quarter.
- Synchronoss ended the quarter with $30.9 million
of cash on the balance sheet.
|
|
|
Three Months Ended March 31, |
$000s |
2020 |
2019 |
% Change |
Revenues |
$ |
77,122 |
|
|
$ |
88,105 |
|
|
(12.5 |
) |
% |
Net Loss Attributable to
Synchronoss |
$ |
(11,990 |
) |
|
$ |
(27,587 |
) |
|
56.5 |
|
% |
Non-GAAP Net Income (Loss)
From Cont. Ops. Attributable to Synchronoss |
2,614 |
|
|
(14,669 |
) |
|
117.8 |
|
% |
Adjusted EBITDA |
1,758 |
|
|
6,630 |
|
|
(73.5 |
) |
% |
Glenn Lurie, president and chief executive officer, stated “The
strong foundation of long-term recurring revenue business that we
have built with blue chip customers, and the new business wins that
we added to our revenue base in 2019 and early 2020, enabled
Synchronoss to deliver a solid first quarter. Synchronoss and our
customers provide services and infrastructure that enable people to
stay connected, which is especially important in the current
environment of stay-at-home orders and social distancing.”
Mr. Lurie added, “The first quarter of 2020 was an incredible
test for Synchronoss on our ability to rise above the global health
and economic crisis caused by COVID-19. In response to the
pandemic, we acted swiftly to adjust our daily business practices
and protect our employees. Over the course of a few days in March,
our company shifted to a predominantly work-from-home virtual model
and found new ways to work with and serve our customers and
prospects. Our team quickly adapted and launched three new cloud
customers including AT&T, TracFone, and Assurant; advanced our
U.S. Advanced Messaging initiative with AT&T, Sprint, T-Mobile,
and Verizon; and continued the strong momentum in our Digital and
IoT platforms around the world. I am incredibly proud of the hard
work and continued sense of purpose and determination of the
Synchronoss team.”
Aggressive Cost Cutting and Cash Preservation Actions
Taken
In light of the uncertain economic environment caused by
COVID-19, Synchronoss took additional action to reduce operating
expenses. These additional actions are expected to reduce annual
expenses by over $40 million and to deliver in-year 2020 savings of
approximately $30 million. These actions are in addition to the
previously announced $15 million of expense savings initiatives
operationalized by Synchronoss for 2020. Accordingly, total expense
savings initiatives implemented by Synchronoss in 2020 are expected
to deliver approximately $55 million of annualized operating
expense reductions, of which approximately $45 million are expected
to be realized in 2020. Steps taken include our executive team
agreeing to take reductions in their base salary, workforce and
contractor reductions, renegotiation of contracts with vendors and
suppliers, facilities rationalizations, and merit increase and
bonus deferrals, among others.
David Clark, chief financial officer, added, “We believe our
high percentage of recurring revenue from our customers in the
essential telecommunications, media, and technology industries will
enable Synchronoss to weather the impact of COVID-19 on the
economy. While our first quarter results were solid, and exceeded
our internal plan, we felt it necessary to take action in these
unprecedented times to shore up our cash and further reduce
expenses. We believe these actions are prudent, long-term strategic
adjustments that put Synchronoss in an increased position of
strength once COVID-19 related uncertainties subside in the
marketplace. We also believe these actions will enable us to
significantly improve the earnings leverage of the company in 2020,
preserve healthy balance sheet liquidity, and deliver on our EBITDA
goals, even in the event of an impact on revenue due to
COVID-19.”
Mr. Clark continued, “We ended the quarter with $31 million of
cash, and our liquidity has since grown to $41 million presently.
We have developed our internal financial plans to maximize
liquidity throughout the year, and we believe we have sufficient
liquidity for the foreseeable future.”
2020 Guidance
Given ongoing COVID-19-related economic uncertainties, and
potential impact on our customers, Synchronoss is withdrawing
revenue guidance for the balance of the year. However, in light of
our strong foundation of recurring revenue and the cost cutting
actions mentioned above, the company reaffirms Adjusted EBITDA
guidance for the year of $25-$35 million.
New Business Update
New customer agreements and partnerships that the company has
completed since the last earnings announcement include:
- AT&T Mobility has launched the Synchronoss Personal Cloud
solution for its wireless customers on its first set of brands. The
Synchronoss Personal Cloud solution will fully integrate into a
suite of AT&T services, leveraging the cloud to vastly improve
the subscriber’s overall experience. It will also give AT&T the
ability to provide and monetize new value-added services to its
wireless customers. Additional AT&T brands will be launched
later in 2020.
- Tracfone has launched the Synchronoss Personal Cloud solution
on its first sets of brands, and we are executing on plans to
launch on additional brands later in 2020.
- Synchronoss’ Personal Cloud Solution has been fully integrated
with Pocket Geek by Assurant to provide an enhanced device and
content protection solution for a leading North American MVNO and a
major carrier in Europe.
- Several new agreements have been booked with CCMI related to
expansion and enhancements of the RCS-based Advanced Messaging
offering. We continue to believe the RCS-based advanced messaging
service will be launched by the CCMI joint venture in 2020.
- In Japan, +Message subscriber growth continues to outpace
expectations beyond the 15 million subscribers announced in
December. We recently booked another contract for additional
license purchases by one of the operators and expect more in
2020.
A reconciliation of GAAP to non-GAAP results has been provided
in the financial statement tables included in this press release.
An explanation of these measures is included below under the
heading "Non-GAAP Financial Measures."
Conference Call Details
Synchronoss will host a conference call on Monday, May 11, 2020,
at 8:00 a.m. (ET) to discuss the company’s financial results. To
access this call, dial 1-201-493-6784. Additionally, a live web
cast of the conference call will be available on the Investor
Relations page on the company’s web site at
www.synchronoss.com.
Following the conference call, a replay will be available for a
limited time at 1-412-317-6671. The replay pass code is 13702908.
An archived web cast of this conference call will also be available
on the Investor Relations page of the company’s web site,
www.synchronoss.com.
Non-GAAP Financial Measures
Synchronoss has provided in this release selected financial
information that has not been prepared in accordance with GAAP.
This information includes historical non-GAAP revenues, gross
profit, operating income (loss), net income (loss), effective tax
rate, earnings (loss) per share and cash flows from operating
activities. Synchronoss uses these non-GAAP financial measures
internally in analyzing its financial results and believes they are
useful to investors, as a supplement to GAAP measures, in
evaluating Synchronoss’ ongoing operational performance.
Synchronoss believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends, and in comparing
its financial results with other companies in Synchronoss’
industry, many of which present similar non-GAAP financial measures
to investors. As noted, the non-GAAP financial results discussed
above add back fair value stock-based compensation expense,
acquisition-related costs which includes integration costs,
restructuring and cease-use lease expense, deferred compensation
expense related to earn outs and amortization of intangibles
associated with acquisitions as well as certain non-recurring
adjustments.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP measures to their most
directly comparable GAAP financial measures as detailed above. As
previously mentioned, a reconciliation of GAAP to non-GAAP results
has been provided in the financial statement tables included in
this press release.
About Synchronoss Technologies, Inc.
Synchronoss transforms the way companies create new revenue,
reduce costs and delight their subscribers with cloud, messaging,
digital and IoT products, supporting hundreds of millions of
subscribers across the globe. Synchronoss’ secure, scalable and
groundbreaking new technologies, trusted partnerships, and talented
people change the way TMT customers grow their businesses. For more
information, visit us at www.synchronoss.com.
Forward-looking Statements
This press release includes statements concerning Synchronoss
and its future expectations, plans and prospects that constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. For this purpose, any
statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words “may,” “should,” “expects,”
“plans,” “anticipates,” “could,” “intends,” “believes,” “potential”
or “continue” or other similar expressions are intended to identify
forward-looking statements. Synchronoss has based these
forward-looking statements largely on its current expectations and
projections about future events and financial trends that it
believes may affect its business, financial condition and results
of operations. These forward-looking statements speak only as of
the date of this press release and are subject to a number of
risks, uncertainties and assumptions including, without limitation,
risks relating to the Company’s ability to sustain or increase
revenue from its larger customers and generate revenue from new
customers, the Company’s expectations regarding expenses and
revenue, the sufficiency of the Company’s cash resources and its
ability to satisfy the Company’s growth strategies, the anticipated
trends and challenges in the business and the market in which the
Company operates, the Company’s expectations regarding federal,
state and foreign regulatory requirements, the pending lawsuits
against the Company described in its most recent SEC filings, and
other risks and factors that are described in the “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” sections of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019, which is on file
with the SEC and available on the SEC’s website at www.sec.gov. The
company does not undertake any obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
Contact:
Investors:Joe CrivelliVice President, Investor
Relations908-566-3131investor@synchronoss.com
Media:CCgroupsynchronoss@ccgrouppr.com
SYNCHRONOSS
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(Unaudited) (In
thousands)
|
|
March 31, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
30,906 |
|
|
$ |
39,001 |
|
Accounts receivable, net |
|
60,817 |
|
|
65,863 |
|
Operating lease right-of-use
assets |
|
52,576 |
|
|
53,965 |
|
Goodwill |
|
219,825 |
|
|
222,969 |
|
Other Assets |
|
148,670 |
|
|
150,225 |
|
Total
assets |
|
512,794 |
|
|
532,023 |
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Accounts Payable and Accrued
expenses |
|
$ |
83,411 |
|
|
$ |
87,538 |
|
Debt, current |
|
10,000 |
|
|
— |
|
Deferred revenues |
|
67,088 |
|
|
87,799 |
|
Operating lease liabilities,
non-current |
|
59,085 |
|
|
60,976 |
|
Other liabilities |
|
18,811 |
|
|
18,768 |
|
Preferred Stock |
|
209,488 |
|
|
200,865 |
|
Stockholders’ equity |
|
64,911 |
|
|
76,077 |
|
Total liabilities and
stockholders’ equity |
|
$ |
512,794 |
|
|
$ |
532,023 |
|
SYNCHRONOSS
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except per share data)
|
|
Three Months Ended March 31, |
|
|
2020 |
|
2019 |
|
|
|
|
|
Net revenues |
|
$ |
77,122 |
|
|
|
$ |
88,105 |
|
|
Costs and expenses: |
|
|
|
|
Cost of revenues |
|
35,471 |
|
|
|
38,953 |
|
|
Research and development |
|
19,788 |
|
|
|
19,681 |
|
|
Selling, general and administrative |
|
26,344 |
|
|
|
29,246 |
|
|
Restructuring charges |
|
1,450 |
|
|
|
421 |
|
|
Depreciation and amortization |
|
11,356 |
|
|
|
20,143 |
|
|
Total costs and expenses |
|
94,409 |
|
|
|
108,444 |
|
|
Loss from continuing
operations |
|
(17,287 |
) |
|
|
(20,339 |
) |
|
Interest income |
|
58 |
|
|
|
189 |
|
|
Interest expense |
|
(245 |
) |
|
|
(585 |
) |
|
Gain (loss) on extinguishment of debt |
|
— |
|
|
|
387 |
|
|
Other Income |
|
1,692 |
|
|
|
463 |
|
|
Equity method investment loss |
|
— |
|
|
|
(1,243 |
) |
|
Loss from continuing
operations, before taxes |
|
(15,782 |
) |
|
|
(21,128 |
) |
|
Benefit for income taxes |
|
12,432 |
|
|
|
1,391 |
|
|
Net loss from continuing
operations |
|
(3,350 |
) |
|
|
(19,737 |
) |
|
Net loss from discontinued
operations, net of tax** |
|
— |
|
|
|
— |
|
|
Net loss |
|
(3,350 |
) |
|
|
(19,737 |
) |
|
Net loss attributable to redeemable noncontrolling interests |
|
(17 |
) |
|
|
(313 |
) |
|
Preferred stock dividend |
|
(8,623 |
) |
|
|
(7,537 |
) |
|
Net loss attributable to
Synchronoss |
|
$ |
(11,990 |
) |
|
|
$ |
(27,587 |
) |
|
|
|
|
|
|
Earnings per
share |
|
|
|
|
Basic |
|
$ |
(0.29 |
) |
|
|
$ |
(0.68 |
) |
|
Diluted |
|
$ |
(0.29 |
) |
|
|
$ |
(0.68 |
) |
|
|
|
|
|
|
Weighted-average
common shares outstanding: |
|
|
|
|
Basic |
|
41,483 |
|
|
|
40,320 |
|
|
Diluted |
|
41,483 |
|
|
|
40,320 |
|
|
SYNCHRONOSS
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Net loss continuing operations |
$ |
(3,350 |
) |
|
|
$ |
(19,737 |
) |
|
|
|
|
|
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
Non-cash items |
14,690 |
|
|
|
26,148 |
|
|
Changes in operating assets and liabilities: |
(26,356 |
) |
|
|
(12,095 |
) |
|
Net cash used in operating activities |
(15,016 |
) |
|
|
(5,684 |
) |
|
Investing activities: |
|
|
|
Purchases of fixed assets |
(249 |
) |
|
|
(2,627 |
) |
|
Purchases of intangible assets and capitalized software |
(4,428 |
) |
|
|
(2,704 |
) |
|
Other investing activities |
1,854 |
|
|
|
14,929 |
|
|
Net cash provided by (used in) investing
activities |
(2,823 |
) |
|
|
9,598 |
|
|
Net cash provided by (used in) financing
activities |
9,996 |
|
|
|
(23,461 |
) |
|
Effect of exchange rate
changes on cash |
(252 |
) |
|
|
(19 |
) |
|
Net decrease in cash and cash equivalents |
(8,095 |
) |
|
|
(19,566 |
) |
|
|
|
|
|
Cash, restricted cash
and cash equivalents, beginning of period |
39,001 |
|
|
|
109,860 |
|
|
Cash, restricted cash
and cash equivalents, end of period |
$ |
30,906 |
|
|
|
$ |
90,294 |
|
|
SYNCHRONOSS
TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES(In thousands, except
per share data) (Unaudited)
|
|
Three Months Ended Mar 31, |
|
|
2020 |
|
2019 |
Non-GAAP financial
measures and reconciliation: |
|
|
|
|
GAAP Revenue |
|
$ |
77,122 |
|
|
$ |
88,105 |
|
Less: Cost of revenues |
|
35,471 |
|
|
38,953 |
|
Gross
Profit |
|
41,651 |
|
|
49,152 |
|
Add /
(Less): |
|
|
|
|
Stock-based compensation expense |
|
752 |
|
|
686 |
|
Adjusted Gross
Profit |
|
$ |
42,403 |
|
|
$ |
49,838 |
|
Adjusted Gross
Margin |
|
55.0 |
% |
|
56.6 |
% |
|
|
|
|
|
Net loss from
continuing operations attributable to Synchronoss |
|
(11,990 |
) |
|
(27,587 |
) |
Add /
(Less): |
|
|
|
|
Stock-based compensation expense |
|
5,169 |
|
|
5,554 |
|
Acquisition costs |
|
— |
|
|
(188 |
) |
Restructuring and cease-use lease expense |
|
1,449 |
|
|
740 |
|
Amortization expense |
|
6,915 |
|
|
6,129 |
|
One-Time Expenses due to Restatement, etc. |
|
1,071 |
|
|
720 |
|
Non-GAAP Expenses attributable to Non-Controlling Interest |
|
— |
|
|
(37 |
) |
Non-GAAP Net Income
(loss) from continuing operations attributable to
Synchronoss |
|
$ |
2,614 |
|
|
$ |
(14,669 |
) |
|
|
|
|
|
Diluted Non-GAAP Net loss from
continuing operations per share |
|
$ |
0.06 |
|
|
$ |
(0.36 |
) |
|
|
|
|
|
Weighted shares outstanding -
Basic |
|
41,483 |
|
|
40,320 |
|
SYNCHRONOSS
TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES(In thousands, except
per share data) (Unaudited)
|
|
Three Months Ended |
|
|
Mar 31, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2019 |
|
Mar 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Synchronoss |
|
$ |
(27,587 |
) |
|
$ |
(25,030 |
) |
|
$ |
(69,432 |
) |
|
$ |
(14,678 |
) |
|
$ |
(11,990 |
) |
Add /
(Less): |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
5,554 |
|
|
5,474 |
|
|
6,000 |
|
|
5,222 |
|
|
5,169 |
|
Acquisition costs |
|
(188 |
) |
|
(42 |
) |
|
— |
|
|
— |
|
|
— |
|
Restructuring and cease-use lease expense |
|
740 |
|
|
474 |
|
|
6,215 |
|
|
17 |
|
|
1,449 |
|
Integration |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Cumulative adjustment to STI receivable |
|
|
|
|
|
26,044 |
|
|
— |
|
|
— |
|
Net change in contingent consideration obligation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
One-Time Expenses due to Restatement, etc. |
|
720 |
|
|
782 |
|
|
4 |
|
|
1,320 |
|
|
1,071 |
|
Net income from discontinued operations, net of taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Depreciation and amortization |
|
20,143 |
|
|
20,269 |
|
|
18,508 |
|
|
18,116 |
|
|
11,356 |
|
Interest income |
|
(189 |
) |
|
(299 |
) |
|
(228 |
) |
|
(542 |
) |
|
(58 |
) |
Interest Expense |
|
585 |
|
|
463 |
|
|
203 |
|
|
104 |
|
|
245 |
|
Gain on Extinguishment of debt |
|
(387 |
) |
|
(430 |
) |
|
(5 |
) |
|
— |
|
|
— |
|
Other (Income) expense, net |
|
(463 |
) |
|
24 |
|
|
422 |
|
|
(7,372 |
) |
|
(1,692 |
) |
Equity method investment loss |
|
1,243 |
|
|
376 |
|
|
— |
|
|
— |
|
|
— |
|
Provision (benefit) for income taxes |
|
(1,391 |
) |
|
(1,844 |
) |
|
9,849 |
|
|
(4,439 |
) |
|
(12,432 |
) |
Net (loss) income attributable to noncontrolling interests |
|
313 |
|
|
593 |
|
|
25 |
|
|
194 |
|
|
17 |
|
Preferred dividend |
|
7,537 |
|
|
7,859 |
|
|
8,194 |
|
|
8,544 |
|
|
8,623 |
|
Reclassification of expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted EBITDA
(non-GAAP) |
|
$ |
6,630 |
|
|
$ |
8,669 |
|
|
$ |
5,799 |
|
|
$ |
6,486 |
|
|
$ |
1,758 |
|
|
|
Three Months Ended Mar 31, |
|
|
2020 |
|
2019 |
Net Cash used in operating activities |
|
$ |
(15,016 |
) |
|
|
$ |
(5,684 |
) |
|
Add /
(Less): |
|
|
|
|
Capitalized software |
|
(4,428 |
) |
|
|
(2,704 |
) |
|
Property and equipment |
|
(249 |
) |
|
|
(2,627 |
) |
|
Free
Cashflow |
|
$ |
(19,693 |
) |
|
|
$ |
(11,015 |
) |
|
Add: One-Time Expenses due to Restatement, etc. |
|
1,071 |
|
|
|
720 |
|
|
Adjusted Free
Cashflow |
|
$ |
(18,621 |
) |
|
|
$ |
(10,295 |
) |
|
Synchronoss Technologies (NASDAQ:SNCR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Synchronoss Technologies (NASDAQ:SNCR)
Historical Stock Chart
From Sep 2023 to Sep 2024