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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2020
Or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission file number 000-52049
SYNCHRONOSS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
06-1594540 |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
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200 Crossing Boulevard, 8th Floor
Bridgewater, New Jersey
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08807 |
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(Address of principal executive offices) |
(Zip Code) |
(866) 620-3940
(Registrant’s telephone number, including area
code)
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x
No
¨
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such files).
Yes
x
No
¨
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large accelerated filer |
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Accelerated filer |
x |
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Non-accelerated filer |
☐ |
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Smaller Reporting Company |
☐ |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
x
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $.0001 par value
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SNCR |
The Nasdaq Stock Market, LLC
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As of August 10, 2020, there were
45,735,138 shares of common stock issued
and outstanding.
SYNCHRONOSS TECHNOLOGIES, INC.
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash, restricted cash and cash equivalents |
$ |
42,771 |
|
|
$ |
39,001 |
|
|
|
|
|
|
Marketable securities, current |
— |
|
|
11 |
|
|
Accounts receivable, net |
57,332 |
|
|
65,863 |
|
|
Prepaid & Other Current Assets |
47,888 |
|
|
38,022 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
147,991 |
|
|
142,897 |
|
|
Non-Current Assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
18,659 |
|
|
26,525 |
|
|
Operating lease right-of-use assets |
46,913 |
|
|
53,965 |
|
|
Goodwill |
222,854 |
|
|
222,969 |
|
|
Intangible assets, net |
72,910 |
|
|
77,613 |
|
|
|
|
|
|
Other Assets, non-current |
12,325 |
|
|
8,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Current Assets |
373,661 |
|
|
389,126 |
|
|
Total assets |
$ |
521,652 |
|
|
$ |
532,023 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
22,948 |
|
|
$ |
21,551 |
|
|
Accrued expenses |
73,506 |
|
|
65,987 |
|
|
Deferred revenues, current |
46,958 |
|
|
65,858 |
|
|
Debt, current |
10,000 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
153,412 |
|
|
153,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
2,161 |
|
|
1,679 |
|
|
Deferred revenues, non-current |
16,315 |
|
|
21,941 |
|
|
|
|
|
|
Leases, non-current |
53,495 |
|
|
60,976 |
|
|
Other non-current liabilities |
3,285 |
|
|
4,589 |
|
|
Redeemable noncontrolling interest |
12,500 |
|
|
12,500 |
|
|
Commitments and contingencies |
|
|
|
|
Series A Convertible Participating Perpetual Preferred Stock,
$0.0001 par value; 10,000 shares authorized; 233 shares issued and
outstanding at June 30, 2020
|
218,482 |
|
|
200,865 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, $0.0001 par value; 100,000 shares authorized, 51,619
and 51,704 shares issued; 44,457 and 44,542 outstanding at June 30,
2020 and December 31, 2019, respectively
|
5 |
|
|
5 |
|
|
Treasury stock, at cost (7,162 and 7,162 shares at June 30, 2020
and December 31, 2019, respectively)
|
(82,087) |
|
|
(82,087) |
|
|
Additional paid-in capital |
517,794 |
|
|
525,739 |
|
|
Accumulated other comprehensive loss |
(34,397) |
|
|
(33,261) |
|
|
Accumulated deficit |
(339,313) |
|
|
(334,319) |
|
|
Total stockholders’ equity |
62,002 |
|
|
76,077 |
|
|
Total liabilities and stockholders’ equity |
$ |
521,652 |
|
|
$ |
532,023 |
|
See accompanying notes to condensed consolidated financial
statements.
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
76,535 |
|
|
$ |
77,846 |
|
|
$ |
153,657 |
|
|
$ |
165,951 |
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues* |
|
29,480 |
|
|
33,403 |
|
|
64,951 |
|
|
72,356 |
|
|
|
|
Research and development |
|
19,096 |
|
|
19,026 |
|
|
38,884 |
|
|
38,707 |
|
|
|
|
Selling, general and administrative |
|
24,640 |
|
|
23,080 |
|
|
50,984 |
|
|
52,326 |
|
|
|
|
Restructuring charges |
|
4,493 |
|
|
356 |
|
|
5,943 |
|
|
777 |
|
|
|
|
Depreciation and amortization |
|
10,284 |
|
|
20,269 |
|
|
21,640 |
|
|
40,412 |
|
|
|
|
Total costs and expenses |
|
87,993 |
|
|
96,134 |
|
|
182,402 |
|
|
204,578 |
|
|
|
|
Loss from continuing operations |
|
(11,458) |
|
|
(18,288) |
|
|
(28,745) |
|
|
(38,627) |
|
|
|
|
Interest income |
|
1,509 |
|
|
299 |
|
|
1,568 |
|
|
488 |
|
|
|
|
Interest expense |
|
(84) |
|
|
(463) |
|
|
(329) |
|
|
(1,048) |
|
|
|
|
Gain (loss) on extinguishment of debt |
|
— |
|
|
430 |
|
|
— |
|
|
817 |
|
|
|
|
Other Income, net |
|
1,367 |
|
|
(24) |
|
|
3,058 |
|
|
439 |
|
|
|
|
Equity method investment loss |
|
— |
|
|
(376) |
|
|
— |
|
|
(1,619) |
|
|
|
|
Loss from continuing operations, before taxes |
|
(8,666) |
|
|
(18,422) |
|
|
(24,448) |
|
|
(39,550) |
|
|
|
|
Benefit for income taxes |
|
7,972 |
|
|
1,844 |
|
|
20,404 |
|
|
3,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
(694) |
|
|
(16,578) |
|
|
(4,044) |
|
|
(36,315) |
|
|
|
|
Net loss attributable to redeemable noncontrolling
interests |
|
(165) |
|
|
(593) |
|
|
(182) |
|
|
(906) |
|
|
|
|
Preferred stock dividend |
|
(9,289) |
|
|
(7,859) |
|
|
(18,197) |
|
|
(15,396) |
|
|
|
|
Net loss attributable to Synchronoss |
|
$ |
(10,148) |
|
|
$ |
(25,030) |
|
|
$ |
(22,423) |
|
|
$ |
(52,617) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.24) |
|
|
$ |
(0.61) |
|
|
$ |
(0.54) |
|
|
$ |
(1.30) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
(0.24) |
|
|
$ |
(0.61) |
|
|
$ |
(0.54) |
|
|
$ |
(1.30) |
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
41,697 |
|
|
40,810 |
|
|
41,482 |
|
|
40,566 |
|
|
|
|
Diluted |
|
41,697 |
|
|
40,810 |
|
|
41,482 |
|
|
40,566 |
|
|
|
________________________________
* Cost of revenues excludes depreciation and amortization
which are shown separately.
See accompanying notes to condensed consolidated financial
statements.
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)
INCOME
(Unaudited) (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
|
|
|
Net loss |
|
$ |
(694) |
|
|
$ |
(16,578) |
|
|
|
|
$ |
(4,044) |
|
|
$ |
(36,315) |
|
|
|
|
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
1,872 |
|
|
802 |
|
|
|
|
(2,069) |
|
|
507 |
|
|
|
|
Unrealized loss on available for sale securities |
|
— |
|
|
3 |
|
|
|
|
751 |
|
|
(902) |
|
|
|
|
Net income (loss) on inter-company foreign currency
transactions |
|
554 |
|
|
264 |
|
|
|
|
182 |
|
|
(119) |
|
|
|
|
Total other comprehensive income (loss) |
|
2,426 |
|
|
1,069 |
|
|
|
|
(1,136) |
|
|
(514) |
|
|
|
|
Comprehensive loss |
|
1,732 |
|
|
(15,509) |
|
|
|
|
(5,180) |
|
|
(36,829) |
|
|
|
|
Comprehensive loss attributable to redeemable noncontrolling
interests |
|
(165) |
|
|
(593) |
|
|
|
|
(182) |
|
|
(906) |
|
|
|
|
Comprehensive loss attributable to Synchronoss |
|
$ |
1,567 |
|
|
$ |
(16,102) |
|
|
|
|
$ |
(5,362) |
|
|
$ |
(37,735) |
|
|
|
See accompanying notes to condensed consolidated financial
statements.
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
(Unaudited) (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Treasury Stock |
|
|
|
Additional |
|
Accumulated Other |
|
|
|
Total |
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Paid-In Capital |
|
Comprehensive Income (Loss) |
|
Accumulated deficit |
|
Stockholders' Equity |
|
Balance at March 31, 2020 |
|
51,758 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
522,164 |
|
|
$ |
(36,823) |
|
|
$ |
(338,454) |
|
|
$ |
64,805 |
|
|
Stock based compensation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,754 |
|
|
— |
|
|
— |
|
|
4,754 |
|
|
Issuance of restricted stock |
|
(138) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,454) |
|
|
— |
|
|
— |
|
|
(8,454) |
|
|
Amortization of preferred stock issuance costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(835) |
|
|
— |
|
|
— |
|
|
(835) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares withheld for taxes in connection with issuance of restricted
stock |
|
(1) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Synchronoss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(694) |
|
|
(694) |
|
|
Non-controlling interest |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
165 |
|
|
— |
|
|
(165) |
|
|
— |
|
|
Total other comprehensive income (loss) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,426 |
|
|
— |
|
|
2,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020 |
|
51,619 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
517,794 |
|
|
$ |
(34,397) |
|
|
$ |
(339,313) |
|
|
$ |
62,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Treasury Stock |
|
|
|
Additional |
|
Accumulated Other |
|
|
|
Total |
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Paid-In Capital |
|
Comprehensive Income (Loss) |
|
Accumulated deficit |
|
Stockholders' Equity |
|
Balance at March 31, 2019 |
|
49,908 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
533,224 |
|
|
$ |
(31,966) |
|
|
$ |
(249,776) |
|
|
$ |
169,400 |
|
|
Stock based compensation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,329 |
|
|
— |
|
|
— |
|
|
5,329 |
|
|
Issuance of restricted stock |
|
1,670 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7,331) |
|
|
— |
|
|
— |
|
|
(7,331) |
|
|
Amortization of preferred stock issuance costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(528) |
|
|
— |
|
|
— |
|
|
(528) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares withheld for taxes in connection with issuance of restricted
stock |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5) |
|
|
— |
|
|
— |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Synchronoss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,171) |
|
|
(17,171) |
|
|
Non-controlling interest |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
593 |
|
|
— |
|
|
— |
|
|
593 |
|
|
Total other comprehensive income (loss) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,069 |
|
|
— |
|
|
1,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019 |
|
51,578 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
531,282 |
|
|
$ |
(30,897) |
|
|
$ |
(266,947) |
|
|
$ |
151,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Treasury Stock |
|
|
|
Additional |
|
Accumulated Other |
|
|
|
Total |
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Paid-In Capital |
|
Comprehensive Income (Loss) |
|
Accumulated deficit |
|
Stockholders' Equity |
|
Balance at December 31, 2019 |
|
51,704 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
525,739 |
|
|
$ |
(33,261) |
|
|
$ |
(334,319) |
|
|
$ |
76,077 |
|
|
Stock based compensation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10,070 |
|
|
— |
|
|
— |
|
|
10,070 |
|
|
Issuance of restricted stock |
|
(83) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16,612) |
|
|
— |
|
|
— |
|
|
(16,612) |
|
|
Amortization of preferred stock issuance costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,585) |
|
|
— |
|
|
— |
|
|
(1,585) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares withheld for taxes in connection with issuance of restricted
stock |
|
(2) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Synchronoss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,044) |
|
|
(4,044) |
|
|
Non-controlling interest |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
182 |
|
|
— |
|
|
(182) |
|
|
— |
|
|
Total other comprehensive income (loss) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,136) |
|
|
— |
|
|
(1,136) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adoption of new credit loss accounting standard |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(768) |
|
|
(768) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020 |
|
51,619 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
517,794 |
|
|
$ |
(34,397) |
|
|
$ |
(339,313) |
|
|
$ |
62,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Treasury Stock |
|
|
|
Additional |
|
Accumulated Other |
|
|
|
Total |
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Paid-In Capital |
|
Comprehensive Income (Loss) |
|
Accumulated deficit |
|
Stockholders' Equity |
|
Balance at December 31, 2018 |
|
49,836 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
534,673 |
|
|
$ |
(30,383) |
|
|
$ |
(233,299) |
|
|
$ |
188,909 |
|
|
Stock based compensation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11,108 |
|
|
— |
|
|
— |
|
|
11,108 |
|
|
Issuance of restricted stock |
|
1,743 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(14,406) |
|
|
— |
|
|
— |
|
|
(14,406) |
|
|
Amortization of preferred stock issuance costs |
|
— |
|
|
— |
|
|
— |
|
|
|
|
(990) |
|
|
|
|
|
|
(990) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares withheld for taxes in connection with issuance of restricted
stock |
|
(1) |
|
|
— |
|
|
— |
|
|
— |
|
|
(9) |
|
|
— |
|
|
— |
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASC 842 Lease implementation Adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,573 |
|
|
3,573 |
|
|
Net income attributable to Synchronoss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(37,221) |
|
|
(37,221) |
|
|
Non-controlling interest |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
906 |
|
|
— |
|
|
— |
|
|
906 |
|
|
Total other comprehensive income (loss) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(514) |
|
|
— |
|
|
(514) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019 |
|
51,578 |
|
|
$ |
5 |
|
|
(7,162) |
|
|
$ |
(82,087) |
|
|
$ |
531,282 |
|
|
$ |
(30,897) |
|
|
$ |
(266,947) |
|
|
$ |
151,356 |
|
See accompanying notes to condensed consolidated financial
statements.
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
2020 |
|
2019 |
|
|
|
Operating activities: |
|
|
|
|
|
|
Net loss |
$ |
(4,044) |
|
|
$ |
(36,315) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
21,640 |
|
|
40,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt issuance costs |
— |
|
|
237 |
|
|
|
|
(Gain) loss on extinguishment of debt |
— |
|
|
(817) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (earnings) from Equity method investments |
— |
|
|
1,619 |
|
|
|
|
|
|
|
|
|
|
(Gain) loss on Disposals of fixed assets |
12 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gain) loss on Disposals of intangible assets |
(2,164) |
|
|
— |
|
|
|
|
Amortization of bond premium |
— |
|
|
(34) |
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
478 |
|
|
(702) |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
10,156 |
|
|
11,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable, net |
904 |
|
|
2,870 |
|
|
|
|
Prepaid expenses and other current assets |
(10,031) |
|
|
17,635 |
|
|
|
|
Other assets |
502 |
|
|
2,042 |
|
|
|
|
Accounts payable |
3,514 |
|
|
5,151 |
|
|
|
|
Accrued expenses |
7,002 |
|
|
(9,569) |
|
|
|
|
|
|
|
|
|
|
Other liabilities |
(1,748) |
|
|
(1,826) |
|
|
|
|
|
|
|
|
|
|
Deferred revenues |
(24,613) |
|
|
(13,167) |
|
|
|
|
Net cash provided by (used in) operating activities |
1,608 |
|
|
18,564 |
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
Purchases of fixed assets |
(424) |
|
|
(4,940) |
|
|
|
|
Purchases of intangible assets and capitalized software |
(8,685) |
|
|
(5,959) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale of intangibles |
2,164 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities available for sale |
— |
|
|
(37,542) |
|
|
|
|
Maturity of marketable securities available for sale |
11 |
|
|
28,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
(6,934) |
|
|
(20,250) |
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxes paid on withholding shares |
(9) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement of Convertible Senior Notes & related
costs |
— |
|
|
(65,887) |
|
|
|
|
|
|
|
|
|
|
Borrowings on revolving line of credit |
10,000 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividend payment |
— |
|
|
(7,075) |
|
|
|
|
|
|
|
|
|
|
Payments on capital obligations |
— |
|
|
(612) |
|
|
|
|
Net cash provided by (used in) financing activities |
9,991 |
|
|
(73,574) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
(895) |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
3,770 |
|
|
(75,250) |
|
|
|
|
Cash and cash equivalents, beginning of period |
39,001 |
|
|
109,860 |
|
|
|
|
Cash and cash equivalents, end of period |
$ |
42,771 |
|
|
$ |
34,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of non-cash investing and financing
activities: |
|
|
|
|
|
|
Paid in kind dividends on Series A Convertible Participating
Perpetual Preferred Stock |
$ |
17,616 |
|
|
$ |
7,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
(Amounts in tables in thousands, except for per share data or
unless otherwise noted)
1. Description of Business
General
Synchronoss Technologies, Inc. (“Synchronoss” or the “Company”)
Digital, Cloud, Messaging and IoT platforms help the world’s
leading companies, including operators, original equipment
manufacturers (“OEMs”), and Technology, Media and Telecom (“TMT”)
providers to deliver continuously transformative customer
experiences that create high value engagement and new monetization
opportunities.
The Company currently operates in and markets solutions and
services directly through the Company’s sales organizations in
North America, Europe and Asia-Pacific. The Company’s platforms
give customers new opportunities in the TMT space, taking advantage
of the rapidly converging services, connected devices, networks and
applications.
The Company delivers platforms, products and solutions
including:
•Cloud
sync, backup, storage, device set up, content transfer and content
engagement for user generated content
•Advanced,
multi-channel messaging peer-to-peer (“P2P”) communications and
application-to-person (“A2P”) commerce solutions
•Digital
experience management (Platform as a Service) - including digital
journey creation, and journey design products that use analytics
that power digital advisor products for IT and Business Channel
Owners
•IoT
management technology for Smart Cities, Smart Buildings and
more
The Synchronoss Personal Cloud Platform™ is a secure and highly
scalable white label platform designed to store and sync
subscriber’s personally created content seamlessly to and from
current and new devices. This allows an Operator’s customers to
protect, engage with and manage their personal content and gives
the Company’s Operator customers the ability to increase average
revenue per user (“ARPU”) through a new monthly recurring charge
(“MRC”) and opportunities to mine valuable data that will give
subscribers access to new, beneficial services. Additionally, the
Synchronoss Personal Cloud Platform performs an expanding set of
value-add services including facilitating an Operator’s initial
device setup and enhancing visibility and control across disparate
devices within subscribers’ smart homes.
The Synchronoss Messaging Platform powers hundreds of millions of
subscribers’ mail boxes worldwide. The Company’s Advanced Messaging
Product is a powerful, secure and intelligent white label messaging
platform that expands capabilities for Operators and TMT companies
to offer P2P messaging via Rich Communications Services (“RCS”).
Additionally, the Company’s Advanced Messaging Product powers
commerce and a robust ecosystem for Operators, brands and
advertisers to execute Application to Person (“A2P”) commerce and
data-rich dialogue with subscribers.
The Synchronoss Digital Experience Platform (“DXP”) is a
purpose-built experience management toolset that sits between the
Company’s customers end-user facing applications and their existing
back end systems, enabling the authoring and management of customer
journeys in a cloud-native no/low-code environment. This platform
uses products such as Journey Creator, Journey Advisor, CX Baseline
and Digital Coach to create a wide variety of insight-driven
customer experiences across existing channels (digital and
analogue) including creating the ability to pause and resume
continuous, intelligent experiences in an omni-channel environment.
DXP can be operated by IT professionals and “citizen” developers
(business analysts, etc.) enabling the Company’s customers to bring
more compelling and complex experiences to market in less time with
fewer and more diverse resources in a real-time, collaborative
environment.
The Synchronoss IoT Platform creates an easy to use environment and
extensible ecosystem making the management of disparate devices,
sensors, data pools and networks easier to manage by IoT
administrators and drives the propagation of new IoT applications
and monetization models for TMT companies. The Company’s IoT
platform utilizes Synchronoss platforms (DXP, Cloud, Messaging),
products and solutions to make IoT more accessible and actionable
for Smart Building facility managers, Smart City planners,
Automotive OEMs and TMT ecosystem players.
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
(Amounts in tables in thousands, except for per share data or
unless otherwise noted)
2. Basis
of Presentation and Consolidation
Basis of Presentation and Consolidation
The accompanying interim unaudited condensed consolidated financial
statements have been prepared by Synchronoss and in the opinion of
management, include all adjustments necessary for a fair
presentation of the Company’s financial position, results of
operations and cash flows for the interim periods. They do not
include all of the information and footnotes required by U.S.
generally accepted accounting principles (“GAAP”) for complete
financial statements and should be read in conjunction with the
Company’s audited consolidated financial statements and related
notes included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2019. The results of operations
for the three and six months ended June 30, 2020 are not
necessarily indicative of the results to be expected for the year
ending December 31, 2020.
The condensed consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiaries and variable
interest entities (“VIE”) in which the Company is the primary
beneficiary and entities in which the Company has a controlling
interest. Investments in less than majority-owned companies in
which the Company does not have a controlling interest, but does
have significant influence, are accounted for as equity method
investments. Investments in less than majority-owned companies in
which the Company does not have the ability to exert significant
influence over the operating and financial policies of the investee
are accounted for using the cost method. All material intercompany
transactions and accounts are eliminated in consolidation. Certain
prior year amounts have been reclassified to conform to the current
year's presentation.
For further information about the Company’s basis of presentation
and consolidation or its significant accounting policies, refer to
the consolidated financial statements and footnotes thereto
included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019.
Risks and Uncertainties
There are many uncertainties regarding the current coronavirus
("COVID-19") pandemic, and the Company is closely monitoring the
impact of the pandemic on all aspects of its business, including
how it will impact its customers, employees, suppliers, vendors,
business partners and distribution channels. While the pandemic did
not materially affect the Company’s financial results and business
operations for the three and six months ended June 30, 2020,
the Company is unable to predict the impact that COVID-19 will have
on its financial position and operating results due to numerous
uncertainties. The Company will continue to assess the evolving
impact of the COVID-19 pandemic and will make adjustments to its
operations as necessary.
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
(Amounts in tables in thousands, except for per share data or
unless otherwise noted)
Recently Issued Accounting Standards
Recent accounting pronouncements adopted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standard |
|
Description |
|
Effect on the financial statements |
|
|
|
|
|
|
|
|
|
|
|
ASU 2016-13, ASU 2019-4 Financial Instruments-Credit Losses (Topic
326): Measurement of Credit Losses on Financial
Instruments |
|
In June 2016, the FASB issued ASU 2016-13 which replaces the
incurred loss impairment methodology in current U.S. GAAP with a
methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable
information to inform credit loss estimates. The ASU is effective
for public companies in annual periods beginning after
December 15, 2019, and interim periods within those
years. Early adoption is permitted beginning after December
15, 2018 and interim periods within those years. |
|
We adopted Topic 326 beginning on January 1, 2020 using the
modified retrospective approach with a cumulative effect adjustment
to opening retained earnings recorded at the beginning of the
period of adoption. Upon adoption, we changed our impairment model
to utilize a forward-looking current expected credit losses (CECL)
model in place of the incurred loss methodology for financial
instruments measured at amortized cost, including our accounts
receivable. CECL estimates on accounts receivable are recorded as
general and administrative expenses on our condensed consolidated
statements of income. The cumulative effect adjustment from
adoption was immaterial to our condensed consolidated financial
statements.
|
|
Date of adoption: January 1, 2020. |
|
|
|
|
Standards issued not yet adopted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standard |
|
Description |
|
Effect on the financial statements |
|
|
|
|
|
|
|
|
|
|
|
Update 2019-12 - Income Taxes (Topic 740) Simplifying the
Accounting for Income Taxes |
|
The ASU removes the exception to the general principles in ASC 740,
Income Taxes, associated with the incremental approach for
intra-period tax allocation, accounting for basis differences when
there are ownership changes in foreign investments and
interim-period income tax accounting for year-to-date losses that
exceed anticipated losses. In addition, the ASU improves the
application of income tax related guidance and simplifies U.S. GAAP
when accounting for franchise taxes that are partially based on
income, transactions with government resulting in a step-up in tax
basis goodwill, separate financial statements of legal entities not
subject to tax, and enacted changes in tax laws in interim periods.
Different transition approaches, retrospective, modified
retrospective, or prospective, will apply to each income tax
simplification provision. |
|
The Company is still evaluating these changes and does not
anticipate any material impact on the Company’s consolidated
financial position or results of operations upon
adoption.
|
|
Date of adoption: January 1, 2021. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Revenue
Disaggregation of revenue
The Company disaggregates revenue from contracts with customers
into the nature of the products and services and geographical
regions. The Company’s geographic regions are the Americas, Europe,
the Middle East and Africa (“EMEA”), and Asia Pacific (“APAC”). The
majority of the Company’s revenue is from the Technology, Media and
Telecom (collectively, “TMT”) sector.
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
(Amounts in tables in thousands, except for per share data or
unless otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
Cloud |
|
Digital |
|
Messaging |
|
Total |
|
Cloud |
|
Digital |
|
Messaging |
|
Total |
|
Geography |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
40,761 |
|
|
$ |
12,637 |
|
|
$ |
8,500 |
|
|
$ |
61,898 |
|
|
$ |
38,582 |
|
|
$ |
20,508 |
|
|
$ |
2,281 |
|
|
$ |
61,371 |
|
|
APAC |
— |
|
|
1,019 |
|
|
6,708 |
|
|
7,727 |
|
|
— |
|
|
1,157 |
|
|
8,785 |
|
|
9,942 |
|
|
EMEA |
1,686 |
|
|
1,347 |
|
|
3,877 |
|
|
6,910 |
|
|
1,849 |
|
|
561 |
|
|
4,123 |
|
|
6,533 |
|
|
Total |
$ |
42,447 |
|
|
$ |
15,003 |
|
|
$ |
19,085 |
|
|
$ |
76,535 |
|
|
$ |
40,431 |
|
|
$ |
22,226 |
|
|
$ |
15,189 |
|
|
$ |
77,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Line |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services |
$ |
4,984 |
|
|
$ |
2,736 |
|
|
$ |
5,972 |
|
|
$ |
13,692 |
|
|
$ |
3,641 |
|
|
$ |
3,989 |
|
|
$ |
4,881 |
|
|
$ |
12,511 |
|
|
Transaction Services |
1,474 |
|
|
2,215 |
|
|
— |
|
|
3,689 |
|
|
1,521 |
|
|
1,144 |
|
|
— |
|
|
2,665 |
|
|
Subscription Services |
35,989 |
|
|
9,251 |
|
|
11,112 |
|
|
56,352 |
|
|
35,199 |
|
|
16,137 |
|
|
8,557 |
|
|
59,893 |
|
|
License |
— |
|
|
801 |
|
|
2,001 |
|
|
2,802 |
|
|
70 |
|
|
956 |
|
|
1,751 |
|
|
2,777 |
|
|
Total |
$ |
42,447 |
|
|
$ |
15,003 |
|
|
$ |
19,085 |
|
|
$ |
76,535 |
|
|
$ |
40,431 |
|
|
$ |
22,226 |
|
|
$ |
15,189 |
|
|
$ |
77,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
Cloud |
|
Digital |
|
Messaging |
|
Total |
|
Cloud |
|
Digital |
|
Messaging |
|
Total |
|
Geography |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
80,083 |
|
|
$ |
23,574 |
|
|
$ |
19,403 |
|
|
$ |
123,060 |
|
|
$ |
77,496 |
|
|
$ |
41,272 |
|
|
$ |
4,350 |
|
|
$ |
123,118 |
|
|
APAC |
— |
|
|
1,577 |
|
|
15,883 |
|
|
17,460 |
|
|
— |
|
|
2,155 |
|
|
26,940 |
|
|
29,095 |
|
|
EMEA |
3,408 |
|
|
2,604 |
|
|
7,125 |
|
|
13,137 |
|
|
3,645 |
|
|
1,650 |
|
|
8,443 |
|
|
13,738 |
|
|
Total |
$ |
83,491 |
|
|
$ |
27,755 |
|
|
$ |
42,411 |
|
|
$ |
153,657 |
|
|
$ |
81,141 |
|
|
$ |
45,077 |
|
|
$ |
39,733 |
|
|
$ |
165,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Line |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services |
$ |
9,145 |
|
|
$ |
7,272 |
|
|
$ |
11,202 |
|
|
$ |
27,619 |
|
|
$ |
7,359 |
|
|
$ |
8,292 |
|
|
$ |
17,368 |
|
|
$ |
33,019 |
|
|
Transaction Services |
2,781 |
|
|
3,289 |
|
|
— |
|
|
6,070 |
|
|
2,883 |
|
|
3,160 |
|
|
— |
|
|
6,043 |
|
|
Subscription Services |
71,565 |
|
|
16,253 |
|
|
21,729 |
|
|
109,547 |
|
|
70,793 |
|
|
32,539 |
|
|
17,722 |
|
|
121,054 |
|
|
License |
— |
|
|
941 |
|
|
9,480 |
|
|
10,421 |
|
|
106 |
|
|
1,086 |
|
|
4,643 |
|
|
5,835 |
|
|
Total |
$ |
83,491 |
|
|
$ |
27,755 |
|
|
$ |
42,411 |
|
|
$ |
153,657 |
|
|
$ |
81,141 |
|
|
$ |
45,077 |
|
|
$ |
39,733 |
|
|
$ |
165,951 |
|
Trade Accounts Receivable and Contract balances
The Company classifies its right to consideration in exchange for
deliverables as either a receivable or a contract asset. A
receivable is a right to consideration that is unconditional (i.e.
only the passage of time is required before payment is due). For
example, the Company recognizes a receivable for revenues related
to its time and materials and transaction or volume-based
contracts. The Company presents such receivables in Trade accounts
receivable, net in its condensed consolidated statements of
financial position at their net estimated realizable value. The
Company maintains an allowance for credit losses to provide for the
estimated amount of receivables that may not be collected. The
allowance is based upon an assessment of customer creditworthiness,
historical payment experience, the age of outstanding receivables
and other economic indicators.
A contract asset is a right to consideration that is conditional
upon factors other than the passage of time. For example, the
Company would record a contract asset if it records revenue on a
professional services engagement but are not entitled to bill until
the Company achieves specified milestones. Contract assets balance
at June 30, 2020 is
$12.8 million.
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
(Amounts in tables in thousands, except for per share data or
unless otherwise noted)
Amounts collected in advance of services being provided are
accounted for as contract liabilities, which are presented as
deferred revenue on the accompanying Condensed Consolidated Balance
Sheets and are realized with the associated revenue recognized
under the contract. Nearly all of the Company's contract
liabilities balance is related to services revenue, primarily
subscription services contracts.
The Company’s contract assets and liabilities are reported in a net
position on a customer basis at the end of each reporting
period.
Significant changes in the contract liabilities balance (current
and noncurrent) during the period are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
Contract Liabilities* |
|
Balance - January 1, 2020 |
|
$ |
87,799 |
|
|
Revenue recognized in the period |
|
(149,666) |
|
|
Amounts billed but not recognized as revenue |
|
125,140 |
|
|
|
|
|
|
|
|
Balance - June 30, 2020 |
|
$ |
63,273 |
|
________________________________
* Comprised of Deferred Revenue
Transaction price allocated to the remaining performance
obligations
Topic 606 requires that the Company disclose the aggregate amount
of transaction price that is allocated to performance obligations
that have not yet been satisfied as of June 30, 2020. The Company
has elected not to disclose transaction price allocated to
remaining performance obligations for:
1.Contracts
with an original duration of one year or less, including contracts
that can be terminated for convenience without a substantive
penalty;
2.Contracts
for which the Company recognizes revenues based on the right to
invoice for services performed;
3.Variable
consideration allocated entirely to a wholly unsatisfied
performance obligation or to a wholly unsatisfied promise to
transfer a distinct good or service that forms part of a single
performance obligation in accordance with Topic 606 Section
10-25-14(b), for which the criteria in Topic 606 Section 10-32-40
have been met. This applies to a limited number of situations where
the Company is dependent upon data from a third party or where fees
are highly variable.
Many of the Company’s performance obligations meet one or more of
these exemptions. Specifically, the Company has excluded the
following from the Company’s remaining performance obligations, all
of which will be resolved in the period in which amounts are
known:
•consideration
for future transactions, above any contractual
minimums
•consideration
for success-based transactions contingent on third party
data
•credits
for failure to meet future service level requirements
As of June 30, 2020, the aggregate amount of transaction price
allocated to remaining performance obligations, other than those
meeting the exclusion criteria above, was $140.6 million, of
which approximately 85.2 percent is expected to be recognized as
revenues within 2 years, and the remainder thereafter.
Estimates of revenue expected to be recognized in future periods
also exclude unexercised customer options to purchase services that
do not represent material rights to the customer. Customer options
that do not represent a material right are only accounted for in
accordance with Topic 606 when the customer exercises its option to
purchase additional goods or services.
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
(Amounts in tables in thousands, except for per share data or
unless otherwise noted)
4. Fair Value Measurements
In accordance with accounting principles generally accepted in the
United States, fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date. A three-level hierarchy prioritizes the inputs used to
measure fair value as follows:
•Level 1
- Observable inputs - quoted prices in active markets for identical
assets and liabilities;
•Level 2
- Observable inputs other than the quoted prices in active markets
for identical assets and liabilities includes quoted prices for
similar instruments, quoted prices for identical or similar
instruments in inactive markets, and amounts derived from valuation
models where all significant inputs are observable in active
markets; and
•Level 3
- Unobservable inputs - includes amounts derived from valuation
models where one or more significant inputs are unobservable and
require the Company to develop relevant assumptions.
The following is a summary of assets, liabilities and redeemable
noncontrolling interests and their related classifications under
the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
|
|
|
|
|
|
|
Total |
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
Assets |
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash
(1)
|
$ |
42,771 |
|
|
$ |
42,771 |
|
|
$ |
— |
|
|
$ |
— |