- Q3 2017 revenue of $36.3 million grew
14 percent over Q3 2016
- Net income of $0.3 million and Adjusted
EBITDA of $1.8 million is up from net loss of $3.4 million and
Adjusted EBITDA of $0.2 million in Q3 2016
- Several customer renewals and wins
including WOW!, NorthwesTel and governmental organizations in
Africa, Southeast Asia and India
Synacor, Inc. (NASDAQ: SYNC), the trusted multiscreen technology
and monetization partner for video, internet and communications
providers, device manufacturers, governments and enterprises, today
announced its financial results for the quarter ended September 30,
2017.
“We delivered strong financial performance during the quarter -
meeting our revenue and adjusted EBITDA growth expectations and
reporting GAAP net income for the first time in nearly four years.
We generated significant revenue growth and increased operating
leverage that drove profitability,” said Synacor CEO Himesh
Bhise.
“Search and advertising grew 23 percent year-over-year and
includes the addition of revenues from AT&T. At the same time,
software and services, which includes identity management and
collaboration, is robust and delivered $13.6 million of high-margin
revenue in the third quarter,” continued Bhise.
Recent Highlights
- Launched a new WOW! portal experience;
renewed and extended relationship that covers portal, advertising
and email services.
- Added several Pay TV operators to
Synacor’s advanced Cloud-based identity management platform,
including NorthwesTel, a wholly-owned subsidiary of Bell Canada,
and WOW!
- Added to a growing list of
international enterprise and government email customers, including
a South East Asia government ministry, an India government research
lab and an Africa government information technology authority.
- Continued to deliver strong user
engagement metrics and grow revenue with ATT.net portal.
- Added 50+ channel partners certified to
sell Synacor products, growing the existing base to more than 1900
partners.
Q3 2017 Financial Results
Revenue: For the third quarter of 2017, total revenue was
$36.3 million, meeting the Company’s financial guidance, an
increase of 16 percent over the second quarter of 2017, and 14
percent over the third quarter of 2016.
Net Income: For the third quarter of 2017, net
income was $0.3 million, compared with a net loss of $3.3 million
in the second quarter of 2017 and a net loss of $3.4 million in the
third quarter of 2016. Net income in the third quarter of 2017
includes a $1.9 million gain on the sale of an investment.
Earnings per share, or EPS, was $0.01 in the third quarter of
2017, compared with a loss of $0.09 in the second quarter of 2017
and a loss of $0.11 in the third quarter of 2016.
Adjusted EBITDA: For the third quarter of 2017, adjusted
earnings before interest, taxes, depreciation and amortization
(adjusted EBITDA), which excludes stock-based compensation expense,
was $1.8 million compared with $0.2 million in the second quarter
of 2017 and $0.2 million for the third quarter of 2016.
Cash: The Company ended the third quarter of 2017 with
$22.9 million in cash and cash equivalents, compared with $23.0
million at the end of the prior quarter.
Guidance
“We expect to continue delivering strong financial growth in the
fourth quarter," concluded Bhise.
Based on information available as of November 14, 2017, the
Company is providing financial guidance for the fourth quarter and
narrowing fiscal 2017 guidance within the previously reported range
as follows:
- Q4 2017 Guidance: Revenue for
the fourth quarter of 2017 is projected to be in the range of $46.0
million to $51.0 million. The Company expects to report net income
of ($1.8) million to $0.5 million and adjusted EBITDA of $2.0
million to $4.0 million, which excludes stock-based compensation
expense of $0.6 million to $0.7 million, depreciation and
amortization of $2.6 million to $2.8 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 now expected to be within the range of
$140 million to $145 million. The Company expects to report a net
loss in the range of $9.1 million to $11.4 million and adjusted
EBITDA in the range of $0.8 million to $2.8 million, which excludes
stock-based compensation expense of $2.5 million to $2.6 million,
depreciation and amortization of $9.6 million to $9.8 million, gain
on investment of $1.9 million and tax, interest expense,
capitalized software impairment, and other income and expense of
$1.7 million.
Conference Call Details
Synacor will host a conference call today at 5:00 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 (833) 235-2655, with conference ID
5949837, 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 5949837.
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.
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 fourth-quarter and fiscal year
2017 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-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, 2017, and Synacor undertakes no duty
to update this information.
Synacor, Inc. Condensed Consolidated Balance
Sheets (In thousands) (Unaudited)
September 30, December 31, 2017
2016 Assets Current assets: Cash and cash equivalents
$ 22,932 $ 14,315 Accounts receivable, net 20,453 27,386 Prepaid
expenses and other current assets 6,583 4,862
Total current assets 49,968 46,563 Property and equipment,
net 20,749 14,406 Goodwill 15,956 15,943 Intangible assets 13,230
14,837 Other long-term assets 802 1,650
Total Assets $ 100,705 $
93,399 Liabilities and Stockholders'
Equity Current liabilities: Accounts payable $ 17,791 $ 18,769
Accrued expenses and other current liabilities 8,126 11,684 Current
portion of deferred revenue 11,005 12,149 Current portion of
capital lease obligations 2,479 982
Total current liabilities 39,401 43,584 Long-term portion of
capital lease obligations 3,981 1,014 Deferred revenue 2,981 3,917
Long-term debt — 5,000 Other long-term liabilities 428
235
Total Liabilities
46,791 53,750 Stockholders'
Equity: Common stock 395 316 Treasury stock (1,664 ) (1,547 )
Additional paid-in capital 141,700 117,747 Accumulated deficit
(86,521 ) (76,850 ) Accumulated other comprehensive income (loss)
4 (17 ) Total stockholders’ equity
53,914 39,649
Total Liabilities and
Stockholders' Equity $ 100,705 $
93,399 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, 2017
2016 2017 2016 Revenue $ 36,269 $
31,721 $ 94,025 $ 92,457 Costs and operating expenses: Cost of
revenue (1) 17,620 14,611 44,644 41,099 Technology and development
(1)(2) 6,748 6,791 20,950 19,255 Sales and marketing (2) 6,179
5,907 19,025 17,177 General and administrative (1)(2) 4,495 4,871
12,820 15,027 Depreciation and amortization 2,596
2,414 7,004 6,782 Total
costs and operating expenses 37,638 34,594
104,443
98,340 Loss from operations (1,369 )
(2,873 ) (10,418 ) (6,883 ) Gain on sale of investment 1,902 —
1,902 — Other income (expense) 99 (38 ) 172 206 Interest expense
(127 ) (75 ) (328 ) (227 ) Income
(loss) before income taxes 505 (2,986 ) (8,672 ) (6,904 ) Income
tax provision 244 379 999
783 Net income (loss) $ 261 $ (3,365 ) $
(9,671 ) $ (7,687 ) Net income (loss) per share:
Basic $ 0.01 $ (0.11 ) $ (0.27 ) $ (0.26 ) Diluted $ 0.01
$ (0.11 ) $ (0.27 ) $ (0.26 ) Weighted average shares
used to compute net income (loss) per share: Basic
38,471,377 30,260,172 35,590,563
30,108,725 Diluted 39,940,790
30,260,172 35,590,563 30,108,725
Notes: (1) Exclusive of depreciation shown separately. (2)
Includes stock-based compensation as follows:
Three months
ended Nine months ended September 30,
September 30, 2017 2016 2017
2016 Technology and development $ 190 $ 238 $ 604 $ 681
Sales and marketing 142 173 500 604 General and administrative
273 269 824 819
$ 605 $ 680 $ 1,928 $ 2,104
Synacor, Inc. Condensed Consolidated
Statements of Cash Flows (In thousands)
(Unaudited) Nine
months ended September 30, 2017 2016
Cash Flows from Operating Activities: Net loss $ (9,671 ) $
(7,687 ) Adjustments to reconcile net loss to net cash (used in)
provided by operating activities: Depreciation and amortization
7,004 6,782 Capitalized software impairment 256 — Stock-based
compensation expense 1,928 2,104 Gain on sale of investment (1,902
) — Provision for deferred income taxes 197 — Increase in estimated
value of contingent consideration 107 90 Change in operating assets
and liabilities net of effect of acquisition: Accounts receivable,
net 6,933 5,313 Prepaid expenses and other assets (1,646 ) (1,282 )
Accounts payable (1,668 ) 1,842 Accrued expenses and other
liabilities (2,369 ) 1,245 Deferred revenue (2,080 )
(1,696 )
Net cash (used in) provided by operating activities
(2,911 ) 6,711 Cash
Flows from Investing Activities: Proceeds from sale of
investment 2,645 — Purchases of property and equipment (5,774 )
(4,246 ) Acquisition — (2,500 )
Net cash
used in investing activities (3,129 )
(6,746 ) 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 (914 ) (1,242 ) Proceeds from exercise of common stock
options 1,942 744 Purchase of treasury stock and shares
received to satisfy minimum tax withholding liabilities (117 ) (128
) Deferred acquisition payment (1,300 ) —
Net cash provided by (used in) financing activities
14,657 (626 ) Effect of exchange
rate changes on cash and cash equivalents — (8
) Net increase (decrease) in Cash and Cash Equivalents 8,617 (669 )
Cash and Cash Equivalents at beginning of period 14,315
15,697 Cash and Cash Equivalents at end of
period
$ 22,932 $ 15,028
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, 2017 2016 2017
2016 Reconciliation of Adjusted EBITDA: Net
income (loss) $ 261 $ (3,365 ) $ (9,671 ) $ (7,687 ) Provision for
income taxes 244 379 999 783 Interest expense 127 75 328 227 Gain
on sale of investment (1,902 ) — (1,902 ) — Other income (expense)
(99 ) 38 (172 ) (206 ) Depreciation and amortization 2,596 2,414
7,004 6,782 Capitalized software impairment — — 256 — Stock-based
compensation expense 605 680
1,928 2,104
Adjusted EBITDA $
1,832 $ 221 $
(1,230 ) $ 2,003
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171114006615/en/
Investor Contact:Sharon Merrill AssociatesAndrew Blazier,
617-542-5300ir@synacor.comorPress Contact:SynacorMatt Wolfrom,
716-362-3880VP, Corporate
CommunicationsMatt.Wolfrom@synacor.com
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