- Notable customer wins include HBO NOW,
TruVista and over 150 new Zimbra enterprise and government
customers around the world
- Q4 net loss of $0.1 million and
adjusted EBITDA of $3.6 million, up from net loss of $3.1 million
and adjusted EBITDA of $1.2 million in Q4 2016
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 fourth quarter and year
ended December 31, 2017.
“We ended the year with a strong fourth quarter,” said Synacor
CEO Himesh Bhise. “Our fourth-quarter revenue of $46 million
represented an increase of 32% from the fourth quarter of 2016,
making it the highest revenue quarter in the history of the
company. We also delivered adjusted EBITDA of $3.6 million,
three-times the adjusted EBITDA from the same quarter in the year
prior.”
“Looking forward, we are focused on improved profitability
balanced with prudent investment in growth. Our revenue guidance of
$150 million to $155 million represents about 7% to 11% revenue
growth, and our adjusted EBITDA guidance of $7 million to $10
million is three to four times our 2017 adjusted EBITDA,” continued
Bhise.
Recent Highlights
- Signed 150 new Zimbra Email and
Collaboration Suite customers, including the city of Rennes,
France, HiWin Technologies Corp. in Taiwan, Maronda Homes in the
U.S., and a European telecommunications company.
- Expanded Synacor’s relationship with
HBO to include HBO NOW, making Synacor the
Authentication/Authorization provider for both HBO GO and HBO
NOW.
- Renewed advanced portal partnership
with Windstream and added TruVista to the CloudID platform.
- Launched Zimbra 8.8, with new features
and tech stack enhancements that improved the value proposition to
operators and enterprises.
FY 2017 and Q4 2017 Financial Results
Revenue: For fiscal 2017, revenue was $140.0 million, an
increase of 10% from 2016. For the fourth quarter of 2017, revenue
was $46.0 million, meeting the Company’s financial guidance, an
increase of 32% versus the fourth quarter of 2016.
Net Income: For fiscal 2017, net loss narrowed to
$9.8 million, or $(0.27) per share, compared with a net loss of
$10.7 million, or $(0.36) per share, in fiscal 2016. For the fourth
quarter of 2017, net loss was $0.1 million, or $(0.00) per share,
compared with a net loss of $3.1 million, or $(0.10) per share, in
the fourth quarter of 2016.
Adjusted EBITDA:
For fiscal 2017, adjusted earnings before interest, taxes,
depreciation and amortization (adjusted EBITDA), which excludes
stock-based compensation expense, was $2.3 million compared with
$3.2 million for fiscal 2016.
For the fourth quarter of 2017, adjusted EBITDA, which excludes
stock-based compensation expense, increased to $3.6 million
compared with $1.2 million for the fourth quarter of 2016.
Cash: The Company ended the fourth quarter of 2017 with
$22.5 million in cash and cash equivalents, compared with $22.9
million at the end of the third quarter of 2017.
Guidance
Based on information available as of March 15, 2018, the Company
is providing financial guidance for the first quarter and full year
2018 as follows:
- Q1 2018 Guidance: Revenue for
the first quarter of 2018 is projected to be in the range of $30
million to $32 million. The Company expects to report a net loss of
$2.6 million to $3.4 million and adjusted EBITDA of $0.5 million to
$1.0 million, which excludes stock-based compensation expense of
$500,000 to $600,000, depreciation and amortization of $2.8 million
to $3.0 million, and tax, interest expense and other income and
expense of approximately $300,000.
- Fiscal 2018 Guidance: Revenue
for the full year of 2018 is expected to be within the range of
$150 million to $155 million. The Company expects to report a net
loss in the range of $4.4 million to $8.6 million and adjusted
EBITDA in the range of $7 million to $10 million, which excludes
stock-based compensation expense of $2.0 million to $2.4 million,
depreciation and amortization of $11.2 million to $12.0 million,
and tax, interest expense, and other income and expense of $1.2
million.
Conference Call Details
Synacor will host a conference call today at 5:00 p.m. ET to
discuss the fourth-quarter and fiscal year-end 2017 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 6378502, 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 through March 22, 2018,
call toll-free (800) 585-8367, or callers outside the U.S. may dial
(416) 621-4642. The conference ID is 6378502.
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 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 loss, 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 first-quarter and fiscal year
2018 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 March 15, 2018, and Synacor undertakes no duty to
update this information.
Synacor, Inc. Condensed
Consolidated Balance Sheets (In thousands)
(Unaudited) December 31, December 31,
2017 2016 Assets Current assets: Cash and cash
equivalents $ 22,476 $ 14,315 Accounts receivable, net 31,696
27,386 Prepaid expenses and other current assets 4,516
4,862 Total current assets 58,688 46,563
Property and equipment, net 20,505 14,406 Goodwill 15,955 15,943
Intangible assets 12,695 14,837 Other long-term assets 937
1,650
Total Assets $
108,780 $ 93,399
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 25,931 $ 18,769 Accrued expenses and other
current liabilities 7,075 11,684 Current portion of deferred
revenue 11,605 12,149 Current portion of capital lease obligations
2,444 982 Total current liabilities
47,055 43,584 Long-term portion of capital lease obligations 3,371
1,014 Deferred revenue 3,682 3,917 Deferred income taxes and other
327 235 Long-term debt — 5,000
Total
Liabilities 54,435 53,750
Stockholders' Equity: Common stock 396 316 Treasury
stock (1,881 ) (1,547 ) Additional paid-in capital 142,486 117,747
Accumulated deficit (86,627 ) (76,850 ) Accumulated other
comprehensive loss (29 ) (17 ) Total stockholders’
equity 54,345 39,649
Total
Liabilities and Stockholders' Equity $ 108,780
$ 93,399
Synacor, Inc.
Condensed Consolidated Statements of Operations (In
thousands except share and per share amounts)
(Unaudited) Three months ended Year
ended December 31, December 31, 2017
2016 2017 2016 Revenue $ 46,002 $
34,916 $ 140,027 $ 127,373 Costs and operating expenses: Cost of
revenue (1) 25,409 18,047 70,053 59,146 Technology and development
(1)(2) 6,692 6,357 27,642 25,612 Sales and marketing (2) 5,916
5,669 24,941 22,846 General and administrative (1)(2) 4,980 4,668
17,800 19,695 Depreciation and amortization 2,816
2,453 9,820 9,235 Total
costs and operating expenses 45,813 37,194
150,256 136,534 Income
(loss) from operations 189 (2,278 ) (10,229 ) (9,161 ) Gain on sale
of investment 85 — 1,987 — Other expense (174 ) (248 ) (2 ) (42 )
Interest expense (105 ) (91 ) (433 )
(318 ) Loss before income taxes (5 ) (2,617 ) (8,677 ) (9,521 )
Income tax provision 101 436
1,100 1,219 Net loss $ (106 ) $ (3,053 ) $
(9,777 ) $ (10,740 ) Net loss per share: Basic $
(0.00 ) $ (0.10 ) $ (0.27 ) $ (0.36 ) Diluted $ (0.00 ) $ (0.10 ) $
(0.27 ) $ (0.36 ) Weighted average shares used to compute
net loss per share: Basic 38,727,724
30,677,457 36,381,299 30,251,685
Diluted 38,727,724 30,677,457
36,381,299 30,251,685 Notes: (1)
Exclusive of depreciation shown separately. (2) Includes
stock-based compensation as follows:
Three months ended
Year ended December 31, December 31,
2017 2016 2017 2016 Technology and
development $ 140 $ 240 $ 744 $ 921 Sales and marketing 136 180 636
784 General and administrative 286 247
1,110 1,066 $ 562 $ 667 $
2,490 $ 2,771
Synacor, Inc. Condensed Consolidated Statements of Cash
Flows (In thousands) (Unaudited) Year
ended December 31, 2017 2016 Cash Flows
from Operating Activities: Net loss $ (9,777 ) $ (10,740 )
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Depreciation and amortization 9,820 9,235
Loss on disposal of property and equipment 203 — Capitalized
software impairment 256 334 Stock-based compensation expense 2,490
2,771 Gain on sale of investment (1,987 ) — Provision for deferred
income taxes 137 143 Change in allowance for doubtful accounts (164
) Increase in estimated value of contingent consideration 107 —
Change in operating assets and liabilities net of effect of
acquisition: Accounts receivable, net (4,146 ) (2,080 ) Prepaid
expenses and other assets 346 (1,572 ) Other long-term assets 15
(314 ) Accounts payable, accrued expenses, and other current
liabilities 3,261 9,286 Deferred revenue (779 ) 1,546 Other
long-term liabilities (45 ) (360 )
Net cash (used
in) provided by operating activities (263
) 8,249 Cash Flows from Investing
Activities: Proceeds from sale of investment 2,645 — Purchases
of property and equipment (7,876 ) (5,939 ) Acquisition —
(2,500 )
Net cash used in investing activities
(5,231 ) (8,439 ) Cash
Flows from Financing Activities: Net proceeds from offering of
common stock 20,258 — Payments of public offering issuance costs
(212 ) — Repayments of long-term debt (5,000 ) — Repayments on
capital lease obligations (1,866 ) (1,672 ) Proceeds from exercise
of common stock options 2,149 1,560 Purchase of treasury stock and
shares received to satisfy minimum tax withholding liabilities (334
) (215 ) Deferred acquisition payment (1,300 ) (860 )
Net cash provided by (used in) financing activities
13,695 (1,187 ) Effect of
exchange rate changes on cash and cash equivalents (40 )
(5 ) Net increase (decrease) in Cash and Cash Equivalents
8,161 (1,382 ) Cash and Cash Equivalents at beginning of period
14,315 15,697 Cash and Cash Equivalents
at end of period
$ 22,476 $
14,315
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 Year ended December 31, December
31, 2017 2016 2017 2016
Reconciliation of Adjusted EBITDA: Net loss $ (106 ) $
(3,053 ) $ (9,777 ) $ (10,740 ) Provision for income taxes 101 436
1,100 1,219 Interest expense 105 91 433 318 Gain on sale of
investment (85 ) — (1,987 ) — Other expense 174 248 2 42
Depreciation and amortization 2,816 2,453 9,820 9,235 Capitalized
software impairment — 334 256 334 Stock-based compensation expense
562 667 2,490
2,771
Adjusted EBITDA $ 3,567
$ 1,176 $ 2,337 $
3,179
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180315006403/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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