- Third quarter revenue of $31.4 million, in line with
guidance
- Third quarter GAAP net loss of $3.7 million, inclusive of $2.3
million of restructuring and impairment charges
- Adjusted EBITDA of $2.7 million, exceeding the high end of
guidance
- 83 new customers and 190 contract expansions for Zimbra email
and collaboration platform
- Completed previously announced wind-down of ATT.net portal and
reduced related costs
Synacor, Inc. (Nasdaq: SYNC), a cloud-based software and
services company serving global video, internet and communications
providers, device manufacturers, governments and enterprises, today
announced its financial results for the third quarter ended
September 30, 2019.
“We continue to deliver strong bottom-line financial results,”
said Himesh Bhise, Synacor’s Chief Executive Officer. “We generated
adjusted EBITDA that exceeded the high-end of our guidance range
and total revenue that was in line with expectations. We completed
the previously announced wind-down of ATT.net and have accordingly
reduced our go-forward costs by more than $8 million on an
annualized basis.
“More importantly, we have accelerated our transformation into a
SaaS-based business and our sales pipeline continues to advance and
expand,” Bhise added. “We are adding customers in North America to
our new cloud-based Zimbra X Email & Collaboration platform, we
launched Zimbra X for worldwide business customers this quarter,
and we continue to to support Zimbra 8 in private clouds. At the
same time, we are expanding Cloud ID Identity and Access management
solutions into broader enterprise applications.”
Recent Highlights
- Zimbra customer wins in Q3 include 83 new deployments and 190
deal expansions
- Added another service provider customer for Zimbra X for
Consumer, and completed development of Zimbra X for Business
- Cloud ID expands into broader enterprise identity and access
management, with first customer win
- Publisher-based Advertising grows active publishers by 64%
year-over-year
Financial Results
Revenue: For the third quarter of 2019, total revenue was
$31.4 million, down from $35.6 million in the third quarter of
2018, primarily due to the ATT.net portal wind down.
Software & Services revenue totaled $11.1 million in the
third quarter of 2019, compared with $12.8 million in the third
quarter of 2018. The third quarter of 2018 included $0.4 million in
revenue from a discontinued product and $1.2 million in
non-recurring services. Portal & Advertising revenue totaled
$20.3 million in the third quarter of 2019, compared with $22.9
million in the year-ago period. The decline was due to the ATT.net
wind down with revenue down $3.1 million from the prior year
quarter.
Net Loss: For the third quarter of 2019, GAAP net loss
was $3.7 million, or $(0.10) per share, compared to a GAAP net loss
of $2.2 million, or $(0.06) per share, in the third quarter of
2018. Adjusted net loss was $1.0 million, or $(0.03) per share,
compared with an adjusted net loss of $0.4 million, or $(0.01) per
share, in the third quarter of 2018. Adjusted net loss excludes
asset impairment, restructuring charges and certain legal and
professional fees.
Adjusted EBITDA: In the third quarter of 2019, adjusted
EBITDA increased 3% to $2.74 million from $2.65 million for the
third quarter of 2018. Adjusted EBITDA excludes stock-based
compensation, other income and expense, asset impairment,
restructuring charges and certain legal and professional fees.
On a segment basis for the third quarter of 2019, segment
adjusted EBITDA margin was 30.5% for Software & Services and
14.2% for Portal & Advertising.
Cash: The Company ended the third quarter of 2019 with
$15.2 million in cash and cash equivalents, compared with $13.4
million at the end of the second quarter of 2019 and $15.9 million
at December 31, 2018.
Guidance
With the early completion of the ATT.net wind-down during Q3 and
based on information available as of November 6, 2019, the Company
is updating its financial guidance as follows:
- Q4 2019 Guidance: Revenue for the fourth quarter of 2019
is projected to be in the range of $25.5 million to $27.5 million.
The Company expects to report a GAAP net loss of $0.8 million to
$1.8 million and adjusted EBITDA of $2.0 million to $3.0
million.
- Fiscal 2019 Guidance: Revenue for full year 2019 is
expected to be in the range of $120.5 million to $122.5 million, a
GAAP net loss in the range of $9.2 million to $10.2 million, and
adjusted EBITDA in the range of $8.0 million to $9.0 million.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the third quarter 2019 financial results. The live webcast
of Synacor’s earnings conference call can be accessed at
https://www.synacor.com/investor-relations/events-and-presentations.
To participate, please log in approximately 10 minutes prior to the
webcast. The call may be accessed toll-free via phone at
1-833-235-2655, using conference ID 3737477, or callers outside the
U.S. may dial 1-647-689-4151.
Following the conclusion of the live call, a replay of the
webcast will be available on the Investor Relations section of the
Company’s website for at least 90 days. A telephonic replay of the
conference call will also be available from 8 p.m. ET on November
6, 2019 until 11:59 p.m. ET on November 13, 2019 by dialing
1-800-585-8367 or 1-416-621-4642 and using conference ID
3737477.
About Synacor
Synacor (Nasdaq: SYNC) is a cloud-based software and services
company serving global 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. www.synacor.com
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures in this
release. Generally, a non-GAAP financial measure is a numerical
measure of a company’s performance, financial position or cash
flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with generally
accepted accounting principles (GAAP).
We report adjusted EBITDA because it is a key measure used by
our management and Board of Directors to understand and evaluate
our core operating performance and trends, to prepare and approve
our annual budget and to develop short- and long-term operational
plans. In particular, the exclusion of certain expenses in
calculating adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our core business. Accordingly, we
believe that adjusted EBITDA provides useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management and Board of
Directors.
For a reconciliation of adjusted EBITDA to net 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.
We report adjusted net loss and adjusted diluted earnings per
share because we believe these measures provide investors with
additional information to assess our financial performance. These
measures should be viewed as supplemental data, rather than
substitutes or alternatives to the comparable GAAP measures. For a
reconciliation of our GAAP Condensed Consolidated Statements of
Operations to our adjusted non-GAAP measures, please refer to the
table “Reconciliation of Adjusted Financial 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 full-year
2019 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 the loss of a significant customer; our
ability to obtain new customers; our ability to integrate the
assets and personnel from acquisitions; expectations regarding
consumer taste and user adoption of applications and solutions;
developments in internet browser software and search advertising
technologies; general economic conditions; expectations regarding
the Company’s ability to timely expand the breadth of services and
products or introduction of new services and products;
consolidation within the cable and telecommunications industries;
changes in the competitive dynamics in the market for online search
and digital advertising; the risk that security measures could be
breached and unauthorized access to subscriber data could be
obtained; potential third party intellectual property infringement
claims or other legal claims against Synacor; and the price
volatility of our common stock.
Further information on these and other factors that could affect
the Company’s financial results is included in filings it makes
with the Securities and Exchange Commission from time to time,
including the section entitled “Risk Factors” in the Company’s most
recent Form 10-K filed with the SEC. These documents are available
on the SEC Filings section of the Investor Information section of
the Company’s website at http://investor.synacor.com/. All
information provided in this release and in the attachments is
available as of November 6, 2019, and Synacor undertakes no duty to
update this information.
Synacor, Inc. Condensed Consolidated Balance Sheets
(In thousands) (Unaudited) September 30,
2019 December 31, 2018 Assets Current assets:
Cash and cash equivalents
$
15,232
$
15,921
Accounts receivable, net
20,121
25,567
Prepaid expenses and other current assets
3,604
3,779
Total current assets
38,957
45,267
Property and equipment, net
16,402
18,707
Operating lease right-of-use assets
5,567
-
Goodwill
15,945
15,941
Intangible assets
8,946
10,553
Other assets
1,168
995
Total Assets
$
86,985
$
91,463
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable
$
16,744
$
19,174
Accrued expenses and other current liabilities
7,156
7,849
Current portion of deferred revenue
5,972
6,672
Current portion of long-term debt and finance leases
3,404
2,328
Current portion of operating lease liabilities
2,487
-
Total current liabilities
35,763
36,023
Long-term portion debt and finance leases
861
1,367
Deferred revenue
2,663
-
Long-term portion of operating lease liabilities
3,266
2,214
Deferred income taxes
290
231
Other long-term liabilities
349
457
Total Liabilities
43,192
40,292
Stockholders' Equity: Common stock
400
399
Treasury stock
(1,931
)
(1,899
)
Additional paid-in capital
145,999
144,739
Accumulated deficit
(100,182
)
(91,726
)
Accumulated other comprehensive loss
(493
)
(342
)
Total stockholders’ equity
43,793
51,171
Total Liabilities and Stockholders' Equity
$
86,985
$
91,463
Synacor, Inc. Condensed Consolidated Statement of
Operations (In thousands except share and per share
amounts) (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenue
$
31,366
$
35,643
$
95,039
$
104,481
Costs and operating expenses: Cost of revenue (1)
15,634
18,317
49,292
52,358
Technology and development (1)(2)
5,545
5,886
14,668
18,074
Sales and marketing (2)
5,473
5,667
17,014
18,507
General and administrative (1)(2)
5,648
5,279
14,068
14,616
Depreciation and amortization
2,605
2,437
7,607
7,316
Total costs and operating expenses
34,905
37,586
102,649
110,871
Loss from operations
(3,539
)
(1,943
)
(7,610
)
(6,390
)
Other income (expense), net
101
(32
)
110
(46
)
Interest expense
(80
)
(80
)
(199
)
(265
)
Loss before income taxes
(3,518
)
(2,055
)
(7,699
)
(6,701
)
Provision for income taxes
207
165
757
478
Net loss
$
(3,725
)
$
(2,220
)
$
(8,456
)
$
(7,179
)
Net loss per share: Basic
$
(0.10
)
$
(0.06
)
$
(0.22
)
$
(0.18
)
Diluted
$
(0.10
)
$
(0.06
)
$
(0.22
)
$
(0.18
)
Weighted average shares used to compute net loss per share: Basic
39,073,998
38,951,558
39,056,470
38,856,836
Diluted
39,073,998
38,951,558
39,056,470
38,856,836
Notes: (1) Exclusive of depreciation and amortization shown
separately. (2) Includes stock-based compensation as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Technology and development
$
103
$
101
$
298
$
369
Sales and marketing
149
110
375
374
General and administrative
277
150
511
708
$
529
$
361
$
1,184
$
1,451
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Reconciliation of Adjusted EBITDA: Net loss
$
(3,725
)
$
(2,220
)
$
(8,456
)
$
(7,179
)
Provision for income taxes
207
165
757
478
Interest expense
80
80
199
265
Other income (expense), net
(101
)
32
(110
)
14
Depreciation and amortization
3,036
2,437
8,509
7,316
Asset impairment
1,525
-
1,751
-
Stock-based compensation expense
529
361
1,184
1,451
Restructuring costs
819
766
819
1,034
Certain legal expenses *
282
1,033
805
1,033
Certain professional services fees**
88
-
601
-
Adjusted EBITDA
$
2,740
$
2,654
$
6,059
$
4,412
* "Certain legal expenses" includes legal fees and other
related expenses outside the ordinary course of business. **
“Certain professional services fees” includes fees and expenses
related to merger and acquisition activities.
Synacor, Inc.
Condensed Consolidated Statements of Cash Flows (In
thousands) (Unaudited)
Nine Months Ended September
30,
2019
2018
Cash Flows from Operating Activities: Net loss
$
(8,456
)
$
(7,179
)
Adjustments to reconcile net loss to net cash and cash equivalents
provided by operating activities: Depreciation and amortization
8,513
7,316
Asset impairment
1,751
-
Stock-based compensation expense
1,184
1,451
Provision for deferred income taxes
59
(179
)
Change in allowance for doubtful accounts
77
118
Changes in operating assets and liabilities: Accounts receivable,
net
5,369
10,398
Prepaid expenses and other assets
59
(291
)
Operating lease right-of-use assets and liabilities, net
36
-
Accounts payable, accrued expenses and other liabilities
(3,132
)
(8,682
)
Deferred revenue
(251
)
(2,756
)
Net cash provided by operating activities
5,209
196
Cash Flows from Investing Activities: Purchases of property
and equipment
(3,159
)
(5,271
)
Net cash used in investing activities
(3,159
)
(5,271
)
Cash Flows from Financing Activities: Repayments on
long-term debt and finance leases
(2,531
)
(1,811
)
Proceeds from exercise of common stock options
40
341
Payment of debt issuance costs
(60
)
-
Purchase of treasury stock and shares received to satisfy minimum
tax withholdings
(32
)
(12
)
Net cash used in financing activities
(2,583
)
(1,482
)
Effect of exchange rate changes on cash and cash equivalents
(156
)
(234
)
Net decrease in Cash and Cash equivalents
(689
)
(6,791
)
Cash and cash equivalents, beginning of period
15,921
22,476
Cash and cash equivalents, end of period
$
15,232
$
15,685
Synacor, Inc. Segment Results (In thousands except
percentages) (Unaudited) Effective March
31, 2019, the Company concluded that we now have two reportable
segments which were determined on the basis of the products and
services provided to customers, identified as follows: (i)
Software & Services, which includes email / collaboration
(Zimbra) and identity management (Cloud ID). (ii) Portal &
Advertising, which includes managed portals and advertising
solutions for publishers. The following table presents the
key segment financial measures for the periods indicated. Please
refer to the Reconciliation of GAAP to Non-GAAP Measures schedule
for the reconciliation of Adjusted EBITDA.
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
% Change
2019
2018
% Change
Segment Revenue: Software & Services
$
11,091
$
12,767
(13.1
)%
$
32,837
$
36,278
(9.5
)%
Portal & Advertising
20,275
22,876
(11.4
)%
62,202
68,203
(8.8
)%
Total
$
31,366
$
35,643
(12.0
)%
$
95,039
$
104,481
(9.0
)%
Segment Adjusted EBITDA: Software & Services
$
3,378
$
4,160
(18.8
)%
$
8,966
$
11,050
(18.9
)%
Portal & Advertising
2,881
2,234
29.0
%
8,036
6,246
28.7
%
Unallocated Corporate G&A Expense
(3,519
)
(3,740
)
5.9
%
(10,943
)
(12,884
)
15.1
%
Total
$
2,740
$
2,654
3.2
%
$
6,059
$
4,412
37.3
%
Segment Adjusted EBITDA margin* Software & Services
30.5
%
32.6
%
-210 bps
27.3
%
30.5
%
-320 bps Portal & Advertising
14.2
%
9.8
%
440 bps
12.9
%
9.2
%
380 bps Total
8.7
%
7.4
%
130 bps
6.4
%
4.2
%
220 bps * Adjusted EBITDA as a percent of revenue The
following tables presents a disaggregation of segment revenue for
the periods indicated based upon the accounting definition of
revenue recognition: (i) Recurring = revenue recognized over time
(ii) Non-recurring = revenue recognized at a point in time
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
% Change
2019
2018
% Change
Software & Services Revenue: Recurring
$
8,240
$
8,541
(3.5
)%
$
25,143
$
25,547
(1.6
)%
Non-recurring
2,851
3,866
(26.3
)%
7,334
9,549
(23.2
)%
Discontinued Products **
-
360
(100.0
)%
360
1,182
(69.5
)%
Total
$
11,091
$
12,767
(13.1
)%
$
32,837
$
36,278
(9.5
)%
Portal & Advertising Revenue: Recurring
$
1,274
$
1,666
(23.5
)%
$
3,982
$
5,717
(30.3
)%
Non-recurring
19,001
21,210
(10.4
)%
58,220
62,486
(6.8
)%
Total
$
20,275
$
22,876
(11.4
)%
$
62,202
$
68,203
(8.8
)%
Total Revenue: Recurring
$
9,514
$
10,207
(6.8
)%
$
29,125
$
31,264
(6.8
)%
Non-recurring
21,852
25,076
(12.9
)%
65,554
72,035
(9.0
)%
Discontinued Products **
-
360
(100.0
)%
360
1,182
(69.5
)%
Total
$
31,366
$
35,643
(12.0
)%
$
95,039
$
104,481
(9.0
)%
** VAM video product line which was discontinued during Q1
2019.
Synacor, Inc. Reconciliation of Adjusted Financial
Measures (In thousands except per share amounts)
(Unaudited) Three months ended September 30,
2019
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain Legal &
Professional
Fees
Adjusted Non-
GAAP
Revenue
$
31,366
$
31,366
Costs and operating expenses: Cost of revenue (1)
15,634
(292
)
15,342
Technology and development (1)(2)
5,545
(329
)
5,216
Sales and marketing (2)
5,473
(192
)
5,281
General and administrative (1)(2)
5,648
(1,525
)
(6
)
(370
)
3,747
Depreciation and amortization
2,605
2,605
Total costs and operating expenses
34,905
(1,525
)
(819
)
(370
)
32,191
Loss from operations
(3,518
)
1,525
819
370
(804
)
Other income, net
101
101
Interest expense
(80
)
(80
)
Loss before income taxes
(3,518
)
1,525
819
370
(804
)
Provision for income taxes (3)
207
207
Net loss
$
(3,725
)
$
1,525
$
819
$
370
$
(1,011
)
Diluted EPS
$
(0.10
)
$
0.04
$
0.02
$
0.01
$
(0.03
)
Three months ended September 30, 2018
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain Legal &
Professional
Fees
Adjusted Non-
GAAP
Revenue
$
35,643
$
35,643
Costs and operating expenses: Cost of revenue (1)
18,317
$
18,317
Technology and development (1)(2)
5,886
(283
)
$
5,603
Sales and marketing (2)
5,667
(339
)
$
5,328
General and administrative (1)(2)
5,279
(144
)
(1,033
)
$
4,102
Depreciation and amortization
2,437
2,437
Total costs and operating expenses
37,586
-
(766
)
(1,033
)
35,787
Loss from operations
(1,943
)
-
766
1,033
(144
)
Other expense, net
(32
)
$
(32
)
Interest expense
(80
)
(80
)
Loss before income taxes
(2,055
)
-
766
1,033
(256
)
Provision for income taxes (3)
165
165
Net loss
$
(2,220
)
$
-
$
766
$
1,033
$
(421
)
Diluted EPS
$
(0.06
)
$
-
$
0.02
$
0.03
$
(0.01
)
Notes: (1) Exclusive of depreciation and amortization
shown separately. (2) Includes stock-based compensation (3) No
income tax effects to adjustments presented due to full valuation
allowance. Synacor's management believes that certain
non-GAAP measures of Adjusted Net Loss and Adjusted Diluted
Earnings per Share provide investors with additional information to
assess the Company's financial performance. These measures should
be viewed as supplemental data, rather than substitutes or
alternatives to the comparable GAAP measures.
Synacor, Inc.
Reconciliation of Adjusted Financial Measures (In
thousands except per share amounts) (Unaudited)
Nine months ended September
30, 2019
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain Legal &
Professional Fees
Adjusted Non-
GAAP
Revenue
$
95,039
$
95,039
Costs and operating expenses: Cost of revenue (1)
49,292
(292
)
49,000
Technology and development (1)(2)
14,668
(329
)
14,339
Sales and marketing (2)
17,014
(192
)
16,822
General and administrative (1)(2)
14,068
(1,751
)
(6
)
(1,406
)
10,905
Depreciation and amortization
7,607
7,607
Total costs and operating expenses
102,649
(1,751
)
(819
)
(1,406
)
98,673
Loss from operations
(7,610
)
1,751
819
1,406
(3,634
)
Other income, net
110
110
Interest Expense
(199
)
(199
)
Loss before income taxes
(7,699
)
1,751
819
1,406
(3,723
)
Provision for income taxes (3)
757
757
Net loss
$
(8,456
)
$
1,751
$
819
$
1,406
$
(4,480
)
Diluted EPS
$
(0.22
)
$
0.04
$
0.02
$
0.04
$
(0.11
)
Nine months ended September
30, 2018
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain Legal &
Professional Fees
Adjusted Non-
GAAP
Revenue
$
104,481
$
104,481
Costs and operating expenses: Cost of revenue (1)
52,358
52,358
Technology and development (1)(2)
18,074
(283
)
17,791
Sales and marketing (2)
18,507
(339
)
18,168
General and administrative (1)(2)
14,616
(412
)
(1,033
)
13,171
Depreciation and amortization
7,316
7,316
Total costs and operating expenses
110,871
-
(1,034
)
(1,033
)
108,804
Loss from operations
(6,390
)
-
1,034
1,033
(4,323
)
Other expense, net
(46
)
(46
)
Interest Expense
(265
)
(265
)
Loss before income taxes
(6,701
)
-
1,034
1,033
(4,634
)
Provision for income taxes (3)
478
478
Net loss
$
(7,179
)
$
-
$
1,034
$
1,033
$
(5,112
)
Diluted EPS
$
(0.18
)
$
-
$
0.03
$
0.03
$
(0.13
)
Notes: (1) Exclusive of depreciation and amortization shown
separately. (2) Includes stock-based compensation (3) No income tax
effects to adjustments presented due to full valuation allowance.
Synacor's management believes that certain non-GAAP measures
of Adjusted Net Loss and Adjusted Diluted Earnings per Share
provide investors with additional information to assess the
Company's financial performance. These measures should be viewed as
supplemental data, rather than substitutes or alternatives to the
comparable GAAP measures.
Synacor Guidance Reconciliation
(In millions) (Unaudited)
Q4-2019
FY 2019
Net Loss $(0.8) - $(1.8) $(9.2) - $(10.2) Taxes, Interest &
Other Income/Expense
0.3
1.1
Depreciation & Amortization
2.5
11.0
Stock-based Compensation
0.5
1.6
Restructuring
0.1
0.9
Certain Legal and Professional Fees
0.4
1.9
Asset Impairment
-
1.7
Adjusted EBITDA $2.0 - $3.0 $8.0 - $9.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106006066/en/
Investor Contact: Rob Fink FNK IR rob@fnkir.com
(646)809-4048
Synacor (NASDAQ:SYNC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Synacor (NASDAQ:SYNC)
Historical Stock Chart
From Sep 2023 to Sep 2024