- Q2 revenue increases to $35.9 million,
beating guidance
- Q2 net loss narrows to $2.6 million and
adjusted EBITDA improves to $1.2 million, from a net loss of $3.3
million and adjusted EBITDA of $0.2 million a year ago
- Q2 wins include Mediacom renewal,
Google renewal and the addition of 110 new Zimbra enterprise and
government customers
- Recurring and fee-based revenue grew
13% year over year to $14.9 million, driven by Collaboration and
Identity platforms
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 second quarter ended June
30, 2018.
“Strong growth from both software and advertising fueled solid
second-quarter revenue,” said Synacor CEO Himesh Bhise. “We
increased revenue 15% year over year to $35.9 million, narrowed our
net loss, and delivered adjusted EBITDA of $1.2 million that was up
from $0.2 million a year ago.
“We continue to make progress on our initiatives to drive value,
and we expanded our cost-reduction program this quarter,” Bhise
continued. “We delivered 13% year-over-year growth in recurring and
fee-based revenue, driven by our operating focus on our
high-margin, recurring-revenue Collaboration and Identity
platforms.”
Recent Highlights
- Renewed an expansive deal covering
portal, identity and email platforms with Mediacom, a top 10
multichannel video service provider in the U.S.
- Added 110 new Zimbra email enterprise
and government customers worldwide.
- Signed agreement to upgrade 3 million
email boxes for an ISP in Japan.
- Extended search and advertising
relationship with Google through May 2020.
- Made progress in the development of a
decentralized app of Zimbra for EOSIO blockchain, which yielded a
revenue benefit.
Q2 2018 Financial Results
Revenue: For the second quarter of 2018, revenue was
$35.9 million, an increase of 15% versus the second quarter of
2017.
Net Income: For the second quarter of 2018, net
loss narrowed to $2.6 million, or $(0.07) per share, compared with
a net loss of $3.3 million, or $(0.09) per share, in the second
quarter of 2017.
Adjusted EBITDA: For the second quarter of 2018, adjusted
EBITDA, which excludes stock-based compensation, other income and
expense and restructuring costs, increased to $1.2 million,
compared with $0.2 million for the second quarter of 2017, which
also excluded a capitalized software impairment.
Cash: The Company ended the second quarter of 2018 with
$15.0 million in cash and cash equivalents, compared with $16.4
million at the end of the first quarter of 2018.
Guidance
Based on information available as of August 1, 2018, the Company
is providing financial guidance for the third quarter of 2018 and
affirming full-year 2018 guidance for revenue, net loss and
adjusted EBITDA as follows:
- Q3 2018 Guidance: Revenue for
the third quarter of 2018 is projected to be in the range of $37
million to $39 million. The Company expects to report a net loss of
$2.2 million to $2.7 million and adjusted EBITDA of $1.5 million to
$2.0 million, which excludes stock-based compensation expense of
approximately $0.6 million, restructuring costs of approximately
$0.8 million, depreciation and amortization of approximately $2.5
million, and tax, interest expense and other income and expense of
approximately $0.3 million.
- Fiscal 2018 Guidance: Revenue
for the full year of 2018 is expected to be in 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 $2.2 million to $2.3 million, restructuring
costs of approximately $1.1 million, depreciation and amortization
of $10.0 million to $11.1 million, and tax, interest expense, and
other income and expense of approximately $1.1 million.
Conference Call Details
Synacor will host a conference call today at 5:00 p.m. ET to
discuss the second-quarter 2018 financial results and 2018
financial guidance 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 5759236, 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 August 15, 2018,
call toll-free (800) 585-8367, or callers outside the U.S. may dial
(416) 621-4642. The conference ID is 5759236.
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. 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.
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 third-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, including by non-renewal of its
contract; 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 August 1, 2018, and Synacor undertakes no duty to
update this information.
Synacor, Inc. Condensed Consolidated Balance Sheets
(In thousands) (Unaudited)
June 30, December 31, 2018 2017
Assets Current assets: Cash and cash equivalents $ 14,954 $
22,476 Accounts receivable, net 21,754 31,696 Prepaid expenses and
other current assets 5,702 4,516 Total
current assets 42,410 58,688 Property and equipment, net 20,400
20,505 Goodwill 15,947 15,955 Intangible assets, net 11,624 12,695
Other long-term assets 623 937
Total
Assets $ 91,004 $ 108,780
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $ 16,527 $ 25,931 Accrued expenses
and other current liabilities 5,929 7,075 Current portion of
deferred revenue 8,443 11,605 Current portion of capital lease
obligations 2,364 2,444 Total current
liabilities 33,263 47,055 Long-term portion of capital lease
obligations 2,188 3,371 Deferred revenue 2,442 3,682 Other
long-term liabilities 247 327
Total
Liabilities 38,140 54,435
Stockholders' Equity: Common stock 393 396 Treasury
stock (1,893 ) (1,881 ) Additional paid-in capital 143,720 142,486
Accumulated deficit (89,152 ) (86,627 ) Accumulated other
comprehensive loss (204 ) (29 ) Total stockholders’
equity 52,864 54,345
Total
Liabilities and Stockholders' Equity $ 91,004
$ 108,780 Synacor,
Inc. Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)
Three months ended Six months ended June
30, June 30, 2018 2017 2018
2017 Revenue $ 35,923 $ 31,216 $ 68,838 $ 57,756
Costs and operating expenses: Cost of revenue (1) 18,256 14,462
33,473 27,024 Technology and development (1)(2) 6,069 6,904 12,756
14,202 Sales and marketing (2) 6,904 6,185 12,840 12,846 General
and administrative (1)(2) 4,320 4,361 9,337 8,325 Depreciation and
amortization 2,444 2,224 4,879
4,408 Total costs and operating expenses
37,993 34,136 73,285
66,805 Loss from operations (2,070 ) (2,920 )
(4,447 ) (9,049 ) Other (expense) income (133 ) 67 (14 ) 73
Interest expense (88 ) (114 ) (185 )
(201 ) Loss before income taxes (2,291 ) (2,967 ) (4,646 ) (9,177 )
Income tax provision 293 309 313
755 Net loss $ (2,584 ) $ (3,276 ) $ (4,959 )
$ (9,932 ) Net loss per share: Basic $ (0.07 ) $
(0.09 ) $ (0.13 ) $ (0.29 ) Diluted $ (0.07 ) $ (0.09 ) $ (0.13 ) $
(0.29 ) Weighted average shares used to compute net loss per
share: Basic 38,823,056 37,284,973
38,808,690 34,228,367 Diluted
38,823,056 37,284,973 38,808,690
34,228,367 Notes: (1) Exclusive of
depreciation and amortization shown separately. (2) Includes
stock-based compensation as follows:
Three months ended
Six months ended
June 30, June 30, 2018 2017 2018
2017 Technology and development $ 134 $ 206 $ 268 $ 414
Sales and marketing 126 190 264 358 General and administrative
277 280 558 551
$ 537 $ 676 $ 1,090 $ 1,323
Synacor, Inc. Condensed Consolidated
Statements of Cash Flows (In thousands)
(Unaudited)
Six months ended
June 30, 2018 2017 Cash Flows from
Operating Activities: Net loss $ (4,959 ) $ (9,932 )
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization
4,879 4,408 Capitalized software impairment — 256 Stock-based
compensation expense 1,090 1,323 Provision for deferred income
taxes (119 ) 219 Increase in estimated value of contingent
consideration — 107 Change in operating assets and liabilities net
of effect of acquisition: Accounts receivable, net 9,942 9,611
Prepaid expenses and other assets (882 ) (136 ) Accounts payable
(9,479 ) (3,132 ) Accrued expenses and other liabilities (1,107 )
(3,436 ) Deferred revenue (1,946 ) (764 )
Net cash
used in operating activities (2,581 )
(1,476 ) Cash Flows from Investing
Activities: Purchases of property and equipment (3,978 )
(3,576 )
Net cash used in investing activities
(3,978 ) (3,576 ) 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 (867 ) (701 ) Proceeds from exercise
of common stock options 103 786 Purchase of treasury stock and
shares received to satisfy minimum tax withholding liabilities (12
) (117 ) Deferred acquisition payment — (1,300
)
Net cash (used in) provided by financing activities
(776 ) 13,714 Effect of exchange
rate changes on cash and cash equivalents (187 ) 6
Net (decrease) increase in Cash and Cash Equivalents (7,522
) 8,668 Cash and Cash Equivalents at beginning of period
22,476 14,315 Cash and Cash Equivalents at end
of period
$ 14,954 $ 22,983
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 Six months ended June 30, June 30,
2018 2017 2018 2017
Reconciliation of Adjusted EBITDA: Net loss $ (2,584 ) $
(3,276 ) $ (4,959 ) $ (9,932 ) Income tax provision 293 309 313 755
Interest expense 88 114 185 201 Other expense (income) 133 (67 ) 14
(73 ) Depreciation and amortization 2,444 2,224 4,879 4,408
Capitalized software impairment — 256 — 256 Stock-based
compensation expense 537 676 1,090 1,323 Restructuring costs
268 — 268 —
Adjusted EBITDA $ 1,179 $
236 $ 1,790 $
(3,062 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180801005955/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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