Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and
innovator in cloud, messaging, digital and IoT platforms and
products, today announced financial results for its third quarter
ended September 30, 2020.
Third quarter highlights:
- GAAP revenue was $68.6 million, compared to GAAP revenue
of $52.2 million in the prior year’s third quarter (after giving
effect to a $26 million unfavorable cumulative adjustment to prior
year third quarter revenue).
- Recurring revenue represented 80% of total GAAP revenue, up
from 69% in the year ago quarter.
- GAAP net loss for the quarter was $15.4 million, or $0.36
cents per share, compared to a GAAP net loss of $69.4 million, or
$1.70 per share, in the prior year’s third quarter.
- Non-GAAP net income was $1.7 million, or $0.04 cent per share,
compared to a non-GAAP net loss of $25.4 million, or $0.62 cents
per share, in the prior year’s third quarter.
- Adjusted EBITDA increased 40% year over year to $8.1 million,
compared to $5.8 million in the third quarter of 2019.
- Adjusted EBITDA margin was 12% compared to 11% in the prior
year's third quarter.
- Cash and liquidity increased to $46.4 million at quarter
end, up from $42.8 million at the end of the second quarter.
Commenting on the results, Jeff Miller, President and
CEO of Synchronoss, said:
“We are taking a pragmatic approach to the business by focusing
our resources on lines of business that are generating the highest
return for shareholders and have the most potential for future
growth and profitability. Despite the recent leadership change, we
haven’t lost a step as an organization and we continue to execute
and build momentum, including renewing our largest cloud client,
Verizon, to a five-year contract extension. Our teams have deep
relationships with our customers, and we look forward to building
on that strength by expanding those relationships and adding new
ones. Our improved adjusted EBITDA for the third quarter highlights
our sharpened focus on increasing our profitability and cash flow
going forward.”
|
Three Months Ended September 30, |
$000s |
2020 |
2019 |
% Change |
Revenues |
$ |
68,636 |
|
|
$ |
52,210 |
|
|
31.5 |
% |
Net Loss |
$ |
(15,367 |
) |
|
$ |
(69,432 |
) |
|
77.9 |
% |
Adjusted EBITDA |
$ |
8,128 |
|
|
$ |
5,799 |
|
|
40.2 |
% |
|
Nine Months Ended September 30, |
$000s |
2020 |
2019 |
% Change |
Revenues |
$ |
222,293 |
|
|
$ |
218,161 |
|
|
1.9 |
% |
Net Loss |
$ |
(37,790 |
) |
|
$ |
(122,049 |
) |
|
69.0 |
% |
Adjusted EBITDA |
$ |
21,435 |
|
|
$ |
21,098 |
|
|
1.6 |
% |
David Clark, CFO of Synchronoss, added:
“Our third quarter results reflect progress with our continued
focus on expanding both our gross and adjusted EBITDA margins. We
are continuing to see the benefits of our cost management efforts
and remain on track to deliver $55 million of annualized savings by
year-end.”
Guidance
The company is raising its adjusted EBITDA guidance range for
the full year to $23-$26 million, up from $20-$25 million.
A reconciliation of GAAP to non-GAAP results has been provided
in the financial statement tables included in this press release.
An explanation of these measures is included below under the
heading "Non-GAAP Financial Measures."
Conference Call Details
Synchronoss will host a conference call at 4:30 p.m. (Eastern
Time) today to discuss the financial results.
To access the live call, dial 866-269-4260 or +1 313-209-6317
(International) and give the participant passcode 6435387.
A live and archived webcast of the conference call will be
accessible on the Investor Relations section of the company’s
website at www.synchronoss.com. In addition, a phone replay will be
available approximately two hours following the end of the call,
and will be available for one week. To access the call replay
dial-in information, please click here.
Non-GAAP Financial MeasuresSynchronoss has
provided in this release selected financial information that has
not been prepared in accordance with GAAP. This information
includes historical non-GAAP revenues, gross profit, operating
income (loss), net income (loss), effective tax rate, and earnings
(loss) per share. Synchronoss uses these non-GAAP financial
measures internally in analyzing its financial results and believes
they are useful to investors, as a supplement to GAAP measures, in
evaluating Synchronoss’ ongoing operational performance.
Synchronoss believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends, and in comparing
its financial results with other companies in Synchronoss’
industry, many of which present similar non-GAAP financial measures
to investors. As noted, the non-GAAP financial results discussed
above add back fair value stock-based compensation expense,
acquisition-related costs which includes integration costs,
restructuring and cease-use lease expense, deferred compensation
expense related to earn outs and amortization of intangibles
associated with acquisitions.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP measures to their most
directly comparable GAAP financial measures as detailed above. As
previously mentioned, a reconciliation of GAAP to non-GAAP results
has been provided in the financial statement tables included in
this press release.
About Synchronoss Technologies, Inc.
Synchronoss transforms the way companies create new revenue,
reduce costs and delight their subscribers with cloud, messaging,
digital and IoT products, supporting hundreds of millions of
subscribers across the globe. Synchronoss’ secure, scalable and
groundbreaking new technologies, trusted partnerships, and talented
people change the way TMT customers grow their businesses. For more
information, visit us at www.synchronoss.com.
Forward-looking Statements
This press release includes statements concerning Synchronoss
and its future expectations, plans and prospects that constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. For this purpose, any
statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words “may,” “should,” “expects,”
“plans,” “anticipates,” “could,” “intends,” “believes,” “potential”
or “continue” or other similar expressions are intended to identify
forward-looking statements. Synchronoss has based these
forward-looking statements largely on its current expectations and
projections about future events and financial trends that it
believes may affect its business, financial condition and results
of operations. These forward-looking statements speak only as of
the date of this press release and are subject to a number of
risks, uncertainties and assumptions including, without limitation,
risks relating to the Company’s ability to sustain or increase
revenue from its larger customers and generate revenue from new
customers, the Company’s expectations regarding expenses and
revenue, the sufficiency of the Company’s cash resources, the
Company’s growth strategies, the anticipated trends and challenges
in the business and the market in which the Company operates, the
Company’s expectations regarding federal, state and foreign
regulatory requirements, the pending lawsuits against the Company
described in its most recent SEC filings, and other risks and
factors that are described in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of the Company’s Annual Report on Form 10-K
for the year ended December 31, 2019, which is on file with the SEC
and available on the SEC’s website at www.sec.gov. The company does
not undertake any obligation to update any forward-looking
statements contained in this press release as a result of new
information, future events or otherwise.
Contact:
Investors:Todd Kehrli or Joo-Hun KimMKR Investor
Relations623-745-4046investor@synchronoss.com
SYNCHRONOSS
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(Unaudited) (In
thousands)
|
|
September 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
46,359 |
|
|
$ |
39,001 |
|
Accounts receivable, net |
|
47,705 |
|
|
65,863 |
|
Operating lease right-of-use
assets |
|
37,019 |
|
|
53,965 |
|
Goodwill |
|
227,012 |
|
|
222,969 |
|
Other Assets |
|
140,479 |
|
|
150,225 |
|
Total
assets |
|
$ |
498,574 |
|
|
$ |
532,023 |
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Accounts Payable and Accrued
expenses |
|
$ |
88,985 |
|
|
$ |
87,538 |
|
Debt, current |
|
10,000 |
|
|
— |
|
Deferred revenues |
|
51,415 |
|
|
87,799 |
|
Operating lease liabilities,
non-current |
|
48,787 |
|
|
60,976 |
|
Other liabilities |
|
18,271 |
|
|
18,768 |
|
Preferred Stock |
|
227,861 |
|
|
200,865 |
|
Stockholders’ equity |
|
53,255 |
|
|
76,077 |
|
Total liabilities and
stockholders’ equity |
|
$ |
498,574 |
|
|
$ |
532,023 |
|
SYNCHRONOSS
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except per share data)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net revenues |
|
$ |
68,636 |
|
|
|
$ |
52,210 |
|
|
|
$ |
222,293 |
|
|
|
$ |
218,161 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of revenues |
|
28,452 |
|
|
|
35,602 |
|
|
|
93,403 |
|
|
|
107,958 |
|
|
Research and development |
|
20,885 |
|
|
|
18,575 |
|
|
|
59,769 |
|
|
|
57,282 |
|
|
Selling, general and administrative |
|
23,265 |
|
|
|
30,536 |
|
|
|
74,249 |
|
|
|
82,862 |
|
|
Restructuring charges |
|
820 |
|
|
|
(39 |
) |
|
|
6,763 |
|
|
|
738 |
|
|
Depreciation and amortization |
|
12,212 |
|
|
|
18,508 |
|
|
|
33,852 |
|
|
|
58,920 |
|
|
Total costs and expenses |
|
85,634 |
|
|
|
103,182 |
|
|
|
268,036 |
|
|
|
307,760 |
|
|
Loss from continuing
operations |
|
(16,998 |
) |
|
|
(50,972 |
) |
|
|
(45,743 |
) |
|
|
(89,599 |
) |
|
Interest income |
|
20 |
|
|
|
228 |
|
|
|
1,587 |
|
|
|
716 |
|
|
Interest expense |
|
(72 |
) |
|
|
(203 |
) |
|
|
(401 |
) |
|
|
(1,251 |
) |
|
Gain (loss) on extinguishment of debt |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
822 |
|
|
Other Income (loss) |
|
2,684 |
|
|
|
(422 |
) |
|
|
5,743 |
|
|
|
17 |
|
|
Equity method investment loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,619 |
) |
|
Loss from continuing
operations, before taxes |
|
(14,366 |
) |
|
|
(51,364 |
) |
|
|
(38,814 |
) |
|
|
(90,914 |
) |
|
Benefit (provision) for income taxes |
|
8,744 |
|
|
|
(9,849 |
) |
|
|
29,148 |
|
|
|
(6,614 |
) |
|
Net loss from continuing
operations |
|
(5,622 |
) |
|
|
(61,213 |
) |
|
|
(9,666 |
) |
|
|
(97,528 |
) |
|
Net loss attributable to redeemable noncontrolling interests |
|
(60 |
) |
|
|
(25 |
) |
|
|
(242 |
) |
|
|
(931 |
) |
|
Preferred stock dividend |
|
(9,685 |
) |
|
|
(8,194 |
) |
|
|
(27,882 |
) |
|
|
(23,590 |
) |
|
Net loss attributable to
Synchronoss |
|
$ |
(15,367 |
) |
|
|
$ |
(69,432 |
) |
|
|
$ |
(37,790 |
) |
|
|
$ |
(122,049 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings per
share |
|
|
|
|
|
|
|
|
Basic |
|
(0.36 |
) |
|
(1.70 |
) |
|
(0.90 |
) |
|
(3.01 |
) |
Diluted |
|
(0.36 |
) |
|
(1.70 |
) |
|
(0.90 |
) |
|
(3.01 |
) |
Weighted-average
common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
42,360 |
|
|
40,910 |
|
|
41,777 |
|
|
40,564 |
|
Diluted |
|
42,360 |
|
|
40,910 |
|
|
41,777 |
|
|
40,564 |
|
SYNCHRONOSS
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
Net loss continuing operations |
$ |
(9,666 |
) |
|
$ |
(97,528 |
) |
|
|
|
|
Adjustments to reconcile net loss to net cash provided by
operating activities: |
|
|
|
Non-cash items |
52,835 |
|
|
109,291 |
|
Changes in operating assets and liabilities: |
(34,508 |
) |
|
76 |
|
Net cash provided by operating activities |
8,661 |
|
|
11,839 |
|
|
|
|
|
Investing activities: |
|
|
|
Purchases of fixed assets |
(571 |
) |
|
(7,077 |
) |
Purchases of intangible assets and capitalized software |
(12,610 |
) |
|
(9,289 |
) |
Other investing activities |
1,775 |
|
|
34,091 |
|
Net cash provided by (used in) investing
activities |
(11,406 |
) |
|
17,725 |
|
|
|
|
|
Net cash provided by (used in) financing
activities |
9,991 |
|
|
(120,993 |
) |
Effect of exchange rate changes on cash |
112 |
|
|
783 |
|
Net increase in cash
and cash equivalents |
7,358 |
|
|
(90,646 |
) |
|
|
|
|
Cash, restricted cash
and cash equivalents, beginning of period |
39,001 |
|
|
109,860 |
|
Cash, restricted cash
and cash equivalents, end of period |
$ |
46,359 |
|
|
$ |
19,214 |
|
SYNCHRONOSS
TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES(In thousands, except
per share data) (Unaudited)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Non-GAAP financial
measures and reconciliation: |
|
|
|
|
|
|
|
|
GAAP
Revenue |
|
$ |
68,636 |
|
|
$ |
52,210 |
|
|
$ |
222,293 |
|
|
$ |
218,161 |
|
Less: Cost of revenues |
|
28,452 |
|
|
35,602 |
|
|
93,403 |
|
|
107,958 |
|
Gross
Profit |
|
40,184 |
|
|
16,608 |
|
|
128,890 |
|
|
110,203 |
|
Add /
(Less): |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
505 |
|
|
803 |
|
|
1,899 |
|
|
2,147 |
|
Restructuring, transition, and cease-use lease expense |
|
89 |
|
|
141 |
|
|
372 |
|
|
405 |
|
Adjusted Gross
Profit |
|
$ |
40,778 |
|
|
$ |
43,596 |
|
|
$ |
131,161 |
|
|
$ |
138,799 |
|
Adjusted Gross
Margin |
|
59.4 |
% |
|
83.5 |
% |
|
59.0 |
% |
|
63.6 |
% |
|
|
|
|
|
|
|
|
|
GAAP Net loss
attributable to Synchronoss |
|
$ |
(15,367 |
) |
|
$ |
(69,432 |
) |
|
$ |
(37,790 |
) |
|
$ |
(122,049 |
) |
Add /
(Less): |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
4,391 |
|
|
6,000 |
|
|
14,547 |
|
|
17,028 |
|
Acquisition costs |
|
— |
|
|
— |
|
|
— |
|
|
(230 |
) |
Restructuring, transition, and cease-use lease expense |
|
6,580 |
|
|
6,215 |
|
|
15,280 |
|
|
7,429 |
|
Amortization expense |
|
4,107 |
|
|
5,808 |
|
|
20,207 |
|
|
19,072 |
|
Cumulative adjustment to STI receivable |
|
— |
|
|
26,044 |
|
|
— |
|
|
26,044 |
|
Net change in contingent consideration obligation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Litigation, remediation and refiling costs |
|
1,943 |
|
|
4 |
|
|
3,500 |
|
|
1,506 |
|
Loss on Extinguishment of Debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net (loss) income attributable to noncontrolling interests |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-GAAP Expenses attributable to Non-Controlling Interest |
|
— |
|
|
— |
|
|
— |
|
|
(76 |
) |
Non-GAAP Net Income
(loss) from continuing operations attributable to
Synchronoss |
|
$ |
1,654 |
|
|
$ |
(25,361 |
) |
|
$ |
15,744 |
|
|
$ |
(51,276 |
) |
|
|
|
|
|
|
|
|
|
Diluted Non-GAAP Net Income
(loss) from continuing operations per share |
|
$ |
0.04 |
|
|
$ |
(0.62 |
) |
|
$ |
0.38 |
|
|
$ |
(1.26 |
) |
|
|
|
|
|
|
|
|
|
Weighted shares outstanding -
Diluted |
|
42,360 |
|
|
40,910 |
|
|
41,777 |
|
|
40,564 |
|
|
|
|
|
|
|
|
|
|
SYNCHRONOSS
TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES(In thousands, except
per share data) (Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
Sep 30, 2019 |
|
Dec 31, 2019 |
|
Mar 31, 2020 |
|
Jun 30, 2020 |
|
Sep 30, 2020 |
|
Sep 30, 2020 |
|
Sep 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Synchronoss |
|
$ |
(69,432 |
) |
|
$ |
(14,678 |
) |
|
$ |
(12,275 |
) |
|
$ |
(10,148 |
) |
|
$ |
(15,367 |
) |
|
$ |
(37,790 |
) |
|
$ |
(122,049 |
) |
Add /
(Less): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
6,000 |
|
|
5,222 |
|
|
5,169 |
|
|
4,987 |
|
|
4,391 |
|
|
14,547 |
|
|
17,028 |
|
Acquisition costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(230 |
) |
Restructuring, transition, and cease-use lease expense |
|
6,215 |
|
|
17 |
|
|
1,696 |
|
|
7,003 |
|
|
6,580 |
|
|
15,279 |
|
|
7,429 |
|
Cumulative adjustment to STI receivable |
|
26,044 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
26,044 |
|
Litigation, remediation and refiling costs |
|
4 |
|
|
1,320 |
|
|
824 |
|
|
733 |
|
|
1,943 |
|
|
3,500 |
|
|
1,506 |
|
Depreciation and amortization |
|
18,508 |
|
|
18,116 |
|
|
11,356 |
|
|
10,284 |
|
|
12,212 |
|
|
33,852 |
|
|
58,920 |
|
Interest income |
|
(228 |
) |
|
(542 |
) |
|
(58 |
) |
|
(1,509 |
) |
|
(20 |
) |
|
(1,587 |
) |
|
(716 |
) |
Interest Expense |
|
203 |
|
|
104 |
|
|
245 |
|
|
84 |
|
|
72 |
|
|
401 |
|
|
1,251 |
|
Gain on Extinguishment of debt |
|
(5 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(822 |
) |
Other (Income) expense, net |
|
422 |
|
|
(7,372 |
) |
|
(1,692 |
) |
|
(1,367 |
) |
|
(2,684 |
) |
|
(5,743 |
) |
|
(17 |
) |
Equity method investment loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,619 |
|
Provision (benefit) for income taxes |
|
9,849 |
|
|
(4,439 |
) |
|
(12,432 |
) |
|
(7,972 |
) |
|
(8,744 |
) |
|
(29,148 |
) |
|
6,614 |
|
Net (loss) income attributable to noncontrolling interests |
|
25 |
|
|
194 |
|
|
17 |
|
|
165 |
|
|
60 |
|
|
242 |
|
|
931 |
|
Preferred dividend |
|
8,194 |
|
|
8,544 |
|
|
8,908 |
|
|
9,289 |
|
|
9,685 |
|
|
27,882 |
|
|
23,590 |
|
Adjusted EBITDA
(non-GAAP) |
|
$ |
5,799 |
|
|
$ |
6,486 |
|
|
$ |
1,758 |
|
|
$ |
11,549 |
|
|
$ |
8,128 |
|
|
$ |
21,435 |
|
|
$ |
21,098 |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net Cash (used in) provided by operating
activities |
|
$ |
7,053 |
|
|
$ |
(6,725 |
) |
|
$ |
8,661 |
|
|
$ |
11,839 |
|
Add /
(Less): |
|
|
|
|
|
|
|
|
Capitalized software |
|
(3,926 |
) |
|
(3,330 |
) |
|
(12,610 |
) |
|
(9,289 |
) |
Property and equipment |
|
(147 |
) |
|
(2,137 |
) |
|
(571 |
) |
|
(7,077 |
) |
Free
Cashflow |
|
$ |
2,980 |
|
|
$ |
(12,192 |
) |
|
$ |
(4,520 |
) |
|
$ |
(4,527 |
) |
Add: Litigation, remediation and refiling costs |
|
1,943 |
|
|
4 |
|
|
3,500 |
|
|
1,506 |
|
Adjusted Free
Cashflow |
|
$ |
4,923 |
|
|
$ |
(12,188 |
) |
|
$ |
(1,020 |
) |
|
$ |
(3,021 |
) |
Synchronoss Technologies (NASDAQ:SNCR)
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