BRIDGEWATER, N.J., Aug. 10, 2020 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2020.

Second quarter highlights:

  • Revenue was $76.5 million, compared to $77.8 million in the second quarter of 2019. Recurring revenue was 78.4 percent.
  • GAAP net loss for the quarter was $10.15 million, or 24 cents per share, compared to $25.0 million or 61 cents per share in the prior year’s second quarter.
  • Non-GAAP net income from continuing operations attributable to Synchronoss was $6.6 million or 16 cent per share, compared to a Non-GAAP net loss of $11.3 million or 28 cents per share in the prior year’s second quarter.
  • Synchronoss delivered $11.5 million of adjusted EBITDA, compared to $8.7 million in the second quarter of 2019. Adjusted EBITDA margin in the second quarter was 15 percent compared to 11.2 percent in last year’s second quarter.
  • Positive Adjusted Free Cash Flow of $13 million drove an increase in cash and liquidity to $42.8 million at quarter end up from $31m at the end of Q1.
  • This morning, in a separate release, the company announced the 5-year renewal of its white-label cloud agreement with its largest customer, Verizon Wireless.

Glenn Lurie, president and chief executive officer, stated, “Synchronoss continued to overcome the many challenges posed by the global pandemic and delivered a solid second quarter. The strength of our customer relationships is highlighted by new wins with some of our largest customers, including the 5-year renewal of our personal cloud contract with Verizon, our largest customer, that we announced this morning in a separate press release. Adjusted EBITDA margins were at the highest level since the fourth quarter of 2018, and free cash flow was $13 million. I am proud of the Synchronoss team as they remained productive and committed to servicing our customers while still working from home, and these results speak to their passion and resilience.”

  Three Months Ended June 30,
   
$000s 2020    2019 % Change
Revenues $76,535  $77,846 (1.7%)
Net Loss (10,148) (25,030)(59.5%)
Adjusted EBITDA 11,549  8,669 33.2%


 
   Six Months Ended June 30,   
$000s 2020      2019 % Change
Revenues $153,657  $165,951 (7.4%)
Net Loss (22,423) (52,617)(57.4%)
Adjusted EBITDA 13,307  15,299 (13.0%)

David Clark, chief financial officer, added, “Our cost cutting efforts remain on track to deliver $45 million of in-year savings and $55 million of annualized savings. These efforts and execution were one of the main drivers of improved financial results including 62.6 percent adjusted gross margins, 15 percent EBITDA margin, and positive free cash flow of $13 million.”

Guidance

The company’s original 2020 Adjusted EBITDA guidance was $25-$35 million. The Verizon renewal reduces non-cash deferred revenue by approximately $10 million in the latter half of 2020. Under accounting standard ASC 606, this remaining $10 million of deferred revenue will now be amortized over the new term of the contract. The implied Adjusted EBITDA guidance range would be $15-$25 million. However, the company is also narrowing guidance to the top half of the range. Accordingly, the company now expects Adjusted EBITDA for the year of $20-$25 million.

New Business Update

New customer agreements and partnerships that the company has completed since the last earnings announcement include:

  • The 5-year contract extension of our personal cloud agreement with Verizon. This extension further solidifies our long-term relationship with Verizon and shows the value they see in our Cloud solution, which delivers solid incremental revenue and profitability for them, and a better user experience for their subscribers.
  • This new personal cloud contract with Verizon includes a joint market agreement to more directly target their existing base of subscribers.
  • We secured additional cloud initiatives in the quarter that will augment Verizon’s service offerings in other areas and expand our access to Verizon customers and help us continue to grow cloud revenue.
  • In Advanced Messaging, we signed two additional Agreements with CCMI to expand our role in preparing for the launch of RCS-based messaging service to be offered by the joint venture between AT&T, Sprint, T-Mobile and Verizon.
  • In Core Messaging, we won new business and expanded our relationship with Proximus to provide Messaging services.
  • In our Digital Platform, we signed a 5-year extension to our relationship with Sage Management, who provides audit services as a complement to our Financial Analytics product.  Additionally, we signed a seven-figure Financial Analytics contract with a nationwide service provider.
  • Finally, we signed Globe Telecom to a Spatial Managed Services contract in the Philippines.

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 8:00 a.m. (ET) that morning to discuss the financial results.
Please click the following link to join the webinar:
https://synchronoss.zoom.us/j/99626412696?pwd=bDJQRlF6MjNoN3c3amJySHFKemx1dz09

Password: 015747

To join by telephone, please dial one of the following numbers based on your location:
US: +1 253 215 8782
+1 346 248 7799 
+1 408 638 0968
+1 669 900 6833
+1 301 715 8592
+1 312 626 6799
+1 646 876 9923
Webinar ID: 996 2641 2696
Password: 015747

International numbers are also available: https://synchronoss.zoom.us/u/ab5P87e92z.  

Following the conference call, an archived webcast of the conference call will be available on the Investor Relations section of the company’s website at www.synchronoss.com.

Non-GAAP Financial Measures
Synchronoss 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:
Leslie Gahagan
Investor Relations Analyst
623-745-4046
investor@synchronoss.com


SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)

  June 30, 2020 December 31, 2019
Assets    
Cash and cash equivalents $42,771  $39,001 
Accounts receivable, net 57,332  65,863 
Operating lease right-of-use assets 46,913  53,965 
Goodwill 222,854  222,969 
Other Assets 151,782  150,225 
Total assets $521,652  $532,023 
     
Liabilities and stockholders’ equity    
Accounts Payable and Accrued expenses $96,454  $87,538 
Debt, current 10,000   
Deferred revenues 63,273  87,799 
Operating lease liabilities, non-current 53,495  60,976 
Other liabilities 17,946  18,768 
Preferred Stock 218,482  200,865 
Stockholders’ equity 62,002  76,077 
Total liabilities and stockholders’ equity $521,652  $532,023 
 
 

SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

  Three Months Ended June 30, Six Months Ended June 30,
  2020  2019  2020  2019 
         
         
Net revenues $76,535   $77,846   $153,657   $165,951  
Costs and expenses:        
Cost of revenues 29,480   33,403   64,951   72,356  
Research and development 19,096   19,026   38,884   38,707  
Selling, general and administrative 24,640   23,080   50,984   52,326  
Restructuring charges 4,493   356   5,943   777  
Depreciation and amortization 10,284   20,269   21,640   40,412  
Total costs and expenses 87,993   96,134   182,402   204,578  
Loss from continuing operations (11,458)  (18,288)  (28,745)  (38,627) 
Interest income 1,509   299   1,568   488  
Interest expense (84)  (463)  (329)  (1,048) 
Gain (loss) on extinguishment of debt    430      817  
Other Income 1,367   (24)  3,058   439  
Equity method investment loss    (376)     (1,619) 
Loss from continuing operations, before taxes (8,666)  (18,422)  (24,448)  (39,550) 
Benefit for income taxes 7,972   1,844   20,404   3,235  
Net loss from continuing operations (694)  (16,578)  (4,044)  (36,315) 
Net loss attributable to redeemable noncontrolling interests (165)  (593)  (182)  (906) 
Preferred stock dividend (9,289)  (7,859)  (18,197)  (15,396) 
Net loss attributable to Synchronoss $(10,148)  $(25,030)  $(22,423)  $(52,617) 
         
Earnings per share        
Basic (0.24) (0.61) (0.54) (1.30)
Diluted (0.24) (0.61) (0.54) (1.30)
Weighted-average common shares outstanding:         
Basic 41,697  40,810  41,482  40,566 
Diluted 41,697  40,810  41,482  40,566 
             
             

SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited)

 Six Months Ended June 30,
 2020 2019
Net loss from continuing operations$(4,044)  $(36,315) 
    
Adjustments to reconcile net loss to net cash used in operating activities:   
Non-cash items30,122   51,743  
Changes in operating assets and liabilities:(24,470)  3,136  
Net cash provided by operating activities1,608   18,564  
    
Investing activities:   
Purchases of fixed assets(424)  (4,940) 
Purchases of intangible assets and capitalized software(8,685)  (5,959) 
Other investing activities2,175   (9,351) 
Net cash used in investing activities(6,934)  (20,250) 
    
Net cash provided by (used in) financing activities9,991   (73,574) 
Effect of exchange rate changes on cash(895)  10  
Net increase (decrease) in cash and cash equivalents3,770   (75,250) 
    
Cash, restricted cash and cash equivalents, beginning of period39,001   109,860  
Cash, restricted cash and cash equivalents, end of period$42,771   $34,610  
 
 

SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

  Three Months Ended Jun 30, Six Months Ended Jun 30,
  2020 2019 2020 2019
Non-GAAP financial measures and reconciliation:        
GAAP Revenue $76,535   $77,846   $153,657   $165,951  
Less: Cost of revenues 29,480   33,403   64,951   72,356  
Gross Profit 47,055   44,443   88,706   93,595  
Add / (Less):        
Stock-based compensation expense 641   657   1,394   1,343  
Restructuring, transition, and cease-use lease expense 243      283     
Adjusted Gross Profit $47,939   $45,100   $90,383   $94,938  
Adjusted Gross Margin 62.6%  57.9%  58.8%  57.2% 
         
GAAP Net loss attributable to Synchronoss $(10,148)  $(25,030)  $(22,423)  $(52,617) 
Add / (Less):        
Stock-based compensation expense 4,987   5,474   10,156   11,028  
Acquisition costs    (42)     (230) 
Restructuring, transition, and cease-use lease expense 7,003   474   8,699   1,214  
Amortization expense 4,062   7,123   8,696   13,252  
Litigation, remediation and refiling costs 733   782   1,557   1,502  
Non-GAAP Expenses attributable to Non-Controlling Interest    (39)     (76) 
Non-GAAP Net Income (loss) from continuing operations attributable to Synchronoss $6,637   $(11,258)  $6,686   $(25,927) 
         
Diluted Non-GAAP Net Income (loss) from continuing operations per share $0.16   $(0.28)  $0.16   $(0.64) 
         
Weighted shares outstanding - Diluted 41,697   40,810   41,482   40,566  
 
 

SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

  Three Months Ended Six Months Ended
  Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Jun 30, 2020 Jun 30, 2019
               
Net (loss) income attributable to Synchronoss $(25,030)  $(69,432)  $(14,678)  $(12,275)  $(10,148)  $(22,423)  $(52,617) 
Add / (Less):              
Stock-based compensation expense 5,474   6,000   5,222   5,169   4,987   10,156   11,028  
Acquisition costs (42)                 (230) 
Restructuring, transition, and cease-use lease expense 474   6,215   17   1,696   7,003   8,699   1,214  
Cumulative adjustment to STI receivable    26,044                 
Litigation, remediation and refiling costs 782   4   1,320   824   733   1,557   1,502  
Depreciation and amortization 20,269   18,508   18,116   11,356   10,284   21,640   40,412  
Interest income (299)  (228)  (542)  (58)  (1,509)  (1,567)  (488) 
Interest Expense 463   203   104   245   84   329   1,048  
Gain on Extinguishment of debt (430)  (5)              (817) 
Other (Income) expense, net 24   422   (7,372)  (1,692)  (1,367)  (3,059)  (439) 
Equity method investment loss 376                  1,619  
Provision (benefit) for income taxes (1,844)  9,849   (4,439)  (12,432)  (7,972)  (20,404)  (3,235) 
Net (loss) income attributable to noncontrolling interests 593   25   194   17   165   182   906  
Preferred dividend 7,859   8,194   8,544   8,908   9,289   18,197   15,396  
Adjusted EBITDA (non-GAAP) $8,669   $5,799   $6,486   $1,758   $11,549   $13,307   $15,299  
 
 


  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
         
Net Cash (used in) provided by operating activities $16,624   $24,248   $1,608   $18,564  
Add / (Less):        
Capitalized software (4,257)  (3,255)  (8,685)  (5,959) 
Property and equipment (175)  (2,313)  (424)  (4,940) 
Free Cashflow $12,192   $18,680   $(7,501)  $7,665  
Add: Litigation, remediation and refiling costs 733   782   1,557   1,502  
Adjusted Free Cashflow $12,925   $19,462   $(5,944)  $9,167