SNCR
$2.85
Synchronoss Technolo
($.20)
(6.56%)
Earnings Details
Quarter December 2019
Monday, March 09, 2020 4:01:00 PM
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Summary

Synchronoss Technolo Beats but Guides Lower

Synchronoss Technolo (SNCR) reported Quarter December 2019 earnings of $0.02 per share on revenue of $90.6 million. The consensus estimate was a loss of $0.42 per share on revenue of $91.2 million. The Earnings Whisper number was for a loss of $0.45 per share. Revenue grew 10.3% on a year-over-year basis.

The company said during its conference call it expects 2020 revenue of $320.0 million to $340.0 million. The current consensus estimate is revenue of $342.7 million for the year ending December 31, 2020.

Synchronoss Technologies Inc provides cloud solutions and software-based activation for connected devices. Its solutions include intelligent connectivity management & content synchronization, backup & sharing service procurement, provisioning, activation.

Results
Reported Earnings
$0.02
Earnings Whisper
($0.45)
Consensus Estimate
($0.42)
Reported Revenue
$90.6 Mil
Revenue Estimate
$91.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Synchronoss Technologies Announces Fourth Quarter and Full Year 2019 Financial Results; AT&T set to deploy the Synchronoss Personal Cloud Solution

BRIDGEWATER, N.J., March 09, 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 fourth quarter and year ended December 31, 2019. Synchronoss is also announced this morning that AT&T is set to deploy the Synchronoss Personal Cloud Solution for AT&T Mobility wireless customers.

Financial highlights:

  • Revenue for the quarter was $90.6 million. For the full year, revenue was $308.7 million.
  • GAAP net loss for the quarter was $14.7 million. For the full year, GAAP net loss was $136.7 million.
  • Synchronoss delivered $6.5 million of adjusted EBITDA for the quarter. For the full year, adjusted EBITDA was $27.6 million.
  • Total costs and expenses were down 13 percent year over year in the fourth quarter and 15 percent for the year.
  • Synchronoss ended the year with $39.0 million of cash on the balance sheet, and no debt.
  Three Months Ended December 31,
$000s2019 2018 % Change
Revenues$90,588  $82,102  10.3%
      
Net Loss Attributable to Synchronoss(14,671) (101,909) 85.6%
Non-GAAP Net Loss From Cont. Ops. Attributable to Synchronoss (2,502) (80,837) 96.9%
Adjusted EBITDA6,486  15,436  (58.0)%


  Twelve Months Ended December 31,
$000s2019 2018 % Change
Revenues$308,749  $325,839  (5.2)%
      
Net Loss Attributable to Synchronoss(136,720) (243,748) (43.9)%
Non-GAAP Net Loss From Cont. Ops. Attributable to Synchronoss
(53,777) (176,914) (69.6)%
Adjusted EBITDA27,584  14,023  96.7%

Glenn Lurie, president and chief executive officer, stated “Synchronoss finished 2019 on a strong note, with our highest revenue quarter in two years. And 2020 is off to a good start, as we have already launched two new cloud customers - TracFone and Assurant - and we are launching AT&T this week. In addition, our advanced messaging work with the CCMI joint venture of AT&T, Sprint, T-Mobile, and Verizon is well underway, and we are already seeing upside to the original contract in the form of additional technology integration and professional services work.”

Mr. Lurie added, “With the new business wins we closed in 2019, we have the business in hand along with the quality of our sales funnel to energize profitable growth for the next several years. We have worked hard to right size our expense base and see additional opportunities to reduce costs and grow operating margins in the new year."

David Clark, chief financial officer, added, “Synchronoss ended the year with $39 million of cash, up from $20 million at the end of the third quarter. In 2019, we reduced total costs and expenses 13 percent, which drove a significant improvement in financial results. For the full year, Adjusted EBITDA was $27.6 million, up from $14.0 million in 2018. We believe we can deliver approximately $15 million of additional cost savings in 2020.”

New Business Update

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

  • AT&T Mobility is launching the Synchronoss Personal Cloud solution for its wireless customers. The Synchronoss Personal Cloud solution will fully integrate into a suite of AT&T services, leveraging the cloud to vastly improve the subscriber’s overall experience. It will also give AT&T the ability to provide and monetize new value-added services to its wireless customers.
  • Synchronoss’ Personal Cloud Solution has been fully integrated with Pocket Geek by Assurant to provide an enhanced device and content protection solution to a leading North American carrier.
  • In November, the company was selected by the Cross-Carrier Messaging Initiative (CCMI), a joint venture of AT&T, Sprint, T-Mobile, and Verizon, to deliver an advanced mobile messaging experience across all four mobile networks.

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 on Monday, March 9, 2020, at 5:00 p.m. (ET) to discuss the company’s financial results. To access this call, dial 1-201-493-6784. Additionally, a live web cast of the conference call will be available on the Investor Relations page on the company’s web site at www.synchronoss.com.

Following the conference call, a replay will be available for a limited time at 1-412-317-6671. The replay pass code is 13698084. An archived web cast of this conference call will also be available on the Investor Relations page of the company’s web site, 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, earnings (loss) per share and cash flows from operating activities. 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 as well as certain non-recurring adjustments.

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 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, 2018, 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:
Joe Crivelli
Vice President, Investor Relations
908-566-3131
investor@synchronoss.com

Media:                                                
CCgroup
US: Diane Rose, +1 727-238-7567 or International: Anais Merlin, +44 20 3824 9219                                   
synchronoss@ccgrouppr.com

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

 December 31, 2019 December 31, 2018
ASSETS
Current assets:   
Cash and cash equivalents$38,990  $103,771 
Restricted cash11  6,089 
Marketable securities, current11  28,230 
Accounts receivable, net of allowances for bad debt of $1,864 and $4,599 at December 31, 2019 and December 31, 2018, respectively65,863  102,798 
Prepaid expenses24,224  45,058 
Other current assets4,792  8,508 
Total current assets133,891  294,454 
Marketable securities, non-current  6,658 
Property and equipment, net26,525  67,937 
Operating lease right-of-use assets53,965   
Goodwill222,969  224,899 
Intangible assets, net77,613  98,706 
Other assets8,054  8,982 
Equity method investment  1,619 
Total assets$523,017  $703,255 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable21,551  13,576 
Accrued expenses56,810  59,545 
Deferred revenues, current65,858  57,101 
Short-term convertible debt, net of debt issuance costs  113,542 
Total current liabilities144,219  243,764 
Lease financing obligation  9,494 
Operating lease liabilities, non-current60,976   
Deferred tax liabilities1,098  1,347 
Deferred revenues, non-current21,941  59,841 
Other non-current liabilities4,588  10,797 
Redeemable noncontrolling interest12,500  12,500 
Commitments and contingencies   
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 217 shares issued and outstanding at December 31, 2019200,865  176,603 
Stockholders’ equity:   
Common stock, $0.0001 par value; 100,000 shares authorized, 51,704 and 49,836 shares issued; 44,542 and 42,674 outstanding at December 31, 2019 and December 31, 2018, respectively5  5 
Treasury stock, at cost (7,162 and 7,162 shares at December 31, 2019 and December 31, 2018, respectively)(82,087) (82,087)
Additional paid-in capital525,739  534,673 
Accumulated other comprehensive loss(32,515) (30,383)
Accumulated deficit(334,312) (233,299)
Total stockholders’ equity76,830  188,909 
Total liabilities and stockholders’ equity$523,017  $703,255 


SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

  Three Months Ended December 31, Twelve Months Ended December 31,
  2019 2018 2019 2018 2017
           
Net revenues $90,588  $82,102  $308,749  $325,839  $402,361 
Costs and expenses:          
Cost of revenues 42,449  31,014  150,407  158,802  181,453 
Research and development 18,286  19,383  75,568  79,172  90,850 
Selling, general and administrative 29,909  22,744  112,771  122,112  154,037 
Restructuring charges 17  3,950  755  12,375  10,739 
Depreciation and amortization 18,116  47,324  77,036  117,654  94,884 
Total costs and expenses 108,777  124,415  416,537  490,115  531,963 
Loss from continuing operations (18,189) (42,313) (107,788) (164,276) (129,602)
Interest income 542  252  1,258  7,770  12,502 
Interest expense (104) (976) (1,355) (4,911) (55,771)
Gain (loss) on extinguishment of debt   1,760  822  1,760  (29,413)
Other Income (expense), net 7,372  (65,737) 7,389  (74,917) (17,678)
Equity method investment loss   (28,671) (1,619) (28,600) (9,125)
Loss from continuing operations, before taxes (10,379) (135,685) (101,293) (263,174) (229,087)
Benefit (provision) for income taxes 4,446  16,290  (2,167) 17,894  34,863 
Net loss from continuing operations (5,933) (119,395) (103,460) (245,280) (194,224)
Net income from discontinued operations, net of tax   18,288    18,288  75,495 
Net loss (5,933) (101,107) (103,460) (226,992) (118,729)
Net (income) loss attributable to redeemable noncontrolling interests (194) 6,715  (1,126) 8,837  9,291 
Preferred stock dividend (8,544) (7,517) (32,134) (25,593)  
Net loss attributable to Synchronoss $(14,671) $(101,909) $(136,720) $(243,748) $(109,438)
           
Earnings per share          
Basic:          
Continuing operations $(0.36) $(3.01) $(3.36) $(6.51) $(4.14)
Discontinued operations   0.45    0.46  1.69 
  $(0.36) $(2.56) $(3.36) $(6.05) $(2.45)
Diluted:          
Continuing operations $(0.36) $(3.01) $(3.36) $(6.51) $(4.14)
Discontinued operations   0.45    0.46  1.69 
  $(0.36) $(2.56) $(3.36) $(6.05) $(2.45)
Weighted-average common shares outstanding:          
Basic 41,085  39,885  40,694  40,277  44,669 
Diluted 41,085  39,885  40,694  40,277  44,669 


SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited)

 Twelve Months Ended December 31,
 2019 2018 2017
Operating activities:     
Net loss continuing operations$(103,460) $(245,280) $(194,224)
Net loss from discontinued operations    75,495 
Gain (loss) on Sale of discontinued operations, net of tax  18,288  (122,842)
Adjustments to reconcile net loss to net cash used in operating activities:     
Depreciation and amortization77,037  97,092  93,924 
Goodwill impairment  9,100   
Impairment of long-lived assets and capitalized software  11,462  960 
Change in fair value of financial instruments(163 (3,849) 4,367 
Amortization of debt issuance costs285  1,294  12,771 
(Gain) loss on extinguishment of debt(822) (1,760) 29,413 
Accrued PIK interest  (7,037) (12,090)
Allowance for loan losses  84,314  14,562 
Loss (earnings) from Equity method investments1,619  28,600  9,125 
(Gain) loss on Disposals of fixed assets15  277  (4,947)
Discontinued operations non-cash and working capital adjustments    48,647 
(Gain) loss on Disposals of intangible assets(5,429)    
Amortization of bond premium(34) 107  244 
Deferred income taxes(222) (12,350) 19,243 
Non-cash interest on leased facility    1,203 
Stock-based compensation22,287  27,604  22,495 
Contingent consideration obligation    (2,711)
Cumulative adjustment to STI receivable26,044     
ROU Asset Impairment6,268     
Changes in operating assets and liabilities:     
Accounts receivable, net of allowance for doubtful accounts10,891  (21,521) 29,283 
Prepaid expenses and other current assets27,215  (5,315) (5,513)
Other assets1,710  973  3,237 
Accounts payable8,879  6,846  (9,098)
Accrued expenses(7,059) (18,068) (4,949)
Other liabilities(4,362) (4,675) (3,337)
Deferred revenues(28,856) 2,529  (23,506)
Net cash provided by (used in) operating activities31,843  (31,369) (18,248)
      
Investing activities:     
Purchases of fixed assets(8,183) (11,656) (12,151)
Purchases of intangible assets and capitalized software(13,008) (14,372) (9,119)
Proceeds from the sale of intangibles5,429     
Proceeds from the sale of Speechcycle    13,500 
Purchases of marketable securities available for sale(51,745) (36,789) (219)
Maturity of marketable securities available for sale86,884  4,865  12,371 
Proceeds from the sale of discontinued operations    928,171 
Equity investment  404  608 
Investing activities in discontinued operations    (13,721)
Investment in note receivable    (6,187)
Business acquired, net of cash  (9,734) (815,008)
Net cash provided by (used in) investing activities19,377  (67,282) 98,245 
      
Financing activities:     
Share-based compensation-related proceeds, net of taxes paid on withholding shares39    2,584 
Taxes paid on withholding shares(15)   (442)
Payments on contingent consideration    (122)
Debt issuance costs related to the Credit Facility    (3,692)
Debt issuance costs related to long-term debt    (19,887)
Debt amendment costs related to long-term debt    (16,776)
Proceeds from issuance of convertible notes    900,000 
Retirement of Convertible Senior Notes & related costs(113,006) (113,696)  
Repayment of long-term debt    (900,000)
Borrowings on revolving line of credit2,000     
Repayment of revolving line of credit(2,000)   (29,000)
Excess tax benefits from stock option exercises    17 
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan    1,047 
Proceeds from issuance of preferred stock  86,220   
Preferred dividend payment(7,075) (7,075)  
Proceeds from mandatorily redeemable financial instruments    33,592 
Payments on capital obligations(1,200) (1,334) (2,985)
Net cash used in financing activities(121,257) (35,885) (35,664)
      
Effect of exchange rate changes on cash(822) (1,729) (9,641)
      
Net decrease in cash and cash equivalents(70,859) (136,265) 34,692 
Cash and cash equivalents, beginning of period109,860  246,125  211,433 
Cash and cash equivalents, end of period$39,001  $109,860  $246,125 
      
Supplemental disclosures of cash flow information:     
Cash paid for income taxes$3,598  $22,549  $7,612 
Cash refund for income taxes$20,733  $  $ 
Cash paid for interest$666  $3,258  $55,957 
      
Supplemental disclosures of non-cash investing and financing activities:     
Supplemental disclosures of non-cash investing and financing activities:     
Accrued dividends on Series A Convertible Participating Perpetual Preferred Stock$22,005  $7,075  $ 
Issuance of common stock in connection with Intralinks acquisition$  $  $4,700 
      
Cash and cash equivalents per Consolidated Balance Sheets$38,990  $103,771  $156,299 
Restricted cash$11  $6,089  $89,826 
Total cash, cash equivalents and restricted cash$39,001  $109,860  $246,125 


SYNCHRONOSS TECHNOLOGIES, INC.

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

  Three Months Ended Dec 31, Twelve Months Ended Dec 31,
  2019 2018 2019 2018
Non-GAAP financial measures and reconciliation:        
GAAP Revenue $90,588  $82,102  $308,749  $325,839 
Less: Cost of revenues 42,449  31,014  150,407  158,802 
Gross Profit 48,139  51,088  158,342  167,037 
Add / (Less):        
Stock-based compensation expense 782  1,035  2,928  3,447 
Restructuring and cease-use lease expense     405   
Cumulative adjustment to STI receivable     26,044   
Adjusted Gross Profit $48,921  $52,123  $187,719  $170,484 
Adjusted Gross Margin 54.0% 63.5% 60.8% 52.3%
         
GAAP Net loss attributable to Synchronoss $(14,671) $(101,909) $(136,720) $(243,748)
Add / (Less):        
Stock-based compensation expense 5,222  7,216  22,250  22,038 
Acquisition costs   38  (230) 149 
Restructuring and cease-use lease expense 17  4,539  7,446  8,425 
Amortization expense 5,610  8,472  24,683  25,122 
Non-GAAP Expenses attributable to Non-Controlling Interest   (523) (76) (1,269)
One-Time Expenses due to Restatement, etc. 1,320  3,638  2,826  19,608 
Cumulative adjustment to STI receivable     26,044   
Income Tax Effect at Statutory Tax Rates   (2,308)   (7,239)
Non-GAAP Net loss from continuing operations attributable to Synchronoss $(2,502) $(80,837) $(53,777) $(176,914)
         
Diluted Non-GAAP Net loss from continuing operations per share $(0.06) $(2.04) $(1.32) $(4.39)
         
Weighted shares outstanding - Basic 41,085  39,612  40,694  40,277 


SYNCHRONOSS TECHNOLOGIES, INC.

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

  Three Months Ended Twelve Months Ended
  Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Dec 31, 2019 Dec 31, 2018
               
Net (loss) income attributable to Synchronoss $(101,909) $(27,587) $(25,030) $(69,432) $(14,671) $(136,720) $(243,748)
Add / (Less):              
Restructuring and cease-use lease expense 3,950  740  474  6,215  17  7,446  12,375 
Depreciation and amortization 47,324  20,143  20,269  18,508  18,116  77,036  117,654 
Interest income (252) (189) (299) (228) (542) (1,258) (7,770)
Interest Expense 976  585  463  203  104  1,355  4,911 
Gain on Extinguishment of debt (1,760) (387) (430) (5)   (822) (1,760)
Other Income (expense), net 65,737  (463) 24  422  (7,372) (7,389) 74,917 
Equity method investment loss 28,671  1,243  376      1,619  28,600 
Provision (benefit) for income taxes (16,290) (1,391) (1,844) 9,849  (4,446) 2,168  (17,894)
Net (loss) income attributable to noncontrolling interests (6,715) 313  593  25  194  1,125  (8,837)
Preferred dividend 7,517  7,537  7,859  8,194  8,544  32,134  25,593 
Stock-based compensation expense 5,566  5,554  5,474  6,000  5,222  22,250  27,604 
Acquisition costs 109  (188) (42)     (230) 258 
Cumulative adjustment to STI receivable       26,044    26,044   
One-Time Expenses due to Restatement, etc. 800  720  782  4  1,320  2,826  20,408 
Net income from discontinued operations, net of taxes (18,288)           (18,288)
Adjusted EBITDA (non-GAAP) $15,436  $6,630  $8,669  $5,799  $6,486  $27,584  $14,023 


  Three Months Ended Dec 31, Twelve Months Ended Dec 31,
  2019 2018 2019 2018
         
Net Cash (used in) provided by operating activities $20,004  $29,293  $31,843  $(31,369)
Add / (Less):        
Capitalized software (3,719) (3,360) (13,008) (14,372)
Property and equipment (1,106) (3,091) (8,183) (11,656)
Free Cashflow $15,179  $22,842  $10,652  $(57,397)
Add: One-Time Expenses due to Restatement, etc. 1,320  800  2,826  20,408 
Adjusted Free Cashflow $16,499  $23,642  $13,478  $(36,989)

 

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Source: Synchronoss Technologies, Inc.