Synchronoss Technologies Reports 40% Increase Year Over Year in Third Quarter Adjusted EBITDA; Raises Adjusted EBITDA Guidance For Full Year 2020

Nachrichtenquelle: globenewswire
09.11.2020, 22:05  |  156   |   |   

Company Renews Largest Cloud Customer, Verizon, to Five Year Contract Extension During the Third Quarter

BRIDGEWATER, N.J., Nov. 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 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 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:
Todd Kehrli or Joo-Hun Kim
MKR Investor Relations
623-745-4046
investor@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 )

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Disclaimer

Synchronoss Technologies Reports 40% Increase Year Over Year in Third Quarter Adjusted EBITDA; Raises Adjusted EBITDA Guidance For Full Year 2020 Company Renews Largest Cloud Customer, Verizon, to Five Year Contract Extension During the Third QuarterBRIDGEWATER, N.J., Nov. 09, 2020 (GLOBE NEWSWIRE) - Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and innovator in cloud, …

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