Synchronoss Reports Second Quarter Revenue of $71.5 Million and Adjusted EBITDA of $13.3 Million, Up 15% Year Over Year

Rhea-AI Summary

Synchronoss Technologies reported Q2 2021 revenue of $71.5 million, a 6.5% decline year-over-year. Recurring revenue accounted for 87% of total revenue. The company posted a GAAP net loss of $23.9 million ($0.54 per share) and a non-GAAP net loss of $11.9 million ($0.27 per share). Adjusted EBITDA was $13.3 million, while cash reserves stood at $32.6 million. The company successfully completed a recapitalization that is expected to yield over 50% in savings for 2021. Synchronoss reiterated its 2021 revenue guidance of $275-285 million.

Positive

• Recapitalization expected to reduce 2021 financial obligations by over 50%.
• Adjusted EBITDA increased by 15% year-over-year to $13.3 million.
• Cloud solution subscriber growth exceeded expectations.
• Signed a new commercial agreement for Cloud solutions, bringing total new customers to three this year.

Negative

• Revenue declined by 6.5% compared to Q2 2020.
• GAAP net loss increased by 136% year-over-year.
• First half 2021 revenue down 10.8% year-over-year.

Recent Recapitalization Provides Flexibility To Support Long-Term Profitable Growth

BRIDGEWATER, N.J., Aug. 09, 2021 (GLOBE NEWSWIRE) -- Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and innovator in cloud, messaging, and digital solutions, today announced financial results for its second quarter ended June 30, 2021.

Second Quarter Highlights & Corporate Updates:

• Revenue for the quarter was $71.5 million.
• Recurring revenue for the quarter represented 87% of total GAAP revenue.
• GAAP net loss for the quarter was $23.9 million or $0.54 per share.
• Non-GAAP net loss for the quarter was $11.9 million, or $0.27 per share.
• Adjusted EBITDA for the quarter was $13.3 million.
• Cash and cash equivalents were $32.6 million at quarter end.
• Completed recapitalization with full year 2021 pro forma savings greater than 50% over the previous capital structure.
• Cloud solution subscriber growth continues to exceed expectations.
• Signed commercial agreement with Kitamura for our Cloud solution, our third new Cloud customer this year.
• Lou Ferraro, EVP of Financial Operations and Chief Human Resources Officer named Acting CFO.
• Reiterates full-year 2021 revenue and adjusted EBITDA guidance.
  

Commenting on the results, Jeff Miller, President and CEO of Synchronoss, said:

“I am pleased to report another solid quarter for Synchronoss and to share that we completed a comprehensive recapitalization during the quarter, that reduces our projected 2021 full year pro forma financial obligations by over 50%. With this recapitalization complete, we believe we will enable long-term sustainable growth in both revenue and profits, and as a result, deliver increased shareholder value. I want to thank the entire team at Synchronoss for their continued contributions to make these results possible.” He continued, “I also want to welcome Lou Ferraro as our Acting CFO. He has been with the Company for three and a half years most recently as our Executive Vice President of Financial Operations and Chief Human Resources Officer, and has spearheaded many of the improvements in the company’s operating expenses and financial controls.”

		Three Months Ended June 30,
(in thousands)		2021					2020					% Change
Revenues		$	71,532				$	76,535				(6.5	)	%
Loss from continuing operations, before taxes		(2,621		)			(8,666		)			69.8		%
Net loss1		(23,946		)			(10,148		)			(136.0	)	%
Adjusted EBITDA		$	13,277				$	11,549				15.0		%

		Six Months Ended June 30,
(in thousands)		2021					2020					% Change
Revenues		$	137,031				$	153,657				(10.8	)	%
Loss from continuing operations, before taxes		(15,150		)			(24,448		)			38.0		%
Net loss1		(46,506		)			(22,423		)			(107.4	)	%
Adjusted EBITDA		$	18,814				$	13,307				41.4		%

________________________

¹  Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption.

Lou Ferraro, Acting CFO of Synchronoss, added:

"We are pleased with our continued growth in our Cloud solution subscribers, the addition of our third new Cloud customer this year, and improved operating results. With my expanded responsibilities, I look forward to continuing our focus on profitable revenue growth, continued cost management, and delivering improved shareholder value."

Reiterating full year 2021 Guidance

Synchronoss is reiterating its revenue and adjusted EBITDA guidance for the full year 2021. The Company continues to expect revenue for the full year 2021 to be in a range of $275-285 million, and adjusted EBITDA in the range of $32-37 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 877-930-7767 or +1 253-336-7416 (International) and give the conference ID 1484858.

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 855-859-2056 and enter the conference ID, 1484858.

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, adjusted EBITDA, 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 include restructuring and cease-use lease expense, litigation, remediation and refiling costs 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. Investors are encouraged to also review the Balance Sheet, Statement of Operations, and Statement of Cash Flow. 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 Technologies (NASDAQ: SNCR) builds software that empowers companies around the world to connect with their subscribers in trusted and meaningful ways. The company’s collection of products helps streamline networks, simplify onboarding, and engage subscribers to unleash new revenue streams, reduce costs and increase speed to market. Hundreds of millions of subscribers trust Synchronoss products to stay in sync with the people, services and content they love. That’s why more than 1,500 talented Synchronoss employees worldwide strive each day to reimagine a world in sync. Learn more 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 impact of investments and legal proceedings involving the Company, including the investigations by the Securities and Exchange Commission and the Department of Justice described in the Company’s 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, 2020, and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, which are 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)

		June 30, 2021				December 31, 2020
ASSETS
Cash and cash equivalents		$	32,570			$	33,671
Accounts receivable, net		44,202				47,849
Operating lease right-of-use assets		29,703				34,538
Goodwill		229,610				232,771
Other Assets		127,605				133,426
Total assets		$	463,690			$	482,255
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued expenses		$	72,777			$	82,075
Debt, current		—				10,000
Deferred revenues		41,095				45,614
Debt, non-current		117,189				—
Operating lease liabilities, non-current		40,315				44,273
Other liabilities		17,852				19,370
Preferred Stock		72,506				237,641
Stockholders’ equity		101,956				43,282
Total liabilities and stockholders’ equity		$	463,690			$	482,255

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,
		2021					2020					2021					2020
Net revenues		$	71,532				$	76,535				$	137,031				$	153,657
Costs and expenses:
Cost of revenues1		27,142					29,480					55,779					64,951
Research and development		17,197					19,096					34,594					38,884
Selling, general and administrative		21,909					24,640					39,837					50,984
Restructuring charges		877					4,493					1,590					5,943
Depreciation and amortization		8,485					10,284					18,352					21,640
Total costs and expenses		75,610					87,993					150,152					182,402
Loss from continuing operations		(4,078		)			(11,458		)			(13,121		)			(28,745		)
Interest income		25					1,509					30					1,568
Interest expense		(144		)			(84		)			(239		)			(329		)
Other Income (expense)		1,576					1,367					(1,820		)			3,058
Loss from continuing operations, before taxes		(2,621		)			(8,666		)			(15,150		)			(24,448		)
Benefit for income taxes		201					7,972					364					20,404
Net loss from continuing operations		(2,420		)			(694		)			(14,786		)			(4,044		)
Net income (loss) attributable to redeemable noncontrolling interests		(50		)			(165		)			286					(182		)
Preferred stock dividend		(21,476		)			(9,289		)			(32,006		)			(18,197		)
Net loss attributable to Synchronoss		$	(23,946	)			$	(10,148	)			$	(46,506	)			$	(22,423	)
Earnings (loss) per share
Basic		$	(0.54	)			$	(0.24	)			$	(1.07	)			$	(0.54	)
Diluted		$	(0.54	)			$	(0.24	)			$	(1.07	)			$	(0.54	)
Weighted-average common shares outstanding:
Basic			44,131					41,697					43,438					41,482
Diluted			44,131					41,697					43,438					41,482

________________________
¹   Cost of revenues excludes depreciation and amortization which are shown separately.

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

	Six Months Ended June 30,
	2021					2020
Net loss continuing operations	$	(14,786	)			$	(4,044	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Non-cash items	22,584					30,122
Changes in operating assets and liabilities:	369					(24,470		)
Net cash provided by (used in) operating activities	8,167					1,608
Investing activities:
Purchases of fixed assets	(1,250		)			(424		)
Purchases of intangible assets and capitalized software	(10,959		)			(8,685		)
Other investing activities	550					2,175
Net cash used in investing activities	(11,659		)			(6,934		)
Net cash provided by financing activities	2,687					9,991
Effect of exchange rate changes on cash	(296		)			(895		)
Net decrease in cash and cash equivalents	(1,101		)			3,770
Cash, restricted cash and cash equivalents, beginning of period	33,671					39,001
Cash, restricted cash and cash equivalents, end of period	$	32,570				$	42,771

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

		Three Months Ended June 30,										Six Months Ended June 30,
		2021					2020					2021					2020
Non-GAAP financial measures and reconciliation:
GAAP Revenue		$	71,532				$	76,535				$	137,031				$	153,657
Less: Cost of revenues		27,142					29,480					55,779					64,951
Gross Profit		44,390					47,055					81,252					88,706
Add / (Less):
Stock-based compensation expense		379					641					857					1,394
Restructuring, transition and cease-use lease expense		—					243					27					283
Adjusted Gross Profit		44,769					47,939					82,136					90,383
Adjusted Gross Margin		62.6			%		62.6			%		59.9			%		58.8			%
		Three Months Ended June 30,										Six Months Ended June 30,
		2021					2020					2021					2020
GAAP Net loss attributable to Synchronoss		(23,946		)			(10,148		)			(46,506		)			(22,423		)
Add / (Less):
Stock-based compensation expense		2,345					4,987					5,066					10,156
Restructuring, transition and cease-use lease expense		2,918					7,003					4,975					8,699
Amortization expense		3,206					4,062					6,815					8,696
Litigation, remediation and refiling costs		3,607					733					3,542					1,557
Non-GAAP Net (loss) income attributable to Synchronoss		$	(11,870	)			$	6,637				$	(26,108	)			$	6,685
Diluted Non-GAAP Net (loss) income per share		$	(0.27	)			$	0.16				$	(0.60	)			$	0.16
Weighted shares outstanding - Dilutive		44,131					41,697					43,438					41,482

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

		Three Months Ended																									Six Months Ended
		Jun 30, 2021					Mar 31, 2021					Dec 31, 2020					Sep 30, 2020					Jun 30, 2020					Jun 30, 2021					Jun 30, 2020
Net loss attributable to Synchronoss		$	(23,946	)			$	(22,560	)			$	(10,892	)			$	(15,367	)			$	(10,148	)			$	(46,506	)			$	(22,423	)
Add / (Less):
Stock-based compensation expense		2,345					2,721					(3,410		)			4,391					4,987					5,066					10,156
Restructuring, transition and cease-use lease expense		2,918					2,057					1,222					6,580					7,003					4,975					8,699
Litigation, remediation and refiling costs, net		3,607					(65		)			1,145					1,943					733					3,542					1,557
Depreciation and amortization		8,485					9,867					9,834					12,212					10,284					18,352					21,640
Interest income		(25		)			(5		)			(9		)			(20		)			(1,509		)			(30		)			(1,567		)
Interest Expense		144					95					75					72					84					239					329
Other Income, net		(1,576		)			3,396					(3,793		)			(2,684		)			(1,367		)			1,820					(3,059		)
Provision (benefit) for income taxes		(201		)			(163		)			2,039					(8,744		)			(7,972		)			(364		)			(20,404		)
Net loss attributable to noncontrolling interests		50					(336		)			101					60					165					(286		)			182
Preferred dividend1		21,476					10,530					10,099					9,685					9,289					32,006					18,197
Adjusted EBITDA (non-GAAP)		$	13,277				$	5,537				$	6,411				$	8,128				$	11,549				$	18,814				$	13,307

________________________

¹     Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption.

		Three Months Ended June 30,										Six Months Ended June 30,
		2021					2020					2021					2020
Net Cash (used in) provided by operating activities		$	5,906				$	16,624				$	8,167				$	1,608
Add / (Less):
Capitalized software		(5,917		)			(4,257		)			(10,959		)			(8,685		)
Property and equipment		(529		)			(175		)			(1,250		)			(424		)
Free Cashflow		(540		)			12,192					(4,042		)			(7,501		)
Add: Litigation, remediation and refiling costs		3,607					733					3,542					1,557
Adjusted Free Cashflow		$	3,067				$	12,925				$	(500	)			$	(5,944	)

FAQ

What were Synchronoss Technologies' Q2 2021 financial results?

Synchronoss reported Q2 2021 revenue of $71.5 million, a 6.5% decline year-over-year, with a GAAP net loss of $23.9 million.

What is Synchronoss' revenue guidance for 2021?

Synchronoss has reiterated its revenue guidance for 2021, expecting it to be in the range of $275-285 million.

How did Adjusted EBITDA perform in Q2 2021 for SNCR?

Adjusted EBITDA for Q2 2021 was $13.3 million, reflecting a 15% increase from the previous year.

What strategic moves did Synchronoss make in Q2 2021?

The company completed a recapitalization aimed at reducing its financial obligations by over 50%.

What is the status of Synchronoss’ cloud solutions subscriber growth?

Synchronoss reported that its Cloud solution subscriber growth continues to exceed expectations.