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Synchronoss Reports Third Quarter Revenue of $69.8 Million and Raises Adjusted EBITDA Guidance For 2021

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Synchronoss Technologies (NASDAQ: SNCR) reported Q3 2021 revenues of $69.8 million, a slight 1.6% increase from Q3 2020. Cloud subscribers grew by 16% year-over-year, highlighting growth in the Cloud segment. Recurring revenue constituted 83% of total revenue. Net loss improved to $9.8 million from $15.4 million a year ago. Adjusted EBITDA increased by 51% to $12.3 million, prompting an upward revision of full-year adjusted EBITDA guidance to $39-$43 million. New commercial agreements with Telkomsel and a major Canadian telecommunications firm were also secured.

Positive
  • Cloud subscribers increased by 16% year-over-year, up from 12%.
  • Adjusted EBITDA rose 51% to $12.3 million.
  • Full-year adjusted EBITDA guidance increased to $39-$43 million from $32-$37 million.
Negative
  • Revenue declined 7% year-to-date compared to the previous year.
  • GAAP net loss for the quarter was $9.8 million, despite improvement.

Cloud Subscribers Grew 16% Year-Over-Year Versus 12% In the Prior Year

BRIDGEWATER, N.J., Nov. 08, 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 third quarter ended September 30, 2021.

Third Quarter Highlights:

  • Revenue for the quarter was $69.8 million.
  • Recurring revenue for the quarter represented 83% of total revenue.
  • Cloud subscribers grew 16% year-over-year versus 12% in the prior year.
  • Signed a commercial agreement with Telkomsel, Indonesia’s largest wireless carrier with 170 million subscribers, for our Cloud solution, the fourth new Cloud customer signed this year.
  • Also signed a significant Digital contract with a Major Canadian Telecommunications & Media Company in the quarter.
  • GAAP net loss for the quarter was $9.8 million or $0.11 per share, up from a loss of $15.4 million or $0.36 per share in the prior year.
  • Non-GAAP net income for the quarter was $7.8 million, or $0.09 per share, up from $1.7 million, or $0.04 per share in the prior year.
  • Adjusted EBITDA for the quarter was $12.3 million, up 51% year over year.
  • Cash and cash equivalents were $24.1 million at quarter end.
  • Full-year 2021 Adjusted EBITDA guidance raised to $39-43 million from $32-37 million.

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

“I am pleased to report strong Q3 results that were driven by sustained year-over-year growth in our Cloud and Digital businesses,” said Jeff Miller, President, and CEO of Synchronoss. “I would like to highlight Cloud subscriber growth which grew 16% year-over-year, up from 12% in the prior year. We are providing this metric for the first time publicly to provide evidence of the strong underlying fundamentals driving Cloud revenue growth, our largest and most strategic business. With the closing of a significant Cloud win with Telkomsel, our fourth Cloud win year to date, I believe we are in a position to continue Cloud subscriber growth in the coming quarters."

  Three Months Ended September 30,
(in thousands) 2021 2020 % Change
Revenues $69,753  $68,636  1.6%
Loss from continuing operations, before taxes (15,091) (14,366) (5.0)%
Net loss (9,831) (15,367) 36.0%
Adjusted EBITDA $12,288  $8,128  51.2%


  Nine Months Ended September 30,
(in thousands) 2021 2020 % Change
Revenues $206,784  $222,293  (7.0)%
Loss from continuing operations, before taxes (30,241) (38,814) 22.1%
Net loss1 (56,337) (37,790) (49.1)%
Adjusted EBITDA $31,102  $21,435  45.1%

___________________________

1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021.

Lou Ferraro, EVP of Financial Operations and CHRO, added:

“We are pleased that our continued growth in Cloud subscribers and improved operating results are allowing us to raise our Adjusted EBITDA guidance for 2021. We continue to focus on profitable revenue growth, diligently managing our cost structure, and delivering improved shareholder value.”

2021 Adjusted EBITDA Guidance

The company continues to expect revenue for full year 2021 to be in the range of $275 to $285 million and is raising its adjusted EBITDA guidance for full year 2021 to $39-$43 million from $32-$37 million, representing adjusted EBITDA growth of 40% to 55% year-over-year, respectively.

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 800-377-9510 or +1 334-454-0059 (International) and give the conference ID number, 6767984.

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.

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 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 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)

  September 30, 2021 December 31, 2020
ASSETS    
Cash and cash equivalents $24,141  $33,671 
Accounts receivable, net 39,073  47,849 
Operating lease right-of-use assets 27,629  34,538 
Goodwill 226,840  232,771 
Other assets 130,692  133,426 
Total assets $448,375  $482,255 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Accounts payable and accrued expenses $77,050  $82,075 
Debt, current   10,000 
Deferred revenues 32,351  45,614 
Debt, non-current 117,494   
Operating lease liabilities, non-current 38,013  44,273 
Other liabilities 17,868  19,370 
Preferred Stock 72,505  237,641 
Stockholders’ equity 93,094  43,282 
Total liabilities and stockholders’ equity $448,375  $482,255 


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,
  2021 2020 2021 2020
Net revenues $69,753  $68,636  $206,784  $222,293 
Costs and expenses:        
Cost of revenues1 27,245  28,452  83,024  93,403 
Research and development 15,368  20,885  49,962  59,769 
Selling, general and administrative 27,953  23,265  67,790  74,249 
Restructuring charges 1,485  820  3,075  6,763 
Depreciation and amortization 8,215  12,212  26,567  33,852 
Total costs and expenses 80,266  85,634  230,418  268,036 
Loss from continuing operations (10,513) (16,998) (23,634) (45,743)
Interest income 24  20  54  1,587 
Interest expense (2,933) (72) (3,172) (401)
Other Income (expense) (1,669) 2,684  (3,489) 5,743 
Loss from continuing operations, before taxes (15,091) (14,366) (30,241) (38,814)
Benefit for income taxes 6,982  8,744  7,346  29,148 
Net loss from continuing operations (8,109) (5,622) (22,895) (9,666)
Net income (loss) attributable to redeemable noncontrolling interests   (60) 286  (242)
Preferred stock dividend (1,722) (9,685) (33,728) (27,882)
Net loss attributable to Synchronoss $(9,831) $(15,367) $(56,337) $(37,790)
         
Earnings (loss) per share        
Basic $(0.11) $(0.36) $(0.98) $(0.90)
Diluted $(0.11) $(0.36) $(0.98) $(0.90)
Weighted-average common shares outstanding:        
Basic 85,646  42,360  57,662  41,777 
Diluted 85,646  42,360  57,662  41,777 

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


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

 Nine Months Ended September 30,
 2021 2020
Net loss continuing operations$(22,895) $(9,666)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Non-cash items33,830  52,835 
Changes in operating assets and liabilities:(5,384) (34,508)
Net cash provided by (used in) operating activities5,551  8,661 
    
Investing activities:   
Purchases of fixed assets(1,386) (571)
Purchases of intangible assets and capitalized software(17,004) (12,610)
Other investing activities550  1,775 
Net cash used in investing activities(17,840) (11,406)
    
Net cash provided by financing activities2,687  9,991 
Effect of exchange rate changes on cash72  112 
Net decrease in cash and cash equivalents(9,530) 7,358 
    
Cash, restricted cash and cash equivalents, beginning of period33,671  39,001 
Cash, restricted cash and cash equivalents, end of period$24,141  $46,359 


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

  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
Non-GAAP financial measures and reconciliation:        
GAAP Revenue $69,753  $68,636  $206,784  $222,293 
Less: Cost of revenues 27,245  28,452  83,024  93,403 
Gross Profit 42,508  40,184  123,760  128,890 
Add / (Less):        
Stock-based compensation expense 432  505  1,289  1,899 
Restructuring, transition and cease-use lease expense 405  89  432  372 
Adjusted Gross Profit 43,345  40,778  125,481  131,161 
Adjusted Gross Margin 62.1% 59.4% 60.7% 59.0%
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
GAAP Net loss attributable to Synchronoss (9,831) (15,367) (56,337) (37,790)
Add / (Less):        
Stock-based compensation expense 2,289  4,391  7,355  14,547 
Restructuring, transition and cease-use lease expense 2,981  6,580  7,956  15,280 
Amortization expense 3,036  4,107  9,851  20,207 
Litigation and remediation costs, net 9,316  1,943  12,858  3,500 
Non-GAAP Net (loss) income attributable to Synchronoss $7,791  $1,654  $(18,317) $15,744 
         
Diluted Non-GAAP Net (loss) income per share $0.09  $0.04  $(0.32) $0.38 
         
Weighted shares outstanding - Dilutive 85,646  42,360  57,662  41,777 


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

  Three Months Ended Nine Months Ended
  Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020
               
Net loss attributable to Synchronoss $(9,831) $(23,946) $(22,560) $(10,892) $(15,367) $(56,337) $(37,790)
Add / (Less):              
Stock-based compensation expense 2,289  2,345  2,721  (3,410) 4,391  7,355  14,547 
Restructuring, transition and cease-use lease expense 2,981  2,918  2,057  1,222  6,580  7,956  15,279 
Litigation and remediation costs, net 9,316  3,607  (65) 1,145  1,943  12,858  3,500 
Depreciation and amortization 8,215  8,485  9,867  9,834  12,212  26,567  33,852 
Interest income (24) (25) (5) (9) (20) (54) (1,587)
Interest Expense 2,933  144  95  75  72  3,172  401 
Other Income, net 1,669  (1,576) 3,396  (3,793) (2,684) 3,489  (5,743)
Provision (benefit) for income taxes (6,982) (201) (163) 2,039  (8,744) (7,346) (29,148)
Net loss attributable to noncontrolling interests   50  (336) 101  60  (286) 242 
Preferred dividend1 1,722  21,476  10,530  10,099  9,685  33,728  27,882 
Adjusted EBITDA (non-GAAP) $12,288  $13,277  $5,537  $6,411  $8,128  $31,102  $21,435 

___________________________

1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021.

  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
         
Net Cash (used in) provided by operating activities $(2,616) $7,053  $5,551  $8,661 
Add / (Less):        
Capitalized software (6,045) (3,926) (17,004) (12,610)
Property and equipment (136) (147) (1,386) (571)
Free Cashflow (8,797) 2,980  (12,839) (4,520)
Add: Litigation and remediation costs, net 1,816  1,943  5,358  3,500 
Adjusted Free Cashflow $(6,981) $4,923  $(7,481) $(1,020)

 


FAQ

What were Synchronoss Technologies' Q3 2021 revenues?

Synchronoss Technologies reported Q3 2021 revenues of $69.8 million.

How much did adjusted EBITDA grow in Q3 2021 for SNCR?

Adjusted EBITDA increased by 51% to $12.3 million in Q3 2021.

What is the cloud subscriber growth rate for SNCR in 2021?

Cloud subscribers grew by 16% year-over-year as of Q3 2021.

What is SNCR's adjusted EBITDA guidance for the full year 2021?

SNCR raised its adjusted EBITDA guidance to $39-$43 million for full-year 2021.

Who did Synchronoss sign agreements with in Q3 2021?

Synchronoss signed agreements with Telkomsel and a major Canadian telecommunications company.

Synchronoss Technologies Inc

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