Synchronoss Successfully Completes Post-Divestiture Cost Removals, Resulting in Approximately $15 Million in Annual Savings
- Synchronoss expects to meet or exceed its 2023 revenue and adjusted EBITDA guidance.
- The company completed the consolidation of standalone Cloud operations, reducing $15 million in annual costs.
- Cost reductions followed the strategic divestiture of non-core assets in 2023.
- Synchronoss projects total revenue growth between 5% and 8% for 2024, with gross margins exceeding 75%.
- The CEO emphasized the successful transition to a Cloud solutions software provider, focusing on improved cash flow generation and financial stability.
- None.
Insights
The announcement by Synchronoss Technologies regarding its financial outlook for 2023 and 2024 is a critical piece of information for stakeholders. The company's expectation to meet or exceed the upper end of its guidance range suggests strong performance and operational efficiency. This is further substantiated by the successful consolidation of its standalone Cloud operations, which resulted in significant cost reductions, including a 12% decrease in employee-related expenses. The focus on a Cloud-based business model appears to be paying dividends, with the expectation of a solidified revenue stream, as nearly 90% of total revenue is anticipated to be recurring.
From a financial perspective, the projected total revenue growth of 5% to 8% and the anticipated improvement in cash flow generation for 2024 are indicators of a healthy business trajectory. However, investors should be cautious about the company's reliance on non-GAAP financial measures such as adjusted EBITDA, which exclude certain expenses that could provide a more comprehensive view of the company's financial health. The lack of a quantitative reconciliation of forecasted adjusted EBITDA to GAAP net income due to 'unreasonable efforts' may raise questions regarding the transparency of the company's financial reporting.
The strategic divestiture of non-core assets and the subsequent focus on Cloud solutions software provision is a strategic move that aligns with current market trends towards digital transformation and cloud computing. Synchronoss' emphasis on strengthening its Cloud solutions offering is likely to resonate well with the increasing demand for scalable and efficient cloud services. The company's improved cash balance at the end of 2023 indicates a robust liquidity position, which is essential for funding future growth initiatives and weathering potential market downturns.
With gross margins expected to be greater than 75% and adjusted EBITDA margins surpassing 25%, Synchronoss is positioning itself competitively within the software and cloud services industry. However, it's important to monitor how the reduction in workforce impacts the company's innovation capabilities and customer service, as these are critical factors for sustainable growth in the technology sector.
The consolidation and cost-cutting measures undertaken by Synchronoss Technologies reflect a broader economic trend of businesses seeking to streamline operations and focus on core competencies to maximize profitability. The company's improved financial outlook and strengthened cash balance suggest a positive economic impact from these strategies. However, the broader economic context, including interest rates, inflation and economic growth rates, could influence the company's performance. An uptick in economic activity could bolster Synchronoss' growth prospects, while a downturn could challenge its revenue and cash flow targets.
Additionally, the company's projected growth rates and high gross margins may indicate a competitive advantage in the Cloud solutions market. Yet, it's important to consider the sustainability of these margins in a market characterized by rapid technological change and increasing competition. The ability to adapt to economic and industry shifts will be crucial for Synchronoss' long-term success.
Company Expects to Report Revenue and Adjusted EBITDA Meeting or Exceeding the Upper End of Previously Communicated Guidance Ranges for 2023
BRIDGEWATER, N.J., Feb. 15, 2024 (GLOBE NEWSWIRE) -- Synchronoss Technologies, Inc. (“Synchronoss” or the “Company”) (Nasdaq: SNCR), a leading global provider of personal Cloud software and services, today announced it has completed the consolidation of its standalone Cloud operations, removing approximately
Completion of Key Cost Reductions
Following the strategic divestiture of non-core assets in November 2023, Synchronoss management shared an initial expectation to further improve the Company’s continuing operations cost profile by eliminating approximately
Today, Synchronoss confirmed the successful elimination of approximately
2023 Financial Outlook
Total Revenue: For the full year 2023, Synchronoss anticipates meeting or exceeding the upper end of its revenue guidance, with expectations previously set between
Adjusted EBITDA: For the full year 2023, the Company also anticipates meeting or exceeding the upper end of its adjusted EBITDA guidance, with expectations previously set between
Cash and Cash Equivalents: As of December 31, 2023, Synchronoss had a strengthened cash balance of
2024 Financial Outlook
Looking to 2024, Synchronoss is also reiterating the following growth expectations:
- Total revenue growth between
5% and8% - Gross margins of greater than
75% - Adjusted EBITDA margins surpassing
25% - Significant improvement in cash flow generation
Management Commentary
Jeff Miller, CEO of Synchronoss, stated: “2023 marked a significant transformational period for Synchronoss, culminating in our successful transition to a Cloud solutions software provider after strategically divesting our non-core Messaging and NetworkX businesses in the fourth quarter. This strategic shift to Cloud solutions has led to a significant reduction in annual costs by an estimated
“As we look to 2024, we expect a more predictable revenue performance, with recurring revenue nearing
Conference Call
Synchronoss plans to report its full financial results for the fiscal fourth quarter and full year 2023 in March 2024, which will be accompanied by a conference call to discuss the results and address questions from investors and analysts. The conference call details will be announced prior to the event.
* Synchronoss has not provided a quantitative reconciliation of forecasted adjusted EBITDA to forecasted GAAP net income (loss) or to forecasted GAAP income (loss) before income taxes within this earnings release because Synchronoss is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include but are not limited to income taxes which are directly impacted by unpredictable fluctuations in the market price of Synchronoss’ stock.
Non-GAAP Financial Measures
Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP although this non-GAAP financial information is derived from numbers that have been prepared in accordance with GAAP. This information includes adjusted EBITDA. The Company believes that the exclusion of non-routine cash-settled expenses, such as Litigation and Remediation costs (net) and Restructuring costs in the calculation of adjusted free cash flow which do not correlate to the operation of its business, provide for more useful period-to-period comparisons of the Company’s results. 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, restructuring, transition and cease-use lease expense, litigation, remediation and refiling costs and depreciation and amortization, interest income, interest expense, loss (gain) on divestitures, other (income) expense, provision (benefit) for income taxes, and net loss (income) attributable to noncontrolling interests, and preferred dividends.
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.
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 federal securities law. These forward-looking statements reflect our views as of the date of this press release with respect to, among other things, future events and our financial performance and prospects. These statements are often, though not always made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “will,” “seek,” “estimate,” “project,” “projection,” “annualized,” “strive,” “goal,” “target,” “outlook,” “aim,” “expect,” “plan,” “anticipate,” “intends,” “believes,” “potential” or “continue” or other similar expressions that are intended to identify forward-looking statements. These forward-looking statements are not historical facts and are based on current expectations and projections about future events and financial trends that management believes may affect its business, financial condition and results of operations, any of which, by their nature, are uncertain and beyond our control. Accordingly, we caution you that any such forward looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Except as otherwise indicated, 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 ability to successfully execute on its cloud focused strategy expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources, the impact of legal proceedings involving the Company, including the litigation by the Securities and Exchange Commission against certain former employees of the Company 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, 2022, and the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023, which are on file with the SEC and available on the SEC’s website at www.sec.gov. Additional factors may be described in those sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, expected to be filed with the SEC in the first quarter of 2024. 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, except as required by law.
About Synchronoss
Synchronoss Technologies (Nasdaq: SNCR), a global leader in personal Cloud solutions, empowers service providers to establish secure and meaningful connections with their subscribers. Our SaaS Cloud platform simplifies onboarding processes and fosters subscriber engagement, resulting in enhanced revenue streams, reduced expenses, and faster time-to-market. Millions of subscribers trust Synchronoss to safeguard their most cherished memories and important digital content. Explore how our Cloud-focused solutions redefine the way you connect with your digital world at www.synchronoss.com.
Media Relations Contact:
Domenick Cilea
Springboard
dcilea@springboardpr.com
Investor Relations Contact:
Matt Glover and Tom Colton
Gateway Group, Inc.
SNCR@gateway-grp.com
FAQ
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