- Quarterly revenue of $29.4 million
- Annual revenue of $111.8 million
- Quarterly adjusted EBITDA of $2.8 million
- Annual adjusted EBITDA of $6.5 million
- 3-year agreement with Google renewed on same revenue-share
terms
- $5 million stock repurchase program authorized
- CEO succession plan announced
Synacor Inc. (Nasdaq:SYNC), the leading provider of next-gen
startpages, homescreens, award-winning TV Everywhere solutions and
cloud-based Identity Management (IDM) services, across multiple
devices for cable, satellite, telecom and consumer electronics
companies in the U.S. and abroad, today announced its financial
results for the fourth quarter and fiscal 2013.
"Throughout 2013 and most intensively in our fourth quarter,
Synacor made significant progress developing new multi-device
touchscreen and mobile products for use in domestic and
international markets. We're particularly excited about our latest
Android homescreen, TV Everywhere search & discovery
interfaces, and authentication offerings. We plan to aggressively
rollout these new products during the next two quarters of this
year and we're encouraged by the early market reception," said
Synacor President and CEO Ron Frankel. "Continuing our Google
partnership for the next three years underscores the strength of
our offerings. Synacor is well-positioned to seize the attractive
market opportunities for our products, and the Board's
authorization of a $5 million stock repurchase program reinforces
that confidence."
Q4 2013 Financial Results
Revenue: For the fourth quarter of 2013, total
revenue was $29.4 million, compared to $32.2 million in the fourth
quarter of 2012. Search and display advertising revenue was $24.0
million, compared to $27.1 million in the fourth quarter of 2012.
Subscription-based revenue was $5.4 million, compared to $5.1
million in the fourth quarter of 2012.
Net Income: For the fourth quarter of 2013, net
income was $0.2 million, compared to net income of $0.8 million in
the fourth quarter of 2012. Diluted earnings per share, or EPS, was
$0.01. Net income includes stock-based compensation expense of $0.7
million, or $0.03 per share, in the fourth quarter of 2013, as
compared to $0.5 million, or $0.02 per share, in the fourth quarter
of 2012. The diluted EPS calculation for the fourth quarter of 2013
is based on 27.6 million weighted average fully diluted common
shares outstanding. The diluted EPS calculation for the fourth
quarter of 2012 was based on 28.6 million shares.
Adjusted EBITDA: For the fourth quarter of
2013, adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA), which excludes stock-based compensation
expense, was $2.8 million, or 9% of revenue, compared to $3.5
million, or 11% of revenue, in the fourth quarter of 2012.
Key Business Metrics: For the fourth quarter of
2013, Synacor averaged 20.0 million unique visitors per month,
compared to 20.3 million in the fourth quarter of 2012. Search
queries were 158 million for the fourth quarter of 2013, compared
to 225 million in the fourth quarter of 2012. Advertising
impressions were 9.7 billion, compared to 11.7 billion in the
fourth quarter of 2012.
Cash: For the fourth quarter of 2013, Synacor
generated $4.5 million in cash from operating activities, compared
to $4.8 million in the fourth quarter of 2012.
Fiscal 2013 Financial Results
Revenue: For fiscal 2013, total revenue was
$111.8 million, compared to $122.0 million in fiscal 2012. Search
and display advertising revenue was $90.4 million, compared to
$101.6 million in fiscal 2012. Subscription-based revenue was $21.4
million, compared to $20.4 million in fiscal 2012.
Net Income: For fiscal 2013, net loss was $1.4
million, compared to net income of $3.8 million in fiscal 2012.
Diluted earnings per share, or EPS, was a loss of $0.05. Net income
includes stock-based compensation expense of $2.6 million, or $0.09
per share, in fiscal 2013, as compared to $2.0 million, or $0.07
per share, in fiscal 2012. The diluted EPS calculation for fiscal
2013 is based on 27.3 million weighted average fully diluted common
shares outstanding. The diluted EPS calculation for fiscal 2012 was
based on 28.1 million shares.
Adjusted EBITDA: For fiscal 2013, adjusted
EBITDA, which excludes stock-based compensation expense, was $6.5
million, or 6% of revenue, compared to $11.6 million, or 10% of
revenue, in fiscal 2012.
Key Business Metrics: For fiscal 2013, Synacor
averaged 19.8 million unique visitors per month, compared to 20.4
million in fiscal 2012. Search queries were 712 million for fiscal
2013, compared to 968 million in fiscal 2012. Advertising
impressions were 41.0 billion, compared to 42.2 billion in fiscal
2012.
Cash: For fiscal 2013, Synacor generated $5.2
million in cash from operating activities, compared to $14.7
million in fiscal 2012. The company ended the year with $36.4
million in cash and cash equivalents, compared to $41.9 million at
the end of the prior year.
Business Outlook
Based on information available as of March 5, 2014, the company
is providing financial guidance for the first quarter and fiscal
2014 as follows:
- Q1 2014 Guidance: Revenue for the first
quarter of 2014 is projected to be in the range of $24.0 million to
$25.0 million. For the first quarter of 2014, the company expects
to report adjusted EBITDA of ($1.2) million to ($0.7) million.
- Fiscal 2014 Guidance: Revenue for the full
year of 2014 is projected to be in the range of $100.0 million to
$105.0 million. For the full year of 2014, the company expects to
report adjusted EBITDA of $2.0 million to $5.0 million.
2014 CEO Succession Plan
Synacor also announced today it will begin the process to
identify a successor to the company's President and Chief Executive
Officer, Ron Frankel. Mr. Frankel, who has led the company since
2001, will remain in his current role until his successor is named.
Thereafter, he will remain on the Synacor Board of Directors and
continue as an advisor.
"I am incredibly proud of our team, our growth, our many
innovations, and all we have accomplished in connecting consumers
to the content and services offered by our customers and partners,
anytime, anywhere, no matter the device," said Frankel. "I have had
the privilege of being the CEO of Synacor for over a decade and I
now feel the time is right for a successor to take the company to
the next level."
"On behalf of the Board, I would like to thank Ron for his
leadership, dedication and innumerable contributions to Synacor,"
said Synacor Chairman Jordan Levy. "We respect his decision to step
down after 13 years of dedicated service and we're grateful for the
strong foundation he is leaving his successor. We have retained a
top national search firm and are confident in our ability to
attract new leadership to the company that will take us to a higher
level of growth and prosperity. We are delighted Ron has agreed to
remain fully engaged as CEO until his successor is named."
Stock Repurchase Program
Synacor announced today that its Board of Directors has
authorized a stock repurchase program under which the company may
repurchase up to $5 million of its outstanding common stock.
Synacor plans to make such purchases at prevailing prices, subject
to applicable rules and regulations of the Securities and Exchange
Commission.
Any purchases under the stock repurchase program may be made,
from time to time, in the open market, through block trades or
otherwise. The program does not obligate Synacor to acquire any
particular amount of common stock and purchases may be commenced or
suspended at any time, or from time to time, without prior notice
based on market conditions and other factors.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the fourth quarter and fiscal 2013 financial results with
the investment community. The live webcast of Synacor's earnings
conference call can be accessed at
http://investor.synacor.com/events.cfm. To participate, please
login approximately ten minutes prior to the webcast. For those
without access to the Internet, the call may be accessed toll-free
via phone at (877) 837-3911, with conference ID 4802704, or callers
outside the U.S. may dial (253) 237-1167. Following completion of
the call, a recorded webcast replay will be available on Synacor's
website through March 14, 2014. To listen to the telephone replay,
call toll-free (855) 859-2056, or callers outside the U.S. may dial
(404) 537-3406. The conference ID is 4802704.
About Synacor
Synacor's white-label platform enables cable, satellite, telecom
and consumer electronics companies to deliver TV Everywhere,
digital entertainment, cloud-based services and apps to their
end-consumers across multiple devices, strengthening those
relationships while monetizing the engagement. In addition, Synacor
offers digital ad inventory for brands wanting a customized,
targeted, programmatic means of reaching their audiences. Synacor
(Nasdaq:SYNC), is headquartered in Buffalo, NY, with tech hubs in
Toronto, Ottawa and Boston, and ad sales offices in New York,
Detroit and Los Angeles. For more information, visit
synacor.com.
The Synacor logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11609
Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures in this
release. Generally, a non-GAAP financial measure is a numerical
measure of a company's performance, financial position or cash
flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with generally
accepted accounting principles (GAAP).
We report adjusted EBITDA because it is a key measure used by
our management and Board of Directors to understand and evaluate
our core operating performance and trends, to prepare and approve
our annual budget and to develop short- and long-term operational
plans. In particular, the exclusion of certain expenses in
calculating adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our core business. Accordingly, we
believe that adjusted EBITDA provides useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management and Board of
Directors.
For a reconciliation of adjusted EBITDA to net income, the most
directly comparable financial measure calculated and presented in
accordance with GAAP, please refer to the table "Reconciliation of
GAAP to Non-GAAP Measures" in this press release.
Safe Harbor Statement
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements concerning Synacor's expected financial performance
(including, without limitation, statements and information in the
Business Outlook section and the quotations from management), as
well as Synacor's strategic and operational plans. The achievement
or success of the matters covered by such forward-looking
statements involves risks, uncertainties and assumptions. If any
such risks or uncertainties materialize or if any of the
assumptions prove incorrect, the company's results could differ
materially from the results expressed or implied by the
forward-looking statements the company makes.
The risks and uncertainties referred to above include - but are
not limited to - risks associated with: execution of our plans and
strategies; the loss of a significant customer; our ability to
obtain new customers; expectations regarding consumer taste and
user adoption of applications and solutions; developments in
Internet browser software and search advertising technologies; CEO
succession planning; general economic conditions; expectations
regarding the company's ability to timely expand the breadth of
services and products or introduction of new services and
products; consolidation within the cable and telecommunications
industries; changes in the competitive dynamics in the market for
online search and display advertising; the risk that security
measures could be breached and unauthorized access to subscriber
data could be obtained; potential third party intellectual property
infringement claims; and the price volatility of our common
stock.
Further information on these and other factors that could affect
the company's financial results is included in filings it makes
with the Securities and Exchange Commission from time to time,
including the section entitled "Risk Factors" in the company's most
recent Form 10-Q filed with the SEC on November 14, 2013. These
documents are available on the SEC Filings section of the Investor
Information section of the company's website
at http://investor.synacor.com/. All information provided in
this release and in the attachments is available as of March 5,
2014, and Synacor undertakes no duty to update this
information.
Synacor,
Inc. |
Condensed Consolidated
Balance Sheets |
(In
thousands) |
(Unaudited) |
|
As of December
31, |
As of December
31, |
|
2012 |
2013 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 41,944 |
$ 36,397 |
Accounts receivable, net |
15,624 |
14,569 |
Deferred income taxes |
1,999 |
314 |
Prepaid expenses and other current
assets |
1,831 |
1,691 |
Total current assets |
61,398 |
52,971 |
Property and equipment, net |
11,043 |
14,085 |
Deferred income taxes, non-current |
2,527 |
4,455 |
Other long-term assets |
543 |
348 |
Goodwill |
819 |
1,565 |
Convertible promissory note |
-- |
1,000 |
Investment in equity interest |
-- |
365 |
Total Assets |
$ 76,330 |
$ 74,789 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 14,204 |
$ 13,573 |
Accrued expenses and other current
liabilities |
7,328 |
5,177 |
Current portion of capital lease
obligations |
2,127 |
1,946 |
Total current liabilities |
23,659 |
20,696 |
Long-term portion of capital lease
obligation |
1,712 |
885 |
Other long-term liabilities |
148 |
977 |
Total Liabilities |
25,519 |
22,558 |
|
|
|
Stockholders' Equity: |
|
|
Common stock |
275 |
277 |
Treasury stock |
(569) |
(569) |
Additional paid-in capital |
99,449 |
102,226 |
Accumulated deficit |
(48,338) |
(49,705) |
Accumulated other comprehensive (loss)
income |
(6) |
2 |
Total stockholders' equity |
50,811 |
52,231 |
Total Liabilities and Stockholders'
Equity |
$ 76,330 |
$ 74,789 |
|
|
Synacor,
Inc. |
Condensed Consolidated
Statements of Operations |
(In thousands except
share and per share amounts) |
(Unaudited) |
|
|
|
|
|
|
Three months
ended December 31, |
Twelve months
ended December 31, |
|
2012 |
2013 |
2012 |
2013 |
|
|
|
|
|
Revenue |
$ 32,178 |
$ 29,406 |
$ 121,981 |
$ 111,807 |
Costs and operating expenses: |
|
|
|
|
Cost of revenue (1) |
17,188 |
15,757 |
66,620 |
59,622 |
Research and development (1)(2) |
6,974 |
6,911 |
25,603 |
28,458 |
Sales and marketing (2) |
2,344 |
1,792 |
9,120 |
8,124 |
General and administrative (1)(2) |
2,627 |
2,891 |
11,011 |
11,663 |
Depreciation |
1,083 |
1,262 |
3,779 |
4,650 |
Total costs and operating expenses |
30,216 |
28,613 |
116,133 |
112,517 |
|
|
|
|
|
Income (loss) from operations |
1,962 |
793 |
5,848 |
(710) |
Other (expense) income |
(6) |
(7) |
1 |
(37) |
Interest expense |
(62) |
(54) |
(270) |
(193) |
Income (loss) before income taxes and equity
interest |
1,894 |
732 |
5,579 |
(940) |
Provision (benefit) for income taxes |
1,104 |
313 |
1,764 |
(134) |
Loss in equity interest |
-- |
(246) |
-- |
(561) |
Net income (loss) |
$ 790 |
$ 173 |
$ 3,815 |
$ (1,367) |
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
Basic |
$ 0.03 |
$ 0.01 |
$ 0.16 |
$ (0.05) |
Diluted |
$ 0.03 |
$ 0.01 |
$ 0.14 |
$ (0.05) |
|
|
|
|
|
Weighted average shares used to compute net
income (loss) per share: |
|
|
|
|
Basic |
27,132,303 |
27,345,725 |
24,411,194 |
27,306,882 |
Diluted |
28,611,056 |
27,608,561 |
28,097,313 |
27,306,882 |
|
|
|
|
|
Notes: |
|
|
|
|
(1) Exclusive of depreciation shown
separately. |
|
|
|
|
(2) Includes stock-based compensation as
follows: |
|
|
|
|
|
Three months
ended December 31, |
Twelve months
ended December 31, |
|
2012 |
2013 |
2012 |
2013 |
Research and development |
$ 150 |
$ 324 |
$ 523 |
$ 1,184 |
Sales and marketing |
112 |
99 |
404 |
348 |
General and administrative |
234 |
276 |
1,072 |
1,029 |
|
$ 496 |
$ 699 |
$ 1,999 |
$ 2,561 |
|
|
Synacor,
Inc. |
Condensed Consolidated
Statements of Cash Flows |
(In
thousands) |
(Unaudited) |
|
|
|
|
Twelve months
ended December 31, |
|
2012 |
2013 |
Cash Flows from Operating
Activities: |
|
|
Net income (loss) |
$ 3,815 |
$ (1,367) |
Adjustments to reconcile net income
(loss) to net cash provided by (used in) operating activities: |
|
|
Depreciation |
3,779 |
4,650 |
Stock-based compensation expense |
1,999 |
2,561 |
Loss on disposal of property and
equipment |
35 |
-- |
Deferred income taxes |
1,557 |
(243) |
Loss in equity interest |
-- |
561 |
Change in assets and liabilities net of
effect of acquisition: |
|
|
Accounts receivable, net |
(1,288) |
1,055 |
Prepaid expenses and other current
assets |
253 |
189 |
Other long-term assets |
380 |
220 |
Accounts payable |
2,335 |
(527) |
Accrued expenses and other current
liabilities |
1,715 |
(2,205) |
Other long-term liabilities |
77 |
334 |
Net cash provided by operating
activities |
14,657 |
5,228 |
|
|
|
Cash Flows from Investing
Activities: |
|
|
Purchases of property and equipment |
(4,269) |
(5,920) |
Investment in equity interest |
-- |
(926) |
Cash paid for business acquisition |
(600) |
(1,011) |
Purchase of convertible promissory
note |
-- |
(1,000) |
Net cash used in investing
activities |
(4,869) |
(8,857) |
|
|
|
Cash Flows from Financing
Activities: |
|
|
Repayment on bank financing |
(250) |
-- |
Repayments on capital lease
obligations |
(2,336) |
(2,121) |
Proceeds from exercise of common stock
options |
1,212 |
195 |
Proceeds from initial public
offering |
25,364 |
-- |
Initial public offering costs |
(2,753) |
-- |
Net cash provided by (used in)
financing activities |
21,237 |
(1,926) |
Effect of exchange rate changes on cash
and cash equivalents |
(6) |
8 |
Net increase (decrease) in cash and
cash equivalents |
31,019 |
(5,547) |
Cash and cash equivalents at beginning
of period |
10,925 |
41,944 |
Cash and cash equivalents at end of
period |
$ 41,944 |
$ 36,397 |
|
|
Synacor,
Inc. |
Reconciliation of GAAP
to Non-GAAP Measures |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
The following table presents a
reconciliation of net income (loss) to adjusted EBITDA for each of
the periods indicated: |
|
|
|
|
Three months
ended December 31, |
Twelve months
ended December 31, |
|
2012 |
2013 |
2012 |
2013 |
|
|
|
|
|
Reconciliation of Adjusted
EBITDA: |
|
|
|
|
Net income (loss) |
$ 790 |
$ 173 |
$ 3,815 |
$ (1,367) |
Provision (benefit) for income taxes |
1,104 |
313 |
1,764 |
(134) |
Interest expense |
62 |
54 |
270 |
193 |
Other expense |
6 |
7 |
(1) |
37 |
Depreciation |
1,083 |
1,262 |
3,779 |
4,650 |
Loss in equity interest |
-- |
246 |
-- |
561 |
Stock-based compensation |
496 |
699 |
1,999 |
2,561 |
Adjusted EBITDA |
$ 3,541 |
$ 2,754 |
$ 11,626 |
$ 6,501 |
|
|
|
Synacor,
Inc. |
Key Business
Metrics |
(Unaudited) |
|
|
|
|
|
|
Three months
ended December 31, |
Twelve months
ended December 31, |
|
2012 |
2013 |
2012 |
2013 |
|
|
|
|
|
Key Business Metrics: |
|
|
|
|
Unique Visitors (1) |
20,297,897 |
19,954,367 |
20,440,169 |
19,818,670 |
Search Queries (2) |
225,339,761 |
157,765,151 |
968,233,560 |
711,992,036 |
Advertising Impressions (3) |
11,712,643,988 |
9,688,051,226 |
42,170,186,571 |
40,982,588,804 |
|
|
|
|
|
Notes: |
(1) Reflects the number of
unique visitors to our customers' websites computed on an average
monthly basis during the applicable period, as measured by
comScore. |
(2) Reflects the total number
of search queries during the applicable period, as reported by
Google. |
(3) Reflects the total number
of advertising impressions during the applicable period, as
reported by DoubleClick and other partners. |
CONTACT: Investor Contact:
Denise Garcia, Managing Director
ICR
ir@synacor.com
716-362-3309
Press Contact:
Meredith Roth, VP, Corporate Communications
Synacor
mroth@synacor.com
646-380-5141
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