- Q1 2017 revenue of $26.5 million in
line with guidance range
- Announces launch of the new ATT.net
portal; phased rollout underway
- Strengthens balance sheet with $20
million through equity offering in April to support sales growth
pipeline
Synacor, Inc. (NASDAQ: SYNC), the trusted multiscreen technology
and monetization partner for video, internet and communications
providers, device manufacturers, governments and enterprises, today
announced its financial results for the quarter ended March 31,
2017.
“We continue to see strong customer affirmation of Synacor
platforms, as we renew and expand key current relationships and win
new customers. And I’m pleased to announce that the new ATT.net
portal is live and the phased rollout is well underway,” said
Synacor CEO Himesh Bhise.
“In April, we strengthened our balance sheet with $20 million in
capital from an equity offering in order to execute on our strong
growth pipeline. We remain well positioned to deliver on our target
of $300 million in revenue and $30 million in adjusted EBITDA in
2019,” said Bhise.
Recent Highlights
- Launched the new ATT.net portal; phased
rollout underway
- Renewed, extended and expanded the
partnership with CenturyLink
- Added Vodafone Iceland, Credit
Guarantee Corporation of India, the Brazilian Ministry of Science
and Technology, and the Philippines Department of Health to the
growing list of international operator and government email
customers
- Added two Pay TV operators to advanced
Cloud-based identity management platform
- Strengthened balance sheet with $20
million of capital through an equity offering in April to support
the Company’s strong growth pipeline
Q1 2017 Financial Results
Revenue: For the first quarter of 2017, revenue was $26.5
million, in line with guidance, a decrease of 12% compared with the
first quarter of 2016, primarily due to the anticipated
year-over-year decline in desktop search revenue.
Net Income: For the first quarter of 2017, net
loss was $6.7 million, compared with net loss of $1.6 million in
the first quarter of 2016, reflecting continued customer-driven
product development investment. Earnings per share, or EPS, was a
loss of $0.21 compared with a loss of $0.05 in the first quarter of
2016.
Adjusted EBITDA: For the first quarter of 2017, adjusted
earnings before interest, taxes, depreciation, and amortization
(adjusted EBITDA), which excludes stock-based compensation expense,
was ($3.3) million in line with guidance compared with $1.5 million
for the first quarter of 2016, reflecting customer-driven product
development investment.
Cash: The Company ended the first quarter of 2017 with
$11.3 million in cash and cash equivalents, compared with $14.3
million at the end of the prior quarter. This excludes the $20
million raised in April from the equity offering, net of
underwriting costs and commissions.
Guidance
Based on information available as of May 10, 2017, the Company
is providing financial guidance for the second quarter and fiscal
2017 as follows:
- Q2 2017 Guidance: Revenue for
the second quarter of 2017 is projected to be in the range of $28.0
million to $30.0 million. The Company expects to report a net loss
of $3.2 million to $5.0 million and adjusted EBITDA of ($1.5)
million to $0.0 million, which excludes stock-based compensation
expense of $0.7 million to $0.8 million, depreciation and
amortization expense of $2.2 million to $2.4 million and tax,
interest expense and other income and expense of approximately $0.3
million.
- Fiscal 2017 Guidance: As
announced earlier, revenue for the full year of 2017 is projected
to be in the range of $160.0 million to $170.0 million. The Company
expects to report a net loss in the range of $2.8 million to $8.0
million and adjusted EBITDA in the range of $6.0 million to $10.0
million, which excludes stock-based compensation expense of $2.8
million to $3.2 million, depreciation and amortization expense of
$8.8 million to $9.6 million, and tax, interest expense and other
income and expense of $1.2 million.
Conference Call Details
Synacor will host a conference call today at 5:00 p.m. ET to
discuss the first quarter 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) 201-0168, with conference ID
7708585, or callers outside the U.S. may dial (647) 788-4901.
Following completion of the call, a recorded webcast replay will be
available on Synacor's website. To listen to the telephone replay,
call toll-free (800) 585-8367, or callers outside the U.S. may dial
(416) 621-4642. The conference ID is 7708585.
About Synacor
Synacor (NASDAQ: SYNC) is the trusted technology development,
multiplatform services and revenue partner for video, internet and
communications providers, device manufacturers, governments and
enterprises. Synacor’s mission is to enable its customers to better
engage with their consumers. Its customers use Synacor’s technology
platforms and services to scale their businesses and extend their
subscriber relationships. Synacor delivers managed portals,
advertising solutions, email and collaboration platforms,
end-to-end video solutions and cloud-based identity management.
www.synacor.com
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 (loss),
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 Under the Private Securities Litigation
Reform Act of 1995
"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, its expectations related to the
AT&T contract, its second-quarter, full-year and three-year
guidance, the statements and quotations from management and
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, including execution against our agreement with
AT&T; the loss of a significant customer; our ability to obtain
new customers; our ability to integrate the assets and personnel
from acquisitions; expectations regarding consumer taste and user
adoption of applications and solutions; developments in internet
browser software and search advertising technologies; 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 digital
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 or
other legal claims against Synacor; 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-K filed with the SEC. 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 May 10, 2017 and Synacor undertakes no duty to
update this information.
Synacor, Inc. Condensed
Consolidated Balance Sheets (In thousands)
(Unaudited) March 31, December 31,
2017 2016 Assets Current assets: Cash and cash
equivalents $ 11,261 $ 14,315 Accounts receivable, net 17,235
27,386 Prepaid expenses and other current assets 5,117
4,862 Total current assets 33,613 46,563
Property and equipment, net 14,895 14,406 Goodwill 15,944 15,943
Intangible assets 14,301 14,837 Other long-term assets 1,753
1,650
Total Assets $
80,506 $ 93,399
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 15,040 $ 18,769 Accrued expenses and other
current liabilities 7,714 11,684 Current portion of deferred
revenue 12,157 12,149 Current portion of capital lease obligations
1,158 982 Total current liabilities
36,069 43,584 Long-term portion of capital lease obligations 1,040
1,014 Long-term debt 5,000 5,000 Deferred revenue 3,957 3,917 Other
long-term liabilities 410 235
Total
Liabilities 46,476 53,750
Stockholders' Equity: Common stock 325 316 Treasury
stock (1,547 ) (1,547 ) Additional paid-in capital 118,730 117,747
Accumulated deficit (83,506 ) (76,850 ) Accumulated other
comprehensive income (loss) 28 (17 ) Total
stockholders’ equity 34,030 39,649
Total Liabilities and Stockholders' Equity $
80,506 $ 93,399
Synacor, Inc. Condensed Consolidated
Statements of Operations (In thousands except share and per
share amounts) (Unaudited) Three months
ended March 31, 2017 2016 Revenue $
26,540 $ 30,260 Costs and operating expenses: Cost of revenue (1)
12,562 12,972 Technology and development (1)(2) 7,298 5,873 Sales
and marketing (2) 6,661 5,650 General and administrative (1)(2)
3,964 5,022 Depreciation and amortization 2,184
2,098 Total costs and operating expenses
32,669 31,615 Loss from operations
(6,129 ) (1,355 ) Other income 6 2 Interest expense (87 )
(68 ) Loss before income taxes (6,210 ) (1,421 ) Income tax
provision 446 144 Net loss $ (6,656 ) $
(1,565 ) Net loss per share: Basic $ (0.21 ) $ (0.05
) Diluted $ (0.21 ) $ (0.05 ) Weighted average shares used
to compute net loss per share: Basic 31,045,488
29,992,248 Diluted 31,045,488
29,992,248 Notes: (1) Exclusive of depreciation shown
separately. (2) Includes stock-based compensation as follows:
Three months ended March 31, 2017 2016
Technology and development $ 208 $ 241 Sales and marketing 168 223
General and administrative 271 273 $
647 $ 737
Synacor,
Inc. Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited) Three Months
Ended March 31, 2017 2016 Cash Flows
from Operating Activities: Net loss $ (6,656 ) $ (1,565 )
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Depreciation and amortization 2,184 2,098
Stock-based compensation expense 647 737 Provision for deferred
income taxes 200 — Increase in estimated value of contingent
consideration 107 — Change in operating assets and liabilities net
of effect of acquisition: Accounts receivable, net 10,151 2,883
Prepaid expenses and other assets (342 ) (1,039 ) Accounts payable
(3,771 ) 2,252 Accrued expenses and other liabilities (3,535 )
(1,766 ) Deferred revenue 48 248
Net
cash (used in) provided by operating activities
(967 ) 3,848 Cash Flows from
Investing Activities: Acquisition — (2,500 ) Purchases of
property and equipment (1,515 ) (937 )
Net cash
used in investing activities (1,515 )
(3,437 ) Cash Flows from Financing
Activities: Repayments on capital lease obligations (319 ) (386
) Proceeds from exercise of common stock options 308 10 Deferred
acquisition payment (567 ) —
Net cash used in financing
activities
(578 ) (376 ) Effect of
exchange rate changes on cash and cash equivalents 6
16 Net (decrease) increase in Cash and Cash
Equivalents (3,054 ) 51 Cash and Cash Equivalents at beginning of
period 14,315 15,697 Cash and Cash
Equivalents at end of period
$ 11,261 $
15,748 Synacor,
Inc. Reconciliation of GAAP to Non-GAAP Measures (In
thousands) (Unaudited) The following table
presents a reconciliation of net loss to adjusted EBITDA for each
of the periods indicated:
Three months ended March
31, 2017 2016 Reconciliation of
Adjusted EBITDA: Net loss $ (6,656 ) $ (1,565 ) Provision for
income taxes 446 144 Interest expense 87 68 Other income (6 ) (2 )
Depreciation and amortization 2,184 2,098 Stock-based compensation
expense 647 737
Adjusted EBITDA
$ (3,298 ) $ 1,480
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170510006526/en/
Investor Contact:Sharon Merrill AssociatesDavid Calusdian,
617-542-5300Presidentir@synacor.comorPress Contact:SynacorMatt
Wolfrom, 716-362-3880VP, Corporate CommunicationsMatt.Wolfrom@synacor.com
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