Synchronoss Technologies Reports Fourth Quarter and Full Year 2020 Adjusted EBITDA of $6.4mm and $27.8mm, Above the High-End of its Guidance Range; Expects to Increase Adjusted EBITDA in 2021

PDF Version
March 8, 2021
Jeff Miller Named President and Chief Executive Officer

BRIDGEWATER, N.J., March 08, 2021 (GLOBE NEWSWIRE) -- Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and innovator in cloud, messaging, and digital platforms and products, today announced financial results for its fourth quarter and year ended December 31, 2020.

Fourth Quarter and Full-Year Highlights:

  • GAAP revenue for the quarter was $69.4 million. For the full year, GAAP revenue was $291.7 million.
  • Recurring revenue for the quarter represented 82% of total GAAP revenue. For the full year, recurring revenue represented 78% of total GAAP revenue.
  • GAAP net loss for the quarter was $10.9 million or $0.26 per share. For the full year, GAAP net loss was $48.7 million or $1.16 per share.
  • Non-GAAP net loss for the quarter was $8.2 million, or $0.19 per share. For the full year, non-GAAP net loss was $0.2 million, or $0.01 per share.
  • Adjusted EBITDA for the quarter was $6.4 million. For the full year, adjusted EBITDA was $27.8 million.
  • Cash and cash equivalent were $33.7 million at year end.
  • During the fourth quarter, Synchronoss worked in conjunction with Verizon to develop the Unlimited Verizon Cloud offering, and during 2020 renewed Verizon’s Cloud Services contract for an additional five years.
  • During the fourth quarter, Japanese carrier customers exceeded 20 million Rich Communication Services (RCS) downloads.
  • During the fourth quarter, Synchronoss extended its partnership to provide AT&T Digital Services for an additional three years.

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

“I’m honored and delighted to be the next CEO of Synchronoss Technologies. I’m grateful for the support of our Board of Directors and the Synchronoss team, who have enabled us to make forward progress over the past six months on refining our strategy and delivering our operating results. We continue to be driven by delivery and execution for our customers, disciplined cost containment, and continued product innovation. Despite what was a challenging year for Synchronoss and indeed the world community, I’m proud of what the Synchronoss team achieved in 2020 and look forward to continuing to execute on our strategy of focused and profitable growth in 2021.”

  Three Months Ended December 31,
  2020   2019   % Change
Revenues $ 69,377       $ 90,588       (23.4 ) %
Net Loss (10,892 )     (14,678 )     25.8   %
Adjusted EBITDA $ 6,411       $ 6,486       (1.2 ) %


  Twelve Months Ended December 31,
  2020   2019   % Change
Revenues $ 291,670       $ 308,749       (5.5 ) %
Net Loss (48,683 )     (136,727 )     64.4   %
Adjusted EBITDA $ 27,848       $ 27,584       1.0   %
                           

David Clark, CFO of Synchronoss, added:

“Our fourth quarter and year end results reflect progress with our continued focus on expanding both our gross and adjusted EBITDA margins. We are seeing the benefits of our cost management efforts, which allowed us to deliver comparable year over year adjusted EBITDA results despite top-line revenue pressures. This is in large part due to significant cost savings delivered during 2020, and we are continuing to streamline our operations with a focus on increasing our adjusted EBITDA in 2021.”

2021 Adjusted EBITDA Guidance

The company expects its revenue for full year 2021 to be in the range of $275 million - $285 million, and its adjusted EBITDA for the full year 2021 to be in the range $30 million - $35 million, representing adjusted EBITDA growth of 8% - 26%, 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 800-437-2398 or +1 786-204-3966 (International) and give the participant passcode 8321337.

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-in information, please click here.

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 transforms the way companies create new revenue, reduce costs and delight their subscribers with cloud, messaging, and digital products, supporting hundreds of millions of subscribers across the globe. Synchronoss’ secure, scalable and groundbreaking new technologies, trusted partnerships, and talented people change the way TMT customers grow their businesses. For more information, visit us 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 Company’s growth strategies, the anticipated trends and challenges in the business and the market in which the Company operates, the Company’s expectations regarding federal, state and foreign regulatory requirements, the pending lawsuits against the Company described in its 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, 2019, which is 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
(In thousands)
         
    December 31, 2020   December 31, 2019
Assets        
Cash and cash equivalents   $ 33,671     $ 39,012  
Accounts receivable, net   47,849     65,863  
Operating lease right-of-use assets   34,538     53,965  
Goodwill   232,771     222,969  
Other Assets   133,426     150,214  
Total assets   $ 482,255     $ 532,023  
         
Liabilities and stockholders’ equity        
Accounts Payable and Accrued expenses   $ 82,075     $ 87,538  
Debt, current   10,000     —  
Deferred revenues   45,614     87,799  
Operating lease liabilities, non-current   44,273     60,976  
Other liabilities   19,370     18,768  
Preferred Stock   237,641     200,865  
Stockholders’ equity   43,282     76,077  
Total liabilities and stockholders’ equity   $ 482,255     $ 532,023  
                 


 
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
         
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019   2018
                     
Net revenues   $ 69,377     $ 90,588     $ 291,670     $ 308,749     $ 325,839  
Costs and expenses:                    
Cost of revenues   28,414     42,449     121,817     150,407     158,802  
Research and development   17,274     18,286     77,043     75,568     79,172  
Selling, general and administrative   15,043     29,909     89,292     112,771     122,112  
Restructuring charges   1,192     17     7,955     755     12,375  
Depreciation and amortization   9,834     18,116     43,685     77,036     117,654  
Total costs and expenses   71,757     108,777     339,792     416,537     490,115  
Loss from continuing operations   (2,380 )   (18,189 )   (48,122 )   (107,788 )   (164,276 )
Interest income   9     542     1,597     1,258     7,770  
Interest expense   (75 )   (104 )   (476 )   (1,355 )   (4,911 )
Gain on extinguishment of debt   —     —     —     822     1,760  
Other Income (expense), net   3,793     7,372     9,535     7,389     (74,917 )
Equity method investment loss   —     —     —     (1,619 )   (28,600 )
Income (loss) from continuing operations, before taxes   1,347     (10,379 )   (37,466 )   (101,293 )   (263,174 )
Benefit (provision) for income taxes   (2,039 )   4,439     27,108     (2,174 )   17,894  
Net loss from continuing operations   (692 )   (5,940 )   (10,358 )   (103,467 )   (245,280 )
Net income from discontinued operations, net of tax   —     —     —     —     18,288  
Net loss   (692 )   (5,940 )   (10,358 )   (103,467 )   (226,992 )
Net income (loss) attributable to redeemable noncontrolling interests   (101 )   (194 )   (344 )   (1,126 )   8,837  
Preferred stock dividend   (10,099 )   (8,544 )   (37,981 )   (32,134 )   (25,593 )
Net loss attributable to Synchronoss   $ (10,892 )   $ (14,678 )   $ (48,683 )   $ (136,727 )   $ (243,748 )
                     
Earnings per share                    
Basic:                    
Continuing operations   $ (0.26 )   $ (0.36 )   $ (1.16 )   $ (3.36 )   $ (6.51 )
Discontinued operations     —       —       —       —       0.46  
Basic   $ (0.26 )   $ (0.36 )   $ (1.16 )   $ (3.36 )   $ (6.05 )
Diluted:                    
Continuing operations   $ (0.26 )   $ (0.36 )   $ (1.16 )   $ (3.36 )   $ (6.51 )
Discontinued operations     —       —       —       —       0.46  
Diluted   $ (0.26 )   $ (0.36 )   $ (1.16 )   $ (3.36 )   $ (6.05 )
Weighted-average common shares outstanding:                    
Basic     42,464       41,085       41,950       40,694       40,277  
Diluted     42,464       41,085       41,950       40,694       40,277  
                                         


 
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
   
  Twelve Months Ended December 31,
  2020   2019   2018
Net loss continuing operations $ (10,358 )   $ (103,467 )   $ (245,280 )
Gain on Sale of discontinued operations, net of tax —     —     18,288  
Adjustments to reconcile net loss to net cash provided by operating activities:          
Non-cash items 65,103     127,464     234,854  
Changes in operating assets and liabilities: (55,309 )   8,586     (39,231 )
Net cash provided by (used in) operating activities (564 )   32,583     (31,369 )
           
Investing activities:          
Purchases of fixed assets (885 )   (8,183 )   (11,656 )
Purchases of intangible assets and capitalized software (17,065 )   (13,008 )   (14,372 )
Other investing activities 3,611     40,568     (41,254 )
Net cash provided by (used in) investing activities (14,339 )   19,377     (67,282 )
           
Net cash provided by (used in) financing activities 9,991     (121,257 )   (35,885 )
Effect of exchange rate changes on cash (418 )   (1,562 )   (1,729 )
Net increase in cash and cash equivalents (5,330 )   (70,859 )   (136,265 )
           
Cash, restricted cash and cash equivalents, beginning of period 39,001     109,860     246,125  
Cash, restricted cash and cash equivalents, end of period $ 33,671     $ 39,001     $ 109,860  
                       


 
SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
         
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019
Non-GAAP financial measures and reconciliation:                
GAAP Revenue   $ 69,377     $ 90,588     $ 291,670     $ 308,749  
Less: Cost of revenues   28,414     42,449     121,817     150,407  
Gross Profit   40,963     48,139     169,853     158,342  
Add / (Less):                
Stock-based compensation expense   511     782     2,409     2,928  
Restructuring, transition and cease-use lease expense   —     —     372     405  
Cumulative adjustment to STI receivable   —     —     —     26,044  
Adjusted Gross Profit   41,474     48,921     172,634     187,719  
Adjusted Gross Margin   59.8 %   54.0 %   59.2 %   60.8 %
                 
GAAP Net loss attributable to Synchronoss   $ (10,892 )   $ (14,671 )   $ (48,683 )   $ (136,720 )
Add / (Less):                
Stock-based compensation expense   (3,410 )   5,222     11,137     22,250  
Acquisition costs   —     —     —     (230 )
Restructuring, transition and cease-use lease expense   1,222     17     16,503     7,446  
Amortization expense   3,704     5,610     16,199     24,683  
Cumulative adjustment to STI receivable   —     —     —     26,044  
Litigation, remediation and refiling costs   1,145     1,320     4,645     2,826  
Non-GAAP Expenses attributable to Non-Controlling Interest   —     —     —     (76 )
Non-GAAP Net income (loss) from continuing operations attributable to Synchronoss   $ (8,231 )   $ (2,502 )   $ (199 )   $ (53,777 )
                 
Diluted Non-GAAP Net loss from continuing operations per share   $ (0.19 )   $ (0.06 )   $ (0.01 )   $ (1.32 )
                 
Weighted shares outstanding - Dilutive   42,464     41,085     41,950     40,694  
                         


 
SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
         
    Three Months Ended   Twelve Months Ended
    Dec 31, 2019   Mar 31, 2020   Jun 30, 2020   Sep 30, 2020   Dec 31, 2020   Dec 31, 2020   Dec 31, 2019
                             
Net loss attributable to Synchronoss   $ (14,678 )   $ (12,275 )   $ (10,148 )   $ (15,367 )   $ (10,892 )   $ (48,683 )   $ (136,727 )
Add / (Less):                            
Stock-based compensation expense   5,222     5,169     4,987     4,391     (3,410 )   11,137     22,250  
Acquisition costs   —     —     —     —     —     —     (230 )
Restructuring, transition and cease-use lease expense   17     1,696     7,003     6,580     1,222     16,503     7,446  
Cumulative adjustment to STI receivable   —     —     —     —     —     —     26,044  
Litigation, remediation and refiling costs   1,320     824     733     1,943     1,145     4,645     2,826  
Depreciation and amortization   18,116     11,356     10,284     12,212     9,834     43,685     77,036  
Interest income   (542 )   (58 )   (1,509 )   (20 )   (9 )   (1,597 )   (1,258 )
Interest Expense   104     245     84     72     75     476     1,355  
Gain on Extinguishment of debt   —     —     —     —     —     —     (822 )
Other Income   (7,372 )   (1,692 )   (1,367 )   (2,684 )   (3,793 )   (9,535 )   (7,389 )
Equity method investment loss   —     —     —     —     —     —     1,619  
Provision (benefit) for income taxes   (4,439 )   (12,432 )   (7,972 )   (8,744 )   2,039     (27,108 )   2,175  
Net loss attributable to noncontrolling interests   194     17     165     60     101     344     1,125  
Preferred dividend   8,544     8,908     9,289     9,685     10,099     37,981     32,134  
Adjusted EBITDA (non-GAAP)   $ 6,486     $ 1,758     $ 11,549     $ 8,128     $ 6,411     $ 27,848     $ 27,584  


    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019
                 
Net Cash (used in) provided by operating activities   $ (9,225 )   $ 20,004     $ (564 )   $ 31,843  
Add / (Less):                
Capitalized software   (4,054 )   (3,719 )   (16,665 )   (13,008 )
Property and equipment   (314 )   (1,106 )   (885 )   (8,183 )
Free Cashflow   (13,593 )   15,179     (18,114 )   10,652  
Add: One-Time Expenses due to Restatement, etc.   1,145     1,320     4,645     2,826  
Adjusted Free Cashflow   $ (12,448 )   $ 16,499     $ (13,469 )   $ 13,478  
                                 

Primary Logo

Source: Synchronoss Technologies, Inc.