sncr-20200331
0001131554FALSEDecember 312020Q1P3YP3Y0.01880720.055555600011315542020-01-012020-03-31xbrli:shares00011315542020-05-18iso4217:USD00011315542020-03-3100011315542019-12-31iso4217:USDxbrli:shares00011315542019-01-012019-03-310001131554us-gaap:CommonStockMember2019-12-310001131554us-gaap:TreasuryStockMember2019-12-310001131554us-gaap:AdditionalPaidInCapitalMember2019-12-310001131554us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2019-12-310001131554us-gaap:RetainedEarningsMember2019-12-310001131554us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001131554us-gaap:CommonStockMember2020-01-012020-03-310001131554us-gaap:RetainedEarningsMember2020-01-012020-03-310001131554us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-03-310001131554us-gaap:RetainedEarningsMember2020-01-0100011315542020-01-010001131554us-gaap:CommonStockMember2020-03-310001131554us-gaap:TreasuryStockMember2020-03-310001131554us-gaap:AdditionalPaidInCapitalMember2020-03-310001131554us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2020-03-310001131554us-gaap:RetainedEarningsMember2020-03-310001131554us-gaap:CommonStockMember2018-12-310001131554us-gaap:TreasuryStockMember2018-12-310001131554us-gaap:AdditionalPaidInCapitalMember2018-12-310001131554us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2018-12-310001131554us-gaap:RetainedEarningsMember2018-12-3100011315542018-12-310001131554us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001131554us-gaap:CommonStockMember2019-01-012019-03-310001131554us-gaap:RetainedEarningsMember2019-01-0100011315542019-01-010001131554us-gaap:RetainedEarningsMember2019-01-012019-03-310001131554us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2019-01-012019-03-310001131554us-gaap:CommonStockMember2019-03-310001131554us-gaap:TreasuryStockMember2019-03-310001131554us-gaap:AdditionalPaidInCapitalMember2019-03-310001131554us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2019-03-310001131554us-gaap:RetainedEarningsMember2019-03-3100011315542019-03-310001131554sncr:CloudMembersrt:AmericasMember2020-01-012020-03-310001131554sncr:DigitalMembersrt:AmericasMember2020-01-012020-03-310001131554srt:AmericasMembersncr:MessagingMember2020-01-012020-03-310001131554srt:AmericasMember2020-01-012020-03-310001131554sncr:CloudMembersrt:AmericasMember2019-01-012019-03-310001131554sncr:DigitalMembersrt:AmericasMember2019-01-012019-03-310001131554srt:AmericasMembersncr:MessagingMember2019-01-012019-03-310001131554srt:AmericasMember2019-01-012019-03-310001131554sncr:CloudMembersrt:AsiaPacificMember2020-01-012020-03-310001131554sncr:DigitalMembersrt:AsiaPacificMember2020-01-012020-03-310001131554sncr:MessagingMembersrt:AsiaPacificMember2020-01-012020-03-310001131554srt:AsiaPacificMember2020-01-012020-03-310001131554sncr:CloudMembersrt:AsiaPacificMember2019-01-012019-03-310001131554sncr:DigitalMembersrt:AsiaPacificMember2019-01-012019-03-310001131554sncr:MessagingMembersrt:AsiaPacificMember2019-01-012019-03-310001131554srt:AsiaPacificMember2019-01-012019-03-310001131554sncr:CloudMemberus-gaap:EMEAMember2020-01-012020-03-310001131554sncr:DigitalMemberus-gaap:EMEAMember2020-01-012020-03-310001131554us-gaap:EMEAMembersncr:MessagingMember2020-01-012020-03-310001131554us-gaap:EMEAMember2020-01-012020-03-310001131554sncr:CloudMemberus-gaap:EMEAMember2019-01-012019-03-310001131554sncr:DigitalMemberus-gaap:EMEAMember2019-01-012019-03-310001131554us-gaap:EMEAMembersncr:MessagingMember2019-01-012019-03-310001131554us-gaap:EMEAMember2019-01-012019-03-310001131554sncr:CloudMember2020-01-012020-03-310001131554sncr:DigitalMember2020-01-012020-03-310001131554sncr:MessagingMember2020-01-012020-03-310001131554sncr:CloudMember2019-01-012019-03-310001131554sncr:DigitalMember2019-01-012019-03-310001131554sncr:MessagingMember2019-01-012019-03-310001131554sncr:ProfessionalServicesMembersncr:CloudMember2020-01-012020-03-310001131554sncr:ProfessionalServicesMembersncr:DigitalMember2020-01-012020-03-310001131554sncr:ProfessionalServicesMembersncr:MessagingMember2020-01-012020-03-310001131554sncr:ProfessionalServicesMember2020-01-012020-03-310001131554sncr:ProfessionalServicesMembersncr:CloudMember2019-01-012019-03-310001131554sncr:ProfessionalServicesMembersncr:DigitalMember2019-01-012019-03-310001131554sncr:ProfessionalServicesMembersncr:MessagingMember2019-01-012019-03-310001131554sncr:ProfessionalServicesMember2019-01-012019-03-310001131554sncr:TransactionServicesMembersncr:CloudMember2020-01-012020-03-310001131554sncr:TransactionServicesMembersncr:DigitalMember2020-01-012020-03-310001131554sncr:TransactionServicesMembersncr:MessagingMember2020-01-012020-03-310001131554sncr:TransactionServicesMember2020-01-012020-03-310001131554sncr:TransactionServicesMembersncr:CloudMember2019-01-012019-03-310001131554sncr:TransactionServicesMembersncr:DigitalMember2019-01-012019-03-310001131554sncr:TransactionServicesMembersncr:MessagingMember2019-01-012019-03-310001131554sncr:TransactionServicesMember2019-01-012019-03-310001131554sncr:CloudMembersncr:SubscriptionServicesMember2020-01-012020-03-310001131554sncr:DigitalMembersncr:SubscriptionServicesMember2020-01-012020-03-310001131554sncr:MessagingMembersncr:SubscriptionServicesMember2020-01-012020-03-310001131554sncr:SubscriptionServicesMember2020-01-012020-03-310001131554sncr:CloudMembersncr:SubscriptionServicesMember2019-01-012019-03-310001131554sncr:DigitalMembersncr:SubscriptionServicesMember2019-01-012019-03-310001131554sncr:MessagingMembersncr:SubscriptionServicesMember2019-01-012019-03-310001131554sncr:SubscriptionServicesMember2019-01-012019-03-310001131554sncr:CloudMemberus-gaap:LicenseMember2020-01-012020-03-310001131554sncr:DigitalMemberus-gaap:LicenseMember2020-01-012020-03-310001131554sncr:MessagingMemberus-gaap:LicenseMember2020-01-012020-03-310001131554us-gaap:LicenseMember2020-01-012020-03-310001131554sncr:CloudMemberus-gaap:LicenseMember2019-01-012019-03-310001131554sncr:DigitalMemberus-gaap:LicenseMember2019-01-012019-03-310001131554sncr:MessagingMemberus-gaap:LicenseMember2019-01-012019-03-310001131554us-gaap:LicenseMember2019-01-012019-03-31xbrli:pure00011315542020-04-012020-03-310001131554us-gaap:FairValueInputsLevel1Member2020-03-310001131554us-gaap:FairValueInputsLevel2Member2020-03-310001131554us-gaap:FairValueInputsLevel3Member2020-03-310001131554us-gaap:FairValueInputsLevel1Member2019-12-310001131554us-gaap:FairValueInputsLevel2Member2019-12-310001131554us-gaap:FairValueInputsLevel3Member2019-12-310001131554sncr:RedeemableNoncontrollingInterestMember2019-12-310001131554sncr:RedeemableNoncontrollingInterestMember2020-01-012020-03-310001131554sncr:RedeemableNoncontrollingInterestMember2020-03-310001131554sncr:SequentialTechnologyInternationalLLCMember2020-01-012020-03-310001131554sncr:SequentialTechnologyInternationalLLCMember2020-01-012020-03-310001131554us-gaap:LoansPayableMembersncr:SequentialTechnologyInternationalLLCAndAPCapitalHoldingsIILLCMemberus-gaap:SubsequentEventMember2020-05-210001131554us-gaap:LoansPayableMembersncr:SequentialTechnologyInternationalLLCAndAPCapitalHoldingsIILLCMemberus-gaap:SubsequentEventMember2020-04-012020-05-210001131554us-gaap:LineOfCreditMembersncr:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMembersncr:CitizensBankNAMember2019-10-040001131554us-gaap:FederalFundsEffectiveSwapRateMemberus-gaap:LineOfCreditMembersncr:CreditAgreementMembersncr:CitizensBankNAMemberus-gaap:RevolvingCreditFacilityMember2019-10-042019-10-040001131554us-gaap:LineOfCreditMembersncr:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMembersncr:CitizensBankNAMemberus-gaap:RevolvingCreditFacilityMember2019-10-042019-10-040001131554srt:MinimumMemberus-gaap:LineOfCreditMembersncr:CreditAgreementMembersncr:CitizensBankNAMemberus-gaap:RevolvingCreditFacilityMember2019-10-042019-10-040001131554us-gaap:LineOfCreditMembersncr:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMembersncr:CitizensBankNAMember2019-10-042019-10-040001131554sncr:ConvertibleSeniorNotesDue2019Member2020-01-012020-03-310001131554sncr:ConvertibleSeniorNotesDue2019Member2019-01-012019-03-310001131554us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2020-01-012020-03-310001131554us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2019-01-012019-03-310001131554us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310001131554us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-03-310001131554us-gaap:AccumulatedTranslationAdjustmentMember2020-03-310001131554sncr:AccumulatedNetGainLossOnIntraEntityForeignCurrencyTransactionsMember2019-12-310001131554sncr:AccumulatedNetGainLossOnIntraEntityForeignCurrencyTransactionsMember2020-01-012020-03-310001131554sncr:AccumulatedNetGainLossOnIntraEntityForeignCurrencyTransactionsMember2020-03-310001131554us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-12-310001131554us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-01-012020-03-310001131554us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-03-310001131554us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001131554us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001131554us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-31sncr:vote0001131554us-gaap:CommonStockMember2020-01-012020-03-310001131554sncr:SilverPrivateHoldingsILLCMember2018-02-150001131554sncr:SilverPrivateHoldingsILLCMember2018-02-152018-02-150001131554us-gaap:SeriesAPreferredStockMember2020-03-3100011315542018-02-152018-02-1500011315542018-02-150001131554us-gaap:SeriesAPreferredStockMember2018-02-152018-02-15sncr:member0001131554sncr:TenPercentorGreaterOwnershipMember2018-02-150001131554sncr:TenPercentorGreaterOwnershipMember2018-02-152018-02-150001131554sncr:GreaterthanFiveandLessthanTenPercentOwnershipMember2018-02-150001131554srt:MinimumMembersncr:GreaterthanFiveandLessthanTenPercentOwnershipMember2018-02-152018-02-150001131554sncr:GreaterthanFiveandLessthanTenPercentOwnershipMembersrt:MaximumMember2018-02-152018-02-15sncr:director0001131554us-gaap:ChiefExecutiveOfficerMember2018-02-150001131554us-gaap:BoardOfDirectorsChairmanMember2018-02-15sncr:registration0001131554us-gaap:PreferredStockMember2019-12-310001131554us-gaap:PreferredStockMember2020-01-012020-03-310001131554us-gaap:PreferredStockMember2020-03-310001131554sncr:EquityIncentivePlan2015Member2020-03-310001131554sncr:NewHireEquityIncentivePlan2017Member2020-03-310001131554us-gaap:CostOfSalesMember2020-01-012020-03-310001131554us-gaap:CostOfSalesMember2019-01-012019-03-310001131554us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-03-310001131554us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-03-310001131554us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-03-310001131554us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-03-310001131554sncr:EmployeeAndDirectorsStockOptionsMember2020-01-012020-03-310001131554sncr:EmployeeAndDirectorsStockOptionsMember2019-01-012019-03-310001131554us-gaap:RestrictedStockMember2020-01-012020-03-310001131554us-gaap:RestrictedStockMember2019-01-012019-03-310001131554us-gaap:PerformanceSharesMember2020-01-012020-03-310001131554us-gaap:PerformanceSharesMember2019-01-012019-03-310001131554us-gaap:PerformanceSharesMember2020-03-310001131554us-gaap:RestrictedStockMember2019-12-310001131554us-gaap:RestrictedStockMember2020-03-310001131554sncr:EquityIncentivePlan2015Memberus-gaap:PerformanceSharesMember2020-01-012020-03-310001131554us-gaap:PerformanceSharesMember2019-12-310001131554us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001131554us-gaap:EmployeeStockOptionMember2019-01-012019-03-310001131554us-gaap:RestrictedStockMember2020-01-012020-03-310001131554us-gaap:RestrictedStockMember2019-01-012019-03-310001131554us-gaap:ConvertibleDebtSecuritiesMembersncr:ConvertibleSeniorNotesDue2019Memberus-gaap:SeniorNotesMember2019-01-012019-03-310001131554us-gaap:SeriesAPreferredStockMember2020-01-012020-03-310001131554us-gaap:SeriesAPreferredStockMember2019-01-012019-03-310001131554us-gaap:ConvertibleDebtSecuritiesMembersncr:ConvertibleSeniorNotesDue2019Memberus-gaap:SeniorNotesMember2020-01-012020-03-31sncr:complaint0001131554sncr:TheSecuritiesLawActionsMemberus-gaap:PendingLitigationMember2017-05-012017-06-140001131554us-gaap:SubsequentEventMember2020-04-012020-05-21
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2020
 
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to
 
Commission file number 000-52049

SYNCHRONOSS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware06-1594540
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
  
200 Crossing Boulevard, 8th Floor
Bridgewater, New Jersey
8807
(Address of principal executive offices)(Zip Code)
 
(866) 620-3940
(Registrant’s telephone number, including area code) 

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filerx
Non-accelerated filerSmaller Reporting Company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.0001 par value
 SNCRThe Nasdaq Stock Market, LLC
As of May 18, 2020, there were 44,541,776 shares of common stock issued and outstanding.


Table of Contents
SYNCHRONOSS TECHNOLOGIES, INC.
FORM 10-Q INDEX

 Page No.
  
  
 
  
 
  
 
  
 
  
  
  
  
  
  
  
  
 
  
  
  
  
  



Table of Contents
PART I.  FINANCIAL INFORMATION
 
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
 March 31, 2020December 31, 2019
ASSETS
Current assets:  
Cash, restricted cash and cash equivalents  $30,906  $39,001  
Marketable securities, current    11  
Accounts receivable, net  60,817  65,863  
Prepaid & Other Current Assets  43,919  38,022  
Total current assets  135,642  142,897  
Non-Current Assets:  
Property and equipment, net  22,160  26,525  
Operating lease right-of-use assets  52,576  53,965  
Goodwill  219,825  222,969  
Intangible assets, net  74,812  77,613  
Other Assets, non-current  7,779  8,054  
Total Non-Current Assets  377,152  389,126  
Total assets  $512,794  $532,023  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Accounts payable  $17,955  $21,551  
Accrued expenses  65,456  65,987  
Deferred revenues, current  49,042  65,858  
Debt, current  10,000    
Total current liabilities  142,453  153,396  
Deferred tax liabilities  1,656  1,679  
Deferred revenues, non-current  18,046  21,941  
Leases, non-current  59,085  60,976  
Other non-current liabilities  4,655  4,589  
Redeemable noncontrolling interest  12,500  12,500  
Commitments and contingencies
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 225 shares issued and outstanding at March 31, 2020
209,488  200,865  
Stockholders’ equity:  
Common stock, $0.0001 par value; 100,000 shares authorized, 51,758 and 51,704 shares issued; 44,596 and 44,542 outstanding at March 31, 2020 and December 31, 2019, respectively
5  5  
Treasury stock, at cost (7,162 and 7,162 shares at March 31, 2020 and December 31, 2019, respectively)
(82,087) (82,087) 
Additional paid-in capital  522,164  525,739  
Accumulated other comprehensive loss  (36,823) (33,261) 
Accumulated deficit  (338,348) (334,319) 
Total stockholders’ equity  64,911  76,077  
Total liabilities and stockholders’ equity  $512,794  $532,023  

See accompanying notes to condensed consolidated financial statements.
3

Table of Contents
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended March 31,
20202019
Net revenues$77,122  $88,105  
Costs and expenses:
Cost of revenues*35,471  38,953  
Research and development19,788  19,681  
Selling, general and administrative26,344  29,246  
Restructuring charges1,450  421  
Depreciation and amortization11,356  20,143  
Total costs and expenses94,409  108,444  
Loss from continuing operations(17,287) (20,339) 
Interest income58  189  
Interest expense(245) (585) 
Gain (loss) on extinguishment of debt  387  
Other Income, net1,692  463  
Equity method investment loss  (1,243) 
Loss from continuing operations, before taxes(15,782) (21,128) 
Benefit for income taxes12,432  1,391  
Net loss(3,350) (19,737) 
Net loss attributable to redeemable noncontrolling interests(17) (313) 
Preferred stock dividend(8,909) (7,537) 
Net loss attributable to Synchronoss$(12,276) $(27,587) 
Earnings per share
Basic$(0.30) $(0.68) 
Diluted$(0.30) $(0.68) 
Weighted-average common shares outstanding:
Basic41,483  40,320  
Diluted41,483  40,320  
________________________________
Cost of revenues excludes depreciation and amortization which are shown separately.

See accompanying notes to condensed consolidated financial statements.





4

Table of Contents
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited) (In thousands)
Three Months Ended March 31,
20202019
Net loss$(3,350) $(19,737) 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(3,941) (295) 
Unrealized gain (loss) on available for sale securities751  (905) 
Net loss on inter-company foreign currency transactions(372) (383) 
Total other comprehensive loss(3,562) (1,583) 
Comprehensive loss(6,912) (21,320) 
Comprehensive loss attributable to redeemable noncontrolling interests(17) (313) 
Comprehensive loss attributable to Synchronoss$(6,929) $(21,633) 

See accompanying notes to condensed consolidated financial statements.
5

Table of Contents
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited) (In thousands)

Three Months Ended March 31, 2020
Common StockTreasury StockAdditionalAccumulated OtherTotal
SharesAmountSharesAmountPaid-In CapitalComprehensive Income (Loss)Accumulated deficitStockholders' Equity
Balance at December 31, 201951,704  $5  (7,162) $(82,087) $525,739  $(33,261) $(334,319) $76,077  
Stock based compensation—  —  —  —  5,316  —  —  5,316  
Issuance of restricted stock55  —  —  —  —  —  —    
Preferred stock dividends declared—  —  —  —  (8,158) —  —  (8,158) 
Amortization of preferred stock issuance costs—  —  —  (750) (750) 
Shares withheld for taxes in connection with issuance of restricted stock (1) —  —  —  —  —  —    
Net loss attributable to Synchronoss—  —  —  —  —  —  (3,350) (3,350) 
Non-controlling interest—  —  —  —  17  —  (17)   
Total other comprehensive income (loss)—  —  —  —  —  (3,562) —  (3,562) 
Adoption of new credit loss accounting standard—  —  —  —  —  —  (768) (768) 
Other—  —  —  —  —  —  106  106  
Balance at March 31, 202051,758  $5  (7,162) $(82,087) $522,164  $(36,823) $(338,348) $64,911  

Three Months Ended March 31, 2019
Common StockTreasury StockAdditionalAccumulated OtherTotal
SharesAmountSharesAmountPaid-In CapitalComprehensive Income (Loss)Accumulated deficitStockholders' Equity
Balance at December 31, 201849,836  $5  (7,162) $(82,087) $534,673  $(30,383) $(233,299) $188,909  
Stock based compensation—  —  —  —  5,779  —  —  5,779  
Issuance of restricted stock73  —  —  —  —  —  —    
Preferred stock dividends declared—  —  —  —  (7,075) —  —  (7,075) 
Amortization of preferred stock issuance costs—  —  —  —  (462) —  —  (462) 
Shares withheld for taxes in connection with issuance of restricted stock (1) —  —  —  (4) —  —  (4) 
Adoption of new lease accounting standard—  —  —  —  —  —  3,573  3,573  
Net loss attributable to Synchronoss—  —  —  —  —  —  (20,050) (20,050) 
Non-controlling interest—  —  —  —  313  —  —  313  
Total other comprehensive income (loss)—  —  —  —  —  (1,583) —  (1,583) 
Balance at March 31, 201949,908  $5  (7,162) $(82,087) $533,224  $(31,966) $(249,776) $169,400  
See accompanying notes to condensed consolidated financial statements.
6

Table of Contents
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
Three Months Ended March 31,
20202019
Operating activities:
Net loss continuing operations$(3,350) $(19,737) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization11,357  20,143  
Amortization of debt issuance costs  155  
(Gain) loss on extinguishment of debt  (387) 
Loss (earnings) from Equity method investments  1,243  
(Gain) loss on Disposals of intangible assets(1,843)   
Amortization of bond premium  (36) 
Deferred income taxes(10) (525) 
Stock-based compensation5,186  5,555  
Changes in operating assets and liabilities:
Accounts receivable, net(6,961) (6,141) 
Prepaid expenses and other current assets(6,240) 4,272  
Other assets198  (242) 
Accounts payable7,515  6,084  
Accrued expenses1  (10,780) 
Other liabilities(415) (370) 
Deferred revenues(20,454) (4,918) 
Net cash used in operating activities(15,016) (5,684) 
Investing activities:
Purchases of fixed assets(249) (2,627) 
Purchases of intangible assets and capitalized software(4,428) (2,704) 
Proceeds from the sale of intangibles1,843    
Purchases of marketable securities available for sale  (11,278) 
Maturity of marketable securities available for sale11  26,207  
Net cash (used in) provided by investing activities(2,823) 9,598  
Financing activities:
Taxes paid on withholding shares(4)   
Retirement of Convertible Senior Notes & related costs  (16,106) 
Borrowings on revolving line of credit10,000    
Preferred dividend payment  (7,075) 
Payments on capital obligations  (280) 
Net cash provided by (used in) financing activities9,996  (23,461) 
Effect of exchange rate changes on cash(252) (19) 
Net decrease in cash and cash equivalents(8,095) (19,566) 
Cash, restricted cash and cash equivalents, beginning of period39,001  109,860  
Cash, restricted cash and cash equivalents, end of period$30,906  $90,294  
Supplemental disclosures of non-cash investing and financing activities:
Paid in kind dividends on Series A Convertible Participating Perpetual Preferred Stock$8,623  $7,075  

 See accompanying notes to condensed consolidated financial statements.
7

Table of Content
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
(Amounts in tables in thousands, except for per share data or unless otherwise noted)


1. Description of Business

General

Synchronoss Technologies, Inc. (“Synchronoss” or the “Company”) Digital, Cloud, Messaging and IoT platforms help the world’s leading companies, including operators, original equipment manufacturers (“OEMs”), and Technology, Media and Telecom (“TMT”) providers to deliver continuously transformative customer experiences that create high value engagement and new monetization opportunities.

The Company currently operates in and markets solutions and services directly through the Company’s sales organizations in North America, Europe and Asia-Pacific. The Company’s platforms give customers new opportunities in TMT space, taking advantage of the rapidly converging services, connected devices, networks and applications.

The Company delivers platforms, products and solutions including:

Cloud sync, backup, storage, device set up, content transfer and content engagement for user generated content
Advanced, multi-channel messaging peer-to-peer (“P2P”) communications and application-to-person (“A2P”) commerce solutions
Digital experience management (Platform as a Service) - including digital journey creation, and journey design products that use analytics that power digital advisor products for IT and Business Channel Owners
IoT management technology for Smart Cities, Smart Buildings and more

The Synchronoss Personal Cloud Platform™ is a secure and highly scalable white label platform designed to store and sync subscriber’s personally created content seamlessly to and from current and new devices. This allows an Operator’s customers to protect, engage with and manage their personal content and gives the Company’s Operator customers the ability to increase average revenue per user (“ARPU”) through a new monthly recurring charge (“MRC”) and opportunities to mine valuable data that will give subscribers access to new, beneficial services. Additionally, the Company’s Personal Cloud Platform performs an expanding set of value-add services including facilitating an Operator’s initial device setup and enhancing visibility and control across disparate devices within subscribers’ smart homes.

The Synchronoss Messaging Platform powers hundreds of millions of subscribers’ mail boxes worldwide. The Company’s Advanced Messaging Product is a powerful, secure and intelligent white label messaging platform that expands capabilities for Operators and TMT companies to offer P2P messaging via Rich Communications Services (“RCS”). Additionally, the Company’s Advanced Messaging Product powers commerce and a robust ecosystem for Operators, brands and advertisers to execute Application to Person (“A2P”) commerce and data-rich dialogue with subscribers.

The Synchronoss Digital Experience Platform (“DXP”) is a purpose-built experience management toolset that sits between the Company’s customers end-user facing applications and their existing back end systems, enabling the authoring and management of customer journeys in a cloud-native no/low-code environment. This platform uses products such as Journey Creator, Journey Advisor, CX Baseline and Digital Coach to create a wide variety of insight-driven customer experiences across existing channels (digital and analogue) including creating the ability to pause and resume continuous, intelligent experiences in an omni-channel environment. DXP can be operated by IT professionals and “citizen” developers (business analysts, etc.) enabling the Company’s customers to bring more compelling and complex experiences to market in less time with fewer and more diverse resources in a real-time, collaborative environment.

The Synchronoss IoT Platform creates an easy to use environment and extensible ecosystem making the management of disparate devices, sensors, data pools and networks easier to manage by IoT administrators and drives the propagation of new IoT applications and monetization models for TMT companies. The Company’s IoT platform utilizes Synchronoss platforms (DXP, Cloud, Messaging), products and solutions to make IoT more accessible and actionable for Smart Building facility managers, Smart City planners, Automotive OEMs and TMT ecosystem players.


2. Basis of Presentation and Consolidation
8

Table of Content
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
(Amounts in tables in thousands, except for per share data or unless otherwise noted)


Basis of Presentation and Consolidation

The accompanying interim unaudited condensed consolidated financial statements have been prepared by Synchronoss and in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020.

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities (“VIE”) in which the Company is the primary beneficiary and entities in which the Company has a controlling interest. Investments in less than majority-owned companies in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. Investments in less than majority-owned companies in which the Company does not have the ability to exert significant influence over the operating and financial policies of the investee are accounted for using the cost method. All material intercompany transactions and accounts are eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year's presentation.

For further information about the Company’s basis of presentation and consolidation or its significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Risks and Uncertainties

There are many uncertainties regarding the current coronavirus ("COVID-19") pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, business partners and distribution channels. While the pandemic did not materially affect the Company’s financial results and business operations in the Company’s first quarter ended March 31, 2020, the Company is unable to predict the impact that COVID-19 will have on its financial position and operating results due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary.


9

Table of Content
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
(Amounts in tables in thousands, except for per share data or unless otherwise noted)

Recently Issued Accounting Standards

Recent accounting pronouncements adopted

StandardDescriptionEffect on the financial statements
ASU 2016-13, ASU 2019-4 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial InstrumentsIn June 2016, the FASB issued ASU 2016-13 which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU is effective for public companies in annual periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted beginning after December 15, 2018 and interim periods within those years.
We adopted Topic 326 beginning on January 1, 2020 using the modified retrospective approach with a cumulative effect adjustment to opening retained earnings recorded at the beginning of the period of adoption. Upon adoption, we changed our impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost, including our accounts receivable. CECL estimates on accounts receivable are recorded as general and administrative expenses on our condensed consolidated statements of income. The cumulative effect adjustment from adoption was immaterial to our condensed consolidated financial statements.
Date of adoption: January 1, 2020.

Standards issued not yet adopted

StandardDescriptionEffect on the financial statements
Update 2019-12 - Income Taxes (Topic 740) Simplifying the Accounting for Income TaxesThe ASU removes the exception to the general principles in ASC 740, Income Taxes, associated with the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments and interim-period income tax accounting for year-to-date losses that exceed anticipated losses. In addition, the ASU improves the application of income tax related guidance and simplifies U.S. GAAP when accounting for franchise taxes that are partially based on income, transactions with government resulting in a step-up in tax basis goodwill, separate financial statements of legal entities not subject to tax, and enacted changes in tax laws in interim periods. Different transition approaches, retrospective, modified retrospective, or prospective, will apply to each income tax simplification provision.
The Company is still evaluating these changes and does not anticipate any material impact on the Company’s consolidated financial position or results of operations upon adoption.

Date of adoption: January 1, 2021.


3. Revenue

Disaggregation of revenue

The Company disaggregates revenue from contracts with customers into the nature of the products and services and geographical regions. The Company’s geographic regions are the Americas, Europe, the Middle East and Africa (“EMEA”), and Asia Pacific (“APAC”). The majority of the Company’s revenue is from the Technology, Media and Telecom (collectively, “TMT”) sector.
10

Table of Content
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
(Amounts in tables in thousands, except for per share data or unless otherwise noted)

Three Months Ended March 31, 2020Three Months Ended March 31, 2019
CloudDigitalMessagingTotalCloudDigitalMessagingTotal
Geography
Americas$39,322  $10,937  $10,903  $61,162  $38,914  $20,764  $2,069  $61,747  
APAC  558  9,175  9,733    998  18,155  19,153  
EMEA1,722  1,257  3,248  6,227  1,796  1,089  4,320  7,205  
Total$41,044  $12,752  $23,326  $77,122  $40,710  $22,851  $24,544  $88,105  
Service Line
Professional Services$4,161  $4,536  $5,230  $13,927  $3,718  $4,303  $12,487  $20,508  
Transaction Services1,307  1,074