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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 June 30, 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
08807
(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 August 10, 2020, there were 45,735,138 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)
 June 30, 2020December 31, 2019
ASSETS
Current assets:
Cash, restricted cash and cash equivalents$42,771  $39,001  
Marketable securities, current  11  
Accounts receivable, net57,332  65,863  
Prepaid & Other Current Assets47,888  38,022  
Total current assets147,991  142,897  
Non-Current Assets:
Property and equipment, net18,659  26,525  
Operating lease right-of-use assets46,913  53,965  
Goodwill222,854  222,969  
Intangible assets, net72,910  77,613  
Other Assets, non-current12,325  8,054  
Total Non-Current Assets373,661  389,126  
Total assets$521,652  $532,023  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$22,948  $21,551  
Accrued expenses73,506  65,987  
Deferred revenues, current46,958  65,858  
Debt, current10,000    
Total current liabilities153,412  153,396  
Deferred tax liabilities2,161  1,679  
Deferred revenues, non-current16,315  21,941  
Leases, non-current53,495  60,976  
Other non-current liabilities3,285  4,589  
Redeemable noncontrolling interest12,500  12,500  
Commitments and contingencies
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 233 shares issued and outstanding at June 30, 2020
218,482  200,865  
Stockholders’ equity:
Common stock, $0.0001 par value; 100,000 shares authorized, 51,619 and 51,704 shares issued; 44,457 and 44,542 outstanding at June 30, 2020 and December 31, 2019, respectively
5  5  
Treasury stock, at cost (7,162 and 7,162 shares at June 30, 2020 and December 31, 2019, respectively)
(82,087) (82,087) 
Additional paid-in capital517,794  525,739  
Accumulated other comprehensive loss(34,397) (33,261) 
Accumulated deficit(339,313) (334,319) 
Total stockholders’ equity62,002  76,077  
Total liabilities and stockholders’ equity$521,652  $532,023  

See accompanying notes to condensed consolidated financial statements.
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SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
   
Net revenues$76,535  $77,846  $153,657  $165,951  
Costs and expenses:
Cost of revenues*29,480  33,403  64,951  72,356  
Research and development19,096  19,026  38,884  38,707  
Selling, general and administrative24,640  23,080  50,984  52,326  
Restructuring charges4,493  356  5,943  777  
Depreciation and amortization10,284  20,269  21,640  40,412  
Total costs and expenses87,993  96,134  182,402  204,578  
Loss from continuing operations(11,458) (18,288) (28,745) (38,627) 
Interest income1,509  299  1,568  488  
Interest expense(84) (463) (329) (1,048) 
Gain (loss) on extinguishment of debt  430    817  
Other Income, net1,367  (24) 3,058  439  
Equity method investment loss  (376)   (1,619) 
Loss from continuing operations, before taxes(8,666) (18,422) (24,448) (39,550) 
Benefit for income taxes7,972  1,844  20,404  3,235  
Net loss(694) (16,578) (4,044) (36,315) 
Net loss attributable to redeemable noncontrolling interests(165) (593) (182) (906) 
Preferred stock dividend(9,289) (7,859) (18,197) (15,396) 
Net loss attributable to Synchronoss$(10,148) $(25,030) $(22,423) $(52,617) 
Earnings per share
Basic$(0.24) $(0.61) $(0.54) $(1.30) 
Diluted$(0.24) $(0.61) $(0.54) $(1.30) 
Weighted-average common shares outstanding:
Basic41,697  40,810  41,482  40,566  
Diluted41,697  40,810  41,482  40,566  
________________________________
Cost of revenues excludes depreciation and amortization which are shown separately.

See accompanying notes to condensed consolidated financial statements.





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SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited) (In thousands)

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net loss$(694) $(16,578) $(4,044) $(36,315) 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments1,872  802  (2,069) 507  
Unrealized loss on available for sale securities  3  751  (902) 
Net income (loss) on inter-company foreign currency transactions554  264  182  (119) 
Total other comprehensive income (loss)2,426  1,069  (1,136) (514) 
Comprehensive loss1,732  (15,509) (5,180) (36,829) 
Comprehensive loss attributable to redeemable noncontrolling interests(165) (593) (182) (906) 
Comprehensive loss attributable to Synchronoss$1,567  $(16,102) $(5,362) $(37,735) 

See accompanying notes to condensed consolidated financial statements.
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SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited) (In thousands)

Three Months Ended June 30, 2020
Common StockTreasury StockAdditionalAccumulated OtherTotal
SharesAmountSharesAmountPaid-In CapitalComprehensive Income (Loss)Accumulated deficitStockholders' Equity
Balance at March 31, 202051,758  $5  (7,162) $(82,087) $522,164  $(36,823) $(338,454) $64,805  
Stock based compensation—  —  —  —  4,754  —  —  4,754  
Issuance of restricted stock(138) —  —  —  —  —  —    
Preferred stock dividends declared—  —  —  —  (8,454) —  —  (8,454) 
Amortization of preferred stock issuance costs—  —  —  —  (835) —  —  (835) 
Shares withheld for taxes in connection with issuance of restricted stock (1) —  —  —  —  —  —    
Net loss attributable to Synchronoss—  —  —  —  —  —  (694) (694) 
Non-controlling interest—  —  —  —  165  —  (165)   
Total other comprehensive income (loss)—  —  —  —  —  2,426  —  2,426  
Balance at June 30, 202051,619  $5  (7,162) $(82,087) $517,794  $(34,397) $(339,313) $62,002  

Three Months Ended June 30, 2019
Common StockTreasury StockAdditionalAccumulated OtherTotal
SharesAmountSharesAmountPaid-In CapitalComprehensive Income (Loss)Accumulated deficitStockholders' Equity
Balance at March 31, 201949,908  $5  (7,162) $(82,087) $533,224  $(31,966) $(249,776) $169,400  
Stock based compensation—  —  —  —  5,329  —  —  5,329  
Issuance of restricted stock1,670  —  —  —  —  —  —    
Preferred stock dividends declared—  —  —  —  (7,331) —  —  (7,331) 
Amortization of preferred stock issuance costs—  —  —  —  (528) —  —  (528) 
Shares withheld for taxes in connection with issuance of restricted stock —  —  —  —  (5) —  —  (5) 
Net income attributable to Synchronoss—  —  —  —  —  —  (17,171) (17,171) 
Non-controlling interest—  —  —  —  593  —  —  593  
Total other comprehensive income (loss)—  —  —  —  —  1,069  —  1,069  
Balance at June 30, 201951,578  $5  (7,162) $(82,087) $531,282  $(30,897) $(266,947) $151,356  



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Six Months Ended June 30, 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—  —  —  —  10,070  —  —  10,070  
Issuance of restricted stock(83) —  —  —  —  —  —    
Preferred stock dividends declared—  —  —  —  (16,612) —  —  (16,612) 
Amortization of preferred stock issuance costs—  —  —  —  (1,585) —  —  (1,585) 
Shares withheld for taxes in connection with issuance of restricted stock (2) —  —  —  —  —  —    
Net loss attributable to Synchronoss—  —  —  —  —  —  (4,044) (4,044) 
Non-controlling interest—  —  —  —  182  —  (182)   
Total other comprehensive income (loss)—  —  —  —  —  (1,136) —  (1,136) 
Adoption of new credit loss accounting standard—  —  —  —  —  —  (768) (768) 
Balance at June 30, 202051,619  $5  (7,162) $(82,087) $517,794  $(34,397) $(339,313) $62,002  


Six Months Ended June 30, 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—  —  —  —  11,108  —  —  11,108  
Issuance of restricted stock1,743  —  —  —  —  —  —    
Preferred stock dividends declared—  —  —  —  (14,406) <