UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 10, 2021
Synchronoss Technologies, Inc.
(Exact Name of Registrant as Specified in its Charter)
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Registrant’s telephone number, including area code: (866 ) 620-3940
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. o
Securities registered pursuant to Section 12(b) of the Act:
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Item 2.02. Results of Operations and Financial Condition.
On May 10, 2021 , Synchronoss Technologies, Inc. (the “Company”) issued a press release (the “Press Release”) relating to its results of operations and financial condition for the quarter ended March 31, 2021. The full text of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | March 8, 2021 | Synchronoss Technologies, Inc. | ||||||||||||
| By: | /s/ David Clark | |||||||||||||
| Name: | David Clark | |||||||||||||
| Title: | Chief Financial Officer | |||||||||||||
Exhibit 99.1
200 Crossing Boulevard, Bridgewater, NJ 08807
SYNCHRONOSS REPORTS FIRST QUARTER ADJUSTED EBITDA OF $5.5 MILLION, A 215% INCREASE YEAR OVER YEAR; INCREASES ADJUSTED EBITDA GUIDANCE FOR FULL YEAR 2021
BRIDGEWATER, NJ - May 10, 2021 - Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and innovator in cloud, messaging, and digital platforms and products, today announced financial results for its first quarter ended March 31, 2021.
First Quarter Highlights:
•GAAP revenue for the quarter was $65.5 million.
•Recurring revenue for the quarter represented 86% of total GAAP revenue.
•GAAP net loss for the quarter was $22.6 million or $0.53 per share.
•Non-GAAP net loss for the quarter was $14.2 million, or $0.33 per share.
•Adjusted EBITDA for the quarter was $5.5 million.
•Cash and cash equivalent were $29.8 million at quarter end.
•Signed two new customers to contracts in Southeast Asia:
◦Signed a new contract with Telkomsigma to deliver the Synchronoss Personal Cloud® Solution to enable 25 universities to securely store, share and transfer academic documents with their professors, students, school groups and peers.
◦Signed a contract with an advanced messaging customer that leverages Synchronoss’ complete end-to-end RCS messaging platform.
•Renewed and expanded core messaging contract with Telecom Italia Mobile (TIM) and added security functionality.
•Accelerated growth in cloud subscribers in the US market.
Commenting on the results, Jeff Miller, President and CEO of Synchronoss, said:
“During the quarter, we closed several new meaningful customer contracts, experienced continued growth in our cloud subscriber base, and delivered on some significant product milestones. I am proud of the Synchronoss team’s hard work as we continue to be driven by delivery and execution for our customers, disciplined cost containment, continued product innovation, and new customer acquisition. Our solid start to the year has provided us with the confidence to raise adjusted EBITDA guidance for 2021.”
| Three Months Ended March 31, | ||||||||||||||||||||
| 2021 | 2020 | % Change | ||||||||||||||||||
| Revenues | $ | 65,499 | $ | 77,122 | (15.1) | % | ||||||||||||||
| Net loss | (22,560) | (12,276) | (83.8) | % | ||||||||||||||||
| Loss from continuing operations, before taxes | (12,529) | (15,782) | 20.6 | % | ||||||||||||||||
| Adjusted EBITDA | $ | 5,537 | $ | 1,758 | 215.0 | % | ||||||||||||||
David Clark, CFO of Synchronoss, added:
“We continue to see the benefits of our cost management efforts, which allowed us to deliver adjusted EBITDA growth of 215% year over year. We also continue to streamline our operations to drive profitability and free cash flow.”
2021 Adjusted EBITDA Guidance
The company expects its revenue for full year 2021 to be in the range of $275 million to $285 million and is raising its adjusted EBITDA guidance for the full year 2021 to be in the range of $32 million to $37 million, representing adjusted EBITDA growth of 15% to 33% year over year, 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 877-930-7767 or +1 253-336-7416 (International) and give the participant passcode 7379831.
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 855-859-2056 and enter the conference ID, 7379831.
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, 2020, 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)
| March 31, 2021 | December 31, 2020 | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 29,818 | $ | 33,671 | ||||||||||
| Accounts receivable, net | 46,236 | 47,849 | ||||||||||||
| Operating lease right-of-use assets | 31,960 | 34,538 | ||||||||||||
| Goodwill | 228,537 | 232,771 | ||||||||||||
| Other Assets | 128,579 | 133,426 | ||||||||||||
| Total assets | $ | 465,130 | $ | 482,255 | ||||||||||
| Liabilities and stockholders’ equity | ||||||||||||||
| Accounts Payable and Accrued expenses | $ | 84,592 | $ | 82,075 | ||||||||||
| Debt, current | 10,000 | 10,000 | ||||||||||||
| Deferred revenues | 39,853 | 45,614 | ||||||||||||
| Operating lease liabilities, non-current | 42,088 | 44,273 | ||||||||||||
| Other liabilities | 18,692 | 19,370 | ||||||||||||
| Preferred Stock | 247,842 | 237,641 | ||||||||||||
| Stockholders’ equity | 22,063 | 43,282 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 465,130 | $ | 482,255 | ||||||||||
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Net revenues | $ | 65,499 | $ | 77,122 | ||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of revenues* | 28,637 | 35,471 | ||||||||||||
| Research and development | 17,397 | 19,788 | ||||||||||||
| Selling, general and administrative | 17,928 | 26,344 | ||||||||||||
| Restructuring charges | 713 | 1,450 | ||||||||||||
| Depreciation and amortization | 9,867 | 11,356 | ||||||||||||
| Total costs and expenses | 74,542 | 94,409 | ||||||||||||
| Loss from continuing operations | (9,043) | (17,287) | ||||||||||||
| Interest income | 5 | 58 | ||||||||||||
| Interest expense | (95) | (245) | ||||||||||||
| Other Income (expense) | (3,396) | 1,692 | ||||||||||||
| Loss from continuing operations, before taxes | (12,529) | (15,782) | ||||||||||||
| Benefit for income taxes | 163 | 12,432 | ||||||||||||
| Net loss | (12,366) | (3,350) | ||||||||||||
| Net income (loss) attributable to redeemable noncontrolling interests | 336 | (17) | ||||||||||||
| Preferred stock dividend | (10,530) | (8,909) | ||||||||||||
| Net loss attributable to Synchronoss | $ | (22,560) | $ | (12,276) | ||||||||||
| Earnings (loss) per share | ||||||||||||||
| Basic | $ | (0.53) | $ | (0.30) | ||||||||||
| Diluted | $ | (0.53) | $ | (0.30) | ||||||||||
| Weighted-average common shares outstanding: | ||||||||||||||
| Basic | 42,737 | 41,483 | ||||||||||||
| Diluted | 42,737 | 41,483 | ||||||||||||
________________________________
* Cost of revenues excludes depreciation and amortization which are shown separately.
SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net loss continuing operations | $ | (12,366) | $ | (3,350) | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Non-cash items | 12,097 | 14,690 | |||||||||
| Changes in operating assets and liabilities: | 2,530 | (26,356) | |||||||||
| Net cash provided by (used in) operating activities | 2,261 | (15,016) | |||||||||
| Investing activities: | |||||||||||
| Purchases of fixed assets | (721) | (249) | |||||||||
| Purchases of intangible assets and capitalized software | (5,042) | (4,428) | |||||||||
| Other investing activities | — | 1,854 | |||||||||
| Net cash used in investing activities | (5,763) | (2,823) | |||||||||
| Net cash provided by financing activities | — | 9,996 | |||||||||
| Effect of exchange rate changes on cash | (351) | (252) | |||||||||
| Net decrease in cash and cash equivalents | (3,853) | (8,095) | |||||||||
| Cash, restricted cash and cash equivalents, beginning of period | 33,671 | 39,001 | |||||||||
| Cash, restricted cash and cash equivalents, end of period | $ | 29,818 | $ | 30,906 | |||||||
SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
| Three Months Ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Non-GAAP financial measures and reconciliation: | ||||||||||||||
| GAAP Revenue | $ | 65,499 | $ | 77,122 | ||||||||||
| Less: Cost of revenues | 28,637 | 35,471 | ||||||||||||
| Gross Profit | 36,862 | 41,651 | ||||||||||||
| Add / (Less): | ||||||||||||||
| Stock-based compensation expense | 478 | 752 | ||||||||||||
| Restructuring, transition and cease-use lease expense | 27 | — | ||||||||||||
| Adjusted Gross Profit | 37,367 | 42,403 | ||||||||||||
| Adjusted Gross Margin | 57.0 | % | 55.0 | % | ||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| GAAP Net loss attributable to Synchronoss | $ | (22,560) | $ | (12,275) | ||||||||||
| Add / (Less): | ||||||||||||||
| Stock-based compensation expense | 2,721 | 5,169 | ||||||||||||
| Restructuring, transition and cease-use lease expense | 2,057 | 1,696 | ||||||||||||
| Amortization expense | 3,609 | 6,915 | ||||||||||||
| Litigation, remediation and refiling costs | (65) | 824 | ||||||||||||
| Non-GAAP Net (loss) income attributable to Synchronoss | $ | (14,238) | $ | 2,329 | ||||||||||
| Diluted Non-GAAP Net loss per share | $ | (0.33) | $ | 0.06 | ||||||||||
| Weighted shares outstanding - Dilutive | 42,737 | 41,483 | ||||||||||||
SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
| Three Months Ended | ||||||||||||||||||||||||||||||||
| Mar 31, 2020 | Jun 30, 2020 | Sep 30, 2020 | Dec 31, 2020 | Mar 31, 2021 | ||||||||||||||||||||||||||||
| Net loss attributable to Synchronoss | $ | (12,275) | $ | (10,148) | $ | (15,367) | $ | (10,892) | $ | (22,560) | ||||||||||||||||||||||
| Add / (Less): | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 5,169 | 4,987 | 4,391 | (3,410) | 2,721 | |||||||||||||||||||||||||||
| Restructuring, transition and cease-use lease expense | 1,696 | 7,003 | 6,580 | 1,222 | 2,057 | |||||||||||||||||||||||||||
| Litigation, remediation and refiling costs, net | 824 | 733 | 1,943 | 1,145 | (65) | |||||||||||||||||||||||||||
| Depreciation and amortization | 11,356 | 10,284 | 12,212 | 9,834 | 9,867 | |||||||||||||||||||||||||||
| Interest income | (58) | (1,509) | (20) | (9) | (5) | |||||||||||||||||||||||||||
| Interest Expense | 245 | 84 | 72 | 75 | 95 | |||||||||||||||||||||||||||
| Other Income, net | (1,692) | (1,367) | (2,684) | (3,793) | 3,396 | |||||||||||||||||||||||||||
| Provision (benefit) for income taxes | (12,432) | (7,972) | (8,744) | 2,039 | (163) | |||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | 17 | 165 | 60 | 101 | (336) | |||||||||||||||||||||||||||
| Preferred dividend | 8,908 | 9,289 | 9,685 | 10,099 | 10,530 | |||||||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 1,758 | $ | 11,549 | $ | 8,128 | $ | 6,411 | $ | 5,537 | ||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Net Cash (used in) provided by operating activities | $ | 2,261 | $ | (15,016) | ||||||||||
| Add / (Less): | ||||||||||||||
| Capitalized software | (5,042) | (4,428) | ||||||||||||
| Property and equipment | (721) | (249) | ||||||||||||
| Free Cashflow | (3,502) | (19,693) | ||||||||||||
| Add: One-Time Expenses due to Restatement, etc. | (65) | 824 | ||||||||||||
| Adjusted Free Cashflow | $ | (3,567) | $ | (18,869) | ||||||||||