Synchronoss Technologies, Inc. Announces First Quarter 2014 Financial Results
-
Non-GAAP total revenue of
$98.7 million increases 24% year-over-year -
Non-GAAP operating income of
$24.2 million or a 25% operating margin driving non-GAAP EPS of$0.39 , an increase of 39% year-over-year -
Cloud Services revenue of
$43.7 million increases 83% year-over-year
“Synchronoss delivered strong first quarter results highlighted by
revenue that exceeded our expectations, driven by 83% year-over-year
Cloud Services revenue growth,” said
Waldis added, “Customer reaction to our most recent product launches,
Synchronoss Integrated Life™ and Synchronoss Workspace™, has been
extremely positive and represents additional growth opportunities over
time. We are seeing our customers rapidly embrace cloud technologies as
a key component of their enhanced communications strategy. Our expanded
product set meaningfully increases the value we can deliver to our
customers and reflects the increasingly strategic role
On a GAAP basis,
On a non-GAAP basis,
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 also included below under the heading "Non-GAAP Financial Measures."
“The first quarter was a strong start to 2014 and we are pleased with
the rapid adoption and customer scaling of our Synchronoss Personal
Cloud™ platform,” said
Other First Quarter and Recent Business Highlights:
-
Cloud Services revenue accounted for
$43.7 million of non-GAAP revenue, representing approximately 44% of total non-GAAP revenue and growing 83% on a year-over-year basis. -
Activation Services revenue accounted for
$55.0 million of non-GAAP revenue, representing approximately 56% of total non-GAAP revenue and essentially flat on a year-over-year basis. -
Announced a partnership with Napster to create cloud-based music
sharing through Synchronoss’ new solution called The
Synchronoss Social Music Platform™ by integrating Napster’s music streaming services directly into the Synchronoss Personal Cloud™. -
Telstra , Australia’s largest telecommunications provider, announced the availability of the T-Cloud™ personal cloud service, which is being powered by the Synchronoss Personal Cloud™. -
Time Warner Cable chose Synchronoss Integrated Life™ to support their Connected Home offering, which includes 24x7 security and fire protection, remote access and lighting and temperature controls. -
Appointed Mr.
Chris Halbard to the role of Executive Vice President and President, International, to lead the company’s international business development initiatives and operations. Mr. Halbard is the former Chief Operating Officer and Chief Financial Officer for British Telecom Global Services and held senior positions atAT&T and Lucent Technologies.
Conference Call Details
In conjunction with this announcement,
Following the conference call, a replay will be available for a limited time at 888-286-8010 (domestic) or 617-801-6888 (international). The replay pass code is 16327293. An archived web cast of this conference call will also be available on the “Investor Relations” page of the company’s web site, www.synchronoss.com.
Non-GAAP Financial Measures
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. 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
Source:
Forward-looking Statements
This document may include certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to, plans,
objectives, expectations and intentions and other statements contained
in this press release that are not historical facts and statements
identified by words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," “outlook” or words of similar
meanings. These statements are based on our current beliefs or
expectations and are inherently subject to various risks and
uncertainties, including those set forth under the caption "Risk
Factors" in Synchronoss’ Annual Report on Form 10-K for the year ended
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| BALANCE SHEETS | ||||||||
| (in thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
|
March 31, 2014 |
December 31, 2013 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 47,271 | $ | 63,512 | ||||
| Marketable securities | 11,122 | 9,105 | ||||||
|
Accounts receivable, net of allowance for doubtful accounts of $329 and $237 at March 31, 2014 and December 31, 2013, respectively |
93,911 | 64,933 | ||||||
| Prepaid expenses and other assets | 19,042 | 19,451 | ||||||
| Deferred tax assets | 3,752 | 4,626 | ||||||
| Total current assets | 175,098 | 161,627 | ||||||
| Marketable securities | 3,833 | 4,988 | ||||||
| Property and equipment, net | 104,165 | 106,106 | ||||||
| Goodwill | 137,373 | 137,743 | ||||||
| Intangible assets, net | 99,997 | 101,963 | ||||||
| Deferred tax assets | 3,175 | 4,210 | ||||||
| Other assets | 9,899 | 10,382 | ||||||
| Total assets | $ | 533,540 | $ | 527,019 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,145 | $ | 9,528 | ||||
| Accrued expenses | 29,717 | 37,919 | ||||||
| Deferred revenues | 12,182 | 15,372 | ||||||
| Contingent consideration obligation | 22 | 22 | ||||||
| Total current liabilities | 48,066 | 62,841 | ||||||
| Lease financing obligation - long term | 9,247 | 9,252 | ||||||
| Contingent consideration obligation - long-term | 6,079 | 4,468 | ||||||
| Other liabilities | 3,686 | 2,819 | ||||||
| Stockholders’ equity: | ||||||||
|
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0
shares issued and |
||||||||
| — | — | |||||||
|
Common stock, $0.0001 par value; 100,000 shares authorized, 44,913
and 44,456 shares |
||||||||
| 4 | 4 | |||||||
| Treasury stock, at cost (3,767 and 3,793 shares at March 31, 2014 and December 31, 2013, respectively) | (66,770 | ) | (67,104 | ) | ||||
| Additional paid-in capital | 403,550 | 393,644 | ||||||
| Accumulated other comprehensive income (loss) | 276 | (723 | ) | |||||
| Retained earnings | 129,402 | 121,818 | ||||||
| Total stockholders’ equity | 466,462 | 447,639 | ||||||
| Total liabilities and stockholders’ equity | $ | 533,540 | $ | 527,019 | ||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| STATEMENT OF INCOME | ||||||||
| (in thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Net revenues | $ | 98,477 | $ | 78,276 | ||||
| Costs and expenses: | ||||||||
| Cost of services (1)(2)(3)* | 39,979 | 32,131 | ||||||
| Research and development (1)(2)(3) | 15,541 | 16,718 | ||||||
| Selling, general and administrative (1)(2)(3) | 17,125 | 14,652 | ||||||
| Net change in contingent consideration obligation | 1,211 | 433 | ||||||
| Restructuring charges | - | 5,172 | ||||||
| Depreciation and amortization | 12,266 | 8,969 | ||||||
| Total costs and expenses | 86,122 | 78,075 | ||||||
| Income from operations | 12,355 | 201 | ||||||
| Interest income | 49 | 86 | ||||||
| Interest expense | (420 | ) | (232 | ) | ||||
| Other income (expense) (4) | 796 | (258 | ) | |||||
| Income before income tax expense | 12,780 | (203 | ) | |||||
| Income tax (expense) benefit | (5,196 | ) | 679 | |||||
| Net income | $ | 7,584 | $ | 476 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 0.19 | $ | 0.01 | ||||
| Diluted | $ | 0.19 | $ | 0.01 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 39,769 | 38,121 | ||||||
| Diluted | 40,655 | 39,089 | ||||||
| * Cost of services excludes depreciation and amortization which is shown separately. | ||||||||
| (1) Amounts include fair value stock-based compensation as follows: | ||||||||
| Cost of services | $ | 1,258 | $ | 1,200 | ||||
| Research and development | 1,270 | 1,296 | ||||||
| Selling, general and administrative | 3,314 | 2,414 | ||||||
| Total fair value stock-based compensation expense | $ | 5,842 | $ | 4,910 | ||||
| (2) Amounts include acquisition costs as follows: | ||||||||
| Cost of services | $ | 31 | $ | - | ||||
| Research and development | 48 | - | ||||||
| Selling, general and administrative | 139 | 574 | ||||||
| Total acquisition costs | $ | 218 | $ | 574 | ||||
| (3) Amounts include fair value earn-out cash and stock compensation as follows: | ||||||||
| Cost of services | $ | - | $ | (57 | ) | |||
| Research and development | - | (66 | ) | |||||
| Selling, general and administrative | 424 | (49 | ) | |||||
| Total fair value earn-out cash and stock compensation expense | $ | 424 | $ | (172 | ) | |||
| (4) Amounts include Fx change of the contingent consideration obligation as follows: | ||||||||
| Other income | $ | - | $ | 30 | ||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||
| (in thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Non-GAAP financial measures and reconciliation: | ||||||||
| GAAP Revenue | $ | 98,477 | $ | 78,276 | ||||
| Add: Deferred revenue write-down | 224 | 1,204 | ||||||
| Non-GAAP Revenue | $ | 98,701 | $ | 79,480 | ||||
| GAAP Revenue | $ | 98,477 | $ | 78,276 | ||||
| Less: Cost of services | 39,979 | 32,131 | ||||||
| GAAP Gross Margin | 58,498 | 46,145 | ||||||
| Add: Deferred revenue write-down | 224 | 1,204 | ||||||
| Add: Fair value stock-based compensation | 1,258 | 1,200 | ||||||
| Add: Acquisition and restructuring costs | 31 | - | ||||||
| Add: Deferred compensation expense - earn-out | - | (57 | ) | |||||
| Non-GAAP Gross Margin | $ | 60,011 | $ | 48,492 | ||||
| Non-GAAP Gross Margin % | 61 | % | 61 | % | ||||
| GAAP income from operations | $ | 12,355 | $ | 201 | ||||
| Add: Deferred revenue write-down | 224 | 1,204 | ||||||
| Add: Fair value stock-based compensation | 5,842 | 4,910 | ||||||
| Add: Acquisition and restructuring costs | 218 | 5,746 | ||||||
| Add: Net change in contingent consideration obligation | 1,211 | 433 | ||||||
| Add: Deferred compensation expense - earn-out | 424 | (172 | ) | |||||
| Add: Amortization expense | 3,914 | 3,622 | ||||||
| Non-GAAP income from operations | $ | 24,188 | $ | 15,944 | ||||
| GAAP net income attributable to common stockholders | $ | 7,584 | $ | 476 | ||||
| Add: Deferred revenue write-down, net of tax | 149 | 791 | ||||||
| Add: Fair value stock-based compensation, net of tax | 3,894 | 3,224 | ||||||
| Add: Acquisition and restructuring costs, net of taxes | 145 | 3,773 | ||||||
| Add: Net change in contingent consideration obligation, net of Fx change, net of tax | 1,211 | 403 | ||||||
| Add: Deferred compensation expense - earn-out, net of tax | 283 | (113 | ) | |||||
| Add: Amortization expense, net of tax | 2,609 | 2,379 | ||||||
| Non-GAAP net income | $ | 15,875 | $ | 10,933 | ||||
| Diluted non-GAAP net income per share | $ | 0.39 | $ | 0.28 | ||||
| Weighted shares outstanding - Diluted | 40,655 | 39,089 | ||||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| STATEMENT OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 7,584 | $ | 476 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization expense | 12,266 | 8,969 | ||||||
| Amortization of bond premium | 74 | 86 | ||||||
| Deferred income taxes | 3,112 | (118 | ) | |||||
| Non-cash interest on leased facility | 230 | 229 | ||||||
| Stock-based compensation | 5,842 | 4,910 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net of allowance for doubtful accounts | (28,935 | ) | 5,519 | |||||
| Prepaid expenses and other current assets | 816 | 4,499 | ||||||
| Other assets | 465 | (384 | ) | |||||
| Accounts payable | (3,388 | ) | (2,639 | ) | ||||
| Accrued expenses | (8,743 | ) | (11,126 | ) | ||||
| Contingent consideration obligation | 1,611 | 241 | ||||||
| Excess tax benefit from the exercise of stock options | (385 | ) | - | |||||
| Other liabilities | 1,249 | 1,247 | ||||||
| Deferred revenues | (3,204 | ) | 3,325 | |||||
| Net cash (used in) provided by operating activities | (11,406 | ) | 15,234 | |||||
| Investing activities: | ||||||||
| Purchases of fixed assets | (8,044 | ) | (10,964 | ) | ||||
| Purchases of marketable securities available-for-sale | (1,244 | ) | (13 | ) | ||||
| Maturities of marketable securities available-for-sale | 315 | 4,791 | ||||||
| Net cash used in investing activities | (8,973 | ) | (6,186 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from the exercise of stock options | 3,273 | 6,212 | ||||||
| Excess tax benefit from the exercise of stock options | 385 | - | ||||||
| Proceeds from the sale of Treasury Stock in connection with an employee stock purchase plan | 740 | 670 | ||||||
| Payments on capital obligations | (324 | ) | (760 | ) | ||||
| Net cash provided by financing activities | 4,074 | 6,122 | ||||||
| Effect of exchange rate changes on cash | 64 | (82 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (16,241 | ) | 15,088 | |||||
| Cash and cash equivalents at beginning of period | 63,512 | 36,028 | ||||||
| Cash and cash equivalents at end of period | $ | 47,271 | $ | 51,116 | ||||
| SYNCHRONOSS TECHNOLOGIES, INC. | |||||||
| Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities | |||||||
| (in thousands) | |||||||
| (Unaudited) | |||||||
| Three Months Ended March 31, | |||||||
| 2014 | 2013 | ||||||
| Non-GAAP cash (used in) provided by operating activities and reconciliation: | |||||||
| Net cash (used in) provided by operating activities (GAAP) | $ | (11,406 | ) | $ | 15,234 | ||
| Add: Tax benefits from stock options exercised | 385 | - | |||||
| Adjusted cash flow (used in) provided by operating activities (Non-GAAP) | $ | (11,021 | ) | $ | 15,234 | ||
Source:
Synchronoss Technologies, Inc.
Investor:
Brian Denyeau,
646-277-1251
investor@synchronoss.com
or
Media:
Stacie
Hiras, 908-547-1260
stacie.hiras@synchronoss.com