DELAWARE

000-52049

06-1594540

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

200 Crossing Boulevard, 8th Floor
Bridgewater, New Jersey

 
08807

(Address of principal executive offices)

(Zip Code)

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SYNCHRONOSS TECHNOLOGIES, INC.

Date: February 5, 2015

By:

/s/ Stephen G. Waldis

Stephen G. Waldis

Chairman of the Board of Directors
And Chief Executive Officer

·

Non-GAAP total revenue of $130.9 million increases 34% year-over-year

·

Cloud Services revenue of $63.4 million increases 61% year-over-year

·

Activation Services revenue of $67.5 million increases 16% year-over-year

·

Non-GAAP EPS of $0.53 increases 29% year-over-year

·

Cloud Services revenue accounted for $63.4 million of non-GAAP revenue, representing approximately 48% of total non-GAAP revenue and growing 61% on a year-over-year basis. 

·

Activation Services revenue accounted for $67.5 million of non-GAAP revenue, representing approximately 52% of total non-GAAP revenue and growing 16% on a year-over-year basis. 

·

Subsequent to the end of the fourth quarter, Synchronoss successfully completed the acquisition of certain assets from F-Secure for $60 million in cash. The acquisition of F-Secure assets significantly expanding Synchronoss’ relationship with global customers worldwide while strengthening its competitive position in the Personal Cloud.

·

On a GAAP basis:  revenues for the full year 2014 were $457.3 million, an increase of 31% compared to $349.0 million in the prior year. Gross profit was $272.9 million, income from operations was $62.3 million and net income was $38.9 million, leading to full year 2014 diluted earnings per share of $0.92.

·

On a Non-GAAP basis:  revenues for the full year 2014 were $458.6 million, an increase of 30% compared to $352.5 million in 2013. Gross profit was $280.2 million, representing a gross margin of 61%, and income from operations was $118.1 million, representing an operating margin of 26%. Net income was $76.8 million for the full year 2014, leading to diluted earnings per share of $1.79, an increase of 35% from $1.33 in the prior year.

December 31, 2014

December 31, 2013

ASSETS

Current assets:

Cash and cash equivalents

$

$

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $88 and $237 at December 31, 2014 and 2013, respectively

Prepaid expenses and other assets

Deferred tax assets

Total current assets

Marketable securities

Property and equipment, net

Goodwill

Intangible assets, net

Deferred tax assets

Other assets

Total assets

$

$

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

$

Accrued expenses

Deferred revenues

Contingent consideration obligation

Total current liabilities

Lease financing obligation - long term

Contingent consideration obligation - long-term

 —

Convertible debt

 —

Deferred tax liability

 —

Other liabilities

Stockholders’ equity:

Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at December 31, 2014 and 2013

 —

 —

Common stock, $0.0001 par value; 100,000 shares authorized, 46,444 and 44,456 shares issued; 42,711 and 40,663 outstanding at  December 31, 2014 and December 31, 2013, respectively

Treasury stock, at cost (3,733 and 3,793 shares at December 31, 2014 and 2013, respectively)

Additional paid-in capital

Accumulated other comprehensive loss

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

  Three Months Ended December 31,   

  Year Ended December 31,   

2014

2013

2014

2013

Net revenues

$

$

$

$

Costs and expenses:

Cost of services (1)(2)(3)*

Research and development (1)(2)(3)

Selling, general and administrative (1)(2)(3)

Net change in contingent consideration obligation

Restructuring charges

 —

 —

 —

Depreciation and amortization

Total costs and expenses

Income from operations

Interest income

Interest expense

Other (expense) income (4)

Income before income tax expense

Income tax expense

Net income

$

$

$

$

Net income attributable to Synchronoss

Add: After-tax interest on convertible debt

 —

 —

Net income for diluted EPS calculation

$

$

$

$

Net income per common share:

Basic

$

$

$

$

Diluted

$

$

$

$

Weighted-average common shares outstanding:

Basic

Diluted

* Cost of services excludes depreciation which is shown separately.

(1) Amounts include fair value stock-based compensation as follows:

Cost of services

$

$

$

$

Research and development

Selling, general and administrative

Total fair value stock-based compensation expense

$

$

$

$

(2) Amounts include acquisition costs as follows:

Cost of services

$

 —

$

$

$

Research and development

Selling, general and administrative

Total acquisition costs

$

$

$

$

(3) Amounts include fair value earn-out cash and stock compensation as follows:

Cost of services

$

 —

$

$

$

Research and development

 —

 —

Selling, general and administrative

Total fair value earn-out cash and stock compensation expense

$

$

$

$

(4) Amounts include Fx change of the contingent consideration obligation as follows:

Other income (expense)

$

$

$

$

   Three Months Ended December 31,    

   Year Ended December 31,    

2014

2013

2014

2013

Non-GAAP financial measures and reconciliation:

 GAAP Revenue

$

$

$

$

Add:  Deferred Revenue Write-Down

 Non-GAAP Revenue

$

$

$

$

 GAAP Revenue

$

$

$

$

Less: Cost of Services

GAAP Gross Margin

Add: Deferred revenue write-down

Add: Fair value stock-based compensation

Add: Acquisition and restructuring costs

 —

Add: Deferred compensation expense - earn-out

 —

Non-GAAP Gross Margin

$

$

$

$

Non-GAAP Gross Margin %

GAAP income from operations

$

$

$

$

Add: Deferred revenue write-down

Add: Fair value stock-based compensation

Add: Acquisition and restructuring costs

Add: Net change in contingent consideration obligation

Add: Deferred compensation expense - earn-out

Add: Amortization expense

Non-GAAP income from operations

$

$

$

$

GAAP net income attributable to common stockholders

$

$

$

$

Add: Deferred revenue write-down, net of tax

Add: Fair value stock-based compensation, net of tax

Add: Acquisition and restructuring costs, net of taxes

Add: Net change in contingent consideration obligation, net of Fx change, net of tax

Add: Deferred compensation expense - earn-out, net of tax

Add: Amortization expense, net of tax

Non-GAAP net income

$

$

$

$

Net income applicable to shares of common stock for earnings per share

$

$

$

$

Add: After-tax interest on convertible debt

 —

 —

Net income for diluted EPS calculation

$

$

$

$

Diluted non-GAAP net income per share

$

$

$

$

Weighted shares outstanding - Diluted

Year Ended December 31,

2014

2013

Operating activities:

Net income

$

$

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

Amortization of debt issuance costs

 —

Loss on disposal of asset

 —

Amortization of bond premium

Deferred income taxes

Non-cash interest on leased facility

Stock-based compensation

Changes in operating assets and liabilities:

Accounts receivable, net of allowance for doubtful accounts

Prepaid expenses and other current assets

Other assets

Accounts payable

Accrued expenses

Contingent consideration obligation

Excess tax benefit from the exercise of stock options

Other liabilities

Deferred revenues

Net cash provided by operating activities

Investing activities:

Purchases of fixed assets

Purchases of marketable securities available-for-sale

Sales and maturities of marketable securities available-for-sale

Business acquired, net of cash

Net cash used in investing activities

Financing activities:

Proceeds from the exercise of stock options

Payments on contingent consideration obligation

 —

Debt issuance costs related to convertible notes

 —

Proceeds from issuance of convertible notes

 —

Borrowings on revolving line of credit

 —

Repayment of revolving line of credit

 —

Excess tax benefit from the exercise of stock option

Proceeds from the sale of Treasury Stock in connection with an employee stock purchase plan

Repayments of capital obligations

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

$

$

Year Ended December 31,

2014

2013

Non-GAAP cash provided by operating activities and reconciliation:

Net cash provided by operating activities (GAAP)

$

$

Add: Tax benefits from stock options exercised

Add: Cash payments on settlement of Earn-out

 —

Adjusted cash flow provided by operating activities (Non-GAAP)

$

$