-
Q3 2017 revenue of $36.3 million grew 14 percent over Q3 2016
-
Net income of $0.3 million and Adjusted EBITDA of $1.8 million is
up from net loss of $3.4 million and Adjusted EBITDA of $0.2 million
in Q3 2016
-
Several customer renewals and wins including WOW!, NorthwesTel and
governmental organizations in Africa, Southeast Asia and India
BUFFALO, N.Y.--(BUSINESS WIRE)--
Synacor, Inc. (NASDAQ: SYNC), the trusted multiscreen technology and
monetization partner for video, internet and communications providers,
device manufacturers, governments and enterprises, today announced its
financial results for the quarter ended September 30, 2017.
“We delivered strong financial performance during the quarter - meeting
our revenue and adjusted EBITDA growth expectations and reporting GAAP
net income for the first time in nearly four years. We generated
significant revenue growth and increased operating leverage that drove
profitability,” said Synacor CEO Himesh Bhise.
“Search and advertising grew 23 percent year-over-year and includes the
addition of revenues from AT&T. At the same time, software and services,
which includes identity management and collaboration, is robust and
delivered $13.6 million of high-margin revenue in the third quarter,”
continued Bhise.
Recent Highlights
-
Launched a new WOW! portal experience; renewed and extended
relationship that covers portal, advertising and email services.
-
Added several Pay TV operators to Synacor’s advanced Cloud-based
identity management platform, including NorthwesTel, a wholly-owned
subsidiary of Bell Canada, and WOW!
-
Added to a growing list of international enterprise and government
email customers, including a South East Asia government ministry, an
India government research lab and an Africa government information
technology authority.
-
Continued to deliver strong user engagement metrics and grow revenue
with ATT.net portal.
-
Added 50+ channel partners certified to sell Synacor products, growing
the existing base to more than 1900 partners.
Q3 2017 Financial Results
Revenue: For the third quarter of 2017, total revenue was
$36.3 million, meeting the Company’s financial guidance, an increase of
16 percent over the second quarter of 2017, and 14 percent over the
third quarter of 2016.
Net Income: For the third quarter of 2017, net
income was $0.3 million, compared with a net loss of $3.3 million in the
second quarter of 2017 and a net loss of $3.4 million in the third
quarter of 2016. Net income in the third quarter of 2017 includes a $1.9
million gain on the sale of an investment.
Earnings per share, or EPS, was $0.01 in the third quarter of 2017,
compared with a loss of $0.09 in the second quarter of 2017 and a loss
of $0.11 in the third quarter of 2016.
Adjusted EBITDA: For the third quarter of 2017, adjusted
earnings before interest, taxes, depreciation and amortization (adjusted
EBITDA), which excludes stock-based compensation expense, was $1.8
million compared with $0.2 million in the second quarter of 2017 and
$0.2 million for the third quarter of 2016.
Cash: The Company ended the third quarter of 2017 with
$22.9 million in cash and cash equivalents, compared with $23.0 million
at the end of the prior quarter.
Guidance
“We expect to continue delivering strong financial growth in the fourth
quarter," concluded Bhise.
Based on information available as of November 14, 2017, the Company is
providing financial guidance for the fourth quarter and narrowing fiscal
2017 guidance within the previously reported range as follows:
-
Q4 2017 Guidance: Revenue for the fourth quarter of 2017
is projected to be in the range of $46.0 million to $51.0 million. The
Company expects to report net income of ($1.8) million to $0.5 million
and adjusted EBITDA of $2.0 million to $4.0 million, which excludes
stock-based compensation expense of $0.6 million to $0.7 million,
depreciation and amortization of $2.6 million to $2.8 million, and
tax, interest expense and other income and expense of $0.3 million.
-
Fiscal 2017 Guidance: Revenue for the full year of 2017
is now expected to be within the range of $140 million to $145
million. The Company expects to report a net loss in the range of $9.1
million to $11.4 million and adjusted EBITDA in the range of $0.8
million to $2.8 million, which excludes stock-based compensation
expense of $2.5 million to $2.6 million, depreciation and amortization
of $9.6 million to $9.8 million, gain on investment of $1.9 million
and tax, interest expense, capitalized software impairment, and other
income and expense of $1.7 million.
Conference Call Details
Synacor will host a conference call today at 5:00 p.m. ET to discuss the
third-quarter financial results with the investment community. The live
webcast of Synacor’s earnings conference call can be accessed at http://investor.synacor.com/events.cfm.
To participate, please login approximately ten minutes prior to the
webcast. For those without access to the internet, the call may be
accessed toll-free via phone at (833) 235-2655, with conference ID
5949837, or callers outside the U.S. may dial (647) 689-4151. Following
completion of the call, a recorded webcast replay will be available on
Synacor's website. To listen to the telephone replay, call toll-free
(800) 585-8367, or callers outside the U.S. may dial (416) 621-4642. The
conference ID is 5949837.
About Synacor
Synacor (NASDAQ: SYNC) is the trusted technology development,
multiplatform services and revenue partner for video, internet and
communications providers, device manufacturers, governments and
enterprises. Synacor’s mission is to enable its customers to better
engage with their consumers. Its customers use Synacor’s technology
platforms and services to scale their businesses and extend their
subscriber relationships. Synacor delivers managed portals, advertising
solutions, email and collaboration platforms, end-to-end video solutions
and cloud-based identity management.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures in this release.
Generally, a non-GAAP financial measure is a numerical measure of a
company's performance, financial position or cash flows that either
excludes or includes amounts that are not normally excluded or included
in the most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles (GAAP).
We report adjusted EBITDA because it is a key measure used by our
management and Board of Directors to understand and evaluate our core
operating performance and trends, to prepare and approve our annual
budget and to develop short- and long-term operational plans. In
particular, the exclusion of certain expenses in calculating adjusted
EBITDA can provide a useful measure for period-to-period comparisons of
our core business. Accordingly, we believe that adjusted EBITDA provides
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our management
and Board of Directors.
For a reconciliation of adjusted EBITDA to net income, the most directly
comparable financial measure calculated and presented in accordance with
GAAP, please refer to the table “Reconciliation of GAAP to Non-GAAP
Measures” in this press release.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
"Safe Harbor" statement under the Private Securities Litigation Reform
Act of 1995: This press release contains forward-looking statements
concerning Synacor's expected financial performance (including, without
limitation, its fourth-quarter and fiscal year 2017 guidance, the
statements and quotations from management and Synacor's strategic and
operational plans. The achievement or success of the matters covered by
such forward-looking statements involves risks, uncertainties and
assumptions. If any such risks or uncertainties materialize or if any of
the assumptions prove incorrect, the Company's results could differ
materially from the results expressed or implied by the forward-looking
statements the Company makes.
The risks and uncertainties referred to above include - but are not
limited to - risks associated with: execution of our plans and
strategies, including execution against our agreement with AT&T the pace
and degree to which the AT&T portal can be monetized; the loss of a
significant customer; our ability to obtain new customers; our ability
to integrate the assets and personnel from acquisitions; expectations
regarding consumer taste and user adoption of applications and
solutions; developments in internet browser software and search
advertising technologies; general economic conditions; expectations
regarding the Company's ability to timely expand the breadth of services
and products or introduction of new services and products; consolidation
within the cable and telecommunications industries; changes in the
competitive dynamics in the market for online search and digital
advertising; the risk that security measures could be breached and
unauthorized access to subscriber data could be obtained; potential
third party intellectual property infringement claims or other legal
claims against Synacor; and the price volatility of our common stock.
Further information on these and other factors that could affect the
Company’s financial results is included in filings it makes with the
Securities and Exchange Commission from time to time, including the
section entitled "Risk Factors" in the Company's most recent Form 10-Q
filed with the SEC. These documents are available on the SEC Filings
section of the Investor Information section of the Company's website at http://investor.synacor.com/.
All information provided in this release and in the attachments is
available as of November 14, 2017, and Synacor undertakes no duty to
update this information.
|
Synacor, Inc.
|
Condensed Consolidated Balance Sheets
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
22,932
|
|
|
|
$
|
14,315
|
|
Accounts receivable, net
|
|
|
|
20,453
|
|
|
|
|
27,386
|
|
Prepaid expenses and other current assets
|
|
|
|
6,583
|
|
|
|
|
4,862
|
|
Total current assets
|
|
|
|
49,968
|
|
|
|
|
46,563
|
|
Property and equipment, net
|
|
|
|
20,749
|
|
|
|
|
14,406
|
|
Goodwill
|
|
|
|
15,956
|
|
|
|
|
15,943
|
|
Intangible assets
|
|
|
|
13,230
|
|
|
|
|
14,837
|
|
Other long-term assets
|
|
|
|
802
|
|
|
|
|
1,650
|
|
Total Assets
|
|
|
$
|
100,705
|
|
|
|
$
|
93,399
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
17,791
|
|
|
|
$
|
18,769
|
|
Accrued expenses and other current liabilities
|
|
|
|
8,126
|
|
|
|
|
11,684
|
|
Current portion of deferred revenue
|
|
|
|
11,005
|
|
|
|
|
12,149
|
|
Current portion of capital lease obligations
|
|
|
|
2,479
|
|
|
|
|
982
|
|
Total current liabilities
|
|
|
|
39,401
|
|
|
|
|
43,584
|
|
Long-term portion of capital lease obligations
|
|
|
|
3,981
|
|
|
|
|
1,014
|
|
Deferred revenue
|
|
|
|
2,981
|
|
|
|
|
3,917
|
|
Long-term debt
|
|
|
|
—
|
|
|
|
|
5,000
|
|
Other long-term liabilities
|
|
|
|
428
|
|
|
|
|
235
|
|
Total Liabilities
|
|
|
|
46,791
|
|
|
|
|
53,750
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
Common stock
|
|
|
|
395
|
|
|
|
|
316
|
|
Treasury stock
|
|
|
|
(1,664
|
)
|
|
|
|
(1,547
|
)
|
Additional paid-in capital
|
|
|
|
141,700
|
|
|
|
|
117,747
|
|
Accumulated deficit
|
|
|
|
(86,521
|
)
|
|
|
|
(76,850
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
|
4
|
|
|
|
|
(17
|
)
|
Total stockholders’ equity
|
|
|
|
53,914
|
|
|
|
|
39,649
|
|
Total Liabilities and Stockholders' Equity
|
|
|
$
|
100,705
|
|
|
|
$
|
93,399
|
|
|
|
|
|
|
|
|
|
Synacor, Inc.
|
Condensed Consolidated Statements of Operations
|
(In thousands except share and per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
36,269
|
|
|
|
$
|
31,721
|
|
|
|
$
|
94,025
|
|
|
|
$
|
92,457
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (1)
|
|
|
|
|
|
17,620
|
|
|
|
|
14,611
|
|
|
|
|
44,644
|
|
|
|
|
41,099
|
|
Technology and development (1)(2)
|
|
|
|
|
|
6,748
|
|
|
|
|
6,791
|
|
|
|
|
20,950
|
|
|
|
|
19,255
|
|
Sales and marketing (2)
|
|
|
|
|
|
6,179
|
|
|
|
|
5,907
|
|
|
|
|
19,025
|
|
|
|
|
17,177
|
|
General and administrative (1)(2)
|
|
|
|
|
|
4,495
|
|
|
|
|
4,871
|
|
|
|
|
12,820
|
|
|
|
|
15,027
|
|
Depreciation and amortization
|
|
|
|
|
|
2,596
|
|
|
|
|
2,414
|
|
|
|
|
7,004
|
|
|
|
|
6,782
|
|
Total costs and operating expenses
|
|
|
|
|
|
37,638
|
|
|
|
|
34,594
|
|
|
|
|
104,443
|
|
|
|
|
98,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
|
(1,369
|
)
|
|
|
|
(2,873
|
)
|
|
|
|
(10,418
|
)
|
|
|
|
(6,883
|
)
|
Gain on sale of investment
|
|
|
|
|
|
1,902
|
|
|
|
|
—
|
|
|
|
|
1,902
|
|
|
|
|
—
|
|
Other income (expense)
|
|
|
|
|
|
99
|
|
|
|
|
(38
|
)
|
|
|
|
172
|
|
|
|
|
206
|
|
Interest expense
|
|
|
|
|
|
(127
|
)
|
|
|
|
(75
|
)
|
|
|
|
(328
|
)
|
|
|
|
(227
|
)
|
Income (loss) before income taxes
|
|
|
|
|
|
505
|
|
|
|
|
(2,986
|
)
|
|
|
|
(8,672
|
)
|
|
|
|
(6,904
|
)
|
Income tax provision
|
|
|
|
|
|
244
|
|
|
|
|
379
|
|
|
|
|
999
|
|
|
|
|
783
|
|
Net income (loss)
|
|
|
|
|
$
|
261
|
|
|
|
$
|
(3,365
|
)
|
|
|
$
|
(9,671
|
)
|
|
|
$
|
(7,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
(0.27
|
)
|
|
|
$
|
(0.26
|
)
|
Diluted
|
|
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
(0.27
|
)
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to compute net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
38,471,377
|
|
|
|
|
30,260,172
|
|
|
|
|
35,590,563
|
|
|
|
|
30,108,725
|
|
Diluted
|
|
|
|
|
|
39,940,790
|
|
|
|
|
30,260,172
|
|
|
|
|
35,590,563
|
|
|
|
|
30,108,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Exclusive of depreciation shown separately.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Technology and development
|
|
|
|
|
$
|
190
|
|
|
|
$
|
238
|
|
|
|
$
|
604
|
|
|
|
$
|
681
|
|
Sales and marketing
|
|
|
|
|
|
142
|
|
|
|
|
173
|
|
|
|
|
500
|
|
|
|
|
604
|
|
General and administrative
|
|
|
|
|
|
273
|
|
|
|
|
269
|
|
|
|
|
824
|
|
|
|
|
819
|
|
|
|
|
|
|
$
|
605
|
|
|
|
$
|
680
|
|
|
|
$
|
1,928
|
|
|
|
$
|
2,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synacor, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
|
|
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(9,671
|
)
|
|
|
$
|
(7,687
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
7,004
|
|
|
|
|
6,782
|
|
Capitalized software impairment
|
|
|
|
|
256
|
|
|
|
|
—
|
|
Stock-based compensation expense
|
|
|
|
|
1,928
|
|
|
|
|
2,104
|
|
Gain on sale of investment
|
|
|
|
|
(1,902
|
)
|
|
|
|
—
|
|
Provision for deferred income taxes
|
|
|
|
|
197
|
|
|
|
|
—
|
|
Increase in estimated value of contingent consideration
|
|
|
|
|
107
|
|
|
|
|
90
|
|
Change in operating assets and liabilities net of effect of
acquisition:
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
6,933
|
|
|
|
|
5,313
|
|
Prepaid expenses and other assets
|
|
|
|
|
(1,646
|
)
|
|
|
|
(1,282
|
)
|
Accounts payable
|
|
|
|
|
(1,668
|
)
|
|
|
|
1,842
|
|
Accrued expenses and other liabilities
|
|
|
|
|
(2,369
|
)
|
|
|
|
1,245
|
|
Deferred revenue
|
|
|
|
|
(2,080
|
)
|
|
|
|
(1,696
|
)
|
Net cash (used in) provided by operating activities
|
|
|
|
|
(2,911
|
)
|
|
|
|
6,711
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
Proceeds from sale of investment
|
|
|
|
|
2,645
|
|
|
|
|
—
|
|
Purchases of property and equipment
|
|
|
|
|
(5,774
|
)
|
|
|
|
(4,246
|
)
|
Acquisition
|
|
|
|
|
—
|
|
|
|
|
(2,500
|
)
|
Net cash used in investing activities
|
|
|
|
|
(3,129
|
)
|
|
|
|
(6,746
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
Net proceeds from offering of common stock
|
|
|
|
|
20,046
|
|
|
|
|
—
|
|
Repayments of long-term debt
|
|
|
|
|
(5,000
|
)
|
|
|
|
—
|
|
Repayments on capital lease obligations
|
|
|
|
|
(914
|
)
|
|
|
|
(1,242
|
)
|
Proceeds from exercise of common stock options
|
|
|
|
|
1,942
|
|
|
|
|
744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock and shares received to satisfy minimum
tax withholding liabilities
|
|
|
|
|
(117
|
)
|
|
|
|
(128
|
)
|
Deferred acquisition payment
|
|
|
|
|
(1,300
|
)
|
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
14,657
|
|
|
|
|
(626
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
—
|
|
|
|
|
(8
|
)
|
Net increase (decrease) in Cash and Cash Equivalents
|
|
|
|
|
8,617
|
|
|
|
|
(669
|
)
|
Cash and Cash Equivalents at beginning of period
|
|
|
|
|
14,315
|
|
|
|
|
15,697
|
|
Cash and Cash Equivalents at end of period
|
|
|
|
$
|
22,932
|
|
|
|
$
|
15,028
|
|
|
|
|
|
|
|
|
|
|
Synacor, Inc.
|
Reconciliation of GAAP to Non-GAAP Measures
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of net loss to
adjusted EBITDA for each of the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
261
|
|
|
|
$
|
(3,365
|
)
|
|
|
$
|
(9,671
|
)
|
|
|
$
|
(7,687
|
)
|
Provision for income taxes
|
|
|
|
244
|
|
|
|
|
379
|
|
|
|
|
999
|
|
|
|
|
783
|
|
Interest expense
|
|
|
|
127
|
|
|
|
|
75
|
|
|
|
|
328
|
|
|
|
|
227
|
|
Gain on sale of investment
|
|
|
|
(1,902
|
)
|
|
|
|
—
|
|
|
|
|
(1,902
|
)
|
|
|
|
—
|
|
Other income (expense)
|
|
|
|
(99
|
)
|
|
|
|
38
|
|
|
|
|
(172
|
)
|
|
|
|
(206
|
)
|
Depreciation and amortization
|
|
|
|
2,596
|
|
|
|
|
2,414
|
|
|
|
|
7,004
|
|
|
|
|
6,782
|
|
Capitalized software impairment
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
256
|
|
|
|
|
—
|
|
Stock-based compensation expense
|
|
|
|
605
|
|
|
|
|
680
|
|
|
|
|
1,928
|
|
|
|
|
2,104
|
|
Adjusted EBITDA
|
|
|
$
|
1,832
|
|
|
|
$
|
221
|
|
|
|
$
|
(1,230
|
)
|
|
|
$
|
2,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|

View source version on businesswire.com: http://www.businesswire.com/news/home/20171114006615/en/
Source: Synacor, Inc.