-
Q2 revenue increases to $35.9 million, beating guidance
-
Q2 net loss narrows to $2.6 million and adjusted EBITDA improves to
$1.2 million, from a net loss of $3.3 million and adjusted EBITDA of
$0.2 million a year ago
-
Q2 wins include Mediacom renewal, Google renewal and the addition
of 110 new Zimbra enterprise and government customers
-
Recurring and fee-based revenue grew 13% year over year to $14.9
million, driven by Collaboration and Identity platforms
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 second quarter ended June 30, 2018.
“Strong growth from both software and advertising fueled solid
second-quarter revenue,” said Synacor CEO Himesh Bhise. “We increased
revenue 15% year over year to $35.9 million, narrowed our net loss, and
delivered adjusted EBITDA of $1.2 million that was up from $0.2 million
a year ago.
“We continue to make progress on our initiatives to drive value, and we
expanded our cost-reduction program this quarter,” Bhise continued. “We
delivered 13% year-over-year growth in recurring and fee-based revenue,
driven by our operating focus on our high-margin, recurring-revenue
Collaboration and Identity platforms.”
Recent Highlights
-
Renewed an expansive deal covering portal, identity and email
platforms with Mediacom, a top 10 multichannel video service provider
in the U.S.
-
Added 110 new Zimbra email enterprise and government customers
worldwide.
-
Signed agreement to upgrade 3 million email boxes for an ISP in Japan.
-
Extended search and advertising relationship with Google through May
2020.
-
Made progress in the development of a decentralized app of Zimbra for
EOSIO blockchain, which yielded a revenue benefit.
Q2 2018 Financial Results
Revenue
: For the second quarter of 2018, revenue was $35.9
million, an increase of 15% versus the second quarter of 2017.
Net Income
: For the second quarter of 2018, net
loss narrowed to $2.6 million, or $(0.07) per share, compared with a net
loss of $3.3 million, or $(0.09) per share, in the second quarter of
2017.
Adjusted EBITDA
: For the second quarter of 2018, adjusted
EBITDA, which excludes stock-based compensation, other income and
expense and restructuring costs, increased to $1.2 million, compared
with $0.2 million for the second quarter of 2017, which also excluded a
capitalized software impairment.
Cash
: The Company ended the second quarter of 2018 with
$15.0 million in cash and cash equivalents, compared with $16.4 million
at the end of the first quarter of 2018.
Guidance
Based on information available as of August 1, 2018, the Company is
providing financial guidance for the third quarter of 2018 and affirming
full-year 2018 guidance for revenue, net loss and adjusted EBITDA as
follows:
-
Q3 2018 Guidance
: Revenue for the third quarter of 2018
is projected to be in the range of $37 million to $39 million. The
Company expects to report a net loss of $2.2 million to $2.7 million
and adjusted EBITDA of $1.5 million to $2.0 million, which excludes
stock-based compensation expense of approximately $0.6 million,
restructuring costs of approximately $0.8 million, depreciation and
amortization of approximately $2.5 million, and tax, interest expense
and other income and expense of approximately $0.3 million.
-
Fiscal 2018 Guidance
: Revenue for the full year of 2018
is expected to be in the range of $150 million to $155 million. The
Company expects to report a net loss in the range of $4.4 million to
$8.6 million and adjusted EBITDA in the range of $7 million to $10
million, which excludes stock-based compensation expense of $2.2
million to $2.3 million, restructuring costs of approximately $1.1
million, depreciation and amortization of $10.0 million to $11.1
million, and tax, interest expense, and other income and expense of
approximately $1.1 million.
Conference Call Details
Synacor will host a conference call today at 5:00 p.m. ET to discuss the
second-quarter 2018 financial results and 2018 financial guidance 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
5759236, 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 through August 15,
2018, call toll-free (800) 585-8367, or callers outside the U.S. may
dial (416) 621-4642. The conference ID is 5759236.
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, and cloud-based identity
management. www.synacor.com
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 loss, 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 third-quarter and fiscal year 2018 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, including by non-renewal of its contract; 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 August 1, 2018, and Synacor undertakes no duty to update
this information.
|
Synacor, Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
14,954
|
|
|
|
$
|
22,476
|
|
|
Accounts receivable, net
|
|
|
|
21,754
|
|
|
|
|
31,696
|
|
|
Prepaid expenses and other current assets
|
|
|
|
5,702
|
|
|
|
|
4,516
|
|
|
Total current assets
|
|
|
|
42,410
|
|
|
|
|
58,688
|
|
|
Property and equipment, net
|
|
|
|
20,400
|
|
|
|
|
20,505
|
|
|
Goodwill
|
|
|
|
15,947
|
|
|
|
|
15,955
|
|
|
Intangible assets, net
|
|
|
|
11,624
|
|
|
|
|
12,695
|
|
|
Other long-term assets
|
|
|
|
623
|
|
|
|
|
937
|
|
|
Total Assets
|
|
|
$
|
91,004
|
|
|
|
$
|
108,780
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
16,527
|
|
|
|
$
|
25,931
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
5,929
|
|
|
|
|
7,075
|
|
|
Current portion of deferred revenue
|
|
|
|
8,443
|
|
|
|
|
11,605
|
|
|
Current portion of capital lease obligations
|
|
|
|
2,364
|
|
|
|
|
2,444
|
|
|
Total current liabilities
|
|
|
|
33,263
|
|
|
|
|
47,055
|
|
|
Long-term portion of capital lease obligations
|
|
|
|
2,188
|
|
|
|
|
3,371
|
|
|
Deferred revenue
|
|
|
|
2,442
|
|
|
|
|
3,682
|
|
|
Other long-term liabilities
|
|
|
|
247
|
|
|
|
|
327
|
|
|
Total Liabilities
|
|
|
|
38,140
|
|
|
|
|
54,435
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
393
|
|
|
|
|
396
|
|
|
Treasury stock
|
|
|
|
(1,893
|
)
|
|
|
|
(1,881
|
)
|
|
Additional paid-in capital
|
|
|
|
143,720
|
|
|
|
|
142,486
|
|
|
Accumulated deficit
|
|
|
|
(89,152
|
)
|
|
|
|
(86,627
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(204
|
)
|
|
|
|
(29
|
)
|
|
Total stockholders’ equity
|
|
|
|
52,864
|
|
|
|
|
54,345
|
|
|
Total Liabilities and Stockholders' Equity
|
|
|
$
|
91,004
|
|
|
|
$
|
108,780
|
|
|
|
|
|
|
|
|
|
|
|
Synacor, Inc.
|
|
Condensed Consolidated Statements of Operations
|
|
(In thousands except share and per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
35,923
|
|
|
|
$
|
31,216
|
|
|
|
$
|
68,838
|
|
|
|
$
|
57,756
|
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (1)
|
|
|
|
18,256
|
|
|
|
|
14,462
|
|
|
|
|
33,473
|
|
|
|
|
27,024
|
|
|
Technology and development (1)(2)
|
|
|
|
6,069
|
|
|
|
|
6,904
|
|
|
|
|
12,756
|
|
|
|
|
14,202
|
|
|
Sales and marketing (2)
|
|
|
|
6,904
|
|
|
|
|
6,185
|
|
|
|
|
12,840
|
|
|
|
|
12,846
|
|
|
General and administrative (1)(2)
|
|
|
|
4,320
|
|
|
|
|
4,361
|
|
|
|
|
9,337
|
|
|
|
|
8,325
|
|
|
Depreciation and amortization
|
|
|
|
2,444
|
|
|
|
|
2,224
|
|
|
|
|
4,879
|
|
|
|
|
4,408
|
|
|
Total costs and operating expenses
|
|
|
|
37,993
|
|
|
|
|
34,136
|
|
|
|
|
73,285
|
|
|
|
|
66,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
(2,070
|
)
|
|
|
|
(2,920
|
)
|
|
|
|
(4,447
|
)
|
|
|
|
(9,049
|
)
|
|
Other (expense) income
|
|
|
|
(133
|
)
|
|
|
|
67
|
|
|
|
|
(14
|
)
|
|
|
|
73
|
|
|
Interest expense
|
|
|
|
(88
|
)
|
|
|
|
(114
|
)
|
|
|
|
(185
|
)
|
|
|
|
(201
|
)
|
|
Loss before income taxes
|
|
|
|
(2,291
|
)
|
|
|
|
(2,967
|
)
|
|
|
|
(4,646
|
)
|
|
|
|
(9,177
|
)
|
|
Income tax provision
|
|
|
|
293
|
|
|
|
|
309
|
|
|
|
|
313
|
|
|
|
|
755
|
|
|
Net loss
|
|
|
$
|
(2,584
|
)
|
|
|
$
|
(3,276
|
)
|
|
|
$
|
(4,959
|
)
|
|
|
$
|
(9,932
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(0.09
|
)
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
(0.29
|
)
|
|
Diluted
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(0.09
|
)
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to compute net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
38,823,056
|
|
|
|
|
37,284,973
|
|
|
|
|
38,808,690
|
|
|
|
|
34,228,367
|
|
|
Diluted
|
|
|
|
38,823,056
|
|
|
|
|
37,284,973
|
|
|
|
|
38,808,690
|
|
|
|
|
34,228,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Exclusive of depreciation and amortization shown separately.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Technology and development
|
|
|
$
|
134
|
|
|
|
$
|
206
|
|
|
|
$
|
268
|
|
|
|
$
|
414
|
|
|
Sales and marketing
|
|
|
|
126
|
|
|
|
|
190
|
|
|
|
|
264
|
|
|
|
|
358
|
|
|
General and administrative
|
|
|
|
277
|
|
|
|
|
280
|
|
|
|
|
558
|
|
|
|
|
551
|
|
|
|
|
$
|
537
|
|
|
|
$
|
676
|
|
|
|
$
|
1,090
|
|
|
|
$
|
1,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synacor, Inc.
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(4,959
|
)
|
|
|
$
|
(9,932
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
4,879
|
|
|
|
|
4,408
|
|
|
Capitalized software impairment
|
|
|
|
—
|
|
|
|
|
256
|
|
|
Stock-based compensation expense
|
|
|
|
1,090
|
|
|
|
|
1,323
|
|
|
Provision for deferred income taxes
|
|
|
|
(119
|
)
|
|
|
|
219
|
|
|
Increase in estimated value of contingent consideration
|
|
|
|
—
|
|
|
|
|
107
|
|
|
Change in operating assets and liabilities net of effect of
acquisition:
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
9,942
|
|
|
|
|
9,611
|
|
|
Prepaid expenses and other assets
|
|
|
|
(882
|
)
|
|
|
|
(136
|
)
|
|
Accounts payable
|
|
|
|
(9,479
|
)
|
|
|
|
(3,132
|
)
|
|
Accrued expenses and other liabilities
|
|
|
|
(1,107
|
)
|
|
|
|
(3,436
|
)
|
|
Deferred revenue
|
|
|
|
(1,946
|
)
|
|
|
|
(764
|
)
|
|
Net cash used in operating activities
|
|
|
|
(2,581
|
)
|
|
|
|
(1,476
|
)
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(3,978
|
)
|
|
|
|
(3,576
|
)
|
|
Net cash used in investing activities
|
|
|
|
(3,978
|
)
|
|
|
|
(3,576
|
)
|
|
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
|
|
|
|
(867
|
)
|
|
|
|
(701
|
)
|
|
Proceeds from exercise of common stock options
|
|
|
|
103
|
|
|
|
|
786
|
|
|
Purchase of treasury stock and shares received to satisfy minimum
tax withholding liabilities
|
|
|
|
(12
|
)
|
|
|
|
(117
|
)
|
|
Deferred acquisition payment
|
|
|
|
—
|
|
|
|
|
(1,300
|
)
|
|
Net cash (used in) provided by financing activities
|
|
|
|
(776
|
)
|
|
|
|
13,714
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(187
|
)
|
|
|
|
6
|
|
|
Net (decrease) increase in Cash and Cash Equivalents
|
|
|
|
(7,522
|
)
|
|
|
|
8,668
|
|
|
Cash and Cash Equivalents at beginning of period
|
|
|
|
22,476
|
|
|
|
|
14,315
|
|
|
Cash and Cash Equivalents at end of period
|
|
|
$
|
14,954
|
|
|
|
$
|
22,983
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Six months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(2,584
|
)
|
|
|
$
|
(3,276
|
)
|
|
|
$
|
(4,959
|
)
|
|
|
$
|
(9,932
|
)
|
|
Income tax provision
|
|
|
|
293
|
|
|
|
|
309
|
|
|
|
|
313
|
|
|
|
|
755
|
|
|
Interest expense
|
|
|
|
88
|
|
|
|
|
114
|
|
|
|
|
185
|
|
|
|
|
201
|
|
|
Other expense (income)
|
|
|
|
133
|
|
|
|
|
(67
|
)
|
|
|
|
14
|
|
|
|
|
(73
|
)
|
|
Depreciation and amortization
|
|
|
|
2,444
|
|
|
|
|
2,224
|
|
|
|
|
4,879
|
|
|
|
|
4,408
|
|
|
Capitalized software impairment
|
|
|
|
—
|
|
|
|
|
256
|
|
|
|
|
—
|
|
|
|
|
256
|
|
|
Stock-based compensation expense
|
|
|
|
537
|
|
|
|
|
676
|
|
|
|
|
1,090
|
|
|
|
|
1,323
|
|
|
Restructuring costs
|
|
|
|
268
|
|
|
|
|
—
|
|
|
|
|
268
|
|
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
|
$
|
1,179
|
|
|
|
$
|
236
|
|
|
|
$
|
1,790
|
|
|
|
$
|
(3,062
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20180801005955/en/
Investor Contact:
Sharon Merrill Associates
Andrew Blazier,
617-542-5300
ir@synacor.com
or
Press
Contact:
Synacor
Matt Wolfrom, 716-362-3880
VP, Corporate
Communications
Matt.Wolfrom@synacor.com
Source: Synacor, Inc.