-
Q3 revenue totaled $35.6 million, recurring software revenue of
$8.9 million grew 17% YoY
-
Q3 net loss was $2.2 million, in line with guidance; adjusted
EBITDA improved to $2.7 million, exceeding guidance range and up from
$1.8 million a year ago
-
Q3 wins include portal and Cloud ID renewal with a major operator,
new ShortsTV Network for Cloud ID agreement, and 80 new Zimbra
enterprise and government customers
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 third quarter ended September 30, 2018.
“Our third-quarter financial results reflect our continued attention to
profitability and our focus on driving high-margin recurring software
revenue,” said Synacor CEO Himesh Bhise. “Recurring software revenue
from collaboration and identity management platforms grew 17% from a
year ago. Our adjusted EBITDA for the quarter was $2.7 million,
representing a 45% increase from the prior-year quarter.
“We are being disciplined in steering away from low-margin,
publisher-based advertising revenue, even if it impacts our top line, so
that we can focus on growing recurring revenue and improving
profitability,” concluded Bhise.
Recent Highlights
-
Extended portal and Cloud ID agreement with a major U.S. operator
-
Signed ShortsTV Network, a 24/7 channel dedicated to short film, to
Cloud ID TV Everywhere authentication platform
-
Signed 80 new Zimbra email business and government agency customers
worldwide
-
Announced that Zimbra X, the first distributed enterprise app on
EOSIO, now leverages additional blockchain capabilities such as smart
contracts, EOS tokens and verified identity APIs.
Q3 2018 Financial Results
Revenue
: For the third quarter of 2018, revenue was $35.6
million, a decrease of 2% versus the third quarter of 2017. Software
revenue grew 20% while portal and advertising revenue was down 11%
primarily due to our increased focus on improving profitability.
Recurring software revenue was $8.9 million for the quarter, and grew
17%.
Net Income
: For the third quarter of 2018, net loss
was $2.2 million, or $(0.06) per share, compared with net income of $0.3
million, or $0.01 per share, in the third quarter of 2017. Net income in
the third quarter of 2017 included a $1.9 million gain on the sale of an
investment.
Adjusted EBITDA
: For the third quarter of 2018, adjusted
EBITDA, which excludes stock-based compensation, other income and
expense, restructuring costs and certain legal expenses, increased 45%
to $2.7 million from $1.8 million in the third quarter of 2017.
Cash
: The Company ended the third quarter of 2018 with
$15.7 million in cash and cash equivalents, compared with $15.0 million
at the end of the second quarter of 2018.
Guidance
Based on information available as of November 8, 2018, the Company is
providing financial guidance for the fourth quarter of 2018. In
addition, as a result of the Company’s refocusing of its advertising
business on higher-margin opportunities, including proactively declining
certain low-margin publisher-based advertising inventory, it is revising
full-year 2018 guidance. The Company’s guidance for Q4 2018 and
full-year 2018 are as follows:
-
Q4 2018 Guidance
: Revenue for the fourth quarter of 2018
is projected to be in the range of $35.5 million to $38.5 million. The
Company expects to report net income of $0.5 million to a net loss of
$1.0 million and adjusted EBITDA of $2.6 million to $4.1 million,
which excludes stock-based compensation expense of approximately $0.5
million, restructuring costs of approximately $0.1 million, certain
legal expenses of approximately $0.3 million, depreciation and
amortization of approximately $2.4 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 $140 million to $143 million. The
Company expects to report a net loss in the range of $6.7 million to
$8.2 million and adjusted EBITDA in the range of $7.0 million to $8.5
million, which excludes stock-based compensation expense of
approximately $2.0 million, restructuring costs of approximately $1.1
million, certain legal expenses of approximately $1.3 million,
depreciation and amortization of approximately $9.7 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
third-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 10 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
2284716, 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 November
15, 2018, call toll-free (800) 585-8367, or callers outside the U.S. may
dial (416) 621-4642. The conference ID is 2284716.
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 fourth-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 our 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 8, 2018, and Synacor undertakes no duty to
update this information.
|
|
|
|
|
|
|
|
Synacor, Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
15,685
|
|
|
|
$
|
22,476
|
|
|
Accounts receivable, net
|
|
|
|
21,180
|
|
|
|
|
31,696
|
|
|
Prepaid expenses and other current assets
|
|
|
|
5,131
|
|
|
|
|
4,516
|
|
|
Total current assets
|
|
|
|
41,996
|
|
|
|
|
58,688
|
|
|
Property and equipment, net
|
|
|
|
19,748
|
|
|
|
|
20,505
|
|
|
Goodwill
|
|
|
|
15,950
|
|
|
|
|
15,955
|
|
|
Intangible assets
|
|
|
|
11,088
|
|
|
|
|
12,695
|
|
|
Other long-term assets
|
|
|
|
598
|
|
|
|
|
937
|
|
|
Total Assets
|
|
|
$
|
89,380
|
|
|
|
$
|
108,780
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
17,220
|
|
|
|
$
|
25,931
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
6,589
|
|
|
|
|
7,075
|
|
|
Current portion of deferred revenue
|
|
|
|
7,481
|
|
|
|
|
11,605
|
|
|
Current portion of capital lease obligations
|
|
|
|
2,376
|
|
|
|
|
2,444
|
|
|
Total current liabilities
|
|
|
|
33,666
|
|
|
|
|
47,055
|
|
|
Long-term portion of capital lease obligations
|
|
|
|
1,668
|
|
|
|
|
3,371
|
|
|
Deferred revenue
|
|
|
|
2,594
|
|
|
|
|
3,682
|
|
|
Deferred income taxes
|
|
|
|
85
|
|
|
|
|
264
|
|
|
Other long-term liabilities
|
|
|
|
151
|
|
|
|
|
63
|
|
|
Total Liabilities
|
|
|
|
38,164
|
|
|
|
|
54,435
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
393
|
|
|
|
|
396
|
|
|
Treasury stock
|
|
|
|
(1,893
|
)
|
|
|
|
(1,881
|
)
|
|
Additional paid-in capital
|
|
|
|
144,334
|
|
|
|
|
142,486
|
|
|
Accumulated deficit
|
|
|
|
(91,348
|
)
|
|
|
|
(86,627
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(270
|
)
|
|
|
|
(29
|
)
|
|
Total stockholders’ equity
|
|
|
|
51,216
|
|
|
|
|
54,345
|
|
|
Total Liabilities and Stockholders' Equity
|
|
|
$
|
89,380
|
|
|
|
$
|
108,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
35,643
|
|
|
|
$
|
36,269
|
|
|
|
$
|
104,481
|
|
|
|
$
|
94,025
|
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (1)
|
|
|
|
18,186
|
|
|
|
|
17,620
|
|
|
|
|
51,659
|
|
|
|
|
44,644
|
|
|
Technology and development (1)(2)
|
|
|
|
6,017
|
|
|
|
|
6,748
|
|
|
|
|
18,773
|
|
|
|
|
20,950
|
|
|
Sales and marketing (2)
|
|
|
|
5,667
|
|
|
|
|
6,179
|
|
|
|
|
18,507
|
|
|
|
|
19,025
|
|
|
General and administrative (1)(2)
|
|
|
|
5,279
|
|
|
|
|
4,495
|
|
|
|
|
14,616
|
|
|
|
|
12,820
|
|
|
Depreciation and amortization
|
|
|
|
2,437
|
|
|
|
|
2,596
|
|
|
|
|
7,316
|
|
|
|
|
7,004
|
|
|
Total costs and operating expenses
|
|
|
|
37,586
|
|
|
|
|
37,638
|
|
|
|
|
110,871
|
|
|
|
|
104,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
(1,943
|
)
|
|
|
|
(1,369
|
)
|
|
|
|
(6,390
|
)
|
|
|
|
(10,418
|
)
|
|
Gain on sale of investment
|
|
|
|
—
|
|
|
|
|
1,902
|
|
|
|
|
—
|
|
|
|
|
1,902
|
|
|
Other (expense) income
|
|
|
|
(32
|
)
|
|
|
|
99
|
|
|
|
|
(46
|
)
|
|
|
|
172
|
|
|
Interest expense
|
|
|
|
(80
|
)
|
|
|
|
(127
|
)
|
|
|
|
(265
|
)
|
|
|
|
(328
|
)
|
|
(Loss) income before income taxes
|
|
|
|
(2,055
|
)
|
|
|
|
505
|
|
|
|
|
(6,701
|
)
|
|
|
|
(8,672
|
)
|
|
Income tax provision
|
|
|
|
165
|
|
|
|
|
244
|
|
|
|
|
478
|
|
|
|
|
999
|
|
|
Net (loss) income
|
|
|
$
|
(2,220
|
)
|
|
|
$
|
261
|
|
|
|
$
|
(7,179
|
)
|
|
|
$
|
(9,671
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.18
|
)
|
|
|
$
|
(0.27
|
)
|
|
Diluted
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.18
|
)
|
|
|
$
|
(0.27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to compute net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
38,951,558
|
|
|
|
|
38,471,377
|
|
|
|
|
38,856,836
|
|
|
|
|
35,590,563
|
|
|
Diluted
|
|
|
|
38,951,558
|
|
|
|
|
39,940,790
|
|
|
|
|
38,856,836
|
|
|
|
|
35,590,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Exclusive of depreciation shown separately.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Technology and development
|
|
|
$
|
101
|
|
|
|
$
|
190
|
|
|
|
$
|
369
|
|
|
|
$
|
604
|
|
|
Sales and marketing
|
|
|
|
110
|
|
|
|
|
142
|
|
|
|
|
374
|
|
|
|
|
500
|
|
|
General and administrative
|
|
|
|
150
|
|
|
|
|
273
|
|
|
|
|
708
|
|
|
|
|
824
|
|
|
|
|
$
|
361
|
|
|
|
$
|
605
|
|
|
|
$
|
1,451
|
|
|
|
$
|
1,928
|
|
|
|
|
|
|
|
|
|
Synacor, Inc.
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(7,179
|
)
|
|
|
$
|
(9,671
|
)
|
|
Adjustments to reconcile net loss to net cash provided (used in) by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
7,316
|
|
|
|
|
7,004
|
|
|
Capitalized software impairment
|
|
|
|
—
|
|
|
|
|
256
|
|
|
Stock-based compensation expense
|
|
|
|
1,451
|
|
|
|
|
1,928
|
|
|
Gain on sale of investment
|
|
|
|
—
|
|
|
|
|
(1,902
|
)
|
|
Provision for deferred income taxes
|
|
|
|
(179
|
)
|
|
|
|
197
|
|
|
Change in allowance for doubtful accounts
|
|
|
|
118
|
|
|
|
|
—
|
|
|
Increase in estimated value of contingent consideration
|
|
|
|
—
|
|
|
|
|
107
|
|
|
Change in operating assets and liabilities net of effect of
acquisition:
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
10,398
|
|
|
|
|
6,933
|
|
|
Prepaid expenses and other assets
|
|
|
|
(291
|
)
|
|
|
|
(1,646
|
)
|
|
Accounts payable
|
|
|
|
(8,284
|
)
|
|
|
|
(1,668
|
)
|
|
Accrued expenses and other liabilities
|
|
|
|
(398
|
)
|
|
|
|
(2,369
|
)
|
|
Deferred revenue
|
|
|
|
(2,756
|
)
|
|
|
|
(2,080
|
)
|
|
Net cash provided (used in) by operating activities
|
|
|
|
196
|
|
|
|
|
(2,911
|
)
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
Proceeds from sale of investment
|
|
|
|
—
|
|
|
|
|
2,645
|
|
|
Purchases of property and equipment
|
|
|
|
(5,271
|
)
|
|
|
|
(5,774
|
)
|
|
Net cash used in investing activities
|
|
|
|
(5,271
|
)
|
|
|
|
(3,129
|
)
|
|
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
|
|
|
|
(1,811
|
)
|
|
|
|
(914
|
)
|
|
Proceeds from exercise of common stock options
|
|
|
|
341
|
|
|
|
|
1,942
|
|
|
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
|
|
|
|
(1,482
|
)
|
|
|
|
14,657
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(234
|
)
|
|
|
|
—
|
|
|
Net (decrease) increase in Cash and Cash Equivalents
|
|
|
|
(6,791
|
)
|
|
|
|
8,617
|
|
|
Cash and Cash Equivalents at beginning of period
|
|
|
|
22,476
|
|
|
|
|
14,315
|
|
|
Cash and Cash Equivalents at end of period
|
|
|
$
|
15,685
|
|
|
|
$
|
22,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$
|
(2,220
|
)
|
|
|
$
|
261
|
|
|
|
$
|
(7,179
|
)
|
|
|
$
|
(9,671
|
)
|
|
Income tax provision
|
|
|
|
165
|
|
|
|
|
244
|
|
|
|
|
478
|
|
|
|
|
999
|
|
|
Interest expense
|
|
|
|
80
|
|
|
|
|
127
|
|
|
|
|
265
|
|
|
|
|
328
|
|
|
Gain on sale of investment
|
|
|
|
—
|
|
|
|
|
(1,902
|
)
|
|
|
|
—
|
|
|
|
|
(1,902
|
)
|
|
Other income (expense)
|
|
|
|
32
|
|
|
|
|
(99
|
)
|
|
|
|
46
|
|
|
|
|
(172
|
)
|
|
Depreciation and amortization
|
|
|
|
2,437
|
|
|
|
|
2,596
|
|
|
|
|
7,316
|
|
|
|
|
7,004
|
|
|
Capitalized software impairment
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
256
|
|
|
Stock-based compensation expense
|
|
|
|
361
|
|
|
|
|
605
|
|
|
|
|
1,451
|
|
|
|
|
1,928
|
|
|
Restructuring costs
|
|
|
|
766
|
|
|
|
|
—
|
|
|
|
|
1,034
|
|
|
|
|
—
|
|
|
Certain legal expenses*
|
|
|
|
1,033
|
|
|
|
|
—
|
|
|
|
|
1,033
|
|
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
|
$
|
2,654
|
|
|
|
$
|
1,832
|
|
|
|
$
|
4,444
|
|
|
|
$
|
(1,230
|
)
|
* "Certain legal expenses" include legal fees and other related expenses
associated with legal proceedings outside the ordinary course of our
business, including the class action securities litigation, and
arbitration costs related to the dissolution of a former joint venture.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181108005936/en/
Sharon Merrill Associates
David Calusdian, 617-542-5300
ir@synacor.com
Source: Synacor, Inc.