BRIDGEWATER, N.J.--(BUSINESS WIRE)--Synchronoss Technologies, Inc. (NASDAQ: SNCR), the leader in mobile cloud innovation and software-based activation for mobile carriers, enterprises, retailers and OEMs around the world, today announced financial results for the first quarter of 2016.
“We are very proud of the Synchronoss team for starting 2016 with a strong first quarter and healthy momentum heading into the rest of the year,” said Stephen G. Waldis, Founder and Chief Executive Officer of Synchronoss. “Cloud services were robust this quarter, as increasing subscriber growth on our core customer base is laying the groundwork for incremental cloud opportunities both domestically and internationally over the next 12 to 18 months. We have a proven history of executing, launching, and scaling new offerings and leveraging technology opportunities into something that becomes much bigger as we have exhibited to our customers, partners, and investors over the years.”
Financial Highlights for the First Quarter of 2016
Non-GAAP
- Total Revenue: $145.6 million compared to $133.1 million in the first quarter of 2015.
- Gross profit: $85.2 million compared to $80.9 million in the first quarter of 2015.
- Operating Income: $33.2 million compared to $34.9 million in the first quarter of 2015.
- Net Income attributable to Synchronoss: $23.0 million compared to $22.3 million in the first quarter of 2015.
- Earnings per Diluted Share: $0.49 compared to $0.49 in the first quarter of 2015.
- Operating Cash Flow: $37.1 million compared to $5.4 million in the first quarter of 2015.
GAAP
- Total Revenue: $142.7 million compared to $132.9 million in the first quarter of 2015.
- Gross profit: $74.4 million compared to $79.3 million in the first quarter of 2015.
- Operating Income: ($4.7 million) compared to $18.3 million in the first quarter of 2015.
- Net Income attributable to Synchronoss: ($7.3 million) compared to $10.6 million in the first quarter of 2015.
- Earnings per Diluted Share: ($0.17) compared to $0.23 in the first quarter of 2015.
- Operating Cash Flow: $37.7 million compared to ($0.1 million) in the first quarter of 2015.
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."
“We are pleased with our strong financial and operational performance to kick off 2016, particularly our ability to generate strong free cash flow,” said Karen L. Rosenberger, Chief Financial Officer and Treasurer. “We believe our ability to balance growth and profitability, while investing in our enterprise and international initiatives, well positions Synchronoss heading into the rest of 2016.”
First Quarter and Recent Business Highlights
- Cloud Services revenue accounted for $84.3 million of non-GAAP revenue, representing approximately 58% of total non-GAAP revenue and growing 18% on a year-over-year basis.
- Expanded our activation business with AT&T through our DIRECTV deal.
- On target with the beta version of our Enterprise solution launched in April with general availability expected in early June.
- Free cash flow of $24 million delivered in the quarter as this continues to be a major focal point of the company.
- Announced $100 million share buyback program with $16.6 million completed in the quarter.
- Completed the acquisition of privately held OpenWave Messaging to enhance our international go-to-market strategy.
Second Quarter Investor Conference Participation Schedule
- Jefferies 2016 Global Technology, Media and Telecom Conference May 11, 2016 – Miami, FL
- J.P. Morgan 44th Annual Technology, Media and Telecom Conference May 25, 2016 – Boston, MA
Financial Analyst Day
Synchronoss will be hosting its annual Financial Analyst and Investor Day on Thursday, June 9th at the Lotte New York Palace in New York City from 8:00 am and is expected to end at 2:00 pm ET. The event will also be webcast on the Synchronoss website. Analysts and investors who would like to register should visit our investor relations page at www.synchronoss.com/investor.
Members of Synchronoss’ management team are expected to present at these conferences and discuss the latest company strategies and initiatives. Conference presentations are expected to be available via webcast on the company’s website. To view these presentations and access the most updated information please visit the company’s website www.synchronoss.com. The schedule is subject to change.
Conference Call Details
In conjunction with this announcement, Synchronoss will host a conference call on Thursday, May 5, 2016, at 5:00 p.m. (ET) to discuss the company’s financial results. To access this call, dial 877-930-7767 (domestic) or 253-336-7416 (international). The pass code for the call is 83684777. Additionally, a live webcast of the conference call will be available on the “Investor Relations” page on the company’s website.
Following the conference call, a replay will be available for a limited time at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 83684777. An archived webcast of this conference call will also be available on the “Investor Relations” page of the company’s website, www.synchronoss.com.
Non-GAAP Financial Measures
Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP. This information includes historical non-GAAP revenues, gross profit, operating income, net income, effective tax rate, earnings per share and cash flows from operating activities. Synchronoss uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Synchronoss’ ongoing operational performance. Synchronoss believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Synchronoss’ industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above add back the deferred revenue write-down associated with acquisitions, fair value stock-based compensation expense, acquisition-related costs which includes integration costs, changes in the contingent consideration obligation, deferred compensation expense related to earn outs and amortization of intangibles associated with acquisitions.
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 Synchronoss Technologies, Inc.
Synchronoss (NASDAQ: SNCR) is the mobile innovation leader that provides personal cloud solutions and software-based activation for connected devices across the globe. The company’s proven and scalable technology solutions allow customers to connect, synchronize and activate connected devices and services that empower enterprises and consumers to live in a connected world. For more information visit us at www.synchronoss.com.
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 December 31, 2015 and other documents filed with the U.S. Securities and Exchange Commission. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. Synchronoss does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
The Synchronoss logo, Synchronoss and Synchronoss Integrated Life are trademarks of Synchronoss Technologies, Inc. All other trademarks are property of their respective owners.
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| BALANCE SHEETS | ||||||||
| (in thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| March 31, 2016 | December 31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 113,084 | $ | 147,634 | ||||
| Marketable securities | 63,713 | 66,357 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $3,329 and $3,029 at March 31, 2016 and December 31, 2015, respectively | 158,590 | 143,692 | ||||||
| Prepaid expenses and other assets | 54,939 | 49,262 | ||||||
| Total current assets | 390,326 | 406,945 | ||||||
| Marketable securities | 17,934 | 19,635 | ||||||
| Property and equipment, net | 162,040 | 168,280 | ||||||
| Goodwill | 310,937 | 221,271 | ||||||
| Intangible assets, net | 230,986 | 174,322 | ||||||
| Deferred tax assets | 5,176 | 3,560 | ||||||
| Other assets | 16,164 | 16,215 | ||||||
| Total assets | $ | 1,133,563 | $ | 1,010,228 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 33,171 | $ | 26,038 | ||||
| Accrued expenses | 48,695 | 45,819 | ||||||
| Deferred revenues | 41,401 | 8,323 | ||||||
| Contingent consideration obligation | 1,271 | — | ||||||
| Short term debt | 50,000 | — | ||||||
| Total current liabilities | 174,538 | 80,180 | ||||||
| Lease financing obligation - long term | 14,047 | 13,343 | ||||||
| Contingent consideration obligation - long-term | — | 930 | ||||||
| Convertible debt | 225,231 | 224,878 | ||||||
| Deferred tax liability | 23,096 | 16,404 | ||||||
| Other liabilities | 10,612 | 3,227 | ||||||
| Redeemable noncontrolling interest | 58,323 | 61,452 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at March 31, 2016 and December 31, 2015 | — | — | ||||||
| Common stock, $0.0001 par value; 100,000 shares authorized, 48,426 and 48,084 shares issued; 45,083 and 44,405 outstanding at March 31, 2016 and December 31, 2015, respectively | 4 | 4 | ||||||
| Treasury stock, at cost (3,343 and 3,679 shares at March 31, 2016 and December 31, 2015, respectively) | (72,368 | ) | (65,651 | ) | ||||
| Additional paid-in capital | 535,326 | 512,802 | ||||||
| Accumulated other comprehensive loss | (29,258 | ) | (38,684 | ) | ||||
| Retained earnings | 194,012 | 201,343 | ||||||
| Total stockholders’ equity | 627,716 | 609,814 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,133,563 | $ | 1,010,228 | ||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| STATEMENT OF INCOME | ||||||||
| (in thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Net revenues | $ | 142,686 | $ | 132,926 | ||||
| Costs and expenses: | ||||||||
| Cost of services (1)(2)* | 68,306 | 53,655 | ||||||
| Research and development (1)(2) | 24,097 | 22,024 | ||||||
| Selling, general and administrative (1)(2) | 27,581 | 20,883 | ||||||
| Net change in contingent consideration obligation | 341 | — | ||||||
| Restructuring charges | 2,971 | 3,240 | ||||||
| Depreciation and amortization | 24,055 | 14,835 | ||||||
| Total costs and expenses | 147,351 | 114,637 | ||||||
| (Loss) income from operations | (4,665 | ) | 18,289 | |||||
| Interest income | 630 | 466 | ||||||
| Interest expense | (1,576 | ) | (1,342 | ) | ||||
| Other income | (884 | ) | 14 | |||||
| (Loss) income before income tax expense | (6,495 | ) | 17,427 | |||||
| Income tax expense | (3,965 | ) | (6,866 | ) | ||||
| Net (loss) income | (10,460 | ) | 10,561 | |||||
| Net loss attributable to noncontrolling interests | (3,129 | ) | — | |||||
| Net (loss) income attributable to Synchronoss | $ | (7,331 | ) | $ | 10,561 | |||
| Net income attributable to Synchronoss | (7,331 | ) | 10,561 | |||||
| Add: After-tax interest on convertible debt | — | 475 | ||||||
| Net (loss) income for diluted EPS calculation ** | $ | (7,331 | ) | $ | 11,036 | |||
| Net (loss) income per common share attributable to Synchronoss: | ||||||||
| Basic | $ | (0.17 | ) | $ | 0.25 | |||
| Diluted | $ | (0.17 | ) | $ | 0.23 | |||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 43,423 | 41,626 | ||||||
| Diluted | 43,423 | 47,080 | ||||||
| * Cost of services excludes depreciation and amortization which is shown separately. | ||||||||
| ** Includes an add back for the convertible debt interest | ||||||||
| (1) Amounts include fair value stock-based compensation as follows: | ||||||||
| Cost of services | $ | 2,019 | $ | 1,482 | ||||
| Research and development | 1,830 | 1,482 | ||||||
| Selling, general and administrative | 4,452 | 3,665 | ||||||
| Total fair value stock-based compensation expense | $ | 8,301 | $ | 6,629 | ||||
| (2) Amounts include acquisition costs as follows: | ||||||||
| Cost of services | $ | 5,928 | $ | — | ||||
| Research and development | 3,575 | 1,135 | ||||||
| Selling, general and administrative | 3,033 | 244 | ||||||
| Total acquisition costs | $ | 12,536 | $ | 1,379 | ||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||
| (in thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Non-GAAP financial measures and reconciliation: | ||||||||
| GAAP Revenue | $ | 142,686 | $ | 132,926 | ||||
| Add: Deferred revenue write-down | 2,891 | 179 | ||||||
| Non-GAAP Revenue | $ | 145,577 | $ | 133,105 | ||||
| GAAP Revenue | $ | 142,686 | $ | 132,926 | ||||
| Less: Cost of services | 68,306 | 53,655 | ||||||
| GAAP Gross Margin | 74,380 | 79,271 | ||||||
| Add: Deferred revenue write-down | 2,891 | 179 | ||||||
| Add: Fair value stock-based compensation | 2,019 | 1,482 | ||||||
| Add: Acquisition and restructuring costs | 5,928 | — | ||||||
| Non-GAAP Gross Margin | $ | 85,218 | $ | 80,932 | ||||
| Non-GAAP Gross Margin % | 59 | % | 61 | % | ||||
| GAAP income from operations | $ | (4,665 | ) | $ | 18,289 | |||
| Add: Deferred revenue write-down | 2,891 | 179 | ||||||
| Add: Fair value stock-based compensation | 8,301 | 6,629 | ||||||
| Add: Acquisition and restructuring costs | 15,507 | 4,619 | ||||||
| Add: Net change in contingent consideration obligation | 341 | — | ||||||
| Add: Amortization expense | 10,808 | 5,175 | ||||||
| Non-GAAP income from operations | $ | 33,183 | $ | 34,891 | ||||
| GAAP net (loss) income attributable to Synchronoss | $ | (7,331 | ) | $ | 10,561 | |||
| Add: Deferred revenue write-down, net of tax | 2,220 | 127 | ||||||
| Add: Fair value stock-based compensation, net of tax | 6,375 | 4,697 | ||||||
| Add: Acquisition and restructuring costs, net of taxes | 12,309 | 3,273 | ||||||
| Add: Net change in contingent consideration obligation, net of Fx change | 341 | — | ||||||
| Add: Amortization expense, net of tax | 9,115 | 3,666 | ||||||
| Non-GAAP net income attributable to Synchronoss | 23,029 | 22,324 | ||||||
| Add: After-tax interest on convertible debt | 549 | 514 | ||||||
| Net income for diluted EPS calculation | $ | 23,578 | $ | 22,838 | ||||
| Diluted non-GAAP net income per share | $ | 0.49 | $ | 0.49 | ||||
| Weighted shares outstanding - Diluted | 48,147 | 47,080 | ||||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| STATEMENT OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Operating activities: | ||||||||
| Net (loss) income | $ | (10,460 | ) | $ | 10,561 | |||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization expense | 24,055 | 14,835 | ||||||
| Amortization of debt issuance costs | 375 | 375 | ||||||
| Amortization of bond premium | 373 | 474 | ||||||
| Deferred income taxes | 5,096 | (733 | ) | |||||
| Non-cash interest on leased facility | 229 | 233 | ||||||
| Stock-based compensation | 8,301 | 6,585 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net of allowance for doubtful accounts | (13,907 | ) | (22,145 | ) | ||||
| Prepaid expenses and other current assets | (3,174 | ) | 5,623 | |||||
| Other assets | 957 | (443 | ) | |||||
| Accounts payable | 8,317 | 106 | ||||||
| Accrued expenses | (8,456 | ) | (12,301 | ) | ||||
| Contingent consideration obligation | 341 | (1,532 | ) | |||||
| Excess tax benefit from the exercise of stock options | 623 | (1,981 | ) | |||||
| Other liabilities | (55 | ) | (243 | ) | ||||
| Deferred revenues | 25,116 | 451 | ||||||
| Net cash provided by (used in) operating activities | 37,731 | (135 | ) | |||||
| Investing activities: | ||||||||
| Purchases of fixed assets | (13,153 | ) | (24,217 | ) | ||||
| Purchases of marketable securities available-for-sale | (8,598 | ) | (43,548 | ) | ||||
| Maturities of marketable securities available-for-sale | 12,565 | 40,285 | ||||||
| Businesses acquired, net of cash | (98,428 | ) | (59,481 | ) | ||||
| Net cash used in investing activities | (107,614 | ) | (86,961 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from the exercise of stock options | 1,755 | 5,398 | ||||||
| Payments on contingent consideration obligation | — | (4,468 | ) | |||||
| Borrowings on revolving line of credit | 50,000 | — | ||||||
| Excess tax benefit from the exercise of stock options | (623 | ) | 1,981 | |||||
| Repurchase of common stock | (16,581 | ) | — | |||||
| Proceeds from the sale of treasury stock in connection with an employee stock purchase plan | 955 | 975 | ||||||
| Repayments of capital lease obligations | (253 | ) | (291 | ) | ||||
| Net cash provided by financing activities | 35,253 | 3,595 | ||||||
| Effect of exchange rate changes on cash | 80 | 21 | ||||||
| Net decrease in cash and cash equivalents | (34,550 | ) | (83,480 | ) | ||||
| Cash and cash equivalents at beginning of period | 147,634 | 235,967 | ||||||
| Cash and cash equivalents at end of period | $ | 113,084 | $ | 152,487 | ||||
| SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||
| Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Non-GAAP cash provided by (used in) operating activities and reconciliation: | ||||||||
| Net cash provided by (used in) operating activities (GAAP) | $ | 37,731 | $ | (135 | ) | |||
| Add: Tax benefits from stock options exercised | (623 | ) | 1,981 | |||||
| Add: Cash payments on settlement of earn-out | — | 3,532 | ||||||
| Adjusted cash flow provided by operating activities (Non-GAAP) | $ | 37,108 | $ | 5,378 | ||||
