Non-GAAP total revenue of $137.9 million increases 33% year-over-year

Cloud Services revenue of $71.9 million increases 54% year-over-year

Activation Services revenue of $66.0 million increases 16% year-over-year

Non-GAAP EPS of $0.56 increases 37% year-over-year

Synchronoss Technologies, Inc. (NASDAQ: SNCR), the mobile innovation leader that provides cloud solutions and software-based activation for mobile carriers, retailers and OEMs around the world, today announced financial results for the second quarter 2015.

“Synchronoss reported strong second quarter results that met or exceeded the high end of expectations,” said Stephen G. Waldis, Founder, Chairman and Chief Executive Officer of Synchronoss. “Each of our businesses performed well in the quarter and we were pleased to see some of our new wins began to scale and drive volumes, particularly on the cloud side. We are gaining strong traction among international mobile operators who are increasingly realizing the significant value Synchronoss’ white-label cloud solution can deliver to their subscribers.”

On a GAAP basis, Synchronoss reported net revenues of $137.8 million, representing an increase of 33% compared to the second quarter of 2014. Gross profit was $82.9 million and income from operations was $23.6 million in the second quarter of 2015. Net income was $15.2 million, leading to diluted earnings per share of $0.33, compared to $0.20 for the second quarter of 2014.

On a non-GAAP basis, Synchronoss reported net revenues, which adds back the purchase accounting adjustment related to revenues for certain acquisitions, of $137.9 million, an increase of 33% compared to the second quarter of 2014. Gross profit for the second quarter of 2015 was $85.4 million, representing a gross margin of 62%. Income from operations was $40.2 million in the second quarter of 2015, representing a year-over-year increase of 55% and an operating margin of 29%. Net income was $26.0 million in the second quarter of 2015, up from $16.8 million in the year ago period. Diluted earnings per share were $0.56 for the second quarter of 2015, compared to $0.41 for the second quarter of 2014.

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 second quarter performance, highlighted by improving operating leverage, better-than-expected profitability and solid cash flow,” said Karen L. Rosenberger, Chief Financial Officer and Treasurer. “We continue to execute at a high level, which is resulting in strong growth across both our cloud and activation services revenue, and we believe we are well positioned to maintain our strong momentum on a global basis.”

Conference Call Details

In conjunction with this announcement, Synchronoss will host a conference call today, July 29, 2015, at 8:30 a.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 87150024. Additionally, a live web cast of the conference call will be available on the “Investor Relations” page on the company’s web site www.synchronoss.com.

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 87150024. An archived web cast of this conference call will also be available on the “Investor Relations” page of the company’s web site, 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 Technologies, Inc. (NASDAQ:SNCR), is the mobile innovation leader that provides 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, 2014 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)       June 30, 2015 December 31, 2014 ASSETS Current assets: Cash and cash equivalents $ 176,053 $ 235,967 Marketable securities 65,939 51,097

Accounts receivable, net of allowance for doubtful accountsof $117 and $88 at June 30, 2015and December 31, 2014, respectively

136,391 118,371 Prepaid expenses and other assets 43,275 35,023 Deferred tax assets   5,151   1,475 Total current assets 426,809 441,933 Marketable securities 7,324 3,313 Property and equipment, net 164,142 151,171 Goodwill 175,611 147,135 Intangible assets, net 105,529 99,489 Deferred tax assets 4,355 1,232 Other assets   18,009   18,549 Total assets $ 901,779 $ 862,822   LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 19,476 $ 25,059 Accrued expenses 37,933 42,679 Deferred revenues 14,424 11,897 Contingent consideration obligation   —   8,000 Total current liabilities 71,833 87,635 Lease financing obligation - long term 13,836 9,204 Convertible debt 230,000 230,000 Deferred tax liability 10,879 3,698 Other liabilities 3,309 3,178 Stockholders’ equity:

Preferred stock, $0.0001 par value;10,000 shares authorized, 0 shares issued and outstandingat June 30, 2015 and December 31, 2014

— —

Common stock, $0.0001 par value;100,000 shares authorized, 47,514 and 46,444 shares issued;43,810 and 42,711 outstanding at June 30, 2015 and December 31, 2014, respectively

4 4

Treasury stock, at cost(3,704 and 3,733 shares at June 30, 2015 and December 31, 2014, respectively)

(65,969) (66,336) Additional paid-in capital 484,161 454,740 Accumulated other comprehensive loss (32,702) (20,014) Retained earnings   186,428   160,713 Total stockholders’ equity   571,922   529,107 Total liabilities and stockholders’ equity $ 901,779 $ 862,822   SYNCHRONOSS TECHNOLOGIES, INC.STATEMENT OF INCOME(in thousands, except per share data)(Unaudited)           Three Months Ended June 30,   Six Months Ended June 30, 2015 2014 2015 2014   Net revenues $ 137,820 $ 103,451 $ 270,746 $ 201,928 Costs and expenses: Cost of services (1)(2)(3)* 54,920 41,290 108,575 81,269 Research and development (1)(2)(3) 22,462 17,305 44,486 32,845 Selling, general and administrative (1)(2)(3) 18,717 17,149 39,600 34,274 Net change in contingent consideration obligation — 115 — 1,326 Restructuring charges 1,451 — 4,691 — Depreciation and amortization   16,632   13,758   31,467   26,024 Total costs and expenses   114,182   89,617   228,819   175,738 Income from operations 23,638 13,834 41,927 26,190 Interest income 471 154 937 286 Interest expense (1,418) (371) (2,760) (874) Other income   415   256   429   1,052 Income before income tax expense 23,106 13,873 40,533 26,654 Income tax expense   (7,952)   (5,509)   (14,818)   (10,705) Net income $ 15,154 $ 8,364 $ 25,715 $ 15,949   Net income attributable to Synchronoss 15,154 8,364 25,715 15,949 Add: After-tax interest on convertible debt   514   —   995   — Net income for diluted EPS calculation $ 15,668 $ 8,364 $ 26,710 $ 15,949   Net income per common share: Basic $ 0.36 $ 0.21 $ 0.61 $ 0.40 Diluted $ 0.33 $ 0.20 $ 0.56 $ 0.39   Weighted-average common shares outstanding: Basic   41,870   40,139   41,898   39,961 Diluted   47,271   40,978   47,371   40,878  

* Cost of services excludes depreciationand amortization which is shown separately.

* Includes an add back for theconvertible debt interest

 

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

Cost of services $ 1,603 $ 1,454 $ 3,085 $ 2,712 Research and development 1,645 1,375 3,127 2,645 Selling, general and administrative   3,210   4,011   6,875   7,325

Total fair value stock-basedcompensation expense

$ 6,458 $ 6,840 $ 13,087 $ 12,682  

(2) Amounts include acquisitioncosts as follows:

Cost of services $ 898 $ — $ 898 $ 31 Research and development 1,508 29 2,643 77 Selling, general and administrative   71   214   315   353 Total acquisition costs $ 2,477 $ 243 $ 3,856 $ 461  

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

Cost of services $ — $ 16 $ — $ 16 Research and development — — — — Selling, general and administrative   —   408   —   832

Total fair value earn-out cash and stockcompensation expense

$ — $ 424 $ — $ 848  

 

  SYNCHRONOSS TECHNOLOGIES, INC.Reconciliation of GAAP to Non-GAAP Financial Measures(in thousands, except per share data)(Unaudited)           Three Months Ended June 30,   Six Months Ended June 30, 2015 2014 2015 2014   Non-GAAP financial measures and reconciliation:   GAAP Revenue $ 137,820 $ 103,451 $ 270,746 $ 201,928 Add: Deferred revenue write-down   38   109   217   333 Non-GAAP Revenue $ 137,858 $ 103,560 $ 270,963 $ 202,261   GAAP Revenue $ 137,820 $ 103,451 $ 270,746 $ 201,928 Less: Cost of services   54,920   41,290   108,575   81,269 GAAP Gross Margin 82,900 62,161 162,171 120,659 Add: Deferred revenue write-down 38 109 217 333 Add: Fair value stock-based compensation 1,603 1,454 3,085 2,712 Add: Acquisition and restructuring costs 898 — 898 31 Add: Deferred compensation expense - earn-out   —   16   —   16 Non-GAAP Gross Margin $ 85,439 $ 63,740 $ 166,371 $ 123,751 Non-GAAP Gross Margin % 62% 62% 61% 61%   GAAP income from operations $ 23,638 $ 13,834 $ 41,927 $ 26,190 Add: Deferred revenue write-down 38 109 217 333 Add: Fair value stock-based compensation 6,458 6,840 13,087 12,682 Add: Acquisition and restructuring costs 3,928 243 8,547 461 Add: Net change in contingent consideration obligation — 115 — 1,326 Add: Deferred compensation expense - earn-out — 424 — 848 Add: Amortization expense   6,150   4,383   11,325   8,296 Non-GAAP income from operations $ 40,212 $ 25,948 $ 75,103 $ 50,136   GAAP net income attributable to common stockholders $ 15,154 $ 8,364 $ 25,715 $ 15,949 Add: Deferred revenue write-down, net of tax 21 75 148 226 Add: Fair value stock-based compensation, net of tax 4,234 4,721 8,931 8,612 Add: Acquisition and restructuring costs, net of taxes 2,559 168 5,832 313

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

— 115 — 1,326 Add: Deferred compensation expense - earn-out, net of tax — 293 — 576 Add: Amortization expense, net of tax   4,060   3,025   7,726   5,634 Non-GAAP net income $ 26,028 $ 16,761 $ 48,352 $ 32,636   Net income attributable to Synchronoss 26,028 16,761 48,352 32,636 Add: After-tax interest on convertible debt   514   —   1,028   — Net income for diluted EPS calculation $ 26,542 $ 16,761 $ 49,380 $ 32,636   Diluted non-GAAP net income per share $ 0.56 $ 0.41 $ 1.04 $ 0.80 Weighted shares outstanding - Diluted   47,271   40,978   47,371   40,878     SYNCHRONOSS TECHNOLOGIES, INC.STATEMENT OF CASH FLOWS(in thousands)(Unaudited)       Six Months Ended June 30, 2015   2014 Operating activities: Net income $ 25,715 $ 15,949

Adjustments to reconcile net income to net cashprovided by operating activities:

Depreciation and amortization expense 31,467 26,024 Amortization of debt issuance costs 750 Amortization of bond premium 756 166 Deferred income taxes 2,065 2,128 Non-cash interest on leased facility 464 460 Stock-based compensation 13,087 12,682 Changes in operating assets and liabilities: Accounts receivable, net of allowance for doubtful accounts (19,758) (21,806) Prepaid expenses and other current assets (4,749) (3,913) Other assets (282) 933 Accounts payable 2,869 (2,220) Accrued expenses (7,897) (10,095) Contingent consideration obligation (1,532) 2,127 Excess tax benefit from the exercise of stock options (3,898) (1,224) Other liabilities (172) 1,152 Deferred revenues   2,882   (3,160) Net cash provided by operating activities 41,767 19,203   Investing activities: Purchases of fixed assets (34,947) (15,672) Purchases of marketable securities available-for-sale (72,015) (4,070) Maturities of marketable securities available-for-sale 52,375 880 Business acquired, net of cash   (59,481)   (6,322) Net cash used in investing activities (114,068) (25,184)   Financing activities: Proceeds from the exercise of stock options 11,828 7,870 Payments on contingent consideration obligation (4,468) — Excess tax benefit from the exercise of stock options 3,898 1,224

Proceeds from the sale of treasury stock in connectionwith an employee stock purchase plan

975 740 Repayments of capital obligations   (564)   (618) Net cash provided by financing activities 11,669 9,216 Effect of exchange rate changes on cash   718   193 Net (decrease) increase in cash and cash equivalents (59,914) 3,428 Cash and cash equivalents at beginning of period   235,967   63,512 Cash and cash equivalents at end of period $ 176,053 $ 66,940         SYNCHRONOSS TECHNOLOGIES, INC.Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities(in thousands)(Unaudited)   Six Months Ended June 30, 2015 2014   Non-GAAP cash provided by operating activities and reconciliation:   Net cash provided by operating activities (GAAP) $ 41,767 $ 19,203 Add: Tax benefits from stock options exercised 3,898 1,224 Add: Cash payments on settlement of earn-out   3,532   — Adjusted cash flow provided by operating activities (Non-GAAP) $ 49,197 $ 20,427  

Synchronoss Technologies, Inc.Media:Stacie Hiras, +1-908-674-0758Stacie.hiras@synchronoss.comorInvestor:Seth Potter, +1-646-277-1230investor@synchronoss.com