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
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version on businesswire.com: http://www.businesswire.com/news/home/20150729005284/en/
Synchronoss Technologies, Inc.Media:Stacie Hiras,
+1-908-674-0758Stacie.hiras@synchronoss.comorInvestor:Seth
Potter, +1-646-277-1230investor@synchronoss.com