Non-GAAP total revenue for the first quarter
was $145.6 million, increasing 9% year-over-year
Cloud Services revenue for the first quarter
was $84.3 million, increasing 18% year-over-year
Non-GAAP EPS for the first quarter was $0.49;
Non-GAAP Free Cash Flow of $24 million
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
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Synchronoss Technologies, Inc.Investor and Media:Daniel
Ives, +1 908-524-1047daniel.ives@synchronoss.com