GAAP total revenue for the second quarter was
$157.6 million, increasing 14% year-over-year
Non-GAAP total revenue for the second quarter
was $161.5 million, increasing 17% year-over-year
GAAP EPS for the second quarter was ($0.10);
Non-GAAP EPS was $0.57
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 second quarter of 2016.
“We are very proud of the Synchronoss team for delivering a
healthy second quarter with momentum especially around cloud
heading into the rest of the year”, said Stephen G. Waldis, Founder
and Chief Executive Officer of Synchronoss. “Cloud was strong this
quarter, as solid subscriber growth in our core customer base is
setting the stage for incremental cloud opportunities while
investments in the enterprise initiatives are already generating
significant customer activity in the field. We are continuing to
execute on our long-term strategy which is laying the foundation
for the future growth of Synchronoss.”
Financial Highlights for the Second Quarter of 2016:
- Total Revenue:
$157.6 million GAAP compared to $137.8 million in the
second quarter of 2015. $161.5 million non-GAAP compared to
$137.9 million in the second quarter of 2015.
- Gross profit: $86.1 million
GAAP compared to $82.9 million in the second quarter of 2015.
$96.9 million non-GAAP compared to $85.4 million in the second
quarter of 2015.
- Operating (Loss) Income:
($3.5 million) GAAP compared to $23.6 million in the
second quarter of 2015. $37.3 million non-GAAP compared to
$40.2 million in the second quarter of 2015.
- Net (Loss) Income attributable to
Synchronoss: ($4.4 million) GAAP compared to
$15.2 million in the second quarter of 2015.
$26.9 million non-GAAP compared to $26.0 million in the
second quarter of 2015.
- Earnings (Loss) per Diluted
Share: $(0.10) GAAP compared to $0.33 in the second quarter of
2015. $0.57 non-GAAP compared to $0.56 in the second quarter of
2015.
- Operating Cash Flow:
$33.7 million GAAP compared to $62.6 million in the second
quarter of 2015. $33.7 million non-GAAP compared to
$60.6 million in the second 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 another quarter that exceeded our
expectations, particularly our ability to deliver strong top-line
growth,” said Karen L. Rosenberger, Chief Financial Officer and
Treasurer. “We believe our ability to drive growth, while investing
in our enterprise and international initiatives positions
Synchronoss well heading into the second half of 2016 and
beyond.”
Second Quarter and Recent Business Highlights:
- Cloud Services revenue accounted for
$95.2 million of non-GAAP revenue, representing approximately 59%
of total non-GAAP revenue and growing 33% on a year-over-year
basis.
- Launched the general availability of
our Enterprise Secure Mobility Platform (SMP) in June.
- Free cash flow of $20.0 million
delivered in the quarter as generating free cash flow continues to
be a major focal point of the Company.
- Share repurchases of $23.4 million
completed in the quarter.
- Held our annual analyst day in NYC,
outlining the Company’s core strategic and growth initiatives.
Second Quarter Investor Conference Participation
Schedule:
- Oppenheimer Annual Technology, Internet
& Communication Conference August 9, 2016-Boston, MA
- Drexel Hamilton TMT Conference
September 8, 2016-New York, NY
- Deutsche Bank Technology Conference
September 14, 2016-Las Vegas, NV
- Credit Suisse US Small & Mid Cap
Conference September 15, 2016-New York, NY
Conference Call Details
In conjunction with this announcement, Synchronoss will host a
conference call today, 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 42244350. 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 42244350. 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 (loss), net income (loss), effective tax
rate, earnings (loss) 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. 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)
June 30, 2016 December 31, 2015
ASSETS Current assets: Cash and cash equivalents $ 111,028 $
147,634 Marketable securities 62,274 66,357
Accounts receivable, net of allowance for
doubtful accounts of $1,508 and $3,029 atJune 30, 2016 and December
31, 2015, respectively
162,386 143,692 Prepaid expenses and other assets 49,947
49,262 Total current assets 385,635 406,945
Marketable securities 13,949 19,635 Property and equipment, net
167,135 168,280 Goodwill 317,586 221,271 Intangible assets, net
222,045 174,322 Deferred tax assets 1,902 3,560 Other assets
14,780 16,215 Total assets $ 1,123,032
$ 1,010,228
LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 35,150 $ 26,038
Accrued expenses 52,534 45,819 Deferred revenues 28,009 8,323
Contingent consideration obligation 7,657 — Short term debt
47,000 — Total current liabilities 170,350
80,180 Lease financing obligation - long term 13,623 13,343
Contingent consideration obligation - long-term — 930 Convertible
debt 225,585 224,878 Deferred tax liability 29,716 16,404 Other
liabilities 22,545 3,227 Redeemable noncontrolling interest 55,459
61,452 Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000
shares authorized, 0 shares issued andoutstanding at June 30, 2016
and December 31, 2015
— —
Common stock, $0.0001 par value; 100,000
shares authorized, 49,132 and 48,084 sharesissued; 45,079 and
44,405 outstanding at June 30, 2016 and December 31,
2015,respectively
4 4
Treasury stock, at cost (4,053 and 3,679
shares at June 30, 2016 and December 31, 2015,respectively)
(95,812 ) (65,651 ) Additional paid-in capital 547,970 512,802
Accumulated other comprehensive loss (34,880 ) (38,684 ) Retained
earnings 188,472 201,343 Total
stockholders’ equity 605,754 609,814
Total liabilities and stockholders’ equity $ 1,123,032 $
1,010,228
SYNCHRONOSS TECHNOLOGIES,
INC. STATEMENT OF INCOME (in thousands, except per
share data) (Unaudited) Three Months
Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Net revenues $ 157,551 $ 137,820 $ 300,237 $ 270,746 Costs
and expenses: Cost of services (1)(2)* 71,468 54,920 139,774
108,575 Research and development (1)(2) 26,170 22,462 50,267 44,486
Selling, general and administrative (1)(2) 30,618 18,717 58,199
39,600 Net change in contingent consideration obligation 6,386 —
6,727 — Restructuring charges 1,191 1,451 4,162 4,691 Depreciation
and amortization 25,262 16,632
49,317 31,467 Total costs and expenses
161,095 114,182 308,446
228,819 (Loss) income from operations (3,544 ) 23,638 (8,209
) 41,927 Interest income 591 471 1,221 937 Interest expense (1,834
) (1,418 ) (3,410 ) (2,760 ) Other income 865
415 (19 ) 429 (Loss) income before
income tax expense (3,922 ) 23,106 (10,417 ) 40,533 Income tax
expense (3,381 ) (7,952 ) (7,969 )
(14,818 ) Net (loss) income (7,303 ) 15,154 (18,386 ) 25,715 Net
loss attributable to noncontrolling interests (2,864 )
— (5,993 ) — Net (loss) income
attributable to Synchronoss $ (4,439 ) $ 15,154 $ (12,393 )
$ 25,715 Net income attributable to Synchronoss
(4,439 ) 15,154 (12,393 ) 25,715 Add: After-tax interest on
convertible debt — 514 —
995 Net (loss) income for diluted EPS calculation **
$ (4,439 ) $ 15,668 $ (12,393 ) $ 26,710 Net
(loss) income per common share attributable to Synchronoss: Basic $
(0.10 ) $ 0.36 $ (0.29 ) $ 0.61 Diluted $ (0.10 ) $
0.33 $ (0.29 ) $ 0.56 Weighted-average common
shares outstanding: Basic 43,450 41,870
43,449 41,898 Diluted 43,450
47,271 43,449 47,371
* 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 $ 1,821 $
1,603 $ 3,840 $ 3,085 Research and development 2,026 1,645 3,856
3,127 Selling, general and administrative 4,278
3,210 8,730 6,875 Total
fair value stock-based compensation expense $ 8,125 $ 6,458
$ 16,426 $ 13,087 (2) Amounts include
acquisition costs as follows: Cost of services $ 5,057 $ 898 $
10,985 $ 898 Research and development 3,113 1,508 6,688 2,643
Selling, general and administrative 1,335 71
4,368 315 Total acquisition
costs $ 9,505 $ 2,477 $ 22,041 $ 3,856
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, 2016
2015 2016 2015 Non-GAAP
financial measures and reconciliation: GAAP
Revenue $ 157,551 $ 137,820 $ 300,237 $ 270,746 Add: Deferred
revenue write-down 3,939 38
6,830 217
Non-GAAP Revenue $ 161,490
$ 137,858 $ 307,067 $ 270,963
GAAP Revenue $ 157,551 $ 137,820 $ 300,237 $ 270,746 Less:
Cost of services 71,468 54,920
139,774 108,576
GAAP Gross Margin
86,083 82,900 160,463 162,170 Add: Deferred revenue write-down
3,939 38 6,830 217 Add: Fair value stock-based compensation 1,821
1,603 3,840 3,084 Add: Acquisition and restructuring costs
5,057 898 10,985 898
Non-GAAP Gross Margin $ 96,900 $ 85,439
$ 182,118 $ 166,369
Non-GAAP Gross Margin % 60
% 62 % 59 % 61 %
GAAP income from operations $ (3,544
) $ 23,638 $ (8,209 ) $ 41,927 Add: Deferred revenue write-down
3,939 38 6,830 217 Add: Fair value stock-based compensation 8,125
6,458 16,426 13,087 Add: Acquisition and restructuring costs 10,696
3,928 26,203 8,547 Add: Net change in contingent consideration
obligation 6,386 — 6,727 — Add: Amortization expense 11,701
6,150 22,509 11,325
Non-GAAP income from operations $ 37,303 $
40,212 $ 70,486 $ 75,103
GAAP net
(loss) income attributable to Synchronoss $ (4,439 ) $ 15,154 $
(12,393 ) $ 25,715 Add: Deferred revenue write-down, net of tax
2,784 21 5,004 148 Add: Fair value stock-based compensation, net of
tax 5,660 4,234 12,035 8,931 Add: Acquisition and restructuring
costs, net of taxes 7,535 2,559 19,844 5,832 Add: Net change in
contingent consideration obligation, net of Fx change 6,386 — 6,727
— Add: Amortization expense, net of tax 8,932
4,060 18,047 7,726
Non-GAAP
net income attributable to Synchronoss 26,858 26,028 $ 49,264 $
48,352 Add: After-tax interest on convertible debt 549
514 1,098 1,028
Net income for diluted EPS calculation $ 27,407 $
26,542 $ 50,362 $ 49,380 Diluted
non-GAAP net income per share $ 0.57 $ 0.56 $ 1.05
$ 1.04 Weighted shares outstanding - Diluted
48,132 47,271 48,120
47,371
SYNCHRONOSS TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS (in thousands)
(Unaudited) Six Months Ended June 30,
2016 2015 Operating activities: Net
(loss) income $ (18,386 ) $ 25,715 Adjustments to reconcile net
(loss) income to net cash provided by operating activities:
Depreciation and amortization expense 49,317 31,467 Loss on
disposals 68 — Amortization of debt issuance costs 750 750
Amortization of bond premium 754 756 Deferred income taxes 5,980
2,065 Non-cash interest on leased facility 458 464 Stock-based
compensation 16,426 13,087 Contingent consideration obligation
6,727 (1,532 ) Changes in operating assets and liabilities:
Accounts receivable, net of allowance for doubtful accounts (18,170
) (19,758 ) Prepaid expenses and other current assets 2,948 (4,749
) Other assets 2,580 (282 ) Accounts payable 51 2,869 Accrued
expenses 1,110 8,947 Other liabilities (6,811 ) (172 ) Deferred
revenues 30,388 2,882 Net cash provided
by operating activities 74,190 62,509
Investing
activities: Purchases of fixed assets (26,864 ) (34,947 )
Purchases of marketable securities available-for-sale (11,592 )
(72,015 ) Maturities of marketable securities available-for-sale
20,567 52,375 Businesses acquired, net of cash (98,428 )
(59,481 ) Net cash used in investing activities (116,317 )
(114,068 )
Financing activities: Proceeds from the
exercise of stock options 4,945 11,828 Taxes paid on withholding
shares (5,380 ) (16,844 ) Payments on contingent consideration
obligation — (4,468 ) Borrowings on revolving line of credit 50,000
— Repayment of revolving line of credit (3,000 ) — Repurchases of
common stock (40,025 ) — Proceeds from the sale of treasury stock
in connection with an employee stock purchase plan 955 975
Repayments of capital lease obligations (1,484 ) (564
) Net cash provided by (used in) financing activities 6,011 (9,073
) Effect of exchange rate changes on cash (490 ) 718
Net decrease in cash and cash equivalents (36,606 ) (59,914
) Cash and cash equivalents at beginning of period 147,634
235,967 Cash and cash equivalents at end of
period $ 111,028 $ 176,053
SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Cash Provided by Operating
Activities (in thousands) (Unaudited)
Six Months Ended June 30, 2016 2015
Non-GAAP cash provided by operating activities and reconciliation:
Net cash provided by operating activities (GAAP) $
74,190 $ 62,509 Add: Cash payments on settlement of earn-out
— 3,532
Adjusted cash flow provided by
operating activities (Non-GAAP) $ 74,190 $ 66,041
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Synchronoss Technologies, Inc.Investor and
Media:Daniel Ives, +1
908-524-1047daniel.ives@synchronoss.com