- GAAP total revenue for the third
quarter was $176.4 million, increasing 17% year-over-year
- Non-GAAP total revenue for the third
quarter was $181.0 million, increasing 20% year-over-year
- GAAP EPS for the third quarter was
$0.16; Non-GAAP EPS was $0.68
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 third quarter of 2016.
“We are very proud of the Synchronoss team for delivering a
strong third quarter with significant momentum around cloud and
enterprise heading into year end and 2017,” said Stephen G. Waldis,
Founder and Chief Executive Officer of Synchronoss. “Cloud was very
strong this quarter with both new and existing customers, as solid
subscriber growth and expanded cloud initiatives in our core
customer base set the stage for the next chapter of growth at
Synchronoss.”
Financial Highlights for the Third Quarter of 2016:
- Total Revenue: $176.4 million
GAAP compared to $150.9 million in the third quarter of
2015. $181.0 million non-GAAP compared to $151.3 million in
the third quarter of 2015.
- Gross profit: $99.2 million GAAP
compared to $87.4 million in the third quarter of 2015. $109.1
million non-GAAP compared to $92.1 million in the third quarter of
2015.
- Operating Income: $13.2 million
GAAP compared to $22.3 million in the third quarter of 2015. $46.5
million non-GAAP compared to $43.2 million in the third quarter of
2015.
- Net Income attributable to
Synchronoss: $7.7 million GAAP compared to $9.6 million in the
third quarter of 2015. $32.5 million non-GAAP compared to $27.1
million in the third quarter of 2015.
- Earnings per Diluted Share:
$0.16 GAAP compared to $0.21 in the third quarter of 2015. $0.68
non-GAAP compared to $0.58 in the third quarter of 2015.
- Operating cash flow: $(17.7)
million GAAP and non-GAAP compared to $14.1 million in the third
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 ability to deliver strong top-line
growth with a growing cloud and enterprise pipeline,” said Karen L.
Rosenberger, Chief Financial Officer and Treasurer. “We believe our
ability to drive software growth, while investing in our enterprise
and international initiatives, positions Synchronoss well heading
into the fourth quarter and beyond.”
Third Quarter and Recent Business Highlights:
- Cloud Solution revenue: $101.9
million of GAAP revenue, representing approximately 58% of total
GAAP revenues and growing 34% on a year-over-year basis. $106.4
million of non-GAAP revenue, representing approximately 59% of
total non-GAAP revenue and growing 40% year-over-year.
- Activation Solution revenue:
$74.5 million of GAAP revenue for the third quarter, representing
42% of our total GAAP revenues and remained flat year-over-year.
$74.6 million of non-GAAP revenue, representing approximately 41%
of our total non-GAAP revenues and was down one percent
year-over-year.
- Completed key cloud migrations at
international customers such as Softbank, America Movil, and
British Telecom as they move towards scaling our Personal Cloud
Platform.
- Enterprise Secure Mobility Platform
(SMP) had numerous customer wins and competitive displacements
during the quarter across the healthcare, legal, and financial
verticals.
- Our Verizon UID partnership is helping
provide us with access to approximately one-third of the US
consumer market and a host of large enterprise customers in this
new market.
Third Quarter Investor Conference Participation
Schedule:
- Credit Suisse Technology Conference
December 1, 2016-Phoenix, AZ
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 96591002. 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 96591002. 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 and restructuring related 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)
September 30, 2016
December 31, 2015 ASSETS Current assets:
Cash and cash equivalents $ 123,319 $ 147,634 Marketable securities
16,973 66,357 Accounts receivable, net of allowance for doubtful
accounts of $1,123 and $3,029 at September 30, 2016 and December
31, 2015, respectively 217,307 143,692 Prepaid expenses and other
assets 48,242 49,262
Total current
assets 405,841 406,945 Marketable securities 3,968 19,635
Property and equipment, net 168,083 168,280 Goodwill 315,185
221,271 Intangible assets, net 215,666 174,322 Deferred tax assets
1,904 3,560 Other assets 14,082 16,215
Total assets $ 1,124,729 $ 1,010,228
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 28,724 $ 26,038 Accrued expenses 54,066 45,819
Deferred revenues 26,106 8,323 Contingent consideration obligation
8,229 — Short term debt 38,000 —
Total current liabilities 155,125 80,180 Lease financing
obligation - long term 13,082 13,343 Contingent consideration
obligation - long-term — 930 Convertible debt 225,938 224,878
Deferred tax liability 26,397 16,404 Other liabilities 20,399 3,227
Redeemable noncontrolling interest 52,616 61,452 Stockholders’
equity: Preferred stock, $0.0001 par value; 10,000 shares
authorized, 0 shares issued and outstanding at September 30, 2016
and December 31, 2015 — — Common stock, $0.0001 par value; 100,000
shares authorized, 49,309 and 48,084 shares issued; 45,315 and
44,405 outstanding at September 30, 2016 and December 31, 2015,
respectively 3 4 Treasury stock, at cost (3,994 and 3,679 shares at
September 30, 2016 and December 31, 2015, respectively) (95,183 )
(65,651 ) Additional paid-in-capital 561,992 512,802 Accumulated
other comprehensive income (31,788 ) (38,684 )
Retained
earnings 196,148 201,343
Total
stockholders’ equity 631,172 609,814
Total liabilities and stockholders’ equity $
1,124,729 $ 1,010,228
SYNCHRONOSS
TECHNOLOGIES, INC. Reconciliation of GAAP to Non-GAAP
Financial Measures (in thousands, except per share data)
(Unaudited) Three Months Ended September
30, Nine Months Ended September 30, 2016
2015 2016 2015 Net
Revenues $ 176,421 $ 150,874 $ 476,658 $ 421,620 Costs and
Expenses: Cost of services (1)(2)* 77,230 63,438 217,004 172,013
Research and development (1)(2) 28,141 23,986 78,408 68,472
Selling, general and administrative (1)(2) 31,600 21,003 89,799
60,603 Net change in contingent consideration obligation 572 —
7,299 — Restructuring charges 977 399 5,139 5,090 Depreciation and
amortization 24,692 19,754
74,009 51,221 Total costs and expenses 163,212
128,580 471,658 357,399 Income from operations 13,209 22,294 5,000
64,221 Interest income 271 546 1,492 1,483 Interest expense (1,596
) (1,448 ) (5,006 ) (4,208 ) Other income (167 )
(1,030 ) (186 ) (601 ) Income before income tax
expense 11,717 20,362 1,300 60,895 Income tax expense (6,884
) (10,717 ) (14,853 ) (25,535 ) Net income
(loss) 4,833 9,645 (13,553 ) 35,360 Net loss attributable to
noncontrolling interests (2,843 ) —
(8,836 ) — Net income (loss) attributable to
Synchronoss $ 7,676 $ 9,645 $ (4,717 ) $ 35,360
Net income (loss) attributable to Synchronoss 7,676
9,645 (4,717 ) 35,360 Add: After-tax interest on convertible debt
323 377 — 1,366
Net income (loss) for diluted EPS calculation ** $ 7,999
$ 10,022 $ (4,717 ) $ 36,726 Net income
(loss) per common share attributable to Synchronoss: Basic $ 0.18
$ 0.23 $ (0.11 ) $ 0.84 Diluted $ 0.16
$ 0.21 $ (0.11 ) $ 0.77 Weighted-average
common shares outstanding: Basic 43,560 42,491
43,488 42,077 Diluted
48,590 47,692 43,488
47,505 * 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 2,184 1,884
6,024 4,969 Research and development 2,510 1,986 6,366 5,113
Selling, general and administrative 4,287
4,277 13,017 11,152 Total fair
value stock-based compensation expense $ 8,981 $ 8,147
$ 25,407 $ 21,234 (2) Amounts include
acquisition costs as follows: Cost of services 3,153 2,304 14,138
3,202 Research and development 3,033 2,289 9,721 4,932 Selling,
general and administrative 1,118 134
5,486 449 Total acquisition costs $
7,304 $ 4,727 $ 29,345 $ 8,583
SYNCHRONOSS TECHNOLOGIES, INC. Reconciliation of
GAAP to Non-GAAP Financial Measures (in thousands, except
per share data) (Unaudited)
Three Months Ended September
30,
Nine Months Ended September 30, 2016
2015 2016 2015 Non-GAAP financial
measures and reconciliation: GAAP Revenue $
176,421 $ 150,874 $ 476,658 $ 421,620 Add: Deferred revenue
write-down 4,554 475 11,384
692
Non-GAAP Revenue $ 180,975 $
151,349 $ 488,042 $ 422,312
GAAP
Revenue $ 176,421 $ 150,874 $ 476,658 $ 421,620 Less: Cost of
services 77,230 63,438 217,004
172,013
GAAP Gross Margin 99,191 87,436
259,654 249,607 Add: Deferred revenue write-down 4,554 475 11,384
692 Add: Fair value stock-based compensation 2,184 1,884 6,024
4,969 Add: Acquisition and restructuring costs 3,153
2,304 14,138 3,202
Non-GAAP Gross Margin $ 109,082 $ 92,099 $
291,200 $ 258,470
Non-GAAP Gross Margin % 60 %
61 % 60 % 61 %
GAAP income from operations $ 13,209 $
22,294 $ 5,000 $ 64,221 Add: Deferred revenue write-down 4,554 475
11,384 692 Add: Fair value stock-based compensation 8,981 8,147
25,407 21,234 Add: Acquisition and restructuring costs 8,281 5,126
34,484 13,673 Add: Net change in contingent consideration
obligation 572 — 7,299 — Add: Amortization expense 10,921
7,184 33,430 18,509
Non-GAAP income from operations $ 46,518 $
43,226 $ 117,004 $ 118,329
GAAP net
income (loss) attributable to Synchronoss $ 7,676 $ 9,645 $
(4,717 ) $ 35,360 Add: Deferred revenue write-down 4,554 475 11,384
692 Add: Fair value stock-based compensation 8,981 8,147 25,407
21,234 Add: Acquisition and restructuring costs 8,281 5,126 34,484
13,673 Add: Net change in contingent consideration obligation, net
of Fx change 572 — 7,299 — Add: Amortization expense 10,921 7,184
33,430 18,509 Less: Noncontrolling interest non-GAAP adjustments
(1,373 ) — (4,375 ) — Less: Tax effect (7,065 )
(3,488 ) (20,477 ) (14,025 )
Non-GAAP net income
attributable to Synchronoss 32,547 27,089 82,435 75,443 Add:
After-tax interest on convertible debt 549 516
1,647 1,544
Net income for
diluted EPS calculation $ 33,096 $ 27,605 $
84,082 $ 76,987 Diluted non-GAAP net income
per share $ 0.68 $ 0.58 $ 1.74 $ 1.62
Weighted shares outstanding - Diluted 48,590
47,692 48,290 47,505
SYNCHRONOSS TECHNOLOGIES, INC. STATEMENT OF
CASH FLOWS (in thousands) (Unaudited)
Nine Months Ended September 30,
2016 2015 Operating activities: (As
Adjusted) Net (loss) income $ (13,553 ) $ 35,360 Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: Depreciation and amortization expense 74,009 51,221
Amortization of debt issuance costs 1,197 1,125 Loss on disposals
(70 ) — Amortization of bond premium 1,214 1,261 Deferred income
taxes 5,537 (11,772 ) Non-cash interest on leased facility 763 694
Stock-based compensation 25,407 21,234 Contingent consideration
obligation 7,299 (1,532 ) Changes in operating assets and
liabilities: Accounts receivable, net of allowance for doubtful
accounts (72,871 ) (40,442 ) Prepaid expenses and other current
assets 1 5,315 8,020 Other assets 4,558 (670 ) Accounts payable
(5,679 ) 106 Accrued expenses 1 4,070 10,497 Other liabilities
(6,596 ) (138 ) Deferred revenues 25,884 1,610
Net cash provided by operating activities 56,484 76,574
Investing activities: Purchases of fixed assets
(46,189 ) (53,461 ) Purchases of intangible assets — (1,200 )
Purchases of marketable securities available-for-sale (12,841 )
(105,817 ) Maturities of marketable securities available-for-sale
76,979 75,370 Businesses acquired, net of cash (98,428 )
(83,592 ) Net cash used in investing activities (80,479 )
(168,700 )
Financing activities: Proceeds from the
exercise of stock options 9,382 16,752 Taxes paid on withholding
shares 1 (7,176 ) (15,472 ) Payments on contingent consideration
obligation — (4,468 ) Debt issuance costs related to convertible
notes (1,346 ) — Borrowings on revolving line of credit 144,000 —
Repayment of revolving line of credit (106,000 ) — Repurchases of
common stock (40,025 ) — Proceeds from the sale of treasury stock
in connection with an employee stock purchase plan 2,183 1,902
Repayments of capital lease obligations (2,933 )
(1,772 ) Net cash used in financing activities (1,915 ) (3,058 )
Effect of exchange rate changes on cash 1,595
2,569 Net decrease in cash and cash equivalents (24,315 )
(92,615 ) Cash and cash equivalents at beginning of period
147,634 235,967 Cash and cash equivalents at
end of period $ 123,319 $ 143,352 1 Certain
prior year amounts have been adjusted to conform with the adoption
of ASU 2016-09.
SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Cash Provided by Operating
Activities (in thousands) (Unaudited)
Nine Months Ended September 30,
2016 2015 Non-GAAP cash provided by
operating activities and reconciliation: Net cash
provided by operating activities (GAAP) $ 56,484 $ 76,574 Add:
Cash payments on settlement of earn-out — 3,532
Adjusted cash flow provided by operating activities
(Non-GAAP) $ 56,484 $ 80,106
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Synchronoss Technologies, Inc.Investor and
Media:Daniel Ives, +1
908-524-1047daniel.ives@synchronoss.com