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Synchronoss Reports Third Quarter Revenue of $69.8 Million and Raises Adjusted EBITDA Guidance For 2021

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Cloud Subscribers Grew 16% Year-Over-Year Versus 12% In the Prior Year

BRIDGEWATER, N.J., Nov. 08, 2021 (GLOBE NEWSWIRE) -- Synchronoss Technologies Inc. (NASDAQ: SNCR), a global leader and innovator in cloud, messaging, and digital solutions, today announced financial results for its third quarter ended September 30, 2021.

Third Quarter Highlights:

  • Revenue for the quarter was $69.8 million.

  • Recurring revenue for the quarter represented 83% of total revenue.

  • Cloud subscribers grew 16% year-over-year versus 12% in the prior year.

  • Signed a commercial agreement with Telkomsel, Indonesia’s largest wireless carrier with 170 million subscribers, for our Cloud solution, the fourth new Cloud customer signed this year.

  • Also signed a significant Digital contract with a Major Canadian Telecommunications & Media Company in the quarter.

  • GAAP net loss for the quarter was $9.8 million or $0.11 per share, up from a loss of $15.4 million or $0.36 per share in the prior year.

  • Non-GAAP net income for the quarter was $7.8 million, or $0.09 per share, up from $1.7 million, or $0.04 per share in the prior year.

  • Adjusted EBITDA for the quarter was $12.3 million, up 51% year over year.

  • Cash and cash equivalents were $24.1 million at quarter end.

  • Full-year 2021 Adjusted EBITDA guidance raised to $39-43 million from $32-37 million.

Commenting on the results, Jeff Miller, President and CEO of Synchronoss, said:

“I am pleased to report strong Q3 results that were driven by sustained year-over-year growth in our Cloud and Digital businesses,” said Jeff Miller, President, and CEO of Synchronoss. “I would like to highlight Cloud subscriber growth which grew 16% year-over-year, up from 12% in the prior year. We are providing this metric for the first time publicly to provide evidence of the strong underlying fundamentals driving Cloud revenue growth, our largest and most strategic business. With the closing of a significant Cloud win with Telkomsel, our fourth Cloud win year to date, I believe we are in a position to continue Cloud subscriber growth in the coming quarters."

Three Months Ended September 30,

(in thousands)

2021

2020

% Change

Revenues

$

69,753

$

68,636

1.6

%

Loss from continuing operations, before taxes

(15,091

)

(14,366

)

(5.0

)%

Net loss

(9,831

)

(15,367

)

36.0

%

Adjusted EBITDA

$

12,288

$

8,128

51.2

%


Nine Months Ended September 30,

(in thousands)

2021

2020

% Change

Revenues

$

206,784

$

222,293

(7.0

)%

Loss from continuing operations, before taxes

(30,241

)

(38,814

)

22.1

%

Net loss1

(56,337

)

(37,790

)

(49.1

)%

Adjusted EBITDA

$

31,102

$

21,435

45.1

%

___________________________

1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021.

Lou Ferraro, EVP of Financial Operations and CHRO, added:

“We are pleased that our continued growth in Cloud subscribers and improved operating results are allowing us to raise our Adjusted EBITDA guidance for 2021. We continue to focus on profitable revenue growth, diligently managing our cost structure, and delivering improved shareholder value.”

2021 Adjusted EBITDA Guidance

The company continues to expect revenue for full year 2021 to be in the range of $275 to $285 million and is raising its adjusted EBITDA guidance for full year 2021 to $39-$43 million from $32-$37 million, representing adjusted EBITDA growth of 40% to 55% year-over-year, respectively.

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 included below under the heading "Non-GAAP Financial Measures."

Conference Call Details

Synchronoss will host a conference call at 4:30 p.m. (Eastern Time) today to discuss the financial results. To access the live call, dial 800-377-9510 or +1 334-454-0059 (International) and give the conference ID number, 6767984.

A live and archived webcast of the conference call will be accessible on the Investor Relations section of the company’s website at www.synchronoss.com. In addition, a phone replay will be available approximately two hours following the end of the call and will be available for one week.

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, adjusted EBITDA, operating income (loss), net income (loss), effective tax rate, and earnings (loss) per share. 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 fair value stock-based compensation expense, acquisition-related costs, which include restructuring and cease-use lease expense, litigation, remediation and refiling costs 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. Investors are encouraged to also review the Balance Sheet, Statement of Operations, and Statement of Cash Flow. 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 (NASDAQ: SNCR) builds software that empowers companies around the world to connect with their subscribers in trusted and meaningful ways. The company’s collection of products helps streamline networks, simplify onboarding, and engage subscribers to unleash new revenue streams, reduce costs and increase speed to market. Hundreds of millions of subscribers trust Synchronoss products to stay in sync with the people, services and content they love. That’s why more than 1,500 talented Synchronoss employees worldwide strive each day to reimagine a world in sync. Learn more at www.synchronoss.com.

Forward-looking Statements

This press release includes statements concerning Synchronoss and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “believes,” “potential” or “continue” or other similar expressions are intended to identify forward-looking statements. Synchronoss has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, risks relating to the Company’s ability to sustain or increase revenue from its larger customers and generate revenue from new customers, the Company’s expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources, the impact of legal proceedings involving the Company, including the investigations by the Securities and Exchange Commission and the Department of Justice described in the Company’s most recent SEC filings, and other risks and factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2021, which are on file with the SEC and available on the SEC’s website at www.sec.gov. The company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

Contact:

Investors:
Todd Kehrli or Joo-Hun Kim
MKR Investor Relations
623-745-4046
investor@synchronoss.com


SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)

September 30, 2021

December 31, 2020

ASSETS

Cash and cash equivalents

$

24,141

$

33,671

Accounts receivable, net

39,073

47,849

Operating lease right-of-use assets

27,629

34,538

Goodwill

226,840

232,771

Other assets

130,692

133,426

Total assets

$

448,375

$

482,255

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued expenses

$

77,050

$

82,075

Debt, current

10,000

Deferred revenues

32,351

45,614

Debt, non-current

117,494

Operating lease liabilities, non-current

38,013

44,273

Other liabilities

17,868

19,370

Preferred Stock

72,505

237,641

Stockholders’ equity

93,094

43,282

Total liabilities and stockholders’ equity

$

448,375

$

482,255


SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net revenues

$

69,753

$

68,636

$

206,784

$

222,293

Costs and expenses:

Cost of revenues1

27,245

28,452

83,024

93,403

Research and development

15,368

20,885

49,962

59,769

Selling, general and administrative

27,953

23,265

67,790

74,249

Restructuring charges

1,485

820

3,075

6,763

Depreciation and amortization

8,215

12,212

26,567

33,852

Total costs and expenses

80,266

85,634

230,418

268,036

Loss from continuing operations

(10,513

)

(16,998

)

(23,634

)

(45,743

)

Interest income

24

20

54

1,587

Interest expense

(2,933

)

(72

)

(3,172

)

(401

)

Other Income (expense)

(1,669

)

2,684

(3,489

)

5,743

Loss from continuing operations, before taxes

(15,091

)

(14,366

)

(30,241

)

(38,814

)

Benefit for income taxes

6,982

8,744

7,346

29,148

Net loss from continuing operations

(8,109

)

(5,622

)

(22,895

)

(9,666

)

Net income (loss) attributable to redeemable noncontrolling interests

(60

)

286

(242

)

Preferred stock dividend

(1,722

)

(9,685

)

(33,728

)

(27,882

)

Net loss attributable to Synchronoss

$

(9,831

)

$

(15,367

)

$

(56,337

)

$

(37,790

)

Earnings (loss) per share

Basic

$

(0.11

)

$

(0.36

)

$

(0.98

)

$

(0.90

)

Diluted

$

(0.11

)

$

(0.36

)

$

(0.98

)

$

(0.90

)

Weighted-average common shares outstanding:

Basic

85,646

42,360

57,662

41,777

Diluted

85,646

42,360

57,662

41,777

________________________________
1 Cost of revenues excludes depreciation and amortization which are shown separately.


SYNCHRONOSS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

Nine Months Ended September 30,

2021

2020

Net loss continuing operations

$

(22,895

)

$

(9,666

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Non-cash items

33,830

52,835

Changes in operating assets and liabilities:

(5,384

)

(34,508

)

Net cash provided by (used in) operating activities

5,551

8,661

Investing activities:

Purchases of fixed assets

(1,386

)

(571

)

Purchases of intangible assets and capitalized software

(17,004

)

(12,610

)

Other investing activities

550

1,775

Net cash used in investing activities

(17,840

)

(11,406

)

Net cash provided by financing activities

2,687

9,991

Effect of exchange rate changes on cash

72

112

Net decrease in cash and cash equivalents

(9,530

)

7,358

Cash, restricted cash and cash equivalents, beginning of period

33,671

39,001

Cash, restricted cash and cash equivalents, end of period

$

24,141

$

46,359


SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited) (In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Non-GAAP financial measures and reconciliation:

GAAP Revenue

$

69,753

$

68,636

$

206,784

$

222,293

Less: Cost of revenues

27,245

28,452

83,024

93,403

Gross Profit

42,508

40,184

123,760

128,890

Add / (Less):

Stock-based compensation expense

432

505

1,289

1,899

Restructuring, transition and cease-use lease expense

405

89

432

372

Adjusted Gross Profit

43,345

40,778

125,481

131,161

Adjusted Gross Margin

62.1

%

59.4

%

60.7

%

59.0

%

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

GAAP Net loss attributable to Synchronoss

(9,831

)

(15,367

)

(56,337

)

(37,790

)

Add / (Less):

Stock-based compensation expense

2,289

4,391

7,355

14,547

Restructuring, transition and cease-use lease expense

2,981

6,580

7,956

15,280

Amortization expense

3,036

4,107

9,851

20,207

Litigation and remediation costs, net

9,316

1,943

12,858

3,500

Non-GAAP Net (loss) income attributable to Synchronoss

$

7,791

$

1,654

$

(18,317

)

$

15,744

Diluted Non-GAAP Net (loss) income per share

$

0.09

$

0.04

$

(0.32

)

$

0.38

Weighted shares outstanding - Dilutive

85,646

42,360

57,662

41,777


SYNCHRONOSS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited) (In thousands, except per share data)

Three Months Ended

Nine Months Ended

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Sep 30, 2021

Sep 30, 2020

Net loss attributable to Synchronoss

$

(9,831

)

$

(23,946

)

$

(22,560

)

$

(10,892

)

$

(15,367

)

$

(56,337

)

$

(37,790

)

Add / (Less):

Stock-based compensation expense

2,289

2,345

2,721

(3,410

)

4,391

7,355

14,547

Restructuring, transition and cease-use lease expense

2,981

2,918

2,057

1,222

6,580

7,956

15,279

Litigation and remediation costs, net

9,316

3,607

(65

)

1,145

1,943

12,858

3,500

Depreciation and amortization

8,215

8,485

9,867

9,834

12,212

26,567

33,852

Interest income

(24

)

(25

)

(5

)

(9

)

(20

)

(54

)

(1,587

)

Interest Expense

2,933

144

95

75

72

3,172

401

Other Income, net

1,669

(1,576

)

3,396

(3,793

)

(2,684

)

3,489

(5,743

)

Provision (benefit) for income taxes

(6,982

)

(201

)

(163

)

2,039

(8,744

)

(7,346

)

(29,148

)

Net loss attributable to noncontrolling interests

50

(336

)

101

60

(286

)

242

Preferred dividend1

1,722

21,476

10,530

10,099

9,685

33,728

27,882

Adjusted EBITDA (non-GAAP)

$

12,288

$

13,277

$

5,537

$

6,411

$

8,128

$

31,102

$

21,435

___________________________

1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021.

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net Cash (used in) provided by operating activities

$

(2,616

)

$

7,053

$

5,551

$

8,661

Add / (Less):

Capitalized software

(6,045

)

(3,926

)

(17,004

)

(12,610

)

Property and equipment

(136

)

(147

)

(1,386

)

(571

)

Free Cashflow

(8,797

)

2,980

(12,839

)

(4,520

)

Add: Litigation and remediation costs, net

1,816

1,943

5,358

3,500

Adjusted Free Cashflow

$

(6,981

)

$

4,923

$

(7,481

)

$

(1,020

)