EX-99.1 2 d581703dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Synacor Delivers 24% YOY Revenue Growth in First Quarter 2018

 

    Q1 Revenue increases to $32.9 million, beating guidance

 

    Q1 net loss of $2.4 million and adjusted EBITDA of $0.6 million significantly improved from a net loss of $6.7 million and adjusted EBITDA of $(3.3) million in Q1 2017

 

    Q1 Wins include Cheddar, Lenovo and more than 120 new enterprise and government customers

BUFFALO, N.Y., May 9, 2018 Synacor, Inc. (NASDAQ: SYNC), the trusted technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, governments, and enterprises, today announced its financial results for the quarter ended March 31, 2018.

“We began 2018 with strong first-quarter results,” said Synacor CEO Himesh Bhise. “Revenue increased 24% from a year ago to $32.9 million, and we delivered adjusted EBITDA of $0.6 million, a $3.9 million improvement from a year ago.

“We are executing a three-pronged approach to drive near-term and long-term value. We have put in place a cost reduction program; we are developing and executing on our software and advertising sales pipeline; and we are prudently investing in the next wave of customer-focused product development to secure the longer-term competitiveness of Synacor,” Bhise concluded.

Q1 Highlights

 

    Signed Cheddar, a leading live and on-demand video news network, to Synacor’s advanced Cloud ID authentication solution for its streaming video apps.

 

    Added more than 120 new Zimbra email enterprise and government customers worldwide, with extremely strong renewal rates.

 

    Hosted the ninth annual Zimbra Forum France, where more than 200 channel, developer and customer participants discussed the Zimbra product roadmap and shared innovative ideas.

 

    Launched RefleX, a suite of video, display and native monetization products that span desktop, tablet and smartphone devices.

 

    Renewed and extended relationship with Lenovo, a leading OEM, that covers portal and advertising services.

 

    Hired Tim Heasley, a seasoned financial executive and former CFO for public and private companies, as SVP of Finance.

Q1 2018 Financial Results

Revenue: For the first quarter of 2018, revenue was $32.9 million, exceeding the Company’s financial guidance, an increase of 24% versus the first quarter of 2017.

Net Income: For the first quarter of 2018, net loss narrowed to $2.4 million, or $(0.06) per share, compared with a net loss of $6.7 million, or $(0.21) per share, in the first quarter of 2017.

 

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Adjusted EBITDA:

For the first quarter of 2018, adjusted EBITDA, which excludes stock-based compensation expense, increased to $0.6 million, compared with $(3.3) million for the first quarter of 2017.

Cash: The Company ended the first quarter of 2018 with $16.4 million in cash and cash equivalents, compared with $22.5 million at the end of the fourth quarter of 2017. The company typically sees a higher use of cash in the first quarter and also had a greater-than-expected receivables balance at quarter end.

Guidance

Based on information available as of May 9, 2018, the Company is providing financial guidance for the second quarter and is affirming its full year 2018 guidance as follows:

 

    Q2 2018 Guidance: Revenue for the second quarter of 2018 is projected to be in the range of $33 million to $35 million. The Company expects to report a net loss of $1.8 million to $2.9 million and adjusted EBITDA of $0.6 million to $1.4 million, which excludes stock-based compensation expense of $500,000 to $600,000, depreciation and amortization of $2.4 million to $2.6 million, and tax, interest expense and other income and expense of approximately $300,000.

 

    Fiscal 2018 Guidance: Revenue for the full year of 2018 is expected to be within the range of $150 million to $155 million. The Company expects to report a net loss in the range of $4.4 million to $8.6 million and adjusted EBITDA in the range of $7 million to $10 million, which excludes stock-based compensation expense of $2.0 million to $2.4 million, depreciation and amortization of $11.2 million to $12.0 million, and tax, interest expense, and other income and expense of $1.2 million.

Conference Call Details

Synacor will host a conference call today at 5:00 p.m. ET to discuss the first-quarter 2018 financial results with the investment community. The live webcast of Synacor’s earnings conference call can be accessed at http://investor.synacor.com/events.cfm. To participate, please login approximately ten minutes prior to the webcast. For those without access to the internet, the call may be accessed toll-free via phone at (833) 235-2655, with conference ID 4399036, or callers outside the U.S. may dial (647) 689-4151. Following completion of the call, a recorded webcast replay will be available on Synacor’s website. To listen to the telephone replay through May 16, 2018, call toll-free (800) 585-8367, or callers outside the U.S. may dial (416) 621-4642. The conference ID is 4399036.

About Synacor

Synacor (Nasdaq: SYNC) is the trusted technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, governments, and enterprises. Synacor’s mission is to enable its customers to better engage with their consumers. Its customers use Synacor’s technology platforms and services to scale their businesses and extend their subscriber relationships. Synacor delivers managed portals, advertising solutions, email and collaboration platforms, and cloud-based identity management. www.synacor.com

 

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Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP).

We report adjusted EBITDA because it is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

For a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the table “Reconciliation of GAAP to Non-GAAP Measures” in this press release.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements concerning Synacor’s expected financial performance including, without limitation, its second-quarter and fiscal year 2018 guidance, the statements and quotations from management and Synacor’s strategic and operational plans. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results could differ materially from the results expressed or implied by the forward-looking statements the Company makes.

The risks and uncertainties referred to above include - but are not limited to - risks associated with: execution of our plans and strategies, including execution against our agreement with AT&T; the pace and degree to which the AT&T portal can be monetized; the loss of a significant customer; our ability to obtain new customers; our ability to integrate the assets and personnel from acquisitions; expectations regarding consumer taste and user adoption of applications and solutions; developments in internet browser software and search advertising technologies; general economic conditions; expectations regarding the Company’s ability to timely expand the breadth of services and products or introduction of new services and products; consolidation within the cable and telecommunications industries; changes in the competitive dynamics in the market for online search and digital advertising; the risk that security measures could be breached and unauthorized access to subscriber data could be obtained; potential third party intellectual property infringement claims or other legal claims against Synacor; the price volatility of our common stock; and being named as a party to a lawsuit.

 

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Further information on these and other factors that could affect the Company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the Company’s most recent Form 10-K filed with the SEC. These documents are available on the SEC Filings section of the Investor Information section of the Company’s website at http://investor.synacor.com/. All information provided in this release and in the attachments is available as of May 9, 2018, and Synacor undertakes no duty to update this information.

Contacts

Investor Contact:

Andrew Blazier

Sharon Merrill Associates

ir@synacor.com

617-542-5300

Press Contact:

Matt Wolfrom, VP, Corporate Communications

Synacor

Matt.Wolfrom@synacor.com

716-362-3880

 

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Synacor, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     March 31,
2018
    December 31,
2017
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 16,425     $ 22,476  

Accounts receivable, net

     24,179       31,696  

Prepaid expenses and other current assets

     5,741       4,516  
  

 

 

   

 

 

 

Total current assets

     46,345       58,688  

Property and equipment, net

     20,621       20,505  

Goodwill

     15,950       15,955  

Intangible assets

     12,159       12,695  

Other assets

     649       937  
  

 

 

   

 

 

 

Total Assets

   $ 95,724     $ 108,780  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 18,726     $ 25,931  

Accrued expenses and other current liabilities

     4,650       7,075  

Current portion of deferred revenue

     8,361       11,605  

Current portion of capital lease obligations

     2,405       2,444  
  

 

 

   

 

 

 

Total current liabilities

     34,142       47,055  

Long-term portion of capital lease obligations

     2,770       3,371  

Deferred revenue

     3,598       3,682  

Other long-term liabilities

     284       327  
  

 

 

   

 

 

 

Total Liabilities

     40,794       54,435  
  

 

 

   

 

 

 

Stockholders’ Equity:

    

Common stock

     393       396  

Treasury stock

     (1,881     (1,881

Additional paid-in capital

     143,079       142,486  

Accumulated deficit

     (86,568     (86,627

Accumulated other comprehensive loss

     (93     (29
  

 

 

   

 

 

 

Total stockholders’ equity

     54,930       54,345  
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 95,724     $ 108,780  
  

 

 

   

 

 

 

 

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Synacor, Inc.

Condensed Consolidated Statements of Operations

(In thousands except share and per share amounts)

(Unaudited)

 

     Three months ended
March 31,
 
     2018     2017  

Revenue

   $ 32,915     $ 26,540  

Costs and operating expenses:

    

Cost of revenue (1)

     15,217       12,562  

Technology and development (1)(2)

     6,687       7,298  

Sales and marketing (2)

     5,936       6,661  

General and administrative (1)(2)

     5,017       3,964  

Depreciation and amortization

     2,435       2,184  
  

 

 

   

 

 

 

Total costs and operating expenses

     35,292       32,669  
  

 

 

   

 

 

 

Loss from operations

     (2,377     (6,129

Other income

     119       6  

Interest expense

     (97     (87
  

 

 

   

 

 

 

Loss before income taxes

     (2,355     (6,210

Income tax provision

     20       446  

Net loss

   $ (2,375   $ (6,656
  

 

 

   

 

 

 

Net loss per share:

    

Basic

   $ (0.06   $ (0.21
  

 

 

   

 

 

 

Diluted

   $ (0.06   $ (0.21
  

 

 

   

 

 

 

Weighted average shares used to compute net loss per share:

    

Basic

     38,794,165       31,045,488  
  

 

 

   

 

 

 

Diluted

     38,794,165       31,045,488  
  

 

 

   

 

 

 

Notes:

(1) Exclusive of depreciation shown separately.

(2) Includes stock-based compensation as follows:

 

     Three months ended
March 31,
 
     2018      2017  

Technology and development

   $ 134      $ 208  

Sales and marketing

     138        168  

General and administrative

     281        271  
  

 

 

    

 

 

 
   $ 553      $ 647  
  

 

 

    

 

 

 

 

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Synacor, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2018     2017  

Cash Flows from Operating Activities:

    

Net loss

   $ (2,375   $ (6,656

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     2,435       2,184  

Stock-based compensation expense

     553       647  

Provision for deferred income taxes

     (39     200  

Increase in estimated value of contingent consideration

     —         107  

Change in operating assets and liabilities net of effect of acquisition:

    

Accounts receivable, net

     7,517       10,151  

Prepaid expenses and other assets

     (942     (342

Accounts payable

     (7,392     (3,771

Accrued expenses and other liabilities

     (2,429     (3,535

Deferred revenue

     (872     48  
  

 

 

   

 

 

 

Net cash used in operating activities

     (3,544     (967
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

    

Purchases of property and equipment

     (1,924     (1,515
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,924     (1,515
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

    

Repayments on capital lease obligations

     (520     (319

Proceeds from exercise of common stock options

     18       308  

Deferred acquisition payment

     —         (567
  

 

 

   

 

 

 

Net cash used in financing activities

     (502     (578
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (81     6  
  

 

 

   

 

 

 

Net decrease in Cash and Cash Equivalents

     (6,051     (3,054

Cash and Cash Equivalents at beginning of period

     22,476       14,315  
  

 

 

   

 

 

 

Cash and Cash Equivalents at end of period

   $ 16,425     $ 11,261  
  

 

 

   

 

 

 

 

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Synacor, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands)

(Unaudited)

The following table presents a reconciliation of net loss to adjusted EBITDA for each of the periods indicated:

 

     Three months ended
March 31,
 
     2018     2017  

Reconciliation of Adjusted EBITDA:

    

Net loss

   $ (2,375   $ (6,656

Income tax provision

     20       446  

Interest expense

     97       87  

Other income

     (119     (6

Depreciation and amortization

     2,435       2,184  

Stock-based compensation expense

     553       647  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 611     $ (3,298
  

 

 

   

 

 

 

 

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