Synacor Reports 17% Increase in Recurring Software Revenue
BUFFALO, N.Y.--(BUSINESS WIRE)--Nov 8, 2018--Synacor, Inc. (Nasdaq: SYNC), the trusted multiscreen technology and monetization partner for video, internet and communications providers, device manufacturers, governments and enterprises, today announced its financial results for the third quarter ended September 30, 2018.
“Our third-quarter financial results reflect our continued attention to profitability and our focus on driving high-margin recurring software revenue,” said Synacor CEO Himesh Bhise. “Recurring software revenue from collaboration and identity management platforms grew 17% from a year ago. Our adjusted EBITDA for the quarter was $2.7 million, representing a 45% increase from the prior-year quarter.
“We are being disciplined in steering away from low-margin, publisher-based advertising revenue, even if it impacts our top line, so that we can focus on growing recurring revenue and improving profitability,” concluded Bhise.
Recent HighlightsExtended portal and Cloud ID agreement with a major U.S. operator Signed ShortsTV Network, a 24/7 channel dedicated to short film, to Cloud ID TV Everywhere authentication platform Signed 80 new Zimbra email business and government agency customers worldwide Announced that Zimbra X, the first distributed enterprise app on EOSIO, now leverages additional blockchain capabilities such as smart contracts, EOS tokens and verified identity APIs.
Q3 2018 Financial Results
Revenue : For the third quarter of 2018, revenue was $35.6 million, a decrease of 2% versus the third quarter of 2017. Software revenue grew 20% while portal and advertising revenue was down 11% primarily due to our increased focus on improving profitability. Recurring software revenue was $8.9 million for the quarter, and grew 17%.
Net Income : For the third quarter of 2018, net loss was $2.2 million, or $(0.06) per share, compared with net income of $0.3 million, or $0.01 per share, in the third quarter of 2017. Net income in the third quarter of 2017 included a $1.9 million gain on the sale of an investment.
Adjusted EBITDA : For the third quarter of 2018, adjusted EBITDA, which excludes stock-based compensation, other income and expense, restructuring costs and certain legal expenses, increased 45% to $2.7 million from $1.8 million in the third quarter of 2017.
Cash : The Company ended the third quarter of 2018 with $15.7 million in cash and cash equivalents, compared with $15.0 million at the end of the second quarter of 2018.
Based on information available as of November 8, 2018, the Company is providing financial guidance for the fourth quarter of 2018. In addition, as a result of the Company’s refocusing of its advertising business on higher-margin opportunities, including proactively declining certain low-margin publisher-based advertising inventory, it is revising full-year 2018 guidance. The Company’s guidance for Q4 2018 and full-year 2018 are as follows:Q4 2018 Guidance : Revenue for the fourth quarter of 2018 is projected to be in the range of $35.5 million to $38.5 million. The Company expects to report net income of $0.5 million to a net loss of $1.0 million and adjusted EBITDA of $2.6 million to $4.1 million, which excludes stock-based compensation expense of approximately $0.5 million, restructuring costs of approximately $0.1 million, certain legal expenses of approximately $0.3 million, depreciation and amortization of approximately $2.4 million, and tax, interest expense and other income and expense of approximately $0.3 million. Fiscal 2018 Guidance : Revenue for the full year of 2018 is expected to be in the range of $140 million to $143 million. The Company expects to report a net loss in the range of $6.7 million to $8.2 million and adjusted EBITDA in the range of $7.0 million to $8.5 million, which excludes stock-based compensation expense of approximately $2.0 million, restructuring costs of approximately $1.1 million, certain legal expenses of approximately $1.3 million, depreciation and amortization of approximately $9.7 million, and tax, interest expense, and other income and expense of approximately $1.1 million.
Conference Call Details
Synacor will host a conference call today at 5:00 p.m. ET to discuss the third-quarter 2018 financial results and 2018 financial guidance 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 10 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 2284716, 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 November 15, 2018, call toll-free (800) 585-8367, or callers outside the U.S. may dial (416) 621-4642. The conference ID is 2284716.
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
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 fourth-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, including by non-renewal of its contract; 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 our 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; and the price volatility of our common stock.
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-Q 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 November 8, 2018, and Synacor undertakes no duty to update this information.
* “Certain legal expenses” include legal fees and other related expenses associated with legal proceedings outside the ordinary course of our business, including the class action securities litigation, and arbitration costs related to the dissolution of a former joint venture.
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CONTACT: Sharon Merrill Associates
David Calusdian, 617-542-5300
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: TECHNOLOGY HARDWARE INTERNET
SOURCE: Synacor, Inc.
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PUB: 11/08/2018 04:05 PM/DISC: 11/08/2018 04:05 PM