Synacor Inc. (NASDAQ:SYNC), the trusted multiscreen technology and
monetization partner for video, internet and communications
providers, device manufacturers, and enterprises, today announced
its financial results for the quarter and year ended December 31,
2015.
“We close an eventful 2015 for Synacor with another successful
quarter,” said Synacor CEO Himesh Bhise. “We acquired advertising
pioneer Technorati, added new customers for our video platform, and
won several email contracts around the world. Our 2015 financial
results show significant year-over-year growth.”
“Today’s Synacor is strong. We have gone through a massive
transformation, strengthened further with the acquisitions of
Zimbra and Technorati. We have emerged with a global customer base,
a compelling portfolio of products generating recurring and
fee-based revenue, and innovative advertising solutions. Our
customers value us as their trusted partner, enabling them to
better engage with their hundreds of millions of consumers. We are
poised for significant growth.”
Recent Highlights
- Acquired digital advertising pioneer Technorati, which serves
1,000+ publishers and brings 100+ million monthly unique visitors
to Synacor’s advertising reach, as well as a state-of-the-art
header bidding management solution.
- Signed a new multi-year contract with a communications provider
to deploy Synacor's End-to-End Advanced Video Solutions.
- Expanded relationship with Grande Communications, a Texas-based
broadband communications company, with a multi-year agreement to
include Managed Portals, Cloud ID TV Everywhere Authentication, and
Search & Discovery Metadata platform for multiplatform
TV.
- Won several email engagements, including a large insurance and
financial company, an international defense department and an
international financial government agency.
- Announced a partnership with VNC to incorporate a chat and
conferencing solution into the Zimbra Email and Collaboration
platform.
Q4 2015 Financial Results
Revenue: For the fourth quarter of 2015, total
revenue was $32.4 million, an increase of 5% compared with $30.9
million in the fourth quarter of 2014. Search and advertising
revenue was $19.3 million, a decrease of 22% compared with $24.9
million in the fourth quarter of 2014. Recurring and fee-based
revenue was $13.1 million, an increase of 118% compared with $6.0
million in the fourth quarter of 2014.
For the fourth quarter of 2015, Synacor averaged 21.0 million
multi-platform unique visitors per month, compared with 21.6
million in the fourth quarter of 2014.
Adjusted EBITDA: For the fourth quarter of
2015, adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA), which excludes stock-based compensation
expense, was $2.9 million, or 9% of revenue, compared with $4.0
million, for the fourth quarter of 2014.
Net Income: For the fourth
quarter of 2015, net loss was $0.4 million, compared with net loss
of $6.4 million in the fourth quarter of 2014. Earnings per share,
or EPS, was a loss of $0.01. The net loss includes stock-based
compensation expense of $0.8 million, or $0.03 per share, in the
fourth quarter of 2015, compared with $0.8 million, or $0.03 per
share, in the fourth quarter of 2014. The EPS calculations for the
fourth quarter of 2015 are based on 30.0 million weighted average
common shares outstanding. The EPS calculations for the fourth
quarter of 2014 are based on 27.4 million weighted average common
shares outstanding.
Cash: The Company ended the fourth quarter of
2015 with $15.7 million in cash and cash equivalents, compared with
$15.6 million at the end of the prior quarter. Cash generated
by operating activities was $1.5 million for the fourth quarter of
2015, compared with $3.0 million generated by operating
activities in the same period of the prior year.
FY 2015 Financial Results
Revenue: For fiscal 2015, total revenue was
$110.2 million, an increase of 3% compared with $106.6 million in
fiscal 2014. Search and advertising revenue was $78.3 million, a
decrease of 7% compared with $83.9 million in fiscal 2014.
Recurring and fee-based revenue was $31.9 million, an increase of
41% compared with $22.7 million in fiscal 2014.
For 2015, Synacor averaged 20.9 million multi-platform unique
visitors per month, unchanged from 2014.
Adjusted EBITDA: For fiscal 2015, EBITDA, which
excludes stock-based compensation expense and $0.5 million in
Zimbra acquisition costs, was $7.6 million, or 7% of revenue,
compared with $2.2 million for fiscal year 2014, which excludes
restructuring costs of $1.3 million and a gain on the sale of the
check.com domain name of $1.0 million.
Net Income: For fiscal 2015,
net loss was $3.5 million, compared with net loss of $12.9 million
in fiscal 2014. EPS was a loss of $0.12 per share compared with a
loss of $0.47 per share in fiscal 2014. The net loss includes
stock-based compensation expense of $3.1 million, or $0.11 per
share, in fiscal 2015, compared with $3.6 million, or $0.13 per
share, in fiscal 2014. The EPS calculations for fiscal 2015 are
based on 28.2 million weighted average common shares outstanding.
The EPS calculations for fiscal 2014 are based on 27.4 million
weighted average common shares outstanding.
Guidance
Based on information available as of March 16, 2016, the company
is providing financial guidance for the first quarter and fiscal
2016 as follows:
- Q1 2016 Guidance: Revenue for the first
quarter of 2016 is projected to be in the range of $28.0 million to
$29.0 million. The company expects to report adjusted EBITDA of
$0.0 million to $1.0 million.
- Fiscal 2016 Guidance: Revenue for the full
year of 2016 is projected to be in the range of $125.0 million to
$130.0 million. For the full year of 2016, the company expects to
report adjusted EBITDA of $4.0 million to $6.0 million.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to
discuss the fourth-quarter and year-end 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 (877) 837-3911, with conference ID 47007081, or
callers outside the U.S. may dial (253) 237-1167. Following
completion of the call, a recorded webcast replay will be available
on Synacor's website through March 24, 2016. To listen to the
telephone replay, call toll-free (855) 859-2056, or callers outside
the U.S. may dial (404) 537-3406. The conference ID is
47007081.
About Synacor
Synacor (NASDAQ:SYNC) enables organizations to better engage
with their consumers. Synacor is the trusted technology
development, multiplatform services and revenue partner for video,
Internet and communications providers, device manufacturers and
enterprises. 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 income, 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
"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, statements and information in the
Business Outlook section and the quotations from management), as
well as 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; 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;
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 March 16, 2016, and Synacor undertakes no duty to
update this information.
Synacor, Inc. |
|
Condensed Consolidated Balance
Sheets |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2014 |
|
|
|
2015 |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
25,600 |
|
|
$ |
15,697 |
|
|
Accounts receivable, net |
|
20,479 |
|
|
|
24,341 |
|
|
Prepaid expenses and other current
assets |
|
2,292 |
|
|
|
3,290 |
|
|
Total current assets |
|
48,371 |
|
|
|
43,328 |
|
|
Property and equipment,
net |
|
15,128 |
|
|
|
14,377 |
|
|
Goodwill |
|
1,565 |
|
|
|
15,187 |
|
|
Intangible assets |
|
— |
|
|
|
14,798 |
|
|
Investments |
|
1,073 |
|
|
|
1,000 |
|
|
Other long-term
assets |
|
101 |
|
|
|
336 |
|
|
Total
Assets |
$ |
66,238 |
|
|
$ |
89,026 |
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
$ |
12,545 |
|
|
$ |
9,004 |
|
|
Accrued expenses and other current
liabilities |
|
7,761 |
|
|
|
9,765 |
|
|
Current portion of deferred
revenue |
|
642 |
|
|
|
11,295 |
|
|
Current portion of capital lease
obligations |
|
1,150 |
|
|
|
1,574 |
|
|
Total current liabilities |
|
22,098 |
|
|
|
31,638 |
|
|
Long-term portion of
capital lease obligations |
|
1,383 |
|
|
|
1,007 |
|
|
Long-term debt |
|
— |
|
|
|
5,000 |
|
|
Deferred revenue |
|
— |
|
|
|
3,225 |
|
|
Other long-term
liabilities |
|
275 |
|
|
|
2,052 |
|
|
Total
Liabilities |
|
23,756 |
|
|
|
42,922 |
|
|
Stockholders'
Equity: |
|
|
|
|
Common stock |
|
279 |
|
|
|
306 |
|
|
Treasury stock |
|
(1,142 |
) |
|
|
(1,332 |
) |
|
Additional paid-in capital |
|
105,961 |
|
|
|
113,238 |
|
|
Accumulated deficit |
|
(62,636 |
) |
|
|
(66,110 |
) |
|
Accumulated other comprehensive
income |
|
20 |
|
|
|
2 |
|
|
Total stockholders’ equity |
|
42,482 |
|
|
|
46,104 |
|
|
Total
Liabilities and Stockholders' Equity |
$ |
66,238 |
|
|
$ |
89,026 |
|
|
|
|
|
|
|
Synacor, Inc. |
|
Condensed Consolidated Statements of
Operations |
|
(In thousands except share and per share
amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
For the Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
30,909 |
|
|
$ |
32,448 |
|
|
$ |
106,579 |
|
|
$ |
110,245 |
|
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
|
Cost of revenue (1) |
|
16,535 |
|
|
|
14,218 |
|
|
|
57,939 |
|
|
|
54,423 |
|
|
Technology and development
(1)(2) |
|
4,071 |
|
|
|
6,219 |
|
|
|
26,259 |
|
|
|
20,007 |
|
|
Sales and marketing (2) |
|
3,614 |
|
|
|
4,797 |
|
|
|
10,807 |
|
|
|
16,272 |
|
|
General and administrative
(1)(2) |
|
3,560 |
|
|
|
5,106 |
|
|
|
14,249 |
|
|
|
15,543 |
|
|
Depreciation and amortization |
|
1,818 |
|
|
|
2,185 |
|
|
|
5,126 |
|
|
|
6,901 |
|
|
Gain on sale of domain |
|
— |
|
|
|
— |
|
|
|
(1,000 |
) |
|
|
— |
|
|
Total costs and operating
expenses |
|
29,598 |
|
|
|
32,525 |
|
|
|
113,380 |
|
|
|
113,146 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
1,311 |
|
|
|
(77 |
) |
|
|
(6,801 |
) |
|
|
(2,901 |
) |
|
|
|
|
|
|
|
|
|
|
Other (expense)
income |
|
(29 |
) |
|
|
16 |
|
|
|
(28 |
) |
|
|
(16 |
) |
|
Interest expense |
|
(32 |
) |
|
|
(102 |
) |
|
|
(218 |
) |
|
|
(245 |
) |
|
Income (loss) before
income taxes and equity interest |
|
1,250 |
|
|
|
(163 |
) |
|
|
(7,047 |
) |
|
|
(3,162 |
) |
|
Provision for income
taxes |
|
7,434 |
|
|
|
209 |
|
|
|
4,821 |
|
|
|
239 |
|
|
Loss on equity
interest |
|
(234 |
) |
|
|
(16 |
) |
|
|
(1,063 |
) |
|
|
(73 |
) |
|
Net loss |
$ |
(6,418 |
) |
|
$ |
(388 |
) |
|
$ |
(12,931 |
) |
|
$ |
(3,474 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.23 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.12 |
) |
|
Diluted |
$ |
(0.23 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used to compute net loss per share: |
|
|
|
|
|
|
|
|
Basic |
|
27,385,741 |
|
|
|
29,977,417 |
|
|
|
27,389,793 |
|
|
|
28,213,838 |
|
|
Diluted |
|
27,385,741 |
|
|
|
29,977,417 |
|
|
|
27,389,793 |
|
|
|
28,213,838 |
|
|
|
|
|
|
|
|
|
|
|
Notes: |
|
|
|
|
|
|
|
|
(1) Exclusive of
depreciation shown separately. |
|
|
|
|
|
|
|
|
(2) Includes
stock-based compensation as follows: |
|
|
|
|
|
|
|
|
|
Three months ended |
|
For the Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
Technology and
development |
$ |
229 |
|
|
$ |
243 |
|
|
$ |
1,621 |
|
|
$ |
936 |
|
|
Sales and
marketing |
|
238 |
|
|
|
226 |
|
|
|
599 |
|
|
|
942 |
|
|
General and
administrative |
|
375 |
|
|
|
295 |
|
|
|
1,375 |
|
|
|
1,237 |
|
|
|
$ |
842 |
|
|
$ |
764 |
|
|
$ |
3,595 |
|
|
$ |
3,115 |
|
|
|
|
|
|
|
|
|
|
|
Synacor, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(Unaudited) |
|
|
|
|
|
For the Year Ended |
|
December 31, |
|
|
2014 |
|
|
|
2015 |
|
Cash Flows from
Operating Activities: |
|
|
|
Net loss |
$ |
(12,931 |
) |
|
$ |
(3,474 |
) |
Adjustments to reconcile net loss
to net cash (used in) provided by operating activities: |
|
|
|
Depreciation |
|
5,126 |
|
|
|
6,901 |
|
Stock-based compensation
expense |
|
3,595 |
|
|
|
3,115 |
|
Gain on sale of domain |
|
(1,000 |
) |
|
|
— |
|
Provision for deferred income
taxes |
|
4,769 |
|
|
|
— |
|
Loss in equity investment |
|
1,063 |
|
|
|
73 |
|
Change in assets and liabilities
net of effect of acquisition: |
|
|
|
Accounts
receivable, net |
|
(5,910 |
) |
|
|
(362 |
) |
Prepaid expenses and
other current assets |
|
(367 |
) |
|
|
(547 |
) |
Other long-term
assets |
|
247 |
|
|
|
(167 |
) |
Accounts payable |
|
(359 |
) |
|
|
(3,579 |
) |
Accrued expenses and
other current liabilities |
|
2,665 |
|
|
|
2,090 |
|
Deferred revenue |
|
— |
|
|
|
3,478 |
|
Other long-term
liabilities |
|
(207 |
) |
|
|
122 |
|
Net cash (used
in) provided by operating activities |
|
(3,309 |
) |
|
|
7,650 |
|
Cash Flows from
Investing Activities: |
|
|
|
Purchases of property and
equipment |
|
(4,982 |
) |
|
|
(3,236 |
) |
Investment in equity interest |
|
(772 |
) |
|
|
— |
|
Proceeds from sale of domain |
|
1,000 |
|
|
|
— |
|
Acquisition net of cash
acquired |
|
— |
|
|
|
(17,260 |
) |
Net cash used
in investing activities |
|
(4,754 |
) |
|
|
(20,496 |
) |
Cash Flows from
Financing Activities: |
|
|
|
Proceeds from bank financing |
|
— |
|
|
|
5,000 |
|
Repayments on capital lease
obligations |
|
(2,258 |
) |
|
|
(1,442 |
) |
Proceeds from exercise of common
stock options |
|
68 |
|
|
|
70 |
|
Purchase of treasury stock and
shares received to satisfy minimum tax withholding liabilities |
|
(562 |
) |
|
|
(190 |
) |
Deferred acquisition payment |
|
— |
|
|
|
(495 |
) |
Net cash (used
in) provided by financing activities |
|
(2,752 |
) |
|
|
2,943 |
|
Effect of exchange rate changes on
cash and cash equivalents |
|
18 |
|
|
|
— |
|
Net decrease in Cash and Cash
Equivalents |
|
(10,797 |
) |
|
|
(9,903 |
) |
Cash and Cash Equivalents at
beginning of period |
|
36,397 |
|
|
|
25,600 |
|
Cash and Cash Equivalents at end of
period |
$ |
25,600 |
|
|
$ |
15,697 |
|
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 |
|
For the Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net loss |
$ |
(6,418 |
) |
|
$ |
(388 |
) |
|
$ |
(12,931 |
) |
|
$ |
(3,474 |
) |
|
Provision for income taxes |
|
7,434 |
|
|
|
209 |
|
|
|
4,821 |
|
|
|
239 |
|
|
Interest expense |
|
32 |
|
|
|
102 |
|
|
|
218 |
|
|
|
245 |
|
|
Other expense (income) |
|
29 |
|
|
|
(16 |
) |
|
|
28 |
|
|
|
16 |
|
|
Depreciation and amortization |
|
1,818 |
|
|
|
2,185 |
|
|
|
5,126 |
|
|
|
6,901 |
|
|
Stock-based compensation
expense |
|
842 |
|
|
|
764 |
|
|
|
3,595 |
|
|
|
3,115 |
|
|
Loss on equity interest |
|
234 |
|
|
|
16 |
|
|
|
1,063 |
|
|
|
73 |
|
|
Gain on sale of domain |
|
— |
|
|
|
— |
|
|
|
(1,000 |
) |
|
|
— |
|
|
Reduction in workforce severance
and related costs |
|
— |
|
|
|
— |
|
|
|
1,260 |
|
|
|
— |
|
|
Acquisition costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
478 |
|
|
Adjusted
EBITDA |
$ |
3,971 |
|
|
$ |
2,872 |
|
|
$ |
2,180 |
|
|
$ |
7,593 |
|
|
|
|
|
|
|
|
|
|
|
Contacts
Investor Contact:
David Calusdian, Executive Vice President & Partner
Sharon Merrill
ir@synacor.com
716-362-3309
Press Contact:
Meredith Roth, VP, Corporate Communications
Synacor
mroth@synacor.com
716-362-3880
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