Quarterly Results in Line with Preliminary
Announcement for Revenue, Net Income and Adjusted EBITDA
Synacor, Inc. (Nasdaq: SYNC), a leading provider of cloud-based
Collaboration and Identity Management software and services serving
global enterprises, video, internet and communications providers,
and governments, today announced its financial results for the
fourth quarter and year ended December 31, 2020.
Fourth Quarter Financial Highlights
- Revenue of $24.1 million
- Net income of $0.1 million and adjusted EBITDA of $3.6
million
“Synacor delivered a strong end to 2020, with solid Q4 results
for revenue, net income and adjusted EBITDA,” said Himesh Bhise,
Synacor’s Chief Executive Officer.
Recent Operating Highlights
- Signed agreement on February 10, 2021 to be acquired by Centre
Lane Partners
- Added 93 new customers and 177 contract expansions for Zimbra
email and collaboration platform delivered through worldwide
channel partners
- Signed four deals with streaming services providers for Cloud
ID identity and access management platform
- Publisher Advertising business continues recovery post the
onset of COVID-19, with 102 active publishers and higher
margins.
Fourth Quarter and Full Year Financial Results:
Revenue
For the fourth quarter of 2020, revenue was $24.1 million,
compared to $26.8 million in the fourth quarter of 2019. The
decline was primarily driven by the COVID-19 impact on our
business.
Revenue in the Software & Services segment totaled $12.2
million for the fourth quarter of 2020, compared with $11.6 million
in the fourth quarter of 2019. Revenue in the Portal &
Advertising segment totaled $11.9 million for the fourth quarter of
2020, compared with $15.2 million in the fourth quarter of
2019.
For fiscal year 2020, total revenue was $81.4 million, compared
to $121.8 million in fiscal year 2019. Software & Services
revenue was $44.3 million, relatively unchanged from $44.5 million
in the prior year. Portal & Advertising revenue was $37.1
million, compared to $77.4 million in fiscal 2019. The decline was
primarily due to the loss of the AT&T portal contract in Q3’19
and the COVID-19 impact on our business.
Net Income / (Loss)
Net income for the fourth quarter of 2020 was $0.1 million, or
$0.00 per basic and diluted share, compared with a net loss of $0.6
million, or $0.01 per basic and diluted share, in the prior year
quarter.
For fiscal year 2020, net loss was $11.6 million, or $0.29 per
basic and diluted share, compared with a net loss of $9.0 million,
or $0.23 per basic and diluted share, in fiscal year 2019.
Adjusted EBITDA
Adjusted EBITDA for the fourth quarter of 2020 was $3.6 million,
or 14.8% of revenue, compared with $3.4 million, or 12.8% of
revenue, in the fourth quarter of 2019. Adjusted EBITDA excludes
stock-based compensation expense, other income and expense, asset
impairments, restructuring costs, and certain legal and
professional services fees.
For fiscal year 2020, adjusted EBITDA was $5.3 million, or 6.5%
of revenue, compared with $9.5 million, or 7.8% of revenue, in
fiscal year 2019.
Cash
Cash and cash equivalents at the end of the fourth quarter of
2020 was $5.7 million, compared with $4.3 million at the end of the
third quarter of 2020 and $11.0 million at December 31, 2019. The
Company continues to have no borrowings on its $12 million credit
facility.
About Synacor
Synacor (Nasdaq: SYNC) is a cloud-based software and services
company serving global 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 income (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.
We report adjusted net loss and adjusted diluted earnings per
share because we believe these measures provide investors with
additional information to assess our financial performance. These
measures should be viewed as supplemental data, rather than
substitutes or alternatives to the comparable GAAP measures. For a
reconciliation of our GAAP Condensed Consolidated Statements of
Operations to our adjusted non-GAAP measures, please refer to the
table “Reconciliation of Adjusted Financial 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 strategic and operational plans
including, without limitation, the impact of the pending
transaction with Centre Lane Partners. 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: the fact that the proposed
transaction with Centre Lane Partners may not be completed in a
timely manner or at all; the impact of the COVID-19 pandemic on our
business; execution of our plans and strategies; 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; 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-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 March 18, 2021, and except as required by
applicable law, Synacor undertakes no duty to update this
information.
Synacor, Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
December 31, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
5,748
$
10,966
Accounts receivable, net
17,518
20,532
Prepaid expenses and other current
assets
3,091
2,989
Total current assets
26,357
34,487
Property and equipment, net
10,815
14,948
Operating lease right-of-use assets
3,146
4,765
Goodwill
15,952
15,948
Intangible assets
6,380
8,411
Other assets
593
1,319
Total Assets
$
63,243
$
79,878
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
9,910
$
12,583
Accrued expenses and other current
liabilities
4,788
5,878
Current portion of deferred revenue
6,617
6,509
Current portion of long-term debt and
finance leases
992
2,529
Current portion of operating lease
liabilities
2,224
2,165
Total current liabilities
24,531
29,664
Long-term portion of debt and finance
leases
1,082
729
Deferred revenue
1,823
2,366
Long-term portion of operating lease
liabilities
1,449
2,846
Deferred income taxes
501
275
Other long-term liabilities
381
334
Total Liabilities
29,767
36,214
Stockholders' Equity:
Common stock
406
401
Treasury stock
(2,004)
(1,931)
Additional paid-in capital
147,940
146,460
Accumulated deficit
(112,308)
(100,747)
Accumulated other comprehensive loss
(558)
(519)
Total stockholders’ equity
33,476
43,664
Total Liabilities and Stockholders'
Equity
$
63,243
$
79,878
Synacor, Inc.
Condensed Consolidated Statement
of Operations
(In thousands except for share
and per share data)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Revenue
$
24,074
$
26,806
$
81,362
$
121,845
Costs and operating expenses:
Cost of revenue (1)
12,068
12,698
42,236
61,990
Technology and development (1)(2)
2,871
3,605
12,007
18,273
Sales and marketing (2)
3,769
4,776
15,350
21,790
General and administrative (1)(2)
3,378
3,666
14,356
17,734
Depreciation and amortization
1,638
2,258
8,068
9,865
Total costs and operating expenses
23,724
27,003
92,017
129,652
Income (loss) from operations
350
(197)
(10,655)
(7,807)
Other income (expense), net
22
(127)
240
(17)
Interest expense
(43)
(69)
(189)
(268)
Income (loss) before income taxes
329
(393)
(10,604)
(8,092)
Provision for income taxes
221
172
957
929
Net income (loss)
$
108
$
(565)
$
(11,561)
$
(9,021)
Net income (loss) per share:
Basic
$
—
$
(0.01)
$
(0.29)
$
(0.23)
Diluted
$
—
$
(0.01)
$
(0.29)
$
(0.23)
Weighted average shares used to compute
net income (loss) per share:
Basic
39,641,158
39,190,444
39,464,954
39,090,239
Diluted
40,279,616
39,190,444
39,464,954
39,090,239
Notes:
(1) Exclusive of depreciation and
amortization shown separately.
(2) Includes stock-based compensation
expense as follows:
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Technology and development
$
55
$
40
$
218
$
338
Sales and marketing
106
138
407
513
General and administrative
202
254
831
765
$
363
$
432
$
1,456
$
1,616
Synacor, Inc.
Reconciliation of GAAP to
Non-GAAP Measures
(In thousands)
(Unaudited)
The following table presents a
reconciliation of net income (loss) to adjusted EBITDA for each of
the periods indicated:
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Reconciliation of Adjusted
EBITDA:
Net income (loss)
$
108
$
(565)
$
(11,561)
$
(9,021)
Provision for income taxes
221
172
957
929
Interest expense
43
69
189
268
Other (income) expense, net
(22)
127
(240)
17
Depreciation and amortization
2,235
2,742
10,294
11,251
Asset impairment*
119
—
806
1,751
Stock-based compensation expense
363
432
1,456
1,616
Restructuring costs**
264
140
1,483
959
Certain legal and professional services
fees***
230
327
1,934
1,733
Adjusted EBITDA
$
3,561
$
3,444
$
5,318
$
9,503
*
"Asset impairment" includes impairment
charges related to property, plant and equipment, capitalized
software and leased assets.
**
"Restructuring costs" include severance
expense, contract termination costs and other exit or disposal
costs.
***
"Certain legal and professional services
fees" includes legal fees and other related expenses outside the
ordinary course of business, as well as fees and expenses related
to merger and acquisition activities.
Synacor, Inc.
Condensed Consolidated Statements
of Cash Flows
(In thousands)
(Unaudited)
Twelve Months Ended December
31,
2020
2019
Cash Flows from Operating
Activities:
Net loss
$
(11,561)
$
(9,021)
Adjustments to reconcile net loss to net
cash and cash equivalents provided by operating activities:
Depreciation and amortization
10,294
11,251
Long-lived asset impairment
806
1,751
Stock-based compensation expense
1,456
1,616
Provision for deferred income taxes
226
44
Change in allowance for doubtful
accounts
(75)
360
Changes in operating assets and
liabilities:
Accounts receivable, net
3,089
4,676
Prepaid expenses and other assets
624
526
Operating lease right-of-use assets and
liabilities, net
(305)
95
Accounts payable, accrued expenses and
other liabilities
(3,081)
(8,828)
Deferred revenue
(435)
(11)
Net cash provided by operating
activities
1,038
2,459
Cash Flows from Investing
Activities:
Purchases of property and equipment
(3,053)
(3,772)
Net cash used in investing
activities
(3,053)
(3,772)
Cash Flows from Financing
Activities:
Repayments on long-term debt and finance
leases
(3,086)
(3,427)
Payments of financing issuance costs
—
(60)
Proceeds from exercise of common stock
options
—
60
Purchase of treasury stock and shares
received to satisfy minimum tax withholdings
(73)
(32)
Net cash used in financing
activities
(3,159)
(3,459)
Effect of exchange rate changes on cash
and cash equivalents
(44)
(183)
Net decrease in Cash and Cash
equivalents
(5,218)
(4,955)
Cash and cash equivalents, beginning of
period
10,966
15,921
Cash and cash equivalents, end of
period
$
5,748
$
10,966
Synacor, Inc. Segment Results (In thousands
except for percentages) (Unaudited)
The Company has two reportable segments which are determined on
the basis of the products and services provided to customers,
identified as follows:
- Software & Services, which includes email / collaboration
(Zimbra) and identity management (Cloud ID).
- Portal & Advertising, which includes managed portals and
advertising solutions for publishers.
The following table presents the key segment financial measures
for the periods indicated. Please refer to the Reconciliation of
GAAP to Non-GAAP Measures schedule for the reconciliation of
Adjusted EBITDA.
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
% Change
2020
2019
% Change
Segment Revenue:
Software & Services
$
12,187
$
11,648
4.6
%
$
44,280
$
44,485
(0.5)
%
Portal & Advertising
11,887
15,158
(21.6)
%
37,082
77,360
(52.1)
%
Total
$
24,074
$
26,806
(10.2)
%
$
81,362
$
121,845
(33.2)
%
Segment Adjusted EBITDA:
Software & Services
$
4,204
$
3,565
17.9
%
$
14,340
$
12,531
14.4
%
Portal & Advertising
2,224
2,621
(15.1)
%
2,168
10,657
(79.7)
%
Unallocated Corporate G&A Expense
(2,867)
(2,742)
(4.6)
%
(11,190)
(13,685)
18.2
%
Total
$
3,561
$
3,444
3.4
%
$
5,318
$
9,503
(44.0)
%
Segment Adjusted EBITDA margin*
Software & Services
34.5
%
30.6
%
390 bps
32.4
%
28.2
%
420 bps
Portal & Advertising
18.7
%
17.3
%
140 bps
5.8
%
13.8
%
-790 bps
Total
14.8
%
12.8
%
190 bps
6.5
%
7.8
%
-130 bps
* Adjusted EBITDA as a percent of revenue
The following tables presents a disaggregation of segment
revenue for the periods indicated based upon the accounting
definition of revenue recognition:
- Recurring = revenue recognized over time
- Non-recurring = revenue recognized at a point in time
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
% Change
2020
2019
% Change
Software & Services Revenue:
Recurring
$
8,540
$
8,526
0.2
%
$
33,072
$
33,669
(1.8)
%
Non-recurring
3,647
3,122
16.8
%
11,208
10,456
7.2
%
Discontinued Product **
—
—
—
%
—
360
(100.0)
%
Total
$
12,187
$
11,648
4.6
%
$
44,280
$
44,485
(0.5)
%
Portal & Advertising Revenue:
Recurring
$
461
$
1,186
(61.1)
%
$
3,120
$
5,168
(39.6)
%
Non-recurring
11,426
13,972
(18.2)
%
33,962
72,192
(53.0)
%
Total
$
11,887
$
15,158
(21.6)
%
$
37,082
$
77,360
(52.1)
%
Total Revenue:
Recurring
$
9,001
$
9,712
(7.3)
%
$
36,192
$
38,837
(6.8)
%
Non-recurring
15,073
17,094
(11.8)
%
45,170
82,648
(45.3)
%
Discontinued Product **
—
—
—
%
—
360
(100.0)
%
Total
$
24,074
$
26,806
(10.2)
%
$
81,362
$
121,845
(33.2)
%
** VAM video product line which was discontinued during Q1
2019.
Synacor, Inc.
Reconciliation of Adjusted
Financial Measures
(In thousands except per share
amounts)
(Unaudited)
Three months ended December
31, 2020
Per GAAP Statements
Asset Impairment
Restructuring Costs
Certain Legal and Professional
Services Fees
Adjusted Non-GAAP
Revenue
$
24,074
$
24,074
Costs and operating expenses
23,724
(119)
(264)
(230)
23,111
Income from operations
$
350
119
264
230
$
963
Net income (1)
$
108
$
119
$
264
$
230
$
721
Diluted EPS
$
—
$
—
$
0.01
$
0.01
$
0.02
Three months ended December
31, 2019
Per GAAP Statements
Asset Impairment
Restructuring Costs
Certain Legal and Professional
Services Fees
Adjusted Non-GAAP
Revenue
26,806
26,806
Costs and operating expenses
$
27,003
—
(140)
(327)
$
26,536
Loss from operations
$
(197)
—
140
327
$
270
—
Net loss (1)
$
(565)
$
—
$
140
$
327
$
(98)
Diluted EPS
$
(0.01)
$
—
$
—
$
0.01
$
—
Notes:
(1) No income tax effects to adjustments
presented due to full valuation allowance.
Synacor's management believes that certain non-GAAP measures of
Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) per
Share provide investors with additional information to assess the
Company's financial performance. These measures should be viewed as
supplemental data, rather than substitutes or alternatives to the
comparable GAAP measures.
Synacor, Inc.
Reconciliation of Adjusted
Financial Measures
(In thousands except per share
amounts)
(Unaudited)
Twelve months ended December
31, 2020
Per GAAP Statements
Asset Impairment
Restructuring Costs
Certain Legal and Professional
Services Fees
Adjusted Non-GAAP
Revenue
$
81,362
$
81,362
Costs and operating expenses
92,017
(806)
(1,483)
(1,934)
87,794
Loss from operations
$
(10,655)
806
1,483
1,934
$
(6,432)
Net loss (1)
$
(11,561)
$
806
$
1,483
$
1,934
$
(7,338)
Diluted EPS
$
(0.29)
$
0.02
$
0.04
$
0.05
$
(0.18)
Twelve months ended December
31, 2019
Per GAAP Statements
Asset Impairment
Restructuring Costs
Certain Legal and Professional
Services Fees
Adjusted Non-GAAP
Revenue
$
121,845
$
121,845
Costs and operating expenses
129,652
(1,751)
(959)
(1,733)
125,209
Loss from operations
$
(7,807)
1,751
959
1,733
$
(3,364)
Net loss (1)
$
(9,021)
$
1,751
$
959
$
1,733
$
(4,578)
Diluted EPS
$
(0.23)
$
0.04
$
0.02
$
0.04
$
(0.12)
Notes:
(1) No income tax effects to adjustments
presented due to full valuation allowance.
Synacor's management believes that certain non-GAAP measures of
Adjusted Net Loss and Adjusted Diluted Loss per Share provide
investors with additional information to assess the Company's
financial performance. These measures should be viewed as
supplemental data, rather than substitutes or alternatives to the
comparable GAAP measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210318005827/en/
FNK IR Rob Fink +1.646.809.4048 rob@fnkir.com
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