Synchronoss Technologies, Inc. Announces Second Quarter 2013 Financial Results
Synchronoss Technologies, Inc. Announces Second Quarter 2013 Financial Results
Second quarter non-GAAP total revenue of $85.2 million increases 27% year-over-year
Second quarter non-GAAP operating income of $19.5 million represents 23% non-GAAP operating margin and drives non-GAAP EPS of $0.31
BRIDGEWATER, N.J.--(BUSINESS WIRE)-- Synchronoss Technologies, Inc. (NAS: SNCR) , the mobile innovation leader that provides personal cloud solutions and software-based activation for connected devices across the globe, today announced financial results for the second quarter of 2013.
"Both our Activation Services and Cloud Services delivered a strong performance during the second quarter, leading to total revenue that exceeded our expectations," said Stephen G. Waldis, Founder and Chief Executive Officer of Synchronoss. "Our second quarter was highlighted by many successful deployments in our Personal Cloud Services offerings, and very encouraging initial subscriber adoption rates and customer forecasts for storage growth. Synchronoss is well positioned to participate in this growth opportunity based on our highly differentiated cloud services platform, proven track record and Tier One customer base."
On a GAAP basis, Synchronoss reported net revenues of $83.8 million, representing an increase of 25% compared to the second quarter of 2012. Gross profit was $48.3 million and income from operations was $5.7 million in the second quarter of 2013. Net income applicable to common stock was $3.4 million, leading to diluted earnings per share of $0.09, compared to $0.31 for the second quarter of 2012.
On a non-GAAP basis, Synchronoss reported net revenues of $85.2 million, an increase of 27% compared to the second quarter of 2012. Gross profit for the second quarter of 2013 was $51.2 million, representing a gross margin of 60%. Income from operations was $19.5 million in the second quarter of 2013, representing an operating margin of 23%. Net income was $12.3 million in the second quarter of 2013, compared to $11.2 million in the year ago period. Diluted earnings per share were $0.31 for the second quarter of 2013, compared to $0.29 for the second quarter of 2012.
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 also included below under the heading "Non-GAAP Financial Measures."
"We are pleased with the strong operational performance Synchronoss delivered in the second quarter, as we met our profitability objectives while continuing to make significant investments in our cloud services offerings," said Lawrence R. Irving, Chief Financial Officer and Treasurer. "We continue to identify new growth opportunities across our worldwide portfolio of Tier One customers as mobile operators begin to launch, test and scale their cloud strategies. As such, we will continue to invest in our cloud services platform in order to maximize our market share and shareholder value over the long-term."
Other Second Quarter and Recent Business Highlights:
Cloud Services revenue accounted for approximately $26.8 million of non-GAAP revenue, representing approximately 31% of total revenue and growing 30% on a year-over-year basis.
Activation Services revenue accounted for approximately $58.4 million of non-GAAP revenue, representing approximately 69% of total revenue and growing 26% on a year-over-year basis.
Conference Call Details
In conjunction with this announcement, Synchronoss will host a conference call on Tuesday, July 30, 2013, at 4:30 p.m. (ET) to discuss the company's financial results. To access this call, dial 877-474-9503 (domestic) or 857-244-7556 (international). The pass code for the call is 83831771. Additionally, a live web cast of the conference call will be available on the "Investor Relations" page on the company's web site, www.synchronoss.com.
Following the conference call, a replay will be available at 888-286-8010 (domestic) or 617-801-6888 (international). The replay pass code is 70537367. An archived web cast of this conference call will also be available on the "Investor Relations" page of the company's web site, www.synchronoss.com.
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, operating income, net income, effective tax rate, earnings per share and cash flows from operating activities. 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 the deferred revenue write-down associated with acquisitions, fair value stock-based compensation expense, acquisition-related costs, changes in the contingent consideration obligation, deferred compensation expense related to earn outs 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. 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 (NAS: SNCR) is the mobile innovation leader that provides personal cloud solutions and software-based activation for connected devices across the globe. The company's proven and scalable technology solutions allow customers to connect, synchronize and activate connected devices and services that empower enterprises and consumers to live in a connected world. For more information visit us at:
Web: www.synchronoss.com
Blog: http://blog.synchronoss.com
Twitter: http://twitter.com/synchronoss
Forward-looking Statements
This document may include certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "outlook" or words of similar meanings. These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption "Risk Factors" in Synchronoss' Annual Report on Form 10-K for the year ended December 31, 2012 and other documents filed with the U.S. Securities and Exchange Commission. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. Synchronoss does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
SYNCHRONOSS TECHNOLOGIES, INC. | ||||||||||
June 30, 2013 | December 31, 20121 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 46,204 | $ | 36,028 | ||||||
Marketable securities | 12,996 | 20,188 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $372 and $258 at June 30, 2013 and December 31, 2012, respectively | 73,995 | 74,980 | ||||||||
Prepaid expenses and other assets | 23,576 | 24,012 | ||||||||
Deferred tax assets | 4,142 | 4,114 | ||||||||
Total current assets | 160,913 | 159,322 | ||||||||
Marketable securities | 1,767 | 653 | ||||||||
Property and equipment, net | 85,009 | 58,162 | ||||||||
Goodwill | 124,160 | 127,322 | ||||||||
Intangible assets, net | 101,954 | 110,760 | ||||||||
Deferred tax assets | 8,008 | 6,961 | ||||||||
Other assets | 3,589 | 3,482 | ||||||||
Total assets | $ | 485,400 | $ | 466,662 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 12,345 | $ | 8,980 | ||||||
Accrued expenses | 33,087 | 41,658 | ||||||||
Deferred revenues | 22,353 | 20,954 | ||||||||
Contingent consideration obligation | 11,051 | 3,279 | ||||||||
Total current liabilities | 78,836 | 74,871 | ||||||||
Lease financing obligation - long term | 9,260 | 9,540 | ||||||||
Contingent consideration obligation - long-term | - | 5,100 | ||||||||
Other liabilities | 3,104 | 2,494 | ||||||||
Stockholders' equity: | ||||||||||
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at June 30, 2013 and December 31, 2012 | ||||||||||
— | — | |||||||||
Common stock, $0.0001 par value; 100,000 shares authorized, 43,945 and 42,533 shares issued; 40,121 and 38,674 outstanding at June 30, 2013 and December 31, 2012, respectively | ||||||||||
4 | 4 | |||||||||
Treasury stock, at cost (3,824 and 3,859 shares at June 30, 2013 and December 31, 2012, respectively) | (67,487 | ) | (67,918 | ) | ||||||
Additional paid-in capital | 366,377 | 344,469 | ||||||||
Accumulated other comprehensive loss | (7,049 | ) | (365 | ) | ||||||
Retained earnings | 102,355 | 98,467 | ||||||||
Total stockholders' equity | 394,200 | 374,657 | ||||||||
Total liabilities and stockholders' equity | $ | 485,400 | $ | 466,662 | ||||||
1 Certain prior period amounts have been recast in connection with ASC 805, Business Combinations.
SYNCHRONOSS TECHNOLOGIES, INC. | |||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Net revenues | $ | 83,848 | $ | 66,990 | $ | 162,124 | $ | 131,550 | |||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of services (2)(3)(4)* | 35,527 | 26,631 | 67,658 | 55,252 | |||||||||||||||
Research and development (2)(3)(4) | 16,358 | 12,570 | 33,076 | 25,446 | |||||||||||||||
Selling, general and administrative (2)(3)(4) | 14,943 | 11,060 | 29,595 | 21,450 | |||||||||||||||
Net change in contingent consideration obligation | 1,743 | (4,628 | ) | 2,176 | (5,408 | ) | |||||||||||||
Restructuring charges | - | - | 5,172 | - | |||||||||||||||
Depreciation and amortization | 9,610 | 5,962 | 18,579 | 11,133 | |||||||||||||||
Total costs and expenses | 78,181 | 51,595 | 156,256 | 107,873 | |||||||||||||||
Income from operations | 5,667 | 15,395 | 5,868 | 23,677 | |||||||||||||||
Interest income | 197 | 330 | 283 | 728 | |||||||||||||||
Interest expense | (247 | ) | (241 | ) | (479 | ) | (480 | ) | |||||||||||
Other income (5) | 301 | 779 | 43 | 793 | |||||||||||||||
Income before income tax expense | 5,918 | 16,263 | 5,715 | 24,718 | |||||||||||||||
Income tax expense | (2,506 | ) | (4,314 | ) | (1,827 | ) | (7,286 | ) | |||||||||||
Net income | $ | 3,412 | $ | 11,949 | $ | 3,888 | $ | 17,432 | |||||||||||
Net income per common share: | |||||||||||||||||||
Basic (1) | $ | 0.09 | $ | 0.31 | $ | 0.10 | $ | 0.46 | |||||||||||
Diluted (1) | $ | 0.09 | $ | 0.31 | $ | 0.10 | $ | 0.45 | |||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||
Basic | 38,551 | 38,353 | 38,368 | 38,207 | |||||||||||||||
Diluted | 39,523 | 39,075 | 39,367 | 39,123 | |||||||||||||||
* Cost of services excludes depreciation which is shown separately. | |||||||||||||||||||
(1) Adjustment to net income for equity mark-to-market on contingent consideration obligation: | |||||||||||||||||||
Net income | $ | 3,412 | $ | 11,949 | $ | 3,888 | $ | 17,432 | |||||||||||
Income effect for equity mark-to-market on contingent consideration obligation, net of tax | - | - | - | - | |||||||||||||||
Net income applicable to shares of common stock for earnings per share | $ | 3,412 | $ | 11,949 | $ | 3,888 | $ | 17,432 | |||||||||||
(2) Amounts include fair value stock-based compensation as follows: | |||||||||||||||||||
Cost of services | $ | 1,204 | $ | 891 | $ | 2,404 | $ | 2,136 | |||||||||||
Research and development | 1,650 | 1,227 | 2,946 | 2,655 | |||||||||||||||
Selling, general and administrative | 3,276 | 2,421 | 5,690 | 4,959 | |||||||||||||||
Total fair value stock-based compensation expense | $ | 6,130 | |||||||||||||||||
