Synacor Beats Guidance for Both Revenue and EBITDA in Fourth Quarter and Full Year 2015 Results

Mar 16, 2016

  • Q4 2015 revenue of $32.4 million, adjusted EBITDA of $2.9 million
  • FY 2015 revenue of $110.2 million, 3.4% year-over-year growth
  • FY 2015 adjusted EBITDA of $7.6 million, 248% year-over-year growth
  • Highlights include Q1 2016 Technorati acquisition; video and email customer wins

BUFFALO, N.Y., March 16, 2016 (GLOBE NEWSWIRE) -- 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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