Synacor Reports Third Quarter 2020 Financial Results

Nov 11, 2020

--Company delivers 17% growth in Zimbra Enterprise SaaS and Cloud ID SaaS revenue

--Reinstates Financial Guidance for Fourth Quarter 2020

BUFFALO, N.Y.--(BUSINESS WIRE)-- 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 third quarter ended September 30, 2020.

Third Quarter Financial Highlights

  • Third quarter revenue of $18.5 million
  • GAAP net loss of $4.0 million, inclusive of $1.8 million of restructuring and impairment charges
  • Adjusted EBITDA of $1.0 million with near break-even operating cash flow
  • Portal & Advertising Segment Adjusted EBITDA margin of 7% with sequential revenue growth of 16%, showing solid recovery post the onset of COVID-19
  • $8.1 million of recurring software revenue, that included 17% year-over-year growth in our focus areas of Zimbra Enterprise SaaS and Cloud ID SaaS
  • Company reinstates financial guidance for the fourth quarter 2020, including expectations for continued double-digit Enterprise SaaS growth, double-digit Adjusted EBITDA margins and positive free cash flow

“Our third quarter results provide real evidence of Synacor’s transformation into a world-class Enterprise SaaS company that is also committed to expanded margins and positive cash flow,” said Himesh Bhise, Synacor’s Chief Executive Officer. “Zimbra Enterprise SaaS plus Cloud ID SaaS delivered 17% year-over-year growth, our second consecutive quarter of double digit Enterprise SaaS revenue growth that we expect will continue into 2021. We have also improved profitability: year-to-date Software Segment adjusted EBITDA margin expanded to 32% from 27% a year ago, and our Portal & Advertising Segment adjusted EBITDA margin was 7% in Q3 and break-even year-to-date, despite the impact of COVID-19.”

Bhise added, “We enter Q4 and 2021 with noteworthy Cloud ID customer launches, a compelling new Zimbra Cloud collaboration platform, a pronounced market recovery underway in Advertising, a robust sales pipeline, and a cost structure that will yield positive free cash-flow.”

Recent Operating Highlights

  • Over 200 new and expansion customers for Zimbra email and collaboration platform delivered through worldwide channel partners
  • Debuted Zimbra Cloud in North America – an integrated collaboration suite for small business with email, videoconferencing, chat, and cloud storage – for $2.95 per month with a 30-day free trial
  • Signed four expansion deals for Cloud ID with content streaming and service provider customers; and pipeline remains robust
  • Achieved significant launch milestones with current Cloud ID customers that will grow active users, including smart-speaker enablement for a large digital services provider, doubling of traffic with a Canadian OTT provider, and going live with content network Epix
  • Active advertising publishers were 104 at the end of the third quarter, reflecting proactive reduction of less profitable publishers to enhance segment profitability
  • Renewed six Zimbra contracts, three Cloud ID contracts, and two portal contracts with service providers in North America
  • Unallocated corporate G&A declined 29% compared to the year ago quarter as a result of previously announced $10 million of cost reductions

Financial Results

Revenue

For the third quarter of 2020, revenue was $18.5 million, compared to reported revenue of $31.4 million, or $23.7 million when excluding the ATT.net portal business, in the third quarter of 2019. The decline was primarily driven by the COVID-19 impact on our business.

Revenue in our Software & Services segment totaled $10.1 million, compared with $11.1 million in the third quarter of 2019, as double-digit growth in Enterprise SaaS was offset by COVID-19 related declines in consumer email, maintenance, and enterprise licenses.

Revenue in our Portal & Advertising segment totaled $8.4 million, compared with reported revenue of $20.3 million, or $12.6 million net of the ATT.net portal business, in the third quarter of 2019. Revenue increased 16% sequentially compared to the second quarter of 2020, and continues to improve into the fourth quarter, despite the impact from COVID-19.

Net Loss

Net loss for the third quarter of 2020 was $4.0 million, or $0.10 per share, compared with a net loss of $3.7 million, or $0.10 per share, in the prior year. Adjusted net loss was $2.3 million, or $0.05 per share in the current quarter, compared with an adjusted net loss of $1.0 million, or $0.03 per share, in the third quarter of 2019. Adjusted net loss excludes asset impairments, restructuring charges and certain legal and professional fees.

Adjusted EBITDA

Adjusted EBITDA for the third quarter of 2020 was $1.0 million, or 5.3% of revenue, compared with $2.7 million, or 8.7% of revenue, in the third quarter of 2019. Adjusted EBITDA excludes stock-based compensation, other income and expense, asset impairments, restructuring costs, and certain legal and professional fees.

Cash

Cash and cash equivalents at the end of the third quarter was $4.3 million, compared with $6.0 million at the end of the second quarter. The Company continues to have no borrowings on its $12 million credit facility, and expects to be cash flow positive beginning with the fourth quarter of 2020 on a go-forward basis.

Guidance

The Company previously suspended its practice of providing financial guidance on May 6, 2020 given the uncertainties regarding the COVID-19 pandemic. Due to improved visibility, the Company has decided to reinstate financial guidance.

Based on information available as of November 11, 2020, the Company is providing guidance as follows for the fourth quarter 2020:

  • Revenue of $20.0 million to $22.0 million
  • GAAP net loss of $0.5 million to $1.1 million
  • Adjusted EBITDA of $2.5 million to $3.1 million

Conference Call Details

Synacor will host a conference call today at 5 p.m. ET to discuss its third quarter 2020 financial results. The live webcast of the Company’s earnings conference call can be accessed at https://www.synacor.com/investor-relations/events-and-presentations. To participate, please dial 1-833-235-2655 (toll free) or 1-647-689-4151 (international) and reference conference ID 4592597.

Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 8 p.m. ET on November 11, 2020 until 11:59 p.m. ET on November 18, 2020 by dialing 1-800-585-8367 or 1-416-621-4642 and using the pin number 4592597.

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 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 expected financial performance including, without limitation, it’s fourth quarter and full year 2020 guidance, the statements and quotations from management, statements regarding the impact of the Company’s cost reduction plan on its future financial results, statements regarding future revenue improvement in the Portal & Advertising segment and the ability to achieve positive cash flow in future periods, 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: 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 November 11, 2020, and except as required by applicable law, Synacor undertakes no duty to update this information.

Synacor, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

September 30, 2020

 

December 31, 2019

 

 

 

 

 

Assets

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

4,280

 

 

 

$

10,966

 

 

Accounts receivable, net

 

12,809

 

 

 

20,532

 

 

Prepaid expenses and other current assets

 

3,287

 

 

 

2,989

 

 

Total current assets

 

20,376

 

 

 

34,487

 

 

Property and equipment, net

 

12,192

 

 

 

14,948

 

 

Operating lease right-of-use assets

 

3,458

 

 

 

4,765

 

 

Goodwill

 

15,943

 

 

 

15,948

 

 

Intangible assets

 

6,820

 

 

 

8,411

 

 

Other assets

 

876

 

 

 

1,319

 

 

Total Assets

 

$

59,665

 

 

 

$

79,878

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

8,597

 

 

 

$

12,583

 

 

Accrued expenses and other current liabilities

 

3,725

 

 

 

5,878

 

 

Current portion of deferred revenue

 

5,750

 

 

 

6,509

 

 

Current portion of long-term debt and finance leases

 

1,018

 

 

 

2,529

 

 

Current portion of operating lease liabilities

 

2,434

 

 

 

2,165

 

 

Total current liabilities

 

21,524

 

 

 

29,664

 

 

Long-term portion debt and finance leases

 

1,309

 

 

 

729

 

 

Deferred revenue

 

1,696

 

 

 

2,366

 

 

Long-term portion of operating lease liabilities

 

1,629

 

 

 

2,846

 

 

Deferred income taxes

 

334

 

 

 

275

 

 

Other long-term liabilities

 

248

 

 

 

334

 

 

Total Liabilities

 

26,740

 

 

 

36,214

 

 

Stockholders' Equity:

 

 

 

 

Common stock

 

405

 

 

 

401

 

 

Treasury stock

 

(2,004

)

 

 

(1,931

)

 

Additional paid-in capital

 

147,572

 

 

 

146,460

 

 

Accumulated deficit

 

(112,416

)

 

 

(100,747

)

 

Accumulated other comprehensive loss

 

(632

)

 

 

(519

)

 

Total stockholders’ equity

 

32,925

 

 

 

43,664

 

 

Total Liabilities and Stockholders' Equity

 

$

59,665

 

 

 

$

79,878

 

 

Synacor, Inc.

Condensed Consolidated Statement of Operations

(In thousands except for share and per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

18,529

 

 

 

$

31,366

 

 

 

$

57,288

 

 

 

$

95,039

 

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

Cost of revenue (1)

 

10,403

 

 

 

15,634

 

 

 

30,168

 

 

 

49,292

 

 

Technology and development (1)(2)

 

3,085

 

 

 

5,545

 

 

 

9,136

 

 

 

14,668

 

 

Sales and marketing (2)

 

3,410

 

 

 

5,473

 

 

 

11,581

 

 

 

17,014

 

 

General and administrative (1)(2)

 

3,238

 

 

 

5,648

 

 

 

10,978

 

 

 

14,068

 

 

Depreciation and amortization

 

1,991

 

 

 

2,605

 

 

 

6,430

 

 

 

7,607

 

 

Total costs and operating expenses

 

22,127

 

 

 

34,905

 

 

 

68,293

 

 

 

102,649

 

 

Loss from operations

 

(3,598

)

 

 

(3,539

)

 

 

(11,005

)

 

 

(7,610

)

 

Other (expense) income, net

 

(124

)

 

 

101

 

 

 

218

 

 

 

110

 

 

Interest expense

 

(37

)

 

 

(80

)

 

 

(146

)

 

 

(199

)

 

Loss before income taxes

 

(3,759

)

 

 

(3,518

)

 

 

(10,933

)

 

 

(7,699

)

 

Provision for income taxes

 

203

 

 

 

207

 

 

 

736

 

 

 

757

 

 

Net loss

 

$

(3,962

)

 

 

$

(3,725

)

 

 

$

(11,669

)

 

 

$

(8,456

)

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

 

$

(0.10

)

 

 

$

(0.30

)

 

 

$

(0.22

)

 

Diluted

 

$

(0.10

)

 

 

$

(0.10

)

 

 

$

(0.30

)

 

 

$

(0.22

)

 

Weighted average shares used to compute net loss per share:

Basic

 

39,503,951

 

 

 

39,073,998

 

 

 

39,405,791

 

 

 

39,047,561

 

 

Diluted

 

39,503,951

 

 

 

39,073,998

 

 

 

39,405,791

 

 

 

39,047,561

 

 

Notes:

(1) Exclusive of depreciation and amortization shown separately.

(2) Includes stock-based compensation as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Technology and development

 

$

50

 

 

$

103

 

 

$

163

 

 

$

298

 

Sales and marketing

 

97

 

 

149

 

 

301

 

 

375

 

General and administrative

 

186

 

 

277

 

 

629

 

 

511

 

 

 

$

333

 

 

$

529

 

 

$

1,093

 

 

$

1,184

 

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 September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

Reconciliation of Adjusted EBITDA:

 

 

 

 

 

 

 

 

Net loss

 

$

(3,962

)

 

 

$

(3,725

)

 

 

$

(11,669

)

 

 

$

(8,456

)

 

Provision for income taxes

 

203

 

 

 

207

 

 

 

736

 

 

 

757

 

 

Interest expense

 

37

 

 

 

80

 

 

 

146

 

 

 

199

 

 

Other expense (income), net

 

124

 

 

 

(101

)

 

 

(218

)

 

 

(110

)

 

Depreciation and amortization

 

2,562

 

 

 

3,036

 

 

 

8,059

 

 

 

8,509

 

 

Asset impairment**

 

687

 

 

 

1,525

 

 

 

687

 

 

 

1,751

 

 

Stock-based compensation expense

 

333

 

 

 

529

 

 

 

1,093

 

 

 

1,184

 

 

Restructuring costs

 

1,099

 

 

 

819

 

 

 

1,219

 

 

 

819

 

 

Certain legal and professional services fees*

 

(94

)

 

 

370

 

 

 

1,704

 

 

 

1,406

 

 

Adjusted EBITDA

 

$

989

 

 

 

$

2,740

 

 

 

$

1,757

 

 

 

$

6,059

 

 

*

"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.

**

"Asset Impairment" includes impairment charges related to property, plant and equipment, capitalized software and leased assets.

Synacor, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

2020

 

 

2019

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

Net loss

 

$

(11,669

)

 

 

$

(8,456

)

 

Adjustments to reconcile net loss to net cash and cash equivalents
provided by (used in) operating activities:

Depreciation and amortization

 

8,081

 

 

 

8,513

 

 

Asset impairment

 

687

 

 

 

1,751

 

 

Stock-based compensation expense

 

1,093

 

 

 

1,184

 

 

Provision for deferred income taxes

 

59

 

 

 

59

 

 

Change in allowance for doubtful accounts

 

(20

)

 

 

77

 

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

7,743

 

 

 

5,369

 

 

Prepaid expenses and other assets

 

122

 

 

 

59

 

 

Operating lease right-of-use assets and liabilities, net

 

(109

)

 

 

36

 

 

Accounts payable, accrued expenses and other liabilities

 

(5,561

)

 

 

(3,132

)

 

Deferred revenue

 

(1,429

)

 

 

(251

)

 

Net cash (used in) provided by operating activities

 

(1,003

)

 

 

5,209

 

 

Cash Flows from Investing Activities:

 

 

 

 

Purchases of property and equipment

 

(2,640

)

 

 

(3,159

)

 

Net cash used in investing activities

 

(2,640

)

 

 

(3,159

)

 

Cash Flows from Financing Activities:

 

 

 

 

Repayments on long-term debt and finance leases

 

(2,863

)

 

 

(2,531

)

 

Proceeds from exercise of common stock options

 

 

 

 

40

 

 

Payment of debt issuance costs

 

 

 

 

(60

)

 

Purchase of treasury stock and shares received to satisfy minimum tax withholdings

 

(73

)

 

 

(32

)

 

Net cash used in financing activities

 

(2,936

)

 

 

(2,583

)

 

Effect of exchange rate changes on cash and cash equivalents

 

(107

)

 

 

(156

)

 

Net decrease in Cash and Cash equivalents

 

(6,686

)

 

 

(689

)

 

Cash and cash equivalents, beginning of period

 

10,966

 

 

 

15,921

 

 

Cash and cash equivalents, end of period

 

$

4,280

 

 

 

$

15,232

 

 

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:

(i) Software & Services, which includes email / collaboration (Zimbra) and identity management (Cloud ID).
(ii) 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 September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

2019

 

 

% Change

 

2020

 

 

2019

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Revenue:

Software & Services

 

$

10,116

 

 

 

$

11,091

 

 

 

(8.8

)

%

 

$

32,093

 

 

 

$

32,837

 

 

 

(2.3

)

%

Portal & Advertising

 

8,413

 

 

 

20,275

 

 

 

(58.5

)

%

 

25,195

 

 

 

62,202

 

 

 

(59.5

)

%

Total

 

$

18,529

 

 

 

$

31,366

 

 

 

(40.9

)

%

 

$

57,288

 

 

 

$

95,039

 

 

 

(39.7

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA:

Software & Services

 

$

2,890

 

 

 

$

3,378

 

 

 

(14.4

)

%

 

$

10,136

 

 

 

$

8,966

 

 

 

13.0

 

%

Portal & Advertising

 

588

 

 

 

2,881

 

 

 

(79.6

)

%

 

(56

)

 

 

8,036

 

 

 

(100.7

)

%

Unallocated Corporate Expense

 

(2,489

)

 

 

(3,519

)

 

 

29.3

 

%

 

(8,323

)

 

 

(10,943

)

 

 

23.9

 

%

Total

 

$

989

 

 

 

$

2,740

 

 

 

(63.9

)

%

 

$

1,757

 

 

 

$

6,059

 

 

 

(71.0

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA margin*

Software & Services

 

28.6

 

%

 

30.5

 

%

 

-190 bps

 

31.6

 

%

 

27.3

 

%

 

430 bps

Portal & Advertising

 

7.0

 

%

 

14.2

 

%

 

-720 bps

 

(0.2

)

%

 

12.9

 

%

 

-1310 bps

Total

 

5.3

 

%

 

8.7

 

%

 

-340 bps

 

3.1

 

%

 

6.4

 

%

 

-330 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:

(i) Recurring = revenue recognized over time
(ii) Non-recurring = revenue recognized at a point in time

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Software & Services Revenue:

Recurring

 

$

8,139

 

 

$

8,240

 

 

(1.2

)

%

 

$

24,532

 

 

$

25,143

 

 

(2.4

)

%

Non-recurring

 

1,977

 

 

2,851

 

 

(30.7

)

%

 

7,561

 

 

7,334

 

 

3.1

 

%

Discontinued Products **

 

 

 

 

 

 

%

 

 

 

360

 

 

(100.0

)

%

Total

 

$

10,116

 

 

$

11,091

 

 

(8.8

)

%

 

$

32,093

 

 

$

32,837

 

 

(2.3

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Portal & Advertising Revenue:

Recurring

 

$

554

 

 

$

1,274

 

 

(56.5

)

%

 

$

2,659

 

 

$

3,982

 

 

(33.2

)

%

Non-recurring

 

7,859

 

 

19,001

 

 

(58.6

)

%

 

22,536

 

 

58,220

 

 

(61.3

)

%

Total

 

$

8,413

 

 

$

20,275

 

 

(58.5

)

%

 

$

25,195

 

 

$

62,202

 

 

(59.5

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue:

Recurring

 

$

8,693

 

 

$

9,514

 

 

(8.6

)

%

 

$

27,191

 

 

$

29,125

 

 

(6.6

)

%

Non-recurring

 

9,836

 

 

21,852

 

 

(55.0

)

%

 

30,097

 

 

65,554

 

 

(54.1

)

%

Discontinued Products **

 

 

 

 

 

 

%

 

 

 

360

 

 

 

%

Total

 

$

18,529

 

 

$

31,366

 

 

(40.9

)

%

 

$

57,288

 

 

$

95,039

 

 

(39.7

)

%

 

** 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 September 30, 2020

Per GAAP
Statements

 

Asset
Impairment

 

Restructuring
Costs

 

Certain
Legal &
Professional
Fees

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

18,529

 

 

 

 

 

 

 

 

$

18,529

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

 

10,403

 

 

 

 

 

 

 

 

10,403

 

Technology and development (1)(2)

 

3,085

 

 

 

 

(405)

 

 

 

 

2,680

 

Sales and marketing (2)

 

3,410

 

 

 

 

(561)

 

 

 

 

2,849

 

General and administrative (1)(2)

 

3,238

 

 

(687)

 

 

(133)

 

 

94

 

 

2,512

 

Depreciation and amortization

 

1,991

 

 

 

 

 

 

 

 

1,991

 

Total costs and operating expenses

 

22,127

 

 

(687)

 

 

(1,099)

 

 

94

 

 

20,435

 

Loss from operations

 

(3,598)

 

 

687

 

 

1,099

 

 

(94)

 

 

(1,906)

 

Other expense, net

 

(124)

 

 

 

 

 

 

 

 

(124)

 

Interest expense

 

(37)

 

 

 

 

 

 

 

 

(37)

 

Loss before income taxes

 

(3,759)

 

 

687

 

 

1,099

 

 

(94)

 

 

(2,067)

 

Provision for income taxes (3)

 

203

 

 

 

 

 

 

 

 

203

 

Net loss

 

$

(3,962)

 

 

$

687

 

 

$

1,099

 

 

$

(94)

 

 

$

(2,270)

 

Diluted EPS

 

$

(0.10)

 

 

$

0.02

 

 

$

0.03

 

 

$

 

 

$

(0.05)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2019

 

 

Per GAAP
Statements

 

Asset
Impairment

 

Restructuring
Costs

 

Certain
Legal &
Professional
Fees

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

31,366

 

 

 

 

 

 

 

 

$

31,366

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

 

15,634

 

 

 

 

(292)

 

 

 

 

$

15,342

 

Technology and development (1)(2)

 

5,545

 

 

 

 

(329)

 

 

 

 

$

5,216

 

Sales and marketing (2)

 

5,473

 

 

 

 

(192)

 

 

 

 

$

5,281

 

General and administrative (1)(2)

 

5,648

 

 

(1,525)

 

 

(6)

 

 

(370)

 

 

$

3,747

 

Depreciation and amortization

 

2,605

 

 

 

 

 

 

 

 

2,605

 

Total costs and operating expenses

 

34,905

 

 

(1,525)

 

 

(819)

 

 

(370)

 

 

32,191

 

Loss from operations

 

(3,539)

 

 

1,525

 

 

819

 

 

370

 

 

(825)

 

Other income, net

 

101

 

 

 

 

 

 

 

 

101

 

Interest expense

 

(80)

 

 

 

 

 

 

 

 

(80)

 

Loss before income taxes

 

(3,518)

 

 

1,525

 

 

819

 

 

370

 

 

(804)

 

Provision for income taxes (3)

 

207

 

 

 

 

 

 

 

 

207

 

Net loss

 

$

(3,725)

 

 

$

1,525

 

 

$

819

 

 

$

370

 

 

$

(1,011)

 

Diluted EPS

 

$

(0.10)

 

 

$

0.04

 

 

$

0.02

 

 

$

0.01

 

 

$

(0.03)

 

Notes:

(1) Exclusive of depreciation and amortization shown separately.

(2) Includes stock-based compensation

(3) 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 Earnings 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)

 

 

 

Nine months ended September 30, 2020

Per GAAP
Statements

 

Asset
Impairment

 

Restructuring
Costs

 

Certain
Legal &
Professional
Fees

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

57,288

 

 

 

 

 

 

 

 

 

$

57,288

 

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

 

30,168

 

 

 

 

 

 

 

 

 

30,168

 

 

Technology and development (1)(2)

 

9,136

 

 

 

 

 

(405

)

 

 

 

 

8,731

 

 

Sales and marketing (2)

 

11,581

 

 

 

 

 

(561

)

 

 

 

 

11,020

 

 

General and administrative (1)(2)

 

10,978

 

 

 

(687

)

 

 

(253

)

 

 

(1,704

)

 

 

8,334

 

 

Depreciation and amortization

 

6,430

 

 

 

 

 

 

 

 

 

6,430

 

 

Total costs and operating expenses

 

68,293

 

 

 

(687

)

 

 

(1,219

)

 

 

(1,704

)

 

 

64,683

 

 

Loss from operations

 

(11,005

)

 

 

687

 

 

 

1,219

 

 

 

1,704

 

 

 

(7,395

)

 

Other income, net

 

218

 

 

 

 

 

 

 

 

 

218

 

 

Interest Expense

 

(146

)

 

 

 

 

 

 

 

 

(146

)

 

Loss before income taxes

 

(10,933

)

 

 

687

 

 

 

1,219

 

 

 

1,704

 

 

 

(7,323

)

 

Provision for income taxes (3)

 

736

 

 

 

 

 

 

 

 

 

736

 

 

Net loss

 

$

(11,669

)

 

 

$

687

 

 

 

$

1,219

 

 

 

$

1,704

 

 

 

$

(8,059

)

 

Diluted EPS

 

$

(0.30

)

 

 

$

0.02

 

 

 

$

0.03

 

 

 

$

0.04

 

 

 

$

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2019

 

 

Per GAAP
Statements

 

Asset
Impairment

 

Restructuring
Costs

 

Certain
Legal &
Professional
Fees

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

95,039

 

 

 

 

 

 

 

 

 

$

95,039

 

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

 

49,292

 

 

 

 

 

(292

)

 

 

 

 

49,000

 

 

Technology and development (1)(2)

 

14,668

 

 

 

 

 

(329

)

 

 

 

 

14,339

 

 

Sales and marketing (2)

 

17,014

 

 

 

 

 

(192

)

 

 

 

 

16,822

 

 

General and administrative (1)(2)

 

14,068

 

 

 

(1,751

)

 

 

(6

)

 

 

(1,406

)

 

 

10,905

 

 

Depreciation and amortization

 

7,607

 

 

 

 

 

 

 

 

 

7,607

 

 

Total costs and operating expenses

 

102,649

 

 

 

(1,751

)

 

 

(819

)

 

 

(1,406

)

 

 

98,673

 

 

Loss from operations

 

(7,610

)

 

 

1,751

 

 

 

819

 

 

 

1,406

 

 

 

(3,634

)

 

Other income, net

 

110

 

 

 

 

 

 

 

 

 

110

 

 

Interest Expense

 

(199

)

 

 

 

 

 

 

 

 

(199

)

 

Loss before income taxes

 

(7,699

)

 

 

1,751

 

 

 

819

 

 

 

1,406

 

 

 

(3,723

)

 

Provision for income taxes (3)

 

757

 

 

 

 

 

 

 

 

 

757

 

 

Net loss

 

$

(8,456

)

 

 

1,751

 

 

 

$

819

 

 

 

$

1,406

 

 

 

$

(4,480

)

 

Diluted EPS

 

$

(0.22

)

 

 

$

0.04

 

 

 

$

0.02

 

 

 

$

0.04

 

 

 

$

(0.11

)

 

Notes:

(1) Exclusive of depreciation and amortization shown separately.

(2) Includes stock-based compensation

(3) 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 Earnings 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.

Guidance Reconciliation

(In millions)

(Unaudited)

 

 

 

Q4-2020

 

FY 2020

 

 

 

 

 

 

 

Net Loss

 

$(0.5) - $(1.1)

 

$(12.1) - $(12.7)

 

Taxes, Interest & Other Income/Expense

 

0.4

 

1.0

 

Depreciation & Amortization

 

2.2

 

10.3

 

Stock-based Compensation

 

0.4

 

1.5

 

Restructuring

 

0.2

 

1.4

 

Certain Legal and Professional Fees

 

0.4

 

2.1

 

Asset Impairment

 

 

0.7

 

Adjusted EBITDA

 

$2.5 - $3.1

 

$4.3 - $4.9

 

 

FNK IR
Rob Fink
+1.646.809.4048
rob@fnkir.com

Meredith Roth
VP, Marketing & Corporate Communications
Synacor
+1.770.846.1911
mroth@synacor.com

Source: Synacor, Inc.

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