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Synacor Reports Solid Third Quarter 2012 Results

Synacor Reports Solid Third Quarter 2012 Results

  *Quarterly revenue of $28.3 million, an increase of 18% year-over-year
  *Quarterly adjusted EBITDA of $2.2 million, 8^th consecutive quarter of
    positive results

BUFFALO, N.Y., Oct. 24, 2012 (GLOBE NEWSWIRE) -- Synacor, Inc. (Nasdaq:SYNC),
leading provider of next-gen startpages, TV Everywhere solutions, and cloud
services across multiple devices for cable, satellite, telecom and consumer
electronics companies, today announced its financial results for the third
quarter of 2012.

"Synacor had another solid quarter. During the third quarter we announced
partnerships with Comcast Spotlight and NCC Media to complement our in-house
national advertising sales force. Also, our TV Everywhere customers continue
to rely on Synacor to expand the online programming available to their
subscribers," said Synacor CEO Ron Frankel. "We are kicking off the fourth
quarter with a new launch announcement. On October 1 we launched the startpage
and email for dishNET, the broadband ISP service of DISH Network. We are
excited to have been chosen by DISH Network. These partnerships, combined with
new customers and products, set the stage for continued momentum through the
remainder of the year."

Q3 2012 Financial Results

Revenue: For the third quarter of 2012, total revenue was $28.3 million, an
18% increase over $24.0 million in the third quarter of 2011. Search and
display advertising revenue was $23.3 million, a 24% increase compared to
$18.7 million in the third quarter of 2011. Subscription-based revenue was
$5.1 million, a 3% decrease compared to $5.2 million in the third quarter of
2011.

Net Income: For the third quarter of 2012, net income was $0.7 million,
compared to $1.5 million in the third quarter of 2011. Diluted earnings per
share, or EPS, was $0.02. Net income includes stock-based compensation expense
of $0.5 million, or $.02 per share, in the third quarter of 2012 and $0.2
million, or $0.01 per share, in the third quarter of 2011. The diluted EPS
calculation for the third quarter of 2012 is based on 30.0 million weighted
average fully diluted common shares outstanding.

Adjusted EBITDA: For the third quarter of 2012, adjusted EBITDA, which
excludes stock-based compensation expense, was $2.2 million, or 8% of revenue,
compared to $2.5 million, or 10% of revenue, in the third quarter of 2011.

Key Business Metrics: For the third quarter of 2012, Synacor averaged 20.2
million unique visitors per month, an increase of 44% from 14.1 million unique
visitors in the third quarter of 2011. Search queries were 234 million for the
third quarter, an increase of 15% from 203 million in the third quarter of
2011. Advertising impressions grew 51% to 11.6 billion, compared to 7.7
billion in the third quarter of 2011.

Cash: For the third quarter of 2012, Synacor generated $5.0 million in cash
from operating activities, compared to $2.8 million in the third quarter of
2011. The company ended the third quarter of 2012 with $38.7 million in cash
and cash equivalents, compared to $35.1 million at the end of the prior
quarter.

"Synacor's third quarter results delivered on our expectations, producing our
8^th consecutive quarter of positive adjusted EBITDA results. Based on our
pipeline, we are well positioned to capitalize on the foundation we have built
as the leading provider of startpages, TV Everywhere solutions and cloud
services that deliver, on behalf of our customers, pay-TV content and services
to consumers any time, anywhere, on any device," said Synacor CFO Bill Stuart.
"We expect Carbyn and our Cloud ID Management offerings, specifically our
social login capability, will greatly accelerate the usage of TV Everywhere
cross-device, continuing to enhance the consumer experience and our
positioning in this rapidly growing market."

Business Outlook

Based on information available as of October 24, 2012, the company is
providing financial guidance for the fourth quarter and fiscal 2012 as
follows:

  *Q4 2012 Guidance: Revenue for the fourth quarter of 2012 is projected to
    be in the range of $31.0 million to $33.0 million. For the fourth quarter
    of 2012, the company expects to report adjusted EBITDA of $2.9 million to
    $3.9 million.
  *Fiscal 2012 Guidance: Revenue for the full year of 2012 is projected to be
    in the range of $120.8 million to $122.8 million. For the full year of
    2012, the company expects to report adjusted EBITDA of $11.0 million to
    $12.0 million.

Conference Call Details

Synacor will host a conference call today at 5 p.m. ET to discuss the third
quarter 2012 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 39604640, 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 November 7, 2012. 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 39604640.

About Synacor

Synacor's white-label platform enables cable, satellite, telecom and consumer
electronics companies to deliver TV Everywhere, digital entertainment,
cloud-based services and apps to their end-consumers across multiple devices,
strengthening those relationships while monetizing the engagement. Synacor
(Nasdaq:SYNC), is headquartered in Buffalo, NY. For more information, visit
synacor.com. Integrate. Authenticate. Engage.

The Synacor logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11609

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; expectations regarding consumer taste and user adoption
of applications and solutions; general economic conditions; expectations
regarding the company's ability to timely expand the breadth of services and
products orintroduction of new services and products; consolidation within
the cable and telecommunications industries; changes in the competitive
dynamics in the market for online search and display 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 on August
14, 2012. These documents are available on the SEC Filings section of the
Investor Information section of the company's website
athttp://investor.synacor.com/. All information provided in this release and
in the attachments is available as of October 24, 2012, and Synacor undertakes
no duty to update this information.

                                                           
                                                           
Synacor, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                           
                                               As of        As of
                                                December 31, September 30,
                                               2011         2012
Assets                                                      
Current assets:                                             
Cash and cash equivalents                      $10,925    $38,709
Accounts receivable, net                       14,336      14,393
Deferred income taxes                          3,534       4,441
Prepaid expenses and other current assets      1,811       2,259
Total current assets                           30,606      59,802
Property and equipment, net                     8,301       11,178
Deferred income taxes, non-current              2,549       1,079
Other long-term assets                          1,926       700
Goodwill                                        --          819
Total Assets                                    $43,382    $73,578
                                                           
Liabilities and Stockholders' Equity                        
Current liabilities:                                        
Accounts payable                               $12,498    $13,396
Accrued expenses and other current liabilities 5,492       6,293
Current portion of bank financing              250         --
Current portion of capital lease obligations   1,593       2,258
Total current liabilities                      19,833      21,947
Long-term portion of capital lease obligation   2,098       2,178
Other long-term liabilities                     71          172
Total Liabilities                               22,002      24,297
                                                           
Stockholders' Equity:                                       
Common stock                                   31          274
Preferred stock                                28,432      --
Treasury stock                                 (569)       (569)
Additional paid-in capital                     45,639      98,712
Accumulated other comprehensive income         --          (8)
Accumulated deficit                            (52,153)    (49,128)
Total stockholders' equity                      21,380      49,281
Total liabilities and stockholders' equity      $43,382    $73,578

                                                               
                                                               
Synacor, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)
                                                               
                              Three months ended      Nine months ended
                               September 30,           September 30,
                              2011        2012        2011        2012
                                                               
Revenue                        $23,954   $28,326   $62,115   $89,803
Costs and operating expenses:                                   
Cost of revenue (1)           12,814     15,792     32,872     49,432
Research and development      4,950      6,218      14,270     18,629
(1)(2)
Sales and marketing (2)       2,127      2,000      5,811      6,776
General and administrative    1,824      2,676      4,887      8,384
(1)(2)
Depreciation                  673        981        1,950      2,696
Total costs and operating     22,388     27,667     59,790     85,917
expenses
                                                               
Income from operations         1,566      659        2,325      3,886
Other income (expense)         (19)       25         (18)       7
Interest expense               (13)       (72)       (64)       (208)
Income before income taxes     1,534      612        2,243      3,685
Provision (benefit) for income 49         (40)       55         660
taxes
Net income                     1,485      652        2,188      3,025
Undistributed earnings
allocated to preferred         1,292      --         1,903      --
stockholders
Net income attributable to     $193      $652      $285      $3,025
common stockholders
                                                               
Net income per share
attributable to common                                          
stockholders:
Basic                         $0.08     $0.02     $0.14     $0.13
Diluted                       $0.07     $0.02     $0.10     $0.11
                                                               
Weighted average shares used
to compute net income per      
share attributable to common
stockholders:
Basic                         2,318,666  27,329,106 2,006,739  23,728,120
Diluted                       21,911,929 30,010,359 22,433,359 28,765,152
                                                               
Notes:                                                          
(1) Exclusive of depreciation                                   
shown separately.
(2) Includes stock-based                                        
compensation as follows:
                              Three months ended      Nine months ended
                               September 30,           September 30,
                              2011        2012        2011        2012
Research and development      $75       $146      $205      $373
Sales and marketing           51         119        141        292
General and administrative    106        255        294        838
                              $232      $520      $640      $1,503

                                                                   
                                                                   
Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                   
                                                                   
                                                           Nine months ended
                                                            September 30,
                                                           2011     2012
Cash Flows from Operating Activities:                               
Net income                                                  $2,188 $3,025
Adjustments to reconcile net income to net cash provided by         
operating activities:
Depreciation                                               1,950   2,696
Stock-based compensation expense                           640     1,503
Loss on disposal of property and equipment                  10      32
Benefit from deferred income taxes                          --      563
Change in assets and liabilities net of effect of                   
acquisition:
Accounts receivable, net                                   (2,350) (57)
Prepaid expenses and other current assets                  121     (115)
Other long-term assets                                     (38)    223
Accounts payable                                           707     1,048
Accrued expenses and other current liabilities             809     812
Other long-term liabilities                                (26)    101
Net cash provided by operating activities                  4,011   9,831
                                                                   
Cash Flows from Investing Activities:                               
Purchases of property and equipment                         (1,478) (2,983)
Cash paid for business acquisition                          --      (600)
Net cash used in investing activities                      (1,478) (3,583)
                                                                   
Cash Flows from Financing Activities:                               
Proceeds from sale/leaseback                                794     --
Repayment on bank financing                                (375)   (250)
Repayments on capital lease obligations                    (1,400) (1,739)
Proceeds from exercise of common stock options             289     922
Proceeds from initial public offering                       --      25,364
Initial public offering costs                               --      (2,753)
Net cash (used in) provided by financing activities        (692)   21,544
Effect of exchange rate changes on cash and cash            --      (8)
equivalents
Net (Decrease) Increase in Cash and Cash Equivalents        1,841   27,784
Cash and Cash Equivalents at beginning of period            5,412   10,925
Cash and Cash Equivalents at end of period                  $7,253 $38,709

                                                               
                                                               
Synacor, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands except share and per share data)
(Unaudited)
                                                               
The following table presents a reconciliation of net income to adjusted EBITDA
for each of the periods indicated:
                                                               
                                                               
                        Three months ended          Nine months ended
                         September 30,               September 30,
                        2011          2012          2011          2012
                                                               
Reconciliation of                                               
Adjusted EBITDA:
Net income              $1,485      $652        $2,188      $3,025
Provision (benefit) for 49           (40)         55           660
income taxes
Interest expense        13           72           64           208
Other (income) expense 19           (25)         18           (7)
Depreciation            673          981          1,950        2,696
Stock-based             232          520          640          1,503
compensation
Adjusted EBITDA         $2,471      $2,160      $4,915      $8,085

                                                           
                                                           
Synacor, Inc.
Key Business Metrics
(Unaudited)
                                                           
             Three months ended               Nine months ended
              September 30,                   September 30,
             2011            2012             2011            2012
                                                           
Key Business                                                
Metrics:
Unique        14,069,737     20,241,871      13,250,013     20,487,594
Visitors (1)
Search        203,335,131    233,767,194     503,476,341    742,893,799
Queries (2)
Advertising
Impressions   7,682,888,761  11,634,386,253  19,461,422,855 30,457,542,583
(3)
                                                           
Notes:                                                      
(1) Reflects the number of unique visitors to our customers' websites computed
on an average monthly basis during the applicable period, as measured by
comScore.
(2) Reflects the total number of search queries during the applicable period,
as reported by Google.
(3) Reflects the total number of advertising impressions during the applicable
period, as reported by DoubleClick and other partners.

CONTACT: Investor Contact:
         Denise Garcia, SVP
         ICR
         ir@synacor.com
         716-362-3309
        
         Press Contact:
         Meredith Roth, VP, Corporate Communications
         mroth@synacor.com
         646-380-5141

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