Synacor Reports Fourth Quarter and Fiscal 2012 Results

Synacor Reports Fourth Quarter and Fiscal 2012 Results

  *Quarterly revenue of $32.2 million, an increase of 11% year-over-year
  *Annual revenue of $122.0 million, an increase of 34% year-over-year
  *Quarterly adjusted EBITDA of $3.5 million vs. $2.7 million in prior year
  *Annual adjusted EBITDA of $11.6 million vs. $7.6 million in prior year

BUFFALO, N.Y., Feb. 20, 2013 (GLOBE NEWSWIRE) -- Synacor, Inc. (Nasdaq:SYNC),
leading provider of next-gen startpages, TV Everywhere solutions, and
cloud-based Identity Management (IDM) services across multiple devices for
cable, satellite, telecom and consumer electronics companies, today announced
its financial results for the fourth quarter and fiscal year 2012.

"We are proud of Synacor's achievements and growth in 2012, as we experienced
record numbers of search queries, advertising impressions, and unique
visitors. This engagement produced record revenue and adjusted EBITDA for the
year," said Synacor CEO Ron Frankel. "Our success was also evident from our
many accomplishments in 2012 including our initial public offering, the
acquisition of Carbyn, the launch of Cloud ID and Social Login, and major
customer wins. We are very proud of our employees, customers and partners.
While we remain passionate about our long-term opportunities, we expect 2013
to be transitional.

Q4 2012 Financial Results

Revenue: For the fourth quarter of 2012, total revenue was $32.2 million, an
11% increase over $28.9 million in the fourth quarter of 2011. Search and
display advertising revenue was $27.1 million, a 13% increase compared to
$24.0 million in the fourth quarter of 2011. Subscription-based revenue was
$5.1 million, a 4% increase compared to $4.9 million in the fourth quarter of
2011.

Net Income: For the fourth quarter of 2012, net income was $0.8 million. This
compared to $7.7 million in the fourth quarter of 2011, which included a $6.1
million income tax benefit for the reduction of our deferred tax asset
valuation allowance. Diluted earnings per share, or EPS, was $0.03. Net income
includes stock-based compensation expense of $0.5 million, or $0.02 per share,
in the fourth quarter of 2012, as compared to $0.3 million, or $0.01 per
share, in the fourth quarter of 2011. The diluted EPS calculation for the
fourth quarter of 2012 is based on 28.6 million weighted average fully diluted
common shares outstanding. The diluted EPS calculation for the fourth quarter
of 2011 was based on 23.0 million shares.

Adjusted EBITDA: For the fourth quarter of 2012, adjusted EBITDA, which
excludes stock-based compensation expense, was $3.5 million, or 11% of
revenue, compared to $2.7 million, or 9% of revenue, in the fourth quarter of
2011.

Key Business Metrics: For the fourth quarter of 2012, Synacor averaged 20.3
million unique visitors per month, an increase of 8% from 18.7 million unique
visitors in the fourth quarter of 2011. Search queries were 225 million for
the fourth quarter of 2012, a decrease of 8% from 245 million in the fourth
quarter of 2011. Advertising impressions grew 41% to 11.7 billion, compared to
8.3 billion in the fourth quarter of 2011.

Cash: For the fourth quarter of 2012, Synacor generated $4.8 million in cash
from operating activities, compared to $4.7 million in the fourth quarter of
2011.

Fiscal 2012 Financial Results

Revenue: For fiscal 2012, total revenue was $122.0 million, a 34% increase
over $91.1 million in fiscal 2011. Search and display advertising revenue was
$101.6 million, a 41% increase compared to $72.1 million in fiscal 2011.
Subscription-based revenue was $20.4 million, an 8% increase compared to $19.0
million in fiscal 2011.

Net Income: For fiscal 2012, net income was $3.8 million. This compared to
$9.9 million in fiscal 2011, which included a $6.1 million income tax benefit
for the reduction of our deferred tax asset valuation allowance. Diluted
earnings per share, or EPS, was $0.14. Net income includes stock-based
compensation expense of $2.0 million, or $0.07 per share, in fiscal 2012, as
compared to $0.9 million, or $0.04 per share, in fiscal 2011. The diluted EPS
calculation for fiscal 2012 is based on 28.1 million weighted average fully
diluted common shares outstanding. The diluted EPS calculation for fiscal 2011
was based on 22.0 million shares.

Adjusted EBITDA: For fiscal 2012, adjusted EBITDA, which excludes stock-based
compensation expense, was $11.6 million, or 10% of revenue, compared to $7.6
million, or 8% of revenue, in fiscal 2011.

Key Business Metrics: For fiscal 2012, Synacor averaged 20.4 million unique
visitors per month, an increase of 40% from 14.6 million unique visitors in
fiscal 2011. Search queries were 968 million for the year, an increase of 29%
from 749 million in fiscal 2011. Advertising impressions grew 52% to 42.2
billion, compared to 27.7 billion in fiscal 2011.

Cash: For fiscal 2012, Synacor generated $14.7 million in cash from operating
activities, compared to $8.7 million in fiscal 2011. The company ended the
year with $41.9 million in cash and cash equivalents, compared to $10.9
million at the end of the prior year.

"In 2012, Synacor achieved record financial performance in revenue and
adjusted EBITDA," said Synacor CFO Bill Stuart. "In 2013, Synacor will
continue to build upon the foundation we have established— investing in our
products, employees, customers and partners, as we position Synacor for the
long-term."

Business Outlook

Based on information available as of February 20, 2013, the company is
providing financial guidance for the first quarter and fiscal 2013 as follows:

  *Q1 2013 Guidance: Revenue for the first quarter of 2013 is projected to be
    in the range of $28.5 million to $29.5 million. For the first quarter of
    2013, the company expects to report adjusted EBITDA of $1.6 million to
    $2.0 million.
  *Fiscal 2013 Guidance: We are forecasting based on our existing customers'
    activity. Growth may develop as we sign and launch new customers and new
    products and services. With this in mind, we expect to report revenue of
    $122.0 to $126.0 million and adjusted EBITDA of $11.6 to $12.6 million for
    2013. We believe that we have potential for upside, subject to the
    performance and timing of the recently announced and future customer wins
    as well as other strategic initiatives we are currently developing.

Conference Call Details

Synacor will host a conference call today at 5 p.m. ET to discuss the fourth
quarter and fiscal 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 94113666, 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 6, 2013. 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 94113666.

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 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 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 November
14, 2012. 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 February 20, 2013, and Synacor undertakes
no duty to update this information.

Synacor, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                          
                                              As of        As of
                                               December 31, December 31,
                                              2011         2012
Assets                                                     
Current assets:                                            
Cash and cash equivalents                      $10,925    $41,944
Accounts receivable, net                       14,336       15,624
Deferred income taxes                          3,534        1,999
Prepaid expenses and other current assets      1,811        1,831
Total current assets                           30,606       61,398
Property and equipment, net                    8,301        11,043
Deferred income taxes, non-current             2,549        2,527
Other long-term assets                         1,926        543
Goodwill                                       —            819
Total Assets                                   $43,382    $76,330
Liabilities and Stockholders' Equity                       
Current liabilities:                                       
Accounts payable                               $12,498    $14,204
Accrued expenses and other current liabilities 5,492        7,328
Current portion of bank financing              250          —
Current portion of capital lease obligations   1,593        2,127
Total current liabilities                      19,833       23,659
Long-term portion of capital lease obligation  2,098        1,712
Other long-term liabilities                    71           148
Total Liabilities                              22,002       25,519
                                                          
Stockholders' Equity:                                      
Common stock                                   31           275
Preferred stock                                28,432       —
Treasury stock                                 (569)        (569)
Additional paid-in capital                     45,639       99,449
Accumulated other comprehensive income         —            (6)
Accumulated deficit                            (52,153)     (48,338)
Total stockholders' equity                     21,380       50,811
Total liabilities and stockholders' equity     $43,382    $76,330


Synacor, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share data)
(Unaudited)
                                                          
                            Three months ended    Twelve months ended
                             December 31,          December 31,
                            2011       2012       2011       2012
Revenue                      $28,945  $32,178  $91,060  $121,981
Costs and operating                                        
expenses:
Cost of revenue (1)          15,789     17,188     48,661     66,620
Research and development     5,958      6,974      20,228     25,603
(1)(2)
Sales and marketing (2)      2,771      2,344      8,582      9,120
General and administrative   1,992      2,627      6,879      11,011
(1)(2)
Depreciation                 717        1,083      2,667      3,779
Total costs and operating    27,227     30,216     87,017     116,133
expenses
Income from operations       1,718      1,962      4,043      5,848
Other income (expense)       1          (6)        (17)       1
Interest expense             (45)       (62)       (109)      (270)
Income before income taxes   1,674      1,894      3,917      5,579
(Benefit) provision for      (6,070)    1,104      (6,015)    1,764
income taxes
Net income                   7,744      790        9,932      3,815
Undistributed earnings
allocated to preferred       6,692      —          8,583      —
stockholders
Net income attributable to   $1,052   $790     $1,349   $3,815
common stockholders
Net income per share
attributable to common                                     
stockholders:
Basic                        $0.35    $0.03    $0.59    $0.16
Diluted                      $0.34    $0.03    $0.45    $0.14
Weighted average shares used
to compute net income per                                  
share attributable to common
stockholders:
Basic                        3,005,714  27,132,303 2,303,443  24,411,194
Diluted                      22,776,471 28,611,056 21,974,403 28,097,313
Notes:                                                     
(1) Exclusive of depreciation shown separately.                          
(2) Includes stock-based compensation as follows:                        
                                                          
                            Three months ended    Twelve months ended
                             December 31,          December 31,
                            2011       2012       2011       2012
Research and development     $90      $150     $295     $523
Sales and marketing          62         112        203        404
General and administrative   128        234        422        1,072
                            $280     $496     $920     $1,999


Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                   
                                                          Twelve months ended
                                                           December 31,
                                                          2011      2012
Cash Flows from Operating Activities:                               
Net income                                                 $9,932  $3,815
Adjustments to reconcile net income to net cash provided            
by operating activities:
Depreciation                                               2,667     3,779
Stock-based compensation expense                           920       1,999
Loss on disposal of property and equipment                 11        35
Benefit from deferred income taxes                         (6,083)   1,557
Change in assets and liabilities net of effect of                   
acquisition:
Accounts receivable, net                                   (4,682)   (1,288)
Prepaid expenses and other current assets                  (45)      253
Other long-term assets                                     164       380
Accounts payable                                           4,120     2,335
Accrued expenses and other current liabilities             1,709     1,715
Other long-term liabilities                                (35)      77
Net cash provided by operating activities                  8,678     14,657
Cash Flows from Investing Activities:                               
Purchases of property and equipment                        (1,848)   (4,269)
Cash paid for business acquisition                         —         (600)
Net cash used in investing activities                      (1,848)   (4,869)
Cash Flows from Financing Activities:                               
Proceeds from sale/leaseback                               794       —
Repayment on bank financing                                (500)     (250)
Repayments on capital lease obligations                    (1,719)   (2,336)
Proceeds from exercise of common stock options             372       1,212
Proceeds from initial public offering                      —         25,364
Initial public offering costs                              (264)     (2,753)
Net cash (used in) provided by financing activities        (1,317)   21,237
Effect of exchange rate changes on cash and cash           —         (6)
equivalents
Net (Decrease) Increase in Cash and Cash Equivalents       5,513     31,019
Cash and Cash Equivalents at beginning of period           5,412     10,925
Cash and Cash Equivalents at end of period                 $10,925 $41,944


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      Twelve months ended
                              December 31,            December 31,
                             2011        2012        2011       2012
Reconciliation of Adjusted                                    
EBITDA:
Net income                    $7,744    $790      $9,932   $3,815
Provision (benefit) for       (6,070)     1,104       (6,015)    1,764
income taxes
Interest expense              45          62          109        270
Other (income) expense        (1)         6           17         (1)
Depreciation                  717         1,083       2,667      3,779
Stock-based compensation      280         496         920        1,999
Adjusted EBITDA               $2,715    $3,541    $7,630   $11,626


Synacor, Inc.
Key Business Metrics
(Unaudited)
                                           
               Three months ended           Twelve months ended
                December 31,                 December 31,
               2011          2012           2011           2012
Key Business                                             
Metrics:
Unique Visitors 18,726,975    20,297,897     14,619,254     20,440,169
(1)
Search Queries  245,100,528   225,339,761    748,576,869    968,233,560
(2)
Advertising     8,287,683,124 11,712,643,988 27,749,105,979 42,170,186,571
Impressions (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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