Synchronoss Technologies, Inc. Announces First Quarter 2013 Financial Results

  Synchronoss Technologies, Inc. Announces First Quarter 2013 Financial
  Results

  *First quarter non-GAAP total revenue of $79.5 million increases 22%
    year-over-year
  *First quarter non-GAAP operating income of $15.9 million represents 20%
    non-GAAP operating margin and drives non-GAAP EPS of $0.28

Business Wire

BRIDGEWATER, N.J. -- May 01, 2013

Synchronoss Technologies, Inc. (NASDAQ: SNCR), the mobile innovation leader
that provides personal cloud solutions and software-based activation for
connected devices across the globe, today announced financial results for the
first quarter of 2013.

“Our strong business momentum entering 2013 led to first quarter revenue that
exceeded our expectations,” said Stephen G. Waldis, Founder and Chief
Executive Officer of Synchronoss. “We have recently launched our Personal
Cloud platform with multiple customers, and our additional cloud services
deployments remain on track. 2013 is a pivotal year for Synchronoss as our
Personal Cloud customers across the globe deploy our platform and begin
scaling their cloud services in the latter half of 2013. We remain highly
focused on ensuring that our mobile operator customers benefit from a superior
customer experience, increasing adoption rates of their cloud services, and
ultimately creating new revenue streams and lowering churn.”

On a GAAP basis, Synchronoss reported net revenues of $78.3 million,
representing an increase of 21% compared to the first quarter of 2012. Gross
profit was $46.1 million and income from operations was $201 thousand in the
first quarter of 2013. Net income applicable to common stock was $476
thousand, leading to diluted earnings per share of $0.01, compared to $0.14
for the first quarter of 2012.

On a non-GAAP basis, Synchronoss reported net revenues of $79.5 million, an
increase of 22% compared to the first quarter of 2012. Gross profit for the
first quarter of 2013 was $48.5 million, representing a gross margin of 61%.
Income from operations was $15.9 million in the first quarter of 2013,
representing an operating margin of 20%. Net income was $10.9 million in the
first quarter of 2013, compared to $10.1 million in the year ago period.
Diluted earnings per share were $0.28 for the first quarter of 2013, compared
to $0.26 for the first quarter of 2012.

A reconciliation of GAAP to non-GAAP results has been provided in the
financial statement tables included in this press release. An explanation of
these measures is also included below under the heading "Non-GAAP Financial
Measures."

Lawrence R. Irving, Chief Financial Officer and Treasurer, said “Synchronoss
delivered a strong operational performance in the first quarter, which enabled
us to meet our profitability objectives while continuing to invest in our
industry leading Personal Cloud Platform. We plan to continue to increase
investments in our business to meet growing customer demand as we believe
there will be significant payback over time. Our cloud services revenue
continues to be the fastest growing portion of our business and we believe we
are well positioned to scale with our portfolio of global, tier one mobile
operator customers.”

Other First Quarter and Recent Business Highlights:

  *Cloud Services revenue accounted for approximately $23.8 million of
    non-GAAP revenue, representing approximately 30% of total revenue and
    growing 29% on a year-over-year basis.
  *Activation Services revenue accounted for approximately $55.7 million of
    non-GAAP revenue, representing approximately 70% of total revenue and
    growing 20% on a year-over-year basis.
  *The Company expanded its executive team with the appointment of Nick
    Lazzaro as President of North America. Mr. Lazzaro will oversee the
    Company’s North American operations under Bob Garcia, President and Chief
    Operating Officer. Mr. Lazzaro has over 20 years of experience in
    technology and telecommunications, including executive positions at Vonage
    and Amdocs.

Conference Call Details

In conjunction with this announcement, Synchronoss will host a conference call
on Wednesday, May 1, 2013, at 4:30 p.m. (ET) to discuss the company's
financial results. To access this call, dial 866-700-6293 (domestic) or
617-213-8835 (international). The pass code for the call is 23643945.
Additionally, a live web cast of the conference call will be available on the
“Investor Relations” page on the company’s web site, www.synchronoss.com.

Following the conference call, a replay will be available at 888-286-8010
(domestic) or 617-801-6888 (international). The replay pass code is 94312991.
An archived web cast of this conference call will also be available on the
“Investor Relations” page of the company’s web site, www.synchronoss.com.

Non-GAAP Financial Measures

Synchronoss has provided in this release selected financial information that
has not been prepared in accordance with GAAP. This information includes
historical non-GAAP revenues, gross profit, operating income, net income,
effective tax rate, earnings per share and cash flows from operating
activities. Synchronoss uses these non-GAAP financial measures internally in
analyzing its financial results and believes they are useful to investors, as
a supplement to GAAP measures, in evaluating Synchronoss’ ongoing operational
performance. Synchronoss believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in evaluating
ongoing operating results and trends, and in comparing its financial results
with other companies in Synchronoss’ industry, many of which present similar
non-GAAP financial measures to investors. As noted, the non-GAAP financial
results discussed above add back the deferred revenue write-down associated
with acquisitions, fair value stock-based compensation expense,
acquisition-related costs, changes in the contingent consideration obligation,
deferred compensation expense related to earn outs and amortization of
intangibles associated with acquisitions.

Non-GAAP financial measures should not be considered in isolation from, or as
a substitute for, financial information prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of these non-GAAP
measures to their most directly comparable GAAP financial measures as detailed
above. As previously mentioned, a reconciliation of GAAP to non-GAAP results
has been provided in the financial statement tables included in this press
release.

About Synchronoss Technologies, Inc.

Synchronoss Technologies (NASDAQ: SNCR) is the mobile innovation leader that
provides personal cloud solutions and software-based activation for connected
devices across the globe. The company’s proven and scalable technology
solutions allow customers to connect, synchronize and activate connected
devices and services that empower enterprises and consumers to live in a
connected world. For more information visit us at:

Web:        www.synchronoss.com
Blog:          http://blog.synchronoss.com
Twitter:       http://twitter.com/synchronoss

Forward-looking Statements

This document may include certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, plans, objectives,
expectations and intentions and other statements contained in this press
release that are not historical facts and statements identified by words such
as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," “outlook” or words of similar meanings. These statements are
based on our current beliefs or expectations and are inherently subject to
various risks and uncertainties, including those set forth under the caption
"Risk Factors" in Synchronoss’ Annual Report on Form 10-K for the year ended
December 31, 2012 and other documents filed with the U.S. Securities and
Exchange Commission. Actual results may differ materially from these
expectations due to changes in global political, economic, business,
competitive, market and regulatory factors. Synchronoss does not undertake any
obligation to update any forward-looking statements contained in this document
as a result of new information, future events or otherwise.

SYNCHRONOSS TECHNOLOGIES, INC.
BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
                                                     
                                        March 31, 2013     December 31, 2012^1
                                                           
ASSETS
Current assets:
Cash and cash equivalents               $   51,116         $      36,028
Marketable securities                       15,392                20,188
Accounts receivable, net of
allowance for doubtful accounts
of $664 and $258 at March 31,               69,461                74,980
2013 and December 31, 2012,
respectively
Prepaid expenses and other assets           19,883                24,012
Deferred tax assets                        4,127                4,114
                                                           
Total current assets                        159,979               159,322
Marketable securities                       583                   653
Property and equipment, net                 64,023                58,162
Goodwill                                    126,106               127,322
Intangible assets, net                      105,902               110,760
Deferred tax assets                         7,009                 6,961
Other assets                               3,698                3,482
                                                           
Total assets                            $   467,300        $      466,662
                                                           
                                                           
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable                        $   6,342          $      8,980
Accrued expenses                            30,653                41,658
Deferred revenues                           24,280                20,954
Contingent consideration                   8,619                3,279
obligation
                                                           
Total current liabilities                   69,894                74,871
Lease financing obligation - long           9,259                 9,540
term
Contingent consideration                    -                     5,100
obligation - long-term
Other liabilities                           3,700                 2,494
Stockholders’ equity:
Preferred stock, $0.0001 par
value; 10,000 shares authorized,
0 shares issued and outstanding             —                     —
at March 31, 2013 and December
31, 2012
Common stock, $0.0001 par value;
100,000 shares authorized, 43,396
and 42,533 shares issued; 39,572            4                     4
and 38,674 outstanding at March
31, 2013 and December 31, 2012,
respectively
Treasury stock, at cost (3,824
and 3,859 shares at March 31,               (67,487)              (67,918)
2013 and December 31, 2012,
respectively)
Additional paid-in capital                  355,829               344,469
Accumulated other comprehensive             (2,842)               (365)
loss
Retained earnings                          98,943               98,467
                                                           
Total stockholders’ equity                 384,447              374,657
                                                           
Total liabilities and                   $   467,300        $      466,662
stockholders’ equity
                                                           
                                                           
^1 Certain prior period amounts have been recast in connection with ASC 805,
Business Combinations.



SYNCHRONOSS TECHNOLOGIES, INC.
STATEMENT OF INCOME
(in thousands, except per share data)
(Unaudited)
                                                              
                                                  Three Months Ended March 31,
                                                                    
                                                  2013              2012
                                                                    
                                                                    
Net revenues                                      $  78,276         $ 64,560
Costs and expenses:
Cost of services (2)(3)(4)*                          32,131           28,621
Research and development (2)(3)(4)                   16,718           12,876
Selling, general and administrative                  14,652           10,390
(2)(3)(4)
Net change in contingent consideration               433              (780   )
obligation
Restructuring charges                                5,172            -
Depreciation and amortization                       8,969          5,171  
                                                                    
Total costs and expenses                            78,075         56,278 
                                                                    
Income from operations                               201              8,282
Interest income                                      86               398
Interest expense                                     (232    )        (239   )
Other (expense) income (5)                          (258    )       14     
                                                                    
(Loss) income before income tax expense              (203    )        8,455
Income tax benefit (expense)                        679            (2,972 )
                                                                    
Net income                                        $  476           $ 5,483  
                                                                    
                                                                    
Net income per common share:
Basic (1)                                         $  0.01          $ 0.14   
                                                                    
Diluted (1)                                       $  0.01          $ 0.14   
                                                                    
                                                                    
Weighted-average common shares outstanding:
Basic                                               38,121         38,099 
                                                                    
Diluted                                             39,089         39,258 
                                                                    
* Cost of services excludes depreciation
which is shown separately.
                                                                    
(1) Adjustment to net income for equity
mark-to-market on contingent consideration
obligation:
Net income                                        $  476            $ 5,483
Income effect for equity mark-to-market on
contingent consideration obligation, net of         -              -      
tax
                                                                    
Net income applicable to shares of common         $  476           $ 5,483  
stock for earnings per share
                                                                    
                                                                    
(2) Amounts include fair value stock-based
compensation as follows:
Cost of services                                  $  1,200          $ 1,245
Research and development                             1,296            1,428
Selling, general and administrative                 2,414          2,538  
                                                                    
Total fair value stock-based compensation         $  4,910         $ 5,211  
expense
                                                                    
                                                                    
(3) Amounts include acquisition costs as
follows:
Research and development                          $  -              $ 1
Selling, general and administrative                 574            265    
                                                                    
Total acquisition costs                           $  574           $ 266    
                                                                    
                                                                    
(4) Amounts include fair value earn-out
cash and stock compensation as follows:
Cost of services                                  $  (57     )      $ -
Research and development                             (66     )        214
Selling, general and administrative                 (49     )       252    
                                                                    
Total fair value earn-out cash and stock          $  (172    )      $ 466    
compensation expense
                                                                    
                                                                    
(5) Amounts include Fx change of the
contingent consideration obligation as
follows:
Other (expense) income                            $  30             $ 233
                                                                             
                                                                             

SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
(Unaudited)
                                                              
                                                  Three Months Ended March 31,
                                                                    
                                                  2013              2012
                                                                    
                                                                    
Non-GAAP financial measures and
reconciliation:
                                                                    
GAAP Revenue                                      $  78,276         $ 64,560
Add: Deferred Revenue Write-Down                    1,204          346    
                                                                    
Non-GAAP Revenue                                  $  79,480        $ 64,906 
                                                                    
                                                                    
GAAP Revenue                                      $  78,276         $ 64,560
Less: Cost of Services                              32,131         28,621 
                                                                    
GAAP Gross Margin                                    46,145           35,939
                                                                    
Add: Deferred revenue write-down                     1,204            346
Add: Fair value stock-based compensation             1,200            1,245
Add: Acquisition and restructuring costs             -                -
Add: Deferred compensation expense -                (57     )       -      
earn-out
                                                                    
Non-GAAP Gross Margin                             $  48,492        $ 37,530 
                                                                    
Non-GAAP Gross Margin %                              61      %        58     %
                                                                    
GAAP income from operations                       $  201            $ 8,282
Add: Deferred revenue write-down                     1,204            346
Add: Fair value stock-based compensation             4,910            5,211
Add: Acquisition and restructuring costs             5,746            266
Add: Net change in contingent consideration          433              (780   )
obligation
Add: Deferred compensation expense -                 (172    )        466
earn-out
Add: Amortization expense                           3,622          1,475  
                                                                    
Non-GAAP income from operations                   $  15,944        $ 15,266 
                                                                    
                                                                    
GAAP net income attributable to common            $  476            $ 5,483
stockholders
Add: Deferred revenue write-down, net of             791              223
tax
Add: Fair value stock-based compensation,            3,224            3,351
net of tax
Add: Acquisition and restructuring costs,            3,773            171
net of taxes
Add: Net change in contingent consideration          403              (352   )
obligation, net of Fx change, net of tax
Add: Deferred compensation expense -                 (113    )        300
earn-out, net of tax
Add: Amortization expense, net of tax               2,379          949    
                                                                    
Non-GAAP net income                               $  10,933        $ 10,125 
                                                                    
Diluted non-GAAP net income per share             $  0.28          $ 0.26   
                                                                   
Weighted shares outstanding - Diluted               39,089         39,258 
                                                                             
                                                                             

SYNCHRONOSS TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(in thousands)
(Unaudited)
                                               Three Months Ended March 31,
                                                                 
                                                  2013               2012
                                                                     
Operating activities:
Net income                                        $  476             $ 5,483
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense                8,969             5,171
Amortization of bond premium                         86                332
Deferred income taxes                                (118)             1,995
Non-cash interest on leased facility                 229               230
Stock-based compensation                             4,910             5,211
Changes in operating assets and
liabilities:
Accounts receivable, net of allowance for            5,519             (1,314)
doubtful accounts
Prepaid expenses and other current assets            4,499             2,361
Other assets                                         (384)             (131)
Accounts payable                                     (2,639)           (2,422)
Accrued expenses                                     (11,126)          (6,928)
Contingent consideration obligation                  241               (3,307)
Excess tax benefit from the exercise of              -                 (269)
stock options
Other liabilities                                    1,247             124
Deferred revenues                                   3,325            89
                                                                     
Net cash provided by operating activities            15,234            6,625
                                                                     
Investing activities:
Purchases of fixed assets                            (10,964)          (4,873)
Purchases of marketable securities                   (13)              (2,729)
available-for-sale
Maturity of marketable securities                    4,791             3,482
available-for-sale
Business acquired, net of cash                      -                (14)
                                                                     
Net cash used in investing activities                (6,186)           (4,134)
                                                                     
Financing activities:
Proceeds from the exercise of stock options          6,212             3,564
Payments on contingent consideration                 -                 (575)
obligation
Excess tax benefit from the exercise of              -                 269
stock options
Proceeds from the sale of Treasury Stock in
connection with an employee stock purchase           670               —
plan
Payments on capital obligations                     (760)            (224)
                                                                     
Net cash provided by financing activities            6,122             3,034
                                                                     
Effect of exchange rate changes on cash             (82)             143
                                                                     
Net increase in cash and cash equivalents            15,088            5,668
Cash and cash equivalents at beginning of           36,028           69,430
year
                                                                     
Cash and cash equivalents at end of period        $  51,116          $ 75,098
                                                                       
                                                                       

SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities
(in thousands)
(Unaudited)
                                                  Three Months Ended March 31,
                                                               
                                                  2013             2012
                                                                   
                                                                   
Non-GAAP cash provided by operating activities
and reconciliation:
                                                                   
Net cash provided by operating activities (GAAP)  $   15,234       $   6,625
Add: Tax benefits from stock options exercised        -                269
Add: Cash payments on settlement of Earn-out         -               3,226
                                                                   
Adjusted cash flow provided by operating          $   15,234       $   10,120
activities (Non-GAAP)

Contact:

Synchronoss Technologies, Inc.
Investor:
Brian Denyeau, 646-277-1251
investor@synchronoss.com
or
Media:
Stacie Hiras, 908-547-1260
Stacie.hiras@synchronoss.com
 
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