Synchronoss Technologies, Inc. Announces Second Quarter 2013 Financial Results

  Synchronoss Technologies, Inc. Announces Second Quarter 2013 Financial
  Results

  *Second quarter non-GAAP total revenue of $85.2 million increases 27%
    year-over-year
  *Second quarter non-GAAP operating income of $19.5 million represents 23%
    non-GAAP operating margin and drives non-GAAP EPS of $0.31

Business Wire

BRIDGEWATER, N.J. -- July 30, 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
second quarter of 2013.

“Both our Activation Services and Cloud Services delivered a strong
performance during the second quarter, leading to total revenue that exceeded
our expectations,” said Stephen G. Waldis, Founder and Chief Executive Officer
of Synchronoss. “Our second quarter was highlighted by many successful
deployments in our Personal Cloud Services offerings, and very encouraging
initial subscriber adoption rates and customer forecasts for storage growth.
Synchronoss is well positioned to participate in this growth opportunity based
on our highly differentiated cloud services platform, proven track record and
Tier One customer base.”

On a GAAP basis, Synchronoss reported net revenues of $83.8 million,
representing an increase of 25% compared to the second quarter of 2012. Gross
profit was $48.3 million and income from operations was $5.7 million in the
second quarter of 2013. Net income applicable to common stock was $3.4
million, leading to diluted earnings per share of $0.09, compared to $0.31 for
the second quarter of 2012.

On a non-GAAP basis, Synchronoss reported net revenues of $85.2 million, an
increase of 27% compared to the second quarter of 2012. Gross profit for the
second quarter of 2013 was $51.2 million, representing a gross margin of 60%.
Income from operations was $19.5 million in the second quarter of 2013,
representing an operating margin of 23%. Net income was $12.3 million in the
second quarter of 2013, compared to $11.2 million in the year ago period.
Diluted earnings per share were $0.31 for the second quarter of 2013, compared
to $0.29 for the second 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."

“We are pleased with the strong operational performance Synchronoss delivered
in the second quarter, as we met our profitability objectives while continuing
to make significant investments in our cloud services offerings,” said
Lawrence R. Irving, Chief Financial Officer and Treasurer. “We continue to
identify new growth opportunities across our worldwide portfolio of Tier One
customers as mobile operators begin to launch, test and scale their cloud
strategies. As such, we will continue to invest in our cloud services platform
in order to maximize our market share and shareholder value over the
long-term.”

Other Second Quarter and Recent Business Highlights:

  *Cloud Services revenue accounted for approximately $26.8 million of
    non-GAAP revenue, representing approximately 31% of total revenue and
    growing 30% on a year-over-year basis.
  *Activation Services revenue accounted for approximately $58.4 million of
    non-GAAP revenue, representing approximately 69% of total revenue and
    growing 26% on a year-over-year basis.

Conference Call Details

In conjunction with this announcement, Synchronoss will host a conference call
on Tuesday, July 30, 2013, at 4:30 p.m. (ET) to discuss the company's
financial results. To access this call, dial 877-474-9503 (domestic) or
857-244-7556 (international). The pass code for the call is 83831771.
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 70537367.
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)
                                                      
                                           June 30, 2013   December 31, 2012^1
                                                           
ASSETS
Current assets:
Cash and cash equivalents                  $  46,204       $    36,028
Marketable securities                         12,996            20,188
Accounts receivable, net of
allowance for doubtful accounts of            73,995            74,980
$372 and $258 at June 30, 2013 and
December 31, 2012, respectively
Prepaid expenses and other assets             23,576            24,012
Deferred tax assets                          4,142           4,114      
                                                           
Total current assets                          160,913           159,322
Marketable securities                         1,767             653
Property and equipment, net                   85,009            58,162
Goodwill                                      124,160           127,322
Intangible assets, net                        101,954           110,760
Deferred tax assets                           8,008             6,961
Other assets                                 3,589           3,482      
                                                           
Total assets                               $  485,400     $    466,662    
                                                           
                                                           
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                           $  12,345       $    8,980
Accrued expenses                              33,087            41,658
Deferred revenues                             22,353            20,954
Contingent consideration obligation          11,051          3,279      
                                                           
Total current liabilities                     78,836            74,871
Lease financing obligation - long             9,260             9,540
term
Contingent consideration obligation           -                 5,100
- long-term
Other liabilities                             3,104             2,494
Stockholders’ equity:
Preferred stock, $0.0001 par value;
10,000 shares authorized, 0 shares
issued and outstanding at June 30,            —                 —
2013 and December 31, 2012
Common stock, $0.0001 par value;
100,000 shares authorized, 43,945
and 42,533 shares issued; 40,121 and
38,674 outstanding at June 30, 2013           4                 4
and December 31, 2012, respectively
Treasury stock, at cost (3,824 and
3,859 shares at June 30, 2013 and             (67,487  )        (67,918    )
December 31, 2012, respectively)
Additional paid-in capital                    366,377           344,469
Accumulated other comprehensive loss          (7,049   )        (365       )
Retained earnings                            102,355         98,467     
                                                           
Total stockholders’ equity                   394,200         374,657    
                                                           
Total liabilities and stockholders’        $  485,400     $    466,662    
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 June      Six Months Ended June 30,
                        30,
                          2013       2012         2013        2012    
                                                                   
                                                                   
Net revenues            $  83,848     $ 66,990       $ 162,124     $ 131,550
Costs and
expenses:
Cost of services           35,527       26,631         67,658        55,252
(2)(3)(4)*
Research and
development                16,358       12,570         33,076        25,446
(2)(3)(4)
Selling, general
and                        14,943       11,060         29,595        21,450
administrative
(2)(3)(4)
Net change in
contingent                 1,743        (4,628 )       2,176         (5,408  )
consideration
obligation
Restructuring              -            -              5,172         -
charges
Depreciation and          9,610      5,962        18,579      11,133  
amortization
                                                                   
Total costs and           78,181     51,595       156,256     107,873 
expenses
                                                                   
Income from                5,667        15,395         5,868         23,677
operations
Interest income            197          330            283           728
Interest expense           (247   )     (241   )       (479    )     (480    )
Other income (5)          301        779          43          793     
                                                                   
Income before
income tax                 5,918        16,263         5,715         24,718
expense
Income tax                (2,506 )    (4,314 )      (1,827  )    (7,286  )
expense
                                                                   
Net income              $  3,412     $ 11,949      $ 3,888      $ 17,432  
                                                                   
                                                                   
Net income per
common share:
Basic (1)               $  0.09      $ 0.31        $ 0.10       $ 0.46    
                                                                   
Diluted (1)             $  0.09      $ 0.31        $ 0.10       $ 0.45    
                                                                   
                                                                   
Weighted-average
common shares
outstanding:
Basic                     38,551     38,353       38,368      38,207  
                                                                   
Diluted                   39,523     39,075       39,367      39,123  
                                                                   
* 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              $  3,412      $ 11,949       $ 3,888       $ 17,432
Income effect for
equity
mark-to-market on
contingent                -          -            -           -       
consideration
obligation, net
of tax
                                                                   
Net income
applicable to
shares of common        $  3,412     $ 11,949      $ 3,888      $ 17,432  
stock for
earnings per
share
                                                                   
                                                                   
(2) Amounts
include fair
value stock-based
compensation as
follows:
Cost of services        $  1,204      $ 891          $ 2,404       $ 2,136
Research and               1,650        1,227          2,946         2,655
development
Selling, general
and                       3,276      2,421        5,690       4,959   
administrative
                                                                   
Total fair value
stock-based             $  6,130     $ 4,539       $ 11,040     $ 9,750   
compensation
expense
                                                                   
                                                                   
(3) Amounts
include
acquisition costs
as follows:
Research and               -            208          $ -           $ 209
development
Selling, general
and                       363        159          937         424     
administrative
                                                                   
Total acquisition       $  363       $ 367         $ 937        $ 633     
costs
                                                                   
                                                                   
(4) Amounts
include fair
value earn-out
cash and stock
compensation as
follows:
Cost of services        $  304        $ -            $ 247         $ -
Research and               171          (98    )       105           116
development
Selling, general
and                       239        (116   )      190         136     
administrative
                                                                   
Total fair value
earn-out cash and
stock                   $  714       $ (214   )     $ 542        $ 252     
compensation
expense
                                                                   
                                                                   
(5) Amounts
include Fx change
of the contingent
consideration
obligation as
follows:
Other (expense)         $  (15    )   $ 347          $ 15          $ 114
income
                                                                             

                                                           
SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
(Unaudited)
                                                                   
                       Three Months Ended June       Six Months Ended June 30,
                       30,
                         2013        2012         2013        2012    
                                                                   
                                                                   
Non-GAAP
financial
measures and
reconciliation:
                                                                   
GAAP Revenue           $  83,848      $ 66,990       $ 162,124     $ 131,550
Add: Deferred
Revenue                  1,342       170          2,546       516     
Write-Down
                                                                   
Non-GAAP Revenue       $  85,190     $ 67,160      $ 164,670    $ 132,066 
                                                                   
                                                                   
GAAP Revenue           $  83,848      $ 66,990       $ 162,124     $ 131,550
Less: Cost of            35,527      26,631       67,658      55,252  
Services
                                                                   
GAAP Gross                48,321        40,359         94,466        76,298
Margin
                                                                   
Add: Deferred
revenue                   1,342         170            2,546         516
write-down
Add: Fair value
stock-based               1,204         891            2,404        2,136
compensation
Add: Deferred
compensation             304         -            247        -       
expense -
earn-out
                                                                   
Non-GAAP Gross         $  51,171     $ 41,420      $ 99,663     $ 78,950  
Margin
                                                                   
Non-GAAP Gross            60      %     62     %       61      %     60      %
Margin %
                                                                   
GAAP income from       $  5,667       $ 15,395       $ 5,868       $ 23,677
operations
Add: Deferred
revenue                   1,342         170            2,546         516
write-down
Add: Fair value
stock-based               6,130         4,539          11,040        9,750
compensation
Add: Acquisition
and                       363           367            6,109         633
restructuring
costs
Add: Net change
in contingent             1,743         (4,628 )       2,176         (5,408  )
consideration
obligation
Add: Deferred
compensation              714           (214   )       542           252
expense -
earn-out
Add:
Amortization             3,525       1,820        7,147       3,295   
expense
                                                                   
Non-GAAP income        $  19,484     $ 17,449      $ 35,428     $ 32,715  
from operations
                                                                   
                                                                   
GAAP net income
attributable to        $  3,412       $ 11,949       $ 3,888       $ 17,432
common
stockholders
Add: Deferred
revenue                   810           115            1,601         338
write-down, net
of tax
Add: Fair value
stock-based               3,719         3,029          6,943         6,380
compensation,
net of tax
Add: Acquisition
and
restructuring             69            243            3,842         414
costs, net of
taxes
Add: Net change
in contingent
consideration             1,758         (5,170 )       2,161         (5,522  )
obligation, net
of Fx change,
net of tax
Add: Deferred
compensation
expense -                 454           (135   )       341           165
earn-out, net of
tax
Add:
Amortization             2,116       1,207        4,495       2,156   
expense, net of
tax
                                                                   
Non-GAAP net           $  12,338     $ 11,238      $ 23,271     $ 21,363  
income
                                                                   
Diluted non-GAAP
net income per         $  0.31       $ 0.29        $ 0.59       $ 0.55    
share
                                                                
Weighted shares
outstanding -            39,523      39,075       39,367      39,123  
Diluted
                                                                   

                                                              
SYNCHRONOSS TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(in thousands)
(Unaudited)
                                                     Six Months Ended June 30,
                                                      2013        2012    
                                                                   
Operating activities:
Net income                                           $ 3,888       $ 17,432
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense                  18,579        11,133
Loss on disposal of asset                              32            214
Amortization of bond premium                           149           665
Deferred income taxes                                  (1,137  )     438
Non-cash interest on leased facility                   462           460
Stock-based compensation                               11,040        9,750
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for              985           (2,165  )
doubtful accounts
Prepaid expenses and other current assets              807           2,844
Other assets                                           (444    )     (170    )
Accounts payable                                       3,364         (4,517  )
Accrued expenses                                       (8,658  )     (5,658  )
Contingent consideration obligation                    2,672         (8,803  )
Excess tax benefit from the exercise of stock          -             (4,864  )
options
Other liabilities                                      511           82
Deferred revenues                                     1,082       (558    )
                                                                   
Net cash provided by operating activities              33,332        16,283
                                                                   
Investing activities:
Purchases of fixed assets                              (37,728 )     (21,863 )
Purchases of marketable securities                     (3,496  )     (13,013 )
available-for-sale
Maturity of marketable securities                      9,391         7,603
available-for-sale
Business acquired, net of cash                        -           (26,467 )
                                                                   
Net cash used in investing activities                  (31,833 )     (53,740 )
                                                                   
Financing activities:
Proceeds from the exercise of stock options            10,630        4,912
Payments on contingent consideration                   -             (2,268  )
obligation
Excess tax benefit from the exercise of stock          -             4,864
options
Proceeds from the sale of Treasury Stock in
connection with an employee stock purchase             670           -
plan
Payments on capital obligations                       (910    )    (480    )
                                                                   
Net cash provided by financing activities              10,390        3,255
                                                                   
Effect of exchange rate changes on cash               (1,713  )    (147    )
                                                                   
Net increase (decrease) in cash and cash               10,176        (34,349 )
equivalents
Cash and cash equivalents at beginning of year        36,028      69,430  
                                                                   
Cash and cash equivalents at end of period           $ 46,204     $ 35,081  
                                                                             

                                                              
SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities
(in thousands)
(Unaudited)
                                                     Six Months Ended June 30,
                                                     2013           2012
                                                                    
                                                                    
Non-GAAP cash provided by operating activities
and reconciliation:
                                                                    
Net cash provided by operating activities            $   33,332     $  16,283
(GAAP)
Add: Tax benefits from stock options exercised           -             4,864
Add: Cash payments on settlement of Earn-out            -            3,533
                                                                    
Adjusted cash flow provided by operating             $   33,332     $  24,680
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
 
Press spacebar to pause and continue. Press esc to stop.