Synacor Reports Second Quarter Results

Synacor Reports Second Quarter Results

  *Quarterly revenue of $26.7 million vs. $30.8 million in prior year
  *Quarterly adjusted EBITDA of $1.0 million, 11th consecutive quarter of
    positive results

BUFFALO, N.Y., Aug. 6, 2013 (GLOBE NEWSWIRE) -- Synacor, Inc. (Nasdaq:SYNC),
leading provider of next-gen startpages, award-winning 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 second quarter of 2013.

"While our second quarter results met our guidance, I believe we have more
potential than this quarter reflects," said Synacor CEO Ron Frankel. "In 2013,
we continue to invest significantly in new products that deliver compelling
experiences on three platforms: smartphones, tablets, and traditional
laptop/desktop computers. We have significant demand for these new products,
and I expect they will drive growth in 2014. While our sales pipeline is
strong, the timing of launches is often difficult to predict. As a result, we
are lowering our guidance for 2013 but remain confident in the long-term
prospects for Synacor as we look forward to growth in 2014."

Q2 2013 Financial Results

Revenue: For the second quarter of 2013, total revenue was $26.7 million,
compared to $30.8 million in the second quarter of 2012. Search and display
advertising revenue was $21.4 million, compared to $25.4 million in the second
quarter of 2012. Subscription-based revenue was $5.3 million, compared to $5.4
million in the second quarter of 2012.

Net Income: For the second quarter of 2013, net loss was $0.6 million,
compared to a profit of $1.2 million in the second quarter of 2012. Diluted
earnings per share, or EPS, was a loss of $0.02. Net income includes
stock-based compensation expense of $0.6 million, or $0.02 per share, in the
second quarter of 2013, as compared to $0.4 million, or $0.01 per share, in
the second quarter of 2012. The diluted EPS calculation for the second quarter
of 2013 is based on 27.3 million weighted average fully diluted common shares
outstanding. The diluted EPS calculation for the second quarter of 2012 was
based on 29.6 million shares.

Adjusted EBITDA: For the second quarter of 2013, adjusted EBITDA, which
excludes stock-based compensation expense, was $1.0 million, or 4% of revenue,
compared to $3.0 million, or 10% of revenue, in the second quarter of 2012.

Key Business Metrics: For the second quarter of 2013, Synacor averaged 20
million unique visitors per month, which was in line with the second quarter
of 2012. Search queries were 177 million for the second quarter of 2013,
compared to 238 million in the second quarter of 2012. Advertising impressions
were 10.3 billion which was also in line with the second quarter of 2012.

Cash: For the second quarter of 2013, Synacor generated $0.5 million in cash
from operating activities, compared to $4.0 million in the second quarter of
2012. The company ended the second quarter of 2013 with $37.7 million in cash
and cash equivalents, compared to $35.1 million at the end of the second
quarter of 2012.

"Synacor continues to be uniquely positioned to capitalize on our rich
customer pipeline and new product initiatives," said Synacor CFO Bill Stuart.
"We remain confident about our future and our market opportunity. We continue
to build upon our strong technology and exceptional customer base and work
through this transition year of 2013."

Business Outlook

Based on information available as of August 6, 2013, the company is providing
financial guidance for the third quarter and fiscal 2013 as follows:

  *Q3 2013 Guidance: Revenue for the third quarter of 2013 is projected to be
    in the range of $25.0 million to $26.0 million. For the third quarter of
    2013, the company expects to report adjusted EBITDA of ($0.3) million to
    $0.3 million.
  *Fiscal 2013 Guidance: Revenue for the full year of 2013 is projected to be
    in the range of $108.0 million to $112.0 million. For the full year of
    2013, the company expects to report adjusted EBITDA of $3.0 million to
    $5.0 million.

Conference Call Details

Synacor will host a conference call today at 5 p.m. ET to discuss the second
quarter 2013 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 23042207, 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 August 20, 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 23042207.

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.

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; our ability to obtain new customers; expectations
regarding consumer taste and user adoption of applications and solutions;
developments in Internet browser software and search advertising technologies;
general economic conditions; expectations regarding the company's ability to
timely expand the breadth of services and products or introduction of new
services and products; consolidation within the cable and telecommunications
industries; changes in the competitive dynamics in the market for online
search and 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 May 14,
2013. 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 August 6, 2013, and Synacor undertakes no duty to update this
information.

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

Synacor, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                          
                                              As of        As of
                                              December 31, June 30,
                                              2012         2013
Assets                                                     
Current assets:                                            
Cash and cash equivalents                      $41,944    $37,742
Accounts receivable, net                       15,624       15,346
Deferred income taxes                          1,999        945
Prepaid expenses and other current assets      1,831        1,936
Total current assets                           61,398       55,969
Property and equipment, net                    11,043       11,836
Deferred income taxes, non-current             2,527        3,779
Other long-term assets                         543          560
Goodwill                                       819          819
Total Assets                                   $76,330    $72,963
Liabilities and Stockholders' Equity                       
Current liabilities:                                       
Accounts payable                               $14,204    $12,793
Accrued expenses and other current liabilities 7,328        5,866
Current portion of capital lease obligations   2,127        1,905
Total current liabilities                      23,659       20,564
Long-term portion of capital lease obligation  1,712        795
Other long-term liabilities                    148          177
Total Liabilities                              25,519       21,536
Stockholders' Equity:                                      
Common stock                                   275          276
Treasury stock                                 (569)        (569)
Additional paid-in capital                     99,449       100,764
Accumulated deficit                            (48,338)     (48,948)
Accumulated other comprehensive income         (6)          1
Total Synacor, Inc. stockholders' equity       50,811       51,524
Noncontrolling interests                       —            (97)
Total equity                                   50,811       51,427
Total liabilities and stockholders' equity     $76,330    $72,963


Synacor, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)
                                                                
                                  Three months ended    Six months ended
                                  June 30,              June 30,
                                  2012       2013       2012       2013
Revenue                            $30,807  $26,708  $61,477  $55,851
Costs and operating expenses:                                    
Cost of revenue (1)                16,876     14,017     33,640     29,781
Research and development (1)(2)    6,123      7,336      12,411     14,201
Sales and marketing (2)            2,399      2,147      4,776      4,277
General and administrative (1)(2)  2,868      2,957      5,708      6,101
Depreciation                       934        1,138      1,715      2,268
Total costs and operating expenses 29,200     27,595     58,250     56,628
Income (loss) from operations      1,607      (887)      3,227      (777)
Other expense                      (18)       (8)        (18)       (15)
Interest expense                   (89)       (43)       (136)      (101)
Income (loss) before income taxes  1,500      (938)      3,073      (893)
Provision (benefit) for income     301        (204)      700        (186)
taxes
Net income (loss)                  1,199      (734)      2,373      (707)
Net loss attributable to           —          97         —          97
noncontrolling interests
Net income (loss) attributable to  $ 1,199    $ (637)    $ 2,373    $ (610)
Synacor, Inc.
Net income (loss) attributable to                                
Synacor, Inc. per share:
Basic                              $0.04    $(0.02)  $0.11    $(0.02)
Diluted                            $0.04    $(0.02)  $0.08    $(0.02)
Weighted average shares used to                                  
compute net income per share:
Basic                              27,212,105 27,311,892 21,907,842 27,273,671
Diluted                            29,592,108 27,311,892 28,261,882 27,273,671
Notes:                                                           
(1) Exclusive of depreciation shown separately.
(2) Includes stock-based compensation as follows:
                                                                
                                  Three months ended    Six months ended
                                  June 30,              June 30,
                                  2012       2013       2012       2013
Research and development           $120     $281     $227     $542
Sales and marketing                99         76         173        152
General and administrative         206        260        583        485
                                  $425     $617     $983     $1,179


Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                   
                                                          Six months ended
                                                          June 30,
                                                          2012      2013
Cash Flows from Operating Activities:                               
Net income (loss)                                          $2,373  $(707)
Adjustments to reconcile net income (loss) to net cash              
provided by (used in) operating activities:
Depreciation                                               1,715     2,268
Stock-based compensation expense                           983       1,179
Deferred income taxes                                      616       (198)
Change in assets and liabilities net of effect of                   
acquisition:
Accounts receivable, net                                   (1,171)   278
Prepaid expenses and other current assets                  (528)     (105)
Other long-term assets                                     120       (17)
Accounts payable                                           782       (1,657)
Accrued expenses and other current liabilities             (155)     (1,269)
Other long-term liabilities                                64        29
Net cash provided by (used in) operating activities        4,799     (199)
Cash Flows from Investing Activities:                               
Purchases of property and equipment                        (2,040)   (2,502)
Cash paid for business acquisition                         (600)     (500)
Net cash used in investing activities                      (2,640)   (3,002)
Cash Flows from Financing Activities:                               
Repayment on bank financing                                (250)     —
Repayments on capital lease obligations                    (1,035)   (1,139)
Proceeds from exercise of common stock options             639       131
Proceeds from initial public offering                      25,364    —
Initial public offering costs                              (2,753)   —
Net cash provided by (used in) financing activities        21,965    (1,008)
Effect of exchange rate changes on cash and cash           9         7
equivalents
Net Increase (Decrease) in Cash and Cash Equivalents       24,133    (4,202)
Cash and Cash Equivalents at beginning of period           10,925    41,944
Cash and Cash Equivalents at end of period                 $35,058 $37,742


Synacor, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands)
(Unaudited)
The following table presents a reconciliation of net income (loss) to adjusted
EBITDA for each of the periods indicated:
                                                               
                            Three months ended        Six months ended
                            June 30,                  June 30,
                            2012          2013        2012        2013
Reconciliation of Adjusted                                      
EBITDA:
Net income (loss)
attributable to Synacor,     $1,199      $(637)    $2,373    $(610)
Inc.
Provision (benefit) for      301           (204)       700         (186)
income taxes
Interest expense             89            43          136         101
Other expense                18            8           18          15
Depreciation                 934           1,138       1,715       2,268
Stock-based compensation     425           617         983         1,179
Adjusted EBITDA              $2,966      $965      $5,925    $2,767


Synacor, Inc.
Key Business Metrics
(Unaudited)
                                                           
              Three months ended              Six months ended
              June 30,                        June 30,
              2012            2013            2012            2013
Key Business                                                
Metrics:
Unique         19,927,835      19,686,182      20,610,455      19,973,574
Visitors (1)
Search Queries 238,348,816     177,025,185     509,126,605     388,669,982
(2)
Advertising
Impressions    10,337,928,948  10,292,927,243  18,823,156,330  21,775,961,313
(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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