Synchronoss Technologies, Inc. Announces Third Quarter 2013 Financial Results

  Synchronoss Technologies, Inc. Announces Third Quarter 2013 Financial
  Results

  *Third quarter non-GAAP total revenue of $90.3 million increases 30%
    year-over-year
  *Third quarter non-GAAP operating income of $21.0 million represents 23%
    non-GAAP operating margin and drives non-GAAP EPS of $0.34

Business Wire

BRIDGEWATER, N.J. -- November 4, 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
third quarter of 2013.

“We are pleased to announce our strong third quarter results,” said Stephen G.
Waldis, Founder and Chief Executive Officer of Synchronoss. “We are excited by
the positive adoption trends we are seeing across our Personal Cloud Services
deployments. Our software is enabling our mobile operator customers to provide
compelling cloud services that have become a critical part of their overall
strategic initiatives. At the same time our Activation Services offering
continues to be positively impacted by industry trends and marketing
initiatives by mobile operators to drive more frequent upgrade activity and
enable more family share plans. We believe Synchronoss is well positioned to
continue driving strong top line growth, and our differentiated value
proposition is further reinforced as our Tier One customers such as AT&T and
Verizon commit to new and expanded multi-year agreements.”

On a GAAP basis, Synchronoss reported net revenues of $89.7 million,
representing an increase of 30% compared to the third quarter of 2012. Gross
profit was $51.6 million and income from operations was $8.8 million in the
third quarter of 2013. Net income applicable to common stock was $3.6 million,
leading to diluted earnings per share of $0.09, compared to $0.16 for the
third quarter of 2012.

On a non-GAAP basis, Synchronoss reported net revenues of $90.3 million, an
increase of 30% compared to the third quarter of 2012. Gross profit for the
third quarter of 2013 was $53.9 million, representing a gross margin of 60%.
Income from operations was $21.0 million in the third quarter of 2013,
representing an operating margin of 23%. Net income was $13.5 million in the
third quarter of 2013, compared to $10.7 million in the year ago period.
Diluted earnings per share were $0.34 for the third quarter of 2013, compared
to $0.28 for the third 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."

“Our third quarter results were driven by solid performance in both our cloud
services and activation services platforms,” said Lawrence R. Irving, Chief
Financial Officer and Treasurer. “The growing adoption of our Personal Cloud
platform, along with positive activation trends around an expanding array of
devices, makes us increasingly confident that the investments we are making in
2013 will generate significant value for Synchronoss, our customers and our
shareholders going forward.”

Other Third Quarter and Recent Business Highlights:

  *Cloud Services revenue accounted for approximately $26.9 million of
    non-GAAP revenue, representing approximately 30% of total revenue and
    growing 55% on a year-over-year basis.
  *Activation Services revenue accounted for approximately $63.4 million of
    non-GAAP revenue, representing approximately 70% of total revenue and
    growing 22% on a year-over-year basis.
  *Executed a new three-year contract with AT&T that extends our successful
    ten-year plus relationship.
  *Entered into a $100 million Credit Agreement to further enhance the
    company’s financial flexibility and facilitate general corporate purposes.
    This Credit Agreement can be expanded to $150 million and expires in
    September 2018.

Conference Call Details

In conjunction with this announcement, Synchronoss will host a conference call
today, November 4, 2013, at 4:30 p.m. (ET) to discuss the company's financial
results. To access this call, dial 866-202-3048 (domestic) or 617-213-8843
(international). The pass code for the call is 92967348. 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 27040474.
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)
                                                           
                                    September 30, 2013     December 31, 2012^1
                                                           
ASSETS
Current assets:
Cash and cash equivalents           $    37,087            $    36,028
Marketable securities                    7,894                  20,188
Accounts receivable, net of
allowance for doubtful accounts
of $440 and $258 at September            88,694                 74,980
30, 2013 and December 31, 2012,
respectively
Prepaid expenses and other               23,710                 24,012
assets
Deferred tax assets                     4,120                4,114      
                                                           
Total current assets                     161,505                159,322
Marketable securities                    5,787                  653
Property and equipment, net              95,821                 58,162
Goodwill                                 125,998                127,322
Intangible assets, net                   100,764                110,760
Deferred tax assets                      4,047                  6,961
Other assets                            9,821                3,482      
                                                           
Total assets                        $    503,743          $    466,662    
                                                           
                                                           
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable                    $    11,660            $    8,980
Accrued expenses                         29,756                 41,658
Deferred revenues                        22,031                 20,954
Contingent consideration                9,037                3,279      
obligation
                                                           
Total current liabilities                72,484                 74,871
Lease financing obligation -             9,257                  9,540
long term
Contingent consideration                 -                      5,100
obligation - long-term
Other liabilities                        3,139                  2,494
Stockholders’ equity:
Preferred stock, $0.0001 par
value; 10,000 shares
authorized, 0 shares issued and          —                      —
outstanding at September 30,
2013 and December 31, 2012
Common stock, $0.0001 par
value; 100,000 shares
authorized, 44,303 and 42,533
shares issued; 40,510 and                4                      4
38,674 outstanding at September
30, 2013 and December 31, 2012,
respectively
Treasury stock, at cost (3,793
and 3,859 shares at September            (67,104   )            (67,918    )
30, 2013 and December 31, 2012,
respectively)
Additional paid-in capital               381,919                344,469
Accumulated other comprehensive          (1,901    )            (365       )
loss
Retained earnings                       105,945              98,467     
                                                           
Total stockholders’ equity              418,863              374,657    
                                                           
Total liabilities and               $    503,743          $    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            Nine Months Ended September
                     September 30,                 30,
                     2013           2012           2013            2012
                                                                   
                                                                   
Net revenues         $ 89,716       $ 68,961       $ 251,840       $ 200,511
Costs and
expenses:
Cost of services       38,133         29,136         105,791         84,388
(1)(2)(3)*
Research and
development            16,554         12,645         49,630          38,091
(1)(2)(3)
Selling, general
and                    15,562         10,278         45,157          31,728
administrative
(1)(2)(3)
Net change in
contingent             500            (327   )       2,676           (5,735  )
consideration
obligation
Restructuring          -              -              5,172           -
charges
Depreciation and      10,213       6,068        28,792        17,201  
amortization
                                                                   
Total costs and       80,962       57,800       237,218       165,673 
expenses
                                                                   
Income from            8,754          11,161         14,622          34,838
operations
Interest income        149            295            432             1,023
Interest expense       (235   )       (222   )       (714    )       (702    )
Other (expense)       (369   )      (207   )      (326    )      586     
income (4)
                                                                   
Income before
income tax             8,299          11,027         14,014          35,745
expense
Income tax            (4,709 )      (4,825 )      (6,536  )      (12,111 )
expense
                                                                   
Net income           $ 3,590       $ 6,202       $ 7,478        $ 23,634  
                                                                   
                                                                   
Net income per
common share:
Basic                $ 0.09        $ 0.16        $ 0.19         $ 0.62    
                                                                   
Diluted              $ 0.09        $ 0.16        $ 0.19         $ 0.60    
                                                                   
                                                                   
Weighted-average
common shares
outstanding:
Basic                 38,960       38,107       38,589        38,219  
                                                                   
Diluted               40,056       38,872       39,662        39,192  
                                                                   
* Cost of
services
excludes
depreciation
which is shown
separately.
                                                                   
(1) Amounts
include fair
value
stock-based
compensation as
follows:
Cost of services     $ 1,470        $ 925          $ 3,874         $ 3,061
Research and           1,538          1,201          4,484           3,856
development
Selling, general
and                   4,264        2,511        9,954         7,470   
administrative
                                                                   
Total fair value
stock-based          $ 7,272       $ 4,637       $ 18,312       $ 14,387  
compensation
expense
                                                                   
                                                                   
(2) Amounts
include
acquisition
costs as
follows:
Cost of services     $ 254          $ -            $ 254           $ -
Research and           353            -              353             209
development
Selling, general
and                   (269   )      -            668           424     
administrative
                                                                   
Total
acquisition          $ 338         $ -           $ 1,275        $ 633     
costs
                                                                   
                                                                   
(3) Amounts
include fair
value earn-out
cash and stock
compensation as
follows:
Cost of services     $ -            $ 199          $ 247           $ 199
Research and           -              353            105             469
development
Selling, general
and                   -            183          190           319     
administrative
                                                                   
Total fair value
earn-out cash
and stock            $ -           $ 735         $ 542          $ 987     
compensation
expense
                                                                   
                                                                   
(4) Amounts
include Fx
change of the
contingent
consideration
obligation as
follows:
Other (expense)      $ 107          $ (32    )     $ 122           $ 82
income
                                                                   

SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
(Unaudited)
                                                          
                     Three Months Ended            Nine Months Ended September
                     September 30,                 30,
                     2013           2012           2013            2012
                                                                   
                                                                   
Non-GAAP
financial
measures and
reconciliation:
                                                                   
GAAP Revenue         $ 89,716       $ 68,961       $ 251,840       $ 200,511
Add: Deferred
Revenue               558          232          3,104         748     
Write-Down
                                                                   
Non-GAAP Revenue     $ 90,274      $ 69,193      $ 254,944      $ 201,259 
                                                                   
                                                                   
GAAP Revenue         $ 89,716       $ 68,961       $ 251,840       $ 200,511
Less: Cost of         38,133       29,136       105,791       84,388  
Services
                                                                   
GAAP Gross             51,583         39,825         146,049         116,123
Margin
                                                                   
Add: Deferred
revenue                558            232            3,104           748
write-down
Add: Fair value
stock-based            1,470          925            3,874          3,061
compensation
Add: Acquisition
and                    254            -              254            -
restructuring
costs
Add: Deferred
compensation          -            199          247          199     
expense -
earn-out
                                                                   
Non-GAAP Gross       $ 53,865      $ 41,181      $ 153,528      $ 120,131 
Margin
                                                                   
Non-GAAP Gross         60     %       60     %       60      %       60      %
Margin %
                                                                   
GAAP income from     $ 8,754        $ 11,161       $ 14,622        $ 34,838
operations
Add: Deferred
revenue                558            232            3,104           748
write-down
Add: Fair value
stock-based            7,272          4,637          18,312          14,387
compensation
Add: Acquisition
and                    338            -              6,447           633
restructuring
costs
Add: Net change
in contingent          500            (327   )       2,676           (5,735  )
consideration
obligation
Add: Deferred
compensation           -              735            542             987
expense -
earn-out
Add:
Amortization          3,534        1,955        10,681        5,250   
expense
                                                                   
Non-GAAP income      $ 20,956      $ 18,393      $ 56,384       $ 51,108  
from operations
                                                                   
                                                                   
GAAP net income
attributable to      $ 3,590        $ 6,202        $ 7,478         $ 23,634
common
stockholders
Add: Deferred
revenue                519            148            2,120           486
write-down, net
of tax
Add: Fair value
stock-based            5,561          2,954          12,504          9,334
compensation,
net of tax
Add: Acquisition
and
restructuring          564            -              4,406           414
costs, net of
taxes
Add: Net change
in contingent
consideration          393            (295   )       2,554           (5,817  )
obligation, net
of Fx change,
net of tax
Add: Deferred
compensation
expense -              29             476            370             641
earn-out, net of
tax
Add:
Amortization          2,801        1,252        7,296         3,408   
expense, net of
tax
                                                                   
Non-GAAP net         $ 13,457      $ 10,737      $ 36,728       $ 32,100  
income
                                                                   
Diluted non-GAAP
net income per       $ 0.34        $ 0.28        $ 0.93         $ 0.82    
share
                                                                
Weighted shares
outstanding -         40,056       38,872       39,662        39,192  
Diluted
                                                                   

SYNCHRONOSS TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(in thousands)
(Unaudited)
                                             Nine Months Ended September 30,
                                               2013              2012
                                                                   
Operating activities:
Net income                                     $  7,478            $ 23,634
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense             28,792             17,199
Loss on disposal of asset                         -                  198
Amortization of bond premium                      225                1,000
Deferred income taxes                             3,401              32
Non-cash interest on leased facility              691                690
Stock-based compensation                          18,313             14,387
Changes in operating assets and
liabilities:
Accounts receivable, net of allowance for         (13,714  )         (6,733  )
doubtful accounts
Prepaid expenses and other current assets         1,656              7,022
Other assets                                      (6,724   )         (122    )
Accounts payable                                  2,680              (2,665  )
Accrued expenses                                  (11,952  )         (3,042  )
Contingent consideration obligation               1,724              (8,396  )
Excess tax benefit from the exercise of           (983     )         (6,592  )
stock options
Other liabilities                                 1,063              (146    )
Deferred revenues                                760              (1,707  )
                                                                   
Net cash provided by operating activities         33,410             34,759
                                                                   
Investing activities:
Purchases of fixed assets                         (55,216  )         (25,377 )
Purchases of marketable securities                (6,703   )         (13,082 )
available-for-sale
Maturity of marketable securities                 13,635             15,531
available-for-sale
Business acquired, net of cash                   -                (26,572 )
                                                                   
Net cash used in investing activities             (48,284  )         (49,500 )
                                                                   
Financing activities:
Proceeds from the exercise of stock               17,495             7,330
options
Payments on contingent consideration              (1,090   )         (2,268  )
obligation
Excess tax benefit from the exercise of           983                6,592
stock options
Repurchase of common stock                        -                  (13,898 )
Proceeds from the sale of Treasury Stock
in connection with an employee stock              1,474              612
purchase plan
Proceeds from capital obligations                 -                  38
Payments on capital obligations                  (1,236   )        (750    )
                                                                   
Net cash provided (used) by financing             17,626             (2,344  )
activities
                                                                   
Effect of exchange rate changes on cash          (1,693   )        391     
                                                                   
Net increase (decrease) in cash and cash          1,059              (16,694 )
equivalents
Cash and cash equivalents at beginning of        36,028           69,430  
year
                                                                   
Cash and cash equivalents at end of period     $  37,087          $ 52,736  
                                                                             

SYNCHRONOSS TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities
(in thousands)
(Unaudited)
                                             Nine Months Ended September 30,
                                               2013               2012
                                                                    
Non-GAAP cash provided by operating
activities and reconciliation:
                                                                    
Net cash provided by operating activities      $   33,410           $  34,759
(GAAP)
Add: Tax benefits from stock options               983                 6,592
exercised
Add: Cash payments on settlement of               1,463              3,533
Earn-out
                                                                    
Adjusted cash flow provided by operating       $   35,856           $  44,884
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