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Synacor Reports Third Quarter 2013 Results



Synacor Reports Third Quarter 2013 Results

  * Quarterly revenue of $26.6 million vs. $28.3 million in prior year
  * Quarterly adjusted EBITDA of $0.9 million, 12th consecutive quarter of
    positive results

BUFFALO, N.Y., Nov. 5, 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 in
the U.S. and abroad, today announced its financial results for the third
quarter of 2013.

"I am pleased to report we exceeded our financial guidance for the third
quarter," said Synacor CEO Ron Frankel. "We are on a path toward advancing the
presence of our customers on a wide range of devices. In this regard, I am
excited to announce our acquisition of Teknision, a company specializing in
the development of intelligent Android home screen experiences for wireless
carriers and consumer electronics manufacturers. Teknision's proprietary
Android development platform strengthens our ability to guide consumers to
their media automatically on their devices of choice. I believe Android will
become the operating system of choice for many CE manufacturers on many
devices relevant to our customers, including smartphones, tablets and
televisions, and we intend to provide the intelligent home screen for all of
them."

Q3 2013 Financial Results

Revenue: For the third quarter of 2013, total revenue was $26.6 million,
compared to $28.3 million in the third quarter of 2012. Search and display
advertising revenue was $20.9 million, compared to $23.3 million in the third
quarter of 2012. Subscription-based revenue was $5.6 million, compared to $5.1
million in the third quarter of 2012.

Net Income: For the third quarter of 2013, the net loss was $0.8 million,
compared to net income of $0.7 million in the third quarter of 2012. Diluted
earnings per share, or EPS, was a loss of $0.03. Net income includes
stock-based compensation expense of $0.7 million, or $0.02 per share, in the
third quarter of 2013, as compared to $0.5 million, or $0.02 per share, in the
third quarter of 2012. The diluted EPS calculation for the third quarter of
2013 is based on 27.3 million weighted average fully diluted common shares
outstanding. The diluted EPS calculation for the third quarter of 2012 was
based on 30.0 million shares.

Adjusted EBITDA: For the third quarter of 2013, adjusted EBITDA, which
excludes stock-based compensation expense, was $0.9 million, or 3% of revenue,
compared to $2.2 million, or 8% of revenue, in the third quarter of 2012.

Key Business Metrics: For the third quarter of 2013, Synacor averaged 19.4
million unique visitors per month, compared to 20.2 million in the third
quarter of 2012. Search queries were 166 million for the third quarter of
2013, compared to 234 million in the third quarter of 2012. Advertising
impressions were 9.5 billion, compared to 11.6 billion in the third quarter of
2012.

Cash: For the third quarter of 2013, Synacor generated $1.0 million in cash
from operating activities, compared to $5.0 million in the third quarter of
2012. The company ended the third quarter of 2013 with $34.8 million in cash
and cash equivalents, compared to $38.7 million at the end of the third
quarter of 2012.

"Synacor's product innovation and deep engineering expertise, coupled with the
acquisition of Teknision, uniquely positions us to capitalize on the rapidly
growing, global smart device market opportunity," said Synacor CFO Bill
Stuart. "We continue to remain focused and committed to executing on our
strategy to return Synacor to growth."

Business Outlook

Based on information available as of November 5, 2013, the company is
providing financial guidance for the fourth quarter and fiscal 2013 as
follows:

  * Q4 2013 Guidance: Revenue for the fourth quarter of 2013 is projected to
    be in the range of $28.0 million to $29.0 million. For the fourth quarter
    of 2013, the company expects to report adjusted EBITDA of $1.3 million to
    $1.8 million.
  * Fiscal 2013 Guidance: For the full year of 2013, the company is narrowing
    its revenue guidance to the top of its previously announced range to
    $110.4 million to $111.4 million. For the full year of 2013, the company
    is also increasing its adjusted EBITDA range to $5.0 million to $5.5
    million.

Conference Call Details

Synacor will host a conference call today at 5 p.m. ET to discuss the third
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 90337930, 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 November 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 90337930.

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;
developments in display advertising technologies and practices; 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 August
13, 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 November 5, 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, September 30,
                                               2012         2013
Assets                                                       
Current assets:                                              
Cash and cash equivalents                      $ 41,944     $ 34,778
Accounts receivable, net                       15,624       14,359
Deferred income taxes                          1,999        1,013
Prepaid expenses and other current assets      1,831        2,239
Total current assets                           61,398       52,389
Property and equipment, net                    11,043       13,244
Deferred income taxes, non-current             2,527        3,981
Other long-term assets                         543          428
Goodwill                                       819          819
Convertible promissory note                    —            1,000
Investment in equity interest                  —            86
Total Assets                                   $ 76,330     $ 71,947
Liabilities and Stockholders' Equity                         
Current liabilities:                                         
Accounts payable                               $ 14,204     $ 11,696
Accrued expenses and other current liabilities 7,328        6,043
Current portion of capital lease obligations   2,127        1,914
Total current liabilities                      23,659       19,653
Long-term portion of capital lease obligation  1,712        753
Other long-term liabilities                    148          212
Total Liabilities                              25,519       20,618
Stockholders' Equity:                                        
Common stock                                   275          277
Treasury stock                                 (569)        (569)
Additional paid-in capital                     99,449       101,497
Accumulated deficit                            (48,338)     (49,877)
Accumulated other comprehensive income         (6)          1
Total stockholders' equity                     50,811       51,329
Total liabilities and stockholders' equity     $ 76,330     $ 71,947

 
 
 
Synacor, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)
                                                                     
                                   Three months ended    Nine months ended
                                   September 30,         September 30,
                                   2012       2013       2012       2013
Revenue                            $ 28,326   $ 26,551   $ 89,803   $ 82,402
Costs and operating expenses:                                        
Cost of revenue (1)                15,792     14,083     49,432     43,864
Research and development (1)(2)    6,218      7,404      18,629     21,548
Sales and marketing (2)            2,000      2,058      6,776      6,332
General and administrative (1)(2)  2,676      2,805      8,384      8,772
Depreciation                       981        1,119      2,696      3,387
Total costs and operating expenses 27,667     27,469     85,917     83,903
Income (loss) from operations      659        (918)      3,886      (1,501)
Other expense                      25         (15)       7          (30)
Interest expense                   (72)       (39)       (208)      (140)
Income (loss) before income taxes  612        (972)      3,685      (1,671)
and equity interest
(Benefit) provision for income     (40)       (260)      660        (446)
taxes
Loss in equity interest            —          (120)      —          (314)
Net income (loss)                  $ 652      $ (832)    $ 3.025    $ (1,539)
Net income (loss) per share:                                         
Basic                              $ 0.02     $ (0.03)   $ 0.13     $ (0.06)
Diluted                            $ 0.02     $ (0.03)   $ 0.11     $ (0.06)
Weighted average shares used to                                      
compute net income per share:
Basic                              27,329,106 27,333,693 23,728,120 27,293,898
Diluted                            30,010,359 27,333,693 28,765,152 27,293,898
                                                                     
Notes:                                                               
(1) Exclusive of depreciation                                        
shown separately.
(2) Includes stock-based
compensation as follows:                                             
 
                                   Three months ended    Nine months ended
                                   September 30,         September 30,
                                   2012       2013       2012       2013
Research and development           $ 146      $ 318      $ 373      $ 860
Sales and marketing                119        97         292        249
General and administrative         255        268        838        753
                                   $ 520      $ 683      $ 1,503    $ 1,862

 
 
 
Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                      
                                                            Nine months ended
                                                            September 30,
                                                            2012     2013
Cash Flows from Operating Activities:                                 
Net income (loss)                                           $ 3,025  $ (1,539)
Adjustments to reconcile net income (loss) to net cash                
provided by (used in) operating activities:
Depreciation                                                2,696    3,387
Stock-based compensation expense                            1,503    1,862
Loss on disposal of property and equipment                  32       —
Deferred income taxes                                       563      (468)
Loss in equity interest                                     —        314
Change in assets and liabilities net of effect of                     
acquisition:
Accounts receivable, net                                    (57)     1,265
Prepaid expenses and other current assets                   (115)    (408)
Other long-term assets                                      223      115
Accounts payable                                            1,048    (2,586)
Accrued expenses and other current liabilities              812      (1,246)
Other long-term liabilities                                 101      64
Net cash provided by operating activities                   9,831    760
Cash Flows from Investing Activities:                                 
Purchases of property and equipment                         (2,983)  (4,550)
Investment in equity interest                               —        (400)
Cash paid for business acquisition                          (600)    (500)
Purchase of convertible promissory note                     —        (1,000)
Net cash used in investing activities                       (3,583)  (6,450)
Cash Flows from Financing Activities:                                 
Repayment on bank financing                                 (250)    —
Repayments on capital lease obligations                     (1,739)  (1,662)
Proceeds from exercise of common stock options              922      179
Proceeds from initial public offering                       25,364   —
Initial public offering costs                               (2,753)  —
Net cash provided by (used in) financing activities         21,544   (1,483)
Effect of exchange rate changes on cash and cash            (8)      7
equivalents
Net Increase (Decrease) in Cash and Cash Equivalents        27,784   (7,166)
Cash and Cash Equivalents at beginning of period            10,925   41,944
Cash and Cash Equivalents at end of period                  $ 38,709 $ 34,778

 
 
 
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        Nine months ended
                              September 30,             September 30,
                              2012         2013         2012       2013
Reconciliation of Adjusted                                          
EBITDA:
Net income (loss)             $ 652        $ (832)      $ 3,025    $ (1,539)
(Benefit) provision for       (40)         (260)        660        (446)
income taxes
Interest expense              72           39           208        140
Other expense                 (25)         15           (7)        30
Depreciation                  981          1,119        2,696      3,387
Loss in equity interest       —            120          —          314
Stock-based compensation      520          683          1,503      1,862
Adjusted EBITDA               $ 2,160      $ 884        $ 8,085    $ 3,748

 
 
 
Synacor, Inc.
Key Business Metrics
(Unaudited)
                                                                
                Three months ended             Nine months ended
                September 30,                  September 30,
                2012            2013           2012            2013
Key Business                                                    
Metrics:
Unique Visitors 20,241,871      19,373,165     20,487,594      19,773,438
(1)
Search Queries  233,767,194     165,556,903    742,893,799     554,226,885
(2)
Advertising     11,634,386,253  9,518,576,265  30,457,542,583  31,294,537,578
Impressions (3)
                                                                
Notes:                                                          
(1) Reflects the number of unique visitors to our customers' websites computed
on an average monthly basis during the applicable period, as measured by
comScore.
(2) Reflects the total number of search queries during the applicable period,
as reported by Google.
(3) Reflects the total number of advertising impressions during the applicable
period, as reported by DoubleClick and other partners.
 

CONTACT: Investor Contact:
         Denise Garcia, SVP
         ICR
         ir@synacor.com
         716-362-3309
        
         Press Contact:
         Meredith Roth, VP, Corporate Communications
         mroth@synacor.com
         646-380-5141

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