Synacor Reports Second Quarter 2014 Results
BUFFALO, N.Y., August 12, 2014 (GLOBE NEWSWIRE) - Synacor Inc. (NASDAQ: SYNC), the leading provider of next-gen start experiences, 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 second quarter of 2014.
“Our second quarter results delivered on our expectations. We continue to remain focused on increasing revenue and managing our costs, and are committed to returning Synacor to growth," said Synacor CFO Bill Stuart. "We are excited about our new CEO and member of our Board of Directors, Himesh Bhise, who joined Synacor on Monday, August 4th. Himesh's experience with cross-platform technology, content and mobile, and his track record successfully managing rapid-growth businesses make him the right leader for Synacor at this time of significant opportunity.”
Q2 2014 Financial Results
Revenue: For the second quarter of 2014, total revenue was $24.2 million, compared to $26.7 million in the second quarter of 2013. Search and display advertising revenue was $18.5 million, compared to $21.4 million in the second quarter of 2013. Subscription-based revenue was $5.7 million, compared to $5.3 million in the second quarter of 2013.
Net Income/Loss: For the second quarter of 2014, net loss was $1.9 million, including a $1.0 million pretax gain from the sale of a domain name no longer used in Synacor’s business, compared to net loss of $0.6 million in the second quarter of 2013. Earnings per share, or EPS, was a loss of $0.07. Net loss includes stock-based compensation expense of $0.8 million, or $0.03 per share, in the second quarter of 2014, as compared to $0.6 million, or $0.02 per share, in the second quarter of 2013. The EPS calculation for the second quarter of 2014 is based on 27.4 million weighted average common shares outstanding. The EPS calculation for the second quarter of 2013 was based on 27.3 million weighted average common shares outstanding.
Adjusted EBITDA: For the second quarter of 2014, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which excludes stock-based compensation expense and the $1.0 million pretax gain from the sale of the domain name, was ($1.2) million compared to $1.0 million in the second quarter of 2013.
Key Business Metrics: For the second quarter of 2014, Synacor averaged 17.9 million unique visitors per month, compared to 19.7 million in the second quarter of 2013. Search queries were 130 million for the second quarter of 2014, compared to 177 million in the second quarter of 2013. Advertising impressions were 8.9 billion, compared to 10.3 billion in the second quarter of 2013.
Cash: For the second quarter of 2014, Synacor used $4.6 million in cash in operating activities, compared to generating $0.5 million in the second quarter of 2013. The company ended the second quarter of 2014 with $25.7 million in cash and cash equivalents, compared to $37.7 million at the end of the second quarter of 2013.
Business Outlook
Based on information available as of August 12, 2014, the company is providing financial guidance for the third quarter and fiscal 2014 as follows:
| |
| • | Q3 2014 Guidance: Revenue for the third quarter of 2014 is projected to be in the range of $25.0 million to $26.0 million. For the third quarter of 2014, the company expects to report adjusted EBITDA of ($0.5) million to $0.5 million. |
| |
| • | Fiscal 2014 Guidance: Revenue for the full year of 2014 is projected to be in the range of $100.0 million to $103.0 million. For the full year of 2014, the company expects to report adjusted EBITDA of ($2.5) million to ($1.0) million, excluding the $1.0 million pretax gain from the sale of the domain name. |
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to discuss the second quarter 2014 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 79343808, 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 30, 2014. 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 79343808.
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. In addition, Synacor offers digital ad inventory for brands wanting a customized, targeted, programmatic means of reaching their audiences. Synacor (NASDAQ:SYNC), is headquartered in Buffalo, NY, with tech hubs in Toronto, Ottawa and Boston, and ad sales offices in New York, Detroit and Los Angeles. For more information, visit synacor.com.
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; the transition of responsibilities to our newly-appointed chief executive officer; 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 15, 2014. 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 12, 2014, and Synacor undertakes no duty to update this information.
Contacts
Investor Contact:
Denise Garcia, MD
ICR
ir@synacor.com
716-362-3309
Press Contact:
Meredith Roth, VP, Corporate Communications
Synacor
mroth@synacor.com
646-380-5141
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
December 31, | | As of
June 30, |
| | 2013 | | 2014 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 36,397 |
| | $ | 25,664 |
|
| Accounts receivable, net | 14,569 |
| | 17,769 |
|
| Preferred expenses and other current assets | 1,691 |
| | 1,794 |
|
| Deferred income taxes | 314 |
| | 1,151 |
|
| Total current assets | 52,971 |
| | 46,378 |
|
| Property and equipment, net | 14,085 |
| | 15,100 |
|
| Deferred income taxes, non-current | 4,455 |
| | 4,969 |
|
| Other long-term assets | 348 |
| | 182 |
|
| Goodwill | 1,565 |
| | 1,565 |
|
| Convertible promissory note | 1,000 |
| | 1,000 |
|
| Investment in equity interest | 365 |
| | 320 |
|
| Total Assets | $ | 74,789 |
| | $ | 69,514 |
|
| Liabilities and Stockholders' Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 13,573 |
| | $ | 10,715 |
|
| Accrued expenses and other current liabilities | 5,177 |
| | 6,375 |
|
| Current portion of capital lease obligations | 1,946 |
| | 1,532 |
|
| Total current liabilities | 20,696 |
| | 18,622 |
|
| Long-term portion of capital lease obligation | 885 |
| | 1,256 |
|
| Other long-term liabilities | 977 |
| | 304 |
|
| Total Liabilities | 22,558 |
| | 20,182 |
|
| Stockholders' Equity: |
| |
|
| Common stock | 277 |
| | 279 |
|
| Treasury stock | (569 | ) | | (1,138 | ) |
| Additional paid-in capital | 102,226 |
| | 103,809 |
|
| Accumulated deficit | (49,705 | ) | | (53,629 | ) |
| Accumulated other comprehensive income | 2 |
| | 11 |
|
| Total stockholders’ equity | 52,231 |
| | 49,332 |
|
| Total Liabilities and Stockholders' Equity | $ | 74,789 |
| | $ | 69,514 |
|
Synacor, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three months ended
June 30, | | Six months ended
June 30, |
| | 2013 | | 2014 | | 2012 | | 2013 |
| Revenue | $ | 26,708 |
| | $ | 24,191 |
| | $ | 55,851 |
| | $ | 49,439 |
|
| Costs and operating expenses: | | | | | | | |
| Cost of revenue (1) | 14,017 |
| | 13,146 |
| | 29,781 |
| | 27,022 |
|
| Research and development (1)(2) | 7,336 |
| | 7,120 |
| | 14,201 |
| | 14,612 |
|
| Sales and marketing (2) | 2,147 |
| | 2,457 |
| | 4,277 |
| | 4,594 |
|
| General and administrative (1)(2) | 2,957 |
| | 3,499 |
| | 6,101 |
| | 6,598 |
|
| Depreciation | 1,138 |
| | 1,117 |
| | 2,268 |
| | 2,175 |
|
| Gain on sale of domain | — |
| | (1,000 | ) | | — |
| | (1,000 | ) |
| Total costs and operating expenses | 27,595 |
| | 26,339 |
| | 56,628 |
| | 54,001 |
|
| | | | | | | |
| Loss from operations | (887 | ) | | (2,148 | ) | | (777 | ) | | (4,562 | ) |
|
| |
| |
| |
|
| Other (expense) income | (8 | ) | | 6 |
| | (15 | ) | | 14 |
|
| Interest expense | (43 | ) | | (23 | ) | | (101 | ) | | (111 | ) |
| Loss before income taxes and equity interest | (938 | ) | | (2,165 | ) | | (893 | ) | | (4,659 | ) |
| Benefit for income taxes | (204 | ) | | (641 | ) | | (186 | ) | | (1,325 | ) |
| Loss on equity interest | — |
| | (344 | ) | | — |
| | (590 | ) |
| Net loss | (734 | ) | | (1,868 | ) | | (707 | ) | | (3,924 | ) |
| Net loss attributable to noncontrolling interests | 97 |
| | — |
| | 97 |
| | — |
|
| Net loss attributable to Synacor, Inc. | $ | (637 | ) | | $ | (1,868 | ) | | $ | (610 | ) | | $ | (3,924 | ) |
| | | | | | | | |
| Net loss per share attributable to Synacor, Inc.: | | | | | | | |
| Basic | $ | (0.02 | ) | | $ | (0.07 | ) | | $ | (0.02 | ) | | $ | (0.14 | ) |
| Diluted | $ | (0.02 | ) | | $ | (0.07 | ) | | $ | (0.02 | ) | | $ | (0.14 | ) |
| | | | | | | | |
| Weighted average shares used to compute net loss per share: | | | | | | | |
| Basic | 27,311,892 |
| | 27,360,588 |
| | 27,273,671 |
| | 27,397,695 |
|
| Diluted | 27,311,892 |
| | 27,360,588 |
| | 27,273,671 |
| | 27,397,695 |
|
Notes:
| |
| (1) | Exclusive of depreciation shown separately. |
| |
| (2) | Includes stock-based compensation as follows: |
|
| | | | | | | | | | | | | | | |
| Three months ended | | Six months ended |
| June 30, | | June 30, |
| 2013 | | 2014 | | 2013 | | 2014 |
| Research and development | $ | 281 |
| | $ | 375 |
| | $ | 542 |
| | $ | 702 |
|
| Sales and marketing | 76 |
| | 125 |
| | 152 |
| | 233 |
|
| General and administrative | 260 |
| | 347 |
| | 485 |
| | 593 |
|
| $ | 617 |
| | $ | 847 |
| | $ | 1,179 |
| | $ | 1,528 |
|
Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
| | | | | | | |
| | Six months ended
June 30, |
| | 2013 | | 2014 |
| Cash Flows from Operating Activities: | | | |
| Net loss | $ | (707 | ) | | $ | (3,924 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
| |
|
|
| Depreciation | 2,268 |
| | 2,175 |
|
| Stock-based compensation expense | 1,179 |
| | 1,528 |
|
| Gain on sale of domain | — |
| | (1,000 | ) |
| Provision for deferred income taxes | (198 | ) | | (1,351 | ) |
| Loss in equity investment | — |
| | 590 |
|
| Change in assets and liabilities net of effect of acquisition: |
|
| |
|
|
| Accounts receivable, net | 278 |
| | (2,200 | ) |
| Prepaid expenses and other current assets | (105 | ) | | (103 | ) |
| Other long-term assets | (17 | ) | | 166 |
|
| Accounts payable | (1,657 | ) | | (2,179 | ) |
| Accrued expenses and other current liabilities | (1,269 | ) | | 703 |
|
| Other long-term liabilities | 29 |
| | (178 | ) |
| Net cash used in operating activities | (199 | ) | | (5,773 | ) |
| Cash Flows from Investing Activities: |
|
| |
|
|
| Purchases of property and equipment | (2,502 | ) | | (2,796 | ) |
| Investment in equity interest | — |
| | (545 | ) |
| Cash paid for business acquisition | (500 | ) | | — |
|
| Net cash used in investing activities | (3,002 | ) | | (3,341 | ) |
| Cash Flows from Financing Activities: |
|
| |
|
|
| Repayments on capital lease obligations | (1,139 | ) | | (1,117 | ) |
| Proceeds from exercise of common stock options | 131 |
| | 59 |
|
| Purchase of treasury stock | — |
| | (562 | ) |
| Net cash used in financing activities | (1,008 | ) | | (1,620 | ) |
| Effect of exchange rate changes on cash and cash equivalents | 7 |
| | 1 |
|
| Net decrease in Cash and Cash Equivalents | (4,202 | ) | | (10,733 | ) |
| Cash and Cash Equivalents at beginning of period | 41,944 |
| | 36,397 |
|
| Cash and Cash Equivalents at end of period | $ | 37,742 |
| | $ | 25,664 |
|
Synacor, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands)
(Unaudited)
The following table presents a reconciliation of net loss to adjusted EBITDA for each of the periods indicated:
|
| | | | | | | | | | | | | | | |
| | Three months ended
June 30, | | Six months ended
June 30, |
| | 2013 | | 2014 | | 2013 | | 2014 |
| Reconciliation of Adjusted EBITDA: |
| |
| |
| |
|
| Net loss attributable to Synacor, Inc. | $ | (637 | ) | | $ | (1,868 | ) | | $ | (610 | ) | | $ | (3,924 | ) |
| Provision for income taxes | (204 | ) | | (641 | ) | | (186 | ) | | (1,325 | ) |
| Interest expense | 43 |
| | 23 |
| | 101 |
| | 111 |
|
| Other | 8 |
| | (6 | ) | | 15 |
| | (14 | ) |
| Depreciation | 1,138 |
| | 1,117 |
| | 2,268 |
| | 2,175 |
|
| Stock-based compensation | 617 |
| | 847 |
| | 1,179 |
| | 1,528 |
|
| Loss on equity interest | — |
| | 344 |
| | — |
| | 590 |
|
| Gain on sale of domain | — |
| | (1,000 | ) | | — |
| | (1,000 | ) |
| Adjusted EBITDA | $ | 965 |
| | $ | (1,184 | ) | | $ | 2,767 |
| | $ | (1,859 | ) |
Synacor, Inc.
Key Business Metrics
(Unaudited)
|
| | | | | | | |
| | Three months ended
June 30, | | Six months ended
June 30, |
| | 2013 | | 2014 | | 2013 | | 2014 |
| Key Business Metrics: | | | | | | | |
| Unique Visitors (1) | 19,686,182 | | 17,932,647 | | 19,973,574 | | 18,810,423 |
| Search Queries (2) | 177,025,185 | | 129,546,784 | | 388,669,982 | | 283,370,361 |
| Advertising Impressions (3) | 10,292,927,243 | | 8,897,558,466 | | 21,775,961,313 | | 17,484,367,947 |
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. |
