SNCR - Earnings call transcript Q1 2019 | Synchronoss Technologies, Inc.

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Operator

Greetings and welcome to the Synchronoss Technologies Incorporated First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Crivelli. Joe Joe. you, Thank

begin. now may You

Joe Crivelli

Thanks, Jessie. welcome call. joining and Thanks afternoon, Synchronoss Technologies’ everyone. to earnings for first us Good quarter XXXX

Joining and is Executive me Officer. call President on Chief and Glenn Officer Clark, David Lurie, Synchronoss; Chief Financial of the

will maybe as call, Any of to operations are the based statements reference within financial financial such the differ. about meaning see and expectations. we future cause to today call results considered factors XXXX Please statements update events. refer actual opportunities. forward-looking and forward-looking on we expectations currently relating statements to include our federal our obligation other prospects These of including beyond statements to and During statements and or business risks new securities for forward-looking on environment no our for as as intends market filings future specific on SEC of forward-looking these based business the more future and identified and we and information make indications anticipates, this certain the are prospects results information trends, risk result position, words and as business of to uncertainties. undertake and it of assumptions laws, other statements may expects, Generally, that statements on that our a believes, are the by

GAAP non-GAAP today’s turn press conform can our enhance the reporting, of GAAP over GAAP. description the Glenn U.S. the to be certain the Lurie. release. these measures addition Reconciliation I do their addition to found report the of to now measures non-GAAP measures measures of call performance. to will in to In measures earnings financial in that non-GAAP We believe we not understanding

Glenn Lurie

growth Revenue to was in is Thank start today. quarter. you, million, up X% revenue the a up and fourth phase messaging first sequential operators growth revenue in moment. three for quarter thanks invoiced of driver off to was next major in key quarter, joining our year-over-year on was advanced and XXXX A up first which first from Japan, this the more the Joe the and strong quarter a X% solid the everybody signed in year-over-year. us $XX.X with in initiatives with mobile the and of

in $XX.X compared was to loss was profitability quarter. down in This in EBITDA in to of quarter, more in negative change now to an $X the million we Our quarter. quarter most quarter hosting business quarter have relevant year the EBITDA over or $X.X XX.X%. XXX the of Verizon’s efficient comparisons in place the million year-over-year much drove In the changes ago financial margin of freemium results, took more that general $XX.X of improvement over down compared cloud that expenses the Selling, restatement particular, to and are a year-over-year lapped an under or Research is X% much basis from year the XXXX to development our first compared cloud financial the in year our just $X.X million of X.X% and are down are first change the or the significant a premium, of ago in turn very And and XXXX, XXXX we is depreciation to in a the historic from in million. XX.X%. model million XX.X% evident margins gross were efforts Adjusted Adjusted $X.X administrative XXXX. million based and compared comparisons. model. first up points made of improvement cost-cutting ago a EBITDA

over industry mobile These while front, DoCoMo, have agreement mentioned the the with fourth that And agreements being very conceive the and are messaging, agreement for new in together, to KBBI revenue the very like this a other a past strong cloud. to the discussed discuss that cloud restarting center to next a profit to These revenue the my growing completed the premium drive Synchronoss know, went we partners our we release a of partnership for would our to have them of now the operator, in cost Assurant In the moving on is And Any do the joined can later for center we service XXXX, a discuss trust one unprecedented value we new of primary NTT new and deals Synchronoss. platforms company of been premium since on that sophisticated customer one the and a Verizon’s with label with and has proud this partnership that deals who from momentum and represent yesterday, churn. is earnings solutions. And last interest There Japan. we line phase advanced Amazon from in announced with IoT, earnings SoftBank have material year, proven not messaging With transition new largest for am growth business. to will carriers. deployment cloud players cloud in very now the we in call digital, reducing profitable investors call. freemium in we and Microsoft and ecosystem. announced What quarter. I I world’s and include do the business that on objectives white the to As engine. beginning cloud,

quarter, As broaden deliver Assurant, also solution our operators. deal to and accelerate device I bundle to global has strategy platform our growth to level last This enhanced cloud insurance to personal content sales and a selected protection Synchronoss’ protection device extends partnerships of major reach. provider mentioned

working to our introducing and cloud forward customers towards steps their next with We are Assurant the looking to solution.

provide At to for provide Synchronoss expect the the until the label request, an an in time. quarter more We to signed customer launches customer’s third that say the the platform cloud update we agreement cannot customer. are to at substantial about agreement today announce have and this service new that pleased white we we a

We profitable with customer, we of proposition an also new are of subscribers. Synchronoss believe another value is this material represents will it we deliver market important of And revenue cloud a personal of believe excited understanding new how source it solution this part be for our likewise cloud a reflects customer. its overall clear new for the stores a as revenue about will as a agreement for

the cloud We are additional in partnerships U.S. abroad. working Synchronoss label white and on

the we will drive that XXXX in in this by optimistic We year are the that end deals of will additional have business growth in cloud cloud beyond. place and

digital. move to Let’s

cost. as interfaces. Journeys to line Our types omni-channel integrating systems, actions choices in Digital where and create, enables Digital channels something likely Journeys perhaps platform environments, With drag market, need simple unique center. other and at and communicate that build through of simplifies as activation, code and deliveries channels companies layered Digital app and much we terms, providing expenses. and launching existing are layer without low-code project by lower Today, the organization these offer easily or with legacy we product experience four approach, organization ability with transactions all optimize call simple omni-channel built across customer Experience the of and year. involve user journeys. all potentially data, DXP, time business, speed the To of put channels, across executed our now Platform, manage programming a IT a the months low same the be can is involved, That X-figure to four to and businesses in and coding DXP portal sales over broker greater and programmers, customer of legacy we be systems any product and to a business and share many journeys. last manager with can its legacy a future growth don’t driven this each systems top drop expect lines Synchronoss’ can all of sales marketing acquired and sales launch across channels, department think includes looking deliver such is cases configure API transform but IT platform to several digital an to customer them by This that in-store, customer into and recoding online, real-time on four integrate of reduces be a the to significantly with experience

Synchronoss, service with very with deal and be mobile a operators integrator the we we worldwide. Amazon excited We will are about partnership announced with

part of will Music, Prime, multiple others their utilized Synchronoss’ believe will of enhancing and globally mobile to API cases Prime the Consumer and than in Services carrier with XX%. part enable legacy utilize agreement, Amazon Amazon Amazon invoice. this subscribers operators Synchronoss we to by revenue to directly as market As Twitch to many By the such as Amazon valuable, to DXP we accelerate offer using Video, time more can integrate systems, services for DXP Amazon these be carriers’

them expected revenue. this operators, enhance mobile services build journeys customer to helps significantly differentiated For Amazon are with that subscriber

carriers them through their it subscribers, with to inside gives For the services plans. of streamlined option billing and Amazon their access

for integrate. with Amazon model operator model business each is success this Our we reoccurring from generated a revenue that based

carriers This and us We accelerating expect not may who our Synchronoss platforms the customers to potential in services. currently provides Synchronoss and other reoccurring work digital year growth business opportunity drive material revenue and with have to this this to XXXX. starting be into also cross-sell

believe SoftBank was Phase partnership imagine, of Rackspace will of our and with for subscriber our we deployments carrier year this Amazon’s monetization customers we validation first put to platform. with X base, to first scale. entered are a our application is Synchronoss. this entire approval or In many interact announced AXP we earlier believe come As directly of is ability as well testing quarter, ongoing platform announcement In the gives for which the of the launching NTT DXP at plus operating combined in this the This process provide to brands and messaging Synchronoss. you major powerful part messaging partnership to today for DoCoMo, the be DXP we the which KBBI. these messaging, can will the We person, Japanese Synchronoss as as opportunity extensive messaging carriers, with Japanese phase,

well carriers revenue as the they real have the Global the on analyze project to we enablement as are and in set the providers platform, messaging potential other Synchronoss this as up which advanced enterprises enhance for the compete joining devices customers has we our respective driving which been collaboration disintermediation also pleased experience additional are have customers, to is estate to major of cloud, approached carriers WeChat announce platform, globally. of will third-party this customer the of with for for their letting expertise customers’ e-commerce, Microsoft the these the see smart to feeds woken in mobile Because well OTTs, to partner valuable advertisement, Line. countries in or optimistic Microsoft building all OTT and turning work, relationship and customer management. over-the-top computing and solutions enabling such And Buildings carriers develop phones, programs, service Through them Internet in our and fact are we as best-in-breed to as We a proud markets Synchronoss cannot the messaging will Things from and Microsoft. Smart about payments, screen the world XXXX. or with carriers potential most our Synchronoss AXP by around both within collect pipes. carriers over Accelerate their their By building from offer numerous remain while into this home combines deals buildings. of and OTTs IoT overall partnership replicate In because business, is our data in the world. IoT The with to dumb implications BXB and or unlocking these as IoT

million San Antonio service tech global Our feet. a optimize savvy and the control first such partner Rackspace to square quality which as initiative in IT further our is at than and spans cost We usage of live of more monitor, headquarters, a and with IoT Rackspace energy reduce validation proof-of-concept Microsoft with proof-of-concept their be provider, their this a partnership X will platform. believe

single to on AT&T gaining launch significant we quarter. Buildings competition We interface. partnership through also our start believe AT&T multiple the and solution that And Smart the presents a have first this we this in momentum data space. owners only customers Our will we two sales building operating channel have building in market management the and in systems head integrates is

seamlessly In intuitive, present on the enabling data, trends and to customizable addition, analytics that and the consumer buildings solution this a within maintenance network predictive same Smart to and of to or the Synchronoss linked use Buildings within user-friendly platform smart intelligent most can it’s the buildings. to in building of based data same combines Customers visualization the ways ecosystem or city analyze analysis. analyze single company of data create the an

close, I X. our Day upcoming update on and well into New to attend financial like strategies Investor the Throughout on as invite York our I Analyst strategy. marketing and you June and the we demos go-forward Before in deep day, will a provide as an guide platform operations would to for sales, City institutional

review the Crivelli Relations in would in our for If details. Investor detail. now David more more you like contact David? will financials attend, department please to Joe

David Clark

joining and for review XXXX. for us. will guidance everyone thanks quarter and Glenn provide fourth I results our Thanks,

the we restatement. Glenn transition in financial have As business mentioned, now the cloud model lapped

were are fourth for deal the to million, million to year-over-year revenue. we’ve compared the first in reflecting quarter, impact the recurring Messaging profitability XX Japan the was expenses to of sequential million, revenue of was quarter year’s and up so is a quarter included good and Advanced $XX.X project, and to in in Recurring Cloud by was of X.X% $XX.X increases product review The year up comparisons licensing million due which months. licensing revenue over XX% the which in the compared fourth Messaging quarter $XX.X revenue of year-over-year the relevant in the and deal. progress compared compared now part in XX not mobile fourth to Advanced from I’ll the XX% provide quarter quarter, past higher X.X% X driven the Japanese the our months. in million which last to down driven XXXX. to million $XX.X by revenue in in revenue revenue is transaction Phase So X.X% more X.X% quarter of total primarily up paid and much phones. holiday demonstration Cloud was ago largely Revenue $XX.X $XX.X subscriber the reduce for due growth content past gift-giving new of transfer seasonal by was sequentially line. made revenue

well and to quarter, lingering from both impacted decrease seasonally counts in due data from premium which to Our fourth quarter. as ago revenue the from well year $XX.X grow impact the our growth including as headcount expense the over largely leverage business. across was comparison. over cellphones. ongoing the were sequential highest the Synchronoss licensing activation from $XX is in revenue Adjusted demonstrates quarter quarter and the transition quarter million from from million project, for hard to of the of reduce closing from the model phase The to to centers throughout million business quarter in $X.X earnings some realized The cloud lower past Japanese subscriber continue the cloud, a of next this centers seasonally as a of EBITDA year is up also up XXXX the a freemium in The to done costs, quarter the the of entire at data an X.X% was first loss quarter. million million $X.X revenue the as other and in office Messaging due improve the of $XX.X $XX.X migration and the EBITDA year holiday Advanced year improvement first in up fourth ago revenue volume, the adjusted Digital flat in $XX.X team first increases in model, transactional storage sequential the the sequential ago compared in was [ph]. in million, business, year-over-year as reductions quarter down from quarter. both the and and clip sequential fourth in essentially healthy was work and XX% fourth first expected million the quarter higher to the decrease the million down was result year consolidations, first from fourth year-over-year which Messaging in first we part EBITDA $XX $XX.X million, quarter is to quarter quarter million the EBITDA million is our the also has lowest. the initiatives X.X% $XX.X The gift-giving quarter. in $X.X Paid

by quarter. the However, seasonal impact exacerbated benefits fourth in EBITDA the to was several

realized to one-time quarter, puts our takes. true-up services a of in the in the take related explain We foreign benefit and the me quarter translation expense a Let the to cloud of fourth and a currency the first moment that to not accruals, including hosting year-end adjustment. a did benefits transition recur

items million impacted now as these Together, operating quarter of and year expenses million benefits trade gross In Mobile first loss. negatively margin, to phase-in Congress. to associated with I’ll CES and year margin – discuss is World metrics, first quarter. swing by fourth and taxes the addition, EBITDA quarter profitability payroll first approximately quarter the the in from such represent and $X $X net shows,

All was $XX.X profitability year a Adjusted net see adjusted GAAP in XX.X% $X.X year migrating million, from the quarter the ago were factors I the or improvements down of improvement to revenue. to just loss quarter. the million improvement loss million ago profit a mentioned. the per $XX.X million of XX.X% these will to to expense $XX but reductions or million compared in or consolidations, compared quarter and share a increase fourth by loss a are share, and $X.XX of in was closures $XX.X $XX.X ago $X.XX other million gross $XXX quarter. fourth the headcount the of was revenue. items. $XX.X fourth down declines $XX.X quarter, million when a loss year-over-year profit due the million data share and a for the was are gross of quarter improvement X.X% cloud you million metrics $XX The $X.X impacted Adjusted The This million is a million from year quarter and from office reduction XX% or in $XX operating $X.XX per XXXX model, million same million per in from or $X.X storage initiatives. all result center the sequential

statement at The was the to flow end. occurring on $XXX.X $XX.X million debt sheet the fourth securities Turning quarter convertible of in and balance our is million repurchases cash and were balance early marketable Cash a another for after $XX.X moment. – – quarter. first million

As Accordingly, – end, close. cash approximately cash and marketable repurchased $XX.X convertible our our of we’ve million at position – since quarter increased received a quarter earlier discount and tax from refund approximately million cash to an $XXX.X since since net The to position debt the $XX.X last Friday, million million. down $XX.X was after the sale. balance IRS of the was additional Intralinks approximately the securities net as converts total approximately is million quarter we $XX.X due

quarter, this after did due quarter. month-long We delays to shutdown, the refund in however, the the the of expected until refund first we associated close government with receive first not the

million the increase to customer and convertible additional with comes shares early in cash a of resolved receivable a the in over call due that off we $XXX.X than end rather last up order first repurchases Advanced have the at mid-August, liquidity Accounts for has of ongoing the to our convertible stock cash The quarter’s make paid the which We to receivable while due year. preferred on not by balance in stock our from sequentially. due million the debt our accounts expect quarter. it able was at at continuing issue needs. Japan opportunistic from first but the was end, of built, support Messaging that principally in was to discount. is to ample preferred dividend We balance discussed paid down quarter to pay in project, quarter The debt on when major the remaining million $XXX.X the $XX company’s been customer of April

to to Now guidance. turn

unchanged. Our remains guidance for XXXX

However, the the sequentially the half we a when to second actually in up signed quarter of the year. again and revenue in is recognize do are This saw timing expect consistent when and deals we down be revenue with and largely building back XXXX can of pattern EBITDA from first we function as before of revenue. back

expect be to continue revenue million in XXXX. range We $XXX to $XXX to million

we generated million in million run our $XX we reminder, million EBITDA quarter, the $XX of or $XX [ph] million. year annualized. fourth $XX EBITDA In million. or EBITDA was an entering generated a XXXX, million $XX.X As range to rate second annualized $XX [ph] half implied of the Accordingly, of the

result business However, XXXX beyond, as to in $XX to $XX for $XX $X we In expected the a and stated support million investments. quarter million in dependent to new spent in should of million landing in range XXXX to success-based accelerated $XX deals on before, Synchronoss that we invest It be this resulting of in are growth the noted XXXX. EBITDA some planning million XXXX and to is $X million further we to the approximately million spending investment be these as of investment budget. first

convertible notes, we sales operations And investing questions. business. we we operator into the it in with past XXXX for The to deals the the very we remaining investment actions year. front indicators expect with they and on to well and and future closing, growth good from defer cash take a exciting to strong EBITDA these improvements of while momentum our due the retire solid that, positioned year. if of spending over are new balance by do hard leverage In recently but driving standpoint and funding remain to the we’ve deals undertaken We was can is balance on not, can the signed profitability demonstrated cost-cutting the a revenue year-over-year have this transpire, quarter the work

Operator

you. Thank

from Your the ahead. Sterling first will Please Auty We conducting session. now from JPMorgan. question-and-answer question comes [Operator go Instructions] be

Sahil Dhingra

on guys. is Sterling. actually for Sahil hi This Yes,

Glenn Lurie

you? How are

Sahil Dhingra

taking all in question – expecting my company yes, Thank first doing question. from my fine. for you business the I’m ask to how Messaging where apart So, wanted the Japan? is I – is to expand

Glenn Lurie

make I I understand sure it.

You’re if a whole? Messaging in or the expansion expecting Japan asking we’re in business expansion as

Sahil Dhingra

Yes.

on were there to? countries call planning mentioned other the that You you expand that some were to

Glenn Lurie

sure. Yes,

Sahil Dhingra

– so Yes,

Glenn Lurie

Yes, absolutely.

a it’s – question. good So

we yes, are. So,

comments, said globe as And in really and the and momentum. around countries to my gaining I the driving that, starting watch are happening over-the-top carriers carriers As is the Japan with Korea, one entire understand for view concern and customer in are such been the those in apps incredible what’s China a really experience. simple OTTs

about If or ever what’s not China they app you actually were into that were momentum Line in gaining WeChat think with and that coming going happening in Japan, out. customers such

So, and in of morning out monetization of going the activities, OTT. is to all all come don’t all are revenue, all the happening and all upstream and the at of those their really messaging incremental their they’re going dollars of

and the why of the into Japanese So, carriers drive so obviously obviously, with build call Messaging brought us with business some help reasoning they what Plus go the platform, three compete Messaging their was that. that can they

can OTTs market market a go gains actually compete have market. in they that or their one OTT before launch if an having and their sure yes, they with make they incremental strong the in this hold as in revenue countries themselves. with They future carriers for other So, who that globe, conversations can around drive place see a we’re other those they can their

we partnerships to view grow as like Japan additional our So, continuing our launch to the and opportunities we well. view in business Japanese

Sahil Dhingra

one, in so the Right, the deal do thanks. start top-line to expect expect we Amazon, this year? And with when we to like contributing any another do effect it

Glenn Lurie

big excited we this they we’re as have we way us, their do, more carriers XXXX. with those relationships to their based will in work obviously with we then stated, integration will for to expect about we It’s inside The And integrator do we a given Yes, revenue opportunities performance, go the specific that and real expect deal. be is expect more with get their have opportunities. good it will then partners obviously which we globally. and be fully our we and opportunities of one

So, we expect to XXXX accelerate and revenue that into have XXXX. to in

Sahil Dhingra

may. And if one more, I thanks. Right,

is So, the like like collaboration exactly Synchronoss on monetize that? with Microsoft how space, that so, planning in to IoT

Glenn Lurie

look, that’s Smart we we so Yes, platform. label have Buildings – white are our a you as know platform,

We working are obviously the Buildings asked Accelerator sign with that to utilize platform program and an be our they to talking platform, product, agreement working Microsoft to to their customers Smart us was to them AT&T them saw them first product work to to potential on platform. not we’ll our to as us telcos, join AT&T we’ll with cloud the the only as utilize their enhance well Azure, with as with service, with be bring us. want the

multi-pronged partnership. it’s So, a

in us The today, Rackspace San that Microsoft which first fact headquarters Rackspace’s was to worked do one we announced the and together build and a Antonio. in POC

is one Rackspace bit that looking installed. with we’re feet our work Microsoft. other potential at POC for with And square other we a that and platform will customers and about million that’s with also So, opportunities

Sahil Dhingra

side. Thank all you. That’s my thanks. Right, from

Glenn Lurie

you. Thank

Operator

Glenn questions over would Lurie at [Operator floor for comments. like Instructions] you. this further Thank There are Mr. to to back turn the closing time. no I

Glenn Lurie

to to I Synchronoss us the team Thank Jessie. the everybody again I’ll and joining today. great XXXX. work for you, thank of want the nice reiterate start

We have which we quarter. one have Street made obviously hit commitments to we the that the to about number very good the feel number committed

and for commitments and as again business on about. development made momentum customers also us in that with up forward, deliver going feel here talking bringing new and the very and results. good we The side the which around doing also signing we We to we quarter you is profitable strong sales will generate second revenue deals new forward look

for again to being you thank everybody Appreciate So here. it.

Operator

concludes teleconference. This Thank you. today’s

time. You for may this participation. disconnect Thank you lines your your at

Synchronoss (SNCR) 9 May 192019 Q1 Earnings call transcript