Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. Welcome to Synchronoss Technologies First Quarter 2023 Earnings Conference Call.

Joining us today are Synchronoss Technologies President and CEO, Jeff Miller; and CFO, Lou Ferraro.

Following their remarks, we will open the call for your questions. Then, before we conclude, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. the remind available this link for Investor section to recorded will in like synchronoss.com. Relations made at and replay of would everyone call that be the I website company's via a

Now I'd over CEO, Miller. Jeff the you proceed. to may Synchronoss' Sir, to like turn call

Jeff Miller

thank XX, Welcome, the the in to available release Relations is us announcing results for for for release today. XXXX. issued press After you, the operator. I be listeners you we of our of press all Thank additional we'll And the quarter view Investor a March ended first website. A today. everyone, and joining what copy market closed, section release discussing information encourage on our our

and I'll our start call highlights to to results it financial up with we'll discuss Lou over for a turning review open updates the. estate before Then, for the questions. of our

We quarter first growth, continue business across the recorded core upon million the XX customer we our our of double-digit Cloud cloud strong, subscribers global of base momentum our to officially surpassed build in XXth quarter. cloud consecutive as only existing and growth fraction opportunity the and engine for represents milestone the at this our of total to customer large. our subscriber the market date, base believe to addressable it while penetrate efforts potential we remains reflects Synchronoss a and subscriber

marketing new continue subscriber and future. scheduled live to later go rate channels of X at this we to underway the the work growth operator global and expansion another foreseeable double-digit With of Tier for existing our year for expect initiatives customers,

the introducing metric. year-over-year nearly Invoiced well. we’ve achieved Our in since accelerated cloud this cash as performance has QX is which quarterly increased XX% strongest revenue performance

challenges year. to in we growth growth flow XX has are also X.X% cloud continued achieve year. The on-going to with return cash cloud pace percentage GAAP plan last positivity even according environment basis our to second the of in combined we’ve growth revenue our becomes combined us our the of of the year-over-year the to on Despite portion on rate. invoice invoice to expectation business revenue executing for a this to revenues. cloud months, continue Over our financial growth strength revenue maintained meaningful a of more that by as return half macroeconomic of the the an on Aided track

Tier as in cloud Along an the are existing made increasing to towards healthy the expand of coming based of we progress a in have to from customers, region prospects And, back operator with building that's online APAC the the I expansion substantial pipeline X our global we half year. scheduled noted, with launch reach. the come

into operations, moments go few further process. I'd our to comments to on-going take on strategic I any before review provide like a about update an Now, our

non-binding XXth March from Synchronoss stock Financial on announced price we B. an received reminder, for a shares unsolicited of acquire to Riley As of proposal common we per that share. $X.XX all a outstanding

that alternatives. strategic the with UBS, closely stockholders. XXXX, our legal advisors our in company's offers and We've potential of we to appropriate whom been due the other proposal, that exception with B. B. well enable Organization several Financial working evaluating our designee, has Riley actively reviewing begun our engaged financial course advisors, and diligence, with action board, for maximize working Bernstein, determine Marty the Since value time, Riley's to carefully as as will of

expand cloud serve and in our global our the customers to and and of chart existing offering. we as course the targets still continue and In operate our the to we position the our best technology timely in a assessing working business Currently, new meantime, white-label leader will diligently execute are profitability and options to action manner. related achieve and

increased operational a the to and XX% number strong XX as nearly company's the percentage cloud customer with million new to to Beginning three further global grow base, noted of our of on in we and XX% our provide a is strategic revenue enabled global This highest over as to our and the expand subscriber cloud protect updates product recurring in XX%, ago, quarter, groups cloud growth personal product, part total business. delivered moment cloud focus of our in I adoption with history. subscribers, cloud deliver the milestone which the in total of now core due revenue continued us results features. the revenue and, exceed performance to priorities anchor continued our the high-margin expanded subscribers. I'll in drove our year-over-year business, We

with throughout XXXX. I'm double-digit trajectory and fully to growth expect performance, sustained strong we subscriber pleased this the main

We work AT&T Verizon, with our close retain to and largest and add continue to collaboration in subscribers. customers,

reach With for we world. their global become launch to will solid the retail year channels quarter, into with around X providers cloud believe channels. Additionally, our marketing we the initiatives of that a solution over through at cloud AT&T our this launched operator new another personal time the while service continue Tier we direct during expand their contributor

AT&T's demonstrates revenue value will future. push Personal to and subscribers contributed from for Synchronoss in marketing the Cloud. growing The additional they're reach growth contribute deriving the invoice and of the that expanded cloud offering the

strong during Congress, by XXX,XXX the the last where attendance mentioned nearly update, attended quarter, World in we Mobile were we participants. of encouraged As our

providers the they and or like Synchronoss profitability, view Personal of general, customers with our their meetings They remain profitability. prospects, in growth as relevance we on our value-added Cloud, heard our value-added strategies and to platform. essential first express our continued and hand During worldwide and focused services services pieces that growth service

that business. cloud year. proof X course, the the form the demonstrates in the we're came point, that of the operator making contract bring major last reach Tier value APAC with in signed multi-year progress of to expand in of we region quarter based of that service fourth of strong to agreement A a providers This the our

experience. have integrating we been localizing environments, phase, deployment into their and the hosting establishing testing the of part systems, As user and

well deployment the for launch continue as track commercial in we are the update, half on revenue So second XXXX, phase. of we during and recognize to an the

million forecast of relationship deliver of more term, to telecommunications is is subscribers. commercial the This customer over leading millions and tens mobile, with than of $XX services expanded and provider ISP a its

Our customer as priority, and additional should reference underscores cloud account global engagement our for serve with this global an opportunities. other

our This Additionally, that we're extended further pleased commitment commercial as share our with solution with allows to we cloud recently trusted provider continued to a partner shows us in partnership cloud telecommunications and solidify our a product. leading their position agreement our to France.

enhance base, users. we're XX go-to-market their exceeds collaboration, million this services deliver and helping strategy their value-added subscriber to Through which across

last going of These intelligence features that spoke Magazine platform our of so reinforce the and the I of and have and The about and efficiency of launch that make machine leverage new Cloud a row. market position personal Year part update, enhancements our curve. cloud R&D for year the the efforts Product our strength artificial forward. help in As capability the will our that we're technology learning earned includes distinction always the upgrades forefront Computing second of at Synchronoss TMC's it from

in are in to value by cloud to technology maintaining our leadership continues the business our this strong customers. white position space. to and largest operators the committed messaging, trusted In label deliver summary, world, we our our is In

During the briefly made announcements quarter, we first several I'll recap. that

over that expansion with messaging supports over now second, we million of a suite RCS-based reached e-mail a milestone of million multimillion-dollar operator a APAC user telecom announced XX in contract Japan. leading base a total subscribers; XX also we subscribers First,

service long-standing global that providers such expansion to DOCOMO, thanks we enjoy NTT in this with SoftBank. the successful Our partnerships region KDDI and is largely as

for new of Overall, shareholders. to track healthy our creation contribute we and messaging prioritize business remains and stable pipeline efficiency our goals opportunities, continue value profitability with to a to as our on

our share to Lou. the brief on update operations NetworkX before handing call a I'll now over

operator of overall efficiencies. This enhance during of former allow a contract thus a As what evidenced far digital is this been to digital. by better closed the reception Synchronoss NetworkX improve rebrand suite our we brand quarter. recently referred the our capabilities performance of favorable state-of-the-art it suite. reported as deployment believe as our experience to we management, inventory reflects formally multiyear of portfolio their the recent to has Tier and because We relaunched and the products Customer reminder, strength ConnectNX streamline and workflow product X auditing as customers our will a

NetworkX remain our remains continue committed and profitability confident summary, We delivering as deliver strategic to strong. revenue steady cloud are offerings innovative business solutions that will our we evaluate partners of alternatives, to company. our the and In the momentum thoroughly to for

materializing through growing a cash customer and market-leading deliver base. capabilities are solutions are generation growing, to continuing we Our global and

free profit As efforts. further while are and improvements cloud through into management the of our we continuing accentuating growth we strong cost drive XXXX, cash flow progress to profile

over the to call in results the quarter to detail. turn greater that, With our financial I'll Lou? discuss for Lou

Lou Ferraro

Jeff. you, Thank

core toward achieving the the business cloud took progress on to diligent our targets The flow and commitment for XXXX. past solid over cash cost focus we strategic resulted actions the on-going in Our of management and $X quarter. cost to centers first led in expenses a such nearly decrease transitioning hosting year, the for divestiture directly operating assets and nonstrategic as further from total data million during

throughout cost and benefiting beyond. these bottom efficiencies line results expect our XXXX to We continue

first internally the and period. $XXX,XXX, on from despite moderate quarter cash free prior performance macroeconomic first was year impacts quarter $X.X on-going pace negative improvements customer million through flow respectively, Free the flow for revenue of million, for slightly. of are a remain negative conditions the cash decision-making adjusted $X.X million, slowing was and track a representing from the $X.X that We

leading briefly Now performance some serve key the for as metrics I'd like to business. indicators, our of the discuss which success

solid of XX%, consecutive the the of First year-over-year growth growth subscriber trend continuing XXth quarter. for is cloud our double-digit

XX% in from prior expected increased million Cloud result of in the of the revenue deferred on Cloud the deferred cloud runoff impact the revenue at quarter of million as a in X.X% over QX for revenue product. of basis, the XXXX. first revenue XXXX, removing of X% in by $X.X of total from first up XX% same period revenue, $XX.X like-for-like a represented XXXX revenue quarter. down year-over-year period. On XX% up basis was and revenue the approximately of year a Looking

product made in of of from in DSP a basis on revenue and of formerly sale activation nonstrategic and the result down the million assets and revenue Revenue year-over-year was $X.X from total digital, of sunsetting XXXX the impact as XX% million up quarter. NetworkX, QX XX% the a $X.X

down first direct cloud in quarter, the increasing of recurring of total from overall the revenue in XX.X% to reflection contribution and X% of The a from up XXXX. revenue revenue. QX our the made Messaging revenue of $X.X of license and XX% prior the associated quarter. up purchases the XX.X% last professional services Quarterly timing revenue total year due year was and from in was of of million to revenue period fourth XX% in increase in XXXX, the recurring an increase quarter is revenue

revenue Invoice XX.X% underlying increased within cloud and This our XX-month Invoice the revenue quarter. X.X% the from reflection during in is is overall -- cloud trends to improvement intended represents basis, a revenue period is $XX.X of million, comparable a cash year-over-year business. earned cash trailing and transparency health the the business evidenced up measure improved revenue in direct the provide to and period. and trajectory on of in non-GAAP the greater the is performance

future cloud driving We customers flow improvement in subscribers online. new in revenue come expect continued growth as our cash of grow invoice and an quarters

a Total financial and decreased results prior million expected result our The $X.X of $XX.X deferred X the and of in from nonstrategic year from was of revenue XX% quarter product million. period. The current the first the and sales DSP decline XXXX. quarter. runoff from ended XX, was these items the to now in quarter sunsetting million in effect expected first revenue for the the $XX.X in XXXX assets impact activation in March Turning revenue combined the the

period. DSP Gross QX the of increased continued or million XX.X% in as or development and of mentioned from and primarily result margins of deferred decreased changes and noted. $XX.X management, decrease expense $XX.X sale previously a and revenue profit a cost amortization year XX.X% of profit to Gross lowered gross total activation revenue total which XX.X% revenues, revenue in result million the assets of in research prior depreciation the previously in the was of and company's costs. The

prior by loss First The to and the efficiency million result revenue a operations was operating in change, resources of from other slightly quarter the a $X.X efforts. compared period. offset in of loss million greater of management loss increase year R&D cost $X.X was

XX% net to million In a the in million or revenue. loss loss in decreased attributable $XX.X EBITDA QX loss or in EBITDA per management. XX.X% offset to by the Net share The per to million revenue in runoff in prior expense prior was the from and in $X.X $X.X decrease period. of $X.XX adjusted QX, partially was in year compared continued The period. or attributable $X.X of growth increase cloud revenue million continued revenue year total XX.X% to was $XX.X primarily in changes growth share $X.XX margin adjusted primarily of net or -- million offset total the cloud primarily deferred by

Moving compared March our and XXXX, the and to capital $XX.X December a sheet. equivalents the cash -- was not do for the reserves cash Free and our forthcoming adjusted and quarters, XXXX, million $XX.X $XXX,XXX. free present XXXX. we XX, to predicted XX, balance flow million at require inflows future. foreseeable cash expect current additional any cash Based on million, negative at a in was flow XX, March on Cash $X.X at $XX.X million cash negative were to

available company's existing the undrawn balance. with of the quarter receivable the at remained agreement end Additionally, securitization an accounts

refunds still during are on-going. the are As the didn't cooperating tax we refunds additional sheet. and data worth that to time prepaid tax of the included request being we claims rest and the with responding is million Unfortunately, have a balance their $XX assets in about the period, receive audited. refund reminder, on audit still IRS of currently the the on We're any

anticipate out plan we And receive quarters. our paid pay tax we in shares. coming the to preferred the once the be we to to refunds, them use down However, refund

adjusted quarter quarter to guidance. we improve. first to XXXX, revenue Compared Moving and expect the to moderately of second EBITDA

our annual from support QX maintenance also payments expecting on are the operating NetworkX messaging to expecting cash several QX. in flow positive receive and renewals in Based recurring performance, are free expected to be we business. We in

performance single-digit within full millions improvements basis positive core as expectation continued unadjusted Based are is flow our cash cash to current flow operational expectation generate reaffirming expense The management, for well our as business an the on for the strong also cloud on the to XXXX. be we in in year.

the factoring to generation as flow of we in after cash significantly again Additionally, payment improve obligation, existing other costs, as general certain XXXX. expiry well in expect

deferred fiscal reiterating The $XXX.X price XX, revenue $XXX to million range $XXX the is pro and and For related DSP revenue less XXXX, GAAP the the sale the our GAAP net revenue for million XXXX ended in are to December after half and XXXX of million deferred it the will revenue be assets comparable between we of to expected XXXX, is XXXX. was million. recognized GAAP company's than to $X.X in $X.X forma The the activation revenue year runoff of contribution most adjusting in revenue million from year. noncash in is which first

quarter As these year-over-year Revenue XXXX moderately decline on a is to of in of the GAAP second result factors, basis. a expected

revenue in for expect half GAAP growth basis do of year total return We to and on the to the a second XXXX.

$XX Finally, reiterating to EBITDA range adjusted between to million we are our in XXXX. $XX million

much, and Thank the turn you very to have Q&A. afternoon. operator now a it for I'll over good

Jeff Miller

commend team. global have diligent you. our unwavering the to moment entire dedication through the your and forefront innovation. take presence, reputation It of robust at is like for and commitment Great. built of to being to a recognize Synchronoss the and that customers Thank we I'd a efforts

and connect over We continued Synchronoss. look Operator, in you. confidence and next we'll of your committed our Thank to For support. gratitude We results who delivering forward ahead. turn appreciate you again shareholders. one-on-ones listening, interest it to value deepest to our for for weeks your to with all days in our and our you in We're those in the sincerely investors. the long-term company extend are value your opportunity to and many on-going strong for we trust

Operator

Thank you.

I statement call, safe forward-looking today's provide harbor conclude that important like call. we made statements includes would during this to regarding Synchronoss' cautions Before

statements During likely this These of considered business prospects factors today meaning expectations influence within include forward-looking about laws. forward-looking particularly of plans discuss be regarding discussed call, company's that to are Any are management should statements not future are forward. the market the and certain that historical comments opportunities that applicable performance. factors company's and going securities the comments our

cause and most are company's these risks. XX-K of number and filings, a review which to differ description recent All XX-Q for a to risks subject of results SEC are the statements to its listeners uncertainties, Forward-looking encouraged materially. could actual including

or as also today, Statements call update to made the management not today's adjusted such as that call, obligation as a revise this does EBITDA. in whether any during financial such throughout future otherwise. note undertake measures, are any of new changes and made company discuss of result or certain non-GAAP expectations forward-looking events, information, Please statements,

cash it does of are necessarily items or measures numbers, derived such software to the generated account as non-GAAP the not the as for not from revenue by EBITDA GAAP development. equate adjusted operations deferred does Although capitalization

release joining Earnings GAAP between Today's periods reconciliation Thank Synchronoss presents describes non-GAAP reported the us in Call. and XXXX Technologies for for reporting Conference the and company's earnings the release. differences Quarter First the for you today

disconnect. may You now

Synchronoss (SNCR) 9 May 232023 Q1 Earnings call transcript