Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to Synchronoss Technologies Second Quarter 2023 Earnings Conference Call.

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

Following their remarks, we will open the call for questions. Then before we conclude, I will provide the necessary cautions regarding the forward-looking statements made by management during this call.

I would like to remind everyone that this call is being recorded and made available for replay via a link in the Investor Relations section of the company's website at synchronoss.com.

to call like CEO, to would Miller. Jeff I turn over the Synchronoss Now ahead. go Please

Jeff Miller

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

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

in invoice highlighted strong From a high revenue level, cloud our core cash second resilience subscriber by the generation. additions, cloud and continued growth, improved business quarter, demonstrated

by share renewal through a Our significant I'll And the performance on XXXX, our Verizon, few which year the was we announced that agreement more largest ago. customer, shortly. punctuated multiyear details weeks with

towards across subscribers customer great a operator, Cloud One Synchronoss the the coming strong also later and made quarters. recent see million of for we readiness continuing sales over activity our ongoing are Tier the funnel to months, to to market base, looking expanding XX global year. of our launch the Having international milestone debut cloud forward this surpassed in scheduled demand We've we're solutions entire and reach through progress

confidence QX for Financially, achieving results growth in targets aligned XXXX. of of promising the the strong performance achievements, trajectory increasing our financial These expectations, our that combined business. cloud future our collectively our with reaffirm view operating in our with our of our

in million the metric mentioned, in just introduced. Cloud was this by $XX.X both XX% As our continued growth and quarter, for record I since at landing numbers revenue robust QX, improving Invoiced

as of period, Cloud which quarter. last an the Invoiced XX% XX-month revenue maintained end a we've is trailing acceleration the rate, growth from of Over now XX% year-over-year

million our cash in also reflecting impressive ability $X.X an improved, free in cash to increase. jump generating flow, resulting year-over-year Notably, has a substantial XX%

result, as all a a to well cash continued As the GAAP this positive flow as on we're to growth XXXX, second revenue growth free on half fueled year by for basis return cloud. of of of the in track

before an Now get update into updates, ongoing to I'd take strategic moment I review provide any our to operational on further process. a like

the As we Riley a $X.XX common Synchronoss a stock listeners, Riley's B. Board, several acquire enable from appropriate of time, have XX, per the potential of unsolicited other those shares and Since B. working our received outstanding reminder Riley been due Bernstein, well with B. carefully as nonbinding with price exception Financial organization for reviewing proposal, alternatives. we Financial offers Marty to as share. strategic of announced evaluating to as proposal March on Designee, diligence, to an all that actively

assessing our we will We've that working in advisers Currently, and for execute we're course the maximize chart the options been legal UBS action. to our action and as value our as still well closely of course with working determine we XXXX when of to stockholders. believe diligently best engaged

advancing several long-term and for a focus parties. business team purposes the with discussions for was of for recent of interested Verizon weeks, our growth our the area with with long-term Our key over renewal leadership the last the relationship of both

label achieve the global cloud as definitely agreement to serve our We our those -- in offerings. meantime, appreciate targets partnership leader stability the assurance long-term the position the securing our customers, allow with us manner be the in as to business believe of to this productive providing a will -- a course, technology securing favorably expand we favorable discussions a provided going profitability white by continue operate In the and and advance of forward. of related We, will Verizon.

groups. now the product three within updates provide further I'll

we Within operational best to our by cloud subscriber performance continue strong total recurring date. to Cloud Comprising the revenue nature revenue Invoiced cloud of financial company. QX, double-digit XX% to and results, performance consecutive deliver the business, the growth led our continues quarter our of fortify the of high-margin XXth in business'

Cloud pivotal XXth accounted where XX% in driving of once a quarter again played revenues. our total revenue for role consecutive more or recurring

over quarters, delivering lean into our we results three will across and continue served approach. the focus strategic well this on several has main priorities Our us to past

opportunities features; global recognized As anchor the to two, to subscribers, these to base. integration and the long-term finalized XXXX. but a to our and support intelligence subscribers; we recognized and share XXth our our with until and protect a extension with significant reminder, priorities only learning provides are: predictable expand we as Beginning grow machine another of agreement efforts anniversary protect Verizon for that evolution in customer product and relationship Verizon not deliver continued grow of opens -- years contract three, extend with capabilities. This and July, new one, its our subscribers, seven also artificial cloud to

our enhances decade, Personal sets for behind stage offerings. further value-added Verizon's the driving This been past has Synchronoss a our range their growth bundles, contract offerings a of and extension mutual services trust service overall force strong in the Cloud solidifying companies. and the cloud between Verizon Over

engagements has as instrumental customers. partnership serves in model cloud Additionally, other a successful driving robust cash this with and for different been generation

is experience. at to Verizon the confidence speaks long to Yet continuously collaborate a Verizon Cloud and our subscriber providing Verizon, collaboration effectively their features, our longstanding base. in their and Our deliver value offering to teams subscribers, there for to best-in-class platform's advanced the their market showcases growth we still that with runway a user

cloud myPlan. been the Verizon is their Recently, needs, places has introduced offer brands product consumer their savings that plans alongside recognized Disney, and it other to offerings one like Cloud. subscribers Apple. in value The their the Walmart their to of and consumer of to our some Verizon and Verizon plan partners, offering, subscriber and including new perks myPlan world's most built Verizon immense allows customize base

to strategic and advancement is of designed the market meet to extended commitment market. cloud our and A anticipate performance keep testament is efficacy business and to technology's trends. key to technological investments, a aspect needs at research of of robust The evolving Synchronoss in forefront a customer relevance the Synchronoss' development agreement our to competitive

to cloud in we deliver of anchor us keep at forefront continued And QX, features that on innovation. the

AI and to platform, those find For people that the features now supported pictures. example, pictures it specific the tagging by inside easier facial making and object we on enable offer in

files search solution. platform. easily. These more refined are personal to into discuss the and software the we've We've cloud the will just minute in take our that the their that users also allow now built few a a value initiatives of our other I'll that updates to placed a few recent enhance of we've to highlight enhancements many

the to system. large performance devices. of ensure Synchronoss their we've their prominence compatibility our capabilities a for In Cloud. Synchronoss the iOS we've subscribers, Cloud photos for more Apple's simultaneously when demand to experience faster, strong iOS on and allowing our and a we've storing QX, backup Underscoring America received push them we've of vastly customers videos, First, in without users from North expanded to strong efficient backup the made and market operating taxing that improved the improve

important continue We enhancing better serve our end this technology to market. strategically plan to

all operating personal app our now continued offers digital Customers up devices. a on experience. enriched This the also synchronize system represents We cross-platform on assets to desktops to laptops back a protect that content of desktop and progression launched strategy an redesigned their user cloud located platform. and can cloud agnostic, digital

quarter, event include the September. now layer we our of share an The learning which Explore This through we our event media. cloud protection generative preparing also another the and in AI personal augmented users features Explore platform web installment secure in cloud assets folder, We're future machine during a offer ability to and coming for announcement to sensitive extra introduced enhancements our our of that at app of with also new capabilities, event will adding the documents digital second highlighting QX.

Collectively, product priority, expanding to cloud, customer leads global for improvements boost ultimately So customer of is update further updates. which regarding our engagement final enhance tuned stay Synchronoss help base. and an these drive adoption which continued our performance, me

strong the with launch Cloud towards Tier Synchronoss of quarter this a made the readiness progress One We international customer.

few in As next this finalizes the them months, ready customer be to market the by readiness live formally announce we'll thereafter. go over launch their and shortly entry name

that financial to Messaging, was to our results with our and In strong QX, continued contribution. last ahead Messaging performance our X with market, In operator, to slightly year's a XX Japan, expansion multimillion revenue and significant growth in million license highlighted major of RCS-based continues messaging business now by our customers deliver value of we in continued dollar well closed a boosts the adoption subscribers. signifying Tier over agreement advanced which where messaging

and the Tier client platforms e-mail our messaging We're continuing Japanese to Japan. MxX we in with our customer to core develop advanced largest version support another core of strong the in the X Also upgraded QX, latest -- product. market both

demand responded a in to our development as support customers by our we platform. Kubernetes Additionally, collective to from region porting core the platform the e-mail

improves customers our decrease the the scalability platform. their automation of deployment cost helps and and This of

storing cloud to we're move between both e-mail directly attachments Multiple opportunities of solutions, which enable global operators to capable nurturing delivering. businesses. cloud, sales and such several and forward, Tier One messaging As and that linkage actively is uniquely as us we is asking Synchronoss Cloud their Messaging advancing within the are something stronger

our our customer seen by also encouraged portfolio, over that funnel sales will of expanding it outlook We're for our growth Digital the strength with quarters. an and NetworkX, confident the coming We've set demand formerly support segments. Product of

construction is the pipeline verticals. as Two within sales utility and providers well as seeing Our service in Tier gains

quarter. to As relationships customers SpatialNX evidence to successfully this license valued transactions in handful continues several the in new and customers long-standing progress, QX, of during and during our a maintaining this strengthening NetworkX completed the we the with solution of while new area. operate brought

In summary, the of business cloud momentum strong. remains our

to and Our are of deliver cash platforms continuing solutions all to base growing, our market-leading our of global customers. across generation capabilities we're large

second the year, growth flow. and progress profit revenue strong to and line for on positive and cloud, our compete deliver of cash across the our platforms all leverage half aggressively we As we continue new growth will top of into profile the business

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

Lou Ferraro

our you, full In high-level readout QX, growth cloud getting to I'll few flow In sequentially. jump million towards before translated year-over-year for commitment $X.X cash us cash propelled a second and fully efficiency achieving XX% operating Thank revenue the driving comments an than and flow, into and which levered our into $XX targets free increase efforts of a Jeff. a is quarter, more share results. XXXX. our million a our

to return flows. in addition expect we generate to half, continuing to GAAP positive second cash revenue the In growth to

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

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

Looking expected deferred $XX.X the of a revenue million quarter. as a Cloud second revenue in runoff $X.X year-over-year X% basis by million of the at on product. approximately was result revenue down of

On the down Revenue increased revenue a Cloud revenue quarter in $X.X assets of from revenue quarter. in nonstrategic slightly impact XXXX X% made Digital period of second Activation product revenue and formerly prior over total XX% the XXXX, from total of removing of up represented of the a in revenue revenue, million year-over-year XX% basis, the QX same sale XXXX. up like-for-like and was the XX% $X.X the result million in as and Cloud DXP impact deferred on in the from NetworkX period. of sunsetting XX% year a basis of

X% revenue first Messaging revenue the decrease quarter $XX.X in the last made up marks of revenue quarter recurring slight Cloud XXXX at million increasing of impacts total total Quarterly the business. XX.X% from The was year or of up XX.X% business revenue percentage year. total of quarter. from revenue, and in of This of Messaging as recurring same in greater. quarter the consecutive last is XX% an revenue due as XX.X% well as of was recurring revenue company's second revenue revenue a period and the the in the a in company's from decrease contribution XX% to deferred XXth of

the trailing On Invoiced launch The Invoiced Cloud XX.X% by XX-month professional and of subscriber service second contributions related XX% to the impact customer an new adjustment, favorable the year-over-year upcoming adjustment. revenue driven million the prior $XX.X from onetime basis, compared Cloud the in year subscriber XX.X% results increased Invoiced revenue a to period. Removing increased revenue a increased quarter. period. were Cloud comparable to

reconciled trends measure impacted the unbilled nor it financial is transparency to deferred non-GAAP in changes by revenue. statements within underlying as intended revenue provide This in not greater the below Cloud is

now $XX.X XX, the in for June decline $XX.X was in results in prior the from as decreased recognized in Turning prior due revenue quarter and million quarter million deferred as divestiture Total ended to the to QX second million from The Activation year revenue revenue $X.X XXXX. period. the in financial our XXXX. second well the X.X% primarily to QX a assets DXP revenue 'XX to recognized

Messaging the as impacted higher revenue, noted which Gross contribution profit positively had or prior or total million the of XX% margins a XXXX revenue revenue company's percentage decreased from in in to decreased $XX.X the of of previously margins year a Gross total $XX.X period. XX.X% result million as the as revenue of changes gross XX.X% as business. in well QX from overall

in from $X.X million the from operating operations professional changes revenue, to loss impairment noted nonrecurring and a income the year the result was and a in quarter period costs fees. cost charge of The increased in loss compared lease current million SG&A lease of the prior R&D increase increased Second related from higher was $X.X previously and in period. operations to employee the impairment charge primarily spread

loss Net in million of exchange or impact $X.X income $X.X in in gain and year to was The was $X.XX million per million noncash loss primarily prior SG&A net recognized share $XX share net due only aforementioned a compared QX the the on per $X.X the $X.XX period. or increased year prior increase to in the divestiture a period. and change foreign changes in the of in revenue, R&D spend, million

XX% to from was in million of changes EBITDA margin In total in decrease the The I year the previously million prior as in or to XX.X% total $XX.X revenue XX.X% EBITDA QX, primarily decreased revenue or adjusted adjusted revenues, attributable period. of $XX.X discussed.

sheet. $XX.X December June million XX, we and $X.X at the balance any $XX.X million Now was Cash Free and compared were XX, Based moving was forthcoming free cash and XXXX, equivalents require adjusted our and cash the flow to expect XX, for present million quarters, March do on in to XXXX, million XXXX. cash cash the foreseeable additional on projected $X.X at at flow inflows million. cash cash not future. reserves flow $XX.X to

our active. the short-term utilized. securitization began basis keep receivable was quarter, arise the needs. business made During in as the the to repay company The do to to whenever accounts look timely the intention utilizing business its to needs this Repayment meet facility on facility facility is company will within manner and It quarter. continue a to a is it fully

our there center when profitability off As settlement are current should our legacy data demonstratively expenditures an next namely, run quarters, fees books aside, improve beyond few various rate. that in payments coming several costs, hosting legal today's and the material resolved,

tax refund worth have prepaid the on we federal balance of assets a sheet. claims included million in our As that still $XX reminder, about are

tax on receive period, their refunds Unfortunately, are the data rest still refunds additional time audit during the responding ongoing. of We're is with IRS, the any currently and cooperating on. to and the we being didn't the request

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

the third basis positive current expect cash for quarter generate revenue as single-digit QX our EBITDA expense in The on our flow is to Now expectation millions in full are reiterating XXXX. cash Based we the moving strong unadjusted year. to improvements manager, expectation business the XXXX, within flow we for Compared be well an guidance. cloud continuing to as operational adjusted moderately improve. to on performance and to

of and in expect in XXXX. subscriber anticipated flow payment rates existing at improve we to factoring Additionally, generation obligations, expected cash with general along expiration after revenue in growth year-over-year basis the other XXXX. a certain is double-digit also growth costs, significantly continue on Cloud to

after for ended reiterating revenue revenue year the fiscal assets. million XXXX, of and our $X.X million. for For revenue million to to The company's revenue we XXXX deferred between $XXX in sale $XXX.X recognized comparable prior the and GAAP the $XXX Activation pro million of and million $X.X range DXP adjusting runoff GAAP was December expectation forma are the XX,

accounting $XX new XXXX. evaluating is million go-forward maintain to our contract have land company Verizon EBITDA impact may million extension, related an the on revenue treatment we the The recognition. and $XX Restating the projections, which that adjusted XXXX between in previous will

the to Thank Q&A. call turn operator the now you for very I'll over much.

Operator

over am I questions closing I for showing remarks. Mr. at Miller will no it time. pass this to

Jeff Miller

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

To all interest of company ongoing those investors, extend our your our appreciate to your sincerely listening, support. gratitude in we for our deepest we and

to results are long-term our committed shareholders. strong to We value delivering and

look connect many you you. of you, days the you your continued in the to and back We trust to Thank forward Synchronoss. turn I'll for it ahead. And again weeks opportunity with to Thank confidence operator. and one-on-one in

Operator

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

likely that and particularly are historical, market are statements laws. to management During An be forward-looking this discussed influence prospects certain that securities should the considered forward. may opportunities call, business acceptable regarding within not meaning that discuss today going the comments factors are company's our of effectors

plans include expectations the forward company's statements about forward-looking of comments performance. These and

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

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

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

reported reconciliation Today's earnings the and GAAP release presents describes a and periods the between non-GAAP differences the company's the release. for reporting in

you call Quarter XXXX for you for Call. Thank Conference Second Earnings -- today's Synchronoss thank joining joining Technologies' today's us for

You may now disconnect. Thank you.

Synchronoss (SNCR) 8 Aug 232023 Q2 Earnings call transcript