SNCR - Earnings call 3 2023 | Synchronoss Technologies, Inc.

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Operator

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

Joining us today are Synchronoss Technologies President and CEO, Jeff Miller; and CFO, Lou Ferraro. [Operator Instructions] Then before we conclude, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call.

I would like to remind everyone that this call will be 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 now Miller. Jeff would turn over the Synchronoss I proceed. please Sir,

Jeffrey Miller

announcing operator. press of you, us closed, press A Relations third the joining and section XX, September available today. market for XXXX. release on quarter a Investor ended issued of Thank we everyone, is After our Welcome, the website. thank copy results the release our you for our

I what Messaging encourage a posted related the and presentation this NetworkX our and additional businesses. discussing listeners We release also recently presentation all divestiture to view we'll to for of today. our information be on

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

achieved significant propelling our company's we a era. week, in a journey, new milestone towards Synchronoss Last

executing positions in our NetworkX Messaging [indiscernible] As fortifies move strategic organization Lumine our incremental we next structure growth even to margins conversion. cloud-only higher-margin, for our our higher businesses our the of improved capital and the with positions and It and business. announced Synchronoss cash a cloud also as planned sale This long-term step strategy, Group.

on Lumine stockholder to complete, are the growing enterprise we With cloud-only Synchronoss achieving now transaction a value. laser-focused as delivering Group dedicated and

X with our the Tier SoftBank, extension to anticipated launch of contract our highly quarter. for solution on highlighted personal operator the largest In strengthen a in current the cloud with to And the in X-year further foundation the updates significant cloud-only Turning QX, customer, of Japan. we a objectives quarter, executed by Verizon. business, our

exercise clearly Tier the growth in with our platform value demonstrate existing of to the position along their extension achievements, robust an milestone provides for years. coming AT&T's and that cloud decision operators Synchronoss X to These agreement,

in invoice business. solid returned in cloud QX. Financially, in delivered increase on $XX.X reach by XX% cloud, GAAP a complemented Cloud to to strong our growth million in year-over-year year-over-year another We we performance revenue revenue

XXth We achieved of of cycle also these again double-digit growth, greater than elongated once such year-over-year years. upgrade our which our among our the results to We despite strength is consumers, by subscriber emphasizing cloud now the platform. smartphone as achieved growth, X.X consecutive quarter marking faced pressures customers extended double-digit enduring

During million. delays we now the our key resulting NetworkX in contract divested businesses. to in performance, profitability quarter, increase through Yet contributed Messaging and also of resiliency worked several in in the cloud an to $XX.X decisions operations our EBITDA our customer

group, will and delve updates time I'll product this businesses. Before on last note be updates I that by Messaging into the provide we NetworkX the

the going business. forward will on solely focus Our Cloud be

our Beginning in this progress. the With of this revenue Thanks of details a let's about revenue to third made cloud total the up with revenue XX% XX% to updates recurring QX. of for XXth in in we quarter row. contribution, mind, excess generated proceed in quarter. for the Cloud our revenue total

we to of business revenue. recurring as climb migrate a model, expect to a we percentage continue revenue As total cloud-centric to

we business. solutions, main the cloud will this sharpen strategic on we As maintain priorities focus for our X

priorities As are expand to: and new anchor deliver base; a protect and those global features. our reminder, grow customer subscribers; two, three, one,

another as and XX% X relationship of year-over-year As our over grow through moment anniversary growth. XX-year our contract recognize I for to successful we by subscriber Verizon, significant a agreement finalized to demonstrated ago, efforts we renew in just mentioned years protect XXXX. with July, were a QX, our the subscribers extension again In

and continued growth been And Personal stage opportunities to preserves extended been sets strong Verizon. Synchronoss previously agreement with that the Verizon's provide for and adoption global value priority. customer a offerings in decade, it as providers product leads Synchronoss Verizon our trust. terms their continues me commercial to Verizon our can base, we significant to which had subscribers, has well a work service serves for instrumental to The partnership strategic our subscribers. the for Cloud and a the recent enhancements. This fostering second as over partnership in mutual that by deliver And place strong highlights leveraging expand study we case

reflects X, launch November newest extends APAC our customer. Synchronoss worth of milestone personal a Anshin of of we On SoftBank, Cloud Japan. preparations more presence cloud SoftBank's an important our launch reached via year's Box The X with giant Data Personal Tier the the service cloud in and than telecom

element the a partner an strategic model. cloud-only The is in addition as new SoftBank important of

customers revenue that subscriber significant with brands. many provides SoftBank across base a million potential its exceeds XXX

to Box Data files Japanese appropriately market. and of our the stored up other on means Anshin, videos restore captures back secure peace the mind, and customers solution which and and phones the Anshin in photos, needs while offers and of content mobile conforming Japanese ability protected precious treatment local devices. of digital to of nature the its

Notably, delivering of leveraging product the essential and essence new encouraged SoftBank's digital footprint X,XXX-store their to that across Synchronoss We're exemplify commitment modern artificial the cloud our functionality, features by this through partnership channels, integrates the Cloud. retail intelligent country. the their

is completed but and well initial we've our just of post Given we're expectations. information launch, receiving week very first about reception ahead the preliminary our consumer encouraging

under see has exercised within an ramp that continuing as AT&T over updates to their additional retail for base. count great cloud in time and customer we're existing a our us, increase been for point-of-sale to they year efforts also partner an agreement. Moving noted subscriber their other extension I AT&T channels.

to features. to deliver improvements and expanded continued backup content both performance priority, final we designed to our make recipes, our which AI curated of improve which In are to to Moving third anchor is engagement. key months, recent user and

recent improvements of performance, management successful our and of in integration were customer Additionally, Collectively, ultimately boost we earlier these systems. Synchronoss provisioning available drive capabilities year, were in deployment. these enhance while engagement continued enhanced with SoftBank that these provisioning And introduced set an for adoption allows simplification operator APIs subscription of key the Cloud. instrumental internal and APIs help

Our us growth beyond. consistent performance well leaves third positioned in quarter and for XXXX

sustained of and substantial continue AT&T we growth. the partners of demonstrate to further long-standing Tier SoftBank. addition anticipate Verizon X expansion with Our And

Moving and contributed these to In the revenue. collectively NetworkX. businesses of QX, XX% updates with Messaging total

NetworkX delays quarter. the Messaging contracts led revenue in period, key the both to experienced and in that During lower-than-expected total performance

We both network as media The strategic they a of communications of growth partner QX noncore the that these in basis divest profile focus some these low decision of the right and Lumine on their for software that to companies. to flat Group of businesses was evident was assets. businesses leading the the future our of provides believe to building shepherd

businesses, well In businesses fit. and Messaging NetworkX these and are they fine fit therefore, our digital or

and employees, for transition Going forward, agreed we Group to a provide seamless system into comprehensive transition ensure these to operations have mutually Lumine businesses portfolio. are as services customers the integrated

positioning marks culmination streamlined, solutions our evolution multiyear as business, Synchronoss transaction the and this a high-margin focused cloud-centric for of closing, In a provider.

Over the resulting strategy, expansion. as and past our Cloud well within embraced X consistent as growth cloud-first in business we've a cash facilitating years, subscriber global customer

its profitable foundation than X-year the enjoy into margins of visibility Synchronoss with subscriber Today, which incremental cloud more solid business XX%, of highly SaaS and future greater has at than least revenue expansion on secured with a a terms. us We upon contracts giving to under strong XX% build.

committed operating NetworkX, business sale will evaluating remains management performance be stockholders. of potential team the our on Following maximizing the Cloud value the maximize and and to all focused to for Messaging of our avenues

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

Lou Ferraro

mixed our third comments of for before quarter, high-level few a in and million. share met We year-over-year results. I'll EBITDA with NetworkX. revenue and results full in objectives cloud, our of getting by including we Jeff. delivered you, the QX, offset still $X.X Thank of weakness cash a strength adjusted flow readout free profitability growth XX% continued into Messaging In

the facilitated with us will the of Lumine structure superior the unlock business. our Cloud capital and Additionally, to enable transaction profile improvement to Group financial the stand-alone has

consideration the We annualized near stock, of already an million a our $XX term. by estimated obligation portion $X.X the approximately pay have down upfront to in million preferred used reducing dividend of

our and also profile closely to Verizon model improve business. the contract, will our between of growth and have cloud invoice subscriber for growth Cloud recognition we more Separately, the Cloud revenue track alignment time over revenue updated our which growth

to our by profile approximately improve cost will stranded eliminating of million million costs, addressing. cloud $XX $XX We are already we which

all costs an forward. are remaining operate business effort as in reviewing addition, Cloud possible we as to our In going efficiently

the and XX%-plus new cash XX%-plus to in structure expect XXXX. margins flow, EBITDA improved meaningful high margins We revenue operating single-digit mid- gross should growth, produce

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

as quarter Jeff of year-over-year we XX%, approximately growth cloud double-digit achieved marking of First, mentioned. has growth, the XXth consecutive subscriber

complete. on in third X% the product, a revenue result basis in by Cloud XX% deferred revenue cloud being our revenue XX% same runoff the of of million at $XX.X from revenue as revenue of total up was mostly in XXXX. up represented period the XXXX, a of year-over-year quarter Looking

of million revenue NetworkX total customer result in XX% in contract from decision-making. up a delays Revenue quarter. of $X.X basis as down XX% was NetworkX on year-over-year of a made the

in million and Messaging as of revenue of customer in XX% the $X Messaging a of was declined year revenue quarter. decision-making. result made delays down similar up XX% last revenue from

year. revenue was This in revenue, creative revenue or of total in second recurring of due the revenue revenue operations. The the a from in XX.X% quarter cloud an XX% marks at XX.X% of recurring total and of contributions recurring to XXth period percentage revenue quarter Quarterly total of increase was increase our last of the XX.X% consecutive XXXX quarter as from greater. third

year-over-year from to changes financial our impacted non-GAAP cloud a and with to basis, greater reconciled trailing provide unbilled transparency Invoice comparable the $XX.X release in measure period. underlying This increased the third quarter. cloud in not revenue and revenue by is XX.X% million by revenue. XX.X% increased accompanying trend invoice statements revenue earnings XX-month deferred in the cloud intended the was On

serious base, and moved recognition now using to revenue a a We usage customer which on based guidance our model approach revenue have simplifies by straightforward pricing. recognition across to

associated for in September to in our SoftBank. in due from $XX.X to $XX.X in cloud the partially primarily third to revenues growth revenue million X.X% of to XXXX. the million was quarter adoption revenue services the businesses, offset third and professional The successful and financial contract the prior customer launch quarter now decline ended delays year the decision-making by decreased key XX, Turning NetworkX Messaging in period. subscriber with results Total due in

revenue $XX.X XX.X% or revenue total to result profit total of of higher of increased year XX.X% of million a the from period. concentration increased revenue. Gross $XX.X to total X.X% as or in margins the prior million cloud revenue Gross

note [indiscernible] year period. receivable prior in primarily of operations within quarter, administrative in to a the general million loss reflected was loss of quarter compared million a selling, expenses. the third The operations income in is was the $X.X from impairments Third increase and which $X.X result positive on operating

Net or loss $X.X of was year in prior [ loss the million share primarily share in net per a or $X.XX impairment. per QX million to the ] loss aforementioned to The $X.XX in period. due increase was compared $X.X

QX, XX% to or revenue XX.X% EBITDA XX.X% in noted of of previously compensation revenue attributable million million adjusted adjusted in $XX.X revenue a performance-related and margin the The $XX.X favorable or expenses. in year to reduction total increase total primarily In the period. more mix increased EBITDA from was prior

adjusted was on $XX.X million $X.X XX, compared at $X.X XXXX, XXXX. XX, XXXX, flow cash cash at Cash and XX, were Free cash $XX.X sheet. to Moving million balance September million million. million, December to equivalents flow $XX.X was the and June free and at

Based reserves projected future. additional we and any for our forthcoming do cash expect present the inflows in quarters, our capital current foreseeable the require to upon cash -- not

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

cooperating receive didn't being any of and the [indiscernible] is still request we to on the the rest refunds the currently tax the We're IRS, refunds during responding audit and with expected, As ongoing. the time, are period, additional audited.

However, we we to XXXX. those down be shares. will received our pay refund, we proceeds anticipate the tax Once use receive of the in further middle the refund to preferred

guidance. to Moving

of recent financial for our the accordingly NetworkX the as have as of strategic result sale operating long-term revised businesses, we our well -- a remainder of As Messaging sale and model. XXXX the forecast

of and and we businesses. basis, the divestiture The XXXX, quarter quarter between $XX.X Compared forma adjusted and pro to for Messaging performance revenue QX million. aforementioned a third to decrease cloud-only GAAP based XXXX million. comparable to expect the fourth revenue expect is million EBITDA on range $XX NetworkX now of we On revenue the $XX

the expect $XX We adjusted between also EBITDA now million range to $X million and fourth quarter. for

XXXX. management in and be for unadjusted on in an our operational business, performance our continued we divestiture, strong expense flow to reiterating the basis core expectation the improvements on Based Cloud cash positive are

Additionally, expiration of certain further along to cash improve existing be expect XXXX. in after cost actions, of costs, generation revenue obligations -- anticipated factoring payment significantly growth, to we the inclusive with restructuring in management flow

in Due in growth customer returning strong to to levels the high growth digit of as recent single recorded XXXX beyond. by are traction -- noted, and we launch, double-digit in Jeff before weeks, cloud quarter subscriber XXXX digits, to in delays subscriber to low moderate fourth counterbalanced double-digit slightly consistent recent expecting

deferred the which to expenses, revenue remove the million stranded The revenue includes forma expect and We EBITDA fiscal the from includes adjusted noncash million cloud to which expect in year to XXXX is plans ended basis $XXX well now going now as $XXX.X December For comparable million, restructuring-related range forward. XXXX, cloud stand-alone $XX we and million. range $X.X $XX XXXX, company $XXX XX, GAAP between as costs which of pro certain GAAP between million revenue. cloud million

XXXX, strong revenue the of margins than to expect XX% company positioning to within of to EBITDA greater the Looking rule growth, firmly in XX the on greater recognized coming rule the we than path margins the and for year, years. adjusted the XX% generate XX of gross and of

are will our flows, dividends, enable stock cash generation net over preferred of Additionally, we of further which to time. capital improvements targeting structure material

additional to call before questions. like the over turning corporate to I'd provide update one

our last common issued incorporation, of approved Board our Directors noted shares proxy to which As a amendment week, an our outstanding Synchronoss stock of in all statement would and unanimously of certificate preliminary has reverse affect the filed split of stock.

The ability which this action action taken, action whether foreseeable to us this scheduled reverse We improve and into investing future. profile the continue If that enable us reverse December. bring stock compliance beneficial by to of ensuring not will stock attract expect our company. exchange tradability this and the currently NASDAQ, further stock will to any for be equity the meeting, or is Board trading of special decision the effect We split determined [indiscernible]. a and for following split necessary the with ratio on be we for also believe our the of believe will our broader to the a

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

Operator

Thalmann. line Hickman first of with [Operator Instructions] from question comes the Our Jon Ladenburg

Jon Hickman

Can you hear me okay?

Jeffrey Miller

you. can. Thank Yes, Jon, we

Jon Hickman

impairment? on dollar the you Can tell value of What the me impairment the what was loan? that was

Jeffrey Miller

it million. Jon, approximately was $X.X

Jon Hickman

forward Okay. issues that side, revenue the $XX And is there there -- then deferred to any -- $XX on are more revenue would affect is there that million any going million? any

Jeffrey Miller

At deferred quantity are contract that. with. consideration this or would point contracts related to price a a complication were a of new we on this a a standpoint. and time, But in none of we twist at would recognition have deal that be that to in basis more much revenue to in happen, time, result our revenue point only Yes. that any Jon, If from

Jon Hickman

one then. question And then last

base, forward better to revenue all in you than your be subscriber it's going going be forecast, ability and so past? consider that much because forward would to Going cloud to the

Jeffrey Miller

absolutely. a where Jon, we of were and above when current We're cloud recurring now well revenue the in XX% Yes, business. revenue of represented quarter even our XX% situation

XXX% improve be go-forward stream. the of will a predictability our basis, will which We revenue the on of business

Operator

Aditya Capital. of line comes the question [indiscernible] next Our from with Northland

Aditya Dagaonkar

give on for some How personal is color Latimore. pipeline personal large on mobile operators behalf This the of for in many Could cloud? pipeline Aditya Mike are you the cloud?

Jeffrey Miller

a operator. now, will dozen relatively is going the are the I'd world global cycle. for sales with in constantly And discussions X time conversations candidly, operator true communication or which Tier of from, good next of that the that long say, existing Tier on operators X all on a operator right are probably We likely next around their take

Just do fruition, prepare through ago. but to conversations delighted started X full quick to years well these time we as work way we with the and launch. over a that to example, and And some cycle their SoftBank brought have then take are

Aditya Dagaonkar

from and And much expected new growth how how from much customers? customers existing rate All right. come your might of your

Jeffrey Miller

Yes. of That's revenues term response as our by covered have with are the I a with I have great because, as that should the revenue years of current our contracts subscribers. going remains that led growth of be X greater. for related to XX% a last question probably that their question. or and a them majority 'XX And vast continued and SoftBank to AT&T of even therefore, Verizon, will 'XX XXXX, into said, and

will We to but those good clients, trajectory. on a look this of business is constantly and anchor customers the growth sound, with complement very it's new additional

Operator

this time, over Miller this to concludes our turn remarks. any back now Mr. closing I'll call for At session. the question-and-answer

Jeffrey Miller

you. Thank

we efforts contributions to have I'd our to moment extra like of made the several close, organization. Before to recognize who an stakeholders outsized key take

teams thank and testing I'd Japan launch. successful the global the development, First, like SoftBank to marketing technical led for and extensive technical preparations and to that the

like also sale the that the to customers a Group, successful operated their and of preparing leaders invested served for Lumine to of I'd Messaging they business. company months our many thank and NetworkX while

especially more as to members of and to they And some success team like thank X continued of I wish their the Group. move the contributions decades. to them businesses our Synchronoss, I'd Relatedly, Messaging Lumine for for than members those NetworkX

team, past have grateful is I'm contributed journey. progress. people Finally, my like to and our instrumental commitment who and to continue drive of entire appreciation and I'd all And express our to to present. the for Synchronoss dedication our those The

future We that Synchronoss. about are the optimistic for lies ahead

delivering strong significant company to we'll We shape stockholders. and than results future, our the focused value determined are and more remain long-term to to continue recently changes we've and for we While the ever. dedicated undergone

continued back are you, to future. prosperous for poised in we for confidence you. Thank your Together, you operator, our a and company. innovative Thank

Operator

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

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

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

number statements actual and differ results could Forward-looking uncertainties, risks which a to to materially. subject of are cause

as this undertake encouraged made forward-looking result SEC recent or are XX-Q and company's description update whether any risks. does changes And in any to its are call today. review events, otherwise. made to listeners XX-K most the future these a information, company during not the obligation filings, for revise a All of including as or statements, Statements of expectations of new such

that also note such management throughout today's matters financial as non-GAAP call, adjusted EBITDA. discussed certain Please

measures Although items for cash operations describes software the the deferred GAAP does generated does non-GAAP not the it Today's release. the in reporting from to and as between company's reported non-GAAP the equate release necessarily the numbers, are periods a GAAP as derived for not differences adjusted and account capitalization revenue presents EBITDA such of or earnings development. by reconciliation

today XXXX Thank joining Technologies Conference Synchronoss us for Quarter you Earnings for Call. Third

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Synchronoss (SNCR) 7 Nov 232023 Q3 Earnings call transcript