The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Business Wire

Synchronoss Technologies, Inc. Announces Fourth Quarter and Full Year 2011 Financial Results

<ul> <li class='bwlistitemmargb'> <i>Fourth quarter non-GAAP total revenue of $62.3 million increases 22% year-over-year</i> </li> <li class='bwlistitemmargb'> <i>Fourth quarter non-GAAP operating income of $15.9 million increases 38% year-over-year and represents 25% non-GAAP operating margin</i> </li> <li class='bwlistitemmargb'> <i>Fourth quarter non-GAAP EPS was $0.34, which was $0.05 above the high-end of guidance after adjusting for a lower than expected tax rate</i> </li> <li class='bwlistitemmargb'> <i>Strong connected device volumes and automation rates drive year-end results</i> </li> </ul>

Tuesday, February 07, 2012

Synchronoss Technologies, Inc. Announces Fourth Quarter and Full Year 2011 Financial Results16:01 EST Tuesday, February 07, 2012 BRIDGEWATER, N.J. (Business Wire) -- Synchronoss Technologies, Inc. (NASDAQ: SNCR), the world's leading provider of transaction management, cloud enablement and connectivity services for connected devices, today announced financial results for the fourth quarter and full year of 2011. “The fourth quarter was highlighted by revenue and profitability that exceeded our expectations, and it was a strong finish to a record year for Synchronoss,” said Stephen G. Waldis, Founder and Chief Executive Officer of Synchronoss. “We experienced strong transaction volumes related to smartphones and connected devices which led to increased automation rates and much stronger than expected profitability. The fourth quarter provided evidence of the operating leverage created by our connect-synch-activate strategy, and we believe it positions us well to scale our business model as we focus on expanding our on-device presence to hundreds of millions of connected devices in the years ahead.” For the fourth quarter of 2011, Synchronoss reported net revenues of $62.2 million on a GAAP basis, representing an increase of 26% compared to the fourth quarter of 2010. Gross profit was $33.8 million and income from operations was $7.0 million in the fourth quarter of 2011. GAAP net income applicable to common stock was $8.2 million, leading to GAAP diluted earnings per share of $0.21, compared to a GAAP net loss per share of ($0.09) for the fourth quarter of 2010. Synchronoss reported non-GAAP net revenues, which adds back the purchase accounting adjustment related to FusionOne's revenues, of $62.3 million, an increase of 22% compared to the fourth quarter of 2010. Non-GAAP gross profit for the fourth quarter of 2011 was $35.4 million, representing a gross margin of 56.8%. Non-GAAP income from operations was $15.9 million in the fourth quarter of 2011, representing a year-over-year increase of 38% and an operating margin of 25.5%. Non-GAAP net income was $13.3 million in the fourth quarter of 2011, leading to diluted earnings per share of $0.34, an increase compared to $0.21 for the fourth quarter of 2010. Non-GAAP diluted earnings per share for the fourth quarter of 2011 was $0.11 above the high end of company guidance, with $0.06 due to a lower than expected tax rate and $0.05 driven by the combination of higher revenue, higher automation rates and prudent expense management. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Lawrence R. Irving, Chief Financial Officer and Treasurer, said “Synchronoss delivered meaningful improvement in gross margins during 2011. While there is an upfront cost associated with the continued build out of our ConvergenceNow® Plus+ platform, we believe that there is an upward bias to our long-term gross margin as we leverage our growing on-device presence to deliver an increasing number of highly automated, cloud-based services.” Other Fourth Quarter and Recent Business Highlights: Business outside of the AT&T relationship accounted for approximately $29.8 million of non-GAAP revenue, representing approximately 48% of total revenue. Verizon Wireless remained the largest contributor to Synchronoss' business outside of AT&T, representing over 10% of Synchronoss' revenue for the quarter. Business related to AT&T accounted for approximately $32.5 million of non-GAAP revenue, representing the other 52% of total revenue. Acquired privately-held Miyowa S.A. during December 2011. As a leading provider of social network and messaging software for mobile devices, Miyowa integrates well with Synchronoss' ConvergenceNow® Plus+™ strategy by incorporating the network address book with social networking. Miyowa also expands our presence in Europe to help manage and drive anticipated growth in that region of the world with Vodafone, Orange and other customers. Announced that Robert Garcia was promoted from Chief Operating Officer to President, where he is responsible for the company's day to day business and operating plans. David Berry re-joined Synchronoss in the position of Chief Innovation Officer, where he is focused on further developing the Synchronoss brand and product portfolio assisting in global growth and innovation. Karen Rosenberger was promoted to Senior Vice President of Finance and Chief Accounting Officer, following her role as the company's Vice President of Finance and Controller. Andrew Wilmott was promoted to Senior Vice President of Service Delivery and General Manager, following his role as the company's Vice President and General Manager, Service Delivery. Full Year 2011 Summary Financial Results On a GAAP basis, revenues for the full year 2011 were $229.1 million, an increase of 38% compared to $166.0 million in the prior year. Gross profit was $122.5 million for 2011. Income from operations was $18.4 million and net income was $15.1 million, leading to 2011 diluted earnings per share of $0.43. On a Non-GAAP basis, revenues for 2011 were $230.5 million, an increase of 35% compared to $170.2 million in the prior year. Gross profit for 2011 was $129.3 million, and gross margin was 56.1%, an increase from 53.6% for 2010. Income from operations was $52.7 million for 2011, an increase of 44% compared to 2010. Operating margin for 2011 was 22.9%, an increase from 21.6% for 2010. Net income was $38.0 million for 2011, leading to diluted earnings per share of $0.98, an increase of 40% from $0.70 in the prior year. Conference Call Details In conjunction with this announcement, Synchronoss will host a conference call on Tuesday, February 7, 2012, at 4:30 p.m. (ET) to discuss the company's financial results. To access this call, dial 866-730-5768 (domestic) or 857-350-1592 (international). The pass code for the call is 69156099. Additionally, a live web cast of the conference call will be available on the “Investor Relations” page on the company's web site, www.synchronoss.com. Following the conference call, a replay will be available at 888-286-8010 (domestic) or 617-801-6888 (international). The replay pass code is 97901267. An archived web cast of this conference call will also be available on the “Investor Relations” page of the company's web site, www.synchronoss.com. Non-GAAP Financial Measures Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP. This information includes historical non-GAAP revenues, gross profit, operating income, net income, effective tax rate, earnings per share and cash flows from operating activities. Synchronoss uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Synchronoss' ongoing operational performance. Synchronoss believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Synchronoss' industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above add back the deferred revenue write-down associated with FusionOne acquisition, fair value stock-based compensation expense, acquisition-related costs, changes in the contingent consideration obligation, deferred compensation expense related to earn outs and amortization of intangibles associated with acquisitions. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures as detailed above. As previously mentioned, a reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. About Synchronoss Technologies, Inc. Synchronoss Technologies (NASDAQ: SNCR) is the world's leading provider of transaction management, cloud enablement and connectivity services for connected devices. The company's technology platforms ensure a simple and seamless on-demand channel for service providers and their customers. For more information visit us at: Web: www.synchronoss.com Blog: http://blog.synchronoss.com Twitter: http://twitter.com/synchronoss Forward-looking Statements This document may include certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," “outlook” or words of similar meanings. These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption "Risk Factors" in Synchronoss' Annual Report on Form 10-K for the year ended December 31, 2010 and other documents filed with the U.S. Securities and Exchange Commission. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. Synchronoss does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. The Synchronoss logo, Synchronoss, ConvergenceNow, InterconnectNow, ConvergenceNow Plus+ and SmartMobility are trademarks of Synchronoss Technologies, Inc. All other trademarks are property of their respective owners.           SYNCHRONOSS TECHNOLOGIES, INC.BALANCE SHEETS(in thousands, except per share data)(Unaudited)   December 31,2011December 31,2010   ASSETS Current assets: Cash and cash equivalents $ 69,430 $ 180,367 Marketable securities 51,504 1,766 Accounts receivable, net of allowance for doubtful accounts of $356 and $558 at December 31, 2011 and 2010, respectively   57,387 34,940 Prepaid expenses and other assets 16,061 8,606 Deferred tax assets   3,938     3,272     Total current assets 198,320 228,951 Marketable securities 31,642 7,502 Property and equipment, net 34,969 32,622 Goodwill 54,617 19,063 Intangible assets, net 63,969 33,231 Deferred tax assets 12,606 16,432 Other assets   2,495     2,598     Total assets $ 398,618   $ 340,399       LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,712 $ 7,013 Accrued expenses 24,153 12,999 Deferred revenues 8,834 5,143 Contingent consideration obligation   4,735     —     Total current liabilities 45,434 25,155 Lease financing obligation - long term 9,241 9,205 Contingent consideration obligation - long-term 8,432 16,915 Other liabilities 948 1,101 Stockholders' equity: Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at December 31, 2011 and 2010, respectively — — Common stock, $0.0001 par value; 100,000 shares authorized, 41,063 and 38,863 shares issued; 38,394 and 36,863 outstanding at December 31, 2011 and 2010, respectively 4 4 Treasury stock, at cost (2,669 and 2,000 shares at December 31, 2011 and 2010, respectively) (43,712 ) (23,713 ) Additional paid-in capital 307,586 255,656 Accumulated other comprehensive loss (699 ) (182 ) Retained earnings   71,384     56,258     Total stockholders' equity   334,563     288,023     Total liabilities and stockholders' equity $ 398,618   $ 340,399                           SYNCHRONOSS TECHNOLOGIES, INC.STATEMENT OF INCOME(in thousands, except per share data)(Unaudited)   Three Months EndedDecember 31,Twelve Months EndedDecember 31,   2011201020112010     Net revenues $ 62,151 $ 49,232 $ 229,084 $ 165,969 Costs and expenses: Cost of services (2)(3)(4)* 28,325 23,579 106,595 83,217 Research and development (2)(3)(4) 10,504 9,248 41,541 26,008 Selling, general and administrative (2)(3)(4) 12,973 10,433 44,886 33,743 Net change in contingent consideration obligation (357 ) 6,263 2,954 4,295 Depreciation and amortization   3,710     2,945     14,739     9,403     Total costs and expenses   55,155     52,468     210,715     156,666     Income (loss) from operations 6,996 (3,236 ) 18,369 9,303 Interest and other income 896 118 1,810 1,058 Interest and other expense   (845 )   (355 )   (1,820 )   (1,264 )   Income (loss) before income tax expense 7,047 (3,473 ) 18,359 9,097 Income tax benefit (expense)   1,161     (481 )   (3,233 )   (5,223 )   Net income (loss) $ 8,208   $ (3,954 ) $ 15,126   $ 3,874       Net income (loss) per common share: Basic (1) $ 0.22   $ (0.09 ) $ 0.44   $ 0.12   Diluted (1) $ 0.21   $ (0.09 ) $ 0.43   $ 0.12       Weighted-average common shares outstanding: Basic   37,683     34,048     37,372     31,971   Diluted   38,755     34,048     38,619     33,011     * Cost of services excludes depreciation which is shown separately.   (1) Adjustment to net income (loss) for equity mark-to-market on contingent consideration obligation: Net income (loss) $ 8,208 $ (3,954 ) $ 15,126 $ 3,874 Income effect for equity mark-to-market on contingent consideration obligation, net of tax   -     864     1,466     (10 )   Net income (loss) applicable to shares of common stock for earnings per share $ 8,208   $ (3,090 ) $ 16,592   $ 3,864       (2) Amounts include fair value stock-based compensation as follows: Cost of services $ 1,308 $ 1,238 $ 4,981 $ 4,057 Research and development 1,579 619 4,510 1,950 Selling, general and administrative   2,725     2,351     11,236     6,965     Total fair value stock-based compensation expense $ 5,612   $ 4,208   $ 20,727   $ 12,972       (3) Amounts include acquisition and restructuring costs as follows: Cost of services $ - $ - $ 15 $ - Research and development - 211 253 344 Selling, general and administrative   2,149     278     2,491     3,196     Total acquisition and restructuring costs $ 2,149   $ 489   $ 2,759   $ 3,540       (4) Amounts include fair value earn-out cash and stock compensation as follows: Cost of services $ 82 $ 77 $ 432 $ 81 Research and development 264 577 1,023 606 Selling, general and administrative   303     455     2,448     477     Total fair value earn-out cash and stock compensation expense $ 649   $ 1,109   $ 3,903   $ 1,164       SYNCHRONOSS TECHNOLOGIES, INC.Reconciliation of GAAP to Non-GAAP Financial Measures(in thousands, except per share data)(Unaudited)   Three Months EndedDecember 31,Twelve Months EndedDecember 31,   2011201020112010     Non-GAAP financial measures and reconciliation:   GAAP Revenue $ 62,151 $ 49,232 $ 229,084 $ 165,969 Add: Deferred Revenue Write-Down   150     1,968     1,387     4,277     Non-GAAP Revenue $ 62,301   $ 51,200   $ 230,471   $ 170,246       GAAP Revenue $ 62,151 $ 49,232 $ 229,084 $ 165,969 Less: Cost of Services   28,325     23,579     106,595     83,217     GAAP Gross Margin 33,826 25,653 122,489 82,752   Add: Deferred revenue write-down 150 1,968 1,387 4,277 Add: Fair value stock-based compensation 1,308 1,238 4,981 4,057 Add: Acquisition and restructuring costs - - 15 - Add: Deferred compensation expense - earn-out   82     77     432     81     Non-GAAP Gross Margin $ 35,366   $ 28,936   $ 129,304   $ 91,167     Non-GAAP Gross Margin % 57 % 57 % 56 % 54 %   GAAP income (loss) from operations $ 6,996 $ (3,236 ) $ 18,369 $ 9,303 Add: Deferred revenue write-down 150 1,968 1,387 4,277 Add: Fair value stock-based compensation 5,612 4,208 20,727 12,972 Add: Acquisition and restructuring costs 2,149 489 2,759 3,540 Add: Net change in contingent consideration obligation (357 ) 6,263 2,954 4,295 Add: Deferred compensation expense - earn-out 649 1,109 3,903 1,164 Add: Amortization expense   660     660     2,640     1,185     Non-GAAP income from operations $ 15,859   $ 11,461   $ 52,739   $ 36,736     Non-GAAP income from operations % 25 % 22 % 23 % 22 %   GAAP net income (loss) attributable to common stockholders $ 8,208 $ (3,954 ) $ 15,126 $ 3,874 Add: Deferred revenue write-down, net of tax 61 1,555 922 2,987 Add: Fair value stock-based compensation, net of tax 3,253 3,625 13,773 9,058 Add: Acquisition and restructuring costs, net of taxes 1,409 580 1,833 2,472 Add: Net change in contingent consideration obligation, net of tax (341 ) 4,219 1,963 2,999 Add: Deferred compensation expense - earn-out, net of tax 330 779 2,594 813 Add: Amortization expense, net of tax   376     502     1,754     827     Non-GAAP net income $ 13,296   $ 7,306   $ 37,965   $ 23,030     Diluted non-GAAP net income per share $ 0.34   $ 0.21   $ 0.98   $ 0.70           Weighted shares outstanding - Diluted   38,755     35,571     38,619     33,011                 SYNCHRONOSS TECHNOLOGIES, INC.STATEMENT OF CASH FLOWS(in thousands)(Unaudited)   Twelve Months Ended December 31,20112010   Operating activities: Net income $ 15,126 $ 3,874 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 14,739 9,403 Loss on disposal of fixed assets — 94 Proceeds from insurance claim 622 — Amortization of bond premium (199 ) (418 ) Deferred income taxes (642 ) 69 Non-cash interest on leased facility 918 913 Stock-based compensation 22,051 13,637 Changes in operating assets and liabilities: - Accounts receivable, net of allowance for doubtful accounts (19,409 ) (8,740 ) Prepaid expenses and other current assets 597 (1,927 ) Other assets (349 ) (1,695 ) Accounts payable and accrued expenses 7,695 5,678 Contingent consideration obligation 2,188 4,795 Excess tax benefit from the exercise of stock options (3,575 ) (2,361 ) Other liabilities (183 ) (228 ) Deferred revenues   3,006     (1,352 )   Net cash provided by operating activities 42,585 21,742   Investing activities: Purchases of fixed assets (14,732 ) (15,423 ) Proceeds from the sale of fixed assets — 55 Proceeds from insurance claim 199 418 Purchases of marketable securities available-for-sale (82,098 ) (4,723 ) Maturity of marketable securities available-for-sale 7,259 3,230 Business acquired, net of cash   (55,752 )   (30,779 )   Net cash used in investing activities (145,124 ) (47,222 )   Financing activities: Proceeds from the exercise of stock options 17,707 8,090 Payments on contingent consideration (8,533 ) — Proceeds from secondary public offering, net of offering costs — 106,637 Excess tax benefit from the exercise of stock options 3,576 2,361 Repurchase of common stock (19,999 ) — Payments on capital obligations   (945 )   (949 )   Net cash (used in) provided by financing activities   (8,194 )   116,139     Effect of exchange rate changes on cash   (204 )   (216 )   Net decrease in cash and cash equivalents (110,937 ) 90,443 Cash and cash equivalents at beginning of year   180,367     89,924     Cash and cash equivalents at end of period $ 69,430   $ 180,367       SYNCHRONOSS TECHNOLOGIES, INC.Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities(in thousands)(Unaudited)   Twelve Months Ended December 31,20112010     Non-GAAP cash provided by operating activities and reconciliation:   Net cash provided by operating activities (GAAP) $ 42,585 $ 21,742 Add: Tax benefits from stock options exercised 3,575 2,361 Add: Cash payments on settlement of Earn-out   3,026     —     Adjusted cash flow provided by operating activities (Non-GAAP) $ 49,186   $ 24,103   Synchronoss Technologies, Inc.Investor:Tim Dolan, 617-956-6727investor@synchronoss.comorMedia:Stacie Hiras, 908-547-1260Stacie.hiras@synchronoss.com