Synacor Reports Solid First Quarter Results

  • Quarterly revenue of $29.1 million vs. $30.7 million in prior year
  • Quarterly adjusted EBITDA of $1.8 million, 10th consecutive quarter of positive results

BUFFALO, N.Y., May 7, 2013 (GLOBE NEWSWIRE) -- Synacor, Inc. (Nasdaq:SYNC), leading provider of next-gen startpages, award-winning TV Everywhere solutions, and cloud-based Identity Management (IDM) services across multiple devices for cable, satellite, telecom and consumer electronics companies, today announced its financial results for the first quarter of 2013.

"We are pleased that we delivered on our expectations for the first quarter," said Synacor CEO Ron Frankel. "I am excited about both our customer and product pipelines. From a new customer perspective, our pipeline has never been stronger, and we are beginning to invest in the requisite resources to win and deliver. We are also strengthening our positioning in the mobile space with new products we will be launching throughout this year and next. We remain confident in the long-term prospects for the company as we transition through 2013."

Q1 2013 Financial Results

Revenue : For the first quarter of 2013, total revenue was $29.1 million, compared to $30.7 million in the first quarter of 2012. Search and display advertising revenue was $24.1 million, compared to $25.8 million in the first quarter of 2012. Subscription-based revenue was $5.1 million, compared to $4.9 million in the first quarter of 2012.

Net Income: For the first quarter of 2013, net income was $0.0 million, compared to $1.2 million in the first quarter of 2012. Diluted earnings per share, or EPS, was breakeven. Net income includes stock-based compensation expense of $0.6 million, or $0.02 per share, in the first quarter of 2013, as compared to $0.6 million, or $0.02 per share, in the first quarter of 2012. The diluted EPS calculation for the first quarter of 2013 is based on 28.2 million weighted average fully diluted common shares outstanding. The diluted EPS calculation for the first quarter of 2012 was based on 26.8 million shares.

Adjusted EBITDA : For the first quarter of 2013, adjusted EBITDA, which excludes stock-based compensation expense, was $1.8 million, or 6% of revenue, compared to $3.0 million, or 10% of revenue, in the first quarter of 2012.

Key Business Metrics: For the first quarter of 2013, Synacor averaged 20.3 million unique visitors per month, compared to 21.3 million unique visitors in the first quarter of 2012. Search queries were 212 million for the first quarter of 2013, compared to 271 million in the first quarter of 2012. Advertising impressions grew 35% to 11.5 billion, compared to 8.5 billion in the first quarter of 2012.

Cash : For the first quarter of 2013, Synacor used $0.7 million in cash from operating activities, compared to generating $0.8 million in the first quarter of 2012. The company ended the first quarter of 2013 with $40.2 million in cash and cash equivalents, compared to $33.1 million at the end of the first quarter of 2012.

"With a strong balance sheet, Synacor is uniquely positioned to capitalize on our exciting new products and our rich customer pipeline," said Synacor CFO Bill Stuart. "We continue to build upon the foundation we have established and we continue to position Synacor for the long-term."

Business Outlook

Based on information available as of May 7, 2013, the company is providing financial guidance for the second quarter and fiscal 2013 as follows:
  • Q2 2013 Guidance : Revenue for the second quarter of 2013 is projected to be in the range of $26.5 million to $27.5 million. For the second quarter of 2013, the company expects to report adjusted EBITDA of $0.8 million to $1.2 million.
  • Fiscal 2013 Guidance : Revenue for the full year of 2013 is projected to be in the range of $122.0 million to $126.0 million. For the full year of 2013, the company expects to report adjusted EBITDA of $8.0 million to $10.0 million.

Conference Call Details

Synacor will host a conference call today at 5 p.m. ET to discuss the first quarter financial results with the investment community. The live webcast of Synacor's earnings conference call can be accessed http://investor.synacor.com/events.cfm. To participate, please login approximately ten minutes prior to the webcast. For those without access to the Internet, the call may be accessed toll-free via phone at (877) 837-3911, with conference ID 48715303, or callers outside the U.S. may dial (253) 237-1167. Following completion of the call, a recorded webcast replay will be available on Synacor's website through May 21, 2013. To listen to the telephone replay, call toll-free (855) 859-2056, or callers outside the U.S. may dial (404) 537-3406. The conference ID is 48715303.

About Synacor

Synacor's white-label platform enables cable, satellite, telecom and consumer electronics companies to deliver TV Everywhere, digital entertainment, cloud-based services and apps to their end-consumers across multiple devices, strengthening those relationships while monetizing the engagement. Synacor (Nasdaq:SYNC), is headquartered in Buffalo, NY. For more information, visit synacor.com. Integrate. Authenticate. Engage.

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP).

We report adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

For a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the table "Reconciliation of GAAP to Non-GAAP Measures" in this press release.

Safe Harbor Statement

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements concerning Synacor's expected financial performance (including, without limitation, statements and information in the Business Outlook section and the quotations from management), as well as Synacor's strategic and operational plans. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company's results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include - but are not limited to - risks associated with: execution of our plans and strategies; the loss of a significant customer; expectations regarding consumer taste and user adoption of applications and solutions; developments in Internet browser software and search advertising technologies; general economic conditions; expectations regarding the company's ability to timely expand the breadth of services and products or introduction of new services and products; consolidation within the cable and telecommunications industries; changes in the competitive dynamics in the market for online search and display advertising; the risk that security measures could be breached and unauthorized access to subscriber data could be obtained; potential third party intellectual property infringement claims; and the price volatility of our common stock.

Further information on these and other factors that could affect the company's financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" in the company's most recent Form 10-K filed with the SEC on March 26, 2013. These documents are available on the SEC Filings section of the Investor Information section of the company's website at  http://investor.synacor.com/. All information provided in this release and in the attachments is available as of May 7, 2013, and Synacor undertakes no duty to update this information.

The Synacor logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11609
 
Synacor, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
  As of As of
  December 31, March 31,
  2012 2013
Assets    
Current assets:    
 Cash and cash equivalents  $ 41,944  $ 40,156
 Accounts receivable, net  15,624  14,548
 Deferred income taxes  1,999  1,987
 Prepaid expenses and other current assets  1,831  2,140
 Total current assets  61,398  58,831
Property and equipment, net  11,043  11,083
Deferred income taxes, non-current  2,527  2,527
Other long-term assets  543  503
Goodwill  819  819
Total Assets  $ 76,330  $ 73,763
     
Liabilities and Stockholders' Equity    
Current liabilities:    
 Accounts payable  $ 14,204  $ 12,673
 Accrued expenses and other current liabilities  7,328  6,180
 Current portion of capital lease obligations  2,127  1,989
 Total current liabilities  23,659  20,842
Long-term portion of capital lease obligation  1,712  1,246
Other long-term liabilities  148  164
Total Liabilities  25,519  22,252
     
Stockholders' Equity:    
 Common stock  275  276
 Treasury stock  (569)  (569)
 Additional paid-in capital  99,449  100,115
 Accumulated deficit  (48,338)  (48,311)
 Accumulated other comprehensive income  (6)  --
Total stockholders' equity  50,811  51,511
Total liabilities and stockholders' equity  $ 76,330  $ 73,763
 
Synacor, Inc. 
Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)
     
  Three months ended
  March 31,
  2012 2013
     
Revenue  $ 30,670  $ 29,143
Costs and operating expenses:    
 Cost of revenue (1)  16,764  15,764
 Research and development (1)(2)  6,288  6,865
 Sales and marketing (2)  2,377  2,130
 General and administrative (1)(2)  2,840  3,144
 Depreciation  781  1,130
 Total costs and operating expenses  29,050  29,033
Income from operations  1,620  110
Other expense  --  (7)
Interest expense  (47)  (58)
Income before income taxes  1,573  45
Provision for income taxes  399  18
Net income  $ 1,174  $ 27
Net income per share:    
 Basic  $ 0.07  $ --
 Diluted  $ 0.04  $ --
Weighted average shares used to compute net income per share:    
 Basic  16,603,579  27,236,186
 Diluted  26,778,455  28,233,297
     
Notes:    
(1) Exclusive of depreciation shown separately.
(2) Includes stock-based compensation as follows:
  Three months ended
  March 31,
  2012 2013
 Research and development  $ 107  $ 261
 Sales and marketing  74  76
 General and administrative  377  225
   $ 558  $ 562
 
Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
     
  Three months ended
  March 31, 
  2012 2013
Cash Flows from Operating Activities:    
Net income  $ 1,174  $ 27
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation   781  1,130
Stock-based compensation expense   558  562
Deferred income taxes  395  12
Change in assets and liabilities net of effect of acquisition:    
Accounts receivable, net   (781)  1,076
Prepaid expenses and other current assets   (534)  (309)
Other long-term assets   123  40
Accounts payable   236  (1,427)
Accrued expenses and other current liabilities   (1,232)  (1,873)
Other long-term liabilities   33  16
Net cash provided by (used in) operating activities   753  (746)
     
Cash Flows from Investing Activities:    
Purchases of property and equipment  (879)  (544)
Cash paid for business acquisition  (600)  --
Net cash used in investing activities   (1,479)  (544)
     
Cash Flows from Financing Activities:    
Repayment on bank financing   (125)  --
Repayments on capital lease obligations   (402)  (604)
Proceeds from exercise of common stock options   559  100
Proceeds from initial public offering  25,364  --
Initial public offering costs  (2,475)  --
Net cash provided by (used in) financing activities   22,921  (504)
Effect of exchange rate changes on cash and cash equivalents  --  6
Net Increase (Decrease) in Cash and Cash Equivalents  22,195  (1,788)
Cash and Cash Equivalents at beginning of period  10,925  41,944
Cash and Cash Equivalents at end of period  $ 33,120  $ 40,156
 
Synacor, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands) (Unaudited)
     
The following table presents a reconciliation of net income to adjusted EBITDA for each of the periods indicated:
     
  Three months ended
  March 31,
  2012 2013
     
Reconciliation of Adjusted EBITDA:    
 Net income  $ 1,174  $ 27
 Provision for income taxes  399  18
 Interest expense  47  58
 Other expense   --  7
 Depreciation  781  1,130
 Stock-based compensation  558  562
 Adjusted EBITDA  $ 2,959  $ 1,802
 
Synacor, Inc.
Key Business Metrics
(Unaudited)
       
    Three months ended
    March 31, 
    2012 2013
       
Key Business Metrics:    
Unique Visitors (1)  21,293,075  20,260,966
Search Queries (2)  270,777,789  211,644,797
Advertising Impressions (3)  8,485,227,382  11,483,034,070
       
Notes:      
(1) Reflects the number of unique visitors to our customers' websites computed on an average monthly basis during the applicable period, as measured by comScore.
(2) Reflects the total number of search queries during the applicable period, as reported by Google.
(3) Reflects the total number of advertising impressions during the applicable period, as reported by DoubleClick and other partners.
CONTACT: Investor Contact:         Denise Garcia, SVP         ICR         ir@synacor.com         716-362-3309                  Press Contact:         Meredith Roth, VP, Corporate Communications         mroth@synacor.com         646-380-5141

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