• Revenue: $43 million, an 8% increase over the prior year period.
• Adjusted EBITDA: $12.7 million, a 37% increase from $9.2 million in the prior year period.
• Net Cash Flow: Positive for the quarter.
• Cloud Subscriber Growth: 5.1% year over year.
• Recurring Revenue: 92.2% of total revenue, up from 89.5% in the prior year period.
• Adjusted Gross Profit: $34.2 million, 79.6% of total revenue, up from $30.4 million and 76.4% of total revenue in the prior year period.
• Income from Operations: $5.5 million, improved from a loss of $3.8 million in the prior year period.
• Net Loss: $5.7 million or $0.56 per share, compared to a loss of $5.2 million or $0.53 per share in the prior year period.
• Cash and Cash Equivalents: $25.2 million as of September 30, 2024.
• Free Cash Flow: Negative $27,000, down from positive $1.1 million in the prior year period.
• Adjusted Free Cash Flow: $1.8 million, down from $3.9 million in the prior year period.
• Full Year Revenue Guidance: Revised to $172 million - $175 million, up from $170 million - $175 million.
• Full Year Adjusted Gross Margin Guidance: Revised to 77% - 78%, up from 73% - 77%.
• Full Year Recurring Revenue Guidance: Revised to 90% - 92% of total revenue, up from 85% - 90%.
• Full Year Adjusted EBITDA Guidance: Revised to $47 million - $48 million, up from $43 million - $46 million.

• Warning! GuruFocus has detected 6 Warning Signs with SNCR.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue increased by 8% year-over-year to $43 million, indicating strong financial performance.
• Adjusted EBITDA grew by 37% to $12.7 million, showcasing improved profitability.
• The company reported positive net cash flow generation and a 5.1% increase in subscriber growth year-over-year.
• A key client, SFR, renewed a three-year contract extension, strengthening long-term business relationships.
• The company successfully launched an updated version of its personal cloud platform with enhanced features, driving user engagement.

Negative Points

• Sequential revenue decline was noted, attributed to a reduction in professional services.
• Net loss increased to $5.7 million from $5.2 million in the prior year period, indicating ongoing financial challenges.
• Free cash flow declined to negative $27,000 from positive $1.1 million in the same period last year.
• The company faces delays in receiving a $28 million IRS tax refund, impacting cash flow projections.
• Interest expenses increased due to the replacement of preferred stock with a term loan, affecting financial costs.

Q & A Highlights

Q: Could you elaborate on the revenues this quarter? They were down sequentially. Was there something seasonal or out of the ordinary that accounted for this? A: Jeffrey Miller, President and CEO, explained that the only modification was a slight reduction in professional services. Recurring or subscription revenue was up over 11% year-over-year. The drop in professional services was due to the completion of the SoftBank deployment.

Q: Could you give some color on the status of the AT&T renewal? A: Jeffrey Miller stated that AT&T continues to grow robustly in their subscriber base, increasing the relevance of Synchronoss's platform. They are working well with AT&T to finalize the contract extension, expected to conclude before the end of the year.

Q: How many paying users do you have with SoftBank? A: Jeffrey Miller did not provide specific numbers but mentioned that they are measuring in the hundreds of thousands of customers. There has been consistent strong growth, and they continue to collaborate with SoftBank to expand its reach.

Q: What is the impact of the term loan financing on interest expenses? A: Louis Ferraro, CFO, noted that the term loan financing structure results in a new quarterly interest expense of $4.7 million, compared to a combined $5.1 million preferred stock dividend and interest expense in the prior quarter. They expect to benefit from falling interest rates as the financing is based on SOFR plus 550 basis points.

Q: Can you provide an update on the tax refund status? A: Louis Ferraro mentioned that they did not receive additional federal tax refunds during the period, leaving a balance of approximately $28 million. They are working with the IRS Taxpayer Advocate Service and local representatives to expedite the refund, now estimated to be received in 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.