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Synacor Beats Q1 2016 Guidance, Grows Margins, Wins AT&T Contract, Sets $300 Million Revenue Target

  • Revenue of $30.3 million and adjusted EBITDA of $1.5 million, exceeds Q1 2016 guidance
  • Delivers 13% year-over-year growth in Revenue, and 17% growth in adjusted EBITDA
  • Announces plan to achieve $300 million in Revenue and $30 million in adjusted EBITDA in 3 years (2019)

BUFFALO, N.Y., May 10, 2016 (GLOBE NEWSWIRE) -- Synacor Inc. (SYNC), the trusted multiscreen technology and monetization partner for video, internet and communications providers, device manufacturers, and enterprises, today announced its financial results for the quarter ended March 31, 2016.

“We begin 2016 with another successful quarter for Synacor - delivering significant year-over-year growth, expanding margins, and achieving several important milestones,” said Synacor CEO Himesh Bhise. “We are honored to have been selected from among the many contenders to provide AT&T with portal services. In addition, we continue to make strong progress in adding and renewing customers to our portal, advertising, email, and video platforms.”

“In less than two years, Synacor has undergone a massive transformation that has positioned us to compete effectively in several high-growth digital markets. Today, we have an enviable global customer base, a compelling and broad portfolio of products, and an advertising platform at scale. Our new contract win with AT&T is not only validation of our transformation, but is also an indicator and accelerator of our future growth and underpins our confidence to achieve our new long-term financial target of $300 million in revenue and $30 million in adjusted EBITDA in 2019,” Bhise continued.

Recent Highlights

  • Signed a multi-year portal services agreement with AT&T, which is expected to reach approximately $100 million of annual revenues after full product deployment is achieved in 2017
  • Introduced a new “Path to 3/30/300” financial plan targeting annual revenue of $300 million and adjusted EBITDA of $30 million in 2019
  • Closed on the acquisition of digital advertising pioneer Technorati, providing a leading programmatic advertising platform to Synacor
  • Added and renewed customers: deployed Cloud ID for a prominent fiber ISP, executed a three-year email renewal with a major service provider, expanded the relationship with K-Opticom, and migrated the Markas Besar Polri, Indonesia's police force, to the Zimbra email collaboration platform.

Q1 2016 Financial Results

Revenue: For the first quarter of 2016, total revenue was $30.3 million, an increase of 13% compared with $26.7 million in the first quarter of 2015. Recurring and fee-based revenue represented 43% of total Revenue, and grew 113% compared with the first quarter of 2015.

Adjusted EBITDA: For the first quarter of 2016, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which excludes stock-based compensation expense, was $1.5 million, or 4.9% of revenue, compared with $1.3 million, or 4.7% of revenue, for the first quarter of 2015.

Net Income: For the first quarter of 2016, higher depreciation and amortization costs associated with the intellectual property acquired from Zimbra and investments in the Company’s next-generation portal resulted in net loss of $1.6 million, compared with net loss of $1.1 million in the first quarter of 2015. First-quarter earnings per share was a loss of $0.05 compared with a loss of $0.04 in the same period last year

Cash: Cash generated by operating activities was $3.9 million for the first quarter of 2016, compared with $2.2 million generated by operating activities in the same period of the prior year. First quarter 2016 operating cash flows funded both the Company’s $2.5 million Technorati acquisition and the necessary expenditures to win the AT&T portal services contract. The Company ended the first quarter of 2016 with $15.7 million in cash and cash equivalents, which is slightly higher than the end of the prior quarter.

Guidance

Based on information available as of May 10, 2016, the company is providing financial guidance for the second quarter and fiscal 2016. Adjusted EBITDA guidance for the second quarter and fiscal year 2016 reflects a planned $10 million investment over the next 12 months to deploy portal services for AT&T.

  • Long-Term Target: The Company introduced a new “Path to 3/30/300” financial plan targeting annual revenue of $300 million and adjusted EBITDA of $30 million in three years (2019).

  • Q2 2016 Guidance: Revenue for the second quarter of 2016 is projected to be in the range of $29.0...

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