Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Synchronoss Technologies Reports Third Quarter 2022 Results By: Synchronoss Technologies, Inc. via GlobeNewswire November 08, 2022 at 16:05 PM EST Operating Income of $1.3 Million Versus Loss of $10.5 Million in the Prior Year Period Adjusted Free Cash Flow of $2.8 Million in Q3 2022, a $6.6 Million Improvement from Q3 2021 Results Driven by Continued Double Digit Cloud Subscriber Growth of 15% Year-Over-Year and Invoiced Cloud Revenue Growth of 7% Company Reaffirms EBITDA Guidance, Revises Revenue Guidance Range to Between $253 Million to $260 Million BRIDGEWATER, N.J., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Synchronoss Technologies Inc. (“Synchronoss” or the “Company”) (Nasdaq: SNCR), a global leader and innovator in cloud, messaging, and digital products and platforms, today reported financial results for its third quarter ended September 30, 2022. Third Quarter and Recent Operational Highlights: Announced 15% year-over-year Cloud subscriber growth for the third quarter of 2022. The tenth consecutive quarter of double-digit subscriber growth has been driven by the continued adoption of the Company’s Personal Cloud product by its customers’ subscribers, including Verizon and AT&T.Extended current Cloud agreement with AT&T for an additional option year through the end of 2023. The extension enables AT&T to continue utilizing Synchronoss Personal Cloud to power its AT&T Personal Cloud offering with no changes to the commercial terms.Consolidated user content to Verizon’s Private Storage infrastructure, allowing for more efficient management of all digital content on the Synchronoss Personal Cloud platform for Verizon customers. This consolidation also enables Synchronoss to more fully focus on developing new features and functionality, while simultaneously eliminating its investment into hosting petabytes of costly storage infrastructure going forward. Critically, this consolidation will enable functionality that will utilize the increased speed, reduced latency, and scalability of Verizon’s 5G network and next-generation storage infrastructure.Signed a Letter of Intent with a tier one global operator and began work to launch a new personal cloud solution in 2023. The carrier will provide access to an extensive mobile subscriber base, which is predominantly postpaid in nature. The new customer launch will begin contributing professional services revenues in Q4 2022 and is forecasted to deliver more than $50 million over the term of the relationship.Appointed Louis (“Lou”) Ferraro, Jr. as Chief Financial Officer, effective November 3. Ferraro had been serving as acting CFO since August and has been with Synchronoss since 2018. Synchronoss also appointed Mina Lackner as Chief Human Resources Officer, further expanding and improving the composition of its senior leadership team in two key areas. Management Commentary“In Q3, we took proactive steps to preserve our profitability and cash flow generation,” said Jeff Miller, President and CEO of Synchronoss. “Our successful actions resulted in positive income from operations and adjusted free cash flow, which improved nearly $11.8 million and $6.6 million, respectively, on a year-over-year basis. Further, we are encouraged by the continued strength of our cloud subscriber growth and invoiced Cloud revenue growth during the quarter, increasing 15% and 7%, respectively, during the period, highlighting the underlying strength of our cloud-first strategy. “We extended our Cloud agreement with AT&T, marked the next chapter of our long-standing relationship with Verizon with an agreement to leverage their private storage infrastructure and signed an LOI with a global tier one operator under which we began work to launch their new cloud solution next year. Additionally, we extended agreements with two prominent Italian customers that have relied on Synchronoss solutions for over 20 years, respectively. Our solutions are becoming more relevant and essential to a large and growing market supported by global 5G adoptions and other major technology evolutions. While we recognize there is still much work to be done, the fundamentals of our business remain solid, and our cloud-first strategy is on the trajectory to deliver high-growth, recurring revenue, and cash generative capabilities.” Key Performance Indicators ("KPIs"): Cloud subscriber growth of 15% continued the Company’s ongoing performance of year-over-year double-digit subscriber growth. Third quarter GAAP Cloud revenue decreased 11% year-over-year as a result of expected deferred revenue run-off in the current quarter as well as one-time professional services fees recorded in the prior year period.Invoiced Cloud revenue increased 6.8% year-over-year to $37.8 million in the third quarter. This non-GAAP measure is reconciled within the financial statements below. This KPI is intended to provide greater transparency in the underlying Cloud revenue trends as it is not impacted by changes in deferred and unbilled revenue.Quarterly recurring revenue was 83.7% of total revenue, a decrease from 86.6% of total revenue in the second quarter and an increase from 83.1% in the third quarter of last year.GAAP revenue breakdown by product is included below: Q3 2022 vs Q3 2021(in thousands)Q3 2022 Revenue Q3 2021 Revenue % Increase/ (Decrease) % of Total Q3 2022 RevenueCloud$38,558 $43,124 (10.6)% 64.4%Digital 9,635 14,365 (32.9)% 16.1%Messaging 11,703 12,264 (4.6)% 19.5% $59,896 $69,753 100.0% Third Quarter 2022 Financial Results:Results compare 2022 fiscal third quarter end (September 30, 2022) to 2021 fiscal third quarter end (September 30, 2021) unless otherwise indicated. Total revenue decreased 14% to $59.9 million from $69.8 million in the prior year period. The decline in revenue was a result of expected deferred revenue run-off in the current quarter, unfavorable foreign exchange impact, the Company’s divestiture of the DXP and Activation assets in the second quarter, and temporary slowdowns in purchasing activity as a result of current macroeconomic conditions. The FX impact to revenue in the third quarter totaled approximately $1.8 million due to the strength of the U.S. Dollar compared to the Euro and Japanese Yen. Negative impact from FX year-to-date has been approximately $3.9 million.Gross profit decreased 12% to $37.5 million (62.5% of total revenue) from $42.5 million (60.9% of total revenue) in the prior year period, primarily attributable to the revenue shortfall previously noted and the sale of the DXP and Activation assets. The increase in gross margin was primarily attributable to increased revenue from high-margin Cloud subscriber growth and ongoing benefits from cost saving initiatives.Income (loss) from operations was $1.3 million compared to a loss of $(10.5) million in 2021. The improvement in operating income was a result of increased high margin Cloud revenue, reduced SG&A expenses and greater efficiency of R&D resources and other cost saving initiatives.Net loss improved to $(1.3) million, or $(0.01) per share, compared to net loss of $(9.8) million, or $(0.11) per share, in the prior year period. The significant improvement in net loss was primarily attributable to operational improvements previously noted.Adjusted EBITDA (a non-GAAP metric reconciled below) decreased 7% to $11.5 million (19.1% of total revenue) from $12.3 million (17.6% of total revenue) in the prior year period. The increase in adjusted EBITDA margin was primarily attributable to the increased revenue from high-margin Cloud subscriber growth and ongoing benefits from cost saving initiatives previously noted. The decrease in adjusted EBITDA resulted from lower revenues as previously outlined.Cash and cash equivalents were $22.6 million at September 30, 2022, compared to $25.5 million at June 30, 2022 and $31.5 million at December 31, 2021. Free cash flow was $(0.7) million and adjusted free cash flow was $2.8 million. The Company did not receive additional tax refunds during the period, leaving its remaining due balance at approximately $28 million, which is expected to be paid out in the coming quarters. Financial CommentaryCFO Lou Ferraro added: “Free cash flow, on both an adjusted and unadjusted basis, continues to demonstrate vast improvements year over year, increasing $8.1 million and $6.6 million, respectively. As noted previously, during the period we did experience a moderate slowing of customer decision making activity in some areas of our business. However, we believe these impacts to be temporary and in line with the overall industry response to current macroeconomic headwinds. Additional contributors to financial performance in the quarter came from an expected $4.2 million run-off in deferred revenue, the $2 million impact from the sale of the DXP and Activation assets earlier this year, $1.8 million in unfavorable revenue impact from foreign exchange, and slightly lower than anticipated cloud subscriber growth. The Company’s progress in improving operations continued, evidenced by an $11.8 million improvement to operating income driven by a $21.7 million reduction in costs and expenses during the period. Moreover, we’ve made significant headway against net loss, already resulting in a roughly $55 million favorable improvement through the first nine months of the year.” 2022 Financial OutlookCompared to the third quarter of 2022, management expects fourth quarter revenue and adjusted EBITDA to increase. Growth in the fourth quarter is expected to come from continued strength in the Company’s Cloud and Messaging businesses, layering growth from existing customers and expected new customer agreements in the quarter. The Company still expects to be free cash flow positive, on an adjusted basis, for the year, and looking to 2023, the Company reiterated that it expects to be free cash flow positive, on an unadjusted basis, given the upward trajectory of its Cloud business and the actions taken to drive down its cost structures. Based on the financial performance in the first half of 2022 and better visibility into the remainder of the year, the Company is maintaining the range of its full year 2022 adjusted EBITDA expectations to between $48.0 million and $55.0 million from a previous range of $45.0 million to $55.0 million. Additionally, the Company now expects GAAP revenue for the fiscal year ending December 31, 2022, to be between $253.0 million and $260.0 million from a previous range of $260.0 million to $270.0 million. This revision was primarily the result of the $5.5 million annualized negative impact in FX and the delay in some decision making due to the macroeconomic environment. The sales pipeline remains healthy and subscriber growth continues to be strong. After adjusting for the divestiture of the Company’s DXP and Activation assets the comparable 2021 revenue is $265.0 million. Synchronoss is reiterating its projection for Cloud subscriber growth to continue at a double-digit rate on a year-over-year basis in 2022. 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 included below under the heading "Non-GAAP Financial Measures." Conference CallSynchronoss will hold a conference call today, November 8, 2022, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. Synchronoss management will host the call, followed by a question-and-answer period. Registration Link: Click here to register Please register online at least 10 minutes prior to the start time. Upon registration, the webcast platform will provide dial-in numbers and a unique access code. If you have any difficulty with registration or connecting to the conference call, please contact Gateway Investor Relations at 949-574-3860. The conference call will be broadcast live and available for replay here and via the Investor Relations section of Synchronoss's website. Non-GAAP Financial Measures Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP although this non-GAAP financial information is derived from numbers that have been prepared in accordance with GAAP. This information includes historical non-GAAP revenues, gross profit, adjusted EBITDA, operating income (loss), net income (loss), effective tax rate, and earnings (loss) per share. 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 fair value stock-based compensation expense, acquisition-related costs, which include restructuring and cease-use lease expense, litigation, remediation and refiling costs 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. Investors are encouraged to also review the Balance Sheet, Statement of Operations, and Statement of Cash Flow. As previously mentioned, a reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. Forward-Looking StatementsThis press release includes statements concerning Synchronoss and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “believes,” “potential” or “continue” or other similar expressions are intended to identify forward-looking statements. Synchronoss has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, risks relating to the Company’s ability to sustain or increase revenue from its larger customers and generate revenue from new customers, the Company’s expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources, the impact of legal proceedings involving the Company, including the investigations by the Securities and Exchange Commission and the Department of Justice described in the Company’s most recent SEC filings, and other risks and factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which is on file with the SEC and available on the SEC’s website at www.sec.gov. The company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise. About SynchronossSynchronoss Technologies (Nasdaq: SNCR) builds software that empowers companies around the world to connect with their subscribers in trusted and meaningful ways. The company’s collection of products helps streamline networks, simplify onboarding, and engage subscribers to unleash new revenue streams, reduce costs and increase speed to market. Hundreds of millions of subscribers trust Synchronoss products to stay in sync with the people, services, and content they love. Learn more at www.synchronoss.com. Media Relations Contact:Domenick CileaSpringboarddcilea@springboardpr.com Investor Relations Contact: Matt Glover and Tom ColtonGateway Group, Inc.SNCR@gatewayir.com -Financial Tables to Follow- SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands) September 30, 2022 December 31, 2021ASSETS Cash and cash equivalents $22,584 $31,504Accounts receivable, net 45,903 47,586Operating lease right-of-use assets 21,471 26,399Goodwill 203,261 224,577Other assets 105,670 120,668Total assets $398,889 $450,734 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $67,067 $73,013Deferred revenues 15,002 22,916Debt, non-current 134,200 133,104Operating lease liabilities, non-current 30,725 36,095Other liabilities 5,482 9,778Preferred stock 68,348 72,505Redeemable noncontrolling interest 12,500 12,500Stockholders’ equity 65,565 90,823Total liabilities and stockholders’ equity $398,889 $450,734 SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (In thousands, except per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Net revenues $59,896 $69,753 $190,998 $206,784 Costs and expenses: Cost of revenues1 22,440 27,245 69,595 83,024 Research and development 12,911 15,368 42,162 49,962 Selling, general and administrative 15,338 27,953 48,523 67,790 Restructuring charges 201 1,485 1,905 3,075 Depreciation and amortization 7,726 8,215 24,019 26,567 Total costs and expenses 58,616 80,266 186,204 230,418 Income (loss) from operations 1,280 (10,513) 4,794 (23,634)Interest income 20 24 230 54 Interest expense (3,463) (2,933) (10,131) (3,172)(Loss) gain on divestiture (73) — 2,549 — Other income (expense), net 4,437 (1,669) 10,206 (3,489)Income (loss) from operations, before taxes 2,201 (15,091) 7,648 (30,241)(Provision) benefit for income taxes (1,115) 6,982 (1,678) 7,346 Net income (loss) 1,086 (8,109) 5,970 (22,895)Net (loss) income attributable to redeemable noncontrolling interests (66) — (256) 286 Preferred stock dividend (2,298) (1,722) (7,255) (33,728)Net loss attributable to Synchronoss $(1,278) $(9,831) $(1,541) $(56,337) Earnings (loss) per share: Basic $(0.01) $(0.11) $(0.02) $(0.98)Diluted $(0.01) $(0.11) $(0.02) $(0.98)Weighted-average common shares outstanding: Basic 86,400 85,646 86,156 57,662 Diluted 86,400 85,646 86,156 57,662 ________________________________1 Cost of revenues excludes depreciation and amortization which are shown separately. SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands) Nine Months EndedSeptember 30, 2022 2021 Net income (loss)$5,970 $(22,895)Adjustments to reconcile net loss to net cash provided by operating activities: Non-cash items 27,378 33,830 Changes in operating assets and liabilities (22,270) (5,384)Net cash provided by operating activities 11,078 5,551 Investing activities: Purchases of fixed assets (1,021) (1,386)Purchases of intangible assets and capitalized software (15,250) (17,004)Other investing activities 8,000 550 Net cash used in investing activities (8,271) (17,840) Net cash (used in) provided by financing activities (10,975) 2,687 Effect of exchange rate changes on cash (752) 72 Net decrease in cash and cash equivalents (8,920) (9,530) Cash and cash equivalents, beginning of period 31,504 33,671 Cash and cash equivalents, end of period$22,584 $24,141 SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands, except per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Non-GAAP financial measures and reconciliation: GAAP Revenue $59,896 $69,753 $190,998 $206,784 Less: Cost of revenues 22,440 27,245 69,595 83,024 Gross Profit 37,456 42,508 121,403 123,760 Add / (Less): Stock-based compensation expense 232 432 592 1,289 Restructuring, transition and cease-use lease expense 67 405 1,038 432 Adjusted Gross Profit $37,755 $43,345 $123,033 $125,481 Adjusted Gross Margin 63.0% 62.1% 64.4% 60.7% Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 GAAP Net loss attributable to Synchronoss $(1,278) $(9,831) $(1,541) $(56,337)Add / (Less): Stock-based compensation expense 1,801 2,289 4,692 7,355 Restructuring, transition and cease-use lease expense 557 2,981 3,949 7,956 Amortization expense1 2,436 3,036 7,469 9,851 Litigation, remediation and refiling costs, net 88 9,316 (227) 12,858 Non-GAAP Net income (loss) attributable to Synchronoss $3,604 $7,791 $14,342 $(18,317) Diluted Non-GAAP Net income (loss) per share $0.04 $0.09 $0.17 $(0.32) Weighted shares outstanding - Dilutive 86,400 85,646 86,156 57,662 ___________________________1 Amortization from acquired intangible assets. SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands) Three Months Ended Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021Net income (loss) attributable to Synchronoss $(1,278) $5,327 $(5,590) $(2,114) $(9,831) $(1,541) $(56,337)Add / (Less): Stock-based compensation expense 1,801 964 1,927 1,950 2,289 4,692 7,355 Restructuring, transition and cease-use lease expense 557 1,381 2,011 2,286 2,981 3,949 7,956 Litigation, remediation and refiling costs, net 88 (1,292) 977 (30) 9,316 (227) 12,858 Depreciation and amortization 7,726 8,259 8,034 9,498 8,215 24,019 26,567 Interest income (20) (118) (92) 15 (24) (230) (54)Interest expense 3,463 3,343 3,325 3,248 2,933 10,131 3,172 Loss (gain) on divestiture 73 (2,622) — — — (2,549) — Other (income) expense, net (4,437) (4,065) (1,704) 1,388 1,669 (10,206) 3,489 Provision (benefit) for income taxes 1,115 435 128 169 (6,982) 1,678 (7,346)Net loss (income) attributable to noncontrolling interests 66 75 115 130 — 256 (286)Preferred dividend1 2,298 2,519 2,438 1,781 1,722 7,255 33,728 Adjusted EBITDA (non-GAAP) $11,452 $14,206 $11,569 $18,321 $12,288 $37,227 $31,102 ___________________________1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Net Cash provided by (used in) operating activities $4,350 $(2,616) $11,078 $5,551 Add / (Less): Capitalized software (4,555) (6,045) (15,250) (17,004)Property and equipment (448) (136) (1,021) (1,386)Free Cashflow (653) (8,797) (5,193) (12,839)Add: Litigation and remediation costs, net 2,030 3,304 2,704 4,045 Add: Restructuring 1,457 1,694 5,890 6,203 Adjusted Free Cashflow $2,834 $(3,799) $3,401 $(2,591) SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 GAAP Cloud Revenue $38,558 $43,124 $123,536 $120,911 Increase / (Decrease) Change in Deferred Revenue 61 (4,224) (7,660) (14,424)(Increase) / Decrease: Change in Unbilled Receivables & Contract Assets (869) (3,548) (4,706) (3,356)Invoiced Cloud Revenue $37,750 $35,352 $111,170 $103,131 Invoiced Cloud Revenue is defined as GAAP revenue for Cloud disaggregated revenue stream, plus the period change in deferred revenue balance related to the Cloud revenue stream, less the period change in Unbilled Receivables and Contract Assets balance related to the Cloud revenue stream. 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Synchronoss Technologies Reports Third Quarter 2022 Results By: Synchronoss Technologies, Inc. via GlobeNewswire November 08, 2022 at 16:05 PM EST Operating Income of $1.3 Million Versus Loss of $10.5 Million in the Prior Year Period Adjusted Free Cash Flow of $2.8 Million in Q3 2022, a $6.6 Million Improvement from Q3 2021 Results Driven by Continued Double Digit Cloud Subscriber Growth of 15% Year-Over-Year and Invoiced Cloud Revenue Growth of 7% Company Reaffirms EBITDA Guidance, Revises Revenue Guidance Range to Between $253 Million to $260 Million BRIDGEWATER, N.J., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Synchronoss Technologies Inc. (“Synchronoss” or the “Company”) (Nasdaq: SNCR), a global leader and innovator in cloud, messaging, and digital products and platforms, today reported financial results for its third quarter ended September 30, 2022. Third Quarter and Recent Operational Highlights: Announced 15% year-over-year Cloud subscriber growth for the third quarter of 2022. The tenth consecutive quarter of double-digit subscriber growth has been driven by the continued adoption of the Company’s Personal Cloud product by its customers’ subscribers, including Verizon and AT&T.Extended current Cloud agreement with AT&T for an additional option year through the end of 2023. The extension enables AT&T to continue utilizing Synchronoss Personal Cloud to power its AT&T Personal Cloud offering with no changes to the commercial terms.Consolidated user content to Verizon’s Private Storage infrastructure, allowing for more efficient management of all digital content on the Synchronoss Personal Cloud platform for Verizon customers. This consolidation also enables Synchronoss to more fully focus on developing new features and functionality, while simultaneously eliminating its investment into hosting petabytes of costly storage infrastructure going forward. Critically, this consolidation will enable functionality that will utilize the increased speed, reduced latency, and scalability of Verizon’s 5G network and next-generation storage infrastructure.Signed a Letter of Intent with a tier one global operator and began work to launch a new personal cloud solution in 2023. The carrier will provide access to an extensive mobile subscriber base, which is predominantly postpaid in nature. The new customer launch will begin contributing professional services revenues in Q4 2022 and is forecasted to deliver more than $50 million over the term of the relationship.Appointed Louis (“Lou”) Ferraro, Jr. as Chief Financial Officer, effective November 3. Ferraro had been serving as acting CFO since August and has been with Synchronoss since 2018. Synchronoss also appointed Mina Lackner as Chief Human Resources Officer, further expanding and improving the composition of its senior leadership team in two key areas. Management Commentary“In Q3, we took proactive steps to preserve our profitability and cash flow generation,” said Jeff Miller, President and CEO of Synchronoss. “Our successful actions resulted in positive income from operations and adjusted free cash flow, which improved nearly $11.8 million and $6.6 million, respectively, on a year-over-year basis. Further, we are encouraged by the continued strength of our cloud subscriber growth and invoiced Cloud revenue growth during the quarter, increasing 15% and 7%, respectively, during the period, highlighting the underlying strength of our cloud-first strategy. “We extended our Cloud agreement with AT&T, marked the next chapter of our long-standing relationship with Verizon with an agreement to leverage their private storage infrastructure and signed an LOI with a global tier one operator under which we began work to launch their new cloud solution next year. Additionally, we extended agreements with two prominent Italian customers that have relied on Synchronoss solutions for over 20 years, respectively. Our solutions are becoming more relevant and essential to a large and growing market supported by global 5G adoptions and other major technology evolutions. While we recognize there is still much work to be done, the fundamentals of our business remain solid, and our cloud-first strategy is on the trajectory to deliver high-growth, recurring revenue, and cash generative capabilities.” Key Performance Indicators ("KPIs"): Cloud subscriber growth of 15% continued the Company’s ongoing performance of year-over-year double-digit subscriber growth. Third quarter GAAP Cloud revenue decreased 11% year-over-year as a result of expected deferred revenue run-off in the current quarter as well as one-time professional services fees recorded in the prior year period.Invoiced Cloud revenue increased 6.8% year-over-year to $37.8 million in the third quarter. This non-GAAP measure is reconciled within the financial statements below. This KPI is intended to provide greater transparency in the underlying Cloud revenue trends as it is not impacted by changes in deferred and unbilled revenue.Quarterly recurring revenue was 83.7% of total revenue, a decrease from 86.6% of total revenue in the second quarter and an increase from 83.1% in the third quarter of last year.GAAP revenue breakdown by product is included below: Q3 2022 vs Q3 2021(in thousands)Q3 2022 Revenue Q3 2021 Revenue % Increase/ (Decrease) % of Total Q3 2022 RevenueCloud$38,558 $43,124 (10.6)% 64.4%Digital 9,635 14,365 (32.9)% 16.1%Messaging 11,703 12,264 (4.6)% 19.5% $59,896 $69,753 100.0% Third Quarter 2022 Financial Results:Results compare 2022 fiscal third quarter end (September 30, 2022) to 2021 fiscal third quarter end (September 30, 2021) unless otherwise indicated. Total revenue decreased 14% to $59.9 million from $69.8 million in the prior year period. The decline in revenue was a result of expected deferred revenue run-off in the current quarter, unfavorable foreign exchange impact, the Company’s divestiture of the DXP and Activation assets in the second quarter, and temporary slowdowns in purchasing activity as a result of current macroeconomic conditions. The FX impact to revenue in the third quarter totaled approximately $1.8 million due to the strength of the U.S. Dollar compared to the Euro and Japanese Yen. Negative impact from FX year-to-date has been approximately $3.9 million.Gross profit decreased 12% to $37.5 million (62.5% of total revenue) from $42.5 million (60.9% of total revenue) in the prior year period, primarily attributable to the revenue shortfall previously noted and the sale of the DXP and Activation assets. The increase in gross margin was primarily attributable to increased revenue from high-margin Cloud subscriber growth and ongoing benefits from cost saving initiatives.Income (loss) from operations was $1.3 million compared to a loss of $(10.5) million in 2021. The improvement in operating income was a result of increased high margin Cloud revenue, reduced SG&A expenses and greater efficiency of R&D resources and other cost saving initiatives.Net loss improved to $(1.3) million, or $(0.01) per share, compared to net loss of $(9.8) million, or $(0.11) per share, in the prior year period. The significant improvement in net loss was primarily attributable to operational improvements previously noted.Adjusted EBITDA (a non-GAAP metric reconciled below) decreased 7% to $11.5 million (19.1% of total revenue) from $12.3 million (17.6% of total revenue) in the prior year period. The increase in adjusted EBITDA margin was primarily attributable to the increased revenue from high-margin Cloud subscriber growth and ongoing benefits from cost saving initiatives previously noted. The decrease in adjusted EBITDA resulted from lower revenues as previously outlined.Cash and cash equivalents were $22.6 million at September 30, 2022, compared to $25.5 million at June 30, 2022 and $31.5 million at December 31, 2021. Free cash flow was $(0.7) million and adjusted free cash flow was $2.8 million. The Company did not receive additional tax refunds during the period, leaving its remaining due balance at approximately $28 million, which is expected to be paid out in the coming quarters. Financial CommentaryCFO Lou Ferraro added: “Free cash flow, on both an adjusted and unadjusted basis, continues to demonstrate vast improvements year over year, increasing $8.1 million and $6.6 million, respectively. As noted previously, during the period we did experience a moderate slowing of customer decision making activity in some areas of our business. However, we believe these impacts to be temporary and in line with the overall industry response to current macroeconomic headwinds. Additional contributors to financial performance in the quarter came from an expected $4.2 million run-off in deferred revenue, the $2 million impact from the sale of the DXP and Activation assets earlier this year, $1.8 million in unfavorable revenue impact from foreign exchange, and slightly lower than anticipated cloud subscriber growth. The Company’s progress in improving operations continued, evidenced by an $11.8 million improvement to operating income driven by a $21.7 million reduction in costs and expenses during the period. Moreover, we’ve made significant headway against net loss, already resulting in a roughly $55 million favorable improvement through the first nine months of the year.” 2022 Financial OutlookCompared to the third quarter of 2022, management expects fourth quarter revenue and adjusted EBITDA to increase. Growth in the fourth quarter is expected to come from continued strength in the Company’s Cloud and Messaging businesses, layering growth from existing customers and expected new customer agreements in the quarter. The Company still expects to be free cash flow positive, on an adjusted basis, for the year, and looking to 2023, the Company reiterated that it expects to be free cash flow positive, on an unadjusted basis, given the upward trajectory of its Cloud business and the actions taken to drive down its cost structures. Based on the financial performance in the first half of 2022 and better visibility into the remainder of the year, the Company is maintaining the range of its full year 2022 adjusted EBITDA expectations to between $48.0 million and $55.0 million from a previous range of $45.0 million to $55.0 million. Additionally, the Company now expects GAAP revenue for the fiscal year ending December 31, 2022, to be between $253.0 million and $260.0 million from a previous range of $260.0 million to $270.0 million. This revision was primarily the result of the $5.5 million annualized negative impact in FX and the delay in some decision making due to the macroeconomic environment. The sales pipeline remains healthy and subscriber growth continues to be strong. After adjusting for the divestiture of the Company’s DXP and Activation assets the comparable 2021 revenue is $265.0 million. Synchronoss is reiterating its projection for Cloud subscriber growth to continue at a double-digit rate on a year-over-year basis in 2022. 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 included below under the heading "Non-GAAP Financial Measures." Conference CallSynchronoss will hold a conference call today, November 8, 2022, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. Synchronoss management will host the call, followed by a question-and-answer period. Registration Link: Click here to register Please register online at least 10 minutes prior to the start time. Upon registration, the webcast platform will provide dial-in numbers and a unique access code. If you have any difficulty with registration or connecting to the conference call, please contact Gateway Investor Relations at 949-574-3860. The conference call will be broadcast live and available for replay here and via the Investor Relations section of Synchronoss's website. Non-GAAP Financial Measures Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP although this non-GAAP financial information is derived from numbers that have been prepared in accordance with GAAP. This information includes historical non-GAAP revenues, gross profit, adjusted EBITDA, operating income (loss), net income (loss), effective tax rate, and earnings (loss) per share. 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 fair value stock-based compensation expense, acquisition-related costs, which include restructuring and cease-use lease expense, litigation, remediation and refiling costs 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. Investors are encouraged to also review the Balance Sheet, Statement of Operations, and Statement of Cash Flow. As previously mentioned, a reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. Forward-Looking StatementsThis press release includes statements concerning Synchronoss and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “believes,” “potential” or “continue” or other similar expressions are intended to identify forward-looking statements. Synchronoss has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, risks relating to the Company’s ability to sustain or increase revenue from its larger customers and generate revenue from new customers, the Company’s expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources, the impact of legal proceedings involving the Company, including the investigations by the Securities and Exchange Commission and the Department of Justice described in the Company’s most recent SEC filings, and other risks and factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which is on file with the SEC and available on the SEC’s website at www.sec.gov. The company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise. About SynchronossSynchronoss Technologies (Nasdaq: SNCR) builds software that empowers companies around the world to connect with their subscribers in trusted and meaningful ways. The company’s collection of products helps streamline networks, simplify onboarding, and engage subscribers to unleash new revenue streams, reduce costs and increase speed to market. Hundreds of millions of subscribers trust Synchronoss products to stay in sync with the people, services, and content they love. Learn more at www.synchronoss.com. Media Relations Contact:Domenick CileaSpringboarddcilea@springboardpr.com Investor Relations Contact: Matt Glover and Tom ColtonGateway Group, Inc.SNCR@gatewayir.com -Financial Tables to Follow- SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands) September 30, 2022 December 31, 2021ASSETS Cash and cash equivalents $22,584 $31,504Accounts receivable, net 45,903 47,586Operating lease right-of-use assets 21,471 26,399Goodwill 203,261 224,577Other assets 105,670 120,668Total assets $398,889 $450,734 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $67,067 $73,013Deferred revenues 15,002 22,916Debt, non-current 134,200 133,104Operating lease liabilities, non-current 30,725 36,095Other liabilities 5,482 9,778Preferred stock 68,348 72,505Redeemable noncontrolling interest 12,500 12,500Stockholders’ equity 65,565 90,823Total liabilities and stockholders’ equity $398,889 $450,734 SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (In thousands, except per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Net revenues $59,896 $69,753 $190,998 $206,784 Costs and expenses: Cost of revenues1 22,440 27,245 69,595 83,024 Research and development 12,911 15,368 42,162 49,962 Selling, general and administrative 15,338 27,953 48,523 67,790 Restructuring charges 201 1,485 1,905 3,075 Depreciation and amortization 7,726 8,215 24,019 26,567 Total costs and expenses 58,616 80,266 186,204 230,418 Income (loss) from operations 1,280 (10,513) 4,794 (23,634)Interest income 20 24 230 54 Interest expense (3,463) (2,933) (10,131) (3,172)(Loss) gain on divestiture (73) — 2,549 — Other income (expense), net 4,437 (1,669) 10,206 (3,489)Income (loss) from operations, before taxes 2,201 (15,091) 7,648 (30,241)(Provision) benefit for income taxes (1,115) 6,982 (1,678) 7,346 Net income (loss) 1,086 (8,109) 5,970 (22,895)Net (loss) income attributable to redeemable noncontrolling interests (66) — (256) 286 Preferred stock dividend (2,298) (1,722) (7,255) (33,728)Net loss attributable to Synchronoss $(1,278) $(9,831) $(1,541) $(56,337) Earnings (loss) per share: Basic $(0.01) $(0.11) $(0.02) $(0.98)Diluted $(0.01) $(0.11) $(0.02) $(0.98)Weighted-average common shares outstanding: Basic 86,400 85,646 86,156 57,662 Diluted 86,400 85,646 86,156 57,662 ________________________________1 Cost of revenues excludes depreciation and amortization which are shown separately. SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands) Nine Months EndedSeptember 30, 2022 2021 Net income (loss)$5,970 $(22,895)Adjustments to reconcile net loss to net cash provided by operating activities: Non-cash items 27,378 33,830 Changes in operating assets and liabilities (22,270) (5,384)Net cash provided by operating activities 11,078 5,551 Investing activities: Purchases of fixed assets (1,021) (1,386)Purchases of intangible assets and capitalized software (15,250) (17,004)Other investing activities 8,000 550 Net cash used in investing activities (8,271) (17,840) Net cash (used in) provided by financing activities (10,975) 2,687 Effect of exchange rate changes on cash (752) 72 Net decrease in cash and cash equivalents (8,920) (9,530) Cash and cash equivalents, beginning of period 31,504 33,671 Cash and cash equivalents, end of period$22,584 $24,141 SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands, except per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Non-GAAP financial measures and reconciliation: GAAP Revenue $59,896 $69,753 $190,998 $206,784 Less: Cost of revenues 22,440 27,245 69,595 83,024 Gross Profit 37,456 42,508 121,403 123,760 Add / (Less): Stock-based compensation expense 232 432 592 1,289 Restructuring, transition and cease-use lease expense 67 405 1,038 432 Adjusted Gross Profit $37,755 $43,345 $123,033 $125,481 Adjusted Gross Margin 63.0% 62.1% 64.4% 60.7% Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 GAAP Net loss attributable to Synchronoss $(1,278) $(9,831) $(1,541) $(56,337)Add / (Less): Stock-based compensation expense 1,801 2,289 4,692 7,355 Restructuring, transition and cease-use lease expense 557 2,981 3,949 7,956 Amortization expense1 2,436 3,036 7,469 9,851 Litigation, remediation and refiling costs, net 88 9,316 (227) 12,858 Non-GAAP Net income (loss) attributable to Synchronoss $3,604 $7,791 $14,342 $(18,317) Diluted Non-GAAP Net income (loss) per share $0.04 $0.09 $0.17 $(0.32) Weighted shares outstanding - Dilutive 86,400 85,646 86,156 57,662 ___________________________1 Amortization from acquired intangible assets. SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands) Three Months Ended Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021Net income (loss) attributable to Synchronoss $(1,278) $5,327 $(5,590) $(2,114) $(9,831) $(1,541) $(56,337)Add / (Less): Stock-based compensation expense 1,801 964 1,927 1,950 2,289 4,692 7,355 Restructuring, transition and cease-use lease expense 557 1,381 2,011 2,286 2,981 3,949 7,956 Litigation, remediation and refiling costs, net 88 (1,292) 977 (30) 9,316 (227) 12,858 Depreciation and amortization 7,726 8,259 8,034 9,498 8,215 24,019 26,567 Interest income (20) (118) (92) 15 (24) (230) (54)Interest expense 3,463 3,343 3,325 3,248 2,933 10,131 3,172 Loss (gain) on divestiture 73 (2,622) — — — (2,549) — Other (income) expense, net (4,437) (4,065) (1,704) 1,388 1,669 (10,206) 3,489 Provision (benefit) for income taxes 1,115 435 128 169 (6,982) 1,678 (7,346)Net loss (income) attributable to noncontrolling interests 66 75 115 130 — 256 (286)Preferred dividend1 2,298 2,519 2,438 1,781 1,722 7,255 33,728 Adjusted EBITDA (non-GAAP) $11,452 $14,206 $11,569 $18,321 $12,288 $37,227 $31,102 ___________________________1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Net Cash provided by (used in) operating activities $4,350 $(2,616) $11,078 $5,551 Add / (Less): Capitalized software (4,555) (6,045) (15,250) (17,004)Property and equipment (448) (136) (1,021) (1,386)Free Cashflow (653) (8,797) (5,193) (12,839)Add: Litigation and remediation costs, net 2,030 3,304 2,704 4,045 Add: Restructuring 1,457 1,694 5,890 6,203 Adjusted Free Cashflow $2,834 $(3,799) $3,401 $(2,591) SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 GAAP Cloud Revenue $38,558 $43,124 $123,536 $120,911 Increase / (Decrease) Change in Deferred Revenue 61 (4,224) (7,660) (14,424)(Increase) / Decrease: Change in Unbilled Receivables & Contract Assets (869) (3,548) (4,706) (3,356)Invoiced Cloud Revenue $37,750 $35,352 $111,170 $103,131 Invoiced Cloud Revenue is defined as GAAP revenue for Cloud disaggregated revenue stream, plus the period change in deferred revenue balance related to the Cloud revenue stream, less the period change in Unbilled Receivables and Contract Assets balance related to the Cloud revenue stream.
Operating Income of $1.3 Million Versus Loss of $10.5 Million in the Prior Year Period Adjusted Free Cash Flow of $2.8 Million in Q3 2022, a $6.6 Million Improvement from Q3 2021 Results Driven by Continued Double Digit Cloud Subscriber Growth of 15% Year-Over-Year and Invoiced Cloud Revenue Growth of 7% Company Reaffirms EBITDA Guidance, Revises Revenue Guidance Range to Between $253 Million to $260 Million BRIDGEWATER, N.J., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Synchronoss Technologies Inc. (“Synchronoss” or the “Company”) (Nasdaq: SNCR), a global leader and innovator in cloud, messaging, and digital products and platforms, today reported financial results for its third quarter ended September 30, 2022. Third Quarter and Recent Operational Highlights: Announced 15% year-over-year Cloud subscriber growth for the third quarter of 2022. The tenth consecutive quarter of double-digit subscriber growth has been driven by the continued adoption of the Company’s Personal Cloud product by its customers’ subscribers, including Verizon and AT&T.Extended current Cloud agreement with AT&T for an additional option year through the end of 2023. The extension enables AT&T to continue utilizing Synchronoss Personal Cloud to power its AT&T Personal Cloud offering with no changes to the commercial terms.Consolidated user content to Verizon’s Private Storage infrastructure, allowing for more efficient management of all digital content on the Synchronoss Personal Cloud platform for Verizon customers. This consolidation also enables Synchronoss to more fully focus on developing new features and functionality, while simultaneously eliminating its investment into hosting petabytes of costly storage infrastructure going forward. Critically, this consolidation will enable functionality that will utilize the increased speed, reduced latency, and scalability of Verizon’s 5G network and next-generation storage infrastructure.Signed a Letter of Intent with a tier one global operator and began work to launch a new personal cloud solution in 2023. The carrier will provide access to an extensive mobile subscriber base, which is predominantly postpaid in nature. The new customer launch will begin contributing professional services revenues in Q4 2022 and is forecasted to deliver more than $50 million over the term of the relationship.Appointed Louis (“Lou”) Ferraro, Jr. as Chief Financial Officer, effective November 3. Ferraro had been serving as acting CFO since August and has been with Synchronoss since 2018. Synchronoss also appointed Mina Lackner as Chief Human Resources Officer, further expanding and improving the composition of its senior leadership team in two key areas. Management Commentary“In Q3, we took proactive steps to preserve our profitability and cash flow generation,” said Jeff Miller, President and CEO of Synchronoss. “Our successful actions resulted in positive income from operations and adjusted free cash flow, which improved nearly $11.8 million and $6.6 million, respectively, on a year-over-year basis. Further, we are encouraged by the continued strength of our cloud subscriber growth and invoiced Cloud revenue growth during the quarter, increasing 15% and 7%, respectively, during the period, highlighting the underlying strength of our cloud-first strategy. “We extended our Cloud agreement with AT&T, marked the next chapter of our long-standing relationship with Verizon with an agreement to leverage their private storage infrastructure and signed an LOI with a global tier one operator under which we began work to launch their new cloud solution next year. Additionally, we extended agreements with two prominent Italian customers that have relied on Synchronoss solutions for over 20 years, respectively. Our solutions are becoming more relevant and essential to a large and growing market supported by global 5G adoptions and other major technology evolutions. While we recognize there is still much work to be done, the fundamentals of our business remain solid, and our cloud-first strategy is on the trajectory to deliver high-growth, recurring revenue, and cash generative capabilities.” Key Performance Indicators ("KPIs"): Cloud subscriber growth of 15% continued the Company’s ongoing performance of year-over-year double-digit subscriber growth. Third quarter GAAP Cloud revenue decreased 11% year-over-year as a result of expected deferred revenue run-off in the current quarter as well as one-time professional services fees recorded in the prior year period.Invoiced Cloud revenue increased 6.8% year-over-year to $37.8 million in the third quarter. This non-GAAP measure is reconciled within the financial statements below. This KPI is intended to provide greater transparency in the underlying Cloud revenue trends as it is not impacted by changes in deferred and unbilled revenue.Quarterly recurring revenue was 83.7% of total revenue, a decrease from 86.6% of total revenue in the second quarter and an increase from 83.1% in the third quarter of last year.GAAP revenue breakdown by product is included below: Q3 2022 vs Q3 2021(in thousands)Q3 2022 Revenue Q3 2021 Revenue % Increase/ (Decrease) % of Total Q3 2022 RevenueCloud$38,558 $43,124 (10.6)% 64.4%Digital 9,635 14,365 (32.9)% 16.1%Messaging 11,703 12,264 (4.6)% 19.5% $59,896 $69,753 100.0% Third Quarter 2022 Financial Results:Results compare 2022 fiscal third quarter end (September 30, 2022) to 2021 fiscal third quarter end (September 30, 2021) unless otherwise indicated. Total revenue decreased 14% to $59.9 million from $69.8 million in the prior year period. The decline in revenue was a result of expected deferred revenue run-off in the current quarter, unfavorable foreign exchange impact, the Company’s divestiture of the DXP and Activation assets in the second quarter, and temporary slowdowns in purchasing activity as a result of current macroeconomic conditions. The FX impact to revenue in the third quarter totaled approximately $1.8 million due to the strength of the U.S. Dollar compared to the Euro and Japanese Yen. Negative impact from FX year-to-date has been approximately $3.9 million.Gross profit decreased 12% to $37.5 million (62.5% of total revenue) from $42.5 million (60.9% of total revenue) in the prior year period, primarily attributable to the revenue shortfall previously noted and the sale of the DXP and Activation assets. The increase in gross margin was primarily attributable to increased revenue from high-margin Cloud subscriber growth and ongoing benefits from cost saving initiatives.Income (loss) from operations was $1.3 million compared to a loss of $(10.5) million in 2021. The improvement in operating income was a result of increased high margin Cloud revenue, reduced SG&A expenses and greater efficiency of R&D resources and other cost saving initiatives.Net loss improved to $(1.3) million, or $(0.01) per share, compared to net loss of $(9.8) million, or $(0.11) per share, in the prior year period. The significant improvement in net loss was primarily attributable to operational improvements previously noted.Adjusted EBITDA (a non-GAAP metric reconciled below) decreased 7% to $11.5 million (19.1% of total revenue) from $12.3 million (17.6% of total revenue) in the prior year period. The increase in adjusted EBITDA margin was primarily attributable to the increased revenue from high-margin Cloud subscriber growth and ongoing benefits from cost saving initiatives previously noted. The decrease in adjusted EBITDA resulted from lower revenues as previously outlined.Cash and cash equivalents were $22.6 million at September 30, 2022, compared to $25.5 million at June 30, 2022 and $31.5 million at December 31, 2021. Free cash flow was $(0.7) million and adjusted free cash flow was $2.8 million. The Company did not receive additional tax refunds during the period, leaving its remaining due balance at approximately $28 million, which is expected to be paid out in the coming quarters. Financial CommentaryCFO Lou Ferraro added: “Free cash flow, on both an adjusted and unadjusted basis, continues to demonstrate vast improvements year over year, increasing $8.1 million and $6.6 million, respectively. As noted previously, during the period we did experience a moderate slowing of customer decision making activity in some areas of our business. However, we believe these impacts to be temporary and in line with the overall industry response to current macroeconomic headwinds. Additional contributors to financial performance in the quarter came from an expected $4.2 million run-off in deferred revenue, the $2 million impact from the sale of the DXP and Activation assets earlier this year, $1.8 million in unfavorable revenue impact from foreign exchange, and slightly lower than anticipated cloud subscriber growth. The Company’s progress in improving operations continued, evidenced by an $11.8 million improvement to operating income driven by a $21.7 million reduction in costs and expenses during the period. Moreover, we’ve made significant headway against net loss, already resulting in a roughly $55 million favorable improvement through the first nine months of the year.” 2022 Financial OutlookCompared to the third quarter of 2022, management expects fourth quarter revenue and adjusted EBITDA to increase. Growth in the fourth quarter is expected to come from continued strength in the Company’s Cloud and Messaging businesses, layering growth from existing customers and expected new customer agreements in the quarter. The Company still expects to be free cash flow positive, on an adjusted basis, for the year, and looking to 2023, the Company reiterated that it expects to be free cash flow positive, on an unadjusted basis, given the upward trajectory of its Cloud business and the actions taken to drive down its cost structures. Based on the financial performance in the first half of 2022 and better visibility into the remainder of the year, the Company is maintaining the range of its full year 2022 adjusted EBITDA expectations to between $48.0 million and $55.0 million from a previous range of $45.0 million to $55.0 million. Additionally, the Company now expects GAAP revenue for the fiscal year ending December 31, 2022, to be between $253.0 million and $260.0 million from a previous range of $260.0 million to $270.0 million. This revision was primarily the result of the $5.5 million annualized negative impact in FX and the delay in some decision making due to the macroeconomic environment. The sales pipeline remains healthy and subscriber growth continues to be strong. After adjusting for the divestiture of the Company’s DXP and Activation assets the comparable 2021 revenue is $265.0 million. Synchronoss is reiterating its projection for Cloud subscriber growth to continue at a double-digit rate on a year-over-year basis in 2022. 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 included below under the heading "Non-GAAP Financial Measures." Conference CallSynchronoss will hold a conference call today, November 8, 2022, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. Synchronoss management will host the call, followed by a question-and-answer period. Registration Link: Click here to register Please register online at least 10 minutes prior to the start time. Upon registration, the webcast platform will provide dial-in numbers and a unique access code. If you have any difficulty with registration or connecting to the conference call, please contact Gateway Investor Relations at 949-574-3860. The conference call will be broadcast live and available for replay here and via the Investor Relations section of Synchronoss's website. Non-GAAP Financial Measures Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP although this non-GAAP financial information is derived from numbers that have been prepared in accordance with GAAP. This information includes historical non-GAAP revenues, gross profit, adjusted EBITDA, operating income (loss), net income (loss), effective tax rate, and earnings (loss) per share. 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 fair value stock-based compensation expense, acquisition-related costs, which include restructuring and cease-use lease expense, litigation, remediation and refiling costs 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. Investors are encouraged to also review the Balance Sheet, Statement of Operations, and Statement of Cash Flow. As previously mentioned, a reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. Forward-Looking StatementsThis press release includes statements concerning Synchronoss and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “believes,” “potential” or “continue” or other similar expressions are intended to identify forward-looking statements. Synchronoss has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, risks relating to the Company’s ability to sustain or increase revenue from its larger customers and generate revenue from new customers, the Company’s expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources, the impact of legal proceedings involving the Company, including the investigations by the Securities and Exchange Commission and the Department of Justice described in the Company’s most recent SEC filings, and other risks and factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which is on file with the SEC and available on the SEC’s website at www.sec.gov. The company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise. About SynchronossSynchronoss Technologies (Nasdaq: SNCR) builds software that empowers companies around the world to connect with their subscribers in trusted and meaningful ways. The company’s collection of products helps streamline networks, simplify onboarding, and engage subscribers to unleash new revenue streams, reduce costs and increase speed to market. Hundreds of millions of subscribers trust Synchronoss products to stay in sync with the people, services, and content they love. Learn more at www.synchronoss.com. Media Relations Contact:Domenick CileaSpringboarddcilea@springboardpr.com Investor Relations Contact: Matt Glover and Tom ColtonGateway Group, Inc.SNCR@gatewayir.com -Financial Tables to Follow- SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands) September 30, 2022 December 31, 2021ASSETS Cash and cash equivalents $22,584 $31,504Accounts receivable, net 45,903 47,586Operating lease right-of-use assets 21,471 26,399Goodwill 203,261 224,577Other assets 105,670 120,668Total assets $398,889 $450,734 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $67,067 $73,013Deferred revenues 15,002 22,916Debt, non-current 134,200 133,104Operating lease liabilities, non-current 30,725 36,095Other liabilities 5,482 9,778Preferred stock 68,348 72,505Redeemable noncontrolling interest 12,500 12,500Stockholders’ equity 65,565 90,823Total liabilities and stockholders’ equity $398,889 $450,734 SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (In thousands, except per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Net revenues $59,896 $69,753 $190,998 $206,784 Costs and expenses: Cost of revenues1 22,440 27,245 69,595 83,024 Research and development 12,911 15,368 42,162 49,962 Selling, general and administrative 15,338 27,953 48,523 67,790 Restructuring charges 201 1,485 1,905 3,075 Depreciation and amortization 7,726 8,215 24,019 26,567 Total costs and expenses 58,616 80,266 186,204 230,418 Income (loss) from operations 1,280 (10,513) 4,794 (23,634)Interest income 20 24 230 54 Interest expense (3,463) (2,933) (10,131) (3,172)(Loss) gain on divestiture (73) — 2,549 — Other income (expense), net 4,437 (1,669) 10,206 (3,489)Income (loss) from operations, before taxes 2,201 (15,091) 7,648 (30,241)(Provision) benefit for income taxes (1,115) 6,982 (1,678) 7,346 Net income (loss) 1,086 (8,109) 5,970 (22,895)Net (loss) income attributable to redeemable noncontrolling interests (66) — (256) 286 Preferred stock dividend (2,298) (1,722) (7,255) (33,728)Net loss attributable to Synchronoss $(1,278) $(9,831) $(1,541) $(56,337) Earnings (loss) per share: Basic $(0.01) $(0.11) $(0.02) $(0.98)Diluted $(0.01) $(0.11) $(0.02) $(0.98)Weighted-average common shares outstanding: Basic 86,400 85,646 86,156 57,662 Diluted 86,400 85,646 86,156 57,662 ________________________________1 Cost of revenues excludes depreciation and amortization which are shown separately. SYNCHRONOSS TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands) Nine Months EndedSeptember 30, 2022 2021 Net income (loss)$5,970 $(22,895)Adjustments to reconcile net loss to net cash provided by operating activities: Non-cash items 27,378 33,830 Changes in operating assets and liabilities (22,270) (5,384)Net cash provided by operating activities 11,078 5,551 Investing activities: Purchases of fixed assets (1,021) (1,386)Purchases of intangible assets and capitalized software (15,250) (17,004)Other investing activities 8,000 550 Net cash used in investing activities (8,271) (17,840) Net cash (used in) provided by financing activities (10,975) 2,687 Effect of exchange rate changes on cash (752) 72 Net decrease in cash and cash equivalents (8,920) (9,530) Cash and cash equivalents, beginning of period 31,504 33,671 Cash and cash equivalents, end of period$22,584 $24,141 SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands, except per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Non-GAAP financial measures and reconciliation: GAAP Revenue $59,896 $69,753 $190,998 $206,784 Less: Cost of revenues 22,440 27,245 69,595 83,024 Gross Profit 37,456 42,508 121,403 123,760 Add / (Less): Stock-based compensation expense 232 432 592 1,289 Restructuring, transition and cease-use lease expense 67 405 1,038 432 Adjusted Gross Profit $37,755 $43,345 $123,033 $125,481 Adjusted Gross Margin 63.0% 62.1% 64.4% 60.7% Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 GAAP Net loss attributable to Synchronoss $(1,278) $(9,831) $(1,541) $(56,337)Add / (Less): Stock-based compensation expense 1,801 2,289 4,692 7,355 Restructuring, transition and cease-use lease expense 557 2,981 3,949 7,956 Amortization expense1 2,436 3,036 7,469 9,851 Litigation, remediation and refiling costs, net 88 9,316 (227) 12,858 Non-GAAP Net income (loss) attributable to Synchronoss $3,604 $7,791 $14,342 $(18,317) Diluted Non-GAAP Net income (loss) per share $0.04 $0.09 $0.17 $(0.32) Weighted shares outstanding - Dilutive 86,400 85,646 86,156 57,662 ___________________________1 Amortization from acquired intangible assets. SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands) Three Months Ended Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021Net income (loss) attributable to Synchronoss $(1,278) $5,327 $(5,590) $(2,114) $(9,831) $(1,541) $(56,337)Add / (Less): Stock-based compensation expense 1,801 964 1,927 1,950 2,289 4,692 7,355 Restructuring, transition and cease-use lease expense 557 1,381 2,011 2,286 2,981 3,949 7,956 Litigation, remediation and refiling costs, net 88 (1,292) 977 (30) 9,316 (227) 12,858 Depreciation and amortization 7,726 8,259 8,034 9,498 8,215 24,019 26,567 Interest income (20) (118) (92) 15 (24) (230) (54)Interest expense 3,463 3,343 3,325 3,248 2,933 10,131 3,172 Loss (gain) on divestiture 73 (2,622) — — — (2,549) — Other (income) expense, net (4,437) (4,065) (1,704) 1,388 1,669 (10,206) 3,489 Provision (benefit) for income taxes 1,115 435 128 169 (6,982) 1,678 (7,346)Net loss (income) attributable to noncontrolling interests 66 75 115 130 — 256 (286)Preferred dividend1 2,298 2,519 2,438 1,781 1,722 7,255 33,728 Adjusted EBITDA (non-GAAP) $11,452 $14,206 $11,569 $18,321 $12,288 $37,227 $31,102 ___________________________1 Includes $10.4 million preferred stock amortization costs accelerated due to Series A Preferred stock redemption in the second quarter of 2021. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Net Cash provided by (used in) operating activities $4,350 $(2,616) $11,078 $5,551 Add / (Less): Capitalized software (4,555) (6,045) (15,250) (17,004)Property and equipment (448) (136) (1,021) (1,386)Free Cashflow (653) (8,797) (5,193) (12,839)Add: Litigation and remediation costs, net 2,030 3,304 2,704 4,045 Add: Restructuring 1,457 1,694 5,890 6,203 Adjusted Free Cashflow $2,834 $(3,799) $3,401 $(2,591) SYNCHRONOSS TECHNOLOGIES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 GAAP Cloud Revenue $38,558 $43,124 $123,536 $120,911 Increase / (Decrease) Change in Deferred Revenue 61 (4,224) (7,660) (14,424)(Increase) / Decrease: Change in Unbilled Receivables & Contract Assets (869) (3,548) (4,706) (3,356)Invoiced Cloud Revenue $37,750 $35,352 $111,170 $103,131 Invoiced Cloud Revenue is defined as GAAP revenue for Cloud disaggregated revenue stream, plus the period change in deferred revenue balance related to the Cloud revenue stream, less the period change in Unbilled Receivables and Contract Assets balance related to the Cloud revenue stream.