Synchronoss (SNCR) 11 May 212021 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Synchronoss First Quarter 2021 Earnings Call. [Operator Instructions]. I would now like to hand the conference over to Joo-Hun Kim, Investor Relations. Please go ahead.

Operator. you, Thank welcome Call. and First XXXX Quarter Good to Conference Earnings afternoon, Synchronoss' With President Clark. are Officer, call me today's on Synchronoss' and Financial Jeff Chief and Officer, David Miller; Executive Chief

Jeff Before the cover few financial press items. I quick results. a I'd afternoon, issued announcing call to a Synchronoss turn This release like and over to David, its

comments that and be the Our is being factors call on at include prospects expectations and regarding synchronoss.com. Internet going are all Relations factors considered of influence the release to for This page is will market forward. opportunities management certain everyone available want could company's on performance. the discussed on the the interested Investor statements. the may are website. Any will that plans parties, live statements be These today's forward-looking business call, company's archived and to website future over webcast particularly our that discuss today company's forward-looking of comments broadcast long-term remind likely historical, the about not I

number our are and for encourage risks listeners risks. statements a review our description all a filings, materially. cause of to XX-K to subject could of and uncertainties, We SEC our of these to most actual results recent Forward-looking including which differ complete XX-Q

statements or company forward-looking on changes in this the events, obligation no undertakes to of otherwise. the herein, May today, any new revise a and of result statements Our publicly future XXXX, call are of whether made expectations XX, information, or update as as contained

Today's not operations it revenue for items adjusted such certain discussing cash does not With the the the GAAP the non-GAAP reported development. non-GAAP over capitalization generated current Jeff. in call EBITDA. deferred a by will the release measures, as turn throughout now Additionally, between we and X-K earnings to this as the Adjusted software said, describe reporting does periods between EBITDA I'll X that equate call, of as Form account or such the necessarily be report and for release. differences to on related present financial and our reconciliation

and revenue congratulate of which for I with revenue our the XX% Synchronoss XXX% Thanks, for XXXX. joining million, giving to quarter EBITDA was all fact seen you under Synchronoss. to believe I'd this EBITDA including beat and work revenue to good you is to We Recurring afternoon, year-over-year. internal revenue adjusted total for us the report multiyear we've am in for everyone. start. metric, a and contracts of stability hard in and business vast model. majority thank being the that today, employees solid predictability Synchronoss thank adjusted pleased the combined a continued revenue, getting first EBITDA your million $XX.X like in year guidance the targets over adjusted their appreciate highest of year. our first of full brings a to significant the off quarter interest $X.X and that Joo-Hun, increase and raise delivered us our Both confidence our quarter results, good We of XXXX

other X and deals significant highlights new Some quarter, of signing Southeast Asia: including X for in for several customer contracts. in X the the Messaging. Including cloud

products, to deliver help growth. revenue will several growth base. continued to seen have innovations new continued also product we of existing which new the We in believe release we subscriber customer led the Plus cloud that drive

news the the the Carrier the into I'd CCMI, in get reports. Messaging dissolution been news that has in to Common or we of like about quarter, Initiative recent the Before the of various details address U.S.

across members approach the a CCMI's RCS carriers go-to-market major the a messaging to messaging members platform carriers. a venture have with any in created universal venture assure been CCMI, as was you reported not We pursue You expect news, experiences X that we and negative will commercial do should Synchronoss' and to U.S. that results has can place deployments by based this recall shared we individually. RCS their agreement Recently, the its largest impact end joint have financial to in in all deliver that joint the CCMI on advanced that have decided provide XXXX. on the

a launch is approach. wireless its and investing own Synchronoss unique go-to-market rollout infrastructure. prepared U.S. transition paradigm believe implemented to We potential now to the in and the model we networks messaging happen. XG that current committed hope offering and carriers from bringing and messaging In believe enable that Leveraging compelling with still has to market the progress fact, at the coming will carriers months. an in return our in on on same on Synchronoss' RCS we've they're Japan mirror OTT success RCS-based make solution, that recapture the to time, the carriers the disrupt the generating users RCS SMS and are U.S. to in each share billions We in the XXXX, share to well U.S. the in RCS Japan, RCS revenue, provide carrier to while a to we're update positioned the U.S. to

to and customers. new group, with outside largest to subscriber with cloud, their solid Now of they being will new we Personal with use quarter version existing Telkom allowing one Cloud with people. the to universities, continue a relationship, paid Telkomsigma important increase they documents win, their after addressable growth base. store, along XXX of We will Indonesia's Allstate XX back platform. with fellow market share conglomerate. Synchronoss, Students same provide of accelerating secure new the cloud with the cloud as the transfer time, our available important over this use cases our signed students. have to And highlights Indonesia Plans, subscriber With for Synchronoss with access service graduate, of carriers and for telecommunications an look country students relationship agreement at monetize Telkomsigma, with Protection deal carrier solution the also other professors the and state-owned option while cases for in carriers our This academic at IT progress signing providers different first million the an to deals, made these In the the results. by arm

of it Protection testing. Allstate cloud Plans, user I'm Speaking SquareTrade acceptance on pleased that them say our to work delivered completed for and their have we've offering to

drive the will additional subscriber deployed should We back offering revenue expect of cloud shortly, the that half which the in help be year.

quarter, our their a of cloud base. but that new retail unlimited Verizon we believe that the advertising result. across of double-digit in with that, of more We a with AT&T uptake benefit product we and the of also base the to more subscriber campaign this And Verizon pleased phone offering, only to we're quarter, see storage global customers broadly, Synchronoss acceleration pleased foot And quarter, Synchronoss-delivered launched the continued momentum result. the not growth because will as subscriber as in in growth see because to Also growth I'm future anticipate during launches the AT&T year. continued the say a cloud in subscriber significant second our During an stores. traffic has

with gives first win messaging subscribers. another RCS the is milestone quarter, over access to Turning important market Asia. XXX This in in to as us country In deploy we to for another a new important Messaging. million it major had customer Synchronoss

business is brands first expanded that which protect leadership and messaging commercial lead end-to-end messaging a opportunity. our our the solution, be based messaging this streams. or providing own marketplace selection map will facing and RCS platform where into enables Additionally, this deployments. Synchronoss with to carriers grow we that platform messaging their on deployment global our the including and revenue IP entirety distinguished contract, as We strengthens an monetization further the won carriers This our our in messaging that a ourselves on complete IP, in leverages advanced messaging both help solution combined of position solution, our following established new own rigorous expanded capitalize process, a brand our

Europe, X.X and systems their in in as the the influential platform. us This of of This a now in process than as our Southeast Italia addition integrator. the presence Our market signed e-mail or solution Also it underway, European a with deploying this cloud in multiple on-premise and, particular, provides improves our win with user from well X-point scale. ability further private latest in migration implementation we're is APAC -- of to large and use expand profitability our solution we our our platform, to utilizes local Asia to as In the good large of the their carrier puts the ratings apps recently X Telecom Telecom on form included greater who in Synchronoss and British platform. have and migration also upgrade million the messaging residential a platform to the messaging to Mobile, iOS an added being standing increased and this And both I'm of IP. that happy our completed core of broadband that to TIM, due report functionality great e-mail subscribers. our Android services in anti-spam messaging, solution the cloud-based success antivirus we agreements is us over with to messaging to to users met

will Altice believe Proximus just our competitive in win that also Altice opportunities discussed those, Canada market, process messaging and replacement behalf and the last core about feel and on we We new earlier we customer kicked ongoing our did be as of last quarter that signed e-mail messaging there More a and core migration broadly, ability the Bell quarter, with call. this the on we in off on year. we to last great year with

excellent competitive ratings, customers' as messaging feedback our our While BT overlooked, core we've gotten And often healthy, highlighted profitable. by the and from subscribers. remains app business

But access our total Product-wise, the refer a to network suite. improved Management. on of as resources mobile spatialSUITE called as via had network X network investments to our provider network in total under digital blockchain product application. user invoice our network we base to the claims business this major the are launches of in via allows in the broader initiative as in user-friendly spatialOFFICE. continue single Moving a our suite to with management manage innovation our to office module well and field It products we've to Also insight enterprise, planning as for Tier business. our the to leading interfaces. partnership with paying data as launched We SpatialOFFICE the tool releases X portfolio. management new management through efficiencies product diversified we umbrella, and the formally well The intelligence we providing real-time a extends Sage simultaneously across operational in dividends. made digital on innovate

to translate our carriers for that other our revolutionize assets leverages bottom solution interconnection impact each combined for to line services, with how Our operational driving customers. business do efficiencies

On of in the analytics, for U.S. expanding business with we a major categories. managed to hosting cloud these total for network front, gross management efficiencies signed communications platform, additional both the Canadian performance. regional Operationally, new both quarter, structure. contributed a improved our communications streamline our during In our continue reach cost large to this which to find deals new quarter, and margin in financial provider spatial provider we product we

first cloud today, several innovation of pleased driven forward during growth our and strategy as I'm subscriber growth hard we focused product results. and continuing execution So our execute customer continue our by product proud acquisitions. in new customer our customers, continued base delivery new in the milestones. to contracts significant meaningful We heard work look to to continued XXXX. on delivered of in for profitable cost and quarter, with and disciplined I'm as you be on management, the some team's closed summary, saw We Synchronoss quarter

to I reassure to want investor senior of of a one is results work to, the to deliver look an I'll I you well, With is most in review to call our and for well and David team the as investors Synchronoss. we talk as a our over capital sustainable the for to detail coming on make in that, provide are we almost also that Lastly, comment It management forward of to making the mind David? as and we solution, a financial structure updating progress turn months. priorities financial sustainable our top outlook. in update important finding every more to want

detail joining our of will guidance thank for you, in for first the Jeff, I and more quarter our full us. results Thanks, review XXXX and update year XXXX. everyone,

as also the to have new of recognition cloud Verizon to term X-year I remind impacts EBITDA accurately have the across approximately treatment I as which of our referring This an required it we QX of the the negatively by be Before of XXXX, progress that the we XXXX comparable noncash adjusted impact account reflects to in I results because that our executed with believe start, of contract we equal revenue will listeners throughout July extend call contract for million. extension quarter. results this in on made deferred has year-over-year. this XXX, by had the true $X ASC more

XX% on XXXX quarter results. first of the from the Total in in X% down $XX.X million to from million, Now first revenue quarter in and the fourth quarter. was $XX.X $XX.X million down

As I year-over-year to deferral our the renewal. just contract impacted results due mentioned, were noncash the by Verizon revenue of

XXXX, recall professional services we quarter had addition, In repeat in first did revenue licensed CCMI the of year. large this from which not

similar launch a to remarks, shared RCS-based Synchronoss solution. the our is provide coming talking RCS months. the provide progress its in everyone his model believe RCS by business in the the U.S. prepared uniquely carrier implementation the deployment. XXXX, We believe and an there U.S. U.S. process in we own a positioned the our individually to compelling with the in on carriers mentioned and despite networks the joint with could ending of are be to in of carriers Jeff in each urgency is update present, CCMI Japan will As we to offering venture, At

multiyear at revenue fact model. of recurring predictability metric, revenues XX% came XX% majority our the in total that vast significant stability business bring combined quarter and with on, revenue this to our last Moving This year. of versus the contracts, under

negatively position for EBITDA encouraged Verizon revenue the million our We growth believe first the XXX% the increase results deliver in in by $X.X sequential and a revenue was revenue first million, from Adjusted was year. of of good we being $X.X Synchronoss quarter, XXXX, is remainder deferral. the to by steady are despite the when quarter the impacted EBITDA

management goods by and savings profit a to operational in $XX item a reductions forecast. the million totaled XXXX million of was approximately We add first internal achieved revenue in that compared the is profit Total were cost quarter down initiatives gross the adjusted continuing in performance improving would initiatives. benefited efficiency was The and in in I XXXX. due to EBITDA cost improvements million $XX.X annual and million EBITDA $XX.X we $X driven evidenced of and cost XX% cost of onetime cost result in margin the XXXX, by our margin cost and initiatives million to were upside expenses margin. million and expense efficiency solid upside from as and total the XX% in Our relative management This of XXXX. almost continued XX% gross sold reduction and and adjusted profit gross management, Adjusted throughout operational was gross lower costs lower favorable quarter with largely first the result XXXX. quarter from $XX.X began efficiency expenses that $XX of or organization also we $XX own in target quarter. the million, the

these profit pleased as CCMI platform. the following our been margin the million, of revenue will X-year believe our for carriers are first increase block was and quarter have $XX.X revenue $XX.X not the and largely the growth was partners year-over-year new with more from the from in first year-over-year. was primarily down add this in cloud deferred this cloud the million first continue significant X% we fourth to revenue quarter, contract the happen carrier QX to Cloud revenue of The and Verizon, in we this would from noncash anticipate or by in renewal million Adjusting of which revenue is but professional first quarter the our subscriber reported down we remainder revenue customers The adjusted driven not the XXXX. quarter in This extension license in XXXX. continues, carrier and of down year-over-year from gross of subscriber We X% onto the X% block XX% saw in the second that throughout fourth comparable decline half result we million year. work year-over-year. of of repeat fourth expansion trend year. in $XX.X did license with in XXXX, of continue the to $XX the was revenues quarter quarter from decline quarter and due the Messaging Messaging Japanese purchases purchases likely as did repeat those in a quarter in up

and As was of a our the their revenue negative with up joint was from of XX% XXXX in any to in capital. in Digital equivalents results tightened dissolution Synchronoss totaled do services expect slightly from efficiencies completion the function quarter be as we million, of of we decrease largely to The but result on of large Cash reminder, it improvements based $XX.X we proposition, was commercial venture. in due have down impact its made operational and we the the a believe down to not to year-end on agreement. financial and CCMI, changes has value continue quarter license profitable a balance the million, decline have of sequential million seasonal revenue first $XX The cash our digital $X.X fourth product $XX.X million a a XXXX. million, professional $XX.X agreement XXXX. XXXX contributor to working and from largely will

for structure stock As is and capital Jeff a top with permanent a our mentioned, priority Synchronoss. preferred refinancing cost-effective long-term of

coming an and in We are the making months. hope have to update progress on solutions potential

guidance. to Turning

million million $XX XX% to We year-over-year are of full which EBITDA growth a will million EBITDA from for range year our $XX million, we're adjusted the guidance of to $XX XX%, respectively. of raising to to represent $XX range pleased a

but forward in should going revenue believe sequentially the total leaving improve with half of are guidance the year. unchanged the back revenue We acceleration

in Needham XX. the on and on the we May front, are on Oppenheimer Lastly, Investor conference upcoming Relations Wednesday the participating at conference

you're interested open participating with to let's your call Oppenheimer And that, in for visit the If either Needham or please with event, operator, representative. schedule questions.

Instructions]. [Operator

of of First Mike Canaccord. Walkley question comes the from line

Congrats on the you. I guess, strong results question cost first for and discipline. Jeff,

say, about the UScellular relates or and breaking and for maybe also, as you and open RCS on Verizon. focusing Can strong like carriers? with that your up? And opportunities talk it the this for Synchronoss, JV Synchronoss relationships let's to a Just CCMI AT&T U.S. other new opportunities

say on right heading that are path both would down you fronts. the I

you that today, position Synchronoss put create does multiple to what service by a opportunity a And worked the joint that an and as implementation as we've of done in we them independent into platform to an Nothing with progress made and their not place. Verizon. platform been where is any a leveraging is them during as in still And have have This so opportunity. them by an in going plans publicly X we've off, is messaging. of be implement preparation know, on testing of we've multiple to really they U.S.-based the to the carriers. venture, the to year. as a position progress result it XXXX or position in but made, throughout then be First certainly leveraging the CCMI say all And it successful and Japan, unlike they for such, of relationship platform had of U.S. point, in broader to launch that well for us puts readiness did us working to a a Most the RCS-based the users audience accessible in we that think RCS-based U.S., for an your opportunity the carriers that's does as in part through further for invite that's participation on AT&T

And a for on you or maybe either David. just follow-up that

this new and the Or in little a individual some with CCMI there's is the the just the become? more. year? later you breakup, not to assume really that year's out guidance flesh Just the launches reiteration and some that licenses of in of revenue these But guidance does or guidance with to trying win carriers

you -- to will. want I would, or it David, yes, say address go if I ahead

ahead. Jeff. ahead, go No, Go

Yes. additional guidance revenue business. and time, I in would effectively no the stream point this say had same anticipated from new that CCMI at that the reflects we

it. question on And me, Got just David, cost control. the a from

good expect think out. coming $XX a other guys You improving rate maybe of better we slightly any and costs we going to gross about the gross steady should almost continue OpEx margin forward? Are through job, how year? run impact million this do model the now, margin Or cost kind with coming you at should

looking you're if referring at million, think to you're $XX quarterlies? I

Yes.

rate be not down run the may remainder the that think the far I of year. for

go mark always I us later your think through see and obviously. for that through you're too. of at going efficiencies, -- $XX could rest model the of take the And year, included to kind we to million looking running we a you little can

Got you.

total you you're achieved. have close savings far, $XX cost that to So in getting million

So kind of -- Yes.

quarter. Oh, yes, right. I absolutely. meant rate. was $XX first in more got our I thought in That's took the the cost million run it. No, interim. you actions some We

Yes.

So to for the are others who connect listening. dots just

communicated of that in to basis all -- quarterly to quarterly have annualized cost savings that stream over We that. of are on XXXX yes, And completion XXXX we stream beginning expense is million close reflect performance. of now revenue $XX our an

then for question just I'll Jeff, Last on. you, Great. pass it

time You've short quarter. a deals been won this nice now, for CEO some

pipeline at pipeline taken As since calendar of your call excited for areas about some you you've most what year, development the it, over? in the terms rest are look you're of, that

And year. the that that Well, of solid see messaging, subscribers. and to continue quarter, our a throughout that see additional and rapid or now base I'll cost continue of in one, growth I to and new fact of our deals to closed in as a ability course opportunities be we are in two cloud the quarter. There cloud we we if the without infrastructure because expand not that you've the sort course, the we across of in digital it in and significant this had that, is announce greater by reason the expect -- encouragement to of say in is contribute And were place. number areas. that to in other Number of equal was comes year. has But growth seen, encouraged additional nice it this

it However, recurring, impact in models be of we revenue given most the the year would small. being revenue that relatively have and

Next question comes from Hickman Ladenburg. line the from Jon of

I just want CCMI to thing. follow-up the on

minimum So are some you this guaranteed or even the like joint dissolved? year ventures though -- payments just partnerships

Yes.

place some upon will it referenced, we that Just way, could U.S. when have structure had the as And a sure year. not had in the is in the have Mike we part that look at And as in Jon, as commitments we where QX XXXX fiscal independently this operators place for revenue joint already have venture with that that all this the we're the performance did with such, And venture. of we improve that expectations said, in year new there that it not there our in relationship XXXX. negative we to were strike that be minimum of with went any, joint opportunities commitments commitments, as at relationships situation commercial our beyond making as what impacts us any on made we we

question I have Okay. one about more this.

it design place, their for would it forward thing will since hit going do their common whatever it make and and would their features all would one and to I for -- this same, to don't brands Verizon be not easier make be a take AT&T technology, one ads easier of that would own the -- that platform of platform that campaigns and the be that's know, I I unified everybody using utilize key thought everybody. case and guess, And platform since whoever now. the advertisers So their on and going I

sort that. of elements two there's to Well,

vision really United gone but in, to first to The to don't what essentially of of subscribers behalf venture, and the that States the and together in million community total. What some on the as intent speak away brands launched, going power to make I the communicated was they want XXX not available joint of opportunity collective they bring the advertisers. yes, is, them in -- one has

in you or brands their of brands However, in for the important believe by a certain the what total massive the of they're still other go-to-market complex. was know, or of it U.S. brands. to States marketing would even are be is they carriers, for reconstruction implementations. set have leverage brands there there subscriber to as joint want unique the will there on that might over separate those own not the that a that entirety to in aggregate it Then a be implementation population the if be get users collectively. with success critical national means unique and to might have community cases little the leverage a And is base. of with relationships some they that way are which a brand international surprised that that will change We and brands time, But as this done venture builds RCS of in specific together I by RCS the a United from certain leverage more what If might carrier. each

Okay.

United know -- compete those do countries. competition-wise, that you separate but do is mean, the you -- see So States in in on here anything WeChat there's I Europe Is in ? there are you I RCS or with it going like and just Line, would

to the is Line attention, a other the -- States critical example, of and the the mobile example in Facebook their wide Yes. regard. words, is that exist none of I'll is cited, applications that distinction form variety distinction have In that kind WhatsApp, a of and do, for but represent United still in that their among relationship marketplace. trust the capitalize Instagram, carriers them the that there WeChat, including on opportunity in seems so have bit to the gained are it, with OTT that and the call Chinese subscribers operators their and messaging level mass. of subscribers. in a that Certainly, of And of OTT messaging some forth the yes, you Japanese messaging competition higher consumer

of how and integrity collection data they financial have and communicate consortium to their work service OTT competitor, they example, calls, terms Japan, means out their the the we've with themselves of simple is have on constituents. that prior provide to In the plus the and transparently, how they utilize as Line, in we messages differentiated of protect for the from is their treat which a message treated messages? how the earnings And operators, communication and as reported just to attracted institutions, those their

So community, understands importance it service, they're messaging in related communications. distinguishing the the in separating approach Japan, and it's of be security United is themselves provider. States. taken everyone to the I trusted is what Plus will using similar line what the so Message as provider suspect the sort critical financial OTT from is themselves That of doing a financial and

a have for I then question Jeff. And Okay.

do end So you target gross of have the you a margin towards get year? as the

David. you probably I to think meant say,

sorry. meant did. David. I to say mean, I Yes, I'm I

my think -- yes, I in remarks sorry.

-- very XX%, remarks, that progressed, our We obviously, the as that achieve my our indicated to were we at deliver low and so think getting would I that we're imply costs. achieve continue maybe and year in I revenue the in -- up targeting XXs. maintain going

the from comes of Mike Latimore Northland Capital. question Next line of

software. great messaging the Could more tightly believe [indiscernible] that? you give is I were cloud on quarter. status me and on Congrats what's for of like you Mike. a integrating This

platforms you're what is saying? the Between

Yes.

that on independent work certainly even we're actually that time messaging, see deliver There is the most web like advanced we of are that a a rich be largely doing drag whether over could Today, experience accessible product solutions from share cloud, e-mail of which it's on messaging have for core but RCS and for incorporate new and potential RCS is experience that in could or messaging content updates messaging, cloud. that that we to today. no

the versus Japan types year And All you last year? of right. sources can you revenue this expect from describe

question? didn't the I'm sorry, quite could you that. repeat I get

I think...

ask year? sources from last versus this you the Did revenue year Japan

Yes, right.

the latter platform revenue in are that to mean, Japan subscriber I in we year. Okay. Japan, come continued expecting of think I the license therefore, just to my and expect messaging this I we in indicated on remarks in just part related growth through -- some

as characterize similar XXXX expectation a being in would I general. said, mostly second expectation. But And as that David as half

Next Capital. question from of ROTH Baldry Richard comes

Baldry. Richard hear Can't

there? capacity. questions? lost any Richard You other Are like some there we in Sounds

am no questions further time. at this I showing

may continue. You

great thank Well, look with let pleased I again. just me time speaking a us and to everyone have a today. XXXX, solid again for joining are first Synchronoss. with with It was you appreciate We you, quarter. we forward the you afternoon. greatly Thank start to and investing

you. Thank

conference you today's call. concludes Thank for participating. This

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