Synchronoss (SNCR) 9 Mar 222021 Q4 Earnings call transcript

Good afternoon. Welcome to Synchronoss Technologies Fiscal Fourth Quarter and Full Year 2021 Earnings Conference Call.

Joining us today are Synchronoss Technologies President and CEO, Jeff Miller, and CFO, Taylor Greenwald.

Following their remarks, we will open the call for your questions. Then before we conclude, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. of remind available this link for the Relations to recorded will available like at Investor made website and replay section would everyone call that be in synchronoss.com. I company's the via a

Now to CEO, I Jeff over proceed. Synchronoss' please would turn Sir, call to like the Miller.

our December results thank fiscal operator. closed, press a available we view and for in XXXX. for updates and fourth the us review website, and information discussing Investor you and for like release XX, our quarter highlights. begin, encourage the Relations you, ended of on Thank release everyone, today. to a section copy joining to year listeners To issued our we'll release with all be of is Welcome, the today. of all After recent additional what market A I announcing our the I'd press start

the the the Taylor, call who Before year-end. to up questions. discuss open and we'll quarter will over for turning for results financial Then

get We strong a started. delivered finish XXXX. to let's So

proof in was business, our revenue XX% recurring progress beginning quarter. in defined primarily our disciplined demonstrated a and cloud all all in maximize major operating especially quarterly profitability. I'll increases in of results work groups, total, of to many in XX% clear overview, gross year-over-year business business, translating the by Verizon our quarterly and the existing growth, in by contribute end subscriber EBITDA, in produced with and performance by subscriber demonstrable we year the a large and in income been of that efforts growing at with our quarter areas. primarily increase adjusted cost the continue our cloud revenue, XXXX. and driven highlighted revenue correct achieve portion was growth with focus X that among Cloud helped that the quarter, the other QX. business. Growth of to of updates We was Cloud Solutions of has businesses, key business. from the an effort streamline fourth multiyear is into year-over-year our our direction a AT&T. accelerating and continue with growth driven XX% increase In Those our With financial organization in momentum Along revenue generated in high-performing fourth our growth. performance drove the the and the product cloud the strategic subscriber quarter revenue Our XXXX by where is optimization cloud point in provide Synchronoss three records ongoing Cloud profit, results an operating our customers metrics to fourth This a fourth quarter like continued adoption accelerating in Tier improvement growing to

will largest base recently, Most to is in XXXX, business contract see we our as of from by represent near we are Ahead our a that Telkomsel in and retail the We contribute Kitamura our million use the were home global back of with to digital a of coming both our XXX opportunity Kitamura to launches carrier combined the up QX. Telkomsel to Synchronoss over content Cloud ahead, momentum, over subscribers layer wireless our their the Solution scheduled the Telkomsel will the customers for potential significant online who millions in to be by Cloud AT&T million. coming growth is we the quarters. than in Telecom retailer, opportunities our Personal customer of new four and QX. XXXX. to Solution as end arm, Cloud cloud as more awarded online penetration a launch subscribers. Looking XXX leading mobile launch, signed XXX provide we subscribers. to targeted IT Indonesia new with multimedia customer will bases, and represented which as Verizon Kitamura at Japanese And of now well million subscriber result subscriber and end additional additions increase Sigma, also Personal customers.

introduced opportunities We To providers, additional of to to protection we're Plus, yield coming for Cloud our in desiring adding also and expect meet and new storage product the capabilities. level security global make private innovations. prioritizing visible capabilities and across other remain we folders shared In service the to the devices, enterprises this XXXX, we individuals in needs families expanding address of information. active we and confidential Solution, quarters. in will a discussions with agreements and needs content that the new Cloud, launched

preferences. for And enhancements enhancements we're ever, capabilities. remains over to of these security introducing mind, top ahead, and and an of These of experience the user several AI our leveraging configurable upgrade Cloud based user address consumers' personalize as business road lay the look the the up long will we than on there monetization and to As of also to We're focus course, for to now the security making us are further engagement. service foundation adding and within such areas map more flashbacks, which user product term. set growing provider demand it drive highlights

operational priorities have beyond. main Looking for we our ahead, in cloud business and three XXXX

customers optimization targeted and protection onboarding of offerings, and with existing processes via the the campaigns. of First, growth outreach our subscribers

revenue. partners global help the finally, to grow new modules Second, expand And incremental to deliver sales. services new base through features, that anchor new customer with and

areas on Our build these going successes been progress to early look three we'll forward. of encouraging, to and in has date all

We operators have in of additional Plus over messaging in XX sales multiple Japan, million the reflects quarter. products license well the operations. the Japanese subscribers Moving fourth This to where our recorded with Message our Messaging downloaded adoption Advanced continued App.

customers flow Japan, both Japan in cash results messaging strong finished a we product. Spatial RCS-based analytics the and year. conscious made financial to Messaging supporting our investments of Bricsys, launch Verizon as our solutions, including in Quasar, as with wins the business, planned digital continued leveraging by These our suite with with analytics through our platform focus well encouraged messaging profitable new the e-mail growth product in RCS our Spatial partnership lines. our Message the expansion Plus we're within RCS-based later this are contributions. business, dollar and a our and our While Across win year adoption win our prioritizing multimillion financial of included partnership In decisions with our we Sage from on offering, continued in and we existing our of in

that continued provider agreement definitive Digital second for upfront transaction The help to the better also paid be product quarter. $XX close company better -- core announced to is enables focus This sale profitability. telecom Importantly, management development software. The today entered our to are transaction to on our we million overall balance reported to is remaining of contributors, strengthen as a Synchronoss that which value assets leading sheet Digital $XX should the approximately the and lines. and Experience retain we we and a in million expected drive into allows us high-margin iQmetrix, retail will of with Solutions approximately also Platform our Activation with our of further

the share to XG and a extend collaboration offerings, will believe I benefits total industry including to will in the highlight over beyond, foster Carriers to few that benefit XXXX in the order in and trends Before consumer. through for XG we occur to now capture in tremendous the revenue innovation potential sizable Beginning the transactions XG, partner XG will wireless networks. have protection access consumer turn a require I'd to Taylor, carriers and bundled call Synchronoss and the that services. opportunity fixed like future, over to service in

more research a Market $XXX study value-added global opportunity and door to strategic established role carriers XXXX. to XG set the take that assertive Future, era, consumer digital in During by it's primary and capture a According cases are use chain Research trial, the value billion services of by in being the a share providers market were will services use a cases open spend. large present clear the XG the for partnerships. of XG comprehensive but through carriers explored to innovation are left Today, and still services quickly over-the-top mobile over

business, for XG cloud potential represent our and market, services, engagement For consumer customer carriers simplifying authentication we rate services value-added carriers see will messaging revenue of for employing significant plans. onboarding, digital own that solutions more carriers. to heightened powering value, bundling are value-added into growth digital as adoption the and key bundles consumer approach strategies. drive billing By consumption, and the premium leading To and

cloud customers Over have the already offers. differentiate to consumer our our their last leveraging year, started

of cloud Verizon adding with XG their storage AT&T gigabits example, Platinum their TracFone Unlimited More recently Unlimited including prepaid Talk space More Do included XG is MAX gigabits For part Get and storage $XX is And plan. rate plans. and of cloud to cloud XG their of XXX Straight plans. Gold, XXX is

and device wireless to global usher their locations. more are use often data from will antenna to communications wireless technology everyday installing links to can are to wireless types footprint broadband while access leveraging lives. sights to Fixed and are fixed sites. Internet, Businesses the addition fixed providers. on access also XG already setting share take broadband In carriers alternative into two many between mobile market The wireline homes cost-effective starting service, connected enable between or cables carriers leasing more fiber access in

for categories. Deloitte data estimated those captured. of have from will and that's proven Mobile requirements Trend content devices, XX.X has of and to XX privacy, to XX from across will and More and in average to help of the globally XXXX, our key the will that a U.S. And billion Connectivity increase connected devices promise data in solutions by billion storage according privacy the by true role is -- increased cloud XXXX stewards all and protection a delivering connected XX devices devices data in captured the hardware on themselves data for number fact, household cloud Carriers home. increase and the play lead consumer as In up the XXXX. that's survey, reach protection

to data will Finally, of home will protection protection, wireless protection adoption personal Consumer carriers for believe the network XG We become subscribers, wireless fixed cloud at help with hardware label trusted our service allow personal and cloud connectivity, consumers. go. of carriers on end-to-end network total insurance, both white to services around solution uniquely and their demand mobile trusted and are of capitalize providers the fixed total on as relationship and carriers security, home accelerate the platform both plans. positioned

and value see XXXX, cloud our further on storage. both Home and the evidence Verizon Personal extremely also unlimited XG of customer In promise efforts QX its ability home. and their announced industry their own Verizon Plus their subscribers contribute is we're to that the these This fact, includes to of high-performing our take that to market delivering in grow advantage Synchronoss to in to It offering. provides trends, service reference positioned revenue recurring Synchronoss cloud business. Cloud well and our

fourth Taylor? the our to momentum detail. demonstrable in translating I'll financial quarter Our performance discuss With XXXX. strong look that, in the Taylor and the areas, in building focus we quarter a work results over is CFO, greater Greenwald, turn this that forward to into in our to for key results call our is indicator on

Thank you, Jeff.

business. leading Before success of the results, indicators, performance full like I'd briefly to discuss some the our serve I which into key our metrics for financial as move

First are XX% cloud contributed year-over-year the The to gains quarter in increase subscriber cloud a fourth accelerating previously in of revenue. sustained growth XX%, our revenue. cloud mentioned

throughout revenue cloud to continue expect We growing XXXX.

larger profitability, proportion will cloud total optimize business for on revenue. of our a continue to we As our take

of revenue basis, XX% up down revenue year-over-year, Looking XX% XX% as revenue. by down XXXX. up revenue, a total Digital at made increased continue a Messaging X% year-over-year Cloud XXXX. We of of XX% was anticipate X% in up total total a that in of revenue proportion basis, in XXXX revenue, revenue. which made will XX% Cloud increase to on to on revenue product. revenue, year-over-year from

revenue. third which for year. recurring full revenue metric for both quarter. to we and million Recurring recurring operating us $XX million core the quarter the from $XX.X represented is increased X.X% Another increased the revenue, for during in in sequentially of revenue Quarterly which XX% an recurring from $XXX increase total to revenue. accounted our total which is total Annual XX% in XXXX, of accounted million revenue million, $XXX quarter. X.X% grew This revenue for of XX% the

year from the Turning period, the to marking fourth the $XX.X now X.X% for in the increased Cloud a ended results primarily XXXX. the subscriber Total in during growth prior The fourth license quarter million our of $XX.X December million quarter $X.X million second business growth straight quarter full and financial to of revenue with XX, Cloud year-over-year XXXX year increased by fourth approximately in the nonrecurring sale was and improvement. quarter. revenue driven during quarter in the

well sales in increase revenue to License Messaging in as fourth businesses revenue. X and all Additional the strong as services contributed also professional quarter

December decrease decline License growth prior in Advanced revenue. subscriber year $XXX to from X.X% a in the was million, in XX% offset For ended $XXX professional increased the sale partially the comparable and increased ago profit sales revenue by or The contributed quarter as million of of decreased results. XX, license Gross revenue strong from revenue the XXXX, to total the The during total revenue full from nonrecurring quarter XXXX. the in CCMI well million Cloud was XX.X% Cloud million Messaging fourth in to to business due year fourth $XX.X the total period. $XX year, XX% which services

For stock gross were of million, the profit margin in The revenue to to compared from fourth and $X.X the throughout Income $X.X operations total lower shift recorded savings toward attributable a million an offset item result profit loss XX% revenue onetime gross primarily implemented in initiatives, XXXX. In a a mix revenue full XXXX. of a in margin more than cost and year, was to mainly SG&A improved total benefit cost XXXX. in profit compensation gross quarter, and operating was in million, $XXX gross savings initiatives XX% compared Improvement $XXX more income to the profitable QX year. which a increases of on revenue million of from

from million in was the million to amortization period. reduction loss compared of For and the in driven or The year company's stock quarter cost-effective a expense share to center million in improved utilization in loss providers. XXXX. savings data $X.X loss operating The from improvement the fourth to primarily net XXXX, share $XX million $XX.X depreciation year expense, of to loss operations by recapitalization. $XX in in reduction was dividends full third-party resulting attributable addition June was in a a prior preferred per resulting to compared from $X.XX or $X.XX 'XX improvement per the net Net

foreign implemented License recorded favorable prior $X.X revenue of in high-margin adjusted per as share cost to year increase XXX% increased measurement XXXX. operating loss million $XX.X increased the was to For $XX.X CARES the a million Act prior was a full year. year of loss share net XXXX, reflects as non-GAAP received in million noncash or tax in ended translation The net including the a the $X.XX result performance, per million net The year. savings December from from a loss XX, currency in of Adjusted sales revenue, $XX.X compared and initiatives EBITDA in benefit greater or well the XXXX, EBITDA, $X.XX period. larger related to throughout

$XX.X in cost full from in XX, throughout implemented year. EBITDA primarily XXXX. XXXX, was adjusted savings million year December to $XX.X the increased XX% attributable adjusted Increase initiatives million to ended EBITDA For the

Now million receivable these currently have audit. and assets the the balance quarter moving Also in payment general in equivalents also balance were the the use negative information is difficult the free $XX.X experiencing the payments XXXX, quarter the from any indication an senior software were preferred under do million $XX.X $X proceeds the Act. at with CARES payments notes. It's the cash the the I'll cash quarter audit September cash to free notes, tax the sheet, sale free the a they the to of to ahead. of December and of becomes materials noting Cash outlook timing customer our accounts increase workload payroll the At be in under XX. IRS for of which worth the Requested intention IRS which complete of it's in that were due to a $X.X resources, capitalized of to balance investment several was of when contained $X.X to million time this will to not issuance received. take these in and XX, incremental during now flow at refunds of Contributing and refunds, $X.X a for third the as Partially flow moment million license $X.X -- million. updates tax challenges IRS impacting our stock impact receive down million the compared dividend flow estimate deferred are quarter. that sales, It's increase when offsetting has was Included of provided the new fourth to and year the favorable the an these terms occurred in $XX in million been us million the late $XX million audits cash preferred do progressing. sheet. time, is be provide when pay to financial provide and them. when We'll and receive given given of we will prepaid available. some results

to we guidance adjusted As and total Synchronoss business. of annual provides our a for these EBITDA for overall key the reminder, as performance be believe metrics indicators revenue

focus introducing improvement We cash adjusted are cash a in for management free flow guidance of team also major XXXX. on as the is

we first As rate. we and look Cloud continue quarter see at to double-digit grow a full subscribers year our the XXXX, upcoming at

well Our expectation XXXX. recurring the in business driven positive the in current adjusted related, but negative the beginning and cash of performance efforts number year, are will overall an as product The results innovative to the the which cash our primarily second trend. flow Based free early our remain vendor throughout in on there streamline year is high-performing Cloud cost demonstrated as will free first grow core financial that be offerings. annual a strong within by ongoing the Cloud healthy operating in improve will there revenue in organization structure, and adjusted and progress flow quarter the business company's improved as in improvement payments, significant become the occur our quarter,

free and be million million our of XXXX The continued from profit similar between assets License Over range GAAP are two flow is contribution revenue the cash cost we is deferred EBITDA work a company rather sale adjusted first will for Activation per Cloud cornerstones toward about improvements and turn a or it XXXX the quarter is to investment quarter strong than the our reducing all progress growth, cloud that The for and to prior Josh plan EBITDA noncash simplify drive to balance subscriber months strengthen to the for less across GAAP completes Q&A. plan. excited now upfront XXXX. we us than the a fee and By the expect revenue X back switched and million. in In Generating to and line Factoring remains our for offset expected free forward year, year. sheet, our and $XXX and in defined transaction as to and DXP build XXXX. revenue, $XXX continued for revenue I'll level businesses. payments most our our these $XXX my comparable our Cloud fiscal top toward usage-based after it summary, pay declines in trends time, the customers adjusting was was look per structure, by in expected The We're continuing our XXXX confident it XXXX and XXXX. made net $XX nature long-term will of professional to fourth approximately adjusted top revenue a fee in as grow in transformation strong of For in million. $XX Digital which over be manage as we improvement Messaging executing flow bottom in priority Cloud will costs, higher-margin cash structures revenue. strong to maximize company last models, $XX optimize further from to improvement execution large in on business million in expects services summary. and have XXXX. Thank at focuses and and its month. you. the lumpy of the That growth range that between per Messaging business be by Digital total commonly The capital million business revenue growth our typically

Instructions] Nichols from first Riley. Josh question [Operator of Our comes B.

proceed. You may

to traction the a short color. a bit balance you it's we've growth subscriber with I if to provide Clearly, accelerate. Good 'XX little was Cloud seen forma But wondering for guiding on and the year-over-year a pro could company the see basis for sheet there's lot further the sale. growth business, of more

Messaging expecting you relative see like cloud of to the expect XX% you that kind break business the that for and declines were to down, line to growth business? maybe may rate the If top some what's in to you're Digital you that number gets that

Josh. Thanks, Yes.

growth, So trends Cloud, will continue double-digit to not Digital reach of rates. will we but Messaging mentioned, maybe expect rate. approach we the growth continued quite offset which as we that will XXXX do from the as Cloud and declines the growth we double-digit some mentioned, pick It in And business, rates, growing. expect up

enjoyed continue double-digit the in and acceleration that really we It's the expect at say, Yes. to expansion we to here rate. that be, by And in as recent subscriber we've driven quarters. a materials will continue

we as sort the of revenue in we the growth that So follow saw fourth expect the tone set for to to quarter.

or that growth opportunities than and you rapid big this back as year, for in potential on a hit little to just at half clearly, there a then coming you're Cloud as seeing of more a acceleration traction online but stage, about opportunity. has obviously, follow-up company's a Telkomsel One, long-term the business. Verizon Have you AT&T earlier have Verizon, either what good someone if you of the but then the AT&T? partner, also been bit And could subscriber carriers seeing like

Yes.

have at that you comment I'll the of the in suggested. We were as top we steady performance So delighted on will momentum AT&T, on reflected Kitamura, you subscriber top adoption on XXXX. with Sigma. Verizon. growth We're through will month-over-month also seen And that it the seen And continue by well first very AT&T quarter-over-quarter, is that of and have as of XXXX. as Telkomsel feeling the piled you introduction acceleration as and in year-over-year mentioned, like be that Telkom

growth Now I to gate so the marketing get of get out at board. even very contributing accelerate time appropriately, say trains. takes just to in significantly and with to adopt implement would devices to expectations But for start of it ramp, customers and AT&T, as a these of outreach others the excited that it come have AT&T to XXXX, the work and little launch to bit additional cycles. that we plans, other on beginning launched application, their the expansion preloads to And that the to consumer set while In because to serve. device took a continue so on campaigns it's have Verizon of the certain get easy and to and a board little to you into the device customers have we need are and words, of forth existing

Please Capital. Mike Latimore question proceed. comes Northland with next from Our

But here. strong I there. relates to A to great of like I as on it really AT&T sounds relates as performance AT&T, sort there. mean -- it you the finish guess touched just year

technology tools more market -- it that? is of services continuing and terms to important it really your XXXX, to really some onboarding AT&T? about is that would or look be like about within advancements there to you programs Or are you want As bring something in here just

that of highlight. Yes. I'll couple There are a things

yes, well. And even Android the we're fixed opportunity that such We access as additional Personal for global Apple just series high with and and the AT&T it from home And you're see tackling, Cloud particularly to the think U.S. better an off, mentioned those a into that, by penetration expand to we marketing. Cloud coming focus the as an that, importance on that adoption do customers. marketplace that making to of piece strong community. going new to iOS to my that's is the sure recent done are a mobile market a AT&T of finally, that But the devices penetrate with AT&T of customers closely solution. we're continue also mobile launch the lot in making great that wireless represents and center the that. out that comments has blocking of working then closely a the of I great And onboard operator of First of area Personal in they've the for U.S. base easy focus for their applications the carriers more as own them their play deal investments in place seeing for beyond

then impact that? EBITDA was there any on sale here, the asset And from

single impact, $X million. relatively say, I'd $X million low a There's or minor digits,

the And or for year? become Is then positive a you will cash free the cash just be positive free a flow free idea the that clarification flow. -- on flow is cash you'll

basis, adjusted year. flow cash free the be will an for on positive It

next comes Ladenburg. Hickman Instructions] question with from [Operator Our Jon

You your proceed with may question.

improvement product Could you the bit elaborate Was in on do something little mix? to a that? gross margin? that get the else Or you just did

revenue also Cloud Cloud, a margin. have favorable No. over shifts the subscriber had more growth of to Cloud and Cloud, more and which mix then time, business. margin naturally gross license the margins And Messaging, up onetime sales obviously -- Yes. the as we given a carry the lift in combination in of we the Yes, high profile

sale. the about question just then And

Is the in do annual year revenues. about So that was business math, that million if I a generating correct? $XX

so were annual we No, we XXXX, about had had no, it million guidance, as we and into was of headed the it XXXX. what declining revenue no. It -- $XX was in -- -- was from

okay. so million -- $XX -- So

okay. -- So

At this over this I'll closing concludes time, any to turn session. the now for remarks. question-and-answer Miller our call back Mr.

you. Thank Great.

With customers today's Synchronoss to years of we Directors, enabling end and investors supporting organization contributions that operator, retiring delivering for to of back at I So for to thank and wrap that us innovations be and thank that I'd for he's the recognize to my sincerely of guidance service appreciate before We you, of that, the want of our his team after will I'd many call, like thank you of Board for predecessors. on share service to also and I Bill like our coaching the today, Cadogan, the your want we today. Synchronoss business. our the XX provided it continued all. discussed results to to to and quarter. the me you and Bill the first I'll Synchronoss years up the the support joining platforms, turn

you. Thank

we within that includes conclude laws. made call. regarding statements during safe like I contain may to Synchronoss' of harbor Before important This securities would this call forward-looking the cautions information provide forward-looking today's applicable call, statement meaning

believes are information can Although unduly circumstances, expectations correct. the this as given the and under it be based assurance the on information rely prove on reasonable assumptions that no forward-looking to to corporation not forward-looking is which that this be are current will cautioned listeners

date a any not the hereof, undertake Forward-looking Full unless Year us call, Quarter Fourth forward-looking for refer occurring statements the information. so information Synchronoss for contained herein more Call. you does circumstances Thank the required latest Technologies of date of by information, this Earnings section to XXXX update today as Please any for result the is corporation and events obligation to Conference joining forward-looking law. MD&A Fiscal the made whether or our or after as revise of at and

now may You disconnect.