Synacor (SYNC) Tops Q1 EPS by 2c, Revenues Miss; Withdraws FY20 Guidance

Synacor (NASDAQ: SYNC) reported Q1 EPS of ($0.08), $0.02 better than the analyst estimate of ($0.10). Revenue for the quarter came in at $20.6 million versus the consensus estimate of $22.45 million.

First Quarter Highlights

• First quarter revenue of $20.6 million
• First quarter GAAP net loss of $4.5 million and Adjusted EBITDA of $0.3 million
• 260 new and expansion customers for Zimbra email and collaboration platform. Ramping up the previously announced significant new streaming services Cloud ID customer
• Software segment adjusted EBITDA margins grew to 31.9% from 25% and unallocated corporate G&A declined 20% compared to the year ago quarter
• Merger planning with Qumu continues; S-4 registration filing has been slightly delayed due to COVID-19

“Our transition to a higher-margin, SaaS-focused software company continued,” said Himesh Bhise, Synacor’s Chief Executive Officer. “It is encouraging that our Software & Services segment grew modestly in the face of economic turmoil, with revenue excluding discontinued products up 2.4% and Segment Adjusted EBITDA growing 26% year-over-year, representing a 31.9% margin. Our collaboration and identity platforms are particularly relevant in an environment of distributed work and higher streaming.”

“The COVID-driven impact on Synacor has been isolated to our publisher advertising line of business,” continued Bhise. “We felt a sharp reduction in March revenue, consistent with the industry-wide reduction in media spend, and expect this slowdown to continue through Q2. However, our active publishers grew 50% over last year, validating an increased need for the monetization services we provide and positioning us well when the economy recovers.”

“We have been working hard to protect the health and safety of our people, do our part to ‘flatten the curve’, deliver excellence to our customers, maintain focus in growing our business, and implement cost and cash-control measures. I could not be prouder of the Synacor team for their hard work and dedication during these volatile times. We have a resilient business, strong balance sheet, and the access to capital to emerge on the other side of this pandemic and accelerate our transformation into a SaaS-focused software company,” Bhise concluded.

Guidance

Due to the uncertainty surrounding the extent, duration, and pace of recovery related to the COVID-19 pandemic, Synacor is withdrawing its previously provided guidance for 2020 and temporarily suspending its practice of providing quarterly guidance updates until the current situation abates and our visibility improves.

For earnings history and earnings-related data on Synacor (SYNC) click here.

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