Synchronoss Technologies(SNCR) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Second Quarter 2025 Performance and Highlights Synchronoss reported solid Q2 2025 financial results with $42.5 million revenue and $12.8 million adjusted EBITDA, despite a net loss, while strengthening its capital structure and reaffirming full-year guidance Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $42.5M | $43.5M | -2.3% | | Recurring Revenue % | 92.6% | 90.5% | +2.1 p.p. | | Net (Loss) Income | ($19.6M) | $78k | N/A | | Adjusted EBITDA | $12.8M | $13.0M | -1.4% | | Adjusted EBITDA Margin | 30.2% | 29.9% | +0.3 p.p. | - Received the full CARES Act tax refund of $33.9 million, using $25.4 million to pay down debt, which is expected to save $2.9 million in annual interest expenses[1][3][5] - The net loss of $19.6 million was primarily driven by a $12.5 million non-cash foreign exchange loss and a $6.4 million combined debt modification expense and loss on debt extinguishment[5][9] - Strengthened the capital structure by closing a new $200 million, four-year term loan, which retired $73.6 million of the prior term loan and $121.4 million in senior notes[5] - Signed an agreement with SoftBank to integrate its personal cloud solution into SoftBank's native customer application, which is expected to increase subscriber uptake in 2026[5] 2025 Financial Outlook The company reaffirmed its full-year 2025 financial guidance, projecting revenues between $170 million and $180 million and adjusted EBITDA of $52 million to $56 million, with specific free cash flow exclusions Full Year 2025 Guidance | Guidance Metric | Full Year 2025 Outlook | | :--- | :--- | | Revenue | $170M - $180M | | Recurring Revenue | At least 90% of total revenue | | Adjusted Gross Margin | 78% - 80% | | Adjusted EBITDA | $52M - $56M (at least 30% margin) | | Free Cash Flow | $11M - $16M | - The Free Cash Flow guidance for 2025 explicitly excludes proceeds from the federal tax refund and approximately $4.4 million in transaction fees related to the new term loan[9] Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, the balance sheet reported $291.4 million in total assets and $241.9 million in total liabilities, with cash decreasing to $24.6 million and total debt at $186.2 million Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Item (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $24,622 | $33,375 | | Total assets | $291,418 | $293,825 | | Total Debt (Current + Non-current) | $186,215 | $186,715 | | Total liabilities | $241,985 | $264,050 | | Stockholders' equity | $49,433 | $29,775 | Condensed Consolidated Statements of Operations In Q2 2025, net revenues were $42.5 million, with income from operations improving to $6.9 million, but significant foreign exchange and debt expenses led to a $19.6 million net loss, or ($1.87) per share Condensed Consolidated Statements of Operations (in thousands) | Income Statement (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenues | $42,486 | $43,458 | | Income from operations | $6,860 | $4,297 | | Foreign exchange (loss) gain | ($12,531) | $1,220 | | Net (loss) income attributable to Synchronoss | ($19,604) | $78 | | Diluted (loss) per share | ($1.87) | $0.01 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities decreased significantly to $2.6 million, resulting in an $8.8 million net decrease in cash and cash equivalents, ending at $24.6 million Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,578 | $11,840 | | Net cash used in investing activities | ($6,685) | ($7,510) | | Net cash used in financing activities | ($4,884) | ($5,105) | | Net decrease in cash and cash equivalents | ($8,753) | ($924) | | Ending cash and cash equivalents | $24,622 | $23,648 | Reconciliation of GAAP to Non-GAAP Financial Measures Gross Profit Reconciliation In Q2 2025, GAAP gross profit was $29.4 million (69.3% margin), which, after adjustments, resulted in a non-GAAP adjusted gross profit of $33.7 million (79.3% margin), remaining flat year-over-year Gross Profit Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Gross Profit | $29,443 | $29,334 | | GAAP Gross Margin | 69.3% | 67.5% | | Adjustments | $4,247 | $4,326 | | Adjusted Gross Profit | $33,690 | $33,660 | | Adjusted Gross Margin | 79.3% | 77.5% | Net Income and EPS Reconciliation In Q2 2025, the company reconciled a GAAP Net Loss of $19.6 million to a Non-GAAP Net Income of $1.1 million, primarily by adjusting for $12.5 million foreign exchange impact and $6.4 million in debt-related expenses Net Income and EPS Reconciliation (in thousands) | Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Net (loss) income | ($19,604) | $78 | | Foreign exchange impact | $12,531 | ($1,220) | | Debt modification expense | $4,384 | $0 | | Loss on debt extinguishment | $1,993 | $0 | | Other adjustments | $1,828 | $4,948 | | Non-GAAP Net income | $1,132 | $3,806 | | Non-GAAP Diluted EPS | $0.10 | $0.37 | Adjusted EBITDA Reconciliation Adjusted EBITDA for Q2 2025 was $12.8 million, nearly flat year-over-year, derived from a GAAP net loss of $19.6 million by adding back significant non-cash and non-recurring items like $12.5 million foreign exchange impact Adjusted EBITDA Reconciliation (in thousands) | Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (loss) income | ($19,604) | $78 | | Add back: Taxes, Interest, D&A | $12,230 | $10,222 | | Add back: Foreign exchange impact | $12,531 | ($1,220) | | Add back: Debt related expenses | $6,377 | $0 | | Other adjustments | $1,283 | $3,920 | | Adjusted EBITDA | $12,817 | $13,000 | Free Cash Flow Reconciliation In Q2 2025, free cash flow was negative $1.1 million, a significant decrease from $7.6 million in Q2 2024, with adjusted free cash flow at $0.5 million after specific adjustments Free Cash Flow Reconciliation (in thousands) | Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $2,285 | $11,313 | | Less: Capital Expenditures | ($3,375) | ($3,707) | | Free cashflow | ($1,090) | $7,606 | | Add: Adjustments | $1,624 | $1,319 | | Adjusted free cashflow | $534 | $8,925 | Supplementary Information Non-GAAP Financial Measures Definitions This section defines key non-GAAP metrics like Adjusted EBITDA, Free Cash Flow, and Recurring Revenue, which provide a normalized view of operating performance by excluding specific non-recurring or non-cash items - Adjusted EBITDA is calculated by taking GAAP Net (loss) income and adding back items such as stock-based compensation, restructuring costs, depreciation and amortization, interest expense, foreign exchange impact, and debt-related expenses[14][15] - Free Cash Flow is defined as operating cash flow minus capital expenditures. Adjusted Free Cash Flow further excludes net cash related to litigation, remediation, and restructuring activities[17] - Recurring Revenue is calculated as the sum of Subscription revenue and Transaction revenue[17] Forward-Looking Statements This section includes standard forward-looking statements regarding future expectations and financial performance, which are subject to risks and uncertainties that could cause actual results to differ materially - The document contains forward-looking statements that are not guarantees of future performance and are subject to risks, assumptions, and uncertainties[18] - Investors are directed to the "Risk Factors" section of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for a detailed description of potential risks[18]