Synchronoss Technologies(US:SNCR)2023-11-08 03:39Financial Data and Key Metrics Changes - In Q3, adjusted EBITDA increased 16.7% to $13.4 million, representing 24% of total revenue, up from $11.5 million or 19.1% in the prior year [1] - Total revenue decreased 7.2% to $55.6 million from $59.9 million in the prior year period, primarily due to delays in key customer contract decision-making [62] - Gross profit increased 1.9% to $30.7 million, or 55.2% of total revenue, compared to $30.2 million or 50.4% in the prior year [42] - Net loss was $5.4 million or $0.06 per share, compared to a loss of $1.3 million or $0.01 per share in the prior year [63] Business Line Data and Key Metrics Changes - Cloud revenue made up 71% of total revenue in Q3, up from 64% in the same period in 2022, with cloud revenue of $39.7 million, a 3% year-over-year increase [22] - Invoiced cloud revenue increased 10.3% year-over-year to $41.6 million in Q3, with a trailing 12-month increase of 13.9% [23] - Messaging revenue was $9 million, down 23% year-over-year, and NetworkX revenue was $6.9 million, down 29% year-over-year due to delays in customer contract decision-making [61] Market Data and Key Metrics Changes - The company secured over 75% of its cloud revenue under contracts with at least 4-year terms, providing strong visibility into future revenue [20] - Quarterly recurring revenue was 88.4% of total revenue, an increase from 83.8% in the previous quarter and 83.7% in the same quarter last year [41] Company Strategy and Development Direction - The company is focused on a cloud-only business model following the divestiture of its Messaging and NetworkX businesses, aiming for higher margins and improved cash conversion [29] - Strategic priorities include protecting and growing subscribers, expanding the global customer base, and delivering new anchor features [32] - The company anticipates strong revenue growth in 2024, targeting gross margins of greater than 70% and adjusted EBITDA margins of greater than 25% [66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, emphasizing a more focused and determined approach to delivering strong results and long-term value to stockholders [74] - The company expects cloud subscriber growth to moderate slightly in Q4 2023 but return to consistent double-digit growth in 2024 and beyond [26] - Management noted that the divestiture will improve the capital structure and enable the company to unlock the superior financial profile of the stand-alone Cloud business [60] Other Important Information - The company has updated its revenue recognition model for its Verizon Cloud contract to improve alignment between subscriber growth and revenue growth [40] - The company expects to generate strong cash flow in 2024, significantly improving its capital structure over time [66] Q&A Session Summary Question: What was the impairment on the loan? - The dollar value of the impairment was approximately $4.8 million [6] Question: Can you provide insight into the pipeline for Personal Cloud? - The company has ongoing discussions with a good number of existing operators, but these sales cycles take time to develop [7] Question: How much of the expected growth rate will come from existing versus new customers? - Approximately 75% of current revenues are covered by contracts with terms of four years or greater, indicating strong revenue predictability [71]