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Sep 30, 2023
Synchronoss Q3 2023 Earnings Report
Reported third quarter 2023 results, completed the sale of Messaging and NetworkX businesses, and realized multi-year strategy of cloud-only operating model.
Key Takeaways
Synchronoss Technologies reported mixed results for Q3 2023, with continued strength in the Cloud business offset by revenue weaknesses in Messaging and NetworkX. The company completed the sale of its Messaging and NetworkX businesses to Lumine Group, positioning Synchronoss as a higher margin, Cloud-only business.
Closed the sale of the Messaging and NetworkX businesses to Lumine Group for up to $41.8 million, focusing on cloud-centric solutions.
Secured a seven-year contract extension with Verizon to provide Synchronoss Cloud through 2030.
Launched Synchronoss Personal Cloud with SoftBank, expanding its global presence in Japan.
Extended existing Cloud agreement with AT&T for an additional year under existing contract terms.
Synchronoss
Synchronoss
Forward Guidance
The company expects fourth quarter revenue and adjusted EBITDA to decrease based on the divestiture of the Messaging and NetworkX businesses. On a pro forma basis, the Company now expects Cloud-only GAAP revenue to range between $40 million and $42 million and adjusted EBITDA to range between $8 million and $11 million.
Positive Outlook
- Expects Cloud-only GAAP revenue to range between $40 million and $42 million.
- Expects adjusted EBITDA to range between $8 million and $11 million.
- Reiterating its expectation to be cash flow positive for 2023.
- Expects cash flow generation to significantly improve in 2024.
- Forecasting strong revenue growth, gross margins of greater than 70%, and adjusted EBITDA margins of greater than 25% in 2024.
Challenges Ahead
- Compared to the third quarter of 2023, management expects fourth quarter revenue and adjusted EBITDA to decrease based on the divestiture of the Messaging and NetworkX businesses.
- Due to elongated mobile device upgrade patterns and the timing of the recent customer launch, the Company expects Cloud subscriber growth to moderate slightly to high-single-digit/low-double-digit levels in the fourth quarter of 2023
- Includes certain stranded costs as well as other restructuring related expenses which the Company plans to remove from the standalone Cloud business going forward.
- The comparable revenue performance for Q4 2022 is $39.8 million.
- Expects adjusted EBITDA to range between $27 million and $30 million in 2023.