Synchronoss Technologies, Inc. (NASDAQ:SNCR) Q3 2018 Earnings Conference Call Transcript

Nov 07, 2018 • 04:30 pm ET

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Synchronoss Technologies, Inc. (NASDAQ:SNCR) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Synchronoss Technologies Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr. Brian Denyeau, IR. Thank you, you may begin.

Executive
Brian Denyeau

Thank you, Michelle. Good afternoon, everyone. Thank you and welcome to the Synchronoss Technologies third quarter 2018 earnings call. We will be discussing the results announced in the press release issued after the market close today. Joining me on the call is Glenn Lurie, President and CEO of Synchronoss, and David Clark, Synchronoss' CFO.

(Forward-Looking Cautionary Statement) In addition to US GAAP reporting, we report certain financial measures that do not conform to GAAP. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliation of GAAP measures to their non-GAAP measures in addition to the description of the non-GAAP measures can be found in today's earnings press release.

With that, I'll turn the call over to Glenn. Glenn?

Executive
Glenn Lurie

Thanks, Brian, and thanks to all of you for joining us today. I'm pleased to report that Synchronoss returned to growth and profitability in the third quarter, driven by improving trends across all parts of our business. Our business has stabilized and our focus going forward is on generating consistent profitable growth, which we believe we will drive significant value for our shareholders.

Before I review the business in more detail, I'd like to highlight the progress we've made across the business and capital structure since our last earnings call. First, we're very happy that we were able to work with NASDAQ to get our suspension lifted, and we are actively trading today as you all know. Second, we generated sequential revenue growth in the quarter as promised. We saw strong performance across each platform with the biggest driver coming from our cloud business which is generating impressive take rates and strong subscriber growth.

Third, we delivered positive adjusted EBITDA of $4.5 million, inclusive of a one-time expense of $4.9 million from the prior quarter. Excluding this one-time expense, normalized adjusted EBITDA was $9.4 million with adjusted EBITDA margin at 11.2%. This puts us on track to achieve our previously stated target of 15% adjusted EBITDA margin exiting 2018 and hitting our adjusted EBITDA guidance.

Fourth, we made significant progress executing on our cost-savings initiatives and expect to achieve our previously stated goal of over $20 million in 2018 and are on target to hit an incremental $25 million of annualized cost savings in 2019. We are committed to investing for growth while maintaining expense discipline and driving greater efficiency across the company.

Fifth, we also recently retired approximately $116 million or over 50% of our convertible notes that were due in August of 2019. And as a result, the lawsuit brought from our holders of those convertible notes was dismissed. This strengthens our balance sheet and shows our confidence in