Synacor, Inc. (NASDAQ:SYNC) Q1 2019 Earnings Conference Call Transcript

May 08, 2019 • 05:00 pm ET

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Synacor, Inc. (NASDAQ:SYNC) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Sharelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Synacor 2019 First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator Instructions) Thank you.

David Calusdian of Sharon Merrill Associates, you may begin your conference.

Executive
David C. Calusdian

Thank you, and good afternoon. Welcome to Synacor's First Quarter 2019 Financial Results Conference Call. On the call today to discuss the company's results are CEO, Himesh Bhise, and CFO, Tim Heasley. Please note that management will make forward-looking statements during the call that are subject to various risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance.

Further information on these and other factors that could affect the company's financial results is included in Synacor's filings with the Securities and Exchange Commission. Also during this conference call, management will refer to non-GAAP financial measures in discussing the company's performance. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables included in today's press release.

I'll now turn the call over to Himesh Bhise, Synacor's CEO.

Executive
Himesh Bhise

Thank you, David. Hello, everyone, and welcome to our Q1 2019 conference call. Today, I would like to emphasize three takeaways. We began 2019 with a strong first quarter driving profitability. Two, we have initiated segment reporting, as promised, to provide greater investor visibility into how we are optimizing our software and our advertising businesses. And three, we continue to deliver customer wins and have a strong pipeline of sales opportunity.

Takeaway 1. I'm pleased to report that we started 2019 with a strong first quarter in keeping with our themes of profitability and high-margin software revenue. We delivered adjusted EBITDA of $1.7 million, a 179% improvement from $0.6 million a year ago and exceeding our guidance for the quarter. This was driven by growth in high-margin software revenue and our continued vigilance on costs. We delivered revenue of $31.8 million, in line with our guidance for the quarter. Software revenue was $11.2 million in the quarter, growing about 4.4% from a year ago. Our recurring software revenue was $8.9 million, representing 79% of our total software revenue.

Takeaway 2. We have initiated segment reporting as announced last quarter to provide greater business transparency. Synacor's white-label Portal & Advertising business is well-known to investors. What many investors may not fully appreciate, however, is been in the past three years, we have also built a high-margin, recurring revenue-driven software business, which includes our Zimbra e-mail and collaboration platform and our cloud-based identity platform.

We have now formalized these lines of business in our accounting processes and today, we are reporting revenue and profitability for our Software & Services segment and our Portal & Advertising segment. We are doing this to provide better visibility for investors into how we are