Synchronoss Technologies, Inc. Q3 FY2024 earnings call

• The third quarter continued steady operational and financial progress with 8% revenue growth and 37% adjusted EBITDA growth. - Announced a key client renewal with SFR, a three-year contract extension for their personal cloud storage platform. - Product innovation includes AI features like Memories and AI-enhanced Genius in the Personal Cloud platform, as well as enhancements to backup and notification management. - Implemented auto-scaling across multiple customers, resulting in a nearly 50% drop in compute expenses for one major customer. - Transformation to a global cloud solutions provider is successful, with strong growth and profitability reflecting strategy execution.

For the third quarter, Synchronoss recorded revenue of $43 million, an 8% increase over the prior year period. Adjusted EBITDA was $12.7 million, a 37% increase from the prior year's $9.2 million. Quarterly recurring revenue was 92.2% of total revenue compared to 89.5% in the prior year period. Cloud subscriber growth was 5.1% year-over-year.

• Increased full-year guidance for revenue to a range of $172 million to $175 million (up from prior range of $170 million to $175 million). - Adjusted gross margin guidance revised to a range of 77% to 78% (up from 73% to 77%). - Recurring revenue guidance revised to a range of 90% to 92% of total revenue (up from 85% to 90%). - Adjusted EBITDA guidance revised to a range of $47 million to $48 million (up from $43 million to $46 million).

• Delayed tax refund: Remaining balance due of approximately $28 million plus interest estimated to be received in 2025, affecting net cash flow projection. - Forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, as detailed in SEC filings.

Q: Could you elaborate a little bit on the revenues this quarter? They were down sequentially. Was there something seasonal or something out of the ordinary that would have accounted for kind of a down sequential move there?

A: The only modification we actually saw on a quarter-over-quarter basis was a slight reduction in professional services. Our recurring or subscription revenue is actually up even higher on a year-over-year basis. It's up over 11%. And our professional services dropped a little bit from the prior quarter as we completed the implementation of our SoftBank deployment.

Q: Could you give some color on what is the status of AT&T renewal?

A: AT&T continues to be a very robust grower in their subscriber base, consistently growing quarter-over-quarter, which is only increasing the relevance of our platform to their business and to their subscribers. As such, we are working very well with AT&T to finalize the contract extension, which we are confident will be concluded before the end of the year.

Q: And how many paying users do you have with SoftBank?

A: We don't go to the specifics of any particular client. But as I mentioned previously, we are now measuring that in the hundreds of thousands of customers. And we have continued to see very strong growth since the last time I had an opportunity to talk to you about that 12, 13 weeks ago. It's been quite consistent, and we've been pleased at our constant collaboration with them to continue to expand its reach.