Synchronoss Technologies, Inc. Q4 FY2024 earnings call

• 2024 was a landmark year with completion of strategic transformation to a high margin global cloud solutions provider, generating positive free cash flow and ~29% adjusted EBITDA margins.
• Fourth quarter had 6% year-over-year subscriber growth, full year revenue $173.6 million (+5.7% YoY) and full year adjusted EBITDA over $50 million (+61% YoY).
• Signed multiyear contract extensions with AT&T and SFR; over 90% of 2025 projected revenue under multiyear contracts with global tier one customers.
• Introduced cloud platform enhancements leveraging AI/ML, showcased at CES and Mobile World Congress.
• Launched Capsyl, a Synchronoss branded Personal Cloud product for smaller and international operators, with promising test results in Indonesia.
• Focus on organic growth with current customers, expanding Personal Cloud solution, and engaging with new customer prospects.

In the fourth quarter, total revenue increased to $44.2 million from $41.4 million in the prior year period, a 6.8% increase. Adjusted gross profit in the fourth quarter was $35 million, 79.3% of total revenue, up from $31.1 million and 75.1% in the prior year. Fourth quarter income from operations was $7.3 million. For the full year, total revenue was $173.6 million, a 5.7% increase year-over-year. Adjusted gross profit for the full year was $135.7 million, 78.2% of total revenue. Income from operations for the full year was $21.7 million. Fourth quarter adjusted EBITDA was $13.9 million, 31.4% margin; full year adjusted EBITDA was $50.4 million, 29% of total revenue. Quarterly recurring revenue was 91% of total revenue in Q4, and in 2025, recurring revenue is expected to be at least 90% of total revenue.

• 2025 revenue expected to be in the range of $170 million to $180 million.
• Adjusted gross margin expected to be in the range of 78% to 80%.
• Recurring revenue in 2025 is expected to be at least 90% of total revenue.
• Adjusted EBITDA expected to be in the range of $52 million to $56 million.
• Free cash flow expected to be between $11 million and $16 million.

• Approximately $2 million in non-recurring professional services revenue from SoftBank integration won't recur in 2025.
• BT's wind-down of legacy Wireline cloud offering, which contributed ~$6 million in 2024 annualized revenue, won't continue in 2025.
• Uncertainties related to the tax refund process and its impact on debt repayment plans.

Q: Talk about to what degree cost cutting or efficiency efforts are completed and seasonality.

A: At this point, cost cutting actions are substantially complete, but will continue to look for efficiencies; with 90% recurring revenue, expect steady revenue throughout 2025 with increases from Q1 through Q4, and Q4 may have additional lift from new customer opportunities.

Q: How does AI offer new revenue opportunities and help with costs.

A: AI enriches product experience and has potential for new revenue through premium features like Genius; also used for operational efficiencies in day-to-day operations and product development, reducing operating expenses.

Q: Plans on debt refinancing.

A: Actively looking at options to refinance senior notes and term loan, will update the financial community when a clear path is established.

Q: Importance of the prepaid sector.

A: Prepaid sector is a relatively small part of the customer base but is growing as Verizon focuses on it, expected to contribute to subscriber growth in 2025