Synacor (SYNC) Tops Q2 EPS by 2c

Synacor (NASDAQ: SYNC) reported Q2 EPS of ($0.07), $0.02 better than the analyst estimate of ($0.09). Revenue for the quarter came in at $18.18 million versus the consensus estimate of $18.5 million.

Second Quarter Highlights

• Second quarter revenue of $18.2 million
• Second quarter GAAP net loss of $3.2 million and Adjusted EBITDA of $0.5 million
• Software & Services segment revenue of $10.9 million, up 3%, and adjusted EBITDA margins expand to 34% from 26% in the prior year
• Delivered double digit growth rates in Cloud ID and Zimbra Enterprise SaaS, expected to sustain, offset by COVID-19 impact on Advertising and consumer Email
• Company’s cost reduction plan expected to yield $10 million of annual savings

“Our Software business grew 3% this quarter, driven by double digit growth rates in Cloud ID and Zimbra Enterprise SaaS tempered by lower revenue from maintenance and consumer Email as certain customers proactively reduced costs during the COVID-19 pandemic,” said Himesh Bhise, Synacor’s Chief Executive Officer. “We renewed all Service Provider customer contracts that were up for renewal, added four new Cloud ID customers, booked 197 new and growth Zimbra customers, and expanded our sales pipeline.”

“In addition, we remain focused on driving profitability, and are executing on a cost reduction plan that is expected to deliver $10 million in annual savings without impacting our customer commitments and growth initiatives,” Bhise added. “These actions will significantly improve our EBITDA margins even at COVID-19-impacted levels of revenue, and position us to generate positive operating cash flow starting in Q4.”

Guidance

Due to the continued uncertainty surrounding the duration and pace of recovery from the COVID-19 pandemic, management has decided to continue the suspension of quarterly guidance updates until visibility improves.

For earnings history and earnings-related data on Synacor (SYNC) click here.

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