10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to              

Commission file number 000-52049

SYNCHRONOSS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	06-1594540
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Crossing Boulevard, 8th Floor Bridgewater, New Jersey	08807
(Address of principal executive offices)	(Zip Code)

(866) 620-3940

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Shares outstanding of the Registrant’s common stock:

Class	Outstanding at July 23, 2013
Common stock, $0.0001 par value	40,154,682

SYNCHRONOSS TECHNOLOGIES, INC.

FORM 10-Q INDEX

		PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements and Notes
	Consolidated Balance Sheets (unaudited)	2
	Consolidated Statements of Income (unaudited)	3
	Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
SIGNATURES

1

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

	June 30, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	46,204		$	36,028
Marketable securities	12,996			20,188
Accounts receivable, net of allowance for doubtful accounts of $372 and $258 at June 30, 2013 and December 31, 2012, respectively	73,995			74,980
Prepaid expenses and other assets	23,576			24,012
Deferred tax assets	4,142			4,114
Total current assets	160,913			159,322
Marketable securities	1,767			653
Property and equipment, net	85,009			58,162
Goodwill	124,160			127,322
Intangible assets, net	101,954			110,760
Deferred tax assets	8,008			6,961
Other assets	3,589			3,482
Total assets	$	485,400		$	466,662
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,345		$	8,980
Accrued expenses	33,087			41,658
Deferred revenues	22,353			20,954
Contingent consideration obligation	11,051			3,279
Total current liabilities	78,836			74,871
Lease financing obligation - long-term	9,260			9,540
Contingent consideration obligation - long-term	—			5,100
Other liabilities	3,104			2,494
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at June 30, 2013 and December 31, 2012	—			—
Common stock, $0.0001 par value; 100,000 shares authorized, 43,945 and 42,533 shares issued; 40,121 and 38,674 outstanding at June 30, 2013 and December 31, 2012, respectively	4			4
Treasury stock, at cost (3,824 and 3,859 shares at June 30, 2013 and December 31, 2012, respectively)	(67,487		)	(67,918		)
Additional paid-in capital	366,377			344,469
Accumulated other comprehensive loss	(7,049		)	(365		)
Retained earnings	102,355			98,467
Total stockholders’ equity	394,200			374,657
Total liabilities and stockholders’ equity	$	485,400		$	466,662

See accompanying notes to consolidated financial statements.

2

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net revenues	$	83,848		$	66,990		$	162,124		$	131,550
Costs and expenses:
Cost of services*	35,527			26,631			67,658			55,252
Research and development	16,358			12,570			33,076			25,446
Selling, general and administrative	14,943			11,060			29,595			21,450
Net change in contingent consideration obligation	1,743			(4,628		)	2,176			(5,408		)
Restructuring charges	—			—			5,172			—
Depreciation and amortization	9,610			5,962			18,579			11,133
Total costs and expenses	78,181			51,595			156,256			107,873
Income from operations	5,667			15,395			5,868			23,677
Interest income	197			330			283			728
Interest expense	(247		)	(241		)	(479		)	(480		)
Other income	301			779			43			793
Income before income tax expense	5,918			16,263			5,715			24,718
Income tax expense	(2,506		)	(4,314		)	(1,827		)	(7,286		)
Net income	$	3,412		$	11,949		$	3,888		$	17,432
Net income per common share:
Basic	$	0.09		$	0.31		$	0.10		$	0.46
Diluted	$	0.09		$	0.31		$	0.10		$	0.45
Weighted-average common shares outstanding:
Basic	38,551			38,353			38,368			38,207
Diluted	39,523			39,075			39,367			39,123
Comprehensive (loss) income	$	(795	)	$	11,530		$	(2,796	)	$	17,281

*         Cost of services excludes depreciation and amortization which is shown separately.

See accompanying notes to consolidated financial statements.

3

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2013			2012
Operating activities:
Net income	$	3,888		$	17,432
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	18,579			11,133
Loss on disposal of asset	32			214
Amortization of bond premium	149			665
Deferred income taxes	(1,137		)	438
Non-cash interest on leased facility	462			460
Stock-based compensation	11,040			9,750
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for doubtful accounts	985			(2,165		)
Prepaid expenses and other current assets	807			2,844
Other assets	(444		)	(170		)
Accounts payable	3,364			(4,517		)
Accrued expenses	(8,658		)	(5,658		)
Contingent consideration obligation	2,672			(8,803		)
Excess tax benefit from the exercise of stock options	—			(4,864		)
Other liabilities	511			82
Deferred revenues	1,082			(558		)
Net cash provided by operating activities	33,332			16,283
Investing activities:
Purchases of fixed assets	(37,728		)	(21,863		)
Purchases of marketable securities available-for-sale	(3,496		)	(13,013		)
Maturities of marketable securities available-for-sale	9,391			7,603
Business acquired, net of cash	—			(26,467		)
Net cash used in investing activities	(31,833		)	(53,740		)
Financing activities:
Proceeds from the exercise of stock options	10,630			4,912
Payments on contingent consideration obligation	—			(2,268		)
Excess tax benefit from the exercise of stock option	—			4,864
Repurchase of common stock	—			(3,773		)
Proceeds from the sale of Treasury Stock in connection with an employee stock purchase plan	670			—
Repayments of capital obligations	(910		)	(480		)
Net cash provided by financing activities	10,390			3,255
Effect of exchange rate changes on cash	(1,713		)	(147		)
Net increase (decrease) in cash and cash equivalents	10,176			(34,349		)
Cash and cash equivalents at beginning of year	36,028			69,430
Cash and cash equivalents at end of period	$	46,204		$	35,081
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	1,047		$	1,636

See accompanying notes to consolidated financial statements.

4

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(in thousands, except per share data unless otherwise noted)

The consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the financial statements and notes in the Annual Report of Synchronoss Technologies, Inc. incorporated by reference in the Company’s annual report on Form 10-K for the year ended December 31, 2012.  The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The Company has no unconsolidated subsidiaries or investments accounted for under the equity method. The results reported in these consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. The balance sheet at December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

1. Description of Business

Synchronoss Technologies, Inc. (the “Company” or “Synchronoss”) is a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe.  Such solutions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type and content transfer, synchronize and share. The Company’s solutions touch all aspects of connected devices on the mobile Internet.

The Company’s Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and “back-office” infrastructure-related systems and processes. The Company’s customers rely on its solutions and technology to automate the process of activation and content management for their customers’ devices while delivering additional communication services. The Company’s platforms also support automated customer care processes through use of highly accurate and effective speech processing technology and enable the Company’s customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets.  The Company’s platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing it to meet the rapidly changing and converging services and connected devices offered by its customers. The Company enables its customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content.  Through the use of the Company’s platforms, its customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected devices and services.  The extensibility, scalability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for its customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience.

The Company currently operates in and markets its solutions and services directly through its sales organizations in North America, Europe and Asia-Pacific.

5

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

2. Basis of Presentation

For further information about the Company’s basis of presentation or its significant accounting policies, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012.

In connection with the Spatial Systems Nominees PTY LTD (“Spatial”) acquisition, the consolidated balance sheet at December 31, 2012 has been recast to include retrospective purchase accounting adjustments.  These adjustments pertain to measurement period adjustments during the six months ended June 30, 2013 based on the reclassification and valuation of assets acquired and liabilities assumed in the Spatial acquisition.  The effect on the consolidated balance sheet at December 31, 2012, as a result of the recast, is a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase in goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase in deferred revenues of $9.6 million.

Impact of Recently Issued Accounting Standards

In February 2013, the FASB issued ASU 2013-02 which requires additional disclosures regarding the reporting of reclassifications out of accumulated other comprehensive income.  ASU 2013-02 requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.  This guidance is effective for reporting periods beginning after December 15, 2012. The Company adopted this guidance effective January 1, 2013.  The Company’s adoption of this standard did not have a significant impact on its consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which permits an entity to release cumulative translation adjustments into net income when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity.  Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, or, if a controlling financial interest is no longer held. The revised standard is effective for fiscal years beginning after December 15, 2013; however, early adoption is permitted.  The Company does not expect adoption of this ASU to significantly impact its consolidated financial statements.

3. Earnings per Common Share

The Company calculates basic and diluted per share amounts based on net earnings adjusted for the effects to earnings that would result if contingently issuable shares related to contingent consideration to be settled in the Company’s stock were reported as equity for the periods presented.  To calculate basic earnings per share, the Company uses the weighted average number of common shares outstanding during the period adjusted for the weighted average number of contingently issuable shares.  The weighted average numbers of shares contingently issuable are calculated as if they were outstanding as of the last day of the period. The diluted earnings per share calculation is based on the weighted average number of shares of common stock outstanding adjusted for the number of additional shares that would have been outstanding had all potentially dilutive common shares been issued.  Potentially dilutive shares of common stock include stock options, non-vested share awards and contingently issuable shares related to contingent consideration to be settled in stock.  The dilutive effects of stock options and restricted stock awards are based on the treasury stock method.  The dilutive effects of the contingent consideration to be settled in stock are calculated as if the contingently issuable shares were outstanding as of the beginning of the period.  The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. Stock options that are anti-dilutive and excluded from the following table totaled 1,477 and 1,970 for the three months ended June 30, 2013 and 2012, respectively, and 1,434 and 1,626 for the six months ended June 30, 2013 and 2012, respectively.

6

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to common stockholders	$	3,412	$	11,949	$	3,888	$	17,432
Denominator:
Weighted average common shares outstanding — basic	38,551		38,353		38,368		38,207
Dilutive effect of:
Options and unvested restricted shares	972		722		999		916
Weighted average common shares outstanding — diluted	39,523		39,075		39,367		39,123

4. Fair Value Measurements of Assets and Liabilities

The Company classifies marketable securities as available-for-sale.  The fair value hierarchy established in the guidance adopted by the Company prioritizes the inputs used in valuation techniques into three levels as follows:

·Level 1 — Observable inputs — quoted prices in active markets for identical assets and liabilities;

·Level 2 — Observable inputs other than the quoted prices in active markets for identical assets and liabilities — includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and

·Level 3 — Unobservable inputs — includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.

The following is a summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy:

	June 30, 2013			December 31, 2012
Level 1 (A)	$	51,575		$	41,395
Level 2 (B)	9,392			15,474
Level 3 (C)	(11,051		)	(8,379		)
Total	$	49,916		$	48,490

(A)Level 1 assets include money market funds and enhanced income money market funds which are classified as cash equivalents and marketable securities, respectively.

(B)Level 2 assets include certificates of deposit, municipal bonds and corporate bonds which are classified as marketable securities.

(C)Level 3 liabilities include the contingent consideration obligation.

The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company’s marketable securities investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the six months ended June 30, 2013.

The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at June 30, 2013 were as follows:

			Aggregate Amount of
	Aggregate		Unrealized
	Fair Value		Gains		Losses
Due in one year or less	$	12,996	$	8	$	(48	)
Due after one year, less than five years	1,767		2		(2		)
	$	14,763	$	10	$	(50	)

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2012 were as follows:

			Aggregate Amount of
	Aggregate		Unrealized
	Fair Value		Gains		Losses
Due in one year or less	$	20,188	$	18	$	(41	)
Due after one year, less than five years	653		1		(1		)
	$	20,841	$	19	$	(42	)

Unrealized gains and losses are reported as a component of accumulated other comprehensive loss in stockholders’ equity. The cost of securities sold is based on specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at June 30, 2013 and December 31, 2012 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not to recover the carrying value prior to being required to sell such investments.

The Company determined the fair value of the contingent consideration obligation based on a probability-weighted income approach derived from quarterly revenue estimates and a probability assessment with respect to the likelihood of achieving the various performance criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.  The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration obligation are the probabilities of achieving certain financial targets and contractual milestones.  Significant increases (decreases) in any of those probabilities in isolation may result in a higher (lower) fair value measurement.  No changes in valuation techniques occurred during the six months ended June 30, 2013.

The changes in fair value of the Company’s Level 3 contingent consideration obligation during the six months ended June 30, 2013 were as follows:

	Level 3
Balance at December 31, 2012	$	8,379
Fair value adjustment to contingent consideration obligation included in net income	2,176
Fx impact of change in contingent consideration obligation	(15		)
Earn-out compensation due to SpeechCycle employees	511
Balance at June 30, 2013	$	11,051

5. Acquisition

Spatial Systems Nominees PTY LTD (“Spatial”)

On November 30, 2012, the Company acquired 100% of the capital stock of Spatial, an Australian company with operations in the U.S., for total cash consideration of $31.0 million and issued approximately 240 shares of the Company’s Common Stock.  The total cash consideration was comprised of $30.0 million for the purchase of all of the shares of Spatial and $625 for the estimated surplus working capital on the date of purchase.  Of the 240 shares of the Company’s Common Stock issued, only a portion valued at approximately $1.4 million based on the Company’s November 30, 2012 closing stock price per share was considered purchase price.  The remaining value of the shares will be recognized as compensation expense and amortized over the service period of three years. In addition, the Company potentially may make payments totaling up to approximately $5.0 million in cash and may issue up to 260

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

shares of stock based on the ability to achieve a range of business objectives for the period from December 1, 2012 through November 30, 2013.

The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date.  The excess of the purchase price over the net tangible assets and liabilities, approximately $36.1 million was recorded as goodwill, which is not tax deductible.  The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change.  The purchase price allocation will be finalized in 2013.

The Company believes that Spatial will help to augment the Company’s activation services offerings with more powerful broadband bundled offerings and expand into new and emerging markets.  In addition, the acquisition of Spatial will help to increase the Company’s penetration of its domestic customer base and expand the Company’s engagements in the Asia-Pacific markets.

Allocation of Consideration Transferred

Total purchase price is summarized as follows:

	November 30, 2012
Cash consideration	$	30,000
Working Capital Surplus	625
Value of Synchronoss common stock issued	1,386
Estimated fair value of the Earn-out payments	4,600
Total purchase price	$	36,611

The Company prepared an initial determination of the fair value of assets acquired and liabilities assumed as of the acquisition date using preliminary information.  In accordance with ASC 805, during the measurement period an acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date.  Accordingly, the Company has recognized measurement period adjustments made during the first quarter of 2013 to the fair value of certain assets acquired and liabilities assumed as a result of the further refinements in the Company’s provisional amounts.  These adjustments were retrospectively applied to the November 30, 2012 acquisition date balance sheet.  The effect of these adjustments on the preliminary purchase price allocation was a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase to goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase to deferred revenues of $9.6 million.  None of the adjustments had a material impact on the Company’s previously reported results of operations.

The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted:

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

	November 30, 2012
Cash and cash equivalents	$	2,395
Accounts receivable	4,409
Prepaid expenses and other assets	5,232
Property and equipment	584
Intangible assets	11,322
Other assets, non-current	70
Total identifiable assets acquired	24,012
Accounts payable and accrued liabilities	(9,860		)
Deferred revenue	(11,111		)
Deferred tax liability	(2,123		)
Other liabilities, non-current	(389		)
Total liabilities assumed	(23,483		)
Net identifiable assets acquired	529
Goodwill	36,082
Net assets acquired	$	36,611

Newbay Software Limited (“Newbay”)

On December 24, 2012, the Company acquired 100% of the capital stock of Newbay, an Ireland company, and its subsidiaries, for cash consideration of $55.5 million.  Newbay has operations in Europe and the U.S.

The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date.  The excess of the purchase price over the net tangible assets and liabilities, approximately $24.1 million was recorded as goodwill, which is not tax deductible.  The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change.  The Company expects the purchase price allocation will be finalized in 2013.

The Company believes that the acquisition of Newbay has the potential to accelerate and expand the Company’s Cloud offerings.  In addition the Company believes it will increase the Company’s penetration of its domestic customer base and other high growth markets through cross channel marketing into Newbay’s customer accounts.

Allocation of Consideration Transferred

Total purchase price is summarized as follows:

	December 24, 2012
Total consideration	$	55,500
Closing Adjustment	(2,947		)
Total purchase price	$	52,553

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted:

	December 24, 2012
Cash and cash equivalents	$	2,444
Accounts receivable	5,748
Prepaid expenses and other assets	3,838
Property and equipment	4,543
Intangible assets	27,989
Other assets, non-current	1,089
Total identifiable assets acquired	45,651
Accounts payable and accrued liabilities	(13,575		)
Deferred revenue	(881		)
Deferred tax liability	(362		)
Captial lease	(2,348		)
Total liabilities assumed	(17,166		)
Net identifiable assets acquired	28,485
Goodwill	24,068
Net assets acquired	$	52,553

Total goodwill changed during the six months ended June 30, 2013 as follows:

Balance at December 31, 2012	$	127,322
Acquisitions	—
Reclassifications, adjustments and other	244
Translation adjustments	(3,406		)
Balance at June 30, 2013	$	124,160

6. Stockholders’ Equity

Stock Options

The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Expected stock price volatility	65	%	69	%	66	%	69	%
Risk-free interest rate	0.84	%	0.77	%	0.85	%	0.83	%
Expected life of options (in years)	4.40		4.84		4.45		4.90
Expected dividend yield	0	%	0	%	0	%	0	%

11

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

The weighted-average fair value (as of the date of grant) of the options was $15.84 and $11.64 per share for the three months ended June 30, 2013 and 2012, respectively, and $15.76 and $14.36 per share for the six months ended June 30, 2013 and 2012, respectively.  During the three months ended June 30, 2013 and 2012, the Company recorded total pre-tax stock-based compensation expense of $6.1 million ($4.0 million after tax or $0.10 per diluted share) and $4.5 million ($2.8 million after tax or $0.07 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006.  During the six months ended June 30, 2013 and 2012, the Company recorded total pre-tax stock-based compensation expense of $11.0 million ($7.3 million after tax or $0.19 per diluted share) and $9.8 million ($6.3 million after tax or $0.16 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006.  The total stock-based compensation cost related to non-vested equity awards not yet recognized as an expense as of June 30, 2013 was approximately $48.8 million. That cost is expected to be recognized over a weighted-average period of approximately 2.74 years.

The following table summarizes information about stock options outstanding as of June 30, 2013:

					Weighted-
					Average
			Weighted-		Remaining	Aggregate
	Number of		Average		Contractual	Intrinsic
Options	Options		Exercise Price		Term (Years)	Value
Outstanding at December 31, 2012	3,976		$	20.88
Options Granted	601		30.19
Options Exercised	(676	)	15.73
Options Cancelled	(113	)	25.06
Outstanding at June 30, 2013	3,788		$	23.15	4.76	$	30,767
Vested or expected to vest at June 30, 2013	3,579		$	22.83	4.67	$	30,263
Exercisable at June 30, 2013	2,202		$	20.27	3.98	$	24,808

A summary of the Company’s non-vested restricted stock at June 30, 2013, and changes during the six months ended June 30, 2013, is presented below:

Non-Vested Restricted Stock	Number of Awards
Non-vested at December 31, 2012	866
Granted	811
Vested	(201	)
Forfeited	(75	)
Non-vested at June 30, 2013	1,401

Employee Stock Purchase Plan

On February 1, 2012, the Company established a ten year Employee Stock Purchase Plan (“ESPP” or “the Plan”) for certain eligible employees.  The Plan is to be administered by the Company’s Board of Directors.  The total number of shares available for purchase under the Plan is 500 shares of the Company’s Common Stock.  Employees participate over a six month period through payroll withholdings and may purchase, at the end of the six month period, the Company’s Common Stock at the lower of 85% of the fair market value on the first day of the offering period or the fair market value on the purchase date.  No participant will be granted a right to purchase Common Stock under the Plan if such participant would own more than 5% of the total combined voting power of the Company.  In addition, no participant may purchase more than a thousand shares of Common Stock within any purchase period.

12

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

The expected life of ESPP shares is the average of the remaining purchase period under each offering period.  The assumptions used to value employee stock purchase rights during the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Expected stock price volatility	66	%	68	%	67	%	68	%
Risk-free interest rate	0.13	%	0.13	%	0.14	%	0.13	%
Expected life of options (in years)	0.50		0.50		0.50		0.50
Expected dividend yield	0	%	0	%	0	%	0	%

During the three months ended June 30, 2013 and 2012, the Company recorded $151 and $117, respectively, of compensation expense related to the ESPP.  During the six months ended June 30, 2013 and 2012, the Company recorded $329 and $208, respectively, of compensation expense related to the ESPP.  During the six months ended June 30, 2013, the Company sold a total of 35 shares of its Treasury Stock pursuant to purchases under its ESPP Plan.  Cash received from purchases through the ESPP Plan during the six months ended June 30, 2013, was approximately $670 and is included within the financing activities section of the consolidated statements of cash flows.  There were no shares sold during the three months ended June 30, 2013 and the three and six months ended June 30, 2012.  The total unrecognized compensation expense related to the ESPP as of June 30, 2013 was approximately $87, which is expected to be recognized over the remainder of the offering period.

7. Restructuring Charges

In January 2013, the Company initiated a work-force reduction of approximately 10 percent as part of a corporate restructuring, with reductions occurring across all levels and departments within the Company.  This measure was intended to reduce costs and to align the Company’s resources with its key strategic priorities.  Additionally, in relation to the work-force reduction, the Company initiated a facilities consolidation, beginning the process of closing one of its leased locations in Seattle, WA.  The Company recorded restructuring charges of $4.6 million and $555 during the six months ended June 30, 2013 for employment termination costs and minimum lease payments, respectively.  There were no additional restructuring charges during the three months ended June 30, 2013.  At June 30, 2013, the restructuring charges that were unpaid and classified under accrued expenses on the balance sheet related to the facilities consolidation were $384.

A summary of the Company’s restructuring accrual at June 30, 2013, and changes during the six months ended June 30, 2013, is presented below:

	Balance at										Balance at
	December 31, 2012		Charges		Payments			Adjustments			June 30, 2013
Employment termination costs	$	—	$	4,617	$	(4,602	)	$	(15	)	$	—
Facilities consolidation	—		555		(171		)	—			384
Total	$	—	$	5,172	$	(4,773	)	$	(15	)	$	384

8. Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income during the three months ended June 30, 2013, are as follows, net of tax:

13

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (Continued)

(in thousands, except per share data unless otherwise noted)

				Unrealized
				Holding Gains on
	Foreign			Available-for-Sale
	Currency			Securities			Total
Balance at March 31, 2013	$	(2,827	)	$	(15	)	$	(2,842	)
Other comprehensive income before reclassifications	(4,188		)	(19		)	(4,207		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Total other comprehensive loss	(4,188		)	(19		)	(4,207		)
Balance at June 30, 2013	$	(7,015	)	$	(34	)	$	(7,049	)

The changes in accumulated other comprehensive income during the six months ended June 30, 2013, are as follows, net of tax:

				Unrealized
				Holding Gains on
	Foreign			Available-for-Sale
	Currency			Securities			Total
Balance at December 31, 2012	$	(352	)	$	(13	)	$	(365	)
Other comprehensive income before reclassifications	(6,663		)	(21		)	(6,684		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Total other comprehensive loss	(6,663		)	(21		)	(6,684		)
Balance at June 30, 2013	$	(7,015	)	$	(34	)	$	(7,049	)

9. Legal Matters

The Company is not currently subject to any legal proceedings that could have a material adverse effect on its operations; however, it may from time to time become a party to various legal proceedings arising in the ordinary course of its business.  The Company is currently the plaintiff in several patent infringement cases. Although the Company cannot predict the outcome of the cases at this time due to the inherent uncertainties of litigation, the Company continues to pursue its claims and believes that the counterclaims are without merit, and the Company intends to defend all of such counterclaims.

10. Subsequent Events

The Company has evaluated all subsequent events and transactions through the filing date.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the information set forth in our consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q and in our annual report Form 10-K for the year ended December 31, 2012. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management as of the date hereof based on information currently available to our management. Use of words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “should”, “continues,” “likely” or similar expressions, indicate a forward-looking statement. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions. Actual results may differ materially from the forward-looking statements we make. We caution investors not to place substantial reliance on the forward-looking statements included in this report. These statements speak only as of the date of this report (unless another date is indicated), and we undertake no obligation to update or revise the statements in light of future developments.  All numbers are expressed in thousands unless otherwise stated.

Overview

We are a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe.  Such solutions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type and content transfer, synchronize and share.  Our global solutions touch all aspects of connected devices on the mobile Internet.

Our Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and “back-office” infrastructure-related systems and processes. Our customers rely on our solutions and technology to automate the process of activation and content management for their customers’ devices while delivering additional communication services. Our platforms also support automated customer care processes through use of accurate and effective speech processing technology and enable our customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets.  Our platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing us to meet the rapidly changing and converging services and connected devices offered by our customers. We enable our customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content.  Through the use of our platforms, our customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected devices and services.  The extensibility, scalability and relevance of our platforms enable new revenue streams and retention opportunities for our customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience.

We currently operate in and market our solutions and services directly through our sales organizations in North America, Europe and Asia-Pacific.

Revenues

We generate a substantial portion of our revenues on a per-transaction or subscription basis, which is derived from contracts that extend up to 60 months from execution. For the three months ended June 30, 2013 and 2012, we derived approximately 66% and 63%, respectively, of our revenues from transactions processed and subscription arrangements.  The remainder of our revenues was generated by professional services and licenses.  The current mix of revenue represents lower transaction and subscription revenues

15

than we have historically experienced.  This is a result of professional services and licenses associated with new arrangements with our customers.  Our expectations are that the percentage of our transaction and subscription revenues will begin to increase moving forward once our Cloud services are more broadly adopted.

Historically, our revenues have been directly impacted by the number of transactions processed.  In recent years, the fourth quarter has had the highest volume of transactions processed due to increased consumer activation activity during the holiday season.  The future success of our business depends on the continued growth of consumer and business transactions and, as such, the volume of transactions that we process could fluctuate on a quarterly basis.  See “Current Trends Affecting Our Results of Operations” for certain matters regarding future results of operations.

Most of our revenues are recorded in U.S. dollars but as we continue to expand our footprint with international carriers and increase the extent of recording our international activities in local currencies we will become subject to currency translation risk that could affect our future net sales.

Our five largest customers, AT&T, Comcast, Level 3 Communications, Verizon Wireless, and Vodafone, accounted for approximately 77% of our revenues for the three months ending June 30, 2013, as compared to our five largest customers, AT&T, Charter Communications, Time Warner Cable, Verizon Wireless, and Vodafone, which accounted for 81% of our revenues for the three months ended June 30, 2012.  AT&T and Verizon Wireless are the only customers that accounted for more than 10% of our revenues for the three months ended June 30, 2013 and 2012.  See “Risk Factors” for certain matters bearing risks on our future results of operations.

Our agreement with AT&T was automatically renewed through December 2013 and will automatically renew each year unless either party notifies the other of its intention not to renew at least sixty days prior to the end of the then-current term. This agreement defines the work activities, transaction pricing, forecasting process, service level agreements and remedies associated with certain services performed by us for AT&T’s e-commerce organizations. The agreement provides for AT&T to pay us (i) monthly hosting fees, (ii) fees based on the number of transactions processed through our technology platform, (iii) fees based on manual processing services and (iv) fees for professional services rendered by us.

Costs and Expenses

Our costs and expenses consist of cost of services, research and development, selling, general and administrative, change in contingent consideration, depreciation and amortization and interest and other expense.

Cost of services includes all direct materials, direct labor, cost of facilities and those indirect costs related to revenues such as indirect labor, materials and supplies. Our primary cost of services is related to our information technology and systems department, including network costs, data center maintenance, database management and data processing costs, as well as personnel costs associated with service implementation, customer deployment and customer care. Also included in cost of services are costs associated with our exception handling centers and the maintenance of those centers. Currently, we utilize a combination of employees and third-party providers to process transactions through these centers.

Research and development costs are expensed as incurred unless they meet GAAP criteria for deferral and amortization. Software development costs incurred prior to the establishment of technological feasibility do not meet these criteria, and are expensed as incurred. Research and development expense consists primarily of costs related to personnel, including salaries and other personnel-related expenses, consulting fees and the cost of facilities, computer and support services used in service technology development. We also expense costs relating to developing modifications and minor enhancements of our existing technology and services.

Selling, general and administrative expense consists of personnel costs including salaries, sales commissions, sales operations and other personnel-related expense, travel and related expense, trade shows, costs of communications equipment and support services, facilities costs, consulting fees and costs of marketing programs, such as internet and print. General and administrative expense consists primarily of salaries and other personnel-related expense for our executive, administrative, legal, finance and human resources functions, facilities, professional services fees, audit, tax and bad debt expense.

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Net change in contingent consideration obligation consists of the changes to the fair value estimates of the obligation to the former equity holders which resulted from our acquisitions.  The estimates are based on the weighted probability of achieving certain financial targets and milestones.  The contingent consideration obligation earn-out periods are no longer than 12 months in duration.

Restructuring charges consist of the costs associated with the January 2013 work-force reduction plan to reduce costs and align our resources with our key strategic priorities.  The restructuring charges include employee termination costs and facilities consolidation costs related to minimum lease payments of a leased location that will be closed.

Depreciation relates to our property and equipment and includes our network infrastructure and facilities. Amortization primarily relates to trademarks, customer lists and technology acquired.

Interest expense consists primarily of interest on our lease financing obligations.

Current Trends Affecting Our Results of Operations

Our on-demand business model enables delivery of our proprietary solutions over the Web as a service and has been driven by market trends such as various forms of device activations, order provisioning, local and mobile number portability (“L/MNP”), the implementation of new technologies, subscriber growth, competitive churn, network changes, growth of the emerging device market (i.e., smartphones, tablets, connected consumer electronics devices, etc.), need for Cloud-based content back up, synchronization and sharing, and a universal connectivity platform for all connected devices and consolidations in the industry. In particular, the emergence of order provisioning of e-commerce transactions for smartphone devices, wireless, VoIP, L/MNP, and other communication services surrounding the convergence of bundled services, as well as the recent cooperative activities between cable MSOs and wireless carriers, have increased the need for our services and we believe will continue to be a source of growth for us. New and emerging companies looking to offer wireless services also look towards us as a source of knowledge and technology.

To support our expected growth driven by the favorable industry trends mentioned above, we continue to look for opportunities to improve our operating efficiencies, such as the utilization of offshore technical and non-technical resources for our exception handling center management as well as routine software maintenance activities. We believe that these opportunities will continue to provide future benefits and position us to support revenue growth. In addition, we anticipate further automation of the transactions generated by our more mature customers and additional transaction types. Our cost of services can fluctuate from period to period based upon the level of automation and the on-boarding of new transaction and service types.

We continue to advance our plans for the expansion of our platforms’ footprint with international carriers to support connected devices and multiple networks through our focus on transaction management and Cloud-based services for back up, synchronization and sharing of content. Our initiatives with AT&T, Verizon Wireless, Vodafone and other CSPs continue to grow along with our account presence with connected device OEM’s. We are also exploring additional opportunities through merger and acquisition activities to support our customer, product and geographic diversification strategies.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements in accordance with GAAP requires us to utilize accounting policies and make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during a fiscal period. The Securities and Exchange Commission (“SEC”) considers an accounting policy to be critical if it is important to a company’s financial condition and results of operations, and if it requires significant judgment and estimates on the part of management in its application. We have discussed the selection and development of the critical accounting policies with the audit committee of our board of directors, and the audit committee has reviewed our related disclosures in this Form 10-Q.  Although we believe that our judgments and estimates are appropriate, correct and reasonable under the circumstances, actual results may differ from those estimates.  If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected. See “Risk Factors” for certain matters bearing risks on our future results of operations.

17

We believe that of our significant accounting policies, which are described in Note 2 in our Annual Report on Form 10-K for the year ended December 31, 2012, the following accounting policies involve a greater degree of judgment and complexity.  Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations:

·Revenue Recognition and Deferred Revenue

·Income Taxes

·Goodwill and Impairment of Long-Lived Assets

·Business Combinations

·Stock-Based Compensation

There were no significant changes in our critical accounting policies and estimates discussed in our Form 10-K during the six months ended June 30, 2013.  Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2012 for a more complete discussion of our critical accounting policies and estimates.

Results of Operations

Three months ended June 30, 2013 compared to the three months ended June 30, 2012

The following table presents an overview of our results of operations for the three months ended June 30, 2013 and 2012.

	Three Months Ended June 30,
	2013				2012					2013 vs 2012
	$		% of Revenue		$			% of Revenue		$ Change			% Change
	(in thousands)
Net revenues	$	83,848	100.0	%	$	66,990		100.0	%	$	16,858		25.2	%
Cost of services*	35,527		42.4	%	26,631			39.8	%	8,896			33.4	%
Research and development	16,358		19.5	%	12,570			18.8	%	3,788			30.1	%
Selling, general and administrative	14,943		17.8	%	11,060			16.5	%	3,883			35.1	%
Net change in contingent consideration obligation	1,743		2.1	%	(4,628		)	(6.9	)%	6,371			(137.7	)%
Depreciation and amortization	9,610		11.5	%	5,962			8.9	%	3,648			61.2	%
	78,181		93.2	%	51,595			77.0	%	26,586			51.5	%
Income from operations	$	5,667	6.8	%	$	15,395		23.0	%	$	(9,728	)	(63.2	)%

*      Cost of services excludes depreciation and amortization which is shown separately.

Net Revenues. Net revenues increased $16.9 million to $83.8 million for the three months ended June 30, 2013, compared to the same period in 2012.  This increase was due primarily to the expansion of our services provided to our customers.  Transaction and subscription revenues as a percentage of sales were 66% or $54.9 million for the three months ended June 30, 2013 and 63% or $42.5 million for the same period in 2012.  Professional service and license revenues as a percentage of sales were 34% or $28.9 million for the three months ended June 30, 2013, compared to 37% or $24.5 million for the same period in 2012.  The increase in professional services and license revenue is primarily due to the expansion of services and license agreements due to new projects primarily relating to Cloud services with existing and new customers.

Net revenues related to Activation Services increased $11.1 million to $57.5 million for the three months ended June 30, 2013 compared to the same period in 2012.  Net revenues related to Activation Services represented 69% for the three months ended June 30, 2013 and 2012.  Net revenues related to our Personal Cloud Services increased by $5.8 million to $26.3 million of our revenues for the three months ended June 30, 2013 compared to the same period in 2012.  Net revenues related to our Personal Cloud Services represented 31% for the three months ended June 30, 2013 and 2012.

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Expenses

Cost of Services.  Cost of services increased $8.9 million to $35.5 million for the three months ended June 30, 2013, compared to the same period in 2012, due primarily to an increase of $3.8 million in telecommunication and facility costs related to the increased call volume and capacity associated with our data facilities.  There was also an increase of $2.4 million in our personnel and related costs and an increase of $313 thousand in our stock-based compensation.  The increase in personnel and related costs and stock-based compensation was due primarily to our continued growth in existing and new programs with our current customers and recent acquisitions.  There was also an increase of $2.3 million in outside consulting expense, due to our increased use of third party exception handling vendors.  Cost of services as a percentage of revenues increased to 42.4% for the three months ended June 30, 2013, as compared to 39.8% for the three months ended June 30, 2012.

Research and Development. Research and development expense increased $3.8 million to $16.4 million for the three months ended June 30, 2013, compared to the same period in 2012, due to headcount increases.  There was an increase of $2.8 million in our personnel and related costs and an increase of $423 thousand in stock-based compensation.  The increase in personnel and related costs and stock-based compensation was due primarily our continued growth as we further expand the capabilities of our offerings, as well as investing in several early-stage customer deployments.  There were also increases of $421 thousand in outside consultants as a result of the expansion of our programs and $372 thousand in telecom and facilities costs as a result of the expansion of our facilities.  Research and development expense as a percentage of revenues increased to 19.5% for three months ended June 30, 2013 as compared to 18.8% for the three months ended June 30, 2012.

Selling, General and Administrative. Selling, general and administrative expense increased $3.9 million to $14.9 million for the three months ended June 30, 2013, compared to the same period in 2012, due to headcount increases.  There was an increase of $1.9 million in personnel and related costs and an increase of $855 thousand in stock-based compensation.  The increase in personnel and related costs and stock-based compensation was primarily due to our continued growth in existing and new programs with our current customers and recent acquisitions.  There were also increases of $675 thousand in professional services related to accounting and legal costs as a result of our acquisition and patent activity and $389 thousand in telecommunications and facility costs as a result of the expansion of our facilities.  Selling, general and administrative expense as a percentage of revenues increased to 17.8% for the three months ended June 30, 2013, compared to 16.5% for the three months ended June 30, 2012.

Net change in contingent consideration obligation. The net change in contingent consideration obligation resulted in a $1.7 million increase of the contingent consideration obligation for the three months ended June 30, 2013 driven by changes in the fair value estimates related to the weighted probability of achieving revenue and product milestones for the SpeechCycle, Inc. (“SpeechCycle) and Spatial Systems Nominees PTY Limited (“Spatial”) Earn-outs and changes in our stock price.  The $4.6 million reduction of the fair value change in the contingent consideration liability for the three months ended June 30, 2012 was due to the change in the estimate of the fair value of the contingent consideration obligation related to the Sapience Knowledge Systems, Inc. (“SKS”) and Miyowa S.A. (“Miyowa”) Earn-outs, primarily due to changes in the probability of achieving product milestones and operational efficiencies.

Depreciation and amortization. Depreciation and amortization expense increased $3.6 million to $9.6 million for the three months ended June 30, 2013, compared to the same period in 2012, primarily related to the amortization of our newly acquired intangible assets of SpeechCycle, Spatial and Newbay Software Limited.  There was also an increase in depreciable fixed assets necessary for the continued expansion of our platforms.  Depreciation and amortization expense as a percentage of revenues increased to 11.5% for the three months ended June 30, 2013, as compared to 8.9% for the three months ended June 30, 2012.

Income from Operations. Income from operations decreased $9.7 million to $5.7 million for the three months ended June 30, 2013, compared to the same period in 2012.  This was due primarily to increased charges related to the net change in contingent consideration obligation, increases in depreciable fixed assets, intangible amortization and the additional costs associated with our acquired operations offset by increased revenues.  Income from operations as a percentage of revenues decreased to 6.8% for the three months ended June 30, 2013, as compared to 23.0% for the three months ended June 30, 2012.

Interest income.  Interest income decreased $133 thousand to $197 thousand for the three months ended June 30, 2013, compared to the same period in 2012.  Interest income decreased primarily due to a reduction of our cash and investment balances as a result of our recent acquisitions.

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Interest expense.  Interest expense increased $6 thousand to $247 thousand for the three months ended June 30, 2013, compared to the same period in 2012.

Other income.  Other income decreased $478 thousand to $301 thousand for the three months ended June 30, 2013, compared to the same period in 2012.  Other income decreased primarily due to a reduction in refundable research and development tax credits in France and changes in foreign currency exchange rate fluctuations.

Income Tax.  We recognized approximately $2.5 million and $4.3 million in related tax expense during the three months ended June 30, 2013 and 2012, respectively.  Our effective tax rate was approximately 42.3% for the three months ended June 30, 2013, which was higher than our U.S. federal statutory rate primarily due to the unfavorable impact of the fair market value adjustment for the contingent consideration obligation related to the Spatial equity holders.  Our effective tax rate was approximately 26.5% for the three months ended June 30, 2012, which was lower than our U.S. federal statutory rate primarily due to the favorable tax impact of the fair market value adjustment for the contingent consideration obligation related to the Miyowa and SKS equity holders and increased profits in foreign jurisdictions, which have lower tax rates than the U.S.  We review the expected annual effective income tax rate and make changes on a quarterly basis as necessary based on certain factors such as changes in forecasted annual operating income, changes to the actual and forecasted permanent book-to-tax differences, and changes resulting from the impact of tax law changes.

Six months ended June 30, 2013 compared to the six months ended June 30, 2012

The following table presents an overview of our results of operations for the six months ended June 30, 2013 and 2012.

	Six Months Ended June 30,
	2013				2012					2013 vs 2012
	$		% of Revenue		$			% of Revenue		$ Change			% Change
	(in thousands)
Net revenues	$	162,124	100.0	%	$	131,550		100.0	%	$	30,574		23.2	%
Cost of services*	67,658		41.7	%	55,252			42.0	%	12,406			22.5	%
Research and development	33,076		20.4	%	25,446			19.3	%	7,630			30.0	%
Selling, general and administrative	29,595		18.3	%	21,450			16.3	%	8,145			38.0	%
Net change in contingent consideration obligation	2,176		1.3	%	(5,408		)	(4.1	)%	7,584			(140.2	)%
Restructuring charges	5,172		3.2	%	—			0.0	%	5,172			100.0	%
Depreciation and amortization	18,579		11.5	%	11,133			8.5	%	7,446			66.9	%
	156,256		96.4	%	107,873			82.0	%	48,383			44.9	%
								0.0	%
Income from operations	$	5,868	3.6	%	$	23,677		18.0	%	$	(17,809	)	(75.2	)%

*      Cost of services excludes depreciation and amortization which is shown separately.

Net Revenues. Net revenues increased $30.6 million to $162.1 million for the six months ended June 30, 2013, compared to the same period in 2012.  This increase was due primarily to the expansion of our services provided to our customers.  Transaction and subscription revenues as a percentage of sales were 65% or $105.9 million for the six months ended June 30, 2013 and 66% or $86.7 million for the same period in 2012.  Professional service and license revenues as a percentage of sales were 35% or $56.2 million for the six months ended June 30, 2013, compared to 34% or $44.9 million for the same period in 2012.  The increase in professional services and license revenue is primarily due to the expansion of services and license agreements due to new projects primarily relating to Cloud services with existing and new customers.

Net revenues related to Activation Services increased $19.5 million to $112.3 million for the six months ended June 30, 2013 compared to the same period in 2012.  Net revenues related to Activation Services represented 69% for the six months ended June 30, 2013, compared to 71% for the same period in 2012.  Net revenues related to our Personal Cloud Services increased by $11.1 million to $49.8 million of our revenues for the six months ended June 30, 2013 compared to the same period in 2012.  Net revenues related to our Personal Cloud Services represented 31% for the six months ended June 30, 2013, compared to 29% for the same period in 2012.

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Expenses

Cost of Services.  Cost of services increased $12.4 million to $67.7 million for the six months ended June 30, 2013, compared to the same period in 2012, due primarily to an increase of $7.3 million in telecommunication and facility costs related to the increased call volume and capacity associated with our data facilities and an increase of $5.1 million in our personnel and related costs due primarily to our continued growth in existing and new programs with our current customers and recent acquisitions.  The increases in cost of services were offset by a decrease of $445 thousand in outside consulting expense, due to our increased productivity and cost saving from changes in our third party exception handling vendors.  Cost of services as a percentage of revenues decreased to 41.7% for the six months ended June 30, 2013, as compared to 42.0% for the six months ended June 30, 2012 as a result of increases in professional services and highly automated transaction revenues which have higher margins.

Research and Development. Research and development expense increased $7.6 million to $33.1 million for the six months ended June 30, 2013, compared to the same period in 2012, due to headcount increases.  There was an increase of $6.7 million in personnel and related costs due primarily to our continued growth as we further expand the capabilities of our offerings, as well as investing in several early-stage customer deployments.  There were also increases of $556 thousand in outside consultants as a result of the expansion of our programs and $414 thousand in telecom and facilities costs as a result of the expansion of our facilities.  Research and development expense as a percentage of revenues increased to 20.4% for six months ended June 30, 2013 as compared to 19.3% for the six months ended June 30, 2012.

Selling, General and Administrative. Selling, general and administrative expense increased $8.1 million to $29.6 million for the six months ended June 30, 2013, compared to the same period in 2012, due to headcount increases.  There was an increase of $4.5 million in personnel and related costs and an increase of $730 thousand in stock-based compensation expense.  The increase in personnel and related costs and stock-based compensation was primarily due to our continued growth in existing and new programs with our current customers and recent acquisitions.  There was also an increase of $1.7 million in professional services related to accounting and legal costs as a result of our acquisition and patent activity and an increase of $1.1 million in telecommunications and facility costs as a result of our acquisitions.  Selling, general and administrative expense as a percentage of revenues increased to 18.3% for the six months ended June 30, 2013, compared to 16.3% for the six months ended June 30, 2012.

Net change in contingent consideration obligation. The net change in contingent consideration obligation resulted in a $2.2 million increase of the contingent consideration obligation for the six months ended June 30, 2013 driven by changes in the fair value estimates related to the weighted probability of achieving revenue and product milestones for the SpeechCycle, Inc. (“SpeechCycle) and Spatial Systems Nominees PTY Limited (“Spatial”) Earn-outs and changes in our stock price.  The $5.4 million reduction of the fair value change in the contingent consideration liability for the six months ended June 30, 2012 was due to the change in the estimate of the fair value of the contingent consideration obligation related to the Sapience Knowledge Systems, Inc. (“SKS”) and Miyowa S.A. (“Miyowa”) Earn-outs, primarily due to changes in the probability of achieving product milestones and operational efficiencies.

Restructuring charges. Restructuring charges were $5.2 million, consisting of $4.6 million for employment termination costs and $555 thousand for minimum lease payments, for the six months ended June 30, 2013, as a result of the January 2013 work-force reduction plan to reduce costs and align our resources with our key strategic priorities.

Depreciation and amortization. Depreciation and amortization expense increased $7.4 million to $18.6 million for the six months ended June 30, 2013, compared to the same period in 2012, primarily related to the amortization of our newly acquired intangible assets of SpeechCycle, Spatial and Newbay Software Limited.  There was also an increase in depreciable fixed assets necessary for the continued expansion of our platforms.  Depreciation and amortization expense as a percentage of revenues increased to 11.5% for the six months ended June 30, 2013, as compared to 8.5% for the six months ended June 30, 2012.

Income from Operations. Income from operations decreased $17.8 million to $5.9 million for the six months ended June 30, 2013, compared to the same period in 2012.  This was due primarily to increased charges related to the net change in contingent consideration obligation, increases in depreciable fixed assets, restructuring charges related to our work-force reduction and facilities consolidation to align our resources with our key strategic priorities, increased intangible amortization and the additional costs associated with our acquired operations offset by increased revenues.  Income from operations as a percentage of revenues decreased to 3.6% for the six months ended June 30, 2013, as compared to 18.0% for the six months ended June 30, 2012.

21

Interest income.  Interest income decreased $445 thousand to $283 thousand for the six months ended June 30, 2013, compared to the same period in 2012.  Interest income decreased primarily due to a reduction of our cash and investment balances as a result of our recent acquisitions.

Interest expense.  Interest expense decreased $1 thousand to $479 thousand for the six months ended June 30, 2013, compared to the same period in 2012.

Other income.  Other income decreased $750 thousand to $43 thousand for the six months ended June 30, 2013, compared to the same period in 2012.  Other income decreased primarily due to a reduction in refundable research and development credits realized in France and changes in foreign currency exchange rate fluctuations.

Income Tax.  We recognized approximately $1.8 million and $7.3 million in related tax expense during the six months ended June 30, 2013 and 2012, respectively.  Our effective tax rate was approximately 32.0% for the six months ended June 30, 2013, which was lower than our U.S. federal statutory rate primarily due to the favorable impact of profits in foreign jurisdictions, which have lower tax rates than the U.S., the favorable impact of recognizing the 2012 tax credit for research and experimentation expenses as a discrete benefit in the first quarter, in accordance with the date of enactment of the American Taxpayer Relief Act of 2012, offset by the unfavorable impact of the fair market value adjustment for the contingent consideration obligation related to the Spatial equity holders.  Our effective tax rate was approximately 29.5% for the six months ended June 30, 2012, which was lower than our U.S. federal statutory rate primarily due to the favorable tax impact of the fair market value adjustment for the contingent consideration obligation related to the Miyowa and SKS equity holders and increased profits in foreign jurisdictions, which have lower tax rates than the U.S.  We review the expected annual effective income tax rate and make changes on a quarterly basis as necessary based on certain factors such as changes in forecasted annual operating income, changes to the actual and forecasted permanent book-to-tax differences, and changes resulting from the impact of tax law changes.

Liquidity and Capital Resources

Our principal source of liquidity has been cash provided by operations. Our cash, cash equivalents and marketable securities balance was $61.0 million at June 30, 2013, an increase of $4.1 million as compared to the balance at December 31, 2012.  During the six months ended June 30, 2013, cash generated from operations and the exercise of stock options was offset by the purchase of fixed assets.  We anticipate that our principal uses of cash in the future will be to fund the expansion of our business through both organic growth as well as possible acquisition activities and the expansion of our customer base internationally.  Uses of cash will also include facility and technology expansion, capital expenditures, and working capital.

Discussion of Cash Flows

Cash flows from operations. Net cash provided by operating activities for the six months ended June 30, 2013 was $33.3 million, as compared to $16.3 million cash provided for the same period in 2012.  The increase in net cash provided by operating activities for the six months ended June 30, 2013 of $17.0 million as compared to 2012 is primarily due to no payments on contingent consideration obligation in 2013 and an increase in accounts receivable collections.  During the six months ended June 30, 2012, we made payments on the settlements of the former FusionOne employees and SKS contingent consideration obligations.

Cash flows from investing.  Net cash used in investing activities for the six months ended June 30, 2013 was $31.8 million, as compared to $53.7 million for the same period in 2012.  The decrease in net cash used in investing activities for the six months ended June 30, 2013 of $21.9 million as compared to 2012 is primarily due to no acquisitions in 2013 offset by increased purchases of property and equipment related to our continued investments in our global information technology and business systems infrastructure.

Cash flows from financing.  Net cash provided by financing activities for the six months ended June 30, 2013 was $10.4 million, as compared to $3.3 million for the same period in 2012.  The increase in net cash provided by financing activities for the six months ended June 30, 2013 of $7.1 million as compared to 2012 is primarily due to an increase in proceeds from the exercise of stock options.

We believe that our existing cash and cash equivalents and cash generated from our existing operations will be sufficient to fund our operations for the next twelve months.

22

Effect of Inflation

Although inflation generally affects us by increasing our cost of labor and equipment, we do not believe that inflation has had any material effect on our results of operations for the six months ended June 30, 2013 and 2012.

Impact of Recently Issued Accounting Standards

In February 2013, the FASB issued ASU 2013-02 which requires additional disclosures regarding the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. This guidance is effective for reporting periods beginning after December 15, 2012.  We adopted this guidance effective January 1, 2013.  Our adoption of this standard did not have a significant impact on our consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which permits an entity to release cumulative translation adjustments into net income when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity.  Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, or, if a controlling financial interest is no longer held.  The revised standard is effective for fiscal years beginning after December 15, 2013; however, early adoption is permitted. We do not expect adoption of this ASU to significantly impact on our consolidated financial statements.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of June 30, 2013 and December 31, 2012.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part II, “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition or future results.  We believe our exposure associated with these market risks has not changed materially since December 31, 2012.

Foreign Currency Exchange Risk

We conduct business outside the U.S. in several currencies including the British Pound Sterling, Euro, Australian Dollar, and Indian Rupee. The financial statements of our foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average rates for the period for revenues and expenses.

We do not hold any derivative instruments and do not engage in any hedging activities. Although our reporting currency is the U.S. dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials. As a result, we are subject to currency translation risk. Further, changes in exchange rates between foreign currencies and the U.S. dollar could affect our future net sales and cost of sales and could result in exchange losses.

We cannot accurately predict future exchange rates or the overall impact of future exchange rate fluctuations on our business, results of operations and financial condition. To the extent that our international activities recorded in local currencies increase in the future, our exposure to fluctuations in currency exchange rates will correspondingly increase and hedging activities may be considered if appropriate.

23

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2013.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of June 30, 2013, the end of the period covered by this quarterly report, to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in internal controls over financial reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We are not currently subject to any legal proceedings that could have a material adverse effect on our operations; however, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business. For instance, on October 4, 2011, we filed a complaint in the United States District Court for the District of New Jersey (Civ Act. No. 3:11-cv-05811 FLW-TJB) against Assurion, Inc. (“Assurion”), claiming that Assurion has infringed, and continues to infringe, several of our patents. On February 3, 2012, Assurion filed an answer to our complaint and asserted certain counterclaims that our patents at issue are invalid. In addition, on November 21, 2011, we filed an amended complaint in the United States District Court for the District of New Jersey (Civ Act. No. 3:11-cv-06713) against OnMobile Global Limited, VoxMobili, Inc. and VolMobili, S.A. (“collectively, VoxMobili”), claiming that VoxMobili has infringed, and continues to infringe, several of our patents. On April 2, 2012, VoxMobili filed an answer to our complaint and asserted certain counterclaims that our patents at issue are invalid.  On March 23, 2013, the Court stayed both the Assurion and VoxMobili actions pending reexamination of several asserted patents in the United States Patent and Trademark Office.  Although due to the inherent uncertainties of litigation, we cannot predict the outcome of the actions at this time, we continue to pursue our claims and believe that the Assurion and VoxMobili counterclaims are without merit, and we intend to defend all of such counterclaims.

ITEM 1A.  RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.  If any of the risks actually occur, our business, financial condition or results of operations could be negatively affected. In that case, the trading price of our stock could decline, and our stockholders may lose part or all of their investment.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

24

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  Mine Safety Disclosures

Not Applicable.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

Exhibit No.	Description
3.2	Restated Certificate of Incorporation of the Registrant, incorporated by reference to Registrant’s Registration Statement on Form S-1 (Commission File No. 333-132080).
3.4	Amended and Restated Bylaws of the Registrant, incorporated by reference to Registrant’s Registration Statement on Form S-1 (Commission File No. 333-132080).
4.2	Form of the Registrant’s Common Stock certificate, incorporated by reference to Registrant’s Registration Statement on Form S-1 (Commission File No. 333-132080).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Labels Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Synchronoss Technologies, Inc.
	/s/ Stephen G. Waldis
	Stephen G. Waldis
	Chairman of the Board of Directors and
	Chief Executive Officer
	(Principal executive officer)
	/s/ Lawrence R. Irving
	Lawrence R. Irving
	Executive Vice President, Chief Financial Officer and Treasurer
August 1, 2013

26

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 13a-14(a)

I, Stephen G. Waldis, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. for the quarter ended June 30, 2013;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2013	/s/ Stephen G. Waldis
	Stephen G. Waldis
	Chairman of the Board of Directors &
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 13a-14(a)

I, Lawrence R. Irving, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. for the quarter ended June 30, 2013;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2013	/s/ Lawrence R. Irving
	Lawrence R. Irving
	Executive Vice President, Chief Financial Officer &
	Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. (the “Company”) for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen G. Waldis, the Chairman of the Board of Directors, President & Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification is being provided pursuant to 18 U.S.C. 1350 and is not to be deemed a part of the Report, nor is it to be deemed to be “filed” for any purpose whatsoever.

Date: August 1, 2013
	/s/ Stephen G. Waldis
	Stephen G. Waldis
	Chairman of the Board of Directors &
	Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. (the “Company”) for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lawrence R. Irving, the Chief Financial Officer & Treasurer of the Company, hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification is being provided pursuant to 18 U.S.C. 1350 and is not to be deemed a part of the Report, nor is it to be deemed to be “filed” for any purpose whatsoever.

Date: August 1, 2013
	/s/ Lawrence R. Irving
	Lawrence R. Irving
	Executive Vice President, Chief Financial Officer &
	Treasurer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Fair Value Measurements of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Measurements of Assets and Liabilities

Schedule of assets and liabilities held and their related classifications under the fair value hierarchy

	June 30, 2013			December 31, 2012
Level 1 (A)	$	51,575		$	41,395
Level 2 (B)	9,392			15,474
Level 3 (C)	(11,051		)	(8,379		)
Total	$	49,916		$	48,490

(A) Level 1 assets include money market funds and enhanced income money market funds which are classified as cash equivalents and marketable securities, respectively.

(B) Level 2 assets include certificates of deposit, municipal bonds and corporate bonds which are classified as marketable securities.

(C) Level 3 liabilities include the contingent consideration obligation.

Schedule of aggregate fair value of available for sale securities and aggregate amount of unrealized gains and losses for available for sale securities

The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at June 30, 2013 were as follows:

			Aggregate Amount of
	Aggregate		Unrealized
	Fair Value		Gains		Losses
Due in one year or less	$	12,996	$	8	$	(48	)
Due after one year, less than five years	1,767		2		(2		)
	$	14,763	$	10	$	(50	)

The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2012 were as follows:

			Aggregate Amount of
	Aggregate		Unrealized
	Fair Value		Gains		Losses
Due in one year or less	$	20,188	$	18	$	(41	)
Due after one year, less than five years	653		1		(1		)
	$	20,841	$	19	$	(42	)

Schedule of changes in fair value of Level 3 contingent consideration obligation

	Level 3
Balance at December 31, 2012	$	8,379
Fair value adjustment to contingent consideration obligation included in net income	2,176
Fx impact of change in contingent consideration obligation	(15		)
Earn-out compensation due to SpeechCycle employees	511
Balance at June 30, 2013	$	11,051

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
CONSOLIDATED STATEMENTS OF INCOME
Net revenues	$ 83,848	$ 66,990	$ 162,124	$ 131,550
Costs and expenses:
Cost of services	35,527	26,631	67,658	55,252
Research and development	16,358	12,570	33,076	25,446
Selling, general and administrative	14,943	11,060	29,595	21,450
Net change in contingent consideration obligation	1,743	(4,628)	2,176	(5,408)
Restructuring charges			5,172
Depreciation and amortization	9,610	5,962	18,579	11,133
Total costs and expenses	78,181	51,595	156,256	107,873
Income from operations	5,667	15,395	5,868	23,677
Interest income	197	330	283	728
Interest expense	(247)	(241)	(479)	(480)
Other income	301	779	43	793
Income before income tax expense	5,918	16,263	5,715	24,718
Income tax expense	(2,506)	(4,314)	(1,827)	(7,286)
Net income	3,412	11,949	3,888	17,432
Net income per common share:
Basic (in dollars per share)	$ 0.09	$ 0.31	$ 0.10	$ 0.46
Diluted (in dollars per share)	$ 0.09	$ 0.31	$ 0.10	$ 0.45
Weighted-average common shares outstanding:
Basic (in shares)	38,551	38,353	38,368	38,207
Diluted (in shares)	39,523	39,075	39,367	39,123
Comprehensive (loss) income	$ (795)	$ 11,530	$ (2,796)	$ 17,281

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Acquisition

6 Months Ended

Jun. 30, 2013

Acquisition

Acquisition

5. Acquisition

Spatial Systems Nominees PTY LTD (“Spatial”)

On November 30, 2012, the Company acquired 100% of the capital stock of Spatial, an Australian company with operations in the U.S., for total cash consideration of $31.0 million and issued approximately 240 shares of the Company’s Common Stock.  The total cash consideration was comprised of $30.0 million for the purchase of all of the shares of Spatial and $625 for the estimated surplus working capital on the date of purchase.  Of the 240 shares of the Company’s Common Stock issued, only a portion valued at approximately $1.4 million based on the Company’s November 30, 2012 closing stock price per share was considered purchase price.  The remaining value of the shares will be recognized as compensation expense and amortized over the service period of three years. In addition, the Company potentially may make payments totaling up to approximately $5.0 million in cash and may issue up to 260 shares of stock based on the ability to achieve a range of business objectives for the period from December 1, 2012 through November 30, 2013.

The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date.  The excess of the purchase price over the net tangible assets and liabilities, approximately $36.1 million was recorded as goodwill, which is not tax deductible.  The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change.  The purchase price allocation will be finalized in 2013.

The Company believes that Spatial will help to augment the Company’s activation services offerings with more powerful broadband bundled offerings and expand into new and emerging markets.  In addition, the acquisition of Spatial will help to increase the Company’s penetration of its domestic customer base and expand the Company’s engagements in the Asia-Pacific markets.

Allocation of Consideration Transferred

Total purchase price is summarized as follows:

	November 30, 2012
Cash consideration	$	30,000
Working Capital Surplus	625
Value of Synchronoss common stock issued	1,386
Estimated fair value of the Earn-out payments	4,600
Total purchase price	$	36,611

The Company prepared an initial determination of the fair value of assets acquired and liabilities assumed as of the acquisition date using preliminary information.  In accordance with ASC 805, during the measurement period an acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date.  Accordingly, the Company has recognized measurement period adjustments made during the first quarter of 2013 to the fair value of certain assets acquired and liabilities assumed as a result of the further refinements in the Company’s provisional amounts.  These adjustments were retrospectively applied to the November 30, 2012 acquisition date balance sheet.  The effect of these adjustments on the preliminary purchase price allocation was a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase to goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase to deferred revenues of $9.6 million.  None of the adjustments had a material impact on the Company’s previously reported results of operations.

The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted:

	November 30, 2012
Cash and cash equivalents	$	2,395
Accounts receivable	4,409
Prepaid expenses and other assets	5,232
Property and equipment	584
Intangible assets	11,322
Other assets, non-current	70
Total identifiable assets acquired	24,012
Accounts payable and accrued liabilities	(9,860		)
Deferred revenue	(11,111		)
Deferred tax liability	(2,123		)
Other liabilities, non-current	(389		)
Total liabilities assumed	(23,483		)
Net identifiable assets acquired	529
Goodwill	36,082
Net assets acquired	$	36,611

Newbay Software Limited (“Newbay”)

On December 24, 2012, the Company acquired 100% of the capital stock of Newbay, an Ireland company, and its subsidiaries, for cash consideration of $55.5 million.  Newbay has operations in Europe and the U.S.

The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date.  The excess of the purchase price over the net tangible assets and liabilities, approximately $24.1 million was recorded as goodwill, which is not tax deductible.  The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change.  The Company expects the purchase price allocation will be finalized in 2013.

The Company believes that the acquisition of Newbay has the potential to accelerate and expand the Company’s Cloud offerings.  In addition the Company believes it will increase the Company’s penetration of its domestic customer base and other high growth markets through cross channel marketing into Newbay’s customer accounts.

Allocation of Consideration Transferred

Total purchase price is summarized as follows:

	December 24, 2012
Total consideration	$	55,500
Closing Adjustment	(2,947		)
Total purchase price	$	52,553

The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted:

	December 24, 2012
Cash and cash equivalents	$	2,444
Accounts receivable	5,748
Prepaid expenses and other assets	3,838
Property and equipment	4,543
Intangible assets	27,989
Other assets, non-current	1,089
Total identifiable assets acquired	45,651
Accounts payable and accrued liabilities	(13,575		)
Deferred revenue	(881		)
Deferred tax liability	(362		)
Captial lease	(2,348		)
Total liabilities assumed	(17,166		)
Net identifiable assets acquired	28,485
Goodwill	24,068
Net assets acquired	$	52,553

Total goodwill changed during the six months ended June 30, 2013 as follows:

Balance at December 31, 2012	$	127,322
Acquisitions	—
Reclassifications, adjustments and other	244
Translation adjustments	(3,406		)
Balance at June 30, 2013	$	124,160

XML

Fair Value Measurements of Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy
Fair value of asset transfers from Level 1 to Level 2	$ 0
Fair value of asset transfers from Level 2 to Level 1	0
Level 1
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy
Money market funds	51,575	41,395
Level 2
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy
Certificates of deposit, municipal bonds and corporate bonds	9,392	15,474
Aggregate Fair Value
Due in one year or less	12,996	20,188
Due after one year, less than five years	1,767	653
Total	14,763	20,841
Aggregate Amount of Unrealized Gains
Due in one year or less	8	18
Due after one year, less than five years	2	1
Total	10	19
Aggregate Amount of Unrealized Losses
Due in one year or less	(48)	(41)
Due after one year, less than five years	(2)	(1)
Total	(50)	(42)
Level 3
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy
Contingent consideration obligation	(11,051)	(8,379)
Total
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy
Fair value of net assets	$ 49,916	$ 48,490

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Acquisition (Tables)

6 Months Ended

Jun. 30, 2013

Acquisition

Schedule of changes in goodwill

Balance at December 31, 2012	$	127,322
Acquisitions	—
Reclassifications, adjustments and other	244
Translation adjustments	(3,406		)
Balance at June 30, 2013	$	124,160

Spatial Systems Nominees PTY LTD (Spatial)

Acquisition

Summary of purchase price

	November 30, 2012
Cash consideration	$	30,000
Working Capital Surplus	625
Value of Synchronoss common stock issued	1,386
Estimated fair value of the Earn-out payments	4,600
Total purchase price	$	36,611

Summary of estimated fair values of assets and liabilities assumed at acquisition date

	November 30, 2012
Cash and cash equivalents	$	2,395
Accounts receivable	4,409
Prepaid expenses and other assets	5,232
Property and equipment	584
Intangible assets	11,322
Other assets, non-current	70
Total identifiable assets acquired	24,012
Accounts payable and accrued liabilities	(9,860		)
Deferred revenue	(11,111		)
Deferred tax liability	(2,123		)
Other liabilities, non-current	(389		)
Total liabilities assumed	(23,483		)
Net identifiable assets acquired	529
Goodwill	36,082
Net assets acquired	$	36,611

Newbay

Acquisition

Summary of purchase price

	December 24, 2012
Total consideration	$	55,500
Closing Adjustment	(2,947		)
Total purchase price	$	52,553

Summary of estimated fair values of assets and liabilities assumed at acquisition date

	December 24, 2012
Cash and cash equivalents	$	2,444
Accounts receivable	5,748
Prepaid expenses and other assets	3,838
Property and equipment	4,543
Intangible assets	27,989
Other assets, non-current	1,089
Total identifiable assets acquired	45,651
Accounts payable and accrued liabilities	(13,575		)
Deferred revenue	(881		)
Deferred tax liability	(362		)
Captial lease	(2,348		)
Total liabilities assumed	(17,166		)
Net identifiable assets acquired	28,485
Goodwill	24,068
Net assets acquired	$	52,553

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Acquisition (Details 2) (USD $) In Thousands, unless otherwise specified	Nov. 30, 2012 Spatial Systems Nominees PTY LTD (Spatial)	Dec. 24, 2012 Newbay
Summary of estimated fair values of assets and liabilities assumed at the acquisition date
Cash and cash equivalents	$ 2,395	$ 2,444
Accounts receivable	4,409	5,748
Prepaid expenses and other assets	5,232	3,838
Property and equipment	584	4,543
Intangible assets	11,322	27,989
Other assets, non-current	70	1,089
Total identifiable assets acquired	24,012	45,651
Accounts payable and accrued liabilities	(9,860)	(13,575)
Deferred revenue	(11,111)	(881)
Deferred tax liability	(2,123)	(362)
Capital lease		(2,348)
Other liabilities, non-current	(389)
Total liabilities assumed	(23,483)	(17,166)
Net identifiable assets acquired	529	28,485
Goodwill	36,082	24,068
Net assets acquired	$ 36,611	$ 52,553

XML

Acquisition (Details) (USD $)	6 Months Ended	0 Months Ended
	Jun. 30, 2013	Nov. 30, 2012 Spatial Systems Nominees PTY LTD (Spatial)	Dec. 31, 2012 Spatial Systems Nominees PTY LTD (Spatial) Retrospective purchase accounting adjustments	Nov. 30, 2012 Spatial Systems Nominees PTY LTD (Spatial) Retrospective purchase accounting adjustments	Dec. 24, 2012 Newbay
Acquisition
Percentage of capital stock acquired		100.00%			100.00%
Total cash consideration including working capital surplus		$ 31,000,000
Number of common shares issued for acquisition		240,000
Cash consideration for capital stock acquired		30,000,000			55,500,000
Cash consideration estimated surplus working capital		625,000
Portion considered as purchase price based on closing stock price per share		1,400,000
Amortization term of remaining value of shares issuable based on service period		3 years
Potential cash payments		5,000,000
Maximum potential shares issuable		260,000
Excess of purchase price over net tangible assets and liabilities, recorded as goodwill which is not tax deductible		36,082,000		11,800,000	24,068,000
Allocation of Consideration Transferred
Total consideration		30,000,000			55,500,000
Working Capital Surplus		625,000
Value of Synchronoss common stock issued		1,386,000
Estimated fair value of the Earn-out payments		4,600,000
Closing Adjustment					(2,947,000)
Total purchase price		36,611,000			52,553,000
Adjustment to purchase price allocation
Accounts receivable		(4,409,000)		2,600,000	(5,748,000)
Prepaid expenses and other assets		5,232,000		5,000,000	3,838,000
Goodwill		36,082,000		11,800,000	24,068,000
Accrued expenses				4,600,000
Deferred revenue		11,111,000		9,600,000	881,000
Goodwill
Balance at the beginning of the period	127,322,000		11,800,000
Reclassifications, adjustments and other	244,000
Translation adjustments	(3,406,000)
Balance at the end of the period	$ 124,160,000		$ 11,800,000

XML

Fair Value Measurements of Assets and Liabilities (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Changes in fair value of the Company's Level 3 contingent consideration obligation
Fair value adjustment to contingent consideration obligation included in net income	$ (1,743)	$ 4,628	$ (2,176)	$ 5,408
Level 3 | Speech Cycle
Changes in fair value of the Company's Level 3 contingent consideration obligation
Earn-out compensation due to SpeechCycle employees			511
Level 3 | Contingent Consideration
Changes in fair value of the Company's Level 3 contingent consideration obligation
Balance as at the beginning of the period			8,379
Fair value adjustment to contingent consideration obligation included in net income			2,176
Fx impact of change in contingent consideration obligation			(15)
Balance as at the end of the period	$ 11,051		$ 11,051

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Description of Business

6 Months Ended

Jun. 30, 2013

Description of Business

Description of Business

1. Description of Business

Synchronoss Technologies, Inc. (the “Company” or “Synchronoss”) is a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe.  Such solutions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type and content transfer, synchronize and share. The Company’s solutions touch all aspects of connected devices on the mobile Internet.

The Company’s Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and “back-office” infrastructure-related systems and processes. The Company’s customers rely on its solutions and technology to automate the process of activation and content management for their customers’ devices while delivering additional communication services. The Company’s platforms also support automated customer care processes through use of highly accurate and effective speech processing technology and enable the Company’s customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets.  The Company’s platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing it to meet the rapidly changing and converging services and connected devices offered by its customers. The Company enables its customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content.  Through the use of the Company’s platforms, its customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected devices and services.  The extensibility, scalability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for its customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience.

The Company currently operates in and markets its solutions and services directly through its sales organizations in North America, Europe and Asia-Pacific.

XML

Earnings per Common Share

6 Months Ended

Jun. 30, 2013

Earnings per Common Share

Earnings per Common Share

3. Earnings per Common Share

The Company calculates basic and diluted per share amounts based on net earnings adjusted for the effects to earnings that would result if contingently issuable shares related to contingent consideration to be settled in the Company’s stock were reported as equity for the periods presented.  To calculate basic earnings per share, the Company uses the weighted average number of common shares outstanding during the period adjusted for the weighted average number of contingently issuable shares.  The weighted average numbers of shares contingently issuable are calculated as if they were outstanding as of the last day of the period. The diluted earnings per share calculation is based on the weighted average number of shares of common stock outstanding adjusted for the number of additional shares that would have been outstanding had all potentially dilutive common shares been issued.  Potentially dilutive shares of common stock include stock options, non-vested share awards and contingently issuable shares related to contingent consideration to be settled in stock.  The dilutive effects of stock options and restricted stock awards are based on the treasury stock method.  The dilutive effects of the contingent consideration to be settled in stock are calculated as if the contingently issuable shares were outstanding as of the beginning of the period.  The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. Stock options that are anti-dilutive and excluded from the following table totaled 1,477 and 1,970 for the three months ended June 30, 2013 and 2012, respectively, and 1,434 and 1,626 for the six months ended June 30, 2013 and 2012, respectively.

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to common stockholders	$	3,412	$	11,949	$	3,888	$	17,432
Denominator:
Weighted average common shares outstanding — basic	38,551		38,353		38,368		38,207
Dilutive effect of:
Options and unvested restricted shares	972		722		999		916
Weighted average common shares outstanding — diluted	39,523		39,075		39,367		39,123

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Stockholders' Equity

6 Months Ended

Jun. 30, 2013

Stockholders' Equity

Stockholders' Equity

6. Stockholders’ Equity

Stock Options

The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Expected stock price volatility	65	%	69	%	66	%	69	%
Risk-free interest rate	0.84	%	0.77	%	0.85	%	0.83	%
Expected life of options (in years)	4.40		4.84		4.45		4.90
Expected dividend yield	0	%	0	%	0	%	0	%

The weighted-average fair value (as of the date of grant) of the options was $15.84 and $11.64 per share for the three months ended June 30, 2013 and 2012, respectively, and $15.76 and $14.36 per share for the six months ended June 30, 2013 and 2012, respectively.  During the three months ended June 30, 2013 and 2012, the Company recorded total pre-tax stock-based compensation expense of $6.1 million ($4.0 million after tax or $0.10 per diluted share) and $4.5 million ($2.8 million after tax or $0.07 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006.  During the six months ended June 30, 2013 and 2012, the Company recorded total pre-tax stock-based compensation expense of $11.0 million ($7.3 million after tax or $0.19 per diluted share) and $9.8 million ($6.3 million after tax or $0.16 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006.  The total stock-based compensation cost related to non-vested equity awards not yet recognized as an expense as of June 30, 2013 was approximately $48.8 million. That cost is expected to be recognized over a weighted-average period of approximately 2.74 years.

The following table summarizes information about stock options outstanding as of June 30, 2013:

					Weighted-
					Average
			Weighted-		Remaining	Aggregate
	Number of		Average		Contractual	Intrinsic
Options	Options		Exercise Price		Term (Years)	Value
Outstanding at December 31, 2012	3,976		$	20.88
Options Granted	601		30.19
Options Exercised	(676	)	15.73
Options Cancelled	(113	)	25.06
Outstanding at June 30, 2013	3,788		$	23.15	4.76	$	30,767
Vested or expected to vest at June 30, 2013	3,579		$	22.83	4.67	$	30,263
Exercisable at June 30, 2013	2,202		$	20.27	3.98	$	24,808

A summary of the Company’s non-vested restricted stock at June 30, 2013, and changes during the six months ended June 30, 2013, is presented below:

Non-Vested Restricted Stock	Number of Awards
Non-vested at December 31, 2012	866
Granted	811
Vested	(201	)
Forfeited	(75	)
Non-vested at June 30, 2013	1,401

Employee Stock Purchase Plan

On February 1, 2012, the Company established a ten year Employee Stock Purchase Plan (“ESPP” or “the Plan”) for certain eligible employees.  The Plan is to be administered by the Company’s Board of Directors.  The total number of shares available for purchase under the Plan is 500 shares of the Company’s Common Stock.  Employees participate over a six month period through payroll withholdings and may purchase, at the end of the six month period, the Company’s Common Stock at the lower of 85% of the fair market value on the first day of the offering period or the fair market value on the purchase date.  No participant will be granted a right to purchase Common Stock under the Plan if such participant would own more than 5% of the total combined voting power of the Company.  In addition, no participant may purchase more than a thousand shares of Common Stock within any purchase period.

The expected life of ESPP shares is the average of the remaining purchase period under each offering period.  The assumptions used to value employee stock purchase rights during the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Expected stock price volatility	66	%	68	%	67	%	68	%
Risk-free interest rate	0.13	%	0.13	%	0.14	%	0.13	%
Expected life of options (in years)	0.50		0.50		0.50		0.50
Expected dividend yield	0	%	0	%	0	%	0	%

During the three months ended June 30, 2013 and 2012, the Company recorded $151 and $117, respectively, of compensation expense related to the ESPP.  During the six months ended June 30, 2013 and 2012, the Company recorded $329 and $208, respectively, of compensation expense related to the ESPP.  During the six months ended June 30, 2013, the Company sold a total of 35 shares of its Treasury Stock pursuant to purchases under its ESPP Plan.  Cash received from purchases through the ESPP Plan during the six months ended June 30, 2013, was approximately $670 and is included within the financing activities section of the consolidated statements of cash flows.  There were no shares sold during the three months ended June 30, 2013 and the three and six months ended June 30, 2012.  The total unrecognized compensation expense related to the ESPP as of June 30, 2013 was approximately $87, which is expected to be recognized over the remainder of the offering period.

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Fair Value Measurements of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Fair Value Measurements of Assets and Liabilities

Fair Value Measurements of Assets and Liabilities

4. Fair Value Measurements of Assets and Liabilities

The Company classifies marketable securities as available-for-sale.  The fair value hierarchy established in the guidance adopted by the Company prioritizes the inputs used in valuation techniques into three levels as follows:

· Level 1 — Observable inputs — quoted prices in active markets for identical assets and liabilities;

· Level 2 — Observable inputs other than the quoted prices in active markets for identical assets and liabilities — includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and

· Level 3 — Unobservable inputs — includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.

The following is a summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy:

	June 30, 2013			December 31, 2012
Level 1 (A)	$	51,575		$	41,395
Level 2 (B)	9,392			15,474
Level 3 (C)	(11,051		)	(8,379		)
Total	$	49,916		$	48,490

(A) Level 1 assets include money market funds and enhanced income money market funds which are classified as cash equivalents and marketable securities, respectively.

(B) Level 2 assets include certificates of deposit, municipal bonds and corporate bonds which are classified as marketable securities.

(C) Level 3 liabilities include the contingent consideration obligation.

The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company’s marketable securities investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the six months ended June 30, 2013.

The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at June 30, 2013 were as follows:

			Aggregate Amount of
	Aggregate		Unrealized
	Fair Value		Gains		Losses
Due in one year or less	$	12,996	$	8	$	(48	)
Due after one year, less than five years	1,767		2		(2		)
	$	14,763	$	10	$	(50	)

The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2012 were as follows:

			Aggregate Amount of
	Aggregate		Unrealized
	Fair Value		Gains		Losses
Due in one year or less	$	20,188	$	18	$	(41	)
Due after one year, less than five years	653		1		(1		)
	$	20,841	$	19	$	(42	)

Unrealized gains and losses are reported as a component of accumulated other comprehensive loss in stockholders’ equity. The cost of securities sold is based on specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at June 30, 2013 and December 31, 2012 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not to recover the carrying value prior to being required to sell such investments.

The Company determined the fair value of the contingent consideration obligation based on a probability-weighted income approach derived from quarterly revenue estimates and a probability assessment with respect to the likelihood of achieving the various performance criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.  The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration obligation are the probabilities of achieving certain financial targets and contractual milestones.  Significant increases (decreases) in any of those probabilities in isolation may result in a higher (lower) fair value measurement.  No changes in valuation techniques occurred during the six months ended June 30, 2013.

The changes in fair value of the Company’s Level 3 contingent consideration obligation during the six months ended June 30, 2013 were as follows:

	Level 3
Balance at December 31, 2012	$	8,379
Fair value adjustment to contingent consideration obligation included in net income	2,176
Fx impact of change in contingent consideration obligation	(15		)
Earn-out compensation due to SpeechCycle employees	511
Balance at June 30, 2013	$	11,051

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Stockholders' Equity (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 29, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Feb. 01, 2012
Number of Awards
Cash received under program				$ 670,000
Employee Stock Purchase Plan
Weighted-average assumptions used in the Black-Scholes option pricing model
Expected stock price volatility (as a percent)		66.00%	68.00%	67.00%	68.00%
Risk-free interest rate (as a percent)		0.13%	0.13%	0.14%	0.13%
Expected life of options		6 months	6 months	6 months	6 months
Expected dividend yield (as a percent)		0.00%	0.00%	0.00%	0.00%
Share-based compensation expense additional disclosures
After tax stock-based compensation expense		151,000	117,000	329,000	208,000
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense		87,000		87,000
Number of Awards
Term of Employee Stock Purchase Plan	10 years
Employee Stock Purchase Plan Payroll Withholding Period				6 months
Total number of shares available for purchase						500
Percentage of fair market value of common stock				85.00%
Maximum Percentage of total combined voting power a participant is allowed to be granted a right to purchase common stock				5.00%
Maximum number of shares allowed to be purchased by single participant				1,000
Number of shares sold under Employee Stock Purchase Plan		0	0	35	0
Cash received under program				670,000
Stock options
Weighted-average assumptions used in the Black-Scholes option pricing model
Expected stock price volatility (as a percent)		65.00%	69.00%	66.00%	69.00%
Risk-free interest rate (as a percent)		0.84%	0.77%	0.85%	0.83%
Expected life of options		4 years 4 months 24 days	4 years 10 months 2 days	4 years 5 months 12 days	4 years 10 months 24 days
Expected dividend yield (as a percent)		0.00%	0.00%	0.00%	0.00%
Share-based compensation expense additional disclosures
Weighted-average fair value (as of the date of grant) of the options granted during the period (in dollars per share)		$ 15.84	$ 11.64	$ 15.76	$ 14.36
Pre-tax stock-based compensation expense recorded		6,100,000	4,500,000	11,000,000	9,800,000
After tax stock-based compensation expense		4,000,000	2,800,000	7,300,000	6,300,000
Stock-based compensation expense per diluted share (in dollars per share)		$ 0.10	$ 0.07	$ 0.19	$ 0.16
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense		48,800,000		48,800,000
Weighted-average period over which stock-based compensation cost related to non-vested equity awards is expected to be recognized				2 years 8 months 26 days
Number of Options
Options outstanding at the beginning of the period (in shares)				3,976
Options Granted (in shares)				601
Options Exercised (in shares)				(676)
Options Cancelled (in shares)				(113)
Options outstanding at the end of the period (in shares)		3,788		3,788
Vested or expected to vest (in shares)		3,579		3,579
Exercisable (in shares)		2,202		2,202
Weighted-Average Exercise Price
Balance at the beginning of the period (in dollars per share)				$ 20.88
Options Granted (in dollars per share)				$ 30.19
Options Exercised (in dollars per share)				$ 15.73
Options Cancelled (in dollars per share)				$ 25.06
Balance at the end of the period (in dollars per share)		$ 23.15		$ 23.15
Vested or expected to vest (in dollars per share)		$ 22.83		$ 22.83
Exercisable (in dollars per share)		$ 20.27		$ 20.27
Weighted-Average Remaining Contractual Term
Outstanding				4 years 9 months 4 days
Vested or expected to vest				4 years 8 months 1 day
Exercisable				3 years 11 months 23 days
Aggregate Intrinsic Value
Outstanding		30,767,000		30,767,000
Vested or expected to vest		30,263,000		30,263,000
Exercisable		$ 24,808,000		$ 24,808,000
Restricted stock
Number of Awards
Non-vested at the beginning of the period (in shares)				866
Granted (in shares)				811
Vested (in shares)				(201)
Forfeited (in shares)				(75)
Non-vested at the end of the period (in shares)		1,401		1,401

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 372	$ 258
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000	100,000
Common stock, shares issued	43,945	42,533
Common stock, shares outstanding	40,121	38,674
Treasury stock, shares	3,824	3,859

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Legal Matters

6 Months Ended

Jun. 30, 2013

Legal Matters

Legal Matters

9. Legal Matters

The Company is not currently subject to any legal proceedings that could have a material adverse effect on its operations; however, it may from time to time become a party to various legal proceedings arising in the ordinary course of its business.  The Company is currently the plaintiff in several patent infringement cases. Although the Company cannot predict the outcome of the cases at this time due to the inherent uncertainties of litigation, the Company continues to pursue its claims and believes that the counterclaims are without merit, and the Company intends to defend all of such counterclaims.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating activities:
Net income	$ 3,888	$ 17,432
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	18,579	11,133
Loss on disposal of asset	32	214
Amortization of bond premium	149	665
Deferred income taxes	(1,137)	438
Non-cash interest on leased facility	462	460
Stock-based compensation	11,040	9,750
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for doubtful accounts	985	(2,165)
Prepaid expenses and other current assets	807	2,844
Other assets	(444)	(170)
Accounts payable	3,364	(4,517)
Accrued expenses	(8,658)	(5,658)
Contingent consideration obligation	2,672	(8,803)
Excess tax benefit from the exercise of stock options		(4,864)
Other liabilities	511	82
Deferred revenues	1,082	(558)
Net cash provided by operating activities	33,332	16,283
Investing activities:
Purchases of fixed assets	(37,728)	(21,863)
Purchases of marketable securities available-for-sale	(3,496)	(13,013)
Maturities of marketable securities available-for-sale	9,391	7,603
Business acquired, net of cash		(26,467)
Net cash used in investing activities	(31,833)	(53,740)
Financing activities:
Proceeds from the exercise of stock options	10,630	4,912
Payments on contingent consideration obligation		(2,268)
Excess tax benefit from the exercise of stock option		4,864
Repurchase of common stock		(3,773)
Proceeds from the sale of Treasury Stock in connection with an employee stock purchase plan	670
Repayments of capital obligations	(910)	(480)
Net cash provided by financing activities	10,390	3,255
Effect of exchange rate changes on cash	(1,713)	(147)
Net increase (decrease) in cash and cash equivalents	10,176	(34,349)
Cash and cash equivalents at beginning of year	36,028	69,430
Cash and cash equivalents at end of period	46,204	35,081
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$ 1,047	$ 1,636

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 46,204	$ 36,028
Marketable securities	12,996	20,188
Accounts receivable, net of allowance for doubtful accounts of $372 and $258 at June 30, 2013 and December 31, 2012, respectively	73,995	74,980
Prepaid expenses and other assets	23,576	24,012
Deferred tax assets	4,142	4,114
Total current assets	160,913	159,322
Marketable securities	1,767	653
Property and equipment, net	85,009	58,162
Goodwill	124,160	127,322
Intangible assets, net	101,954	110,760
Deferred tax assets	8,008	6,961
Other assets	3,589	3,482
Total assets	485,400	466,662
Current liabilities:
Accounts payable	12,345	8,980
Accrued expenses	33,087	41,658
Deferred revenues	22,353	20,954
Contingent consideration obligation	11,051	3,279
Total current liabilities	78,836	74,871
Lease financing obligation - long-term	9,260	9,540
Contingent consideration obligation - long-term		5,100
Other liabilities	3,104	2,494
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at June 30, 2013 and December 31, 2012
Common stock, $0.0001 par value; 100,000 shares authorized, 43,945 and 42,533 shares issued; 40,121 and 38,674 outstanding at June 30, 2013 and December 31, 2012, respectively	4	4
Treasury stock, at cost (3,824 and 3,859 shares at June 30, 2013 and December 31, 2012, respectively)	(67,487)	(67,918)
Additional paid-in capital	366,377	344,469
Accumulated other comprehensive loss	(7,049)	(365)
Retained earnings	102,355	98,467
Total stockholders' equity	394,200	374,657
Total liabilities and stockholders' equity	$ 485,400	$ 466,662

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Restructuring Charges (Details) (USD $)	1 Months Ended	3 Months Ended	6 Months Ended
	Jan. 31, 2013	Jun. 30, 2013	Jun. 30, 2013
Restructuring Charges
Percent of work-force reduction under corporate restructuring plan	10.00%
Restructuring charges for Employment termination costs		$ 0	$ 4,600,000
Restructuring charges for Minimum lease payments		0	555,000
Restructuring accrual and changes
Charges			5,172,000
Payments			(4,773,000)
Adjustments			(15,000)
Balance at the end of the period		384,000	384,000
Employment termination costs
Restructuring accrual and changes
Charges			4,617,000
Payments			(4,602,000)
Adjustments			(15,000)
Facilities consolidation
Restructuring accrual and changes
Charges			555,000
Payments			(171,000)
Balance at the end of the period		$ 384,000	$ 384,000

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Earnings per Common Share (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings per Common Share
Stock options that are anti-dilutive and excluded from calculation of diluted earnings per share (in shares)	1,477	1,970	1,434	1,626
Numerator:
Net income attributable to common stockholders	$ 3,412	$ 11,949	$ 3,888	$ 17,432
Denominator:
Weighted average common shares outstanding - basic	38,551	38,353	38,368	38,207
Dilutive effect of:
Options and unvested restricted shares	972	722	999	916
Weighted average common shares outstanding - diluted	39,523	39,075	39,367	39,123

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

8. Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income during the three months ended June 30, 2013, are as follows, net of tax:

				Unrealized
				Holding Gains on
	Foreign			Available-for-Sale
	Currency			Securities			Total
Balance at March 31, 2013	$	(2,827	)	$	(15	)	$	(2,842	)
Other comprehensive income before reclassifications	(4,188		)	(19		)	(4,207		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Total other comprehensive loss	(4,188		)	(19		)	(4,207		)
Balance at June 30, 2013	$	(7,015	)	$	(34	)	$	(7,049	)

The changes in accumulated other comprehensive income during the six months ended June 30, 2013, are as follows, net of tax:

				Unrealized
				Holding Gains on
	Foreign			Available-for-Sale
	Currency			Securities			Total
Balance at December 31, 2012	$	(352	)	$	(13	)	$	(365	)
Other comprehensive income before reclassifications	(6,663		)	(21		)	(6,684		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Total other comprehensive loss	(6,663		)	(21		)	(6,684		)
Balance at June 30, 2013	$	(7,015	)	$	(34	)	$	(7,049	)

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Changes in accumulated other comprehensive income
Balance at the beginning of the period	$ (2,842)	$ (365)
Other comprehensive income before reclassifications	(4,207)	(6,684)
Total other comprehensive loss	(4,207)	(6,684)
Balance at the end of the period	(7,049)	(7,049)
Foreign Currency
Changes in accumulated other comprehensive income
Balance at the beginning of the period	(2,827)	(352)
Other comprehensive income before reclassifications	(4,188)	(6,663)
Total other comprehensive loss	(4,188)	(6,663)
Balance at the end of the period	(7,015)	(7,015)
Unrealized Holding Gains on Available-for-Sale Securities
Changes in accumulated other comprehensive income
Balance at the beginning of the period	(15)	(13)
Other comprehensive income before reclassifications	(19)	(21)
Total other comprehensive loss	(19)	(21)
Balance at the end of the period	$ (34)	$ (34)

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Earnings per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings per Common Share

Schedule of reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to common stockholders	$	3,412	$	11,949	$	3,888	$	17,432
Denominator:
Weighted average common shares outstanding — basic	38,551		38,353		38,368		38,207
Dilutive effect of:
Options and unvested restricted shares	972		722		999		916
Weighted average common shares outstanding — diluted	39,523		39,075		39,367		39,123

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Restructuring Charges

6 Months Ended

Jun. 30, 2013

Restructuring Charges

Restructuring Charges

7. Restructuring Charges

In January 2013, the Company initiated a work-force reduction of approximately 10 percent as part of a corporate restructuring, with reductions occurring across all levels and departments within the Company.  This measure was intended to reduce costs and to align the Company’s resources with its key strategic priorities.  Additionally, in relation to the work-force reduction, the Company initiated a facilities consolidation, beginning the process of closing one of its leased locations in Seattle, WA.  The Company recorded restructuring charges of $4.6 million and $555 during the six months ended June 30, 2013 for employment termination costs and minimum lease payments, respectively.  There were no additional restructuring charges during the three months ended June 30, 2013.  At June 30, 2013, the restructuring charges that were unpaid and classified under accrued expenses on the balance sheet related to the facilities consolidation were $384.

A summary of the Company’s restructuring accrual at June 30, 2013, and changes during the six months ended June 30, 2013, is presented below:

	Balance at										Balance at
	December 31, 2012		Charges		Payments			Adjustments			June 30, 2013
Employment termination costs	$	—	$	4,617	$	(4,602	)	$	(15	)	$	—
Facilities consolidation	—		555		(171		)	—			384
Total	$	—	$	5,172	$	(4,773	)	$	(15	)	$	384

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Basis of Presentation

Basis of Presentation

2.Basis of Presentation

For further information about the Company’s basis of presentation or its significant accounting policies, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012.

In connection with the Spatial Systems Nominees PTY LTD (“Spatial”) acquisition, the consolidated balance sheet at December 31, 2012 has been recast to include retrospective purchase accounting adjustments.  These adjustments pertain to measurement period adjustments during the six months ended June 30, 2013 based on the reclassification and valuation of assets acquired and liabilities assumed in the Spatial acquisition.  The effect on the consolidated balance sheet at December 31, 2012, as a result of the recast, is a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase in goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase in deferred revenues of $9.6 million.

Impact of Recently Issued Accounting Standards

In February 2013, the FASB issued ASU 2013-02 which requires additional disclosures regarding the reporting of reclassifications out of accumulated other comprehensive income.  ASU 2013-02 requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.  This guidance is effective for reporting periods beginning after December 15, 2012. The Company adopted this guidance effective January 1, 2013.  The Company’s adoption of this standard did not have a significant impact on its consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which permits an entity to release cumulative translation adjustments into net income when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity.  Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, or, if a controlling financial interest is no longer held. The revised standard is effective for fiscal years beginning after December 15, 2013; however, early adoption is permitted.  The Company does not expect adoption of this ASU to significantly impact its consolidated financial statements.

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2013

Stockholders' Equity

Schedule of weighted-average assumptions used in the Black-Scholes option pricing model

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Expected stock price volatility	65	%	69	%	66	%	69	%
Risk-free interest rate	0.84	%	0.77	%	0.85	%	0.83	%
Expected life of options (in years)	4.40		4.84		4.45		4.90
Expected dividend yield	0	%	0	%	0	%	0	%

Summary of information about stock options outstanding

					Weighted-
					Average
			Weighted-		Remaining	Aggregate
	Number of		Average		Contractual	Intrinsic
Options	Options		Exercise Price		Term (Years)	Value
Outstanding at December 31, 2012	3,976		$	20.88
Options Granted	601		30.19
Options Exercised	(676	)	15.73
Options Cancelled	(113	)	25.06
Outstanding at June 30, 2013	3,788		$	23.15	4.76	$	30,767
Vested or expected to vest at June 30, 2013	3,579		$	22.83	4.67	$	30,263
Exercisable at June 30, 2013	2,202		$	20.27	3.98	$	24,808

Schedule of non-vested restricted stock and changes

Non-Vested Restricted Stock	Number of Awards
Non-vested at December 31, 2012	866
Granted	811
Vested	(201	)
Forfeited	(75	)
Non-vested at June 30, 2013	1,401

Schedule of assumptions used to value employee stock purchase rights

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Expected stock price volatility	66	%	68	%	67	%	68	%
Risk-free interest rate	0.13	%	0.13	%	0.14	%	0.13	%
Expected life of options (in years)	0.50		0.50		0.50		0.50
Expected dividend yield	0	%	0	%	0	%	0	%

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events

Subsequent Events

10. Subsequent Events

The Company has evaluated all subsequent events and transactions through the filing date.

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Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Basis of Presentation
Accounts receivable	$ (73,995)	$ (74,980)
Prepaid expenses and other assets	23,576	24,012
Goodwill	124,160	127,322
Accrued expenses	33,087	41,658
Deferred revenues	22,353	20,954
Spatial Systems Nominees PTY LTD (Spatial) | Retrospective purchase accounting adjustments
Basis of Presentation
Accounts receivable		2,600
Prepaid expenses and other assets		5,000
Goodwill		11,800
Accrued expenses		4,600
Deferred revenues		$ 9,600

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Restructuring Charges (Tables)

6 Months Ended

Jun. 30, 2013

Restructuring Charges

Summary of the restructuring accrual and changes

	Balance at										Balance at
	December 31, 2012		Charges		Payments			Adjustments			June 30, 2013
Employment termination costs	$	—	$	4,617	$	(4,602	)	$	(15	)	$	—
Facilities consolidation	—		555		(171		)	—			384
Total	$	—	$	5,172	$	(4,773	)	$	(15	)	$	384

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 23, 2013
Document and Entity Information
Entity Registrant Name	SYNCHRONOSS TECHNOLOGIES INC
Entity Central Index Key	0001131554
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		40,154,682
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income

Schedule of changes in accumulated other comprehensive income

The changes in accumulated other comprehensive income during the three months ended June 30, 2013, are as follows, net of tax:

				Unrealized
				Holding Gains on
	Foreign			Available-for-Sale
	Currency			Securities			Total
Balance at March 31, 2013	$	(2,827	)	$	(15	)	$	(2,842	)
Other comprehensive income before reclassifications	(4,188		)	(19		)	(4,207		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Total other comprehensive loss	(4,188		)	(19		)	(4,207		)
Balance at June 30, 2013	$	(7,015	)	$	(34	)	$	(7,049	)

The changes in accumulated other comprehensive income during the six months ended June 30, 2013, are as follows, net of tax:

				Unrealized
				Holding Gains on
	Foreign			Available-for-Sale
	Currency			Securities			Total
Balance at December 31, 2012	$	(352	)	$	(13	)	$	(365	)
Other comprehensive income before reclassifications	(6,663		)	(21		)	(6,684		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Total other comprehensive loss	(6,663		)	(21		)	(6,684		)
Balance at June 30, 2013	$	(7,015	)	$	(34	)	$	(7,049	)