8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2016

SYNCHRONOSS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	000-52049	06-1594540
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 Crossing Boulevard, 8th Floor Bridgewater, New Jersey	08807
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (866) 620-3940

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

OnAugust 3, 2016, Synchronoss Technologies, Inc. issued a press release relating to its results of operations and financial condition for the quarter ended June 30, 2016.  The full text of this press release is furnished as Exhibit 99.1 to this Current Report on form 8-K.

The information in Item 2.02 of this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

Exhibit 99.1 Press Release of Synchronoss Technologies, Inc. dated August 3, 2016.

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 hereunto duly authorized.

	SYNCHRONOSS TECHNOLOGIES, INC.
Date: August 3, 2016	By:	/s/ Stephen G. Waldis
		Stephen G. Waldis
		Chairman of the Board of Directors And Chief Executive Officer

EX-99.1

Exhibit 99.1

200 Crossing Boulevard, Bridgewater, NJ 08807

Press Release:

SYNCHRONOSS TECHNOLOGIES, INC. ANNOUNCES

STRONG SECOND QUARTER RESULTS

· GAAP total revenue for the second quarter was $157.6 million, increasing 14% year-over-year

· Non-GAAP total revenue for the second quarter was$161.5 million,  increasing17% year-over-year

· GAAP EPS for the second quarter was ($0.10); Non-GAAP EPS was$0.57

BRIDGEWATER, NJ  –August 3, 2016–  Synchronoss Technologies, Inc. (NASDAQ: SNCR), the leader in mobile cloud innovation and software-based activation for mobile carriers, enterprises, retailers and OEMs around the world, today announced financial results for thesecond quarter of2016.

“We are very proud of the Synchronoss team for delivering a healthy second quarter with momentum especially around cloud heading into the rest of the year”, said Stephen G. Waldis, Founder and Chief Executive Officer of Synchronoss. “Cloud was strong this quarter, as solid subscriber growth in our core customer base is setting the stage for incremental cloud opportunities while investments in the enterprise initiatives are already generating significant customer activity in the field. We are continuing to execute on our long-term strategy which is laying the foundation for the future growth of Synchronoss.”

Financial Highlights for the Second Quarter of 2016:

· Total Revenue: $157.6 million GAAP compared to $137.8 million in the second quarter of 2015.  $161.5 million non-GAAP compared to $137.9 million in the second quarter of 2015.

· Gross profit: $86.1 million GAAP compared to $82.9 million in the second quarter of 2015.  $96.9 million non-GAAP compared to $85.4 million in the second quarter of 2015.

· Operating (Loss) Income: ($3.5 million) GAAP compared to $23.6 million in the second quarter of 2015.  $37.3 million non-GAAP compared to $40.2 million in the second quarter of 2015.

· Net (Loss) Income attributable to Synchronoss: ($4.4 million) GAAP compared to $15.2 million in the second quarter of 2015. $26.9 million non-GAAP compared to $26.0 million in the second quarter of 2015.

· Earnings (Loss) per Diluted Share: $(0.10) GAAP compared to $0.33 in the second quarter of 2015. $0.57 non-GAAP compared to $0.56 in the second quarter of 2015.

· Operating Cash Flow: $33.7 million GAAP compared to $62.6 million in the second quarter of 2015.  $33.7 million non-GAAP compared to $60.6 million in the second quarter of 2015.

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

“We are pleased with another quarter that exceeded our expectations, particularly our ability to deliver strong top-line growth,” said Karen L. Rosenberger, Chief Financial Officer and Treasurer.  “We believe our ability to drive growth, while investing in our enterprise and international initiatives positions Synchronoss well heading into the second half of 2016 and beyond.”

 

Second Quarter and Recent Business Highlights:

· Cloud Services revenue accounted for $95.2 millionof non-GAAP revenue, representing approximately 59% of total non-GAAP revenue and growing 33% on a year-over-year basis. 

· Launched the general availability of our Enterprise Secure Mobility Platform (SMP) in June.

· Free cash flow of $20 million delivered in the quarter generating free cash flow continues to be a major focal point of the Company.

· Share repurchases of $23.4 million completed in the quarter.

· Held our annual analyst day in NYC, outlining the Company’s core strategic and growth initiatives.

Second Quarter Investor Conference Participation Schedule:

· Oppenheimer Annual Technology, Internet & Communication Conference August 9, 2016-Boston, MA

· Drexel Hamilton TMT Conference September 8, 2016-New York, NY

· Deutsche Bank Technology Conference September 14, 2016-Las Vegas, NV

· Credit Suisse US Small & Mid Cap Conference September 15, 2016-New York, NY

Conference Call Details

In conjunction with this announcement, Synchronoss will host a conference call today, at 5:00 p.m. (ET) to discuss the company’s financial results. To access this call, dial 877-930-7767 (domestic) or 253-336-7416 (international). The pass code for the call is 42244350. Additionally, a live web cast of the conference call will be available on the “Investor Relations” page on the company’s web site www.synchronoss.com.

Following the conference call, a replay will be available for a limited time at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 42244350. An archived web cast of this conference call will also be available on the “Investor Relations” page of the company’s web site, www.synchronoss.com.

Non-GAAP Financial Measures

Synchronoss has provided in this release selected financial information that has not been prepared in accordance with GAAP. This information includes historical non-GAAP revenues, gross profit, operating income (loss), net income (loss), effective tax rate, earnings (loss) per share and cash flows from operating activities. Synchronoss uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Synchronoss’ ongoing operational performance. Synchronoss believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Synchronoss’ industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above add back the deferred revenue write-down associated with acquisitions, fair value stock-based compensation expense, acquisition-related costs which includes integration costs, changes in the contingent consideration obligation, deferred compensation expense related to earn outs and amortization of intangibles associated with acquisitions.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures as detailed above. As previously mentioned, a reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release.

About Synchronoss Technologies, Inc.

Synchronoss (NASDAQ:SNCR), is the mobile innovation leader that provides personal cloud solutions and software-based activation for connected devices across the globe. The company’s proven and scalable technology solutions allow customers to connect, synchronize and activate connected devices and services that empower enterprises and consumers. For more information visit us at: www.synchronoss.com.

Forward-looking Statements

This document may include certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by

words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," “outlook” or words of similar meanings. These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption "Risk Factors" in Synchronoss’ Annual Report on Form 10-K for the year ended December 31, 2015and other documents filed with the U.S. Securities and Exchange Commission. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. Synchronoss does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

The Synchronoss logo, Synchronoss and Synchronoss Integrated Life are trademarks of Synchronoss Technologies, Inc. All other trademarks are property of their respective owners.

SOURCE: Synchronoss Technologies, Inc. 

CONTACT:Synchronoss Technologies, Inc.

Investor and Media:

Daniel Ives, +1 908-524-1047

daniel.ives@synchronoss.com

SYNCHRONOSS TECHNOLOGIES, INC.

BALANCE SHEETS

(in thousands, except per share data)

(Unaudited)

	June 30, 2016		December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	111,028	$	147,634
Marketable securities		62,274		66,357
Accounts receivable, net of allowance for doubtful accounts of $1,508 and $3,029 at June 30, 2016 and December 31, 2015, respectively		162,386		143,692
Prepaid expenses and other assets		49,947		49,262
Total current assets		385,635		406,945
Marketable securities		13,949		19,635
Property and equipment, net		167,135		168,280
Goodwill		317,586		221,271
Intangible assets, net		222,045		174,322
Deferred tax assets		1,902		3,560
Other assets		14,780		16,215
Total assets	$	1,123,032	$	1,010,228
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	35,150	$	26,038
Accrued expenses		52,534		45,819
Deferred revenues		28,009		8,323
Contingent consideration obligation		7,657		—
Short term debt		47,000		—
Total current liabilities		170,350		80,180
Lease financing obligation - long term		13,623		13,343
Contingent consideration obligation - long-term		—		930
Convertible debt		225,585		224,878
Deferred tax liability		29,716		16,404
Other liabilities		22,545		3,227
Redeemable noncontrolling interest		55,459		61,452
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at June 30, 2016 and December 31, 2015		—		—
Common stock, $0.0001 par value; 100,000 shares authorized, 49,132 and 48,084 shares issued; 45,079 and 44,405 outstanding at June 30, 2016 and December 31, 2015, respectively		4		4
Treasury stock, at cost (4,053 and 3,679 shares at June 30, 2016 and December 31, 2015, respectively)		(95,812)		(65,651)
Additional paid-in capital		547,970		512,802
Accumulated other comprehensive loss		(34,880)		(38,684)
Retained earnings		188,472		201,343
Total stockholders’ equity		605,754		609,814
Total liabilities and stockholders’ equity	$	1,123,032	$	1,010,228

SYNCHRONOSS TECHNOLOGIES, INC.

STATEMENT OF INCOME

(in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net revenues	$	157,551	$	137,820	$	300,237	$	270,746
Costs and expenses:
Cost of services (1)(2)*		71,468		54,920		139,774		108,575
Research and development (1)(2)		26,170		22,462		50,267		44,486
Selling, general and administrative (1)(2)		30,618		18,717		58,199		39,600
Net change in contingent consideration obligation		6,386		—		6,727		—
Restructuring charges		1,191		1,451		4,162		4,691
Depreciation and amortization		25,262		16,632		49,317		31,467
Total costs and expenses		161,095		114,182		308,446		228,819
(Loss) income from operations		(3,544)		23,638		(8,209)		41,927
Interest income		591		471		1,221		937
Interest expense		(1,834)		(1,418)		(3,410)		(2,760)
Other income		865		415		(19)		429
(Loss) income before income tax expense		(3,922)		23,106		(10,417)		40,533
Income tax expense		(3,381)		(7,952)		(7,969)		(14,818)
Net (loss) income		(7,303)		15,154		(18,386)		25,715
Net loss attributable to noncontrolling interests		(2,864)		—		(5,993)		—
Net (loss) income attributable to Synchronoss	$	(4,439)	$	15,154	$	(12,393)	$	25,715
Net income attributable to Synchronoss		(4,439)		15,154		(12,393)		25,715
Add: After-tax interest on convertible debt		—		514		—		995
Net (loss) income for diluted EPS calculation **	$	(4,439)	$	15,668	$	(12,393)	$	26,710
Net (loss) income per common share attributable to Synchronoss:
Basic	$	(0.10)	$	0.36	$	(0.29)	$	0.61
Diluted	$	(0.10)	$	0.33	$	(0.29)	$	0.56
Weighted-average common shares outstanding:
Basic		43,450		41,870		43,449		41,898
Diluted		43,450		47,271		43,449		47,371
* Cost of services excludes depreciation and amortization which is shown separately.
** Includes an add back for the convertible debt interest
(1) Amounts include fair value stock-based compensation as follows:
Cost of services	$	1,821	$	1,603	$	3,840	$	3,085
Research and development		2,026		1,645		3,856		3,127
Selling, general and administrative		4,278		3,210		8,730		6,875
Total fair value stock-based compensation expense	$	8,125	$	6,458	$	16,426	$	13,087
(2) Amounts include acquisition costs as follows:
Cost of services	$	5,057	$	898	$	10,985	$	898
Research and development		3,113		1,508		6,688		2,643
Selling, general and administrative		1,335		71		4,368		315
Total acquisition costs	$	9,505	$	2,477	$	22,041	$	3,856

SYNCHRONOSS TECHNOLOGIES, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Non-GAAP financial measures and reconciliation:
GAAP Revenue	$	157,551	$	137,820	$	300,237	$	270,746
Add:  Deferred revenue write-down		3,939		38		6,830		217
Non-GAAP Revenue	$	161,490	$	137,858	$	307,067	$	270,963
GAAP Revenue	$	157,551	$	137,820	$	300,237	$	270,746
Less: Cost of services		71,468		54,920		139,774		108,576
GAAP Gross Margin		86,083		82,900		160,463		162,170
Add: Deferred revenue write-down		3,939		38		6,830		217
Add: Fair value stock-based compensation		1,821		1,603		3,840		3,084
Add: Acquisition and restructuring costs		5,057		898		10,985		898
Non-GAAP Gross Margin	$	96,900	$	85,439	$	182,118	$	166,369
Non-GAAP Gross Margin %		60%		62%		59%		61%
GAAP income from operations	$	(3,544)	$	23,638	$	(8,209)	$	41,927
Add: Deferred revenue write-down		3,939		38		6,830		217
Add: Fair value stock-based compensation		8,125		6,458		16,426		13,087
Add: Acquisition and restructuring costs		10,696		3,928		26,203		8,547
Add: Net change in contingent consideration obligation		6,386		—		6,727		—
Add: Amortization expense		11,701		6,150		22,509		11,325
Non-GAAP income from operations	$	37,303	$	40,212	$	70,486	$	75,103
GAAP net (loss) income attributable to Synchronoss	$	(4,439)	$	15,154	$	(12,393)	$	25,715
Add: Deferred revenue write-down, net of tax		2,784		21		5,004		148
Add: Fair value stock-based compensation, net of tax		5,660		4,234		12,035		8,931
Add: Acquisition and restructuring costs, net of taxes		7,535		2,559		19,844		5,832
Add: Net change in contingent consideration obligation, net of Fx change		6,386		—		6,727		—
Add: Amortization expense, net of tax		8,932		4,060		18,047		7,726
Non-GAAP net income attributable to Synchronoss		26,858		26,028	$	49,264	$	48,352
Add: After-tax interest on convertible debt		549		514		1,098		1,028
Net income for diluted EPS calculation	$	27,407	$	26,542	$	50,362	$	49,380
Diluted non-GAAP net income per share	$	0.57	$	0.56	$	1.05	$	1.04
Weighted shares outstanding - Diluted		48,132		47,271		48,120		47,371

SYNCHRONOSS TECHNOLOGIES, INC.

STATEMENT OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	2016		2015
Operating activities:
Net (loss) income	$	(18,386)	$	25,715
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense		49,317		31,467
Loss on disposals		68		—
Amortization of debt issuance costs		750		750
Amortization of bond premium		754		756
Deferred income taxes		5,980		2,065
Non-cash interest on leased facility		458		464
Stock-based compensation		16,426		13,087
Contingent consideration obligation		6,727		(1,532)
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for doubtful accounts		(18,170)		(19,758)
Prepaid expenses and other current assets		2,948		(4,749)
Other assets		2,580		(282)
Accounts payable		51		2,869
Accrued expenses		1,110		8,947
Other liabilities		(6,811)		(172)
Deferred revenues		30,388		2,882
Net cash provided by operating activities		74,190		62,509
Investing activities:
Purchases of fixed assets		(26,864)		(34,947)
Purchases of marketable securities available-for-sale		(11,592)		(72,015)
Maturities of marketable securities available-for-sale		20,567		52,375
Businesses acquired, net of cash		(98,428)		(59,481)
Net cash used in investing activities		(116,317)		(114,068)
Financing activities:
Proceeds from the exercise of stock options		4,945		11,828
Taxes paid on withholding shares		(5,380)		(16,844)
Payments on contingent consideration obligation		—		(4,468)
Borrowings on revolving line of credit		50,000		—
Repayment of revolving line of credit		(3,000)		—
Repurchases of common stock		(40,025)		—
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan		955		975
Repayments of capital lease obligations		(1,484)		(564)
Net cash provided by (used in) financing activities		6,011		(9,073)
Effect of exchange rate changes on cash		(490)		718
Net decrease in cash and cash equivalents		(36,606)		(59,914)
Cash and cash equivalents at beginning of period		147,634		235,967
Cash and cash equivalents at end of period	$	111,028	$	176,053

SYNCHRONOSS TECHNOLOGIES, INC.

Reconciliation of GAAP to Non-GAAP Cash Provided by Operating Activities

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	2016		2015
Non-GAAP cash provided by operating activities and reconciliation:
Net cash provided by operating activities (GAAP)	$	74,190	$	62,509
Add: Cash payments on settlement of earn-out		—		3,532
Adjusted cash flow provided by operating activities (Non-GAAP)	$	74,190	$	66,041