Basis of Presentation and Consolidation (Tables)

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

The Company’s typical performance obligations include the following:



Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Software License
Software License	Upon shipment or made available for download (point in time)	Within 90 days of delivery	Observable transactions or residual approach when prices are highly variable or uncertain
Software License with significant customization	Over the performance of the customization and installation of the software (over time)	Within 90 days of services being performed	Residual approach
Hosting Services	As hosting services are provided (over time)	Within 90 days of services being provided	Estimated using a cost-plus margin approach
Professional Services
Consulting	As work is performed (over time)	Within 90 days of services being performed	Observable transactions
Customization	SaaS: Over the remaining term of the SaaS agreement License: Over the performance of the customization and installation of the software (over time)	Within 90 days of services being performed	Observable transactions
Transaction Services	As transaction is processed (over time)	Within 90 days of transaction	Observable transactions
Subscription Services
Customer Support	Ratably over the course of the support contract (over time)	At the beginning of the contract period	Observable transactions
SaaS	Over the course of the SaaS service once the system is available for use (over time)	Within 90 days of services being performed	Estimated using a cost-plus margin approach

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into the nature of the products and services and geographical regions. The Company’s geographic regions are the Americas, EMEA, and APAC. The majority of the Company’s revenue is from the Technology, Media and Telecom (collectively, “TMT”) sector.



	Three Months Ended September 30, 2018								Three Months Ended September 30, 2017
	Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total
Geography
Americas	$	41,029	$	24,563	$	2,714	$	68,306	$	49,555	$	28,071	$	2,125	$	79,751
APAC	—		2,082		4,647		6,729		—		1,637		4,540		6,177
EMEA	1,967		2,216		4,068		8,251		1,708		634		2,745		5,087
Total	$	42,996	$	28,861	$	11,429	$	83,286	$	51,263	$	30,342	$	9,410	$	91,015

Service Line
Professional Services	$	2,982	$	4,051	$	1,728	$	8,761	$	4,309	$	6,990	$	1,809	$	13,108
Transaction Services	1,918		2,845		—		4,763		2,883		4,113		—		6,996
Subscription Services	38,096		20,572		7,976		66,644		41,831		17,666		5,706		65,203
License	—		1,393		1,725		3,118		2,240		1,573		1,895		5,708
Total	$	42,996	$	28,861	$	11,429	$	83,286	$	51,263	$	30,342	$	9,410	$	91,015



	Nine Months Ended September 30, 2018								Nine Months Ended September 30, 2017
	Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total
Geography
Americas	$	113,452	$	65,614	$	7,585	$	186,651	$	175,560	$	75,371	$	5,812	$	256,743
APAC	—		4,697		30,287		34,984		—		5,157		17,864		23,021
EMEA	6,568		3,747		11,787		22,102		5,248		2,630		8,460		16,338
Total	$	120,020	$	74,058	$	49,659	$	243,737	$	180,808	$	83,158	$	32,136	$	296,102

Service Line
Professional Services	$	10,002	$	14,053	$	8,118	$	32,173	$	23,731	$	19,307	$	5,423	$	48,461
Transaction Services	6,703		6,740		—		13,443		9,098		15,058		—		24,156
Subscription Services	102,891		50,103		23,709		176,703		140,224		40,107		21,708		202,039
License	424		3,162		17,832		21,418		7,755		8,686		5,005		21,446
Total	$	120,020	$	74,058	$	49,659	$	243,737	$	180,808	$	83,158	$	32,136	$	296,102

Contract with Customer, Asset and Liability

Significant changes in the contract liabilities balance (current and noncurrent) during the period are as follows (in thousands):



	Contract Liabilities*
Balance - January 1, 2018	$	115,009
Revenue recognized in the period	(99,405		)
Amounts billed but not recognized as revenue	68,257
Balance - September 30, 2018	$	83,861

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*	Comprised of Deferred Revenue

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The table below shows Topic 606 Retained earnings reconciliation:



Cumulative catch up Topic 606 adjustment as of January 1, 2018	$	(10,130	)
Net loss from continued operations	31,001
Retained Earnings at September 30, 2018	$	20,871

In accordance with Topic 606, the disclosure of the impact of adoption to the Company’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations was as follows:



	September 30, 2018
	As Reported			Impacts of the New Revenue Standard			Adjusted amounts under prior GAAP
ASSETS
Current assets:
Cash and cash equivalents	$	222,438		$	—		$	222,438
Restricted cash**	4,377			—			4,377
Marketable securities, current	6,989			—			6,989
Accounts receivable, net	52,617			19,718			32,899
Prepaid expenses	46,922			—			46,922
Other current assets ⁽²⁾	14,115			(415		)	14,530
Total current assets	347,458			19,303			328,155
Marketable securities, non-current	8,716			—			8,716
Property and equipment, net	80,519			—			80,519
Goodwill	234,480			—			234,480
Intangible assets, net	117,448			—			117,448
Other assets ⁽²⁾	8,940			369			8,571
Note receivable from related party**	66,089			—			66,089
Equity method investment	30,694			—			30,694
Total assets	$	894,344		$	19,672		$	874,672

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,300		$	—		$	14,300
Accrued expenses	53,794			(14,756		)	68,550
Deferred revenues, current ⁽³⁾	54,046			2,281			51,765
Short-term debt	228,764			—			228,764
Total current liabilities	350,904			(12,475		)	363,379
Lease financing obligation	10,006			—			10,006
Deferred tax liabilities	12,109			—			12,109
Deferred revenues, non-current ⁽³⁾	29,815			11,200			18,615
Other liabilities	11,329			—			11,329
Redeemable noncontrolling interest	12,500			—			12,500
Commitments and contingencies (Note 12)
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018	176,160			—			176,160
Stockholders’ equity:
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively	5			—			5
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively)	(82,087		)	—			(82,087		)
Additional paid-in capital	561,144			—			561,144
Accumulated other comprehensive loss ⁽⁴⁾	(30,557		)	76			(30,633		)
Accumulated deficit	(156,984		)	20,871			(177,855		)
Total stockholders’ equity	291,521			20,947			270,574
Total liabilities and stockholders’ equity	$	894,344		$	19,672		$	874,672

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**	See Note 5 -Investments in Affiliates and Related Transactions for related party transactions reflected in this account.



	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018
	As Reported			Impacts of the New Revenue Standard			Adjusted amounts under prior GAAP			As Reported			Impacts of the New Revenue Standard			Adjusted amounts under prior GAAP
Net revenues ⁽³⁾	$	83,286		$	11,605		$	71,681		$	243,737		$	31,871		$	211,866
Costs and expenses:
Cost of revenues* ⁽⁵⁾	43,714			249			43,465			127,788			613			127,175
Research and development	18,684			—			18,684			59,789			—			59,789
Selling, general and administrative ⁽²⁾	27,320			51			27,269			99,368			152			99,216
Restructuring charges	4,539			—			4,539			8,425			—			8,425
Depreciation and amortization	23,658			—			23,658			70,330			—			70,330
Total costs and expenses	117,915			300			117,615			365,700			765			364,935
Loss from continuing operations	(34,629		)	11,305			(45,934		)	(121,963		)	31,106			(153,069		)
Interest income	203			—			203			7,518			—			7,518
Interest expense	(1,370		)	(33		)	(1,337		)	(3,935		)	(105		)	(3,830		)
Other expense, net	(13,439		)	—			(13,439		)	(9,180		)	—			(9,180		)
Equity method investment income	283			—			283			71			—			71
Loss from continuing operations, before taxes	(48,952		)	11,272			(60,224		)	(127,489		)	31,001			(158,490		)
Benefit for income taxes	2,308			—			2,308			1,604			—			1,604
Net loss from continuing operations	(46,644		)	11,272			(57,916		)	(125,885		)	31,001			(156,886		)
Net loss	(46,644		)	11,272			(57,916		)	(125,885		)	31,001			(156,886		)
Net (income) loss attributable to redeemable noncontrolling interests	(422		)	—			(422		)	2,122			—			2,122
Preferred stock dividend	(7,463		)	—			(7,463		)	(18,076		)	—			(18,076		)
Net loss attributable to Synchronoss	$	(54,529	)	$	11,272		$	(65,801	)	$	(141,839	)	$	31,001		$	(172,840	)

Basic:
Continuing operations	$	(1.38	)	$	0.28		$	(1.66	)	$	(3.51	)	$	0.77		$	(4.28	)
Diluted:
Continuing operations	$	(1.38	)	$	0.28		$	(1.66	)	$	(3.51	)	$	0.77		$	(4.28	)
Weighted-average common shares outstanding:
Basic	39,612						39,612			40,405						40,405
Diluted	39,612						39,612			40,405						40,405

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*	Cost of revenues excludes depreciation and amortization which are shown separately.


⁽¹⁾	Reflects the impact of changes to the contract term as defined by the new revenue recognition standard.


⁽²⁾	Reflects capitalization of costs to obtain a contract.


⁽³⁾	Reflects the impact of changes in the delayed pattern of recognition on the Company’s professional services, timing of revenue recognition and allocation of purchase price on software license contracts and legally enforceable rights and obligations prior to when persuasive evidence of an arrangement exists.


⁽⁴⁾	Reflects the impact of foreign currency translation related to the above impacts.


⁽⁵⁾	Reflects the impact of amortization of third party costs over the term of the contract.

Recent accounting pronouncements adopted



Standard	Description	Effect on the financial statements
Accounting Standards Update (“ASU”) 2017-09 Stock Compensation (Topic 718), Scope of Modification	In May 2017, the Financial Accounting Standards Board (“FASB”) issued guidance which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. The guidance also clarifies that a modification to an award could be significant and therefore require disclosure, even if modification accounting is not required. ASU 2017-09 is effective for fiscal years, and interim periods within those years, beginning after December 31, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date.	This ASU did not have a material effect on the Company’s condensed consolidated financial statements as of the date of adoption.
Date of adoption: January 1, 2018.

Standards issued not yet adopted



Standard	Description	Effect on the financial statements
ASU 2018-15 Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Cloud Computing Arrangements	In August 2018, the FASB issued final guidance requiring a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in Accounting Standards Codification (“ASC”) 350-402 Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40) to determine which implementation costs to capitalize as assets. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019. Early adoption of the amendments is permitted, including adoption in any interim period, for all entities and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.	The Company is currently reviewing its cloud computing arrangements to evaluate the impact of adoption of the final guidance but does not expect that the pending adoption of this ASU will have a material effect on its condensed consolidated financial statements.
Date of adoption: January 1, 2020.
Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting	In June 2018, the FASB issued ASU 2018-07, regarding ASC Topic 718 “Compensation - Stock Compensation,” which largely aligns the accounting for share-based compensation for non-employees with employees. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.	The Company does not expect the adoption of this standard to have a material effect on its condensed consolidated financial statements.
Date of adoption: January 1, 2019.
ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	In June 2016, the FASB issued ASU 2016-13 which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU is effective for public companies in annual periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted beginning after December 15, 2018 and interim periods within those years.	The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements.
Date of adoption: January 1, 2020.



ASU 2016-02 Leases (Topic 842 or “ASC 842”)	In February 2016, the FASB issued ASU 2016-02 which requires lessees to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. The ASU is effective for public companies in interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach.	The Company has elected to apply the transition requirements as of January 1, 2019 and as such, the Company will neither restate comparative periods for the effects of applying ASC 842 nor provide the disclosures required by ASC 842 for the comparative periods. In addition, there are several practical expedients and accounting policy elections offered within ASC 842 to both ease the transition to, and simplify the adoption of, ASC 842. In connection therewith, the Company elected the package of transition practical expedients related to lease identification, lease classification, and initial direct costs. The Company also elected the lessor practical expedient to not separate lease and non-lease components when the requisite criteria is met to be treated as such. In addition, the Company made the following accounting policy elections: (1) the Company will not separate lease and non-lease components by class of underlying asset (2) the Company will apply the portfolio approach, specifically in the development of the Company’s discount rates (3) the Company will apply the short-term lease exemption by class of underlying asset (4) the Company will apply a capitalization threshold policy.
Date of adoption: January 1, 2019.		Adoption of the new standard will result in the recording of additional net lease assets and lease liabilities as of January 1, 2019. The difference between the additional lease assets and lease liabilities, net of the deferred tax impact, will be recorded as an adjustment to retained earnings. The standard will not materially impact our consolidated net earnings and will have no impact on cash flows.