Anyone following SNCR? I have a very small position and it seems the analysts do not like the slowing growth. Last quarters great results appeared to be buoyed by a one time revenue bump to the cloud business.
Sincerely,
Charlie
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Last quarters great results appeared to be buoyed by a one time revenue bump to the cloud business.
Charlie, why do you call it a one-time bump. Their cloud services have been growing rapidly every quarter, and also growing rapidly as a percentage of their total revenue.
They also just announced a $100 million share buyback and said this along with it:
As we begin 2016, we have a very strong market position and financial profile and a large and expanding addressable market opportunity. We expect to deliver solid top line growth, strong profit margins and expanding free cash flow. In addition, we are making important investments in our enterprise business, including our ventures with Goldman Sachs and Verizon, that we believe will enhance our long-term growth and profitability. Our new share repurchase program is another excellent way to take advantage of our strong balance sheet and cash flow in order to enhance long-term shareholder value.
Sounds like a wild overreaction by the market to me (but what do I know!)
Saul
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Dear Saul,
I am referring to this analyst (Stifel Nicolaus) who downgraded the stock based upon their belief that the cloud business did not do as well as perceived based on $18M that they think was a one time boost to cloud revenues last quarter:
Synchronoss did catch an analyst downgrade on Thursday, which could be contributing to the decline in the stock price. Stifel Nicolaus lowered its rating on Synchronoss from “buy” to “hold,” citing concerns that the quality of the company’s cloud revenue is lower than it appears. It believes that Synchronoss’ joint venture with Verizon contributed at least $18 million in one-time cloud revenue, boosting the company’s results during the fourth quarter.
http://www.fool.com/investing/general/2016/02/04/why-shares-…
Sincerely,
Charlie
2 Likes
I still don’t understand why it it’s a one timer.
Synchronoss releases Universal ID, enters JV with Verizon
Wednesday 3 February 2016 | 16:19 CET | News
Synchronoss Technologies expanded its enterprise offering with the release of Synchronoss Universal ID, a new user-authentication and identity management platform for enterprises and consumers. As part of this expansion, Synchronoss entered into a joint venture with Verizon to deliver a multi-factor platform for managing identities online.
The joint venture with Verizon adds another complementary component to Synchronoss’ Secure Mobility Platform which was announced in collaboration with Goldman Sachs last November.
Aimed at enterprises, government agencies and consumers, the new platform will provide a way to manage identity in a digital world through a trusted single source. The company plans to integrate the platform into its Synchronoss Secure Mobility Platform for multi-factor authentication and identity management. Synchronoss will support existing enterprise customers with the platform formerly only available through Verizon, while working to build a newly enhanced platform slated for roll out in the latter half of 2016 for new and current customers.
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This seems like short time thinking to me. From MF:
http://www.fool.com/investing/general/2016/02/03/synchronoss…
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Anyone following SNCR?
I am definitely one following SNCR and amounts to a good sized holding in my portfolio.
Last night I spent 5 hours evaluating the earnings call along with various other news. Did anyone catch the samsung keynote speech at CES where the Goldman Sachs exec announced Samsung will be using the software package Synchronoss is selling? I know old news but I missed it so I thought id mention it. Anyway what I took away from the call is that Synchronoss has a lot of good things going on. This year (2016) for the most part sounds like an investment year for the company and management seemed pretty confident they will have strong growth in 2017 and on. Though for an investment year the company still isn’t doing bad at all. Lets take a quick look at what we actually have.
First of all we have a company that just grew Revenues for the fourth quarter by 21% and earned $2.23 Non-gaap EPS for the year. Given today’s closing price of 22.34 we have a P/E of 10. They are projected to grow revenues by 15% in 2016 and grow cash flows by 10% to 20%. All this from a company trading at a P/E of 10 in a possible investment year. This is a valuation I would expect from a company growing revenues closer to 5% with little hope of re-accelerating. Given everything management is saying it sounds like there is good reason to believe growth can accelerate again in 2017.
I also don’t know how many noticed this little bit of information. In 2014 Synchronoss had cash flows that were basically break even. In 2015 they grew cash flows to $66 million. In 2016 they are projected to grow them another 10% to 20%. Synchronoss seems to be turning into a cash generating machine as margins continue to improve.
From the conference call transcript…
While we have not historically provided guidance on free cash flow, directionally, we wanted to share our expectation that free cash flow is expected to grow 10% to 20% in 2016, achieving historical highs after going from breakeven in 2014 to $66.4 million in 2015 on a non-GAAP basis. This highlights the power of our business model, as we move to a virtualized infrastructure. At the same time, we are increasing investments in strategic growth initiatives as we discussed earlier.
http://seekingalpha.com/article/3861046-synchronoss-technolo…
As always please do your own DD
Best,
Soth
11 Likes
Here are my own notes and summary from the conference call:
Outlook for 2016:
Adj revenues in the range of $655 million to $680 million, up 15% at the midpoint.
Cloud Services revenue will be in the range of $378 million to $391 million, up 24% at the midpoint.
Enterprise will generate revenue in single-digit range.
Our enhanced solutions in the Secure Mobility Suite, in collaboration with Goldman Sachs and Verizon, are expected to be available in the second quarter and second half of the year, respectively. It takes time to finalize contracts and then for the subscription revenue stream to build. While revenue contribution in 2016 will be fairly small, we will be building a foundation for strong growth in those areas in 2017.
Activation revenue in the range of $277 million to $289 million, up 5% at the midpoint. We believe we are taking a conservative view on our Activation business until we have better visibility into the timing of international deployments. In addition, there is a large range of variability in smartphone forecasts in 2016 and the strength of potential new device launches.
Adj gross margins of 60% to 61%.
Adj operating margins of 23% to 25%,
Adj earnings of $2.22 to $2.45.
(The investments required to support our venture with Verizon and the launch of our ID platform will be $0.06 to $0.10 per share for 2016. Without this, our outlook would have been $2.28 to $2.55. Our Goldman Sachs venture will also be dilutive in 2016 by approximately $0.10 to $0.12 per share for the year and approaching breakeven by the end of the year. We expect these dilutive impacts to be largest in the first quarter and improve throughout the year as subscription revenue ramps. We expect the Enterprise unit to have a positive earnings in 2017).
Cash flow. We expect to achieve substantial growth in free cash flow during 2016. We currently expect CapEx to be approximately $60 million to $65 million. Free Cash Flow will be up 10% to 20% in 2016, achieving new highs after going from breakeven in 2014 to $66.4 million in 2015. At the same time, we are increasing investments in strategic growth initiatives as we discussed earlier.
Outlook for the first quarter.
Adj revenues of $142 million to $147 million, up 7% to 10%.
Adj gross margins will be 60% to 61%,
Adj operating margins of 20% to 23%
Adj earnings of 44 to 50 cents.
After the Earnings announcement the price dropped 20%, I bought some, and they announced a $100 million share repurchase program.
As we begin 2016, we have a very strong market position and financial profile and a large and expanding addressable market opportunity. We expect to deliver solid top line growth, strong profit margins and expanding free cash flow. In addition, we are making important investments in our enterprise business, including our ventures with Goldman Sachs and Verizon, that we believe will enhance our long-term growth and profitability. Our new share repurchase program is another excellent way to take advantage of our strong balance sheet and cash flow in order to enhance long-term shareholder value.
It’s my thought (Saul, here) that selling off 20%, on top of a drop before earnings, to a PE under 10, on a report like that, is absolute insanity. But it’s just my opinion. I didn’t catch the bottom at $21.50 or so but I did buy some.
Saul
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