On Tuesday, July 30, 2009, after the market close, Synchronoss reported 2Q09 results.
Healthy AT&T contribution and business expansion with Time Warner highlight solid 2Q09
results: Total revenue of $30.6mn came in ahead of our estimate of $29.9mn and the Street estimate
of $30.2mn as well as the company’s guidance of $29.5-30.5mn. Breaking down the company’s topline
results, 66% of revenue came from AT&T, an increase versus the 63% contribution level in
1Q09. Non-GAAP EPS of $0.12 also came in ahead of our estimate of $0.11 and was in-line with the
Street estimate of $0.12 as well as the company’s guidance of $0.11-0.12. During the quarter,
Synchronoss saw expansion with its Time Warner relationship, developing a common web front-end
and end-to-end e-commerce platform that is already showing solid contribution by lowering
subscription acquisition costs and improving conversion rates. Synchronoss also continued to make
progress with OEM device manufacturers, confirming that it has directly engaged with Apple to offer
the iPhone through apple.com. Finally, Synchronoss continued to expand its relationship with AT&T,
onboarding its consumer indirect channel (announced last quarter) and also expanding the number of
u-verse transactions being handled on the synchronoss platform. AT&T was 66% of customer
revenues this quarter.
Low-end of revenue guidance raised again as new business growth helps offset economic
headwinds: For 2009, Synchronoss modestly raised its revenue guidance from the previous range of
$121-126mn to $124-126mn, due in large part to continued expansion with its existing customer base.
EPS guidance for FY10 was held at $0.50-0.54. While the macroeconomic environment continues to
pressure transaction volumes, we believe the company is gaining traction with both its customer base
as well as with OEM device manufacturers that is driving meaningful revenue contribution.
Maintain Market Weight: We are raising our price target to $15 from $14 on shares of SNCR
