Synchronoss Technologies Reports Q3 Loss Amid Rising Revenues
Synchronoss Technologies SNCR reported a non-GAAP loss of 26 cents per share in the third quarter of 2024, falling short of the Zacks Consensus Estimate of earnings at 25 cents. This compares to earnings of 35 cents in the same quarter last year.
Net revenues were $43 million, an increase of 8% year over year, but still missed the Zacks Consensus Estimate by 0.79%.
Following these results, SNCR’s shares dropped 4.65% in pre-market trading. However, Synchronoss’ stock has surged 78.3% this year, outpacing the Zacks Computer and Technology sector, which has risen 30.1% during the same period.
Analysis of Synchronoss Technologies, Inc.’s Stock Performance
Synchronoss Technologies, Inc. stock analysis
Financial Overview: SNCR’s Revenue Growth
In the third quarter, total revenue increased to $43 million from $39.8 million, thanks to a 5.1% rise in cloud subscribers.
Recurring revenues accounted for 92.2% of total revenues, up from 89.5% in the same quarter last year.
SNCR secured a three-year extension with SFR to continue its Personal Cloud storage service for 27 million subscribers.
The company also launched an updated version of its Personal Cloud platform, featuring new AI capabilities like Memories and AI-Enhanced Genius with One-Click Editing, along with improved backup options.
Moreover, auto-scaling has been implemented, contributing to financial and operational efficiencies for both Synchronoss and key customers.
Operating Results for SNCR
The adjusted gross margin rose by 310 basis points year over year to 79.6%.
Research and development expenses increased by 11.1% to $10.3 million, rising to 24.1% of total revenues.
In contrast, selling, general, and administrative expenses fell 32.2% year on year to $13.8 million, representing 19% of total revenues.
Adjusted EBITDA was $12.7 million, reflecting a 29.5% margin—an improvement from last year’s adjusted EBITDA of $9.2 million and a margin of 23.2%. SNCR also reported operating income of $5.5 million, compared to a loss of $3.8 million in the prior year.
Assessing SNCR’s Financial Position
As of September 30, 2024, SNCR had cash and cash equivalents totaling $25.2 million, up from $23.6 million on June 30, 2024.
The operating cash flow in the recent quarter was $3.4 million, a decline from $6.7 million in the previous quarter.
Adjusted free cash flow also decreased to $1.8 million from $3.9 million in the prior quarter.
Future Outlook: SNCR Increases 2024 Revenue Projections
For 2024, Synchronoss anticipates revenues between $172 million and $175 million, indicating a growth rate of 6-8% year over year.
Recurring revenues are expected to range from 90-92% of total revenues.
Additionally, the adjusted gross margin is projected to be between 77-78%, an increase from the prior estimate of 73-77%.
Adjusted EBITDA is forecasted to be in the range of $47 million to $48 million, up from the earlier guidance of $43-$46 million.
Stock Rankings and Comparisons
Currently, Synchronoss holds a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader Zacks Computer & Technology sector include Tuya TUYA, Palo Alto Networks PANW, and NVIDIA NVDA. Tuya has a Zacks Rank #1 (Strong Buy), while Palo Alto and NVIDIA both have a Zacks Rank #2 (Buy). Details on Zacks #1 Rank stocks can be found here.
Tuya’s shares have dropped 35.7% this year. TUYA is expected to announce its third-quarter 2024 results on November 18.
Palo Alto Networks has seen a 35% jump in shares this year and will report results for the first quarter of fiscal 2025 on November 20.
Meanwhile, NVIDIA’s shares have surged 199.3% year to date and will release its third-quarter fiscal 2025 results on November 20.
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