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ST

SYNCHRONOSS TECHNOLOGIES INC (SNCR)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue of $42.2M with 93.1% recurring revenue and adjusted EBITDA margin of 30.2%; revenue was slightly above consensus while EPS missed materially; GAAP gross margin expanded to 70.4% and adjusted gross margin to 79.0% . Revenue $42.2M vs $42.15M* consensus; Primary EPS -$0.30 vs $0.285* consensus (beat on revenue, miss on EPS) .
    Values retrieved from S&P Global.
  • GAAP net loss of $3.8M (-$0.37 diluted EPS) driven primarily by $5.6M non-cash FX losses on intercompany revaluations; income from operations rose to $8.2M on disciplined cost control (OpEx down 11.5% YoY) .
  • Closed a $200M four-year term loan in April, retiring $73.6M prior term loan and enabling redemption of $121.4M senior notes around May 12, extending debt maturity to 2029 and improving capital structure flexibility .
  • Reaffirmed FY25 guidance: revenue $170–$180M, ≥90% recurring revenue, adjusted gross margin 78–80%, adjusted EBITDA $52–$56M, and FCF $11–$16M; management cited stable carrier partnerships (AT&T, Verizon, SoftBank) and improving subscriber momentum as catalysts .

What Went Well and What Went Wrong

  • What Went Well
    • Margin expansion and profitability quality: GAAP gross margin rose to 70.4% (from 66.9% YoY), adjusted gross margin to 79.0%, and adjusted EBITDA increased 17% to $12.7M with a 30.2% margin .
    • Capital structure improved: “we announced the refinancing of our debt with a $200 million, 4-year term loan … extends our debt maturity out to 2029” (Jeff Miller) .
    • Carrier momentum and product integration: “we’ve recently completed an integration of our Cloud Verizon SDK into the My Verizon app … anticipate expanded discoverability … with iOS users” .
  • What Went Wrong
    • EPS miss vs Street driven by FX: GAAP diluted EPS -$0.37 and Primary EPS -$0.30 vs $0.285* consensus, with a $5.6M non-cash FX loss creating the delta .
      Values retrieved from S&P Global.
    • Top-line down YoY due to customer contract expiration: revenue decreased to $42.2M from $43.0M YoY, offset partially by 3.3% subscriber growth .
    • Cash outflow seasonality persisted: FCF was -$3.0M and adjusted FCF -$3.6M, consistent with Q1 cash spend seasonality .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$43.0 $44.2 $42.2
GAAP Diluted EPS ($)-$0.56 $0.71 -$0.37
Non-GAAP Diluted EPS ($)$0.35 $0.94 -$0.30
GAAP Gross Margin (%)69.6% 69.1% 70.4%
Adjusted Gross Margin (%)79.6% 79.3% 79.0%
Income from Operations ($USD Millions)$5.5 $7.3 $8.2
Adjusted EBITDA ($USD Millions)$12.7 $13.9 $12.7
Adjusted EBITDA Margin (%)29.5% 31.4% 30.2%

Segment breakdown: No segment revenue reporting was provided this quarter; business is described as Personal Cloud-centric .

KPIs and Cash Metrics

KPIQ3 2024Q4 2024Q1 2025
Recurring Revenue (% of total)92.2% 91.0% 93.1%
Cloud Subscriber Growth YoY (%)5.1% 6.0% 3.3%
Cash & Cash Equivalents ($USD Millions)$25.2 $33.4 $29.1
Free Cash Flow ($USD Millions)-$0.027 $9.1 -$3.017
Adjusted Free Cash Flow ($USD Millions)$1.8 $12.0 -$3.639

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$170–$180M $170–$180M Maintained
Recurring RevenueFY 2025≥90% ≥90% Maintained
Adjusted Gross MarginFY 202578%–80% 78%–80% Maintained
Adjusted EBITDAFY 2025$52–$56M $52–$56M Maintained
Free Cash FlowFY 2025$11–$16M $11–$16M Maintained
IRS Tax RefundFY 2025~$28M + interest expected ~$28M + interest expected; high confidence Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4)Current Period (Q1 2025)Trend
AI/technology initiativesIntroduced latest Personal Cloud with AI capabilities; next-gen platform with AI-powered tools Ongoing Verizon SDK integration into My Verizon app to boost discoverability, especially iOS; Capsyl turn-key expansion Positive momentum in AI-enabled UX and distribution
Tariffs/macroNot a material theme in prior press releases Explicit monitoring of tariff impacts on device pricing and upgrade cycles; dual effect on cloud storage demand Emerging headwind; potentially net-neutral/positive for storage demand
Carrier/product performanceSFR 3-year extension; major U.S. provider extension; subscriber growth AT&T digital onboarding boosts take-rates; Verizon myPlan perk adoption and SMB My Biz perk; SoftBank Anshin Data Box momentum Strengthening relationships and adoption across top carriers
Regional mixU.S. anchor with Europe (SFR) extensions 90% of revenue derived from U.S.-based customers; pipeline across U.S., APAC, Europe, Africa US-heavy; international pipeline building
Regulatory/legal (IRS refund)Expected ~$28M refund in 2025 Final review stage; obligated to use 75% to prepay term loan at par upon receipt Nearing resolution; de-leveraging trigger
Cost discipline/OpexSG&A/R&D efficiencies noted YoY Total operating expenses down 11.5% YoY; cost structure near desired baseline Sustained cost control supporting margins

Management Commentary

  • “We’re pleased to report … a more predictable, stable business model … Revenue for the quarter was $42.4 million … adjusted EBITDA margin of 30.2% … more than 90% of our projected 2025 revenue under long-term contracts with Tier 1 carriers like AT&T, Verizon and SoftBank” (Jeff Miller) .
  • “We’ve recently completed an integration of our Cloud Verizon SDK into the My Verizon app … we anticipate … greater subscriber adoption and utilization” (Jeff Miller) .
  • “Total operating expenses decreased 11.5% … Income from operations up 79.8% YoY … Net loss was $3.8M … driven primarily by … $5.6M noncash foreign exchange losses” (Lou Ferraro) .
  • “Under our new term loan agreement … use 75% of the proceeds … from the anticipated $28 million IRS refund to prepay a portion of the term loan at par” (Lou Ferraro) .

Q&A Highlights

  • Cost structure baseline: Management views current cost structure as largely where they want it after reductions at end of 2023 and 2024; continued refinement possible .
  • Pipeline and expansion: Active BD conversations across U.S., APAC, Europe, and Africa; optimistic for new logos; details pending contract signings .
  • Free cash flow cadence: FY25 FCF reiterated at $11–$16M; intra-year variability with historically strong Q4 .
  • Gross margin modeling: Adjusted gross margin expected to remain 78–80% across rest of 2025 .
  • Carrier growth mix: AT&T and SoftBank both growing at healthy clips; company avoids client-specific disclosure .

Estimates Context

MetricQ3 2024Q4 2024Q1 2025
Revenue Consensus Mean ($USD Millions)$43.285*$43.759*$42.154*
Revenue Actual ($USD Millions)$42.964*$44.207*$42.213*
Primary EPS Consensus Mean ($)$0.25*$0.095*$0.285*
Primary EPS Actual ($)-$0.26*$0.94*-$0.30*
  • Q3 2024: Revenue slight miss; EPS large miss. Q4 2024: Revenue and EPS large beats. Q1 2025: Revenue slight beat; EPS large miss.
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and margin resilience: Despite a December 2024 contract expiration, recurring revenue rose to 93.1% and adjusted margins remained ~79%, underscoring a durable Personal Cloud model .
  • EPS miss was transitory FX-driven: $5.6M non-cash FX loss primarily from intercompany revaluations drove GAAP and Primary EPS misses; operating performance improved YoY (income from operations +79.8%) .
  • Balance sheet de-risking in progress: $200M term loan extends maturity to 2029, enables redemption of senior notes, and positions the company to deploy IRS refund to reduce debt at par (75% mandatory prepayment) .
  • Carrier execution is a catalyst: AT&T digital onboarding, Verizon myPlan perk/SMB My Biz, and SoftBank Anshin Data Box momentum support subscriber growth and discoverability (Verizon SDK integration) .
  • Guidance reaffirmation boosts visibility: FY25 revenue $170–$180M, ≥90% recurring revenue, adjusted GM 78–80%, adjusted EBITDA $52–$56M, FCF $11–$16M; confidence supported by >90% contracted revenue and improving pipeline .
  • Seasonal cash dynamics: Q1 is historically cash-spend heavy; monitor FCF progression through Q2–Q4 and expected IRS refund timing .
  • Product-led engagement: Continued AI feature releases (e.g., Personal Cloud 25.5) enhance user engagement; supports long-term ARPU and retention through richer experiences .

Additional Data and Prior Quarter References

  • Q4 2024: Revenue $44.2M; adjusted gross margin 79.3%; adjusted EBITDA $13.9M (31.4% margin); three-year extension with a major U.S. telecom .
  • Q3 2024: Revenue $43.0M; adjusted gross margin 79.6%; adjusted EBITDA $12.7M (29.5% margin); three-year extension with SFR and latest Personal Cloud release .