Executive Summary

Q4 delivered solid top-line and profitability: revenue grew 6.8% YoY to $44.2M, GAAP gross margin expanded 520 bps to 69.1%, and adjusted EBITDA rose 39% to $13.9M (31.4% margin) .
Business quality improved with 91% recurring revenue and cash rising to $33.4M; free cash flow was $9.1M in Q4 (adjusted FCF $12.0M) .
2025 outlook calls for $170–$180M revenue, ≥90% recurring revenue, 78–80% adjusted gross margin, $52–$56M adjusted EBITDA (≥30% margin), and $11–$16M FCF (ex-IRS refund); management reiterated high confidence in receiving ~$28M IRS refund plus interest in 2025 (50% required debt prepay) .
Strategic updates: three-year extension with a major U.S. telecom in December; AT&T, Verizon, SoftBank adoption catalysts; new branded cloud “Capsyl” launched (MWC ‘25) to unlock smaller/international operators (initial traction at Telkomsel) .

What Went Well and What Went Wrong

What Went Well
- Margin and cash execution: GAAP gross margin 69.1% (+520 bps YoY), adjusted EBITDA $13.9M (31.4% margin), and Q4 free cash flow $9.1M; cash ended at $33.4M .
- Commercial durability: three-year extension with a major U.S. telecom (Dec-24) and recent SFR extension (Q3) underpin >90% of 2025 revenue under contract; CEO: “over 90% of our 2025 projected revenue under multiyear contract” .
- Product/AI momentum and new GTM: next-gen Personal Cloud with AI “Genius” tools; Capsyl targets smaller/international operators with lower integration friction; early Telkomsel tests show thousands of sign-ups .
What Went Wrong
- 2025 revenue headwinds: ~~$2M 2024 SoftBank integration services won’t recur and BT is winding down a legacy wireline cloud offer (~~$6M annualized in 2024) .
- Financing costs elevated near-term: higher interest expense after replacing preferred equity with a term loan, albeit structurally cheaper than the prior dividend + interest burden; new quarterly interest expense ~$4.5M vs ~$5.1M prior combo .
- Estimates visibility: S&P Global consensus data was unavailable at retrieval time, limiting beat/miss analysis for Q4 (see Estimates Context).

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$43.5	$43.0	$44.2
Revenue YoY Growth %	6.0%	8.0%	6.8%
Diluted EPS ($)	$0.01	$(0.56)	$0.71
GAAP Gross Margin %	67.5%	69.6%	69.1%
Adjusted Gross Margin %	77.5%	79.6%	79.3%
Income from Operations ($M)	$4.3	$5.5	$7.3
Adjusted EBITDA ($M)	$13.0	$12.7	$13.9
Adjusted EBITDA Margin %	29.9%	29.5%	31.4%
Free Cash Flow ($M)	$7.6	$(0.03)	$9.1

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Recurring Revenue %	90.5%	92.2%	91.0%
Cloud Subscriber Growth YoY %	6.1%	5.1%	6.0%
Cash and Equivalents ($M)	$23.6	$25.2	$33.4
Adjusted Free Cash Flow ($M)	$8.9	$1.8	$12.0

Segment breakdown: Not applicable; Synchronoss principally reports as a Personal Cloud platform business (no disaggregated segment tables provided in the release/8-K) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	N/A (initial)	$170–$180M	New
Recurring Revenue %	FY 2025	N/A (initial)	≥90%	New
Adjusted Gross Margin %	FY 2025	N/A (initial)	78%–80%	New
Adjusted EBITDA ($)	FY 2025	N/A (initial)	$52–$56M (≥30% margin)	New
Free Cash Flow ($)	FY 2025	N/A (initial)	$11–$16M (ex-IRS refund)	New
IRS Refund (timing/amount)	2025	N/A (initial)	Expect ~$28M + interest in 2025; 50% of proceeds to repay term loan at par	New

Management also explained two items depressing 2025 YoY revenue: ~$2M 2024 SoftBank integration services not recurring and BT’s ~$6M annualized wind-down of a legacy wireline offering .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
AI/Technology in Product	Introduced latest Personal Cloud with AI features (Memories, AI-Enhanced Genius) in Q3 .	Next-gen platform with AI “Genius”; ability to price AI modules as premium features in future .	Expanding AI use cases and monetization options.
Customer Contracts	SFR 3-year extension in Q3 ; Verizon myPlan perks partnership (Q2) .	AT&T 3-year extension (Dec); >90% of 2025 revenue under contract .	Strengthened contract base; visibility improved.
Go-to-market (Verizon)	Verizon introduced Unlimited Cloud via myPlan/myHome (Q2) .	Verizon shifted to selling Personal Cloud as a paid myPlan Perk; pushing “unlimited” offer to raise ASP .	Premiumization and attachment lift.
Regional/Japan (SoftBank)	Japan highlighted as growth focus (Q2); new country manager .	SoftBank penetration <2%; significant room to grow via retail/digital channels .	Early traction; large runway.
New Branded Offering	—	Capsyl launched to reach smaller/international operators; early Telkomsel tests: thousands of sign-ups .	New TAM unlock beyond white-label.
Macro/Subscriber Channels	Emphasis on retail/digital/prepaid/SMB in prior commentary .	AT&T onboarding improvements; retail incentives; prepaid/value segment to contribute in 2025 .	Broader funnel; diversified channels.
Financing/Capital Structure	Retired preferred stock and some notes at discount (Q2) .	Refinancing senior notes/term loan under evaluation; interest expense ~$4.5M/quarter, benefits from falling SOFR; planned amortization reduces interest ~$0.2M/year .	De-risking path; interest burden manageable.
IRS Refund	Expected in 2H24 (Q2 commentary), later shifted .	“High level of confidence” refund (~$28M + interest) received in 2025; 50% to term loan prepay .	Visibility improving.
Customer Churn Event (BT)	—	BT winding down legacy wireline cloud; ~$6M 2024 annualized headwind for 2025 .	One-off structural headwind.

Management Commentary

“We just completed a transformational year... high margin, free cash flow positive global cloud solutions provider... over 90% of our revenue under contract for [2025] thanks to key contract renewals.” — Jeff Miller, CEO .
“AT&T... excellent subscriber growth momentum following their recent contract extension... Verizon... transitioned to selling our Personal Cloud as... myPlan [Perk]... prioritizing the unlimited cloud offer... increasing the average selling price.” — Jeff Miller .
“We announced... Capsyl... offering to smaller and international operators... no customization or integration... promising initial test results with Telkomsel... thousands of subscribers... first months.” — Jeff Miller .
“Term loan financing... new quarterly interest expense of $4.5M vs a combined $5.1M preferred dividend + interest expense in Q2’24... expect to benefit from falling interest rates (SOFR)... amortize 2.5% of the loan per quarter.” — Lou Ferraro, CFO .
“We... continue to receive indications from the IRS that solidifies our high level of confidence in receiving the entire tax refund, including accrued interest, in the ensuing months.” — Lou Ferraro .

Q&A Highlights

Cost structure largely optimized: management believes cost-cutting is “substantially complete,” while continuing to pursue efficiency gains (including AI tools in development/QA) .
Seasonality/profile: with ~90% recurring revenue, expect steady revenue with increases from Q1 to Q4; top-end of range may require incremental Q4 contribution from potential new customers .
AI impact: enhances user experience and opens potential premium features; internally, AI tools are improving development efficiency and could reduce OpEx over time .
Debt refinancing: evaluating options; expects a “clear and concrete path” to refinance senior notes and the term loan in coming months .
Prepaid/value segment: currently <5% of base, but Verizon’s increased focus should drive adoption and contribute in 2025 .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable at retrieval time due to S&P Global daily request limits; therefore, we cannot determine beat/miss vs consensus for Q4. We will update upon availability.

Key Takeaways for Investors

High-quality recurring model with strengthening unit economics: 91% recurring revenue and 69.1% GAAP gross margin in Q4, with adjusted EBITDA margin at 31.4% .
Contract visibility and cross-carrier momentum: three-year AT&T extension (Dec) and SFR extension (Q3) support >90% of 2025 revenue under multiyear contracts; Verizon’s shift to paid myPlan Perks plus “unlimited” positioning should support ARPU and attach .
2025 guide embeds identifiable headwinds (SoftBank services and BT wind-down, ~$8M combined) yet still targets ≥30% adjusted EBITDA margin and $11–$16M FCF (ex-refund), signaling operating leverage durability .
New TAM unlock via Capsyl lowers integration friction and accelerates time-to-revenue with smaller/international carriers; early Telkomsel tests show promising adoption .
Balance sheet catalysts: management expresses high confidence in ~$28M IRS refund plus interest in 2025; half of proceeds to term loan prepayment at par—deleveraging and interest savings potential .
Medium-term thesis: mid-single-digit subscriber growth across existing customers in 2025 plus Capsyl-led new logos positions the company for a return to double-digit revenue growth “in coming years,” per management .
Near-term trading setup: stable quarterly trajectory (Q1→Q4 build), potential incremental catalysts from new customer wins and IRS refund timing; monitor BT offset and gauge Verizon/AT&T channel lift sustainability .

Additional Context and Cross-Checks

Q4 results (vs prior two quarters) confirm trajectory: revenue $44.2M (Q3: $43.0M; Q2: $43.5M), adjusted EBITDA $13.9M (Q3: $12.7M; Q2: $13.0M), and cash rose to $33.4M (Q3: $25.2M; Q2: $23.6M) .
Non-GAAP reconciliations detail adjustments (stock comp, restructuring, litigation, D&A, etc.) and show adjusted free cash flow improvement in Q4 .

Sources: Q4 2024 8-K/press release, earnings call transcript, and prior-quarter press releases .

SYNCHRONOSS TECHNOLOGIES INC (SNCR)·Q4 2024 Earnings Summary