Investor deck november2016

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SYNC Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc. NASDAQ: SYNC DRIVING GROWTH IN ATTRACTIVE DIGITAL MARKETS NOVEMBER 2016

Transcript of Investor deck november2016

Page 1: Investor deck november2016

SYNCContains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.NASDAQ: SYNC

DRIVING GROWTH IN ATTRACTIVE DIGITAL MARKETS

NOVEMBER 2016

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SAFE HARBOR

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements concerning Synacor’s expected financial performance as well as Synacor’s strategic and operational plans. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company's results could differ materially from the results expressed or implied by the forward-looking statements the company makes. Synacor is under no obligation to, and expressly disclaims any such obligation to, update or alter forward-looking statements, whether as a result of new information, future events, or otherwise.

The risks and uncertainties referred to above include - but are not limited to - risks associated with: execution of Synacor’s plans and strategies; the loss of a significant customer; the company’s ability to obtain new customers; expectations regarding consumer taste and user adoption of applications and solutions; developments in Internet browser software and search advertising technologies; developments in display advertising technologies and practices; general economic conditions; expectations regarding the company's ability to timely expand the breadth of services and products or introduction of new services and products; consolidation within the cable and telecommunications industries; changes in the competitive dynamics in the market for online search and display advertising; the risk that security measures could be breached and unauthorized access to subscriber data could be obtained; potential third party intellectual property infringement claims; and the price volatility of Synacor’s common stock.

Further information on these and other factors that could affect the company's financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" in the company's most recent Form 10-K filed with the SEC. These documents are available on the SEC Filings section of the Investor Information section of the company's website at investor.synacor.com.

2Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

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INVESTMENT HIGHLIGHTS

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc. 3SYNC

A Transformation Story with Multiple Profitable Growth Avenues

STRONG OPPORTUNITIES FOR

GROWTH

NEW MANAGEMENT

TEAMRECURRING AND

FEE-BASED REVENUE

MASSIVE TRANSFORMATION

ON A PATH:

• 3 YEARS (2019)

• $30M EBITDA

• $300M REVENUE

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MISSION

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

We enable our customers to better engage with their consumers

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TRUSTED TECHNOLOGY DEVELOPMENT, MULTIPLATFORM SERVICES AND REVENUE PARTNER

Managed Portals Email/CollaborationVideo Platform/Cloud IDAd Solutions

Operate 50 portals 1,000 publishers 198M monthly visitors

Authentication Reaches 80M Pay TV subscribers 500M mailboxes

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc. 5

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WE WORK WITH OUR CUSTOMERS AND PARTNERS TO OPTIMIZE USER ENGAGEMENT AND MONETIZATION

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Advertising and Content Partners

Command and Simulation Solutions

Chile

Customers

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ADVERTISING

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SYNCContains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

MASSIVE TRANSFORMATION AT SYNACOR

• Desktop: Portals, Search, Advertising, ServicesPRODUCTS

• 50 Service ProvidersCUSTOMERS

• United StatesGEOGRAPHY

• Direct SalesCHANNEL

• 80% Search & Advertising, 20% Fee-Based RevenueREVENUE

• 20 Million Monthly Portal VisitorsREACH

Then: 1Q ‘14

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SYNCContains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

Then: 1Q ‘14

MASSIVE TRANSFORMATION AT SYNACOR

• Desktop: Portals, Search,

Advertising, ServicesPRODUCTS

• 50 Service ProvidersCUSTOMERS

• United StatesGEOGRAPHY

• Direct SalesCHANNEL

• 80% Search & Advertising,

• 20% Fee-Based RevenueREVENUE

• 20 Million

Monthly Portal VisitorsREACH

• Multiplatform: Portals, Search, Advertising, Email, Video, Cloud ID

• 120 Service Providers

• 3500 Enterprises, 1000 Publishers

• Worldwide

• Direct Sales, 1500 Resellers

• 58% Search & Advertising• 42% Recurring and Fee-Based Revenue

• 198 Million Monthly Total Visitors

Now: 3Q ‘16

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SYNACOR IS POISED FOR SIGNIFICANT GROWTH

SEARCH & ADVERTISING MARKET

EMAIL & COLLABORATION MARKETVIDEO SOLUTIONS MARKET

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$58B Market

16%

Online OTT and Video Revenue Email & Collaboration

Sources: eMarketer, Digital TV Research, Parks Associates, Radicati - 2015 numbers

Search & Advertising Revenue

Market growth in ‘16

$26B Market

100% 6%

$14B Market

Growth by ’20

Growth in ’16

(MANAGED PORTALS, AD SOLUTIONS) (VIDEO PLATFORM/CLOUD ID) (EMAIL/COLLABORATION)

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AT&T SELECTS SYNACOR TO ENABLE PORTAL SERVICES

120

Service Providers

1,000 Government

Agencies

2,500 Businesses 1,000

Web Publishers

In partnership with AT&T, Synacor will:

• Develop and manage innovative desktop and mobile portal services designed to drive user engagement

• Populate these portal experiences with rich Internet content sourced from popular brands

• Monetize these experiences through search and advertising

Synacor honored to be selected by AT&T:

• Synacor selected from among 30 contenders in AT&T RFI process

• Portal services designed to engage AT&T’s user audience of 10M desktop and 20M mobile monthly visitors

• 3 year deal with auto-renewals

INITIAL LAUNCHES IN 1H2017, NEXT-GEN PRODUCTS IN 2017

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WE ENABLE OUR CUSTOMERS TO BETTER ENGAGE WITH THEIR CONSUMERS

120

Service Providers

1,000 Government

Agencies

2,500 Businesses 1,000

Web Publishers

Why AT&T chose Synacor:

• A proven managed portal services platform

• Significantly improved monetization across mobile and desktop, video and display

• Flexible technology and UX that serves as a foundation for next-gen development

• A relevant product portfolio and strong team to enable additional services as needed

How all Synacor customers benefit:

• Benefits of platform development to drive engagement shared across all customers

• Increases scale of traffic to deliver higher quality content and improved search and advertising monetization

• Strengthens Synacor’s financial profile and competitiveness

STRONG PIPELINE OF ADDITIONAL CUSTOMER OPPORTUNITIES

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OUR 4-PILLAR GROWTH AGENDA BUILT ON OPERATING DISCIPLINE

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Profitable revenue growth

Operating discipline

Increase value for existing customers by optimizing consumer

experience & monetization

Innovate on Synacor-as-a-platform for advanced

services

Win new customers in current and related

verticals

Extend product portfolio into international and

enterprise

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90% of users upgraded to next-generation portal platform

Drove 11% increase in year-over-year engagement

More than doubled advertising monetization in the past two years

Long-form video streams up 20% YoY

Technorati acquisition expands programmatic advertising and mobile reach

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

GROWTH STRATEGY – ACHIEVEMENTS

INCREASE VALUE FOR EXISTING CUSTOMERS BY OPTIMIZING CONSUMER

EXPERIENCE AND MONETIZATION

NEW PORTAL DESIGNED FOR ENGAGEMENT AND MONETIZATION

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Developed end-to-end advanced video platform and announced initial customers

Formed strategic partnership with Siemens Convergence Creators

Acquired NimbleTV for multiplatform live-linear TV and Cloud DVR expertise

Able to authenticate over 80 million TV households in the US through Cloud ID

Selected to provide Cloud ID Authentication for HBO Go

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GROWTH STRATEGY – ACHIEVEMENTS

INNOVATE ON SYNACOR-AS-A-PLATFORM FOR ADVANCED SERVICES

END-TO-END VIDEO PLATFORM AND CLOUD-BASED IDENTITY MANAGEMENT

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GROWTH STRATEGY – ACHIEVEMENTS

WIN NEW CUSTOMERS IN CURRENT AND RELATED VERTICALS

120

Service Providers

1,000 Government

Agencies

2,500 Businesses 1,000

Web Publishers

Won many email/collaboration engagements with domestic and international government agencies, such as:

The National Space Institute for India

The Ministry of Foreign Affairs of The Russian Federation,

an international defense agency

the New York State Assembly

Won multiple contracts with communications providers to deploy Synacor’s End-to-End Video Solutions

Won and expanded contracts with several communications companies for next-generation portals

Selected to provide Cloud ID Authentication for HBO Go

Won portal services contract with AT&T, the largest pay TV provider in the United States

Serve 1,000+ publishers through the acquisition of Technorati

Syndicated ad-supported video content modules to web publishers

Won key new email/collaboration deals for many business enterprises, such as:

a large insurance and financial services company

the leading network technology service provider for many industries in Indonesia

a leading retailer in Indonesia

a leading provider of ICT infrastructure services in Thailand

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14.4% of revenue in 3Q ‘16 coming from international

Announced Open Source Support program for Email

Active reseller community – Zimbra Forums around the world are a success with high partner attendance

Strong interest in broader portfolio of products

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EXPANDED INTERNATIONALLY AND INTO ENTERPRISE

GROWTH STRATEGY – ACHIEVEMENTS

EXTEND PRODUCT PORTFOLIO INTO EMERGING GROWTH AREAS

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DELIVERING ON OUR 2016 OBJECTIVES

• Win new portal customers

• Become significant player in programmatic advertising

• Win new video platform customers

• Extend Cloud ID into new customer verticals

• Leverage Zimbra partner community to accelerate feature development and grow email/collaboration sales

• Launch open source support offering for email

• Introduce Synacor products into new geographies

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✔✔

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TWO PRIMARY SOURCES OF REVENUE

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

SEARCH AND ADVERTISING RECURRING AND FEE-BASED

Managed Portals Email/CollaborationVideo Platform/Cloud IDAd Solutions

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$2.0

$0.2

$4.7

$2.0

Q3 2015 Q3 2016 Nine Months… Nine Months…

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

$8M

Revenue, $Millions

$26.4 $31.7

$77.8

$92.5

Q3 2015 Q3 2016 Nine Months2015

Nine Months2016

Adjusted EBITDA*, $Millions

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*Please refer to the appendix for information regarding the reconciliation of GAAP net loss to adjusted EBITDA for three months ended June 30, 2015 and June 30, 2016.

FINANCIAL PERFORMANCE

TOP LINE GROWTH, BOTTOM LINE REFLECTS STRATEGIC INVESTMENT

YTD EBITDA REFLECTS $3.8 MILLION INVESTMENT IN AT&T PORTAL BUSINESS

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SYNACOR’S 3/30/300 PATH

TARGETING $300M IN REVENUES AND $30M IN EBITDA IN 3 YEARS

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

$8M

Revenue, $Millions

$106.6 $110.2 $126 - $130

~$300

2014 2015 2016G 2019G

Adjusted EBITDA*, $Millions

$2.2

$7.6

$2 - $3

~$30

2014 2015 2016G 2019G

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*Please refer to the appendix for information regarding the reconciliation of GAAP net loss to adjusted EBITDA for twelve months ended

December 31, 2014 and December 31, 2015 and for guidance for twelve months ending December 31, 2016.

2016 IS AN INVESTMENT YEAR TO DEVELOP AND DEPLOY AT&T

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INVESTMENT HIGHLIGHTS

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc. 21SYNC

A Transformation Story with Multiple Profitable Growth Avenues

STRONG OPPORTUNITIES FOR

GROWTH

NEW MANAGEMENT

TEAMRECURRING AND

FEE-BASED REVENUE

MASSIVE TRANSFORMATION

ON A PATH:

• 3 YEARS (2019)

• $30M EBITDA

• $300M REVENUE

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THANK YOU

22Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc. SYNC

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APPENDIX

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ADJUSTED EBITDA RECONCILIATION

Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

$8M

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2014 Q1 2015 Q2 2015 Q3 2015

First Nine

Months 2015 2015 Q1 2016 Q2 2016 Q3 2016

First Nine

Months 2016

Revenue 106,580 26,730 24,716 26,351 77,797 110,245 30,260 30,476 31,721 92,457

Net Loss (12,931) (1,073) (1,082) (931) (3,086) (3,474) (1,565) (2,757) (3,365) 7,687

Provision (benefit) for income taxes 4,821 4 16 10 30 239 144 260 379 783

Interest expense 218 50 59 35 144 245 68 84 75 227

Other (income) expense 29 16 (17) 32 31 16 (2) (242) 38 (206)

Depreciation and amortization 5,126 1,496 1,660 1,560 4,716 6,901 2,098 2,270 2,414 6,782

Stock-based compensation 3,595 742 800 810 2,352 3,115 737 687 680 2,104

Loss in equity interest 1,063 32 25 - 57 73 - - - -

Gain on sale of domain (1,000) - - - - - - - - -

Reduction in Workforce 1,260 - - - - - - - - -

Acquisition Costs - - - 478 478 478 - - - -

Adjusted EBITDA 2,180 1,267 1,461 1,994 4,722 7,593 1,480 302 221 2,003

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SYNC 25Contains proprietary and confidential information owned by Synacor, Inc. © / 2016 Synacor, Inc.

Q4 2016 AND FISCAL 2016 GUIDANCE RECONCILIATION

Q4 2016 Guidance: Revenue for the fourth quarter of 2016 is projected to be in the range of $34.0 million to $38.0 million. The company expects to report a net loss of $2.5 million to $3.2 million and adjusted EBITDA of $0.0 million to $1.0 million, which excludes stock-based compensation expense of $0.7 million to $0.8 million, depreciation and amortization of $2.2 million to $2.4 million and tax, interest expense and other income and expense of $0.3 million.

Fiscal 2016 Guidance: Revenue for the full year of 2016 is projected to be in the range of $126.0 million to $130.0 million. The company expects to report a net loss in the range of $10.2 million to $10.9 million and adjusted EBITDA in the range of $2.0 million to $3.0 million, which excludes stock-based compensation expense of $2.8 million to $2.9 million, depreciation and amortization of $9.0 million to $9.2 million, and tax, interest and other income and expense of $1.1 million.