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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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06-1594540
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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200 Crossing Boulevard, 8th
Floor
Bridgewater, New Jersey
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08807
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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☐
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Accelerated filer
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x
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Non-accelerated filer
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☐
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Smaller Reporting Company
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☐
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Emerging growth company
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☐
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Class
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Outstanding at November 02, 2018
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Common stock, $0.0001 par value
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42,474,351
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PAGE NO.
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September 30, 2018
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December 31, 2017
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||||
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|
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
222,438
|
|
|
$
|
156,299
|
|
Restricted cash**
|
4,377
|
|
|
89,826
|
|
||
Marketable securities, current
|
6,989
|
|
|
3,111
|
|
||
Accounts receivable, net of allowances of $3,492 and $3,107 at September 30, 2018 and December 31, 2017, respectively
|
52,617
|
|
|
78,186
|
|
||
Prepaid expenses
|
46,922
|
|
|
33,957
|
|
||
Other current assets
|
14,115
|
|
|
9,600
|
|
||
Total current assets
|
347,458
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|
|
370,979
|
|
||
Marketable securities, non-current
|
8,716
|
|
|
—
|
|
||
Property and equipment, net
|
80,519
|
|
|
111,825
|
|
||
Goodwill
|
234,480
|
|
|
237,303
|
|
||
Intangible assets, net
|
117,448
|
|
|
132,167
|
|
||
Other assets
|
8,940
|
|
|
5,236
|
|
||
Note receivable from related party**
|
66,089
|
|
|
73,984
|
|
||
Equity method investment
|
30,694
|
|
|
33,917
|
|
||
Total assets
|
$
|
894,344
|
|
|
$
|
965,411
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
14,300
|
|
|
$
|
5,959
|
|
Accrued expenses
|
53,794
|
|
|
72,739
|
|
||
Deferred revenues, current
|
54,046
|
|
|
75,829
|
|
||
Short-term debt
|
228,764
|
|
|
—
|
|
||
Mandatorily redeemable financial instrument
|
—
|
|
|
37,959
|
|
||
Total current liabilities
|
350,904
|
|
|
192,486
|
|
||
Lease financing obligation
|
10,006
|
|
|
11,183
|
|
||
Convertible debt, net of debt issuance costs
|
—
|
|
|
227,704
|
|
||
Deferred tax liabilities
|
12,109
|
|
|
13,735
|
|
||
Deferred revenues, non-current
|
29,815
|
|
|
25,241
|
|
||
Other liabilities
|
11,329
|
|
|
6,195
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
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Redeemable noncontrolling interest
|
12,500
|
|
|
25,280
|
|
||
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018
|
176,160
|
|
|
—
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively
|
5
|
|
|
5
|
|
||
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively)
|
(82,087
|
)
|
|
(105,584
|
)
|
||
Additional paid-in capital
|
561,144
|
|
|
597,553
|
|
||
Accumulated other comprehensive loss
|
(30,557
|
)
|
|
(23,373
|
)
|
||
Accumulated deficit
|
(156,984
|
)
|
|
(5,014
|
)
|
||
Total stockholders’ equity
|
291,521
|
|
|
463,587
|
|
||
Total liabilities and stockholders’ equity
|
$
|
894,344
|
|
|
$
|
965,411
|
|
**
|
See
Note 5 -Investments in Affiliates and Related Transactions
for related party transactions reflected in this account.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
|
$
|
83,286
|
|
|
$
|
91,015
|
|
|
$
|
243,737
|
|
|
$
|
296,102
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues*
|
|
43,714
|
|
|
45,576
|
|
|
127,788
|
|
|
139,386
|
|
||||
Research and development
|
|
18,684
|
|
|
20,926
|
|
|
59,789
|
|
|
67,234
|
|
||||
Selling, general and administrative
|
|
27,320
|
|
|
34,881
|
|
|
99,368
|
|
|
103,049
|
|
||||
Restructuring charges
|
|
4,539
|
|
|
2,312
|
|
|
8,425
|
|
|
11,715
|
|
||||
Depreciation and amortization
|
|
23,658
|
|
|
23,459
|
|
|
70,330
|
|
|
71,098
|
|
||||
Total costs and expenses
|
|
117,915
|
|
|
127,154
|
|
|
365,700
|
|
|
392,482
|
|
||||
Loss from continuing operations
|
|
(34,629
|
)
|
|
(36,139
|
)
|
|
(121,963
|
)
|
|
(96,380
|
)
|
||||
Interest income
|
|
203
|
|
|
3,274
|
|
|
7,518
|
|
|
9,157
|
|
||||
Interest expense
|
|
(1,370
|
)
|
|
(25,555
|
)
|
|
(3,935
|
)
|
|
(48,016
|
)
|
||||
Other (expense) income, net
|
|
(13,439
|
)
|
|
(256
|
)
|
|
(9,180
|
)
|
|
2,374
|
|
||||
Equity method investment income
|
|
283
|
|
|
645
|
|
|
71
|
|
|
1,626
|
|
||||
Loss from continuing operations, before taxes
|
|
(48,952
|
)
|
|
(58,031
|
)
|
|
(127,489
|
)
|
|
(131,239
|
)
|
||||
Benefit for income taxes
|
|
2,308
|
|
|
12,825
|
|
|
1,604
|
|
|
17,973
|
|
||||
Net loss from continuing operations
|
|
(46,644
|
)
|
|
(45,206
|
)
|
|
(125,885
|
)
|
|
(113,266
|
)
|
||||
Net income (loss) from discontinued operations, net of tax**
|
|
—
|
|
|
8,842
|
|
|
—
|
|
|
(14,067
|
)
|
||||
Net loss
|
|
(46,644
|
)
|
|
(36,364
|
)
|
|
(125,885
|
)
|
|
(127,333
|
)
|
||||
Net (income) loss attributable to redeemable noncontrolling interests
|
|
(422
|
)
|
|
1,276
|
|
|
2,122
|
|
|
6,980
|
|
||||
Preferred stock dividend
|
|
(7,463
|
)
|
|
—
|
|
|
(18,076
|
)
|
|
—
|
|
||||
Net loss attributable to Synchronoss
|
|
$
|
(54,529
|
)
|
|
$
|
(35,088
|
)
|
|
$
|
(141,839
|
)
|
|
$
|
(120,353
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(1.38
|
)
|
|
$
|
(0.98
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.38
|
)
|
Discontinued operations**
|
|
—
|
|
|
0.20
|
|
|
—
|
|
|
(0.32
|
)
|
||||
|
|
$
|
(1.38
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.70
|
)
|
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(1.38
|
)
|
|
$
|
(0.98
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.38
|
)
|
Discontinued operations**
|
|
—
|
|
|
0.20
|
|
|
—
|
|
|
(0.32
|
)
|
||||
|
|
$
|
(1.38
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.70
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
39,612
|
|
|
44,893
|
|
|
40,405
|
|
|
44,576
|
|
||||
Diluted
|
|
39,612
|
|
|
44,893
|
|
|
40,405
|
|
|
44,576
|
|
*
|
Cost of revenues excludes depreciation and amortization which are shown separately.
|
**
|
See
Note 3 - Acquisitions and Divestitures
for transactions classified as discontinued operations.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
$
|
(46,644
|
)
|
|
$
|
(36,364
|
)
|
|
$
|
(125,885
|
)
|
|
$
|
(127,333
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(1,544
|
)
|
|
4,631
|
|
|
(6,529
|
)
|
|
17,003
|
|
||||
Unrealized loss on available for sale securities
|
(3
|
)
|
|
(7
|
)
|
|
(52
|
)
|
|
20
|
|
||||
Net (loss) income on intra-entity foreign currency transactions
|
(72
|
)
|
|
932
|
|
|
(603
|
)
|
|
1,940
|
|
||||
Total other comprehensive (loss) income
|
(1,619
|
)
|
|
5,556
|
|
|
(7,184
|
)
|
|
18,963
|
|
||||
Comprehensive loss
|
(48,263
|
)
|
|
(30,808
|
)
|
|
(133,069
|
)
|
|
(108,370
|
)
|
||||
Comprehensive (income) loss attributable to redeemable noncontrolling interests
|
(422
|
)
|
|
1,276
|
|
|
2,122
|
|
|
6,980
|
|
||||
Comprehensive loss attributable to Synchronoss
|
$
|
(48,685
|
)
|
|
$
|
(29,532
|
)
|
|
$
|
(130,947
|
)
|
|
$
|
(101,390
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net loss from continuing operations
|
$
|
(125,885
|
)
|
|
$
|
(113,266
|
)
|
Net loss from discontinued operations**
|
—
|
|
|
(14,067
|
)
|
||
|
|
|
|
||||
Adjustments to reconcile Net Loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
70,330
|
|
|
71,098
|
|
||
Change in fair value of financial instruments
|
(3,849
|
)
|
|
—
|
|
||
Amortization of debt issuance costs
|
1,060
|
|
|
12,523
|
|
||
Accrued PIK interest*
|
(7,037
|
)
|
|
(8,805
|
)
|
||
Allowance for loan losses*
|
18,225
|
|
|
—
|
|
||
Loss (earnings) from equity method investments*
|
(71
|
)
|
|
(1,626
|
)
|
||
Loss (Gain) on disposals
|
277
|
|
|
(4,947
|
)
|
||
Discontinued operations non-cash and working capital adjustments**
|
—
|
|
|
68,377
|
|
||
Amortization of bond premium
|
75
|
|
|
219
|
|
||
Deferred income taxes
|
(1,648
|
)
|
|
(8,937
|
)
|
||
Stock-based compensation
|
22,040
|
|
|
14,427
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
28,789
|
|
|
24,029
|
|
||
Prepaid expenses and other current assets
|
(12,844
|
)
|
|
(29,143
|
)
|
||
Other assets
|
947
|
|
|
2,768
|
|
||
Accounts payable
|
8,195
|
|
|
(2,294
|
)
|
||
Accrued expenses
|
(24,539
|
)
|
|
(16,775
|
)
|
||
Other liabilities
|
(3,886
|
)
|
|
594
|
|
||
Deferred revenues
|
(30,841
|
)
|
|
4,732
|
|
||
Net cash used in operating activities
|
(60,662
|
)
|
|
(1,093
|
)
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Purchases of fixed assets
|
(8,565
|
)
|
|
(10,315
|
)
|
||
Purchases of intangible assets and capitalized software
|
(11,012
|
)
|
|
(7,848
|
)
|
||
Proceeds from the sale of SpeechCycle
|
—
|
|
|
13,500
|
|
||
Purchases of marketable securities available for sale
|
(15,784
|
)
|
|
(219
|
)
|
||
Maturity of marketable securities available for sale
|
3,050
|
|
|
10,856
|
|
||
Equity investment distributions
|
—
|
|
|
608
|
|
||
Investing in discontinued operations**
|
—
|
|
|
(11,429
|
)
|
||
Investment in note receivable
|
—
|
|
|
(6,187
|
)
|
||
Business acquired, net of cash
|
(9,734
|
)
|
|
(815,008
|
)
|
||
Net cash used in investing activities
|
(42,045
|
)
|
|
(826,042
|
)
|
Financing activities:
|
|
|
|
||||
Share-based compensation-related proceeds, net of taxes paid on withholding shares
|
—
|
|
|
2,460
|
|
||
Taxes paid on withholding shares
|
—
|
|
|
(410
|
)
|
||
Debt issuance costs related to the Credit Facility
|
—
|
|
|
(3,692
|
)
|
||
Debt issuance cost related to amendment
|
—
|
|
|
(16,776
|
)
|
||
Debt issuance costs related to long term debt
|
—
|
|
|
(19,887
|
)
|
||
Proceeds from issuance of long term debt
|
—
|
|
|
900,000
|
|
||
Repayment of long term debt
|
—
|
|
|
(4,500
|
)
|
||
Repayment of revolving line of credit
|
—
|
|
|
(29,000
|
)
|
||
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan
|
—
|
|
|
1,047
|
|
||
Proceeds from issuance of preferred stock
|
86,220
|
|
|
—
|
|
||
Payments on capital obligations
|
(1,018
|
)
|
|
(2,244
|
)
|
||
Net cash provided by financing activities
|
85,202
|
|
|
826,998
|
|
||
Effect of exchange rate changes on cash
|
(1,805
|
)
|
|
4,938
|
|
||
Net decrease in cash, restricted cash and cash equivalents
|
(19,310
|
)
|
|
4,801
|
|
||
Cash, restricted cash and cash equivalents, beginning of period
|
246,125
|
|
|
211,433
|
|
||
Cash, restricted cash and cash equivalents, end of period
|
$
|
226,815
|
|
|
$
|
216,234
|
|
|
|
|
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Issuance of common stock in connection with Intralinks acquisition
|
$
|
—
|
|
|
$
|
4,700
|
|
|
|
|
|
||||
Cash and cash equivalents per the Condensed Consolidated Balance Sheets
|
$
|
222,438
|
|
|
$
|
210,070
|
|
Restricted cash per the Condensed Consolidated Balance Sheets
|
4,377
|
|
|
6,164
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
226,815
|
|
|
$
|
216,234
|
|
*
|
See
Note 5 -Investments in Affiliates and Related Transactions
for related party transactions reflected in this account.
|
**
|
See
Note 3 - Acquisitions and Divestitures
for transactions classified as discontinued operations.
|
Standard
|
|
Description
|
|
Effect on the financial statements
|
Accounting Standards Update (“ASU”) 2017-09 Stock Compensation (Topic 718), Scope of Modification
|
|
In May 2017, the Financial Accounting Standards Board (“FASB”) issued guidance which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. The guidance also clarifies that a modification to an award could be significant and therefore require disclosure, even if modification accounting is not required. ASU 2017-09 is effective for fiscal years, and interim periods within those years, beginning after December 31, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date.
|
|
This ASU did not have a material effect on the Company’s condensed consolidated financial statements as of the date of adoption.
|
Date of adoption: January 1, 2018.
|
|
|
|
|
Standard
|
|
Description
|
|
Effect on the financial statements
|
ASU 2018-15 Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Cloud Computing Arrangements
|
|
In August 2018, the FASB issued final guidance requiring a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in Accounting Standards Codification (“ASC”) 350-402 Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40) to determine which implementation costs to capitalize as assets. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019. Early adoption of the amendments is permitted, including adoption in any interim period, for all entities and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.
|
|
The Company is currently reviewing its cloud computing arrangements to evaluate the impact of adoption of the final guidance but does not expect that the pending adoption of this ASU will have a material effect on its condensed consolidated financial statements.
|
Date of adoption: January 1, 2020.
|
|
|
|
|
Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting
|
|
In June 2018, the FASB issued ASU 2018-07, regarding ASC Topic 718 “Compensation - Stock Compensation,” which largely aligns the accounting for share-based compensation for non-employees with employees. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.
|
|
The Company does not expect the adoption of this standard to have a material effect on its condensed consolidated financial statements.
|
Date of adoption: January 1, 2019.
|
|
|
|
|
ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
|
In June 2016, the FASB issued ASU 2016-13 which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU is effective for public companies in annual periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted beginning after December 15, 2018 and interim periods within those years.
|
|
The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements.
|
Date of adoption: January 1, 2020.
|
|
|
|
|
ASU 2016-02 Leases (Topic 842 or “ASC 842”)
|
|
In February 2016, the FASB issued ASU 2016-02 which requires lessees to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. The ASU is effective for public companies in interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach.
|
|
The Company has elected to apply the transition requirements as of January 1, 2019 and as such, the Company will neither restate comparative periods for the effects of applying ASC 842 nor provide the disclosures required by ASC 842 for the comparative periods. In addition, there are several practical expedients and accounting policy elections offered within ASC 842 to both ease the transition to, and simplify the adoption of, ASC 842. In connection therewith, the Company elected the package of transition practical expedients related to lease identification, lease classification, and initial direct costs. The Company also elected the lessor practical expedient to not separate lease and non-lease components when the requisite criteria is met to be treated as such. In addition, the Company made the following accounting policy elections: (1) the Company will not separate lease and non-lease components by class of underlying asset (2) the Company will apply the portfolio approach, specifically in the development of the Company’s discount rates (3) the Company will apply the short-term lease exemption by class of underlying asset (4) the Company will apply a capitalization threshold policy.
|
Date of adoption: January 1, 2019.
|
|
|
|
Adoption of the new standard will result in the recording of additional net lease assets and lease liabilities as of January 1, 2019. The difference between the additional lease assets and lease liabilities, net of the deferred tax impact, will be recorded as an adjustment to retained earnings. The standard will not materially impact our consolidated net earnings and will have no impact on cash flows.
|
Performance Obligation
|
|
When Performance Obligation is Typically Satisfied
|
|
When Payment is Typically Due
|
|
How Standalone Selling Price is Typically Estimated
|
Software License
|
|
|
|
|
|
|
Software License
|
|
Upon shipment or made available for download (point in time)
|
|
Within 90 days of delivery
|
|
Observable transactions or residual approach when prices are highly variable or uncertain
|
Software License with significant customization
|
|
Over the performance of the customization and installation of the software (over time)
|
|
Within 90 days of services
being performed
|
|
Residual approach
|
Hosting Services
|
|
As hosting services are provided (over time)
|
|
Within 90 days of services
being provided
|
|
Estimated using a cost-plus margin approach
|
Professional Services
|
|
|
|
|
|
|
Consulting
|
|
As work is performed (over time)
|
|
Within 90 days of services
being performed
|
|
Observable transactions
|
Customization
|
|
SaaS: Over the remaining term of the SaaS agreement
License: Over the performance of the customization and installation of the software (over time)
|
|
Within 90 days of services
being performed
|
|
Observable transactions
|
Transaction Services
|
|
As transaction is processed (over time)
|
|
Within 90 days of transaction
|
|
Observable transactions
|
Subscription Services
|
|
|
|
|
|
|
Customer Support
|
|
Ratably over the course of the support contract
(over time)
|
|
At the beginning of the
contract period
|
|
Observable transactions
|
SaaS
|
|
Over the course of the SaaS service once the system is available for use
(over time)
|
|
Within 90 days of services
being performed
|
|
Estimated using a cost-plus margin approach
|
|
Three Months Ended September 30, 2018
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||||||||||
|
Cloud
|
|
Digital
|
|
Messaging
|
|
Total
|
|
Cloud
|
|
Digital
|
|
Messaging
|
|
Total
|
||||||||||||||||
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Americas
|
$
|
41,029
|
|
|
$
|
24,563
|
|
|
$
|
2,714
|
|
|
$
|
68,306
|
|
|
$
|
49,555
|
|
|
$
|
28,071
|
|
|
$
|
2,125
|
|
|
$
|
79,751
|
|
APAC
|
—
|
|
|
2,082
|
|
|
4,647
|
|
|
6,729
|
|
|
—
|
|
|
1,637
|
|
|
4,540
|
|
|
6,177
|
|
||||||||
EMEA
|
1,967
|
|
|
2,216
|
|
|
4,068
|
|
|
8,251
|
|
|
1,708
|
|
|
634
|
|
|
2,745
|
|
|
5,087
|
|
||||||||
Total
|
$
|
42,996
|
|
|
$
|
28,861
|
|
|
$
|
11,429
|
|
|
$
|
83,286
|
|
|
$
|
51,263
|
|
|
$
|
30,342
|
|
|
$
|
9,410
|
|
|
$
|
91,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Service Line
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Professional Services
|
$
|
2,982
|
|
|
$
|
4,051
|
|
|
$
|
1,728
|
|
|
$
|
8,761
|
|
|
$
|
4,309
|
|
|
$
|
6,990
|
|
|
$
|
1,809
|
|
|
$
|
13,108
|
|
Transaction Services
|
1,918
|
|
|
2,845
|
|
|
—
|
|
|
4,763
|
|
|
2,883
|
|
|
4,113
|
|
|
—
|
|
|
6,996
|
|
||||||||
Subscription Services
|
38,096
|
|
|
20,572
|
|
|
7,976
|
|
|
66,644
|
|
|
41,831
|
|
|
17,666
|
|
|
5,706
|
|
|
65,203
|
|
||||||||
License
|
—
|
|
|
1,393
|
|
|
1,725
|
|
|
3,118
|
|
|
2,240
|
|
|
1,573
|
|
|
1,895
|
|
|
5,708
|
|
||||||||
Total
|
$
|
42,996
|
|
|
$
|
28,861
|
|
|
$
|
11,429
|
|
|
$
|
83,286
|
|
|
$
|
51,263
|
|
|
$
|
30,342
|
|
|
$
|
9,410
|
|
|
$
|
91,015
|
|
|
Nine Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||||||||||
|
Cloud
|
|
Digital
|
|
Messaging
|
|
Total
|
|
Cloud
|
|
Digital
|
|
Messaging
|
|
Total
|
||||||||||||||||
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Americas
|
$
|
113,452
|
|
|
$
|
65,614
|
|
|
$
|
7,585
|
|
|
$
|
186,651
|
|
|
$
|
175,560
|
|
|
$
|
75,371
|
|
|
$
|
5,812
|
|
|
$
|
256,743
|
|
APAC
|
—
|
|
|
4,697
|
|
|
30,287
|
|
|
34,984
|
|
|
—
|
|
|
5,157
|
|
|
17,864
|
|
|
23,021
|
|
||||||||
EMEA
|
6,568
|
|
|
3,747
|
|
|
11,787
|
|
|
22,102
|
|
|
5,248
|
|
|
2,630
|
|
|
8,460
|
|
|
16,338
|
|
||||||||
Total
|
$
|
120,020
|
|
|
$
|
74,058
|
|
|
$
|
49,659
|
|
|
$
|
243,737
|
|
|
$
|
180,808
|
|
|
$
|
83,158
|
|
|
$
|
32,136
|
|
|
$
|
296,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Service Line
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Professional Services
|
$
|
10,002
|
|
|
$
|
14,053
|
|
|
$
|
8,118
|
|
|
$
|
32,173
|
|
|
$
|
23,731
|
|
|
$
|
19,307
|
|
|
$
|
5,423
|
|
|
$
|
48,461
|
|
Transaction Services
|
6,703
|
|
|
6,740
|
|
|
—
|
|
|
13,443
|
|
|
9,098
|
|
|
15,058
|
|
|
—
|
|
|
24,156
|
|
||||||||
Subscription Services
|
102,891
|
|
|
50,103
|
|
|
23,709
|
|
|
176,703
|
|
|
140,224
|
|
|
40,107
|
|
|
21,708
|
|
|
202,039
|
|
||||||||
License
|
424
|
|
|
3,162
|
|
|
17,832
|
|
|
21,418
|
|
|
7,755
|
|
|
8,686
|
|
|
5,005
|
|
|
21,446
|
|
||||||||
Total
|
$
|
120,020
|
|
|
$
|
74,058
|
|
|
$
|
49,659
|
|
|
$
|
243,737
|
|
|
$
|
180,808
|
|
|
$
|
83,158
|
|
|
$
|
32,136
|
|
|
$
|
296,102
|
|
|
Contract Liabilities*
|
||
Balance - January 1, 2018
|
$
|
115,009
|
|
Revenue recognized in the period
|
(99,405
|
)
|
|
Amounts billed but not recognized as revenue
|
68,257
|
|
|
Balance - September 30, 2018
|
$
|
83,861
|
|
*
|
Comprised of Deferred Revenue
|
1.
|
Contracts with an original duration of one year or less, including contracts that can be terminated for convenience without a substantive penalty;
|
2.
|
Contracts for which the Company recognizes revenues based on the right to invoice for services performed;
|
3.
|
Variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with Topic 606 Section 10-25-14(b), for which the criteria in Topic 606 Section 10-32-40 have been met. This applies to a limited number of situations where we are dependent upon data from a third party or where fees are highly variable.
|
|
|
September 30, 2018
|
||||||||
|
|
As Reported
|
Impacts of the New Revenue Standard
|
Adjusted amounts under prior GAAP
|
||||||
ASSETS
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
222,438
|
|
$
|
—
|
|
$
|
222,438
|
|
Restricted cash**
|
|
4,377
|
|
—
|
|
4,377
|
|
|||
Marketable securities, current
|
|
6,989
|
|
—
|
|
6,989
|
|
|||
Accounts receivable, net
|
|
52,617
|
|
19,718
|
|
32,899
|
|
|||
Prepaid expenses
|
|
46,922
|
|
—
|
|
46,922
|
|
|||
Other current assets
(2)
|
|
14,115
|
|
(415
|
)
|
14,530
|
|
|||
Total current assets
|
|
347,458
|
|
19,303
|
|
328,155
|
|
|||
Marketable securities, non-current
|
|
8,716
|
|
—
|
|
8,716
|
|
|||
Property and equipment, net
|
|
80,519
|
|
—
|
|
80,519
|
|
|||
Goodwill
|
|
234,480
|
|
—
|
|
234,480
|
|
|||
Intangible assets, net
|
|
117,448
|
|
—
|
|
117,448
|
|
|||
Other assets
(2)
|
|
8,940
|
|
369
|
|
8,571
|
|
|||
Note receivable from related party**
|
|
66,089
|
|
—
|
|
66,089
|
|
|||
Equity method investment
|
|
30,694
|
|
—
|
|
30,694
|
|
|||
Total assets
|
|
$
|
894,344
|
|
$
|
19,672
|
|
$
|
874,672
|
|
|
|
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
14,300
|
|
$
|
—
|
|
$
|
14,300
|
|
Accrued expenses
|
|
53,794
|
|
(14,756
|
)
|
68,550
|
|
|||
Deferred revenues, current
(3)
|
|
54,046
|
|
2,281
|
|
51,765
|
|
|||
Short-term debt
|
|
228,764
|
|
—
|
|
228,764
|
|
|||
Total current liabilities
|
|
350,904
|
|
(12,475
|
)
|
363,379
|
|
|||
Lease financing obligation
|
|
10,006
|
|
—
|
|
10,006
|
|
|||
Deferred tax liabilities
|
|
12,109
|
|
—
|
|
12,109
|
|
|||
Deferred revenues, non-current
(3)
|
|
29,815
|
|
11,200
|
|
18,615
|
|
|||
Other liabilities
|
|
11,329
|
|
—
|
|
11,329
|
|
|||
Redeemable noncontrolling interest
|
|
12,500
|
|
—
|
|
12,500
|
|
|||
Commitments and contingencies (Note 12)
|
|
|
|
|
||||||
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018
|
|
176,160
|
|
—
|
|
176,160
|
|
|||
Stockholders’ equity:
|
|
|
|
|
||||||
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively
|
|
5
|
|
—
|
|
5
|
|
|||
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively)
|
|
(82,087
|
)
|
—
|
|
(82,087
|
)
|
|||
Additional paid-in capital
|
|
561,144
|
|
—
|
|
561,144
|
|
|||
Accumulated other comprehensive loss
(4)
|
|
(30,557
|
)
|
76
|
|
(30,633
|
)
|
|||
Accumulated deficit
|
|
(156,984
|
)
|
20,871
|
|
(177,855
|
)
|
|||
Total stockholders’ equity
|
|
291,521
|
|
20,947
|
|
270,574
|
|
|||
Total liabilities and stockholders’ equity
|
|
$
|
894,344
|
|
$
|
19,672
|
|
$
|
874,672
|
|
**
|
See
Note 5 -Investments in Affiliates and Related Transactions
for related party transactions reflected in this account.
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||
|
As Reported
|
Impacts of the New Revenue Standard
|
Adjusted amounts under prior GAAP
|
|
As Reported
|
Impacts of the New Revenue Standard
|
Adjusted amounts under prior GAAP
|
||||||||||||
Net revenues
(3)
|
$
|
83,286
|
|
$
|
11,605
|
|
$
|
71,681
|
|
|
$
|
243,737
|
|
$
|
31,871
|
|
$
|
211,866
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||||||
Cost of revenues*
(5)
|
43,714
|
|
249
|
|
43,465
|
|
|
127,788
|
|
613
|
|
127,175
|
|
||||||
Research and development
|
18,684
|
|
—
|
|
18,684
|
|
|
59,789
|
|
—
|
|
59,789
|
|
||||||
Selling, general and administrative
(2)
|
27,320
|
|
51
|
|
27,269
|
|
|
99,368
|
|
152
|
|
99,216
|
|
||||||
Restructuring charges
|
4,539
|
|
—
|
|
4,539
|
|
|
8,425
|
|
—
|
|
8,425
|
|
||||||
Depreciation and amortization
|
23,658
|
|
—
|
|
23,658
|
|
|
70,330
|
|
—
|
|
70,330
|
|
||||||
Total costs and expenses
|
117,915
|
|
300
|
|
117,615
|
|
|
365,700
|
|
765
|
|
364,935
|
|
||||||
Loss from continuing operations
|
(34,629
|
)
|
11,305
|
|
(45,934
|
)
|
|
(121,963
|
)
|
31,106
|
|
(153,069
|
)
|
||||||
Interest income
|
203
|
|
—
|
|
203
|
|
|
7,518
|
|
—
|
|
7,518
|
|
||||||
Interest expense
|
(1,370
|
)
|
(33
|
)
|
(1,337
|
)
|
|
(3,935
|
)
|
(105
|
)
|
(3,830
|
)
|
||||||
Other expense, net
|
(13,439
|
)
|
—
|
|
(13,439
|
)
|
|
(9,180
|
)
|
—
|
|
(9,180
|
)
|
||||||
Equity method investment income
|
283
|
|
—
|
|
283
|
|
|
71
|
|
—
|
|
71
|
|
||||||
Loss from continuing operations, before taxes
|
(48,952
|
)
|
11,272
|
|
(60,224
|
)
|
|
(127,489
|
)
|
31,001
|
|
(158,490
|
)
|
||||||
Benefit for income taxes
|
2,308
|
|
—
|
|
2,308
|
|
|
1,604
|
|
—
|
|
1,604
|
|
||||||
Net loss from continuing operations
|
(46,644
|
)
|
11,272
|
|
(57,916
|
)
|
|
(125,885
|
)
|
31,001
|
|
(156,886
|
)
|
||||||
Net loss
|
(46,644
|
)
|
11,272
|
|
(57,916
|
)
|
|
(125,885
|
)
|
31,001
|
|
(156,886
|
)
|
||||||
Net (income) loss attributable to redeemable noncontrolling interests
|
(422
|
)
|
—
|
|
(422
|
)
|
|
2,122
|
|
—
|
|
2,122
|
|
||||||
Preferred stock dividend
|
(7,463
|
)
|
—
|
|
(7,463
|
)
|
|
(18,076
|
)
|
—
|
|
(18,076
|
)
|
||||||
Net loss attributable to Synchronoss
|
$
|
(54,529
|
)
|
$
|
11,272
|
|
$
|
(65,801
|
)
|
|
$
|
(141,839
|
)
|
$
|
31,001
|
|
$
|
(172,840
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
$
|
(1.38
|
)
|
$
|
0.28
|
|
$
|
(1.66
|
)
|
|
$
|
(3.51
|
)
|
$
|
0.77
|
|
$
|
(4.28
|
)
|
Diluted:
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
$
|
(1.38
|
)
|
$
|
0.28
|
|
$
|
(1.66
|
)
|
|
$
|
(3.51
|
)
|
$
|
0.77
|
|
$
|
(4.28
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
39,612
|
|
|
39,612
|
|
|
40,405
|
|
|
40,405
|
|
||||||||
Diluted
|
39,612
|
|
|
39,612
|
|
|
40,405
|
|
|
40,405
|
|
*
|
Cost of revenues excludes depreciation and amortization which are shown separately.
|
(1)
|
Reflects the impact of changes to the contract term as defined by the new revenue recognition standard.
|
(2)
|
Reflects capitalization of costs to obtain a contract.
|
(3)
|
Reflects the impact of changes in the delayed pattern of recognition on the Company’s professional services, timing of revenue recognition and allocation of purchase price on software license contracts and legally enforceable rights and obligations prior to when persuasive evidence of an arrangement exists.
|
(4)
|
Reflects the impact of foreign currency translation related to the above impacts.
|
(5)
|
Reflects the impact of amortization of third party costs over the term of the contract.
|
Cumulative catch up Topic 606 adjustment as of January 1, 2018
|
$
|
(10,130
|
)
|
Net loss from continued operations
|
31,001
|
|
|
Retained Earnings at September 30, 2018
|
$
|
20,871
|
|
•
|
Level 1 - Observable inputs - quoted prices in active markets for identical assets and liabilities;
|
•
|
Level 2 - Observable inputs other than the quoted prices in active markets for identical assets and liabilities includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and
|
•
|
Level 3 - Unobservable inputs - includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.
|
|
September 30, 2018
|
||||||||||||||
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash, cash equivalents and restricted cash
(1)
|
$
|
226,815
|
|
|
$
|
226,815
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities-short term
(2)
|
6,989
|
|
|
—
|
|
|
6,989
|
|
|
—
|
|
||||
Marketable securities-long term
(2)
|
8,716
|
|
|
—
|
|
|
8,716
|
|
|
—
|
|
||||
Total assets
|
$
|
242,520
|
|
|
$
|
226,815
|
|
|
$
|
15,705
|
|
|
$
|
—
|
|
Temporary equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
(3)
|
$
|
12,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,500
|
|
Total temporary equity
|
$
|
12,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,500
|
|
|
December 31, 2017
|
||||||||||||||
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash, cash equivalents and restricted cash
(1)
|
$
|
246,125
|
|
|
$
|
246,125
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities-short term
(2)
|
3,111
|
|
|
—
|
|
|
3,111
|
|
|
—
|
|
||||
Total assets
|
$
|
249,236
|
|
|
$
|
246,125
|
|
|
$
|
3,111
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent interest derivative
(4)
|
$
|
193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193
|
|
Mandatorily redeemable financial instrument
(5)
|
$
|
37,959
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,959
|
|
Total liabilities
|
$
|
38,152
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,152
|
|
Temporary Equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
(3)
|
$
|
25,280
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,280
|
|
Total temporary equity
|
$
|
25,280
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,280
|
|
(1)
|
Cash equivalents primarily included money market funds.
|
(2)
|
Marketable securities are comprised of municipal bonds and certificates of deposit.
|
(3)
|
Put arrangements held by the noncontrolling interests in certain of the Company’s joint ventures.
|
(4)
|
Contingent interest derivative related to convertible debt is included in accrued expenses, for further details see
Note 6 - Debt
.
|
(5)
|
Mandatorily redeemable financial instruments are comprised of the Company’s contractual obligation to deliver a set number of preferred shares at a time in less than twelve months and the option for the Company to receive a set number of common shares. In 2018, this was exchanged as partial consideration in connection with issuance of the Company’s Series A Convertible Participating Perpetual Preferred Stock.
|
|
September 30, 2018
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
3,776
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
3,761
|
|
Corporate bonds
|
402
|
|
|
—
|
|
|
(3
|
)
|
|
399
|
|
||||
Municipal bonds
|
11,598
|
|
|
1
|
|
|
(54
|
)
|
|
11,545
|
|
||||
Total marketable securities
|
$
|
15,776
|
|
|
$
|
1
|
|
|
$
|
(72
|
)
|
|
$
|
15,705
|
|
|
December 31, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
Municipal bonds
|
2,867
|
|
|
—
|
|
|
(6
|
)
|
|
2,861
|
|
||||
Total marketable securities
|
$
|
3,117
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
3,111
|
|
|
September 30, 2018
|
||||||
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due within one year
|
$
|
7,006
|
|
|
$
|
6,989
|
|
Due after 1 year through 5 years
|
8,718
|
|
|
8,664
|
|
||
Due after 5 years through 10 years
|
52
|
|
|
52
|
|
||
Due after 10 years
|
—
|
|
|
—
|
|
||
Total available-for-sale debt securities
|
$
|
15,776
|
|
|
$
|
15,705
|
|
Balance at December 31, 2017
|
$
|
25,280
|
|
Fair value adjustment
|
(10,658
|
)
|
|
Net loss attributable to redeemable noncontrolling interests
|
(2,122
|
)
|
|
Balance at September 30, 2018
|
$
|
12,500
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
Revenues
|
|
$
|
33,119
|
|
|
$
|
94,758
|
|
Expenses
|
|
32,177
|
|
|
94,523
|
|
||
Net(loss) income
|
|
$
|
942
|
|
|
$
|
235
|
|
|
Seller Note
|
Impairment
|
Unamortized Discount
|
Loan Accrued Interest
|
Distribution Note
|
Distribution interest
|
Total
|
||||||||||||||
December 31, 2017
|
$
|
83,000
|
|
$
|
(14,562
|
)
|
$
|
(12,163
|
)
|
$
|
11,096
|
|
$
|
6,187
|
|
$
|
426
|
|
$
|
73,984
|
|
Activity
|
—
|
|
(18,225
|
)
|
438
|
|
6,103
|
|
3,293
|
|
496
|
|
(7,895
|
)
|
|||||||
September 30, 2018
|
$
|
83,000
|
|
$
|
(32,787
|
)
|
$
|
(11,725
|
)
|
$
|
17,199
|
|
$
|
9,480
|
|
$
|
922
|
|
$
|
66,089
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Restricted cash
(A)
|
$
|
—
|
|
|
$
|
118
|
|
Accounts receivable
(B)
|
22,274
|
|
|
18,033
|
|
||
Total assets
|
$
|
22,274
|
|
|
$
|
18,151
|
|
|
|
|
|
||||
Accrued expenses
(A)
|
—
|
|
|
118
|
|
||
Total liabilities
|
$
|
—
|
|
|
$
|
118
|
|
(A)
|
The Company collected
zero
and
$0.1 million
from STIN customers, on behalf of STIN, which remained outstanding as of
September 30, 2018
and
December 31, 2017
, respectively. This amount has been classified in short-term restricted cash and in accrued expenses on the Condensed Consolidated Balance Sheets.
|
(B)
|
These amounts principally included revenues generated from the Cloud and Telephony Support Services agreement and pass-through of vendor expenses incurred during the transition and assignment of vendor contracts.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Convertible Senior Notes
|
$
|
230,000
|
|
|
$
|
230,000
|
|
Unamortized debt issuance cost
(1)
|
(1,236
|
)
|
|
(2,296
|
)
|
||
Total debt, carrying value
|
$
|
228,764
|
|
|
$
|
227,704
|
|
Total short-term debt, carrying value
|
$
|
228,764
|
|
|
$
|
—
|
|
Total long-term debt, carrying value
|
$
|
—
|
|
|
$
|
227,704
|
|
(1)
|
Unamortized debt issuance cost is related to Convertible Senior Notes.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amended Credit Facility
|
|
|
|
|
|
|
|
|
||||||||
Amortization of debt issuance costs
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
748
|
|
Commitment fee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||
Interest on borrowings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
||||
2017 Term Facility
|
|
|
|
|
|
|
|
|
||||||||
Amortization of debt issuance costs
|
|
—
|
|
|
1,021
|
|
|
—
|
|
|
2,376
|
|
||||
Interest on borrowings
|
|
—
|
|
|
12,411
|
|
|
—
|
|
|
29,047
|
|
||||
Contingent Interest Derivative
|
|
—
|
|
|
2,489
|
|
|
—
|
|
|
2,489
|
|
||||
Amendment fees paid to third parties
|
|
—
|
|
|
5,716
|
|
|
—
|
|
|
5,716
|
|
||||
Revolving Facility
|
|
|
|
|
|
|
|
|
||||||||
Amortization of debt issuance costs
|
|
—
|
|
|
204
|
|
|
—
|
|
|
542
|
|
||||
Commitment fee
|
|
—
|
|
|
114
|
|
|
—
|
|
|
448
|
|
||||
Amendment fees paid to third parties
|
|
—
|
|
|
1,662
|
|
|
—
|
|
|
1,662
|
|
||||
Convertible Senior Notes
|
|
|
|
|
|
|
|
|
||||||||
Amortization of debt issuance costs
|
|
354
|
|
|
354
|
|
|
1,060
|
|
|
1,060
|
|
||||
Interest on borrowings
|
|
430
|
|
|
431
|
|
|
1,292
|
|
|
1,294
|
|
||||
Additional interest on default
|
|
—
|
|
|
—
|
|
|
192
|
|
|
288
|
|
||||
Capital leases
|
|
241
|
|
|
243
|
|
|
724
|
|
|
729
|
|
||||
Other
|
|
345
|
|
|
910
|
|
|
667
|
|
|
1,568
|
|
||||
Total
|
|
$
|
1,370
|
|
|
$
|
25,555
|
|
|
$
|
3,935
|
|
|
$
|
48,016
|
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized
(Loss) Income on Intra-Entity Foreign Currency Transactions |
|
Unrealized Holding
Gains (Losses) on Available-for-Sale Securities |
|
Total
|
||||||||
Balance at Balance at December 31, 2017
|
$
|
(20,284
|
)
|
|
$
|
(3,085
|
)
|
|
$
|
(4
|
)
|
|
$
|
(23,373
|
)
|
Other comprehensive income
|
(6,529
|
)
|
|
(883
|
)
|
|
(52
|
)
|
|
(7,464
|
)
|
||||
Tax effect
|
—
|
|
|
280
|
|
|
—
|
|
|
280
|
|
||||
Total comprehensive income
|
(6,529
|
)
|
|
(603
|
)
|
|
(52
|
)
|
|
(7,184
|
)
|
||||
Balance at Balance at September 30, 2018
|
$
|
(26,813
|
)
|
|
$
|
(3,688
|
)
|
|
$
|
(56
|
)
|
|
$
|
(30,557
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenues
|
$
|
1,035
|
|
|
$
|
1,118
|
|
|
$
|
3,447
|
|
|
$
|
3,326
|
|
Research and development
|
1,340
|
|
|
1,201
|
|
|
4,682
|
|
|
4,181
|
|
||||
Selling, general and administrative
|
4,841
|
|
|
1,359
|
|
|
13,911
|
|
|
6,920
|
|
||||
Total stock-based compensation expense
|
$
|
7,216
|
|
|
$
|
3,678
|
|
|
$
|
22,040
|
|
|
$
|
14,427
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options
|
$
|
1,940
|
|
|
$
|
1,534
|
|
|
$
|
5,680
|
|
|
$
|
4,522
|
|
Restricted stock awards
|
5,276
|
|
|
2,092
|
|
|
16,360
|
|
|
9,523
|
|
||||
Employee Stock Purchase Plan
|
—
|
|
|
52
|
|
|
—
|
|
|
382
|
|
||||
Total stock-based compensation before taxes
|
$
|
7,216
|
|
|
$
|
3,678
|
|
|
$
|
22,040
|
|
|
$
|
14,427
|
|
Tax benefit
|
$
|
1,402
|
|
|
$
|
973
|
|
|
$
|
4,356
|
|
|
$
|
2,686
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Expected stock price volatility
|
66.0
|
%
|
|
0.0
|
%
|
|
65.2
|
%
|
|
49.2
|
%
|
||||
Risk-free interest rate
|
2.7
|
%
|
|
0.0
|
%
|
|
2.6
|
%
|
|
1.7
|
%
|
||||
Expected life of options (in years)
|
4.29
|
|
|
0.00
|
|
|
4.11
|
|
|
4.03
|
|
||||
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
||||
Weighted-average fair value (grant date) of the options
|
$
|
3.33
|
|
|
$
|
—
|
|
|
$
|
5.04
|
|
|
$
|
7.79
|
|
Options
|
|
Number of
Options
|
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 31, 2017
|
|
3,950
|
|
|
$
|
21.54
|
|
|
|
|
|
||
Options Granted
|
|
1,065
|
|
|
9.75
|
|
|
|
|
|
|||
Options Exercised
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Options Cancelled
|
|
(464
|
)
|
|
21.81
|
|
|
|
|
|
|||
Outstanding at September 30, 2018
|
|
4,551
|
|
|
$
|
18.75
|
|
|
5.10
|
|
$
|
56
|
|
Vested at September 30, 2018
|
|
1,449
|
|
|
$
|
31.04
|
|
|
3.23
|
|
$
|
—
|
|
Exercisable at September 30, 2018
|
|
1,449
|
|
|
$
|
31.04
|
|
|
3.23
|
|
$
|
—
|
|
Unvested Restricted Stock
|
|
Number of
Awards
|
|
Weighted- Average
Grant Date
Fair Value
|
|||
Unvested at December 31, 2017
|
|
2,064
|
|
|
$
|
22.75
|
|
Granted
|
|
1,801
|
|
|
9.15
|
|
|
Vested
|
|
(738
|
)
|
|
26.75
|
|
|
Forfeited
|
|
(211
|
)
|
|
17.52
|
|
|
Unvested at September 30, 2018
|
|
2,916
|
|
|
$
|
13.74
|
|
|
Balance at December 31, 2017
|
|
Charges
|
|
Payments
|
|
Other Adjustments
1
|
|
Balance at September 30, 2018
|
||||||||||
Employment termination costs
|
$
|
474
|
|
|
$
|
8,003
|
|
|
$
|
(6,505
|
)
|
|
$
|
(38
|
)
|
|
$
|
1,934
|
|
Facilities consolidation
|
24
|
|
|
422
|
|
|
(14
|
)
|
|
1,997
|
|
|
2,429
|
|
|||||
Total
|
$
|
498
|
|
|
$
|
8,425
|
|
|
$
|
(6,519
|
)
|
|
$
|
1,959
|
|
|
$
|
4,363
|
|
(1)
|
Includes non-cash adjustments.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator - Basic:
|
|
|
|
|
|
|
|
||||||||
Net loss from continuing operations
|
$
|
(46,644
|
)
|
|
$
|
(45,206
|
)
|
|
$
|
(125,885
|
)
|
|
$
|
(113,266
|
)
|
Net (income) loss attributable to redeemable noncontrolling interests
|
(422
|
)
|
|
1,276
|
|
|
2,122
|
|
|
6,980
|
|
||||
Preferred stock dividend
|
(7,463
|
)
|
|
—
|
|
|
(18,076
|
)
|
|
—
|
|
||||
Net (loss) income from continuing operations attributable to Synchronoss
|
(54,529
|
)
|
|
(43,930
|
)
|
|
(141,839
|
)
|
|
(106,286
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations, net of taxes**
|
—
|
|
|
8,842
|
|
|
—
|
|
|
(14,067
|
)
|
||||
Net (loss) income attributable to Synchronoss
|
$
|
(54,529
|
)
|
|
$
|
(35,088
|
)
|
|
$
|
(141,839
|
)
|
|
$
|
(120,353
|
)
|
|
|
|
|
|
|
|
|
||||||||
Numerator - Diluted:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income from continuing operations attributable to Synchronoss
|
$
|
(54,529
|
)
|
|
$
|
(43,930
|
)
|
|
$
|
(141,839
|
)
|
|
$
|
(106,286
|
)
|
Income effect for interest on convertible debt, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net loss from continuing operations adjusted for the convertible debt
|
(54,529
|
)
|
|
(43,930
|
)
|
|
(141,839
|
)
|
|
(106,286
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations, net of taxes**
|
—
|
|
|
8,842
|
|
|
—
|
|
|
(14,067
|
)
|
||||
Net loss attributable to Synchronoss
|
$
|
(54,529
|
)
|
|
$
|
(35,088
|
)
|
|
$
|
(141,839
|
)
|
|
$
|
(120,353
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding — basic
|
39,612
|
|
|
44,893
|
|
|
40,405
|
|
|
44,576
|
|
||||
Dilutive effect of:
|
|
|
|
|
|
|
|
||||||||
Shares from assumed conversion of convertible debt
1
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Shares from assumed conversion of preferred stock
2
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Options and unvested restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average common shares outstanding — diluted
|
39,612
|
|
|
44,893
|
|
|
40,405
|
|
|
44,576
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic EPS
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(1.38
|
)
|
|
$
|
(0.98
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.38
|
)
|
Discontinued operations**
|
—
|
|
|
0.20
|
|
|
—
|
|
|
(0.32
|
)
|
||||
|
$
|
(1.38
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.70
|
)
|
Diluted EPS
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(1.38
|
)
|
|
$
|
(0.98
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.38
|
)
|
Discontinued operations**
|
—
|
|
|
0.20
|
|
|
—
|
|
|
(0.32
|
)
|
||||
|
$
|
(1.38
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(2.70
|
)
|
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive stock options excluded
|
4,647
|
|
|
3,012
|
|
|
4,412
|
|
|
2,655
|
|
||||
Unvested shares of restricted stock awards
|
2,916
|
|
|
3,259
|
|
|
2,916
|
|
|
3,259
|
|
**
|
See
Note 3 - Acquisitions and Divestitures
for transactions classified as discontinued operations.
|
(1)
|
The calculation for each period does not include the effect of assumed conversion of convertible debt of
4,325,646
shares, which is based on 18.8072 shares per $1,000 principal amount of the 2019 Notes.
|
(2)
|
The calculation for each period does not include the effect of assumed conversion of preferred stock of
10,843,398
shares, which is based on 55.5556 shares per $1,000 principal amount of the preferred stock, because the effect would have been anti–dilutive.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
FX gains
(1)
|
$
|
38
|
|
|
$
|
(173
|
)
|
|
$
|
(241
|
)
|
|
$
|
(2,912
|
)
|
PIK Note impairment
(2)
|
(18,225
|
)
|
|
—
|
|
|
(18,225
|
)
|
|
—
|
|
||||
Litigation settlement
(3)
|
4,495
|
|
|
—
|
|
|
4,495
|
|
|
—
|
|
||||
Remeasurement gain on financial instrument
(4)
|
—
|
|
|
—
|
|
|
3,849
|
|
|
—
|
|
||||
Divestiture: SpeechCycle
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
4,947
|
|
||||
Income from Investment
(6)
|
519
|
|
|
—
|
|
|
519
|
|
|
—
|
|
||||
Royalty income
(7)
|
—
|
|
|
—
|
|
|
92
|
|
|
—
|
|
||||
Others
(8)
|
(266
|
)
|
|
(83
|
)
|
|
331
|
|
|
339
|
|
||||
Total
|
$
|
(13,439
|
)
|
|
$
|
(256
|
)
|
|
$
|
(9,180
|
)
|
|
$
|
2,374
|
|
(1)
|
Fair value of foreign exchange gains and losses
|
(2)
|
PIK Note impairment on the troubled debt restructuring
|
(3)
|
Represents Legal settlement of
$4.2M
from Open Exchange and
$0.3M
IP settlement from F-Secure
|
(4)
|
Remeasurement of gain/loss on Put option for common shares held by Siris.
|
(5)
|
Gain on Divestitures: SpeechCycle
|
(6)
|
Represents gain on sale on the Company’s cost investment in Clarity, Money Inc.
|
(7)
|
Includes royalty income in connection with Mirapoint sale
|
(8)
|
Represents individual transactions in other income (expense) that management determined to be immaterial
|
|
Three Months Ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
$ Change
|
||||||
Net revenues
|
$
|
83,286
|
|
|
$
|
91,015
|
|
|
$
|
(7,729
|
)
|
Cost of revenues*
|
43,714
|
|
|
45,576
|
|
|
(1,862
|
)
|
|||
Research and development
|
18,684
|
|
|
20,926
|
|
|
(2,242
|
)
|
|||
Selling, general and administrative
|
27,320
|
|
|
34,881
|
|
|
(7,561
|
)
|
|||
Restructuring charges
|
4,539
|
|
|
2,312
|
|
|
2,227
|
|
|||
Depreciation and amortization
|
23,658
|
|
|
23,459
|
|
|
199
|
|
|||
Total costs and expenses
|
117,915
|
|
|
127,154
|
|
|
(9,239
|
)
|
|||
Loss from continuing operations
|
$
|
(34,629
|
)
|
|
$
|
(36,139
|
)
|
|
$
|
1,510
|
|
*
|
Cost of revenues excludes depreciation and amortization which are shown separately.
|
•
|
a $14.6 million decrease in
Cloud
revenues primarily resulting from:
|
◦
|
a change in the business model from a freemium pricing model to an active premium pricing model, resulting in a $11.4 million decrease and,
|
◦
|
a $3.2 million reduction from a decline in business volume related to decisions to sunset certain non-strategic cloud customers.
|
•
|
a $5.4 million decrease in
Digital
Transformation revenues due to:
|
◦
|
a reduction in professional services revenue of $3.3 million;
|
◦
|
a decrease in subscription revenue of $1.9 million;
|
◦
|
a reduction in transaction revenue of $1.3 million;
|
◦
|
partially offset by an increase in license revenue of $1.1 million.
|
•
|
an increase in
Messaging
revenue of $0.7 million primarily due to the current quarter impact of new sales in the Japanese market; and
|
•
|
an increase of $11.6 million as a result of the Company’s implementation of Topic 606. This resulted in an increase in Cloud revenues of $6.3 million; Digital Transformation revenue of $4.0 million and Messaging revenue of $1.3 million.
|
|
Nine Months Ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
$ Change
|
||||||
Net revenues
|
$
|
243,737
|
|
|
$
|
296,102
|
|
|
$
|
(52,365
|
)
|
Cost of revenues*
|
127,788
|
|
|
139,386
|
|
|
(11,598
|
)
|
|||
Research and development
|
59,789
|
|
|
67,234
|
|
|
(7,445
|
)
|
|||
Selling, general and administrative
|
99,368
|
|
|
103,049
|
|
|
(3,681
|
)
|
|||
Restructuring charges
|
8,425
|
|
|
11,715
|
|
|
(3,290
|
)
|
|||
Depreciation and amortization
|
70,330
|
|
|
71,098
|
|
|
(768
|
)
|
|||
Total costs and expenses
|
365,700
|
|
|
392,482
|
|
|
(26,782
|
)
|
|||
Loss from continuing operations
|
$
|
(121,963
|
)
|
|
$
|
(96,380
|
)
|
|
$
|
(25,583
|
)
|
*
|
Cost of revenues excludes depreciation and amortization which are shown separately.
|
•
|
a $78.1 million decrease in
Cloud
revenues resulting due to:
|
◦
|
a change in the business model from a freemium pricing model to an active premium pricing model, resulting in a $50.1 million decrease;
|
◦
|
a $21.7 million reduction in subscription revenue due to a cumulative adjustment in the the prior year period related to persuasive evidence; and
|
◦
|
a $7.8 million reduction from a decline in business volume related to decisions to sunset certain non-strategic cloud customers
|
•
|
a $21.9 million decrease in
Digital Transformation
revenues due to:
|
◦
|
a reduction in transaction revenue of $8.4 million resulting from a decline in business volume of $7.3 million and the divestiture of the SpeechCycle business of $1.0 million;
|
◦
|
a reduction in subscription revenue of $6.2 million resulting from a decline in business volume;
|
◦
|
a reduction in professional services revenue of $5.3 million; and
|
◦
|
a reduction in license revenue of $2.0 million.
|
•
|
an increase in
Messaging
revenue of $15.8 million primarily due to the delivery of an advanced messaging solution to a customer in the Japanese market and an uptick in business volume in our core messaging business; and
|
•
|
an increase in revenues of $31.9 million as a result of the Company’s implementation of Topic 606, which resulted in an increase in Cloud revenues of $17.3 million, Digital Transformation revenue of $12.9 million and Messaging revenue of $1.7 million.
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(60,662
|
)
|
|
$
|
(1,093
|
)
|
Investing activities
|
(42,045
|
)
|
|
(826,042
|
)
|
||
Financing activities
|
85,202
|
|
|
826,998
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Remainder of 2018
|
|
2019 - 2021
|
|
2022 - 2023
|
|
Thereafter
|
||||||||||
Capital lease obligations
(1)
|
|
$
|
12,742
|
|
|
$
|
1,302
|
|
|
$
|
5,566
|
|
|
$
|
2,563
|
|
|
$
|
3,311
|
|
Convertible Senior Notes
|
|
230,000
|
|
|
—
|
|
|
230,000
|
|
|
—
|
|
|
—
|
|
|||||
Interest
(2)
|
|
1,509
|
|
|
431
|
|
|
1,078
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
|
84,289
|
|
|
3,312
|
|
|
33,704
|
|
|
16,037
|
|
|
31,236
|
|
|||||
Purchase obligations
(3)
|
|
9,133
|
|
|
349
|
|
|
8,784
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term liabilities
(4)
|
|
1,923
|
|
|
859
|
|
|
1,064
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
339,596
|
|
|
$
|
6,253
|
|
|
$
|
280,196
|
|
|
$
|
18,600
|
|
|
$
|
34,547
|
|
(1)
|
Amount includes the Pennsylvania facility lease and the cloud hosting data center in England.
|
(2)
|
Represents the interest on the 2019 Notes.
|
(3)
|
Amount represents obligations associated with colocation agreements and other customer delivery related purchase obligations.
|
(4)
|
Amount represents unrecognized tax positions recorded in our balance sheet. Although the timing of the settlement is uncertain, we believe this amount will be settled within
three
years.
|
|
|
|
|
2017 Impairment Test
|
|||||||||
Reporting Unit
|
Discount Rate
|
Growth rate range
|
Terminal Growth Rate
|
Goodwill
|
|
Fair Value Exceeds Carrying Value by
|
|
Fair Value method
|
|||||
A
|
10.5
|
%
|
(5.5%) - 12.7%
|
3.0
|
%
|
$
|
226,758
|
|
|
18.0
|
%
|
|
Income Approach, Market Approach
|
B
|
11.0
|
%
|
3% - 67%
|
3.0
|
%
|
9,100
|
|
|
34.0
|
%
|
|
Income Approach
|
•
|
Continued CEO Communication to reinforce compliance
|
•
|
Recruiting and hiring a Director of Revenue Recognition, and other resources to augment our staff to support further enhancement on the controls and procedures surrounding revenue recognition.
|
•
|
The development of a more comprehensive review process and monitoring controls over contracts with customers to ensure accurate accounting for multiple-element arrangements
|
•
|
The Company developed a comprehensive revenue recognition and contract review training program that has been focused on the impacts of adopting Topic 606. This training is focused on senior-level management and customer-facing employees, as well as finance, sales and marketing personnel as of September 30, 2018.
|
•
|
Establishment of an Internal Audit function
|
•
|
Development of a recurring non-recurring transaction review meeting cadence with key stakeholders within the Company to identify and discuss potentially significant transactions. Meetings are attended by process owners across various functions or departments, both domestic and international, to promote regular and effective communication between finance and non-finance personnel, and to ensure that information related to significant transactions is communicated timely as of September 30, 2018.
|
•
|
Increased standardization of contract documentation and revenue analysis for individual transactions, including increased oversight of revenue opportunities and contract review by personnel with the requisite accounting knowledge to identify revenue-impacting terms and consider potential downstream effects;
|
•
|
The development of a more comprehensive review process and monitoring controls over contracts with customers to ensure accurate accounting for multiple-element arrangements
|
•
|
The Company performed a review of key business process controls related to high-risk financial statement accounts, such as revenue, significant transactions, capitalized software, accounts receivable, treasury and financial close, which resulted in the redesign of existing controls and the addition of newly developed / documented control activities, in order to mitigate known risks and strengthen the overall control environments as of September 30, 2018.
|
•
|
Sub-certification Process: Key process owners each quarter (as part of the Form 10-Q and to be annual as part of the 10-K preparation) complete a sub-certification questionnaire and checklist to support how the process owner reached the conclusion that controls are operating effectively in their respective areas and provide an opportunity to highlight any concerns they have related to internal control over financial reporting.
|
•
|
The Company has performed a review of key IT process controls and is in the process of enhancing process to remediate material weakness in the general control environment.
|
Exhibit No.
|
|
Description
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
10.4†
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
101.SCH
|
|
|
XBRL Schema Document
|
101.CAL
|
|
|
XBRL Calculation Linkbase Document
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
|
XBRL Labels Linkbase Document
|
101.PRE
|
|
|
XBRL Presentation Linkbase Document
|
†
|
Compensation Arrangement.
|
|
|
|
|
|
|
Synchronoss Technologies, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Glenn Lurie
|
|
|
|
Glenn Lurie
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ David Clark
|
|
|
|
David Clark
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. for the quarter ended
September 30, 2018
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
/s/ Glenn Lurie
|
|
Glenn Lurie
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. for the quarter ended
September 30, 2018
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
/s/ David Clark
|
|
David Clark
|
|
Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ Glenn Lurie
|
|
Glenn Lurie
|
|
Chief Executive Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ David Clark
|
|
David Clark
|
|
Chief Financial Officer
|