UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________________________
FORM 8-K
________________________________________________________________________________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2020
________________________________________________________________________________________________

Synacor, Inc.
(Exact name of registrant as specified in its charter)
________________________________________________________________________________________________

					
Delaware	 	001-33843	 	16-1542712	
(State or other jurisdiction
of incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	
		
		40 La Riviere Drive, Suite 300
Buffalo, New York, 14202			
		(Address of principal executive offices, including zip code)	 		
					
		(716) 853-1362 			
		(Registrant’s telephone number, including area code)			
					
		Not Applicable			
		(Former name or former address, if changed since last report)			
________________________________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 	☒	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

 	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

 	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

 	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
Securities registered pursuant to Section 12(b) of the Act:
															
Title of Each Class	 	Trading Symbol(s)	 	Name of each exchange on which registered	
Common Stock, $0.01 Par Value (voting)	 	SYNC	 	The Nasdaq Stock Market LLC
(The Nasdaq Global Market)	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

	

Item 2.02. Results of Operations and Financial Condition.
On May 6, 2020, Synacor, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2020. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Synacor, Inc. is making reference to non-GAAP financial information in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.

Exhibit No.	  	Description			
				
99.1 	 	  	Press release issued by Synacor, Inc. dated May 6, 2020			

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

							
	 		 	Synacor, Inc.	
				
Date: May 7, 2020	 		 	By:	 	/s/ Timothy J. Heasley	
	 		 		 	Timothy J. Heasley	
	 		 		 	Chief Financial Officer and Secretary	

Exhibit 99.1
  
Synacor Reports First Quarter 2020 Financial Results; Strength In Software Offset By COVID-19 Impact On Publisher Advertising

BUFFALO, N.Y., May 6, 2020 – Synacor, Inc. (Nasdaq: SYNC), a cloud-based software and services company serving global video, internet and communications providers, device manufacturers, governments and enterprises, today announced its financial results for the first quarter ended March 31, 2020.

First Quarter Highlights

•First quarter revenue of $20.6 million
•First quarter GAAP net loss of $4.5 million and Adjusted EBITDA of $0.3 million
•260 new and expansion customers for Zimbra email and collaboration platform. Ramping up the previously announced significant new streaming services Cloud ID customer
•Software segment adjusted EBITDA margins grew to 31.9% from 25% and unallocated corporate G&A declined 20% compared to the year ago quarter
•Merger planning with Qumu continues; S-4 registration filing has been slightly delayed due to COVID-19

“Our transition to a higher-margin, SaaS-focused software company continued,” said Himesh Bhise, Synacor’s Chief Executive Officer. “It is encouraging that our Software & Services segment grew modestly in the face of economic turmoil, with revenue excluding discontinued products up 2.4% and Segment Adjusted EBITDA growing 26% year-over-year, representing a 31.9% margin. Our collaboration and identity platforms are particularly relevant in an environment of distributed work and higher streaming.”

“The COVID-driven impact on Synacor has been isolated to our publisher advertising line of business,” continued Bhise. “We felt a sharp reduction in March revenue, consistent with the industry-wide reduction in media spend, and expect this slowdown to continue through Q2. However, our active publishers grew 50% over last year, validating an increased need for the monetization services we provide and positioning us well when the economy recovers.”

“We have been working hard to protect the health and safety of our people, do our part to ‘flatten the curve’, deliver excellence to our customers, maintain focus in growing our business, and implement cost and cash-control measures. I could not be prouder of the Synacor team for their hard work and dedication during these volatile times. We have a resilient business, strong balance sheet, and the access to capital to emerge on the other side of this pandemic and accelerate our transformation into a SaaS-focused software company.” Bhise concluded.

Recent Highlights

•70 new customers and 190 contract expansions for Zimbra email and collaboration platform delivered through worldwide channel partners.
•Began ramping up the previously announced large subscription services customer of Cloud ID to support digital streaming growth.
•Signed two service providers and two content networks to Cloud ID
•Active publisher customers for advertising were 133 in Q1, growing 50% year-over-year, despite a decline in industry-wide media spend due to COVID-19.

Financial Results:

Revenue

Revenue was $20.6 million, compared to $31.8 million or $22.5 million when excluding the ATT.net portal business in the first quarter of 2019. The decline was driven by the COVID-19 impact on the Publisher advertising business consistent with the industry-wide decline in media spend.

Revenue in our Software & Services segment totaled $11.1 million, compared with $11.2 million or $10.8 million net of discontinued product in the prior year. Revenue in our Portal & Advertising segment totaled $9.5 million, compared with $20.7 million or $11.4 million net of the ATT.net portal business in the prior year due to lower publisher based advertising revenue related to the COVID-19 pandemic.
Net Loss

Net loss was $4.5 million, or $0.11 per share, compared with a net loss of $2.2 million, or $0.06 per share in the prior year. The current year quarter includes $1.4 million of M&A expenses related to our pending merger with Qumu.
Adjusted EBITDA
Adjusted EBITDA was $0.3 million, or 1.5% of revenue, compared with $1.7 million (5.4% of revenue) in the first quarter of 2019. Adjusted EBITDA excludes stock-based compensation, other income and expense, asset impairments, restructuring costs, and certain legal and professional fees. The decline was driven by the COVID-19 impact on publisher based advertising revenue and margins.
Cash

The Company ended the quarter with $8.9 million in cash and cash equivalents, compared with $11.0 million at the end of 2019. Similar to prior years, the first quarter cash decline was driven by the normal seasonality of some annual disbursements. In addition, we also paid out approximately $0.5 million in non-recurring expenses related to the pending merger with Qumu. The company continues to have no borrowings on its credit facility and had approximately $6.7 million of availability as of quarter-end. The company has taken actions to reduce costs and preserve cash in response to the pandemic, and believes that it has sufficient liquidity for operations going forward.

Guidance

Due to the uncertainty surrounding the extent, duration, and pace of recovery related to the COVID-19 pandemic, Synacor is withdrawing it’s previously provided guidance for 2020 and temporarily suspending its practice of providing quarterly guidance updates until the current situation abates and our visibility improves.
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to discuss it’s first quarter 2020 financial results. The live webcast of Synacor’s earnings conference call can be accessed at https://www.synacor.com/investor-relations/events-and-presentations. To participate, please dial 1-833-235-2655 (toll free) or 1-647-689-4151 (international) and reference conference ID 5194062.

Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 8 p.m. ET on May 6, 2020 until 11:59 p.m. ET on May 13, 2020 by dialing 1-800-585-8367 or 1-416-621-4642 and using the pin number 5194062.
About Synacor
Synacor (Nasdaq: SYNC) is a cloud-based software and services company serving global video, internet and communications providers, device manufacturers, governments and enterprises. Synacor’s mission is to enable its customers to better engage with their consumers. Its customers use Synacor’s technology platforms and services to scale their businesses and extend their subscriber relationships. Synacor delivers managed portals, advertising solutions, email and collaboration platforms, and cloud-based identity management. www.synacor.com
Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP).

We report adjusted EBITDA because it is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

For a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the table “Reconciliation of GAAP to Non-GAAP Measures” in this press release.

We report adjusted net loss and adjusted diluted earnings per share because we believe these measures provide investors with additional information to assess our financial performance. These measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures. For a reconciliation of our GAAP Condensed Consolidated Statements of Operations to our adjusted non-GAAP measures, please refer to the table “Reconciliation of Adjusted Financial Measures” in this press release.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements concerning Synacor’s expected financial performance including, without limitation, its first-quarter and full-year 2020 guidance, anticipated benefits from the merger with Qumu, the statements and quotations from management and 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.

The risks and uncertainties referred to above include – but are not limited to – risks associated with: : Synacor and Qumu’s ability or inability to obtain shareholder approval as required for the merger or to satisfy other conditions the merger; the effect of the announcement of the merger on Synacor and Qumu’s ability to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom Synacor or Qumu does business; disruption of Synacor management’s attention due to the merger; the combined company’s ability to achieve cost reductions and cost synergies from the merger; execution of our plans and strategies, including the loss of a significant customer; our ability to obtain new customers; our ability to integrate the assets and personnel from acquisitions; expectations regarding consumer taste and user adoption of applications and solutions; developments in internet browser software and search advertising technologies; 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 digital 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 or other legal claims against Synacor; and the price volatility of our common stock.

No Offer or Solicitation

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed merger or otherwise. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Additional Information and Where to Find It

In connection with the proposed merger between Synacor and Qumu, Synacor intends to file a registration statement on Form S-4 containing a joint proxy statement/prospectus of Synacor and Qumu and other documents concerning the proposed merger with the SEC. The definitive proxy statement will be mailed to the stockholders of Synacor and Qumu in advance of the meeting. BEFORE MAKING ANY VOTING DECISION, SYNACOR’S AND QUMU’S RESPECTIVE STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED BY EACH OF SYNACOR AND QUMU WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the joint proxy statement/prospectus and other documents containing important information about Synacor and Qumu, once such documents are filed with the SEC, through the website maintained by the SEC at www.sec.gov. Synacor makes available free of charge at www.synacor.com, copies of materials it files with, or furnishes to, the SEC. The contents of the website referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.

Participants in the Solicitation

This document does not constitute a solicitation of proxy, an offer to purchase or a solicitation of an offer to sell any securities. Synacor, Qumu and their respective directors, executive officers and certain employees may be deemed to be participants in the solicitation of proxies from the stockholders of Synacor and Qumu in connection with the proposed merger. Information regarding the special interests of these directors and executive officers in the proposed merger will be included in the joint proxy statement/prospectus referred to above. Security holders may also obtain information regarding the names, affiliations and interests of Synacor’s directors and executive officers in Synacor’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on March 6, 2020, its Current Report on Form 8-K dated February 11, 2020, which was filed with the SEC on February 11, 2020, its Current Report on Form 8-K dated March 3, 2020, which was filed with the SEC on March 3, 2020, and its definitive proxy statement for the 2020 annual meeting of stockholders, which was filed with the SEC on April 29, 2020. Security holders may obtain information regarding the names, affiliations and interests of Qumu’s directors and executive officers in Qumu’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on March 6, 2020, and its definitive proxy statement for the 2019 annual meeting of shareholders, which was filed with the SEC on April 9, 2019. To the extent the holdings of Synacor securities by Synacor’s directors and executive officers or the holdings of Qumu securities by Qumu’s directors and executive officers have changed since the amounts set forth in Synacor’s proxy statement for its 2020 annual meeting of stockholders or Qumu’s proxy statement for its 2019 annual meeting of stockholders, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the interests of such individuals in the proposed merger will be included in the joint proxy statement/prospectus relating to the proposed merger when it is filed with the SEC. These documents (when available) may be obtained free of charge from the SEC’s website at www.sec.gov, Synacor’s website at www.synacor.com and Qumu’s website at www.qumu.com. The contents of the websites referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.

Synacor, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

		March 31, 2020		December 31, 2019	
Assets	
Current assets:						
Cash and cash equivalents		$	8,922 	 		$	10,966 	 	
Accounts receivable, net		14,820 	 		20,532 	 	
Prepaid expenses and other current assets		4,181 	 		2,989 	 	
Total current assets		27,923 	 		34,487 	 	
Property and equipment, net		14,234 	 		14,948 	 	
Operating lease right-of-use assets		4,051 	 		4,765 	 	
Goodwill		15,934 	 		15,948 	 	
Intangible assets		7,875 	 		8,411 	 	
Other assets		1,136 	 		1,319 	 	
Total Assets		$	71,153 	 		$	79,878 	 	
						
Liabilities and Stockholders' Equity					
Current liabilities:					
Accounts payable		$	12,588 	 		$	12,583 	 	
Accrued expenses and other current liabilities		3,313 	 		5,878 	 	
Current portion of deferred revenue		5,952 	 		6,509 	 	
Current portion of long-term debt and finance leases		1,819 	 		2,529 	 	
Current portion of operating lease liabilities		1,826 	 		2,165 	 	
Total current liabilities		25,498 	 		29,664 	 	
Long-term portion debt and finance leases		986 	 		729 	 	
Deferred revenue		2,295 	 		2,846 	 	
Long-term portion of operating lease liabilities		2,411 	 		2,366 	 	
Deferred income taxes		295 	 		275 	 	
Other long-term liabilities		341 	 		334 	 	
Total Liabilities		31,826 	 		36,214 	 	
Stockholders' Equity:							
Common stock		403 	 		401 	 	
Treasury stock		(1,971)	 		(1,931)	 	
Additional paid-in capital		146,844 	 		146,460 	 	
Accumulated deficit		(105,272)	 		(100,747)	 	
Accumulated other comprehensive loss		(677)	 		(519)	 	
Total stockholders’ equity		39,327 	 		43,664 	 	
Total Liabilities and Stockholders' Equity		$	71,153 	 		$	79,878 	 	

Synacor, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share amounts)
(Unaudited)

		Three Months Ended March 31,	
		2020		2019	
								
Revenue		$	20,583 	 			$	31,824 	 	
Costs and operating expenses:								
Cost of revenue (1)		10,729 	 			16,506 	 	
Technology and development (1)(2)		3,108 	 			4,546 	 	
Sales and marketing (2)		4,368 	 			5,991 	 	
General and administrative (1)(2)		4,466 	 			4,465 	 	
Depreciation and amortization		2,214 	 			2,435 	 	
Total costs and operating expenses		24,885 	 			33,943 	 	
Loss from operations		(4,302)	 		(2,119)	 	
Other income (expense), net		167 	 		216 	 	
Interest expense		(59)	 		(64)	 	
Loss before income taxes		(4,194)	 		(1,967)	 	
Provision for income taxes		331 	 		277 	 	
Net loss		$	(4,525)	 		$	(2,244)	 	
Net loss per share:					
Basic		$	(0.11)	 		$	(0.06)	 	
Diluted		$	(0.11)	 		$	(0.06)	 	
Weighted average shares used to compute net loss per share:					
Basic		39,677,738 	 		39,038,642 	 	
Diluted		39,677,738 	 		39,038,642 	 	
Notes:					
(1)Exclusive of depreciation and amortization shown separately.			
(2)Includes stock-based compensation as follows:			
		Three Months Ended March 31,	
		2020		2019	
Technology and development		$	57 	 		$	103 	 	
Sales and marketing		101 	 		115 	 	
General and administrative		219 	 		113 	 	
		$	377 	 		$	331 	 	

Synacor, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands)
(Unaudited)

The following table presents a reconciliation of net loss to adjusted EBITDA for each of the periods indicated:

		Three Months Ended March 31,	
		2020		2019	
Reconciliation of Adjusted EBITDA:					
Net loss		$	(4,525)	 		$	(2,244)	 	
Provision for income taxes		331 	 		277 	 	
Interest expense		59 	 		64 	 	
Other expense, net		(167)	 		(216)	 	
Depreciation and amortization		2,732 	 		2,487 	 	
Asset impairment		— 	 		226 	 	
Stock-based compensation expense		377 	 		331 	 	
Restructuring costs		60 	 		— 	 	
Certain professional services and legal fees*		1,446 	 		779 	 	
Adjusted EBITDA		$	313 	 		$	1,704 	 	

						
*	Certain legal & professional services fees" includes legal fees and other related expenses outside the ordinary course of business, as well as fees and expenses related to merger and acquisition activities.	

Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

		Three Months Ended March 31,	
		2020		2019	
Cash Flows from Operating Activities:					
Net loss		$	(4,525)	 			$	(2,244)	 	
Adjustments to reconcile net loss to net cash and cash equivalents
provided by (used in) operating activities:					
Depreciation and amortization		2,740 	 			2,487 	 	
Asset impairment		— 	 			226 	 	
Stock-based compensation expense		377 	 		331 	 	
Provision for deferred income taxes		20 	 		20 	 	
Change in allowance for doubtful accounts		4 	 		38 	 	
Changes in operating assets and liabilities:							
Accounts receivable, net		5,708 	 		4,522 	 	
Prepaid expenses and other assets		(1,017)	 		(432)	 	
Operating lease right-of-use assets and liabilities, net		(59)	 		29 	 	
Accounts payable, accrued expenses and other liabilities		(2,408)	 		(4,598)	 	
Deferred revenue		(628)	 		(684)	 	
Net cash provided by (used in) operating activities		212 	 		(305)	 	
Cash Flows from Investing Activities:							
Purchases of property and equipment		(965)	 		(1,325)	 	
Net cash used in investing activities		(965)	 		(1,325)	 	
Cash Flows from Financing Activities:							
Repayments on long-term debt and finance leases		(1,107)	 		(694)	 	
Proceeds from exercise of common stock options		— 	 		37 	 	
	
Purchase of treasury stock and shares received to satisfy minimum tax
withholdings		(40)	 		— 	 	
Net cash used in financing activities		(1,147)	 		(657)	 	
Effect of exchange rate changes on cash and cash equivalents		(144)	 		(140)	 	
Net decrease in Cash and Cash equivalents		(2,044)	 		(2,427)	 	
Cash and cash equivalents, beginning of period		10,966 	 		15,921 	 	
Cash and cash equivalents, end of period		$	8,922 	 		$	13,494 	 	

Synacor, Inc.
Segment Results
(In thousands except percentages)
(Unaudited)
The Company operates its business in two reportable segments which are determined on the basis of the products and services provided to customers, identified as follows:
(i) Software & Services, which includes email / collaboration (Zimbra) and identity management (Cloud ID).
(ii) Portal & Advertising, which includes managed portals and advertising solutions for publishers.
The following table presents the key segment financial measures for the periods indicated. Please refer to the Reconciliation of GAAP to Non-GAAP Measures schedule for the reconciliation of Adjusted EBITDA.

		Three Months Ended March 31,	
		2020		2019		% Change	
Segment Revenue:							
Software & Services		$	11,062 	 		$	11,158 	 		(0.9)	%	
Portal & Advertising		9,521 	 		20,666 	 		(53.9)	%	
Total		$	20,583 	 		$	31,824 	 		(35.3)	%	
							
Segment Adjusted EBITDA:						
Software & Services		$	3,528 	 		$	2,794 	 		26.3 	%	
Portal & Advertising		(241)	 		2,621 	 		(109.2)	%	
Unallocated Corporate Expense		(2,974)	 		(3,711)	 		19.9 	%	
Total		$	313 	 		$	1,704 	 		(81.6)	%	
							
Segment Adjusted EBITDA margin*							
Software & Services		31.9 	%		25.0 	%		690 bps	
Portal & Advertising		(2.5)	%		12.7 	%		-1520 bps	
Total		1.5 	%		5.4 	%		-380 bps	

* Adjusted EBITDA as a percent of revenue
The following tables presents a disaggregation of segment revenue for the periods indicated based upon the accounting definition of revenue recognition:
(i) Recurring = revenue recognized over time
(ii) Non-recurring = revenue recognized at a point in time

																					
		Three Months Ended March 31,	
		2020		2019		% Change	
Software & Services Revenue:							
Recurring		$	8,330 	 			$	8,514 	 		(2.2)	%	
Non-recurring		2,732 	 			2,284 	 		19.6 	%	
Discontinued Products **		— 	 		360 	 		(100.0)	%	
Total		$	11,062 	 			$	11,158 	 		(0.9)	%	
							
Portal & Advertising Revenue:							
Recurring		$	1,224 	 			$	1,506 	 		(18.7)	%	
Non-recurring		8,297 	 			19,160 	 		(56.7)	%	
Total		$	9,521 	 			$	20,666 	 		(53.9)	%	
											
Total Revenue:											
Recurring		$	9,554 	 			$	10,020 	 		(4.7)	%	
Non-recurring		11,029 	 			21,444 	 		(48.6)	%	
Discontinued Products **		— 	 			360 	 		(100.0)	%	
Total		$	20,583 	 			$	31,824 	 		(35.3)	%	

** VAM video product line which was discontinued during Q1 2019.

Synacor, Inc.
Reconciliation of Adjusted Financial Measures
(In thousands except per share amounts)
(Unaudited)

		Three months ended March 31, 2020	
		Per GAAP Statements		Asset Impairment		Restructuring Costs		Certain Legal & Professional Fees		Adjusted Non-GAAP	

											
Revenue		$	20,583 	 												$	20,583 	 	
Costs and operating expenses:																	
Cost of revenue (1)		10,729 	 												10,729 	 	
Technology and development (1)(2)		3,108 	 												3,108 	 	
Sales and marketing (2)		4,368 	 												4,368 	 	
General and administrative (1)(2)		4,466 	 						(60)	 		(1,446)	 		2,960 	 	
Depreciation and amortization		2,214 	 												2,214 	 	
Total costs and operating expenses		24,885 	 		— 	 			(60)	 		(1,446)	 		23,379 	 	
Loss from operations		(4,302)	 		— 	 			60 	 		1,446 	 		(2,796)	 	
Other income, net		167 	 												167 	 	
Interest Expense		(59)	 												(59)	 	
Loss before income taxes		(4,194)	 		— 	 			60 	 		1,446 	 		(2,688)	 	
Provision for income taxes (3)		331 	 												331 	 	
Net loss		$	(4,525)	 		$	— 	 			$	60 	 		$	1,446 	 		$	(3,019)	 	
Diluted EPS		$	(0.11)	 		$	— 	 			$	— 	 		$	0.04 	 		$	(0.08)	 	
											
		Three months ended March 31, 2019	
		Per GAAP Statements		Asset Impairment		Restructuring Costs		Certain Legal & Professional Fees		Adjusted Non-GAAP	

											
Revenue			$	31,824 	 												$	31,824 	 	
Costs and operating expenses:																		
Cost of revenue (1)			16,506 	 												16,506 	 	
Technology and development (1)(2)			4,546 	 												4,546 	 	
Sales and marketing (2)			5,991 	 												5,991 	 	
General and administrative (1)(2)			4,465 	 		(226)	 						(779)	 		3,460 	 	
Depreciation and amortization			2,435 	 												2,435 	 	
Total costs and operating expenses			33,943 	 		(226)	 			— 	 		(779)	 		32,938 	 	
Loss from operations		(2,119)	 		226 	 			— 	 		779 	 		(1,114)	 	
Other income, net		216 	 												216 	 	
Interest Expense		(64)	 												(64)	 	
Loss before income taxes		(1,967)	 		226 	 			— 	 		779 	 		(962)	 	
Provision for income taxes (3)		277 	 												277 	 	
Net loss		$	(2,244)	 		$	226 	 			$	— 	 		$	779 	 		$	(1,239)	 	
Diluted EPS		$	(0.06)	 		$	0.01 	 			$	— 	 		$	0.02 	 		$	(0.03)	 	

Notes:
(1)Exclusive of depreciation and amortization shown separately.
(2)Includes stock-based compensation
(3)No income tax effects to adjustments presented due to full valuation allowance.

Synacor’s management believes that certain non-GAAP measures of Adjusted Net Loss and Adjusted Diluted Earnings per Share provide investors with additional information to assess the Company’s financial performance. These measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures.

Contact:
FNK IR
Rob Fink
+1.646.809.4048
rob@fnkir.com

Meredith Roth VP, Marketing & Corporate Communications
Synacor
+1.770.846.1911
mroth@synacor.com