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): March 15, 2017
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)	 	(Zip Code)	
Registrant’s Telephone Number, Including Area Code: (716) 853-1362
 
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:

☐	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))	

 
Item 2.02.	Results of Operations and Financial Condition.	
 
On March 15, 2017, Synacor, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2016 and for the fiscal year ended December 31, 2016. 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.

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

Exhibit No.	  	Description	
 	 	
99.1	  	Press release issued by Synacor, Inc. dated March 15, 2017	

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 thereunto duly authorized.
 
 	 	Synacor, Inc.	
 	 	 	 	
Date: March 15, 2017	 	By:	/s/ William J. Stuart	
 	 	 	William J. Stuart	
 	 	 	Chief Financial Officer and Secretary	

 
 
Exhibit 99.1

Synacor Reports 16% Revenue Growth for 2016 and
Announces Guidance of About 30% Growth for 2017
 
 	•	FY 2016 revenue of $127.4 million, a 16% year-over-year increase	
 	•	FY 2017 revenue guidance of $160 million to $170 million, reflecting 30% year-over-year growth at midpoint of range	
 	•	Synacor on track with AT&T launch; Announces several customer wins in email and video	
 
BUFFALO, N.Y., March 15, 2017 - Synacor Inc. (NASDAQ: SYNC), the trusted multiscreen technology and monetization partner for video, internet and communications providers, device manufacturers, and enterprises, today announced its financial results for the quarter and year ended December 31, 2016.
 
“We are seeing strong market validation of Synacor’s portal, email, advertising and video products,” said Synacor CEO Himesh Bhise. “We continue to make excellent progress toward the launch and deployment of the AT&T portal, and we announced several new customer wins in email and video .
 
“We begin 2017 a stronger Synacor, well positioned in attractive and growing digital markets. We expect accelerated revenue growth of about 30% this year, as we continue to progress on our Path to 3/30/300 .”
 
Recent Highlights
 
 	•	Made excellent progress on plan to launch the new AT&T desktop and mobile web portal in the first half of 2017, and deployment will be completed through 2017.	
 
 	•	Launched TV Everywhere video apps for GVTC and Consolidated Communications, powered by Synacor’s end-to-end video platform - now available in the Apple App Store and Google Play Store.	
 
 	•	Selected to provide hosted email service for a top 10 U.S. service provider.	
 
 	•	Added several new Zimbra email customers, including a major international IT organization; a European financial services company; an international state-owned seaport enterprise; and an international police department.	
 
FY 2016 and Q4 2016 Financial Results
 
Revenue : For fiscal 2016, total revenue was $127.4 million, an increase of 16% compared with fiscal 2015. For the fourth quarter of 2016, total revenue was $34.9 million, an increase of 8% compared with the fourth quarter of 2015.
 
 Net Income : For fiscal 2016, net loss was $10.7 million, compared with net loss of $3.5 million in fiscal 2015, reflecting the investment to support the AT&T portal business. Earnings per share, or EPS, was a loss of $0.36 compared with a loss of $0.12 in fiscal 2015. For the fourth quarter of 2016, net loss was
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$3.1 million compared with a net loss of $0.4 mi llion in the fourth quarter of 2015.  EPS was a loss of $0.10 compared with a loss of $0.01 in the fourth quarter of 2015.
 
Adjusted EBITDA : For fiscal 2016, adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), which excludes stock-based compensation expense, was $3.2 million compared with $7.6 million for fiscal 2015. The fiscal 2016 adjusted EBITDA includes $6.3 million in investment (operating expense) to support the AT&T portal business. For the fourth quarter of 2016, adjusted EBITDA was $1.2 million, which includes $2.2 million in investment (operating expense) to support the AT&T portal business. This compares with $2.9 million in adjusted EBITDA for the fourth quarter of 2015.
 
Cash : Synacor ended the fourth quarter of 2016 with $14.3 million in cash and cash equivalents, compared with $15.0 million at the end of the prior quarter. Cash generated by operating activities was $1.5 million for the fourth quarter of 2016, despite the investment in the AT&T portal business.  
 
Guidance
 
Based on information available as of March 15, 2017, Synacor is providing financial guidance for fiscal 2017 and the first quarter of fiscal 2017 as follows:
 
 	•	Fiscal 2017 Guidance : Revenue for the full year of 2017 is projected to grow 26% to 33% to be in the range of $160.0 million to $170.0 million. Synacor expects to report a net loss in the range of $2.8 million to $8.0 million and adjusted EBITDA in the range of $6.0 million to $10.0 million, which excludes stock-based compensation expense of $2.8 million to $3.2 million, depreciation and amortization of $8.8 million to $9.6 million, and tax, interest expense and other income and expense of $1.2 million.  	
 	•	Q1 2017 Guidance : Revenue for the first quarter of 2017 is projected to be in the range of $26.0 million to $28.0 million. Synacor expects to report a net loss of $6.2 million to $7.5 million and adjusted EBITDA of $(3.0) million to $(4.0) million, which excludes stock-based compensation expense of $0.7 million to $0.8 million, depreciation and amortization of $2.2 million to $2.4 million and tax, interest expense and other income and expense of $0.3 million.	
 
Net Income and adjusted EBITDA guidance for the first quarter and fiscal year 2017 reflect a portion of the $10 million investment planned from the second quarter of 2016 through the first quarter of 2017 to deploy portal services for AT&T.  
 
Conference Call Details
 
Synacor will host a conference call today at 5:00 p.m. ET to discuss the fourth-quarter and year-end financial results with the investment community. Investors interested in listening to the webcast should log on to the “Investors” section of Synacor’s website under the subheading “Events and Presentations,” located at www.synacor.com.  To participate, please login approximately 10 minutes prior to the webcast. For those without access to the internet, the call may be accessed toll-free via phone at (877) 201-0168, with conference ID 75167396, or callers outside the U.S. may dial (647) 788-4901. Following completion of the call, a recorded webcast replay will be available on Synacor's website. To listen to the telephone replay, call toll-free (800) 585-8367, or callers outside the U.S. may dial (416) 621-4642. The conference ID is 75167396.

 
 
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About Synacor
 
Known for managed portals and apps, advertising, email and collaboration, authentication, and end-to-end advanced video services, Synacor (Nasdaq:SYNC) is the trusted technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, and enterprises. We deliver modern, multiscreen experiences and advertising to their consumers that require scale, actionable data and sophisticated implementation. Synacor enables our customers to better engage with their consumers. www.synacor.com
 
Non-GAAP Financial Measures
 
We use 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 income, 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.
 
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 expectations related to the AT&T contract, its first-quarter and fiscal year 2017 guidance, 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, Synacor’s results could differ materially from the results expressed or implied by the forward-looking statements we make.
 
The risks and uncertainties referred to above include - but are not limited to - risks associated with: execution of our plans and strategies, including execution against our agreement with AT&T; 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.
 
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Further information on these and other factors that could affect Synacor’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" in the company's most recent Form 10-Q filed with the SEC. These documents are available on the SEC Filings section of the Investor Inform ation section of the company's website at http://investor.synacor.com/. All information provided in this release and in the attachments is available as of March 15, 2017, and Synacor undertakes no duty to update this information.
 
Contacts
 
Investor Contact:
David Calusdian, President
Sharon Merrill Associates
ir@synacor.com
617-542-5300
 
Press Contact:
Matt Wolfrom, VP, Corporate Communications
Synacor
Matt.Wolfrom@synacor.com
716-362-3880

 

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Synacor, Inc.	
Condensed Consolidated Balance Sheets	
(In thousands)	
(Unaudited)	
 	 	 	 	
 	December 31,	 	December 31,	
 	2016	 	2015	
Assets	 	 	 	
Current assets:	 	 	 	
Cash and cash equivalents	$                 14,315	 	$                     15,697	
Accounts receivable, net	27,386	 	24,341	
Prepaid expenses and other current assets	4,862	 	3,290	
Total current assets	46,563	 	43,328	
Property and equipment, net	14,406	 	14,377	
Goodwill	15,943	 	15,187	
Intangible assets	14,837	 	14,798	
Other long-term assets	1,650	 	1,336	
Total Assets	$                93,399	 	$                    89,026	
 	 	 	 	
Liabilities and Stockholders' Equity	 	 	 	
Current liabilities:	 	 	 	
Accounts payable	$                 18,769	 	$                        9,004	
Accrued expenses and other current liabilities	11,684	 	9,765	
Current portion of deferred revenue	12,149	 	11,295	
Current portion of capital lease obligations	982	 	1,574	
Total current liabilities	43,584	 	31,638	
Long-term portion of capital lease obligations	1,014	 	1,007	
Long-term debt	5,000	 	5,000	
Deferred revenue	3,917	 	3,225	
Other long-term liabilities	235	 	2,052	
Total Liabilities	53,750	 	42,922	
Stockholders' Equity:	 	 	 	
Common stock	316	 	306	
Treasury stock	(1,547)	 	(1,332)	
Additional paid-in capital	117,747	 	113,238	
Accumulated deficit	(76,850)	 	(66,110)	
Accumulated other comprehensive (loss) income	(17)	 	2	
Total stockholders’ equity	39,649	 	46,104	
Total Liabilities and Stockholders' Equity	$                93,399	 	$                    89,026	

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Synacor, Inc.	
Condensed Consolidated Statements of Operations	
(In thousands except share and per share amounts)	
(Unaudited)	
 	 	 	 	 	 	 	 	
 	Three months ended	 	For the Year Ended	
 	December 31,	 	December 31,	
 	2016	 	2015	 	2016	 	2015	
 	 	 	 	 	 	 	 	
Revenue	$     34,916	 	$           32,448	 	$   127,373	 	$   110,245	
Costs and operating expenses:	 	 	 	 	 	 	 	
Cost of revenue (1)	18,047	 	14,218	 	59,146	 	54,423	
Technology and development (1)(2)	6,357	 	6,219	 	25,612	 	20,007	
Sales and marketing (2)	5,669	 	4,797	 	22,846	 	16,272	
General and administrative (1)(2)	4,668	 	5,106	 	19,695	 	15,543	
Depreciation and amortization	2,453	 	2,185	 	9,235	 	6,901	
Total costs and operating expenses	37,194	 	32,525	 	           136,534	 	113,146	
 	 	 	 	 	 	 	 	
Loss from operations	(2,278)	 	(77)	 	(9,161)	 	(2,901)	
 	 	 	 	 	 	 	 	
Other (expense) income	(248)	 	16	 	(42)	 	(16)	
Interest expense	(91)	 	(102)	 	(318)	 	(245)	
Loss before income taxes and equity interest	(2,617)	 	(163)	 	(9,521)	 	(3,162)	
Provision for income taxes	436	 	209	 	1,219	 	239	
Loss on equity interest	—	 	(16)	 	—	 	(73)	
Net loss	$     (3,053)	 	$              (388)	 	$  (10,740)	 	$     (3,474)	

Net loss per share:	 	 	 	 	 	 	 	
Basic	$       (0.10)	 	$             (0.01)	 	$       (0.36)	 	$       (0.12)	
Diluted	$       (0.10)	 	$             (0.01)	 	$       (0.36)	 	$       (0.12)	
 	 	 	 	 	 	 	 	
Weighted average shares used to compute net loss per share:	 	 	 	 	 	 	 	
Basic	30,677,457	 	     29,977,417	 	30,251,685	 	28,213,838	
Diluted	30,677,457	 	    29,977,417	 	30,251,685	 	28,213,838	
 	 	 	 	 	 	 	 	
Notes:	 	 	 	 	 	 	 	
(1) Exclusive of depreciation shown separately.	 	 	 	 	 	 	 	
(2) Includes stock-based compensation as follows:	 	 	 	 	 	 	 	
 	Three months ended	 	For the Year Ended	
 	December 31,	 	December 31,	
 	2016	 	2015	 	2016	 	2015	
Technology and development	$            240	 	$                  243	 	$            921	 	$            936	
Sales and marketing	180	 	226	 	784	 	942	
General and administrative	247	 	295	 	1,066	 	1,237	
 	$            667	 	$                  764	 	$        2,771	 	$        3,115	

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Synacor, Inc.	
Condensed Consolidated Statements of Cash Flows	
(In thousands)	
(Unaudited)	
 	 	 	 	
 	For the Year Ended	
 	December 31,	
 	2016	 	2015	
Cash Flows from Operating Activities:	 	 	 	
Net loss	$ (10,740)	 	$ (3,474)	
Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	
Depreciation and amortization	9,235	 	6,901	
Stock-based compensation expense	2,771	 	3,115	
Capitalized software impairment	334	 	—	
Provision for deferred income taxes	143	 	—	
Loss in equity investment	—	 	73	
Change in assets and liabilities net of effect of acquisition:	 	 	 	
Accounts receivable, net	(2,080)	 	(362)	
Prepaid expenses and other current assets	(1,572)	 	(547)	
Other long-term assets	(314)	 	(167)	
Accounts payable	8,706	 	(3,579)	
Accrued expenses and other current liabilities	580	 	2,090	
Deferred revenue	1,546	 	3,478	
Other long-term liabilities	(360)	 	122	
Net cash provided by operating activities	8,249	 	7,650	
Cash Flows from Investing Activities:	 	 	 	
Purchases of property and equipment	(5,939)	 	(3,236)	
Acquisition net of cash acquired	(2,500)	 	(17,260)	
Net cash used in investing activities	(8,439)	 	(20,496)	
Cash Flows from Financing Activities:	 	 	 	
Proceeds from bank financing	—	 	5,000	
Repayments on capital lease obligations	(1,672)	 	(1,442)	
Proceeds from exercise of common stock options	1,560	 	70	
Purchase of treasury stock and shares received to satisfy minimum tax withholding liabilities	(215)	 	(190)	
Payment of contingent consideration	(860)	 	(495)	
Net cash (used in) provided by financing activities	(1,187)	 	2,943	
Effect of exchange rate changes on cash and cash equivalents	(5)	 	—	
Net decrease in Cash and Cash Equivalents	(1,382)	 	(9,903)	
Cash and Cash Equivalents at beginning of period	15,697	 	25,600	
Cash and Cash Equivalents at end of period	$   14,315	 	$ 15,697	

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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	 	For the Year Ended	
 	December 31,	 	December 31,	
 	2016	 	2015	 	2016	 	2015	
 	 	 	 	 	 	 	 	
Reconciliation of Adjusted EBITDA:	 	 	 	 	 	 	 	
Net loss	$ (3,053)	 	$     (388)	 	$(10,740)	 	$ (3,474)	
Provision for income taxes	436	 	209	 	1,219	 	239	
Interest expense	91	 	102	 	318	 	245	
Other expense (income)	248	 	(16)	 	42	 	16	
Depreciation and amortization	2,453	 	2,185	 	9,235	 	6,901	
Capitalized software impairment	334	 	—	 	334	 	—	
Stock-based compensation expense	667	 	764	 	2,771	 	3,115	
Loss on equity interest	—	 	16	 	—	 	73	
Acquisition costs	—	 	—	 	—	 	478	
Adjusted EBITDA	$    1,176	 	$    2,872	 	$    3,179	 	$    7,593	
 
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