Document and Entity Information

6 Months Ended

Jun. 30, 2014

Aug. 8, 2014

Document and Entity Information [Abstract]

Entity Registrant Name

Synacor, Inc.

Entity Central Index Key

0001408278

Document Type

10-Q

Document Period End Date

Jun. 30, 2014

Amendment Flag

false

Document Fiscal Year Focus

2014

Document Fiscal Period Focus

Q2

Current Fiscal Year End Date

--12-31

Entity Filer Category

Non-accelerated Filer

Entity Common Stock, Shares Outstanding

27,612,941

Condensed Consolidated Balance Sheets—Unaudited (USD $)

In Thousands, unless otherwise specified

Jun. 30, 2014

Dec. 31, 2013

CURRENT ASSETS:

Cash and cash equivalents

$ 25,664

$ 36,397

Accounts receivable—net of allowance

17,769

14,569

Prepaid expenses and other current assets

1,794

1,691

Deferred income taxes

1,151

314

Total current assets

46,378

52,971

PROPERTY AND EQUIPMENT—Net

15,100

14,085

DEFERRED INCOME TAXES, NON-CURRENT

4,969

4,455

OTHER LONG-TERM ASSETS

182

348

GOODWILL

1,565

CONVERTIBLE PROMISSORY NOTE

1,000

INVESTMENT IN EQUITY INTEREST

320

365

TOTAL ASSETS

69,514

74,789

CURRENT LIABILITIES:

Accounts payable

10,715

13,573

Accrued expenses and other current liabilities

6,375

5,177

Current portion of capital lease obligations

1,532

1,946

Total current liabilities

18,622

20,696

LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS

1,256

885

OTHER LONG-TERM LIABILITIES

304

977

Total liabilities

20,182

22,558

COMMITMENTS AND CONTINGENCIES

0

STOCKHOLDERS’ EQUITY:

Common stock, $0.01 par value—100,000,000 shares authorized, 27,684,598 issued and 27,365,098 outstanding at December 31, 2013, and 100,000,000 authorized, 27,923,365 issued and 27,374,815 shares outstanding at June 30, 2014

279

277

Preferred stock, $0.01 par value—10,000,000 shares authorized, no shares issued and outstanding at June 30, 2014

0

Treasury stock—at cost, 319,500 shares at December 31, 2013 and 551,163 shares at June 30, 2014

(1,138)

(569)

Additional paid-in capital

103,809

102,226

Accumulated deficit

(53,629)

(49,705)

Accumulated other comprehensive income

11

2

Total stockholders’ equity

49,332

52,231

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 69,514

$ 74,789

Condensed Consolidated Balance Sheets—Unaudited (Parenthetical) (USD $)

In Thousands, except Share data, unless otherwise specified

Jun. 30, 2014

Dec. 31, 2013

Statement of Financial Position [Abstract]

Allowance for doubtful accounts

$ 176

$ 76

Common stock, par value (in dollars per share)

$ 0.01

Common stock, shares authorized

100,000,000

Common stock, shares issued

27,923,365

27,684,598

Common stock, shares outstanding

27,374,815

27,365,098

Preferred stock, par value (in dollars per share)

$ 0.01

Preferred stock, shares authorized

10,000,000

Preferred stock, shares issued

0

Preferred stock, shares outstanding

0

Treasury stock, shares

551,163

319,500

Condensed Consolidated Statements of Operations—Unaudited (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Income Statement [Abstract]

REVENUE

$ 24,191

$ 26,708

$ 49,439

$ 55,851

COSTS AND OPERATING EXPENSES:

Cost of revenue (exclusive of depreciation shown separately below)

13,146

14,017

27,022

29,781

Research and development (exclusive of depreciation shown separately below)

7,120

7,336

14,612

14,201

Sales and marketing

2,457

2,147

4,594

4,277

General and administrative (exclusive of depreciation shown separately below)

3,499

2,957

6,598

6,101

Depreciation

1,117

1,138

2,175

2,268

Gain on sale of domain

(1,000)

0

(1,000)

0

Total costs and operating expenses

26,339

27,595

54,001

56,628

LOSS FROM OPERATIONS

(2,148)

(887)

(4,562)

(777)

OTHER (EXPENSE) INCOME

6

(8)

14

(15)

INTEREST EXPENSE

(23)

(43)

(111)

(101)

LOSS BEFORE INCOME TAXES AND EQUITY INTEREST

(2,165)

(938)

(4,659)

(893)

BENEFIT FOR INCOME TAXES

(641)

(204)

(1,325)

(186)

LOSS IN EQUITY INTEREST

(344)

0

(590)

0

NET LOSS

(1,868)

(734)

(3,924)

(707)

Net loss attributable to noncontrolling interests

0

97

0

97

NET LOSS ATTRIBUTABLE TO SYNACOR, INC.

$ (1,868)

$ (637)

$ (3,924)

$ (610)

NET LOSS ATTRIBUTABLE TO SYNACOR, INC. PER SHARE:

Basic (in dollars per share)

$ (0.07)

$ (0.02)

$ (0.14)

$ (0.02)

Diluted (in dollars per share)

$ (0.07)

$ (0.02)

$ (0.14)

$ (0.02)

WEIGHTED AVERAGE SHARES USED TO COMPUTE NET LOSS PER SHARE:

Basic (in shares)

27,360,588

27,311,892

27,397,695

27,273,671

Diluted (in shares)

27,360,588

27,311,892

27,397,695

27,273,671

Condensed Consolidated Statements of Comprehensive Loss—Unaudited (USD $)

In Thousands, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Statement of Comprehensive Income [Abstract]

Net loss

$ (1,868)

$ (734)

$ (3,924)

$ (707)

Other comprehensive income (loss):

Change in foreign currency translation adjustment

(4)

1

9

7

Comprehensive loss

(1,872)

(733)

(3,915)

(700)

Comprehensive loss attributable to noncontrolling interests

0

97

0

97

Comprehensive loss attributable to Synacor, Inc.

$ (1,872)

$ (636)

$ (3,915)

$ (603)

Condensed Consolidated Statements of Cash Flows—Unaudited (USD $)

In Thousands, unless otherwise specified

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$ (3,924)

$ (707)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

2,175

2,268

Stock-based compensation expense

1,528

1,179

Gain on sale of domain

(1,000)

0

Provision for deferred income taxes

(1,351)

(198)

Loss in equity interest

590

0

Change in assets and liabilities, net of effect of acquisition:

Accounts receivable, net

(2,200)

278

Prepaid expenses and other current assets

(103)

(105)

Other long-term assets

166

(17)

Accounts payable

(2,179)

(1,657)

Accrued expenses and other current liabilities

703

(1,269)

Other long-term liabilities

(178)

29

Net cash used in operating activities

(5,773)

(199)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(2,796)

(2,502)

Investment in equity interest

(545)

0

Cash paid for business acquisition

0

(500)

Net cash used in investing activities

(3,341)

(3,002)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments on capital lease obligations

(1,117)

(1,139)

Proceeds from exercise of common stock options

59

131

Purchase of treasury stock

(562)

0

Net cash used in financing activities

(1,620)

(1,008)

Effect of exchange rate changes on cash and cash equivalents

1

7

NET DECREASE IN CASH AND CASH EQUIVALENTS

(10,733)

(4,202)

CASH AND CASH EQUIVALENTS—Beginning of period

36,397

41,944

CASH AND CASH EQUIVALENTS—End of period

25,664

37,742

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest

111

91

Cash paid for income taxes

0

138

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:

Property and equipment acquired under capital lease obligations

1,074

0

Accrued property and equipment expenditures

40

822

Treasury stock received to satisfy minimum tax withholding liabilities

$ 6

$ 0

The Company and Summary of Significant Accounting Policies

Synacor, Inc., together with its consolidated subsidiary, Synacor Canada, Inc. (collectively, the “Company”), is a leading provider of start experiences (startpages and homescreens), TV Everywhere, Identity Management (IDM) and various cloud-based services across multiple devices for cable, satellite, telecom and consumer electronics companies. The Company is also a leading provider of authentication and aggregation solutions enabling the delivery of personalized online content. The Company's technology allows its customers to package a wide array of personalized online content and cloud-based services with their high-speed Internet, communications, television and other digital offerings. The Company's customers offer the Company's services under their own brands on Internet-enabled devices such as PCs, tablets, smartphones and connected TVs.

Basis of Presentation — The interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiary. Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise have the power to control, are accounted for using the equity method and are included as investments in equity interest on the condensed consolidated balance sheets. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period and should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (as amended).

Accounting Estimates — The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Such estimates primarily relate to unsettled transactions and events as of the date of the consolidated financial statements. Accordingly, actual results may differ from estimated amounts.

Concentrations of Risk — As of December 31, 2013 and June 30, 2014, and for the three and six months ended June 30, 2013 and 2014, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable and revenue as follows:



	Accounts Receivable
	December 31, 2013		June 30, 2014
Google	47	%	24	%
Display Advertising Partner	11	%	18	%



	Revenue				Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Google	51	%	46	%	53	%	49	%

For the three and six months ended June 30, 2013 and 2014, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to customers for their supply of Internet traffic on the Company's start experiences:



	Cost of Revenue				Cost of Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Customer A	20	%	23	%	20	%	23	%
Customer B (1)	13		N/A		14		12
Customer C	10		10		12		11
Customer D	11		10		12		10

Notes:


(1)	For the three months ended June 30, 2014, the cost of revenue-share payments received by Customer B were less than 10%.

Acquisitions — In January 2012, the Company acquired the assets of Carbyn, Inc., or Carbyn, an Ontario, Canada-based company. The assets acquired are principally comprised of mobile device software and technology and other intellectual property, which the Company expects to enhance its efforts in the development of next generation web applications for

mobile devices. The aggregate purchase price was $1,100 for the acquired assets, of which $600 was paid upon consummation of the acquisition and the remaining $500 was paid in April 2013. In addition, the Company hired seven employees from Carbyn who accepted employment with Synacor Canada, Inc. The acquisition and its impact on the consolidated financial statements are not material. The purchase price was allocated to the assets acquired based on their respective fair values as of the acquisition date, with the amount exceeding the fair value recorded as goodwill of $819, which is expected to be deductible for tax purposes.

In November 2013, the Company acquired the assets of Teknision, Inc., or Teknision, an Ontario, Canada-based company. Teknision has created a development framework that accelerates the production of home screen and other Android applications. The Company expects to leverage the framework to enable a range of customer applications for Android devices. The Company also expects to enhance its presence in mobile and provide a platform for custom Android launchers and intelligent home screens for wireless carriers and consumer electronics companies. The aggregate purchase price is up to $1,005 for the acquired assets, of which $510 was paid upon consummation of the acquisition and the remaining $495 is due in May 2015 unless such amount is offset in satisfaction of certain indemnification obligations of Teknision. In addition, the Company hired eleven employees from Teknision who accepted employment with Synacor Canada, Inc. The acquisition and its impact on the condensed consolidated financial statements are not material. The purchase price was allocated to the assets acquired based on their respective fair values as of the acquisition date, with the amount exceeding the fair value recorded as goodwill of $746, which is expected to be deductible for tax purposes.

Sale of Domain — In June 2014, the Company executed a transaction to sell a domain name of its legacy business. The sale amounted to $1,000 and the entire amount was recorded as a gain on the sale in the consolidated statement of operations. The Company collected the full amount of the sale in July 2014, and as a result, $1,000 has been included in accounts receivable, net on the consolidated balance sheet.

Recent Accounting Pronouncements — In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the consolidated financial statements.

Investments and Fair Value Measurements

In July 2013, the Company made a $1,000 investment (in the form of a convertible promissory note) in a privately held Delaware corporation called Blazer and Flip Flops, Inc., or B&FF (doing business as The Experience Engine). B&FF is a professional services company whose principals have experience integrating its customers' systems with their consumers' devices, including smartphones and tablets.

The investment in B&FF is considered an available-for-sale security and is reported on the Company’s condensed consolidated balance sheets as a convertible promissory note.

The provisions of the FASB Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures, establish a framework for measuring the fair value in accounting principles generally accepted in the U.S. and establish a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value as follows:

Level 1 - Level 1 inputs are defined as observable inputs such as quoted prices in active markets.

Level 2 - Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Level 3 inputs are unobservable inputs that reflect the Company’s determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including the Company’s own data.

The Company classifies its investment in B&FF within Level 3 because it is valued using unobservable inputs. As of June 30, 2014, the estimated fair value is equal to the carrying amount, which was the purchase price of $1,000.

Property and Equipment - Net

Property and Equipment—Net

Property and equipment, net consisted of the following (in thousands):



	December 31, 2013			June 30, 2014
Computer equipment (1)	$	19,361		$	20,465
Computer software	4,625			5,235
Furniture and fixtures	1,634			1,694
Leasehold improvements	1,044			1,052
Work in process (primarily software development costs)	3,893			5,301
Other	173			173
	30,730			33,920
Less accumulated depreciation (2)	(16,645		)	(18,820		)
Total property and equipment—net	$	14,085		$	15,100

Notes:


(1)	Includes equipment under capital lease obligations of approximately $5,289 and $6,363 as of December 31, 2013 and June 30, 2014, respectively.


(2)	Includes $2,053 and $2,672 of accumulated depreciation of equipment under capital leases as of December 31, 2013 and June 30, 2014, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):



	December 31, 2013		June 30, 2014
Accrued compensation	$	2,787	$	2,729
Accrued content fees	580		1,923
Unearned revenue on contracts	247		504
Other	1,563		1,219
Total	$	5,177	$	6,375

Information About Segment and Geographic Areas

Operating segments are components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a total Company basis, accompanied by information about revenue by major service line for purposes of allocating resources and evaluating financial performance. Profitability measures by service line are not routinely prepared or used. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the Company level. Accordingly, the Company has determined that it has a single reporting segment and operating unit structure.

The following table sets forth revenue and long-lived tangible assets by geographic area (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Revenue
United States	$	26,531	$	24,026	$	55,497	$	49,104
United Kingdom	177		165		354		335
Total revenue	$	26,708	$	24,191	$	55,851	$	49,439



	December 31, 2013		June 30, 2014
Long-lived tangible assets
United States	$	13,825	$	14,971
Netherlands	260		129
Total long-lived tangible assets	$	14,085	$	15,100

Commitments and Contingencies

Contract Commitments —The Company is obligated to make payments under various contracts with vendors and other business partners, principally for revenue-share and content arrangements. Contract commitments as of June 30, 2014 are summarized as follows (in thousands):



Year ending December 31:
2014 (remaining six months)	$	2,408
2015	1,630
2016	1,080
2017	360
2018	—
Due after 5 years	—
Total contract commitments	$	5,478

Litigation — From time to time, the Company is a party to legal actions. In the opinion of management, the outcome of these matters is not expected to have a material impact on the consolidated financial statements of the Company.

Equity

Common Stock — Effective on February 15, 2012, the Company’s board of directors and stockholders approved the Fifth Amended and Restated Certificate of Incorporation. The total number of common shares that the Company is authorized to issue is 100,000,000 with a par value of $0.01 per share.

Preferred Stock — Effective on February 15, 2012, the Company’s board of directors and stockholders approved the Fifth Amended and Restated Certificate of Incorporation. The total number of preferred shares that the Company is authorized to issue is 10,000,000 with a par value of $0.01 per share. None have been issued to date.

Stock Repurchases — Effective February 26, 2014 the Board of Directors approved a Stock Repurchase Program, which authorizes a repurchase of up to $5,000 worth of the Company's outstanding common stock. The Stock Repurchase Program has no expiration date, and may be suspended or discontinued at any time without notice. The Company repurchased all shares with cash resources.

The following table sets forth the shares of common stock repurchased through the program:



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Shares of common stock repurchased	—		207,050		—		229,050
Value of common stock repurchased (in thousands)	$	—	$	507	$	—	$	562

Withhold to Cover — During the six months ended June 30, 2014, certain employees, in lieu of paying withholding taxes on the vesting of certain shares of restricted stock awards, authorized the withholding of 2,613 shares of the Company's common stock to satisfy their minimum statutory tax withholding requirements related to such vesting. These shares were recorded as treasury stock using the cost method at the per share closing price on the date of vesting, for a total of $6. No shares of the Company's common stock were withheld to cover minimum statutory tax withholding requirements during the six months ended June 30, 2013.

Stock-based Compensation

The fair value of each stock option was determined on the date of grant using the Black-Scholes option pricing model, and stock-based compensation is recorded over the requisite service period. The Company recorded $617 and $847 of stock-based compensation expense for the three months ended June 30, 2013 and 2014, respectively. Stock based compensation for the six months ended June 30, 2013 and 2014 amounted to $1,179 and $1,528, respectively. No income tax deduction is allowed for incentive stock options, or ISOs. Accordingly, no deferred income tax asset is recorded for the potential tax deduction related to these options. Expense related to stock option grants of non-qualified stock option ("NSOs") result in a temporary difference, which gives rise to a deferred tax asset.

Total stock-based compensation expense included in the accompanying condensed consolidated statements of operations for the periods presented, is as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Research and development	$	281	$	375	$	542	$	702
Sales and marketing	76		125		152		233
General and administrative	260		347		485		593
Total stock-based compensation expense	$	617	$	847	$	1,179	$	1,528

Stock Option Activity — A summary of the stock option activity for the six months ended June 30, 2014 is presented below:



	Number of Stock Options		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding—January 1, 2014	5,770,168		$	3.85
Granted	589,000		$	2.34
Exercised	(234,255	)	$	0.25
Forfeited	(487,746	)	$	4.01
Outstanding—June 30, 2014	5,637,167		$	3.83	$	672	7.38
Vested and expected to vest—June 30, 2014	5,231,560		$	3.78	$	647	7.28
Vested and exercisable—June 30, 2014	2,933,122		$	3.69	$	505	6.15

Aggregate intrinsic value represents the difference between the Company’s closing stock price of its common stock and the exercise price of outstanding, in-the-money options. The Company’s closing stock price as reported on the NASDAQ as of June 30, 2014 was $2.56. The total intrinsic value of options exercised for the three and six months ended June 30, 2014 amounted to approximately $275 and $517, respectively. The weighted average fair value of options issued during the six months ended June 30, 2014 amounted to $1.31.

As of June 30, 2014, the unrecognized compensation cost related to non-vested options granted, for which vesting is probable, under the plan was approximately $5,552. This cost is expected to be recognized over a weighted-average period of 2.5 years. The total fair value of shares vested was $1,444 for the six months ended June 30, 2014.

Option Modifications — Pursuant to the transition agreement the Company entered into in March 2014 with the former President and CEO, Mr. Frankel's options to purchase common stock of the Company were modified to accelerate vesting for options that would have otherwise been forfeited during the transition period to the beginning of the transition period ("Transition Date"), and the period options are exercisable is now the earlier of the third anniversary of the Transition Date or the original 10 year contractual term of each option. The total incremental expense resulting from Mr. Frankel's modification is $190.

In August 2014, the compensation committee of the Company's board of directors agreed to modify all outstanding employee options with an exercise price of $3.00 or greater, other than options held by directors and executive officers, by resetting the exercise price per share to the closing price of the Company's common stock on August 4, 2014. As a result of the modification, 203 employees had options reset to an exercise price of $2.38. The total incremental compensation expense expected to be recognized is estimated to be from $600 to $700.

RSU Activity — A summary of RSU activity for the three months ended June 30, 2014, is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested—January 1, 2014	45,000		$	5.46
Granted	1,000		$	2.49
Released	(7,125	)	$	5.56
Forfeited	(4,000	)	$	3.68
Unvested—June 30, 2014	34,875		$	5.56
Expected to vest—June 30, 2014	29,644		$	4.73

As of June 30, 2014, total unrecognized compensation cost, adjusted for estimated forfeitures, related to RSUs was approximately $188, which is expected to be recognized over the next 2.5 years.

Investment in Equity Interest

In March 2013, the Company entered into a Joint Venture Agreement, pursuant to which it owns 50% of the outstanding common stock and 100% of the preferred shares of Synacor China, Ltd., or the JV Company. The Company has agreed to provide up to $2 million in funding to the JV Company over the two year period following the initial funding. The Company provided $926 of funding to the JV Company during the year ended December 31, 2013, and $545 of funding during the six months ended June 30, 2014. The JV Company will, through its wholly foreign-owned subsidiary in the People's Republic of China (the “PRC”), supply start experiences, authentication and aggregation solutions for the delivery of online content and services to customers in the PRC.

The investment in the JV Company is being accounted for using the equity method and is classified as an investment in equity interest on the Company’s condensed consolidated balance sheets. The Company records its share of the results of the JV Company within earnings in equity interest. Because the Company provided nearly all of the capital to form the JV Company, the Company has recorded 100% of the losses incurred by the JV Company within earnings in equity interest in the condensed consolidated statements of operations. Since acquiring its interest in the JV Company in 2013, the Company has recorded, in retained earnings, cumulative losses in equity interest of $1,151.

The following tables represents summarized financial information of the JV Company for the three and six months ended June 30, 2013 and 2014, and as of December 31, 2013 and June 30, 2014 (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2014			2013			2014
Revenue	$	—		$	—		$	—		$	—
Loss from operations	(194		)	(344		)	(194		)	(590		)
Net loss	$	(194	)	$	(344	)	$	(194	)	$	(590	)



	December 31, 2013		June 30, 2014
Total assets	$	442	$	453
Total liabilities	$	77	$	133

Net Income (Loss) Per Common Share Data

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The Company’s potential common shares consist of the incremental common shares issuable upon the exercise of stock options, and to a lesser extent, shares issuable upon the release of RSUs. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

The following table presents the calculation of basic and diluted net loss per share for the three and six month periods ended June 30, 2013 and 2014 (in thousands, except share and per share amounts):



	Three Months Ended, June 30,						Six Months Ended, June 30,
	2013			2014			2013			2014
Basic net loss per share:
Numerator:
Net loss attributable to Synacor, Inc.	$	(637	)	$	(1,868	)	$	(610	)	$	(3,924	)
Denominator:
Weighted-average common shares outstanding	27,311,892			27,360,588			27,273,671			27,397,695

Basic net loss per share attributable to Synacor, Inc.	$	(0.02	)	$	(0.07	)	$	(0.02	)	$	(0.14	)

Diluted net loss per share:
Numerator:
Net loss attributable to Synacor, Inc.	$	(637	)	$	(1,868	)	$	(610	)	$	(3,924	)
Denominator:
Number of shares used in basic calculation	27,311,892			27,360,588			27,273,671			27,397,695
Add weighted-average effect of dilutive securities:
None	—			—			—			—
Number of shares used in diluted calculation	27,311,892			27,360,588			27,273,671			27,397,695

Diluted net loss per share attributable to Synacor, Inc.	$	(0.02	)	$	(0.07	)	$	(0.02	)	$	(0.14	)

The following equivalent shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:



	Three Months Ended, June 30,		Six Months Ended June 30,
	2013	2014	2013	2014
Antidilutive equity awards:
Stock options and RSUs	5,462,134	5,672,042	5,462,134	5,672,042

Subsequent Events

Rights Plan — On July 14, 2014 the Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock and adopted a stockholder rights plan (the “Rights Plan”). The dividend was paid on July 14, 2014 to the stockholders of record at the close of business on that date. Each Right allows its holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock (a “Preferred Share”) for $10.00 (the “Exercise Price”), if the Rights become exercisable. This portion of a Preferred Share will give the stockholder approximately the same dividend, voting, and liquidation rights as would one share of common stock. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights. On July 14, 2014, in conjunction with the adoption of the Rights Plan, the Company designated 2,000,000 shares of its Preferred Stock as Series A Junior Participating Preferred Stock.

The Rights will not be exercisable until 10 days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 10% or more of the Company’s outstanding common stock (the “Distribution Date”). If a person or group becomes an Acquiring Person, each Right will entitle its holder (other than such Acquiring Person) to purchase for $10.00, a number of shares of the Company’s common stock having a market value of twice such price based on the market price of the common stock prior to such acquisition. Additionally, if the Company is acquired in a merger or similar transaction after the Distribution Date, each Right will entitle its holder (other than such Acquiring Person) to purchase for $10.00, a number of shares of the acquiring corporation with a market value of $20.00 based on the market price of the acquiring corporation’s stock, prior to such merger. In addition, at any time after a person or group becomes an Acquiring Person, but before such Acquiring Person or group owns 50% or more of the Company’s common stock, the Board of Directors may exchange one share of the Company’s common stock for each outstanding Right (other than Rights owned by such Acquiring Person, which would have become void). An Acquiring Person will not be entitled to exercise the Rights.

The Rights will expire on July 14, 2017, provided that if the Company’s stockholders have not ratified the Rights Plan by July 14, 2015, the Rights will expire on such date.

Non-plan Option Grant — On August 4, 2014, the Company appointed Himesh Bhise as President and CEO of the Company. In conjunction with the effective date of Mr. Bhise's first day of employment, and as part of Mr. Bhise's compensation, the Company awarded Mr. Bhise options to purchase 2,001,338 shares of the Company's common stock with an exercise price of $2.38 per share.

The Company and Summary of Significant Accounting Policies (Policies)

Basis of Presentation

Basis of Presentation — The interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiary. Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise have the power to control, are accounted for using the equity method and are included as investments in equity interest on the condensed consolidated balance sheets. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period and should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (as amended).

Accounting Estimates

Accounting Estimates — The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Such estimates primarily relate to unsettled transactions and events as of the date of the consolidated financial statements. Accordingly, actual results may differ from estimated amounts.

Concentrations of Risk

Concentrations of Risk — As of December 31, 2013 and June 30, 2014, and for the three and six months ended June 30, 2013 and 2014, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable and revenue as follows:



	Accounts Receivable
	December 31, 2013		June 30, 2014
Google	47	%	24	%
Display Advertising Partner	11	%	18	%



	Revenue				Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Google	51	%	46	%	53	%	49	%

For the three and six months ended June 30, 2013 and 2014, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to customers for their supply of Internet traffic on the Company's start experiences:



	Cost of Revenue				Cost of Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Customer A	20	%	23	%	20	%	23	%
Customer B (1)	13		N/A		14		12
Customer C	10		10		12		11
Customer D	11		10		12		10

Recent Accounting Pronouncements

Recent Accounting Pronouncements — In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the consolidated financial statements.

The Company and Summary of Significant Accounting Policies (Tables)

Schedule of concentrations equal to or exceeding 10% of the Company's accounts receivable, revenue, and cost of revenue

As of December 31, 2013 and June 30, 2014, and for the three and six months ended June 30, 2013 and 2014, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable and revenue as follows:



	Accounts Receivable
	December 31, 2013		June 30, 2014
Google	47	%	24	%
Display Advertising Partner	11	%	18	%



	Revenue				Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Google	51	%	46	%	53	%	49	%

For the three and six months ended June 30, 2013 and 2014, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to customers for their supply of Internet traffic on the Company's start experiences:



	Cost of Revenue				Cost of Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Customer A	20	%	23	%	20	%	23	%
Customer B (1)	13		N/A		14		12
Customer C	10		10		12		11
Customer D	11		10		12		10

Property and Equipment - Net (Tables)

Schedule of property and equipment

Property and equipment, net consisted of the following (in thousands):



	December 31, 2013			June 30, 2014
Computer equipment (1)	$	19,361		$	20,465
Computer software	4,625			5,235
Furniture and fixtures	1,634			1,694
Leasehold improvements	1,044			1,052
Work in process (primarily software development costs)	3,893			5,301
Other	173			173
	30,730			33,920
Less accumulated depreciation (2)	(16,645		)	(18,820		)
Total property and equipment—net	$	14,085		$	15,100

Notes:


(1)	Includes equipment under capital lease obligations of approximately $5,289 and $6,363 as of December 31, 2013 and June 30, 2014, respectively.


(2)	Includes $2,053 and $2,672 of accumulated depreciation of equipment under capital leases as of December 31, 2013 and June 30, 2014, respectively.

Accrued Expenses and Other Current Liabilities (Tables)

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):



	December 31, 2013		June 30, 2014
Accrued compensation	$	2,787	$	2,729
Accrued content fees	580		1,923
Unearned revenue on contracts	247		504
Other	1,563		1,219
Total	$	5,177	$	6,375

Information About Segment and Geographic Areas (Tables)

Schedule of revenue and long-lived tangible assets by geographic area

The following table sets forth revenue and long-lived tangible assets by geographic area (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Revenue
United States	$	26,531	$	24,026	$	55,497	$	49,104
United Kingdom	177		165		354		335
Total revenue	$	26,708	$	24,191	$	55,851	$	49,439



	December 31, 2013		June 30, 2014
Long-lived tangible assets
United States	$	13,825	$	14,971
Netherlands	260		129
Total long-lived tangible assets	$	14,085	$	15,100

Commitments and Contingencies (Tables)

Schedule of contract commitments

Contract commitments as of June 30, 2014 are summarized as follows (in thousands):



Year ending December 31:
2014 (remaining six months)	$	2,408
2015	1,630
2016	1,080
2017	360
2018	—
Due after 5 years	—
Total contract commitments	$	5,478

Equity (Tables)

Schedule of stock repurchased

The following table sets forth the shares of common stock repurchased through the program:



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Shares of common stock repurchased	—		207,050		—		229,050
Value of common stock repurchased (in thousands)	$	—	$	507	$	—	$	562

Stock-based Compensation (Tables)

Schedule of total stock-based compensation expense

Total stock-based compensation expense included in the accompanying condensed consolidated statements of operations for the periods presented, is as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2014		2013		2014
Research and development	$	281	$	375	$	542	$	702
Sales and marketing	76		125		152		233
General and administrative	260		347		485		593
Total stock-based compensation expense	$	617	$	847	$	1,179	$	1,528

Summary of the status of options granted under all options

A summary of the stock option activity for the six months ended June 30, 2014 is presented below:



	Number of Stock Options		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding—January 1, 2014	5,770,168		$	3.85
Granted	589,000		$	2.34
Exercised	(234,255	)	$	0.25
Forfeited	(487,746	)	$	4.01
Outstanding—June 30, 2014	5,637,167		$	3.83	$	672	7.38
Vested and expected to vest—June 30, 2014	5,231,560		$	3.78	$	647	7.28
Vested and exercisable—June 30, 2014	2,933,122		$	3.69	$	505	6.15

Summary of RSU activity

A summary of RSU activity for the three months ended June 30, 2014, is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested—January 1, 2014	45,000		$	5.46
Granted	1,000		$	2.49
Released	(7,125	)	$	5.56
Forfeited	(4,000	)	$	3.68
Unvested—June 30, 2014	34,875		$	5.56
Expected to vest—June 30, 2014	29,644		$	4.73

Investment in Equity Interest (Tables)

Summarized financial information

The following tables represents summarized financial information of the JV Company for the three and six months ended June 30, 2013 and 2014, and as of December 31, 2013 and June 30, 2014 (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2014			2013			2014
Revenue	$	—		$	—		$	—		$	—
Loss from operations	(194		)	(344		)	(194		)	(590		)
Net loss	$	(194	)	$	(344	)	$	(194	)	$	(590	)



	December 31, 2013		June 30, 2014
Total assets	$	442	$	453
Total liabilities	$	77	$	133

Net Income (Loss) Per Common Share Data (Tables)

Schedule of basic and diluted net income per share

The following table presents the calculation of basic and diluted net loss per share for the three and six month periods ended June 30, 2013 and 2014 (in thousands, except share and per share amounts):



	Three Months Ended, June 30,						Six Months Ended, June 30,
	2013			2014			2013			2014
Basic net loss per share:
Numerator:
Net loss attributable to Synacor, Inc.	$	(637	)	$	(1,868	)	$	(610	)	$	(3,924	)
Denominator:
Weighted-average common shares outstanding	27,311,892			27,360,588			27,273,671			27,397,695

Basic net loss per share attributable to Synacor, Inc.	$	(0.02	)	$	(0.07	)	$	(0.02	)	$	(0.14	)

Diluted net loss per share:
Numerator:
Net loss attributable to Synacor, Inc.	$	(637	)	$	(1,868	)	$	(610	)	$	(3,924	)
Denominator:
Number of shares used in basic calculation	27,311,892			27,360,588			27,273,671			27,397,695
Add weighted-average effect of dilutive securities:
None	—			—			—			—
Number of shares used in diluted calculation	27,311,892			27,360,588			27,273,671			27,397,695

Diluted net loss per share attributable to Synacor, Inc.	$	(0.02	)	$	(0.07	)	$	(0.02	)	$	(0.14	)

Schedule of equivalent shares that were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive

The following equivalent shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:



	Three Months Ended, June 30,		Six Months Ended June 30,
	2013	2014	2013	2014
Antidilutive equity awards:
Stock options and RSUs	5,462,134	5,672,042	5,462,134	5,672,042

The Company and Summary of Significant Accounting Policies - Concentrations of Risk (Details) (Customer Concentration Risk [Member])

6 Months Ended

12 Months Ended

6 Months Ended

12 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

Jun. 30, 2014

Accounts Receivable [Member]

Google [Member]

Dec. 31, 2013

Accounts Receivable [Member]

Google [Member]

Jun. 30, 2014

Accounts Receivable [Member]

Display Advertising Partner [Member]

Dec. 31, 2013

Accounts Receivable [Member]

Display Advertising Partner [Member]

Jun. 30, 2014

Revenue [Member]

Google [Member]

Jun. 30, 2013

Revenue [Member]

Google [Member]

Jun. 30, 2014

Revenue [Member]

Google [Member]

Jun. 30, 2013

Revenue [Member]

Google [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer A [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer A [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer A [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer A [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer B [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer B [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer B [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer C [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer C [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer C [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer C [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer D [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer D [Member]

Jun. 30, 2014

Cost of Revenue [Member]

Customer D [Member]

Jun. 30, 2013

Cost of Revenue [Member]

Customer D [Member]

Schedule of concentrations equal to or exceeding 10% of the Company's accounts receivable and revenue

Concentration risk, percentage

24.00%

47.00%

18.00%

11.00%

46.00%

51.00%

49.00%

53.00%

23.00%

20.00%

23.00%

20.00%

13.00% ¹

12.00% ¹

14.00% ¹

10.00%

11.00%

12.00%

10.00%

11.00%

10.00%

12.00%

[1] For the three months ended June 30, 2014, the cost of revenue-share payments received by Customer B were less than 10%.

The Company and Summary of Significant Accounting Policies - Acquisition (Details) (USD $)

In Thousands, unless otherwise specified

6 Months Ended

1 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Apr. 30, 2013

Carbyn Inc [Member]

Jan. 31, 2012

Carbyn Inc [Member]

person

Nov. 30, 2013

Teknision, Inc [Member]

person

Business Acquisition [Line Items]

Aggregate purchase price

$ 1,100

$ 1,005

Cash paid for business acquisition

0

500

600

510

Payment remaining

495

Employees hired from acquiree

7

11

Goodwill

$ 1,565

$ 819

$ 746

The Company and Summary of Significant Accounting Policies - Additional Disclosures (Details) (USD $)

In Thousands, unless otherwise specified

1 Months Ended

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Gain on sale of domain

$ 1,000

$ 0

$ 1,000

$ 0

Investments and Fair Value Measurements (Details) (USD $)

In Thousands, unless otherwise specified

1 Months Ended

Jul. 31, 2013

Jun. 30, 2014

Level 3 [Member]

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Payments to acquire investment

$ 1,000

Estimated fair value of convertible promissory note

$ 1,000

Property and Equipment - Net (Details) (USD $)

In Thousands, unless otherwise specified

Jun. 30, 2014

Dec. 31, 2013

Schedule of property and equipment

Property and equipment-gross

$ 33,920

$ 30,730

Less accumulated depreciation

(18,820)¹

(16,645)¹

Total property and equipment-net

15,100

14,085

Computer equipment [Member]

Schedule of property and equipment

Property and equipment-gross

20,465 ²

19,361 ²

Computer software [Member]

Schedule of property and equipment

Property and equipment-gross

5,235

4,625

Furniture and fixtures [Member]

Schedule of property and equipment

Property and equipment-gross

1,694

1,634

Leasehold improvements [Member]

Schedule of property and equipment

Property and equipment-gross

1,052

1,044

Work in process [Member]

Schedule of property and equipment

Property and equipment-gross

5,301

3,893

Other [Member]

Schedule of property and equipment

Property and equipment-gross

$ 173

[1] Includes $2,053 and $2,672 of accumulated depreciation of equipment under capital leases as of December 31, 2013 and June 30, 2014, respectively.

[2] Includes equipment under capital lease obligations of approximately $5,289 and $6,363 as of December 31, 2013 and June 30, 2014, respectively.

Property and Equipment - Net - Additional Disclosures (Details) (USD $)

In Thousands, unless otherwise specified

Jun. 30, 2014

Dec. 31, 2013

Property and Equipment - Net (Textual) [Abstract]

Property and equipment-gross

$ 33,920

$ 30,730

Accumulated depreciation of equipment under capital leases

18,820 ¹

16,645 ¹

Capital lease obligations [Member]

Property and Equipment - Net (Textual) [Abstract]

Accumulated depreciation of equipment under capital leases

2,672

2,053

Computer equipment [Member]

Property and Equipment - Net (Textual) [Abstract]

Property and equipment-gross

20,465 ²

19,361 ²

Computer equipment [Member] |
Capital lease obligations [Member]

Property and Equipment - Net (Textual) [Abstract]

Property and equipment-gross

$ 6,363

$ 5,289

[1] Includes $2,053 and $2,672 of accumulated depreciation of equipment under capital leases as of December 31, 2013 and June 30, 2014, respectively.

[2] Includes equipment under capital lease obligations of approximately $5,289 and $6,363 as of December 31, 2013 and June 30, 2014, respectively.

Accrued Expenses and Other Current Liabilities (Details) (USD $)

In Thousands, unless otherwise specified

Jun. 30, 2014

Dec. 31, 2013

Schedule of accrued expenses and other current liabilities

Accrued compensation

$ 2,729

$ 2,787

Accrued content fees

1,923

580

Unearned revenue on contracts

504

247

Other

1,219

1,563

Total

$ 6,375

$ 5,177

Information About Segment and Geographic Areas (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

segment

Jun. 30, 2013

Dec. 31, 2013

Revenues from External Customers and Long-Lived Assets [Line Items]

Number of reportable segments

1

Number of operating units

1

Schedule of revenue and long-lived tangible assets by geographic area

Revenue

$ 24,191

$ 26,708

$ 49,439

$ 55,851

Long-lived tangible assets

15,100

14,085

United States

Schedule of revenue and long-lived tangible assets by geographic area

Revenue

24,026

26,531

49,104

55,497

Long-lived tangible assets

14,971

13,825

United Kingdom

Schedule of revenue and long-lived tangible assets by geographic area

Revenue

165

177

335

354

Netherlands [Member]

Schedule of revenue and long-lived tangible assets by geographic area

Long-lived tangible assets

$ 129

$ 260

Commitments and Contingencies (Details) (USD $)

In Thousands, unless otherwise specified

Jun. 30, 2014

Schedule of contract commitments

2014 (remaining six months)

$ 2,408

2015

1,630

2016

1,080

2017

360

2018

0

Due after 5 years

0

Total contract commitments

$ 5,478

Equity (Details) (USD $)

0 Months Ended

Feb. 26, 2014

Jun. 30, 2014

Dec. 31, 2013

Feb. 15, 2012

Equity [Abstract]

Common stock, shares authorized

100,000,000

Common stock, par value (in dollars per share)

$ 0.01

Preferred stock, shares authorized

10,000,000

Preferred stock, par value (in dollars per share)

$ 0.01

Preferred stock, shares issued

0

Shares authorized to be repurchased, amount

$ 5,000,000

Equity - Shares Repurchased (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Equity [Abstract]

Shares of common stock repurchased

207,050

0

229,050,000

0

Value of common stock repurchased

$ 507

$ 0

$ 562

$ 0

Equity - Withhold to Cover (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Class of Stock [Line Items]

Shares withheld to satisfy minimum statutory tax withholding requirements

2,613

Treasury stock received to satisfy minimum tax withholding liabilities

$ 6

$ 0

Stock-based Compensation - Allocation of Stock-based Compensation Expense (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Schedule of total stock-based compensation expense

Total stock-based compensation expense

$ 847

$ 617

$ 1,528

$ 1,179

Research and development [Member]

Schedule of total stock-based compensation expense

Total stock-based compensation expense

375

281

702

542

Sales and marketing [Member]

Schedule of total stock-based compensation expense

Total stock-based compensation expense

125

76

233

152

General and administrative [Member]

Schedule of total stock-based compensation expense

Total stock-based compensation expense

$ 347

$ 260

$ 593

$ 485

Stock-based Compensation - Stock Option Activity (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

6 Months Ended

Jun. 30, 2014

Number of Stock Options (shares)

Outstanding number of stock options beginning balance

5,770,168

Number of stock options granted

589,000

Number of stock options exercised

(234,255)

Number of stock options forfeited

(487,746)

Outstanding number of stock options ending balance

5,637,167

Outstanding number of stock options vested and expected to vest

5,231,560

Outstanding number of stock options vested and exercisable

2,933,122

Weighted Average Exercise Price (in dollars per share)

Outstanding, Weighted Average Exercise Price, Beginning

$ 3.85

Weighted Average Exercise Price Granted

$ 2.34

Weighted Average Exercise Price Exercised

$ 0.25

Weighted Average Exercise Price Forfeited

$ 4.01

Outstanding, Weighted Average Exercise Price, Ending Balance

$ 3.83

Vested and expected to vest, Weighted Average Exercise Price Ending Balance

$ 3.78

Vested and exercisable, Weighted Average Exercise Price Ending Balance

$ 3.69

Aggregate intrinsic value, outstanding

$ 672

Aggregate intrinsic value, vested and expected to vest

647

Aggregate intrinsic value, vested and exercisable

$ 505

Weighted Average Remaining Contractual Term (in years), outstanding

7 years 4 months 17 days

Weighted Average Remaining Contractual Term (in years), vested and expected to vest

7 years 3 months 11 days

Weighted Average Remaining Contractual Term (in years), vested and exercisable

6 years 1 month 25 days

Stock-based Compensation - RSU Activity (Details) (Restricted Stock Units (RSUs) [Member], USD $)

6 Months Ended

Jun. 30, 2014

Restricted Stock Units (RSUs) [Member]

Number of Shares

Unvested—January 1, 2014

45,000

Granted

1,000

Released

(7,125)

Forfeited

(4,000)

Unvested—June 30, 2014

34,875

Expected to vest—June 30, 2014

29,644

Weighted-Average Grant Date Fair Value (in dollars per share)

Unvested—January 1, 2014

$ 5.46

Granted

$ 2.49

Released

$ 5.56

Forfeited

$ 3.68

Unvested—June 30, 2014

$ 5.56

Expected to vest—June 30, 2014

$ 4.73

Stock-based Compensation - Additional Disclosures (Details) (USD $)

3 Months Ended

6 Months Ended

0 Months Ended

1 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Stock Options [Member]

Jun. 30, 2014

Restricted Stock Units (RSUs) [Member]

Jun. 30, 2014

Former Chief Executive Officer [Member]

Jun. 30, 2014

Former Chief Executive Officer [Member]

Stock Options [Member]

Aug. 14, 2014

Subsequent Event [Member]

Employees, Excluding Directors and Officers [Member]

employee

Aug. 14, 2014

Minimum [Member]

Subsequent Event [Member]

Employees, Excluding Directors and Officers [Member]

Aug. 31, 2014

Forecast [Member]

Minimum [Member]

Employees, Excluding Directors and Officers [Member]

Aug. 31, 2014

Forecast [Member]

Maximum [Member]

Subsequent Event [Member]

Employees, Excluding Directors and Officers [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation expense

$ 847,000

$ 617,000

$ 1,528,000

$ 1,179,000

Tax deduction allowed for incentive stock options

0

Deferred income tax asset for the expense related to options

0

Closing stock price as reported on the NASDAQ

$ 2.56

Total intrinsic value of options exercised

275,000

517,000

Weighted average fair value of options issued (in dollars per share)

$ 1.31

Unrecognized compensation cost related to non-vested options granted

5,552,000

Unrecognized compensation cost related to RSUs

188,000

Expected weighted-average period to recognize unrecognized compensation cost

2 years 6 months 13 days

2 years 6 months

Total fair value of shares vested

1,444,000

Contractual term

10 years

Incremental compensation expense from plan modification

$ 190,000

$ 600,000

$ 700,000

Option modification, minimum exercise price required for modification (in dollars per share)

$ 3.00

Number of employees affected by plan modification

203

Reset exercise price (in dollars per share)

$ 2.38

Investment in Equity Interest (Details) (USD $)

6 Months Ended

1 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Mar. 31, 2013

Synacor China, Ltd [Member]

Jun. 30, 2014

Synacor China, Ltd [Member]

Dec. 31, 2013

Synacor China, Ltd [Member]

Mar. 31, 2013

Common Stock [Member]

Synacor China, Ltd [Member]

Mar. 31, 2013

Preferred Stock [Member]

Synacor China, Ltd [Member]

Schedule of Equity Method Investments [Line Items]

Ownership percentage

50.00%

100.00%

Additional funding over the remainder of the two year period following the initial funding

$ 2,000,000

Term of funding (in years)

2 years

Funding to JV Company

545,000

0

545,000

926,000

Cumulative losses in equity interest

$ 1,151,000

Investment in Equity Interest - Summarized Financial Information (Details) (Synacor China, Ltd [Member], USD $)

In Thousands, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Synacor China, Ltd [Member]

Schedule of Equity Method Investments [Line Items]

Revenue

$ 0

Loss from operations

(344)

(194)

(590)

(194)

Net loss

(344)

(194)

(590)

(194)

Total assets

453

442

Total liabilities

$ 133

$ 77

Net Income (Loss) Per Common Share Data - Calculation of Basic and Diluted Net Income Per Share (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Numerator:

Net loss

$ (1,868)

$ (637)

$ (3,924)

$ (610)

Denominator:

Weighted-average common shares outstanding

27,360,588

27,311,892

27,397,695

27,273,671

Basic net loss per share (in dollars per share)

$ (0.07)

$ (0.02)

$ (0.14)

$ (0.02)

Numerator:

Net loss

$ (1,868)

$ (637)

$ (3,924)

$ (610)

Denominator:

Weighted-average common shares outstanding

27,360,588

27,311,892

27,397,695

27,273,671

Add weighted-average effect of dilutive securities

Weighted-average effect of diluted securities (shares)

0

Number of shares used in diluted calculation

27,360,588

27,311,892

27,397,695

27,273,671

Diluted net loss per share (in dollars per share)

$ (0.07)

$ (0.02)

$ (0.14)

$ (0.02)

Net Income (Loss) Per Common Share Data - Antidilutive Securities Excluded (Details) (Stock Options and RSUs [Member])

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Stock Options and RSUs [Member]

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Antidilutive equity awards

5,672,042

5,462,134

5,672,042

5,462,134

Subsequent Events (Details) (USD $)

6 Months Ended

0 Months Ended

Jun. 30, 2014

Dec. 31, 2013

Feb. 15, 2012

Jul. 14, 2014

Subsequent Event [Member]

Jul. 14, 2014

Subsequent Event [Member]

Aug. 4, 2014

CEO [Member]

Subsequent Event [Member]

Jul. 14, 2014

Series A Junior Participating Preferred Stock [Member]

Subsequent Event [Member]

Subsequent Event [Line Items]

Common stock dividend declared, number of preferred share purchase rights for each outstanding share of common stock

1

Number of shares called by each Right

0.01

Exercise price (in dollars per share)

10.00

Preferred stock, shares authorized

10,000,000

2,000,000

Exercisable period after public announcement

10 days

Beneficial ownership threshold of common stock for rights be become exercisable

10.00%

Market value of acquiring corporation shares (in dollars per share)

$ 20

Minimum ownership percentage of common stock Board of Directors may no longer exchange common stock

50.00%

Exchange of common stock for Right, exchange ratio

1

Number of stock options granted

589,000

2,001,338

Options granted, exercise price (in dollars per share)

$ 2.34

$ 2.38