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): October 24, 2012

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 October 24, 2012, Synacor, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2012. 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 October 24, 2012	

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: October 24, 2012	 		 	By:	 	/s/ W ILLIAM J. S TUART	
	 		 		 	William J. Stuart	
	 		 		 	Chief Financial Officer and Secretary	

Exhibit 99.1

Synacor Reports Solid Third Quarter 2012 Results
 
 	•	 	Quarterly revenue of $28.3 million, an increase of 18% year-over-year	
 
 	•	 	Quarterly adjusted EBITDA of $2.2 million, 8th consecutive quarter of positive results	
Buffalo, NY, Oct. 24, 2012 (GLOBE NEWSWIRE) – Synacor, Inc. (NASDAQ: SYNC), leading provider of next-gen startpages, TV Everywhere solutions, and cloud services across multiple devices for cable, satellite, telecom and consumer electronics companies, today announced its financial results for the third quarter of 2012.
“Synacor had another solid quarter. During the third quarter we announced partnerships with Comcast Spotlight and NCC Media to complement our in-house national advertising sales force. Also, our TV Everywhere customers continue to rely on Synacor to expand the online programming available to their subscribers,” said Synacor CEO Ron Frankel. “We are kicking off the fourth quarter with a new launch announcement. On October 1 we launched the startpage and email for dishNET, the broadband ISP service of DISH Network. We are excited to have been chosen by DISH Network. These partnerships, combined with new customers and products, set the stage for continued momentum through the remainder of the year.”
Q3 2012 Financial Results
Revenue : For the third quarter of 2012, total revenue was $28.3 million, an 18% increase over $24.0 million in the third quarter of 2011. Search and display advertising revenue was $23.3 million, a 24% increase compared to $18.7 million in the third quarter of 2011. Subscription-based revenue was $5.1 million, a 3% decrease compared to $5.2 million in the third quarter of 2011.
Net Income : For the third quarter of 2012, net income was $0.7 million, compared to $1.5 million in the third quarter of 2011. Diluted earnings per share, or EPS, was $0.02. Net income includes stock-based compensation expense of $0.5 million, or $.02 per share, in the third quarter of 2012 and $0.2 million, or $0.01 per share, in the third quarter of 2011. The diluted EPS calculation for the third quarter of 2012 is based on 30.0 million weighted average fully diluted common shares outstanding.
Adjusted EBITDA : For the third quarter of 2012, adjusted EBITDA, which excludes stock-based compensation expense, was $2.2 million, or 8% of revenue, compared to $2.5 million, or 10% of revenue, in the third quarter of 2011.
Key Business Metrics : For the third quarter of 2012, Synacor averaged 20.2 million unique visitors per month, an increase of 44% from 14.1 million unique visitors in the third quarter of 2011. Search queries were 234 million for the third quarter, an increase of 15% from 203 million in the third quarter of 2011. Advertising impressions grew 51% to 11.6 billion, compared to 7.7 billion in the third quarter of 2011.
Cash : For the third quarter of 2012, Synacor generated $5.0 million in cash from operating activities, compared to $2.8 million in the third quarter of 2011. The company ended the third quarter of 2012 with $38.7 million in cash and cash equivalents, compared to $35.1 million at the end of the prior quarter.

 
“Synacor’s third quarter results delivered on our expectations, producing our 8th consecutive quarter of positive adjusted EBITDA results. Based on our pipeline, we are well positioned to capitalize on the foundation we have built as the leading provider of startpages, TV Everywhere solutions and cloud services that deliver, on behalf of our customers, pay-TV content and services to consumers any time, anywhere, on any device,” said Synacor CFO Bill Stuart. “We expect Carbyn and our Cloud ID Management offerings, specifically our social login capability, will greatly accelerate the usage of TV Everywhere cross-device, continuing to enhance the consumer experience and our positioning in this rapidly growing market.”
Business Outlook
Based on information available as of October 24, 2012, the company is providing financial guidance for the fourth quarter and fiscal 2012 as follows:
 
 	•	 	Q4 2012 Guidance : Revenue for the fourth quarter of 2012 is projected to be in the range of $31.0 million to $33.0 million. For the fourth quarter of 2012, the company expects to report adjusted EBITDA of $2.9 million to $3.9 million.	
 
 	•	 	Fiscal 2012 Guidance : Revenue for the full year of 2012 is projected to be in the range of $120.8 million to $122.8 million. For the full year of 2012, the company expects to report adjusted EBITDA of $11.0 million to $12.0 million.	
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to discuss the third quarter 2012 financial results with the investment community. The live webcast of Synacor’s earnings conference call can be accessed at http://investor.synacor.com/events.cfm. To participate, please login approximately ten minutes prior to the webcast. For those without access to the Internet, the call may be accessed toll-free via phone at (877) 837-3911, with conference ID 39604640, or callers outside the U.S. may dial (253) 237-1167. Following completion of the call, a recorded webcast replay will be available on Synacor’s website through November 7, 2012. To listen to the telephone replay, call toll-free (855) 859-2056, or callers outside the U.S. may dial (404) 537-3406. The conference ID is 39604640.
About Synacor
Synacor’s white-label platform enables cable, satellite, telecom and consumer electronics companies to deliver TV Everywhere, digital entertainment, cloud-based services and apps to their end-consumers across multiple devices, strengthening those relationships while monetizing the engagement. Synacor (Nasdaq:SYNC), is headquartered in Buffalo, NY. For more information, visit synacor.com. Integrate. Authenticate. Engage.
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 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
“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, statements and information in the Business Outlook section and the quotations from management), as well as Synacor’s strategic and operational plans. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.
The risks and uncertainties referred to above include—but are not limited to—risks associated with: execution of our plans and strategies; the loss of a significant customer; expectations regarding consumer taste and user adoption of applications and solutions; general economic conditions; expectations regarding the company’s ability to timely expand the breadth of services and products or introduction of new services and products; consolidation within the cable and telecommunications industries; changes in the competitive dynamics in the market for online search and display advertising; the risk that security measures could be breached and unauthorized access to subscriber data could be obtained; potential third party intellectual property infringement claims; and the price volatility of our common stock.
Further information on these and other factors that could affect the company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company’s most recent Form 10-Q filed with the SEC on August 14, 2012. These documents are available on the SEC Filings section of the Investor Information 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 October 24, 2012, and Synacor undertakes no duty to update this information.
Contacts
Investor Contact:
Denise Garcia, SVP
ICR
ir@synacor.com
716-362-3309
Press Contact:
Meredith Roth, VP, Corporate Communications
mroth@synacor.com
646-380-5141
The Synacor logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11609

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

 	  	As of
December 31,	 	 	As of
September 30,	 	
 	  	2011	 	 	2012	 	
Assets 	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	10,925	  	 	$	38,709	  	
Accounts receivable, net	  	 	14,336	  	 	 	14,393	  	
Deferred income taxes	  	 	3,534	  	 	 	4,441	  	
Prepaid expenses and other current assets	  	 	1,811	  	 	 	2,259	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	30,606	  	 	 	59,802	  	
Property and equipment, net	  	 	8,301	  	 	 	11,178	  	
Deferred income taxes, non-current	  	 	2,549	  	 	 	1,079	  	
Other long-term assets	  	 	1,926	  	 	 	700	  	
Goodwill	  	 	—  	  	 	 	819	  	
	  	 	 	 	 	 	 	 	
Total Assets	  	$	43,382	  	 	$	73,578	  	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	12,498	  	 	$	13,396	  	
Accrued expenses and other current liabilities	  	 	5,492	  	 	 	6,293	  	
Current portion of bank financing	  	 	250	  	 	 	—  	  	
Current portion of capital lease obligations	  	 	1,593	  	 	 	2,258	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	19,833	  	 	 	21,947	  	
Long-term portion of capital lease obligation	  	 	2,098	  	 	 	2,178	  	
Other long-term liabilities	  	 	71	  	 	 	172	  	
	  	 	 	 	 	 	 	 	
Total Liabilities	  	 	22,002	  	 	 	24,297	  	
	  	 	 	 	 	 	 	 	
Stockholders’ Equity:	  				 				
Common stock	  	 	31	  	 	 	274	  	
Preferred stock	  	 	28,432	  	 	 	—  	  	
Treasury stock	  	 	(569	) 	 	 	(569	) 	
Additional paid-in capital	  	 	45,639	  	 	 	98,712	  	
Accumulated other comprehensive income	  	 	—  	  	 	 	(8	) 	
Accumulated deficit	  	 	(52,153	) 	 	 	(49,128	) 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	21,380	  	 	 	49,281	  	
	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	43,382	  	 	$	73,578	  	

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

 	  	Three months ended
September 30,	 	 	Nine months ended
September 30,	 	
 	  	2011	 	 	2012	 	 	2011	 	 	2012	 	
Revenue	  	$	23,954	  	 	$	28,326	  	 	$	62,115	  	 	$	89,803	  	
Costs and operating expenses:	  				 				 				 				
Cost of revenue (1)	  	 	12,814	  	 	 	15,792	  	 	 	32,872	  	 	 	49,432	  	
Research and development (1)(2)	  	 	4,950	  	 	 	6,218	  	 	 	14,270	  	 	 	18,629	  	
Sales and marketing (2)	  	 	2,127	  	 	 	2,000	  	 	 	5,811	  	 	 	6,776	  	
General and administrative (1)(2)	  	 	1,824	  	 	 	2,676	  	 	 	4,887	  	 	 	8,384	  	
Depreciation	  	 	673	  	 	 	981	  	 	 	1,950	  	 	 	2,696	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and operating expenses	  	 	22,388	  	 	 	27,667	  	 	 	59,790	  	 	 	85,917	  	

	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	1,566	  	 	 	659	  	 	 	2,325	  	 	 	3,886	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income (expense)	  	 	(19	) 	 	 	25	  	 	 	(18	) 	 	 	7	  	
Interest expense	  	 	(13	) 	 	 	(72	) 	 	 	(64	) 	 	 	(208	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	1,534	  	 	 	612	  	 	 	2,243	  	 	 	3,685	  	
Provision (benefit) for income taxes	  	 	49	  	 	 	(40	) 	 	 	55	  	 	 	660	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	1,485	  	 	 	652	  	 	 	2,188	  	 	 	3,025	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Undistributed earnings allocated to preferred stockholders	  	 	1,292	  	 	 	—  	  	 	 	1,903	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholders	  	$	193	  	 	$	652	  	 	$	285	  	 	$	3,025	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share attributable to common stockholders:	  				 				 				 				
Basic	  	$	0.08	  	 	$	0.02	  	 	$	0.14	  	 	$	0.13	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	$	0.07	  	 	$	0.02	  	 	$	0.10	  	 	$	0.11	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares used to compute net income per share attributable to common stockholders:	  				 				 				 				
Basic	  	 	2,318,666	  	 	 	27,329,106	  	 	 	2,006,739	  	 	 	23,728,120	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	 	21,911,929	  	 	 	30,010,359	  	 	 	22,433,359	  	 	 	28,765,152	  	

Notes:
(1)    Exclusive of depreciation shown separately.
(2)    Includes stock-based compensation as follows:	  

			
 	  	Three months ended
September 30,	 	 	Nine months ended
September 30,	 	
 	  	2011	 	 	2012	 	 	2011	 	 	2012	 	
Research and development	  	$	75	  	 	$	146	  	 	$	205	  	 	$	373	  	
Sales and marketing	  	 	51	  	 	 	119	  	 	 	141	  	 	 	292	  	
General and administrative	  	 	106	  	 	 	255	  	 	 	294	  	 	 	838	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	232	  	 	$	520	  	 	$	640	  	 	$	1,503	  	

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

 	  	Nine months ended
September 30,	 	
 	  	2011	 	 	2012	 	
Cash Flows from Operating Activities:	  				 				
Net income	  	$	2,188	  	 	$	3,025	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				
Depreciation	  	 	1,950	  	 	 	2,696	  	
Stock-based compensation expense	  	 	640	  	 	 	1,503	  	
Loss on disposal of property and equipment	  	 	10	  	 	 	32	  	
Benefit from deferred income taxes	  	 	—  	  	 	 	563	  	
Change in assets and liabilities net of effect of acquisition:	  				 				
Accounts receivable, net	  	 	(2,350	) 	 	 	(57	) 	
Prepaid expenses and other current assets	  	 	121	  	 	 	(115	) 	
Other long-term assets	  	 	(38	) 	 	 	223	  	
Accounts payable	  	 	707	  	 	 	1,048	  	
Accrued expenses and other current liabilities	  	 	809	  	 	 	812	  	
Other long-term liabilities	  	 	(26	) 	 	 	101	  	
	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	4,011	  	 	 	9,831	  	
	  	 	 	 	 	 	 	 	
Cash Flows from Investing Activities:	  				 				
Purchases of property and equipment	  	 	(1,478	) 	 	 	(2,983	) 	
Cash paid for business acquisition	  	 	—  	  	 	 	(600	) 	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(1,478	) 	 	 	(3,583	) 	
	  	 	 	 	 	 	 	 	
Cash Flows from Financing Activities:	  				 				
Proceeds from sale/leaseback	  	 	794	  	 	 	—  	  	
Repayment on bank financing	  	 	(375	) 	 	 	(250	) 	
Repayments on capital lease obligations	  	 	(1,400	) 	 	 	(1,739	) 	
Proceeds from exercise of common stock options	  	 	289	  	 	 	922	  	
Proceeds from initial public offering	  	 	—  	  	 	 	25,364	  	
Initial public offering costs	  	 	—  	  	 	 	(2,753	) 	
	  	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities	  	 	(692	) 	 	 	21,544	  	
	  	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	  	 	—  	  	 	 	(8	) 	
Net (Decrease) Increase in Cash and Cash Equivalents	  	 	1,841	  	 	 	27,784	  	
Cash and Cash Equivalents at beginning of period	  	 	5,412	  	 	 	10,925	  	
	  	 	 	 	 	 	 	 	
Cash and Cash Equivalents at end of period	  	$	7,253	  	 	$	38,709	  	

Synacor, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands except share and per share data)
(Unaudited)
The following table presents a reconciliation of net income to adjusted EBITDA for each of the periods indicated:

 	  	Three months ended
September 30,	 	 	Nine months ended
September 30,	 	
 	  	2011	 	  	2012	 	 	2011	 	  	2012	 	
Reconciliation of Adjusted EBITDA:	  				  				 				  				
Net income	  	$	1,485	  	  	$	652	  	 	$	2,188	  	  	$	3,025	  	
Provision (benefit) for income taxes	  	 	49	  	  	 	(40	) 	 	 	55	  	  	 	660	  	
Interest expense	  	 	13	  	  	 	72	  	 	 	64	  	  	 	208	  	
Other (income) expense	  	 	19	  	  	 	(25	) 	 	 	18	  	  	 	(7	) 	
Depreciation	  	 	673	  	  	 	981	  	 	 	1,950	  	  	 	2,696	  	
Stock-based compensation	  	 	232	  	  	 	520	  	 	 	640	  	  	 	1,503	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Adjusted EBITDA 	  	$	2,471	  	  	$	2,160	  	 	$	4,915	  	  	$	8,085	  	

Synacor, Inc.
Key Business Metrics
(Unaudited)

 	  	Three months ended
September 30,	 	  	Nine months ended
September 30,	 	
 	  	2011	 	  	2012	 	  	2011	 	  	2012	 	
Key Business Metrics:	  				  				  				  				
Unique Visitors (1)	  	 	14,069,737	  	  	 	20,241,871	  	  	 	13,250,013	  	  	 	20,487,594	  	
Search Queries (2)	  	 	203,335,131	  	  	 	233,767,194	  	  	 	503,476,341	  	  	 	742,893,799	  	
Advertising Impressions (3)	  	 	7,682,888,761	  	  	 	11,634,386,253	  	  	 	19,461,422,855	  	  	 	30,457,542,583	  	
Notes:
(1)	Reflects the number of unique visitors to our customers' websites computed on an average monthly basis during the applicable period, as measured by comScore.	
(2)	Reflects the total number of search queries during the applicable period, as reported by Google.	
(3)	Reflects the total number of advertising impressions during the applicable period, as reported by DoubleClick and other partners.