investor deck january 2017 final
TRANSCRIPT
1Contains proprietary and confidential information owned by Synacor, Inc. © / 2017 Synacor, Inc.
DRIVING GROWTH IN ATTRACTIVE DIGITAL MARKETS
J A N U A RY 2 0 1 7
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SAFE HARBOR
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements concerning Synacor’s expected financial performance 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. Synacor is under no obligation to, and expressly disclaims any such obligation to, update or alter forward-looking statements, whether as a result of new information, future events, or otherwise. The risks and uncertainties referred to above include - but are not limited to - risks associated with: execution of Synacor’s plans and strategies; the loss of a significant customer; the company’s ability to obtain new customers; expectations regarding consumer taste and user adoption of applications and solutions; developments in Internet browser software and search advertising technologies; developments in display advertising technologies and practices; 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 Synacor’s 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-K filed with the SEC. These documents are available on the SEC Filings section of the Investor Information section of the company's website at investor.synacor.com.
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INVESTMENT HIGHLIGHTS
A Transformation Story with Multiple Profitable Growth Avenues
STRONG OPPORTUNITIES FOR GROWTH
RECURRING AND FEE-
BASED REVENUE
MASSIVE TRANSFORMATION
ON A PATH:• 3 YEARS (2019)• $30M EBITDA• $300M REVENUE
SEASONED MANAGEMENT
TEAM
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TWO PRIMARY SOURCES OF REVENUE
SEARCH AND ADVERTISING RECURRING AND FEE-BASED
Advanced Portal Experiences
Email/Collaboration
Video Platform/Cloud ID
Advertising Solutions
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MULTI-PLATFORM PORTAL EXPERIENCES DESIGNED FOR ENGAGEMENT AND MONETIZATION
Personalized, curated, and relevant content experience that drives engagement and reinforces ISP brand across devices
• Modern design, stream-based experience• Hundreds of thousands of articles and videos• Push notification for breaking news• Flexible and customizable for
customer needs• Monetization through integration with
Synacor Media
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Combined Technorati with Synacor, creating direct and programmatic advertising platform at scale:
• Strong Monetization• Search, display, video and
mobile ad products• Direct, programmatic,
network monetization• Publisher and Portal Network
• Operated and managed portals• Publisher platform
• Targeting Expertise• Proprietary and third-party data• Ad Ops and Analytics
Hundredsof Publishers
SYNACOR MEDIA: COMPELLING AD PLATFORM AT SCALE
198MUniques
35M+Broadband Households
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SYNACOR IS ENABLING PORTAL SERVICES FOR AT&T
In partnership with AT&T, Synacor will:
• Develop and manage innovative desktop and mobile portal services designed to drive user engagement
• Populate these portal experiences with rich Internet content sourced from popular brands
• Monetize these experiences through search and advertising
Why AT&T chose Synacor:
• A proven managed portal services platform
• Significantly improved monetization across mobile and desktop, video and display
• Flexible technology and UX that serves as a foundation for next-gen development
• A relevant product portfolio and strong team to enable additional services as neededMOBILE APP LAUNCHED IN BETA WITH 4.2 RATING; DESKTOP LAUNCH IN 1H17
ALL SYNACOR CUSTOMERS BENEFIT FROM AT&T PLATFORM DEVELOPMENT
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SEARCH & ADVERTISING GROWTH OPPORTUNITY
• Launch AT&T• Win new portal customers• Programmatic growth• Grow publisher reach and products• Expand mobile monetization
Digital Ad Spending
15%$72B
Total Market
Source: eMarketer, growth for 2016 - 2020 10
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EMAIL & COLLABORATIONOPEN, SECURE, PRIVATE PRODUCT SUITE
Powering ~500M mailboxes –
one of the largest providers of white label email in the world
Offered as open source, on-prem software, and as a fully managed & hosted solution
Unmatched migration & hosting capability
Serving service providers, government agencies, and business enterprises 11
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EMAIL & COLLABORATION GROWTH OPPORTUNITY
• Open source program to monetize ~400 million existing mailboxes • Open Source Support subscription• Suite Plus (e.g. backup, admin
tools)
• Grow government customer base focusing on security & privacy
• Leverage partner community to accelerate feature development and grow sales
Market Growth
24%$19B
Total Market
12Source: Radicati, growth for 2016 - 2020
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VIDEO PLATFORM/CLOUD IDEND-TO-END VIDEO AND IDENTITY MANAGEMENT PLATFORM
• Able to authenticate nearly all Pay TV households in US
• Selected to provide Cloud ID Authentication for HBO Go
• Supported deployment of Apple’s Single Sign-On platform
• Participating with CTAM & OATC on industry standards
• Debuted end-to-end TVE and OTT solutions for GVTC and Consolidated
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VIDEO PLATFORM/CLOUD ID GROWTH OPPORTUNITY
• Win new video platform customers• Win new content provider customers• Extend Cloud-ID into new verticals
and geographies
Online OTT & Video Revenue
76%$37B
Total Market
14Source: Digital TV Research, 2010 - 2020
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BLUE-CHIP CUSTOMERS AND PARTNERS
Advertising and Content Partners
Command and Simulation Solutions
Chile
120 Service Providers, 1,000 Government Agencies, 2,500 Businesses, 1,000 Publishers
ADVERTISING
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2016Won new portal customersWon new video platform customers2017Win new portal customersGrow government email customersWin new video platform & content provider customers
2016Became a significant player in programmatic advertising2017Launch AT&T Programmatic growthExpand mobile monetization
4-PILLAR GROWTH AGENDA BUILT ON OPERATING DISCIPLINE
Increase value for existing customers
by optimizing consumer
experience & monetization
Innovate on Synacor-as-a-platform for
advanced services
Win new customers in current and
related verticals
Extend product portfolio into international and enterprise
PROFITABLE REVENUE GROWTH
OPERATING DISCIPLINE
2016Extended Cloud-ID into new content verticalLaunched Open Source Support offering for email2017Grow Open Source Support adoption
2016Activated email partner community Introduced Synacor products in new geographies2017Leverage partner community to accelerate email feature developmentWin customers in new geographies
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SYNACOR’S 3/30/300 PATHTARGETING $300M IN REVENUES AND $30M IN EBITDA IN 3 YEARS
Revenue, $Millions Adjusted EBITDA*, $Millions
*Please refer to the appendix for information regarding the reconciliation of GAAP net loss to adjusted EBITDA for twelve months ended December 31, 2014 and December 31, 2015 and for guidance for twelve months ending December 31, 2016. Guidance is as of November 14, 2016.
INVESTING ~$10M BETWEEN 2H16 – 1H17 TO DEVELOP AND DEPLOY AT&T
2014 2015 2016G 2019G
$106.6 $110.2 $126 - $130
~$300
2014 2015 2016G 2019G
$2.2 $7.6
$2 - $3
~$30
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INVESTMENT HIGHLIGHTS
A Transformation Story with Multiple Profitable Growth Avenues
STRONG OPPORTUNITIES FOR GROWTH
RECURRING AND FEE-
BASED REVENUE
MASSIVE TRANSFORMATION
ON A PATH:• 3 YEARS (2019)• $30M EBITDA• $300M REVENUE
SEASONED MANAGEMENT
TEAM
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ADJUSTED EBITDA RECONCILIATION
2014 Q1 2015 Q2 2015 Q3 2015First Nine
Months 2015 2015 Q1 2016 Q2 2016 Q3 2016First Nine
Months 2016
Revenue 106,580 26,730 24,716 26,351 77,797 110,245 30,260 30,476 31,721 92,457
Net Loss (12,931) (1,073) (1,082) (931) (3,086) (3,474) (1,565) (2,757) (3,365) 7,687 Provision (benefit) for income taxes 4,821 4 16 10 30 239 144 260 379 783 Interest expense 218 50 59 35 144 245 68 84 75 227 Other (income) expense 29 16 (17) 32 31 16 (2) (242) 38 (206) Depreciation and amortization 5,126 1,496 1,660 1,560 4,716 6,901 2,098 2,270 2,414 6,782 Stock-based compensation 3,595 742 800 810 2,352 3,115 737 687 680 2,104 Loss in equity interest 1,063 32 25 - 57 73 - - - - Gain on sale of domain (1,000) - - - - - - - - - Reduction in Workforce 1,260 - - - - - - - - - Acquisition Costs - - - 478 478 478 - - - -
Adjusted EBITDA 2,180 1,267 1,461 1,994 4,722 7,593 1,480 302 221 2,003
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Q4 2016 AND FISCAL 2016 GUIDANCE RECONCILIATION*
Q4 2016 Guidance: Revenue for the fourth quarter of 2016 is projected to be in the range of $34.0 million to $38.0 million. The company expects to report a net loss of $2.5 million to $3.2 million and adjusted EBITDA of $0.0 million to $1.0 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.
Fiscal 2016 Guidance: Revenue for the full year of 2016 is projected to be in the range of $126.0 million to $130.0 million. The company expects to report a net loss in the range of $10.2 million to $10.9 million and adjusted EBITDA in the range of $2.0 million to $3.0 million, which excludes stock-based compensation expense of $2.8 million to $2.9 million, depreciation and amortization of $9.0 million to $9.2 million, and tax, interest and other income and expense of $1.1 million.
*Guidance is as of November 14, 2016.