Application software maker Synchronoss Technologies Inc. (SNCR: Quote), Monday reported an increase in profit for the first quarter, as revenues and margins improved bolstered by higher demand for cloud-based mobility services from Verizon Wireless. Synchronoss' both earnings and revenues for the quarter came in ahead of analysts' estimates.
Going ahead, the company lowered its outlook for revenue growth from AT&T, its biggest customer. Following the news, shares of the company plummeted 18 percent in after hours on the Nasdaq.
Chief Executive Stephen Waldis said, "We are pleased with the company's performance during the first quarter, which contributed to revenue coming in at the high end of our guidance, continued non-GAAP gross margin expansion and profitability exceeding our expectations."
Business from AT&T accounted for about 50 percent of total revenue. Business outside AT&T was about $32.3 million, representing about 50 percent of total revenues, with Verizon Wireless contributing over 10 percent of total revenues.
"The success of our cloud-based mobility services strategy is evidenced by our expanded relationship with Verizon Wireless. We believe our multi-year agreement provides a solid opportunity for us to deploy the first ever comprehensive carrier based subscriber cloud platform designed to manage millions of devices for a unique and personalized experience," Waldis added.
First-quarter revenues grew 22 percent to $64.6 million from $52.9 million last year. Adjusted revenues rose to $64.9 million from $53.4 million last year. Wall Street analysts on a consensus estimated revenues of $64.16 million for the quarter.
Adjusted gross margins improved to 58 percent from 56 percent last year. Financial Chief Lawrence Irving said, "The primary driver to our gross margin expansion continues to be carriers' growing adoption and scaling of cloud-based services associated with our highly differentiated ConvergenceNow Plus+ platform."
Bridgewater, New Jersey-based Synchronoss' first-quarter profit surged to $5.5 million or $0.14 per share from $139 thousand or $0.04 per share in the year-earlier quarter.
Adjusted earnings for the period was $10.1 million or $0.26 per share, compared to $7.8 million or $0.20 per share last year.
On average, 10 analysts polled by Thomson Reuters expected the company to earn $0.25 per share for the first-quarter. Analysts' estimates typically exclude special items.
In a conference call, Synchronoss said it expects revenues from AT&T to grow between 5 and 10 percent for the full year 2012, down from its initial estimate of low double-digit growth.
SNCR closed Monday's trading at $28.34, down $1.10 or 3.74% on a volume of 0.8 million shares. In after-hours trading, the stock further lost $5.11 or 18.03%.
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by RTT Staff Writer
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