Synchronoss Technologies, Inc.

Good day and thank you for standing by. Welcome to the synchronous first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press the star zero. I would now like to hand the conference over to Johan Kim, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon and welcome to Synchronos' first quarter 2021 earnings conference call. With me on today's call are Synchronos' President and Chief Executive Officer, Jeff Miller, and Chief Financial Officer, David Clark. Before I turn the call over to Jeff and David, I'd like to cover a few quick items. This afternoon, Synchronos issued a press release announcing its financial results. Our release is available on the company's website at Synchronos.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the investor relations page of the company's website. I want to remind everyone that on today's call, management will discuss certain factors that are likely to influence the business going forward. Any factors discussed today that are not historical, particularly comments regarding our long-term prospects and market opportunities, could be considered forward-looking statements. These forward-looking statements may include comments about the company's plans and expectations of future performance. Forward-looking statements are subject to a number of risks, and uncertainties which could cause actual results to differ materially. We encourage all of our listeners to review our SEC filings, including our most recent 10-K and 10-Q, for a complete description of these risks. Our statements on this call are made as of today, May 10, 2021, and the company undertakes no obligation to revise or publicly update any of the forward-looking statements contained herein, whether as a result of new information, future events, changes in expectations or otherwise. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures, such as adjusted EBITDA. Adjusted EBITDA does not necessarily equate to cash generated by operations as it does not account for such items as deferred revenue or the capitalization of software development. Today's earnings release and the related current report on Form 8 described the differences between our non-GAAP and GAAP reporting and present a reconciliation between the two for the periods reported in the relief. With that said, I'll now turn the call over to Jeff.

Thanks, Juhan, and good afternoon, everyone. We appreciate you joining us today and thank you for your continued interest in Synchronous. I am pleased to report that Synchronous delivered solid first quarter results, including first quarter revenue of $65.5 million, an adjusted EBITDA of $5.5 million, a 215% increase year over year. Both revenue and adjusted EBITDA beat our internal targets, giving us confidence to raise our adjusted EBITDA guidance for the full year of 2021. Recurring revenue for the quarter was 86% of total revenue, which is the highest we've seen in over a year. We believe this metric, combined with the fact that the vast majority of our revenue being under multi-year contracts, brings significant stability and predictability to our business model. I'd like to thank and congratulate the employees of Synchronous for all their hard work in getting 2021 off to a good start. Some other highlights in the quarter, including the signing of several new customer contracts, including two significant deals in Southeast Asia, one for cloud and one for messaging. We also have seen continued growth in the existing cloud customer subscriber base. Plus, we continue to deliver new product innovations that led to the release of several new products, which we believe will help drive revenue growth. Before we get into the details of the quarter, I'd like to address the recent news about the dissolution of CCMI, or the Common Carrier Messaging Initiative in the U.S. that has been in various news reports. You should recall that CCMI was a joint venture created by the three largest US carriers to provide its members a universal RCS messaging platform and a shared go-to-market approach to deliver advanced messaging experiences across all the major carriers. Recently, as has been reported in the news, CCMI's members have decided to end the joint venture and pursue their RCS deployments individually. We can assure you that based on the commercial agreement that we have in place with CCMI, we do not expect that this will have any negative impact on synchronous financial results in 2021. In fact, the transition from SMS to RCS messaging has the potential to disrupt the current OTT messaging paradigm and enable carriers to recapture market share and revenue while at the same time generating a return on the billions that they're investing in 5G infrastructure. We believe the U.S. carriers are still committed to bringing RCS to U.S. wireless users and to launching RCS-based networks in 2021. And Synchronous is prepared to make that happen. We believe the RCS rollout in the U.S. will now mirror the model that we've implemented in Japan, with each carrier offering its own unique go-to-market approach. Leveraging on synchronous success in Japan, we're well positioned to provide U.S. carriers a compelling RCS solution, and we hope to share an update on our progress in the coming months. Now back to the first quarter results. In cloud, we made solid progress by signing new deals while at the same time accelerating subscriber growth with our existing carrier customers. We signed an important deal with Telecom Sigma, the IT arm of Telkom Indonesia Group, Indonesia's state-owned telecommunications conglomerate. With this relationship, TelkomSigma will provide students with the synchronous personal cloud solution at 25 universities, allowing for secure cloud access to store, share, and transfer academic documents with their professors and fellow students. Students will also have the option to continue with a paid version after they graduate. Outside of being an important relationship with one of the largest carriers in the country of over 270 million people, this win, along with our new agreement with Allstate Protection Plans, highlights the different use cases available to carriers and other service providers as they look to monetize their subscriber base. And for synchronous, these new use cases increase the addressable market for our cloud platform. Speaking of Allstate Protection Plans, I'm pleased to say that we've completed our work on their Square Trade cloud offering and have delivered it to them for user acceptance testing. We expect that the subscriber offering will be deployed shortly, which should help drive additional cloud revenue in the back half of the year. During the quarter, we continue to see an acceleration in our AT&T subscriber base. And I'm pleased to say that that momentum has continued in the second quarter, not only because of new phone launches, but also because of more foot traffic in the AT&T retail stores. Also during the quarter, Verizon launched a significant advertising campaign for their synchronous delivered unlimited cloud storage offering, and we're pleased to see the growth and the uptake of that product as a result. We believe our future subscriber growth with Verizon will benefit as a result, and more broadly, we anticipate double-digit subscriber growth across the global base of Synchronous Cloud customers this year. Turning to messaging. In the first quarter, we had a major new customer win to deploy RCS in another country in Asia. This is another important milestone for Synchronous as it gives us access to important messaging market with over 100 million subscribers. Additionally, this will be the first commercial deployment that leverages the entirety of our expanded messaging IP into a complete end-to-end synchronous solution, including our own map or messaging as a platform and our own messaging marketplace solution, which is our brand-facing monetization platform that enables both carriers and brands to capitalize on the business messaging opportunity. This new contract combined with our expanded IP further strengthens our lead in providing an advanced messaging solution that helps carriers protect and grow their messaging revenue streams. We won this following a rigorous selection process where we distinguished ourselves based on our established leadership position in global RCS deployments. Our implementation is now underway, and we're in the process of deploying the solution through a large local systems integrator. This win provides us the ability to further expand our presence in the APAC, and in particular, Southeast Asia market, as well as it improves our messaging profitability due to the increased use of synchronous IP. In core messaging, we've recently completed the migration of over 4 million British Telecom residential broadband users to our email platform. And I'm happy to report that this is being met with great success, as both our iOS and Android email user apps have ratings of greater than 4.5 on a five-point scale. This puts us in good standing with this large and influential European carrier who also utilizes our cloud platform in addition to our messaging platform. Also in Europe, we signed multiple agreements with Telecom Italia Mobile, or TIM, that included the upgrade to our latest messaging platform, the migration from an on-premise solution to a private cloud-based solution and added functionality in the form of antivirus and anti-spam services to their subscribers. We also kicked off the email migration process on behalf of Altice this quarter, a new core messaging customer that we signed earlier in the year and discussed on our last call. More broadly, we believe that there will be ongoing competitive replacement opportunities in the core messaging market, and we feel great about our ability to win on those, just as we did with Altice last quarter and with Bell Canada and Proximus last year. While often overlooked, our core messaging business remains healthy, competitive, and profitable, and as highlighted by the BT app ratings, we've gotten excellent feedback from our customers' subscribers. Moving on to digital business, the investments we've made in product innovation and improved operational efficiencies in our digital business are paying dividends. Product-wise, we continue to innovate on our total network management product suite. We formerly referred to this suite of products as the diversified portfolio, but we had two major releases for invoice claims management, as well as launches of new module in our spatial suite, called Spatial Office. Spatial Office extends the access to our leading network intelligence and planning tool to a broader user base across the enterprise, providing real-time insight to network data via user-friendly interfaces. It allows resources in the field as well as in the office to manage the network simultaneously via a single application. Also under the total network management umbrella we launched our blockchain initiative with a tier one mobile provider through our partnership with Sage Management. Our solution leverages our combined assets to revolutionize how carriers do business with each other for interconnection services, driving operational efficiencies that translate to bottom line impact for our customers. On the new business front, we signed new deals with a major Canadian communications provider for spatial, and a large U.S. regional communications provider for financial analytics, both during the quarter, expanding our reach in both of these total network management product categories. Operationally, we continue to streamline our cost structure. In this quarter, we managed to find additional efficiencies in our cloud hosting platform, which contributed to improved gross margin performance. So, in summary, I'm pleased with our first quarter results. We closed several new meaningful customer contracts during the quarter, saw continued growth in our cloud subscriber base, and delivered on some significant product milestones. I'm proud of the synchronous team's hard work as we continue to be driven by delivery and execution for our customers, disciplined cost management, continued product innovation, and as you heard today, new customer acquisitions. We look forward to continuing to execute on our strategy of focused and profitable growth in 2021. Lastly, I want to make a comment on our work to deliver a sustainable capital structure for Synchronous. It is top of mind for almost every investor we talk to, and I want to reassure you that is also one of the most important priorities of our senior management team as well. And we are making progress in finding a sustainable solution and we look forward to updating the investors in the coming months. With that, I'll turn the call over to David to review the financial results in more detail, as well as provide an update to our financial outlook. David?