Synchronoss Technologies, Inc.

Greetings and welcome to the Synchronous Technologies fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Gardella of Investor Relations. Thank you. You may begin.

Thanks, Matt. Good afternoon and welcome to the Synchronous Technologies fourth quarter and full year 2024 earnings conference call. Joining us today are Synchronous Technologies President and CEO Jeff Miller and CFO Luis Ferreira. By now, everybody should have access to the company's fourth quarter and full year 2024 earnings press release issued this afternoon, which is available in the investor relations section of our website. Today's call will begin with remarks from Jeff and Lou, after which we will host a question and answer session. Before we conclude, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. I would like to remind everyone that this call will be recorded and made available for replay via a link in the investor relations section of the company's website. Now, I'd like to turn the call over to Jeff Miller, President and CEO of Synchronous.

Thank you, Ryan. Welcome, everyone, and thank you for joining today's call. 2024 was a landmark year for Synchronous. one which saw the completion of our strategic transformation to a high-margin global cloud solutions provider that is generating positive free cash flow and approximately 29% adjusted EBIT margins. We're pleased to have concluded 2024 with 6% year-over-year subscriber growth in the fourth quarter, which contributed to a full-year revenue of $173.6 million, a 5.7% increase year-over-year, and above the midpoint of our outlook. We also achieved over $50 million of adjusted EBITDA for the full year, an increase of approximately 61% year-over-year, and above the high end of our revised annual outlook range. This improved profitability resulted in more than $20 million in positive income from operations and generation of $8.8 million in net cash flow. Our teamwork has worked hard and diligently to beat expectations, and I'm proud of their efforts that they've put forth to achieve it. Our transformation to a global cloud solutions provider has resulted in stable recurring revenue model, now with net 90% of our revenues, of total revenues greater in the recurring revenue bucket, and approximately 30% adjusted EBITDA margins in the fourth quarter, and free cash flow generation. In addition to our financial results, during the quarter we signed two significant multi-year contract extensions with existing customers, AT&T and SFR. The successful three-year extension of the AT&T contract through 2027 marks a key milestone for us in that we now have over 90% of our 2025 projected revenue under multi-year contract with global Tier 1 customers, further strengthening the foundation of our business and making us poised for future growth. As a reminder, in 2023, we extended our contractual relationship with Verizon through the year 2030. That year also kicked off the five-year agreement with SoftBank, which carries into 2028. We also introduced additional enhancements to our cloud platform during the quarter, which we've showcased at this year's Consumer Electronics Show and last week's global industry event known as Mobile World Congress in Barcelona. Leveraging AI and machine learning, we enhanced the presentation of memories for our subscribers, inviting them to revisit and share their most precious moments in the form of a slideshow with atmospheric soundtracks, which also increases user engagement with our platform. Our performance in the fourth quarter was the result of a cloud focus of our business and the execution of our full team, which delivered year-over-year revenue growth and generated significant value for our key stakeholders. Today, I also want to spend some time talking about the future of our business, our growth prospects, and our 2025 financial guidance. First, let's discuss the growth opportunities with our current customers, where we continue to see significant opportunity to grow organically within the Blue Chip customer base. We're continuing to work with our operator partners to expand the offering of our personal cloud solution to end users outside of the traditional phone upgrade cycle by drawing upon a variety of relevant customer channels, including retail, digital, prepaid or value brands, and the small and medium business market, or SMB, we're creating new inflection points in the customer journey to ensure that Synchronous' white label solution remains front and center for our customers and users throughout their relationship with the operator. We've seen positive early indicators of success here, including increased take rates through retail channels across all of our carrier partners, and are confident that continued expansion of these efforts will drive subscriber adoption for our personal cloud solution. AT&T is demonstrating excellent subscriber growth momentum following their recent contract extension. In addition to expanding our personal cloud solution offering outside the traditional upgrade cycle, we've taken steps to improve the availability and ease of adoption of their offering in the phone onboarding process at AT&T. And we're experiencing very positive results from this improvement. And following the recent launch of the new Samsung Galaxy product line, We're seeing dramatically improved frequency of cloud offer presentment and higher take rates. We also have exciting plans to continue our growth and adoption with SoftBank in Japan, bringing the ancient data box to more subscribers throughout their retail and digital channels. We're encouraged at the early pace of cloud subscriber adoption during the first full year of operation, yet our with SoftBank's mobile customers is less than 2%, and therefore, we believe there is a large and growing opportunity in Japan to add to our subscriber base. Now let's turn our attention to Verizon, whose subscriber base represents a significant number of synchronous personal cloud users. In the fourth quarter, we continued to invest heavily in sales and training measures, which have been paying dividends in new subscriber additions. During this time, we launched incentives through Verizon retail channels, which generated significant improvements in attach rates, and in-store Verizon Cloud app downloads, which has translated to positive momentum that has continued in the first quarter. Verizon has also been shifting their strategy for their cloud offering to attract premium subscribers through their My Plan perks offering in recognition of the value that the personal cloud solution provides. Following many years of bundling our product, Verizon has now transitioned to selling our personal cloud as one of their highly promoted and most successful perks on a standalone basis within their My Plan offerings. This has dramatically increased the stickiness and engagement of new premium subscribers who pay monthly for Verizon Cloud. Additionally, Verizon is prioritizing the unlimited cloud offer as the lead customer option, increasing the average selling price of the solution and placing a spotlight on the compelling economic value of the unlimited offer versus the competition. We believe this will be a net positive for our business in 2025 as we work through the natural transition of customers rolling off the bundled plans and opting into individual perk options through My Plan. In aggregate, we're expecting mid-single-digit subscriber growth across our existing customer base in 2025. Next, let's talk about new customers and prospects. Our targeted sales efforts in 2024 have yielded a growing number of prospects that are evaluating our personal cloud solution as they seek new opportunities to drive revenue growth and customer retention. This engagement is providing us increased confidence in the potential sign to sign additional customer contracts to expand the reach of our global personal cloud solution. While obviously we cannot provide any more information on these prospects until commercial terms and contracts are finalized, We believe that this will provide us with the additional subscribers needed over time to achieve our projected double-digit revenue growth in the coming years. Now I want to talk about a new go-to-market strategy to accelerate adoption and global availability of our personal cloud solution, which supports our growth and goals and objectives. As you know, our business model is currently based on a white-label resale of our personal cloud solution to major carriers and home broadband service providers. This model requires a certain level of investment and time to integrate for our carrier partners, which can limit the markets and geographies it's profitable to sell into. During this year's Mobile World Congress event, we announced the general availability of Capsule, which is our synchronous branded personal cloud product that we will be offering to smaller and international operators around the world including in regions previously where it was not economical to offer the white label solution. We believe this is a large, long-term opportunity for Synchronous, with tens of millions of potential new subscribers being unlocked by knocking down financial obstacles for carriers since it requires no customization or integration to the carrier's ecosystem, yet does not sacrifice any of the features or functionality of our white label solution. With Capsule, All a carrier needs to do is agree to offer the service to their subscriber base, and we can onboard those subscribers immediately to the Capsule platform. We've already seen promising initial test results in our partnership with Telkomsel in Indonesia, with thousands of subscribers signing up in just the first couple of months. Finally, I want to talk about our 2025 guidance. There are two items from 2024 that will affect our year-over-year top-line revenue growth. First, we have approximately $2 million in professional services revenue from the completion of our SoftBank integration work that we believe will not recur in 2025, and thus should be treated as a one-time contribution to our 2024 results. Second, one of our European customers, BT, who is in the middle of a multi-year business rightsizing and transformation, has decided to wind down their legacy wireline cloud offering as part of a broader cost reduction effort. This was the result of a business and branding consolidation effort and a deliberate shift in strategy by the customer and does not reflect any dissatisfaction with the performance of our cloud offering. In fact, during last week's Mobile World Congress, I met with senior leaders of BT on how to leverage our longstanding partnership and collective cloud experience and apply that to their latest brand strategy for broadband and mobile subscribers going forward. BT contributed approximately $6 million in annualized revenue in 2024. That is not expected to continue in 2025. But with recurring revenue representing more than 90% of our 2025 total revenue projection, we're confident in our numbers for the next year and anticipate that the projected subscriber growth will compensate for these two events. As we move forward through 2025, I'm filled with confidence based upon the early positive signs of accelerated subscriber adoption at AT&T, the expansion of Verizon cloud growth through retail, value, and the SMB channels, and the significant opportunities that exist with only 2% subscriber penetration at SoftBank. I'm also encouraged by our active conversations with new cloud customer prospects and look forward to expanding the reach of our cloud platform, including our new capsule offering, and then replicating the success that we've enjoyed with our existing customers. We've taken concrete steps to pivot our business model and emerge as a high margin, free cash flow positive cloud provider, and believe we are now poised for new customer expansion and continued growth. We're confident in our new business model, our product offering, and strategy, and feel that there is near-term opportunity for growth in our existing customers, our ability to add new customers, and the promising rollout of Capsule. Now I'd like to pass the call over to Lou for a more detailed review of the financials.