synchronoss overview

1 © 2018 Synchronoss Technologies, Inc. All Rights Reserved.© 2018 Synchronoss Technologies, Inc. All Rights Reserved.

SYNCHRONOSSOVERVIEW

BUILDING BLOCKS FOR A DIGITAL FUTURE Q1 2019

2 © 2018 Synchronoss Technologies, Inc. All Rights Reserved.

Legal Disclaimers

This presentation includes statements concerning Synchronoss and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “believes,” “potential” or “continue” or other similar expressions are intended to identify forward-looking statements. Synchronoss has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, risks relating to the Company’s ability to sustain or increase revenue from its larger customers and generate revenue from new customers, the Company’s expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources and its ability to satisfy or refinance its existing debt obligations, the Company’s growth strategies, the anticipated trends and challenges in the business and the market in which the Company operates, the Company’s expectations regarding federal, state and foreign regulatory requirements, the pending lawsuits against the Company described in its most recent SEC filings, and other risks and factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, which are on file with the SEC and available on the SEC’s website at www.sec.gov. The company does not undertake any obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or otherwise.


Synchronoss Technologies at a Glance

EXPANDINGFrom Operators

to TMT

NEW MARKETS

Increasing New

Customer Opportunities

SCALINGVia Partnerships

NEW CHANNELS

Increased Sales

Velocity, Lower Costs

TRANSITIONFrom License to

Recurring

NEW MODELS

Increasing

Predictability

GROWINGFrom Domestic to

Global

NEW FOCUS

Increasing Reach

and Scale

• NASDAQ: SNCR

• 2018 Revenue: $326 million

• Market capitalization: $267 million (5/13/19)

• 200+ Customers, 1,500 Employees, 135+ Patents

• A history of solving complex technological issues for wireless carriers with innovative software solutions

• Newly configured leadership team driving significant turnaround and refocus of business model:


SEVERAL NEW DEALS ANNOUNCED

Strong Business Momentum in 2019

• New white label cloud customer launching in Q3 2019

• New Digital Experience Platform agreement with Amazon

• New IoT partnership with Microsoft

• Live IoT proof of concept with Rackspace

• Phase II of Japan Advanced Messaging Partnership

• Commercial launch of AT&T IoT Smart Cities initiative – first two customers

• White label cloud agreement with Assurant, one of the largest providers of device protection insurance

• 5 year extension of BT white label cloud agreement

• DXP reseller agreement with Rackspace


World-Class Leadership Team

28+ years of experience

• Previously President

and CEO of AT&T’s

Mobility Operations

• Led Negotiations for 1st

iPhone

• Led building of AT&T’s

IoT, Cricket – Flanker

Brand, and Digital Life

Businesses

30+ years of

experience

• Previously CFO of

Nutrisystem

(NASDAQ:NTRI)

• Suncom Wireless

(NASDAQ:TPCS)

• The Meet Group

(NASDAQ:

MEET)

25+ years of

experience

• Previously CMO

and SVP of

Roaming for

Syniverse

• VP Cibernet

20+ years of

experience

• Joined

Synchronoss in

2002

• Previously Agility

Communications

25+ years of

experience

• Joined

Synchronoss in

2006

• Previously

Group

Counsel, Intel

25+ years of

experience

• Joined

Synchronoss in

2016

• Previously WWVP

HR Openwave

• VP HR Deem

30+ years of

experience

• Previously

President of Ideal

Industries

Technology

Group

• VPGM Motorola

North America

Jeff Miller

Chief

Commercial

Officer

David Clark

Chief Financial

Officer

Mary Clark

Chief Product,

Marketing

Officer

Pat Doran

Chief

Technology

Officer

Ronald Prague

Chief Legal

Officer

Kevin Hunsaker

Chief People

Officer

Glenn Lurie

Chief

Executive

Officer


Current Trends Facing Our Customers

OVERALL TMT TRENDS:• Disintermediation

• Convergence

• Digital transformation

• FAANG impact

TECHNOLOGY:• Importance of customer

experience

• New modes of customer

experience

• Impact of intelligence (AI, ML,

NLP)

TELECOMMUNICATIONS:• Revenue growth slowing

• Smart phone growth slowing

• Capex increasing

• OTT disintermediation

MEDIA:• OTT, TV everywhere growing

• Content costs rising

• Social media influence

• Wireless carriers moving into

media


Synchronoss Platform Overview

CLOUD DIGITAL MESSAGING IOT

Value Added Service Channel Experience Management

Messaging Channel Innovation

M2M Channel Enabler

• 92PB+ Cloud Storage

• 95M+ Devices

• Intake of up to ~300TB+/day

• 200M+ Activations/year

• 95%+ Task Automation

VERIZON BT SPRINT AT&T SOFTBANK KDDI AT&T

• 450M+ Provisioned

Mailboxes

• 250M+ Active Subscribers

• 5-9’s Availability

• Smart Buildings Platform

• AT&T Smart Cities Partner

• Microsoft IoT Accelerator

Program partner

Rackspace DoCoMoNew Carrier

TBA* AmazonAssurant

* New significant carrier contract signed May

2019, partner to be disclosed later in 2019

Rackspace

Microsoft


Synchronoss Cloud Platform & Products

PERSONAL CLOUD APPLICATION

THE WORLD’S LARGEST WHITE LABEL CLOUD SOLUTION

PROVEN PREMIUM BUSINESS MODEL

WORLD WIDE PARTNER DISTRIBUTION

SECURE AND SCALABLE PLATFORM

Synchronoss is Positioned to Win In Cloud:


PLATFORM CLOUD PROVIDERS ARE COMPETITORS

REVENUE GROWTH IS SLOWING OR DECLINING

PROVIDES A BETTER CUSTOMER EXPERIENCE ACROSS TOUCH POINTS

PERSONAL DATA KEEPS ON GROWING

New, incremental profitable services revenue are at a premium

Operators are handing over valuable customer data to iOS and Android

Operators must own the whole customer experiences long-term – device and content

The growth in user-generated media and capabilities of 5G place new value on Cloud

Why Operators are Changing Their Views on Cloud


Synchronoss Digital Platform & Products

COORDINATED PAUSE

AND RESUME

CUSTOMER

EXPERIENCES ACROSS

CHANNELS

OMNI AND SINGLE CHANNEL

EASY TO OPERATE

CREATES FAANG-LIKE EXPERIENCES

SIMPLE INTEGRATION

Synchronoss is Positioned to Win In Digital:


DXP Solves a Critical Problem in Experience Management

▪ Coordinated pause and resume customer experiences

▪ Agile teams of IT and marketing working closely together

▪ Increased NPS from seamless, insightful experiences

Now, Digital Journeys creates…

“An Omni-Channel Experience”Today…

There is a hole in the IT Stack

▪ All channels must be integrated to back end

▪ Each channel requires its own work flow

▪ Each customer experience is hand coded

ONE TEAM


ACQUISITION & INTEGRATION IS EXPENSIVE & TIME CONSUMING

NO ONE CAN AFFORD TO HAVE A BAD CUSTOMER EXPERIENCE

INCREMENTAL NEW REVENUE MUST BE PROFITABLE

INNOVATION CAN’T HAPPEN SLOWLY

FANG-quality digital experiences are what consumers expect from companies

TMT companies struggling legacy systems - time and costs of convergence

New revenue growth, reduced cost and better customer experiences hallmark of

successful digital players

Innovation to customer experiences must happen within the window of opportunity

Why TMT

Companies

Need DXP to

Compete


Synchronoss Messaging Platform & Products

DEPLOYED ADVANCED MESSAGING SOLUTION

ECOSYSTEM MANAGEMENT PLATFORM

WELL POSITIONED WITH OPERATORS

MARKET LEADING CLIENT

Synchronoss is Positioned to Win In Messaging:


OTT MESSAGING PROVIDERS ARE GROWING OR PREFERRED

THERE ARE NEW REVENUE MODELS CARRIERS DON’T HAVE

Effective rate of messaging is zero and now included in rate structure

Operators must find new incremental areas of net/new revenue growth

OTT Messaging applications have become more relevant - Facebook is beginning to

harness the future of A2P

Advanced messaging features are attracting advertising, commerce, etc. revenue

Why

Operators

Need

Advanced

Messaging

OPERATOR MESSAGING BUSINESSES HAVE NO REVENUE

OPERATOR REVENUE GROWTH IS SLOWING OR DOWN


Synchronoss IoT Platform & Products

$10.2BN 20% 35% Estimated

Market Size by

2026

Return based on

savings per

engagement

CAGR

between 2017-

2025

The Smart Building Platform partnership that adds a new energy and building management offering to AT&T’s Smart Cities offering

20 21 22

Sources:

20 – Navigant Research

21 – Variant Market Research

22 –

END-TO-END SOLUTION APPROACH

WELL POSITIONED WITH OPERATORS

IOT TRACK RECORD

SMART BUILDINGS PLATFORM

Synchronoss is Positioned to Win In IoT:


IT’S HARD TO DRIVE EFFICIENCIES PROMISED IN THE TECHNOLOGY

DATA INTEGRATION DOESN’T REALLY EXIST

SMART BUILDINGS ARE BUT ONE PIECE IN THE IOT PUZZLE

There is no single place to combine data from all the systems and sensors.

There isn’t a single lens to reduce costs, create efficiencies in building management systems

Smart City Platforms need a vertical to start, integrate and then add - Telematics

Why Channel

Distributors

Need Smart

The Buildings

Platform

NONE OF THE EXISTING VERTICAL PLAYERS WORK TOGETHER

Management of multiple systems, OS’s, devices and data sources,

sensors is a challenge


FINANCIAL OVERVIEW



Synchronoss: Executing on Financial Objectives

Financial Objective Proof Points

Build recurring revenue✓ $326 million revenue in 2018

✓ First quarter revenue $88.1 million, up 5.3% YOY and 7.3% sequentially

✓ 79% recurring revenue in 2018, 73% in Q1

Reduce cost base

✓ $25 million annual run rate cost savings exiting 2018

✓ Q1 2019 adjusted gross margins up 850 basis points YOY

✓ Q1 total operating expenses down 17% YOY

Improve profitability and cash flow

Grow EBITDA

✓ Consistent EBITDA improvement throughout 2018

✓ 2H18 Adjusted EBITDA of $24.8 million

✓ Q1 2019 Adjusted EBITDA of $6.6 million, a $17.4 million improvement

over Q1 2018

Increase capital efficiency

✓ Balance of convertible debt down to $64 million at May 3, 2019 due to

opportunistic early retirements in 2018 and 2019

✓ Net cash of $36.4 million as of May 3, 2019


Adjusted EBITDA Trend

($10.8)

$0.0

$9.4

$15.0

($15.0)

($10.0)

($5.0)

$0.0

$5.0

$10.0

$15.0

$20.0

Q4 2018

Q1 2018

Q2 2018 Q3 2018

▪ Consistent improvement in Adjusted EBITDA throughout the year

▪ $14 million of full-year Adjusted EBITDA, meeting guidance for the year

▪ Generated $24.8 million of Adjusted EBITDA in the second half

▪ 18.8% Adjusted EBITDA margin in Q4, exceeding end-of-year target of 15%.

$6.6

($10.8)($12.0)

($10.0)

($8.0)

($6.0)

($4.0)

($2.0)

$0.0

$2.0

$4.0

$6.0

$8.0

Q1 2018

Q1 2019

▪ Year over year improvement in adjusted EBITDA demonstrates

effectiveness of 2018 cost reduction efforts

2018 Quarterly Trend

($mil)

Q1 2019 Year-over-Year Trend

($mil)


40.00%

42.00%

44.00%

46.00%

48.00%

50.00%

52.00%

54.00%

56.00%

58.00%

Q1 18 Q1 19

Adjusted Gross Margin – Year Over Year Improvement

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Q1 18 Q1 19

EBITDA Margin – Year Over Year Improvement

✓ Significant improvement in gross margin and EBITDA margin throughout 2018 and 2019

✓ Earnings leverage driven by cost reduction efforts – transition from data centers to cloud

for storage, office consolidation, headcount reductions, etc.

Improving Earnings Leverage Due to Cost Reduction Efforts


Product Portfolio Performance

▪ Strong growth in Premium Cloud subscribers

throughout the year

▪ Renewed Verizon contract for additional five years

▪ Renewed BT contract for additional five years in early

2019

▪ Signed new cloud contract with Assurant in early 2019

▪ Signed major new carrier cloud contract in early

2019; partner to be disclosed after service is

launched later this year.

▪ Acquired Digital Journeys platform 2018

▪ Entered Rackspace reseller relationship Jan 2019

▪ Announced Amazon partnership May 2019; DXP to

be used to integrate Amazon services such as

Amazon Prime, Prime Video, Amazon Music, and

Twitch with carriers worldwide

CLOUD

DIGITAL

$38.3

$40.7

$30.0

$32.0

$34.0

$36.0

$38.0

$40.0

$42.0

Cloud YOY Rev Growth

Q1 2018 Q1 2019

$23.0 $22.9

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

Digital YOY Rev Growth

Q1 2018 Q1 2019


Product Portfolio Performance

$22.4

$24.5

$15.0

$17.0

$19.0

$21.0

$23.0

$25.0

$27.0

$29.0

Messaging YOY Rev Growth

Q1 2018 Q1 2019

MESSAGING

IOT

▪ Signed contract to develop advanced messaging for

the Japanese market in 2018

▪ Enables Japanese carriers to fend off competition

from OTT messaging apps

▪ Entered second phase of Japan advanced

messaging project in early 2019 – launch of A2P

messaging, enabling monetization opportunities

▪ AT&T Smart Buildings partnership gaining

momentum, with first two customers launching in Q2

2019

▪ Joined Microsoft Azure IoT Solutions Accelerator

program

▪ Announced Rackspace live proof of concept to

monitor, control, and optimize energy usage at

their 1,000,000 square foot headquarters facility


SNCR – Current Capital Structure

($mil) At 3/31/19 At 5/3/19:

Cash and marketable securities $ 110.3 $100.5

Convertible debt 97.2 64.1

Net cash position 13.1 36.4

Preferred stock $177.1


Consolidated Statement of Operations – First Quarter($000’s, unaudited)


Consolidated Statement of Operations – Full Year ($000’s, unaudited)


Reconciliation of GAAP to non-GAAP Financial Measures – Adjusted EBITDA($000s, unaudited)


Reconciliation of GAAP to non-GAAP Financial Measures($000s, unaudited)

synchronoss overview

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