Investor deck march 2017 final
1Contains proprietary and confidential information owned by Synacor, Inc. / 2017 Synacor, Inc.DRIVING GROWTH IN ATTRACTIVE DIGITAL MARKETS M A R C H 2 0 1 712SAFE HARBOR"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements concerning Synacors expected financial performance as well as Synacors 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 Synacors plans and strategies; the loss of a significant customer; the companys 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 Synacors 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. 3INVESTMENT HIGHLIGHTSA Transformation Story with Multiple Profitable Growth AvenuesSTRONG OPPORTUNITIES FOR GROWTHRECURRING AND FEE-BASED REVENUE MASSIVE TRANSFORMATIONON A PATH: 3 YEARS (2019) $30M EBITDA $300M REVENUESEASONED MANAGEMENTTEAM34PORTALS EMAIL ANDCOLLABORATIONMULTIPLATFORM VIDEOCLOUD ID ENGAGING CONSUMERSADVERTISING5MISSIONWe enable our customers to better engage with their consumers56TWO PRIMARY SOURCES OF REVENUESEARCH AND ADVERTISING RECURRING AND FEE-BASEDAdvanced Portal ExperiencesEmail/Collaboration Video Platform/Cloud IDAdvertising Solutions7MULTI-PLATFORM PORTAL EXPERIENCES DESIGNED FOR ENGAGEMENT AND MONETIZATIONPersonalized, 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 Media8Combined 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 AnalyticsHundredsof PublishersSYNACOR MEDIA: COMPELLING AD PLATFORM AT SCALE200MUniques35M+Broadband Households9SEARCH & ADVERTISING GROWTH OPPORTUNITY Launch AT&T Win new portal customers Programmatic growth Grow publisher reach and products Expand mobile monetizationDigital Ad Spending15%$72BTotal MarketSource: eMarketer, growth for 2016 - 2020 910EMAIL & 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-premsoftware, and as a fully managed & hosted solution Unmatched migration & hosting capability Serving service providers, government agencies, and business enterprises1011EMAIL & 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 salesMarket Growth24%$19BTotal Market11Source: Radicati, growth for 2016 - 202012VIDEO 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 Apples Single Sign-On platform Participating with CTAM & OATC on industry standards Debuted end-to-end TVE and OTT solutions for GVTC and Consolidated1213VIDEO PLATFORM/CLOUD ID GROWTH OPPORTUNITY Win new video platform customers Win new content provider customers Extend Cloud-ID into new verticals and geographiesOnline OTT & Video Revenue76%$37BTotal Market13Source: Digital TV Research, 2010 - 202014BLUE-CHIP CUSTOMERS AND PARTNERSAdvertising and Content PartnersCommand and Simulation SolutionsChile120 Service Providers, 1,000 Government Agencies, 2,500 Businesses, 1,000 PublishersADVERTISING152016Won new portal customersWon new video platform customers2017Win new portal customersGrow government email customersWin new video platform & content provider customers2016Became a significant player in programmatic advertising2017Launch AT&T Programmatic growthExpand mobile monetization4-PILLAR GROWTH AGENDA BUILT ON OPERATING DISCIPLINEIncrease value for existing customers by optimizing consumer experience & monetizationInnovate on Synacor-as-a-platform for advanced servicesWin new customers in current and related verticalsExtend product portfolio into international and enterprisePROFITABLE REVENUE GROWTHOPERATING DISCIPLINE2016Extended Cloud-ID into new content verticalLaunched Open Source Support offering for email2017Grow Open Source Support adoption2016Activated email partner community Introduced Synacor products in new geographies2017Leverage partner community to accelerate email feature developmentWin customers in new geographies16SYNACORS 3/30/300 PATHTARGETING $300M IN REVENUES AND $30M IN EBITDA IN 2 YEARSRevenue, $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, 2015 and December 31, 2016 and for guidance for twelve months ending December 31, 2017. Guidance is as of March 15, 2017.INVESTING ~$10M BETWEEN 2H16 1H17 TO DEVELOP AND DEPLOY AT&T$106.6$127.4 $160 - $170~$300 2015 2016 2017G 2019G$7.6 $3.2 $6 - $10 ~$302015 2016 2017G 2019G17INVESTMENT HIGHLIGHTSA Transformation Story with Multiple Profitable Growth AvenuesSTRONG OPPORTUNITIES FOR GROWTHRECURRING AND FEE-BASED REVENUE MASSIVE TRANSFORMATIONON A PATH: 3 YEARS (2019) $30M EBITDA $300M REVENUESEASONED MANAGEMENTTEAM1718THANK YOU19APPENDIX20ADJUSTED EBITDA RECONCILIATIONQ1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 2016Revenue 26,730 24,716 26,351 32,448 110,245 30,260 30,476 31,721 34,916 127,373Net loss (1,073) (1,082) (931) (388) (3,474) (1,565) (2,757) (3,365) (3,053) (10,740) Provision (benefit) for income taxes 4 16 10 209 239 144 260 379 436 1,219 Interest expense 50 59 35 102 245 68 84 75 91 318 Other (income) expense 16 (17) 32 (16) 16 (2) (242) 38 248 42 Depreciation and amortization 1,496 1,660 1,560 2,185 6,901 2,098 2,270 2,414 2,453 9,235 Stock-based compensation 742 800 810 764 3,115 737 687 680 667 2,771 Loss in equity interest 32 25 - 16 73 - - - - - Capitalized software impairment - - - - - - - - 334 334 Acquisition costs - - 478 - 478 - - - - - Adjusted EBITDA 1,267 1,461 1,994 2,872 7,593 1,480 302 221 1,176 3,179 21FISCAL 2017 AND Q1 2017 GUIDANCE RECONCILIATION* FY 2017 Guidance: Revenue for the full year of 2017 is projected to grow 26% to 33% to be in the range of $160.0 million to $170.0 million. Synacor expects to report a net loss in the range of $2.8 million to $8.0 million and adjusted EBITDA in the range of $6.0 million to $10.0 million, which excludes stock-based compensation expense of $2.8 million to $3.2 million, depreciation and amortization of $8.8 million to $9.6 million, and tax, interest expense and other income and expense of $1.2 million. Q1 2017 Guidance: Revenue for the first quarter of 2017 is projected to be in the range of $26.0 million to $28.0 million. Synacor expects to report a net loss of $6.2 million to $7.5 million and adjusted EBITDA of $(3.0) million to $(4.0) 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.*Guidance is as of March 15, 2017.