Synacor Files For $75 Million IPO

Synacor, a provider of TV Everywhere services and other portal solutions to cable and telecom operators, filed to raise up to $75 million in an initial public offering.

Charter Communications and CenturyLink are Synacor's two biggest customers, together accounting for 65%, 62% and 60% of its revenue for the years ended 2008, 2009 and 2010, according to its S-1 filing with the Securities and Exchange Commission.

Synacor generated $66.2 million in revenue for the year ended 2010 and posted a net loss of $3.6 million. For the first nine months of 2011, the company had $62.1 million in revenue and a net profit of $2.2 million.

As of the end of September, Synacor had 45 Internet service provider customers representing about 20 million users, or 25% of the estimated 79 million U.S. high-speed Internet households.

Among its risk factors, Synacor said it relies significantly on revenue from Google. Synacor has a revenue-sharing relationship with the Internet giant under which it includes a Google-branded search tool on the websites of Charter, CenturyLink and other customers. Google-related revenue was approximately 48%, 45% and 49% of its revenue in 2008, 2009 and 2010, respectively, and approximately 55% of revenue for the nine months ended Sept. 30, 2011.

Synacor's agreement with Google expires in February 2014 "unless we and Google mutually elect to renew it," and Synacor noted that Google may terminate the agreement if Synacor experiences a change in control, if it doesn't maintain certain search and display advertising revenue levels, or upon the two-year anniversary of the agreement in February 2013.

As of Sept. 30, Buffalo, N.Y.-based Synacor had 253 employees in the U.S. and one employee in the United Kingdom. The company's three primary data centers are located in shared facilities in Atlanta, Denver and Amsterdam, The Netherlands, and it also maintains a secondary data center in a shared facility in Buffalo.

Underwriters on the IPO are BofA Merrill Lynch, Citigroup, Stifel Nicolaus Weisel, BMO Capital Markets, Needham & Co. and Oppenheimer & Co.

Synacor was originally formed in January 1998 with the name Chek, which was an Internet messaging technology provider. In December 2000, Chek acquired, and changed its name to CKMP; in July 2001, CKMP, Inc. changed its name to Synacor. MyPersonal remained a subsidiary of Synacor until May 2007 when it was dissolved.

Synacor's investors include Crystal Ventures, Intel Capital, Advantage Capital Partners, North Atlantic Capital and Walden International.