Shares in Synacor were down more than 27% Thursday morning, the day after the company said revenues linked to its portal agreement with AT&T will be delayed into 2018.
“The joint AT&T-Synacor team has decided to focus on engagement over monetization…so we anticipate that the ramp up in revenue that we were expecting towards the end of this year will get delayed to 2018,” Himesh Bhise, Synacor’s CEO, said Wednesday on the company’s Q2 earnings call.
As a result of the delay, Synacor revised its full year 2017 revenue guidance to a range of $140 million to $150 million, down from a previous range of $160 million to $170 million. It’s also expecting a full year 2017 net loss of $9.3 million to $13.9 million, from a previous range of a net loss of $2.8 million to $8.0 million.
Shares in Synacor were down 98 cents (27.65%) to $2.57 in morning trading Thursday.
Update: Shares of Synacor closed Thursday down $1.15 (32.39%), to $2.40 each.
Synacor announced the AT&T deal last May, noting that expected revenues from the contract were expected to be about $100 million per year following full product deployment, which, at the time, was seen starting in 2017.
The latest revelation is another bump in the road. Last November, Synacor said it and AT&T had agreed to push back the launch of a next-gen desktop and mobile portal service to the first half of 2017.
Despite the shift in timing, “the AT&T portal product implementation, rollout and migration have been completed as planned and engagement metrics look strong,” Bhise said. “We worked with AT&T to successfully roll out the new ATT.net portal across the country and completed the migration of the installed base of desktop, mobile, and tablet users to the new experience. We are particularly pleased to see the customer satisfaction ratings across the various facets of the new ATT.net are increasing towards pre-migration levels.”
Bhise also stressed that, despite the decision to prioritize experience and engagement, “we are monetizing today” with AT&T.
“The AT&T team and the Synacor teams are working extremely well together and so given the nature of that relationship, given the size and strategic presence of AT&T, I’m very comfortable making sure that this is the right long-term relationship for us and then,” Bhise said.
Likewise, he said Synacor remains committed to its “3/30/300” plan, which anticipates $300 million of revenue, $30 million of adjusted EBITDA in 2019.
Synacor today announced that it has expanded its partnership with Alaska’s GCI, noting that the new multi-year deal includes an upgrade to Synacor’s hosted email platform and the deployment of the vendor’s Advanced Cloud ID platform to streamline the log-in experience on connected TVs and mobile devices. That latter effort will let users access authenticated video content across devices without having to enter passwords repeatedly.
Synacor posted a Q2 net loss of $3.3 million on revenues of $31.2 million, up 2% from the year-ago quarter. It ended the quarter with $23 million in cash and cash equivalents, a number that includes $20 million raised in April 2017 from an equity offering.
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