Synchronoss Technologies is taking steps in “unprecedented times” to shore up its cash position and reduce expenses, leading to a 10% reduction of its workforce.
In addition, Synchronoss’ senior executives have agreed to a 15% reduction in their base salary, and CEO Glenn Lurie will personally take a 20% reduction in salary. It also instituted an across-the-board hiring freeze.
During the company’s first-quarter earnings call on Monday, Lurie said he made a decision to consolidate some functions under Chief Commercial Officer Jeff Miller, who previously led Motorola’s handset business in North America.
That meant the elimination of the Chief Product and Marketing Officer role held by Mary Clark, who left the company on May 1. Lurie called that “an extremely tough decision.” Clark joined Synchronoss in 2018 and had been at Syniverse and Cibernet before that.
“While our first quarter results were solid and exceeded our internal plan, we felt it necessary to take unprecedented steps in unprecedented times to shore up our cash and accelerate additional actions to further reduce expenses,” Lurie said, according to a Seeking Alpha transcript.
“I will also underscore that these actions are not just about COVID-19 pandemic,” he added. “They are about us continuing to position the company to drive free cash flow and ultimately refinance our preferred stock. COVID-19 simply became the catalyst for us to accelerate these actions.”
Synchronoss reported first-quarter revenue of $77.1 million compared with $88.1 million in the year-ago quarter, a decrease of 12.5%. Total costs and expenses were down 12.9% in the first quarter, and it ended the quarter with $30.9 million of cash on the balance sheet.
Lurie said it’s important to note, Synchronoss’ reoccurring revenue business and revenue from new deals won over the past few years puts Synchronoss in “great shape” to weather the economic downturn. Synchronoss has long-term relationships with the likes of Verizon, AT&T, Sprint, British Telecom, Comcast, Vodafone, NTT DoCoMo, KDDI, SoftBank and more.
About 70%-plus of its revenue from these relationships is recurring in nature, which provides a solid base of revenue, he said. It also has seen little indication of cancellations or deferrals of deals in its business.
Several new agreements have been booked with the Cross Carrier Messaging Initiative (CCMI) related to expansion and enhancements of the RCS-based Advanced Messaging offering. The company still expects the CCMI joint venture to launch an RCS-based advanced messaging service in 2020.
However, the company is seeing signs that COVID-19 is having an impact on its customers and in turn, that may affect new deals, contracts and its customers for the remainder of the year. That includes a high percentage of its carrier customers globally as retail stores are closed and there’s no clear timeline for many of them to reopen. New phone activations and handset upgrades are down, and some carriers are reporting a decrease in subscriber counts.
That said, it’s still able to work with its customers. Everybody is in the same boat, dealing with work-from-home orders and it’s happening globally, not on a regional basis.
“We’re seeing some things, as we said, slow a bit but nothing has stopped, and everybody’s still working together and everybody’s still focused on delivering. So – so far so good,” Lurie said. “And in fact now that we’ve been in this for the number of weeks we have, we’re actually – everybody including our customers are actually getting better at it, and we’re getting back to that acceleration of trying to act like this is the new normal.”