Synchronoss Looks to Keep Up Its Cloud Momentum

Image source: Synchronoss Technologies.

Cloud computing has taken off in the tech world, and Synchronoss Technologies (SNCR 2.96%) has sought to play a key role in the industry. By offering mobile activation services to wireless companies, as well as the ability to back up devices on the cloud, Synchronoss has attracted an impressive customer list that includes many well-known telecom giants.

However, even though revenue growth trends have been favorable, Synchronoss hasn't seen the same strength on its bottom line. Coming into its second-quarter financial report on Aug. 3, Synchronoss investors believe that earnings could take a slight hit compared to year-ago numbers; but they want sales to keep climbing vigorously. Let's take an early look at Synchronoss Technologies to see what investors should prepare for this quarter.

Stats on Synchronoss Technologies

Data source: Yahoo! Finance.

What can investors expect from Synchronoss' earnings?

In recent months, investors have grown more excited about the prospects for Synchronoss' earnings. They've inched upward their calls for second-quarter earnings by $0.01 per share, but they've made more significant boosts of close to $0.10 per share each for full-year 2016 and 2017 projections. The stock has picked up some steam, as well, climbing 9% since mid-April.

Synchronoss Technologies' first-quarter results created most of the momentum for the upward movement in the company's stock. Adjusted revenue growth of 9% represented a slowdown compared to previous quarters, and net income was only able to inch upward by 3%.

Yet Synchronoss made progress in pushing more of its business toward the cloud-services segment, which grew at twice the rate of the overall business, and now makes up more than half of the company's total sales. CEO Stephen Waldis said that he believes the company is ready to take advantage of rapid expansion in cloud-based opportunities in the next year to 18 months, even as Synchronoss also expanded activation arrangements with one of its major customers after it completed a merger transaction.

What Synchronoss' new offering means for growth

One big part of that potential growth will come from Synchronoss' new Secure Mobility Platform. The company had been working on a beta version of the platform earlier this year, but in June, Synchronoss made the product available for general use.

The platform consists of a secure device container that encrypts an enterprise-customer's data on mobile devices and in transmissions, and a collection of productivity apps that are designed to provide a balance between the need for efficient use and maintaining appropriate levels of security. Synchronoss says that the secure enterprise mobility-technology platform satisfies regulatory requirements, even in highly regulated businesses like healthcare, law, financial services, and life sciences.

The Secure Mobility Platform also emphasizes the extent to which Synchronoss has been willing and able to work with partners. The cloud-services specialist completed agreements with several other companies, including Box, to provide secure file sharing, Symphony, for secure messaging, and Samsung, with its Samsung Knox platform for protection and security. By putting together a vital service that will help enterprise customers with their security and mobility needs, Synchronoss hopes that it can move forward to expand the overall reach of its enterprise unit, and find new markets for its services.

In the Synchronoss Technologies' earnings report, investors should pay a lot of attention to comments in the conference call about the early acceptance of the Secure Mobility Platform. Ongoing business from its legacy mobile-activation segment will be important to Synchronoss' current financial results, but it increasingly appears that the future for the company will rely much more heavily on how widely accepted its cloud-services offerings become. If the Secure Mobility Platform rollout looks promising, it could be a positive sign of things to come for Synchronoss in the years to come.