Shares of Synchronoss Technologies (SNCR -0.69%) have plunged today, down by 20% as of 12:15 p.m. EST, after the company reported third-quarter earnings. The results badly missed the market's expectations.
Revenue in the third quarter was $78.2 million on an adjusted basis after excluding the impact of a writedown. Approximately $26 million of accounts receivable was written down since it was deemed uncollectible. Analysts were modeling for $86.9 million in sales. That all translated into an adjusted net loss per share of $0.62, significantly worse than the $0.40 per share in red ink that investors were expecting.
The tech company said it had inked a new cloud deal with a Tier 1 wireless carrier in the U.S. "We are very excited to announce our third new cloud deal of the year, this time with a major U.S.-based Tier 1 carrier," CEO Glenn Lurie said in a statement. "This new customer, along with our previously announced new cloud deals, demonstrate that the Synchronoss white-label cloud is in the sweet spot of what carriers need as they prepare for the widespread launch of 5G cellular and continue to seek out new sources of revenue and profitability."
The writedown is related to Sequential Technology International (STI), which Synchronoss has a 30% equity stake in. Synchronoss says STI is evaluating strategic alternatives and Synchronoss is now taking a "conservative approach" to its financial relationship with STI.
Synchronoss is now cutting its full-year guidance due to the impact of the writedown. "We are revising down our annual guidance due to the impact of the STI revenue writedown and then transition to cash base accounting for the STI relationship," CFO David Clark said on the conference call with analysts. "We are also narrowing the guidance range."
Full-year revenue is now expected to be $308 million to $315 million, down from the prior range of $340 million to $355 million. Adjusted EBITDA for 2019 is forecast at $24 million to $30 million.