Now that mobile phones have become the official documentarians
of the 21st Century -- recording everything from important
messages to civil unrest to your teenage r's 4,000th selfie --
you don't want to risk losing all that data by losing your
That's become much less of a problem thanks to the cloud. It
allows users to store photos, videos, music files and other
content in a secure environment that doesn't get lost when your
As more wireless carriers provide Internet cloud-based
services to customers, there is greater demand for companies that
offer cloud-based storage solutions.
One of those companies isSynchronoss Technologies (
). It provides a cloud platform to carriers and software-based
activation for connected devices worldwide.
Most of Synchronoss' revenue comes from online activation
services for mobile devices, such asApple 's (
Synchronoss' software allows mobile network operators to
connect devices or plans into networks. The company, which serves
large clients such asAT&T (
) andVerizon Communications (
), gets paid a transaction fee for each activation.
An increasing chunk of Synchronoss' business comes from the
cloud side, where it gets paid every time a mobile operator's
subscriber signs on to cloud services that are provided by
CEO: It's About Content
The cloud service is important because of the value consumers
place on mobile phone content, says Synchronoss CEO Steve
"If anything gets stolen or lost, all that data is backed up
for you," he told IBD in a phone interview. "These days people
value the content on the phone almost as much as the phone
Only a few years after launching its cloud business,
Synchronoss now boasts more than 33 billion entities in its
cloud, including 5 billion photos, 10 billion address book
contacts, 125 million videos and more than 300 million music
Those numbers keep growing.
"Every week around the world we sign up more than 100,000 new
subscribers," Waldis said.
The company's cloud products include Synchronoss Personal
Cloud, which allows subscribers to back up content on their
Personal Cloud comes embedded on most new smartphones and
devices direct from the manufacturers, Stacie Hiras, Synchronoss'
vice president of marketing and communications, said in an
"This is gaining more usage and adoption, as it's built into
the flow to activate the phone," she said.
Other cloud products include Synchronoss WorkSpace, which lets
business employees access and edit documents stored in the
business cloud; and Integrated Life, an "Internet of Things"
platform that lets users connect and activate smartphones and
tablets, and provides services for connected homes, automobiles
and health and wellness devices.
Recent wins include a deal, announced Aug. 5, in which
Synchronoss will provide Integrated Life services forTime-Warner
Cable 's (
) IntelligentHome brand.
This is TWC's entry "into the home automation market, which
allows customers to control and automate lights, thermostats,
security alarms, video surveillance cameras and more," Tavis
McCourt, analyst at Raymond James, said in a research note.
A day later, Timex announced the launch of a
cellular-connected GPS "smartwatch," called the Ironman One, that
uses Synchronoss cloud-based services. Synchronoss also developed
the watch's mobile applications and Web portal.
Cloud Builds Revenue
During the second quarter, Synchronoss' cloud revenue grew 74%
from the prior year to $46.7 million, topping most analyst
expectations. Cloud revenue represented 45% of the total, up from
31% the previous year.
"We believe SNCR has positioned itself nicely to help the tier
1-2 wireless carriers better position themselves in the evolving
consumer and commercial cloud business," JPMorgan analyst
Sterling Auty noted in a report.
Overall Q2 revenue climbed 22% from a year earlier to $103.6
million, continuing a years-long run of double-digit gains on the
top line. Results also topped consensus estimates for $102.5
Earnings for the quarter rose 32% to 41 cents a share, a penny
Analysts surveyed by Thomson Reuters expect full-year earnings
to rise 27% in 2014 and 18% in 2015.
Synchronoss' stock price shot up nearly 15% to 39.72 when Q2
results were reported on July 29. Shares have continued to rise
since then, reaching a nearly seven-year high of 44.43 intraday
"Each quarter that SNCR continues to produce
better-than-expected cloud revenue is helping convince investors
that have been sitting on the fence," Auty said.
Working The World
One of Synchronoss' growth strategies is to continue expanding
its international presence. More than 100 carriers worldwide use
its full suite of products, Hiras says, and more than 30 use the
Synchronoss Personal Cloud platform.
The company broadened its global footprint in July when it
acquired France's Voxmobili, a provider of address book personal
cloud solutions to leading mobile operators such as AT&T,
Airtel and Orange.
The buyout allows Synchronoss "to move into new areas," CEO
Waldis said. "Voxmobili combines our core technology and
increases our distribution."
In addition to growth in Europe, he says Synchronoss has also
seen "very strong growth rates in Asia."
The company's M&A strategy focuses on small deals.
"In the past we've done small tuck-in acquisitions that have
been technology driven," Waldis said. "Most are small privately
held tech companies. We are also looking for efficiencies. We
haven't really done anything that has been transformational."