Company Overview
| Company Name |
SYNACOR, INC. |
| Company Address |
40 LARIVIERE DRIVE
SUITE 300
BUFFALO, NY 14202 |
| Company Phone |
716-853-1362 |
| Company Website |
www.synacor.com |
| CEO |
Ronald N. Frankel |
| Employees (as of 12/31/2011) |
261 |
| State of Inc |
DE |
| Fiscal Year End |
12/31 |
| Status |
Priced (2/10/2012) |
| Proposed Symbol |
SYNC |
| Exchange |
Nasdaq National Market |
| Share Price |
$5.00 |
| Shares Offered |
6,818,170 |
| Offer Amount |
$34,090,850.00 |
| Total Expenses |
$2,665,773.00 |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
1,363,625 |
| Shares Outstanding |
25,583,027 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
8/8/2012 |
| Quiet Period Expiration |
3/21/2012 |
| CIK |
0001408278 |
We estimate that our net proceeds from the sale of the 5,454,545 shares of
common stock that we are offering will be approximately $22.7 million, based
upon an initial public offering price of $5.00 per share, and after deducting
the underwriting discounts and commissions and estimated offering expenses
payable by us. If the underwriters’ option to purchase additional shares in
this offering is exercised in full, we estimate that our net proceeds will
increase by approximately $1.4 million. We will not receive any of the
proceeds from the sale of shares by the selling stockholders.
The principal purposes of this offering are to obtain additional capital, to
create a public market for our common stock, to facilitate our future access
to the public equity markets and to increase our visibility in markets. We
intend to use the net proceeds to us from this offering for working capital
and other general corporate purposes. These purposes may include expansion of
our sales and marketing activities through hiring additional personnel or
funding new marketing initiatives. They may also include investments in
research and development projects that our management and technical staff may
wish to pursue in the future to enhance our product offerings. In addition,
the net proceeds may be used to pursue other corporate opportunities that
arise in the future.
We may also use a portion of the net proceeds to expand our current business
through acquisitions of other companies, assets, products or technologies
that enhance or add functionality to our solution, further solidify our market
position or allow us to offer complementary services and products. However,
we do not have agreements or commitments for any specific acquisitions at
this time.
As of the date of this prospectus, we have not yet determined the specific
uses of the net proceeds from this offering, and therefore we cannot specify
with certainty the amounts to be used for each of the purposes discussed
above. The amounts and timing of any expenditures will vary depending on the
amount of cash generated by our operations, competitive and technological
developments and the rate of growth of our business. As a result, we will
have broad discretion in applying the net proceeds from this offering, and
investors will be relying on our judgment regarding the application of these
net proceeds.
Pending the use of the net proceeds from this offering, we intend to invest
the net proceeds in short-term investment-grade, interest-bearing securities.
The goal with respect to the investment of these net proceeds will be capital
preservation and liquidity so that these funds are readily available to fund
our operations.
The market for Internet-based services and products in which we operate is
highly competitive and involves rapidly-changing technologies and customer and
consumer requirements, as well as evolving industry standards and frequent
product introductions. While we believe that our platform offers considerable
value and flexibility to our customers by helping them to extend their
consumer relationships to a wide variety of Internet-based services, we face
competition at three levels:
• When one of our prospective or existing customers considers another
supplier, including one of our partners, for elements of the services
or products which we provide.
• When consumers choose to rely on other vendors for similar products and
services.
• When content and service providers prefer to establish direct
relationships with one or more of our customers.
Our technology platform, value added services and paid content offerings
compete primarily with high-speed Internet service providers that have internal
information technology staff capable of developing similar solutions in-house.
In addition, we compete with companies such as Facebook, Inc., Yahoo!, Google,
AOL and MSN, which have destination websites of their own or are capable of
delivering competing platforms with content and service offerings similar to
ours.
We also compete with providers of paid content and services over the Internet,
especially companies with the capability of bundling paid content and value
added services in much the same manner that we do. These companies include
ESPN3, F-Secure Corporation or F-Secure, Exent Technologies Ltd. or Exent,
Zynga Inc., MLB Advanced Media, Symantec Corporation, McAfee, Inc., Activision
Blizzard, Inc. and Electronic Arts Inc. In some cases we have performed
software integrations with these companies on behalf of our customers or, as in
the case of F-Secure and Exent, we have partnered with them in order to offer
their services more broadly to all our customers.
We believe the principal competitive factors in our markets include a company’s
ability to:
• reinforce the brand of the high-speed Internet service provider;
• produce products that are flexible and easy to use;
• offer competitive fees for website development and operation;
• generate additional revenue for high-speed Internet service providers;
• enable high-speed Internet service providers to be involved in designing
the “look and feel” of their online presence;
• offer services and products that meet the changing needs of high-speed
Internet service providers and their subscribers, including emerging
technologies and standards;
• provide high-quality product support to assist the customer’s service
representatives; and
• aggregate content to deliver more compelling bundled packages of paid
content.
We believe that we distinguish ourselves from potential competitors in three
principal ways. First, we provide a white-label solution that, unlike the co-
branded approach of most of our competitors, creates a consumer experience that
reinforces our customers’ and partners’ brands. Second, we give customers
control over the sign-on process and billing function for a wide range of
Internet services and content by integrating with their internal systems (where
applicable) thereby allowing our customers to “own the consumer.” Finally, our
solution is flexible, meaning that we allow each customer to fashion websites
that are specifically tailored to their desired “look and feel.”
Company Description
We are a leading provider of authentication and aggregation solutions for
delivery of online content and services. We deliver our solutions as a set
of services through our hosted and managed platform, enabling cable and
telecom service providers and consumer electronics manufacturers to provide
the online content and services that their consumers increasingly demand. Our
platform allows our customers to package a wide array of online content and
services with their high-speed Internet, communications, television and other
offerings. Our customers offer our services under their own brands on
Internet-enabled devices such as PCs, tablets, smartphones and connected TVs.
As of December 31, 2011, our high-speed Internet service provider customers
used our platform to offer an engaging Internet experience to over 25% of
the estimated 79 million United States high-speed Internet households.
Our hosted and managed platform allows our customers to enhance their
consumers’ online experience. Individuals are spending more time consuming
online content at home and on the go, and as a result, it has become
increasingly important for our customers to provide consumers with choice,
a personalized experience and seamless, single sign-on, access to online
content and services. We believe the increased functionality we offer through
our platform results in an enhanced experience for consumers and a broadened
relationship between our customers and their consumers, both of which increase
the traffic associated with our platform. This increased traffic creates an
opportunity, through our revenue-share agreements, for increased monetization
for both us and our customers.
Our platform provides single sign-on capability, enabling consumers to
seamlessly sign in and consume packaged online content and services from
numerous programmers and content providers. These services include e-mail,
security, online games, music and authentication of TV Everywhere,
a technology enabling consumers with applicable rights to access on-demand
television online via multiple devices including PCs, tablets, smartphones
and connected TVs. We enable our customers to up-sell a menu of content and
services to their consumers either on a pay-per-view basis or as a new service
tier added to their existing subscription relationship.
Our customers direct consumers to their branded websites, which comprise the
consumer-facing components of our platform, where consumers have access to
the online content and services available to them at their respective
subscription levels. We monetize the online traffic generated by these
consumers through search and display advertising. We also charge fees for
value added services delivered through our platform. Our business model
creates deep customer relationships: as we monetize our customers’ online
traffic, we share a portion of this revenue with our customers, resulting in
a mutually beneficial partnership.
We have historically experienced growth in the number of consumers whose
online traffic can generate search and display advertising revenues through
our platform. The number of these consumers who are subscribers through our
high-speed Internet customers has increased from 5.2 million in December 2006
to 9.5 million in December 2009 to 21.8 million in December 2011. These
subscribers, along with other consumers, such as those attributable to our
consumer electronics manufacturer customer, have driven a 127% increase in
average monthly unique visitors to our customers’ websites, a 118% increase
in average monthly search queries by consumers on our platform and a 77%
increase in average monthly advertising impressions, each on a comparative
quarterly basis from the first quarter of 2010 through the end of 2011.
------
Synacor was originally formed as a New York corporation in January 1998 with
the name Chek, Inc., or Chek. Chek, an Internet messaging technology provider,
designed and managed a proprietary messaging platform that supported the
hosting of branded e-mail and time management applications. In December 2000,
Chek acquired MyPersonal.com, Inc., or MyPersonal, through a recapitalization
and stock swap and changed its name to CKMP, Inc. MyPersonal developed white-
abel Internet community portals and built and managed a flexible platform for
delivering content-rich, branded portals to affinity groups with a focus on
the educational marketplace. In July 2001, CKMP, Inc. changed its name to
Synacor, Inc., and in November 2002, Synacor re-incorporated under the laws of
the State of Delaware. MyPersonal remained a subsidiary of Synacor until May
2007 when it was dissolved. As of the date of this prospectus, Synacor has one
subsidiary, Synacor Canada, Inc., an Ontario corporation which is wholly owned.
Our corporate headquarters are located at 40 La Riviere Drive, Suite 300,
Buffalo, New York 14202. Our telephone number is (716) 853-1362. Our website
address is www.synacor.com.
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