Synchronoss Technologies SNCR shares have surged 44.2% in the year-to-date (YTD) period compared with the Zacks Internet - Software industry’s return of 25.2% and the broader Zacks Computer & Technology sector’s appreciation of 25.8%.
SNCR has outperformed its peers, such as Alphabet GOOGL and Dropbox DBX, which also offer personal cloud services integrated with its respective platforms.
Alphabet has returned 23.5% YTD, whereas Dropbox has lost 8.2% over the same time frame.
The outperformance can be attributed to SNCR’s impressive third-quarter 2024 results and strong cloud subscriber growth.
Synchronoss Technologies, Inc. Price and Consensus
Synchronoss Technologies, Inc. price-consensus-chart | Synchronoss Technologies, Inc. Quote
SNCR Shares Rides on Expanding Cloud Portfolio
In the third quarter of 2024, the number of cloud subscribers grew 5.1% year over year, which drove 8% of total revenues. Quarterly recurring revenues were 92.2% of revenues.
Portfolio strength has been a key catalyst. SNCR introduced the latest version of its Personal Cloud platform, featuring AI-enhanced capabilities like Memories, Genius with One-Click Editing, and improved backups.
Synchronoss also introduced auto-scaling capabilities, delivering enhanced financial and operational efficiencies for the company and several of its key customers.
Further expanding its reach, the deployment of the personal cloud platform to power SoftBank’s Angel data box service has expanded SNCR’s footprint in Japan. Synchronoss continues to invest in expanding its presence and customer relationships in the country.
Expanding Clientele Aids SNCR’s Prospects
SNCR’s rich partner base has been a key catalyst. Strong demand for SNCR’s personal cloud, which supports smartphones, tablets, desktop computers and laptops, is expected to expand its clientele, which includes Verizon VZ and AT&T.
SNCR’s partnership with Verizon extends until 2030. The focus is on AI-driven enhancements for Synchronoss Personal Cloud to support over 10 million subscribers with advanced content management.
Synchronoss’s 75% of revenues are under contract for at least four years, which boosts top-line visibility.
In the third quarter of 2024, SNCR secured a three-year contract extension with SFR, part of Altice France, which operates high-speed fixed and mobile networks serving over 27 million users.
The extension further deepens SNCR’s integration with SFR’s ecosystem, reflecting strong customer satisfaction and the value of SNCR’s cloud platform.
Synchronoss Offers Strong View for 2024
For 2024, Synchronoss expects revenues between $172 million and $175 million, which indicates 6-8% year-over-year growth.
Recurring revenues are expected to be 90-92% of total revenues.
Synchronoss expects an adjusted gross margin of 77-78% (up from the previously mentioned 73-77%).
Adjusted EBITDA is expected to be between $47 million and $48 million, up from the previously stated $43-$46 million.
SNCR’s Earnings Estimate Reflects Mixed Prospects
The Zacks Consensus Estimate for fourth-quarter 2024 revenues is currently pegged at $43.64 million, indicating year-over-year growth of 5.41%.
For the fourth quarter of 2024, the Zacks Consensus Estimate for earnings is pegged at 27 cents per share, unchanged over the past 30 days, but indicates 131.76% year-over-year growth.
The Zacks Consensus Estimate for 2024 revenues is currently pegged at $173.36 million, indicating year-over-year decline of 19.17%.
The Zacks Consensus Estimate for 2024 earnings is pegged at $1.19 per share, unchanged over the past 30 days, suggesting a 184.4% year-over-year increase.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
SNCR Shares: Buy, Hold or Sell?
SNCR’s shares are currently trading at a significant discount as suggested by a Value Score of A.
The forward 12-month Price/Sales ratio for SNCR stands at 0.53X, significantly below the industry average of 3.47X.
Synchronoss expanding cloud subscriber base is a key catalyst. However, SNCR’s top-line growth is expected to be hurt by intense competition and foreign exchange losses.
Synchronoss currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
