Aug. 13--Synacor's financial picture appeared to worsen in the second quarter, as the beleaguered media company's net loss widened sharply on lower revenues from advertising.
But its new CEO is hoping to change that, promising to develop a new strategic plan within the next 45 days, which will then be presented to the company's board and then to investors.
The Buffalo-based company, whose technology allows users to watch TV from any device and provides more sophisticated start-screens for websites, reported a net loss of $1.9 million, or 7 cents per share, in the second quarter. That compares to a net loss of $734,000, or 2 cents per share, for the same period a year ago.
Results include a $1 million one-time pre-tax gain from selling the Chek.com Internet domain name. Not including income taxes, interest expense, depreciation, stock-based compensation and the one-time gain, adjusted earnings swung to a $1.2 million loss for the quarter, compared to a $1 million profit a year ago.
Revenues fell 9.4 percent to $24.2 million, led by a 13.6 percent decline in search and display advertising revenues to $18.5 million. Subscription-based revenues, meanwhile, rose 7.5 percent to $5.7 million.
On the other side, the cost of sales fell 6.2 percent to $13.1 million, research and development costs fell 2.9 percent to $7.1 million, sales and marketing expenses rose 14.4 percent to $2.46 million, and general and administrative costs increased 18 percent to $3.5 million.
The company's performance stumbled on all of its key measures. During the quarter, Synacor averaged 17.9 million unique visitors, down 9.1 percent from 19.7 million a year ago. Similarly, search queries tumbled 27 percent to 130 million, and advertising impressions fell 14 percent to 8.9 billion.
The earnings report demonstrates the challenge facing new CEO Himesh Bhise, who was named just a few days ago to succeed Ronald Frankel and lead the company as it confronts hostile activist investors and struggles to grow revenues, boost the bottom line and improve returns for shareholders.
But Bhise cited the company's reputation and "product roadmap," and said his immediate tasks are to get to know those products better, meet with customers and "prospects," and get out to investors.
"Clearly the company is facing headwinds, but I joined Synacor because I see opportunities for the company," he said. "I see really strong bones and I'm excited about putting the strategy together over the next 45 days to grow the company again."
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