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Synacor profits jump, boosted by visitors to websites it runs

Synacor's second quarter as a publicly traded company was another strong one.

The Buffalo-based Internet content provider's first-quarter profits soared as revenues jumped by almost two-thirds because more people visited the websites that Synacor operates for its customers.

Synacor earned $1.2 million, or 4 cents per share, during the quarter, up from $10,000, or less than a penny per share, a year ago. The earnings were a penny better than analysts expected.

Much of the improvement stemmed from a steep increase in the number of people visiting the start pages Synacor provides for consumers who are using a wide range of devices, from personal computers to tablets, televisions and smartphones.

The websites Synacor operates for its customers averaged 21.3 million unique visitors a month during the first quarter, an 81 percent increase from 11.8 million a year ago.

"Traffic to our customer start pages continued to grow to record levels," said Ron Frankel, Synacor's chief executive officer, during a conference call. "Our customers are constantly packaging more services for delivery to their customers on more devices."

That increased traffic led to a 64 percent jump in Synacor's overall revenues to $30.7 million from $18.7 million. Revenues from search and display advertising through those websites jumped by 81 percent to $25.8 million from $14.2 million as consumers made more search queries through those sites and viewed more advertisements on them. Synacor gets about 60 percent of its revenues from search queries that go through Google, said William Stuart, Synacor's chief financial officer.

Subscription-based revenues increased by 10 percent to $4.9 million.

Frankel said he expects Synacor's revenues to keep growing as consumers use more devices to access the pages it operates for its customers.

"It's really a great opportunity," Frankel said. "I think it's very, very large."

Synacor executives said they expect the growth to continue during the current quarter. They forecast that revenues would jump about 58 percent to around $31 million, while its earnings before interest, taxes, depreciation and amortization would almost double to between $2.8 million and $3 million, stronger than the $2.7 million forecast by analysts surveyed by Bloomberg News.

For the year, Synacor expects its revenues to rise about 37 percent, to between $123 million and $126 million, with operating earnings jumping by 64 percent, to between $12 million and $13 million.

email: drobinson@buffnews.com