Synacor snapped an eight-quarter streak of declining revenues during the fourth quarter, posting the second-highest quarterly sales in its history and easily topping analyst profit forecasts.
The Buffalo-based Internet content firm earned $1 million, or 4 cents per share, excluding a $7.4 million noncash charge for deferred tax expenses. The profits were much stronger than the $200,000, or 1 cent per share, that Synacor earned a year ago and also easily topped the penny per share that analysts expected it to earn.
Including the charge for the deferred tax expenses, Synacor lost $6.4 million, or 23 cents per share.
“Our strategy is delivering,” Synacor CEO Himesh Bhise said during a conference call.
“We have reduced our dependence on desktop search. Two, we have made solid progress in building out our video solutions. And three, we have demonstrated that Synacor can indeed drive profitable year-over-year revenue growth.”
Synacor’s revenues rose by 5 percent, to $30.9 million, from $29.4 million, as search and advertising revenue increased by 4 percent and subscription fees grew by 11 percent. It was the first quarter in Synacor’s history that advertising revenue topped search revenue in a quarter.
Synacor said that it expects its sales to drop this year as the impact of the loss of Charter Communications as a startup page customer increases as the year goes on. Bhise said Synacor already has lost more than 30 percent of Charter’s page views and expects that to increase going forward.
Synacor said that it expects its sales to drop by about 9 percent, to between $95 million and $100 million, down from $106.6 million last year, as the declining revenues from Charter offsets forecast growth in the company’s other ventures. The company’s adjusted cash flow is expected to be between $1.5 million to $3.5 million, compared with $2.2 million last year.
The company’s shares fell by 17 cents, or 7.3 percent, to close at $2.16 on Thursday.