Synacor had its first profitable quarter in nearly four years as the Buffalo internet content provider added sales from its portal development work with AT&T and other customers.
Synacor earned $261,000, or a penny per share, during the third quarter, compared with a loss of $3.5 million, or 11 cents per share, a year ago, as new business from AT&T and other customers led to a 23 percent increase in search and advertising revenue.
Overall, Synacor's sales grew by 14 percent to $36.3 million from $31.7 million a year ago.
The small quarterly profit surprised analysts, who had expected Synacor to report a loss of 5 cents per share, although sales were slightly below their average forecast of $37 million. Synacor's stock rose 10 percent, or 24 cents, to $2.54 per share in late morning trading on Wednesday.
Synacor executives said during a conference call that the AT&T portal services contract still could turn into the $100 million revenue source they initially expected, although the pace of sales has been slower than expected because AT&T has chosen to emphasize customer use of its web portal over revenue-raising elements.
"Clearly that depends on AT&T's business priorities and how they need to balance engagement and monetization," said William Stuart, Synacor's chief financial officer. "We do expect to increase monetization in 2018."
Himesh Bhise, Synacor's CEO, said the company's relationship with AT&T is "really strong."
"At the end of the day, we anticipate a long and fruitful relationship with AT&T and have to follow their lead as they balance engagement and monetization," he said.