Synchronoss: Real Profits From The Cloud

May 12 2014, 12:54pm CDT | by

Things have been brutal for cloud stocks lately. It seems that no company has been spared, including veteran operators like Synchronoss (SNCR).

But the company’s CEO, Steve Waldis, remains very optimistic. Then again, SNCR has continued to grow at a nice pace and yes, to generate profits. In the latest quarter, revenues jumped by 25% to $98.7 million and the cloud business spiked by 83%. The net income came to 39 cents per share.

Keep in mind the SNCR’s original business is mobile phone activations for carriers like AT&T, which continues to be lucrative. But the platform has proven to be effective in launching cloud services. “We’ve found that the new offerings result in more purchases of devices, better plans and less churn,” said Steve.

Such factors are nirvana for the mobile carriers, which are trying to find new ways to grow their businesses. But of course, this has turned into a way for SNCR to mint money as the company now has 70+ million cloud customers.

Yet all this appears to be in the early innings. For example, SNCR is rolling out its WorkSpace solution, which is focused on small and medium size businesses. Not only is this a big market but the margins should be juicier.

But there are also lucrative opportunities in foreign markets. So far, these efforts are still getting started. Although, there are already signs of traction. For example, SNCR recently snagged a deal Telstra, which is the largest carrier in Australia.

So, if anything, the recent plunge in cloud stocks has provided some nice opportunities to pick-up solid companies at nice discounts. True, there needs to be lots of analysis. But for the most part, SNCR does look compelling, in terms of a strong go-to-market strategy and clear signs that customers want the products being offered.

Tom Taulli (@ttaulli) is an advisor of tech companies and author of books on venture capital, M&A and IPOs.

 
 
 

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