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What changed in SYNCHRONOSS TECHNOLOGIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SYNCHRONOSS TECHNOLOGIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+382 added−430 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-25)

Top changes in SYNCHRONOSS TECHNOLOGIES INC's 2024 10-K

382 paragraphs added · 430 removed · 268 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+14 added−31 removed12 unchanged
Biggest changeTo compete against global platform providers, we offer a collection of products that help to keep subscribers, systems, networks, and content in sync to enable a better, more engaging experience. Our white label products enable subscribers to connect with one another, the networks they rely on, the brands they love and the services they need.
Biggest changeHowever, these providers target second and third tier regional operators with low-risk, revenue share business models and do not generally pose a real threat to Tier 1 world-wide operators. To compete against global platform providers, we offer a collection of products that help to keep subscribers, systems, networks, and content in sync to enable a better, more engaging experience.
We also cultivate a culture which encourages creativity and innovation amongst our employees by maintaining a patent award program, hosting events such as an annual Innovation Jam and periodic “hackathons.” We believe this facilitates the development of new features, functionality and products, which are essential to establishing our solutions as the leading solutions in the industry.
We also cultivate a culture which encourages creativity and innovation amongst our employees by maintaining a patent award program and hosting events such as an annual Innovation Jam and periodic “hackathons.” We believe this facilitates the development of new features, functionality, and products, which are essential to establishing our solutions as the leading solutions in the industry.
Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only. Synchronoss and Synchronoss Personal Cloud TM and other trademarks of Synchronoss appearing in this Form 10-K are the property of Synchronoss. Other trademarks or service marks that may appear in this Annual Report are the property of their respective holders.
Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only. Synchronoss, Synchronoss Personal Cloud TM and other trademarks of Synchronoss appearing in this Form 10-K are the property of Synchronoss. Other trademarks or service marks that may appear in this Annual Report are the property of their respective holders.
They also use our Personal Cloud to enhance their service offerings to subscribers who purchase and lease mobile devices and network connectivity by providing an easy solution for storing and syncing user generated content (e.g., videos, photos, documents, contacts, music, etc.). Our customers include global service providers such as AT&T, BT, Verizon, and Softbank.
They also use our Personal Cloud to enhance their service offerings to subscribers who purchase and lease mobile devices and network connectivity by providing an easy solution for storing and syncing user generated content (e.g., videos, photos, documents, contacts, music, etc.). Our customers include global service providers such as AT&T, Verizon, and Softbank.
In 2027, it is projected that North America will have the highest 5G penetration at 90 percent. 5G adoption among mid-tier smart phones also continued to abound as new devices and capabilities were introduced by mobile phone manufacturers in 2023. More devices will lead to more vulnerabilities around privacy, data, and hardware protection.
In 2027, it is projected 1 that North America will have the highest 5G penetration at 90 percent. 5G adoption among mid-tier smart phones also continued to abound as new devices and capabilities were introduced by mobile phone manufacturers in 2023. More devices will lead to more vulnerabilities around privacy, data, and hardware protection.
We hold and/or are pursuing patents in the United States, Germany, the United Kingdom, France and Spain and we may seek additional jurisdictions to the extent we determine such coverage is appropriate and cost efficient. Our issued patents cover all aspects of our business including cloud and security.
We hold and/or are pursuing patents in the United States, Germany, the United Kingdom, France, Ireland and Spain and we may seek additional jurisdictions to the extent we determine such coverage is appropriate and cost efficient. Our issued patents cover all aspects of our business including cloud and security.
Our next generation Personal Cloud gives operators a new way to create, deliver, engage, and monetize more personalized experiences and offers for their subscribers. When operators have millions of active users leveraging cloud, it becomes a channel for cross selling security services, insurance, merchandise like prints & gifts, and other carrier services, leading to a significant increase in ARPU.
Our next generation Personal Cloud gives operators a new way to create, deliver, engage, and monetize more personalized experiences and offers for their subscribers. When operators have millions of active users leveraging cloud, it becomes a channel for cross selling security services, insurance, merchandise, and other carrier services, leading to a significant increase in ARPU.
What We Deliver - Our Services Synchronoss offers professional services including consulting, installation and deployment, configuration, customization, systems integration and support to ensure our customers’ successful deployment and utilization of our products and solutions. Product Development At Synchronoss we have focused our product development efforts on expanding the functionality, scalability and security of our products and solutions.
What We Deliver - Our Services Synchronoss offers professional services including consulting, installation and deployment, configuration, customization, systems integration, and support to ensure our customers’ successful deployment and utilization of our products and solutions. 5 Table of Contents Product Development At Synchronoss we have focused our product development efforts on expanding the functionality, scalability, and security of our products and solutions.
Giving subscribers the ability to protect hardware investments with insurance plans, protect their families from cyber threats with network-based security services, and their personal content - with cloud, will differentiate the value proposition of 5G service plans and deliver significant brand value for our customers.
Giving subscribers the ability to protect hardware investments with insurance 6 Table of Contents plans, protect their families from cyber threats with network-based security services, and their personal content - with cloud, will differentiate the value proposition of 5G service plans and deliver significant brand value for our customers.
Solely for convenience, the trademarks and trade names in this Annual Report are sometimes referred to without the ®, ™ and SM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
Solely for convenience, the trademarks and trade names in this Annual Report are sometimes referred to 8 Table of Contents without the ®, ™ and SM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
Cable MSO and broadband service providers have a unique opportunity to offer personal cloud as an ‘all home’ data protection offering which increases ARPU and provides the much needed access to the home service provider market beyond being a connectivity and content provider.
Cable Multiple System Operators (“MSO”) and broadband service providers have a unique opportunity to offer personal cloud as an ‘all home’ data protection offering, which increases ARPU and provides the much-needed access to the home service provider market beyond being a connectivity and content provider.
As a result, we are fostering new partnerships, building exciting new capabilities, and now enabling subscribers to protect the home.
As a result, we are fostering new partnerships, building exciting new capabilities, and now enabling subscribers to protect the connected devices.
We face the following categories of competitors: Personal Cloud • Over-the-top (“OTT”) Service & Platform Providers - Apple, Google, Dropbox, Box, Microsoft and Amazon all provide personal cloud services closely integrated to their respective technology or service platforms.
We face the following categories of competitors in Personal Cloud: • OTT Service & Platform Providers - Apple, Google, Dropbox, Box, Microsoft and Amazon all provide personal cloud services closely integrated to their respective technology or service platforms.
We completed our initial public offering in 2006, and our common stock is listed on the NASDAQ Global Select Market under the symbol “SNCR” and our Senior Notes as listed on the NASDAQ Global Select Market under the symbol “SNCRL.” Available Information Our website is located at www.synchronoss.com and our investor relations website is located at https://synchronosstechnologiesinc.gcs-web.com/ .
Our common stock is listed on the NASDAQ Global Select Market under the symbol “SNCR” and our Senior Notes as listed on the NASDAQ Global Select Market under the symbol “SNCRL.” Available Information Our website is located at www.synchronoss.com and our investor relations website is located at https://synchronosstechnologiesinc.gcs-web.com/ .
We enter into proprietary information and invention agreements with all of our employees and consultants during the onboarding process and non-disclosure agreements with all third parties. In the United States, as of December 31, 2023 we had 45 patents issued and 7 patents pending. Internationally, as of December 31, 2023 we had 70 patents issued and 6 pending.
We enter into proprietary information and invention agreements with all of our employees and consultants during the onboarding process and non-disclosure agreements with all third parties. As of December 31, 2024, we had 37 patents issued and 13 patents pending in the United States, and we had 67 patents issued and 3 pending internationally.
These strategic efforts are crucial in generating business-to-business (B2B) sales leads, enhancing the visibility of our cloud solutions, and reinforcing our brand presence across the telecom, insurance, and retail sectors in the North America, EMEA, and APAC regions.
These strategic efforts are crucial in generating business-to-business (B2B) sales leads, enhancing the visibility of our cloud solutions, and reinforcing our brand presence across the telecom, insurance, and retail sectors in the North America, EMEA, and APAC regions. We also support our partners’ direct-to-consumer (D2C) marketing to drive subscriber growth and adoption.
Our Synchronoss white label Personal Cloud has been certified to be compliant with the Service Organization Controls (SOC) 2 type II audit that tests the design and operating effectiveness of controls over time.
Compliance and Certifications We obtain third-party reviews of our controls relating to security. Our Synchronoss white label Personal Cloud has been certified to be compliant with the Service Organization Controls (“SOC”) 2 type II audit that tests the design and operating effectiveness of controls over time.
The Synchronoss Personal Cloud TM platform is a secure and highly scalable, white label platform that allows our customers’ subscribers to backup and protect, engage with, and manage their personal content and gives our operator customers the ability to increase average revenue per user (“ARPU”) and reduce churn. 5 Table of Contents Our Synchronoss Personal Cloud TM platform is specifically designed to support smartphones, tablets, desktops computers, and laptops.
What We Deliver - Synchronoss Personal Cloud TM Platform The Synchronoss Personal Cloud TM platform is a secure and highly scalable white label platform that allows our customers’ subscribers to backup and protect, engage with, and manage their personal content and gives our operator customers the ability to increase average revenue per user (“ARPU”) and reduce churn.
According to Market Research Future, Mobile Value-Added-Services (“VAS”) are set to hit $309.1 billion by 2025. The transition to 5G provides an opportunity to strengthen their position in the consumer market and function as a service 7 Table of Contents enabler by bundling VAS into premium offers.
According to Market Research Future, Mobile Value-Added-Services (“VAS”) are set to hit $309.1 billion by 2025. The transition to 5G provides an opportunity to strengthen operators’ position in the consumer market and function as a service enabler by bundling VAS into premium offers. Service providers should also become service creators by developing new, immersive products under their own brand.
Marketing The Synchronoss marketing team, with our cloud-focused approach, is dedicated to implementing the right strategies and employing effective tools to drive customer acquisition and accelerate our growth. Our mission is centered on developing compelling product-specific messaging and comprehensive brand narratives through an array of channels, including digital marketing, sales support, social media, and public relations.
Marketing The Synchronoss marketing team uses a cloud-focused approach to drive customer acquisition and growth through strategic, targeted campaigns. Our mission is centered on developing compelling product-specific messaging that addresses end user needs and comprehensive brand narratives through an array of channels, including digital marketing, sales support, social media, and public relations.
We expect to sustain our research and development investments as we intend to continue on an aggressive path to develop new features and functionality, upgrade and extend our product offerings and develop new technology.
We expect to sustain our research and development investments as we intend to continue on an aggressive path to develop new features and functionality, upgrade and extend our product offerings, and develop new technology. To this effect, Synchronoss has invested in and implemented AI technology to introduce several new features in the Personal Cloud product.
An independent auditor tests these controls annually and addresses, among other areas, the environmental and physical safeguards for production data centers, legal controls, change management and logical security.
An independent auditor tests these controls annually and addresses the environmental and physical safeguards for production data centers, legal controls, change management, and logical security among other areas. Additionally, our operations in Bangalore are certified under ISO27000, ensuring best practices for information security management.
Sales We sell our solutions, products, and services through a direct sales force, with strategic partners and in collaboration with our customers to resell services to their end customers and subscribers. Our sales professionals are well versed in our platforms, products and services with an understanding of market trends, demands and conditions that our current and potential customers are facing.
Sales We sell our solutions, products, and services through a direct sales force, with strategic partners, and in collaboration with our customers to resell services to their end customers and subscribers. Our sales professionals have deep expertise in our products, along with a strong understanding of market trends and customer needs.
Corporate Information We were incorporated in Delaware in 2000. Our principal offices are located at 200 Crossing Boulevard, Bridgewater, New Jersey.
Our principal offices are located at 200 Crossing Boulevard, Bridgewater, New Jersey. We completed our initial public offering in 2006.
Beyond being a buzz word or strategy, 5G is the next wave in Communication Service Providers’ technological future. In 2023, we saw the continued adoption of 5G use cases and Operators begin to reap returns carriers were reliant on when making their investment in 5G technology.
In 2024, we saw the continued adoption of 5G use cases and operators began to reap returns carriers were reliant on when making their investment in 5G technology.
This includes interactions during online checkout, retail engagements, customer support, the initial setup of products, and via in-app notifications for devices pre-installed with our cloud application.
Through our integrated go-to-market and awareness campaigns, orchestrated with an omnichannel approach, we ensure that consumers are engaged at every pivotal point in the purchase lifecycle. This includes interactions during online checkout, retail engagements, customer support, the initial setup of products, and via in-app notifications for devices pre-installed with our cloud application.
Divestiture of the Messaging and NetworkX businesses On October 31, 2023, Synchronoss Technologies, Inc. entered into an Asset Purchase Agreement with Lumine Group Software Solutions (Ireland) Limited, pursuant to which the Company sold its Messaging and NetworkX businesses. This transaction represents a strategic shift designed to maximize shareholder value and allow the Company to solely focus on providing cloud-centric solutions.
Designed for smartphones, tablets, and desktops across all operating systems, our platform ensures a seamless, cross-device experience. Divestiture of the Messaging and NetworkX Businesses On October 31, 2023, Synchronoss Technologies, Inc. entered into an Asset Purchase Agreement with Lumine Group Software Solutions (Ireland) Limited, pursuant to which the Company sold its Messaging and NetworkX businesses.
We believe we compete favorably through our differentiated product capabilities, vast reach across global markets, and our 20+ years of experience building carrier grade solutions that are proven to scale. Compliance and Certifications We obtain third-party reviews of our controls relating to security.
Our white label products enable subscribers to connect with one another, the networks they rely on, the brands they love and the services they need. We believe we compete favorably through our differentiated product capabilities, vast reach across global markets, and our 20+ years of experience building carrier grade solutions that are proven to scale.
These customers utilize our solutions to service both consumer and enterprise customers. How We Go to Market We market our solutions and services directly through our sales organizations in the Americas, Europe, Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”).
These customers utilize our solutions to service both consumer and enterprise customers. 4 Table of Contents How We Go to Market We market our solutions through multiple channels such as our corporate website, direct sales teams across key regions (North America, Europe, Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”)), and industry partnerships.
In connection with the sale transaction, the Company determined its Messaging and NetworkX Businesses qualified for discontinued operations accounting treatment in accordance with ASC 205-20. Accordingly, the operating results of, and costs to separate the Messaging and NetworkX businesses are reported in Net loss from discontinued operations, net of taxes in the Consolidated Statements of Operations for all periods presented.
Accordingly, the operating results of, and costs to separate the Messaging and NetworkX businesses are reported in Net loss from discontinued operations, net of taxes on the Consolidated Statements of Operations for all periods presented. The Notes to the Consolidated Financial Statements have been adjusted on a retrospective basis. For additional information, see Note 4.
Service providers should also become service creators by developing new, immersive products under their own brand. In either case (branded and partner services) powering digital bundles and simplifying onboarding, consumption, billing, and authentication of VAS will drive higher adoption of premium 5G service plans and ARPU.
In either case (branded and partner services) powering digital bundles and simplifying onboarding, consumption, billing, and authentication of VAS will drive higher adoption of premium 5G service plans and ARPU. Beyond being a buzz word or strategy, 5G is the next wave in communication service providers’ technological future.
Divestitures and Discontinued Operations of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. Who We Serve At Synchronoss we focus on delivering carrier-grade solutions to three markets globally: communications service providers/multi-service operators (such as cable and mobile network operators), mobile insurance providers and retailers.
Who We Serve At Synchronoss we focus on delivering carrier-grade solutions to three markets globally: communications service providers/multi-service operators (such as cable and mobile network operators), mobile insurance providers and retailers. We enable our customers to monetize value-added services, drive growth, and boost retention through differentiated experiences.
In addition, service providers also can include personal cloud into a security bundle where consumers get data protection combined with other features like anti-virus, password protection, VPN and more. _____________________________ 1 Ericsson June 2022 Mobility Report Competition Competition across our markets is incredibly diverse, dynamic and nuanced in an increasingly interconnected landscape of rapidly changing technologies, evolving industry standards, new product introductions and converging spaces and services.
Competition Competition across our markets is incredibly diverse, dynamic, and nuanced in an increasingly interconnected landscape of rapidly changing technologies, evolving industry standards, new product introductions, and converging spaces and services.
We continue to invest in our employees, as well as developing and promoting our team-oriented culture, and believe that these efforts provide us with a sustainable competitive advantage. As of December 31, 2023 we had 1,321 full-time employees located in India, North America, Europe, and Asia Pacific regions.
By investing in our people and nurturing a team-oriented culture, we believe that we have established a sustainable competitive advantage that helps to fuel our long-term success. As of December 31, 2024 we employed 802 full-time employees and 47 contingent workers across India, North America, Europe, and Asia Pacific regions.
Human Capital At Synchronoss, we believe that our growth and success are attributable in large part to our diverse employee base and an experienced management team, with a mission to make Synchronoss a great place to work.
Human Capital At Synchronoss, we recognize that our growth and success are driven by our talented employees and experienced management team. Our mission is to foster an environment that makes Synchronoss a great place to work, where employees 7 Table of Contents feel valued, empowered, and inspired to excel.
ITEM 1. BUSINESS Overview Synchronoss Personal Cloud TM is an innovative software that drives revenue growth and consumer engagement for global network operators and mobile insurance providers.
ITEM 1. BUSINESS Overview Synchronoss Personal Cloud TM is a powerful software solution that helps global network operators and mobile insurance providers drive revenue, increase engagement, and enhance digital security. Our platform enables customers to connect, engage, and monetize subscribers by offering a trusted, seamless way to sync, organize, and protect their digital content.
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We help our customers to connect, engage and monetize subscribers in more meaningful ways by providing trusted platforms through which end users can sync, organize and protect all of their digital content, connect with one another and enjoy precious memories. Our mission is to help our customers create new revenue streams, reduce the cost of innovation, and captivate their subscribers.
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With Artificial Intelligence (“AI”) powered features that enrich user experiences, we help operators create new revenue streams, lower innovation costs, and strengthen customer loyalty, all while ensuring secure and effortless content management.
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In addition, the related assets and liabilities held prior to the sale are reported as Assets and liabilities of discontinued operations on the Consolidated Balance Sheets. The notes to the financial statements have been adjusted on a retrospective basis. For additional 4 Table of Contents information, see Note 4.
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This transaction represented a strategic shift designed to maximize shareholder value and allowed the Company to solely focus on providing cloud-centric solutions. In connection with the sale transaction, the Company determined its Messaging and NetworkX Businesses qualified for discontinued operations accounting treatment in accordance with ASC 205-20.
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We help our customers accelerate and monetize value-added services to drive growth, facilitate retention and enable differentiated experiences. In 2023, we continued to strengthen our focus through the asset sale of our Messaging and Digital businesses to Lumine.
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Divestitures and Discontinued Operations of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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To complement our B2B initiatives, we provide robust support for our partners' direct-to-consumer (D2C) marketing activities, with the aim of driving customer adoption and subscriber growth. Through our integrated go-to-market and awareness campaigns, orchestrated with an omnichannel approach, we ensure that consumers are engaged at every pivotal point in the purchase lifecycle.
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These features include advanced editing of photos using AI models and auto-curating subscriber content using several AI models to generate engaging collections to be shared with users as memories.
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What We Deliver - Synchronoss Personal Cloud TM Platform The Synchronoss Personal Cloud TM solution is designed to create an engaging and trusted customer experience through ongoing content management and engagement.
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In addition, service providers also can include personal cloud into a security bundle where consumers get data protection combined with other features like anti-virus, password protection, Virtual Private Network (”VPN”) and more.
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Messaging Platform (Owned and operated through October 31, 2023) Synchronoss’ Messaging platform powers mobile messaging and mailboxes for hundreds of millions of telecommunication subscribers. Our Advanced Messaging platform is a powerful, secure , intelligent, white label messaging platform that expands capabilities for communications service provider and multi-service providers to offer P2P messaging via Rich Communications Services (“RCS”).
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Additionally, the personal cloud market is expected to grow at 18.5% compound annual growth rate (CAGR) 2 during the forecast period (2023-2028), reflecting continued need and interest by consumers for a solution to protect and save their digital content across the globe.
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Our Mobile Messaging Platform (“MMP”) is poised to provide a single standard ecosystem for onboarding and management to brands, advertisers and message wholesalers. • Advanced Messaging: Our Advanced Messaging platform supports rich messaging channel in both RCS and other Real-Time Communication (“RTC”); it enables rich, P2P communications and creates new commerce and revenue opportunities across channels via A2P experiences for our customers and other brands.
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Market research conducted in the first quarter of 2024 further affirmed the opportunity finding 1) nearly a third of users who have not yet adopted a personal cloud solution in North America intend to adopt cloud in the next 3 years; 2) nearly 15% expected growth in secondary cloud adoption; and 3) keen opportunity to win over Over-the-Top (“OTT”) cloud users willing to switch for price, storage and privacy. _____________________________ 1 Ericsson June 2022 Mobility Report. 2 Markets to Market January 2024 Personal Cloud Report.
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Our messaging platform operates in tandem with Messaging-as-a-Platform (“MaaP”) Messaging Marketplace as well as dedicated, third-party clients and native original equipment manufacturer (“OEM”) clients, providing an end-to-end messaging platform and monetization tools to the operators, Communications-Platform-as-a-Service (“CpaaS”) players and brands. • E-Mail: Our Email suite provides service providers with a secure, white label, back-end framework for a branded email service that provides the opportunity to introduce and promote services that can be monetized.
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Our purpose-driven culture emphasizes employee well-being, inclusivity, and open communication, enabling us to attract and retain top talent worldwide. To support our employees' evolving needs, we implemented a flexible work policy, allowing the majority of our workforce to choose remote work arrangements.
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Our carrier branded Email Suite solution offers leading anti-virus, anti-spam and malware technology to keep the integrity and security of the customer experience and protection of subscriber data to carrier standards. Our Email solution is an important repository for critical communications with an intuitive and feature-rich mobile and desktop email experience ensuring stickiness and increasing customer lifetime value.
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We are committed to continuous learning and development, offering robust programs that support personal and professional growth at all levels of the organization. Employees are encouraged to share their insights and feedback through multiple channels, including company-wide town hall meetings and engagement surveys, fostering a culture of transparency and collaboration.
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OnboardX (Owned and operated through October 31, 2023) products simplify subscriber onboarding and drive service adoption at scale . The first impression of a new product or service can either make or break your subscriber relationship. A poor onboarding experience leads to revenue losses and customers feeling stranded.
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We have also taken significant strides to enhance employee engagement and inclusivity, fostering a more connected and collaborative workplace. We have introduced formal training programs, strengthened internal communications, and updated corporate language to reflect inclusivity and align with industry best practices. In addition, we have prioritized initiatives that increase access to leadership and reduce silos across the organization.
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Our customizable service activation, content backup, and device setup experiences make onboarding frictionless. • Mobile Content Transfer : Our Synchronoss Mobile Content Transfer ® solution is an easy-to-use product whose client enables a secure, peer-to-peer, wireless transfer of content from one mobile smart device to another in a carrier retail location or at home/work, etc.
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We regularly host leadership roundtables, town hall meetings, and cross-departmental forums to encourage open dialogue and collaboration, which allow employees at all levels to have the opportunity to engage directly with senior leaders. Recognizing the value of in-person connections, we have also increased on-site employee social events, fostering camaraderie and teamwork in a more informal setting.
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Our solution can transfer select data classes that may include photos, videos, music, messages, documents, contacts, and call logs, across operating systems including iOS and Android. • Out of Box Experience: Our Synchronoss Out of Box Experience solution is a device setup solution that assists customers in setting up the features of their new device, including Wi-Fi, email, social network accounts and voicemail, as well as prompting restoration of content and enrollment in a cloud service.
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These efforts not only strengthen employee relationships, but also reinforce our inclusive and team-oriented culture. Further demonstrating our commitment to making a positive impact, we continued the Sync Cares program, launched in 2022, to connect employees and leadership with opportunities to give back to their communities.
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It also offers the ability to highlight programs and revenue generating initiatives during the setup process, such as loyalty programs, third-party partnerships and value-added services. NetworkX (Owned and operated through October 31, 2023) products streamline networks to be more efficient and profitable.
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In 2024, hundreds of our employees dedicated 566 hours to supporting 11 organizations globally through our Sync Cares program, showcasing our collective dedication to social responsibility and community engagement. Our total rewards philosophy prioritizes competitive compensation and comprehensive benefits. We conduct an annual compensation review and pay equity analysis with the goal of ensuring fairness and alignment with market standards.
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In a world where subscribers expect seamless connectivity and zero network interruptions, delivering superior network quality can be complex and costly. Our physical network asset management, off-network procurement, and expense control solutions reduce the complexity and cost of network management.
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This process is integrated with our performance management cycle, which includes regular feedback discussions to support career development and align individual contributions with our organizational goals. Through these initiatives, Synchronoss continues to build a workplace where employees feel empowered, engaged, and motivated to drive innovation and deliver results. Corporate Information We were incorporated in Delaware in 2000.
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The Synchronoss NetworkX products provide operators with the tools and software to design their physical network, streamline their infrastructure purchases, and manage and optimize comprehensive network expenses for leading top tier carriers around the globe. • spatialNX: Our spatialSUITE provides enterprise-wide access to timely, accurate and comprehensive network information – including physical location, specifications, attributes, connectivity and capacity – for every inside-plant 6 Table of Contents and outside-plant asset.
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It delivers data across the enterprise to support provisioning, planning and design, construction, fault and event management, work order management, customer service, marketing and other critical business functions.
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The automation and ease of integration of our platform is designed to enable our customers to lower the cost of new subscriber acquisitions and enhance the accuracy and reliability of customer transactions. • ConnectNX (iNOW): Our iNOW provisioning system eliminates manual handling of service orders and manages the full order lifecycle between customer and supplier via automation and rules-based validation. iNOW includes an interface that powers bulk provisioning needs and an open API to seamlessly integrate to other carrier systems. iNOW also provides an electronically bonded gateway platform enabling rapid electronic order confirmations and status updates between bonded carriers.
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Finally, completed order information flows to Financial Analytics providing integrated and automated order to billing reconciliation functionality. • ExpenseNX: Our Financial Analytics Platform is a comprehensive application suite that helps operators reduce costs, mitigate risks, enforce financial compliance and controls, and increase operational efficiencies.
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Financial Analytics ingests any supplier invoice (in any format) through a unique software-driven process – with 100% of the detail. Invoices are managed via automated audit and payment workflow tightly coupled with a software driven dispute management lifecycle, providing a true procurement-to-payment process on network expenses and disputes across a carrier’s organization.
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However, these providers target second and third tier regional operators with low-risk, revenue share business models and do not generally pose a real threat to Tier 1 world-wide Operators. 8 Table of Contents Messaging (Owned and operated through October 31, 2023) • The emerging RCS marketplace is intensely competitive across the globe.
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Leading OTT device and OS platform providers Google and Samsung, along with prominent online platform providers such as Facebook, WhatsApp, Instagram, WeChat and LINE have created a radically new market for communication and monetization that is turning “messaging” into a new, virtual OS. • Our Email suite provides service providers with a secure, white-label, back-end framework for a branded email service that provides the opportunity to introduce and promote services that can be monetized.
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Our carrier branded Email Suite solution offers leading anti-virus and anti-spam and malware technology to keep the integrity and security of the customer experience and protection of subscriber data to carrier standards. Our Email solution is an important repository for critical communications with an intuitive and feature-rich mobile and desktop email experience ensuring stickiness and increasing customer lifetime value.
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Digital Products (Owned and operated through October 31, 2023) • Telecom Expense Management (TEM) Providers – ▪ TEOCO and Tangoe are two major providers that offer wholesale and retail TEM software and services.
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Each of these vendors have large customers/contracts to better account, reconcile and pay out on vendor contracts, network circuits, roaming agreements and other complex expense areas. • Telecom Service Order Management Providers – ▪ Neustar supports major providers with software that handles the full order lifecycle of telecommunications service orders. ▪ Order management applications and processes developed/utilized by Operators also present competition. • Geospatial Network Planning Providers – ▪ Major providers of software that manage the planning and design of physical communication networks include Bentley, GE Smallworld, and 3-GIS.
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In addition, our Financial Analytics hosted solution is certified to be compliant with a SOC 1 type II audit that tests the design and effectiveness of controls related to our customers’ use of this service in financial reporting. Finally, our operations in Bangalore are certified under ISO27000, ensuring best practices for information security management, and ISO9000, ensuring quality management.
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We have a purpose-driven culture, with a focus on employee input and well-being, which we believe enables us to attract and retain exceptional talent. We have moved to a flexible work policy, providing the majority of our employees the flexibility 9 Table of Contents to work remotely from off-site locations at their election.
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We offer learning and development programs for all employees. Employees are able to actively voice their questions and thoughts through many internal channels, including our company town hall meetings and employee engagement surveys.
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With a continued focus on employee engagement, we formed a global Diversity, Equity, and Inclusion (DE&I) committee, laying the groundwork to embed DE&I as part of our corporate culture and pave the way for a more comprehensive program.
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We took initial steps in this space through formal trainings, employee communications, and updating our corporate language to be more inclusive, aligned with industry’s best practices, and compatible with our DE&I philosophy. More recently, we launched a series of employee initiatives designed to strengthen employee morale, with more to come in this area.
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We also launched the Sync Cares program in 2022 to bring employees and leadership together to lend their time and talent to support causes and communities around the globe. In our initial year hundreds of our employees volunteered and contributed a total of over 450 hours to 15 organizations in the global communities in which we do business.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLegal, Regulatory and Compliance Risks • Government regulation of the Internet and e-commerce and of the international exchange of certain information is subject to possible unfavorable changes, and our failure to comply could harm our business and operating results. • We collect, process, store, disclose and use personal information and other data, and our perceived failure to protect this information and data could damage our reputation and harm our business and operating results. • If we are required to collect sales and use taxes on the services we previously sold in additional jurisdictions, we may be subject to liability for past sales. 11 Table of Contents Risks Related to our Series B Preferred Stock, Senior Notes and Common Stock • Our stock price may continue to experience significant fluctuations and could subject us to litigation. • We have, and in the future may be, the target of stockholder derivative complaints or other securities related legal actions that could adversely affect our results of operations and our business. • Delaware law and provisions in our restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, therefore depressing the trading price of our common stock. • We have incurred (and expect to continue to incur) significant costs in connection with the restatement of previously issued consolidated financial statements. • Our current or future debt securities or preferred equity securities, which would be senior to our common stock, may adversely affect the market price of our common stock. • B.
Biggest changeRisks Related to our Term Loan, Senior Notes and Common Stock • We may fail to refinance, redeem or repay in full our Senior Notes prior to March 31, 2026, and in that event the maturity date of our Term Loan will be March 31, 2026. • The terms of our Credit Agreement restrict our operating and financial flexibility, and any breach of the covenants in that agreement, if the lenders elected to accelerate the due date of the loan, could significantly harm our business and prospects and lead to the liquidation of our business. • Our stock price may continue to experience significant fluctuations and could subject us to litigation. • We have, and in the future may be, the target of stockholder derivative complaints or other securities related legal actions that could adversely affect our results of operations and our business. • Delaware law and provisions in our restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, therefore depressing the trading price of our common stock. • Our current or future debt securities or preferred equity securities, which would be senior to our common stock, may adversely affect the market price of our common stock. • The Senior Notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future. • The Senior Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. • The indenture under which the Senior Notes were issued contains limited protection for holders of the Senior Notes. • A 1% U.S. federal excise tax may be imposed upon us in connection with redemptions or repurchases of our equity.
Our acquisitions, divestitures and other strategic transactions face difficulties, including, but not limited to, the following: • the process of integration being more expensive or requiring more resources than anticipated; • a transaction changing the composition of our markets and product mix, and difficulty gaining the skills necessary for such markets or products; • delays or difficulties continuing to implement our cloud-first strategy, including industry and financial analysts not understanding the changes to our business model, resulting in changes in financial estimates or failure to meet investor expectations; 39 Table of Contents • delays or difficulties consolidating corporate and administrative infrastructures and eliminating duplicative operations, including issues in integrating financial reporting, information technology infrastructure, data and content management systems and product platforms, communications and other systems; • delays or difficulties harmonizing corporate cultures, operating practices, management philosophies, employee development and compensation programs, internal controls, compliance programs and other policies, procedures and processes; • assuming unintended liabilities; • unexpected regulatory and operating difficulties and expenditures; • failure to maintain employee morale or retain key personnel of the current or acquired business; • failure to retain existing business and operational relationships; • difficulty coordinating geographically separate organizations, including consolidating offices; • the impact of divestitures on our revenue growth being larger than projected due to greater dis-synergies or adverse effects on our overall product offerings than expected; • divestitures requiring continued financial involvement in the divested business through continuing equity ownership, guarantees, indemnities or other financial obligations; • incurring impairment charges or other losses related to divestitures; and • diversion of management’s focus from other business operations.
Our acquisitions, divestitures and other strategic transactions face difficulties, including, but not limited to, the following: • the process of integration being more expensive or requiring more resources than anticipated; • a transaction changing the composition of our markets and product mix, and difficulty gaining the skills necessary for such markets or products; • delays or difficulties continuing to implement our cloud-first strategy, including industry and financial analysts not understanding the changes to our business model, resulting in changes in financial estimates or failure to meet investor expectations; • delays or difficulties consolidating corporate and administrative infrastructures and eliminating duplicative operations, including issues in integrating financial reporting, information technology infrastructure, data and content management systems and product platforms, communications and other systems; • delays or difficulties harmonizing corporate cultures, operating practices, management philosophies, employee development and compensation programs, internal controls, compliance programs and other policies, procedures and processes; • assuming unintended liabilities; • unexpected regulatory and operating difficulties and expenditures; • failure to maintain employee morale or retain key personnel of the current or acquired business; • failure to retain existing business and operational relationships; • difficulty coordinating geographically separate organizations, including consolidating offices; • the impact of divestitures on our revenue growth being larger than projected due to greater dis-synergies or adverse effects on our overall product offerings than expected; • divestitures requiring continued financial involvement in the divested business through continuing equity ownership, guarantees, indemnities or other financial obligations; • incurring impairment charges or other losses related to divestitures; and • diversion of management’s focus from other business operations.
The difficulties associated with managing a large organization spread throughout various countries and potential tax issues, including restrictions on repatriating earnings and multiple changing and complex tax laws and regulations, and the differences in foreign laws and regulations, including foreign tax, data privacy requirements, anti-competition, intellectual property, labor, trade and other laws.
The difficulties associated with managing a large organization spread throughout various countries and potential tax issues, including restrictions on repatriating earnings and multiple changing and complex tax laws and regulations, and the differences in foreign laws and regulations, including foreign tax, data privacy requirements, tariffs, anti-competition, intellectual property, labor, trade and other laws.
Our level of indebtedness could have important consequences to investors, because: • it could affect our ability to satisfy our financial obligations, including those relating to the Senior Notes; • a substantial portion of our cash flows from operations would have to be dedicated to interest and principal payments and may not be available for operations, capital expenditures, expansion, acquisitions or general corporate or other purposes; • it may impair our ability to obtain additional debt or equity financing in the future; • it may limit our ability to refinance all or a portion of our indebtedness on or before maturity; • it may limit our flexibility in planning for, or reacting to, changes in our business and industry; and • it may make us more vulnerable to downturns in our business, our industry or the economy in general.
Our level of indebtedness could have important consequences to investors, because: • it could affect our ability to satisfy our financial obligations, including those relating to the Senior Notes and Term Loan; • a substantial portion of our cash flows from operations would have to be dedicated to interest and principal payments and may not be available for operations, capital expenditures, expansion, acquisitions or general corporate or other purposes; • it may impair our ability to obtain additional debt or equity financing in the future; • it may limit our ability to refinance all or a portion of our indebtedness on or before maturity; • it may limit our flexibility in planning for, or reacting to, changes in our business and industry; and • it may make us more vulnerable to downturns in our business, our industry or the economy in general.
We may not be able to offset the effects of this potential pricing pressure. Our failure to adapt to changing market conditions and to compete successfully with established or new competitors may have a material adverse effect on our results of operations and financial condition.
We may not be able to offset the effects of this potential pricing pressure. Our failure to adapt to changing market conditions, including potential pricing pressure, and to compete successfully with established or new competitors may have a material adverse effect on our results of operations and financial condition.
Our amended and restated certificate of incorporation and bylaws: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of the stock to elect some directors; • establish a classified board of directors as a result of which successor to a director whose term has expired will be elected to serve from the time of election and qualification until the third annual meeting following election; • require that directors only be removed from office for cause; • provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office; 35 Table of Contents • limit who may call special meetings of stockholders; • prohibit stockholder action by written consent, requiring all actions to be taken at a stockholder meeting; and • establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Our amended and restated certificate of incorporation and bylaws: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of the stock to elect some directors; • establish a classified board of directors as a result of which successor to a director whose term has expired will be elected to serve from the time of election and qualification until the third annual meeting following election; • require that directors only be removed from office for cause; • provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office; • limit who may call special meetings of stockholders; • prohibit stockholder action by written consent, requiring all actions to be taken at a stockholder meeting; and • establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
As a result of a variety of factors discussed in this report, many of which are out of our control, our operating results for a particular quarter is difficult to predict, especially in light of a challenging and inconsistent global macroeconomic environment and related market uncertainty.
As a result of a variety of factors discussed in this report, many of which are out of our control, our operating results for a particular quarter are difficult to predict, especially in light of a challenging and inconsistent global macroeconomic environment and related market uncertainty.
If there continues to be volatility in foreign currency exchange rates, we will continue to experience fluctuations in our operating results due to revaluing our assets and liabilities that are not denominated in the functional currency of the entity that recorded the asset or liability, and the translation of our non-U.S. denominated revenue and expenses into U.S. dollars may affect the year-over-year comparability of our operating results.
If there continues to be volatility in foreign currency exchange rates, we will continue to experience fluctuations in our operating results due to revaluing our assets and liabilities that are not denominated in the functional currency of the entity that recorded the asset or liability, and the translation of our non-U.S. denominated revenue and expenses into U.S. dollars may affect the period-over-period comparability of our operating results.
Our future results could be materially adversely affected by a variety of political, economic or other factors relating to our operations inside and outside the United States, including impacts from global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect the willingness of customers in those countries to purchase products from companies headquartered in the United States; business interruptions resulting from regional or larger scale conflicts or geo-political actions; the impact of the COVID-19 or other public health epidemics or concerns on our customer’s component suppliers, and the challenging and inconsistent global macroeconomic environment, any or all of which could have a material adverse effect on our operating results and financial condition, including, among others things: • current or future supply chain interruptions; • foreign currency exchange rates; • political or social unrest or instability; • economic instability or weakness, including inflation, or natural disasters in a specific country or region; • environmental and trade protection measures and other legal and regulatory requirements, some of which may affect our ability to import our products, to export our products from, or sell our products in various countries; • political considerations that affect service provider and government spending patterns; • health or similar issues and the responses thereto, such as a pandemic or epidemic, including the COVID-19 pandemic and responses taken thereto; • natural disasters, terrorism, war or other military conflict, including effects of the ongoing conflict between Russia and Ukraine, the conflict between Israel and Hamas and other militant groups in the Middle East and the possibility of a wider regional or global conflict, and global sanctions imposed in response thereto, telecommunication and electrical failures; • difficulties in staffing and managing international operations; or • adverse tax consequences, including imposition of withholding or other taxes on our global operations.
Our future results could be materially adversely affected by a variety of political, economic or other factors relating to our operations inside and outside the United States, including impacts from global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect the willingness of customers in those countries to purchase products from companies headquartered in the United States; business interruptions resulting from regional or larger scale conflicts or geopolitical actions; the impact of public health epidemics or emergencies, or concerns on our customer’s component suppliers, and the challenging and inconsistent global macroeconomic environment, any 19 Table of Contents or all of which could have a material adverse effect on our operating results and financial condition, including, among others things: • current or future supply chain interruptions; • foreign currency exchange rates; • political or social unrest or instability; • economic instability or weakness, including inflation, or natural disasters in a specific country or region; • environmental and trade protection measures and other legal and regulatory requirements, such as tariffs, some of which may affect our ability to import our products, to export our products from, or sell our products in various countries; • political considerations that affect service provider and government spending patterns; • health or similar issues and the responses thereto, such as a pandemic or epidemic; • natural disasters, terrorism, war or other military conflict, including effects of the ongoing conflict between Russia and Ukraine, the conflict between Israel and Hamas and other militant groups in the Middle East and the possibility of a wider regional or global conflict, and global sanctions imposed in response thereto, telecommunication and electrical failures; • difficulties in staffing and managing international operations; or • adverse tax consequences, including imposition of withholding or other taxes on our global operations.
Any decline in our customer renewal and expansions would harm our operating results. • The markets in which we market and sell our products and services are highly competitive, and if we do not adapt to rapid technological change, our ability to sustain or grow revenue could be adversely affected. • Consolidation in the telecommunications, media, technology industry and other industries that we serve can reduce the number of actual and potential customers and adversely affect our business.
Any decline in our customer renewal and expansions would harm our operating results. • The markets in which we market and sell our products and services are highly competitive, and if we do not adapt to rapid technological change, our ability to sustain or grow revenue could be adversely affected. 9 Table of Contents • Consolidation in the telecommunications, media, technology industry and other industries that we serve can reduce the number of actual and potential customers and adversely affect our business.
In particular, our growth will increase the challenges involved in: • recruiting, training and retaining technical, finance, marketing and management personnel with the knowledge, skills and experience that our business model requires; • maintaining high levels of customer satisfaction; • developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems; • preserving our culture, values and entrepreneurial environment; and • effectively managing our personnel and operations and effectively communicating to our personnel worldwide our core values, strategies and goals.
In particular, our growth will increase the challenges involved in: 22 Table of Contents • recruiting, training and retaining technical, finance, marketing and management personnel with the knowledge, skills and experience that our business model requires; • maintaining high levels of customer satisfaction; • developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems; • preserving our culture, values and entrepreneurial environment; and • effectively managing our personnel and operations and effectively communicating to our personnel worldwide our core values, strategies and goals.
Other than payment of dividends on our Preferred Stock, we have never paid dividends on our capital stock and we do not anticipate paying any dividends in the foreseeable future. Consequently, any gains from an investment in our common stock will likely depend on whether the price of our common stock increases.
Other than payment of dividends on our previously outstanding preferred stock, we have never paid dividends on our capital stock and we do not anticipate paying any dividends in the foreseeable future. Consequently, any gains from an investment in our common stock will likely depend on whether the price of our common stock increases.
Conversely, a default under any other indebtedness, if not waived, could result in acceleration of the debt outstanding under the related agreement and entitle the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder.
Additionally, a default under any other indebtedness, if not waived, could result in acceleration of the debt outstanding under the related agreement and entitle the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder.
GAAP, resulting in a material adverse impact on our financial position or results of operations. In addition, we are subject to the continued examination of our income tax returns by the Internal Revenue Service (“IRS”), and other tax authorities.
GAAP, resulting in a material adverse impact on our financial position or results of operations. In addition, we are subject to the continued examination of our income tax returns by the Internal Revenue Service (IRS), and other tax authorities.
We offer certain of our products and services primarily through fixed or variable commitment contracts and recognize revenue ratably over the related service period, which typically ranges from twelve to twenty-four months. As a result, some portion of the revenue we report in each quarter is revenue from contracts entered into during prior periods.
We offer certain of our products and services primarily through fixed or variable commitment contracts and recognize revenue ratably over the related service period, which typically ranges from twelve to twenty-four months. As a result, some 11 Table of Contents portion of the revenue we report in each quarter is revenue from contracts entered into during prior periods.
Further instability or tension in the geopolitical climate could also cause us to adjust our operating model, which would increase our costs of operations. As we continue to expand our business globally, 28 Table of Contents our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations.
Further instability or tension in the geopolitical climate could also cause us to adjust our operating model, which would increase our costs of operations. As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations.
We continue to update and implement our FCPA/anti-corruption compliance program and no assurance can be given that all of our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
We continue to update and implement our FCPA/anti-corruption compliance program and no assurance can be given that all of our employees and agents, as well as those companies to which 27 Table of Contents we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
We enter into subscription agreements with certain of our customers that are generally one to three years. As a result, maintaining the renewal rate of those subscription agreements is critical to our future success.
We enter into subscription agreements with certain of our customers that are generally three to five years. As a result, maintaining the renewal rate of those subscription agreements is critical to our future success.
If we do not support the continued integration of our products and services with third-party applications, including through the provision of application programming interfaces that enable data to be transferred readily between our services and third-party applications, demand for our services could decline and we could lose sales or experience declining renewal rates.
If we do not support the continued integration of our products and services with third-party 25 Table of Contents applications, including through the provision of application programming interfaces that enable data to be transferred readily between our services and third-party applications, demand for our services could decline and we could lose sales or experience declining renewal rates.
Like all software solutions, our software is vulnerable to these types of attacks. An attack of this type could disrupt the proper functioning of our software solutions, cause errors in the output of our customers’ work, allow unauthorized 16 Table of Contents access to sensitive, proprietary or confidential information of ours or our customers, and other destructive outcomes.
Like all software solutions, our software is vulnerable to these types of attacks. An attack of this type could disrupt the proper functioning of our software solutions, cause errors in the output of our customers’ work, allow unauthorized access to sensitive, proprietary or confidential information of ours or our customers, and other destructive outcomes.
The willingness of these types of customers to provide referrals or serve as anchor or reference customers depends on a number of factors, including the performance, ease of use, reliability, reputation and cost-effectiveness of our services as compared to those offered by our competitors, as well as the internal policies of these customers.
The willingness of these types of customers to provide referrals or serve as anchor or reference customers depends on a number of factors, including the performance, ease of use, reliability, reputation and cost-effectiveness of our services as compared to those offered by our competitors, as well as the internal policies of these 14 Table of Contents customers.
Any damage to, or failure or capacity limitations of, our systems and our related network could result in interruptions in our service that could cause us to lose revenue, issue credits or refunds or could cause our customers to terminate their subscriptions for our services, in each case adversely affecting our renewal rates.
Any damage to, or failure or capacity limitations of, our systems and our related network could result in interruptions in our service that could cause us to lose revenue, issue credits or refunds or could cause our customers to terminate their 17 Table of Contents subscriptions for our services, in each case adversely affecting our renewal rates.
As a result, the Senior Notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness.
As a result, the Senior Notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of 35 Table of Contents the assets securing such indebtedness.
Our current or future debt securities or preferred equity securities, which are and would be senior to our common stock, may adversely affect the market price of our common stock. Our Senior Notes and Series B Preferred Stock are senior to our common stock.
Our current or future debt securities or preferred equity securities, which are and would be senior to our common stock, may adversely affect the market price of our common stock. Our Senior Notes are senior to our common stock.
Rising tensions in the geopolitical climate, including effects of the ongoing conflict between Russia and Ukraine, and the conflict between Israel and Hamas and other militant groups in the Middle East and the possibility of a wider regional or global conflict, and global sanctions imposed in response thereto, have created significant uncertainty in the global economy.
Rising tensions in the geopolitical climate, including effects of the ongoing conflict between Russia and Ukraine, and the conflict between Israel and Hamas and other militant groups in the Middle East and the possibility of a wider regional or global conflict, and global 12 Table of Contents sanctions imposed in response thereto, have created significant uncertainty in the global economy.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide technology support, maintenance, warranties or assurance of title or controls on the origin of the software.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as 30 Table of Contents open source licensors generally do not provide technology support, maintenance, warranties or assurance of title or controls on the origin of the software.
Our customers’ businesses are relatively complex and their purchase of the types of products and services that we offer generally involve a significant financial commitment, with 12 Table of Contents attendant delays, frequently associated with large financial commitments and procurement procedures within a large organization.
Our customers’ businesses are relatively complex and their purchase of the types of products and services that we offer generally involve a significant financial commitment, with attendant delays, frequently associated with large financial commitments and procurement procedures within a large organization.
In addition, there may be a limited number of buyers when a holder decides to sell their Senior Notes. This may affect the price, if any, offered for such notes or the holders’ ability to sell them when desired or at all. We may issue additional Senior Notes.
In addition, there may be a limited number of buyers when a holder decides to sell their Senior Notes. This may affect the price, if any, offered for such notes or the holders’ ability to sell them when desired or at all.
Any regulation imposing greater fees for Internet use or restricting the exchange of information over the 27 Table of Contents Internet could result in reduced growth or a decline in the use of the Internet and could diminish the viability of our Internet-based services, which could harm our business and operating results.
Any regulation imposing greater fees for Internet use or restricting the exchange of information over the Internet could result in reduced growth or a decline in the use of the Internet and could diminish the viability of our Internet-based services, which could harm our business and operating results.
If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things: • develop or enhance our products and platforms, • acquire complementary technologies, products or businesses, • expand operations in the United States or internationally, or • respond to competitive pressures or unanticipated working capital requirements.
If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things: 10 Table of Contents • develop or enhance our products and platforms, • acquire complementary technologies, products or businesses, • expand operations in the United States or internationally, or • respond to competitive pressures or unanticipated working capital requirements.
As a result, we expect to concentrate our resources on those technologies that we believe have or will achieve substantial customer acceptance and in which we will have appropriate technical expertise. However, existing products often have short product life cycles characterized by declining prices over their lives.
As a result, we expect to concentrate our resources on those technologies that we believe have or will achieve substantial customer acceptance and in which we will have appropriate technical expertise. However, existing products often have short product life cycles characterized by declining 24 Table of Contents prices over their lives.
Our competition may also independently develop technology equivalent to ours and our intellectual property rights may not be sufficient to prevent them from marketing and 17 Table of Contents selling those products which incorporate such technology, which could have a material adverse effect on our ability to compete in the marketplace.
Our competition may also independently develop technology equivalent to ours and our intellectual property rights may not be sufficient to prevent them from marketing and selling those products which incorporate such technology, which could have a material adverse effect on our ability to compete in the marketplace.
If we fail to compete successfully with existing or new competitors, our business could be harmed. If we fail to compete successfully with established or new competitors, it could have a material adverse effect on our results of operations and financial condition. The industries in which we operate are highly competitive and fragmented, and we expect competition to increase.
If we fail to compete successfully with established or new competitors, it could have a material adverse effect on our results of operations and financial condition. The industries in which we operate are highly competitive and fragmented, and we expect competition to increase.
Our future growth will depend, at least in part, on our ability to enter into and maintain successful strategic relationships with these third 26 Table of Contents parties. Identifying partners and negotiating and documenting relationships with them requires significant time and resources, as does integrating third-party content and technology.
Our future growth will depend, at least in part, on our ability to enter into and maintain successful strategic relationships with these third parties. Identifying partners and negotiating and documenting relationships with them requires significant time and resources, as does integrating third-party content and technology.
Any such damages, penalties, disruptions or limitations in our ability to do business could have an adverse effect on our business and operating results. Changes in laws, regulations or governmental policy applicable to our customers or potential customers may decrease the demand for our solutions or increase our costs.
Any such damages, penalties, disruptions or limitations in our ability to do business could have an adverse effect on our business and operating results. 26 Table of Contents Changes in laws, regulations or governmental policy applicable to our customers or potential customers may decrease the demand for our solutions or increase our costs.
In addition, such default or acceleration may result in an event of default and acceleration of other indebtedness of the Company, entitling the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder.
In addition, such default or acceleration may 13 Table of Contents result in an event of default and acceleration of other indebtedness of the Company, entitling the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder.
Additionally, the price of our common stock may continue to fluctuate greatly in the future due to factors that are non-company specific, such as the decline in the United States and/or international economies, acts of terror against the United States or other jurisdictions where we conduct business, war or other military conflict or due to a variety of company specific factors, including quarter to quarter variations in our operating results, shortfalls in revenue, gross margin or earnings from levels projected by securities analysts and the other factors discussed in these risk factors.
Additionally, the price of our common stock may continue to fluctuate greatly in the future due to factors that are non-company specific, such as the downturns or expected changes in the United States and/or international economies, acts of terror against the United States or other jurisdictions where we conduct business, war or other military conflict or due to a variety of company specific factors, including quarter to quarter variations in our operating results, shortfalls in revenue, gross margin or financial results or forecasts from levels projected by securities analysts and the other factors discussed in these risk factors.
Changes in applicable laws, regulations or procedures could adversely affect our ability to hire or retain these skilled employees and could affect our costs of doing business and our ability to deliver services to our customers.
Changes in applicable laws, regulations or 32 Table of Contents procedures could adversely affect our ability to hire or retain these skilled employees and could affect our costs of doing business and our ability to deliver services to our customers.
We traditionally have had substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues. The Company’s top five customers accounted for 96.6%, 94.6% and 92.4% of net revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Contracts with these cust omers typically run for three to five years.
We traditionally have had substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues. The Company’s top five customers accounted for 97.6%, 96.6% and 94.6% of net revenues for the years ended December 31, 2024, 2023 and 2022, respectively. Contracts with these cust omers typically run for three to five years.
In connection with our new strategy, we consummated a divestiture of our Messaging Solutions and Digital Solutions business units, which closed in October 31, 2023. We cannot guarantee that our strategy is the right one or that we will be effective in executing our strategy.
In connection with this change in strategy, we consummated a divestiture of our Messaging Solutions and Digital Solutions business units, which closed on October 31, 2023. We cannot guarantee that our strategy is the right one or that we will be effective in executing our strategy.
In addition, our subscription based offerings may be invoiced over multiple reporting periods, which could subject us to additional collection 24 Table of Contents and credit risks, particularly if a customer does not plan to renew these subscriptions.
In addition, our subscription based offerings may be invoiced over multiple reporting periods, which could subject us to additional collection and credit risks, particularly if a customer does not plan to renew these subscriptions.
In addition to fines, a violation of the GDPR may result in regulatory investigations, reputational damage, orders to cease/change our data processing activities, enforcement notices, assessment notices (for compulsory audits) and/or civil claims (including class action lawsuits). We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.
In addition to fines, a violation of such regulations may result in regulatory investigations, reputational damage, orders to cease/change our data processing activities, enforcement notices, assessment notices (for compulsory audits) and/or civil claims (including class action lawsuits). We are also subject to evolving privacy laws on cookies, tracking technologies and e-marketing.
An economic downturn or our work from home practices may cause us to need less office space than we are contractually committed to leasing and prevent us from finding subtenants for such unused office space, causing us to pay for unused office space.
Our work from home practices have caused us to need less office space than we are contractually committed to leasing and an economic downturn may prevent us from finding subtenants for such unused office space, causing us to pay for unused office space.
Moreover, we may face regulatory challenges that impact our ability to conduct due diligence. There can be no assurance that future discoveries will not have a material adverse effect on our ability to realize the cost or revenue synergies or other benefits we expect from the November 2023 Divestiture.
Moreover, we may face regulatory challenges that impact our ability to conduct due diligence. There can be no assurance that future discoveries will not have a material adverse effect on our ability to realize the cost or revenue synergies or other benefits.
There are several proposed changes to U.S. and non-U.S. tax legislation and the ultimate enactment of any of them could have a negative impact on our effective tax rate. It is possible that 33 Table of Contents future requirements, including the recently proposed implementation of International Financial Reporting Standards (“IFRS”) could change our current application of U.S.
There are several proposed changes to U.S. and non-U.S. tax legislation and the ultimate enactment of any of them could have a negative impact on our effective tax rate. It is possible that future requirements, including the proposed implementation of International Financial Reporting Standards (IFRS) could change our current application of U.S.
Other than the payment of dividends, either in-kind or in cash, on our Preferred Stock, we have not paid dividends on any of our classes of capital stock and we currently intend to retain our future earnings, if any, to fund the development and growth of our business.
Other than the payment of dividends, either in-kind or in cash, on our previously outstanding preferred stock, we have not paid dividends on any of our classes of capital stock and we currently intend to retain our future earnings, if any, to fund the 34 Table of Contents development and growth of our business.
Any such development could have an adverse effect on our margins and financial position and would negatively affect our revenues and results of operations and/or trading price of our common stock. We may be able to incur substantially more debt, which could have important consequences to investors. We may be able to incur substantial additional indebtedness in the future.
Any such development could have an adverse effect on our margins and financial position and would negatively affect our revenues and results of operations and/or trading price of our common stock. We may be able to incur substantially more debt, which could have important consequences to investors.
However, given our international operations we currently have, and expect to have in the future, revenue and expenses and related assets and liabilities denominated in foreign currencies. 21 Table of Contents Foreign currency transaction exposure results primarily from transactions with customers or vendors denominated in currencies other than the functional currency of the entity in which we record the transaction.
However, given our international operations we currently have, and expect to have in the future, revenue and expenses and related assets and liabilities denominated in foreign currencies. Foreign currency transaction exposure results primarily from transactions with c ustomers or vendors denominated in currencies other than the functional currency of the entity in which we record the transaction.
Our strategy may not succeed for a number of reasons, including, but not limited to: general economic risks; execution risks with acquisitions; risks associated with sales not materializing based on a change in circumstances; disruption to sales; increasing competitiveness in the cloud-based software markets; our ability to retain key personnel; the dynamic nature of the markets in which we operate; specific economic risks in different geographies and among different customer segments; changes in foreign currency exchange rates; uncertainty regarding increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; execution risks around new product development and introductions and innovation; product defects; unexpected costs, assumption of unknown liabilities and increased costs for any reason; potential litigation and disputes and the potential costs related thereto; distraction and damage to sales and reputation caused thereby; market acceptance of new products and services; the ability to attract and retain personnel; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks associated with the adoption of, and demand for, our model in general and by specific customer segments; competition and pricing pressure.
Our strategy may not succeed for a number of reasons, including, but not limited to: general economic risks, risks associated with sales not materializing based on a change in circumstances, disruption to sales, increasing competitiveness in the cloud-based software markets, our ability to retain key personnel, the dynamic nature of the markets in which we operate, specific economic risks in different geographies and among different customer segments, changes in foreign currency exchange rates, uncertainty regarding increased business and renewals from existing customers, uncertainties around continued success in sales growth and market share gains, failure to convert sales pipeline into final sales, risks associated with successful implementation of multiple integrated software products and other product functionality risks, execution risks around new product development and introductions and innovation, product defects, unexpected costs, assumption of unknown liabilities and increased costs for any reason, potential litigation and disputes and the potential costs related thereto, distraction and damage to sales and reputation caused thereby, market acceptance of new products and services, the ability to attract and retain personnel, risks associated with management of growth, lengthy sales and implementation cycles, particularly in larger organizations, technological changes that make our products and services less competitive, risks associated with the adoption of, and demand for, our model in general and by specific customer segments, competition and pricing pressure. 21 Table of Contents If one or more of the foregoing risks were to materialize, our business, results of operations and ability to achieve sustained profitability could be adversely affected.
There can be no guarantee that this strategy will be successful or that we will experience consistent and sustainable profitability in the future as a result of our new strategy. We have recently made a major announcement to pivot our strategy to focus on our cloud-centric solutions moving forward.
There can be no guarantee that this strategy will be successful or that we will experience consistent and sustainable profitability in the future as a result of our new strategy. We decided to pivot our strategy to focus on our cloud-centric solutions moving forward.
The 1% excise tax may increase our costs and impact our operations. This could have an adverse effect on our margins and financial position and would negatively affect our revenues and results of operations and/or trading price of our common stock.
Treasury Department and the IRS. The 1% excise tax may increase our costs and impact our operations. This could have an adverse effect on our margins and financial position and would negatively affect our revenues and results of operations and/or 37 Table of Contents trading price of our common stock.
Our cloud strategy will 23 Table of Contents continue to evolve, and we may not be able to compete effectively, generate significant revenues or maintain profitability.
Our cloud strategy will continue to evolve, and we may not be able to compete effectively, generate significant revenues or maintain profitability.
Third parties may attempt to fraudulently induce our or our service providers’ employees to misdirect funds or to disclose information in order to gain access to personal data we maintain about our users or website users.
Third parties may attempt to fraudulently induce 29 Table of Contents our or our service providers’ employees to misdirect funds or to disclose information in order to gain access to personal information we maintain about our users or website users.
None of our subsidiaries is a guarantor of the Senior Notes, and the Senior Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.
The Senior Notes are obligations exclusively of Synchronoss Technologies, Inc. and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Senior Notes, and the Senior Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.
The scope of these laws is changing, they are subject to differing interpretations from one jurisdiction to another, and they may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules or our practices.
The scope of these laws has and continues to change, they are subject to differing interpretations from one jurisdiction to another, and they can be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules or our practices.
In that case, the trading price of our securities could decline, and our investors may lose part or all of their investment. 10 Table of Contents Risk Factors Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our actual results to be harmed, including risks regarding the following: Operation Risks • Our business may not generate sufficient cash flows from operations or future borrowings may not be available in amounts sufficient to enable us to fund liquidity needs or capital expenditures. • Our revenue, earnings and profitability are affected by the length of our sales cycle, and a longer sales cycle could adversely affect our results of operations and financial condition. • If we do not meet our revenue forecasts, we may be unable to reduce our expenses in a timely fashion to avoid or minimize harm to our results of operations. • We traditionally have had substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenue. • We must recruit and retain our key management and other key personnel and our failure to recruit and retain qualified employees could have a negative impact on our business. • Our products are complex and may contain defects that are detected only after deployment. • Failure to maintain the confidentiality, integrity and availability of our systems, software and solutions could seriously damage our reputation and affect our ability to retain customers and attract new business. • The quality of our support and services offerings is important to our customers and if we fail to meet out service level obligations under our service level agreements or otherwise fail to offer quality support and services, we would be subject to penalties and could lose customers. • Our reliance on third-party providers for communications software, services, hardware and infrastructure exposes us to a variety of risks we cannot control. • We are subject to credit risk and other risks associated with our accounts receivable securitization facility. • Fluctuations in foreign currency exchange rates could result in foreign currency transaction losses, which could harm our operating results and financial condition. • Downgrades in our credit ratings may increase our future borrowing costs, limit our ability to raise capital, cause our stock price to decline, any of which could have a material adverse impact on our business. • Our insurance policies, including general liability, errors and omissions and cyber insurance, may not totally protect us.
Risk Factors Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our actual results to be harmed, including risks regarding the following: Operation Risks • Our business may not generate sufficient cash flows from operations or future borrowings may not be available in amounts sufficient to enable us to fund liquidity needs or capital expenditures. • Our revenue, earnings and profitability are affected by the length of our sales cycle, and a longer sales cycle could adversely affect our results of operations and financial condition. • We traditionally have had substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenue. • We may be able to incur substantially more debt, which could have important consequences for investors. • We may not generate sufficient cash to enable us to service our debt. • We must recruit and retain our key management and other key personnel and our failure to recruit and retain qualified employees could have a negative impact on our business. • Our products are complex and may contain defects that are detected only after deployment. • Failure to maintain the confidentiality, integrity and availability of our systems, software and solutions could seriously damage our reputation and affect our ability to retain customers and attract new business. • The quality of our support and services offerings is important to our customers and if we fail to meet out service level obligations under our service level agreements or otherwise fail to offer quality support and services, we would be subject to penalties and could lose customers. • Our reliance on third-party providers for communications software, services, hardware and infrastructure exposes us to a variety of risks we cannot control. • Fluctuations in foreign currency exchange rates could result in foreign currency transaction gains or losses, which could affect our operating results and the period-over-period comparability of our operating results. • Downgrades in our credit ratings may increase our future borrowing costs, limit our ability to raise capital, cause our stock price to decline, any of which could have a material adverse impact on our business. • Our insurance policies, including general liability, errors and omissions and cyber insurance, may not totally protect us.
For the purposes of calculating the excise tax, the repurchasing corporation is permitted to net the fair market value of certain new stock issuances against the fair market value of the stock repurchases that occur in the same taxable year. On December 27, 2022, the U.S.
For the purposes of calculating the excise tax, the repurchasing corporation is permitted to net the fair market value of certain new stock issuances against the fair market value of the stock repurchases that occur in the same taxable year.
In periods of economic slowdown our typical sales cycle lengthens, which means that the average time between our initial contact with a prospective customer and the signing of a sales contract increases. The lengthening of our sales cycle could reduce growth in our revenue.
In periods of economic slowdown our typical sales cycle lengthens, which means that the average time between our initial contact with a prospective customer and the signing of a sales contract increases. The lengthening of our sales cycle has and could in the future adversely affect our results of operations or reduce growth in our revenue.
Continued uncertainty about the associated economic consequences may have a long-term adverse effect on the economy, our sellers, customers, suppliers, and our business. For example, we are currently subletting some of our office space.
Current world tensions could escalate, and this could have unpredictable consequences on the world economy and on our business. Continued uncertainty about the associated economic consequences may have a long-term adverse effect on the economy, our sellers, customers, suppliers, and our business. For example, we are currently subletting some of our office space.
Moreover, these rules and 32 Table of Contents regulations increase our legal and financial compliance costs and make some activities more time-consuming and costlier.
Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costlier.
We intend to continue to make substantial investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new products and enhancements to our platforms or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds.
We intend to continue to make substantial investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new products and enhancements to our platforms or acquire complementary businesses and technologies.
If our renewal rates are lower than anticipated or decline for any reason, if customers renew on terms less favorable to us, or if there’s a substantial subscriber migration from our customers, our revenue may decrease, and our profitability and gross margin may be harmed, which would have a material adverse effect on our business, results of operations and financial condition.
If our renewal rates are lower than anticipated or decline for any reason, if customers renew on terms less favorable to us, or if there’s a substantial subscriber migration from our customers, our revenue may decrease, and our profitability and gross margin may be harmed, which would have a material adverse effect on our business, results of operations and financial condition. 23 Table of Contents If we fail to compete successfully with existing or new competitors, our business could be harmed.
While we have security measures in place that are designed to protect against these risks, preserve the integrity of customer and personal information and prevent information loss, misappropriation and other security breaches, our security measures may be compromised as a result of intentional misconduct, including by computer hackers, employees, contractors or service providers, as well as software bugs, human error, technical malfunctions or other malfeasance.
While we have security measures in place that are designed to protect against these risks, our security measures may be compromised as a result of intentional misconduct, including by computer hackers, employees, contractors or service providers, as well as software bugs, human error, technical malfunctions or other malfeasance.
In particular, the terms of the indenture and the Senior Notes do not place any restrictions on our or our subsidiaries’ ability to: • issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Senior Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Senior Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Senior Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Senior Notes with respect to the assets of our subsidiaries; • pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to the Senior Notes; • sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); • enter into transactions with affiliates; • create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions; • make investments; or • create restrictions on the payment of dividends or other amounts to us from our subsidiaries. 37 Table of Contents In addition, the indenture does not include any protection against certain events, such as a change of control, a leveraged recapitalization or “going private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or similar transactions.
In particular, the terms of the indenture and the Senior Notes do not place any restrictions on our or our subsidiaries’ ability to: • issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Senior Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Senior Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Senior Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Senior Notes with respect to the assets of our subsidiaries; • pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to the Senior Notes; • sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); • enter into transactions with affiliates; • create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions; • make investments; or • create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
We cannot provide any assurances that an active trading market will develop for the Senior Notes or that holders of our Senior Notes will be able to sell their Notes.
The Senior Notes are listed on Nasdaq under the symbol “SNCRL”. We cannot provide any assurances that an active trading market will develop for the Senior Notes or that holders of our Senior Notes will be able to sell their Notes.
Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Senior Notes may have important consequences for you as a holder of the Senior Notes, including making it more difficult for us to satisfy our obligations with respect to the Senior Notes or negatively affecting the trading value of the Senior Notes.
Also, an event of default or acceleration under our other indebtedness would not necessarily result in an Event of Default under the Senior Notes. 36 Table of Contents Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Senior Notes may have important consequences for you as a holder of the Senior Notes, including making it more difficult for us to satisfy our obligations with respect to the Senior Notes or negatively affecting the trading value of the Senior Notes.
We base our operating expense and capital investment budgets on expected sales and revenue trends, and many of our expenses, such as office and equipment leases and personnel costs, will be relatively fixed 13 Table of Contents in the short term and will increase over time as we make investments in our business.
We base our operating expense and capital investment budgets on expected sales and revenue trends, and many of our expenses, such as office and equipment leases and personnel costs. These expenses and the impact of long-term commitments are relatively fixed in the short term and are expected to increase over time as we make investments in our business.
If we fail to meet our service level obligations under these 18 Table of Contents agreements, we would be subject to penalties, which could result in higher than expected costs, decreased revenues and decreased operating margins. We could also lose customers.
In the past we have failed to meet certain service level obligations under these agreements, and in the future, if we fail to meet our service level obligations under these agreements, we would be subject to penalties, which could result in higher than expected costs, decreased revenues and decreased operating margins. We could also lose customers.
Such transactions present significant challenges and risks, as the market for acquisitions, divestitures and other strategic transactions is highly competitive, especially in light of industry consolidation, which may affect our ability to complete such transactions.
We have made and expect to continue to make acquisitions, divestitures and other strategic transactions to strengthen our business and grow our Company. Such transactions present significant challenges and risks, as the market for acquisitions, divestitures and other strategic transactions is highly competitive, especially in light of industry consolidation, which may affect our ability to complete such transactions.
Fluctuations in foreign currency exchange rates could result in foreign currency transaction losses, which could harm our operating results and financial condition. We consider the U.S. dollar to be our functional currency.
Fluctuations in foreign currency exchange rates could result in foreign currency transaction losses, which could affect our operating results and the period-over-period comparability of our operating results. We consider the U.S. dollar to be our functional currency.
A change in these principles can have a significant impact on our reported results and may even retroactively affect previously reported transactions. The adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls and could have a significant impact on our financial position and results of operations.
The adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls and could have a significant impact on our financial position and results of operations.
We could also experience failures or interruptions of our systems and services, or other problems in connection with our operations, as a result of, among other things: • damage to, or failure of, our computer software or hardware or our connections and outsourced service arrangements with third parties; • errors in the processing of data by our systems; • computer viruses or software defects; • physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events; • fire, cybersecurity attack, terrorist attack or other catastrophic event; • increased capacity demands or changes in systems requirements of our customers; or • errors by our employees or third-party service providers.
In the past we have, and in the future we may experience failures or interruptions of our systems and services, or other problems in connection with our operations, as a result of, among other things: • damage to, or failure of, our computer software or hardware or our connections and outsourced service arrangements with third parties; • errors in the processing of data by our systems; • computer viruses or software defects; • physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events; • fire, cybersecurity attack, terrorist attack or other catastrophic event; • increased capacity demands or changes in systems requirements of our customers; or • errors by our employees or third-party service providers. 16 Table of Contents We rely on various systems and applications to support our internal operations, including our billing, financial reporting and customer contracting functions.
We believe our estimates to be reasonable, but there can be no assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position.
We believe our estimates to be reasonable, but there can be no assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position. Our employee retention and hiring may be adversely impacted by immigration restrictions and related factors.
This may have the effect of reducing the amount of proceeds paid to investors. Incurrence of additional debt would also further reduce the cash available to invest in operations, as a result of increased debt service obligations. If new debt is added to our current debt levels, the related risks that we now face could intensify.
Incurrence of additional debt would also further reduce the cash available to invest in operations, as a result of increased debt service obligations. If new debt is added to our current debt levels, the related risks that we now face could intensify. We may not generate sufficient cash to enable us to service our debt.
If we incur any additional indebtedness that ranks equally with the Senior Notes, the 14 Table of Contents holders of that debt will be entitled to share ratably with holders of the Senior Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution.
If we incur any additional indebtedness that ranks equally with the Senior Notes, the holders of that debt will be entitled to share ratably with holders of the Senior Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution. This may have the effect of reducing the amount of proceeds paid to investors.
Additionally, due to political uncertainty and military actions associated with Russia’s invasion of Ukraine, we and our service providers are vulnerable to heightened risks of security incidents and security and privacy breaches from or affiliated with nation-state actors, including attacks that could materially disrupt our systems, operations, supply chain, products, and services.
Additionally, due to political uncertainty and military actions associated with the ongoing conflict between Russia and Ukraine and the conflict between Israel and Hamas and other militant groups in the Middle East, we and our service providers are vulnerable to heightened risks of security incidents and security and privacy breaches from or affiliated with nation-state actors, including attacks that could materially disrupt our systems, operations, supply chain, products, and services.
For example, the conflict between Russia and Ukraine or the conflict between Israel and Hamas and other militant groups in the Middle East could continue to lead to disruption, instability and volatility in global markets and industries.
Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability. For example, the conflict between Russia and Ukraine or the conflict between Israel and Hamas and other militant groups in the Middle East could continue to lead to disruption, instability and volatility in global markets and industries.
In addition, non-GAAP metrics we may disclose, such as Adjusted EBITDA, Invoiced Revenue, and any corresponding trends in such metrics should not be relied on as an indication that our GAAP results, such as net income (loss), will be similar or will follow the same trends.
In addition, non-GAAP metrics we may disclose, such as Adjusted EBITDA, Adjusted Gross Profit, Adjusted Gross Margin, Non-GAAP net (loss) income attributable to Synchronoss, Non-GAAP net (loss) income per share, Free Cash Flow, Adjusted Free Cash Flow and any corresponding trends in such metrics should not be relied on as an indication that our GAAP results, such as net income (loss), will be similar or will follow the same trends.
Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. 31 Table of Contents Changes in, or interpretations of, tax rules and regulations, results of tax audits and other factors, including timing of tax refund receipt, could cause fluctuations in or adversely affect our effective tax rates and operating results.
This business model depends heavily on achieving economies of scale due to the initial upfront investment, and the associated revenue is recognized on a ratable basis. Our customers typically have no contractual obligation to renew their subscriptions after completion of their then-current subscription term . We may be unable to predict future customer renewal rates accurately.
We derive a portion of our revenue growth from subscription offerings and specifically SaaS offerings. This business model depends heavily on achieving economies of scale due to the initial upfront investment, and the associated revenue is recognized on a ratable basis. Our customers typically have no contractual obligation to renew their subscriptions after completion of their then-current subscription term .

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−1 removed16 unchanged
Biggest changeWe also engage a third-party service provider to assess our third-party suppliers for potential risks and effectiveness of controls related to information security and data privacy protection that are relevant in the context of their delivery of services.
Biggest changeWe also engage a third-party service provider to assess our third-party suppliers for potential risks and effectiveness of controls related to information security and data privacy protection that are relevant in the context of their delivery of services. 39 Table of Contents Governance Our CISO and GIS team meets regularly with our information technology (IT) and cybersecurity service providers and internal teams, such as the Risk Advisory Board (RAB), about our Company’s ongoing compliance and risk management.
Pursuant to our current policies the GIS team also provides, at the minimum, annual briefings to our Board of Directors and periodic briefings to the Audit Committee regarding our cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties, among other relevant topics.
Pursuant to our current policies the GIS team also provides, at the minimum, annual briefings to our Board of Directors and periodic briefings to the Audit Committee regarding our cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, and activities of third parties, among other relevant topics.
Our CISO has over 13 years of experience serving in various roles in risk management as well as enterprise and cyber security, including serving as the project lead and founder of the Open Worldwide Application Security Project (OWASP) flagship project Security Shepherd, a web and mobile application security training program, and leading IBM’s ethical hacking team.
Our CISO has over 10 years of experience serving in various roles in risk management as well as enterprise and cybersecurity, including serving as the project lead and founder of the Open Worldwide Application Security Project (OWASP) flagship project Security Shepherd, a web and mobile application security training program, and leading IBM’s ethical hacking team.
GIS also drives business continuity and crisis management through coordinating and communicating with all levels of an organization and seeks to 41 Table of Contents ensure that trends and emerging issues that could impact the business are considered and communicated as appropriate.
GIS also drives business continuity and crisis management by coordinating and communicating with all levels of the organization and seeks to ensure that trends and emerging issues that could impact the business are considered and communicated as appropriate.
Removed
Governance Our CISO and GIS team meets regularly with our IT and cybersecurity service providers and internal teams, such as the Risk Advisory Board (RAB), about the Company’s ongoing compliance and risk management.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES We lease approximately 120,000 square feet of office space for our corporate headquarters in Bridgewater, New Jersey. We have other leases in certain countries including India, Ireland, and in various states in the United States including Arizona and Pennsylvania. The lease terms for our locations expire in the years between 2024 and 2028.
Biggest changeITEM 2. PROPERTIES We lease approximately 120,000 square feet of office space for our corporate headquarters in Bridgewater, New Jersey. We have other leases in certain countries including India, Ireland, and in various states in the United States including Pennsylvania. The lease terms for our locations expire in the years between 2025 and 2028.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+3 added−11 removed5 unchanged
Biggest changeInformation concerning securities authorized for issuance under equity compensation plans is set forth under the heading “Securities Authorized for Issuance Under Equity Compensation Plans” in the Synchronoss Proxy Statement for the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. 44 Table of Contents Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2018 and December 31, 2023, with the cumulative total return of (i) the Nasdaq Computer Index and (ii) the Nasdaq Composite Index, over the same period.
Biggest changeAs a result of the Series B Repurchase, no shares of the Series B Preferred remain outstanding and none are authorized for issuance as of December 31, 2024, and the authorized shares of Series B Preferred Stock were returned to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series pursuant to the Certificate of Designations. 41 Table of Contents Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2019 and December 31, 2024, with the cumulative total return of (i) the Nasdaq Computer Index and (ii) the Nasdaq Composite Index, over the same period.
Preferred Stock Series B Non-Convertible Preferred Stock On June 30, 2021, the Company closed a private placement of 75,000 shares of its Series B Perpetual Non-Convertible Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share (the “Series B Preferred Stock”), for net proceeds of $72.8 million (the “Series B Transaction”).
Preferred Stock Series B Non-Convertible Preferred Stock On June 30, 2021, the Company closed a private placement of 75,000 shares of its Series B Perpetual Non-Convertible Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share (the “Series B Preferred Stock”), for net proceeds of $72.5 million (the “Series B Transaction”).
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information As of December 31, 2023, our common stock was traded and listed on The Nasdaq Global Select Market under the symbol “SNCR.” As of December 31, 2023, there were approximately 52 named holders of record of our common stock as according to our transfer agent.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information As of December 31, 2024, our common stock was traded and listed on The Nasdaq Global Select Market under the symbol “SNCR.” As of December 31, 2024, there were approximately 34 named holders of record of our common stock as according to our transfer agent.
The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by banks, brokers and other nominees. On December 31, 2023, the last reported sale price of our common stock as reported on The Nasdaq Global Select Market was $6.21 per share.
The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by banks, brokers and other nominees. On December 31, 2024, the last reported sale price of our common stock as reported on The Nasdaq Global Select Market was $9.60 per share.
This graph assumes the investment of $100 on December 31, 2018 in our common stock, the Nasdaq Computer Index and the Nasdaq Composite Index, and assumes the reinvestment of dividends, if any. The graph assumes the initial value of our common stock on December 31, 2018 was the closing sales price of $55.26 per share.
This graph assumes the investment of $100 on December 31, 2019 in our common stock, the Nasdaq Computer Index and the Nasdaq Composite Index, and assumes the reinvestment of dividends, if any. The graph assumes the initial value of our common stock on December 31, 2019 was the closing sales price of $42.75 per share.
December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Synchronoss Technologies, Inc. $100 $77 $77 $40 $10 $11 Nasdaq Composite Index $100 $135 $194 $236 $158 $226 Nasdaq Computer Index $100 $150 $225 $311 $200 $332 45 Table of Contents
December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Synchronoss Technologies, Inc. $100 $99 $51 $13 $15 $22 Nasdaq Composite Index $100 $144 $174 $117 $167 $215 Nasdaq Computer Index $100 $150 $207 $133 $221 $301 42 Table of Contents
Removed
The rights, preferences, privileges, qualifications, restrictions and limitations of the shares of Series B Preferred Stock are set forth in the Series B Certificate.
Added
In connection with the closing of the Series B Transaction, the Company (i) filed a Certificate of Designation with the State of Delaware setting forth the rights, preferences, privileges, qualifications, restrictions and limitations on the Series B Preferred (the “Series B Certificate”) and (ii) entered into an Investor Rights Agreement with B. Riley Financial, Inc. (“B.
Removed
Under the Series B Certificate, the holders of the Series B Preferred Stock are entitled to receive, on each share of Series B Preferred Stock on a quarterly basis, an amount equal to the dividend rate, as described in the following sentence, divided by four and multiplied by the then-applicable Liquidation Preference per share of Series B Preferred Stock (collectively, the “Preferred Dividends”).
Added
Riley Financial”) and BRPI setting forth certain governance and registration rights of B. Riley Financial with respect to the Company. Repurchase of Series B Preferred On June 28, 2024 the Company repurchased all outstanding shares of the Series B Preferred stock, as discussed in Note 13.
Removed
The dividend rate is (1) 9.5% per annum for the period commencing on June 30, 2021 and ending on and including December 31, 2021, (2) 13% per annum for the year commencing on January 1, 2022 and ending on and including December 31, 2022; and (3) 14% per annum for the year commencing on January 1, 2023 and thereafter.
Added
Debt of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K. On July 1, 2024 the Company filed a Certificate of Elimination to the Series B Certificate with the Secretary of State of the State of Delaware.
Removed
The Preferred Dividends will be due in cash on January 1, April 1, July 1 and October 1 of each year (each, a “Series B Dividend Payment Date”). The Company may choose to pay the Series B preferred dividends in cash or in additional shares of Series B Preferred Stock.
Removed
In the event the Company does not declare and pay a dividend in cash on any Series B Dividend Payment Date, the unpaid amount of the Preferred Dividend will be added to the Liquidation Preference. As of December 31, 2023, the Liquidation Value and Redemption Value of the Series B Preferred Shares was $63.0 million.
Removed
The Company paid the following Series B preferred dividends and principal during the year ended December 31, 2023 and accrued the following preferred dividends as of December 31, 2023: • paid $9.8 million preferred dividends in cash; • made a $9.9 million principal payment to redeem 9,874 shares of Series B Preferred stock; • accrued $2.3 million preferred dividend which was paid in cash on January 3, 2023.
Removed
Series A Convertible Preferred Stock On February 15, 2018, the Company issued to Silver Private Holdings I, LLC (“Silver”), an affiliate of Siris Capital Group, LLC (“Siris”) 185,000 shares of our newly issued Series A Preferred Stock, par value $0.0001 per share.
Removed
Under the Series A 43 Table of Contents Certificate, the holders of the Series A Preferred Stock were entitled to receive, on each share of Series A Preferred Stock on a quarterly basis, an amount equal to the dividend rate of 14.5% divided by four and multiplied by the then-applicable Liquidation Preference (as defined in the Series A Certificate) per share of Series A Preferred Stock (collectively, the “Preferred Dividends”).
Removed
The Preferred Dividends were due on January 1, April 1, July 1 and October 1 of each year (each, a “Series A Dividend Payment Date”). The Company may choose to pay the Preferred Dividends in cash or in additional shares of Series A Preferred Stock.
Removed
Redemption of Series A Preferred Stock The Company redeemed in full all of the 268,917 outstanding shares of the Series A Preferred Stock for an aggregate redemption price of $278.7 million and all rights under the Investor Rights Agreement relating to the Series A Preferred Stock were terminated effective with the Redemption.
Removed
No Series A Preferred Stock remains outstanding or authorized as of December 31, 2023. For a discussion of our stockholder’s equity refer to Note 15. Capital Structure of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+26 added−38 removed38 unchanged
Biggest changeYear Ended December 31, 2023 vs 2022 2023 2022 $ Change Net revenues $ 164,196 $ 173,756 $ (9,560) Cost of revenues 1 42,218 46,500 (4,282) Research and development 46,565 49,598 (3,033) Selling, general and administrative 65,216 61,153 4,063 Restructuring charges 4,013 1,443 2,570 Depreciation and amortization 16,830 14,756 2,074 Total costs and expenses 174,842 173,450 1,392 (Loss) income from operations $ (10,646) $ 306 $ (10,952) ________________________________ 1 Cost of revenues excludes depreciation and amortization which are shown separately.
Biggest changeYear Ended December 31, Change 2024 2023 2024 vs 2023 Net revenues $ 173,594 $ 164,196 $ 9,398 Cost of revenues 1 39,041 42,218 (3,177) Research and development 42,819 46,565 (3,746) Selling, general and administrative 51,688 65,216 (13,528) Restructuring charges 1,273 4,013 (2,740) Depreciation and amortization 17,091 16,830 261 Total costs and expenses 151,912 174,842 (22,930) Income (loss) from operations 21,682 (10,646) 32,328 Interest income 810 426 384 Interest expense (18,003) (13,963) (4,040) Other income (expense), net 9,278 (5,128) 14,406 Income (loss) from continuing operations, before taxes 13,767 (29,311) 43,078 Provision for income taxes (7,613) (4,743) (2,870) Net income (loss) from continuing operations $ 6,154 $ (34,054) $ 40,208 ________________________________ 1 Cost of revenues excludes depreciation and amortization, which are shown separately.
The Company’s software licenses typically provide for a perpetual or term right to use the Company’s software. The Company has concluded that in most cases its software license is distinct as the customer can benefit from the software on its own. Software revenue is typically recognized when the software is delivered to the customer.
The Company’s software licenses typically provide for a perpetual or term right to use the Company’s software. The Company has concluded that in most cases the software license is distinct as the customer can benefit from the software on its own. Software revenue is typically recognized when the software is delivered to the customer.
Components of the reserve are classified as current or a long-term liability in the Consolidated Balance Sheets based on when we expect each of the items to be settled. We record interest and penalties accrued in relation to uncertain tax benefits as a component of interest expense.
Components of the reserve are classified as current or a long-term liability on the Consolidated Balance Sheets based on when we expect each of the items to be settled. We record interest and penalties accrued in relation to uncertain tax benefits as a component of interest expense.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. We recognize a tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position.
These assumptions require judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. We recognize a tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position.
Standalone selling prices of services are typically determined based on observable transactions when these services are sold on a standalone basis to similarly situated customers or estimated using a cost-plus margin approach. Estimating the transaction price of variable consideration including the variable quantity subscription or transaction contracts in a multiple performance obligation arrangement requires significant judgment.
Standalone selling prices of services are typically determined based on observable transactions when these services are sold on a standalone basis to similarly situated customers or estimated using a cost-plus margin approach. Estimating the transaction price of variable consideration including the variable quantity subscription or transaction contracts in a multiple performance obligation arrangement requires judgment.
However, we believe that the costs incurred and subscriber disruption by Verizon or AT&T to replace Synchronoss’ solutions would be substantial. Key Developments Discontinued Operations On October 31, 2023, Synchronoss Technologies, Inc. entered into an Asset Purchase Agreement with Lumine Group Software Solutions (Ireland) Limited, pursuant to which the Company sold its Messaging and NetworkX businesses.
However, we believe the costs incurred by and subscriber disruption for Verizon or AT&T to replace Synchronoss’ solutions would be substantial. Key Developments Discontinued Operations On October 31, 2023, Synchronoss Technologies, Inc. entered into an Asset Purchase Agreement with Lumine Group Software Solutions (Ireland) Limited, pursuant to which the Company sold its Messaging and NetworkX businesses.
Discussions of 2022 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
As these devices replace other traditional devices like PCs, the ability to securely back up content from mobile devices, sync it with other devices and share it with family, friends and business associates have become an essential need and subscriber expectation. Such devices include smartphones, connected cars, personal health and wellness devices and connected home devices.
As these devices replace other traditional devices like PCs, the ability to securely back up content from mobile devices, sync it with other devices and share it with family, friends and business associates has become an essential need and subscriber expectation. Such devices include smartphones, connected cars, personal health and wellness devices, and connected home devices.
Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of December 31, 2023 and December 31, 2022 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of December 31, 2024 and December 31, 2023 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
The additional Senior Notes sold have terms identical to the initial Senior Notes and are be fungible and vote together with the initial Senior Notes immediately upon issuance.
The additional Senior Notes sold have terms identical to the initial Senior Notes and are fungible and vote together with the initial Senior Notes immediately upon issuance.
Typically, we perform a qualitative assessment in the fourth quarter of the fiscal year to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. As part of this qualitative assessment, we perform a quantitative assessment where necessary in substantiating our qualitative assessment.
Typically, we perform a qualitative assessment in the fourth quarter of the fiscal year to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. As part of this qualitative assessment, we may perform a quantitative analysis where necessary in substantiating our qualitative assessment.
The effective tax rate was approximately (16.2)% for the year ended December 31, 2023, which was lower than the U.S. federal statutory rate primarily due to the impact of Global Intangible Low-Taxed Income, attributable to income in foreign jurisdictions and the impact of the U.S. capitalization of research expenses, and the impact of recognizing a deferred tax liability associated with changes in management’s indefinite reinvestment assertion under APB 23.
The Company’s effective tax rate was approximately (16.2)% for the year ended December 31, 2023, which was lower than the U.S. federal statutory rate primarily due to the impact of Global Intangible Low-Taxed Income, attributable to income in foreign jurisdictions and the impact of the U.S. capitalization of research expenses, and the impact of recognizing a deferred tax liability associated with changes in management’s indefinite reinvestment assertion under APB 23 for one foreign jurisdiction.
Our policy is to perform an impairment test of goodwill at least annually, and more frequently if events or circumstances occurred that would indicate a reduced fair value in our reporting units could exist.
Our policy is to perform an impairment test of goodwill at least annually, and more frequently if events or circumstances occurred that would indicate a reduced fair value in our reporting unit could exist.
However, as the current geopolitical tensions unfold, we will continue to assess any impact on our operations and our liquidity needs. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. “Risk Factors”, some of which are outside of our control.
However, as the current geopolitical tensions unfold, we will continue to assess any impact on our operations and our liquidity needs. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. “Risk Factors,” some of which are outside of our control.
Of these customers, Verizon accounted for more than 10% of the Company’s revenues in 2023, 2022, and 2021; and AT&T accounted for more than 10% of the Company’s revenues in 2023. The loss of Verizon or AT&T as a customer would have a material negative impact on our company.
Of these customers, Verizon accounted for more than 10% of the Company’s revenues in 2024, 2023, and 2022; and AT&T accounted for more than 10% of the Company’s revenues in 2024 and 2023. The loss of Verizon or AT&T as a customer would have a material negative impact on our company.
If the carrying amount exceeds the reporting unit's fair value, we recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. We recognize any impairment loss in operating income. 2023 Goodwill Impairment Analysis For our 2023 impairment tests, the Company identified one reporting unit, Core.
If the carrying amount exceeds the reporting unit's fair value, we recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. We recognize any impairment loss in operating income. 2024 Goodwill Impairment Analysis For our 2024 impairment tests, the Company identified one reporting unit, Core.
The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The MD&A should be read in conjunction with the Financial Statements and Notes to the Consolidated Financial Statements. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Our policy has been to leave our cumulative unremitted foreign earnings invested indefinitely outside the United States, and we intend to continue this policy for most of our foreign subsidiaries. During 2023, we changed our indefinite reinvestment assertion for our Indian subsidiary and recorded a deferred tax liability associated with the outside basis difference.
Our policy has been to leave our cumulative unremitted foreign earnings invested indefinitely outside the United States, and we intend to continue this policy for most of our foreign subsidiaries. During 2023 we changed our indefinite reinvestment assertion for future years related to our Indian subsidiary and recorded a deferred tax liability associated with the outside basis difference.
In most cases, the subscription or transaction arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).
In most cases, the subscription arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).
The Company may also sell the same three goods and services in a contract, but there may be three performance obligations, where the customer has the right to take possession of the software license without significant penalty. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.
The Company may also sell the same three goods and services in a contract, but there may be three performance obligations, where the customer has the right to take possession of the software license without significant penalty. 49 Table of Contents The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.
The cash provided by operating activities for fiscal 2023 and 2022 is mainly driven by continued growth in cloud subscribers, reduced operating costs, and improved margins as the business focuses on Cloud.
The cash provided by operating activities for fiscal 2024 and 2023 is mainly driven by continued growth in cloud subscribers, reduced operating costs, and improved margins as the business focuses on Cloud.
The Company generates revenue from Subscription services from monthly active user fees, software as a service (“SaaS”) fees, hosting and storage fees, and fees for the related maintenance support for those services.
The Company generates revenue from Subscription services by charging monthly active user fees, software as a service (“SaaS”) fees, hosting and storage fees, and fees for the related maintenance support for those services.
This transaction represents a strategic shift designed to maximize shareholder value and allow the Company to solely focus on providing cloud-centric solutions. In connection with the sale transaction, the Company determined its Messaging and NetworkX Businesses qualified for discontinued operations accounting treatment in accordance with ASC 205-20.
This transaction represented a strategic shift designed to maximize shareholder value and allowed the Company to solely focus on providing cloud-centric solutions. In connection with the sale transaction, the Company determined its Messaging and NetworkX Businesses qualified for discontinued operations accounting treatment in accordance with ASC 205-20.
The need for the content from these devices to be stored in a common cloud is also expected to drive our business in the longer term. 46 Table of Contents Discussion of the Consolidated Statements of Continuing Operations The following table presents an overview of our results of operations for the years ended December 31, 2023 and 2022 (in thousands).
The need for the content from these devices to be stored in a common cloud is also expected to drive our business in the longer term. 43 Table of Contents Discussion of the Consolidated Statements of Operations The following table presents an overview of our results of operations for the years ended December 31, 2024 and 2023 (in thousands).
Cash flows from investing activities for the year ended December 31, 2023 was $3.8 million of cash provided by investing activities, as compared to $13.2 million in cash used by investing activities during the same period in 2022 .
Cash flows from investing activities for the year ended December 31, 2024 was $13.1 million used in investing activities, as compared to $3.8 million of cash provided by investing activities during the same period in 2023.
The Company’s top five customers accounted for 96.6%, 94.6% and 92.4% of net revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Contracts with these cust omers typically run for three to five years.
The Company’s top five customers accounted for 97.6%, 96.6% and 94.6% of net revenues for the years ended December 31, 2024, 2023 and 2022, respectively. Contracts with these cust omers typically run for three to five years.
Cash flows from operating activities for the year ended December 31, 2023 was $18.8 million of cash provided by operating activities, as compared to $17.4 million of cash provided by operating activities for the same period in 2022 .
Cash flows from operating activities for the year ended December 31, 2024 was $28.3 million provided by operating activities, as compared to $18.8 million of cash provided by operating activities for the same period in 2023.
The restructuring charges primarily related to employment termination costs as a result of the work-force reductions initiated post divestiture to reduce operating costs and align our resources with our key strategic priorities. Depreciation and amortizati on expense increased $2.1 million for the year ended December 31, 2023.
The restructuring charges primarily related to employment termination costs as a result of the work-force reductions initiated to reduce operating costs and align our resources with our key strategic priorities. Depreciation and amortizati on expense increased $0.3 million to $17.1 million for the year ended December 31, 2024, compared to the same period in 2023 .
The Senior Notes are effectively subordinated in right of payment to all of the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness of the Company’s subsidiaries, including trade payables. The Senior Notes bear interest at the rate of 8.375% per annum.
The Senior Notes are effectively subordinated in right of payment to all of the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness of the Company’s subsidiaries, including trade payables.
In these instances, if the customer’s total estimated transaction volume for the period is expected to be less than the contractual amount, the Company records revenues at the minimum guaranteed amount on a straight line based over the period covered by the minimum.
Some of the Company’s contracts guarantee minimum volume transactions from the customer. In these instances, if the customer’s total estimated transaction volume for the period is expected to be less than the contractual amount, the Company records revenues at the minimum guaranteed amount on a straight-line basis over the period covered by the minimum.
This decrease was partially offset by loss jurisdictions where full valuation allowances have been recorded, foreign rate differential and GAAP to statutory adjustments.
This increase was partially offset by changes in the valuation allowance for loss jurisdictions where full valuation allowances have been recorded, foreign rate differential and GAAP to statutory adjustments.
Series B Non-Convertible Preferred Stock On June 30, 2021, the Company closed a private placement of 75,000 shares of its Series B Perpetual Non-Convertible Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share (the “Series B Preferred Stock”), for net proceeds of $72.8 million (the “Series B Transaction”).
Debt of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K. 46 Table of Contents Series B Non-Convertible Preferred Stock On June 30, 2021, the Company closed a private placement of 75,000 shares of its Series B Perpetual Non-Convertible Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share (the “Series B Preferred Stock”), for net proceeds of $72.8 million (the “Series B Transaction”).
Factors specific to the reporting unit include revenue 54 Table of Contents and cost growth, profit margins, terminal value growth rates, capital expenditures projections, assumed tax rates, discount rates and other assumptions deemed reasonable by management. For the market approach, we used judgment in identifying the relevant comparable-company market multiples.
Factors specific to the reporting unit include revenue and cost growth, profit margins, terminal value growth rates, capital expenditures projections, assumed tax rates, discount rates and other assumptions deemed reasonable by management. For the market approach, we use judgment in identifying the relevant comparable-company market multiples. If sufficient comparable data is not present, the market approach will not be employed.
At December 31, 2023, our goodwill balance was $183.9 million, representing approximately 59% of total assets. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including other definite-life intangible assets.
At December 31, 2024, our goodwill balance was $179.4 million, representing approximately 61% of total assets. Goodwill represents the excess of the purchase price over the fair value of net assets 50 Table of Contents acquired, including other definite-life intangible assets.
Actual results of operations, cash flows and other factors will likely differ from the estimates used in our valuation, and it is possible that differences and changes could be material.
We believe that the estimates and assumptions we made are reasonable, but they are susceptible to change from period to period. Actual results of operations, cash flows and other factors will likely differ from the estimates used in our valuation, and it is possible that differences and changes could be material.
The Company continues to assert permanent reinvestment of foreign earnings in all other foreign jurisdictions. Due to the timing and circumstances of repatriation of such earnings, if any, it is not practicable to determine the unrecognized deferred tax liability relating to such amounts.
Due to the timing and circumstances of repatriation of such earnings, if any, it is not practicable to determine the unrecognized deferred tax liability relating to such amounts.
Revenues We generate most of our revenues on a subscription basis, which is derived from contracts that extend up to 48 months from execution. The future success of our business depends on the continued growth of Business-to-Business and Business-to-Business-to-Consumer driving customer transactions, and continued expansion of our platforms into the TMT market globally through cloud markets.
Revenues We generate most of our revenues on a subscription basis, which is derived from customer contracts with terms ranging from three to five years. The future success of our business depends on the continued growth of B2B and Business-to-Business-to-Consumer driving customer transactions, and continued expansion of our platforms into the telecom (“TMT”) market globally through cloud markets.
This often requires significant judgment based upon knowledge of the products, the solution provided and the structure of the sales contract. In SaaS agreements, the Company provides a service to the customer which combines the software functionality, maintenance and hosting into a single performance obligation when the customer doesn’t have the ability to take possession of the underlying software license.
In SaaS agreements, the Company provides a service to the customer which combines the software functionality, maintenance and hosting into a single performance obligation when the customer doesn’t have the ability to take possession of the underlying software license.
Net revenues decreased $9.6 million to $164.2 million for the year ended December 31, 2023, compared to the same period in 2022.
Net revenues increased $9.4 million to $173.6 million for the year ended December 31, 2024, compared to the same period in 2023.
For the income approach, we used projections, which require the use of significant estimates and assumptions specific to the reporting unit as well as those based on general economic conditions.
Fair value estimates used in the quantitative impairment test are calculated using a combination of the income and market approaches. For the income approach, we use projections, which require the use of significant estimates and assumptions specific to the reporting unit as well as those based on general economic conditions.
Accordingly, the operating results of, and costs to separate the Messaging and NetworkX businesses are reported in Net loss from discontinued operations, net of taxes in the Consolidated Statements of Operations for all periods presented.
Accordingly, the operating results of, and costs to separate the Messaging and NetworkX businesses are reported in Net loss from discontinued operations, net of taxes on the Consolidated Statements of Operations for all periods presented. The Notes to the Consolidated Financial Statements have been adjusted on a retrospective basis. For additional information, see Note 4.
Setup 52 Table of Contents fees for transactional service arrangements are deferred until set up activities are completed and recognized on a straight‑line basis over remaining expected customer relationship period. Revenues are presented net of discounts, which are volume level driven.
Setup fees for service arrangements are deferred until set up activities are completed and recognized on a straight‑line basis over remaining expected customer relationship period.
The Senior Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness.
The Senior Notes and initial Senior Notes are listed and trade on The Nasdaq Global Market under the symbol “SNCRL.” The Senior Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness.
The offering was conducted pursuant to an underwriting agreement (the “Notes Underwriting Agreement”) dated June 25, 2021, by and among the Company and B. Riley Securities, Inc., as representative of the several underwriters (the “Notes Underwriters”).
The offering was conducted by and among the Company and B. Riley Securities, Inc., as representative of the several underwriters (the “Notes Underwriters”).
We are not able to reasonably estimate when we would make any cash payments required to settle these liabilities, but we do not believe that the ultimate settlement of our obligations will materially affect our liquidity. We do not expect that the balance of unrecognized tax benefits will significantly increase or decrease over the next twelve months.
Uncertain Tax Positions Unrecognized tax benefits associated with uncertain tax positions are $4.4 million at December 31, 2024. We are not able to reasonably estimate when we would make any cash payments required to settle these liabilities, but we do not believe that the ultimate settlement of our obligations will materially affect our liquidity.
Subscription and Transaction revenues consist of revenues derived from the processing of transactions through the Company’s service platforms, providing enterprise portal management services on a subscription basis and maintenance agreements on software licenses.
The Company generates all of its revenue from contracts with customers. Revenues are presented net of discounts, which are volume level driven. Subscription revenues consist of revenues derived from the processing of transactions through the Company’s service platforms, providing enterprise portal management services on a subscription basis, and maintenance agreements on software licenses.
Selling, general and administrative expense increased $4.1 million to $65.2 million for the year ended December 31, 2023, compared to the same period in 2022.
Selling, general and administrative expense decreased $13.5 million to $51.7 million for the year ended December 31, 2024, compared to the same period in 2023.
Revenues are recognized when control of the promised goods or services are transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company generates all of its revenue from contracts with customers.
We offer services principally on a Subscription basis or in the form of Professional Services or Software Licenses. Revenues are recognized when control of the promised goods or services are transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.
Most of the Company’s contracts with customers contain multiple performance obligations which generally include either 1) a perpetual software license with support and maintenance and sometimes a hosting agreement or 2) a term SaaS agreement, frequently sold along with professional services. For these contracts, the Company accounts for individual goods and services separately if they are distinct performance obligations.
Most of the Company’s contracts with customers contain multiple performance obligations which generally include a term SaaS agreement sold along with professional services. In other instances contracts will include a perpetual software license with support and maintenance and sometimes a hosting agreement sold along with professional services.
The amounts capitalized include external direct costs of services used in developing internal-use software, employee compensation and related expenses of personnel directly associated with the development activities. Software development costs are evaluated for recoverability whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
The amounts capitalized include external direct costs of services used in developing internal-use software and employee compensation and related expenses of personnel directly associated with the development activities.
(the “Agent”), a related party, pursuant to which the Company may offer and sell, from time to time, up to $18.0 million of the Company’s 8.375% Senior Notes due 2026.
On October 25, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) between the Company and B. Riley Securities, Inc. (the “Agent”), a related party, pursuant to which the Company may offer and sell, from time to time, up to $18.0 million of the Company’s 8.375% Senior Notes due 2026.
This decrease was partially offset by loss jurisdictions where full valuation allowances have been recorded and foreign income tax credits generated in the period. 47 Table of Contents Liquidity and Capital Resources As of December 31, 2023, our principal sources of liquidity have been cash provided by operations.
This decrease was partially offset by loss jurisdictions where full valuation allowances have been recorded, foreign rate differential and GAAP to statutory adjustments. Liquidity and Capital Resources Our principal sources of liquidity have been cash provided by operations.
Cash flows from financing activities for the year ended December 31, 2023 was $20.0 million of cash used by financing activities, as compared to $13.3 million of cash used for the same period in 2022, primarily due to principal and dividend payments associated with the redemption of Series B Preferred Stock in 2023.
Cash flows from financing activities for the year ended December 31, 2024 was $5.9 million of cash used by financing activities, as compared to $20.0 million of cash used for the same period in 2023.
If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, we perform a quantitative goodwill impairment test. Fair value estimates used in the quantitative impairment test are calculated using a combination of the income and market approaches.
If we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill, or depending on the amount of time that has passed since our last quantitative assessment, we perform a quantitative goodwill impairment test.
Offering of 2021 Senior Notes due 2026 On June 30, 2021, the Company closed its underwritten public offering of $120.0 million aggregate principal amount of 8.375% senior notes due 2026 at a par value of $25.00 per senior note (the “Senior Notes”).
Debt of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for further details on the 2024 Term Loan. 2021 Senior Notes On June 30, 2021, the Company closed its underwritten public offering of 8.375% senior notes due 2026 at a par value of $25.00 per note (the “Senior Notes”).
No Series A Preferred Stock remains outstanding or authorized as of December 31, 2023. 50 Table of Contents Discussion of Cash Flows A summary of net cash flows follows (in thousands): Year Ended December 31, Change 2023 2022 2023 vs 2022 Net cash provided by (used in): Operating activities $ 18,829 $ 17,359 $ 1,470 Investing activities $ 3,800 $ (13,166) $ 16,966 Financing activities $ (19,979) $ (13,276) $ (6,703) Our primary source of cash is receipts from revenue.
Discussion of Cash Flows A summary of net cash flows follows (in thousands): Year Ended December 31, Change 2024 2023 2024 vs 2023 Net cash provided by (used in): Operating activities $ 28,280 $ 18,829 $ 9,451 Investing activities $ (13,130) $ 3,800 $ (16,930) Financing activities $ (5,853) $ (19,979) $ 14,126 Our primary source of cash is receipts from revenue.
Our policy has been to leave our cumulative unremitted foreign earnings invested indefinitely outside the United States, and we intend to continue this policy for most of our foreign subsidiaries. During 2023 we changed our indefinite reinvestment assertion for our Indian subsidiary and recorded a deferred tax liability associated with the outside basis difference.
During 2023, we changed our indefinite reinvestment assertion for our Indian subsidiary and recorded a deferred tax liability associated with the outside basis difference. The Company continues to assert permanent reinvestment of foreign earnings in all other foreign jurisdictions.
We cannot assure you, however, that we will not be affected by general inflation in the future. Contractual Obligations Our contractual obligations consist of office and laptop leases, notes payable and related interest as well as contractual commitments under third-party hosting, software licenses and maintenance agreements.
Contractual Obligations Our contractual obligations consist of office and laptop leases, notes payable and related interest as well as contractual commitments under third-party hosting, software licenses and maintenance agreements. The following table summarizes our long‑term contractual obligations as of December 31, 2024 (in thousands).
Our cash and cash equivalents balance was $24.6 million at December 31, 2023. At December 31, 2023, our non-U.S. subsidiaries held approximately $8.2 million of cash and cash equivalents that are available for use by all of our operations around the world.
At December 31, 2024 the Company had an aggregate of $33.4 million cash and cash equivalents and generated operating cash flows of $28.3 million for the year ended December 31, 2024. At December 31, 2024, our non-U.S. subsidiaries held approximately $18.3 million of cash and cash equivalents that are available for use by our operations around the world.
Factors influencing the revenue growth rates include the nature of the services the reporting unit provides for its clients, the maturity of the reporting unit and any known concentrated customer contract renewals. We believe that the estimates and assumptions we made are reasonable, but they are susceptible to change from period to period.
The discount rate for the reporting unit is influenced by general market conditions as well as factors specific to the reporting unit. Factors influencing the revenue growth rates include the nature of the services the reporting unit provides for its clients, the maturity of the reporting unit and any known concentrated customer contract renewals.
The overall change in revenue was primarily due to the runoff of deferred revenue recognized in the first half of 2022 and revenue recognized from the DXP and Activation assets prior to the divestiture in the prior period . The decrease in revenue was partially offset by continued cloud subscriber growth and professional services associated with the launch of SoftBank.
The overall increase in revenue was primarily due to continued cloud subscriber growth, which was partially offset by $3.5 million higher professional services revenue in the prior year associated with our top customers and the implementation and launch of SoftBank.
Effect of Inflation Inflationary increases in certain input costs, such as occupancy, labor and benefits, and general administrative costs, have impacted our business. Management does not believe these impacts have had a material impact on our results of operations during the 2023, 2022 and 2021.
Management does not believe these impacts have had a material impact on our results of operations during 2024, 2023 and 2022. We cannot assure you, however, that we will not be affected by general inflation in the future.
The CARES Act amends the Net Operating Loss provisions of the Tax Cuts and Jobs Act, allowing for the carryback of losses arising in tax years 2018, 2019 and 2020, to each of the five taxable years preceding the taxable year of loss. 53 Table of Contents Since we conduct operations on a global basis, our effective tax rate has and will depend upon the geographic distribution of our pre-tax earnings among locations with varying tax rates.
Income Taxes Since we conduct operations on a global basis, our effective tax rate has and will depend upon the geographic distribution of our pre-tax earnings among locations with varying tax rates. We account for the effects of income taxes that result from our activities during the current and preceding years.
The increase was primarily attributable to increased amortization of capitalized software as we continue to invest in our cloud technology. Income tax. The Company recognized approximately $4.7 million in related income tax expense and $0.1 million in related income tax benefit during the years ended December 31, 2023 and 2022, respectively.
The Company recognized approximately $7.6 million and $4.7 million in related income tax expense during the years ended December 31, 2024 and 2023, respectively.
The amounts capitalized include external direct costs of services used in developing internal-use software and employee compensation and related expenses of personnel directly associated with the development activities. Once technological feasibility has been determined, a portion of the costs incurred in development, including coding, testing and quality assurance, are capitalized until available for general release to clients.
Amortization begins when the software is substantially completed for its intended use. Costs incurred during the preliminary and post-implementation stages are expensed as incurred. The amounts capitalized include external direct costs of services used in developing internal-use software, employee compensation and related expenses of personnel directly associated with the development activities.
Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K . There were no significant changes in our critical accounting policies and estimates discussed in our Form 10-K during the year ended December 31, 2023.
Recently Issued Accounting Standards For a discussion of recently issued accounting standards see Note 2. Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Unrecoverable costs are reviewed annually and recognized in the period they become unrecoverable, as needed, and are recorded in the Consolidated Statements of Operations as depreciation and amortization expense. 55 Table of Contents Recently Issued Accounting Standards For a discussion of recently issued accounting standards see Note 2.
Software development costs are evaluated for recoverability whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Unrecoverable costs are reviewed annually and recognized in the period they become unrecoverable, as needed, and are recorded in the Consolidated Statements of Operations as depreciation and amortization expense.
The Company performed a quantitative impairment assessment as of October 1, 2023, the fair value of the reporting unit was estimated using the income and market approach. Based on the October 1, 2023 quantitative assessment, the indicated fair value of Core exceeded the carrying value in excess of 10%.
The Company performed a qualitative impairment assessment as of October 1, 2024, which indicated that is was more likely than not that the fair value of the reporting unit exceeded its carrying value.
Amortization is calculated on a solution-by-solution basis and is recognized over the estimated economic life of the software, typically ranging two to three years. Amortization begins when the software is substantially completed for its intended use. Costs incurred during the preliminary and post-implementation stages are expensed as incurred.
Once technological feasibility has been determined, a portion of the costs incurred in development, including coding, testing and quality assurance, are capitalized until available for general release to clients. 51 Table of Contents Amortization is calculated on a solution-by-solution basis and is recognized over the estimated economic life of the software, typically ranging two to three years.
Revenue Recognition and Deferred Revenue The Company generates revenue from the delivery of a range of products, solutions and services for operators, enterprises, OEMs and technology providers. We offer services principally on a Transactional or Subscription basis (SaaS) or in the form of Professional Services or Software Licenses.
There were no significant changes in our critical accounting policies and estimates discussed in our Form 10-K during the year ended December 31, 2024. 48 Table of Contents Revenue Recognition The Company generates revenue from the delivery of a range of products, solutions and services for operators, enterprises, OEMs and technology providers.
Interest on the Senior Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on July 31, 2021. The Senior Notes will mature on June 30, 2026, unless redeemed prior to maturity.
The Senior Notes bear interest at the rate of 8.375% per annum, payable quarterly. The Senior Notes will mature on June 30, 2026, unless redeemed prior to maturity. T he Company is in compliance with its debt covenants as of December 31, 2024. For further details, see Note 13.
The Company’s effective tax rate was approximately 0.9% for the year ended December 31, 2022, which was lower than the U.S. federal statutory rate primarily due to the impact of Global Intangible Low-Taxed Income, attributable to income in foreign jurisdictions and the impact of the U.S. capitalization of research expenses, and the divestiture of the DXP and Activation assets.
The effective tax rate was approximately 55.3% for the year ended December 31, 2024, which was higher than the U.S. federal statutory rate primarily due to the impact of Global Intangible Low-Taxed Income, an increase in the deferred tax liability associated with changes in management’s indefinite reinvestment assertion under APB 23 in one foreign jurisdiction, changes to tax attributes associated with the open IRS audit, amended returns, and legal entity liquidations, and the tax impact of equity compensation shortfalls and cancellations and current period financing transactions.
Debt of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K. 2019 Revolving Credit Facility On October 4, 2019, the Company entered into a Credit Agreement with Citizens Bank, N.A., for a $10.0 million Revolving Credit Facility.
For further details on the repurchase of Senior Notes and Series B Preferred stock, see Note 13. Debt of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.
Research and development expense decreased $3.0 million to $46.6 million for the year ended December 31, 2023, compared to the same period in 2022. The research and development costs decreased year over year mainly as a result of continued strategic efforts to streamline our product enhancements and developments.
Interest income increased as a result of higher interest rates on India's Unitized Time Deposits (UTDs) and an extended holding period in the current year. Interest expense increased $4.0 million to $18.0 million for the year ended December 31, 2024, compared to the same period in 2023 .
Removed
In addition, the related assets and liabilities held prior to the sale are reported as Assets and liabilities of discontinued operations on the Consolidated Balance Sheets. The notes to the financial statements have been adjusted on a retrospective basis. For additional information, see Note 4.
Added
Cost of revenues decreased $3.2 million to $39.0 million for the year ended December 31, 2024, compared to the same period in 2023. The 2024 decrease was primarily attributable to lower hosting and telecom expense in the current period and reduced baseline employee costs due to restructuring measures taken in the fourth quarter of 2023.
Removed
Cost of revenues decreased $4.3 million to $42.2 million for the year ended December 31, 2023, compared to the same period in 2022. The 2023 decrease was mainly driven by a decrease in revenue and improved gross margins as the Company continues to optimize our cost structure as we enhance our focus on higher margin cloud products post divestiture.
Added
This was partially offset by a higher bonus and performance-based compensation expense in the current period due to full-year metric attainment compared to the prior period performance. Research and development expense decreased $3.7 million to $42.8 million for the year ended December 31, 2024, compared to the same period in 2023.
Removed
The increase in selling, general and administrative expense is mainly related to the write-down of the STIN Note receivable of $4.8 million , change in contingent consideration for iQmetrix of $1.5 million , and non-recurring professional fees. Restructuring charges were $4.0 million and $1.4 million for the year ended December 31, 2023 and 2022.
Added
The decrease was primarily attributable to reduced third party contractor expense and lower baseline employee costs due to restructuring measures taken in the fourth quarter of 2023, which was partially offset by a higher bonus and performance-based compensation expense in the current period due to full-year metric attainment compared to the prior period performance.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical 100 basis point movement in interest rates applicable to our cash and cash equivalents outstanding at December 31, 2023 would increase interest income by approximately $0.2 million on an annual basis. 56 Table of Contents
Biggest changeA hypothetical 100 basis point movement in interest rates applicable to our cash and cash equivalents outstanding at December 31, 2024 would increase interest income by approximately $0.3 million on an annual basis. 52 Table of Contents Borrowings pursuant to the Credit Agreement bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the Credit Agreement) for the applicable interest period, plus 5.50%, subject to a floor of 2.50%.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk The following discussion about market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk The following discussion about market risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.
Our cash and cash equivalents at December 31, 2023 and December 31, 2022 were invested in liquid money market accounts and certificates of deposit. All market-risk sensitive instruments were entered into for non-trading purposes.
Our cash and cash equivalents at December 31, 2024 and December 31, 2023 were invested in liquid money market accounts and certificates of deposit. All market-risk sensitive instruments were entered into for non-trading purposes.
Added
As such, our net income is sensitive to movements in interest rates. If interest rates increase, our debt obligations pursuant to the Credit Agreement would increase even though the amount borrowed remained the same, and our net income would decrease. Such increases in interest rates could have a material adverse effect on our cash flow and financial condition.
Added
We do not hold any derivative instruments and do not engage in any hedging activities to mitigate interest rate risk.
Added
Based on our outstanding borrowings pursuant to the Credit Agreement as of December 31, 2024 a hypothetical 100 basis point movement in interest rates would have affected interest expense on the debt by $0.8 million on an annual basis. 53 Table of Contents

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