Synchronoss Technologies SNCR shares have rallied 16.3% in the past month, outpacing the Zacks Computer & Technology sector’s appreciation of 6%. It has also surpassed the Zacks Internet - Software industry’s 11% rise and peers like Fortinet’s FTNT 6.7% growth over the same time frame.

Synchronoss's recent positive share price movement has been driven by its strong 2024 revenue growth guidance. The company has indicated an upward revision in its expectations due to consistent growth in its cloud segment, driven by increased subscriber activity and enhanced platform functionality.

SNCR forecasts 2024 revenues of $172-$175 million, an upward revision from the prior stated $170-$175 million, indicating year-over-year growth of 6-8%. The company anticipates recurring revenues to contribute 90-92% to total revenues, up from the previously mentioned 85-90%, reflecting its focus on building a stable and predictable income stream through its cloud-based solutions.

SNCR Gains Momentum From Cloud Growth

Synchronoss’s growth is driven by its cloud business, which benefits from increasing subscriber activity, enhanced platform features, and strong demand for secure and scalable storage solutions.

In the third quarter of 2024, the cloud business significantly contributed to overall 8% year-over-year revenue growth, driven by a 5.1% increase in subscriber activity.

In September, the company launched the latest version of the Personal Cloud platform, which includes features like Memories, AI-enhanced Genius with One-Click Editing and better backup options.
Introducing auto-scaling infrastructure has significantly improved operational efficiency for Synchronoss's customers. This technology dynamically adjusts platform capacity to meet demand fluctuations, delivering tangible cost benefits.

SNCR focuses on constantly improving and updating its products to stay ahead of competitors. A key element of their strategy is offering a Personal Cloud platform that prioritizes security and privacy, ensuring that customers and their subscribers can trust the service.

Partnership Expansion Enhances Prospects for SNCR

Synchronoss has established significant partnerships with major carriers like AT&T T, T-Mobile, Verizon VZ and Sprint. One key collaboration involves a joint venture to advance Rich Communications Services, enhancing mobile messaging with interactive, multimedia capabilities.

Synchronoss has secured a partnership with SFR, a major French telecommunications provider, through a three-year contract extension. This strengthens its position in the Europe market with 27 million subscribers, ensuring continued revenues from this partnership.

SNCR Earnings Estimates Show Downward Movement

Despite an expanding portfolio and strong partner base, cash flow management remains a key concern for Synchronoss, especially in the coming quarters. In the third quarter of 2024, the cash flow showed some mixed dynamics. While the company reported a positive net cash flow for the quarter, its free cash flow was negative at $27,000, down from $1.1 million in the prior-year quarter.

SNCR has a mixed earnings surprise history. Over the trailing four quarters, the company’s earnings beat the Zacks Consensus Estimate twice and missed in the remaining two, the average negative surprise being 25.76%.

The Zacks Consensus Estimate for 2024 revenues is pegged at $173.03 million, indicating a year-over-year decline of 19.32%.

The consensus mark for earnings is pegged at 73 cents per share, revised downward by 38.7% in the past 30 days.

What Investors Should Do With SNCR Stock?

Despite revenue growth, Synchronoss faces financial hurdles, including ongoing net losses and challenges in improving cash flow stability. The company’s mixed financial results highlight the need for better operational efficiency and stronger liquidity management to ensure long-term sustainability.

SNCR currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to hold off for a more favorable entry point in the stock. You can find the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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