Synacor, the Buffalo, N.Y.-based provider of TV Everywhere authentication and Web portal services, said Tuesday that it will cut about 70 jobs, or 20% of its workforce, as it moves forward on a plan to streamline the business and focus its R&D costs.
Synacor, which has been struggling to grow and is coming under new leadership, said the workforce reduction will become effective at the end of the third quarter. The company also reaffirmed third quarter revenue guidance of $25 million to $26 million, and adjusted EBITDA of ($0.5) million to $0.05 million, figures that exclude one-time costs tied to the coming layoffs.
For the full fiscal year, Synacor reaffirmed revenue guidance of $100.0 million to $103.0 million, and increased adjusted EBITDA guidance from a range of ($2.5) million to ($1.0) million to a range of ($1.0) million to breakeven. Full-year guidance does not factor in one-time costs related to the workforce reduction and a $1.0 million pretax gain from the sale in the second quarter of the Check.com domain.
Synacor said it will discuss the financial impact of Tuesday’s announcement when the company reports third quarter results on Thursday, Oct. 30. Synacor added that its board is currently reviewing the company's revised strategic plan, will also be discussed on the call.
"These are difficult decisions that, regrettably, affect talented people," said Himesh Bhise, a former Comcast exec who was named CEO of Synacor on August 4, succeeding longtime CEO Ron Frankel, who also resigned from the company’s board in late August. "However, becoming leaner and more agile strengthens Synacor and serves as the foundation for a broader strategic agenda to return the Company to growth. We remain fully committed to our customers and are confident we can deliver on product expectations."
Last week, Synacor announced that COO Scott Bailey left the company effective Sept. 30 to “pursue other interests.” Synacor does not intend to replace Scott Bailey; his direct reports now report to Bhise
During Synacor’s second quarter call last month, analysts questioned the company about its growth prospects as Charter Communications, on of Synacor's largest customers, takes its Charter.net Web portal in-house.
Synacor is also making changes as two dissident investors – JEC Capital and Ratio Capital – that together own almost 10% of Synacor’s common stock -- continue to push for the resignation of Synacor chairman Jordon Levy while also urging Synacor’s board to seek a sale. Synacor has since instead adopted a shareholder rights plan that guards against potential attempts to seize control of the company and has instead pushed ahead on a growth plan that aims to keep the Buffalo, N.Y.-based company autonomous.
Synacor shares were up 7.33% (14 cents) to $2.05 each in after-hours trading Tuesday.
