Q3 2019 Earnings Call

Greetings and welcome to the Synchronoss technologies incorporated third quarter 2019 earnings Conference call.

At this time, all participants are in listen only mode.

Great question answer session will follow the formal presentation.

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As a reminder, this conference is being recorded.

It is not my pleasure to introduce your host Joe Crivelli, Vice President of Investor Relations. Thank you Sir you may begin.

Thanks Diego Good afternoon, everyone welcome to the Synchronoss technologies third quarter 2019 earnings call.

Joining me on the call, it's Glenn Laurie President and CEO , Synchronoss and David Clark, Our Chief Financial Officer.

During the call, we'll make references to our prospects and expectations for 2019 and beyond and other statements relating to our business that maybe considered forward looking statements within the meaning of the federal securities laws, including statements about our future trends future financial results and financial position business prospects and market opportunities.

Generally forward looking statements are identified by words, such as expects believes anticipates intends and other indications of future expectations.

These forward looking statements are based on business environment as we currently see it and include certain risks and uncertainties.

Please refer to our FCC filings for more information.

Specific risk factors that may cause actual results to differ.

Any forward looking statements on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result.

Information or future events.

In addition to U.S. GAAP reporting we report certain financial measures that did not conformed to gap. We believe these non-GAAP measures enhance the understanding of our performance reconciliation of the GAAP measures to their non-GAAP measures. In addition to description of the non-GAAP measures can be found in today's earnings release, I'll now turn the call over to Glenn Laurie.

Thanks, Joe and thanks, everybody for joining us today.

Before I comment on earnings I want to take a moment to comment on the multiple exciting and transfer more transformative new deals that synchronous has announced.

Today, we're very excited to announce a new major U.S. based tier one carrier customer for a white label cloud offering.

Well as its typical and the industry. They have a question they remain quiet around their identity until they launch the service in early 2020 overtime. We expect this customer to generate material revenue for Synchronoss is obviously, a tremendous growth catalyst for synchronoss.

We believe puts us on the path to return to substantial substation double digit revenue growth in 2020 M. beyond.

In addition, we're very excited about the deal we announced with British American tobacco for our digital experience platform last week.

I'll talk about a this deal more in a moment, but we believe what the completion of these two new modules and analytics based decision engine and cattle and a catalog module.

We now have the most advanced customer experience software available for we tell us today.

As British American tobacco was also our first DXP customer outside our traditional TMT ecosystem. We believe the successful pilot will result in a proof case weekend market to an entirely new set of prospects.

Combined with our other new business wins, we announced this quarter and in the first half from 29 team. We believe we are executing and moving the company Ford to an exciting future with four platforms that can help customers accelerate revenue growth manage expenses and transform their customer experience.

This is a backdrop and as a result.

Sequential technology or S. T. I currently being in the process of evaluating strategic alternatives and moving toward the end of that process. We made a decision to take a conservative financial approach to our S. T I relationship.

As our understanding of the potential cash we would realize from the S.T.I. process. It has become clearer.

We are writing off 26 million of S.S.T.I. related accounts receivable, which represents invoices from 2018 and 29.

Our revenue relationship with S.T.I. is within the scope of.

New lease accounting rules, which requires us to account for the write off as a cumulative adjustment to prior revenue that is as an offset against third quarter 2019 revenue.

Excluding the S. T I write downs third quarter revenue would have been 78.2 million and would have put us very much on track to meet our original full year guidance that we establish back in March.

So the third quarter GAAP revenue figure up 52 too.

<unk> million does not accurate accurately reflect the operational performance of our business. Obviously, the onetime cumulative adjustment to revenue will have an impact on our full year guidance, David will discuss that in a moment.

I'll now update you on the recent new customers and partnership wins as well as the status. The some of the deals we announced earlier this year first on our cloud business I've already talked about the new U.S. base tier one cloud customer, but wanted also give an update on the rest of our cloud business.

Horizon caught offering that's delivered healthy double digit subscriber growth since the end up 2018. In addition, we have worked closely with of rising team to launch a new family plan that provides two terabyte of storage for 12 nine nine per month, which is seeing good early traction under this plan.

We view the variety unleashed relationship as extremely strong and look forward to continued innovation around their cloud product the new cloud customer we announced in the second quarter has extended the launch from the third quarter. The fourth quarter. So we're still silent on a asylum mode on the customers identity until that time, we'll provide more information to investors assumes we.

Yeah, we're excited to get this to market and are working closely with them to make that happen.

We also believe we began we will begin recognizing revenue from our previously announced a short relationship in the fourth quarter. After a short is planning to begin migrating customers to the synchronous club.

Second with respect to our messaging business, let me give me an update on our work in Japan on plus message. Our carrier partners are now in the process of rolling out eight a pea application to person messaging, ER and and and advertising to go with it initially they are focused on select industries, where carriers believed.

They can optimize success in the first wave of eight a BHP launch we expect our initial revenues you made a p. messaging to begin flowing in fourth quarter of 29 team. We're very excited about the new source of recurring revenue that we expect to grow to scale in coming years. We also have some additional exciting opportunities we're working on in our advanced.

It's engine business that we hope to announce in the very near future.

Third our digital or de X P business, our momentum in our DSP business has accelerated considerably after the announcement of our agreements with Amazon wireless advocates and Telkom, Indonesia last quarter. This quarter, we also announced T X P deals with British American tobacco and Indosat or do.

Regarding a B.A.T. or British American tobacco last week, we announced they are launching a multi multi country pilot DXP across 25 of their 2000 BHP retail locations in Europe .

We believe the success of this pilot could lead to additional permanent deployment across the additional BHP locations and channels.

The Synchronoss DSP platform will provide beachy with the ability to quickly design deploy manage and optimize customer journeys, while providing a unified experience across its owned retail locations.

As I stated earlier, our new catalog and the stringent engine modules combined with our core DSP platform will help BHP to better manage retail employees in delivering a satisfying retail experience that improves the overall customer experience and maximizes revenue.

As I also stated a this pilot would be a T is significant because just the first proof case outside for Dx be outside of the TMT market base or ecosystem. We believe this will be able to leverage our success would be a t. with other traditional retailers.

We're also announcing today that indosat or do a leading telecom service provider in Indonesia has chosen the synchronous DSP platform to deliver a unified interconnected user experience for customers across its engagement channels. The synchronous DSP platform will also support indosat or just future digital economy.

Project, a nationwide initiative to encourage collaboration and develop new ideas products and use cases in fall involving I would you technology to help economic growth.

Rackspace has signed a multiyear deal for our financial analytics platform to accurately validate expenses in invoices.

This is a long standing business for Synchronoss and a product within our digital portfolio and platform that we believe has nice growth potential heading into 2020 .

The first lived appointments with Amazon are underway with carriers in Singapore in Mexico in process being integrated with Amazon three other customers are in the queue for integration into fourth quarter and Amazon has indicated they plan on a signing five more customers per quarter for synchronoss going forward.

As mentioned the Amazon partnership as a shared success model, where we share in any revenue generated through these care deployment as such this is one of the larger contracts, we announced in 2019 in terms of total expected contract value.

Wireless advocates is officially signed off on acceptance criteria of DXP and they are now moving into full implementation. Our first revenue from this three year deal will be realized in the fourth quarter. We're currently building out customer journeys and workflows and we'll move to an in integrating the care activation flow and into DXP once that work is going.

Please.

Our tank Telkom, Indonesia, DXP deployment is likewise underway and they're all utilizing gxp.

To consolidate multiple data sources for one of their commercial businesses to feed into a single pane of glass management portal.

And fourth Internet of things or Aiotv and has been extremely active year in building, our I O T revenue pipeline as we announced the partnerships or deals with Errol, Microsoft Rackspace and tritium last quarter, adding to these today, we're announcing a partnership with the crew it the world's leading provider of physical resource management solution.

And with 10000 clients worldwide to combine synchronicity expertise and smart building analytics, where the where the current asset monitoring system.

The collaboration will deliver valuable insights and efficiencies to enterprises across facilities and greater expand the effectiveness of our I O T solutions.

In conjunction with your current partnership we have signed a letter of intent with Citi FM one of the world's most trusted facility management companies with over 12000 employees across Europe , Australia, North American Asia to combine their expertise in facility management engineering, what synchronous his expertise in software analytics to create an end to end but.

The only management offering which is scalable and will drive greater efficiencies.

We also have completed our live proof of concept with Rackspace undertaken in partnership with Microsoft I O T accelerator as a result of that you will see rackspace assigned a multiyear deal to license our smart building solutions to monitor control and optimize power usage in their headquarters facility and major data centers.

In San Antonio, which represent over 1 million square feet.

The 18 T. I O T sales channels also gaining momentum 18th he is lined up the next 10 clients that we are jointly working on we began engaging with these clients in early Q4.

By any measure this is a lot of traction for synchronous I'm very proud of the work the entire synchronous team has done over the past two years in that time, we rebuilt our team white labeled our platforms and products added powerful new platforms, such as DXP and I O T to our offerings and energize the sales effort and sales funnel. This year. We're so.

The fruits of that labor with numerous deals that we have announced we believe these new customer relationships will drive revenue and EBITDA and shareholder value for years to calm.

Most importantly, these new relationships that synchronous up tick up to me very well to become a consistent double digit growth company with a higher percentage of recurring revenue because the majority of these deals are SAS pass software as a service platform as a service base revenue models.

This has been my goal since becoming CEO the company and and our hope is that we will be achieving this in 2020.

The focus in 2018 was preserving existing customer relations relationships. The focus in 2019 has been growing the sales funnel for all four platforms, while winning new business and growing our quality revenue.

With the deals announced in 2900, such as Amazon British American tobacco, our three new cloud customers as well as our strong relationships with Verizon between the Japanese carriers and others. We believe we now have the business in hand, we need to meet our long term revenue EBITDA growth goals.

And we're not done yet they're still additional transformative new deals being worked and the sales funnel continues to grow week by week.

David now will review the financials in more detail.

Thanks, Glenn and thanks, everyone for joining US I'll review, our third quarter results and update guidance for 2019.

Revenue for the quarter would've been $78.2 million. However, due to the impact the S.T.I. impairment GAAP revenue is $52.2 million. This compares to $83.3 million in the year ago quarter and $77.8 million in second quarter 2019.

Investors should note that the STR revenue write down included invoices from 2019 as well as prior periods.

Using the pre Sci $78.2 million revenue figure recurring revenue was 79% a total in the third quarter compared to 80% in second quarter.

Cloud revenue was $40.5 million down, 5.8% compared to $43 million in last year's third quarter.

I've never knew was essentially flat from $40.4 million in the second quarter year over year decline was due to a large true up of cloud revenue in last year's third quarter as actual subscribers exceeded forecast subscribers in the horizon revenue model.

Digital revenue, which is where the S.G.I. impact sits in our PNM was $20.7 million in the third quarter, excluding the Sci revenue write down this compares to $28.9 million in the year ago quarter and $22.2 million in the second quarter year over year did decrease was due to the sunsetting of a legacy product.

In 2019, as well as the recognition of deferred revenue the third quarter 2018 from the prior owner of the only be platform.

Messaging revenue was $17.1 million up 50% from $11.4 million in the year ago quarter and up 12.5% from 15.2 million in the second quarter. This year.

The increase was due to additional license sales in the Japanese market.

I'll now discuss properly metrics.

Note that GAAP gross margin operating margin net loss were all impacted by the STR revenue write down, but weve added back the S.J. I write down in the adjusted figures to provide the ability to do an apples to apples comparison to prior quarters.

Adjusted gross profit in the third quarter was $43.6 million for the nine month period. Adjusted gross profit was $138.5 million non-GAAP loss from continuing operations was $6.9 million in the quarter compared to a $10.7 million loss in the year ago quarter.

In an 18.8 million dollar loss in the first nine months 2019, compared to 46.6 million loss in the comparable 2018 period.

GAAP net loss for the quarter was $69.4 million or $1.70 per share and 122 million, our loss or $3.01 per share for the nine month period.

non-GAAP net loss from continuing operations are Trudeau sick, Synchronoss, which excludes the S. T. I write down was 25.4 million were 62 cents per share an improvement from $33.5 million or a loss of 84 cents per share in the third quarter 2018.

For the nine month period, non-GAAP net loss from continuing operations attributable to synchronize, which excludes yes do I write down was $51.3 million or dollar 26 per share an improvement from a 75 million dollar loss or $1.86 per share last year.

Adjusted EBITDA on a quarter was $5.8 million compared with $9.4 million in a third quarter 2018, and $8.7 million in the second quarter 2019.

Now turning to the balance sheet and cash flow.

Cash and marketable securities totaled $20.1 million, which is in line with a net cash balance in previous quarters. We also paid down the remaining balance on our convertible notes in August over the past five quarter ends our cash balance net of a convertible debt outstanding has ranged from a low of $13 million to a high at about 32 million.

There's.

Accounts receivable was $73.5 million at quarter end and the reduction from $100 million at the end of the second quarter was largely due.

To the Sta write down.

Net cash provided by operating activity for the nine month ended September was $11.8 million compared to a negative $60.7 million last year. This is a significant turnaround last 12 months.

As we announced Synchronoss is entered into a relationship with citizens Bank, which provided a 10 million dollar three year revolving credit facility to the company.

In addition to the citizens revolver. We also entered into a supply chain Finance program, a city bank, which is expected provide on average $15 million to $20 million of additional liquidity for the company going forward.

We continue to explore longer term financing solutions as we get closer to the August 2020 date, when we have the option to redeem our preferred stock without penalty.

We are encouraged by the conversations have been having so far with both capital providers investment bankers, but what form that recapitalization me take.

Now turning to guidance.

We are revising down our annual guidance due to the impact of the S.T.I. revenue write down in the transition to cash based accounting for the STR relationship.

We're also narrowing the guidance range.

As Glenn mentioned, our business are performing as expected and we are tracking we were tracking to meet the original guidance that was issued at the started the year before the decision was made to address our STR relationship.

Ill also note that all the deals we announced this year, we're in our funnel and included in our guidance started the year, which is why we have not increased guidance. Despite the visible progress on the sales front.

We now expect revenue for the full year to be $308 million to $315 million and adjusted EBITDA to be $24 million to $30 million. This revised range accounts. The removal of 26 million of STR revenue from the first nine month year as our accounts receivable write down was accounted for under lease accounting as a cumulative revenue reduction.

It also accounts for lower expected fourth quarter STR revenue as we recognize revenue growth going forward on a cash basis.

To make the math easy if you take the low end of our prior guidance range $340 million and deduct 26 million.

Dollars write down as well as 2019 fourth quarter revenue is expected to be $6 million lower to the transition a cash accounting it will bring to $308 million, which is the new low end of a guidance range.

Earlier this year, we mentioned it making a 20 $520 million to $25 million success based investment in growth of the business is important new contract wins through September Thirtyth. We've spent approximately $10 million of this investment and expect the balance we spent in fourth quarter based on new business, we expect to close in the fourth quarter.

In closing we know the STR relationship has been a difficult chapter in the company's history. We believe we're making the right decision to take a conservative financial position on our STR relationship as we can now all focus collectively on the future of Synchronoss, we believe the future synchronous in closing deals such as the new cloud customers, we've announced in 2019 and deals.

With BT Amazon in our other customers as well as the traction we're demonstrating in our DXP and T. platforms. As Glenn said. These are all transformative deals that positions us as a growing provider of Hsas and pass it based solutions going forward and with that we can open the line for questions.

Thank you.

Ladies and gentlemen at this time, we will conduct their question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a confirmation total indicate that your line is in the question Q.

You May press Star too if you would like to remove your question from the Q4 participants using speaker equipment, and maybe necessary to pick up your handset before pressing the star keys.

Our first question comes from Mike Walkley with Canaccord Genuity. Please state your question.

Hi, I said this is anthony on for Mike actually.

Your which we announced a deal with British American tobacco I know you mentioned.

Kind of a for a outside of TMT can you talk little bit about how this deal came about just given the focus on TMT previously up to this plan is there.

I have a set strategy of how you're going about this diversification like which verticals you might be tackling first.

Yes. Thank you for the question Yeah. There is a strategy around it look one of the moves we made when I came in was to try very quickly to move into GMT. You know, obviously synchronicity history is very care focused and we've been able to do that with some of the Microsoft deals Amazon deals and other things we've done.

One of the great things about the digital platform DXP is that it is very flexible and works in many places I mean, we because of our focus in TMT.

Thats, where we have our relationships we have started to build relationships with others outside of that weather third parties that deal in digital experience.

As well as potentially even other consultants that obscene and worked with us on our platform and we were introduced to be 80 and went in and obviously showed them what we could do for them looking at them trying to improve the overall customer journeys focused obviously as we announced on their 25 actual.

Physical locations, but we're pretty excited about the opportunity to do in a similar way how we're working with wireless advocates really have the entire platform.

Allow them to completely rethink what a customer touch is and what customer journeys can be.

You'll see us heading in this direction as we go forward there we have.

A whole bunch of discussions happening.

Outside of what is traditional TMT because the software is just so so a very much later bolt anybody who has multiple channels or customer journeys inside of their business, which we know is a massive marketplace.

So this was that kind of the next step and Mary and her team have done a great job along working with Jeff and the team and we just got back from from mobile World Congress in L.A., when we had numerous conversations.

With just retailers outside of just the traditional TMT ecosystem.

Got it and then just kind of in conjunction with that do you foresee any impacts to SGN a in terms of.

You know kind of expanding the scope of the sales force to outside of PMT, yes, not at all we actually don't because one of the things that we're going to be doing is we're going to be utilizing more partners and more third parties that will go out and sell with US one of the key partners that you know, we announced a quite a bit ago was rackspace and rack.

Space is working very closely with us in helping US show DXP to their customers. For example, many of their customers our traditional retailers outside of the ecosystem. So we're going to utilize partners' third parties.

That that want to sell and actually represent our DSP platform as well as co sell with us to do that.

And then on the S T I.

I think just kind of back Danville math the margin profile that is is it around 25% or I don't know if you can provide color on that yes, it's hard to do because there's so many shared services and support our non Sci businesses.

So it's hard to sort of break out what.

What the directly applied or not directly applied.

Obviously this.

The impairment was added back.

For EBITDA purposes, because it's a nonrecurring item.

Got it and then lastly from me that's on the Q.

I think the you know the U.S. carriers recently announced Rcs CCM I JV recently I don't know how much you can speak to Synchronoss this potential involvement in that.

Yeah, we can't comment on that at this time.

Understood. Thank you.

Thank you are next question comes from Richard Baldry with Roth Capital. Please state your question.

Thanks.

The 25 million in sort of success based spending expected for the year, it's been pretty moderate to rollout throughout the year, but looks like it would speed up.

Usually pretty consistent concern.

[noise] materially in the fourth quarter thing, but can you talk about what would be the drivers of that in the fourth quarter, where we would see that through the piano and what we would expect headlines maybe coincident with that.

Yeah.

Sure I can start Nancy David wants to jump in we as we stated much of that his success based.

And you've seen the number of deals that we've gotten done and now obviously theres deals. We now have to go delivered to our customers.

Fourth quarter. Obviously for example, the tier one us based new cloud customer Workstar. We've already started that work so that they can they can get launched in early 2020, we also expect to close additional deals.

In fourth quarter that we would have to invest in in fourth quarter I can't seem much more about that as you probably understand but we're very optimistic that we have other deals to close and which will then drive that spent.

And rich that would manifest itself in the two lines one being cost of revenues of one being research and development.

Okay.

And when you talk about.

Goal to get back at double digit growth.

Possibly as early as 2020.

Based on [noise].

Sort of a pro forma revenue backing that 26 million into it or that you know what that taken out of the number for comparison sake.

I think for comparison say you have to take take it out I mean, we do expect to have an ongoing relationship.

With a with Sci or whatever successor, there there is.

But we don't really know form it's going to take so I think you'd have to take it out.

Okay, and then Theres a lot of new wins come, but I think they all share characteristic.

Got to deploy the customer before the revenues generated out of it so.

About the variety of.

Sort of ways to look at how quickly you think some of those come online how quickly they could ramp.

What do you think they can be material in first half 2022nd half 2020, just any sort of color around where we start to see the impact of those after your.

Yeah Ciber to really good question I would say at this would let me do it from a high level by by platform for a second and then that really kids very hard for me to get into specifics of up specific deals and specific contracts, but if you think about a cloud customer the majority of our cloud deals our success pace. Yes, there are some implementation dollars, but but that is.

Not the material the materiality happens as you grow the subscriber base and we obviously get paid on a per subscriber basis, which by the way is fantastic for us long term, but as you know you've got to invest short term and then and slow we built I do think when you look at the three new cloud deals that we've announced obviously.

Assurant and the work we're doing with them and then the one we announced in second quarter that I mentioned in the call today that we look to launch in fourth quarter and then obviously the new one those will have revenue for us in 2020 mean, they will grow in 2020.

They will they will start from from scratch and then grow and so that is part of of being in that in the business and being what we want to be obviously, which is a SaaS past a company and we want to win with our customers who want to grow with our customers you think about DXP the majority of that.

Is there all again theres implementation cost upfront and then in most cases, we're going to be working in a success based model there as well with our customers.

The deals we've announced our exciting and we've gotten a lot Don and we're starting to see really nice.

Wins on DXP, we do expect that as I said in that we will start to see revenue from those as well obviously the Amazon relationship is the success based relationship with US sharing revenue. We've got our first few under our belt here and then we expect more as I talked about and we expect.

More in early 2020, when you talk about wireless advocates are indosat. These others, they're all exactly what we said they were going to be with their exciting deals that were going to obviously grow into and we will see revenue from those in 2020.

If you think about Aiotv little different if somebody when we do a smart buildings.

Were like we've done with the rack space is a great example, where we are seeing revenues from those a little quicker and then obviously are the key to our messaging business right now is our plus message relationships and you've seen what's happening there. We certainly hope to have a additional new deals in advance.

Messaging as well as in our email business and when those obviously.

Have a bit of a different revenue profile in the depending on how they come they can come earlier, so I hope that helps I really can't get into very specific deals.

Right and again sort of broadly speaking had a pretty big flurry of activity on the deal from recently, how do you feel sorry generically about.

Rest of the year heading into 2020 in terms of or deal potential and maybe also just about your bandwidth to support.

Yeah, the when you've had and getting them ready to launch tomorrow. Thanks, Yeah, we feel really good we spend a lot of time on this.

Mary and Pat.

And Jeff really really drive this saw him and Mary Clark, our CMO pad Duran, our CTO and Jeff Miller, our CCOH spend a lot of time together working through where we're going to put our resources and how we're going to work on delivery. The good news is Pat and his team did a fantastic job white labeling these platforms.

In.

Obviously, the cloud in 18, and working through 18, and 19 with the others. So our ability to repeat is and our velocity is definitely picking up in our ability to deliver velocity and a lower cost is also happening central all part of our planning process. As we came into 2019. So we feel very good about that.

Now as far as the funnel goes the sales cycles and TMT our long.

And I had a part of my earlier comments, where you know 2018 was about making sure. Our current customers were good and starting to build the funnel 2019 were reaping the benefits of that hard work and that's why you're seeing the deal flow come as it is and come into volumes. It's coming we also fewer call. One of my very first things that I did with it.

Team coming in as we wanted to be a truly global player you're seeing many of these deals happening in Asia and in Europe , as well and that goes kudos to our leadership in both of those regions.

And Jeff and the team working together to get those done so we actually don't see the deal flow slowing.

We do see our ability in the velocity to deliver the deals going up and the cost structures to deliver them staying flat are coming down based upon the fact that we're a you know our goal is to be a SaaS pass white label player. That's a lot of repeatable I've said, many times I want 80% White label, 20% custom that's our goal.

I'm not saying, we're there yet we're working towards that but we're definitely making good progress which allows us to handle this volume.

Great. Thank you.

Thank you. Our next question comes from Sterling Auty with JP Morgan. Please state your question.

Hey, guys decided on for Sterling. Thank you for taking my question.

So did the delaying the cloud service so did the new U.S. customer.

To Q4 or maybe after that lead to any impact on revenue in this quarter or or maybe the guidance.

No. It does not lead to an impact in this quarter as we said that we would that particular customer we expect to be launching in early 2020. So we expect that it will lead to our.

Guidance for 2020, when we give that.

Thank you and so <unk> any plans to replicate the success of the messaging business in Japan due to other geographies.

And yet glance, absolutely that we definitely have that plan. Obviously, we're proud of the team and what we've done with the plus message and the carriers in Japan.

We think it's a great model and we absolutely are having conversations with others globally about that model and really hope that we will repeat that success. Many many times over.

Got it. Thank you I know one more if I may Oh from a modeling perspective. So if it's part of the Miami mid segment of the business do you see growing is the fastest yeah. If you returned to double digit growth in branded Wendy.

Well look I think as as we went through we obviously believe our cloud business is very strong obviously, adding three new partners customers. This year.

We also obviously, you're gaining incredible momentum in our digital experience platform.

And as we've discussed from your first question. The messaging business is a solid business is strong business for us and we do anticipate.

Replicating what we're doing in Japan, and other countries and then lastly, but certainly not least the aiotv business was nascent this year and was a very very small act you hire that we've done a lot of work on and the level of of partners that we have announced just shows you that we have something very very special.

So in the marketplace and we fully expect that to be a grower in 2020 as well.

Good thank you.

Thank you just a reminder to ask a question press.

Star one on your telephone keypad one moment. Our next question comes from Jason Allen with part well investments. Please state your question.

Yes, guys. Thank you production S. couple of questions to two brief questions.

And just to clarify I guess, what prompts the I've been following the company and investing it now for about a year to house and have been enjoy tracking the progress.

At times I feel discontinuity between the numbers and the narrative that communicated a rounded numbers and conversations like like today, and so I guess trying to get little more clarity there I'm asked two questions that for Mylan say hopefully bring some clarity.

Number one is when you talk about double digit sequential growth, which we've spoken of a number of times here as you look to 2020 and you talk about that double digit sequential gross glance at times to me that sounds like an expectation.

At times that sounds like a business goal can you kind of clarify the library to touch as which category you're communicating in on that front.

Yes, so we first of all thanks for the question and we never use the term award sequential once make sure. We're clear on that Okay. What we said as David said and I said is that we believe we can return to double digit.

Growth going forward and we have we will make and give our guidance for 2020 when times appropriate as we head into the new year.

So that's kind of 0.8 point b.

We believe based upon the customers that we've put on this year. We believe based upon the deals we've announced we believe based upon the deals that we that we hope to get across the line and we'll announce before the end of year that that will be possible for synchronoss going forward, which is.

Having double digit revenue growth from an end on an annual basis.

Okay. Thank you in the second question kind of is derived from that.

Help me to understand better internally for you and your team.

The maturity of the deal when you're able to bake that into your guidance because there have been times when I I'll hear deals analysis, saying, okay. The quarterly call, perhaps it will be an over vision of guidance then Thomas we made including on this call earlier that well that was already baked into guidance. So I know you guys are intentional about that internally as to.

The relative maturity of a deal for you to factor that into your guidance for my Kid can you elaborate on what that looks like for you in your team.

So I mean, the the good news bad news of our business as we have very long sales cycles about who takes a little longer than we like good news is when we go into a new year, we do have visibility as to what the formulas.

So we really.

I think long and hard about when we do issue. The annual guidance is one of the reasons. We also do issued strictly annual guidance because things can.

Things can change quarter to quarter and also put up for put a fairly large range in there. So hopefully that gives you a little more clarity is how we how we think about one thing I'll add to David's comments I think it's important to when you in a business like ours.

With our four platforms looking at our sales funnels. We also know not every deal is going to close so the we have a history of understanding what percentage do. So this is this is an art and science when you walk through look at the deals you have looked at what you're working look at what percentage in the past years have closed in that and of those deals and then.

As David said you put in your guidance when we give our guidance you always have a bit of a low in the high tech because youre going to have movement based upon what happens during year and that's exactly what's happening with us since I've been here for going on two years.

Okay. That's helpful. Thank you.

Thank you, ladies and gentlemen, there no further questions at this time I'll turn the floor back to management for closing remarks. Thank you.

Thank you very much but we thank you everybody for joining us today.

And I appreciate all the questions. They were there were very good.

We are again are very proud of what we've gotten accomplished.

Obviously, the comments the David and I made today about S. T I that was.

Very very needed conservative accounting that we felt was the right thing to do for the business and the right decision to make I'm also very proud of the fact that the trend that we had would have met guidance as we said numerous times that we gave the beginning in year 420, 19th.

The the momentum we have in all four platforms is exciting, but we have a lot of work to do and we know that as as a management team.

But we appreciate everybodys interest and everybody support and we'll talk to you all soon.

This concludes today's conference all participants connect have a great day.