Synacor files for IPO

Synacor (Buffalo, NY, USA) has filed for an IPO to help expand its network of online portals. The proposed flotation comes after the content provider withdrew its IPO filing in 2008, due to challenging market conditions. Markets were difficult in late 2008 as the financial crisis exploded, making public offerings difficult to complete.

Synacor was originally formed in January 1998 with the name Chek, which was an Internet messaging technology provider. In December 2000, Chek acquired MyPersonal.com, and changed its name to CKMP; in July 2001, CKMP, Inc. changed its name to Synacor. MyPersonal remained a subsidiary of Synacor until May 2007 when it was dissolved.

The company has build a provisioning platform, enabling delivery to Internet broadband service providers. Today, Synacor’s solution integrates its customers’ existing legacy systems, with a provisioning platform that delivers digital content across multiple devices, content-rich white-label Internet portals, and value-added services. The solution complements customers’ existing service offerings and enables them to participate and capitalize in the rapidly growing digital content delivery market.

Ronald Frankel, CEO of Synacor Inc.

Every company likes to win awards, and we’re no different. In several years, as recent as 2011, we’ve been ranked on the Deloitte Technology Fast 500 list of companies. This is an annual ranking of the fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America. Award winners are selected based on percentage fiscal year revenue growth from 2006 to 2010. For Synacor, this illustrates our growth trajectory and the industry’s support of TV Everywhere initiatives, so we’re honored to have this distinction!

Synacor said its ISP customers used its platform to deliver content to a quarter of the roughly 79 million households with high-speed Internet connections. The company’s clients include companies like Best Buy Co. and Verizon Communications Inc.

Among its risk factors, Synacor said it relies significantly on revenue from Google. Synacor has a revenue-sharing relationship with the Internet giant under which it includes a Google-branded search tool on the websites of Charter, CenturyLink and other customers. Google-related revenue was approximately 48%, 45% and 49% of its revenue in 2008, 2009 and 2010, respectively, and approximately 55% of revenue for the nine months ended Sept. 30, 2011.

Synacor’s agreement with Google expires in February 2014 “unless we and Google mutually elect to renew it,” and Synacor noted that Google may terminate the agreement if Syancor experiences a change in control, if it doesn’t maintain certain search and display advertising revenue levels, or upon the two-year anniversary of the agreement in February 2013.

Charter Communications and CenturyLink are Synacor’s two biggest customers, together accounting for 65%, 62% and 60% of its revenue for the years ended 2008, 2009 and 2010, according to its S-1 filing with the Securities and Exchange Commission.

As of Sept. 30, Buffalo, N.Y.-based Synacor had 253 employees in the U.S. and one employee in the United Kingdom. The company’s three primary data centers are located in shared facilities in Atlanta, Denver and Amsterdam, The Netherlands, and it also maintains a secondary data center in a shared facility in Buffalo.

Synacor generated a profit of about $285,000 during the first nine months of 2011, compared with a loss of $3.2 million a year earlier. Revenue grew 29% to $62.1 million. The booked $80 million in sales for the full FY ending September 30, 2011.

Synacor’s current investors include Crystal Ventures, Intel Capital, Advantage Capital Partners, North Atlantic Capital and Walden International.

Sources: Synacor IPO, MarketWatch and MultiChannel