with Himesh Bhise, CEO, Synacor
To say multi-screen vendor Synacor was struggling on August 27, 2014 is like saying it's still pretty cold and dark at the company's Buffalo, N.Y. headquarters in late February.
Assuming the reigns as CEO from longtime company chief executive Ron Frankel, veteran pay-TV executive Himesh Bhise immediately faced two dissonant shareholder groups, who were trying to oust the board and sell the company.
Sales were down, and the tech company faced layoffs. Once the darling of the Buffalo investment scene, the company's stock price had fallen from nearly $17 a share to under $2.
Trade publications covering the pay-TV market used "struggling" next to Synacor's name. A lot.
But we tend to do that much less these days.
With the company reporting a 13 percent year-over-year uptick in first quarter revenue to $30.3 million, beating analyst consensus forecast, Synacor seems to have found momentum under the affable Bhise, even if the stock price hasn't rebounded explosively.
FierceCable recently sat down with him to discuss the turnaround.
FierceCable: Can we call it a comeback for Synacor?
Himesh Bhise: We have now shown pretty good growth. We ended 2014 at about $106 [million] in revenue. We grew in 2015 to a little over $110 [million] in revenue and significantly increased profitability. And the guidance we've given for 2016 a few months ago was in the range of $125 million to $130 million in revenue. So we've been kind of willing to show on all our product lines and what we're building some pretty good revenue growth.
FierceCable: What was your initial objective when you took over?
Bhise: The goal we've always had was to return the company to profitable growth, which is great. It's a good financial metric. But what we think of our mission is, we're the trusted partner that enables our customers to deepen their engagement with their subscriber base. And that has several components to it that we take very seriously. There's this whole thing about trust, which is now deeply rooted in the company, where we really think of ourselves working side by side with our customers and being respective to all the access we have — to billing systems, CRM systems, privacy protection, all that kind of good stuff.
Fierce: So what is Synacor selling these days?
Bhise: When you think about deepening engagement, it gets pretty broad. And there are so many different ways an operator can deepen engagement with their subscribers. Portals were one way of doing that. They were extremely important several years ago. They're still important for the operator community. For portals, we handle about 50 different providers. Email is kind of another service that all ISPs typically provide. Email continues to be really important. In fact, we've doubled down on it. We acquired Zimbra last year. With Zimbra, there are now about 500 million mailboxes running on our platform around the world. With Zimbra, there are now about 500 million mailboxes running on our platform globally. This makes us the largest provider of open source, white-label email. And it's becoming clear to us that advertising is an important revenue stream. Some operators below the Comcasts of the world don't have enough scale to get the right kind of advertising monetization, particularly in digital. And we kind of aggregate that scale and drive the right kind of monetization for digital advertising. We recently acquired Technorati. And along with the Technorati publisher base, our ad network now, and our ad platform, services close to 200 million uniques in the U.S.
Fierce: How hard is it to serve the pay-TV industry with all the recent consolidation that has occurred?
Himesh Bhise: The structure of the industry that makes it attractive for players like us is also the same dynamic that makes it challenging. You have the Comcast and the new Time Warner/Charter, and AT&T and Verizon at the top. And then you have this really long tail of several hundred operators in the U.S. You see that same industry dynamic in the media industry with content providers. You've got the Disneys of the world and a few others. You see that in consumer electronics. The long tail is where our value proposition is strongest, but the long tail typically represents 20 to 30 percent of the market.
Fierce: What's Synacor's most lucrative business at this point?
Himesh Bhise: We don't break down by product line, but what we have said is that the shift that we have made has been a shift to fee-based services. The Synacor from kind of way back, the vast majority of our revenues were from advertising. We had some service revenues, call it 20 percent of the pie. What we've now done is we've not only grown our overall top line, but the share of fee-based services is now 45 percent of the company. That's healthy, recurring revenue, that's the balance we're trying to build. But we're also a recurring revenue company, and that's the balance we're trying to bring.