Synchronica boosted revenues and reduced losses in H1 2011

Next-generation mobile messaging firm Synchronica (LON:SYNC, TSE:SYN) increased revenue and reduced its loss during the first half of 2011, according to interim results released today.

Overall revenue during the six months to the end of June increased by 16 per cent to US$5.8 million, with US$3.9 million of that coming in the second quarter. The firm’s operating loss declined to US$379,000 from US$1.7 million in H1 2010, while its net loss fell to US$1.1 million from US$2.4 million in H1 2010.

But the most notable figure was recurring revenue growth of 207 per cent. Recurring revenue accounted for one-fifth of Synchronica’s revenues in the second quarter of 2011, compared with seven per cent in Q2 2010.

And the recent acquisitions of Neustar and Nokia Operator-Brand Messaging business (Nokia OBM) should boost recurring revenue even further, according to Synchronica chairman David Mason. “With the Neustar acquisition we gained key customers in Europe and a strong base of recurring revenue; the Nokia OBM acquisition is expected to advance us even further with its leading North American carrier customers and a revenue base that should be over 80 per cent recurring,” he said. “We have made great strides to becoming a global leader in mobile messaging with a software-as-a-service revenue stream.”

In June, Synchronica agreed to buy the Nokia OBM business for US$25 million. Synchronica said that this acquisition has provided it with a successful and complementary mobile messaging business, as well as a strong foothold in the strategically important North American operator market.

As part of the deal, Synchronica and Nokia have entered into a long-term relationship in which Synchronica will provide messaging software that Nokia will continue to preload onto its Series 40 mobile phones. This contract, with expected revenues of US$18.2 million over the next 18 months, will also see Synchronica assume responsibility for the development, maintenance and support of Nokia Messaging software, which ships with millions of Nokia devices.

During the second quarter, Synchronica saw further deals in its existing markets in the developing world.

In early May the firm announced it has signed an expansion to a contract it already had with a multinational mobile operator group. The expansion contract will see Synchronica extend the functionality of the customer’s existing mobile instant messaging services to provide mass-market push e-mail and synchronisation, and this is currently in the process of being deployed across of thus customer’s subsidiaries in Latin America.

Then, in June, Synchronica, said that it had signed an expansion order with a second major mobile operator group targeting Latin America. This contract covers the deployment of Synchronica’s Mobile Gateway 6 platform across all of the group’s Latin American subsidiaries.

Synchronica also scored successes in Africa and India. In the latter case, Indian mobile manufacturer Wyncomm launched a family of affordable feature phones that are optimised for Synchronica Mobile Gateway.

Synchronica said it expects to continue grow its market share further as it converts more of a strong pipeline of prospective customers in both device manufacturer and operator markets.

“Looking forward, we expect further advances during the second half of 2011 as we begin to realise revenue from the Nokia OBM,” added Mason. “Management is confident that the company will deliver in line with market expectations for the full year.”