Cloud and messaging player Synchronoss reported its first financial results for a year and-a-half and restated figures for 2015 and 2016, after it was forced to make changes to accounting processes following fraud allegations.
Synchronoss said in a statement it has now filed its annual report for the year ending 31 December 2017, which includes restated results for 2015 and 2016, and form 10-Q for Q1 2018.
The company’s issues came to media attention towards the end of 2017. It was alleged the company’s then CEO and founder Stephen Waldis and CFO Karen Rosenberger implemented a fraudulent scheme to conceal the company’s struggling finances by prematurely recognising contractual revenue, inflating revenue with a company called Sequential which it had sold its legacy handset business to and issuing falsely inflated earnings guidance, among other accounting discrepancies.
In May 2017, the company rescheduled its Q1 2017 earnings call, filing and release, which drew fire from stock exchange Nasdaq for failing to comply with its rules.
Its problems mounted after announcing in 2017 it needed to restate at least two years’ worth of accounts because they were no longer reliable and its revenue could have been overstated by as much as 10 per cent, amounting to around $100 million.
Synchronoss then missed a deadline with Nasdaq for restating its accounts in May 2018, increasing the chance it would be delisted, before finally meeting a deadline of 30 June.
Current president and CEO Glenn Lurie (pictured) added in today’s statement the company’s filings “represent a significant step towards reaching our SEC financial reporting obligations and Nasdaq listing requirements”.
The company said the restatement and delay in reporting was due to changes in three primary areas: revenue related to hosting services; revenue recognition related to establishing persuasive evidence of an arrangement; and revenue recognition related to accounting for acquisitions and divestures.
Synchronoss explained it will revise its accounting practices to book fees “on a straight line basis over the term” of contracts; “revise the timing of revenue recognition to when it received final formal contract documentation”; and correct errors it found “related to fees received under licence agreements”.
For Q1 2018, revenue dropped to $83.7 million from $86.1 million in Q1 2017, while its loss narrowed to $44.2 million from $51.3 million in the 2017 quarter.