Synchronoss Technologies inked a deal to provide its white-label cloud service to AT&T, scoring its second major contract with a US operator in the space and drastically expanding its total addressable market.

As part of the deal, Synchronoss will provide cloud services to help AT&T automate device backup and make it easier for customers to manage content. Its cloud platform will also enable AT&T to launch new service for customers, the company stated.

On an earnings call, Synchronoss CFO David Clark said the AT&T deal builds on an existing cloud arrangement the company holds with Verizon, which provided a “significant portion” of the $167.2 million generated in cloud revenue in 2019.

He added AT&T is expected to become a similarly valuable contributor over time.

Synchronoss president and CEO Glenn Lurie (pictured) explained the company profits from its cloud deals based on the number of subscribers who sign up. He noted the combination of AT&T and Verizon’s customer pools offers Synchronoss a total addressable market of more than 270 million.

Along with cloud contracts recently signed with prepaid provider Tracfone Wireless and device protection company Assurant, Lurie said the AT&T deal is expected to provide incremental revenue in 2020 and grow into a “meaningful revenue stream” in 2021 and 2022.

“Assuming a very modest 5 per cent penetration over three years, these customers have the potential to grow into a pure SaaS revenue stream for Synchronoss that nearly equals our current cloud business.”

In Q4 2019, Synchronoss posted a net loss of $14.6 million, an improvement from a loss of $101.9 million in Q4 2018, and increased revenue 10 per cent to $90.5 million. Lurie noted the latter marked the company’s “highest revenue quarter in two years”.