Synchronoss Technologies, Inc. (SNCR) Earnings Call Transcript & Summary

[Audio Gap] exciting, informative and valuable [Technical Difficulty] with a good sense of our strategic direction and the goals we are driving towards. On Slide 2, we will be making forward-looking statements today. Any forward-looking statements are made under the legal disclaimers that you see on the screen that are in Page 2 of today's presentation. And on Slide 3, you see the agenda for the day. So a few logistical items. I'm sure you noticed, we haven't scheduled any breaks. We figured we're all working from home today and joining via Zoom. So if you need to take a break, go ahead and take a break. Just be sure to turn your camera off and mute your mic if you're bringing your computer with you. We'll still be here. [Operator Instructions] And then the session is being recorded, and a replay will be posted as soon as practical after the event concludes. And with that, I'll turn things over to Glenn Lurie, President and CEO. Glenn?

Good morning, everybody, and thank you very much for joining us. I want to reiterate what Joe said. Our goal today is to make this as interactive as we possibly can. I think it's really, really important to have that Q&A going on during the day. So as we're walking through this, we have folks monitoring the questions that come in. I'm really, really excited to get with you all today. The last time we did this, we did do it together in New York City. Obviously, that was not possible. But we felt it was still very important for us to spend a few hours together talking about where the business is and where we're headed. I'm going to move to the next slide and dive right in. So I want to start here. I started here a year ago, and I think it's really important. As we think about our business, as we think about the environment we're in, we're going to talk a lot today about where we are in the world, the things we are dealing with. And really, it's critical for any company to bring those things together to understand where you are as a business and also where you're headed. Most important for us, and we start at the bottom of the page, the foundation of our business is our people. I'm very, very proud of how our folks have handled the last 3.5, now going on almost 4 months. We have a foundation of our business that we call the 3Ps, which is people, purpose and passion. This drives our culture. It drives not only how we act internally, but also how we treat and act externally with our customers and our partners. But this foundation you're looking at here really drives everything that we do. It powers every aspect of our business. It brings together our 4 pillars that you can see here, our grow, build, deliver and win pillars. And really, those things actually drive how not only do we judge ourselves, how you all judge us and how we go together, grow the business, build those trusted relationships, deliver the cost structures that we will talk about a lot today and the moves that we've made as well as how we go win together and drive engagement, not only with our employees, but with our shareholders, our investors, our customers. On top, you can see really, really important are a few words that really talk about how we are as a culture from a standpoint of the things that we focus on: innovation, collaboration, excellence, accountability, integrity. These are all, number one, how our values work and how we are about each other. It's how we hire. It really goes throughout the whole way we work together every day. So I want you to walk away understanding that we look and talk about this every single meeting. We pick different pieces of this to make sure that we're all in sync. And I can tell you that we're a global company. We've got 1,500-plus employees, and we are in sync. Even though over the last few months, we've all been working remotely, we've stayed very close, and this has really helped us do that. Our mission is important. We built this and really adjusted this last year, but I want to make sure as we walk through that this is something that resonates with all of you. Our goal is to help world's leading companies deliver transformative customer experiences that create high-value engagement and new monetization opportunities. If you go to our next, which is important, is our vision. With our help, the world's leading companies routinely create game-changing interactions with their customers that were previously considered unachievable. This has absolutely not changed in the environment. In fact, we're going to spend time today talking about how this is actually critically important for our customers and customers that we're talking to about being new customers and our partners as we go forward, right? The environment and the world has changed. And in our opinion, it's changed forever. And that change, when we look at what we do every day, we look at our 4 platforms, we believe, actually enhances our ability as a company to grow. Here is our Board of Directors. Thought important that you see who is on our Board. It's important to see the diversity of individuals on our Board. And it's also important to see the diversity of backgrounds on our Board. Obviously, I'm not going to go through each individual. We have a lot of history here in multiple phases. We have our partners with Siris Capital, with Bob Aquilina and Pete and Frank. You have some long -- folks that have been on Synchronoss Board for many, many years: Tom Hopkins and Bill Cadogan; and obviously, Stephen Waldis, who's the founder of the business. And you have some newer members on the Board: Mohan Gyani, Laurie Harris and Kris Rinne. So a lot -- incredible set of human beings, incredibly talented, incredibly passionate about where we're taking the business. And then here is our leadership team. We will get questions and discuss this today. We obviously have some adjustments to this team. But very important, you're going to be hearing today from Jeff Miller, our Chief Commercial Officer; Pat Doran, our Chief Technology Officer. Ron Prague is a longtime Synchronoss Chief Legal Officer and doing a great job. David Clark is with us today, that's our Chief Financial Officer. You're also seeing some adjustments to the leadership team with our HR, we call our people function, rolling in under myself, a really important move in how we want to run the business. You got Mina and Jayne, Frank and Laura, really key players in how we take care of our employees, how we manage the business globally. And I'm -- just brought a wealth of experience to the leadership team. Here are our 4 platforms. Obviously, I'm not going to drain the whole slide. We're going to get deeply into this today. I think really critically important to understand is as these 4 platforms all play a role as we go forward, these 4 platforms all have a golden thread throughout. We get asked regularly, "Well, you guys are doing a lot of things." You've got to remember the key is who we're selling to, who we're talking to and how these work together. You will see on the cloud business is that right now, about 52% of our revenue. You can see our customers down below on the left, very important that we have launched 3 new clouds. We have a lot going on with our cloud business, so we will get deeply into that. Olman, who is with us and is our key leader around cloud, will be going through that. On our Messaging business, there's a ton happening. Obviously, you can see our customers down below about 30% of the revenue of the company. Everything that's going on in the Advanced Messaging side in Japan and the U.S., there'll be lots of questions. We also have a very, very strong embedded business in our e-mail business that Lokdeep will talk about. On the digital front, still a lot of activity, about 18% of our business. There's been a lot of change here. We'll talk about the changes around STI, which was a big part of the revenue here in 2018; and obviously, in 2019; big changes for 2020. But going forward, when you think about the new world and how we're going to interact, we see our digital business as a very nice opportunity as we move through the rest of '20 and into '21. And then last but not least, one of our emerging businesses, our IoT business. We're going to spend time here, also critically important business as we move forward. A concept of a smart building is where we are here, is a big part of our platform. The future is about smart and healthy buildings and be able to know that building. And when we say building, we mean almost anything, whether it's a restaurant, a movie theater. At some point down the road, a stadium that people want to move back into, people want to get back to the normal or the new normal. It's going to be critically important that they know that place is safe. And we have a wonderful platform that we'll get in deeply into it. The point at the bottom is really, really critically important. And I'm going to read it because I think it's -- I want everybody to resonate that we help companies maximize growth, reduce operating costs and improve customer experiences and engagement in order to be competitive. I tend to call that the perfect storm. If you have an opportunity, you bring a product or a platform into your business that can grow your business, reduce your costs, improve experiences with your customers and engagement, you have the perfect storm. And that is what we talk about all the time. And it is just simply what we do, and in all 4 platforms there's great examples of that. I'm going to spend a couple of minutes, and I'm again not going to drain all these slides since you have these. What's important to understand is where the trend is going. By the way, they've changed. I mean they've changed significantly with the environment we're in and with COVID. And we needed to step back as a business and take a look at those trends, see where they go and where they fit. And I would just say, we view these trends as very positive for us in those 4 platforms and where we spend our time. We still see in the global TMT market, right, telecommunications, media and technology market that there's going to be convergence. In fact, when we talk about convergence, that's what you're seeing globally. A good example here in the U.S. is AT&T going out and buying DIRECTV and buying Time Warner and looking for those new opportunities to grow revenue. One of the things you're going to hear from me in the section here in a couple of slides around telecommunications companies, mainly wireless companies are seeing the revenues flatten or go down, which means you have to get into other businesses. Digital transformation is a massive opportunity, especially as we move forward past COVID, right? People are going to be looking to have different types of activities. They're not going to be looking to go into stores. Not saying, and you won't ever hear me say that retail is going away. Retail will stay. But retail has to work hand in hand with online, with the app on that device. There has to be a different kind of experience. Experiences are going to need to be much more efficient. Disintermediation. Look, OTTs, right, over-the-top players are definitely causing some disintermediation. Lokdeep's going to get into this when you think about what's happening over in Asia in the messaging world. We're seeing it happen in the media world, where there's a ton of opportunities to go pick the type of content you want to see from an OTT rather than a fixed player. And that disintermediation is actually beneficial. It's causing chaos. It's causing change, which obviously Synchronoss comes in and helps fix. And the marketplace as a whole is just going to have an overall. TMT players are going to have to rethink their entire business because work, life and play trends are now changed, and they will continue to change. And it's going to cause people to rethink how they want to be a customer with a certain business. And that, we think, is actually going to be a positive trend for us, a difficult trend for folks in that marketplace. When you think about telecommunications companies, I just talked about it. Revenue growth is going to go down, right? Telecommunications companies today are focused very heavily on bad debt. When you have the kind of unemployment we're seeing, that's the first thing they think about is bad debt. One of the things that we are seeing so far is if you're going to pay a bill, the first bill you're paying is your smartphone bill. But we still think that there are other places that they're going to see degradation, OTT, obviously, applications. When you look at what's happening in the messaging world, the media world, definitely, without question, folks are trying to take revenue away from the telecommunications companies. You can see the impact of COVID on revenue. We've had store closures, right? We've had, really, activity almost stop for a period of time around the world. We fully expect that, that activity will come back, but it's going to come back differently. And it's going to have -- the customers' expectations are going to be different. Mobile is going to continue to go down. And without question, IoT is going to continue to go up. The concept of using IoT, whether you talk about a smart building application, to know that building I'm walking into or that restaurant I'm walking into or that store I'm walking into, is safe and free of pathogens and going forward is going to be an important thing. And then CapEx. CapEx is not decreasing, right? The telecommunications providers are moving to 5G as fast as they can. And you can see the stats here of $1.1 trillion in CapEx spending globally, 80% focused on 5G. The stat in the U.S., just so you understand, is $275 million for the now 3 wireless carriers to really deliver ubiquity in 5G. With all that spending, they're going to need to have return, and they're going to need to have ways to find those returns. When you look at the media world, I talked about it quickly. Fixed television subscriptions are declining at an amazing rate. You can see what happened in Q1 as 1.6 million subscribers cut the cord. At the same time, the second bullet, you're seeing the OTTs and the streaming competition continue to increase. You got Disney and Apple. Obviously, AT&T launched HBO Max. And what you're going to see is -- continue to see is high level of competition here. By the way, you're also going to see many of that convergence coming together where the telecommunications players are getting into the TV business. That abundance of choice will help drive costs down, but it's also going to mean that they're going to need help to do that, right? Many of these companies have never really been business-to-consumer. They're B2B2C. They're going directly to consumer for the first time. And now obviously, the social media world continues to change. Actually, there's opportunities there, but it's also going to be a part of that convergence I talked about earlier. And last but not least, in TMT as a technology companies. FAANG disruption is happening. We're seeing it, right? You think about what -- that $641 billion worldwide spend, that was pre-COVID. We only believe that number is going to accelerate. Now the question becomes is, is that's going to really funnel very neatly into the second bullet, which is new customer experiences? Everybody is going to expect a different level of experience, a different type of experience, a no-touch experience. That is going to have to change for everybody in technology. And companies that move to those experiences are going to be the winners. Companies that can't make those adjustments are going to struggle, okay? From a digital transformation perspective, that's the point I just made. We should expect, right, that people are going to expect those experiences. We should expect that customers are going to want to do business differently. And last but certainly not least, it truly hasn't changed. AI, machine learning, full intelligence, helping those experiences is going to continue to grow. Now when you look at all of these, this slide really brings together our 4 platforms. We feel very strong that we have an opportunity to come out at the back end of this a better and stronger company with more opportunities based upon the places that we sit. Our cloud business, which you're going to hear about, has the opportunity, not just to deliver incremental revenue, which we've talked about a lot to those carriers, let the carriers deliver another option on cloud to their customers, but it also allows us to use incredible technology to reduce in-store transaction time. Today, when you walk into a carrier store, it's 46 minutes to upgrade your phone. The carriers are looking to reduce that, and customers now are not going to want to be in a store or in a physical place for that period of time. We can use our cloud to very much allow a lot of that work to be done at home. And if the customer still feels they want to walk into a store, now significantly reduce that time. We also feel very good that we can look and shift to activations upgrades completely virtual without touch. And that is another piece that we believe the carriers are going to be looking for. We're already having these conversations today. On the Messaging side, we -- the Messaging future, the Advanced Messaging on top of RCS is about digital experiences. Lokdeep's going to get deeply into this today. It's about being able to transact. It's about being able to talk to your friends and talk to brands and do it all virtually. And the number of opportunities in there for new business models, whether you talk about advertising, analytics, you talk about A2P, by the way, business-to-consumer direct engagement through the messaging is exactly where that is going, and it's going to accelerate a carrier's and customers' expectations. On digital, I've hit it. The new normal is going to be a shift, right? 94% of customers want more and/or want better and frictionless digital experiences. We know from talking with all of TMT that you've got your Amazons and your Netflix, which were born and raised from the beginning as a virtual experience. Now everybody else have to catch up with those players to make sure they can deliver the same. On IoT, again, I'm going to reiterate. There is a fear of coming back to work. There is a fear of going to the grocery store. There is a fear of walking into a restaurant. And there are absolutely ways to help solve those things. We believe employee safety is absolutely going to go through the roof from a liability, responsibility for every business. We expect that environment is going to have to pass health guidelines and qualifications. And we fully expect that those things are going to need to be real-time. It's not going to be, "Hey, this building was safe 5 minutes ago." It's going to be, "What is it right now?" And the opportunity to deliver a platform that has sensors and the capability to detect pathogens to make sure that, that office or hotel or restaurant is safe at that time is exactly where we're headed, and we're going to be and believe we can be dead in the middle of it. Here are a couple of stats I want you to think about as we go through today. We are, as it says, well positioned to weather the near-term economy and also drive growth as we head into 2021. Really important, and we talk about this on every call, David usually brings this up, we're -- we have about 70% recurring revenue on average. We've been as high as 80%. We've been as low as 70%. Last quarter, I believe, we were 73%. 82% of our revenue is with Tier 1 players. So very, very strong. And look, we made this point on our last call with all of you that our business is with big, big players. Those big players, yes, you're going to ask; they're paying their bills. We're not seeing that as an issue. And we're also seeing those big players looking at how they are successful in this environment. A new stat for you that we think is an important one is 85% of our revenue currently is under multi-year contracts. That's really important as you view us and see where we are. And that 85%, I believe, can actually go up, right? We've done a bunch of renewals. You're probably going to ask questions today about renewals, some of the things we can answer and can't answer. But I think it's really critical you understand how solid our base of customers are today and how long term our contracts are with them. So as we go through this, we're going to get into this more. Jeff is going to talk more about this. Look, it's important as I hand the ball over to the -- my fantastic team that we are participating in large markets with large growth potential. One of the places that is going to benefit is telecom out -- as we go out of and hopefully get past this environment that we're in. That phone, that smartphone is the absolute one thing that customers are not going to give up, and they're going to be looking to use that to run their life. One of the comments we used to make is it's the -- it's a remote control for your life, and that's actually become more true in the new environment. We have existing relationships to leverage across our portfolio. I think you guys all know, we have great relationships with the large carriers globally. That is how we're growing. That is how we're continuing to be successful. We are penetrating new vertical markets through direct and partner channels. Look, we said from the beginning, the first day I walked in, that we are all about partners. And you're going to see more and more discussions around how we're going to use partners to actually go out and help us sell those 4 platforms and the products that are underneath. We are participating in reoccurring revenue businesses that are at scale. And that is what you, as you're looking at us, want to see and hear, and we believe that we're going to continue to do that. So look, net-net, as these times, more than ever, our platforms are vital and helping our customers grow new revenue, lower cost and provide those incredible customer experiences, which is that perfect storm I talked about earlier. I think it's important that you understand where we are in our planning with COVID. Like I said earlier, I give the team a lot of credit at preparing and seeing this coming. Pat Doran, who's our CTO, did a fantastic job. He and his team are making sure we gave our employees the tools to work from home. As I've said, we have not missed moving the ball forward. We transitioned very seamlessly. We kept developing. We kept delivering. We kept selling. And that is absolutely the case. Now some of the folks that we do business with were not as quick as we were. That's just the way it works. But we've been able to work with them and really drive them. You can see our Phase 1, March through July and what we focused on. We have formed a global business continuity task force that has been literally meeting every single day and looking at every one of our offices independently because as you all know, we have a couple of offices in the U.S. and then we have offices globally. And the situation in whether it's in each of the states or each of those countries is different. And we have to make sure we treat our employees correctly in each one of those situations. You can see Phase 2, July through September. We are starting to talk about returns to work. We're starting to talk about -- we just actually did an employee survey and asked our employees, what did they want? And how would they like to see them coming back? We were also only going to come back in a safe way. I just talked about the fact that we are in this smart buildings and healthy buildings. We're going to definitely be utilizing our own products and services here. And we're talking with many of our partners about how we do that and get ahead of the curve. So we're learning so we can share those learnings with our potential customers. And then Phase 3 -- as you can see, is Phase 3 is TBD. We just don't know. Lots of concerns today in the market around second waves and things that we're seeing. We are watching very closely. But do know, we have a very, very, very succinct plan. We are communicating not just internally, but also with our customers and understanding we are also sharing best practices with our partners and customers to make sure that we are doing things that make sense as we come out of this. So with that, I'm going to hand this over. I'd like to introduce Chris Hill. Chris Hill is our Executive Vice President of Product Management. Chris?

Hey, Glenn, before we go there, we do have a question.

Sure. Absolutely.

Okay. What strategic initiatives, if any, has the pandemic forced you to deprioritize or postpone? And on the flip side, with an acceleration in digital transformation, given how the pandemic is changing, how we work, shop and interact, has management shifted areas to accelerate investments?

Yes. Great questions. Thank you for those. Yes. We have not, in a sense, decelerated, and I use that word. We are -- look, the pandemic definitely had a step back. And as I've just gone through, we believe each of our platforms has a place in the near term and a potential opportunity long term. Obviously, the digital side is a critically important side for us. And we are right now in the process of still working with all the customers we talked about the last few quarters and the deals that we've signed. We are getting a lot of questions about how we can help new customers. So I would say our decisions on where we invest and how we invest, we talk about and make on a weekly basis. We look at what our current customers are asking for. We look at what our future customers and customers were talking to and partners are looking for. I would tell you that really important is that in this time, you have to listen to your customer. You have to understand what their priorities are and how you're going to support them. And in some cases, we've had customers come up and say, "Look, we're going to step back and here are the 3 things when you do the focus on." And I'm speaking in digital right now versus where we were headed before. So we're absolutely making changes. But I would tell you, at the same time, another great example of digital experience is our Messaging business. And Lokdeep will get into what we're seeing today in Japan. Obviously, Japan was one of the early countries to shut down. Messaging is a critical element of how to stay in touch, not just with your family but business-wise. It's a critical element of how you're going to do commerce. So we're seeing -- and it's happened real-time, the changes that we may need to make. At the same time, we'll talk about CCMI, the Cross-Carrier Messaging Initiative in the U.S. And obviously, this has caused that team to step back and think about what's important, what we want to do first or second and how we prioritize. So the answer is we're constantly doing that and constantly making decisions, not just as a company as a whole, but inside of each of our 4 platforms.

Glenn, we have another question for you. But before we go to it, for the audience, I understand some of the slides may be blurry and we're trying to troubleshoot that on the fly. We're not sure what the issue with Zoom is. But if it's too bad to read, you can download the presentation from our IR website. Just go to synchronoss.com, click on Investors, download the presentation, and then I'm going to ask all the presenters to just announce the slide number they're speaking from as they flip through their presentations. Hopefully, we'll troubleshoot this issue with Zoom before too long here. So another question. Geographically, COVID-19 has impacted things differently and at different times. What do you see happening in EMEA versus APAC versus North America in terms of renewals and new business?

Yes. Great question. As I said, we are evaluating this by each very independent place. But remember, we have offices in certain places, as I talked about with our continuity team doing that. We also have customers in certain places that we have to take, and we have to do it very independently. I would tell you that again, we, as we get into this today, you're going to see our first quarter. As you all know, we obviously beat our revenue guide and feel very good about how we performed. David will get into how we're performing. We really can't, guys, talk much about second quarter. But I'd say this, I think we are doing a very, very good job of communicating on a regular, if not daily, basis with our large customers. Those large customers are obviously global. They're in EMEA, they're in Asia, they're in the U.S. And we are reacting to their wants, needs and also reacting, as the question was earlier, to where we're investing and how and what we're doing. The one thing that we know right now is that we're going to have to continue to do that. We have places like Bridgewater, where one of our U.S. headquarters, which was shut down very early. And then obviously, they have obviously improved. And now where I'm standing today in Phoenix, Arizona, we're one of the hot spots. And that has -- we have to adjust to that all the time. Obviously, we have a good -- massive business in Japan. We've adjusted there. Anthony, who runs that region for us, has kept us very much in sync with all what's happening with those 3 customers and same within EMEA.

Okay. That's it. We can go to Chris Hill now.

Okay. Chris, you're up.

Thanks, Glenn, Joe. Hello, all. Looking forward to going through each of our product platforms and solutions here over the next couple of hours. Introducing a couple of members of my team and our senior product leadership, Olman Barber, who heads up our cloud team; and then Lokdeep Singh will be reviewing our Messaging business. Before we have Olman jump into the cloud business, we're going to play a short video that does a nice job and a short overview of the product. Thank you. [Presentation]

Thank you, guys. Good morning, and I'm thankful for you guys for joining us today. So as Chris mentioned, my name is Olman Barber, and I lead the cloud product organization. If we want to move forward to the next slide. So we saw in the video, Synchronoss Cloud is a white-label cloud solution. But we're not just any white-label cloud solution. We're the largest white-label cloud solution, trusted with hundreds of billions of items with an App Store rating over 4 stars. We're highly scalable with great performance, and our global net base of subscribers is 40 million and growing. And this is important because you see on the left, cloud opportunity is 80 billion globally. And as the number of connected devices increases, so does the importance of cloud. Our solutions are private and secure while offering similar features to leading OTT solutions, and I'll go into more depth on our products later in the presentation. If you look to the right, we recently achieved key wins with 3 new customers and 3 new -- 3 contract extensions, which is establishing the value of Personal Cloud in the market. Move to the next slide. So why is cloud important for operators? So first, operators are usually the ones that are managing the first interaction a subscriber has when purchasing a new device. And as a result, helps decide how they manage and back up that content. So there's a unique opportunity here for operators to capitalize on capturing cloud revenue that would otherwise default to an OTT cloud solution later on in the customer journey. Secondly, we all know that the subscriber-operator growth is slowing. We've seen it, and it's continued to trend that way. So cloud provides a new profitable revenue stream. And third, we've seen engagement increase of 33% on average per week, and we've seen a reduction in churn during the pandemic. So consumers are changing their behaviors since COVID-19. We're seeing subscribers generate more content and engage more often with cloud and as people remain at home, and operators should really capitalize on these trends. And another reason cloud is so important, Synchronoss Cloud is so important, is because we provide a white-label solution that operators get to control. They get to control the end-to-end experience that delivers on brand loyalty and improves Net Promoter Score. The key thing to note here is that we are not competing for the consumer relationship with the operators. We're actually here to improve it. All right, Slide 25. We offer a family of cloud solutions, broader than the experience of just content in personal cloud storing, right? So our solutions are addressing consumer pain points and experiences such as upgrade or -- upgrading or onboarding to a new device. So these transactions, they're not easy. And these transactions, as Glenn said, they're not often frictionless and they're not often pleasant. So they take too long and consumers are hesitant to even get a new device at times, right? So not only do support -- we support these transactions, we also support varying channels, such as retail and online care with an easy auto backup solution that can be accessed across multiple devices and operating systems. And we help restore data, and helping restore data is especially important when you lose a device: lost, stolen or damaged. There are 3 products outside of the cloud -- Personal Cloud. Content transfer helps move content from one device to another wirelessly. This is predominantly solution for device upgrades. We also support multiple ways of onboarding a new cloud customer. Out of Box Experience is our onboarding solution that helps with content transfer, but also goes a step further and assess -- assist in setting up new devices for providing the ability to provision and select apps and services like insurance or games. And then we have Switcher, which is a solution that helps facilitate switching from 1 carrier to the next. Next slide, please. So as we come back from COVID-19 and settle into a new world, retail stores will have new constraints, right? They'll be required to have less customers in the stores, and the customers are going to want to spend less time there, frankly. New customer experience is going to be vital to the success of the future. We're able to provide a better retail experience that is super simple, secure and digital here. Cloud is essential for every transaction, and having the ability to back up and restore the content in the palm your hands is critical in these times. So we live in a world that needs to be touchless, and we're built for that. Next slide, please. I believe we're positioned for the future, and here's why. We've delivered steady growth there with high margins within our existing customers like Verizon and BT. We're in the process of replicating our success model of AT&T TracFone insurance with additional subscriber opportunities. We are focusing on enhancing our value proposition in one such way by creating experiences for the family, such as family cloud plan and group sharing capabilities. These are key strategies which will drive engagement with our product and continue to support churn reduction for our operators. Next slide. Slide 28. Our diverse set of products across cloud have multiple revenue components, which help diversify our revenue potential. So first, we have set up an integration. It's a onetime setup fee to integrate with our operator back-end systems and billing systems. It supports specific branding requirements that they might have. We have hosting and professional services. And I think there was a question about 75% of our reoccurring revenue, 85% of reoccurring revenue, and pro services is not a reoccurring revenue to that. So that's part of that -- those numbers to that question. Then we have monthly license revenue. We provide flexibility in supporting various constructs such as freemium offer, a premium offer and bundling into an existing service or rate plan. And in these models, operators can buy tiers of licenses or buy a per subscriber basis. Our premium is our primary and most popular offer, where every subscriber can get a free trial for 30 days and then they convert to a pay model. I want to show a video that kind of gives you a better view into our bundled offer with BT.

Hey, Olman, if I can jump in for a second. Let's go on.

Sure. Yes.

Really important. I know there's some questions that are flying around. So I think I want to make sure we clarify first. What Olman said is absolutely correct. When you have reoccurring revenue business, as we talked about, 70%, and then 85% of our business under 2-year contracts, we do obviously do reoccurring revenue business and we also do implementations. We do a whole bunch of other things that are services that are not reoccurring. So that's how there's that difference. So I want to make sure we clarify that. Number two, I didn't want you to miss the products that Olman just went through. Our cloud, most people, the most of the questions we get are just about specifically cloud and personal cloud and us giving that to go pick on Verizon, which is our largest partner. But we also have the capability to do so many more things. Today, we do content transfer for AT&T. We do that for others around the world. When you start to bring those together, allows us to do what Olman was talking about, which is allow someone to go up into the -- go up, download all of their content into the cloud before they walk in and upgrade a device, before they walk in and they want to switch carriers and make that a very frictionless experience. And as you can imagine in the future world, we're getting questions and more asks around that. So I just wanted to clarify that and make sure you caught that at how important that is as we think about growing cloud. [Presentation]

All right. So since last year's Investor Day, we had sustained growth in both subscribers and revenue over multiple quarters. So this is in spite of new Accounting Rule 606, which tends to flatten revenue growth over the contract term. This is also in spite of the start of a pandemic last quarter. As previously mentioned, we executed contract extensions with our main European operators and signed new contracts in the U.S. that bring over 170 million additional cloud subscriber opportunities. And our contracts are built such that as our customers grow, our revenues grow. And this chart on the right does not reflect the new customers we just launched. They were launched in Q1. So that's why we're so excited about the future growth and the cloud prospects and what is in the works for the second half of 2020 and beyond. Next slide. So what's next for cloud? We have 3 areas we'll continue to focus on over the next 1.5 years. We'll continue to grow our upper funnel with key integration and features. Evolving the family use cases and e-mail integration will help improve our user experiences, but ultimately, they provide opportunities for cross-selling to existing operators and subscribers. So that's number one. The next one, we continue to close the feature gap with OTT providers having added time and search and highlights and flashbacks. And we'll also continue to improve with additional features such as messaging integration. So there's so many synergies between cloud and Advanced Messaging that we're well positioned to leverage in an overall experience. That's the second area. And then third is connecting devices like health and fitness and Internet of Things that benefit from faster network and real-time access. Cloud will continue to grow. And even more rapidly with IoT devices in 5G, cloud will -- could be the portal to all devices the consumer has. Before I hand it off to Lokdeep to review Messaging and answer any questions, I want to end on this. So consumers -- consumers are creating more content than ever today. We're sharing more content than ever today. We want to save these memories, and we wanted the ability to look back on them. We're taking selfies and creating memes and videos, and we continue to expect more. And Synchronoss Cloud is the operator solution that will deliver on that expectation. So thank you for your time. And I'll stop here and answer any questions that you might have.

Olman, so question came in from Mike Walkley. For the cloud business, is the pandemic impacting cloud subscription metrics from existing customers, viewing cloud as more of a discretionary item with cancellation? Or is there more of a tailwind given acceleration of mobile remote use cases and consumer behavior driving higher cloud engagement? And then [ he has a follow-up ] that.

Yes, it's definitely the tailwind. Yes, definitely a tailwind. There's churn benefits that's going on right now. There is engagement. Like I said, the usage is up significantly. So I definitely think it's a tailwind. I'm not seeing the former happening right now. Not to say it won't, but it's not what we see right now in the results.

And then he asks, how is AT&T ramping given they shut down their last cloud offering, AT&T Locker in 2017? Wondering how the new reboot is faring. And any metrics you can share? And do you still expect it to grow to Verizon levels over time?

Yes. I think that's a great question. So it's -- it was delayed. Frankly, it was delayed a couple of months. There's COVID delays. There's delays with inventory with Asia. The priority shifted, right? It's operators. Everybody's priority shifted, and it was about the customer and their needs and the network focus. We absolutely expected to go to the Verizon model. And that run rate and that ramp, we're going to continue working with them. And so I'm absolutely expecting it to be improved. Yes.

So Olman, let me jump in there, too.

Yes.

So it's important, as I said in the opening, for everybody on the call that there, without question, things have gotten pushed. We have been very clear on that. From a -- one of the parts of Mike's question around the OOBE launch, the OOBE launch is still scheduled, and that is actually still scheduled for -- as we head Q2 into Q3. That's still happening. The conversations and discussions, the work Olman and team are doing with AT&T continues. But there really isn't a carrier in the world that didn't have to step back and look at COVID, look at how it's impacting them, look at how it impacted their stores, which is most of those stores closed and looked at their businesses just like every other business in the world has done. We're still very, very bullish on where AT&T is going. Their senior team still views us as a massive project for them, a massive opportunity for them. And as Olman said, we fully expect second half of the year for it to grow.

Okay. Another question, this one from Jeff Bernstein. Are the AI capabilities for the cloud product new?

So we're going to continue advancing on them. So yes, they're fairly new. We've got this internal AI tool that kind of gets machine learnings and insights and consumer behaviors. So -- and then the functionality that we'll deliver, it will continue to go through '21. So yes, it's definitely some new stuff going on.

From Mike Latimore. Did you say that cloud churn declined during 2019? And when will OOBE launch at AT&T? And what percentage of their phones will get that?

Joe, I just answered the OOBE question. We said we'll launch end of Q2 into Q3, which is really the plan from the beginning. And so that we fully expect to take place. And Olman did say that churn is down, right? We are seeing, obviously, gross adds down, but we're also seeing churn down. That is across all the carriers as customers are hunkered down in their homes in dealing with the pandemic. But also don't miss, what's really important is we're seeing an increase in usage and an increase in customers going into their cloud and utilizing their cloud and the kind of content they're putting in their cloud.

Okay. We got a couple of questions from Steve Wilson. First, can you discuss the 3 levels of service? Freemium conversion rate improvement, how is that going? Premium cloud, how is that being positioned with new clients and those in the pipeline? And where is the interest level in bundled cloud?

Yes. So freemium is not the go-to. It's just really the premium offer that we talked through a lot. We are talking to some prospects and funnel pipeline on the bundled offer. So that's going to be more prominent, I think, in the future. I can't talk about key metrics and all that stuff. We don't go down to that level. But there's definitely -- our focus has been with Tier 1, especially, it's a premium offer. So what -- Verizon model is what we do. AT&T is going that way. So did I answer the question? Is there another -- there's still -- they were asking?

Yes. I think you did, Olman. I think the key, as we've discussed in the past, is we obviously have customers that have done freemium and premium. We think premium is the way to go. We do have some potential new customers that are looking at doing both. You asked about 3 different types. We think customers will do -- and cloud's become so important that bundling it into your higher-end plans does make sense for some customers. We may see that. The freemium might make sense for some lower-end customers. We're seeing that. You've got to remember, we're not -- cloud is so important. We've mainly focused it on postpaid. We're seeing a lot of press on the prepaid side and the prepaid front, which by the way, I think prepaid has a massive opportunity to grow based on COVID and based on especially the unemployment rate and how customers may want to use those smartphones, but they still need cloud. And that's part of the growth opportunities that we really feel good about.

Okay. Also from Steve Wilson. You mentioned closing gaps to the OTT offerings. Where are the biggest gaps? And what's your priority list to continue to catch up?

So I think there are key functionalities. And what I'll be honest and frank about is that we're not going to compete with the Googles or the iOSs, right? So there's things that we're just not going to be able to invest hundreds of millions of dollars into feature R&Ds. But we have more focus on Internet of Things devices, health care, connecting things that Glenn said, everybody is connected to their phones, but think about like watches, and all that stuff. So what can we connect? And what can we store that is relevant for their content is critical things that we're thinking through right now. There are some features that I don't want to give our goodness away to upfront and to give our competitors an agile unrest, but there's some good stuff coming. So good features coming.

The key, to add to Olman's point, is we need to and we will be working with our partners to make sure that we have the features they deem important. Each of the carriers has a different opinion. That's why it's a white label. That's why, as Olman said at the beginning, these offerings are about what they want and the customer experience they're looking for. The type of number of customers with our largest players that are doing well and gaining customers wanting to get that full experience from the carrier, we have to have and make sure that, that carrier has what they want, and that's the focus. Now Olman's got a whole bunch of things coming she cannot talk about, and -- but we will be announcing those as we go. I also see a question here from Mike Latimore. Yes, not just Verizon. Everybody is talking more about prepaid. The future and where prepaid is today is it's just a different way of paying for really a smartphone plan. And without question, you've seen our work with TracFone, where TracFone is bundling our cloud into some of their plans. You've seen a lot of discussions around customers may be moving to prepaid from postpaid because it's more flexible based upon the fact that they may be unemployed with the unemployment rate where it's at. All of those customers, no matter who they are, they need cloud, and they need to make some decisions about how they're going to get cloud. And in a lot of cases, we will be there to help play with those individuals, which is why we're seeing so much activity, not just in our new customers on cloud, but in our funnel for cloud.

9 And I'll add -- just to add to that before we move on. We aren't competing like Google because we're not selling the content, right? Operators don't want to sell their customer's content. We're not doing that. We're not coming through it. We're not utilizing it. This is not risk here for private, right? So I just want to make sure we add that in.

And it looks there's no questions about cloud, so we can go ahead and proceed with Lokdeep.

Okay. Perfect. Good morning, everyone. Thank you for your continued investments in Synchronoss. Glenn spoke about the market trends and market opportunity and the strong traction of our Messaging products; in fact, all products we're having in the market. I would like to spend time with you on -- mainly on 2 things and then help answer any questions. First is, what are the products that we have deployed successfully in the market to address the opportunity? And then secondly and maybe more importantly, how are we making money from this in a way that we believe is sustainable over a long period of time? Next slide, please. So I know that several of you follow and invest in the Messaging space as well as the so-called communication SaaS space. And as a result, you would know that there are 2 segments to the Messaging market. There is the person-to-person consumer messaging. And I think we are all familiar with that because we send and receive e-mails, SMSs and maybe WhatsApp every day. And that's the P2P part. But then there is the -- Glenn spoke about it. There's the A2P part, which is the use of messaging as a commerce platform. I think that part may be a little bit less well-known, so let me share some stats with you. And then we also have a video that explains that concept and the use cases we're bringing to market a little bit later. So there are about 75 million brands that are part of the messaging platforms today. And they pay good money in order to be onboarded to the messaging platforms, then they pay money to stay there on a monthly basis and then they pay money, then they send messages to the consumers. So this is very much about the second part, the commerce platform is very much about a 2-way engagement channel between the brands and the consumers. And now the reason that they're doing that, they're paying this kind of money, is because that's where the users are. If you look at the popularity of the messaging apps, there are about 4 billion messaging app users. Then on top of that, there are 5 billion SMS users that carriers have control over. There are 125 billion messages sent in a day. And then on top of that, an average messaging app is open about 9 times a day, and the average time spent is around 42 minutes. So essentially, that's where the eyeballs are. That's where the users are. And therefore, the brands are spending money. And as a result, it has become a commerce platform. And you'll see that shortly in the video. So to -- we have offers that address both sides of the opportunity. There is the white-label, consumer-facing e-mail offer with some SMS capability that addresses the P2P, person-to-person part of the market. And then there's the Advanced Messaging offer that addresses the Messaging commerce opportunity that I just spoke about. If you see on the right-hand side, I think everyone is aware of the 2 large contracts in 2 very big markets that we have, starting with Japan in 2018. The service that was launched, Plus Message, by the 3 carriers there through a consortium. And then also the CCMI JV by the 4, and now, 3 carriers in the U.S. So we'll talk a little bit more about it, but these are the 2 offers that we bring to the market to address both sides of the opportunity. Here, you see the underlying product portfolio. To the left is the e-mail offer that I was speaking about. This is a source of our repeatable and very predictable revenue for us. We have more than 20 Tier 1 operators using this service and have more than 25 million active users that are actively using this e-mail service. Then in the middle, you have the Advanced Messaging that I spoke about, the use of messaging as a commerce platform. More information coming on that in the video. The third part that I would like to cover on the right is our Messaging Marketplace. So this component does 2 things. First of all, it's the gateway between the brands, and the telcos because that's where the business is on the A2P side. And then secondly, it makes our Advanced Messaging offer multichannel. What I mean by that is like the Advanced Messaging is anchored by a new technology called RCS. But for it to appeal to the brand, you have to offer a multichannel service. That includes e-mail, that includes SMS and even some of the OTT channels potentially. So now let's see why the operators continue to invest in this. So the first one is, and Glenn spoke about this, is their legacy revenues are declining, whether it's coming from voice or SMS. The consumer side of the revenue at all the operators is declining. However, when it comes to the Advanced Messaging side, it is a good source of revenue for them today. The operators are making about $20 billion from the brand-to-consumer SMS-based business today. So they have to defend that. So that's the second reason they will continue to invest and are continuing to invest. The third point I would make here is messaging has emerged as very resilient channel in the post-COVID world globally across the different operators and messaging providers, the number of messages has grown by about 50% over the last 3 months. And we are seeing no slowdown. In fact, we are seeing more and more demand as a result of the environment that we are in. So with this, let's take a look at the video that describes the use cases for the A2P side of the business. [Presentation]

So there in the video, you saw the use of messaging as a commerce platform for the brands, our consumers, in fact, within Messaging, all within Messaging, including payments. What I would say is that what's good about this is that this is not just the stuff of the future. It's happening right now. And the Japanese carriers are rolling out some of these select use cases as we speak. The second part, which is even better, is that you saw some OTT names in there, WeChat, et cetera, but this is not just an OTT phenomena. Operators are already part of this business. What I mean by that is if you look at the chart on the left-hand side, the same slide, next one, please. On the left-hand side, all the use cases that you saw in the video at a basic level are today being done through SMS. So examples of that would be any time you receive a onetime password from your band, from your doctor's appointment, notification coming in. And in the past, when we used to receive the airline notifications as well, all of that comes through SMS today. And that business today is worth about $20 billion, as we're saying, globally to the carriers. So the first reason is they have to defend that business. Because if they don't, you can see that this business, which is essentially SMS A2P today can go over to the OTTs. But this is where this new technology on the top right-hand comes in, which is the Advanced Messaging, will help the operators, number one, keep the revenue and then grow it through the commerce use cases that I spoke about. Next one. I would also say that Messaging over the last 3, 4 years and even before, we've had a good track record in delivering on our strategic go-to-market plan. If you see on the left-hand side, what we had prior to Advanced Messaging was essentially an e-mail business deployed everywhere, but we leverage that in Japan to launch our Advanced Messaging. And right now, the public numbers for Plus Message growth are 15 million. In reality, they're a little bit higher, but we're not able to share that number with you today. Then we took that experience and we were able to replicate that in the U.S. with the CCMI joint venture. And then as a result of that, we're seeing a lot of traction in rest of the world with opportunities coming to us that we are addressing, [ India] and then beyond 2020. So one other thing I wanted to clarify is that we not only provide the technology and the infrastructure that you see here in the middle to the operators to take advantage of the opportunity on the messaging commerce side, but we also help them monetize this investment by bringing brands to them, which is what you see on the left-hand side. So starting with Japan and moving to other markets, we have access rights where we can bring certain verticals as well as brands to the platform through our Messaging Marketplace platform that I spoke about, which is the gateway between the telcos on the right-hand side and the brands on the left-hand side. So this helps us as well as the carriers further monetize the investment that they're making into Advanced Messaging.

So Lokdeep, if I can jump in for a second and go back. Thank you.

Please.

Really important, we get a lot of questions from many of you around exactly what are we offering and what is Synchronoss bringing to the table. And I think it's critical in the middle, you take a step back for a second. The MaaP, which is the very center messaging as a platform, is the platform that Lokdeep will speak more about of where this traffic will go over. And obviously, the RCS client, the mobile client to the right, is also what we deliver with our partner with to deliver an experience, the app experience. And important, the MMP to the left is the Messaging Marketplace. It really isn't on branding. It's a portal to bring those brands into this environment and for them to be able to transact, run their campaigns, et cetera. And it's really critical that you all, because I get this question all the time, this is what we deliver. And Lokdeep's going to get into how other players play. But when you talk about the opportunity for revenue, there's opportunity in those 3. By the way, we -- as Lokdeep will also tell you, we can actually deliver those together or independently depending on the carriers around the world and where they are and the needs that they have. So I want to make sure we're really clear here because this is going to set up the rest of what Lokdeep is going to talk about.

Yes, Glenn, thank you. That's exactly where I'm going next is how we make money and what are the revenue streams within Advanced Messaging. So similar to our cloud business, if you start from the top, there are implementation upfront technology fees that we charge for integration as well as technology licenses. And then in cases where we host a platform, there are -- there's a revenue stream coming from hosting. So that's very similar to what happens on the cloud side as well. Then after that, the second revenue stream is the subscriber growth. So as the subscribers continue to adopt the technology, move over into RCS, the operators need more licenses, more seats. So that becomes the second source of revenue. And within that, there are 2 kinds. One is like how many downloads you have. And then on top of that, how many subscribers then are actually engaging with the brands. So we have 2 monetization opportunities when it comes to the subscriber growth. Then Glenn was talking about the platform in the middle, which is the so-called messaging as a platform, through which all the messages, whether it's SMS or RCS in the future, they go through that. So the operators then have to also have a capacity license from us in all the cases. So we make money as the volume of messages through that platform, the back-end platform, continues to grow. And you can see how the subscriber growth as well as the brand growth actually feeds that. And that's actually where a majority of the money long term is made. Then the last 2, I go back to what I was talking about, the brands being onboarded into this ecosystem. We monetize that through two ways. One is we have technology share of our MMP, which is the Messaging Marketplace onboarding platform. So operators pay us either upfront technology fees or ongoing recurring revenues for use of that technology. Or in some other cases, we participate on a success-based revenue basis, where either the revenue is shared or it's a transaction-based revenue. Okay. So these are the various revenue streams. Let me also give you an example of what's going on in Japan right now. I spoke about that the Japanese are taking a very vertical-based approach. They've just announced that all the top 5 banks in Japan will be using Plus Message for all digital transactions within Japan going forward. So that can be anything from change of your address, it can be if you apply for a loan. Anything essentially that you do online today, you'll be able to do through Plus Message in Japan. Secondly, they're trying to position, and I think they've been successful in positioning Plus Message or RCS as the national communication infrastructure. So it will be used for anything like COVID notifications, anything related to public health, anything related to utilities. So that is being rolled out right now, and we will continue to participate in those revenue streams as well.

And Lokdeep, while you're on that subject, there's a timely question from Jeff Bernstein. Facebook's being boycotted. Google isn't loved by advertisers either. How and when do the RCS consortia become legitimate alternative ad platforms?

Yes. I would say that, Jeff, that it's happening right now. But then I would qualify that by saying that we and the operators are being careful so that we don't become another scam-y channel just like Facebook. So that is why this select vertical approach is how we are starting and the carriers are starting. So for example, about 40% of the traffic today in the SMS world comes from the banking and insurance sector. So that will be one of the targets. The second one is health care. So anything that requires security interest is where we're starting. And then we want to be very careful when it comes to advertisement. They will be there. But the idea is to position RCS as somewhat of a premium channel where the advertisement and marketing is done only when it's consumer-initiated. So starting to happen right now, but it's a phased approach.

Lokdeep, if I can just add a little bit on top. Jeff, I think your question is really a good one. And I'm going to talk more futures. Lokdeep's talking about what we're seeing today. If you step out and say, "Okay, let's pick on CCMI for a second there. They're still saying that the launch is in 2020." And really, the key is eyeballs, right? The reason that Facebook and Google have done so well in digital advertising is volume, numbers of customers they can hit and advertisers view that every dollar spent, they can get a return. That's the simplistic key to advertising. The thing I'd say about this business and about what Lokdeep is walking through, this is going to be and is the best 1v1 type of advertising. You're advertising to someone's smartphone. You're advertising to Lokdeep. You're advertising and working with Olman. And by the way, as Lokdeep said, this is initiated by the customer. So there's no spam here because Olman and Lokdeep are going to decide what they like, what they want to see, who they want to interact with, and that is going to be the most valuable. So the key to get there is going to be the number of customers that they bring on to this platform. As Lokdeep said, in Japan, they announced end of -- the end of last year, they're about 15 million. As they grow that and become and have more and more interaction, more and more engagement, then that advertising dollar makes more and more sense. Last thing I'll say is we did a whole bunch of research at the end of 2019 that Lokdeep and team led, where we talk to some of the biggest advertisers in the world. And you're absolutely right, they want a third solution. They want another opportunity. They want the data that comes off and the ability to work with individuals. So we do see that as a massive opportunity going forward. Lokdeep said probably the largest long term.

Yes. Totally agree. And I think it's best demonstrated by what's on the right-hand side of this slide, why advertisers and publishers are interested. An average banner ad, the open rate is 0.001%. On SMS, it climbs up to 1%. But here, with RCS because it's so interactive, you can see some of the open rates, et cetera. So even though it may not be the same in terms of impressions, and it doesn't need to be, but in terms of efficiency and the money generated, this is going to be a much better channel.

We have another question from Orin Hirschman. When does the recurring ad revenue and similar recurring revenue streams from Japan start for us? Do we see anything this year? And then the second question, what makes us think the U.S. will follow the same model as Japan because Japan had a specific problem with lack of interoperability on SMS that pushed them towards RCS?

Yes. So for Japan, this service is being rolled out as we speak. I gave the example of the banks and then the utilities. And then it's going to be some of the retail channels through which marketing and advertisement will come. The revenue for that and the monetization for that is this year, both for us and the operators. CCMI has not declared their go-to-market approach publicly, but we expect that it will follow the similar trend, given that, that's the basic thesis behind this investment.

Yes. And I think, Lokdeep, Orin was also asking, yes, Japan did not have interoperability in their SMS, which I think really sped up kind of where they are as the number of customers that are engaged. I think the one thing in the U.S. is, yes, we have interoperability, but the U.S. carriers, we believe, are going to be much more aggressive at loading customers from here and getting customers to engage here. I think we've -- our first engagement in this space was in Japan. We learned a lot from that engagement. Lokdeep can speak for more hours than we have around what we've learned, what we saw, the decisions they made. And we do believe that we can bring that intelligence, that learnings to the U.S. carriers and CCMI and actually help them grow this faster at a greater pace. And it's not just about interoperability, it's about all the other opportunities and advancements. Also don't miss, COVID is actually helping. And I mean that in the sense that we're seeing messaging as such a key element. We had Hans Vestberg, who's the Chairman and CEO of Verizon say, every single day in the messaging volume that Verizon is seeing is at New Year's Eve levels, right? And that is every day because people are locked up, they can't leave their homes and they want to communicate in a way. So messaging is that way they want to communicate. If you step back and look at Lokdeep's video and what that kind of experience could mean, we're bringing a completely new digital experience to the U.S., which is how the carriers believe they can grow the business.

A question from Mike Latimore. What kind of volumes are you seeing for A2P messaging distinct from P2P now? And how will your revenue sources in Japan change this year versus last? When will CCMI technology development conclude? And are the carriers likely to launch more RCS services immediately thereafter? And then a third question, Mavenir announced RCS interoperability deals in Europe. How do you -- do you compete for that? And are there other opportunities in Europe for us?

Okay. Yes, there's a lot to unpack, so let me start with the Japan side, A2P. So Mike, we're not able to share the exact numbers as to the volumes we are seeing on the platform. I would say that like I said, in terms of the revenue, both for the carriers coming from A2P and us, it is this year. And there are 2 ways we sort of monetize that, right? One is from the growth of the subscribers, the active subscribers or the subscribers that engage with the brands. And then secondly, increase in traffic that flows through the system. Going forward, as we bring more brands, our brands to the market, then we'll also start to participate in some of this commerce revenue. So revenue [ in here ], can't share the volume growth. On the CCMI side, I think they will follow a similar path, as I was saying. If you look at the CCMI scope, that's essentially what it is. The underlying carriers have the P2P, person-to-person infrastructure, and then a JV is an overlay to drive the A2P traffic. So more to share on that as we get public information from the JV. Glenn, I don't know if you want to add something. I would like to address the third part of the question about Mavenir.

No, no. You nailed it. Why don't you talk about the Mavenir announcement?

Yes. I think let me actually address several PRs that have been out in the market. Mavenir is one of them. I think there's -- there have been some from Google as well. What I would say is that in order to be successful in this business, both for us and the carriers, the first thing we have to do is create scale. And I think that's obvious. On the consumer side, get as many customers, as many subscribers using the service as possible, right? And 2 things help with that. First is interoperability at the person-to-person level. So when T-Mobile does an interoperability deal with Google for their markets, we see that as a good thing. When Mavenir does an interoperability deal for some of the opcos that they have deployed RCS into, we see that as a good thing because it helps us create scale. Just if you go back to SMS, that's when SMS really took off when it became global. You could send the SMS and it became ubiquitous, right? So all the interoperability press releases around Google, T-Mobile, Mavenir fall into that category. We don't directly compete in that, but it helps with the A2P side of the business that we do for this payment.

Yes. Lokdeep, I'd add one thing, and we'll get more into the discussions and there's a lot of confusion around why would Google is putting out press releases around that. The key element right now, as Lokdeep said, first of all, when you think about Europe, what they announced was simple P2P interoperability. That's good, as Lokdeep said, that we wouldn't compete with that because we're advanced messaging on top of that. And again, the key is the A2P and the Messaging Marketplace. And when you think about the U.S., one of the key elements is the carriers are the ones that dictate and control interoperability, right? The carriers have made a decision that any interoperability on Advanced Messaging is going to go through CCMI. And that's the key element, right? That is the key element for us because as Lokdeep showed you, how we make money, it's about subscribers and messages. And as there's more and more noise and more and more activity, all of that activity is going to go over CCMI's MaaP platform, which obviously is our MaaP platform, allows us to obviously increase revenues.

Question from Orin Hirschman. It sounds like Japan is running well on the subscriber ads. When do they announce their latest numbers of subscribers? And when might you see the next license upgrade for additional users?

In terms of the announcements, they, Orin, they typically do that through the GSMA events, which are on a quarterly basis. Clearly, these events have not happened as a result of COVID. So therefore, we don't have the public information. I would expect that over the next couple of months, they should go public with where they stand right now.

And Lokdeep, the opportunity for more license, I believe we had one of our partners buy license from us last quarter. Can you talk about that?

Yes. So we see license opportunity this year, some of which we've already closed and the others that we're pursuing.

Let me move on. If you go to the next slide, please. It's again about the revenue time line. And I think for the most part, I have already discussed it. But this, from the left-hand side, shows you using CCMI as well as Japan as the 2 large contracts as to what drives our revenue, right? So in 2018 is when the Japan Plus Message deal was signed. And in there, we obviously collected the implementation and technology revenues. Then going forward, in 2019, we continue to collect from the growth of the technology, the licenses that we sold as well as some professional services coming from change in scope. Also, in 2020 then, we have the CCMI build phase, and we are monetizing that. As you know, we are in the delivery phase right now. In parallel, if you see in the middle on the top, is the continued growth in the subscribers, both on the P2P side as well as A2P side. And then as we move towards end of 2020, as I was saying before, we're seeing a lot of traction in the marketplace from rest of the world, where we can leverage our credibility that we've built in Japan and U.S. to close on some opportunities there that we are actively pursuing. And they will follow a similar trend, upfront technology fees, then some fees ongoing that are tied to the success of the plan from the growth of the subscribers as well as the growth of the messages, okay? One last piece at the top is when we start to bring brands to the market like we're doing in Japan, then we actually start to participate in this fourth revenue stream, either through a rev share, also technology share in the actual advertisement and commerce that you saw in the video. Any more questions due on this? Okay.

No, Lokdeep. You can continue.

Here is how this maps into the last 3 years, starting with 2017 to 2019 where Messaging has continued to grow. You see both the recurring side of the Messaging revenue as well as some of the license revenue. So at a macro level, we feel very positive about the Messaging business, and we expect that will continue to grow.

And Lokdeep, and one thing to think about, I want to add because, again, I have the advantage of talking to many of you all the time. There's been things shown out we -- around -- and David always talks about the fact that we have some lumpiness in our businesses. And really important, as you saw in Olman's slides, even though there's lumpiness in the cloud business, it's still growing, even though we've done and redone our deals, which 606 forces us to peanut butter that revenue when we do and renew a deal, we're still growing. Really important here is same thing. We've had lumpiness because of the deals we've done, because of the fact that we have license deals. Because of the fact that in that quarter, as a question that Orin asked, we had a carrier that needed to buy more licenses, which can create lumpiness. The most important you all need to understand is this slide for Lokdeep's business is that we're growing year over year over year. And the important thing you saw on Olman's slide, on cloud, is that we're growing. And by the way, as Olman said very clearly, we're growing, and our 3 new carriers aren't even in -- our 3 new deals in cloud aren't even in what she showed you. So that's what I want you to make sure you take away. And as we talk more and more and you see David's slides, and he gets into this. That's where I think there's been some folks throwing some things out that actually just don't really depict this correctly. This is what our trend looks like. We're proud of it, and you'll see it again when Chris goes as we talk about the other businesses. Thank you, Glenn.

Next slide, please. This part, we've already covered based on the question that was asked by Mike. Is a century, like I was saying before, what we are doing is to help create scale for the carriers on the consumer side, so that more brands can be interested and help monetize the opportunity. Players like Google, they are important part of the ecosystem, especially on the client side, they clearly control the Android OS. To the extent that there will be native support for RCS technology, first by Google and maybe in the far, far future by Apple as well, that's a good thing for us as well as for CCMI and the market overall. So all the press release is about Google having a role in CCMI, yes. And that's on the client side, and it's a good thing because every market is going to have multiple OEM clients. Our technology does the interoperability between all of them, helping create the scale that I was talking. Next one, please. I would like to conclude by saying that, hopefully, you've seen that in terms of the market dynamics, we are seeing the right trends. The products that we have are highly relevant to what's going on in the market, addressing both the consumer side as well as the business side of the opportunity. It's very obvious that Japan and U.S. are hugely important to us. Those are one of the largest markets in the world in terms of GDP and several other factors. So our #1 priority is, of course, to continue to grow Japan, launch CCMI, start to grow that as well and then establish scale across the 2 of them, attracting more and more brand revenue. Also, we will continue the development of our advanced messaging capabilities. There are some key things that we think some innovation is needed, for example, around brand discovery, multichannel capabilities, so that's not limited just to RCS, and also AI and Brand Lifecycle management. And for that, we are leveraging both our in-house tools as well as some third-party partners that we bring to the market. And then finally, we're starting to see a lot of traction, as I was saying before, in rest of the world, so working on actively on opportunities in EMEA, APAC, and that's going to be our third priority for the business. So feeling very good about the outlook of the business and proud of the performance like Glenn was saying.

Lokdeep, important too -- and I know there's a question right now around other opportunities. I am going to repeat this again and let Lokdeep dig in further. We are viewed as the leader in this space. And the space that we're talking about is what Lokdeep showed you, which is the advanced messaging space. We have tools that others don't have, right? There's folks that have great slideware around their map and that they're going to build the client. We have, obviously, map and client working at scale in Japan, soon, hopefully, the launch here in the U.S. We also have the MMP, the messaging marketplace, which is that brand portal that is absolutely world-class that we can actually sell with everything else or we can sell that separate. And it's important with COVID hitting and messaging becoming so critical of a communication device for people around the world that our pipeline has expanded. And Lokdeep can't give you too much. You guys know that. But at least he can give you an idea of the level of questioning now coming from carriers all over the world, Lokdeep?

Yes. Glenn, what I would add to that is that if you look at the overall market, there are about 800 operators. I would say, at this stage, going by the GSMA numbers, only about 60 to 70 have deployed some part of this technology, again, not all the technology. A lot of the operators probably have the P2P part covered, so person-to-person, where you can send a message to someone else. What they don't have covered is the A2P, sort of the B2C part of it, right? So that's where we come in. So we're seeing a lot of opportunities where P2P is rolled out, but they're looking at someone who can help them monetize that opportunity, not just through technology, but like also bridging the gap between the telco side and the advertisers, the publishers. That is where our MMP, messaging marketplace platform, comes in because it speaks the language of the brands rather than the telcos, right? So that's one set of opportunities that we're seeing. The third is opportunities where carriers for cost reasons had decided to go with another provider, a cloud-based provider. But now they're saying that they do not have the control that they actually need in order to monetize the opportunity. And in fact, if they're not careful, it can also hurt their existing SMS business. So we're seeing some return business from the players, let's call them OTT or cloud-based providers of RCS. So that's the second set of opportunity that we see.

There's no questions in the queue. If anybody has questions on messaging before we move on. Please go ahead and post them. Here we go. Just if you would clarify the relationship between us and WIT?

Yes. So WIT, for us, is a strategic partner for both Japan and CCMI in the U.S. What we are doing is that -- WIT is an important partner, at the same time, in order to bring best-of-class technology to the operators we are actually putting an end-to-end solution together, which involves WIT as well as some other partners. And we are making that into a carry [ bridge] service, and we're acting not just as the prime contractor, but also providing our own software on top of that. A prime example of that is the messaging marketplace. So that's how I would describe, I think, is the important relationship for us for both the markets.

I would just add that they've been a great partner. I mean, really important to know, Lokdeep and team have done a phenomenal job working with them. Their team is terrific, and we're looking forward to doing more with them as we go forward.

And with that, it looks like we can move on to Chris.

Okay. Thank you, all.

Thanks, Lokdeep. Thanks, Joe. Okay. If we'll move to the next slide, Leslie, we'll jump into our digital portfolio. Within our digital portfolio, we address a number of challenges that are being faced by the communication service providers globally as well as our enterprise clients. We have 4 main product lines that we consider part of our digital portfolio. They encompass our activation business that Synchronoss has been in for -- since its beginning. And we'll spend a little more time on how that is evolving and we're utilizing DXP within the activation business, our digital experience platform. This is really borne out of the acquisition we made a little over 2 years ago of honeybee, and how we've continued to evolve that and the ability to provide true omni-channel customer engagements, customer experiences. Certainly, we'll go into that, and that is -- we're seeing increased demand in this area. And then we have our Financial Analytics and iNOW products that we have now integrated. We'll talk through the significance of that and the uniqueness of that offer in the marketplace and the wins we're starting to see and the ability to have integrated order life cycle management tied with Financial Analytics and insights and how those 2 are coming together and we're winning more clients with that solution. And then last, but not least, our spatialSUITE, which gives carriers ability to plan and design and construct their networks as well as the network asset management and inventory management. We had some great wins so far this year in the DXP space. In Asia Pac, we have Indosat Ooredoo as well as Telkom Indonesia sign contracts and are utilizing DXP. We've started to deploy our first Amazon clients and carriers, Waoo being the first of that and actually now have that live in production. And then Wireless Advocates, and we'll talk through what we're doing with them, really groundbreaking in terms of productizing the wireless activation via our digital experience platform and how we're able to take that now and monetize that with other clients. CenturyLink, we will -- we are going live with CenturyLink. This has been almost a year in the works from implementation. We announced this last year, a massive deployment with CenturyLink. To give you a sense of the size and scale that we're handling here, think 50,000 orders and records that we are scanning and analyzing, represents about $450 million of monthly expense to which we are looking at providing insight and reconciliation. So in terms of what Glenn talked about in operating at scale, certainly another example of that. Great win, and we go live with that next week, and been able to manage that through the COVID environment. Windstream was one of our Financial Analytics customers. They've now added in iNOW, and we'll talk through that integration of the 2, but great opportunity for us to go back to both our iNOW and FA-only customers and adding this additional component. And then Globe Telecom, spatial traditionally has been an on-prem deployment. We've now launched a SaaS version of our spatialNET product. And Globe is one of the first clients moving from an on-prem to a cloud-managed service solution from us. So we go to the next slide. So if we look at the current environment. Our digital solutions are more relevant than ever in the current environment. Consumer behavior is certainly changing, as we've all seen. And the ability for carriers and enterprise clients to grow top line revenue is being challenged. And so clients are searching for different areas for cost efficiencies and automation, and these are critical corporate initiatives more than ever today. The digital transformation aspect is accelerating. The funnel has been growing through this COVID environment over the last few months in clients looking at the ability to handle multiple channels, ability to pause and resume across mobile, web, retail chat. Actually, the retail experience has changed more so to buying online or buying via mobile and the ability to pick up at curbside or in the store and having that readily available. So those aspects of combining multiple channels is very challenging for carriers and enterprise clients, and we have products and platforms that can solve that. Next slide, please. Okay. So we're going to go a little bit deeper in each of these areas, but our traditional Activation business, where we are handling the orchestration of legacy IT systems, doing that order management and workflow. We're now bringing that in and tying that in with our digital experience platform. We'll go through an example of that. But if you think about what we're doing with DXP, and on the next slide, we'll go deeper into this. But we're providing a new layer that is starting to centralize all of the customer experiences that an enterprise or a carrier would have. In the case of FA and iNOW, we now have the ability to from the wholesale order provisioning of off-network services that the carrier would look to procure, tie that directly into our Financial Analytics and insights so they are able to reconcile what they ordered, when they ordered it, how much they should be paying, dramatically improves the efficiency and the ability for reconciliation of their invoices, saving carriers millions of dollars per month and per quarter. And then last, but not least, on the spatialSUITE side. This is all about managing and designing their networks, both on net and off-net, in providing that inventory management. Next slide, please. Okay. So let's double-click on DXP. So on the left, today, in most enterprise and carrier environments, you have what we like to call the spaghetti flow here. You have multiple channels, all of which are being individually looked at, a couple of experiences being coded, business logic being replicated channel over channel over channel. Clients are grappling with massive complexity in this space. And as they add more channels and they have more legacy back-end systems, as they do additional acquisitions, this problem only gets more and more complex. And what we're able to do now with the Digital Experience Platform, if you think back to the days, reflect back when you had content all of your enterprise and content management systems evolved to be able to centralize and manage that essentially for an enterprise. DXP does that, but does that for your customer experience and your customer workflows. So no longer do you have all of these multiple integration points with all of your channels to your back-ended systems independently; DXP is that centralized platform where clients can go in, design and build via a very advanced visual GUI, where you're simply doing drag-and-drop to create your customer experiences and workflows, not across one channel, but across multiple channels. And then being able to do the same in terms of tying in to your back-end systems without having to rip and replace those legacy systems, which is incredibly powerful and saves customers tens of millions of dollars for which they traditionally spent in doing large-scale digital transformations that, for the most part, have largely failed. DXP is this lightweight platform that can centralize all of that for clients and do that in a very cost-efficient manner. In addition to managing and operating the customer experiences, we have the ability to apply decision engine technology, so being able to provide contextually relevant buying and purchase recommendations. In addition, we have an advanced catalog that allows the ability to bring together multiple different product and service catalog so that you can start to create bundles. And then last but not least is our digital coach capability. Think about this as a socially-engaging gamified way to engage contact center in retail agents so that they have the ability to have a trophy wall and business objectives being set that they can earn different badges and trophies by the day, by the month, by the quarter that align to the business objectives and do that in a socially engaging and gamified way. Next slide, please. So let's double-click on the wireless activation aspect of this. And this is where we're utilizing our Digital Experience Platform in combination with some of our legacy activation capabilities. In terms of monetizing this, typically, as we go out and we're talking with clients, they would range depending on the number of back-end systems, the number of carriers that they're looking to deploy, anywhere from around $50,000 to $150,000 per month for platform-as-a-service fee for core platform, and this allows them to, or us to create their customer workflows and build those out on a professional service engagement or train customers to be able to do that on their own. The next aspect of the monetization is what we call our Activation Accelerator Pack. So we've actually productized the integration elements to each of the U.S.-based carrier. So today, we have Verizon and AT&T. T-Mobile is in the process of launching and exposing a new set of APIs. As those are available, we'll have that brought on board in the first quarter of '21, but in general, that is around $25,000 per month per carrier that we charge for that activation product pack. And last, but not least, there is a OEM commission. Typically, on average, the average commission that an agent or anyone activating a U.S.-based activation or trade-in ranges around USD 100. Of that, Synchronoss sees around $20 to $30 per activation, as we turn those up and monetize the actual activation element of it. So what we're hearing from clients, this is an extremely cost-effective and very fast means to get up and operating to be able to activate with carriers that traditionally has cost millions of dollars and taken literally years to be able to deploy. And then to actually keep up with the carrier changes to their APIs, which happen on a monthly and quarterly basis, our ability to productize that is receiving a lot of interest, not just with master agents and dealers, but also very large device OEMs. Next slide, please. Okay. So let's spend a minute on what we are branding and going to market this year as a total access management platform for carriers. We're taking together our iNOW platform, our spatialSUITE product as well as Financial Analytics. We brought this all together in an integrated fashion. And truly, this is a competitive advantage in the industry. There's no one else that we know of competitively that has all of these components to allow our carrier partners and telcos to have a unified framework to handle contract and order management, the building reconciliation and then to tie it all off with inventory management. So a client would begin with utilizing spatialSUITE to design and plan their network, determine what aspects are on-net or off-net. Then they'll utilize iNOW to be able to handle the automated ordering and fulfillment of those off-network assets and connections that they need to procure. And that's where Financial Analytics comes in and ties out the ability to ensure that what they designed and planned and then process the order. They're getting billed the appropriate amount. Tens of millions, literally hundreds of millions of dollars that are exchanging hands between carriers is a massive amount of reconciliation. And a number of errors that we find that allow the carriers once we go through this and apply our Financial Analytics suite and insights, allow them to recoup a lot of error-prone invoices that they receive on a monthly basis, and so that is the total package to which we're operating. We've had our first very large RFP that we responded to of the total package there that we're excited about. Hearing about here soon that we just put forward. And so you'll hear more from us on the total package in terms of what we're representing from access management. Next slide, please. Okay. In terms of our investment priorities, and as we look at DXP, we're continuing to improve the usability that can -- so that as users are in there and configurating their customer journeys that we're creating fans and advocates because one thing we're seeing as DXP is in there and customers are starting to utilize the platform, the light bulb is starting to go off in terms of the efficiencies the DXP is providing them. And so it's critical for us to have fans and advocates in the early days such that we can expand the utilization across an enterprise if it's initially deployed. Feature competitive on the access management platforms, as I showed on the previous slide, the integration elements that we're bringing together of each of those 3 products is important. We continue to evolve those. We mentioned the fact that we've taken our spatialSUITE product to a cloud-based SaaS offer now, that will allow us to go down market and address additional geographies. And then last, but not least, looking at ways from the fully integrated products there to be able to leverage blockchain, as we think about the ability to have a -- the ordering, the design, the ordering part of the distributed ledger to which we then can apply Financial Analytics, and insights would be a first in the industry, and we believe we're well on the way to be able to start to bring those pieces together for our clients such that the idea of having to reconcile and do dispute management after the fact really moves to the front and becomes a monetizable service and offering that we can provide clients that we know that they're asking for today.

Chris, before you go on, there's a question I just noticed about asking about our pipeline based upon COVID. I think that I was earlier talking about the fact that obviously it's a new world and the new normal is going to still be much more digital. And as Chris said, we're working with a whole bunch of customers that we had before COVID hit. And now, Chris, talk a little bit about some of the other discussions, you can't obviously name names, but discussions that we're having are -- really have, obviously, picked up in a big way around all the things that we're talking about here.

Yes. Exactly, Glenn. So as I mentioned, the consumer behavior has rapidly changed and believe it is here to stay or at least a large number of elements of it. Really around the aspect of the ability to move across different channels to complete a service request or an order is critical now. And this has traditionally been a very hard problem, a complex challenge for carriers, in particular, to be able to address because of all the legacy systems that they have to touch and all of those independent channels that I showed on the spaghetti slide that they're dealing with. So we are being -- the questions are and the opportunities are starting to increase and clients saying, "Hey, how do you help me solve this rapidly?" Because they have that -- the need demand. They know this is the wave of the future in terms of being competitive. And the ability to move from mobile to web to retail is a must have now. It's not a nice to have. And so that is really fueling the demand that we're starting to see from clients. Okay. Next slide. Oh, I see one from...

Chris, before you move on, question from Sterling Auty, what are the average lengths of DXP contracts? And how much of DXP do you consider recurring revenue?

So the average length on the contracts, it's taken -- most of the clients have started with a pilot or POC. We had a lot of those in 2019. We're having some of that in this year, but more so starting and immediately moving from an initial use case deployment. We have one client that we just built out trade-in. [ By flows ], took us about 2 months to complete that from start to finish, and we're immediately moving that into a production environment. So that is more so the norm to what we're seeing now in terms of, I would say, about a 2- to 3-month period to which we are building out an initial customer experience or workflow and then structuring the contract that it can roll directly into a production solution so that the client can immediately take advantage of it. We're not just building something that's interesting to kick the tires on, this is an actual use case that can literally be utilized by the clients. In terms of recurring revenue, it is 90-plus percent recurring revenue. We do have professional services and initial implementation fees that we charge in terms of the setup. Most of the clients we're seeing today are asking us to do the initial build of the journey -- customer journey or customer workflow. And a number of them are sort of sitting side-by-side with us starting to see how we do that such that they would then do the next build on their own. And at that point, then it's 100% recurring revenue.

And from Mike Latimore, do you have key technology partners you work with on DXP deals? Is the incremental opportunity you're seeing more from new logos or current customer expanding use?

The area where we're seeing more new customers in terms of DXP in terms of -- so new logos would be the predominant we're seeing in the DXP space. We're going back in. The large Tier 1 carriers have massive IT departments, as we all know, and that is a longer, slower sales cycle. And so that is looking at small use cases to start and grow as probably most here have seen most of the platform-as-a-service ramp, so it takes multiple years for the large Tier 1 carriers to adopt something at scale. So our opportunity is to start smaller, look at these new logos and ramp those quickly while we're planting the seeds with the Tier 1 carriers. In terms of additional technology partners, we play well with pretty much everyone. So where we sit on top, we are a layer that sits on top of both legacy and existing systems and partners in terms of our ability to deploy. So -- but we don't need necessarily an additional partner for deployment. It is an end-to-end solution that clients can immediately take advantage of. As I said, we sit on top of any number of existing systems that are out there and then have the ability to publish out to multiple UIs and channels.

Okay. We're good to continue.

Okay. Next slide, please. Okay. So as we look at the digital SaaS revenue, the key takeaway I'd like you to have here is that these are solid high-margin revenue product lines. We have had, as it's been well discussed, legacy activation volumes have been impacted by the STI financial issues. We'll talk through the acquisition by APC Holdings and how we believe that will now stabilize that aspect of the business and allow us to start to look to grow that. So that's why you see the lumpiness of the decline certainly in Q3 as we had to do the write-down as STI. We're struggling through that period and obviously impacted us negatively. But we'll talk through the APC acquisition and where we see that going. Next slide, please. So as we have announced the sale of -- or it's been publicized, STI has been sold to APC Holdings, a whole new leadership team focus on returning the business to growth. And they've got a track record of success in this space, in particular, by helping clients drive more of their supplier revenue through minority-owned businesses. Alex Parker, the new CEO, coming from AT&T, that many of us know well, we believe and I've already been engaged in multiple conversations with him and the STI team and our carrier contracts, the ability to support this business and start to grow it from this space. We do have in the new agreement that we've inked with STI a rev share component that will allow us to continue to grow that business. In addition, Synchronoss has a 3-year preferred note where we receive $10 million over that period of time. And we have additional earn-out measurements based on EBITDA milestones that would allow us to earn an additional $6 million in terms of the consummation of the acquisition. And as I stated, in addition to that -- those monetary or that monetization, we have the ability to drive revenue through our revenue share partnership in going after opportunities together.

Chris, a couple of questions. So we have actually 2 questions, one from [ Bart Mann from Winguard ] and one from Mike Walkley, that are similar, asking about Amazon and Wireless Advocates and what the outlook is for those deals.

So from an Amazon perspective, I think I would be frank in saying that this has not ramped as quickly as we wanted. We have a number of different carriers that we've been selected to do the implementation for. But Amazon has done some changes in terms of their agreements with the carriers that have slowed the implementation time lines on their side for us to be able to turn up and start those activations flowing. We're working through that. Amazon has finalized the new agreements that they want to have with their carriers and third parties to which are reselling Amazon services. So we're seeing that start to pick back up again, but that definitely slowed things down. Waoo is our first carrier that we have turned up, and we're starting to see those activations flowing, and those are flowing at a nice rate beyond what the initial forecast that we had. So the key there is really we're beholden on the carriers and Amazon to complete their agreements such that we can then engage, turn up process on our end as relatively quick in terms of our ability to get them up and starting to drive activations.

And then another question from Mike Walkley. Can you walk through an example of a deal-time horizon from pilot and then through the duration of the recurring revenue contract? And what is the rough percentage of revenue from DXP within the digital portfolio?

All right. We'll start at the bottom. We are not breaking out DXP as a percentage of our digital revenue. I think Glenn covered that in upfront slides, it's about 18% of our overall revenue. And we'll, I'm sure, provide more visibility to DXP specifically as we go forward. As it relates to the time line on pilot to contract. Typically, we're seeing in and around anywhere from 3 to 9 months in terms of the initial engagements and discussions with clients. The actual pilot process is about a 2-month period, which we do the initial scoping of the use case and the build, and that rolls directly into contract. The contracts are typically 3-year terms -- agreements that we have in place. That's our standard agreement to which we're -- we have contracted for, clients for DXP.

Chris, there was a question about Wireless Advocates and how that's going and when we're going to see revenue. Do you want to have to [ answer ] that as well?

Sure. So this was very complex implementation with Wireless Advocates not only on our end, but they were doing a new point-of-sale system as well. That is -- Wireless Advocates is looking to go live. We had supplied the platform, the carrier readiness in terms of the activation elements with AT&T and Verizon, and you'll look to see them make some announcements likely in later third quarter or fourth quarter in terms of channels that are turning up through their partnerships with the military branches to which they support, the kiosks as well as their relationship with Costco. And then we'll be adding in T-Mobile in the first quarter of the year as T-Mobile is ready.

All right. It looks like that's it for digital and DXP, Chris.

Okay. Great. All right. We will jump right into our IoT platform. And also, I could say, this is our newest area, but I would say this is probably the area that we've seen the most significant growth in demand, and we'll talk through the positive momentum we're seeing due to the pandemic. We have 3 primary product lines within our IoT portfolio. Our IoT Edge, and we'll talk through this as just -- as we look at directly connecting sensors to our analytics cloud, the BMS Edge. Think of this as Tridium [ primarily ] as -- and Accruent in terms of these platforms, these building management systems and our ability to extract data from the building management system, aggregate that with other siloed information coming in on the building and provide consolidated visualization and analytics. And P2P, this is our platform to platform. And this comes into play with our partnership with Accruent, where we are directly integrating to their platform and looking at refrigeration-centric analytics and optimization tools, and we'll be looking at and working with. Discussing in the third quarter some very large clients, and we're working together with them. And in addition to that is with CityFM, so City Facility Management as a global provider of facility management services, they support the likes of Walmart and other very large enterprise clients. And we see that as a tremendous opportunity as a channel for us, and we have a great partnership working with them. We've already previously announced our Arrow partnership. Arrow really provides the ability to -- on a global basis to handle the procurement of the hardware and the deployment of the hardware, the setup and connecting that to our cloud analytics platform. And then certainly, Tridium, we have optimized stream being one of the largest players in the BMS space, really looking and ensuring that we have the abilities to extract, provide additional insights, and bidirectional ability to take action on those insights back through the Tridium BMS. In terms of the initial contracts wins, we announced Rackspace last year. We deployed at 1 million square foot castle their headquarter locations. We've now added 4 more global facilities for them and looking to expand beyond that. And then also, just recently, in the past month, AT&T has agreed to commercially move forward with the launch of the smart building platform and have gone through and done initial training with the AT&T sales teams and looking to increase the exposure with AT&T, as we move into the second half of the year. Next slide, please? Okay. So I mentioned the significant growth and impact. But the market demand is literally exploding in the areas of wellness and pathogen remediation. In addition to an already strong demand that we were seeing in reducing and minimizing business and operational risk as well as the energy efficiencies, which we can drive. So one recent stat that we came across, and then we're looking at there, was -- the market was growing at a 12% CAGR before the pandemic. Post pandemic, as the economies start to grow again, it's now estimated that, that's going to grow at a 28% CAGR over the next 3 years. So significant growth opportunity for us here, and we're seeing opportunities directly from clients as well as carrier partners for solutions that they can take to market. Mentioned our work with CityFM, Accruent, Tridium, but really the ability to apply our analytics and insights and machine learning to be able to provide predictive maintenance and facilities automation is certainly a key area that clients are looking for. This helps drive to the bottom line. It also provides a smaller ecological footprint in terms of the energy efficiencies that we're driving. In the area of wellness, and we're seeing this start to explode as looking and monitoring air quality, space utilization, comfort levels, CO2 levels being a key piece within that. How is that being measured and monitored such that the employees in the workspaces are more productive, more efficient and certainly more healthy. And then the last area we're also seeing a significant amount of interest in Asia Pac and Middle East is around smart cities, and tying that together, we've got a couple of opportunities that we'll go into today, but I hope to bring you in Q3 where we're looking at multiple buildings being linked together across a citywide footprint. Next slide, please. Okay. So this gives you a high-level snapshot of the platform that we have. And so think about our IoT platform as an extensible analytics and orchestration platform, where we're able to aggregate all of the disparate siloed systems and solutions that you see at the bottom and be able to pull that into a consolidated platform to where we can start to apply analytics by combining some of these siloed systems, but also in addition to the analytics provided by the siloed system itself. And so what we're seeing from that is certainly a smaller environmental footprint. As we look at the energy efficiency where we're driving, reduced cost from that energy efficiency, but also the predictive maintenance that we can start to apply. Building wellness and pathogen remediation is a critical area that we're actively working with a number of different partners today, the ability to snap those in. Our strategy in this space is not to pick the winners or losers, but the ability to provide a platform to which we can bring together the best-of-breed for our clients, snap those in and provide a consolidated visualization and additional insights and analytics across that for a given building or a set of buildings for our clients. Next slide, please. So these -- this is a little bit more detail around each of the product sets areas and different use cases. As we look at the IoT Edge, this is typically some of our smaller clients, where we're looking at why they do not have a building management system in place, or maybe where we're augmenting a solution where they need additional sensors deployed out beyond what is being managed by the building management system. So the ability to deploy these sensors and connect those to our synchronized IoT platform. We've also developed in this area, a very cool tool, what we call our technician app that allows our partners like Arrow and others that can go out and through a mobile application be able to set up those sensors, register those and ensure they are talking to our cloud. And so that is another innovation that we've just recently launched that will speed the deployment of our solutions. Our BMS Edge is -- as I've mentioned before, is specifically today focused around the Tridium-based building management systems. We'll add additional as we move forward, but Tridium has a massive base of customers for which we can support. Where we are able to extract data, we can provide additional configurations and insights with the Tridium platform itself. And then we layer on an additional set of advanced analytics on top of that. And then platform-to-platform is where we're integrating with different solution providers like Accruent and getting very specific in vertical use cases such as refrigeration, where the businesses in operational risk are very high and the return on investment is also high such that clients are very much looking for and willing to pay for advanced platforms such as ours.

Chris, we just had a question pop up. It would be helpful for you to explain and flesh out how your low-code, no-code technology is enabling the offerings across your business?

Okay. So that's really jumping back into our digital discussion and DXP, and that is where we are applying our no-code, low-code. As we look at the visual GUI we have there, it allows for those familiar, sort of the Google Blockly capability, where we're able to drag and drop different blocks or feature capabilities and steps to create end-to-end customer experiences. And that allows a -- what is broadly termed as citizen developer, think an advanced product marketing where business analysts that today would have to hand off a set of requirements that they built to IT or an engineer to go develop and code. That can now be done directly by themselves without having to know a specific coding language and have that experience. And so that is what's rapidly reducing the cost and the time to market for clients to be able to do that in a whole new manner using technology. And you see the biggest players, Google, Microsoft and others, are adopting this and ramping this in terms of their deployments. So certainly validated in terms of the market adoption and where technology is heading. Okay. Let's go to the next slide. Let's just spend a minute on health and wellness. So certainly, this is front of mind and a critical area right now. There are a number of different solutions that are popping up. We're working with companies like Synexis that provides a dehydrated hydrogen peroxide to kill off pathogens. But a lot of these players need additional support in terms of sensors and monitoring, real-time monitoring, and our ability to come and provide that expertise and then be able to bring that together so that customers have a holistic solution. We're talking to several very large universities, as we're thinking about bringing together and our Smart Building platform's ability to manage their various BMS systems that they've deployed across their building for looking at HVAC and temperature, but then adding in solutions that can do pathogen remediation. Or maybe -- and with another case with Wello's, is another partner that we're working in terms of wellness, as we're looking at both light and air quality and space that's being utilized, tying those together. And so the extensible nature of our Smart Building platform is the critical value proposition that we bring and the clients are resonating with because they're not looking at having 10 different portals to which they have to log into to understand what's going on. And in addition, the ability for us to inject metadata, think weather, utility pricing, bringing all of that together to provide the insights is driving a lot of value and a lot of interest from our clients here, and we're looking to rapidly scale this business as we look at the back half of the year, as we build on the initial deployments we have.

Chris, I think it's just critically important for folks to understand is the uniqueness of what we have here and what we're bringing is the majority in the history of these players, the Honeywells, the Siemens, et cetera, are vertically oriented, right? Their stuff works with their stuff. But they -- but their stuff doesn't work horizontally across other folks' stuff. That's my technical terms, right, which means that we're bringing a middleware that allows to go across vertically all of these different devices and pull the data out of these devices into a single place to deliver that GUI interface that's in the middle of Chris' slide right now. And what we have found and the reason we went into this business is that really there was nobody we could find doing this well. And so that's why when we think about a SaaS model and the ability to pull in these different devices, pull in these different types of data, throw analytics at it and metadata at it and look at now how to be predictive and forward-thinking, and then you throw this in the health world, that's the advantage that we have. And with all of a sudden, 4 months ago, we were talking health and wellness, but it wasn't really the primary thing. We were talking about energy savings and efficiencies and those types of things. Now, this has really become the key part of the conversation. And the reason we have an advantage is that we can integrate this in faster and more efficiently than others can, and bring a full platform that includes both the smart building aspects and the health and wellness aspects.

On that point, we have a question from Mike Walkley. Given COVID and more people moving toward work from home and companies looking at adopting that as a bigger part of their model. How does that impact these -- demand for these technologies?

Yes. One second, Joe. So really quick, when you think about that, and I said it earlier, but I want to make sure I say it again. This is -- we call this our Smart Buildings platform. This is a smart platform that can be used in any place that you're going to have multiple people. So this is going to be about restaurants, theaters, places you want to shop, sports arenas, et cetera. Every one of those places is going to have to have Smart Buildings, using our term, types of features, software devices to make sure that place is safe. So reality is, Mike, where you're going, is it, well, if there are less people going to the office, is it less of an opportunity? No, actually, every single structure you see if you look out your window wherever you are, it's going to need to be smart and need to be healthy and need to have the ability in real-time to know that. So actually, we think that the opportunity has -- is just going to completely explode.

Mike also asked what are our top use cases and what is our go-to-market strategy?

So we're focused at a high end of the market in terms of -- I would say, our sweet spot is 200,000 square feet and above in terms of our focus broadly. But as Glenn stated, retail is another area to which we're looking to package a solution. Specifically for carriers, when we think about all of their points of distribution and the need to be able to turn those back up and be able to support that in a more touchless way. We're seeing significant interest in that particular area as we tie together not only our ability to look at from a retail employee's wellness, as we think about lighting and air quality, but then also things like the pathogen remediation, tying that together with the energy efficiency. So bringing all those pieces together, that is an area where we've significant interest that we think based on our carrier relationships that we can be able to take this on a global basis to market in terms of retail. Refrigeration is another use case area that we've got -- we've started to get our initial clients and wins with that you'll start to see here in the second half of the year. And the reason around refrigeration is the amount of spoilage and operational risk that is presented is significant. And our ability to make small incremental changes and improvements a very big return on investments for clients, and thus, the willingness to pay a higher price is well justified from that perspective. So those are a couple of areas that we're focused on. I see a question for Mike Latimore on the long sales cycles or how long are the sales cycles and deployment time lines. So it's important to note, this is a new area of our business area, and we started purposely with large clients and we have been learning with them as for what is their need for that. And so our sales cycles that you'll see on some of the wins we'll be announcing in Q3, we're looking at about 1 year, honestly, as we've started, but that has been a learning process, and that is starting to rapidly decrease now that we've done things like our technician app, we're starting to standardize product elements. So our ability to get up and running is significantly faster now with different kind of deployment. So I think you'll look to see us come back as we look to do this on a quarterly basis with you. That's starting to drop rapidly as we approach the second half of the year and start to scale this.

Okay. And we also have a question that was posted in the chat function. I'd like to ask everybody, if you have a question, please post it in Q&A, not chat, if you can. Asking about Domo and how we work with or compete with Domo, which offers integrated multiple IoT sources into one dashboard.

To be honest, we haven't run into Domo in any of the engagements that we've been out to market with to date. The -- our ability to not only just integrate these siloed systems, but because that we have a very sophisticated analytics platform that we've put on top, we are providing additional value and what we're seeing from some of the industry leaders like Accruent and others and Tridium, our ability to provide additional analytics insights, predictive maintenance on top of that, is a big value-add we bring that Domo does not in terms of just simple aggregation.

Okay. We're good to go, Chris.

All right. Let's go to the next slide. Okay. In terms of our investment priorities as we head to the end of the year, certainly, we want to capitalize on a healthy building opportunity. We're evaluating a number of different solutions today such that we can start with some of the leading ones we see. But as I stated, our ability to provide the extensible platform such that different partners can come and become Synchronoss-enabled on a rapid basis is critical to us and for our success as we go into '21. Reducing the barriers to quickly implementing. I mentioned the technician application. That is a critical piece of that. But what are the other things that we allow -- that we already have preconfigured for clients to be able to quickly and rapidly deploy? Partnerships with Arrow and other leading SIs. We'll be announcing another one here in Q3 for some global reach that would allow us to have the boots on the ground to be able to quickly go out there, install, connect and enable our platform, will be coming here as we look into second half of the year and make announcements then. And then I had mentioned actually in the first part there, our platform to platform, our sensor-agnostic infrastructure such that we have a certain set of protocols that we've certified that we work with. And as long as the devices or sensors are operating in one of those protocols or utilizing one of those radio protocols or access networks, our ability to quickly add those into the platform will be important for us to be able to scale. And I think we're going to wrap up with a short video that gives you a nice overview of our IoT solution. [Presentation]

Okay. So thanks, Chris. So as we are making a couple of adjustments to try to make sure everybody is getting the highest quality. While we're doing that, I really just wanted to thank the team, who did a nice job. I also appreciate all the questions that you have thrown forward. You can see that our 4 platforms play a big role today and will play, we believe, an even bigger role tomorrow and with our customers and how they're viewing next steps after COVID. Obviously, what Chris went through there at the end, the IoT platform, our plans there and the successes that we've had in a very short period of time by signing up partners like Tridium and Arrow and others are all about the fact that we're bringing unique software to the table. We're going to move now, and I'm going to introduce Jeff Miller, who's our Chief Commercial Officer. And Jeff is going to spend some time talking about his organization and the changes that we've made that we think are really going to speed up the velocity and our ability to execute. Jeff?

Great. Thank you, Glenn. As introduced, my name is Jeff Miller, Chief Commercial Officer for the business. I'm now enjoying my second year with Synchronoss. And now that you've received an update on the 4 platforms, I'd like to share more about how we're going to leverage those portfolios to enable growth for the business. So if we can move on to the next page. In spite of the uncertainty that's been abruptly introduced due to COVID-19, we did deliver a solid first quarter performance, and we feel confident that we're in a position to do the same throughout the remainder of 2020. Now it's important to note that our recurring revenue business model and the contracts that we signed in 2019 put us in a strong position to sort of weather this economic storm. We do enjoy very long-term relationships with some of the most stable TMT companies in the world: AT&T, Comcast, T-Mobile and Verizon in the U.S.; KDDI, NTT Docomo in Asia; and BT, Vodafone in Europe. Plus, we have the diversity of over 200 accounts that we serve all around the globe. And as previously mentioned, over 70% of our revenue in the relationships with these customers are recurring, and that provides us solid and predictable revenue to some degree in very uncertain times. We've also worked hard over the past few years to make sure that we renew long-term customers into multiyear contracts. And then that allows us to continue to win new business and also expand into new markets. So as last year, we landed major contracts for TracFone, Assurant and for AT&T and Cloud. And as much discussed, the CCMI relationship with the joint venture, which is served by Verizon, AT&T, T-Mobile and Sprint. We've put ourselves in a position to have some greater stability and predictability as we go through the year. And finally, the value that our products provide are relevant in today's marketplace because they provide an enabled digital engagement. And as Glenn emphasized, they help generate revenue and they help save costs. So let's go on to the next page. As Glenn also mentioned, we've taken steps to centralize all the revenue-producing aspects of our business into one organization that I have the privilege to lead. By combining sales, product management, marketing and service delivery, we ensure that the voice of our customers are heard and reflected in the products that we provide as well as in the new innovations that we introduce. We make certain that our marketing efforts drive consumer engagement with our platforms, and we do so in conjunction with our customers. It's also important for us to make sure that our marketing efforts and programs are generating an ongoing stream of new pipeline opportunities for our sales funnel. And working as one organization, we're also increasing the focus of our sales team to convert those opportunities into revenue. This transition continues all the way to service delivery, where we take a carrier-grade, carrier-quality approach to our execution and delivery, which is required by the marketplace we serve. Now the simplified organization is also helping us with our own internal velocity in making decisions and working at the speed that the marketplace that we served requires. On to the next page. We'll emphasize the fact that we're leveraging and capitalizing on our 4 platforms by our global sales reach through 3 regional sales organizations in the Americas, Asia Pacific, and EMEA, each of which of these regions has in-region, in-language account teams that support our existing customers. Plus, we have business development and partner resources that drive sales to new customers and partners in new markets. And this entire organization is supported by a global set of resources for sales realization like sales enablement as well as service delivery and sales operations. Now this allows us to achieve operational efficiency and leverage best practices across the globe. If you move on to the next page, we'll just reinforce messages that have been shared with you throughout the day, that our product offerings are more relevant today than they have ever been to the TMT leaders that we serve and the consumers that they serve in turn. We're working with our existing and new customers to leverage our cloud platform to reduce the time required to purchase and upgrade mobile devices throughout their retail experiences. We do this by enabling them to transfer all that precious digital content into the cloud prior to ever walking into the store and then preserving that content in the cloud thereafter. While COVID-19 accelerated everyone's digital interactions with your favorite brands, whether it was your local restaurant or Walmart, our Advanced Messaging solutions, as Lokdeep shared, are making that experience much richer and more successful statistically. And as explained by Chris, our Smart Buildings solutions have become an important element about how the world will return to work with greater confidence. And any solution that generates revenues in difficult economic times or saves money, like our Financial Analytics or Smart Buildings products, will never run out of style. To the next page. I also have the privilege of working with a world-class team of sales and business development leaders whose careers have been focused on building long-term customer relationships, and they have spanned many technology and software companies. This team is also actively coaching and leading a dedicated sales -- set of professionals who are located close to our customers, in their countries where they transact business. I'll start with Andy who leads our business in the Americas, serving a broad array of customers that are quite diverse, including Andy's former employer, AT&T, where you've seen an increase in our activity and business. Brian has recently joined our direct team in recognition of the significant customer relationships that we have with Verizon, our largest customer; and CCMI, made up of Verizon, AT&T, Sprint and T-Mobile. We have dedicated cross-functional teams supporting both of these strategic accounts, including sales, service, delivery, our marketing team as well as product management, as you would expect for business relationships as large as those. Anthony leads our business in Asia Pacific based in Tokyo. He does so following successful engagements within Synchronoss in the United States and in Europe in similar leadership positions. Anthony oversees our Advanced Messaging relationships with the consortium of operators in Japan and, in parallel, is helping to grow us into other businesses in other countries throughout the Asia Pacific, such as the DXP digital deployments that were referenced earlier in Indonesia, with both Indosat and with Telkom Indonesia. Stefano is the newest member of our sales leadership team. He's based in London and manages our customer relationships across Western Europe and the Middle East. He joins us from Tata Communications and has prior pan-European experience with HP Enterprises. And then finally, Dave plays a global role of leading our engagements with key technology and channel partners as well as leaders in business development, sales realization and our sales operations team. If we move on to the next page. It is Dave's team that are making partnerships a core competency for Synchronoss. We strengthened our platforms through technology partnerships with companies such as Arrow Electronics and Tridium to complement the Smart Buildings products that we offer and with WIT Software and Medialink to enhance our Advanced Messaging solutions. We also expand our market reach by cultivating channel partners with some of the same technology companies, but then a new set of partners such as Assurant, who helps our global reach for cloud, or Amazon and STI, which are expanding our capabilities for digital products. These partnerships help accelerate our delivery of innovation, and they also create complementary channels to drive revenue growth. Finally, these partnerships also influence our marketing efforts, which I'll talk about next. Move on to the next page. Our marketing focus is highlighted sort of in 3 areas. And I'm going to start first by talking about what we do to drive revenue growth with our existing cloud platform customers. This team is led by Ted Woodbery. And Ted's team is focused on the fact that we win when our customers win in the area of cloud by expanding the number of active users who interact with our white-label deployments and by creating greater engagement, as seen in the BT video. This way, we're making our cloud solutions easy to discover and a delightful experience to use. Our addressable market here is quite significant, as mentioned by Olman, with over 300 million end users or subscribers represented by current cloud customers alone, let alone additional opportunities that we're pursuing around the globe. We're creating significant growth with these activities through our base marketing campaigns that drive touchless retail experiences, as previously described, or more traditional efforts such as targeted campaigns that might be focused specifically on direct marketing with bundles, like our cloud solution bundled along with device insurance, for example. On the next page, we'll start moving to the second area of our marketing initiatives, that area of preparing our channel partners. For example, we have conducted extensive Smart Buildings training, as was earlier referenced, for AT&T's business channel, providing them the tools to identify the profile of the ideal customer that matches the capabilities of our Smart Buildings offer. We're also helping to generate leads through our sponsorship and authorship of activities such as hosted podcasts and Smart Buildings white papers and articles. Finally, while much of our engagement with customers is handled one-on-one because of the nature of the relationships with large telecom, media and technology companies, but our marketing contributes by creating a new pipeline of opportunities through targeted campaigns for specific product offerings, cross-selling opportunities to take our platforms to customers that we already have, maybe using only 1 of our portfolio set, and now we're expanding even more digitally to use more webinars, in some cases, in replacement for those traditional trade shows that we used to attend. Plus, we're increasing podcasts and social campaigns to drive awareness and new sales activities. So finally, if you move to the last page, I'll just reiterate some points that were made earlier by Glenn. We're pleased to work in a marketplace with vast opportunities. These are big markets both in the Messaging arena, as outlined by Lokdeep, our cloud business and the emerging opportunities that are just taking place with Smart Buildings. We are in a position to not only have good relationships with a large number of customers, but contracts to back those up. That gives us a great foundation upon which to grow, yet we are still expanding and penetrating into new select markets with new products and new offerings where it makes sense and is the best leverage of our capabilities. And as we've said throughout the process today, our recurring revenue business model is all built for scale over time. And we expect that, that will be a recurring theme. So with that, I'll pause, Joe, to see if there are any new questions or hand it over to Pat Doran, my counterpart.

Yes. We just have one, Jeff. What areas of the business are you currently moving or targeting up market? And in what areas are you targeting down market?

When you call -- Joe, I'm not sure I understand the upmarket, down-market reference, but do you want to -- can you clarify that a little bit? Or effectively, what we're doing in cloud, let me use that as an example, we have a foundation of very large customers right now in the United States. And by virtue of what we've seen and proven as a revenue-producing model for those carrier customers, we are seeing smaller clients, TracFone is a good example, starting to want to implement that as well. So we do believe we will scale to smaller clients not only in the United States but other places around the world, like our relationships with Proximus and SFR. That is in cloud. In the case of Smart Buildings, as Chris indicated, we're focused at the higher end of Smart Buildings solutions and attracting large enterprises, and maybe a subtlety that I'll emphasize that we will do that ourselves on a direct basis as we've done with Rackspace. But beyond that, we're utilizing channel partner relationships like Arrow Electronics and others to expand our reach to other markets. Anything else, Joe?

No, it looks like that's it. We can move to Pat now.

Okay. Great.

Pat.

Thanks, Jeff. Let's go to the next slide. So I wanted to start off today just going over to the technology organization, what it is and how we support the larger team and a lot of the product offerings you saw from Olman, Lokdeep and Chris. So this is a chart of my team and shows the responsibility areas for that team. So starting on the left, the delivery aspect of our different engagements. And Jeff Gill fills that role for us, and he really placed the glue between Jeffrey Miller's organization and my organization, and making sure that we meet our customer commitments and deliver our products and programs on time. Hosting and IT under Sheri. So think of this as your traditional IT functions, your global information security, but also the software hosting and operations for all the different SaaS offerings that Synchronoss brings to bear across cloud and Messaging. Under engineering and core R&D, we have different product development leads for each of the product managers. So you have Chandra, who works very closely in Messaging with Lokdeep, helping deliver the software for advanced and core messaging. Suren working very closely with Olman from cloud. James working closely with Chris and the team on the digital side, the DXP. Barry runs a lot of the common centers of excellence for engineering as well as our platform engineering teams. And then finally, with the largest office and the team being based out of India, Subhash Bana runs that for us out of Bangalore. So the technology team, end of the day, is responsible for delivering our software, hosting it, IT and the R&D associated with all the products and programs we've talked about today. Next slide. All right. So first thing I want to talk about, and we talked about this last year when we met, was our move to the cloud. And this was moving a lot of our expense-hosting operations that we had either on-site or through co-lo, into the public cloud, given on a progress report on where we are and where we're going. Okay. So it's a similar slide to what many of you may have saw last year. What this slide is basically showing is where we have data centers in the top and which ones we've closed in green over the last year, which ones we're in the progress of closing in yellow, and then which ones we're teeing up for 2021. So just to recap, when we met last time, we talked about taking the 24 data centers that we had down to about 16, which is what we accomplished. So closing about 8 data centers over the course of the year and removing all the capital costs associated with maintaining, operating and running those data centers. We also talked about taking a lot of that storage and moving that storage from our prem and into the cloud. So basically, not having to continue to make large capital purchases to store petabytes of data and leverage best-in-class public cloud assets to do that. In 2019 going into '20, we moved -- we went from moving terabytes of data into the public cloud into petabytes of data. So let's go to the next slide, and I can give a little more detail on that. So this slide is meant to show at a very high level the number of data centers we have going down over the years. But the amount of data coming into our systems, from messaging and cloud, going up considerably, and the vast majority of that data, is going to require us to purchase capital, storage, going into public cloud and using the likes of Amazon and Azure and others to help defer -- basically pivot from capital acquisition to operating expense, but also to take advantage of their scale and take advantage of their technology to help drive the overall cost and efficiency of the operation into a much more positive place. So we're making good progress on our move to the cloud, and we'll continue to move on this through '20 and '21. Next slide. All right. So now I want to give the team a little update on what we've been working on from an intellectual property and innovation point of view. Important thing for Synchronoss as many of the programs you saw today requires some pretty advanced technologies to run on. They're pretty different across the board. So let's go down to the next slide. So this is an updated version of where we are with our patent portfolio. And you'll see it's a higher number than we had shown previously. Key takeaways on this is we continue to invest heavily in developing IP internally. And we really focus in different areas that support our products, those being around messaging, around mobile, around synchronization and around IT operations and Saas, right? So you see a lot of patents in here that really focus on our core offerings for how we synchronize content in the cloud, how we move large sets of data from point A to point B and how we make it very efficient to run our solutions. What I do want to give everyone a little feel for is some of the things we've been working on this year and some of the things I'm excited to talk about, so next slide. So here's areas of focus for this year. And really breaking down some of the -- and these are all ideas that we have, basically patent-pending at this point, the team is working on. So that -- we don't want to -- as Olman had said earlier, we can't really discuss our road maps and what new features we're bringing to bear, but I can talk about some of the things that we saw from an IP point of view to give everyone an idea of where we're heading. And one is network optimization. So 5G is a big thing in the industry, and it's a big thing for Synchronoss' strength. And you think about how you're going to move data from your phone into the cloud and how you're going to move it from your desktop or from a camera, an IoT device in your house and what you're going to do there. Well, you're going to have different types of networks. You're going to have maybe a very low-latency 5G connection or you can have a much, much slower, older legacy LTE or CDMA connection. So a lot of work is going in around what can you do to maximize the throughput when you have a bigger pipe and what can you do to take advantage of that pipe in real-time, especially if you [ trespass ] networks back and forth. So a series of patents and work efforts around optimizing the speed and then really how you chunk the data up such that you can get that data into the cloud in an efficient way. Next around, we talked a lot about AI in image tagging and using computational vision and machine learning to be able to curate your photo collection or your video collection. And that's kind of table stakes now in a lot of applications that you can do plain text search. But there's a lot more you can do there, and there's a lot more we're excited to be working on. And 2 of the areas in particular are -- that we're looking at is, when you take a picture, you can have a tag for things like car or beach or sand or night or skyscraper, but those algorithms typically tag what they see. And sometimes what they tag, it's not of which interest of you. Typically the small things may be not of interest, but things that are in focus or that are big are of interest, so that when you search for dog or you search for a car, you don't want the random picture when you have the small dog in the background. You want the one where it's front and center, right? So basically using depth and scale information to enhance photo tagging to be able to more accurately hand back search results there. Another exciting one is using the topography at an image, basically looking at the skyline or looking at where the horizon of that photo to be able to infer location in lat and long because many of the photos that you may have or you may have access to could have the geolocation information strip for them. So patents and processes to be able to just take those photos, look at that image topography and be able to do an approximate geolocation of that to enrich the tagging and the searching and the curation of those photos. So these are all patents that we are having in the cloud space right now, new for this year. On the Messaging side, Lokdeep talked a little bit about how multichannel messaging is important, right? You want to be able to deliver commercial payloads to RCS but to other channels as well. Some of those channels may not be as rich as RCS, some may be richer, right? So how do you make sure that, that message can effectively be delivered to those different channels, but delivered in such a way that has the highest fidelity that, that channel supports. So a lot of effort in IP going into that area. And then on the IT space, one exciting thing the team is working on is a lot of these devices are not going to have full screens, and they're not going to have the rich interface that you expect on a smartphone. But you're going to be able to interact with them in some way to get some things done. So how can you use audio input to basically mimic haptics. So haptics being when you touch your phone, something happens, using things like the microphone or gyro sensor or other to kind of simulate those haptics to be able to interact with those IoT devices. These are all things that we work on from technology level and that we're filing for from an IP point of view, and look forward to bringing some of these ideas into our products in the near future. Next. All right. So then I wanted to touch on the agile transformation. And this is something that we talked about in the last investor meeting which was, if you wound the clock back a couple of years, Synchronoss was operating in a very siloed fashion across its different products and programs. And we had grown rapidly through acquisition, and that resulted, in many ways, having many different processes and many different technology stacks across the board. So what we wanted to do is begin to look at how we could optimize the SDLC for the company and have one way of bringing software and products and programs to market. Next slide. So we started to scale agile transformation. I described at the beginning of some of it last year. And a couple of things with this year, 2020 has been an interesting year and one has obviously been remote working and the impacts of corona and what that means. So we had started a program where we took a really hard look at where we had our teams and how we can co-locate them. Well, the reality is, given the new normal that we're all seeing, that's just not so possible, right? So we had to pivot on that really and really look at how can we enable remote work for everyone. How to -- specifically for me, selfishly, how can I make sure the engineering and the IT and the delivery teams have what they need in order to be able to accomplish their missions. So we very rapidly moved to that full remote delivery. And we did that in a couple of ways. One is by adopting several new tools that allowed the teams to work effectively remotely. So tools like Aha! as an example, right, tools like Microsoft Teams that enabled the teams to stay in touch, and also to make sure that the intent of a requirement can be made very clear to an engineer in the other side of the world operating in a very different time zone. Things like remote whiteboards and also a number of tools that we're exploring right now around basically being able to monitor remotely the productivity of the teams and understanding any roadblocks or any hiccups in the development life cycle in an automated fashion. Because when you don't have that face-to-face interaction and you don't have the ability to walk down to your teammate, having more tools and processes in place become that much more important to us. So strong pivot on the tools and the process side as it relates to COVID. And also, that kind of helped us though when we looked at how we were going to adopt one model to deliver across the company because we're going to centralize that tool stack. So the team has been very aggressively moving toward -- moving to what we're calling the scale of the agile model or SAFe. And that involves having a certain cadence of different processes and of different ceremonies as you bring your software to market, including things like quarterly planning sessions, PI planning and getting the entire team together on a regular basis to decide what is going to be in the next release and the release after that. Obviously, doing that remote, being together in Zoom, being together in Teams, but still doing that. And then on the technology stack, I showed this picture last year where we had a lot of different software running a lot of different programs. We've made big strides. And we've heard some of these names today in slides that only incur some low people churn, where we began to basically take a lot of our technology and move it into common platforms that can be leveraged across the board. So you heard both -- as Chris and Olman referenced SIP, which is our insights platform which is a common piece of software that runs through all of our products to drive analytics and to apply forecasting and a lot of what you saw on the IoT side around data visualization, ID3 as it relates to identification and access control and then the DXP product, it's actually being used across the board and within our company so that when we want to integrate a cloud customer, we can very rapidly do it using the same technology we bring to market for our customers. Next slide. Right. This is a quick kind of scorecard on where we are versus what we said we were going to do with this rollout to make sure that kind of trending in the direction that we set and that we're going to end up in that more efficient single model for Synchronoss. We started this in '19 with some pilots and some workshops. At the end of -- as we roll into 2020 through the end of '19, we got about 30% of the team adopting a common framework. Through this year and through early '21, we're going to continue that rollout basically to about 70% of the team, right, going through many of the products that have yet to transition over, and you see some of them listed there, with our goal basically of being certified and having this wrapped up by the second half of '21. So we're making good progress on this. And this is actually one area where I'd say having people work remote has played a little bit more to our advantage than against us. All right. Next slide. Okay. So now I'm going to transition a little bit over into delivery and things that we have delivered both in '19 and where we're going to be focusing in 2020. So first, I did want to do a little bit of a victory lap for last year. And some of the -- and these are meant in no way to be an exhaustive list, but this is some of the large items that the team delivered last year. And you've heard about many of these already in the product sessions, but I want to provide a little more color and detail on these. Lokdeep talked a lot about message plus (sic) [ +Message ] in Japan and scaling that to over 15 million users at this point. This is a huge effort across 3 carriers. Many, many different time zones to get this out. We're very excited about this and by the fact that there's a lot more scaling and work to be done here, but also the transition to A2P and moving from that person-to-person messaging to that commercial and monetization that we are going to be moving very rapidly with in 2020. Glenn spoke a little bit earlier about when people think of cloud, they think of our -- the white-label cloud. But cloud is actually other things. It's our OOBE offering. It's our setup-and-transfer offering, and one large body of work was integrating that with the insurance offering at AT&T last year. That helped scale the offering. It puts us on a great trajectory for additional OOBE work with AT&T in 2020 and beyond. Last year, we talked about we were going to start looking at onboarding Assurant and TracFone. They're both on the platform right now, basically proving out the white-label cloud and its ability to deploy across multiple customers, taking advantage of us and taking what was a somewhat specific solution for Verizon, productizing it and making it available across the board to many customers. On DXP, as Chris had mentioned, we got that first rollout for Waoo on Fuse, and it's now deployed there and other carriers are coming on board. So a real proof point for that technology to how quickly we can onboard carrier solutions using that technology stack. And finally, on the IoT side, we deployed that offering at Rackspace along with our Financial Analytics platform. So real wins there with a partner of ours in kind of blazing the trail for our IoT offer. Next slide. On 2020, when I look at what's in front of us and what we have to get done, again, this is big, big blocks from the person who's got to worry about delivering the software and making sure it works for our customers. Obviously, CCMI had a huge time, right? 2020 is the year that they intend to bring that to market. And we're supporting that effort soup to nuts, whether it be on the server side, on the client side, carrier integration, all and everything that's there. So getting that ready to roll, getting the testing done and getting that out the door and getting it on the phones. It's a huge effort for the team and something that's all hands on deck. Next one equally important for us is scaling that AT&T cloud offering. We got them on board. Now we want to begin to scale the availability of the client on handsets and scale the data into our data centers. Huge initiative for us. A lot of great things that Olman has in the pipeline to make that happen and a lot of work with them to basically get the numbers where we want to see them in 2020. We're going to make sure we integrate our cloud and our Messaging platforms so that when you want to do things like send a large e-mail attachment for customers that have both, you can link that to your cloud platform. You can send jumbo attachments. You can have shared quotas, common identity, things of that nature, so really making the products more synergistic, sharing more technology among them, but also making them more invaluable when you have a one plus one versus having one with some. Obviously, Verizon being our largest customer, we have a lot of great things that we're doing with them and continue to expand the cloud at Verizon and delivering a robust road map. They have many exciting things that we're doing with them, always a key thing. And then finally, as I look at from a -- putting my EBITDA and cost hat on, a lot of that going on. We had a lot of work early on in making cloud more efficient and making it -- its total cost to serve better for our customers. We're going to be tackling Messaging in a bigger way this year to do the same, to allow us consolidating some of those platforms and improving margin on that platform. All right. While we talk about delivery, you really can't talk about delivery unless you talk about information security in this day and age. Everything that we do has to be on top of a framework and a foundation of solid information security. It's a given in our market. When we store things like your personal photos, you store things like your e-mail, your messages, right, that security has to be paramount in everything that we do. And we've done a number of things to improve our security posture that I wanted to share both from a corporate point of view and with different products. From a corporate point of view, we've taken on security budget that which we invest in what we call GIS or goal information security, and year-over-year proactively increased that while holding the IoT budget -- sorry, the IT budget flat. So we're putting more and more time, effort and energy into securing our products and our solutions while maybe not staying in probably the latest and greatest laptops to all of our employees, but it's money well spent there. And all you have to do is think about recent headlines for Zoom as an example, and issues that have happened there around their product security, right? Around what does it mean to have encryption? When is encryption appropriate? So we look at where we're investing in our global information security. It's really in these 4 areas, right? So product security, Zoom is a perfect example of what you don't want to have happen, right? And we're putting a lot of effort and energy with Chris' team around looking at the product road maps and the products as they are today to make sure that they're secure today and that the features that we're developing would keep them that way. Data privacy. We have GDPR in the rearview mirror, but CCPA is just about to go out, right? Critical thing for us from our -- to enable Jeff's team to sell our products, but also for me to be able to sleep comfortably at night knowing that the data that we store for our customers is secure. Governance and risk compliance, think of this as your PCI compliance. I think of this as basically your SOC 2 compliance and things of that nature. We've really upped the game here, right, where we've basically begun to have certifications to attest to the level of compliance of our different programs to make it easier to sell them and to make the sales cycle shorter. It's one of the longest things often is in any sales cycle is that security conversation. We're doing everything we can to kind of make that faster and easier, right? Next slide. So anything that you're looking to improve, you need to be able to measure in some meaningful way. But how do you know you've made it better? So we adopted a model, it was a Forrester model, right? And this model basically allows you to look at your security posture across 4 silos: silos of oversight, technology, process and people. And you can self-score and then you can obviously be externally validated with that. And we use this to set objectives for ourselves and say we are here, we want to go here today. And tomorrow, we need to be here. And then we can use that to drive both internal process improvements and improvements in our products as well. We started this journey adopting this metric in late '18, early '19. And where we were on that spectrum was in what we considered it ad hoc area, right? We've progressed now so that we're in a managed state. It's a much healthier place to be. And we're going to continue to move up that framework for a higher and higher score. And we will actually use this over time, once we -- when we go beyond self-certifying and we are externally certified, as a selling point for our programs and for our hosting solutions. Next slide. All right. So I want to wrap this up with an updated version of what I had showed last year at the investor program -- at the investor event, sorry. On the right-hand side were the goals we have laid out for our 3-year program across -- with this transformation that we were doing in the technology organization, right? With all the different initiatives that we had across IT, delivery, engineering and even some cross-functional ones between the human resource or GPS and finance. And that -- we basically put down the goal that we were going to do a lot of work to improve our efficiency, make some investments but be able to see those on the other side. To support that this year, there's a number of things going on, right? We're going to continue on the data center optimization that we talked about, specifically closing some of the more expensive European data centers that we had. Those are getting shut down. That will result in significant savings. We did a lot of work around span of control. Span of control basically being how much management do you have to how many workers do you have and what does that structure look like, looking at our third-party spend and how we can optimize that, and then around commercial software reduction and programs around that. So these are all different programs that are running in 2020 with different leadership teams driving basically the end result on each of these. So in summary, a lot of great work the team has done to deliver for our customers and a lot of work that's going on to make us more efficient. We've been marching toward the goals that we set last year, and we're making decent progress against those while meeting the needs of the business. All right. That's it.

Thanks, Pat. [Operator Instructions] Mike Latimore has posted a question on an earlier topic, on IoT, asking what has been the main value or ROI that Rackspace has seen so far?

Joe, I'd be happy to answer that one. Mike, so we're seeing mid- to high teens in terms of multi-energy spend savings. In addition, we're still assessing the savings we have generated from the Tecan outage that they would have had no visibility to for multiple days that they did based on our system. So we'll be adding that to the ROI. But they're very pleased with what we are generating with energy spend savings alone.

And then, Mike, your other question on revenue contribution going forward from the 4 product lines, I think we'll cover that after David's finance section as we might be able to better answer it there with that info as a backdrop. All right. I'm not seeing any other questions for Pat, so we can segue into David Clark, our CFO.

Okay. Thanks, Joe. It's not really in finance type's nature to brag a lot, but I did notice my colleagues all had discussions with their team. So since we're running slightly ahead. I'm going to take a minute and just mention that for folks who work for me, Joe, many of you know, I've had the pleasure of collaborating with him on IR for over a decade, does a great job. Josh Shaver is our Controller. You may have noticed that our material weakness was fully remediated in 2019, something we're very proud of. Josh deserves all the credit there. Matthias Norweg is our Treasurer, also Senior VP of Development. He does a great job managing our liquidity, accessing the Citizens line and things of that sort. And then Lou Ferraro is our SVP of Financial Operations. When I talk about the expense savings we've achieved and continue to achieve, Lou is really at the forefront of that and deserves a lot of credit. So again, not in our nature to brag, but I thought I'd take the opportunity. Anyway, let's jump to the next slide. So you heard a lot about how we're driving revenue. Synchronoss is also an expense-reduction story. We have continually targeted expense reductions. You'll see demonstrated about $85 million of expense reductions a little later in my slides. And really, 2020 is no exception. We started with an intent of going after $15 million reductions. With the onset of the COVID crisis, we are now targeting a $45 million in-year expense savings. And in response to the COVID crisis, we stress tested our business, and we really wanted to see if we could deliver our original EBITDA targets. We came out with the conclusion that we could hit our expectations if we did get ahead of the expense curve and also position us well going in 2021, especially as we think about the refinancing the PIK preferred, which I'll talk about a little bit later. We did withdraw our revenue guidance, but that's really a function of the fact that many of our large clients did just the same thing. But again, we stress tested our business down to some fairly low levels and released guidance that was unchanged for EBITDA when we announced on May 9. We enjoy a strong cash and liquidity position. We ended the quarter -- first quarter with $31 million in cash on May 9, when we announced a $41 million of liquidity available to the company. So let's move to the next slide, which is Slide 93. So if you're following along, just on the download. You can see our GAAP revenue, we did have the STI write-down in year, and this is fully reflected in the $308,000 number. Without that, we would have been up slightly about 3% for the year. On our adjusted gross profit, we are continuing to transition, that Pat mentioned, to the cloud, reducing our data centers. That not only drives lower expenses but also lower CapEx, which we're seeing. And then you can see an 84-basis-point improvement in adjusted gross margin, almost 100% improvement in adjusted EBITDA and similar-sized improvements in both our better GAAP net loss or reduced GAAP net loss and better non-GAAP net loss attributable to Synchronoss. So on Slide 94, our revenue in the first quarter was down. Obviously, we're not recording revenue at the same level as we were for STI. We also had a product sunset in 2019. But through cost optimization, we were able to bring down our expenses 13%. And our adjusted EBITDA was down, but we had a very large license payment we recognized in Q1 of 2019, as we announced in -- both in the first quarter 2019 and also fourth quarter 2019. In Q1 2020, that did not repeat. But again, we have -- when we announced back in May, we did reaffirm our EBITDA guidance of $25 million to $35 million. So next slide. So overall, you can see across almost all expense categories, the 2-year trend is down substantially with our total cost and expenses coming down from almost $0.5 billion to less -- well less than $400 million expected in 2020. And that's across all categories. People don't generally focus on depreciation and amortization, but that decline manifests itself in obviously lower CapEx over time as well. So this is the $84 million 2-year decrease I mentioned at the outset of my section. So if we can move on, digging in a little bit deeper on some of the cost actions we're taking in 2020. We really went around -- went after operational rightsizing. By that, I mean, we really eliminated a management layer at almost across the board in every part of our business. We announced some salary reductions for the senior management team in response to COVID. And you can see some of the other actions we've taken. Obviously, our travel was down dramatically. We continue to focus on facilities reductions, and the hosting savings also continue to be a meaningful contributor. And the in-year impact we are targeting is $45 million, and hope to see that manifest itself in the second half of the year. Cash and liquidity. I mentioned this at the outset. As of quarter end, we were about $31 million. As of the time we announced, we were about $41 million. We have the trade receivables facility done through Citibank, backed by our receivables from AT&T and Verizon, and that provides us with additional liquidity over and above of our cash balances. To the next slide. So one important thing to take away from this slide is, Glenn mentioned, I used the term lumpiness. We -- even though we've been moving increasingly to a SaaS model, there will be quarters, especially in Messaging, where revenue will take the form of a license payment, and that's going to cause some lumpiness. But overall, if you look at the right-hand corner chart, you can see the improvement, a dramatic improvement in our run rate EBITDA. Our adjusted EBITDA almost doubling year-over-year for 2019. So we tend not to get too hung up on quarterly swings in EBITDA, but more focused on a yearly target, and that's what's behind our target of $25 million to $35 million that we guided on May 9. Lastly, our biggest financial objective, and I'll get into this a little bit in just a moment, is to retire this preferred stock instrument if there's a very high coupon, also is convertible at $18 a share. We have the option, and I repeat, the option to prepay this without penalty starting in August of this year. It is a very high priority for us, but we will do it when we think the time is absolutely right. Sooner is better than later, we certainly can see that, but also want to make sure we replace it with capital we consider more or less permanent. And so as I said, refinancing the pipe is a top financial priority for us, and we are actively evaluating financing alternatives and consider it to be -- to really consider it essential to be in a position to move very quickly if markets come our way and create a recently priced capital structure. And in that connection, we are -- we believe, filing a universal shelf to allow us to quickly access public markets in any form would be prudent. That would not mean a financing is imminent, but that we are simply positioning ourselves to be able to move quickly in the future. And any feedback is appreciated on that intent. And with that, Joe, we move to questions.

Yes. David, if I can jump in on one thing. I think it's really important -- as David walked through that, and many of you will dissect David's section as you do very, very well -- that all the trends are positive. We're seeing trends, whether it be in cost savings. Obviously, the COVID environment we're in will have some impact on our revenue. As David said, we stress tested that very low when we made our decisions about our cost savings in-year and did -- don't want people to miss. That, that is a $55 million set of cost savings as we head into 2021. And the majority of those, really about $50 million of those, obviously, will head into '21, a little more than $50 million. So we looked at making these decisions around COVID. We didn't just look at them short term, we look at them long term. We look at where we want to go. So we believe strongly in our cost structure today. The team has done a great job executing cost savings while keeping the business functioning and running very well, which was that $85 million David showed you. We will do that again for the rest of this year, which really puts us in a position headed into '21 to continue those trends and with a very strong hope that COVID is much more behind us as we head into '21 and we can get to where we started this year, which was double-digit kind of revenue growth. We're hoping that that's what we're talking about as we head into '21. So really, really important that you catch those key points that David made. And again, the execution around these things in the last few years has been very, very strong. Joe?

Thanks, Glenn. So this is the open Q&A section of our program, and we're about an hour ahead of time. So we have plenty of time to answer your questions. So go ahead and post those up in the Q&A section. And we'll start with Mike Latimore's earlier question I said we'd come back to in finance. Of the 4 business segments, which one should be the biggest revenue driver over the next year? And what are the main variables that would produce the upper or lower end of guidance? Is it more an expense or revenue timing issue?

Let me start. I would say, look, right now, as you all know, the cloud business being 50-plus percent of our business and us having 3 brand-new cloud customers as well as you saw the discussion that we had around the marketing efforts that Jeff went through that we are taking with our customers. The cloud business expectation is a growth business. A couple of examples. When you have a base as big as Verizon's, for example, most of that has been gained by using OOBE, the out-of-box experience on gross adds and on upgrades. We are working with Verizon for the first time and actually marketing cloud to their base. We obviously have the growth that we expect out of AT&T and the growth at TracFone and the growth out of Assurant. So I would fully expect that cloud continues to deliver for us as a big growth engine. At the same time, you heard from Lokdeep about what's going on in Messaging, what we're seeing happen in Japan as they move into the A2P phase. And we're also obviously anticipating the launch of CCMI and the work that those now 3 carriers will do around that as a JV and working together. So we expect growth there as well. And then you talked about digital, Chris did a great job. I think we've laid out that in the world, the new world, the new normal is going to be a digital world. And we have assets and wonderful software to help in that world. And we expect growth there. And then IoT being nascent today and really one of our start-ups, but we all know that for every one of us that's on this call that's not in the building, when we do go to that building, we're going to want to know and ensure, and whether you're an employer or an employee, that, that building is healthy. So we see opportunity in all 4 platforms and look forward to showing you that as we move forward.

Okay. So one of the other questions, we've got a bunch in the queue now. This is from Sterling Auty. Is there a point where you feel the operations and financials normalize? Yes, we'll see variability in Messaging revenue, et cetera, but in terms of the other lumpier impacts?

David?

Yes, I could take a shot at that. I mean the Advanced Messaging deals have a license aspect to them as they grow, so there will -- yes, you're right, within Messaging, there should continue to be some quarters where we'll see a jump due to growth. But in terms of the other businesses, the new cloud deals, et cetera, they are much more traditional subscriber base. So I think as they become a larger component of our overall business, you would see some smoothing out, if you will, I guess, in latter 2021 once the additional cloud customers launch.

Okay. A question on financing options, what are the alternative financing options that the company can consider given any potential covenants?

There really aren't any covenants preventing us from doing a refinancing. Once the preferred is paid off, it's paid off. Covenants go away. So obviously, we're looking at a total solution as our preferred method here and to take out the preferred in its entirety. So there wouldn't be any covenant implications. Obviously, if we do a bank deal, which would be our preferred option, at least part of it, those would contain traditional bank covenants, but that would be in future instrument.

So David, just to clarify, because this is a question we get often, if we lined up financing to take out Siris there's no covenants that prevent us from accessing that financing and paying?

No. No.

Exactly. Yes. The instrument goes away. And so any covenants in the instrument currently go away as well.

Yes. And Joe, one more clarification on that. I think there, as we always get questions around the date that we can take out that without penalty, which is this year in August. It's really important to note that, that is our option, right? To utilize that and look at refinancing or whatever we plan to do. We absolutely don't have to do anything with that until, keep me honest, David, I believe, it's by 2024, right? We have -- it's our optionality. There's nothing that's going to force us to have to do something. And the key for you all to understand is any activity we take on will be the right activity for our shareholder, right? We're going to look for the markets, are a little crazy right now with everything going on. We obviously feel good about our ability to deliver in this environment. And we think '21, obviously, will improve even more, which should give us more optionality as to how and the most efficient way to do that.

Okay. From Mike Lati (sic) [ Mike Latimore ], given the trends across some business lines with some lumpy and others starting to improve and with smartphone sales picking up and expected to improve later in the year, how should investors think about the slope of the year for revenue? Is June the trough?

So yes, I mean, I think we are expecting substantial improvement in our numbers in EBITDA in the second half. And obviously, that would be tied both to the success of the cost-reduction efforts, but also some expectation about revenue ramping as well. The cloud launches will help determine to drive that.

Yes. And I would throw out one more thing. Just as you're hearing in most discussions from most companies is what we don't know, we don't know, right? We were looking at potentially concerns around second waves and all those things. I think David said very, very well. We pressure tested this very, very low and still feel confident in delivering our EBITDA, and that obviously hasn't changed. . Obviously, improvements in the second half of the year, improvements in the environment would be very helpful. And I hope your comments around smartphones being sold accelerating, carriers becoming more comfortable opening stores up, carriers looking for folks like us to help them with their digital experience will absolutely drive that. That would be a win-win for us.

Okay. A question from Sterling Auty. Are all the headcount needed changes done? And would you expect hiring from here versus cuts?

Yes. So all of the job actions were taken in this quarter. And there -- obviously, there's some transition period going on. So from here, in terms of job actions, it would be mostly hiring going forward.

Yes. And I'll add -- I call it rightsizing. It's around where we're making our investments, the things that change. And a great question earlier about where we're going to develop, Pat walked through the flexibility he has in his agile organization. We're going to do -- that's where the hiring will be, right? We'll be moving from one to the other. The other thing that Pat's team has done a great job of is as we make decisions around investing in certain areas, and we are. We have some very, very good resources, we can move inside the organization. But you will start to see us out there looking for very specific skill sets to be able to deliver for our customers.

From Jeffrey Bernstein, what is Synchronoss doing in terms of helping measure and publish ESG data? Are we helping customers with this? ESG being environmental, social, governance.

Is that question focused around our IoT platform?

That's how I would interpret it.

Joe, I can take that one. We're delivering that as part of our Smart Buildings solution to clients. I mean this is something that they're looking for and a critical piece that's a part of corporate initiatives that we need to report out on, on the savings that we're generating for clients and reducing their environmental footprint.

Yes. I would also add, as Chris went through earlier, the beauty of our platform and our Smart Buildings platform is its flexibility. And the fact that we can, at speed, bring and add what customers want. Remember, we have a platform that's a white-label platform. We also have the ability to customize that platform based on what that customer is looking for. And Chris, you can talk about the different, basically, templates, you set up, whether that is the CFO wanting to look at a group of buildings or that is a building manager who want to look at one building.

That's correct, Glenn. So within the platform, the portal itself, we allow -- we can do this for our client or our client can do themselves the ability to configure various dashboards based on roles. So certainly, from the CFO perspective, much more financially driven at a higher level versus the building manager that may want to get into literally the nuts and bolts and look at air handlers, chillers and all of that good stuff. So -- but that is completely configurable within the portal that we provide for clients.

And Glenn, just one thing I would add to an ESG point of view that we don't talk -- I didn't hit specifically. But as we close our colos and our data centers and moved to the public cloud, typically the likes of Amazon, Azure and others have a considerably lighter environmental footprint than what we would have been running from a legacy point of view. So you get an inherent industry benefit there as well with that migration.

Thanks, Pat. From Mike Walkley. With the cost savings accelerating in Q2, should adjusted EBITDA double in second half versus first half to reach the $25 million to $35 million range?

Yes. I mean that's the way the math would work that the -- you'd see a substantial step-up to hit the numbers, see a substantial step-up in the second half of the year, which has been kind of the flow of our business in the past as well.

From Mike Latimore. Pat talked about messaging and cloud combo. Can you elaborate more on that? And what's the status of relevant phone releases for AT&T cloud?

Okay. Joe, I can take the first part, and then Olman can cover the latter one. Yes, Mike. So I would say there are 3 main categories of synergies between cloud and messaging. The first one is from a messaging point of view, which Pat spoke about, so any large attachments or any user-generated content that is shared via messaging can now be stored in cloud. So that is something that we are developing and delivering this year. Then there's a reverse of that, which is essentially, if you think of cloud as the content or content storage for all user-generated content, messaging becomes a way to share that. And so basically, that helps drive the adoption of cloud. That's on the road map. The third part, I would say, is like just like we speak about all applications being available within messaging, so all functionality on Bank of America being available within messaging. Similarly, the third part is going to be making the cloud app functionality available within messaging to the extent possible. So those are the 3 areas. And Olman, if you want to you cover...

Yes, yes. And then second part with relevant phone launches, obviously, we can't share the types of phones and the dates on -- for AT&T's releases, but there are strong plans to be launching with cloud on their key devices, for sure.

Thank you. From Jon Hickman. Have we gotten an opinion from the Siris Board members regarding refinancing the preferred? Have they expressed any opinion?

Look, I think we talk with our Siris Board members all the time. They're -- as we've said, they're very good partners and very well aware of -- because we've been very public that that's an expensive piece of paper that -- for the business, we do need to refinance. That's really all I can say on that. Obviously, they're involved with every aspect of the business and are well aware of our plans.

I mean I've observed that the -- upon the refinancing, they get to basically print a 14.5% annual return, which in this environment is a good return for a private equity player. So I would think they'd be happy is my guess.

Yes. I would agree, David. One other thing, David. I saw a couple of notes here, this -- that are around liquidity, cash. I think there is some -- maybe you can clarify that, obviously, quarter-to-quarter, we have movement in that for different reasons. It depends on billings, our AR. Can you give a little high level around that as we obviously ended with the $31 million and the $41 million in overall liquidity and what you see?

Yes. I mean, because of changes in working capital, our quarterly numbers can move quite a bit. Overall, the simplest way to think about it is that we -- let's just take the middle of the EBITDA range of $30 million. Our fixed outlay, which would be CapEx plus software capitalization, is about $20 million. We're not a taxpayer. In fact, we are expecting a tax refund this year as a result of the new legislation. But let's just keep that at 0. You get a simple -- very simplified free cash flow number, about $10 million, but quarterly swings in working capital can also sway that.

Yes. And I think it's important to note, as we think about going forward, you think about the new cost structure, you think about post-COVID ability to grow our revenue, we absolutely believe that we will be a free cash flow company. And that is really critical when you start talking about refinancing and preferred, as we are, we start talking about EBITDA growth into '21. And being free cash flow positive puts us in a nice position to have those options that we're talking about.

Question from Mike Walkley. Would you consider selling some legacy businesses as a potential source of financing, such as messaging outside of RCS or legacy digital offerings?

I'll start, and David, you can jump in. Look, I think we have a fiduciary responsibility to listen to anything that comes our way, and we do. As we've said, we believe very strongly in our 4 platforms. We believe strongly in the growth and profitability of those platforms and also where they fit post-COVID in the world and with our customers. Of course, we're going to have conversations, and we're going to look at anything that comes our way because the key and our goal and our role is to maximize shareholder value, and that's exactly what we would do. David, anything you want to add to that?

No. I think we're -- look, we're actively talking to the intermediaries out there for -- across a lot of different solutions, and so that would be one consideration.

Absolutely.

Okay. From [ Drew Glaser ]. Could you provide a little more color on the AT&T delays you're seeing, especially in Asia? And what do you expect from AT&T in 2020?

Yes. So I don't want to misstate. It wasn't just like the supply chain delay, right? It was the priority shifting as well from a COVID perspective. Our model was aggressive, right? It was more aggressive than what was possible with the pandemic. And I don't think I can speak to the platform sales for AT&T., I think it's -- we don't share customer-level detail at that granular level.

I would add, as Olman said, AT&T is fully committed. We have said in our earnings when we last spoke with everybody, that we did expect some things to push. The good news is, as we've seen, most everything stay on schedule. Some things have pushed, like we said, and the best part of this is nothing has been canceled. So we are still moving along at a nice pace. I also think some of the big concerns early on around devices and those things, most of those right now, unless there's a second wave or something that happens that we don't know about, have been alleviated.

Okay. [ Juan ] -- I think this is [ Juan Solis ], who we talk to pretty regularly. Can you touch upon the tax refund and how this should be looked at, for example, as a $9 million-or-so cash infusion?

Yes. We are expecting a $9 million net refund from the IRS. That will be a $9 million cash infusion. We are told it is in process. Like anything coming out of the IRS, obviously, pretty -- a lot easier once it's here, but we are being told that is in process.

From Jon Hickman, I may have missed this, but are there any particularly important hardware partners on the IoT side.

Chris?

Sure. We are hardware or sensor-agnostic. We are working with some partners in terms of specific verticalized solutions, Conectric being one of them. We are more standardizing around the platform and services, or SI partners, as we mentioned, our relationship with Arrow. We'll have another one where we'll be mentioning to support some additional global deployments and then Accruent being another critical software platform partner.

Yes. For us, I'd just add. For us to scale, as Chris said, we want to be the software player, and we want to be able to integrate with hardware quickly and do what our customers would like us to do. I think Chris spoke very well around this health and wellness side of this. There will be integration with hardware, right? There is actual hardware and sensors that will come in that can detect pathogens and other things. Those are things that we want to be able to integrate quickly with and be able to bring solutions quickly to our customers.

While we're on the topic of IoT, we'll stick there. Mike Walkley is asking. For your IoT refrigerated pipeline, who do you compete with for those deals? And are they targeted at certain verticals such as health care, restaurants, grocery stores, et cetera?

So Mike, we have been -- we compete with the likes of the Siemens or the Honeywells that have verticalized solutions. But as Glenn has stated, where we're finding our value is providing additional analytics on top of what's provided today as well as giving a more holistic view for a given building. We are focused on high-value refrigeration. So as you think about pharmaceuticals, you think about grocery stores and refrigeration cases where spoilage is driving significant cost business for outages, so that's why we have our focus in terms of refrigeration.

Okay. The next couple are financial questions, all from anonymous attendees. David, anything you can share on the expected working capital deferred revenue movement for the rest of the year?

Again, that's going to swing quarter-to-quarter. We are working through our deferred revenue from the original Verizon Cloud deal that should run off mostly in this year. So that should come down going forward.

And then on the STI sale. Can Synchronoss sell the $9 million note, if needed, to generate liquidity. And what's the metric that will determine the ending contingent consideration?

I don't know about the legality of selling the note but certainly probably isn't a market out there for this type of note. It's simply a private note between 2 parties. The contingent consideration is based on their EBITDA performance. And as you heard, these guys are very well positioned to see a dramatic improvement in their business. So that could be a nice win for us in the future.

Yes. I'll add to this. First of all, I mean, David's right on whether it's viable or not. At this point, we don't -- it's not something we need, so we're in a good place there on the $9 million. I think it's also important, as Chris went through what the new owners bring to the table, we are also engaged very closely. The new CEO, Alex, is somebody that I've known for many, many years. We obviously took a hit based upon the former STI and how they've performed in '19, and our expectation is that this is just digital upside for us. Important, the question we get all the time, STI utilizes our platforms and our IP to deliver those services. As they grow, we grow. And as we had them as pretty much a negative in most of '18 and '19, we believe the rest of '20 and '21, they're going to be a positive. And Richard and team will do a very nice job of growing that.

David, another finance question. Could you bridge the EBITDA guidance to an approximate range for free cash flow? And in particular, how do you expect working capital to impact cash flow for the balance of the year?

Again, working capital can swing quarter-to-quarter. So what I laid out earlier, the simplified definition was really the annualized definition that evidenced about a $10 million cash generation on a run rate basis.

And then our last question, are you finding alternative debt credit facilities available to help take out the preferred?

The availability is out there. I'd like to think that if we continue to progress in the way we're expecting for the year, that will have even better availability. But we're going to -- we're in active dialogue with banks and investment banks, alike, to try to determine what the best alternatives are available. So...

All right. Looks like that's it for the questions in the queue. So we're about an hour and 15 minutes ahead of time. Glenn, do you want to make some closing comments?

Yes. I mean, first of all, I thank everybody again for joining us. Obviously, most of us are living our lives on some form of Zoom or other video, and these obviously are difficult to do and long to keep people focused. We've had a huge group on here the whole time, and I appreciate you sticking with us and listening and understanding where we are. I will reiterate the teams that have spoken to you today and the team that's behind the team that's spoken to you today is fantastic. These are interesting times to execute in these kinds of environment, and I think we are doing a very nice job of that. At the same time, we really tried today to dig a little deeper on each of the 4 platforms. You got a feel for how those are faring today and how they will in the future. I think we talked about the trends and where the world is going and how we structured ourselves to be even more efficient in those trends. I think Jeff did a very nice job talking about his new organization and how that's going to speed up our ability to execute all the way from the sale to, obviously, Jeff and Pat working together to delivery and making sure the marketing element is also very well connected to that. So overall, I hope this helped. I know we're going to be talking to many of you, and we do regularly. And I also look forward to being able to discuss our results for Q2 when we announce those dates and times to do so. But even in this environment, this team is confident in what we have in front of us, confident in our ability to execute around it. And like I said, I believe we can come out the backside of this an even stronger company, a more profitable company, headed to growth and getting back, hopefully, COVID behind all of us in 2021. So thank you again. I'd ask everybody to be safe as we work through this, and hope to talk to you all soon.