Slide 1: Q4 2023 Investor Presentation
Q4 2023 Laurinda Pang, CEO I N V ES T O R P R ES ENT A T I O N Roshan Saldanha, CFO F EBR U A R Y 1 5, 2024 Thomas Heath, Chief Strategy Officer
Slide 2: Pioneering the way the world communicates
150,000+ 700bn+ 60+ Scalable cloud communications business interactions countries with platform for messaging, voice, customers per year local presence email and video Pioneering the way the world communicates SEK 28.7bn SEK 9.5bn SEK 3.6bn net sales in the gross profit in the Adj. EBITDA in the pas
Slide 3: Fourth quarter highlights
Fourth quarter highlights 01 02 03 Stable margins Robust cash flow Growth acceleration plan • Gross margin at 33.5%, stable • Operating cash flow of SEK 727 • Launched Growth Acceleration Plan compared to Q3 2023 and up 0.7pp million in Q4 with launch of new organization from Q4 2022 from 1 January
Slide 4: A new global messaging standard
A new global messaging standard Smartphone OS market shares by country* • Rich Communications Services 100% (RCS) is feature-rich messaging protocol designed to succeed SMS 41% 43% • Users experience RCS in the 75% 47% 64% same app where they read SMS today 81% 50% 95% • A global GSMA standard 58% 5
Slide 5: RCS adds valuable new features
RCS adds valuable new features Verified sender Significantly reduces the risk for fraud Branding Name, logo, color Better analytics Rich media Improved delivery Images, video, animated receipts and read GIFs and custom colors receipts for brands QR codes For tickets, tracking and redemptions Suggest
Slide 6: Hassle-free holidays with Picard
Hassle-free holidays with Picard Verified sender Innovative messaging for the holidays Picard, France’s leading supplier of high-quality frozen foods, fulfils 25% of its annual sales during the year-end holidays. They leverage Sinch to increase ROI in their Swipe to Christmas sales campaigns. choose
Slide 7: Financials
Financials 7
Slide 8: Net sales
Net sales Net sales, SEKm • Net sales up 2% year-on-year, 8,000 7,532 helped by currency tailwind of 7,361 7,265 6,927 7,021 2% 7,000 • Organic growth in local 6,000 currency at 1%* 5,000 4,000 • Organic growth in Messaging (1%), 3,000 Email (10%) and SMB (15%) • Organic decline in Voice (-2%) 2,000
Slide 9: Gross profit
Gross profit Gross profit, SEKm • Gross profit up 5% 3,000 year-on-year, helped by 2,526 currency tailwind of 1% 2,500 2,416 2,433 2,260 2,322 • Organic growth in local currency at 4% 2,000 1,500 • Organic growth in Messaging (3%), Email (13%) and SMB (15%) 1,000 • Organic decline in Voice (-4%) 500
Slide 10: Margin stability
Margin stability Gross margin, % EBITDA margin, % 36% 14% 13% 13% 13% 12% 12% 12% 35% 10% 12% 11% 11% 34% 33.5% 10% 10% 33.5% 8% 33.1% 32.8% 33% 32.6% 6% 4% 32% 2% 31% 0% Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 30% Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 EBITDA margin Adjusted EBITDA margin • Gross margin remains above
Slide 11: Strong cash conversion
Strong cash conversion Cash flow, SEKm Cash conversion from Adj EBITDA, R12M 1,000 80% 790 800 60% 60% 678 60% 574 600 38% 40% 35% 400 32% 200 20% 58 0 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 0% -200 -151 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 • Chart illustrates cash flow from operating • Cash flow from operating act
Slide 12: Reduced leverage
Reduced leverage Net debt/Adjusted EBITDA R12m* • Continued deleveraging with Net debt/EBITDA now at 2.0x 2.7 2.7 2.7 2.7 • Three components affecting Net 2.4 2.4 debt/EBITDA: 2.2 2.2 2.0 2.0 ‒ EBITDA growth ‒ Cash generation ‒ Immediate currency impact Create chart on debt, but trailing impact on e
Slide 13: Well-covered debt maturities
Well-covered debt maturities Maturity schedule, SEKm • Available cash and committed credit facilities more than exceed loans maturing in 2024 ‒ Cash and cash equivalents of SEK 1,012m ‒ SEK 4,346m in unutilized long-term credit facilities ‒ SEK 901m in unutilized overdraft facilities • Last 12 month
Slide 14: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months Targets: 4.5 • Adjusted EBITDA per share to 4.0 grow 20% per year 3.5 • Net debt < 3.5x adjusted EBITDA over time 3.0 2.5 Performance: 2.0 • Adjusted EBITDA per share grew 1.5 14% in 2023 1.0 • Net debt/adjusted EBITDA of 2.0x 0.5 excl.
Slide 15: Growth acceleration plan
Growth acceleration plan 15
Slide 16: Our next phase
Our next phase Stabilised and rising margins, strong cash flow, and continued deleveraging • Organic and • Business Unit setup to • Maintain strong acquired growth protect value in profitability & cash flow acquired businesses • Mainly focused on • Increase focus on messaging • Weakened growth busin
Slide 17: Growth acceleration plan
Growth acceleration plan 2023 2024 2025 2026 2027 Investment phase Accelerated product integration SEK 350 million Go-To-Market and CRM transformation … investment over 3 years ERP modernization SEK ~300 million integration and restructuring cost in 2024 Return phase Initial savings Additional effic
Slide 18: Tracking our progress
Tracking our progress Go-To-Market transformation Product integration Operational excellence Unified sales teams tasked to sell all products. Single product organization reporting to group CPO. ERP transformation blueprint. Customer analysis. segmentation and New product taxonomy. Rollou
Slide 19: Thanks!
Thanks! For more information, contact: Ola Elmeland Investor Relations Director investors@sinch.com
Slide 20: Income statement
Income statement SEKm Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 2022 2023 Net sales 7,196 7,361 6,927 7,021 7,265 7,532 27,722 28,745 Cost of services sold -4,835 -4,945 -4,667 -4,699 -4,832 -5,006 -18,912 -19,204 Gross profit 2,361 2,416 2,260 2,322 2,433 2,526 8,810 9,542 Operating expenses -1,553 -1,62
Slide 21: Cash flow
Cash flow SEKm Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 2022 2023 Profit or loss before tax -4,673 -166 -75 -25 -26 -26 -4,775 -152 Adjustment for non-cash items 5,301 988 684 633 640 903 7,167 2,859 Income tax paid -112 -161 -199 -226 -127 -48 -560 -600 Cash flow before changes in working capital 516 66
Slide 22: Cash conversion
Cash conversion SEKm Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 2022 2023 Adjusted EBITDA 901 960 834 865 943 996 3,124 3,637 Paid interest -51 -119 -127 -145 -159 -156 -279 -588 Paid taxes -112 -161 -199 -226 -127 -48 -560 -600 Other items -222 -18 -97 -111 -170 36 -453 -342 Cash flow before changes in wo