Slide 1: Q1 2024 Investor Presentation
Q1 2024 Laurinda Pang, CEO I N VES T O R PR ES EN T AT I O N Roshan Saldanha, CFO M AY 7, 2024 Sean O’Neal, CPO Thomas Heath, Chief Strategy Officer
Slide 2: Pioneering the way the world communicates
150,000+ 800bn+ 60+ Scalable cloud communications business interactions countries with platform for messaging, voice and email customers per year local presence Pioneering the way the world communicates SEK 28.6bn SEK 9.6bn SEK 3.6bn net sales in the gross profit in the Adj. EBITDA in the past 12 mo
Slide 3: First quarter highlights
First quarter highlights 01 02 03 Rising gross margin Strong cash flow Growth acceleration plan • Gross margin at 34%, up 1.4pp from • Operating cash flow of SEK 553 • Launched Growth Acceleration Plan Q1 2023. million in Q1. with launch of new organization from 1 January 2024. • Adjusted EBITDA mar
Slide 4: Overview
Overview Operating segments Product categories Expenditures Gross profit by region, 2023 Gross profit by product, 2023 Adjusted opex by function, 2023 15% 23% 22% 49% 22% 55% 63% 22% 29% Americas API Platform R&D EMEA Applications Sales & marketing APAC Network Connectivity General & administrative
Slide 5: Performance by segment
Performance by segment Americas EMEA APAC • Gross profit up 4% year-on- • Gross profit down 5% year- • Gross profit up 9% year-on- year in constant currencies. on-year in constant year in constant currencies. currencies. • Sinch named the 2024 Adobe • Regional partnership with • Customer cases this
Slide 6: Boosting brand visibility for MicroMania-Zing
Boosting brand visibility for MicroMania-Zing Increased interactivity with RCS MicroMania-Zing, part of the gaming retail giant Game Stop, used Sinch RCS to boost brand visibility, trigger customer interactions, simplify transactions, and improve customer experience. Full customer story at sinch.com
Slide 7: Investing in growth areas
Investing in growth areas Gross profit, Q1 24 vs Q1 23, SEKm • Targeting continued profitable 1,500 +8% growth in API Platform and 1,321 Applications 1,233 • Focusing on cash generation in 1,250 Network Connectivity 1,000 • API Platform and Applications contribute 80% of gross profit 750 +11% -15% 5
Slide 8: Sean O’Neal
• 30 years of cloud marketing and communications experience • Joined Sinch in 2022 to lead the SMB business unit • Strong track record at Sinch delivering consistently solid results • Appointed Chief Product Officer from 1 January 2024 Sean O’Neal Chief Product Officer 8
Slide 9: Product update
Product update 9
Slide 10: New product categories
New product categories • Software applications for customer engagement supporting use cases across marketing, operations Applications and customer care. • Targets business users. Customer • APIs allow businesses to trigger mobile messaging, Communications API Platform voice calling, and emails from
Slide 11: Customer-facing brands
Customer-facing brands Product categorization Audience Brand Applications Marketing, customer Sinch Engage care, etc. API Platform Developers, Sinch Build IT, product managers Network Operators, wholesale Sinch Connect voice buyers Connectivity Across the entire technology stack: Sinch AI 11
Slide 12: Complementary product sets…
Complementary product sets… • SMS focus • Email marketing • Large ecosystem footprint • 40k customers • 40k customers • Primarily Europe • USA, Australia, NZ, UK and USA • SMS focus • WhatsApp, Telegram, Instagram, etc. • Frictionless onboarding • 1k customers • 20k customers • Europe, Latin America
Slide 13: …combined for scale and differentiation
…combined for scale and differentiation Mailjet • One unified application with support for all communications channels. • Leverages AI to deliver personalized Sinch Message Sinch communications at scale. Engage Media Engage • Bringing together the key capabilities from multiple best-of-breed softwar
Slide 14: Financials
Financials 14
Slide 15: Changes to our reporting
Changes to our reporting 01 02 03 Reporting changes from Q1 Three operating segments New product categories • Sinch announced changes to its • Integrated sales force now tasked • Financial performance by product operating model on 26 October to sell the full Sinch portfolio. supplements regional seg
Slide 16: New reporting vs earlier disclosure
New reporting vs earlier disclosure Complementary Previous operating segments New operating segments product view SMB APAC Applications Email EMEA Voice API Platform Americas Messaging Network Connectivity Relative size reflects share of gross profit in 2023. 16
Slide 17: Net sales
Net sales Net sales, SEKm • Net sales decreased by 2% 8,000 7,532 year-on-year 7,265 6,927 7,021 7,000 6,792 • Organic growth in constant currencies decreased by 2% 6,000 • Seasonal decrease from Q4 to Q1 5,000 4,000 3,000 • Americas down 2% year-on- year, and EMEA down 9%, in 2,000 constant currenc
Slide 18: Gross profit
Gross profit Gross profit, SEKm • Gross profit up 2% 3,000 year-on-year, with a negative 2,526 currency effect of 1% 2,433 2,500 2,322 2,312 2,260 • Organic growth in constant currencies at 3% 2,000 1,500 • Americas growing 4%, EMEA 1,000 down 5%, and APAC up 9% in constant currencies. 500 • Continu
Slide 19: Network Connectivity
Network Connectivity Gross profit, Q1 24 vs Q1 23, SEKm • Network Connectivity impacted 600 552 -34 -35 by a negative development in -13 our U.S. voice interconnect 470 500 business towards carriers • 8YY reform is completed but 400 causes year-on-year headwind due to a higher base 300 • Cost pressu
Slide 20: Rising gross margins
Rising gross margins Gross margin, % EBITDA margin, % 36% 14% 13% 13% 12% 12% 12% 12% 35% 10% 12% 11% 34.0% 11% 34% 33.5% 10% 10% 33.5% 8% 33.1% 33% 32.6% 6% 4% 32% 2% 31% 0% Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 30% Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 EBITDA margin Adjusted EBITDA margin • Continued improvement
Slide 21: Strong cash conversion
Strong cash conversion Cash flow after investments, SEKm Cash conversion from Adj EBITDA, R12M 1,000 80% 800 678 60% 574 60% 600 424 42% 400 38% 40% 35% 32% 200 58 0 20% Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 -200 -151 0% -400 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 • Chart illustrates cash flow from operating • Cash
Slide 22: Reduced leverage
Reduced leverage Net debt/Adjusted EBITDA R12m* • Continued deleveraging with Net 2.7 debt/EBITDA now at 2.0x 2.4 • Three components affecting Net 2.2 debt/EBITDA: 2.0 2.0 ‒ EBITDA growth ‒ Cash generation ‒ Immediate currency impact on debt, but trailing impact on earnings Q1 23 Q2 23 Q3 23 Q4 23 Q
Slide 23: Well-covered debt maturities
Well-covered debt maturities Maturity schedule, SEKm • Available cash and committed 10,000 credit facilities more than exceed loans maturing in 2024 and 2025 7,500 5,000 4,914 • Last 12 months: ‒ Generated SEK 1.5 billion in 2,500 Cash flow from operating activities after investments 2,250 2,673 2,7
Slide 24: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months 4.5 Targets: • Adjusted EBITDA per share to 4.0 grow 20% per year 3.5 • Net debt < 3.5x adjusted EBITDA 3.0 over time 2.5 2.0 Performance: 1.5 • Adjusted EBITDA per share grew 12% in Q1 2024, measured on a 1.0 rolling 12-month basis 0.5
Slide 25: Growth acceleration plan
Growth acceleration plan 25
Slide 26: 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 27: Growth acceleration plan
Growth acceleration plan Today 2023 2024 2025 2026 2027 Investment phase Accelerated product integration SEK 350 million investment Go-To-Market and CRM transformation … in IT initiatives over 3 years ERP modernization SEK ~300 million integration and restructuring cost in 2024 Return phase Initial
Slide 28: Tracking our progress
Tracking our progress Go-To-Market transformation Product integration Operational excellence Americas, EMEA and APAC reported as financial segments. Unified cross-Sinch product strategy. Target operating model for business support functions. Integrated account coverage Financial reporting matc
Slide 29: Thanks!
Thanks! For more information, contact: Ola Elmeland Investor Relations Director investors@sinch.com
Slide 30: Income statement
Income statement SEKm Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 2023 R12M Net sales 7,361 6,927 7,021 7,265 7,532 6,792 28,745 28,610 Cost of services sold -4,945 -4,667 -4,699 -4,832 -5,006 -4,480 -19,204 -19,017 Gross profit 2,416 2,260 2,322 2,433 2,526 2,312 9,542 9,593 Operating expenses -1,625 -1,56
Slide 31: Cash flow
Cash flow SEKm Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 2023 R12M Profit or loss before tax -166 -75 -25 -26 -26 40 -152 -37 Adjustment for non-cash items 988 684 633 640 903 574 2,859 2,749 Income tax paid -161 -199 -226 -127 -48 -57 -600 -458 Cash flow before changes in working capital 661 410 382 487
Slide 32: Cash conversion
Cash conversion SEKm Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 2023 R12M Adjusted EBITDA 960 834 865 943 996 794 3,637 3,597 Paid interest -119 -127 -145 -159 -156 -131 -588 -591 Paid taxes -161 -199 -226 -127 -48 -57 -600 -458 Other items -18 -97 -111 -170 36 -49 -342 -294 Cash flow before changes in wor
Slide 33: Previous segments vs new products
Previous segments vs new products Share of total Messaging Voice Email SMB Net sales Applications 3% 1% 24% 100% API Platform 92% 26% 76% – Network Connectivity 5% 73% – – 100% 100% 100% 100% Gross profit Applications 11% 2% 23% 100% API Platform 81% 36% 77% – Network Connectivity 8% 62% – – 100% 10