Converge Information & Communications Technology Solutions Inc · PSE:CNVRG
Converge Information & Communications Technology Solutions — 9M2022 Earnings Presentation
38 slides from Converge Information & Communications Technology Solutions's earnings presentation, November 2022
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Slide 2: Meeting Reminders
MEETING REMINDERS • Please mute your microphones during the presentation. • Questions will be entertained during the Q&A portion after the presentation. You may send your questions through the Zoom Chat feature. Please introduce yourself along with your affiliated company/research house. • The sessi
Slide 3: Today's Speakers
Mr. Matthias Vukovich Mr. Jesus C. Romero Mr. Benjamin B. Azada Chief Financial Office Advisor Chief Operations Officer Chief Strategy Officer (converse
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Slide 5: Industry Leading Trifecta
Industry Leading Trifecta Robust revenue growth of ~30% and industry leading profitability with ~59.0% EBITDA margin and ~16.6% ROIC Revenue EBITDA (2) PHP MM (US$ MM) (1) PHP MM (US$ MM) (1) ($494) Enterprise ($457) ($276) ($270) 26,479 Residential 24,481 14,803 14,445 3,350 ($351) 3,119 ($194) ($2
Slide 6: Network expansion and household coverage already nearing 2023 targets
Network expansion and household coverage already nearing 2023 targets The Philippines’ Broadest Fiber Network Homes Passed (MM) (1)(2)(3) Number of Ports (MM) (1)(2) 13% 25% 43% 38% 53% 55% 0.9 1.4 2.4 1.7 1.7 190 350 343 477 247 14.3 15.1 7.6 7.5 – 8.0 11.0 0.9 5.9 0.9 9.6 0.9 5.2 0.3 0.9 0.8 0.4 6
Slide 7: Steady ARPU for 3Q2022 supported by improved churn to sub-2% levels
Steady ARPU for 3Q2022 supported by improved churn to sub-2% levels Number of Subscribers (‘000) ✓ 617 841 678 473 Net subscriber adds of almost 30k in 3Q2022 – doubling in comparison to 2Q2022 – resulting in a ~1.85MM subscriber count as of September 2022 1.7x 1,845 1,691 1,577 Subscribers 192 1,03
Slide 8: Continued profitability through economies of scale and prudent cost management
Continued profitability through economies of scale and prudent cost management initiatives Strong net income margin of 25% despite significant increase in D&A and finance costs 9M2022 P&L Breakdown Margins Key drivers In PHP Mn In % of revenues for the period Revenue 24,481 9M2021 9M2022 • Continued
Slide 9: Reduced capex guidance driven by deployment efficiencies
Reduced capex guidance driven by deployment efficiencies Capex guidance reduced from PHP 26 - 28 Bn to PHP 21 - 23 Bn Backbone PHP 26 to 28 Bn Access PHP 25 Bn Others 25% PHP 21 to 23 Bn 35% 32% 9M2022 CAPEX: PHP15.3Bn 62% (vs. 9M2021 – PHP18.2Bn) 56% 53% 13% 15% 9% 2021 Actual 2022 Initial 2022 Rev
Slide 10: Strong balance sheet with limited exposure to macro pressures
Strong balance sheet with limited exposure to macro pressures Moderately leveraged capitalization structure Long-term diversified debt, with rates 100% fixed Debt exposure(1) Capitalization Structure In PHP Bn Common Equity In PHP Bn 1.7 PHP Bn Current portion of LT debt 2.1 Share capital 1.9 Long t
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Slide 12: Update on nationwide roll-out initiatives
Update on nationwide roll-out initiatives Continued network expansion into new services areas …resulting in significant gross adds contribution from North Luzon and VisMin areas Quarterly Gross Adds In 000s 280 163 188 150 136 5.0% 5.4% 12.2% 15.8% 10.5% 12.6% 19.1% 12.8% 10.3% 12.1% 84.5% 82.0% 74.
Slide 13: Expanding addressable market
Expanding addressable market New product offerings to result in larger addressable market Proper market segmentation Targeted Value Optimized product offering to match Household Count Market Segment In MM households Proposition segment’s needs Total: [c.22] BASE PLAN P1500 or Higher Postpaid Target
Slide 14: Continuous enterprise growth momentum
Continuous enterprise growth momentum Enterprise revenue grew by 29% in 3Q2022 vs. the same period last year SME and wholesale revenues are a growing contributor to Enterprise Revenues Enterprise revenues by segment In PHP millions YoY growth rate (3Q): 29% 1,146 1,029 247 22% YoY growth rate 936 88
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Slide 16: Digital Business Transformation
Digital Business Transformation https://gofiber.ph Converge GoFiber! App Social Media Business Support System Social Social Customer Listening Operations Support System Service
Slide 17: Resulting in Streamlined Customer-facing Processes
Resulting in Streamlined Customer-facing Processes Faster creation and launch of new products, services, and promotions Digital customer interactions across all touchpoints: selling, payment & after-sales Seamless management of field technicians Real-time understanding of customer sentiment on socia
Slide 18: Continued development in customer experience initiatives
Continued development in customer experience initiatives Improving customer service metrics Increased app usage and take-up Trouble Ticket Index Contact Agent (CA) Installation Lead Times % to total Jos for the period Head Count 0.42% 0.38% 1,812 0.32% 0.31% 1,602 1,523 93% 1,277 88% 90% 0.26% 1,005
Slide 19: Typhoon Response Updates
Typhoon Response Updates Proactive support for subscribers affected by severe calamities Restoration by the numbers Odette ~60% of residential customers restored within 2 mos. 100% of enterprise customers restored after 1 mo. Karding ~75% of residential customers restored within 2 wks. 100% of enter
Slide 20: Q&A
Q&A
Slide 21: Contact details
www.convergeict.com Dennis Anthony Uy Converge ICT Solutions Inc. @DennisUyFiberMaster @ConvergeICTOfficial @TheFiberMaster @ExperienceCNVRG
Slide 22: Thank you!
Thank you! (converce
Slide 23: Disclaimer
Disclaimer This material has been prepared exclusively for information and disclosure purposes only. This does not constitute any offer to buy or sell securities. These may contain forward-looking statements and information that are, by their nature, subject to significant risks, uncertainties, and
Slide 24: Appendix
Appendix (converse
Slide 25: 9M/3Q2022 Results Key Takeaways
9M/3Q2022 Results Key Takeaways ✔ Converge continues its growth trend in 9M2022 with 30.0% YoY revenue growth and 39.3% YoY EBITDA growth ✔ EBITDA margins expanded significantly from 55.1% in 9M2021 to 59.0% in 9M2022 ✔ Net income after tax of PHP6,107 million in 9M2022 represents net income margin
Slide 26: Revenue growth and cost management initiatives contributed to EBITDA growth
Revenue growth and cost management initiatives contributed to EBITDA growth YoY EBITDA Growth PHP MM Decreased Increased 9M2022 margins (% of revenue) 55.1% 8% > 4% 4% > 4% 8% > 6% 3% > 3% 4% > 3% 14% > 15% 4% > 5% 59.0% Total Cost Net Increase: PHP (1,575) MM 9M2021 Inc in Revenue Dec in network In
Slide 27: Quarterly Operational Performance
Quarterly Operational Performance 2021 2022 YoY Change % 1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q2022 vs 3Q2021 Residential Revenues 4,797 5,415 6,162 6,754 6,812 7,272 7,278 18% FTTH 4,086 4,771 5,571 6,215 6,299 6,800 6,853 23% HFC 711 644 590 539 513 472 424 -28% Customers 1,181,723 1,355,079 1,576,759 1,691,550
Slide 28: Consolidated Income Statement
Consolidated Income Statement For the nine months ended For the three months ended September 30 September 30 YoY YoY YoY YoY change 2022 2021 change change % 2022 2021 change % (in P millions) Revenues …………………………………………………… 24,481 18,831 5,650 30% 8,427 7,050 1,377 20% Residential……………………………………………………
Slide 29: Consolidated Income Statement
Consolidated Income Statement For the nine months ended For the three months ended September 30 September 30 YOY change YoY change 2022 2021 YoY change % 2022 2021 YoY change % (in P millions) Depreciation and amortization 4,282 2,565 1,717 67% 1,576 937 640 68% Amortization of deferred contract cos
Slide 30: Consolidated Income Statement
Consolidated Income Statement For the nine months ended For the three months ended September 30 September 30 YoY change YoY change 2022 2021 YoY change % 2022 2021 YoY change % (in P millions) Personnel costs 1,302 1,030 271 26% 360 311 48 15% Managed Service Fees 768 557 211 38% 305 222 83 37% Outs
Slide 31: Consolidated Income Statement
Consolidated Income Statement For the nine months ended For the three months ended September 30 September 30 YoY change YoY change 2022 2021 YoY change % 2022 2021 YoY change % (in P millions) Net foreign exchange gain/(loss) (22) (223) 201 -90% 164 (338) 503 N/M Gain on transfer of network material
Slide 32: Consolidated Balance Sheet
Consolidated Balance Sheet As of the period Sep 30 2022 Dec 31 2021 Change Change % (in P millions) Current assets 26,910 21,040 5,869 28% Cash and cash equivalent 11,788 8,084 3,704 46% Trade and other receivables, net 3,674 3,033 641 21% Network materials and supplies 5,150 3,485 1,665 48% Other c
Slide 33: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement For the nine months ended September 30 2022 2021 YoY change YoY change % (in P millions) Cash flow from operating activities Profit before income tax...……………………………………………………… 7,848 6,740 1,108 16% Adjustments for operating income……..……………………………………… 8,676 5,573 3,103 5
Slide 34: Liquidity and Capital Resources
Liquidity and Capital Resources September 30, 2022 December 31, 2021 Change (%) Balance Sheet Data (in P millions) Total Assets 100,574 81,864 23% Total Debt 38,669 19,846 95% Total Stockholders' Equity 34,772 35,111 -1% Financial Ratios Total Debt to EBITDA (gross) 2.1x 1.3x Total Debt to EBITDA (n
Slide 35: Bi-Frost Cable System route map
CHINA TAIWAN CALIFORNIA HONGKONG BI-FROST CABLE SYSTEM READY BY 2024
Slide 36: Augmenting Our International Network Capacity
Augmenting Our International Network Capacity 36
Slide 37: Best-in-Class 3Q Results Ahead of Global Benchmarks
Best-in-Class 3Q Results Ahead of Global Benchmarks Converge Philippines Telcos APAC Fixed Broadband Players Global Peers (1) Superior Revenue Growth Rate (2) 30.0% Significantly Above Regional and Global Peers 9.5% 4.0% 6.0% 1.0% (10.6%) Globe PLDT HKBN TIME dotCom Global Peers 59.0% 49.6% 46.0% In
Slide 38: Best-in-Class 3Q Results Ahead of Global Benchmarks
Best-in-Class 3Q Results Ahead of Global Benchmarks Converge Philippines Telcos APAC Fixed Broadband Players Global Peers (1) Strong Debt Service Capability as Net Debt to EBITDA 4.4x 4.0x levels well below 2.7x 2.3x peers (1) 1.4x (0.8x) Globe PLDT HKBN TIME dotCom(3) Global Peers 16.6% Efficient C
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