Sinch Ab · OMXSTO:SINCH
Sinch Ab — CLX Communications — Q3 2018 Earnings Presentation
25 slides from Sinch Ab's earnings presentation, Nov 6, 2018
Slide 1: 18Q3 Interim Report
18Q3 INTERIM REPORT Stockholm, November 6, 2018 Oscar Werner President and CEO Odd Bolin Chief Financial Officer Thomas Heath Chief Strategy Officer and Head of Investor Relations Copyright© 2018 CLX Communications AB (publ). All rights reserved. NDA Confidential.
Slide 2: Highlights 18Q3
HIGHLIGHTS 18Q3 Oscar Werner, CEO Copyright© 2018 CLX Communications AB (publ). All rights reserved. NDA Confidential. 2
Slide 3: 18Q3 Summary
18Q3 SUMMARY ▪ Group organic revenue growth of 13 percent in local currency ▪ Gross profit up 26 percent due to organic growth & successful M&A ▪ Adjusted EBITDA up 33 percent ▪ We see strong market growth in certain segments with further growth opportunities both organically and through M&A ▪ Revis
Slide 4: Organic Growth Initiatives
ORGANIC GROWTH INITIATIVES ▪ Targeted sales initiatives and new product offerings to drive organic revenue and gross profit growth: ▪ Internal automation and efficiency ▪ Product development around rich media and conversational messaging ▪ Faster go to market for personalized video messaging ▪ Sales
Slide 5: Messaging
MESSAGING Transactions Gross profit 2.0 200 Number of A2P transactions per month (bn) Gross profit, Enterprise Division (MSEK) 175 1.5 150 125 1.0 100 75 0.5 50 25 0.0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 2018 2015 2016 2017 2018 ▪ Enterprise Division gross profit up 26 perc
Slide 6: Messaging
MESSAGING ▪ Increased messaging traffic to certain high-margin markets ▪ Unwire continuing to perform well ▪ Increasing revenues in Vehicle personalized video with cross selling to Operators in Europe and our Enterprise customer in the US ▪ Active dialogue with several US-based, global, tech compani
Slide 7: Real-Time Voice & Video
REAL-TIME VOICE & VIDEO ▪ Sinch is continuing to invest in real-time voice and customer adaptions ▪ Ride-hailing developing favorably with plans to launch number masking in further markets later this year ▪ Strong pipeline for number verification with customers in multiple industries ▪ Improved cros
Slide 8: Operator Division
OPERATOR DIVISION ▪ Underlying business developing as planned ▪ Continued improvement in EBITDA compared to Q1 and Q2 this year ▪ Unusually high earnings from capacity expansion projects in the 17 Q3 comparison period ▪ Strong sales pipeline but slow conversion to projects and revenue ▪ Work ongoing
Slide 9: Financials
FINANCIALS Odd Bolin, CFO Copyright© 2018 CLX Communications AB (publ). All rights reserved. NDA Confidential. 9
Slide 10: July – September 2018
JULY – SEPTEMBER 2018 ▪ Gross profit increased to SEK 249.9 million (198.1 in 17Q3) ▪ Adjusted EBITDA was SEK 95.4 million (71.7) ▪ EBITDA was SEK 99.4 million (67.0) ▪ EBIT was SEK 50.0 million (34.5) ▪ Net profit for the quarter was SEK 37.9 million (11.8) ▪ Higher gross profit and EBITDA in the E
Slide 11: Gross Profit, Q/Q
GROSS PROFIT, Q/Q Organic* +1% 300 249 -9 2 5 -1 250 4 250 ▪ We maintain the high level 200 established in Q2 despite Q3 being a seasonal weak quarter MSEK 150 ▪ Strong momentum with key US 100 clients 50 ▪ Good performance in Vehicle 0 18 Q2 Enterprise Operator Sinch Vehicle Other 18 Q3 Organic gro
Slide 12: Adjusted EBITDA, Q/Q
ADJUSTED EBITDA, Q/Q Organic* -2% 120 97 -19 6 95 100 5 1 5 ▪ We maintain the high level established 80 in Q2 despite Q3 being a seasonal MSEK weak quarter 60 ▪ Improved EBITDA in the Operator 40 division 20 ▪ Strong contribution from Vehicle 0 18 Q2 Enterprise Operator Sinch Vehicle Other 18 Q3 Org
Slide 13: Gross Profit, Y/Y
GROSS PROFIT, Y/Y Acquisitions +15% Organic +11% 300 26 -4 2 -2 250 250 14 15 198 ▪ Significant GP contribution from 200 acquired businesses MSEK 150 ▪ Organic GP growth helped by key client wins in the U.S. 100 50 0 17 Q3 Unwire Vehicle Enterprise Operator Sinch Other 18 Q3 Organic growth includes
Slide 14: Adjusted EBITDA, Y/Y
ADJUSTED EBITDA, Y/Y Acquisitions +24% Organic +9% 120 14 -7 100 0 -1 95 ▪ Significant EBITDA contribution from 10 7 acquired businesses 80 72 ▪ Healthy underlying growth MSEK 60 ▪ Unusually high EBITDA in Operator division in Q3 17 impacts the y/y 40 comparison 20 0 17 Q3 Unwire Vehicle Enterprise
Slide 15: Key Metrics
KEY METRICS Enterprise Division: ▪ Gross profit – we use gross profit as our key measure since gross margin depends on geographical traffic mix, which we have limited influence over ▪ Adjusted EBITDA/gross profit – measures operational efficiency in the business ▪ OPEX per transaction – measures ope
Slide 16: Operational Efficiency in Messaging
OPERATIONAL EFFICIENCY IN MESSAGING 60% 0.06 50% 0.05 ▪ Gross profit is the primary bottom 40% 0.04 line driver 30% 0.03 ▪ GP/transaction rising as traffic increases to key high-margin 20% 0.02 countries ▪ Revenue and gross margin depend 0.01 10% on mix of terminating markets 0% 0.00 2016 2017 2018
Slide 17: Our Story
OUR STORY Oscar Werner, CEO Copyright© 2018 CLX Communications AB (publ). All rights reserved. NDA Confidential. 17
Slide 18: CLX at a Glance
CLX AT A GLANCE ▪ We deliver customer engagement, helping businesses engage people through mobile technology ▪ We address a growing, global multi-USD billion market ▪ The mobile channel has 100% penetration and reaches 5bn mobile users world-wide ▪ Customer satisfaction is generally very high ▪ Clou
Slide 19: Growth Markets
GROWTH MARKETS Messaging CPaaS Application-to-Person (A2P) Communications Platform as a messaging is used across the world Service (CPaaS) allows businesses for ever-more use cases to easily integrate messaging, voice and video services into their own business applications • We believe a USD10bn • J
Slide 20: Infinite use cases
Infinite use cases BANKING HEALTHCARE INTERNET INDUSTRIAL Confirmations Patient monitoring COMMERCE & UTILITIES Transaction alerts Voice authentication Verification Meter reading 2FA, One time PIN codes Appointment reminders Two Factor Authentication Workforce automation Order tracking Process alert
Slide 21: Innovative Solutions in Voice and Video
INNOVATIVE SOLUTIONS IN VOICE AND VIDEO • Cloud-based capabilities in voice and • Targeted sales effort now focusing on real-time video ride-hailing vertical • Number masking with temporary phone numbers safeguards privacy and improves platform revenue assurance Copyright© 2018 CLX Communications AB
Slide 22: Personalized Video
PERSONALIZED VIDEO • Unique, personalized videos to each recipient • Dynamically rendered at scale with no limits • Nearly 100 percent device reach and 98 percent open-rate • 4.5 higher click-thru rate than email • 17% annualized churn reduction across the subscriber base for a major US wireless car
Slide 23: Next Gen Messaging for the "Post App" Era
NEXT GEN MESSAGING FOR THE “POST APP” ERA Branding RCS = SMS “2.0” Customize with your Real Time Feedback company name, colour and Know when your customer has received and read your message and whether your logo. customer is typing you a response to your message. Know if your customer has tapped on
Slide 24: Future Growth
FUTURE GROWTH ▪ Strong pipeline with several US-based, global, digital-native companies ▪ Considerable interest and increasing revenues in Vehicle personalized video ▪ Sinch number masking products for ride-hailing developing well with further markets set to go live this year ▪ Improving pipeline an
Slide 25: Q&A
Q&A Copyright© 2018 CLX Communications AB (publ). All rights reserved. NDA Confidential. 25