Sinch Ab · OMXSTO:SINCH
Sinch Ab — Q1 2021 Earnings Presentation
31 slides from Sinch Ab's earnings presentation, Apr 28, 2021
Slide 1: Q1 2021 Investor Presentation
Q1 2021 Investor Presentation 28 April 2021 Oscar Werner CEO Roshan Saldanha CFO Thomas Heath Chief Strategy Officer & Head of Investor Relations
Slide 2: Sinch at a glance
SEK 9.7bn SEK 968m SEK 104bn 2,160 47 countries with revenue in the Adj. EBITDA in the Market Cap people local presence past 12 months past 12 months 152 billion Publicly listed on Customer engagement through mobile technology engagements per year NASDAQ in Stockholm Scalable cloud communications Se
Slide 3: Track record of profitable growth
Track record of profitable growth 6,000 • Focus on Gross profit since pass- 5,000 through revenues vary between Inteliquent geographies 4,000 SEK million ACL • Acquisitions of ACL, SDI, Wavy 3,000 SDI and Inteliquent adding Wavy significantly to our scale and 2,000 profitability Inteliquent ACL SDI
Slide 4: Growth markets
Growth markets Messaging CPaaS Application-to-Person (A2P) messaging is used Communications Platform as a Service (CPaaS) across the world for ever-more use cases allows businesses to easily integrate messaging, voice and video services into their own applications • USD 17 bn market size for A2P SMS
Slide 5: Creating value for businesses & their customers
Creating value for businesses & their customers Next-gen Email SMS messaging Rich content Limited content Rich content Limited reach 100% reach 100% reach* 35x higher open rate App-like experience * Blending multiple channels including RCS, WhatsApp, Messenger and SMS with landing page technology 5
Slide 6: Conversational messaging
Conversational messaging SMS RCS WhatsApp Messenger Viber 6
Slide 7: Strategic partnership with Adobe
Strategic partnership with Adobe • Strategic partnership between Sinch and Adobe • One and two-way campaigns across multiple next-generation messaging channels • Leverages Sinch Conversation API • Available in Journey Optimizer within Adobe Experience Cloud 7
Slide 8: Scaling with Sinch
Scaling with Sinch Sinch acquired Chatlayer in March 2020, a cloud-based software platform that lets businesses create multi-lingual chatbots and voicebots using Artificial Intelligence (AI) and Natural Language Understanding (NLU). 32x increase in messages on platform 1 +330% increase in recurring
Slide 9: Playbook for profitable growth
Playbook for profitable growth • Empower businesses to leverage rich and conversational messaging Software- • Increase our software value-add (CPaaS) in addition to our connectivity offering as-a-Service • Increase stickiness with maintained scalability • Ensure leading direct global connectivity wi
Slide 10: Strategic acquisitions
Strategic acquisitions Conversational AI Technology & Innovation Go To Market Voice, video, Personalized Rich messaging, Next-generation verification video Low code tools messaging 2016 2017 2018 2020 2021 Scale and profitability USA, Australia, SMS Western Europe South East Asia Brazil Latin Americ
Slide 11: Deal rationale: Inteliquent
Deal rationale: Inteliquent • Largest independent voice communications provider in the United States Inteliquent • 300+ billion voice minutes per year and 100+ million active phone numbers • Around 600 employees including contractors with headquarters in Chicago, Illinois • Establish Sinch as a lead
Slide 12: January – March 2021
January – March 2021 • Gross profit rising 84% to SEK 820.0 million (446.7) • Adjusted EBITDA rising 30% to SEK 240.3 million (184.3) • Adjusted EBIT excl. acquisition-related amortization of SEK 215.0 million (168.8) • Profit after tax of SEK 140.8 million (96.4) • Organic Gross Profit growth of 24
Slide 13: Key growth drivers
Key growth drivers 1. 2. 3. Acquisition of SDI, Volume growth & new Sales and marketing TWW, Wavy and use cases with US big improvements driving ACL Mobile tech companies broader growth Growing both with new and existing customers 13
Slide 14: Gross profit growth
Gross profit growth SEKm Organic Acquisitions FX • Gross profit growth of 84% +24% +65% -6% compared to Q1 2020 900 291 -27 820 800 • 24% organic Gross profit growth 700 • Continued strong performance with 118 -7 600 -2 0 large US tech companies, but lower 500 447 percentage growth rate after strong
Slide 15: Adjusted EBITDA margin
Adjusted EBITDA margin • Large impact from currency effects 12.0% 11.3% -0.5% -0.6% and costs for share-based incentive 10.0% -0.9% programs -0.7% -1.4% 8.0% • Margin dilution from acquired 7.2% SDI business 6.0% • Investments in scale and growth 4.0% • 30% growth in Adjusted EBITDA, 2.0% with 52% g
Slide 16: Headcount increase
Headcount increase Wavy 2 000 1887 1 800 SDI 1 600 1490 • Headcount rises with recruitment 1 400 ACL and acquisitions 1 200 1 000 992 • Added 382 people in Q1, of which 800 744 794 305 people joined from Wavy 654 542 573 600 366 392 412 412 420 441 462 469 496 • 2,160 people in Sinch at end of Q1 40
Slide 17: Strong growth in Messaging
Strong growth in Messaging Messaging (SEKm) • Total Gross profit growth of 85% with organic growth at 32% 3 500 800 3 000 700 • SDI contributing from 1 November 600 2020 & Wavy from 1 February 2021 2 500 2 000 500 • Growth broadening beyond US tech 400 companies 1 500 300 1 000 200 • Tough comparabl
Slide 18: Rising message volumes
Rising message volumes Number of transactions per month (billions) • Large increase in September 2020 due to ACL acquisition in India 16.0 Wavy • 327% year-on-year growth in 14.0 SDI transactions in Q1 with 47% growth 12.0 in comparable units 10.0 ACL • Seasonal uptick in March due to 8.0 end of fin
Slide 19: Gross profit per transaction
Gross profit per transaction OPEX/transaction & Gross profit/transaction (SEK) 0.050 Acquisition • Gross profit is the primary of ACL bottom line driver 0.040 • Per-transaction measures relevant to track profitability and economies 0.030 of scale • ACL Mobile has significantly lower 0.020 GP and OPE
Slide 20: Messaging margin affected by M&A
Messaging margin affected by M&A Messaging EBITDA/Gross profit • Revenue and gross margin depend on mix of terminating markets 70% 60% • EBITDA/Gross profit shows margin excluding mobile operator charges 50% 40% • Acquisition of SDI causing 3.3% dilution to Adj EBITDA/Gross profit 30% in Messaging 2
Slide 21: Continued Covid impact on Voice and Video
Continued Covid impact on Voice and Video Voice and Video (SEKm) • Sharp decrease in demand for Number masking from ride hailing 100 customers as Covid-19 reduces 90 80 travelling 70 60 • Increase in traffic with low gross 50 margin contributing revenue with 40 limited gross profit 30 20 10 • Planni
Slide 22: Broadened product offering to Operators
Broadened product offering to Operators Operators (SEKm) • Sinch and SDI operator 230 210 organizations united in early 2021 190 170 • High margins in Operator Software 150 business 130 110 • SDI person-to-person (P2P) 90 messaging hub operating at lower 70 gross margin 50 30 10 • Stable underlying
Slide 23: Integration
Integration + SAP Digital Interconnect Integration planning Integration Integration Integration • Deal signed in February 2021 • TWW closed October 2019 • Deal closed September 2020 • Deal closed November 2020 • Wavy closed February 2020 • Regulatory approval process is • Jointly rebranded as Sinch
Slide 24: Q1 2021 Financials
CA Q1 2021 Financials
Slide 25: Income statement
Income statement Q1 Q1 Sinch Group, SEK million 2021 2020 2020 R12M Net sales 3,349.9 1,624.2 8,023.3 9 749,0 • Non-recurring items in EBITDA Cost of goods sold and services Gross profit -2 529,8 820.0 -1,177.5 446.7 -5,840.0 2,183.3 -7 192,4 2,556.6 reflect recent M&A activity Other operating incom
Slide 26: Reconciling Cash flow with EBITDA
Reconciling Cash flow with EBITDA Q1 Q1 SEK million 2021 2020 2020 R12M Adjusted EBITDA 240.3 184.3 912.5 968.5 Paid interest -11.1 -6.9 -29.7 -33.9 Paid taxes -48.1 -3.0 -101.3 -146.4 • High conversion of Adjusted Other 44.7 1.2 -179.4 -135.9 EBITDA to cash flow Cash flow before changes in • “Other
Slide 27: Cash flow
Cash flow Q1 Q1 Sinch Group, SEK million 2021 2020 2020 R12M Cash flow before changes in working capital 225.8 175.6 602.1 652.3 Changes in working capital 361.3 -40.9 -148.2 254.0 Cash flow from operating activities 587.1 134.7 453.9 906.3 • Positive change in working capital Net investments in tan
Slide 28: Financial targets
Financial targets Targets: • Adjusted EBITDA per share to grow 20% per year Adjusted EBITDA per share, rolling 12 months • Net debt < 2.5x adjusted EBITDA 18.0 over time 16.0 14.0 12.0 Performance: 10.0 • Adjusted EBITDA per share grew 8.0 30% in Q1 21, measured on a rolling 6.0 12 month basis 4.0 2
Slide 29: Financial leverage
Financial leverage Pro forma net debt/Adjusted EBITDA 3.3 2.5 • Pro forma calculation includes last 12 months of Adj EBITDA for acquired entities • Financial target is to maintain Net debt < 2.5x adjusted EBITDA over time -1.8 -2.1 Q1 21 Q1 20 + Inteliquent reported pro forma 29 The acquisition of I
Slide 30: Key priorities ahead
Key priorities ahead Build on momentum for broadened growth across the base Continued growth with US-based, global tech companies New customer wins in Conversational messaging Integration of recently acquired entities & initiatives to increase growth and margins Preparation for future organic & acqu
Slide 31: Thanks!
Thanks! Copyright© 2019 CLX Communications AB (publ). All rights reserved. NDA Confidential. 31