Gamma Communications Plc · LSE:GAMA
Gamma Communications — FY2023 Earnings Presentation
34 slides from Gamma Communications's earnings presentation, Mar 25, 2024
Slide 1: Gamma Full Year 2023 Results
Gamma Full Year 2023 Results 25 March 2024 Andrew Belshaw, CEO Bill Castell, CFO Working smarter, together.
Slide 2: FY 2023 Results Agenda
FY 2023 Business Update 01. Andrew Belshaw FY 2023 Financial Highlights FY 2023 Results 02. Bill Castell Strategic Progress Agenda 03. Andrew Belshaw ESG 04. Andrew Belshaw Business Outlook 05. Andrew Belshaw Q&A 06. Andrew Belshaw and Bill Castell 2
Slide 3: Full year 2023 Business Update
Full year 2023 Business Update Andrew Belshaw, CEO
Slide 4: Full year 2023 Business Update – Business Highlights
Full year 2023 Business Update – Business Highlights • Continued strong financial performance • 8% Revenue growth to £521.7m • 9% EBITDA growth to £114.3m • Strong cash position • Cash generated by operations of £123.5m (2022 £99.1m) • Net cash balance of £134.8m at 31 December 2023 (2022: 92.5m) •
Slide 5: Full year 2023 Financial Highlights
Full year 2023 Financial Highlights Bill Castell, CFO
Slide 6: Track record of high growth and cash generation
Track record of high growth and cash generation Adjusted EBITDA Adjusted EPS Cash generated by operations 150.0 140.0 16% CAGR 90.0 18%* CAGR 23% CAGR 79.6 130.0 123.5 120.0 114.3 80.0 105.1 71.8 70.0 75.1 110.0 100.0 95.4 64.0 99.1 (38.3) 60.0 89.8 79.0 90.0 80.0 51.3 (35.1) 70.3 50.0 (30.1) 63.5 4
Slide 7: 2023 Financial Highlights
2023 Financial Highlights Revenue Adjusted EBITDA Adjusted EPS – Constant tax Up Up Up 8% 9% 11%* to £521.7m to £114.3m to 75.1p Cash generated by operations Cash balance Dividend Up Up 25% £136.5m As at 31 Dec 14% to £123.5m (net cash of £134.8m) to 17.1p *5% EPS growth at actual tax rates. 11% whe
Slide 8: Income Statement
Years ended 31 December 2021 2022 2023 Growth (£m) 23 vs 22 Income Statement Revenue 447.7 484.6 521.7 8% Cost of sales (219.2) (236.9) (254.5) • Recurring revenue grew to £462.8m, 89% Gross profit 228.5 247.7 267.2 8% of total revenue (2022: 89%) Gross profit margin 51.0% 51.1% 51.2% • Revenue and
Slide 9: Gamma Business
+7% Gamma Business 309.4 332.2 Revenue (£m) • Healthy 7% growth in revenue with increased volumes • Growth driven by our Cloud PBX solutions (Horizon and PhoneLine+) as well as those FY 2022 FY 2023 SIP trunks supporting MS Teams implementations and other non-Gamma Cloud PBX solutions • Revenue grow
Slide 10: Gamma Enterprise
+8% Gamma Enterprise 110.1 102.0 Revenue (£m) • Delivered 8% revenue growth, driven by key contract performance and M&A – Satisnet Ltd, acquired in August 2023, has been successfully integrated and contributed £4.6m of revenue and £1.5m gross profit in the year FY 2022 FY 2023 • Gross profit increas
Slide 11: Europe
Europe +8% 79.4 • Revenue growth 8% (6% at constant currency) 73.2 – Mixed performance across our European footprint Revenue (£m) • Cloud seats* grew by 5% and MS Teams voice users by 800% • Gross profit grew 11% (8% at constant currency) FY 2022 FY 2023 – Gross margin improving largely due to the i
Slide 12: Investments
Investments Overheads Development costs • Development spend increased by £2.6m due to investment in • Increased by 7% to £152.9m (2022: £142.6m), our own voice application products and the voice enablement compared to a gross profit growth of 8%. of 3rd party solutions • Organic growth of 6% £m 2022
Slide 13: Balance Sheet
Balance Sheet as at 31 Dec 31 Dec 31 Dec (£m) 2021 2022 2023 Balance Sheet Non-current assets (incl. PPE) 197.6 185.7 214.3 Receivables and inventories 111.4 126.5 124.0 • Strong cash reserves – £136.5m Cash 52.8 94.6 136.5 Current assets 164.2 221.1 260.5 • Net cash of £134.8m Total assets 361.8 40
Slide 14: Cashflow
Cashflow • Adjusted cash conversion of 108% • Taxes paid increase due to growth in Cash Flow Statement (£m) 2021 2022 2023 Adjusted PBT Adjusted EBITDA 95.4 105.1 114.3 Cash generated by operations 89.8 99.1 123.5 • 2023 M&A activity Adjusted cash conversion* 94% 94% 108% – Acquisition of Satisnet £
Slide 15: Gamma's Balanced Approach to Capital Allocation
Gamma’s Balanced Approach to Capital Allocation £ £ £ Organic investment in Pursue value Progressive the business accretive M&A dividend policy Return surplus Maintain robust balance sheet £ cash to shareholders 15 15
Slide 16: Analyst Modelling Guidance
Analyst Modelling Guidance • Overall expectations for the full year 2024: – The current company compiled consensus range* for adjusted EBITDA is £118.3m – £127.4m and adjusted EPS (fully diluted) is 75.8p – 86.3p, as at 22 March 2024 – We expect to be in the above ranges – Note that the guidance exc
Slide 17: Strategic Progress
Strategic Progress Andrew Belshaw, CEO
Slide 18: What does Gamma do?
What does Gamma do? UCaaS Solutions Voice Enablement Connectivity 18
Slide 19: Gamma's unique position
Gamma’s unique position Carrier Capability Key for voice enablement Global tech giants and Local large partners distribution reach Quality of service Portal Improvements 19
Slide 20: Voice Enablement
Voice Enablement
Slide 21: Gamma - Service Provider
Gamma - Service Provider • Coolwave acquired in Feb 2024 • Will allow us to provide voice enablement in around 20 countries by the end of 2024 using our own capability • Will increase TAM for Operator Connect
Slide 22: UCaaS Solutions
UCaaS Solutions
Slide 23: EnableX Acquisition
iPECS Up EnableX Acquisition 24% • Purchase of EnableX came with 3 businesses to 130k cloud seats • Provides new relationship • UC Enablement for Service • Pure SaaS, white labelling with Ericsson-LG Providers and Enterprises key digital security and • Access to iPECS – 130k • Great partnership with
Slide 24: Gamma's UCaaS Portfolio
Gamma’s UCaaS Portfolio Analysis of other Providers Enterprise iPECS SME Centile Horizon Flex PL+ Micro Companies Microsoft Teams 24
Slide 25: Growth
ee eee Gamma
Slide 26: Four drivers of sustainable growth
We have identified four drivers of sustainable growth - Our strategy exploits each of these 1 2 PSTN Switch-off in the UK is driving millions of Customers are requiring more complex consumers and microbusinesses to seek other solutions which we are now able to address solutions such as our own Phone
Slide 27: Voice Enablement – Performance
Voice Enablement – Performance SIP Trunks Enabling SIP Trunks Enabling MS Teams Enablement Traditional Hardware PBX non-Gamma Cloud PBX Down Up Up UK 3% 8% 21% to 1,019k SIP Trunks to 398k SIP Trunks to 429k users SIP Trunks Enabling SIP Trunks Enabling MS Teams Enablement Traditional Hardware PBX n
Slide 28: Cloud Communications – Performance
Cloud Communications – Performance Horizon (Cloud PBX) iPECS Micro Market* Up Acquired Up UK Cloud 6% 130k 80% to 797k cloud seats cloud seats to 27k cloud seats Collaborate MS Teams Integration Voice Recording Horizon Contact Up Up Up Up “bolt ons” Horizon 5% 86% 22% 55% to 77k seats to 13k seats t
Slide 29: ESG Update
ESG Update Andrew Belshaw, CEO
Slide 30: Communications with a Conscience
gammagroup.co/company/esg Communications with a Conscience Environment Social Governance • The Science-Based Target initiative • ‘You Belong’ initiative launched across • Gamma received “AA” ESG rating from (SBTi) has verified Gamma's near-term Gamma Group in 2023, with 450 MSCI and long-term emissi
Slide 31: Business Outlook
Business Outlook Andrew Belshaw, CEO
Slide 32: Business Outlook
Business Outlook We continue to build on our core strengths to ensure we provide excellent service to our customers Robust business model with strong recurring Significant migrations in UK market revenue and margin, cash generative and with “SIP + Hardware" moves to Cloud Product; strong balance she
Slide 33: Q&A
Q&A Andrew Belshaw, CEO Bill Castell, CFO
Slide 34: Thank you.
Thank you.