Vercom Sa · GPW:VRC
Vercom Sa — Q2 2023 Earnings Presentation
41 slides from Vercom Sa's earnings presentation, September 2023
Slide 1: Q2 2023 Investor presentation
| Q2 2023 Investor presentation September 2023 : Scale beyond
Slide 2: Key investment highlights
: Key investment highlights We are one of leaders of a fast-growing segment of tech market • Operating in a market growing 30%+ driven by secular tailwinds • One of the fasting growing and most profitable CPaaS companies • Proven ability to double the scale of operations every 2 years We are scaling
Slide 3: Our mission is to help our clients reconnect with their audience
: Our mission is to help our clients to reconnect with their audience by removing communication and technological barriers
Slide 4: Customer engagement platform leveraging cross-channel communication
: Customer engagement platform leveraging cross-channel communication 4
Slide 5: Facilitating everyday communication between businesses and their customers
: Facilitating Our solutionseveryday are an communication inherent part ofbetween everydaybusinesses life and their customers 5
Slide 6: 20 years of experience rewarded with trust of landmark partners
: 20 years of experience rewarded with trust of landmark partners 73.100+ CPaaS customers 6
Slide 7: Selling services to customers in 180 markets globally
: Selling services to customers in 180 markets globally +300 team members in 30 locations incl. San Francisco, New York and Dublin Team locations Top markets Other markets 7
Slide 8: Dynamic growth driven by organic expansion and value-accretive acquisitions
: Dynamic growth driven by organic expansion and value-accretive acquisitions x40 2022: Global scale-up 2021: Debut on the WSE 260 2020: CPaaS leader in the CEE 179 Up to 2020: Scaling up operations on the local and regional markets Revenue, PLNm 117 78 59 34 10 12 20 6 2013 2014 2015 2016 2017 2018
Slide 9: Attractive perspective of growing dividends
: Attractive perspective of growing dividends Net profit (PLNm) +50% CAGR 2018 – 2022 PLN +25m 31 Dividend payout in 2023 23 19 14 6 2018 2019 2020 2021 2022 9
Slide 10: Passing PLN 1.6bn valuation mark
: Passing PLN 1.6bn valuation mark Market capitalization (PLNk) 1,900 29 Jun: Vercom passed 1,700 PLN 1.6bn valuation mark 1,500 1,300 1,100 7 Mar 22: Vercom included in sWIG80 index 900 700 500 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 Jan 23 Feb 23 Mar 23 Apr 23
Slide 11: We are on track to meet ESOP financial targets
: We are on track to meet ESOP financial targets Financial target – adjusted EBITDA (PLNm) Market target – stock price (PLN per share) On track to meet the target with (48% Implied valuation delivery already in H1) of PLN 2bn +45% Strong H2 due to seasonality and accumulated growth +21% 95 90 80 75
Slide 12: We continue to grow fast while improving product mix
: We continue to grow fast while improving product mix
Slide 13: Q2 2023 financial results
: Q2 2023 financial results Gross profit Increase y/y PLN 44m +108% EBITDA PLN 21m +94% Net income PLN 18m +269% : Scale beyond 13 13
Slide 14: Strong gross profit growth reflects the growing scale of operations
: Strong gross profit growth reflects the growing scale of operations Gross profit (PLNm) +77% CAGR Q2 2020 – Q2 2023 44 21 12 8 Q2 2020 Q2 2021 Q2 2022 Q2 2023 14
Slide 15: Gross profit growth is driven by customer adds and margin expansion
: Gross profit growth is driven by customer adds and margin expansion Gross profit (PLNm) x2 +14 p.p. +103% +53.900 15 (1) NER (Net Expansion Rate) – change in revenue from retail customers generating revenue in the current and the comparative period. Applies to revenue from the CPaaS segment
Slide 16: Stable SG&A cost base allows to benefit from operating leverage
: Stable SG&A cost base allows to benefit from operating leverage General and administrative expenses (PLNm) Note Increase of G&A was mostly associated with the impact of acquisitions, i.e.: Consolidated since mid Jul-22: (i) MailerLite (c. PLN 4.7m) (ii) Oxylion (c. PLN 1.3m) Consolidated since May
Slide 17: Our cash generation capacity is benefiting from expanding profit margins
: Our cash generation capacity is benefiting from expanding profit margins
Slide 18: Dynamic EBITDA growth in line with target growth trajectory
: Dynamic EBITDA growth in line with target growth trajectory EBITDA (PLNm) Note Q2 2023 EBITDA above the +51% CAGR Q2 2019 – Q2 2023 Management expectations and target growth trajectory for 2023 Nearly twofold increase of EBITDA YoY to PLN 21m Increasing EBITDA margin amounting to c. 26% in Q2 2023
Slide 19: Growing conversion rate of EBITDA into operating cash flow
: Growing conversion rate of EBITDA into operating cash flow Adjusted EBITDA and net cashflow from operating activities (PLNm) Adjusted EBITDA Net cashflow from operating activities 73 69 39 31 34 20 LTM Q2 2021 LTM Q2 2022 LTM Q2 2023 19
Slide 20: High cash generation capacity
: High cash generation capacity LTM EBITDA to LTM FCF bridge (PLNm) 80% EBITDA to FCF conversion rate 3) 2) 1) 1) 20
Slide 21: We deliver strong net income growth providing ample space for generous dividends
: We deliver strong net income growth providing ample space for generous dividends
Slide 22: Robust net income growth
: Robust net income growth Net profit (PLNm) Note Robust net profit growth yoy Net income (PLNm) +269% FX adjustment (PLNm) Net income supported by: ▪ Favourable FX rates ▪ Decrease in the cost of financing due to the lower credit margin resulting from gradual decrease of net debt / EBITDA ▪ Expecte
Slide 23: Safe and decreasing level debt
: Safe and decreasing level debt Net debt / LTM EBITDA Net debt (PLNm) -1.9x -PLN 55m 140 3.0x 2.0x 85 1.6x 1.1x Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q2 2023 23
Slide 24: Increasing global footprint means we are more diversified than ever before
: Increasing global footprint means we are more diversified than ever before
Slide 25: 3x increase in the number of customers
: 3x increase in the number of customers Number of CPaaS customers +53.900 73,100 19,200 Q2 2022 Q2 2023 : Scale beyond 25 25
Slide 26: Growing contribution of international sales
: Growing contribution of international sales International sales as a % of CPaaS revenue +20 p.p. 57% 37% Q2 2022 Q2 2023 26
Slide 27: Attractive customer structure
: Attractive customer structure Estimated structure of gross margin generated on foreign customers in H1 2023 North America Europe Asia Other 36% 48% 5% 11% 3% Spain 4% Benelux 2% France The US is the largest export market in terms of gross margin 32% US 3% Germany, Austria, Switzerland 9% UK 27
Slide 28: We have secured long-term growth potential via 14x increase of TAM
: We have secured long-term growth potential via 14x increase of TAM
Slide 29: Exponential growth of target addressable market
: Exponential growth of target addressable market Target addressable market (TAM) Global CPaaS market value (USDb) 14x TAM growth +34% CAGR 2021 - 2025 Market growth driven by secular tailwinds: ▪ Progressing digitalization of business processes ▪ Growing volume of transactional communication ▪ Deve
Slide 30: Strategic focus on increasing international presence
: Strategic focus on increasing international presence Growth strategy in SME segment Tap the tremendous potential of 2m freemium clients : SME Improve monetization of paying users via new services and localizations Leveraging strong competitive position and brand recognition Targeting broader spect
Slide 31: Product roadmap reflects our strategic goals for 2023-2024
: Product roadmap reflects our strategic goals for 2023-2024 : Solutions for Launch of MessageFlow New integrations with global Mid-market to enable expansion into new SaaS systems clients geographies Commercial implementation of conversational communication solutions leveraging proprietary and Mult
Slide 32: Continuous development of key products to drive customer growth
: Continuous development of key products to drive customer growth
Slide 33: MessageFlow – the new platform aimed at Enterprise and Mid-market clients
: MessageFlow – the new platform aimed at Enterprise and Mid-market clients MessageFlow.com One stop-shop for our enterprise customers providing access to the most advanced features and all communication channels Dedicated suite of tools for both marketers and developers Fresh look and new back-end
Slide 34: MailerLite – one of the top3 global email marketing platforms for SME clients
: MailerLite – one of the top3 global email marketing platforms for SME clients MailerLite Award-winning digital email marketing platform enabling SME customers to grow the audience and drive revenue Strong focus on customer-friendly approach that removes complexity while still offering advanced fea
Slide 35: Tapping new SME client pockets via new language versions of MailerLite
: Tapping new SME client pockets via new language versions of MailerLite Most spoken languages (mn of speakers) Mandarin Spanish English Hindi Spanish: Arabic second most-spoken Bengali language (natively) in the world Portugese Russian French Indonesian 0 200 400 600 800 1000 35
Slide 36: New AI-powered drag&drop editor in MailerLite
: New AI-powered drag&drop editor in MailerLite New AI-powered Drag & drop editor The new Drag & drop editor leverages GPT technology to help prepare high-quality content in seconds Completely redesigned and full of features specifically requested by MailerLite users One of the key features is AI-po
Slide 37: We are on track to achieve our mid-term growth targets
: We are on track to achieve our mid-term growth targets
Slide 38: We are on track to maintain EBITDA growth trajectory
: We are on track to maintain EBITDA growth trajectory Adjusted EBITDA (PLNm) 120 100 +55% EBITDA growth drivers 80 +34% CPaaS market growth CAGR in 2021-2025 60 x14 Increase of TAM 100 ### 40 55 20 37 26 19 10 0 2018 2019 2020 2021 2022 2024 target 38
Slide 39: Significant upside potential
: Significant upside potential We are exploring new client pockets • New language versions of MailerLite aimed at SME customers • Launch of MessageFlow – a dedicated platform for Mid-market clients • Preparing to re-scale transactional communication services globally We see considerable headroom to
Slide 40: Our unique business model translates into an excellent financial profile
: Our unique business model translates into an excellent financial profile Attractive financial profile Unique investment proposition Filter criteria # of companies(1) Cash-generative business model >PLN 200m SCALE (LTM revenue) 219 + ▪ 40x revenue growth in the last 10 years ▪ 90%+ EBITDA to OCF co
Slide 41: Q&A
VERCOM > Q&A