Sinch Ab · OMXSTO:SINCH
Sinch Ab — Q4 2019 Earnings Presentation
26 slides from Sinch Ab's earnings presentation, Feb 20, 2020
Slide 1: Q4 2019 Investor Presentation
Q4 2019 Investor Presentation 20 February 2020 Oscar Werner CEO Roshan Saldanha CFO Thomas Heath Chief Strategy Officer & Head of Investor Relations
Slide 2: Sinch at a glance
SEK 5.0bn SEK 574m SEK 21bn 722 33 countries with revenue in the Adj. EBITDA in the Market Cap people local presence past 12 months past 12 months 40 billion Publicly listed on Customer engagement through mobile technology engagements per year NASDAQ in Stockholm Scalable cloud communications Servin
Slide 3: What one word sums up 2019 for you?
Asking everyone at Sinch for one word that captures the year ”What one word sums up 2019 for you?” 3
Slide 4: The world's first texting switchboard
The world’s first texting switchboard. Send a text you would love to get, to a stranger. To take on online negativity, we created #TextForHumanity, where you send a positive message to a stranger and receive one in return. Why? Because although we’re using our phones to communicate 24/7, we feel wor
Slide 5: Organic and acquired growth
Organic and acquired growth Sinch Gross profit and Adj EBITDA (SEKm) 500 450 400 • Focus on Gross profit and EBITDA 350 since pass-through revenues vary 300 between geographies 250 200 • Track record of profitable growth 150 • 42% growth in gross profit and 82% 100 growth in EBITDA in Q4 19 50 0 Q1
Slide 6: 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 (MobileSqua
Slide 7: 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 8: Strategic acquisitions
Strategic acquisitions Founded IPO One brand in Stockholm 2009 2014 2015 2016 2017 2018 2019 2008 Technology & Industry-leading Voice, video, Personalized video and Rich messaging, Go To Market Billing rich media messaging tech platform technology verification Low code tools Scale and Germany, profi
Slide 9: October – December 2019
October – December 2019 • Gross profit rising 42% to SEK 439.9 million (309.9) • Adjusted EBITDA rising 82% to SEK 199.5 million (109.4) • Adjusted EBIT excl. acquisition-related amortization of SEK 185.7 million (104.1) • Profit after tax of SEK 94.7 million (103.5) • Organic Gross profit growth of
Slide 10: Key growth drivers
Key growth drivers 1. 2. 3. Rising message Growth in Acquisition of TWW volumes with large Voice & Video and myElefant US tech companies Growing both with new and existing customers 10
Slide 11: Four investment areas
Four investment areas Growth with Operational Sales and New existing customers efficiency marketing technology • Continuous • COGS efficiency • Lead generation • Software for investment in • Internal automation • Greater focus on advanced, platform scalability for improved new sales interactive Key
Slide 12: Continued growth in Messaging
Continued growth in Messaging Messaging (SEKm) • Rising message volumes 1,600 • US tech companies continue to 1,400 fuel growth 1,200 • Businesses shifting from email to 1,000 mobile messaging 800 • myElefant & TWW included since 600 mid-October 2019 400 • Investments in next-generation 200 messagin
Slide 13: Rising message volumes
Rising message volumes Number of transactions per month (billions) • Acquisition of TWW and myElefant adding significant volumes in 3.5 October-November 3.0 • Growth from existing customers, new customers, new use cases 2.5 • Positive seasonality with more 2.0 transactions in Q4 than in other 1.5 qu
Slide 14: Gross profit per transaction
Gross profit per transaction OPEX/transaction & Gross profit/transaction (SEK) 0.050 • Gross profit is the primary bottom line driver 0.040 • GP/transaction decline due to 0.030 inclusion of TWW • Opex/transaction decline due to 0.020 economies of scale & seasonal increase in volumes 0.010 0.000 1 2
Slide 15: Rising margin in Messaging
Rising margin in Messaging Messaging EBITDA/Gross profit • Revenue and gross margin depend on mix of terminating markets 60% 60% • EBITDA/Gross profit shows margin 50% 50% excluding mobile operator charges 40% 40% • Adding traffic volume increases gross profit more than it increases 30% 30% opex 20%
Slide 16: Maintained growth in Voice and Video
Maintained growth in Voice and Video Voice and Video (SEKm) 90 80 70 • Growth fuelled by Number Masking 60 and Verification 50 • Continued growth in Gross profit 40 30 • Increasing OPEX to ensure quality 20 as volumes ramp quickly 10 0 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -20 2017 2018 2019 Reven
Slide 17: Project delays in Operators
Project delays in Operators Operators (SEKm) 60 50 • Fluctuations in results as projects 40 are realized 30 • Project delays and currency headwind in Q4 19 20 • Investments in RCS-as-a-Service 10 for mobile operators 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -10 2017 2018 2019 Revenue Gross profit EBITD
Slide 18: Q4 2019 Financials
CA Q4 2019 Financials
Slide 19: Income statement
Income statement • Non-recurring items of SEK 5.2 Q4 Q4 million in Q4 19 relate to the SEK million 2019 2018 2019 2018 acquisitions of myElefant and TWW Net sales 1,540.7 1,151.3 5,035.6 3,986.6 Cost of goods sold and services -1,100.7 -841.5 -3,641.4 -2,978.2 • Full year Adj EBITDA in 2019 rose by
Slide 20: Accelerating Gross Profit growth
Accelerating Gross Profit growth Organic Acquisitions FX +23% +14% +4% 500 SEKm 44 13 440 450 66 12 -5 0 400 • 42% total Gross Profit growth 350 310 300 • 23% organic Gross Profit growth 250 • 14% contribution from acquisitions 200 150 • Big US tech companies and 100 acquisitions fuelling growth 50
Slide 21: Headcount increase
Headcount increase 800 +39% • Headcount rising due to 700 654 recruitment and acquisitions 600 573 542 137 496 • Headcount at 722 at end of Q4 500 462 469 119 441 110 412 412 420 400 366 392 61 69 77 91 • Quarterly average of 654 would 49 47 53 61 62 have been 614 excluding 300 acquisitions, implyin
Slide 22: Reconciling Cash Flow with EBITDA
Reconciling Cash Flow with EBITDA Q4 Q4 SEK million 2019 2018 2019 2018 Adjusted EBITDA 199.5 109.4 573.5 367.1 • Strong underlying cash generation Paid interest -2.4 -4.8 -20.8 -19.4 Paid taxes -54.0 1.5 -117.4 -65.1 • Seasonally high tax paid in Q4 19, Other 6.5 -24.4 18.2 -59.0 one-off tax item i
Slide 23: Cash flow
Cash flow Q4 Q4 SEK million 2019 2018 2019 2018 Cash flow before changes in working capital 149.7 81.7 453.5 223.6 • Net Working Capital fluctuates Changes in working capital -13.7 10.9 -126.2 81.0 between quarters Cash flow from operating activities 135.9 92.6 327.3 304.6 Net investments in fixed a
Slide 24: Financial targets
Financial targets Targets: Adjusted EBITDA per share, rolling 12 months • Adjusted EBITDA per share to grow 20% per year 12.0 • Net debt < 2.5x adjusted EBITDA 10.0 over time 8.0 Performance: 6.0 • Adjusted EBITDA per share grew 4.0 54% in Q4 19, measured on a rolling 2.0 12 month basis 0.0 • Net de
Slide 25: Future growth
Future growth Strong pipeline with several US-based, global tech companies Enterprises shifting from mail to messaging Further growth in Voice and Video Larger Sinch field sales organisation, strengthened marketing M&A Continued strengthening of our connectivity offering Increased SaaS value-add thr
Slide 26: Thanks!
Thanks! Copyright© 2019 CLX Communications AB (publ). All rights reserved. NDA Confidential. 26