Slide 1: Q3 2024 Investor Presentation
Q3 2024 Laurinda Pang, CEO I N VES T O R PR ES EN T AT I O N Roshan Saldanha, CFO N O V 6, 2024 Thomas Heath, Chief Strategy Officer
Slide 2: Pioneering the way the world communicates
150,000+ 800bn+ 60+ Scalable cloud communications business interactions countries with platform for messaging, voice and email customers per year local presence Pioneering the way the world communicates SEK 28.5bn SEK 9.6bn SEK 3.6bn net sales in the gross profit in the Adj. EBITDA in the past 12 mo
Slide 3: Third quarter highlights
Third quarter highlights 01 02 03 Stable performance Continued cash generation Transformation • Gross profit growth of 1%, in • Operating cash flow of SEK 437 • Realized gross savings of SEK 84 constant currencies, with a stable million in Q3 and SEK 2.8 billion over million in Q3, corresponding to
Slide 4: Overview
Overview Operating segments Product categories Expenditures Gross profit by region, R12M Gross profit by product, R12M Adjusted opex by function, R12M 16% 21% 23% 48% 21% 56% 63% 23% 29% Americas API Platform R&D EMEA Applications Sales & marketing APAC Network Connectivity General & administrative
Slide 5: Performance by segment
Performance by segment Americas EMEA APAC • 1% year-on-year gross profit • Gross profit down 3% • 12% year-on-year growth in growth in constant currencies. year-on-year in constant gross profit in constant currencies. currencies. • Gross profit positively affected by SEK 40m timing • Improvement in
Slide 6: Gross profit by product
Gross profit by product Gross profit, Q3 24 vs Q3 23, SEKm +2% • Targeting continued profitable growth in API Platform and 1,500 Applications 1,370 1,369 • Focusing on cash generation in 1,250 Network Connectivity • API Platform and Applications 1,000 contribute 80% of gross profit +6% 750 -5% 536 5
Slide 7: Rising interest in RCS messaging
Rising interest in RCS messaging The power of default: Cooperation with Google: • RCS is now turned on by default • Google operates the on new Androids and iPhones infrastructure used by most carriers to offer RCS • RCS messages appear in the same app that is used for SMS • Joint Sinch/Google events
Slide 8: Financials
Financials 8
Slide 9: Net sales
Net sales Net sales, SEKm • Net sales in constant currencies 8,000 7,532 7,265 7,150 increased by 2% year-on-year 7,041 6,792 7,000 • Net sales decreased by 2% on a reported basis 6,000 5,000 4,000 • Americas up 5% year-on-year in 3,000 constant currencies 2,000 • EMEA down 4%, APAC unchanged 1,000
Slide 10: Gross profit
Gross profit Gross profit, SEKm 3,000 2,526 • Gross profit grew 1% 2,433 2,386 2,406 year-on-year in constant 2,500 2,312 currencies, and declined 1% on a 2,000 reported basis • Positively affected by a SEK 40m 1,500 adjustment of Cost of services sold related to Q1 and Q2 1,000 500 • Americas up 1%
Slide 11: Network Connectivity
Network Connectivity Gross profit (SEKm) and organic gross profit growth, Network Connectivity, Americas • Price increases for legacy voice network connections impacted gross profit in Q1 24. -4% • Improvement in Q2 24 following 600 -12% Commercial negotiations with -18% North American carriers. 487
Slide 12: Stable margins
Stable margins Gross margin, % EBITDA margin, % 36% 14% 13% 13% 13% 12% 12% 12% 35% 10% 12% 11% 11% 34.0% 33.9% 11% 11% 34% 33.5% 33.5% 33.6% 8% 33% 6% 4% 32% 2% 31% 0% Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 30% Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 EBITDA margin Adjusted EBITDA margin • Gross margin development aff
Slide 13: Strong cash conversion
Strong cash conversion Cash flow after investments, SEKm Cash conversion from Adj EBITDA, R12M 1,000 80% 903 72% Early receipts 61% 800 of SEK 240m 678 recorded in Q2 60% 574 600 42% 38% 424 40% 32% 400 293 20% 200 0 0% Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 • Net working capita
Slide 14: Reduced leverage
Reduced leverage Net debt/Adjusted EBITDA R12m* • Continued deleveraging with Net debt/EBITDA now at 1.6x • Three components affecting Net 2.2 debt/EBITDA: 2.0 2.0 ‒ EBITDA growth 1.7 ‒ Cash generation 1.6 ‒ Immediate currency impact on debt, but trailing impact on earnings Q3 23 Q4 23 Q1 24 Q2 24 Q
Slide 15: Well-covered debt maturities
Well-covered debt maturities Maturity schedule as of 30 September, SEKm 10,000 • After the end of the quarter, a bond loan of SEK 673m with 7,500 maturity in November 2024 was prematurely redeemed • Available cash and committed 5,000 4,647 credit facilities more than exceed loans maturing in 2025-26
Slide 16: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months 4.5 • Financial target to grow Adjusted EBITDA per share by 4.0 20% per year 3.5 • Adjusted EBITDA per share decreased by 1% in Q3 2024, 3.0 measured on a rolling 12-month 2.5 basis 2.0 1.5 1.0 • Financial leverage policy to maintain Net
Slide 17: Growth acceleration plan
Growth acceleration plan 17
Slide 18: Our next phase
Our next phase Stabilised and rising margins, strong cash flow, and continued deleveraging • Organic and • Business Unit setup to • Maintain strong acquired growth protect value in profitability & cash flow acquired businesses • Mainly focused on • Increase focus on messaging • Weakened growth busin
Slide 19: Growth acceleration plan
Growth acceleration plan Today 2023 2024 2025 2026 2027 Investment phase Accelerated product integration SEK 350 million investment Go-To-Market and CRM transformation … in IT initiatives over 3 years ERP modernization SEK ~300 million integration and restructuring cost in 2024 Return phase Initial
Slide 20: Tracking our progress
Tracking our progress Go-To-Market transformation Product integration Operational excellence Americas, EMEA and APAC reported as financial segments. Unified cross-Sinch product strategy. Target operating model for business support functions. Integrated account coverage Financial reporting matc
Slide 21: Capital Markets Day November 2024
Capital Markets Day 20 November 2024 Register to attend in person: Participate via webcast: investors.sinch.com/cmd-live investors.sinch.com/cmd-online For more information, visit investors.sinch.com/cmd-2004. To contact Investor relations, reach out to: Ola Elmeland Investor Relations Director inve
Slide 22: Income statement
Income statement SEKm Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 2023 R12M Net sales 7,021 7,265 7,532 6,792 7,041 7,150 28,745 28,515 Cost of services sold -4,699 -4,832 -5,006 -4,480 -4,655 -4,744 -19,204 -18,885 Gross profit 2,322 2,433 2,526 2,312 2,386 2,406 9,542 9,630 Operating expenses -1,606 -1,58
Slide 23: Cash flow
Cash flow SEKm Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 2023 R12M Profit or loss before tax -25 -26 -26 40 21 -5,963 -152 -5,929 Adjustment for non-cash items 633 640 903 574 594 6,754 2,859 8,825 Income tax paid -226 -127 -48 -57 -147 -99 -600 -351 Cash flow before changes in working capital 382 487 828
Slide 24: Cash conversion
Cash conversion SEKm Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 2023 R12M Adjusted EBITDA 865 943 996 794 867 923 3,637 3,579 Net interest paid -145 -159 -156 -131 -130 -117 -588 -534 Paid taxes -226 -127 -48 -57 -147 -99 -600 -351 Other items -111 -170 36 -49 -122 -15 -342 -149 Cash flow before changes in
Slide 25: New reporting vs earlier disclosure
New reporting vs earlier disclosure Complementary Previous operating segments New operating segments product view SMB APAC Applications Email EMEA Voice API Platform Americas Messaging Network Connectivity Relative size reflects share of gross profit in 2023. 25
Slide 26: New product categories
New product categories • Software applications for customer engagement supporting use cases across marketing, operations Applications and customer care. • Targets business users. Customer • APIs allow businesses to trigger mobile messaging, Communications API Platform voice calling, and emails from