Vercom Sa · GPW:VRC
Vercom Sa — FY2023 Earnings Presentation
42 slides from Vercom Sa's earnings presentation, Feb 26, 2024
Slide 1: Preliminary results 2023
| Preliminary results 2023 Investor presentation 26 February 2024 : Scale beyond
Slide 2: Disclaimer
: Disclaimer By reviewing this material, you agree to the following limitations: The information provided was prepared by VERCOM S.A. (the "Company”) for informational purposes only and for the purposes of this presentation (the "Presentation"). This Presentation does not constitute or form part of
Slide 3: Another record year underpinned by +30% organic growth
: Another record year underpinned by +30% organic growth
Slide 4: 2023 was another record year
: 2023 was another record year Gross profit Growth y/y PLN 181m +56% Adj. EBITDA PLN 85m +54% Net income from continuing operations PLN 60m +94% : Scale beyond 44
Slide 5: Beating financial target for 2023 by PLN 5m
: Beating financial target for 2023 by PLN 5m ESOP financial target – adjusted EBITDA (PLNm) +PLN 5m above the 2023 EBITDA target 5 80 55 37 2021 2022 2023 5
Slide 6: Adding 1,000+ customers per month
: Adding 1,000+ customers per month Number of customers +13,100 79,400 66,300 2022 2023 : Scale beyond 66
Slide 7: Growing headroom for M&A and dividends
: Growing headroom for M&A and dividends Net debt / EBITDA -1.4x 2.0x 0.6x 2022 2023 : Scale beyond 77
Slide 8: Attractive perspective of growing dividends
: Attractive perspective of growing dividends Net profit from continuing operations, dividend payout (PLNm) Dividend payout Net income from continuing operations Potential dividend payout resulting from Vercom dividend policy (+50% of consolidated net profit) 60 31 30 25 2022 2023 8
Slide 9: Nearing PLN 2.0bn valuation mark (ESOP target for 2024)
: Nearing PLN 2.0bn valuation mark (ESOP target for 2024) Market capitalization (PLNk) 2,100 ESOP target 2024 (PLN 90 p.s.) 1,900 ESOP target 2023 (PLN 75 p.s.) 1,700 1,500 1,300 7 Mar 22: Vercom included in sWIG80 index 1,100 900 700 500 Dec 21 Mar 22 Jun 22 Sep 22 Dec 22 Mar 23 Jun 23 Sep 23 Dec 2
Slide 10: Our mission is to help our clients to reconnect with their audience
: Our mission is to help our clients to reconnect with their audience by removing communication and technological barriers
Slide 11: Facilitating everyday communication between businesses and their customers
: Facilitating Our solutionseveryday are an communication inherent part ofbetween everydaybusinesses life and their customers 11 11
Slide 12: Vercom customer engagement flywheel
: Vercom customer engagement flywheel Design & templates TRACT NEW CUSTOMER Segmentation Save time using our content creation AT S tools and templates Boost customer engagement and loyalty by focusing on the right people Smart analytics Turn insights into actions with A/B testing advanced analytical
Slide 13: 20 years of experience rewarded with trust of landmark partners
: 20 years of experience rewarded with trust of landmark partners 79,400+ Customers 13
Slide 14: One of the highest-rated email marketing platforms
: One of the highest-rated email marketing platforms MailerLite Klaviyo Mailchimp HubSpot 4.7 (1887) 4.7 (386) 4.5 (16449) 4.5 (5736) Capterra rating 4.6 4.5 x 4.4 x 4.3 x Ease of Use 4.8 4.4 4.1 4.4 Customer Service 4.6 4.6 4.4 4.4 Features 4.8 4.4 4.4 4.2 Value for Money $10.00 $20.00 $13.00 $50.0
Slide 15: Strategic focus on SME clients to drive global expansion
: Strategic focus on SME clients to drive global expansion
Slide 16: Strong focus on scalability to further grow international presence
: Strong focus on scalability to further grow international presence +1m : SME Long-term target: Paying customers Targeting broader spectrum of customers : MID-MARKET Globalization of the customer base : CEE : GLOBAL 16
Slide 17: Strategic shift towards small businesses and creators
: Strategic shift towards small businesses and creators Evolution of customer structure since IPO Gross profit margin LTM (%) Enterprise x9 +24 p.p. SME Growing contribution of high-margin services combined with stronger focus on SME clients translate into gross profit margin expansion (c. 55% in Q3
Slide 18: Selling services to customers in 180 markets globally
: Selling services to customers in 180 markets globally Estimated structure of gross margin from foreign customers in 2023 37% North America 47% Europe 16% Other Team locations Top markets Other markets 18
Slide 19: Growing contribution of international sales
: Growing contribution of international sales International sales as a % of revenue +13 p.p. 59% 46% 2022 2023 19
Slide 20: Continuous development of key products to drive customer growth
: Continuous development of key products to drive customer growth
Slide 21: Successful delivery of key development milestones for 2023
: Successful delivery of key development milestones for 2023 : Solutions for : Solutions for : Solutions for Mid-market SMBs and SMBs and clients creators creators Launch of Integration of Freshmail with Polish and Spanish MessageFlow brand for mid- MailerLite localization of MailerLite market custo
Slide 22: MessageFlow launched in Q4 2023
: MessageFlow launched in Q4 2023 MessageFlow – the new platform aimed at mid-market clients One stop-shop for our mid-market 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 23: We are testing new markets (LATAM)
: We are testing new markets (LATAM) MailerLite Spanish – new paid accounts 650 620 400 255 135 40 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 23
Slide 24: Polish localization facilitated migrating of Freshmail clients to MailerLite
: Polish localization facilitated migrating of Freshmail clients to MailerLite MailerLite Poland – new paid accounts Migration of Freshmail clients to MailerLite Polish localization of MailerLite facilitated transfer of customers from Freshmail, which is another milestone in the organization structu
Slide 25: Product development focused on customer engagement and new features
: Product development focused on customer engagement and new features Capex structure Key development vectors R&D Other NEW FEATURES: expanding AI-powered feature list (e.g. landing pages, automated templating, smart sending, drag&drop) 3.5 MONETIZATION: new integrations with third-party application
Slide 26: We continue to enjoy strong organic growth
: We continue to enjoy strong organic growth
Slide 27: Gross profit margin reflects dynamically growing scale of the business
: Gross profit margin reflects dynamically growing scale of the business Gross profit (PLNm) +64% CAGR 2019 – 2023 181 116 57 25 36 2019 2020 2021 2022 2023 27
Slide 28: 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) +56% +9 p.p. +111% +13.100 * NER (Net Expansion Rate) – change in revenue from customers generating revenue in the current and the comparative period, excl. wholesale traffic 28
Slide 29: 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 costs (PLN 17.0m) YoY is mostly associated with the impact of acquisitions (PLN 14.4m) The increase of other G&A costs (PLN 2.6m) YoY is mostly associated with the growin
Slide 30: Our cash generation capacity is benefiting from expanding profit margins
: Our cash generation capacity is benefiting from expanding profit margins
Slide 31: Dynamic EBITDA growth in line with target growth trajectory
: Dynamic EBITDA growth in line with target growth trajectory Adjusted EBITDA (PLNm) Note 2023 EBITDA PLN 5m+ above the +45% Management expectations and target growth trajectory for 2023 Strong organic growth rate in Q4 amounting to c. 28% YoY Growing EBITDA margin amounting to c. 25% 85 Expansion o
Slide 32: 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 Growing contribution of SaaS services with annual prepaid plans has positive impact on NWC supporting EBITDA to OCF co
Slide 33: High cash generation capacity
: High cash generation capacity LTM EBITDA to LTM FCF bridge (PLNm) 85% EBITDA to FCF conversion rate 22% FCF margin 3) 2) 1) 1) 33
Slide 34: Rule of 40 - outstanding performance vis-à-vis global SaaS peers
: Rule of 40 - outstanding performance vis-à-vis global SaaS peers Rule of 40 for selected SaaS peers One of the highest Rule of 40 (FCF margin + growth rate) among 65% top global competitors 54% 50% FCF margin 22% 41% 40% 19% 18% EBITDA growth* 32% Source: finbox.com * Organic adjusted EBITDA growt
Slide 35: Net income growth and decreasing leverage provide more space for dividends
: Net income growth and decreasing leverage provide more space for dividends and growth initiatives
Slide 36: Robust net income growth
: Robust net income growth Net profit from continuing operations (PLNm) Note Strong reported net profit growth of 94% yoy to PLN 60m +43% CAGR 2019 – 2023 Reported net profit in 2023 was affected by positive, non-cash FX differences in the amount of c. PLN 6m (post-tax) Net income to be supported by
Slide 37: Increasing headroom for potential dividends and planned acquisitions
: Increasing headroom for potential dividends and planned acquisitions Net debt / LTM EBITDA Note Safe and decreasing net debt / -2.4x EBITDA (c. 0.6x) Net debt amounts to PLN 47m Stronger cash position means more headroom for potential dividends and planned acquisitions 3.0x 2.0x 1.6x 1.1x 0.9x 0.6
Slide 38: We are on track to achieve our ambitious goals
: We are on track to achieve our ambitious goals
Slide 39: We are on track to maintain EBITDA growth trajectory
: We are on track to maintain EBITDA growth trajectory Adjusted EBITDA (PLNm) 120 +55% x2 100 EBITDA growth drivers 80 +30% Organic growth rate 60 x14 ### Increase of target 40 85 addressable market 55 20 37 26 19 10 0 2018 2019 2020 2021 2022 2023 2024 target 39
Slide 40: Key takeaways from 2023 results
: Key takeaways from 2023 results We celebrate another record year underpinned by organic growth rate of c. 30% and c. 22% FCF margin – it means we boast one of the highest Rule of 40 benchmark among leading SaaS companies Growing contribution of high-margin SaaS services and stronger focus on SME c
Slide 41: 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 Cash-generative business model >PLN 300m SCALE (LTM revenue) 202 + ▪ 40x revenue growth in the last 10 years ▪ 90%+ EBITDA to OCF conve
Slide 42: Thank you for your attention
: Thank you for your attention