Vercom Sa · GPW:VRC
Vercom Sa — Q3 2023 Earnings Presentation
35 slides from Vercom Sa's earnings presentation, November 2023
Slide 1: Q3 2023 Investor presentation
| Q3 2023 Investor presentation November 2023 : Scale beyond
Slide 2: Outstanding financial results underpinned by +30% organic growth
: Outstanding financial results underpinned by +30% organic growth
Slide 3: Q3 2023 financial results
: Q3 2023 financial results Gross profit Organic growth y/y PLN 47m +28% EBITDA PLN 22m +36% Net income PLN 13m +197% : Scale beyond 33
Slide 4: Growing number of paying customers
: Growing number of paying customers Number of paying customers +12.700 75,500 62,800 Q3 2022 Q3 2023 : Scale beyond 44
Slide 5: Sale of minority stake in User.com
: Sale of minority stake in User.com Stake sold 30.3% Transaction value c. PLN 24m Capital invested c. PLN 10m ROI 144% Return on investment IRR 24% 5
Slide 6: Decreasing level of net debt / EBITDA
: Decreasing level of net debt / EBITDA Net debt / EBITDA -2.1x 3.0x 0.9x Q3 2022 Q3 2023* : Scale beyond * Including c. PLN 24m from the sale of minority share in User.com received in October 2023 66
Slide 7: 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 8: Facilitating everyday communication between businesses and their customers
: Facilitating Our solutionseveryday are an communication inherent part ofbetween everydaybusinesses life and their customers 88
Slide 9: 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 10: 20 years of experience rewarded with trust of landmark partners
: 20 years of experience rewarded with trust of landmark partners 75.500+ Paying customers 10
Slide 11: Top Email Marketing Tools
: Top 3 Email Marketing Tools 2023 by Forbes mailer 4.7 Forbes Apvisor BEST FOR SELLING PAID SUBSCRIPTIONS : Scale beyond
Slide 12: 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 4.3 4.1 4.4 Customer Service 4.5 4.6 4.3 4.4 Features 4.8 4.3 4.4 4.2 Value for Money $10.00 $20.00 $13.00 $50.0
Slide 13: Increasing global footprint means we are more diversified than ever before
: Increasing global footprint means we are more diversified than ever before
Slide 14: Strategic shift towards small businesses and creators
: Strategic shift towards small businesses and creators Number of Enterprise customers Number of SME customers x9 x2 75,040 460 206 8,290 Q3 2020 Q3 2023 Q3 2020 Q3 2023 14
Slide 15: Changes in client base and product mix drive gross profit margin expansion
: Changes in client base and product mix drive gross profit margin expansion Gross profit margin LTM (%) +25 p.p. 55% 53% 50% 46% Growing contribution of high- margin services combined with stronger focus on SME clients 39% translate into gross profit margin expansion (c. 55% in Q3 2023 LTM) 34% 32%
Slide 16: 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 Q3 2023 36% North America 48% Europe 16% Other Team locations Top markets Other markets 16
Slide 17: Growing contribution of international sales
: Growing contribution of international sales International sales as a % of revenue +13 p.p. 61% 48% Q3 2022 Q3 2023 17
Slide 18: We continue to enjoy strong organic growth
: We continue to enjoy strong organic growth
Slide 19: Strong gross profit growth reflects the growing scale of operations
: Strong gross profit growth reflects the growing scale of operations Gross profit (PLNm) +86% CAGR Q3 2020 – Q3 2023 47 36 14 7 Q3 2020 Q3 2021 Q3 2022 Q3 2023 19
Slide 20: 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) +28% +7 p.p. +110% +12.700 * NER (Net Expansion Rate) – change in revenue from customers generating revenue in the current and the comparative period, excl. wholesale traffic (99% for all customers) 20
Slide 21: 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 2.1m) YoY is mostly associated with the growing scale of the business PLN 0.7m of G&A increase YoY was associated with the impact of Appchance Group and Center
Slide 22: Our cash generation capacity is benefiting from expanding profit margins
: Our cash generation capacity is benefiting from expanding profit margins
Slide 23: Dynamic EBITDA growth in line with target growth trajectory
: Dynamic EBITDA growth in line with target growth trajectory EBITDA (PLNm) Note +55% CAGR Q3 2020 – Q3 2023 Q3 2023 EBITDA above the Management expectations and target growth trajectory for 2023 Strong organic growth rate amounting to 36% YoY Increasing EBITDA margin amounting to c. 26% in Q3 2023
Slide 24: 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 55% 50% 47% FCF margin 19% 42% 35% EBITDA growth 36% 14% Source: finbox.com 24
Slide 25: +90% conversion rate of EBITDA into operating cash flow
: +90% conversion rate of EBITDA into operating cash flow Adjusted EBITDA and net cashflow from operating activities (PLNm) Adjusted EBITDA Net cashflow from operating activities 80 73 47 46 35 27 LTM Q3 2021 LTM Q3 2022 LTM Q3 2023 25
Slide 26: High cash generation capacity
: High cash generation capacity LTM EBITDA to LTM FCF bridge (PLNm) 78% EBITDA to FCF conversion rate 3) 2) 1) 1) 26
Slide 27: 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 28: Robust net income growth
: Robust net income growth Adjusted net profit (PLNm) Note Strong reported net profit growth of Reported net income +197% 197% yoy to PLN 13m Adjustments* 1 Reported net profit in Q3 2022 was affected by negative, non-cash FX differences in the amount of c. PLN 4m Net income to be supported by: ▪ Ex
Slide 29: 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 / EBITDA, already below 1.0x -2.1x Net debt amounts to PLN 74m (incl. PLN 24m from the sale of minority share in User.com received in October 2023) Stronger cash position me
Slide 30: We are on track to achieve our ambitious goals
: We are on track to achieve our ambitious goals
Slide 31: Strategic focus on increasing international presence
: Strategic focus on increasing international presence +1m : SME Long-term target: Paying customers Targeting broader spectrum of customers : MID-MARKET Globalization of the customer base : CEE : GLOBAL 31
Slide 32: We have already met financial target for 2023 on the LTM basis
: We have already met financial target for 2023 on the LTM basis Financial target – adjusted EBITDA (PLNm) We have already met the 2023 target on the on the last twelve months basis (LTM) Q4 usually is the strongest quarter due to seasonality 95 80 55 37 2021 2022 2023 2024 32
Slide 33: 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 80 addressable market 55 20 37 26 19 10 0 2018 2019 2020 2021 2022 Q3 2023 LTM 2024 target 33
Slide 34: Key takeaways from Q3 2023 results
: Key takeaways from Q3 2023 results SME clients account for the majority of our 75,000 client base We stand out as one of the highest Rule of 40 companies among the leading SaaS companies with organic growth rate of more than 30% and c. 20% FCF margin Our profit margins are expanding across all P&L
Slide 35: Thank you for your attention
: Thank you for your attention