Sinch Ab · OMXSTO:SINCH
Sinch Ab — Q4 2022 Earnings Presentation
19 slides from Sinch Ab's earnings presentation, Feb 16, 2023
Slide 1: Q4 2022 Investor Presentation
Q4 2022 Investor Presentation 16 February 2023 Johan Hedberg, Interim CEO Roshan Saldanha, CFO Thomas Heath, Chief Strategy Officer & Head of Investor Relations
Slide 2: A global leader in cloud communications and mobile customer engagement
SEK 27.7bn SEK 8.8bn SEK 3.1bn 60+ net sales in the gross profit in the Adj. EBITDA in the countries with past 12 months past 12 months past 12 months local presence a global leader in cloud communications and mobile customer engagement Scalable cloud communications platform More than 600 billion Ov
Slide 3: Three priorities
Three priorities 01 Cost control 02 Cash flow 03 Growth
Slide 4: Delivering on our cost reduction program
Delivering on our cost reduction program Adjusted Opex, SEKm • Half of the targeted SEK 300m gross savings have now been 1,600 1,434 1,460 1,456 realized 1,400 1,336 • Adjusted Opex in constant currency 1,200 658 is 12% lower in Q4 than in Q2 643 690 583 1,000 877 – One-time items reduce costs 800 b
Slide 5: Lower expected restructuring charges
Lower expected restructuring charges Adj Opex, Q2 2022, SEKm • Targeting SEK 300 million (10%) in gross savings through 1,600 1,434 – Reduced non-personnel 1,400 expenses 1,200 Voice, Email and SMB maintain – Fewer consultants 643 1,000 strong margins and are out of scope – Accelerated platform 800
Slide 6: Robust EBITDA development
Robust EBITDA development Adjusted EBITDA 1,200 • Proforma Adjusted EBITDA in Q4 +15% 2021 was SEK 831m 1,000 960 831 • Adjusted EBITDA in Q4 22 is 15% 800 higher than proforma Q4 21 600 • Cost control and margin focus safeguard earnings growth 400 200 0 Q4 2021 Q4 2022 proforma 6
Slide 7: Continued, strong cash flow
Continued, strong cash flow • Cash flow from operating activities Days Sales Outstanding* at SEK 973m in Q4 and 2,508m for 2022 77 • YTD cash conversion at 60%** 69 70 68 62 60 • Focused effort to reduce Accounts Receivables is yielding results • DSO at 60, down from 62 in Q3 31 Dec 31 Dec 31 March
Slide 8: Growth
Growth Q4 2022 Messaging Voice • Total revenue growth of 41% and gross profit growth of 79%, • Revenue growth at -5% and • Revenue growth at 4% and GP growth at -8% GP growth at 6% with acquisitions and currency contributing* • -1% revenue growth and 3% growth in gross profit • Large impact from red
Slide 9: Financials
Financials CAD sinch
Slide 10: Fourth quarter highlights
Fourth quarter highlights 01 02 03 Lower costs Margin stability Strong cash flow • Cost reduction program announced • Net sales growing 41%, Gross • Adjusted EBITDA of SEK 960m, up Q2 2022 has delivered faster profit 79% and Adj EBITDA 104% 104% vs Q4 2021 and 15% higher results than anticipated tha
Slide 11: Gross profit evolution
Gross profit evolution Gross profit, SEKm • Organic gross profit growth of 2% and proforma gross profit growth of 3% in constant currency Organic Acquisitions FX SEKm 2% +65% +12% • Organic growth impacted by 2 500 6 156 2 416 reduced Messaging volumes and 240 104 the price negotiation with one of 2
Slide 12: Margin development
Margin development Gross margin & Adjusted EBITDA margin • Stable gross margin • Q2 2022 affected by SEK 162 35% 33% 31% 32% 33% 33% million reassessment of reserves 29% 30% for accrued traffic costs 25% • Opex control contributing to 20% improved Adjusted EBITDA margin 15% in H2 2022 15% 13% 13% 13
Slide 13: Income statement
Income statement Q4 Q4 SEKm 2022 2021 2022 2021 Net sales 7 361 5 207 27 722 16 177 Cost of goods sold and services -4 945 -3 860 -18 912 -12 244 Gross profit 2 416 1 347 8 810 3 933 • Currency effects increase Net sales, Gross profit and EBITDA Other operating income 107 89 611 192 Work performed b
Slide 14: Cash conversion
Cash conversion Q4 Q4 SEKm 2022 2021 2022 2021 • Cash conversion* of 82% in Q4 and Adjusted EBITDA 960 471 3 124 1 322 60% for 2022 Paid interest -119 6 -279 -34 Paid taxes -161 -109 -560 -254 • Higher paid interest in Q4 due to Other items -18 127 -453 154 increased interest rates Cash flow before
Slide 15: Cash flow
Cash flow Q4 Q4 SEKm 2022 2021 2022 2021 Profit after financial items -166 603 -4 775 1 197 Adjustment for non-cash items 988 2 7 167 245 Income tax paid -161 -109 -560 -254 • Cash flow from operating activities Cash flow before changes in working capital 661 496 1 832 1 188 at SEK 973 million in Q4
Slide 16: Lower Net debt/Adjusted EBITDA
Lower Net debt/Adjusted EBITDA • Three components affecting Net debt/EBITDA: – EBITDA growth Net debt/Adjusted EBITDA – Cash generation – Immediate currency impact 3.1 3.3 3.2 on debt, but trailing impact on 2.9 2.7 earnings • EBITDA growth and strong cash generation causing Net debt/EBITDA to fall
Slide 17: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months Targets: • Adjusted EBITDA per share to grow 20% per year • Net debt < 3.5x adjusted EBITDA over time Performance: • Adjusted EBITDA per share grew 104% in Q4 22, measured on a rolling 12-month basis • Net debt/adjusted EBITDA of 2.7x ex
Slide 18: Three priorities
Three priorities 01 Cost control 02 Cash flow 03 Growth
Slide 19: Thank you!
Thank you! To get in touch, contact: Ola Elmeland, Investor Relations Director investors@sinch.com