Sinch Ab · OMXSTO:SINCH
Sinch Ab — Q3 2021 Earnings Presentation
24 slides from Sinch Ab's earnings presentation, Nov 2, 2021
Slide 1: Q3 2021 Investor Presentation
Q3 2021 Investor Presentation 2 November 2021 Oscar Werner, CEO Roshan Saldanha, CFO Thomas Heath, Chief Strategy Officer & Head of Investor Relations
Slide 2: Customer engagement through mobile technology
SEK 14.0bn SEK 122bn SEK 1.2bn 2,424 49 countries with revenue in the Market Cap Adj. EBITDA in the people local presence past 12 months past 12 months Listed on NASDAQ Customer engagement through mobile technology in Stockholm, Sweden Scalable cloud communications 190 billion B2C Serving 8 of the 1
Slide 3: Third quarter highlights
Third quarter highlights 01 02 03 Organic growth & growth Acquisitions of Pathwire Investments in scale, through acquisitions and MessengerPeople systems and people • Total revenues growth of 122%, • Pathwire offers a leading, cloud- • Inteliquent, MessageMedia and with organic growth at 41% based e
Slide 4: Continued, broad-based growth
Continued, broad-based growth Gross profit, SEKm 1,000 +86% • Focus on gross profit since pass- 896 through revenues vary between products and geographies 750 • 86% higher gross profit with organic gross profit growth at 20% 481 500 • Higher growth in transaction 250 volumes and revenues, with organ
Slide 5: Adding volumes in Messaging
Adding volumes in Messaging Messaging, SEKm 4,000 800 • 46 billion transactions in Q3, a 229% increase y-o-y 3,500 700 • 97% higher revenues with 35% 3,000 600 organic growth 2,500 500 • 67% higher gross profit with19% 2,000 400 organic growth 1,500 300 1,000 200 • Continued, broad growth across 500
Slide 6: Extending the Sinch Conversation API
Extending the Sinch Conversation API Apple Messages Telegram KakaoTalk for Business 6
Slide 7: Healthy growth in Voice and Video
Healthy growth in Voice and Video Voice and Video, SEKm 120 40 • 23% higher revenues with organic growth at 26% 90 30 • 44% higher gross profit with 60 20 organic growth also at 44% 30 10 • Temporary traffic at low gross 0 0 margin now ended; gross margin -30 -10 from 18% in Q2 to 28% in Q3 • Prepar
Slide 8: Strong performance in Operators
Strong performance in Operators Operators, SEKm 400 200 • Growth since Q4 2020 driven 350 175 primarily by SDI acquisition 300 150 • Healthy growth and profitability in 250 125 both Sinch and SDI businesses in Q3 2021 200 100 150 75 • Expect continued earnings volatility 100 50 between quarters 50 2
Slide 9: Strategic acquisitions
Strategic acquisitions SAP Digital Interconnect Rich messaging, Conversational Low code tools Conversational AI messaging Technology & Go To Market Voice, video, Personalized Conversational Email Voice SME verification video messaging Developer GTM Australia, Americas, Southeast Asia Europe, APAC Sc
Slide 10: Pro forma illustrates greater scale
Pro forma illustrates greater scale Proforma gross profit and Adjusted EBITDA • Focus on Gross profit since pass- 8.0 through revenues vary between products and geographies 7.0 Pathwire • Acquisitions adding significantly to 6.0 MessageMedia our scale and profitability SEK billion 5.0 Inteliquent •
Slide 11: Pathwire adds email and developer go-to-market
Pathwire adds email and developer go-to-market Enterprise Developer SMB* • Online lead-generation • Online self-signup • Online self-signup • Lead with APIs and SaaS • Lead with APIs • Lead with SaaS & integrations • Target enterprise customers and • Target developers, who may work • Target small an
Slide 12: Extending our leadership with MessengerPeople
Extending our leadership with MessengerPeople • Conversations with customers in all different messaging apps are handled in a single business inbox • Time-saving tools increase agent efficiency and reduce waiting times • Quick to demo, quick to deploy • Optimised for mid-sized businesses 12
Slide 13: Integration projects
Integration projects + SAP Digital Interconnect Scale-up • TWW closed October 2019 • Deal closed September 2020 • Deal closed November 2020 • Wavy closed February 2020 • Migration of customers and • International traffic to India • Sales teams merged with • Rapid inorganic growth suppliers to shared
Slide 14: Integration planning
Integration planning • Deal signed February 2021 • Deal signed June 2021 • Deal signed September 2021 • Deal signed September 2021 • Expected to close H2 2021 • Expected to close H2 2021 • Deal closed 1 November 2021 • Expected to close H2 2021 • Regulatory approval process • Regulatory approvals ha
Slide 15: Financials
Financials CAD sinch
Slide 16: Gross profit bridge
Gross profit bridge Organic Acquisitions FX • High growth rates in Q3 and Q4 SEKm +20% +70% -4% 2020 implies tougher comparables 1,000 337 -17 896 • 20% organic gross profit growth 900 800 • Inorganic growth contributions from 700 SDI (SEK 247m), Wavy (SEK 58m) 79 6 6 3 600 and ACL (SEK 32m) 481 500
Slide 17: Income statement
Income statement Q3 Q3 SEKm 2021 2020 2020 R12M Net sales 3,938 1,778 8,023 13,969 • Adjusted EBITDA is different from Cost of goods sold and services -3,042 -1,297 -5,840 -10,589 EBITDA primarily due to acquisition Gross profit 896 481 2,183 3,381 costs, integration costs, and share- Other operatin
Slide 18: Reconciling Cash flow with Adjusted EBITDA
Reconciling Cash flow with Adjusted EBITDA Q3 Q3 • High conversion of Adjusted SEKm 2021 2020 2020 R12M Adjusted EBITDA 298 234 989 1,229 EBITDA to cash flow Paid interest -16 -9 -30 -45 Paid taxes -30 -73 -101 -137 Other items -8 -8 -256 -200 Cash flow before changes in working capital 244 145 602
Slide 19: Cash flow
Cash flow Q3 Q3 SEKm 2021 2020 2020 R12M Cash flow before changes in working capital 244 145 602 846 • Change in working capital affected Change in working capital -735 -38 -148 -1,041 by prepayment of operator traffic Cash flow from operating activities -491 107 454 -195 charges Net investments in
Slide 20: Cash flow reclassification
Cash flow reclassification Q1 Q2 Q3 Jan-Sep SEKm 2021 2021 2021 2021 Cash flow before changes in working capital 226 221 244 692 • Part of the financing for Wavy was Change in working capital 361 -461 -735 -834 recognised as “New share issue” in Cash flow from operating activities 587 -240 -491 -143
Slide 21: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months Targets: 2.00 • Adjusted EBITDA per share to grow 20% per year 1.50 • Net debt < 3.5x adjusted EBITDA over time 1.00 Performance: 0.50 • Adjusted EBITDA per share grew 19% in Q3 21, measured on a rolling 12 month basis 0.00 • Net debt/EB
Slide 22: Financial leverage
Financial leverage Pro forma net debt/Adjusted EBITDA 2.7 2.8 2.8 • Pro forma calculation includes last 12 months of Adj EBITDA for 0.6 acquired entities -0.4 • Updated financial target is to maintain Net debt < 3.5x adjusted EBITDA over time • Pro forma Net debt/Adj EBITDA of 2.8x after payment for
Slide 23: Improved margin profile and balanced product mix
Improved margin profile and balanced product mix Gross margin & Adjusted EBITDA margin Gross profit by product 40% 100% 34% 12% 19% 30% 75% 12% 24% 15% Other 20% 50% Operators 15% Email 83% Voice & Video 10% 9% Messaging 25% 52% 0% Gross margin Adj EBITDA margin 0% L12M Q3 21 L12M Q3 21 L12M Q3 21 L
Slide 24: Thank you!
Thank you! To get in touch, contact: Thomas Heath, Chief Strategy Officer & Head of Investor Relations Ola Elmeland, Investor Relations investors@sinch.com