Vercom Sa · GPW:VRC

Vercom Sa — FY2022 Earnings Presentation

47 slides from Vercom Sa's earnings presentation, March 2023

  1. Slide 1: Annual results 2022 Investor presentation

    | Annual results 2022 Investor presentation March 2023 : Scale beyond

  2. Slide 2: Introduction

    : Introduction

  3. Slide 3: Our mission is to help clients reconnect with their audience

    : Our mission is to help our clients to reconnect with their audience by removing communication and technological barriers

  4. Slide 4: Customer engagement platform leveraging cross-channel communication

    : Customer engagement platform leveraging cross-channel communication 4

  5. Slide 5: Facilitating everyday communication between businesses and their customers

    : Facilitating Our solutionseveryday are an communication inherent part ofbetween modern,businesses and their customers everyday life 5

  6. Slide 6: Rapid growth of the business scale reflected in 2022 volumes

    : Rapid growth of the business scale reflected in 2022 volumes 2 bn+ 40 bn+ 100 bn+ SMS Emails PUSH notifications Open rate Deliverability SLA 98% +98% +99% 6

  7. Slide 7: 20 years of experience rewarded with trust of landmark partners

    : 20 years of experience rewarded with trust of landmark partners 66.000+ customers 7

  8. Slide 8: Quality of the business model proved by 40x growth over 10 years

    : Quality of the business model proved by 40x growth achieved over the past 10 years

  9. Slide 9: Dynamic growth driven by organic expansion and acquisitions

    : Dynamic growth driven by organic expansion and value-accretive acquisitions x40 2022: Global scale-up 2021: Debut on the WSE 260 2020: CPaaS leader in the CEE 179 Up to 2020: Scaling up operations on the local and regional markets Revenue, PLNm 117 78 59 34 10 12 20 6 2013 2014 2015 2016 2017 2018

  10. Slide 10: Operating summary

    VERCOM : Operating summary

  11. Slide 11: Another record year underpinned by the global expansion

    : Another record year underpinned by the global expansion

  12. Slide 12: Financial results

    : Financial results Revenue Increase y/y PLN 260m +45% Gross Profit PLN 116m +103% EBITDA* PLN 55m +49% *EBITDA normalized for the impact of non-recurring costs related to acquisitions and non-cash expenses : Scale beyond (ESOP) 12 12

  13. Slide 13: We achieved ESOP targets for 2022

    : We achieved ESOP targets for 2022 Adjusted EBITDA (mln zł) EBITDA target EBITDA target adjusted for M&A 95 80 75 60 55 45 37 37 2021 2022 2023 2024 13

  14. Slide 14: One of the highest-value acquisitions in tech sector in 2022

    Zdjęcie zmienić : One of the highest-value acquisitions in tech sector in 2022

  15. Slide 15: Acquisition of MailerLite

    GRAFIKA TBU : Acquisition of MailerLite Strong growth dynamics and robust outlook • 40% revenue CAGR in the last 3 years • The company reached USD 500k of monthly EBITDA : Global presence • Margin-accretive impact for Vercom @25% EBITDA margin • Dynamic growth of the client base + improving monetiza

  16. Slide 16: Selling services to customers in 180 markets globally

    : Selling services to customers in 180 markets globally +300 team members in 30 locations incl. San Francisco, New York and Dublin Team locations Top markets Other markets 16

  17. Slide 17: Foreign sales exceeds 50% of CPaaS revenue

    : Foreign sales exceeds 50% of CPaaS revenue 53% Share of foreign sales in the CPaaS revenue* PLN 269m CPaaS revenue* * Proforma 17

  18. Slide 18: We intend to share the success with our investors via generous dividends

    : We intend to share the success with our investors via generous dividends

  19. Slide 19: Dividend policy

    : Dividend policy Net profit (PLNm) Dividend policy announced in March 2023 assumes a minimum of 50% of consolidated net profit to be paid out as dividend +50% CAGR 2018 – 2022 PLN +25m Recommended 31 dividend value 23 19 14 6 2018 2019 2020 2021 2022 19

  20. Slide 20: Passing PLN 1bn valuation mark

    : Passing PLN 1bn valuation mark Market capitalization (PLNk) Vercom among top companies listed on the Warsaw Stock Exchange (GPW) according to Puls Biznesu annual survey 1 300 7 Mar 23: Vercom passed PLN 1bn valuation mark 1 200 1 100 7 Mar 22: Vercom included in sWIG80 index 1 000 900 800 700 600

  21. Slide 21: Financial overview

    VERCOM : Financial overview

  22. Slide 22: Twofold increase in gross profit driven by high-margin services

    : Twofold increase in gross profit driven by increasing share of high-margin services

  23. Slide 23: Dynamic top line growth continued in 2022

    : Dynamic top line growth continued in 2022 Revenue (PLNm) +45% CAGR 2018 – 2022 260 179 117 59 78 2018 2019 2020 2021 2022 23

  24. Slide 24: Twofold increase in gross profit

    : Twofold increase in gross profit Gross margin (PLNm) +64% CAGR 2018 – 2022 116 57 36 16 25 2018 2019 2020 2021 2022 24

  25. Slide 25: Gross profit growth driven by new customers and margin expansion

    : Gross profit growth driven by new customers and margin expansion Gross profit (PLNm) x2 +13 p.p. +109% +47.550 25 (1) NER (Net Expansion Rate) – change in revenue from customers generating revenue in the current and the comparative period. Applies to revenue from the CPaaS segment.

  26. Slide 26: Increasing diversification underpinned by c. 50% share of international sales

    : Increasing diversification underpinned by c. 50% share of the international sales

  27. Slide 27: 3x increase in the number of customers

    : 3x increase in the number of customers Number of customers +47,550 66 300 18 750 2021 2022 : Scale beyond 27 27

  28. Slide 28: Attractive customer structure - nearly 35% gross margin in North America

    : Attractive customer structure - nearly 35% gross margin in the North American market Estimated structure of gross margin generated on foreign customers (proforma data for 2022) North America Europe Asia Other 34% 50% 6% 10% 3% Spain 3% Benelux The US is the largest export 2% France market in terms

  29. Slide 29: 2.5x increase in the international sales

    : 2.5x increase in the international sales International sales (PLNm) x2.5 53% Share of foreign sales in the CPaaS 142 revenue* 56 2021 2022 * Proforma 29

  30. Slide 30: Strong profitability and record-high cash flow

    : Strong profitability and record-high cash flow

  31. Slide 31: Room for further cost optimization

    : Room for further cost optimization General and administrative expenses (PLNm) Note Increase of SG&A costs mostly associated with the impact of new acquisitions, i.e.: Consolidated since Jul-22: (i) MailerLite (c. PLN 28.5m) (ii) Oxylion (c. PLN 2.7m) Consolidated since Jul-21: (i) Freshmail (c. PL

  32. Slide 32: Twofold increase of EBITDA every two years

    : Twofold increase of EBITDA every two years EBITDA (PLNm) Note +53% Dynamic growth of adjusted EBITDA continued in 2022 EBITDA margin remains high at 21%+ 55 37 26 19 10 2018 2019 2020 2021 2022 Adjustments in 2022 include: mployee stock option plan (ESOP) in the amount of PLN 931k and transaction

  33. Slide 33: High conversion rate of EBITDA into operating cash flow

    : High conversion rate of EBITDA into operating cash flow Adjusted EBITDA and net cashflow from operating activities (PLNm) Note Adjusted EBITDA High quality of earnings underpinned by c. 90% conversion Net cashflow from operating activities rate of EBITDA into net cashflow from operating activities

  34. Slide 34: High cash generation capacity

    : High cash generation capacity EBITDA to FCF bridge (PLNm) 77% EBITDA to FCF conversion rate 3) 2) 1) 1) 34

  35. Slide 35: Strong cash flows and comfortable debt level

    : Strong cash flows and comfortable debt level FCF (PLNm) Debt service (PLNm) Note Free cash flow (PLN 42.7m) significantly exceeds debt service costs in 2022 (PLN +PLN 16.2m 18.6m) Safe level of net debt to EBITDA (2.0x) +PLN 4.7m Completion of the acquisition program carried out with funds raised

  36. Slide 36: Dynamic net profit expansion

    : Dynamic net profit expansion Net profit (PLNm) Note Robust net profit growth of 38% yoy +50% CAGR 2018 – 2022 Increase in non-cash amortization of PPA trademarks and client base in the amount of PLN 2.0m Net financial expenses growth amounting to PLN 4.5m driven mostly by the increase in debt serv

  37. Slide 37: Strategy

    VERCOM : Strategy

  38. Slide 38: Global presence translates into 14x increase in target addressable market

    : Global presence translates into 14x increase in target addressable market

  39. Slide 39: We operate on the intersect of several fast-growing markets

    : We operate on the intersect of several fast-growing markets Vercom core market value: Diversification: >26bn USD by 2025 CPaaS New opportunities for product diversification leading to expansion of Vercom core market of communication potential customer base, leveraging expertise in the areas of pla

  40. Slide 40: Strategic focus on increasing international presence

    : Strategic focus on increasing international presence 14x TAM growth : SME Targeting broader Global spectrum of customers 8 200m USD Europe 1,200m USD : MID-MARKET Globalization of the customer base CEE 600m USD 40 Source: Juniper Research

  41. Slide 41: A proven strategy to loyalize Mid-market clients

    : A proven strategy to loyalize Mid-market clients : LAND & EXPAND • We are gradually expanding scope of co-operation with our clients from e.g. marketing to sales, customer support, product updates and notifications • We share the success of our clients (pay-as-you-grow model) : LEVERAGE CROSS-SELL

  42. Slide 42: Partner of choice for SMBs and creators

    : Partner of choice for SMBs and creators : ATTRACT NEW CUSTOMERS • Leverage strong brand awareness, attractive pricing, and 2MM freemium client base to increase the number of paying users • Expand into new markets to target Spanish-speaking audiences in the US, LATAM, Mexico, and Spain through loca

  43. Slide 43: Product roadmap reflects our strategic goals for 2023-2024

    : Product roadmap reflects our strategic goals for 2023-2024 : Solutions for Launch of New integrations with global Mid-market MessageFlow and expansion SaaS systems clients into new geographies Commercial implementation of conversational communication solutions leveraging proprietary and Integratio

  44. Slide 44: Long-term growth potential in the coming years

    : Long-term growth potential in the coming years

  45. Slide 45: Significant potential to maintain EBITDA growth trajectory

    : Significant potential to maintain EBITDA growth trajectory Adjusted EBITDA (PLNm) 120 100 +55% EBITDA growth drivers 80 +34% CPaaS market growth CAGR in 2021-2025 60 x14 Increase of TAM 100 ### 40 55 20 37 26 19 10 0 2018 2019 2020 2021 2022 2024 target 45

  46. Slide 46: Key takeaways

    : Key takeaways Attractive growth profile • 2x increase in gross profit to PLN 116m in 2022 • Proven ability to achieve ESOP financial targets • Aiming to double the EBITDA by 2024 Growing international presence • Selling services to 66,000+ customers in 180 markets • +50% proforma share of internat

  47. Slide 47: Q&A

    VERCOM > Q&A

Vercom — FY2022 Earnings Presentation on 6ix