Sinch Ab · OMXSTO:SINCH
Sinch Ab — Q3 2022 Earnings Presentation
20 slides from Sinch Ab's earnings presentation, Nov 2, 2022
Slide 1: Q3 2022 Investor Presentation
Q3 2022 Investor Presentation 2 November 2022 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 25.6bn SEK 7.7bn SEK 2.6bn 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: Stable cost base compared to Q2
Stable cost base compared to Q2 Adjusted Opex, SEKm 1,600 1,434 1,460 • Adjusted Opex in Q3 is 2% higher 1,336 1,400 than Q2 in SEK, but 4% lower in 1,200 constant currencies 643 658 1,000 877 583 • Focus and simplicity key to 800 reduce costs 205 586 597 600 400 753 791 802 672 586 597 200 0 Q2 Q3
Slide 5: Implementing our Cost reduction program
Implementing our Cost reduction program • Targeting SEK 300 million (10%) in gross savings by Q3 2023 Adj Opex, Q2 2022, SEKm • Gradual impact: 1/3 in Q1 2023, 1,600 1,434 full effect from Q3 2023 1,400 – Reduced non-personnel 1,200 Voice, Email and SMB maintain expenses 643 1,000 strong margins and
Slide 6: Continued, strong cash flow
Continued, strong cash flow • Cash flow from operating activities Days Sales Outstanding* at SEK 726m in Q3 & 1,535m YTD • YTD cash conversion at 50%** 77 69 70 68 • Focused effort to reduce Accounts 62 Receivables is yielding results • DSO at 62, down from 68 in Q2 31 Dec 31 Dec 31 March 30 June 30
Slide 7: Growth
Growth Messaging Voice Email SMB • Q3 organic revenue growth at • Q3 revenue growth* at 2%, up • Q3 revenue growth* at 22%, • Q3 revenue growth* at 9%, 11%, up from 9% in Q2 from 1% in Q2 down from 23% in Q2 down from 18% in Q2 • Q3 organic GP growth at 4%, • Q3 GP growth* at 3%, up from • Q3 GP gro
Slide 8: A global leader in cloud communications
A global leader in cloud communications Rising gross profit and broadened product mix Gross profit in SEKm. 8
Slide 9: Welcoming new leaders
Welcoming new leaders Sean O’Neal Brett Scorza • New Business Unit President for SMB, • New Business Unit President for Voice, succeeding Paul Perrett succeeding Ed O’Hara • Broad experience in technology and • Background in telecoms and technology online marketing • With Inteliquent since 2004, alr
Slide 10: Financials
Financials CAD sinch
Slide 11: Third quarter highlights
Third quarter highlights 01 02 03 Stable cost base Strong cash flow Growth and margin recovery • Adjusted Opex in Q3 is 2% higher • Adjusted EBITDA of SEK 901m, up than Q2 in SEK, but 4% lower in 202% vs Q3 2021 and higher than • Net sales growing 83%, Gross constant currencies Q3 2021 pro forma Adj
Slide 12: Gross profit evolution
Gross profit evolution Gross profit, SEKm • Organic gross profit growth of 8% and proforma organic gross profit Acquisitions growth of 6% Organic FX 8% +147% +9% SEKm • Continued negative impact from Q2 2,500 292 17 85 2,361 price negotiation with one of our 299 largest customers in Messaging 2,000
Slide 13: Margin development
Margin development Gross margin & Adjusted EBITDA margin • Gross margin is affected by mix but relatively stable at group level 35% 33% 31% 32% 33% • Q2 2022 affected by SEK 162 29% 30% million reassessment of reserves 25% for accrued traffic costs 20% • Opex control contributing to 15% improved Adj
Slide 14: Income statement
Income statement Q3 Q3 SEKm 2022 2021 2021 R12M Net sales 7,196 3,938 16,177 25,568 Cost of goods sold and services -4,835 -3,042 -12,244 -17,826 Gross profit 2,361 896 3,933 7,742 • Currency effects increase Net sales, Gross profit and EBITDA Other operating income 226 46 192 594 Work performed by
Slide 15: Cash conversion
Cash conversion Q3 Q3 SEKm 2022 2021 2021 R12M • Cash flow before changes in Adjusted EBITDA 901 298 1,322 2,636 working capital is affected by Paid interest -51 -16 -34 -154 realized currency effects on Paid taxes -112 -30 -253 -507 Other items -222 -8 152 -307 financial items Cash flow before chan
Slide 16: Cash flow
Cash flow Q3 Q3 SEKm 2022 2021 2021 R12M Cash flow before changes in working capital 516 244 1 188 1 668 Change in working capital 211 -735 -859 339 • Cash flow from operating activities Cash flow from operating activities 727 -491 329 2 007 at SEK 727 million in Q3 and 1,535 Net investments in prop
Slide 17: 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 earnings • EBITDA growth and strong cash generation causing Net debt/EBITDA to fall in Q
Slide 18: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months Targets: • Adjusted EBITDA per share to grow 3.50 20% per year 3.00 • Net debt < 3.5x adjusted EBITDA 2.50 over time 2.00 1.50 Ann-Christin Performance: 1.00 • Adjusted EBITDA per share grew 83% in Q3 22, measured on a 0.50 rolling 12-mo
Slide 19: Three priorities
Three priorities 01 Cost control 02 Cash flow 03 Growth
Slide 20: Thank you!
Thank you! To get in touch, contact: Ola Elmeland, Investor Relations Director investors@sinch.com