Sinch Ab · OMXSTO:SINCH
Sinch Ab — CLX Communications — Q2 2018 Earnings Presentation
22 slides from Sinch Ab's earnings presentation, Jul 20, 2018
Slide 1: 18Q2 Interim Report
18Q2 INTERIM REPORT Stockholm, July 20, 2018 Johan Hedberg President and CEO Odd Bolin CFO Thomas Heath Chief Strategy Officer and Head of Investor Relations Copyright© 2018 CLX Communications AB (publ). All rights reserved. NDA Confidential.
Slide 2: CLX at a Glance
CLX AT A GLANCE ▪ Established leader in enterprise messaging, connecting businesses to 5bn mobile users across the globe ▪ Leading cloud communications platform for mobile messaging, voice, video and the Internet of Things (IoT) ▪ Preferred partner to the world’s most demanding enterprises ▪ Softwar
Slide 3: Infinite Use Cases
INFINITE USE CASES BANKING HEALTHCARE INTERNET INDUSTRIAL Confirmations Patient monitoring COMMERCE & UTILITIES Transaction alerts Voice authentication Authorization Meter reading 2FA, One time PIN codes Appointment reminders Two Factor Authentication IoT connectivity Virtual phone numbers Workforce
Slide 4: Highlights 18Q2
HIGHLIGHTS 18Q2 Johan Hedberg, CEO Copyright© 2018 CLX Communications AB (publ). All rights reserved. 4
Slide 5: 18Q2 Summary
18Q2 SUMMARY ▪ Group organic revenue growth of 18 percent in local currency ▪ Gross profit up 30 percent due to organic growth & successful M&A ▪ Adjusted EBITDA up 32 percent ▪ Strong performance in the Enterprise Division ▪ Slight improvement in Operator Division EBITDA versus last quarter ▪ Conti
Slide 6: Enterprise Division
ENTERPRISE DIVISION ▪ Continued growth in messaging traffic from new and existing customers ▪ Unwire performing better than expected ▪ Mblox and Dialogue traffic successfully migrated to our new Nova platform ▪ Strong pipeline with several US-based, global, digital-native companies ▪ Flat or slightl
Slide 7: Traffic Growth
TRAFFIC GROWTH Transactions Gross profit 2.5 200 Gross profit, Enterprise division (MSEK) A2P transactions per month (bn) 175 2.0 150 1.5 125 100 1.0 75 50 0.5 25 0.0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 2018 2015 2016 2017 2018 ▪ A2P messaging volume up 14 percent y/y in compa
Slide 8: Operator Division
OPERATOR DIVISION ▪ Underlying business developing as planned ▪ Slight EBITDA improvement from 18 Q1 ▪ No significant capacity expansion projects during the quarter ▪ Continued investments to grow future topline ▪ Strong sales pipeline but slow conversion to projects and revenue ▪ Slight improvement
Slide 9: Sinch & Vehicle
SINCH & VEHICLE ▪ Sinch is continuing to invest in increased functionality and customer-adaptions ▪ Ride-hailing developing favorably with further markets set to go live this year ▪ Considerable interest and increasing revenues in Vehicle personalized video ▪ Cross selling Vehicle products to Operat
Slide 10: Financials
FINANCIALS Odd Bolin, CFO Copyright© 2018 CLX Communications AB (publ). All rights reserved. 10
Slide 11: April – June 2018
APRIL – JUNE 2018 ▪ Gross profit increased to SEK 248.6 million (190.7 in 17Q2) ▪ Adjusted EBITDA was SEK 97.4 million (74.0) ▪ EBITDA was SEK 80.3 million (49.3) ▪ EBIT was SEK 39.8 million (18.3) ▪ Net profit for the quarter was SEK 29.0 million (-1.2) ▪ Higher gross profit and EBITDA in the Enter
Slide 12: Gross Profit, Q/Q MSEK
GROSS PROFIT, Q/Q Acquisitions +13% Organic* +11% 300 20 1 1 0 249 250 9 17 200 ▪ Strong momentum in Unwire 200 ▪ Large US clients driving organic MSEK 150 growth 100 50 0 Q1 18 Unwire Vehicle Enterprise Operator Sinch Other Q2 18 Organic growth includes the impact of currency fluctuations. Unwire i
Slide 13: Adjusted EBITDA, Q/Q MSEK
ADJUSTED EBITDA, Q/Q Acquisitions +22% Organic* +28% 120 22 2 -1 -6 97 100 80 12 2 ▪ Growth in gross profit drives EBITDA 65 ▪ Combination of acquisitions and MSEK 60 organic growth 40 20 0 18 Q1 Unwire Vehicle Enterprise Operator Sinch Other 18 Q2 Organic growth includes the impact of currency fluc
Slide 14: Gross Profit, Y/Y MSEK
GROSS PROFIT, Y/Y Acquisitions +18% Organic* +12% 300 23 -3 2 2 249 250 9 17 200 191 9 ▪ Significant GP contribution from acquired businesses MSEK 150 ▪ Organic GP growth impacted by UK regulatory changes and lost wholesale 100 traffic in H2 17 50 0 17 Q2 Dialogue Unwire Vehicle Enterprise Operator
Slide 15: Adjusted EBITDA, Y/Y MSEK
ADJUSTED EBITDA, Y/Y Acquisitions +26% Organic* +6% 120 14 -2 -1 -8 97 ▪ Significant EBITDA contribution from 100 2 12 acquired businesses 5 80 74 ▪ Forward-looking OPEX investments in sales and product development MSEK 60 40 20 0 17 Q2 Dialogue Unwire Vehicle Enterprise Operator Sinch Other 18 Q2 O
Slide 16: Key Metrics
KEY METRICS Enterprise Division: ▪ Gross profit – we use gross profit as our key measure since gross margin depends on geographical traffic mix, which we have limited influence over ▪ Adjusted EBITDA/gross profit – measures operational efficiency in the business ▪ OPEX per transaction – measures ope
Slide 17: Operational Efficiency in Messaging
OPERATIONAL EFFICIENCY IN MESSAGING 60% 0.05 50% 0.04 ▪ Improving operational efficiency due 40% to economies of scale 0.03 30% ▪ Gross profit is the primary bottom 0.02 line driver 20% ▪ Revenue and gross margin depend 0.01 on mix of terminating markets 10% ▪ Improved EBITDA/GP 0% 0.00 2016 2017 20
Slide 18: Way Forward
WAY FORWARD Johan Hedberg, CEO Copyright© 2018 CLX Communications AB (publ). All rights reserved. 18
Slide 19: Future Growth
FUTURE GROWTH ▪ Strong pipeline with several US-based, global, digital-native companies ▪ Sinch investments in real-time voice functionality and customer-adaptions ▪ Ride-hailing developing favorably with further markets set to go live this year ▪ Considerable interest and increasing revenues in Veh
Slide 20: Personalized Video
PERSONALIZED VIDEO ▪ Unique, personalized videos to each recipient ▪ Dynamically rendered at scale with no limits ▪ Nearly 100 percent device reach and 98 percent open-rate ▪ Nearly perfect open rates and 4.5 higher click-thru rate (than email) Copyright© 2018 CLX Communications AB (publ). All right
Slide 21: Next Generation Enterprise Messaging
NEXT GENERATION ENTERPRISE MESSAGING Branding RCS = SMS “2.0” Customize with your Real Time Feedback company name, colour and Know when your customer has received and read your message and whether your logo. customer is typing you a response to your message. Know if your customer has tapped on links
Slide 22: Q & A
Q&A Copyright© 2018 CLX Communications AB (publ). All rights reserved. 22