Slide 1: Q2 2024 Investor Presentation
Q2 2024 Laurinda Pang, CEO I N VES T O R PR ES EN T AT I O N Roshan Saldanha, CFO J U L Y 19, 2024 Thomas Heath, Chief Strategy Officer
Slide 2: Pioneering the way the world communicates
150,000+ 800bn+ 60+ Scalable cloud communications business interactions countries with platform for messaging, voice and email customers per year local presence Pioneering the way the world communicates SEK 28.6bn SEK 9.7bn SEK 3.6bn net sales in the gross profit in the Adj. EBITDA in the past 12 mo
Slide 3: Second quarter highlights
Second quarter highlights 01 02 03 Record cash flow Improved margins Growth acceleration plan • Operating cash flow of SEK 1,049 • Organic gross profit growth at 2%. • Targeting SEK 300 million gross million in Q2 and SEK 3.2 billion over opex savings run-rate by year-end the last 12 months. • Gross
Slide 4: Overview
Overview Operating segments Product categories Expenditures Gross profit by region, R12M Gross profit by product, R12M Adjusted opex by function, R12M 16% 21% 22% 49% 21% 56% 63% 23% 29% Americas API Platform R&D EMEA Applications Sales & marketing APAC Network Connectivity General & administrative
Slide 5: Performance by segment
Performance by segment Americas EMEA APAC • Stable gross profit • Gross profit down 4% year- • 7% organic growth in Net sales year-on-year in constant on-year in constant and 19% organic growth in currencies. currencies. gross profit. • Commercial focus on RCS and • Higher gross profit growth is • R
Slide 6: Gross profit by product
Gross profit by product Gross profit, Q2 24 vs Q2 23, SEKm • Targeting continued profitable +5% growth in API Platform and 1,500 1,325 Applications 1,250 • Focusing on cash generation in 1,250 Network Connectivity • API Platform and Applications 1,000 contribute 79% of gross profit +5% 750 -8% 520 5
Slide 7: Customer Connections report
Customer Connections report • More than 3 in 4 consumers say • For more than 54% of the • 58% of businesses integrate one bad experience (just one!) consumers we surveyed, messaging channels in CRM can end their relationship with a convenience is what makes the systems and 57% directly within brand.
Slide 8: RCS support on the iPhone
RCS support on the iPhone Smartphone OS market shares by country • Rich Communications Services (RCS) is feature-rich messaging protocol designed to succeed USA 58% SMS • Users receive RCS messages in UK 52% the same app where they read SMS today Sweden 56% France 35% • A global GSMA standard Brazil
Slide 9: RCS adds valuable new features
RCS adds valuable new features Verified sender Significantly reduces the risk for fraud Branding Name, logo, color Better analytics Rich media Improved delivery Images, video, animated receipts and read GIFs and custom colors receipts for brands QR codes For tickets, tracking and redemptions Suggest
Slide 10: RCS for EasyPark
RCS for EasyPark One communications partner for all markets EasyPark Group needed a reliable partner to send messages across more than 20 countries. Creating a secure driver experience with RCS By switching to Sinch, Easypark only has one partner for all markets, which simplified their messaging inf
Slide 11: Financials
Financials 11
Slide 12: Net sales
Net sales Net sales, SEKm • Net sales unchanged 8,000 7,532 year-on-year 7,265 7,021 7,041 6,792 7,000 • Organic growth in constant currencies decreased by 1% 6,000 5,000 4,000 • Americas up 1% year-on-year in 3,000 constant currencies 2,000 • EMEA down 8%, APAC growing 7% 1,000 0 Q2 23 Q3 23 Q4 23
Slide 13: Gross profit
Gross profit Gross profit, SEKm • Gross profit up 3% 3,000 year-on-year, with a positive 2,526 currency effect of 1% 2,433 2,386 2,500 2,322 2,312 • Organic growth in constant currencies at 2% 2,000 1,500 • Americas unchanged, EMEA 1,000 down 4%, and APAC up 19% in constant currencies 500 • 5% organ
Slide 14: Network Connectivity
Network Connectivity Gross profit (SEKm) and organic gross profit growth, Network Connectivity, Americas • Price increases for legacy voice network connections impacted gross profit in Q1 24. -12% • Commercial negotiations with 600 North American carriers reduces -18% 487 490 the risk for future pri
Slide 15: Rising gross margins
Rising gross margins Gross margin, % EBITDA margin, % 36% 14% 13% 13% 12% 12% 12% 12% 35% 10% 12% 11% 11% 34.0% 33.9% 11% 34% 33.5% 10% 33.5% 8% 33.1% 33% 6% 4% 32% 2% 31% 0% Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 30% Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 EBITDA margin Adjusted EBITDA margin • Favourable mix shift b
Slide 16: Strong cash conversion
Strong cash conversion Cash flow after investments, SEKm Cash conversion from Adj EBITDA, R12M 1,000 903 80% 72% 800 678 574 60% 600 424 42% 400 38% 40% 35% 32% 200 0 20% Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 -200 -151 0% -400 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 • Net working capital causes variation between • Ca
Slide 17: Reduced leverage
Reduced leverage Net debt/Adjusted EBITDA R12m* • Continued deleveraging with Net debt/EBITDA now at 1.7x • Three components affecting Net 2.4 debt/EBITDA: 2.2 2.0 2.0 ‒ EBITDA growth ‒ Cash generation 1.7 ‒ Immediate currency impact on debt, but trailing impact on earnings Q2 23 Q3 23 Q4 23 Q1 24 Q
Slide 18: Well-covered debt maturities
Well-covered debt maturities Maturity schedule, SEKm • Available cash and committed 10,000 credit facilities more than exceed loans maturing in 2024 and 2025 7,500 4,416 5,000 • Last 12 months: ‒ Generated SEK 2.6 billion in Cash flow from operating 2,500 activities after investments 3,251 2,667 ‒ R
Slide 19: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months 4.5 Targets: • Adjusted EBITDA per share to 4.0 grow 20% per year 3.5 • Net debt < 3.5x adjusted EBITDA over time 3.0 2.5 Performance: 2.0 • Adjusted EBITDA per share grew 1.5 1% in Q2 2024, measured on a rolling 12-month basis 1.0 • Net
Slide 20: Growth acceleration plan
Growth acceleration plan 20
Slide 21: Our next phase
Our next phase Stabilised and rising margins, strong cash flow, and continued deleveraging • Organic and • Business Unit setup to • Maintain strong acquired growth protect value in profitability & cash flow acquired businesses • Mainly focused on • Increase focus on messaging • Weakened growth busin
Slide 22: Growth acceleration plan
Growth acceleration plan Today 2023 2024 2025 2026 2027 Investment phase Accelerated product integration SEK 350 million investment Go-To-Market and CRM transformation … in IT initiatives over 3 years ERP modernization SEK ~300 million integration and restructuring cost in 2024 Return phase Initial
Slide 23: Tracking our progress
Tracking our progress Go-To-Market transformation Product integration Operational excellence Americas, EMEA and APAC reported as financial segments. Unified cross-Sinch product strategy. Target operating model for business support functions. Integrated account coverage Financial reporting matc
Slide 24: Capital Markets Day
Save the date! Capital Markets Day 20 November 2024 For more information, contact: Ola Elmeland Investor Relations Director investors@sinch.com
Slide 25: Income statement
Income statement SEKm Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 2023 R12M Net sales 6,927 7,021 7,265 7,532 6,792 7,041 28,745 28,630 Cost of services sold -4,667 -4,699 -4,832 -5,006 -4,480 -4,655 -19,204 -18,973 Gross profit 2,260 2,322 2,433 2,526 2,312 2,386 9,542 9,657 Operating expenses -1,568 -1,60
Slide 26: Cash flow
Cash flow SEKm Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 2023 R12M Profit or loss before tax -75 -25 -26 -26 40 21 -152 8 Adjustment for non-cash items 684 633 640 903 574 594 2,859 2,711 Income tax paid -199 -226 -127 -48 -57 -147 -600 -379 Cash flow before changes in working capital 410 382 487 828 557
Slide 27: Cash conversion
Cash conversion SEKm Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 2023 R12M Adjusted EBITDA 834 865 943 996 794 867 3 637 3 600 Net interest paid -127 -145 -159 -156 -131 -130 -588 -587 Paid taxes -199 -226 -127 -48 -57 -147 -600 -379 Other items -97 -111 -170 36 -49 -122 -342 -294 Cash flow before changes i
Slide 28: New reporting vs earlier disclosure
New reporting vs earlier disclosure Complementary Previous operating segments New operating segments product view SMB APAC Applications Email EMEA Voice API Platform Americas Messaging Network Connectivity Relative size reflects share of gross profit in 2023. 28
Slide 29: New product categories
New product categories • Software applications for customer engagement supporting use cases across marketing, operations Applications and customer care. • Targets business users. Customer • APIs allow businesses to trigger mobile messaging, Communications API Platform voice calling, and emails from