Converge Information & Communications Technology Solutions Inc · PSE:CNVRG
Converge Information & Communications Technology Solutions — FY2022 Earnings Presentation
36 slides from Converge Information & Communications Technology Solutions's earnings presentation, February 2023
Slide 1: Results Briefing
RESULTS BRIEFING #LeaveNoOneBehind
Slide 2: Meeting Reminders
Meeting Reminders • Please mute your microphones during the presentation. • Questions will be entertained during the Q&A portion after the presentation. You may send your questions through the Zoom Chat feature. Please introduce yourself along with your affiliated company/research house. • The sessi
Slide 3: Presenters: Grace Y. Uy and Jesus C. Romero
Grace Y. Uy Co-Founder and President Deputy Chi Jesus C. Romero Be Chief Operations Officer Ct oOneBehind
Slide 4: Mr. Dennis Anthony H. Uy
Mr. Dennis Anthony H. Uy CEO and Co-Founder
Slide 5: Ms. Grace Y. Uy
Ms. Grace Y. Uy President and Co-Founder
Slide 6: 4Q/FY2022 Results Key Takeaways
4Q/FY2022 Results Key Takeaways ✔ Converge continues its growth trend in FY2022 with 27.3% YoY revenue growth and 30.7% YoY EBITDA growth ✔ EBITDA margins expanded significantly from 55.9% in FY2021 to 57.4% in FY2022, surpassing management guidance ✔ Net income after tax of PHP7,439 million in FY20
Slide 7: Ms. Christine R. Blabagno
Ms. Christine R. Blabagno Deputy Chief Finance Officer
Slide 8: Industry Leading Trifecta
Industry Leading Trifecta Robust revenue growth of ~27.3% and industry leading profitability with ~57.4% EBITDA margin and ~15.7% ROIC Revenue EBITDA (2) PHP MM (US$ MM) (1) PHP MM (US$ MM) (1) ($618) ($355) Enterprise 33,696 19,353 Residential ($486) ($272) 4,297 26,479 14,803 3,350 ($287) ($151) 1
Slide 9: Continued profitability through economies of scale and prudent cost management
Continued profitability through economies of scale and prudent cost management initiatives FY2022 P&L Breakdown Margins Key drivers In PHP Mn In % of revenues for the period Revenue 33,696 FY2021 FY2022 • Continued strong top-line growth, registering a 27.3% increase for FY2022 vs. the same period l
Slide 10: Lower CAPEX requirements driven by deployment efficiencies
Lower CAPEX requirements driven by deployment efficiencies Deployed a total of PHP 22 Bn in CAPEX for FY2022, expenditures moving forward to focus on port deployment PHP 25 Bn PHP 22 Bn Backbone 35% Access Others 30% ~PHP 12-15 Bn 26% 56% 61% 58% 9% 9% 17% 2021 Actual 2022 Actual 2023 Guidance • 202
Slide 11: Strong balance sheet with limited exposure to macro pressures
Strong balance sheet with limited exposure to macro pressures Moderately leveraged capitalization structure Long-term diversified debt, with rates 100% fixed Debt exposure(1) Capitalization Structure In PHP Bn Common Equity In PHP Bn 1.5 PHP Bn Current portion of LT debt 3.2 Share capital 1.9 Long t
Slide 12: Mr. Jesus C. Romero
Mr. Jesus C. Romero Chief Operations Officer
Slide 13: Network expansion and household coverage already above 2023 targets
Network expansion and household coverage already above 2023 targets The Philippines’ Broadest Fiber Network Homes Passed (MM) (1)(2)(3) Number of Ports (MM) (1)(2) 13% 25% 43% 56% 55% 0.9 1.4 2.4 2.0 190 350 342 226 14.9 14.6 - 7.9 7.5 to 8.0 0.9 0.9 11.0 5.9 0.9 0.4 0.9 0.4 6.1 3.5 0.1 14.1 0.2 3.2
Slide 14: 4Q2022 monthly churn already at 1.75%
4Q2022 monthly churn already at 1.75%, down significantly from 2Q2022 high of 2.49% Number of Subscribers (‘000) 591 ✓ 617 615 841 Net subscriber adds of ~32k in 4Q2022, marking a re-acceleration for two consecutive quarters, culminating in FY22 end of period sub count of ~1.9 million. 1.8x 1,691 1,
Slide 15: Update on nationwide roll-out initiatives
Update on nationwide roll-out initiatives Continued network expansion into new services areas …resulting in significant gross adds contribution from North Luzon and VisMin areas Quarterly Gross Adds In 000s 163 188 150 124 129 5.4% 12.1% 12.6% 18.7% 18.2% 18.5% 13.9% 11.8% 10.4% 9.9% 82.0% 74.1% 69.
Slide 16: World-class performance reflected in consumer-initiated ratings
World-class performance reflected in consumer-initiated ratings Ookla Speedtest Award Netflix ISP Speed Index 10 out of 12months in FY2022 Where Converge topped local ranking in Netflix’ ISP Speed index
Slide 17: Expanding target addressable market
Expanding target addressable market New product offerings to result in larger target market Proper market segmentation Targeted Value Optimized product offering to match Household Count Market Segment In MM households Proposition segment’s needs Total: [c.22] BASE PLAN P1500 or Higher Postpaid [c.5]
Slide 18: Strong enterprise growth momentum
Strong enterprise growth momentum Enterprise segment continues its growth trajectory by growing 26% YoY in FY2022 SME and wholesale revenues are growing contributors to Enterprise Revenues Enterprise revenues by segment MRC only - In PHP millions 4-Year CAGR: 23% YoY Growth (FY2022 vs. FY2021) FY202
Slide 19: Mr. Benjamin B. Azada
Mr. Benjamin B. Azada Chief Strategy Officer
Slide 20: Continued development in customer experience
Continued development in customer experience Improving customer service metrics due to CX improvements and network investments Increased app usage and take-up Trouble ticket index (TTI) Service affecting tickets (SA) SA tickets as a percent of total network tickets Ticket count (In thousands) Troubl
Slide 21: Converge continues to deliver on its Sustainability Commitment
Converge continues to deliver on its Sustainability Commitment by undertaking various ESG-related projects Converge undertook various initiatives in 4Q2022, some of which include… Some of the other initiatives were implemented in the earlier parts of the year Engagement with ESG rating agencies such
Slide 22: Q&A
(CONVERGE ath 4Q/FY 2022 RESULTS BRIEFING Q&A #LeaveNoOneBehind
Slide 23: Thank you!
ath (CONVERGE 4Q/FY 2022 RESULTS BRIEFING Thank you! #LeaveNoOneBehind
Slide 24: Disclaimer
Disclaimer This material has been prepared exclusively for information and disclosure purposes only. This does not constitute any offer to buy or sell securities. These may contain forward-looking statements and information that are, by their nature, subject to significant risks, uncertainties, and
Slide 25: Appendix
APPENDIX 1»... #LeaveNoOneBehind
Slide 26: Revenue growth and cost management initiatives contributed to EBITDA growth
Revenue growth and cost management initiatives contributed to EBITDA growth YoY EBITDA Growth PHP MM Decreased Increased FY2022 margins (% of revenue) 55.9% 7% > 3% 4% > 5% 6% > 5% 3% > 4% 4% > 2% 16% > 18% 4% > 5% 57.4% Total Cost Net Increase: PHP (2,666) MM FY2021 Inc in Revenue Dec in network In
Slide 27: Excluding one-off items, FY2022 normalized EBITDA margin reaches 58.8%
Excluding one-off items, FY2022 normalized EBITDA margin reaches 58.8% Increase in EBITDA margin due to decrease in revenues being larger than decrease in EBITDA FY2022 margins (% of revenue) 57.4% 58.8%1 Total cost net decrease: PHP 28 Mn Actual FY2022 Revenue Cost of sales Other expense Normalized
Slide 28: Quarterly Operational Performance
Quarterly Operational Performance 2021 2022 YoY Change % 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4Q2022 vs 4Q2021 Residential Revenues 4,797 5,415 6,162 6,754 6,812 7,272 7,278 8,100 11% FTTH 4,086 4,771 5,571 6,215 6,299 6,800 6,853 7,605 23% HFC 711 644 590 539 513 472 424 480 -11% Customers 1,181,723 1,355,079 1
Slide 29: Consolidated Income Statement
Consolidated Income Statement For the twelve months ended December 31 For the three months ended December 31 2022 2021 YoY Change YoY Change% 2022 2021 YoY Change YoY Change% In PHP millions Revenues 33,696 26,479 7,217 27% 9,215 7,648 1,567 20% Residential 29,462 23,129 6,333 27% 8,100 6,755 1,345
Slide 30: Consolidated Income Statement
Consolidated Income Statement For the twelve months ended December 31 For the three months ended December 31 2022 2021 YoY Change YoY Change% 2022 2021 YoY Change YoY Change% In PHP millions Depreciation and amortization 6,063 3,748 2,315 62% 1,781 1,184 597 50% Amortization of deferred contract cos
Slide 31: Consolidated Income Statement
Consolidated Income Statement For the twelve months ended December 31 For the three months ended December 31 2022 2021 YoY Change YoY Change% 2022 2021 YoY Change YoY Change% In PHP millions Personnel costs 1,435 1,254 181 14% 134 224 (90) -40% Managed service fees 1,186 736 450 61% 418 120 297 247%
Slide 32: Consolidated Balance Sheet
Consolidated Balance Sheet As of the period Dec 31, 2022 Sep 30, 2022 Change Change % (in P millions) Current assets 22,593 26,910 (4,316) -16% Cash and cash equivalent 10,214 11,788 (1,574) -13% Trade and other receivables, net 3,337 3,674 (337) -9% Network materials and supplies 4,385 5,150 (765)
Slide 33: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement For the twelve months ended December 31 2022 2021 YoY change YoY change % (in P millions) Cash flow from operating activities Profit before income tax...……………………………………………………… 9,856 9,553 302 3% Adjustments for operating income……..……………………………………… (13,238) (7,652) (5,5
Slide 34: Liquidity and Capital Resources
Liquidity and Capital Resources December 31, 2022 September 30, 2022 Change (%) Balance Sheet Data (in P millions) Total Assets 98,098 100,574 -2% Total Debt 38,222 38,669 -1% Total Stockholders' Equity 36,057 34,772 4% Financial Ratios Total Debt to EBITDA (gross) 2.0x 2.1x Total Debt to EBITDA (ne
Slide 35: Bi-Frost Cable System ready by 2024
CHINA TAIWAN CALIFORNIA HONGKONG BI-FROST CABLE SYSTEM READY BY 2024
Slide 36: Augmenting Our International Network Capacity
Augmenting Our International Network Capacity 37
Converge Information and Communications Technology Solutions — FY2022 Earnings Presentation on 6ix