Slide 1: Q3 2023 Investor Presentation
Q3 2023 Laurinda Pang, CEO I N VES T O R PR ES EN T AT I O N Roshan Saldanha, CFO N O VEM B ER 7, 2023 Thomas Heath, Chief Strategy Officer
Slide 2: Pioneering the way the world communicates
150,000+ 700bn+ 60+ Scalable cloud communications business interactions countries with platform for messaging, voice, customers per year local presence email and video Pioneering the way the world communicates SEK 28.5bn SEK 9.4bn SEK 3.6bn net sales in the gross profit in the Adj. EBITDA in the pas
Slide 3: Third quarter highlights
Third quarter highlights 01 02 03 Stable margins Strong cash flow New operating model • Gross margin at 33.5%, up 0.4pp • Operating cash flow of SEK 862 • Increasing our customer focus and from Q2 2023 and up 0.7pp from million in Q3 leveraging economies of scale Q3 2022 • Operating cash flow above
Slide 4: Recognized leadership
Recognized leadership Leader in CPaaS “The breadth of Sinch’s CPaaS offering, including more advanced features such as • Sinch named Leader in Gartner’s video and email, is rivaled by first Magic Quadrant™ for CPaaS only a few other vendors.” • Highlights ability to meet demanding enterprise require
Slide 5: Innovation with AAA
Innovation with AAA 30 million calls for roadside assistance each year AAA, the American Automobile Association, is one of North America’s largest and most trusted membership organizations and has more than 63 million members. New satellite capabilities For AAA, Sinch has extended its Customer Commu
Slide 6: Digital transformation with Harrods
Digital transformation with Harrods A legacy of excellence Founded in 1849, Harrod’s is one of London’s most recognized and prestigious department stores. It’s 5-acre site makes it one of Europe’s largest department stores. SAP partnership Using technology from Sinch and SAP, Harrods now has a singl
Slide 7: Recent product launches
Recent product launches Mailgun Optimize & Mailgun Validate Elastic SIP Trunking • Mailgun Optimize adds integrated • Elastic SIP trunking expands addressable deliverability tools to the Mailgun market for Sinch voice services sending platform • Allows business customers to easily buy • Mailgun Vali
Slide 8: Financials
Financials 8
Slide 9: Net sales
Net sales Net sales, SEKm • Net sales up 1% year-on-year, 8,000 7,361 helped by currency tailwind 7,196 7,265 of 5% 6,927 7,021 7,000 • Organic growth in local 6,000 currency at -4% 5,000 4,000 • Organic decline in Messaging 3,000 (-5%) and Voice (-4%) • Organic growth in Email (+7%) 2,000 and SMB (
Slide 10: Gross profit
Gross profit Gross profit, SEKm • Gross profit up 3% 3,000 year-on-year, helped by currency tailwind of 5% 2,416 2,433 2,500 2,361 2,322 • Organic growth in local currency 2,260 at -2% 2,000 1,500 • Organic decline in Messaging (-7%) and Voice (-5%) 1,000 • Organic growth in Email (+14%) and SMB (+1
Slide 11: Margin stability
Margin stability Gross margin, % EBITDA margin, % 36% 14% 13% 13% 13% 12% 12% 12% 35% 11% 12% 10% 11% 34% 10% 10% 33.5% 8% 33.1% 32.8% 32.8% 33% 32.6% 6% 4% 32% 2% 31% 0% Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 30% Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 EBITDA margin Adjusted EBITDA margin • Gross margin rising above
Slide 12: Strong cash conversion
Strong cash conversion Cash flow, SEKm Cash conversion from Adj EBITDA, R12M 1,000 80% 790 800 60% 60% 678 56% 60% 600 559 38% 40% 35% 400 200 58 20% 0 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 0% -200 -151 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 • Chart illustrates cash flow from operating • Cash flow from operating act
Slide 13: Lower leverage
Lower leverage Net debt/Adjusted EBITDA, x • Continued deleveraging with Net debt/EBITDA now at 2.2x • Three components affecting Net 3.2 3.2 debt/EBITDA: 2.7 2.7 2.7 2.7 ‒ EBITDA growth 2.4 2.4 ‒ Cash generation 2.2 2.2 ‒ Immediate currency impact Create chart on debt, but trailing impact on earnin
Slide 14: Well-covered debt maturities
Well-covered debt maturities Maturity schedule, SEKm • Available cash and committed credit facilities more than exceed 10,000 loans maturing in 2024 ‒ Cash and cash equivalents of 7,500 SEK 1,620m ‒ SEK 3,166m in unutilized long- 3,166 term credit facilities 5,000 ‒ SEK 925m in unutilized overdraft
Slide 15: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months Targets: 4.5 • 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 31% in Q3 23, measured on a 1.0 rolling 12-month basis 0.5 •
Slide 16: New operating model
New operating model 16
Slide 17: 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 18: Organization from January 1
Organization from January 1 • Customer-facing teams organized into three regions Americas EMEA APAC • Americas contributing more than 50% of Net sales and Gross profit • Single global Product, Product Product, Sourcing, Customer Insights Technology and Marketing functions supporting regional GTM Tec
Slide 19: Accelerating growth
Accelerating growth Organize around customers Leverage our global scale Accelerate growth • Customer-facing teams will be • Product, R&D, Operations will be • Leverage differentiation from organized into three regions: organized into global functions unified offering Americas, EMEA and APAC • Levera
Slide 20: Thanks!
Thanks! For more information, contact: Ola Elmeland Investor Relations Director investors@sinch.com
Slide 21: Income statement
Income statement SEKm Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 2022 R12M Net sales 7,196 7,361 6,927 7,021 7,265 27,722 28,574 Cost of services sold -4,835 -4,945 -4,667 -4,699 -4,832 -18,912 -19,143 Gross profit 2,361 2,416 2,260 2,322 2,433 8,810 9,431 Operating expenses -1,553 -1,625 -1,568 -1,606 -1,585 -6
Slide 22: Cash flow
Cash flow SEKm Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 2022 R12M Profit or loss before tax -4,673 -166 -75 -25 -26 -4,775 -291 Adjustment for non-cash items 5,301 988 684 633 640 7,167 2,945 Income tax paid -112 -161 -199 -226 -127 -560 -714 Cash flow before changes in working capital 516 661 410 382 487 1,83
Slide 23: Cash conversion
Cash conversion SEKm Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 2022 R12M Adjusted EBITDA 901 960 834 865 943 3,124 3,601 Paid interest -51 -119 -127 -145 -159 -279 -550 Paid taxes -112 -161 -199 -226 -127 -560 -714 Other items -222 -18 -97 -111 -170 -453 -397 Cash flow before changes in working capital 516 661