Slide 1: Gamma Full Year 2022 Results
Gamma Full Year 2022 Results 21 March 2023 Andrew Belshaw, CEO Bill Castell, CFO Working smarter, together.
Slide 2: FY 2022 Results Agenda
FY 2022 Business Update 01. Andrew Belshaw FY 2022 Financial Highlights FY 2022 Results 02. Bill Castell Strategic update and growth drivers Agenda 03. Andrew Belshaw ESG 04. Andrew Belshaw Business Outlook 05. Andrew Belshaw Q&A 06. Andrew Belshaw and Bill Castell 2
Slide 3: Full year 2022 Business Update
Full year 2022 Business Update Andrew Belshaw, CEO 3
Slide 4: Full year 2022 Business Update – Business Highlights
Full year 2022 Business Update – Business Highlights • Strong financial performance with high levels of recurring revenue and margin • Strong cash position • Cash generated by operations of £99.1m • Net cash balance of £92.5m at 31 December 2022 • Further integration of European business • Acquisiti
Slide 5: 2022 Business Update – Business Units
2022 Business Update – Business Units Gamma Group UK Indirect UK Direct Europe Up to Up to Up to Up to £484.6m £295.9m £115.5m £73.2m +8% growth +10% growth +10% growth +1% growth Gamma Group revenue 61% of Group revenue 24% of Group revenue 15% of Group revenue • UK Indirect business continues to s
Slide 6: Full year 2022 Financial Highlights
Full year 2022 Financial Highlights Bill Castell, CFO
Slide 7: 2022 Financial Highlights
2022 Financial Highlights Revenue Adjusted EBITDA Adjusted EPS Up Up Up 8% 10% 12% to £484.6m to £105.1m to 71.8p Cash generated by operations Cash balance Dividend Up Up 10% £94.6m As at 31 Dec 14% to £99.1m (net cash of £92.5m) to 15.0p 7
Slide 8: Income Statement
Income Statement Years ended 31 December (£m) 2020 2021 2022 Growth 22 vs 21 Revenue 393.8 447.7 484.6 8% • Recurring revenue grew to £431.7m, Cost of sales (193.0) (219.2) (236.9) 89% of total revenue (2021: 89%) Gross profit 200.8 228.5 247.7 8% • Revenue and gross profit grew by 8% Gross profit m
Slide 9: UK Indirect
Revenue(£m) UK Indirect 350.0 300.0 250.0 • Strong 10% growth in revenue with 200.0 increased volumes 150.0 100.0 • Growth primarily driven by UCaaS, 50.0 mobile and data products 0.0 FY 2020 FY 2021 FY 2022 • Healthy momentum with rate of growth of cloud “bolt ons” increasing faster than Gross Prof
Slide 10: UK Direct
Revenue (£m) UK Direct 140.0 120.0 100.0 • Delivered impressive 10% revenue 80.0 growth driven by key contract 60.0 performance 40.0 20.0 • Gross profit increased by 9% 0.0 FY 2020 FY 2021 FY 2022 • Gross margin fluctuates due to timing and mix of installations and hardware sales Gross Profit (£m) 7
Slide 11: Europe
Europe Revenue (£m) • Revenue growth 1% (2% at constant 80.0 70.0 currency) with mixed financial 60.0 performance across our European 50.0 40.0 footprint 30.0 • Cloud seats grew by 28% with 2 large 20.0 10.0 German deals towards the end of the 0.0 FY 2020* FY 2021 FY 2022 year • Gross profit grew by
Slide 12: European Revenue
European Revenue Revenue as at 31 Dec 31 Dec 2022 vs • Solid UCaaS revenue growth in the (€m unless stated) 2021 2022 2021 period UCaaS NL 8.5 7.9 -8% • UCaaS strong in Germany (+8%), ES 10.9 10.9 0% Spain growth recovering in H2 DE 14.2 15.4 8% following NeoTel acquisition offset by Subtotal 33.6 3
Slide 13: Investments
Investments Overheads Capital expenditure and development costs • Increased by 7% to £142.6m (2021: £133.1). • Development spend increased by £9.5m due to (6% increase when adjusted for the immaterial investment in our own voice applications products (in alignment) part using the capabilities acquir
Slide 14: Balance Sheet
Balance Sheet as at 31 Dec 31 Dec 31 Dec (£m) 2020 2021 2022 Balance Sheet Non-current assets (incl. PPE) Receivables and inventories 163.6 104.4 197.6 111.4 185.7 126.5 Cash 53.9 52.8 94.6 Current assets 158.3 164.2 221.1 • Strong cash reserves – £94.6m Total assets 321.9 361.8 406.8 • Net cash of
Slide 15: Cashflow
Cashflow • Cash conversion remained at 94% • Taxation cashflow increased inline with growth in Cash Flow Statement 31 Dec 31 Dec 31 Dec Adjusted PBT (£m) 2020 2021 2022 Adjusted EBITDA 79.0 95.4 105.1 • Capex (incl. intangibles) increased as a result of Cash generated by 70.3 89.8 99.1 operations th
Slide 16: Analyst Modelling Guidance
Analyst Modelling Guidance • Overall expectations for the full year 2023: – Within the current company compiled consensus range* for adjusted EBITDA (£110.1m – £117.2m) and adjusted EPS (67.9p – 77.0p) as at 20 March 2023 • Updated Gamma investor web page, including company compiled consensus • UK C
Slide 17: Update on Strategy and Growth Drivers
Update on Strategy and Growth Drivers Andrew Belshaw, CEO 17
Slide 18: 2018 – Five year plan to 2023
2018 – Five year plan to 2023 Evolve our strong cloud telephony position into the UCaaS market Expand to Europe to gain continued growth and scale Continue to build on our digital capabilities to assure agility and sustain competitiveness Build on our Fixed and Mobile Telecom strength to differentia
Slide 19: Self-Evaluation of 2018 Plan
Self-Evaluation of 2018 Plan Continue to build on our digital Evolve our strong cloud telephony capabilities to assure agility and sustain position into the UCaaS market competitiveness • Built Collaborate, Contact, Call Recording • CircleLoop presence in UK and launch in EU • ARPU stabilised on Hor
Slide 20: Gamma's 2026 strategic priorities
Gamma’s 2026 strategic priorities We will develop We will develop We will become a We will create an a common multiple routes trusted partner to organisation that European to the market in Enterprises across engages all our product set for each country in Europe, people with a UCaaS and which we ope
Slide 21: Five drivers of long-term growth
At the half year we identified five drivers of long-term growth – our Strategy exploits each of these 1 2 3 European market is Favourable customer under-penetrated which presents trends and behaviours present Cloud Comms remains a us with an opportunity to grow us with an opportunity to growing mark
Slide 22: Gamma's 2026 strategic priorities
Gamma’s 2026 strategic priorities We will develop We will develop We will become a We will create an a common multiple routes trusted partner to organisation that European to the market in Enterprises across engages all our product set for each country in Europe, people with a UCaaS and which we ope
Slide 23: Developing a common European product set gives us opportunity for upsell
Developing a common European product set gives us opportunity for upsell Opportunities to increase wallet share from Horizon users Horizon - Cloud Horizon MS Teams Call Horizon PBX Collaborate Integration Recording Contact List Price* c£8.00 c£3.00 c£1.00 c£1.50 c£18.00 per user per user per user pe
Slide 24: Cloud Communications – Performance in the UK
Cloud Communications – Performance in the UK Horizon (Cloud PBX) Collaborate MS Teams Integration Up Up Up 11% 16% 250% to 751k cloud seats to 73k seats to 7k cloud seats Voice Recording Horizon Contact Up Up 43% 175% To 96k users to 11k seats • Rate of growth of "bolt-ons "increasing faster than co
Slide 25: Evolution of UK SIP business
Evolution of UK SIP business As SIP users migrate to our other products there is an opportunity to increase ARPU Existing SIP Customer c.£8.00+ per User c.£1.25 per User We believe that three migration paths 2022: 751k Seats 2021: 676k Growth = +11% c.£5.00 per Trunk will emerge Approximation based
Slide 26: Gamma's 2026 strategic priorities
Gamma’s 2026 strategic priorities We will develop We will develop We will become a We will create an a common multiple routes trusted partner to organisation that European to the market in Enterprises across engages all our product set for each country in Europe, people with a UCaaS and which we ope
Slide 27: Our existing strong capability supporting Microsoft Teams users enables Enterprises to trust us
Our existing strong capability supporting Microsoft Teams users enables Enterprises to trust us Microsoft rely on third parties to provide voice capabilities for Teams As more organisations “voice enable” their solution we are gaining revenue Voice for Teams Users Teams Integration with Horizon Prof
Slide 28: Gamma's 2026 strategic priorities
Gamma’s 2026 strategic priorities We will develop We will develop We will become a We will create an a common multiple routes trusted partner to organisation that European to the market in Enterprises across engages all our product set for each country in Europe, people with a UCaaS and which we ope
Slide 29: Purpose, Vision and Mission
PURPOSE To empower the people at the heart of good business. VISION Abetter connected world in which we can work smarter for the benefit of business, people and the planet. MISSION To make communication more human. 29
Slide 30: ESG Update
ESG Update Andrew Belshaw, CEO
Slide 31: Communications with a Conscience
www.gammacommunicationsplc.com/esg Communications with a Conscience Environment Social Governance • Preparation for SBTi validation • ‘You Belong’ initiative launched across • Gamma received “AA” ESG rating from in progress, underpinning our Gamma Group, our response to MSCI 2042 carbon net-zero amb
Slide 32: Business Outlook
Business Outlook Andrew Belshaw, CEO
Slide 33: Business Outlook
Business Outlook Our strategy builds on our core strengths to exploit existing opportunities for growth in the markets we serve Robust business model with strong recurring Continued execution of our own-IP technology revenue and margin, cash generative and with driven product strategy across all rou
Slide 34: Q&A
Q&A Andrew Belshaw, CEO Bill Castell, CFO
Slide 35: Thank you.
Thank you. Working smarter, together.