Slide 1: Q2 2023 Investor Presentation
Q2 2023 Investor Presentation 21 July 2023 Laurinda Pang, CEO Roshan Saldanha, CFO Thomas Heath, Chief Strategy Officer & Head of Investor Relations
Slide 2: Powering meaningful conversations through the Customer Communications Cloud
SEK 28.5bn SEK 9.4bn SEK 3.6bn 60+ net sales in the gross profit in the Adj. EBITDA in the countries with past 12 months past 12 months past 12 months local presence Powering meaningful conversations through the Customer Communications Cloud Scalable cloud communications platform More than 700 billi
Slide 3: Three priorities
Three priorities 01 Cost control 02 Cash flow 03 Growth 3
Slide 4: Second quarter highlights
Second quarter highlights 01 02 03 Delivering on cost targets Growing EBITDA Lower financial leverage • Reached and exceeded targeted • Improved year-on-year growth in • Net debt/Adjusted EBITDA excl. SEK 300 million in annual gross Net sales and Gross profit IFRS16 leases at 2.4x, down from savings
Slide 5: Improvements throughout the business
Improvements throughout the business 01 Messaging 03 Email • Improved growth rates* despite continued • 14% organic year-on-year growth in Net macroeconomic headwinds sales fueled by customer wins and volume growth • Organic Gross profit growth at -3% year- on-year, up from -8% in Q1 23 • Cloud infr
Slide 6: Artificial Intelligence
Artificial Intelligence Conversational AI made Conversational AI embedded available in Sinch Contact Pro in Sinch Engage Chatlayer investment Sinch recognized as only CPaaS Smart Conversations for adding multilingual chat- in Gartner’s Magic Quadrant for embedded AI within and voice bot capabilities
Slide 7: Reached cost reduction target
Reached cost reduction target Adjusted Opex, SEKm • Annualized savings in Q2 2022 of SEK ~360 million, exceeding SEK Annualized 300 million gross savings target SEK ~360m Annualized – 115 people affected by SEK ~130m 80 1,457 workforce reductions 1,434 -89 32 • Cost increases mainly due to pay incre
Slide 8: Gross profit evolution
Gross profit evolution Gross profit, SEKm • Reported organic gross profit growth of 13% in constant currency Organic FX – Up 4% when adjusted for last SEKm +13% +7% year’s reassessed reserves 2,500 128 2,322 for accrued traffic costs 59 29 146 23 2,000 1,937 • Email growth fueled by customer wins an
Slide 9: Margin development
Margin development Gross margin & Adjusted EBITDA margin • Positive gross margin development rising 0.4pp from Q1 2023 35% 33% 31% 32% 33% 33% 33% 33% • Q2 2022 affected by SEK 162 29% 30% million reassessment of reserves 25% for accrued traffic costs 20% – Gross margin up 1.3pp vs Q2 15% 2022 exclu
Slide 10: Income statement
Income statement Q2 Q2 SEKm 2023 2022 2022 R12M Net sales 7,021 6,615 27,722 28,505 Cost of goods sold and services -4,699 -4,678 -18,912 -19,146 Gross profit 2,322 1,937 8,810 9,359 • Currency effects increase Net sales, Gross profit and EBITDA Operating expenses -1,606 -1,409 -6,036 -6,353 EBITDA
Slide 11: Cash flow
Cash flow Q2 Q2 SEKm 2023 2022 2022 R12M Profit after financial items -25 -47 -4,775 -4,938 Adjustment for non-cash items 633 323 7,167 7,605 Income tax paid -226 -187 -560 -699 • Cash flow from operating activities Cash flow before changes in working 382 89 1,832 1,968 at SEK 2 billion over the pas
Slide 12: Cash conversion
Cash conversion Q2 Q2 SEKm 2023 2022 2022 R12M • Paid tax fluctuates between Adjusted EBITDA 865 503 3,124 3,559 quarters Paid interest -145 -60 -279 -443 Paid taxes -226 -187 -560 -699 • Higher paid interest in due to Other items -112 -167 -453 -450 increased interest rates Cash flow before changes
Slide 13: Reduced DSO
Reduced DSO Days Sales Outstanding* • Working capital affected by increased accounts receivables due to timing effects 77 69 70 68 • No increase in overdue receivables 62 60 62 vs Q1 2023 56 • DSO at 62, down from 68 in Q2 2022 31 Dec 31 Dec 31 March 30 June 30 Sept 31 Dec 31 March 30 June 2020 2021
Slide 14: Lower Net debt/Adjusted EBITDA
Lower Net debt/Adjusted EBITDA Net debt/Adjusted EBITDA • Continued deleveraging with Net debt/EBITDA now at 2.4x 3.1 3.3 3.2 • Three components affecting Net 2.9 debt/EBITDA: 2.7 2.7 2.4 – EBITDA growth – Cash generation – Immediate currency impact on debt, but trailing impact on earnings Q4 Q1 Q2
Slide 15: Financial targets
Financial targets Adjusted EBITDA per share, rolling 12 months Targets: • Adjusted EBITDA per share to grow 20% per year • Net debt < 3.5x adjusted EBITDA over time Performance: • Adjusted EBITDA per share grew 62% in Q2 23, measured on a rolling 12-month basis • Net debt/adjusted EBITDA of 2.4x exc
Slide 16: Thank you!
Thank you! To get in touch, contact: Ola Elmeland, Investor Relations Director investors@sinch.com