Acquisition of MessageMedia - 9 June 2021 Oscar Werner - Sinch Investors
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Acquisition of MessageMedia 9 June 2021 Oscar Werner CEO Roshan Saldanha CFO Thomas Heath Chief Strategy Officer & Head of Investor Relations
SEK 9.7bn SEK 968m SEK 111BN 2,160 47 countries with
revenue in the Adj. EBITDA in the Market Cap people local presence
past 12 months past 12 months
152 billion Publicly listed on
Customer engagement through mobile technology engagements per year NASDAQ
in Stockholm
Scalable cloud communications Serving 8 of the 10 largest
platform for messaging, voice and video U.S. tech companies
100% Consumer penetration Growing, global, multi-billion
USD market
Profitable since our 10x growth in gross profit
$ foundation in 2008 since IPO in 2015
2
Track record of profitable growth
6,000
MessageMedia
5,000 • Focus on Gross profit since pass-
Inteliquent through revenues vary between
4,000
geographies
SEK million
Wavy
3,000
Acquisitions adding significantly
SDI
ACL •
2,000
MessageMedia
Inteliquent
to our scale and profitability
1,000
Wavy
SDI
• Investing to increase growth in
ACL acquired units
Synergies
0
2016 2017 2018 2019 2020 Q1 L12M
Gross profit Adj EBITDA Acquisitions
The acquisitions of Inteliquent and MessageMedia are pending regulatory approval. ACL includes the last 5 months of earnings before the unit was consolidated on 1 September.
SDI includes the last 7 months of earnings before the unit was consolidated on 1 November. Wavy includes the last 10 months of earnings before the unit was consolidated on 1
February. Synergies refer to expected synergies for Wavy and SAP Digital Interconnect, estimated mid-point, at full run rate. Exchange rates as of 6 June 2021.
3Complementary Go-To-Market models
Enterprise Developer SME
• Online lead-generation • Online self-signup • Online self-signup
• Lead with APIs and SaaS • Lead with APIs • Lead with SaaS & integrations
• Target enterprise customers and • Target developers, who may • Target small and medium sized
indirect channel partners work for any size business businesses: local dentists,
• Customers have in-house mechanics, etc.
• Customers may have in-house
development resources or use developer resources • Customers have limited
System Integrators • Customers look for intuitive UX, development resources
• Customers look for superior self-signup and self-service, • Customers look for ‘out-of-the-
service delivery, global reach, SDKs, tutorials and code box’ solution, ease-of-use, quick
end-to-end connectivity, examples, strong time-to-value, and ability to
compliance, and competitive documentation reach wanted business objective
pricing at high volumes without coding
4Expanding our addressable market
Turnkey Consumer Engagement
market, 2018-24 (USDbn) 26.9
• Global market for “Turnkey
Consumer Engagement” solutions
21.2 estimated at USD 9-13 billion
16.7 • Market expected to grow at 25-30%
CAGR, with US growth at 30-35%
13.2
10.5 • 50-70% of turnkey spend from small
7.9 and medium sized businesses
6.3
• Growth driven by higher adoption
6.7
9.0 among businesses and rising number
2.0 2.9 3.8 5.1 of use cases
1.5
2018 2019 2020 2021 2022 2023 2024
USA Rest of world
5SaaS products focused on ease-of-use
• Web-based SaaS application suite
supporting outbound messaging
and conversational use cases
• Optimized for ease-of-use and
quick time-to-value
• Subscriptions-based price model
• Single platform supporting
multiple brands
• Preconfigured integrations to
multiple SME-focused cloud
platforms
Integrations …and many
including: more!
6Playbook for profitable growth
• Empower businesses to leverage rich and conversational messaging
Software-
• Increase software value-add (CPaaS) in addition to our connectivity offering
as-a-Service • Increase stickiness with maintained scalability
• Ensure leading direct global connectivity without middlemen
Connectivity • Differentiate through superior quality, scale and reach
• Benefit from market growth and continue to win market share
7Leveraging M&A to meet strategic objectives
• Complementary technology that fits our strategic product roadmap
Technology & • Go To Market-ability in relevant products and geographies
Go To Market • Increased software value-add with higher gross margin
• Future growth drivers
• Acquire sticky customer relationships
Scale and • Add direct operator connections
profitability • Leverage shared platform assets and extract synergies
• EV/EBITDA-accretive: acquiring profit at a valuation below our own
8Strategic acquisitions
SAP Digital
Interconnect
Rich messaging,
Low code tools Conversational AI
Technology &
Go To Market
Voice, video, Personalized Conversational
Voice SME
verification video messaging
Australia, Americas,
Southeast Asia Europe, APAC
Scale and
profitability
USA, Western Germany, Latin North USA,
Nordics Brazil India
Europe Central Europe America America Australia
2016 2017 2018 2019 2020 2021
9Deal rationale
• Leading provider of software-as-as-service for mobile customer engagement to small and medium sized
businesses with strong organic growth in the United States, Australia, New Zealand and beyond
Message • More than 60,000 customers, sending over 5 billion mobile messages per year
Media • 9 successful acquisitions with focus on integration to leverage shared technology platform
• Over 350 employees with headquarters in Melbourne, Australia
• Expand addressable market and position Sinch for growth with small and medium sized businesses
Deal • Add digital customer acquisition engine winning >1,500 new customers per month
rationale • Expand scope of future M&A with experienced team leveraging modern multi-brand platform
• Accretive deal that fits both Scale and Profitability & Technology and Go To Market criteria
• MessageMedia to form SME-focused part of Sinch with current management in place
• Integration costs estimated to reach USD 8 million over 18 months
Integration
• MessageMedia to benefit from Sinch’s global super network and investments in new conversational
messaging channels. Savings to be reinvested in expansion, leveraging Sinch’s presence in 47 countries
• Enterprise value of USD 1,300m, of which USD 1,100m is paid in cash and 200m is paid in equity
• Closing is subject to regulatory approval, closing expected in H2 2021
Financials • Revenues of USD 151m, gross profit of USD 94m, and EBITDA of USD 51m expected in L12M to June 2021
• Underlying year-on-year revenue growth around 22% over the past 2 years with higher growth in the US
10Global, digital, go-to-market model
Website Hundreds of
thousands per
users month
Leads & Thousands per
>5,000 customers
4% of gross profit
>25,000 customers Trials month
27% of gross profit
40%+ y/y growth
Paying >20%
customers
>28,000 customers
62% of gross profit
Returning 2/3
>1,000 customers customers
7% of gross profit
> 1,500 net new
customers per month
11Multi-brand strategy
Legacy brands
Mid-market Tech-capable Non-technical Existing customers
• Small and medium sized • Targets “tech capable” • Targets non-technical • Legacy brands and website
businesses, mid-market small and medium sized small and medium sized maintained as is
accounts, and channel businesses businesses • Customers migrated to
partners • Feature-rich offering • Focus on easy-of-use, shared technology platform
• Established position in • Strong partner ecosystem quick setup and pre- once feature gaps are
Australia and New with integrations to other programmed use cases closed
Zealand, some presence in SaaS applications that are • US focus • Limited outbound
US and Europe popular with SMEs marketing, but digital
• Global focus footprint kept in place for
inbound leads
Track record of successful M&A with Migration to capable multi-brand platform creates economies of scale
9 acquisitions since 2014. and improves product experience for acquired customers.
12Improved margin profile
33% • Multiple acquisitions over past year
26% • ACL, SDI, Wavy consolidated less
than 12 months
14%
• Inteliquent and MessageMedia
10%
transactions not yet closed
• Pro forma* calculation implies SEK
17.9 bn revenue, SEK 6.0 bn gross
profit, and SEK 2.4 bn Adj EBITDA
Gross profit Adj EBITDA
margin margin • Significantly strengthened
margin profile
Sinch L12M as reported Sinch L12M pro forma*
* Pro forma as of Q1 2021, including last 12 months earnings in Sinch, ACL, SDI, Wavy, Inteliquent and
MessageMedia. Inteliquent contribution excludes covid uplift considered to be temporary.
13Financial leverage
Pro forma net debt/Adjusted EBITDA
• Pro forma calculation includes last
3.1
2.6
12 months of Adj EBITDA for
acquired entities
• Updated financial target is to
maintain Net debt < 3.5x adjusted
EBITDA over time
• Pro forma Net debt/Adj EBITDA of
-0.9 2.6x to after recent share issue and
payment for Inteliquent and
-2.1
-1.8
MessageMedia
Q1 21 Q1 21 + Inteliquent Share issue + Message
reported pro forma May 2021 Media
The acquisitions of Inteliquent and MessageMedia are pending regulatory approval.
14Financial targets
Targets:
• Adjusted EBITDA per share to grow
Adjusted EBITDA per share, rolling 12 months 20% per year
18.0 • Net debt < 3.5x adjusted EBITDA
16.0 over time
14.0
12.0
10.0 Performance:
8.0
• Adjusted EBITDA per share grew
6.0
30% in Q1 21, measured on a rolling
4.0 12 month basis
2.0
0.0
• Net debt/EBITDA of -2.1x, measured
on a rolling 12 month basis
Jun
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2016 2017 2018 2019 2020 2021
15Thanks! Copyright© 2019 CLX Communications AB (publ). All rights reserved. NDA Confidential. 16
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