Sinch (SINCH) Q1 2025 earnings summary

Executive summary

• Net sales rose 4% year-over-year to SEK 7,049m, with 3% organic growth and the third consecutive quarter of organic net sales growth; gross profit increased 4% to SEK 2,408m, with all regions and product categories contributing.

• Adjusted EBITDA increased 12% to SEK 889m, with an 8% organic rise, and margin improved to 13%; growth driven by gross profit and reduced operating expenses.

• Transformation initiatives and strategic focus on enterprise expansion, self-service, RCS/email, and partnerships are yielding operational improvements and financial resilience.

• Cash conversion reached 50% for the last 12 months, at the upper end of the 40%-50% target range.

• Net debt-to-Adjusted EBITDA improved to 1.4x from 2.0x year-over-year, enhancing financial flexibility and reflecting continued deleveraging.

Financial highlights

• Net sales for Q1 2025 were SEK 7,049m, up from SEK 6,927m in Q1 2024; gross profit was SEK 2,408m, up from SEK 2,312m.

• Adjusted EBITDA for Q1 2025 was SEK 889m, a 12% increase year-over-year; margin at 13%, in line with guidance.

• Gross margin stable at 34%; EMEA at 31%, Americas at 34%, APAC at 40%.

• Cash flow from operations after investments was SEK -104m, impacted by a temporary SEK 370m working capital increase.

• Free cash flow for the last 12 months was at the top of the guidance range; free cash flow per share (R12M) increased to SEK 2.15.

Outlook and guidance

• Targeting 7%-9% organic growth in net sales and gross profit, with Adjusted EBITDA margins of 12%-14% by end of 2027; net debt to remain below 2.5x Adjusted EBITDA.

• Management expects gradual progress toward midterm targets, with no immediate acceleration but positive momentum.

• Macroeconomic uncertainty and new US tariffs are not expected to directly impact services; working capital increase expected to normalize.

• No formal forecasts provided, but company remains confident in achieving mid-term financial targets.