Sinch (SINCH) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered stable performance with 1% organic gross profit growth in constant currency and a stable gross margin year-over-year, despite a SEK 6,000m goodwill impairment leading to a net loss after tax of SEK -6,095m.

• Net sales were SEK 7,150m in Q3 2024, up 2% year-over-year in constant currencies but down 2% on a reported basis.

• Achieved SEK 335m in run-rate cost savings, exceeding the SEK 300m target ahead of schedule.

• Strong cash generation with SEK 437m operating cash flow in Q3 and SEK 2.8bn over the last 12 months; cash conversion from adjusted EBITDA reached 61%.

• Net debt to adjusted EBITDA reduced to 1.6x from 2.2x a year ago, reflecting continued deleveraging.

Financial highlights

• Net sales grew organically by 2% year-over-year, reversing a 1% decline in the previous quarter; Q3 net sales: SEK 7,150m (-2% YoY reported).

• Gross profit was SEK 2,406m in Q3, up 1% organically in constant currency but down 1% on a reported basis; gross margin stable at 34%.

• Adjusted EBITDA for Q3 was SEK 923m, 2% lower year-over-year; adjusted EBITDA margin stable at 13%.

• Free cash flow after investments was SEK 293m in Q3 and SEK 2.2bn on a rolling 12-month basis.

• Basic and diluted EPS for Q3: SEK -7.22, mainly due to goodwill impairment.

Outlook and guidance

• Q4 gross profit growth expected to be flat or slightly negative year-over-year, with a slow start to 2025 and operating expenditures set to rise as investments are made to drive growth in 2026 and beyond.

• No full-year 2025 guidance, but management expects gradual improvement in growth trajectory after a slow start.

• Financial target to grow adjusted EBITDA per share by 20% per year; leverage policy to keep net debt/adjusted EBITDA below 2.5x.