Sinch (SINCH) Q3 2024 earnings summary

Executive summary

• Net sales in Q3 2024 were SEK 7,150m, up 2% organically year-over-year in constant currencies but down 2% on a reported basis; gross profit grew 1% organically and gross margin remained stable at 34%.

• Adjusted EBITDA margin was 13%, with EBITDA margin at 11%; adjusted EBITDA for Q3 was SEK 923m, down 2% year-over-year.

• Operating cash flow in Q3 was SEK 437m, with cash conversion from adjusted EBITDA at 61% over the last 12 months.

• Net debt/adjusted EBITDA improved to 1.6x, down from 2.2x a year ago.

• SEK 6,000m goodwill impairment in Q3 led to a net loss after tax of SEK -6,095m.

Financial highlights

• Q3 2024 net sales: SEK 7,150m (-2% YoY reported); gross profit: SEK 2,406m (-1% YoY); adjusted EBITDA: SEK 923m (-2% YoY); free cash flow after investments: SEK 293m.

• Net sales in Americas up 5% organically, EMEA down 4%, APAC flat; Applications gross profit up 6%, API Platform up 2%, Network Connectivity down 5%.

• Applications products achieved a 67% gross margin.

• Adjusted EBITDA per share for Q3: SEK 1.09 (down from SEK 1.12 YoY).

• Net debt at quarter-end: SEK 6,473m; cash and equivalents: SEK 1,108m.

Outlook and guidance

• Management expects flat or slightly negative gross profit growth in Q4 2024 and a slow start to 2025, with operating expenditures set to rise as investments are made for future growth.

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

• Focus remains on executing the growth acceleration plan, emphasizing go-to-market transformation and operational excellence.