Cantor Fitzgerald has revised its rating for Sinch (CLCMF, Financial), lowering it from Overweight to Neutral. The decision was accompanied by setting a price target of SEK 23. This change reflects the investment firm's concerns about the absence of immediate growth drivers and uncertainties surrounding the company's future prospects.
The downgrade suggests that Cantor Fitzgerald anticipates limited upside potential for Sinch in the near term, prompting a more cautious stance. Investors and analysts will likely be closely monitoring Sinch's strategic developments to assess any changes in its market position and growth trajectory.
CLCMF Key Business Developments
Release Date: February 13, 2025
- Net Sales: SEK28.7 billion over the past 12 months; Q4 organic growth of 3% year-over-year.
- Gross Profit: SEK9.7 billion over the past 12 months; Q4 organic growth of 1% year-over-year.
- Adjusted EBITDA: SEK3.6 billion over the past 12 months; Q4 margin at 13%.
- EBITDA Margin: 4% in Q4 due to a SEK700 million onetime tax provision; underlying margin would have been 13%.
- Cash Flow from Operating Activities: SEK905 million in Q4; SEK2.9 billion for the full year.
- Cash Conversion: 66% for the last 12 months.
- Leverage Ratio: Improved to 1.5 times net debt to adjusted EBITDA.
- Cost Savings: Achieved SEK352 million in gross savings on a run rate basis, exceeding the target of SEK300 million.
- Regional Performance: Americas net sales grew 5%, EMEA net sales grew 2%, APAC net sales declined 5% in Q4.
- Free Cash Flow: SEK734 million in Q4; SEK2.4 billion for the full year.
- Debt Reduction: Paid down SEK2.1 billion in debt over the last 12 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sinch AB (CLCMF, Financial) reported strong cash conversion at 66% for the last 12 months, delivering SEK905 million in cash flow from operating activities in the quarter.
- The company achieved SEK352 million in gross savings on a run rate basis, surpassing their original target of SEK300 million.
- Sinch AB (CLCMF) maintained a leverage ratio of 1.5 times net debt to adjusted EBITDA, showing improvement from previous quarters.
- The company reported positive developments in each region, with significant customer wins and partnership momentum.
- Sinch AB (CLCMF) is leveraging AI to enhance product capabilities, drive automation, and improve internal efficiencies, positioning itself for future growth.
Negative Points
- The company faced a SEK700 million onetime historical tax provision, impacting EBITDA margins for the quarter.
- Gross profit in the Americas region declined by 5% due to weaker performance in the API platform, specifically SMS.
- APAC experienced a 5% decline in net sales, driven by a decrease in lower-margin SMS revenue in India.
- The company is facing pricing pressure in the SMS business in both the US and India, affecting margins.
- Sinch AB (CLCMF) anticipates a slow start to 2025, with ongoing challenges in certain markets and product segments.
