Sinch, a global leader in cloud communications for mobile messaging, reported a 2.6% increase in revenue to 7.729 billion SEK in the fourth quarter of 2024. This exceeded Factset’s analyst consensus of 7.530 billion SEK. The company’s organic sales growth was 3%, showcasing its strong performance in a competitive market.
The gross profit for the quarter was 2.582 billion SEK, with a gross margin of 33.4%. Despite a slight decrease in gross margin compared to the previous year, Sinch maintained a healthy profitability level. However, the EBITDA result showed a significant decline to 307 million SEK, with an EBITDA margin of 4.0%, down from 10.9% in the same period last year.
In a surprising move, Sinch announced a one-time provision of 700 million SEK related to historical tax exposure, which impacted the EBITDA result. Adjusted EBITDA reached 1.003 billion SEK, surpassing expectations at 927 million SEK, with an adjusted EBITDA margin of 13.0%.
The operating result showed a loss of 304 million SEK, reflecting the impact of the tax provision on Sinch’s financial performance. However, the adjusted operating result was 875 million SEK, with an adjusted operating margin of 11.3%. This demonstrated the company’s ability to maintain operational efficiency despite external challenges.
The net result for the quarter was a loss of 324 million SEK, indicating a challenging period for Sinch. Earnings per share also showed a negative trend at -0.38 SEK, compared to 0.17 SEK in the previous year. As a result, Sinch did not propose an ordinary dividend for the quarter.
On a positive note, the cash flow from operating activities increased to 905 million SEK, up from 727 million SEK in the same period last year. This demonstrated the company’s strong cash generation capabilities and financial resilience in a dynamic market environment.
Overall, Sinch’s fourth-quarter results highlighted both strengths and challenges for the company. Despite the impact of the tax provision on its financial performance, Sinch showed resilience in maintaining operational efficiency and cash flow generation. With a strategic focus on innovation and customer-centric solutions, Sinch is well-positioned to navigate the evolving landscape of cloud communications and mobile messaging.