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05/05/2021

Sinqia releases its 1Q21 results

Sinqia announces its consolidated results for the first quarter of 2021 (“1Q21”).

1Q21 Highlights

Innovation Strategy

Announcement of new investments though Darwin Startups and partnership with Distrito;

Consolidation Plan

Announcement of the acquisition of Simply and FEPWeb;

Software ARR

Record of R$227.2 million in 1Q21 (+54.7% vs. 1Q20);

Number of Customers

392 customers at the end of 1Q21 (+41 vs. 1Q20);

Net Revenues

Record of R$68.2 million in 1Q21 (+40.3% vs. 1Q20);

Proforma of R$81.4 million in 1Q21 (+67.5 vs. 1Q21) considering recent acquisitions;

Recurring Revenues

Record of R$62.1 million in 1Q21 (+50.9% vs. 1Q20), 91.0% of total;

Adjusted EBITDA

Record of R$12.4 million in 1Q21 (+4x vs. 1Q20), margin of 18.2%;

 

MESSAGE FROM MANAGEMENT

We have worked hard to build solid foundations for Sinqia’s future.  2021 will be a period with important transformations in our sector and significant improvements in our Company. We could not have had a better start, and we are very excited to announce our excellent first quarter results!

Our open innovation strategy has continued to evolve. The investments in Batch #8 of Darwin Startups are already producing results: the CashWay investee (BaaS) has become an important partner and created several commercial opportunities for our Pix solution. The investments in Batch #9 have already been disclosed, with the inclusion of promising startups, fully in line with our open innovation strategy, such as CondoConta (digital account), Evlos (BaaS) and QGX (BaaS). Additionally, we entered into a partnership with Distrito, an innovation hub for startups, investors and companies, giving us access to its platform and the opportunity to construct initiatives jointly.

Our consolidation plan advanced substantially with two new acquisitions: Simply, specialized in the opening of digital accounts, and FEPWeb, a benchmark in the formalization of digital transactions. They were combined in a new business unit called Digital Sinqia.  According to preliminary figures, these businesses recorded net revenues of R$9.0 million in 1Q21, up 59% vs. 1Q20. It is worth noting that the figures will be consolidated in our results as of 2Q21.

The acquisitions made in recent months, including the two most recent ones, totaled investments of R$259.5 million (including earnouts and call options), representing 71.5% of the proceeds from the share offering in 3Q19. We are following the use of preceeds schedule, and we are pleased with our progress: the plan is being implemented with strategic and financial discipline. There are many opportunities ahead.

Gross cash closed the quarter at R$234.0 million (or R$177.0 million considering the payment of the two new acquisitions). In order to enable the continuity of our plan, we intend to reinforce this balance. We are starting discussions about potential funding, probably through an increase in leverage.

Software ARR (annual recurring revenues) reached a record of R$227.2 million, a total addition of R$80.3 million, up 54.7% over 1Q20, not yet considering the two most recent acquisitions.

Net revenues reached a record of R$68.2 million, growing 40.3% over 1Q20, of which 12.8% organic and 27.5% inorganic. Recurring revenues totaled R$62.1 million, up 50.9%, accounting for 91.0%% of the total, a new record.

Costs amounted to R$43.0 million, up 30.8% over 1Q20, of which 5.8% organic and 25.0% inorganic. Costs grew less than revenues, highlighting efficiency gains. We are significantly increasing our RD&I investments in order to accelerate product integration and updates and promote the launch of new ones. These investments, fully recorded in costs, totaled R$1.1 million, an increase of 44.3% vs. 1Q20.

General and administrative expenses (ex-depreciation and amortization) amounted to R$12.8 million, up 3.0% from 1Q20, growing less than revenues and inflation. This increase was mostly due to the consolidation of general and administrative expenses arising from acquisitions, in the amount of R$2.0 million, and M&A expenses totaling R$1.8 million, which are mostly non-recurring, reflecting an increase in the number of transactions in progress. On the other hand, the reversal of provisions for contingencies, which totaled R$1.4 million, had a positive impact on the result.

Adjusted EBITDA hit an all-time high of R$12.4 million, up 267.4% over 1Q20, while the EBITDA margin stood at a record 18.2%, up 11.2 p.p. These figures confirm our expectations for 2021 and show that we began the year on a very positive note, reinforced by the new unit, Digital Sinqia, which will start to be consolidated in our results in 2Q21, representing yet another step in the growth and profitability trajectory.

Finally, as the last five acquisitions took place within a short period of time, we can still see asymmetry of information on the company. Sinqia had an excellent performance this quarter, but, based on pro-forma information, it is already a much larger and much better company!

We are ready to deliver excellent results and maintain the fast pace of our consolidation plan. The windshield shows a much better view than the rearview mirror. We invite you to join us on this journey!

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