Gigas Hosting S A : Financial Results Q3 2023 presentation

Diego Cabezudo Javier Cañete

CEOCFO

Q3 2023 Results Presentation for Investors

DEC 2023

gigas

Disclaimer

This document and the conference-call webcast (including the Q&A session) may contain forward-looking statements and information (hereinafter, the "Information") relating to GIGAS HOSTING S.A. or GIGAS GROUP (hereinafter "Gigas", the "Company" or the "Gigas Group"). This Information may include financial forecasts and estimates based on assumptions or statements regarding plans, objectives and expectations that make reference to different matters, such as the customer base and its evolution, organic growth, potential acquisitions, Company's results and other aspects related to the activity and financial situation of the Company. The Information can be identified, in some cases, through the use of words such as "forecast", "expectation", "anticipation", "projection", "estimates", "plan" or similar expressions or variations of such expressions.

The Information reflects the current view of Gigas with respect to future events, and as such, do not represent any guarantee of future certain fulfilment, and are subject to risks and uncertainties that could cause the final developments and results to materially differ from those expressed or implied by such Information. These risks and uncertainties include those identified in the documents containing more comprehensive information filed by Gigas, such as Annual Accounts or the Incorporation Memorandum (Sept. 2015).

Except as required by applicable law, Gigas does not assume any obligation to publicly update the Information to adapt it to events or circumstances taking place after the date of this presentation, including changes in the Company's strategy or any other circumstance.

This presentation and the conference-call webcast (including the Q&A session) contains or might contain non-audited financial information as prepared by Management. The information contained herein should therefore be considered as a whole and in conjunction with all the public information regarding the Company available, including any other documents released by the Company that may contain more detailed information. Neither this document nor the conference-call webcast (including the Q&A session) constitute an offer to purchase, sale or exchange any shares, a solicitation of any offer to purchase, sale or exchange of any shares, or a recommendation or advice regarding any shares.

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Q3 2023 Key Highlights

Net Revenues reached €49.5M in first 9 months 2023, from €45.8M the previous year, 8.2% growth, although below budget (-6.4%)

Gross Margin of €30.1M in first 9 months 2023,

• 6.6% better than €28.2M of same period 2022, which represents 60.9% of revenues, better than the 58.8% budgeted

Adj. EBITDA for the 3 quarters of the year

€ reached €12.2M, up 2.3% YoY (€11.9M) and 1.2% slightly lower than €12.3M budgeted

€	New Acquisition in Portugal (Alterlinks), which
adds infrastructure and a high capacity DWDM
	network and strategic alliance with Lyntia

CAPEX (excl. M&A and R&D) in first 9 months 2023 reached €6.06M (12.2% of sales), lower than the same period in 2022 (€6.72M)

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Revenues 9 months 2023

• Net revenues grew to €49.5M in the first nine months of the year, 8.2% higher than the €45.8M from same period last year but 6.4% lower than budgeted, due mainly to the full consolidation of TPartner acquired in September 2022, and organic growth, driven by cloud and cybersecurity services
• Customer loses from MM portfolio impacting this years' revenues significantly
• Telecommunications services represented 61.9% of total revenues while cloud and cybersecurity represented 38.1% (33.3% during 2022)

9 Months Net Revenues

Revenue Distribution by Service

33.8%

Gross Margin and EBITDA 9m 2023

• Gross Margin of €30.1M in 9m 2023, 6.6% better than the €28.2M of 9m 2022
• Gross Margin reached 60.9% of revenues, slightly lower than the 61.7% of same period of last year, due to extraordinary savings of telecom wholesale contracts in 2022, but much better than the 58.8% budgeted, due to higher growth in cloud services which enjoy higher margins than telco services
• Adjusted EBITDA reached €12.2M (before M&A costs, long term remuneration plans and other extraordinary), 2.3% higher than same period last year (€11.9M)
• EBITDA margin was 24.6% over Revenues, lower than same period last year (26.0%) but significantly better than budgeted (23.3%).

9m Adj. EBITDA Evolution

36.1%

*Adjusted EBITDA represents recurring EBITDA excluding M&A related costs, multiyear remuneration plans and other non-recurring extraordinary expenses

9m 2023 RESULTS

GIGAS

Consolidated Results		REAL	REAL	REAL		REAL		REAL	REAL		Budget 2023
Figures in euros		Q1 23	Q2 23	Q3 23		9m 2023		% Var	9m 2022		% Var	9m 2023B
Net Revenues		16,575,987	16,756,741	16,170,647		49,503,375		8.2%	45,770,569		-6.4%	52,888,248
Cloud, IT & Cybersecurity Services	6,425,401	5,978,382	6,220,033	18,623,816	27.1%	14,650,473	-10.6%	20,830,239
Telecommunications Services	9,915,597	10,560,617	9,717,389	30,193,602	-2.8%	31,076,347	-3.8%	31,383,009
ExtraoRdinary Income, Subsidies & O.	234,990	217,742	233,225	685,957	1468.0%	43,749	1.6%	675,000
Cost of Sales		(6,699,844)	(6,459,943)	(6,218,991)		(19,378,778)		10.7%	(17,512,568)		-11.1%	(21,806,691)
Direct Product Costs	(5,920,454)	(5,668,503)	(5,373,260)	(16,962,217)	5.5%	(16,084,573)	-16.2%	(20,252,899)
Operations and Technical costs	(779,390)	(791,440)	(845,731)	(2,416,561)	69.2%	(1,427,994)	55.5%	(1,553,792)
Gross Margin		9,876,142	10,296,799	9,951,656		30,124,597		6.6%	28,258,001		-3.1%	31,081,557
Gross Margin %	59.6%	61.4%	61.5%	60.9%			61.7%			58.8%
Personnel Costs		(3,153,978)	(2,960,017)	(3,168,176)		(9,282,171)		10.5%	(8,397,170)		-8.3%	(10,122,658)
Salaries and Social Security	(3,965,039)	(3,939,358)	(3,979,909)	(11,884,306)	16.3%	(10,222,522)	-0.3%	(11,915,999)
Capitalised R&D	811,060	979,341	811,733	2,602,135	42.6%	1,825,352	45.1%	1,793,341
Corporate Costs		(2,877,623)	(3,090,070)	(2,704,560)		(8,672,252)		9.0%	(7,959,712)		0.4%	(8,639,664)
Customer Operations and Marketing	(816,916)	(847,680)	(824,248)	(2,488,844)	-9.2%	(2,740,344)	-23.4%	(3,247,564)
Network, Operations and IT	(1,069,007)	(1,049,342)	(1,125,242)	(3,243,591)	34.7%	(2,407,993)	26.2%	(2,570,248)
Other Corporate Costs	(991,700)	(1,193,047)	(755,069)	(2,939,817)	4.6%	(2,811,376)	4.2%	(2,821,851)
	-	-	-					-			-
Adjusted EBITDA **		3,844,542	4,246,712	4,078,920		12,170,174		2.3%	11,901,118		-1.2%	12,319,235
Adjusted EBITDA %		23.2%	25.3%	25.2%	24.6%			26.0%			23.3%

Maintenance CAPEX (**)				451,085	703,204	656,151		1,810,440				2,725,517						2,483,771
% over Revenues		2.7%	4.2%	4.1%	3.7%				6.0%			4.7%
EBITDA - Maintenance CAPEX			3,393,456	3,543,508	3,422,770	10,359,734				8,292,803				9,835,465
% over Revenues		20.5%	21.1%	21.2%	20.9%				18.1%			18.6%

*Adjusted EBITDA represents recurring EBITDA excluding M&A related costs and multiyear remuneration plans (stock options, etc.) **Maintenance CAPEX represents recurring investments to maintain existing infrastructures and current cloud capacity

CAPEX 9m 2023

• CAPEX (excl. M&A and R&D) grew to €6.0M this first nine months of the year, due to additional storage capacity, a new cloud node in Portugal and customer projects implemented
• Budget for the first nine months of the year was €6.5M (€6.7M in 9m 2022), and therefore investment was €0.5M lower than budgeted and represented a CAPEX to sales ratio of 12.2%
• No new investments in M&A CapEx during first 9 months of the year. Recent Alterlinks acquisition, together with strategic agreement with Lyntia, have not required cash

Figures in

Thousands of

Euros

Capex to Sales	6.0%	13.6%	16.1%	12.2%
(excl. M&A)

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Debt and Cash Evolution - 30th of September

• Gross Debt at 30/SEP reached €55.7M, reflecting the new debt agreements signed in the period and includes vendor loan for TPartner acquisition (€6.5M)
• Cash at hand amounted €11.8M as of 30/SEP
• Net Financial Debt at 30/SEP reached €43.9M which represents 2.54x times budgeted EBITDA. This leverage increase from December 2022 is due, among others, to payment of fees and costs of new debt signed in April
• Gross debt does not include convertible bonds (€2.6M) or IFRS16 and IRU agreements (mainly linked to the Lisbon datacenter and telecoms infrastructure). IRUs totalled €22.0M at the end of September

	2021		2022	9m 2023
R&D and Banks Debt LT	16,525,064		27,229,872	47,408,001
M&A Related Debt LT	2,177,500		6,450,000	6,450,000
R&D and Banks Debt ST	5,682,250		9,285,638	69,967
M&A Related Debt ST	5,305,000		2,677,500	1,820,000
GROSS FINANCIAL DEBT	29,689,814	45,643,010	55,747,969
Cash at hand	12,292,022		13,695,585	11,832,503
Net Financial Debt	17,397,792	31,947,426	43,915,466
Adj. EBITDA	12,140,830		16,489,424	17,266,225
NFD/EBITDA	1.43	1.94	2.54
(*) Adj. EBITDA is the budgeted EBITDA for the year		EUR Million

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End of Year Guidance

• Gigas confirms guidance provided when presenting H1 results and estimates net revenues to reach €66M to €67M this year, approx. 10% higher than the €61.5M last year but lower than budgeted (€72.6M)
• In terms of EBITDA the Company expects to end between €16.3M and €16.8M (~24% - 25% margin), slightly below budget (€17.3M) but with higher margin than budgeted (23.8%)

Share Evolution

• Share price started at €10.20 in 2023 and it has been influenced by high market volatility and volume reduction in most markets, especially in the microcap / small cap segments
• Share Price closed at €6.94 yesterday, below the price at start of the year, and at current prices, Enterprise Value is €125M, representing an EBITDA multiple significantly below the multiples of our peers

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