Sinqia S A : releases its 3Q21 results

11/16/2021

Sinqia releases its 3Q21 results

Sinqia announces its consolidated results for the third quarter of 2021 ("3Q21").

3Q21 Highlights

Consolidation Strategy

We announced the acquisition of QuiteJá to reinforce Sinqia Digital;

Innovation Strategy

We selected Canary, a venture capital manager, as a new partner of Torq Ventures;

We announced a direct investment in CashWay, in order to evolve BaaS technology;

We announced a partnership with TechRules to expand the offer in Funds;

Capital Structure

We issued a debenture of up to R$250 million;

We concluded a follow-on offering in the amount of R$400 million;

Software ARR

All-time high of R$286.9 million in 3Q21 (+88.3% vs. 3Q20);

Number of Customers

493 customers at the end of 3Q21 (+148 vs. 3Q20)

Net Revenue

All-time high of R$92.1 million in 3Q21 (+74.5% vs. 3Q20);

Recurring Revenue

Reached R$81.4 million in 3Q21 (+73.6% vs. 3Q20), 88.4% of the total amount;

Adjusted EBITDA

Reached R$16.6 million in 3Q21 (+88.0% vs. 3Q20), with a Margin of 18.0%;

MESSAGE FROM MANAGEMENT

The third quarter of 2021 was one of the most important quarters in Sinqia's history, mainly marked by the issue of debentures and shares that enabled the beginning of a new investment cycle. In addition, we continued to advance in our consolidation and innovation strategies, delivering growing results.

In July, we concluded the second offering of debentures of up to R$250.0 million, of which R$150.0 million has already been paid and R$100.0 million will be paid in the future. Given the potential commitment of these resources, in light of our M&A pipeline, we carried out a third share offering of R$400.0 million in September 2021. These resources will allow us to capture all the consolidation opportunities offered by the market.

In addition to the Company's capitalization, the share offering helped us conclude important objectives: (i) we increased our market visibility, demonstrating our strategy's consistent track record and enormous potential; (ii) we diversified our shareholder base, attracting new investors; and (iii) we significantly increased our liquidity, with ADTV by 145% in the 60 days after the offer pricing in relation to the previous 60 days. Therefore, we further strengthened our market presence.

We started the fourth cycle of consolidation with the acquisition of QuiteJá. This movement reinforces our digital presence and entry into the credit recovery market, which has an annual turnover of billions of reais in Brazil and represents an important expansion of our TAM, surpassing the borders of the software market.

We advanced in our open innovation strategy by becoming shareholders of Canary, a venture capital manager. This will help us to expand the origination capacity of our corporate venture capital (CVC). Our ecosystem now has 3 important managers, Astella, Parallax and Canary, in addition to other players, such as Darwin and Distrito.

We announced a direct minority investment in CashWay, a startup that provides technological solutions for credit unions and fintechs. It became part of our ecosystem through Darwin Startups in 2020 and in the last months, we have seen a strong synergy, mainly due to he use of our PIX solution by the startup, we decided to further strengthen the relationship.

In addition, we signed a partnership with TechRules, a Spanish company, aimed at expanding our offer to Funds vertical, with unparalleled asset management, private banking and wealth management solutions. This partnership is a step towards the goal of building a complete solution for the vertical.

The third quarter of 2021 was extremely positive, supported by the consolidation of the results from latest acquisitions, strong revenue growth and enhancement of the R&D investments. It is worth noticing that the numbers below do not include the newly acquired companies Mercer and QuiteJá.

ARR - Annual Recurring Revenues for Software totaled R$286.9 million in the quarter. In comparison with 3Q20, this number increased by R$134.5 million, (or 88.3%). In comparison with 2Q21, this number increased by R$14.1 million, (or 5.2%). This is one of the best quarterly results since we began reporting ARR. Thanks to this, net revenue recorded a record of R$92.1 million, a growth of R$39.3 million (or 74.5%) over the same period of the previous year, being R$81.4 million recurring.

Costs totaled R$56.9 million, an increase of R$21.6 million (or 61.0%) over the same period of 2020, with a relevant intensification of R&D investments, aiming at the integration and modernization of the product portfolio. General and administrative expenses totaled R$20.0 million, up by R$11.4 million (or 131.7%) over 3Q20. Excluding costs reclassifications for expenses, this account would have totaled R$12.6 million in the period, significantly lower than the growth in net revenue.

Consequently, our Adjusted EBITDA was R$16.6 million, up by R$7.8 million (or 88.0%) over the same period of 2020, with an Adjusted EBITDA Margin of 18.0%, up by 1.3 p.p.. Net income, in turn, reached R$3.0 million, an increase of R$2.1 million (or 248.4%), positively impacted by the increase in the fair value of investments from Torq Ventures, which were marked to market. This indicates that we have already started to reap the first financial results of the program.

As we enter into the final stretch of 2021, it is worth highlight the coherence of the financial results, and, above all, the rapid evolution in our consolidation strategy: we are confident with the quantity and quality of opportunities in our M&A pipeline and we are working hard to carry out these opportunities in the short-term and continue to pursue our growth history.

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