9.3.2023
Shares converted from the company's convertible bond
The shares converted from the company's convertible bond on 31.12.2022 have now been registered in the Trade Register. The company has now 5,312,759 registered shares. The registration of the new shares lead to changes in the company's shareholder register. The list of shareholders can be made available by the company upon request.
27.2.2023
Update about the subscription period and maximum amount
The Board of Directors of the company has decided to increase the maximum amount of the round to €1,875,000 (1 250 000 shares) and to extend the subscription period until 15 March 2023.
In addition to the Board of Director's decision to extend the subscription period and increase the maximum size of the issue, the company's EGM decided to increase the share issue authorisation granted to the Board of Directors (the original authorisation was registered in the Trade Register on 22 December 2022) in a way that a maximum of 1,300,000 shares may be issued under the authorisation.
Scenario IV – €1,875,000 funding collected in the financing round.
As a part of the go-to-market plan in Latin America Sisua has studied the competition. Some of these companies would have better opportunities for growth and value creation as part of a larger company. To enter negotiations of a potential merger or acquisition Sisua would need to sufficient buffer in financial resources. Sisua Digital Oy plans to use additional funds to capitalise a selected group company in order to pay share acquisition of the target company.
22.2.2023
Q&A - Sisua's answers to an investor's questions
Question:
"Your materials say: 'Sisua Digital's customer churn has historically been very low in both developed and emerging markets.'" But what has been the churn rate year on year? I could not find this in the materials. The net revenue retention rate would also be of interest for the continuing billing business. The webinar talked about the company's strong cash flow, this apparently referred to future projections, not the current situation. The cash flow statement is also not in the materials so is there anything to support this?"
Answer from Sisua:
"Churn has been moderate as a service business: in 2021 group churn (incl. FI, CL, VN customers) about 7% and in 20222 about 6%. We do not track the Net revenue retention metric separately, as it is better suited to track a pure SaaS business where customers come and go on a monthly basis. Sisua's ongoing B2B services business is relatively predictable for which ARR is better suited: the metric is updated on a monthly basis, which includes annual renewal license sales and recurring monthly service fees (MRR) * 12. In addition to ARR, a variable amount of man-days of work is delivered under service contracts, and in addition to this, project-based consulting.
Sisua's profitability has developed positively from 2019 onwards. The first EBITDA-positive quarter was achieved in 2021, while in 2022 the company's profitability has been burdened by the growth investments launched at the end of the year. However, the operating business, which is not burdened by growth investments in new markets, was already profitable in 2022. The company's profitability is forecast to develop positively in 2023 and 2024, but growth investments will weigh on cash flow in 2023. The operating business, including the existing businesses in Finland, Chile and Vietnam, is forecast to be profitable in 2023 (EBITDA% 15%). This will cover loan repayments that will weigh on the company's cash flow. In addition, growth investments will be managed taking into account working capital needs. From 2024 onwards, the entire business, including growth investments, is estimated to be profitable (2024 EBITDA% 15%) and cash flow positive. A possible acquisition will be financed mainly by own shares and debt."
17.2.2023
Webinar VOL 2: Thu 23.2. at 5 pm
The founders of Sisua Digital will talk about the development of the company and the ongoing investment opportunity. See more details and register. Webinar is in Finnish.
17.2.2023
Webinar 16.2.2023
Sisua Digital’s webinar can now be seen here below (In Finnish)
The founders of Sisua Digital Oy talk about the company's development and the ongoing investment opportunity.
17.2.2023
Questions and answers from the webinar
Question from the crowd:
"When will or must the company seek additional funding?"
Answer from Sisua:
"The company does not plan to raise new equity. Cash flow from operations is positive and growth investments are controlled by working capital needs. The planned acquisition will be financed mainly by own shares and debt."
Question from the crowd:
"The growth forecast looks like a hockey stick. Is it credible?"
Answer from Sisua:
"The conditions for strong growth exist in the growth markets of the Americas and Asia, where demand is strong and the talent availability is limited. Growth investments in the Americas and Asia between 2022 and 2024 will improve the conditions for strong growth. At the end of 2022, customer contracts were signed with order backlog extending to H2/2023 and revenue impact to 2024, which will have time to increase December 2022 revenue to bring the annual run-rate to €4.1M. In the 2024 revenue forecast, the anticipated acquisition is not certain."
Question from the crowd:
"Will 2023-2024 be a tough year for the company?"
Answer from Sisua:
"Yes, there is a lot of work ahead, but so is behind. We have years of experience and a proven track record of launching and growing businesses in new markets. The implementation and integration of the acquisition will probably be the most challenging part."
Question from the crowd:
"What is the S-curve and how does it affect revenue generation?"
Answer from Sisua:
"The S-curve reflects the stages of opening a new market. In the initial phase, investments are needed and there is a delay in revenue generation. Fortunately, we have multinational customers in South America, who allow us to 'wing' local projects without delay."
Question from the crowd:
"Is there a delay in revenue generation for the company?"
Answer from Sisua:
"Yes. Pricing for ongoing service customers is set up so that the majority of revenue generation occurs over the life of the customer relationship (ARR), which allows for a steady cash flow and higher margin compared to the project business."
Question from the crowd:
"Does the difference between gross margin and staff costs justify the improvement in profitability?"
Answer from Sisua:
"Yes. See separate graph in attachement page 4"
Question from the crowd:
"What does the term 'operational profitability' used by Sisua mean?"
Answer from Sisua:
"Operational profitability refers to the profitability of existing businesses that are not burdened by growth investments in new markets. Until 2022, growth investments are mainly focused on launching Vietnam business, from 2023 onwards they are mainly focused on growing South and North American businesses."
Question from the public:
"What is the basis for the planned improvement in profitability between 2023 and 2026?"
Answer from Sisua:
"The improvement in profitability is based on an as-a-service business model, packaged services and geographic arbitrage that will enable Sisua to serve customers in developed markets from emerging, low-cost countries."
Question from the audience:
"Did the company apply for too little capital in the last round of financing?"
Answer from Sisua:
"Yes. The last time equity funding was raised in an MBO was in 2019."
Question from the audience:
"What happens to profitability if growth in the coming years is 'only' 40% per year?"
Answer from Sisua:
"Profitability will develop favourably even if growth is lower than planned due to lower than planned staff costs."
Question from the public:
"Is EV/EBIT a good ratio to estimate the future value of the company?"
Answer from Sisua:
"No it isn't. A more descriptive and more commonly used ratio is EV/EBITDA, which excludes goodwill amortisation according to the plan."
Question from the audience:
"Is the company very leveraged?"
Answer from Sisua:
"No. The MBO loan will be repaid on 31 March 2023, after which the leverage ratio will be low (5%). The Nordea loan is scheduled to be repaid by February 2025, but refinancing is also possible. The debt leverage is being considered for a drawdown in connection with the acquisition."
Q&A from Sisua's webinar on 16.2.2023
9.2.2023
Webinar on Thursday 16.2.2023 at 5 pm
In a webinar on Thursday, 16 February, the founding shareholders will present the development of the company and the ongoing investment opportunity. The webinar will be held in Finnish. See more information and register here.
7.2.2023
Q&A - Sisua's answer to a question from the crowd
Question from the crowd:
"Sisua's business model presentation says "Recurring revenues consist of software license sales and monthly maintenance fees, which effectively separate Sisua's revenue generation from the linear need to increase headcount." When looking at the projected revenue/employee numbers they do not increase 1:1, but the number of employees does increase significantly with revenue. In particular, the forecast already made and the forecast for this year (which is supposed to be fairly accurate) shows that turnover/employee will not increase much. Are you sure that the forecast increase in turnover/employee from about 45 thousand to about 60 thousand euros is possible? In the forecast, this is largely a bounce between 2023 and 2024 and not a steady one.
A follow-up question on staff costs. The projected staff costs per employee seem to stabilise at around €38k for the period 2023-2026. What is the justification for this? I would assume that salaries would increase at least in line with inflation. For example, Vietnam has had a stable annual inflation rate of around 3.5%, Chile more variable but on average at least in the same range."
Answer from Sisua:
”Sisua Digital's turnover per employee in 2022 was around €43,000. In 2023, Sisua Digital's turnover per employee is forecast to grow to €49,000 per year. In 2023, Sisua will invest in growth largely by recruiting new staff for customer projects, sales and marketing, product development and support functions. These investments are expected to create the basis for higher revenue per employee figures from 2024 onwards, with an increasing share of recurring revenue.
Sisua Digital's personnel costs per employee will stabilise at EUR 38,000 as an increasing proportion of Sisua Digital's employees will continue to be from low-cost countries. From 2020 to 2022, the majority of employees will be recruited in high-cost countries such as Finland and Chile, while from 2023 onwards, new employees will be recruited mainly in low-cost countries such as Vietnam. In addition, the forecast assumes that part of the staff costs will be shifted to Material costs and external services."
Notice:
In this update section you will find, among other things, answers to investor questions that reach us. The answers shown originate from the respective entrepreneur and are therefore marked accordingly. Invesdor does not undertake any separate verification of the information received after the start of the financing phase.
If you have any questions about the company, send them directly to us at service@invesdor.com.