1H2024 CONSOLIDATED RESIDENTIAL NET ADDS REACHED 223,751 – HIGHER BY 142% VS 1H2023 AND REPRESENTING ALMOST 90% OF TOTAL NET ADDS IN FY2023.
SUSTAINED INDUSTRY-LEADING FINANCIAL TRIFECTA; CONSOLIDATED REVENUE GROWTH FOR 1H2024 AT 12.4% YOY; EBITDA MARGIN ENDED AT 60.9% AND ROIC AT 17.3%
1H2024 Key Highlights
- Converge registered consolidated revenues of P19.5Bn for 1H2024, higher by 12.4% from the same period last year
- 1H2024 Residential revenues grew to P16.6Bn or 11.8% YoY growth
- Enterprise revenues reached P2.9Bn in 1H2024, a growth of 16.0% YoY
- EBITDA grew 18.3% to P11.9Bn with margin ending at 60.9% for 1H2024
- 1H2024 net income after tax increased by 23.6% from last year to reach P5.3 Bnrepresenting net income margin of 27.1%
- Consolidated residential net additions for the quarter reached a total of 223,751 (fiberonly net adds reached 236,951)
- Maintained industry-leading ROIC at 17.3% for 1H2024
MANILA, Philippines, August 14, 2024 – The Philippines’ only pure-play high-speed fixed broadband operator, Converge Information and Communications Technology Solutions, Inc. (PSE: CNVRG) (“Converge” or the “Company”) ended June 2024 with a total of 2,351,803 subscribers. This is comprised of 2,159,284 postpaid subscribers and 192,519 prepaid subscribers. The 1H2024 net adds of 223,751 shows continuous demand for core product FiberX, as well as the new brands BIDA Fiber and Surf2Sawa.
Residential and Enterprise segments post improved performance, reaccelerating to double digit growth
Highest quarterly fiber gross additions in 11 quarters
Consolidated revenues grew by 12.4% in 1H2024 to P19.5Bn from P17.4Bn in 1H2023 – reenforcing the Company’s position as the fastest-growing fixed broadband service provider in the Philippines.
Residential business grew to P16.6Bn during the same period, representing 11.8% YoY growth. FiberX has seen a steady demand growth from 1H2023 with an 18.8% increase in gross additions and 83.3% increase in net additions. BIDA Fiber and Surf2Sawa continued to register all-time-high quarterly gross adds – a testament to the intact and growing demand for fiber broadband across all income segments. BIDA Fiber and Surf2Sawa now represent 5% of residential revenue and more than 13% of total residential subscriber base. Consolidated subscriber base reached 2,351,803 as of June 2024.
In 1H2024, enterprise revenue grew by 16.0% year-on-year to P2.9Bn from P2.5Bn in 1H2023. Small and medium enterprise (“SME”) continued to be the fastest growing subsegment with 29.5% revenue growth.
EBITDA levels and profitability margins well above guidance owing to prudent cost management approach and maintaining moderate levels of leverage
EBITDA growth trajectory remains strong with profitability margins further outperforming initial guidance
The Company’s EBITDA grew by double-digits at 18.3% to P11.9Bn in 1H2024 from P10.1Bn in 1H2023. Consolidated EBITDA margin improved to 60.9% in 1H2024 compared to 57.9% during the same period last year. Provision for impairment of trade and other receivables significantly improved to 3.9% cost margin due to improved efficiency and effectivity in collection.
Industry-Leading ROIC and Strong Balance Sheet
The Company maintained its industry-leading Return on Invested Capital (“ROIC”) at 17.3% from 17.4% last quarter. This performance is a result of the Company’s disciplined approach in deploying capital to expand its fiber network and improve its overall services.
Net income after tax grew by 23.6% from P4.3Bn in 1H2023 to P5.3Bn in 1H2024, resulting in a net income margin of 27.1% for 1H2024, higher than the 1H2023 net income margin of 24.7%.
Converge has been able to maintain its strong balance sheet and cash flows with ample liquidity and gearing comfortably within bank covenants. The Company’s net debt position (as measured by total financial debt less cash and cash equivalents) decreased from P20.1Bn as of March 31, 2024, to P15.8Bn as of June 30, 2024. The Company repaid a portion of its financial debt, reducing the balance to P32.8Bn. This slightly reduced the finance cost incurred in 2Q2024. The Company’s debt service coverage ratio (“DSCR”) was 3.4x, the net debt-to-total equity was at 0.4x, and gross debt-total equity was at 0.6x – well within the required financial covenants from its debt facilities.
Total cash CAPEX as of 1H2024 amounted to P4.7Bn.
Converge introduced innovative products to further empower microbusinesses and expand disaster recovery options for enterprises
Converge introduced MicrobizMax and Disaster Recovery as a Service (“DRaaS”) to improve our microbusiness portfolio and support businesses with disaster mitigation.
MicrobizMax is an upgrade to its earlier iteration, Microbiz, with improved speeds. This was designed to make pure fiber connectivity affordable for those businesses upgrading from other forms of connectivity, including legacy and mobile data. Understanding the needs of promising entrepreneurs, Converge aims to provide innovative solutions and ensure these enterprises have low-cost business-grade plans.
Powered by HPE Zerto, a subsidiary of Hewlett Packard Enterprise (“HPE”), DRaaS is a cloud computing product that provides business continuity and data protection capabilities to organizations using Continuous Data Protection (“CDP”) technology in the event of a natural disaster, power outage, cyberattack, or other type of business disruption.
Designed as a disaster recovery solution, Converge DRaaS sees the company hosting, managing, and providing the tools and infrastructure to conduct corporate disaster recovery processes. The product assures that customers can quickly reestablish access to applications, data, and IT resources after an outage, switching over to a redundant set of servers and storage systems until the business’ primary data center is functional again.
“In the age of shifting market conditions where cybersecurity is an important focus for businesses, digital resilience is fundamental for companies to be able to adapt and swiftly deal with disruptions,” said Converge Senior Executive Vice President and Chief Operations Officer Jesus C. Romero. “Converge DRaaS is the reliable, hassle-free, affordable, and flexible support our enterprise clients can take advantage of to bolster their resilience capabilities,” he adds.
Converge was recognized again as the Fastest Internet Service Provider in the Philippines by Ookla
For its reliable performance and fast speeds during the first half of the year, Converge was awarded by Ookla® as the fastest internet provider in the Philippines for the covered period with a speed score of 147.77. This is the second year running that Converge surpassed industry peers. Ookla® is the global leader in mobile and broadband network intelligence, testing applications, and related technologies.
“What we’re seeing is a changing of the guard in the industry and this comes as no surprise given our hard-earned investments into our fiber network. In the end, service excellence through innovation and technology ruled the day,” shared Converge President and Co-Founder Grace Y. Uy.
Converge maintains its commitment to the UN Global Compact and Sustainable Development Goals
Converge submitted its Communication on Progress (“CoP”) for 2023 to the United Nations (“UN”) on strides made in the areas of human rights, labor, environment, and anti-corruption, as enshrined in the UN Global Compact.
The UN Global Compact is a call to companies to align their strategies and operations with ten universal principles related to human rights, labor, environment, and anti-corruption, and take actions that advance societal goals and the implementation of the SDGs.
The Company continues to uphold customer privacy and data security, which is central to its Human Rights Policy. In the area of labor, Converge champions workforce welfare through offering various benefits, engagement programs, and talent development to build leaders within its ranks.
“Reporting on our sustainability gains is part of the push for transparency and accountability expected of signatories to the UN Global Compact. Converge is proud to share how we’ve been making progress in fulfilling the Ten Principles of the UNGC in 2023, which embody our responsibility to safeguard our people and our planet,” said Converge Chief Sustainability Officer Benjamin B. Azada.
Please refer to the link below for Converge’s Communication on Progress 2023: https://copreport.unglobalcompact.org/COPViewer/2024?responseId=R_4V833x1X0BJJBUl
Supplementing the CoP, interested stakeholders may download the Sustainability Report through the link: https://corporate.convergeict.com/wp-content/uploads/2023/03/2023-Sustainability-Report.pdf
Upgraded 2024 Financial Targets
With the first six months significantly outperforming expectations, Converge has upgraded its full-year 2024 targets. From 7-8% consolidated revenue growth, Converge now expects to grow top-line revenue by 12-14% with BIDA Fiber and Surf2Sawa continuing their growth trajectory and FiberX exceeding targets.
Profitability margins also outpaced targets – pushing our EBITDA margin guidance to a range of 59%-60% from 58-59%. The ROIC target will also be upgraded to 16-17% from 15-16% declared previously. Cash CAPEX for the year is expected to range between P15-17Bn.
