Converge Information and Communications Technology Solution (CNVRG) Q2 2024 earnings summary

Executive summary

• Consolidated revenues for the first half of 2024 rose 12.4% year-over-year to ₱19.5 billion, driven by both residential and enterprise segments.

• Net income after tax increased 23.6% to ₱5.3 billion, with net profit margin improving to 27.1% from 24.7% in 1H2023.

• Subscriber base reached 2,351,803 as of June 2024, with strong demand across all income segments.

• EBITDA grew 18.3% to ₱11.9 billion, with margin improving to 60.9%.

• Recognized as the fastest internet provider in the Philippines by Ookla for the second consecutive year.

Financial highlights

• Residential revenues grew 11.8% year-over-year to ₱16.6 billion, with 19.4% increase in subscribers despite a lower blended ARPU.

• Enterprise revenues rose 16% to ₱2.9 billion, with SME subsegment up 29.5%.

• Cost of services increased 24%, outpacing revenue growth, leading to a lower gross margin of 64% (from 67%).

• General and administrative expenses rose 16% to ₱4.2 billion.

• Provision for impairment of receivables dropped 33% to ₱764 million.

• Finance costs decreased 11% to ₱973 million due to loan repayments.

Outlook and guidance

• Maintains strong balance sheet and liquidity, with net debt position reduced to ₱15.8 billion.

• Debt service coverage ratio at 3.4x, well above covenant requirements.

• Focus remains on disciplined capital deployment and network expansion to capture broadband demand.