Earnings call transcript: Link Mobility’s Q1 2025 growth in CPaaS and UK expansion

Link Mobility has reported its Q1 2025 earnings, highlighting significant growth in its CPaaS solutions and an expanded market presence in the UK. The company, currently valued at $55.54 million in market capitalization, achieved a revenue of approximately 1 billion NOK, with a gross profit of 409 million NOK, marking a 15% reported growth. Despite an organic revenue decline of 7% in stable currency, the company’s adjusted EBITDA saw an 18% organic growth, reaching 198 million NOK. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, suggesting investors should carefully evaluate entry points.

Key Takeaways

• Link Mobility’s gross profit grew by 15%, with an adjusted EBITDA margin improvement to 12%.
• The company expanded its UK market presence, achieving an 8% market share through three acquisitions.
• Notable growth in OTT channels, with WhatsApp messaging volumes increasing significantly.

Company Performance

Link Mobility’s performance in Q1 2025 reflects its strategic focus on advanced CPaaS solutions and market expansion. The company reported a 7% organic revenue decline, attributed to the termination of low-value traffic in its Global Messaging segment. Despite this, the company maintains a strong gross profit margin of 41.49% and an impressive current ratio of 4.96, according to InvestingPro data. The gross profit and adjusted EBITDA demonstrated robust growth, supported by improvements in the product mix and operational efficiencies.

Financial Highlights

• Revenue: 1 billion NOK
• Gross Profit: 409 million NOK (15% reported growth)
• Adjusted EBITDA: 198 million NOK (18% organic growth)
• Adjusted EBITDA Margin: 12% (improved by 2.5 percentage points year-over-year)

Outlook & Guidance

Looking ahead, Link Mobility expects high single-digit gross profit growth throughout 2025, with EBITDA growth anticipated to exceed gross profit growth. The company is focusing on expanding its advanced conversational products and exploring potential RCS expansion with an upcoming iOS update. The M&A strategy will continue to target European and select international markets.

Executive Commentary

Thomas Bargie, CEO of Link Mobility, emphasized the company’s strategic use of its experience to drive development in less penetrated European markets. He noted, "Enterprises are increasingly choosing the mobile phone as the communication channel towards the end users." Bargie also highlighted the potential for increased penetration rates as more use cases are introduced.

Risks and Challenges

• Organic revenue decline due to traffic termination could impact future growth.
• Market saturation in established regions may limit expansion opportunities.
• Macroeconomic pressures could affect enterprise spending on communication solutions.

Link Mobility’s Q1 2025 earnings call underscores its commitment to innovation and expansion, particularly in the UK and less penetrated European markets. The company’s focus on advanced CPaaS solutions and strategic acquisitions positions it well for future growth, despite the challenges of organic revenue decline and market saturation.

Full transcript - Link Mobility Group ASA (LINK) Q1 2025:

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Good morning, and welcome to the First Quarter ’20 ’20 ’5 Financial Results Presentation for Link Mobility. My name is Kristian Niegel, Investor Relations and Corporate Strategy Manager in the company. And with me here this morning are Thomas Bargie, CEO and Mohsen Advaldsen, CFO, which will present the results. After the presentation, there will be a Q and A session. Please post questions online during and after the presentation.

Thomas, the word is yours.

Thomas Bargie, CEO, Link Mobility: Thanks for the introduction, Christian. Another great quarter for Link with strong organic growth and two new M and A deals for the start of the year. Link is the leading and largest CPaaS player in Europe. We started out more than twenty years ago in The Nordics and have been part of building the messaging market in The Nordics to one of the most advanced messaging markets in the world. Link is using this experience to fuel the development in the less penetrated markets in Europe.

Our strategy is dedicated to providing digital communication products to the enterprise market for them to interact with their end customers. We approach the enterprise market through a strategy of local touch points with our clients. We have numerous, sales reps, customer service, and customer success employees on the ground winning new contracts and supporting existing clients, in the local language and culture. This setup is creating a larger reach than many of our competitors who have a more regional or centralized approach to the market. Link’s more than 50,000 clients serviced by our more than 30 offices in 18 countries are a result of the successful implementation of this strategy over many years.

Gross profit, the last twelve months was recorded at almost 1,600,000,000.0. Link has grown significantly over the last year with a gross profit CAGR of 12%. Profitability has always been a key priority. Link is growing the business while generating additional profitability and cash. Over the last four years, adjusted EBITDA has a CAGR of 14%, higher than gross profit growth due to Link’s scalable business model.

For Q1 twenty twenty five, the last twelve months adjusted EBITDA is reported at NOK $757,000,000 or a growth of almost NOK 40,000,000 in one quarter. Link has a central position in the industry value chain, supporting clients with connectivity and SaaS solutions to enable clients to communicate with their end users. Enterprises have a constant need to communicate and inform their end users. Enterprises are increasingly choosing the mobile phone as the communication channel towards the end users. This megatrend is being driven by the end users themselves.

We prefer that enterprises communicate with us over the mobile phone and the enterprises adapt. Link has their connectivity to the mobile operators and relevant OTT channels, are combined with our software solutions to provide, our enterprise clients with an end to end communication solution towards their end users. Those software solutions include chatbots combined with AI, marketing automation, CDP, payment solution, template builders, and template managers. Link software solutions combined with connectivity enables a state of the art multichannel and conversational communication platform, ensuring satisfied end users and high return on investments for our clients. We’re happy to report an excellent first quarter.

Both gross profit growth and adjusted EBITDA growth are strong and the continuation of the solid performance the company has reported over the last two years. Organic gross profit growth came in at 9% versus the same period last year. Adjusted EBITDA growth is reported organically at a very strong 18%. In the current quarter, profit growth is significantly higher than revenue growth, the same trend as we have reported in the two previous quarters. Enterprise revenue growth is lower than gross profit growth due to more demand for advanced products with higher margins and more activity on higher value clients.

The profitability contribution on the more advanced products has contracted the softer development on low margin traffic on gross profit, but not to the same extent on revenue, thereby resulting in higher gross profit growth than revenue growth. For global messaging segment, the discrepancy between the revenue and gross profit development is clear. Revenue declined with a hundred and 18,000,000, while gross profit grew with 7,000,000. Revenue decline in global messaging is a result of LINK terminating traffic to lower margin destinations, focusing on more profitable arrangements. The aggregator business in global messaging is more volatile and less sticky compared to the enterprise regions.

Volumes fluctuate based on decisions on the Link side as well as clients’ needs and adaptions. Link has terminated several low margin destination, reduced revenue growth, but still increasing gross profit growth and gross margin in the segment. Gross profit is reported at SEK409 million or an organic growth of 9% in fixed currency, which is in line with expectations of high single digit growth. Adjusted EBITDA is reported at 198,000,000 or an organic growth of 18% in fixed currency. Linkara recognized an extraordinary bad debt provision in the Global Messaging segment, same period last year.

Underlying growth in adjusted EBITDA is 12% and higher than gross profit growth due to Ling’s scalable business model. Reported EBITDA is 187,000,000, reflecting NOK 11,000,000 in M and A cost. Link signed new contracts in the quarter with an estimated gross profit of $42,000,000 above the quarterly target of $40,000,000 A higher share of the new agreements is for more advanced solutions with higher profitability. New contract utilizing advanced conversational products on RCS constitutes 17 of all new contracts closed in the quarter. Link also closed two new M and A transactions, both

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: in The UK market. The UK market is an attractive market, and the two new acquisitions have solidified LingQ’s presence and expanded the customer portfolio to new verticals like the public sector.

Thomas Bargie, CEO, Link Mobility: Additional size in The UK elevates linked to a clear tier two player in a very large market, which further fuels our growth opportunities in The UK. We have a strong M and A pipeline with five targets in due diligence, of which three have been added in the quarter. Gross profit is reported at SEK409 million or a growth of 9% in fixed currency. A solid contribution from the more advanced CPaaS solutions with high margins together with stronger growth momentum on high margin client traffic was the main driver of growth. Increased market demand for more advanced conversational products is clearly materializing in the P and L with a solid gross profit growth.

This effect is also evident in the organic margins with a 3.3 percentage points increase in gross profit margins. The graph at the bottom of the slide displays the margin impact from the segments. Both the enterprise segment and global messaging are reporting a positive contribution to group margin expansion with one point six and one point eight percentage points, respectively. Link has significant improvement in new business wins over the last two years based on renewed focus and changes in commercial execution. The graph on the left shows the estimated annualized gross profit on new contracts.

The numbers are extracted from our CRM systems and the estimations are based on contractual arrangements and specific dialogue with clients. In Turnitin Link, we have a target of achieving $40,000,000 plus in gross profit from new contracts per quarter, except Q3, which will be lower due to summer break. The current quarter resulted in $42,000,000 in expected gross profit from new contracts, Isolating the new contracts for advanced conversational products, named CPaaS in the graph, the current quarter is at $15,000,000 on estimated gross profit. We observed more traction in market demand on advanced mobile marketing solutions combined with bots and WhatsApp RCS. We also see more demand for marketing automation and CDP in The Nordics.

The OTT channels are in high demand. RCS and WhatsApp combined with chatbots and other software solutions are growing rapidly. The main use cases are mobile marketing and customer support use cases. Link is further announcing its SaaS solutions with AI content creation to help our clients to automate more of their campaign activity. Activity.

Historically, about 75% of the gross profit is recorded in the p and l after twelve months. We expect the higher contract backlog to benefit gross profit growth gradually. The more advanced CPaaS contracts take longer time to scale, volumes versus legacy product, but of course, result in immediate and higher license revenue. Link has a healthy sales pipeline in addition to the new agreements won. Link is operating in a growing market with two growth engines, continued growth on existing products and accelerated growth on the more advanced conversational solutions.

For existing products utilizing SMS and email as a channel, most markets experience market growth as more and more, businesses are using digital communication solutions to alert, notify, and promote their end users. On top, of businesses utilizing digital communications for the first time, there is also a growth momentum on businesses using digital communications on new use cases. The Nordics are the highest penetrated messaging market in the world with 436 messages per citizens, with the rest of Europe lagging behind with 186 messages per citizen. We expect the less penetrated markets to continue increasing the penetration rates as more use cases are introduced, gradually closing the gap to The Nordics. The more advanced solutions enabling two way dialogue on the new OTT channels like RCS and WhatsApp are creating new use cases for the industry.

Suddenly, enterprises want to engage, with their end users instead of just pushing out the message. This market is in the early stages of adoption, but growing aggressively from low volumes. This growth is expected in our industry to accelerate, partly taking over the growth momentum on existing products, partly creating growth on top. Profitability is much higher for these more advanced solutions, both on a per message basis, but also higher license fees. The continued growth on the more advanced products is expected to raise margins levels going forward, but we expect an evolution over time, not

Executive, Link Mobility: a revolution.

Thomas Bargie, CEO, Link Mobility: On this slide, we provide a specific example of a conversational use case growing rapidly on one of the OTT channels, WhatsApp. The logistic industry is rapidly demanding conversational products to engage end users in dialogue regarding tracking shipment, delivery time, payment, and collecting NPS score to both save money on no shows and to create a better end user experience. Link is implementing a lot of new contracts on this use case, increasing the volume to almost 50,000,000 messages this quarter versus 2,500,000 same period last year. RCS, it’s a feature channel that we expect significant growth from going forward. RCS can be viewed as SMS version two as the channel is embedded in the SMS app, but with all the functionality and features that were used on, for example, WhatsApp or iMessage.

RCS has been on the market for several years, but until now, only been available on or compatible on selected Android handsets. Apple has not opened up for RCS until now. This has held back the adoption significantly. Apple launched RCS on iOS 18 dot one and are gradually rolling out this feature through mobile operators in Europe. Spain, France, UK, Belgium, and Germany offer RCS on both iOS and Android.

The rest of the market are waiting for RCS to be rolled out. Customer demand is driven by the additional value this channel is creating through a better end user experience and interaction. We see a higher response rate, higher engagement rate, and a significantly better conversion on RCS than SMS. The RCS volumes, are increasing rapidly from 82,000,000 messages last year to 119,000,000 this year on an LTM basis. Looking

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: at

Thomas Bargie, CEO, Link Mobility: the new contracts, we expect NOK 17,000,000 on gross profit from new contracts, which is a growth of 49%. We expect material commercial traction on RCS when we can reach all end users with the increased security features and ease of engaging into a conversational dialogue. RCS is rapidly growing as we speak, but we expect this growth to accelerate when the channel is available for most end users. Link has closed three acquisitions in The UK market the last seven months. The UK market is large with good growth potential.

Link has got the size after the three acquisitions to become a relevant vendor in most verticals. We have 8% market share in The UK, become becoming one of the biggest tier two vendors and a much more relevant player towards the mobile operator benefiting from higher discounts due to the additional volumes. Lynx customer stock in The UK also increased significantly with more than 3,600 clients representing all verticals and a great potential for upselling activities. The customers from the acquired entities will also benefit from Link’s additional product portfolio, and we are upselling more advanced conversational products on RCS and WhatsApp as we speak. Link is interested in further acquisitions in The UK market.

In addition to organic growth opportunities, the company is well positioned for inorganic growth through M and A. Link has the competence, the historical track record for value creation through m and a and a solid pipeline with m and a targets. Since 02/2015, Link has closed over 30 acquisitions, of which the majority have been a great success generating significant value. In 02/2024, Link closed three acquisitions, e z for you in Portugal, NRS in Spain, and Reach Interactive in The UK. In 02/2025, Link has closed two more acquisitions so far, both in The UK.

The acquisition had a multiple of between six to seven times cash EBITDA and was highly accretive to Link’s own valuation. We have 10 prioritized targets, most of them located in Europe. These prioritized targets have an EBITDA potential of up to EUR30 million to EUR40 million. Of these targets, Link has five companies under due diligence, and we have added, in 2025, ’3 more targets to the due diligence process. Bolt ons in Europe have priority, but we’re also looking outside Europe.

Private companies in our space have a target evaluation of between six to nine times cash EBITDA before synergies. The quality of the customer base, growth momentum of the targets and synergy potential are the main criteria, placing the valuation in the mentioned range of six to nine times cash EBITDA. The company is pointing to Link’s stable historical performance to provide further guidance on reasonable expectations going forward. We expect Link’s European business to continue to display a high single digit gross profit growth rate. Additionally, we expect adjusted EBITDA growth rate to be higher than the gross profit due to our scalable business model.

Inorganically, Link has a growth target of 10% on adjusted EBITDA through bolt on acquisitions. Link has SEK2.5 billion in cash reserves. The cash position will be further strengthened by time as the company historically generates approximately SEK400 million in free cash flow on a yearly basis. The high cash reserves will be used for acquisitions and a significant repayment of the existing bond when the last tranche of the bond will be refinanced. Acquisitions will not increase net debt beyond a leverage ratio of between two point zero to 2.5.

That was my part of the presentation. Morten, please take over and guide us through the financial section.

Mohsen Advaldsen, CFO, Link Mobility: Thank you, Thomas. In the first quarter, Link reports revenue of billion. Total revenue growth was, as in the previous two quarters, impacted by termination of low value traffic in the Global Messaging segment and high comparables on high volume, low margin clients. These effects resulted in an organic revenue decline in stable currency of 7%, taking into account positive currency effects of 1,000,000 in the quarter. Acquisitions closed in 2024 contributed with $56,000,000 and total reported revenue remained fairly stable year over year.

Enterprise revenue remained stable year on year as we faced stronger comparables this quarter on high volume, low margin clients, including extraordinary high volumes on one single retail client in Q4 twenty twenty four. We continue to observe increased volume and revenue stemming from more advanced products, reflecting implementation of sold contracts in the preceding quarters. Regionally, we observed low single digit growth in The Nordics in line with previous quarters, while Central Europe growth was reported at 7% in the quarter, somewhat down quarter on quarter impacted by the extraordinary high volumes from the one large retail client. With an underlying momentum of double digit excluding this mentioned client. Western Europe revenue growth was as in the previous quarter impacted by strong comparables on selected high volume, low margin clients, and this effect were stronger quarter on quarter as Q1 twenty twenty four included even higher volumes from such clients.

The Global Messaging segment reported revenues of more than NOK300 million or an organic decline of 28%, impacted by termination of low value traffic as in line with the previous quarters from refocus towards higher value traffic and reduced credit risk. Total volume reported for the quarter was 5,400,000,000.0 messages, representing a reported growth of 17% and impacted by adding on significant volumes from the LATAM business as part of the acquisition of NetReal Solutions in Spain. Organic volume growth on SMS was as for revenue impacted by termination of traffic and high comparables and declined year on year by 8%. OTT channels continue with solid organic growth momentum of 130% year on year, impacted by strong growth in WhatsApp messaging, as Thomas touched upon previously, in addition to growth in RCS messaging. Moving over to the churn and net retention overview.

Enterprise churn remained in the historical level of 1.5 percentage points and includes a 0.3 percentage point impact from the large retail client that churned Q3 last year. The low churn reflects sticky integrations to clients’ IT stack and high transition costs, which are further supported by implementation of more advanced CPaaS contracts. As per revenue, net retention metric is impacted by the terminated traffic and high comparable low value traffic same period last year. The year on year effect related to selected high volume clients are stronger in Q1, as mentioned, versus last quarter, hence a softer net retention is reported quarter over quarter, while the effect from terminated traffic in Global Messaging is at a similar level as we’ve seen in the last two quarters. We would emphasize that we expect net retention metric to normalize in the second half of this year once the high comparables last year are faded out.

Moving over to the next slide on gross profit. Gross profit is reported at NOK409 million or a reported growth of 15%, with a positive impact from currency of NOK8 million and acquisitions adding NOK15 million. Organic growth in stable currency was 9% and outpacing revenue growth from shift towards higher value revenue compared to same quarter last year. The enterprise gross profit growth was 7% and outpacing stable revenue development from improved revenue mix towards both higher value traffic and products driven by implementation of higher value CPaaS contracts. Regionally, Northern Europe gross profit was slightly down year on year following softer volume development on selected clients.

The underlying growth momentum on existing clients is influenced by price increases from operators in the region, while new contracts contribute positively on the back of consistent strong commercial results in the region. Central Europe contributed positively to total growth from both domestic and global clients, and an improved contribution from more advanced products on selected global clients, leading to a reported organic growth of 22% year over year. Western Europe delivered organic growth of 3% despite 6% lower revenue year on year linked to higher comparables on high traffic, low margin clients, driving a positive margin mix. Growth is impacted by the isolated bankruptcy churn of a large retail client since the third quarter last year, impacting approximately 2% on year on year growth. In Western Europe, higher interest in and increased use of richer OTT channels contributed positively, but was also somewhat offset by the isolated churn, retail churn, which include a high share of OTT, mainly related to RCS messaging.

The lower graph shows development in the gross margin level in the enterprise segment, which improved year over year and quarter over quarter to 28%. The mix towards higher margin revenue as in traffic and products impacted enterprise margin positively, while the contribution from more advanced feature rich channels was 0.4 percentage point on the year on year margin expansion. Then to the next slide on adjusted EBITDA. Adjusted EBITDA is reported at million, a reported growth of 2518% or NOK28 million organic growth in stable currency. Growth is driven by $31,000,000 organic gross profit growth and partly offset by an organic OpEx growth of 1% or $3,000,000 in the quarter.

As Q1 twenty twenty four included a $9,000,000 bad debt recognition related to the Global Messaging segment, The underlying OpEx growth was 6% and mainly driven by salary inflation and other growth related items. Adjusted for extraordinary bad debt provision, the organic growth in adjusted EBITDA was 12%. The inorganic growth contribution from acquisitions closed in 2024 was $8,000,000 in the quarter. Adjusted EBITDA margin improved year on year by 2.5 percentage points to 12%, driven by the 3.3 percentage points organic expansion in gross margin, partly offset by increased OpEx to sales ratio linked to revenue decline from low margin traffic. Moving on to an overview of the P and L.

I will only focus on a selected few items as we’ve been through the development in adjusted EBITDA in the earlier slides. Non recurring costs in the quarter is reported at SEK11 million and results are in a reported EBITDA of $187,000,000 for the quarter. M and A costs were NOK 11,000,000 in the quarter, whereas $6,000,000 was related to closed acquisitions, while the residual is related to ongoing processes, including the ongoing due diligence on five prioritized targets. Share option costs include a net reversal as the ordinary program cost of 3,000,000 were more than offset by $4,000,000 in reversal of social security tax accruals following share price development in the quarter. The net reversal of $1,000,000 in share option cost was fully offset by recognition of $1,000,000 in other restructuring costs.

Cost of depreciation and amortization is reported at $92,000,000 a $9,000,000 increase versus $7,000,000 related to finalized projects end of twenty twenty four and the remaining increase related to acquired entities. Net financial items are reported at negative 35,000,000 and include a net currency loss of 8,000,000, which includes a 19,000,000 negative currency adjustment of the receivables related to domestic broadcast, reflecting a weakening of US dollar versus NOK, partly offset by an 11,000,000 adjustment on liabilities denominated in euro. Net interest costs reported at 27,000,000 includes 39,000,000 in interest mainly related to bonds, dollars 4,000,000 amortized transaction costs, which was partly offset by $16,000,000 in interest on cash deposits. Then to the balance sheet. Non current assets amount to 6,400,000,000.0, whereof 4,600,000,000.0 in goodwill, with no indications of impairment.

The year on year decrease in non current assets of $7.00 8,000,000 was primarily driven by reclassification of the receivables related to The US divestment, representing a decline of $400,000,000 and cancellation of owned bonds represent a decline of $259,000,000 Trade and other receivables was reported at SEK1.6 billion and includes the seller’s credit and earn out related to sale of message broadcasts totaling SEK267 million and due in the second quarter this year, which is the main driver for the increase together with $30,000,000 related to acquisitions. The underlying development was positive following termination of low value traffic and improved collections. Cash reserves reported at $2,400,000,000 and declining $900,000,000 year on year, mainly from M and A of $235,000,000 share buybacks of $3.00 $5,000,000 and investment in own bonds of close to 600,000,000 partly offset by cash generated from operations. Reported payables is reported at $1,300,000,000 or a $220,000,000 decline year over year with contribution from acquisitions adding $32,000,000 The underlying decrease reflects the effects of terminated traffic as well as normal fluctuation in timing of payables to mobile operators. The net interest bearing debt is reported at just above billion dollars calculated in accordance with our bond agreement with gross debt related to the two outstanding bonds totaling €296,000,000 with €171,000,000 due in December year.

Leverage is reported at 1.4 times LTM pro form a adjusted EBITDA at the end of the quarter and in line with the previous quarter. Receivables, sellers’ credit and earn out related to the sale of Message Broadcast due this quarter total to totaling 267,000,000 is not deductible in the net debt calculation according to bond terms. Including these receivables, leverage would be at one times, adjusted EBITDA. Then to an overview of key operational cash flow items. In the quarter, we report cash flow from operation of SEK133 million, somewhat impacted by net working capital build in the quarter from timing effects on payables.

Working capital fluctuates from quarter to quarter, but we expect the impact to normalize on an LTM basis. CapEx was reported at $46,000,000 impacted by year on year by salary inflation on development resources and a push on selected CPaaS solution to capture opportunities in terms of customer contracts. Interest payments representative of Link two quarterly interest payment and lease payments of 3,000,000. On an LTM basis, free cash flow after CapEx and interest paid was $350,000,000 with $100,000,000 negative impact of working capital build, which is expected to normalize. Lastly, an overview of bond maturity with the two outstanding bonds totaling €296,000,000 divided into Link zero one with €171,000,000 maturing December and Link zero two with €125,000,000 maturing October 2029, with a current blended interest rate of 3.8%.

Our current solid cash position derisks a refinancing of Link zero one as full repayment leaves sufficient working capital to operate the group. The refinancing of Link zero one will be directly linked to expected development in the actionable M and A pipeline, where our clarified targets are in due diligence stage. The refinancing will be managed in due time ahead of maturity end of this year. We reiterate that the financial policy remains of net debt not exceeding two point zero to 2.5 times LTM pro form a adjusted EBITDA, which still gives ample room for executing on our inorganic growth strategy. That completes the financial section.

Handing the word back to Kristian.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Now we open up for Q and A. Please post questions online. We have received some questions already, and we’ll start the session by some questions from Sigve Flor from Nordea Markets. You reported 17% higher volume year on year, million transactions increase in both SMS one way messaging and other messaging, but 7% decline year on year in the reported revenue. Could you give some more flavor of the organic revenue decline?

Executive, Link Mobility: Yes. I can take that one. Good morning, Sigurd. The reported number includes m and a, and we have a significant contribution from the Latam business as part of the acquisition we did in Spain through with the NRS acquisition.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: When we

Executive, Link Mobility: look at organic volume development on SMS, that is declining 8%. So that’s fairly in line with the with the top line development. As we’ve just went through in the in the numbers, we see still have termination of traffic in in global messaging, but we also have specifically for high volume, low margin client across Central Europe and and Western Europe, which drove high volumes in q one twenty four. That was higher year quarter on quarter. So that is the main drivers for the organic volume decline.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Great. And we have another question from Sigu. Do you expect the product mix effect you saw in q one towards higher margin products to continue into 2025 on a year on year basis?

Executive, Link Mobility: I can take that one. Thank you, Sigurd. Yeah. I do expect based on the one contract and sales pipeline that would have a beneficial product mix effect going forward. There are two main sort of drivers on gross margin.

It’s the product mix effect and the customer mix effects. How this translates into the P and L going forward is difficult to say. It’s based on sort of the customer mix effects too. But we are optimistic on product mix effects that is improving our margin levels. But as I said, how this translates into the P and L going forward, that also depends on the customer mix effects.

Now it’s difficult to give a detailed view on. We have 50,000 customers.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Right. And then we have some question from Ola Bodhavan in Pareto Securities. We’ll start with the first one. Can you give some color on how Q2 has been going so far into the quarter?

Executive, Link Mobility: I think I’m going to point to what I said on my last slide that for the full year of 2025, we expect a high single digit gross profit growth and an EBITDA growth higher than that. Yeah, that’s my comment.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Great. Next question. Also, do you have any indications on when RCS will be enabled for iOS in other markets?

Executive, Link Mobility: We have gotten some indications that the next iOS update happening in July, May, open up for for new countries. Apple is known for its secrecy, so, let’s wait and see. But, it’s our best estimate now is is July.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: And next question. RCS, new contract wins up year on year, but looks to be down q on q. Should we read anything out of this, or is it driven by some other effects such as seasonality?

Thomas Bargie, CEO, Link Mobility: No. You shouldn’t really read anything out of it. It’s quite normal that

Executive, Link Mobility: the end of the year is is very strong on the OTT channels and RCS specifically. Clients are planning their next year’s campaign activity and therefore, so, sign contracts then. So, there’s nothing abnormal about that.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Moving on some to some questions from Jesper Strygimaud from Handelsbanken. Net retention rate is still low despite adjusting for the 7% impact on terminated traffic in global messaging. How should we read into this in terms of Lync’s ability for upsell to existing and new customers? And could you give some color on the mix between regions? Is there a certain loss in specific regions?

Executive, Link Mobility: Yes. We spoke about on the on the webcast earlier. We we have, of course, the effect of permitted traffic being domestic. This is fairly the contribution map is fairly stable quarter on quarter. We have, as I mentioned on the question to from the Sigrid, is that we have specifically four clients, which are very high volume, very low margin, driving high volumes in comparable quarter last year, which are impacting the net retention rates, but not not the gross profit growth to a material extent.

So that is mainly in Western Europe, but also partly in Central Europe. In Central Europe, we had one large retail client driving extraordinary high volumes in the same quarter last year, which is impacting the numbers year on year. When it comes to to upselling, we target 60% to 70% of the the the sort of close to one contracts to be on on existing clients, and that’s what we’re seeing also in historical numbers. So the success rate on upselling is is high. That’s what we also target going forward.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Another question from. One smaller European CPaaS pair reported a deteriorating ATP market in The Nordics. Given the somewhat slower development than The Nordics, do you see similar market dynamics, or what’s the main hurdle in the Nordic region?

Executive, Link Mobility: I can take that one. It’s for Link, specifically, it’s difficult for me to comment on on what the competitors are experiences. But for for for Link, specifically, we see Norway is a challenging market. The three other Nordic markets are okay, but Norway is a little bit softer. And this is, due to the fact that Norway is the highest penetrated, messaging market in the world, and it’s been growing quite, high, in number of messages, especially during the pandemic.

And we have seen that certain, or some high volume clients have implemented measures to to keep volume stable after the pandemic in order to to have a more foreseeable cost towards messaging and products. So that combined with smaller yearly COGS increases in Norway have made the market a little bit soft. We have seen that this can happen from time to time, and then some time will pass, and then clients, will will be more ready to to to increase their spend again. So we think this is going to to blow over, by time.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Right. And last question from Espel. What’s what’s a feasible enterprise gross margin in your view for the coming twelve to twenty four months given terminated low margin traffic, increased usage of advanced messaging, and possible possible gradual improving markets.

Mohsen Advaldsen, CFO, Link Mobility: I can refer to the

Executive, Link Mobility: the answer Thomas gave previously. We see a positive impact from the more advanced solution on our own margins right now, and that’s a trend we expect us to see going forward. But like Thomas mentioned, we have more than 50,000 clients, and then the the mix of these vary from quarter to quarter. So it is hard to sort of give a outlook. I mean, I’ll give an outlook on it to how it actually gonna sort of materialize in the p and l, going forward.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Moving on to some question from, Varian Syan in from Daske Bank. Could you help us think about what is driving the 40 basis points uplift on gross profit margin from last year? Is it upselling of value add, or is it two way price uplift, etcetera? Yes.

Executive, Link Mobility: I guess, Joanne is referring to the positive impact from the the sort of richer channels or the older details. That is mainly driven by by the the the increased volumes and the higher share of revenue coming from those services. So that is especially RCS, but also WhatsApp contributing to that. So that is basically based on the the signed contracts we are implementing on the back of strong commercial results within CPaaS over the last few quarters. So that is the what we’re seeing sort of entering the p and l and impacting the margin in the quarter.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: And another question from my end. Could you help could you also help us think about amortization going forward? It’s a meaningful line item in your EBIT bridge. And with new acquisitions closed in The UK, how should we model DNA, especially the split between tangibles versus intangibles, and where are you expected to grow materially through 2025?

Executive, Link Mobility: Yeah. I think that’s, of course, depends on, m and a activity. We will have, we’ve consolidated The UK, targets, the recent two, from, from the second quarter. So, that will drive some impact. It’s

Mohsen Advaldsen, CFO, Link Mobility: that’s natural.

Executive, Link Mobility: The split between tangible and intangible is mainly talking basically mainly about tangible assets that we are amortizing. So I expect some some growth, but that’s usually the right of this over approximately seven to ten years, based on whether it’s technology or, client relations.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: And we move on to a question from Denai Badwain from Kanto. You revealed that your market share in The UK is 8%. Can you share what percent of your gross profit comes from The UK given that your activity there has picked up pace over the last few quarters. Who are some of your competitors in the country? How do margins in The UK compare with other European countries?

Yeah.

Thomas Bargie, CEO, Link Mobility: I can start with the competitor landscape.

Executive, Link Mobility: The UK is one of the densely populated countries in in Europe with a fairly high penetration rate. So The UK market is quite big. And there are a few local competitors. Comify is one of them, mainly catering to small and medium sized businesses more. And then you also have the bigger global players who are in The UK markets.

I would imagine or guess that is due also due to the fewer language barriers. English is being smoke spoken in UK, and it’s easier to sort of attack that market with, with, resources outside The UK. So we see Cinch, we see Belarsh, Nexmo, Infobip being active in the markets. The margins, they are they don’t deviate that much from what we see in other European countries. The COGS level is fairly similar to to what we’ve seen, for example, France, a little bit lower, but not materially.

Martin, you might want to comment some on the gross profit.

Executive, Link Mobility: Yeah. Yeah. And, of course, the quarter is reflecting the fairly low position we have, had before we did the recent M and A. So it’s slightly below, three per 10 2% of the, total gross profit that we report.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Good. Moving on to a question on m and a. Are all 10 current prospects inside Europe? Are there any plans to expand m and a further outside of Europe?

Executive, Link Mobility: Yes. We have plans to expand our footprint outside Europe. As I said, priority number one is to do bolt ons in Europe, but we are looking at targets outside Europe as well. We have identified a few markets that is low risk, and we see a lot of value creation opportunities there. So we have specific plans to expand with M and A outside Europe in the pipeline of 10 prioritized targets.

Most, of those targets are inside Europe. We have two targets, outside Europe. I don’t want to comment on their location.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Moving on to a question on message broad transaction. When in May will you receive the remaining amount from the message broad broadcast transaction, and what do you plan to use it for?

Executive, Link Mobility: Yeah. So there’s two items there. There’s the seller’s credit that is due June. The the earn out, we agreed with the SBA with the the seller to to do a review of the process of of the revenue in 2024. So that is in progress.

Once that is finalized, we we expect to receive the money a few days later according to the to the SBA. So it’s just it’s just the process that we need to to run through.

Kristian Niegel, Investor Relations and Corporate Strategy Manager, Link Mobility: Great. There are currently no questions. You will have one minute to ask questions, and we’ll hold the line.

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