Earnings call transcript: Link Mobility’s Q2 2025 sees growth in EBITDA

Link Mobility (market cap: $68.9M) reported its Q2 2025 earnings, highlighting a strong performance in adjusted EBITDA despite a decline in revenues. According to InvestingPro analysis, the company maintains a Financial Health Score of 1.59 (labeled as WEAK), though its strategic focus on innovation and market expansion appears to be paying off, with notable contract wins and a successful acquisition in South Africa.

Key Takeaways

• Adjusted EBITDA grew by 18% to 212 million NOK, with a margin increase of 2.2 percentage points.
• Revenues fell by 3% year-on-year, with an 11% decline in organic revenue.
• The company completed the acquisition of SMS Portal in South Africa, expanding its market reach.
• Link Mobility is focusing on channel-agnostic communication solutions and AI capabilities.

Company Performance

Link Mobility’s Q2 2025 performance shows a mixed picture, with a decline in revenues but significant growth in adjusted EBITDA. The company is navigating a challenging market environment by shifting focus towards more innovative and diversified communication solutions. This strategic pivot is evident in its record-high contract wins and increased emphasis on CPaaS and RCS contracts.

Financial Highlights

• Revenue: 1.8 billion NOK, down 3% year-on-year
• Organic revenue decline: 11%
• Gross profit: 422 million USD, up 11%
• Adjusted EBITDA: 212 million NOK, 18% growth
• Adjusted EBITDA margin: 12.1%, up 2.2 percentage points

Outlook & Guidance

Link Mobility is targeting high single-digit organic gross profit growth, with expectations for EBITDA growth to outpace gross profit growth. The company plans to continue its focus on accretive mergers and acquisitions and is considering a Capital Markets Day in 2026. While the guidance for future EPS shows a slight negative forecast, suggesting cautious optimism in financial projections, InvestingPro analysis indicates the stock is currently trading slightly above its Fair Value. The company’s strong liquidity position is reflected in its healthy current ratio of 4.52, despite challenging market conditions.

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Executive Commentary

Thomas Berger, CEO of Link Mobility, emphasized the company’s strategic balance between organic growth and margin improvements. "Our strategy is about balancing solid organic growth with margin improvements while using disciplined capital allocation to drive additional value through acquisitions," Berger stated, highlighting the company’s commitment to long-term value creation. He also noted, "We are well positioned not only to capture these changes but also to lead the market transition," indicating confidence in Link Mobility’s market leadership.

Risks and Challenges

• Continued revenue declines could pose a risk if not offset by growth in other areas.
• The transition from A2P to CPaaS channels might lead to temporary revenue cannibalization.
• Economic uncertainties in key markets could impact future growth prospects.
• Integration challenges may arise from recent acquisitions, affecting operational efficiency.
• Competition in the digital messaging space remains intense, requiring constant innovation.

Q&A

During the earnings call, analysts inquired about the temporary headwinds from enterprise clients, which are expected to diminish by year-end. Questions also focused on the rollout of RCS for iOS in the Nordics, anticipated in Q1 2026, and the ongoing transition from A2P to CPaaS channels. The potential for both cannibalization and net new gross profit in this channel transition was a key topic of interest.

Full transcript - Link Mobility Group ASA (LINK) Q2 2025:

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Hi, and welcome to Link Mobility’s Second Quarter Presentation. My name is Kristian Niego, and I’m the IR and Corporate Strategy Manager here at Link. Joining me today are our CEO, Thomas Berger and our CFO, Morten Adwarzen. We’ll start with the presentation, and afterwards, we’ll open up for questions. Please feel free to post your questions online at any time during the session.

With that, I’ll hand it over to our CEO, Thomas Bergen.

Thomas Berger, CEO, Link Mobility: Thank you for the introduction, Kristian. This year marks a major milestone for Link Mobility as we celebrate our twentieth twenty fifth year anniversary. We, began in 2000 as a small Norwegian start up and have grown into the European market leader in digital messaging, now trusted by more than 55,000 customers. 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 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. Over the years, we have built a pan European presence. We are the number one provider in Europe for a to p messaging with a customer base that relies on our services on a recurring basis. Today, we have more than 700 employees across over 30 offices, a presence in 18 countries and have completed more than 35 acquisitions since 2014.

If you look at the map on the right hand side, you can see the breadth of our footprint and the acquisitions that have helped us get there. Our growth story has been driven by a combination of strong organic growth and targeted strategic acquisitions. Profitability has always been a key priority. Link is growing the business while generating additional profitability and cash. Since 2014, we have expanded steadily across Europe, completing over 35 transaction to strengthen our position.

Looking at our journey, you can see key moments in our history. Nordic expansion between 2012 and 2015, the European expansion from 2016, the acquisition by Avery Partners in 2018 and our relisting at the Oslo Stock Exchange in 2020. In 2025, we expanded beyond Europe once again with the acquisition of South Africa’s SMS portal. This marks a renewed and deliberate step into international markets aligned with our long term growth ambitions. The combination of strong market leadership, long term customer relationships and strategic expansions lay foundations for continued growth in the years ahead.

Q2 was a strong quarter for Link, delivering both solid growth and important strategic progress. The highlight this quarter was the acquisition of SMS Portal, a market leader in South Africa. This is a transformative step that lifts our pro form a adjusted EBITDA and cash EBITDA to $1,100,000,000 and $900,000,000 respectively. The transaction was agreed at an attractive upfront multiple of 4.6 times cash EBITDA with an additional conditional payment of up to USD 30,000,000. Regulatory approval is progressing as planned, and we expect closing in early September.

Turning to our financials. Pro form a gross profit, including SMS portal, is reported at over $500,000,000 in the second quarter, representing 7% year over year growth despite challenging comparables. This performance was driven by continued strong demand for our high margin conversational solutions combined with OTT channels and chatbots. A handful of large enterprise clients reduced noncritical communication spend during the quarter, which we estimated lowered growth momentum by two to three percentage points. Similar patterns have been observed in previous years, typically following periods in which these customers have significantly increased their communication spend with Link, as has been the case in the recent years for the mentioned clients.

The impact is generally temporary, and we expect this headwind to ease by year end. The underlying market trends remain strong with continued support for growth in richer messaging channels with higher profitability. Pro form a adjusted EBITDA is reported at million or a growth of 12%, in line with our stated performance targets. Link’s business model is scalable, meaning that most of the gross profit increase is hitting the EBITDA figure. Pro form a margin is also increasing from 11.3% to 13.8% or a growth of 2.5 percentage points.

Improvement in margins is a result of accelerated growth momentum on high margin conversational products, traffic mix in Europe and the profitability increase in SMS portal. The quality of our revenue continues to improve with gross profit growth outpacing revenue growth due to strong demand for advanced solutions with higher margin and strong comparable same period last year for selected customer with low margin, high volume traffic. Lastly, momentum is accelerated in the quarter. We saw record high, closed won contracts at $50,000,000 in gross profit terms. For the first time, CPaaS contract wins exceed ATP contracts.

RCS contracts were up fourfold, now representing 24% of total wins. The chart at the bottom right illustrates the growth in expected gross profit for one CPaaS contracts over the past five quarters, with a clear increase in Q2. Overall, Q2 shows we’re executing on both growth profitability while strengthening our market position and expanding our global footprint. In Q2, we signed the acquisition of SMS Portal, the leading player in South African messaging market with a strong international customer base. This acquisition establishes a leading position for Link in South Africa, supported by a robust technology platform, a scalable and profitable business model, and contain competitive pressure with relatively few stronger local and international competitors.

South Africa represents an attractive and growing market with predictable regulatory framework. SMS is still the primary communication channel. The country also benefits from a stable regulatory environment and a growing digital economy, creating strong demand for scalable communication solutions. The transaction also opens substantial opportunities for synergies and accelerated growth. We see the potential to grow the SME customer base, expand into underpenetrated sectors and introduce our high margin CPaaS products to address local market demand.

In addition, integrating SMS Portal’s technology platform into Link’s existing operations will strengthen our capabilities and efficiency. All of this comes at an attractive valuation of 4.6 times cash EBITDA on upfront consideration or 5.8 times including the maximum conditional payments. We are confident SMS portal will be a powerful growth driver within the Link family. The transaction is expected to close early September after regulatory approval. In Q2, we delivered profitability improvements with pro form a adjusted EBITDA up 12% in stable currency and continued margin expansion.

Pro form a adjusted EBITDA reached $84,000,000 in reported currency, with the margin improving to 14%. SMS Portal’s highly scalable and efficient operations combined with higher growth on the more advanced products with higher profitability in Europe and the decline on low margin traffic in Global Messaging are driving the margin increase. The organic footprint delivered 11% growth with our scalable business model enabling gross profit growth to flow effectively through to EBITDA. We also saw a slight decline in OpEx compared to the higher levels same period last year. The full month gross profit grew 7% in stable currency, including the contribution from SMS portal.

This performance was driven by continued growth in high margin conversational solutions and favorable traffic mix. Looking at the organic footprint, growth was 5% in stable currency. The mid single digit growth rate reflects the impact from elevated comparables against a campaign driven peak in the same quarter of last year as well as the temporary effect of reduced spend from the before mentioned handful of enterprise clients estimated to have lower growth momentum by two to three percentage points. As we have seen in the past, such adjustments typically follow periods of significant increases in communication spend and are temporary. We expect this headwind to fade out by year end.

On new contract wins, Q2 delivered a record performance, reaching an all time high estimated gross profit value of 50,000,000 fifty two percent came from CPaaS solutions, highlighting the shift in our contract mix towards higher value channels. The graph on the left shows the estimated annualized gross profit on new contracts. The numbers are extracted from our CRM system and the estimations are based on contractual arrangements and specific dialogue with clients. In Tourmalink, we have a target of achieving PLN 40,000,000 plus in gross profit from new contracts per quarter, except Q3, which will be lower due to summer break. Looking at the breakdown, gross profit from new CPaaS contracts increased 60% year over year to SEK 25,000,000.

This growth resulted in CPaaS representing a larger share of new wins than traditional A2P SMS. New contracts on A2P declined as customers shifted towards richer and more advanced messaging solutions. Conversational OTT solutions were a key driver of the CPaaS momentum in the quarter. They represent the majority of the CPaaS contract closed with OTT contract wins up 7,000,000 RCS contracts were up four times $12,000,000 in gross profit, supported by major wins in banking, insurance and further momentum coming from supermarkets, retail and e commerce. Link Mobility is a growth company, positioned to benefit from two key trends, the ongoing increase in adoption rates for A2P SMS and the shift towards more advanced solutions on OTT channels.

If we start with adoption rates on the left hand side, A2P SMS usage has been steadily increasing across all European countries where Alink operates. While the Nordic markets are among the world’s most mature in the world, we have still seen growth in this region over the past few years, albeit lower than less mature markets. There remains a strong growth potential in Central And Western Europe. You can see from the chart that A2P SMS adoption per inhabitant continued to increase with an 8% to 10% year on year increase in Central And Western Europe from 2017 to 2024. This ongoing adoption trend provides a solid foundation for Link’s future growth momentum.

At the same time, traction on the new CPaaS products is adding another growth layer. The expansion from one way communication on A2P SMS to conversational dialogue on richer channels such as RCS and WhatsApp are opening up a large amount of new use cases. This means a higher return on investment for clients in mobile marketing campaigns, more value from notifications and more efficient customer interactions. As we saw previously, growth in CPaaS is already well underway. The market is evolving rapidly with a clear shift towards more advanced CPaaS solutions.

To capture this demand, it’s critical to be channel agnostic. And this is exactly where Link is strongly positioned. Our MyLink products enable clients to manage all customer engagement in one place regardless of which channel their end users prefer. This flexibility is becoming increasingly important as the market shifts, ensuring that our customers can always meet their users where they are. In competition, we often see local players who lack the resources to invest in these kinds of solutions.

This gives Link a clear competitive advantage as we can offer more advanced scalable products that deliver higher value. Another important trend that we are observing is the strong push towards WhatsApp. In several regions, WhatsApp has priced its services below operator levels. This strengthens Link’s bargaining power in the industry as we partly can control which channel we terminate messages on. We believe this is an opportunity to further strengthen gross profit growth through lower COGS.

This also underlines the importance of being channel agnostic. Think is well positioned not only to capture these changes, but also to lead the market transition. RCS has become one of the key CPaaS trends in the market. At customers increasingly demand compatibility with new messaging formats, Link’s model ensures that we can seamlessly support that shift, positioning us to capture the growing demand for RCS and other emerging channels. RCS is more mature in France, Italy and Germany with higher adoption versus the Nordic region.

Less mature SMS markets are taking charge of utilizing the more advanced communication channels like RCS. The Nordic is expected to follow, especially when RCS is compatible with iOS in that region. This slide shows Lynx first RCS pilot in Northern Europe conducted in collaboration with Yanceidia to improve mileage reporting on cars. The pilot was carried out on Android devices. The use case is simple.

Incedia want customers to report mileage more accurately. If drive more than agreed, your compensation in case of a claim is reduced. And if you drive less, your insurance becomes cheaper. RCS makes this reporting much more interactive and convenient for the customers. The pilot results were a very strong success, underscoring both the reach and effectiveness of RCS.

On the right, you can see the status of the RCS rollout across Europe, where some countries have RCS limited to Android devices, while others already offer RCS on both Android and iOS. We see market demand increase exponentially when enterprises can reach all end users on RCS, not just Android users. In The Nordics, where iOS penetration is high, our best estimate is that iOS will open up for RCS in Q1 twenty twenty six. While there is still uncertainty around the exact timing, we view this as a significant growth driver in the years ahead. By the time iOS adoption in The Nordic is possible, Link will have refined and scaled RCS solutions in other markets.

With our strong market share in the region, we are well positioned to capture the potential once the rollout is implemented. Link Mobility has demonstrated a strong track record of driving growth through value accretive acquisitions. As illustrated by the acquisitions shown on the right hand side, our extensive M and A activity has given us significant experience and a clear understanding of key drivers behind successful integrations as well as the pitfalls to avoid. This experience, have developed a structured M and A playbook that defines a set of criteria we consider essential for value creation. These criterias have been refined over time and serve as a guiding framework in our evolution of M and A opportunities.

Companies that meet these requirements have consistently shown the highest likelihood of successful integration and long term value contribution to Link. We’re looking for companies with strong local position and deep industry relationships, a proven ability to generate cash and resilient customer base. Technological and commercial alignment is key along with clear potential to realize synergies after the acquisition. Typically, our target valuations are between six to nine times cash EBITDA before synergies with upside potential from growth. However, as we saw with SMS portal, individual transactions might deviate from this range with SMS portal acquired at four time 4.6 times cash EBITDA or 5.8 times including the maximum conditional payment.

Looking ahead to the 2025, our main focus will be to close the acquisition of SMS Portland South Africa, secure a successful integration and start extracting synergies and growth potential. We see opportunities to grow the SME customer base, expand into underpenetrated sectors and introduce higher margin CPaaS products to address local market demand. In addition, integrating SMS Portal’s technology platform into Link’s existing operations will strengthen our capabilities and efficiency. At the same time, we will continue to execute our broader M and A strategy in Europe, where bolt on acquisition remains an important lever for growth, allowing us to strengthen our market position and realize additional synergies across the group. When it comes to the current M and A pipeline, we have eight prioritized targets with three in due diligence.

The pipeline includes a mix of bolt on acquisition and larger scale up opportunity with targets both inside and outside Europe. In total, the pipeline represents more than EUR 15,000,000 in cash EBITDA. Overall, our track record demonstrates that we have successfully executed our M and A strategy. We remain focused on pursuing accretive opportunities and continue actively monitor the market, maintaining an opportunistic approach as we evaluate potential targets. Our key objective medium term focused on value creation through a combination of organic growth and accretive M and A.

Firstly, when it comes to growth, our ambition is to deliver high single digit organic gross profit growth. This is driven by the two key market trends we discussed earlier, the ongoing increase in adoption rates for our A2P SMS and the shift towards more advanced solutions with higher margins. Naturally, as we have seen this quarter, growth will show some fluctuations from period to period, but the underlying market trends, remain strong with continued support from both rising adoption rates and the shift towards richer messaging channels. Secondly, on profitability, we’re targeting adjusted EBITDA growth outpacing gross profit growth. This reflects the scalable nature of our business model with the gross profit expected to grow faster than operating expenses over time.

And thirdly, on capital allocation, our top priority remains accretive M and A, while maintaining a leverage policy of maximum two point zero to 2.5 times adjusted EBITDA. This balance allows us to pursue attractive opportunities while preserving financial flexibility. In short, our strategy is about balancing solid organic growth with margin improvements while using disciplined capital allocation to drive additional value through acquisitions. That’s it for me. Now we move over to the financial section.

Over to you, Martin.

Morten Adwarzen, CFO, Link Mobility: Thank you, Thomas, and good morning to everyone listening in on the call. Let me start with the SMS port transaction and the impact on pro form a financials on a last twelve months basis. Firstly, a quick recap on the transaction details. The total purchase price amounts to up to 145,000,000 equivalent. This includes US100 million dollars upfront cash payment expected to be fully financed with cash on balance sheet, 15,000,000 in equity consideration and up to $30,000,000 in conditional payments over the next two years.

The valuation at the time of signing represents 4.6 times cash EBITDA on initial cash consideration and 5.8 times including the maximum conditional payment. We see this as an attractive entry point given SMS portal’s strong profitability and growth potential. Looking at the financials for the group on a combined basis in reported currency. The pro form a revenues for the last twelve months reached NOK 8,500,000,000.0. Adjusted EBITDA reaches NOK 1,100,000,000.0 with an adjusted EBITDA margin of 13%, with SMS portal contributing with its higher margin profile.

Cash EBITDA is NOK 900,000,000.0, which underlies strong cash generating capacity of the combined group. Following the cash payment of SEK 1,000,000,000 for SMS portal, net interest bearing debt would stand at SEK 1,900,000,000.0, resulting in a leverage ratio of 1.7 times adjusted EBITDA that is comfortably within our financial policy range of two point zero to 2.5 times, leaving headroom for further inorganic growth. Overall, these acquisitions add scale, improves profitability and strengthens our cash generation going forward. Now let’s turn to the reported financials for the second quarter. Starting off with revenue and how the shift in revenue mix is impacting profitability.

Reported revenues for the quarter came in at almost 1,800,000,000.0, down 3% year on year. On an organic basis, revenue declined by 11%, whereas eight percentage points are explained by global messaging following the termination of low value clients and destinations since the third quarter last year and the normal volatility that we observed in the aggregator segment. A further three percentage points are related to the enterprise segment, where elevated comparables from campaign peaks impacted the year on year growth, like we observed also in the first quarter this year. One large retail client alone explains around three percentage points of the decline due to abnormal volumes last year. In addition, a handful of large enterprise clients have reduced their messaging spend, which dilutes the revenue growth momentum.

We expect this headwind to diminish by the end of the year, while new contracts implemented partly offset the decline. Foreign exchange effects of $30,000,000 and contribution from closed and consolidated acquisitions in Portugal, Spain and The UK of $107,000,000 bridges the gap between organic 11% decline to the reported 3% total revenue decline in the quarter. Overall, while the top line reflects higher comparables and some short term headwinds, the shift away from low margin traffic toward higher margin products is supporting improved profitability. Moving on to churn and net retention metrics. Starting with churn, both enterprise and global messaging remain at normal levels.

Global messaging churn spike last year are reflecting of LINK terminating low value clients as a need to preserve profitability and reduce bad debt risk exposure. The increased demand for more advanced CPaaS solutions further supports current drivers for low churn, such as sticky integrations and high transition costs. Net retention came in at 84% in the quarter. Significant explanation to the reduction in net retention is the termination of low value traffic within the global messaging segment, representing eight percentage points impact in the quarter, which will normalize in the second half of this year. In addition, the elevated comparables and the volume impact from a handful of large clients impacts net retention development in the quarter.

It is important to highlight that while reported net retention has come down, gross profit growth continues to outpace revenue growth. The phasing out of current headwinds, especially on higher volume, low margin traffic, will largely fade out by year end, which we expect to lead to a normalization of net retention. Our medium term target for organic gross profit growth in the high single digit range would with a relatively stable revenue mix imply a normalized net retention of around 105%. Turn to the next slide on development in gross profit and gross margin. Reported gross profit increased by 11% in the quarter, reaching $422,000,000.

On an organic basis, growth was 5%, with closed and consolidated acquisitions contributing an additional 20,000,000. Organic growth was, as mentioned, influenced by elevated comparables from campaign driven peaks in the same quarter last year as well as the impact from some large enterprise clients reducing noncritical communication spend, especially on SMS. This created a temporary headwind of around two to three percentage points, which we expect will diminish by year end. At the same time, Conversational Solutions supported both gross profit growth and margin expansion. Global Messaging segment delivered a 27% increase in gross profit, equal to NOK 8,000,000 from growth on higher margin traffic.

Looking at gross margin. The group gross margin expanded from 20.9% last year to 24% this in the current quarter, reflecting an organic increase of 3.4 percentage points. Enterprise accounted for 1.6 percentage points of the organic uplift supported by growth on higher value clients and on advanced CPaaS solutions, including OTT on behalf of lower value traffic. Global messaging added another 1.8 percentage points positive contribution to the total margin from traffic mix improvements. Moving on to the development in adjusted EBITDA.

Reported adjusted EBITDA growth was 18%, reaching $212,000,000 On an organic basis, growth was 11% in fixed currency, equivalent to $20,000,000 Of this, 17,000,000 derived from organic gross profit growth, while the remaining $3,000,000 reflects operating expenses being slightly down from a somewhat elevated level last year. In addition, closed and consolidated acquisitions contributed $10,000,000 in the quarter. Adjusted EBITDA margin expanded 2.2 percentage points to 12.1% and was in line with the previous quarter. The improvement is mainly driven by gross margin expansion, as explained, reflecting a more favorable traffic mix and increased contribution from mature OTT channels. We also note that the operating expense to sales increased as a percentage of revenue, which is a result of the lower top line.

Overall, the quarter showed strong organic EBITDA growth and solid margin uplift. Let’s now turn to the statement of profit and loss, and I will comment only on material items below adjusted EBITDA as I already covered the lines above. Nonrecurring costs came in at a high level of NOK 47,000,000 in the quarter. This includes NOK 28,000,000 related to M and A activity as well as NOK 20,000,000 in option cost, of which NOK 17,000,000 is linked to accruals of social security tax, reflecting the strong share price development in the quarter. This results in an EBITDA for the quarter of $165,000,000 slightly down year on year due to the higher level of nonrecurring costs in the quarter.

Depreciation and amortization were SEK 97,000,000, consisting of SEK 27,000,000 from R and D intangibles, SEK 63,000,000 from acquisitions related PPA amortization with no replacement CapEx required and 6,000,000 from leasing and fixed assets. Net financial costs were $68,000,000 in the quarter. Out of this, 29,000,000 related to net currency losses, primarily on US dollars and euros. Net interest expense were 30,000,000 and consisted of mainly bond interest of 39,000,000 and amortized transaction cost of 11,000,000, were of $6,000,000 related to early recognition due to the termination of Link01 bond in the quarter. These effects were partly offset by an interest income of $20,000,000 in the quarter.

In addition, we recorded $8,000,000 in other financial costs linked to the core premium paid on the Link01 bond. Moving over to the balance sheet, which remains solid and provides ample capacity for further inorganic growth. Non current assets ended at NOK 6,800,000,000.0 and down year on year. The main driver for the decline was the termination of the company’s own investment in linked zero loan bonds amounting to SEK $842,000,000, which were canceled in Q4 twenty twenty four. In addition, negative currency effects contribute to the reduction, while partly offset by SEK $4.00 5,000,000 add on from M and A since last year.

Receivables were positively impacted by $218,000,000 received related to the divestment of Message Broadcast. This included a settlement of earn out of 144,000,000 and a partial repayment of the seller’s credit of $74,000,000 An outstanding balance of $35,000,000 remains on the seller’s credit maturing early twenty twenty seven with a 5% interest payable together with the principal amount. Cash balance stood at SEK 1,800,000,000.0 at the end of the quarter and is expected at SEK 800,000,000 post closing of the SMS portal acquisition expected early September. Year on year, cash is lower due to debt repayment, M and A transactions and the share buyback program. At the same time, gross debt has decreased by 1,500,000,000.0 year over year following the final refinancing of the Link01 bond in June 2025.

Following the refinancing of Link01, current debt structure consists of two outstanding bonds, Link02 of €125,000,000 and Link01 of €100,000,000 maturing in 2029 and 02/1930, respectively. In addition, we have secured a senior secured working capital facility of €65,000,000 which provides additional flexibility for inorganic growth. Equity stood at €5,500,000,000 with an equity ratio of 55%, which underlies the strength of the balance sheet. Net interest bearing debt was reported at $870,000,000, and the leverage ratio declined quarter on quarter to 1.1x adjusted EBITDA. Received consideration for the

S. Business had a positive impact on leverage in the quarter, while M and A activity added 0.1x to leverage. Including the SMS portal acquisition, the leverage ratio would increase to 1.7 times adjusted EBITDA, as mentioned, which remains comfortable within our financial policy range. Moving over to my last slide on cash flow. Adjusted cash flow from operations was 77% of adjusted EBITDA in the quarter or million.

Working capital development in the quarter was impacted by a delay in the payment process with a large global client and receivables of 90,000,000 from these clients were settled early July, hence more than normalizing the negative working capital impact last twelve months. On a LTM basis, adjusted net cash flow from operations was $757,000,000 representing a conversion rate of 96% from adjusted EBITDA. CapEx in the quarter was $55,000,000 including an $11,000,000 out of period onetime correction, while underlying increase reflects fast track development of CPaaS solutions due to strong market demand. For the full year, we expect CapEx level at approximately 180,000,000 to 190,000,000 In the lower graph, we see that beyond organic cash flow, impact from M and A and U. S.

Receivables has a net positive impact of $88,000,000 in the quarter. Cash outflow of $130,000,000 related to acquisitions in The UK reflect both net cash consideration and share consideration of NOK 28,000,000, more than offset by the NOK $218,000,000 cash consideration from The U. S. Divestment received in the quarter. Cash outflow related to financing of $862,000,000 in the graph mainly reflects NOK $843,000,000 in cash outflow related to the final refinancing of LinkserOne in June, 5,000,000 in proceeds from share issuance, including the 28,000,000 related to M and A and remaining 54,000,000 in interest paid in the quarter.

That concludes the financial section and the Q2 presentation. Handing the word over to Christian for Q and A.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Then we will start the Q and A session. Please feel free to post questions online at any time during the session. So we have received a question from Erik Raphthal in Denbeck, Carnegie. You note that headwind is expected to diminish by end of the year on GP headwinds from a handful of enterprise clients. Based on what you see today, should we expect a gradual recovery through Q3 and Q4 towards seven to eight organic growth rate, excluding these effects?

Or could we see organic gross profit growth bounce back to the high single digits already in Q3? Yes, I can

Martin, Financial Executive, Link Mobility: take that. Based on what we’re seeing right now, we see, as mentioned, a headwind of two to three percentage points on these clients. We see them starting to adjust somewhat their spend on the beginning of the year. So we expect this to this effect to also impact the second half of both Q3 and Q4, but sort of fading out. And then we should see a recovery then as these effects are faded out in the 2026.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. And then a new question from Erik Laffthal. Maybe

Martin, Financial Executive, Link Mobility: a bit

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: of a disappointment that RCS still hasn’t been launched for iOS in The Nordics. Do you have an updated view on when that is likely to happen?

Thomas, CEO, Link Mobility: Yes. The feedback from the mobile operators are in the 2026. Both the mobile operators and LINK rely on Apple basically implementing this in their operating software. So 2026 is the latest estimate.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: And another question from Eirate. For modeling purposes, could you help us understand what type of report revenue is sorted with NOK 25,000,000 CPaaS contract wins in Q2?

Martin, Financial Executive, Link Mobility: Yes. Specifically to the contracts sold in Q2, the margin of those were high end, I would say, at 57%. Typically, what we see is between 40% to 50%. So this is, of course, estimates in the sales force system. So typically, you see margin ending up at 40% to 50%.

There were some higher margin deals in the mix here. So the revenue linked is then mathematically, it’s $4,000,000 If we take

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: a few steps back, you’ve turned the ship performing very well on organic metrics, seeing accelerated momentum on CPaaS and done a step up M and A transaction. Is it time for a Capital Markets Day sometimes late this year or in 2026?

Thomas, CEO, Link Mobility: Thank you. We are thinking about arranging a Capital Markets Day in 2026, actually. We just signed a big acquisition. We expect closing in early September. And we think that it will be best to have a Capital Markets Day when we have a couple of quarters with the sizable the new sizable acquisition in the P and L.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Then two more questions from Erik. We will start with the first one. What is the effect of cannibalization on A2P from the growth of CPaaS? Would you be able to split what part of CPaaS growth is transitioned from A2P? And how much is net new gross profit?

Thomas, CEO, Link Mobility: Yes, I can take that one. That’s a good question. The answer to this is we expect a little bit of both. Exactly how much, it’s difficult to say. Some use cases on SMS will transition over to OTT channels and cannibalize existing volumes.

For us, that is completely fine because we see that the use cases that are being cannibalized is being cannibalized because customers want to use that as an opportunity to engage with their end customers. So then we will have a dialogue. So there will be much more messages and the profitability is much higher. And there are use cases which will not be cannibalized, which are new, which you cannot do on SMS today, which will come as, you call, net new gross profit. Exactly sort of how much this is, we don’t it’s impossible to calculate it, basically.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Yes. And last question is a question from Erik. CapEx was up approximately $10,000,000 quarter over quarter. Is NOK 55,000,000 a fair run rate going forward? Or is it 40,000,000 to $45,000,000 as we’ve seen in Q3 twenty twenty four to Q1 twenty twenty five more representative ahead?

Yes.

Martin, Financial Executive, Link Mobility: Just to note that we had an $11,000,000 onetime sort of out of period effect in the second quarter. So adjusting for that, we’re at CapEx level of 44,000,000 which is so I would say, yes, 40,000,000 to $45,000,000 is what we expect at least in the second half of the year. So I think that’s a fair assumption going forward. Great.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: And then moving on to some questions from Patak Kungsle at SPA Bunker Markets. Can you explain the decline in NRR performance excluding terminated traffic?

Martin, Financial Executive, Link Mobility: Yeah, adjusting for I think we explained some of these effects. It’s related to the high sort of campaign driven peaks that we saw same quarter last year. And also, obviously, some of the clients which have already in their spend is also impacting the NRR. Just to recap, Q2 last year, we had a retail client in Central Europe selling extreme volumes, which alone is impacting NRR by a three percentage point drop, which was extraordinary campaign activity for this client.

Morten Adwarzen, CFO, Link Mobility: Great. So I I I Yeah. Yeah.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: I can move on to the next one. Yeah. Say that high single digit gross profit growth equals 105% net retention rate. This had historically been 110%. What is the change?

Martin, Financial Executive, Link Mobility: When we say January, we’re basically assuming a fairly stable revenue mix also between enterprise and global messaging. We had periods of 110,000,000 and above for some quarters, and that was impacted by very high growth in the Global Messaging segment, where we now have sort of terminated traffic and closely monitoring both sort of margin levels and also bad debt exposure. So given our normalized revenue mix, the 105 will sort of support gross profit growth in the high single digit range. Great.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: And then a couple of more questions from Patakong Svein. There is negative gross profit growth in South Africa in Q2. How does this compare to your expectations during due diligence? And how should we read this compared to guidance of high single digits?

Martin, Financial Executive, Link Mobility: Suspect, Petr, that you’re referring to Slide six in the presentation, where we have sort of tried to isolate out the nonconsolidated pro form a. How we should view this is that in Q2 twenty twenty five, we have SEK 21,000,000, which of M and A effects consolidated into the P and L. So you need to add that on top of the 85,000,000 non consolidated performance. So that gives you around $106,000,000 in sort of which is comparable then to the $91,000,000 last year. So that gives you a growth of around 16%.

So that’s the growth momentum on the M and A part. I would say we’re very pleased with the SMS portal performance in Q2. It’s growing nicely and according to expectations.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. And then CapEx around NOK 180,000,000, 190,000,000 this year, which is a significant increase compared to 2024. How should we view this in 2026?

Martin, Financial Executive, Link Mobility: Yes. As I mentioned, we have a onetime effect, basically related to 2024 impacting the second quarter figure. So going forward, we will, of course, monitor sort of market demand for CPaaS solutions and the need to invest. But I would my best take is that somewhere between 2024 level, one and fifty and guiding now 108, 190 is what we would see in 2026.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. And last question from Patan. What about dividends?

Thomas, CEO, Link Mobility: I can answer that one. As I said on the M and A slide, sort of the main priority for us is to do accretive M and A. We have a big pipeline with a lot of interesting targets. So the main priority for the company as of now is to create additional value through accretive M and A. The acquisition of SMS portal, of course, the cash generation of the company is getting quite substantial, which could open up for a scenario or an alternative where we can do both.

There is no decision on this yet, and we will revert back to you as soon as the Board has taken a decision on it.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. And then a question from Jes Postugimu at Hannelsbanken. Could you provide more color on net retention rate being low and enterprise customer reducing messaging spend? What type of use cases?

Martin, Financial Executive, Link Mobility: Yes. I think we explained the the effects on NRR previously on another question. So when it comes to sort of the the clients adjusting their spend, we’re seeing as they’re going through their their communication with with the end users and reducing some of the sort of more noncritical updates. It can be during a service interaction, for instance, that they might reduce an SMS or so, which is sort of an update, which maybe they don’t see as giving that much value to the client. So it’s

Morten Adwarzen, CFO, Link Mobility: a small adjustment to the communication strategy and different kinds of

Martin, Financial Executive, Link Mobility: settings in how they interact with clients after they’ve been growing significantly and entering new budget years. They look at opportunities to take down cost, and they do small changes in the way they communicate with their end clients. So it ranges across

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: different types of use cases. Yes. Then we have a question from Vinay from Cantor. Congrats on strong set of results. Just a couple of questions from me.

What were the elevated campaign driven peaks related to in the prior year period?

Martin, Financial Executive, Link Mobility: Yes. We also I mentioned one of these. We had a large retail client in Central Europe last year driving massive amounts of volumes, which we knew were more or less nonrecurring. There were also other selected clients. This is more high volume, low margin clients, which were also pushing a lot of traffic.

It’s also something we saw into the first quarter reducing spend year on year. It’s across different types of industries, which we’re pushing a lot. And it varies a little bit like Thomas said, it’s how much they push in one quarter will vary a little bit, and then they often push more in other quarters. So it’s based on how they best see if it to to communicate and push the message out to their to their end clients.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. Then he wants to understand the cost base, how that has evolved over the past year. So despite an organic gross profit growth expansion of 5%, your organic operating costs fell despite headcount rising. So where are these cost efficiencies coming from?

Thomas, CEO, Link Mobility: I can start before handing it over to Martin. It’s important to remember that the 2024 was exceptionally strong. We grew more than what we expected. That also impact the cost levels. Bonus accruals for employees, provisions for partners increases accordingly.

So that is part of the explanation.

Thomas Berger, CEO, Link Mobility: Martin, do you have any further details to add here?

Martin, Financial Executive, Link Mobility: Yes. I think it’s all covered most of it, Thomas. We had some higher some a couple of other areas, which also were a little bit high. Last year, we had some bankruptcy clients, which we covered with some bad debt provisions, which a little bit higher than normal quarters. So basically, it was a little bit elevated in second quarter last year,

But you covered the main areas, which are the main drivers for the elevated OpEx we saw last quarter or same quarter last year.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: We only have a few questions left. Please feel free to post questions online if you have any. Any. So moving on. You reported record NOK 50,000,000 contract wins in this quarter.

How long is the typical lag from signing to revenue recognition? And what portion of these wins should we expect to see contributing already in Q3 twenty twenty five? This is sort of

Thomas, CEO, Link Mobility: a very good question, but also a very difficult question to answer because it varies quite a lot. Some of these contracts are going to be implemented the next week. Other contracts, we can use two years to scale them. It depends on the use case, the clients. What we see on average is that around 75% of the expected volumes are in the P and L after twelve months.

On the more advanced solutions, it can take somewhat longer, but that is sort of on average what we see. Great.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: And then we have a question from Olajan at Danske Bank. Given the strong year over year growth in gross profit margin, could you break down the contribution from volume, client mix and pricing? Yes, we can start with that.

Martin, Financial Executive, Link Mobility: Yes. I think we can say that what we seen over the last few quarters is a positive contribution margin on implementing the more advanced contracts, especially on OTT. So we see that contributing around zero five percentage point to the margin expansion. Other effects are more or less related to volume mix and client mix and also how big share of the business, the global messaging parties. So see there’s a significant contribution to the margin expansion from the Global Messaging segment, both being from the share of the mix and also the increased profitability in that segment.

And then 1.6 is coming from the enterprise side, where you have, of course, a higher contribution from the more advanced solutions. I think that’s And the we can

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: then what level should we expect going forward, especially as order intake on CPaaS is increasing for Link and general demand across the industry?

Thomas, CEO, Link Mobility: Yes. We have communicated that we are working towards high single digit gross profit growth. That is sort of the level that we are committing ourselves to. If we see that market demand for more advanced solutions are increasing and that we feel that it’s appropriate to change or lift sort of what we are aiming for, then we will communicate that when we sort of see that happening. But as of now, we are holding the high single digit gross profit growth target.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. Can you elaborate on how Link is using AI internally, for example, in development, operations or maintenance? Should we expect AI adoption to make Link more effective either by reducing costs, accelerating product rollouts or improving service reliability?

Thomas, CEO, Link Mobility: Internally, we’re using AI for development, as most companies are doing, checking code and so on. We’re also using AI in customer products. Content generation, for example, is something that we are developing AI functionality into. And we are also looking into using AI in implementing new contracts, but that hasn’t that is still on proof of concept phase.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Regarding the sharp increase in fraud attempts via SMS and thus increasing focus among consumers on not clicking on links in SMS messages? How does this affect links revenue?

Thomas, CEO, Link Mobility: Right now, it doesn’t really impact us at all. This has been sort of a stable situation in the last five, six years. So five, six years ago, this has had a negative impact of the industry that it closed down certain use cases on SMS because you couldn’t provide a landing page where it’s sort of the necessary interaction between the end users and our clients could happen. The OTT channels, on the other hand, they bypass this problem because here, all the interaction is happening in the app. So the OTT channels are basically opening up a growth opportunity for us where we’re able to bypass this for the temps on SMS.

Kristian Niego, IR and Corporate Strategy Manager, Link Mobility: Great. It looks like there are no further questions. So that concludes the Q and A session. Thank you so much, Thomas and Morten, for joining the session, and thank you to all participants for joining the call this morning. Have a good day.

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