LINK Mobility Group Holding ASA Q3 2020
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LINK Mobility Group Holding ASA Interim financial report Third Quarter 2020 © LINK Mobility, November 16, 2020 Highlights Third Quarter 2020 • Successful IPO launched on 21st October 2020 • Revenue of NOK 828 million or 19 percent reported revenue growth • Adjusted EBITDA1 of NOK 89 million and 11 percent margin • Gross profit to adjusted EBITDA conversion of 43 percent • Messaging volume of 2 415 million reaching close to 250 million end-users • Diversified base of 35.000 customer accounts2 • Strong growth in e-Commerce / Logistics from change in end-user behaviour • The outbreak of Covid 19 generates new use cases and is expected to accelerate adoption of LINK’s CpaaS product portfolio • Observing rapid traction in several markets for LINK’s CPaaS solutions with OTT channels like RCS and WhatsApp experiencing large growth Customer accounts (last quarter) Net Retention % Enterprise clients3 Group3 +6% 120 129 114 117 35.000 109 113 116 118 115 33.000 2.000 112 Q2 20 Organic growth Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Group revenue Adjusted EBITDA NOK million +19% NOK million +14% 828 89 24 2 697 107 78 9 Q3’19 Organic growth Acquired growth Q3’20 Q3’19 Organic growth Acquired growth Q3’20 1.) Please refer to note 3 for segment information and reconciliation of Alternative Performance Metrics 2.) Customer accounts invoiced LTM 3.) Net retention rate excluding aggregator clients. The relative change in revenue from the net of upsale, downsale and churn for customers at the start of the period throughout the last 12 months, not considering new customers. Excluding 2019 acquisitions of Terracom and Spot-Hit and other smaller acquisitions. Spain is excluded for the quarters Q319-Q220 due to the aggressive behaviour from operators driving down prices. The effect has diminished and represents only a 1 percentage points effect in Q3 20. Group figures excludes Spain Q319-Q220. Copyright 2020 LINK Mobility. All rights reserved. 2 Resilient growth and improved profitability LINK Mobility Group (LINK) reports strong revenue growth and solid profitability despite the Covid 19 pandemic. The diversity in customer use cases, geographies and product portfolio have shown resilience through the pandemic resulting in continued growth in volumes, revenues and profitability. Revenue growth is driven by a strong momentum in net retention rate of 117 percent in the enterprise segment. In several markets the pandemic has accelerated adoption of LINK’s services and products as new customer needs and use cases have emerged. LINK is well positioned to capitalize on future growth opportunities with the scalable CPaaS infrastructure and rich product offering. LINK achieved an operating revenue of NOK 828 million in the third quarter or 19 percent growth compared with corresponding period last year. Organic revenue growth was 15 percent on the back of 10 percent organic growth in messaging volumes. More and more businesses are utilizing LINKs CpaaS solutions to optimize their business and end-user communication driving adoptions rates upwards. Organic revenue growth in the Mobile Messaging segment was 18 percent. A lower organic growth rate of 15 percent for total revenue is due to revenue decline for direct carrier billing which is a mature product with a declining market trend. LINK experienced a rebound in marketing messaging volumes during the quarter, especially in countries where severe Covid 19 lockdown measures were imposed on societies during the previous quarter. LINK is closely monitoring the second wave of Covid 19 infections and the potential impact on the fourth quarter performance. LINK is reiterating the outlook for 2020 communicated in connection with the IPO in October. During the third quarter LINK managed a messaging volume of 2 415 million which led to an organic revenue growth in the Mobile Messaging segment of 18 percent compared to the same period last year. Messaging revenue Messages delivered NOK million Million +21% +10% 2 889 764 2 571 19 2 427 2 415 630 115 2 195 Q3’19 Organic growth Acquired growth Q3’20 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 The reported growth in adjusted EBITDA was 14 percent or NOK 11 million, whereof NOK 2 million was related to acquisitions compared to corresponding period last year. The adjusted EBITDA margin at 11 percent was in line with the corresponding period last year. 43 percent of the Gross Profit floated through to adjusted EBITDA driven by the scalable business model Copyright 2020 LINK Mobility. All rights reserved. 3 where large amounts of volumes and revenues can be produced with small expansion in operating expenses fueling growth in profitability. Acquisitions and pro forma financials The closing of Teracomm and Spot-Hit acquisitions during the third quarter last year impact the full year 2019 pro forma financials of the Group. Below are the updated pro forma (full-year effect of closed acquisitions) key financial numbers for 2019. (Amounts in NOK million) – 2019 Reported 2019 Pro forma **) excluding websms Operating revenues 2.933 3.061 Adjusted EBITDA* 308 319 Adjusted EBITDA margin* 10.5% 10.4% Number of messages (million) 9 495 9 734 On November 16th, LINK acquired the Austrian company websms. Below are the updated estimated pro forma (full-year effect of closed acquisitions) key financial numbers for the first nine months of 2020. Please also refer to note 6 regarding the transaction details. (Amounts in NOK million) – 2020 YTD Reported 2020 YTD Pro forma **) including websms Operating revenues 2.545 2.667 Adjusted EBITDA* 271 311 Adjusted EBITDA margin* 10.7% 11.7% Number of messages (million) 7 413 7 630 *) EBITDA adjusted for expenses related to significant one-time, non-recurring events such as acquisitions and restructuring activities. **) Pro forma: FY 2019 includes the acquisition of Teracomm and Spot-Hit consolidated in the Group financials from August and September 2019 respectively. YTD 2020 includes nine months effect of the acquisition of webms (to be consolidated in Group financials from December 2020). New contracts LINK generally sees a great demand for multi-channel mobile communication and our enterprise grade solutions. The following material new contracts were signed: • Eika Gruppen, a large banking group in Norway, has chosen LINK Mobility as a provider of SMS services towards their dialogue activities with customers, partners, and employees • Coventry Building Society, one of the UK’s largest building societies, has chosen LINK’s Account Takeover Protection service to support fraud protection measures related to secure customer authentication • Iberinfo, a large marketing agency, has chosen LINK Mobility for mobile marketing activities in Singapore and Hong Kong. Copyright 2020 LINK Mobility. All rights reserved. 4 • ING DIRECT Spain, a leading Spanish financial services company, has chosen LINK’s Operator Mobile Identity API products to prevent account takeover fraud • Center of Distribution for Supermarket (CDS), a leading supermarket player is Sicily owning several brands, have chosen LINK Multichannel to provide their customers with information and communication flow on an omnichannel basis but with a clear preference for WhatsApp • ADL SRL, a Spanish medical wholesale company, has chosen LINK Messaging services to communicate with their distributors in Spain • Rue du Commerce, a large French online and retail stores, has chosen LINK’s mobile marketing solution to carry out their summer campaigns on a multichannel basis but focused on the RCS channel with fallback to SMS with visual elements and direct access to their online store • Intralot, a leading Greek gaming player, will use LINK Mobility SMS connector embedded in their CRM system to engage and communicate with mobile users • Likeit Solutions, a large Finnish HR software company, has chosen LINK’s 2-way messaging gateway API to be embedded into Likeit Solutions’ recruitment software • Airmee, a Swedish last mile delivery solution, has chosen LINK Mobility as their mobile messaging provider of their business crucial communication towards end-users Outlook 2020 (excluding websms acquisition) LINK reiterates the guidance communicated in relation to the IPO on 21st October with the following expected key financial metrics for the full year 2020. LINK expects to exceed the guidance when factoring in the additional contribution from websms. Revenues Gross Margin Adj. EBITDA Other 3,500m – 3,600m NOK 24.2% – 24.7% 360m – 370m NOK Capex: 95m – 105m NOK Financial Review (Figures in brackets refer to the same period last year) Group Income Statement Operating revenues amounted to NOK 828 million (NOK 697 million) or a growth of 19 percent versus same period last year driven by a strong growth momentum on existing clients with a net retention rate of 117 percent for enterprise segment together with an increase in the price per message and positive contribution from the depreciation of NOK compared to foreign currencies. In the third quarter, LINK observes a rebound in growth rates for volumes and revenues deriving from marketing messages after the slow-down during lockdown periods last quarter. Despite some regional volume drops due to Covid 19, the Group’s diverse footprint and use cases have shown resilience with revenue and gross profit increasing compared to the same period last year. LINK still observes a minor negative Covid 19 effect regarding smaller retail clients especially in Central and Western Europe. Copyright 2020 LINK Mobility. All rights reserved. 5 For the third quarter, LINK reports an organic revenue growth in Mobile messaging of 18 percent compared to the same period last year. A slightly lower organic growth rate of 15 percent for total revenue is due to a revenue decline for direct carrier billing which is a mature product with a declining market trend. Gross Profit and margin Reported Gross profit of NOK 207 NOK million million or a growth of 16 percent.