Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LINK Mobility Group Holding ASA (LMGHF, Financial) reported strong organic gross profit growth of 9% in fixed currency, aligning with expectations.
- The company achieved a significant adjusted EBITDA growth of 10% in fixed currency, showcasing the benefits of its scalable business model.
- LINK Mobility Group Holding ASA (LMGHF) successfully executed a refinancing of its existing bond, issuing a new 5-year bond with favorable interest terms.
- The company closed three acquisitions in 2024, expanding its market presence in Portugal, Spain, and the UK, with expectations of further market share growth.
- LINK Mobility Group Holding ASA (LMGHF) has a robust M&A pipeline with 12 prioritized targets, indicating potential for future growth and expansion.
Negative Points
- The company experienced a decline in global messaging revenue by NOK87 million due to the termination of low-margin aggregator clients.
- Western Europe reported lower growth momentum due to a client bankruptcy and disputed operator price increases in Italy.
- The enterprise segment's churn rate increased to 2.5%, impacted by the bankruptcy of a large client in Western Europe.
- LINK Mobility Group Holding ASA (LMGHF) faced elevated M&A costs, including a NOK11 million write-off related to a past acquisition.
- The company anticipates potential challenges in refinancing the remaining portion of its 2025 bond, despite a strong credit market.
Q & A Highlights
Q: How much of the increased customer churn is due to terminating low-value traffic versus losing important clients?
A: The churn in global messaging is primarily due to our decision to terminate several low-value clients. This was done because these contracts were not profitable and some clients were not creditworthy. Thus, the churn is a result of proactive measures taken by us.
Q: What is your take on the RCS dynamics on revenue and margins in the European market compared to the US?
A: RCS is more advanced in Europe than in the US. In Europe, RCS is available on both Android and Apple devices in several countries, unlike in the US where mobile operators have not prioritized it. This makes Europe a more mature market for RCS.
Q: Could you elaborate on the growth in Northern Europe and what drives it?
A: Growth in Northern Europe was reported at 3%. This was impacted by the internal shift of larger clients to Central Europe and a one-time effect on gross profit. The growth is mainly driven by existing clients and traction in CPaaS and marketing automation products.
Q: Can you provide an example of CPaaS order intake this quarter?
A: While we cannot disclose specific customer names due to competitive reasons, we have seen significant traction in RCS, WhatsApp, chatbots, and advanced mobile marketing solutions. We also experienced growth in contracts for pure chatbot solutions.
Q: How do you handle price increases from telecom operators?
A: We pass any price increases from operators to our customers, usually with the same timing. Our customer contracts reflect our mobile operator contracts regarding notice periods for price changes. In Italy, we are currently negotiating a price increase with the operator and regulator.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
