Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
LINK Mobility Group Holding ASA (FRA:L1N) reported strong organic gross profit growth of 9% year-over-year, driven by higher demand for advanced products with higher margins.
-
The company achieved a significant adjusted EBITA growth of 18% organically, showcasing the scalability of its business model.
-
LINK Mobility Group Holding ASA (FRA:L1N) successfully closed two new M&A transactions in the UK, enhancing its market presence and expanding its customer portfolio.
-
The company has a robust M&A pipeline with five targets in due diligence, indicating potential for further growth through acquisitions.
-
LINK Mobility Group Holding ASA (FRA:L1N) has a strong cash position with 2.5 billion in reserves, providing flexibility for future acquisitions and debt repayment.
Negative Points
-
The company experienced a 7% organic revenue decline in stable currency, impacted by the termination of low-value traffic in the global messaging segment.
-
Revenue in the global messaging segment declined by 28% organically due to the focus on higher-value traffic and reduced credit risk.
-
The net retention rate remains low, influenced by terminated traffic and high comparables from low-margin clients.
-
The Nordic market, particularly Norway, is experiencing challenges due to high penetration rates and stable messaging volumes post-pandemic.
-
There is uncertainty regarding the exact timing of RCS availability on iOS in additional markets, which could impact growth in advanced messaging solutions.
Q & A Highlights
Q: You reported 17% higher volume year on year, but a 7% decline in reported revenue. Could you explain the organic revenue decline? A: The reported numbers include M&A contributions, particularly from the Latam business acquisition in Spain. Organic volume development on SMS is declining by 8%, aligning with the topline development. The decline is mainly due to the termination of traffic in global messaging and high volume, low margin clients in Central and Western Europe.
Q: Do you expect the product mix towards higher margin products to continue into 2025? A: Yes, based on current contracts and the sales pipeline, we anticipate a beneficial product mix effect going forward. The gross margin is influenced by both product and customer mix effects, and while it's difficult to predict exact P&L outcomes, we are optimistic about improving margin levels.