Good morning and welcome to the Fourth Quarter 2024 Financial Results presentation for LINK Mobility. My name is Morten Edvardsen, CFO and Head of Investor Relations, and this morning I am joined by Thomas Berge, CEO, and together we 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.
Thank you, Morten. The fourth quarter of 2024 is another great quarter concluding a strong year with 10% gross profit growth and 13% adjusted EBITDA growth. LINK is the leading and largest CPaaS player in Europe. We started out more than 20 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 their 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 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 30 offices in 18 countries are a result of the successful implementation of this strategy over many years. Group revenue during the last 12 months was recorded at NOK 7 billion. LINK has grown significantly over the last years with a revenue CAGR of 19%. Profitability has always been a key priority. LINK is growing the business while generating consistent profitability growth with a CAGR of 16% the last four years. For 2024 adjusted EBITDA is reported at NOK 718 million or a growth of NOK 105 million or 17%.
LINK has a central position in the industry value chain supporting clients with connectivity and SaaS solution to enable clients to communicate with their end users. Enterprises have a constant need to communicate and inform their end users. The enterprises are increasingly choosing the mobile phone as the communication channel towards their end users. This megatrend is being driven by the end users. We prefer that enterprises communicate with us over the mobile phone and the enterprises are just adapting.
LINK has the connectivity to the mobile operators and the relevant OTT channels which is 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 and template builders and managers, just to mention some LINK software solutions combined with the connectivity enables a state-of-the-art multi-channel and conversational communication platform ensuring satisfied end users and high return on investments for our clients.
LINK is operating in a growing market. There are two main growth engines in our industry. Firstly, more and more enterprises are using digital communication solutions and they are utilizing it in more and more areas. This significant upside is documented by differences in penetration rates per country. The Nordics are the most penetrated regions with the rest of Europe lagging 250 messages per citizen per year behind the Nordics. This is 134% gap or a growth potential as we see it. Successfully introducing new use cases to market will result in a higher growth momentum as the penetration rates are increasing. LINK has an excellent position to extract this growth with our local approach. We have people on the ground to explain and motivate enterprises to adopt new ways of communicating digitally, learning from our experience in the more advanced Nordic region.
Secondly, new channels like RCS and WhatsApp are opening up for new ways of engaging with end users through initiating conversations with the support of AI driven bots. We already see these more advanced products yielding significantly higher value for our customers, enabling us to charge a premium for those services. Before presenting the Q4 results, I would like to summarize the strong year of 2024 LINK performed in the high end of expectations with a 10% gross profit growth and 13% adjusted EBITDA. These growth numbers are well over what peers have been able to deliver, which in our view is a documentation of the strength of the LINK's local approach. Our local teams are working the market, growing the number of use cases in each country and we are increasing our market share.
The fourth quarter reports high performance with an organic gross profit growth of 8% on top of high comparable same period last year. Adjusted EBITDA growth is reported organically at 12%. The quarter is a continuation of the solid performance the company has reported over the last seven to eight quarters. In the current quarter, gross profit growth is significantly higher than revenue growth. Gross profit growth is driven by more activity on higher value clients and advanced products with higher margins. Revenue growth in the current quarter is impacted by software development on low margin traffic, partly caused by high comparables in the global messaging segment but also on certain high volume low margin enterprise clients.
The profitability contribution on the more advanced products have contracted the softer development on the low margin traffic on gross profit but not to the same extent on revenue, thereby resulting in a higher gross profit growth than revenue growth. The enterprise segment is reporting a revenue growth of NOK 50 million. Revenue in global messaging has declined NOK 78 million due to LINK terminating traffic to lower margin destination 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 adaptations. LINK has terminated several low-margin destinations, reduced revenue growth but still increasing gross profit growth and gross margin in the segment.
Gross profit is reported at NOK 436 million or an organic growth of 8% in fixed currency which is in line with expectations of high single digit gross profit growth. Adjusted EBITDA is reported at NOK 213 million or an organic growth of 12% in fixed currency higher than gross profit growth due to LINK's scalable business model. LINK also generated high net operating cash flows of NOK 166 million. LINK has invested significant resources over the last years to have a superior product offering on RCS, combining the channel with AI-driven chatbots and template managers and builders to automate and support client communications and campaigns. Juniper Research has recently rewarded LINK with the Platinum Award for the best RCS solution in Europe.
Gross profit is reported at NOK 436 million or a growth of 8% in fixed currency. A solid contribution from the more advanced CPaaS solutions with higher margins together with strong growth momentum on high margin clients and traffic was the main driver of the growth. Q4 is a retail heavy quarter and we observed strong interest for many clients to perform more advanced mobile marketing campaigns on richer channels like RCS in combination with chatbots. This effect is also evident in the organic margins with a 2.1 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 is reporting an increase in margins with approximately one percentage points each.
LINK's revenue churn has historically been low, normally between 1%-2% of revenue. Last quarter the churn was extraordinarily impacted by termination declines in global messaging with minimal effect on gross profit growth. In the current quarter the churn on global messaging has returned to a normalized level and the revenue decline on this segment is a result of terminating traffic to low margin destinations on existing clients. Enterprise churn is reported at 2.2%, similar trend or similar trends as observed in the third quarter. The enterprise churn was impacted by a bankrupt retail client in Western Europe, increasing the churn with + 0.2 percentage points.
Net retention in the current quarter is a less relevant KPI due to a stronger growth momentum on higher value clients and products and a softer growth on low margin revenue resulting in solid gross profit growth while the revenue development is more stable. The softer growth on low margin revenue is partly explained by high comparables same period last year and the refocus on profitability and global messaging terminating high volume but very low margin traffic. Net retention is expected to normalize after Q2 2025. With normalizing, the company is expecting a net retention rate more in line with gross profit growth. Excluding the impact from new clients.
LINK has significant improvement in new business wins over the last two years based on the renewed focus and changes in commercial execution. The graph on the bottom left shows the estimated analyzed 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. Internally in LINK we have a target of achieving NOK 40 million plus in gross profit from new contracts per quarter except Q3 which will be lower due to some vacation.
The current quarter resulted in NOK 38 million in expected gross profit from new contracts isolating new contracts for the advanced conversational products named CPaaS in the graph. The current quarter is at NOK 14 million on estimated gross profit. We observe more traction and market demand on advanced mobile marketing solutions combined with bots and WhatsApp RCS. We also see more demand for marketing automations 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 enhancing its SaaS solutions with AI content creation to help our clients to automate more of their campaign activities.
Historically about 75% of the gross profit is recorded in the P & L. After 12 months we expect the higher contract backlog to benefit gross profit growth gradually. The more advanced CPaaS contracts take longer to scale volumes versus legacy products, but of course results in immediate and higher license revenue. LINK has a healthy sales pipeline in addition to new agreements. Well.
RCS is a feature rich channel that we expect significant growth from going forward. RCS can be viewed as SMS version 2 as the channel is embedded in the SMS app but with all the functionality and features we are used to. For example, WhatsApp or iMessage. RCS has been on the market for several years but until now has only been available 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 18.1 and is 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 countries are waiting for iOS to be rolled out.
Customer demand is driven by the additional value this channel is creating through a better end user experience and interaction with a higher response rate engagement and significantly better conversion on RCS than SMS. We expect material commercial traction on RCS when you can reach all end users with the increased security features and ease of engaging into 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 made significant investments in RCS as a channel and developed software solutions on top of the channel. The state-of-the-art product offering has been recognized by Juniper as the best RCS business messaging solution in Europe. Specifically LINK AI bots and software solutions supporting and automating client campaigns on RCS together with our exceptional customer support has been highlighted by Juniper as unique in the industry. RCS is getting traction in the Nordics also. Two large Nordic brands have started utilizing RCS for customer dialogue with tremendous results.
RCS through the channel's rich feature set is enabling increased customer value through higher sales conversion, click through rates and end user engagement. LINK's state of the art RCS product offering will secure the company a leading position in this rapidly growing market. In addition to organic growth opportunities, the company is well positioned for inorganic growth through M&A. LINK has the competency, the historical track record for value creation through M&A and a solid pipeline with M&A targets. Since 2015, LINK has closed over 30 acquisitions of which the majority have been in great success generating significant value.
In 2024 LINK has closed three acquisitions, EZ4U in Portugal, NRS in Spain, and Reach Interactive in UK and more is expected to come. All of these three acquisitions had a multiple of between six to seven times cash EBITDA and was highly accretive to LINK's own valuation. We have 11 prioritized targets, most of them are located in Europe. These prioritized targets have an EBITDA target of up to EUR 30-40 million. Of these 11 targets, LINK has four companies under due diligence as we speak in Q4. One target in due diligence process was dropped due to our findings and has been replaced by another opportunity.
Bolt-ons in Europe have priority, but we're also looking outside Europe. Private companies in our space have a target valuation of between 6-8 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 6-8 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 the 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 NOK 2.5 billion in cash reserves. The cash position will be further strengthened over time as the company historically generates approximately $400 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 in 2025.
Acquisitions will not increase net debt beyond a leverage ratio of between 2.0-2.5. That was my part of the presentation. Morten, please take over to guide us through the financial section.
Thank you, Thomas. LINK reports quarterly revenue of more than 1.8 billion NOK. Revenue growth was, as in the third quarter, impacted by termination of low value traffic in the global messaging segment, while in Q3 2023 we observe high comparables on high volume low margin clients leading to a slight organic revenue decline in stable currency of 2%, taking into account positive currency effects of 22 million NOK in the quarter. Acquisitions closed this year contributed with 58 million NOK and total reported revenue growth was 3% in the quarter.
Zooming in on the organic revenue development, enterprise revenue growth was 4% with Central Europe contributing significantly to the total growth of NOK 50 million with healthy growth on both domestic and global clients, and organic revenue growth in the region was 13%. Northern Europe delivered low digit growth in line with previous quarters and was negatively impacted by 3 percentage points from the internal shift of global clients to Central Europe. Western Europe remained fairly stable due to higher comparables mainly on high volume and low margin clients.
The global messaging segment reported revenues of nearly NOK 380 million or an organic decline of 17% impacted by termination of low value traffic as in line with the previous quarter from refocus towards higher value traffic mix and reduced credit risk.
Total volume reported for the quarter was close to 6 billion messages representing a reported growth of 24% and impacted by adding on significant volumes from the Latvian business part of the acquisition of Net Real Solutions in Spain. Organic volume growth on SMS was as for revenue impacted by termination of traffic and high comparable low-margin traffic while other messaging including OTT channels continued to grow with solid growth momentum organically at 30%.
Moving over to the next slide on gross profit. Gross profit is reported at NOK 436 million, already reported a growth of 13% with a positive impact from currency of NOK 5 million and acquisitions adding on NOK 16 million. Organic growth in stable currency was 8% and outpacing revenue growth from shift towards higher value revenue compared to the same quarter last year. We are pleased to deliver a strong last quarter of 2024 with gross profit growth in line with expectations and concluding the year with double digit organic gross profit growth.
The enterprise gross profit growth improved quarter over quarter by 2 percentage points to 8% and outpacing revenue growth of 4% from improved revenue mix towards both higher value traffic and products. In terms of regional contribution, Northern Europe delivered an underlying gross profit growth of 3% adjusted for the internal shift of global clients to Central Europe.
The underlying growth momentum is soft on existing clients influenced by price increases from operators over the last few years. While new contracts contribute positively. Central Europe contributed positively to total growth from both top line growth but also an improved contribution from more advanced products on selected global clients leading to a reported organic growth of 23% in the quarter including approximately 2 percentage point growth from the internal shift of clients from the Nordics. Western Europe delivered organic growth in line with the previous quarter of 2%, impacted by both the isolated bankruptcy churn of a large retail client since last quarter and high comparable same quarter last year. In the quarter the disputed operator price increase in Italy was resolved resulting in a full reversal of the accrued COGS last quarter of NOK 3 million.
Higher interest in an increased use of richer OTT channels contributed positively in a retail peak quarter but was partly offset by the isolated retail churn which included a high OTT share.
The lower graph shows development in the gross margin level in the enterprise segment which improved year over year and quarter over quarter to 27%. The mix towards higher margin revenue in traffic and products impacted enterprise margin positively while the reversal of accruals related to the disputed operator price increase had a 0.2 percentage points impact on the margin year over year.
Then to the next slide on Adjusted EBITDA. Adjusted EBITDA is reported at 213 million NOK, a reported growth of 18% and 12% or 22 million NOK. Organic growth in stable currency growth is driven by 30 million NOK organic gross profit growth and partly offset by an organic OpEx growth of 4% or 8 million NOK in the quarter. The increase in operating expenses was mainly driven by salary inflation and growth related items. The inorganic growth contribution from acquisitions closed in 2024 was 9 million NOK in the quarter.
Adjusted EBITDA margin improved year over year by 1.5 percentage points driven by the expansion in gross margin partly offset by increased OpEx to sales ratio LINKed to revenue decline from low margin traffic. In the lower graph we have bridged the effects from non-recurring costs between adjusted EBITDA and EBITDA in the fourth quarter. In total we recognize non-recurring cost of NOK 51 million in the quarter. Cost related to share option was reported at NOK 8 million and includes outstanding incentive programs and employee share option programs with a declining cost recognition as programs approach maturity. M&A costs were NOK 21 million in the quarter and whereof NOK 15 million was related to closed acquisitions. While the residual is related to ongoing processes including the ongoing due diligence processes on four prioritized targets. Other non-recurring costs was related to restructuring.
Costs related to severance agreements of NOK 5 million. Unfortunately we experienced a successful phishing attempt in one of our subsidiaries despite high focus on awareness and training on this topic. The amount assumed lost in relation to the incident is NOK 18 million and an insurance claim is ongoing and still pending. Conclusion. Moving over to the P&L, I will only focus on a selected few items as we have been through development in adjusted EBITDA and I have explained the non-recurring cost in the quarter.
The cost of depreciation and amortization is reported NOK 82 million, a nine million decrease related to a one-time catch-up in D&A in the fourth quarter of 2023. D&A related to acquisitions added was NOK 3 million which together with currency effect was fully offset by decline in D&A on development projects and right-of-use assets.
Net financial items are reported at negative NOK 27 million and includes a net currency gain of NOK 14 million recognized in relation with revaluation of the earn out from Message Broadcast divestment of NOK 50 million partly offset by a small net other currency loss of NOK 1 million. Net interest cost reported at NOK 25 million includes NOK 27 million in bond interest cost, NOK 10 million in amortized transaction cost whereof NOK 6 million is an early recognition due to the partial refinancing of LINK01 bond ahead of maturity. Interest and transaction cost was partly offset by net interest from cash deposits totaling NOK 12 million in the quarter.
Then to the balance sheet. Non-current assets amount to NOK 6.6 billion of NOK 4.7 billion in goodwill. The year-on-year increase of NOK 260 million is mainly driven by acquisitions closed in 2024 contributing NOK 200 million while the remaining increase is related to currency effects. The decline in non-current assets from the third quarter of NOK 860 million was mainly driven by cancellation of the EUR 74 million Euro own bonds held in October 2024 in relation to the partial refinancing of the LINK01 bond.
Non-trade receivables was reported at NOK 1.6 billion and includes the seller's credit and earnout related to the divestment of Message Broadcast totaling NOK 286 million which is due in the second quarter this year which is the main driver for the increase. Together with currency adjustments of NOK 48 million and NOK 32 million related to acquisitions. Underlying development was positive following termination of low value traffic and improved collections.
Cash reserves were reported at NOK 2.5 billion and expanding year over year mainly from contribution from the US divestment with NOK 2.2 billion received in the first quarter 2024. Cash generated from operations and partly offset by buyback programs were on bonds and shares as well as closed acquisitions during the quarter. LINK acquired own shares worth NOK 36 million and concluded a share buyback program while the consideration net of cash paid for Reach Interactive acquisition in the UK was NOK 37 million.
The cash outflow impact of the partial refinancing was NOK 33 million in the quarter related to call premium and transaction fees. Reported payables was close to NOK 1.5 billion for a slight decline year over year with contribution from acquisitions adding NOK 14 million and currency effects adding another NOK 55 million. Underlying decrease reflecting normal fluctuation timing of payments mainly to mobile operators.
Net interest bearing debt is reported at 994 million NOK calculated in accordance with our bond agreement with gross debt related to the two outstanding bonds totaling 296 million EUR. The remaining 171 million EUR LINK01 bond matures December this year and is reclassified to short term borrowings from this quarter and is expected to be refinanced at a lower level in due time. Quarter over quarter net debt was marginally up despite extraordinary cash outflows of more than 100 million NOK related to the acquisition of Reach, share repurchase and refinancing related cash outflows which was offset by the strong operational cash flow. Leverage end of 2024 was reported at 1.3 times LTM pro forma Adjusted EBITDA or slightly down from the previous quarter.
The receivable seller's credit and earnout related to the divestment of Message Broadcast during second quarter totaling NOK 286 million is not deducted in net debt calculation according to bond terms including these receivables. Leverage would be at 1x LTM pro forma adjusted EBITDA end of 2024.
Further to the last slide and an overview of key operational cash flow items in the quarter, we report a strong cash flow from operations of NOK 166 million or close to 80% of Adjusted EBITDA with a slight positive net impact from interest received and other working capital items in the quarter. CapEx was reported at NOK 41 million with the impact of NOK 3 million related acquisitions closed during 2024. Second half CapEx was somewhat elevated compared to first half as selected CPaaS solutions will have been fast tracked to secure closing of customer contracts.
Interest payments at a lower level than normal due to the cancellation of own bonds held totaling EUR 74 million and refinancing EUR 125 million of LINK02 into the LINK02 bond which have quarterly interest payments compared to biannual in LINK01 and hence approximately EUR 50 million in interest paid have been shifted to first quarter 2025 on an LTM basis. Free cash flow after Capex and interest paid was close to NOK 400 million.
Following the partial refinancing. We still reiterate that the financial policy remains of net debt not exceeding 2-2.5 times LTM performance adjusted EBITDA, which still gives ample room for executing on the inorganic growth strategy. That completes the financial section. Now we open up for Q and A. Please post questions online. Okay, received some questions. We'll start off with some questions from ABG. The first one was: Was there some specific reason for the lower GP from new contract wins year on year or just normal fluctuations in contract sizes?
No, there were no specific reasons for it being slightly lower than the target of 40 million NOK. It was more as Øystein is mentioning normal fluctuation basically.
Second one, do you see potential for larger developed acquisitions in Europe or would you need to go outside Europe to do larger M&A?
We do see opportunities for bolt-on acquisitions in Europe, but that doesn't necessarily mean that they're only in Europe. The company can be located outside Europe and also have a significant footprint in Europe. So there are still opportunities for M&A in Europe.
I will move to some questions from Kristian's battalion in Arctic. The first one on the specific phishing incident in Q4 is NOK 18 million the maximum loss or could there be more? I can take that one. That is the max exposure that we have recognized. There is no further exposure on that incident. The second question from Kristian is can LINK do anything to mitigate operator price increases.
Normally or LINK always. Transfers mobile operator price increases to our customers that is mirrored in our customer agreements. We of course do what we can to avoid mobile operator price increases in advance if possible. It varies from country to country. In some markets we have a better opportunity to avoid mobile operator price increases. Like in Italy, for example, where we. Negotiated with Italian mobile operator and got a much more favorable outcome than what the mobile operator initially flagged.
The third one from Christian is, given the higher share of CPaaS in new contracts, does this imply a high risk of growth materializing? Given that RCS only has partial support across Europe.
We've been fairly restrictive when we estimate the gross profit from the CPaaS contracts. In many instances we only include license fees. If we include the volumes, it's because we have very specific guidance from the customers. So I don't think that necessarily the risk profile is higher, but we do. See that it takes a little bit longer to scale those contracts, so it might take LINK longer to sort of get the full gross profit. Potential in the P&L. And.
We'll take some follow up from Øystein in ABG. Have you seen any changes in the competition for M&A targets?
No, we haven't seen any changes in the competition. It's more or less only LINK which is interested in acquiring companies in our industry right now and we haven't seen a change on that.
The last one from Øystein so far is, are there anything special in the comparable numbers for H1 2025 or should we expect growth in line with your guidance of high single digit organic growth? I can maybe comment on that. When it comes to sort of gross, we focus on gross profit. First half was fairly normal quarters for us as we presented on net retention. We expect that to sort of normalize after Q2 once we sort of faded out to strong comparables on these low margin high volume clients and the termination of traffic in global messaging.
Then we'll move to some follow-ups from Kristian. He had a follow-up. The EBITDA contribution from acquired companies is similar to LINK's recognized M&A expense. How do you weigh the benefits from smaller bolt-on acquisitions versus the M&A expense and M&A activity taking some of the management focus away from organic growth?
Yeah, I can start with the last part of the question and maybe you Morten, you can go into the details on M&A expenses and the contribution from the EBITDA contribution from the acquired targets. The benefits from small bolt-on acquisitions are quite large actually and it doesn't take away the focus of top management. At least I am of course involved. In in.
Reviewing the bolt-on opportunities that we're having and which we want to acquire and what to pay for them. But when you look at the onboarding, it's handled by local management in Spain or in U.K. So that is happening quite efficiently. And also the bolt-ons, they give us more capacity in a certain country. We get more resources, more people, more customers and more opportunities to find growth.
Yes, I alluded to it in my section. About NOK 15 million is related to closed opportunities. Fair share that is coming from what we closed this year. There are also some runoff costs on all the projects and some related to the Message Broadcast divestment which I will also booked in the fourth quarter. While five million is related to ongoing processes and especially the four targets which are in a due diligence stage. Then we have some other questions from other listeners. There's a question here. How will AI influence on your business?
Yeah, AI. We have already introduced AI into our products. The chatbot solution is combined with AI. We are selling that. So. This is sort of in the beginning phase of course of the. The product and. It's only the sort of more first movers who are interested in. Experimenting with these kind of solutions. As I said, we are also. Now working on AI when it comes to the content generation of the more complex campaigns and communications. So AI is something we're working on.
There's a follow up, and when will you be able to pay dividends?
The bond agreement from 2020 prohibits us from paying dividends when that is being refinanced. The company will give some more clarifications on our intentions regarding that topic that is expected happen later on in 2025.
Yes, I can just comment that there's a limitation there in the LINK01 bond agreement. The LINK02, there's more room for dividend or gives more dividend capacity basically. So as Thomas said, once we refinance the last year of LINK01 we will come back with an update on dividend policy. Some other questions.
Congrats on yet another solid quarter. Clearly the company has ample flexibility to address the final outstanding on the bond issue in December this year. How should we think about the company's cash position and liquidity beyond 2025? What is a reasonable long term liquidity position? And is a revolving facility not a better option? Having so much cash on the balance sheet.
Yeah, I agree. We have too much. Cash on the balance sheet right now. This is not necessarily something we were aiming for. It was a result of the. Disposal of Message Broadcast in January 2024. When we do refinance the bond we have said that we expect a larger sum also to be paid down on the outstanding LINK01 bond. And after the refinancing we will of course have much less liquidity. In our bank deposits. The long-term liquidity need of the company when you exclude M&A is around NOK 400-500 million. We will get back to how we want to sort of add flexibility for acquisitions. That can be done with a smaller sum on the balance sheet or it can be done through an RCF. That's something we will get back.
Yeah.
Then it's a question from. From. Olav Rødevand from Pareto Securities. Do you have an update on the operator price dispute from Q3? Yes, as we mentioned earlier today, and also writing that in the report, we have come to agreement, as Thomas said, with the operator after negotiations, and we have fully reversed the additional accrual of around NOK 3 million that we. Recognized in the third quarter. So that is reversed in the fourth quarter financials as reported. Let's see if there's some additional questions coming in.
Yeah.
Then there is a question from. Oliver Pisani in Carnegie. Could you comment on the operating momentum? So far in the first quarter?
Yeah. Basically sort of we have given. A range for what to expect in 2025 and we wouldn't have given that range if we saw a deviating development or expected a deviating development in Q1. So it's in line with the high single digit gross profit growth and a higher EBITDA growth than gross profit growth.
Yep. There's a question on M&A. Is there any plan to expand the M&A pipeline or will the existing prospects be closed first?
No, we are shifting targets in the pipeline as we see progress are made or not made, especially if the progress is not made, then so that we can exclude one target that was prioritized and add another one. So. From time to time there are changes in the pipeline based on the development.
Yeah. Then there is a couple of questions from Vinay in Cantor. First one is within your own internal forecast for gross profit growth this year, what are some of the key factors or trends that you're watching which would either result in you achieving the upper end or the lower end of your organic profit growth target?
Yeah, I think. Sort of sadly, the market now it is, we are still getting. The market is developing positively. There's a growth in the market as we see from how sort of the penetration and adoption rates are developing. When it comes to RCS, we are a bit more prudent there internally when it comes to how fast this will be rolled out, but we are ready and we have the products ready to serve the clients on RCS as we're doing in some markets. We also see some traction in the Nordics, which is basically new to RCS, but we don't have the full reach to deliver RCS, so.
We believe as long as the market remains. Fairly normalized, we don't see huge downside to delivering on our growth ambitions. But of course we need to deliver on sales and get the contracts into the P and L. There are some. See if we have some follow ups now.
Yeah, there's another one from Vinay, one of your competitors reported today with some quite positive commentary on RCS market. Can you give a sense of what percent of your traffic currently comes from RCS? That is fairly limited. It's a small share of the 6 billion that we're sending in the quarter but it has healthy margin. So it is contributing positive to the gross profit growth.
That was the question we had. So far. Let's give it some seconds to see if there are some follow ups.