Thank you very much, Operator, and thank you, everyone, for attending today's call with Sinch, where we will present and discuss the restated historical segment reporting for 2023, which we published this morning. The restated figures have been prepared on a pro forma basis to align with our new operating model and future quarterly reporting. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. With me today, I have our CFO, Roshan Saldanha. There will be a possibility to ask questions after the presentation. Please note that we are in our silent period preceding the Q1 report, which means that we will only answer questions relating to the restated segment reporting. We will therefore refer any possible remaining questions to the day of the report for the first quarter 2024, which is scheduled for May 7th.
With those opening remarks, I'll hand the word over to you, Roshan.
Thank you, Thomas, and a warm welcome to everyone who's joining us today for this call. Before we dive into the restated segment reporting, please turn to slide two for a brief introduction to our business again. We at Sinch are pioneering the way the world communicates. We are helping businesses throughout the world to communicate with their customers by leveraging cloud-based technology for messaging, voice, and email. Our Customer Communications Cloud powers more than 800 billion unique transactions unique customer transactions per year on behalf of more than 150,000 paying customers. We are present in more than 60 countries and serve businesses of all sizes. In the full-year 2023, we recorded revenues of SEK 28.7 billion, gross profit of SEK 9.5 billion, and Adjusted EBITDA of SEK 3.6 billion.
We have been profitable and cash-generative since our foundation in 2008 and generated SEK 1.8 billion in cash flow from operating activities over the past 12 months. Please turn to slide three, where we capture the most important changes to our reporting from the first quarter 2024. As a background, these changes are necessitated by our new operating model announced in October 2023. As of the 1st of January, we are operating our business as one unified company. We are increasing our focus on customers, and we are leveraging our scale in product and technology. We are charting a path to higher organic growth, and this reporting shall enable you to track our progress. We will report net sales and gross profit according to our regional structure with three operating segments: Americas, EMEA, and APAC.
The sales force in each region will also be equipped to sell the full Sinch portfolio. In addition to our operating segments, we will provide financial performance by three product categories: Applications, API Platform, and Network Connectivity. These product categories supplement the regional segment reporting and will reflect accelerated product integration and focus on cost and upselling. Thomas will speak in greater detail to these product categories later in the call. In addition, although we will not report OPEX by region, we are providing additional information about our overall group costs in the new reporting. This means that you will be able to track and forecast our group OPEX in three distinct categories of sales and marketing, research and development, and general and administrative expenses. I will come back to this updated OPEX disclosure later in the call.
Please turn to slide four, where you see a transition from our previous to our new operating segments. The illustration is drawn to scale so you get a sense of the relative contribution of each part. As you know, we tend to focus on gross profit more than revenues, and therefore the distribution here is based on gross profit. Before we turn to further details on our operating segments, I want to highlight that we are introducing new complementary product disclosure in addition to the operating segments. You can see here that we break the business down into our Network Connectivity offering, our API Platform, and Applications. Again, these three are also drawn to scale. We will also provide a breakdown of revenue and gross profit in the product categories for each region to enable further transparency. Please turn to slide five for further details on our three operating segments.
As we have said before, we are reorganizing our customer-facing teams in three regions and the launch of a new global sales organization. The go-to-market transformation is about winning in the markets we serve. The Americas region includes both North and Latin America. The United States is our largest revenue contributor within the region, while Brazil is a significant contributor in Latin America. The region is led by Julia Fraser, Executive Vice President for Sinch Americas. Across all functions, about 45% of the Sinch headcount are situated in the Americas region. Within EMEA, customers in the United Kingdom and France are the largest contributors of revenue. The EMEA region is led by Nicklas Molin, Executive Vice President Sinch EMEA. Again, across all functions, about 30% of Sinch staff work in the EMEA region.
Turning to APAC, which is led by Wendy Johnstone, Executive Vice President of the APAC region for Sinch. Australia and India are the largest contributing countries by revenue in the APAC region, and we have 25% of the Sinch staff based in the region, again looking across all functions. As you may recall, we have organized our customer-facing go-to-market teams by region, but we have central global functions for product, technology, and support functions like finance and HR. This means that some employees in each region report to the regional head, while others report to their functional leaders. Please turn to slide six for a summary of key financials for each segment for the full-year 2023. Sinch is a global leader within the CPaaS market and has customers spread across multiple regions with a diversification of revenues and gross profit.
These customers also spread across different segments: customers that buy Sinch solutions to communicate directly with their own end customers and customers that are integrating Sinch solutions into another package or offering. Finally, we have individual developer or non-technical users who purchase Sinch solutions through an online self-serve go-to-market. All of the revenues from each of these customer groups are now allocated to the regions or reported within the regions based on the customer's presence. As you see, Sinch's largest region is Americas, contributing 62% of net sales and 63% of gross profit. This is followed by EMEA with 24% and 22% respectively of net sales and gross profit. We offer products within each product category to customers in all regions. The regions have a relatively similar gross margin profile across the three segments.
Even the gross margin may vary due to mixed effects and by product, customer size, and geography. With these encouraging proof points, I want to hand over to Thomas, who will guide us through the new product categories of Applications, API Platform, and Network Connectivity.
Thanks, Roshan. Please turn to slide seven for an introduction to our new product categorization. You will recall that the growth acceleration plan outlined by our CEO earlier this year consists of three main parts. We have initiatives around go-to-market transformation, product unification, and operational excellence. We are shifting from an operating model based on business units to a more integrated company. We know that our customers would like to buy more than one product, but we haven't made it easy enough for them to consume different parts of our offering. This is where product unification plays a key part and why we're introducing a product categorization that focuses on different customers rather than different individual communications channels. Our overall offering, what we call our Customer Communications Cloud, consists of three product categories.
They are laid out as layers, which is by design, as they match to a technology stack where you have capabilities in several layers. The largest part is our API platform. The API platform includes APIs to send messages by SMS or chat apps, to buy numbers and connect voice calls, to send email, verify email addresses, phone numbers, and more. What we're selling here is the ability to draw on our full capabilities with a few lines of code, and it hence captures our offering for developers and product managers. Built on top of our API platform is our applications offering, which targets business users. Unlike the API platform, using our applications does not require technical expertise or coding skills. We have a broad set of capabilities here, including simple texting for SMS marketing, Mailjet for email marketing, and Chatlayer for conversational AI.
As we've said before, a key focus during 2024 is to further unify these products so that they work more seamlessly together. As with our API Platform, we sell both direct in a sales-led motion and online through our self-service product. In addition to the Applications and APIs for business customers, we also offer a set of products around Network Connectivity that orient more towards telecom operators. The largest part is our Voice Interconnect offering, which we sell primarily in North America. The category also includes global products for messaging interconnects, which allows mobile operators to terminate messages to subscribers outside their own network, and software products for mobile operators. The main audience for these offerings are telecom operators, but some voice products are also sold to wholesale voice buyers.
With that introduction to our new product categories and the Customer Communications Cloud, I want to hand the word back over to you, Roshan.
Thank you, Thomas. Please turn to slide eight, where you can see the relative product distribution within each region. As you can see, the API Platform contributes 70% of group Net Sales and just over half of group Gross Profit. It is the largest product category in each region. Network Connectivity makes a relatively large part of our Americas segment. It contributed about 31% of Gross Profit last year, but it has a smaller role within the EMEA and APAC regions. Applications contribute just 13% of the Gross Profit in Americas compared to 51% of Gross Profit in APAC. But here, it is important to distinguish between absolutes and percentages. The absolute size of the Applications business isn't all that different in the Americas versus APAC, but the overall size of the Americas region for Sinch is so much larger that Applications contribute a relatively lower share.
Please turn to slide nine for Thomas to come in and give some brief commentary on the comparison between our old segments and new product categories.
Thank you, Roshan. To understand and forecast our business, we believe it's helpful to look at the business in both the regional and product dimension. Recall that we shifted to our new operating model on 1st of January this year, and that regional financials for 2023 are pro forma figures. As time progresses, you will have more information and be able to look at longer time series for the regions. As of Q1 2024, we will no longer report figures for our previous segments. What we're showing here is a bridge from our previous financial segments to our new product breakdowns. This allows you to map your existing forecasts for messaging, voice, email, and SMB to our updated product categorization.
As you update your models, we urge you to have a look not just at a product within each region, but also how the product categories are performing on an overall global level. For example, for our API Platform, there can be variances between the regions even if there is stability overall from a global perspective. Looking then one by one at the previous segments, you can see here that most of the net sales and gross profit in the former messaging segment will now be recognized in API Platform. Some parts, like software to create marketing campaigns over SMS, RCS, and WhatsApp, will be recognized in Applications. Other parts, primarily the interconnect products and software for mobile operators, will be reported in Network Connectivity. For the voice segment, its net sales and gross profit now sit primarily in Network Connectivity and API Platform.
You will recall that our year-on-year growth rates are still impacted by the 8YY toll-free messaging reform in the U.S., which affects network connectivity in the Americas region. For the former email segment, you will see those parts relating to APIs, products primarily used by developers, are recognized in the API Platform. Products for marketeers, like tools to build visually stunning marketing campaigns, sit in the Applications category. Lastly, for SMB, that entire former segment is now recognized within Applications. Here, we should add, perhaps, that while very popular with small and medium-sized businesses, many of those products are also used by larger enterprises. With that in mind, it makes sense also to move away from the previous terminology. This wraps up how the previous segments translate into the new product categorization. With that, back to Roshan for some discussion around OPEX.
Again, thank you, Thomas. Please turn to slide 10. Our new operating model includes consolidated global functions to drive synergies of scale and deliver operational excellence. Hence, we will now provide additional OPEX disclosure in the three updated functional groupings of sales and marketing, research and development, and general and administrative operating expenses. Note that these groupings and their definitions are specific to Sinch and are updated from similar reporting in previous years. For 2023, sales and marketing expenses constituted nearly 30% of total adjusted OPEX. R&D expenses, which include expenses for development, maintenance, implementation, and operation of our products, accounted for nearly half of our adjusted OPEX. G&A expenses, which include the cost of our support functions as well as office costs, make up the remaining slightly north of 20% of our adjusted OPEX. Sinch already reports operating expenses by nature, which remains unchanged.
Adjustment items to EBITDA will only be reported for the group. They will, however, be split by nature in the same way as previously reported, with integration costs, acquisition costs, share-based incentive programs, et cetera, reported separately. We aim to report on the OPEX investments and gross OPEX savings that we announced in the Q4 earnings call. Together with the changed segment reporting, this should enable you to track our growth acceleration plan. So with that, we can open for any questions on this call.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Stefan Gauffin from DNB. Please go ahead.
Yes. So first one is perhaps not the question, but rather I want to hear your comments around that. I mean, I think people already find it difficult to understand Sinch, and now you just provide one-year history on the segments. So the visibility on difference in growth and seasonality for both the segments and the complementary products is basically non-existing. So this makes it almost impossible to model. So just any comments on this and any information on seasonality differences, that would be helpful. Thank you.
Sure. Thank you, Stefan. This is Roshan. Thanks for the question. I will start off a little bit. Maybe Thomas will add more on the modeling aspects here. I think, firstly, obviously, we're changing our reporting to the new operating model as of the 1st of January, which means that we will provide the first quarter results already scheduled in the beginning of May. So you will be able to get more information on growth and trends when we come out with that information briefly. When it comes to kind of visibility into growth and seasonality, I think it's very important to remember, like we've said before, that we do have seasonality in the fourth quarter that you will see very clearly in the API platform, but also in the applications area that we have kind of seasonality affecting growth in the fourth quarter.
And also, I think when you look at the trends individually, it's very important to look at the regions and the product categories on a global basis. So I think that says more than looking at it in the product categories individually within each region. So those were some detailed comments. But I think the point you're trying to make about kind of having more information, more historical information, yes, I think that's noted. I mean, that's something that we have provided what we believe is possible to do with reasonable effort at this point in time. And I think that's something we will have to work with going forward and come back with more information. As I said, in the first quarter already, you will see a little bit more. So that was it.
Okay. Thank you.
The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead.
Thank you very much. I have a question on the gross margin and applications here. It seems to differ quite a lot between the regions. What is the reason for that? I understand that it does it in API, for example. Should that change over time to any meaningful extent?
Thank you very much for that question. Within applications, you have some variations depending on individual products. Overall, the margin profile is relatively stable if you look across regions, especially sort of compared to the API platform and network connectivity. I think the one point perhaps to call out is that you do have some seasonality in terms of Q4, also to some extent Q3, with a bit more marketing use cases, which increases the relative share of messaging in both API platform and applications. And that can have an impact on margins if you look at the second half of the year compared to the first half of the year.
Okay. I see. Then, secondly, the gross margin in Network Connectivity is quite volatile over the quarters. Just to understand the drivers up and down in that segment, what is causing that?
Yeah. I think, Daniel, I think it's important to look at the relative scale of the businesses when you're making this analysis. I think on a consolidated level at the group, it is certainly less volatile. But you're right that if you look at a region like EMEA or APAC, where the network connectivity business is relatively small-scale, that can be affected and can be more volatile due to timing effects. In addition, I think it's important to look, I mean, from a slightly more long-term structural trend perspective, that the 8YY toll-free effect that we've quantified, we've said that's around 4% of our worldwide voice business in terms of gross profit, is affecting gross profit in the Americas region for network connectivity. So that is definitely a downward trend affecting the Americas region.
That's true. I see. And then finally, a question in terms of cross-selling. I mean, the whole reason for doing this is to improve the cross-selling, obviously, between the products. Has it been hardest to cross-sell SMS features to email customers or vice versa? Or what have you seen that you can share and try to improve from this reorganization? I agree with the first question here that this is making it a little bit more messy from our side. It is a company that is complex and quite hard to understand for many, especially investors. So just to understand in terms of products, what do you think you will accelerate the most by doing this?
Yeah. So we won't make any sort of detailed or forward-looking comments here at this call in terms of what we communicated earlier. We've noted that the first level of cross-sales is often within a type of use case category. So if you're using email marketing products today, you'd potentially be interested in SMS marketing products. If you're using voice products for customer care, you might want to consider chat apps or RCS. And depending on how these businesses were structured historically, it's been challenging to different degrees. With the new operating model, we're tackling these questions from two important angles, right? One is the product unification. So if you're a developer, you can reuse your API keys and log in again. If you started with Mailgun for email, it's now easier to buy SMS products or other products.
And so for the second part, which is not around product integration directly, is the go-to-market transformation. A large part of our business is sales-led, where we engage with customers and we advise customers. And equipping our sales teams to sell the full portfolio is as important as the product offering itself. So we're quite excited about the future. But as we've communicated previously, it'll take some time before we start to see tangible results.
Yeah. Makes sense. Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Laura Metayer from Morgan Stanley. Please go ahead.
Hi. Thanks for taking the question. I have two questions, please. Just to clarify, for Q1 results, are you going to disclose the financials as per the new segmentation but won't give anymore the old segmentation? Then the second question is, are you planning on disclosing some KPIs to assess the progression of cross-selling in the business, please? Thank you.
Hi, Laura. Thank you for those questions. This is Roshan. I think we can be on the first question on the Q1 results. Yes, we will be reporting as per the new segment reporting. And this is why we've come out with the announcement today to give you a historical view of 2023 so you have a baseline to compare against. And that means that we will not be reporting as per the old segment reporting for the Q1 and going forward. This is also how we are following our business internally now going forward, and we will increase disclosure over time. On the second question on KPIs, I think the request has been made before, and it is well noted. I think that's something we have to come back to as part of our Q1 reporting and going forward as to how we increase visibility in that area.
Nothing to add today.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
So with that, then I want to say thank you very much for everyone for attending today's call. We've discussed the restated historical segment reporting for 2023. We look forward to connecting with you again when we are publishing our first quarter results of 2024 scheduled on the 7th of May. Thank you very much, and have a nice afternoon.