Good day, and thank you for standing by. Welcome to Investor Update. At this time, all participants are listen only mode. After the speaker's presentation, there will be a question and answer session. To ask questions during the session, you need to press star one on your telephone. You may also write questions via webcast. Two questions are only allowed per person. You can press star one for a follow-up question. If you require any further assistance, please press star zero. I would like to hand the conference over to our first speaker today, Thomas Heath. Please go ahead, sir.
Thank you, operator. Warmly welcome everyone to this conference call with Sinch AB, where we're announcing the acquisition of MessageMedia. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. With me, well, for the first time in a long time, in the same room even, our CFO, Roshan Saldanha, and our CEO, Oscar Werner. With those opening remarks, I'll hand the word over to Oscar.
Thank you, Thomas. It's actually pretty amazing. First time we meet in the last 18 months, I think, all the three of us. That's actually amazing. Happy to do that as well. That's not the main event of the day. We are focusing on the recent acquisition of MessageMedia. I thank you all for participating in the call. Operator, if you go to slide two, please. This is Sinch in a nutshell. Revenue, SEK 9.7 billion, relevant past 12 months. Adjusted EBITDA, SEK 968 million, again, past 12 months. Significantly higher, of course, if you include all the acquisitions we have done. 2,100 people. If you would include MessageMedia and Inteliquent, it would be 3,200, something like that, 3,100. We do customer engagement through mobile technology.
Any enterprise who wants to do a video call with their customers or want to do a voice call with their customers, 1-800 numbers or want to do messaging transactions, maybe via WeChat or WhatsApp with their customers, we provide a communication platform that handles all of that. We do 152 billion engagements per year. That is 15 per human on the planet, so very deep market, and we're the market share leader in messaging in terms of volume. We serve eight out of 10 of the largest U.S. tech companies. If you take the biggest companies on the West Coast, eight out of 10 are customers. We stand out in the market by high-quality international service delivery, so being able to deliver on a global level. It's got 100% consumer penetration.
I have yet to meet one single person since I started that is not a user, and I don't think any of you can meet any of your friends who have not had a video call with a doctor or a voice call to a ride-hailing app or a message from their dentist or hairdresser. The market is very large, and I think these two recent acquisitions really show the power and the depth and the breadth of this market. If I would count the total market, I'd probably get to $60 billion-$80 billion, if you count the total CPaaS markets. These two acquisitions show that in two different segments where we truly complement Sinch in order to address the main areas and main segments of this market.
Sinch has been profitable since our foundation in 2008, founded on $10,000 in share capital, has not needed any money from inception to fund its business. You can see that in those recent acquisitions as well. It's highly profitable companies that we do acquire, it will add to the EBITDA we do, then continue the profitable journey. All right. Operator, slide three, please. We've got a track record of profitable growth. We have an organic growth agenda and, as you know, an M&A-driven growth agenda. We have grown consistently with some 25%, 30%, 20% quarter-on-quarter over the last several years. On top of that, we have an M&A agenda to grow roughly the same level. If you take on average the last five years, we've grown something like 25% gross profit per share.
In total growth being 50% gross profit per share roundabout on average the last five years. We really do see these two growth avenues complementing each other. As you've seen, we have been more active on the M&A market lately, and we have stepped up our game on the consolidation. We do believe this is because the market is consolidating now, and our goal is to be one of the top two players in this very large market. If we do that, we think it's going to be a very good return to our shareholders. On the slide, you can see the impact of the latest acquisitions on ACL, SDI, Wavy, Inteliquent and now MessageMedia, both on the gross profit and the adjusted EBITDA level.
You see the power of both Inteliquent and MessageMedia on gross profit and adjusted EBITDA, which are major transactions and big transactions, and I think they just show how big and how broad this market is. To us, it's very logical. On the one hand, we're adding voice, a very logical part of the CPaaS market. Any enterprise that wants to serve its customers over the customer life cycle needs messaging and voice. With MessageMedia, we add a good market and product to the SMB markets, which we have previously not served. As you can see, it's a very large and very attractive market. That's the logic in a nutshell. Operator, if you go to slide three, please. Oh, four , sorry. What are we doing here?
To us, it's very logical, and it's something we have known exists in this market for a long time. Basically, this market is comprised of three main go-to markets, if you talk about the go-to markets to the enterprise or business side, if you exclude the operator go-to market. One go-to market is enterprise, selling to enterprises direct with a direct sales force. The other go-to market motion is you attract developers, and the developers may exist at any enterprise. It may be a small tech startup up to the Googles and the Amazons. You can address the developer persona via a web and online go-to-market model. The third one is focusing on the small and medium business segment, the SME or SMB segment.
Sinch has previously selected to focus on the enterprise and the developer side purely because we had to focus organically and didn't think that we organically had the bandwidth to focus on the SMB segment. We've always known that this has been an attractive market segment. We've always seen, at some point in time, we will address it. Just because it is a large portion of this market with a very attractive profitability profile and growth profile. Now we saw what we believe is the best company in this space, MessageMedia, running a structured process. When we think this is an attractive segment in the market, we believe the best company on the planet is running a structured process, we think it's a very good addition to Sinch.
Therefore, we made this acquisition, and we see it as a strong addition of yet another growth engine. What the SMB market is, it's basically, think about the customers as the dentist on the corner, or I sometimes say Joe mechanic shop. The dentist on the corner wants to sign up online and get a service for text messaging or WhatsApp to do reminders to reducing no-shows in their dentist practice. What they do is they basically realize they have a need, they go online, they search, they find the service, put in their credit card, and then they start ordering the service for EUR 100 a month, in principle. It's a SaaS buy where they buy the actual platform.
It's a prepaid model where they pay with their credit card, and the go-to-market model is 100% online because we can't afford to have a salesperson selling onto these types of business. On the other hand, as you can see, it's high growth, it's a very large market, and it is very profitable if you do this right. That's the segment that we are now adding to complement our large-scale enterprise go-to markets. We're doing two things, targeting SMB and adding a very strong online go-to-market model. All right. Operator, let's go to the next slide, please. Slide five. This market is sometimes called the turnkey consumer engagement markets. Turnkey denotes you go online, you sign up, you enter your credit card, you get everything there in the SaaS solution, in the turnkey solution. Consumer engagement, very much aligned with us.
You want to use the mobile channel to engage your customers. That's what it is. The market reports of the turnkey consumer engagement market estimates this market to be between $9 billion-$13 billion alone. From a market size perspective, we're addressing the market. We're increasing our addressable market with $9 billion-$13 billion, and we're acquiring what we believe is the number one player in that market. This segment of the CPaaS market is expected to grow at 25%-30% CAGR, with U.S. growth being 30%-35% CAGR over the coming years. As you can see, it's a strong growth engine. MessageMedia is based out of Australia, but their main growth focus is in the U.S., so that's where they're focusing the majority of the growth, and they also have a high-growth business in Europe.
50%- 70% of turnkey spend will come from the SMB segment. This is a market that is dominated by SMB. The growth is driven by a higher adoption among businesses and a rising number of use cases. I think the same report here denotes that roughly a 10%, 15% penetration among SMB of these type of services. It's driving the penetration game, and we have a long way to drive growth there. You can think about the market if you take a step back, it's every SMB on the planet. That's how we see it here. We acquire MessageMedia in order to address all the SMBs on a global basis. We're obviously focusing on U.S. as track number one and Europe as track number two as the two biggest growth engines in the short term.
The charter, if you will, for MessageMedia is win in the SMB segment on a global level. The number of enterprises to address are all the millions of SMB businesses on the planet that want to communicate with their consumers via any of the mobile channels. Good. Operator, next slide, please. We're on slide six. This is truly a SaaS product focused on ease of use. MessageMedia has a web-based SaaS application suite supporting outbound messaging in some conversation use cases. It's optimized truly for ease of use and quick time to value as opposed to Sinch, which is best cost quality when you are at volume. Think a big bank, they buy messaging in one way, and the hairdresser on the corner, they buy messaging much more on getting started and quickly and ease of use.
The actual cost per transaction is less important in this area, which you can also see in the gross margin profile from MessageMedia being higher than Sinch because hairdresser on the corner has lower purchasing power than the big banks, of course. Subscription-based price model. It's a single platform supporting multiple brands. They have acquired a couple of companies and then have a platform to integrate these SMB players or other SMB targets and one platform managing multiple brands. This is good for us because in some of our acquisitions, we had a tail of SMB players which we have a hard time supporting with our platform because that's simply not what it's focused on. It has a set of pre-configured integrations to multiple SMB-focused cloud platforms. We can take Shopify as an example to exemplify a little bit.
In Shopify, they have an application built in, which is having a use case for reducing shopping cart abandonment rate for e-tailers. An SMB e-tailer, they get the consumer into the shopping cart, and they always have a certain percent of people getting into there abandon the purchase when they are in the process of purchasing. MessageMedia has a module there for re-engaging those consumers basically by sending a text or a WhatsApp message saying, "Hey, what happened? Can we help?" They can reduce the shopping cart abandonment rate for that e-tailer. As you can understand, reducing that is very powerful for most e-tailers. Now you can see an example of the integrations in various cloud platforms that we have talked about on Adobe and Salesforce. MessageMedia are doing as well, but again, they're focused on the SMB segment.
Operator, slide number seven, please. This is very much a continuation of our profit playbook for profitable growth and connectivity layer around software as a service. This acquisition is geared much more towards the software as a service layer. The SMB market is buying connectivity, the key thing that they're buying is ease of use of the dev platform and getting started quickly. Truly, it's the online marketing machine and the ease of use that makes you win here because the local hairdresser, if their 20 messages a week costs 10% more, that's not really what the purchasing decision is about. This is a step up into the SaaS area. All right, next slide, please, operator. Slide number eight. Technology, go-to-market, and scale, and profitability. Thomas had to fight a little bit with this one for this acquisition.
We're actually rejigging this slide a little bit, the reason is simple, that MessageMedia, they tick both boxes. It's both scale and profitability, as you can see, with the high profitability and high gross margin and high scale. It ticks that box, but it also ticks a portion of the technology and go-to-market by adding a SaaS application for the SMB, but also adding an online go-to-market model. It's truly an SMB acquisition that ticks both boxes. Therefore, we or Thomas, thank you, have rejigged this slide a little bit to try to represent this in a better way. You see on the right, you see Inteliquent and MessageMedia. In Inteliquent, we got a voice platform, which is the technology piece of them, but it also does a very large scale in profitability play in North America.
MessageMedia adds an SMB focused SaaS product and online go-to-markets. It's adding U.S. and Australia and a little bit of Europe in scale and profitability. That's the market where it's focused on. As you can see, the financials are strong with MessageMedia. All right. Operator, if we go to slide 10, please. What is it? Leading provider of a SaaS service for mobile engagement to SMB segments. More than 60,000 customers sending some 5 billion mobile messages per year. Nine successful acquisitions in the past from MessageMedia and some 350 employees. Headquarters in Melbourne, offices in the U.S., Europe, and a couple of other places. Australia and the United States are the two strongest markets, the biggest markets. The rationale is very straightforward to us being in the market. Expand the addressable markets and position Sinch for growth in the SMB segment.
Add a strong digital or online customer acquisition engine, winning 1,500 customers per month. You see this is a high number of customers, very automated online go-to-market. We expand the scope of future M&A with a team that had done it before to handle any smaller scale M&A, which we today have not been able to do, and we will run the business unit, so they will take care of that. Basically, low impact on the integration to our team because we acquire the leading player and a team that works today. It's an accretive deal that fits both the scale and profitability and technology go-to-market criteria. It's an ethnic focus part of Sinch that will keep the current management and keep the current team intact. Integration costs some $8 million over 18 months.
MessageMedia will benefit from our global network and our investment in new technology, which becomes available to them. There will be savings, but it will be reinvested in expansion to leverage Sinch presence in 47 countries. Roshan will take the financials on this one.
Sure. Thanks, Oscar. Hi, everybody. Briefly, MessageMedia, we're acquiring them at an enterprise value of $1.3 billion, on a cash and debt-free basis, of which $1.1 billion is paid in cash, and $200 million is paid in equity, converted to a fixed number of shares at signing today. Closing is subject to regulatory approval, primarily in Australia and in the U.S. We expect closing to be completed during the second half of 2021. MessageMedia had revenues of $151 million, and gross profit of $94 million, and adjusted EBITDA of $51 million expected in the 12 months up until June 2021. They have an underlying year-on-year revenue growth of around 22% over the past two years, with a higher growth in the U.S. at 40%. Oscar, thank you.
Operator, if you go to the next slide, please, slide 11.
We love this chart with Australia being focused in the middle. Not always how we see the world, but we love that chart. We want to be very appreciative of local views, and I think this is one. We just use this view for this presentation. You see 28,000 customers with a 62% gross profit in Australia. The higher gross profit denotes that it's much more of a SaaS play and focused more on the application than the actual messages as such. 25,000 customers with a 27% gross profit and 40% year-on-year growth in the U.S. U.S. obviously being the number one growth engine going forward. The MessageMedia number two is moving to the U.S. in order to focus on the growth here.
We're really focused on driving the U.S. growth in the coming years, and they have a strong platform and strong traction and proven traction in that market. They have also launched relatively recently in Europe without a lot of investment, but still getting to 5,000 customers and lower gross profit, but very high growth rates. The name of the game here is very much you get in, you drive the growth, and then you upsell them with more and more services, and that's how you work your gross profit up. That's all in the playbook. You see on the right-hand side, you see the web chat users, it's 100,000+ per month, and leads and trials becomes thousands. Paying customers convert about 20%, and then returning customers, basically returning month after month, is two-thirds of that.
Very strong, high conversion rate funnel, which they have optimized over many years. We think that's a very strong addition to our go-to-market. It adds such a well-tuned go-to-market channel. They're acquiring over 1,500 net new customers per month. As such, you can see it's a strong diversification of revenue and truly adding another growth engine to our already strong growth. All right. MessageMedia on slide 12, multi-brand strategy. They are operating several brands because this is a very large market, like we said. It's focused on ease of use, so you need to focus the brands on various personas and make it very good for that persona. If you know
VEM theory, you just take away everything that the user doesn't need in order to have a high conversion rate. Maybe the best example is Google, one line and one of the world's biggest companies. To do this, you can't clog it down with too much information. There we have a couple of brands, MessageMedia being focused on the mid-market customers, ClickSend on the tech-capable buyers. Some overlap here with Twilio, but not direct competition, but there is some overlap in the tech persona. SimpleTexting focusing on the non-technical buyers, and then a set of legacy brands which they are managing on the same platform as the MessageMedia. Good. Slide number 13, please. Roshan, why don't you take the last three slides?
Thank you, Oscar, again. Just to give you a walkthrough of the development of Sinch over the last period as we've done a number of acquisitions. Here on this page, you see our gross profit margin and adjusted EBITDA margin development. On a pro forma basis, and when I say pro forma, I mean including the closed acquisitions for an entire period of a year, 12 months, and then also including Inteliquent and MessageMedia, which are announced but not yet closed acquisitions. As at first quarter 2021, on a pro forma basis, Sinch would have had revenues of close to SEK 18 billion, SEK 6 billion in gross profit, and SEK 2.4 billion in adjusted EBITDA. These acquisitions have significantly diversified our revenue base and our profit base, just as Oscar said. In addition to that, they're also improving our margin profile.
On the gross profit margin on this pro forma basis looking at the last 12 months as of Q1 2021, we would have a gross profit margin of 33% and an adjusted EBITDA margin of 14% compared to 26% and 10% respectively, standalone or as reported. Please turn to the next page, operator. Financial leverage. Again, just a walkthrough of where we are as of today with the announced transaction of MessageMedia. Our financial leverage target until we made the announcement today was to keep net debt to adjusted EBITDA at less than 2.5 over time. In a separate announcement today, we have said that we see a lot of opportunities to grow and consolidate the market, and therefore we are choosing to increase that financial leverage target to less than 3.5 net debt to adjusted EBITDA over time.
On a pro forma basis as of Q1 2021, we had a net debt or a leverage position of 1.8x, a cash position of 1.8x. Including Inteliquent, we would have had a leverage position of 3.1x. As you know, we thank our shareholders for the strong subscription to the share issue that was completed in May 2021. Including that share issue, we would then have had a cash position of just under 1x. Now if we include the MessageMedia acquisition, again, as at Q1 2021, we would have a leverage position of 2.6x. This is still very much under our leverage target. In addition to that, we see strong continued possibilities for de-leveraging using organic cash generation until closing of Inteliquent and MessageMedia transactions. Operator, please turn to the next page 15.
Again, just to remind us on our financial targets, our two financial targets are adjusted EBITDA per share to grow more than 20% per year and net debt to adjusted EBITDA to be less than 3.5 as we changed it now. On the first target, we grew 30% in Q1 2021, measured on a rolling 12-month basis. We have a net cash position of 2.1x on net debt to EBITDA measured on a rolling 12-month basis. With that, I guess I'll hand back to Thomas to help us through the Q&A.
Thank you very much, Roshan. Thank you, Oscar. Operator, we're ready for questions. Just want to remind everyone, please limit yourself to one or two questions, and then we're happy to have you return to the queue again just to ensure that everyone gets their say. Operator?
Thank you, sir. As a reminder, to ask question, you need to press the star one on your telephone, and to withdraw your question, just press the pound key. Once again, please press star one for question. Sir, your first question comes from the line of Predrag Savinovic from Carnegie. Please go ahead, your line is open.
Thank you, operator. Thank you very much for taking my questions. Very interesting acquisition that you announced today. This bridges your gap to SMEs, which I guess is one of the white spots you had before compared to, say, Twilio or Plivo. The question is, do you feel that MessageMedia is large and capable enough to fill this gap completely in SMEs? Do you think you might need to acquire more companies for this purpose or invest organically now in FTEs to get the scale you really require.
Yeah, no, we believe MessageMedia is the best player in this market on a global level. Yes, we believe they're highly competitive against all of these players. Twilio is not as strong in this market anyway, prior to their acquisition of Zipwhip, which they just announced. They focused on the developer persona, not the SMB persona. Zipwhip has a little bit more, or they do have more of an SMB focus, just to be clear on where they are. Truly, yes, against Twilio and against Zipwhip, definitely in a strong position and against Plivo and all the other players as well. We believe this is the strongest player globally focusing on this area. Investments will be run from this P&L, and that's really why we focus on acquiring them and what we believe is the market leader.
Yeah, from their own growing adjusted EBITDA of $50 million, they will continue to invest organically, strongly in this market. There's no growth. They will continue on that trajectory is our plan, and we'll run them as a business unit focused on our profits there. Of course, there will be a lot of investment in there. They may decide, of course, to add smaller local acquisitions of local companies doing this in various countries. They have a machine to integrate them within MessageMedia, right? We're truly adding a business unit that can operate these markets, and their very strong stated goal is winning the SMB market globally. Start focusing on Europe, second priority Europe. Start focusing on U.S., second priority Europe, let's see where we take it.
I think, Predrag, just as a complement I think, not really directly related to your comment there, but I think we just want to remind on the investments that we've said we're making into scale-up, and here you sort of see a little bit the reason for the investments that we've commented on during the Q1 results. I think I just want to remind that, in Q1, we're still in a ramp-up phase on the scale-up investments, and of course, that continues during the rest of this year.
I think you also see the reason we see this type of large deal, very good additions, and then we think it's good to take some optics in order to be able to manage this obviously from a central perspective.
All right. Very clear.
Yes. Next question, please.
My next question is on the growth ahead for this company. You cite some say 20% historically in this market vertical, which you say is growing 25%-30%. So somewhat above what MessageMedia has had. Now that you've acquired it, do you think you can accelerate this growth beyond, say, the market growth? I mean, adding this distinction, Sinch being the player it is, should have some benefits to it, right?
Yes, I'll try to answer that. I think, the market growth is an approximation. We do not believe that this has been growing slower than the market, in the markets where it operates. There is a bit of a geographical difference, and you can see really high performance in the U.S., and of course, just the relative shares of the geographies have some impact here, right? We think they've been performing very well in that strong market in the different geographies, right? What you're seeing there is a little bit of mixed effect. For the future, I think, Oscar, you want to?
Yeah, no, but really, you see their Australian business growing at one rate because they're very well penetrated. They fine-tune their models. If you look at the U.S. market, their growth rate is 40%, but the market growth rate is 30%-35%.
In our perspective, and in Europe, it's a similar level. In our perspective, in the core growth markets, I think Message Media is growing faster than the 30%-35% at all. Obviously being well penetrated in Australia, and there you get a little bit lower growth rate.
Okay. Thank you very much.
Operator, next question.
Yes, sir. Your next question comes from the line of Daniel Djurberg from Handelsbanken. Please go ahead.
Thank you, operator. Thank you for taking my question. Gentlemen, congratulations on a pretty interesting acquisition. My question is, first, in current relationship between the companies, how large a proportion of sales today from Sinch is to MessageMedia? Also on the synergy side of things, on the direct connectivity that you will offer for MessageMedia, direct connection, how important is this for MessageMedia and from a competitive point of view? Thank you.
On the synergies there, we haven't quantified the synergies other than to say that they will be reinvested. We have a business relationship today. I think we'd prefer not to go into any details. From a forward-looking point of view, Oscar, do you want to comment a little bit on how these two will relate?
Exactly. The business, it's small. I mean, from this perspective, I think very small. The next question was?
Yes, I think going forward in terms of how we will operate side by side, we have some business relationships today where we support MessageMedia with connectivity, that we can of course expand. Also internationally, of course, we will lower the barrier for MessageMedia to expand with our existing presence. Synergies here are both on the cost and the revenue side.
You know we're quite conservative on revenue synergies and rarely even communicate them. What we're saying here is that there are synergies, yes, we will reinvest them. We see very close opportunities.
They will benefit from our network. We have a stronger network, but it's purely a SaaS and it's a new sale. It's not the main thing that they would need. That's important now. They will benefit more from all the new tech investments that we do in various other areas, and they can leverage in an easier way, which would've been hard to do alone, right? That's how it is.
Perfect, we get back in line. Thank you, and congratulations again.
Your next question comes from the line of Ramil Koria from SEB. Please go ahead. Your line is open.
Yep. Thank you, operator. Seems like I always have too many questions. Let me start with two at least. First off, to be the devil's advocate a tiny bit here, but you've spoken quite a bit about this really strengthening your SME presence. Then again, this will be several separate brands and at the end of the day, I cannot really see the synergy as to you or from MessageMedia to you, so to say. How do you intend to really reap the benefits of this SME presence? Will you funnel SME Sinch customers today to the MessageMedia platform? Is there anything I'm missing?
No, is the short answer. Of course, that will happen a bit, no is the short answer. This is more expanding the addressable market so we cover the full CCaaS market. That's what this is about. Not really about driving customers from one player to another, because an SMB will typically stay an SMB. It's relatively seldom that the hairdresser on the corner becomes Bank of America, right? It's more expanding addressable markets and adding another growth engine, diversifying, than funneling customers in between. Of course, in the general development of new technology, you can deploy that technology at more customers. I would love to put the conversation API that we have out to the SMB market, driving them more into WhatsApp, et cetera. It's more on that level than moving customers in between.
That's clear. My second question relates to that. You're moving up the stack, the way I see it at least. When Twilio did the same thing, a lot of questions were asked about the relationship with Zendesk and potential or the risk of competing with partners and customers. First off, would you concur that you're moving up the stack? Secondly, have you done the analysis as to what some of your partners and customers will say?
Yes. I'll just add one comment to my latest answer. The way I see there's really good addition of competence is also in the online go-to-market rights. They really refine their model of online go-to-market website and et cetera. I think Sinch will learn a lot from that, even though it's not the same customers, just seeing the models, knowing exactly what it is and replicating the models in other areas, I think it's a very strong addition to us. There you see the synergy on the other end. It's not like something we would count or talk, but it's really having a competence internally improving is very good. In terms of moving upstack, yes, I confirm that this is moving upstack in the SMB segment. What people are buying is the functionality of the SaaS or web platform. Definitely that's what they're buying.
We have done the analysis on our customers, and we think that's relatively small. Yes, there are. We have some customers in the segment, but we go through it with all of our regional leaders, and they don't think that's a material factor. Therefore, we think that is good. We also seen other companies acquiring those type of customers in Europe. If you have those customers and then they get acquired by a competitor, well, you don't have them anymore. That has actually been one of the reasons to our growth having been lower in Europe because our customers got acquired by competition and therefore not selling to us anymore. That's been one of the issues before. No, we don't see a big losing customers there. It's a little bit, but not in a material way, in a strong way.
On the competing with Zendesk, no, I don't see this as being competitive with Zendesk. I think Twilio Flex is much more competitive with a CCaaS way. That's a deep CCaaS, a contact center in the cloud. That's what it is, right? This is some self-serve customer engagement customers for SMB, right? That's not really what Zendesk is doing. They're more kind of a deeper CCaaS solution.
Right. As a brief follow-up, if I may just, does this mean that you won't go up the stack on the enterprise side, or is that the way I should read this?
No. We believe our strategy is very clear. It's connectivity and SaaS value add.
We build hard on the connectivity layer on the enterprise side. This moves us up the stack in the SMB, but we're working hard with organic and the investments we've done in Chatlayer, myElefant, Vehicle, and a couple of others to move up the stack on the enterprise side as well. We're definitely seeing us being able to offer much higher up stack services in enterprise as well. We can utilize our broad network of customers on the connectivity and then move up the stacks because they simply want more services from us.
I think what we can add here as well is that these different type of customers have a different tech stack, current tech stack before they look to engage with our customers. That means, for an SMB, the attraction of having one platform which handles a broad set of functionalities is very high, right? You have most of your things fulfilled with one platform. When you sell to the enterprise, you would have a more complex IT landscape where there are best-of-breed solutions for various different areas, right? That means that it's normal for us when we address the enterprise to come in with some parts, and some parts they'll have from other vendors, right? You really need to be best of breed when you sell to the enterprise, right? For SMB, it's slightly different. It's about the totality of your total platform, right?
Perhaps that helps to puzzle it together.
It does. Thank you so much.
I think before we take the next question from the audio call. No, sorry. Let's take the next question from the conference call, operator.
Okay, no problem, sir. Your next question comes from the line of Fredrik Stenkil from Nordea. Please go ahead. Your line is open.
Hi, good afternoon. Thanks for taking my question. One quick one on the EBITDA margin for MessageMedia, 34%. You did say you will reinvest cost synergies, should we expect the 34% level to be roughly where you'll try to keep this business, or will you go below that in order to grow faster?
Hi, Fredrik. Thanks for the question. I think, the way we should interpret that is that as we said, we're seeing first of all, that this segment is a very profitable segment. I think that is super interesting for us. This is more profitable than the large enterprise segment that we are used to working with, which is great. We're opening up our access to the SMB segment globally, through the MessageMedia platform, which we see as a long-term driver of margin upwards. The second thing, of course, as we said, is that even if we're not quantifying synergies in this case, we will see some synergies, sort of on common platforms. We will also see some revenue synergies going forward, expecting to leverage on both the global scale of Sinch, but also the access to our investments in conversational messaging.
The benefits accruing from those synergies, we plan to reinvest. We do expect margins to not worsen going ahead. That is our view.
Okay, thanks. If I could ask, if MessageMedia were to start doing bolt-on M&As of their own, what's your thinking around handling the brands? Do you have three brands and the legacy brands today? Say they would acquire something, would that be put into like ClickSend, SimpleTexting or MessageMedia, or would you leave them as they are? How should we think around that?
This is, and we see that this is not the only company we have looked at in this market, right? We have over the years, we know a lot of players in this industry, and we regularly speak to them, and then we learn the market as well. This market is a multi-brand market, right? You need multiple brands to cover different personas, and you have very strong online strength in the various brands. Typically, players in this area, they keep a multi-brand strategy. Therefore, yes, I believe they will keep some of them, and they will integrate some of them, and those decisions will be made by MessageMedia as we go along in such case. The really strong thing with MessageMedia, which I think is standout in this market, is that they have one platform handling multiple brands.
That we have never seen any other player to do. That's why we believe these are the company that can cost efficiently win in this market on a global level. If that would not have been the case, we would've been much more negative, but we saw that standout being done, an investment being done on the platform over many years to do that. That's super strong with this company.
Just to complement that, Fredrik, just to give an example of the strength of platform, this is also a company that's moving towards subscription revenues. I think it's on our presentation. Over time, they've built about a quarter of the revenue base now coming through a subscription. That's a strong trend that we hope we can continue to get going well.
Okay, excellent. If I may, just one quick last one. The integrations like HubSpot and Shopify, how much of sales is that roughly?
We haven't quantified that, and I don't think we will. I think what we can say is it's a very important part of the go-to market.
Of course, it's a key attraction for the SMB buyer because it makes time to value shorter ultimately, right? You get to your wanted business objective very rapidly, and you're able to work with the other tools that you have out of the box, right? We haven't quantified how much.
Okay, thanks.
Operator, before we take the next question, we got a question from the webcast that I'll pitch in here to my colleagues. Ryan Koontz asks us, "I think of the SMB market as very highly fractured. How do you handle the costs of integrations given the fractured platform usage?
I can take that. We have looked at that already, what MessageMedia has done, and that's one of the key attractiveness on this market that I see. They have a model. They've integrated six or seven brands to their platform, and they have a model. They measure the cost, they know how much the cost is, and they do it very cost efficiently. We know what the past number of transactions have been costing, and we think that's at an attractive level. Therefore, we think that is highly possible with this acquisition, but not possible with a lot of other players in the market.
Clear. Operator, any more questions?
Yes, sir. We've got two more questions over the phone lines. Another question comes from the line of Stefan Gauffin from DNB. Please go ahead. Your line is open.
Yes, hello. Coming back a little bit to some previous questions. As I understand, this will be run totally separate, and you will not integrate the platforms. Just to understand why this acquisition is important to win on a global level, given that it's a totally different market that you address, or is this more you enter a new growth leg and diversify your offering? I have understood that you have some technology synergies, et cetera, but it seems fairly small synergies.
Well, no, you're correct. This is adding or increasing addressable market in a very large segment, yes. We believe, it's not adding lots of functionality to our enterprise customers. If we only want to focus on enterprise customers, you would not do this transaction. We believe if we have the goal to win in CPaaS on a global level, we need to address the major segments. That will drive the size and we can prove and do better on data, et cetera. We also believe that it's very good for our shareholders because this segment is very large, highly profitable and grow at very high rates and gives us a lot of diversification. We think it's a good addition to it. It's a little bit like a car company saying, "Do I want to address the SUV market versus the normal car market?
Is that a good strategy or not? Many car companies select to address both markets because it's just profitable to do so, and it addresses their growth options.
I think another aspect to add is that from the end customer point of view, it's very clear that this is one market, right? Being able to engage with a business, whether it's large or small, through interactive messaging is super appreciated, still relatively low penetrated and rapidly growing. Of course, at Sinch, when we get inbound requests from relatively small companies, we haven't historically been particularly well set up to serve them, even if we get those types of questions, right? We've seen this demand from a very closely adjacent segment, which ultimately is the same market from the end user point of view.
I should add again, the online side, adding a very strong online go-to-market with proven models, proven in many markets from people who have done that at scale will benefit us in the enterprise go-to-market in a relatively large way, because we're moving that direction, right? We come from a selling to the very large customers and moving down and moving more to an online base. Having that internally will accelerate the enterprise side move into a stronger go-to-market model, which I think is very good potential. From that side, doesn't only think about product, but think about the go-to-market in this model as well.
Yes. That's good. Can I just ask, is everything here when we model this, will that be included in the messaging segment?
Yes, that is correct.
Yes. Okay, perfect. Thank you.
Sir, we've got a follow-up question, comes from the line of Daniel Djurberg. Please go ahead.
Thanks so much. In fact, Stefan just asked my question on where it was going to be fully consolidated. I can ask you when I have the opportunity, if you can give a comment on the status on the Inteliquent deal process and also the consolidation of the merger work with Wavy and SDI. It would be great to just to get your view right now on the progress. Thank you.
Yeah. Inteliquent status, the competition and the approval from the regulatory bodies on the telecom operator side. The competition, we applied, we didn't get response. We see that as going through the anti-competitive hurdles. That was expected. We're in two different markets. The telecom operator, we are significantly deep to all the states, and we've gotten all the big ones in and the long-ones in. We're still projecting a late H2 close. There's always some risk in this, but that's what we're projecting, and we see very limited risk, maybe a little bit on the timing, but risk level very low according to our lawyers. On the integration side, we are on SDI and Wavy. SDI and Wavy, we are integrating the tools. Operationally, SDI fully integrated. You can't say who is who or who comes from what. The go-to-market is fully integrated.
The regional teams are fully integrated. We have SDI leaders leading various countries in Europe, et cetera, so you can't pull them apart. Organizationally, they're very integrated. We're doing the same with Wavy now, moving their developers over to our core platform who are taking up these images. I'm very happy with that. I'm seeing great injections from very good people with a lot of competence into our teams. On the platform migration side, we have spec'd it out. We have a plan. We listed every single customer, and we said, "This customer needs these features or these things in order to migrate," and we grouped them by cohorts, and then we have put the plan to R&D and operations and say, "All right, when you deliver XYZ, we'll move cohort B.
When you deliver SDI, we know cohort two. We go on there. We're right now in the development phase of these features, and over the coming quarters, there will be a release of features, and then we move cohort over cohort. I would say we're on track with that. It's always more work, but in general on track. Inteliquent not been closed, but we have good discussions. We see good potential in the market. Their customers want to buy stuff from us. Our customers want to buy stuff from them. Clearly see from the largest customers and our largest account managers to the big tech, super good response to the big enterprises or the X as you just said, really good response from that acquisition.
Obviously, we're still operating as separate entities, but we're very, very happy about that acquisition and what we're doing, and we're going through the planning phases and going well.
Perfect. Sounds highly promising. Thank you, and have a great summer.
Thank you.
Operator, can we take the last question for the call? Thank you.
Okay. Sir, our follow-up question comes from the line of Predrag Savinovic. Please go ahead, your line is open.
Thank you very much. A follow-up on the brands, the question that Fredrik asked. You said it's common with local brands, and it sounds like you intend to keep MessageMedia and the respective brands over time. Do you think this is the case in the future? Would you like to consolidate it, say, to Sinch, which is quite strong and rather centralized marketing efforts, and then we get Sinch being recognized in different forms of studies as market leader, et cetera. Could that be better over time? What's your thinking there in the long-term perspective?
Well, we see that generally up to MessageMedia and their decision. What you do need to realize in this market is you want the brands to be very focused because that's part of the simplicity. You want them to do simple A and B testing, et cetera, on their brands to have the flexibility to drive the online and online discussion, online conversion. In general, up to MessageMedia, and we do believe multi-brand is good here, but in general, up to them, we hold it on them.
Okay.
All right.
Thank you.
Thank you very much, everyone, for engaging with us and participating in the call today. With that, we wrap it up. Any last final remarks after ?
No, thank you for listening. To us, having been in this market a long time, this is a very logical addition. It's expanding the addressable market strongly, adding another growth engine to us with very strong financials, then adding a strong online go-to-market motions, which we can utilize and learn from in many different areas. We think it's a very good addition to Sinch, and it will make it easier for us to get to the scale and get to the customers and get the usage that we need in many different segments in order to win in the total CPaaS market.
All right. That concludes the call. Thank you very much.
Thank you.
Thank you.
This is our conference for today. Thank you for participating. You may now all disconnect. Speakers, please stand by.