M&A Announcement

Jun 9, 2021

Good day and thank you for standing by. Welcome to Investor Update. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I would like to hand the conference over to your first speaker today, Thomas Heath. Please go ahead, sir. Thank you, operator. Warmly welcome, everyone, to this conference call with Cinch AB, where we are announcing the acquisition of Message Media. My name is Thomas Heek. I'm Chief Strategy Officer and Head of Investor Relations. And with me, Well, for the first time in a long time, in the same room even, our CFO, Roshan Saldanha and our CEO, Oskar Werner. Without opening remarks, I'll hand the word over to Oscar. Thank you, Thomas. Yes, it's actually pretty amazing. First time we meet in last 18 months, I think, on the 3 of us. So that's actually amazing. So that's happy to do that as well. But that's not the main event of the day. We are focusing on the recent acquisition of Message Media, and I thank you all for participating in the call. Operator, if you go over to Slide 2, please. So this is Cinch, in a nutshell, so revenue, SEK 9,700,000,000 revenue in the past 12 months. Adjusted EBITDA, 9.68 Again, past 12 months, significantly higher, of course, if you include all the acquisitions we have done. 2,100 people, if you would include Message Media and Intelliquent, it would be 3,200 something like that, 3,100. We do customer engagement through mobile technology. So anybody who wants to do any enterprise wants to do a video call with With our customers, we provide a communication platform that handles all of that. We do $152,000,000,000 engagements per year, that is $16,000,000,000 per human on the planet. So very deep market, and we were the market If you take the biggest companies on the West Coast, 8% are customers. We stand out in the market by High quality international service delivery, so being able to deliver on a global level. This market is fashionately always. It's Got a 100% consumer penetration. I 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 hitting app or The market is very large, and I think these two recent acquisitions really show the power and the depth And the breadth of these markets, if I would count the total market, I'd probably get to a $60,000,000,000 to $80,000,000,000 if you count the total And these truck acquisitions show that in 2 different segments where we truly complement Cinch in order to address the main areas and main segments of this market. Since it's been profitable since our foundation in 2,008, Found around $10,000 in share capital and has not needed any money from inception to fund its business. And you can see that in those recent acquisitions as well. It's highly profitable companies that we do acquire, and it will add to the EBITDA, we do and then continue the profitable journey. All right. Operator, Slide 3, please. So we've got a track record of profitable growth. We have an organic growth agenda and, as you know, a M and A driven growth agenda. We have grown consistently with some 25%, 30%, 20% over the last Quarter on quarter over the last several years. On top of that, we do we have an M and A agenda to grow Roughly the same level if you take on average the last 5 years. We've grown something like 25% gross profit per share. So in total growth being 50% gross profit per share roundabout on average the last 5 years. And we really do see these 2 growth avenues complementing each other. As you've seen, we have been More active on the M and 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 2 players in this very large market. If we do that, we think it's going to be a very good return to our shareholders. We on the slide, you can see the impact of the latest sessions on ACL, FTI, WAVI, Intelliquent and now Message Media, both on the gross profit and the adjusted EBITDA level. And you see The power of both Intelliquent and Message Media on gross profit and it has 3rd EBITDA. These are Major transactions and big transactions, and I think they just show how big and how broad this market is. And to us, it's very, very logical. We're just adding on the one hand, we're adding voice, very logical part of the CPaaS market. Any enterprise to the SMB markets, which we have previously not served. But as you can see, it's a very large and very attractive market. So that's the logic in a nutshell. Operator, if you go to Slide 3, please or 4, sorry. So what are we doing here? Well, to us, it's very logical, and it's something that we have known exists In this market for a long time. So basically, this market is comprised of 3 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 sell 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, but you can address the developer persona via a web and online go to market model. And the third one is Focusing on the small and medium business segment, the SME or SMB segment. Finch has Previously selected to focus on the enterprise and the developer side purely because we Didn't think that we organically we had to focus organically and didn't think that we organically had the bandwidth to focus on the SMB segment. But we always known that this has been an attractive market segment. So We always seen, right, at some point in time, we will address it just because it is a large portion of this market with a very attractive with a drive traffic profitability profile and growth profile. Now we saw what we believe is the best Company in this space, Message Media, running a structured process. And when we I 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 Cinch. And therefore, we made this acquisition, and we see it as a strong addition of a jet and other 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. And the dentist on the corner want to sign up online and get a service for text messaging or WhatsApp to do reminders for to reducing no shows in the dentist practice. So 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 €100 a month in principle. So they add a they buy it's a SaaS buy where they buy the actual platform. It's Prepaid model where they pay by their credit card and the go to market model is 100% online because we can't afford to have a salesperson selling on to This size of the 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. And that's the segment that we are now adding All right. Operator, let's go to next slide please, Slide 5. And This market is sometimes called the turnkey consumer engagement markets. And 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. And consumer engagement very much aligned with us. I mean, you want to use the mobile channel to engage your customers. So That's what it is. The market reports of the turnkey consumer engagement market estimates this market to be between $9,000,000,000 to $13,000,000,000 alone. So we're adding From a market size perspective, we're addressing the market. We're increasing our addressable market with $9,000,000,000 to $13,000,000,000 And we're acquiring what we believe is the number one player in that market. This market, this segment of the CPaaS market is So as you can see, it's a strong growth engine. Message Media is based out of Australia, but their main growth focus is in the U. S. That's where they're market that is dominated by SMB. And 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. So It's driving the penetration gain, and we have a long way to drive growth. So 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, right? We acquire Hessia Media in order to address All the SMBs on a global basis, but we're obviously focusing on U. S. As product number 1 and Europe as product number 2 was the 2 biggest growth engines in the short term. But the charter, if you will, for MessageMe It's win in the SMB segment on a global level. And the number of enterprises to address are all the Good. Operator, next slide please. We're on Slide 6. So this is truly, I mean, SaaS products focused on ease of use. And so Mesobedia has a web based SaaS Application Suite is supporting outbound messaging and some conversational use cases. It's optimized truly for ease of use and quick time to value As opposed to Singe, which is best cost quality when you are at volume. So think a big bank, they buy Messaging in one way. And the hairdresser on the corner, they buy messaging much more on getting started quickly and ease of use. And the actual cost per transaction is less important in this area, which you can also see on the you can see in the gross margin profile Gross margin profile from Message Media being higher than Cinch because headrests on the corner has lower purchasing power than the big banks, Subscription based price model, it's a single platform supporting multiple brands. So they have acquired a couple of companies and then have a platform to integrate this SMB players or other SMB targets And one platform managing multiple brands. This is good for us because in some of our acquisitions, we have 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. I'll attach a set of preconfigured 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. So an e tailer, as an SMB e tailer, have a 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. And then Message Media has a module there for reengaging those Consumers basically by sending a text or a WhatsApp message saying, hey, what happened? Can we help? And then they can reduce the shopping cart abandonment rate For that e tailer. And as you can understand, reducing that is very, very powerful for most e tailers. So Now you can see an example of the cloud of the integrations in various cloud platforms that we have talked about on Adobe and Salesforce. Message Media are doing as well, but again, then focused on the SMB segment. Operator, Slide number 7, please. So this is very much a continuation of our profit playbook for profitable growth Connectivity layer around software as a service, this acquisition is geared much more toward software as a service layer. The SMB market is buying connectivity, but the key thing that they're buying is ease of use of the web platform and getting started quickly. And truly, it's the kind of the marketing online marketing machine and the ease of use that makes you win here because the local hairdresser, If a message costs if there are 20 messages a week, costs 10% more, it really doesn't it really that's not really what the purchasing decision is about. So this is a it can now step up into the SaaS area. All right. Next slide please, operator, Slide number 8. So to can only go to market and scale and profitability, we Thomas had to fight a little bit With this one, for these acquisitions, we're actually rejigging this slide a little bit. And the reason is simple that Memphis Media, they ticked both boxes. It's both scale and profitability, as you can see, with a high profitability and high gross margin and high scale. So 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 a Adding an online go to market model. So this truly represents an acquisition that ticks both boxes. So therefore, we or Thomas, thank you, have rejigged this slide a little bit to try to represent this in a better way. So you see on the right, you see Intelliquent and Message Media. So in Intelliquent, we got a voice platform, which is the technology piece of them, but it also does a very large scale and profitability scale and profitability play in North America. And Message Media adds an SME SaaS product and is an AFFO SaaS product and Good market and online go to markets. And it's adding U. S. A. And Australia and a little bit of Europe in scale and profitability, that's the market where it's focused on. And as you can see, the financials are very strong with Vasapedia. All right. Operator, if we go to Slide 10, please. So what is it, leading provider as a side service for mobile engagement to SMB segments? More than 60,000 customers sending some 5,000,000,000 mobile messages per year. The 9 successful acquisitions in the past from Message Media and some 350 employees, Headquarters in Melbourne, offices in the U. S, in Europe and a couple of other places. So but Australia and United States The rationale is very straightforward to us being in the market, Expand the addressable markets and positions in for growth in the SMB segment. Add a Strong digital or online customer acquisition engine winning 1500 customers per month. So you see this is High, high the high number of customers, very, very automated online go to market. We Expand the scope of future M and A with a team that has done it before to handle any Smaller scale M and A, which we today have not been able to do, and we will run this as a business unit, so they will take care of that. So basically, Low impact on the integration to our team because we acquired the leading player and a team that works today. And it's an accretive deal that fits both the scaling profitability and technology go to market criteria. It's As an Evolux part of Cinch, we'll keep the current management and keep the current team intact. Integration costs $8,000,000 over 18 months, and Message Media will benefit from our global network and our Investments in new technology, which becomes available to them. And there will be savings, but it will be reinvested in expansions, levering Cinch prices in 47 Roshan, will you take the financials on this slide? Sure. Thanks, Oscar. Hi, everybody. So briefly, Message Media has we're acquiring them At an enterprise value of $1,300,000,000 on a cash and debt free basis, of which $1,100,000,000 It's paid in cash and $200,000,000 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 twenty twenty one. Message Media had revenues of $151,000,000 and gross profit of $94,000,000 and adjusted EBITDA of $51,000,000 expected in the 12 months up until June 2021 and they have an underlying year on year revenue growth of around 22% over the past 2 years with a higher growth in the U. S. At 40%. Oscar? Thank you. So operator, if you go to next slide, please, Slide 11. We love this chart with Australia being Of local views, and I think this is one. So we just use this view for this presentation. So you see 28,000 customers with a 62% gross profit in Australia and the higher gross profit, the notes, but it's Much more of the SaaS play and focus more on the application than the actual method is as such. 25,000 customers with 27% gross profit and 40% year on year growth in the U. S. So U. S. Obviously being The number one growth engine going forward, the message media number 2 is moving to the U. S. In order to focus on the growth here. So we're really focused on driving 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 Some 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. So that's all in the playbook. You see there on the right hand side, you see We've got users, it's 100,000 per month. Leads and trials becomes 1,000. Paying customers convert some above 20%. And then returning customers, Basically, returning month after month is 2 thirds of that. So very strong high conversion rate funnel, which they have optimized over many years. And we think that's a very, very strong addition to our go to market. So I'd add such a well tuned go to market channel. And we're acquiring over 1500 net new customers per month. And as us, you can see it's a strong diversification of revenue and Truly adding another growth engine to our strong growth. All right. And Mesopedia on Slide 12, multi brand strategy. So 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 make it very, very good for that persona. I mean, if you know web theory, you just take away everything that The user doesn't need in order to have high conversion rates. Maybe the best example is Google, one line and one of the world's biggest companies, right? And To do this, you can't clog it down with too much information. So they have a couple of brands. Message Media being focused on the mid market customers, Click send on the tech capable buyers. Some overlap here with Twilio, but not direct Competition, but there is some overlap in the tech persona. Simple texting focus on the non technical buyers and then a set of legacy brands Slide number 13, please. And Russian, why don't you take the last three slides? Thank you, Oskar, again. So just To give you a walk through of sort of the development of Cinch 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 form a basis, when I say pro form a, I mean, including the closed acquisitions for an entire period of the year, so 12 months and then also including Intelliquint and Message Media, which are announced but not yet closed acquisitions. As of Q1 2021 on a pro form a basis, Cinch would have had revenues of close to SEK 18,000,000,000, DKK 6,000,000,000 in gross profit and DKK 2,400,000,000 in adjusted EBITDA. These acquisitions have significantly diversified our revenue base and our profit base, just as Oscar said. But in addition to that, they are also improving our margin profile. And on a gross profit margin, On this pro form a basis, looking at the last 12 months, as at Q1 2021, we would have a gross profit margin of 33% And an adjusted EBITDA margin of 14% compared to 26% 10% respectively, stand alone or as reported. Please turn to the next page. Operator, financial leverage, again, just a walk through of where we are As of today, with the announced transaction of Message Media, our financial target or 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 are 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 form a basis, as of Q1 2021, We had a net debt or a leverage position of 1.8x A cash position of 1.8x, including Intelliquent, 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. And including that share issue, we would then have had a cash position of just under 1x. And now if we include the Message Media acquisition, Again, as at Q1 2021, we would have a leverage position of 2.6x. So this is still very much under our leverage target. And in addition to that, we see strong continued possibilities for deleveraging using organic cash generation until closing of Intelliquent and Message Media transactions. Operator, please turn to the next page, Page 15. And again, just to remind us on our financial targets, Our two financing 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. And on the first target, we grew 30% in Q1 2021 measured on Rolling 12 month basis and we have a net cash position of 2.1x on net debt to EBITDA measured on a rolling 12 months basis. So with that, I guess I'd hand back to Thomas to help us through the Q and A. Thank you very much, Rocha. Thank you, Oscar. Operator, we're ready for questions. Just want to remind everyone, please Operator? Thank you, sir. And sir, your first question comes from the line of Pradurath Savinovic from Carnegie. Please go ahead. Your line is open. Thank you, operator. Thank you very much for taking my questions. So very, very interesting acquisition that you announced today. And this bridges your gap to SMEs, which I guess is one of the white spots you had before compared to, Say Twilio or Clivo, the question is, do you feel that Message Media is large and capable enough to fill this GAAP completely on 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? Yes. No, we believe Message Media is the best player in this market on a global level. So yes, we believe they're highly competitive against all of these players. Twilio is not as strong in this market. Anyway, prior to the acquisition of Zipwhip, which they just announced, they focused on the developer persona, not the SMB persona. Zipwhip has a little bit more of what they do have and more of an To be focused, just to be clear on where they are, right? So truly, yes, against Twilio and against Equip, Definitely in a strong position against Plivo and all the other players as well. We believe this is the strongest player globally focusing on these areas. Investments will be run from this P and L, and that's really why we focus On acquiring what we believe is the market leader. So yes, I mean from their own growing adjusted EBITDA of $50,000,000 They will continue to invest organically strongly in this market, but we see no but there's no They will continue on that trajectory. It's our core plan, and we'll run them as a business unit focused on our profits there. But of course, there would be a lot of investment in there. They may decide, of course, to add Smaller local acquisition local acquisitions of local companies doing this in various countries. Yes. But then they have a machine to integrate them within Message Media, right? So we're truly guiding a business unit that can operate these markets. And their very strong statement goal is going to win in the SME market globally, start focusing on Europe, 2nd part of Europe or start focusing on U. S, 2nd part of Europe, And then let's see what we're taking. I think, Fredrik, just as a compliment, right, 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 I think I just want to remind that in Q1, we're still in a ramp up phase in the scale up investments, and of course, that continues during the rest of the year. I think you also see the reason. We see this type of large scale, very good additions. And then we think it's good to take some OpEx in order to be able to manage this, obviously, All right. Very clear. So 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% to 30%, so somewhat above what Message Media has had. You have some benefits to it, right? Yes. I'll try to answer that. I think that the market Growth is an approximation. We do not believe that this has been growing slower than the markets 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 The geographies have some impact here, right? So we think they've been performing very well in a strong market in the different geographies, right? And what you're seeing is a little bit of mix effect. For the future, I think, Oskar, you want to Yes. No, but really, I mean, you see the The Australian business going at one rate because they're very well penetrated. They fine tune their models. And if you look at the U. S. Market, their growth rate is 40%, but the market growth rate is 30%, 35%. So in our perspective and in Europe, it's at similar levels. In our perspective, in the core growth markets, I think that's mainly just growing faster than the 30%, 35% at all. But obviously being well penetrated in Australia and there yet a little bit lower growth. Okay. Thank you very much. Your next question comes from the line of Daniel Burberry from Halesburg Banking. Please go ahead. Your line is open. Thank you, operator, and thank you for taking my question, gentlemen, and congratulations to a really interesting acquisition. My question is first In current relationship between the companies, how a large proportion of sales Today from Cinch, it's a message media, so and also on the synergy side Thanks. On the direct connectivity that you will offer EUR 450,000,000 direct connection, how important is this For Mesos Mihir, yeah, and from a competitive point of view. Thank you. Yes. So on the synergies there, we haven't Quantify 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, if you want to comment a little bit on how these 2 will relate? Exactly. But the business, it's small. I mean, it's from this perspective, I think, very small. The next question was, so I think going forward in terms of How we will operate side by side, we have some business relationship today where we support Message Media with connectivity that we can, of course, Also internationally, of course, we will lower the barriers for Formative Media to expand with our existing presence. So synergies here are both on the cost and the revenue side. You know we're quite conservative on revenue synergies and rarely Ethan communicate them. What we're saying here is that if there are some GCS, we will reinvest them with a great growth opportunity. They will benefit from our network. We have a stronger network, but it's purely a SaaS and it's a new sale, right? So it's not the main thing that they would need. So that's Important now. They will benefit more from all the new tech investments that we do in various other areas. They can leverage in an easier way, which would have been hard to do Alone, right? But that's yes, that's all it. Perfect. I will get back in line. Thank you and congratulations again. Sir, your next question comes from the line of Ramiel Karjal from SEB. Yes. Thank you, operator. It seems like I always have Too many questions, but let me start with 2 at least. So first off, to be the devil's advocate A tiny bit here. But I mean, you've spoken quite a bit about sort of this really strengthening your SME presence. But 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 sort of from message media to you, so to say, how do you intend to really reap the benefits of this SME presence? Will you funnel SME singe customers today to the message media platform? Or is there anything I'm missing? No is the short answer. I mean, of course, that will happen a bit, but no is the short answer. This is More expanding the addressable market, so we cover the full CPaaS market. That's what this is about, not really about driving customers from one player to another because in SMB, we'll typically say in SMB, it's Relatively seldom that the hairdresser on the corner becomes Bank of America, right? So it's more expanding the rest of the market and adding another growth ending diversifying Then funding customers in between. Then of course, in the general development of new technology, you will use the Same. It will become you can deploy that technology in at more customers. I would love to put the conversation API that we have out to the SMB market, Driving them more into WhatsApp, etcetera. But it's more on that level than moving customers in between. That's clear, Oscar. Thank you. And my second question relates to that. I mean, you're moving up the stack And the way I see it at least. And when Twilio did the same thing, a lot of questions were asked about the relationship with Zendesk and sort of the potential or the risk of Competing with partners and customers, have you first of all, would you concur that you're moving up the stack? And secondly, have you done the analysis I'll just add one comment to my latest answer. Where I see there's really good additional competence is also in the online go to market rights. This They really refined their model of online go to market website and etcetera. And I think Cinch 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. So There you see the synergy on the other hand. It's not like something we would count or talk, but it's really having the confidence internally improving the service. In terms of moving upstack, yes, I confirm that this is moving upstack in the SMB segment. Is it true What people are buying is the functionality of the SaaS or Web platform. So definitely, that's what they're buying. We have done the analysis on our customers, and we don't think that's we think that's relatively small. Yes, there are. We have some customers in the segments, but we've gone through it with all of our regional leaders, And they don't think that's a material factor. So therefore, we think that is good. We also see other companies acquiring those type of customers in Europe. And So if you have those customers and then being acquired by a competitor, well, you don't have them anymore. So that has actually been one of the reasons to our Growth have been lower in Europe because our customers got acquired by competition and therefore not sending to us anymore, right? So I've been one of the issues before. So no, we don't see a big losing customer. There is a little bit, but not in a material way, in a 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 the CCaaS gateway. So that's a contact center in the cloud, that's in principle what it is, right? This is a Self serve SMB customer engagement customer for SMB, right? And that's not really what Zendesk is doing. They're more kind of a deeper Right. 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? Or No. We believe what we I mean, Our strategy is very clear. It's connectivity and SaaS value add. We've been 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 Chatelet, MyElephant vehicle and a couple of others to move up the stack on the enterprise And we're definitely seeing us being able to offer much higher upstack services in enterprise as well. So we can utilize our broad network of customers on I think what we can add here as well is that these different type of customers have a slightly they have a different tech stack, current tech stack before they look to engage with their customers. And that means for an SMB, the attraction of having one platform, which handles a broad set of functionalities is very high, Right, Kukiyom. And you have most of your things fulfilled with one platform. When you sell to the enterprise, you will have a more complex IT landscape Where there are best of breed solutions for various different areas, right? And that means that it's normal for us when we address the enterprise Come in with some parts and some parts they'll have from other vendors, right? And 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? So perhaps that helps to puzzle it together. Thank you so much. I think before we take the next question From the audio call, I do believe we have I do believe 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 Frederic Stencil from Nordea. Please go ahead. Your line is open. So one quick one on the EBITDA margin for Message Media, 34%. You did say you will reinvest cost synergies, but should we expect the 34% level to be Roughly where you'll try to keep this business? Or will you go sort of below that in order to grow faster? Hi, Frederic. Thanks for the question. I think the way we should interpret that is that, as we said, I mean, We're seeing, 1st of all, that this segment is a very profitable segment. I think that is super interesting for us. And This is more profitable than sort of than the large enterprise segment that we are used to working with, which is great. And we're opening up our access to the SMB segment globally through the Message Media platform, which we see as a long term driver of margin upwards. The second thing, of course, as we've said is that even if we're not quantifying synergies in this case, we will see some synergies On common platforms, we will also see some revenue synergies going forward, expecting to leverage on Both the global scale of Cinch, but also the access to our investments in conversational messaging And the benefits accruing from those synergies, we plan to reinvest. So we do expect margins to not worsen going ahead. That is our view. Okay, thanks. And then if I can ask, if Message Media were to start doing kind of bolt on M and As of their own, What's your thinking around kind of handling the brands? Do you have 3 brands and the legacy brands today? Say they would acquire something, Would that be put into like clicks on simple texting or message media? Or would you kind of leave them as they are? How should we think around that? So this is and we see that this is not the only company we have looked up at this in this market, right? So we have Over the years, we know a lot of players in this industry, and we regularly speak to them, and then you learn the markets after all. So 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. So Typically, players in this area, they keep a multigram strategy. So therefore, yes, I believe them to keep some of I believe they will keep Some of them, and they will integrate some of them, and that will be made but those decisions will be made by Message Media as we go along in such case. The really strong thing with Mesopedia, which I think is stand out 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 And win in this market on a global level. So if that would not have been the case, we would have been much more negative. But we saw that stand out Being done and investment team being done on the platform over many years to do that. And that's super, super strong with this company. Just to complement that, Frederic, I mean, 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. And over time, they've built about a quarter of the revenue base now coming through a subscription. So That's a strong trend that we hope we can continue to get it to bring back. Okay. If I may, just one quick last one. The integrations like HubSpot and Shopify, how much of sales is that roughly? Yes. So we haven't quantified that, and I don't think we will. I think what we can say is it's It's a very important part of the go to market. And 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. But we haven't quantified how much. Okeydoke. 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 Koons 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. All right. I can take that. So we have looked at our review of what Message Media has done, and That's one of the key attractiveness on this market that I see. They have a model. They have integrated 6 or 7 brands To their platform, and they have a model, they measure their cost, they know how much the cost is, and they do it very cost efficiently. And so we know what number of transactions has been costing, and we think that's at an attractive level. So therefore, we think that is Highly possible with this acquisition, but not possible with all other players in the market. Clear. Operator, any more questions? Yes, sir. We've got 3 more questions over the phone lines. Another question comes from the line of Stephane Galpin from DNB. Please go ahead. Your line is open. Yes, hello. Coming back a little bit to some previous And 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. Just I have understood that you have Some technology synergies, etcetera, but it seems fairly small synergies. Well, no, you're correct. This is adding For increasing addressable market with a large in a very large segment, yes. We believe that in but it's not adding lots of functionality to our enterprise So if we only want to focus on enterprise customers, you would not think this transaction is You will not do this transaction. But we believe if we have the goal to win in CPaaS on a global level, we need to address the major Segment because that will drive the size and we can still can do better on the investment, etcetera. We also believe that it's very, very good for our shareholders because this segment is very large, highly profitable and grow at very, 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? And many company many car companies select to address both markets Because it's just profitable to do so and it addresses the growth option. I think another one aspect to add is that from the end customer point of view, It's very clear that this is one market, right? So being able to engage with a business, whether it's large or small, Through interactive messaging, it's super appreciated, not Still relatively low penetrated and rapidly growing. And of course, at Cinch, 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? So we've seen this demand from a very closely adjacent segment, which is ultimately is the same market from the end user point of view. I should add again, I mean, the online side, I mean, adding a very strong online order market with proven models proven in many markets from people who have done that at scale We'll benefit us in the enterprise go to market in a relatively large way because we're moving that direction, right? We come from selling to the very large customers Moving down and moving more to an online data, having that internally will accelerate our Or the enterprise side move into a stronger go to market model, which I think is very, very good for Finjan. So on that side, let's not only think about the product, but think about Go to market in this model, yes. Yes. That's good. Can I just add, is everything here when we model this, Is everything will that be included in the messaging segment? Yes, that is correct. That is correct. Yes. Okay, perfect. Thank you. Sir, we got a follow-up question comes from the line of Daniel Lorberg. Please go ahead. Your line is open. Thank you so much. In fact, If I just ask my question on where it was going to be consolidated. But I can ask you when I have the opportunity, if you can give Comment on your the status on the Telequent deal process And also the consolidation of the merger work with Weywe and STI, it would be great to just to get Your view right now on the progress? Thank you. Yes. In TeleQua, I mean, status The competition and the approval from the regulatory parties on the telecom oversight, the competition with supply, we didn't get response. So we see that as going through the anti competitive hurdle. And that was expected. We're in 2 different markets. The telecom operator, we are going to submit the gift into all the states, and we've gotten all the big ones in and the long ones in. So We're still projecting late H2 close. There's always some risk in this, but that's what we're projecting. And it's We see very limited risk, maybe a little bit on the timing, but risk level very low according to our lawyers. Then we on the integration side, we are on SDI and WAVI and SDI and WAVI. We are Integrating the teams, operational 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 STI leaders leading various countries in Europe, etcetera. So you can't pull them apart. So organizationally, we're very integrated. We're doing the same with RavenHawk, moving their developers over to our core platform or taking out the synergies. So we're doing the organizational side. On the traffic, and 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, you We have spec ed 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 group them by cohorts and then we have to put the plant R and D in operations and say, right, when you deliver XYZ, we'll move When you believe our Df Window cohort go to, and we go on there. And 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. And I would say we're on track with that. It's always more work, but in general, on track. Intelligents, MacClean 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. So clear this Yes. From the largest customers and our largest account managers to the big take, super good response to the big enterprises. So we'll see, as you can say, Really good response from that acquisition. Obviously, we're still operating at separate entities, but we're very, very happy about that acquisition We're doing and we're doing we're going through the planning phases and going well. Perfect. Sounds highly promising. Thank you and have a great summer. Thank you. Thank you. Operator, can we take the last question for the call? Thank you. Okay, sir. A follow-up question comes from the line of Pedreg Savinovic, please go ahead. Your line is open. Thank you very much. A follow-up on the brands to a question that Frederic asked. You said it's common with local brands, and it sounds like you intend to keep Message Media and the respective brands over time. Do you Think this is the case in the future? Would you like to consolidate it, say, to Cinch, which is quite strong and rather centralized marketing efforts and you get Since being recognized in different forms of studies as market leader, etcetera, shouldn't Could that be better over time? What's your thinking there in the long term perspective? Well, we see that generally up to Message Media 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, etcetera, on their brands to have the flexibility to drive the online discussion or online conversion, but in general, up to message media. And we do believe that Mastercard is good here, but in general, not to them over the long Okay. All right. Thank you very much, everyone, for engaging with us and participating in the call today. And with that, we wrap it up. Any last final remarks, Oscar? No, thank you for listening. To us, having been in this market a long time, this is a very logical addition, Expanding the addressable market strongly, adding another growth engine to us with very strong financials And 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 Cinch, 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 seat belt market. All right. That concludes the call. Thank you very much. Thank you. Thank you. This concludes our conference for today. Thank you for participating. You may now all disconnect. Speakers, please stand by.