Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Sinch Investor Update. At this time, all participants are in listen only mode. There'll be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you'll need to press star and one on your telephone and wait for your name to be announced. I must advise you that the conference is being recorded today, Thursday, the 26th of September, 2019. I would now like to hand the conference over to your speaker today, Thomas Heath. Please go ahead.
Thank you, operator. Good morning and welcome everyone to this investor update with Sinch. We're very glad to announce the acquisition of myElefant. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. I'll be around for any questions. Right now I want to hand the word over to our CEO, Oscar Werner. Oscar?
Thanks a lot, Thomas. Yes, we are super happy to today announce the acquisition of myElefant. It's a French mobile engagement company, which complements us very well and will help us on our journey going forward. Can I have the next slide, please? This is now showing just an overview of what Sinch is. We're a SEK 4.4 billion company, and doing a SEK 400 million adjusted EBITDA plus over the last 12 months. We're running a customer engagement through mobile technology, basically using mobile technology to engage customers, or to help enterprises engage their customers in various forms. It can be text messaging, it can be voice and video, and it can be advanced messaging formats such as personalized video.
As you know, if you listened in to our calls for a couple of months, we are doing this all the way from the hairdresser on the corner up to the largest companies. We're serving eight out of 10 of the largest U.S. tech companies. We're now going to talk about how this acquisition helps us on this journey going forward. Can I have the next slide, please? As we have described before, there's a technology evolution in the messaging market, and we're basically going from straightforward text notifications, where we're sending out a text string. Can be, "Don't be late for a doctor's appointment," or, "Here is your boarding pass," or, "Your flight is canceled," or it's a bank statement or something like that. I think you have all experienced those type messages.
It's a SEK 17 billion market globally, and we are the global leader in that market. That market is now going through a very fundamental, and to us, exciting change. That is, it's moving from straight text messaging to what we call rich media messaging, so that is you're able to send voice or send video or pictures via new formats of messaging. The next stage is going into what we call conversational messaging, which is not only can you add more richer media in the messages, but you can also start a conversation with your brand.
You can respond to the message sent out, and you can reach a chatbot for the brand, and you can have a conversation with the brand, if the chatbot cannot answer, you can be handed over to the customer care operator at the brand. We believe that this journey, obviously, being able to both have a conversation with the brand and having voice and video in the messages will increase the value of the services to consumers and increase the value of the services to enterprises, will therefore drive a strong growth in our market for the years to come. The acquisition of myElefant plays very nicely into us taking a good position in this newer and larger and faster-growing market. Can I have the next slide, please?
We have identified where the CPaaS or communication platform as a service, where that is relevant through the customer journey. It's relevant in a couple of areas. The first one is revenue generation, where it's people doing various forms of communication to their customers in order to increase revenue. That may be reducing churn or impacting other formal metrics. It is also used for service enablement, which is maybe it's a one-time password, or when you signed up for one of these big internet service. I'm sure a lot of you have gotten a password sent via text message. That's an example of the service enablement category. The other category, which is growing very fast right now, is to use mobile technology to handle customer care. Basically having a chat with your customers via mobile messaging formats.
That's another area which is growing very fast right now. Can I have the next slide, please? As we've communicated before, there is very strong growth in our market, and the growth is in two categories. The basic category is where we play and are very large, is the connectivity layer. That is basically making sure the message is delivered to customers. We are making sure the voice call is terminated to a customer so the enterprise can reach the consumer. That is, in its simplest form, just, if you will, making the call or making the video call or delivering the message. There you differentiate between superior quality, scale, and reach, and that's the most basic form our market. That market is growing.
Like I said, the size of that position in the messaging market is around about SEK 17 billion. It's growing at the rate of, say, 10%-15% per year. Then we have on top of that, we have a faster-growing market, which is a software as a service or a SaaS market, where you add more software and more services on top of the connectivity in order to provide a better service to the brands. It may be an advanced functionality up in the web so somebody can create a rich media message. It may be other forms of software up in the cloud that makes it easier for the enterprises to consume these type of services. That market is growing very fast. You probably have a growth rate of around about 50% per year.
As the market moves into rich media messaging, this layer is much more needed, because it's more complex for an enterprise to create a video or a picture message than just sending a text string. It is more complex for an enterprise to have a conversation with a consumer than it is to send off a one-off notification. Therefore, they need more software for companies like us. Typically, you can charge one charge for the connectivity as such, that is delivering the message, and you can charge an additional SaaS fee for the software as a service. That is exactly what this acquisition is targeting. All right. Can I have the next slide, please? With that, I would like to hand over to Roshan, who will speak about the rationale of this acquisition.
Thank you, Oscar. Good morning to everyone on the call. This is Roshan Saldanha, CFO. I'm very excited to be here as we present our first acquisition in 2019. Before I do that, I'll talk a little bit about the overall M&A strategy for Sinch. Can I have the next slide, please? Leveraging M&A to meet strategic objectives. We look for acquisitions and mergers primarily within two strategic domains. The first one being to augment our technological platform and our go-to-market capabilities. The second, to add scale and of course, profitability over time. Within technology and go-to-market, we're looking for a complementary technology that fits our strategic product roadmap in all of the areas: text notifications, rich media messaging, and conversational messaging. Our go-to-market ability needs to be augmented in relevant products and geographies.
We have strong presence in key markets in Europe and in the U.S., we'll need to add that, we'll also need to add capabilities in terms of being able to sell more to enterprise customers. We also look to add increased software value add, this is increasing the SaaS component of our revenues and our margins, which then leads to higher gross margins overall for the company. Of course, creating future growth drivers to meet our growth targets for the company. As you know, we have a growth target to increase adjusted EBITDA per share with 20% over time. Then on the scale and profitability, we want to increase and acquire sticky customer relationships. A key component in our business is, of course, the direct operator connections.
Sinch has a strong platform of operator connections globally. We want to keep adding to that in new markets. This, of course, enables us to acquire more traffic from our customers, especially from our larger global customers into those markets. Again, driving growth and profitability. We also want to extract synergies, of course. We have a very scalable central platform that currently is delivering more than 30 billion engagements. We believe that that can be scaled further, and we can extract synergies by transferring traffic to Sinch's technology platform. At the same time, we look upon acquisitions, especially in the scale and profitability area, as needing to be EBITDA accretive, and therefore acquiring profit at the valuation below our own. Can I have the next slide, please? Strategic acquisitions. CLX, of course, was founded in Stockholm in 2008, rebranded to Sinch in 2019.
During this time, we have made a number of acquisitions. We've tried to show on this slide that these acquisitions have been done both in the technology and go-to-market space, as well as in the scale and profitability space. Right from the beginning, when Symsoft was acquired in 2009, being a technology acquisition, until the Unwire acquisition last year, which was a scale acquisition. Now we are adding myElefant, which brings us unique, rich messaging capabilities and low-code tools. Can I have the next slide, please? Deal rationale. Coming to the deal rationale for this transaction, for this acquisition. We're acquiring myElefant, a company founded in France in 2010, with a cloud-based software platform for mobile engagement.
It is a pioneer in the use of mobile landing pages, but also in delivering advanced real-time analytics to its customers that enables them to configure how they communicate with their end customers. The acquisition brings with it a team of 41 people that is based in Paris and Bordeaux. Our deal rationale is, of course, this is a technology and go-to-market type acquisition to strengthen our product offering and fuel future growth. The future growth will be both in the form of expansive cross and upsell opportunities for our existing global customers spread globally, but also in terms of being an attractive door opener to new customers in all of our markets. In addition to that, we are increasing SaaS value add in our revenue base, as we will be able to leverage Jungle's platform in our existing customer base.
We'll be step-changing customer experience for both businesses and their customers. The integration of myElefant is expected to be done during the next 12-18 months, with the migration of myElefant SMS traffic to Sinch direct operator connections, a full virtualization of runtime platforms, and of course, technical and operational readiness to expand the platform beyond France to key markets in Europe and in the U.S. We expect that a team of around 10 persons will be working with this integration during that period, and delivering the integration. As an introduction to the financials, Sinch is paying an upfront enterprise value of EUR 18.5 million with a performance-based earn-out up to EUR 3 million in the next two years, 2020 and 2021. The transaction expected to close is in early October.
myElefant recorded revenues last year of EUR 10.5 million, with a gross profit of EUR 3 million and an EBITDA of just under EUR 1 million in 2018. We expect that in the short term, profitability or the cash flow will be neutral to Sinch. Revenue growth last year was 25% in 2018 compared to 2017. With that summary of the deal rationale, I would like to hand back over to Oscar to walk us more through the strengths of the myElefant platform.
Thank you, Roshan. Can I have the next slide, please? MyElefant is a low-code mobile engagement platform with strong real-time analytics services. I'm waiting for Yeah, there we go. I see it on the webcast as well. What you're able to do is you'll be able to go into a webpage and you'll be able to create a message in a good web UI. This is the additional SaaS services that we're getting. You're able to create the message through a nice and easy-to-use web interface, and then send the message. Brands can go in and brand managers can go into this web interface and create the message. Then you can send it via various channels. It may be SMS, it is WhatsApp, it is pretty large on Facebook Messenger.
It also, apart from taking us into the SaaS service of ability to create these type of messages and handle them on a SaaS web event interface, they are relatively large in new channels, such as WhatsApp and Facebook Messenger. Using new channels to communicate those messages out. You get a strong analytics software, so brand managers can optimize their campaigns or see the metrics of their campaigns in an easy-to-use web interface as well. That's the service that an enterprise will experience. The added software is in the web interfaces, and the added software on the cell site, and then strong on the various new channels. myElefant is also integrated in various forms of marketing tools or CRM tools, so integrated into Adobe Campaign and Salesforce Marketing Cloud and Selligent and Microsoft Dynamics, et cetera.
In those, you have a drag and drop interface if you're an Adobe user. If an enterprise is an Adobe user, you have a drag and drop interface. Basically, you create your flow in the Adobe tool, but then you want to do this messaging campaign, where you then drag in myElefant with the logo into your flow in Adobe. When you have then created the campaign in myElefant's web interface and have dragged in their logo into your flow, the visual flow builder in Adobe, then the messages will be sent via myElefant's platform. It's very nice integration to the larger marketing clouds, basically. Can I have the next slide, please? This is now playing on the left-hand side of the slide. I'm just waiting for the webcast to update. This is now playing on the new channels.
Text messaging being the largest channels, but then a lot of other channels coming in with new types of technology. That is exactly what this acquisition is playing into, is moving us in text messaging to richer formats of text messaging, but then into new channels. The message out of this platform can look as on the left. It is no longer a text string. It is an interactive multimedia message, basically, where you can have pictures, you can have logos, you can have various forms of carousels and action buttons, et cetera, which obviously makes the price on the end user a lot more valuable. Can I have the next slide, please? Two very effective forms of communication. The reason that this market has grown so big is you have 98%, we can reach everyone in the world in some one second.
You have a 98% open rate, 95% read rate within three minutes. This very powerful form of reaching users is very effective when delivering notifications or updates or something like that, like don't be late for your doctor's appointment. Super powerful since it gets directly to the pocket or to an area where the user is at all times, and it is read very fast. That form of text message typically have an interaction time of three seconds or five seconds or something like that because it is like that. It is a very short, very targeted 160-character message. What's happening with myElefant, they have created a technology to, in this text message, you basically embed a link. In the message, you see a link, and when you click on that link, on Android phones especially, that link does not look like a link.
It looks like a picture. It's very nice user interface in the text message. You click on the link, you click on the picture, then you get into what we call this rich text messaging, rich messaging here. You get into a mobile landing page. That mobile landing page may look as in the center of the screen here. There you have pictures, you may have videos, you may have action buttons, you may have carousels, you can have call to actions and links to your own web shop, et cetera. Needless to say, that is a much richer experience to the brand, and they can do a lot more in that type of format than they can do in a text notification. You can see that the average interaction there on myElefant services is moving from three seconds to 45 seconds.
It's a 15 times larger and more interactive type of service than the simplest form of text messaging. What myElefant software is doing very elegantly is giving the brands the ability to, in a web-based self-serve, to create this type of mobile landing page. That is the first move. Increasing the interaction time with 15x, also giving the brands other forms of services to be able to connect this to their mobile commerce or to sell stuff or to do a poll or to do all forms of things in this mobile landing page. The next form is what we call conversational messaging.
Jungle or myElefant is also giving the ability to, via various channel, respond to this message and then having a chat conversation with the brand or with the consumer when the consumer responds to the brand. They're doing so via various channels like WhatsApp or Facebook Messenger or RCS. What happens then is suddenly that in addition to the value of being able to have rich media messages and a carousel or selectable buttons, you can also have a conversation with the brand. You see that the average attention span of a user then moves from 45 seconds to 120 seconds because the user is actually starting to have a conversation with the brand. That's a 40 times higher or more intense or longer interaction with the end user to the brand than a simple form of text message.
Needless to say, that is very powerful when you want to engage users to first be able to do this rich media and then also have a conversation with the brand. Therefore, it's higher value to the end user, higher value to the enterprise, and you can then charge more as well. This is then driving the growth of the market and therefore also our own future growth. Can I have the next slide, please? We're going to look a little bit on how that looks. The pricing here becomes a clear SaaS pricing. In the straight text messaging space, you would have the charging model or pricing model. It's clear. You send the text message and we pay the operator a fee, and we have an uplift for our own services, and it's a pure transaction-based service.
For every transaction, you get a fee per transaction, which is basically an uplift on the operator fee for the software and services that we do. What happens in the middle model where you would send a link to a mobile landing page, what we are doing, we have added software to create this landing page with adding an additional software to the brand. We are getting, if you see at the bottom there, you're getting the routing fee for sending the text message. You're still getting that, but you're getting an additional Software as a Service fee for the software that makes it possible for the brand to create this mobile landing page. It's an additional or increase in margins to us on top of the messaging fee.
Like we have explained in many different sales calls in our main business as well, but it is just adding to those capabilities since we're providing more and more software. On the conversational side, it is a similar model. In the most basic form, sending message is one fee. Creating the mobile landing page or creating the rich media content is one fee. If the brand also want to be able to have a conversation with the brand, it's an additional fee. You charge basically in the typical SaaS way, you charge an additional fee for additional software that the brand wants to use. As we can see, this then drives a significant higher margin per transaction because it also gives a richer experience to the brand per transaction. The value to the brand is much higher.
Adding these type of services over time is a core strategy, and this plays into that strategy because it will increase our value add and our ability to charge for each transaction that we deliver. Can I have the next slide, please? With that, I would like to leave over to Roshan to explain how this plays in our financial targets.
Thank you again, Oscar. Just a very brief comment on our financial targets. As we have said before, our financial targets are that adjusted EBITDA per share, we aim to grow that 20% per year, and we aim to keep net debt over adjusted EBITDA below 2.5 times over time. The transaction impact of the acquisition of myElefant when closed increases net debt over adjusted EBITDA by around 0.4x, taking us to a pro forma net debt over adjusted EBITDA of around 1.4 times following the acquisition. With that said, I would like to hand back over to Oscar for concluding remarks.
Thank you, Roshan. What we're doing here is basically, I think you have understood, this is playing very nicely in the move from text messaging into more advanced forms of messaging, more richer media and conversational. When we're doing that, we're adding more value add in the software, in the SaaS world to the enterprises, and therefore we can charge a higher margin per transaction, which we think is very attractive. That's very much what we're doing here, is we're taking a step up the value chain and therefore adding more services and being able to charge more per transaction. We also see in this transaction a strong product company, but that is focused on one region or one country. Pretty much the majority of the revenue is in France.
We see, obviously, as a global company, we see a very strong ability to take this company or to take this strong product and sell it to all our own regions. We see a strong ability to upsell and cross-sell the products into new regions. You can compare this to that acquisition we did of a Vehicle of a personalized video in Seattle. We saw this strong and market-leading technology in personalized video being in the U.S. We acquired it, we continued the growth in the U.S., and then we also took it international. Market in a very effective way, and we could see that the growth on Vehicle post-acquisition has been between 50% and 100% per year, and still keep profitability. This is something we plan to do on this acquisition as well.
myElefant from their perspective realized in order to go international in a big way, they needed a Vehicle to do so. We have the muscles, and we have the staff in place to do that. We're basically taking the product and then expanding internationally. We can do that by our own existing sales force. Since they're selling similar services and our existing sales force get an additional tool to sell. We see the financial impact to us will be both gradually increasing margin when we're adding value-added SaaS services on top of the message transmission. We're also seeing an ability to upsell in all our own markets and bringing this company international. We see a growth impact for ourselves since we have more tools in our toolbox to sell.
When you buy these type of market-leading companies in one region and bringing them international, we think it's a strong growth opportunity for us. That said, we're super excited about making this deal. We think it fits our strategic agenda very, very nicely. It's a go-to-market and technology play, which we communicated we want to do. By doing this, we're strengthening our product offering and therefore making us stronger in the international market. Very happy to have made this transition. It's a very strong team in France, and we're looking forward to driving growth together in the coming years. That said, I will leave it to Thomas to ask for any questions.
Thank you. If there are any questions on the call, please let the operator know.
Just as a reminder to participants, it's star and one on your telephone if you'd like to ask a question. We've not had any questions come through at the moment. Please continue.
Thank you very much. With that in mind, this concludes this investor update with Sinch announcing the acquisition of myElefant. Very glad to have you all listen in, and don't hesitate to reach out if you have any further questions or comments. Thanks.
Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.