M&A Announcement

Sep 30, 2021

Good day and thank you for standing by. Welcome to your conference call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your 1st speaker today, Mr. Thomas Heath. Thank you. Please go ahead. Thank you very much, Operator, and warmly welcome everyone to this conference call discussing Finch's acquisition of Pathwire. My name is Thomas Heath, Chief Strategy Officer and Head of Investor Relations. And with me today, I have our CEO, Oskar Werner And our CFO, Roshan Saldanha. And with those opening remarks, I'll hand the word over to Oskar. And if you're on mute, let's try again. And we are trying again. Sorry about that. So thank you, Thomas, and thanks for listening and thanks for your time. So we are Extremely happy to announce the acquisition of Tapware today. I think it's a foundational deal and it's Justice in Intelliquent really positioning us to be a true leader in this very large and exciting CPaaS industry. And why I think that we will go through all these slides and then open up for any questions that you may have. So operator, if you go to Slide 2, please. So this is the slide we showed many times before. We got a revenue of €8,000,000,000 and adjusted EBITDA 1,200,000,000 the past 12 months. And now given the last Very significant acquisitions. You obviously need to add the non closed EBITDA there in order to get the true run rate when the OIBDA is closing. 2,000 people, but we're going to be over 3,000 when these acquisitions close to 27 countries. And the line we have here is engagement through mobile technology. I mean, customer engagement that you get to your mobile phone. And I think we can all agree That's actually done in a multitude of channels, and that is this is what this deal is about. Scalable cloud communications for messaging voice and video, we can probably update that to email, Serving 8 out of 10 largest U. S. Tech companies. Thinking about all of those customers, they all have significant Text, voice and e mail usage. In fact, any company you talk to and you can probably go any company on the planet We'll use email at scale. And I think that's the significance of this channel. And I think almost all companies, which has a Large penetration consumers are using voice for some purposes, e mail for some purposes and text or mobile messaging for some That is again what this deal is about, the ability to serve the enterprise on those areas, right? Text has 100 percent trans consumer penetration. Email is very close to that as well. So it's a very similar So I think it hits a lot of the statements on the slides. It's just very much true for EMEA as well. So if you go to Slide 3, please, operator. So transaction highlights. At first, This is a leading cloud based email communication platform for transactional emails, but it's not for marketing emails, but for transactional emails, which is more the Delivery of your mobile boarding pass. That's one of the world's leaders And that's part of our strategy really. If we go and acquire somebody on a big channel, let's be best of breed. And this is truly best of breed on the globe in email. The other thing which is very, very significant for us is it has a proven developer centric go to market model. 1 of the big go to market models in the CPaaS industry is selling to developers because they may see them developer at Microsoft or at DoorDash or at A medium or small sized company, they all have developers. Sometimes you can sell to this via going via main door, knock on the door and the other ones, But sometimes it is just the developer signing up online. We have not been good at this developer centric go to market model and supporting developers. Pathwire is. They're really good at this. That's the main go to market model. So adding that knowledge to us is very significant. They're also very well positioned in a fast and in a growing market. Market size estimated to $16,000,000,000 by Technavio And transaction even making up more than 60%. So this is a good market in its own. That's a highly attractive financial profile. Historical revenue growth consistently above 30% with gross margin close to 80% and adjusted EBITDA margin above 35. Sometimes you talk about the rule of 40, like growth of 20 and profit margin of 20, rule of 40. And if you're above that, This is more like rule of 65 or rule of 80 or rule of 70, right? So it's very, very attractive growth profile of this, which is obviously attractive to us. And then you see significant cross sell opportunities. We know that 100% of CIMS customers are using email And we know that a vast majority of Pathwise customers are using other channels such as messaging and voice as well. In fact, they're starting to sell messaging and that's their CEO says, I just don't seem to be able to stop selling text messaging, right? So it's a lot of crossover there. And then again, I got a comment from the Message Media CEO, oh, email is our number one channel. And We had a discussion yesterday or a couple of weeks ago where we thought Pathway or MegaGrant was the best company on the planet doing this. So a lot of synergies across our different units. That is the transaction highlights and really focusing on the first two from an operational All right. Operator, let's go to the next slide please. So really, A couple of months ago, almost a year ago, when I first heard about the possibility of this transaction, but also the e mail market, We were a little bit, does that really fit into SUTAS? But then we really thought took a step back and how do we think about this market really? And I think the only conclusion you can get to is, if you think about CPaaS Throughout the customer journey from an enterprise or from a consumer perspective. I think if you go to yourself, what channels are you using to interact with enterprises? And I think the answer will be, well, sometimes you're using Text or mobile channels when you want the notification of your doctor's appointment or the notification of your flight is delayed, then you want it in your inbox because that's what See, you read it fast, a little bit more costly, shorter format, but very, very high attention rate, right? Sometimes you want to do it via voice because it doesn't really work to do this via text. I need to Speak to somebody as well. So sometimes you want to call your enterprises. And I can guarantee that sometimes all of you And all of the people I meet are also, in many cases, using e mail as the 3rd big channel to communicate with enterprises. So these are the channels that consumers are using and conversely, these are the channels that enterprises are using to communicate with their customers. So if I as a company want to serve all enterprises with all the main communication channels, I needed to cover the main channels. And that is what we have done with both first Intelliquent and then with the Pathwire acquisition. And I think that's a very, very powerful position And very, very, very few companies can do that at scale on a global level, but we're definitely one of them. So that's thinking about it from the customer journey, this actually makes very logical sense So that is the reason why the first previous slide was the reason why e mail made sense. And now on Slide 5, it makes sense. Why doesn't developer go to market And I think all of you on the call on the acquired Message Media, we said, okay, we were good at From the CIM side of the enterprise go to market, we're now adding the SMB go to market with Message Media. And the SMB, you should think about Joe mechanic shop or you should think about it. Thinking about that as the hairdresser, it's not a developer, it is a Business user, often CEO of that company or owner of that company that goes in, I need an easy web tool application where I can So my communication needs and they sign up online with a credit card and then they go. So that's what Message Media does. And we added that very strong go to market But we had a hole in the middle where which is Twilio stronghold, which is the developer go to market and we're good at enterprise, we're adding SMB, But now we're also adding a company which is very strong at the developer go to market. And the developer go to market is The developer at Microsoft or at Wells Fargo or at a small company could just search online for I need to solve my communication need for this request I got from my CEO or product manager or something like that. And they sign up online with a credit card, but they're using not a web tool, By using an API, right? You need to be a developer, you code into this API. So they're going on GitHub, So looking at the APIs, etcetera. So it's like it's a developer go to market, which is different to the SMB market and very different to the enterprise go And now we're adding a company that is very strong at this developer go to market on one product, and we aim to use Pathway's PIVAS on the developer. Marketing email to expand that to approach developers in voice and developers on messaging from this team with our strong experience. And we think it's much better to go that way than to build it ourselves because having somebody who's proven that they can do it before It's obviously and can do that scale is obviously more powerful. So from a go to market perspective, this also fills a box for us. Finding company that fills both the box on the product, on the e mail side and a box on the go to market side, Extremely good fit for us. And I think it will propel us to really new heights and really doing good things together. That's the two main Thanks. Two main reasons why we believe this acquisition is super, super good. All right. Operator, next slide, please. So this is Slide 6. You can see Then us, which is extremely efficient and impressive. We're very profitable ourselves, right? But this company is actually Related to the revenue has a higher profile. Now they have a lower COGS, so that's not That's odd, but still it drives up both our gross margin and it drives up our adjusted EBITDA margin, which we think is great. The other thing that happens, which is very significant, if you look to the right hand graph, we're really turning the company from a 1 channel or messaging in many channels, but it's kind of 1 category of channels to from 85% on that channel to being around about 50% on that channel and balancing the companies to all the other channels. And you can see this, then you can support a much larger need of the enterprise needs, but it's also obviously from a diversification side, A much stronger and more well balanced company when you have this type of broadened growth or Broad GP generation. So we're really turning the company to be true all channels in CPaaS and really showing that by gross profit generation. And I think that's very, very powerful. So having on the left right hand, we have 55% 51% messaging, 16% voice and video, 13% e mail and then 19% operator, which is the largest part is coming from the Intelliquent serving the U. S. Operation on the voice side, right? I think that's a very, very strong and diversified company. All right. Operator, Slide 7, please. This is what IDC did, I don't remember, maybe 12 months ago, maybe 9 months ago. They're really kind of picturing the companies in this market, and you can see the jump we did from 2019 to go away with the blue blob in the middle. We did a jump to 2021 where we're the orange number 2 blob in this market. And we have repeatedly said, all right, our goal is to be number 1 or number 2 in this industry. We want to be we think the market is fantastic. The market is very, very large And we want to be one of the 2 largest players. And what we're doing now is exactly according to what we have said. We're really taking that step and really distancing the midsized companies or the large, But doesn't have all the channels or not as a global company basically. And I think we're definitely putting some ground in between us and the others and really singling out Two leaders in this industry that are doing multiple channels at scale basically. So that's the goal here. That's what we're doing. And we think that of being able to serve global enterprises or channels on a global basis is very, very attractive. So we're just taking the next step to this slide basically. All right. Operator, going to Slide 8 please. Where we have shown the Gartner model of the CPaaS industry several times, this is now the New Gartner model, they just updated this. So they had a couple of layers. And as you can see, we're The core of this is really filling 2 core boxes. 1 is the e mail box, as you see in the bottom right hand corner and the other one is the developer blogs, developer relations certifications event. And I mean developer go to market and support for developers And products for developer on the left hand side. Again, repeating the 2 key rationales for doing this deal, that's the 2 things. And it's very clear, if you go to analysts, they would all say that's a core part of the C plus plus industry. We want to be a leader in the C plus plus industry, and then we got to fill the main boxes. They have a great analytics offerings. They have sentiment analysis. They have some AI tools, etcetera, etcetera, etcetera. So I could also go in and then half code or 20% code or a couple of the other boxes, but let's not go into that. It's like on the top level, this is the 2 things, But there will also strengthen our ability in a lot of the other boxes. So it makes sense from a wide variety of reasons. And as you can see, with recent transactions, we're picking off a large part of the boxes in this type of chart. And it's very hard to do so. So doing that at scale of global level, very, very few companies will be able to do so. But that's again following on the strategy of being a leading CPaaS player in the market. All right. Operator, Slide Line, please. So we've shown this slide many times before for those of you who've been Ocros before. We do technology and go to market Acquisitions, scale and profitability acquisitions. So technology go to market being, We need this technology and go to market knowledge. We typically see them together. And we think it's better we make a buy analysis. We think it's better to Acquire and then try to build on ourselves because it will go faster and we're going to get a better service. So that's when we kind of try to fill the technology over the market box. And the other one is scale and profitability. So really acquiring sticky customer relations, adding to the EBITDA, Leverage share platforms, adding operator connections, etcetera. This truly fits both categories, Trying to build an e mail service from the ground up today is going to be close to impossible, Extremely expensive, taking many, many years. When you get there, all the other players will probably have moved 4 years ahead. So it's going to be very, very, very hard and extremely expensive. The other part on the go to market, adding a developer go to market is expensive as such. We've been trying to find ways to do it, but not really found the ROI to be worth it so far because we had so good ROI in the other channels. But when we found the company is doing this at scales with 35% profit, great, let's do that and let's build on that and then add that developer to the market The other channels in a strong way. That's a very good way of covering that go to market model for CIM. So it's a definite technical market. It's also obviously also a scale and profitability. Just the probably the 35% EBITDA margin and 30% growth, This type of size of company adds to our scale, adds to our profitability, obviously also ticks that box. So If operator, go to next slide. If you would draw it, it would definitely be in the top hand of both the e mail and developer go to market. And it would be on the profitability in North America primarily, but also across Europe, but a lot of revenue, a lot of gross profit, a lot of EBITDA coming into the company, So The Rationale founded in 2010 leading developer centric cloud based e mail communication platform, More than 100,000 paying customers using Mailgun and Mailjet, that's the 2 main brands. Again, they're signing up online Now, 100 or 1000 of customers on a recurring basis. So it's very, very good customer acquisition machine, Sign up online with a no touch model, headquartered in San Antonio, Texas, 290, 209 employees worldwide. The rationale where straightforward begin a leading product offering for email. We dramatically strengthened our development going market and has a very attractive financial profile. So now it's home on all these three points, which is truly what we look for. Another point, which is Always important for us, it's the culture fit. This company has a great culture fit. They are Truly focused on profit. I've been profitable since day 1, just as we have. They're a non excessive company. They're really down to earth. They are not the high flyers. They are cost conscious. The CEO just told me when he talked to a couple of our teams, he said, I love the Swedish word lagom, and lagom means no excesses, down to earth. And I think it's a phenomenal kind of view from them of being this ambitious, this high growth In the world's biggest market, but loving the word of logon or being non existent and excessive down to earth. I think it's just a great culture fit with us. And We are trying to have a lot of fun on all the calls. So that's also great, great things. Integration, we see significant revenue synergies from neutral Basically, all of our customers, we know they use e mails. How can we open the doors to PathFires? Basically saying, right, take this 100 customers' work. Let's have a let's bring the Pathwire team in. Let's have a call with them. Can we cross sell can we cross sell to all these big brands that we have? And on the other hand, Pathwire is already selling quite a bit of text and expanding that, Selling Synch products into Pathwire. And as you heard Message Media, the number one request is, can we get e mail into our offering? So cross selling Pathwire products to message BBS 60,000 customer base is also going to merit for a strong trial. So significant revenue synergies. Using our global footprint to accelerate international expansion and then using path to our expertise in developer go to market, Making them own developer guard market across all channels. It's a relatively low touch integration because they will be run as a separate business unit. This is a profitable company. It's a large company that will be used. We won't merge the platforms underlying. So relatively low touch on integration because They would kind of operate on its own business units with their own platform and run this thing. So less concerned about that, Even though it's always a lot of work, of course. So, Roshan, if you would do the financials on a high level, that would be good. Thank you. Thank you, Oscar. Again, pleasure to speak with all of you on the announcement. We're acquiring PartWire I'm paying $925,000,000 in cash and delivering also 51,000,000 New Sing shares to the sellers. At the closing price yesterday and at yesterday's exchange rate, That gives us an implied enterprise value of SEK 1,900,000,000 or SEK 16.6 SEK 1,000,000,000. This transaction is expected to close before the end of 2021. We expect to incur integration cost of $75,000,000 over 18 months post closing and this is Of course, drive the revenue synergies and obtain the revenue synergies, but also to integrate the Pathwire business Into the Cinch business in terms of common platforms, so finance, HR and other administrative systems. On financials for PartsWire, they had revenues of $132,000,000 expected in 2021 with a gross profit With a high gross profit percentage close to 80 percent of gross profit of $104,000,000 and again strong adjusted EBITDA at $55,000,000 This is a company that has tended to have EBITDA adjusted EBITDA margin of In the high 30s as well as a consistent pro form a organic growth above 30%. So this contributes really well to Cinch's financial profile as well. Oscar? Thank you, Roshan. Let's operate, let's go to Slide 12. So this company is targeting transactional email. So really the payment confirmation, the purchase confirmation, all of that, it is not so large in the marketing email side. So it's really focusing on having a high delivery rate of transactional email. And there's also, I mean, I've gotten that question a lot of times on our text message volume. It's mainly the transactional side, basically Appointment reminders and things like that. So the fit is very, very good in that sense. So prime focus being on the transactional e mail side. Operator, Slide 13, please. When I look at it on the outside, it's like it's very simple, right? Sending an e mail, why is that a problem? But it is actually not when you go through it. And this was it has been a learning experience over the last year for us since Cinch because we looked at this market for A bit now. Sending an e mail to mailbox is easy, but sending it but getting it into the inbox and making it read an action on, it's another store entirely. Over 90% of income in email is blocked by inbox service providers with only 8% of all email traffic making it to the inbox. And deliverability is the rate in which the messages are being sent in the e box. That's where Pathwire is well leading. It also says, if you want to do this, you can't focus on too much marketing emails because you need to focus on the emails people really want to get. Otherwise, you're free to leave, Alex. So that's the kind of the core focus they have. And I think we can all agree that's something that we All are using and all need and then we need it delivered to the inbox, not in any spam filter basically to the emails that we need. Operator, next slide please. It is also an API platform for developers, so very strong at that. So some 20 plus API, fast onboarding. So the product for developer is usable in less than 1 minute. As you can imagine, all these developers around the world, we're looking for communication, signing up is fast, super good. And we want to take this model and bring it to all our other products. Deliverability rate is 98% versus industry average of 83%. That's another extremely point to this company and why they keep on growing above industry average, right? It's scalable cloud native on a global delivery 9.99 percent uptime. So That's a very strong part of this developer offering basically and ability to talk to and serve developers well. Operator, Slide 15, please. We also have Mailjet. Mailjet, it's a smaller product, but it's a marketing platform. It's a kind of a platform for marketeers. So one of the most advanced web tools like drag and drop in a business on the markets Seamless collaborations for features for designers and developers and very advanced automation to onboard the recipients, reward action and react Here again, you can see the website, the kind of online go to market, very, very powerful in this market. That's truly where we're Turning Cinch as well, coming from the selling to the world's largest enterprises with a rock solid quality, really turning and being Getting into this rapid fire web tool online go to market with both the message media and the platform acquisitions, I think it's going to be very, very powerful for us going forward. Still, you sell to a lot of big brands like DHL or American Express. I mean, they all use these type of services because they need the simplicity in order to handle the product. All right. Operator, Slide 16, please. A platform managing the entire e mail life cycle, so validate, collect real e mail addresses, define it, segment it, create it. Being able to create beautiful emails that companies actually read, just ensure that it actually works, sending it, So sending it, deliverability and then optimizing it using a good advanced analytics and campaign statistics tool, All of these things they do. So it's a lot more than just click the send button and then make sure you deliver an e mail basically. And this is what the entire SaaS tool does. All right, Slide 17. Loved by developers, The first one, Eben delivers super fast straight to your customers' inboxes. I just read the green ones. The reports are fantastic. Megan makes it easy. Megan is consistently fast, hacker news. That's truly a truly true developer centric view. We went from thousands of e mails a megahertz to over 7,000,000 emails across 100 and 40 domains. And never had and we've never had the account for reputation issue over the years with Houston. So this is from a developer News outlet, right? They know what they're talking about and they really come to this type of business. So very, very strong. And then on the second slide, thanks for the amazing e mail framework. For any developers out there who need response e mail, this a wicked solution, truly getting to the tech arena. I think that's very, very strong with this business. All right. Operator, Slide 18. Pricing, very short as well, but pricing on a SaaS model, really pricing, a monthly fee, monthly recurring fees. A lot of these companies are very small, but they also sell to the Amex's and the FedEx's on completely different and there, the revenue gets very, very large, of course. But their stronghold has been this developer go to market, but now also Having signed some of the world's largest enterprises and seeing the platform is there, they can deliver, they just haven't scaled out their go to market, To you, Roshan. I think this again shows, I mean, the transformation of the company that we're doing. We're really having strong organic growth. It's Always the core for us continue to run the core business, but then we're really truly making a jump here to truly be 1 or 2 in CPaaS. And that's what you're seeing with these latest acquisitions. Intelliquent adding voice, big channel. Message Media adding SMB go to market, a very big channel. Pathwire adding e mail plus a developer go to market. So 3 extremely significant and pivotal transactions that we have done here. Profit of $7,200,000,000 and adjusted EBITDA of $3,200,000,000 I think that just shows the power of the combination of these companies, shows the power when you are profitable yourself and acquire truly highly profitable companies with the same culture. I think it just shows the power of that type of model that we're applying And Roshan, anything else you want to say on this slide? And then if you take the rest of the deck here. No, nothing to add really on this slide. I think you covered it very well. I mean, obviously, The growth profile as well as the distribution of the revenues across all these products It's very exciting for the future with the combination with Pathwire. Thank you, operator. Can you please turn to Page 20 or Slide 20, where we show the financial targets. And our 2 financial targets, again, to remind everybody, is adjusted EBITDA per share to grow at more than 20% per year. And we want to keep net debt to adjusted EBITDA or leverage below 3.5 times over time. And at the end of Q2, I mean, we grew adjusted EBITDA per share by 38%, and net debt for EBITDA, It was reported at 9.6 times negative, which means essentially a cash position at the end of Q2. On the next page, Slide 21, operator, if you could turn to that, you will see the pro form a net debt over adjusted EBITDA. And yes, we're starting with obviously the SEK 9,600,000,000 which was the Q2 2021 reported. And then if we add the adjusted EBITDA for the acquisitions, which are not included on a full year basis in Q2 21, and that is primarily then ACL, Way B and STI. Then we would have a Q2, 2021 pro form a Leverage of negative 8.8 percent together with Intelliquin and the payment of Intelliquin that will bring us to a Negative 0.5. And going forward with that with Message Media and with Messenger People, We would have had a pro form a leverage of positive 2.7x. Now together with the Cartwire Announcement, we've also successfully announced and closed a directed share issue of SEK 6,600,000,000 or $750,000,000 And we're super happy to get the support of our existing shareholders, but also some very select new shareholders, including Canada Pension Plan. And together with that share issue and with the announced transaction of Pathwire, Our pro form a leverage would be 2.7x. I think another key point to note in the Podwire transaction is that We're delivering a large part of the enterprise value through Cinch Equity, which also shows The strong faith that the current shareholders of Pathwire plays in the combined With that, I'd like to hand back over to you, Oskar, I guess, for final comments and winning. All right. Thank you, Roshan. So again, I think it's a pivotal transaction. If you see it together with Intelliquant, This is truly about can we serve enterprises with all the main communication channels the customer journey on a global level, I think both Intelliquent and Mail and Pathwire really makes puts us in that position, covering the 3 biggest channels, messaging, voice and e mail. And the other one is adding a strong developer go to market, which we didn't have, alongside our enterprise go to market and alongside Message Media's strong SMB go to market, I think it's very, very powerful. These are the two main points that made to me. This transaction is just super good for Cinch. I think it will propel us to really good positions in the future. And I think it really puts us in a position to Be able to be a winner. I think there will be several, but a winner in the large CPaaS market. With that said, thanks a lot for listening. Open up for any questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. And your first question comes from the line of Daniel Derbergh from Handelbanskin. Your line is now open. You may ask your question. Thank you very much, operator, for taking my question. And also congratulations to another attractive acquisition and To broaden your technology base and the revenue base substantially. I have a question starting on the Potential for upselling and cross selling. And it your email channel Or normally, the e mail channel is a little bit less of a success rate, you could say. And that could give opportunities, I guess, For some kind of selling Sephora back services to Pathwire perhaps. Still, you commented about quite low touch integration from a technology standpoint. So is that Doable at all to have SMS or other channels as fallback to emails or If you can comment on that, would be great. And also, if you more or less from day 1, can the revenue model they have, the scale model, If that works already from day 1 for your enterprise go to market, including SDI's large customers. Thank you. Very good question. It shows that you understand it, and I love the question, and you're 100% correct. So Yes. It is and that's one of the key things that I maybe should have commented on, but it's not only serving enterprises These are the 4 channels, you can buy them separately. It is also and maybe most interestingly saying, okay, I will make sure I get The message read by your consumer. And then you will say, okay, we will take care of the optimization in between channels for you, and we will use the channel that is from a data model proven to be Most successful. And that may be starting with an e mail, and if you're not reading it, then you'll get reminder by text. Or for another person, it may be you start with an e mail and then WhatsApp. And for a third one, it's starting with e mail, but then having a voice call for another use case, right? So it's optimizing that. Extremely interesting, and I think that's where the market will truly turn. I think if you can't then do all the channels, it's going to be hard to optimize. Now, so 100% agree, that is where the big data and the data models Form 2, the messaging platform, or the voice platform, simply because they're too big, They're too much at scale and they do different things. That's like integrating a car, a boat and a plane. But I think when you want to go to your vacation, you would take Maybe the airport train to the airport and then you take the airline to your destination and then you run the car and it's just a little bit same thing, right? So basically, what you integrate is the layer above. So you need a data layer above that can track the data across all of these channels. But that's actually it's more a layer above, which we need to figure out together with Pathwire and Majet. So that's not really truly integrating the core platform, and that makes it a lot easier. On the sending side, it would be adding email to our conversation API. But that's really how the conversation API is already built. It's built for multiple channels. It's got like 12 or 15 channels already adding email there. It's just I'm simplifying a bit, but connecting the email API from Pathwise up into the conversation API, but that's actually how it's actually built. So 100% true, 100% right, but that type of integration is much, much easier than porting all the traffic customers of 1 platform to another platform. Perfect. Thank you. May I also ask you on I just saw last week on Intelliquent that they are Expanding its scope to Europe and many other markets like New Zealand, Thailand, Australia and so forth, both with international phone numbers and Calling services, etcetera. And my question is perhaps not the right forum, but if you can comment a little bit on this and how it impacts your operations after this So I think it is closed. Yes. So that's obviously in I mean, first, we're 2 separate companies still. It's Closed. We're very high confident that we'll close, but it's their decision. But it's obviously very much in line with our And it's two things. They have very large U. S. Customers. I think the Zooms, the Microsoft, all of these other world are their customers. Those customers obviously have needs for international delivery and Intelliquent is a trusted supplier and they ask Intelliquent, could you please just Give me international, I can have 1 supplier. Obviously, good growth opportunity. And the other end, the other thing is, as we As they can now get a much more international footprint with all the sales reps we have everywhere, then it makes probably a ton more sense For them because it's they got higher probability as winning local business. So it fits us very well. That's great. And I think it's very much in line with Stratford. Yes. And just to secure, it doesn't give any more hurdles from a security point of view. This is more of a collaboration for them with some third party or do you need United Kingdom and Germany and New Zealand to also change anything. What they said is we're expanding our product footprint. They're not acquiring anybody. It's like so they win another customer. No, there's 0 impact on the approval side now. Perfect. Thanks. And good luck. Thank you. Thank you. Thank you. We will now be taking our next question that comes from the line of Ramiel A few questions from my side. Just first off, as always, being the devil's advocate here, could you Perhaps elaborate a bit more on the well, first off, on the barriers to entry to new entrants, but also why this company is able to outgrow, let's say, Mailchimp, for Is it due to the transactional emails focus? Or is there sort of anything in the stack here that really sets it apart, Perhaps the sort of the ability to bypass the junk box or anything like that? Or is that certainly pertaining to the fact that And yes, if you want to start, fine, and then I'll fill on. I'll interesting clear, so fire away. Yes. No, great question, Rami. And I More traditional platforms, and I think that is part of the whole ship to cloud, which is essentially making Cart Y win versus the competition. I think the second thing As is of course, they are focused on developer go to market. And I think through that, they're bringing a lot of Digital native companies into the fold, which would definitely adds volume and brings business to them, right? And then thirdly, you're right. I mean, they have a higher deliverability rate. They have worked a lot in terms of through algorithms and through different methods, improving sort of the accuracy and the timeliness of their delivery, Making sure of their delivery of email, making sure that they have that they're winning on that front. And then this better product, so to say, with higher deliverability and developer focus, I mean, Has meant that they've taken market share since founding 2010. And in a sense that very much like CIM, right? I mean, we've taken market share Since we were founded in 2,008, I mean, we're not the 1st player in this industry. So that really is in a sense brings Means that we are more similar to each other as well. Oscar, back to you. No, I think that was a very good answer. I would add one thing, which is just Strengthening your 2 first point is the cloud and developer side, and we've seen this across many different areas, and that is APIs outgrow everything. It is so scalable business model. When you get to an API model, it is Extremely scalable and you just get integrated everywhere. If you have a good API product, you get integrated everywhere. And I think that's a new It's Parete Grid Shifting Cloud really doing true APIs and really growing strong. This is pretty much as Stripe did, right? They did really easy to use payments APIs And started to hit the market with that and created a very, very large company on it. And we're doing the same on text messaging. We're doing the same on voice. And these guys are truly Kind of cloud, e mail, super strong APIs. And that business model is just growing very, very strong. So That's another kind of strengthening the 2 first points Roshan said. Then I think it's just good, acquired good companies with proven growth, Proving competitors that outgrow the markets. I mean, it's a very good model, right? Yes, you pay a little bit more, but it's in the end the winning strategy if you want to win in the market. In terms of barriers to entry, interesting. There are only a few large players in this industry, right? It was Mailchimp Mandrill just acquired by Intuit for $12,000,000,000 It was SendGrid acquired by Twilio. It was SparkPost acquired by MessageBird and now Pathwire acquired by us. That's it. That's the 4 largest players in this market. Next Big player is Amazon SES and they've been in this market for a long time. Even though Such a powerful company like Amazon has been in the market for this long. You always need to be very careful because they're powerful, but they only have a I think it's a 9% market share or something like that. It's a tough market, right? So If Amazon can get to a 9% market share over a couple of years and not more than that, I think it just proves that antivirus in this market is large. I would not start an e mail company today and try to get up on the top into top area here. That's going to be very expensive. And that's true even for the largest companies on the world, right? Now said, competition is tough as any market which has But that just shows the anti barriers, I think. Okay. And brief follow-up on that. Thank you both. Oscar, you referred to Amazon's market share. Could you talk about a bit about Pathwire's market share and perhaps the market growth rate? Yes. So in this it's always hard because market share is always, I don't know, did you get all carriers. But in that report that we saw, PathWires was about double of that. So significant larger. And then So that's kind of the relative size. Then I'm always on this market report, I think it may have been a little bit like U. S.-centric, did it really cover all APAC, Etcetera. And this was in the transactional market, not in the email market in the marketing email market. So it's always a little bit hard, but that's kind of relatively size wise directional approximately right. I think, Rami, just to complement that, right? I think if you look at some of the industry reports, I think we're referring to one of them, right, Technavio, I think they say the email market is $16,000,000,000 You can compare that with what we say about the messaging market, which is only slightly bigger. But at the same time, the gross profit profile of the business is much, much higher, right? I mean, you don't have the operator cost elements. So from a gross profit perspective, it's a larger market. And I think what we look at industry estimates, I mean, they say they grow sort of in the 10% range, right? I mean, this market is growing in the 10% range. But the interesting thing is that there's an undergoing underlying sort of On prem to cloud shift, which means that a company like Pathwire, which is in the front end technologically and is providing a cloud product, grows much faster than market. So that's what we're seeing in the growth numbers when they're growing 30 plus percent, right, for a long period of time Organically. So really front end cloud on prem to cloud and also in the front end in API enabled business for developer, That's 2 very strong growth drivers driving above market average growth rates. It's very clear. Thank you both again. A final question From my side, going all the way back to Page 6 on the right hand side, the gross GP byproduct I mean there are a lot of moving parts here. And of course, from an external point of view, it's becoming more and more difficult to pinpoint every moving part here. But Could you elaborate a bit on the trajectory of the split as such? Perhaps a few years from now, Will messaging still be roughly half the business? Or do you foresee a future where perhaps it's a smaller or even a bigger part of total here? And Same question for the other revenue buckets here. All right. Great question. Roshan, do you want to start? Or did you have a follow-up? Yes. I just want to I think you can give the long term answer, right? And Rami, just very briefly, right? I I think this is the challenge, right? I mean, we have a very large business, which is messaging, text messaging, which is growing, still growing, Right, from a large base. And which means that it takes even if the percentage numbers on the smaller business element, the business Sort of or high. It takes a while before they catch up, right, just purely mathematically. So I think my guess would be that for a number of years, Messaging will still continue to be important. Obviously, some of the other segments, especially mail and I hope voice as well, When we get sort of more into the CPaaS product area, we'll grow faster the messaging and That's what my hope is for at least the traditional messaging business. Then you've got the OTT messaging within messaging as well, which has high growth rates, but from a smaller base. And then I think the other thing to remember, of course, in this Aspect is operator, right? And operator is fairly steady. So that will reduce. I hope I really hope that we have an omni channel As we develop our omni channel experience, that we have an omni channel gross profit base as well going forward. But I'll let Oscar elaborate more on that. All right. So the first principle to me is like, A, the market is going to be huge in CPaaS Because enterprise will communicate with consumers. All right. B, how do I make sure I win? Okay. If we cover all the main channels market competitors off using our large one, then we will be covered in the tech shifts, right, in the shifts in between the channels. So It becomes like significant to de risk the company profile because you're good at all the channels. And if it shifts a little bit more to email or less To email or more to voice or like it's like you're going to be leading, right? And I don't think any of the channels will disappear because it's just human nature to use different channels for different areas, right? So that's one. Then how it develops, we don't know. But We can conclude, if you would look at other players in this market, if you would look at how Twilio looks And you can start that on low. It is relatively similar, which is very interesting, right, which shows a couple of things. Great, it's relatively similar. That's good. But it also shows the extreme powerhouse that messaging has been. It is just A very profitable, very large market. And it's also interesting that it's the kind of the messaging people, Ask Twilio, MessageBird, they're actually acquiring the email people. Why is that happening? And it's the messaging people acquiring the voice player. So It is the consolidators in this market has mainly come from that area because I think that's where the area that CPaaS really grew up. So that's but it's also because that's a very sizable, a very, very large market that is driving a lot of needs. So I think the split today is comparative to other companies. I think it will change, but I think it will messaging will Still be a very large segment and that was also proven by it's actually the companies coming from that are the main consolidators in the market So far, I should say. World class answers. Thank you so much. That's really good. Thank you. We will now be taking our next question that comes from the line of Fedragu Sabinovic from Carnegie. Your line is now open. You may ask your question. Thank you, operator, and thank you guys for taking my questions. The first one is really on deal rationale. What is mostly driving you for this? The developer led go to market that Sounds intriguing. Sounds like you're very enthusiastic of how you can leverage this in other verticals. So to you, Oscar, what do you think is the biggest factor here in value creation? Is it this, which covers the white spot you had? Or is it Adding a leading position on email delivery, which is also a white spot. And a follow-up to that, how important is e mail and your ongoing customer discussions on the multichannel strategy. I think it's both. You can't acquire a developer good market if you don't have a product that you're good at it, right? So So like you can't be good at something if you don't have the product. So I think it's truly both. It's adding email and developer. I don't think I can differentiate them, but it's both really being good. And I think the Other thing that really drives value is this layer on top switching in between channels. That's what I think Switching in between channels and driving all the cross sells to the e mail platform and adding the developer go to market. That's the 3 main Thanks, driving value creation there. Okay. And on the e mailing market, you call Pathwire, one of the leaders or the leader. And thinking of you citing this CHF 16,000,000,000, you would have roughly 1% of that pie, which Sounds quite small and then you referred to another figure bigger than this. So trying to figure out what is really the tangible TAM here for Pathwire. Good question. And Pathwire is the leader on the delivery deliverability or delivery side than there are companies who are Have more volumes such as SparkPost or Manrhill, but that's what we're saying when we call it, I mean, ability to deliver the email, that's where they're the leaders and then they're One of the largest players on the planet. On the market size, Russian, I haven't read that specific report. So if you could comment relative to the Yes, I mean, I think it's in the long term, I mean, what we'd say is, I mean, a large part of this market It is addressable, right? Of course, there's a bit of geographic aspects. There's a bit of technology aspects. Is the mail sort of bundled with another product such as contact center product or a CRM product? So there are, of course, some restrictions. But in the long term, a large part of this kind of entire market is addressable. And I think what's important is, like we said before, the shift to tariff, right, which sort of increases the addressability constantly. So there's a long runway of growth from that perspective. Okay. And on the customer side, you cite a few big ones using this like DHL, Microsoft and many more. Do these customers typically have a multi vendor strategy or a single vendor? Maybe take that into context of the 100,000 you have. I guess the bigger ones probably Multi vendor, but what does it look like? Enterprises typically have a single vendor Strategy per channel, but the multi vendor strategy per for channels because they can't handle 2 email providers. Big Tex typically have a multi vendor or 2 or 3 vendor strategy even on per channel because their volumes are so huge. But we see enterprises really wanting and also the big banks really wanting to consolidate their providers because there are so many and it's so complex. And also using the switching in between channels logic that we discussed before. Okay. Thank you. And one final on the Slide 8 on the Gartner model of this CPaaS industry. Of the parts where Cinch is not present in or only partly present in, which of these boxes would you say are important for you to add or to grow into to be The number 1 or 2 player in the industry that you target. So happy to say that these are the 3 largest channels. Then obviously, video is a channel we're already using. We're not super large there. You can say in app services, we're not super large there. I think the data models like analytics, CDP, those areas, interesting, but we're like looking at what are we doing, what are we building What do we have? What can we do, etcetera? So it's payments interesting, but it's probably more a part Over what we're doing, payments within the message flow, etcetera. So there are definitely interesting areas, Definitely areas we want to cover, but then it's a question of make or buy and doing it in a stepwise manner. I think just a very short fit for that one, right, Oscar. I think one thing to remember is also that We have within TeleQuint Message Media and PartWire 3 fantastic acquisition platforms, right? I mean, Cinch I've had a great story consolidating the text messaging market. Intelliquent, we see as our platform for Global Voice, MessageMedia is a platform for GlobalSMB and Fraudwire is a global e mail platform. And they all of these companies have experience with consolidating those markets. So there's the geographical regional aspect to this? Yes. So see them as BUs. Itel will win in developer, win in email globally. Itel, Paul, you're winning SMB and they have handled acquisitions and things within the BUs. We're kind of Just leveling up at 1 and within those BUs, it's a different story, right? So see that BUs that has their own CEO and drives their own business, Which I also think is a very, very powerful model here. All right. Super. Thank you very much, guys. Thank you. And your next question comes from the line of Ramiel Kuria team that you have on board. You've recruited someone to the management team. I mean, how many are you how should that team sort of Increase or decrease, I guess it's more towards the former than the latter moving forward. How much are you scaling up integration capacity as such, knowing that this isn't a cumbersome integration as such? So the integration team today, I think the latest are some 80, 75 people. So it's a significant team. Super happy to have a leader in that, which we didn't have like 7 months ago. And she's driving it. It's a full time job. That's the only thing she does. She has an integration lead for every deal and then an integration team for every deal doing the things, right? So that's Round about what we're doing, how it scales up and scales down, it's her budget is the integration budgets that I report to you. That's what she can keep to. So, Julie, this is your money integrated this. You get the people in that you need to do that in order to do so and you need When that budget is off, you need to scale down the team or get those people back into the main lines basically. So That's the size and how we scale up and our task is to continue to keep within budget that we have reported to you. I think we scaled up really good. I think we can do some more, but also and I'm conscious on cost and keeping to the budget that we communicated. And so We've been very successful in doing so. Now lots of work, very hard. This is ain't easy. We've got to be very, very humble about The challenges we have on doing this, on the other hand, if we wouldn't have made this deal now, it wouldn't be there. So the choice for us was do the deal be big in email or leave the email market. And in that decision, I think it's good to make the deal because you need to understand the deals don't stay. They will be gone if you don't do them and somebody else will do them. Okay. Thank you, Oscar. Thank you. And for listening to what we think is a very exciting opportunity And a very exciting story. I'll hand over back to Oscar for any final remarks before we wrap up. Thanks for listening. Thanks for your continued interest. We have a lot of these calls. Super excited to have you on the call. To me, these two deals and then this deal here is very logical. Enterprises have many use many channels. We want to serve them throughout their needs. If you want to be a leader in the CPaaS on a global level, you need to do all channels. Secondly, if you need to do be a leader in CPaaS, you need to cover all the go to market models and covering off being strong in the developer, go to market and serving developer And good APIs, extremely important. And then adding a company with such fantastic financial profile, Low on ego, low on excesses, always been profitable, driving profit. I think it's When you see that type of deal, I think it's just a very, very good combination with what we are and getting a team in with a culture that really fits us. I'm super happy with the deal and thank you for listening. Thank you. That does conclude the conference for today. Thank you all for