Welcome everyone to this Q3 results presentation with Sinch AB. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. With me on the call today is our CEO, Oscar Werner, and our CFO, Roshan Saldanha. As a reminder to everyone dialing in, whilst this call is open to everyone, questions are reserved for investors and analysts. With those opening remarks, I'll hand the word over to our CEO, Oscar Werner.
Thank you, Thomas. Everyone, welcome to this Q3 Presentation from Sinch. Operator, if you could move to slide two, please. As you can see, we're now revenue past 12 months, SEK 6.6 billion, and adjusted EBITDA of SEK 786 in the past 12 months. We're up to now with the closed acquisitions of 1,484, and present in 41 local countries. We do, like we've said, customer engagement through mobile technology. Any way enterprises want to engage with their consumers via mobile channels, that's where we come in. That may be via messaging, it may be via voice or video. A video example would be you're connecting a call to your doctor, making the call with the doctor online working, or calling your ride-hailing service. We would connect the call to your ride-hailing service via voice.
Messaging, you may get a reminder from your dentist or your ticket from your airline, then we would transmit those messages. We are now up to 107 billion engagements per year. This includes ACL. You can see that has gone up pretty significantly since the last presentation, and that is due to the huge volume in India and with the SDI transaction. Very much in a very high increase on that number, and we're going to come to that through the presentation. You're going to see the volumes going up. Obviously in India, the gross profit per transaction is lower than in U.S. and Europe. We are serving eight out of 10 of the largest U.S. tech companies.
We're working well and closely with a lot of these companies, and they are an important, but by far not the only customer group, but an important customer group for us. Fascinating thing with this market, it's got 100% consumer penetration. I've yet to meet one single person of the adult population since I joined Sinch that is not a user. I know that you all have used or received the messaging, voice or video services of the types I just described before. We're very proud that we've been profitable since our foundation in 2008. That's the way we run the company. We think it's a good way to run the company of always delivering a lot of value to customers, and therefore being able to be profitable. Operator, next slide, please. If you look up, we have a track record of profitable growth.
Here you see the gross profit and the adjusted EBITDA development of the last couple of years. You see the impact of the last acquisitions with ACL and SDI, which are now closed, then Wavy, which we're still working on closing for. You see the impact of both our adjusted EBITDA and gross profit in this chart. We take a major leap going forward now with the last acquisitions we've made. In Q3, 40% gross profit growth and 53% growth in EBITDA in Q3 2020. All right, operator, let's move to next slide, please. The reason we can do what we're doing and continuing on growing as we have been doing is partly it's a good market. We're in a very good market right now. The other part is we are having good performance and relative to the market as well.
The messaging side, which is our largest segment, this is a SEK 17 billion market on SMS only, as per Mobilesquared. The business usage of SMS or base services continuing to grow. We're also seeing +100% growth rates in the new messaging channels, such as WhatsApp, RCS, Viber, KakaoTalk. The reason for that is very simple. It is you have the same read rate, very high read rate, very high response rate as you have with text, but you have a richer format message. You can actually send more and make a more attractive experience for the consumer, and therefore you're seeing very high growth rates in those areas right now. The other part of this market is the CPaaS market, where you typically say value added on top of just delivering the message or just connecting the voice or video call.
There you see a lot of value-added services. In our example, it would be like Chatlayer services, where you have an NLP service, and in that area, we're seeing 30%-50% growth, round about. In principle, we are in a really good market with a base business of SMS, which is big and growing, but a little bit slower rate. You have a very fast-paced growth in the WhatsApp and RCS or new messaging formats business, and you have a very solid growth in the software value on top. That's if you would summarize the market in three different areas. Operator, if you go to slide five, please. What is really happening in this market, or what happened in the first 30 years in this market was basically enterprises realized that there's an additional channel to email, which is SMS.
The reason enterprises adopt SMS is pretty simple. It has much higher open rate. Typically, we say it's 98% open rate and 95% read rate within three minutes, which you know beats email hands down. Enterprises realized, hey, if I got a short, simple message to tell, text messaging is a more effective way to get attention of consumers than email, that's why that market grew to SEK 17 billion. Text has one major limitation, that is it's only 160 characters, it's text only. That limitation is now removed with the next-gen messaging formats being RCS, WhatsApp, Facebook, Apple Business Chat. There's a lot of those channels. What's happening is basically you can keep the high open rates, you get an app-like experience instead.
The number one limitation of text is being removed while you keep the big benefits of the high open rates, and that is something that we think is going to grow this market for the coming 20 years. We believe this is going to be a gradual evolution. Enterprises are slow to adopt, and there's a lot of them. We talk about communicating to every single consumer in the world. This is millions of enterprises. It's going to be a gradual approach, but it's going to drive growth going forward in this market. Operator, slide six, please. Just one example of what we're talking about. Here we're doing an RCS campaign for a company called Cdiscount in France. Cdiscount is an e-commerce company. They're doing an outbound mobile marketing campaign.
Previously, they were using SMS, right now they moved a portion of that traffic to RCS. As you can see on the left, you see how it looks. Instead of just having a text message, you can have a picture message, you can also have action buttons. You can click on buttons if you want the user to do anything. On the bottom right, you see the increase in the performance indicators. They had a 9% increase in the average basket size of consumers actually responding and buying something from these messages, they had a 4% increase in revenue. This is only by moving from SMS to RCS. As you can see, pretty much any outbound campaign, you will have a significant uptake in your conversion rate to whatever key business KPI that you have. That's the power of this market.
All right, let's move to slide number seven, please. Playbook for profitable growth, we play in two different areas. Our main area and number one area is the connectivity. This is making it possible to send a text message, making it possible to send on WhatsApp or Apple Business Chat or RCS or WeChat message or Facebook or Viber or KakaoTalk. There's a lot of these new channels. Making it possible to deliver that message. It is connecting the voice call from you to your ride-hailing company. It is connecting the video call to your doctor online. That's kind of the connection piece, making sure you can communicate. That's the largest part of our business. What we call the SaaS services or the value add on top is basically where we add something like Chatlayer.
Not only do we deliver the message, because what happens is enterprises get responses from consumers, they ask us, "Well, can you interpret the intent of the responses of these consumers?" Basically, either they have to channel all these responses into the care center and pay SEK 5 per response, or they can automate understanding the intent of what the user wants. With Chatlayer, we can automate understanding the intent. We would tell the enterprise, "A message came in. Here is the message, and this consumer wants to rebook his ticket," or, "This consumer wants to cancel his appointment." We would tell them that, and in that case, they can actually automate the entire chain and reduce their cost. That's one example of the Software as a Service on top.
There are very large amount of those type of services that enterprises now demand when they go into the next-generation services. Right. Operator, slide eight, please. We made quite a few acquisitions, as you know. The latest ones are SAP and ACL, which are now closed. We're happy to announce that. Then Wavy, where we're still working on closing with the regulatory authorities in Brazil. We do this in two different areas. We do it in scale and profitability and technology and go to market. Scale and profitability is larger, typically getting market access, getting access to operator, get access to a large country and a large number of customers. Where technology and go to market is where we talk about Chatlayer and myElefant, where it's a technology proven with customers in one country that we want to scale globally.
That's what's happening with Chatlayer and myElefant and Vehicle right now. We're taking those, and we're selling them through our entire distribution network of Sinch. Operator, slide nine, please. I do not intend to go through this slide, but I want to have it in the deck in order for you to have it as a reference slide. The deal rationale of ACL is very simple. India is the world's second-largest mobile market, 1.3 billion population. We get access to that market, 500 large enterprise companies, including the majority of India's privately owned banks. It's a highly profitable company where we make an accretive acquisition. We think that's very good for our shareholders. Operator, next slide, please. The next one is SAP Digital Interconnect. You saw the numbers before. It's a major step up for us, both on the gross profit and EBITDA level.
SDI is present with the majority of the revenue in the U.S., Europe, and APAC. This is 1,500 enterprise customers, some of the world's most valued brands. It truly diversifies our customer base. It's also a highly accretive deal, and it fits the scale and profitability category. I think both of those acquisitions we're very happy with. We think they significantly strengthen our position in the market. All right, let's move on to the next slide, please. In the quarter, we launched the Conversation API. We're now on slide 11. This is a way to, via one API or one access point, access all channels. As an enterprise, you don't have to make one connection to us for SMS, one for WhatsApp, one for RCS, et cetera. You can make one connection, and you can use all different channels.
We would then help enterprises to select the channel that is best and best fits consumers' needs. This is a major launch for us, and it is moving us squarely into the omni-channel or multi-channel land. We call it Conversation API because it also enables consumers or enterprises to have an easy way of handling true conversations with their consumers. If we look at slide number 12, operator, this is just an example of how it looks. If you look at a text message to the left, it's a text only. If you look at an RCS message next to the left, you see you have a picture, but you also have action buttons on the bottom. If you look at a WhatsApp message, you have the pictures, you have a couple of links, et cetera.
You look at a Facebook Messenger message, you have the picture, but you have a text, then you have a couple of action buttons. The Viber message looks pretty similar. I think you can all agree on the attractiveness for a consumer of any of the most right-hand messages is more attractive than the leftmost. Therefore, the conversion rates to whatever key goal they had with this message is likely to increase. That's basically what our data is showing us. We are also helping enterprises to render or display these messages across different channels. They can tell us, "This is what I want to send," and we will help them, via our technology, to format the message in the optimal way across the different channels.
That's obviously a great value-added service for enterprises because this gets pretty complex when you're trying to communicate with consumers around the world across multiple formats. That's one of the benefits of Conversation API. This picture, I think, shows very clearly, just the difference between the different channels and the power to reach commercial rates. All right, operator, slide 13, please. July to September, gross profit up 40% to SEK 418 million or SEK 481. Adjusted EBITDA rising 53% to SEK 226, and previous quarter, SEK 147. Adjusted EBIT excluding acquisition-related amortization was SEK 210.7 million, compared to SEK 137 million.
Profit after tax then including acquisition-related amortization being SEK 91, but that's non-cash flow impacting. Organic gross profit growth was 24% in local currency, so without currency effects. You see the COVID-19 causing a reduced voice traffic and length inside sales cycle, but the main business is doing well.
You have an impact on some segments, but a negative impact on some segments and a positive on others. Therefore, we net and probably even. You see that we have seen high scalability, meaning that EBITDA grows faster than gross profit, despite us increasing OpEx to handle greater business volumes and strengthen go-to-market and develop new products. Operator, slide 14, please. Key growth drivers in this quarter has been continued volume growth with the U.S. big tech companies. It is the general trend of businesses increasing their use of text messaging and messaging in addition to email. That's a trend that has been going on for the last 30 years, and I think it will continue to go on for the foreseeable future. Then, obviously, the acquisition of TWW, myElefant, Chatlayer, and ACL Mobile impacting in this quarter.
Four investment areas, it's organic growth, operational efficiency, new technology integration. That's our four main topics. I won't go into detail, but organic growth obviously being very important to us. Operational efficiency, given the number of volumes we do, 107 billion transactions. That is, what is it? 15 or 13 transactions per mobile phone on the planet every year. Every year we touch every single phone on the mobile on planet 10- 15 times, basically. Obviously, there's a lot of operational efficiency we can do that and automate our tools and drive more COGS efficiency. New technology, investing in the Conversation API and new channels and additional software, I think that's relatively apparent for you, when you look at the differences in what you can actually get from a consumer conversion rate perspective. Obviously we take quite a bit of cost right now for integrating these companies.
You see that below our adjusted EBITDA, in integration cost in order to be transparent for you what the integration costs are. Slide 16, please, operator. We have strong growth in messaging, total gross profit growth of 57 with organic at 35. You see messaging segment growing the fastest for us, driven by U.S. tech and myElefant and TWW are included since mid-October, Chatlayer since April, and ACL since September. We're obviously getting tougher comparable figures heading into 2021 given the very strong growth we had in the couple of last quarters. We ask you to be mindful of that, even though we were obviously continuing to push hard on the growth area. Comparables are obviously getting tougher when you've done this type of growth hike. All right, operator, slide 17, please. This is an interesting slide.
As you can see the last quarter when we include the message volume ACL, we do a true step change. Yeah, nominal figures at 265% year-on-year growth in transactions in Q3 with 19% growth in comparable units. SAP will add further volume from 1st of November, and then growth from existing customers and new customers and new use cases. Mind you, this very large jump from ACL, it is important to remember it's a very, very large country. That is why we were interested in acquisition. It's huge volume, but obviously at a lower gross profit per transaction. That's something that also will continue to grow both as the economy in India grows, but also as the mobile penetration grows.
There's both a growth in the economy and therefore hopefully then in gross profit per transaction, but also a penetration growth rate in India, which we think is very attractive to be in such a market. All right, operator, slide 18, please. On this you can see a consistent effect on the gross profit and OpEx per transaction, and this is very interesting of course. Obviously, you will have a drop in gross profit per transaction when you move into this type of market with such a high volume. You see the drop at the tail end there. You have a little bit of a downturn before, but I think that's within the trend line, on the gross profit per transactions. The major thing here is from ACL.
Then you see on the OpEx per transaction truly going down as well, which is a very interesting concept, and that's another reason why we did this. I mean, truly establishing ourselves as with a low-cost base, being able to play the true low-cost game as this market becomes increasingly competitive, having a base in India where you can run operations, you can have development centers where you still own, you can run a lot of functions there at a much lower cost than the Western countries. That's another very strategic thing that we have done and that we're looking forward to exploit fully. Operator, slide 19, please. You see the margin in messaging, and we measure that as messaging EBITDA per gross profit. This includes both the text messaging and the new messaging formats.
As you're seeing, we had a good growth for that, showing the true scalability on the messaging-based business. This is a very highly scalable business. We're dropping in the last month here, more than 50% of each gross profit dollars that we make, we drop down to EBITDA in messaging. I think the trend of this curve is obviously very, very strong. Revenue and gross margin depend on the mix on the terminating market. The EBITDA gross profit shows margin excluding the mobile operator charges. You can really see here that adding traffic volume increases gross profit more than increasing OpEx. This is the scalability in our business. When you get to this scale and you run it like we're doing, then you have a truly scalable business model. We're obviously now doing continued OpEx investments to capture growth.
There are some positive timing effects here, so holiday and currency reducing OpEx in Q3. This will look a little bit up and down, but I think in general, we are performing very well on this trend over the last quarters and years. If you look at voice and video, you see what we have been talking about, a sharp decrease in demand in Q2, as number masking from ride-hailing customers as COVID-19 reduces traveling. You see an improvement which continued into Q3, but you see improvement at the end of the quarter. Especially the last month, we saw an improvement, which is great. On the other hand, it's uncertain future due to renewed lockdowns. Obviously with lockdown, it's less ride-hailing traffic. I think through this we see, when there's a lockdown, when there's reduced traffic, we will have a significant reduced traffic.
We're also seeing it's coming back when the lockdowns are going away. Now let's see what's going to happen with the renewed lockdowns, then it may increase going forward. I think your estimate is as good as ours there. We have positive underlying trends in the other part of this, which is number verification. It's not all ride-hailing. Around about 50% of this is ride-hailing, but the other 50% is number verification, where we see a positive trend underlying. Last slide for me, the recovering operators. We do see a return to profitability, partly driven by currency headwind, by reduced currency headwind. We do see lengthened sales cycles with operators and slower investments due to COVID-19.
We're also investing quite a bit here due to the 5G messaging product sold together with Ericsson, and we see a positive customer feedback on that. All right. Operator, next slide, please. I hand over to Roshan. Over to you.
Thank you, Oscar. Good afternoon, everybody. Glad to be able to present some comments on the financials for Sinch in this quarter. Our scalable cloud platform continues to enable delivery of digitized customer experience journeys. On page 23, if you turn to page 23, you see the consolidated net sales, which grew by 46% in the quarter to SEK 1, 778 million. The growth rate in the quarter was positively affected by the acquisitions of TWW, Chatlayer, myElefant, and ACL. The organic growth rate of net sales in local currency was 35%. We see a strong continued development of adjusted EBITDA per share, which was SEK 3.65 for the quarter, versus SEK 2.73 same period last year. On a running 12-month basis, adjusted EBITDA per share increased to SEK 13.53.
For the messaging segment, adjusted EBITDA was a record high at SEK 246 million for the quarter versus SEK 135 million last year, same period, and SEK 214 million in the previous quarter. EBIT came in at SEK 155 million versus SEK 87 million in the same period previous year. Acquisition-related amortization, which does not affect cash flow, was SEK 44 million in the quarter. This amortization relates mainly to planned amortization of acquired brand customer and operator relationships as well as software. If you exclude this, we look at a measure called adjusted EBIT. Adjusted EBIT was SEK 211 million for the quarter against SEK 132 million last year. Operator, please turn to page 24. Here we see a bridge explaining our underlying gross profit development.
A significant part of our revenues are passed on as cost of goods sold to mobile operators, and hence we tend to focus on gross profit in our internal target setting and measurement versus revenues, and that's how we steer our business. Changes in our gross margin oftentimes reflect changes in geographical mix rather than underlying performance. Over time, of course, we aim to improve gross margins through delivering additional value-added components to our customers. Consolidated gross profit rose by 40% during the quarter to SEK 481 million, versus SEK 344 million the same period last year. Negative exchange rate movements reduced growth by SEK 16 million or 5%. The acquired companies, TWW, ACL, Chatlayer, and myElefant, contributed 21% or SEK 72 million of this increase. Organic growth in gross profit in local currency and comparable units was at 24%.
Gross profit growth was by far the strongest in the messaging segment at 57%, in line with recent quarters, of which organic growth in local currency was 35%. Adjusted EBITDA over gross profit came in at a record 58% for the quarter as we benefit both from increased sales scale, but also from a somewhat more cautious approach to increasing costs earlier in the year in the light of COVID-19. As you will see, we are continuing to invest in the business as we see that COVID-19 has not hit our messaging business negatively. Gross profit declined by 54% in the voice and video segment and 5% in the operator segment, both affected by muted demand due to the ongoing pandemic and related economic development. Operator, please turn to page 25, where you will see a summary of the number of resources at Sinch.
We continue to invest for continued growth. The main areas of resource addition, as Oscar referred to, are driving internal operational efficiency and quality, increasing our sales and marketing efforts, as well as investment both in new technology and in integration of acquired companies. Our headcount is distributed in many different locations across the globe. Definitely the diversity is increasing with the acquired companies, but the majority of resources are still in Sweden, with the U.S., Poland, and U.K. being other locations. We're happy that 288 employees from ACL Mobile have joined us during the quarter. As we close SAP Digital Interconnect transaction after the quarter, 322 employees have joined us from the 1st of November. In addition, we see that the Sinch headcount during the quarter has grown by around 50. The numbers that you see on this page, of course, are quarterly averages.
A lot of the work that is being done to support our gross profit growth in the current periods, and also investments in conversational messaging using channels such as WhatsApp, for example, you saw the launch of the Conversation API, which also Oscar referred to. These investments are taken mostly as OpEx, through our income statement. We have very limited capitalization of resource costs, which we believe to be prudent. Turning to page 26, you will find a bridge from adjusted EBITDA to cash flow before changes in working capital. As we informed with the Q2 report, there's a timing effect in paid tax in the United States, which we see now in Q3 as higher paid tax. In the quarter, we have also significant acquisition costs related to the announced transactions with SDI and ACL.
Despite this, we see a strong cash flow generation from operations of SEK 145 million or 64% in relation to adjusted EBITDA. Please turn to page 27 for the cash flow statement. You see cash flow from operating activities was SEK 107 million due to seasonal swings in working capital. Changes in working capital, of course, fluctuates from quarter-to-quarter. I think overall we're happy with, as we continue to grow the business, that we're able to manage working capital in a good way. Many of our customers, of course, try to maximize the liquidity, especially at quarter end. This can affect us from quarter-to-quarter. On page 28, I would like to summarize the status of our ongoing acquisition and integration processes.
I'm incredibly excited today to again say that we have closed the acquisition of SAP Digital Interconnect, and therefore can move it to the integration execution phase. For Wavy, we continue to go through the regulatory approval process, and we continue to be confident that this transaction will be approved. As usual with regulatory processes, there might be small delays which might occur in comparison with our original time plan, but we still expect to close it during Q4. For the integration phase, our focus remains on commercial execution, on the launch of new products and services, and cross-fertilization across our customer bases, technical integration, and finally, of course, other functional integration. It has been great to see already in this quarter contributions of SEK 71 million in gross profit from the acquired companies, but also we see other cross-sale successes, such as signing the first Chatlayer customer in India.
Turning to page 29, adjusted EBITDA per share grew 51% in Q3 2020, measured on a rolling 12-month basis. Sinch has a positive cash generation, and we had a positive cash position at the end of the quarter with SEK 970 million. Net debt to EBITDA was at negative 1.2x . The financial targets for the company are unchanged from what we have previously stated, where we aim to grow adjusted EBITDA per share by 20% per year and maintain net debt below 2.5x adjusted EBITDA over time. Please turn to page 30. On page 30, we summarize our financial leverage pro forma upon closing the announced acquisitions. As at Q3, if we closed the outstanding acquisitions of SDI and Wavy, then we would have had a net debt to adjusted EBITDA of 1.8. We believe that our underlying business performance will enable a timely de-leveraging.
We're happy to report that at the end of Q3, our pro forma leverage is already below our financial targets. We look forward to the future. With that said, I'd like to hand back over to Oscar to summarize today's presentation.
Thank you, Roshan. Key priorities, continued growth with U.S.-based global tech companies, great customer base. Of course, we should try to continue to grow with them. Our initiatives for broadening our growth, we work hard on that, and we see good positive early signs across the base. New customer wins in next-gen messaging through Sinch Conversation API. We see this market is really running, and we see great early-stage demand, even after the first days of launch. Closing our pending transactions, obviously, very key. Working with Wavy, we were successful in SDI. We hope to close Wavy, you got to be, in these type of acquisitions, when you do a lot of them, there are always risks for delays, and we're aware of that, and that's the game we play. We continue to be positive on all the acquisitions we've done.
Nothing has changed in our belief in probability of closing them. Obviously, technical and commercial integration of SAP Digital Interconnect and the other acquisitions we've made, it's a very large focus area. We continue to strengthen our connectivity offering, focusing hard on that. That's where we are probably the largest in the world, but also investing in the SaaS product for advanced next generation messaging. With that said, I would like to conclude the presentation and hand back to Thomas and operator for any questions. Thank you for listening.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypad now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Once again, that's zero one to ask the question or zero two if you need to cancel. Please limit yourselves to two questions per turn. You can rejoin the queue if you have any follow-up questions. Our first question comes from the line of Predrag Savinovic of Carnegie. Please go ahead. Your line is open.
Thank you very much, operator. Hello, everyone. My first question, I'm wondering a bit on your U.S. revenue opportunity here. The U.S., it's 54% of total messaging revenue in the quarter, and judging by the gross margin, it seems to be mainly non-domestic traffic, and the growth year-over-year for the U.S. seems to be over 100%. This is clearly impressive, but I can't help but wonder, what can you do to get more domestic traffic here? Do you see this happening, in that case, when and why?
It is not only, and we have a very large domestic U.S. business. We are if we're number two or number three, but in that area, in the domestic U.S. market, I just want to be very clear. We have a very strong standing in messaging in the U.S., full stop. We have a large and significant domestic U.S. business. We're also good at international. If we stick out anything, it's high-quality international delivery, because that's harder and less competitors that can actually do that. Because in each region, U.S. being one region or Europe, you have a couple of local regionals who can compete in that, but fewer of the competitors can actually do high-quality international delivery. That's where maybe it's only us and two other companies who can do it for the really biggest customers.
We see growth in both of those two areas, and I want to be very clear that we have a large and solid U.S. domestic business as well. Did that answer your question, or did you have any follow-up on that specific one?
No, that's very clear. I'll take my second question then, which is one of your competitors, Twilio, with their recent investments and acquisitions, they will now be competing to what seems to be some of your key customers within the U.S. big tech. Given this move, competing with some of the major platform owners, could this imply that your relations with some of your largest companies will strengthen even further?
Yeah. Well, first, you'd have to ask them. We obviously ask them. Here you see a little bit of the difference in strategy between the companies. Basically, we believe in a very partner-oriented go-to-market approach. The basics are our enterprises should reach 100% for the consumers in the world. That means millions of enterprises, and there is no way that any single company will be able to sell all of those enterprises directly, in our view. That said, we believe that using partners to reach them, that may be the cloud platforms, which I assume you're alluding to, Salesforce, Oracle, Adobe, Selligent, I mean, but there's a lot of them. That's one group, but it's also local ASPs, like local ASPs or application service providers in the local market, but it also includes SIs and creatives, so system integrators and creative agencies.
We believe that partner go-to-market is very important. Yes, you're right. Some of the moves that Twilio have made puts them in a competitive situation among a couple of these. Flex competing on the call center side, and then the latest acquisition of Segment may be seen as competitive on more the cloud platform side. The acquisitions of SendGrid on the mail side is obviously competitive to the mail people, but it may also be to the other side. That said, we have a partner-oriented approach, and then how the customers react, we'll have to see in the coming quarters.
Very clear. Thank you very much.
Thank you. Our next question comes from the line of Daniel Djurberg of Handelsbanken. Please go ahead. Your line is open.
Thank you very much for taking my question and congratulations on a really strong messaging growth. I have a question first on your new Sinch Conversation API. Can you comment or give us a little bit more on your go-to-market strategy and also the unique selling points you have here versus competitors, for example, Twilio, is your reach rendering better or on par with the messaging orchestration they have? Let's start with that one.
Yeah. It's a good question. Go-to-market is, in one way, in the simplest form, relatively similar to text if you sell an API with more channels. I mean, either you sell a text messaging API or you sell an API with more channels. That's an API-based sales of messaging connectivity, which is pretty similar. When you go into Conversation API, what happens is enterprises typically want more software on top. They would typically want Chatlayer on top because consumers start to respond, and then you need to have an automated response engine, or they want more software to create the messages. It becomes a more value-added go-to-market model. There you need a different type of sales force, who are a more value-based sale than you had in the classic old CLX days, if you will. That is changing our go-to-market model.
In one way, it's similar. In one way, it's different. That's a transformation we're going through, and believe me, it's very exciting, but it's not easy. Your second question I have now forgotten. Could you please repeat that?
It was a little bit on the competition. For example, you have the rich rendering, while some of your competitors have this orchestration offering, if it's similar or unique selling points, was my other question.
It's hard to say because the market is so similar, it hasn't really ironed out or so early because it hasn't really ironed out yet. One is the number of channels. We're going for having the broadest channel selection. Number two is personalization, using the assets from Vehicle and a couple of other technologies. Really making the messages personal to the consumer is one key thing. Second one is our core USP in all the company, which is just service quality, uptime service quality. The third one would be looking into the data side and looking at how can we actually help companies to improve their commercial rates. That's a couple of the USPs we're targeting.
This is customer-driven development. You need to work closely with the customers and realize what do they need, what can we do, and that's going to be developed over the coming quarters. That's directionally where we're going.
Okay, thanks. A super fast question on Vehicle. You did this earn-out write-down in the quarter, but the company reached the targets for 2018 and 2019, it seems. What has happened, and which criteria did the entity fail to meet?
Roshan, do you want to answer that?
I can take that one. When we do these acquisitions, we have a number of targets, both in terms of overall financials, but also in terms of what KPIs we want to deliver underlying those financials. I think without going into too much of detail, obviously, we're happy with the overall development of the business, but there are some parts of that agreement that were not fully met, and therefore, we have a positive one-time effect below adjusted EBITDA in our P&L this quarter.
We should be very clear. We're very happy with the Vehicle acquisition. We think the team is doing great. They were one of the teams hit by COVID, gross profit development and growth in the tail end were slower than expected, which made a little bit below targets, and that's when these things happen. In general, we think that if you look at the longer term, it's a great acquisition. The team is doing very well, and it fits extremely well into our portfolio. I think we're super happy with it. With the target set, yes, they were a little bit below, we obviously act according to contract.
Okay, crystal clear. I'll get back to queue. Thanks.
Thank you. Our next question comes from the line of Ramil Koria of SEB. Please go ahead, your line is open.
Thank you, operator. Thank you, gents, for the presentation. Two questions, I'll take both immediately. First off, following up on the Conversation API question. On a like-for-like basis, is there any sort of gross margin differences in relating to differences in the pricing model here as opposed to pure play single messaging APIs, given rendering capabilities, et cetera, being added on top of this? My second question relates to your comments, Oscar, about expanding outside or improving your momentum with customers outside of U.S. big tech. Can you take us through what's specifically being done there? Could you perhaps verticalize the sales force to find for sector-specific use cases? Yeah, just take us through that. That would be great. Thank you.
On the first question, there are two parts to when you sell the Conversation API, alluding to what I said before. Basically, there is a pure messaging markup, just delivering the message. In that part today, the margins are a little bit higher than text because the volumes are lower. We, in principle, believe that long run, they will be similar if it's just delivering the message via an API, if you will. That's what we see when we go in and make deals with big customers. The people with big volumes, the margins actually become similar on an absolute gross profit per message level, because then the percentage obviously depends on the carrier charges. That's how it looks. There is a large opportunity, which we also see, for adding software value on top.
There, the margin profile looks much more like a SaaS business, where you charge either on a seat-based model, like monthly active users, or you charge an additional transaction fee, so you charge SEK 0.01 extra per transaction, or you charge a monthly fee. That can come in the form of Chatlayer, or it can come in the form like you correctly stated, improved rendering capabilities, or it can come as improved automated routing in between the channels and optimizing that for the enterprise via data and AI and machine learning. Just three examples. All of those will in total increase the gross profit per transaction, and all of those will look more like a SaaS-based model where you have a total 80% margin or 90% margin in that value-added services area. Moving on to your second question. You had two questions in one.
One was, what are we doing? The other one is, could you divide up the customer segments? If I start with the second, the customer segments are, big tech is one, we have cloud platforms, a second one, a channel. We have ASPs, so application service providers. We have enterprises. We have system integrators and creatives. That's in principle our four major segments. We're not targeting SMBs in any major scale. Other competitors do. We are not focusing on that at the moment. All of those categories are significant to us. All of them are a significant part of our base. They're all significant and all big, basically. The way we go to market, or what we do in order to increase growth is we are dividing. There are two parts to our sales, if you will.
It is new sales or signing new logos, and it is managing the base. We divide that with dedicated people in selling new stuff and then managing the base. The new stuff we're dividing in field sales and inside sales. What we're doing there is tightly measuring how much bookings do each of those reps have per head. We see now a good increase in the bookings per rep on both the field sales and the inside sales area. Second step there is turning that booking into GP, where we see an improvement, but we think it takes a little bit too long time for us to turn it into GP. There we have another set of actions of making it from order to live or order to gross profit faster. That's the number two.
We're working with the account management base, and you have a bookings per rep. That is what they sell in new, in cross-sell and up-sales. There, we're working with them to increase their cross-sales numbers. That's one area. The other area which we've seen very successful with the strategic accounts is just increasing the amount of traffic we have on existing products, like just the SMS business or the voice business or whatever we have, by focusing on the largest accounts. We've done that very successfully with the strategic accounts by putting cross-functional teams with them and really supporting them. We're now doing that on a set of other key accounts, some 50, and then going down the base and really focusing on the most important customers in order to grow their base traffic.
We're also doing efforts in marketing, where we have started to measure an ROI. Basically, if I spend SEK 1 in marketing, how much do I get back? We see now we've proven during the year getting an increased ROI. If I spend SEK 1 in marketing, how much gross profit do I sign based on that? We measure that and track that through the entire chain, and we see that number's increasing. We're obviously optimizing that number, but now we're starting to increase more in marketing because we see the ROI is good. I could probably go on for 50 more minutes on this, but that's a very high-level explanation of what we're doing.
Yeah, that's crystal clear. Thank you, Oscar.
Our next question comes from the line of Fredrik Lithell of Danske Bank. Please go ahead. Your line is open.
Thank you very much. Congrats to a great report. I have two questions, please. First one, Oscar, if you could, on the SAP acquisition, talk a little bit about the two smaller segments and your impressions of those right now, and if you have changed any views on what you intend to do with them and how you intend to maybe trim them in terms of profitability or grow them. That's one question, really. The second one is a question I've raised before, a couple of years back maybe, and I'm still very interested about your views on the same question, and it goes to COGS and the fact that you are growing in size with all the acquisitions you do.
Does this change your competitive situation, your power situation in negotiating prices you get on SMS volumes or termination fees or something like that with the operator? Does it change anything on a global scale maybe, or maybe locally? Just interested. Thank you.
All right. First on the SDI business, I assume you refer to the P2P and then the enterprise solutions, which is primarily a contact center. On the P2P side, we are continuing to keep that business. It is a highly cash-generative business, which is profitable. It is growing slower on average than our main business, but it's cash-generative and profitable. It is also making our relations to operators much closer because we have software in the networks, and it gives us relations to the operators, which are very, very valuable. We see that's a strategic benefit to have that type of business because you're getting close to the operators and can do more with them in the future. That we're continuing to run, and we're running it as a separate business with a separate P&L, a little bit like we do with our own operator business.
Exactly how we organize the relation in between them, need to get back to that, but we have a view on how we do that. On the contact center business or enterprise solution, which is mainly contact centers, I talk about a contact center. We are engaging with the contact center team and, but mind you, we closed it yesterday, or the day before yesterday. Sure. We have obviously engaged within what we could do to avoid gun jumping, and we'd be very clear on not taking any risk there. We're engaging with that team now and seeing how and what can we do with this team that aligns it with our core business strategy. There we have some very interesting strategic discussions of how can we align this closer to the CPaaS business and closer to the messaging business.
There are a set of needs that enterprises have that we think we can do, but I will need to get back to exactly what we do when we actually gone through the strategic process. We do see a great value in that team, but we're having the strategic discussion of being aligned.
That's very clear.
On your second question now was, remind me here,
On the COGS, if the scale that you have now sort of brought in through all these acquisitions, if it changed anything, your sort of negotiation power towards operators on the traffic costs.
Yeah. COGS is very important in the text messaging business, of course. A couple of aspects of that. Yes, volumes give you, in some way, higher Works you up the volumes games with the operators, I would say. Yes, with higher volumes, you may get a bigger discount, and that happens. Last time I checked, I was still much smaller than AT&T and Verizon, right? In terms of a purchasing power, operators still have the power. In principle, if they have a volume scale, then yes, we get higher, but it's not like we're then going up to AT&T and calling the shots, right? They are still calling the shots, and that's still the same with the operators in Brazil.
They decide their pricing. Obviously you're a bigger partner, yes, and you can talk to them, but it's still an operator set pricing, and we've got to be very clear on that. COGS is also important, which we need to know that COGS is, there is a big gray route in COGS. A lot of companies in this market are using gray routes or using SIM farms to send around operators. We see an increased usage of that in the market, which is a big concern because they're going around the operators and not playing according to rules. That's a bigger concern where we're getting competition from gray routes in various areas, which is a concern of us right now. That's another trend in market, if I compare.
Okay. All right. Thank you very much.
All right, everyone. I think we're quickly running out of time. I think we'll have to ask people to get in touch with us. We're happy to try to answer as many questions as you have, and really thanks for the engagement and interest. We'll have to cut it short here as we've reached this full hour. I think with that, thank you very much, and I'll leave to Oscar for a final remark before we close the call.
Thanks for listening in to us. We truly appreciate your interest. We're happy to delivering a good result and we're working very hard to continue to do that. Thank you for your interest.