M&A Announcement

Sep 22, 2021

Good day and thank you for standing by. Welcome to the Investor Update. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the call over Your speaker today, Chief Strategy Officer and Head of Investor Relations, Mr. Thomas Heath. Thank you. Please go ahead, sir. Thank you very much, operator, and good afternoon, good morning, everyone. Welcome all This conference call with Cinch AD announcing the acquisition of Messenger People. My name is Thomas Heath, Chief Strategy Officer, heading up Investor Relations. With me today on the call is our CEO, Oskar Werner and our CFO, Roshan Saldan. And with those introductory remarks, I'll hand the line over to Oskar. All right. Thank you, Thomas. So we're very happy to have announced today that we have agreed with Messenger People to join forces with them. So this is an acquisition we this company we have been following and talking to for quite some time, but It's a very interesting position and good traction within the conversational SME space in Europe, and we think strengthens Operator, Slide 2, please. So this slide you've seen many times before, we have a revenue of $11,800,000 or $1,000,000,000 In the past 4 months, SEK 1,000,000,000, I'm right. It's still morning here in Atlanta. Sorry, it's SEK 11,800,000,000 in the past 12 months. Sorry about for any confusion. Adjusted EBITDA of $1,200,000,000 SEK. 2,300 people before the latest acquisitions with all of the ones we have announced is going to be a little bit above 3,000. Customer engagement through mobile technology is the key. And I think looking at this transaction, it really goes to the customer engagement part. We're really hitting the being able to engage customers in a better way, and we think that's very, very attractive and exciting. Scalable cloud complications for messaging, voice and video, so this clearly strengthens us in the messaging area. And the messaging is to us, it's kind of the big and large text messaging market, which grows at some 15%, 20% per year. And then we got the Very early stage, but very high growth conversational messaging market where Volume over which is growing at 100 plus percent per year basically. So this is kind of strength in house in the newer messaging segments. But the good news in this market is that both are actually still growing strong, but obviously, the compensation and management segment is growing much, much faster, but from obviously also a much smaller base. Doing JPY 107,000,000,000 engagements a year and So Yirend serving the biggest, largest tech companies here. So this is our market and this really hits the consumer engagement. It hits messaging And it's primarily and it's kind of the newer segment of messaging, which is conversation messaging, going via WhatsApp, Apple Business Chat, RCS and all these new channels And adding applications and a SaaS layer on top of that. So that's kind of the area we're talking about on this side. Operator, next slide, please. So where we see CPaaS and where we actually interact With our customers, it's pretty fascinating because it's we do this across the customer journey. So we see that we may get in with And one persona, one buyer in the company, and then we typically get brought in by other departments. So the core If you look in a company, the core buyer persona or the core functions that we're actually selling to is, 1, is marketing, which is Not so much outbound marketing of sending big marketing campaigns, but it's within In the journey, you want to do cart abandonment rate, then you send a text message Saying, hey, we saw you abandoned the shopping cart. Can we help you? Or it's things Churn reduction during explaining the phone bill, how it works in order to reduce churn in the sign up flow. So It's marketing, but more kind of when you have made a transaction, how do you keep the customer or when you're about to make a transaction. So that's kind of one big persona that we're selling to. The other one is more operational. These are you've gotten them like appointment reminders, one time passwords. It could be delivery of the mobile boarding pass things like that, just a delivery of the service to you as a user, given a reminder, for example, to reduce The no show rate at a hospital is a very effective use case. And the third one It's customer service, which is basically consumer preferences are moving From voice to messaging channels, and we see that in the chat usage. If you look at all your kids, you see that, I mean, the use of all the chat apps. And this is really a trend that consumers that they're going to increasingly want to use messaging type services in order to communicate with their friends, But also with enterprises and companies. So a lot of enterprises are adding a messaging component to customer service. And there that's where you can actually both do the channel, but you can also do a SaaS on top to interpret the intent, to automate some of the answers, etcetera. So there's a lot of like a Software suite that you can add on top of the messaging channels in that. So these are the 3 categories. Cinch has traditionally been big in the yellow part. We have been growing very well on the marketing part. We are traditionally smaller in the customer service part. Messenger people are strongest in the customer service So they're kind of strengthening our offering in that area as well as in conversation messaging. So that's kind of the use case that they have the majority of the revenue. We have shown this slide before. We have a playbook for profitable growth is really investing on the connectivity side and then adding Software as a service on top in order to extract more revenue from each customers and give a better service to each customer. This acquisition falls in the top one, software as a service, Messenger People sells primarily a SaaS software, Charging $500 a month or charging on a per user basis. And so it's Almost exclusively, I think it's 92%, it's the SaaS revenue model, which is just selling software on Top all the channels and monetizing AA software platform. Operator, if you go to Slide 5, please. In our categories of M and A, we've talked about this before. So scale and profitability being the bigger ones giving us large Scale and significant increased profitability and then technology and go to market acquisitions where we see this is a Complementary technology that complements Artech, and it's a complementary go to market where we would really strengthen our own go to market In a segment in the market, etcetera, this acquisition falls squarely in the technology and go to market. It's a relatively small 40 person team, but with a very strong position in Europe and in Germany In conversational messaging to the CustomCare area. So this is a okay, we gain a technology component and we gain a Strong low market traction that we then can scale out to all the other Cinch regions and take a lot of lessons from. We've seen this done very effectively with Chatlayer being a Belgian company that we acquired and now so Chatlayer went from Selling their biggest customers was Proximus in Belgium and now they're selling to customers like AT and T in the U. S. And they're selling in India and their largest market right It's Latin America actually. So all of that is coming from the Cinch sales network and go to market network, We have picked up Chatlayer and then pushing it out in all the regions and using their original technology, but it's more than technology. It's like also the understanding on You sell these different customers that we learned a lot from chat player and then pushing that out into other markets. This is a Similar route here with Messenger People, where we get it together with our platform, but then push it out into a lot of other markets that have showed interest for this type of technology and go to market knowledge. Operator, Slide 6, please. So in the recent transactions, you have I know many of you have seen this before. So latest one being Message Media, that was both in technology and scale technology to market and scale and profitability since they had SaaS platform for SMBs, but there were also scale and profitability because they were so large and adding really to our scale and our profitability, While Messenger People is squarely in the tech and go to market, while we pick up a really good component and a really good go to market team, And we aim to scale up on global level in the coming quarters and coming years. All right. Operator, Slide 7, please. So Deal Rationale, Messenger people, and a little bit of the background, founded in 2015 as a pioneering provider as a software as a service business for communications via Messenger apps, one of the So the first people on the planet to work closely with WhatsApp and as a messaging app for enterprises, 700 active customers, of which 80% is in the DACH region and a team of around 40 people in Germany. It is some of the deal rationality tech and go to market type transactions, which will strengthen our product offering and fuel our growth by being strong go to market. We're going to scale it out to other regions basically. What it will give us, it will accelerate Something we talked a lot about, concession Messaging, to acquire a European leader focused on the mid market business. So this is not focused on the smaller, not on the largest accounts, but on the mid market. It will increase our SaaS revenues And GP in a high growth market segment. This segment is growing fast and adding gross profit that has very high growth profile is very good. And it builds on our organic investments. This is something that we have evaluated closely from a tech perspective, and we Our tech, product and engineering teams see, all right, if we bring this in and we combine it like this with our existing offering and then unifying these five things, Then we will have a very strong offering. So it's this is not a standalone thing. In the end, you're not going to see a standalone Messaging People product, it's going to be merged together with our product offering, but it saves us quite a bit of time in order to go to market and it will give us a strong traction and a much stronger position in the market. And a much stronger position in the market. Integration, near term focus is on go to market expansion, Accelerate international rollout. We have specifically identified India and Brazil as 2 really attractive markets. We will use their expertise in presales and customer service use cases to scale to existing and new Cinch customers, Use our global presence and then a phased integration of the product suites within our own software and communication APIs. So Roshan or Thomas, do you want to do the financials here? Yes, I can step in. Thanks, Oscar. Yes, I mean, we're paying an enterprise value of €48,000,000 Of which 70% or $33,600,000 is paid in cash and $14,400,000 is paid in equity. The transaction is expected to close shortly in Q4 2021. We are over Time, primarily investing in acceleration of the go to market by expanding the product To our existing markets, both within Europe, but also other interesting markets, which we see from a WhatsApp Active are high volume markets for WhatsApp traffic such as India and Brazil, where we have strong local presence. And then over the long term, of course, we will integrate this into the Cinch product platform or And the integration cost is expected to be SEK 16,000,000 and expected over the next 12 months to be able to do that. Cambly generated €5,100,000 Or will generate €5,100,000 in revenues, €4,500,000 in gross profit and €600,000 in adjusted EBITDA During 2021, and it's growing at a rate of 35% compared to the previous year. So a Strong growth rate, which adds to Cinch's growth potential in the future. Good. Thank you, Roshan. We all think it's very positive that many of these companies that we have talked to lately, they're very Taking new shares in Cinch, they believe in the story. They want to continue to contribute from a founder perspective in the Cinch story. And I think that's a very positive thing when we get like Engage founders and we want to continue to drive the growth of CIMS Global. If you go to Slide 8, operator, this is conversational care for a company called Women's Best. It's a Woman's Best is fast growing e commerce business focused on sportswear and sports and nutrition for women. Customer care, It's interesting because they have now decided to handle customer care exclusively through WhatsApp and iMessage using Messenger People. So they're just all other channels non effective. If you want to talk to us, you have to use one of these 2 apps. And the results are pretty staggering. It's 50% lower average handling time, 70% fewer emails in service and very positive reviews on the review sites. And here you can see what people are doing, how people are interacting with them, Sending a message in, getting the first answer from a bot, second answer from a bot, third answer seamlessly over to a human And then maybe the ending of the conversation may be done by a bot, etcetera. So it's like it's a very integrated experience where The agents on the other side can really decide when do they step in, when do they do not step in, but they can actually see the flow in one unified experience here. So next slide, operator, would show one of the reviews From Trustpilot, basically even better was the customer service after they write to you on WhatsApp, the best customer experience I ever had honestly. And I would encourage you all to just try any of these experiences on customer care via WhatsApp. KLM is a good example. Personally, I just think it's a great we're not powering KLM, by the way. But it's a very good Experience of how accessible it gets. And suddenly, when you have KLM in your inbox, You just start when next time you want to do want to contact them, you just like click that you just type KLM in your flow and you And I was doing customer care to one of these companies. I was doing it from the U. S. In the middle of the night, European Time, sending off the message, didn't have to be connected because we don't have the issue with the web chat side. On the website, web chat, you need to be connected all the time. And if it times out, then you will lose your conversation and that need to restart on. That doesn't happen with messaging Because it's asynchronous, so I just fired off a message. Next thing, I got a little response, and then I respond with my day as well. So it's a very effective flow there, which I encourage you all to try. It's slow there, which I encourage you all to try. So operator, go to Slide 10, please. This is how it looks on the agent side, the service on the agents. It's a little bit stylized, but this is how it looks on the agent side. So providing this type of interface to the agents at, for example, Women's Best, where you can see Who are the agents? What are the active conversations that we're actually having? Which one I'm going to answer on now? And which ones do I push to a bot? And then what suggested responses do we have, etcetera? So it's both kind of an interface to the user, but also an It's to the agent, which is very tailored to this channel. And you can either choose to have it in this channel or you can choose to integrate it with 1 of your big customer care Customer Care Systems, right? But a lot of companies actually do need the tailored channels, which you can see on this slide. It's also very quick to demo, quick to deploy. Customers can try it off the bat. They can just log in to the website, get the test Try it out, see if it works and then get going. And we've seen that they'd be very effective in order to attract especially midsized businesses. All right. Operator, let's go to the next slide, please. SaaS based monetization, this is off their website. So you can see that the business model here is pure SaaS. You Don't sell the transactions in this type of business. You sell a platform either $4.99 monthly or $9.99 monthly or a large On request, you sign up online, you get going online and then you get a little bit support later. But you can see it's Turning into a pure SaaS model, depending on, as you can see, the number of channels that you're using, WhatsApp RCS, Apple Business Chat, etcetera, Or the number of agents you're using, the number of customer care agents that you have internally, it's either 5 or 10 or above And the number of monthly active users that you want to target and you get to the medium large or very large category there. So Really SaaS business, which is selling the software on top of the transaction channel, which I think is Big growth area in this business. CoreTAR Group is midsized businesses With a high level of customer interactions, a lot of tutorials and guides to drive online lead generation and very simple packages and rapid Time to value, which we think is very good and easy to see and very well packaged. Feel free to go into our websites. 85% of the use cases relate to presales and customer service and 92% of revenue is from SaaS and 8% from API. So Kind of on the inverse or to what Cinch is, which has the majority from the API type business, but really driving us at the SaaS fleet. All right. Operator, Slide 12, please. We are, as you know, track record of profitable growth. This is our growth in the last 12 months. We're really focusing on the organic growth, Driving organic growth solidly and adding acquisitions on top and having this 2 pronged growth strategy, I think, give us a lot of options in order to Continue our strong growth for the foreseeable quarters and years. Obviously, this one being a tech and go to market, It doesn't move the needle in a great way on this type of slide, but it moves the needle in a very good way Enabling all the other acquisitions to grow faster. So this is like a growth engine that you then put into the other acquisitions and make Help them to grow faster, and we see that very effectively with, for example, chat layer, and we plan to do the same here. But obviously, on day of acquisition, it doesn't show up on this slide. It shows up much more on the future growth in organic going forward. All right. Operator, go to Slide 13, please. And Roshan, could you please take the slide? Thanks, Oscar. By the way, I just want to also repeat, I love the simplicity of the pricing on Page 11, right? And Really using simple pricing to drive customer stickiness. And I think You've got the indices package really being the sticky one for Messenger people. But coming to our financial targets, unchanged since previously adjusted EBITDA per share to grow 20% per year and net debt To stay below 3.5 times adjusted EBITDA over time, again until Q2 2021 on a rolling 12 months, We were we delivered adjusted EBITDA per share growth of 38%, so well in advance of our target, well ahead of our target. And due to the fact that we have taken the cash to pay for the acquisitions through equity emissions, We're sitting on a positive cash position of 9.6 times measured on a rolling 12 month basis. Operator, please change to Slide 14. And on this page, you'll see sort of the net debt position on a pro form a basis, essentially using The adjusted EBITDA as at the end of the Q2 2021 and then adjusting the net debt For the potential payments that are due for the announced but not yet closed acquisitions of Intelliquent Message Media and Messenger People. And what you'll see then is that our reported net debt or leverage going from negative 9.6 With IntelliQuint and Message Media, we would have had a pro form a net debt to adjusted EBITDA of 2.6 And Messaging People essentially makes a very small change to that to 2.7x and therefore has a minor impact With that, Oscar, I'll hand back over to you for any closing comments and Q and A. Yes. So thank you, Roshan. So my closing comments is, to us internally, This is a very logical transaction. We're increasing our exposure to the high growth Segment of messaging, which is conversational messaging, this market is growing very rapidly and increasing the exposure to that is good. We're increasing the exposure to the SaaS pipe business model and being self serve easy to use. This easy pricing model, I couldn't agree with more Exposing ourselves more to that and getting both technology and go to market knowledge on how to operate that business is very good In combination with our organic strong organic investments, so there's kind of a fuel and strengthening that area. So That's the other major things we do. And the third thing is we this is a team that we really like and really appreciate. We think they've done Super well in the market. They're very well respected in the market. It's again a team we have known for several years. The first time I met this team was 2 years ago. And I immediately felt, Wow. This is a team that has something else that can really make a difference in this market. And we often do that. We build relations over a long We monitor the companies. We get to know them, and we see that their traction is good over years. And when we make the transactions, we're actually knowing the teams, And we've seen the business for several times, seen the development, and this is one of them, right? So we feel very confident with what they've done In the market, they managed through good times and through hard times, but done it in a very good well. So it's a classic model of building long standing relations and partnering with the teams that we think are the best in the industry. And I'm just super, super happy to have made this transaction. So that said, over to you. Feel free to field any questions. Thank you. Ladies and gentlemen, we will now begin the question and answer And your first question comes from the line of Daniel Durberg from Handelsbanken, your line is now open. And congratulations also to this acquisition. My question is really, since you acquired Sure. Secure Communication in 2017, I guess I had expected you to be able to Do the similar thing in the German market with that entity that we see now that messaging people has done, I. E, Go from your SMS messaging also into Imessage and etcetera, etcetera, new channels. So my question is really, 1, how will you go In Germany, with the consolidation with these entities and also if the reason why We believe this perhaps has been more stronger than shorter communication On this side of the conversational messaging? It's a good question. So Sura was when we Car then, I don't remember what year that was, from last May 2017. 2017. 2017, Sorry, Sabine. SORA was a pure tax financing operation, really good and accretive and adding a lot to that. We're super happy with that It gave us a strong foothold in Germany, and we still have a strong business in Germany. It is true in a sense that one would always hope So that you can do everything in one market yourself. And If that could happen, then obviously, that would have been great. But it is also true that that's Not always happening. And in this type of extremely dynamic market, there will always be Strong and Invert teams teams coming up with things from the side or things that you don't do, even though you have a very strong performance on your internal teams. So If we have communicated what we focused on, the and that's very much the CIM's model, right? We operate our own teams. We run them strongly. We have a very strong organic agenda, as you have seen, 25% to 35% growth On average, organically over the last 10 quarters, I think that shows the strong performance organically. But then when we see somebody who's done something innovative where we think, oh, they did this well. That's going to strengthen us. Well, let's join forces in selected cases, right? And I think that's the model we're applying here. And in this type of very, very large market, that will happen. Imagine CPaaS being $50,000,000,000 in globetrotum in total and extremely innovative and high growth, there will be these pockets Which you don't do which we just there is no chance you can do everything ourselves. And I think that model of strong organic growth Coupled with when you see somebody else doing something good and it's a good team, let's join forces, I think that model is very good. And if you did it the other way, you would have much higher organic OpEx in front of them, much lower profit Over these years, because you need to do all the investments upfront, and we take a little bit of a different model, right? We're a little bit more conservative On that side, driving higher profits, but then joining with acquisitions, which is also lower cost Or lower or higher profitability strategy. But then so I think that's the logic in general, right? Then of course, I always want to succeed with everything organically, but I don't think that's a Feasible strategy to believe that you always will do that. On the other hand, what you have seen that we have done is we have significant increased growth In Europe, as we have reported. So the core thing that we focused on, we really did, but this team actually did it better than us I think just one comment to add to that, right, Daniel, which is, I think even though MessagePeople is very much a German product or German company, I mean, they do have customers outside of Germany, and we see this as a product that we also Can bring to other markets, right? So we're not seeing it as a product that's focused on the German market only. Perfect. So there are no hard feelings between the existing team and the new team coming in. So if they see themselves as Complimentary, I guess, on this conversational higher up in the value exchange of On the contrary, it was kind of a I just had that discussion with Thomas. They're both based in Munich. And I When we briefed them just a couple of hours before this, they We said, can you guess? And they were like, oh, no, could it be this company? And when we said what company it was, they were super ecstatic and saying, oh, this will just like make us so So much stronger in the German market. That's joined forces. That's good. It's a good culture, etcetera. So they were super excited about it because they See, all right. This is going to strengthen us in 2 very, very important segments. Great to hear. Thanks. We'll be back. This one is coming into the Synch Ecosystem. I have a few questions. The first one is, what is the situation today for messenger people in terms of Integrating into CRM software, how does this fit along with your strategy, for example, going with Salesforce and Adobe? Could this be integrated? Or is this more of a stand alone web based app? And also on the topic, What's kind of the plan around SDI Enterprise Solutions, the contact center you have there? Perhaps I can have a question. Two questions, I was going to give the first one to you, Thomas. So yes, go ahead. So sure, very good question, right. And we see this as very complementary. If you think about this from a business point of view, depending if you're a Small business, midsize business or complex large international business, you will have slightly different needs. If you're in the last category, a more complex, larger international business, You will be working with an Adobe or an Oracle or a sales force, and you'll be probably working with us indirectly In a model which we've proven over the years. When you're a midsized business, You might be looking at a solution that's more packaged, more sort of all in one. And that's even more so the case if you're A very small business, right, then you want something off the shelf that you can just start in a complete self serve, no touch Set up, right. So these are a bit complementary and business has a different demands and that's sort of one of the things we see as strengths. Generally speaking, there is a play for both APIs and applications to all categories of customers. And absolutely, you're able to use these products in tandem With other softwares, right, including the ones you mentioned. But I think where they really excelled, Messenger People, is managing to package this in a very attractive, Low friction, quick time to value way, where companies get a lot of value without having Work on APIs or have a big SI integration project. So very complementary in that sense. If you look at historically What we've done with other customers, as you know, we're successful in Latin America with conversational messaging, We're often working with larger customers, a little bit more project based, more heavy involvement, API based, Good business, but slightly different customer segments. So this is very, very complementary. I think that answered your first question. Oscar, if you recall the last question, Then, then she will. No. And just to be clear, we don't try to be Salesforce. We don't try to be Shopify. We don't try to be Genesis. But enterprises need Actually, they need an easy to use well packaged software when they do these things, When they trial them, when they run it up to a certain level, at some point, some enterprises will choose to get it merged within their Genasys or Customer Care software. Then both ours and people struggle is to have the APIs pre integrated into those. So you can actually do a good handover to them, While you then keep the bots, you keep the messaging channel, but you cut off the UI to the customer care agents, But you still keep a large portion of the business, but then you hand it over there. So that's it. We have a very clear strategy for doing that and that's very similar as chat player And investor people. On your second question, 100% correct, impressed by the question. This will be From a product perspective, aligned or complementary and in some parts merged with the Customer care software from SDI, the customer care software from SDI is a much more full featured And you can imagine if you get those together, you have a really, really strong product. It's also going to get Interfaced with or merged or strengthened by the Chatlayer product because Chatlayer is a pure bot, which is stronger on the AIM and P side, But weaker on the ease of use, well packaged self start SaaS software. So You can imagine Chat there being integrated as an API on the back end of this to strengthen their AI, MLP capabilities. And that's something the product team has gone through in quite some detail with the investor people to pre this transaction. All right. Very clear. And so when can we expect the sort of relaunch of the SDI contact center merge with these Capabilities? Yes, I think we'll refrain from a timeline on that one, right. But I think the balance That of course in any of these acquisitions, it's a question of selling what you have here and now and continuing to work on that While ensuring that you deliver on the longer term roadmap and innovation in parallel, right? And that's sort of what we see as the key to success here. Oscar, do you want to add to that? Yes. And I don't think it's the concept of relaunch. I think it's a concept of lifting various features, adding them We've already done them and just like gradually improving and increasing the speed of that. So it's not really a relaunch, it's more kind of increasing the speed because You got the knowledge and the code and know how to do it basically. Okay. Excellent. And then if I may, just one last topic, sort of the growth, you said 35% this year for Messenger People. What's It's been like before that? And also if you could answer today for the group, how much is conversational messaging roughly? Yes. So a few things there. On their growth, it's varied over the years. So Oscar alluded to this. They were very Early start, the business model has pivoted over the years, which we think is a huge sign of strength for the business. 35% is sort of the run rate they're growing now. Are we able to improve on that? Well, arguably we have some We can bring to the table, even if we're not quantifying that, of course, we will set high targets as we accelerate international expansion and across and up sales of course. Lastly, we haven't given any figures on the overall part of conversational messaging Other than to say that it is a smaller base growing very rapidly, with becoming significant in lead markets, Particularly Brazil and India. But you got to recognize that the established The more mature products continue to grow at a very good clip. We continue to take market share and we grow those off Very high base, right. So whenever you look at a share of Cinch, the worst competitors are other Strong internal teams, right. We prefer to look at how much can we grow each business in absolute terms and percentage terms rather than To track it on a percentage basis, right, because otherwise the easiest way to bump that figure you're asking for is to fail on other products, right, and that's not really our Thank you. And still no further questions. We do have now one question on the line that comes from Frederic Stenkiel from Nordea. Your line is now open. You may ask your question. Okay. So since there were no other questions, I had a few more. One is sort of what Gaps do you see in the offering as of now in terms of technology? I would be curious to hear your thinking around video, if you feel you need to do an acquisition to beef that up. So in general, you can see the gaps Or the growth opportunities in 2 categories, we would call the first connectivity. That's all the channels That you are that consumers are using to interact with their customers. And so that without naming names, I would Ask you all to go back to yourself. In what channels are you interfacing with consumers or with businesses? And which of those are Singhs present in? And I think we all can list quite a few, and then you can probably match Where we have a large offering. And you're correct, in video, we have a mini offering, but it's not really big, and it's a Rapidly growing CPaaS segment, so that's one interesting category, yes, but there are quite a few of them. The other category would be upstack on the SaaS side. Here we are It's rapidly evolving, I would say. I don't think anybody knows, a little bit alluding to a previous question, what Components will be in CPaaS and what will end up in the other clouds like Marketing Cloud, Commerce Clouds, Customer Care Cloud, etcetera. So I think it's pretty clear that quite a bit will be in Zippas and a very large There's a lot of components and go to market models in that area, which are very interesting. And I think we're going to see a plethora of things happening there and therefore various types of offerings approaching. So that's a little bit more fussy, a little bit harder to understand. I think we Got a lot of the major components now, but it's still the market is moving so rapidly. So in 6 months, We'll see some new things and we'll continuously evolve and evaluate in order to make sure we're a winner on the global basis. Thank you. Roshan, do you want to take this or should I? Yes, I can do that. I mean, there's no I mean, firstly, there's no major update as such, which is good news, right? I mean, we're progressing As per plan, the dates that we have communicated for both those transactions are H2, 2021. And I think we are in well in place to be able to close both those scales. What we have to say is that we're We've got certain approvals from both transactions already and we see the remaining part of the process more As a necessary process to go through, but not really anything that includes any risks for us when it comes to closing these transactions. For example, for IntelliQuint, I think the bulk of the remaining part of the work is approaching the communications Authorities in every state in the U. S. Are actually getting a clearance, which is simply administratively time consuming. For 50 states that we have to go through that process, But there are no risks associated with actually getting those approvals in So we're in general, we're well on track and we're more confident than ever that we'll close this during the second half of the year. We're same dates. We're not changing the dates. We're gradually every day that goes by more Since we're taking off box after box, but then it's a lot of boxes. It's a little bit like that. Okay, perfect. Thank you. Thank you. And your next question comes from the line of Daniel Gerberg from Handelsbanken, your line is now open. You may ask your question. It's a similar question, but I may ask you on the if you can give us any Percentage of the number of states that you have got clearance from so far, just to give us a view on where you are And also, if I may, a question that is a little bit stupid perhaps. But it is do you see any risk that if you're Extremely successful in the conversational messaging that some of your wholesale supplier of SMS It becomes easier as a competitor and raises prices or something on the SMS side, it's the same. So is that out of the question? Thanks. Oscar, I can take the first one and maybe you want to explain why we don't see second one has a risk, right? Daniel, just very briefly, I mean, It wouldn't make sense to describe the process in that way because the each state has really a different process And a different timeline to approve these transactions. So just measuring the percentage of states completed is not really a good measure of When we might get this done, right? I mean, we've approached the majority of these states at the same time, but they just have a different way of approaching this question. I think I just want to reiterate, we see this as something that is a necessary exercise that we have to go through, but We are confident that we'll close both transactions in H2, right? I think that's where we are and we feel comfortable about that. Maybe we They can come back at a later stage, maybe in conjunction with our Q3 report, give more insight and hopefully better guidance at that time when that will If we haven't closed more deals already by then. Oscar, back to you. Yes. No, it's a good question. But I think what's but I see it a little bit in the inverse. What's happening is The operators have so far had a monopoly over mobile communications to the users That's the only way you can get a text messaging to a user. What's happening now is all these other channels opening up is, If a transaction is going by WhatsApp, the operator doesn't make any money. So what's happening is the operators are suddenly getting A competition, not by us, but by WhatsApp. And if the operators are not pushing their features and are not Price competitive enough, well, enterprise will say, why don't I go via an operator, let's go via WhatsApp, it's a better feature, better feature and lower price. So it's introducing a competition on the operator level, right? Then to us, we Are acting very closely. We like to work with the operators, right? So we're trying to push the operators to push their RCS service on a faster pace. And we tell them every day like please launch your RCS services faster because the minute you do, we have another channel and We can send more conversational messaging through you. We won't be forced to send it via WhatsApp because today WhatsApp better feature features than text for certain segments, not for all segments. So to us, we're like trying to get the operators to launch faster so we can use them more, but they have a it has taken them very many, many years To do so, which is also one of the reasons why WhatsApp has grown big in the conversational messaging based segment. Particular with this transaction, We're trying to work very closely with the operators in Germany and we're super, super happy to work close to them in order to drive the WhatsApp revenue Or to drive the RCS revenue on other channels as well since RCS is a great channel for many use cases. So we're happy to work closer to them or Thank you. And your next question comes from the line of Tobias Decholz from DWS. Your line is now open. You may ask your question. Thank you for taking my questions and congratulations on the acquisition of Messenger People. I would like to return to that acquisition. When looking at the Financials, I can see that the gross margins are higher than those of yours, which is like I understand. The reason is that it is a fast business and they do not have these messenger fees, which they have to pay to the operators. My question regards The EBITDA margin, which I think is kind of in line with yours at like 11% or something like that, and I wonder if you see The potential to increase these margins and where the margin increase would come from, from which sources? Thank you. So, you're right. This is a SaaS business. So it has the same gross Margin in percent levels as the Synch SaaS businesses. If you look at Chatla, it looks exactly the same, like very high gross margin percent, right? So that's true. On the EBITDA level, I think We can improve that tomorrow if we want. So that's a choice between growth versus profitability. And Maslow People today is Roundabout breakeven from a macro perspective, yes, maybe a couple of percentage positive, which is exactly how we like to keep to run the companies. But the core reason for this is accelerate growth and drive growth. So I think we would be focused most on driving growth in this business while keeping it slightly positive because we believe in positive businesses Because that's that kind of keeps all the entrepreneurs and the leaders straight, if you will. But then we'll focus a lot on driving the growth in this business. Also because the relative size of the EBITDA compared The same EBITDA becomes small, so it won't really make a difference there. But on the growth side, it will make a big difference. So that's how we would think. Then obviously, it is just when you got in the business to profitability or a little bit plus. If you then want to say, oh, this year and you're growing at 35% or 50% or 60% per year. You can obviously say, all right, this year, I'm just going to dial down OpEx investments and do them a little bit lower, And then you will eventually eat up EBITDA. So we feel very confident we can do that tomorrow. We feel very confident we can do it today, but I think the best Trade off for the shareholders today, investment with people specifically is to drive the growth and increase the margin in maybe 1 to 2 years or something. Okay. We're still keeping it positive. Thank you for that one. Got that. But Maybe then on the broader horizon, what would then be like the go to EBITDA margins for Cinch in total, long term So, you say, in short term, you prioritize growth over profitability, which is what I completely understand. But long term, where do you see Your margins could go or is it very, very difficult to forecast? Or how is your view on that one? No, without giving forward looking projections now, but when I was talking about growth over the I was talking about Messenger People, not about Just to be clear, so that was like in this pocket, I was talking about that. We have said before that Our historic profitability levels are roughly what we're targeting over time, Right. Keeping OpEx growth in line with GP growth and therefore continuing on the Roughly what we have had historically, correct me if I'm wrong here, Rashaan and Thomas, EBITDA per gross profit at the 5% level, that's a very, very solid profitability, like on every gross profit dollar, a very large portion falls down to EBITDA. And then that translates on the profitability levels on EBITDA to revenue on whatever we have had. And we continue to kind of run the business in the same way we have run it. Now we have had a little bit of a hike in investments due to Doing a scale up when we do this very rapid acquisitions. Like if you can imagine, when we do like Intelliquent Message Media, we do those type of acquisitions and SDI in a very rapid pace. We just got to invest in the core systems to handle Just the increased scale. You can imagine the finance organization. What about the ERP system? What about the HR systems? What about all these things when we suddenly Double the business over the course of 18 months. So we're taking a little bit of an outsized investments in those areas in order to handle the incoming profit And EBITDA and size of business that is coming in very shortly. So therefore, we have increased investments Short term, but we plan to scale that back as we get into a more normal pace basically. Mind you though that the investments we're taking now has been targeted at a much higher EBITDA level than we have today because we're not counting Intelligents, we're not counting necessarily that we're still taking investments for them. So it's a little bit like we know it's going to happen, but we take investments pre. So The share has gone down, but that's going to preview of actually taken down taking in the actual profitability of this. I don't know, Thomas or Roshan, if you want to comment. No, just to add, I mean, just in terms of to mirror how we think about this, we don't really track Margin, as such, of course, we look at the margin. We know that our margin will rise not least just from M and A, right, which we've talked about earlier with the mix effect Message Media and Intelliquent. But the way we plan our business is we say, okay, we can drive a certain amount of growth in gross profit. What sort of OpEx does that require? And with the surplus, what's the business case to reinvest and drive further growth? The way the market looks now, which has been a while like that, the market is very strong and there is a lot of opportunity. So The business case to reinvest profit in future growth continues to look very good, right? Rather than to target a particular percentage, Our sort of fundamental thesis is that we should grow absolute level of gross profit and we should grow the absolute level of adjusted EBITDA and that's sort of What the target is and then this translates into a margin eventually. Okay. Thank you. Got that. Thank you. So no further questions have came through, sir. Please continue. Oskar, any final remarks? No. Thank you for listening. We're super happy about this acquisition. It really plays to Our strategy in a very high growth segment in this area, Commercial Messaging and Intra SaaS base, to us, It's very, very logical from both of those. We think it's going to accelerate and drive SIMS growth. And we feel very comfortable with the team. We've known them for over 2 years, Interacted with them many, many times. So we think it's a strong team, which we'd really like to bring into the same family and get learn from and have them learn from us well, so we're super excited about joining forces with Messerli people. And that said, thanks a lot for your time and time spent on us. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.