Welcome everyone. 2016 was a great year of growth and innovation for CLX. We grew the business with 145% compared to the same quarter last year, of which 35% is organic growth. Through the acquisition of mBlox, we have larger exposure to fast-growing, high-margin regions like North America. This changed our margin profile in the enterprise division. Gross profit margin is 23%, up from 16.6% compared to same quarter last year. Our business has a low seasonal effect, but worth to mention is that Q4 is typically a strong quarter. Enterprises are at an increasing pace discovering the benefits of cloud communications. We are integrating application-to-person use cases on a global basis using our programmable communication services. The core communication services that they build into applications are: messaging, voice, and mobile data. SMS remains the main driver for CLX.
It's ubiquitous, works on all the handsets, operating systems, and mobile networks. It's an instant access to 5.7 billion users and handsets across the globe. People like to receive content on the SMS channel that helps them in life. Example of use cases that drives growth for CLX: cloud marketing companies adopting messaging for permission-based marketing, finding SMS conversion rates superior to email for high-value use cases; secure messaging, enterprises and service providers wish to authenticate users online by sending one-time passwords to handsets; and appointment reminders built into software to avoid no-shows for restaurants, doctors, dentists, et cetera. Next slide. Growth during 2016 has mainly been driven by the mBlox acquisition, also by the organic growth of 35%. Our enterprise customers' use cases are getting more adopted by consumers, that results in growth in the installed base.
Existing customers are also launching new use cases based on success. We also add new customers to our platform, also adding an increasing number of channel partners. Next slide. The integration of mBlox has gone beyond our expectations. Thousands of new enterprise customers and ten thousands of developers have been added to our services. Large presence on the North American market that has stipulated many interesting conversations and a strong sales pipeline. Substantial cost synergies that has been delivered better and faster than the plan, also revenue synergies. To summarize the acquisition of mBlox, this has given us scale and the financial muscles to continue to be an aggressive player in this market. We also announced the acquisition of Sinch in December. The acquisition is more of a strategic nature. It adds voice to our product portfolio. It adds a voice customer base, volumes, and purchase power.
Foremost, voice expertise and great team members. Our customer prefer to buy communication services from the same supplier. Including voice solutions in our product portfolio, it's a natural step to increase sales to our combined customer base. CLX can sell voice solutions to its customers, and Sinch can sell messaging to its installed base. We have already seen early signs of this being successful and executed on two cross-sell opportunities. Next slide. Also today, we announced the acquisition of Xura Secure Communications. Xura gives us a solid enterprise customer base in Germany, Europe's largest economy, also add technology around mobile security solutions. The turnover of Xura is 25.5 million, and EBITDA approximately is EUR 2.1 million with around a 16% gross margin. We pay SEK 15.5 million for this acquisition, with a potential SEK 1.5 million add-on based on 2017 actual results. Next slide.
We are convinced that communications will continue to move to the cloud, and that enterprises will increase investments in application-to-person use cases to become more efficient and to communicate with their customers. The cloud communication market is large and is growing rapidly. CLX will continue to be an active part in the consolidation of the market going forward. The main reason why enterprises and the communications are moving to the cloud is the scalability. You can launch a service to. Try it out, and then launch full scale within a very short period of time. It's easy to integrate and fast time to market. It's flexible. You can launch something, try it out, adapt, and move forward. It's a pay-as-you-go business model with small upfront or no upfront investments at all. We launched our mobile data and IoT service for customers in 2016.
One of the first use cases that are live on the platform is a customer that provides solutions to remotely measure tank fluid levels to optimize refill and maintenance. Together with the GSMA, we are launching a whitepaper on the new standard for last mile cloud connectivity for IoT. I'm excited about all the meetings and conversation that are scheduled for the Mobile World Congress in Barcelona this year around IoT. Another area where we continue to invest is our online sales channel. We have simplified communications to the extent that it can be sold online and delivered in a highly automated manner. We believe that this sales channel will grow rapidly from low levels in 2017. This will be a good complement to our field sales team to cost efficiently address small and medium sized enterprises.
We also continue to build out our leading tier 1 super network that connects hundreds of mobile operators globally to our communication platform. Our deep carrier integration gives us unique insight to provide service to the most demanding enterprise customers. Owning and controlling this network is a core asset to our business and set us apart from competition. Next slide. The enterprise division continues to grow at a rapid pace. Q4 net sales was SEK 619.1 million. Organic growth, 43%. We talked earlier about the drivers of the organic growth in the business. Next slide. The operator division continues to develop well and in line with the company's strategic plan. The Q4 net sales was SEK 60 million. Next slide. We have a couple of key financial metrics, and I will read through them to summarize them. Revenue increased by 145%. Organic growth was 35%. Gross margin was 28.3%.
EBITDA amounted to SEK 68.1 million, adjusted EBITDA, SEK 76 million. The adjusted EBITDA margin, 11.4%. Next slide. For the full year, net sales increased by 55%. Organic growth was 28%. Gross margin was 27.5%. EBITDA amounted to SEK 161.9 million. Adjusted EBITDA, SEK 238 million. Next slide. Finally, I would like to thank all the customers, partners, employees, and investors for a fantastic 2016. We enter 2017 as a leading company in the enterprise cloud communications market. Our customers continue to grow and add new use cases that drive more communication through our platform. We have a strong sales pipeline that will continue to fuel organic growth. We will continue to evaluate strategic opportunities in the market to either acquire customer relationships or complement our product portfolio that we can leverage on our existing customers.
Thank you for your continued support, and I hand over to the moderator again for questions.
Thank you, sir. Ladies and gentlemen, if you have a question for the speaker, please press 01 on your telephone keypad. We have our first question from Laurent Jure-Berlet from Handelsbanken. Please go ahead.
I think it should be Laurent Jure-Berlet. My first question would be, congratulations first to a strong ending of 2016, and also to the interesting acquisition here in Germany. The first question would be actually on Sinch, if you could give anything more color on the potential restructuring charges that you will, I guess, take to make this profitable entering 2018, the level and if it will be back end or how it will be loaded during the year, et cetera. If you could give a ballpark of the Sinch restructuring charges.
I think at this point in time, we will not communicate any more than what is in the report.
Okay. In the report you write about Xura, sorry about the French pronunciation. It states about SEK 20 million-SEK 24 million restructuring charges to be reported 2017 to 2018. I might ask if this will be more or less even during this two-year timeframe, or if it will be back end or front end loaded. If the SEK 20 million-SEK 24 million will be cashflow impacting in full.
Yeah. Yeah, over two years.
Okay. Quite evenly, or it will be back end? Do you think it would be early or come in most part in 2017?
I think we'll see some upfront more evenly throughout the time period.
Okay. Also, if I may, it is like 16 employees in this company, if I read it rightly. What is it you are going to do? Restructure? SEK 20 million-SEK 24 million versus the number of employees is quite high number.
That's mainly around migrating everything to one platform.
Okay. It's a cost for that migration, and then there is some write-downs perhaps, or?
Yeah. It's mainly around the integration of the platforms.
Okay, thanks. I think I leave it there. Thank you so much, and good luck.
We have another question from Fredrik Lytzen from Danske Bank. Please go ahead, sir.
Yes. Good morning. Thank you. I have a question. You started off your presentation, Johan, by talking about the seasonality. Can you sort of split a little bit for us up how the seasonality should be viewed and what we should expect and calibrate for the quarter we've entered in those terms? Also if you could give us some more color on what mBlox and the traditional before mBlox enterprise division did in the quarter would be helpful. Thank you.
Yeah. For the seasonal effects, mainly around large holidays like Christmas and New Year's, there are slightly more promotions and marketing activities that increase. I think Black Friday is part of that as well in this quarter, that increase traffic through the platform. Also in Q1, it takes a little bit before everyone is back at work and traffic start ramping up. Typically the first day in January is a little bit slower, and then February is a short month. It's still small seasonal effects in the business. Although Q4 typically is our strongest quarter for those reasons.
Okay, thank you.
We have another question from Lena Österberg from Carnegie. Please go ahead, madam. Madam Lena Österberg, your line is open. You can ask your question.
Yes, sorry, I was on mute. Great report. Good morning to you. A few questions, if I may. First of all, in the enterprise division, which saw very strong growth in this quarter, could you say a little bit more about which countries were the largest contributors to the strong organic growth?
Yeah. North America has been very strong, and we've seen revenue synergies from the mBlox acquisition. That is contributing with the strongest growth. Also some central European countries have been very strong.
Okay, thank you. Also on Xura, could you say something? You mentioned the restructuring or integration costs, you say nothing about synergies. I assume that as in the case with mBlox, once traffic is moved to one platform, you should be able to lift margins here as well.
Yeah, that's correct.
When do you think you can get some synergies out of the business?
I think we will have some smaller upfront synergies, then once we migrate traffic within 18 to 24 months to our platform, a larger part.
Okay. Should we assume similar size of synergies as we saw in relation to sales as we saw with mBlox, or is there a difference between the two companies that would make them bigger or smaller?
We don't comment on that in this report.
Okay. mBlox then, how much do you have left of the integration and integration work on the platform? When do you think you'll have full integration and synergy extraction?
Yeah. Our estimations right now is that we can complete that work in Q1 2018, and that will mainly synergies and platform costs, and that is in the range of SEK 15 million-SEK 25 million.
Okay. Also on FX, if you could say a little bit, you had some tailwind from FX in the quarter. The organic growth rate that you say is 35% in the quarter. Is that net of FX or is it just acquisition adjusted?
Can you please repeat the question again?
You report 35% organic growth for the quarter year-over-year. Is that just adjusted for M&A or is it also adjusted for FX?
No, not adjusted FX. It's not adjusted for FX.
Okay, how much roughly did FX contribute in the quarter positively?
No comment on that right now.
Okay. Can you say something about the Internet of Things platform and the success with new customers there? Are you still in sort of technical trial phase? When do you expect to be more commercial? Is that now with Barcelona and the launch there, or how should we view the revenue projection of that business?
IoT, that has been in production now since late 2016. We are bringing customers and new connectivity on board and ramping up our efforts in that area. Of course, Barcelona will stipulate a lot of conversations in this area, as we are now also ramping up our marketing efforts in this area. We are launching a white paper together with the GSMA. We also have some marketing activities planned for Barcelona. I would say Barcelona this year is really the starting point for when we actively go out to the market with the offering.
Okay. How much-
I will still repeat what we had said earlier, that we're starting from low levels, and it will take time before this ramps up to something that becomes visible in our numbers.
Okay. Could you maybe say something about the projection of signing up connectivity, new operator partners?
So far, we have not included that as a metric, but we will take that into consideration.
Okay. Thank you very much.
Thank you.
We have another question from Tomas Hejds from Danske Bank. Please go ahead, sir.
Thank you. Tomas Hejds here. Just a question. You mentioned channel partners contributing to top-line growth. How large is this as a proportion of the total? Should we assume a similar financial profile for new channel partners as the earlier agreement with Vodafone? Thank you.
I think this is a mix of channel partners. It's not only mobile operators, but it's partners that we work very closely with to basically get a broader reach to, for example, retail or enterprise customers. Of course, the Vodafone partnership has helped us to win more deals in the market. It's not something that we isolate as a separate post in our reporting, but we have really good progress in that area.
Is it fair to say that the revenues that you're adding through channel partners have the same lower margin profile? Just curious, what I'm trying to get at is whether there is a general pressure on gross margins or whether there is more of a mixed shift where you're adding some revenue streams that have lower margin.
I would say it's still much more relevant to look at what region in the world we are growing in than what the specific sales channels are coming in through.
All right. Thank you. That's helpful.
We have another question from Daniel Djurberg from Handelsbanken. Please go ahead.
Thank you so much. I have a follow-up on the Xura acquisition. I just looked at their homepage and found that they had quite a lot of different offering solutions, including WebRTC and video chat and so on. I was wondering if you will fully migrate their customer base to your technology or if you can use some of their existing technologies that are cloud-based, you can use some of their platform as well, adding technology.
We acquired a part of Xura is a bigger entity that has been merged with Mavenir and another business as well. This is a division that didn't fit in their strategy going forward, but fit very well with ours.
Okay. That's clarified. Thanks so much.
We have another question from Fredrik Lytzen from Danske Bank. Please go ahead.
Thank you. Yes, Johan, just a general question. After you have now completed the mBlox acquisition from this last summer, have you felt any sort of positive effects in your relationships with operators globally? Maybe any early signs if you have a better negotiation power due to the fact that you have now turned into maybe the largest entity that they need to cooperate with, any positive effects from that? Thanks.
Yeah. I would say with mobile operators to some extent, but definitely in the North American market, where we are now seen as a large player and the only player with a truly global presence. That helped a lot in discussions with large enterprise customers, in particular in the U.S.
Okay. Follow up on that, there are a lot of A2P vendors that do not really have these relationships themselves, but that are using your network and paying you for the use of it. Have you any stronger position in those discussions as well, so you can get a bit better pricing out of that? Or how does that work? Thanks.
I would say, typically we always work with our cost base. I wouldn't have a specific comment on that segment of the market in particular.
Okay. Thank you.
We have another question from Daniel Djurberg from Handelsbanken. Please go ahead.
Two more follow-ups, if I may. The first one is if you could say now on the IoT, if you now feel that you have a global reach, that you have so many- Operators on board that you can go out and state that you're global. If you can also perhaps say something, how many, if it's north of 50 or number of operators you're working with. Also if I may, Johan, on the operator outlook and also on the collaboration, one year back with SAP and also Ericsson, if you see any progress? Thanks.
Yes. We are not yet global on IoT. We predominantly now focus our efforts in Europe and North America, where we have a strong sales force. I would say even though we are in production mode, and this is a sort of an immature market yet, we are still learning a lot from the customer use cases that we get on board on the platform. We typically do not comment, or we will not comment on the number of connections we have, with mobile operators in this area, but we have many connected already and we have many interesting discussions in this area. I think the Ericsson and the SAP partnerships are developing well, and we are seeing a continuous flow of deals coming through those partnerships. It is not something that I comment in more detail.
Okay. Thank you so much.
For the moment, we have no further questions, sir. Ladies and gentlemen, I would like to remind you that if you wish to ask a question, please dial zero and one on your telephone keypad.
All right, seems like there are no more questions.
Sorry, sir. We have a question. We have a question from Frederick Little from Danske Bank. Please go ahead.
Sorry for the late addition. I just wanted to put one question on the operator division. You had a very nice sequential growth in the quarter of 32% on top line. You also did well on margins. Can you elaborate a little bit on where you are in your deliveries to a few big projects and how we should expect that to continue in coming quarters? Thank you.
We had some elements of a capacity expansion project in this quarter. We continue to see that at least through the first half of this year as well. That's sort of the outlook that I can give right now.
Okay. Thank you.
We have a question, I think. Yeah, we have a question from Thomas Eads from Danske Bank. Please go ahead.
Thank you. Just also on operators division. These Platform-as-a-Service offers, you built a new site and so forth. Any progress in that regard and sort of what the outlook would be from new business on a more recurring basis, where you host and run the full product? Thank you.
Yeah. It has strong synergies with our IoT offering, we build a complete new network operations in Poland to support this offering. We get a, I would say, a continuous stream of And I would say more and more interest in the market for this offering. We have not selected yet to report on it as a separate item. It's developing well, but still from low levels.
That's very helpful. Thank you.
Now we have no further questions, sir.
Okay. I want to take the opportunity to thank you for listening in to our year-end report. Yeah, thanks for today.