Earnings Call: Q4 2020

Feb 18, 2021

Thank you, operator, and welcome everyone to this Q4 presentation with Cinch. We're very glad to have you listen in and hear our story. With me on the call today, I have our CEO, Oskar Werner and our CFO, Roshan Saldanha. Before we start, a few housekeeping rules. This call is primarily for analysts and investors. So other participants are of course free to listen in. But for question you can contact us directly. And when we get to Q and A where I would like to ask everyone to restrain themselves to 2 questions each. Then you're happy to join the queue again, but we'll have 2 questions each to start with and that will ensure that everyone gets to ask questions. So with those first remarks, I'll hand the word over to our CEO, Oscar. It. Thank you, Thomas. So welcome, everybody, and thanks for your interest in Cinch. So without further ado, this the Q4 investor presentation. So let's go to slide number 2, please, operator. It. So this slide, the ones who've been with us for a while have seen a couple of times. So past trailing 12 months revenue SEK 8,000,000,000 it. Adjusted EBITDA SEK 912. We are 2,083 people, including Wavy. So all the figures it. So there are 3 figures that includes wavy, and that is the people, the countries and the engagement and all the financials, obviously, since Q4 is excluding wavy. It. About 2,000 people with wavy, 47 countries with wavy and 145,000,000,000 engagements per year with wavy. It. So as you see, we have quite good progress on these three key metrics. We do customer engagement through mobile technology. Any enterprise that want to engage with their consumers via the mobile channel, we help. We do that via a global CPaaS platform that provides messaging services, voice services and video services. To put it simple, if you or an enterprise want to have a video call with 1 of your consumers, then we provide the technology to connect that video call and to make it possible for you to run with high quality. If you're an enterprise who wants to have a voice call maybe from your app with your consumers. Then we provide a communication to connect that call. Or if you're a company that wants to provide an RCS sort of WhatsApp or Viber or an SMS message. We would provide the SIPA's platform in order to send that message. We serve 8 out of 10 largest U. S. Tech companies. That's one of our larger customer groups, very powerful companies. And we have been growing well with that due to our focus on high quality international global service delivery. I used to say always that this market what fashionates me and still fashionates me with this market, it's 100% consumer penetration. I yet to meet one single person since I joined the company who is not a user. I know that you all have used the video service and call the voice service from the web or used a bank or received text messages from your bank or something. It. This is a large growing multibillion dollar market. We have a very high profit focus. We've been profitable since our foundation in 2,008, us. And we continue to run this company on profit, and we think that's a very good one to a very good way to run a business. All right. Operator, next slide, please. It. Track record of profitable growth. This is showing our gross profit growth. We focus on gross profit since pass through revenues between geographies is so it. It's varying so much. And so in Germany, you may have a 10% gross margin. In U. S, you may have a 50%. So therefore, focusing on revenue in this business would be distorting. And so this shows our gross profit trajectory and our adjusted EBITDA trajectory. And as you've seen, we have solid growth over the years. And you see we do a true growth spurt here at the end with the larger acquisitions we made. So you see both the impact on gross profit and adjusted EBITDA of We have the SBI ACL and also Intelliquent. And as you can see, the largest of them all is Intelliquent. So that's a major peace to our growth, and this is obviously on an economic pro form a basis. We did 81% gross profit growth and 63% gross EBITDA growth in Q4. And we're going to break that down organic and NAA driven a little later. It. Acquisitions of Wavius, Dynas and ACL and Intelliquent is adding significantly to our scale and profitability. It. I should also say comparing between product lines, if you compare like voice business now, which is becoming forward looking large to us and text messaging, they also have a different gross margin gross profit profile. So again, looking at gross profit in a mix between geographies and the product lines would be misleading. Operator, next slide, please. Growth Markets. So we are in a very good spots. Our market is growing fast. Up until today, before the Inteliquent acquisition, messaging has been our largest segment. Messaging is comprised of 2 parts. 1 is text messaging or ADP SMS. That's an we see that's an $18,000,000,000 $20,000,000,000 market roundabout. We take the lower end of the market estimates here on a global basis, highly scalable, highly profitable. And then it's combined with an OTT market, which is going to RCS, WhatsApp, LINE, Viberg, Kaltalk, WeChat, etcetera, which has plus 100% growth rates in the market. So it's like it is base, highly profitable, highly scalable combined with a high growth add on top market. And then we have the CPaaS increase, which is it. On top of messaging and voice, adding software as a service components Charged at typically an 80%, 90% gross margin profile, and that market is growing at a 30% CAGR per year. So you've got also with Investing, but also software accessories on top, you've got a very interesting growth profile of adding additional software. It. To this slide, we obviously now need to add the voice business from when we close Intelligance, so that's a large portion of the market, of course. Operator, next slide, please. So this is how we're basically seeing on the Messaging side, creating value for businesses. I mean, the market started many, many years ago of emails and then enterprises figured out that, hey, if I want high open rates in high response rates. Text is a better way to reach every person on the planet in a time critical manner in a time critical manner. So they figured out the text is a complementary channel to email, because it's got much higher read rate and a much, much higher open rate. It. Now what's happening is enterprises are figuring out that, hey, next gen messaging, like sending WhatsApp message, sending a reach out message us combines the immediacy and open rate and read rate of text with the ability to send an app like experience because the main limitation of a text, which is 160 characters only. And now we can, in principle, send to your inbox an app like experience. And as you can imagine, that just like expands the number of use cases you can do via messaging, which we think will greatly expand the addressable market. All right. Operator, next slide, please. So as a response to this, we have launched multiple products. 1 is Cinch Conversation API, which is one API covering all the messaging channels in the all the messaging channels in the markets. So you connect once and then you can send messages via all the channels in the markets. And you also expanded feature set of that is needed for these next generation facilities. And so what you're basically seeing here is, right, one API being able to communicate by managed channels and then enterprises being able to increase the engagement with our consumers because suddenly they can have the images of text combined with an app like experience with action buttons and pictures and videos, better reporting statistics and the carousels. So combining the immediacy of text with an app like experience drives a whole lot of adoption, and that's what we're seeing by a Cynch conversation API. If you go to next slide, please, operator, that's number 7. Just to visualize this, you can see Here's the same message sent via 5 different channels: RCS, RCS, WhatsApp, Messenger, Viber. And you can see the difference in consumer experience just by visual inspection here. Looking at the pictures, if you look at the RCS message, look at the picture, then you got it on text and then you got action buttons. And you can basically then generate the call to action that you want from the consumer via clicking those action buttons, which greatly increases conversion. All right. Operator, go to Slide 8, please. It. We're very happy to announce that we are have entered into a partnership with Salesforce. And we and Salesforce us providing next generation methodologies to Salesforce customers using Salesforce Marketing Cloud. So basically Salesforce want to WhatsApp enabled our marketing cloud. They came to Cinch. We did a joint development project. We have integrated the Cinch Conversation API on our WhatsApp channel into the back end of Salesforce. You can now go into Salesforce Marketing Cloud, create the customer journey, click on I want to send it via WhatsApp. And then it would kind of create that story, and then the messaging would go via Cinch channels. Us. This native integration in the Salesforce Marketing Cloud, Journey Builder is, I think, a very, very powerful tool to enterprises, and it shows how we work with partners in this ecosystem. This is available from 16th February. If you want more info on this, I urge to watch the product demo on this presentation that you see on the link below. All right, Slide 9. Another example is Ifood coming in from WayVie. I'm just showing some use cases there. Ifood is the largest food delivery app in Latin America. They have a challenge to handle the customer service via the drivers and the customer care centers. It. So they're struggling to handle that volume. So what they did was we delivered a solution to register new drivers. So when a new driver wants to register, think about it's like an Uber driver, but in this case, ifood. A new driver wants to register, they can do that via a bot. You can onboard restaurants. So basically, think about the restaurant owner with a WhatsApp message saying, hey, our data suggests that your restaurants would benefit from being in our from benefit from being in our service. Do you want to register? In that case, respond. It. So and then they register the restaurants via WhatsApp flow. And then you measure NPS. Us. This has resulted in a 70% of reduction in service delivery cost in the support to the drivers. So this is not consumer facing, this is driver facing. 1,500,000 conversations per year and 44 percent 44.6% of the requests from the drivers to the customer care is handled by the bots. It. So you can automate a large portion of the driver requests here. It. Wavy has here been using chat layer in order to use their NLP technology. They did it first on another technology, but then they had integrated chat layer since it's a better tech. So here you can see the kind of the combination of our various acquisitions like Chatlayer having NLP. Our goal is to scale them globally, WayVie then using that type of service in order to deliver to the largest customers in Brazil. All right. Next slide, please. So Slide 10. So we have a playbook for profitable growth. We do that in connectivity and software as a service. We're focused both on the connectivity layer versus making the voice call, connecting the video call or sending message and ensuring that it's high quality and delivered with low latency, etcetera. It. And then we add on top the software as a service, that may be the AI MLP services like I talked about chat player, which is basically saying, okay, we placed a voice call here. Do you also, Mrs. Customer, want to know what the customer what the consumer sent to you. We can then interpret the intent for you. That's obviously an additional charge. So either you can just like place the voice call or you can have us interpret the intent of the consumers to say the intent of this consumer is to speak to this customer service rep or to cancel their contract. And that's obviously an additional service, which we charge for on a SaaS based metric like a monthly fee for a monthly active user team, typically having a traditional SaaS style metric with SaaS style profile, which is 80%, 90% gross margin. So connectivity and software as a service, and we're gradually growing both the connectivity base and the software the SaaS services that we add on top. So operator, next slide, please. So strategic acquisitions, we have done a few. We do them in 2 categories as you see to the left. It's Technolingo to market and scale and profitability. So Technolingo to market, we acquire companies that are and add a technical component that we want to scale globally like we did with vehicle, MyElephant, chat layer and also partner way base like that. And I JB the chat later example before. Scale and profitability, that's when we enter a market like we did with Wavy or ACL in India or SAP. We scaled up our European and American business. Intelliquent is also a scale and profitability acquisition, but it's into a new segment, which is voice. But Intelligo is essentially a voice connectivity provider. They don't have a lot of SaaS services. So the way we think here is we get a good base. We sell to almost all the largest companies voice customers in the U. S. That gives us a way to upsell them in Stage 2 with all the SaaS services that we are developing in other entities. It. But it gives you a very good scale and profitability and it gives us access to a lot of customers that we then can Sell with other services. All right. Slide 12, please. So we went through this yesterday, but for those of you who were not on the call, a short recap. So Intelequent is the largest independent voice communication provider in the U. S. So they do 300,000,000,000 voice minutes per year and have had 100,000,000 the phone numbers in their system. That means roughly 10% of all the phone numbers in the U. S, around 600 employees, including contractors, headquartered in Chicago. It. We think this is a very logical acquisition. Voice is a large portion of the CPaaS market, us being the largest provider in messaging and then adding the largest U. S. Voice, the largest voice connectivity player in the U. S. Makes a ton of sense because ultimately what it's about is enterprises want their consumers to both be able to communicate with them via messaging and voice. You can just go to yourselves. Sometimes you can do an e mail or messaging interaction. But in some case, you want to connect or talk to the rep, and that's when Intelliquent comes in. And having both of those, we can kind of cross collaborate and do good services, including both. So the rationale establishing us as a leader in voice communications, ability to sell to the largest U. S. Voice customers. And it's a very financially accretive deal, as you can see from the financials. Integration costs estimated to some $25,000,000 over 18 months. We will do a lot of cross sell. We have also said that we will reinvest around about $15,000,000 to $20,000,000 of Intelliquent's EBITDA to accelerate the joint CPaaS roadmap to strengthen and strengthen and the Graduated Guard market. So this is basically saying they're a voice connectivity player. You need more services on top in order to address in a more automated way, in a more programmable way enterprises. We will take a significant or a portion of their EBITDA in order to invest in that area. And the reason is very straightforward is because it increases the growth. We have seen a peer do this and that is bandwidth in the market, and you can see that their growth has increased significantly by doing this investment, and we're doing a similar thing here. This is, by the way, also very similar to what we did on the messaging side. We were SMS provider and added a lot of things and then we're growing faster. So this is known territory to us and we're applying same tactic. It. Enterprise value was $1,140,000,000 Closing is subject to regulatory approval expected H2. Obviously, we're not in this they are in voice, we're investing. So it's by competition, but we're actually in 2 different markets. So we would assume the risk would be low on that side. Then there is a regular approval for operator licenses in various U. S. States, which it. It will take some time, so it will take 6 to 9 months or something like that in order to run through. Reported revenue, dollars 500,000,000 gross profit of $256,000,000 and EBITDA of $135,000,000 That is including a COVID effect. And if you take away that COVID positive COVID effect, we would assume that the run rate EBITDA is approximately 112,000,000 it. Okay. Let's go on to next slide, please. Then coming into Q4, so we had a gross profit rising of 80 1% to SEK 700,000,000 Adjusted EBITDA rise 63 percent to SEK 320 $5,700,000 Adjusted EBIT, excluding acquisition related amortization, is $303,000,000 And if you have the acquisition related amortization, EBIT profit after tax obviously comes significantly less, but that's non cash flow impacting. Organic gross profit grew with 37% in local currency, so very strong organic growth quarter to quarter in Q4. COVID causing reduced voice traffic and lengthened sales cycle. We're also investing, as you know, relatively stronger to handle greater business volumes and strengthen our go to market and new product offerings. Operator, next slide, please. So growth drivers, we have continued to see good growing growth with our U. S. Big tech companies. We're seeing a groundswell broad growth. Businesses increasing their use of text messaging in addition to email it. And also new channels coming on board, but since the text messaging market is so large, that's still a large share. It. But in the more advanced markets like Brazil, the kind of the OTT or volumes are becoming a significant part of the business. It. We're also seeing the acquisitions of SDI, TWW, Wavin ACL Mobile driving growth. And we're growing both with new and existing customers. All right. Operator, next slide please. The 4 investment areas, organic growth continuing to support that, how do we continue to build the machine to drive organic growth. It's very, very important to us to have this 2 pronged strategy where we focus hard on organic growth because that's our own machine, right? So that's we focus a lot on that and we see good momentum and things happening in that area and improving there. It. We focus on operational efficiency, which is both COGS and automation and client self serve too. With the scale we have, obviously, you can have we can extract a lot of operational efficiency, so that's another big area. New technology, things like conversation API, WhatsApp RCS, etcetera is a big focus area. And then obviously integration, we have the philosophy of really spending to integration to get the companies together and drive this in reverse drive this as a unified entity. It's obviously a lot of work. It's hard, it's messy, but about an area and we think we're good at and we drive hard. Operator, next slide please. It. So here you see the strong growth in the messaging on the gross profit and the EBITDA level and how that's developing in Q4. Total gross profit growth of 84% with organic at 47%, and STI contributing from 1st November and WAVI from 1st February 2021. You see strong performance in December. And you see, obviously, we got tougher comparable comps heading into 2021. And we had a great growth spurt for quite a year. And the comps are obviously getting higher. We will fight on absolutely as much as we are, but it's important to understand the comp levels, of course. It. And operator, Slide number 17, please. Rising message volumes, so this is the number of transactions per month, how that is having a very interesting development. Obviously, a very large increase in September with ACL Mobile in India. And you can just realize how powerful India market is in terms of volume basically. We had a 3 54% year on year growth in transactions in Q4, 44% growth in comparable units. We will add further volume from 1st February. And again, we're going with existing new and new customers and new use cases. All right. So let's go to Slide number 18. It. So here you can see the OpEx per transaction. We're measuring our kind of our scalability how we do, both GP per transaction and OpEx per transaction. And you can see the impact of ACL, how that is kind of changing things. And I think per transaction measures relevant to track it's relevant or tracked by a different margin, different geographies since it's got such a big it's obviously such so much lower per message in GP and OpEx in markets like India. So these graphs becomes a little bit odd when you add different geographies, obviously. But we think this on overall, these metrics look good and obviously the difference in between is the money we can make. It. All right. Slide number 19, please. We're measuring EBITDA per gross profit. So you can see that roughly of every gross profit dollar that we make. We dropped in the last months here more than half down to EBITDA. That shows the very large scalability of this business. It shows how profitable we are and I think very few companies can show that type of metric. It. You can also see that trend increasing. And I think that shows the scalability in this business. On your ad volumes, you can actually go for scale. You actually get a better reconnaissance scale it because you see that adding volume increases gross profit more than increases OpEx basically. Then it's a big revenue and gross margin depends so much on the mix of the terminating markets, but that's something we manage through looking at these it. But we look at this metric. We think it's a very good scaling value metric. All right. Operator, Slide 20, please. We're seeing modest improvement in voice and video. You had a sharp decrease in demand in number masking from ride hailing do COVID-nineteen reduces the need for traveling. We do see positive online trends in number verification. That is actually not a voice call, but if you do a 2 factor authentication and want to verify the number, which is not COVID impacted as much, it's more of a voice calling business since we're exposed to so much to ride hailing that has taken a big hit. But you see the large hit and then gradually improving from there and working ourselves back a profit positive EBITDA in this business. All right. Operator, next slide. It. We see a good recovery in the operator business. They typically have a good Q4 should be said. So and this is a little bit of a lumpy business. It. So shouldn't talk too much on quarter to quarter as you look at the overlying trend. But it's high margins. It. You see the SDI, person to person messaging hub operating at a lower gross margin. It. We're also seeing good demand here from the 5 gs messaging products sold together with Ericsson. So here, we're seeing a using SMS to wake up IoT devices, and we're selling that to operators together with Ericsson, and we see a promising funnel there to the largest operators on the planet. All right. Financials, I will now leave over to Roshan. It. Thank you, Oskar. I'm super glad today to present some comments on the financials for Cinch this quarter. Our organic growth is the strongest ever yet on gross profit, growing 37% year on year. Operator, please turn to Page 23 for the condense for the income statement. Consolidated net sales grew by 90 5% in the quarter to nearly SEK 3,000,000,000. The growth rate in the quarter was positively affected by the acquisition. So we've done Chatlayer, at the SDI ACL. The Wavee acquisition was closed in February and we will be consolidated first in Q1. Also the SDI acquisition was contributing only for 2 months this quarter since the acquisition was closed in the beginning of November. The organic growth of net sales in local currency, it. So excluding currency effects was 43%. Adjusted EBITDA grew by 64% to SEK326,000,000 from SEK199,000,000 last year same quarter. And full year EBITDA was at €912,000,000 adjusted EBITDA was at €912,000,000 a growth of 59% year on year. We see a strong continued development of diluted adjusted EBITDA per share, which was it. On a running 12 month basis, adjusted EBITDA per share increased to DKK 15.1. For the Messaging segment, especially, adjusted EBITDA was record high at SEK349,000,000 for the quarter versus euros 205,000,000 last year and euros 248,000,000 just the last quarter in Q3. Adjusted EBIT also, which excludes items affecting comparability and amortization of acquisition related intangible assets, it. Because those do not affect cash flow, amounted to €304,000,000 versus €186,000,000 last year same quarter. It. Operator, please turn to the next page, Page 24, it. Which shows a bridge underlying explaining our underlying gross profit development. A significant part of our revenues are passed on as cost of goods sold to mobile operators. We pay them to send messages and place calls, but the rates they charge can vary greatly between markets. And since these pass through revenues do not contribute to our profits, we focus internally and steer almost exclusively on gross profit. It. Changes in our gross margin very often reflect more changes in geographical mix rather than underlying performance or competitiveness. It. Over time, we aim to, of course, improve gross margins by delivering additional value added components to customers. It. Now turning to the numbers. Consolidated gross profit rose by 81% during the quarter to close to SEK 800,000,000 SEK 796,000,000 from a base of $440,000,000 a year ago the same quarter. Negative exchange rate movements it. Reduced the growth by CHF 23,000,000 or 5%. The acquired companies ACL, Chatlayer and SDI contributed 49% of the increase and then the remaining organic growth in gross profit in local currency and comparable units it was at 37%. When looking into the segments, gross profit growth in the Messaging segment was 84%, it, of which organic growth in local currency was 47%. Also adjusted EBITDA over gross profit in the segment came in at 52% for the quarter as we continue to benefit from increased scale. It. Gross profit declined by 34% in the Voice and Video segment affected by muted demand due to the ongoing pandemic and related economic development. And gross profit in the operator segment rose by 99%, which is entirely attributable to the consolidation of STI's having services to operators, hence the sort of organic growth in the operator segment was 0. Please turn to the next page, Page 25, to see a summary of the number of resources at Cinch. We continue to invest, as Oscar showed, for continued growth. It. And main areas of resource addition are, of course, driving operational internal operational efficiency and quality, increase our scale sales and marketing efforts as well as investment in new technology and the integration of acquired companies. Please note that the figures on this page are all quarterly averages. It. As we have closed the STI transaction during the quarter, you can see the effect of that with 480 employees and consultants joining us from the 1st November, and the remaining is the increase in Cinch headcount. It. Due to the nature of the work that is being done to support our gross profit growth with these increased resources, they do not actually contribute to the gross profit growth in the current period, but rather in future periods. And also all of the investments in our systems our take on as OpEx and we have very limited capitalization of resource costs, which we believe to be prudent. Turning to the next page, Page 26, it. You will see a reconciliation between adjusted EBITDA and cash flow before changes in working capital, highlighting the important items. In this quarter, we have significant acquisition and integration costs of SEK 146,000,000 related to the announced transactions of SDI NACL and WAVI. And despite this, we see a strong cash flow generation from operations of SEK 155,000,000 or 48% in relation to adjusted EBITDA. On a full year basis, we generated CHF602 million before changes in operating capital, which is equivalent to 66% of adjusted EBITDA. Please turn to Page 27. Here you see the cash flow statement. I think the highlights, of course are the negative change in working capital, which is primarily related to the acquisition of SAP Digital Interconnect and incorporating those balances into our balance sheet. In addition to that, also we have the cash flow resulting from the issue of shares that we did in November 2020. Please turn to Page 28, which summarizes our integration progress. Of course, on this page, you see that we have also included the deal that we signed and announced yesterday of acquiring Intelequent in the U. S, where we're just starting to work with the regulatory process. And we expect this to close during the second half twenty twenty one. It. Starting from yesterday, essentially, we will start to put together a team that will work on the integration planning together with management from the Intelliquent it. On TWW and Wayby, there is Wayby was closed in February 2020. It. We're, of course, on boarding and consolidating joint teams, aligning sales goals and performing a platform assessment to decide which platforms to keep and how we will evolve them over time. And there are initiatives to scale WayVy's success in the conversational messaging business in Latin America to other parts of the world. Commenting on ACL, a deal that we closed in September 2020, there's of course activities to onboard the team to gain from cross selling our products, both from ACL to other parts of Singe and vice Diversa traffic pooling outside India and also performing a technology assessment. And then on STI, I think here the deal was closed in the transaction was closed in November 2020. We have successfully onboarded all employees across 19 countries. We have transferred shared functions and are consolidating the shared functions. We're separating the A2P and P2P businesses as well as performing a comprehensive product portfolio review and a future product strategy for what products we will retain and in what we will develop that. The key focus on the SAP Digital Interconnect is also, of course, driving commercial execution through common goals and focus. Please turn to Page 29 for a summary of the financial targets. It. Our targets remain unchanged. Adjusted EBITDA per share to grow 20% per year and net debt over adjusted EBITDA to remain under 2.5x over time. On a rolling 12 month basis, including Q4 2020, we grew adjusted EBITDA per share with 43% in Q4 and net debt over adjusted EBITDA was a positive cash position of 2.2x as at the end of Q4. Please turn to Page 30 again for a further so some further details around our financial leverage, where we show how the leverage would look like if we had closed all of the announced acquisitions as at the end of Q4 on a pro form a calculation including the last 12 months of adjusted EBITDA 4 acquired entities. And here you see that if we had closed Wavy as of the end of Q4, we would still have a cash position of 1.3 And then assuming that we had closed Intelliquent as at the end of Q4, we would have a net debt to EBITDA ratio of 3.4. This should be compared with the number that we gave yesterday when we announced the Intelliquin transaction of SEK 3,700,000,000 which was based on the Q3 adjusted EBITDA and shows the strong cash flow generation we have on our business and how this ratio how we expect this ratio to decline as we come closer to the closing of this transaction. With that being said, I will hand over to Oskar for closing comments. It. Last slide. Thank you, Russian. So continued priorities, obviously, going to continue to grow with U. S.-based global tech companies. Strong initiative for broadening growth across the base. We're working hard on that and on broadening the organic growth. Organic growth is super important to us to maintain. New customer wins in next gen messaging through Cinch conversation API. That's the major thing in the market, and we're focusing a lot on proliferating that API to most of our customers. It. Integration of WAVI to WW, ACL and SDI, obviously, being a big, big theme. And then continued strengthening of our connectivity offering, both on the voice and the messaging side and investment in the SaaS products, the value added SaaS products for advanced next generation messaging and additional features. That said, thank you. I'm very happy to report a strong result. It. And then thank you for listening, and we open up for any questions you may have. Thank that. Our first question is from Petrij Cervinovich of Carnegie. Please go ahead. Thank you very much, operator. Good afternoon. So first question on general market activity and growth going forward. 2020 was very strong, very well executed. And looking ahead, I'm curious us what kind of themes you think will drive growth going forward. Is it U. S. Tech mainly? Or do you see more broad based growth from other customers as well. And if more broad based, what will trigger that change in trajectory? It. No, I do think and hope that we will continue to grow with the U. S. Tech companies, at U. S. Big Tech Companies. So that's a key thing. We do also see the business in increasing uses of SMS and other forms of messaging at a broad scale. It's a market trend. It's also so that we are working hard on increasing our own growth by various being more effective, selling more customers, and we see good signs on that. So it's both in market growth and increasing our own growth in that area. So that's the second one. And then you obviously have the acquisitions coming online and then being reported more into the figures. That's what I would say the main growth drivers are. On a little bit more longer term basis, I think the introduction of richer messaging channels into the market. The explanation simple. You move from 160 characters to an uplike experience in a message. Will that drive market growth? Yes, it will over a long period of time going forward. Looking forward, looking at if Intelicor when Intelicoint comes in, the voice market is in the CPaaS segment growing at a 20% rate as well. So then that will be an additional growth driver on the SIPA segment of Intelliquant. It. And a follow-up to that and also what you mentioned in the report in the CEO letter, Oscar, that conversational messaging next gen channels are rapidly gaining momentum. If you could elaborate a bit on this, maybe dress that into numbers. Is it somehow driven from, I don't know, WhatsApp, which has opened up their ecosystem or for business now following user agreement changes? What is really kicking this off and also what kind of momentum are you seeing. It. I think it's it's important to focus on the phenomenon and not individual channels. So yes, WhatsApp is one of the largest channels, but we also see RCS. So you see I mean, WeChat, if you look at China. It's obviously a massive channel, right? So there's a lot of different channels that enterprises use. MMS, Switchly growing well as well in the U. S. Old technology, but enterprises are realizing it now. So it's like it's a plethora of new channels coming on board, which makes messaging go from 160 characters to an app like experience. That will drive growth. The metrics we're seeing is 100% growth rates, 100 plus percent growth rates in this area. So then you can figure out, all right, if that portion is growing faster than the rest, yes, it. It will going to gradually take up a bigger share. But it will take quite a while before it becomes big, right, because the size of the main business. You see especially rapid growth in Latin America and India on these new channels. That's where the most aggressive growth or the highest penetration in those markets. It. Super. Thank you. Thank you. Our next Question is from Ramiel Khouria of SEB. Please go ahead. Thank you, operator. Thank you for the presentation. Thank you us. I can take both straight away, I think. First off, perhaps if you could expand a bit on geographical differences in sort of growth rates. For you specifically, but perhaps also from a market perspective, I mean, is it so that if you're not in the U. S, then put very simply, you're not relevant? Or if you could expand a bit on that? And then Secondly, circling back to a question you got yesterday about the constraining factors on the M and A side. You mentioned the integration capacity. Perhaps if you could Provide us with a snapshot of where you are on the integration capacity part, but also reasoning a bit on balance sheet All right. So geographical growth rates, we see it's a little bit different markets. We see the U. S. Market becoming very strong, but then remember U. S. Market is partly U. S. To U. S. Enterprises, but then it's also U. S. Cloud, SaaS ecosystem is so strong. So maybe U. S. Companies selling to other parts of the world and are winning market share. So if we sell to, say, Shopify without saying they're a customer, they would have may have customers in Europe, but the growth in our books looks like it's in U. S. Because that would be the customer. So U. S. Is very strong, yes. You see slower growth in Europe, but still solid growth. I think we have we, As you know, we've had to improve our own performance in the European market. And there, we have been working very, very hard. And I think we see promising early signs there, but that's also good, both the market but also a little bit of our own performance to be honest. Then we see Latin America and India, our other 2 big regions. They are growing faster from a just like pure messaging and even text perspective them Europe. And also, I think, faster than the U. S. On it alone. In India, you've got like a penetration question and in Brazil as well. So you're those two markets are growing at very solid healthy rates kind of stand alone. Greater APAC also growing very fast. That's a smaller portion of our business, and therefore, you don't see the major impact there. Are you relevant if you're not in the U. S? I think the world is global. I think the U. S. Is the most powerful economy, of course, strengthened by the fact in this particular market that you've got a lot of these SaaS companies. I think all markets are relevant, but obviously, U. S. Being a really, really our house. If you want to be a really global player, it is extremely strong to be in the U. S. It's hard to be a really global player without, it. But I would not go as far to say that you're not relevant. And consolidation, M and A, yes, it. The core limiting factor to us, we think it's not the opportunities in the market. It is the ability to integrate. Us. We are increasing our investment there. I have a VP for integration reporting only to me Reporting to me with a dedicated team and building up a dedicated team to do this. She was within the Thompson Reuters roll up. She was going to be participating in that when Thomson Reuters did 40 acquisitions a year. So that's her perspective. It. We are investing continuously. We're getting better and better, but this is where we have to think about in terms of acquisitions. I think the integration is doing well, but it's obviously a lot of work and we're working to improve. On the balance sheet side, I would ask Roshan to answer that question. Yes. I think thanks, Oscar. Just a Couple of comments there. I think one, Ramin, just as a clarification, the growth figures, I think, from our report. It's, of course, based on where the customer is based. When you look at the traffic spread, it's a lot broader than that. It. I think on the balance sheet constraints question, I can just say that we have not it. Currently, we don't have any constraints in terms of the acquisitions that we've announced. We're satisfied with the financing that we have to be able to complete the Intelligerent acquisition. It. We, of course, don't comment on future acquisitions. That's a separate process, but we'll come back to that if we have something to communicate. It. Thank you. Our next question is from Daniel Djerberg of Handelsbanken. Please go ahead. It. Thank you very much and congratulations to stellar messaging growth. I have a question first on Wave, consolidated now since, I guess, 3 weeks. And we have the rolling twelve numbers until March 31, I believe, roughly SEK 1,000,000,000 or SEK 928,000,000 and SEK 260,000,000 in gross income. Can you comment a bit on the current how the momentum in the company being impacted by the quite lengthy M and A process. That's my first question. I'll jump in there, Daniel. I think we'll refrain from any numerical answers on sort of how these acquisitions have been progressing in the interim period. I think what we can say is that the trends that we saw when we signed the deal. They have continued and we're very happy with the progress in particular with the development on next generation conversational messaging. Perfect. Fair enough. And then my second question, I guess, to on this interesting marketing cloud solution for WhatsApp with Salesforce. Can you help me understand a little bit more on the revenue model on the if it's revenue sharing somehow and also if this is more or less the only WhatsApp cloud solution that sales for us or if this is 1 of a dozen or whatever. That's my question. It. Right. Revenue model is very similar to our existing revenue model. This is like a big partnership with a big with a big customer, and they would pay in a similar fashion as they do for others. They just like and partner with a big provider that likes Cinch to do this. And then they are paying in a similar fashion as for all other messages basically, as for all other customers. So the revenue model is similar and no difference. The second part of your question. Please repeat that again. That was It was more on how to consider this. If you're one of many collaboration partners with for Salesforce on the WhatsApp cloud solution or if you are more or less a little bit more exclusive the collaboration. So this so we are the only partner that we know that has integrated this deeply. It. This is really you go into the sales force, you go into the journey builder where you can like create customer journey flows graphically, click on something, drag in Cinch. You see the Cinch logo. We're the only partner to our knowledge that is doing that. They have another mode of great thing, which is what you must call via the app exchange, where people can like upload services that is connected to their service. So that's kind of a more of an arm's length partnership. There, there are several providers. But for our knowledge with WhatsApp being integrated this deeply into the Journey Builder. We haven't seen anyone else, which is obviously a very strong position to be in. It. Yes, that's interesting. Thank you. I'll go back to the queue. Thank you. Our next question is from Frederic Littel of Danske Bank. Please go ahead. Thank you. Thank you for taking my questions. Congrats to a great report. I have maybe a follow-up on Daniel's a question on Salesforce. Is this sort of a first project with Salesforce? Or have you sort of engaged with them in other types of more applications earlier. So is this a first with a giant? Or are you acquainted with them since before? So That's one question. Then I would like to ask a question on intelligent that we talked about yesterday as well. But can you a little bit it. Describe your plan so far, I know it's early times, on how you will drive sort of revenue synergies out of the combination of you 2, because I guess that's where your most intrigued and see the potential. So could you elaborate a little bit on that if we then assume that it will be approved in the fall of it. 2021. What should we expect there? Thank you. Thank you. The WhatsApp partnership is a continuation of an existing relation. The Intelliquant revenue synergies side. We think it's very interesting, both because if I take a use case or 2 use cases. If I'm here in the U. S, I when I walk into my Honda dealer, I got the Honda people wagon because I got 4 kids. So that's what I drive. And I go into my Honda dealer. I'm really hot in the market, by the way. It's the hardest car you can have. It, I can tell you. So when I go into the Honda dealer, I speak to a representative, then I get a message to say, all right, your car is available to pick up. I get that via text. Cinch to say, all right, your car is available to pick up. I got that via text. If I click on that phone number, I get a callback into the right person at Honda. Just by clicking that number because the number is both text and phone enabled. Or when I use DoorDash here in the U. S, a number is allocated to the DoorDash dasher that is coming out. And then my food was we ordered was canceled here the other day. Then I got a message saying, hey, your quote is canceled. And I was like, awesome. I didn't understand. I tried to text them. I got a response from text. I didn't understand. Then I clicked the number and I called the driver, and I could get allocated to that specific driver at that specific time. So As humans, we sometimes want to do like message based interaction because it's asynchronous. I can do it for the sofa. I don't need to talk to anybody, right on the timeline. But sometimes I need to do voice. That's the combination, I think. So the ultimate is like integrating voice and messaging into the customer journey of the enterprise and handling them in whatever channel they want. This is kind of omni channel in a broader way than messaging omni channel, if you understand. It. Then concretely, obviously, they sell to all the biggest contact center providers, all the biggest UCaaS providers, all the biggest cloud collaboration tools like Cisco, WebEx and Zoom and what have you. They sell to a lot of big tech companies. They save all services we sell to customer's messaging service, are they cross sell opportunities? Well, of course, there are similar customer base. It. Then we obviously buy services from the same operators. They partner very closely with the biggest U. S. Operators on voice and actually outsource part of delivery of voice connectivity to the U. S. Operators. We buy messaging service to them. Will we increase our volumes and standing with the U. S. Operators and relations? I I would be hard pressed to say that we would not. So that's kind of the major areas, I would say. Is it fair to assume that You can see sort of the benefits very clearly already now. Will you sort of already start to drive it. For innovation that then can just be sort of bolted on when you get an approval and you get really starting running. Is that fair or we need to wait? Yes. So first, I mean, there's ganjam growth. So we need to operate at separate entities in the market until the deal close. And we are very careful about doing that. And we're we always stay to the book. And so we operate the separate entities, period, then they close and then we can fully cooperate. Do I see opportunities? Of course, I see tons of opportunities. Everybody I speak to, there are going to, we say, various opportunities. We can cooperate in various ways on an arm's length basis on market based premises, all right. If we can do that in an area and that's all good and we check with our legal team, then we will do that. It. That's how we think. I think it's very straightforward. Perfect. Thank you very much for the answers. It. Thank you. Our next question is from Andreas Marco of Berenberg. Please go ahead. It. Hi, everyone. Thanks for the presentation and for taking my questions. So the first one is actually on video, something we haven't talked about a lot today. It. What do you see the opportunity in Fidio? And how do you think about it for the next couple of years? I mean, obviously, since yesterday, You're now much bigger in voice as well and your U. S. Competitors are talking a lot about video. So what do you think about the video opportunity? It. We think the video opportunity is very fast growing. We think it's a great opportunity for customer engagements. I would say that the largest channel is messaging, 2nd largest is voice and then the by far smallest but growing very fast is video. And I think you should think about it in terms of effectiveness of communication messaging is more and most the most time effective for you and the enterprise. You want a little bit higher bandwidth, you would go voice. You want the most high bandwidth, you would go video. That's kind of the premium channel, right? But you wouldn't do video always. So I think it's by in volume, it's going to be the smaller channel apart from these kind of Zoom calls and what you have, which is a little bit of a different market. But if you talk like general enterprise consumer engagement, it will be like that. It. And we think it's very interesting. And we think it's there are definitely opportunities in the market this market. There are 2 parts to the market. 1 is like live video and the other one is like video that you send out. We have a good drive and growth in the like a video that is sent out via message, which we would count in our messaging business because it's like non live video, right? But that's a very strong format we see, good for conversion rates. On live video. We see us a good growth rate, very interesting market. We are small. We tend to focus on the core areas. And then when we do something, we do something big. And that's exactly what we saw in Intelligent. In the long run, it's a logical extension. We see good growth, but then we also need to focus on the core areas and make sure we win where we are. It. Okay. I guess, if I may kind of a follow-up on this. Do you see there's a risk that if you don't do anything big in the video segment. You might actually become less competitive in the next couple of years compared to your U. S. Peers, which are quite aggressive in this segment. Do I think I lose customers in messaging and voice today because I don't have a video service. I don't think that's a lot. I think it's always, of course, best to offer everything from a customer perspective. But from an internal operations perspective, it may be good, but you may spread yourself too thin, right? So Yes, it's good to offer, but if you would spend those on being best in messaging instead, what's the biggest growth drivers to my investors? That's not the it. Easy question to answer, right? And that's the balance I tried to strike. But shortly, do I lose some of our customers now? No. Is it better for customers? If I were for everything, yes. Is it always best to spread pain or to focus? Well, that's a good question. It. Okay. And then my second question, if I may, is on working capital. Are you taking any steps to improve this us for 2021. Yes, I guess I can answer that, Oscar. Yes, so I mean, Andreas, we have a continuous us. Work with improving working capital, obviously, when we and if you look at the previous reports, I think you'll see that in the numbers and in the trend. It. Obviously, when we acquire companies in a way, we acquire a working capital that comes with it. And that's it. In the short term, it's very little you can do with that. So I think that's sort of the Q4 effect that you see, a little bit coming from the SDI acquisition and the the size of the SDI acquisitions impacting working capital as a whole. It's quite obvious that we want to get not only the organic growth, but also the working capital sort of quality up to the Cinch standard, but that's going to take some time. Okay. Thank you very much. Us. Thank you. And with that, I think we've exhausted our time. Thank you for all the keen interest and the questions. Feel free to reach out with any follow ups. With that, we've finished the call and I'll just hand back to Oscar for concluding remarks. It. So thank you all for your interest. We're very thankful for all your interest and your time. We think we're in a very good market. This market is continuing to expand and continuing to surprise me on how strong it is. We've been fortunate to execute well in the last quarters, and we will fight as hard as we humanly possibly can in order to continue to grow good on a quarter to quarter basis. But I think we are in a very good position in a very good market right now. So thank you.