Hi, everyone, and very welcome to Sinch Q3 2026 earnings presentation. My name is Mia Nordlander, and I am Senior Vice President Investor Relations and Sustainability. With me here in Stockholm in the studio today, I have our acting CEO and CFO, Jonas Dahlberg, and our Senior Vice President Corporate Control, Sofia Ohlander. Today, you will hear Sofia and Jonas present the quarter, and thereafter, we will have time for questions. If you are calling in through the telephone conference and want to ask questions, please remember to press pound key and five. If you have questions using the webcast, you can just chat them directly to us, and we will answer as many questions as possible. Once again, very welcome. I hand over to you, Jonas.
Thank you so much, Mia. Let us start to look at the highlights of the quarter. It is a quarter with continued profitable organic growth, with the U.S. being the engine. Americas delivering 7% organic revenue growth, and at the same time, we have essentially stability in the combined EMEA and APAC in terms of revenue. in the quarter, we are advancing our offering in AI-driven customer communications. That is about expanding our messaging network, it is about enabling our voice network for voice AI agents, and it is about enabling developers to use all Sinch channels in agentic development tools. We do all this from a position of financial strength. We are at the upper end of our profitability target. We have super strong cash flow in the quarter, and we are continuing to deleverage our balance sheet accordingly. With that, let us look at the regional performance.
Americas is two-thirds of our business, and it is really the engine of the group, supported by our strong market position, blue-chip clients, strong market fundamentals, and an emerging AI-native customer base. Revenue growth in the quarter is driven by messaging and email APIs, as in the previous quarters. What is also encouraging is that we actually start to see some shy growth also from the voice business. Americas' gross profit expansion has largely the same drivers as revenue, but in addition, it continues to be driven by the strong margin expansion in Network Connectivity, driven by the upgrade of the network from TDM to IP. We are now about to complete that transition in the next couple of quarters. In EMEA, we are taking decisive steps to improve performance. The core business is solid, with, in particular, email being the growth engine.
What is still burdening us year-over-year are some legacy and niche products, including fixed fee operator contracts impacting primarily the year-over-year comparisons, while they are more stable on a sequential basis. In APAC, we are combining sustainable revenue growth, predominantly in email APIs, but it is also boosted by some temporary low-margin traffic. The gross profit in APAC is burdened by margin compression. Some of that is temporary, and some of that is more sustained. Let us look at the commercial momentum in the quarter. I am very pleased with the strong commercial momentum we have. I will not go through all the deals in detail, but I want to emphasize a few points here. As you can see, we have won several six-digit USD deals. What is encouraging to see is this is across customers, and new customers as well as existing customers, and through our partner motions.
It's truly a diversified commercial momentum, including every region and every product. What's also very encouraging is a common denominator is that we're winning because of our infrastructure advantage. Customers are choosing Sinch because of our superior infrastructure, providing enterprise-grade quality and reliability. Also, what's great to see here are several voice wins. If you look at the top row here, you can see a global cybersecurity company who are choosing our Voice API. We have a financial services company, being an existing customer, which is adding voice as a product to the portfolio. Through our partner motion, we have an agentic AI provider who have chosen Sinch. The common denominator across these three is we're displacing competitors, and we're displacing them because we provide an enterprise-grade performance in terms of voice quality and reliability.
We're going to talk more about our voice offering in a bit. This was history, and now let's talk about future. What will drive growth in the future? Short term, it's about continuing to double down on what's working, and that's truly the U.S., as well as our email offering. Those are the growth engines from a regional and product perspective. Simultaneously, we're working to elevate the performance in EMEA and APAC, and we see very good progress there, although it will take maybe a quarter or two before it's shown in the numbers. Medium term, it's about driving net revenue retention. That's about winning fast-growing customers, such as AI natives, but it's also about expanding existing customers and increase the loyalty in the customer base. Longer term, it's about providing innovative products for our customers.
Let's talk more about that, and I want to talk first about the expansion of our RCS network. As you know, we are very bullish about RCS and WhatsApp, as they provide the foundation for a conversational AI future. Both RCS and WhatsApp are promising a better customer experience and more customer value than the traditional SMS messaging. In the quarter, we achieved full tier 1 RCS coverage across North America, with direct connects to all tier 1 carriers in Canada. We're now complete in North America. On a global basis, we now have 84 direct connects on RCS, which is up 24% from a year ago, and we see continued strong growth in traffic. In North America, in particular, we see traffic going up 5 x from last year, although from a low basis.
APAC still remains the majority, actually three-quarters of the RCS traffic, and volumes have doubled to 1.4 billion messages in the quarter. That is on a global basis. Now, I want to move on from messaging, because many people still think we are a messaging company. In fact, voice and email are equally important, and on top of that, we have an application business. Last quarter, we talked about email, so this quarter, I want to share some exciting developments we have in voice. Our voice advantage is based on truly an infrastructure advantage. We have, and we own the largest independent carrier-grade voice network in the U.S. Our network carries more than 250 billion voice minutes a year. It's directly connected to all relevant carriers in the U.S., and we own a pool of 160 million phone numbers.
Our network provides best-in-class performance in terms of voice quality and reliability. It is an enterprise and carrier-grade network. A few years back, many people thought that the voice channel would perish on behalf of text. What we now see is a renaissance truly of voice AI. Voice is back as a channel, and that is what I want to talk a little bit more about. Voice agents are now truly coming to market, but they need good infrastructure to provide a good customer experience. This is where our voice network comes into play. They also need an easy-to-use interface to the carrier-grade networks, and this is where our Voice API comes into play. We have provided a programmable voice offering for years, but we are now launching our Voice API v2, providing more functionality, and it is really geared towards enabling agentic AI on our network.
If you combine our Voice API with our voice network infrastructure, we have what I would be confident to say the best home for agentic voice in the market, and that is why we are also winning voice agents. More AI. I want to talk about how we enable not only voice, but all our products to the new market of agentic development tools. Software, as you know, is today not just written by humans, but by humans operating agentic AI tools, and we are positioning Sinch to win in this new developer market. We are now available in all leading agentic development tools, including well-known brands as Anthropic's Claude, Codex from OpenAI, and Google Agentspace. The latest addition to this is SpaceX Super Intelligence Grok Build.
As you know, we are also available through Lovable. Maybe what is not as well-known is that we are also available through a voice AI specialist called ElevenLabs. The way we work with these agentic development tools is we make ourself available through our MCP servers, through our skills that describe how AI can use our products. We have functions which are really pre-packaged operations, and we have developer tools such as our command line interface and our SDK framework. With this combination, what we do is we enable these agents to, in a very simple way, develop applications on top of our channels, which are provided through our APIs. The result is a faster path from idea to live customer communications. For Sinch, this is a new distribution channel of our products, and we think this is very exciting.
SpaceX Super Intelligence Grok Build is the latest addition to this. We are now a SpaceXSI marketplace partner. As you know, or may know, SpaceX recently acquired Cursor, and it is one of the fastest-growing agentic AI coding environments. More than 50,000 enterprises use this tool to develop software. With Sinch plugins, developers now can easily build applications based on messaging, voice, and email into their apps, basically without leaving that environment. Grok Build codes, and Sinch provides the enterprise-grade communications infrastructure. Let us look at what that could look like before handing over to Sofia.
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Hello, everybody. My name is Sofia Ohlander, and I am Senior Vice President at Corporate Control at Sinch, and I am very happy to be here with you today to present yet another solid quarter at Sinch. Starting with the headline numbers. As a reminder, we report in SEK, but USD is our dominating trading currency, and we always look to organic growth to measure the underlying performance of our business. Organic revenue growth came in at 5% in this quarter. This is driven by our largest region, Americas, coming in at 7%, and it is driven by our largest product category, API Platform, where we have our messaging and email business. Also in this quarter, we saw cost increases from certain U.S. suppliers that were passed on to customers at cost, supporting group organic revenue growth by approximately 2 percentage points.
As I said in Q2, while this has an effect on our gross margin, it is a natural part of our industry, and we do not see this as a sign of shift in underlying profitability. If we normalize for this effect, we actually see strong underlying profitability in Americas, and we see that new business is coming in at stable, healthy margins. In EMEA, we had a revenue decline in this quarter at negative 3%. While we see some stabilization in the core and high double-digit growth in email, year-over-year was impacted by the reduction of fixed-fee operator contracts. In Q3 last year, these contracts were declining, but sequentially had a peak, which impacts this quarter's year-over-year. Importantly, these contracts now represent a low single-digit share of Sinch revenue and gross profit.
In APAC, revenue came in at 5%, and this is driven by high double-digit growth in email, but we also had some temporary low-margin messaging traffic, which impacted revenues. Moving on to gross profit. GP came in at 4%, and this is fully driven by Americas at 10% organic GP growth. This comes from API, where we have both existing and new customers driving GP growth, as well as both messaging and email. In Network Connectivity, continuous work of shift of TDM to IP technology reduces our cost and drives up organic GP growth as well as margins. In EMEA, we had a decline in GP growth in this quarter of 2%, and it is driven from a few different factors. Again, we had strong double-digit growth in email, but this was offset by churn in legacy technology products and the before-mentioned reduction of fixed-fee contracts.
Important to mention also here on gross profit is that on a sequential basis, EMEA gross profit is gradually stabilizing. In APAC, GP declined in this quarter, and this is driven by the margin compression in our applications business in Australia from high levels and a year-over-year decline in India. Our business in India experienced a decline against high prior year comparisons, and also here on a sequential basis, we see signs of stabilization. A reminder again that India is now a low single-digit share of Sinch group gross profit, so any further downside should have a limited effect on a sequential basis. All in all, a solid organic revenue growth and a stable gross profit growth driven from our largest region and our largest product category, and signs of stabilization in EMEA and India, but decline on a year-over-year basis from EMEA and APAC.
Moving on to look at the nature of the top-line development and profitability. Let us start with gross margin. In Q3, we see an uptick in the margin versus Q2 and stability on a year-over-year basis. Before we go into the details, the core message I want to convey is that even though the reported numbers look flat on a year-over-year basis, our underlying profitability remains strong. On a year-over-year basis, we have a shift of TDM to IP technology, and that has a positive effect on group gross margin. This is countered by two distinct factors in this quarter. In APAC, the gross margin is declining, and that weighs on the total gross margin. The effect that I mentioned from increased costs passed on to customers at cost, they have a dilutive effect on the gross margin.
Combined, these effects net to a flat gross margin on a year-over-year basis. Importantly, if we adjust for the zero-margin traffic, we actually see a strengthened margin year-over-year, which is a sign of maintained profitability. On a sequential basis, the margin is up about 1.1 percentage points, and this is driven by the uptick in Network Connectivity in this quarter, and also some FX movements on a Q-on-Q basis. If we move on to adjusted EBITDA and profitability, the adjusted EBITDA margin is flat on a year-over-year basis and up with about 1.2 percentage points sequentially. This is really driven by the stronger gross margin. Let us stop for a moment to look at our profitability. Adjusted EBITDA margin is at historically high levels, and further adjusted EBITDA and EBITDA are moving closer and closer together.
Our adjustments to EBITDA have been decreasing over time, reflecting consistent healthy profitability. Actually, in Q3, we have an all-time high EBITDA margin since we were listed at 12.9%. Let's look a bit more at our cost development on the next slide. We continue to be in control of our costs. Adjusted OpEx is at 4% organic growth, and this supports our adjusted EBITDA growth of 5%. It is important to know here that while we see a step-up in adjusted OpEx growth on a year-over-year basis, on an FX-neutral sequential basis, adjusted OpEx is flat in Q3 versus Q2. It is also relevant to mention the distribution of our costs, where we have decreases in G&A expenses, which free up funding toward growth areas such as sales, marketing, product, and technology.
We will continue to make targeted investments in these functions while driving productivity improvements across the board. Let's see what this trickles down to in cash flow. In Q3, our free cash flow was SEK 787 million, with a cash conversion on a rolling 12 basis of 75%. This is well above our guidance over time, and the positive development is really a result of our solid underlying profitability and disciplined capital expenditure. I want to emphasize a point we usually make, that working capital may have swings between quarters driven by timing. I also want to remind you that our guidance over time is at 40%-50% cash conversion on a rolling 12 basis. All in all, very pleased to see a solid cash flow in this quarter and a stable working capital. Let's finish off with a look at our balance sheet.
Our leverage continued to improve in the quarter, with a net debt to adjusted EBITDA reduced to 1.7 x. Between Q2 last year and Q2 in this year, we repurchased 15% of our outstanding shares, which have been canceled, and we made no share repurchases during this period. During the quarter, leverage decreased rapidly, and this is driven by the strong cash flow and a strong balance sheet, which gives us good financial flexibility, and makes us be able to maintain a strong position to return shareholder value. With that, I will hand over to Jonas for some concluding remarks.
Thank you, Sofia. Just to conclude before Q&A, we are on a trajectory of profitable organic growth, and we continue that. We advance our efforts in AI-driven customer communications, and we do this from a very strong financial position. With that, Mia, let's take Q&A.
Yes. Time for questions. Once again, if you are using the telephone conference, remember to press pound key five or send them through the webcast to me here in the chat. We will try to answer as many questions as possible. We start with the telephone conference. We have Georg Attling from Pareto. Good morning.
Thank you, and good morning to you all as well. Just a couple of questions from me. I am looking at the gross margin here in Network Connectivity Americas at 42% now on a rolling 12-month basis. How much more potential do you see there? How much more is there to capture from the TDM to IP transition?
We are about to complete the transition now in the next two to three quarters. You should look at the margins in the quarter, then you can expect maybe some percentage point uptick in addition from this transition in the next couple of quarters. Look at the quarterly performance and then take it from there.
Okay, that is helpful. I mean, relating to that, if we look into next year and you do not have this tailwind from gross margins in Network Connectivity Americas, which is the current largest driver to gross profit growth, what makes you confident that you can continue to accelerate organic GP growth and reach the targets you have?
I mean, that's going to come from the revenue growth, and we see an acceleration in revenue growth. We have solid growth in the U.S., and also our highest margin product being email. It's growing stronger than the average mix. Actually, very much stronger than the average mix. That makes us comfortable, or confident, I would say, that we can maintain the current gross margin.
Okay. Just a final question on the buybacks. Why haven't you restarted the buybacks?
I think you need to look at the buybacks in the perspective of last year's very ambitious buybacks. We repurchased 15% of total outstanding stock last year. At every point in time, the board optimized the capital allocations, across buybacks, delevering the balance sheet, or looking at M&A opportunities. We are ready to do buybacks, but we could also use the capital for M&A or to further deleverage the balance sheet.
Okay. Just a final question. In terms of M&A, is it primarily bolt-ons that you're looking for, or could it be a larger, more transformational one?
Repeating what we have said previously is, we are continuously looking at bolt-ons if we think they add value. But this is also an industry where we think consolidation will happen, so we are also looking at transformational opportunities. But that is not really new. It is in line with what we have said earlier.
Yep. All right. Thank you very much. That is all I had.
Thank you. Next one is Daniel Thorsson from ABG. Good morning.
Yes. Hi. Thank you very much. First one, a little bit differently framed here on the Americas, but the organic gross profit growth for API Platform in the quarter continues to be around 5% and actually slightly decelerating a bit to 4% in Q3. Do you expect this growth rate to accelerate in the quarters to come when growth from Network Connectivity may fade, to keep the region at 10%?
Yes. We have higher ambitions in API Americas. Absolutely.
What is the main driver for that? Is it email or voice or anything else specifically?
It is going to be voice, email, and messaging. I think most of the volume growth will come from messaging, but it is all three.
In API Platform, you will definitely see from email and messaging.
Yeah. Clear. Secondly, on group level, you have said that the second half of this year, organic GP growth should be better than the first half. If we are right here, it was 4% in the first half, 4% in Q3, meaning that you need an accelerated growth in Q4 to be above 4%. What is the main driver of that?
Well, it is Americas, and the continued development of Americas, and also meeting better comps or easier comps in APAC and EMEA.
Okay. Finally, you are mentioning in your report that you are open for potential divestments, which I think is a new communication. Are these primarily related to underperforming units like the SMS business in India or certain parts of EMEA, or is this basically opening up discussions with external partners across the entire product portfolio?
No, it is not the entire product portfolio. What this is about is, you know that Sinch made several major acquisitions a couple of years back. With those acquisitions also came, let us say, adjacent businesses, which, when we combine this into one Sinch and we position ourself for an AI future, it is good businesses, but they may not really fit the portfolio. So, they could find a better home maybe somewhere else and develop more favorably with someone else. That is how you should think about it. In that way, we are also focusing our efforts where we think Sinch has the brightest future.
Okay. Would you say that those are concentrating to declining units at the moment, or could this affect the growth rate of the entire group?
I don't want to get into exactly what financial profile we're looking at here. What I want to say, this is more focusing the business on the core going forward to make sure we're just focused on the growth opportunities. Exactly what the financial profile is, if and when something would happen, we have to come back to.
Yeah. That's clear. Fair enough. Thank you very much.
Thank you.
Thank you. Next one, we have Viktor Högberg from Danske Bank. Good morning, Viktor.
Yes, good morning. Just want to confirm on the Americas Network Connectivity gross margin was 47% now in Q3. Did you say you expect that to improve by one percentage point in the next coming quarters and then stay at that level? Just confirming that. That is the first question.
Yeah, if you look in isolation, and everything else being equal, and then you add further rollout of the IP technology, there is room for a couple of percentage points additional gross margin expansion from Network Connectivity over the next, say, two to three quarters.
Okay, thank you. Maybe coming back to AI just a bit. You are more concrete on it. Your peers have been as well. Early days, of course. When do you see this adding materially or meaningfully to gross profit growth? When can you separate it out and be a part of driving growth on the group level, or at least in Americas to begin with?
We expect it to meaningfully contribute to growth next year. Maybe low single-digit contributions to growth next year.
Okay. Is that driven by just thinking about if you could elaborate on the confidence in that and the background for it. Is it the volumes that you've not been promised maybe, but what you're seeing in discussions with your customers? Or what is the basis for that? Because that's quite material from an expectations point of view, maybe, if it would deliver growth already next year. Thank you.
Yeah. I mean, the reason why we believe in that, firstly, these companies, they need customer communications, and they're growing fast, real fast. We have discussions ongoing with several of these companies. They are in our pipeline. Initially, the volumes may be limited, but it's just a fundamental need and demand that's coming in the market. Yes, I think it's going to be visible as a contributor next year.
Thank you.
Thank you. Next one, we have Daniel Djurberg from Handelsbanken. Good morning, Daniel.
Good morning, and thanks for taking my question. Good morning, Jonas and Sofia as well. Most questions asked that I had, but I can try on. If you look at, you mentioned, for example, WhatsApp being a strong contributor to growth, and that Meta is also hardly kill its own channel. But over time, they have, at least to my knowledge, a more comprehensive enterprise communication platform offering. Do you see a risk that the value add from the CPaaS layer will be less pronounced given what they are doing internally?
We don't. There are two main reasons for this. The first one is the more channels, the better for us, because our job then becomes to orchestrate the customer communication across all those communication channels. So, complexity is good. That's the first reason. The second reason is Meta have, they've realized that they can't do this themselves. They are a consumer-facing company predominantly, and dealing with enterprises is a different business, and we provide clear value add. So, no, I think we can have a great partnership with Meta and all the operators on RCS and also other channels as well.
Yeah, that sounds good. Also turning to EMEA, you write in your CEO letter that it would take a few quarters to make the turnaround, but we see some solid progress. Can you give us some more insight in this progress and also what you're aiming to do more in hands-on in EMEA?
Yes. As you know, we have a new leader for EMEA, Jonathan Bean, and he's taken quite some action in the EMEA organization to elevate the performance. What we can see now is in the core EMEA business, if you look at the API business, the email business, that's stable. Actually, the email business is growing quite nicely. Where we have weakness is really on the fringes in EMEA. It's about the fixed fee operator contract. It's about some niche software business we have for telcos. But underlying solid business in EMEA, and we see pipeline growing in EMEA. I think this will translate into growth numbers within the next few quarters.
Also strong in conversational and RCS in EMEA, so that's something that we're driving, pushing hard on.
Perfect. Can you also just give some more color on the RCS? You have more and more coverage with, I think, 21 countries and more or less all tier ones. But obviously, this will take over some of the SMS revenues. Do you have any percentage-wise on growth or part of the total messaging being or yesterday or something?
Yes.
[inaudible] .
Year-over-year, volumes doubled. If we look at North America, it is five times last year. It is still low single-digit percentage of the total messaging mix. We have to be honest, this moves slower than we expected, and a lot of this is onboarding friction with operators. At the same time, the SMS business is there. It is growing in terms of volume. WhatsApp is also an alternative. We still believe that the conversational future is looking good. I think for us, as you know, we have always said, you should not expect a massive margin increase from these channels. It is more about a richer customer experience, which will longer term drive volume. We are not really, I would not be worried about somewhat slower uptake in RCS. Obviously, if we can accelerate that together with operators, that would be great.
Perfect. If I may, the very last question from my side would be on OpEx. I think it was up some 4% year-over-year in Q3. A little bit on how to think on this when we do our estimates, and also if you can give us some, where do you say, where do you invest in terms of segments, geographies, and so on?
Yeah, I can take that one. You are absolutely correct that OpEx is up at 4% on a year-over-year basis, versus 1% on a year-over-year basis last quarter. Just as a reminder, what I said is that on a sequential basis, we are actually flat, if we neutralize for FX. In terms of estimates, I would guide you to what we have said at our Capital Markets Day in 2024, which is that we will look at adjusted EBITDA margin, and we should be around 12%-14%, and we are well within that range in this quarter at just south of 14%. We will prioritize investments, further investments in growth, as opposed to further elevating the adjusted EBITDA margin. Where we invest is really in areas that we see that we can get healthy growth from.
A lot of that is Americas, obviously API. We talk about messaging, email. We also have a great voice opportunity in that area. We are also working to stabilize EMEA and APAC, obviously.
I think what is not really-
Perfect. That is all for me, and good luck in Q4.
Yes.
I am sorry.
Just piling on, what is not visible in the total OpEx number is quite significant shift within OpEx from reducing G&A, reinvesting in sales and marketing, and product development.
Okay. Next one is Thomas Nilsson from Nordea. Hi, Thomas.
Thank you for taking my question. We have seen throughout the year organic gross profit growth increasing and EBITDA growing faster. I would like to think, how do you think about operating leverage as growth accelerates? How much operating leverage should we expect? Would it be reasonable over time to see your EBITDA margin rising over the coming three to five years?
What we have said is, now when we have the leverage target is ticked off, the profitability target is ticked off, now the priority is accelerating growth. We work with efficiencies continuously, shifting from G&A into growth. We are also deploying AI on our internal processes. That efficiency, rather than driving further margin uplift, we prioritize to elevate growth. To answer your question, we could drive margins even more, but we are prioritizing to reinvest the efficiencies into growth.
Okay. Thank you very much.
Thank you, Thomas. Then we have Deepshikha from Goldman Sachs. Good morning.
Hey. Hi. Thanks for taking my questions. I have two, actually. One is, I think at the beginning of the year, it was highlighted that there were a lot of contracts, especially in America, that were expected to ramp and help driving the growth in this region. Can you just talk about that dynamic in terms of how those contract ramps are? How is that 10% growth in Americas being driven by these contract ramps? Especially when once this upside that you're seeing from Network Connectivity on the GP, that starts normalizing, how should we think about the growth in the region? The second one is basically just a quick update on the impact on the cash flow related to, there were some provisions made on taxes. Is it fair to assume that it's largely behind and most likely that would not happen?
Is it like, how should we think about those payouts going forward?
Starting with the contracts. We won some very nice contracts in the beginning of the year, in particular one on voice. That is ramping. It is ramping a little bit slower than expected, but it is ramping towards our expectation in terms of GP. The second question was on. Sorry.
Yeah, it is on the provision that we made, and Deepshikha, we made a provision in Q4 in 2024, and we have utilized about SEK 35 million of that provision during the first half of this year. In Q3, we have not utilized anything, and we have further reclassified from short-term to long-term. In terms of cash flow, I think that you should assume that we will have a long-term outflow, but longer term, as you know, means more than one year out. That is our best estimate at this point in time, and when we have a new estimate, we will come back with that.
Okay. Thanks.
Thank you. Next one is Bharath from Cantor Fitzgerald. Good morning.
Thank you. I have a few questions, please. Given the few issues at the fringes in Europe, EMEA, that you mentioned, how do you reckon your market shares in the region have trended in the past year? That is the first question. The second one on EMEA API gross profit growth, am I right in saying that the legacy messaging churn is largely offsetting the entire email ramp? Lastly, voice seems to be largely an America story, AI Voice API Streams, Voice API v2, et cetera. There is no mention of Europe at all. Is the European voice opportunity structurally different? Any color there helpful. Thank you.
Let me start with the market shares. It is very difficult to measure market shares in this industry, so I do not want to really talk about the market shares in Europe because we do not know, to be honest. Moving on to the next question in terms of what is the strength and what is burdening us in EMEA. The strength is in email, but traditional SMS is also strong in EMEA. It is not the SMS business that is burdening us in EMEA, it is niche products we have with these fixed fee operator contracts and also our niche telco software business. That is really what is burdening us in EMEA. When it comes to the voice AI opportunity, two drivers here.
The first one is the structural advantage we have in Americas is our voice network, our carrier-grade voice network, which provides a competitive advantage for anyone who wants to run voice AI agents. This is very difficult to replicate. We do not have the same asset in Europe, so that is a structural difference. The second thing is, most of these companies are coming from the U.S. So, what we expect is to gain a foothold in this market and grow in this market in Americas. Then we will expand from that also into Europe, although not on the same infrastructure advantage.
Okay, understood. Do you see that Europe, the demand for such a product is there, or is it a bit lagging the U.S., or how does it-
I would say it is lagging a bit. In general, we see the AI demand lagging behind the U.S. But it is difficult to assess how long it will take. But I think, since we have two-thirds of our business in the U.S., that is important for us and very meaningful, of course. We will be ahead of the curve in a way, in that way. Once we have that business, we have a competitive advantage also in Europe and APAC, since we bring basically the U.S. experience into those markets.
Understood. Sorry, can I ask just one more question on Australia? I know there has been some pressure there. Is that mainly from high competition, or is there any further color you can provide, please? Thank you.
Sorry, can you say again? You were breaking up a little bit.
Sorry, I was asking about Australia. Is the main reason for the business being under pressure there, is that for competitive reasons, or is there anything else that is going on?
The situation in Australia is we have a very solid business. We are a market leader in Australia, but we are coming from very high margins in Australia. This has attracted some competition from the outside. To defend the market share and the position in Australia, we need to work with price and normalize basically the price level in Australia. Australia has been an outlier with very high pricing and profitability. It is not really, I would not call it a weakness in the business. It is rather that we are coming from a super strong position, and now the market is somewhat normalizing, but we are defending the share in the market.
Okay, understood. Thank you. Very clear.
Thank you. Next one, we have Victor Cheng from Bank of America. Good morning, Victor.
Morning, and thanks for taking my questions. A lot of them has been asked, but maybe one from my side. I think earlier you mentioned about across different scenarios displacing competitors. Can you talk a bit about maybe who you are displacing? Is it the larger peers that you are displacing? Where do you see strength and maybe some directional comments about win rates, where you are feeling a bit stronger versus areas that still need some more work? Thank you.
I do not want to single out particular competitors or name them, but what I can say is, in voice, it looks like us and maybe some others who actually have their own network, and we have the best network in the market, we are winning because of that in voice AI. CPaaS providers without that infrastructure advantage are maybe more vulnerable than we are. That is what I would like to say. In terms of win rates, we do not really have enough statistics to make that into a reliable number. It is a good win rate, I would say that.
Yeah, and just to also emphasize that there are very few players in the market that can do this at this scale. I would say it is us and probably one or two more. That is also important when we win customers.
Got it. Thank you.
Okay, next one we have Daniel Thorsson from ABG.
Yes, thank you very much. I just have a final one which we haven't touched upon today. I'm fully aware that this probably, or this is not the question for you to respond, but are there any news to share on the recruitment of a permanent CEO, and why has it taken such a long time? Anything you can share?
I can give you the phone number to my chairman, and the two of you can discuss it. That's, I guess, what I can say.
Okay. That's fine.
Okay. I think that was it from the telephone conference. Looking at the chat, we have actually answered most of them. There's one here. What is your current mandate to buy back shares?
We have a mandate to buy back up to 10% of outstanding shares currently.
Yeah, until next AGM.
Yes.
Good. That was it for today. Thank you, Jonas. Thank you, Sofia. Thank you to everyone that listened in to us today. We will be back here in the studio for the Q4 and year-end result on February 11. If you have any questions, feel free to reach out to the IR department. Thank you very much, and goodbye.