Earnings Call: Q2 2021

Jul 16, 2021

Welcome to the Sinch AB interim report, January to June 2021. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Just to remind you, the conference call is being recorded. Today, I'm pleased to present Thomas Heath, Chief Strategy Officer and Head of Investor Relations. Please begin your meeting. Thank you very much, operator, warmly welcome everyone to this conference call with Sinch AB, where we will present and discuss our results for the second quarter 2021. My name is Thomas Heath. I'm Chief Strategy Officer and also Head of Investor Relations. With me on the call today are CEO, Oscar Werner, and our CFO, Roshan Saldanha. Before I leave the word over to Oscar, can I remind everyone that when we get to questions, please limit yourselves to maximum 2 questions, you're welcome to join the queue again, we'll ensure that everyone has a say and gets to ask their questions. With those introductory remarks, the floor is yours, Oscar. Thank you, Thomas, and thank you, everybody, for your interest in listening to our presentation. Without further ado, we will jump into the slides and run through them. Operator, if you can move to slide 2, please. Revenue in the past 12 months in Sinch is SEK 11.8 billion. Adjusted EBITDA is SEK 1.2 billion, and that is not including, obviously, the non-closed transactions. Including Inteliquent and MessageMedia, it would be a bit over SEK 2 billion. 2,300 people and present in 47 countries. I think we could stop a little bit at the adjusted EBITDA number. I think that's where we truly stick out. Being a cloud business, growing at the rates we're doing, some 25%, 30%, sometimes above 30% organically, plus adding a strong M&A growth at 25%, 30%, 40% on top of that organic growth and doing an adjusted EBITDA at these levels, I think that combination is where we truly stick out, and that's something we're very proud of, and that's something we're working very hard to maintain. The profitability level, the cash flow levels, driving that is something we're working very hard to maintain and obviously grow. We do customer engagement through mobile technology. What that means is basically, if you have cloud communication, think about an enterprise and how do they want to communicate with their consumers. If they want to communicate with their consumers via messaging, voice, or video, we would be there having a platform for them to make the video call, to make the voice call from the app, or to send a message if that is an OTT, WhatsApp message, or a text message. We do 170 billion engagements per year. That is on average, above 15, closing up to 17 engagements per mobile phone on the planet. We are the largest, to our knowledge, provider of messaging services on the planet, and this is a very large market and very deeply penetrated in almost all geographical markets. In addition to that, we do something close to 100 billion voice minutes, with Inteliquent, when that is closed. That is obviously not closed yet. That's also a very large segment for us. One thing we stand out with is we serve 8 out of 10 largest U.S. tech companies. If you take the largest companies on the West Coast, we are a house supplier to them at the largest volume, at very large volume in multiple countries. I think that proves our quality and what we truly stand for, giving a high-quality, truly international service. This market has 100% consumer penetration. I have not yet to find one single person on the planet that is not a user. It's a very large, growing, multi-billion dollar market. We have been profitable since our foundation, so focused on profit since day 1. Founded on $10,000 in share capital and never needed any capital since day 1. All right. Let's go on to the next slide. Slide 3, operator, please. We have a very clear growth strategy, and we have a two-pronged growth strategy. One of them is driving strong organic growth. Over the past 10 quarters, we have been averaging in between 25%-35%, something in that region per quarter-on-quarter, over the last 10 quarters. Driving organic growth, extremely important to us. That is what we think shows we have good systems, good processes, and good business. In addition to that, we add a strong M&A-driven growth agenda, where we, on top of the 25% organic growth, add M&A-driven growth. If you look back the past five years, we probably averaged around some 25% per quarter in M&A-driven growth again. In the last quarters, we have accelerated that agenda because we think we are in a consolidation game. You can see the type of gross profits that we are today, where organic growth being 32% and total growth being 89% on the gross profit level. That's how we drive that growth. We believe we can continue to drive the strong organic growth in the market. The market is very strong. The underlying market is very good, and we believe we can, for some times to come, for some quarters or years to come, continue to drive the M&A-driven growth agenda. There's a lot of activity in the market, but we see both of those activities being strong going forward. On this slide, you can see the impact of the organic growth and how that is driven, but also the impact of the latest acquisitions of ACL, SDI, Wavy, Inteliquent, and MessageMedia, and you can see the relative sizes to them on the gross profit and adjusted EBITDA. We focus on gross profit and not on revenue, since the gross profit margin in different countries is so different. If we focused on revenue, we would prioritize wrongly because we would think that a high revenue, low gross margin country is better than a high gross margin, low revenue country. The other thing is we focus on it because different products have different gross margin profiles. Our SaaS products are 90% gross margin, while our messaging or voice products are maybe 30% or 25% gross margin. If we focused on revenue, we would focus more on the messaging and voice products than on the SaaS products, while the SaaS products drive high gross profit per revenue dollar. Therefore, the only way to look at a company in this business and run it correctly or evaluate that it's in gross profit. All right. Operator, slide number 4, please. We worked very hard. Our strategy is simple. Our reasoning is very straightforward. This market, the CPaaS market, is very large. You can see the market as being 40, 50, 60 or 70 or even $80 billion, depending on how you define it, but it's in that type of category. We have set a goals to be one of the 2 top leader in that market. You can see the move we have made from 2019 being in the middle of the pack, the blue blurb, to 2021 being the clear number, or maybe not clear, but the number 2 in the market. I would say clear number 2 in the market, behind Twilio on a couple of metrics, but ahead of them on a couple of them like message volume or profitability and things like that. Being positioned as the number 2 in the market, and it's a very strong position in this market, and that's what our strategy is about, being positioned as 1 or 2 in this very attractive market. Thank you, let's go to the next slide, please. One of the things that is super exciting about this market is the transformation and why this market can grow this fast. That is the past 20 years of this market, enterprise has figured out that text messaging was a very strong way of complementing email. Basically, you have a higher open rate with text than you have with email. You, for certain use cases like a notification on an airport, you get via text because you would simply not read email. There's a lot of such use cases. Now, the next wave coming out is conversational messaging, where new channels coming out with richer formats. You can send videos and action buttons and then pictures, and you can have conversations with the users, which drives a whole new set of use cases and in one more way, can compare it with sending a 160-character text string to send almost an app-like experience to your phone. Obviously, with that type of app-like experience, you will get a deeper experience as a user, and you can drive more use cases, and those things will drive the market for the years to come. All right, operator, let's go to the next slide. In this conversational messaging area, we're constantly adding channels. We added RCS, we added WhatsApp, we added Telegram, and we added a couple of these. In the last quarter here, we just added Instagram. Basically enabling businesses to have one-to-one conversations with the customers of theirs who happen to be large on Instagram. That is over 1 billion monthly active users on Instagram, and 60% of people say they discover new brands on Instagram, and 80% of users follow a company. This is a very strong additional channels to the RCS or the WhatsApp or the MMS channels or the SMS channels that we have. Very happy to add that and driving a good interest in the market for that channel. This is launched via our Conversation API, one API handling multiple channels. Therefore, it's no need for an enterprise to connect to multiple APIs. If they connect to the Sinch Conversation API, they already have this out of the get go. Operator, if you move to slide 7, please. We also launched a zero-click user authentication. This is to complement the two-factor authentication with text messaging. Maybe, Thomas, you're a little bit closer to this than me, but maybe you can give the explanation of the user experience on this type of service. Absolutely, I will, Oscar. You probably recognize this yourself from downloading an app or starting a new service. Perhaps you're renting an e-scooter to get to the beach on a hot summer day like this. You're asked to input your phone number, then the app maker wants to verify that the phone number is actually yours. We do this at a great scale today, often sending a text message with a PIN code, and you enter that PIN code in. We also have an innovative method called Flash Call which is another option. What we're adding here, Data Verification, is a really innovative way to solve the same problem, but in a better way. What you get is a faster, easier, and more secure way to verify that someone controls their phone number. Rather than you having to input a PIN code that you received by a message, you simply say, "Verify," and we will directly connect to mobile carriers in the background, and we will check that your phone number is actually yours by correlating the data stream that hits your handset with the number that you've submitted. An innovative way to improve the user experience to power security solutions for enterprises who want to enable two-factor authentications, and a great fun announcement to make this quarter. What's fascinating to me about the market we're in is there are so many of those type of use cases. It's not hundreds, it's thousands of those type of use cases that you're actually launching. You're launching them on one platform, and then as enterprises start to use them and roll them out through the world, it gets a very sticky service, the more of this type of added functionality that you have in your platform. This is one of them, which we think is very exciting, but there are a lot of those type of use cases in this market. I think that's one of the core reasons to why it's growing as fast. All right. Operator, slide 8, please. We have a very clear table for profitable growth. On the one hand, it's organic and M&A. On the other hand, it's driving both the connectivity business, making a voice call, sending the OTT message, the Instagram message, the text message, or making the video call. That's the connectivity business. Then you have the SaaS business on top, which is the maybe a Chatlayer, an NLP interpreting the intent of the call. What is the user wanting to say to the brand? Interpreting the intent in the message, in order to automate that intent interpretation for the customer care agent. That's a typical software service, but there can be a lot of other kind of components that enterprise are using, and we're playing in both of those. Obviously, connectivity being the largest. Then the SaaS services or applications growing very fast and being a very exciting future. Business model-wise, connectivity is like a tick-based model, either per minute on the voice side or video side, or on a per message on the messaging side, and you have a markup with the COGS. The SaaS service is a classic SaaS model, which is a seat-based model or a monthly subscription fee or something like that, but typically a 90% margin classic SaaS service model. All right, operator, slide 9, please. We have done a lot of acquisitions. We categorize them in technology and go-to-market on scale and profitability. Typical technology go-to-market being Chatlayer, AI, NLP-type service, where you just add a SaaS service to interpret the intent. Typical scale and profitability would be ACL, entering into India, getting 300 people on the ground in India, selling to 50% of the private banks in India, getting a solid base in India to expand to other services. What we do, we obviously take Chatlayer and launch in India with their ACL and have them sell it. We take all our next generation channel, launch in India, and have ACL sell it. There we have very good traction on the WhatsApp channels, for example. Latest acquisitions, Inteliquent, being both. It's like a North America, very large, highly profitable business, but it also adds a voice connectivity offerings to us. MessageMedia being a highly profitable U.S., Australia company, but it also adds a SaaS service for SME or small and medium businesses to us, which is a technology and go-to-market offering. As long as we can hit both of them, that's great, but either one or both of these 2 type of strategies, that's what we're looking for and complementing our product functionality in the technology go-to-market and then complementing our scale and profitability and financials on the scale and profitability area. All right, operator, let's go to slide 10, please. Thinking about the go-to-market models in this market, if you're selling to the businesses, if you will. You have an enterprise go-to-market, which may be an online lead generation, but it's a salesperson calling up and making the sale to the enterprise. That's kind of the traditional Sinch where we have been very strong and where we are very good, calling out, talking to big banks, et cetera. With MessageMedia, we add an SME or SMB go-to-market, which is an online self-sign-up, €150 or dollars a month type of business. Think about it as a local dentist, local hairdresser, who wants to add messaging to avoid no-shows. Then they sign up online to something, enter a credit card, and off they go, and they send a couple of message. What they're really buying is this online SaaS tool in order for them to handle their messaging needs. Truly online business model and signing up thousands of customers per month, so much more rapid pace, but then also smaller customers. Adding MessageMedia and complementing the enterprise go-to-market with an SMB and online go-to-market, we're very, very happy that we're doing that. We have the developer go-to-market in the middle, where Twilio has typically been the strongest, and that is developer exists with both enterprises and at small businesses. They exist with any business. There's a different go-to-market. You have developer tools, you have SDKs. It's an online marketing thing. You have a community of other developers creating code, et cetera, and that's something you need to build up, and that's where Twilio is the strongest in the market today. We have some initiatives, but so far, we haven't invested so much in that go-to-market model, but we're sticking to the four core focus areas of winning where we're strong in enterprise and SMB, and not neglecting to develop our offerings in developers. We're being stronger, but relative to Twilio, we're weaker there, but we're, on the other hand, stronger on the really big enterprises. All right. Operator, next slide, please. This is how MessageMedia looks, like a web-based SaaS application suite supporting outbound and inbound messaging and conversational use cases. It's truly optimized for the SMB needs for ease of use and quick time to value, as opposed to the enterprise, which is good cost, quality ratio. It's a subscription-based price model, and it's a single platform supporting various types of brands. It's a lot of integrations with things like Shopify, HubSpot, NetSuite, CRM, in order to have that kind of channel go to market and be present in all the various channels where SMBs are present. You have various types of apps from MessageMedia in there. The most well-known is maybe the Shopify app, where you have a cart abandonment app with Shopify. SMBs go in, they realize that, okay, if I have an abandonment rate in my shopping cart on my online sales, I can use this app from MessageMedia in order to reduce the abandonment rate in the shopping cart with, say, 25%, 30%. It's a very, very powerful tool to use text messaging or messaging to do that, and MessageMedia has a very good app in Shopify to do that, which generates a lot of leads into MessageMedia. That's just 1 example, if you want an example on it. Slide 12. This is a true digital go to market. I'm talking a little about MessageMedia, since I'm not sure all of you heard it. You can see 25,000 customers in the U.S. are growing 40% year-on-year, 28,000 customers in Australia, and then 5,000 customers roundabout very early stage in Europe. Seeing the U.S. as a very large growth engine, adding over 1,500 net new customers per month in an online model. You can see the different model and the higher paced web-based model in acquiring a different type of customers here. I think it's also a great diversification to add this tens of thousands of customers to Sinch, which is in a very sticky model. It's a great diversification of gross profit and also another very strong growth engine. We truly believe that the SMB market will continue to grow for the years to come, and we believe the growth prospects for this type of business is large. We want to have a leading play on a global level in this type of segment. All right, next slide, please. I won't go through it. I'll just highlight one thing, and this is more for your reference. I highlight one thing in the financials. Look at the second row from the bottom. MessageMedia has a revenue of SEK 151 million, a gross profit of SEK 94 million, and an EBITDA of SEK 51 million. This is a, you can see how much higher gross margin you get when you sell to smaller businesses. Obviously, you have a higher cost to serve them as well, but it's a very high gross margin business. The other thing, it's a very, very profitable business. This is probably the only business we've found in this industry who's more profitable compared to gross profit than we are, or close to what we are. Very, very happy to pick up such a financially sound company. This company has really proven this model in an online go-to-market, fast-paced, but also driving high growth and having very, very strong numbers. All right, slide number 14, please. If we go into our report here, gross profit rising 89% to SEK 869 million. Adjusted EBITDA rising 42% to SEK 284 million. Organic gross profit growth of 32% in local currency. We're very happy with that number and a strong growth. A 42% growth in Adjusted EBITDA. All in all, a strong growth on all our key metrics. We're also very happy to see broad growth across customer segments and geographies. Really diversifying the growth from being a lot of the big tech companies to now being much more weighted to a broad-based growth across many customers and many geographies. That is something we have worked hard on to do and now seeing the good effect in the financial numbers of the couple of last quarters. We're continuing to do OpEx investments to handle this rapid growth and to prepare the business for the future growth that we see as possible. As you can imagine, if you're growing your gross profit at 89%, you need to make scale-up investments to handle that. We also need to make the investments in order to set ourselves up for the possibilities and strong growth prospects in the future in this market. All right, operator, slide 15, please. Like we said, we worked a lot on broad-based organic growth. This is, you see, our organic growth over the past 10 quarters. We've been averaging, as I said, between 25 and 35 percentage points roughly. Doing that quarter on quarter, and year after year for such a long period, I think is a very strong testimony first to the market. It's a very good market. Also to the hardworking team who are really delivering those numbers. On the right, you can see that the growth comes both from net new businesses and wins from competition. A lot of new use cases coming in and then displacement of competition due to typically its quality or something like that, higher quality for industrial delivery or high quality in 1 single market. It's a large thing that where we win a lot of businesses as well, and it's roughly neck and neck between new and displacement wins. Very happy with this type of growth model. Very happy to see this organic growth and then happy to add the M&A-driven growth on top of that. Slide 16, please, operator. Gross profit, messaging being organic growth 2032. You see the messaging being the strongest one. You see voice and video in this quarter growing relatively well. Still pandemic effects hitting that business, but still growing. Operating, having a really good quarter here. Acquisitions obviously adding a lot and some negative FX headwinds, ending up at the 89%. All right, operator, next slide, please. Key thing to us is always watch the adjusted EBITDA margin. That's very core to us. We're very profit-focused, we truly want to do that. On the other hand, we also obviously need to capture the growth in the market, both from an organic perspective and an M&A-driven perspective. We do think investments are needed and good for the shareholders in order to capture more of that growth right now, and that's what we have been doing for a while. This is a bridge describing where the growth impacts come from, it's not at all only the investments in scale and growth. Part of it comes from the dilution of profitability since ACL, SDI, and Wavy had a lower relative profitability than Sinch. We take that in, and then we work, obviously, on increasing their growth levels and increasing their profitability levels, but it takes a little while. You had some temporary traffic invoicing video or RTC that actually drove down the adjusted EBITDA margin some. Some currency effects. You had some lower gross margin in a couple of countries. You had some increases in prices in Brazil from operators and some operator changes in India and a couple of other markets where operators are changing prices. Typically, that's a one-off, and then it takes a couple of quarters, and then you get back to the same profitability levels. Right now, we're seeing a little bit more of that on the market, and therefore, seeing some lower gross margin here. Mind you, this is the game we play. Being the largest provider in the market, we have a much easier time handling those type of things than most other players in the market. As you can see in the total gross profit growth, we more than make up for this loss in total volume and, therefore, seeing good growth in the messaging business. Then you see the investment in scale and growth, both for handling the existing ones and setting ourselves up for the future. Taking significant investment there in order to drive the growth. We think it's the right thing to do and good for shareholders. Yes, you see some impact in the short term on adjusted EBITDA for that. We're very confident we can get back to the run rate numbers we have had, and there's nothing that says that we wouldn't. At this stage, we think it's right to be a little bit more growth-focused while still maintaining high profitability levels. You should also see that we do still do 42% growth in adjusted EBITDA despite scale of investments. I think that's a strong number in any case on the total metrics. All right. Operator, slide 18. Headcount increase. Headcount is increasing. Obviously, the largest numbers here have grown with the acquisitions, but we're also adding quite a lot of new people. Our general strategy is just to grow OpEx in line with adjusted EBITDA, or, sorry, grow OpEx in line with GP to keep adjusted EBITDA level. In the past quarters, we have had a little bit higher on the adjusted OpEx. At some point, we will turn that back and have a little bit lower OpEx growth than GP in order to get back to the same profitability levels, and that's something we feel is confident about, and we feel it's good to screw that timing a little bit in favor of growth at this point. At some point, we will turn that tide back, and long term, growing OpEx in line with GP is a clear target for us, which we communicated many times. Operator, slide 19. Strong growth in messaging. Total gross profit growth of 76% with organic growth of 31%. Here you can see, yes, we have some price impact of operator raising prices, but you still see very strong growth in the business. On total levels, that is the volumes and then the customer wins are more than making up for the impact on the margin levels. You see SDI contributing from 1st November and Wavy from 1st of February 2021. This is including all the investments in product and sales and marketing to deliver broad rate growth and on the product side. This is a very strong number, including all the big investments we do in the conversation messaging side, et cetera. This is bearing that. If you would only look at SMS, the growth would be even stronger. All right, slide 20. Rising message volumes. Number of transactions per month, you're seeing we made a big tick up with ACL, SDI, and Wavy, but then continuing the organic growth after that. Happy with the increase. Here we can see, to the operational teams, a 352% year-on-year growth in transactions in Q2 with 59% growth in comparable units. You can see the pressure we put on our operational teams, but also the amount of scalability that we can get out of this if we do the platforms in the right way, which we very much intend to do. This is growth from existing customers, new customers, and new use cases, so all of the above. All right, slide 21. Gross Profit per transaction. This is something that we look at very closely. You see a big shift in ACL. There's a very high message volumes and much lower OpEx per transaction. Looking at this OpEx per transaction and gross profit per transaction and keeping those aligned, that's something we're very focused on and we keep a very close look at and driving this to be at the right level. I think, yes, we take a little bit of investment. On the other hand, we feel comfortable about getting back. This is a key metric to us that we look closely at. Slide 22, messaging margin affected by M&A. Here you see the messaging EBITDA over gross profit. You see despite the large investments here, you can see the messaging EBITDA over gross profit being very stable in between 40%-50%, like we had it. Then we have some ups and downs a little bit depending on timing gross profit growth and timing and OpEx growth, of course. In general, we keep it very stable at this level at this stage. You see the scale-up investments being primarily on the G&A functions because it's coming in other companies that they need to handle as well, and therefore we need to take that. We take the OpEx, obviously, before we get the EBITDA, which looks a little bit funny in our books, but obviously we need to make sure we can handle the financials and the HR and operations, et cetera, of these companies as they come in. This metric is being very stable and very solid, I think. On slide 23, continued COVID impact on voice and video. We see some growth. We have a large customer with temporary traffic and low gross margin, so that will not continue after Q2. You'll see a little bit of a rundown or slump in revenue, but gross profit levels, it's not a big impact since that's a very high margin, very low gross profit customer. You're going to see revenue go down, the gross profit being relatively similar. Obviously we're working hard here. You see gross profits continue to rise now, and you see the COVID effects still being there, but still easing. We need to get the profitability levels back, and it's something we work very hard on. Obviously here we start to take, how do we combine this business with Inteliquent? There's also, we need to see the businesses in combined ways. It comes in a little bit in a different light than what we have done before. Operator side, we're broadening the product offering with the SDI. Sinch selling software services. SDI selling messaging P2P services. There's a broadened product offering, and you see a strong solid quarter here, both organic and by SDI. You see the high margins in the operator service businesses and though it's volatile between the quarters. You see the SDI person-to-person business operating at the lower gross margin, has always been like that, but the mix effect, obviously the gross margin here becomes a little bit lower. We're happy that the operator business is doing well and at a stable margin. It's good that it's a little bit bigger because then it becomes easier to run it as a P&L and handle various one-offs in various quarters. All right. Integration side, I think we won't spend much time on this, but we're working hard on integration. We have a full team working on integration with now a leader in the management team reporting to me, who are now having a full team, both directly to her, but also in the various functions. We're going through integration planning with Inteliquent, integration planning with MessageMedia, and then in full integration swing with TWW, Wavy, and SAP, where we're moving customers over from their platforms to our platforms in order to be able to shut their platforms down and then reap economies of scale and synergies. ACL, we have put a little bit behind Wavy, TWW, and SAP, just because of priority. We need to prioritize something, but we're getting the teams in place there and doing the integration, but in a little bit of a slower pace. Overall, I'm happy with the progress. I think there's a lot of work, but I think we're building a true muscle here in order to be a true integration machine. We're confident on the commitments we made to the financial markets on all the financials in those integration areas. Also very happy on the people front. The people are coming in and really contributing to the business and adding a lot of competence to the business, things we didn't know. It's a real boost to the business to get these high-performing teams in that know a lot of things that we don't know. We obviously teach them quite a bit as well. All right. Roshan, why don't you go into the financials? I'll leave it over to Roshan. Thank you, Oscar. Just a quick walkthrough for the financials today. First of all, super happy with another strong quarter for the business with strong organic growth, as Oscar just explained. Please turn to page 27 for the income statement. I think consolidated net sales here growing by 127% in the quarter to SEK 3.6 billion. The growth rate in the quarter was affected by the acquisitions of SDI, ACL, and Wavy, and organic growth of net sales in local currency was 48%. Adjusted EBITDA grew by 42% to SEK 284 million. Adjusted EBITDA per share on a diluted basis was at SEK 0.41 for the quarter, compared to SEK 3.33 for the same period last year. On a rolling 12-month basis, adjusted EBITDA per share as diluted increased to SEK 1.79. For the messaging segment, we have a strong adjusted EBITDA development at SEK 301 million versus SEK 217 million last year, growth of 39%. Adjusted EBIT amounted to SEK 215 million, versus SEK 169 million last year. Adjusted EBIT excludes items affecting comparability and amortization of acquisition-related assets, which we don't consider affect cash flow. EBIT came in at SEK 254 million versus SEK 185 million last year. Overall, a strong P&L. As you can see also, the investments into integration of the acquired businesses continue, as well as integration planning for Inteliquent and MessageMedia, and we have costs of SEK 75 million this quarter related to those integration activities. Please turn to page 28, where you will find a bridge from adjusted EBITDA to cash flow before changes in working capital. In the quarter, we have a strong continued cash conversion. We see a cash flow generation from operations of SEK 400 million, primarily due to non-recurring items and the valuation of balance sheets. On average, over the last 12 months, we have a cash flow conversion of 81%. Please turn to page 29, where you see the cash flow statement. Again, cash flow from operating activities was negative SEK 43 million, as we had a significant swing in working capital. The change in working capital is both related to continued investment in growth as we are investing in the business, and also seasonal swings in working capital. We're overall very happy with the ability for long-term cash flow generation and consider this to be more seasonal in nature. Please turn to page 30, where you'll find our two financial targets. Adjusted EBITDA per share grew 38% in the quarter, measured on a rolling 12-month basis. We had a cash position at the end of the quarter of SEK 11 billion. Leverage as net debt to adjusted EBITDA was at negative SEK 9.6 because we had a cash position. Again, we'd like to thank our shareholders for their continued trust in our strategy and its execution, and their support for the directed share issue of SEK 9.4 billion in May. The financial targets of the company are to grow adjusted EBITDA per share by 20% per year, as well as maintain net debt below 3.5 times adjusted EBITDA over time. The latter target was changed in May 2021, before which it was at 2.5 times adjusted EBITDA over time. Please turn to page 31, which is summarizing our financial leverage situation on a pro forma basis. That is comparing the Q2 2021 adjusted EBITDA to net debt as it would be after we close the acquisitions of Inteliquent and MessageMedia. Here you can see that post the closing of those transactions, we would have a pro forma leverage of 2.8x, which is well below our updated financial target of 3.5x. In addition to this, of course, during the second half of the year, we expect continued cash flow generation to further improve this ratio. Please turn to page 32, where you see a summary of the margins from the businesses that we have acquired, but not yet closed. Inteliquent then, on a last 12-month basis, would have a gross margin of 47% and an adjusted EBITDA margin of 22%. MessageMedia would have a gross margin of 63% and an adjusted EBITDA margin of 34%. Together, they will add 8% to Sinch's gross margin and 4% to adjusted EBITDA margin. As at the end of the second quarter 2021, we would have had last 12 months revenues of over SEK 19 billion and gross profit of over SEK 6 billion and adjusted EBITDA at SEK 2.6 billion if we included these two acquisitions, as well as the full year impact of ACL, SDI, and Wavy. Thank you for that. Oscar, handing back over to you for the last slide. Oscar, I think you're on mute. Here I am. Sorry for the little bit long presentation. We'd rather keep it a little bit shorter, sometimes you have a lot to say, I guess. We'll try to keep it a little bit shorter. Key priorities ahead, continued high growth, both on the broad-based organic, super key, and through M&A. These two growth engines in the market we have, we think are very strong, and we can continue to do them in the coming quarters or in the coming years. We're super happy to be in a market where we can execute both of those strategies. That's a very strong standing we have. That's a big focus. We have a big focus which is improving growth in acquired businesses like SDI and Inteliquent grow slower than we do. We have initiatives to take the same models as we have proven in Sinch and apply them on the acquired businesses. Hiring more salespeople, doing better marketing, doing better targeting, et cetera. We have good belief that we will do that and increase growth. In them, we see very good growth prospects with both of those companies, but it will take some time and there will be some dilution effect once they come in and then our nominal growth will go down even if our Sinch Classic growth is still high. Focusing on driving that growth up, creating other growth engines within them is a very big focus area. Again, we focused a lot on cost control this quarter. We had a big cost control effort. We think it's merited to go like we do, but we also want to make sure we can be very confident on the cost we take are the right ones. We had a big cost control effort this quarter in order to prune out things and take away things, and take away some things and allocate the other things in better buckets. That's a focus for the last quarter, but also the coming quarters to have. Synergies being a large focus and also operational efficiency with all the M&A we've done, how do we get this together, getting them onto one platform, being efficient, automation, et cetera. On the product side, continue to strengthen our connectivity offering. That's our bread and butter. Then, high investment pace in the source products for advanced conversational messaging and conversational voice, and those type of products in order to have the applications or the SaaS revenue growing, being a large growth engine for the future. That said, I want to thank you for your interest and thank you for listening to us, and I hand it back over to Thomas for questions. Thank you, Oscar. Operator, may we have the first questions, please? A reminder to limit yourself to two questions initially. Thank you. Another reminder, if you do wish to ask a question, please press 01 on your telephone keypad. Our first question comes from Ramil Koria from SEB. Please go ahead. Your line is now open. Thank you, operator. Thank you, guys, for the presentation. Starting off on the OpEx side, perhaps if you could touch upon a bit about previous commentary. In Q1, you said that you took some investments which didn't fully materialize, expectedly going to materialize in Q2, which I guess they did. You're continuously taking these investments. Could you talk a bit about the cadence of the current investment run rate? Has it decelerated, or have investments accelerated? How these operational efficiency programs are expected to offset that. Basically, if you could touch upon a bit about the development of the operating margin here in the coming few quarters. Thanks. Go ahead. Shall I start off on that, Oscar? Yep. I think on the investments side, what I could say is on the scale-up investments, as we said in the 1st quarter, you correctly summarized, Ramil, we have started to take those investments during last year, and they have scaled up gradually over the quarters. There will still be some scale up, of course, investments, but we don't expect those to increase significantly over the coming quarters. I think they're more likely to stabilize. I think, of course, our long-term goals when it comes to increasing adjusted EBITDA to gross profit stand constant, and that is where we're driving our operational efficiency, but also our integration efforts. They're related to technical migrations, and they're related to process improvements, so they take a bit more time to realize and see in the P&L. Yeah. Another comment to it, please realize that the investments we took Q1 here, it's actually for taking in the big companies like Inteliquent and MessageMedia, and a couple of these. It's like we're taking them pre-we have the EBITDA. It looks a little bit more than it is when you compare it to current gross profit, because it's actually down to drive the very rapid M&A growth. It's another perspective that you should have when looking at the graphs. Right. That's clear. Then secondly, this pie chart, which you showed on new client wins versus, or new use cases versus displacement use cases. You mentioned that clients choose you because of your quality and reach. Could you touch a bit upon who the average competitor that you're winning business from is? In broader terms, the competitive landscape. It's all of the usual suspects, I would say. You know the big players in the market, and I think in general, big players are winning against smaller players. That's one trend. Winning against a lot of local competitors, local smaller players in every market is one big trend because it's hard to compete when companies get the type of quality we do and breadth in service offering. It's also winning against big competitors, and we have a very high service quality in the market, and customers know that. We also win against all the big brands in the industry. That's another route, basically. Trend versus smaller, but also we're relatively stronger on the high service side. We typically gradually win those type of businesses from the big competitors as well. Half of it was new use cases. Don't forget that. We have a lot of interest in the new use cases as well. That was just as big as the displacement, just we're positioning it correctly. That's very clear. I think just one nuance there. Of course, what we're trying to say with this graph is that we have a lot of new use cases. This market is still growing, we're winning business on those new use cases. There is still also a strong underlying growth from our existing customer base, which is helping this growth, overall growth momentum that we're seeing. That's just an addition on that. Right. No change in the competitive dynamics here. The displacement rate is intact versus, let's say, the last few quarters. Q2 wasn't a big step up here. We haven't measured this specifically over so many quarters, so I can't give the exact details. No, if I give more how it fits in the market, no big change apart from the fact that the bigger players win more and more against the smaller, I would say. We have always been strong on service quality versus competition, and that has always been the case. What is changing is that we're gradually winning more and more broad-based wins. That has been changing over the last quarter, so we're kind of winning more and more and then being less and less dependent on the big tech, if you will. That has happened. We've increased our competitiveness in the market in that sense, if you will. Super. Thank you both. Thank you. Our next question comes from Predrag Savinovic from Carnegie. Please go ahead. Your line is now open. Thank you very much for taking my questions. My first question is tied to something not in the report, but it's to the 10DLC regulation in the U.S. that is effective as of June this year. How do you think this will impact Sinch in the U.S. market? If any, could this lead to gaining more business? We think it's very positive for us. We think we are one of the two providers with the most advanced 10DLC offerings in the market. We think the acquisition of Inteliquent significantly strengthened that. For those of you who don't know, 10DLC is 10-digit long code. That is basically a phone number to speak normal speak. It's basically a phone number to which you can both call and text. Imagine getting your order via DoorDash and you want to speak to the driver, you can either text it and it gets to the driver, or you can call and it gets to the driver. You can alternate in between them. That's a very strong service. Adding Inteliquent to the mix obviously adds to our voice offering there, and therefore, we become relatively stronger. We believe we're strong standing, one of the strongest players in the market. We also believe that this market has been a gray, unregulated market where Sinch has not played until it became regulated. We, if you will, have nothing to lose to all upside, whereas to other players who have a big market here, they have more to lose, if you will, because they already have a big, large exposure to this market. To us, it's mainly growth opportunity. Okay. Interesting. Then a follow-up question to what Ramil asked on the displacement charts, I guess this market is generally quite sticky, isn't it? This slide is quite intriguing on the topic. Looking at Sinch from the outside, you are very strong in terms of coverage and capabilities I guess with growth in OTT channels, the use cases like zero-click user authentication that you post today. Could this imply that displacement increases favoring Sinch because there are few that offer what you can offer and demand increases for newer, more advanced products? Like we've said many times, we have low single-digit churn, so churn is not a big problem to us. Typically, we keep the customers that we have, and then we have a good service quality. Yeah, churn is low for us. You can see from that chart, of course, yeah, we win quite a lot from displacement. That is for the reasons you say. If you're a small player now with 50 developers and us and Twilio come in with 600, 700, 800, it's hard to compete on the breadth of offering, and it's hard to compete on the service quality as well with somebody who processes 170 billion transactions, right? Yes, you do see displacement. Our focus is high service quality, and we typically, if you compare us to Twilio, they are better than us in winning the developer market. They already use cases volume low, and we are typically better than them when the volumes become very high and the cost-quality ratio become more important. Obviously we win against such players as well because that's our really strong side, while they win more on the new entrants in the market. Yes, that area is something where Sinch is probably relatively stronger than the average on the market. Okay. Clear. Thank you very much. Thank you. Our next question comes from Daniel Djurberg from Handelsbanken. Please go ahead. Your line is now open. Thank you very much. Thank you for letting me on the call, and congratulations on the solid report with stellar growth, I would say. First, a question on the, we heard that you talked about some operator pricing changes that might hit the gross margin if you can't move these prices forward. Is there a risk that this continues in more markets, and that if it starts to move the prices to your customers, that it could hit volumes as well, or is that out of the question? No, first, I should say this is normal business in this market. I think we have some 200 price changes in a month or something. That's one of the core things you need to handle in this market in order to keep margins, and this is what we're good at, just so we put it down. We have always had operator price changes. That is nothing new. That's what we're good at handling. Now, I think I do agree with the rate has increased somewhat in this regard. That obviously puts pressure on margin in a quarter like this, yes. On the other hand, I think we have an easier time with the volumes and with the systems we have to manage the others, so it may actually increase the displacement win rate as well. All in all, as you see, very strong growth in messages despite that, and I think that gives our position. Of course, yes. Do we get concerned in a certain region or certain market where there's a lot of operator prices? Yes. That's happening in Brazil right now, and therefore we have lower growth in Brazil, but other markets are weighing out for that. Interesting thing also that operators are starting to get competition from WhatsApp, Instagram, et cetera, because there are other channels to market. Operators will relatively soon notice that they're not alone anymore. That will also relatively soon put the price pressure down in the market because they will need to compete for keeping their gross margin that they had safe for the last 20, 25 years. Perfect. Thank you. My second question would be on the Data Verification authentication. You go now with your own offering there, and obviously positive for your CPaaS services and offering. My question is more if you see any impact on the SMS authentication volumes from the market where we see Microsoft, Google, Twilio, Auth0, Evo Mobile, and all the others also having similar offerings. Has this segment started to take share from the SMS authentication, or is that still growing? Perhaps I can jump in there with a little bit on this particular market segment. This is using our different products, whether it's messaging, voice, or in this case, Data Verification, to authenticate users. I think you have a few different moving parts here. There are multiple tech options, and they vary by geography. I know, Daniel, you're based in Sweden. You will know BankID, which is a strong and secure authentication option for Swedes. Only issue, Sweden is 10 million population country in a very large world. You have other options in a lot of different countries. What you see here is that these carrier-based technologies have a special standing in their ubiquitous reach. You can authenticate any user on the planet. What we see in practice happening is that the focus on security and digitalization is pretty massive overall, and this is a proven and well-working and secure option. Then there are some nuances between the different methods. That's why we continue to see growth in this area. Perfect. Did I answer your question, Daniel? Yep. Yeah. I shouldn't be too worried, I guess, at least short term. Thanks, and have a great summer. Thank you. Thank you. Our next question comes from Daniel Thorsson from ABG. Please go ahead. Yes. Thank you very much. First question for Oscar, I guess. As SDI will soon start to contribute to the organic gross profit growth for the group, can you say something on where you are in the process of that integration and the current run rate you see in growth? Also what you expect going forward, given the investments you do in growth. Current run rate is lower. I think we gave the numbers as they were at acquisition. I think they are lower in that type of range. The long-term, we see no reason that this wouldn't grow as much as Sinch Classic, if you will. It's in the same industry, same business. What we're doing is very concrete. Okay, SDI, you have no people focusing on new sales. If you have no people focusing on new sales, you won't grow. Let's add that. Hey, your targets are a little bit too easy per rep. Let's increase the targets per rep. Your lead generation per the number of leads coming in per rep is too low, but we have this process over here, which is working better. Let's add that to your and give more leads to your reps, and things like that. You're also working on the COGS side, et cetera. There's no reason it wouldn't over time turn into Sinch. That is our goal. As you know, with any type of operational change, it takes some time because it's a tanker that you're turning, and it takes some time to do it. That's the growth area and what we're targeting and a couple of the things. It's very concrete, as you can see. On the other side, on the integration forum, it's moving platforms over. We have divided all the customers into cohorts. We have said what do we need to develop in order to port them over, and our development teams are developing them. We have moved the first customers, and then as the features come online, then we move cohort after cohort. We typically say it takes 12-18 months to move, and I think we're still targeting that type of time range in order to move the traffic over to our platforms, and eventually, at some 2 years after shutting down the platforms and reaping large amounts of synergies. Hopeful. Can you say if you see a no growth current run rate, or if you actually see a small negative current run rate in the growth in FTI? I will defer that question to Roshan. That's not the number we're disclosing. I think it's fair to say that growth is in line on the broad terms, growth is in line, and growth expectations short-term are in line with where we were when we announced the transaction. Sales transformations do take time. I think Oscar outlined very much the things that we're doing. Obviously, the broader Sinch product portfolio helps a lot in that sense. We will be, obviously, at that point in time when we integrate it into the rest of the Sinch business, we will be able to call out, just as we do on adjusted EBITDA now, we will be able to call out the FTI impact, so to say, on gross profit, right? I think we will help with that information when we get there. I see. Okay. That's fine. That's a good answer. The second one is for Roshan. The large negative working capital in Q2, is that purely timing related, or does it also include effects from acquired companies maybe having different payment terms with suppliers and customers that you could change over time? Or how should we see about the more long-term working capital tie-up here? No, I think it's not only purely seasonal. There is definitely a large seasonal impact. I think, as we are doing business around the world, we find that there's a lot of levers that we can pull to get great deals, both with customers, as well as with operators, often. I think, there are ways in which we can use our strong cash position to leverage growth, going forward. Of course, we're trying to do that. Therefore, working capital becomes a good tool for us to fuel future growth. Part of that impact, it's a bit lumpy, it comes in sometimes, but part of that impact is also affecting working capital this quarter. Okay. Thank you very much. Thank you. The next question comes from Stefan Gauffin from DNB. Please go ahead. Your line is now open. Hello. First I would like to ask a little bit about the investments in scale. You talked about that you have done large investments also in the Conversation API. Can you elaborate a little bit on how much is building the organization in order to handle the acquired companies, and how much is investments in your capabilities of organic growth? I give a first comment, then Roshan, I'll leave it over to you. First, all the investments in the conversation messaging area, which is more product, we don't call that scale up. You can see those within the messaging performance and EBITDA. Within that, was it 31% growth this quarter? You have all of that. Basically you could say that SMS is even stronger if you wouldn't do it. That's not what we call scale up, because that's what we see as organic core business development. What we see as scale up is more of those things where we clearly can say, and we're pretty strict on this, clearly say, "Okay, if we're going to add Inteliquent here, Roshan, how are you going to account for it?" "If we're going to add all the 600 people from Inteliquent into our HR systems, how are we going to handle them?" That's more the type of investments we do on the scale up side. Just to divide them. Roshan, don't know if you have anything you can add some color to that. Yeah, I think, I don't know if we want to give you just the breakdown that you asked for, but those are the two large buckets. I think, obviously, we are investing. We have to realize, on a pro forma basis, this company is now at roughly SEK 19 billion in revenue and SEK 2.6 billion in adjusted EBITDA. We're spread over 50 countries. I think there's a lot of functions that weren't mature enough for this kind of business, over the last couple of years that we're rapidly having to build up, and it's quite a challenging journey from a financial perspective, but also from a human perspective for many of our colleagues, as they stretch to manage this powerful growth engine. That's one bucket of investment, so to say, it's in systems and it's in people, and processes. The third one is definitely investments in new products. I think we've shown you, just today, a couple of the different ones. It's the verification product that we launched. It's the conversational messaging where we're adding more and more channels, and we recently added Instagram. We are rolling out new products which make us more attractive to existing and to new customers, and further fuel growth. Those are broadly the two buckets, yes. The last ones, the product ones are not scale-up investments, just to be clear. Just be clear on that. Yes. That's fine. I believe the integration cost was exceptionally high this quarter. Given that you had quantified integration costs for FTI to EUR 6 million-EUR 8 million, have you increased the restructuring charges that you're taking from the recent acquisitions, or how should we look upon that going forward? I can start there, Oscar. Yes. I think, looking at individual transactions, of course, there are definitely SDI, I think we said that last year. The carve-out cost that we had to incur to be able to close the SDI transaction was definitely higher than what we had expected it to be. Looking at individual transactions, it's difficult. For example, if we're implementing an ERP system, how do I look at it across all of the different acquisitions that we're doing? When we look at the sum total of the restructuring charges that we have across the acquisitions that we have done and the acquisitions that we have announced, we are still forecasting our restructuring charges to be well within those limits. We're not right now foreseeing that we will exceed that total spend budget. The restructuring charges can be a bit lumpy from quarter to quarter, so we shouldn't expect the high level in Q2 to be a recurring feature either. No, I agree. Totally in line. Individual cases, higher or lower, but totally in line. Then we're obviously doing this to reap the synergies, and we see huge economies of scale. Remember that we believe comparing us to a player that operates in one country, we believe they have 5X-10X higher OpEx per message than we do. It's a huge scalability in this business. That's why we push this, because we see the scalability effect. Yes, great. Thank you. Thank you. The next question comes from Fredrik Lithell from Danske Bank. Please go ahead. Thank you, and thank you for taking my question late into the call. Could you just please, Oscar, maybe update a little bit on your thoughts regarding the U.S. market? We've seen Twilio acquire a minority stake in Syniverse, and then they bought Zipwhip, and you have Infobip acquiring OpenMarket. How is this changing the dynamics in the U.S. market, maybe specifically, or if you feel it changes the dynamics in the international market, I'm happy to listen to your thoughts around that. Secondly, could you just update a little bit on the preparation work to get all the necessary regulatory approvals for the Inteliquent acquisition in place, where you are and how you feel about it? Thank you. Yeah. On the first one, we expected competitors to follow suit when we did the acquisition spree. I think we set the market. We proved to the market this was possible, and I think we've seen quite a lot of competitors follow, Infobip and Twilio being two of them. We expected that, and we focused on acquiring the companies we wanted most first, and we're very happy we did that. We think we sit within a very good space. Does it affect us in a major way? No. These are competitors we meet every day anyway, so I think it takes away a couple of competitors but makes a couple of the big ones bigger. That was expected. No, not in any major way impacting us there. Obviously, we in more markets will compete against Twilio, and then in more markets will compete against Infobip. We know how to do that, they know how to compete against us. I think it's a pure consolidation effect, nothing more than that. I do think you will see now a couple of winners here being standing out against versus the crew, and we're very focused on being one of them. I think we're very well positioned to be one of them. I think that's what you see is happening, the bigger players winning against the smaller. On the second question, Inteliquent, we feel comfortable about that. The regulatory approval and the competition we supplied, we got no comments, we see that as 2. You have the regulatory for operator licenses in many of the states, I think that's proceeding. Last time I heard, we were still targeting the dates we have communicated to close the transaction, and our lawyers are still saying it is mainly administrative and very low risks on that side, but it takes some processing time. Okay. Perfect. Thank you. Very clear. Thank you. Our next question comes from Mike Latimore from Northland Capital Markets. Please go ahead. All right. Thank you. Yeah, congratulations on the quarter there. I guess, Oscar, can you just talk a little bit about the trends you saw in major geographies, Europe, India, and Brazil in particular, I guess? How do you think about the influence of just reopening, going back to school and work versus periods of travel restrictions on the industry? U.S. has been growing very good. It's a very good, solid growth market with very large customers. Also, the American cloud ecosystem is U.S.-based, but actually driving global growth in terms of message delivery. That trend, I think, is continuing. Strong growth in the U.S., but also consider U.S. as driving the cloud ecosystems globally with a lot of international message delivery. Europe, I think, was a little bit slower, but now we are seeing solid growth there. We're very happy with the turnaround in Europe from our perspective. Solid growth Europe. Brazil and India has been very high, rapid growth markets for the last quarters and last years, up to the 25% level. Brazil now you see a little bit slowdown due to some operator changes. Typically that takes a couple of quarters and then it sometimes comes back. I see no difference in the overall market perspective. India, you also see that right now, some operator price changes, and then you see the growth slowing in these quarters. Speaking to the leaders, they see the growth coming back as we have gone through this in a couple of quarters. Right now, you have some hit in those markets, but we don't see that as long-term. On the second question, remind me now, please, Thomas. Yeah. Last year, as people had travel restrictions, worked from home, did more online shopping, you saw an uptick in volume. I guess as people go back to work, school, stores, how do you think about that influencing volumes? We saw a downtick in retail and ride hailing, but an uptick in e-commerce and other segments. We think we were pretty all balanced zero negative, zero impact. Therefore, that's how we see it going forward as well. If anything, a bit positive, but when the pandemic ends. I think in general, we didn't get, and we don't think we'll get, a big COVID impact one way or the other. The exception is maybe Inteliquent, who saw a big COVID drive as more and more Zoom calls, et cetera, where they supply the phone numbers. There, there may be a bit of COVID impact, and I think we have reported that in various communications. That's the area which is not closed yet, but where you may have a little bit of a larger impact. Got it. What % of your customers buy your SaaS offering as opposed to connectivity only? Yeah, that's not something we have disclosed. It's an increasing rate, and obviously, the big thing being SMS and voice, if including Inteliquent, but at an increasing rate are buying various types of other services and SaaS services and other channels and what have you. It's an increasing rate, but we haven't given the figures externally, so we shouldn't do that now either. Okay. Thank you. Thank you. We have a follow-up question from Ramil Koria from SEB. Please go ahead. Your line is now open. Yeah. Thank you. A follow-up on the gross margin side. Perhaps everything you know today, of course, assuming no price changes from here on forth from operators. Would you say that Q2 consumed the entire price hike impact from Brazilian and Indian operators, or is there still some short-term downside here on the gross margin? Yeah. First, we do assume operator price changes every quarter. Remember, we have 200 of them every quarter. That has been every quarter we have price changes, just so we're clear, and it will happen in some market next quarter as well. That's part of the business model and has been part of the numbers every single quarter you've looked at us. Now, in Brazil, in India, hard to tell. I'll let Roshan comment on this. Typically, you have a larger impact in the beginning and then tapering off. Exactly how, it's always very hard to say in those type of markets. That's the typical type of impact. Roshan, don't know if you have another comment there. Sorry, I missed that specific part of the question, Oscar. Can you just ask me what you want me to comment on? Yeah. It was if the price impacts, operator price hikes in India, Brazil, if the largest impact has been taken, or if we're going to see gradually larger impacts going forward? I think the impact has come in during the quarter. Of course, there will be a full quarter impact probably slightly going forward. We don't expect that to be material on an aggregated basis for the company. Remember, this happens every quarter. It's normal. These two were a little bit bigger than normal. We had that last year as well. Yeah. That's fully understood. The way you're basically saying right now is that you'll see a gradual work back, if you will, as you push out the price hikes gradually towards customers, right? Or is that the way you see it? Yeah, exactly. Typically, what happens, if you take operators raise prices on a day, boom. Prices go up 20%. Okay. Some customers you do straight away, some customers you need to work a little bit with, some customers you cannot increase, you do it after three months or six months, and then you gradually find your way back, and the market becomes a little bit more competitive, and you win some traffic, and you lose some traffic, and then after a while, it's settled down again. It's kind of big impact, and then you get it back to the normal levels. That's typically what happens. Gradually tapering off over two to three quarters. Okay. That's very clear. Thank you, guys. Thank you. The final question comes from Mike Latimore from Northland Capital Markets. Please go ahead. Your line is now open. Great. Thanks. On your messaging business, can you track or do you have a % of volume that is two-way messaging? I think a lot of messaging outbound, but there's also inbound. Do you have a breakdown of what's inbound versus outbound from your customers? We do. I don't know if we give it. I don't know if I actually know that specific metric, Thomas. Good question. No. Yeah. It's a good question. No, we do not disclose it. It varies quite a lot by geography. Some markets are in the lead here, the U.S. in particular, where two-way messaging is more commonplace. In Europe, it's relatively more one-way, often because you send from an alphanumeric sender, right? It'll say Walmart rather than a number as the sender ID, which is not possible in the U.S. It looks nice. On the other hand, you can't reply. There are these regional variations. U.S. is relatively in the lead. Of course, two-way is a growth area for us, and it's a growth area also for MessageMedia which are building a lot of their growth around conversational use cases on SMS. As we then look into new channels like WhatsApp and Instagram, they are almost by definition two-way, right? There's a lot of two-way happening on SMS, even if the vast majority is one-way, both for us and all competitors. Okay. Thank you. Right. Operator, if that was the last question, I think we have a question from the web. I'll ask that one, and then I'll hand back to see if there's anyone in the phone queue. We have Michael Constantinov asking on the web, "Can you please explain your brand strategy? Do the acquired companies continue operating under their own brand once they are integrated, or are they rebranded under Sinch?" Oscar. General strategy, all one brand, like Sinch or ACL, SDI, Inteliquent, all of those, all one brand. No questions, we can only have one brand in the market. The only exception would be a couple of brands under MessageMedia, partly because it's a little bit online. You need more shelf space, if you will. More brands are maybe better. You need to target the brands to different personas, and you need to have very rapid iterations on the website. There, it's better to give more freedom to the local teams. But that is the only exception to that rule. Apart from that, it's all in one brand. Very clear. Thank you. Operator, any final questions? There are no audio questions. Thank you very much. In that case, thanks for taking the time with us today, and for all the good questions. Wishing you all a very good and warm summer. With that little bit of thanks, Oscar, if you have any closing remarks, I'll ask you for them to finish the call. Thanks a lot for your interest. Thanks a lot for your continued interest in Sinch, and we are happy to deliver this quarter. We think it's very good, and we are very focused on continuing to deliver good financial numbers to you. We also thank you for the support in all the M&A we've done. Thanks a lot for that. Without that, it would not have been possible. Thank you for that. That said, have a nice summer.