LINK Mobility Group ASA - CEO Den store selskapskvelden 6.juni 2018 Arild E.Hustad - AksjeNorge
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LINK Mobility Group ASA
Den store selskapskvelden 6.juni 2018
Arild E.Hustad
CEO
LINK Mobility What does Link do?
Link makes businesses mobile across all
messaging platforms
– the undisputed, How?
Linking businesses to consumers,
sending 6 billion B2C messages in
2017, reaching +200 million unique
mobile users on behalf of more than
market leading mobile
16,500 customers
Where?
Link is in 15 European countries, and
messaging and solution the market leader in in the Nordics,
Germany, Spain and Poland
What next?
provider Execute ambitious M&A and organic
growth strategy, attain scaling synergies
and drive profitability
Copyright 2017 LINK Mobility 2
LINK Mobility key figures
2018 outlook
15
2.7bn revenue
(54% growth)
…
…
18 countries with
leading positions
acquisitions … 1
400m EBITDA
(14.8% margin)
since 2014
1
… 1
1
…
… 1
1
320 >17,000 24% 1
customers average
organic
1
employees 1
across 15 growth L8Q
countries
1) Pro forma guidance for 2018 revenue and EBITDA, including full year effect of acquisitions. Revenue growth relates to growth versus 2017 pro forma figures. The above outlook for 2018 is calculated on LINK’s best estimate based on
information available to LINK, and views and assessment of LINK, as of the date of this report. LINK’s growth assumptions may deviate from the outcome resulting in material or immaterial deviations from the outlook. Further, LINK’s
assumption relating to successfully acquire further businesses during 2018 is to a great extent outside the control of LINK. LINK’s ability to successfully acquire new businesses at fair value, or at all, could materially affect the outlook
figures correspondingly. Investors must therefore make their own calculation in relation to valuing LINK based on their own analysis and judgement
Copyright 2017 LINK Mobility 3
Successfully LINKing enterprises with consumers
Appointments
…but businesses are struggling to navigate
through the increased complex mix of
Polls
devices, platforms, technologies and
…revenue
regulations
growth… Loyalty
programs
…customer Parcel
interaction & notifications
loyalty…
Enterprise use Alerts
mobile solutions
to increase…
…customer Chat
satisfaction…
Payments
…cost Link provides a platform agnostic,
Updates
savings… integrated messaging solution that
seamlessly finds the most efficient
Invoices communication platform to fit the
customer’s requirements
Copyright 2017 LINK Mobility 4
Fully integrated services and solutions offering driving growth
Product description Business model Share of revenues1 COGS
Enriched mobile Monthly messaging Fee to mobile
86%
messaging and omni platform license fee operators and
1 channel solutions Revenue per Double-digit growth rate other channel
message owners
Recurring, scalable
revenue
Mobile Mobile Mobile payment and Monthly license fee 14%
Limited
3 Intelligence Messaging 1
licenses Revenue per mobile
Customer club, mobile solution transaction
2
invoice, notifications,
Recurring and sticky
authentication and
revenue, high margins,
Mobile Joyn
Solutions highly scalable
2 Making mobile Revenue from 2018 Limited
3 messaging more
powerful by data
harvesting and analysis
Copyright 2017 LINK Mobility 5
Strong organic growth combined with M&A
Revenue growth 2013 – 2018E
NOKm 2,700
Reported revenue Estimated
annualized
Proforma effect
M&A effect3
Estimated
1,754 organic growth
Revenue run-
rate end 2017
2007-2012 1 294
622
361
161
136
2013 2014 2015 2016 2017PF 2018 Est
1) Reported revenue growth from 2013 to 2017. Organic growth based on average organic growth across the period
2) 2018 outlook represents year-end revenue run-rate based on the assumptions of organic growth of 25% on the 2017 pro forma revenue run-rate and acquisitions representing NOK ~500m in full year revenues. Note that a term sheet to
acquire SMS.it was disclosed in late January and is not included in the 2017 pro forma revenue run-rate
3) Please note that Link Mobility has signed terms sheets with SMS.it and Allterco regarding the Teracomm assets, i.e. the acquisitions are not closed
Copyright 2017 LINK Mobility 6
Nordic innovation driving European sales
Early adopters Late majority
Travel Financials Retail TMT Travel Financials Retail TMT
+ +
Public Logistics Industry Other Public Logistics Industry Other
Norway historically been an early
adopter of technology
Significant potential from
Status and vertical penetration
maturity of
the mobile
messaging Market development in other
market European countries assessed to be
~4 years behind Norway Market development in the Nordics
assessed to be ~1-2 years behind
Norway
Source: Management estimates
Copyright 2017 LINK Mobility 7
Significant revenue potential from increased market penetration
Number of mobile messages per capita (NOK)1 Market size ’17E Population2 Market potential
Norway 362 NOK ~700m 5.1m NOK ~1.3bn
Spain 48 Volume increase NOK ~500m 46.4m NOK ~3bn
Germany 37 NOK ~1.3bn 82.1m NOK ~11bn
Denmark 213
Sweden 181
Finland 109
Poland 74
Austria
Nordics ahead in B2C messaging penetration
71
compared to Europe. Substantial revenue potential
France 68
from volume growth across existing Link markets
Italy 54
Switzerland 48
Bulgaria 39
1) Company input and Mobilesquared Global A2P messaging traffic 2018
2) Worldometers European Countries by population 2018 (http://www.worldometers.info/population/countries-in-europe-by-population/)
Copyright 2017 LINK Mobility 8
Mobile messaging market expected to continue growing in double digits
Global and Western European messaging volume SMS is still the preferred and superior B2C solution
Billion messages sent per year1
SMS 98 % read rate, compared to email, Facebook and
Worldwide Western Europe
tweets with 20%, 12% and 29%, respectively
2 381
CAGR
22%
90% opened within 3 minutes
2 127
1 923 CAGR
1 697 14% 67
60
Average response time 90 seconds
1 432
53
46
41 Reliable – independent of platform, network, device,
875 35 apps, internet access.
More than 6.1bn frequent users
Safe communication platform
17E 18E 19E 20E 21E 22E 17E 18E 19E 20E 21E 22E
1) Mobilesquared Global A2P messaging forecast by country 2017-2022
9
Copyright 2017 LINK Mobility 9
Geographically diversified, low customer concentration and insignificant churn
Geographically diversified Low customer concentration Insignificant churn
Revenue by geography, Q4 2017 Top 30 customers percent of gross margin, 20171 Norway: Loss of recurring revenue to total revenue (%)2
Norway 29%
Germany 21%
Spain 14% 2,2% 2,3%
Sweden 10%
24% 0,6%
Poland 8%
Denmark 7%
2015 2016 2017
France 5%
Finland 4%
Bulgaria 2%
Baltics 0%
Link gateway solutions are
Low customer concentration implemented in customer’s CRM
Over 17 000 customers across and well-diversified across
15 countries in Europe system, creating high switching
sectors and geography costs
1) Average of the top 30 customers across four quarters for 2017
2) Churn measured for the 100 largest customers in Norway
Copyright 2017 LINK Mobility 10Market dynamics favour market leaders
LINK is the unrivalled European market leader
1 As the market leader, LINK is in a highly attractive
position with several competitive advantages
Market visibility Broader service offering
1
1 R&D competence and technologic Facilitating for multinational clients
leadership
1 Leverage to suppliers
Technology sharing
1
1
1 Significant economies of scale realised by leveraging the position as market leader
with >6bn messages sent¹
1 Attractive position towards new clients with a demonstrated track record of
working with large and reputable regional and international clients
Substantial cost synergies across subsidiaries and geographical markets
1
1
1) Pro forma including full year effect of companies acquired in 2017
Copyright 2017 LINK Mobility 11Innovation driving revenue and differentiation
New and innovative services Next generation messaging Upgrade SMS with rich media
+
RCS1 Early Access Program
1) Early Access Program from Google for RCS business messaging. RCS business messaging uses RCS (Rich Communication Services) to upgrade business SMS with rich media, interactivity, branding and better analytics
Copyright 2017 LINK Mobility 12LINK Conversations to be launched in July 2018
Release 1.0 – Ultimo June 2018 Release 1.x – Q3 2018
• Channels: RCS via Googles RBM API, depending on coverage in Europe, Web Client
• Business Information Page • Carousels of Rich Cards
• Text (bi-directional)
• Suggestions • Media (inbound)
• Suggested actions (e.g. create calendar item, location request, phone call, …)
• Media (outbound: picture, video, audio) • Mobile invoice (Release 2.0 - 2019)
• Rich Cards
Copyright 2017 LINK Mobility 13LINK Mobile Invoice
• Great interest for LINK mobile invoice in
several of our markets; Spain, Bulgaria,
Germany as well as the Nordics
• Strong growth in number of transactions
• 36 contracts signed to date and a strong
salespipe of 120 prospects
• Agreement with BankBridge to enable direct
customer account debiting throughout
Copyright 2017 LINK Mobility 16
EuropeLINK drives European consolidation
Significant experience acquiring assets across W. Europe Established acquisition criteria and structure
Limited competition for targets, due to lack of Strong local market position
companies with scale and well developed Cash positive, i.e. no turnaround cases and cash
platforms flow to LINK from day one
Solid, well-diversified customer portfolios
Churn below 3%
Proven value-creating
acquisition strategy
~80% overlapping technology
Strong telecom operator relationships
All companies acquired have
been purchased at attractive
multiples (average of ~6.2x
EV/EBITDA) Typical financing structure
Attractive synergy potential
utilized, driving strong margin
expansion
Historically financing has consisted of
1/3 cash, 1/3 seller’s credit and 1/3
LINK
Cash shares in LINK Mobility Group ASA1
shares
Proven successful
integration Seller’s Shares and cash settled at closing
Credit while sellers credit has historically
had a tenor of 3 years
1) The financing structure for future acquisitions will be tailored and optimized to each specific situation
Copyright 2017 LINK Mobility 17Significant benefits gained from consolidation and scaling
COGS savings
One LINK Messaging • Consolidate local
Annual recurring
Platform platforms and solutions synergies of NOK
• 50-70m from end of
+ •
Terminate local products
and services
Joint support, operations
2019
and routing
Delivered NOK 17m
One LINK Services in 2017
Application Platform
Plan to deliver NOK
30-40m in 2018
Capex savings
• Common products and
services EBITDA margin
One LINIK Common • Cost efficient Bulgarian
contribution of 2-3
Routing Team development hub p.p
Copyright 2017 LINK Mobility 18Strong revenue and profitability performance
Revenue evolution Organic growth evolution EBITDA evolution 1
Reported revenue (NOKm) Y-o-y growth Organic growth y-o-y Adjusted EBITDA (NOKm) EBITDA margin
53% 58% 43% 115% 107% 126% 129% 89% 9.1% 13.7% 8.0% 11.7% 7.3% 10.8% 10.8% 12.5%
486 61
30% 29%
25% 25%
23%
22%
20%
298 19%
281
256 32
229 30 30
125 130 17 17
111
10 10
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17
1) Adjusted for costs related to acquisitions, one-off costs and share based compensation
Copyright 2017 LINK Mobility 19Continued strong growth in revenues in Q1
Operating revenues
(NOKm)
– Revenues of NOK 467 (23% organic growth & 104% total 104%
486
growth) 467
281 298
– An adjusted EBITDA of NOK 51m (10,9%) up from NOK 17 229
25% 23% 22% 25% 23%
– 1,6 billion transactions and interaction with more than
205 million unique mobile phones Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
= Organical growth QonQ
– 17 000 customer and signed 658 new contracts of which Adjusted EBITDA
(NOKm)
61
384 new customers 51
– High acquisition activity 30 32
17
– Continued strong performance in all our markets 7,3% 10,8% 10,8% 12,5% 10,9%
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
= Adjusted EBITDA margin
subsidiaries as reported in first quarter in 2017. Acquired business inlude the acquisition of Didimo-Jet Group, GMS, Voicecom,
Copyright 2017 LINK Mobility 20Considerable scale advantages visible in Q1 2018
Adjusted EBITDA% development
QonQ Substantial scale advantages in business model
0,2 %
1,4 %
§ +4.3 percentage points increased margin from scale advantages
offsetting gross margin reduction of -2.0 percentage points in
4,3 %
10,9 % existing markets
§ High organic growth is expected to drive scale advantages going
-2,0 %
7,3 %
-0,3 %
forward
Q1 17 GM1 pr market GM1 mix Delta OPEX Delta OPEX Margin effect Q1 18
Existing markets Group Aquired § Future acquisitions will further strengthen scale advantages
functions entities
Existing markets are defined as the subsidiaries as reported in first quarter in 2017. Acquired business inlude the acquisition of Didimo
Adjusted EBITDA 61
(NOKm)
51 Scale advantages counteract gross margin reduction
32
§ High growth from large enterprises customers drives scalability
30
further, positive gross profit and no additional OPEX
17
§ Dilutes gross margin in existing markets as large enterprise
7,3% 10,8% 10,8% 12,5% 10,9% customers have lower margins than SME customers
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
§ Acquired entities have lower gross margin than existing markets
= Adjusted EBITDA margin
n 2017. Acquired business inlude the acquisition of Didimo-Jet Group, GMS, Voicecom,
Copyright 2017 LINK Mobility 21Asset light business model
Low working capital requirements Low investment requirements High cash conversion
Net working capital and share of revenue1 (NOKm) Quarterly capital investments and share of revenue2 (NOKm) Cash conversion: Average last three years3
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 19,9
-2%
- -4% -
-7% -6% -6%
-7%
- 14,5
-17,9 -11% -
- -14%
-27,9 -
-32,9 10,7
-
- 8,6 9,1 8,7
- -42,6 87%
6,9
-
- -53,9
3,9 1,9%
-62,6 -
- -65,7 1,4% 1,5% 1,6% 1,5%
1,2%
1,0% 1,0%
- -
-79,3
- -
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17
Net working capital Share of revenue CAPEX Share of revenue
1) Net working capital: (trade receivables – trade payables – tax payables)
2) CAPEX: Investments excl. acquisitions
3) Cash conversion: Net cash flow from operations to adjusted EBITDA (average FY’15-FY’17)
Copyright 2017 LINK Mobility 22Delivering on the 2018 outlook
LTM Revenue evolution 2018 Outlook (NOK)2
LTM per. quarter, NOKm 3
2 700
1 065
1 294
1 754
€ 2,700m
740 897 25%
+500m in Pro forma revenue
445 485 622 organic
acquisitions
236 289 361 400 growth
198
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4
2017 2018
2015 2016 2017 Pro
forma
Organic
growth
M&A outlook 400m
Pro forma EBITDA
LTM Adjusted EBITDA1 evolution
LTM per. quarter, NOKm
400
25%
Organic growth
209
140
87 109 25% organic growth
49 51 54 52 67 74 Acquisitions
33 40 48
3%-p margin
improvement
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4
2017 2018 8bn
2015 2016 2017 Pro outlook Mobile messages
forma
1) Adjusted for costs related to acquisitions, one-off cost and share based compensations
2) Pro forma revenue and EBITDA outlook figures. Includes full year effect of acquisitions. The above outlook for 2018 is calculated on LINK’s best estimate based on information available to LINK, and views and assessment of LINK, as of the date of this report.
LINK’s growth assumptions may deviate from the outcome resulting in material or immaterial deviations from the outlook. Further, LINK’s assumption relating to successfully acquire further businesses during 2018 is to a great extent outside the control of LINK.
LINK’s ability to successfully acquire new businesses at fair value, or at all, could materially affect the outlook figures correspondingly. Investors must therefore make their own calculation in relation to valuing LINK based on their own analysis and judgement
3) Please note that Link Mobility has signed terms sheets with SMS.it and Allterco regarding the Teracomm assets, i.e. the acquisitions are not closed
Copyright 2017 LINK Mobility 23Key investment highlights
The #1 European mobile messaging and mobile solutions company – well protected by high
1 barriers to entry
Annual organic growth of 20+%, backed by strong underlying market growth through increased
2 European mobile messaging penetration
The European consolidator with a proven roll-up acquisition model in a fragmented market with
3 attractive benefits of scale
Highly scalable and asset light business model with ~90%+ recurring revenues and ~90% cash
4 conversion
5 Experienced management team ready to take LINK Mobility to the next level
Copyright 2017 LINK Mobility 24Thank you www.Linkmobility.com
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