LINK Mobility : Q1 Interim Report 2023

LINK Mobility Group Holding ASA

Interim financial report First quarter 2023

10 May 2023

linkmobility.com

Highlights first quarter

• Stronger Q1 than expected after increased traction in the US
• Revenue reported at NOK 1 440 million. Organic growth in fixed currency 12%
• Gross profit reported at NOK 398 million. Organic growth in fixed currency 13%
• Adjusted EBITDA reported at NOK 181 million. Organic growth in fixed currency 16%
• Cash generation after capex and interest of NOK 118 million in the quarter
• • Group leverage reduced to 4.3x from 4.6x previous quarter
• LINK signed a record 826 new and expanding agreements in the first quarter

Total operating revenues NOKm		Adjusted EBITDA NOKm
NOK million		NOK million

Customer accounts		Net retention rate in fixed currency
NOK million		NOK million

LINK Mobility Holding Group ASA

Strong quarter with traction in the US

LINK Mobility (LINK) reports revenue of NOK 1,440 million, growing 23% in the first quarter of 2023 with strong FX tailwind. Organic revenue growth in fixed currency was 12%. Gross profit and adjusted EBITDA was reported at NOK 398 million and NOK 181 million, with organic growth in fixed currency of 13% and 16% respectively. The US business performed better than planned, whilst Europe as expected saw moderate underlying growth with high same period last year comparables and softness in the retail markets in Q1 23. Cost initiatives were executed according to plan. Strong free cash flow generation in the quarter of NOK 118 million. LINK reiterates its forward-looking statement for 2023 for an organic adjusted EBITDA growth of 12-15% in fixed currency.

LINK experienced strong momentum in the US with a high contract backlog for messaging solutions and a broader geographical exposure to critical events messaging across the continent. Critical events messaging amounted to USD 1.4 million in Q1 23 related to winter storms. Messaging solutions gained traction from a catch-up effect related to a delayed build-up of contract backlog last year.

LINK's commercial focus resulted in a strong contract backlog growth in Europe driven by the preferred

customer channel. SMS remains the channel of choice globally with more than 5 billion active users. The forecasted annual gross profit contribution from new contract wins, not including the US, increased by 45% YoY in Q1 23. A2P SMS grew by 55%, as traditional products were the solutions of choice in an uncertain macroeconomic landscape.

Reported revenue increased 23% to NOK 1,440 million in the first quarter YoY, with organic revenue growth at 12% in fixed currency. Underlying growth was driven by a more than doubling of US revenue and Global Messaging revenue growth of 25%. Europe experienced moderate growth as expected with high covid comparables in the same period last year and softer mobile marketing volumes in the first quarter following a stronger Q4 22.

Gross profit grew 24% to NOK 398 million in Q1 23, with an organic gross profit growth in fixed currency of 13%. A larger contribution form the high margin US business offset the dilution effect from more Global Messaging revenue, the low margin aggregator business, bringing gross profit growth in line with revenue growth.

Adjusted EBITDA increased 27% to NOK 181 million in the first quarter, with an organic growth at 16% in fixed currency. Adjusted EBITDA margin improved slightly to 12.5% compared to same period last year.

Cost initiatives were executed as scheduled with an annualized FCF effect of NOK 96 million completed by end Q1 23. The full run-rate FCF effect, including both opex and capex, is forecasted at NOK 116 million by year end 2023. Reported costs were elevated by FX as NOK depreciated versus most other currencies.

Reported messaging volumes increased by 8% and grew less than revenue in the first quarter. The difference reflected a higher share of non-messaging revenue like licences and professional services and destination mix effects in Global Messaging towards higher priced countries.

SMS One-way messaging (mill messages)

Other messaging (mill messages)

LINK Mobility Holding Group ASA

Forwarding-looking statement

LINK expects organic adjusted EBITDA growth of 12-15% in fixed currency for 2023, driven by higher gross profit growth than in 2022 and opex savings from cost reduction initiatives. The increased growth in profitability reflects significantly improved commercial momentum with increased inflow of new business, opex reductions progressing ahead of target partly offsetting underlying cost increases and dilutive effect on growth from non- recurring covid traffic to disappear after Q1 23. Macroeconomic uncertainty remains, customer churn is however expected to remain at a low level.

LINK aims to become a top 5 global CPaaS player and sees long-term organic revenue growth at 20% per year with traction on adoption of advanced CPaaS solutions. Pro forma annual revenue of NOK 10 billion, from both

accretive acquisitions and organic growth, is targeted for 2025. LINK's highly scalable business model will

support a pro forma adjusted EBITDA margin in the 15-17% range at that revenue level.

New agreements signed

LINK signed record high new and expanding agreements at 826 in the first quarter, securing significant new revenue and future growth potential. The new agreements consisted of 545 signed direct customer contracts, 69 signed partner framework agreements and 212 new partner customers.

Market trends towards advanced solutions

Market adoption for selected CPaaS products are accelerating as observed by LINK's record number for new contract wins.

In the market for notification use cases, applied for essential information, there is stable demand and growth momentum estimated in the high single-digits. Growth is driven mainly by alerts, reminders, payment and security products while demand for two-factor authentication (2FA) use cases are stable.

Mobile marketing use cases are increasingly adopting new channels. Demand for new channels with a richer feature set are accelerating and use cases are evolving from one-way mass communication to more conversational solutions. European retail markets are still challenging and partly driven by inventories. Q1 23 was weaker, following a strong Q4 22 supported by discount marketing.

Customer service is growing quickly albeit from lower volumes contributing about 10% of group revenue. Parts of IVR (automated telephone systems) are being replaced by messaging services which enhance consumer interaction and reduce supplier costs. Chatbots and new channels in demand are more time- consuming to implement and scale.

LINK Mobility Holding Group ASA

Financial Review

(Figures in brackets refer to the same period last year)

Group income statement

Total operating revenue amounted to NOK 1 440 million (NOK 1 174 million) or a reported growth of 23% versus the same period last year. Organic revenue growth in fixed currency was 12% with currency translation effects in the quarter of NOK 128 million related to depreciation of NOK against foreign currencies. Solid revenue growth momentum in the US from signed contracts during second half of 2022 combined with critical event messaging totalling NOK 14 million during the quarter. Critical event messaging was mainly related to winter storms in new geographical areas for the subsidiary Message Broadcast. Enterprise business revenue growth in Europe was 4% still negatively impacted by non-recurringcovid-related traffic same period last year across especially Northern and Central regions. In the beginning of the first quarter LINK observed softer retail volumes in Europe following a strong fourth quarter and reflecting the somewhat more volatile business environment.

Total operating revenues (mNOK)		Gross Profit and Gross Margin
NOK million	NOK million

Reported gross profit growth reported at 24% to NOK 398 million in the quarter. In fixed currency the gross profit growth was 13%, slightly higher than the revenue growth driven by higher share of revenues deriving from the US with higher margin. In fixed currency the growth in gross profit in the US was 106%, driven by a higher order backlog from second half of 2022 and contribution from critical event messaging through broader geographical exposure. The gross profit from European enterprise segments remained stable yoy in fixed currency negatively impacted by non-recurring covid traffic last year and a more volatile business environment.

The gross profit margin expanded to 27.7% (27.4%) positively impacted by higher share of revenue from US, partly offset by revenue expansion in the Global Messaging segment with lower margin level compared to same period last year.

LINK Mobility Holding Group ASA