LINK Mobility Group Holding

Investor Presentation • Aug 16, 2023

Financial presentation

Q2 2023

16 August 2023

LINK in short

#1 in Europe for enterprise digital messaging - Established player for more than 20 years

• ~ 650 employees in 30 offices across 18 countries
• 18 billion messages sent annually by ~ 50,000 customers

Adjusted EBITDA NOKm

Q2 2023 highlights

Strong organic growth reduced leverage to 4.0x

Revenue reported at NOK 1 652 million. Organic growth in fixed currency 23%

• US reported organic revenue growth of 79% in fixed currency
  • Continued traction on messaging services from high contract backlog on both new and existing clients
• Enterprise segments in Europe reported organic revenue growth of 12% in fixed currency
  • Supported by higher contract backlog and improved retail volumes YoY

Gross profit reported at NOK 410 million. Organic growth in fixed currency 15%

• US segment reported growth of 52% in fixed currency
• Growth rate improved for enterprise segments in Europe to 7% in fixed currency

Adjusted EBITDA reported at NOK 191 million. Organic growth in fixed currency 32%

• Solid improvement in gross profit
• Opex reductions delivered ahead of plan

Group leverage continued lower to 4.0x from 4.3x in the previous quarter

• High cash generation after capex and interest of NOK 129 million

LINK signed 715 new and expanding agreements in the second quarter

• New signings increased 25% YoY supporting long-term growth momentum

Reported figures impacted by NOK depreciation

			Q2 2023
1 177	268	207	1 652
	23%
317	46	47	410
	15%
129	41	21	191
	32%
	Q2 2022	Organic growth	FX effect

LINK to benefit from AI

Huge potential - Early days

LINK's Xenioo chatbot integrated with AI

• IBM Watson been integrated for more than 2 years
• More recent integration with ChatGPT still in concept phase

AI potentials for LINK medium term

• Improved management of globally increasing fraud / spam activity
  • New AI tools to supplement current ML methods in detection and prevention
• Better use of internal resources and optimization of MNO / OTT suppliers
  • AI supporting LINK's software development
  • Reduced COGS by improving current ML routing rules with AI

Full commercial adoption of AI still early

• Control and data protection concerns
• Uncertainty regarding regulatory framework

Strong gross profit growth

Strong gross profit growth of 15% in fixed currency

US reported growth of NOK 21 million or 52% organic in fixed currency

• Continued momentum for messaging solutions
  • Driven by high contract backlog for both new and existing customers
• No critical events messaging in Q2 23 as expected for seasonal business

Improvement in Europe NOK 18 million or 7% organic growth in fixed currency

• Growth support from weak retail volumes in Europe in Q2 last year
• Normalized comparables as covid effects out from figures
• Contribution from higher contract backlog

Global Messaging growing at 38% organic in fixed currency

• High activity on favorable routes
• Scaling revenue and gross profit on new contracts

Organic gross profit development NOKm

Quarterly US revenue contribution USDm

Strong growth in European contract backlog

New contract wins increased by more than 50% in H1 23

Clear step up in new contract wins with commercial refocus

• Higher contract backlog to gradually materialize in P&L
  • Historically 75% of gross profit recorded in P&L within 12 months

New contract wins increased 55% YoY in Q2 23

• Forecasted gross profit contribution from new wins NOK 36 million

All customer channels saw strong growth

• SMS supported by familiarity in more uncertain economic times
• Solid CPaaS growth from low base especially for RCS

Gross profit contribution from new contract wins NOKm

RCS gaining traction in France

Rich Communication Services (RCS) or SMS 2.0 provides comparable features to the new richer OTT channels

23 million end-users now use RCS as their messaging application for richer features in France

• Developed by MNOs together with Google and compatible with Android mobile devices
• RCS introduced by MNOs in numerous European countries and by hundreds of operators globally

LINK has helped French insurance company GMF to deploy a chatbot via RCS

• To better understand and analyze customer expectations

Kérastase, the high-end hair products brand, is marketed through RCS by LINK

LINK supporting optical centers Grand Optical and Générale d'Optique to enrich marketing with RCS

• Generating more customers through eye test bookings

LINK analysis shows significant benefits with RCS

• Performance of customer campaigns improved by up to 4x

LINK grows customers and agreements

New contract wins grew 25% YoY in Q2 23

~ 50' active customers accounts

• Removal of small inactive accounts from Q2 23 negatively affected growth

New small enterprise customer base in Italy added at attractive valuation

• Clients fully integrated with significant upselling potential

Customer accounts

New signed agreements grew by 25%

• Contract wins in Q2 23 rose to 715 from 571 in the same quarter last year

Customer churn increased slightly to 2.1% in Q2 23

• Increase of 0.6 percentage points fully explained by aggregator segment
  • More voliatile and low margin with limited impact on gross profit

New agreements signed in quarter / customer churn (%)

H1 23 supportive to FY 2023

LINK reiterates its forward-looking statement

Market trends confirm shift towards conversational solutions

Gross profit growth expected to be higher than in 2022

• H1 23 delivered within upper end of expectations with growth helped by favourable comparables

Organic adjusted EBITDA growth expected to be 12-15% in fixed currency

• Supported by execution on opex savings

Financial review

Q2 2023

Reported revenue growth of 40%

FX tailwind contributed 17 percentage points

Reported volume (mill transactions)

Reported revenue NOKm

Organic revenue growth of 23% in fixed currency

• Strong organic revenue growth in the US at 79%
  • Messaging solutions growth driven by signed contracts in H2 22
  • No critical events messaging revenue in Q2 23
• Global Messaging posted organic growth of 64% with higher activity
• European enterprise segments grew 12% organically
  • Supported by higher retail volumes YoY

Reported volume growth for Q2 23 at 21%

• Improved growth momentum across all regions QoQ
• Higher priced OTT channels continue to gain traction in selected markets

Gross profit growth of 29%

FX tailwind contributed 14 percentage points to gross profit growth

Gross profit NOKm

Gross margin (%)

Organic gross profit growth 15% in fixed currency

• Solid growth in US business related to messaging solutions
  • Driven by both new and existing clients
• Gross profit contribution from enterprise clients in Europe improved
  • Growth support from soft retail volumes last year
  • Normalized comparables as covid effects out from figures
  • Contribution from new contract signings

Gross margin impacted negatively by higher share of Global Messaging

• Increased share of US revenue largely offsetting a margin dilution effect from scaling of global clients in Central Europe
• Slight negative FX impact on margin reflecting NOK deprecation to EUR larger than USD

Cost reduction initiatives delivered according to plan

Reported costs higher with NOK depreciation

Opex development YoY NOKm

Cost saving initiatives in fixed FX NOKm

Opex growth of 2% in stable currency

• Investments in commercial capabilities in the US through 2022 and onboarding of new customer base late last year
• European segments costs were 5% lower YoY in stable FX, whilst group headquarter costs rose 8% YoY in stable FX

Execution on cost initiatives exceeding plans

• Actual capex and opex savings of NOK 27 million in Q2 23
  • Ahead of NOK 25 million plan
• Total cash savings from cost initiatives in 2023 expected at NOK 107 million
• Depreciation of NOK impacts nominal effect of cost reductions
  • P&L effect YoY NOK 14 million

Adjusted EBITDA growth of 48%

FX tailwind contributed 16 percentage points to reported adjusted EBITDA growth

Adjusted EBITDA NOKm

Adjusted EBITDA margin (%)

Organic growth in adjusted EBITDA 32% in fixed currency

• Improved gross profit contribution from all regions
• Managed opex growth with cost initiatives

Adjusted EBITDA margin improved YoY

• US margin slightly down YoY reflecting integration of new customer base
• European enterprise segments expanded 0.4 percentage points as opex initiatives more than offset gross margin dilution
• Group opex lower relative to revenue

P&L - Large one-off accounting effect

NOK in millions		022023 0222022	YID 2023	YID 2022	Full Year 2022
Total operating revenues	1 652	1 177	3 092	2 351	5 190
Direct cost of services rendered	(1 243)	(861)	(2 284)	(1 713)	(3 805)
Gross profit	410	317	308	638	1385
Operating expenses	(218)	(188)	(436)	(367)	(760)
Adjusted EBITDA	191	129	372	271	625
Non-recurring costs	(48)	(28)	(62)	(56)	(148)
EBITDA	143	101	310	216	478
Depreciation and amortization	(129)	(102)	(238)	(202)	(416)
Impairment cost					(180)
Operating profit (loss)	14	(1)	72	14	(118)
Net financials	(43)	65	(113)	59	(37)
Profit (loss) before income tax	(29)	64	(41)	73	(155)
Income tax	13	(26)	29	(34)	4
Profit (loss) for the period	(16)	38	(13)	39	(151)

Non-recurring costs of NOK 48 million o/w 15 million one-off effect

• Costs related to M&A NOK 3 million
• Restructuring costs NOK 6 million
• Options cost of NOK 40 million with no cash effect in the quarter
  • Normalized quarterly LTIP options cost of NOK 15 million
  • One-off accounting effect of NOK 15 million catch-up effect for Q1 of new LTIP program approved by AGM in May
  • Accounting effect related to remaining RSU's NOK 5 million to be finalized in October 2023
  • Social security accrual increase of NOK 5 million

Depreciation and amortization NOK 129 million

• Increase QoQ reflected timing effects related to closed projects
  • Depreciation of intangible assets NOK 35 million from R&D
  • Depreciation of PPA's NOK 87 million
  • Depreciation of leasing and fixed assets NOK 8 million

Net financial items negative NOK 43 million

• Negative currency effect NOK 4 million with limited cash effect
• Interest NOK 38 million related to outstanding EUR 370 million bond

Strong cash on balance sheet

NOK in millions	02 2023	Q2 2022	Year 2022
Non-current assets	9 553	9 143	8 924
Trade and other receivables	1 304	938	1 244
Cash and cash equivalents	1 089	902	827
Total assets	11 946	10 983	10 994
Equity	5 647	5 362	5 226
Deferred tax liabilities	485	591	533
Long-term borrowings	4 281	3 837	3 837
Other long term liabilities	46	60	45
Total non-current liabilities	4 812	4 488	4 416
Trade and other payables	1 430	1 079	1 331
Other short term liabilities	57	ર્ટિક	22
Total current liabilities	1 487	1 133	1 353
Total Liabilities	6 299	5 621	5 769
Total liabilities and equity	11 946	10 983	10 994

Non-current assets increased mainly due to currency effects

• Marginal additions related to PPA

Cash on balance sheet NOK 1 089 million

• Expanding QoQ from free cash flow generation and positive FX effect

Equity NOK 5 647 million and equity percentage of 47%

Receivables and payables increased with organic growth and FX effects

Net interest-bearing debt* of NOK 2 954 million

LINK leverage continued down

Strong growth in adjusted EBITDA and high cash conversion drove leverage lower to 4.0x

NOK '000	03 2072	Q4 2022	01 2023	0722073
Adjusted EBITDA	166	188	181	191
Change working capital	-103	ଚନ	-27	73*
Taxes paid	-10	-30	0	-14
Non-reccuring costs M&A	-15	-53	-7	-8
Net cash flow from operating activities	38	170	147	242
Add back non-recurring costs M&A	15	રેરિક	7	8
Adjusted cash flow from operations	રે રે	223	154	251
Capex	-38	-47	-35	-49
Interest	-1	-69	-1	-73
Cash flow after capex and interest	14	107	118	129

Leverage (Net debt / LTM proforma adjusted EBITDA)**

* Adjusted for NOK 5m share option social cost provision payable in Q4 23 ** Calculated according to the company's bond terms

Adjusted LTM cash flow from operations of NOK 598 million • Reported cash flow from operations include M&A related expenses
• FCF generated after capex and interest of NOK 368 million
Working capital varies significantly between quarters
• LTM build mainly reflects periodization and not higher underlying WC • WC remains net negative and a funding source for organic growth
High cash conversion LTM
• Adjusted cash flow from operations 94% to adjusted EBITDA
• Free cash flow after interest and capex 51% to adjusted EBITDA
Cost reduction initiatives support FCF and adjusted EBITDA in 2023

LTM Q2 23 leverage reduced to 4.0x during the second quarter

• FCF and adjusted EBITDA growth to continue deleveraging trend

LINK's EUR 370 million fixed coupon bond matures in December 2025

• Fixed interest rate at 3.375% secured for more than 2 years

Appendix

Q2 2023

Northern Europe

Central Europe

Western Europe

North America

Global Messaging

Q&A

linkmobility.com/investors

16 August 2023