Quarterly Report • May 10, 2022
Quarterly Report
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LINK Mobility Group Holding ASA Interim financial report First Quarter 2022
1) Net retention rate (NRR) including all client segments. NRR is net change in revenue from upsale, downsale and churn of existing customers YoY. New customers are excluded
2) NRR excluding aggregator clients. Includes markets counting for more than 80% of total transaction revenue
LINK Mobility (LINK) reports revenue growth of 24% to NOK 1,174 million in the first quarter of 2022. Organic revenue growth in fixed currency was 15% and within the medium-term revenue growth target. Gross profit increased 30% to NOK 322 million and the margin expanded 1.3 percentage points YoY to 27.4%. Adjusted EBITDA grew 30% to NOK 142 million whilst the margin improved YoY to 12.1% (11.5%). Reflecting a seasonally low contribution from the high margin U.S. business, the adjusted EBITDA margin was lower than the two previous quarters. LINK reiterates its forward-looking statement including a medium-term revenue growth expectation in the 14-17% range.
LINK experiences increased demand for advanced CPaaS solutions and has made significant go-to-market (GTM) investments during the last two years. The GTM strategy includes roll-out of self-sign-up (SSU) platforms, further expansion of the partner network and a continued focus on LINK's unique locally present salesforce and customer service in local languages. A2P messaging is being transformed to conversational CPaaS communication and LINK has obtained a strong position in rapidly expanding segments through the acquisitions of chatbot solution Xenioo and the telecoms provider Tismi. The new advanced automized conversations and voice solutions offer attractive cross-sell opportunities to European and U.S. customers.
Revenue was reported at NOK 1,174 million, which translates into an organic revenue growth in fixed currency of 15% YoY. Increased Global messaging revenue positively impacted growth rates on total revenue. For the Enterprise segment, most markets have rebounded from lockdown induced restrictions. However, in France, whilst improving compared to the two previous quarters, retail activity remains below pre Covid volumes. Poland experienced a lower growth momentum in this quarter due to the war in Ukraine dampening economic activity. Growth in the Nordics was negatively impacted by an unusual churn of a sizeable, but low margin simple use case client in the first quarter.
Gross profit grew 30% to NOK 322 million with a gross margin at 27.4% (26.1%) reflecting contribution from acquired entities. Organic gross profit growth in fixed currency was 9%, lower than organic revenue growth due a higher share of Global messaging volumes at lower margin. Organic gross margin in the Enterprise segment declined by 0.8 percentage points YoY due to pass through cogs increases at a constant contribution in Northern Europe, and different country/region mix with more growth deriving from countries with lower profitability.
Reported adjusted EBITDA grew 30% YoY to NOK 142 million, whilst the adjusted EBITDA margin improved 0.6 percentage points to 12.1% YoY. Organic adjusted EBITDA grew 8% in fixed currency.
Messaging volumes increased 26% in the first quarter to 3 691 million compared to the same quarter last year, of which 12% organically. Pro forma growth in messaging volumes was 11%, negatively impacted by abnormally high critical event messaging in the U.S. last year.
Million messages / Price per message in NOK Pro forma Messaging volume in million
LINK acquired Message Broadcast in the U.S., MarketingPlatform in Denmark and AMM in Italy during the second quarter 2021. The closing of these acquisitions, in addition to the closing of Xenioo in Italy and Altiria in Spain in the fourth quarter 2021 and Tismi in March 2021, affects the last twelve months pro forma financials for the LINK Group. The tables below show pro forma figures (full-year effect of closed acquisitions) for LTM Q1 2022 and LTM Q1 2021. The financials are based on management estimates given the information available.
| LTM Q1 2022 (Reported curr) |
LTM Q1 2021 (Fixed curr) |
Growth % (Fixed curr) |
LTM Q1 2021 (Reported curl) |
|
|---|---|---|---|---|
| Revenue | 4726 | 4 0 4 2 | 17% | 4 2 3 2 |
| Gross Profit | 1 3 3 3 | 1 2 4 9 | 7% | 1 3 0 8 |
| GP.margin | 28% | 31% | 31% | |
| Adj.EBITDA | 619 | 603 | 3% | 637 |
| Adj.EBITDA margin | 13% | 15% | 15% |
Currency changes through 2020 and 2021 had a material effect on pro forma revenue, gross profit and adjusted EBITDA. NOK appreciated during 2021 to major currencies, resulting in a LTM Q1 2021 FX impact of minus NOK 190 million for revenue, NOK 59 million for gross profit and NOK 34 million for adjusted EBITDA (when applying similar currency rates as for the LTM Q1 2022 numbers).
Message Broadcast has two revenue streams, stable revenue from messaging solutions (transactions, licenses, professional services) and volatile revenue from weather related critical events messaging. In H2 2021, there was a drop in critical events messaging due to unusual weather, resulting in a decline in LTM revenue over the last three quarters. The decline in revenue also translated into a lower gross margin and adjusted EBITDA. Critical events messaging relates to the utility vertical and oscillate with weather events normally taking place in H2, like droughts in Western U.S. and hurricanes in the Gulf of Mexico. These events require utilities to shut-down electricity grids and inform their end-users, driving significant messaging volumes towards millions of consumers. In Q1 2022, the revenue development in the messaging solutions business was softer due to delays in professional services projects, growing 8% YoY on an LTM basis. Traction on new projects expected to support revenue growth throughout the year
LINK benefits from strong long-term market trends with increased demand for advanced CPaaS solutions and products. As LINK expands its go-to-market (GTM) initiatives and launches new products, demand is expected to support even higher growth. LINK is also executing on its M&A strategy with several acquisitions closed in Europe and expansion to the US last year.
LINK has confidence in the medium-term revenue growth range in the forward-looking statement of 14-17% based on current market adoption of CPaaS solutions and GTM roll-out. Growth rates may however vary between quarters in 2022 as 2021 was impacted by lockdowns, resulting in high and low comparables. For full year 2022, the net retention rate is expected to remain above 110% for the Enterprise segment and gross profits are expected to trend upwards in H2 2022 with a normal season for high margin critical events messaging in the US. Potential additional growth through M&A will be accretive to LINK's valuation and deleveraging or at least neutral to leverage. A significant deleveraging effect from organic growth is expected to bring leverage closer to the financial policy target of <3.5x by end of 2022.
LINK retains its long-term 2024 forward-looking revenue and margin statement and commitment to its 20% annual growth target in a mature CPaaS market with S-curve adoption of omnichannel solutions.
| Forward looking statement | |
|---|---|
| Amounts are in million NOK | 2024 |
| Pro forma revenue | 10.000 |
| Pro forma adjusted EBITDA margin | 15% - 17% |
LINK signed 753 new agreements in the first quarter of the year (new and expanding), securing significant new revenue and future growth potential. The new agreements consisted of 470 signed direct customer contracts, 53 signed partner framework agreements and 230 new partner customers.
Copyright 2022 LINK Mobility. All rights reserved.
(Figures in brackets refer to the same period last year)
Operating revenues amounted to NOK 1 174 million (NOK 946 million) or a reported growth of 24 percent versus same period last year including acquisitions. Organic revenue growth in fixed currency was 15 percent, currency translation negatively affected reported organic revenue growth in NOK by 3 percentage points. Global messaging revenue growth was 40% in the current quarter, contributing positively to overall revenue growth. The growth in revenue from the Global messaging segment was mainly due to attracting higher volumes from large global aggregators and OTP volumes through onboarding of new destinations. Messaging revenue growth was 23% which was lower than total revenue growth as Message Broadcast has significant revenue stream from licenses and other recurring fees fueling a higher revenue growth compared to core messaging revenue streams
Reported gross profit of NOK 322 million or a growth of 30 percent. Organic growth in gross profit was 9% in fixed FX. Gross profit margin was 27.4% in the current quarter, an increase of 1.3 percentage points mainly due to;
Total operating expenses amounted to NOK 179 million (NOK 138 million) or a growth of 30
percent. Organic growth in operating expenses was 7 percent mainly from investments in GTM initiatives, centralized billing capabilities and costs related to supporting a larger commercial footprint.
Adjusted EBITDA, before non-recurring cost, was reported at NOK 142 million (NOK 109 million) or 12,1 percent of total revenues (11,5 percent). Organically, adjusted EBITDA increased by 5% negatively impacted by currency effects of -3pp. Investments in commercial capabilities supporting global expansion and future revenue growth did not offset the organic growth in gross profit due to the scalable business model. Gross profit to adjusted EBITDA conversion remained stable at 44% compared to same period last year.
EBITDA after non-recurring items was reported at NOK 115 million (NOK 53 million) after deduction of non-recurring cost of NOK 28 million (NOK 56 million) related to acquisitions, share option programs and restructuring costs. The non-recurring costs declined mainly related to lower costs connected to share-option programs as initial tranches have been vested and lower M&A costs compared to same quarter last year.
First quarter depreciation and amortization was NOK 100 million (68 million). Depreciation and amortization expense was higher in the first quarter 2022 as compared to the first quarter in 2021 related to depreciation of intangible assets acquired in FY2021. Depreciation and amortization expense is comparable to the fourth quarter 2021.
In the first quarter, net financial expense was NOK 6 million (NOK 52 million). The reduction is related to a net currency exchange gain in the current quarter of NOK 26 million (NOK 30 million loss) which is partly offset by increased interest expenses related to Bond tap issue in second quarter 2021. The currency gain is attributable the decline in foreign currency rates and mainly to the EUR/NOK and USD/NOK.
Non-current assets amounted to NOK 8 589 million (NOK 5 966 million). The increase was attributable to the acquisitions of MarketingPlatform Aps, AMM S.p.A, Message Broadcast LLC, Matelab Srl, and Altiria TIC, S.L. compared to same period last year.
Trade and other receivables amounted to NOK 865 million (NOK 674 million). NOK 94 million increase was attributable to acquisitions. The remainder of the increase was attributable to organic growth and timing of collections.
Trade and other payables were reported at NOK 936 million (NOK 751 million). The increase was largely attributable to acquisitions with NOK 88 million and the remaining increase is related to timing of operator payments.
Total equity amounted to NOK 5 021 million (NOK 4 245 million) or 49 percent (57 percent) of balance sheet value. The increase is due to issuance of new equity related to acquisitions during second half of FY2021 and to the management option programs.
Long-term liabilities amounted to NOK 4 203 million (NOK 2 389 million); the largest components consist of external debt through a bond loan and deferred tax liability. Increase compared to same period last year is related to the Bond tap issue conducted in second quarter 2021. Please see note 5 for more details
Net cash from operating activities was NOK 19 million (negative NOK 18 million), an increase of NOK 36 million mainly explained by positive EBITDA development and positive working capital changes partly offset by higher income taxes paid. The negative change in working capital of NOK 98 million during the first quarter was related to timing of operator payments.
Net cash from investing activities was negative NOK 50 million (negative NOK 87 million); the decrease was driven by increased investments of NOK 27 million related to CPaaS capabilities and centralized billing system partly offset by the acquisition of Tismi B.V. in Q1 2021 of NOK 64 million.
Net cash flow from financing activities was negative NOK 7 million (negative NOK 4 million); the key elements in both periods being interest paid and principal elements of lease payments (both slightly higher in the current quarter).
Cash and cash equivalents were NOK 802 million at the end of the quarter (NOK 807 million). Decrease in cash balance during the first quarter was mainly related to settlement of accounts payables related to operator termination cost.
| NOK '000 | Note | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|---|
| Total operating revenues | 3 | 1 173 825 | 945 733 | 4 4 1 0 1 3 6 |
| Direct cost of services rendered | $-852016$ | $-698748$ | -3 209 707 | |
| Gross profit | 3 | 321 809 | 246 984 | 1 200 429 |
| Payroll and related expenses | $-117715$ | $-95729$ | -416 968 | |
| Other operating expenses | $-61688$ | $-42$ 101 | -226 803 | |
| Adjusted EBITDA | 3 | 142 406 | 109 155 | 556 659 |
| Restructuring cost | $-7492$ | $-6605$ | $-26815$ | |
| Share based compensation | 6 | $-13845$ | $-41313$ | $-149457$ |
| Expenses related to acquisitions | $-6222$ | $-8169$ | $-75870$ | |
| EBITDA | 114 848 | 53 068 | 304 517 | |
| Depreciation and amortization | $\overline{7}$ | $-99867$ | $-67501$ | -337 706 |
| Operating profit (loss) | 14 980 | $-14434$ | $-33189$ | |
| Finance income and finance expenses | ||||
| Net currency exchange gains (losses) | 26 190 | $-30322$ | 99 745 | |
| Net interest expense | $-34533$ | $-21043$ | $-127518$ | |
| Net other financial expenses | 2 4 0 4 | $-318$ | 13 291 | |
| Finance income (expense) | $-5938$ | $-51683$ | $-14481$ | |
| Profit (loss) before income tax | 9 0 4 2 $-8283$ |
$-66$ 117 | -47 670 | |
| Income tax Profit (loss) for the period |
759 | 16 543 $-49574$ |
$-29891$ $-77561$ |
|
| Minority Interest Income | ||||
| Owner's income | 759 | $-49574$ | $-77561$ | |
| Earnings per share (NOK/share): | ||||
| (Loss) earnings per share (NOK/share): | 9 | 0,00 | $-0,18$ | $-0,26$ |
| Diluted (loss) earnings per share | 9 | 0,00 | $-0,18$ | $-0,26$ |
| NOK '000 | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Profit (loss) for the period | 759 | $-49574$ | $-77561$ |
| Total effect - foreign exchange | $-103946$ | $-149877$ | $-113432$ |
| Gains and losses net investment hedge | 26 391 | 45 106 | 45 743 |
| Tax on OCI that may be reclassified to P&L | $-5806$ | $-9923$ | $-10003$ |
| Total Other Comprehensive Income (OCI) | $-83361$ | $-114694$ | $-77753$ |
| Total Comprehensive Income | $-82602$ | $-164268$ | $-155314$ |
| Attributable to: | |||
| Owner's equity | $-82602$ | $-164268$ | $-155314$ |
| NOK '000 | Note | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 5 500 984 | 3 956 652 | 5 614 510 | |
| Other intangible assets | 2 859 336 | 1825962 | 2 946 506 | |
| Right-of-use-assets | 61 100 | 22 064 | 64 398 | |
| Equipment and fixtures | 21 616 | 21 267 | 20 4 8 5 | |
| Deferred tax assets | 143 206 | 139 020 | 142 944 | |
| Other non-current assets | 2887 | 1 2 7 2 | 3 0 1 1 | |
| Non-current assets | 8 589 128 | 5966237 | 8791854 | |
| Current assets | ||||
| Trade and other receivables | 865 253 | 673 945 | 904 923 | |
| Cash and cash equivalents | 801 599 | 807 216 | 843 618 | |
| Current assets | 1 666 852 | 1481161 | 1 748 540 | |
| Total assets | 10 255 980 | 7 447 398 | 10 540 394 | |
| Equity & Liabilities | ||||
| Shareholders equity | 5 0 20 8 85 | 4 245 129 | 5 089 557 | |
| Total equity | 5 0 20 8 8 5 | 4 245 129 | 5 089 557 | |
| Long-term liabilities | ||||
| Long-term borrowings | $\overline{5}$ | 3 597 287 | 2 051 764 | 3 696 470 |
| Lease liabilities | 5 | 43 142 | 29 4 27 | 45 040 |
| Deferred tax liabilities | 543 037 | 306 295 | 556 961 | |
| Other long-term liabilities | 5 | 19 238 | 1 2 9 9 | 18792 |
| Total non-current liabilities | 4 202 704 | 2 388 786 | 4 317 263 |
| Short-term borrowings | 5 | 53 358 | 43 791 | 24 4 23 |
|---|---|---|---|---|
| Lease liabilities | 5 | 16 582 | 7419 | 16 906 |
| Trade and other payables | 936 344 | 751 413 | 1 062 618 | |
| Tax payable | 26 108 | 10 861 | 29 6 27 | |
| Total current liabilities | 1 032 392 | 813 483 | 1 133 574 | |
| Total liabilities | 5 235 095 | 3 202 269 | 5 450 837 | |
| Total liabilities and equity | 10 255 980 | 7 447 398 | 10 540 394 |
| Q1 2022 (NOK '000) | Share capital |
Share premium |
Other equity |
Retained earnings |
Other reserves |
Minority interest |
Total equity |
|---|---|---|---|---|---|---|---|
| Total Opening Balance | 1471 | 5 661 307 | -464 193 | $-235108$ | 126 081 | $-0$ 5 089 557 | |
| Changes in Net Income | $\blacksquare$ | $\blacksquare$ | $\blacksquare$ | 759 | $\blacksquare$ | $\blacksquare$ | 759 |
| Total Other Comprehensive Income (OCI) | $\blacksquare$ | $\blacksquare$ | $\blacksquare$ | $-83361$ | $\sim$ | $-83361$ | |
| Total Comprehensive Income | $\blacksquare$ | $\blacksquare$ | $\blacksquare$ | $-82602$ | $\blacksquare$ | $\blacksquare$ . | $-82602$ |
| Changes due to issue of stock | $\blacksquare$ | $-67$ | $\blacksquare$ | $-67$ | |||
| Share based payment | $\blacksquare$ | $\sim$ | 13 996 | $\blacksquare$ | $\sim$ | 13 996 | |
| Closing Balance | 1471 | 5 661 239 | -450 197 | $-317710$ | 126 081 | $-5020885$ |
| Q1 2021 (NOK '000) | Share capital |
Share premium |
Other equity |
Retained earnings reserves |
Other | Minority interest |
Total equity |
|---|---|---|---|---|---|---|---|
| Total Opening Balance | 1 3 5 5 | 4 875 968 | 185 497 | $-840572$ | 81 651 | $\blacksquare$ | 4 303 897 |
| Changes in Net Income | $\sim$ | $-49574$ | $\blacksquare$ | $\blacksquare$ | $-49574$ | ||
| Other Comprehensive income | $\blacksquare$ | $\sim$ | $-114694$ | $\blacksquare$ | $\blacksquare$ | $-114694$ | |
| Total Comprehensive Income | $\blacksquare$ | $\blacksquare$ | $\blacksquare$ | $-164268$ | $\blacksquare$ | $\blacksquare$ | $-164268$ |
| Issue of ordinary shares | 6 | 67 115 | $\blacksquare$ | 67 121 | |||
| Change in share options | $\blacksquare$ | 38 380 | $\blacksquare$ | $\blacksquare$ | $\blacksquare$ | 38 380 | |
| Closing Balance | 1 3 6 1 | 4943082 | 223 877 | -1 004 841 | 81 651 | $\blacksquare$ | 4 245 129 |
| NOK '000 | Note | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|---|
| Net cash flows from operating activities | ||||
| Profit (loss) before income tax | 9 0 4 2 | $-66$ 117 | -47 670 | |
| Adjustments for: | ||||
| Taxes paid | $-12528$ | $-8255$ | $-57224$ | |
| Finance income (expense) | 5938 | 51 683 | 14 4 8 3 | |
| Depreciation and amortization | $\overline{7}$ | 99 867 | 67 501 | 337 706 |
| Employee benefit - share based payments | 6 | 13 996 | 41 313 | 134 505 |
| Net losses (gains) from disposals | 32 | $-88$ | ||
| Change in other provisions | $-4830$ | $-3327$ | $-3328$ | |
| Change in trade and other receivables | 18 343 | 49 4 43 | $-115968$ | |
| Change in trade and other payables | $-111347$ | $-150000$ | 93 529 | |
| Net cash flows from operating activities | 18 514 | $-17838$ | 355 944 | |
| Net cash flows from investing activities | ||||
| Payment for equipment and fixtures | $-3486$ | $-1314$ | $-2506$ | |
| Payment for intangible assets | $-46544$ | $-22041$ | -137 453 | |
| Payment for acquisition of subsidiary, net of cash acquired | 8 | $-63741$ | $-1869208$ | |
| Disposal of subsidiary | 62 | |||
| Net cash flows from investing activities | $-50030$ | $-87096$ | $-2009105$ | |
| Net cash flows from financing activities | ||||
| Proceeds on issue of shares | $-67$ | 60 807 | ||
| Proceeds from borrowings | 5 | 1670021 | ||
| Repayment of borrowings | $-40898$ | |||
| Interest naid | -2 891 | .1 323 | -110 076 |
| Principal elements of lease payments | $-3677$ | $-3041$ | $-11379$ |
|---|---|---|---|
| Net cash flows from financing activities | $-6635$ | $-4.364$ | 1 568 476 |
| Net increase (decrease) in cash and cash equivalents | $-38152$ | $-109298$ | $-84686$ |
| Effect of foreign exchange rate changes | $-3867$ | $-35630$ | $-23840$ |
| Cash and equivalents at beginning of period | 843 618 | 952 144 | 952 144 |
| Cash and equivalents at end of the period | 801 599 | 807 216 | 843 618 |
The Board of Directors approved the condensed interim financial statements for the three months ended 31 March 2022 for publication on 10 May 2022. The Group financial statements for first quarter have not been subject to audit or review by auditors; figures for FY2021 are audited.
LINK Mobility Group Holding ASA (LINK) is a public limited company registered in Norway. The Company is one of Europe's leading CPaaS providers within mobile communication, specializing in messaging and digital services. Headquartered in Oslo, Norway, the Group has 714 employees and operates in 19 countries.
The consolidated condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34 "Interim Financial Reporting." The condensed interim financial statements do not include all information and disclosures required in the annual financial statement and should be read in accordance with the Group's annual report for 2021, which has been prepared according to IFRS as adopted by the EU.
The preparation of interim financial statements requires the Group to make certain estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income, and expenses. Estimates and judgements are continually evaluated by the Group based on historical experience and other factors, including expectations of future events that are deemed to be reasonable under the circumstances. Actual results may differ from these estimates. The most significant judgements used in preparing these interim financial statements and the key areas of estimation uncertainty are the same as those applied in the consolidated annual report for 2021.
Goodwill and other Intangible assets with an indefinite useful economic life are not amortized but are tested annually for impairment. The company performs an impairment test for goodwill on an annual basis or when there are circumstances which would indicate that the carrying value of goodwill may be impaired. When assessing impairment, assets are grouped into cash generating units (CGU's).
The presentation currency of the consolidated financial statement is Norwegian kroner (NOK), which is also the functional currency of the parent company. Unless otherwise stated, amounts presented are in thousands of NOK.
The accounting policies applied in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the annual IFRS financial statements for the year ended December 31, 2021, except for the adoption of new and amended standards as set out below.
The Group applies hedge accounting for hedges that meet the criteria for hedge accounting. The Group has a hedge of net investments in foreign operations.
At the inception of each hedge relationship, the Group designates and documents the hedge accounting relationship, risk management objective, and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to change in the hedged item's fair value of cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they have been highly effective throughout the financial reporting periods for which they were designated.
Hedge relationships that meet the requirements for hedge accounting are accounted for in the Group's consolidated financial statements as follows:
A hedge of a net investment in a foreign operation is accounted for in a similar way to a cash flow hedge. Foreign exchange gains or losses on the hedging instrument relating to the effective portion of the hedge are recognized directly in comprehensive income while any foreign exchange gains or losses relating to the ineffective portion are recognized in the income statement. On disposal of the foreign entity, the cumulative foreign exchange gains or losses recognized in other comprehensive income is reclassified to the income statement.
Net investment hedge accounting is applied when possible.
For information related to amendments to standards, new standards, and interpretations effective from 01 January 2022, please refer to the Group Annual Report for 2021. None of the amendments, standards, or interpretations effective from 01 January 2022 have had a significant impact on the Group's consolidated interim financial information.
The Group reports revenue, gross profit (revenue less direct costs), gross margin (gross profit divided by revenue) and adjusted EBITDA in functional operating segments to the Board of Directors (the Group's chief operating decision makers). While LINK uses all four measures to analyze performance, the Group's strategy of profitable growth means that adjusted EBITDA is the prevailing measure of performance (refer to alternate performance measures).
An examination of operating units based on market maturity and product development as well as geography identifies five natural reporting segments. These are Northern Europe, Western Europe, Central Europe, Northern America and Global Messaging; these represent market clusters. Generally, regions are segregated into similar geographic locations as these follow similar market trends. Global Messaging includes all regions with aggregator traffic; the other four have enterprise traffic.
The regions are:
The Nordics is composed of Norway, Sweden, Denmark, Finland, and Baltics.
Central Europe is composed of Bulgaria, Romania, North Macedonia, Poland, Hungary, Germany, Austria, and the Netherlands.
Western Europe is composed of Spain, France, the United Kingdom, and Italy.
Northern America is composed of the US market currently includes the entity Message Broadcast.
Global messaging is comprised of non-enterprise traffic and is representative of either stand-alone business or as a component of revenues in countries included above. If a business is comprised of both enterprise and wholesale/aggregator transactions, the latter is segregated here. The Swiss operation Horisen Messaging is included here. Wholesale/aggregator business is defined as an operating unit within LINK's industry, and that use LINK connections in markets where they do not have such connections themselves. This business can generally be referred to, at least partly, as a direct competitor that use LINK connections. Smaller local aggregators cannot be expected to be covered efficiently by Global Messaging and as such they are still subject to local handling (not a focus area though because they are generally low margin and switch easily).
NOK '000
| Revenues by segment | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Northern Europe | 334 682 | 293 935 | 1 333 080 |
| Central Europe | 258 511 | 241 167 | 1 075 264 |
| Western Europe | 348 206 | 276 077 | 1 251 4 25 |
| North America | 42 003 | 0 | 119 502 |
| Global Messaging | 190 425 | 134 554 | 630 866 |
| Total revenues | 1 173 825 | 945 733 | 4 4 10 1 36 |
| Gross profit by segment | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Northern Europe | 96 339 | 88 350 | 381 904 |
| Central Europe | 86 547 | 79 650 | 360 094 |
| Western Europe | 80 238 | 62 998 | 285 686 |
| North America | 37 482 | 0 | 108 937 |
| Global Messaging | 21 204 | 15 986 | 63 808 |
| Total gross profit | 321 809 | 246 984 | 1 200 429 |
| Adj. EBITDA by segment | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Northern Europe | 59 604 | 57 477 | 241 137 |
| Central Europe | 55 450 | 53 069 | 241 614 |
| Western Europe | 42 654 | 25 4 8 2 | 139 421 |
| North America | 16 553 | 0 | 65 692 |
| Global Messaging | 12 3 14 | 9 1 5 0 | 33 601 |
| Group Costs | $-44168$ | $-36023$ | $-164806$ |
| Total adjusted EBITDA | 142 406 | 109 155 | 556 660 |
| Reconciliation of adjusted EBITDA to Group profit (loss) before income tax |
Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Adjusted EBITDA | 142 406 | 109 155 | 556 659 |
| Non-recurring items* | $-27559$ | $-56087$ | $-252$ 142 |
| Depreciation and amortization | $-99867$ | $-67501$ | $-337706$ |
| Operating profit | 14 980 | $-14434$ | $-33189$ |
| Finance income (expense) | $-5938$ | $-51683$ | $-14481$ |
| Profit (loss) before income tax | 9 0 4 2 | $-66$ 117 | $-47670$ |
* Non-recurring items are expenses related to significant one-time, non-recurring events such as acquisitions and restructuring activities and share-based compensation
Balances and transactions between LINK Mobility Group Holding ASA and its subsidiaries, have been eliminated on consolidation and are not disclosed in this note.
As of 31 March 2022, the Group has not entered any transactions with related parties.
On 23rd June 2021 LINK issued EUR 170 million new bonds in LINK's outstanding 5-year senior unsecured 3.375% fixed rate bond issue, raising the total outstanding amount to EUR 370 million. The bonds were issued at par.
| Non-current financial liabilities | YTD 2022 | Year 2021 |
|---|---|---|
| Bond loan | 3 532 600 | 3 629 772 |
| Lease liability | 43 142 | 45 040 |
| Hold-back | 64 687 | 66 698 |
| Other long-term liabilities | 19 238 | 18792 |
| Total | 3 659 667 | 3760303 |
| NOK '000 | ||
| Current liabilities | YTD 2022 | Year 2021 |
| Hold-back | 15 598 | 15 598 |
| Lease liability | 16 582 | 16 906 |
| Debt to financial institutions/bond loan* | 37 760 | 8856 |
| Total | 69 940 | 41 360 |
* Instalments falling due within a 12-month period, including non-capitalized interest, are classified as current.
In Q1 2022, an expense of NOK 14 million was recognized in relation to the RSU and LTI program. Please refer to the annual report for 2021 regarding details for the respective option programs.
Depreciation and amortization are comprised of the following amounts:
| Depreciation and amortization | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Equipment and fixtures | 1 7 2 1 | 1619 | 7 0 7 7 |
| Right-of-use-assets | 4 7 6 4 | 4 4 6 0 | 17 622 |
| Intangible assets acquisitions* | 75 041 | 42 968 | 238 359 |
| Intangible assets - subsidiaries** | 18 341 | 18 4 54 | 74 648 |
| otal depreciation and amortization | 99 867 | 67 501 | 337 706 |
|---|---|---|---|
There were no new or corrections to previously closed business combinations during the first quarter of 2022.
* Acquisitions: depreciation of allocated surplus values from purchase price allocations on acquisitions (Group level)
** Subsidiaries: depreciation of amounts booked in subsidiary balances. Includes book values from acquisitions
The Group's earnings per share is calculated as below:
| NOK '000 | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Net (loss) income | 759 | -49 574 | $-77561$ |
| Non-controlling interests | $\blacksquare$ | $\sim$ | |
| Owners of LINK Mobility Group Holding ASA | 759 | $-49574$ | $-77561$ |
| Weighted average number of ordinary shares (basic) | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Issued ordinary shares at 01 January | 294 252 | 270 911 | 270 911 |
| Effect of shares issued (11 March 2021) | 1 2 2 7 | 1 2 2 7 | |
| Effect of shares issued (31 May 2021) | 1688 | ||
| Effect of shares issued (07 June 2021) | 1 7 2 3 | ||
| Effect of shares issued (24 June 2021) | 16 755 | ||
| Effect of shares issued (11 November 2021) | 1 2 3 5 | ||
| Effect of shares issued (14 December 2021) | 713 | ||
| Weighted average number of ordinary shares | 294 252 | 272 138 | 294 252 |
| Basic (loss) earnings per share (NOK) | 0,00 | (0, 18) | (0, 26) |
| Weighted average number of ordinary shares (diluted) | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Weighted average number of ordinary shares (basic) | 294 252 | 272 138 | 294 252 |
| Effect of share options on issue | $\sim$ | $\blacksquare$ | |
| Diluted (loss) earnings per share (NOK) | 0,00 | (0, 18) | (0, 26) |
| Number of outstanding ordinary shares per 01.01 | 294 252 | 270 911 | 270 911 |
| Number of outstanding ordinary shares per period end | 294 252 | 272 138 | 294 252 |
.
The financial information in this report is prepared under International Financial Reporting Standards (IFRS), as adopted by the EU. To enhance the understanding of LINK's performance, the Group presents several alternative performance measures ("APM's"). An APM is defined by the European Securities and Markets Authority (ESMA) guidelines as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework (IFRS).
Below, LINK presents certain APMs, including gross margin, EBITDA, adjusted EBITDA, and adjusted EBITDA margin. APMs such as EBITDA are commonly reported by companies in the markets in which LINK competes and are widely used by investors when comparing performance on a consistent basis without regard to factors such as depreciation and amortization, which can vary significantly, depending upon accounting methods (particularly when acquisitions have occurred) or based on non-operating factors.
Gross Profit means revenues less direct costs of services rendered.
Gross margin means gross profit as a percentage of total operating revenues.
Adjusted EBITDA means EBITDA adjusted by expenses related to significant onetime, non-recurring events such as acquisitions and restructuring activities, and share-based compensation. LINK has presented adjusted EBITDA in the consolidated statement of profit and loss because management believes the measure provides useful information regarding operating performance.
Adjusted EBITDA margin is presented as adjusted EBITDA as a percentage of total operating revenues in the respective periods.
EBITDA means earnings before interest, taxes, amortization, depreciation, and impairments. LINK has presented EBITDA in the consolidated statement of profit and loss because management believes that the measure provides useful information regarding the Group's ability to service debt and to fund capital expenditures and provides a helpful measure for comparing its operating performance with that of other companies.
See below for a reconciliation of EBITDA to Adjusted EBITDA, and adjusted EBITDA margin.
| NOK '000 | Q1 2022 | Q1 2021 | Year 2021 |
|---|---|---|---|
| Operating profit (loss) ("EBIT") | 14 980 | $-14434$ | $-33189$ |
| Depreciation and amortization | 99 867 | 67 501 | 337 706 |
| EBITDA | 114 848 | 53 068 | 304 517 |
| Restructuring cost | 7492 | 6 6 0 5 | 26 815 |
| Share based compensation | 13 845 | 41 313 | 149 457 |
| Expenses related to acquisitions | 6 2 2 2 | 8 1 6 9 | 75 870 |
| Adjusted EBITDA | 142 406 | 109 155 | 556 659 |
| Operating revenues | 1 173 825 | 945 733 | 4 4 1 0 1 3 6 |
| Adjusted EBITDA | 142 406 | 109 155 | 556 659 |
| Adjusted EBITDA margin | 12,1% | 11,5% | 12,6 % |
The Group monitors Net debt according to Bond loan terms which includes interestbearing debt and debt like arrangements. Net debt is derived from the balance sheet and consists of both current and non-current liabilities such as bond loan, other debt from financial institutions and current and non-current lease liabilities less cash and cash equivalents. Sellers credits, holdback and earn-outs are excluded as they are not interest-bearing.
LINK measures leverage ratio as Net debt/Last Twelve Months Adjusted EBITDA. The measure provides useful information about the financial position. Due to the significant M&A activity LINK use Last Twelve Months Proforma Adjusted EBITDA to calculate net debt to present a comparable measure over time.
Below is a reconciliation of Net debt and Net debt/Adjusted EBITDA ratio:
| NOK '000 | Q1 2022 | Year 2021 |
|---|---|---|
| Bond loan - Principal | 3 593 070 | 3 695 856 |
| Other long term | -0 | -0 |
| IFRS 16 liabilities | 59 7 24 | 61 946 |
| Sellers Credit (interest-bearing) | 64 687 | 66 698 |
| Net debt/LTM adjusted EBITDA | 4,7 | 4.8 |
|---|---|---|
| LTM adjusted EBITDA (proforma) | 619 138 | 619 304 |
| Net debt | 2915882 | 2980882 |
| Less cash | $-801599$ | $-843618$ |
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