Sinch AB (publ)

Hello everyone and very welcome to CINCH Q1 2026 earnings presentation. My name is Simeon Nordlander and I am Cinevice President Investor Relations and Sustainability. With me here in the studio today I have our CEO Dorinda Pang and our CFO Jonas Dahlberg. And today you will hear them present the quarter. Thereafter, we will have time for questions. And if you have a question, you can dial into us here. And if you use the telephone, please remember to press star 11. Would you like to withdraw the question? Do the same. Press star 11. You can also send your questions directly here into the chat. So once again, very welcome to this presentation. I hand over to you, Lorinda.

Thank you, Mia. Good morning, good afternoon, good evening, wherever you are in the world. We very much appreciate you joining us here today. I think before we start going into Q1, which I'm very excited about, and I can't wait to talk to you about that today, I thought we'd start by just talking about the leadership transition that we announced here this morning. And that is that I have shared with the board my intention to step down as CEO of Cinch by the end of this year, by the end of 2026. This is very much a looking forward decision, and it's with great pride that I reflect, actually, on the past three years. When I joined the business three years ago, Cinch had grown substantially through several acquisitions that had quadrupled the size of the organization. And with that comes a lot of complexity, but tons of opportunity. So when I started as CEO originally, I was asked or I was given a mandate to do a couple of things. First was to stabilize the business. I was also asked to integrate the business and also to make sure that we were protecting profitability and improving profitability and ultimately to return the business back to organic growth. And I'm really pleased to say that this team, this Cinch team around the world, has delivered on a lot of that. We're in a very strong position today. We moved from acquisition silos to where we are now when we show up as one Cinch to our customers. We have delivered the highest profitability of the company's history, and we have reignited organic growth. So all of those are extremely strong signals of what the future has to come. And again, I'm both proud and grateful to the organization. So we have momentum in the business, and I'll talk to you a little bit about that here this morning with regards to our Q1 results, but also what we're seeing in terms of leading indicators. We are operating from a position of strength. Today's world of agentic, the agentic economy and the AI economy, Cinch is extremely well positioned to be a winner in that world. And again, we'll talk a little bit more about that here today. And also, we have structural tailwinds. So, again, with regards to the AI economy, we think that communication volumes are going to explode. And we're extremely well positioned to take advantage of that and to deliver results. So, this is the right moment with the momentum that we have in the business. Leadership transitions can often be hard. And, however, I think they can actually be very healthy and helpful. And it only happens if it's in a planful way, right? We want to make sure that there's continuity in this business, and I will work very closely with the board to make sure that that happens. Until I leave, though, I want to be very clear that I am in position. I will continue to run this organization with the same level of focus and intensity that that I've brought to the table every day for the last three years. So I look forward to doing that. There's a strong leadership team in place. As I mentioned, we have clear momentum. We have a strategy that will win for the future. And we have been delivering better and better every quarter. And so I think that's a great segue for me to talk about what the results were for Q1. So as I think about the highlights from the quarter, you know, it's really oriented around three areas. One is certainly the financial performance of the business. And Jonas will, of course, go through the vast majority of those details. I want to talk a little bit about the value creation and the return to shareholders and also about innovation, which is where I'll spend the majority of my time here with you this morning. We had strong growth and, again, strong momentum coming into this year. So America has delivered very nicely, and they have clear opportunities ahead to continue with the momentum that they've delivered in Q1. At a total company level, we delivered 3% organic revenue growth. And as you know, we do have FX headwinds, so I will always speak in organic terms because that is really the proof point of the underlying health of the business. So revenue growth organically was 3% year over year. Gross profit growth organically was 5% in the first quarter. Adjusted EBITDA growth was 10% in the quarter. And EBITDA growth was 18% year over year in the corner on an organic basis. Now, that EBITDA growth is impressive, and it certainly came through with regards to the actual performance of the business, but also we had less restructuring and integration costs given where we are in our transformation. So all very positive signs from a financial metric standpoint. The second piece is, and I'll touch on shareholders first, which is we've continued the buyback program through the first quarter. And you can read all of the details. But I would highlight the fact that since July, since we launched this program initially, we have repurchased 15% of the outstanding shares for Cinch. And what that means is that our EBITDA per share metric has increased by 15% year over year. But when you normalize for FX, because again, reminder, we have lots of headwinds given the fact that the majority of our business is denominated in U.S. dollar. With those FX headwinds, when you normalize for those, that EBITDA per share metric actually is 27%. So it is incredibly powerful and meaningful and something that we're very proud of. The last piece I want to highlight from the quarter is around innovation. And I'll talk more about this as we move through my material here this morning. But we released two specific innovations and product capabilities to the market. One was around agentic conversations, which allows... organizations, companies, enterprises to bring their own AI agents to Cinch across all of our channels of communications, voice, messaging, email. So we brought that to market earlier this year in the first quarter. And then secondly, we announced voice relay. I'm going to talk a lot more about voice relay in a moment, so I'll leave it at that for now. This is just a reminder of the value creation agenda that we put in place roughly about two years ago. And it's oriented in three different pillars. One is growth reacceleration, right? We wanted to make sure that we have profitable and sustainable growth. The second pillar is around margin expansion. What we said we would do is we would reshape the business and reshape the product mix so that we can continue to expand margins. And then finally, we always talked about capital allocation. We're in a position of strength given the cash generation has been very strong for Cinch and will continue to be strong. We are developing very well against our midterm financial targets that we communicated two years ago. But the strategy that we've put in place, and it's oriented and grounded in our winning strategies, how do we go to the market and win and compete, actually has to translate into something. And so I want to talk to you a little bit about the commercial momentum that we're seeing. This is where strategy is actually coming to fruition. What you can see across this chart is several multimillion dollar deals and wins that we had in the first quarter. This chart demonstrates a mix of new logo wins, existing customers where we have expanded with them, and then also some partnership capabilities where, you know, we think that partnerships are incredibly important in this entire ecosystem. The other thing I would point out on this slide is that these winds demonstrate momentum across the regions and, importantly, across all of our products. But there are several in here that I want to call out. I told you that I'll talk a little bit about voice relay and the strength of our voice capabilities. But I want to call out the fact that you have one of the largest hyperscalers in the world. You have one of the largest carriers, U.S. telecom carriers in the world, and one of the world's largest hospital groups who have done deals with us in the first quarter to take advantage of our voice infrastructure, because quality matters when you're communicating via voice. These large organizations recognize that, and I'm going to talk about that in a minute in terms of why Cinch is extremely well positioned to be able to take advantage of this moment in time that we find ourselves in. Just a quick example is a customer called IHG. IHG is a hotel. It's the International Hotels Group. They represent and own brands like the Intercontinental Hotel, Kimpton Hotel, Holiday Inn. They have 6,800 hotels across 100 countries. So a large organization that's very global. Their membership, their loyalty membership is over 130 million members. So quite a large group of people that they need to communicate with. This is obviously a highly competitive industry, and loyalty in the hotel industry is won or lost in the customer experience. You know this when you go to a hotel. You want that experience to be very powerful, and you want to be able to communicate with whoever your hotel is in a clear and consistent way in the way that you want to communicate with. So IHG is a huge brand. Like I said, it's global. But the reality is they were dealing with a strategic risk, which is that their communications platform was built on a legacy environment, infrastructure that was built for, quite frankly, an era gone by. And so they needed to modernize to be able to deliver the customer engagement and the customer experience that they wanted to help deliver to their customers ultimately. So in walks Cinch and in walks Genesis. You have these three brands, IHG, Cinch, and Genesis, coming together to create a new experience for these loyalty members. So you know who IHG is. I just introduced them. Who is Genesis? Genesis is one of the world's largest contact center solutions that's cloud-based and cloud-native in the world. It's one of the highest ranked contact center solutions also in the world. So they're the third leg of this stool. Genesys comes to this and brings the platform itself. This is a powerful platform. It scales. It's secure. It's agile. It helps IHG start to innovate in terms of how they communicate with their customers. But Genesis admits that their powerful platform is only as good as it is the connections where they can connect to the outside world. And if you give me a moment here, I want to read a quote from a Genesis executive, which said... or who said, Cinch acted as the central nervous system or critical link with robust voice services and all communications channels to bring the solution to life where others had failed in the past. And the reason why I read that quote to you is because this is exactly who Cinch is. We are the trusted infrastructure for communications channels, whether it be voice, messaging, or email. So voice relay, how do we make voice AI actionable? And if you think about where we stand in this transformation, this technology transformation that we're experiencing currently, you know that most AI work is text-based today. You've probably seen some of the reports and lots of the articles that come out to say that, is AI really real? Is it really going to deliver for enterprises? There's a lot of pilots that never make it into production, and they call it AI purgatory. We actually don't see it as that. We actually see quite a lot of pilots moving into production. But what we do see, and we've done this research, is we see three quarters of those production deployments having to be rolled back because they're not effective. And the reason half of those are being rolled back is because the communications infrastructure that they've deployed this AI on is not purpose fit for the real world. Why is that? The world is complicated as it relates to communications. They, you know, no matter where you are in the world, you have regulatory requirements, you have compliance requirements, you have lots of carriers to negotiate and deal with, and all of their technology is complicated. So Cinch has built an infrastructure that is well poised to be able to support any enterprise who wants to deploy AI in their ecosystem. So today, AI is mostly text-based. However, voice continues to be an extremely critical, vital channel for enterprises to be able to communicate to their customers. But voice is complex, and quality matters, latency matters. Now, I want to explain to you exactly what voice relay is, but rather, I think we should just show you a demo so that you can see it in action.

Sophia has a problem with her Fresh Dash account. When Sophia calls customer support, she's not thinking about AI. She just wants help, quickly, without repeating herself. Behind the scenes, Alex is responsible for making sure customer issues are resolved quickly. Bad support experiences are memorable.

Hi, I'm calling about my order status.

I can help with that. What is your appointment date?

I said order status.

Sorry, can you repeat your request?

This is what it sounds like when the pieces don't fit. Latency kills the conversation. Wrong context frustrates the customer, and they hang up. That one bad customer support call can lose a customer for life. But there's a better way. Alex makes sure this doesn't happen for customers of FreshDash. Alex uses Cinch Voice Relay to build a support experience that keeps customers happy. One interface to connect the entire voice chain, transcription, reasoning, voice, and logic. You choose the components, your speech to text, your text to speech, your agent. Need custom logic? Drop in a function like routing a complex issue to the right specialist with full conversation history. Cinch connects it all. For the voice, Alex chose 11 Labs. Listen to Rachel.

I'm Rachel. I can represent your company.

Alex selects the agent builder. Critical. How fast does it respond? We test latency. Fast enough for a natural conversation. Or Alex could simply plug in OpenAI. Your choice. Now the chain is complete. Speech to text, agent, and voice, all linked.

Hi, I have a billing question on my account. I can help with that. Do you have your account number handy?

Her voice is transcribed, the request is understood, and the response comes back smoothly, without awkward pauses or dropped context. This is what a conversation is supposed to feel like. When Sophia asks something more complex, the conversation doesn't stall.

My delivery was delivered to the wrong address.

A small piece of deterministic logic runs, pulling the right context and routing the call to the right specialist.

Hi, Sophia. I'm Dan, a customer care representative at FreshDash. I can help you with that. Let me check the conversation history.

No restarts, no repetition, just continuity. And Alex can see exactly how the system performs, where time is spent, where handoffs happen, and where conversations succeed or need tuning. In support, trust isn't about the cheapest call. It's about speed, context, and getting the right person when it matters. Cinch, powering trusted, intelligent customer service.

So what you just saw there was a great example of how AI is really kind of changing the world in which we live. And before I hand over to Jonas, I just wanted to say that Cinch is giving AI a voice in that example and that demo that you just saw. AI is changing the way the world communicates. Cinch is extremely well positioned to be able to take advantage of that. We've been building infrastructure for the last several decades to be able to be ready for this point in time. The example you just saw is the voice infrastructure, but what you also started to hear in that demo is the fact that context matters. Latency matters. Quality of service matters. The ability that Cinch has across all of our channels of communications, not just voice, but across messaging as well as email, carrying that context through is an incredibly important capability for enterprises to be able to deliver the experience that they need to deliver to their end users. So with that, we're giving a voice to AI. Jonas, let's talk about the financials.

Thank you so much, Lorinda. So exciting times, Cinch powering the world of AI communications. And let's talk about what you think is a very solid quarter. So starting on top line, we're returning to organic net sales growth, which we are very happy about. 3% year over year. organic. In addition, what we have, which is very solid, is an acceleration of our organic gross profit growth to 5% in the quarter. And the engine behind this is Real Americas, both on top line and on gross profit growth. So we're going to talk more about that. And it is voice. It's our innovative voice offering that also contributes significantly to the GP growth. Now, no surprise to anyone, everyone in this quarter has a lot of FX headwinds and so do we, given our exposure to the US dollar and the American market. So in the quarter we have actually FX headwinds of 11% on sales and 13% on gross profit. But we're going to focus on the organic numbers. So that's the underlying strength of the business. All right, let's talk about the regional performance. Again, the engine is Americas with 65% of the gross profit in the quarter. And on top line here, really what's strong is the API business. The API business grows double digit. And the API business is what connects us with our customers. customers applications, and if it's a partner, their customers applications. And increasingly, this is where you will see AI natives and AI applications connect with Cinch. So 10% top line growth coming from API in Americas, very strong. And then looking at GP, 7% growth in the quarter for Americas. And here we see contribution from all product categories, but in particular, we see very strong growth from the network voice business. and this is driven by a bit of growth but most importantly we're shifting transmission technology from legacy tdm to ip and this provides significant cost savings Also, what contributes in the quarter to the performance are wins from last year. And we were very happy about wins we also have this quarter. It's in all relevant and important sectors. It's tech, it's financial services, it's retail and it's healthcare, as Lorinda mentioned earlier. And with those wins, we also are looking forward to continued positive development for Americas in combination with continued rollout of IP technology. Looking at EMEA, this is 22% of gross profit. It's really a story about stability. Yes, we see a slight decline due to continued phase out of these fixed priced operator contracts. But on a sequential basis, it's actually stable. So it's more the comps. And we expect this to be stable going forward, even though you can never give any guarantees. And combine that with the positive development we see in applications and also We have a new leader here, Jonathan Bean, that will reposition EMEA for growth. We're also confident about the future development for EMEA. Moving on to APAC. Here we have a decline on net sales of 5% organically and 10% in gross profit. This is predominantly about India. Tough market. And in addition, we have a revenue adjustment due to a dispute with a client of 20 million SEK, which trickles down, of course, revenue, GDP and all the way down. We also have a bit of an impact on operator costs in the application segment in Australia, but also when it comes to APAC, we think it's a very stable business with some challenges in India. Now, looking at India, it's worthwhile to remember that India is a low single-digit percentage of the business, so the downside for the group still is limited. So looking ahead, we are positive about the full year outlook. We've said that we expect the second half to be stronger than the first half. And we believe that because of the momentum we see in Americas with the contracts that we just won being ramped and continued development of this shift into IP technology that will support profitability. And also some of the difficult comps we have in both EMEA and Americas rolling off. So that was regional performance. Let's look at overall profitability. Group gross margin essentially unchanged compared to last year. A slight sequential drop. And this is a combination of positive development from Americas, predominantly the voice business with the technology shift and lower cost. And FX headwinds, which are transactional. And this is worthwhile talking a little bit more about because we usually don't mention our transactional effects because they are minor. But if we have material and also rapid movements in FX, we may have also transactional effects. This comes from revenue in US dollar and contracts priced in US dollars, where we have traffic costs in other currencies, predominantly then, of course, for our American clients. And this has an impact on gross margin in the quarter of 0.8 percentage points. But overall, stable gross margin, and that also then trickles down to stable adjusted EBITDA. We're going to talk more about EBITDA in a bit. But what's positive here is you see an uptick in unadjusted EBITDA since we have lower adjustment items, and that elevates the unadjusted EBITDA margin. So quite tight now between adjusted and unadjusted EBITDA. So let's look closer at the cost development and EBITDA development. And again, lots of FX here. So we're going to talk about the organic numbers. And what you can see here on the left hand side is, you know, very disciplined cost control and adjusted OPEX increasing below inflation. And this is due to a combination of lower G&A costs, but some reinvestments of those cost reductions into growth. And what I mean with that is investments in sales, marketing and product development. And if you combine this disciplined cost control with the gross margin, gross profit expansion that is, we have a very nice pop to organic adjusted EBITDA, which is up 10% in the quarter. And as I said, we also have lower adjustment items. Most importantly, lower adjustment items on transformation cost, and what we mean with that is integration and restructuring cost, which is down 60% in the quarter, and hence unadjusted EBITDA is actually up 18% organically, and the nominal numbers actually beating the FX effect, so also nominal numbers are up here, which we think is very positive. All right, let's talk about cash flow. Cash flow in the quarter, positive, plus 375 millions. And we are very happy about that. Typically, Q1 is seasonally challenged when it comes to cash flow. In particular, given the strong cash release we had year-end. This is strong. And this provides a positive development also to cash conversion LTM, which is now at 54%, which is ahead of our guidance and ahead of the average over the last four years that has been 50%. So positive development on cash flow. Working capital within normal variations. Networking capital essentially nil. So that's very positive. What I want to remind everyone about is that working capitals may swing. So you may see a quarter or so where we have some working capital swings impacting cash flow. But then I want to remind everyone about this very solid and consistent cash conversion over time. So with solid cash flow and a strong balance sheet you can repurchase shares and that is what we have done. Since Q2, when we initiated the share buyback program, we have repurchased 15% of the outstanding equity. And in addition, we have also, through a swap agreement, repurchased a bit more to the LTIP program we have, to not dilute shareholders. So in total, outstanding shares is down 16% in a few quarters. And this is obviously very positive for shareholders, we believe. And what you can expect now going forward is continued share buybacks. But the board does not want to push leverage any further, even though we are clearly within our financial target of net debt to EBITDA being below 2.5. We're at 2.0 right now and we have sufficient liquidity available for more buybacks. We don't want to push leverage further, but you can expect buybacks to happen in line with free cash flow, maintaining leverage if the board believes that it's in the shareholders interest. Now, Lastly, before handing back to Lorinda, Cinch was listed 2015. We now have 10 full years of performance and it's worthwhile reflecting on that performance. And it's a very positive story. So looking at adjusted EBITDA per share, we have returned on average 29% since IPO, which we are very proud of. As you can see, this is a combination of organic growth and the major acquisitions that happened. We had a couple of years of integration and consolidation, but now we're back to growth. And with the buybacks we have done, this also gives a very good kick to adjusted EBITDA per share. And adjusted EBITDA per share is up 15% on LTM basis. But as Lorinda started, there is significant FX effects in this as well. So in fact, if you adjust for the FX effect, we have... an increase of the adjusted EBITDA per share with 27%. Which we're very happy about and it's lined with the historical average. And with that, Lorinda, welcome back.

Thank you, Jonas. Appreciate all that good detail, fine detail. Before we open up for questions, I wanted to quickly summarize, and that is that Cinch is in an extremely strong position. I mentioned earlier in this world of AI, conversations are changing. And the way in which conversations happen is changing. What's important in those conversations is changing. Cinch is the infrastructure, the trusted infrastructure to be able to enable all of those conversations and those communications. We have momentum. We have a clear strategy. We have a strong leadership team. And I think that we also have a significant opportunity ahead. We have structural tailwinds that, you know, we plan to take advantage of. So with that, we're in a good position. And I'm very pleased to be able to talk to you today and take your questions here with Jonas.

Thank you very much, Lorinda. Thank you, Jonas. It's time for questions. Once again, if you want to use the telephone, please remember to press star 11. Same if you want to withdraw your question or send them here to me in the chat. So let's start. Let's see who we have first on the line. We have Erik Lindholm Røystål from SEB. Good morning, Erik.

Good morning. Thanks for taking my questions. So I just wanted to start by asking about the improvement in network connectivity. How much of this is sort of driven by the switch to IP infrastructure? And how much would you say is driven by better demand around voice? I'll start there. Thanks.

I'll let you go through the particulars, but I would just say that it's both. That's the easy, finite answer. The reality is we've been working on this network transformation for the last several years. It's been an important part of our strategy to ensure that we generate cash out of that asset. And in addition to that, we now find ourselves where voice is... dare I say, sexy again. And what I mean by that is, again, voice is a critical and complex channel, and it is incredibly important in the communications to customers at the end of the day.

If you look in the quarter, the improvement is a combination, but it's predominantly from the cost savings. However, what you'll see going forward, given some of the wins we've had, is also actually continued growth in the voice business. So the services we provide within AI voice and enterprise voice, they get consolidated into the network voice segment, even though it's... you know, more than the traditional voice service.

Right, great. And as you said, I mean, voice really picking up interest here as Twilio is showing strong growth in that segment as well. And I just want to ask, I mean, you spoke about voice relay at length and it's an interesting product. I mean, have you seen any customer wins on that specifically already now?

It's a new product for us, Eric. So we don't have anything to announce at this moment in time, but we do have a lot of interest from the enterprises.

Okay, great. And then just on the contract signings in the U.S., several new significant contracts, as you said. I mean, was this a key driver here already in the quarter, or should this sort of contribute more in the coming quarters? Thank you.

Yeah, so the deals that were signed in the first quarter actually had very little impact on the financial results in the first quarter. So those are forward-looking. And as Jonas said, we do see that contributing to the go-forward growth.

All right, great. And maybe a final question for me. I mean, Twilio mentioned RCS doubling here sequentially in Q1. So what share of your volumes comes from RCS now? And do you feel like there are sort of incremental use cases that are being launched around RCS, or is this mostly cannibalizing on SMS volumes?

Thanks. Yeah, no, also a great question. And we didn't spend a whole lot of energy today talking about RCS, and we have in the past. We are very bullish on RCS. We continue to be. We think it is a really important capability as conversations change and become more advanced. in this world that we find ourselves in. The volumes are low, though, in comparison to our overall messaging volumes. So it's not something that we could report on to say it's any material impact yet. However, volumes continue to increase. We're continuing to see new use cases. And interestingly enough, we're starting to see more traction in the U.S. In the commercial momentum slide, though, we specifically called out with an Asian hyperscaler e-commerce company where we're deploying RCS for them in other parts of the world. So it's very geographic based at this moment in time, but we're seeing traction start to build.

Okay. Thanks for the clarity.

Thank you. Thank you. And let's look at the second one in line. That is Daniel Torsson from Nordea. No, sorry. Yeah. Yeah. ABG. Sorry.

Yes. Thank you very much. Can you hear me? Okay, perfect. So just the first one to Jonas here. You said the outlook for second half is to see a stronger growth than in the first half. Is that organic GDP growth you referred to, I guess?

Correct.

Perfect. And then I have a question on investments and OPEX here. Given the solid growth momentum and tailwinds in the market, you elaborate on here very well. Do you think that we will see OPEX expansion in a different way today, like we are seeing a return to growth mode again and maybe headcount growth in the latter part of 2026 or potentially into 2027? Or do you see that you can scale the current organization meaningfully before that is needed?

What we've said, and we will stick to this, is that we are within our profitability targets and we will prioritize growth ahead of further profitability improvements. So, yes, we may... invest more in OPEX to further stimulate growth. Having that said, we're turning every penny to be as efficient as possible. So we will maintain a very disciplined cost focus.

Okay, that's clear. And then the final one on M&A opportunities, you have been very active on buyback here, obviously, but now you're up to two times leverage. And you say that you don't want to go above two and a half, and we also have a change of CEO in the coming six to nine months. Should we expect a muted M&A discussions with potential targets, or are you doing that work in parallel at equal pace as before?

We continue to look at M&A opportunities. Again, if we execute on M&A or buy back our shares, very much depending on what we think is best for shareholders and obviously what's best strategically. So we're ready to execute on bolt-ons. And when it comes to more transformational deals, They come when they come. You can't really just time them at your own discretion. It requires two to tango to make that work. But we're definitely looking at M&A as well.

Okay, I see that's clear. And maybe if I can take a last one on the Americas, you said around year end or in Q3 that you saw a price competition in terms of like traditional SMS volumes in the Americas. Has that faded or is that behind us now, given the solid growth rates you report?

I think that is honestly a misunderstanding from earlier. What happened was we had one particular customer loss and maybe we used the wrong language around that. And that is what leaves us from the comps starting now Q2. And what we see is a fairly stable development when it comes to the price levels actually.

Okay, very clear. Thank you.

Thank you. Let's take the next question. Then we have Thomas Nilsson from Nordea.

Hello. Yes, hello. Yes, thank you for taking my question. With fixed price operating contract headwinds announced to have limited downside, what needs to happen for EMEA to return to positive gross profit growth?

So quite frankly, the first is just to make sure we have stability in this fixed price operator contract. And two thirds is gone. It's only one third of those contracts left. And we see stability. And then with the commercial momentum we have in EMEA, we expect EMEA to return gradually to modest growth coming quarters. And then we have a very strong position in EMEA it's our home base we have a strong market share so we're also confident when it comes to EMEA but it takes some time to build that momentum Jonathan is new and you know again we're positive about it

Very positive. And I would say, yes, Jonathan's new in the role, but Jonathan is not new to Cinch. He's been here for seven years as our chief marketing officer before this role. He knows this industry extremely well. He's well known in the industry and he's well known in the market. So he was absolutely the right choice. And he is coming into this position with a tremendous amount of urgency and energy. And, you know, he's actually in market right now meeting with his teams and with customers. We believe that there's a lot of opportunity here in the market. And we're excited to see, you know, him in action and delivering results for us.

And one final question for me, if I may. You are well known to be bullish on RCS. Could you talk a bit about your expectations for gross margins for RCS as compared to traditional SMS, even though RCS are small volumes but growing?

Yeah, I think our expectation on margins is what we've always said, which is the traditional SMS replacement in RCS, the margins won't shift very much at all. What gets exciting with RCS is when you start to move into the two-way conversations, the rich media, the more complex use case, particularly as it relates to marketing, that's when margins will expand. We see that position happening geo by geo or geography by geography. So we have a lot of traction in Brazil and India, as an example, because those consumers are very used to interacting through these sorts of channels, to do commerce through these sorts of channels. it's slower uptake in some of the other markets like the U.S. So right now, RCS in the U.S., I would say, is probably more of a one-for-one comparison to the traditional SMS margins, where we have it in other places that are in the higher kind of value aspect of RCS. We do see a bit of a higher margin.

Okay. Thank you very much.

Thank you. I think we're going to take the next one then. And that is Daniel Jurberg from Handelsbanken. Hello.

Hello, Mia. And good morning also, Lorinda and Jonas. Sad to see you leave, Lorinda, but glad that you'll stay on for a while at least. I would like to start on asking, I know it's a tricky question perhaps, But you have organic growth in API platform, also in Americas, driven by messaging and email business, you write. But is it possible to give a ballpark range of this underlying FX adjusted organic growth in Americas with regards to the API platform, if you adjust for this large customer? And also, when should we expect this to be annualized, the effect of this customer?

So are you referring to the loss we had in Q2 last year, leaving the comps? Is that one?

Yes. Yes, yes. And you're right about this. So I guess Q3 will be this in full out. But is it possible to give some kind of, you know, range or whatever on the growth itself underneath this?

Yeah, it's... Well, I can say it's a meaningful part of the API business. So... I don't want to give a precise number, but we're talking a couple of percentage points at least.

Thank you. That's good to know. And would you, Jonas, also, I would like to ask about the provision for the taxes. It was 700 million made in Q4, I think. I think you utilized some 33 million in the quarter, but you will have some 200 million for this year or for the coming 12 months, I guess. And some 468 million left for further ahead. So first and foremost, should we expect the similar facing on a cash flow perspective? as we have seen so far, and will this 199 million hit the full cash flow in 2026? Just to understand the cash flow impact.

Quite frankly, this is very difficult to estimate when this will happen and also to what extent it will happen. What we believe is that the provision we have on this tax item is sufficient. But this relates to fairly complicated indirect taxes in a global environment. So timing and exactly where this will land is uncertain. But we're confident that we have a sufficient provision.

Super. And so we shouldn't expect any reversals at least. So more that it's sufficient, 700 million in total still. Yeah.

So, you know, reversing this will happen if we have more clarity and we don't have that clarity. If there will be a reversion.

Yeah, and I will ask the last question to Lorinda then on your part of the Ericsson Juno program, you know, reselling network APIs functionality. Early days, obviously, but my question is, do you see any progress so far in this, you know, reseller business of of new standardized network APIs available so far?

So we believe in network APIs very much so, particularly the transition around verification specifically. As it relates to the specific partnership and agreements that you've called out, I would say we see limited traction.

Perfect, thank you, and good luck to you too, Herren.

Thank you. Thank you. Let's go to the next one in the queue. And that is Predrag Savinovic from DNB Carnegie. Hello.

Hi, good morning, guys. Thanks for taking my questions. I'm sorry to see you go, Lorenda. Congrats to everything you achieved at Finch and best of luck to your future endeavors as well. Thank you. I also wanted to ask a few things about the contracts you announced today. I think historically when you land a large deal, the ramp-up phase is typically quite long, at least 12 months. But here it sounds like this is going to go quite quick. What is different this time, would you say?

I think it actually ranges, Prajag. I think, to your point, we've had slower ramp-up when we've had large, large messaging deals. Part of the transformation that we've been going through over the last couple of years has had a focus in on time to revenue, meaning, you know, how do we put policies and process and tools or systems in place to accelerate the revenue recognition and the actual time to value for customers? There's still plenty of opportunity to grow there. I won't claim victory entirely on that, but we have made progress. And so we're definitely better today than we were a few years ago. That being said, there are other parts of the business that do turn up much faster. Email is a good example of that. In the smaller end of the business, when we have large customers, you know, we have to soak it in. So, again, I would say it's a range. Our point earlier when we called out the fact that this commercial momentum will have, you know, meaningful impact in the second half of the year, you know, it gives us that flexibility, right? We still have seven months, I think, left in the year. That gives us flexibility to fully ramp those customers. But it ranges.

Thank you. And how were they sourced? Have these customers, for example, been customers on the messaging side before? And has this helped you win those deals based on historic collaborations and so on.

Sure. So the wins on that page or that slide talk about three different variations. One is new customer wins, so they're new logos, new relationships to Cinch. Then there's the expansion with existing customers, and then there's a third category through partnerships. I called out the IHG partnership, deal very specifically because that's a partnership deal with Genesis. But really why we have traction in the market is because of the go-to-market transformations that are finally starting to execute. Last year when we talked about, well, I'll go back even two years ago when we started this process, I talked about the pain in the system because we're bringing together multiple organizations We move from seven or nine CRMs, if memory serves correct, to one now. So there's been a lot of integration and transformation on the go-to-market side. And so last year, I started speaking about pipeline and some green shoots or some leading indicators. What you're seeing now is that actually translating into revenue and gross profit.

Very good. And then on the sustainability of organic growth in the Americas, can you elaborate a little bit on that, considering how well you do now at the start of Q1, how 25 progressed? One thing to be potentially cautious about would be growth pains then.

Yeah, yeah.

Growth fatigue.

We have big ambitions, and as does the market leader and her team. You know, they're really pushing themselves to do more. A couple of things that give us confidence. Number one is certainly the trajectory into Q1. You know, Q1 results is as a result of deals and execution in the second half of last year. The new wins in Q1, which have not shown up in revenue and gross profit yet, but will by the second half of this year. The other piece that Jonas has called out a few times here is there was a big negative last year in the Americas because of this one customer loss that we had in the second quarter. that will disappear from the comps in mid-second quarter. So certainly by third quarter, it's completely out. So those are really the aspects that give us confidence.

And adding to that, when it comes to growth pains, we have a very scalable platform, so I wouldn't expect growth pains.

Okay, that's very good. Thank you very much.

Thank you. We have many questions today. Let's see who it is next. That is Victor Högberg from Danske Bank. Good morning.

Good morning. So just wondering, given the momentum and cost optimizations, could you just help us with your expectations about the group cross-margin trajectory over time, not just this year, but say three to five years out versus the current level?

Yeah, that's a good question. And I wish I had a precise answer to that. So what I can say is, if you looked at last year, we had a gross margin expansion because of mixed shift towards, in particular, email, which is a very profitable product for us. I expect to see further gross margin expansion. Now we have a temporary setback because of FX. And that is an unknown swing factor, of course. But we are positive about gross margin. So I guess that's what I can say. But it is a little bit of a million dollar question as well.

Are you there? We might have lost him. Can you hear us, Victor? Okay, we're running out of time, so we need to take the next one. We have on the telephone queue here. And that is Deep Shikha from Goldman Sachs. Good morning.

Hey, good morning. Thanks for taking my questions. I think a lot of the questions are already answered. Just one on APAC. I think obviously there's been, you know, like the thing on SMS called out in India and then APAC also there have been pricing pressures. So please, can you just give more details around the dynamic in that region? And as the comms get easier through the year, how should we be thinking about, like, you know, the growth progression in this particular region?

Yes, so there are three parts to APAC. It's India, it's the Australian applications business, and then it's basically the rest of Asia. So let me pick that apart. So India is tough. But India is low single-digit percentage of group gross profit. So whatever happens, the impact on group will be limited. We are working to turn around India and put India back, firstly to stability and then to growth. I mean, India is an amazing market. It's 1.4 billion inhabitants, 1.1 billion subscribers. So we want to be in the game, but it is a competitive market. When it comes to the application business in Australia, we've had increased traffic costs. We don't expect that going forward, so that's what hits the GDP growth. We have a very strong position in this business, but it's not really a growth engine. Where we see most growth is in the API business in the rest of Asia, basically. Now, that had a very strong growth last year. We've had a bit of volatility in that, but we believe that's where you can expect growth going forward.

Thank you so much.

Thank you. We have a few minutes left. A few questions from the chat about fixed price contracts. Can you quantify what the residual headwinds is and when you expect the region to return to positive growth? Inemia.

So the fixed price contract in EMEA is around 10% of EMEA now, the remaining part, and we believe that will be stable. So that translates also to low single-digit numbers of total group GP. I don't want to give a precise outlook on when EMEA will be back to growth, but we have wins and we have stability in the rest of the business. So we will see growth eventually.

Good. And the last question we have time for today is to Lorinda. Why are you leaving Sinch?

I, listen, I've thought very deeply about this and I think it's important that, you know, businesses, teams, they require different leadership for different points in time. And over the last three years, I believe we have delivered on the mandate that I was given, which was to stabilize the business, to integrate the business and to make sure that we were profitable and return to organic growth. We've done those things, and I'm extremely grateful and proud, like I said earlier, to the cinchers, as we call ourselves, to the cinchers around the world. I think people have worked very hard to move from a lot of standalone silos to one cinch. They've worked really hard and taken sacrifices to protect and improve profitability and deliver our highest profitability. And you can see today that we've reignited organic growth. And so it's a fantastic platform. We've built the foundation and, you know, the next leader is going to be able to build off of that foundation and take Cinch to the next level. And I'm excited to be a part of that journey. I'm fully supportive while I'm here. And while I'm not here, I'll be, you know, the biggest cheerleader for the organization on the sidelines. But it has been my honor to be a part of this journey.

Thank you, Lorinda, for your fantastic contributions and leadership. And thank you, Jonas. It was what we had time for today. We will be back here for the Q2 earnings presentation. It will be 22nd of July. If you have questions, feel free to reach out to me and our department. We are very happy to help you. Thank you very much for listening in and goodbye.