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Good morning, and welcome to the first quarter results presentation for LINK Mobility. I'm Tom Rogn, Head of Investor Relations. I'm joined by Guillaume Van Gaver, our CEO; and Thomas Berge, CFO, who will present the results.
Following the presentation, there will be a Q&A session. Please refer to dial-in details in the stock exchange release. It is also possible to post questions during the presentation and Q&A. Guill?
Thank you, Tom. Welcome to all of you, and thank you for joining this presentation for the first quarter 2022 results. As you know, LINK Mobility was founded 20 years ago, and we've been consistently delivering on revenue growth and EBITDA growth. If you look at the last 3 years, we've achieved a CAGR of 18% on the revenue side and 26% on the EBITDA side.
We are now operating in 19 countries, and we will continue to expand. Over the last 12 months, we've reached NOK 4.7 billion of revenues and NOK 619 million in adjusted EBITDA.
So let's take a deeper look into the first quarter results. Our revenue grew by 24% to NOK 1.174 million, more than NOK 1.1 billion. This represents a 15% revenue growth in fixed currency on an organic basis, supported by larger contribution from Global Messaging. If you look at the reported gross profit, we grew this by 30% to reach NOK 322 million. This margin expansion is explained by a stronger contribution from Message Broadcast.
If you look at a more deep level from an organic standpoint, our gross profit grew by 9% compared to first quarter 2021. Our adjusted EBITDA has reached NOK 142 million, which is 30% year-on-year growth with an EBITDA margin of 12.1% as compared to last year's 11.5% due to the same higher contribution from Message Broadcast. And if you look at an organic adjusted EBITDA in fixed currency, we grew EBITDA by 8%.
It's great to see also that we are gaining commercial momentum, and we will go deeper into these numbers later in the presentation. But we have signed 753 new agreements in the first quarter, both from existing and new customers. This will secure significant new revenue growth and also future growth potential.
Also, a very interesting point to highlight in the first quarter of 2022 is that we are expanding our business with large IT hyperscaler of the likes of [ GAFAM ] as we also call them. And this is explained by a stronger product offering with Tismi, and we are now able to expand in this segment, which also offers significant growth potential from a revenue and also from a profitability standpoint.
So let's look into deeper details the performance of the first quarter. First of all, the go-to-market expansion that we have presented to you has actually made significant progress. If we look at all of the investment that has been made in that field over the last 2 years. We are now seeing this as a real competitive advantage to be offering complex and advanced solution still with a very local focus, serving customers in local languages, helping them to implement new solutions into their IT solutions.
We have also rolled out a deeper and wider sales culture across LINK using common CRM systems, measurements and incentive plans. If we look at today, for instance, more than 2/3 of all the sales team involved, I think, Mobility across all of the 19 countries are actually presenting both A2P offering, but also CPaaS offering, and that's a significant increase as compared to last year.
If you look at the value and the forecasted value of the new agreements signed, we are making great progress as this 37% growth in the graph is showing us as we are planning with a 75% assumption of implementation of those new signed agreements in our P&L in the next 12 months, NOK 24 million as compared to NOK 18 million a year ago.
What is very exciting for us to see is that we are growing the A2P segment by 21%, which means that A2P is still growing for LINK Mobility. If you look at the forthcoming gross profit with new contracts signed. But also, we see the expansion and the significant expansion of CPaaS, reaching now NOK 5 million and a 159% increase as compared to the first quarter of 2021.
To summarize this slide, LINK Mobility is making great progress in go-to-market and will bear the fruit in our P&L going forward. Also very exciting to see that we've made smart acquisitions, which enable us to provide a wider product offering. As an example, for all of the conversation flow solutions and chatbots, we can see increased demand of our new products and offers. As an example, we see that companies are asking us to move from A2P one-way messaging to conversational messaging regardless of the size of the company.
We offer chatbots and also conversation flow solutions for small and medium companies, which can be done with a simple-to-use GUI, which enables them to build the conversation flows. For medium-sized companies with the now advancements we see on chatbot you can see the size of this market and the forecast up to 2026 with a 35% CAGR. We can see that medium companies are actually using AI and LLP chatbots in order to automize, for instance, Q&A on their website. And they do this from a LINK Mobility standpoint because we offer the conversation flows and the chatbot solutions.
Also for larger companies, and we serve very large companies, we have the technology now to serve them in order to create those conversations in the LINK Mobility CPaaS ecosystems without having to implement this deep into their own IT solutions.
To summarize also this slide, we can see that LINK Mobility through the expansion and the further M&A that has been done in 2021 is starting to bear the fruit of its positioning towards moving from A2P to CPaaS, and serve customers for wider conversational use cases.
The second interesting element, which you can see on Slide 6, is that we are now also bearing the fruit of the acquisition of Tismi, which was done a year ago, where we can see that large IT hyperscaler are actually implementing our LINK Mobility Tismi solutions. That is also explained by the fact that we've increased the number of countries where we operate with a license, and that is 4 new licenses since February 2021. And we now have an MNO status in 11 countries, which enable us, for instance, to offer mobile masking to those companies and also offer, of course, some of the A2P traffic that they have used historically with onetime passwords.
All of this combined offers LINK Mobility some interesting further growth opportunities that will materialize in 2022 and 2023 going forward. If you look at our customer stock, this is, of course, one of the biggest assets of LINK Mobility. As the country and the also use cases are moving from A2P one-way messaging to CPaaS. We can leverage this important customer base of 47,330 which has been increased due to M&A and also our organic growth where we can see that the S-curve adoption of CPaaS solution will materialize for LINK Mobility in additional revenue streams.
Let's look at the important net retention rate, which we have been able to maintain at 111%. This is in fixed currency, and we can see a slight decrease at group level between Q1 2022 and Q1 2021 due to an unusual churn with a customer having large revenues and low margins with a use case and a case study that is not to repeat itself according to analysis because it's a very exceptional situation.
So on the line, LINK Mobility is able to actually maintain very low churn below 2% to 3% on an annual basis. If you look at the Enterprise net retention rate, we have reached 108% in fixed currency. There is a slight deviation compared to the group numbers due to Global Messaging.
Let's spend a few minutes regarding our forward-looking statement, which remains unchanged. We are confident to deliver 14% to 17% revenue growth for the full year 2022. As expected, there has been strong variation in 2021 in terms of revenues due to lockdowns and reopening of society with, for instance, a strong second quarter 2021. Obviously, this will impact the quarter-on-quarter comparison, but we are confident as LINK Mobility to deliver 14% to 17% revenue growth for the full year 2022.
We expect net retention rate to remain above 110% for Enterprise for the full year of 2022. We also expect a strong increase in our H2 2022 profit as in the U.S., critical event revenues were low in the first -- and the second half, sorry, of 2021. And therefore, this will materialize in higher gross profit levels in the second half of 2022.
As explained also during the last quarter presentation, we have a vibrant M&A portfolio of opportunities to continue our expansion from a geographic and from a solution standpoint, and we will apply strict transaction requirements so that the acquisitions will be accretive to LINK's current valuation, and also delever what the worst remain leverage neutral going forward.
Indeed, LINK Mobility is forecasting to go back to its financial policy, which is close to 3.5% by the end of the year. By 2024, in the long term, we expect indeed to reach NOK 10 billion of revenues, but also 20% organic growth as the S-curve of omni-channel CPaaS solution is materializing. Also from a profitability standpoint, with this expansion of CPaaS and the increased contribution from the U.S., for instance, our EBITDA margin will grow from 15% to 17%.
With that in mind, I would like to hand over to Thomas for deeper details in our financial performance of the first quarter. Over to you, Thomas.
Thank you, Guillaume. Starting with reported revenue. LINK reports quarterly revenue of almost NOK 1.2 billion, a 24% growth, including M&A. Organic growth, excluding acquired entities, is reported at 15% in fixed currency. Revenue from acquired entities amounted to NOK 113 million. The 2 latest acquisitions, Xenioo and Altiria are consolidated in LINK's accounts from January 2022.
Messaging volumes grew 26%, somewhat higher than revenue growth of 24% due to the dilution effect of higher portion of volumes deriving from the low-price, low-margin Global Messaging segment. Global Messaging reports a growth rate of 40% in the current quarter. Higher revenue for Global Messaging was mainly due to increased volumes through onboarding of new traffic to new destinations.
Pro forma revenue growth. LINK has closed 6 acquisitions in the last 12 months. Pro forma revenue growth for all entities, including and excluding the U.S., is presented in the graph at the left, so relative performance in the U.S. and Europe can be assessed. Pro forma figures include financials for acquired entities also before closing.
Total revenue growth, excluding the U.S., is reported at 16%. The Enterprise segment is reported at 12% revenue growth, excluding the U.S. Within the Enterprise segment, regions are displaying the following trends: the Nordic region is reporting 15% organic growth on a pro forma basis, especially Denmark and Sweden are displaying high growth rates. Denmark partly due to COGS increases, which have been transferred fully to the end clients. Norway is experiencing as Guillaume said, lower growth rates in the current quarter due to an unusual churn of a large client with a simple use case and low profitability, which will impact revenue growth for that country going forward, but to a much lesser extent, gross profit growth.
In Central Europe, the growth rate was 7% in fixed currency, lower than the growth levels observed in previous quarters. In Poland, a downturn in economic activity due to the Ukrainian war has negatively impacted messaging volumes, especially in the retail sector. And as informed previously, volumes in Austria have been partly driven by COVID vaccination and testing, which is flattening out in the current quarter, thereby limiting the growth rate on a temporary basis. There is an underlying positive revenue growth in Austria, excluding COVID traffic.
In Western Europe, the growth rate has rebounded to 14% on a pro forma basis. This region experienced the highest volume decline caused by the harsh lockdowns of Q1 of last year, thereby leading to somewhat easier comps. The region is observing a high growth momentum in Italy and a rebound in the French market, whilst improving compared to the 2 previous quarters, retail activity remains below pre-COVID volumes in France.
The U.S. negatively impacted revenue growth by 2 percentage points in the current quarter. Next slide goes more deeply into the U.S. business. Message Broadcast has a business model with 2 separate revenue streams, one being stable revenue from messaging solutions like transactions, licenses and professional services. The second revenue category is critical event messaging derived from the utility vertical. Critical event messaging are more volatile volumes being triggered by bad weather, which causes problems with maintaining the electricity grid in the affected regions.
This again triggers a regulatory obligation for the utility companies to communicate with the end users. One critical event can result in over $1 million in revenue per day due to the dimensions of our utility clients with millions of end users. As informed last quarter, H2 in 2021 saw abnormal weather, which reduced critical event revenues significantly compared to a more normal year like 2020.
Peak season for critical event is in H2, mainly connected to seasonal hurricanes in the Southeast and droughts in Western U.S. The graph on the left displays LTM revenue numbers for both critical event and messaging solutions. A shortfall of critical event revenue in H2 2021 explains the decline in total revenue of 15% on an LTM basis. Messaging solutions revenue reports a growth of 8% on a LTM basis. In the current quarter, Message Broadcast has experienced delays in implementation of new client projects, which has hampered growth on messaging solution revenue. Message Broadcast expects a catch-up effect in the remaining 3 quarters as the different client project starts and revenue can be recognized. The company has that sale churn in the current quarter.
Gross profit is reported at NOK 322 million or a growth of 30%. Organic gross profit growth is reported at 9% in local currency. A gross profit margin bridge from Q1 2021 to Q1 2020 is included in the slide. The Enterprise segment and Global Messaging segment are diluting margins in the current quarter with 0.8 percentage points and 0.6 percentage points, respectively.
The Enterprise segment has experienced a small decline in margins in the current quarter due to COGS increases in the Nordics, which has been passed on to our clients, resulting in the same gross profit per message in euro cents, but a reduction in margins by 0.4 percentage points. An additional 0.3 percentage points in lower margins for the Enterprise segment is due to country and region mix. The revenue composition per country and region is slightly different compared to same period last year, thereby causing a smaller variation in profitability as gross margin vary per region and per country.
A higher portion of revenue from Global Messaging in the current quarter compared to same quarter of last year dilutes total gross margin with 0.6 percentage points. Gross margin for Global Messaging is around 9% to 11%, lower than the Enterprise segment with a margin of around 30%.
Adjusted EBITDA is reported at NOK 142 million, organic growth in fixed currency at 8% and a total growth of 30% when including the effect from the acquired entities. The EBITDA margin at 12.1%, which is 0.6 percentage points higher compared to same period last year. EBITDA margin is lower than the 2 previous quarters, mainly due to seasonality in the U.S. H2 is peak season for the U.S. business, and Q1 is normally significantly slower, which impacts total EBITDA margins as the U.S. business has significantly higher profitability compared to LINK's European footprint.
We have been through the P&L down to adjusted EBITDA. Nonrecurring costs consist of M&A costs and share option costs, cost items not related to the underlying operations of the company. M&A cost consists mostly of external advisory costs, reported share option costs are the accounting treatment of a future dilution effect with 0 cash outlay in the current quarter.
For Q1, share option costs are reported at NOK 14 million, down from the previous quarter as the first tranche of the RSUs have been distributed. M&A-related costs are reported at NOK 6 million and restructuring costs are reported at NOK 7 million. Restructuring costs are related to the integration of acquired assets and mostly connected to personnel changes. Cost of depreciation reported at NOK 100 million, where NOK 75 million relates to the depreciation of assets deriving from purchase price allocations of acquired companies with no cash effect and no future replacement CapEx.
Net financial items negative at NOK 6 million, impacted by net currency gain of NOK 26 million, and interest costs related to the outstanding bond of NOK 35 million, including amortized fees. Total balance sheet is at NOK 10.3 billion with an equity ratio of 49%. LINK has significant cash reserves of over NOK 800 million, more than NOK 500 million above the level needed for operational purposes.
Receivables increased by NOK 191 million year-over-year. Payables increased by NOK 185 million, both due to the inclusion of acquired entities. Net interest-bearing debt is reported at NOK 2.9 billion. The bond has a fixed coupon of 3.375% interest and matures in December 2025, thereby securing LINK's long-term funding structure.
Next slide is cash flow. Net cash flow from operating activities, including nonrecurring costs for M&A is reported at NOK 384 million on an LTM basis or NOK 19 million in the current quarter, which was negatively impacted by temporary movements on working capital. Working capital will vary from quarter-to-quarter, but is expected to be stable over time. Change in working capital over the last 12 months is reported at a stable minus NOK 37 million.
Cash flow from operations, excluding nonrecurring costs for M&A is at NOK 486 million on LTM basis or a ratio of 82% compared to adjusted EBITDA. LINK generates excess cash also after CapEx and interest costs. In the net free cash flow after deducting CapEx of NOK 167 million and interest costs at NOK 112 million, the company generated excess cash over the last 12 months of over NOK 200 million.
The full year effect of the acquisitions closed in 2021 will further increase cash generation in 2022. As a whole year of EBITDA will be included in the P&L and by far outweigh the full year increases in CapEx and interest costs connected to the acquired entities.
After closing the transaction with Message Broadcast, leverage is temporarily higher than LINK's financial policy. The financial policy is unchanged, and the company has as a top priority to push the leverage below 3.5 through cash generation, organic growth and potentially accretive M&A. The company expects a significant deleveraging effect from organic growth at the end of 2022, bringing leverage much closer to the financial policy.
That was the financial section. Over to Tom and Q&A.
Thank you, Thomas. We are now ready for the Q&A session. [Operator Instructions]
Operator, please help us with the Q&A.
[Operator Instructions] The first question is from [ Sanjag ] Savinovic.
This is actually Predrag Savinovic, but thank you, operator. So a few questions. Starting with the hyperscaler, which you referred to. It looks like a contract extension or an expansion rather. If I recall correctly, you have done business previously with Facebook or Meta platforms. Is that true? And is this the one you're referring to? And given the size of the business like this, what would you expect in terms of volumes here? And has this driven volumes or organic growth in the quarter already?
Thank you, Predrag, for the question. We refer to new hyperscaler agreements. And that's very low in terms of revenues for the first quarter of 2022. We expect this to grow further. It's not a typical hyperscaler Facebook-type agreement, focusing on onetime password, one-way communication. We have agreements that cover a wider set of use cases, including what we call mobile originated messages on top of mobile terminated messages. And also it involves providing mobile numbers and mobile masking solutions.
Going forward, we expect these agreements to grow progressively. Of course, these are very large companies consuming a very large number of messages. But we have a prudent rollout, albeit also that the gross margin we expect from these agreements is higher than what you see traditionally in Global Messaging because of the solution set that we are offering. And this has been possible through the technical platforms and the license status of Tismi.
That's very clear. Then on the organics, 15% organic revenue growth in the quarter, 111% net retention. Should we read this as the new customers you signed in Q1 driving the additional 4% revenue growth in the quarter? And then I think you also mentioned in the beginning of your report that you have some seasonal weakness in the U.S. business. Then you have this hyperscaler you referred to, which sounds quite like a pretty good contract. So should we be able to land above the midterm guidance in terms of revenue growth for Q1 because seems to be pointing that way at least?
I can start responding, Predrag. I guess you're referring to Slide 4, when you emphasized the won contracts in Q1, there is an implementation time on these won contracts. So the revenue contribution in the current quarter is minimal. We have historical data that tells us that around 75% of the estimated gross profit is going to be implemented within 12 months. So this is going to be something that will help us on the gross profit growth going forward, more than what you see in the current month.
And Guillaume also mentioned that new contract that we won on the hyperscaler that is of limited impact in Q1, and we expect a bigger impact going forward. You also had questions regarding the U.S. business. And as we said in the presentation, we are seeing some delays in the implementation of customer projects, which had a negative impact on messaging solution revenue in Q1 2022.
In Message Broadcast, it's pretty normal that you do early negotiation on professional services and other product offerings in connection with a new calendar year. So we have had some delays compared to normal there, and we do expect that we will have a catch up the rest of the year.
On critical event messaging revenue, the low revenue that we are seeing in Q1 of 2022 is actually quite normal as critical event messaging is mainly contained to the second half of the year. We do expect this to change gradually in the next couple of years as the new contracts that we have won in the Northeast of the U.S. is also going to increase critical event messaging in connection with [ LINK account ], but we don't see that in the P&L yet.
I'm going to let Guillaume also come in with some feedback here for your questions.
Yes, one of the questions you had was regarding the net retention rate of 111% and the organic growth rate of 15%. Not exactly scientifically. The difference is indeed mostly coming from the new agreements. And that, of course, explains the difference between the net retention rate growth from existing customers, net of churn and the contribution from new contracts. So that's how you bridge the gap. It's not 100% on a like-for-like basis, but that gives you the right metrics, so to say.
All right. And then on the cash flow, Thomas, you did make some comments there on a buildup in working cap. What does this consist of? And what we know today? How do you plan? And what do you expect to see in terms of cash flow for the second quarter? So based on your comments, it sounds like we should expect a release by Q2. Is that correct?
Yes. Normally, I would expect that unless there are other things coming into play here. You have to remember that we have 47,000 customers and some of them are quite big and changes in the payment dates will impact working capital. Most of the impact in Q1 is also coming from the COGS side. We have around 72% of our revenue, which is distributed to the mobile operators. Some of them are being significant. So if they are invoicing us later or earlier in 1 month compared to another, this will have an impact on working capital.
That's why I say that normally, it varies significantly between quarters. But when you look at the last 4 quarters, it should be pretty stable. So unless there are other events happening with the bigger clients or some of the bigger operators in Q2, we should see a more flattish development in working capital.
Okay. Fantastic. And just a final question on one of the slides you had, you cited chatbot market as a substantial revenue driver going forward. You cited a path that is almost $100 billion besides that's quite a massive number. But given that this is such a size, shouldn't this be a material driver for you already now? Or at least, if not now, shouldn't this be included in your guidance or a raised guidance that this is going to be a tingible business driver for LINK in the coming years? So how do you see that playing out?
I think, Predrag, it's a very good question. So for LINK Mobility, as we presented in the last quarter, using the Gartner CPaaS ecosystem, the solution layer, the chatbot is, of course, part of the solution we offer. We offer either to implement use cases using chatbot from the third-party suppliers. Or we've acquired Xenioo and we can offer the in-house chatbot AI MLP solution to our customers.
Therefore, we are going to benefit from the growth on license revenues when we sell our own chatbot solution. And if we don't have our own chatbot solution, we also are going to benefit from the messaging traffic coming from the chatbot solution being implemented because we take care of the communication layer and transiting the messages and the conversations.
So you can expect that from a LINK Mobility standpoint, we will hold a small portion of the chatbot market even in 2026. But that has a halo effect to LINK Mobility revenues as more chatbots are implemented, more conversation. And you know that we have some of our pricing model based on conversations, which are charged at a higher rate than one-way message. And therefore, this is positive for LINK Mobility, and embedded into our 14% to 17% midterm growth rate. And also embedded into the long-term growth rate of 20% that we have also communicated to you.
The next question is from [indiscernible] from Jefferies.
A couple from my side. I just want to go back to the growth rate through the year. So can you help us go through the trajectory of the growth? Correct me if I'm wrong, but I think the rest of the year, especially in 2Q, you guys will be facing tougher comps. And given that you delivered 15% in Q1, what gives you the confidence that you will achieve the medium-term guided range of 14% to 17%?
And then the second question is on the margin. So you mentioned about the margin compression in the Nordic region. Do you think you guys can pass out the price increase near to your customers? And should we expect to see this situation of cost increase in other regions in the coming quarter?
And just if I can squeeze in the last one, on Global Messaging, I just want to get a sense of how sustainable is the current quarter margin reaches 11%. And is there any dynamics that we should be aware of moving forward?
Thank you, [ Alex ]. From a revenue standpoint and our forward-looking outlook at 14% to 17%, we've highlighted that there will be quarterly fluctuations. And indeed, Q2 was a strong quarter last year, especially, for instance, the month of April when society was starting to reopen. We are confident in our guidance due to the fact that we expect a strong performance in the second half, especially from the U.S., where from an exceptional standpoint, actually, the second half of 2021 was very low with missed broadcast. Therefore, we expect to be in a positive situation for measuring the quarterly -- annual growth, sorry.
So we think that 15% gives us the confidence that we can stick to the 14% to 17% revenue growth for the full year, albeit that we need to accept, all of us, that the second quarter of 2021 was high, and therefore, the comp more difficult. You mentioned, [ Alex ], in your second question, the impact of price increases and lower margin levels in the Nordics. In the case of Denmark, for instance, we have seen a quite significant price increase for mobile operators.
We are keeping the same level of margins on a unitary basis, but it has a negative impact on the margin rates. But we also want to make it super clear that all of our agreements with our customers enables us to pass through any price increase from the mobile operators to our customers. We are an enterprise solution provider, and we have secured in our agreements that in the event that we have to pay messages at a higher price for mobile operators, we can pass it on to our customers, which I think is great because it prevents us from inflation in COGS.
Regarding Global Messaging, you have seen indeed that Global Messaging has been performing strongly in the last 3 quarters. We expect that performance to maintain. There was a question -- we will cover a question later on how do we expect Global Messaging to perform going forward. But this clearly is sustainable, albeit that it's more volatile than Enterprise. But we have diversified our customer base, and therefore, we see that we can maintain the current level of performance.
COGS increases in other regions. That's another question I noted that was asked, and we see very little price increases in Europe in other regions. It's actually quite stable. The last few years, we have seen some price increases, but also some price reductions in -- from country to country. So it's -- if you exclude the Nordics, the COGS situation is quite stable in the rest of Europe.
I would like to highlight also the fact that from a midterm perspective, we expect our other channels to play a role in mobile operator pricing. If you look at Eastern Europe, for instance, Viber is now being more and more used, which also restricts the ability for mobile operators to increase price.
Let me fill in on your question regarding gross profit development for Global Messaging. You can expect it will vary between the high 9% to around 11%, depending on the destination mix and underlying profitability that we're having on the different destinations. I would not expect it to go below 9.5%. So even if revenue can vary somewhat, that's sort of the interval that we would expect gross margin to be within. The variation there on gross margin is also higher on the Global Messaging segment compared to the more stable Enterprise segment. But you have our thinking regarding an actual interval for gross margin variation for Global Messaging.
That's clear. And then if I may, could you remind us again how many percent of the revenue do Poland and Ukraine account for the group revenue? And what is the cost on the situation here?
Of course, it's clear that it's difficult to forecast what's going to happen in the next. But for us, the impact in the first quarter was low. We have had some reductions in retail volumes in Poland due to some consumer confidence decrease in the Polish market. And therefore, some of the large retailers, for instance, prevented from engaging in marketing campaigns. But if you look at it from a total revenue perspective and the company total revenue, the impact was below 1%.
Yes, that's right.
[Operator Instructions] Okay. There are no further questions at this moment. I'll hand it back to the speakers for any written questions and the closing remarks.
As there are no further questions from the callers, we will continue with the posted questions that has not already been answered. The first one we can take is from [indiscernible], and is regarding net working capital, which has usually been negative for LINK. Is that to change now as the company grows? Or is it to remain negative?
Yes, I can take that. Net working capital is negative for all regions, except the U.S. There, we have a smaller positive working capital due to their business model, basically. We expect this ratio to continue. The total working capital should still be negative going forward. It's more negative in the Nordics than in Southern Europe. But we would still expect a total negative working capital going forward, too.
We have a follow-up question from Mads Rosendal regarding the performance of the U.S. business, where it was a shortfall of the revenue compared to previous quarters. What was the driver of that specifically in the quarter? And how do you expect new signed agreements to change that in coming quarters?
Thank you, Mads, for the question. You can see indeed on Page 24, the quarterly variance of revenues starting from Q3 '21. I will nevertheless invite us to go deeper into Slide 13, which provides kind of a good understanding of the dynamics of Message Broadcast revenue. First of all, currently, a lot of the critical event revenues from Message Broadcast happens in the second half, specifically during the summer in the southern part of the U.S. and also in the southern part of the U.S. due to the hurricane seasons. This means that on a regular basis, we expect much higher revenues in second half of the year as compared to the first half. Therefore, you can see that we expect a stronger comp in the second half of 2022. Specifically also for Q1 2022, we have had some delays on onboarding and recognizing the revenues of professional services for several of our customers. Due to revenue recognition, we cannot recognize revenues as the contracts are not fully signed. So this delay will be absorbed in the next quarters.
Another followup from [ Daniel Dulberger ]. It's partly been answered already, but the trend from going from towards more CPaaS conversational solutions from plain SMS A2P. How will that affect volume growth and gross margins? And can that help LINK to grow beyond the current organic growth range of 14% to 17%?
A very good question. Thank you very much for the questions. Daniel, so I think we can actually look into the fact that CPaaS, first of all, is following an S-curve adoption. And we are at the beginning of the adoption of CPaaS. Good KPIs that today, more than 2/3 of our conversations with customers include a CPaaS solution, albeit, it's from a low number and therefore, the impact of CPaaS in our total P&L will take time to materialize. And therefore, we are not changing our forward-looking statement from the 14% to 17% because it includes that gradual increase of CPaaS product adoption.
I have a question from [ Frank Ma ] regarding exponential growth in spam and fraudulent text messages. How does that trend affect the LINK business? And is there anything you can do about it?
Thank you for the question, Frank. So we don't recognize exponential increase of spam and fraudulent text messages. We are extremely vigilant with the other CPaaS providers to put in place code of conduct and rules so that the spam is being managed. We are also working with the mobile operators to put spam filters so that we reduce the spam. I have to say that the level of spam is much lower in SMS, for instance, and it can be in other communication channels.
So when we have a market where spam is actually higher, and we can take the example of Mexico, we have observed 2 elements. First of all, the use of verified solutions so that the sender is clearly defined. And the customer will receive a message not from a long number, but from an identified sender, which can be viewed by the recipient of the message.
And we also see that we put those rules and regulations in place for OTTs. If we take the example of Mexico, for instance, we see a strong growth of WhatsApp as being also very stringent when it comes to identification of senders. So it is not increasing exponentially, sorry. But it is definitely something that we as an industry fight, and we make sure that our customers enjoy a good experience reading our messages.
Also just an additional input to this. Most of the spam that we detect is coming from aggregators. Because our enterprise clients, they sort of -- they are solid and they don't do spam. So we, of course, have measures and banning mechanisms within Global Messaging to make sure that we do not process any more spam risk and sort of what we can avoid basically. So this is something we're working actively with, and we are turning down also certain clients because of spam risk that we don't want to take that risk basically.
We have no further questions, please post any additional questions.
I think there was a question from [ Jesper ] who's kindly asking the question first, but I believe we've covered this in our answers regarding Poland and the impact of the Ukrainian war, and also what to expect from a gross profit perspective and gross margin perspective for Global Messaging. I think Thomas has been really detailed in his answers. So I don't see that we have a question unanswered.
We have one more question from [ Frank Mora from DNB ].
Yes, my question was double posted on the web as well. So thanks for that. It's already been answered.
As there are no additional questions, we thank all participants and conclude the Q&A.
Thank you.