Sinch AB (publ)
STO:SINCH
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
18.732
37.81
|
Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Welcome to the Sinch Interim report January to March 2021. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I am pleased to present Thomas Heath, Chief Strategy Officer and Head of Investor Relations.Please begin your meeting.
Thank you very much, operator, and good morning, everyone. Welcome to this Q1 2021 results presentation for Sinch.My name is Thomas Heath, I'm Chief Strategy Officer and Head of Investor Relations. With me today is Oscar Werner, our CEO; and Roshan Saldanha, our CFO, who will take us through a presentation before we open up for questions. And with that, I leave the floor to Oscar.
Thank you, Thomas, and welcome, everybody, and thanks for your interest in Sinch. So we'll run through a presentation, and then happy to answer your questions. So then please go to Slide 2, please. So we had a revenue of USD 1.2 billion and in -- sorry, Thomas, should I have the SEK presentation? Why am I having it in U. S. dollars [ there ]...
You should probably let me emcee it. Let me run those -- just those numbers for you, and then I'll hand the word back.
Right.
So past 12 months, just under SEK 10 billion in revenue, and SEK 968 million in adjusted EBITDA over the past 12 months, and a market cap around SEK 100 billion.That's the only SEK I've got for you, Oscar. So you're back again.
Thank you. All right. You're trying to confuse me there, sorry. All right. Good. Looking at those numbers, obviously, that is the past 12 months. It is, run rate-wise, without acquisitions, it would be higher. Interesting to note and think about, when you look at the Inteliquent, that's like a $10 million a month adjusted EBITDA that they're throwing off, you have the figures in the exact figures in the statements we've given. But it's a significant piece that is coming in, which is highly profitable and highly cash generative. So it's -- just when you think about the business, you can think about it now, but you can also think about it when you add all of these things, obviously. And that is a lot what we need to scale the business for in order to handle all of that, of course. So that's a -- contextually important to understand.And 2,160 people, if you would add Inteliquent, it would add some 600, so 2,800 round about. That's another point that is, that we're obviously considering when we're scaling the business right now. That's all right.We're really coming closer to the 3,000 mark here. And what do we need to do in order to support that type of company. For the 7 countries, we do customer engagement through mobile technology. So basically messaging, voice, video. So if you want to have a video, call video doctor, if you have -- want to have a voice call to your -- to your doctor or to your ride-hailing supplier, or if you want to get a message from your bank or something like that, then we provide those type of services.We do 152 billion engagements per year. That is, we touch, on average, every single mobile phone on the planet a little bit over 15 times.And that is pre-Inteliquent. With Inteliquent, we would add 300 billion voice minutes per year in the U.S. So that is -- we're the largest provider then to all the 108 -- 1 800 numbers in the U.S., for example. So as -- from a volume perspective, it's also a significant add to the business.We serve 8 out of 10 of the largest U.S. tech companies. So you can rank the largest tech companies, we serve 8 of 10. We didn't win the first round, not in the second round. We won them on the -- when they really looked for a high-quality international provider who could give -- to provide them globally on their messaging or voice needs, that's when they came to us. And that's a very, very strong position to be in, and we have proven -- that's kind of the proof for our quality. You wouldn't get there if you -- if you don't have absolute top-notch [ phone ] quality in the world. And we've been continuously growing with these accounts over the last quarters. This market has a 100% consumer penetration. I've not yet met 1 single person since I joined, and I bet that you can't do the same, of the adult populations in any country, which is not a user. I mean all of your friends have used messaging, voice or video services from these type of providers. They call the doctor. They had a voice call to Uber or they got a message from their bank or their dentist or what have you. So this is an extremely big market. And I think that's -- when you think about the growth that we are having, that the leading place in this market is having and the opportunity going forward. That's what you need to think about. It's like every single consumer on the planet is a user at volume. And every single enterprise who wants to communicate with the consumers, is a potential customer on these type of services. It is a huge market and it's sometimes mind-boggling to me, how many customers and types of customers, you can actually find in this type of market.We've been profitable since our foundation in 2008, we pride ourselves for that. We found our own $10,000 share capital, not needed $1 single for funding operations since that.And we had, obviously, as you've seen, a very strong growth in gross profit over the last years. Operator, let's go to the next slide, please.We -- on Slide #3, here, we show the gross profit development and adjusted EBITDA development. You see the organic development and you see the acquisitive of what we have done in the last years and the last year with Wavy, SBI, ACL and now in telecom, and we can see the size of these businesses. And how much it is adding to our GP and adjusted EBITDA.We focus on gross profit since the pass-through revenues vary between geographies. The pass-through revenues vary between, if you combine messaging and voice or if you combine messaging and SaaS, it is just different. So you would think about the business in the wrong way, both from a geo perspective and from a cross-product perspective, if you think on revenue. You would just make the wrong decisions. So it is -- we focus on gross profit, absolute growth. And as you can see, when you do when -- my situation is when you do this type of growth, and I think all of these acquisitions, I'm super happy with all of them. I wouldn't want any of them undone.I think that really puts us in a good position. And I really like the teams that we're adding to the core. But when you do this type of growth, you're getting to the situation where you've got to scale to handle it. And I think that's what we are in. We're kind of now saying, all right, we need to up our systems. We need to up everything from our management of facilities. We have so many facilities around the planet, right? We can optimize that going forward, but we need a person responsible for that, or maybe we need 2 or 3.HR systems. We're growing out our HR system. We need to change to [ again ] more effective systems. You have [ comp and ban ] how to handle [ comp and ban ] in this many people, this many companies in efficient way, you need to up the team to be able to do it and you need to up the systems to do it.So there we're taking, as you can see, kind of scale up investments to handle a bigger scale. And that's, to me, 100% the right thing to do. And right now, it looks like an OpEx increase. Over time, I think it will drive efficiency gains, but that's what you're seeing in the business right now, which, to me, 100% the right thing to do.And I'm also convinced for you to know that over time, it will drive the cost down. We think about the facilities. If we have people managing the facilities on growth, we will be more efficient, but it will take some time. If we have good [ comp and ban ] systems at the scales, it will drive efficiency, but it will take some time. So that's really what you're seeing. We're also actually investing to this growth in the acquired units, taking SDI and SDI had -- we were at 11% EBITDA -- adjusted EBITDA and SDI was 5%. SDI didn't have any new -- and our growth was faster -- SDI didn't have any new salespeople. That didn't have any marketing investment [ at ] scale, didn't have any new salespeople. So we're obviously they would say, well, we can increase growth in the SDI base if we apply the Sinch model of adding a new sales team to the SDI and adding marketing investment here. So we can increase growth to our levels, and we can increase profitability to our levels, but we need to do the investments now in order to do it forward. Same thing with Inteliquent. I think it's a fantastic, best voice network in the U.S., but they were only spending 10% of their OpEx -- 10% of their OpEx in sales and marketing, and we're like -- but you can grow faster here.But then I need to get the people in first and get the marketing investment first, and then I can grow. So it's both a scale-up to increase growth, which will, over time, drive better financials. But as anybody who's run a business at this scale of operations, it's going to take 6 quarters, 4 quarters in order to get this motion going. But the good news is we're just applying the same models. We're [ down in same ] successfully two new businesses. I'm confident of it, but it's obviously taking some time. All right. Operator, next slide, please.So growth markets, we are in a really good market. This market is growing in [ wealth ]accounts. Our biggest segment, pre-Inteliquent, is messaging.$17 billion A2P SMS, growing 10% to 15%. Plus you got a 100% growth rate in conversation and business messaging like WhatsApp, RCS, WeChat, [ Pikaltool ] [ Gololat ] that's very high-growth in the market. So a combination of big market, steady, profitable right now with hyper growth.On top of that, you've got the CPaaS. This is the software service like a chat layer, you just like on top of delivering a message, you interpret the intent, like a SaaS service on top. And where you see like a 30% to 50% CAGR in the SaaS services business. All right. Operator, next slide, please. This is just a fundamental, very strong kind of market-driving momentum. I mean the text messaging industry has rolled out because it has higher open rates, higher read rates than e-mail or any other channel on the planet.If you want to reach anybody, any individual on the planet today, text is the most efficient channel. Because compare e-mail and text, higher read rate, higher open rates. So -- and enterprises figured that out, and they're using text for -- it's not like replacing. It's complementing. So it's adding another tool to their communication strategy. But text has 1 big issue or 1 big limitation, it's 160 characters only. With the next-generation messaging channel, that main limitation is taken away. So you're going to -- in the WhatsApp or RCs or WeChat or [ Kikaltalk ] or all of these applets, business channels, those channels, you're combining a high open rate, the hybrid rate, with an app-like experience instead of that 160-character message. And just like GHOST, I think, very naturally, that is a much better service. It's going to improve the performance KPIs of any customers using e-mail or text campaigns on the planet, and that is driving a lot of the high growth in this area. That's why we're seeing the growth rates in these areas basically. So very natural, very fundamental, which is what we like. We focus on the value to our enterprise and value to end user.I think optical inspection, you can see it here as well. You can see the text RCS, WhatsApp. I mean, just compare the text message, great service, high open rates, high read rates, but compare it to RCS or to Messenger or to Viber, where you have a picture, you have an action button which you can click, you can have a conversation with them, et cetera. It is just a different level of service, a different level of user experience. And as an enterprise, you can -- you can do a lot more things when you can have a conversation, when you can have action buttons, when you can have pictures and carousels and et cetera. You can just communicate in a richer form or way, which drives a lot of volume and a lot of need for SaaS services. So that's what's happening. It's going to be a rapid growth, but it's going to take several years before this penetrates into the market at full scale. So it's going to be a steady growth in this area over the coming years, is my projection.All right. Next slide, Slide 7, operator, please. So last quarter, we are very partner-oriented. We believe that given the market is so huge, we can't sell to every single enterprise on the planet. That's not what we're going to do. They're very partner-oriented. So last time -- last quarter, we announced a partnership with Salesforce. This one, we announced one with Adobe. So basically, we have partnered with Adobe strategically to do 1- and 2-way messaging campaigns across next-generation messaging channels. Again, we're integrating the Sinch conversation API into the Adobe product suite.And this one, we're doing it through Adobe Experience Cloud. So basically, in the Adobe Experience Cloud, which is a new product set coming out soon, we are integrating the Sinch message nodes. So in the picture, you can see the little blue box, blue purple on the top, purple circle on the top, which says send a message through Sinch, which, if you add that node in the flow builder of Adobe Experience Cloud, then you can click on that, and then you can create the campaign or create messages on any other channels in the Sinch conversation API. And then you can use the Adobe software to manage -- I mean what everything, all the great things it does and send the campaign, you have your lists and send lists in there and send the campaign there. And it's just like seamlessly goes into us -- into Sinch basically. So this is a very powerful partnership with the -- I mean, first it was Salesforce, now Adobe the other very large marketing cloud here.We're not only partnering with the Adobe Experience Cloud. It's a partnership on a broader level, but I would say a very -- as well as Salesforce, a very, very powerful partnership here.All right. Next slide. Just Slide 8, please. Just showing a little bit how what we do with tech and go-to-market acquisitions, what we're doing after that, you actually take Chatlayer, another AI, they acquired a company in Belgium, great technology, SaaS company. They do intent recognition, right? So when a message or voice call comes in, they would interpret, what does the consumer want to tell us. So from our perspective, we would send the message out, and we would charge for that. If the consumer responds, we would then tell the enterprise well, we sent the message, we charge for that. Do you also want us to interpret the intent of the response here, so you can automate that?And if you do, you need to pay a SaaS fee. It can be a monthly fee or a [ month of active user ] or a per transaction level, but it's a pure SaaS fee. That's what Chatlayer is. We acquired this company in Belgium. Great technology but relatively small team. And then you see 1 year after the acquisitions, the number of messages on the platforms has increased 32x. It's a 330% increase in recurring SaaS revenue. They're now in 3 data locations, up from 1 because they were in Europe. And then our American team says, well, you need to have your data here. And our Indian team says, you have to have the AI data here because of local regulations and customer proximity, et cetera. We have moved from the largest customers in Belgium to the largest customers in the U.S., and this is now on the very largest companies in the U.S. in total that we have sold Chatlayer integrating into it.And we have an intact team, adding headcount here to cope up with the growth. Their biggest customers is Wavy. So the biggest region is actually Wavy, another acquisition.ACL is selling it aggressively and the same sales team is selling aggressively. So there's a very good view of what -- exactly what we do when we acquired technology go-to-market company. We have a great piece of technology, and we scale it globally.All right. Operator, next slide, please. This is our strategy. Many of you have seen it many times before. It's the connectivity, it's the text messaging services, the WhatsApp services, the WeChat services just -- or the voice services, just connecting the call or sending the message. And they got SaaS services where Chatlayer is a good example, just the services on top that you can use there, which is complete SaaS services, where you would charge an additional fee in a traditional SaaS model, basically. While on the lower level, it's a per message or per call or per minute type of model.Next slide, please, Slide 10. Strategic acquisitions. We have done a lot. We have announced all of those. So Inteliquent being the latest, and I think we talked about this. So this is more of a reference slide, where you see the strategy of technology go to market. You saw what we did number wise with Chatlayer, and that's obviously the intent to do all here. Wavy is very good at conversational messaging, and now we're scaling out the Wavy model to all the regions in order to increase our conversational messaging growth in all the other regions. So that's another 1 of those. myElefant, we've done the same. So we're kind of scaling out the vehicle and myElefant offerings to the global teams. And all the scale in profitability where we choose a region, a large customer base, a product with a highly scalable and large company that we add to the mix.And what we think here is like, we think what is logical in CPaaS? What is logical for our position? First, we're thinking make or buy? And if we think, well, this thing is better to make, then we make it. And if this business we think it's better to acquire, and we find a good target, then we will try to acquire. And I think the combination of organic growth and M&A-driven growth is very good from both an operational and financial perspective.Slide 11. It's just for your reference. I won't comment on this. We're just like giving you again that the numbers of Inteliquent, you have it readily available, but I won't talk about it. So operator, if we go to Slide 12, please.So getting into the financials. So here, we will explain what's going on in the business. And I think what's going on is very straightforward, but it takes this quarter a little bit more to understand, I think. So I think we will spend quite a bit of time of trying to articulate what we're doing and what's happening in the business. So January to March '21, gross profit rising 84%. All right. That's a great figure. So we're very happy with that figure. Next figure that you can look at is obviously the adjusted EBITDA rising 30%. And the obvious question is, why -- why is it so large of a difference between the gross profit and adjusted EBITDA? And I think that's the main thing that, obviously, we're looking at and being very, very diligent on understanding and making sure we make the right decisions, and that's what we want to explain or spend the majority of the rest of the call to explain here.So if you jump down to the organic gross profit growth, the first of the second order bullets here. So we would look at our business and organically then, how does it trade? And organic gross profit growth is 24% in local currencies. Obviously, in this quarter, you have a lot of currency effect. So I mean the dollar is going down versus the SEK [ of ] all right, obviously, the growth in SEK becomes lower, but our main business is in the U.S., and we obviously measure the business in local currencies. So I can't give SEK progress to my U.S. sales team. That's a bad process, right? So organic gross profit growth, 24% in local currency. I think that's a really good figure. We had a whopping 37% last quarter, but this is a very solid performance. So we're happy with that figure.Then when you look at adjusted EBITDA growth and exclude currency effects and share incentive plans, is our stock price has gone up so much lately. Then we need to account for the share incentive plans in that, obviously, for what it may be in the future. So if you take away those 2, currency and share incentive, it's 52% underlying adjusted EBITDA growth.We're going to come back to that to get more details on it. But -- so then if you take away currency share incentives, the gross profit is 84%, and the adjusted EBITDA is 52%, all right.Still a big difference, but a much less difference. So that's kind of the first step that you need to [ rush ] down there.The second thing then you may ask, and what I ask to my team and what we really go into, hmm, but this 52% versus 84%, why is that difference? And when you look at that, it's 2 major things or 2 big buckets, which is roughly half and half. And the one is, its SDI gives us a dilution effect. And SDI is a great company, super happy having done the deal, but they had a -- say it was an 11% adjusted EBITDA and a high growth. And SDI was at a 5% adjusted EBITDA and a lower growth.And when you mix these, you get almost like a dilution effect to Sinch, right? You get a lower adjusted EBITDA growth and the lower adjusted EBITDA in higher absolute, but lower in percent. So that's kind of roughly half of the difference between 52% and 84%. And that's exactly why we're investing there to increase the growth because well, surprise, surprise, if you don't have any new sales people, you're not going to grow very fast, right? And why we're porting all of their traffic over to the Sinch platform, because we know that we can increase the efficiency, et cetera. So that's -- am I worried about that? No, because we've done it before, increasing growth, and we've done it before [ in the efficiency ], but it's going to take a while before we can reap all of those benefits. So that's half of it, or a little bit less than half. And the rest is, what we got to is, given that we were so successful in making the acquisitions we wanted, we actually hit almost every acquisitions we wanted to do. Then we've gotten to the position where the business is so large, we need to add what we call scale-up OpEx, which is we don't count it as integration because we're pretty tight in the integration. We're saying we'll only count it as integration cost if you're allocated to a project in this specific company, and we're tying reporting your hour to do something specifically to integrate this company, to move traffic or implement the CRM.But we're also getting into the -- we just need to have bigger core functions, bigger HR, more systems in finance, et cetera. We need to scale the core functions up in order to handle the incoming volume.So that's the other half of the difference between 52% and 84% that we're doing. So gross profit 84%, adjusted EBITDA ex currency effect incentive 52%, and then you can divide the difference 52% to 84% in SDI dilution, if you will, and scale up.I'm not at all worried about the scale-up in the long term. That's -- we're going to drive out the efficiency side there. So I'm not at all worried about getting back to levels, but we just need to do the work, and that work typically takes 4 or 6 quarters, basically in order to get back there. All right. Operator, let's go to the next slide, please.Key growth drivers in this quarter is acquisition of SDI, TWW, Wavy and ACL mobile. Obviously, you can see that. And #2 is continued growth with big -- U.S. big companies. We're also seeing new use cases. We're selling more than our original product, which was text to them. So they're kind of requiring more SaaS services, more new services from us in [ their different accounts ]. So that's been good as well.And the third one, which we're very happy with, as we've been talking about improving our broad growth in sales and marketing to the base. And in this quarter, we see a significant effect and growth driver, just like our sales and marketing motion being more efficient, driving improvements and driving a broader growth. That's the third big growth drivers that we're talking about here. We've talked about a couple of quarters, we see good signs and good indications. And this quarter, it's kind of -- yes, it's -- it is a significant contributor to growth here. All right, operator, next slide. And I will give this to you, Roshan.
Thank you, Oscar. I hope you can all hear me. I'm glad to present some of the financials -- some comments on the financial pages today.On Slide 14, I think as we usually show every quarter, you see a bridge explaining our underlying gross profit development. We focus on gross profit in our business.In terms of targets and incentives, really what drives our business because a large part of our revenues are paid to carry the underlying transaction to either telecom operators or OTT providers. And therefore, we feel gross profit is what is used to assess development.Consolidated gross profit rose by 84% during the quarter to SEK 820 million from SEK 447 million last year. Negative exchange rate movements, that's the Swedish kroner getting stronger, reduced growth by SEK 27 million or 6%. We've -- since the first quarter last year, we've closed ACL, Chatlayer, Wavy and SDI. And these 4 companies contributed 65% of the increase this quarter. Remember again that Wavy was closed 1st of February, so it's only a 2-month effect this quarter. Organic growth in gross profit, then excluding the acquisitions and then in local currency and in comparable unit,s, was 24%.This is something we're very satisfied with. I think the underlying gross profit growth is strong. Especially looking at the messaging segment where the total growth was 85%, but the organic growth in local currency and comparable units was at 32%. And again, the scalability in the messaging segment, where you can see that the adjusted EBITDA and over gross profit came in at 60% for the quarter. Gross profit declined by 50% in the voice and video segment, where we are seeing still-muted demand due to the ongoing COVID-19 pandemic. And we haven't seen signs of recovery during the first quarter here.And then just looking at the small operator segment. Again, this is the operator segment excluding the SDI piece, because that is in the acquired gross profit. So the operator segment, the organic operator segment remaining more or less flat versus last year. Together with SDI, that segment grew 91% on gross profit. Operator, please move to Slide 15.And here again, it's a bit of a numerical explanation, I think, of the things that Oscar said. I can walk you through a bridge, essentially, starting from the EBITDA margin that we had a year back in Q1 2020, which was 11.3%. This was before we started to consolidate the acquisitions that we closed after Q1. So when comparing to the Q1 2021 EBITDA margin of 7.2%, we see essentially 5 items that have caused this decline. You can say that the first 2, I mean, 1 are pretty self explanatory. I mean, you have, of course, the currency effect. There's a currency effect in terms of declining gross profit, but it also declines OpEx. So the net of those had an EBITDA margin impact of roughly 0.5 percentage point. And then we have sort of the costs related to the share incentive programs, which is affected by the stock price development, contributing an additional roughly 0.5 percentage point. Then I think we talked about the SDI business. That's a business that is margin-dilutive. We, of course -- we also said that when we brought in that business, when we announced the transaction, it had a growth rate of about 10%. And that was a bit weaker when we actually closed the transaction.We're still very optimistic and positive. And looking at our organic growth rates that we can drive further growth in this business, and therefore, we make investments to actually reach or to improve the growth rates, and we will also take out synergies from the consolidation of SDI, as we have said before. But both of these things take time to realize. And then we only closed the transaction on the 1st of November. So it's been really too short a period to see any kind of impact from growth or from synergies -- or significant impact from synergies in the SDI business, and therefore the margin dilution effect remains. We also spoke about the headwind in voice and video. So that contributes an additional 0.7%. Hopefully, something that we can improve as the world recovers from the pandemic going forward. And then finally, of course, investments both in scale, but also in growth. I mean, remember that we're also investing in new products like conversational messaging, which today don't realize short-term, of course, the kind of gross profit, but the large investments in scale, as the company has more or less doubled -- or sorry, quadrupled in size during the last 2 years, and we need to scale up a lot of functions to be able to manage the company at the size that we are today, but more importantly, also prepare the company for the continued growth story and continued acquisitive journey that we have set out to do.Operator...
A comment from me on this. When you look at this, a question we ask, are these the right investments? Like, is it right at this stage, invest in scale in growth and take a little bit short term, lower adjusted EBITDA margin. To me, the question is, yes, we have organic growth opportunities and M&A-related growth opportunities that are very large.Therefore, it is right, right now. And the same headwind in voice and video, I think that will turn together with Inteliquent, we're going to be much, much, much stronger. And then margin dilution for SDI, are we comfortable we can increase that? Yes.So all of this we're -- we're kind of -- we believe in it. It's work. You can never know, but it's work, but we're comfortable on that. And at that stage, and then are we -- do we think we can turn this over time? Is it right to do it? Yes. Do we think we can turn it back? Yes, we're very comfortable on seeing the OpEx per message in core Sinch versus the acquired companies. We just see that we're -- we have much more efficiency. And therefore, we're very comfortable on this. But right now, the numbers look like this.Right. So Roshan,, sorry.
No, thank you. Important clarification, important confirmation, of course. And I think -- yes. And in terms of time line, I think when it comes to SDI, I think we've indicated about 18 to 24 month time line in terms of realizing the full synergies.Operator, please move to the next slide on Page 16. Here, you see the headcount growth. In Q1 2021, we added 382 people, of which 305 joined from the acquisition of Wavy, the remaining being in organic growth.And at the end of the quarter, we had 2,160 people across Sinch, both as employees and as resource consultants.With that, Oscar, I'll hand back over to you to continue.
All right. Thank you. I'll speed up a little bit here. I want to leave quite a bit of time for questions here. So if we go to Slide 17, Operator.Messaging, biggest segment, you see what Roshan said, total gross profit growth of 85%, organic growth in our core segment of 32%. That's 2 very strong numbers. Obviously growth broadening beyond U.S. tech, and SDI and Wavy contributing. Obviously, we're getting tougher comps, but still very solid growth rates in our main segments.If you go to Slide 18, you see the rising message volumes. And here, you can see the huge amount of transaction increase we had, 327% year-on-year basis, 47% growth in comparable units. I mean you can imagine the type of things we need to do to the organization in order to be able to handle this type of growth.We're not concerned, we're doing the right things, but we need also the scale, which will in turn, turn out to efficiency and adjusted EBITDA going forward, but we need to scale up to handle it.All right. Slide 19, please. Gross profit per transaction. Here, you see the gross profit and the OpEx per transaction, and we're very focused on driving the OpEx down with automation, et cetera.You see the big impact that ACL is having. You see the investments we're doing now, lowering this margin a little bit in order to get it back to where we want to be going forward. But this is a key metric that we're keeping a very, very close eye on. And interesting, I just got the stats from our chief operating officer, who's been comparing what we have here and what we have in small and nonintegrated units, and it's like our OpEx per message is 5 to 10x lower than a 1-country business, if you will. So that's kind of a reason for the consolidation, right? When you scale, you get much more efficiency out. And we see that in our own units for platforms we haven't integrated, which is few, but whether it is 1 or 2. And then you're like, you see the difference here.All right. Slide 20, please, Operator. So adjusted EBITDA on the messaging side per gross profit. We've been around -- between 40% and 50%. We're at that rate right now. We're a little bit lower due to the OpEx investments and the acquisition of HDI having a dilution effect here as well. I think the levels are still very, very good, but we're kind of trending down a couple of the last months here. And we're managing this to the right level. All right. Operator, Slide 21, please. Voice and video. Here we see good revenue growth. We've taken a couple of high-revenue, low-margin customers that we think are really good to take, but this, we're seeing good revenue growth, but -- and gross profit not following at the same way. We still see COVID impact. On the other hand, we see very, very good possibilities for this business when you combine our skill sets and our products combined with Inteliquent, where we think we're very strong going forward at a completely different level than this is.All right. Operator, Slide #22, please. Operator, we're combining the operator teams in SDI and Sinch.And that kind of combines the software business with the P2P business in SDI. It makes a ton of sense operationally. Teams are very motivated, they're combined and merged. So that's super good. And here, we see how the combined business looks today, and it's a stable underlying performance in the operator business. All right. Then I'll move to the next slide, Slide 23.Integration generally performing as per plan. Integration costs are as per plan. What we have added is the scale-up OpEx to handle the very large growth on existing M&A, but also prep us for there is a lot of opportunities going forward. And we just need to -- when you grow this way, which I just need to take care of the teams and make sure the teams can live and breathe and have the right scale and structure, and that's why we're taking this scale-up OpEx. I would love to talk a little bit more like this, on this, but let's leave it to Q&A. But in general, I think they're proceeding as per plan.We're starting to move traffic over from SAP. We're starting to soon move it over from TWW, Wavy, and we will be at significant numbers by the end of this year of importing traffic over basically.All right, Roshan. Financials, leave it back to you.
Thanks, Oscar again. Operator, if you could take us to Page 25, please.And Page 25 is summarizing, of course, the condensed income statement. Very briefly then, consolidated net sales grew by 106% in the quarter to SEK 3.3 billion.The organic growth of net sales was 38%. Adjusted EBITDA grew by 30% to SEK 240 million from SEK 184 million a year ago.Diluted adjusted EBITDA per share was 3.6% for the quarter versus 3.2% last year. On a running 12-month basis, adjusted EBITDA per share increased to SEK 15.3.For the messaging segment, adjusted EBITDA was at SEK 283 million versus SEK 177 million last year.And then, of course, commenting adjusted EBIT -- adjusted EBIT excludes both items affecting comparability and amortization of acquisition-related intangible assets, since the latter doesn't affect cash flow.And adjusted EBIT came in at SEK 215 million against SEK 169 million last year.Operator, if you could take us to Page 26, please. On Page 26, you'll find a bridge from adjusted EBITDA to cash flow before changes in working capital. To explain the effects between these items, I think on interest and taxes, we have a steady development. In the quarter, we also have a strong cash conversion due to nonrecurring items and the valuation of balance sheet items. So we see a cash flow generation from operations of SEK 226 million, 94% cash conversion, which is very strong.On Page 27, you see the full cash flow statement. And here, in addition to the nonrecurring items and revaluation, balance sheet items, resulting in a strong cash flow before changes in working capital.We also have a very positive change in working capital. This is aided by operational improvements in SDI as we take over the SDI business and we look at how we can operationally tweak that and apply the Sinch policies. We've made significant operational improvements. In addition, we have the consolidation of Wavy, bringing in a positive change in working capital.And also then a seasonal swing in working capital since changing work -- since that can fluctuate from quarter-to-quarter. The cash flow from investing activities relates to the acquisition of Wavy as well as -- including the net investments in tangible assets and intangible assets. Turning to Page 28. Here, you see the financial targets for Sinch. Adjusted EBITDA per share grew 30% in Q1 2021, measured on a rolling 12-month basis. Sinch had a positive cash position at the end of the quarter and a net debt of just over SEK 2 billion. So net debt-to-EBITDA is at negative 2.1x. The financial targets for the company are unchanged from what we previously stated.Please turn to Page 29. And here, you see our financial leverage, both the reported leverage as well as the pro forma leverage. I think the difference between the 2 being that we include the acquired entities for the last 12 months. If we were then to close Inteliquent as at the end of the first quarter of 2020, we would end up with a leverage of 3.3.We believe that our underlying business performance and strong cash flow generation will enable a timely deleveraging to meet our financial goals. With that, I'd like to hand back over to Oscar for final comments and Q&A.
Thank you. Operator, we'll go to Slide 30. Last slide. Sorry for the somewhat long presentation. I think we had a little -- a couple of things to go through.Key priorities, build on momentum for broadened growth across the base. I mean, we see that, we see it quarter-on-quarter. We'd just like to build on that, improve sales efficiency, market efficiency of course very, very key to us.Continued growth for the U.S.-based global tech. I mean, obviously, a really good segment to be in and new customers wins in conversational messaging. So that's the kind of 3 go-to-market key priorities.On the M&A side, integration of recently acquired entities and that kind of initiatives and initiatives to increase growth and margins. And the next one is preparation for future organic and acquired growth, this is the scale-up. We see that we've done a lot. Great. We need to scale to that, and we see there's opportunity to do it going forward. And we need to make sure we have the scale and the systems and the processes to handle it. And then it's continued strengthening our connectivity offering. We have really good focus on being best on the planet on doing that, and then investing increasingly on the SaaS side to gradually grow the SaaS revenue at good and solid rates.That's it. And that was the last slide and last comment from me. And then with that, we're happy to hand it over to Thomas and open up for any Q&A here.
Thank you, Oscar. Thank you, Roshan. Operator, may we have the first question, please.
[Operator Instructions] The first question comes from the line of Daniel Djurberg from Handelsbanken.
Daniel Djurberg here. I would start off with the EBITDA margin headwinds, as you touched upon in length on Slide 15. I was wondering if you can touch a little bit more on the SDI and investment in scale and growth. How we should think of more near term, Q2, Q3, will the percentage effect flat increase reduce just the coming quarters? Just to understand where we are in the process.And the second question, if I may, would be on Wavy. And that would be on how you can give us the underlying growth in Q1 in local currency, i.e., proforma [ with dorsos ] generally, it seems quite high to me. So okay.
Thank you, Daniel. We'll pass those first question on to Roshan, and I don't think we give the numbers for the second questions, but perhaps a little bit of commentary. Roshan?
Yes. Thanks, Thomas. I think, Daniel, I think the first thing to think about is that we are -- the margin dilution is something that is underlying the SDI business.There's just 2 ways that we will really address that, right? One way is by growing the SDI business and the second way is by realizing synergies.And I think you're well familiar with sort of the long sales cycles and the long implementation times that we have typically in our business.And therefore, to see material impact in growth is still a few quarters out. And the same applies as well for synergies, that while we're taking out some of, of course, the early synergies, the large synergies lie in the combination of platforms. And that is, again, something that we've started with. We're very happy with where we are. We've completed planning.And we're doing some pilot migrations. But this is a continued journey over the next 18 months or so, where we will combine platforms and therefore, be able to realize the large synergies with sort of the big centralization coming towards the end of that period. The second, on the investment and headwind scaling growth, I think it's fair to say that -- obviously, these investments have come in both during last quarters as well as during Q1. The people coming in during Q1 and the spend coming in during Q1 is not fully reflected in Q1. And I don't think we're -- we're done with that either. I think we need to make further investments in the coming quarter as well, to prepare the company both for the increased scale and for continued growth as well as to continue on the acquisition journey that we want to make.So I think that's how I would like to sort of outline that and how you can think about that.On Wavy, again, I don't think -- we're not able to give you the numbers right now. Maybe we can take that off-line. I think in general, I mean, the Wavy business is performing well. We're happy with the overall SMS development as well as the new business development. I don't know Oscar, if you want to add something more on that.
Yes. No, we're happy with Wavy. The only worry sign, which is kind of the nature of our business, is the operators are increasing prices at there. I think it's 27%, one of the biggest operator, that always rocks the market a little bit. So that's the external negative. We're going to manage through that. We've done it many times before. But yes, it takes a little bit of it -- yes, it's a little bit rocky for a little while, but nothing major that I would be worried about.
Okay. And that is in Brazil, I guess.
Sorry, say that again?
Is it in Brazil, the operator rate with 27%.
Yes, 1 of the major operators in Brazil, they're increasing prices, exactly.
The next question comes from the line of Predrag Savinovic from Carnegie.
So a little bit on the growth side, last year's big revenue driver. That was U.S. big tech, right, and in this presentation, I mean, the report, you mentioned more broad-based growth across also different customer segment, also different geographies in addition to these, and it will be interesting to have some more flavor of new customer types that are opting in. And also if we think ahead, if you would categorize the growth drivers and thinking then on an organic basis, which ones do you think are the biggest drivers the next 12 months? Is it still big tech? Or do you see any other categories overtaking this role?
So I can take that question. So I mean, our goal is obviously to have multiple cylinders firing at the same time. That's my -- if you ask me what I want, that's what I want. Now that's not always happening. But -- so we're doing the organic growth on the broader base, and we see good trends. We think that will continue. And on big tech, you -- I mean we have no reason to believe. We think that's a strong segment going forward. But obviously, it's always like that. We had a couple of really strong quarters, then comps get tougher, and we've got to plan for relative lower growth for a while. But I think it's -- generally, we see good growth opportunities in both these segments. But while the big tech can be more lumpy, as you can understand, because it's [ human ] customers, the other 1 is more stable.In terms of -- and we're now happy to see [ Predrag ] broadening of that. The other question, segments, it's very wide. I mean, it is primarily banking and finance is big, and travel and transportation is big, e-commerce is big, retail is pretty big. So it's all the large -- and hospitals and health care is big. So it's a very broad set of customers that is coming in.And it's -- but it's coming from those major segments, major communication segments in the world, basically.Was there another -- so yes, so we see a broad growth and it's broad amount of segments, but it's obviously from the other large segments that were already large are the biggest contributors.Interestingly enough, you can get companies like an Amex signing up online or like a Porsche or Coke signing up online to new services. And it's -- it just shows the power of the business and how much opportunity there are in many, many different areas, basically. So that's another interesting aspect of this industry. Did that answer your question? Or did I miss an angle there?
No. That's very clear. Perfect.
The next question comes from the line of Ramil Koria from SEB.
Just continuing perhaps on Daniel's, going back to the EBITDA bridge or margin bridge here and touching upon perhaps the third component here, which isn't transitory, the headwind in voice and video, and you're mentioning that you've taken some customers with lower margins. Could you shed some light as to why would you do that? Is it illustrative for anything more broad-based we could speak of? Are you investing in price to get these customers? Is the competitive environment fiercer with them, et cetera, et cetera?
No. I don't see any big trends in -- if we first talk about our business, right? And then we can talk about the combination with Inteliquent because it changes the pictures quite dramatically here. But if we talk about the existing Sinch, no, we don't see a big price drop or increase. I mean, there's always price pressure, of course, but that's not it. It was -- this is more like this customer is really good for a set or specific reason. We take it now. We think we can increase margin going forward with upselling on other stuff, et cetera. So that's kind of what you see. Then you also see, we think absolute GP from this customer is going to be good, even though the margin is a little bit low. And again we think, is this absolute GP good? And is it a profitable customer? That's the other aspect to that. And in this case, we think that the absolute GP from this type of customers is going to be good going forward. So I think it's more down to kind of continued headwind in that industry during COVID, during this time, and we still haven't really gotten out of it. You should also think about that the comparison in Q1 was a really good quarter, and that was pre-COVID in this case. So it's like we're comparing to the highest point to a kind of post-COVID hasn't fully recovered situation. So that's on the first part on our area. And then -- but when you combine our capabilities with Inteliquent, I think we're going to be a very, very strong voice player over time because we have a little bit more of the [ opstay ] capabilities. We complement it with more of the CPaaS capability and SaaS capabilities. We're building out the self-serve developer go-to-market offering and then you combine it with Inteliquent's strongest network in the U.S. I think I'm very positive on that business on a macro level going forward. Now that takes some time, but I think we're going to be a very strong voice player going forward, at a completely different scale that we've been playing at today.
Roshan, do you want to add something to that?
Thanks, Thomas. I think just on the first part of your question, Ramil, I think I just want to accentuate what Oscar said. It's primarily a mix effect.I would say that going back last year, the main -- I think we talked about this, we have 2 main products that we offer in the voice segment, is the number masking product and the verification product. And the -- we've seen revenues drop really in both of these.And at the same time, essentially we're bringing in new customers, some of the new customers will be brought in, we're offering products with not as much value-add over the core voice connectivity.Now in a growing business in a larger business, like if you had -- if we continue to transit out the pandemic, this would not be as visible as it is today. So it's more visible since we've lost the higher -- since we've lost the high -- higher-margin revenues that we've had previously. So it's a mix effect.
So that's very clear. A final 1 from my side. Again, on the OpEx side. I mean, to me, it doesn't seem like -- and of course, there's a lot of moving parts here. So I could be completely wrong. But to me it doesn't seem like it's a massive step-up in OpEx, if you compare sort of Q1 '21 over Q1 '20 and then square that to Q4 '20 over Q4 '19. So the scale-up investments, first off how big of a delta is there really underlying from the last quarter to this quarter? And then secondly, why are we talking about them more today than we did yesterday, if you understand what I mean.
Roshan, if you take the first, and then I'll take the second.
I think when you look at sort of the delta, I guess, the key delta is, of course, what you looked at on the margin bridge, I think, which is adding about 1.5 percentage points. And I think if you convert that to absolute figures, I'll have to come back on that specific item. But there is -- I mean, we've been talking about sort of the increase -- we've been talking about the increase in headcount resources all of last year. So in that sense, you're right, Ramil, that this is not -- for us, it's not a change in strategy. What does happen, of course, that you have a bit of different things affecting us together, the margin dilution and SDI, of course, is something that comes in this quarter. If you remember, there was there 2 quarters also last year, but it's a bit hidden by the fact that Q4 usually tends to be a blowout quarter for Sinch. I think I'd like to come back on the specific number question, but we can do that offline, Ramil. I can hand over to Oscar for the second part.
Yes. Why we're talking about them more now? I think it's -- since we've been successful in so many deals, and we see there is a continued possibility to do great deals in the future as well. So if we would only have done SDI, I don't need to scale up.But when we do SDI, ACL, Wavy and then Inteliquent and see that there is more opportunities, then my question becomes, well each one -- take into account, but each one of the direct reports to my CTO needs to handle 250 people, and our engineering team was 250 18 months ago.So it's like when you're so successful in the M&A track, you suddenly need to kind of scale the entire organization to be able to handle something which is much, much bigger. And that, well, we knew that it could happen if we were so successful. But then when you are so successful, you need to do it as well, right? But you don't really do that before you actually -- you're on the journey. And that's why we talk about it more now, because it you kind of grow out of your old costume and you need to put on the new costume, if you will. Does that explain it? Or...
Yes , it does. It does.
The final question comes from Stefan Gauffin from DNB.
Yes, a couple of questions. First of all, both SDI and ACL reported lower gross margins in Q1 versus Q4. Is this a seasonal issue or a temporary issue? And what should we expect going forward? Then in terms of the pandemic impact, it's very clear, the voice and video business, where you will likely see some tailwind once the pandemic fades out. But how do you foresee the messaging segment being impacted when the societies open up?You clearly have really good volumes continuing into Q1.
Roshan, do you take the first?
Yes. Sorry, it just took a second to get me off mute here. Yes, I can take the first one. I think, Stefan, thanks for the question. I think we tend to focus on absolute gross profit when we assess and steer our business. That's because our gross margin is affected a lot by -- in a sense, where our customers choose to terminate their traffic. And since we're a global deliverer of traffic, we delivered around 40 billion transactions during Q1. I mean, that can be affected a lot due to swings of the traffic termination destinations.So I think that's really the key explanation for the margin difference that you see in the messaging segment during Q1. I think on overall basis, of course, you also have the mix impact when you look at the operator segment that we bring in, we bring in SDI P2P, which is really interworking hub, different from the traditional operator software business that we have had, which have software-like margins of close to 90%. And on voice and video, of course, margins declined in line with the pandemic effects and other related commentary previously today. Oscar, back to you.
Yes. On the pandemic, we have said that we have seen we don't -- we haven't seen like pluses and minuses. I mean, minuses in retail but pluses in e-commerce.So minuses in travel and transport, the pluses in all the online collaboration tools type of thing. So we don't think that the pandemic has had a major negative or positive effect on us today. We think it's been a little bit plus and minus. We don't see that we have large pandemic-driven volumes. We don't think we're on a hike because of the pandemic in any way. So we think some will go down. Yes, cloud [ collaborations ] will go down a little bit, but it's probably going to be on a much higher level than it's been before. I think you can go back to your own behavior. I think e-commerce will go down maybe, because when retail open up. But on the other hand, I mean, I think we've driven a digital transformation in the world that is going to stay at some level. And then on the other hand, when retail goes up, that helps. So I think we're relatively balanced. We don't think we have a lot of pandemic-driven volumes. And we're kind of -- we think that it's relatively a wash. If anything, probably a little bit on the positive side when the pandemic ends, but it's not something I, from a financial perspective, would count on in a new world.
Okay. Perhaps I can sneak in a final question.You mentioned that the investments are done to be ready for future M&A. Is that just a broad comment? Or do you see M&A opportunities as we speak?
If you ask me what companies, then I obviously can't answer, but we see continued interest and continued ability to do M&A. And yes, we always have discussions with a set of companies. And we say no to a lot. And you never know if you're going to make them because somebody else may make them so you don't know. But yes, we see on a broad level, a lot of interesting opportunities that I think would strengthen Sinch as a customer if you think broader CPaaS space. So yes, we do see concrete and long term, but it's more a broad opportunity base of good possible transactions that would strengthen Sinch. Yes. And it's yes, broad and concrete, and then we're only going to make a few. But yes, that's what we see.
We do have 1 further question from Mike Latimore.
Mike Latimore here. On conversational messaging or 2-way messaging, roughly what percent of your volumes are in that category versus the kind of 1-way messaging?
Because we haven't -- thank you, Oscar. I'll leave that to you.
All right. Yes, we haven't given those figures. We can't give them. But I think as you can see, the growth rates, we're saying is much, much higher in this segment.In the larger regions, so we don't give it, but we see higher growth rates there, and we're seeing that's going to increase in general faster than the messaging business. Then it's obviously dependent on how much do we -- we're super successful in the core messaging part as well? And how much does that grow? Do we make an acquisition there? And then obviously, the percentage figures shifts. So it's a little bit hard to talk about percent of figures. But I think the market is in -- is in the more advanced countries, maybe at the 10% level right now in most advanced countries like Brazil, and we see that we're also trading with the market. And in the bigger countries it is -- or in the less advanced, like Europe and U.S., it is much, much lower than that from a market volume perspective.
Interesting. And then just with regard to some of the recent new lockdowns that have occurred in Europe and now in India. Does that have a negative or positive influence on your messaging volumes? Do you end up with more e-commerce and less other areas? I'm just kind of curious about these recent lockdowns, do they influence volumes?
So first, they influence people, right? And we care about our people in both India and -- where we have around about 700 people now and Latin America and Brazil a lot. So we need to take care of the people first and make sure they are -- they are safe and sound, and that's a tough situation. I just need to be clear on that. On the volume side, we -- but like I said, we haven't -- we've gone through the pandemic, and we see the ups and downs. And yes, you have some negatives and you have some positives. It's never good when a company is in complete lockdown, of course. But yes, we have seen in positive increases on e-commerce or from hospitals or from various different segments, and we have seen positive increases. In general, our volume has been a little bit stable.You can probably as -- yes, it's relatively stable. That's the general view. And then you will see, all right, this happened in this country. But in general, it has been stable across the pandemic on a global level.
We have no further questions. So I will pass back for any closing comments.
Thank you. With that, that ends our call. I'll give a moment for Oscar to wrap things up.
Thank you. Sorry for the long call. Thanks for a lot of the questions. In general, my sense, business is doing well. I mean, organic business is doing well. We're doing well on the M&A side. I mean, I'm very happy with the growth rates, organic and M&A driven. So that's kind of the first one.Second one, yes, we have an EBITDA impact now. Part of that is currency and share-based incentive. When the stock price goes up, then you have the others like margin dilution, SDI, some headwinds for some video and investments in secular growth.I'm 100% confident the investments in scaled growth are the right things. I'm 100% confident that they will -- for 100%, it can never be, but I'm high confidence that they will turn out well going forward in efficiency gains.I believe we're going to increase the SDI, and I believe we're going to turn the headwind on voice and video, both pandemic ending and the Inteliquent. So I'm good with that. Are we worried that our margins, profit margins, adjusted EBITDA in the long run, will be lower than we've been trading before? No. We think we're doing the right thing for the business. At this type of scale, you just need to invest, and if anything, if I can use a little bit of the adjusted EBITDA to scale for this growth and future growth, I think it's the right decision. So we're confident. But we obviously need to keep a very close eye on this. I mean, it's never easy when you do this, and we need to be close to it and make sure we don't take any wrong turns, and rest assured that, that's what we're doing because you can't just have OpEx scaling uncontrolled, and in a way that you're not doing. And then we need to keep a close eye on that. And that's me, and Roshan, and Thomas and the rest of the management, to really keep a close eye on that. But organically, doing well. And then these investments, I think, are the right thing.I think that's the -- and the market in general is very, very good, both from the organic and the M&A side. So we see good opportunities going forward.That said, I think that's all we have to say. So thanks a lot for your interest and listening, and hope to meet you again in the future.
Thank you for attending. You may now disconnect your lines.