Link Mobility Group (LINK) Q1 2025 earnings summary

Executive summary

• Achieved strong organic gross profit growth of 9% year-over-year, with gross profit reaching NOK 409 million and adjusted EBITDA up 18% to NOK 198 million, driven by a favorable shift to higher-margin products and advanced CPaaS solutions.

• Revenue declined 1% year-over-year to NOK 1,651 million, mainly due to the termination of low-value, low-margin traffic, but gross profit growth outpaced revenue, reflecting improved profitability.

• Closed two UK acquisitions, expanding market share to 8% and adding significant upsell opportunities; M&A pipeline remains robust with over 10 actionable targets and five in due diligence.

• Over 50,000 customers and 872 new agreements signed in the quarter, with RCS contract wins up over 49% year-over-year.

• Won contracts expected to contribute NOK 42 million in gross profit, with high demand for OTT channels and RCS, which made up 17% of new wins.

Financial highlights

• Gross profit for Q1 was NOK 409 million, up 15% year-over-year (9% organic), with margin expanding to 24.8% from 21.3% last year.

• Adjusted EBITDA for Q1 was NOK 198 million, up 25% year-over-year (18% organic), with margin improving to 12% from 9.5%.

• Revenue for Q1 was NOK 1,651 million, with a 7% organic decline due to termination of low-margin traffic, but stable total revenue year-over-year due to M&A contributions.

• Net income from continuing operations was NOK 39 million, with EPS of NOK 0.13.

• Free cash flow after CapEx and interest paid was NOK 350 million on an LTM basis; cash and cash equivalents at quarter-end were NOK 2,446 million.

Outlook and guidance

• Expects continued high single-digit gross profit growth and double-digit adjusted EBITDA growth, supported by increased adoption of advanced messaging and CPaaS products.

• Inorganic growth target of 10% on adjusted EBITDA through bolt-on acquisitions, with leverage policy maintained at a maximum of 2.0–2.5x adjusted EBITDA.

• Net retention rate expected to normalize in the second half, trending in line with gross profit growth as impact from terminated low-margin traffic subsides.

• Continued margin expansion anticipated from advanced product mix and customer mix effects.