Good day, and welcome to the Sinch third quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw from the queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Thomas Heath, Chief Strategy Officer and Head of Investor Relations. Please go ahead. Thank you very much, operator. Good day, everyone, and welcome to Sinch's Q3 2022 results presentation. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. With me on the call today is our Co-Founder and CEO, Johan Hedberg, and our CFO, Roshan Saldanha. With those opening remarks, I'll hand the word over to you, Johan. Thank you. Thank you, Thomas, and good afternoon. Next slide please. For those of you who don't know Sinch, we help some of the largest global brands, enterprises, and hundreds of thousands medium and small businesses and developers around the globe to engage with customers through cloud communications. The marketplace is driven by digital transformation across multiple verticals. Our services are embedded in business processes and consumed by billions of people every year. This is a stable base to stand on. Our strategy has been, and still is, organic growth combined with acquisitive growth. Over the past few years, the company has undergone a major transformation from a single product business, SMS, into a cloud communications full suite offering, including messaging, voice, email, and more products. Our total addressable market has expanded significantly with the platform acquisitions made in recent years. Since our IPO in 2015, our compounded annual growth rate exceeds 60%, both for sales and gross profit. For those of you who don't know me, I'm Johan Hedberg. I'm one of the co-founders of Sinch. The business was founded back in 2008, and last quarter, I stepped back in as interim CEO. We founded the business just months before Lehman Brothers crash. Sinch has been bootstrapped. We have always been profitable and generated positive cash flow. We used external capital only for M&A. We IPO'd the business in 2016, did our first large acquisition in North America in 2016. I moved to the U.S. in the role as CEO to oversee the integration and U.S. expansion. Since 2018, I've been working with corporate development on many of the acquisitions we've done in the recent years. Next slide please, operator. Our near-term focus is on consolidation and profitability and cash flow. After this very aggressive growth period, it is now time to allow for successful integration of acquisitions and execute on synergies, getting margins and cash flow up. We launched the following three priorities in relation to our Q2 report, cost control, cash flow, and growth. Next slide, please. To also stabilize the cost base, we launched several initiatives to immediately get cost under control. In constant currencies, we have stabilized the cost base in Q3. This is shown in the organic green graph in the chart. The cost control initiatives will remain in place until the budget 2023 is approved by the board and implemented in the organization. Next page. We launched a cost reduction program in Q2, targeting gross savings of SEK 300 million (Swedish Krona). The program has been communicated within the organization during this quarter. We estimate one-third of the cost savings to show in Q1 and full effect in Q3 2023. The restructuring cost will be around SEK 120 million (Swedish Krona). Some have been taken already this quarter, but most will impact Q4. It was a difficult decision to launch the cost control program or cost reduction program. Most importantly, I want to thank every Sincher of today and also worked with us over the years. Your commitment in good and in challenging times makes the difference. Next slide, please. In this quarter, we are focused on cash flow. We have a strong cash flow of SEK 726 million (Swedish Krona), driven by strong results. In addition, we have a positive working capital development, driven by decreasing accounts receivable. DSO down from 68 days in Q2 to 62 days in this quarter. We now have focus on cash flow and DSO, and we are off to a good start. I wanna send my thanks to the finance team and the sales team for hard work. Roshan will speak more about this in his section of the presentation. In this quarter, we show progress on free cash flow to deleverage the balance sheet. The primary reason is to have the flexibility to continue our combined organic and acquisitive growth journey. Next slide, please. I wish to send one important message. When we talk about growth here, we mean profitable growth. We will not go into all the details in this quarter, but here are some of the highlights. Three out of the four business unit has increased growth in the quarter, including our two largest business unit, messaging and voice. Next slide, please. We are a global leader in cloud communications. We have a large, stable, and diversified customer base in growing marketplace. We are winning new customers every day through our sales team and our online presence. In recent years, we've rapidly changed the product mix to have both the depth and the width. We have the largest core network for many of our products, and we have a full suite of products to sell to our customers. Focus long-term is to provide an integrated product offering and customer experience. This will allow us to reach more customers, grow with our installed base, and enable faster sales cycles. Organic gross profit pro forma grew 6% this quarter. We are positive to see the improvement since Q2, but are not pleased with this number. It is our intention to grow faster. Focus for this quarter has been on profitability and cash flow, and we'll talk more about growth in the coming quarters. Next page, please. We continue to evolve the management team, recruiting top talent externally and internally. I'm glad to welcome Sean and Brett to the team. We now have three out of four business unit heads in North America. This is a fast-growing market and we have many international businesses. Then, next slide. Good. With that, handing over to our CFO, Roshan. Thank you, Johan. My name is Roshan Saldanha, and I'm CFO for Sinch. Operator, can you please give me page 11 on the webcast? Here we just want to start by pointing to the key highlights for the third quarter. As Johan mentioned earlier, our focus is on cost control, cash flow, and then profitable growth. We're happy to report the progress on cost, where we see that our actions to control the increase in cost have resulted in a stable cost base during Q3, where on a constant currency basis, cost is about 4% lower than the second quarter. Again, our efforts in cash flow have resulted in improved cash flow from operating activities at SEK 727 million (Swedish Krona), and also, then the resulting effect on our leverage ratio of net debt to adjusted EBITDA at 3.2x. Finally, while we don't have a significant impact from new growth initiatives, it is pleasing to see the market continuing to be strong for services that Sinch provides, and we see good growth in several of our segments, as well as a gross margin stabilization at 33%, which is up 4% from Q2 2022, and stable compared to the pro forma gross margin from a year ago in the same quarter. Turning to page 12, which shows the gross profit evolution for the business. A significant part of our revenues, especially within the messaging segment, are passed on as cost of goods sold to mobile operators. Hence we focus within that segment, especially almost exclusively on gross profit when we assess and steer our business. Consolidated gross profit rose by 164% during the quarter to SEK 2.361 billion (Swedish Krona). Gross margin, as I said earlier, improved as well from 23% in the third quarter last year to 33% this year. This change is mainly driven by the higher margin businesses that were acquired during late 2022. The SEK weakening against major currencies helped growth by SEK 85 million (Swedish Krona), or 9%. The acquired companies, Inteliquent, Pathwire, MessageMedia, and MessengerPeople, contribute 147% of the increase. Hence, organic growth in gross profit in local currency and in comparable units was at 8%, which is a positive change in the trend compared to the last quarters. Also, on a pro forma organic gross profit base, which means if we were to include the acquisitions as though they were part of the base last year, and in local currency again, we can see that there is a growth of 6% on gross profit. Specifically within the segments then, looking to messaging, we see a gross profit growth of 15%, of which organic growth in local currency was at 4%. Adjusted EBITDA over gross profit in the messaging segment came in at 32%. In voice as well, we see a pro forma organic growth of 3% positive, which was negatively affected by the 8YY regulation change that we have talked about. In email, we see a gross profit growth on a pro forma organic basis of 17%. Finally, in SMB, we see a pro forma organic growth of 11%, where in the SMB segment, growth in the U.S. market continues to be strong, but offset by slower growth among larger customers in Australia. Turning to page 13, where we show the margin development. Here you see both gross margin and adjusted EBITDA margin. Gross margin is affected by mix, but relatively stable at the group level. The dip in the second quarter of 2022 was because we took an additional cost of SEK 162 million (Swedish Krona) related to reassessment of reserves for through traffic costs in the messaging segment. Also, OpEx control contributed to improving adjusted EBITDA margin during the third quarter of 2022. Our cost reduction program and focus on scalable growth is expected to improve both these KPIs over the next 12 months. Please turn to page 14 for the income statement. Here you see the full income statement. Of course, currency effects are increasing net sales, gross profit and EBITDA. The depreciation and amortization row includes a non-cash amortization related to acquired entities, as well as a SEK 5 billion (Swedish Krona) goodwill impairment related to the email segment. The consolidated net sales grew by 83% in the quarter to SEK 7.2 billion (Swedish Krona), which was of course affected by acquisitions and FX. The organic growth of net sales in local currency and excluding acquisitions was 13%. On a full pro forma basis, including the acquisitions in the third quarter last year, growth would have been 10%. EBITDA was SEK 808 million (Swedish Krona) for the quarter. Diluted adjusted EBITDA per share was at SEK 1.04 (Swedish Krona) for the quarter versus SEK 0.33 (Swedish Krona) during the same period last year. On a rolling 12-month basis, adjusted EBITDA per share increased to SEK 1.79 (Swedish Krona). EBIT came in at SEK 254 million (Swedish Krona) versus SEK 185 million (Swedish Krona) in the same period previous year, excluding the goodwill amortization. Adjusted EBIT was SEK 774 million (Swedish Krona). Finance net for the quarter was SEK 142 million (Swedish Krona), whereas tax net was SEK -92 billion (Swedish Krona). Effective interest rate was at around 2.5%, and the effective tax rate was at around 27.5% for the quarter. Let's turn to page 15. On slide 15, you will see a bridge from adjusted EBITDA to cash flow before changes in working capital or after changes in working capital, and also including our investments in property, plant, and intangible assets, so all CapEx. As you can see from the page, our cash flow is affected by realized currency effects on financial items. This is reported within the other items row, and that impacts the third quarter by SEK -158 million (Swedish Krona). On the bottom line, we see a cash conversion from adjusted EBITDA of 62%. For the quarter, on a year-to-date basis, we see a cash conversion of around 50%, after considering changes in working capital and CapEx. Please turn to page 16 for the full cash flow statement. Cash flow from operating activities was at SEK 727 million (Swedish Krona) during the third quarter and SEK 1,535 million (Swedish Krona) for the three quarters year-to-date. We see that our actions have resulted in improved working capital, primarily driven by reduction in accounts receivables. Net debt decreased as well during the quarter by SEK 272 million (Swedish Krona) despite the fact that a portion of our debt is denominated in U.S. dollar and the U.S. dollar strengthened further versus the Swedish Krona during this quarter. We can also see that we have a strong financial profile with a diversified earnings pool, which is reflected in our consistent cash flow generation. Please note that working capital can of course be a bit lumpy from quarter to quarter as we have large enterprise customers. Turning to page 17, where we see the net debt to adjusted EBITDA and how that has developed during the last few quarters. As you know, we closed three large acquisitions during the fourth quarter last year, and we reported a net debt to adjusted EBITDA of 2.9 on a full pro forma basis. There are essentially three components which affect net debt to EBITDA, and one is EBITDA growth. What we can see in this quarter is that our EBITDA on a pro forma basis compared to last year has improved, which has not been the case in the second quarter and the first quarter this year. That is a welcome change in trend. Secondly, second factor impacting this KPI, of course, is our cash generation. Here again, we're happy to report that we have a strong underlying cash generation in the third quarter as we had in the first and as we had in the second. Hence, you know, strong cash generation so far year to date. Then, of course, the third factor impacting this KPI is currency movements since we generate a large portion of our profits in non-Swedish Krona denominated currency. But we also have about 40% of our debt denominated in US dollars. That creates an impact in the sense that we revalue our debt immediately, but the impact on profit comes in trailing over a 12-month period. We expect, of course, to continue to deleverage from this position from earnings growth and cash generation. In addition, we would like to point out that we have during this quarter extended maturities on about SEK 3 billion (Swedish Krona) of debt that was maturing in 2023 by a year to 2024. Under normal circumstances, we would expect to pay off these debts before they come to maturity the next time and therefore not need to extend them. Turning to page 18, where you see we are reiterating our financial targets. The two financial targets that the company has is adjusted EBITDA per share to grow 20% per year and net debt over adjusted EBITDA to remain at below 3.5 x over time. We're happy to say that in the third quarter, our adjusted EBITDA per share grew 83% measured on a rolling 12-month basis, and pro forma net debt over adjusted EBITDA was at 3.2x, excluding the IFRS 16 related lease impacts. With that, I would like to hand back over to you, Johan, for final comments. Let's see here. Operator, may we have the last slide here, slide 19, please. We are executing on the plan, and we are on track. Financially, costs are getting under control. We enjoyed improved profitability and strong cash flow. In addition, we are seeing organic growth improving, which is a proof point of the strong underlying market and the strong position we have in that market. We are, however, not done yet, and we will continue to execute on our plan. It is necessary, but unfortunately, some colleagues have been giving notice in the wake of the cost-saving program. With that marks the end of our prepared remarks. We're ready to answer questions. To cover as many participants as possible, we ask that you limit yourself to one or two questions, and you may, of course, re-enter the queue with more questions if you wish. With that, operator, may we have the first question, please? Yes. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question is from Mohammed Moawalla from Goldman Sachs. Please go ahead. Thank you. Good afternoon. I had two questions, if I may. Hi, Johan. The first one was just an improvement in the organic gross profit growth. We saw it in both messaging and voice, kinda back into kinda positive territory. How should we think of this? Is this a kinda normalized rate of growth for these segments? More broadly, taking a step back at the group level, the 8% that you sort of reported, is this sort of likely to be the normalized growth rate for the kinda near term as you still focus on sorta cost-cutting and cash flow? How long does it take before you get back to kind of the double-digit growth, which is kind of the market growth, but also implying kinda market share gains that you expect to reach? The second question was on OpEx. Obviously OpEx still decreased on a constant currency basis, 4%, versus Q2. I know that you have the benefits of the cost-cutting current cost saving program coming, but is there anything else you can do over and above that, around the cost base? Thank you. Hi Mo, this is Roshan. I can start off. Hi, Roshan. ... and maybe Johan wants to complement. I think on the organic growth. Yes, I mean, you know, I think first of all, we see the growth in Q3 as a proof point of the underlying market and the strength in the underlying market. As you know, we already said in Q2 that in messaging we had a large customer renegotiation which affected growth by around 9 percentage points. That effect remains of course, you know, for Q3 as well. I think, you know, our view is that we're not satisfied with the growth as it is today. Johan has come in and you know, I think, I mean, Johan will speak to that a little bit more himself, but I think he started to take actions. Of course, it takes some time before that is reflected in the numbers, and it's nothing we would not expect, you know, those actions to be reflected in the numbers during 2022. On the second point, I can just start off by saying that, you know, I think the. Yes, the OpEx has decreased, I mean, marginally by 4%, I would say. This is, you know, a result of some of the actions that we took earlier this year, in terms of introducing new processes to control the cost increases. The cost reduction program is not reflected in the current figures. Our first focus here now is to execute on the cost reduction program. That's what, you know, that's what we want to secure delivery of at this point in time. Yeah. Yeah. I think adding to that, this is Johan Hedberg. Yeah, we're not pleased with the current growth rate. We have initiated several initiatives, mainly based on providing an integrated product offering and customer experience. I think this is just enabling all our products in our go-to-market motions and geographies. We're not there yet, but this is something that will gradually be rolled out over the coming years. I think we will see effects in 2023. Got it. Thank you. The next question is from Akhil Dattani of JP Morgan. Please go ahead. Yeah. Hi, good afternoon. Thanks for taking the questions. I've got two follow-ups please, if I may, both related to the financials. The first is, you've commented through the presentation around, not being satisfied with the growth and obviously the ongoing cost improvements that you will see over the coming quarters. I wondered if you could maybe just help us better understand the scale and shape of that. I mean, I appreciate you might not wanna micromanage the uncertainties we've had over recent quarters. Any sort of color on how we should think about sequentially how things evolve from here would be useful? Particularly if there's any big items to call out. The second thing, which I guess is linked to that, is, I know we've not had in the CPaaS space operators typically giving guidance year to year. They've typically been, you know, midterm targets around the outlook. As you've obviously gone through the changes you have this year, how are you thinking about that as we get into 2023? Are you likely or contemplating potentially giving specific targets for 2023 just to restore confidence and help us understand the recovery? Or is that something you'd still prefer not to do? Thanks a lot. Hi, Akhil, Roshan here again. I'll start off on both of those questions. I think on the first one, I mean, you know, I think the callouts that we can make is of course the, you know, what we've said regarding the cost reduction program, number one, which is that, you know, we're executing towards a SEK 300 million (Swedish Krona) annual run rate reduction compared to the second quarter on a gross basis, in the messaging and central function segments. We expect that a third of that saving will be actualized already during Q1, and the full impact will come in during Q3 2022. A part of that saving is of course related to us reducing staffing. Johan talked about that, action on both employees and consultants. It's also related to, you know, migrating platforms and integrating systems, especially within the messaging segment, right? Now I think in the short term, I mean, you know, while the macro continues to be uncertain, I mean, you know, what we can say after Q3 so far is that we still see a continued demand for our services, and we don't see any change, you know, in that consumption pattern so far. You know, I think we have to watch how the market develops, and we're exposed to that as any other company. On the target discussion, I think, you know, we have the financial progress that we have and thus far, I don't think we have anything new to say on that front. The next question is from Predrag Savinovic. I'm getting. I'm sorry, are you? Yeah, we were done. Sorry. Go ahead operator. Okay, I'm sorry. The next question is from Predrag Savinovic of Carnegie Investment Bank. Please go ahead. Thank you very much, operator. Afternoon, Johan, Roshan and Thomas. Wondering on Pathwire and the write-down, if you could reason a little bit what triggered this. Also in looking at these figures, I mean, they are quite strong write-down compared to Pathwire history, but we know there's a migration which hurts gross margin, so that can return, but the organic growth is 20%+ still. Thinking of what triggered this write-down, and is there anything you see, you know, now post that, I mean, leading into Q4 that would trigger something like this? Then on a general growth question, we see given the growth in messaging volumes versus the organic growth you posted versus the gross profit and on revenues, it's safe to assume that you are overall improving pricing on messaging. Finally, if you can share some flavor on the seasonal effects into Q4, where you usually have some support. I mean, that's usually a quite good quarter, and how that can pan out? Thank you. Maybe I can start with the goodwill write down question, Roshan here again. I think, I mean, as you know, Pathwire was a company that we acquired in September last year. I think it was quite different macroeconomic environment at that point in time. The enterprise value at acquisition was estimated to SEK 16.6 billion (Swedish Krona), that was paid through a cash component of $925 million in cash, and then, you know, a certain number of shares, which at the time of that agreement were valued to $1 billion, right? Total compensation of $1.925 billion. The shares were delivered in February and May, by which time already, you know, the value had declined. What we do is we test the goodwill on our balance sheet on a regular basis and, you know, we're performing exercises, of course. You know, data and information available at every point in time needs to be considered, and we don't do long-term forecasts, you know, on a quarterly basis. When we look at the long-term forecast, when we look at, you know, kind of how the external market environment when it comes to valuations as well as, you know, interest rates, you know, and volatilities in our segments, I think all of that led us to the conclusion that we made and which we announced, that an impairment of SEK 5 billion (Swedish Krona) was necessary. Now if you look at email as a segment, I think you're absolutely right. I mean, we have, I think we have a revenue growth of around 22% in the quarter on a pro forma basis and a gross profit growth of 17%. This is impacted by the migration of platforms, which is expected to be concluded during Q4. Hence, you know, as we hope that margins will improve and which would lead to, you know, gross profit growing faster than revenue, as we sort of improve margins, right? This is a good level of growth, and we're happy and satisfied with the development within the email business, but of course, it's a lower level than what that business has enjoyed during the last year. I think I want to add here, Pathwire was a strategic acquisition of an email asset of size. Also, if you compare the relative valuation between the businesses at the point of acquisition, we paid a fair price. Yeah. I think just to close off, I think you had a question on, you know, on the other segments and acquisitions. We again, you know, in the assessments that we perform, we see no such risk at this point in time, and therefore we have not, you know, made any impairments, and we have sufficient headroom within the other segments. You know, again, this is something we will continue to evaluate and follow how the market and our businesses develop on a continuous basis. I think then there was a question on pricing, and Yeah, pricing, seasonality, generally. Yeah. Into Q4 and that's usually a strong quarter. Have you managed to, you know, get prices on messaging volumes overall up? I mean, it looks like that from the figures you posted. I think pricing is generally, you know, business as usual for us. This is something we live with in different markets. For example, in Brazil, we had operators increasing prices. In other markets, we get higher volumes and prices decrease. This is business as usual for us. I think on seasonal effects, Q4 is normally a very strong quarter for us. We see increased activity due to, for example, Black Friday, around Christmas shopping, and that has a positive effect with more transactions through our systems. I think this year with uncertainties that affect everyone and all businesses, I think we are a little bit more careful. We do not understand what the effects on our business will be from this. If I can add there as well, Thomas here. We talked in Q2 about a price negotiation with one of our largest customers. Bear in mind that customer is, you know, has a relatively large share of traffic in the fourth quarter, which means that the impact from that price negotiation will hit a little harder in Q4 than it did in Q2 and Q3, right? For Q3, the impact is relatively similar in absolute terms compared to Q2. But this would, you know, could have a few percentage points, you know, detrimental impact just on the fourth quarter in this year, right? Some uncertainties to be wary of or be aware of, as we head into Christmas season. Super. Thank you very much. The next question is from Laura Metayer of Morgan Stanley. Please go ahead. Hi. Thank you for taking my question. Two questions, please. One, you've seen a significant organic growth profit acceleration in the messaging segment. Could you comment on whether you've seen any changes in the market trends? Specifically, have you seen a decrease in the level of competition and price aggressiveness in messaging over this quarter? Second question is about cost savings and R&D. Could you please comment on what is the plan for R&D spend specifically and the integration of your offering? Do you plan to increase or decrease R&D in the next few quarters? Thank you. Hi, Laura. Roshan here. I can take the first question. On the organic GP acceleration, I think, you know, if you look at it by segment, I think if you look at the messaging segment, we've made, I would say three significant call-outs during the previous quarters. We talked about India, where we had a deceleration in growth, and we've said that we expected that to recover and we've seen that recover then in Q2 and Q3 and now, you know, over 20% growth in the Indian market. We talked about the single customer renegotiation. I think Tom has commented on that as well, so we can leave that one. Then the third one I would say is Brazil, where we talked about, you know, a competitive market situation where we are the market leader. You know, while we haven't seen a worsening of the trend in Brazil, I wouldn't say that we're completely recovered yet. There is still some way to go. Besides that, I think on an overall basis, we don't see, you know, any significantly changed competitive behavior. I think, you know, I hope that the kind of focus on, you know, profitable growth and cash flow is not limited only to U.S., but to many other companies in this market environment and, you know, that we're making kind of responsible decisions about, you know, about growth going forward. We don't see any changes in practice. It's not an increased competition or significantly decreased, I would say, besides for the specific call-outs that we have made. I think on the cost saving and R&D investment going forward, maybe you want- Yeah, yeah. I think right now we do not want to comment, you know, specifically on R&D. I think the new growth philosophy for us is really coming back to profitable growth. That's our roots. You know, as GP increase, we will have also increased OpEx but at a slower pace. Profitable growth is how we think about growth. The next question is from Stefan Gauffin of DNB. Please go ahead. Yes, hello. First on the gross margin in messaging, that improved 1.1 percentage point quarter-over-quarter. You mentioned a little bit better performance in India. So, is price increases in India and also the end of the fixed volume contract the main reason why we're seeing the gross margin improving? And is this level we can expect going forward? Second, on the voice business, it seems like the non-Inteliquent business had a stellar performance. What is driving this? And should we expect continued strong performance for that business? Gross margins on. Yeah. On messaging first, and then voice, I think, was the second question. I think on messaging, there are several contributors. India, as we mentioned already, when we saw the deceleration back in Q4, we've always expected to recover. We had gross margin pressure driven by a very specific regulatory change, with the implementation of Distributed Ledger Technology, which would take us some time to pass on to customers. We're happy to see this play out as expected, and we're now, you know, back to 20%+ growth in India. Brazil also, we commented back in Q4, Q1, more uncertain, as a deterioration driven more by competition, where you know we're no longer seeing a worsening, but as Roshan said, not an improvement either. Back to the gross margin, there are several contributors. Of course, India is one of them. Of course, you know, our general focus is profitable growth. It also comes into the individual customer discussion and to how you assess, you know, a particular opportunity in the marketplace. Where we've had some large volume deals at relatively low margins, we've taken a careful look and looked through the full P&L and the cash flow and been a bit more disciplined, right? You see that in gross profit developing well, with a slightly lower increase in transaction volumes as we, you know, focus on profitable growth. On voice, there are several contributors. It's, you know, continued financially very sound business with strong EBITDA and cash flow generation. Despite the regulatory reform, which we call out, we're seeing organic growth. You know, a large part of this comes from the development, you know, where we do more intelligent voice services. We combine messaging and voice services for number verification. This is a business which we've been active in also before the acquisition of Inteliquent, the former voice and video segment, which is now performing really well. We're combining, you know, a niche asset with some great strengths, you know, layering that on top of North America's leading network assets, you know, creating some really strong results, which is pleasing to see. The next question is from Andreas Joelsson of Danske Bank. Please go ahead. Good morning, all. First, a quite simple question on the effective interest rate that we should expect going forward. I think you said, Roshan, that it was 2.5% in the quarter. Then secondly, maybe on sort of lifting the view a little bit, can you say anything about what you see in terms of benefits from now being a lot broader with a broader product offering? What kind of customer discussions you have and maybe potential revenue synergies from these acquisitions that you have done, that you have seen now when it's been almost a year that you've had these assets? Thanks. Yeah. Andreas, thanks for the questions. Roshan, again, I'll take the first one and hand over to you for the second. I think, you know, it's hard for me to try to predict, you know, interest rate development, but suffice it to say that it will head upwards, right, in the short term, and then we'll see what happens. We feel comfortable that we have a good interest coverage, you know, which is trending up to almost 16 times, I think so. And also that we have a good portfolio of debts that, where we have good terms. Besides that, let's see where the market, kind of ends up. I'll hand over to Johan for the second question. Yeah. No, but the focus long term is to provide a much more of an integrated product offering and experience for our customers. This will allow us to reach more customers, grow with our installed base, selling more products to same customers, and also faster sales cycles. I think so far we had some wins on cross-sell, but they've been more driven by individual performers than systematically driven. I think now we're moving into having a systematic approach to this. We think that will start resulting in higher sales during 2024, 2023. Perfect. Thanks. The next question is from Daniel Thorsson of ABG. Please go ahead. Yes. Thank you very much. Daniel here from ABG. First question, looking at the organic GP drivers in segment messaging, you have already talked quite a lot about it, but do you see any specific customer groups or any specific customer that drove volumes in Q3 here? Secondly, on the working capital, which is moving quite a lot between quarters, I'm more interested in the longer term view on normalized working capital to sales. Can you say something on the level that you target or what you think is reasonable for the business? Thanks. I'll start with the first one on customers and leave the second part to Roshan. I think, you know, it's worth thinking about in terms of individual drivers that the company is becoming quite large and diversified by now. Our largest customer, you know, is less than 5% of gross profit, and we've seen a broadening both of our growth and of our base. With that in mind, you know, the development is relatively broad-based, which is of course a positive development compared to previous years. Yeah. I think just maybe one final comment on that one is also that, you know, if you look back to the last couple of years, of course, we've had, you know, one of the contributors has been, you know, some amount of communications related to COVID, right? Whether that's come from health authorities or governments, et cetera, and that segment is not existing now. I think on the working capital, you know, I'd say that what we aim to, of course, to do firstly is reduce our overdue receivables situation right to a level that is more acceptable. I think, you know, we've made some progress, but I do believe that there is more potential within overdue receivables, even if, you know, that's most likely not going to end up at zero. I think what we can help you there is to say that, you know, our goal and what we strongly believe is that we can generate or convert about 40%+ of the adjusted EBITDA to cash after working capital and after CapEx. That is excluding then any release of working capital, you know, buildup that we've had in the past. Okay. That's clear. Thank you. The next question is from Vikram Kumar of Kuvari Partners. Please go ahead. Yeah, thank you. Just to follow up on that question on the working capital. You talked about DSOs coming down. I don't think we had a sort of Q2 breakdown receivables, so I just had a couple of questions on cash flow as a whole. When you talk about receivables coming down, when I look at it from the year-end, actually unbilled receivables has gone up from SEK 1.95 billion (Swedish Krona) to SEK 2.1 billion (Swedish Krona), and I think your accounts receivable is up from SEK 3,870 (Swedish Krona) to SEK 4,311 (Swedish Krona). So I just wanted a point of clarity of what you refer to when you talk about receivables coming down in that working capital? On the flip side, the thing I do see is the benefit of accrued expenses, which seems to have gone up from SEK 2.8 billion (Swedish Krona) to SEK 3.7 billion (Swedish Krona), which I presume is kind of including the estimate of what you pay the carriers, et cetera. Maybe you could just clarify for me the drivers of that working capital improvement you've seen, which on a rolling 12-month basis is SEK 300 million (Swedish Krona) other in the quarter was a SEK 200 million (Swedish Krona)-odd release, given those breakdowns that I see in the statement. I've got a follow-up. Thank you. I'll start off and let Roshan fill in. I think firstly, you know, with the growth we're seeing in the business and the changes that the best metric to look at, of course, is DSO. As you saw in the presentation, DSO is consistently coming down throughout this year. That I think is the most forward-looking metric you can look at. When you look at the krona denominated levels of accounts receivable, of course, you will recognize that the absolute levels rise on the back of organic growth and currency tailwind as the Swedish krona has weakened versus the US dollar. That's probably what you should expect. In terms of disclosure, you have the full disclosure in our Q2 results presentation, which is available online and which you can compare to the notes added in our quarterly report. Thank you. No, sorry, I hadn't finished on that. On the accrued expenses point in terms of why that's gone up as much as it's gone up within the working capital. I think we'll have to look at. Let me. I think, I mean, you mean, do you mean accrued expenses and prepaid expenses? Yeah, I just mean like crudely when I look at it and I look at working capital release, mostly the biggest delta I see in the balance sheet is accrued expenses going up from SEK 2.8-SEK 3.7 (Swedish Krona), which is I think in business terms kind of the estimate and reality of what cash you pay out to the carriers in particular, right? Which presumably has to come out of cash at some point, does it not? In the same vein, as we generate traffic on the back of a growing business, of course, we generate more cost of goods sold with carriers, which is what you should expect. As we continue to show organic growth and also see the krona weakening towards the USD, when you look in Swedish krona denominated values, you should of course expect an increase in that line item as well, just as on the other side. Okay. The relevant forward-looking metric we should look at here is of course DTO, which you can calculate, and DPO is not the contributor to cash flow in the third quarter. The strengthening you see has to do with improved DSO. Okay. The last thing I had on the free cash was just to clarify on the EBITDA, the SEK 228 (Swedish Krona) of other income, and then on the free cash you had SEK 222 (Swedish Krona) of reversal of other items. Is that nearly the same items? What does that refer to, the increase in other income and then on the free cash with the -SEK 222 (Swedish Krona)? I think they're not the same item. The other income is of course a mix of different things. I mean, partly it is also compensation received for costs incurred from the acquisition where we had certain retention bonuses that had to be paid out that were covered by sellers. We have the costs on the cost lines, and then we have you know the corresponding sort of repayment from the sellers in the other operating income. On the cash flow, the other items is a mix of adjustment items. There we also have, you know, the realized currency effects or financial items that we have called out in our report presentation with the amounts given there. Okay. Thank you. All right. Okay. Thank you. Next question, please. The next question is from Daniel Djurberg of Handelsbanken. Please go ahead. Thank you, operator, and hello, Johan, Roshan, and Thomas. Most questions asked, but I will go into the SMB side, the growth topic. The growth there was 11%, I think, down from 13%. Weak in Australia, and my question is really, since it's somewhat good growth in the U.S., can you perhaps comment on that isolated and also on the, when we should expect to see a positive force when looking at Australia? Thank you. Thank you. The line was a bit poor, but we'll do our best. I think the question related to the growth trend in SMB, Australia versus the U.S. As we talked about before, and also, you know, when announcing the acquisition of MessageMedia, that business, you know, the growth is primarily coming from SMB customers signing up online with our web-based communication tools. That continues to be the case, very healthy growth in the U.S. on the base of products offered under the MessageMedia, ClickSend, and SimpleTexting brands. There is also a part of that business unit selling to larger customers in Australia, more of an enterprise type customer base, where we're seeing a weaker trend compared to H1. This has, you know, partly to do with comparables the second half of last year. As you may recall, Australia had a pretty severe lockdowns on the back of COVID, which extended further than in many other countries. Which means that this time last year, you had some traffic volumes which were COVID related, and which tailed off in the beginning of the year. A little bit harder comps here in Q3 and Q4 for SMB, which would get a little bit easier starting next year. Thank you. If I may ask you also on you're still working on migrating SDI and Wavy through your Sinch, let's call it, super global, super Nova platform. When will this be ready in full and what kind of benefits should we expect? Also what has been the key hurdles there, why I at least thought it should be ready by now? Yeah. Thanks, Daniel. Roshan here. I think the you know, I mean, again, the integration of platforms is typically 18-24 month journey. That's what we've always said. I mean, it's quite a large amount of work that needs to be done to move customers and also build incremental features on our Nova platform to be able to support sort of the customer requirements or demands. We're happy to say that, you know, post the third quarter here, we have executed upon a large migration of SDI customers to our central platform. That is not all of the customers. There is still some work to be done during Q4 here and in the beginning of 2023. We expect to be completed with that migration early 2023. On the Wavy and the TWW platforms that were acquired in Brazil, where the Wavy platform, you know, the Wavy acquisition was completed in February of 2021. The work is ongoing, and we expect to complete, you know, those migrations as well during 2023. Now, as Johan, I think alluded to earlier, we see a potential for improving, you know, margins within the messaging segment. Of course these system migrations or platform migrations are a key driver or enabler for us to be able to reach the efficiency levels that we expect. Correct. Thank you. Good luck, people. This concludes our question and answer session. I would like to turn the conference back over to Thomas Heath for closing remarks. Thank you very much everyone for listening in to this results presentation. We hope to keep you updated on any further news of course. If not before then, of course, with the fourth quarter results coming up early next year. Thanks for tuning in today and have a good day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.