Sinch AB (publ) (SINCH) Earnings Call Transcript & Summary

Welcome to the End of Year Report, January to December 2019. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I'm pleased to present Thomas Heath, Chief Strategy Officer. Please go ahead with your meeting.

Thank you, operator, and welcome, everyone, to this full year results presentation for the year 2019 and Q4 results presentation with Sinch AB. My name is Thomas Heath, I'm Chief Strategy Officer and Head of Investor Relations. With me in the room today is Oscar Werner, our CEO; and Roshan Saldanha, our CFO. With those introductory remarks, I'll hand the word over to Oscar.

Thank you, Thomas. And so, I also want to welcome you all to this report. And so we can start right away, we're going to Slide #2, please? And this is a slide many of you have seen before and every quarter, we are updating the numbers. And so as you can see, there are quite a few things that have changed in this quarter. So we have the past revenue, in the past 12 months, up to SEK 5 billion. Adjusted EBITDA in the past 12 months up to SEK 574 million. And the market cap has moved quite a bit lately, as many of you know, to around about SEK 20 billion. And we're up to 722 people at the end of the quarter, both employees and contractors. It's up significantly, a lot of that is driven by acquisitions, as you know. And we are in 33 countries where we have local presence and local sales force. That's a presence which I think is just showing how truly global this market is. We increased the number of engagements to 40 billion on a run rate basis, if you take the numbers that we have right now. The remainder are obviously very similar. We're doing customer engagement, we're scalable or we're cloud communications and in messaging, voice and video, in that order. And we're serving a lot of large U.S. tech companies. I don't think I need to go through the rest of this slide. But as a principle, you can see the change in this slide. Then move on to Slide #3, please. This is something that we -- always fun to show all of you. It's a little bit internal. We made a -- it's called a Mentimeter. We asked, I think, we asked the staff in an all-hands meeting, if you can all submit one word that sums up 2019 for you, this is around 230 or so people from Sinch sending in their suggestions, and the more people that vote for a specific word, the bigger it becomes in this word graph. So you see this is what people internally believe is -- sums up 2019, and you have, well, the words success, growth and success and exciting and team, and combined with words such as baguette and other things. It's a little bit of what we see internally, but also, as you can see, a lot of hard work and very busy, et cetera. Next, if we then go to Slide #4, this is something, a marketing campaign we did. We're gradually scaling up our marketing efforts. The main reason and the main goal for the marketing organization is to drive leads to sales. We think there's a lot of -- we can increase sales efficiency a lot when we drive more leads automatically from marketing. Automatic is one word [indiscernible] lead for marketing. One of the things we did here was we discussed once and we said, "Hey, we think there's so much negativity in the world. There's so much -- a lot of the comments are so negative in so many different forums." So we said, "Well, let's launch something where we fight the world of negativity or fight online negativity." Where we did a campaign called #TextForHumanity, where we partnered up with some non-for-profit organizations and said, "All right, let's do a positive message switchboard." So the way it works is basically you would, if you send a message via WhatsApp or text message or other channels into this switchboard and you write something positive, you write your name, and you get a positive message back, in order to counter all the negativism in the world. And we think it's fascinating to see how much positivism you can get out of this. And so far, we have seen 50,000 net positive messages exchanged between people in around, I think, 60 different countries. So a very large interaction of positivism, which we think is super positive. Then going to the next results, Slide #5. So of the gross profit and EBITDA level. That's what we focus on. As you know, since the pass-through of the revenue is large and varied between geographies, we think that the correct measure is gross profit and EBITDA. And this quarter, we had a 42% growth in gross profit and an 83% growth in EBITDA over Q4 in '19. And I will comment more on why we have those results a little bit later in the presentation. So if we then go on to Slide #6. And the first thing that you need to know in any business that is growing well and consistently, it's about the markets. That's the -- probably the single most important factor. And the next most important factor is the people in the business. But we are in the growth markets. I said this several times before. The fascinating thing I think about with Sinch is it has the combination of being a profitable here-and-now business and an attractive business for the future that can drive growth. And I think this slide sums up the 2 major aspects of that. The messaging market, as such, on A2P SMS messaging, it's a $17 billion market size, and that's where we make the majority of our profits and the majority of our revenue and gross profit. That is growing well and it's our profit machine, so to speak. And then we have the CPaaS market, where it's the software [ value ] on top of that, which is a high-growth market, which has a growth of 50% CAGR, roundabout, where we supply various forms of more advanced and more intelligent software modules on top of just delivering the message or just to deliver the phone call, if you will. So that's the 2 aspects of the market. It's growing on both these accounts, and that's [ 2 ] reasons for our growth. So next slide, please. Replay, as we've been talking about several times, in 2 different areas. The first is the connectivity layer, which is completing a phone call, making sure that Enterprise A can call Customer B, or that Enterprise A can send a message, WhatsApp, Facebook, text, what-have-you, to Customer B -- or to Consumer B. That's the connectivity business. It's making sure you can connect with these messages. And then, like we said, Software as a Service on top, where it's an additional service value add, which is additional software modules, and which may be you want a web-based graphical user interface to send that message, so you don't have to program to an API; or you want to mask your numbers so that the caller cannot see the -- who is calling or the receiver cannot call -- see who's calling; or our want an AI service in order to respond to the message you got as an enterprise. You don't want to have an operator respond, you want to have an automated response that when they can [indiscernible] service. And of course, we will charge an additional fee for that, which becomes a more classic Software as a Service business with high margins. Go on to the next slide, Slide 8. We have been doing several acquisitions over the past years. And in this quarter, you can see a significant effort or impact from both myElefant and TWW, this [ ultimate ] TWW acquisitions. We do acquire companies both in the technological market, where we want to add a software module or the functionality that we can upsell our existing base and new customers, too. And the other area is scale and profitability, where we acquire into the connectivity area, which is the scale and profitability, which is represented by TWW. These companies are typically larger, more profitable, and in the yellow part here. While they're smaller and exploratory in the purple part, in the technology part. So then go to the next slide. So looking at October to December, like we said, we have gross profit rising 42% to SEK 439.9 million. We had adjusted EBITDA rising 82% to SEK 199.5 million. We had adjusted EBIT, excluding acquisition-related amortization, of SEK 185 million. And you have a profit after tax of SEK 94 million. And the big reason -- difference there between the SEK 185 million and the SEK 94 million is the acquisition-related amortization that we do that are non-cash-flow impacting. So we think the EBITDA is the best and then the EBIT, and you can see it's relatively close between EBITDA and EBIT. And the reason is, obviously, that we take -- we don't capitalize [ a lot ] we take the majority of our cost straight over OpEx. Organic growth -- in organic growth in gross profit is 23%. So you can see the difference on the myElefant and the TWW acquisitions. It has a large impact on the growth levers in this quarter, which is why we made them, of course. You can also see that it's a very scalable business model. We have high scalability, and that means that EBITDA grows faster than gross profit and despite increased OpEx. So when traffic volumes increase and our big customers are starting to send a lot, a lot of that drops down to the EBITDA level, which is a fact of a scalable business model. We should also say in this quarter, seasonality plays a strong and noticeable effect. Q4 is -- has been the strongest quarter traditionally for us. In this quarter, it's an even larger effect, both due to the TWW and myElefant acquisitions. They both are skewed to Q4. And we're seeing an increased kind of effort from Q4, since we've been able to deliver well for the big senders there, when they tend to give us a lot of traffic during Q4. So that effect has been kind of strengthened during this quarter, obviously, resulting in the 82% growth on the EBITDA level. Let's go to the next slide. So the key growth drivers is, like we have said before, I mean the rising message volumes with large U.S. tech companies. They do see that we have high-quality labor, and they do trust us with their messaging. Number two is the growth in voice and video. We see a good trajectory in the voice and video business, and we're continuing to invest in that. And the third one, noticeable significant in this quarter is the acquisition of TWW and myElefant. That's the 3 main growth drivers, and you should include them on the seasonality side [ of core ] [indiscernible] effect on the quarter. And we should say they're both -- growing both with new and existing customers. So this is a -- both of these factors are in play in this quarter. Next slide, please. We're investing in 4 areas. As you can imagine, when you are in a business in a market which is developing well and in a business that is doing well, you needed to continue to invest in order to keep up this growth. And it's both forward-looking investment, investment just to handle the actual growth and the number of customers and the traffic volumes that we have. So there's relatively large areas where you need to focus on, but there are 4 areas. So it's to grow with existing customers. So it's both on the platform scalability side and on the key account management customer handling side, it's investments we're doing. We have an operational efficiency. We want to keep and increase our scalability, so we're looking both on the COGS efficiency. On the automation and the client self-service tools, it's a long-term investment theme that we think, and we think there are more to do there. Even though we think we're scalable, we think there are significant improvements we can do. We are investing in sales and marketing, and both on the lead generation side and the marketing side. And on the new sales focus, we want to expand our client base and have a broader client base. And on the international expansion of the personalized video products. And of course, we're investing organically in the new technology, so software for advanced, interactive messagings, new channels like WhatsApp, RCS. And RCS-as-a-Service for the mobile operators. So these are the 4 areas. If we then go to the next slide. Looking at the messaging segment being the biggest. As you can see, we have rising volumes and then rising revenue, gross profit and EBITDA. It's -- from a macro perspective, this is -- the business is shifting from e-mail to mobile messaging. That's the underlying trend due to the fact that it's more efficient. The underlying logic here is you've got a -- with mobile messaging via any of these channels, we got a 98% open rate and we got a read rate of some 95% within 2 minutes, and that is higher than e-mail. It also has a more limited content, but if you want to reach somebody, this is a very effective channel and that's driving the growth -- the underlying growth. myElefant and TWW are included since mid-October. I think it's -- yes, it's mid-October. And we're doing investments in the next-generation messaging side here. As you can see, the spike in Q4, acquisition-related and seasonality-related, driving that growth. On the message volume side, you see it's a big jump this quarter, primarily acquisition-related, and you see the big jump in the last quarter on a higher number of transactions per month. In 2016, you saw the acquisition of Mblox, how the jump played out there. So there you see the 2 acquisition-related jumps. There is also the growth from existing customers, like we said, and a positive seasonality in the fourth quarter, which we should not underestimate, where our large customers are sending more and that gives us a -- the big drive in Q4 and -- but then, seasonality-wise, Q4 is much stronger than Q1. 41% growth in transactions and 49% growth in gross profit quarter-on-quarter, over since a year ago and on a Q4 basis. Gross profit per transaction and here, you see some interesting trends. We've been gradually, over the last quarters and months, increasing the gross profit per transaction on a rolling 3 months basis. And here, you see it going down a little bit, and that is primarily due to the acquisition of TWW that have a lot of messages at a lower price point, basically, and that's what's driving that. And partly it is because the market in Brazil is very large, and partly it is because it's competitive, so depending on what you have. Partly it is also since TWW does not have a lot of additional services on top, of value-added services on top, so when we acquire large SMS companies, you will see -- see that type of effect. On the other hand, we see a large effect, positive effect, on the profit side. You can also see the OpEx per transaction going down, that is mainly, actually, driven by economies of scale and seasonal increase in volumes. So partly TWW, the large portion of this one is that the model is scalable and a lot of customers are increasing traffic. We don't have to add as much OpEx. So then you have a decrease in OpEx per transaction, which we obviously think is positive. And you can see the scalability of the business and in the seasonality one, we have a quarter where large senders are sending a lot, we don't need to add as much OpEx to support the traffic. Next slide, please. On the margin side, we've shown this graph a lot of times. We're very proud of it. The messaging EBITDA over profit -- over gross profit. So as you can see, traditional [indiscernible] 45% of every gross profit dollar that we generate has been dropped down to EBITDA, which I think is a great measure of the scalability and the efficiency in the organization. You see this quarter or the last month, it's going above 50%. So that is actually increasing. And it, again, shows the scalability of the organization. And you see that we're -- even though we're investing heavily in OpEx growth, the last quarter's solid gross profit growth has been more than compensating for the addition in our Opex, that's basically what this graph shows. And something that we keep a very close eye on. We know we're adding OpEx at a rapid rate. But as long as we keep this graph in check, then we're growing with the OpEx. So it's actually now we're growing faster than the OpEx, and we think that's where we want to be. It's obviously hard to tie it on a exact quarter-to-quarter basis. But over time, we think we have a lot of room to make sure this is in balance and so if we've got a couple of quarters, we can make sure there's a balance, but hard to manage on an exact quarter-to-quarter basis. Voice and video, if we go to the next slide, Slide 16, maintained momentum in growth in voice and video. It's growing on nicely. Like we have said before, it's fueled both by new and existing customers, and is both number masking and verification. We are increasing OpEx here to ensure quality as volumes ramp, but as you can imagine, when you have this type of ramp in the business, that is hard. We're fighting hard there, but I think we're making good progress in increasing quality and increasing our service level to our big customers. And we see a solid market for this area as well. And to us, it's important to keep on growing, and we're investing heavily here, or aggressively here, in order to make this a long-term growth driver for the business. Next slide, please. On the operator side, and that's one of the negative sides for the quarters. We have had -- in this business, we have fluctuations in results as projects are realized. In this quarter, we had project delays and currency headwind in Q4. We're also investing in RCS-as-a-Service for mobile operators. And as you can see, in Q4, the EBITDA on the operator side turned negative. It's not something we're happy with. It's something we want to turn back. So that's something we're working hard on. But this is one of the negative messages for this quarter. You should obviously realize that, yes, it's a -- this is a fluctuating business, but by no means, we're not happy with having a negative quarter in our business units. It's -- we're a company that takes a lot of pride in having our larger business units being profitable. So that's something we have to work on. With that, I want to leave to Roshan Saldanha, our CFO. So Roshan, welcome to the call.

Thank you, Oscar, and good morning to everyone on the call. Turning to Page 19. Consolidated net sales grew in the period by 34% to SEK 1.54 billion. Organic growth was at 17% in local currency and excluding acquisitions. The acquisitions of myElefant and TWW contributed 13 percentage points. And the positive currency effect on consolidated net sales was 4%. Consolidated gross profit grew during the quarter by 42%. Organic growth was 23%. And the acquisitions of TWW and myElefant contributed 14 percentage points, and currency tailwind was 4 percentage points. Nonrecurring items in the quarter relates to the acquisition and integration of myElefant and TWW, growing about SEK 5.2 million in Q4 2019. Full year adjusted EBITDA rose by SEK 27.5 million due to IFRS 16 -- or the IFRS 16 accounting treatment of leases contributed SEK 27.5 million to full year adjusted EBITDA. This effect, of course, stops with 2019 and there is no further contribution in 2020 due to the change in accounting treatment. Amortization of acquisition-related assets during the quarter was SEK 37 million. As Oscar pointed out during his comments, this has no cash flow impact but it's related to previous acquisitions. And adjusted EBIT, excluding nonrecurring items, as well as amortization of acquisition-related items, ended up at SEK 185 million against an adjusted EBITDA of SEK 199 million, showing the strong cash flow generation in the business. Turning to Page 20. We have an accelerating gross profit growth. The messaging segment continues to grow strongly, with SEK 66 million in additional gross profit during the quarter; voice and video with SEK 12 million additional gross profit during the quarter; operator slightly negative at SEK 5 million; and the acquisitions of TWW and myElefant contributing SEK 44 million additional gross profit during the quarter. And then we have an FX tailwind of SEK 13 million. What is driving the messaging growth is definitely our largest customers in the U.S., besides, of course, the acquisitions, as commented earlier. We have a limited total ForEx effect on adjusted EBITDA during the quarter, as the ForEx effect on adjusted EBITDA is a combination of increase in net sales leading to increase in gross profit as well as, of course, increased OpEx due to a negative headwind from ForEx effects. Turning to Page 21. You see the headcount development in the business. We've grown the headcount year-on-year, grew it 39%, both through recruitment and acquisitions. Headcount was at 722 at the end of Q4, but the quarterly average for Q4 was at 654. If we excluded the acquisitions of TWW and myElefant, the headcount would have been at 614, implying organic addition of 41 employees, which is a slight increase compared to the trend in the previous quarter, but this is a seasonal increase. Near-term negative impact on EBITDA, it's been due to the increase in headcount, before some of the new initiatives translate into higher revenues and higher gross profit. Turning to Page 22, you see a reconciliation from EBITDA to cash flow before changes in working capital. During the quarter, we have paid interest of SEK 2.5 million and paid taxes of SEK 54 million. Our effective tax rate continues to be around 22% on a rolling 12-month basis. We have a strong underlying cash flow generation of 75%, especially considered that in 2019, the EBITDA is inflated by the change of accounting treatment due to IFRS 16, but we still continue to maintain a strong cash flow generation compared to the previous Q4 2018. Turning to Page 23, where you see a summary of the cash flow statement. As we have a net working capital which is a negative SEK 13 million for the quarter, and working capital consumption during the year was at SEK 126 million. Net working capital fluctuates between quarters. Due to the strong growth that we have experienced during 2019, there has been a higher consumption of working capital compared to 2018. This continues to remain a focus for us within the company, to work with and find solutions to manage our working capital. However, we have very low bad debt at around 0.1% to 0.2%, varying between quarters. We have successful -- we had also a successful bond issue during the quarter and a refinancing of our debt, which you can see on the financing activities through new borrowings and through amortization of bank loans. The net debt is increased by SEK 84 million since January 1, 2019, due to the implementation of IFRS 16 accounting for leases. Finally, turning to Page 24, you see our key financial targets. The 2 financial targets that the company have declared before is to grow adjusted EBITDA with 20% per year, and net debt-to-EBITDA -- to adjusted EBITDA to remain under 2.5x over time. During the quarter, we're proud to say we have delivered adjusted EBITDA per share of 54%, measured on a rolling 12-month basis. And net debt-to-EBITDA remains at 1.7x, measured on a rolling 12-month basis, despite financing our acquisitions of TWW and myElefant. With those words, I would like to move back to Oscar to conclude the presentation.

Thank you, Roshan. So if you then move to Slide 25, future growth. In general, we see a strong pipeline with several U.S.-based global tech companies, and we see we have a good solid delivery to those. And so we see that's a potential for future growth. We see, generally, the market trends, enterprises shifting to mail to messaging. We do not see that, that trend will slow down. We think it's going to continue for the coming years. So it's a good, in general, market. We see further growth of [ usage ] of voice and video. Many companies want to include voice and video in their customer journeys in many different ways, and we see that's a growth market for the coming years as well. We are building a larger Sinch field sales organization and strengthening our marketing, in order to address more enterprises on a global basis. And we think we have a focus to broaden growth in this area, and we think that's a positive sign from those [indiscernible]. As you know, we also have an active M&A agenda, and then as opportunities come up, we have a strategy of strengthening the organic growth with acquisitions. In general, I mean these 2 areas, the 2 major areas for growth, will continue to strengthen our connectivity offering. We're one of the absolute best players in the world of offering mobile connectivity, and we intend to stay in that position. And so we continue to invest in our connectivity offering. And we're also investing into the SaaS value-add, through investments in software, RCS, OTT chat apps and a lot of different areas. So with that said, we think we are well-positioned for the future in the general markets, and we hope to continue a good growth story going forward. And we think the market is there to do so. Then, it's obviously hard to tell exactly what quarter and how and where it's going, and we do not give any forward-looking projection for that. With that said, I want to conclude the presentation of this quarter, and I want to thank the entire team of Sinch for a lot of hard work and a very well-performed quarter and year. And I want to open the presentation for questions. So thank you.

[Operator Instructions] The first question we have is from the line of Predrag Savinovic from Carnegie.

Starting with a bit on messaging. You mentioned time and time again that the big U.S. tech companies are one of your growth drivers, but it's hard for us to size the market here and see what kind of true growth potential there is for you guys. So if you could let us know, for example, of the biggest accounts here, how much traffic do they currently allocate to you in percentage points? And what is the upside here? Do you have feeling -- any type of feeling on the potential here continued? And you also say the pipeline is very strong still.

Thank you for the question. We do not give -- we have not given information about the customer concentration, and we cannot give the names of those companies. We are legally obliged to do so -- not to do so in the names. They're very protective of their brand names. So I would love to, but I cannot. We can say it's 8 out of 10 of the largest U.S. tech companies, and I think you can all understand roughly who they are without naming names. We have continued growth, both from existing accounts and the potential for new accounts in that area. But I want to also stress that we have a -- this is a messaging business, it's a global business. It is pretty much any enterprise in any country, would have messagings and do have messaging needs. The other big segment in our businesses is the banking and finance segments, where we have a large portion of big retail banks as our customers to do fraud alerts and to provide notifications, et cetera, but there's also a very large number of banks that we do not have. Other big segments are travel and transport, for example and the Internet sector, in general, and the large number of subscription-based services. So it is a very, very broad market that we're talking about that exists in any country, and there's also a lot of potential for -- large potential and large amount of revenue from non-big tech companies, of course.

All right. Super. Another question then, looking back at, say, the beginning of 2018 or even end of 2017, it seems that the gross profit per transaction has quite -- had quite a positive trend, slightly less in Q4. But can you give us some flavor on the drivers behind this? Is it FX tailwind, mix effect, or more higher charging from value-added services in the longer-time perspective?

This is Roshan. Yes, I think it's a combination of those factors. I think one of the things that we see is, definitely, if you go back a few years ago, this business is coming from selling wholesale and as we have increased the enterprise share of our business, and we continue to focus on growing that, we can see that, that's a higher value-add and therefore, a higher gross profit result for us, especially when we talk about the scale and size of the large tech companies in the U.S. as important to the business that has grown over time and definitely leading to a higher gross profit, even on the messaging side. Then, I think also, definitely, that the value-added services that we are continuing to build, have built over the years, continue to build and acquire and deliver to our customers, means that we can increase margins over time. At the same time, I must say, this is a competitive market, and we are in a competitive market. So we definitely see also increased price pressure, and we work continuously on our cost base to be able to retain and grow margins over time.

Yes. I mean it's important to understand, this is a market where, with large-scale U.S. competitors, I mean competing with companies like Twilio. I mean they have a lot of cash, a lot of developers, a very successful and good company in so many different ways. We like competition because it makes us more on our toes and it drives the market. So that's good. But you also need to understand, this is a big global market with strong competitors, and that's something that's important to understand.

Okay. Super. And looking in a little bit in new verticals. And I know it's still early days, but can we get an update of the progression on myElefant, since you acquired the company, in terms of revenue progression. And it seems that there is some quite meaningful upsell potential here from adding these services to the mix, and you already mentioned that you have started the cross-selling. So what are your expectations here? And some kind of revenue update?

Yes. I mean we don't give the broken out financial figures. So I cannot and will not give that, but I can give the commentary around it. We're very, very happy with both of those acquisitions. On the myElefant side, we see very strong synergies across our base and we have a large number of Sinch salespeople that are super excited to sell it, and we have a large number of salespeople that are already selling these services. And we see that in all our geographies. So we see -- the theory we had, this is a great service with a great go-to market, and we want to add it on and sell to our existing customers. To me, it turns out 100% true. And then we're very, very confident that will be a growth driver going forward for many years to come. Obviously, then we're gradually now integrating myElefant into our own offering. So gradually, over the quarters here, you will see no difference in between the Sinch offering and the myElefant offerings, and we're giving them a global responsibility to drive this, but it's -- but the thing that they have started is very, very good, and we see growth from that. And you should also see the seasonality in myElefant. It has a strong impact, and it has a very strong Q4, given that it's relatively marketing oriented. So therefore, we see an extra strong impact in Q4 from the myElefant acquisition. That will [ wane ] off a little bit in Q1.

Okay. Super. And finally, maybe an update on the acquisition pipeline? That's -- this is becoming an integral part of your story.

Yes. No, I mean it is -- needless to say, we cannot talk about any specifics on this one. We have an active M&A agenda in the connectivity area and the technology and go-to-market area and in both of those, and we have an active agenda. And we are continuously working to find good partners to work with and hopefully, we're successful, but it's not something we can give any projections on. But this is a big market, and it's a good market, and we see a lot of opportunities in many different areas. If that leads to a transaction, it obviously depends on so many factors, so it's very hard to tell.

The next question we have is from the line of Ramil Koria from SEB.

Just -- I have a bunch of questions. I'll try to limit myself. But starting off, really, on the former question, a follow-up on the M&A pipe. Just sort of given the balance sheet situation, and you obviously executing on 2 acquisitions quite recently, how do you reason around timing, et cetera? I mean you have a pipe, would you shy away from execute on that due to integration, et cetera, of current or recently made acquisitions?

Yes. Roshan, again, I can take that question, Ramil. I think the first is, as Oscar said, there is a very strong pipe out there, has been and we see definitely increased interest. There's a couple of drivers to that. I think one key driver is definitely the underlying tech shift in the market, which means that the larger players have a better possibility to invest. What we can say is we are keeping to our financial targets, and one of our financial targets is to keep net debt-to-EBITDA at 2.5x over time. We can definitely see that adjusted EBITDA grows on a rolling 12-month basis as the business grows, and that increases, definitely, our possibility to leverage and make acquisitions. In addition to that, and this is more of a shareholder decision in the end and a Board decision, which is that we have the possibility to fund acquisitions through equity as well. And that is not -- that is nothing that the management will comment on, and that is nothing that we can say anything about it.

Yes. And from an organizational perspective -- yes, acquisitions takes a toll on the organization and it has an opportunity cost, and we need to be careful about that. And we'll continue setting our -- gradually setting our organization up to handle both the ability to execute on transactions and to integrate them. To us, that's work like anything else. I mean we have organic sales work and organic R&D work, and we have an acquisition-related work, and we're building the organization to handle that on a day-to-day basis. And of course, there are limits, and it's hard to talk exactly about what these limits are, and we have to evaluate each case when we see them.