Link Mobility Q2 2025 slides: Profitability surges as SMSPortal acquisition expands footprint

Link Mobility (OB:LINK) reported Q2 2025 results reflecting a strategic shift, with organic revenue declining 11% due to a move away from low-margin traffic, yet achieving significant profitability growth including an 18% increase in adjusted EBITDA and 11% in gross profit, driven by higher-margin products. The quarter's highlight was the transformative acquisition of SMSPortal, South Africa’s market leader, which significantly expanded Link's scale, pushing proforma LTM adjusted EBITDA to 1.1 billion NOK and marking its first major non-European expansion. This strategic pivot towards CPaaS solutions and geographic diversification, supported by a strong balance sheet, positions Link for continued accretive growth and further M&A.

Analysis

Link Mobility's Q2 2025 results illustrate a successful strategic pivot towards higher profitability, despite a headline organic revenue decline of 11%. This revenue contraction is a deliberate outcome of shifting away from low-margin traffic, a strategy validated by superior profitability metrics, including an 11% year-over-year increase in reported gross profit and an 18% rise in adjusted EBITDA. The organic gross margin expanded by a significant 3.4 percentage points, underscoring the positive impact of the new product and traffic mix. The quarter's pivotal event was the acquisition of SMSPortal, South Africa's market leader, which not only marks Link's first major expansion outside Europe but also significantly enhances its scale, boosting proforma LTM adjusted EBITDA to 1.1 billion NOK. This M&A activity, executed at an attractive 4.6x cash EBITDA multiple, is complemented by strong organic developments in high-value services, with new CPaaS contract wins accelerating and now accounting for 52% of new business. With a solid balance sheet, strong cash flow from operations representing 77% of adjusted EBITDA, and a clear forward-looking guidance for EBITDA growth to outpace gross profit growth, the company has established a clear framework for value creation centered on margin expansion and accretive M&A.

Key Decisions for Investors

• Investors should look past the 11% organic revenue decline and focus on the superior growth in profitability, such as the 18% increase in adjusted EBITDA and the 3.4 percentage point gross margin expansion, which validate the strategic shift to higher-quality revenue.
• The successful integration and synergy realization from the SMSPortal acquisition should be monitored closely, as it serves as a primary catalyst for growth and a potential blueprint for the company's non-European expansion strategy.
• Given the company's explicit guidance for EBITDA growth to exceed gross profit growth and its active M&A pipeline, positions should be evaluated on the expectation of continued margin expansion and value creation from future accretive acquisitions.
• Note the acceleration in CPaaS contract wins, which now represent over half of new business, as a key organic indicator confirming the company's successful transition into higher-value communication solutions.