Words from our CEO – Johan Hedberg

The USA is now CLX’s largest market

July – September 2016 is the first quarter following the acquisition of Mblox for which we are reporting consolidated results. After the initial period of restructuring and integration I can already see positive operational and performance measures. When we announced the acquisition, we expected annual synergies of at least USD 10 million, and in addition to positive earnings and margin effects during the quarter, I can state that the integration surpasses our expectations from an operational perspective.

Consolidated revenue for the quarter was SEK 590.2 million, which represents growth of 143 percent. EBITDA is positively affected by the acquisition, and consolidated adjusted profit amounted to SEK 72.1 million, representing a margin of 12.2 percent. Organic growth remains strong and the underlying gross margins in our Enterprise Division are trending in the right direction.

Our industry is changing rapidly, and CLX is not content to simply evolve with the industry; on the contrary, we will lead this development. The acquisition of Mblox is an important component in our strategy to expand into geographies and market segments where the gross margin is higher. Furthermore, the acquisition is strategically important in the long term as it positions us as the leading provider in our market.

Through the acquisition, CLX has gained a significantly larger customer base and organization in North America, the world’s most important market for cloud-based communications. Its structure, with higher gross margins than other markets, make the USA an important component in our efforts to generate higher margins in the long term.

In the coming quarters, we will continue to focus on completing the implementation of a common, cost-effective and customer-focused organization that, in a market characterized by continuous growth, means that we see further good opportunities to grow organically, not least in the USA.

The main purpose of the acquisition of Mblox was to achieve economies of scale that create the conditions to be one of the market’s foremost and most profitable providers. Our long-term strategy is to leverage our market-leading and strong financial position to grow, both organically and through acquisitions, and thereby deliver increasing value for our shareholders. To achieve full synergies from the acquisition, a technology project has been initiated, intended to migrate all customers to a uniform technical platform. The project is proceeding as planned.

Efforts continue to improve the gross margin of the Enterprise Division in markets other than the USA, and positive effects are already visible. My assessment is that there are good prospects of improving profitability in these markets as well during 2017.

During the quarter, we intensified our efforts to develop in the Internet of Things (IoT) business area in order to address growing interest and demand in this field, and in November we have delivered our first commercial application. In addition to continued growth in communication between computers and people (A2P), we are convinced that communication with and between things and physical products will demonstrate substantial growth over the next few years. Our aim is to benefit from the business opportunities this generates.

The Operator Division, which supplies strategic support systems to mobile operators, continues to develop well and its order book remains very strong.

In conclusion, I look to the future with great confidence. We are rapidly seeing positive results from the acquisition and integration of Mblox, which combined with continued growth and improved profitability in our core operations and efforts in IoT will further advance our position as the leading global partner in cloud-based communications services.

Stockholm, 15 November 2016
Johan Hedberg
President and CEO

Strategic Principles

CLX Communications provides cloud communication technology, services and solutions to enterprises, society and mobile operators, supporting them to address and find solutions to all aspects of communication challenges today and for the future.

Cost leadership and Differentiation Strategy is at the core of CLX business principles and it defines us, who we are and how we operate.

Our Cost Leadership ambitions are to focus on achieving:

  • Lowest customer acquisition cost by blending online, inside and field sales in an optimal manner.
  • Lowest Cost of Goods Sold (COGs) by procuring directly from the source.
  • Lowest number of customer care touches and lowest number of support tickets by focusing on the highest quality products.
  • Lowest Cost of Ownership of our core platform by leveraging our Operator division technology capability and generating profit from R&D investments in our core platform.

Our aspiration to differentiate ourselves are focused in the following areas:

  • Be the best in class Tier 1 Super Network with more Tier 1 connections to more places than anyone else.
  • Acquire and develop product features that no one else has.
  • Address the global geographic coverage challenge.
  • Being communications experts.

Vision

Our vision is to be the world's leading Cloud Communications and IOT company, addressing and fulfilling all aspects of communication needs, empowering and supporting global enterprises, organizations and mobile operators to achieve their objectives to the benefit of society, employees, customers and shareholders.

Mission Statement

Connecting People and Things to a World of Infinite Possibilities.

Goals

Provide our customers with world-leading technology excellent products, services and a personalized support with second-to-none quality ambitions.

Maintain a healthy and challenging environment for our employees

Grow Revenue at 20% or more per year

Maintain EBITDA margin of 10% or more

Corporate Values

Be a Trusted Partner
Provide solutions proactively, always exceed customer expectations

It’s one global network
Think Big, and act local. We are part of a global ecosystem.

Embrace and Drive change
Be agile, flexible, and act fast. Think ahead and drive change.

Listen and Learn
Be honest, humble and learn to continuously improve. Kaizen.

Be Cost Conscious
Be smart, act smart. Drive value creation with a culture of frugality.

Empower Others
Share knowledge and give guidance to feed creativity. We grow and succeed together.

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