Link Mobility's Strategic M&A and CPaaS Growth Catalysts for High EBITDA Expansion

In the ever-evolving digital communications landscape, Link Mobility has emerged as a standout player, leveraging strategic acquisitions and a sharp pivot toward high-margin OTT (Over-The-Top) channels to drive EBITDA expansion. As the CPaaS (Communications Platform as a Service) sector matures, companies that can scale efficiently while adapting to shifting consumer and enterprise demands are poised to outperform. Link's Q2 2025 results—marked by 12% pro forma EBITDA growth, a 4.6x acquisition multiple, and a fourfold surge in RCS (Rich Communication Services) contract wins—underscore its ability to balance disciplined capital allocation with innovation. For investors, this represents a compelling case study in how inorganic growth and margin-enhancing product transitions can create long-term value in a sector transitioning from legacy SMS to next-generation messaging.

The Q2 2025 Catalysts: EBITDA Growth and Strategic Acquisitions

Link's Q2 2025 financials tell a story of resilience and strategic foresight. Despite a 3% year-on-year revenue decline to 1.8 billion NOK, the company's adjusted EBITDA surged 18% to 212 million NOK, with margins expanding by 2.2 percentage points to 12.1%. This margin improvement was fueled by a shift in contract mix toward high-margin CPaaS solutions, which now account for 52% of gross profit from new contracts. The acquisition of South Africa's SMSPortal—a $4.6x cash EBITDA deal—added $30 million in conditional value and is projected to boost pro forma EBITDA to $1.1 billion and cash EBITDA to $900 million post-integration.

The SMSPortal acquisition is emblematic of Link's disciplined M&A playbook. By targeting underpenetrated markets with stable regulatory environments, the company is not only expanding its geographic footprint but also diversifying revenue streams. South Africa's growing digital economy, coupled with SMSPortal's existing client base in SMEs and financial services, positions Link to capitalize on untapped demand for conversational AI and omnichannel engagement.

OTT Channel Adoption: A Margin-Enhancing Transition

The shift from traditional A2P SMS to OTT channels like RCS and WhatsApp is a structural tailwind for Link. In Q2, CPaaS gross profit grew 7% year-on-year to $422 million, with RCS contracts surging fourfold to $12 million. This growth is driven by enterprise demand for richer, more interactive messaging formats in sectors like banking, retail, and e-commerce. For example, a pilot program with Incedia demonstrated how RCS can streamline mileage reporting in the automotive industry, showcasing the platform's versatility beyond traditional use cases.

Link's MyLink platform, which enables channel-agnostic communication, is a key differentiator. By allowing clients to manage SMS, RCS, WhatsApp, and voice channels through a single interface, the company is future-proofing its offerings as iOS prepares to roll out RCS support in the Nordics by Q1 2026. This transition is expected to unlock new revenue streams, particularly in markets where iOS adoption is high.

Competitive Positioning: Outpacing Global and Regional Players

While global CPaaS giants like Twilio and Vonage dominate headlines, Link's regional focus and localized expertise give it an edge in Europe and emerging markets. Unlike pure-play cloud providers, Link's hybrid model—combining telecom-grade infrastructure with AI-driven analytics—enables it to offer scalable, secure solutions tailored to regional compliance requirements. For instance, its pre-established carrier partnerships in Europe reduce delivery friction for clients, a critical advantage in markets with fragmented regulatory landscapes.

Moreover, Link's leverage ratio of 1.7x adjusted EBITDA leaves ample room for further M&A, with a pipeline of eight targets in due diligence. This disciplined approach contrasts with the aggressive debt-fueled strategies of some peers, ensuring Link maintains financial flexibility to navigate macroeconomic headwinds.

The Road Ahead: Capitalizing on iOS RCS and M&A Synergies

The rollout of RCS on iOS in 2026 is a pivotal moment for Link. With iOS users accounting for a significant portion of enterprise messaging traffic, the company's early adoption of RCS pilots positions it to capture market share as adoption accelerates. Additionally, the integration of SMSPortal is expected to drive synergies in underpenetrated sectors like SMEs, where Link's high-margin CPaaS solutions can replace fragmented, low-margin SMS usage.

Investors should also monitor Link's leverage ratio and its ability to maintain organic gross profit growth of 7–8% while scaling through acquisitions. A Capital Markets Day in 2026 will provide further clarity on its long-term financial targets and M&A strategy, offering a transparency boost that could enhance investor confidence.

Investment Thesis: A High-Conviction Play in Digital Infrastructure

Link Mobility's strategic M&A, margin-enhancing OTT adoption, and proactive positioning for iOS RCS make it a high-conviction investment in the digital communications infrastructure space. The company's ability to convert inorganic growth into sustainable EBITDA expansion—while navigating near-term headwinds like enterprise client spending fluctuations—demonstrates operational discipline. For investors seeking exposure to the CPaaS sector's long-term growth, Link offers a compelling combination of scalability, innovation, and financial prudence.

In a world where digital communication is no longer a luxury but a necessity, Link Mobility is not just keeping pace—it's setting the standard. For those willing to bet on the next phase of messaging evolution, the company's Q2 2025 results are a clear signal: the future is OTT, and Link is leading the charge.