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Sinch reported expanding margins, strengthening cash flow, and integrating AI into its core platform. Gross profit rose 6%, adjusted EBITDA grew 8%, and leverage dropped to 1.3x, enabling share buybacks.
RCS adoption surged, with nearly 800 million business messages sent (+27% QoQ), though monetization remains unclear (more on this later). While net sales growth is still slower than the 7–9% target, Sinch is executing on a plan to accelerate revenue growth.
The Good
Organic gross profit rose 6%, while net sales grew just 2%. Gross margin expanded to 35%, and adjusted EBITDA increased 8% organically to SEK 869M (~$91.7M USD). Margin strength was driven by high-value email (enhanced by AI tools) and improved networks pricing discipline in the US.
Self-serve continues scaling quietly—delivering double-digit growth and now representing over 15% of gross profit.
Sinch generated SEK 523M (~$55.3M USD) free cash flow, with 60% cash conversion. Leverage dropped to 1.3x net debt-to-EBITDA, allowing the board to activate the approved share buyback program.
AI is now integral to core infrastructure. Sinch’s Model Context Protocol (MCP)—its “USB for AI”—allows AI agents to discover and execute messaging, email, voice, and verification workflows with built-in compliance and formatting logic. Already live with Claude and integrated into Salesforce and Microsoft Dynamics, this infrastructure positions Sinch strongly for AI-driven growth.
Sinch explicitly clarified it will not sacrifice profitability for short-term, top-line acceleration. Management intends to carefully manage investments, maintaining EBITDA margins within the stated mid-term 12–14% range, rather than burning cash simply to chase growth.
The Interesting
The RCS adoption surge is eye-opening. Ordinarily, this metric would land solidly in the “good.” But the fact that it’s been revenue neutral demands context.
I suspect that Sinch, like other early adopters, is encountering significant customer price sensitivity, especially around conversational messages, which can cost 2–3x more than simple messages.
It’s likely Sinch is switching customers onto simple RCS messages (branding + delivery status) at no extra cost as a low-friction way to show the tech. It is a smart, long-term play to encourage customers to embrace higher-margin products.
While Sinch secured new logos, enterprise customer growth was flat quarter-over-quarter. This multi-factorial issue raises critical questions. Is it a pricing problem or a product problem? Is it an account coverage issue or a demand sensitivity issue? Or more directly, are you selling software, a service, or a commodity?
In my consulting work, I build bidding marketplaces where Sinch competes directly against Twilio and others for clients seeking the best CPaaS partner. From that vantage point, I’d say Sinch is working through the answers.
The board explicitly paused new M&A activity, prioritizing share buybacks and integration of previous acquisitions. This is the right move. I’ve long argued the market undervalues Sinch relative to its industry position as it continues to trade at a significant discount to revenue.
With a comfortable debt position, Sinch can use cash to repurchase shares and increase the stock price. If you know the company is worth more than the market thinks, you buy shares at a discount and wait for the price to catch up. Strategically, a rising stock price positions Sinch powerfully as both an acquirer and acquiree. Regardless of where you are in the M&A deal, everyone wants to be part of an on-its-way-up story. This is Investing 101. This is self-confidence.
The Unknown
Cross-selling remains anecdotal rather than revenue-impacting. Despite industry-wide recognition that cross-selling can be the largest revenue multiplier after retention, it’s notoriously challenging at scale. Meaningful cross-selling demands a compelling use case—a forcing function—that naturally integrates multiple products into a unified workflow. Without this clear value-driver, sales incentives easily become misaligned, risking alienation of customers and strategic partners alike. For Sinch, as for others, smooth cross-selling is likely a multi-year journey; achieving it quickly or seamlessly is improbable, given inherent organizational complexity and integration hurdles.
AI monetization remains early stage and an infrastructure play. Sinch remains cautious on enterprise spending and acknowledges potential volatility in marketing budgets.
Finally
Like Christian Bale’s character in Ford v. Ferrari, Sinch has removed unnecessary weight by improving profitability and cash generation and embedding AI across its platform. But shedding weight alone won’t deliver speed. Sinch now needs creative calibration through sustained revenue acceleration, clear monetization pathways, and resolute product execution. All without blowing up the engine.