LINK Mobility Reports Double-Digit Q2 Growth; and AT&T Tells the FCC It Has Blocked 9.5 Billion Spam Texts in 2023
RCS maybe the key to margin expansion and fighting spam
LINK Mobility Reports a Solid Q2
Like its peers, LINK Mobility showed strong results in Q2. Unlike its peers, however, it is the only CPaaS company to report double-digit improvements in both sequential and year-over-year revenue growth. Additionally, it expanded into Portugal via its EZ4U acquisition and has delivered 51 million RCS messages this year.
Disclaimer: This is not stock advice. Everything about the messaging business interests me, including asset pricing. Use your judgment to invest your money.
The Good
With 18% YoY (in USD) growth and 10% QoQ growth, expansion into the Portuguese market, and a market-leading 112% net retention, there was plenty of good news in the report. LINK Mobility also reported double-digit organic gross profit growth driven by small volumes, RCS, and WhatsApp. High profit from new contract wins included a 7% YoY growth in A2P traffic and 23% message volume growth. The message volume growth apparently comes without compromising on gross margins. This too is rare.
The Interesting
The majority of the growth was driven by core use cases, such as alerts, reminders, payment, and security. Demand for the 2FA product remains stable, which could indicate that the industry-wide AIT backlash has run its course.
The most aggressive growth is coming from mobile marketing use cases that require richer features like RCS and WhatsApp. In fact, LINK Mobility reported 51 million RCS messages in the first half of the year, marking a 322% increase from the same period in 2022.
The Unknown
LINK Mobility consistently releases a transparent earnings packet. It is the only company I watch that shares message volumes and its M&A valuation criteria. However, the one unknown is how RCS will affect its margins and products. Will it create new use cases? How much will RCS cannibalize existing SMS/MMS channels? How will it affect WhatsApp? On the M&A front, will it reignite its appetite for big acquisitions?
Finally
LINK Mobility remains the only company I watch that is on a stated, well-defined path to build an M&A pipeline. In this focus, it is special. However, everything I hear from the industry suggests that M&A activity remains a major issue—particularly the disconnect on asset pricing. More on that in a future post.
AT&T Tells the FCC It Has Blocked 9.5 Billion Spam Texts in 2023
This week’s FCC update comes from The Docket Digest, an email subscription service that’s currently in private beta. It is an AI-generated, human-curated update for all messaging-related topics at the FCC. If you’d like an invite, drop me a line. From the latest issue of the Digest:
TLDR:
Representatives from AT&T Services, Inc. met with FCC officials to discuss their extensive measures in fighting spam and scam text messages, emphasizing the effectiveness of existing initiatives and advocating for informed regulatory approaches.
Summary:
On August 14, 2024, representatives from AT&T Services, Inc. met with members of the Consumer and Governmental Affairs Bureau to discuss the current state of the messaging ecosystem and AT&T’s efforts to combat spam and scam text messages. AT&T highlighted their significant investment in innovative technologies, reporting the blockage of 9.5 billion spam messages in 2023. They introduced the AT&T ActiveArmorSM app, a free multi-layered defense tool combining machine learning and human oversight.
AT&T shared data indicating a decline in both spam texts and customer complaints, though political messaging remains a significant complaint source. The company collaborates with federal and state authorities to enhance consumer protection and has expressed concerns over the accuracy of data used by the FCC, specifically calling out the methodology of third-party tools like Robokiller.
They anticipate a reduction in SMS/MMS usage with the rollout of Rich Communications Service (RCS) and argue for a broader regulatory scope to address consumer vulnerabilities across multiple platforms. AT&T supports the 10DLC system requiring message senders to register through The Campaign Registry (TCR) for accountability and transparency. They conveyed their commitment to ongoing collaboration with the FCC to refine strategies for combating spam and scam texts.
Overall, AT&T stressed the importance of accurate data for regulatory decisions and the need for a holistic approach to combat illegal text messages without over-regulating older technologies.
Link: FCC Filing
Thank you for reading, and have a great week!
TJ