Kaleyra, Inc.

Thank you. Good morning and welcome to Kaleyra's fourth quarter and full year 2020 conference call.

Kaleyra released unaudited results for its fourth quarter and full year ended December 31, 2020 earlier this morning. The press release, as well as the replay of today's call can be found on the investor section of the company's website at investors.kaleyra.com.

Joining us for today's call from the management is the Founder and Chief Executive3 Officer, Dario Calogero and the company’s Chief Financial Officer, Giacomo Dall'Aglio. Management is doing this call from different locations today so please bear with us as we transition between speakers and address your questions.

During today's call, management will be making forward-looking statements. Please refer to the company's SEC filings, including the company's annual report on Form 10-K for a summary of the forward-looking statements and the risks, uncertainties and other factors that could cause actual results to differ materially from those forward-looking statements.

Kaleyra cautions investors not to place undue reliance on any forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law.

Throughout today's press release and our call today, we will refer to adjusted EBITDA. This metric is not determined in accordance with Generally Accepted Accounting Principles and therefore is susceptible to varying calculations.

A definition, calculation and reconciliation to the financial statements of adjusted EBITDA can be found in the tables included in our press release. We believe this non-GAAP measure of Kaleyra's financial results provides useful information regarding certain financial and business trends and results of operations.

With that, let me turn the call over to Dario. Please go ahead.

Thank you, Marc and thank you to everyone joining us on the call today. As you are all aware, the effects of the global pandemic continue to unfold, and why we believe we are most likely through the worst of it, the residual assets on the global economy are still present.

We continue to see a modest recovery in Italy, while our other largest market leader reported solid growth, and the United States of America led the way with growth, which was over 100% from last year. Digital transformation is driving change for organizations around the world.

And the pandemic has only accelerated those plans. Now our interactions with enterprise customers, their own customers are demanding enhancement digital relationships, through a variety of new channels like video, chatbot, and interactive voice response or IVR.

We are well-equipped to handle this additional demand on our full range CPaaS tools, will allow to capitalize on these opportunities and provide solutions to any communication platform challenges our customers might face during these times. In addition, the scale and scope of our trusted CPaaS platform, and our reputation as a global provider of communication tools is resonating with large multinational corporations.

And we are starting to see traction outside of our core mass markets. By leveraging our positioning as the most trusted, cheapest provider for banking and financial services in Europe and India, we are now making significant inroads in the United States, where we see strong demand for our industry leading API protocols.

This strategy is now starting to pay off, as our United States business saw 100% increase in 2020 and believe we have a number of greenfield opportunities with additional Fortune 500 companies in the region. Now moving on to some financial highlights, we reported record quarterly revenues in Q4, with $44.3 million between the high end of our guidance of $42.5 million.

Most importantly, Q4 revenues was up 16% from Q3 and 24% from the same period last year, demonstrating continued momentum in the recovery. For the full year.

2020, revenue increased 14% from full year 2019 to $147.4 million. The main drivers in the quarter was our e-commerce customers in India, and they continued renting for large US based enterprise customers.

Other enterprise customers have the momentum with an increasing number of digital payments and transactions, which drove messages up 16% sequentially and 18% on a year-over-year basis. On the voice side, costs were up 27% from Q3, and 100% year-over-year.

For the full year, we've delivered nearly 26 billion billable SMS messages and 4 billion voice calls on behalf of Kaleyra’s customers. Now, I would like to touch on some of our key initiatives in the quarter.

Early last year, we launched k-lab, as the center of excellence dedicated to supporting Kaleyra in developing new solutions to enhance the customer experience for financial services companies in the US market. Our goal was to leverage our expertise, solution development, digital innovation, and go to market strategist for the financial sector to build more impactful mobile customer experience solution for both new and existing client clients.

We are very excited to see that this initiative beginning to bear fruit and we announced the signing of our first k-lab agreements in the fourth quarter. The first agreement involves the deployment of a proprietary application to personal solution for MasterCard, banking customers in Latin America and the Caribbean.

The second agreement is with one of the top five US banks, helping them to design digital onboarding processes and systems. We are thrilled with the current pipeline for this new initiative, and believe our bespoke solution for the financial services sector will quickly build sustainable momentum.

We also announced a strategic partnership with WebEngage, India's leading marketing automation and customer data platform for business to consumer businesses. WebEngage will use Kaleyra platform in its state of the art communication channel infrastructure to engage customers and provide an omni-channel brand experience to consumers across the globe.

Enhancing customer engagement is becoming increasingly crucial to the station [ph] and Kaleyra’s addition to the WebEngage service will empower brands to foster a personalized connection with their consumers. In October 2020, the breadth of our platform and our global reach which was highlighted when Kaleyra were listed as a representative vendor in Gartner's all-encompassing Market Guide for communication platform as a service, by the estimation by 2023 90% of global enterprises will leverage API-enabled CPaaS offerings as a strategic IT skill set to enhance their digital competitiveness up from only 20% in 2020.

Our wide range of developer tools help customers get the most of our expansive platform, particularly our visual builder which is crucial for workers without coding skills to access the full range of the CPaaS toolset. Finally, Kaleyra won gold in the 2021 Juniper Research Future Digital Award for Telco Innovation in the category of Best RCS Provider, highlighting the strength of our platform.

Kaleyra has dedicated the best amount of time and expertise to the advancement of RCS, and we couldn't be more honored to be recognized on a global level for our efforts. In summary, we believe that Kaleyra is well-positioned to execute on our initiatives with our broad portfolio of products, global reach and unbelievable worldwide team.

We continue to build traction globally with solid growth in India and the United States, which we see as key markets going forward for Kaleyra. Let me now turn the call over to Kaleyra’s Chief Financial Officer, Giacomo Dall'Aglio, who will review our financials in more detail.

Giacomo, please go ahead.

Thanks, Dario. For the fourth quarter ended December 31, 2020, we reported total revenue of $44.3 million, beating the guidance disclosed in the previous quarter.

Q4 revenue was up 16% from Q3, which demonstrated the continued strength of the recovery and was also up 24% year-over-year, a slightly return to pre-COVID growth levers. For the full year 2020, revenue increased 14% to $147.4 million.

The main drivers in the quarter was our e-commerce customers in India, and they continue to ramping of large used based enterprise customers. Our geographical mix shift continues to move away from Italy with India growing 39% year-over-year to 27% of our revenue and the US growing over 100% to 16% of revenues.

In the quarter, we processed 7.1 billion messages, up 8% from the prior year, and up 13% on sequential basis. We connected 1.4 billion voice calls in the quarter, up 100% year-over-year and 27% from Q3.

For the full year, we delivered nearly 26 billion billable messages and 4 billion voice calls on behalf of Kaleyra customers. Gross margin was 18% in the fourth quarter of 2020, down approximately two points from Q3 20% and down approximately five points from 23% we reported in the fourth quarter of 2019.

Decline in volumes in the first half of the year caused by COVID created a negative residual effect on margins in the fourth quarter. Q3 gross margin increased following the effect of the renegotiation of agreements in premium services.

We compare the first half of 2020, the main drivers of gross margin expansion were reopening of economies, which led to an increase in higher margin premium service and voice calls. Operating expenses were $12.5 million in Q4 2020 compared with $9.8 million in Q4 2019.

These operating expenses include $4 million in stock based compensation, $1.4 million of transaction one-off costs and $1.5 million pertaining to the public company compliance, which we did not have in Q4 2018 [ph] Excluding these costs, operating expenses would have increased by $2.4 million compared with adjusted operating expenses of $3.1 million in the fourth quarter of 2019, mainly driven by significant increase in human [ph] capital. Lost from operation was $4.7 million for the fourth quarter of 2020 and includes $4 million of stock based compensation, $1.4 million of transaction one-off cost and $1.5 million of public company costs, as I just mentioned.

This compare with a loss from operating of $1.8 million in the fourth quarter of 2019. Net loss was $4.5 million or $0.15 per share for the fourth quarter of 2020, a 15% improvement when compared to Q3 net loss of $5.3 million.

The quarter net loss can be compared to the net loss of $3.6 million or $0.25 per share for the fourth quarter of 2019. Adjusted EBITDA comparable with the previous year was $3.1 million in the fourth quarter of 2020 and includes approximately $1.5 million of costs incurred as a public company that were not recognized in the fourth quarter of 2019.

Without adjusting for those costs, adjusted EBITDA would have been $1.6 million and compared to $5.6 million on the fourth quarter of 2019. The decline in adjusted EBITDA is attribute to the increase in the healthcare and mainly in the engineering talent that has been hired to execute on emerging growth opportunities to develop and deliver new products and services.

For the full year 2020 gross margin were 17%, down approximately 3.75 points from 2019. Net loss was $26.8 million or $1.09 per share compared to the net loss of $5.5 million or $0.48 cents in 2019.

Adjusted EBITDA comparable with the previous year was $7.5 million compared to $11.1 million and includes approximately $4.3 million of cost included as a public company that were not recognized in 2019. Without adjusting for those costs, adjusted EBITDA would have been $3.2 million and compared to $11.1 million in 2019.

Cash used in operating activities was $11.5 million in the year 2020, mainly due to working capital changes, compared with the cash provided of $6.4 million in the prior year. Cash and cash equivalents were $33 million as of December 31 2020.

This cash position is after paying mainly through restricted cash of $20.9 million the remaining obligation are under the forward share purchase agreement and compared with $37 million cash, cash equivalents and restricted cash of December 31, 2019. Now, I'd like to expand our total regarding our financial outlook.

We are issuing annual revenue guidance in the range of $183 million to $185 million, up approximately 25% in the midpoint of the range. For Q1, total revenue is expected to be in the range of $40.5 million to $41.5 million, up approximately 22% in the midpoint of the range.

Thank you for taking the time to join us on our call today. And with that, we would be happy to proceed with your question now.

Thank you. A few if I might.

Could you talk a little bit about non-SMS revenue of voice, video, chatbot - sorry, IVR these other products. You know, roughly what percentage of revenue are they now?

Maybe what the growth rates is? And how do the margins kind of compare to more legacy SMS services?

Thanks.

Thank you, Tim. This Dario answering.

Well, the exact percentage of the non-SMS revenues its a figure that I would ask Giacomo to provide. We have seen an expansion in that product line, it should be about 10% in 2020 on a full year basis.

With an increase in voice, especially in India, where voice is taking - getting momentum. Also WhatsApp business is going pretty well.

Video is still at the very, very early stage. So let me say very promising going forward, but not really providing significant revenues in 2020.

And, in general, we foresee the expansion of new channels because all of them come with an higher gross margin. On Voice its over 45% for example.

Giacomo, do you have the figure of the overall non-SMS revenue that we ever attend?

Yeah, its a little less than 10% of the overall revenues.

On a full year basis, yes.

Yeah.

It's increasing over time, quarter-by-quarter.

Yeah.

And what's that growing - roughly that growth rate versus SMS and revenue?

So of voice the growth is 27% on Q3 and 100% year-over-year. And voice is the most significant piece of this kind of revenue.

Great. And in the quarter, what percentage of revenue do you think was cyclical, you know, due to the holiday season and e-commerce and you know, I know your mix is very different.

I'm not sure if India has the same type of cyclicality as so as the United States for the fourth quarter. But yeah, do you have a rough idea what percentage was more out of trend in the quarter?

If I got the question right, the increase of the fourth quarter is the highest seasonality quarter in general, in the US in Italy, and also in India, due to multiple reasons. But the most relevant one is because it's a holiday season where you have Diwali.

And in Italy, and in the US, you have Christmas, which is the period where people is making a lot of different presents. And this is leading to more traffic in terms of platform.

In terms of seasonality, in general, Q4 is the biggest volume quarter in the year and Q1 is a little less than Q4, that’s the typical pattern that we observed over the last few years. Said that, 2020 has been a little bit different from the other years because of the pandemic and because that very substantial increase of digital transaction, e-commerce on delivery, electronic payments, and a relatively lower volume of cash present transaction in Italy for instance at the retail shops.

Because, you know, people have been more using the online channel to reduce the exposure to the pandemic.

And then lastly, any update on campaign registry? Is it being implemented at this point?

And when do you think it will be fully implemented? And if you could maybe a rough idea what you know, how large a contract or how many can this be?

Thanks.

Well, we start seeing the volume of campaign service providers registering, if you want to check on campaign registry.com, which is our website, we publish the names of the carriers and the names of the company service provider which has been awarded. This is a moving target, which is changing on a daily basis.

The major operators are expected to enter into the commercial phase of the service as of March 1, 2021, next month. And after having observed what's going on be the volume of the registration and the campaign and the traffic that we see in second quarter, then we will be in the position to make a best guess about what does it was in terms of revenues and volume, but sounds to be very, very promising, frankly speaking and also this is an AI [ph] growth and AI [ph] gross margin segment.

So this will be very, very let me say – it will provide an extension to the gross margin of Kaleyra as a whole.

Thank you.

Thank you, Tim.

Great. Yeah, thanks very much.

Congratulations on the strong rebound to the year there. I guess, Giacomo on the - your comments about gross margin, how volumes in the first half of the year affected fourth quarter gross margin.

Just can you just elaborate on that a little bit? And then how do you think about that dynamic playing out in 2021?

And you know, what kind of visibility do you have to gross margin in 2021 here?

Yeah. So, let me say there are some agreements that are on a cumulative basis on the year related to the cost of messaging, and we did some targets and because of the Q2 decline on revenues and volumes, we are not able to reach some targets.

So these are taken effect, the residual effect as I said on Q4. So Q4 is not so high as we expected in a normal situation, compared to the other quarter.

But starting from June, we see our recovery, and we can project for the next year our recovery in the gross margin, let me say, as we were before the pandemic in 2019, the gross margin was 20%. And we can project something like that for this year.

Okay, got it…

Let me add on [indiscernible] Let me add the only one comment on this, most of contract with the mobile network operators have kind of a volume discount theme, which is progressive. So due to the lower than expected volume in Q2, we basically didn't reach the threshold in Q4 that we were expecting normally, because we had this slowdown in Q2.

So that's the mechanism basically. So the anomaly is still Q2.

Okay, got it. Great.

And then, Dario, you talked about the pipeline for k-lab looking pretty solid. Can you elaborate on that a little bit more?

You know, what are the use cases? And also, is the – does the pipeline involved sort of Greenfield opportunities?

Or are you looking at replacing?

No, I believe that it's more Greenfield opportunities, rather than replacement. In the US domestic market, the banks have been using messaging only for KYC strong customer authentication, and some that you say marketing and engagement, we don't see very sophisticated used cases like we have seen answering the world.

And in Latin America, where we are working closely with MasterCard now with their issuers, the used cases are very much related to the prepaid plastic card, because the Latin American Caribbean market is significantly higher than the US in terms of prepaid. Because of you know, the credit scoring of the typical Latin American citizen is lower.

And those specific classic used cases are typically like transaction denial, because you run out of credit. So we notify the cardholder to top up the card higher to the typical monthly transaction for subscriptions, like Netflix or Amazon Prime, these kind of things.

Also, dispute management seems to be very promising. And the way we handle this as co-creator, we sit alongside with the – we sit with them, the issuers to analyze their data, and to decide where they should focus on the design of new services to improve the overall performance, as more cardholders, more transactions per cardholder, less transaction denial, and less dispute, that that's all idea.

And this is very interesting and very promising, in the future it’s a process. So it takes some time to get into volume, but once it's full fledged, and full throttle, it becomes very relevant.

Okay. Yeah.

Excellent. Thank you.

Thanks very much. Good luck this year.

Thank you, Mike.

Hi. Thanks, guys.

Thanks for taking my questions. Congratulations on the strong quarter.

I want you start – could you start a couple of housekeeping questions first. The 7.1 billion messages in Q4 that was up 13%.

Was that up 13% from the fourth quarter of ‘19, or the third quarter of ’20, as similar as this fourth quarter of ‘19?

Giacomo?

A 13% increase from the previous period, I would just want to make sure that I know what period that is?

Its sequential, I believe.

Yeah. So 13%.

So it's over Q3 of 2020. And then okay, so then likewise, the 1.4 billion voice calls that was doubled from 3Q to 4Q?

The doubling of the call is year-over-year.

That's year-over-year. Okay, got you.

But the 13% is sequential. Okay.

Do you have the number of categories - the number of billable messages that you did in the fourth quarter of 2019?

I will.

We can follow up offline, if you don’t have any...

Yeah, yeah, I can for the figures.

Yeah, exactly. Go ahead in the loop for that figure specific and Lance, let’s go forward.

Sure. So some more kind of point, If I may, just to confirm what I think you said a minute ago, was voice calls are not only growing much more quickly than SMS, but are also significantly more profitable.

It sounded like you said, if I heard you correctly, that the voice margins are 45%. Did I get that right?

Yes, that's right. Its 45 plus, frankly figure.

So wider term, when the business is at scale, what kind of gross margin do you anticipate for? Or do you think is feasible?

I mean - and I guess, when - I mean, how many years do you think before we kind of get to that scale, I'm just trying to sort of think more about the longer term opportunity, as opposed to the next quarter?

Lance, so let me give you the drivers and not let - allow me not to give you an exact figure. So the drivers for the function of the gross margin are multiple.

On messaging, it's also a volume business, the higher the volume, the best of the gross margin. And that's like a baseline because we are still, you know, a company where volumes ire increasing year-over-year.

The second very significant element is the geographical mix on messaging, because the US market is much more profitable, rather than any other rest of the world market. Europe, typically on messaging, you have about 20%, 24%, depending on the segmentation of the customer base, same thing in Asia Pacific, same thing, even maybe lower in Latin America, in the US, you easily can add more than 30%, 35% on gross margin.

The other rider is the mix of the customer, if you have a very large account, like we do have, because like, top 30 customer make about 70% of our revenues, then you typically have lower gross margin compared to players which have – which work on the long tail of the small medium enterprises. Because if a customer is sourcing, say 350 million messages in a year, is getting a better unit price rather than a customer, which is sourcing 3.5 million messages a year.

So going forward, we expect to widen all of this for variables. But the last one also, which I didn't mention, but we said before is the product mix.

Not all the products comes with such an high cost of goods sold like SMS. So voice, for instance, is much more profitable.

And all the IP services in general, the access to the network is a [indiscernible] is the bandwidth that’s not variable. For messaging, you pay the termination fee, which is a variable cost.

So my expectation and my aim as a manager for this operation is to work on both the two leverage that I have to widen the gross margin. Is this answering to your question?

Great. Yeah, that's very helpful.

And if I could just get in one other question. I guess, I wanted to just try to understand, you know, you have these big revenue numbers and big volume numbers.

So - but what does that imply about your customer count? And I want to kind of think about that in both the US and then in, you know, everywhere else sort of, so to speak.

So in the US, revenues up 100%, did you add - basically, did you have any customers a year ago? Or was this all new customers or did – you know, or restrict some of that be thought of as being more organic?

And then likewise, if we think about revenues away from the US, revenues were up 16% year-on-year, just doing the math. So my question here, when you think about away from the US, in Italy, and in India, et cetera, did you add any customers or is that 16% growth is that almost entirely driven by just the same customer transaction volume growth.

Indeed, we are adding new customers for multiple reasons, but the most relevant one being the launch of Kaleyra Cloud which is a medium and small enterprises and we are winning tens of customers on that specific platform. They still are not very relevant in terms of revenues, because there is a ramp up of the volume that brings up the revenues quarter-by-quarter.

But the number of customers is increasing. Same thing is happening in the US.

That was - it's an emerging market. But if you want to understand how can that we increased and expanded so much the revenues, this is more coming from larger volume made by existing customers, rather than new revenues from new customers, especially because we focus on large accounts and larger accounts, typically, that cycle to ramp up the volume and ramp up the drivers which has spanned over more than a quarter.

Giacomo, how many – how much of the fourth quarter revenues are coming from customers existing on our platform for more than one year?

About 80%. And let me say also the first - the bigger customers that we announced last February, the social media, media cap as a lot of traction in the growth of the US customers.

And to answer your first question, the messaging in Q3 2020 was 6.3 billions, in Q4 is 7.1 billion messages.

Thank you.

Thanks. Guys, I wondered if you could focus on the trusted platform message, as you move into the US.

You discussed the pipeline of Fortune 500 companies and an expanded pipeline. Can you just give us a sense of that trusted platform message?

And it gives us a little bit more depth in terms of what you were seeing in terms of US response?

Yes, indeed. But most of the expansion that we are having on the US labs account is coming from our innovation lab initiative, k-lab, which is typically engaging with large financial institutions.

So let me say at the moment, Kaleyra is focusing on that segment in the US. And so basically, this is where we see no significant traction on one hand, and the most significant increase in terms of volume.

Again, George, as you perfectly understand, large accounts, they do not rank in the number of funds, they rank in the number of 10s, of potential institution that we are going after.

Understand. So that continues to be the focus.

Relative to the MasterCard relationship in the Caribbean, my belief is they've been bringing you into some very attractive issuer accounts. Can you just give us a sense of the opportunity in Latin America with MasterCard?

Yes, of course. But first thing, let me say that the partnership with MasterCard is global, it's worldwide.

We are now focusing on Latin America, because Latin America is a very important market for MasterCard, and it's also a market where they require to announce the relationship between the issuer and the card holders. And they want to use mobile to do this.

So at the moment, we are interacting with, mostly with issuers in Latin America, in Brazil in particular. The potential is huge, because if you think that MasterCard had more than 1000 issuers in Latin American, Caribbean, we are now focusing on the top guys, because again, you go in ABC in this kind of processes.

Now you focus on the largest one, because that's where the most significant opportunities are.

Understand. Okay, perfect.

Thanks, guys.

Yes, good morning. And, you know, impressive coming up with 24% revenue growth in the environment we're living in.

So I have two questions. The first one is for WebEngage.

Could you just go into it explaining how it works a little bit more and what the opportunity is? And second for campaign registry?

Can you give us an opportunity, I'm sorry, an update on how that's progressing? Thank you.

Thank you, Allen. Well, on WebEngage, read the press release, a specific press release that we have issued when we have made the agreement.

WebEngage it the largest Indian provider for engagement and customer data platform, and we strongly believe, as other industry players, that customer data platform would be very significant in the CPaaS play. So we have been very proactive in managing this partnership with WebEngage.

Because basically, they use the knowledge that they can get from the customer data platform, to help their customers to better interact with the consumer. And basically, we are the mobile leg for them to do that before Kaleyra, they were doing this using the typical web channels, like email marketing and things now with using messaging and other mobile channels.

So it's very, very promising, and so it's also a great learning opportunity for Kaleyra, because India is one of the most advanced markets in this perspective, for two reasons. One reason is demographics, which is, you know, like very young people, this is the average age of population is way below 30.

And the other thing is that technology, digital companies are very well advanced in India, because India is one of the sweet spot in the world for technology, information technology and software development. And on campaign registry, very quickly, I already touched the same with Tim Horan a little earlier.

The Campaign Registry is progressing is progressing nicely. The mobile network operator are mandating the registration of the campaign starting from March 1.

One of them is also sanctioning the ones that do not register the campaign with the sanction and in terms of differential pricing on the traffic. And many, many campaigns service provider have already signed, some of them have already given also indication and run workshop with customers to understand what the process is, this is a new process, registering a campaign.

It's a new process. So it has to be brought to the attention and the knowledge of the marketeers so that they understand the process and they do whatever it takes to make sure that their campaign would be registered.

And this, over time, will definitely reduce the spam on the mobile telephony network. And this is also in the interest of all of us because we an lot of antivirus [ph] traffic on our sink.

Could I just have one follow up? How do you - do you think that at some point in 2021, that this can be a material meaningful contributor to your revenues from…

Yes, indeed, Indeed, indeed. I think again, maybe you missed this Allen, I already mentioned, we will - we are launching - we are launching and the mobile network operators are launching commercially the service as of March 1.

We want to see the numbers to have historical data because this is a new service. So it's kind of a Greenfield market.

For the second quarter, once we'll have a better understanding of the dynamics and the take off of the volume and the revenue standard, we can give, let me say, a forecast for the full fiscal year. We expect campaign registry to provide material increase in the top line in the gross margin in the second half.

That's great. Thank you so much.

Thank you, Allen.

Oh, great. Thank you.

Congratulations, you guys. Giacomo, this is for you first, so if I look at your slide deck, you guys say that you think your market opportunity is growing, almost 30%, right.

And, and the revenue guidance is 25. So I'm sure part of that's COVID.

But can you just parse for that? Why would it be…

Yeah…

As fast if not faster than the market?

So, yes, sure. We are exposed in particularly in markets like Italy, and India.

So 30% of the market growth is worldwide and in particular is related also to United States where the market that we're exposed are a little less growing because there are some partial lockdown and the economy are not fully recovered yet. So - and we are very conservative to our projection.

And so for the first half of the year, we project not grow like the market, but we can see in the second half, I think, to return to the normal growth. As Kaleyra did in the in the four years from ‘16 to ‘19 was 33, so organic.

So I think we - as soon as we are out of COVID, we can return there.

And also part Pat, this Dario, hi. I want to add on thing, being a marketing question at the end, I think I want to get my two sense.

When you look at the market size, you look at the market of the CPaaS growing 28%, 29%. But basically the real market is the blend of the CPaaS market and the application to person messaging market, which is by far the largest part of the pie because when going up 51 billion in 2019, up to 78 billion if I remember well in 2023 or 2022, I can provide that exactly.

So basically, if you consider the blend of the two markets, the growth rate of the overall market, which is also including application to person messaging is lower than 25%.

Okay. Okay.

And then Dario, the one for you, is if you look at sort of all your R&D priorities, what sort of the most important thing for you that you want your software to be able to do in the future that it can't do today? So it's the sort of most important piece of functionality that you'd like to add.

Well, the strategy is to remain the most trusted, omni-channel CPaaS in the world. So we keep on investing heavily in having high quality, highly resilient network on one end, on the incumbent existing channels, and also adding new channels going forward.

For instance, we've been investing significantly on WebRTC. We've been investing significantly on voice on instant messaging, and chatbot, Flow Builder.

So let me say the investments that will be and are indeed significant for Kaleyra in keeping the pace with the evolution of the technology and the omni channel paradigm, which we believe is the most important thing, because at the end of the day, the consumer and the brand, they want to interact on the service, they don't really care about the channel. So the channel is a mean, is not - it's not the name.

The aim is e-commerce, buying goods, accessing health care, accessing services and doing in the most convenient way across multiple channels.

Perfect, thank you.

Thank you, Pat.

Thank you. Good morning.

In addition to the strong organic growth opportunities as development here, I'm just curious if there are acquisition opportunities in the marketplace, if that's something you think could be achieved on an accretive basis prospectively?

Thank you, Jeff, for your question. This is a very good question.

Yes, we indeed are extremely active in pursuing accretive, when you say acquisitions, we already have told to the investor community that Kaleyra is a consolidator in this space, we'll keep on consolidating the space. And we are very much working on this Jarkko [indiscernible] and the corporate development team is working on this.

I unfortunately can't tell you anything more than that, but definitely the acquisition shall be relevant. Let me say in an industrial perspective, adding more footprint and adding more revenues and will be definitely relevant financially because we have an history of really accretive acquisitions.

And we'll keep on being pushing accretive acquisition.

Okay, it sounds like you're optimistic that there's opportunities that fit that accretive benchmark.

I am optimistic, Jeff, I am an enterpreneur. If I were not, I would be an entrepreneur.

Okay, thank you very much. But you also done a good job being conservative.

So thank you.

Thank you. Thank you.

Yes, in general, one thing, let me comment on this final comment, please. In general, due to the very high level of uncertainty in the market, due to the pandemic, we all perceive and lead in this climate of uncertainty.

In general, we are conservative, because it's much more difficult nowadays, in February 2021, to make an estimate, at least for the next six months. So basically, our approach to the to the guidance and to the forecast is to be very conservative, at least until we want to see the light for the vaccine campaign.

Now, the USA, the vaccine will be completed by May, but maybe in other geographies, you know, the process is lagging a little bit behind. So just to you an example, in Italy with things that we would the vaccine for the elders over 80 by the end of February.

So with it.

Hi, Dario and Giacomo. Thanks for taking my question.

Cisco is acquiring IMImobile, which looked like a pretty similar kind of comp to you guys. I don't think you had much overlap geographically with their focus in the UK.

But just talk a little bit about your thoughts about Cisco getting into this market and what it means?

Thank you. Thank you for your question.

Yes, this is a very interesting question. Because in general, I think in the industry, nobody did expect Cisco getting into the CPaaS play, and getting involved into the space because IMImobile, it's a good one.

It's a very well reputed player, focusing pretty much on the UK. You're right, we do not have any geographical overlap.

We know each other and we respect each other. I know personally, the chief executive officer, its very well represented company with a significant track record in financial services in the UK, where unfortunately, we do not compete, and they do not compete in Italy.

So let we say in Italy, ubiquity at that point in time, then changes many Kaleyra in 2018 was very similar in terms of position into IMImobile, that's why we know each other. But this is a very emerging market yet.

So competition is very local, you don't really compete. I couldn't, you know, go in London and knock at the door of Barclays saying, hey, I'm a messaging provider doing banking.

So this…

That's great, thank you. And then you guys won a nice award from Juniper Research on RCS.

And that seems to be burgeoning around the world with more and more carriers and phone providers setting that up that capability. What are your thoughts about RCS?

Is this a sort of evolutionary, I know, they're guys with visions of creating WeChat in various countries. But let's just talk about RCS and your presence there and your thoughts about it?

RCS is a natural evolution of SMS. It's the standard brought forward by the GSMA, is a standardization body in the GSM space, and its rich media interaction on SMS, which is definitely, let me say, brought along because of the competition from the Eastern messaging platforms.

But RCS has two major assets. One thing the interoperability, which no one of the other platform apps, including WeChat, WhatsApp or Messenger or any other and the second one is the endorsement made by Google.

Because Google a couple of years ago endorses RCS as the standard for Android phones and Android is by far the largest operating system in mobile handset and smartphone in the world. So I believe that RCS will be very, very relevant going forward.

It takes time to, you know, get the consensus of multiple operators, which are in a way competitors in the market. But I believe it gets through, it will get through and we handle the positioning on this very carefully, building up a partnership with Google and working closely together with the operators worldwide.

And you know, this is going at different velocities in different markets. So in the US, it has been a little bit difficult, recently in India is progressing very well.

Italy is a little bit behind for – it depends on the market, but we think that strategically is going to be relevant.

Great. Thank you.

Thank you very much. I think this call has been very, very interesting.

I'm glad that you had the time to spend with us and I'm very optimistic about the future. And the resilience of this company has shown to be incredible in the very, very stormy weather we have been living through over the last year.

Thank you again for joining us today for them in call and for the question and answer. Thank you ladies and gentlemen.