By Alan Hatfield
Mobile telecommunications company Syniverse Technologies, LLC announced in August that it plans to list on the New York Stock Exchange through a merger with M3-Brigade Acquisition II Corp. (NYSE: MBAC). Syniverse is a leading global provider of unified, mission-critical platforms enabling seamless interoperability across the mobile ecosystem.
IPO Edge sat down with Syniverse CEO & President Andrew Davies to find out more.
IPO Edge: You might be the most important company on earth in the mobile ecosystem, but maybe some people haven’t heard of you. Could you explain how Syniverse fits into our viewers’ daily lives?
Put simply, Syniverse powers mobile experiences for almost every person and device on the planet. We are the trusted neutral intermediary that keeps devices, data traffic, and messages flowing seamlessly and securely across the globe. Our business is actually comprised of two segments: our foundational carrier segment and our enterprise segment.
As you mentioned, people across the globe interact with our carrier business daily and have no idea. When you send a text message to someone with a different carrier, or travel overseas and successfully make a phone call, then you’ve probably met Syniverse and didn’t realize it.
The backbone of what we do is our IPX network, which really is the backbone of the entire mobile ecosystem given our share of the market. You should think of our IPX network as the world’s super highway for voice and data traffic connecting mobile phones and messaging platforms. People probably don’t realize that the carrier networks aren’t automatically connected to each other, and it takes Syniverse to connect them together.
Think about a carrier’s network as being a big island in the middle of an ocean. This ocean is filled with over 800 carrier islands that don’t connect with each other automatically. If you are on one island and you want to send a message to one of your friends on another island, those two carrier networks aren’t going to communicate naturally. We provide the connectivity between the two islands to enable your text message to flow.
IPO Edge: You’re going public via a merger with MBAC. Why go public through a SPAC and why now?
It’s really because we’re ready to. We’ve got significant tailwinds at our disposal that are really going to turbocharge over growth over the next half a decade to a decade.
We’ve already operated as a successful public company prior to being taken private by Carlyle in 2011. But 2021 is very different to 2011. In 2011, 4G was only really starting to get going. Whereas now, as I’ve alluded to, we’re sitting at the cusp of an enormous set of tailwinds, revolving around 5G and enterprise messaging.
Going public allows us to capture those growth opportunities available to us. It’s the right time in our life cycle, combined with the right time in the industry for Syniverse to go public. We’ve spent our time under private ownership increasing our scale, increasing some of our competencies, doubling down our enterprise segment to be much more than ready for the opportunities ahead of us.
No other company provides the combination of connectivity and software that powers the global mobile ecosystem, so MBAC is simply the vehicle that allows us to become a public company once again. We expect to raise $1.125 billion in new equity from this transaction. That will allow us to de-lever and free up cashflow to reinvest in innovation and grow even faster.
Of that $1.125 billion, over $1 billion of that is already committed by the PIPE (Private Investment in Public Equity) and Twilio’s strategic investment. Going public with MBAC also provides an opportunity to bring other strategic partners to the table, both before and after the merger is final. Twilio is going to have a seat around the board table and Mo Meghji, who is MBAC’s CEO and has great experience in corporate finance, will also be joining Syniverse’s board of directors following the merger. In summary, it’s the right business and the right time given the secular tailwinds we’ve got at our disposal.
IPO Edge: We cover a lot of SPACs here at IPO Edge, some of them dealing with futuristic technologies such as flying taxis. How is this a very different proposition than that?
Firstly, financial scale.
We’re very different from your typical mining-water-on-the-moon and flying helicopter services in that we generate positive free cashflow. We’re going to generate $240 million of adjusted EBITDA this year, not only after five years’ time. Our technology gives us a central position in the communication value chain in enabling the future of mobile innovation, with multiple secular tailwinds at our back. As I mentioned, 5G and NextGen mobile net stream.
We recently issued a business update about a week ago. We announced our preliminary audited revenue from last year was over $730 million at 12% year-on-year, our fastest rate of growth since 2013. Our 2021 adjusted EBITDA was over $210 million and we’re going to grow that by over 14% this year. We’ve got a couple of consecutive years of free cash flow. That financial profile is very rare for a SPAC, where often there’s no real revenue EBITDA or cash flow for many years given some of the improving business models.
And secondly, mission criticality in a very large part of the modern global economy.
In IPX, as I mentioned earlier, we’ve got 40% of global market share, including and settlement. Our market share, as I mentioned, is 80% internationally. In 10-digit long code, which is part of A2P messaging, we have over 70% share in North America. Even in the business that I didn’t really cover too much in the introduction, P2P messaging within carrier, we have over 80% market share in north America.
We’re a 35-year-old company rooted at the center of the mobile ecosystem and have been since its origin. I think that’s clearly, significantly different from many SPACs.
IPO Edge: With mobile communication changing so drastically year-to-year, where does Syniverse fit into the next five, ten years of mobile innovation?
Yeah. It’s really exciting. We’re going to be an enabler of this new digital economy we’re all living in, because the internet is going increasingly mobile. That’s the important thing to understand. And that, twinned with the explosion in mobile messaging, messaging increasingly replacing email as the primary form of communication, and will be increasingly supported by rich forms of two-way conversational video embedded and transactional messaging; all of which is going to require lower latency, better security, and industry leading quality at global scale that really only Syniverse can provide. So we’re in a very good place for all of that.
First and foremost, innovation begins with messaging. I mentioned Jeff Lawson’s view on the messaging app on the smartphone earlier. I don’t think anybody really disagrees with that. And that’s a good thing, given the size and scale of our messaging platforms, with, I mentioned already, I think, 80% share for PTP messaging in the US and 50% outside of the US. So this scale in messaging puts us in a position to help advance mobile engagement over the next decade. We have the capability to reach over 800 carriers around the world. These partners give us reach that few others have, and for most companies, in terms of mobile engagement and CPaaS capability, the key is to have that global reach, all done at carrier grade service levels, with unrivaled speed, reliability, capacity, et cetera.
But then mobile engagement is increasingly going to require orchestration. Syniverse can harmonize the data required for this mobile engagement of the future. We enable enhanced integration, including artificial intelligence, chat bots, and machine learning. In addition, the future of mobile engagement will require even more anti-spam technology, and we’ll be there for that as well. So today, as billions and trillions of messages pass through Syniverse, we’re monitoring them for spam on behalf of mobile operators, and we’re constantly working on ways to improve customer experiences.
So in summary, as more and more innovations take root over the next decade, we’ll be there ready to enable them.
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