Pexip Holding

Investor Presentation • Nov 7, 2024

Quarterly Presentation Q3 2024

November 7, 2024

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Pexip at a -glance

2011 founded

286 employees across 25 countries

Specialist video conferencing player

Mission -critical, enterprise -grade, secure video conferencing provider

Software only

Develop and deliver software and SaaS

Unique tech partnerships

Partner with the global industry leaders to complement their solutions

Serving large organizations

Across enterprise and public sector

\$110 million

in Annual Recurring Revenue (ARR)

Q3 2024 highlights

• Continued improved ARR growth

  • Double-digit growth from both business areas
  • Improved EBITDA¹ despite one-off items of negative NOK 15 million
  • Strong free cash flow, up NOK 18 million y-o-y

• Strong start for the Connect for Zoom Rooms

• Launched partnership with RingCentral

Continued growth and further improved profitability

Total ARR USDm

Adjusted EBITDA¹ NOKm, Last twelve months

Free Cash flow² NOKm, Last twelve months

1 EBITDA less Other gains and losses 2 Operating cash flow, investment cash flow and leases

Underlying ARR

Legacy

Pexip's two business areas

Pexip Connected Spaces

Video meeting room interoperability

Pexip Secure & Custom Spaces Video meetings that are self-hosted on-premises or in a private cloud

Connected Spaces

Our vision is to connect any meeting room to any meeting

Strong market position in a growing market Connected Spaces

Video device growth expected to drive TAM growth

• Only one in ten office meeting rooms globally have a video endpoint installed
• USD 3 billion TAM in software solutions for video room systems

Pexip with leading technology solutions

• Unmatched user experience
• Work with all major vendors and cover all relevant use cases
• Full hosting flexibility

Partnerships underline market position

Pexip is Microsoft ISV Partner of the Year 2024 Connected Spaces

• Continue to be recognized by Microsoft for our exceptional results with a new standard for success.
• Azure Marketplace Global Partner Finalist
• Independent software vendor Partner of the year 2024

Complementary video services cater to specific customers' security & privacy requirements

Secure & Custom Spaces

AI for Secure Meetings general available in Q4 through NVIDIA partnership

• Private deployment with complete data control
• Customer-specific language libraries
• Built on NVIDIA AI models

Sales update

12

Connected Spaces

+1.5m ARR change Q-o-Q USD

Strong first full quarter with the new Connect for Zoom Rooms product

Closed several Fortune 500 accounts with strong momentum in particular in US Enterprise

Strong uptake of our FedRAMP authorized cloud service

Connected Spaces

Customer use-case: HSBC

CONNECT FOR ZOOM ROOMS PRODUCT

Use case

Pexip was selected by HSBC to enable their ~4,000 Zoom Rooms to join Teams meetings with a high-quality experience. HSBC are extensively using Zoom and Teams internally and when meeting external suppliers and customers.

Key winning USPs

• Significantly improved experience on twoscreen systems
• Support for in-room sharing
• Easier user experience

Secure and Custom Spaces

+1.3m ARR change Q-o-Q USD

Increased upsales across several key accounts in Q3 2024

Closed first Virtual Courts sale outside of Europe

Customer use-case: Large European Naval Defence Force Secure and Custom Spaces

SECURE MEETINGS PRODUCT

Use case: Multi-Nation Defence Collaboration

• Operate across multiple domains with the highest level of security
• Enabling quick collaboration and fast decisionmaking

Key winning USPs

• Pexip is leading in video collaboration within a Data-Centric Security systems architecture
• Attribute-based access controls (ABAC)
• Unique integration capabilities

Financial update

17

Total ARR base at USD 110 million in Q3 2024

18

Booked Annual Recurring Revenue (ARR) development. Note: Will incorporate legacy in Connected Spaces from 2025

Growth in both business areas

USD million, quarter-over-quarter

• Strong new sales with quarter-on-quarter increase in New customers across both areas, with new sales of USD 5.7 million compared to USD 2.1 in Q3 2023

Continued revenue growth driven by SaaS

520 449 LTM Q3 2023 553 519 LTM Q3 2024 ⁹⁶⁹ 1,071 LTM Q3 2023 LTM Q3 2024 76 (8%) 178 (17%) Last 12 months

• Quarterly revenue increase of 6% y-o-y
  • Strong growth of 22% on Software as a Service, reduction of 13% on Software
  • Mix shift towards SaaS in the quarter
• Gross margin increased with NOK 15 million, and EBITDA¹ increased with NOK 8 million
• 11% revenue growth on LTM, in line with ARR growth
• NOK 102 million growth in EBITDA¹ on LTM basis, 17% adjusted EBITDA¹ margin

Q3 EBITDA impacted by a few notable elements

Q3 2024 EBITDA bridge NOK million

Increase in share-option costs

• Share price growth during Q3 2024 of NOK 9.8 per share
• This impacts cost accruals for employer tax on share options, driving a NOK 8 million y-o-y increase in share option costs for Q3 2024

Shift in ARR mix

• Decrease of USD 0.8 million in software ARR due to shift towards software-as-a-service
  • Strong uptake of FedRAMP service in Q3 2024
• SaaS and software contracts have the same cash flow profile, however, the shift delays revenue recognition and positively impacts working capital

High conversion of revenue growth to EBITDA in 2024

Revenue and gross margin NOK million

EBITDA excl. other gains and losses

Note: Q1-Q3 22 Converted 83%¹ of revenue growth to EBITDA growth

Stable operating expenses outside share option related costs

Quarterly OPEX development

NOK million

Other operating expenses Share option related costs

Salary and personnel expenses

Salary and personnel expenses

• NOK 5 million reduction y-o-y in fixed salary in Q3 and an increase in variable salary of NOK 4 million
• Increase of NOK 8 million on share option related costs

Other Operating expenses

• Seasonally somewhat lower than previous quarters, and NOK 1 million lower than Q3 2023.
• Reduction related to lower consultancy costs

NOK 8 million in free cash flow in Q3 – NOK 18 million better than Q3 2023

Cash flow bridge Q3 2024

NOK million

• Positive EBITDA main driver of Q3 operating cash flow
• NOK 11 million investment cash flow (+8 million y-o-y), due to delayed reception of outstanding R&D tax credits (NOK 5 million in Q3 2023)

Q3 2024 Financial results

Profit and loss

NOK million

	Q3 2024	Q3 2023	Y-o-Y
Revenue	228	215	14
Cost of goods sold	25	25	0
Gross Profit	204	190	14
Salary and personnel exp.	151	144	7
Other operating exp.	35	35	-1
Adjusted EBITDA	18	11	8
Other gains and losses	3	6	-2
EBITDA	15	5	10
D&A	19	27	-8
EBIT	-4	-22	18
Net financials	13	-3	16
Profit/loss before income tax	9	-25	34

• 6% increase in year-on-year revenue, negatively impacted by higher SaaS mix (timing effect)
• COGS is mainly relating to sale of Pexip-as-a-Service and is stable despite revenue growth, in part due to cloud service rebates received in Q3 2024
• EBITDA excluding other gains and losses of NOK 18 million, NOK 8 million higher than in Q3 2023.
• NOK 3 million in other gains and losses from restructuring
• Reduction in D&A in Q3 2024 due to lower depreciation of fixed assets and reduced leasing costs
• Improvement in net financials from foreign exchange difference gains

Outlook and targets

26

Outlook

• Continued positive market outlook across the business areas
• Strong market position and industry partnerships are expected to continue to drive growth
• End Q4 2024 ARR expected 111-114 USD millions

2024 outlook

• ARR of USD 111-114m
  • 8-11% y-o-y
• 17-20% EBITDA¹

2025+ targets

Consistently deliver:

• Above 10% ARR growth
• Above 20% EBITDA¹

Upcoming dates

Q4 2024 Quarterly Presentation

February 13th , 2025

Q&A Investor.pexip.com

BACKUP

Supporting materials

Summary of key figures

KPI	Unit	Q3 2023	Q4 2023	Q1 2024	Q2 2024	Q3 2024	Y-o-y	Q-o-Q
ARR
Connected Spaces	MUSD	60.5	63.1	64.2	65.3	66.8	6.3	1.5
Secure & Custom	MUSD	35.5	36.3	37.7	39.7	41.0	5.5	1.3
Legacy	MUSD	3.8	3.3	2.8	2.1	1.8	-1.9	-0.3
Total	MUSD	99.7	102.8	104.8	107.1	109.5	9.8	2.4
P&L
Revenue	MNOK	214.9	285.2	292.0	265.6	228.5	13.6	-37.1
Cost of Goods Sold	MNOK	-25.2	-28.1	-27.1	-27.1	-24.8	0.4	2.3
Gross profit	MNOK	189.7	257.0	264.9	238.5	203.7	14.0	-34.8
Salary and personnel expenses	MNOK	-143.6	-161.2	-161.4	-163.8	-151.0	-7.4	12.8
Other OPEX	MNOK	-35.4	-36.7	-39.1	-38.7	-34.6	0.8	4.1
Adj. EBITDA	MNOK	10.6	59.2	64.4	36.0	18.1	7.5	-17.9
Other gains and losses	MNOK	-5.7	-4.5	-6.7	-3.0	-3.4	2.3	-0.4
EBITDA	MNOK	4.9	54.6	57.7	33.0	14.6	9.8	-18.3
D&A	MNOK	-27.1	-100.0	-19.8	-19.6	-18.6	8.5	1.0
EBIT	MNOK	-22.3	-45.4	37.9	13.4	-4.0	18.3	-17.4
Net Financials	MNOK	-3.2	0.4	22.5	-1.0	13.0	16.2	14.0
Tax	MNOK	1.2	-13.6	-15.0	-5.4	-3.2	-4.5	2.2
Net profits	MNOK	-24.2	-58.6	45.4	7.0	5.8	30.0	-1.2
Cash and cash flow
Operating cash flow	MNOK	(1.7)	50.4	112.3	78.9	22.2	23.9	-56.7
Investing cash flow	MNOK	(3.4)	(12.5)	(8.7)	(7.2)	(11.1)	-7.7	-3.9
Principal lease payments	MNOK	(5.2)	(4.8)	(3.0)	(4.0)	(3.3)	1.9	0.7
Free cash flow	MNOK	(10.3)	33.1	100.5	67.7	7.8	18.0	-59.9
Cash position	MNOK	494.3	522.7	628.1	586.5	593.2	98.9	6.7

Comments Q3 2024

ARR

• Delta ARR Q3 of 2.4 MUSD, with good contibutions across Connected Spaces and Secure&Custom
• Annual ARR growth of 10% p.a. (12% excl legacy)

Revenues

• Growth in quarterly revenues of 14 MNOK (+6%)
• Seasonal variation in software revenues main driver for q-o-q reduction

COGS

• Stable COGS despite Software-as-a-Service revenue growth, in part due to one-off rebates

Opex

• Main driver of y-o-y increase is 8 MNOK in increased share option costs due to share price growth
• Stable Other OPEX y-o-y despite inflation

Cash

• Improved operating cash flow y-o-y from improved profitability
• Increased investment cash flow in part due to later payment of R&D tax credits (5 MNOK)