Zalaris

Investor Presentation • Oct 24, 2024

24 October 2024

Presentation of financial results Q3 2024

PeopleHub BY ZALARIS Your one-stop HR platform

Disclaimer

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Zalaris ASA ("Company"). The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the Company's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Company. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although the Company believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation. The Company is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither the Company nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

Agenda

• Highlights
• Financial review
• Outlook
• Q&A
• Appendix: Company in brief

Today's presenters

Hans-Petter Mellerud CEO and Founder

Gunnar Manum CFO

Highlights

All time high revenue and adj. EBIT in Q3 2024

• Strong growth: Revenue increased 22.1% YoY to NOK 340 million with Net Revenue Retention in Managed Services of 108%
• High EBIT: adj. EBIT of NOK 37.0 million (10.9%), up from NOK 23.7 (8.5%) last year
• Strong sales pipeline in both Managed Services and Professional Services securing continued growth
• Improved cash flow: Operating cash flow of NOK 48 million, up from NOK 15 million last year
• The strategic review process announced in April is still ongoing

Q3 sales securing growth and continued low churn

• Expanded and renewed services with existing customers in Managed Services
• Started implementation project for two large German Managed Services customers
• Significant pipeline of Multi-Country PeopleHub new name and upsell opportunities
• Securing large long term Professional Services engagements with both public and private clients

Renewed agreements with Tryg Insurance and Entercard for new long terms and expanded service coverage with Telenor to cover 1,800 employees in Finland, and SAS to cover UK.

Signed agreements for delivery of Peoplehub HR powered by SAP SuccessFactors and Peoplehub Payroll supporting Gallerias 11'000 employees, the implementation of a new SAP SuccessFactors solution for the City of Osnabrück's 3200 employees, and long-term AMS services to Max-Planck Institute

Signed LOI and started implementation of Peoplehub to 2'500 employees of multi-national oil & gas company. Expanded relationship with Low-Cost airline for further roll-out of multi-country payroll after successful go-live in France during the quarter

Continued sales streak to support first overall quarter with positive EBIT supporting customers implement SAP SuccessFactors HR, performance management, time and attendance and payroll functionality.

Managed Services grew 27% YoY to NOK 254 million and 75% of total revenue.

*Revenue in local currency converted to NOK using the avg. currency rate from the quarter last year. See the interim financial report for definitions of APMs

• Revenue in Managed Services grew by 26.9% YoY (+23.3% growth YoY when adj. for currency effects)
• 108% Net Revenue Retention YoY in constant currency as existing customers expand their geographic footprint and functionalities
• Significant growth in most regions in local currency.
  • Northern Europe: +19%
  • DACH: +40%
  • UK&I: -2%

Professional Services revenue was 2% lower YoY mainly due to less consulting projects in UK

*Revenue in local currency converted to NOK using the avg. currency rate from the quarter last year. See the interim financial report for definitions of APMs

Revenue in Professional Services was 1.8% lower YoY (-6.1 when adjusted for currency effects). Revenue reduction is mainly due to the partial completion of a large consulting project in UK.

Significant PS capacity being utilized to support Managed Services in implementing new customers (transformation projects) or delivering change orders. Particularly in Germany

Financial Review

Revenue increased by 18% for the quarter YoY in constant currency

• Revenue growth (as reported) for the quarter YoY: +22.1%
• Revenue growth +18.3% YoY in constant currency*
• MS +26.9% to NOK 254m
  • Net retention of 108%
• PS -1.8% to NOK 72m
• Net new SaaS/BPaaS contracts signed, but yet to go live, has annual recurring revenue* of ~NOK 106m

*See the interim financial report for definitions of APMs

Strong revenue visibility through 2024/25 - new BPO customers to go live should result in >13% revenue increase compared to revenue LTM

Revenue development based on signed MS contracts (NOKm)

Contracted ARR* development over time based on signed contracts (NOKm)

• Total annual revenue expected to increase by ~NOK 173m (+13%) vs. LTM Q3'24, based on already signed contracts (assuming no material churn and based on avg. currency rates for Q3 2024)
• The new contracts will normally generate full monthly recurring revenue when the customer has gone live on the PeopleHub platform
  • All current contracts expected to be fully implemented by Q1-2026
• Estimated future annual revenue assumes MS change order level at historical ~12% of recurring revenue, and revenue from PS & APAC LTM Q3'24

*The ARR for the quarter is an estimate calculated by annualising the actual recurring revenue (according to contract revenue and additional services) for the quarter, for customers at the end of the quarter. Please refer to the APMs section of the interim financial report for further details.

All time high adj. EBIT for the quarter

23.7 8.5% Q3-23 33.4 10.7% Q4-23 34.8 10.9% Q1-24 28.4 8.8% Q2-24 Q3-24 10.9% 37.0

MS – adj. EBIT* (NOKm) and margin (%) PS – adj. EBIT* (NOKm) and margin (%)

Adj. EBIT* (NOKm) and margin (%)

• Adj. EBIT NOK 37.0 (NOK 23.7m) +56%

• Adj. EBIT margin 10.9% (+2.4pp)

  • EBIT and margin improvements from increased revenue (lower unit cost) and operational improvements in NE and Germany (e.g. larger share of services in MS delivery from near-shore and offshore locations)
  • APAC contributing with a positive EBIT for the quarter

• MS: Adj EBIT NOK 45.4m (NOK 29.3m) +55%

  • Positively impacted by operational improvements in NE and Germany (ref. above)
• PS: Adj. EBIT NOK 5.1m (7.0m) -27%
  • Adversely impacted by reduced revenue, however increased utilisation vs. Q2'24 had a positive impact on margins and the trend is expected to continue in Q4

*See the interim financial report for definitions of APMs

© zalaris 2024 Page 12

Condensed Profit and Loss

	2024	2023	2024	2023	2023 *
(NOK 1 000)	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Jan-Dec
Revenue	339 682	278 157		981 406 820 761	1 133 971
License costs	27 113	24 644	79 363	76 733	103 231
% of revenue	8,0 %	8,9 %	8,1 %	9,3 %	9,1 %
Personnel expenses	165 156	139 862	500 233 436 195		589 845
% of revenue	48,6 %	50,3 %	51,0 %	53,1 %	52,0 %
Other operating expenses	87 169		74 298 255 535 205 839		287 068
% of revenue	25,7 %	26,7 %	26,0 %	25,1 %	25,3 %
(Gain)/loss on sale of assets	-	-	(10 503)	-	-
Amortisation implementation costs customer projects	12 670	8 959	34 039	23 850	33 765
Depreciation, amortisation and impairments	16 523	15 008	46 805	44 221	59 940
EBIT	31 051	15 387	75 934	33 922	60 122
Adjustment items**	5 981	8 278	24 304	28 447	35 647
Adjusted EBIT	37 032		23 665 100 238	62 368	95 768
Adjusted EBIT margin %	10,9 %	8,5 %	10,2 %	7,6 %	8,4 %
Net financial income/(expense)	(21 086)	1 009	(51 203)	(58 937)	(74 630)
Profit/(loss) for the period	8 292	13 370	20 042	(23 843)	(18 980)
Total comprehensive income	19 125	(1 684)	40 898	4 325	26 798

* 2023 accounts are reclassified

• License costs: Increased due to higher revenue from Payroll/HR solutions that incurs license costs
• Personnel expenses: Revenue per FTE in constant currency increased by ~10%. Cost increase mainly due to increased number of FTEs YoY (+55) and currency impact. Lower option costs offset by higher bonus accruals
• Other op. exp.: Reduced as a % of revenue (-1.0pp). Higher expenses mainly from use of external payroll providers for global payroll, external hosting, and costs related to the strategic project
• Financial expense: Includes NOK 8.0m in unrealised currency loss on EUR bond loan

Page 13 **Items excluded in adjusted EBIT Q3 2024: share-based payments (NOK -0.8m), amortization of excess values on acquisitions (NOK 3.5m), strategic process costs (NOK 2.5m) and negative EBIT vyble (NOK 0.8m) - see definition of adj. EBIT under APMs in the interim financial report )

Operating cash flow increased by NOK 33m YoY to NOK 48m

Development in cash balance (NOKm)

• Cash flow from operating activities of NOK 48.4m vs. NOK 15.3m last year
• Cash balance at 30 September NOK 180.1m (+NOK 16.9m from Q2)
• Net interest-bearing debt of NOK 286.4m vs. NOK 286.5m at the end of previous quarter

* Before share based payment costs (ex. payroll taxes)

** Revenue deferred less project costs capitalised

*** Relates mainly to rental costs for office premises

**** Including currency movements

Outlook

Zalaris target NOK 1.5bn in 2026 revenues with 12-15% adj. EBIT through operational excellence and scale

Development in revenue

Key growth and margin initiatives

Drive revenue growth through continued new customers and upsell of existing customers targeting run rate of NOK 1,5 billion by 2026

German improvement program, standardized solutions and targeting right shoring will improve EBIT to 12-15%

Retool the organisation with AI tools for increased productivity and improved customer offerings 3

1) Numbers in parenthesis in constat currency based on 31.12.23 currency rates 2) 2023 Q4 run rate of EUR 100m based on currency rate of 11.22 per 31.12.23

1

2

#teamZalaris is UNSTOPPABLE: another all-time high revenue quarter delivered and significant uptick in EBIT as improvements in Germany start materialize

• Solid Q3 with growth of 22% to annualized revenue of almost NOK 1.4 billion with 10,9% EBIT
• Growth to continue as annual revenue expected to increase by ~NOK 173m (+13%) vs. LTM Q3'24, based on already signed contracts over the next 12 months to bring us close to our target for 2026 of being a 1.5 billion company
• Margins expected to continue improving toward target of 12-15% as German EBIT improvement programme progresses combined with incremental margin from contract backlog being realized
• Strategic Review well underway after initial planning period to explore options for the future

Zalaris is the proud title sponsor of the Zalaris Norseman Xtreme Triathlon – perceived as one of the toughest triathlons in the world. As part of our engagement our #teamZalarisNorseman raised about NOK 1 million to support cancer fighting charities. You can watch the 2024 film "Unstoppable" on Youtube.

Q&A

Appendix:

Company in brief

Payroll & HR solutions that enable digital organizations

Zalaris is a leading European provider of global payroll and human capital management solutions delivered through software as a service, outsourcing, or consulting delivery models

Supporting fully digital processes for payroll and human capital management targeting 20-30% cost savings

One common multi-country solution satisfying GDPR requirements combined with competent resources serving complex customers with local competence and language

A market leader within mid-size companies with cross-border needs and a strong customer portfolio of some of the largest corporations in the Nordics, DACH, UK&I and APAC regions

1,500,000	~1,100	340,000+
Employees served monthly by Zalaris supported HR solutions	Zalaris employees across the world	Employees served monthly through payroll services
NOK 1.13bn / 8%	17 countries	150+ countries
2023 revenues / adj. EBIT margin	With service centres and expertise in local regulations	With expertise in local regulations with partners

Zalaris' Product offering covering the full employee life cycle

Services delivered by two integrated business units with most revenues being recurring of nature

Diversified and large customer base comprising blue-chips across multiple industries

We simplify HR and payroll administration, and empower you with useful information so that you can invest more in people.

Thank you!

Zalaris ASA | +47 4000 3300 | www.zalaris.com