Quarterly Report • Nov 2, 2023
Quarterly Report
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Quarterly Report
Pexip's Q3 2023 Report
"We are pleased to have two quarters in a row with positive ARR growth and four quarters in a row with positive EBITDA. Our focus remains on generating profitable growth through our market leading position in our two target markets, and we are seeing the results of that focus in our Q3 performance."
Trond K. Johannessen Chief Executive Officer
| Q3 2023 | Q2 2022 | YTD 2023 | YTD 2022 | ||
|---|---|---|---|---|---|
| Revenue | NOK million | 214.9 | 189.2 | 708.4 | 606.7 |
| Cost of Sale | NOK million | 25.2 | 21.2 | 70.9 | 76.2 |
| Salary and personnel expenses | NOK million | 143.6 | 161.6 | 460.2 | 553.7 |
| Other operating expenses | NOK million | 35.4 | 62.7 | 123.2 | 182.6 |
| Other gains/losses | NOK million | (5.7) | (5.3) | (6.4) | (32.1) |
| EBITDA | NOK million | 4.9 | (61.5) | 47.7 | (237.8) |
| EBITDA margin | % | 2% | -33% | 7% | -39% |
| Reported profit for the period | NOK million | (24.2) | (45.7) | (21.2) | (199.0) |
| Earnings per share | NOK per share | (0.2) | (0.5) | (0.2) | (2.0) |
| ARR | USD million | 99.8 | 100.7 | ||
| Number of employees end of period | # | 315 | 451 |
Pexip's subscription base measured in Annual Recurring Revenue (ARR) amounted to USD 99.8 million in Q3 2023, representing a year-on-year decline of 1% from USD 100.7 million in Q3 2022. Pexip grew its overall ARR base with USD 1.1 million from Q2 2023, and have grown its ARR in two consecutive quarters.
Connected spaces ARR amounted to USD 60.4 million at the end of Q3 2023, up USD 0.8 million from Q2 2023. The net revenue retention rate, reflecting the percentage of retained revenue from existing customers, was 98% in Q3 2023. Secure and Custom ARR amounted to USD 35.5 million at the end of Q3 2023, up USD 1.0 million from Q2 2023. The net revenue retention rate was 102% in Q3 2023. ARR from Pexip as-a-Service was at USD 47.4 million in Q4 2023, up 2% year-on-year, while ARR from Pexip's Self-hosted Software ended at USD 52.3 million, down 4% year-on-year.
In August, BlueJeans by Verizon announced that they would retire all BlueJeans products and services during the first half of 2024. BlueJeans was a video conferencing company offering cloud-based video meetings as well as a digital event platform and Cloud Video Interop to Microsoft Teams. As a consequence, Pexip has seen an increase in pipeline and sales from BlueJeans customers needing to transition to other solutions for Microsoft Teams interoperability. With BlueJeans exiting the market, and HP|Poly's having changed their CVI offering to Poly CloudConnect powered by Pexip, there are only two certified CVI solutions sold at the end of Q3 2023.
The development so far in 2023 continues to provide momentum to reach the financial targets set for 2023; delivering flat to positive development in ARR, delivering NOK 100-150 million in EBITDA and delivering NOK 85-100 million in free cash flow. Our secure solutions are increasingly relevant and awareness around sovereignty and privacy for government data is increasing, with more countries issuing specific recommendations and regulations. Within interoperability and infrastructure solutions, we continue to capture new accounts, and saw quarter-on-quarter growth in this segment in Q3.
The development in the strategic partnerships with both Microsoft and Poly continues to show that Pexip's focused approach to our key markets makes us an attractive partner in our industry.
Following the successful change in strategy, the Board of Directors is recommending a new capital distribution policy. Going forward, Pexip will seek to distribute 50- 100% of free cash flow generated to shareholders as a dividend. In addition, the Board has concluded that the Company has excess capital following the change in strategy and that Pexip should repay some of the capital raised in 2020 to the owners. The Board will recommend an extraordinary capital repayment to the AGM in 2024 of NOK 0.5 per share in addition to the ordinary capital distribution.
AstraZeneca chose Pexip to provide SIP dial capabilities to their Microsoft Teams Rooms, which Pexip is currently the only global provider of. They chose Pexip in order to enable their Microsoft Teams Rooms to seamlessly interoperate with other video systems and platforms.
A Fortune 500 company recently chose Pexip to provide video infrastructure for the video systems. They chose Pexip for our ability to integrate with their current environment and Pexip's leading capabilities in ensuring seamless connectivity with all major meeting platforms.
A major European energy company with over 60,000 employees needed an on-premises video solution to deliver a great video experience while at the same time operating within their security and privacy policies. The customer has been a HP|Poly video infrastructure customer, and have chosen the Poly Private Connect powered by Pexip offering and signed a three-year contract.
Pexip has won a large US Federal Agency with more than 50,000 employees. The agency chose Pexip's FedRamp Authorized platform to provide Microsoft Teams Cloud Video Interop for their SIP video endpoints.
(Figures in brackets = same period prior year or relevant balance sheet date).
Pexip operates in two main product areas. Pexip selfhosted software, which mainly consists of sales from software licenses and related maintenance contracts, and Pexip as-a-Service, which consists of sales from Pexip's public cloud service.
Consolidated revenue amounted to NOK 214.9 million in Q3 2023 (NOK 189.2 million in Q3 2022), representing a 14% increase from Q3 2022. The increase is a result of the ARR increase in Q3 2023 as well as some currency impact, although the positive currency impact on revenues is less in Q3 2023 than in H1 2023. Europe, Middle East, and Africa (EMEA) was the largest sales theatre, accounting for NOK 105.0 million (NOK 100.3 million) representing 49% of group revenue in Q3 (53%), followed by Americas, accounting for NOK 97.5 million (NOK 73.5 million) representing 45% (39%), and Asia-Pacific (APAC), accounting for NOK 12.3 million (NOK 15.4 million) representing 6% (8%).
Self-hosted software revenue accounted for NOK 101.2 million in Q3 2023 (NOK 82.8). Revenue from Pexip as-a-Service was NOK 113.7 million in Q3 2023 (NOK 106.4 million). Software revenue is mainly recognized at the time of delivery, which leads to variations in revenue recognition across periods and drives seasonal variations of software revenue.
Cost of sale consists mainly of network, data center and hosting for the Pexip as-a-Service, as well as some 3rd party commissions and software licenses. Cost of sale amounted to NOK 25.2 million in Q3 2023 (NOK 21.3 million), reflecting a gross margin of 88% (89%).
Operating expenses consist mainly of salary and personnel expenses and other operating expenses. Salary and personnel expenses amounted to NOK 143.6 million in Q3 2023 (NOK 161.6 million), which is 67% of the quarterly revenue (85%). In Q3 2023 Pexip had a positive impact from holiday pay periodization of NOK 10 million (NOK 14 million), which is expected seasonality. Pexip had 315 employees employed at the end of Q3 2023 (451 at the end of Q3 2022).
Other operating expenses amounted to NOK 35.4 million (NOK 62.7 million), which reflects a level of 16% of the quarterly revenue (33%). The reduction is due to the cost-cutting initiatives and the effects were realized across multiple cost categories, including a reduction in spending on sales and marketing, travel, and other professional fees such as R&D, licensing, and HR.
Other gains and losses amounted to a loss of NOK 5.7 million (NOK 5.3 million). The costs in Q3 2023 are mainly related to the termination of employees in order to secure long-term cost reductions, as in Q3 2022.
Earnings before interest, tax, depreciation, and amortization (EBITDA) amounted to NOK 4.9 million in Q3 2023 (negative NOK 61.5 million), reflecting a 2% EBITDA margin (-33%).
Depreciation and amortization costs were NOK 27.1 million in Q3 2023 (NOK 23.2 million). The increase is due to the increased depreciation in intangible assets and leasing contracts.
Net financial expenses were NOK 3.2 million (income of NOK 24.3 million). Pexip had financial income of NOK 4.7 million related to interest on cash holdings (NOK 2.9 million), while the net impact of foreign exchange differences gave a loss of NOK 7.3 million (gain of 23.1 million).
Profit before tax was negative NOK 25.4 million (negative NOK 60.4 million). Profit after tax was negative NOK 24.2 million (negative NOK 45.7 million).
Consolidated revenue was NOK 708.4 million year to date 2023 (NOK 606.7 million). The increase was driven by currency effects as well as underlying sales growth. Europe, Middle East, and Africa (EMEA) was the largest sales theatre, accounting for NOK 340.7 million (NOK 318.9 million) representing 48% of group revenue in the period (45%), followed by Americas, accounting for 309.0 million (NOK 223.9 million) representing 44% (37%), and Asia-Pacific (APAC), accounting for NOK 58.8 million (NOK 63.9 million) representing 8% (11%).
Cost of sale amounted to NOK 70.9 million (NOK 76.2 million), reflecting a gross margin of 90% (87%). Cost of sales decreased due to lower hosting and network costs, as well as lower costs of hardware and equipment.
Operating expenses consist mainly of salary and personnel expenses and other operating expenses. Salary and personnel expenses amounted to NOK 460.2 million year to date (NOK 553.7 million), which is 65% of revenues in the period (91%). The reduction is mainly due to the reduction in employees over the last twelve months.
Other operating expenses amounted to NOK 123.2 million (NOK 182.6 million) for the first half of 2023, which reflects 17% of revenue (30%). The reduction is due to the cost-cutting initiatives and the effects were realized across multiple cost categories.
Other gains and losses amounted to a loss of NOK 6.4 million (NOK 32.1 million) and is related to restructuring.
Earnings before interest, tax, depreciation, and amortization (EBITDA) amounted to NOK 47.7 million year to date in 2023 (negative NOK 237.8 million), reflecting a 7% EBITDA margin (negative 39%).
Depreciation and amortization costs were NOK 99.1 million for the period (NOK 70.9 million).
Net financial income was NOK 32.8 million for the period (NOK 51.1 million) and was mainly related to currency gains as well as interest income.
Profit before tax was negative NOK 18.6 million year to date in 2023 (negative NOK 257.5 million). Profit after tax was negative NOK 21.2 million (negative NOK 199.0 million).
Pexip continues to have a very robust financial position as the company has a solid cash buffer, no material interest bearing debt as of Q3 2023 and a positive cash flow year to date. Total assets amounted to NOK 2,043 million (NOK 2,087 million at the end of Q4 2022), and total equity amounted to NOK 1,612 million (NOK 1,597 million at the end of Q4 2022).
Current assets amounted to NOK 676 million (NOK 679 million at the end of Q4 2022). Trade and other receivables decreased to NOK 141 million (NOK 199 million at the end of Q4 2022). Cash and cash equivalents decreased somewhat to NOK 494 million in Q3, while up for the year (NOK 419 million at the end of Q4 2022).
Non-current assets amounted to NOK 1,367 million (NOK 1,408 million at the end of Q4 2022). Contract costs decreased in Q3 to NOK 296 million (NOK 286 million at the end of Q4 2022).
Total liabilities were at NOK 431 million (NOK 490 million at the end of Q4 2022). Of this, NOK 2 million are borrowings (NOK 4 million at the end of Q4 2022). Current liabilities decreased to NOK 356 million (NOK 415 million at the end of Q4 2022). Of this, NOK 231 million are contract liabilities (NOK 231 million at the end of Q4 2022).
Non-current liabilities amounted to NOK 75 million (NOK 75 million at the end of Q4 2022).
Net cash flow from operating activities was negative NOK 1.7 million in Q3 2023 (negative NOK 34.4 million) compared to an EBITDA of NOK 4.9 million.
Cash flow from investing activities was negative NOK 3.4 million for Q3 2023 (negative NOK 13.9 million). The main driver is investments in software development. In Q3, investment cash flow benefited from received investment grants of NOK 4.7 million. Cash flow from financing activities was negative NOK 6.4 million for Q3 2023 (negative NOK 8.0 million), mainly related to leasing.
In total, Pexip had a net cash flow of negative NOK 11.5 million for Q3 2023 (negative NOK 56.1 million). In addition, there was an exchange loss of NOK 1.9 million (NOK 17.5), resulting in a negative cash flow of NOK 13.4 million (negative NOK 38.6 million)
Cash flow from operating activities was NOK 127.2 million year to date (negative NOK 130.9 million year to date in 2022). The positive cash flow reflects the positive operating EBITDA as well as a positive development in working capital.
Cash flow from investing activities was negative NOK 38.7 million year to date (negative NOK 110.3 million). The main driver was investments in software development as well as a acquisition of a service provider customer base.
Cash flow from financing activities was negative NOK 21.2 million year to date (negative NOK 112.7 million).
In total, Pexip had a net cash flow of NOK 67.3 million year to date (negative NOK 353.9 million). In addition, there was an exchange gain of NOK 7.7 million, resulting in a positive cash flow of NOK 75.0 million (negative NOK 317.5 million)
There were no subsequent events after September 30, 2023.
Risk management in Pexip is based on the principle that risk evaluation is an integral part of all business activities and is a part of the annual strategy review. Pexip has developed its approach to risk assessment and risk mitigation within financial reporting and information security, where Pexip holds ISO 27001 and 27701 certifications as external recognition of its approach.
Pexip is exposed to several risk factors related to operational and market activities, customer relationships and third parties, laws, regulations, and compliance, financial and market, among others. The Risk and Risk Management section in the 2022 Annual Report contains detailed descriptions and mitigating actions.
The global economic situation has faced increasing challenges into 2023, with slowing growth and higher inflation in Pexip's key markets. This impacts Pexip's customers, and several large enterprise companies have announced cost reduction programs. This has also had a negative impact on the financial markets with an increasing cost of capital. Pexip has acted through its cost reduction program to reduce its cost base, which has contributed to mitigating cost increases on key cost categories such as employee benefit expenses and the cost of cloud computing. Pexip targets a positive free cash flow in 2023 and has very limited interestbearing debt and a strong balance sheet. As such, the company is less exposed to the increasing cost of capital.
Pexip has not identified any further significant risk exposures beyond the ones described in the 2022 Annual Report.
In the long-term, Pexip believes that the market for enterprise-grade video communication will continue to increase due to the increased adoption and usage of video communication, and increased awareness of sustainability. Pexip has unique video technology with capabilities within security, interoperability, and flexible deployments. This makes the company well-positioned as enterprises and public sector organizations continue to adopt hybrid working models. Furthermore, Pexip believes in the increased use of video in organizations' workflows with their clients/customers, creating additional new and significant market opportunities. In particular, the use of video for mission-critical, high-security meetings has increased. This is the foundation of the focused strategy Pexip is executing, pursuing market-leading positions in Secure and Custom Video and Connected Spaces.
Pexip focuses its business areas into two main areas: Interoperability and infrastructure solutions comprising Connected Spaces including legacy areas, and secure, custom solutions - comprising Video Innovation and Secure Meetings. Pexip targets growth of 20% in Secure Spaces and Video Innovation while estimating a stable development in Connected Spaces.
For 2023, Pexip is targeting an EBITDA of NOK 100 – 150 million and NOK 85 to 100 million in free cash flow. Going forward, Pexip will balance growth and profitability to create top-line and bottom-line growth.
These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties, and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this section. Readers are cautioned not to put undue reliance on forward-looking statements.
Oslo, November 2, 2023 Board of Directors and CEO of Pexip Holding ASA
Kjell Skappel Chair of the Board
Silvija Seres Board Member
Irene Kristiansen Board Member
Geir Langfeldt Olsen Board Member
Phillip Austern Board Member
Trond K. Johannessen CEO
| Notes | Third Quarter | YTD | |||
|---|---|---|---|---|---|
| (NOK 1.000) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | |
| Revenue | 3 | 214 858 | 189 245 | 708 425 | 606 689 |
| Cost of sale | 25 185 | 21 246 | 70 885 | 76 167 | |
| Salary and personnel expenses | 143 647 | 161 576 | 460 233 | 553 659 | |
| Other operating expenses | 35 443 | 62 659 | 123 223 | 182 592 | |
| Other gains and losses | 5 711 | 5 294 | 6 376 | 32 059 | |
| EBITDA | 4 872 | -61 530 | 47 708 | -237 789 | |
| Depreciation and amortization | 27 127 | 23 202 | 99 113 | 70 854 | |
| Operating profit or loss | -22 255 | -84 733 | -51 405 | -308 643 | |
| Financial income | 4 739 | 2 933 | 11 772 | 4 156 | |
| Financial expenses | -600 | -1 684 | -1 994 | -3 736 | |
| Net gain and loss on foreign exchange differences | -7 317 | 23 070 | 23 054 | 50 716 | |
| Financial income/(expenses) - net | -3 178 | 24 319 | 32 832 | 51 136 | |
| Profit or loss before income tax | -25 433 | -60 414 | -18 573 | -257 508 | |
| Income tax expense | -1 247 | -14 687 | 2 657 | -58 467 | |
| Profit or loss for the year | -24 186 | -45 727 | -21 230 | -199 041 | |
| Profit or loss is attributable to: | |||||
| Owners of Pexip Holding ASA | -24 186 | -45 727 | -21 230 | -199 041 | |
| Earnings per share | |||||
| Basic earnings per share | -0.24 | -0.45 | -0.21 | -1.96 | |
| Diluted earnings per share | -0.24 | -0.45 | -0.21 | -1.96 |
| Third Quarter | Year | |||
|---|---|---|---|---|
| (NOK 1.000) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 |
| Profit or loss for the year | -24 186 | -45 727 | -21 230 | -199 041 |
| Items that may be reclassified to profit or loss: | ||||
| Exchange difference on translation of foreign operations | 12 580 | 24 869 | 12 580 | 27 389 |
| Total comprehensive income for the year | -11 606 | -20 857 | -8 650 | -171 651 |
| Total comprehensive income is attributable to: | ||||
| Owners of Pexip Holding ASA | -11 606 | -20 857 | -8 650 | -171 651 |
| (NOK 1.000) | 09/30/2023 | 12/31/2022 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 21 279 | 29 039 |
| Right-of-use assets | 50 685 | 77 154 |
| Goodwill | 662 645 | 662 645 |
| Other intangible assets | 138 051 | 178 606 |
| Deferred tax asset | 194 311 | 169 279 |
| Contract costs | 296 019 | 285 779 |
| Receivables | 1 179 | 1 602 |
| Other assets | 3 186 | 4 041 |
| Total non-current assets | 1 367 354 | 1 408 145 |
| Current assets | ||
| Trade and other receivables | 140 737 | 198 727 |
| Contract assets | 22 180 | 37 233 |
| Other current assets | 18 364 | 23 326 |
| Cash and cash equivalents | 494 349 | 419 306 |
| Total current assets | 675 630 | 678 592 |
| TOTAL ASSETS | 2 042 984 | 2 086 736 |
| (NOK 1.000) | 09/30/2023 | 12/31/2022 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Total equity | 1 612 117 | 1 596 571 |
| Non-current liabilities | ||
| Borrowings | 1 643 | 16 |
| Lease liabilities | 33 674 | 57 560 |
| Deferred tax liabilities | 39 824 | 15 388 |
| Other payables | 61 | 2 526 |
| Total non-current liabilities | 75 201 | 75 490 |
| Current liabilities | ||
| Trade and other payables | 102 423 | 148 153 |
| Contract liabilities | 230 511 | 231 004 |
| Current tax liabilities | 1 638 | 5 002 |
| Borrowings | 178 | 4 077 |
| Lease liabilities | 20 917 | 26 439 |
| Total current liabilities | 355 667 | 414 675 |
| Total liabilities | 430 867 | 490 166 |
| (NOK 1.000) | Share capital |
Share premium |
Other reserves |
Translation differences |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|
| Balance at January 1, 2022 | 1 556 | 2 115 938 | 86 018 | -3 553 | -291 770 | 1 908 191 |
| Profit or loss for the year | -262 248 | -262 248 | ||||
| Other comprehensive income for the year | 11 416 | 11 416 | ||||
| Total comprehensive income for the year | 11 416 | -262 248 | -250 831 | |||
| Capital increase/share issue | -270 | -270 | ||||
| By/sell treasury share | -35 | -87 404 | -87 439 | |||
| Share-based payments | 26 920 | 26 920 | ||||
| Balance at December 31, 2022 | 1 521 | 2 115 938 | 25 265 | 7 863 | -554 018 | 1 596 571 |
| Balance at January 1, 2023 | 1 521 | 2 115 938 | 25 265 | 7 863 | -554 018 | 1 596 571 |
| Profit or loss for the period | -21 230 | -21 230 | ||||
| Other comprehensive income for the year | 12 580 | 12 580 | ||||
| Total comprehensive income for the year | 12 580 | -21 230 | -8 650 | |||
| Capital increase/share issue | -3 | 111 | 109 | |||
| By/sell treasury share | ||||||
| Share-based payments | 24 087 | 24 087 | ||||
| Balance at September 30, 2023 | 1 518 | 2 115 938 | 49 464 | 20 443 | -575 248 | 1 612 117 |
| Balance at January 1, 2022 | 1 556 | 2 115 938 | 86 018 | -3 553 | -291 770 | 1 908 189 |
| Profit or loss for the period | -199 041 | -199 041 | ||||
| Other comprehensive income for the year | 27 389 | 27 389 | ||||
| Total comprehensive income for the year | 27 389 | -199 041 | -171 651 | |||
| Capital increase/share issue | -258 | -258 | ||||
| By/sell treasury share | -35 | -87 404 | -87 439 | |||
| Share-based payments | 28 348 | 28 348 | ||||
| Balance at September 30, 2022 | 1 521 | 2 115 938 | 26 704 | 23 836 | -490 811 | 1 677 188 |
| Third Quarter | YTD | |||
|---|---|---|---|---|
| (NOK 1.000) | Q3 2023 | Q3 2022 | 09/30/2023 | 09/30/2022 |
| Cash flow from operating activities | ||||
| Profit or loss before income tax | -25 433 | -60 414 | -18 573 | -257 508 |
| Adjustments for | ||||
| Depreciation, amortization and net impairment losses | 27 127 | 23 202 | 99 113 | 70 854 |
| Non-cash - share based payments | 7 606 | 8 992 | 25 615 | 28 348 |
| Interest income/expenses - net | -3 976 | -9 634 | ||
| Net exchange differences | -8 080 | 586 | -4 038 | 2 197 |
| Other adjustments | -35 | -6 367 | -791 | -6 169 |
| Change in operating assets and liabilities | ||||
| Change in trade, other receivables and other assets | 7 155 | 22 357 | 68 619 | 25 230 |
| Change in trade, other payables and contract liabilities | -9 741 | -19 711 | -38 169 | 9 690 |
| Interest received | 4 553 | 193 | 11 586 | 298 |
| Income taxes paid/refunded | -897 | -3 246 | -6 501 | -3 843 |
| Net cash inflow/outflow from operating activities | -1 720 | -34 408 | 127 227 | -130 903 |
| Cash flow from investing activities | ||||
| Payment for property, plant and equipment | -349 | -1 786 | -15 044 | -69 216 |
| Payment of software development cost | -3 035 | -12 136 | -23 667 | -41 066 |
| Payment for acquisition of subsidiary, net of cash acquired | ||||
| Net cash inflow/outflow from investing activities | -3 384 | -13 922 | -38 711 | -110 282 |
| Cash flow from financing activities | ||||
| Proceeds from issuance of ordinary shares | ||||
| Repayment of borrowings | -631 | -500 | -2 272 | -1 500 |
| Principal element of lease payments | -5 160 | -6 445 | -16 972 | -21 059 |
| Interest paid | -577 | -779 | -1 952 | -2 495 |
| Sale/(purchase) of treasury shares | -87 674 | |||
| Net cash inflow/outflow from financing activities | -6 368 | -7 725 | -21 196 | -112 728 |
| Net increase/(decrease) in cash and cash equivalents | -11 471 | -56 054 | 67 321 | -353 914 |
| Cash and cash equivalents start of the period | 507 706 | 524 998 | 419 306 | 803 852 |
| Effects of exchange rate changes on cash and cash equivalents | -1 886 | 17 458 | 7 723 | 36 464 |
| Cash and cash equivalents end of the period | 494 349 | 486 402 | 494 349 | 486 402 |
Pexip Holding ASA is the parent company of the Pexip Group. The Group includes the parent company Pexip Holding ASA and its wholly owned subsidiary Pexip AS, which have the wholly owned subsidiaries Pexip Inc, Pexip Ltd, Pexip Australia Pty Ltd, Pexip Japan GK, Pexip Singapore Pte Ltd, Pexip Germany GmbH, Pexip France SAS, Pexip Netherlands B.V, Skedify NV, Pexip Italy S.R.L, Pexip Spain SL and Videxio Asia Pacific Ltd. The Group`s head office is located at Lilleakerveien 2a, 0283 OSLO, Norway. Pexip Holding ASA is listed on the Oslo Stock Exchange (Norway) under the ticker PEXIP.
The consolidated condensed interim financial statements comprise the financial statements of the Parent Company and its subsidiaries as of September 30, 2023, authorised for issue by the board of directors on November 1, 2023.
The condensed interim financial statements are unaudited.
The condensed interim financial statements for the three months ending on September 30, 2023, have been prepared according to IAS 34 Interim Financial reporting. This quarterly report does not include the complete set of accounting principles and disclosures and should be read in conjunction with the Annual Financial Statement for 2022. All accounting principles applied in preparing this interim financial statement are consistent with the annual report as of 2022. The Group has not early adopted any new standards, interpretations or amendments issued but not yet effective.
Rounding differences may occur.
(NOK 1,000)
The Group has one segment, sale of collaboration services.The market for Pexip's software and services is global. The chief decision maker will therefore follow up revenue and profitability on a global basis This is consistent with the internal reporting submitted to the chief operating decision maker, defined as the Management Group. The Management Group is responsible for allocating resources and assessing performance as well as making strategic decisions.
Principles of revenue recognition are stated in accounting principles to consolidated financial statements, section 2.3.5 Revenue from contracts with customers.
In the following table, revenue is disaggregated by primary service line, geography and timing of revenue recognition. In presenting the geographic information, revenue has been based on the geographic location of customers.
| EMEA1) | Americas | APAC2) | Total | |
|---|---|---|---|---|
| Pexip as-a-Service | 61 992 | 46 621 | 5 092 | 113 705 |
| Self-hosted Software | 42 975 | 50 923 | 7 254 | 101 152 |
| Total revenue | 104 967 | 97 544 | 12 346 | 214 857 |
| EMEA1) | Americas | APAC2) | Total | |
|---|---|---|---|---|
| Pexip as-a-Service | 58 833 | 41 143 | 6 431 | 106 406 |
| Self-hosted Software | 41 480 | 32 388 | 8 973 | 82 841 |
| Total revenue | 100 313 | 73 530 | 15 404 | 189 247 |
| EMEA1) | Americas | APAC2) | Total | |
|---|---|---|---|---|
| Pexip as-a-Service | 188 152 | 131 793 | 20 884 | 340 829 |
| Self-hosted Software | 152 528 | 177 186 | 37 882 | 367 596 |
| Total revenue | 340 681 | 308 979 | 58 766 | 708 425 |
| EMEA1) | Americas | APAC2) | Total | |
|---|---|---|---|---|
| Pexip as-a-Service | 175 955 | 104 453 | 19 684 | 300 092 |
| Self-hosted Software | 142 933 | 119 455 | 44 209 | 306 597 |
| Total revenue | 318 888 | 223 908 | 63 892 | 606 689 |
| Third quarter | Third quarter | |
|---|---|---|
| Timing of revenue recognition | 2023 | 2022 |
| Products and services transferred at a point in time | 73 590 | 68 485 |
| Products and services transferred over time | 141 267 | 120 762 |
| Total revenue | 214 857 | 189 247 |
| Year to date | Year to date | |
|---|---|---|
| Timing of revenue recognition | 2023 | 2022 |
| Products and services transferred at a point in time | 279 081 | 239 230 |
| Products and services transferred over time | 429 344 | 367 459 |
| Total revenue | 708 425 | 606 689 |
1)Europe, Middle East and Africa
2)Asia Pacific (East and South Asia, Southeast Asia and Oceania)
The Group conducts its sales through channel partners. No channel partner represent more than 10% of the Group's revenue as of September 2023. In Q3 2023 the 5 largest represent approximately 30% (26% in Q3 2022) of total revenue, while the 10 largest represent 44% (36% in Q3 2021). Of the Group's total channel partner base per Q3 2023, the five largest represent approximately 24% of total revenue (25% per Q3 2022), and the ten largest represent approximately 36% (38% per Q3 2022).
The following geographic information of non-current assets is based on the geographic location of the assets.
| 9/30/2023 | 9/30/2022 |
|---|---|
| 234 553 | 310 951 |
| 117 001 | 77 535 |
| 123 687 | 130 069 |
| 30 791 | 33 652 |
| 506 032 | 552 207 |
Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, other intangible assets and contract costs.
The Group uses the following terms in the definition of APMs in this Report:
EBITDA: Profit/(loss) for the period before net financial items, income tax expense, depreciation, and amortization.
Adjusted EBITDA: EBITDA adjusted for cost that are not related to the ordinary business and that are non-recurring costs.
EBITDA-margin: EBITDA in the percentage of revenue.
Share of recurring revenues: Recurring revenue from own products is defined as revenue from time-limited contracts where the purchase is recurring. Revenue from time-limited software subscriptions and related mandatory maintenance contracts are considered recurring. Revenue from third-party software licences, perpetual software licences and project-based professional services, such as customer-specific proof-of-concept projects or installation projects, are considered non-recurring.
Contracted Annual Recurring Revenue (ARR): Annualized sales from all active subscriptions/contracts and ordered subscriptions with a future start date where the subscription is time-limited and recurring in nature.
This corresponds to Pexip's order backlog.
Gross Margin: Revenue after the cost of goods sold in the percentage of revenue.
Delta Annual Recurring Revenue (DARR): The difference in ARR from one quarter to another.
Net Revenue Retention (NRR) Rate is the percentage of annual recurring revenue retained from customers' existing in the prior year, including upsell, downsell and total churn.
Lilleakerveien 2A, 0283 Oslo, Norway www.pexip.com
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