Pexip Holding

Investor Presentation • Sep 16, 2022

Pexip

September 16, 2022

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These materials have been produced by Pexip Holding ASA (the "Company", and with subsidiaries the "Group"). The materials have been prepared for the exclusive use of persons attending an oral briefing and meeting to which these materials relate given by a representative of the Company and/or persons to whom these materials have been provided directly by an authorized representative of the Company (the "Recipients"). For purposes of this notice, "materials" means this presentation, its contents and appendices and any part thereof, any oral presentation and any question or answer session during or after or in relation to any of the foregoing.

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Pexip at a glance

2011 Company founded

300+ Partners in 75 countries

4,400 Enterprise and public sector customers

\$106 million Annual Recurring Revenue 2021

Challenger in Gartner Magic Quadrant¹ Strong Position in Frost & Sullivan FrostRadar²

1) Gartner Quadrant for Meeting Solutions 2021, by Mike Fasciani, Tom Eagle, Adam Preset, Brian Doherty 2) Source: Frost & Sullivan, Frost Radar for Cloud meetings and Team Collaboration Services 2021, January 2022

Pexip has a unique patented core technology platform

Core transcoding

• Processing happens in the network and not on the device
• Facilitates interoperability across platforms and devices
• Works well with devices that run on batteries or have limited processing capacity (thin clients)

architecture Self-hosted and cloud-hosted capabilities

• Enables complete control of data & business continuity
• Perfect for organizations with a need to bypass the internet or operate with a sovereign cloud

Built as a platform: Highly customizable

• Enables complete customization
• Ideal for new applications of video in sectors such as healthcare, video banking and virtual courts

~50 patents

Pexip's focused and clearly differentiated approach addresses a massive market opportunity

Pexip is focused on addressing customer needs in three core solution areas

Secure Spaces

When complete privacy and control over data is required

Target customers:

Key players in the market

Video Innovation

When an embedded or custom video solution is required

Connected Spaces

When you have several video solutions that need to work together

Target customers:

Pexip is finding great success in ultra secure meetings segment

Deliver ultra-secure and highly private platforms to the military and government

Becoming FedRamp certified to deliver a US sovereign cloud service

EU use cases:

Deliver ultra-secure and highly private platforms to the military and government

We provide large enterprises with high-security meetings to protect e.g., industry secrets, M&A, call records

APAC use cases:

Deliver ultra-secure and highly private platforms to the military and government

Have launched Pexip Virtual Courts

• Proven customer value. Court systems have already adopted non-purpose built video solutions to cope with the pandemic, which has proven cost efficiencies for the justice system and is essential to deal with large case backlogs
• Proven solution. Pexip is already being used as the backbone of one major European court system, and this experience has helped us develop true-to-life court workflows beyond what is available in standard video meeting platforms
• Proven opportunity. The pilot virtual courts customer is above 1 MUSD in ARR to Pexip, and the new virtual court system has helped us close two more justice systems in H1 2022

Pexip delivers a great Teams experience on third-party hardware

connected via Room Connector Microsoft Teams Client

Great and familiar user experience

• Pexip brings familiar Teams Experience to your video systems
• Enable users to utilize the current video systems at the click of a button

Cost Savings

• Extend the life of existing video conferencing hardware
• Modernize video infrastructure without the need for large investments in new hardware, and reduce maintenance costs to existing suppliers

Sales & Financials

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USD million Flat development in Annual Recurring Revenue so far in 2022

• ARR of USD 106.1 million at the end of Q2 2022

– USD 0.5 million above Q1 2022

• Lower new sales and upsell due to:

• Continued competition in Connected Spaces, and continued 3rd party supply chain problems delaying projects
• Lower net upsell due to strong growth in capacity last two years

Year-to-date growth in Secure Spaces and Video Innovation

USD million

Connected Spaces Legacy areas ^{54 58 63 62 62} 2021 Q4 2021 Q2 2021 Q3 2022 Q1 2022 Q2 -1 15 14 13 12 10 2021 Q3 2021 Q2 2021 Q4 2022 Q1 2022 Q2 -3

• Continue strong growth in Secure Spaces and Video Innovation
  • USD 2.8 million of ARR growth in total across the two areas in Q2
• Stable development in Connected spaces over the last three quarters, which is the main driver for lower growth overall compared to 2021
• Legacy areas continue to reduce in line with expectations

New customers represent the main driver for ARR growth

• Sales to new customers continue to be main driver behind growth, in line with previous period
• Improved churn at 8.8% continuing positive development from last quarters
• Lower ARR net retention due to lower net upsell from excess capacity

Q2 2022 Financial results

Profit and Loss Comments

1) Percent point change in margin

NOK million

			Change			Change
P&L item	Q2'22	Q2'21	Percent	LTM'22	LTM'21	Percent
Revenue	195.0	177.1	10%	866.1	722.1	20%
Cost of sale	29.1	20.9	39%	95.9	63.5	51%
Salary and personnel expenses	204.0	148.6	37%	702.4	572.2	23%
Other operating expenses	59.5	48.2	23%	247.9	154.7	60%
Restructuring costs	26.8	0	n.a.	26.8	0	n.a.
EBITDA	-124.4	-40.6	-41 p.p.1	-206.8	-68.3	-14 p.p.1
EBITDA excluding restructuring costs	-97.7	-40.6	-27 p.p.1	-180.1	-68.3	-11 p.p.1

• 10% (20%) increase in Q2 (LTM) yearon-year revenue in line with ARR increase driven by Pexip-as-a-Service
• Increased Cost of Sale from increased cloud service share of revenues, in addition to strengthening the robustness of the service platform
• Continued growth in employee benefit expenses following growth in employees
• Restructuring impact will be seen from Q3 2022
• Significantly lower EBITDA in Q2, also impacted by restructuring costs of NOK 27 million, of a total of NOK -124.4 (-206.8) million in Q2 (LTM)

On the path to EBITDA-positive run-rate, and cash flow positive run-rate after Q1 2023

Cash flow from investing activities per quarter Comments Cost reduction program

Estimated cost savings, NOK million, annualized

• Have reduced annual run-rate salary and personnel expenses with over NOK 130 million
  • 474 employees in permanent positions into Q3, down from peak of 571 in Q2
• Identified and committed savings on other cost areas such as IT, Cost of Goods Sold and marketing for an additional NOK 64 million which will take effect through Q3 and Q4 2022
• Current secured and committed savings takes Pexip ahead of plan to reach run-rate EBITDA neutral operations
• Plans in place for additional NOK 100 million in savings to support run-rate cash flow positive operations out of Q1 2023

Negative cash flow of NOK 65 million in Q2, solid cash position to return to cash flow positive

Cash flow bridge Q2 2022

NOKm

Comments

• Cash flow of negative NOK 65 million driven by a negative EBITDA with a seasonal improvement in working capital
• Positive impact on currency holdings in USD from the higher USD/NOK exchange rate

Current cash reserves considered sufficient to drive growth and return to profitability

Summary and outlook

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Summary and Outlook

• Pexip is a specialized video player focusing on large enterprise and public sector
• Rapid return to profitability and profitable growth is #1 priority
• Continued good underlying momentum for Secure Spaces and Video Innovation
• Solid pipeline in the Public Sector globally, and Pexip's dedicated solutions for the target verticals Judicial, Health, Finance and Retail have good traction in the market
• Strategic partnerships within Connected Spaces develop positively, but supply chain issues and overcapacity continue to impact sales performance in the short term
• Overall ARR development in Q3 2022 is expected flat to negative driven by a single large customer not renewing its contract
• Ahead of plan for EBITDA neutral operations for Q4 and the full year 2023, and plans in place for cash positive run rate exiting Q1 2023

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