Pexip Holding

Investor Presentation • Nov 10, 2020

Meet the world with video communication as it should be

Quarterly Presentation Q3 2020

10 November 2020

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Q3 highlights

Business update

Video communications as it should be

• ✓A better way to meet with business-quality audio/video
• ✓Securely join from anywhere across multiple technologies
• ✓Powerful administration tools and integrations to meet the requirements of IT
• ✓Full control of data privacy and sovereignty, and compliance with data security standards

Pexip is a high-growth subscription-based video communication company

Booked Annual Recurring Revenue ("ARR") portfolio per year end, USDm

• Users in ~190 countries
• ~300 partners in 75 countries
• +300 employees in 20+ countries
• 97% of revenue from subscriptions

	EMEA	Americas	APAC
Share of ARR	55%	35%	10%

Solid growth path to USD 300 million

Pexip accelerates long-term target of reaching USD 300 million

Enterprise IT will re-assess video strategy post-Covid

"Everybody" has started using video in 2020

PC-to-PC has been the primary use case

As Organizations plan their return to the office, many will need to reevaluate their existing solution

Key questions to be asked by customers

Do we have the features we need?

Given we use video so much, are we having the right meeting quality and experience?

Is data about our conversations protected?

Is our current solution in line with our security policies?

Pexip will be more relevant than ever, both as stand-alone and add-on solution to others

Pexip ideally positioned for enterprises' reality as organizations return to the office

Conference rooms

Small huddle rooms

Working from home

The new normal will be hybrid working

• People combining working from home and the office
• "Every" room in the office will have a video device
• "Every" meeting will be a video meeting
• Need to connect everything from the browser to the board room – internally and externally

Bring meetings to life

A natural, engaging meeting experience provided by AI-driven adaptive experience

Bring meetings to life

Say goodbye to black screens and hard-to-see faces. Naturally arranges your screen layout to elevate large groups and active speakers, creating a more immersive meeting experience. Enjoy super-wideband audio for a natural experience.

Focus on your conversation

With real-time image framing that automatically crops, pans, and tilts, you can maintain better eye contact and focus on your conversation for more productive, engaging meetings.

Pexip is the leader on interoperability

• 62% of organizations use more than three video communication solutions¹
• Deep technology and GTM partnerships with collaboration giants
• Allows solutions from Microsoft and Google to immediately connect with a range of non-compatible systems
• Maintains the video system's full capabilities
• Pexip is the only solution in the market that is available both as a cloud service and as a self-hosted software

Customers choose Pexip for three main use cases

High-quality video meetings with focus on privacy and security

Vertical market applications and integrations

Expanding access to Microsoft Teams and Google Meet

13

Pexip is for the second time named a Visionary in the recent Gartner Magic Quadrant

• Gartner MQ is a key IT buyer awareness driver and decision support
• Gartner highlights Pexip's strengths in:
• Expansive APIs
• Interoperability leadership
• Vertical industry expertise

*Source: Gartner Quadrant for Meeting Solutions 2020, by Mike Fasciani, Tom Eagle, Adam Preset

Pexip continues to win the trust of new large enterprises and public organizations

Enabling sustainable development for our customers and users

Pexip contributes to the green economy

• Pexip is committed to supporting our customers in making their business processes more sustainable
• –Enabling vital healthcare service delivery despite severe Covid-19 disruption
• –Enabling significant reductions in travel and commuting
• Pexip has initiated a project to deliver a separate sustainability report outlining Pexip's ESG impact due Q2 2021

Pexip has started on the next phase of our video communication adventure

*Equity of USD 25m¹ turned into ARR of USD 57m at time of IPO

1) NOK 225m, USDNOK 9.00

Product update

Solid progress on Pexip Private Cloud pilots – commercial launch in Q4 2020

Rob Arnold, Program Manager, Unified Communications and Collaboration

Continue to make virtual meetings even better than in-person meetings

Service features released last three months

1080p on GW/VMRs

• Higher resolution improving meeting experience

Adaptive Composition

• Bring your meetings to life
• Initiated Tech preview on Service

Custom Branding

• Customised, branded background images and logos

Americas

10 new US Fortune 1000 companies chose Pexip in Q3 across several industries

Recent sales successes demonstrate Pexip's appeal to security-conscious organizations

• The National Aeronautics and Space Administration is an independent agency of the U.S. Federal Government responsible for the civilian space program, as well as aeronautics and space research

• One of the eleven unified combatant commands in the United States Department of Defense
• USNORTHCOM partners to conduct Homeland Defense and Civil Support operations within the assigned area of responsibility to defend, protect, and secure the United States and its interests

Sales results and financials

Strong development in Annual Recurring Revenue with 70% growth YoY

Growth across all main product lines and geographies

Significant improvement in new sales in Q3 2020

• Year-on-year growth increased to 70% out of Q3 2020 from 64% out of Q2 2020
• Majority of growth driven by net new sales, up from 46% in Q2 2020
• Net retention at 115%, slightly down from 118% in Q2 2020
• Slight increase in churn to 10% from 8% related to an increase in churn from smaller accounts

NOK 136 million in Q3 revenue with 68% revenue growth

Comments

Operating revenues – Cloud service

• Overall year-on-year growth of 133% to NOK 60 million due to strong sales across a number of accounts, especially driven by a large account in Americas. Benefit from higher USD/NOK exchange rate last twelve months

• Cloud service revenues are recognized over the lifetime of the subscription contract

Operating revenues - Software

• Overall growth of 38% to NOK 76 million. Strong sales in Americas across private and public sector growing 99% y-o-y. APAC sales impacted by delayed renewal of a single large customer where the renewal was executed in October 2020 (Difference of NOK -6.1 million in Q3 2020 vs Q3 2019 from this account).
• Software revenue mainly recognized at time of delivery
• 28 • Seasonally Q3 has a lower sales volume than Q2, similar to 2019

Gross margin

• Gross margin somewhat down due to high Cloud Service share in Q3 2020. Cost of Sales in line with Q2 following the scale-up of our infrastructure in Q1/Q2.

Strong progress on acceleration plan

Increase in operating expenses from higher headcount

Reduction in EBITDA in line with acceleration plan

Cash flow bridge

Cash flow bridge Q3 2020

NOKm

1,217	24	9	11	30	3	6	1,159
Cash balance EoQ2 2020	EBITDA	Share based payments	CAPEX	NWC	Financing activites incl. leases	Other, incl. exchange differences	Cash balance EoQ3 2020

Comments

• Have a solid cash position to fund our acceleration plan, which is also impacting cash flow
• Increase in net working capital driven by an increase in trade receivables and contract cost assets
• CAPEX is 25% higher than in Q3 2019, and lower than Q2 2020 due to lower IT infrastructure spend
• Cash position of NOK 1,159 million out of Q3 2020

Summary

Third quarter in brief

Strong top line growth

• Added a range of new high-profile Fortune 1000 companies and large public organizations
• Outstanding quarter especially in the Americas
• Continued strong ARR growth with USD 7 million
• 68% year-on-year growth in revenue

Executing on the acceleration plan

• Continue to build sales and R&D capacity
• Named a Visionary in the Gartner Magic Quadrant for Meeting Solutions for the second year in a row
• Customer base acquisition in Q3 expected to positively impact Q4 ARR
• Solid cash position to invest in further growth

Outlook

Positive medium- and long-term outlook for video communication

• Majority of enterprises shifting to a hybrid workforce
• Pexip's technology is uniquely positioned to meet these new customer needs

Will continue to execute on growth plan

• Increase investments in future growth by adding talent in sales and marketing as well as R&D – targeting 350-400 employees by end of 2020
• Deploy up to 70% of raised capital during the next three years

Expect to reach long-term target of USD 300 million in ARR by 2024, from a earlier presented target of USD 300 million by 2025

Upcoming dates

Investor Tech Summit December 9th 2020 at 15-17 CET

Update on Annual Recurring Revenue January 7th 2021

Q4 2020 quarterly presentation February 11th 2021

Q&A

Meet the world with video communication as it should be

Quarterly Presentation Q3 2020

10 November 2020