Airthings — Interim / Quarterly Report 2024

Aug 21, 2024

Second Quarter & First Half 2024

1

Airthings at a glance

A hardware-enabled software company solving real issues

• Global leader in indoor air quality solutions
• Serving consumers, businesses, and professionals
• Empowering people to breathe better
• Increasing demand by changing perceptions

Strong growth

EBITDA margin, %

User-friendly, engaging products, and actionable insights

International and expanding presence in core markets (revenue split, %)

Addressing a critical issue

Health

The air we breathe has significant impact on our health, and yet most of us do not understand it well.

Radon-induced cancer

Respiratory problems

Uniquely positioned in a growing global market

Building health

376M

residential homes in the EU and North America Airthings for Consumers

130M

offices in the EU and North America Airthings for Business

9M

classrooms in the EU and North America Airthings for Business

Comments from the CEO

The second quarter was marked by continued strong growth and customer loyalty in the Consumer segment, combined with lagging sales in the Business segment due to challenging market conditions and order postponements.

Revenues from the Consumer segment were up 37 percent year-over-year, exceeding expectations. Sales increased across all channels, with a particularly strong growth in North America. Total revenues were up 17 percent, despite low sales in the Business segment.

Performance and insights gained during the first half of 2024 prompted a review and update of our strategy to make sure we capitalize on market trends and deliver the best possible return on investment in the short to medium term. Climate change and general health awareness contribute to increased focus on indoor air quality and Airthings is well positioned to capture business in a rapidly growing market for health-tech devices and services.

Since the Airthings 3.0 strategy, announced at the Capital Market Day last year, we have continued our progress towards profitability. To accelerate the process, we will sharpen the focus and reduce complexity. We will concentrate resources on one, shared and customer-centric value proposition: Health-driven Indoor Air Quality Devices (IAQ). Airthings will empower people to breathe better at home, at school and at work. Going forward, building control will be developed and distributed through partners, and not as part of our core offering. Proactive direct sales to non-scalable business customer segments will be halted. During the second half of 2024 we will establish a leaner and more focused organization, reducing the workforce by 20 percent.

In addition to updating our strategy, we have set a new target for profitability: We aim to be EBITDA positive for the second half of 2025, and for the full year 2026 and expect that our current operating plans remain fully funded to break even.

Our products and solutions meet the needs of individuals, families, businesses and authorities, all increasingly aware of the importance of health-driven indoor air quality. Our insights confirm that people in many parts of the world now consider indoor air quality as a "must have", rather than a "nice to have". The trend will grow. And we will be there to capture market share, capitalizing on our position to ensure profitable growth.

All the best,

Emma Tryti CEO, Airthings

Key highlights

Consumer segment with quarterly revenues of

USD 6.8m, up 37 percent YoY, driven by strong underlying demand across all channels, and particularly strong growth in North America.

80% YoY growth in airthings.com, with the direct sales channel now accounting for nearly 20% of Consumer revenue.

Gross margin stable at 62%, despite a significantly higher share of revenues from the Consumer segment.

Q2 revenues of USD 8.7m

up 17 percent YoY, driven by strong consumer sales. Continued challenging market conditions in the Business segment.

REVENUES

Q2 gross profit of USD 5.4m

Up 18 percent from USD 4.6 million in Q2 23, with a stable gross profit margin despite changes in segment mix.

Q2 23 Q3 23 Q4 23 Q1 24 Q2 24

Q2 total ARR of USD 4.3m

up 7 percent YoY supported by increased software sales and low churn in the Business segment.

ANNUAL RECURRING REVENUE* (USDm)

Operational review

Revenues and margin development

Airthings delivered revenues of USD 8.7 million in Q2 24, a 17 percent year-over-year growth, driven by strong growth in the Consumer segment and offset by continued challenging market conditions in the Business segment.

Revenues from the Consumer segment reached USD 6.8 million in the quarter, up 37 percent year-over-year, driven by sales growth across all channels, primarily the direct-to-consumer channel and key distribution partners. Consumer demand remained high in the North-American market, particularly in Canada. 26% repeat purchases indicated consumer

stickiness.

Revenues from the Business segment amounted to USD 1.4 million in Q2 24, down 30 percent year-over-year mainly due to one large US school deal in the same period last year. Challenging market conditions in the commercial real estate market continued to cause revenue volatility and longer sales cycles. New contracts in the quarter included the deployment of IAQ sensors to 1,500 US classrooms and in the office buildings of a leading financial institution in Oslo, Norway.

Annual Recurring Revenue (ARR) came in at USD 4.3 million in Q2 24, within the guided range of USD 4.3–4.5 million. This represented a 7 percent growth year-over-year. ARR from the Business segment reached USD 3.2 million, up 11 percent compared to Q2 23. The gross margin from ARR remains >80 percent. The increase in ARR was driven by large installations at large enterprise customers and US school districts.

Gross profit was USD 5.4 million in Q2 24, up 18 percent from USD 4.6 million in Q2 23. The gross profit margin was 62 percent in Q2 24, about the same level as the same quarter last year, despite a significant higher share of revenues from the Consumer segment.

OPEX was reduced by 3 percent year-over-year to USD 7.1 million, including a 10 percent- decline in employee benefit expenses related to cost initiatives. Overall, this generated an EBITDA-loss in Q2 24 of USD 1.7 million, compared to a loss of USD 2.7 million in Q2 23.

Outlook and guidance

Airthings reported revenues of USD 8.7 million in Q2 24, within the USD 8.0 – 10.0 million guided range announced in the Q1 24 report. Revenues are expected to increase to USD 9.5 - 11.5 million in Q3 24.

The market in the second quarter continued to be characterized by contrasting dynamics; increasing demand across all channels in the Consumer segment, and longer sales cycles in the Business segment.

We expect the strong growth rate in the Consumer segment to continue in the third quarter, partly driven by major high velocity events such as Prime Day and Fire Safety Event in collaboration with Amazon and Home Depot in the United States. Additionally, the need for air quality control typically increases with the forecasted surge of wildfires in the quarter, a problem increasingly affecting more and more regions globally.

We expect lower Q3 revenues in the Business segment than in the same period last year. The third quarter last year was exceptionally strong, mainly due to one large transaction that generated USD 1.2 million in hardware revenue. We are building a promising pipeline for the segment and remain confident in the long-term prospects generated by rising demand from large accounts and school districts in the United States, the Nordic countries and the United Kingdom.

The work to revamp our logistics set-up continues with good progress. During the first half of this year, a new US warehouse with effective system integration has been set up, and we are consolidating all US product distribution there. This will improve cost without impacting delivery times and give us a scalable distribution system in the US. We expect the majority of this work to complete by the end of this year. In parallel we have started to work on setting up a EU warehouse and will continue this work into 2025.

Inventory management remained a focus area. In Q2 24, days of inventory ended at 346, a reduction of 14 days from Q1 24, despite significant ramped-up production in the second quarter for order deliveries to high velocity events in the third quarter.

Revenues in Q3 24 are expected to end in the range of USD 9.5-11.5 million. ARR at the end of the quarter is expected at USD 4.3-4.5 million.

USDm	Guidance Q3 2024
Revenue	9.5 - 11.5
ARR	4.3 - 4.5

Despite the positive impact of the Airthings 3.0 strategy execution, we need to speed up our path to profitability as we capitalize on growing underlying demand. With a strengthened management team in place, a strategy review process was initiated in H1. The process has identified strategic initiatives to capitalize on IAQ awareness and reduce complexity.

Going forward, we will invest in one, united value proposition: Indoor air quality solutions to people at home, at school and at work. Consequently, we will stop in-house development initiatives for building control and solutions and enable trusted partners to sell and grow building control to businesses. Further, we will reduce complexity through a leaner and more focused operating model and organization, resulting in a 20% workforce reduction in the second half of 2024. This will have effect from Q1 2025, reducing operating expenses by approx. USD 2.5 million in 2025. As a consequence of the strategic initiatives: one value proposition, partnerships and leaner organization, we target positive EBITDA for the second half of 2025 and for the full year 2026 and expect that our current operating plans remain fully funded to break even.

Segment overview

The Consumer segment

Revenues from the Consumer segment came in at USD 6.8 million in Q2 24, representing a 37 percent year-over-year increase. The growth was driven by the implementation of the Airthings 3.0 strategy globally, with a particularly robust performance in North America. Our efforts to enhance direct sales yielded positive results, with airthings.com accounting for nearly 20 percent of Consumer revenues in Q2. Gross profit in the Consumer segment came in at USD 4.0 million in Q2 24, with a gross margin of 58 percent on par with Q2 23.

New device registrations for connected products increased 12 percent year-over-year in Q2 24, up from a high level in Q2 23 which was characterized by extensive promotional activities. Sales of our non- connected radon-senso increased by 274 percent this quarter, contributing to the deviation between growth in revenue and device registrations. Repeat sales accounted for 26 percent of total sales in Q2 24, indicating customer satisfaction and loyalty. The View Plus remained the most popular second device purchase.

General health awareness, combined with increased prevalence of wildfires, extreme weather conditions and extended indoor activities, has heightened the relevance of Airthings' products also in the summer months. North America was a key growth driver in the second quarter, with 40 percent year-over-year sales growth in Canada due to heightened awareness of radon and wildfirerelated concerns.

The Business segment

Revenues from the Business segment came in at USD 1.4 million in Q2 24, down 30 percent from USD 2.0 million in Q2 23. This mainly reflected reduced contribution from USD school districts, which declined to USD 0.2 million in Q2 24 from USD 0.6 million in the same quarter last year. Gross profit for the Business segment was USD 1.0 million in Q2 24, compared to USD 1.3 million in Q2 23. The gross margin came in at 73 percent, up from 66 percent in Q2 23.

There were no large shipments executed in the second quarter. Airthings continued to experience challenging market conditions and order postponements in the commercial real estate market. Some clients reduced their real estate portfolios in the quarter. Nevertheless, the pipeline for large projects continued to grow and we maintain a positive long-term outlook for the segment.

US school districts are prioritizing healthy indoor air quality, representing significant business opportunities for Airthings. We are well positioned for several upcoming large tenders. Airthings was selected for deployment of IAQ sensors in 1,500 classrooms across 5+ school districts including Beverly Hills USD and Huntington Beach USD in the state of California in the second quarter. The company was also a finalist in a significant tender for one of the largest school districts in the United States, although this tender process ended with no bid awarded.

The number of devices in the field increased by 31 percent year-on-year in Q2 24, mainly driven by increasing demand from existing large enterprise clients. During the past half year, more than 23,000 monitors have been deployed across the global offices of a major enterprise client, significantly expanding Airthings' market presence.

Airthings, in collaboration with Energy Control, was selected in Q2 24 to install devices at the Radisson Blu Royal Hotel (Bergen, Norway), a UNESCO-protected heritage building, and at Telenor's headquarters outside Oslo. Airthings' partnership with Sony Network Communications and the integration on the NIMWAY platform resulted in a deployment of hundreds of sensors at a major financial institution in Norway.

The Professional segment

Revenues from the Professional segment reached USD 0.5 million in Q2 24, at the same level as the same quarter last year. Gross profit from the Pro segment was USD 0.5 million in the quarter, with a gross profit margin of 89 percent compared to 86 percent in Q2 23.

Oslo, 20 August 2024

Geir Førre Chairman of the Board

Elisabeth Barrie Board member

Karin Berg Board member

Emma Tryti CEO

Niklas Norin Board member

Liv Dyrnes Board Member

Aksel Lund Svindal Board member

Anlaug Underdal Board member

Financials

13

Financial highlights (IFRS)

Key financials (USD 1,000)	Q2 2024	Q2 2023	Δ	H1 2024	H1 2023	Δ	2023
Total revenues	8,733	7,457	17%	18,244	16,208	13%	36,592
Gross profit	5,445	4,627	18%	11,202	9,492	18%	22,290
Gross margin	62%	62%		61%	59%		61%
EBITDA	-1,663	-2,734		-3,506	-5,940		-6,832
EBIT	-2,241	-3,109		-4,460	-6,703		-8,349
Profit (loss) before tax	-2,521	-2,825		-3,541	-5,429		-8,030
Annual Recurring Revenue	4,306	4,012	7%	4,306	4,012	7%	4,175

Consolidated statement of profit or loss

For details related to revenue and gross profit, please see 'Operational review' and "Segments".

Operating expenses for the group came in at USD 7.1 million in Q2 24 and USD 14.7 million for the first half 2024, down 5% YoY from USD 15.4 million from first half 2023. After controlling for currency effects and capitalization of intangible assets and grants, the overall cost base has held relatively constant from first half 2023 despite significant inflationary pressures on wages and prices as well as payroll tax increases in Norway.

EBITDA came in at negative USD 1.7 million in the quarter and negative USD 3.5 million for the first half 2024.

Depreciation and amortization was USD 0.6 million in Q2 24 and USD 1.0 million in the first half of 2024, driven by depreciation of internally generated intangible assets and right-of-use assets for the period for leases recognized under IFRS 16 (see note 7).

EBIT came in at negative USD 2.2 million in Q2 24 and negative USD 4.5 million in the first half 2024.

Net financial items consist primarily of exchange rate fluctuations between USD and NOK, interest expense on the growth loan from Innovation Norway, and interest expense on the IFRS 16 lease liability.

Loss before taxes ended at USD 2.1 million in Q2 24 and negative USD 2.9 million in the first half 2024.

Tax income was USD 0.5 million in Q2 24 and USD 0.7 million for the first half 2024 (see note 8). This resulted in a net loss of USD 2.1 million in Q2 24 and a net loss of USD 2.9 million for the first half 2024.

Consolidated statement of financial position

Total assets at the end of Q2 24 were USD 58.3 million (end Q1 24: USD 60.0 million). Non-current assets made up USD 18.3 million (end Q1 24: USD 17.5 million), and current assets USD 40.0 million (end Q1 24: USD 42.5 million). Non-current assets mainly consisted of goodwill, intangible assets, deferred tax assets and right of use assets. Current assets were mainly made up of USD 11.2 million in cash and cash equivalents, inventories and trade receivables. Since 2023, inventories have fallen by USD 2.1 million due to the company's heightened focus on improving its working capital situation.

The book value of equity was USD 45.2 million at the end of the quarter (end Q1 24: USD 46.6 million). This equated to an equity ratio of 77.6% (end Q1 24: 77.6%)

Total liabilities were USD 13.1 million at the end of Q2 24 (end Q1 24: USD 13.5 million).

Non-current liabilities were mainly made up of the growth loan from Innovation Norway (see note 10) and lease liabilities recognized under IFRS 16. Current liabilities consisted of deferred revenue related to subscription service, public duty taxes, personnel related accruals and other accrued expenses.

Consolidated statement of cash flows

Total cash and cash equivalents balance decreased by USD 2.0 million from Q1 24 to USD 11.2 million.

Cash flow from operating activities

came in at negative USD 1.5 million in Q2 24 and negative USD 1.3 million in first half 2024 mainly driven by a loss before tax offset by positive working capital as a result of the company's heightened focus on improving its working capital situation as well as external financing.

Cashflow from investment activities

ended at negative USD 0.3 million in Q2 24 and negative USD 0.6 million in first half 2024 driven by capitalization development costs offset by interest on the growth loan from Innovation Norway.

Cashflow from financing activities was negative USD 0.2 million in Q2 24 and negative USD 0.5 million in first half 2024 related to payments of lease liabilities recognized under IFRS 16.

Consolidated statement of profit or loss

		Unaudited				Audited
Amounts in USD 1,000	Notes	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Revenues	4, 5	8,733	7,457	18,244	16,208	36,592
Total revenues		8,733	7,457	18,244	16,208	36,592
Cost of goods sold	7	3,287	2,830	7,042	6,716	14,302
Employee benefit expenses	6	3,823	4,261	7,466	8,433	15,090
Other operating expenses	6	3,285	3,100	7,241	6,999	14,033
Operating profit or loss before depreciation & amortization (EBITDA)		-1,663	-2,734	-3,506	-5,940	-6,832
Depreciation, amortization and impairment	7	577	375	954	762	1,517
Operating profit or loss (EBIT)		-2,241	-3,109	-4,460	-6,703	-8,349
Net financial items		-280	285	919	1,273	320
Profit (loss) before tax		-2,521	-2,825	-3,541	-5,429	-8,030
Income tax expense	8	-461	-612	-683	-1,136	-1,772
Profit (loss) for the period		-2,060	-2,212	-2,858	-4,293	-6,258
Profit (loss) for the year attributable to: Equity holders of the parent company		-2,060	-2,212	-2.858	-4,293	-6,258
Earnings per share:
Basic earnings per share	12	-0.01	-0.01	-0.01	-0.02	-0.03
Diluted earnings per share	12	-0.01	-0.01	-0.01	-0.02	-0.03

Consolidated statement of comprehensive income

		Unaudited				Audited
Amounts in USD 1,000	Notes	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Profit (loss) for the period		-2,060	-2,212	-2,858	-4,293	-6,258
Other comprehensive income:
Items that subsequently will not be reclassified to profit or loss:
Exchange differences on translation of parent company		676	-1,432	-2,228	-4,645	-1,838
Total items that will not be reclassified to profit or loss		676	-1,432	-2,228	-4,645	-1,838
Items that subsequently may be reclassified to profit or loss:
Exchange differences on translation of foreign operations		-2		-15	2	-3
Total items that may be reclassified to profit or loss		-2		-15	2	-3
Other comprehensive profit (loss) for the period		674	-1,432	-2,243	-4,643	-1,841
Total comprehensive profit (loss) for the period		-1,386	-3,644	-5,101	-8,937	-8,099
Total comprehensive profit (loss) attributable to:
Equity holders of the parent company		-1,386	-3,644	-5,101	-8,937	-8,099

Consolidated statement of financial position

		Unaudited		Audited
Amounts in USD 1,000	Notes	30.06.2024	30.06.2023	31.12.2023
ASSETS
Non-current assets
Goodwill	7	2,659	2,628	2,783
Intangible assets	7	3,739	2,840	3,610
Deferred tax assets	8	9,233	7,665	8,849
Property, plant and equipment		511	729	639
Right-of-use assets		2,022	2,740	2,520
Other non-current assets	13	95	82	111
Total non-current assets		18,259	16,684	18,510
Current assets
Inventories		14,048	16,168	15,320
Trade receivables		9,015	8,152	11,175
Other receivables		5,763	4,662	5,096
Cash and cash equivalents	9	11,212	17,380	14,553
Total current assets		40,039	46,363	46,143
TOTAL ASSETS		58,297	63,047	64,653

		Unaudited		Audited
Amounts in USD 1,000	Notes	30.06.2024	30.06.2023	31.12.2023
EQUITY AND LIABILITIES
Equity
Share capital	11	215	215	215
Share premium		86,383	86,362	86,383
Other capital reserves		2,442	2,281	2,359
Other equity		-43,795	-39,532	-38,694
Total equity		45,245	49,326	50,264
Non-current liabilities
Non-current interest-bearing liabilities	10	1,315	1,300	1,376
Non-current lease liabilities		1,437	2,156	1,903
Other non-current liabilities	13	99	72	108
Total non-current liabilities		2,851	3,529	3,388
Current liabilities
Current lease liabilities		821	837	885
Trade and other payables		5,946	5,611	6,526
Contract liabilities		1,731	1,296	1,368
Income tax payable		6	32	73
Other current liabilities	10	1,698	2,416	2,150
Total current liabilities		10,201	10,192	11,001
Total liabilities		13,052	13,721	14,389
TOTAL EQUITY AND LIABILITIES		58,297	63,047	64,653

Geir Førre Chairman of the Board

Karin Berg Board member

Elisabeth Barrie Board member

Oslo, 20 August 2024

Liv Dyrnes Board Member

Niklas Norin Board member

Aksel Lund Svindal Board member

Anlaug Underdal Board member

Emma Tryti CEO

Consolidated statement of cash flows

					Unaudited
Amounts in USD 1,000	Notes	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Cash flows from operating activities
Profit (loss) before tax		-2,521	-2,825	-3,541	-5,429	-8,030
Adjustments to reconcile profit before tax to net cash flows:
Net financial items		280	-285	-919	-1,273	-320
Depreciation, amortization and impairment	7	577	375	954	762	1,517
Share-based payment expense	13	67	214	83	214	292
Working capital adjustments:
Changes in inventories		106	948	1,271	2,545	3,394
Changes in trade and other receivables		313	3,767	1,493	2,399	-1,057
Changes in trade and other payables and contract liabilities		-228	-660	-217	-381	606
Changes in other liabilities		-46	1,029	-461	425	194
Net cash flows from operating activities		-1,450	2,564	-1,337	-738	-3,403
Cash flows from investing activities
Development expenditures	7	-424	-412	-774	-826	-1,678
Purchase of property, plant and equipment				-14	-26	-92
Interest received		95	79	201	101	395
Net cash flow from investing activities		-329	-333	-588	-750	-1,375
Cash flow from financing activities
Proceeds from issuance of equity	11				7,122	7,143
Proceeds of interest-bearing liabilities	10		1,300		1,300	1,300
Payments for the principal portion of the lease liability		-178	-180	-371	-364	-724
Payments for the interest portion of the lease liability		-30	-40	-65	-85	-159
Interest paid		-26		-52		-52
Net cash flows from financing activities		-234	1,080	-488	7,972	7,508
Net increase/(decrease)in cash and cash equivalents		-2,014	3,311	-2,413	6,484	2,730
Cash and cash equivalents beginning of the period		13,231	15,426	14,553	13,274	13,274
Net foreign exchange difference		-5	-1,357	-928	-2,378	-1,451
Cash and cash equivalents at end of the period		11,212	17,380	11,212	17,380	14,553

Consolidated statement of changes in equity

		Other equity
Amounts in USD 1,000	Share capital	Share premium	Other capital reserves	Cumulative translation s differences	Retained earning	Total equity
Equity 31 December 2022	192	78,979	2,068	-5,062	-25,248	50,928
Profit (loss) for the period					-4,293	-4,293
Other comprehensive profit (loss)				-4,643		-4,643
Total comprehensive profit (loss)				-4,643	-4,293	-8,937
Capital increase (note 11)	23	7,383				7,406
Transaction cost share issues					-285	-285
Share-based payments (note 13)			214			214
Equity 30 June 2023	215	86,362	2,281	-9,706	-29,826	49,326

			Other equity
Amounts in USD 1,000	Share capital	Share premium	Other capital reserves	Cumulative translation s differences	Retained earning	Total equity
Equity 31 December 2023	215	86,383	2,359	-6,903	-31,791	50,264
Profit (loss) for the period					-2,858	-2,858
Other comprehensive profit (loss)				-2,243		-2,243
Total comprehensive profit (loss)				-2,243	-2,858	-5,101
Share-based payments (note 13)			83			83
Equity 30 June 2024	215	86,383	2,442	-9,146	-34,649	45,245

Notes

Note 1: Corporate information

Airthings ASA ('the Company') is a publicly listed company on Oslo Stock Exchange, with the ticker symbol AIRX. Airthings ASA is incorporated and domiciled in Norway with principal offices located at Wergelandsveien 7, 0167 Oslo, Norway.

Airthings and its subsidiaries (collectively 'the Group', or 'Airthings') develop and produce solutions for monitoring indoor air quality, radon and energy efficiency. The Group sells its products and solutions to consumers and businesses around the world.

The interim consolidated financial statements of the Group for the period ended 30 June 2024 were authorized for issue in accordance with a resolution of the Board of Directors on 20 August 2024.

Reference is made to note 4.1 in the Group's consolidated financial statements for the year ended 31 December 2023 for a list of subsidiaries.

Note 2: Basis of preparation and significant accounting policies

The interim consolidated financial statements of the Group comprise consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and selected explanatory notes. The interim consolidated financial statements have been prepared

in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union ('EU').

The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with Airthings' 2023 consolidated financial statements as of 31 December 2023. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those applied in the preparation of Airthings' consolidated annual financial statements for the year ended 31 December 2023. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

The interim consolidated financial statements have been prepared on a historical cost basis. All figures are presented in United States dollar ('USD') thousands (USD 1,000), except when otherwise stated.

Further, the interim consolidated financial statements are prepared based on the going concern assumption. The macroeconomic environment has proven challenging throughout both 2022 and 2023 with increasing interest rates and inflation causing uncertainty and reduced consumer confidence. Consequently, retailers and distribution partners have reduced inventory coverage to lower their capital burden and reduce risk exposure. The investment climate also remain subdued in the Business segment. The Board continues to monitor the situation carefully to ensure appropriate measures are taken going into 2024.

Presentation currency and functional currency

Airthings ASA has Norwegian krone ('NOK') as its functional currency and its subsidiaries

have SEK or USD as their functional currencies. The Group presents its consolidated financial statements in USD to provide the primary users of the financial statements with more convenient information. When converting from NOK to USD large items on the balance sheet, such as Equity and Cash and cash equivalents, may show significant unrealized differences when the exchange rate between these two currencies fluctuates substantially.

Note 3: Significant accounting judgements, estimates and assumptions

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis.

In preparing the interim consolidated financial statements, the significant judgments, estimates and assumptions made by management in applying the Group's accounting policies and the key source of estimation uncertainty were the same as those applied to Airthings' annual financial statements for the year ended 31 December 2023.

Note 4: Operating segments

For management purposes, the Group is organized into business areas based on its different markets and has three reportable segments, as follows:

• Consumer private customers
• Business business customers such as schools, office buildings and other commercial buildings
• Professional professional customers such as home inspectors and certified radon professionals

No operating segments have been aggregated to form the above reportable operating segments.

The Board of Directors is the Group's chief operating decision maker and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on EBITDA measured consistently with operating profit or loss before depreciation and amortization. The Group's financing (including finance costs and finance income), depreciation and amortization and income taxes are managed on a Group basis and are not allocated to operating segments.

Group functions

The remaining of the Group's activities and business are shown in the 'Group functions' column in the tables below. These activities mainly relate to R&D, marketing and administrative functions of the Group.

Q2 2024 (USD 1,000)	Consumer	Business	Professional	Group functions	Consolidated IFRS
REVENUES & PROFIT
External customers	6,808	1,378	546		8,733
Total revenue	6,808	1,378	546		8,733
Cost of goods sold	2,857	369	62		3,287
Employee benefit expenses	507	870	78	2,368	3,823
Other operating expenses	1,272	126	124	1,763	3,285
EBITDA	Consumer 2,172	Business Professional 13	Group 283 functions	Adjustments/ -4,131 eliminations	Consolidated -1,663 IFRS

1Q 2021 (USD 1,000) Consumer Business Professional IFRS

Q2 2023 (USD 1,000)	Consumer	Business	Professional	Group functions	Consolidated IFRS
REVENUES & PROFIT
External customers	4,970	1,955	532		7,457
Total revenue	4,970	1,955	532		7,457
Cost of goods sold	2,102	655	72		2,830
Employee benefit expenses	434	1,005	85	2,737	4,261
Other operating expenses	1,066	150	69	1,816	3,100
EBITDA	1,368	145	306	-4,553	-2,734

H1 2024 (USD 1,000)	Consumer	Business	Professional	Group functions	Consolidated IFRS
REVENUES & PROFIT
External customers	14,594	2,530	1,121		18,244
Total revenue	14,594	2,530	1,121		18,244
Cost of goods sold	6,239	670	133		7,042
Employee benefit expenses	864	1,804	151	4,647	7,466
Other operating expenses	3,245	382	246	3,368	7,241
EBITDA	4,425	-326	591	-8,015	-3,506

H1 2023 (USD 1,000)	Consumer	Business	Professional Group	Group Adjustments/ functions	Consolidated Consolidated IFRS
REVENUES & PROFIT			functions	eliminations	IFRS
External customers	11,371	3,690	1,147		16,208
Total revenue	11,371	3,690	1,147		16,208
Cost of goods sold	5,370	1,193	153		6,716
Employee benefit expenses	1,055	2,126	160	5,093	8,433
Other operating expenses	2,810	355	207	3,627	6,999
EBITDA	2,137	16	627	-8,720	-5,940

1Q 2021 (USD 1,000) Consumer Business Professional IFRS

2023 (USD 1,000)	Consumer	Business	Professional	Group functions	Consolidated IFRS
REVENUES & PROFIT
External customers	24,773	9,673	2,145		36,592
Total revenue	24,773	9,673	2,145		36,592
Cost of goods sold	10,735	3,242	325		14,302
Employee benefit expenses	1,667	3,878	290	9,255	15,090
Other operating expenses	6,178	957	590	6,308	14,033
EBITDA	6,193	1,597	941	-15,563	-6,832

Segmental analysis of assets and liabilities

Assets and liabilities by reporting segment is not included in management reporting and is therefore not disclosed separately within the operating segments.

Geographical disaggregation

2022 (USD 1,000) Consumer Business Professional Group Adjustments/ Consolidated functions eliminations IFRS Reference is made to note 5 Revenue for information on the Group's geographical markets.

Note 5: Revenue

Airthings Group is a manufacturer of air quality sensors and hardware-enabled software products for air quality, radon measurement and energy efficiency solutions. The Group's revenue from contracts with customers are reported in three main segments as described in note 4: Consumer, Business and Professional.

• The consumer segment sells air quality sensors to private customers through retailers and e-commerce
• The business segment sells air quality solutions to schools, office buildings, and other commercial buildings
• The professional segment sells measurement solutions which enables inspectors and certified radon professionals to accurately measure, analyze and report on buildings. The professional segment also offers rental of products and calibration services

Set out below is the disaggregation of the Group's total revenue:

Revenues (USD 1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Revenue from contracts with customers	8,640	7,350	18,060	15,999	36,185
Rental income	92	107	184	209	407
Total revenues	8,733	7,457	18,244	16,208	36,592

Set out below is the disaggregation of the Group's revenue from contracts with customers:

Geographical information (USD 1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
EMEA	1,558	1,508	3,218	3,360	7,961
North America (USA and Canada)	7,083	5,842	14,841	12,639	28,224
Total revenue from contracts with customers	8,640	7,350	18,060	15,999	36,185

The information above is based on the location of the customers:

Timing of revenue recognition (USD 1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Goods transferred at a point in time	7,634	6,548	16,050	14,340	32,991
Subscription and services transferred over time	1,007	801	2,009	1,658	3,244
Total revenue from contracts with customers	8,640	7,350	18,060	15,999	36,185

Note 6: Other operating expenses

Total operating expenses by function

The table below illustrates the Group's employee benefit expenses and other operating expenses by function. These measures are regularly provided to and reviewed by the Board.

Operating expenses (USD 1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Sales and marketing	4,060	4,235	8,740	9,308	17,706
Research and development	1,574	1,713	3,137	3,608	6,496
General and administrative	1,474	1,414	2,830	2,516	4,921
Total operating expenses	7,109	7,361	14,708	15,432	29,123
Number of employees	132	130	132	130	129

Note 7: Intangible assets

Depreciation and amortization expenses includes the monthly charge on property, plant and equipment, intangible assets and right-of-use assets over the assets estimated useful lives or lease term. The depreciation and amortization expenses are recognized on a straight-line basis.

Depreciation, amortization and impairment (USDx1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Depreciation of property, plant and equipment	56	90	110	157	284
Depreciation of right-of-use assets	173	184	363	375	735
Amortization and impairment of intangible assets (see details in the table below)	348	101	481	231	497
Total depreciation, amortization and expenses (USD 1,000) impairment expenses	577	375	954	762	1,517

Nature of the Group's intangible assets

The Group's intangible assets mainly comprise of software and systems, internal development projects and technology acquired through the acquisition of subsidiaries.

(USD 1,000)	Capitalized development costs	Software	& systems Technology	Goodwill 1) Total
Acquisition cost as of 31 December 2022	1,148	1,171	2,383	2,872	7,574
Additions* Transfer of finished development projects Currency translation effects	826				826
Acquisition cost as of 30 June 2023	-109 1,865	-99 1,072	-202 2,181	-244 2,628	-654 7,746
Acquisition cost as of 31 December 2023	2,479	1,232	2,583	2,783	9,076
Additions*	721		53		774
Transfer of finished development projects	-2,306		2,306
Currency translation effects	-104	-55	-115	-124	-398
Acquisition cost as of 30 June 2024	790	1,177	4,827	2,659	9,452
Accumulated amortization as of 31 December 2022		554	1,690		2,244
Amortization charge for the period		163	68		231
Currency translation effects		-52	-146		-198
Accumulated amortization as of 30 June 2023		665	1,612		2,277
Accumulated amortization as of 31 December 2023		864	1,823		2,687
Amortization charge for the period		153	328		481
Currency translation effects		-39	-83		-122
Accumulated amortization as of 30 June 2024		978	2,068		3,056
Net book value:
As of 30 June 2023	1,865	407	569	2,628	5,468
As of 31 December 2023	2,479	370	760	2,783	6,392
As of 30 June 2024	790	199	2,749	2,659	6,398
Economic life (years) Depreciation plan		5	3-5 Straight-line	Indefinite

* Development expenditures

1) Goodwill

Airthings performed its annual impairment test for goodwill in December 2023 and no impairments were made. The impairment test for goodwill is based on value-in-use calculations. The key assumptions used to determine the recoverable amount is disclosed in Airthings' consolidated financial statements for the year ended 31 December 2023.

Airthings considers the relationship between our market capitalization and our book value, among other factors, when reviewing for indicators of impairment. In addition, the group considers factors such as revenue growth in the industry, impact of general economic conditions, changes in the technological environment, the group's market share, and performance compared to previous forecasts in this assessment.

Note 8: Income tax

The consolidated tax rate for the Group are approximately 22%. The Group's operations are subject to income tax in various foreign jurisdictions. The statutory income tax rates vary from 20.6% to 22%, which results in a difference between the statutory income tax rate in Norway and the average tax rate applicable to the Group. The effect from the statutory income tax rates from other countries (Sweden and USA) on the Group tax rate is very limited as the main operations are in Norway.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Tax losses carried forward in the parent company have been fully recognized as deferred tax assets in the consolidated financial statements, as the Group consider it to be probable that these taxable losses may be utilized in the future. Reference is made to note 2.8 in the Group's consolidated financial statements for the year ended 31 December 2023 for more information.

Note 9: Revolving credit facility

In 1Q 2023 Airthings secured a USD 8 million revolving credit facility (RCF) with Danske Bank which was renewed in 1Q 2024. The size was reduced to USD 6 million. As of 30 June 2024, USD 0 million of the facility was utilized. The RCF has a tenor of 12 months and falls due 31 March 2025. When the facility is utilized, it will be classified as short-term interest-bearing debt in the financial statements.

Covenants:

• 1. Borrowing base: Utilized facility < 30% of inventory and 50% of trade receivables excl. trade receivables more than 60 days due
• 1. Clean-down: Minimum 1 period of 5 working days between 1 September 2024 and 31 March 2025

Covenants will be measured and monitored quarterly. Airthings was compliant with all covenants as of 30 June 2024.

Note 10: Grants and growth loan from Innovation Norway

In May 2023, Airthings secured funding from Innovation Norway linked to the companies R&D activities with final reporting 31 March 2025. A maximum grant of 17 MNOK and a growth loan of maximum 24 MNOK were awarded to the company. The company received 5.1 MNOK of the grant and 14 MNOK of the growth loan in a first installment of the funding.

Covenants related to the Innovation Norway funding (with effect from 30 June 2023):

• 1. Equity ratio: Equity ratio > 35%
• 1. Working capital: Working capital > 50 000 000 NOK

Covenants will be measured and monitored quarterly. Airthings was compliant with all covenants as of 30 June 2024.

Note 11: Share capital and shareholders information

Issued capital and reserves:

Share capital in Airthings ASA	Number of shares authorized and fully paid	Par value per share (NOK)	Financial Position (USD 1,000)
At 31 December 2022	173,992,346	0.01	192
Share capital increase - February 2023	23,437,500*	0.01	23
At 30 June 2023	197,429,846	0.01	215
Share capital increase - November 2023	328,600	0.01	0
At 31 December 2023	197,758,446	0.01	215
At 30 June 2024	197,758,446	0.01	215

* Airthings raised NOK 75 million in gross proceeds through a private placement of 23,437,500 shares in the quarter.

All shares are ordinary and have the same voting rights and rights to dividends. Reconciliation of the Group's equity is presented in the statement of changes in equity.

No distributions were made to shareholders in the current or prior period. Further, there are no proposed dividends.

Share price information

Share 30 June 2024 (NOK)	2.85
Market capitalization 30 June 2024 (NOKm)	564

The Group's shareholders:

Shareholders in Airthings ASA at 30 June 2024	Total shares	Ownership/Voting rights
Firda AS	57,213,289	29%
Holmen Spesialfond	9,298,059	5%
Victoria India Fund AS	5,901,881	3%
Rabakken Invest AS	5,800,364	3%
Atlas Invest AS	5,637,468	3%
Halvor Wøien	4,894,522	2%
Erlend Peter Johnsen Bolle	4,819,722	2%
Verdipapirfondet KLP AksjeNorge	4,462,222	2%
Koki Yoshioka	4,166,650	2%
Brownske Bevegelser AS	3,500,000	2%
The Bank Of New York Mellon SA/NV	3,401,784	2%
A Management AS	3,311,098	2%
Spectatio Finans AS	2,997,064	2%
Møsbu AS	2,814,236	1%
Longfellow Invest AS	2,753,534	1%
Nore-Invest AS	2,450,659	1%
Grotmol Invest AS	2,434,403	1%
Storlien Invest AS	2,432,000	1%
Skilling Systemer AS	2,300,000	1%
Jolly Roger AS	2,233,284	1%
Other	64,936,207	33%
Total	197,758,446	100%

The Group's shareholders:

Shareholders in Airthings ASA at 31 December 2023	Total shares	Ownership/Voting rights
Firda AS	57,213,289	29%
Victoria India Fund AS	5,901,881	3%
Rabakken Invest AS	5,800,364	3%
Atlas Invest AS	5,637,468	3%
Halvor Wøien	4,894,522	2%
Erlend Peter Johnsen Bolle	4,819,722	2%
Verdipapirfondet KLP AksjeNorge	4,462,222	2%
Holmen Spesialfond	4,228,559	2%
Koki Yoshioka	4,166,650	2%
Brownske Bevegelser AS	3,500,000	2%
The Bank Of New York Mellon SA/NV	3,500,000	2%
A Management AS	3,311,098	2%
Danske Invest Norge Vekst	2,962,962	1%
Skilling Systemer AS	2,850,000	1%
Møsbu AS	2,814,236	1%
Longfellow Invest AS	2,753,534	1%
Nore-Invest AS	2,450,659	1%
Grotmol Solutions AS	2,434,403	1%
Storlien Invest AS	2,432,000	1%
Spectatio Finans AS	2,287,877	1%
Other	69,337,000	35%
Total	197,758,446	100%

Note 12: Earnings per share

(Profit or loss in USD)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Profit or loss attributable to ordinary equity holders - for basic EPS	-2,060,014	-2,212,298	-2,858,417	-4,293,413	-6,257,752
Profit or loss attributable to ordinary equity holders adjusted for the effect of dilution*	-2,060,014	-2,212,298	-2,858,417	-4,293,413	-6,257,752
Weighted average number of ordinary shares - for basic EPS	197,758,446	197,429,846	197,758,446	191,830,888	194,708,073
Weighted average number of ordinary shares adjusted for the effect of dilution	199,790,753	199,489,621	199,854,763	194,095,521	196,862,214
Basic EPS - profit or loss attributable to equity holders of the parent	-0.01	-0.01	-0.01	-0.02	-0.03
Diluted EPS - profit or loss attributable*	-0.01	-0.01	-0.01	-0.02	-0.03

*The ordinary shares are not adjusted for the effect of dilution as the effect of including the additional shares is antidilutive.

Note 13: Share-based payments

Employees of the Group receive remuneration in the form of share-based payment, whereby employees render services as consideration for equity instruments (equity-settled transactions). As at 30 June 2024, the Group had 10,401,789 outstanding options with a weighted average strike price of NOK 2.45. Reference is made to note 6.8 of Airthings' 2023 consolidated financial statements for a description of the Group' share option plans.

During Q2 2024, 17,307 share options were granted to employees under the Group's share option plan from 2023. The fair value of the options granted during the three months ended 30 June 2024 was estimated on the date of grant using the following assumptions:

Weighted average fair values at the measurement date (NOK)	1.07
Dividend yield (%)	0.00%
Expected volatility (%)	51.71%
Risk–free interest rate (%)	3.92%
Expected life of share options (years)	2.50
Weighted average share price (NOK)	3.12
Weighted average exercise price (NOK)	3.10
Model used	BSM

YTD 2024, the Group has recognized USD 83 thousands of share-based payment expense in the statement of profit or loss (YTD 2023: USD 214 thousands).

As of 30 June 2024, the Group has recognized a social security provision for share-based payment of USD 99 thousands (30 June 2023: USD 74 thousands).

Note 14: Other factors and significant events

Reference is made to note 6.4 of Airthings' 2023 consolidated financial statements. The key risk areas are discussed below:

Liquidity risk - represents the risk that the Group may potentially encounter difficulties in meeting obligations associated with financial liabilities that are settled by provision of cash or another financial asset. The Group supervises its risk by monitoring its cash balances and working capital exposure, as well as production commitments to main contract manufacturers. The Group has intensified its focus on optimizing business operations, reducing current and incoming inventories and collecting overdue receivables.

The Group raised NOK 75.0 million in gross proceeds through a private placement of 23,437,500 shares in February 2023. In addition, the Group secured funding from Innovation Norway in the form of a NOK 17.0 million grant and a loan of NOK 24.0 million. NOK 5.1 million of the grant and NOK 14.0 million of the loan were paid out to the Group in 2Q 2023. The Group's cash position was USD 11.2 million on 30 June 2024. The Group also has access to liquidity through a revolving credit facility (RCF) with Danske Bank. This was initially entered for USD 8 million in Q1 23 and renewed for USD 6 million in Q1 24. The liquidity risk is hence considered to be at a reasonable level.

Geopolitical risks - the ongoing war in the Ukraine does not impact the Group directly, as it has no operating presence in either Russia, Belarus or Ukraine. However, indirect effects such as general economic market conditions, financial market volatility, sanctions-related knock-on effects or other future responses of

international governments, might have an impact on the Group's financial results and financial position. Similarly, the ongoing war in Israel/Gaza is not currently impacting the Group, although the Group has a very limited exposure through a contract manufacturer near Tel Aviv in Israel. The Group's management continuously monitors these situations and assesses the potential impact on the Group's financial results and financial position.

Climate risk - the Group has considered the impact of climate risks when preparing the Group's interim consolidated financial statements for the period ended 30 June 2024. We have especially considered how our current valuation of assets and liabilities may be impacted by risks related to climate and weather change, waste management, manufacturing, material and sourcing risk and water consumption and innovation for a circular economy, as well as our plans to mitigate those risk factors. Especially, the Group's climate change risk analysis has identified the following:

• Higher energy price fluctuations might affect the Group's manufacturing costs in the short run
• More extreme weather might affect infrastructure, manufacturing/operations, logistics and component scarcity both in the shorter and longer run
• Potential future regulation related to improved battery usage and waste management might lead to changes in product development and manufacturing, potentially increasing manufacturing expenses in the long run

We do not believe that there is a material impact on the financial reporting judgments and estimates arising from our considerations. The valuations of our assets or liabilities have not been significantly impacted by these risks as at 30 June 2024.

Note 15: Events after the reporting period

Adjusting events

There have been no significant adjusting events subsequent to the reporting date.

Non-adjusting events

There have been no significant non-adjusting events subsequent to the reporting date.

Alternative performance measures

This section includes information about alternative performance measures (APMs) applied by the Group.

These alternative performance measures are presented to improve the ability of stakeholders to evaluate the Group's operating performance. The Group applies the following APMs.

Annual recurring revenue (ARR)

ARR is the value of annualized sales from all active subscriptions, licenses and service contracts within the Airthings for Business and Professional segments. The calculation is based on monthly subscription fees for the ending period (MRR), multiplied by 12 in order to represent an annualized figure. The numbers presented in the table below are translated from NOK to USD applying the average NOK/USD exchange rate for YTD 2024 and YTD 2023 respectively. ARR is considered an important supplemental measure for stakeholders to get an overall understanding of revenue generation within the Group's operating activities.

(USD 1,000)	Q2 2024	Q2 2023	2023
MRR	359	334	348
ARR	4,306	4,012	4,175

EBITDA

The Group's earnings before interest, tax, depreciation and amortization (EBITDA) is used to provide consistent information on Airthings' operating performance relative to other companies, and is frequently used by analysts, investors and other stakeholders when evaluating the financial performance of the Group. EBITDA, as defined by Airthings, includes total operating revenue

and excludes depreciation, amortization and impairment loss. For a reconciliation of EBITDA, refer to the consolidated statement of profit or loss.

EBITDA (USD 1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Revenue	8,733	7,457	18,244	16,208	36,592
EBITDA	-1,663	-2,734	-3,506	-5,940	-6,832
EBITDA margin	-19%	-37%	-19%	-37%	-19%

Gross profit margin

Gross profit margin is defined as revenue less cost of goods sold as a percentage of total revenue. Management believes that this measure is important for the users of the financial statements to determine the profitability and the financial performance of the Group.

Gross profit margin (USD 1,000)	Q2 2024	Q2 2023	H1 2024	H1 2023	2023
Revenue	8,733	7,457	18,244	16,208	36,592
Cost of goods sold	3,287	2,830	7,042	6,716	14,302
Gross profit	5,445	4,627	11,202	9,492	22,290
Gross profit margin	62%	62%	61%	59%	61%

Forward-looking statements

Forward-looking statements presented in this report are based on various assumptions. The assumptions were reasonable when made but are inherently subject to uncertainties and contingencies that are difficult or impossible to predict. Airthings ASA cannot give assurances that expectations regarding the outlook will be achieved or accomplished.

Statement of the Board of Directors and CEO

We hereby confirm that, to the best of our knowledge, that the interim financial statements for the period from 1 January, 2024 to 30 June, 2024, have been prepared in accordance with IAS 34 Interim Financial Statements, and that the information in the financial statements gives a true and fair view of the group's assets, liabilities, financial position and profit or loss taken as a whole. We also confirm that, to the best of our knowledge, the interim report for the full year gives a true and fair view of important events in the accounting period and their influence on the interim report for the first half 2024.

Oslo, 20 August 2024

Geir Førre Chairman of the Board

Karin Berg Board member

Elisabeth Barrie Board member

Liv Dyrnes Board Member

Niklas Norin Board member

Aksel Lund Svindal Board member

Anlaug Underdal Board member

Emma Tryti CEO