Airthings — Investor Presentation 2022

Oct 27, 2022

October 27, 2022 Oyvind Birkenes, CEO Jeremy Gerst, CFO

Billy McFadden, VP Consumer Sales, North America

3Q22 Presentation

Disclaimer

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

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

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

Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although The Company believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

The Company is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither The Company nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared in connection with the 3Q results released on October 27th, 2022. Information contained herein will not be updated. The following slides should also be read and considered in connection with the information given orally during the presentation.

Empower the world to breathe better

High-growth and expanding business

Return to growth in third quarter

• Sales revenue of USD 10.1M, up 10% YoY
• Inventory replenishment picking up at retail and channel partners
• Growth in Airthings for Business more than offsetting modest declines in Consumer
• Gross profit margin of 60%
• Largely in line with prior quarters
• 4Q22 revenue guidance of USD ⁹– 13M

3Q Highlights

26% growth in Consumer device registrations

135% YoY growth in Airthings for Business

Signed new AfB contract worth USD 4.6M for global enterprise customer through US partnership. Including USD 1.4M in SaaS revenues over 3 years

Macroeconomic uncertainty remains

Returned to healthier inventory levels at retail and channel partners

Launch of Space CO² Mini for Airthings for Business

Growing focus on IAQ pushing awareness

Optimizing cost base and working capital to accelerate the path to profitability

Brand awareness

• Continued coverage in leading publications around the world
• Participation in high exposure events including IFA (Berlin), Expo Real (Munich), and IFMA World Workplace (Nashville)
• 0.4 million Unique Web Visitors in 3Q22, and YTD 2.5 million, up 100%

"The person who manages your building has a bigger impact on your health than your doctor"

• Joseph Allen, Associate Professor at Harvard University

Growing focus on IAQ

• On October 11th, the White House held a summit on Indoor Air Quality

Key messages

• Indoor Air Quality is crucial to public health
• Poor Indoor Air Quality is the main cause of transmission of respiratory pathogens (virus and bacteria)
• Building consume 40% of the world's energy, and in some places up to 70%. IAQ can be used for demand-based heating, cooling, and ventilation
• It all starts with Indoor Air Quality monitoring. Especially important for schools and commercial buildings

https://www.youtube.com/watch?v=1BeEfDLDJSA

Update by Segment

Consumer

For everyone with a home

Business

For commercial & public buildings

Pro

For home inspectors & radon professionals

Consumer Segment 3Q Update ^{7 302}

• Revenue of USD 6.4M, down 13% YoY
• Gross Profit Margin was 59.0% in 3Q, up 1%-point from 2Q22
• Channel and retail partners beginning to replenish inventories
• Device registrations shows end-demand remains strong, especially for flagship product View Plus, and Wave Mini
• Global uncertainties continuing to affect market visibility

Continued growth in Consumer device registrations

• New devices are registered when linked to an Airthings app
• Proxy for true end-user demand
• Growth of 26% in 3Q 2022 vs. 3Q 2021

Airthings @ Home Depot

• Airthings in 1360 stores across 48 states in the US
• Digital Radon Detector and Wave Mini
• Strong and increasing sell-through per store

Airthings @ Home Depot EPA Radon Map

2022 Marketing Events

1Q

• Radon Awareness Month Jan
• Quarter Pallet Displays of Digital Radon Detector
• National (All 1,360 Stores)

2Q

• Spring Allergy Campaign
• Wave Mini Displays
• Regional View Plus rollout (West Coast 200 Stores)

3Q

• October Fire & Safety Event
• Digital Radon Detector and Wave Mini Displays
• National (1,360 Stores)

Radon Legislation by State

Business Segment 3Q Update

• Sales revenue of USD 3.2M, with 135% YoY growth
• 60% Gross Profit Margin, in line with 4Q21 and 1Q22
• Increasing share of business
• From ~15% in 3Q21 to ~32% in 3Q22
• USD 1.7M of 3Q22 revenue is from the large contract with global enterprise customer

Rapidly expanding devices in the field

• Devices in the field grew by 179% in 3Q 2022 vs. 3Q 2021, and up 14% vs. 2Q 2022
• Driver of underlying growth in ARR

Launch of Space CO² Mini

• Innovative, accurate, and scalable CO² monitor covering the most essential indoor air quality aspects
• Includes temperature, humidity, lux, noise, air pressure, virus risk, and presence detection
• More than 10-year battery lifetime
• Helps achieve a balance of health and energy efficiency across all rooms in a building
• Enables mass-level scalability of CO² monitoring at an affordable cost

Product partnership boosting our ability to energy optimize buildings

• Partnership announced at Norway's largest HVAC conference; VVS-dagene
• The solution is targeting the retrofit market enabling the fastest way to upgrade to a demandcontrolled ventilation system
• Airthings devices can now integrate directly to Lindab's UltraLink VAV-dampers
• Saves energy, cost, and brings the fresh air to where people are

Pro Sales Revenue (USD'000)

Pro Segment 3Q Update

• Sales revenue of USD 0.45M, representing a growth 4% YoY
• Challenging home inspector market, leading to slow sales in the segment
• 79% Gross Profit Margin down 1%-point from 2Q22

Annual Recurring Revenue (ARR)

• ARR of USD 3.4M, up 66% YoY
• A modest decline in Pro's ARR (USD 0.1M) was more than compensated by continued growth in AfB's ARR
• >80% gross profits from ARR
• 3Q22 ARR guidance of USD 3.5 – 4.0M, mainly driven by continued new sales in Airthings for Business

Note: Note: ARR equals annualized sales from all active subscriptions, licenses and service contracts within AfB and Pro. (i.e. subscription service revenues booked in September multiplied by 12)

Financials Jeremy Gerst, CFO

Income Statement

Sales revenue of USD 10.1M, up 10% YoY

Sales gross margin at 60% for 3Q

EBITDA of USD -0.2M

• Reduced Payroll expenses

EBIT of USD -0.5M

• Depreciation of right-of-use assets for leases recognized under IFRS 16

(USD'000)	3Q22	3Q21	YTD 2022	YTD 2021
Total revenue	10 052	9 106	25 965	23 116
Cost of sales	3 996	3 284	7 730	8 554
Gross profit	6 056	5 822	15 363	14 590
Sales Gross Margin	60%	64%	59%	63%
Payroll expenses	2 885	3 369	12 316	10 422
Other operating expenses	3 385	2 847	12 077	9 065
EBITDA	-214	-395	-9 030	-4 897
Depreciation and amortization	284	335	1 041	958
Impairment	0	0	1 522	0
Operating profit / EBIT	-498	-730	-11 592	-5 855
Financial income / (expenses)	936	117	2 177	56
Profit (loss) before tax	438	-613	-9 415	-5 800
Income tax	172	-153	-2 099	87
Net profit (loss)	266	-461	-7 316	-5 886
Earnings per share (USD)
Basic earnings per share	0.00	-0.00	-0.04	-0.03
Diluted earnings per share	0.00	-0.00	-0.04	-0.03

Balance Sheet

Change in assets

• Deferred tax asset
• Inventory increase due to strategic decision to secure supply
• Trade receivables
• Cash due to profitability, working capital, and exchange rates

Change in liabilities

• Significant portion of equity decline due to exchange rate between NOK and USD
• Decline in long -term liabilities
• Trade and other payables
• Lower Provisions due to segment mix

(USD'000)	30.09.2022	30.09.2021
Assets
Intangible assets	1 765	2 171
Goodwill	2 607	3 224
Property, plant and equipment	843	755
Right -of-use assets	3 040	4 189
Deferred tax assets	5 479	2 731
Other non -current assets	223	1 095
Total non -current assets	13 957	14 165
Inventories	15 518	9 040
Trade receivables	10 581	12 131
Other receivables	2 314	2 661
Cash and cash equivalents	17 014	44 987
Total current assets	45 426	68 819
Total assets	59 383	82 984
Total equity	48 979	69 284
Non -current lease liabilities	2 489	3 786
Deferred tax liabilities	0	307
Non -current provisions	218	1 030
Total non -current liabilities	2 707	5 123
Lease liabilities	782	609
Trade and other payables	4 780	5 209
Contract liabilities	934	781
Income tax payable	8	3
Government grants	0	114
Provisions	1 195	1 862
Total current liabilities	7 697	8 577
Total equity and liabilities	59 383	82 984

Cash Flow Statement

Cash flow from operating activities USD -2.5M

• Operating profit
• Net working capital due to reduction of trade payables and provisions

Cash flow from investment activities of USD -0.5M

• Internally generated intangible assets, purchase of software, production tooling and office equipment

Cash flow from financing activities of USD -0.2M

Net unrealized foreign exchange difference of USD -3.0M

Modest improvements in Inventories

• Build-up was a strategic decision to mitigate effect of global component shortage
• Modest improvements with a decline in Average Days of Inventory from 402 to 370
• Reducing both Days of Inventory and Days of Trade Receivables remains a key focus area
• Cross-functional teams are working continuously to identify and implement improvements

Note: Days of Inventory calculation – Inventories / (4 quarter rolling average COGS) * 90 days in quarter

Summary and outlook

Summary

• Revenue of USD 10.1M, up 10% year-on-year
• Strong gains in the Airthings for Business segment (up 135% YoY)
• Seeing promising signals in Consumer with retailers and channel partners beginning to replenish their inventories. And device registrations growing
• Stable Gross Profit Margin of 60%
• Growing revenues while continuing to optimize cost base focus on working capital to accelerate path to profitability

4Q22 Outlook

• 4Q22 revenue estimated at USD 9.0 13.0M
• ARR expected to grow to USD 3.5 4.0M during the fourth quarter

Guidance 4Q22

Revenue and ARR guidance (USD M)	4Q22
Revenue	9.0 – 13.0
Annual Recurring Revenue	3.5 – 4.0

Exciting long-term outlook

Global leader in indoor air quality for homes and businesses

Consumer Segment

• Great products
• Increased awareness
• Leading brand in the segment
• Continuous channel expansion, market penetration and scaling

Goal of >USD 60M revenue by 2024

Business Segment

• Continue growth from a broad range of customers
• Improve margins by growing ARR
• Continue proven partnership model with regional and global players

Goal of >USD 40M revenue by 2024

Goal of >USD 20M ARR by 2024

2024 Goal

Revenue of USD 100M

ARR of USD 20M+

Long-term EBITDA margin target >25%

Supported by lasting factors and megatrends

Consumer Segment

• Health tech Smart home
• We spend 90% of our time indoors, where the air is 2 to 5 times worse than outside
• Radon is the leading cause for lung cancer among those that do not smoke
• The EU is estimating that 350,000 premature deaths are caused by fine particulate matter annually, carrying a yearly economic cost of up to EUR 940 billion
• About 55 million people have asthma in the US and Europe combined. Particle pollution is found to be a major cause of asthma
• Rapid increase in instances of wildfires in the US and globally showing an increase in the risk of both cardiovascular- and respiratory-related effects
• Increasing IoT adoption is fueling growth of smart home market going forward

Business Segment

• ~4/5 of today's building will still exist in 2050 meaning we need to find ways to improve their sustainability
• 40% of global energy consumption comes from commercial buildings representing an enormous opportunity to save costs and CO2
• Most existing buildings don't have an automated system for HVAC control
• 6 out of 10 students are exposed to CO2 levels higher than the recommended threshold of 1,000 ppm
• Regulation and Legislation for building energy performance and health of workers
• IoT and digitalization for more efficient facility management
• ESG and sustainability

Breathe better. Live better.

Q&A