Pexip Holding

Investor Presentation • Nov 11, 2021

Meet the world with video communication as it should be

Quarterly Presentation Q3 2021

November 11, 2021

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Presenters

Interim CEO and CFO Øystein Dahl Hem

Chair of Board Michel Sagen

President Global Sales & Marketing Åsmund Fodstad

Chief Strategy Officer Tom-Erik Lia

Q&A: IR@pexip.com

Pexip has successfully solved the complex video needs of large organizations since its inception

• Investing raised capital for growth in 2020 and 2021
• Accelerated ARR growth and normalized investment level in 2022 improving profitability
• Return to profitable growth from 2023+

Pexip's differentiated customer offering is underpinned by unique technology

• All compute heavy operations done in Pexip nodes
• Unique patented architecture
• Benefits:
  • Unique interoperability & no download experience
  • AI in the cloud with Nvidia
  • More environmentally sustainable

Core transcoding Run on any compute platform

• Pexip can run on all cloud providers and on-prem
• Unique patented technology
• Benefits:
• Total data privacy and control
• Full customization capabilities
• Unique position in sovereign video services

Unique technology powers our success in three core markets

Video infrastructure with interoperability to Microsoft Teams and Google Meet

Critical video meetings for private and secure environments

Video enablement

for healthcare, judiciary, government, retail and finance

These three core markets represent a massive market opportunity

Pexip intends to have a leadership position in a 5 BUSD segment by 2024

Video-centric Unified Communications (UC) market		20+ BUSD in 2024
Pexip current core markets	5 BUSD in 2024

Well-positioned to benefit from mass adoption of video communication

Q3 Operational Update

Recent highlights

37% y-o-y growth in ARR to USD 100 million	NOK 183 million in Q3 2021 revenue 34% y-o-y growth	Executing on growth strategy; -22% EBITDA margin for Q3 2021
Starting to see impact from investments in sales organization	Named a Challenger in Gartner's Magic Quadrant for Meetings Solutions	Acquired Skedify to enhance Pexip's capabilities in video enablement

9

9

Pexip is finding great success in our three core markets

Video infrastructure with interoperability to Microsoft

Teams and Google Meet

Critical video meetings for private and secure environments

Video enablement

for healthcare, judiciary, government, retail and finance

Pexip is finding great success in ultra secure meetings segment

Americas use cases:

• 1 Deliver Ultra secure / highly private platforms to the military and government
• 2 Becoming Fedramp certified to deliver a US sovereign cloud service

EU use cases:

• 1 Deliver Ultra secure / highly private platforms to the military and governments
• 2 Large enterprise highsecurity meetings, e.g., industry secrets

APAC use cases:

1 Deliver Ultra secure / highly private platforms to the military and governments

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

Large organizations driving growth

Share of ARR by account size in ARR, USD

Have substantially strengthened the team since IPO, expect employee growth below ARR growth in 2022+

Number of employees

Have scaled the team to drive future growth Nearing the end of the aggressive expansion – expect employee growth below ARR growth in 2022

• Expect to add net 100-150 new employees in 2022 (implied 18%-25% growth)
• From start of 2022, growth in employees/cost expected to be substantially lower than expected growth in ARR going forward, supporting return to profitable growth
  • Target return to profitability in 2023

Pexip is continuing to gain industry recognition

A challenger in the Gartner Magic Quadrant for Meeting Solutions¹

15

Skedify

16

Skedify strengthens Pexip's offering in Video Enablement pillar

Video infrastructure with interoperability to Microsoft Teams and Google Meet

Critical video meetings for private and secure environments

Video enablement

for healthcare, judiciary, government, retail and finance

Skedify offer the next-generation scheduling technology for hybrid customer engagements

The Skedify solution is highly complementary to Pexip

Skedify transaction

• Pexip have acquired 100% of the shares in Skedify B.V. for an Enterprise Value of EUR 8.0 million on a cash and debt-free basis
  • Equity value of:
    • EUR 1.59 million in cash settlement
    • 275,917 Pexip shares valued at NOK 85
  • Net financial debt including working capital adjustments of EUR 4.04 million
• The main owners of Skedify are the founders of the Company, for which 66% of the Equity Value will be settled in shares. They will be key leaders for Pexip in the Video Enablement business area. The founders have a 3 year lock-up on their shares depending on continued employment in Pexip.
• Skedify B.V. has 30 employees at the time of transaction, of which 14 are in Engineering,15 in Sales and marketing and 1 in Administration
• The estimated revenue for 2021 is EUR 1.3 million of which a substantial share is non-recurring and EUR -0.7 million in EBITDA on a stand-alone basis.
• SPA is signed, and completion is expected to happen during November 2021

Sales and Financial Performance

37% growth in Annual Recurring Revenue – Added 7.1 million in Q3 2021

• Q3 2021 growth in ARR of USD 7.1 million, compared to USD 7.0 million in Q3 2020 and USD 2.7 million in Q3 2019
• Strong development in Federal for Q3 2021
• Higher competition on video infrastructure, impacting pipeline conversion and average deal size
• Both Q3 2020 and Q3 2021 positively impacted by Service provider portfolio conversions

Solid growth contributions from all geographies and products

USD million

New customers represent the main driver for ARR growth with 37% in the last twelve months

• months sales to new customers
  • Strong performance especially in US Federal
• ARR net retention is at a normal level at 100%, compared to 114% in 2020 benefiting from Covid upsell and 99% in 2019
• Higher churn from non-core usecases, accounting for ~50% of total churn in Q3 2021
• Lowest churn with customers above USD 100k in ARR of 5% vs 11% overall

ARR growth driving revenue growth

Quarterly revenue development

(3%)

4 (7%)

(6%)

(8%)

NOK million

(5%)

(4%)

(8%)

Comments

Pexip as-a-Service Self-hosted Software

Operating revenues – Pexip as-a-Service

• Overall growth of 31% year-on-year to NOK 78 million, below ARR growth due to currency and high sales in Q3 2021 with delivery in Q4 2021

Operating revenues – Self-hosted Software

• Overall increase of 37% year-on-year to NOK 104 million
• No material impact of renewal timing which impacted Q1 and Q2 revenue recognition
• Software revenue mainly recognized at time of delivery, which leads to quarterly variations in revenue recognition.

Gross margin

• Higher cost of goods sold mainly due to high Pexip as-a-Service revenue growth and higher usage
• Modernized service platform from own hardware to cloud compute, for better scale, resiliency and operations as well as lower investments in own hardware going forward

Increase in operating expenses from planned investments in Sales and R&D capacity

2019 Q2 2019 Q3 2019 Q4 Q2 2021 2020 Q1 2020 Q2 Q3 2021 2020 Q3 2020 Q4 Q1 2021

Executing on communicated growth strategy

Cash flow from investing activities per quarter Comments Significant investments in sales-related headcount, impacting EBITDA

NOK million, cash outflow

• Investments outweighing growth in revenue, leading to lower EBITDA

• YTD EBITDA-margin of -25% in line with 2021 guidance

Targeting negative 25-35% EBITDA margin in 2021/2022, profitable growth from 2023

Cash flow bridge

Cash flow bridge Q3 2021

NOKm

Comments

• Negative EBITDA and net working capital main contributors to cash flow
• Negative development in Net Working Capital in part related to holiday pay periodization, and high billing volume at the end of the quarter increasing accounts receivables
• Cash position of NOK 923 million out of Q3 2021, Pexip has a solid cash position to fund the acceleration plan

Robust underlying profitability in line with mid-term ambition of growth + EBITDA above 50%

Illustrative EBITDA build-up

NOK million last twelve months (Percent of revenue)

• Last twelve months revenue growth of 36%, gross margin of 90% and EBITDA of 25% excluding accelerated growth investments
• Invested NOK 276 million in growth investments with limited revenue impact so far, that are essential to accelerate growth in a high-growth market

Note: Adjusting OPEX to employee staffing, assuming salary and other OPEX is scalable to number of employees. A normal long-term investment level would grow employees in Pexip to 300 in Q3 2021 from 215 in Q1 2020.

Starting to see impact of investment in new hires on sales to new customers

Average sales to new customers YTD 2021

Ratio to experienced reps

• Hires from 2020 are starting to be fully ramped with regards to new sales, in particular Q1 and Q2 cohorts
• Ramp-up time of ~4-5 quarters about one quarter more than before 2021, continue to see this in Q4

Approaching the next phase of investment plan

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

• Investing raised capital for growth in 2020 and 2021
• Accelerated ARR growth and normalized investment level in 2022 improving profitability
• Return to profitable growth from 2023

Summary and Outlook

Q3 2021 in brief

Solid top line growth

• Continued ARR growth with USD 7.1 million in Q3 2021/37% y-o-y growth
• Continue to win major customers in our core markets
• NOK 183 million in revenue for Q3 2021, +34% compared to Q3 2020

Executing on the acceleration plan

• Continue to build sales and R&D capacity reached 492 employees end of Q3 2021
• Acquired Skedify to enhance Video Enablement product portfolio
• -22% EBITDA in line with announced strategy
• Solid cash position to invest in further growth

Outlook

Positive outlook for video communication

Will continue to execute on growth plan

• Nearing the end of the accelerated investment phase – expect ARR growth substantially above people growth for 2022
• Plan for negative 25-35% EBITDA margin in 2021/2022, neutral to positive EBITDA in 2023
• Target 2025 EBITDA of +25% with +25% revenue growth

Target reaching long-term target of USD 300 million in ARR by end-of-2024

Upcoming dates

Capital Markets Day December 9, 2021

Q4 2021 ARR Update

January 10, 2022

Q4 2021 quarterly presentation

February 10, 2022

Q&A