Pexip Holding

Investor Presentation • Feb 14, 2024

Quarterly Presentation Q4 2023

February 14, 2024

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Q4 highlights

• Q4 revenue of NOK 285 million, up 10% y-o-y
• Total ARR at USD 102.8 million, up USD 3.0 million q-o-q
• EBITDA¹ of NOK 59 million and cash flow of NOK 28 million

Strong development in Connected Spaces

• USD 2.7 million in ARR growth in the quarter for Connected Spaces
• Benefiting from positive market trends, HP|Poly partnership, improved competitive dynamics and product enhancements

Solid Q4 results Delivered on 2023 targets

• ARR growth of 3% (7% excluding legacy)
• NOK 113 million in EBITDA excluding other gains and losses
• NOK 105 million in free cash flow

Launched VPaaS

• Pexip launched its new Video Platform as a Service (VPaaS)
• The new platform is targeting embedded video for regulated organizations
• Recommend dividend of NOK 1.1 per share to 2024 AGM
  • Ordinary dividend of 0.6 NOK per share for 2023
  • Extraordinary dividend of NOK 0.5 per share

2023 capital distribution Financial targets and 2024 outlook

• Medium term we target to consistently deliver above 10% ARR growth and minimum 20% EBITDA
• For 2024 we have the following outlook:
  • 5-10% ARR growth
  • 13-18% EBITDA

Pexip has a unique video technology platform

Patented transcoding architecture

Centralized data processing

• Gives improved interoperability & browser experience
• Enables AI applications

Run on any compute platform

Works in all environments, including self hosted and sovereign clouds

• Enables total data privacy and control
• Easy to customize

Flexible video technology that powers everything from business communication to ultra secure government meetings, doctor's appointments and court proceedings.

Powered by Pexip

MISSION

To make seamless video communication available to all organizations regardless of technology platforms and security requirements

Pexip Connected Spaces Video meeting interoperability

When several video technologies need to work seamlessly together

Pexip Secure & custom Spaces Video meetings for self hosting or private clouds

When complete privacy and control over data is required

Selected partners Selected partners

5

Connected Spaces market opportunity

• Market for interop solutions is growing
• Installed base of SIP end-points up for grabs in short to medium term
• Longer term there is a large opportunity in next generation interop providing "any to any" seamless video communication
• Only two players left
• Pexip is technology leader

On a journey to connect any meeting room to any meeting

Strengthening Pexip Connect for Teams Rooms ecosystem with Lenovo partnership

"We are excited to collaborate with Pexip to enhance the capabilities of our Teams Rooms. With the capabilities provided by Pexip, customers can have a more complete solution – making it an attractive and preferred option for businesses seeking a single provider to meet all their video meeting room needs."

Andrea Recupero, Lenovo Director EMEA Smart Collaboration

MISSION

To make seamless video communication available to all organizations regardless of technology platforms and security requirements

Pexip Connected Spaces Video meeting interoperability

When several video technologies need to work seamlessly together

Pexip Secure & custom Spaces Video meetings for self hosting or private clouds

When complete privacy and control over data is required

Selected partners Selected partners

Secure & Custom market opportunity

• Analysts expect 30% growth in private clouds
• 137+ countries have enacted some form of data protection and sovereignty laws
• 50% of European CXOs see data sovereignty as a top issue
• 44% of European enterprises plan to move to sovereign cloud in the next 2 yrs.
• Pexip well positioned

Complementing Teams meetings with Pexip Secure Meetings

European Country Government

GKN Aerospace

Pexip Secure Meetings as a complementary video meeting platform for meetings that require an extra level of security. The application is an Outlook plug-in, alongside Teams.

Need for a secure on-premises video platform with full opportunity to audit access to information to comply with regulatory demands related to international trade

Step-change in financial performance

Total ARR USDm

Adjusted EBITDA¹ NOKm, last 12 months

Free Cash flow² NOKm

2023 target achievement

Target 2023 EBITDA of NOK 100-150 million

Target 2023 free cash flow¹ of NOK 85-100 million

Target flat to positive development in recurring revenues for FY 2023

NOK 113 million in EBITDA adjusted for other gains and losses (restructuring)

NOK 105 million in free cash flow

3% growth in ARR to USD 102.8 million (7% growth excluding legacy areas)

Sales update

14

Connected Spaces

• Growth in Connected Spaces in Q4 benefiting from improved product differentiation, increasing momentum in Poly|HP partnership and BlueJeans sunsetting their CVI solution
• All regions contributing positively to Connected Spaces growth
• Positive feedback on SIP Point to Point for Microsoft Teams Rooms – opens a new market opportunity for Pexip for the next generation of video interoperability
• In Q4, Pexip signed several large customers in Connected spaces, including:
  • Pexip Connect to a major pharmaceutical company
  • Pexip Connect to a major luxury brand
  • A large upsell to a Big Four Audit and advisory firm
  • A large expansion to a Western Government

Big Four Audit and Consulting firm

• Complex internal UC setup using both Google Meet and Microsoft Teams internally
• Wide range of video systems internally
• High number of interactions with clients using a range of UC tools
• Pexip is providing the full Pexip Connect offering, with interop to Teams and Google Meet, One-touch-join automation and direct support to the customer

Secure and custom solutions

• Secure and custom solutions growing 2.4% in Q4 and 13% y-o-y, driven largely by strong upsell across several accounts in Secure and Custom
• Secure spaces was the main source of growth, with 22% growth yo-y. Large wins include:
  • Secure meetings to a defence contractor
  • Secure meetings to a Middle Eastern government
  • Secure meetings to several Swedish government entities

Seeing solid traction in the defense space

Defence classified meetings

For SECRET and above, its 100% on prem, or private cloud.

Replace existing solutions with Pexip & Rocket.chat, and ensure business continuity.

Deployed video tools

Wearables, mobile and application integration for the battlefield.

Pexip works better across poor network conditions.

Mission partner collaboration

Federate & plan with partner orgs, with unique Pexip capabilities based on Data Centric Security.

Relevant for multinational organisations.

Collaboration for development

Protect advanced engineering development programmes.

Lever Pexip's partners' collaboration technologies to foster creativity for dispersed teams.

Launched Video platform as a Service (VPaaS) beta

Unique value proposition built on core Pexip strengths

Private and compliant

• No Personal Identifiable Information is obtained or stored on the service at any time
• You choose where your tenant operates without sacrificing features or functions
• Built with compliance in mind

• Multi-stream video/content for advanced collaboration
• Switching/composable video; each user can create a unique experience
• Audio & video codec built from the ground up will protect quality in sub optimal conditions

Easy to adopt

• Published sample apps make migrating easier
• Unified APIs (future) will make adoption of service & self hosted seamless

Financial update

20

Total ARR base at USD 103m in Q4 2023

Breakdown of ARR development

USD million, quarter-over-quarter

• Improved new sales in Secure and Custom
• Very strong sales for both new and existing customers in Connected Spaces

Continued improvement in revenue and EBITDA

• Positive revenue increase of 10% compared to Q4'22
  • Strong revenue development despite delivering NOK 25 million less in pre-paid multi-year software contracts delivered in Q4 2023 compared to Q4 2022
• Continued positive EBITDA development from increased revenues and lower costs

Adjusted EBITDA¹

NOK million

Q4 2023 OPEX base 10% below Q4 2022

Quarterly OPEX development

NOKm

Salary and personnel expenses

Stable salary and personnel expenses compared to Q1/Q2, with somewhat lower fixed salary and higher variable compensation achievement from stronger sales in Q4

Other Operating expenses

• Overall in line with previous quarters, and 33% lower than Q4 2022.
• Reduction mostly from lower sales and marketing costs as well as smaller reductions on all other items

NOK 28 million in positive cash flow in Q4 – 2023 free cash flow of NOK 105 million

Cash flow bridge Q4 2023 NOKm

• Positive EBITDA excluding share based compensation costs contributing positively to Q4 cash flow
• Seasonal negative development on working capital due to higher invoice volume in Q4, in particular for December
• For 2023, Pexip achieved a free cash flow of NOK 105 million from NOK 178 million in operational cash flow, negative 51 million in investing cash flow and negative 22 million in lease payments

Q4 2023 Financial results

Profit and loss

NOKm

	Q4 2023	Q4 2022	Y-o-Y
Revenue	285	260	25
Cost of goods sold	28	18	10
Gross Profit	257	243	14
Salary and personnel exp.	161	166	(5)
Other operating exp.	37	54	(17)
Adjusted EBITDA	59	22	37
Other gains and losses	(5)	(29)	(22)
EBITDA	55	(7)	62
D&A	100	44	56
Operating profit	(45)	(52)	7
Net financials	0	(8)	8
Profit/loss before income tax	(45)	(59)	14

• 14% increase in year-on-year revenue, driven by stronger Software and Software-as-Service revenues and currency
• COGS is mainly relating to sale of Pexip-as-a-Service with the increase being related to increased usage as well as activation of key AI features
• EBITDA excluding other gains and losses of NOK 59 million, NOK 37 million higher than in Q4 2022.
• NOK 5 million in other gains and losses from restructuring supporting long-term cost reductions
• High D&A in Q4 2023 due to impairment of Skedify goodwill of NOK 63.6 million following costreductions in the business unit

FY 2023 Financial results

Profit and loss

NOKm

	FY 2023	FY 2022	Y-o-Y
Revenue	994	867	127
Cost of goods sold	99	94	5
Gross Profit	895	773	121
Salary and personnel exp.	621	720	-98
Other operating exp.	160	238	-78
Adjusted EBITDA	113	-184	297
Other gains and losses	11	61	-50
EBITDA	102	-245	348
D&A	199	115	84
Operating profit	-97	-360	264
Net financials	33	44	-10
Profit/loss before income tax	-64	-317	253

• For FY 2023 revenues are up 15% or NOK 127 million compared to 2022
• COGS overall in line with last year, benefiting from improved operational efficiency but impacted by higher usage and traffic
• Cost reductions on Salary and personnel expenses and other OPEX of NOK 98 million and NOK 78 million respectively
• NOK 11 million in other gains and losses for 2023, mainly related to cost reduction initiatives
• NOK 199 million in D&A in 2023, compared to NOK 73 million in investment and leasing cash cost

Outlook and targets

28

Updated financial targets and current 2024 outlook

2023 achievement

• 3% ARR growth (7% excluding legacy)
• 11% EBITDA¹

Current 2024 outlook

• 5 to 10% ARR growth
• 13-18% EBITDA¹

Mid-term targets

Consistently deliver:

• Above 10% ARR growth
• Above 20% EBITDA¹

Market outlook

• Continued positive market outlook across the business areas
• Key drivers for Connected Spaces is the Hybrid work mode, the HP|Poly partnership, BlueJeans' exit, Pexip's unique product and FedRAMP authorization in this space in addition to the growth in video devices
• Key drivers for Secure and Custom is the growth in private clouds, the geopolitical situation, and the HP|Poly partnership
• Q1 2024 ARR expected 103-106 USD millions

Current 2024 outlook

• 5 to 10% ARR growth
• 13-18% EBITDA¹

Mid-term targets Consistently deliver:

• Above 10% ARR growth
• Above 20% EBITDA1

Will recommend a NOK 1.1 per share dividend to AGM 2024

Introduced a capital distribution policy

• Distribute 50-100% of free cash flow generated to shareholders as a dividend, with the concrete recommendation to be presented and approved by the AGM
• In addition, an extraordinary dividend of NOK 0.5 per share to be paid together with the ordinary dividend

2023 dividend recommendation of NOK 1.1 per share

• NOK 0.6 dividend per share as an ordinary divided
• In addition, an extraordinary dividend of NOK 0.5 per share to be paid together with the ordinary dividend

Upcoming dates

Q1 2024 Quarterly Presentation May 6, 2024

2024 AGM

April 12, 2024

Q&A Investor.pexip.com

Thank you for listening!

Investor.pexip.com

High gross margins across the business areas

Gross profit by segment

NOKm	Q4 2023	Q4 2022	YoY dev.
Revenue from Connected Spaces	184	168	10%
COGS of Connected Spaces	24	18	32%
Gross Profit from Connected Spaces	160	150	7%
Gross margin Connected Spaces	87%	89%	-2 p.p.

	Q4 2023	Q4 2022	YoY dev.
Revenue from secure, custom solutions	101	93	9%
COGS of secure, custom solutions	5	4	17%
Gross Profit from secure, custom solutions	96	89	9%
Gross margin secure, custom solutions	95%	96%	-1 p.p.

• 10% and 9% revenue development in the two business areas
• Somewhat lower gross margin growth due to increased COGS