Q-Free ASA — Investor Presentation 2021

Oct 28, 2021

Q-FREE IS A PRIME MOVER IN TRAFFIC TECHNOLOGY…

COMPANY & PEOPLE

FOUNDED IN 1984

HEADQUARTERED IN NORWAY

OFFICES IN 15 COUNTRIES

BUSINESS AREAS & INSTALLED BASE

Tolling:

>40 million tolling tags sold

>2 000 tolling lanes in operation

>50 000 active ALPR SW licenses

30+ NATIONALITIES

50+ REFERENCE MARKETS

Traffic Management:

>500 000 highway lane miles monitored and managed

> 35 000 traffic controllers and ~100 centralSW systems deployed

…WITH A STRONG AND COMPELLING PURPOSE & OFFERING

Q-FLOW Optimize how people and goods move Q-CLEAN Stimulate sustainable transportation Q-SAFE Make roads and travel safe • Regional Freeway Management • Traffic Signal Operations and Management • Electronic Toll Collection and Congestion Charging • Incident Management • Connected Intersections • ALPR Enforcement • Weigh-in-motion • Smart Digital Tachographs • Congestion charging and Low-emission zones • Traffic Signal Operations and Management • Bicycle and pedestrian monitoring CONGESTION ACCIDENTS POLLUTION KEY MOBILITY CHALLENGES Q-FREE'S SOLUTIONS

HIGHLIGHTS

FINANCIAL HIGHLIGHTS Q3-21 (Q3-20)

204 MNOK (210) +4% organic growth

118 MNOK (354) REVENUES: ORDER INTAKE:

EBITDA:

31 MNOK (32)

ORDER BACKLOG: 1 135 MNOK (1 169)

18 MNOK (18) 36 MNOK (24)

EBIT: CASH FLOW FROM OPERATIONS:

OPERATIONAL HIGHLIGHTS Q3-21

Finalized Queensland tolling project delivery in Australia

Went live with ALPR solution for New York toll authorities

Went live with statewide ATMS for Colorado DOT

Expanded cycle monitoring network in Scotland

Continued roll-out of weigh-in-motion in Ukraine

Established subsidiary in Kiev, Ukraine

FINANCIAL UPDATE

FINANCIAL SUMMARY Q3-21 AND 9M-21

MNOK	Q3 2021	Q3 2020	YoY Change
Revenues	204	210	-3.1%
Gross contribution	139	135	+2.8%
Gross margin	68.1%	64.2%	+3.9 pp
OPEX	108	103	+5.1%
EBITDA	31	32	-4.6%
EBITDA margin	15.1%	15.3%	-0.2 pp
EBIT*	18	18	+3.6%
EBIT margin	9.0%	8.4%	+0.6 pp
EPS	0.13	0.03

9M 2021	9M 2020	YoY Change	FY 2020
648	635	+2.1%	889
421	399	+5.6%	545
65.0%	62.9%	+2.1 pp	61.3%
343	348	-1.6%	469
79	50	+56%	76
12.1%	7.9%	+4.2 pp	8.5%
37	4	>800%	-9*
5.7%	0.6%	+5.1 pp	-1.0%
0.20	-0.17		-0.56

* FY 2020 EBIT includes 21 MNOK in impairment of intangible assets and PP&E

REVENUE DEVELOPMENT

QUARTERLY REVENUES NOK million

-3% YoY nominal revenue growth, but +4% organic growth adjusted for currency effects and Assets Held for Sale

Q3-21 REVENUES PER BUSINESS AREA Percent

YTD Tolling accounts for 63% of revenues and Traffic Management 37%

YOY REVENUE COMPARISON

SEGMENT REVENUE DETAILS

NOK million

SEGMENT	Q3-21	Q3-20	YoY Change	9M 2021	9M 2020	YoY Change	FY 2020
Tolling	131	142	-8%	411	415	-1%	572
Traffic Management	73	58	+25%	234	197	+19%	282
Assets held for sale	-*	10*	*	2*	24*	*	35
REVENUES	204	210	-3%	648	635	+2%	889

4% YoY organic revenue growth adjusted for currency effects and Assets Held for Sale

9% YoY organic revenue growth adjusted for currency effects and Assets Held for Sale

* Parking assets divested in Q1-21

EBITDA DEVELOPMENT

EBITDA EXCL. NON-RECURRING ITEMS NOK million

103 MNOK in 12m rolling EBITDA, 105 MNOK when adjusting 12.1% EBITDA margin YTD 2021 vs. 7.9% YTD 2020 for assets held for sale

EBITDA MARGIN EXCL. NON-RECURRING ITEMS Percent

SEGMENT EBITDA DETAILS

NOK million

SEGMENT	Q3-21	Q3-20	Margin change	9M 2021	9M 2020	Margin change	FY 2020
Tolling	33	39	-2.8 pp	88	78	+2.6 pp	104
Traffic Management	2	-1	+5.1 pp	16	3	+5.2 pp	8
Assets held for sale*	0*	0		-2*	-6		-7
Group Functions	-4	-7		-23	-24		-29
EBITDA	31	32	-0.2 pp	78	50	+4.2 pp	76

* Parking assets divested in Q1-21

ORDER INTAKE DEVELOPMENT

ORDER INTAKE & BOOK-TO-BILL PER QUARTER NOK million / ratio

Frame contracts with no committed minimum volume not included, YTD order intake down 6% compared to 2020

Q3-21 ORDER INTAKE PER BUSINESS AREA Percent

Tenders with an accumulated value in excess of 600 MNOK already submitted and awaiting award

POST-QUARTER CONTRACT WINS

Tolling contract with Transport for New South Wales in Australia

• Contract to design, supply, and install replacement tolling roadside systems for the Sydney Harbour Bridge and Harbour Tunnel
• Minimum revenues of ~40 MNOK including 5 years of recurring service and maintenance
• 3 rd major tolling project in Australia in the past 2 years

Tolling frame agreement with Vegamot/Bompengeselskapet Nord in Norway

• Q-Free chosen by Vegamot/Bompengeselskapet Nord as the preferred vendor for mobile tolling solutions + replacement of three-gantry toll stations
• Moreover, Q-Free is qualified as 1 of 2 suppliers that can bid on projects involving single gantry toll stations
• Expected revenues >100 MNOK actual amount will depend on call-offs and success on coming mini-tenders

THE OPPORTUNITY PIPELINE CONTINUES TO LOOK SIZEABLE AND ATTRACTIVE

ESTIMATES

ADDRESSABLE OPPORTUNITIES EXPECTED TO BE TENDERED/AWARDED IN 2021&2022 MNOK

NOTE: Planned tenders and contract signings might be delayed by customers

ORDER BACKLOG DEVELOPMENT

ORDER BACKLOG NOK million

Frame contracts with no committed minimum volumes are not included in the backlog

EXPECTED DELIVERY SCHEDULE NOK million

The Covid-19 pandemic might cause changes to the planned delivery schedule

CASH FLOW AND AVAILABLE FUNDS

CASH FLOW FROM OPERATIONS:

36 MNOK (24)

CASH FLOW FROM INVESTING:

-8 MNOK (-6)

CASH FLOW FROM FINANCING:

-7 MNOK (-16)

AVAILABLE CREDIT AND CASH AT HAND NOK million

Available credit Cash at hand

KEY BALANCE SHEET ITEMS

BALANCE SHEET COMPOSITION NOK million

46% (42%) EQUITY RATIO (Q3-20):

WORKING CAPITAL RATIO (Q3-20):

14% (22%)

GW & other intangible assets

NET INTEREST BEARING DEBT

NET INTEREST BEARING DEBT NOK million

NET FINANCIAL ITEMS:

0.1 MNOK (-16)

OUR 2020-2023 PLAN

Q-FREE GENERATES ~250 MNOK IN ARR AND ~50% COMES FROM SW

ANNUALIZED RECURRING REVENUES NOK million

SPLIT OF ANNUALIZED RECURRING REVENUES NOK million, 100% = 150 MNOK

ESTIMATES

MAIN SW ARR DRIVERS

Advanced Traffic Management Systems

• Statewide inter-urban ATMS SW platforms including O&M
• Combination of cloud and onpremise SW systems
• Trend towards SaaS and cloud hosting

48% of SW ARR 31% of SW ARR 21% of SW ARR

• Automated (and manual) processing of license plate images for tolling transactions
• Trend towards more demanding KPIs and higher automation rates

License plate processing Tolling back-office systems

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• Advanced transaction processing and system management platform for tolling operators
• Important in new markets without legacy platforms

ESTIMATES

SW ARR GROWTH INITIATIVES

SPLIT OF CURRENT RECURRING SW REVENUES NOK million, 100% = 117 MNOK

ESTIMATES

ATMS ARR growth plan:

• Win new inter-urban statewide O&M contracts a la CDOT
• Increase sale of SW products on SaaS contracts a la LaneAware

ALPR ARR growth plan:

• Increase sale of Intrada® Insight in the US
• Replicate US business model in Europe

Tolling back-office ARR growth plan:

• Increase sale of simple back-office solutions to tag issuers a la Leaseplan
• Sell full-scale tolling back-office solutions a la Portugal and Slovenia in connection with new projects

COMMENTS ON OUTLOOK

2021 outlook:

• 8-10% organic revenue growth pending global supply chain situation
  • − 9% growth YTD adjusted for discontinued business and currency effects
  • − Global supply constraints on chips/microcontrollers will negatively impact 2021 tag sales (most orders are not lost but postponed)

• >10% EBITDA margin

• − 12% margin YTD
• − Favorable product mix with good margins
• − Solid cost control

2025 outlook:

• 1.3-1.5 bn NOK revenue target unchanged
  • − Several large tolling projects expected in new markets + replacement contracts in existing markets
  • − Early signs of market recovery for Traffic Management in the US
• Margin targets unchanged
  • − Operational leverage
  • − Increasing share of high-margin SW revenues
  • − Ongoing conversion to SaaS and ARR