Interim report Q3 2021

Making work mobile

Highlights Q3 2021

● Revenue was NOK 290 million, up 36% from NOK 213 million in the third quarter of 2020
● Gross profit was NOK 109 million, up 52% from NOK 71 million in the third quarter of 2020
● EBITDA adjusted was NOK 17 million vs NOK 16 million in the third quarter of 2020
● Recurring revenues in the third quarter of NOK 259 million (annualized), including Own Software, Advisory & Services and Hardware-as-a-Service
● Signed 8 new managed mobility service contracts in the third quarter, with an estimated value of NOK 34 million and ~5,900 managed devices
● New CEO aligning organization around customer journey, sharp focus on product and sales growth

CEO comment

"Techstep continued to develop and transform in the third quarter. Our numbers are also moving in the right direction and reflect that we are positioned to become a leading European Managed Mobility Services provider. Strategic development, acquisitions and continued development of our product, software and IP are driving our progress.

In the third quarter this year, recurring revenues on an annualized basis was NOK 259 million, while last twelve months gross profit was NOK 485 million and our EBITDA adjusted was NOK 95 million. But we are still in an early phase when it comes to capturing the available market in the Nordics and Europe, and with growth, economies of scale and increased profitability will kick in. That is why my mandate was very clear when I joined Techstep as the company's new CEO in August: Grow sales, accelerate Techstep's transformation into a software company and expand in the Nordics and Europe.

Today, the Techstep team has a sharp focus on product development, and we are aligning the whole organization around the customer journey with several new roles focused on product, sales, marketing, growth and other recurring services and revenue enablers.

Over the last couple of months, I have spent time with a lot of great colleagues, customers and partners. The consistent message from all stakeholders is that we are in a unique position to help businesses and people enjoy next generation mobile solutions that deliver substantial value to customers and end users. Techstep is improving the work lives of many people and we make companies more productive, more profitable and more sustainable, all at the same time. What we do represents a substantial growth opportunity, considering an available market with thousands of enterprises and millions of workers across the Nordics and Europe.

Techstep make work mobile at scale in an easy, secure, and sustainable way for end users and many leading companies and organizations in the Nordics. To make sure we expand and deliver growth going forward, and create stakeholder value and good returns to our investors, we will continue to embrace digital transformation and deliver great user, customer, partner and employee experiences" says Børge Astrup, CEO of Techstep.

About Techstep

Techstep is purpose-built to become a leading European provider of Managed Mobility Services (MMS). Techstep provides a complete Managed Mobility Services offering that presents enterprises and their employees with access to efficient, secure, and value-creating mobile work solutions – wherever and whenever they choose to work. Customer benefits include reduced IT complexity and costs, improved employee capabilities and engagement, as well as increased productivity and sustainability. Techstep has more than 350 employees based in Norway, Sweden, Denmark, and Poland, serving more than 2,000 customers across different industries and sectors. The company is listed on the Oslo Stock Exchange under the ticker TECH. To learn more, please visit www.techstepasa.no.

Key Figures

(amounts in NOK 1 000)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020

Revenues	290 122	212 732	920 790	743 582	1 142 866
Annual Recurring Revenue (ARR)	95 912	37 632	95 912	37 632	63 629
Gross profit	108 665	71 447	336 575	229 783	378 287
EBITDA adjusted1)	17 311	16 470	43 930	45 042	95 640
EBITDA	10 499	13 940	28 606	49 839	104 455
EBITA	(17 440)	(6 709)	(50 575)	3 074	17 122
EBIT	(30 618)	(12 734)	(86 680)	(14 351)	(10 771)
Net profit (loss) for the period	(25 057)	(13 269)	(72 766)	(12 673)	(23 557)

EBITDA adj. margin (%)	6.0%	7.7%	4.8%	6.1%	8.4 %
EBITDA rep. margin (%)	3.6%	6.6%	3.1%	6.7%	9.1 %
EBITA margin (%)	-6.0%	-3.2%	-5.5%	0.4%	1.5 %
EBIT margin (%)	-10.6%	-6.0%	-9.4%	-1.9%	(0.9 %)
Net profit (loss) for the period (%)	-8.6%	-6.2%	-7.9%	-1.7%	(2.1 %)

Cash	59 164	54 920	59 164	54 920	27 203
Net interest-bearing debt	182 166	12 337	182 166	12 337	166 838
Capex2)	9 492	3 271	26 664	13 464	21 386

1) EBITDA adjusted in Q3 2021 excludes non-recurring items such as M&A and restructuring-related costs totalling NOK 6.8 million.

2) Capex does not include Hardware-as-a-Service to customers, booked as capex under IFRS 16.

The Optidev acquisition is included in the financial statements from Q4 2020 and the Famoc acquisition is included in the financial statements from Q3 2021.

Operational review

Main developments

In the third quarter of 2021, Techstep continued to pursue its growth strategy and further the company's transformation into becoming a software-driven Managed Mobility Services (MMS) leader. Techstep continued to develop its MMS offering, designed as a recurring services bundle that integrates market leading IP, software and mobility expertise to fulfil the needs of the customer.

In the quarter, Techstep launched a new management structure with focus on customer and product offering to improve sales and strengthen Techstep's software-led growth strategy. The new management is working on streamlining the organisation and its product offering to support commercialisation and customer adoption. Moving away from a transactional to recurring revenue business model is expected to materialise in the medium term.

The integration of Famoc started in the beginning of the quarter and is progressing according to plan. In Sweden, the integration of eConnectivity and Optidev is being finalised.

Sales

Sales were slow at the start of the third quarter as expected for the mid-summer period. Techstep experienced sales improvements at the end of the quarter with several customer wins due to own IP. The company signed 8 new MMS contracts with a total estimated value of NOK 33.7 million and ~5,900 managed devices in the quarter.

Among the MMS solutions sold in the quarter was 'Flow', a recurring services bundle consisting of software, hardware devices and services. More specifically, 'Flow' includes the Origo Business Cloud software, mobile devices and device service, support, financing and lifecycle management. Origo is Techstep's

proprietary cloud software-as-a-service solution, expected to be a core value driver going forward. Techstep Finance is Techstep's own Hardware-as-a-Service solution that adds customer benefits like lower total cost of ownership.

Techstep's MMS offering also includes TrueMobile, a cloud-based mobile software solution platform. Through apps it makes work performed by deskless workers traceable. The software application can be paired with a broad selection of certified hardware and can be tailored to the customer's specific needs. TrueMobile also supports back-office personnel by web-based functions in addition to a powerful integration platform enabling integration with the client's business systems.

With the recent acquisition of Famoc, the MMS offering also includes Techstep's proprietary software Famoc Manage. Famoc Manage simplifies deploying, configuring and managing all devices by delivering IT control in one place. A platform that offers a wide array of services such as creating profiles, enforcing restrictions, installing applications, setting PIN and password policies.

In summary, Techstep's MMS offering comprise the following Own Software: Origo, True Mobile and Famoc Manage. Either combined or stand alone.

Techstep is focused on evolving its product offering, and will launch a new solution consisting of SmartControl, SmartWorks and SmartDevice in 2022. The new product offering is designed to strengthen the value proposition to customers. Continuously improvements in Techstep's value proposition is yielding results as key customers are expanding their business with the company by increasing the purchases of recurring revenue products.

Techstep's annual recurring revenue base (ARR¹ ) was NOK 95.9 million, whereof MMS related ARR was 67.3 million at the end of the quarter. ARR in the third quarter of 2020 was NOK 37.6 million. This gives a 155% increase mainly driven by the acquisitions of Optidev and Famoc. Organic growth in ARR from Origo software was 33% in the same period. Techstep's recurring revenue relates to the sale of Own Software with ~91% gross margin – sold either as a white-label service through partners or directly by Techstep.

Total Origo users were ~54,000 at the end of the third quarter 2021, up from ~34,000 users at the end of third quarter 2020.

Strategic initiatives to strengthen mobility offering

Techstep has acted as a market consolidator in Norway and Sweden over the past five years and continuously evaluates potential M&A opportunities to further strengthen and expand its managed mobility service offering. In the quarter, Techstep closed the acquisition of software provider Famoc, strengthening Techstep's MMS capabilities and unlocking a European expansion opportunity.

¹Refer to alternative performance measures

Financial review

The interim financial information has not been subject to audit.

Famoc is fully consolidated in the consolidated financial statements with effect from the third quarter 2021.

Profit and loss third quarter 2021

Techstep generated total revenue of NOK 290.1 million in the third quarter of 2021, up from NOK 212.7 million in the corresponding quarter last year.

Techstep's Own Software accounted for NOK 21.6 million (NOK 9.7 million), whereas Hardware-as-a-Service revenue accounted for NOK 33.4 million (NOK 25.5 million). Advisory & Services amounted to NOK 52.7 million (NOK 30.4) and related commissions were NOK 5.1 million in the third quarter (NOK 6.0 million). Hardware revenue (excluding Hardware-as-a-Service) was NOK 178.4 million (NOK 140.9 million) in the quarter.

Gross profit increased by 52.1% year-over-year to NOK 108.7 million. Gross margin for the quarter thus increased to 37.5%, up from 33.6% in the corresponding quarter of 2020. The improved gross margin relates to acquisitions of Optidev and Famoc, both adding revenues from Own Software, as well as an increase in the Hardware-as-a-Service portfolio.

Salaries and personnel costs increased by NOK 21.2 million year-over-year to NOK 62.7 million, of which NOK 17.9 million related to acquisitions made in the period. Other operational costs were NOK 28.6 (NOK 13.5 million) due to integration of acquisitions as well as restructuring and internal efficiency programs. Option costs for the quarter were NOK 1.0 million (NOK 1.1 million).

EBITDA amounted to NOK 10.5 million in the third quarter of 2021 and includes other operating one-off costs related to the Famoc acquisition and restructuring costs of NOK 6.8 million. EBITDA in the corresponding quarter last year was NOK 13.9 million.

Financial position

As at 30 September 2021, total assets were 1,316.8 NOK million, compared with NOK 1,300.5 million as at 31 June 2021.

Intangible assets accounted for NOK 816.7 million. They included a deferred tax asset of NOK 10.1 million, goodwill of NOK 624.6 million and customer relations and technology of NOK 182.0 million. See note 8 for the Famoc effect.

Total tangible assets were NOK 189.1 million as at 30 September 2021 including NOK 160.4 million in Hardware-as-a-Service to customers and NOK 28.8 million in premises and IT licenses.

Total inventories and receivables were NOK 250.3 million as at 30 September 2021. The increase from NOK 222.8 million at the end of the preceding quarter primarily reflects an increase in accounts receivables.

Total equity at the end of the third quarter was NOK 590.0 million (NOK 605.6 million), corresponding to an equity ratio of 45% (47%).

Non-current interest-bearing debt of NOK 125.8 million (NOK 123.7 million) includes acquisition loans of NOK 65.7 million related to the Optidev and Famoc acquisitions and a seller's credit of NOK 55.2 million. Other non-current debt of NOK 41.7 million mostly relates to leasing commitments of NOK 20.6 million and a buyback obligation for Hardware-as-a-Service of NOK 21.1 million.

Current interest-bearing liabilities amounted to NOK 115.5 million. They include net bank overdraft accounts of NOK 61.0 million, as well as a short-term seller's credit of NOK 28.4 million and the short-term acquisition loans of

NOK 20.1 million related to the Optidev and Famoc acquisitions.

Other current liabilities of NOK 227.4 million as at 30 September 2021 mainly include payables to employees of NOK 32.9 million, deferred revenue of NOK 138.1 million, leasing commitments of NOK 10.7 million and a buyback obligation for Hardware-as-a-Service of NOK 8.8 million.

Net interest-bearing debt was NOK 182.2 million at the end of the third quarter 2021, compared to NOK 64.3 million at the end of the preceding quarter. The increase is mainly due to the closing of the Famoc acquisition and the corresponding use of proceeds from the private placement in the second quarter of 2021.

Cash flow third quarter 2021

Net cash inflow from operating activities was NOK 2.7 million in the third quarter of 2021 and includes a negative effect of NOK 7.4 million from an increase in working capital.

Net cash flow used for investment activities was negative NOK 98.8 million. This is largely due to payments for acquisitions of NOK 79.0 million, capital expenditures for equipment related to Hardware-as-a-Service of NOK 34.7, investments in Own Software and IT development of NOK 1.1 minus proceeds from sale of equipment of NOK 15.9 million.

Net cash flow from financing activities was positive at NOK 1.7 million in the third quarter 2021. This includes NOK 11.7 million from borrowings, largely offset by repayments of NOK 10.0 million.

Cash and cash equivalents decreased by NOK 94.5 million from NOK 154.0 million in the previous quarter to NOK 59.2 million at the end of the quarter.

Outlook

Techstep has positioned itself as the leading Nordic provider of managed mobility services by making work mobile at scale in an easy, secure, and sustainable way. The company's value proposition is to help enterprises harvest the benefits from mobile technology.

Through its software-led growth strategy, Techstep is serving more than 2,000 customers across industries in both the private and public sector. Going forward, Techstep will continue to transform into a cloud-based software and services company targeting strong growth and geographic expansion in the Nordics and in Europe.

As part of its transformation journey, Techstep invests in Own Software and IP and pursues M&A opportunities to further strengthen and expand its Managed Mobility Services (MMS) offering and market position.

In parallel, Techstep is transforming the business model from a transactional to recurring revenue model by redesigning and streamlining its product offering. The new branding, marketing and solution consisting of SmartControl, SmartWorks and SmartDevice will launch in 2022. The new offering is designed to strengthen the value proposition to customers and drive recurring revenues.

Techstep has stated clear medium and longterm goals. In the medium term, the ambition is to enter into 30 new MMS contracts per year for a gross profit growth of 20-25%, with a gross profit to EBITDA conversion of 20-25%. Annual development capex is expected to be NOK 35- 40 million, of which NOK 15-20 million relates to software acquired through Optidev and Famoc. Moving forward, Techstep envisions strong growth and targets managing 1 million devices by 2025, with a gross profit to EBITDA conversion above 30%.

Growth will come from converting existing customers to MMS, onboarding new customers, M&A to acquire new software, IP and market positions and from geographical expansion. To release growth, Techstep will increase focus on the customer, the products it brings to market, and the technology and software that power its solutions. Techstep is confident that its MMS offering has a strong value proposition and increasing relevance as it helps enterprises reduce costs, increase productivity, transform employee capabilities and enhance their engagement, ultimately driving business value and revenue growth, while delivering on ESG goals.

Consolidated income statement

(Amounts in NOK 1 000)	Note	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020

Revenue	2, 3	289 986	212 432	919 304	740 578	1 138 943
Other revenue		136	300	1 485	3 004	3 923
Total revenues		290 122	212 732	920 790	743 582	1 142 866

Cost of goods sold		(181 458)	(141 286)	(584 214)	(513 800)	(764 579)
Salaries and personnel costs		(62 739)	(41 579)	(208 986)	(136 398)	(208 243)
Other operational costs		(28 615)	(13 398)	(83 659)	(48 343)	(74 405)
Depreciation	5	(27 939)	(20 650)	(79 181)	(46 765)	(87 332)
Amortisation		(13 177)	(6 025)	(36 105)	(17 423)	(27 892)
Other income		11	4 795	11	12 795	17 843
Other expenses	8	(6 824)	(7 324)	(15 335)	(7 997)	(9 028)
Operating profit (loss)		(30 618)	(12 734)	(86 680)	(14 350)	(10 770)

Financial income		1 453	1 791	7 171	8 203	5 760
Financial expense		(3 565)	(3 641)	(13 172)	(12 282)	(11 822)
Profit before taxes		(32 730)	(14 584)	(92 681)	(18 428)	(16 832)
Income taxes		7 673	1 315	19 914	5 755	(6 725)
Net profit (loss) for the period		(25 057)	(13 269)	(72 766)	(12 673)	(23 557)

Net income attributable to
Non-controlling interests		224	45	435	113	1 188
Shareholders of Techstep ASA		(25 281)	(13 315)	(73 201)	(12 786)	(24 746)

Earnings per share in NOK:
Basic		(0.13)	(0.08)	(0.39)	(0.08)	(0.15)
Diluted		(0.13)	(0.08)	(0.38)	(0.08)	(0.13)

Consolidated statement of comprehensive income

(Amounts in NOK 1 000)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020
Net profit (loss) for the period	(25 057)	(13 269)	(72 766)	(12 673)	(23 557)
Items that may be reclassified to profit and loss
Exchange differences on translating foreign operations	(3 265)	3 583	(17 026)	18 502	22 346
Income tax related to these items	(124)	(636)	(807)	(3 354)	(730)
Total comprehensive income	(28 446)	(10 323)	(90 599)	2 474	(1 941)
Total comprehensive income attributable to
Non-controlling interests	224	-	435	-	1,188
Shareholders of Techstep ASA	(28 670)	(10 323)	(91 034)	2 474	(3 130)

Consolidated statement of financial position

(Amounts in NOK 1 000)
Note ASSETS	Q3 2021	FY 2020
Non-current assets
Deferred tax asset	10 054	-
Goodwill	624 625	571 372
Customer relations and technology	182 013	161 892
Total intangible assets	816 692	733 263
Right-of-use assets 5	28 770	40 233
Property, plant and equipment 5	160 350	133 384
Total tangible assets	189 120	173 617
Shares and investments	597	44
Other non-current assets	954	169
Total financial assets	1 550	213
Total non-current assets	1 007 362	907 093
Inventories	19 533	28 158
Accounts receivable	193 222	203 083
Other receivables	37 523	33 594
Total inventories and receivables	250 278	264 836
Cash and cash equivalents 7	59 164	27 203


Total current assets Total assets	309 442 1 316 804	292 039 1 199 131

Note EQUITY AND LIABILITIES	Q3 2021	2020
Share capital 4	209 630	183 295
Other equity	379 122	379 272
Total equity attributable to the owners of Techstep ASA 4	588 752	562 568
Non-controlling interests	1 314	884
Total equity	590 066	563 451
Deferred tax	23 208	27 659
Non-current interest-bearing debt	125 798	108 539
Other non-current debt	41 733	54 488
Total non-current debt	190 738	190 686
Current interest-bearing liabilities	115 532	85 502
Accounts payable	153 131	154 442
Tax payable	-	(750)
Public taxes, provisions	39 886	39 756
Other current liabilities 8	227 449	166 044
Total current debt	535 999	444 994
Total liabilities	726 737	635 680

Consolidated statement of changes in equity

(Amounts in NOK 1 000)	Share	Other paid-in	Other	Reval.		Minority	Total equity
	capital	capital	equity	reserve	SUM	interest	capital
Equity as at 1 January 2020	162 795	504 273	(205 402)	(5 394)	456 273	(304)	455 970

Profit for the period	-	-	(24 746)		(24 746)	1 188	(23 557)
Other comprehensive income	-	-		21 616	21 616	-	21 616
Total comprehensive income for
the period	-	-	(24 746)	21 616	(3 130)	1 188	(1 941)
Transactions with owners in their capacity as owners: Issue of ordinary shares as consideration for a business combination, net of transaction costs
and tax	20 500	87 088			107 588		107 588
Share-based payments	-	-	1 834		1 834	-	1 834
Equity as at 31 December 2020	183 295	591 361	(228 311)	16 222	562 568	884	563 451

Equity as at 1 January 2021	183 295	591 361	(228 311)	16 222	562 568	884	563 451
Profit for the period Other comprehensive income	- -	- -	(73 201)	(17 833)	(73 201) (17 833)	435 -	(72 766) (17 833)
Total comprehensive income for the period	-	-	(73 201)	(17 833)	(91 034)	435	(90 599)
Transactions with owners in their capacity as owners: Issue of ordinary shares as consideration for a business	3 679	12 141	-	-	15 821	-	15 821
combination, net of transaction costs and tax
Contributions of equity net of transaction costs	22 655	75 264	-	-	97 920	-	97 920
Share-based payments	-	-	3 473		3 473	-	3 473
Equity as at 30 Sept 2021	209 630	678 773	(298 040)	(1 611)	588 752	1 314	590 066

Consolidated statement of cash flow

(Amounts in NOK 1 000)	Note	Q3 2021	Q3 2020	YTD2021	YTD2020	FY 2020

Profit before tax		(32 730)	(14 584)	(92 681)	(32 730)	(16 832)
Depreciation equipment and other fixed	5
assets		24 584	17 225	69 111	24 584	72 590
Depreciation right-of-use assets	5	3 355	3 425	10 070	3 355	14 743
Amortisation		13 177	6 025	36 105	13 177	27 892
Share-based payments		1 014	681	3 473	1 014	1 834
Dividend and other reclassified to
investment activities Gain from sale of PPE reclassified to		-	-	-	-	(8 000)
investment activities		-	(4 795)	-	-	(4 795)
Remeasurement of contingent liability		-	-	-	-	4 859
Net exchange differences		834	(139)	1 169	834	923
Taxes paid		(209)	(850)	(1 630)	(209)	(5 514)
Changes in core net operating working
capital		(5 354)	(1 104)	22 163	(5 354)	(30 107)
Changes in other net operating working
capital		(1 999)	(8 146)	67 830	(1 999)	13 528
Net cash flow from operational
activities		2 673	(2 262)	115 610	2 673	71 120
Payment for acquisition of subsidiaries
net of cash acquired	8	(78 978)	-	(78 978)	(78 978)	(61 414)
Payment for equipment and other fixed
assets	5	(34 656)	(45 426)	(132 286)	(34 656)	(108 650)
Payment for intangible assets		(1 097)	(3 271)	(24 969)	(1 097)	(21 386)
Proceeds from sale of property, plant
and equipment		15 925	12 980	24 014	15 925	13 089
Proceeds from sale of business		-	-		-	8 000
Net cash used on investment
activities		(98 806)	(35 717)	(212 219)	(98 806)	(170 361)
Proceeds from issuance of shares		-	-	101 853	-	-
Proceeds from borrowings		11 701	67 000	55 192	67 000	109 764
Repayment of borrowings		(6 932)	(7 529)	(14 126)	(7 655)	(12 686)
Lease repayments		(3 088)	(3 358)	(12 514)	(9 907)	(17 459)
Net cash flow from financing
activities		1 681	56 113	130 405	49 438	79 619

Net change in cash and cash
equivalents1)		(94 452)	18 134	33 796	6 362	(19 622)

Cash and cash equivalents at beginning of period		154 036	36 560	27 203	44 390	44 588
Effects of exchange rate changes on
cash and cash equivalents		(421)	225	(1 835)	4 168	2 236
Cash and cash equivalents at end of
period	7	59 164	54 920	59 164	54 920	27 203

Cash flow has been restated for FY2020. Bank overdraft and cash is no longer presented net in the consolidated statement of cash flow. Payment for intangible assets was overstated in Q2.

The statement of cash flow has been corrected in Q3. The capex presented in key figures represents the correct cash flow in Q3.

Proceeds from sale of property, plant and equipment consists of sale of returned equipment and a group correction related to the hardware as a service portfolio.

The interim financial information has not been subject to audit.

Notes to the consolidated financial statements

Techstep (the Group) consists of Techstep ASA (the Company) and its subsidiaries. Techstep ASA is a limited liability company, incorporated in Norway. The consolidated interim financial statements consist of the Group and the Group's interests in a joint arrangement. As a result of rounding differences, numbers or percentages may not add up to the total.

The figures presented in the quarterly report are in NOK thousand unless otherwise stated.

Note 1. Accounting principles

The interim consolidated financial statements are prepared under International Financial Reporting Standards (IFRS), for the periods presented. The interim financial report is presented in accordance with IAS 34 Interim Financial Reporting. 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 the Group's Annual Financial Statements for 2020. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's Annual Financial Statements for the year ended 31 December 2020. The report has not been audited.

Revenue Recognition

The term Hardware-as-a-Service has replaced the term leasing in the group's reporting. The new term represents the same revenue streams as leasing. Please refer to the Techstep Group annual report 2020, note 1.6 lessor accounting.

Note 2. Business segments

Techstep has four business segments, which are represented by the geographic locations where the Group's entities are incorporated, the Optidev group acquired in 2020, and Famoc purchased in 2021. The entities are controlled and owned by the Techstep Group. Other companies are included in the segment Headquarters and other.

Eliminations comprise intersegment sales. Transactions between operating segments are conducted on normal commercial terms.

1) Norway

Techstep Norway AS: The offerings of the company are mobile hardware, servicing, support and mobility consultancy services. The company is located in Oslo and Sandefjord.
Mytos AS: A Norwegian-based software-as-a-services company with mainly recurring revenue. Mytos offers a full range of telecom expense management (TEM) modules, all with proprietary software and highly user-friendly implementation and operation. The company is located in Oslo.
Techstep Denmark ApS: Established to invoice Danish customers. The company is fully supported from Norway and does not have any employees.
Techstep Finance AS: Provides financing and remarketing services.

2) Sweden:

Techstep Sweden AB: The company offers mobile hardware, industry leading cloud-based (UCaaS) PBX solutions, Mobility consultancy services and Enterprise Mobility Management (EMM) services, including Mobile Security, system design, implementation, mobile device management. The company is located in Karlstad, Gothenburg and Stockholm.
Techstep Finance AB: Provides financing and remarketing services.

3) Optidev:

Optidev AB, Optidev AS and Optidev ApS: The companies develop and provide enterprise mobility software and solutions, predominantly to customers in the transportation, logistics and public safety sectors in Sweden, Norway and Denmark.
eConnectivity CC AB: the company is a specialised developer and provider of enterprise strategic services related to mobility and digitalisation.

4) Famoc

Famoc S.A.: A Polish software-as-a-services company with mainly recurring revenue. Famoc offers a portfolio of solutions for the mobile device lifecycle management market. The company is located in Gdansk.
Famoc Software Ltd: An Ireland based company acting as a reseller of Famoc S.A. software to customers outside Poland.
Santa Maria Private Ventures sp. z.o.o.: A holding company owning shares in Famoc S.A. and Famoc Software sp. z.o.o.

5) Headquarters and other:

• Techstep ASA, Techstep Nordic AS and Techstep Holding AB.

					HQ and	Elim
Q3 2021	Norway	Sweden	Optidev	Famoc	other	inations	Total
Operating revenues
from external
customers	182 440	54 411	47 216	6 055	0	-	290 122
Operating revenues
from other segments	745	2 420	223	-	9 130	(12 518)	-
Operating revenues	183 185	56 832	47 439	6 055	9 130	(12 518)	290 122
Cost of goods sold	(128 197)	(39 049)	(18 532)	(1 095)	-	5 416	(181 458)
Salaries and personnel
costs	(25 703)	(11 756)	(14 596)	(3 354)	(7 728)	400	(62 739)
Other operational
costs	(11 002)	(3 904)	(6 360)	15	(15 679)	8 315	(28 615)
Share of profit (loss) of
joint venture	-	-	-	-	-	-	-
Depreciation	(16 232)	(5 290)	(5 190)	(204)	(1 022)	-	(27 939)
Amortisation	(2 358)	(1 935)	(5 085)	(1 405)	(2 394)	-	(13 177)
Impairment	-	-	-	-	-	-	-
Other income	-	-	-	11	-	-	11
Other expenses	-	-	-	-	(6 824)	-	(6 824)
Operating profit
(loss)	(307)	(5 104)	(2 324)	22	(24 517)	1 613	(30 618)

Employees 30 Sept
2020	113	62	104	51	24		354

					HQ and	Elim
Q3 2020	Norway	Sweden	Optidev	Famoc	other	inations	Total
Operating revenues
from external
customers	150 412	62 074	-	-	246	-	212 732
Operating revenues
from other segments	111	534	-	-	8 274	(8 919)	-
Operating revenues	150 523	62 609	-	-	8 521	(8 919)	212 732
Cost of goods sold	(94 211)	(47 726)	-	-	-	651	(141 286)
Salaries and personnel
costs	(22 920)	(11 285)	-	-	(7 374)	-	(41 579)
Other operational
costs	(11 661)	(4 986)	-	-	(12 022)	15 271	(13 398)
Share of profit (loss) of
joint venture	-	-	-	-	-	-	-
Depreciation	(16 596)	(1 826)	-	-	(2 228)	-	(20 650)
Amortisation	(3 468)	(1 958)	-	-	(599)	-	(6 025)
Impairment	-	-	-	-	-	-	-
Other income	-	4 795	-	-	-	-	4 795
Other expenses	(150)	-	-	-	(7 174)	-	(7 324)
Operating profit
(loss)	1 518	(378)	-	-	(20 876)	7 002	(12 734)

Employees 30 Sept
2021	127	61	-	-	19		207

					HQ and	Elim
YTD 2021	Norway	Sweden	Optidev	Famoc	other	inations	Total
Operating revenues
from external
customers	568 376	203 532	142 242	6 055	585	-	920 790
Operating revenues
from other segments	5 928	5 168	591	-	27 391	(39 078)	-
Operating revenues	574 304	208 701	142 833	6 055	27 976	(39 078)	920 790
Cost of goods sold	(396 438)	(144 012)	(52 629)	(1 095)	( 267)	10 227	(584 214)
Salaries and personnel
costs	(88 429)	(41 541)	(48 497)	(3 354)	(28 822)	1 658	(208 986)
Other operational
costs	(33 930)	(15 943)	(17 248)	15	(42 502)	25 949	(83 659)
Share of profit (loss) of
joint venture	-	-	-	-	-	-	-
Depreciation	(45 758)	(13 820)	(15 693)	( 204)	(3 706)	-	(79 181)
Amortisation	(7 411)	(5 802)	(15 086)	(1 405)	(6 400)	-	(36 105)
Impairment	-	-	-	-	-	-	-
Other income	-	-	-	11	-	-	11
Other expenses	-	-	-	-	(15 335)	-	(15 335)
Operating profit
(loss)	2 337	(12 417)	(6 321)	22	(69 058)	(1 244)	(86 680)

					HQ and	Elim
YTD 2020	Norway	Sweden	Optidev	Famoc	other	inations	Total
Operating revenues
from external
customers	525 414	217 429	-	-	739	-	743 582
Operating revenues
from other segments	3 145	3 270	-	-	24 823	(31 239)	-
Operating revenues	528 559	220 699	-	-	25 562	(31 239)	743 582
Cost of goods sold	(359 297)	(159 668)	-	-	(283)	5 448	(513 800)
Salaries and personnel
costs	(78 827)	(34 465)	-	-	(23 470)	365	(136 398)
Other operational
costs	(40 538)	(15 072)	-	-	(38 318)	45 586	(48 343)
Share of profit (loss) of
joint venture	-	-	-	-	-	-	-
Depreciation	(35 234)	(5 349)	-	-	(6 182)	-	(46 765)
Amortisation	(9 944)	(5 779)	-	-	(1 700)	-	(17 423)
Impairment	-	-	-	-	-	-	-
Other income	8 000	4 795	-	-	-	-	12 795
Other expenses	(105)	-	-	-	(7 892)	-	(7 997)
Operating profit
(loss)	12 613	5 160	-	-	(52 283)	20 161	(14 350)

				HQ and
FY 2020	Norway	Sweden	Optidev	other	Eliminations	Total
Operating revenues from
external customers	760 611	310 577	70 692	986	-	1 142 866
Operating revenues from
other segments	6 397	4 202	112	32 204	(42 916)	-
Operating revenues	767 007	314 779	70 805	33 190	(42 916)	1 142 886
Cost of goods sold	(511 798)	(224 774)	(34 788)	-	6 782	(764 579)
Salaries and personnel costs	(112 736)	(49 604)	(15 716)	(31 652)	1 465	(208 243)
Other operational costs	(53 544)	(21 928)	(4 324)	(25 580)	30 971	(74 405)
Share of profit (loss) of joint
venture	-	-	-	-	-	-
Depreciation	(61 479)	(11 422)	(5 990)	(8 442)	-	(87 332)
Amortisation	(7 816)	(7 770)	(4 161)	(8 145)	-	(27 892)
Impairment	-	-	-	-	-	-
Other income	8 150	4 835	-	4 859	-	17 843
Other expenses	(105)	-	-	(8 923)	-	(9 028)
Operating profit (loss)	27 679	4 116	5 826	(44 694)	(3 698)	(10 770)

Note 3. Disaggregation of revenues

In the following tables, Total revenue is disaggregated by major revenue streams divided into the reportable segments as shown in Note 2:

					HQ and	Elim
Q3 2021	Norway	Sweden	Optidev	Famoc	other	inations	Group
Total revenues	183 185	56 832	47 439	6 055	9 130	(12 518)	290 122

Hardware
Hardware revenues	118 258	33 424	15 103	-	-	(347)	166 438
Hardware-as-a-Service	21 958	5 714	5 776	-	-	-	33 448
Kickback	9 615	2 017	297	-	-	-	11 929
Total	149 832	41 155	21 176	-	-	(347)	211 815

Solutions
Advisory & Services	18 524	15 597	16 778	575	-	(2 818)	52 686
Own Software	9 713	-	9 209	5 479	-	-	20 372
Commission	5 024	89	-	-	-	-	5 113
Total	33 261	15 686	25 987	6 055	-	(2 818)	78 171

Other revenues
Other	92	(9)	276	-	9 130	(9 353)	136
Total	92	(9)	276	-	9 130	(9 353)	136

					HQ and	Elim
Q3 2020	Norway	Sweden	Optidev	Famoc	other	inations	Group
Total revenues	150 523	62 609	-	-	8 521	(8 919)	212 732

Hardware
Hardware revenues	89 520	43 969	-	-	-	(31)	133 457
Hardware-as-a-Service	19 473	6 039	-	-	-	-	25 511
Kickback	7 289	152	-	-	-	-	7 441
Total	116 282	50 159	-	-	-	(31)	166 409

Solutions
Advisory & Services	19 699	11 277	-	-	-	(614)	30 363
Own Software	9 662	-	-	-	-	-	9 662
Commission	4 765	1 234	-	-	-	-	5 999
Total	34 126	12 511	-	-	-	(614)	46 023

Other revenues
Other	115	(62)	-	-	8 521	(8 274)	300
Total	115	(62)	-	-	8 521	(8 274)	300

					HQ and	Elim
YTD 2021	Norway	Sweden	Optidev	Famoc	other	inations	Group
Total revenues	574 304	208 701	142 833	6 055	27 976	(39 078)	920 790

Hardware
Hardware revenues	381 783	126 739	38 592	-	-	(2 460)	544 653
Hardware-as-a-Service	61 844	16 063	19 004	-	-	-	96 911
Kickback	27 004	8 060	1 186	-	-	-	36 249
Total	470 631	150 862	58 782	-	-	(2 460)	677 814

Solutions
Advisory & Services	60 313	55 819	63 564	575	-	(8 177)	175 095
Own Software	29 204	-	19 486	5 479	-	-	51 169
Commission	13 223	2 004	-	-	-	-	15 227
Total	102 741	57 823	83 049	6 055	-	(8 177)	241 491

Other revenues
Other	933	16	1 002	-	27 976	(28 441)	1 485
Total	933	16	1 002	-	27 976	(28 441)	1 485

					HQ and	Elim
YTD 2020	Norway	Sweden	Optidev	Famoc	other	inations	Group
Total revenues	528 559	220 699	-	-	25 562	(31 239)	743 582

Hardware
Hardware revenues	345 794	149 074	-	-	-	(2 774)	492 095
Hardware-as-a-Service	41 301	9 801	-	-	-	-	51 102
Kickback	21 979	2 950	-	-	-	-	24 929
Total	409 074	161 825	-	-	-	(2 774)	568 125

Solutions
Advisory & Services	72 193	51 649	-	-	-	(3 642)	120 200
Own Software	28 903	-	-	-	-	-	28 903
Commission	16 376	6 974	-	-	-	-	23 350
Total	117 472	58 623	-	-	-	(3 642)	172 453

Other revenues
Other	2 013	252			25 562	(24 823)	3 004
Total	2 013	252	-	-	25 562	(24 823)	3 004

					HQ and	Elim
FY 2020	Norway	Sweden	Optidev	Famoc	other	inations	Group
Total revenues	767 007	314 779	70 805	-	33 190	(42 916)	1142 866

Hardware
Hardware revenues	492 315	210 373	24 662	-	-	(3 399)	723 950
Hardware-as-a-Service	79 494	14 929	10 883	-	-	-	105 305
Kickback	31 040	3 138	-	-	-	-	34 179
Total	602 849	228 440	35 544	-	-	(3 399)	863 434

Solutions
Advisory & Services	102 351	75 905	29 867	-	-	(7 199)	200 924
Own Software	38 420	-	4 956	-	-	-	43 376
Commission	21 031	10 291	-	-	-	-	31 322
Total	161 802	86 196	34 823	-	-	(7 199)	275 622

Other revenues
Other	2 356	143	438		33 190	(32 317)	3 811
Total	2 356	143	438	-	33 190	(32 317)	3 811

Note 4. Share capital and shareholders

The company's share capital as at 30 September 2021 was NOK 209,629,830 consisting of 209,629,830 ordinary shares with a par value of NOK 1.00.

Each share gives the right to one vote at the company's annual general meeting. At the time of this report, Techstep holds 1,914 treasury shares.

Techstep's 20 largest shareholders at 30 September 2021 were as follows:

Shareholder	# of shares	Ownership %
DATUM AS1)	36 615 646	17.5%
MIDDELBORG INVEST AS	23 528 007	11.2%
KARBON INVEST AS2)	21 804 349	10.4%
SWEDBANK AB	18 998 133	9.1%
DNB NOR BANK ASA	10 333 304	4.9%
VERDIPAPIRFONDET DNB SMB	8 005 334	3.8%
TIGERSTADEN AS	5 000 000	2.4%
CIPRIANO AS	4 538 498	2.2%
TORSTEIN TVENGE	3 000 000	1.4%
SÅ&HØSTE AS	2 925 936	1.4%
ZONO HOLDING AS3)	2 801 938	1.3%
Saxo Bank A/S	2 777 435	1.3%
BRIDGE CAPITAL AS	2 513 317	1.2%
NORDHOLMEN AS	2 075 608	1.0%
ADRIAN AS	2 038 851	1.0%
UNIFIED AS	1 969 264	0.9%
PIKA HOLDING AS	1 956 512	0.9%
NORDIALOG ENSJØ AS	1 946 253	0.9%
SABINUM AS	1 802 813	0.9%
IDEKAPITAL AS	1 797 532	0.9%
Total number owned by top 20	156 428 730	74.6%
Total number of shares	209 629 830	100.0%

1) Datum AS is controlled by deputy board member Jan Haudemann-Andersen. Board member Harald Arnet is the CEO and board member in Datum AS.

2) Karbon Invest AS is owned by chairman of the board Jens Rugseth

3) Zono Holding AS owned by Middelborg Invest AS 50.44%, Duo Jag AS 0.93%

Idekapital AS, which is controlled by board member Anders Brandt, owns 1,802,8013 shares in Techstep ASA.

Duo Jag AS, which is partly owned by board member Ingrid Leisner, owns 601,562 shares in Techstep ASA.

Share option grant

At the Annual General meeting 22 June 2020, 4,069,883 share options (2.5% of existing shares) were granted under the 2020 programme. The share options will become exercisable (vest) on 22 June 2021 and must be exercised by 22 June 2024. The exercise price is NOK 3.00.

At the Annual General meeting 22 April 2021, 4,593,307 share options (2.5% of existing shares) were granted under the 2021 programme. The share options vest 1/3 each year from 22 April 2022 and are fully vested on 22 April 2024. The options must be exercised by 22 April 2026. The exercise price is NOK 5.80.

The exercise price will be adjusted for any dividends paid or accrued before exercise. Each option holder's aggregated gross profit from exercising the options shall be limited to the amount equal to 3 years' gross base salary at the time of exercising the options. The exercise of share options can be settled in cash, and/or with new or existing treasury shares.

CEO Børge Astrup was awarded 4,500,000 share options on an extraordinary general meeting held 22 September 2021. The options vest in three tranches with 1/3 per tranche, on 1 September 2024, 2025 and 2026. The exercise period is two years from the applicable Vesting Date. The strike price is NOK 4.75, NOK 5.75 and NOK 6.75 for the respective tranches. If the average, weighted Techstep share price for seven calendar days exceeds NOK 30 per share, then the Company may require that all vested options are exercised by Børge Astrup.

The Board intends to propose the adoption of a similar option program in 2022.

As at 30 September 2021, the total number of outstanding share options was 9,305,679 (4.4%) .

Overview of share options held by members of the management group as at 30 September 2021:

Name	Position	Shares	Share options
Børge Astrup	CEO	58 396	4 500 000
Marius Drefvelin	CFO	63 364	1 663 720
Mads Vårdal	CPO	5 019	1 156 726
Erik Haugen	CTO	4 672	1 156 726
Fredrik Logenius	COO	9 469 399	229 660

Note 5. Property, plant and equipment

	Land
	and	Right-of-use		Other fixed
	buildings	assets	Equipment1)	assets	Total

Accumulated cost as at 1 January 2021	-	69 045	281 974	32 334	383 353
Additions	-	7 932	130 591	1 695	140 219
Additions arising from business
combinations	-	-	-	882	882
Disposals	-	(12 559)	(109 432)	(3 788)	(125 779)
Translation differences	-	(1 414)	(8 320)	2 083	(7 651)
Reclassified to asset classified as held for
sale	-	-	-	-	-
Accumulated cost 30 September 2021	-	63 004	294 813	33 207	391 024

Accumulated cost as at 1 January 2020	-	47 552	105 865	19 966	173 383
Additions	-	9 287	105 340	3 836	118 462
Additions arising from business
combinations	-	11 877	78 768	10 725	101 369
Disposals	-	-	(9 677)	(2 619)	(12 296)
Translation differences	-	330	1 679	425	2 434
Reclassified to asset classified as held for
sale	-	-	-	-	-
Accumulated cost 31 December 2020	-	69 045	281 974	32 334	383 353
	-
Accumulated depreciation as at 1 January
2021	-	(28 813)	(153 906)	(27 018)	(209 737)
Additions arising from business
combinations	-	-	-	(778)	(778)
Current year depreciation	-	(9 854)	(67 200)	(1 926)	(78 979)
Disposals	-	2 903	76 470	3 686	83 060
Translation differences	-	1 530	2 837	164	4 531
Reclassified to asset classified as held for
sale	-	-	-	-	-
Accumulated depreciation 30 Sept 2021	-	(34 234)	(141 798)	(25 872)	(201 904)

Accumulated depreciation as at 1 January
2020	-	(10 962)	(33 871)	(16 703)	(61 536)
Additions arising from business
combinations	-	(3 639)	(47 936)	(6 969)	(58 544)
Current year depreciation	-	(14 361)	(71 560)	(1 411)	(87 332)
Disposals	-	-	-	(1 971)	(1 971)
Translation differences	-	149	(538)	35	(353)
Reclassified to asset classified as held for
sale	-	-	-	-	-
Accumulated depreciation 31 Dec. 2020	-	(28 813)	(153 906)	(27 018)	(209 737)

Book value of assets 31 December 2020	-	40 233	128 068	5 316	173 617
Book value of assets 30 September 2021	-	28 770	153 015	7 335	189 120

1) Equipment comprises mobile phones, tablets and other equipment where the Group is the lessor.

Note 6. Impairment

The group's assets have been assessed for impairment, and it is management's judgement that no impairment charge is necessary.

Note 7. Cash and cash equivalents

Current assets	Q3 2021	FY 2020
Cash at bank and in hand, not included in cash pool	59 164	27 203
of which is restricted	4 178	6 356

The Group has a credit facility of NOK 80 million related to the cash pool.

Note 8. Changes in Group structure and business combinations

2021

In May 2021, Techstep merged its two subsidiaries eConnectivity CC AB and Optidev Integration AB into Optidev AB.

Techstep acquired 100 % of the shares in Famoc S.A, Famoc Software Ltd. And Santa Rita Private Venture 1 July 2021. The transaction was settled partly in 3,679,211 consideration shares in Techstep ASA. At the time completion, this corresponded to NOK 15.8 million.

The tables below summarise the consideration transferred, and the amounts recognised for assets acquired and liabilities assumed after the business combinations:

Consideration and amount recognised	Famoc	Total
Cash payments	82 444	82 444
Consideration shares	15 821	15 821
Seller credit	11 976	11 976
Total	110 240	110 240

Net assets
Intangible assets	5 348	5 348
Property plant and equipment	734	734
Other non-current assets	-	-
Inventories	-	-
Trade and other receivables	6 058	6 058
Cash and cash equivalents	8 185	8 185
Deferred tax liabilities	-	-
Other non-current liabilities	(2 244)	(2 244)
Current liabilities	(934)	(934)

Net assets	17 147	17 147
Excess value	93 094	93 094

Purchase price allocation	Famoc	Total
Technology	17 150	17 150
Customer relations	18 735	18 735
Customer contracts	0	0
Deferred tax	(6 844)	(6 844)
Goodwill	64 052	64 052
Total	93 094	93 094

The goodwill of NOK 64.1 million relates to the know how within the mobility space. The acquired company broadens the Group's product offering. There are synergies with existing Group companies by cross selling of products. None of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of the Group's growth strategy.

The companies acquired in business combinations completed through purchase of shares have since the acquisition date contributed NOK 6.1 million to operating revenues and NOK 1.0 million to consolidated net profit. If the acquisition date of all business combinations completed through purchase of shares was as at 1 January 2021, the operating revenues of the Group would have increased by NOK 22.3 million and the effect on the consolidated net profit would have been negative NOK 1.6 million.

2020

In 2020, Techstep invested NOK 73.2 million in cash (net of cash acquired NOK 61.4 million) related to the acquisition of subsidiaries and businesses (Business combinations). Furthermore, the Group issued consideration shares amounting to NOK 107.6 million in 2020. In addition, seller credits amounting to NOK 74.0 million have been recognised. All investments have been accounted for as business combinations.

Techstep acquired 100% of the shares in Optidev AB 1 October 2020. The transaction was settled partly in 19,744,177 consideration shares in Techstep ASA. At the time of completion, this corresponded to NOK 103.7 million.

On 18 December 2020 Techstep acquired 100% of the shares in eConnectivity CC AB. The transaction was settled partly in 755,958 consideration shares in Techstep ASA. At the time of completion, this corresponded to NOK 3.9 million.

Acquisition-related costs amounting to NOK 7.0 million are recognised in the consolidated income statement in the line item Other expenses.

The tables below summarise the consideration transferred, and the amounts recognised for assets acquired and liabilities assumed after the business combinations:

Consideration and amount recognised	Optidev	eConnectivity	Total
Cash payments	69 706	3 893	73 599
Consideration shares	103 657	3 893	107 550
Seller credit	70 092	3 893	73 985
Total	243 455	11 680	255 135

Net assets	Optidev	eConnectivity	Total
Intangible assets	1 829	-	1 829
Property plant and equipment	43 052	325	43 377
Other non-current assets	38	-	38
Inventories	28 753	-	28 753
Trade and other receivables	50 040	3 772	53 812
Cash and cash equivalents	11 110	299	11 409
Deferred tax liabilities	(3 118)	-	(3 118)
Other non-current liabilities	(19 949)	(153)	(20 101)
Current liabilities	(69 487)	(3 664)	(73 151)

Net assets	42 268	580	42 848
Excess value	201 187	11 100	212 287

Purchase price allocation	Optidev	eConnectivity	Total
Technology	17 683	-	17 683
Customer relations	56 379	5 464	61 843
Customer contracts	9 882	-	9 882
Deferred tax	(19 965)	(1 126)	(21 091)
Goodwill	137 208	6 761	143 969
Total	201 187	11 100	212 287

The goodwill of NOK 144.0 million relates to the know-how within the mobility space. The acquired companies broaden the Group's scope on Managed mobility in specific vertical segments. There are synergies with existing Group companies by cross-selling of products. None of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of the Group's growth strategy.

The above companies acquired in business combinations completed through purchase of shares contributed NOK 70.8 million to operating revenues and NOK 4.9 million to consolidated net profit in 2020. If the acquisition date of all business combinations completed through purchase of shares was as at 1 January 2020, the operating revenues of the Group for 2020 would have increased by NOK 184.0 million and the effect on the consolidated net profit would have been positive NOK 21.0 million.

Note 9. Subsequent events

There were no subsequent events after the close of the third quarter.

Alternative performance measures

Techstep Group's financial information is prepared in accordance with International Financial Reporting Standards (IFRS). In addition, it is management's intention to provide alternative performance measures that are regularly reviewed by management to enhance the understanding of Techstep's performance, but not instead of the financial statements prepared in accordance with IFRS. The alternative performance measures presented may be determined or calculated differently by other companies. The principles for measuring the alternative performance measures are in accordance with the principles used both for segment reporting in Note 2 and internal reporting to Group Executive Management (chief operating decision makers) and are consistent with financial information used for assessing performance and allocating resources.

Gross profit

Gross profit is defined as Total revenue less Cost of goods sold.

Gross margin

Gross margin is defined as Total revenue less Cost of goods sold divided by Total revenue.

EBITDA

Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) is a key financial parameter for Techstep. This measure is useful to users of Techstep's financial information in evaluating operating profitability on a more variable cost basis as it excludes depreciation and amortisation expense related primarily to leases, capital expenditures and acquisitions that occurred in the past. The EBITDA margin presented is defined as EBITDA divided by total revenues.

Adjusted EBITDA

Adjusted Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) is based on EBITDA but adjusted for transactions of a non-recurring nature. Such non-recurring transactions include, but are not limited to restructuring costs, gains or losses related to sale of subsidiaries, acquisition-related costs and other nonrecurring income and expenses.

EBITA

Earnings before interest, tax and amortisation (EBITA) is a key financial parameter for Techstep. This measure is useful to users of Techstep's financial information in evaluating operating profitability on a more variable cost basis as it excludes depreciation related primarily to leases and capital expenditures and acquisitions that occurred in the past. The EBITA margin presented is defined as EBITA divided by total revenue.

EBIT

Earnings before interest and tax (EBIT) is useful to users with regard to Techstep's financial information in evaluating operating profitability on the cost basis as well as the historic cost related to past business combinations and capex. The EBIT margin presented is defined as EBIT divided by total revenue.

Total net operating expenses

Total net operating expenses includes the line items Cost of goods sold, Salaries and personnel costs, Other operating costs, Share of profit (loss) in joint venture, Depreciation, Amortisation, Impairment and Other income.

Hardware revenue

Hardware revenue is defined as revenue from sales of tangible goods and related discounts from suppliers and partners.

Hardware share of revenue is the hardware revenue divided by total revenues.

Solutions revenue

Solutions revenue is defined as revenue from sales of licenses, support and other non-tangible items to customers. Also included are discounts from suppliers and partners. Solutions share of revenue is the solutions revenue divided by total revenue.

Net interest-bearing debt (NIBD)

Net interest-bearing debt is non-current interest-bearing debt plus current interest-bearing liabilities less cash and cash equivalents.

Equity ratio

Equity ratio is defined as Total equity divided by total equity and liabilities.

Capital Expenditure (Capex)

Capital expenditure is the same as payment for property, plant and equipment and intangible assets.

ARR

ARR is calculated as the revenue the following 12 months from Own Software as at the balance sheet date. The ARR is calculated by multiplying the number of users of Own Software with the price per product and in turn annualized.

Recurring revenue

The recurring revenue portfolio includes Own Software, Advisory & Services and Hardware-as-a-Service on contracts of 24 months or more excluding mobile expenses management (MEM) white label (with three months notice before year-end). Calculated as the recognised recurring revenue each quarter, annualized.

LTM

Last Twelve Months. Sum of each month for the historical period of the previous 12 months. Used for gross profit and EBITDA adjusted.

APM's in the income statement	Q3 2021	Q3 2020	YTD2021	YTD2020	FY 2020
Total revenue	290 122	212 732	920 790	743 582	1 142 866
Cost of goods sold	(181 458)	(141 286)	(584 214)	(513 800)	(764 579)
Gross profit	108 665	71 447	336 575	229 783	378 287
Gross margin	37%	34%	37%	31%	33%
Salaries and personnel costs	(62 739)	(41 579)	(208 986)	(136 398)	(208 243)
Other operational costs	(28 615)	(13 398)	(83 659)	(48 343)	(74 405)
Share of profit (loss) in joint ventures	-	-	-	-	-
Other income	11	4 795	11	12 795	17 843
Other expenses	(6 824)	(7 324)	(15 335)	(7 997)	(9 028)
EBITDA	10 499	13 940	28 606	49 839	104 455
Depreciation	(27 939)	(20 650)	(79 181)	(46 765)	(87 332)
Impairment	-	-	-	-	-
EBITA	(17 440)	(6 709)	(50 575)	3 074	17 122
Amortisation	(13 177)	(6 025)	(36 105)	(17 423)	(27 892)
EBIT	(30 618)	(12 734)	(86 680)	(14 350)	(10 771)

Adjusted EBITDA	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020
EBITDA	10 499	13 940	28 606	49 839	104 455
Other income	(11)	(4 795)	(11)	(12 795)	(17 843)
Other expense	6 824	7 324	15 335	7 997	9 028
Adjusted EBITDA	17 311	16 470	43 930	45 042	95 640

Total net operating expenses	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020
Cost of goods sold	(181 458)	(141 286)	(584 214)	(513 800)	(764 579)
Salaries and personnel costs	(62 739)	(41 579)	(208 986)	(136 398)	(208 243)
Other operational costs	(28 615)	(13 398)	(83 659)	(48 343)	(74 405)
Share of profit (loss) in joint ventures	-	-	-	-	-
Depreciation	(27 939)	(20 650)	(79 181)	(46 765)	(87 332)
Amortisation	(13 177)	(6 025)	(36 105)	(17 423)	(27 892)
Impairment	-	-	-	-	-
Other expenses	(6 824)	(7 324)	(15 335)	(7 997)	(9 028)
Total net operating expenses	(320 751)	(230 261)	(1 007 480)	(770 726)	(1 171 479)

Revenue splits	Q3 2021	Q3 2020	YTD 2021	YTD 2020	2 020
Revenue	290 122	212 732	920 790	743 582	1 142 866
Hardware revenue	211 952	166 709	679 299	571 129	867 244
Solutions revenue	78 171	46 023	241 491	172 453	275 622
Hardware share of revenue	73%	78%	74%	77%	76%
Solutions share of revenue	27%	22%	26%	23%	24%

Q3 2021 NIBD		FY 2020
59 164 Cash and cash equivalents		27 203
125 798 Non-current interest-bearing borrowings		108 539
115 532 Current interest-bearing borrowings		85 502
(182 166) NIBD		(166 838)

Q3 2021 Equity ratio		2 020
590 066 Total equity		563 451
1316 804 Total equity and liabilities		1199 131
Equity ratio	45%	47%

Q3 2021 ARR		FY 2020
Number of users (1 000)	252	249
Average price Own Software	381	254
95 912 ARR (1 000)		63 329

TECHSTEP ASA

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