Techstep ASA — Investor Presentation 2011

Nov 10, 2010

Birdstep Technology ASA Third Quarter Interim Report

Torbjörn Sandberg - CEO & President
André V. Demarest - CFO

birdstep TECHNOLOGY

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Birdstep has passed the turning point

• Birdstep Technology & EasyConnect have passed the turning point
• Q3 revenues of 14,5 million (13,1 million)
• Adjusted EBITDA of −2,1 million (−8,7 million)
• Four new customers signed in Q3
• Rate of new customer acquisitions is unprecedented in the company’s history. We’re on track for a solid year in 2011
• Remaining challenge to scale SafeMove despite cuts in Europe’s public sector.
• Succeeded in carving out loss making Raima
• Good and steady progress for making a exit for our non-core assets.

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Birdstep Technology ASA

• Headquartered in Oslo
• Listed on Oslo Stock Exchange since 2002 (BIRD)
• 82 employees
• whereof 14 in Orbyte
• Offices in Norway, Sweden, Finland, UK and the United States
• Organisation
• Birdstep Technology
• Orbyte

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André V. Demarest

• 12 years of relevant experience from Norway in the enterprise software industry with a strong background in financial and human resource management
• 5 years - Senior VP of Finance and Administration for Fast Search & Transfer ASA (FAST) until August 2006
• subsequently acted as a Financial Advisor to FAST until August 2008
• Previously - Senior Manager for PricewaterhouseCoopers (PwC) in Transaction Services in Oslo
• Certified Public Accountant while employed at PwC in New York
• American Chamber of Commerce in Norway - Treasurer and Chairman
• Graduated cum laude with B.S. degree in Accounting - Fairfield University, USA

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Q3 Financials– Changes in Presentational Format

IFRS Income Statement (P&L):

• Operating Revenues – core businesses
• EasyConnect
• SafeMove
• Operating Expenses
• Operating Income(Loss) from Continuing Operations
• Discontinued Operations
• Raima – sold on August 31, 2010
• Orbyte – highly probable that a sale will take place within 1 year
• Net Income(Loss)

Non-GAAP Measure (EBITDA):

• Operating Income(Loss) from Continuing Operations
• +Share-based compensation
• +Depreciation & amortization
• Adjusted EBITDA

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Q3 Summary – QoQ Financial Highlights

✓ Delivering Top-Line Growth
- 11% for core businesses – NOK 14.5m in total
- 15% for EasyConnect segment – NOK 10.4m in total

✓ Keeping Costs under Control
- Core operating losses reduced to NOK 4.7m
- upside of NOK 3.3m during quarter – no more accrued pension benefits due to Norwegian employees

✓ Moving Toward Profitability
- Adjusted EBITDA improved by NOK 6.6m to (2.1m)
- Operating cash flow improved by NOK 6.2m to (1.8m)

✓ Maintaining Sufficient Cash Balances
- NOK 33.5m in the bank
- Net cash used during quarter reduced to NOK 4.2m

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Q3 Revenue vs. Q2

• Operating revenues: NOK 14.5m in Q3 (vs. NOK 13.1m)
• EasyConnect: 10.4 in Q3 (vs. 9.0) = 15% increase
• SafeMove: 4.1 in Q3 (vs. 4.1) = flat

• Discontinued Operations (Orbyte): 6.1 in Q3 (vs. 7.1) = 14.1% decrease

• EasyConnect – signed new contracts

• Cell C in South Africa
• Elisa in Estonia (expanded in Finland)
• North American service provider

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Q3 Operating Cost Development vs. Q2

Q2 Salaries and Wages:

• 13.3m in total per P&L
• -1.0m – additional payroll tax assessment
• 12.3m – Total quarterly base line

Q3 Salaries and Wages:

• 8.0m – Total per P&L
• +3.3m - reduction of accrued pension benefits
• +1.0m - reduction of accrued vacation
• 12.3m - Total quarterly base line: before considering
• employee turnover
• voluntary pay cut by 25% of staff for 1 year from 15 November 2010

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Q3 Adjusted EBITDA vs. Q2

• Adjusted EBITDA: NOK -2.1m in Q3 (vs. NOK -8.7m)
• Improvement of 6.6 – due to higher revenue + upside on cost accrual reductions
• Operating cash flow: NOK -1.8m in Q3 (vs. NOK -8.0m)
• Improvement of 6.2 – due to higher cash receipts from customers + upside on lower cash expenses
• Adjusted EBITDA: NOK -24.5m in FY 2009
• Operating cash flow: NOK -24.1m in FY 2009

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Q3 Cash Balances vs. Q2

• Ending cash balance: NOK 33.5m in Q3 (vs. NOK 37.7m in Q2)

• Overall, net cash outflow reduced to 4.2 = improvement of 5.6

• Voluntary pay cut by employees

• Expected to save NOK 1.7m in cash costs over 1 year from 15 Nov 2010

• Expected to receive NOK 2.3m in cash in exchange for shares at a 50% discount on 14 Nov 2011

• Discontinued operations – Orbyte

• Highly probable that a sale will take place within 1 year

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QoQ Financial Checklist

• Delivering Top-Line Growth
• Keeping Costs under Control
• Moving Toward Profitability
• Maintaining Sufficient Cash Balances

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EasyConnect customer wins Q3

cell
Signed agreement with CellC in South Africa for its recently launched mobile broadband product.

signed agreement with Virgin Media for its mobile broadband product in the UK.

elisa
Signed agreement with Elisa Estonia for its recently launched mobile broadband product

Signed agreement with North American service provider

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EasyConnect customer wins Q4

• Signed expansion order with a leading European mobile operator
• Signed OEM Agreement with Leading Multinational Telecommunications Vendor
• Signed expansion order with a leading European mobile operator

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EasyConnect clients out there – a growing opportunity

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EasyConnect clients out there – a growing opportunity

• EasyConnect Go & Advanced: 5 million in total
• Easy Connect Inside: 2 million
• Totally more than 7 million clients by the end of 2010
• Growing opportunity for us to together with our customers capitalize on all the clients out there for future growth

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Changed IR Policy

185 529 EasyConnect activations in October

(Oslo, November 10, 2010) Birdstep Technology ASA reported 185 529 EasyConnect activations in October 2010.

185 529 new customers activated their EasyConnect software in October 2010 compared to 189 756 in October 2009, thus representing a 2.2% year on year decline.

The activations apply to EasyConnect Go and EasyConnect Advanced products, Birdstep Technology's solutions for mobile broadband connectivity through USB modems. Birdstep Technology's embedded solution for laptop manufacturers, EasyConnect Inside, is not included in the figures.

Birdstep Technology reports EasyConnect Go and Advanced activations monthly, in order to provide increased transparency to the financial market. The report is disclosed the 10th every month or the first trading day following the 10th. Going forward the activation reports will be disclosed on a quarterly basis in conjunction with the quarterly presentation.

For further information, please contact:

Torbjörn Sandberg
CEO and President of Birdstep Technology ASA
+46 70 5170964
Torbjorn.Sandberg@birdstep.com

About Birdstep:

Birdstep Technology ASA is a leading provider of secure and seamless wireless connectivity software for operators, enterprises and mobile device manufacturers. EasyConnect offers advanced connection and service management solutions for network operators and laptop manufacturers. SafeMove is a mobile VPN solution providing seamless and secure connectivity to business data for corporations and governments.

Birdstep Technology was founded in 1996 and is since 2002 listed on the Oslo Stock Exchange under the ticker "BIRD". The company has 82 employees and is headquartered in Oslo, Norway, with competence centres in Sweden, Finland, UK and the United States. For more information, visit www.birdstep.com.

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Orbyte Q3 highlights

Orbyte

• Revenues of 6,1 million in Q3 (7,1 million)
• Two Orbyte upgrade orders from a major European mobile operator

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Summary

Birdstep Technology has passed the turning point

• Four new Easy Connect customers signed in Q3
• Rate of new customer acquisitions is unprecedented in the company’s history. We’re on track for a solid year in 2011
• Remaining challenge is to scale SafeMove despite cuts in Europe’s public sector.
• Succeeded in carving out loss making Raima
• Good and steady progress for making a exit for our non-core assets.

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Thank you!
Questions?

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Birdstep Market & Products

Stephen Morris

VP Products & Marketing

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Birdstep Technology

Providing innovative, secure and cost cutting mobile broadband access and management solutions for service providers

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Service Provider Solution for Operators - EasyConnect

EasyConnect BEC 2.9

Comes Pre-Installed on USB and/or embedded modems
- Connects to operator networks
- Supports roaming control
- Includes pre-paid and post billing
- Simplifies support
- Automate Hot-Spot logins
- Automatic Hand-over / 3G handoff

Sold to Mobile Operators & Service Providers who:
- Deliver Mobile Broadband Services
- Have Wifi Footprints or partnerships

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Market Overview for EasyConnect

Operators

• 337 Operators Globally deployed, with an estimated 600 by 2013

Device Shipments

• 67 million devices shipped in 2010 growing to 138 Million devices in 2013

Subscribers

• Wireless Modems shipped for business users showing CAGR of 38%

Service Profitability

• Market profitability a key concern with growing costs in relation to returns

GSMA August 2010

Ovum Big-Screen MBB devices Forecast Sept. 2009

ABI Research Cellular Modems and MBB

Ovum – Mobile Broadband profitability
enhanced responsibility

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Service Provider Solution for Operators - EasyConnect

EasyConnects business justification covers 4 key areas of savings for operators

Support	• Common Client and integrated Support tools can save 9,3 Euro per subscriber customer per annum
Data Hand-off	• The Ability to handoff data to preferred networks allows for savings of 9,9 Euro per subscriber customer per annum
User Communication	• The Inbuilt ability to market and communicate with subscribers provides for savings of 1,6 Euro per subscriber customer per annum
User Migration	• EasyConnects migration services brings customers onto a common platform and allows for up to 5,3 Euro per subscriber customer in savings

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Increasing Importance of our Solutions

From a Get Connected Environment

Customers wanting

• Always Best Connections
• Seamless transitioning between networks
• Alerts and network updates
• Pre and Post Paid Billing services
• Integrated Support

Operators Needing

• Analytics and Statistics
• Cost Saving network policies
• Direct Communication
• Comprehensive Support Reduction

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Product enhancements - a continuous process

Next Generation EasyConnect
New Networking Services
Advanced Service Management
Automated Wifi Service deployment

• Analytics and Statistics
• Expansions
• Second Generation Support Services
• Client Communication Modules

LTE Adaptations
3rd Party Service Management
User Retention Modules

1 – 6 months
6 – 12 months
12 – 18 months

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SafeMove

SafeMove

• Available on Notebooks, PDAs, Smartphones
• Manages wireless network connectivity
• Provides advanced security
• Allows seamless sessions
• Reduces costs and increases productivity

Sold to enterprises who:

• Have mobile workforces
• Recognise that successful mobility needs a different approach
• Require secure access to data

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Market Overview for SafeMove

Enterprise Market

• Enterprise Mobility Market growing alongside increasing penetration of Mobile broadband in business

Platforms

• Wireless Modems shipped for business users showing CAGR of 38%

New Technology

• The worldwide Smartphone market grew 50pc year-over-year in the second quarter of 2010, driven by Smartphone's powered by Android, IDC August 2010

Service Adoption

• Increased uptake with Mobile VPN Market growing at 26,1 % Per Annum.

Nielsen Company 2010

Frost & Sullivan World mVPN Product Market 2008
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Service Provider Solution for Enterprises - SafeMove

SafeMove business justification covers 4 key areas of efficiency's for enterprises

• Maximize productivity

• Real-time access to corporate resources independently of time and place results to significant time-savings, increased productivity and improved quality of service

• Reduce data costs

• The ability to seamlessly switch to preferred networks allows for savings of over 200.000 Euro per annum for a customer with 1000 users

• Security

• Standards-compliant security

• Automated secure connectivity to corporate network reduces the probability of human error when dealing with corporate data

• Operational efficiency

• Always online, always available
• Allows up-to 30 per cent increase of efficient working time
• Enables right decisions based on accurate information at the right time

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Increasing Importance of these services

From Corpoate LAN Access on the Move

Enterprises needing

• Roaming Control
• IT Support simplification
• Expanded policy Controls
• Cost efficient network routing
• Reporting & Statistics
• Support of new technologies

Users demanding

• Complete mobility
• Automatic network selection
• Seamless application handling

Operators/Service Providers

• Seeing Opportunities in a seamless "always connected" world!

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SafeMove Product enhancements - a continuous process

New reporting and statistics
Deployment enhancements
Authentication enhancements

Improved diagnostics
Application Session persistence
Access network resilience

Advanced application control
Next generation cryptography

1 – 6 months
6 – 12 months
12 – 18 months

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Our Market Progress

• Platform extensions for WiMax and Android solutions
• Regional breakthrough's showing global suitability of Birdstep solutions
• Product suitability to North American market proven with two key partnership wins in Q3
• Attracting world leading SI's for regional partnerships
• Product performance is shown with a key OEM partnership with a large multi-national

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In Summary

• Great product in a growing market
• Increasing demands and service relevance
• Increasing product value and platform coverage
• A path of innovation
• Successful market leadership

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EasyConnect Sales Insight

Michael Jönsson– VP Global Sales
EasyConnect

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The EasyConnect Market

• We have a great product in a growing market
• We are providing advanced functionality to assist with minimising support - fully in par with market trends:

En av fyra klagar

Nästan en av fyra som använder det har vänt sig till sin leverantör och klagat över ickeexisterande eller usel uppkoppling.

Ett annat vanligt klagomål är sedan att kunderna upplever att de inte får hjälp när de har problem.

"Närmare 20 procent upplever att klagomålet inte blivit löst eller avklarat trots att flertalet kontakter med leverantören gjorts", skriver SKI.

Svenskvalitets Institute Oct 2010

• The market has challenges - and therefore opportunities. These we seek and deliver against.

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What we are seeing in the space

• An ever increasing no. of operators face OPEX challenges and realise they need help to address these
• New global RFPs showing big intent to standardise on solutions against any environment
• Increasing demands on operational excellence – cost, time, innovation & quality
• Increasing demands on market alignment with System Integrators and hardware manufacturers
• Economy of scale driving new business - hurting the smaller competitors

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Example of our recent success – Cell C

• Cell C is 100% owned by 3C Telecommunications (part of Oger Group)
• Third Mobile Operator in SA after MTN and Vodacom
• Initial contact in December 2009
• Sale cycle = 9 months from first contact to contract signature.

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Our way to signature

COLLECTION
STANDARD
DISPERSER
DRAFT
CONNECTING
STANDARD
DRAFT
APPLICATION

Our way to signature

Product Sold:

BEC 2.9 GO

Initial Deal Value:

1 MNOK

• Complex USSD structure
• Multiple vendor support
• Backend solution for roaming tariffs
• Initially no WiFi requirements, but future capability

Special requirements

Birdstep

• Standard Product
• Quick turn-over project (compressed time-plan, demo)
• Constant reminder (webex, documents, meeting in Barcelona, "home-meeting").
• "Honest" vendor
• Assistance with management presentation
• Multiple interfaces within Birdstep

• Agressive yet creative Pricing

• Assistance with "standard contract"

• On-site project kick-off based on a LOI and not signed contract
• On-site contract negotiations
• Management discussions (CEO -> CEO)

Contract

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Delivering a great experience with Cell C

• Advanced Pre-Paid Service
• Common Support Capability
• Intelligent Roaming messaging
• Supporting need for differentiation as well as end-customer communication
• Upsell Opportunities:
• Extenstion to additional Wifi Service (Phase 2)
• Additional Brand - RedBull (under Negotiation)

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Delivering on our Commitments – part 1 (3)

In order to achieve our projected growth

Dominate Europe

• Build strong & coherent sales team in Europe
• Coninue to build pipeline
• Proven product & strong experience w/ commercial guile to close new deals
• Provide superior product, support & road-map to grow existing accounts
• Close 2 new deals per Quarter in 2010
• Maintain # 1 position in Europe

Progress so Far

• Strong & experienced team in place in Europe.
• > 150% growth in pipeline. Now exceeding 25 MNOK per quarter
• Great deals with key customers in Europe (TDC, 3Grp, KPN, Elisa Finland)
• Six Deals Closed in 2010 so far:
• Q1: Meteor/Eircom + KPN Group
• Q2: US Serv. Prov. + Virgin Mobile UK
• Q3: CellC (SA) + Elisa Estonia
• LoE via SI for Latin American Grp
• No 1 Vendor in Europe

→ We are doing it!

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Delivering on our Commitments - part 2 (3)

In order to achieve our projected growth

Increase Market Reach

Progress so Far

- Expand regional sales teams - Partnering with leading global & regional SI's - Partnering with leading HW vendors - Use position and foothold in US to enter US Operator Market - Use new products to enter competitors fields

- New Recruits in Latin America - Juan M. Alvarez now Sales Director Latin America - Partnership with world-leading SI for LA: - Latin America => Latin America Group Deal with first deployment for Mexico - OEM Partnership w. Leading HW vendor: - OEM & Sales collaboration Agreement signed Oct/Nov for BEC 2.9 & 3.0 - Successfully entered US carrier market: - Contract with US Service Provider - Additional Expansion orders with US Ser. Prov. - Additional field trials underway in US - Competitor Fields: - US Serv. Prov. - DigiNext - Red Bull (CellC) - Webtogo - US Market - SmithMicro

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Delivering on our Commitments – part 3 (3)

In order to achieve our projected growth

Capatilize on base

• Close partnership with customers to increase run-rate
• Use strong Road-map for continued upsale
• Use new products to convert entire MBB bases at customer to Birdstep
• Create significant re-current revenue for Birdstep
• Truly become Market Leader

Progress so Far

• Examples of such close partnership:
• 2.8 MNOK expansion deal with Nordic Mob. Operator
• 3 MNOK license deal with leading Mobile European Operator

• 2 MNOK expansion deal w. Elisa

• Strong Roadmap for Upsale:

• EasyFlash (e.g. Elisa, 3Rol)

• EasyHelp (Latin American Group)

• New Products to convert installed base:

• EasyFlash (see above)

• UMT: Negotiations w. Operator in Europe

• Recurrent revenue now generated through new pricing & licensing models

→ Well on our Way

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What's Next - Game Plan

Europe:

Domination

• Birdstep to become / remain the dominant vendor & obvious choice
• Keep, Grow & Expand Installed Base
• Select, Dominate & Win new Accounts

Middle East & Africa:

Beach-Heads & Cherry Picking

• Birdstep to become established player in preferred regions / markets through careful selection of Markets & Customers

USA:

Major Carrier Vendor

• Birdstep to continue & accelerate transition from OEM player to Carrier Vendor. Become chosen vendor to at least one of 4 major Operators.

Latin America:

Strong Presence

• Birdstep to capitalize on LA Engagement & SI relation to establish strong presence in major markets in Latin America.

Asia Pacific:

Investigate & Position

• Birdstep needs to investigate and position for market presence in 2012

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Current EasyConnect Pipeline

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In Summary

EasyConnect Sales Insight

• Delivered 2 new deals per Quarter
• Increasing Revenue Quarter by Quarter
• Expanding upon existing account base
• Following strategy with partners for:
• Market Reach (System Integrator)
• One-stop shopping (HW – OEM)
• Overall Solution (complementary offering)
• Built Sales Team and Pipeline for a great 2011
• Having Fun

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Operational Excellence

Anders Storm

VP Operations & Engineering

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Anders Storm

• Msc, Computer Science and Engineering
• ABB: Executive Management Trainee
• 13 years within the data and telecommunication eco-system
• 12 years in management, 7 years as senior line-manager
• 10 year within product development and operations
• 6 years within Sony Ericsson R&D, 100 M Euro, Presidents Award
• Start-ups and large corporations

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The foundation for success

Engineering and operations has fundamental impact on Birdstep success

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A need to embrace the eco-system

True success comes from embracing all players

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Key Requirements on Birdstep as a Supplier

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Time To Market
- Technology
- Services

High Quality
- Time To Market (TTM) is nothing without Quality

Innovative solutions
- We are expected to drive the innovation

Low cost
- Cost optimized delivery

Seamless end-user Experience
- The operators/services providers brand

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Our principles of excellence

• Over deliver on customer expectations
• Be Responsive
• Learning organization
• Embrace innovation
• Quality, Quality, Quality

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Our planned market growth requires

• Cost efficient resource expansion and increased efficiency
• Tight quality control
• Reduce TTM
• Global support capabilities through world class support organization
• Technology partnerships
• Improved innovation process

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Main objectives

2010			2011			2012
Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
Cont.	Embrace innovation
FedEx days
“Google 20%”
		Vendor Relationships
Closer partnerships with the key hardware vendors and chip-set manufactures
Timeboxed	TTM KPI
Reduce TTM by 50% (efficient tools, improved ways of working)						Q4-2012
	World class support organization
Global support with EU and US hosting
	Quality Control
Implementation of full ALM tool
with test Automation and Quality Metrics
	Centres of Excellence
Complement internal effiency with with near-shored centres of excellence

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In Summary

Operations & Engineering

• Embrace the Eco-system
• Understand key customer requirements and over deliver on customer expectations
• Be a trustworthy foundation for the organization

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In Summary

Torbjörn Sandberg – CEO & President

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Birdstep Technology

In Summary

• Underlying EasyConnect Growth (15,0 %) showing positive trend
• Key financial benchmarks being hit
• A growing market with increasing opportunities
• Fantastic customer traction and an increased pipeline
• Clear Engineering and Operation direction and control
• Focus is delivering results

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Questions