Pexip Hldg Asa

Good morning, and welcome to this presentation of PECSIP's first quarter results. My name is Trond Johansson, and I am the CEO. Together with me here at Lysaker, I have Øystein Hamm, our CFO, and our Chief Revenue Officer, Osmund Fodstad. Together, we will take you through the highlights of the first quarter and what we are focusing on going forward. The standard disclaimers apply as usual. First a few words about Pexip for potential new viewers. Pexip was founded in 2011 and currently we operate in 25 countries across the globe. We are a specialist video conferencing and infrastructure company focusing on interoperability and secure and custom meetings. We do software only delivered as a software or as a service. Pexip has unique and established partnerships with the leading companies in our industry. We complement and enhance their solutions and do not generally compete with them. Our customers are mainly large organizations, both in the private and public sector, that have complex needs when it comes to video communication. Our financial performance is strong and has been improving over the last quarters. Now to the highlights of the quarter. Our annual recurring revenues, ARR, grew with 2.4 million US dollars during the quarter, and this leaves us with an ARR base of 115.5 million US dollars leaving Q1. In Q1, we had particularly strong performance in our secure and custom business area, and the development here is supported by increased public awareness around the need for secure and sovereign IT solutions, including video communication. EBITDA came in at 112.5 million Norwegian kroner in the quarter and cash flow ended at 221 million Norwegian kroner for the quarter. Based on a strong cash position and existing commitments we have related to share option programs, we are initiating a share buyback program of up to 2 million shares or up to 100 million Norwegian kroner Whichever happens first, we'd start already in Q2. In other news, we were in April proud to announce, in close cooperation with Google, a new solution that enables Google Meet hardware to connect to Teams meetings. If we look at our Q1 performance in the context of the last 12 months, we see that the positive trend from the last quarters continues. Our total ARR continues to grow and is at an all-time high. Our 12-month rolling EBITDA reached NOK 255 million, which corresponds to a 22% EBITDA margin. And finally, our free cash flow the last 12 months was 315 million Norwegian kroner. We take this performance as evidence that we are working in attractive markets with relevant products and a strong market position. Pexip's mission is to make seamless video communication available to all organizations, regardless of technology platforms and security requirements. We have two main solution areas. Pexip's secure and custom spaces is privately hosted video meetings that give complete privacy and data control with the desired level of customization. Pexip Connected Spaces is about video meeting interoperability by enabling any meeting room to connect to any meeting platform. First, a few words about secure and custom. Here, Pexip provides a video meeting platform that can be used exclusively or alongside, for example, Teams or Zoom in those situations where you need to close the door and have a secure meeting. Our solution includes security features such as tailored user authentication, clear meeting classification labeling, and complete control over what data is stored and where. integrated chat is also an option. The secure meeting can easily be booked through the Outlook calendar, exactly the same way as Teams meetings. I believe that most large organizations will have more than one video meeting solution in the future, and Pexip is very well positioned as the secure meetings alternative. Pexip's unique technology gives us a leading position for those organizations that cannot use a global SaaS solution hosted in the public cloud for all their meetings. The Pexip platform can be deployed in all relevant environments from fully air-gapped to sovereign clouds and even public clouds when relevant. This is not the case for Teams, Zoom, WebEx, and Google, which are mainly operating as global SaaS services hosted in public clouds. This strong and unique market position has resulted in a solid development for our secure and custom business area with a 27% growth in our ARR base since Q1 last year. The current geopolitical situation has reintroduced self-hosted and sovereign IT solutions after a period where a global cloud-only strategy has been followed by many organizations. In Europe and Asia, both the large US technology giants and local players are investing in building alternatives to public clouds to meet sovereignty requirements. Consequently, we now see organizations operating with hybrid or mixed IT environments where some data is in public clouds and other must be in more controlled IT environments. Now moving over to connected spaces. This is where Pexip has the vision of connecting any meeting room to any meeting platform. With the introduction of an interop solution enabling Google Meet Rooms to connect to Teams meetings, we have completed the picture. With Pexip's unique technology, interoperability focus, and industry partnerships, we have a market-leading position in this field. The new solution for Google hardware, Zoom rooms, and Teams rooms are unique to Pexip and are evidence of the leading position we have. A few more words about the new Google solution. We have been in partnership with Google for many years, and Pexip is already the only provider of an interrupt solution enabling SIP endpoints to connect to Google meetings. Google has its own hardware software solutions for meeting rooms that is used by many organizations. These solutions have not been able to connect to Teams meetings before now. The product is requested by large Google customers and has been developed in close cooperation between Pexip and Google. Now, let me leave it to Osmund to take you through a deeper sales update.

Thank you, John, and good morning, everyone. We are proud and reporting another strong quarter for Pexip in secure and custom, with $3 million AR growth to $47.9 million. That is a 27% growth year over year. We are especially strong in defense and see an increased awareness and pipeline for secure solutions, especially in Europe. Now let's move to connected spaces. For connected spaces, we delivered a flattest quarter, ending the quarter at 67.6 million, which represent a 1% growth year over year. In Q1, the main reason for a somewhat higher churn is the loss of two service providers for interoperability amounting to a negative 0.6 million US dollars. This is as expected, and there is limited service provider revenues left in our ARR base. Pexip continues to see strong momentum with both our Microsoft and Zoom partnerships, and soon to come, like John said, Pexip Connect also for Google. We are confident to see good results with our connected products in Q2, the rest of 2025, and beyond. And I'm excited to share a large Fortune 500 customer win that truly validates our competitive advantage and traction in this space. Walmart. Walmart is a fantastic win and another Fortune 500 under the belt for Pexip. Let's have a look at their use case. Walmart has, as any large enterprise organization, a mix of technologies. They have a large estate of Microsoft Teams and Zoom rooms that does not interoperate. Walmart has evaluated standardizing on one technology that has decided to get a higher return on their existing investment and to support all meeting scenarios with their current estate. They simply just want to meet. Pexip can support this decision with a solution for seamless interoperability. And because of that, we see customers like Walmart decide to radically expand their commitment with Pexip. We continue to see an increased interest and pipeline for Pexip Connect. And again, in Q3, we will also have Pexip Connect for Google. We're confident about the future and our position to continue supporting Fortune 500 companies with our technology solutions. And with that, I'll hand it over to Øystein for a financial update.

Thanks a lot, Åsman. As Trond noted, we grew our annual recurring revenues with $2.4 million in Q1, compared to a growth in Q1 of last year of $2.0 million. The year-on-year growth rate is at 10%, which is the same as it was out of Q4. Secure and custom is driving the growth, and it's up to a year-on-year growth of 27%, while, as Osman mentioned, connected spaces is growing at 1%. As much as $1 million of the incremental growth in this quarter came from defense and aerospace, and this vertical has shown significant growth in 2024 and continues now in 2025. Looking closer at the two business areas, connected spaces saw a slight decline of $0.5 million. Compared to last year, new sales is somewhat lower than in 2024, while net retention is stable. This is from a combination of a few material up sales, like Walmart, compensating for higher churn compared to last year. Securing Custom, on the other hand, had another very strong quarter, growing $3 million, and this took the annual growth to 27%. Compared to last year, new sales is up half a million, and net upsell is up one million, while churn continues to be low in this segment. We're happy to see the shift in new sales towards Secure and Custom, as this product area has shown better net retention over time. And as a consequence, we're now shifting the ARR mix towards Secure and Custom. In terms of RP&L, reported revenues follow ARR, and in Q1, they were 348 million NOC, up 19% compared to Q1 of last year. The growth is balanced between the two product areas, software and software as a service. It's worth noting that in stable currency, we estimate that revenue growth would be 13% and not 19%. EBTA is also significantly up, growing 75% compared to Q1 of last year. For Q1, we delivered 32% EBTA margin for the quarter, taking our 12-month rolling margin to 22%. This is in line with our near-term target for 2025. We continue to convert a higher share of our revenue growth to incremental EBITDA. In Q1, we grew revenues with 56 million NOC, and we increased EBITDA with 48 million NOC, meaning that we converted 86% of the increased revenues into increased EBITDA. This is a result from a combination of increased revenues, improved gross margins, a beneficial currency situation, as well as good cost control. In terms of cost, we continue to maintain a fairly stable cost development. Salary expenses are stable year on year, with a reduction in headcount compensating for inflation. Other OPEX is also stable. In Q1, we did see a cost increase on share option-related costs, and this is a result from setting some exercise share options in cash rather than in shares. This is neutral in terms of the value impact on shareholders, but it does have a negative impact on the reported P&L. On the other hand, due to a reduction in the share price during Q1, we also saw a reduced accrual for social security taxes, which has the opposite effect. Looking at cash flow, Q1 had a free cash flow of 221 million NOC, which is 120 million above 2024. Operating cash flow is driving this and was up 115 million NOC compared to last year, significantly above the growth in EBITDA. A big part of this is a seasonal improvement in working capital, as we collected on revenues that was invoiced late in Q4. Investment and leasing cash flows are slightly down compared to last year. We did see a 19 million NOC reduction in our cash position due to exchange rate impact on our holdings in US dollars, which reduces their value in Norwegian kroner. This took our net cash position to 830 million NOC at the end of Q1. To summarize the main points for the quarter, revenues are up 56 million NOC, 19%, and EBITDA, excluding other gains and losses, is up 48 million NOC. Depreciation is down 6 million, resulting in EBIT coming in at 101 million NOC for the quarter. Net financials is down 36 million NOC due to negative currency impact from the stronger NOC compared to the US dollar. And in total, we improved our profit before tax, which came in at 87 million NOC for the quarter. And with that, I hand it back to Trond.