Pexip Hldg Asa

Good morning, and welcome to this presentation of Pexip's second quarter results. My name is Trond Johansson, and I'm the CEO. Together with me here today at Lysaker, I have our CFO, Øystein Hem, and our Chief Revenue Officer, Osmund Fodstad. Together, we will take you through the highlights of the past quarter and our focus going forward. The standard disclaimers apply as usual. First, for new viewers, a brief overview of Pexip. Pexip was founded in 2012 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 software 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 directly compete with them. Our customers are mainly large organizations in both the public and private sectors that have very complex needs when it comes to video collaboration. The financial performance is strong and has been improving over the last quarters. Now to the highlights of the past quarter. Our annual recurring revenues, ARR base, grew with 3.5 million US dollars during the quarter, and this leaves us with an ARR base of $119 million leaving Q2. In the quarter, 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. We also see that our new interop solution for Zoom rooms continues to do very well in the market. In Q2, we also renewed a partnership agreement with an important partner in connected spaces. And this underlines the importance of interoperability for this key player in the industry. EBITDA came in at 57 million Norwegian kroner and cash flow ended at 32 million for the quarter. If we look at our Q2 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. Year over year, the growth rate is 11%. Our 12-month rolling EBITDA reached 276 million Norwegian kroner, which corresponds to a 23% EBITDA margin. And finally, our free cash flow the last 12 months was 281 million Norwegian kroner. We take this performance as evidence that we are operating in attractive markets with relevant products and a strong market position. Now a bit more detail on the two business areas. Pexip's mission is to make seamless video communication available to all organizations regardless of technology platforms and security requirements. Our two business areas, the first one being Pexip's secure and custom spaces, is about privately hosted video meetings that give complete privacy and data control with the desired level of customization. The second business area, 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 spaces. Here, Pexip provides a video meeting platform that can be used exclusively or alongside, for example, Teams or Zoom in those situations when 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 or started through a chat session, exactly the same way as for 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. Those organizations that have requirements that fit well with Pexip's value proposition span over a wide range of industries and sectors. Most notably, we see that organizations within defense and national security, as well as government bodies in all shapes and forms, together with healthcare and other regulated industries, constitute the sectors where we see the highest demand. As a result of this, we have increased our focus on meeting the needs of customers in these sectors to ensure that we continue to take market share in what we define as our core customer groups for secure meetings. Osman will show a couple of customer use cases related to defense and healthcare a bit later, but let me share some recent wins we had in Q2 with government organizations that are outside of defense and healthcare. These include secure meetings plus chat integration for a European civil agency, a secure meeting solution for a public prosecutor's office, secure meetings with AI translation for a foreign ministry, secure meetings to a U.S. state corrections agency, and finally, a secure meetings and chat solution for another civilian agency in Europe. In total, these contracts with high-profile government agencies sum up to 1.3 million U.S. dollars in new ARR in the quarter. We see significant momentum in this area, and we are often asked about the key drivers behind the decisions to purchase PECSIP solutions for this customer group. There is no single answer that fits all customers, but in aggregate, we see the following key reasons for selecting PECSIP. A requirement for data sovereignty, control, and compliance. A need for customization capabilities as well as deployment and integration flexibility. a desire for vendor independence and reduced vendor lock-in, and a need for a modern user interface also in secure environments. To give you some more flavor to what we actually deliver to these customers, let me show you a short video describing Pexip Secure Meetings, including an example of an integration with chat. And this solution is a popular replacement of legacy solutions such as Skype for Business or Cisco Meeting Server.

Starting a Pexip secure meeting is easy. You can do it in several ways. You can schedule a meeting using the email plugin, set the optional confidentiality level, and invite your guests. You can also start a secure meeting directly from a message when Pexip is integrated with a supported secure chat platform. Access and authorization levels carry over from the platform you use. Meetings can be direct one-to-one or multi-party. When you're done meeting, The in-meeting chat conversation is stored individually and accessible for the participants. PECSIP integrates securely and seamlessly with a number of self-hosted chat platforms and supports a number of critical shared features. Verification, such as access and permission levels, is seamless and secure and supports, for instance, granular access control. Secured with leading encryption and certifications, Pexip seamlessly integrates with existing infrastructure. You control where to deploy. With Pexip, it's your meeting, your data, your rules.

Now, moving over to connected spaces. This is where Pexip has the vision of connecting any meeting room to any meeting platform. With Pexip's unique technology, interoperability focus, and industry partnerships, we have a market-leading position in this field. The new solutions for Google hardware, Zoom rooms, and Teams rooms are unique to Pexip and are evidence of the leading position we have. Interoperability continues to be highly relevant with several platforms and hardware solutions widely used. As earlier communicated, we are working with both Google and Microsoft to deliver interop for Google Meet hardware and MTRs on Android. The progress is good on both these joint development projects. Also on positive partnership news, we have in the second quarter renewed a long-term commercial agreement with a key partner, adding an additional three years to the existing agreement. This renewal signals the continued importance of interoperability for one of the key players in the industry. The new business model has a higher variable unit price and a lower fixed fee, which is estimated to give Pexip higher revenues and margins over the three years. Short term, it will, however, have a temporary one-off ARR effect of minus $1 million in Q3 this year. Now, let me leave it to Osmund for a sales update.