Pexip Hldg Asa

Good morning, and welcome to this presentation of PECSIP's first quarter results. My name is Trond Johansson, and I'm the CEO. Together with me here at Lysakir, I have Øystein Hamm, our CFO, and Osmund Fodsla, our Chief Revenue Officer. Together, we will take you through the highlights of the quarter and our current focus. The standard disclaimers apply as usual. First, a brief overview of PECSIP for those new to the company. TechSIP was founded in 2012 and currently we operate in 25 markets 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 software or software delivered as a service. TechSIP 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 public and private sectors, that have complex needs when it comes to video collaboration. The financial performance has been strong and has also been continuously improving over the last quarters. Now to the highlights of the past quarter. Our annual recurring revenues grew with $4 million during the quarter, and this gives us an ARR base of $135 million leading Q1. In Q1, we had continued strong growth in our secure and custom business area with new ARR of $2.9 million. $1.3 million of this growth came from defense, which is a core segment to Pexit. In connected spaces, we had solid progress with our solutions for native rooms. This means Teams rooms, Zoom rooms, and Google rooms. And this was the main growth driver in this business area. EBITDA came in at $18.7 million, which corresponds to a 46% margin in the quarter. Free cash flow was just below $20 million in Q1. If we look at our Q1 performance in the context of the last 12 months, we see that the positive trend from the previous quarter continues. Our total ARR continues to grow, and year-over-year the growth rate was 17%. Our 12-month rolling EBITDA reached $39 million, which is a 68% improvement since Q1 last year, and this corresponds to a 30% EBITDA margin. Finally, the free cash flow continues to grow, this time with 14%, and ended at $32 million for the last 12 months. We take this performance as evidence that we are operating in attractive markets with relevant products and a strong market position. As you know, Pexip has two main solution areas. Pexip Secure and Custom is about privately hosted video meetings that give complete privacy and data control with a desired level of customization. Pexip Connected Spaces is about video meeting interoperability by enabling any meeting room to connect to any meeting platform. Now a few words about each business area. In Secure and Custom, we are targeting a segment of the video conferencing market that is largely unserved by the major players like Teams, Zoom, Google, and Webex. The market is growing fast, and currently we conservatively estimate an addressable annual market for Pexip of around $1 billion. We are catering to those organizations that have limitations with respect to the use of global cloud platforms like Azure, GCP, or AWS. And consequently, they have a need for their video conferencing software to run in a controlled IT environment, either self-hosted or in a private or sovereign cloud. The need for sovereign clouds in Europe has been on the agenda for some time already, as a consequence of the current geopolitical situation. But only recently have we seen that regulations and mandates are coming into place to govern the establishment and use of such infrastructure. The market is developing quickly, and significant investments are being put into building IT infrastructure and solutions in many countries. TechSIP is highly relevant in this context, and we are actively involved in several ongoing initiatives across several countries to make video meetings available in the new sovereign clouds. Let me briefly explain why we are so relevant in this area. As a technology built as a platform with on-premises deployment in mind, TechShip has some clear competitive advantages vis-à-vis other players in the market for European sovereign solutions. First, TechShip can be deployed in any IT infrastructure from public clouds to on-premises. Second, we are a European company operating within the European economic area. Third, TechShip integrates really well with other collaboration tools such as chat, file sharing, etc. And this is very important for service providers that want to provide a complete suite of collaboration solutions to customers. Finally, Pexip is a modern experience that meets the needs of an increasingly demanding group of end users that use video more and more. Together, these advantages put Pexip in a good position as the market for sovereign solutions continues to develop. Now to connected spaces, a part of the video device software market that we estimate to around $1.4 billion annually. Here we have basically completed the any room to any meeting platform vision. In close partnerships with Google, Zoom, and of course Microsoft, we provide the most comprehensive suite of interoperability solutions available in the market. This quarter also brought some good news for MTR users. because finally we have confirmation that TechSIP Connect for MTRs on Android is on Microsoft's public roadmap and will be rolled out in June. We know that many have been waiting for this, as quite a few organizations have a combination of MTRs on Windows and on Android. AI is high up on TechSIP's agenda and is being used both in the solutions we sell and in the organization. In the products, AI powered captions and translated captions are already available. Now we are working to enable transcript export for storage or integration with other private AI systems. The common thread is of course that the AI solution needs to be deployed in a controlled IT environment with full data control. Within the TechShip organization, we have enabled software developers with AI agents to support the development work. The experiences are really good, and we have seen solid results in both simple and more complex development tasks. Also outside of engineering, we have realized several AI use cases in sales enablement and back office automation. Now, let me hand this over to Osmund for a sales update.

Thank you, Tom, and good morning, everyone. In Q1, Pexip reinforced yet again our momentum across both the current custom and connected spaces. Let's look at the details. It's great to present another strong growth quarter for Pexip, adding 1.1 million US dollars AR and 12% year-over-year increase for connected spaces. And 2.9 million and a solid 24% increase for securing custom is a strong statement to our technology and to our team. Pexip continues to win large Fortune 500 customers, as well as government institutions, healthcare, justice, minister of defense, and important military organizations. Let's look at why Pexip are successful in these spaces. We see commonalities for why we win. These are number one, the acceleration of sovereign IT solutions and the need for data control. Governments across Europe and North America select TechSIP as the standard for secure internal and cross-agency collaboration. Let me share with you a few large win examples. A European state IT provider doubled its deployment with TechSoup. They were a large connected spaces customer who now has added secure meetings to power ministries in a sovereign, self-hosted environment. And one of the largest justice systems in Europe has expanded their commitment to TechSoup and now runs more than 3,000 court cases per day in a customized, sovereign, and controlled environment. The second trend is growth in healthcare. TechSIP continues to demonstrate success in the healthcare market. These customers require both customized and integrated solutions, as of course, full control of their data. The wins on the side from Canada and the US are great examples of healthcare organizations that have adopted TechSIP in a sovereign, customized environment. Thirdly, TechShip's unique position for classified and mission-critical collaboration. TechShip had multiple wins across classified networks in Europe, as well as large deployments at the highest impact level in the U.S. for government, underscoring our unique suitability for classified environments. Let me highlight a couple of our wins. A European Ministry of Defense now powers their classified communication with PECSIP across intelligence agencies, Ministry of Defense, and national security. The U.S. Department of War is now enabled with PECSIP secure meetings. And remember, PECSIP is the only certified Microsoft vendor at aisle 4, 5, 6, and 7 that can meet the strict security regulations of the U.S. government. Lastly, interoperability remains a strategic differentiator for Pexip. As enterprises and government institutions are using multiple technology platforms, Pexip's ability to deliver a seamless and consistent user experience across platforms is of the highest importance for these customers. Recent wins prove of a relevance a long-term competitive strength. One of the world's largest companies and a retailer double its commitment to Pexip as they run with both Microsoft and Zoom and need the Pexip Connect portfolio to make this work seamless across all their divisions. In addition, one of the world's largest consumer brands are now using Pexip Connect standard as they are consolidating technology platforms. They use the Pexip solution for their meeting rooms to ensure that all their hundreds of thousands of employees can simply meet every day, not thinking about technology platforms. These four commonalities are core to what makes Pexip unique in the market. They explain why we continue to win major customers in both secure and custom and in connected space. And at the end, we continue to see a solid pipeline across both business areas and expect sustained, strong traction in 2026 and beyond. And with that, I will hand it to Øystein for all the financial details.

Thank you. Starting with annual recurring revenue, we increased our growth to 17% overall. This is a combination of continued strong growth in secure and custom of 24% and connected spaces growing at 12% per year. We have a diversified base of customers, both across geographies and industries, with the majority of customers in North America and in Europe. Breaking down the growth into relevant components. We saw connected spaces increase with $1.1 million in the quarter, resulting from continued strong new sales. We also saw an improvement in the net retention rate compared to previous quarters. Secure and Custom continues to deliver strong growth, growing $2.9 million from a combination of new sales and a positive net retention. We continue to see customers growing from their initial purchase as their usage of Pexip expands. Churn is back to a more normal level, following a slightly higher churn in Q4. And combined across both business areas, we reach a net retention of above 100%, which is a milestone we have not reached since 2021. This is a result of good performance in both areas, as well as securing custom becoming a bigger share of the total mix. In terms of the P&L, recognized revenue came in significantly higher than last year. This is mostly due to the strong ARR growth in Q4, now becoming recognized revenue, and in particular driving our software revenues, which has earlier revenue recognition. The increased revenues drive the increase in EBTA. On a 12-month basis, revenue growth is in line with ARR growth, and is at 18% year-on-year, while EBTA margin is up to 30%, up from 21% a year ago. Our operating expenses were more or less flat compared to Q1 of last year. On cash-based salary, we have an increase of $1.5 million, driven by ordinary salary increases, as well as the not-USD rate appreciating, which is impacting our costs in Norway. Share-based expenses are down almost $2.5 million compared to Q1 of last year. which is due to a reduction in the share price during Q1 of this year. Other OPEX came in at $4.4 million, up $1 million, of which half a million was tied to a semi-annual company event that we did not have in 2025. Given disabled OPEX, 93% of the incremental revenue increase ended up as incremental EBITDA in the quarter, increasing quarterly EBITDA with $8.6 million as we continue to deliver strong operational leverage. Q1 is usually a strong cash flow quarter for Pexip, and this is also the case this year. In Q1, we had $20 million in free cash flow, up 7% year-on-year. This quarter, the working capital improvement was less than last year, which should be a positive for Q2. We left Q1 with a cash position of $81 million. However, it's worth noting that this position is significantly reduced now, as we have distributed $45 million as a dividend in April. Looking at the rest of the P&L, depreciation is in line with last year and similar with that financials. We also had a positive contribution from other gains losses of half a million dollars in the quarter, taking profit before tax to $16 million. With that, I give it back to Tom.