Pexip Hldg Asa

Good morning and welcome to this presentation of PEGSIP second quarter results. My name is Trond Johannessen and I'm the CEO. Together with me here at Lysaker, I have Oystein Hem, our CFO, and Åsmund Fodstad, our Chief Revenue Officer. Together we will take you through the highlights of the quarter. The standard disclaimers apply as usual. First, a brief overview of PEGSIP for those new to the company. Pexip was founded in 2012 and currently we operate in 25 countries across the globe. We are a secure video meeting and video infrastructure company delivering software and 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, both in the private and public sector, that have specific needs when it comes to interoperability, security and data control. The financial performance has been strong and has been continuously improving over the last quarters. Now to the highlights of the past quarter. Our annual recurring revenues continues to grow and this quarter we grew with 5.2 million dollars and this gives us an ARR base leaving Q2 of 140 million dollars. In Q2 we had continued strong growth in our secure and custom business area with new ARR of 4.9 million dollars coming from this area. A large part of this came from defense and national security, which is a core segment to PEGSIP, and I'll come back to that. Connected spaces also grew slightly in the quarter, which is good to see. EBITDA came in at $7.2 million, and cash flow ended at $8.1 million. If we look at our second quarter performance in the context of the last 12 months, we see that the positive trend from the previous quarters continues. Our total ARR continues to grow, and year over year, the growth rate was 18%. Our 12-month rolling EBITDA reached 40 million US dollars, which is a 60% improvement since second quarter last year. This corresponds to a 31% EBITDA margin. And finally, also our free cash flow continues to grow and ended at $38 million for the last 12 months. We do take this performance as evidence that we are operating in attractive markets with relevant products and a strong market position. As most of you know, Pexip has two main solution areas. Pexip Secure and Custom, which is about privately hosted video meetings that give complete privacy and data control with the desired level of customization. And Pexip Connected Spaces, which 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 & 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 estimate an addressable annual market for Pexip of above $1 billion. We are catering to those organizations that have limitations with respect to use of global cloud platforms such as Azure, GCP or AWS and consequently have a need for their video conferencing software to run in controlled IT environments, either self-hosted or in private or sovereign clouds. Pexip's technology is very well suited for these use cases due to its deployment flexibility, open interfaces and modern user experience. As a result of this clear market focus and recognized competitive advantages, 57% of Pexip's recurring revenues are now linked to customers deploying Pexip in self-hosted environments or dedicated sovereign clouds. This is a combination of our secure and custom customers and a number of self-hosted software customers using Pexip mainly for interoperability. One such example is organizations using PECSIP in combination with teams in closed US government Microsoft Clouds. Going forward, we do expect the 57% to increase as more on-premises and sovereign infrastructure is built for organizations with specific requirements for security and data control. Defense is a key segment for PECSIP, and currently around 15% of PECSIP's total ARR is linked to defense and national security. PECSIP is mainly used for secure video meetings or interoperability in dedicated IT environments. But recently, we also see positive developments in tactical use cases where PECSIP is used out in the field. Increasingly, video is used for better situational awareness through transfer of live video streams from drones into mobile command centers, armored vehicles, tanks, and even all the way back to headquarters. Pexip's technology works really well in these scenarios, and we're constantly expanding our partnerships and position in this ecosystem. Let me hand it over to my colleague Nick Ross, Director of Defence and National Security and former reconnaissance operator in the British Army to explain a bit more.

I was a soldier with UK forces for just over 10 years. As a reconnaissance operator, you are the eyes and ears of the force. With your patrol radio in the reconnaissance role, you had to interpret what you were seeing on the ground. You'd have to describe it. Over the radio and headquarters would be completely reliant on what it is that you thought you were seeing. But if you had video, it would allow you to be much more of a collaborative element. What's really important is to have a video platform that works across all environments. Video allows commanders to cut through in a way which is really unique. Ultimately, it's two or more humans collaborating on taking the best possible decision and using the least possible time to do that.

Thank you, Nick. Now moving over to another key focus area for PECSIP, namely AI. Organizations with strict requirements for data control would also like to have access to AI functionality, but deployed in their approved environment. Video meetings constitute an important input source for any AI productivity tool. And PECSIP as a self-hosted meeting platform can enable advanced private AI capabilities. Pexip can privately and securely exchange relevant meeting platform information to a completely private LLM on the customer's network. For example, Pexip meetings can connect to and use Google Gemini self-hosted and keep all data fully within the organization's own control. Another key area of AI application in Pexip is building customer specific integrations and video applications. Pexip is uniquely flexible to integrate and adapt to fit with specific use cases. AI significantly lowers the cost and complexity to write such custom integrations, which is a real amplifier on our API based architecture. Now to connected spaces, a part of the video device software market that we estimate to around 1.4 billion dollars annually. Here, we deliver solutions to connect any meeting room to any meeting platform. In close partnerships with Google, Zoom and Microsoft, we have a unique market position and provide the most comprehensive suite of interoperability solutions in the market. The latest addition to the product portfolio in connected spaces is Pexip Connect for MTRs on Android. And this is now fully publicly available for purchase. We know many have been waiting for this, and we are in active dialogues with customers to set up pilots for testing. The first orders are also in the books. Now over to Åsmund for a more detailed sales update.