Pexip (PEXIP) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw ARR reach $109.5 million, up 10% year-over-year and $2.4 million quarter-over-quarter, with both connected spaces and secure/custom segments achieving double-digit growth.

• EBITDA for Q3 was NOK 18.1 million (adjusted), impacted by share option costs and revenue mix; adjusted EBITDA margin was 8% for the quarter and 17% for the last twelve months.

• Free cash flow improved to NOK 7.8 million in Q3 and NOK 209 million over the last 12 months, with a cash position of NOK 593 million and no material interest-bearing debt.

• Major customer wins included Fortune 500 companies, a global financial institution, a US federal agency, and a leading European naval defense force.

• Launched Connect for Zoom Rooms, partnered with RingCentral, and recognized as Microsoft ISV Partner of the Year 2024.

Financial highlights

• Q3 2024 revenues were NOK 228–228.5 million, up 6% year-over-year, driven by 22–24% growth in SaaS and a 13% decline in software revenues.

• Gross margin improved to 89% in Q3, with NOK 15 million increase year-over-year; YTD gross margin stable at 90%.

• EBITDA (excluding other gains/losses) was NOK 18.1 million in Q3, with a margin of 6–8% for the quarter and 13–17% for the last twelve months.

• Net profit before tax was NOK 9 million, and profit after tax was NOK 5.8 million, reversing a loss from last year.

• Free cash flow improved by NOK 18 million in Q3 compared to last year, with YTD free cash flow at NOK 175.4 million.

Outlook and guidance

• ARR is expected to end 2024 between $111 million and $114 million, representing 8–11% year-over-year growth.

• EBITDA margin guidance for 2024 is 17–20%, with long-term targets above 10% ARR growth and above 20% EBITDA margin from 2025 onwards.

• No update to 2025 guidance at this time; management will review as pipeline visibility improves.