Pexip (PEXIP) Trading update summary

ARR and retention

• Subscription ARR reached $105.6M in Q1 2022, up 21% YoY from $87.2M; quarterly ARR fell $0.8M.

• A strategic partner pricing change reduced ARR by $2.0M; underlying ARR was $1.2M higher, and the change is expected to add more than $4M during the rest of 2022.

• Annual churn improved to 9.2%; LTM net retention was 95%. New customers added $23M ARR over the last 12 months, net upsell added $3.4M, and churn reduced ARR by $8M.

Business mix and sales

• Self-hosted Software ARR was $59.4M, up 15% YoY; as-a-Service ARR was $46.2M, up 30%.

• Video infrastructure ARR was $62M, up 21% YoY; Critical Video Meetings ARR was $11M, up 106%; Video Enablement ARR was $21M, up 38%.

• Video Enablement and Critical Video Meetings added $2.3M ARR in Q1; new-customer sales remained the main growth driver.

• Lower upsell reflected the partner pricing change and excess capacity amid lower-than-planned video-room use; sales momentum was also affected by the refocus on three core areas and hardware endpoint delivery delays.

Growth plan and profitability

• Growth was below the pace needed for the $300M ARR target by end-2024, with less visibility on timing as larger customers in targeted areas have longer purchasing decisions.

• Quarterly ARR growth was expected to resume in Q2 2022 and beyond.

• EBITDA profitability was targeted for Q4 2022 and full-year 2023; lower investment was anticipated.

• An updated growth plan and targets were expected later in 2022, with a focus on accelerating the return to profitability.

• Target markets were estimated at $5bn in 2024, supporting significant ARR growth over the next three years and beyond.