Annual Report
2021
Table of
Contents
About Pexip
3
The Pexip Way 12
Team Pexip At a Glance
11
Meeting Customer Needs with a
Focus on Three Business Sectors
5
Unique Technology at the Core
of Business Strategy
10
#WeArePexip 13
Business Model 17
Pexip’s Sustainability Report 15
Letter from the CEO
Targets 19
Statement from the Board of
Directors
20
Statement of Corporate
Governance (NUES)
22
Executive Management
27
Board of Directors
40
Consolidated Accounts
51
Auditor’s Report
53
55
111
Key Figures and Alternative
Performance Measures
Strategy 18
About Pexip
Annual Report 2021
Content placeholder
4
Pexip is a global technology company that enables the world to realize
the opportunities and outcomes that can be achieved through video
communication. The Company’s goal is to help the world embrace the full
potential of video. Pexip’s platform is secure and scalable and can be deployed
as a self-hosted, hybrid or as-a-service option.
Pexip’s customers are mainly large private and
public organizations, including more than 15%
of the Fortune 500. These are organizations for
whom security, privacy and data sovereignty
are paramount. The need to connect dierent
platforms and devices is also of utmost
importance, as is the possibility to integrate video
into existing workflows and platforms to create
customized and branded solutions.
The Pexip platform is sold through a global
network of over 300 reseller partners located in 75
countries, serving users in 190 countries.
Powering the Video Economy
During 2021, organizations started to realize the
full potential of video communication to make
business more ecient and public services
more easily accessible. The potential use cases
of video now stretch far beyond traditional
videoconferencing and Pexip is at the core of this,
enabling organizations to make the most of these
possibilities.
Video now plays a critical role in safely connecting
patients with healthcare providers, making public
services more accessible to citizens, providing
better customer service, and facilitating business
continuity by enabling both internal meetings and
customer-facing interactions to securely happen
from anywhere.
However, while video communication brings people
closer together, geopolitical complexity and tension
mean that nations need to think about how they
can safely use video technology in areas such as
defense, government, and public institutions, which
is resulting in increased demands for communication
tools that promote and facilitate privacy, trust, and
data sovereignty.
In addition, today’s organizations are increasingly
exposed to cyber-attacks, from data breaches
to denial-of-service. Organizations need to look
carefully at who they are willing to share their data
with and who controls the technology. With hybrid
working having become engrained in companies’
cultures, knowledge workers will continue to work
from a variety of locations and are dependent on
having a video communication platform that lets
them do this in both a simple and secure way. Pexip’s
customers deal with these challenges every day, and
Pexip has the solutions they need for critical and
high-security meetings.
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5
Meeting Customer Needs with a Focus on Three Business Sectors
Meeting Customer Needs with a
Focus on Three Business Sectors
With a background in the burgeoning video economy, Pexip realigned its
strategic direction in the second half of 2021 to focus on three main
business areas:
Pexip believes that technology
should fit into existing workflows
and with installed systems.
With Pexip, no matter the video
system, platform, calendar
or device, organizations can
connect the tools and workflows
already in use and utilize native
integrations with Google Meet
and Microsoft Teams.
Video meetings are a space
where sensitive or even classified
information is shared, and where
reliability and continuity are
absolute requirements. Pexip can
be configured to meet the internal
security requirements of each
organization, ensuring business
continuity, full transparency and
control of meeting data.
Video is now powering a
range of both business-to-
consumer and government-
to-citizen applications. Pexip
is enabling organizations to
transform traditional client
services with custom user
experiences in sectors such
as healthcare, financial
services and retail.
Video
Infrastructure
Critical Video
Meetings
Video
Enablement
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Infrastructure
Pexip believes that technology should work with
existing workflows and systems. With Pexip’s
interoperability solutions, users can securely join
meetings with any device - laptops, smartphones
and conference room systems - from any
location, without the need for downloads or
software installs. With Pexip, no matter the video
system, productivity tool, platform, calendar
or device, organizations can connect the tools
and workflows already in use and utilize native
integrations with Google Meet and Microsoft
Teams. The result is an optimal user experience,
ease of management for administrators,
enhanced return on investment on existing
infrastructure and a reduction in e-waste as
organizations extend the lifetime of their video
conferencing equipment and upgrade it in the
most ecient and sustainable way possible.
Case Example: APG Group
APG is a Dutch pension provider and is one of
the largest pension investors in the world. The
institution manages over EUR 500 billion in total
capital on behalf of eight pension funds and their
members and beneficiaries. Approximately 3,000
APG employees work from the Netherlands, Hong
Kong, and New York. The Company needed:
• A solution that could integrate Cisco
hardware, Microsoft Teams, and virtual
meeting rooms all in one. Pexip helped
them create a seamless virtual meeting
environment across Microsoft Teams and
Cisco devices.
• New dial-in capabilities to replace previous
video infrastructure. Pexip helped improve
the employee experience, connectivity,
and eciency between oce, remote, and
overseas workers.
• To meet high compliance requirements and
be a highly secure platform. Pexip ensured
regulatory compliance without compromising
on the user experience.
“Given the positive stories we had
heard from other companies and the
scalability, ease of use, and wide
variety of capabilities available, we
felt confident in choosing Pexip.
Pexip’s interoperability between
Teams and Cisco met our needs
better than other potential solutions.
We also appreciated that robust
dial-in and compliance capabilities
are included so we could meet all our
virtual meeting needs from a single,
secure platform”
Patrick de Klerk
APG System Engineer
Meeting Customer Needs with a Focus on Three Business Sectors
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it’s essential for organizations to be prepared for
disruptions in the service of their communication
tools, or if internet and mobile network connections
fail. Pexip can be deployed in ways that make
it significantly less vulnerable than other third-
party solutions. The solution can be hosted on-
premises and be configured to operate without an
internet connection. Hosting on-premises ensures
organizations are able to communicate if a primary
solution fails or if communication is lost due to
network outages, natural disasters, or digital
attacks.
Case Example: Charter Communications
Critical Meetings
With cyber-attacks on the rise, confidential business
information, critical services and infrastructure
are at risk. Industry analysts, Gartner, report that
cyber-attacks are up a staggering 3,900% since
2013. For many organizations, especially those in
the government, healthcare, and financial sectors,
video meetings are a space where sensitive or
even classified information is shared. Reliability
and continuity are absolute requirements. In
these cases, there is no room for error; call data
cannot be leaked, meeting room security cannot be
breached, and real-time connections cannot be lost.
Organizations with the most stringent security and
continuity requirements need a videoconferencing
solution designed to support - and withstand - their
most critical demands.
This is where Pexip’s oering within the Critical
Meetings space comes in to serve organizations that
need to ensure business continuity, maintain full
transparency and control of meeting data and rely
on superior audio and video. No matter the size or
location of the organization, Pexip can be configured
to meet the internal security requirements of that
organization. Thanks to the flexible architecture and
deployment possibilities, organizations keep full
control of all Call Detail Records (CDR) and meeting
details, and patterns are never exposed to third
parties, making it easy to comply with any regional
data storage and transit requirements. In addition,
Meeting Customer Needs with a Focus on Three Business Sectors
Charter Communications is an American
telecommunications and mass media company.
With over 26 million customers in 41 states, it is
the second-largest cable operator and the fifth
largest telephone provider in the United States, with
100,000 employees across North America. The
company currently uses Pexip primarily as a disaster
recovery communication platform, and their executive
management relies heavily on video for their day-
to-day business. Pexip was chosen for its ability to
be deployed in Charter’s many data centers across
the US and made immediately available as a failover
service. Charter Communications views Pexip as a
mission-critical disaster recovery platform.
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Video Enablement
Video is now powering a range of business-to-
consumer (B2C) and government-to-citizen (G2C)
applications and Pexip is enabling organizations
to transform their businesses and reimagine their
customers’ experiences with the digitalization of
traditional client services.
With Pexip, organizations can use application
programming interfaces (APIs) to build custom
branded experiences and integrate with their chosen
technology and workflows to provide video-enabled
consultations that are easy to join from any device
or location. The APIs can integrate with “out of the
box” workflows and can be extended to perform a
range of tasks including adding an SMS invitation,
providing access to a company directory, or building
a fully-branded experience with custom apps
and integration with external control systems for
inbound call management.
This means that video powered by Pexip is playing a
key role in a range of applications including:
• Providing remote patients with specialist care
• Helping couples get their first mortgage via
video banking
• Enabling courts to conduct virtual hearings
• Helping families plan a new kitchen from the
comfort of their home
• Delivering essential public services to citizens
Financial Services
Judicial
Public Services
Healthcare
Retail
Meeting Customer Needs with a Focus on Three Business Sectors
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Case Example: The Federal Employment
Agency (BA) in Germany
“The employees report a relaxed
atmosphere on the part of the
customers through the use of ‘My
Video Appointment’. Our solution
eliminates the stress of commuting.
Therefore, we will continue to rely
on consultations via ‘My Video
Appointment’ and continue to scale
the solution”
Lucas Albracht
Product Manager „Mein Videotermin“
Bundesagentur für Arbeit
The Federal Employment Agency (Bundesagentur
für Arbeit, BA) is responsible for job and training
placement and is at the same time Germany’s
largest service provider on the labor market. Every
day, BA advises people on career-related issues
and supports millions of citizens with applications
for financial benefits such as unemployment
and child benefits. Its stated mission is to be
“close to the customer.” The Agency has 100,000
employees in 156 employment agencies with
around 600 branches, 302 job centers and
family welfare oces at around 100 locations.
Approximately 14,000 counseling sessions take
place every day. As part of their “Strategy 2025,”
the Agency wanted people to easily access their
advisory services from home or on the road.
Currently, all employment services at 1,000
locations are running “My Video Appointment”,
based on the Pexip platform, for online counseling.
The “My Video Appointment” solution is designed to
achieve the following objectives:
• BA customers must be able to participate in
counseling appointments online from home or on-
the-go with just three clicks
• They must also be able to participate using any
device without installing additional
plug-ins
• Participants are oered secure exchanges via
video, chat, audio and collaborative document
editing, regardless of operating system
• The solution complies with the BA’s very high
security and data protection requirements
(GDPR/DSGVO-compliant use as well as hosting
of data in accordance with European law)
Meeting Customer Needs with a Focus on Three Business Sectors
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Unique Technology at the Core of Business Strategy
Network-based transcoding architecture
This enables Pexip to optimize the video and audio
meeting experience for all participants, regardless
of the type of equipment they have - old or new.
There are also environmental benefits because, as
the processing is done in the network and not on
the device itself, the devices use less processing
power and consume less energy. This also enables
mixed and augmented reality applications to run at
a low power consumption, extending battery life.
In addition, old equipment can be easily upgraded,
prolonging its lifetime. Transcoding is the reason
Pexip is the leading interoperability vendor, and it
also means Pexip can apply artificial intelligence
to the entire conference, allowing the Company to
create features that improve the user experience.
Transcoding is important for all business areas but
is especially key in the infrastructure area.
At the heart of the product oerings in these business areas is unique
Pexip technology. This technology allows for interoperability, security, the
flexibility for customers to brand and make the solution their own, and an
outstanding audio and video experience for all meeting participants.
Unique Technology at the Core of
Business Strategy
Agnostic infrastructure
This provides unrivaled deployment flexibility
to customers, allowing them to run the Pexip
platform on the cloud of their choice or self-
hosted, and even avoid the internet altogether if
desired. This capability is vital to customers who
have specific requirements when it comes to
privacy and data sovereignty. This is particularly
important for critical meetings.
Built as-a-platform
This means that Pexip’s technology platform and
the actual applications or products have been
decoupled. The advantage here is that it allows for
a high level of customization of the technology by
customers, which is especially important in the
video enablement space.
Network-based
transcoding
architecture
Agnostic
infrastructure
Built
as-a-platform
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Team Pexip At a Glance
The Pexip team is distributed across many countries. Development teams
are located in Norway, the UK and Belgium. Other functions are spread
throughout Europe, Asia and Pacific, and North America. The Company is
headquartered in Oslo, and has oces in London, New York, Washington
DC, Sydney, Singapore, Tokyo, Düsseldorf, Ghent, Utrecht, Stockholm,
Copenhagen and Paris.
Team Pexip At a Glance
300+
Partners in 75 countries
Washington DC
New York
Oslo, London, Stockholm, Paris,
Copenhagen, Düsseldorf, Ghent, Utrecht
535
101%
4,400+
Employees in 34 countries
Net customer retention rate
Enterprise and public sector customers
2011
Company founded
Sydney
Tokyo
Singapore
100
370
65
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The Pexip Way
The Pexip Way
Professional & Fun
We are committed to our partners and customers
We are passionate and fun to work with
We strive for excellence
No Bullshit
We say it as it is
We do what needs to be done
We stand for honesty and integrity
Freedom & Responsibility
We encourage initiative and innovation
We are all leaders
We act like owners
One Team
We make each other better
We respect, support and care for each other
We appreciate diversity
“Pexip’s core values not only
help drive the culture within
an incredible organization, but
they also resonate with our
user base. That’s extremely
important because it is a perfect
example of the energy Pexipers
project. Having the freedom and
responsibility to do right by our
customers, but also do right for
ourselves as individuals”
Percy Pineda
Solutions Architect, LATAM
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#WeArePexip
“At the core of Pexip lie its values,
and it is the foundation on which
everything is built. It is easy to
assemble a team of people, but that
team is not whole unless it is created
with respect. The recruitment process
at Pexip is fantastic because it
includes everyone. Diversity is not a
requirement; it is a fact and a result.
It’s the combination of people, culture,
and values that makes magic happen”
Emma Larsen Al-Hashimi
Channel Sales Manager, Sweden
We know that video communication has the power
to improve workdays and impact lives, and our
customer stories are what drive and inspire us
every day. From the boardroom to the courtroom,
and from doctor’s oce to the home oce,
we help organizations be more accessible and
innovative in how they work and communicate.
Our company values are at the core of everything
we do and they define how we interact with each
other, our customers and our partners daily. They
guide our business, our product development, and
our brand. As our company continues to evolve
and grow, scaling the Pexip Way as the company
grows is critical to Pexip’s success. Since day one,
Pexip has had an open and inclusive work culture
with equal opportunities for all. We are proud to
represent a diverse workforce and we see diversity
as a competitive advantage.
Pexip is founded on the three building blocks of Technology, Partner
Ecosystem and Culture. These are interrelated and Pexip’s culture is driven
by people, technology, and possibilities.
#WeArePexip
Technology Ecosystem Culture
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15
Pexip’s Sustainability Report
Sustainability at Pexip
Pexip aims to create sustainable value through
a business strategy that fully integrates ESG at
its core.
Video communication now plays a critical role
in safely connecting patients with healthcare
providers, making public services more accessible
to citizens, providing better customer service,
and facilitating business continuity by enabling
both internal meetings and customer-facing
interactions to securely happen from anywhere.
This has consequences for all aspects of ESG and
for Pexip’s sustainability contributions.
For the environment, it means that organizations
have seen that video communication provides
a viable alternative to travel, whether that’s
for meetings or for other business processes
Pexip’s Environmental, Social and Governance (ESG) work is presented in its
2021 Sustainability Report. The report provides an overview of the Company’s
material ESG topics and its performance metrics for 2021. The report has
been prepared in accordance with the Core option of the Global Reporting
Initiative (GRI) Standards.
Pexip’s Sustainability Report
or healthcare and government services. From a
social aspect, a recent study conducted by the
World Economic Forum and Ipsos found that
86% of people want to see a more equitable and
sustainable world after the Covid-19 pandemic.
Pexip believes video can contribute to that by
creating a fundamental change in how organizations
communicate, helping close the digital divide and
increasing accessibility to a variety of services.
Whether it’s providing better healthcare to remote
communities or bringing the classroom to sick
children, video has a role to play in promoting equity.
For governance, it means that the use of video
technology in areas such as defense, government,
and public institutions, is resulting in increased
demands for communication tools that promote and
facilitate privacy, trust, and data sovereignty. Pexip
provides secure conferencing to companies looking
for these secure spaces.
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16
Pexip’s Sustainability Report
Strategic Focus Areas
The United Nations’ Sustainable Development
Goals (SDGs) were agreed upon by 193 UN member
states in 2015, including all of the countries in which
Pexip operates. A key component of the SDGs is
the principle of collaboration for their achievement,
including between Government, Civil Society and
Business. Pexip has identified the following SDGs as
ones the Company can contribute to: Goal 4 (quality
education), Goal 5 (gender equality), Goal 9 (industry
innovation and infrastructure), Goal 11 (sustainable
cities and communities), Goal 12 (responsible
consumption and production).
In addition, the Company has established baseline measures for the following material topics:
• Data security and privacy
• Talent attraction and retention
• Greenhouse gas emissions and energy use
• Ethical business practices
• Diversity and equal opportunity
• Digital inclusion and positive industry impacts
• Health, safety and wellbeing
• Supply chain management
• Intellectual property rights
The Company is actively addressing critical areas,
such as diversity. With rapid company growth over
the last two years, talent acquisition and retention
are key material topics for Pexip. The Company
realizes that, as for the IT sector as a whole, it still
has considerable work to do to address gender
diversity, inclusion and equal opportunity. Some
improvements have been made and in 2021, 30%
of new hires to Pexip were female. The Company’s
Diversity Taskforce continues to assess, plan
and implement initiatives to ensure diversity in
recruitment, succession planning and leadership.
For more information, the full ESG report can be
downloaded at investor.pexip.com.
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Business Model
Pexip has developed a strong and sustainable business by investing in
research and development (R&D) and sales and marketing. The R&D team has
built a leading end-to-end video-first communications platform, while the
sales and marketing team have enabled a rapidly growing and highly scalable
business model with presence in Europe, North America, and selected
countries in the Asia-Pacific region.
Pexip has established and trained a global
community of authorized channel partners
and service providers, and currently has more
than 300 authorized channel partners globally.
Pexip’s channel partners are supported by Pexip’s
high-touch sales organization, which provides
expertise and focus on promoting and selling Pexip
solutions. These channel partners, which include
companies such as Orange, the global technology
and business solution provider, ConvergeOne, the
US IT service provider and Kinly, the audio video
specialist integrator, provide Pexip solutions to
their existing and new customers and possess the
technical knowledge and relationships to manage
those customers throughout the sales process,
Businesss Model
from IT business strategy development to trials
to onboarding and support. This strategy also
provides the most scalable in-country sales and
support capability (i.e. local language, time zone
coverage, etc.).
Pexip oers both a self-hosted software
application and as-a-service deployment options
to its customers. Both oerings are delivered as a
recurring subscription-based model.
Approximately 97% of Pexip’s revenues are
generated from recurring subscription fees.
Additional revenues are one-o revenues related
to set-up and professional services.
Solution
Partners
Strategic
Partners
Customers
Products &
components
Integration &
solutions
Customer
requirement solved
Annual Report 2021
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Strategy
Product strategy
Pexip’s product strategy is to further develop its
position as a market leader within video software
infrastructure, critical meetings and video enabled
workflows. The Company will do this by developing
a portfolio of products leveraging the top USPs in
Pexip’s technology (interoperability, lightweight
Strategy
client architecture, flexible end-user experience
and total privacy) and positioning itself as a market
leader in its target segments. Pexip will also seek
to innovate on its core technology pillars, network
based transcoding architecture and agnostic
compute. The use cases are further described in the
About Pexip section.
1
2
3
Investing in developing its relationship with key Alliance partners (Microsoft, Google, Nvidia,
others). These partnerships involve both cooperation on technology development and
commercial activities.
Targeting large enterprises and public sector clients with complex business workflows and high
security and privacy requirements. These customers are targeted through a distributed, regional
operating model combining high-touch, channel-led sales with digital transaction platforms (e.g.
Azure Marketplace, other).
Enabling channel and delivery partners to deliver high-value solutions based on Pexip technology.
A channel network capable of initiating and driving sales as well implementing and supporting
Pexip solutions, is key for Pexip’s scaling and growth.
Go-to-market strategy
Pexip’s go-to-market strategy is focused on:
Annual Report 2021
19
Targets
Targets
Pexip targeting to reach USD 300 million in ARR by end of 2024
Pexip has started on the
next phase of growth!
2011
Founded
2020
Pexip listed on the
Oslo Stock Exchange
2024
Established leadership
position within key
business areas
ARR target of USD
300m by 2024 with
25%+ EBITDA-margin
from 2025
Strong profitable growth
Expand and innovate product oering
Supercharge sales and marketing
Revenue
growth
Long-term
profitability
#1 in Pexip’s three
business areas
ARR of 300 million by end of 2024
2025 EBITDA margin of 25% with 25% revenue
growth. Plan for negative 25-35% EBITDA in
2021/2022, neutral to positive EBITDA in 2023
Established leadership position within key
business areas
Key Numbers
and Alternative
Performance
Measures
Annual Report 2021
21
Key numbers and alternative performance measures
Geographical Distribution ARR 2021
34%
Americas
56%
EMEA
10%
APAC
2018 2018
2018
2018
2018
36
215
47
370
82
106
679
806
2019 2019
2019
2019
2019
2020 2020
2020
2020
2020
2021 2021
2021
2021
2021
2021
2021
Contracted Annual Recurring
Revenue (ARR, MUSD)
Revenue (MNOK)
2018
32
7
76
12
103
-124
28
24
2019 2020
ARR from New Customers (MUSD)
EBITDA adjusted (MNOK)
EBITDA
Full year negative EBITDA of NOK
-124 million (-15%), which is better
guidance of negative 25-35%
EBITDA margin in 2021
2018
95
97
95
99
94
90
114
101
2019 2020
Customer Retention Rate (% of ARR) Gross Margin (% of revenue)
161
182
361
535
Employees
Letter from
the CEO
Annual Report 2021
23
Letter from the CEO
The Advent of the Video Economy
While 2020 was a year of explosive growth in
the use of videoconferencing as a result of the
Covid-19 pandemic, in 2021 we saw this new
way of working consolidating into what we are
deeming the Video Economy. By this, we mean
that organizations across the globe have started to
see the full potential of a video-enabled world, not
just for inter-company communication but also for
mission-critical high-security meetings, as well as
a range of new applications, including healthcare,
financial services, retail and virtual court hearings.
Video now plays a key role in safely connecting
patients with healthcare providers, making
education and public services more accessible,
and facilitating business continuity by enabling
both internal meetings and customer-facing
interactions to happen from anywhere. Video has
become an integral part of most organizations’
operations, strategies, and workflows.
Rethink. Renew. Reimagine.
The potential use-cases powering the Video
Economy shaped Pexip’s strategy in 2021 as we
worked to address the changing needs of our
customers and reimagine the future of video
communication. Rethink, renew and reimagine
were at the forefront of our decision in mid-2021
to build on our key technology dierentiators and
focus on three main business areas: Infrastructure,
Critical Meetings, and Video Enablement.
At the heart of each of these areas lies
Pexip’s highly dierentiated core technology.
Within Infrastructure, we are committed to
interoperability, allowing people to easily connect
to video meetings from any location, device, or
platform, as well as ensuring that organizations
can extend the life of their video infrastructure
and in turn reduce e-waste. For Critical Meetings,
Pexip provides security, data privacy, and business
continuity, for public and private organizations.
Within the Video Enablement space, our APIs
allow customers to carry out deep workflow
customization for business to consumer
applications across a range of industries.
We see a massive five billion USD market
opportunity across these pillars, with the possibility
to expand in adjacent markets over time. By
focusing on these three areas, I believe that we
are building a strong foundation for the years to
come, giving us a clearly dierentiated position
in the market that makes us the first choice for
organizations that are looking to solve complex
video communication needs.
2020 estimate
Source: McKinsey, Wainhouse, company estimates
5 BUSD
in 2024
20+ BUSD
in 2024
Pexip current
core markets
Video-centric Unified
Communications
(UC) market
Annual Report 2021
24
Letter from the CEO
Awards and Recognition for Technology
and Execution
The awards and recognition we have received
throughout the year also speak to the unique position
Pexip holds in terms of our core technology and
product portfolio.
We were delighted to move up to a Challenger
position in Gartner’s Magic Quadrant for Meeting
Solutions in October. The Magic Quadrant is widely
recognized as the world’s most influential market
analysis for IT buyers, and companies are evaluated
on their ability to execute and completeness of
vision. After two consecutive years as a Visionary,
we believe that our new position as a Challenger
validates the uniqueness of our product portfolio and
extensive global customer base, and recognizes our
growth plans and ability to execute on them.
In December, Pexip was awarded the 2021 Australia
Video Conferencing Services in Healthcare
Competitive Strategy Leadership Award by global
research and consulting firm, Frost & Sullivan,
for enhancing healthcare services for 13 million
Australian residents. Security of information,
interoperability and ease of use are essential
requirements for videoconferencing solutions in the
healthcare space. With Pexip, healthcare providers
benefit from flexible videoconference hosting options
and patients can join virtual clinics with a single click
– regardless of the device or platform they use. NSW
Health, Queensland Health and Telehealth Tasmania
are all utilizing Pexip video technologies. Virtual
healthcare represents one of the main use-cases
within the Video Enablement space and it is exciting
to see the growth potential in this space.
Pexip was also awarded Best Sustainability
Newcomer by the Nordic investment bank, Carnegie,
chosen among 360 listed companies in the Nordic
markets. The award recognizes companies creating
shareholder value through sustainable growth.
The Pexip Board and Management Team see ESG
measurement, management, and reporting as a
long-term value creation strategy that helps us
build resilience in all aspects of our business. More
information can be found in our Sustainability report.
“Through its video conferencing
services for the healthcare sector,
Pexip addresses challenges facing
healthcare providers to make video
conferencing available to all patients
seeking virtual visits. It enables
patients to join virtual physician
clinics with a single click using an
application or a web browser on any
device, democratizing healthcare
service delivery”
Shailendra Soni
Principal Consultant of Information Communications
and Technologies at Frost & Sullivan
Annual Report 2021
25
Letter from the CEO
Channel and Strategic Partnerships
Essential to Success
We continue to sell exclusively through channel
partners, and we work closely with our over 300
channel partners to scale our sales and marketing
eorts and promote brand recognition globally. With
our renewed strategic focus on the three business
areas of infrastructure, critical meetings, and video
enablement, we see that the competence needed
from our partner community is increasing as the
projects become more complex. We are working
with our key go-to partners to ensure they have the
knowledge needed to best support our customers
and we are excited to continue to grow our revenue
with them.
We have close commercial, go to market and
development relationships with a range of strategic
partners including Microsoft, Google and Nvidia.
Pexip has been the only Certified Video
Interoperability Partner (CVI) for both Microsoft
Teams and Skype for Business for several years.
The usage of Microsoft Teams has skyrocketed as
a result of the Covid-19 pandemic and customers
now see a greater need to connect their existing
videoconferencing solutions with their Teams
meetings. The Pexip Enterprise Room Connector
(ERC) enables that integration, and, at the same
time, provides a way for customers to consolidate
their video meeting solutions to the cloud. At the
end of 2021, we entered into an agreement with
Microsoft, eective as of 2022, to make ERC
available in the Microsoft Azure Marketplace, the
most comprehensive online global software market,
providing applications and services certified to
run in the Microsoft Azure cloud. Being available
in the Marketplace enables customers to simply
and eciently procure Pexip through their existing
contracts with Microsoft, extending Pexip’s reach
to a broader customer base and making it easier
for customers to both subscribe to and get started
with Pexip. About 95% of Fortune 500 companies
use Microsoft Azure and are able to procure their
solutions via the Marketplace.
Strong Foundation for Profitable Growth
I am pleased to report that we are continuing
to develop our subscription base. In 2021, Pexip
experienced a solid increase in its customer base
and revenue in all geographies. We grew our
contracted Annual Recurring Revenues by 30%,
to USD 106.4 million. We did this in a market
environment where many of our customers are
not using their oces, which has reduced demand
for the Pexip solutions in video infrastructure. As
we planned for, the investments we have made in
strengthening our Sales and R&D team during the
past two years led to a negative EBITDA for the
year, with an EBITDA margin of -15%. This was
significantly better than our guidance of -25% to
-35%. We closed the year with a solid cash position
of NOK 804 million, over five times our negative
operating cash flow for 2021, which we expect to be
more than sucient to fund our growth plan until
we return to profitability during 2023.
From an organizational perspective, it was an
exciting, but also somewhat challenging year. We
experienced rapid growth and we went from 361
employees at the end of 2020 to 535 employees at
Annual Report 2021
26
Letter from the CEO
the end of 2021. The Pexip team still had to juggle
the uncertainty created by Covid-19 restrictions,
including canceled events, ever-changing travel
rules and hybrid working. Virtual hiring and
onboarding had to be dealt with at scale, utilizing
our own technology to the full. I am impressed with
how the team dealt with the situation and continued
to work in the Pexip Way, demonstrating resilience
and a One Team mentality. I do hope, however,
that 2022 will make it easier for the team to meet
in person; we use video to its full potential but
sometimes it is important to meet.
We executed our first acquisition in November
2021, welcoming the Skedify team into Pexip. Many
organizations are opening their eyes to the huge
potential video communication has to improve
customer service and interaction. The addition of
the Skedify customer engagement platform to the
Pexip portfolio enables Pexip to provide an end-
to-end solution to meet the needs of customers
in key verticals, such as financial services, high-
involvement retail and HR & recruitment, making
it easier and faster for our customers to deploy
a video-enabled digital customer journey. The
acquisition strengthens our position in the video
enablement space and the response from the
market has been overwhelmingly positive.
As we approach 2022, we are entering a new phase
of our investment plan. Since the IPO in 2020, we
have invested heavily in growth across sales and
R&D to drive future growth. In 2022, we plan to
have a more normalized investment level which,
together with continued ARR growth, will help us
return to profitable growth during 2023. We will put
even more emphasis on learning and development
to make sure that the resources we hired in 2021
are fully enabled to execute their jobs in the best
possible way. We believe that this will in turn
promote job satisfaction and performance, helping
build a future-ready organization, and ensuring
continued technology leadership.
In September 2021, Odd Sverre Østlie, who was
CEO at the time, decided to part ways with Pexip
and I was appointed as Interim CEO and CFO. It
has been an honor to lead the Company during
this succession period, and I am extremely proud
of what the team has achieved. I strongly believe
that our combination of innovative core technology,
partner ecosystem, and strong culture puts Pexip
in a unique position to take full advantage of the
opportunities opening up in the Video Economy.
2021 was a year of change - rethinking and
reimaging. We are ready to meet 2022 with a
renewed focus and I feel confident that capitalizing
on the growth investments made in 2020 and 2021
will enable us to deliver on our ambitions to return
to positive EBITDA during 2023 and reach USD 300
million in ARR by the end of 2024. Finally, I look
forward to handing over the reigns as CEO to Trond
K. Johannessen in May 2022 and supporting him
and Pexip as CFO. Trond has significant experience
in scaling technology companies globally, and with
him on the team, Pexip will be strongly positioned
for future success.
On behalf of the Pexip team,
Øystein Hem
Interim CEO and CFO
Statement of
the Board
of Directors
Annual Report 2021
28
Statement of the Board of Directors
The statement from the Board of Directors (The Board) reflects the
development of the Pexip group (“Pexip”, “the Company”) unless otherwise
stated. For more information about Pexip, the nature of the business and
where the business is conducted, please see the “About Pexip” section.
2021 has been an important year for Pexip as the
Company continued to execute on its growth
strategy, and completed its first full year as a listed
company. During 2021 organizations continued to
rely heavily on the power of videoconferencing, and
we are starting to see the emergence of a new video
economy. Pexip is well positioned to benefit from
this, and has continued to grow strongly during
2021 and made significant investments for future
growth. The new video economy is also creating
new customer needs, and Pexip has introduced
several innovative technologies during the year to
help customers take advantage of the opportunities.
Pexip saw a solid increase in its customer base and
its revenue throughout 2021. The contracted ARR
at the end of 2021 was USD 106.4 million, up 30%
from the end of 2020. The dierent geographies
have all contributed to the overall growth, with
Europe, Middle East and Africa (EMEA) growing
24% to USD 57 million, Americas growing 40%
to USD 39 million, and Asia and Pacific (APAC)
growing 32% to USD 10 million. Pexip has
invested significantly for growth during 2021 in all
geographies by scaling the local sales teams and
will continue to do so in 2022, although at a more
normalized level.
Another key driver supporting growth in 2021
has been net revenue retention from existing
customers. Pexip delivered a net revenue retention
of 101%, meaning that on average an existing Pexip
customer generated 1% higher ARR at the end of
2021 compared to the start of the year. This is at a
good level in a normal year, especially after a very
strong 2020 where the pandemic outbreak resulted
in record high growth in new customers. The main
driver supporting net revenue retention is stronger
upsell, mainly driven by existing customers scaling
up their Pexip deployment, while churn was kept at
10%, similar to 2020.
In 2021 Pexip continued to significantly accelerate
its growth plan. The IPO in 2020 saw Pexip increase
its capital with NOK 1.1 billion, to be deployed
in investments for growth. The two main focus
areas for these investments are supercharging
Pexip’s sales and marketing capabilities as well as
expanding and innovating Pexip’s product oering.
These investments are mainly in human capital, and
Pexip increased the team from 361 employees at
the start of 2021 to 535 employees at the end of the
year, up 49%. Of the 535 employees, 147 work out
of Pexip’s headquarter in Oslo, 215 in other parts of
EMEA, 108 in the USA and Canada and 65 in the
Asia Pacific region. In total, Pexip has a presence
in 34 countries. Following the two focus areas,
the largest increase was in sales and marketing,
growing from 197 to 304 employees, and R&D,
growing from 130 to 184 employees. The Group’s
strategy is to continue to invest in 2022, although
at a more normalized level, and to continue building
a strong growth capacity for the years to come,
enabling Pexip to reach its long-term ambition of
USD 300 million in ARR by the end of 2024 and
return to positive EBITDA during 2023.
The consolidated accounts include business
activities in Pexip Holding ASA, Pexip AS, Pexip Inc.,
Pexip Ltd., Pexip Australia Pty Ltd, Skedify N.V.,
Pexip Netherlands B.V., Pexip Germany GmbH,
Pexip France SAS, Pexip Singapore Pte Ltd, Pexip
Japan GK and Videxio Asia Pacific Ltd.
Financial Review
(Figures in brackets = same period prior year or
relevant balance sheet date).
For the full year (FY) of 2021, Pexip’s revenue was
NOK 805.5 million, up 19% from FY 2020. EBITDA
was negative NOK 124.3 million, reflecting a
negative 15% EBITDA margin.
Annual Report 2021
29
Statement of the Board of Directors
Consolidated revenue for FY 2021 increased by
19% to NOK 805.5 million (NOK 678.5). Revenue in
EMEA increased to NOK 439.1 million (NOK 378.6
million), Americas increased to NOK 299.9 million
(NOK 234.5 million), and APAC increased to NOK
66.4 million (NOK 65.5 million).
Pexip operates with two main products areas. The
Pexip self-hosted software product area, which
mainly consists of sales from software license sales
and related maintenance contracts, and the Pexip-
as-a-Service area, which consists of sales from
Pexip’s public cloud service. Revenue from self-
hosted software was NOK 491.0 million (NOK 465.8
million), up 5.4 %. Revenues from Pexip as-a-Service
was NOK 314.6 million (NOK 212.7 million), up 48%.
Cost of sale amounted to NOK 76.9 million for FY
2021 (NOK 42.6 million), reflecting a gross margin
of 90% (94%). Cost of sale has mainly increased
due to a shift towards cloud compute compared
to investing in own or renting hardware, which
also reduces operating expenses. This is driven by
an increase in service robustness and to ensure a
better long-term cost structure. Higher revenues
and related hosting and network cost from products
requiring cloud compute is also a driver for higher
cost of sale. In Q4 2021 Pexip started to see cost
savings eects in line with expectations as the
transformation period is coming to an end. Going
forward this development is expected to continue,
as some of the costs related to the platform
modernization are fixed and not volume driven.
Operating expenses consist mainly of salary and
personnel expenses and other operating expenses.
Salary and personnel expenses amounted to NOK
634.4 million for FY 2021 (NOK 400.5 million),
which is 79% of revenue in the period (59%). The
increase is mainly due to high growth in employees
over the last twelve months, in line with Pexip’s
growth strategy.
Other operating expenses amounted to NOK
218.6 million (NOK 180.0 million) for FY 2021, which
reflects 27% of revenue (27%). Other operating
expenses in the period increased in line with
overall activity growth in the business, as well as
investments in marketing to raise the awareness of
Pexip amongst potential customers.
Earnings before interest, tax, depreciation, and
amortization (EBITDA) amounted to negative NOK
124.3 million for FY 2021 (positive NOK 55.6 million),
reflecting a negative 15% EBITDA margin (positive
8%). The development in the EBITDA margin is
better than expected in the guidance previously
given between negative 25-35% for 2021 and 2022.
Pexip had depreciation and amortization costs of
NOK 73.7 million for FY 2021 (NOK 47.3 million).
Financial income was NOK 0.5 million (NOK 68.3
million). Financial expenses amounted to NOK 4.6
million (NOK 178.5 million). Financial income and
expenses were mainly related to currency exchange
gains and losses and the decrease in both income
and expenses from prior period is due to large
fluctuations in currencies for 2020 due to the
Covid-19 pandemic. For financial expenses, NOK
24.0 million was related to realization of outstanding
options on Pexip’s own shares at fair value as part of
the IPO. These options were settled in equity as part
of the IPO transaction.
Profit before tax was negative NOK 195.2 for FY
2021 (negative NOK 102.0 million). Profit after tax
was negative NOK 157.3 million (negative NOK 89.0
million).
Other comprehensive income consists of exchange
income on translation of foreign operations of
NOK 3.0 million (loss of NOK 5.5 million). The total
comprehensive loss for the year was NOK 154.3
million (loss of NOK 94.5 million).
Financial Position
Pexip’s total assets amounted to NOK 2,388 million
at the end of FY 2021 (NOK 2,436 million).
Current assets amounted to NOK 1,067 (NOK
1,321 million). Cash equivalents decreased to NOK
804 million (NOK 1,101 million at the end of FY
2020), mainly as a result of investments in sales
capacity and R&D, according to strategy. Cash and
cash equivalents are held in a range of currencies
matching the distribution of cash outflows to reduce
Annual Report 2021
30
Statement of the Board of Directors
currency risk. Trade and other receivables increased
to NOK 218 million (NOK 193 million), due to higher
sales. Contract assets increased to NOK 17.4 million
(NOK 9.1 million) as previously non-invoiced revenue
was invoiced. Other current assets increased to
NOK 27.9 million (NOK 18.7 million).
Non-current assets increased to NOK 1,321 million
(NOK 1,114 million). This is mainly explained by
increase in deferred tax asset to NOK 109.1 million
(NOK 54.6 million). Contract costs increased to
NOK 262 million at the end of FY 2021 (NOK 211
million). Other intangible assets increased to NOK
138.9 million (NOK 133.7 million). The increase in
Contract costs is related to growth in paid and
periodized commissions in line with strong growth
in sales sta and activity, and the increase in Other
intangible assets is mostly related to the purchase
price of acquired customer contracts. Property,
plant and equipment increased to NOK 36.0 million
(NOK 25.2 million), and right of use assets increased
to NOK 103.4 million (NOK 87.8 million) due to
increase in oces leased. Other items saw small
changes over the period.
Pexip’s total liabilities amounted to NOK 479 million
at the end of FY 2021 (NOK 413 million).
Current liabilities amounted to NOK 375.6 million
(NOK 326.6 million). Trade and other payables
decreased to NOK 138.6 million (NOK 154.6 million).
Contract liabilities increased to NOK 202.3 million
(NOK 155.2 million), due to high increase in sales
and deferred revenue. Lease liabilities increased to
NOK 28.8 million (NOK 14.1 million).
Non-current liabilities amounted to NOK 103.8
million (NOK 86.8 million). Non-current borrowings
decreased to 4.0 million from 6.0 million, due
to scheduled repayments of borrowings. Lease
liabilities increased to NOK 84.8 million (NOK
78.2 million), mainly due to repayment of lease
obligations but is oset by some increase in oces
rented. Deferred tax liabilities increased to NOK
12.3 million (NOK 0.0 million) due to incurred tax
liabilities for specific legal entities. Other payables
saw small movements and were at NOK 2.7 million
(NOK 2.6 million).
Pexip had a total equity of NOK 1,908 million at the
end of FY 2021 (NOK 2,022 million). The equity ratio
was 80 % at the end of FY 2021, compared to 83 %
at the end of 2020.
Cash Flow
Pexip had a cash flow from operating activities
of negative NOK 155.3 million for FY 2021 (positive
NOK 71.3 million). The operating cash flow was
mainly impacted by a higher loss before income tax
of NOK 195.2 million (102.0 million) as well as net
negative of NOK 3.0 million in operating receivables
and payables (positive NOK 66.2 million).
Cash flow from investing activities was negative
NOK 98.8 million in FY 2021 (negative NOK 73,8
million). The increase in cash out flow is related
to higher payment of software development cost
of NOK 48.3 million (NOK 33.7 million) as well
as payment for acquisition subsidiary, net cash
acquired of NOK 15.2 million (NOK 0.0 million),
related to Skedify acquisition.
Cash flow from financing activities was negative
NOK 45,6 million for FY 2021 (positive NOK
1,099.2 million). In 2020, cash flow from financing
activities reflects the listing on the Norwegian
stock exchange May 14, 2020 with the issuance of
new shares giving Pexip new funding of gross NOK
1,209.9 million. In 2021 Pexip had a positive cash
flow from share issues related to employee incentive
programs of NOK 94.5 million, and a negative cash
flow related to the purchase of treasury shares
of negative NOK 88.0 million. In aggregate this
gave a net issuance of 1,914,646 shares and a net
cash flow of NOK 6.5 million. In 2021 Pexip had a
cash flow from borrowings of negative 34.7 million
(negative 2.5 million), mainly related to repayments
of debt related to the Skedify transaction. Pexip
further had a negative cash flow from principal lease
payments of negative NOK 13.7 million. The share
capital of Pexip Holding ASA at the end of 2021 was
1,566,445.065, divided on 104,429,671 shares. Per
December 31, 2021, Pexip held 719, 228 own shares
in Pexip Holding ASA, by 0.7% of the total shares
outstanding.
Annual Report 2021
31
Statement of the Board of Directors
Debt Facilities
The Pexip Group has an interest-bearing loan from
Innovation Norway (Innovasjon Norge) of NOK 6.0
million at the end of 2021, with maturity in 2024.
The loan has pledged security against property,
plant and equipment in addition to trade receivables.
There are no covenants or other restrictions on the
loan.
Other than the Innovasjon Norge loan, Pexip had
no interest-bearing debt, credit lines (drawn or
undrawn) or other borrowings requiring repayments
on December 31, 2021. There are no restrictions
or other covenants related to the cash or liquidity
position for any company in Pexip. With the IPO
listing and cash raised related to this in May 2020,
the Pexip Group has a solid cash balance and a
healthy liquidity position.
Outlook
In the long-term, Pexip believes that the market for
enterprise-grade video communication will increase
due to the explosive adoption and usage of video
communication following Covid-19, and increased
awareness of sustainability. Many enterprises plan
to adopt hybrid working models as they return to
the oce, combining oce and remote working,
that will provide benefits far beyond the need for
social distancing, such as reducing travel and
related emissions, enabling work flexibility and
increasing productivity. Furthermore, Pexip believes
in increased use of video in organizations’ workflows
with their clients/customers, creating additional
new and significant market opportunities. In the
short term, renewed Covid-19 restrictions will cause
limited use of oces and delays in roll-out of new
video rooms. In addition, Pexip’s customers have
experienced delays in video hardware deliveries due
to chip shortages.
To accelerate growth Pexip has invested in
increasing the Company’s sales and marketing
presence as well as R&D capabilities since the IPO.
During 2022 Pexip expect ARR growth to again
overtake growth in employees and cost. This will
support returning to a positive EBITDA during 2023.
In the mid-term, the Company expects above 25%
EBITDA-rate in 2025 together with revenue growth
above 25%. The key enabler for all these initiatives
is the robust strengthening of the Pexip team during
2020 and 2021.
In an environment that is adapting to a more
decentralized working environment with focus
on sustainability, Pexip believes that it is uniquely
positioned to address the new technology needs
of customers, with its ability to provide a great
meeting experience regardless of the device or
platform in use. This is reflected in Pexip’s long-term
ambition to reach an ARR of USD 300 million
by 2024.
These forward-looking statements are not
guarantees or predictions of future performance,
and involve known and unknown risks, uncertainties
and other factors, many of which are beyond our
control, and which may cause actual results to dier
materially from those expressed in the statements
contained in this section. Readers are cautioned
not to put undue reliance on forward-looking
statements.
Subsequent Events
On February 7, 2022, Pexip announced the
appointment of Trond K. Johannessen as CEO,
following an extensive international search process.
Mr. Johannessen will join Pexip in May 2022.
Øystein Hem will continue to lead the Company
until Mr. Johannessen assumes the role as CEO and
will thereafter continue with Pexip as CFO.
On February 10, 2022, Pexip announced that the
Company has decided to initiate a buyback of its
own shares in the market for a total of NOK 87.5
million. Pexip has an ongoing employee share-
based compensation program with existing future
commitments on delivery of shares. Due to a solid
cash position, the Board believes that it is an
attractive option to buy back shares to fulfil its
obligations in future share option exercises. After
this buyback program, Pexip will continue to have
sucient cash reserves to fund the communicated
growth plan until the Company returns to cashflow
positive operations.
Annual Report 2021
32
Statement of the Board of Directors
Parent Company and Allocation
of Net Profit
Pexip Holding ASA is a public limited liability
company. It has 0 employees, and its activities are
limited to being listed on Oslo Børs and being the
parent company of Pexip AS. Pexip Holding ASA had
a loss of NOK 11.4 million in 2021 (NOK 96.0 million),
mainly related to fees for external services and
operating expenses, but oset by financial income.
Pexip has a strategy for growth and has several
attractive investment opportunities available to it.
Pexip reinvests its growth in revenues to seize these
opportunities and does not have a policy to distribute
an annual dividend in the medium-term.
The loss for the year of the parent company, Pexip
Holding ASA, of NOK 10.1 million has been allocated
in its entirety to other equity.
Environmental, Social and
Governance
Environmental, Social and Governance (ESG) means
to run the business in a responsible and sustainable
manner over time, and in a way that contributes to
a positive, trust-based relationship between Pexip,
Pexip’s stakeholders and society as a whole. Material
topics included in Pexip’s Sustainability Report
were identified in alignment with GRI’s materiality
principle. Pexip considers SASBs Software and IT
Services Standard and the disclosures contained
within it to represent material ESG topics for the
Company. All disclosures from the Standard have
been included in this report. The Sustainability Report
can be found on Pexip’s webpage under https://
investor.pexip.com/ and includes the following
material topics:
• Data security and privacy
• Talent attraction and retention
• Greenhouse gas emissions and energy use
• Ethical business practices
• Diversity and equal opportunity
• Digital inclusion and positive industry impacts
• Health, safety, and wellbeing
• Supply chain management
• Intellectual property rights
Reducing both Pexip’s and the customers’ impact on
the environment is an important focus for Pexip and
the Board, and it will become even more important
in the future. The Board considers Pexip’s operations
to have an overall positive eect on the global
environment. Pexip delivers videoconferencing
services, which can be used to reduce business
travel and commuting, thereby reducing carbon
emission, and improving the environment. Pexip’s
software also allows enterprises to increase the
lifetime of their technical equipment through
interoperability, giving the opportunity to reduce
e-waste. Pexip only produces software and
software-as-a-service and does not use products
or materials which are harmful to the natural
environment in the production of its services. Pexip
uses waste sorting and recycling schemes for
supplies and materials.
The direct impact of climate change is not expected
to have a material impact on Pexip’s financial
performance and accounts in the short term, as
Pexip has a limited carbon footprint and limited
physical infrastructure which can be impacted.
In the mid-term Pexip expects climate change
to have a positive eect on revenue due to the
positive nature of videoconferencing when it comes
to reducing travel and commuting, improving
the environment as described above. Similarly,
it may negatively impact the cost of operations,
mainly related to data centers and compute due to
increasing cost of electricity.
People and Organization
Pexip aims to be the leading People organization
in the industry and focuses heavily on people and
culture, inclusion, and diversity. Pexip works hard to
ensure that equality is practiced across all aspects
of business operations. Pexip’s goal is to oer an
equal opportunity, safe, and risk-free working
environment fostering individual growth and
enjoyment at work.
In 2021, Pexip had 535 employees, of which 114
were female and 421 male. The Company had six
part-time employees, three female, and three male.
The Company had 12 temporary employees of which
nine men and three female. 10 employees enjoyed
Annual Report 2021
33
Statement of the Board of Directors
parental leave in 2021, where eight men took 50
weeks in total, and two women took 24 weeks. Sick
leave amounted to 190 days. 68 men with 137 days
leave in total, and 30 women with 53 days leave.
The Board considers this to be satisfactory and no
special measures have been taken. The working
environment in Pexip is good, and during 2021 there
have been no work-related accidents or injuries.
At the end of the year, the parent company had no
employees.
The Group’s policies are deemed to be gender-
neutral in all respects. Pexip appreciates diversity
and believes in equal opportunity regardless of
gender, age, language, ethnicity, sexual orientation,
cultural aliation, disability, religion, or faith. Any
form of discrimination, harassment, bullying, or
victimization is unacceptable in Pexip.
Almost 30% of the new hires in 2021 were women,
a small improvement for the Company and well
above the current ratio of 21%, reflecting that
the Company operates in an industry that has
traditionally been male-dominated. That said, the
Company is committed to recruiting more women,
and has engaged an internal team of volunteers to
work on the topic of Equity, Diversity and Inclusion
based on the company values, the Pexip Way. This
initiative is designed to create awareness and build
engagement around recruiting and developing a
more diverse team.
The Group regularly conducts employee Net
Promoter Score (NPS) surveys to monitor employee
satisfaction and guide management actions,
providing employees with an anonymous feedback
channel in addition to other channels to raise what
they like about Pexip and the areas of improvement.
The response rate in 2021 was 62%. The result was
a promoter score of 56, reflecting a high satisfaction
rate among Pexip employees.
Pexip continuously monitors the eect Covid-19
has on employees. As the Company is founded on
a video-way-of-life, employees are accustomed to
remote working, but measures have been taken
to promote a sense of belonging and reinforce
the Pexip Way while people have been working
largely from home. The Pexip Way is embedded in
everything from recruitment, onboarding, learning,
and development at Pexip.
As Pexip grew with almost 50% in 2021, the
Company has increased both the size of the HR
team and expanded the initiatives designed to help
the Pexip team scale and grow the Pexip Way. Extra
eorts have been made to secure communication
flow and information availability, as well as enable
remote learning. Through the Pexip Academy, the
Company helps develop employees and complies
with ISO-regulated training. Courses include the
Pexip Way of Selling, Pexip Way of Coaching, and
Pexip Way of Leadership programs, all delivered
remotely to boost employee engagement and
growth in sales and leadership. The Company has
a 4-day virtual orientation program for new hires
to secure successful onboarding. Finally, Pexip has
implemented PexTalks, a systematic approach to
personal development and growth.
Research and Development (R&D)
Pexip’s core activity is R&D related to distributed
software platforms for videoconferencing and
collaboration. The continued momentum and the
results achieved in this area have been excellent,
as demonstrated with the innovations described
elsewhere in this report. The product development
strategy was assessed throughout the year.
The technology is developed with the aim to
make the company a supplier of comprehensive
collaboration software with focus on the needs of
large international corporations and public sector
organizations. Of the total R&D in 2021, Pexip
capitalized NOK 48 million (NOK 34 million) and
the remaining cost has been classified as operating
expenses.
Risk and Risk Management
Risk management in Pexip is based on the principle
that risk evaluation is an integral part of all business
activities, and is a part of the annual strategy review.
Pexip has developed its approach to risk assessment
and risk mitigation within financial reporting, and
within information security, where Pexip holds an
ISO 27001 certification as an external recognition of
its approach. Pexip’s key commercial, technological,
Annual Report 2021
34
Statement of the Board of Directors
and operational risk factors are summarized here.
Operational and Market Activities
Pexip may be unable to retain or replace its
founders, management and/or key IT-, sales-
and marketing professionals. Retaining Pexip’s
strong talent and leadership is vital due to their
extensive experience and skill sets within the
videoconferencing and collaboration industry,
which is required to support and develop Pexip’s
projects. It is also vital for Pexip’s operations to
retain or replace its IT professionals with expertise
within information security and privacy, as well
as certain IT professionals within R&D with skills
required to sustain and develop Pexip’s competitive
dierentiation. There is shortage of, and intense
competition for, sales and marketing professionals
with ability and expertise to sell product and
services to large worldwide businesses and
organizations with lengthy procurement cycles and
severe evaluation and negotiation processes.
Pexip may not be able to respond to rapid
technological changes, extend its platform or
develop new services in a highly competitive
market. The communications and collaboration
technologies market is highly competitive and
characterized by rapid technological change and
frequent new product and service introductions.
Pexip’s future profitability depends heavily on
its ability to enhance and improve the platform,
introduce new features and products and
interoperate across an increasing range of devices,
operating systems and third-party applications.
There can be no assurance that any attempts on
enhancements to the platform or new product
experiences, features or capabilities will be
compelling to users or gain market acceptance in a
timely and cost-eective manner.
Pexip is exposed to risk related to high upfront
sales and marketing costs, lengthy sales cycles
and unexpected deployment challenges due to
its sales and marketing to large businesses and
organizations. As Pexip’s main focus is on large
enterprise customers, a large proportion of the sales
and marketing costs are related to such customers.
These customers and potential customers have
lengthy procurement cycles and severe evaluation
and negotiation processes due to their leverage,
size, organizational structure, and approval
requirements, and often demand additional features,
support services and pricing concessions or require
additional security management or control features.
Pexip spends substantial time, eort and funds on
sales and marketing eorts to potential customers
without any assurance that this will produce any
sales.
Pexip is exposed to risk related to cyber-
threats. As a technology group that delivers an
end-to-end videoconferencing platform and digital
infrastructure, Pexip and its customers are subject
to cyber-attacks from cybercriminals. Rapid
changes in attack vectors makes it dicult to stop
attacks and adapt to new threats and the increased
social hacking creates a cyber-threat risk for Pexip.
Pexip is exposed to risk relating to system
failures, defects, or errors. Certain applications
oered to customers are hosted on Pexip’s own
servers, running in co-located data centers. Pexip
must maintain continuous data center operations
(including network, storage, and server operations)
to ensure adequate delivery of services. Pexip’s
data center operations may experience disruptions
or outages as a result of human error, equipment
error, cyberattacks, software failure or natural
disasters. Pexip’s platform and services are based
on inherently complex software technology, which
may have real or perceived defects, errors, failures,
vulnerabilities, or bugs in the platform and Pexip’s
products could result in negative publicity or
lead to data security, access, retention, or other
performance issues.
Operational Activities Risk Mitigation
To retain and attract talent, Pexip continuously
invests in strengthening the corporate culture, the
Pexip Way, as well as making sure Pexip is taking
advantage of all available talent through its diversity
initiatives. Pexip is also investing in its sales and
R&D capacity to stay ahead of competition. In order
to mitigate risks within cyber security and system
errors, Pexip invests in strengthening its system
architecture, as well as investing in competence
Annual Report 2021
35
Statement of the Board of Directors
development and awareness training. Since the
founding of the company Pexip has invested in
automated software testing to ensure a robust,
enterprise-grade product oering.
Customer Relationships and Third Parties
Pexip depends highly on existing customers
renewing their subscriptions. Pexip’s oerings
are in a highly competitive communications
and collaboration market, with fluctuating user
satisfaction, demand for products and/or services,
financial position of customers and acceptance
and use of communications and collaboration
technologies in general. Pexip’s business operations
depend highly on renewed subscription by its
existing customer base.
Pexip is exposed to risk related to the
interoperability of Pexip’s platform across
devices, operating systems, and third-party
applications. Compared to its competitors’
solutions, Pexip’s platform is accessible irrespective
of technology and device, and has integrations
with traditional video equipment, via browser,
collaboration tools, enterprise & internet streaming,
and telephony. Pexip is highly dependent on the
accessibility of its platform across these and other
third-party operating systems and applications
that it does not control. Third-party services
and products are constantly evolving, and Pexip
may not be able to modify its platform to assure
compatibility with that of other third parties
following development changes.
Customer Relationships and Third Parties
Risk Mitigation
Pexip invests substantial resources into R&D to
further develop its oering, and has also invested
in strengthening the Customer Success team and
data-driven methodology. In addition, Pexip has a
dedicated alliance team working with its strategic
partners to build joint customer value and explore
new areas of cooperation with its alliance partners.
Laws Regulations and Compliance
Pexip is exposed to risk relating to data
protection and data privacy regulations, licenses,
etc. Pexip receives, stores and processes personal
information and other user data through its business
and operations in multiple jurisdictions. This makes
Pexip exposed to data protection and data privacy
laws and regulations it must comply with, which all
impose stringent data protection requirements and
provides possibly high penalties for non-compliance,
in particular relating to storing, sharing, using,
processing, disclosing and protecting personal
information and other user data on its platforms.
Pexip is subject to laws and regulations in
several jurisdictions, including governmental
export and import controls. Pexip’s platform and
products are subject to governmental export and
import controls that could impair Pexip’s ability to
compete in international and/or national markets
due to specific licensing requirements. Any change
in export or import laws and regulations could
result in decreased use of the Pexip platform or
decreased ability to export or sell subscriptions to
the platform to existing and/or potential customers
with international operations.
Pexip is exposed to risks of claims and legal
proceedings, including intellectual property
right disputes. Pexip may be party to various legal
proceedings that arise in the ordinary course of
its business, including intellectual property rights
disputes. The value of intellectual property rights
is of high importance for Pexip, as it operates in a
highly competitive commercial environment where
the strength of the intellectual property rights
may be an important feature that distinguish Pexip
from its competitors. It is therefore important for
Pexip to ensure the value and commercial use of
its intellectual property rights. There can be no
assurance that third parties have not or may not
infringed intellectual property rights owned by
Pexip, who may have to challenge such parties’
rights to continue to use or sell certain products
and/or may seek damages from such parties.
Moreover, there can be no assurance that Pexip
may not infringe or be alleged to have infringed
intellectual property rights owned by third parties
who may challenge Pexip’s right to continue to use
or sell certain products and/or may seek damages
from Pexip. Any infringement or other intellectual
property claims made by or against Pexip could be
Annual Report 2021
36
Statement of the Board of Directors
time-consuming, result in costly litigation, cause
product delays, divert its Management from its
regular responsibilities or require Pexip to enter into
royalty or licensing agreements.
Laws Regulations and Compliance
Risk Mitigation
Pexip monitors the development of laws and
regulations in the markets it operates in, especially
within the data privacy area which has seen
significant development in recent years. Industry
standard insurance policies are also in place.
Financial and Market Risk
Pexip’s profitability, operating results and
working capital may fluctuate significantly.
With a strong focus on long-term growth and
significant investments in strengthening its growth
capacity, Pexip’s profitability, results of operations
and working capital is expected to fluctuate
significantly on a quarterly and annual basis. The
main levers to invest in will be increased sales
capacity and marketing spend as well as increased
R&D capacity, both of which will increase operating
costs. The long-term ambition is to have operating
profitability, in EBITDA margin, of more than 25%.
The subscription-based revenues may also fluctuate
significantly, both in the short-term and long-term.
Working capital may also fluctuate significantly
on a quarterly and on an annual basis, which could
have a material adverse eect on Pexip’s business
and financial performance. This may be caused by
factors beyond Pexip’s control, such as variations
in the timing of orders and deliveries, new product
introductions by Pexip and its competitors,
variations in spending budgets of customers, shifts
in market and industry emphasis and end user
demands, and general economic conditions and
economic conditions.
Pexip is exposed to foreign currency exchange
risk. Because a significant part of Pexip’s business
is conducted in currencies other than its functional
reporting currency (NOK, as defined below)
and Pexip has its majority of ARR in contracts
denominated in USD, Pexip will be exposed to
volatility associated with foreign currency exchange
rates. Exchange rate fluctuations may aect Pexip’s
financial results through translation of the profit
and loss accounts and balance sheets of foreign
subsidiaries into NOK. Currency risks may also arise
when Group companies enter into transactions
that are denominated in currencies other than their
functional currency. Pexip itself is also invoiced
in other currencies than its functional currency,
thus resulting in currency exposure from both a
customer and supplier position. Currency exposure
is the result of purchases of goods and services in
other currencies than Pexip’s functional currency
(transaction exposure) and of the conversion of
the balance sheets and income statements in
foreign currencies into NOK (translation exposure).
Such translation exposure does not give rise to an
immediate cash eect. Pexip does not use financial
instruments to hedge its exposure to foreign
exchange rate risks, and there is no guarantee
that Pexip’s financial results will not be adversely
aected by currency exchange rate fluctuations
or that any eorts by Pexip to engage in currency
hedging activities will be eective.
Pexip is exposed to risk relating to impairment
of intangible assets, including goodwill. The
Company’s audited consolidated financial statement
for the year ended December 31, 2021 was prepared
in accordance with the International Financial
Reporting Standards (IFRS), as adopted by the
European Union. As of December 31, 2021, Pexip’s
non-current assets amounted to approximately NOK
1,321 million which constituted 55% of Pexip’s total
assets, most of which are intangible assets including
NOK 663 million in goodwill. Goodwill acquired in a
business combination is not amortized pursuant to
IFRS, but is tested for impairment annually, or more
often, if an event or circumstance indicates that
an impairment loss may have been incurred. The
key assumption aecting the present value of cash
flows are the development of the net sales (expected
growth rate), profitability, the discount rate and the
growth rate. Changes in the development of the
key assumptions could lead to impairment losses
on goodwill, which could weaken Pexip’s financial
conditions, results of operations, equity and/or its
ability to pay dividends or distributions.
Annual Report 2021
37
Statement of the Board of Directors
Financial and Market Risk Mitigation
Pexip maintains a robust balance sheet with a
significant cash position in order to fund its growth
investments and working capital needs. In addition,
the company has very limited interest-bearing debt.
Pexip does not use hedging instruments, but holds
its cash holdings in a range of currencies according
to its main cash outflows. Pexip currently has
significant headroom in its impairment tests.
Impact from Covid-19
Covid-19 has created disruption to the global
economy. Pexip’s business has continued to develop
well in 2021, partly due to the fact that Pexip’s
products and services are within videoconferencing,
an industry that has seen a significant increase
in use-cases during the pandemic. Pexip’s own
operations have pivoted to an all-digital workflow
where required, and most Pexip locations have been
in some lockdown situations during 2021. Moreover,
Pexip employees’ expertise within videoconferencing
and hybrid-working solutions has contributed to
a smooth transition for the Pexip workforce to
the required changes in ways of working that the
pandemic has caused. The pandemic has required
extraordinary eorts from the organization to
support existing and new customers. This has
enabled many of Pexip’s customers to maintain
business continuity and deliver vital services in
industries such as healthcare, public services
and pharmaceuticals. In the short term, renewed
Covid-19 restrictions will cause limited use of oces
and delays in roll-out of new video rooms.
War in Ukraine
The development in Ukraine, and the impact on
business in the region is continuously changing and
the following statements apply up to the date of
the release of this report and may not be applicable
after the date of release.
The war in Ukraine has impacted Pexip in several
ways. Pexip has three remote employees based in
the conflict area and several employees from the
involved countries in other oces. Pexip’s main
concern has been to ensure their safety and oer
support to them in the best way. The financial eect
from this is minimal until this date.
In response to the attack on Ukraine, several
extensive packages of sanctions towards Russia
have been launched. The imposed sanctions are
far-reaching. Norway has adhered to all EU
sanctions and has transposition sanctions into
Norwegian law. To ensure compliance with the
abovementioned measures, Pexip continuously
maps our exposures to Russia, Donetsk and
Luhansk and Belarus. This includes, for example,
systematic identification and assessment of current
relationships with banks, Resellers and Customers
based in Russia or wholly or partly owned by
Russian interest. All such relations are thoroughly
considered to ensure compliance with sanctions.
Pexip has ten end customers in Russia and three in
Ukraine, of which all have purchased the self-hosted
software, with around USD 0.3 million in annual
recurring revenue from these customers. One third
of this is scheduled for renewal in Q1, which will not
happen due to the ongoing conflict and sanctions.
As of this date, Pexip has around USD 65,000 in
unpaid invoices, in which we see increased risk
in getting paid. The war has aected Pexip as
Pexip has stopped all new sales and renewals to
companies in Russia. Further, many companies
in the corresponding countries and regions are
aected by the situation and some have postponed
purchase decisions for video solutions. This will
impact the growth in annual recurring revenue and
revenue for Q1 2022.
Corporate Governance
Good corporate governance provides the foundation
for long-term value creation, to the benefit of
shareholders, employees and other stakeholders.
The Board has established a set of governance
principles in order to ensure a clear division of roles
between the Board, the executive management
and the shareholders. The principles are based
on the Norwegian Code of Practice for Corporate
Governance. Pexip is subject to annual corporate
governance reporting requirements under section
3-3b of the Norwegian Accounting Act and
the Norwegian Code of Practice for Corporate
Governance, cf. section 7 on the continuing
obligations of stock exchange listed companies.
The Accounting Act may be found (in Norwegian) at
Annual Report 2021
38
Statement of the Board of Directors
www.lovdata.no. The Norwegian Code of Practice
for Corporate Governance, which was last revised
on October 14, 2021, may be found at www.nues.
no. The annual statement on corporate governance
for 2021 has been approved by the Board and can be
found on page 39 in this annual report.
An insurance policy is in place for members of the
Board of Directors and the CEO for their potential
liability towards the Company and third parties. The
insurance covers the Board’s and the CEO’s legal
personal liability for financial damage caused by the
performance of their duties.
Share and Shareholder Matters
The Pexip share is listed on Oslo Børs under the
ticker PEXIP. The company was listed on Oslo Børs
on May 14, 2020 with a subscription price of NOK
63.00 per share.
Pexip has only one share class, and all shares have
equal rights in the Company.
On December 31, 2021, the share capital of Pexip
Holding ASA was NOK 1,566,445.065 divided into
104,429,671 ordinary shares with a par value of NOK
0.015. The share had a closing price on December
30, (last day the share was traded in 2021) of NOK
41.00 per share.
The turnover of shares is a measure of traded
volumes. On average, 508,018 Pexip shares were
traded on Oslo Børs every day in 2021.
As of December 31, 2021, Pexip had 6,938
shareholders registered in the Norwegian Central
Securities Depository (VPS) The shareholders were
from 61 dierent countries across the world, with
40% of holdings were held by shareholders outside
Norway. The top 20 shareholders held 44.4% of the
registered shares.
The shares are registered in the VPS. The company’s
registrar is DNB Markets. The shares carry the
securities number ISIN NO 0010840507.
Pexip aims to have an open and transparent dialog
with shareholders and investors. Pexip has a set
of guidelines for investor relations. The purpose of
the investor relations guidelines is to ensure that
relevant, accurate and timely information is made
available to the market as a basis for fair pricing
and regular trading of the company’s shares, and
the company is perceived as a visible, accessible,
reliable and professional company by the capital
market, while at the same time always observing
the rules and legislation for listed companies on
Oslo Børs.
Pexip ensured that all relevant information
required for external evaluation of the company
was published in accordance with applicable rules
and guidelines set by Oslo Børs. The company
also conducted investor roadshows with investors
across the globe in connection with the interim
results and participated on a number of industry
and investment seminars during the year.
Going Concern
The Board confirms that Pexip qualifies as a going
concern and the financial statements have been
prepared on this basis. The Board has confirmed
that this assumption can be made on the basis of
the Group’s strategy, outlook and budgets.
Annual Report 2021
39
Statement of the Board of Directors
Oslo, March 30, 2022
Board of Directors and CEO of Pexip Holding ASA
Michel Sagen
Chair of the Board
Øystein Hem
CFO and Interim CEO
Per Kogstad
Board Member
Irene Kristiansen
Board Member
Kjell Skappel
Board Member
Marianne Wergeland Jenssen
Board Member
Statement
of Corporate
Governance
(NUES)
Table of content
1. Implementation and Reporting on
Corporate Governance
2. Business
3. Equity and Dividends
4. Equal Treatment of Shareholders and
Transactions with Close Associates
5. Shares and Negotiability
6. General Meetings
7. Nomination Committee
8. Board of Directors: Composition
and Independence
9. The Work of the Board
10. Risk Management and Internal Control
11. Remuneration of the Board of Directors
12. Remuneration of Executive Personnel
13. Information and Communication
14. Takeovers
15. Auditor
41
41
42
42
43
43
44
44
45
46
48
48
49
49
50
Annual Report 2021
41
Statement of Corporate Governance (NUES)
Corporate Governance
Good corporate governance provides the basis for long-term value creation,
to the benefit of shareholders, employees and other stakeholders. The Board
of Pexip has established a set of governance principles in order to ensure
a clear division of roles between the Board, the executive management
and the shareholders. The principles are based on the Norwegian Code of
Practice for Corporate Governance.
Pexip is subject to annual corporate governance
reporting requirements under section 3-3b of the
Norwegian Accounting Act and the Norwegian Code
of Practice for Corporate Governance, cf. section
7 on the continuing obligations of stock exchange
listed companies. The Accounting Act may be found
(in Norwegian) at www.lovdata.no. The Norwegian
Code of Practice for Corporate Governance, which
was last revised on October 14, 2021, may be found
at www.nues.no.
The annual statement on corporate governance for
2021 follows below. The statement was approved by
the Board on March 30, 2022.
1. Implementation and Reporting
on Corporate Governance
The Board is committed to building a sound and
trust-based relationship between Pexip and the
Company’s shareholders, the capital market
participants, and other stakeholders.
Pexip’s overall principles for corporate governance
are approved by the Board and can be found at
https://investor.pexip.com/corporate-governance.
Pexip complies with the Norwegian Code of
Practice for Corporate Governance (the code) issued
by the Norwegian Corporate Governance Board,
latest edition of October 14, 2021.
The Board’s annual statement on how Pexip
has implemented the code is set out below. The
statement covers each section of the code, and
deviations from the code, if any, are specified under
the relevant section.
2. Business
Pexip’s articles of association are available on
Pexip’s website.
Article 3 of these articles, Pexip’s business
objectives states: “The Company’s objective is
to operate, own and/or invest in businesses or
development related to telecommunication services
and telecommunication solutions, investment
in other companies or development of other
businesses, and anything related to the foregoing.
Within the framework of its articles of association,
Pexip has established goals and strategies for its
business.
Pexip’s objectives and strategies are presented
in the annual report in section “About Pexip”. The
evaluation of Pexip’s objectives and strategies as
well as risk and risk management is described in
the Board’s report. The “Environmental, Social and
Governance” section in the Board’s report covers
considerations on sustainable value creation.
When carrying out its work on defining objectives,
strategies, and risk profiles to create value
for shareholders in a sustainable manner, the
Board takes into account financial, social and
environmental considerations. The Board has
guidelines for how it integrates considerations
related to its stakeholders into its value creation.
The Board evaluates these objectives, strategies
and risk profiles at least yearly.
Annual Report 2021
42
Statement of Corporate Governance (NUES)
3. Equity and Dividends
Equity
As of December 31, 2021, Pexip had a consolidated
equity of NOK 1,908.2 million, corresponding to an
equity ratio of 79.9%.
The Board considers that Pexip has a capital
structure that is appropriate for its objectives,
strategy and risk profile.
Dividends
In deciding whether to propose a dividend and in
determining the dividend amount, the Board will
comply with the legal restrictions set out in the
Norwegian Public Limited Liabilities Companies
Act and take into account the Company’s capital
requirements, including capital expenditure
requirements, the Company’s financial condition,
general business conditions and any restrictions
that its contractual arrangements in place at the
time of the dividend may place on its ability to pay
dividends and the maintenance of appropriate
financial flexibility.
The proposal to pay a dividend in any year is, in
addition to any legal restrictions, further subject
to any restrictions in the Company’s borrowing
arrangements or other contractual arrangements in
place at the time.
The Company is focusing on pursuing growth
through expanding its sales operations, moving
into new customer segments and further
devloping and enhancing its product oering (see
section 8.3 “Strategy and objectives”), and does not
anticipate paying any dividends for the next three to
five years. The Company has not paid any dividends
on its shares during the financial years ended
December 31, 2021, 2020, 2019, 2018 and 2017.
Board Mandates to Increase the
Share Capital
At the Annual General Meeting of the Company on
May 20, 2021 the Board was authorized to increase
the share capital of Pexip for general purposes by
up to NOK 310,000 in one or more share capital
increases through issuance of new shares. The
authorization was only to be used in connection with
(i) capital raisings for the financing of the Company’s
business; and (ii) in connection with acquisitions and
mergers. The authorization can be used in situations
described in the Norwegian Securities Trading Act
section 6-17. The authorization was valid until the
annual general meeting in 2022, however no longer
than until June 30, 2022. The Board did not issue
any shares in relation to this authorization.
At the Annual General Meeting of the Company on
May 20, 2021 the Board was authorized to increase
the share capital of Pexip by up to NOK 155,700
in one or more share capital increases through
issuance of new shares. The authorization was only
be used in connection with issuance of shares to the
Group’s employees or board members in relation
with option and incentive programs, both individual
and general. The authorization can be used in
situations as described in the Norwegian Securities
Trading Act section 6-17. The authorization is valid
until the annual general meeting in 2022, however
no longer than until June 30, 2022. In relation to this
authorization, the Board issued 612,288 new shares
and increased the share capital with NOK 9,184.32
since Annual General Meeting on May 20, 2021 and
up to the date of this report.
4. Equal Treatment of
Shareholders
The Company’s share capital is NOK 1,566,445.065,
divided into 104,429,671 shares, each with a nominal
value of NOK 0.015.
The Board and the executive management are
committed to ensuring equal treatment of all the
Company’s shareholders and that transactions with
related parties take place on an arm’s length basis.
Note 27 to the consolidated financial statements
provides details about transactions with related
parties. Financial relationships related to the
directors and executive personnel are described in
note 4.
In June 2021, the Company purchased 1,182,950
of its own shares at an average price of NOK 74.39
per share through Oslo Børs. The share buyback
Annual Report 2021
43
Statement of Corporate Governance (NUES)
program was publicly disclosed in a stock exchange
announcement on May 31, 2021.
5. Shares and Negotiability
The Company’s shares are freely negotiable. The
articles of association do not impose any restriction
on the negotiability of the shares. There are no
general restrictions on the purchase or sale of
shares by members of the Company’s management
as long as they comply with the regulations on
insider trading and in the Market Abuse Regulation.
Each share carries one vote.
6. General Meetings
All shareholders have the right to participate in the
general meetings of the Company, which exercise
the highest authority of the Company. The Board
ensures that its shareholders can attend and
participate in the general meeting. The annual
general meeting will take place on April 21, 2022.
The Group’s financial calendar is published via Oslo
Børs and in the investor relations section of Pexip’s
website.
Notice, Registration and Participation
The full notice for general meetings shall be
sent to shareholders no later than 21 calendar
days prior to the meeting. The notices for such
meetings shall include documents providing the
shareholders with sucient detail in order for
the shareholders to make an assessment of all
the cases to be considered as well as all relevant
information regarding procedures of attendance
and voting. The notice and the documents may
be sent to or made available for the shareholders
by electronic communication, to the extent
allowed in the Company’s articles of association.
The members of the Board and the Chair of the
nomination committee are present at the general
meeting. The Company’s auditor shall normally
be present at general meetings. The deadline
for registering attendance is set as close to the
meeting as possible, and, pursuant to the articles
of association; no sooner than five days in advance
of the general meeting. Shareholders who intend
to attend a general meeting of the Company shall
give the Company written notice of their intention
within a time limit given in the notice of the general
meeting, which cannot expire earlier than five days
before the general meeting. Shareholders, who have
failed to give such notice within the time limit, can
be denied admission.
Proxy Form, Advance Voting and Voting
Restrictions
Notices with documentation are made available
on Pexip’s website immediately after the
documentation has been issued as a stock exchange
announcement.
General-meeting notices provide information on the
procedures for attendance and voting, including the
use of proxies. Shareholders who cannot attend in
person are encouraged to appoint a proxy.
A proxy form, where a proxy has been named, is
framed in such a way that the shareholder can
specify how the proxy should vote on each issue
to be considered. The notices include information
on the right to raise issues for consideration at the
general meeting, including the relevant deadlines.
Shareholders may cast a written vote in advance in
matters to be discussed at the general meetings of
the Company. Such votes may also be cast through
electronic communication.
The access to cast votes in advance is subject to
the presence of a safe method of authenticating the
sender. The Board decides whether such a method
exists before each individual general meeting.
The notice of the general meeting states whether
votes in advance are permitted and which
guidelines, if any, that have been issued for such
voting.
Chairing Meetings, Elections, etc.
General meetings will normally be chaired by the
General Counsel. The Board will however evaluate
whether it is appropriate to engage an external
Chair to chair the meeting.
The Group’s members of the Board and Chief
Executive Ocer (CEO) are required to attend, in
accordance with the instructions for the Board.
Annual Report 2021
44
Statement of Corporate Governance (NUES)
The nomination committee is encouraged to
attend those meetings where the election and
remuneration of directors and members of the
nomination committee are to be considered. The
Board requires that the Chair of the nomination
committee is present. The Group’s auditor is
normally present at the Annual General Meeting.
The general meeting is normally invited to vote for a
complete shareholder-elected Board. As a result, no
opportunity has been provided to vote in advance for
individual candidates.
Minutes from general meetings are published
as soon as practicable via the stock exchange’s
reporting system (www.newsweb.no, ticker code:
PEXIP) and in the investor relations section of
Pexip’s website.
7. Nomination Committee
The nomination committee is laid down in article
8 of the Company’s articles of association. The
Company shall have a nomination committee,
elected by the general meeting. The members of
the nomination committee should be selected to
take into account the interests of shareholders
in general, and the majority of the nomination
committee should be independent of the Board
and the executive management team. No board
member or member of the executive management
team should serve on the nomination committee.
Members of the executive management team should
not be members of the nomination committee.
The nomination committee shall present proposals
to the general meeting regarding (i) election of
the Chair of the Board, board members and any
deputy members, and (ii) election of members of the
nomination committee. The nomination committee
shall also present proposals to the general meeting
for remuneration of the Board and the nomination
committee, which is to be determined by the
general meeting.
In its work, the nomination committee may
contact shareholders, members of the Board, the
management and external advisers. Shareholders
should be given the opportunity to propose board
member candidates to the Nomination Committee.
The nomination committee shall give considerable
weight to the wishes of the shareholders when
making its recommendations.
Members of the nomination committee are elected
for a term of two years but may be reelected. The
members may be removed or replaced at any time
by a resolution of the general meeting. In order to
ensure continuity, a maximum of two members
should be up for election at any time.
The annual general meeting stipulates the
remuneration to be paid to the nomination
committee. The nomination committee’s expenses
shall be covered by the Company.
The general meeting shall adopt instructions for the
nomination committee.
The Annual General Meeting on March 20, 2020
elected Dag S. Kaada (Chair), Oddvar Fosse
and Arild Resen as members of the nomination
committee for a period up to the annual general
meeting in 2021. The annual general meeting on
May 20, 2021 made no changes to the composition
of the committee. No directors or members of
executive management are represented in the
nomination committee.
8. Board of Directors:
Composition and Independence
Pursuant to the articles of association, the Board
shall consist of between 3 and 7 board members,
as decided by the general meeting. The Board
currently has five shareholder-elected directors.
Directors and the Chair of the Board are currently
elected by the general meeting for a one-year term.
The composition of the Board is intended to secure
the interests of the shareholders in general, while
the directors also collectively possess a broad
business and management background as well
as in-depth sector understanding and expertise
in investment, financing and capital markets.
Weight is also given to the Board’s ability to make
independent judgements of the business in general
Annual Report 2021
45
Statement of Corporate Governance (NUES)
and of the individual matters presented by the
executive management. Consideration has also been
given to gender representation and independence of
directors from the Company and its management.
The Board does not include executive personnel.
All shareholder elected directors are independent
of Pexip’s executive management and commercial
partners. The Chair of the Board has during 2021
worked as support to executive management in the
initial phase as a listed company, and is currently
doing this at a 60% engagement.
Details on background, experience and
independence of directors are presented on Pexip’s
website.
13 board meetings were held in 2021, in addition to
several Board workshops and committee meetings.
Each board member’s attendance at Board
meetings is recorded by the Company.
Members of the Board are encouraged to own
shares. The shareholding of each board member
can be found in note 16 to the consolidated financial
statements and in the biography of each board
member on https://investor.pexip.com/corporate-
governance-Board.
9. The Work of the Board
The Board shall prepare an annual plan for its
work with special emphasis on goals, strategy and
implementation. The Board’s primary responsibility
shall be (i) participating in the development and
approval of the Company’s strategy, (ii) performing
necessary monitoring functions and (iii) acting as
an advisory body for the executive management
team. Its duties are not static, and the focus will
depend on the Company’s ongoing needs. The Board
is also responsible for ensuring that the operation
of the Company is compliant with the Company’s
values and ethical guidelines. The Chair of the Board
is responsible for ensuring that the Board’s work
is performed in an eective and correct manner.
The Board shall ensure that the Company has
proper management with clear internal distribution
of responsibilities and duties. A clear division of
work has been established between the Board
and the executive management team. The CEO
is responsible for the executive management of
the Company. All members of the Board shall
regularly receive information about the Company’s
operational and financial development. The
Company’s strategies shall regularly be subject to
review and evaluation by the Board. The Board shall
prepare an annual evaluation of its work.
The Role of the Board
The Board shall contribute with expertise and
experience to management. It shall set the vision,
values and long-term objectives of the Company.
The Duties of the Board
The duties of the Board are subject to the existing
laws, the Company’s articles of association, powers
and instructions given by the general meeting,
these instructions and the Company’s Corporate
Governance Policy. The main duties of the Board
may be divided in:
• The Board’s administration of the Company,
cf. the Norwegian Public Limited Liability
Companies Act (the Companies Act) Section
6-12
• The Board’s supervisory responsibility, cf. the
Companies Act Section 6-13
The Board shall in general get involved and consider
all matters that are significant to the Company’s
financing, operational performance and long-term
development.
The Board’s Administration of the Company
The Board shall ensure an adequate organization of
the business, including appointment and discharge
of the CEO and issuing of instructions to him
(the Companies Act Section 6-2) The Board is
responsible for issuing any incentive programs for
the management of the Company.
The Board shall approve the overall strategy,
business plans and budgets for the Company.
The strategy discussions shall be finalized well in
time before the yearly budget process is started.
The Board shall, when necessary, timely initiate
Annual Report 2021
46
Statement of Corporate Governance (NUES)
discussions on strategic areas, especially within
re-structuring and/or change of the administration
and/or the management.
Through an adequate monthly reporting system,
the Board members shall keep themselves fully
updated on the Company’s operational and financial
development. The information shall be given in a
meeting and/or in writing.
The annual report and the annual accounts shall be
submitted to the Board for approval within relevant
legal time frames. The Board shall submit its annual
report, which shall include information about net
profit or loss and prospects for the future (cf. the
Accounting Act Section 3-3, cf. Section 3-8).
The Board shall, in cooperation with the executive
management team, issue the Company’s dividend
policy and is responsible for submitting proposals
(if any) for distribution of dividend to the general
meeting.
The Board’s Supervisory Responsibility
The Board shall supervise the management of the
Company’s business in general. The Board may
issue instructions for the CEO.
Adequate Equity
The Board shall see to that the Company is at all
times funded and financed adequately in terms of
the risk and scope of the Company’s business.
The Board’s Duties in Relation to the
General Meeting
The general meetings are convened by the Board
(the Companies Act Section 5-8). The Board shall
prepare all matters which shall be considered by the
general meeting.
Directors of the Board and the CEO have the right
to attend and speak at general meetings. The Chair
of the Board and the CEO shall, save in case of
legal absence, attend general meetings unless the
general meeting in each case decides otherwise (the
Companies Act Section 5-5).
The Board shall submit its proposal to profit and
loss account and balance sheet, and its proposal
to application of profit or coverage of loss to each
shareholder (the Companies Act Section 5-6 third
paragraph) preferably together with the notice to
the general meetings, but not later than one week
before the matter shall be considered by the general
meeting.
Related Parties
Any transactions, agreements or arrangements
between the Group and the Company’s
shareholders, members of the Board, members of
the executive management team or close associates
of any such parties may only be entered into as part
of the ordinary course of business and on arm’s
length market terms. All such transactions shall
where relevant comply with the procedures set out
in the Norwegian Public Limited Liability Companies
Act. The Board will arrange for a valuation to be
obtained from an independent third party unless the
transaction, agreement or arrangement in question
is considered to be immaterial. The Company’s
financial statements shall provide further
information about transactions with related parties
in accordance with applicable accounting principles.
Board members shall immediately notify the Board
and members of the executive management team
shall immediately notify the CEO (who where
relevant will notify the Board) if they have any
material direct or indirect interest in any transaction
entered into by the Group.
Other Responsibilities
The Board shall be responsible for all other duties
which are attributed to the Board pursuant to laws
or the articles of association, and the Board shall
keep itself informed about or resolve matters which
in the opinion of the administration or the Chair of
the Board is natural or required.
10. Risk Management and
Internal Control
As set out in the corporate governance guidelines
of Pexip Holding ASA, the company’s Board shall
ensure that the Company has sound internal
Annual Report 2021
47
Statement of Corporate Governance (NUES)
control and systems for risk management that are
appropriate in relation to the extent and nature
of the Company’s activities. This document sets
out the routines for such internal control and risk
management.
Objective of the risk management and
internal control
The objective for the Company’s risk management
and internal control is to manage, rather than
eliminate, exposure to risks related to the successful
conduct of the Company’s business and to support
the quality of its financial reporting. Eective risk
management and good internal control contribute to
securing shareholders’ investment in the Company
and the Company’s assets.
The Board’s Responsibility for Risk
Management and Internal Control
The Board shall ensure that the Company’s internal
control comprises guidelines, processes, duties,
conduct and other matters that:
• facilitate targeted and eective operational
arrangements for the Company and also make it
possible to manage commercial risk, operational
risk, the risk of breaching applicable legislation
and regulations as well as all other forms of
risk that may be material for achieving the
Company’s commercial objectives
• contribute to ensuring the quality of internal
and external reporting
• contribute to ensuring that the Company
operates in accordance with the relevant
legislation and regulations as well as with its
internal guidelines for its activities, including
the Company’s ethical guidelines and corporate
values
The Board shall form its own opinion on the
Company’s internal controls, based on the
information presented to the Board. Reporting
by executive management to the Board shall
be prepared in a format which gives a balanced
presentation of all risks of material significance, and
of how the internal control system handles these
risks.
Internal Control and Risk Management
System
The Board shall develop and assess the need
for internal control systems which address the
organization and execution of the Company’s
financial reporting. These systems shall be
continuously developed in light of the Company’s
growth and situation.
The Board shall also focus on the need for
developing ethical guidelines ensuring that
employees can safely communicate to the Board
matters related to illegal or unethical conduct by the
Company. The Board shall ensure that the Company
has the necessary routines and hired personnel to
ensure that any outsourced functions are handled in
a satisfactory manner.
Pexip’s primary internal control routines related
to financial reporting are as follows: The Finance
department prepares a monthly financial report
which also contains the most important operational
KPIs and qualitative developments, comparing the
results to previous period and to budget. This report
is reviewed by the CEO, the management team and
the Board. The Board Audit Committee reviews
each quarterly financial statement with a particular
focus on risk elements, such as special transactions
and estimates, and the Board reviews and approves
quarterly and annual reports.
Each year, the external auditor performs tests of the
Company’s internal control routines and presents
the findings to the Board. On this basis, the Board
reviews managements plan for further development
of the Company’s internal control system.
Annual Review by the Board
The Board shall carry out an annual review of the
Company’s most important areas of exposure to risk
and of the Company’s internal control systems. The
Board’s review shall cover all matters included in
reports to the Board during the course of the year,
together with any additional information that may
be necessary to ensure that the Board has taken
into account all matters related to the Company’s
internal control.
Annual Report 2021
48
Statement of Corporate Governance (NUES)
When conducting their review, the Board shall pay
attention to:
• changes relative to previous years’ reports in
respect of the nature and extent of material
risks and the Company’s ability to cope with
changes in its business and external changes
• the extent and quality of management’s routine
monitoring of risks and the internal control
system and, where relevant, the work of the
internal audit function
• the extent and frequency of management’s
reporting to the Board on the results of such
monitoring, and whether this reporting makes
it possible for the Board to carry out an overall
evaluation of the internal control situation in the
Company and how risks are being managed
• instances of material shortcomings or
weaknesses in internal control that come
to light during the course of the year which
have had, could have had or may have had a
significant eect on the Company’s financial
results or financial standing
• to which extent the Company’s external
reporting process functions
The Board shall provide an account in the annual
report of the main features of the Company’s
internal control and risk management systems as
they relate to the Company’s financial reporting.
11. Remuneration of the Board
of Directors
The general meeting determines the Board’s
remuneration annually, normally in advance, on the
basis of recommendations from the nomination
committee. Remuneration of Board members
shall be reasonable and based on the Board’s
responsibilities, work, time invested and the
complexity of the enterprise. The Board shall be
informed if individual Board members perform tasks
for the Company other than exercising their role
as Board members. Work in sub-committees may
be compensated in addition to the remuneration
received for Board membership. This is further
described in the Pexip’s Remuneration Guidelines
and Remuneration report for 2021.
With the exception of the Chair of the Board,
none of the directors have undertaken any special
assignments for Pexip other than their work on the
Board and Board committees. Directors are unable
to accept such assignments without approval from
the Board in each case.
12. Salary and Other
Remuneration of Executive
Personnel
The Board has a remuneration committee. The main
responsibilities of the committee are to evaluate and
propose the remuneration guidelines and issue an
annual report on the compensation of the executive
management team, which shall be included in the
Company’s annual accounts pursuant to applicable
rules and regulations, including accounting
standards, promulgated from time to time. This
is further described in Pexip’s Remuneration
Guidelines and Remuneration report for 2021.
Changes to the Executive Management
and the Board
The annual general meeting on May 20, 2021 re-
elected the following Board, in accordance with the
Board’s proposal:
(i) Michel Sagen, chair
(ii) Kjell Skappel, member
(iii) Per Kogstad, member
(iv) Irene Kristiansen, member
(v) Marianne Wergeland Jenssen, member
All of the above were elected for a term of one year.
No new deputy members were elected.
On August 30, 2021 Nicolas Cormier assumed the
position of Chief Technology Ocer. He previously
held the role as Chief Operating Ocer, and is
one of the founding engineers in Pexip. The role
was previously held by Giles Chamberlin, who
has assumed a part-time position as a software
engineer.
Annual Report 2021
49
Statement of Corporate Governance (NUES)
13. Information and
Communications
The Board has established guidelines for investor
communication. Pexip’s communication with
the capital markets is based on the principles of
transparency, full disclosure and equality. These
guidelines are published on investor.pexip.com.
The CEO, CFO and Director of Investor Relations
are responsible for the main dialogue with the
investor community, hereunder the Company’s
shareholders.
Pexip follows the Norwegian corporate governance
code. This includes the code’s policy and principles
for publication of relevant information. Therefore,
information shall at all times be available on Pexip’s
investor website (investor.pexip.com).
English will be the primary language used for
investor communication. Stock exchange notices
and other formal communications will be published
in English. Information to the stock market is
published in the form of annual and interim reports,
press releases, stock exchange announcements and
investor presentations. All information considered
relevant and significant for valuing the Company’s
shares will be distributed and published in English
via Oslo Børs disclosure system, www.newsweb.no,
and via Pexip’s investor website (investor.pexip.com)
simultaneously.
Pexip holds public presentations in connection
with the announcement of quarterly and annual
financial results as well as strategic updates. The
presentations are also available as live presentations
via the internet. Presentation material is made
available via Oslo Børs’ news site www.newsweb.no
and investor.pexip.com.
Pexip gives weight to maintaining an open and
ongoing dialogue with the investor community,
hereunder frequent meetings with investors, fund
managers, analysts and journalists. The Company
is also present at relevant investor conferences and
seminars. Presentations held at such events are
made public via investor.pexip.com.
The guidelines for investor communication state
that in the last three weeks prior to distribution and
publication of company results, no meetings with
shareholders, investors or analyst are to be held.
Pexip also has the right to put into eect Silent
Periods in connection with other corporate events.
In Silent Periods, no comments will be given to other
stakeholders, such as the press, on Pexip’s results
and future development.
Reporting of financial and other information shall
be timely and accurate. The main purpose of this
information presents a complete picture of Pexip’s
financial results and position as well as articulating
Pexip’s long-term goals and potential, including its
strategy, value drivers and important risk factors.
The Group publishes a financial calendar every year
with an overview of the dates of important events,
including the general meeting, publication of interim
reports and open presentations. This calendar is
made available as a stock exchange announcement
and on Pexip’s website as soon as it has been
approved by the Board.
14. Takeovers
The Board has established guiding principles for
responding to possible takeover bids.
In a take-over process, should it occur, the Board
and the executive management team each have
an individual responsibility to ensure that the
Company’s shareholders are treated equally and
that there are no unnecessary interruptions to the
Company’s business activities. The Board has a
particular responsibility in ensuring, to the extent
possible, that the shareholders have sucient
information and time to assess the oer.
In the event of a take-over process, the Board shall
ensure that:
• the Board will not seek to hinder or obstruct
any takeover bid for the Company’s operations
or shares unless there are particular reasons for
doing so;
Annual Report 2021
50
Statement of Corporate Governance (NUES)
• the Board will not undertake any actions
intended to give shareholders or others an
unreasonable advantage at the expense of other
shareholders or the Company;
• the Board will not institute measures with the
intention of protecting the personal interests of
its members at the expense of the interests of
the shareholders; and
• the Board shall be aware of the particular duty
it has for ensuring that the values and interests
of the shareholders are protected.
In the event of a take-over bid, the Board will, in
addition to complying with relevant legislation
and regulations, seek to comply with the
recommendations in the Norwegian Code of
Practice for Corporate Governance unless there are
particular reasons not to. This includes obtaining a
valuation from an independent expert. On this basis,
the Board will seek make a recommendation as to
whether or not the shareholders should accept
the bid.
15. Auditor
The external auditor, Deloitte, annually presents
its overall plan for the audit of Pexip for the audit
committee’s consideration.
The external auditor’s involvement with the Board
during 2021 related to the following:
• Presented the main features of the audit work.
• Attended board meetings approving the
financial statements, reviewing possible
significant changes in accounting principles,
assessing significant accounting estimates, and
considering all possible disagreements between
the external auditor and executive management.
• Reviewed Pexip’s internal control procedures
and systems, including the identification of
weaknesses and proposals for improvements.
• Held a meeting with the Board without the
presence of the executive management.
• Confirmed its independence, and provided
an overview of non-audit services provided to
Pexip.
• During 2021, the external auditor attended six
meetings with the audit committee in addition
to one meeting with the Board.
• Pursuant to the code, the Board has established
guidelines for Pexip’s management use of the
external auditor for non-audit services.
The Board reports annually to the annual general
meeting on the external auditor’s total fees, split
between audit and non-audit services. The annual
general meeting approves the auditor’s fees for the
holding company.
Oslo, March 30, 2022
Board of Directors and CEO of Pexip Holding ASA
Michel Sagen
Chair of the Board
Øystein Hem
CFO and Interim CEO
Per Kogstad
Board Member
Irene Kristiansen
Board Member
Kjell Skappel
Board Member
Marianne Wergeland Jenssen
Board Member
Executive
Management
Annual Report 2021
52
Executive Management
Executive Management
Nico Cormier
Chief Technology Ocer
Tom-Erik Lia
Chief Strategy Ocer
Øystein Hem
Interim CEO and
Chief Financial Ocer
Åsmund O. Fodstad
Chief Revenue Ocer
Ingrid Woodhouse
Chief People Ocer
Patricia Auseth
Chief Marketing Ocer
John Thorneycroft
SVP Business Management
Board of
Directors
Annual Report 2021
54
Board of Directors
Board of Directors
Marianne Wergeland Jenssen
Board Member
Irene Kristiansen
Board Member
Michel Sagen
Chair of the Board
Per Kogstad
Board Member
Kjell Skappel
Board Member
Consolidated
Accounts
Annual Report 2021
56
Consolidated Statement of Profit or Loss
Note Year ended December 31
(NOK 1,000) 2021 2020
Revenue 3 805 518 678 513
Cost of sale 76 940 42 583
Salary and personnel expenses 4,23,24 634 422 400 483
Other operating expenses 5 218 615 179 960
Other gains (losses) -161 -141
EBITDA -124 297 55 628
Depreciation and amortization 9,10,12 73 726 47 330
Operating profit or loss -198 023 8 298
Financial income 6 517 141
Financial expenses 6 -4 638 -29 890
Net gain and loss on foreign exchange dierences 6 6 897 -80 527
Financial income/(expenses) - net 2 776 -110 276
Profit or loss before income tax -195 247 -101 978
Income tax expense 7 -37 923 -12 968
Profit or loss for the year 6 -157 324 -89 010
Profit or loss is attributable to:
Owners of Pexip Holding ASA -157 324 -89 010
Earnings per share
Basic earnings per share 8 -1.53 -0.95
Diluted earnings per share 8 -1.53 -0.95
Annual Report 2021
57
Consolidated Statement of Comprehensive Income
Year ended December 31
(NOK 1,000) 2021 2020
Profit or loss for the year -157 324 -89 010
Items that may be reclassified to profit or loss:
Exchange dierence on translation of foreign operations 2 988 -5 464
Total comprehensive income for the year -154 336 -94 473
Total comprehensive income is attributable to:
Owners of Pexip Holding ASA -154 336 -94 473
Annual Report 2021
58
Consolidated Statement of Financial Position
(NOK 1,000) Note 12/31/2021 12/31/2020
ASSETS
Non-current assets
Property, plant and equipment 3,9 36 033 25 177
Right-of-use assets 3,10 103 362 87 765
Goodwill 11,30 662 645 598 998
Other intangible assets 3,12 138 920 133 709
Deferred tax asset 7 109 096 54 615
Contract costs 3,18 262 076 211 077
Receivables 4,13,19 6 859 2 919
Other assets 1 522 0
Total non-current assets 1 320 512 1 114 261
Current assets
Trade and other receivables 4,13,19 217 875 192 916
Contract assets 18 17 431 9 069
Other current assets 14 27 913 18 680
Cash and cash equivalents 15,19 803 852 1 100 656
Total current assets 1 067 071 1 321 322
TOTAL ASSETS 2 387 582 2 435 582
(NOK 1,000) 12/31/2021 12/31/2020
EQUITY AND LIABILITIES
Equity
Total equity 16 1 908 191 2 022 125
Non-current liabilities
Borrowings 17,19 4 000 6 000
Lease liabilities 10,19 84 782 78 220
Deferred tax liabilities 7 12 338 0
Other payables 19 2 703 2 622
Total non-current liabilities 103 824 86 842
Current liabilities
Trade and other payables 19,21 138 586 154 595
Contract liabilities 18 202 302 155 180
Current tax liabilities 7 3 935 209
Borrowings 17,19 2 000 2 500
Lease liabilities 10,19 28 745 14 130
Total current liabilities 375 567 326 614
Total liabilities 479 392 413 456
TOTAL EQUITY AND LIABILITIES 2 387 582 2 435 582
Annual Report 2021
59
Oslo, March 30, 2022
Board of Directors and CEO of Pexip Holding ASA
Michel Sagen
Chair of the Board
Øystein Hem
CFO and Interim CEO
Per Kogstad
Board Member
Irene Kristiansen
Board Member
Kjell Skappel
Board Member
Marianne Wergeland Jenssen
Board Member
Annual Report 2021
60
Consolidated Statement of Changes in Equity
Note
Share
capital
Share
premium
Other
reserves
Translation
dierences
Retained
earnings
Total
equity(NOK 1,000)
Balance at January 1, 2020 1 198 860 073 9 321 -1 078 -45 437 824 077
Profit or loss for the year 0 0 0 0 -89 010 -89 010
Other comprehensive income for the year 0 0 0 -5 464 0 -5 464
Total comprehensive income for the year 0 0 0 -5 464 -89 010 -94 473
Contribution of equity net of
transaction cost 325 1 167 133 101 175 0 0 1 268 634
Share-based payments 24 0 0 23 887 0 0 23 887
Balance at December 31, 2020 1 523 2 027 206 134 383 -6 541 -134 446 2 022 125
Balance at January 1, 2021 1 523 2 027 206 134 383 -6 541 -134 446 2 022 125
Profit or loss for the period 0 0 0 0 -157 324 -157 324
Other comprehensive income for the year 0 0 0 2 988 0 2 988
Total comprehensive income for the year 0 0 0 2 988 - 157 324 -154 336
Capital increase/share issue 16 43 88 732 255 0 0 89 030
By/sell treasury share 16 -10 0 -78 984 0 0 -78 994
Share-based payments 24 0 0 30 365 0 0 30 365
Balance at December 31, 2021 1 556 2 115 938 86 018 -3 553 -291 770 1 908 191
Annual Report 2021
61
Consolidated Statement of Cash Flows
Year ended December 31
(NOK 1,000) Note 12/31/2021 12/31/2020
Cash flow from operating activities
Profit or loss before income tax -195 247 -101 978
Adjustments for
Depreciation, amortization and net impairment losses 9,10,12 73 726 47 330
Non-cash - share based payments 24 30 365 23 887
Fair value adjustment to derivatives 0 23 992
Interest income/expenses - net 6 3 710 1 801
Net exchange dierences 6 -2 962 66 233
Transaction cost IPO 0 43 155
Change in operating assets and liabilities
Change in trade, other receivables and other assets 4,13,19 -90 655 -230 526
Change in trade, other payables and contract liabilities 19,21 26 701 201 791
Interest received 6 41 119
Income taxes paid/refunded 7 -1 001 -4 458
Net cash inflow/outflow from operating activities -155 321 71 346
Cash flow from investing activities
Payment for property, plant and equipment 9 -35 324 -40 094
Payment of software development cost 12 -48 308 -33 661
Payment for acquisition of subsidiary, net of cash acquired 30 -15 193 0
Net cash inflow/outflow from investing activities -98 825 -73 754
Cash flow from financing activities
Proceeds from issuance of ordinary shares 16,20 94 486 1 209 873
Repayment of borrowings 17,20 -34 689 -2 500
Principal element of lease payments 10,20 -13 688 -9 269
Interest paid 6 -3 751 -1 920
Transaction cost IPO 0 -97 020
Sale/(purchase) of treasury shares 16 -87 995 0
Net cash inflow/outflow from financing activities -45 637 1 099 163
Net increase/(decrease) in cash and cash equivalents -299 784 1 096 755
Cash and cash equivalents start of the period 1 100 656 75 515
Eects of exchange rate changes on cash and cash equivalents 2 979 -71 613
Cash and cash equivalents end of the period 803 852 1 100 656
Annual Report 2021
62
The Group includes the parent company Pexip Holding and
its wholly-owned subsidiary Pexip AS, which have the wholly-
owned subsidiaries Pexip Inc, Pexip Ltd, Videxio Asia Pacific
Ltd, Pexip Australia Pty Ltd, Pexip Singapore Pte Ltd, Pexip
France SAS, Pexip Germany GmbH, Pexip Netherlands B.V,
Skedify NV and Pexip Japan GK. The Group’s head oce
is located at Lilleakerveien 2a, 0283 OSL O, N orway . Pexip
Holding ASA is a public list ed company on the Oslo Stock
Exchange (Norwa y ) under the ticker PEXIP.
application and as-a-service deployment options for
enterprise video conferencing, built on Pexip’s proprietary
Infinity technology. Both oerings are delivered as a recurring
subscription-based model.
The consolidated financial statements of Pexip Holding ASA
and its subsidiaries (collectively, the Group) for the year
ended December 31, 2021 was authorized for issue by a
resolution of the directors on March 30, 2022.
1.1 Adoption of New and Rrevised
Accounting Standards
The Group has applied the following standards and
amendments for the first time in for the annual report period
commencing on the January 1, 2021:
• Interest rate benchmark Reform – amendments to IFRS
9 and IFRS 7 Phase 2
• Amendment to IFRS 16 Covid-19 related Rent
Concessions
The amendments listed above did not have any material
impact to the current financial statement presented in this
report is not expected to aect future accounting periods.
1.1.2 New and Revised IFRS Standards in Issue but
not yet Eective
The Group has not applied the following revised standards,
which have been issued by the IASB and not yet been
endorsed by the EU:
• Amendments to IFRS 3, ‘Business combinations’, IAS 16,
‘Property, plant and equipment’, and IAS 37 ‘Provisions,
contingent liabilities and contingent assets’.
• Amendments to IFRS 17, ‘Insurance contracts’ (will not
be relevant for the Group)
• Amendments to IAS 1, ‘Presentation of financial
statements’, IFRS Practice statement 2 and IAS
8’Accounting policies, changes in accounting
estimates and errors’.
The Group does not expect that the adoption of these
Standards will have a material impact on the financial
statements in future periods.
Note 2 - Accounting Principles
2.1 Basis for Preparation
The financial accounts for Pe xip Holding A SA “the
Parent company” together with its subsidiary Pexip
AS, and its wholly-owned and controlled subsidiaries,
together called “the Group”, have been prepared
following International Financial Reporting Standards as
adopted by the EU(IFRS), relevant interpretations, and
the Norwegian Accounting Act.
The consolidated financial statements have been
prepared on a historical cost basis, except where IFRS
explicitly requires the use of other values.
The Parent company has NOK as its functional currency;
the financial accounts are presented in NOK, rounded to
the nearest thousand if nothing else is noted. As a result
of the rounding dierences, it is possible that amounts
and percentages do not add up to the total.
2.2 Basis of Consolidation
The consolidated financial statements comprise the
consolidated financial statements including the Parent
Company’s financial statements and subsidiaries as of
December 31, 2021.
Control is established when the Parent Company is
exposed to, or has rights to, variable returns from its
involvement with the entity and could aect those
returns through its power over the entity.
Consolidation is done using the acquisition method and
begins when control over the subsidiary is obtained. The
consolidation stops when the control ceases.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting
policies used into line with the Group’s accounting
policies.
Intercompany transactions, balances, and unrealized
gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated unless
Note 1 - General
Annual Report 2021
63
the transaction provides evidence of an impairment of the
transferred asset.
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the
Parent Company.
If the Group loses control over a subsidiary, it
derecognizes the related assets (including goodwill),
liabilities, non-controlling interest, and other equity
components, while any resultant gain or loss is recognized
in profit or loss. Any investment retained is recognized at
fair value.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity
transaction.
2.3 Summary of Significant
Accounting Policies
2.3.1 Business Combinations and Goodwill
The acquisition method of accounting is used to account
for all business combinations. The consideration
transferred for the acquisition of a subsidiary comprises
the:
• fair values of the assets transferred.
• liabilities incurred to the former owners of the
acquired business.
• equity interests issued by the Group.
• fair value of any asset or liability resulting from a
contingent consideration arrangement, and
• fair value of any pre-existing equity interest in the
subsidiary.
On the acquisition date, the identifiable assets acquired
and the liabilities assumed are recognized at their fair
value, except for:
• Deferred tax assets or liabilities are recognized and
measured under IAS 12 - Income taxes.
• Liabilities or equity instruments related to share-
based payment arrangements of the acquiree,
or share-based payment arrangements of the
Group entered to replace share-based payment
arrangements of the acquiree, are measured per IFRS
2 at the acquisition date.
• the value of a reacquired right is recognized as an
intangible asset based on the remaining contractual
term of the related contract regardless of whether
market participants would consider potential
contractual renewals when measuring its fair value.
Acquisition-related costs are recognized in profit or loss as
incurred.
Contingent consideration is classified either as equity or
financial liability. Amounts classified as
financial liabilities are subsequently remeasured to fair
value, with changes in fair value recognized in profit or
loss.
Goodwill is measured as the excess of the sum of the
consideration transferred over the fair value of the net of
the acquisition date amounts of the identifiable assets
acquired, and the liabilities assumed.
Goodwill arising in a business combination is not
amortized. Initially, goodwill is recognized at cost.
Thereafter, goodwill is measured at cost less accumulated
impairment. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-
generating units that are expected to benefit from the
combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units. The
carrying amount of goodwill is tested for impairment at
least annually. Impairment losses are recognized directly
in profit for the year and are not subsequently reversed.
2.3.2 Foreign Currencies
Transactions and balances
Transactions in foreign currencies are translated into the
respective functional currencies of Group companies at
the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at
the exchange rate at the reporting date. Dierences in
settlement or translation of monetary items are generally
recognized in profit or loss.
Non-monetary assets and liabilities measured at fair value
in a foreign currency are translated into the functional
currency at the exchange rate when the fair value is
determined.
Non-monetary items that are measured based on the
historical cost in a foreign currency are translated at
the exchange rate at the date of the transaction. The
gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value
of the item (i.e., translation dierences on items whose fair
value gain or loss is recognized in OCI or profit or loss are
also recognized in OCI or profit or loss, respectively.)
Annual Report 2021
64
Group companies
The Group’s presentation currency is NOK. The results
and financial position of foreign operations that have
a functional currency dierent from the presentation
currency are translated into the presentation currency
as follows:
• assets and liabilities for each balance sheet
presented are translated at the closing rate at the
date of that balance sheet.
• income and expenses for each statement of profit
or loss and statement of comprehensive income are
translated at average exchange rates (unless this is
not a reasonable approximation of the cumulative
eect of the rates prevailing on the transaction
dates, in which case income and expenses are
translated at the dates of the transactions), and
• all resulting exchange dierences are recognized in
other comprehensive income.
2.3.4 Current Versus Non-current Classification
An asset is classified as current when it is expected to
be realized or intended for sale or consumption in the
Group’s normal operating cycle. It is held primarily to be
traded or expected/due to be realized or settled within
twelve months after the reporting date. Other assets are
classified as non-current.
A liability is classified as current when it is expected to
be settled in the Group’s normal operating cycle, is held
primarily to be traded, the liability is due to be settled
within twelve months after the reporting period or if
the Group does not have an unconditional right to defer
settlement of the liability for at least twelve months after
the reporting period. All other liabilities are classified as
non-current.
Deferred tax assets and liabilities are classified as non-
current assets and liabilities.
2.3.5 Revenue from Contracts with Customers
Revenue from contracts with customers is recognized
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Group expects to be entitled
in exchange for those goods and services.
Revenue from the sale of software licenses
Infinity software licenses are classified as software
licenses where the customer is provided with a right
to use the software as it exists when made available to
the customer. Revenue from distinct software licenses
is recognized at the point in time when the software is
made available to the customer and the right to use the
software has commenced. Most of the Infinity license
agreements with customers are annual contracts. Invoices
are generated when the license key is made available to
the customers (at a point in time), and most invoices are
payable within 30 days.
Revenue from the sale of cloud services
Cloud service licenses, “software as a service”, entitle
the customers to use the Pexip software together with
the Group’s IP and production network over the contract
period. Revenues from the sale of Cloud Services are
recognized over time on a straight-line basis over the
license period. Approximately 30% of the Cloud service
license agreements with customers are ongoing monthly
contracts; the rest are mainly yearly contracts. Invoices
are generated monthly or yearly, and most invoices are
payable within 30 days.
Partner fees
The Group has a partner program that provides the
partner with the right to sell The Group’s services. The
partner receives support, training and access to the
service, and the performance obligations related to partner
fees are satisfied on an ongoing basis. Revenue related too
partner fees is thus recognized linearly over time.
Most of the partner fees are invoiced, as are annual
agreements. Invoices are generated at contract inception
and payable within 30 days.
Revenue from the sale of support and maintenance
The Group oers support and maintenance services
to its customers. For services related to the software
licenses, the performance obligations related to support
and maintenance are satisfied on an ongoing basis,
and revenue related to the sales of services are thus
recognized on a linear basis over time.
Most of the maintenance and support agreements are
related to the license period. Proof of concept (POC) is a
professional service oered for up to 6 months. Revenue
from these contracts is recognized linearly throughout
the contract period. The Group also has customers with
service contracts of 1-3 months. Revenues related to the
sale of services are recognized on a linear basis over time.
Transaction price
The Group determines the transaction price to be the
amount of consideration which it expects to be entitled in
exchange for transferring the promised goods and services
to the customer, net of discounts and sales-related taxes.
Sales related taxes are regarded as collected on behalf
Annual Report 2021
65
of the authorities. When the contract includes a variable
amount, the Group estimates the amount of consideration
expected to receive from the customer using either the
expected value method or the most likely method. The
method is used consistently throughout the contract. The
Group has few contracts with variable consideration.
The Group uses the practical expedient in IFRS 15 not
adjust for a financing component. Where applicable, the
variable consideration is estimated using the most likely
amount method. The estimate is revised and updated
every quarter.
The Group considers whether there are other promises
in the contract that is separate performance obligations
to which a portion of the transaction price needs to be
allocated.
Contract balances
Contract balances consist of client-related assets and
liabilities. Contract assets relate to consideration for work
complete but not yet invoiced at the reporting date. The
contract assets are transferred to trade receivables when
the right to payment has become unconditional, usually
when invoices are issued to the customers.
When a client pays consideration in advance, or an amount
of consideration is due contractually before transferring
of the license or service. The amount received in advance
is presented as a liability. Contract liabilities rep¬resent
mainly prepayments from clients for unsatisfied or
partially satisfied performance obligations concerning
licenses and services.
Contract assets are within the scope of impairment
requirements in IFRS 9. For con¬tract assets, the
simplified approach is applied, and the expected loss
provision is measured at the estimate of the lifetime
expected credit losses.
Costs of obtaining or fulfilling contracts with customers
The Group pays sales commission to its employees based
on actual sales. Commissions that are incremental costs
of obtaining a contract with a customer are recognized
as an asset if the costs are expected to be recovered.
Subsequently, the asset is amortized on a systematic
basis consistent with the transfer to the customer of the
goods or services to which the asset relates. This is usually
the expected total contract period and includes expected
renewals. The expected contract period is seven and half
years for software licenses and about five years for Cloud
services. Further information regarding commission and
salary is disclosed in note 4.
2.3.6 Government Grants
Government grants are recognized with reasonable
assurance that the grant will be received, and all attached
conditions will be complied with. When the grant relates
to an asset, it reduces its carrying amount. The grant is
then recognized in profit or loss over the useful life of
the depreciable asset by way of a reduced depreciation
charge.
2.3.7 Share-based Payment Transactions
The Group provides incentives to employees in the form
of equity-settled share-based instruments. The Company
has two incentive programs: share-based programs for
employees and management and key employees.
Equity-settled share options are measured at fair value at
the grant date and recognized in the income statement
under salary and personnel expenses over the period—
the final right of the options vest. The balancing item is
recognized directly in equity.
The number of options expected to vest at expiry is
estimated on the initial recognition of share options.
Subsequently, the estimated number of vested options is
revised for changes so that the total recognition is based
on the actual number of vested options.
The fair value of the options granted is estimated using the
Black-Scholes model with the parameters stated in
Note 24.
The dilutive eect of outstanding options is reflected as
additional share dilution in diluted earnings per share
(further details are given in Note 8).
2.3.8 Other Intangible Assets
Intangible assets other than goodwill acquired separately
are measured on initial recognition at cost. Other
intangible assets include software, trademarks, and
client contracts. The cost of intangible assets acquired
in a business combination is their fair value at the date of
acquisition. Following initial recognition, intangible assets
are carried at cost less any accumulated amortization and
accumulated impairment losses.
Intangible assets with finite useful lives are amortized
straight-line over their estimated useful lives. The
amortization expense is recognized in the statement of
Annual Report 2021
66
profit or loss. The estimated useful life and amortization
method is reviewed at the end of each reporting period,
with the eect of any changes on estimates being
accounted for on a prospective basis.
Gains or losses arising from the derecognition of an
intangible asset are measured as the dierence between
the net disposal proceeds and the asset’s carrying
amount. They are recognized in the statement of profit or
loss when the asset is derecognized.
The estimated useful lives of intangible assets are as
follows:
• Software: 5 years
• Client contracts: 5 years
• Trademarks: 5 years
Research and development costs
Development expenditures are capitalized only when
the criterion for recognition is met, i.e., that it is
probable that the expected future economic benefits
that are attributable to the asset will flow to the entity,
management has committed itself to complete the asset,
the technical feasibility of completing the asset has been
demonstrated, and the cost can be measured reliably.
The assets are amortized over their expected useful life
once the assets are available for use. During the period of
development, the asset is tested for impairment annually.
Development costs that do not meet the criteria for
capitalization are expensed as incurred.
2.3.9 Property, Plant, and Equipment
Tangible assets are recorded at historical cost, less
accumulated depreciation, and possible impairment.
Depreciation is recorded on a straight-line basis over the
estimated useful life of an asset, which is as follows:
• Land and buildings: 5 years
• Plant and machinery: 3 to 5 years
• Fittings and fixtures: 3 to 5 years
Gains or losses on the disposal of tangible assets are
included in the statement of profit or loss. The residual
values, useful lives, and methods of depreciation of
property, plant and equipment are reviewed at each
financial year-end and adjusted prospectively, if
appropriate.
2.3.10 Leases
The Group as lessee
The Group assesses whether a contract is or contains a
lease at the contract’s inception.
The Group recognizes a right-of-use asset and a
corresponding lease liability concerning all lease
arrangements in which it is the lessee, except for short-
term leases (defined as leases with a lease term of 12
months or less) and leases of low-value assets (such as
tablets and personal computers, small items of oce
furniture and telephones). For these leases, the Group
recognizes the lease payments as an operating expense
on a straight-line basis over the lease term. The Group
presents interest expense on lease liabilities under
finance expenses and the depreciation charge on the
right-of-use asset under depreciation and amortization
in the profit and loss statement.
Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses and
adjusted for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount of lease
liabilities recognized, initial direct costs incurred, and
lease payments made at or before the commencement
dateless any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the
shorter of the lease term and the estimated useful lives
of the assets, as follows:
• Buildings: 2-10 years
• Equipment: 3-5 years
The right-of-use assets are also subject to impairment.
Refer to the accounting policies in
section 2.3.11 Impairment of intangible assets and
property, plant, and equipment.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted by using the rate
implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing
rate.
At the commencement date, the Group assesses
whether they are reasonably certain to exercise an
option to extend the lease or purchase the underlying
asset or not to exercise an option to terminate the lease.
This assessment is reflected in the initial measurement
of the lease contract.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on
the lease liability (using the eective interest method)
and reducing the carrying amount to reflect the lease
payments made.
Annual Report 2021
67
The lease liability and right-of-use asset are presented
as separate lines in the consolidated statement of
financial position.
2.3.11 Impairment of Intangible Assets and
Property, Plant, and Equipment
Goodwill and intangible assets with an indefinite
useful life are not subject to amortization and are
tested annually for impairment or more frequently if
events or changes in circumstances indicate that the
carrying amount might be impaired. Other assets are
tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognized
as the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount
is the higher asset’s fair value, lower disposal costs, and
value in use. To assess impairment, assets are grouped
at the lowest levels. There are separately identifiable
cash inflows largely independent of the cash inflows
from other assets or groups of assets (cash-generating
units). Non-financial assets other than goodwill that
have historically been impaired are reviewed for possible
reversal of the impairment at the end of each reporting
period. Disclosures relating to impairment testing are
found in Note 11.
2.3.12 Taxes
The period’s income tax expense or credit is the tax
payable on the current period’s taxable income, based
on each jurisdiction’s applicable income tax rate,
adjusted for changes in deferred tax assets and liabilities
attributable to temporary dierences, and unused tax
losses.
Current income tax
The current income tax charge is calculated based on
the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Group
operates and generates taxable income. Management
periodically evaluates positions taken in tax returns
regarding situations in which applicable tax regulation
is subject to interpretation. Management establishes
appropriate provisions based on amounts expected to be
paid to the tax authorities.
Deferred tax
Deferred income tax is provided in full, using the liability
method, on temporary dierences arising between
assets and liabilities’ tax bases and their carrying
amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognized
if they emerge from the initial recognition of goodwill.
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by
the end of the reporting period and are expected to apply
when the related deferred income tax asset is realized, or
the deferred income tax liability is settled.
Deferred tax assets are recognized only if it is probable
that future taxable amounts will be available to utilize the
temporary dierences and losses.
Deferred tax assets and liabilities are oset when there is
a legally enforceable right to oset current tax assets and
liabilities. The deferred tax balances relate to the same
taxation authority. Existing tax assets and tax liabilities are
oset. The entity has a legally enforceable right to oset
and intends to settle on a net basis or realize the asset and
settle the liability simultaneously.
Current and deferred tax is recognized in the income
statement, except that it relates to items recognized in
other comprehensive income or directly in equity.
2.3.13 Financial Instruments
Financial assets and financial liabilities are recognized
in the Group’s statement of financial position when The
Group becomes a party to the contractual provisions of
the instrument.
Financial assets and financial liabilities are initially
measured at fair value plus transaction costs in the case
of a financial instrument not at fair value through profit or
loss.
The Group has classified its financial instruments as either
measured at amortized cost or fair value through profit
or loss for subsequent measurement. The classification
depends on the Group’s business model for managing
them and the contractual cash-flow characteristics of the
instrument.
Financial liabilities subsequently measured at fair value
through profit or loss include the line-item Derivative
financial liability in the statement of financial position.
Derivative financial liabilities are measured at fair value
at the end of each reporting period. The gains or losses
arising from the change in fair value are recognized in the
statement of profit or loss.
At amortised cost, financial assets are held to collect
the contractual cash-flow and where the cash-flows
are solely payments of principal and interest on the
outstanding principal. The category is included in the
Annual Report 2021
68
consolidated statement of financial position financial
line items Trade and other receivables (current and non-
current), Other assets, Other current assets and cash
and cash equivalents. Non-current assets are measured
at amortized cost using the eective interest method,
reduced by any impairment loss. Due to their short-term
nature, the carrying amounts of line items classified as
current are assumed to be the same as their fair values.
Short-term loans and receivables are for practical reasons
not amortized unless the eect is material.
The category financial liabilities at amortized cost are
included in the consolidated statement of financial
position line items Borrowings (current and non-current),
and Trade and other payables. Non-current financial
liabilities are measured at amortized cost using the
eective interest method. Eective interest is recognized
in the income statement as financial expenses. Current
items in the category are for practical reasons not
amortized unless the eect is material.
Financial assets are derecognized when the contractual
rights to the cash flow from the financial asset expire,
and the Group has transferred substantially all the risks
and rewards of ownership. If it is not apparent that the
entity has transferred or retained all risks and rewards
substantially, the Group evaluates by comparing the
entity’s exposure, before and after the transfer, with the
variability in the amounts and timing of the net cash flows
on the transferred asset. In the securitization facility
agreement to which the Group is a party, the receivables
are derecognized (see note 13).
Financial liabilities are derecognized when the obligation
is discharged, cancelled or expires. Any rights and
obligations created or retained in such a transfer are
recognized separately as assets or liabilities.
The Group has applied the simplified approach in IFRS 9
to measure the loss allowance at lifetime ECL for trade
receivables and contract assets. The Group determines
the expected credit losses on these items by using a
provision matrix, estimated based on historical credit loss
experience based on the past due status of the debtors,
adjusted as appropriate to reflect current conditions and
estimates of future economic conditions. Accordingly, the
credit risk profile of these assets is presented based on
their past status in terms of the provision matrix.
Financial assets and financial liabilities are oset with
the net amount reported in the consolidated statement of
financial position only if there is a currently enforceable
legal right to oset the recognized amounts and an intent
to settle on a net basis or to realize the assets and settle
the liabilities simultaneously.
The fair value of financial instruments
The fair value of financial instruments is based on quoted
prices as at the balance sheet date in an active market if
such markets exist. If an active market does not exist, fair
value is established using valuation techniques that are
expected to provide a reliable estimate of the fair value.
Financial instruments measured at fair value are classified
according to the valuation method:
Level 1: Valuation based on quoted prices (unadjusted) in
active markets for identical assets or liabilities.
Level 2: Valuation based on inputs other than quoted
prices included within level 1 observable for the asset or
liability, either directly (that is, as prices) or indirectly (that
is, derived from prices).
Level 3: Valuation based on the asset or liability inputs that
are unobservable market data.
If one or more significant inputs are not based on
observable market data, the instrument is included in
level 3.
Changes in fair value are presented in profit or loss in the
line-item Financial expenses.
2.3.14 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at banks.
2.3.15 Cash Flow Statement
The Group presents the statement of cash flows using the
indirect method. Cash inflows and outflows are shown
separately for investing and financing activities, while
operating activities include cash and non-cash line items.
Interest paid is classified as cash flows from financing
activities and interest received as cash flows from
operating activities.
2.3.16 Earnings per Share
Basic earnings per share
Basic earnings per share are calculated by dividing:
• the profit attributable to owners of the company,
excluding any costs of servicing equity other than
ordinary shares.
• by the weighted average number of ordinary shares
outstanding during the financial year, adjusted
for bonus elements in ordinary shares issued and
excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjust the figures used in the
determination of basic earnings per share to consider:
Annual Report 2021
69
• the after-income tax eect of interest and other
financing costs associated with dilutive potential
ordinary shares, and
• the weighted average number of additional ordinary
shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
2.4 Significant Accounting Judgements,
Estimates and Assumptions
Judgements
In the process of applying the Group’s accounting policies,
management has made the following judgements,
which have the most significant eect on the amounts
recognized in the consolidated financial statements:
Determining the lease term of contracts with renewal
options – Group as lessee
The Group determines the lease term as the non-
cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an
option to terminate the lease if it is reasonably certain not
to be exercised.
The Group applies judgement in evaluating whether it
is reasonably sure to exercise the option to extend. It
considers all relevant factors that create an economic
incentive for it to exercise either the renewal or
termination. After the commencement date, the Group
reassesses the lease term if there is a significant event or
change in circumstances that are within its control and
aects its ability to exercise or not to exercise the option.
The Group has not included the renewal period as part of
the lease term for the oce lease as the options are not
reasonably certain to be exercised. Refer to note 10 for
information on potential future rental payments relating to
periods following the exercise date of the extension option
that is not included in the lease term.
Estimates and assumptions
The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date
that has a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within
the next financial year are described below. The Group
based its assumptions and estimates on parameters
available when the consolidated financial statements
were prepared. However, existing circumstances and
assumptions about future developments may change
due to market changes or circumstances arising that
are beyond the control of the Group. Such changes are
reflected in the assumptions when they occur.
Impairment of assets
The Group has investments in intangible assets such as
customer contracts and internally generated software,
Goodwill, and Right-of-Use Assets (ROU assets). Before
each quarterly report, all assets are assessed for any
indication of impairment. If such movement exists,
the Group estimates the asset’s recoverable amount
according to IAS 36.
Factors that indicate impairment include significant
underperformance in revenue-generating operation
relative to historical data and future projections,
substantial changes in the use of the asset or any
malfunctions, substantial changes in the market and
economy, in general, aecting the future economic benefit
of the asset and significant fall in market values.
Regardless of any indication of impairment, Goodwill and
internally generated intangible assets not yet in use are
tested for impairment in the fourth quarter of the year
(Q4).
The recoverable amount of an asset is the higher its fair
value, less cost of disposal, and its value in use. Value in
use is the present value of the future cash flows expected
from an asset. This valuation consists of dierent
estimates that the Group makes, such as estimates of
the future cash flows the entity expects to derive from
the asset, expectations about possible variations in the
amount or timing of those future amounts, time value of
money and other relevant factors. All estimates are based
on reasonable, relevant, and supportable information and
represent the management’s best estimate.
Deferred tax assets from tax losses
Deferred tax asset is recognized for the carryforward of
unused tax losses and unused tax credits to the extent
that it is probable that future taxable profit will be
available against which the unused tax losses and tax
credits can be utilized. The Group has projected future
taxable profits pr jurisdiction for which the tax losses can
be utilized based on approved budgets and forecasts.
Refer to note 7 for further disclosures.
Annual Report 2021
70
Note 3 - Revenue and Segment Information
(NOK 1,000)
The Group has one segment, sale of collaboration services.The market for Pexip’s software and services is global. The
chief decision maker will therefore follow up revenue and profitability on a global basis. This is consistent with the internal
reporting submitted to the chief operating decision maker, defined as the Management Group. The Management Group is
responsible for allocating resources and assessing performance as well as making strategic decisions.
Principles of revenue recognition are stated in accounting principles to consolidated financial statements, section 2.3.5
Revenue from contracts with customers.
Disaggregation of revenue
In the following table, revenue is disaggregated by primary service line, geography and timing of revenue recognition. In
presenting the geographic information, revenue has been based on the geographic location of customers.
Year to date 2021
EMEA
1)
Americas APAC
2
Total
Pexip as-a-Service 193 768 99 019 21 771 314 558
Self-hosted software 245 380 200 915 44 665 490 960
Total revenue 439 148 299 934 66 436 805 518
Year to date 2020
EMEA
1)
Americas APAC
2)
Total
Pexip as-a-Service 127 326 71 637 13 769 212 732
Self-hosted software 251 241 162 855 51 685 465 781
Total revenue 378 567 234 492 65 454 678 513
Full year Full year
Timing of revenue recognition 2021 2020
Products and services transferred at a point in time 394 559 392 941
Products and services transferred over time 410 959 285 572
Total revenue 805 518 678 513
1)
Europe, Middle East and Africa
2)
Asia Pacific (East and South Asia, Southeast Asia and Oceania)
Information about major customers
The Group conducts its sales through channel partners. No channel partner represent more than 10% of the Group’s
revenue. Of the Group’s total channel partner base in 2021, the five largest represent approximately 21% of total revenue
(28% in 2020), and the ten largest represent approximately 30% (42% in 2020).
Information about share of recurring revenue from own products
Recurring revenue from own products is defined as revenue from time-limited contracts where the purchase is recurring
in nature. Revenue from time-limited software subscriptions and related mandatory maintenance contracts are considered
recurring. Revenue from third-party software licences, perpetual software-licences and project-based professional
services, such as a customer-specific proof-of-concept project or installation project, are considered non-recurring.
Annual Report 2021
71
Non-current assets
The following geographic information of non-current assets is based on the geographic location of the
assets.
12/31/2021 12/31/2020
Norway 314 811 315 174
Europe (other than Norway) 113 990 56 555
Americas 108 085 80 573
APAC 20 429 5 426
Total non-current operating assets 540 391 457 728
Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, other
intangible assets and contract costs.
Note 4 - Salary and Personnel Expense and Management Remuneration
(NOK 1,000)
2021 2020
Wages and salaries 444 554 294 263
Social security tax 58 535 29 160
Commission employees 59 273 27 766
Share-based payment expense (note 24) 14 652 34 258
Pension costs (note 23) 13 431 6 719
Other personnel cost 82 484 34 281
Salary cost capitalised -38 506 -25 963
Total 634 422 400 483
Average number of labour-years employed during the year 467 278
Loan to employees
The Group provided unsecured loans to employees of NOK 554 thousand at December 31, 2021 (2020: NOK 254 thousand).
The repayment schedule is 2 years and the interest rate is 2%.
Management remuneration
The remuneration to management is included in the management remuneration report for 2021.
Bonus agreements and severance pay
The bonus scheme and severance pay for Group management is included in the management remuneration report for 2021.
Remuneration to board of directors in the parent company
The remuneration to board of directors is included in the management remuneration report for 2021.
Share option plan
The Group has share-based payment programs to employees. The share option plan is further presented in note 24.
An overview of management share options is disclused in the management remuneration report for 2021.
Annual Report 2021
72
Note 5 - Other Operating Expenses
(NOK 1,000)
Note 6 - Financial Income and Expenses
(NOK 1,000)
2021 2020
Sales and marketing 56 754 40 996
Computers and software 61 668 35 746
Fees for external services 58 890 45 557
IPO transaction cost - 43 155
Travel expenses 9 243 6 220
Other operating expenses 32 056 8 285
Total 218 615 179 960
Auditor’s fees
The remuneration breakdown (excl. VAT) paid to Deloitte AS and their associates are as follows:
2021 2020
Statutory audit 4 920 4 593
Other certification services 80 222
Tax advisory services - -
Other services - -
Total 5 000 4 815
2021 2020
Interest income 517 141
Financial income 517 141
Interest expense -1 878 -2 476
Interest expense on lease liabilities (note 10) -2 110 -2 307
Other financial expenses -650 -1 115
Fair value adjustments on derivative financial liabilities (note 19) - -23 992
Financial expenses -4 638 -29 890
Net foreign currency gains and losses 6 897 -80 527
Net financial income(expense) 2 776 -110 276
Annual Report 2021
73
Note 7 - Income Tax Expense
(NOK 1,000)
Specification of income tax expense: 2021 2020
Current tax on profits for the year 4 169 996
Changes in deferred tax -41 992 -12 983
Adjustments for current tax of prior periods -99 -
Eect of changes in tax rules and rates - -981
Tax on profit/(loss) -37 923 -12 968
Reconciliation from nominal to eective income tax rate: 2021 2020
Profit/(loss) before tax -195 246 -101 977
Estimated income tax according to nominal tax rate of 22% -42 954 -22 435
Eect from dierent tax rate in other countries -9 -1 013
Eect of changes in tax rules and rates 819 -981
The tax eect of the following items:
Non-deductible expenses 9 421 5 763
Non-taxable income -211 -159
Share-based payment expenses -6 294 5 255
Adjustments for prior period tax -62
Other items 1 369 601
Income tax expense -37 922 -12 968
Eective income tax rate 19% 13%
Changes in tax rate
There are no changes in tax rates in the Group for 2021
Amounts recognised directly in equity 2021 2020
Deferred tax: Tax on share issue costs - -11 850
Deferred tax balances: 12/31/2021 12/31/2020
Deferred tax assets:
Tax losses 157 375 77 197
Tangible and intangible assets 5 239 20
Receivables 1 023 962
Contract liabilities 5 270 22 323
Current and non-current liabilities 28 890 32 436
Other -157 -
Set-o tax -70 836 -78 323
Net deferred tax assets after set-o 126 805 54 615
Unrecognised deferred tax assets -17 709 -
Net deferred tax assets 109 096 54 615
Deferred tax liabilities:
Tangible and intangible assets 83 174 64 026
Current assets - -
Contract liabilties - 14 037
Other dierences - 261
Set-o tax -70 836 -78 323
Net deferred tax liabilities 12 338 -
Annual Report 2021
74
Deferred tax assets Movements Tax losses contract
liabilities
current and non-
current liabilities
Other Total
At January 2021 77 197 22 323 32 436 982 132 938
(Charged)/credited
- to profit or loss 66 701 -17 053 -3 546 -54 46 048
- to other comprehensive income
- directly to equity
- not recognized 13 477 5 178 18 655
At December 2021 157 375 5 270 28 890 6 106 197 641
Deferred tax liability Movements Tabgible and
intangible
assets
Current
assets
Contract liabilities Other
dierences
Total
At January 2021 64 026 - 14 037 261 78 324
(Charged)/credited
- to profit or loss 18 202 - -14 037 -261 3 904
- to other comprehensive income
- directly to equity -
- not recognized 946 946
At December 2021 83 174 - 0 0 83 174
Utilisation of taxable temporary dierences are assessed by taxation authority and by taxable entity if the temporary
dierences can’t be utilised across dierent entities within the same taxation authority. As of December 31, 2021 and
2020 a deferred tax asset is recognised for all the individual taxation authorities where the Group conduct business.
The deferred tax asset is included in the balance sheet based on an assessment of the probability that sucient taxable
profit will be available in the future to allow the deferred tax asset to be utilised.
Deferred tax assets on tax losses arising in Norway, the US and UK, in total NOK 143.9 million as at December 31, 2021 (US
and UK in 2020: NOK 77.2 million) have been recognised based on the same assessment of the probability for sucient
taxable profit in the future.
Temporary dierences relating to the Skedify acquisition for which deferred tax assets have not been recognised was in
the amount of NOK 17.7m.
Tax losses carried forward 12/31/2021 12/31/2020
Expire (2033 and forward) 61 011 59 027
Never expires 625 766 289 012
Total tax losses carried forward 686 777 348 039
Tax losses for which deferred tax asset is recognised 647 126 348 039
Tax losses for which no deferred tax asset is recognised 39 651 -
Potential tax benefit 13 477 -
Tax losses incurred in the US after January 1, 2018 do not expire, but are limited to 80% usage in one year. Tax losses
carried forward from the US business with no expiration date amount to NOK 50.1 million at December 31, 2021
(December 31, 2020: NOK 11.0 million). The expiring tax losses have priority over the never-expiring losses and are used
earliest-first. The main part of the losses carried forward is from Pexip Holding ASA (NOK 188 million) and Pexip AS (NOK
264.8 million).
Annual Report 2021
75
Note 8 - Earnings per Share
(NOK 1,000)
Earnings 2021 2020
Earnings for the purpose of basic earnings per share being
net profit attributable to the owners of the company -157 324 -89 009
Eect of dilutive potential ordinary shares 0 0
Earnings for the purpose of diluted earnings per share -157 324 -89 009
Number of shares
Weighted average number of ordinary shares for the purpose
of basic earnings per share 103 092 229 93 458 336
Eect of dilutive potential ordinary shares:
Share options 1 458 102 3 391 553
Weighted average number of ordinary shares for the purpose
of diluted earnings per share
104 550 331 96 849 889
Earnings per share
Basic earnings per share -1,53 -0,95
Diluted earnings per share -1,53 -0,95
12/31/2021 12/31/2020
Overview of outstanding share options
Share-based payments awards (refer to note 24) 5 225 178 7 908 534
Option over own equity instruments (refer to note 21)
Total options outstanding 5 225 178 7 908 534
Dilutive potential ordinary shares of 1,458,102 for 2021 (2020: 3,391,553) diers from total outstanding options at
December 31, 2021 (and December 31, 2020). The main reasons for this is that potential ordinary shares used to calulated
diluted earnings per share are a weighted average for the year, the use of the treasury method when calculating dilutive
potential ordinary shares and that the options over own equity instruments are anti-dilutive.
Annual Report 2021
76
Note 9 - Property, Plant & Equipment
(NOK 1,000)
Plant and
machinery
Fittings and
fixtures Total
Acquisition cost January 1, 2020 3 915 8 267 12 182
Additions 8 234 15 759 23 993
Disposals - -
Exchange dierences 191 169 360
Acquisition cost December 31, 2020 12 339 24 195 36 535
Additions
Aquisitions
5 625 17 522 23 244
725 - 725
Exchange dierences 65 74 139
Acquisition cost December 31, 2021 18 754 41 791 60 643
Accumulated depreciation and impairment losses January 1, 2020 1 29 3 689 4 981
Disposals - -
Depreciation for the period 3 193 3 054 6 246
Exchange dierences 117 14 130
Accumulated depreciation and impairment losses December 31, 2020 4 601 6 756 11 358
Depreciation for the period 4 938 8 203 13 112
Exchange dierences -45 -21 -65
Accumulated depreciation and impairment losses December 31, 2021 9 494 14 939 24 404
Carrying value at December 31, 2020 7 738 17 439 25 177
Carrying value at December 31, 2021 9 260 26 852 36 033
Estimated useful life and depreciation plan is as follows:
Useful life 3 - 5 years 3 - 5 years
Depreciation plan Linear Linear
Property, plant and equipment is pledged as security for liabilities, refer to note 17 - Borrowings.
Annual Report 2021
77
Note 10 - Leases
(NOK 1,000)
Set out below are the carrying amount of right-of-use assets recognised and the movements during the period:
Land and
Buildings
Plant and
machinery
Total
As at January 1, 2020 50 372 2 047 52 419
Additions (new leases) 42 957 5 741 48 699
Adjustments -1 528 -252 -1 780
Depreciation expense -9 717 -1 111 -10 828
Exchange dierences -745 - -745
As at December 31, 2020 81 339 6 426 87 765
Additions (new leases) 30 058 2 903 32 961
Adjustments 1 792 - 1 792
Depreciation expense -17 666 -1 746 -19 412
Exchange dierences 461 - 461
As at December 31, 2021 95 779 7 583 103 362
Lower of remaining lease term or useful life 2-10 years 3-5 years
Depreciation method Linear Linear
Set out below are the carrying amounts of lease liabilities and the movements during the period:
2021 2020
As at January 1 92 349 55 488
Additions (new leases) 32 961 48 699
Adjustments 1 425 -1 600
Principal element of lease payments -13 688 -9 589
Exchange dierences 480 -648
As at December 31 113 527 92 349
Maturity analysis of lease liabilities 12/31/2021 12/31/2020
Less than 6 months 16 454 6 841
6-12 months 13 431 7 576
1-2 years 25 114 20 187
2-5 years 47 764 45 594
Over 5 years 22 080 22 532
Total face value 124 844 102 729
Carrying amount 113 527 92 349
Current 28 745 14 130
Non-current 84 782 78 220
Annual Report 2021
78
The following are the amounts recognised in profit or loss and other comprehensive income:
2021 2020
Depreciation expense for the right-of-use asset 19 412 10 828
Interest expense on lease liabilities 2 113 2 168
Exchange dierence (included in OCI) -69 -45
Exchange dierence (included in financial income) 69 139
Expense related to short-term leases (included in other operating expenses) 925 1 227
Total amount recognised in profit or loss 22 450 14 317
The Group had total cash outflows for leases of NOK 16.6 million in 2021 (NOK 13.0 million in 2020).
An incremental borrowing rate (IBR) of 3M Nibor + 3% has been applied on all new leases during the 2021 accounting
year. We have selected Nibor as the risk-free rate as a starting point to determine the IBR. We have also chosen to apply a
constant financing spread adjustment of 3% to a portfolio of leases with reasonably similar characteristics (such as leases
with a similar class of underlying assets). This approach will change if we observe the material dierences in financing
costs in the specific region we operate.
Refer to note 2.3.10 for a summary of significant accounting policies and note 2.4 for significant accounting judgements,
estimates and assumptions for the Group leases.
Extension and purchase options
The Group’s lease of lands and buildings have lease terms that vary from 16 months to 10 years, and some agreements
involve a right of renewal which may be exercised during the last period of the lease term. The Group assesses whether
it is reasonably certain to exercise the renewal right at the commencement date. The Group’s potential future lease
payments not included in the lease liabilities related to extension options is NOK 13.3 million (gross) on December 31, 2021
(NOK 8.3 million on December 31, 2020).
The Group leases plant and machinery with 3 to 5 years lease terms. These contracts include a right to purchase the asset
at the end of the contract term. The Group assesses whether it is reasonably certain to exercise the purchase option at the
commencement date. The Group has estimated that all the purchase options will be exercised. No potential future lease
payments are included in the lease liabilities related to purchasing options on December 31 in 2021 and 2020.
Annual Report 2021
79
Goodwill
Acquisition cost December 31, 2020 598 998
Acquisition cost December 31, 2021 662 645
Note 11 - Goodwill
(NOK 1,000)
Recognised goodwill in the Group amounts to NOK 662.7 million as of December 31, 2021. Goodwill is derived from the
acquisition of Videxio AS (599 million), which was completed in 2018, and the acquisition of Skedify (NOK 63.7 million),
which was completed on November 8, 2021 (please refer to the Note 30. Business Combination for further details on
Skedify acquisition Goodwill calculation). Goodwill is tested on an aggregate (Group) level since the synergies stemming
from the business combination will materialize on the Group level.
The carrying amount of customer relations is also derived from the acquisition of Skedify and is an estimate of the value of
acquired customer databases. The intangible assets attributable to customer relationships are expected to be amortised
over a period of twenty years.
Although IFRS 3 (section 45 “measurement period”) allows undertaking the fair value measurement within one year from
the date of acquisition, the Company engaged itself with an independent valuer to undertake the fair value assessment
to include Skedify Goodwill purchase price allocation into the 2021 Annual Report. Notwithstanding these eorts, the
Company wants to mark these numbers as preliminary as there might be further adjustments to the Goodwill amount,
which may increase by approximately MNOK 3.8.
Goodwill is tested for impairment annually or more frequently if there are indications that goodwill might be impaired.
Testing was most recently conducted in Q4 2021. The recoverable amount is set to the estimated value in use. The value
in use is the net present value of the estimated cash flow before tax, using a discount rate reflecting the timing of the cash
flows and the expected risk.
Revenue development and operating profits are estimated based on past performance and management expectations for
2022 to 2026. The expectations for the overall economic conditions and market outlook are in line with industry analysts,
expecting continued strong growth within the collaboration market. Capital investments and depreciation are estimated to
align with historic values relative to revenues.
Cash flows were discounted to a weighted average cost of capital (WACC) corresponding to 8.22% (before tax). The asset
beta is based on the average of peer companies in the segment with a small company premium. The risk-free interest rate
applied is the average monthly interest rate for 10-year Norwegian government bonds from 2010 to 2020. The long-term
optimal weight of equity of 95% is used in WACC calculation.
For Pexip the impairment test on goodwill has been based on an approved business plan, which includes management’s
best estimate of cash flows for the next 5 years. Cash flows beyond the five-year forecast period have been extrapolated
using a steady 5% per annum growth rate. The collaboration industry is expected to grow significantly faster than the
terminal growth rate used in impairment testing. The industry is expected to grow by 15% annually over the forecast period.
Sensitivity analysis
The Group has prepared a sensitivity analysis of the impairment tests to key assumptions: terminal growth rate and
discount rate. Any reasonably possible changes in the key assumptions would not cause the aggregate carrying amount to
exceed the recoverable amount. A sensitivity analysis indicates that goodwill values would be justifiable even if the discount
rate were to be raised by three percentage points or if the terminal growth rate fell to two per cent. Impairment testing has
indicated no existing impairment requirements for goodwill.
Annual Report 2021
80
Note 12 - Intangible Assets
(NOK 1,000)
Software
Customer
contracts Patents
Re-aquired
rights Total
Acquisition cost January 1, 2020 134 935 30 115 238 5 354 170 642
of which internally generated
64
309
- - -
64 309
Additions (internally generated) 33 661 - - - 33 661
Additions - 33 105 - 33 105
Government grants -4 750 - - - -4 750
Acquisition cost December 31, 2020 163 846 63 221 238 5 354 232 659
of which internally generated
93
220
- -
93 220
Additions (internally generated) 39 042 - - 39 042
Additions 9 265 1 952 11 217
Aquisitions 2 862 3785 6 647
Disposals - -5 744 - -5 744
Government grants -4 750 - - - -4 750
Acquisition cost December 31, 2021 210 265 63 214 238 5 354 279 071
of which internally generated
127
512
- - -
127 512
Accumulated amortisation and
impairment losses January 1, 2020 56 148 7 173 185 5 354 68 860
of which internally generated
36
165
- - -
36 165
Amortisation of internally generated assets 6 781 - - - 6 781
Amortisation of other assets 16 172 7 084 53 23 309
Accumulated amortisation and
impairment losses December 31, 2020 79 101 14 257 238 5 354 98 950
of which internally generated
42
946 42 946
Amortisation of internally generated assets 9 649 - - - 9 649
Amortisation of other assets 18 778 10 821 - 29 599
Impairment 1 952 1 952
Accumulated amortisation and
impairment losses December 31, 2021 107 528 27 030 238 5 354 140 151
of which internally generated
52
595
- - -
52 595
Carrying value as at January 1, 2020 78 787 22 942 53 0 101 783
of which internally generated
28
144
- - -
28 144
Carrying value as at December 31, 2020 84 745 48 964 - 0 133 709
of which internally generated
50
274
- - -
50 274
Carrying value as at December 31, 2021 102 737 36 184 - 0 138 920
of which internally generated
74
917
- - -
74 917
Estimated useful life and amortisation plan is
as follows:
Useful life 5 years 5 years 5 years 1 year
Amortisation plan straight-line straight-line straight-line straight-line
Annual Report 2021
81
The development expenditures that do not meet the criteria for capitalisation are recognised as salary and personnel
expenses and other operating expenses in profit and loss. The aggregate amount for 2021 is NOK 158,96 million (2020:
NOK 109,12 million).
The Group has received government grants related to development of software of NOK 4,75 million in 2020 and NOK 4,75
million in 2021. The grants have been subtracted from the carrying amount of internally generated software.
The impairment of Customer Contracts is related to a reduction in purchase price for the Customer Contracts from
Pexip. This reduction is due to performance criteria not being fully met.
Note 13 - Trade and Other Receivables
(NOK 1,000)
12/31/2021 12/31/2020
Trade receivables 216 337 192 179
Provisions for bad debt -4 684 -4 357
Public taxes and funds 4 839 4 839
Other current receivables 1 383 254
Total current trade and other receivables 217 875 192 916
Deposits 6 859 2 919
Public taxes and funds
Total non-current trade and other receivables 6 859 2 919
Aging of trade receivables 12/31/2021 12/31/2020
Current and guaranteed
1)
170 381 142 875
1-30 days past due 21 181 18 446
31-60 days past due 7 109 11 240
61-90 days past due 5 455 7 330
More than 90 days past due 12 212 12 288
Less provision for bad debt -4 684 -4 357
Total 211 653 187 822
1)
From January 1, 2021, the Securitization facility agreement with Sparebank 1 Factoring was terminated.
Movements in the provision for impairment of trade receivables 2021 2020
Opening balance provision for bad debt as at January 1 4 357 3 112
Change in provision for the year 1 828 2 252
Receivables written o during the year -1 282 -1 183
Translation dierences -218 175
Closing balance provision for bad debt as at December 31 4 684 4 357
Annual Report 2021
82
Note 14 - Other Current Assets
(NOK 1,000)
Note 15 - Cash and Cash Equivalents
(NOK 1,000)
Note 16 - Share Capital, Shareholder Information and Dividend
(NOK 1,000)
12/31/2021 12/31/2020
Other prepayments 27 913 18 680
Other current assets - -
Total 27 913 18 680
12/31/2021 12/31/2020
Bank deposits 803 852 1 100 656
Total cash and cash equivalents 803 852 1 100 656
Restricted cash
These deposits are subject to regulatory restrictions and are therefore not available for general use.
12/31/2021 12/31/2020
Taxes withheld 6 996 5 753
Total restricted cash 6 996 5 753
Of the total cash and cash equivalents as of December 31, 2021 NOK 5 498 is held as a bank guarantee at DNB bank for
the lease contract with Mustad Eiendom AS regarding rental of oces in Lysaker.
The Parent Company’s registered share capital as at December 31, 2021 was NOK 1,566 divided into 104,429.671 ordinary
shares with a par value of NOK 0.015. All issued shares have equal voting rights. The parent company holds treasury shares
of 719,228 making the presented share capital NOK 1,556.
The Parent Company’s registered share capital as at December 31, 2020 was NOK 1,523 divided into 101,563,487 ordinary
shares with a par value of NOK 0.015. All issued shares have equal voting rights.
Development in the number of issued and outstanding shares
Number of shares (1,000) Share capital
Outstanding at January 1, 2021 101 563 1 523
Employee share scheme issue 2 866 43
Outstanding at December 31, 2021 104 429 1 566
Annual Report 2021
83
Treasury shares
Number of shares (1,000)
Outstanding at January 1, 2021 -
Shares bought back on-market -1 183
Acquisition of subsidiary 87
Shares transferred with restrictions 189
Employee share scheme issue 188
Outstanding at December 31, 2021 -719
In June 2021 the company performed a share buyback of NOK 88,2 million, equal to the cash amount raised in employee
share excersise in Q1 2021.
The shares acquired in this buyback program are expected to be used to fulfil the companys obligations in future share
option excersises. Number of shares bought back from the market was 1 182 950.
On November 8, 2021, the company acquired Skedify, a Belgium based Software -as-a-Service customer engagement
solution. Pexip acquired 100% of the shares in Skedify BV for an enterprise value of EUR 8 million on a cash and debt free
basis and an equity value of EUR 3,95 million settled in 275 917 shares valued to NOK 85 and EUR 1,58 million in cash.
Ownership structure
The 20 largest shareholders as of December 31, 2021:
Shares Ownership
T.D. VEEN AS 4 832 764 4.63%
FOLKETRYGDFONDET 4 158 742 3.98%
BJØBERG EIENDOM AS 4 025 775 3.86%
Skandinaviska Enskilda Banken AB 3 614 343 3.46%
Avanza Bank AB 3 224 511 3.09%
Skandinaviska Enskilda Banken AB 2 976 755 2.85%
Euroclear Bank S.A./N.V. 2 368 976 2.27%
SYNESI AS 2 100 000 2.01%
VEEN EIENDOM AS 1 922 223 1.84%
STAVANGER VENTURE AS 1 822 018 1.74%
BNP Paribas Securities Services 1 807 824 1.73%
XFILE AS 1 781 107 1.71%
BARCLAYS CAPITAL SEC. LTD FIRM 1 712 056 1.64%
CARABACEL AS 1 563 064 1.50%
CHAMBERLIN 1 516 101 1.45%
The Bank of New York Mellon SA/NV 1 512 460 1.45%
The Bank of New York Mellon SA/NV 1 442 439 1.38%
LIA INVESTMENTS LIMITED 1 438 252 1.38%
Morgan Stanley & Co. Int. Plc. 1 293 398 1.24%
SIRIUS AS 1 255 000 1.20%
Total top 20 shareholders 46 367 808 44.40%
Others 58 061 863 55.60%
Total 104 429 671 100%
Annual Report 2021
84
Number of shares owned or controlled directly or indirectly by the Management Group and Board of Directors at
December 31, 2021:
Shares Ownership
Kjell Skappel (Board Member) 8 599 505 8.23%
Per Kogstad (Board Member) 4 059 775 3.89%
Michel Sagen (Chairman) 1 563 064 1.50%
Irene Kristiansen (Board Member) 150 000 0.14%
Marianne Wergeland Jenssen (Board Member) 3 000 0.00%
Tom Erik Lia (CSO) 1 438 252 1.38%
Giles Chamberlin 1 516 101 1.45%
Nicolas Cormier (CTO) 230 573 0.22%
Ingrid Woodhouse (CPO) 24 930 0.02%
Øystein Hem (CFO and interim CEO) 109 968 0.11%
Odd Sverre Østlie (Former CEO) 406 729 0.39%
Total 17 695 168 16.94%
Dividend paid and proposed
Proposed for approval at AGM for financial year 2021 is that no dividend will be paid. No dividend was paid for financial
year 2020.
Note 17 - Borrowings
(NOK 1,000)
The Group’s interest-bearing liabilities consists of:
Interest rate Year of maturity 12/31/2021 12/31/2020
Loan from Innovasjon Norge 3.95% 2021
Loan from Innovasjon Norge 3.70% 2024 4 000 6 000
Total long-term debt 4 000 6 000
Loan from Innovasjon Norge 3.95% 2021 500
Loan from Innovasjon Norge 3.70% 2022 2 000 2 000
Total short-term debt 2 000 2 500
The leasing liabilities are presented separately in note 10 - Leases.
The fair value of external borrowings does not materially dier from the carrying amount since interest payable is close to
current market rates.
Pledged as security
The Group’s loans to Innovasjon Norge are secured borrowings. The carrying amount of assets pledged as collateral are as
follows:
12/31/2021 12/31/2020
Property, plant and equipment 36 033 25 177
Trade receivables 211 653 187 822
Total 247 686 212 999
Annual Report 2021
85
Note 18 - Contract Costs, Contract Assets and Contract Liabilities
(NOK 1,000)
Contract assets 2021 2020
Balance at January 1 9 069 14 015
Additions 17 431 5 463
Reclassifications to accounts recievables -9 069 -10 407
Balance at December 31 17 431 9 069
Contract assets are presented as other current assets. Refer to note 14.
Contract liabilities 2021 2020
Balance at January 1 155 180 47 880
New contract liabilities 187 489 151 798
Revenue recognised from liability opening balance -140 366 -44 499
Balance at December 31 202 302 155 180
For impairment of contract assets the simplified approach is used and the expected loss provision is measured at the
estimate of the lifetime expected credit losses. The provision matrix is disclosed in Note 21 - Financial risk. In accordance
with the provision matrix no loss allowance or impairment is recognised for contract assets in 2021 or 2020.
Contract costs 2021 2020
Balance at January 1 211 077 74 235
Additions 101 630 160 898
Depreciated during the year -50 630 -24 056
Balance at December 31 262 076 211 077
Contract assets and liabilities
Of the contract liabilities as of December 31, 2021, NOK million 140.4 has been recognised as revenue in 2021 (2020:
NOK million 44.5) corresponding to 92% (2020: 93%) of the contract liability the preceding year end. The increase of the
contract liability in 2020 and 2021 is mainly due to increase in sales.
Of the contract assets as of December 31, 2020, NOK million 9.1 is reclassified to accounts receivables in 2021 (2020:
NOK million 10.4). The increase in contract asset to NOK million 17.4 in 2021 (2020: NOK million 9.1) is mainly due to
increase in sales.
The definition of contract assets and contract liabilities, together with a description of the relevant accounting principles
can be found under the headline Contract balances in the description of the group’s accounting principles (section 2.3.5).
Contract costs
The definition of contract costs, together with a description of the relevant accounting principles can be found under the
headline Costs of obtaining or fulfilling contracts with customers in the description of the Group’s accounting principles
(section 2.3.5).
In 2021, amortization of contract costs amounting to NOK million 48.8 was recognised as part of salary and personnel
expenses and NOK million 1.9 as cost of sale. For 2020 the amounts were NOK million 22.8 and NOK million 1.2
respectively.
Annual Report 2021
86
Note 19 - Categories of Financial Assets and Financial Liabilities
(NOK 1,000)
Note 20 - Reconciliation for liabilities arising from financing activities
(NOK 1,000)
Financial assets 12/31/2021 12/31/2020
Financial assets at amortised cost:
Cash & cash equivalents (note 15) 803 852 1 100 656
Trade and other receivables (note 13) 217 875 190 741
Total 1 021 727 1 291 397
Financial liabilities 12/31/2021 12/31/2020
Liabilities at amortised cost:
Borrowings (note 17) 6 000 8 500
Trade and other payables 111 808 94 100
Lease liabilities (note 10) 113 527 92 349
Total 231 335 194 949
Non-financial assets and liabilities are excluded from the table.
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-
cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be,
classified in the Group’s consolidated cash flow statement as cash flows from financing activities.
For the year ended December 31, 2021 1/1/2021 Net cash flows New liabilities 12/31/2021
Borrowings (note 17) 8 500 -2 500 6 000
Lease liabilities (note 10) 92 349 -13 688 34 866 113 527
Total liabilities from financing activities 100 849 -16 188 34 866 119 527
Proceeds from issuance of ordinary shares of NOK 89 million is recognised in equity.
For the year ended December 31, 2020 1/1/2020 Net cash flows New liabilities 12/31/2020
Borrowings (note 17) 11 000 -2 500 8 500
Lease liabilities (note 10) 55 488 -11 838 48 699 92 349
Total liabilities from financing activities 66 488 -14 338 48 699 100 849
Proceeds from issuance of ordinary shares of NOK 1 269 million is recognised in equity.
Annual Report 2021
87
Note 21 - Financial Risk
The most significant financial risks which aect the group are credit risk, liquidity risk and market risk related to foreign
exchange rate risk, described further below. Management performs continuous evaluations of these risks and related
processes established to manage them within the group.
Credit risk
The group is exposed to credit risk from its operating activities, primarily trade receivables. The group does not have a
specific procedure for assessing credit risks for its customers before transactions are entered, and mainly does business
with large channel partner organizations. The group does not have significant credit risk associated with a single
counterparty.
Most customer contracts are with channel partners, of which Pexip has multiple engagements. Such contracts are mainly
invoiced yearly or monthly in advance with standard payment terms of 30 days. The group has a collection policy to ensure
overdue invoices are taken action.
The group applies the IFRS 9 simplified approach to measuring expected credit losses, using a lifetime expected loss
allowance for all trade receivables. Trade receivables have been grouped based on shared credit risk characteristics and the
days past to measure the expected credit losses. The historical loss rate has been adjusted to reflect current and forward-
looking information on macroeconomic factors aecting the ability of the customers to settle the receivables. The amount
of expected credit loss is updated at each reporting date to reflect changes in credit risk since the initial recognition of the
respective financial instrument.
The following table provided information about the exposure to credit risk and expected credit losses for trade receivables
and contract assets as of December 31 in 2021 and 2020:
For the year ended December 31, 2021
Trade receivables and
contract assets
Current 1-30 days
past due
31-60 days
past due
61-90 days
past due
More than 90
days past due
Loss rate 1.35% 1.80% 2.25% 3.00% 8.74%
For the year ended December 31, 2020
Trade receivables and
contract assets
Current 1-30 days
past due
31-60 days
past due
61-90 days
past due
More than 90
days past due
Loss rate 1.35% 1.80% 2.70% 3.90% 8.74%
The Group has historically had little receivables loss and has not seen any more significant eect from the covid-19 virus.
However, the Group has considered the uncertainty in the market and the time value of money from later payments.
In addition to using the simplified approach, the Group has made an individual assessment of trade receivables above a
particular value and adjusted the provision with specific allowances for doubtful accounts. The Group writes o a trade
receivable when there is information indicating that the debtor is in severe financial diculty and there is no realistic
prospect of recovery, e.g., when the debtor has been placed under liquidation or has entered bankruptcy proceedings, or
when the trade receivables are over two years past due, whichever occurs earlier. None of the trade receivables that have
been written o is subject to enforcement activities.
Cash and cash equivalents: The counterparts for the group’s cash deposits are large banks considered to be solid. The group
assesses no material credit risks associated with these deposits.
Liquidity risk
The group monitors liquidity centrally across the group. It is the group’s strategy to have sucient cash and cash
equivalents to at any time fund operations and investments according to the company’s strategic plans. The group monitors
its liquidity risk through a short-term and a long-term liquidity forecast to manage the target of a minimum position of cash
imposed by the Board of Directors.
Annual Report 2021
88
The group’s financial liabilities are mainly traded payables. In addition, the group has a long-term loan to Innovation Norway
and multi-year leases on oces and IT equipment.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. The maturity profile of the
Group’s leasing liabilities can be found in note 10.
Market risk
Foreign exchange rates
The group operates globally and is exposed to foreign exchange risk regarding trade receivables, payables, and cash and
cash equivalent holdings. Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities denominated in a currency that is not the functional currency of the group and the value of cash holdings in other
currencies than the functional currency, which is NOK.
For the year ended December 31, 2021
Current Non-current
(NOK 1,000) 1-6 months 6-12 months 1-2 years 2-5 years Later than 5 years
Borrowings 1 114 1 094 2 129 2 050 -
Trade and other payables 111 808 - - - -
Total liabilities 112 921 1 094 2 129 2 050 -
For the year ended December 31, 2020
Current Non-current
(NOK 1,000) 1-6 months 6-12 months 1-2 years 2-5 years Later than 5 years
Borrowings 1 413 1 388 2 208 4 179 -
Trade and other payables 94 100 - - - -
Total liabilities 95 512 1 388 2 208 4 179 -
The carrying NOK amounts of the Group’s financial assets and liabilities at the reporting date are as follows
(in 1,000 NOK):
Financial assets 2021 % of total 2020 % of total
NOK 348 513 34.11% 417 421 32.3 %
USD 451 233 44.2 % 517 283 40.1 %
GBP 169 391 16.6 % 208 457 16.1 %
Other currencies 52 657 5.2 % 148 236 11.5 %
Total 1 021 727 100% 1 291 397 100%
Financial liabilities 2021 % of total 2020 % of total
NOK 131 866 57.0 % 130 083 66.7 %
USD 27 426 11.9 % 27 517 14.1 %
GBP 29 854 12.9 % 27 040 13.9 %
Other currencies 42 241 18.3 % 10 310 5.3 %
Total 231 335 100% 194 949 100%
Annual Report 2021
89
Sensitivity analysis
Based on the net exposure of the Group, the hypothetical impact of exchange rate fluctuations on the profit before tax for
the year is as follows if all other variables are held constant:
2021 2021 2020 2020
Foreign currency Change in rate Eect on profit
before tax
(in 1,000 NOK)
Eect on Equity
(in 1,000 NOK)
Eect on profit
before tax
(in 1,000 NOK)
Eect on Equity
(in 1,000 NOK)
USD +/- 7%
+/- 7%
29 666 25 894 34 284 29 924
GBP 9 768 8 525 12 699 11 084
Note 22 - Capital Management
The Group’s objectives for capital management are to ensure that it maintains sucient free liquidity with regards to cash
and cash equivalents to support its business and obligations and have enough flexibility to invest in attractive investment
opportunities. The group manages its capital structure, considering changes in economic and actual conditions and the
development of its underlying business.
No changes were made in the objectives, policies, or processes for managing capital during December 31, 2021, and 2020.
Note 23 - Pensions and Other Long-term Employee Benefits
(NOK 1,000)
The employees of the group are covered by dierent pension schemes that vary from country to country and between the
dierent companies in accordance with local law. All the plans are assessed to be defined contribution plans. The period’s
contributions are recognised in the income statement as salary and personnel costs.
The Norwegian company in the group is required to have an occupational pension scheme in accordance with the
Norwegian law on required occupational pension (“lov om obligatorisk tjenestepensjon”). The company’s pension
arrangements fulfil the requirements of the law.
The pension plans in the group require that the company pays premiums to public or private administrative pension plans
on a mandatory, contractual or voluntary basis. There are no further obligations once the annual premiums are paid.
The premiums are accounted for as salary and personnel expenses as soon as they are incurred. Prepaid premiums are
accounted for as an asset to the extent that future benefits can be determined as plausible.
2021 2020
Pension cost 13 431 6 719
Long-term employee benefits comprise loans to employees (refer to Note 4) and share-based payments
(refer to Note 24).
Annual Report 2021
90
Note 24 - Share-based Payments
Pexip has two share-based compensation programs oered to employees: stock options and restricted stock units (RSUs).
Stock options vest over a period of four years and fully vest, at earliest, in 2023 and at latest during 2025. Options expire
5 years after grant date – at earliest in 2024 and latest in 2026. Exercise windows for stock options are currently oered
twice, annually, to employees and are typically conditional upon active employment at the time of exercise. Stock options
programs directed towards management have an exit event as a vesting condition and can be settled in either cash or
equity. These options are, however, treated as equity settled due to historical practice and future intentions of only settling
in equity. Exercises related to option programs for management are conditional upon active employment status at the time
of exercise.
In 2021 Pexip introduced an RSU program for both new and existing employees. The share price at grant date is used as the
basis for calculation of RSUs, and RSUs vest in the third year after grant date.
Options 2021 2021 2020 2020
Weighted average
exercise price
Number Weighted average
exercise price
Number
Outstanding at January 1 41.03 7 908 534 27.49 6 740 432
Granted during the year 84.20 942 000 62.60 2 620 000
Forfeited during the year 46.65 -621 000 34.11 -351 917
Exercised during the year 30.50 -3 097 596 11.73 -1 095 223
Expired during the year - - 0.06 -4 758
Outstanding at December 31 54.62 5 131 938 41.03 7 908 534
RSUs 2021 2021 2020 2020
Number Number
Outstanding at January 1 - - - -
Granted during the year - 98 310 - -
Forfeited during the year - -4 530 - -
Exercised during the year - - - -
Expired during the year - - -
Outstanding at December 31 - 93 780 -
The exercise price of options outstanding at December 31, 2021 ranged beetween NOK 14.5 and NOK 100
(2020: NOK 11.85 and NOK 90) and their weighted average contractual life was 3.2 years (2020: 3.3 years). Weighted
average contractual life for RSUs outstanding at December 31, 2021 was 3.12 years.
Of the total number of options outstanding at December 31, 2021 325,438 (2020: 260,263) had vested and were
excercisable. No RSUs were vested at December 31, 2021.
The weighted average fair value of each option granted during the year was 25.46 (2020: NOK 22.13). The weighted
average fair value of each RSU granted during the year was NOK 64.06.
The total expense recognised for the period arising from equity-settled share-based payment transactions was
NOK 30,4 million (2020: NOK 23,9 million).
Annual Report 2021
91
The following information is relevant in the determination of the fair value of instruments granted during the year.
Options 2021 2020
Option pricing model used Black-Scholes
Weighted average share price at grant date (in NOK) 83 68
Excercise price (in NOK) 84 63
Weighted average contractual life (in days) 1 827 1 827
Expected volatility 36.01% 33.90%
Risk-free interest rate 0.76% 0.58%
The expected volatility is based on the volatility for a selection of comparable listed peer companies.
As there are no expected dividend payments, the dividend parameter is not included in the calculations.
RSUs 2021 2020
Weighted average share price at grant date (in NOK) 64 -
Excercise price (in NOK) - -
Weighted average contractual life (in days) 1 230 -
Note 25 - Government Grants
(NOK 1,000)
The Group is eligible for government grants of NOK 4.8 million in 2021 (2020: NOK 4.8 million) which has been deducted
from the carrying amount of other intangible assets (software).
In 2021 government grants relates to a SkatteFUNN project. Pexip aims to develop the next generation video conferencing
system, lifting the experience to new levels for both users and administrators. This project aims to improve the usability
compared to solutions on the market today.
All conditions and contingencies attached to the grants have been fulfilled.
Annual Report 2021
92
Note 26 - List of Subsidiaries
The consolidated financial statements for 2021 include the following subsidiaries:
Company Registered oce Voting share Ownership share
Pexip AS Oslo, Norway 100% 100%
Pexip Ltd. Berkshire, England 100% 100%
Pexip Inc. Virginia, USA 100% 100%
Pexip Australia Pty Ltd Sydney, Australia 100% 100%
Pexip Singapore Pte Ptd Singapore, Singapore 100% 100%
Pexip Japan GK Tokyo, Japan 100% 100%
Videxio Asia Pacific Ltd. Kuala Lumpur, Malaysia 100% 100%
Pexip France SAS Neuilly-sur- Seine, France 100% 100%
Pexip Germany GbmH Düsseldorf, Germany 100% 100%
Pexip Netherlands B.V Utrecht, Netherlands 100% 100%
Skedify NV Ghent, Belgium 100% 100%
The consolidated financial statements for 2020 include the following subsidiaries:
Company Registered oce Voting share Ownership share
Pexip AS Oslo, Norway 100% 100%
Pexip Ltd. Twyford, England 100% 100%
Pexip Inc New York, USA 100% 100%
Videxio Asia Pacific Ltd. Kuala Lumpur, Malaysia 100% 100%
Pexip Australia Pty Ltd Sydney, Austrlia 100% 100%
Pexip Singapore Pte Ptd Singapore, Singapore 100% 100%
Pexip Japan GK Tokyo, Japan 100% 100%
Note 27 - Transactions with Related Parties
The Group’s related parties include Parent Company and subsidiaries, as well as members of the Board, Management Group
and their related parties. Related parties also include companies in which the individuals mentioned above have significant
influence.
The Group is not part in any agreements, deals, or other transactions in which the Parent company’s Board of Directors
or Management Group had a financial interest, except for transactions following from the employment relationship.
Remuneration to key personnel is disclosed in the remuneration report.
Transactions and balances between the parent company and its subsidiaries, and between the subsidiaries, have been
eliminated on consolidation, and are not disclosed in this note. The Group does not have other transactions with related
parties, except for remuneration for their role in the Group.
Annual Report 2021
93
Note 28 - Events After the Balance Sheet Date
On February 7, 2022, Pexip announced the appointment of Trond K. Johannessen as CEO, following an extensive
international search process. He will join Pexip in May 2022. Øystein Hem will continue to lead the Company until Mr
Johannessen assumes the role as CEO and will continue with Pexip as CFO.
On February 8, 2022, Pexip completed the portfolio acquisition from Kinly. As part of the transaction, Pexip will assume
the responsibility of the service delivery of several Video-as-a-Service customers across Video Infrastructure and Video
Enablement, including the related IPR and a development and operations team of 9 people.
On February 10, 2022, Pexip announced that the company had decided to initiate a buyback of its shares in the market
for a total of NOK 87.5 million. Pexip has an ongoing employee share-based compensation program with existing future
commitments to deliver shares. Due to a solid cash position, the Board believes it is an attractive option to buy back shares
to fulfil future share option exercises obligations. After this buyback program, Pexip will have sucient cash reserves to
fund the communicated growth plan until the company returns to cashflow positive operations.
Note 29 - Market Situation
Impact from Covid-19
Covid-19 has disrupted the global economy. Pexip’s business has continued to develop well in 2021, partly because Pexip’s
products and services are within videoconferencing, an industry that has seen a significant increase in use-cases during
the pandemic. Pexip’s operations have pivoted to an all-digital workflow where required, and most Pexip locations have
been in some lockdown situations during 2021. Moreover, Pexip employees’ expertise in videoconferencing and hybrid-
working solutions has contributed to a smooth transition for the Pexip workforce to the required changes in ways of
working that the pandemic has caused. The pandemic has required extraordinary eorts from the organization to support
existing and new customers. This has enabled many of Pexip’s customers to maintain business continuity and deliver
vital services in industries such as healthcare, public services and pharmaceuticals. In the short term, renewed Covid-19
restrictions will cause limited use of oces and delays in the roll-out of new video rooms.
War in Ukraine
The development in Ukraine, and the impact on business in the region is continuously changing and the following
statements apply up to the date of the release of this report and may not be applicable after the date of release.
The war in Ukraine has impacted Pexip in several ways. Pexip has three remote employees based in the conflict area and
several employees from the involved countries in other oces. Pexip’s main concern has been to ensure their safety and
oer support to them in the best way. The financial eect from this is minimal until this date.
In response to the attack on Ukraine, several extensive packages of sanctions towards Russia have been launched.
The imposed sanctions are far-reaching. Norway has adhered to all EU sanctions and has transposition sanctions into
Norwegian law. To ensure compliance with the abovementioned measures, Pexip continuously maps our exposures to
Russia, Donetsk and Luhansk and Belarus. This includes, for example, systematic identification and assessment of current
relationships with banks, Resellers and Customers based in Russia or wholly or partly owned by Russian interest. All such
relations are thoroughly considered to ensure compliance with sanctions.
Pexip has ten end customers in Russia and three in Ukraine, of which all have purchased the self-hosted software, with
around USD 0.3 million in annual recurring revenue from these customers. One third of this is scheduled for renewal in Q1,
which will not happen due to the ongoing conflict and sanctions. As of this date, Pexip has around USD 65,000 in unpaid
invoices, in which we see increased risk in getting paid. The war has aected Pexip as Pexip has stopped all new sales and
renewals to companies in Russia. Further, many companies in the corresponding countries and regions are aected by the
situation and some have postponed purchase decisions for video solutions. This will impact the growth in annual recurring
revenue and revenue for Q1 2022.
Annual Report 2021
94
Note 30 - Business Combinations
Acquisition of Skedify
On November 8, 2021, the Company acquired a 100% equity interest in Skedify NV for NOK 19.1 million. The transaction
resulted in the Company obtaining control of Skedify. All shares were transferred from the previous owners of Skedify to
Pexip AS on November 8, 2021, setting this to the acquisition date.
According to the Sales Purchase Agreement, Pexip shall transfer 275.917 shares to previous owners. As the shares are
regularly traded on the Norwegian stock exchange, the stock price will be used to calculate fair value as of the acquisition
date. On November 8, 2021, the share was traded at 39,94 NOK. One hundred nine thousand shares contributed to two
previous owners have been preliminarily scoped out from IFRS 3 Business Combination and included into Pexip Group
financials under IFRS 2 Share Option. The shares granted to these two shareholders will have a vesting period of 3 years,
and they will need to stay on board (be employed by Skedify during those three years for the shares to vest). A clause in
the agreement entitles these two owners to 50% of this consideration in any course of future events. The final assessment
for scoping out this element from IFRS 3 Business Combination to IFRS 2 is pending. Therefore, the initial accounting for
the business combination is preliminary and subject to further assessment.
Pexip acquired Skedify to accelerate the delivery of video-enabled business-to-consumer applications.
The Company accounts for acquisitions of subsidiaries using the acquisition method of accounting, including those
acquisitions under common control, and having commercial substance, by IFRS 3 Business Combinations. This requires
recognising the assets acquired and liabilities assumed at fair value as of the acquisition date. Consideration is the sum
of the fair values, as of the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments
issued in exchange for control of the acquiree.
The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized separately at the acquisition date
at their fair value irrespective of any non-controlling interest, and goodwill is recognized to the extent the consideration
exceeds identified net assets.
In a business combination, consideration, assets, and liabilities are recognized at estimated fair value, and any excess
purchase price is included in goodwill. Estimating fair values requires using valuation models for acquired assets and
liabilities. Such evaluations are subject to numerous assumptions and are thus uncertain.
Pexip has engaged an independent valuer to determine the fair values of the assets and liabilities of Skedify as part of the
purchase price allocation.
The table below summarizes key figures for the Skedify acquisition. Fair value adjustments from Pexip’s acquisition of
Skedify are included. Intercompany transactions and balances are included and are not eliminated in the numbers below
Pexip has engaged an independent valuer to determine the fair values of the assets and liabilities of Skedify as part of the
purchase price allocation. The preliminary fair values of the identifiable assets and liabilities are as follows:
Purchase Consideration in NOK
Base Purchase Price - Cash
payment
15 641
Treasury Shares consideration
in NOK (non-cash transaction)
3 471
Consideration transferred 19 113
Annual Report 2021
95
Purchase consideration in cash included 15.64 million cash payments (excluding Skedify cash balance at the acquisition
date, NOK 0.448m). Other pre-existing transactions not included in purchase consideration were NOK 5.9 million as debt
cancellation to previous shareholders, NOK 2.64 million as a pre-acquisition bridge loan to Skedify and NOK 2.6 million
reclassification of Pexip receivable balance with Skedify to intercompany loan.
The provisional goodwill of NOK 63.647 million has been recognized for 2021 annual reporting.
We expect goodwill to include synergies from the transaction, representing the value chain capture through Skedify
technology integration, marketing, sales, future customer relationships, and intangibles such as the acquired workforce.
Goodwill has been provisionally allocated to Pexip, which is expected to benefit from the synergies of the acquisition.
The determination of the estimated market value of the client relationships and the (SaaS) software of Skedify were
respectively conducted based on a MEEM (multi-period excess earnings method.
Following the acquisition of Skedify by Pexip, two intangible assets were identified for revaluation at fair value: (i) the
customer contracts and related relationships and (ii) the (SaaS) software developed by Skedify.
Recognized amounts of identifiable assets acquired and liabilities assumed
Non Current Assets 7 375
Software (SaaS) 2 862
Customer Relationships 3 785
Intangibles -
Investments in financial assets 3
Tangible Assets 725
Current Assets 4 370
Other assets 1 730
Trade and other receivables 2 192
Cash and cash equivalents 448
Non-Current Liabilities 34 363
Debt 34 363
Current Liabilities 21 916
Trade and other payables 16 035
Deferred Taxes -
Deferred Income 6 121
Current taxes -224
Short term debt -15
Total Identifiable Net Assets at fair value -44 534
Provisional Goodwill 63 647
Pre-existing transactions not included into Purchase Consideration in NOK
Debt Cancellation to Shareholders (cash transaction) 5 868
Skedify bridge loan (cash transaction) 2 642
Pexip account receivable reclassified to intercompany loan (non cash transaction) 2 619
Annual Report 2021
96
Customer relationships were valued using a MEEM approach. They are estimated to amount to NOK 3.8m and to have 20
years remaining useful life. The long useful life is because the churn observed on the existing clients is very low
(almost zero).
The main assumptions used for the valuation were:
• A churn rate of 2%
• A discount rate of 11.43%
• A 10% EBITDA margin
• Contributory Assets Charges for the (SaaS) software, net working capital and the assembled workforce.
The (SaaS) software was valued using a relief from royalty method. Its fair value is estimated to be NOK 2.8m, and its
remaining useful life is estimated to be five years. The royalty rate used for the valuation is 2%. This rate has been selected
because the software is not patented or protected, and the development is mainly front/interface related. It does not consist
of the development of a core system or technology.
The trade name was not considered as having value given the young character of the company and given the B2B activities.
The remaining goodwill is estimated to be NOK 63.7m, but this amount might have to be adjusted during 2022, depending
on further analysis of this transaction.
The acquisition-realted costs have been accounted for separately from the business combination.
Acquisition and transaction costs amounting to NOK 1.5m were expensed as general expenses in the Consolidated Income
Statement.
Temporary dierences relating to the Skedify acquisition for which deferred tax liabilities have not been recognised
were NOK 0.9m. This deferred tax liability has not been recognised as the liability was oset against deferred tax assets
generated due to Skedify’s fair valuation process. Please refer to the tax Note 7. Income Tax Expense and to below table for
further details on deferred tax balances resulting from this transaction.
Deferred tax balances as a result of Skedify transaction :
Deferred tax assets:
Tax losses
Tangible and intangible assets 5 178
Set-o tax -946
Net deferred tax assets after set-o 4 232
Unrecognised deferred tax assets 4 232
Net deferred tax assets -
Deferred tax liabilities:
Tangible and intangible assets 946
Set-o tax -946
Net deferred tax liabilities -
Skedify contributed revenues of NOK 1.82 million and a net loss of 3.17 million to Pexip for November 8, 2021, to December
31, 2021. If the acquisition had occurred on January 1, 2021, management estimates that consolidated Pro-forma revenue
and net loss for the year ended December 31 would have been NOK 9.59 million and 22.4 million, respectively.
Annual Report 2021
97
Financial
Statements
Pexip Holding ASA 2021
Annual Report 2021
98
Profit and Loss Statement
(NOK 1,000)
NOTE OPERATING REVENUE AND OPERATING EXPENSES 01/01/21- 31/12/21 01/01/20- 31/12/20
2, 8 Other operating expenses 22 544 57 109
Total operating expenses 22 544 57 109
Operating loss -22 544 -57 109
FINANCIAL INCOME AND FINANCIAL EXPENSES
10 Other financial income 9 671 847
10 Other financial expenses -176 -66 803
Financial items, net 9 495 -65 956
Loss before taxation -13 049 -123 065
7 Income tax -2 871 -27 074
LOSS FOR THE FINANCIAL YEAR -10 178 -95 990
ALLOCATION OF NET LOSS AND EQUITY TRANSFERS
6 Transferred to / from other equity -10 178 -95 990
Total allocations and equity transfers -10 178 -95 990
Annual Report 2021
99
Balance Sheet at December 31
(NOK 1,000)
NOTE ASSETS 31/12/2021 31/12/2020
Non-current assets
Financial non-current assets
7 Deferred tax 41 795 38 925
3, 9 Investments in group companies 1 086 303 1 055 938
4 Receivables from Group company 245 765
Total financial non-current assets 1 373 864 1 094 863
Total non-current assets 1 373 864 1 094 863
Current assets
Receivables
Other current assets 1 147 1 353
4 Receivables from Group company 6 343
Total receivables 7 490 1 353
Cash and cash equivalents 635 053 884 567
Total current assets 642 543 885 920
TOTAL ASSETS 2 016 407 1 980 784
Balance sheet at 31 December
(NOK 1,000)
NOTE SHAREHOLDERS EQUITY AND LIABILITIES 31/12/2021 31/12/2020
Shareholders equity
Paid-in equity
5,6 Share capital 1 556 1 523
6, 9 Share premium 2 115 938 2 027 206
Total paid-in equity 2 117 495 2 028 730
Equity
6 Other equity -114 592 -55 795
Equity -114 592 -55 795
Total shareholders equity 2 002 903 1 972 935
Liabilities
Current liabilities
Trade and other payables 973 1 239
4 Debt to group Company 12 532 6 609
Total current liabilities 13 505 7 848
Total liabilities 13 505 7 848
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 2 016 407 1 980 784
Annual Report 2021
100
Oslo, March 30, 2022
Board of Directors and CEO of Pexip Holding ASA
Michel Sagen
Chair of the Board
Øystein Hem
Interim CEO
Per Kogstad
Board Member
Irene Kristiansen
Board Member
Kjell Skappel
Board Member
Marianne Wergeland Jenssen
Board Member
Annual Report 2021
101
Cash Flow Statement
(NOK 1,000)
2021 2020
CASH FLOW FROM OPERATIONS:
Profit/(loss) before taxation -13 049 -123 065
Taxes paid for the period -3 787
Eect of currency rate changes -6 350 61 303
Financial income/(expenes) - net -286
Transaction cost related to IPO 43 155
Interest received 461
Change in trade receivables 3
Change in trade payables -266 7 848
Changes in inter-company balances 3 050
Changes in other current assets and other liabilities -150 -1 281
Net cash flow from operations -16 589 -15 824
CASH FLOW FROM INVESTMENT ACTIVITIES:
Outflows due to investments in daughter company -245 765
Net cash flow from investment activities -245 765
CASH FLOW FROM FINANCING ACTIVITIES:
Inflow from share exercise 94 486 1 209 547
Purchase of treasury shares -87 996
Transaction cost related to IPO -97 020
Payments out due to group contribution -154 337
Net cash flow from financing activities 6 490 958 190
Eects of currency rate changes on bank deposits, cash and equivalents 6 350 -61 303
Net change in bank deposits, cash and equivalents -249 514 881 064
Bank deposits, cash and equivalents at January 1, 2021 884 567 3 503
Bank deposits, cash and equivalents at December 31 635 053 884 567
Annual Report 2021
102
Note 1 - Accounting Policies
The financial statements have been prepared in accordance with the Norwegian Accounting Act of
1998 and generally accepted accounting principles in Norway.
Valuation and classification of assets and liabilities
Assets intended for permanent ownership or use in the business are classified as non-current assets.
Other assets are classified as current assets. Receivables due within one year are classified as current
assets. The classification of current and non-current liabilities is based on the same criteria.
Current assets are valued at the lower of historical cost and fair value.
Fixed assets are carried at historical cost, but are written down to their recoverable amount if this is lower than the
carrying amount and the decline is expected to be permanent. Fixed assets with a limited economic life are
depreciated on a systematic basis in accordance with a reasonable depreciation schedule.
Other long-term liabilities, as well as short-term liabilities, are valued at nominal value.
Foreign currency
All balance sheet items denominated in foreign currencies are translated into NOK at the exchange rate prevailing
at the balance sheet date.
Shares in subsidiaries and associates
Subsidiaries and investments in associates are carried at cost. A write-down to fair value will be performed if the
impairment is not considered to be temporary, and an impairment charge is deemed necessary according to generally
accepted acccounting principles. Received dividends and group contributions are recognised as other financial income. The
same applies for investments in associates.
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation
model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most
appropriate inputs to the valuation model including the expected life of the share option or appreciation right,
volatility and dividend yield and making assumptions about them.
For the measurement of the fair value of the equity-settled transactions with employees at the grant date, the Group
uses the Black-Scholes-Merton option pricing model.
Revenue
Revenue is recognised when it is earned, i.e. when the claim to remuneration arises. This occurs when the service is
performed, as the work is being done. The revenue is recognised with the value of the remuneration at the time of
transaction.
Receivables
Trade receivables and other receivables are recognised at nominal value, less the accrual for expected losses of
receivables. The accrual for losses is based on an individual assessment of each receivable.
Cash and cash equivalents
Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three
months at the date of purchase.
Income taxes
Tax expenses are matched with operating income before tax. Tax related to equity transactions e.g. group contribution, is
recognised directly in equity.
Tax expense consists of current income tax expense and change in net deferred tax. Deferred tax liabilities and deferred tax
assets are presented net in the balance sheet.
Annual Report 2021
103
Note 2 - Payroll Costs, Number of Employees, Benefits,
Loans to Employees etc
(NOK 1,000)
Note 3 - Investments in Subsidiaries and Associated Companies
(NOK 1,000)
Note 4 - Related Party Transactions and Balances
(NOK 1,000)
Average number of employees during the year 0
Pexip Holding ASA has no employees.
Chief Executive Ocer is compensated from Pexip AS. The remuneration to CEO is disclused in the managment
remuneration report for 2021.
Remuneration to board of directors in the parent company
The remuneration to board of directors is disclused in the management remuneration report for 2021.
Auditor
Remuneration to Deloitte AS and their associates is as follows:
2021 2020
Statutory audit 1 740 1 013
Other certification services 80 222
Total 1 820 1 235
Amounts are excl. of VAT
Date of acquisition Registered oce Voting share Ownership share Company
Pexip AS 10/22/2018 Lysaker, Norway 100% 100%
Company
Equity latest financial
statements
Profit/loss latest
financial statements
Pexip AS 260 431 -383 662
Related party transactions, profit and loss
Related party balance items
Relationship to the
counterpart
Intercompany borrowings Intercompany borrowings
Counterpart 2021 2020
Pexip AS Subsidiary 12 532 6 609
Total 12 532 6 609
Relationship to the
counterpart
Intercompany receivables Intercompany receivables
Counterpart 2021 2020
Pexip AS Subsidiary 252 108
Total 252 108
Annual Report 2021
104
Note 5 - Share Capital, Shareholder Information and Dividend
(NOK 1,000)
The Parent Company’s registered share capital as at December 31, 2021 was NOK 1,566 divided into 104,429.671 ordinary
shares with a par value of NOK 0.015. All issued shares have equal voting rights. The parent company holds treasury shares
of 719,228 making the presented share capital NOK 1,556.
The Parent Company’s registered share capital as at December 31, 2020 was NOK 1,523 divided into 101,563,487 ordinary
shares with a par value of NOK 0.015. All issued shares have equal voting rights.
Development in the number of issued and outstanding shares
Number of shares
(1,000)
Share capital
Outstanding at January 1, 2021 101 563 1 523
Employee share scheme issue 2 866 43
Outstanding at December 31, 2021 104 429 1 566
Treasury shares
Number of
shares (1,000)
Outstanding at January 1, 2021 -
Shares bought back on-market -1 183
Acquisition of subsidiary 87
Shares transferred with restrictions 189
Employee share scheme issue 188
Outstanding at December 31, 2021 -719
In June 2021 the company performed a share buyback of NOK 88,2 million, equal to the cash amount raised in employee
share excersise in Q1 2021.
The shares acquired in this buyback program are expected to be used to fulfil the companys obligations in future share
option excersises. Number of shares bought back from the market
was NOK 1 182 950.
On November 8, 2021, the company acquired Skedify, a Belgium based Software -as-a-Service customer engagement
solution. Pexip acquired 100% of the shares in Skedify BV for an enterprise value of EUR 8 million on a cash and debt free
basis and an equity value of EUR 3,95 million settled in 275 917 shares valued to NOK 85 and EUR 1,58 million in cash.
Annual Report 2021
105
Ownership structure
The 20 largest shareholders as of December 31, 2021:
Shares Ownership
T.D. VEEN AS 4 832 764 4.63%
FOLKETRYGDFONDET 4 158 742 3.98%
BJØBERG EIENDOM AS 4 025 775 3.86%
Skandinaviska Enskilda Banken AB 3 614 343 3.46%
Avanza Bank AB 3 224 511 3.09%
Skandinaviska Enskilda Banken AB 2 976 755 2.85%
Euroclear Bank S.A./N.V. 2 368 976 2.27%
SYNESI AS 2 100 000 2.01%
VEEN EIENDOM AS 1 922 223 1.84%
STAVANGER VENTURE AS 1 822 018 1.74%
BNP Paribas Securities Services 1 807 824 1.73%
XFILE AS 1 781 107 1.71%
BARCLAYS CAPITAL SEC. LTD FIRM 1 712 056 1.64%
CARABACEL AS 1 563 064 1.50%
CHAMBERLIN 1 516 101 1.45%
The Bank of New York Mellon SA/NV 1 512 460 1.45%
The Bank of New York Mellon SA/NV 1 442 439 1.38%
LIA INVESTMENTS LIMITED 1 438 252 1.38%
Morgan Stanley & Co. Int. Plc. 1 293 398 1.24%
SIRIUS AS 1 255 000 1.20%
Total top 20 shareholders 46 367 808 44.40%
Others 58 061 863 55.60%
Total 104 429 671 100 %
Number of shares owned directly or indirectly by the Management Group and Board of Directors at December 31, 2021:
Shares Ownership
Kjell Skappel (Board Member) 8 599 505 8.23%
Per Kogstad (Board Member) 4 059 775 3.89%
Michel Sagen (Chairman) 1 563 064 1.50%
Irene Kristiansen (Board Member) 150 000 0.14%
Marianne Wergeland Jenssen (Board Member) 3 000 0.00%
Tom Erik Lia (CSO) 1 438 252 1.38%
Giles Chamberlin (CTO) 1 516 101 1.45%
Nicolas Cormier (CTO) 230 573 0.22%
Ingrid Woodhouse (CPO) 24 930 0.02%
Øystein Hem (CFO and interim CEO) 109 968 0.11%
Odd Sverre Østlie (Former CEO) 406 729 0.39%
Total 18 101 897 17.33%
Dividend paid and proposed
Proposed for approval at AGM for financial year 2021 is that no dividend will be paid. No dividend was paid for financial
year 2020.
Annual Report 2021
106
Note 6 - Equity
(NOK 1,000)
Note 7 - Income Tax Expense
(NOK 1,000)
Paid-in equity
Share
capital
Share
premium
Other
reserves
Retained
earnings
Total
Equity
Equity at January 1, 2021 1 523 2 027 206 33 208 -89 003 1 972 935
Capital increase/share issue 43 88 732 88 775
Profit/(loss) of the year -10 178 -10 178
Buy/sell treasury shares -10 -78 984 -78 994
Share based payments 30 365
Equity at December 31, 2021 1 556 2 115 938 -15 411 -99 181 2 002 903
Specification of income tax expense: 2021 2020
Current income tax payable
Changes in deferred tax -2 871 -27 074
Tax on profit/(loss) -2 871 -27 074
Allocation of income tax expense between Norway 2021 2020
Tax on profit/(loss) -2 871 -27 074
Reconciliation from nominal to real income tax rate:
2021 2020
Profit/(loss) before taxation -13 049 -123 065
Estimated income tax according to nominal tax rate (22%) -2 871 -27 074
Income tax expense -2 871 -27 074
Eective income tax rate 22% 22%
The size of the current income tax payable and deferred tax related to items recorded directly against equity:
2021 2020
Deferred tax: tax on share issue costs recognised directly in equity -11 850
Total -11 850
Specification for the tax eect of temporary dierences and losses carried
forward
2021
Asset
2020
Asset
Tax losses 41 795 38 925
Total 41 795 38 925
Annual Report 2021
107
Deferred tax is determined based on the amount dierences between the accounting principles and the taxation purposes,
of assets and liabilities at the reporting date. Deferred tax assets are generally recognised for all deductable temporary
dierences to the extent that it is probable that they can be oset by future taxable income for the Pexip Group. The
company has assesed that the tax losses will be recoverable in the future.
Note 8 - Operating Expenses
(NOK 1,000)
Note 9 - Share-based Payments
Pexip has two share-based compensation programs oered to employees: stock options and restricted stock units (RSUs).
Stock options vest over a period of four years and fully vest, at earliest, in 2023 and at latest during 2025. Options expire
5 years after grant date – at earliest in 2024 and latest in 2026. Exercise windows for stock options are currently oered
twice, annually, to employees and are typically conditional upon active employment at the time of exercise. Stock options
programs directed towards management have an exit event as a vesting condition and can be settled in either cash or
equity. These options are, however, treated as equity settled due to historical practice and future intentions of only settling
in equity. Exercises related to option programs for management are conditional upon active employment status at the time
of exercise.
In 2021 Pexip introduced an RSU program for both new and existing employees. The share price at grant date is used as the
basis for calculation of RSUs, and RSUs vest in the third year after grant date.
Other operating expenses 2021 2020
Operating expenses 12 532 6 842
IPO fee 43 155
Audit fees 1 820 1 235
Other professional fees 4 248 4 899
Other operating costs 3 945 977
Total 22 544 57 109
Options 2021 2021 2020 2020
Weighted average
exercise price
Number Weighted average
exercise price
Number
Outstanding at January 1 41,03 7 908 534 27,49 6 740 432
Granted during the year 84,20 942 000 62,60 2 620 000
Forfeited during the year 46,65 -621 000 34,11 -351 917
Exercised during the year 30,50 -3 097 596 11,73 -1 095 223
Expired during the year - - 0,06 -4 758
Outstanding at December 31 54,62 5 131 938 41,03 7 908 534
Annual Report 2021
108
RSUs 2021 2021 2020 2020
Number Number
Outstanding at January 1 - - - -
Granted during the year - 98 310 - -
Forfeited during the year - -4 530 - -
Exercised during the year - - - -
Expired during the year - - -
Outstanding at December 31 - 93 780 -
The exercise price of options outstanding at December 31, 2021 ranged beetween NOK 14,5 and NOK 100 (2020:
NOK 11,85 and NOK 90) and their weighted average contractual life was 3,2 years (2020: 3,3 years). Weighted average
contractual life for RSUs outstanding at December 31, 2021 was 3,12 years.
Of the total number of options outstanding at December 31, 2021 325.438 (2020: 260.263) had vested and were
excercisable. No RSUs were vested at December 31, 2021.
The weighted average fair value of each option granted during the year was 25,46 (2020: NOK 22.13). The weighted
average fair value of each RSU granted during the year was NOK 64,06.
The total expense recognised for the period arising from equity-settled share-based payment transactions was NOK 29,8
million (2020: NOK 23,9 million).
The following information is relevant in the determination of the fair value of instruments granted during the year.
Options 2021 2020
Option pricing model used Black-Scholes
Weighted average share price at grant date (in NOK) 83 68
Excercise price (in NOK) 84 63
Weighted average contractual life (in days) 1 827 1 827
Expected volatility 36.01% 33.90%
Risk-free interest rate 0.76% 0.58%
The expected volatility is based on the volatility for a selection of comparable listed peer companies.
As there are no expected dividend payments, the dividend parameter is not included in the calculations.
RSUs 2021 2020
Weighted average share price at grant date (in NOK) 64 -
Excercise price (in NOK) - -
Weighted average contractual life (in days) 1 230 -
Annual Report 2021
109
Note 10 - Financial Income and Expenses
(NOK 1,000)
Note 11 - Events After the Balance Sheet Date
On February 7, 2022, Pexip announced the appointment of Trond K. Johannessen as CEO, following an extensive
international search process. He will join Pexip in May 2022. Øystein Hem will continue to lead the Company until Mr
Johannessen assumes the role as CEO and will continue with Pexip as CFO.
On February 8, 2022, Pexip completed the portfolio acquisition from Kinly. As part of the transaction, Pexip will assume
the responsibility of the service delivery of several Video-as-a-Service customers across Video Infrastructure and Video
Enablement, including the related IPR and a development and operations team of 9 people.
On February 10, 2022, Pexip announced that the company had decided to initiate a buyback of its shares in the market
for a total of NOK 87.5 million. Pexip has an ongoing employee share-based compensation program with existing future
commitments to deliver shares. Due to a solid cash position, the Board believes it is an attractive option to buy back shares
to fulfil future share option exercises obligations. After this buyback program, Pexip will have sucient cash reserves to
fund the communicated growth plan until the company returns to cashflow positive operations.
Note 12- Market Situation
The impact from Covid-19 and war in Ukraine is disclosed in the Annual report and note 29.
2021 2020
Interest income 461 847
Exchange gains 6 338
Other financial income
Interest income from Group company 2 872
Financial income 9 671 847
Interest expense -176 -93
Exchange losses -66 682
Other financial expenses -27
Financial expenses -176 -66 803
Net financial income(expense) 9 495 -65 956
Of the Exchange gains and losses as of December 31, 2021, NOK 6 350 are related to currency changes (USD, EUR, GBP)
for the bank accounts.
Annual Report 2021
110
Declaration in Accordance with 5-5
of the Securities Trading Act
We confirm that the financial statements for the period January 1 to December 31, 2021, have, to the best of
our knowledge, been prepared in accordance with applicable accounting standards and give a true and fair
view of the assets, liabilities, financial position and profit or loss of the company and the Group.
We also hereby declare that the annual report provides a true and fair view of the financial performance and
position of the company, as well as a description of the principal risks and uncertainties facing the company.
Oslo, March 30, 2022
Board of Directors and CEO of Pexip Holding ASA
Michel Sagen
Chair of the Board
Øystein Hem
CFO and Interim CEO
Per Kogstad
Board Member
Irene Kristiansen
Board Member
Kjell Skappel
Board Member
Marianne Wergeland Jenssen
Board Member
Annual Report 2021
111
Auditor’s
Report
Annual Report 2021
112
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Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities
(collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally
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NO-0103 Oslo
Norway
Tel: +47 23 27 90 00
www.deloitte.no
To the General Meeting of Pexip Holding ASA
INDEPENDENT AUDITOR’S REPORT
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Pexip Holding ASA, which comprise:
• The financial statements of the parent company Pexip Holding ASA (the Company), which comprise the balance
sheet as at 31 December 2021, the profit and loss statement and cash flow statement for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and
• The consolidated financial statements of Pexip Holding ASA and its subsidiaries (the Group), which comprise the
statement of financial position as at 31 December 2021, the statement of profit and loss, statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies.
In our opinion:
• the financial statements comply with applicable statutory requirements,
• the financial statements give a true and fair view of the financial position of the Company as at 31 December
2021, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian
Accounting Act and accounting standards and practices generally accepted in Norway, and
• the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021,
and its financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company and the Group as required by laws and regulations and
the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation
(537/2014) Article 5.1 have been provided.
The company was listed in 2020. We have been the company's elected auditor since before the company was listed.
We have been the company's elected auditor continuously for 2 years since the company was listed, including the
listing year.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
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statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Carrying amount of goodwill
Key audit matter How the matter was addressed in the audit
As disclosed in note 2 and 11, the Group has recognized
goodwill of NOK 662.645 thousand.
Goodwill is tested for impairment annually, or more
frequently if there is an indication of impairment.
To assess recoverability of goodwill, management must
make assumptions about future revenues, discount rates
as well as future operating costs.
Due to the inherent uncertainty involved in the
forecasting and discounting of future cash flows, and the
level of management judgment involved, this has been
identified as a key audit matter.
We evaluated relevant controls associated with
impairment testing.
We obtained the valuation model and challenged
management’s key assumptions used in the impairment
model. In particular;
• the growth rate in revenues;
• the future operating costs and margins; and
• the discount rate used.
We validated the mathematical accuracy of cash flow
models.
We used Deloitte valuation specialists in our audit of the
impairment assessment, including for review of
calculations and discount rate.
We also assessed the adequacy of the disclosures
provided by the Group in relation to the impairment
testing.
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information in the Board of
Directors’ report and the other information accompanying the financial statements. The other information comprises
information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other
information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report
and the other information accompanying the financial statements. The purpose is to consider if there is material
inconsistency between the Board of Directors’ report and the other information accompanying the financial
statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’
report and the other information accompanying the financial statements otherwise appears to be materially
misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the
other information accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance
and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance
with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for
the preparation and true and fair view of the consolidated financial statements of the Group in accordance with
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International Financial Reporting Standards as adopted by the EU, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial
statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise
will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but
to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error.
We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's or the Group's internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of accounting, and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company and the Group's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company and the Group to cease to continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
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From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format (ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file
name PexipHoldingASA-2021-12-31-en have been prepared in accordance with Section 5-5 of the Norwegian
Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic
Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance with the
requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single electronic
reporting format required in ESEF. This responsibility comprises an adequate process and the internal control
procedures which management determines is necessary for the preparation, tagging and publication of the financial
statements.
Auditor’s Responsibilities
Our responsibility is to express an opinion on whether the financial statements have been prepared in accordance
with ESEF. We conducted our work in accordance with the International Standard for Assurance Engagements (ISAE)
3000 – “Assurance engagements other than audits or reviews of historical financial information”. The standard
requires us to plan and perform procedures to obtain reasonable assurance that the financial statements have been
prepared in accordance with the European Single Electronic Format.
As part of our work, we performed procedures to obtain an understanding of the company’s processes for preparing
its financial statements in the European Single Electronic Format. We evaluated the completeness and accuracy of
the iXBRL tagging and assessed management’s use of judgement. Our work comprised reconciliation of the financial
statements tagged under the European Single Electronic Format with the audited financial statements in human-
readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Oslo, 30 March 2022
Deloitte AS
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State Authorised Public Accountant
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Annual Report 2021
116
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Serienummer: 9578-5994-4-1479369
IP: 217.173.xxx.xxx
2022-03-29 13:37:51 UTC
Penneo Dokumentnøkkel: AAZZL-KQ146-QWIDS-JULUU-MJBMX-8CXAJ
Annual Report 2021
117
Appendix — Alternative Performance Measures (APMs)
The following terms are used by the Group in the definition of APMs in this Report:
EBITDA: Profit/(loss) for the period before net financial items, income tax expense, depreciation
and amortization.
Adjusted EBITDA: EBITDA adjusted for IPO-related, non-recurring costs.
EBITDA-margin: EBITDA in percentage of revenue.
Share of recurring revenues: Recurring revenue from own products is defined as revenue from time-limited
contracts where the purchase is recurring in nature. Revenue from time-limited software subscriptions and
related mandatory maintenance contracts are considered recurring. Revenue from third-party software
licences, perpetual software-licences and project-based professional services, such as a customer-specific
proof-of-concept project or installation projects, are considered non-recurring.
Contracted Annual Recurring Revenue (ARR): Annualized sales from all active subscriptions/contracts and
ordered subscriptions with a future start date where the subscription is time-limited and recurring in nature.
This is corresponding to Pexip’s order backlog.
Gross Margin: Revenue after cost of gods sold in percentage of revenue.
Delta Annual Recurring Revenue (DARR): The dierence in ARR from one quarter to another.
Net Revenue Rentation (NRR) Rate is the percentage of annual recurring revenue retained from customers
excisting in prior year, including upsell, downsell and full churn.
Adjusted EBITDA
(NOK 1,000) 2021 2020
EBITDA -124 297 55 629
IPO transaction costs 43 155
Non recurring IPO related services 4 613
EBITDA adjusted -124 297 103 397
The adjustment made in 2020 was related to the IPO process and is non-recurring. For detaljs regarding these cost, please
refer to Note 5.
Gross Margin
(NOK 1,000) 2021 2020
Revenue 805 518 678 513
Cogs 76 940 42 513
Calculated Gross Margin 90% 94%
