U.S. futures subdued as government shutdown stretches into second week
Introduction & Market Context
Pexip Holding ASA (OB:PEXIP) presented its second quarter 2025 results on August 14, showcasing continued growth in annual recurring revenue (ARR) and improved profitability. The company’s stock closed at NOK 58.90 on August 13, up 1.03% ahead of the presentation, reflecting ongoing investor confidence following a 51.25% return over the past year.
As a software-only specialist in video conferencing solutions, Pexip continues to leverage its partnerships with technology giants including Microsoft, Google, Zoom, and Cisco to strengthen its market position. The company’s focus on secure communications for defense, government, and healthcare sectors is yielding particularly strong results.
Quarterly Performance Highlights
Pexip reported total ARR of $119.0 million at the end of Q2 2025, representing an 11% year-over-year increase and a $3.5 million sequential improvement from Q1. This result hit the upper end of the company’s previously communicated guidance range of $117-120 million.
The company’s performance was driven by particularly strong growth in its Secure & Custom Spaces segment, which grew 27% year-over-year to reach $50.6 million in ARR. Meanwhile, the Connected Spaces segment showed more modest growth of 2% year-over-year, reaching $68.4 million in ARR.
As shown in the following chart of ARR, EBITDA, and Free Cash Flow growth:
Quarterly revenue increased by 6% year-over-year, while the last twelve months (LTM) revenue growth reached 13%. The company achieved an adjusted EBITDA margin of 23% on an LTM basis, representing a 7 percentage point improvement compared to the same period last year.
Detailed Financial Analysis
Pexip’s gross margin remained strong at 92% LTM, reflecting the company’s software-focused business model. Free cash flow reached 281 million NOK on an LTM basis, representing a 25% margin and demonstrating the company’s ability to convert earnings into cash.
The company’s financial results show a consistent improvement in profitability metrics, as illustrated in this financial overview:
Pexip distributed 318 million NOK in cash to shareholders during Q2 2025, highlighting its commitment to returning value to investors while maintaining a solid financial position. The company reported somewhat lower operating cash flow year-over-year, which management attributed to normalization following an exceptionally strong Q1 2025.
On the expense side, Pexip maintained stable year-on-year costs with salary and personnel expenses decreasing by 5 million NOK. This reduction came from 3 million NOK in lower fixed salaries and 2 million NOK from higher capitalization of R&D expenses. These savings were partially offset by 7 million NOK in higher share option-related costs, primarily driven by social security accruals resulting from the company’s rising share price.
The company’s subscription revenue model and regional distribution is shown in the following chart:
Strategic Initiatives
Pexip continues to focus on two main business areas: Secure & Custom Spaces and Connected Spaces. The Secure & Custom segment, which now represents 43% of total ARR (up from 37% a year ago), is outperforming due to lower churn rates and increased new sales.
The company highlighted several key wins in the defense sector, including a contract with a European Ministry of Defence that chose Pexip Secure Meetings for its NATO approval, mission readiness, and ease of operation. In healthcare, Pexip secured five contracts above $200,000, adding $900,000 in ARR overall, including one with a major global hospital group implementing a video-enabled contact center.
Pexip also announced progress on strategic partnerships, including:
1. Joint development with Google to support interoperability for Google Meet Hardware
2. Ongoing collaboration with Microsoft to develop a Microsoft Teams Rooms on Android interoperability solution
3. Renewal of a long-term commercial agreement with a key partner for an additional three years
The following image illustrates the company’s business areas and technology partnerships:
In the Connected Spaces segment, Pexip reported strong momentum for its native rooms solutions, particularly with the new Connect for Zoom Rooms product. The company also secured several significant interoperability contracts for SIP rooms, including deals with a Fortune 500 global bank, a large global software company, and several public sector organizations.
Forward-Looking Statements
Looking ahead, Pexip maintains a positive market outlook across its business areas, driven by increasing demand for private video meeting platforms, custom video workflows, and interoperability solutions. The company reaffirmed its commitment to consistently deliver above 10% ARR growth and above 20% EBITDA margin.
Pexip’s long-term ambition remains achieving Rule of 40 performance across ARR growth and EBITDA margin. Currently, the company’s combined metric stands at 34% (11% ARR growth plus 23% EBITDA margin), showing progress toward this goal.
Management noted that a renewed commercial partnership agreement will have a short-term negative impact of approximately $1 million on ARR in Q3 2025, but is expected to generate higher revenues and margins over the three-year term due to a higher variable unit price structure.
The company’s next quarterly presentation is scheduled for November 7, 2025, when it will report Q3 2025 results.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.