Earnings call transcript: Pexip Q3 2025 shows growth in revenue and ARR

Pexip Holding ASA reported a solid performance in its Q3 2025 earnings call, highlighting a 16% year-over-year increase in revenue and a 12% growth in Annual Recurring Revenue (ARR). The company’s stock showed a modest 0.97% rise in pre-market trading, reflecting a cautiously optimistic market sentiment. Pexip’s strategic focus on product innovation and market expansion continues to drive its growth trajectory.

Key Takeaways

• Revenue grew 16% year-over-year in Q3.
• ARR increased by 12%, reaching $122.2 million.
• EBITDA margin stood at 20%, with NOK 52 million in Q3.
• Cash position remains robust at $526 million.
• Stock price rose by 0.97% in pre-market trading.

Company Performance

Pexip’s Q3 2025 results demonstrated strong performance metrics, with significant revenue and ARR growth. The company has maintained its leadership in video meeting interoperability, leveraging unique partnerships with major tech companies like Microsoft, Zoom, and Google. This strategic positioning has allowed Pexip to capitalize on increasing demand for secure and sovereign IT solutions, particularly in government, healthcare, and defense sectors.

Financial Highlights

• Revenue: 16% year-over-year growth in Q3.
• Annual Recurring Revenue (ARR): $122.2 million, up 12% year-over-year.
• EBITDA: NOK 52 million, with a 20% margin for Q3.
• Free Cash Flow: NOK 29 million in Q3, NOK 303 million over the last 12 months.
• Cash and money market position: $526 million.

Market Reaction

Pexip’s stock experienced a slight increase of 0.97% in pre-market trading following the earnings announcement. This movement suggests a positive reception from investors, who appear to be encouraged by the company’s strong financial performance and innovative product launches. The stock remains within its 52-week range, indicating stability.

Outlook & Guidance

Looking forward, Pexip anticipates continued growth, targeting an ARR range of $124-$127 million in Q4. The company aims for over 10% ARR growth and a 20% EBITDA margin. Pexip’s ongoing focus on expanding its engineering and sales capacity, coupled with planned product innovations, supports its positive growth outlook.

Executive Commentary

Trond, an executive at Pexip, stated, "We take this performance as evidence that we are operating in attractive markets with relevant products and a strong market position." This sentiment underscores the company’s confidence in its strategic direction. Additionally, Åsmund Fodstad expressed excitement about new projects, highlighting Pexip’s proactive approach to market opportunities.

Risks and Challenges

• Potential market saturation in video conferencing solutions.
• Competition from other major technology companies.
• Macroeconomic pressures that could impact IT spending.
• The need to continuously innovate to maintain competitive advantage.

Q&A

During the earnings call, analysts inquired about the impact of the US government shutdown, to which Pexip responded that no significant effects are anticipated. There was also strong interest in the company’s Secure and Custom solutions, with potential significant ARR from US government projects.

Full transcript - Pexip Holding ASA (PEXIP) Q3 2025:

Trond, Company Presenter/Executive, Pexip: Together with me here at Lysaker, I have our CFO, Øystein Hem, and our Chief Revenue Officer, Åsmund Fodstad. Together, we will take you through the highlights of the past quarter and our focus going forward. The standard disclaimers apply as usual. First, a brief overview of Pexip for potential new viewers. Pexip was founded in 2012, and currently we operate in 25 countries across the globe. We are a specialist video conferencing and infrastructure company focusing on interoperability and secure and custom meetings. We do software only, delivered as software, or delivered as a service. Pexip has unique and established partnerships with the leading companies in our industry. You see some of them on this slide. We complement and enhance their solutions and do not generally directly compete with them.

Our customers are mainly large organizations in both the private and public sector that have complex needs when it comes to video collaboration. The financial performance is strong and has been improving over the last quarters. Now to the highlights of the past quarter. Our annual recurring revenues grew with $3.2 million during the quarter, and this leaves us with an ARR base of $122.2 million out of Q3. In the quarter, we had particularly strong performance in our Secure and Custom business area, and the development here is supported by increased public awareness around the need for secure and sovereign IT and communication solutions. In Connected Spaces, our Connect for Zoom product continues to perform well. We also see that our solutions for self-hosted interoperability in high-security private clouds in the US are developing positively.

In Q3, we also launched a brand new product in cooperation with Google that enables Google Meet hardware to connect to Teams meetings with excellent quality. This was not possible before. EBITDA came in at NOK 52 million in the quarter, and free cash flow came in at NOK 29 million in the quarter. If we look at our Q3 performance in the context of the last 12 months, we see that the positive trend we have seen over the past quarters continues. Our total ARR continues to grow and is at an all-time high. Year over year, the growth rate is 12%. Our 12-month rolling EBITDA reached NOK 310 million, which is a 74% improvement since Q3 last year. This corresponds to a 25% EBITDA margin. The free cash flow the last 12 months was NOK 303 million.

This is 45% higher than at the same time last year. We take this performance as evidence that we are operating in attractive markets with relevant products and a strong market position. Pexip has two main solution areas. Pexip Secure and Custom is about privately hosted video meetings that give complete privacy and data control with the desired level of customization. Pexip Connected Spaces is about video meeting interoperability by enabling any meeting room to connect to any meeting platform. First, a few words about Secure and Custom. This area grew 30% year over year in Q3 and now constitutes 44% of our total ARR base. Here, Pexip provides a video meeting platform that can be used exclusively or alongside, for example, Teams or Zoom in those situations when you need to close the door and have a secure meeting.

Our solution includes security features such as tailored user authentication, clear meeting classification labeling, and complete control over what data is stored and where. Integrated chat is also an option. The secure meeting can easily be booked through the Outlook calendar or started through a chat session exactly the same way as with Teams meetings. I believe that most large organizations will have more than one video meeting solution in the future, and Pexip is very well positioned as the secure meetings alternative. AI functionality is clearly in demand also for organizations that use secure meetings. Pexip works with NVIDIA to bring relevant AI features to our customers as added features in secure meetings. Previously, we have launched live captions, and now in Q3, we introduced translated live captions covering 36 languages. Next up is exporting transcripts to enable video meeting summaries and the like.

This will come in our version three of the Pexip AI Media Server. A typical use case for AI-based translated live captions would be court hearings where all participants do not speak the same language. On this slide, you see an example of a satisfied customer that used translated captions in a recent court hearing in the U.K. Cleveland Faulkner, Director of the U.K. Military Court Service, says, "Today, the U.K. Military Court Service used Pexip’s secure meetings platform to enable remote participation in the hearing at the Beaufort Military Court Center by native German-speaking attendees. Through Pexip, powered by NVIDIA, all spoken content was translated in real time into German, allowing the participants to follow every part of the proceedings." I think it’s a pretty good testament to the perceived value and, of course, the observed quality of this Pexip functionality.

In our other business area, Connected Spaces, Pexip has the vision of connecting any meeting room to any meeting platform. A vision that now pretty much has become a reality. With Pexip’s unique technology, interoperability focus, and industry partnerships, we have a market-leading position in this field. The new solutions for Google hardware, Zoom Rooms, and Teams Rooms are unique to Pexip and are evidence of the leading position that we have. In Q3, we launched a brand new Connected Spaces product named Pexip Connect for Google Meet hardware. With this new product that we have co-developed with Google, all meeting rooms that have Google Meet hardware can now connect to Teams meetings with excellent quality. This was not possible before. The market interest is strong, and we closed $250,000 in new ARR on this product during the month of October alone.

This is really no big surprise to us, as Google has stated that this is the most requested feature for Google Meet hardware by their customers. Let me show you a short demonstration of how the solution works and looks.

Your Google Meet hardware can now dial into a Teams meeting. I’ve already dialed in three Teams users from their Teams application on their laptop. Let’s connect the Google Meet hardware as well. Notice how we get a Teams-like experience when using Pexip Connect. At any given time, we get the Teams-like features seen here, as exemplified with profile picture, speaking indicator on the ones speaking without sending video. Someone in Teams has clicked "Raise Hand," and at the same time, we maintain most of the screen real estate for those that are sending video. If someone wants to click "Share" from their Teams application, down here, we have a PowerPoint Live list. Let’s go for the top one. Content is being prepared. And shared in Teams. Which in turn is being projected on the Google Meet hardware as well.

I hope you like it. In my humble opinion, it looks pretty good. Moving over to a slightly different use case within Connected Spaces where Pexip is truly unique. In the US government space, various private or government clouds are in use for different classification levels up to top secret. Interoperability solutions are required to enable the use of Microsoft Teams from meeting rooms in organizations using these various government clouds. Pexip works closely with Microsoft to deliver these critical solutions. It is worth noting that Pexip is the only technology partner enabling video devices to join Teams meetings in US government clouds. This past quarter, we initiated two different projects within high-security government organizations that now will get access to Pexip’s Connect products for the first time. We expect these projects to expand significantly in 2026, so stay tuned.

Now, I hand it over to Åsmund for a sales update.

Åsmund Fodstad, Chief Revenue Officer, Pexip: Excellent. Thank you, John, and good morning, everyone. I’m proud to say that Pexip’s success in Secure and Custom continues with another very strong quarter ending at $2.8 million in ARR growth to $53.4 million. It represents a 30% growth year over year. Pexip’s solutions for defense and justice are yet again significant to our growth in this space. In addition, we do see an increased demand for secure collaboration and sovereign IT, especially in Europe. Adding several large customer wins and expanding opportunities for regulated privacy-focused solutions in Q3. Let me share with you a recent win with exactly this in mind. The Spanish State Agency for Digital Administration serves as the service provider for the Spanish public sector. To enable secure and seamless communication across millions of users, ESTLAD turned to Pexip, the only provider certified by the National Cryptological Center, CCN. Pexip powers two distinct national platforms.

Number one, citizen-to-government communication, a scalable platform that makes it simple and safe for Spanish citizens to connect with public services, of course, without friction or any compromise. Second, intergovernment communication, a highly secure collaborative environment with advanced authentication and data protection. Pexip was the only provider capable of meeting Spain’s strengthened security, scalability, and user experience requirements, delivering a modern service to both citizens and public servants. Let me move to Connected Spaces. This is the second consecutive quarter with growth for Connected Spaces, ending the quarter at $68.8 million. Despite the one-off reduction of $1 million from the change of a partner business model announced back in Q2. Pexip continues to see strong momentum with all our strategic partnerships, like Microsoft, Zoom, and Google. As John said, we have already seen very good traction with the new Pexip Connect for Google product now in Q4.

Pexip maintains a solid pipeline for our Connect portfolio, and we expect continued strong traction into 2026. Let me also share a major win from Q3. As the leader in universal interoperability, Pexip was selected by one of the world’s largest banks to extend seamless video collaboration across its highly regulated environment. The bank wanted employees to move seamlessly between Zoom and Teams, this time from virtual desktops or so-called thin clients. Thousands of virtual desktops are enabled with Pexip Connect for Zoom, allowing flexible video communication between the platforms and at the same time maintaining strict compliance and data protection standards, which is, of course, very important in the financial market. This marks Pexip’s first interop for PC clients, demonstrating the company’s ability to innovate in new areas for interoperability. With that, I’m going to hand it over to Øystein for the financial details.

Øystein Hem, CFO, Pexip: Thank you, Åsmund. For annual recurring revenue, as stated, we grew 12% overall, driven by strong growth in secure and custom of 30%. Connected Spaces is flat year on year. However, it has seen modest growth for the past two quarters. The growth came from customers in government, healthcare, and defense. In terms of geographies, with good contributions from both Americas and Europe. In terms of net retention and new sales, Connected Spaces saw an increase of $400,000, and it is the second consecutive quarter with a slight growth. This is despite the large downsell we mentioned in the Q2 presentation, which impacts the net retention for this quarter, and it shows a positive underlying momentum within Connected Spaces. Most of the growth, as Åsmund mentioned, continues to come from secure and custom, which had new sales of $1.6 million and existing customers growing with $1.2 million.

In terms of the P&L, revenues grew 16% year on year in Q3, helped by strong software sales and the ARR growth of 12%. EBITDA came in at 20% for the quarter, up 12 percentage points year on year. On a 12-month rolling basis, revenues grew with 15%, and EBITDA is now at 25% if you look on a full-year basis. For the quarter, Pexip increased its EBITDA with $34 million compared to the revenue growth of $37 million. We’re continuing to leverage the scale benefits of our software business, enabling us to grow without adding significant costs. In terms of costs, they were flat overall compared to Q3 of last year. Cash-based salary expenses are up $1.5 million. Share-based compensation is down $5 million, and other OpEx is up $4 million compared to Q3 of last year.

Other OpEx was lower in Q3 of last year, while this year it came in very much in line with the past couple of quarters. Overall, a fairly consistent development and in line with previous quarters. Looking at cash flow, Q3 had $44 million in operating cash flow, which is up $23 million year on year. Investments and leases are stable year on year, and in total, we delivered $29 million in free cash flow. We also completed our buyback program in Q3, leading our cash and money market fund position in total to close slightly below Q2 and is now at $526 million. To summarize, revenues are up $37 million, gross profit is up $35 million, and adjusted EBITDA is up $34 million, and is now at 20% margin.

Depreciation is slightly down year on year, while net financials is down due to currency fluctuations this quarter going against us. This resulted in a profit before tax of $33 million for the quarter. With that, I hand it back to you two.

Trond, Company Presenter/Executive, Pexip: Thank you, Øystein. Now, a few words about our outlook. As described earlier, we maintain a positive market outlook based on the key trends we see in our markets and the unique technology, strong market position, and solid industry partnerships that we have. Our expectation going forward is that we will end Q4 with an ARR in the range of $124-$127 million, compared to the $122 we had leaving Q3. This expectation is a reflection of our belief that the positive trend we have seen over the past quarters is expected to continue. Our near-term targets of consistently delivering above 10% ARR growth and above 20% EBITDA margin have been reached over the last quarters. Longer term, we have an ambition to deliver above Rule of 40 performance across ARR growth and EBITDA margin. Last 12 months, we are at 37 on this parameter.

Finally, before we go to Q&A, our Q4 presentation will be given on February 12th next year. Now, Q&A, and I welcome my friends back in the studio.

Øystein Hem, CFO, Pexip: Thank you, Trond. We’ll start with a question from the analysts that are with us live. Jørgen Veidemann from Pareto, do you have any questions for us?

Hello. Thank you so much for taking my questions. First of all, could I ask, the US shutdown, have you seen any effects on that, or do you expect any effects of that going forward?

Åsmund Fodstad, Chief Revenue Officer, Pexip: We still have strong momentum in both federal and public sector in the US. However, it’s hard to really predict what’s going on on the US side. So far, we haven’t seen any impact on the opportunities we are working on, but it’s hard to predict what’s going on on the US side on a daily basis.

Yeah, I think the uncertainty is higher than it has been. Some of the projects we are working on are kind of classified as sort of of a kind of importance level that enables sort of those organizations to keep on working and those employees to operate as normal. Of course, there might be situations where we see delays, which I think will be the actual effect, not actually business going away, but orders being delayed if there’s any effect at all. We have to just wait and see on this, I guess.

Okay, that’s fair. Then considering 2026 is getting closer, could you remind us what you did on pricing this year and if you see any possibilities of increasing prices into 2026?

Øystein Hem, CFO, Pexip: Yeah, so I think on average, there are some product variations, but on average, we increased our prices with 5% in 2025 and also in 2024. I think that’s a fairly sort of fair estimate for 2026 as well, although that decision is still ahead of us.

Okay, that’s fair. A final question from me. It seems like the interest in Secure and Custom is still quite high. Could you give us a little color on what you see on sales compared to leads generation as of right now?

We normally do not comment on order intake. We, of course, measure our pipeline. I think what we have said around secure and custom is that the growth momentum we have seen, we had 27% over the last time we reported our year-over-year growth of 27%, this time it was 30%. It is definitely a level that we think is achievable going forward, whether it is going to be a bit higher. I mean, let’s work to make that happen. There is at least no kind of indication that the growth here will slow down.

Okay, that’s very clear. Thank you so much.

Thanks, Tom. Thank you. And we’ll move on to Christopher Bjørnsen from DNB Carnegie. Welcome, Christopher.

Thanks. Good morning. Can you hear me?

Yes, we can.

Yeah, I know this is a video focused company, but I’m traveling, so I can’t really do video today, unfortunately. Yeah, thanks anyways. Just want to, first of all, on the revenues, it was pretty strong. We’re thinking maybe there was going to be some currency headwinds and so on. Just can you maybe unpack a bit. What brought that strong revenue development? Was there any, I think you mentioned in the report that there were some renewals and some license deals and so on? Maybe unpack a bit the strength in the revenues.

Yeah, happy to. I think we benefited in terms of revenue recognition this quarter by most of the ARR growth coming on software as opposed to software as a service, which accelerates revenue recognition somewhat. That is the main sort of driver for it. We are, as you say, starting to face sort of a bit more difficult comparisons given that we invoice mostly in US dollars and the currency rate is a bit stronger compared to the Norwegian kroner now than it was a year ago. So far, we’ve been able to sort of offset that effect by our ARR growth.

All right, thank you. That’s helpful. Then on the, you mentioned you’ve won this bank, which was, I think you said it’s your first use case for Connected Spaces or Interop on desktop, right?

Correct. Correct.

That’s super exciting. Can you maybe help us understand a bit better? Is this typically something that a customer would do when they have a new office setting up from Greenfield, or is this also kind of relevant for retrofitting of existing office facilities? Just how much does this expand your TAM, essentially? Because this goes from the, I think, I don’t know how many more webcams there are in offices than there are meeting rooms, but this sounds pretty exciting.

No, absolutely. I think there’s a most common use case for sort of PC to PC video calls is to download another application. If you’re using Zoom in your normal work life, if you’re invited to a Teams call, you will download the Teams application to do that specific call. That’s what we mostly see and what I think will be the most common sort of workflow going forward. For this bank in particular, their virtual desktop environment made it a lot easier to just have one application than two. Also, by using one application, they can make sure that they’re fully compliant with all types of compliance recordings across all calls, not just the ones that are on their platform. We’re super excited about the opportunity and sort of having the first sort of project live out there.

It remains to see sort of to what extent will this be a common adoption. I think outside of regulated industries, having two apps will still be the most common workflow. Excited to see how, if we can get more traction on this, also outside of this one bank.

If I can expand a bit on this, this is already an existing customer on the room side, now expanding to the desktop and then to the clients. The main point here is the regulation, being able to do all the recordings and what they have with the compliance around that. I do think one thing is bank and finance, but we could see that in different industries as well. This is our first win, a large win with this product, and we’re excited about the future for this Interop solution as well.

It clearly speaks to the flexibility of the technology and the way we can work with various types of endpoints and connection points into video and be that interoperability expert even when we’re talking beyond the specific room systems that’s been kind of the core business for a long time.

Yeah, definitely. It’s super exciting. And then just finally, on that headwind to the ARR and Connected Spaces from that shift from fixed to more variable-oriented deal structure or pricing structure, can you just give an update on that $1 million? That ends up being like a pure $1 million with no gain from signing new customers on that new deal or just, and then how do you expect that to develop into the kind of Q4?

Yeah, we have had some minors of, call it, we’ve reclaimed a small portion of that in Q3, and then I expect to sort of reclaim the rest of that throughout the contract period ahead of us. I would say progressing as planned.

Sorry to be difficult, but so, when is it, like, best case to be reclaimed? What’s the contract period? Remind me.

That over the next, I would say, one to two years is my best estimate. But that depends on sort of to what extent, when those new opportunities close with that new partner or with that partner.

All right. Thanks a lot.

Thank you.

Thank you. Moving on to Markus Heiberg from SEB. Welcome, Markus.

Thank you.

First one, just on the timing of revenue recognition, what do you expect for Q4 relative to ARR to help our modeling going forward?

Q4 is usually a fairly strong software quarter. I expect that this year as well. My sort of main assumption will be that revenues will grow roughly in line with ARR. I would factor in that we are facing a bit more headwinds with regards to the currency, which was extraordinarily good for us in Q4 of last year, whereas this year it will be more sort of normal.

That’s clear. Thank you. On Connected Spaces, can you elaborate on the new revenues that you have? How much of that is from sort of new service-attached rooms, and how do you expect that to develop over the coming quarters? Do you expect that pace to increase now with Google? Secondly, of course, Microsoft Teams Rooms for Android that are coming. Maybe you can give some more flavor there.

Absolutely. Native rooms have increased around $1 million quarter on quarter this quarter as well, which has been a fairly consistent pace over the past four quarters. I think it’s fair to expect some acceleration of that now with the Connect for Google Meet. We are hopeful that with the introduction of Android, we will also get the bigger contribution from Teams Rooms. I do think that native rooms, if you look a year or two ahead, will be a significant part of the Connected Spaces revenues overall.

Very good. Thank you. The final one for me is on the employee side. It’s flat quarter over quarter. How should we think about that now over the coming quarters?

We do see the scaling effects that was mentioned during the presentation that sort of even with the relatively stable cost base, we’re able to grow the business. We are planning for a slight increase in the number of employees. We’ve talked about maybe around 300 being kind of a reasonable figure. Do not expect any kind of major shifts or kind of dramatic increases, but kind of a stable increase to basically mainly, I guess, to build capacity on the engineering side as we have new products and new solutions in the market. And to have sort of enough salespeople in the parts of or in the geographies where we have significant traction, for example, in the US.

That’s great. That’s all for me. Thank you.

Thank you, Markus. Moving on to Halvor Dybdal from Arctic. Can you hear us, Halvor?

Yes. Can you hear me?

Yes, we can.

Perfect. Just a question regarding the ARR guidance for Q4. The Delta ARR seems to be quite in line with Q3, which often is a more, is a seasonally slower quarter. How should we think going into Q4? Did you have any large contracts announced in Q3 that we sort of have to extrapolate or just some color on that?

No, I think the Q3 was a reasonably good normal quarter. Nothing kind of major that drove it in the direction where it ended. Kind of across the board, pretty solid. Looking at Q4, the guiding that, and as I said in the presentation, the guiding that we’re giving for Q4 is meant to sort of send the signal that we expect the positive trend that we have seen over the last quarters to continue. It’s not meant to give you kind of a decimal figure to put into your spreadsheet. It’s meant to indicate that we sort of see the trends that we have seen over the last quarters will continue also in the fourth quarter and hopefully beyond.

To add some color to that, I think we did 3.6 in Q4 of last year. From our starting points, we sort of have a range now of 2-5. Yeah, our expectation is that Q4 will be a good quarter in line with the previous Q4s.

Yeah, great. Thank you.

Lovely. We move on to Lisa Viemyr from Sparbanken Markeds.

Trond, Company Presenter/Executive, Pexip: Hi, thanks for taking my question. First, I wonder what is the current progress on the Teams Rooms for Android rollout?

January. Again, I think we said that in the previous earnings call as well. We’re dependent on the markets of putting this out in the market. We are on track and we know they are saying Q1 2026. We also know that they are talking to some of their largest customers about this coming. We are very optimistic about rolling that out in Q1, but it sits with Microsoft for now.

Øystein Hem, CFO, Pexip: I think the official roadmap says January or is it Q1?

Kind of.

We have heard rumors of January.

Yes.

Trond, Company Presenter/Executive, Pexip: Okay, thanks. What do you see in ARR potential for the Microsoft rollout of Teams for the US government potential? When do you see potential deployment from this contract?

I think that’s an excellent question. The potential here could be significant. Currently, our current sort of projects are in the sort of hundreds and hundred thousands of dollars ARR. We see sort of potential for going into the millions. Just with a couple of projects that we’re currently working on, and there could be potential beyond that. The uniqueness of Pexip’s technology and the market position we have and the cooperation with Microsoft is really helping us in this area. To give you a more exact answer than that is a bit difficult. We’re kind of working to understand which organizations, which clouds, which deployment situations will be relevant for us here going forward.

Is that an excellent opportunity also at some more color working with these large communities, especially on the federal side in the US? It’s long sales cycles. That’s one thing. What’s going on in the US market currently is kind of hard to predict. You typically go through proof of concepts, et cetera, et cetera, before you basically get the entire deployment. We are in a very, very good place, but also hard to say when will it happen and the exact timing on it, which is a couple of components that we are not able to control, basically.

It is clearly one of the reasons why we are feeling good about the development in Secure and Custom going forward.

Yes.

Okay, thank you.

Øystein Hem, CFO, Pexip: Thank you. That concludes our Q&A session. Thanks for the attention.

Thank you. Thank you.

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