Ladies and gentlemen, Welcome to Pexip's second quarter earnings presentation. My name is Odd Sverre Østlie, and I'm the CEO of Pexip. For today's presentation, I'll be joined by our CFO, Øystein Hem, and our head of global sales and APAC, Åsmund Fodstad. This presentation will last for approximately 40 minutes, followed by a Q&A session. The presentation is webcasted on our webpage under the IR section, and a recording will be published after the presentation. Questions can be submitted through email to ir@pexip.com. With that, let's get into this. We have for you a quick primer refresher on Pexip. We have a operational update where myself and Åsmund will share some perspectives on market developments and those impacts on Pexip, and also how we are working on scaling our sales capacity. We'll then have a financial update with Øystein before we close with outlook and a Q&A. First, some headlines on Q2. The highlights for Q2 can be arranged on two dimensions. First, on top, we are delivering financial results, taking us towards our growth ambitions. This in the form of ARR growth, revenue growth, and also investments in line with our growth strategy, and thus a negative EBITDA margin. Second, we are delivering on the acceleration plan, readying us for the future. We're doing a lot of work on products, including some launch in Q2 with the Pexip Control Center. This helps organizations and partners manage their video deployments. We have a Direct Peering out in beta, allowing customers to get high quality and secure private direct connections to our cloud services. We have also added Avaya video endpoints to our capabilities, which is helpful for some of our customers in South Europe and North America. We're also continuing our work in verticals and healthcare, notably getting praise this quarter from MedTech in their Breakthrough Awards for 2021. While back to the office is taking some more time than we had expected, thus also impacting a bit new ARR in Q2, we continued to add customers, and in some cases then with initial smaller deployments. We see continued traction, definitely with large organizations and also in the Fortune 500 space and we'll cover a bit more about customers later in the operational review, of course. Next, let's do a quick primer or refresh for some of you on Pexip. Starting with our business, we are primarily a subscription-based business, and we measure that in annual recurring revenue, ARR. Since Pexip's inception, we have shown that we can grow strongly, which was further accelerated by the pandemic. As our market and customers are global, so are we when it comes to users, partners, and employees across the world. In terms of geographical distribution, having our base and origin in Europe, we have 56% of our ARR here, but also 34% in North America and 10% in APAC. In terms of what we are, Pexip is at the core a video conferencing company targeting large organizations, and we aspire to give our users video communications as it should be. How can we say that? What do we mean with that? Well, we aspire to provide our end users with a better way to meet with business quality audio and video. Also a secure way to join from anywhere across multiple technologies. For our IT and channel partners, we offer unprecedented customization in terms of our platform and the way that can meet whatever unique needs the organization and the IT department has. Since Pexip can be delivered from a pure cloud solution to a fully self-hosted solution, we offer full control of data privacy, data sovereignty, as well as compliance with data security standards. Due to this combined fit for both end users and IT, Pexip is typically preferred by larger organizations, but also other advanced video users. In terms of our customers, what they typically choose Pexip for is one or a combination of three main use cases, which all makes us differentiated in this market. When it comes to meetings, customers tend to list high quality video audio, the ability to join from anywhere, taking care of privacy and security as important for why they choose Pexip. When it comes to vertical applications, Pexip is a leader in integrating video into workflows such as telehealth or video banking, as well as government use cases like virtual justice. Third, we provide access for high quality video room devices into Microsoft Teams or Google Meet. These platforms do not natively work with standards-based video equipment, and Pexip helps bridge that gap. Next, in terms of what we have at the core of Pexip is two unique technology differentiators, which our competitive advantage is coming from. On the one side, Pexip uses transcoding, which is a very different technical architecture than our competitors. This allows Pexip to receive, optimize, and send video to each participant in the cloud, as opposed to do this on each client. This proprietary real-time video engine is the source of Pexip's unique capabilities when it comes to interoperability, and it allows us to take advantage of artificial intelligence in the cloud, not constrained by the PCs or video room devices dialing in. This, in combination, leads to a very rich end-user experience. On the other hand, Pexip is cloud agnostic. What we mean by that is that Pexip can be consumed as a software as a service or as a self-hosted software being run on premise or in a cloud provider such as GCP or Azure. This gives our customers unique control of data privacy and security and makes our platform more flexible to fit their needs. In summary, this leads to a very flexible IT admin experience. In summary, the investment case and the story around Pexip can be organized around six elements. One, we no doubt we are in a massive high growth market when it comes to video overall. In this market, we have a pretty unique position towards large organizations. Second, in the industry, even though we're not a big consumer brand, but within the industry, we are a well-recognized video communication platform with some unique technology. This technology is built by an exceptional R&D team with a history of doing a lot of innovation. We believe we'll continue to do that in the future with this team. That is then further augmented by, even though we are a relatively young company, we are already trusted by some of the most demanding, both enterprise customers as well as government organizations on the planet. When you add on a very scalable business when it comes to high margins, but also a business which has a significant sustainability impact on our customers, we believe we have a very solid growth path to reach a $300 million target of ARR by the end of 2024. This target of $300 million is a main strategic target for Pexip in the midterm. To reach this ambition, we need to invest in building our capacity for growth, meaning that we're building our sales and marketing team as well as our R&D team. On long-term growth and profitability, we aim for revenue growth and EBITDA to be above 25% in 2025. On the journey towards 2025, we plan to invest up to 70% of the net proceeds from our recent IPO in these growth initiatives. This means that we expect negative EBITDA in 2021 and 2022 before the revenue growth pulls EBITDA to be positive during 2023. Ultimately reaching these targets, they both depend upon and enable us to be a recognized leader in the meeting solutions market. Now moving to the operational update. I thought I'd begin here this operational review with reflecting a bit on the wider market context for Pexip and some of the changes that has happened since our IPO about 15 months ago. Since the IPO, there has been a significant adoption of video. The market has really exploded, not only in the way knowledge workers in private and public sector all have been using video meetings on a scale never seen before, but also in the way personal services have been rendered on video. Healthcare providers are meeting patients on video and banks and customer service organizations have been offering advice and help through the screen. We believe this is a trend that will last well beyond COVID, which is echoed in our conversations with our customers. We're also seeing attitudes in society changing a deep way. Working from home or from a different location is no longer frowned upon, and people and companies everywhere are planning the new hybrid way of working, office and at home or at any location. Also the environmental benefits. I mean, as recent as this week with the United Nations reports, it has never been understood by more people than ever. I think it's safe to say that there's many people that will never again take a plane to a different city just to do a single two-hour meeting. Second, Pexip has clearly benefited from this transition and we saw ARR in 2020 soaring. At the same time, the competitive pressure has increased, in particular on cloud-based meetings, and many large brand name players have seen phenomenal success, Zoom and Microsoft Teams for example. A known brand has been a significant advantage towards buyers with urgency. So has a pure working from home scenario where meetings happen exclusively on PC to PC versus the Pexip meeting platform while good on PC to PC really shines in more complex scenarios involving office meeting rooms and different video systems. Third, at the beginning of this year, before the rollout of vaccines and before we heard about the Alpha and Delta variants of the virus, we were thinking that the return to the office was going to start in April or May and that we would start to see the end of the pure work from home scenarios. The return to the office have been delayed, which we for Pexip also saw in Q2 where we achieved somewhat less new ARR than we had expected due to some customers postponing purchases or still buying but though with the smaller starter packages. While we're adapting to the environment we are in, as we also are ready to adapt to future changes, we see some developments going in Pexip's favor. Let's talk about those and put them in context of what we refer to as our main customer use cases. To help me do that, please welcome on stage, Åsmund, our President of global sales and Asia- Pac. Thank you, Odd Sverre. Thank you. How are you? Pleasure to be here. Thanks. I'm great. Good. I'm very optimistic about this call and about the future. Taking some precious time out of you from selling, we hope this will be informative for our audience. Let's hope so. Good. If we start with the first, hybrid working, we talked about. Yes. This combination of home and office. It's safe, I think, to say that we feel the pull from customers. It's coming, it's being planned for, purchases are increasingly being made. This is positive to all our use cases. Let's here major on the value for customers with Microsoft Teams, as we are strong in bringing Teams to work with various meeting rooms, as illustrated on the right-hand side on this chart. Åsmund going to give some color on this. Sure. Thank you, Odd. As video meetings now have become commodity for almost everyone in the world, both privately and professionally, which was actually not the case just 17 months ago, just reflecting a bit on that. We understand that it might be difficult to really understand where the different vendors play and why we are successful. Pexip continues to win large opportunities and be strong in our focus markets, which are high-quality meetings with large enterprises, vertical market applications, or I would call them business to consumer solutions. I like that word better. Integrations with other applications and technologies, and of course, in the public and government sector. Let me take you through a few recent wins from Q2 to hopefully make it easier to understand where do actually Pexip win. Looking at the high-quality meetings, the integrations, and so forth. In Q2, we won Shell, a Fortune 500 company, one of the oil and gas super majors, and if I have the right information, the fifth-largest company in the world. Shell is moving to the newest technology, basically replacing their old technology, make sure that everyone are video enabled and have the latest technology, work seamless with other technologies they already have. Like their Cisco meeting rooms, like Microsoft on their desktops, and it's also important for Shell that it should be easy to book, easy to join, and easy to have meetings, no matter where you are. They also have high concerns around secure solutions and where their data is going. What they're doing is basically replacing Cisco technology, integrating it with Microsoft workflows like Microsoft Teams and Office 365. They will roll out Pexip virtual meeting rooms, integrated what we call Pexip One-Touch Join, which then makes it easier to join any video meeting. Integrated with Outlook, which makes video meetings easy to book, join, and use, no matter if you are in the office, at home, or anywhere in the world. How they're doing it is they currently have an on-prem solutions in their own data centers, but moving it to a Pexip self-hosted secure solution deployed in Microsoft Azure Cloud. Which is actually a Pexip unique solution. We are the only one who can do that. Pexip are enabling Shell to move from on-prem to a Shell-only solution, but in the cloud. They are, in addition, adding trusted devices like video endpoints, home office connections to this solution. We do also know that they will expand this to include Cisco endpoints to register on the Pexip technology for simplicity and seamless integration with the other solutions they have. How do Pexip actually win a customer like Shell, which is actually pretty unique? It is our unique integration with Microsoft. You talked about also us being able to do that with Google, with Cisco, and now Avaya and others, as well as our high secure and privacy solutions. Our ability to transition from on-prem to the cloud or self-hosted solutions in the cloud, combined with easy-to-use features, makes Pexip a chosen solution for Shell and these large enterprises. Very good. Thanks for that. It's an excellent example, I think. If we move to the left-hand side here. When it comes to meetings and meeting platforms, as we go forward, we don't believe that all organizations will be using only one big brand name for solution for all their meeting needs, right? As such, we also don't believe that the public cloud-based solutions, I mean Webex, Teams, Zoom. Yep. That they will be for everyone, for everything. Many organizations have decided to take control of their meeting platforms, as recent examples with, for example, the Swedish local government has shown. What is your read on this? No, absolutely. I think we've been saying in Pexip since day one that we have actually not seen anyone actually really standardizing one technology. As you are a large organization, you have already multiple technologies, and it's hard to change them, and you rather want to integrate. In this, as an example here in Q2, we won the US Army. We continue to see that privacy and security are important to large enterprises and of course, especially public and government sector. We also seen an increase in consciousness around where does actually my data go, how to make sure that our meetings are as secure as possible. We see that new rules and regulations, like you just spoke about, Odd, kind of restrict certain technology solutions to be applicable for these customers. The last product launch, which we heard about as well from Pexip, like the Control Center, which actually enables an IT admin to have full control of their setup within the collaborations network and system, and Direct Peering fits very well into the Pexip product offering and story around high secure solution. Again, back to US Army, they have chosen Pexip for these exact reasons. What are they looking for? Security, privacy, data storage, where is my data being stored, integrations with other existing solutions, and of course, being able to have video meetings that are both unclassified and classified, since they are the US Army. Usability and flexibility for all the employees of the organization. What are they doing? Again, another large organization moving to the newest technology, making sure to have video as their primary collaboration solution for all soldiers and officers. Basically ensuring that the video enabled the entire organization with the Pexip technology, including the Pexip virtual meeting rooms. How they're doing it, they will stay on-prem. They will stay in their own data centers. They will have two separate secure networks. Again, both classified and unclassified. They're super high on security. Competition again, here has been mainly Cisco, and we're doing a technology replacement. At the same time, they do want to do integrations with Microsoft, Cisco endpoint systems, and other workflows in the U.S. Army. How can actually Pexip win a customer like U.S. Army? Of course, security being the main driver, which is very understandable for the U.S. Army to choose the Pexip technology, but also ease of use, the ability to give every soldier a Pexip virtual meeting room has been important to them, as well as having integration with existing technologies. I want to add, as we see military and public sector are very concerned with security, but we do see this more and more also from large organizations that have concerns about who they are sharing their data with and how easy it could be to tap into their private information. On-prem or self-hosted solutions, which are dedicated to these organizations only, are a Pexip unique and a preferred solution among these companies and organizations for those exact reasons as well. Very good. I think with that, we can talk about, call it the centerpiece here. Yeah. Which is video in businesses' workflows. Yeah. With their customers and their partners, verticals or B2C, which we call it. We believe this is a large opportunity for, well, the market, but also specifically for Pexip, with our flexible video engine. We fit really well with customers that want to have their own tailored solution, which we talked about, both in terms of what they can do with it, look and feel, but also data privacy, et cetera. Do we have anything to say there in terms of recent market developments or perspectives? Moving to then vertical markets or again, business to consumer solutions. Pexip have actually been a big player here since we started. If I recall correctly, I think that more than 50%, or we said that more than 50% of all daily doctor-patient meetings in North America is being fueled by Pexip technology. You also see the same thing happening in Australia, in Germany, in U.K., Scandinavia and so forth. Besides healthcare, other vertical markets for Pexip is typically bank finance and increasingly also now in retail. We see that video is now moving beyond internal meetings and move into becoming the default for communication in any B2C setup. In Q2, we saw that one of the largest retailers in the world, IKEA, chose to build their retail solution using Pexip technology at core. IKEA want to enable remote advisory calls for kitchen and eventually wardrobe planning, mainly driven by adapting to market trends, enabling increased sales, but also motivation around the threat to potentially get out of business in selective countries if they only have physical stores. I think the whole COVID-19 has shown how this can quickly change. What they are doing is deploying then a B2C solution to enable online consultancies and sales. The solution is being currently rolled out in 17 countries, and it's increasing from, I believe, just shy of 20 to now daily 1,500 consultant appointments per day. 1,500? 1,500. That's pretty. Current agents working? Exactly, and working on selling kitchens for IKEA. What are they doing? They're building IKEA specific solution, but with Pexip at core, utilizing the Pexip APIs to meet IKEA specific needs, like integration with their contact center and other workflows that they already have then that are important to them. They don't want to change this or everything upside down. And again, having it deployed in a secure self-hosted solution, IKEA, I believe, is going to go with Amazon, so in AWS, and not Azure as many do, to protect employee information and control where the data is going has been essential to them. The solution is being hosted by a Pexip partner, so they don't necessarily need to host this themselves. We have the partner community, which we'll come back to, who also provides this. Again, why do we win? IKEA needed a secure solutions. They have restrictions on data going to other continents and employee security has been the main reason for IKEA to choose Pexip over other manufacturers. In addition, our integration to other systems through Pexip's open APIs, interoperability, but this time with any kind of web browser, not having any downloads, which makes it easy for any customer to connect with IKEA from any kind of technology, has also been super important to them. I'm glad to see that as the project rolls out, currently they're tracking with a 97% satisfaction rate with the operators or the consultants actually sitting on the IKEA side, and 99% customer satisfaction rate for those customers who's using this solution. IKEA, to me, is a great example from a customer who has strong requirements around the new hybrid working, and I like to call it shopping trends or habits, restrictions around data flows, secure employee solutions, and easy to use for the customers, all being fueled and met with the Pexip technology. No other vendor can actually offer this combination in the market today. It's Pexip unique. Very good. I think with that, maybe we also can talk about Q2 more in general and when it comes to customers. Yep. Let's do that. Looking at some of the other great wins for Q2, again, Pexip keeps on winning major logos and organizations in the key markets for our solutions. We stay focused there. We're adding another five Fortune 500 customers and now having more than 15% of them as our customers or I like to say as a salesperson, in the bank, it's actually quite impressive. Other recent Q2 wins for us, London Stock Exchange, Foreign, Commonwealth & Development Office, Regeringskansliet. We've seen Honda Motor, TDX, Boston Consulting Group, and two of the largest technology companies in the world, LinkedIn and NVIDIA, standardizing on the Pexip technologies. That's more references in Q2. On the right-hand side here, you will see that these wins and large organizations, of course, drive growth for Pexip. It also results in an increased share of our ARR, the annual recurring. Large contracts above NOK 100,000 now represents 54% of our business. That's also increasing. Good stuff. We have good customer traction. We are often being asked then, how do we actually sell and deliver to these customers? Maybe you can give a perspective on that and maybe double-clicking on a channel partner or two. Yep. Happy to do so. In the same way that the Pexip product is designed for large organizations, so is actually our go-to-market model. Again, keeping in mind, that's where we play and where we play the best. How do we actually then do work sales at Pexip? We are extremely focused on sales and run with what we like to call a high-touch sales and sales engineering organization, meaning that we actively make sure that we prospect and work opportunities in all our key segments, making sure they are aware of our solution and ensure that they evaluate the Pexip technology when they are making their collaboration strategy. We have heavily invested, like you said, in the sales over the last year with more than additional hundreds of salespeople and then some. Over the last year, we also have had an increased focus on inside sales and customer success team, basically doubling down on the investments and efforts to make these teams a success for us and, of course, making our customers successful as they purchase the Pexip technology. This is in addition being fueled by marketing, channel sales, and leads generation. We have channel partners as part of a go-to-market strategy, which we call an indirect business model. This business model with the channel partners gives us market access in our market segments and in our focus deals. We see that 60%-70% of our leads comes from our partner community who already have many of these target customers in their customer portfolios. This gives us fast access to the customers and the prospects that we are looking for. We see that our channel partners are now integrating the Pexip technology with their new and existing customers, and they are building services and solutions around our technology, meaning that Pexip becomes a strategic technology in these channel partners' offering. We also now see in our organizations as people are slowly moving back to the office and hybrid working environments, we see that these channel partners have started developing new approaches and solutions with high-quality video meetings at core for both office, home office, and work from anywhere kind of environments. We have started seeing that large organization are now revisiting their whole collaboration strategy. Last year, they needed to take whatever they had and deploy that to every employee in the company. They're revisiting what are we doing around collaboration? What kind of technologies and solutions should we have? We also seen a large pickup over the last, I would say, almost two years with some of the largest system integrators in our space. Good old Dimension Data are now NTT, which I believe is the fourth largest telecom company in the world, and Tata Consultancy Services. It is the same as the car manufacturer, but they are also the biggest IT service company in the world. They're now certifying themselves on the Pexip technology and are the ones that delivering our solution to more and more of their and our largest customers. It's good to see that we now have much bigger traction with some of the largest system integrators. Basically, it is a verification that Pexip is an important and strategic technology vendor for their success and for some of the larger customers in the world. Good stuff. We have discussed how we sell and how we work with customers and partners, and an instrumental part of building our growth capacity is scaling our sales coverage and thus people. In general, in Q2, we have continued to hire from engineering to sales to drive future growth. Overall, we're still targeting 550 to 600 employees by the year-end, which will conclude the major ramp-up phase of our acceleration plan as we expect to continue definitely to hire in 2022 and beyond, though at a more, relatively speaking, moderate pace. Specifically, when it comes to sales, previously we have been talking about how this is an upfront investment with about a year to achieve normal new ARR contribution for new hires. As we see here in the chart, we're starting to hit the one-year mark for the hires following the IPO now in H2. Åsmund how are we working with recruiting and onboarding of these sales? More importantly, are we seeing any effects of this? Yes, we do. As head of sales, I want to say, how do we actually enable the sales team in Pexip to become successful? Well, number one, we have been building sales capacity. According to our business plan, which is market coverage and geo coverage and so on in new markets. We have systematically the Pexip way of recruiting. We are very focused on sales and hiring senior sales executives, SaaS and industry experts with a hunter profile that are systematically going after named targeted accounts. We have a very thorough onboarding program ensuring that we get them quickly or as quickly up to speed as possible. It's new hire training, it's sales fundamentals, it's the Pexip way of selling, Pexip way of coaching, mentor programs, product training, real-time and virtual training. Most importantly, start building pipeline immediately. Our business case, which is built on a 12-month ramp-up for salespeople, this is because we have long sales cycle with our customers. Why is that? I've heard that question several times. Where Pexip play the best, there are already multiple and complex technologies deployed within these large organizations. They have a need and a wish for integration and building out specific solutions. In addition, they also have a high concern around security and data storage. These things takes time with our customers and prospects, and often requires several technical workshops and so on to design the best solution for these customers. It takes time. Still, we of course, have salespeople who sell in their first month, some sell in month three, and so on. For pipeline, though, which is maybe the big question, we do see a strong increase in pipeline. It's not only linear to the amount of salespeople we have hired. We see an increase with both experienced and new salespeople in their pipeline development. At Pexip, we work very seriously with sales enablement. In addition, we have extended focus on inside sales and qualifying sales leads and turning them into Pexip customers, as well as major expansions and efforts around customer success, enabling successful deployments, usage, happy customers, and eventually expansion and renewals with our install base. I believe that is Pexip sales in a nutshell. Very good. Thanks for that, Åsmund. I think we both, actually, with that will leave the scene for Øystein, our CFO. Excellent. Okay. Thank you, Odd Sverre and Åsmund. Let me start off with giving an introduction into our growth in annual recurring revenue. For Q2, we landed at $93 million in annual recurring revenue, which is 41% up from Q2 of last year. If we look at Q2 standalone, our subscription base increased with $5.5 million. This is down from $9.1 million in Q2 of last year, which was at the start of COVID-19, and it's a bit more than double the growth if we compare to the same period in 2019. Overall, as Åsmund and OS have talked about, we saw a lot of high-profile wins demonstrating our ability to win the most competitive accounts in the market. If we look at geographies and product, the development in Q2 was overall in line with what we've seen in previous quarters. EMEA is still the largest sales theater, both overall and in additional ARR for the quarter. In Q2, EMEA delivered somewhat less additional ARR than in Q1, which is a bit different than the normal seasonality we tend to see. This reflects that most of Europe was still in a lockdown state in Q2. Both the Americas and the Asia-Pacific teams delivered more in Q2 than they did in Q1. In terms of products, the growth of Pexip- as- a- Service, which is our SaaS offering, and our self-hosted software offering, which is built on subscription software licenses, was about the same if you measure it in absolute dollars. Adding $2.9 million to our self-hosted software ARR, and $2.6 million to our Pexip- as- a- Service. This takes the growth rate to 62% for Pexip- as- a- Service and 29% for self-hosted software. We continue to see that offering that flexibility between Software- as- a- Service and self-hosted software is a competitive advantage for Pexip, allowing us to meet a variety of customer needs. On this page, we show the split of growth from new and existing customers. The majority of growth over the last 12 months is from net new customers, which has also been the case in the past, and is now at 40% year-on-year. That means that $26.5 million of Pexip's ARR is from customers that were not customers of ours 12 months ago. The net retention rate is at 101%, showing that on average, upsell among some of our customers balance out the churn of the customers that have left Pexip. 101% is somewhat above the net retention rate of 2018 and 2019, however, down from 2020, where we saw extraordinary upsell due to COVID-19. Churn is at 10% year-over-year, which is a similar level compared to 2020. Moving on to the P&L. In terms of recognized revenue, Pexip delivered NOK 177 million in Q2 of 2021 compared to NOK 163 million in Q2 of last year. Starting with Pexip- as-a-Service, the revenue is recognized over the time of the contract, it follows ARR development quite closely. For Q2, it's grown to NOK 75 million, giving a growth of 68% compared to Q2 of last year. In the self-hosted software area, ARR growth is the main driver of revenue growth. There are, however, quarterly variations due to when contracts are delivered and renewed, as software license revenues are mainly recognized when the license is delivered. This impacted the recognized revenue growth for Q2, as it also did for Q1, as some of the upsell done at the start of the pandemic was renewed in Q4 2020 with the main subscription. The consequence is that the revenue of the renewal was recognized in Q4 as opposed to now in Q2. This is the main driver behind the reduction in quarterly revenue if you compare it to Q2 of 2020. In addition, for Q2, the currency conversion rate from US dollars to Norwegian kroner impacted us by the lower exchange rate. For self-hosted software, this effect is around 15%. In terms of gross margin, our cost of goods sold is at NOK 21 million for Q2. The main driver of the increase is higher revenues, with that, higher usage from the Pexip- as-a-Service area. We've also modernized our service platform to more cloud-based compute, which is contributing to the higher cost of goods sold. Some of that move is more of a one-off increase as opposed to solely a function of more usage. As such, we expect cost of goods sold to grow somewhat less than Pexip- as-a-Service revenues going forward, as some of the costs related to the platform organization are fixed and not volume driven. This upfront investment in the new platform, together with lower self-hosted software revenues, are the main drivers for lower gross margin for the quarter at 88%. Moving on to operating expenses. The main cost element for Pexip is salary and personnel expenses. In Q2, this was NOK 149 million. We have split out on this chart the cost related to share options, as it varies from quarter to quarter, as cost accruals for future employer tax cost reflects the accumulated gains. Hence, it varies with the share price, and you can see it fluctuating. Excluding share option costs, other salary and personnel expenses were NOK 147 million for Q2, developing in line with the number of employees. For 2021, we have shifted the prioritization of holiday pay to Q3 to better correspond to when employees are taking most of their vacation. This is different than last year when that was recognized in Q2. This effect is roughly NOK 10 million for 2021. The increase in other operating expenses reflect an increase in marketing spend, as well as an overall increase in activity. Travel expenses remain low due to COVID-19 and is contributing to other operating expenses growing less than employee expenses. We're also doing less physical marketing events than we were planning to do at the start of the year. Hence, as the world opens up, we do expect that other operating expenses will increase in those two areas. In total, Pexip delivered an EBITDA of minus NOK 41 million, or minus 23% of revenue for Q2. The reduction in EBITDA is reflecting a significant investment that we have been doing and will continue to do in building our growth capacity and organization. We're now past the peak growth rate, in terms of number of people, which is the main driver of cost, with the year-on-year growth dropping from 98% in 2020 to 80% year-on-year at the end of Q2. We expect these investments will continue to drive revenue growth and a return to profitability, which is reflected in our targets of negative 25%-35% EBITDA margin in 2021 and 2022, before we target a neutral EBITDA in 2023 and positive from there on out. We are seeing very good results from these growth investments, both in terms of sales, pipeline generation, and innovation and R&D contributions. This gives us confidence in reaching our target of $300 million in ARR by the end of 2024. In terms of capitalized investments in fixed and intangible assets are in line with Q2 of last year and down from the previous quarters. This is due to lower spend on computer equipment and office equipment, as well as no spend on customer base acquisitions compared to Q4 and Q1. Capitalization of software development is overall in line with Q2 of last year. Lastly from me on cash flow. Pexip had a negative operational cash flow reflecting a negative EBITDA, also adjusted for non-cash share-based costs. We also had a neutral net working capital development. Investment cash flow was a negative NOK 12 million, as we just discussed. The largest impact on cash flow for the quarter was that in Q2, Pexip bought back shares for a total of NOK 88.2 million. This amount is just below the NOK 88.8 million that Pexip raised from employee share issues in Q1 and Q2 of this year. The buyback of shares was done to reduce the dilution from those share issues to the underlying net dilution. In total, this has given us a net cash flow in 2021 of NOK 0.6 million from share issues and share buybacks combined, and minus NOK 72 million for Q2 isolated. We exit the quarter with a cash balance of NOK 1 billion, which is a very robust cash position, which will fund our exploration plan. With that, I give the word back to you, Odd. Thanks a lot for that, Øystein. We'll soon have you back for questions. To give a quick summary, Q2 in brief, then. A solid top-line growth, continued ARR growth, as well as revenue growth. When it comes to executing on our control plan, we launched Pexip Control Center. We have also bettered off direct peering and also done this collaboration with Avaya on their video endpoints. We have continued to build sales and R&D capacity. We reached 451 em ployees end of Q2. We have a negative EBITDA, in line with our announced strategy to invest. As Øystein said, also a very solid cash position to invest in further growth. Next, when it comes to outlook, we have a very positive outlook for video communications in general, also specifically for Pexip. It's driven by several things, amongst them, the majority of enterprises and organizations shifting to hybrid working, but also organizations looking to embed video into their workflows towards customers. We believe Pexip's technology is uniquely positioned to meet these customer needs. As we discussed as well, our sales pipeline for the second half is strong. We will continue to execute on our growth plan. We are continuing our investments on sales and marketing, as well as R&D, targeting 550-600 employees by the end of this year, plan for a negative EBITDA 25%-35% in 2021, neutral to positive in 2023, before we in 2025 aim to have a +25% EBITDA, as well as revenue growth. Last but not least, we expect to reach our long-term target of $300 million in ARR by the end of 2024. Quickly before questions, a couple of upcoming dates. We expect to do our update on annual recurring revenue following Q3, October 7th, and then our Q3 presentation on November 11th. With that, I thank you for your attention, and I believe we will open up for questions. Øystein, can you come back as well? Thank you, Odd Sverre, Øystein, and Åsmund for your presentations. We'll now go into the Q&A session, where we are pleased to welcome three of the analysts covering Pexip. We have Oliver Pisani from Carnegie, Kristian Spetalen from Arctic, and Øystein Lodgaard from ABG. We will begin with the questions from the analysts, and followed by the questions received from email. Let's start with Kristian. Do you have any questions for us, please? Yes. Thank you. I have two questions first relating to the pipeline. The first is, given the spread of the Delta virus now, do you believe there will be further delays of customers reassessing their video solutions, and then affecting the Q2 sales as well? That's a good question. I think this is an area of uncertainty. We believe that most countries will lift restrictions once a material share of adults are vaccinated, as we have seen in the U.K. However, that remains to be seen. If businesses delay their plans to return to the offices to 2021-2022, that will have a negative influence on Pexip, as we have seen in Q2, but that's not what we're expecting as of now. Thank you. My second question is if you could provide some color on the pipeline in terms of account sizes. Is there any differences compared to pre-COVID? I think what we've seen in terms of account sizes, not looking necessarily just on the average, but also looking at where the majority of business is coming from, we do see a slight increase in pipeline and wins from larger accounts. You can see that also in how our split in ARR has developed across those categories, as we've discussed earlier in the presentation. We also see that if you just look at the high water mark in terms of the size of our largest accounts, which is at a higher level now than it was pre-pandemic. Thank you. Should I do my final question now or wait until the end again? You can go ahead and ask the final question from your side. Okay, thanks. I saw that Microsoft and Teladoc is doing a collaboration on unified practice on the telehealth, and I was wondering if this is an opportunity for you in terms of CVI endpoints. Absolutely. I think, as we know, a lot of the medical sector in the U.S. are using video conferencing devices. We have already today many successful partnerships with Microsoft in the healthcare space, both using CVI and Teams Interop and Pexip for their video meetings. I think that said, for our target healthcare customers, they are more looking for the core Pexip platform to build their B2C offering, even though they might have Microsoft Teams as an internal collaboration tool. Both scenarios can come up. Okay. Thank you. Thank you, Kristian. Let's move on to Øystein from ABG. Yes. Thank you very much. To start off with this IKEA contract, which is really exciting. First of all, I guess this is something that could maybe turn into a larger contract size over time if this turns out to be a success for IKEA. Second question, are you in talks with other retailers for similar types of collaborations, or is IKEA a first mover here? A short answer is yes and yes. Great. We can take the next one. Of course, we've all become a lot more accustomed to use of video over the last years, and a lot of organizations already have some sort of video systems. Are you seeing now a change in how organizations think about this, that it's becoming more verticalized, that they see that they have specific needs and therefore needs a more specialized video software? Do you see like this more of a verticalization of the market going forward? I think we do. It's both in terms of how we use video internally, between knowledge workers in an organization. We have different tools for different type of scenarios. We've different meeting rooms for this, different for that. I think we'll have that on video as well. For sure, there is a lot of, I think now, thinking on how organizations can apply video into their normal, call it, customer workflows. In particular there is a growing desire to make it more theirs. Like when you invite customers to your meeting facilities, you have it branded, you have nice coffee, it is kind of, "Welcome to my house," and you want to make it yours. I think that is a key driver also in what we call B2C. At least in larger organizations are keen on putting their stamp on their video solution. Right. In terms of now going into the second half of the year, you noted that you see a strong pipeline. Is this for both Q3 and Q4, or will you expect more of a back-end loaded year, as typically Q4 is the strongest quarter for you guys? I think the short answer, both Q3 and Q4 looks healthy. As you said, we have seen that Q4 is stronger than Q3, and with what we know now, we would expect the same. Thank you. Thank you, Øystein. Let's move on to Oliver from Carnegie. Yes. Thank you. I think you discussed it slightly before, Øystein, but your gross margin was down this quarter, down to 88%. Could you again elaborate a bit on that dynamic? As I understood it, you also guide for gross margin expansion going forward now, right? I think there are two drivers for why cost of goods sold are up and then gross margins down. One is of course, that quarters with lower self-hosted software revenues will tend to have lower gross margins, because there is some quarterly seasonality in terms of in which quarter we see the highest revenue. You saw that in Q2. The other driver, which is more the underlying factor, is that we've upgraded our Pexip Capacity Service platform, moved that over to cloud compute, which is a shift that has happened partly Q1, but now especially in Q2. With that platform increase, there's both a fixed component and also there's a factor of having both a new platform and an existing one that we're winding down at the same time. Got it. Okay. That makes sense. I was looking at your number of employees at 451, I think it was. That represents a slowdown in your pace of hiring now to about 35 new employees on average in this quarter. Do you have problems finding enough skilled staff, and how do you think about the significant acceleration in hiring that your 550-600 employee targets imply for H2? That's a good question. I do think that we are able to find the talent that we're searching for. To your point, it is more challenging than in a normal environment to get people through the pipeline, not least get them onboarded and taken care of by our organization. So far, I think we're doing well. We believe also for H2 that we'll be able to get to that within that target range. If we are a little bit short on the top end of it, we can move that into the next year as well. Most important for us is that we hire the right people, and that we are able to onboard them in the best possible way. It's quite expensive to hire the wrong people, at least. Yeah, for sure. Good. I guess you semi answered that already. As a last question perhaps, with respect to the Logitech offering, do you see any sort of revenue generation from that in this quarter? How do you see that demand developing for that offering? I think the whole concept of our Pexip Room app, which is related to that, I think that will more follow Pexip Meetings in general, and specifically for rooms, it will be more of a back to the office wave than what we have seen now. We are seeing traction in terms of interest for the product. I think where we'll see it more shine is in combination with our meetings platform plus getting back to the office as we move forward. All right. That makes sense. Thank you. Thank you, Oliver, a big thank you to all the analysts participating today. We have received one question in the email, and that is the following. The video meeting market is crowded with Microsoft Teams, Zoom, and Webex. How will you find space for the $300 million in ARR in your ambition? Yeah, I guess that's mine to answer. I think first, while it is crowded in terms of this public cloud meeting area, we believe there is meaningful ARR for us here as well, of course. Because we believe that, as we have talked about, there are maybe some cases for running entirely on Pexip Meetings, but it's definitely a market to have Pexip in addition to other meeting solutions when it comes to specific users, use cases or meeting rooms. That said, maybe to give you some color on how we're thinking about this, if we focus on just two of our core segments, notably maybe the market for large government and for military type of organizations. That segment alone, we believe in the next three to four years, is a order of magnitude $100 million opportunity for Pexip. Similarly, we think that this B2C market has a similar $100 million order of magnitude opportunity for us in the same timeframe. Just with those two segments alone, we could achieve our $300 million target. Great. Thank you. No more questions on the email, so that concludes our Q&A session. I'll say thank you all for listening and see you soon.