Norwegian Zoom rival Pexip seeks Scandinavia’s biggest tech IPO 

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A Norwegian videoconferencing company whose technology is used by the US government, Amnesty International, Spotify and PayPal is seeking to raise $200m in what could be the largest software IPO in Scandinavia.

Pexip has experienced a seven-fold surge in usage in recent weeks as the coronavirus pandemic has forced millions of people to work from home, while concerns over the security of the dominant player in the sector — Zoom — have led companies to seek more secure alternatives.

The Norwegian company will announce on Monday that it is seeking to raise about $100m in fresh capital on the Oslo stock exchange, with existing shareholders selling a similar amount of shares with a targeted post-money valuation of about NKr6bn ($570m).

Pexip has already secured the backing of four cornerstone investors for about NKr1bn including Capital Group and Wasatch Global Investors of the US, DNB Asset Management in Norway, and TIN Fonder from Sweden.

“The joke in the industry always was that this is the year of video and it will be different this year. What’s really different this time is societal change. Everybody has to use video today in some shape or form. Our main competitor is not another company in the industry, it’s non-use,” Michel Sagen, executive chairman and co-founder of Pexip, told the Financial Times.

Pexip, which offers a video meeting platform either as a cloud-based service or for companies to host themselves, experienced a 50 per cent jump in annual recurring revenues to $57m in the first quarter of this year compared with the same period in 2019. Its reported revenues last year were NKr370m, up from NKr215m in 2018, while its earnings before interest, tax, depreciation and amortisation more than doubled to NKr76m, giving an ebitda margin of 21 per cent. About 97 per cent of its revenues are subscription-based.

The company’s software is used by Irish courts to conduct hearings, as well as the US Department of Veterans Affairs for patient-doctor meetings and 70 of the Fortune 500 companies. Other organisations using Pexip include Vodafone, Accenture, the US Air Force, the Environmental Protection Agency, Intel, General Mills and the Nordic region’s largest lender Nordea.

Asked about the security concerns that have dogged Zoom recently, with meetings interrupted by a range of troublemakers, Pexip’s chief executive Odd Sverre Ostlie said that customers were increasingly concerned by security and privacy. “Some customers really want to take control of this themselves,” he added. Since Pexip allows organisations to host the software themselves, in some cases they can use video meetings without being connected to the internet.

Mr Sagen said of military customers: “They don’t trust anybody. Instead of going into a ‘hey, trust us’ discussion, they can host it themselves.”

Pexip, which is aiming to complete its listing this quarter after an entirely virtual roadshow with more than 50 video meetings with an investor, is planning to use the proceeds from the IPO to boost its growth. It is aiming for $300m in annual recurring revenues by 2025 and an ebitda margin of 25 per cent.

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