[PPT] - 3 PRESENTATION OF THIRD QUARTER 2019 RESULTS President & CEO PowerPoint Presentation

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PRESENTATION OF THIRD QUARTER 2019 RESULTS

President & CEO Håkon Volldal / CFO Tor Eirik Knutsen

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Q-FREE AT A GLANCE

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THIRD QUARTER 2019

>50 000 ~40

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SUMMARY

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Q3-19 HIGHLIGHTS

243 MNOK in revenues, up 12% YoY driven by good growth in the tolling and inter-urban

segments

31 MNOK in EBITDA (13% margin), almost a doubling from 16 MNOK in Q3-18. The number is

positively impacted by 9 MNOK in reduced pension obligations

206 MNOK in order intake plus a new 80-130 MNOK ALPR frame agreement
1 091 MNOK in order backlog (excluding frame agreements), unchanged from Q3-18
Improved financial situation due to 36 MNOK in net cash flow from operations leading to a 10

percent reduction in net interest-bearing debt

95 MNOK tolling contract in Thailand awarded in early October after closing of Q3-19

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THIRD QUARTER 2019

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MNOK Q3 2019 Q3 2018 YoY Change Revenues 243 217 +11.6% Gross contribution 142 136 +3.9% Gross margin 58.4% 62.7%

4.3pp

OPEX 111 120

8.1%

EBITDA 31 16 +95.6% Margin 12.7% 7.3% +5.3pp EBITDA before non- recurring items 22 16 +38.6% Margin 9.0% 7.3% +1.7 pp EBIT 13 5 161% EBIT margin 5.2% 2.2% +3.0 pp

THIRD QUARTER 2019

YTD 2019 YTD 2018 YoY Change FY 2018 717 647 +10.8% 889 405 418

3.1%

569 56.5% 64.6%

8.1pp

64.1% 343 356

3.5%

498 62 62

71

8.7% 9.7%

1.0pp

8.0% 53 62

14.5%

89 7.4% 9.7%

2.3 pp

10.0% 7 27

72,3%

24 1.0% 4.2%

3.2pp

2.7%

SUMMARY FINANCIALS

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BUSINESS UPDATE

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TOLLING

117 121 126 138 147 121 144 177 117 137 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Revenue Order intake

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REVENUE AND ORDER INTAKE DEVELOPMENT NOK million HIGHLIGHTS Q3-19

Revenues up 14% YoY

− High product and ALPR revenues in EUROPE − Storebælt project in Denmark and Cross City Tunnel

in Australia

Strong EBITDA performance

− High contribution from ALPR − Project financials still weak, will improve from 2020 − One-time positive impact from pension plan

adjustment

Good order intake

− New MLFF project in Australia (55 MNOK) − Misc. smaller product/service orders (82 MNOK)

Q3-19 Q3-18 YTD19 YTD 18

EUROPE 107 92 307 277 APMEA 26 19 57 47 AMERICAS 14 7 47 37 REVENUE 147 117 411 361 EBITDA 40 15 79 62

REVENUES AND EBITDA NOK million

THIRD QUARTER 2019

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RECENT KEY CONTRACT WINS IN TOLLING

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THIRD QUARTER 2019

MLFF project in Queensland, Australia (~55 MNOK) ETC project in Bangkok, Thailand (~95/75 MNOK)

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HIGHLIGHTS Q3-19

Revenues up 23% YoY driven by increased deliveries

in AMERICAS (ref. Charles Schwab project announced earlier this year)

EBITDA still not positive, but development cost will go

down going forward

New indoor sensor gaining momentum in the US and

France, several pilots of outdoor sensors

PARKING

13 13 18 13 18 13 22 35 5 14 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Revenue Order intake

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REVENUE AND ORDER INTAKE DEVELOPMENT NOK million REVENUES AND EBITDA NOK million Q3-19 Q3-18 YTD19 YTD 18

EUROPE 5 6 15 19 APMEA 2 2 4 AMERICAS 13 5 31 16 REVENUE 18 13 48 39 EBITDA

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4
10
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THIRD QUARTER 2019

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INFOMOBILITY

16 26 25 16 17 23 30 27 18 14 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Revenue Order intake

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REVENUE AND ORDER INTAKE DEVELOPMENT NOK million REVENUES AND EBITDA NOK million HIGHLIGHTS Q3-19

Revenues fairly flat YoY, no special events during the

quarter

YTD EBITDA negatively impacted by lower ALPR license

revenues in the segment Q3-19 Q3-18 YTD19 YTD 18

EUROPE 14 15 50 45 APMEA 1 1 1 3 AMERICAS 2 6 4 REVENUE 17 16 57 52 EBITDA 1 2 5 6

THIRD QUARTER 2019

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HIGHLIGHTS Q3-19

Low revenues in the quarter as several deliveries have

been postponed to Q4-19 and 2020 (orders are not lost)

EBITDA decline explained by low share of SW revenues

in the quarter (rebound expected in Q4). YTD margin is also down YoY due to limited SW sales

Order intake fairly stable – several small and medium-

sized contracts

URBAN

41 49 30 58 23 74 42 41 32 32 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Revenue Order intake

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REVENUE AND ORDER INTAKE DEVELOPMENT NOK million REVENUES AND EBITDA NOK million

THIRD QUARTER 2019

Q3-19 Q3-18 YTD19 YTD 18

EUROPE 1 1 1 APMEA AMERICAS 23 40 110 107 REVENUE 23 41 111 108 EBITDA

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HIGHLIGHTS Q3-19

Strong YoY revenue growth driven by Slovenia, which

has caught up after a slow first half, and ALPR camera contract with Norwegian Customs

YoY EBITDA significantly up driven by high revenue

recognition in the quarter. YTD margin is stable versus 2018

Low order intake in the quarter as a couple of tender

awards were postponed, ALPR frame agreement (80- 130 MNOK) not included in order intake or backlog

INTER-URBAN

29 32 25 26 38 23 25 17 37 8 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Revenue Order intake

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REVENUE AND ORDER INTAKE DEVELOPMENT NOK million REVENUES AND EBITDA NOK million Q3-19 Q3-18 YTD19 YTD 18

EUROPE 11 2 22 16 APMEA AMERICAS 27 27 68 72 REVENUE 38 29 90 88 EBITDA 12 6 15 15

THIRD QUARTER 2019

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NEW ALPR LICENSE FRAME AGREEMENT (80-130 MNOK)

Undisputed leader in Automated License Plate Recognition

Proprietary processing algorithms and patented analytics give

unmatched accuracy and read rates for high automation and predictability

> 150 States and countries supported and actively maintained
> 50 000 Licenses in operation
> 1 Billion tolling transaction images processed per year
Supports any OS/platform architecture deployment without special

dependencies, can operate on premise or in the cloud

Risk-free OEM partner program supports customer growth

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THIRD QUARTER 2019

Q-Free can offer a range of Intrada products/services

Intrada ALPR: unparalleled ALPR engine with high accuracy OCR

and lowest error rates available for custom integration

Intrada Synergy Server (ISS): integrated high performance

(private) cloud ALPR solution incl. multiple OCR engines, fingerprinting, tuned business rules and grouping

Intrada Synergy as a Service (ISaaS): managed cloud solution

for flexible scaling and centralized operations

Intrada Insight: ISS including optimized workflows for handling

manual reviewing to achieve low operational costs

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FINANCIAL UPDATE

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REVENUE DEVELOPMENT

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TOLLING 61 % PARKING 7 % INFOMOBILITY 7 % URBAN 9 % INTER- URBAN 16 %

Revenues up 12% from Q3 2018

Tolling revenues up 25% YoY driven by Denmark
Non-tolling revenues down 4.5% YoY due to postponed

delivery of urban SW contracts

QUARTERLY REVENUES NOK million Q3-19 REVENUES PER REGION/BUSINESS AREA Percent

217 241 223 251 243 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

EUROPE is the largest region with 57% of revenues, up from 53%

in Q3-18. Nominally, revenues increased YoY in all regions

Non-tolling businesses accounted for 39% of revenues in the

quarter, down from 46% in Q3-18

EUROPE 57 % AMERICAS 32 % APMEA 11 %

THIRD QUARTER 2019

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YoY EBITDA improvement due to higher revenues and high

margin ALPR deliveries

Q3-19 EBITDA has been adjusted with 9 MNOK in positive

effect from reduced pension obligations

EBITDA DEVELOPMENT

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16 22 9 23 22 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

EBITDA EXCL. NON-RECURRING ITEMS NOK million EBITDA MARGIN EXCL. NON-RECURRING ITEMS Percent

7,3 % 9,2 % 3,8 % 9,1 % 9,0 % 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Significant rebound in EBITDA margin in Q2-19 and Q3-19

compared to a weak Q1-19

2019 EBITDA negatively impacted by several low-margin tolling

projects that will be finalized in 2019

Q1-19 number adjusted for positive pension obligation

THIRD QUARTER 2019

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