Announcement PDF 5GG INVESTOR UPDATE FY23 ANNUAL REPORT Page 2 5GG PRESENTATION DISCLAIMER IMPORTANT: You must read the following before continuing. Summary information in relation to Pentanet Limited. This presentation contains summary information about Pentanet Limited (ACN 617 506 279) (“Company”), its subsidiaries and their activities which is current as at the date of this presentation, unless otherwise indicated. The information in this presentation remains subject to change without notice, and the Company is not responsible for updating, nor does it undertake to update, it. Industry data - Certain market and industry data used in connection with or referenced in this presentation, including in relation to other companies in the Company’s peer group, may have been obtained from public filings, research, surveys or studies made or conducted by third parties, including as published in industry-specific or general publications. 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Page 3 5GG PRESENTATION About Us OUR VISION To build a market leading telecommunications network utilises cutting-edge technologies with an emphasis on speed, quality and local support. 🔶 Next-gen capable network 🔶 Market leading brand WHAT WE DO Pentanet is a licensed telecommunications carrier based in Perth, delivering high-speed, reliable internet with a focus on outstanding customer service and support. Since inception in 2017, Pentanet has built the largest Fixed Wireless (FW) telecommunications network across the Perth metro area. With towers connected by rings of dark fibre, Pentanet has purposefully designed our network with enough capacity for next-generation, bandwidth-heavy applications – including cloud gaming. 🔶 Perth-based local team with global esports presence 🔶 National cloud gaming alliance partner OUR COMPANY VALUES Impactful Innovation Good Connections We Meme Business PentaFam First Be The Supercar We dare to introduce new ideas and technology that can positively impact the world around us, not just the screens in front of us. We bring people together both digitally and IRL for shared experiences and memorable moments. Nextlevel service is just a given. Genuinely hyped on what we do, we take fun stuff seriously, and make serious stuff fun. Unapologetically us, we use our unique attributes and abilities to get shit done. We do whatever it takes for our team and community to know they are safe, protected, and valued as part of the Pentanet family. The world moves fast, so we move faster with our speed, agility and expertise. High performance is in our DNA, and we bet on ourselves every time. Page 4 5GG PRESENTATION FY23 Financial Summary REVENUE +17% GROSS PROFIT +15% FY23 $20M FY22 FY21 $17M $11M EBITDA +29% FY23 $8M FY22 FY21 $7M $5M • Revenue increased 17% YoY to $19.7 million • Consolidated gross profit increased by 15% YoY to $8.5 million, with a gross margin of 43% • Gaming segment revenue grew by 43% YoY to $1 million due to an increase in paid GeForce NOW subscribers • Telecommunications sector's gross margin rose by 4.4% YoY to 47% • Telecommunications revenue rose 16% YoY to $18.7 million • Gross profit improvement mainly due to higher-margin on-net customers and offnet service price increases FY23 FY22 FY21 ($3M) ($4M) ($8M) • EBITDA Breakeven exit run rate in June 2023 • EBITDA loss reduced by 29% to $3.1 million through successful execution of strategic initiatives to improve profitability EBITDA is a financial measure which is not prescribed by Australian Accounting Standard (‘AAS’) and represents the profit under AAS adjusted for depreciation, amortisation, interest and tax. Underlying EBITDA is EBITDA adjusted to exclude share-based payments, options exercised on behalf of employees and IPO cost. Page 5 5GG PRESENTATION Profit and Loss Profit and Loss Revenue FY23 FY22 change $'000 $'000 % 19,733 16,829 17% Gross Profit 8,469 7,368 15% Gross Margin 43% 44% (2%) Other income 1,223 300 307% Operating expenses (12,806) (12,066) (6%) EBITDA (3,114) (4,397) 29% Depreciation and amortisation (4,088) (3,381) (21%) EBIT (7,202) (7,778) 7% Net finance cost (367) (146) (151%) Net loss before tax (7,569) (7,925) 4% PROFIT AND LOSS SUMMARY • Revenue increased by 17% helped by 25% YoY increase in off-net recurring revenue from price increases. • Other income increased by 307% driven by a $670k cash rebate from the Research and Development Tax Incentive scheme. • Gross margin of 43% decreased slightly due to $1m investment in gaming segment with telecommunications gross margin of 47% increasing by 4.4% YoY. • Overheads increased by 6% YoY due to 1HFY23 team expansion and associated costs but fell from 72% to 65% of revenue due to successful cost management. • EBITDA loss reduced by 29% to $3.1 million due to strategic initiatives improving profitability, revenue growth, and overhead management. EBITDA is a financial measure which is not prescribed by Australian Accounting Standard (‘AAS’) and represents the profit under AAS adjusted for depreciation, amortisation, interest and tax. Underlying EBITDA is EBITDA adjusted to exclude share-based payments, options exercised on behalf of employees and IPO cost. Page 6 5GG PRESENTATION Balance Sheet Summary Balance Sheet FY23 FY22 Cash and cash equivalents $'000 7,368 $'000 13,388 Trade and other receivables Inventories 3,875 653 493% 407 334 22% Deposits and prepayments 483 726 -33% Plant and equipment 19,647 16,171 21% Right of use assets 5,171 2,298 125% Intangible assets 7,967 8,568 -7% Investment 3,180 4,000 -21% Total Assets 48,098 46,138 Trade and other payables 3,870 3,684 5% Contract liabilities 80 100 -19% Employee benefits 339 404 -16% Other liabilities 4,554 6,084 -25% Lease liabilities Borrowings 2,305 7,461 138% Total liabilities 5,492 2,607 7,902 Net assets 31,156 33,561 -7% change % -45% 6% BALANCE SHEET SUMMARY • The year-end cash balance of $7.4 million does not include a $2.5m term deposit set to mature on October 10, 2023. The term deposit serves as security for the Company's Westpac Business loan. • Included in trade and other receivables is an a $2.5m term deposit and $0.57m representing the early payment of an off-net telecommunications wholesale account bill. • Investment consists of a 13.4% interest in Canopus Network Pty Ltd for $4m. During the year Canopus issued a SAFE (Simple Agreement for Future Equity of the Company) note of $4.20 per note from Investors, resulting in a recognised fair value reduction of $0.8m. • The increase in right of use assets and lease liabilities increased due to a 10-year Master Access Agreement with Axicom Pty Ltd starting 1 July 2022, with an option to extend for five years, resulting in $4.7m lease liabilities and right of use assets as of 1 July 2022. • Borrowings increased following a $2.4m drawdown from a $5m loan facility provided by Westpac Banking Corporation to acquire Gen3 servers. The loan has a 5-year term, variable interest rate with a year-end exit rate of 7.38%, and standard terms and conditions. • Other liabilities include a 15-year Spectrum license acquired in the April 2021 ACMA auction for $8m (Cost). The license fee was payable over five equal instalments per ACMA's allocation determination, with the first instalment paid on 25 June 2021. The remaining two instalments will be paid over the next two years. Page 7 5GG PRESENTATION Telecommunications Highlights $17.2m FY23 FY22 Subscribers On-net Off-net Total Total Opening Balance 6,537 10,137 16,674 12,486 Sales 976 2,077 3,053 5,758 Churn (821) (1,852) (2,673) (1,570) Average Monthly Churn % 1.0% 1.5% 1.3% 0.86% Closing Balance 6,692 10,362 17,054 16,674 • Subscriber growth of 2% driven by network capacity shortages and delayed full scale rollout of neXus mesh service. 5G expansion now underway to alleviate shortages. • Off-net churn increased to 1.5%, however this was offset by a 67% profitability improvement following price increases in October 2022. • Churn was primarily due to the relocation of subscribers outside serviceable areas. 95% Recurring Revenue in FY23 Recurring Revenue, +3% YoY 39% 47% of total subscriber base are on-net Telecommunications gross margin, +4.4% YoY $89 87% On-net ARPU, +2% YoY On-net gross margin, +1% YoY $79 $91 Off-net ARRPU, +8% YoY ARPU, +2% YoY Page 8 5GG PRESENTATION Wireless Network Expansion EXPANDING ON-NET SERVICE OFFERING • FY23 initiated 5G network expansion utilising 5G 26GHz mm Wave Spectrum • Four towers with 5G Infrastructure installed and operational • Increasing coverage to 8 towers to enable 5G product launch in 1HFY24 • Plan for greenfields neXus rollout to increase neXus footprint TARGETED INFRASTRUCTURE DEPLOYMENT • High-demand sites across existing tower footprint selected for initial deployments • Aim is to increase coverage in these areas to drive on-net subscriber growth • Alleviate capacity constraints for on-net services FINANCIAL STRATEGY • Utilise $5.95m Cambium ‘Network-as-a-Service’ (NaaS) vendor financing for 5G rollout • NaaS model spreads 5G CAPEX over 48 months and covers both tower and customer infrastructure • neXus rollout utilises existing hardware stock • Targeting to retain average +85% Gross Margin and ~$89 ARRPU for on-net services Page 9 5GG PRESENTATION Cloud Gaming Operational Update • 370,000 CloudGG users to end FY23 • Over 350 million minutes of gameplay with now over 1,600 titles • Achieved EBITDA breakeven in June 2023, with significant capacity for future paid growth. • YoY subscription revenue increased by 126% • Additional $2.2 million of second POD of new Gen 3 infrastructure acquired for NVIDIA’s next-generation cloud gaming rollout • Installation underway for GeForce NOW RTX3080 SuperPOD infrastructure for 4K gameplay experiences • Current ARPU of $13 across blended plans, with Gen3 3080 plans expected to increase ARPU Page 10 5GG PRESENTATION Cloud Gaming Strategic Partnerships & Integration • Collaboration Agreement with Optus expected to accelerate paid user growth and will be launched in 1HFY24. • Exclusive distribution right for GeForce NOW in Australia still maintained • Integration with Samsung Gaming Hub, LG TVs, Google Chromebook, and Microsoft's Xbox PC Game Pass expands the potential user base and library of supported games • Positioned for expansion with new Gen 3 infrastructure and higher-tier plans • Capitalise on upcoming Microsoft's owned-content via Xbox Game Pass integration THANK YOU Unit 2, 8 Corbusier Place Balcatta WA 6021 +61 8 9466 2672 investors@pentanet.com.au ASX: 5GG pentanet.com.au/investor-centre