Announcement PDF 1 ASX : 5GG INVESTOR UPDATE FY25 Q2 22 JANUARY 2025 “You can’t change the direction of the wind, but you can adjust the sails, and if the wind will not serve, take to the oars” - Latin proverb 2 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. 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This presentation and its contents must not be distributed, transmitted or viewed by any person in any jurisdiction where the distribution, transmission or viewing of this document would be unlawful under the securities or other laws of that or any other jurisdiction. 3 AGENDA 01 INTRODUCTION AND KEY HIGHLIGHTS STEPHEN CORNISH MANAGING DIRECTOR 02 STRATEGY UPDATE 03 FINANCIAL RESULTS MART DERMAN CHIEF FINANCIAL OFFICER 04 Q&A 4 INTRODUCTION AND SUMMARY OF RESULTS We're excited to share a significant turning point in our business journey, marking the fruition of our strategic focus over the past several quarters. Our commitment this year to double our 5G coverage is on schedule, and not only bolsters our ultrafast bandwidth capabilities but also set the stage for sustainable competitive growth and profitability for our Telco division, capitalising on our 5G spectrum. As we continue to build and expand our 5G capacity, we've simultaneously increased optimisation of our NVIDIA Cloud division, showcasing our ability to increase monetisation of our CloudGG platform in stages effectively. This achievement is built on the foundation of scaling up from our freemium service strategy, and we're now positioned to leverage our enhanced capacity to deliver even greater value to our customers and further growth for stakeholders. This pivotal moment underscores our dedication to innovation and our readiness to lead in the digital landscape. STEPHEN CORNISH FOUNDER & MANAGING DIRECTOR “Just keep swimming” - Dory 5 Key Financial Highlights from H1FY25 Delivering First EBITDA+ Quarter and EBITDA+ YTD ~$1m EBITDA improvement Q1FY25 to Q2FY25 Consolidated Revenue increase of 7% PcP and 6% QoQ Consolidated gross profit increased 6% on PcP and 17% QoQ Gaming revenue up 31% on PcP and 27% QoQ 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. Q1FY25 EBITDA included one-off restructuring costs of $0.25m 6 Key Operational Updates Aim of doubling 5G coverage across FY25 is on track Improved Telco Operating Efficiencies 709 5G subscribers added to date Increased NVIDIA Cloud GPU Optimisation Furthered CloudGG Monetisation Strategy 7 FY25 1H Strategy Recap Amidst other operational initiatives, these were the key objectives completed which underpinned our forward strategy Accelerate 5G coverage expansion Implement operating cost efficiency Inventory swap to minimise 5G expansion cost End FY25 1H EBITDA+, Continue growth momentum across 2H Increasing Cash Implement next phase of CloudGG user monetisation to increase group profitability Work with NVIDIA to improve GPU optimisation Complete network and software upgrades to further automations and maintain new operating costbase with future growth 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. “Let’s-a go” - Mario 8 On track with aim to double our 5G coverage across FY25 Telco is focused on building 5G coverage before launching a new competitive offering at scale Fourteen towers upgraded to 5G, and on-track to complete an additional five in 2HFY25 Upon completion of FY25 upgrade program, roughly half of our tower footprint will have 5G coverage Traditional Fixed-wireless 5G Coverage live 25 5G Base Stations and 423 CPEs secured via stock swap, minimising upgrade CAPEX cash cost “You’re gonna need a bigger boat” - Martin Brody 9 Still adding new users incrementally as we build 5G coverage Resources are focused on coverage and capacity expansion to facilitate returning to high growth On-net 5G subscribers are still being added as we go, with targeted marketing initiatives 5G QoQ Growth Total Q1FY25 Q2FY25 Q1FY25 Q2FY25 Q1FY25 Q2FY25 Opening Balance 6,794 6,936 10,589 10,796 17,383 17,732 Gross New Subscribers 394 220 658 571 1,052 791 Churn (252) (231) (451) (436) (703) (667) Closing Balance 6,936 6,925 10,796 10,931 17,732 17,856 Average Monthly Churn 1.2% 1.1% 1.4% 1.3% 1.3% 1.2% To drive a competive on-net offering in market, we need the Ultrafast capability of 5G The strategy is to cast a wider coverage net, to allow for broader marketing whilst further reducing CAC Off-net +17% QoQ 709 605 400 Churn has reduced QoQ to our target of 1.2%. Net subscriber growth is still present, but we must expand our catchment/coverage, and launch 5G at scale in market to return Telco to high growth. 274 145 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 “Get ready for the launch” - DJ Jean Every month, our free users play for over 20 million minutes on our infrastructure. That would equate to one person gaming 24 hours a day for FOURTY YEARS. NVIDIA Cloud Strategy 10 Own & Operate the Largest Commercial Deployment of NVIDIA GPU’s in the Country, Profitably Profitable Gaming Platform Increase Market Awareness Adopt & Convert Users Increase value offering to gamers. Layer commercial GPU revenue on idle capacity. Scale. Expand. Optimise. Evolve Freemium to Paid conversion, as Captured Userbase Matures Demonstrate Margin Uplift at Each Optimisation inflection Oversubscription Efficiency & Margin Continually improves with Scale Scale Existing Infrastructure and expand Offering to enable 4K high FPS Freemium adoption to grow market awareness - Currently 670,000 Users I wonder if there WILL BE other use cases FOR running hIGH-END NVIDIA GPU’s at scale IN THE NEAR FUTURE? Deploy and Launch service in Australia, Retaining exclusivity “If you build it, they will come!” - Ray Kinsella 11 Cloud accretion, driving growth across all metrics Quarterly Revenue $’000 ARPU +26% QoQ +40% PcP +23% QoQ +39% PcP $634 $17.4 +100% PcP $499 $14.2 $422 $12.5 $12.5 Q2 FY23 Q2 FY24 +91% PcP $214 Q2 FY23 Q2 FY24 Prior Comparative Quarters Q1 FY25 Q2 FY25 This Financial Year Prior Comparative Quarters Q1 FY25 Q2 FY25 This Financial Year Moving our cloud gaming market monetisation strategy into its next phase. 12 Our Strategy Drove Revenue and GP Growth, with EBITDA Up $1m QoQ Revenue ($m) +6% QoQ +10% PcP Gross Profit ($m) EBITDA ($m) +17% QoQ +12% PcP $5.7m $2.8m $5.4m $2.5m +4% PcP $2.4m $5.2m +25% PcP +24% PcP $5.0m $2.1m Q2 FY23 Q2 FY24 $0.6m +19% PcP Q1 FY25 Q2 FY25 Q2 FY23 Q2 FY24 Q1 FY25 Q2 FY25 -9% PcP +92% PcP ($1.2m) ($0.1m) ($0.4m) Q2 FY23 Q2 FY24 Q1 FY25 Q2 FY25 Organic growth underpinned by optimised cost-efficiency and pricing strategies 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. Q1 FY25 EBITDA includes one off cost of $0.25 13 FINANCIAL RESULTS Implementing a robust first-half year strategy has proven instrumental in bolstering our business's financial position. By focusing on strategic direction, we identified and capitalized on key opportunities that enhanced our financial stability and growth. Through disciplined execution and adaptive management, we optimized our resources and streamlined operations, which resulted in increased revenue and profitability. As we look towards the remainder of the financial year, we are confident that our strengthened financial position will continue to grow. MART DERMAN CHIEF FINANCIAL OFFICER 14 Consolidated revenue update across segments Revenue ($m) +6% QoQ +10% PcP $5.7m Group revenue grew by 6% QoQ and 10% on PcP to $5.7 million GeForce NOW revenue saw a significant increase, up 27% QoQ and 50% on PcP, driven by a combination of membership $5.4m growth and the implementation of price increases across key +4% PcP monthly plans $5.2m +25% PcP Telecommunications recurring revenue showed consistent $5.0m performance, growing by 2% during the quarter, in line with ongoing subscriber growth across the network. Non-recurring telecommunications revenue increased by 9% QoQ, supported by increased hardware sales and setup fees during the period Q2 FY23 Q2 FY24 Q1 FY25 Q2 FY25 15 Consolidated gross profit update across segments Gross Profit ($m) +17% QoQ +12% PcP $2.8m +19% PcP strong operational performance and effective cost management initiatives across the business Consolidated gross profit of $2.8 million for the quarter, $2.5m driven by margin expansion in the telecommunications and $2.4m +24% PcP Gross profit improved in line with revenue growth, reflecting gaming segments. Gross margin is up 5pp to 49% $2.1m GeForce NOW gross profit recorded notable improvements, benefiting from higher ARPU and cost optimisation strategies that increased profitability. Gross margin is up 51pp to 66% Telecommunications gross profit grew steadily, supported by recurring revenue growth and NBN margin optimisation. Gross margin is up 1pp to 48% QoQ Q2 FY23 Q2 FY24 Q1 FY25 Q2 FY25 16 EBITDA improvement driven by strategic priorities: revenue gains and cost optimisation +$1m QoQ +$0.7m PcP $0.6m -9% PcP +92% PcP ($1.2m) ($0.1m) EBITDA improved by $1m QoQ, reaching $0.6 million, marking a positive result for both Q2 and YTD Revenue growth across telecommunications and GeForce NOW contributed to the EBITDA uplift, reflecting good ($0.4m)* performance across both segments Cost efficiencies, achieved through platform subscription optimisations and supplier renegotiations, played a critical role in EBITDA improvement The company’s restructuring efforts further improved operational efficiency, aligning resources with strategic priorities in 5G expansion and subscriber growth Q2 FY23 Q2 FY24 Q1 FY25 Q2 FY25 *Adjusted for a one-off restructure cost of $0.25 million, EBITDA shows a $1.25m QoQ increase. 17 Positive operating cash flow, driven by improved EBITDA performance Net cash position improved by $0.4 million, driven by positive cash flow from operating activities Operating cash flow increased significantly, moving from -$0.6 million to +$0.9 million, supported by strong EBITDA growth Closing cash balance as of 31 December 2024 was $2.2 million FY25 Q1 $’m FY25 Q2 $’m Change QoQ $’m Cash and cash equivalents 1.8 2.2 +0.4 Net operating cash inflow (0.6) 0.9 +1.5 Net cash used in investing activities (2.4)* (0.3) +$2.1 Net cash used in financing activities (0.4) (0.2) +$0.2 Net cash (3.5) 0.4 3.9 *Investing cash flow was $2.4 million, including the fourth $1.6 million payment toward the $8 million, 15-year high-band 5G Spectrum license, and a $0.1 million annual spectrum fee. 18 Wrapping up, key takeaways Delivering First EBITDA+ Quarter and EBITDA+ H1FY25 Aim to doubling of 5G coverage across FY25 is on track Increased NVIDIA Cloud GPU Optimisation We expect financial growth to continue across 2H FY25 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. 19 Q&A 20 Glossary ARPU (Average Revenue Per User) A key performance indicator that calculates the average revenue generated per user or subscription over a specific period, often used to measure the revenue of individual customers. ARPU is calculated. GPU (Graphics Processing Unit) A specialised electronic circuit designed to accelerate the rendering of images, video, and 3D graphics, widely used in gaming, AI, and cloud computing applications. CAC (Customer Acquisition Cost) The total marketing cost associated with acquiring a new customer, including expenses for marketing and other related efforts, is divided by the number of new customers gained. PcP (Prior Corresponding Period) A comparison of a company's performance or metric in a given period to the same period in the previous year, providing insights into year-overyear trends. CPE (Customer Premises Equipment) Devices located at a customer’s premises and used to access telecommunications or internet services, such as routers, modems, or set-top boxes. Churn Churn is the rate at which customers discontinue their subscriptions or services with the company over a specific period, often expressed as a percentage. It is calculated by dividing the number of customers lost during a period by the total number of customers for that period. FPS (Frames Per Second) A measurement of how many individual frames are displayed per second in a video or game. Higher FPS typically results in smoother motion and better visual performance. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) A financial metric measures a company’s operational profitability by excluding the effects of financing and non-cash expenses. 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. pp (Percentage Points): A unit used to describe the absolute difference between two percentages. QoQ (Quarter-on-Quarter) A comparison of a company's performance or metric between one fiscal quarter and the immediately preceding quarter, used to assess shortterm trends. Subscribers: The number of individuals actively enrolled in and paying for a company’s services on a recurring basis. YTD (Year-to-Date): A time-based metric that refers to the period starting from the beginning of the current calendar or fiscal year up to the present date. It is often used to measure performance or progress over the year.