Nordic Semiconductor

Investor Presentation • Aug 8, 2024

Quarterly Presentation Q2 2024

© Nordic Semiconductor

August 8, 2024

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This presentation was prepared in connection with the Q2 results released on August 8, 2024. Information contained herein will not be updated. The following slides should also be read and considered in connection with the information given orally during the presentation.

Today's presenters

Vegard Wollan CEO

Pål Elstad

CFO

Revenue recovery as guided

Q2 2024:

• Revenue of USD 128 million
• Sharp sequential improvement
  • Increased underlying demand + seasonality
  • Less adverse effect of distributor inventory changes
• USD 10m write-down of Long-range components
• Reported gross margin 42%, adjusted at 50%
• Reported EBITDA USD -7m, adjusted USD +3m

Q3 2024 guidance:

• Revenue of USD 150-170 million
  • Continued improved underlying demand
  • Q3 the seasonally strongest quarter of the year
• Gross margin expected at ~50%

Quarterly revenue development (USDm)

Progressing to plan in stabilizing market

• See return to year-on-year growth in Q3
• Managed downturn with key workforce and momentum intact
• Maintained and developed strong portfolio of key customer partnerships, and see more broad market customers returning
• Design activity picking up across the customer base for exciting future endproduct launches

NOD 2.0 – addressing three main purposes

Initiated step-wise strategic process to improve return on R&D investment over time

Top-10 and broad market split stabilizing

Bluetooth revenue composition (USDm)

Top 10 Other BT customers Top 10 (%)

• High priority to regain traction in the broad market
• Maintaining strong relationships with the key customers

High and stable design win market share Outpacing the total market LTM

Bluetooth Low Energy end-product certifications, last 12 months

*Source: DNB Markets/FCC

New customer product launches in Q2 2024

Status nRF54 Series On-track for end-of-year launches

• The nRF54 Series remains on-track for endof-year launches and start of revenues, as previously communicated
• More than 200 customers sampled on each of the L and H products so far
• Good mix between key customers and broad market customers

SoC Series

Requirements

Recognized by Time magazine and Statista

Named one of the "Worlds Most Sustainable Companies"

TIME and Statista recognizing companies that prioritize sustainability, promote corporate responsibility, and advance sustainable practices

Financials Pål Elstad, CFO

Revenue by technology

Stronger sequential performance

	Group Consumer		Industrial		Healthcare		Other
127.9 USDm		83.0 USDm		26.6 USDm		14.9 USDm		2.9 USDm
-16% y-o-y	73% q-o-q	-2% y-o-y	63% q-o-q	-11% y-o-y	59% q-o-q	-57% y-o-y	318% q-o-q	-23% y-o-y	16% q-o-q

Revenue for the individual markets excludes ASICs and consulting revenue

Gross margin

• • Write-down of Long-range components of USD 10 million
  • Underlying sequential improvement due to changes in customer and product mix, and higher revenue on which to allocate overhead costs
• Expecting gross margin around 50% for Q3 2024
• Reiterating long-term ambition to maintain gross margin >50%

Operating model performance Q2 2024

Adj. Gross Margin 49.8%			Q2 2024	Q2 2023	Δ
R&D Short-range		Revenue	USD 127.9 m	USD 154.2 m	-17.0%	Bluetooth decline in Industrials and Healthcare
	18.5%	Adj. gross margin*	49.8%	53.0%	-3.2pp	Customer and product mix, adverse effect of inventory changes, lower
			USD 63.8 m	USD 81.7 m		revenue
		R&D	18.5%	12.3%	+6.2pp	Lower capitalization rate
		Short-range	USD 23.7 m	USD 18.9 m
R&D Long-range	9.5%	R&D	9.5%	7.4%	+2.1pp
		Long-range	USD 12.1 m	USD 11.5 m
R&D Wi-Fi 3.4%			3.4%	2.6%
		R&D Wi-Fi	USD 4.4 m	USD 4.0 m	+0.8pp
SG&A		SG&A	16.3%	12.3%	+4.0pp	Wage increases and higher provisions for variable pay partly offset by lower workforce
	16.3%		USD 20.8 m	USD 18.9 m
		Adj. EBITDA*	2.2%	18.5%	-16.3pp	Decline mainly reflecting lower
Adj. EBITDA	2.2%		USD 2.8m	USD 28.5m		revenue and gross margin
	Q2 2024

* Adjusted for USD 10m write-down of Long-range components in Q2

Cash cost increase of ~3% year-on-year

• Workforce reduced by 9% y-o-y, cost effect mostly neutralized by salary increases
• Other costs stable, reflecting savings initiatives in inflationary environment
• Continued focus on adjusting spending to improve margins

Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 38 20 38 20 44 25 43 19 41 19 Cash Other Opex

Cash OPEX* (USDm)

Cash Salaries

Underlying capex intensity remains low

Capex (USDm)

Low capex of USD 0.7m in Q1 and USD 2.5m in Q2

Capex / Revenue

Focus on cash spending

Cash position and Cash Flow Q2 2024 (USDm)

• Return to positive operating cash flow in Q2, supported by changes in NWC
• NWC/Revenue LTM remains relatively high historically at 44%
• Low capex spending and continued focus on cash spending
• Other items mainly reflecting financial income and other working capital effects

Summary and Outlook Vegard Wollan, CEO

© Nordic Semiconductor

Q3 - expecting return to year-on-year growth

Q3 2024 guidance

Revenue	Gross margin
USDm 150-170m	~50%
+11% to +26% +17% to +33% y-o-y q-o-q	Unchanged from the underlying Q2 gross margin level
Welcome to Capital Markets Day in Oslo, Norway on Sept. 26

• Q3 revenue increase supported by improved underlying demand and seasonal effects
• Gross margin expected at ~50%, on par with the underlying level in Q2

© Nordic Semiconductor