Nordic Semiconductor

Investor Presentation • Feb 6, 2024

Quarterly Presentation Q4 2023

© Nordic Semiconductor

February 6, 2024

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This presentation was prepared in connection with the Q4 results released on February 6, 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

2023: Weaker results on 30% revenue drop

0 100 200 300 400 500 600 700 800 900 Revenue development, last 12 months (USDm)

2019 2020 2021 2022 2023

A sharper and more prolonged downturn than anticipated

• § 39% revenue CAGR in 2019-22
• § 30% revenue decline in 2023

2023 key figures:

• § Revenue: USD 543m (USD 777m in 2022)
• § Gross margin: 52% (56% in 2022)
• § EBITDA: USD 49m, 9% (USD 206m, 26% in 2022)

Q4: Persisting cyclical downturn

Q4 2023:

• § Revenue of USD 108m (-43% y/y, -20% q/q)
• § Gross margin of 52% vs 53% in Q4'22
• § EBITDA of USD -7m vs. USD +39m in Q4'22
• § EBITDA of USD -2m adjusted for restructuring

Quarterly revenue development (USDm)

Lower Bluetooth revenue

Revenue by markets

150

Group		Consumer		Industrial		Healthcare		Others
USDm		USDm		USDm		USDm		USDm
108.2		67.4		18.3		18.8		2.5
-43%	-20%	-38%	-17%	-65%	-23%	-16%	-29%	-62%	-26%
y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q

Revenue for the individual markets excludes ASICs and consulting revenue

Top-10 have been resilient in the downturn

Bluetooth revenue composition (USDm)

• § Increasing customer concentration, with top-10 accounting for 57% of Bluetooth revenue in 2023
• § Stable revenue from Top-10 but 46% drop for other Bluetooth customers

Nordic gaining design win market share Nordic no. of designs +8% in 2023, vs -10% for all others combined

*Source: DNB Markets/FCC

New customer product launches

70%

Gross margin

59.7% 55.4% 57.3% 52.7% 53.3% 53.0% 50.5% 52.0% 30% 40% 50% 60% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023

• § Customer and product mix leading to increased margin q-o-q
• § Expecting gross margin around 50% for Q1 2024
• § Reiterating long-term ambition to maintain gross margin >50%

Operating model performance Q4 2023

Gross margin

52.0%		Q4 2023	Q4 2022	Δ
R&D short-range 23.1% R&D cellular IoT 11.3%	Revenue	USD 108.2m	USD 191.4m	-43.5%	Demand contracting in a cyclical downturn throughout 2023
	Gross margin	52.0% USD 56.3m	52.7% USD 100.9m	-0.7pp	Change in customer and product mix
	R&D short-range	23.1% USD 25.0m	14.2% USD 27.3m	+8.8pp
	R&D cellular IoT	11.3% USD 12.2m	7.0% USD 13.5m	+4.2pp	Total R&D down from USD 45.2m to USD 41.1m § Partly reflects increase in capitalization of § USD 5.7m primarily related to nRF54
R&D Wi-Fi 3.6%	R&D Wi-Fi	3.6% USD 3.9m	2.3% USD 4.4m	+1.3pp
SG&A 15.9%	15.9% SG&A USD 17.2m		8.8% USD 16.8m	+7.1pp	Higher activity in 2023, mainly related to acquisition
	EBITDA*	-1.9% USD -2.0m	20.3% USD 38.9m	-22.2pp	Decline mainly reflecting lower revenue
EBITDA -1.9%					12

*Excluding restructuring costs of USD 4.9 million

Balancing investments and cost awareness

Significant gross one-offs in Q4 2023

• § 5 % increase in payroll from Q4 2022
• § Reversal of variable remuneration and other effects more than offset the restructuring cost
• § Employees increased by 3% y-o-y to 1,493
• § High Q4 increase in other opex due to late product stage activities but also increased price environment

Continuing work to adjust cost base to protect margins

Other Opex Salary

Cash OPEX* (USDm)

Underlying capex intensity remains low

Capex (USDm)

10

Capex of USD 13.2m in Q4, of which USD 8.5m reflects the Atlazo IP acquisition

§ Overall capex intensity 3.1 % LTM, excl. the Atlazo IP acquisition

Strong Cash Position

Cash position and Cash Flow Q4 2023 (USDm)

• § Bond issue of USD 93m
• § Taxes paid on 2022 profits
• § Capex include Atlazo IP acquisition of USD 8.5m
• § NWC/Revenue LTM of 41%
• § Other items mainly impacted by increased other short-term liabilities

Introducing our new CEO, Vegard Wollan

Wollan has vast experience from the semiconductor industry

• § 2016-2023: CEO of Touchnetix
• § 1996-2016: VP Atmel Touch & MCU
• § 1991-1995: Engineer Nordic VLSI

The Nordic team extends its gratitude to Svenn-Tore Larsen, who stepped down after 22 years with Nordic at YE'23

Summary and Outlook Vegard Wollan, CEO

© Nordic Semiconductor

Kicking off the year at CES 2024

Nordic showing innovative demonstrations

• § Bluetooth LE Audio and Auracast
• § End-to-end solutions for cellular IoT and DECT NR+
• § Wi-Fi locationing
• § Apple and Google ecosystem coexistence within Matter
• § Machine Learning using the Thingy:53

Important meeting place for Nordic:

§ Team had >100 customer and Partner meetings

My first impressions

• § We have world class engineers, great employees and a great culture
• § We have innovative and leading products and total solutions – although with potential for improved execution
• § We have an impressive customer base and strong partner relationships with tier -ones
  • but now we also need to regain traction in the broad market
• § Our focus is on returning to growth and restore profitability

Create and execute on right product roadmaps

Requirements

Sustainable growth and profitability requires us to:

• § Have the winning products
• § Deliver on new product development and engineering execution

My key initial focus areas are hence:

• § Product introductions and product strategies across our different technologies
• § Executing on our development pipeline
• § Secure efficient use of our excellent engineering development resources

Driving the next level of IoT with world leading efficiency and performance

Low revenue in Q1 and limited visibility

Q1 2024 guidance

Revenue	Gross margin
USDm 70-80m	~50%
-52% to -45% -35% to -26% y-o-y q-o-q

Financial calendar 2024

• § Q1: 24 April 2024
• § Q2: 8 August 2024
• § CMD planned for September 2024, date TBD
• § Q3: 24 October 2024
• § Q4: 5 February 2025
• § Low revenue in Q1 with continued inventory adjustments - in addition to normal seasonality
• § Reporting philosophy:
  • § Only guiding for the current quarter
  • § Limiting specific customer comments
  • § May limit certain information due to the competitive landscape

© Nordic Semiconductor