Quarterly Presentation Q4 2019

February 7, 2020

CITCH CHICK CLE CLAIM TEACH CHAIN THE T

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This presentation was prepared in connection with the Q4 results released on February 7, 2020. Information contained herein will not be updated. The following slides should also be read and connection with the information given orally during the presentation.

Record Quarter- strong order backlog

Q4 2019

Revenue,			Gross margin
USDm 83.1			51.6%
+36.0% y-o-y	+1.2% g-o-a	+0.6%p y-o-y	+1.8%p q-o-q

All time high revenue of USD 83.1m (+36%)
Gross margin of 51.6%, supported by product mix
= Bluetooth revenue of USD 65.5m (+63%)
Order backlog of USD 107m (+52%)

Tier 1 customers fuel backlog development

Backlog (USDm) 120 100 80 60 40 20 0 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019

Order backlog of USD 107m, +52% compared to Q4 2018
Strong year-on-year development reflecting increased Bluetooth Tier 1 business
Tier 1 customers typically offer more predictable production and longer order backlog horizons

Continued high certification leve

Bluetooth Low Energy end-product certifications*

End-product certifications, Nordic Q4 19 136 39% mkt share +2% -19% у-о-у q-o-q

Working to excite developers

Kit shipments

Total kit shipments +34% in 2019

Shipped 49,600 kits in H2 2019

Significant contribution from nRF52840 development kits

Cellular gaining traction with Nordic Thingy:91 attracting attention

Total nRF9160 development kit shipments increased to 5,600 in H2 2019 from 2,700 in H1 2019

H1 ■H2

Broad range of new product launches in Q4

Tile	APS Detector	Colgate	Meshtech	Actinius
nRF52811	nRF52840	nRF52832	nRF9160/nRF52811	nRF9160
Asset tracking	Asset tracking	Electronic toothbrush	Asset tracking	Development kit with firmware as a service",

Well positioned in the Smart Home universe

Nordic has the largest pool of multiprotocol customers in the broad market
Attractive partner to ensure connectivity and interoperability for the platforms

Connecting the Smart Home Keys: Interoperability - coexistence - security

Project Connected Home over IP (CHIP)

Working group initiated in December 2019 to develop a new open-source connectivity standard for smart home products
Aims to make it easier for device manufacturers to build compatible devices and to deliver benefits to consumers faster
Leveraging technology from market leaders Amazon Alexa, Apple HomeKit and Google Weave
Nordic's broad range of multiprotocol SoCs supporting both Thread and Bluetooth LE will be compatible with the new standards

Complete solution from board to cloud

A scalable software framework for next generation IoT devices

Higher scalability in software development
Supports advanced multi processor devices
Platform for devices, cloud, tools and services
Improves partner engagement by enabling partner contribution
Strong fundament for . AI/ML development

Unifying

Support for all Nordic ICs
Support for all Nordic wireless technologies
Complete solution from board to cloud

Modern

RTOS integration for complex designs
Open source when and where it makes sense
· Modern development and distribution model

Scalable

For low and high complexity applications
For single core and multi-core SoCs
Allow customer to focus on application

Value

Broad product range maximizes customer value

Nordic products recognized globally

Alliance Award

Most Respected Emerging Semiconductor Company for the second year running

Annual Tech Award for the 'cutting-edge' technical development of the nRF9160 SiP for cellular IoT applications

2019 Norwegian

Technology Award

技术创新奖 | OT 开发工具 / 套件 / 云平台联网原型开发平台Thingy:91 2020 China loT Innovation Award

Technical Innovation Award for the Nordic Thingy:91 cellular loT prototyping platform

Positive reception for Nordic's cellular products

Q4 firmware release well received by customers
Reached milestone of 10 000 units shipped of nRF9160 development kit and Nordic Thingy:91
Market acknowledgement of disruptive lead on power consumption

Expanding footprint of certifications

Carrier certifications

Regulatory certifications

Q3 2019 Verizon

Deutsche Telekom Q4 2019

Vodafone Q1 2020

In addition to carriers requiring only GCF/PTCRB and local regulatory certification

Ongoing projects across a variety of verticals

Environmental monitoring & disaster prediction

Energy savings enabled by cellular connectivity

The 'Apricity Ara'

· Water heater controller for real time. demand-driven utility load management
Lowers peak power usage across the utility grid
Saves money and the environment
Uses both the cellular nRF9160 SiP and the short-range nRF52840 SoC
- Cellular connectivity via nRF9160 and wireless mesh via nRF52840
- Unique mesh network fallback in low cellular signal environments

Financials Pål Elstad, CFO

Record high revenue

Quarterly revenue (USDm)

36% y-o-y growth .
- Bluetooth growth accelerating to 63%
- Proprietary reported 7% decline
- Cellular IoT revenue USD 0.2m, still in early stages of commercialization
Strong y-o-y growth partly driven by weak Q4 2018
- · Increased revenue contribution from Tier 1 customers in Q4 2019
- Weak end-customer demand and inventory reductions impacted revenues in Q4 2018

Revenue development - Group and markets

Group	Consumer Electronics	Building/ Wearables Retail		Healthcare	Others
. USDm . . USDm . . . . . . . . . . . 83.1 33.8 . . . . . . . . . . .		. . . . . . USDm . . . . . . . . . . . . . . . . . . 16.1 . . . . . . . . . . . . . . . . . .	. . . . USDm 16.6 . .	USDm : : . . 5.0 : : : :	. . USDm . . . 10.4 . . . . .
+36.0% y-o-y q-o-q	. . . . . . +35.5% -9.2% : : у-о-у : : a-o-a . . . . . . .	. . . . . . . :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: +72.1% +15.9% . . y-o-y : : q-o-q . . . . . .	. . . : : : +66.7% +18.5% y-o-y :: a-o-a . . . .	. -9.2% - - - - -1.9% : : y-o-y a-o-q .	. . +31.2% -1.6% : : y-o-y a-o-a : : . . .

Wearables positively impacted by nRF52 Series design wins, especially in the high-end Chinese domestic market
Building and retail driven particularly by Home Automation, such as smart lighting, alarm systems, smoke detectors and smart locks

Solid gross margin

Gross margin (%)

54%

Strong gross margin of 51.6%

Favorable product mix, with a higher share of more complex high-margin SoCs
Improved cost on newly introduced products
Gross margin expected at ~50% in Q1 2020
Reiterating medium-term gross margin range of 48%-50% for the short-range business

Operating model performance Q4 2019

Gross margin 51.6%		Q4 2019*	Q4 2018
R&D short-range 14.4%	Revenue				USD 83.1m
R&D	Gross margin	51.6% USD 42.9	51.0% USD 31.2		+0.6pp Favorable product mix in the quarter
cellular lot 8.4%	R&D short- range	14.4% USD 12.0m	21.5% USD 13.1m	-7.1pp	Continued investments to capture growth opportunities
SG&A 13.4%	R&D cellular loT	8.4% USD 7.6m	8.2% USD 5.0m		+0.2pp High spending during commercialization stage
	SG&A	13.4% USD 11 1m	18.0% USD 11 Om	-4.6pp	Continued cost focus
EBITDA 14.7%	EBITDA	14.7% USD 12.2m	3.4% USD 2.1m	+11.3pp	Positive operating leverage enables profitable growth

Cash operating expenses*

Salary:

Number of employees increased by 12.0% during the year, from 685 to 767
Growth in customer facing teams, both within R&D and Sales
Continued favorable FX development

Other opex:

▪ Driven by introduction of new products

Overall cash cost increase of 4.8% in Q4 shows continued cost discipline

Cash Opex (USDm)

EBITDA lift-up during the year

EBITDA (USDm) and margin (%)

EBITDA-margin excluding cellular back above 20% for third consecutive quarter

Capex development

Capex of USD 5.3 million final build of new R&D lab
Q1 2020 guidance of USD 4-5m
Annual capex to remain around current levels in absolute terms for the next years

Maintaining cash

Cash Flow Q4 2019 (USDm)

Maintaining cash in growth quarter

USD 3.9m in cash inflow during Q4 2019
NWC/LTM revenue at 24.3% at year-end (22.6% year-end 2018)

Continued disciplined cash strategy

▪ Tight cash management and optimized cash generating ability

Summary & Q&A Svenn-Tore Larsen, CEO

Strong Q4 - uncertainty for Q1

Q1 2020 guidance

Revenue	Gross margin
USDm 64-71	~50%
+22 to 35% -15 to -23% y-o-y g-o-q	-1.0%p -1.6%p y-o-y q-o-q

Strong Q4

Revenue and gross margin above guidance
Cost discipline and positive cash flow Wide revenue range for Q1
Uncertainty due to the coronavirus outbreak in China
Received push-outs of some orders

Unchanged medium-term outlook

20%-30% annual growth for Bluetooth low energy and multiprotocol solutions
48%-50% gross margin for short-range
Continued investments in R&D

AI Terminal

Nordic Semiconductor

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