Cherry AG — Investor Presentation 2023

Sep 4, 2023

EQUITY FORUM September 4/5, 2023

CHERRY MANAGEMENT BOARD & MISSION STATEMENT

Oliver Kaltner - CEO Mathias Dähn - CFO Udo Streller - COO

CHERRY continually strives to learn and create value. We provide responsibly developed hardware, software & cloud-services, enabling efficient, creative design in the digital world.

70 YEARS OF RELEVANCE AS AN INNOVATION AND QUALITY LEADER

Business development on the foundation of global mega trends and the CHERRY Legacy

• 3bn. Gamers worldwide

• Individualization trend
• Mindset with Start-up-Logic

Gaming / eSports Work-from-anywhere Digital healthcare

• 2/3 Germans prefer hybrid workplaces

• Up to 80k daily keystrokes for Creators
• Enormous sales potential via eCommerce

• 70% market share in new HW sales

• E-health PIN pad required in future
• Scalability via cloud-based SaaS-offering

CHERRY LEGACY – 70 YEARS OF RELEVANCE & TRANSFORMATION

CHERRY GLOBAL FOOTPRINT

With satellite hubs and highly automated production

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VISION & STRATEGIC FOCUS 2023

VISION

STRATEGIC FOCUS

• We enable people to
• advance into and
• scale the digital world
• to maximize
• performance,
• creativity, and

interaction across the

digital value chain.

• Combination of profitable organic & and strategic non-organic growth
• Leverage digitization of German healthcare sector to introduce platform-based SaaS business model with recurring revenues
• Expand and internationalize CHERRY's premium market position in gaming with the rapid global spread of eSports activities and the global "work-from-anywhere" trend
• Keep the CHERRY business model "assetlight"

2023 – A YEAR IN STRATEGIC & OPERATIONAL TRANSITION

Managing the growth – turning an established manufacturer into a Tech Company

Current optimization focus is on fundamental business processes, i.e.

• Market analysis and assessment
• Sales planning and control
• Production planning and control
• Finance, accounting and controlling
• Seamless interaction between Sales / Supply Chain / Finance

Achieving greater overall resilience and precision in our business and economic processes

"To change and strive for improvement is living part of the DNA of the Cherry culture in a dynamic world." Oliver Kaltner, CEO of Cherry SE

SPEEDING UP BUSINESS PERFORMANCE WITH OPERATIONAL EXCELLENCE

Ongoing efforts to solidify & leverage our position as an industry leader

	Corporate Policy	• Market orientation includes customers and competitors and involves all business partners
		• Management culture to co-create efficient business processes in hybrid work environment
	Update	• Employees/quality/processes orientation for continuous improvement and efficiency
		• Commitment to environmental protection with resource-efficient production processes
		• Creation of a unified BU "Peripherals & Gaming" incl. full integration of Xtrfy to promote
	Organizational	synergies between teams and drive further efficiencies with clear Route to Market strategy
	Development	• Transformation of Industrial Engineering department into Operational Excellence to focus on
		Product Engineering, Project Management, Industrial Engineering
		• Several changes in management positions to boost efficiencies – full Xtrfy integration
	People & Culture	• Execution of first Cherry Culture Survey throughout all locations
		• Early achievement of 10% goal for women in management – "Female Talents@Cherry"

REVISED M&A STRATEGY

Clear focus on software and cloud services in Digital Health & Solutions and Gaming business units

Objectives				• Cherry is an attractive takeover company for other companies.
M&A as catalyzer for transformation towards platform oriented	Regions & Sizes			• We integrate these assets into our business, with technical, workflow and cultural processes almost seamlessly. • We are leaving the brand essence of these companies with the aim
portfolio of HW/SW (SaaS) & Cloud Services	Focus on	Focus areas		of further developing the CHERRY platforms in full.
Creating a well balanced	Europe & USA			• We ensure that integrated
revenue mix post 2025 Generating	≥ Single digit €m revenue	High priority: SaaS & cloud services	Opportunistic: HW Peripherals & Switches	companies meet the corporate objectives immediately after acquisition.
positive impact on profitable growth & IP portfolio	Focus on IT & dev.	(Start-ups / Grown-ups)	(Established Players)	• We avoid sales or profit losses in the ramp-up phase.

PEOPLE & CULTURE

New role for HR: Cultural development of CHERRY as an employer

HR's remit is changing as part pf Cherry's realigned strategy

People & Culture as…

• Shaper of the transformation towards being a listed pioneer TECH Company with an attractive & positive culture
• Ambassador of the company culture
• Driver & explainer of the necessary organizational changes

Important Measures

Value communication Communicate training and development opportunities

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Promote diversity Attractive workplace design / hybrid work

Effective & efficient people processes Satellite Hubs

KEY ACTION ITEMS 2023 (YTD)

Variety of discrete actions successfully executed in all relevant business areas

B2B2C

• Refinement of partner bonus and incentive program for T1 and T2
• Strong focus on synchronized sales steering across all channels
• Controlled inventory management both in own warehouses and in all distribution partner channels

• Full availability of all product lines in all countries, especially Gaming finished goods in Americas and Office products in APAC

• Strong focus on sales steering & inventory management

• Successful integration of XTRFY into Gaming and Office Peripherals BU
• Extension of product reach due to sponsorships and internationalization
• Expansion of eCommerce business both in breadth and depth
• Full availability of new microphone product series
• Market introduction of new high-end office keyboard with ULP-Switches
• Introduction of "Pokemon" Series Products in China

B2C B2B

• Rigorous reduction of production overhead
• Switch production adjusted to current market situation ("built-to-order") and latest demands
• Start of MX2 Production
• Launch of E-Health PinPad
• Initial development cooperation with Medion ERAZER

INTRODUCTION OF OUR BUSINESS AND STRATEGIC OUTLOOK

Innovative and high-quality products & services that are specially developed for specific customer needs

Successful positioning of business activities in core markets along major global trends <

CHERRY LEGACY TOUCH IT. FEEL IT. LOVE IT.

World leading switch technology

INVENTOR & INNOVATION LEADER FOR MECHANICAL SWITCHES

The CHERRY legacy: the first snap-action switches were produced in 1953

The exclusive and patented switch design includes the feature set of CHERRY MX switches that has been proven for decades, which ensures maximum precision and perfect function even in the ultra-thin design. This is primarily due to the highly precise and extremely reliable gold crosspoint contact system as well as the special choice of materials such as stainless steel or high-temperature resistant polymer plastic, which are essential for the market-leading specifications of this switch.

MX2A SWITCH LAUNCH IN AUGUST 2023 – THE NEW GOLD STANDARD

Yet another revolution in mechanical switch technology by the market leader – redefining excellence

Characteristics

Key Benefits

• Each technical aspect of the switch has been precisely refined
• Unrivaled tactile experience
• Derivatives available for ultimate customization

• 100M lifetime

• Even more precise contact actuation

• < 1ms bounce time
• Extra smooth operation with low friction
• No pinging sound

- Packaging reduces plastic waste by more than 90%

• 35% higher packaging density on palette Environment Reduced storage space and CO2 emissions during transport

COMPONENTS – SWITCHES GOES OEM

From indirect business to direct business

GAMESCOM 2023 – ERAZER AND CHERRY MX UP TO JOIN FORCES

World's largest computer and video games event from Aug. 23 – 27 in Cologne

Europe's leading business platform for games/eSports industry

• Visitors had the opportunity to test CHERRY MX switches at the ERAZER booth for the first time
• CHERRY MX ULP switches highlighted in existing flagship gaming laptops such as ERAZER Beast X40 and ERAZER Major X20
• Joint development of new gaming keyboard announced by CHERRY and ERAZER to expand partnership into peripherals
• Plans to develop partnership even further into multi-media sector

High-end MEDION ERAZER Beast X40, one of the fastest laptops ever, has received numerous awards and is highly praised by external testers.

CHERRY LEGACY TOUCH IT. FEEL IT. LOVE IT.

High-end peripherals for Gaming/ eSports, Creators and (hybrid) Office

POSITIONING AS LEADING INNOVATOR IN HIGH-END GAMING PERIPHERALS

Kick-off event at Saturn Xperion Cologne in May and live events at Gamescom 2023 in August

100 million total reach published press content

Major events with international reach in gaming/IT industry

• 130 international journalists, influencers, streamers from Germany, France, UK, Sweden, USA (e. g. Heise, Chip, PC-Welt, Toms Hardware, Fnac, Axel Springer, Rocket Beans) covering CHERRY XTRFY

• One joint premium brand to the customer with new style guide introduced to international customers and partners, eSport teams & gamers (e. g. API, Cyberport, Terra, SK)
• Gamescom 2023 exclusive sponsor of peripherals for "HMX4"

XTRFY K5 COMPACT RGB – 5th generation keyboard shaped by the community's input and trusted by top players, ultra-customizable with super-scan technology for instant response, pre-lubed PCB-mounted

stabilizers and double layers of sound-dampening foam.

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INTERNATIONALIZATION: E-COMMERCE AS STRONG DRIVER

Increasing global brand awareness of end consumers through a variety of online platforms and market-places

INTERNATIONALIZATION ON TRACK

Country expansion, multi-channel approach and various partnerships leverage strong growth potential

Direct business on 3 continents with 30 countries covered

• Country expansion and deepening sales lines in the major markets outside of German-speaking markets, the United States and China.
• Broadening our sales lines in Central Europe with focus on France and the UK, Benelux, the Nordic countries, Italy, and Spain, as well as Korea and other Asian countries.

Multi-channel approach as a B2B and B2C company

• Further strengthening of multi-channel sales and targeted additions to our product portfolio.

B2B – Direct Partnerships & Distribution Partnerships

B2C – Direct Retail & eCommerce & Distribution Partnerships & Sub-Distribution Partnerships.

At CHERRY, we are investing in the successive expansion of our eCommerce activities. Platforms such as Amazon in the USA and Europe are supplemented by online social media platforms such as TikTok, JD and others in China and Asia.

RECENT NEW PRODUCT RELEASE HIGHLIGHTS

New product innovations in peripherals serve as ambassadors for latest CHERRY switch technology ULP & MX2A

CHERRY KW X ULP - first keyboard with CHERRY MX ULP

• Combines the advantages of a mechanical keyboard with the aesthetics of modern slimline devices – market launch in April.
• Equipped with state-of-the-art connectivity, a rechargeable battery and high-quality materials, it sets new standards.

CHERRY XTRFY K5V2 - first gaming keyboard with CHERRY MX2A

• Global market introduction of one of the most customizable 65% mechanical gaming keyboards in the world in August at Gamescom 2023 (ETA: late 2023).
• Based on the popular K5 keyboard, it will feature hot-swappable CHERRY MX2A Red switches, pre-lubed PCB-mounted stabilizers as well as double layers of sound-dampening foam and super-scan technology for instant response.

RECENT AWARD HIGHLIGHTS OF INNOVATIVE PRODUCT RANGE

Awards as a proof point for further upgrading the portfolio with relevant products strengthen CHERRY legacy

CHERRY UM 9.0 PRO RGB – microphone for streaming and gaming

• USB microphone for maximum versatility whether for a Let's Play, a podcast with several people or a face-to-face interview.
• Four different polar patterns available to specific user needs: CARDIOID, OMNIDIRECTIONAL, BIDIRECTIONAL, STEREO.

• Shock mount function ensures interference-free recordings and filters out any unwanted vibrations or background noise.

CHERRY eHealth PIN-Pad PP-1516 – Ideal extension for CHERRY eHealth terminal

• Applications of the telematics infrastructure (e. g. electronic patient record, electronic medication plan, emergency data management) require PIN entry by the patient.
• The PIN pad is the ideal terminal device for comfort and hygiene on the patient side, easy to disinfect and prepared with a 5 MP camera for reading data matrix codes (QR codes).
• It is ideally suited for use in (medical) practices, clinics and pharmacies, among others.

CHERRY LEGACY TOUCH IT. FEEL IT. LOVE IT.

Driver & enabler for healthcare digitalization

INCREASING POPULARITY OF CHERRY DIGITAL HEALTH & SOLUTIONS

Focus on smart solutions, high quality and certified components to further increase installed base

Advantage of the technological edge of CHERRY devices, i.e.

• Four card slots and NFC enable authentication and give access to the telematics infrastructure via eHealth Terminal.
• Connectivity via LAN (power supply or PoE) or USB (supported by the CHERRY "eHealth USB-LAN Proxy" software). The new eHealth PIN pad can also be connected to the eHealth Terminal via USB.
• Thanks to the REST API, all settings of the eHealth terminal (e.g., entering the SMC-B PIN) can be performed remotely via a web browser.
• Integrated VPN client also supports use in TI-as-a-Service environments and in the future with TI gateway and high-speed connectors.
• Can be used with Apple devices via USB (USB-ECM) due to MAC-OS compatibility, thereby further increasing user-friendliness.
• Prepared with a 5 MP camera for reading data matrix codes (QR codes), the PIN pad is ideally suited for use in (medical) practices, clinics and pharmacies, among others.

CHERRY AT THE SWEET SPOT OF FUTURE DIGITAL HEALTHCARE MARKET

Digitization of German healthcare system unlocks potential for additional recurring revenues via SaaS

Momentum of digitization of the German healthcare system is picking up

• Increasing political direction from the German Federal Minister of Health to introduce e-prescriptions across the board from July
• E-prescription is set to be made mandatory from 2024 and thus established as a fully digital standard in the provision of medicines
• Digitization of the German healthcare market will be significantly expedited in future and new digital health applications will be brought closer to the point of care
• The move will create a huge demand for diverse cloud-based application software combined with certified hardware in future

Cherry Digital Health preparing to expand business model

• Expand market share of > 70% in new eHealth terminal sales
• Capitalize on technical advancements of current devices, driven by
  • Roll-out of additional applications
  • Deployment to new user groups
  • Synergies with connector replacement efforts
  • Strong partnerships. i.e.

Future-proof expansion of the value chain

eHealth Terminal ST-1506 (Since Q1/2021) G87-1505 (Since Q2/2018) eHealth PIN-Pad PP-1516 (Since Q3/2023) Future Cloudbased Services…

BENEFITS AND ASPECTS OF THE RECURRING REVENUE BUSINESS MODEL

About the attractiveness and relevance of business models with recurring revenues

A reversed development process in the digital era

• HW remains an important part of the triad with SW and cloud services, however
• Cloud services determine the future HW requirements in the development process.

CHERRY is evolving from a hardware into a hardware, software and cloud services company

• The recurring component of these business models consists accordingly in the regular renewal or extension of the subscription.
• The installed base (hardware and software base) is defined by the number of users or subscribers.
• The attractiveness of such a business model depends very much on the strength of the "lock-in" effect: optout instead of opt-in.

CHERRY AT A GLANCE – FINANCIAL HIGHLIGHTS H1/23

Overall development of business activities above internal plan

KEY FINANCIAL INDICATORS H1/23

Profitable growth in Q2/23 supports FY 2023 targets

in € million/ As indicated	Q2/23	Q2/22	∆	H1/23	H1/22	∆
Revenue	32.6	32.9	-0.9%	61.3	65.9	-6.9%
Gross profit margin	36.6%	33.4%	3.2pp.	30.2%	31.6%	-1.4pp.
EBITDA margin	13.4%	12.9%	0.5pp.	2.5%	12.4%	-9.9pp.
(adj.) EBITDA	4.5	5.0	-10.4%	3.2	9.4	-66.2%
(adj.) EBITDA margin	13.8%	15.3%	-1.5pp.	5.2%	14.3%	-9.1pp.
EBIT	0.9	0.4	115.9%	-5.7	0.4	n.a.
Group result	0.3	-0.4	n.a.	-5.0	-0.6	n.a.

Group revenue mainly driven by

• Strong sequential growth in Q2 in Digital Health & Solutions, Office Peripherals, and Gaming Devices, thereby further gaining market shares in focus markets
• Xtrfy included in Gaming Devices revenue in H1/23

Gross profit margin mainly impacted by

• Positive product mix effects
• Significant reduction of cost of sales in Q2 (€ 20.7m) below 2-year average (øQ2/21 – Q1/23: € 24.4m)

EBITDA margin (adj.) mainly driven by

• Higher gross profit margin in Q2/23

OUTLOOK FY 2023 CONFIRMED

Current fiscal year as a year of transition and consolidation

* Change in segment reporting from FY 24 with 3 operating segments.

MAIN DRIVERS FOR H2/23

Continued growth momentum supporting the business performance in H2/23

• Continued internationalization of Gaming Devices and Office Peripherals business to further penetrate European and US markets
• Seasonal peaks in demand in both B2C and B2B due to various sales events, i.e. "Black Friday", "Cyber Monday", and holiday season
• Various product launches and updates and increasing collaboration with influencers, e-sports organizations, etc.
• Current legislative projects establishing e-prescription as digital standard in pharmaceutical care from January 1, 2024, among others
• Initial sales from MX2 switch generation and increased sales of ULP switches

APPENDIX APPENDIX

RELATIVE SHARE PERFORMANCE & CURRENT SHAREHOLDER STRUCTURE

SHAREHOLDER STRUCTURE

* Based on internal investor reporting to Cherry, not subject to disclosure. ** Includes 0.3% held directly and indirectly by the members of the Management Board.

CHERRY SHARE BUY BACK PROGRAM 2022 COMPLETED

• The Management Board has resolved on June 9, 2022, with the consent of the Supervisory Board, to launch a share buyback program using the AGM authorization of June 23, 2021.
• Within the framework of the Share Buyback Program 2022, up to a total of 2,000,000 shares (corresponding to up to 8.2 % of the existing share capital of the Company) may be repurchased
• from June 13, 2022, to June 30, 2023,
• at a total purchase price (excluding incidental acquisition costs) of a maximum of EUR 25.0 million
• up to a price cap of EUR 14.00 per share.

DAILY NO. OF SHARES REPURCHASED

Overview Programme completed as of June 30, 2023

Period	No. of shares purchased	Average price (in€)	Purchased volume (in€)
Q2/22	215,318	9.0457	1,947,711
Q3/22	434,894	7.5458	3,281,642
Q4/22	256,905	6.1301	1,574,849
Q1/23	170,843	7.1235	1,217,002
Q2/23	266,462	4.6512	1,239,357
Total	1,344,422*	6.9031	9,280,680**

* Including 234,138 shares transferred in Q1/23 as part of the Xtrfy acquisition. ** Excluding Bank Commissions.

FINANCIAL CALENDAR 2023*

DATE	EVENT
September 4/5	Equity Forum
September 18/19/20	Berenberg Flagship German Corporate Conference
November 15	Interim report for Q3/9M 2023
November 16	Münchner Kapitalmarkt Konferenz

* Expected dates, subject to change..

FORWARD LOOKING STATEMENTS

Disclaimer

This presentation contains forward-looking statements. These statements are based on the current views, expectations and assumptions of the management of Cherry SE and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those described herein due to factors affecting Cherry SE such as, among other things, changes in the general economic and competitive environment, capital market risks, currency exchange rate fluctuations and competition from other companies, and changes in international and national laws and regulations, in particular with respect to tax laws and regulations. Cherry SE does not assume any obligation to update any forward-looking statements.

The information contained in this presentation is for background purposes only and does not purport to be full or complete. No reliance may be placed, for any purpose, on the information contained in this announcement or its accuracy or completeness. The information in this presentation is subject to change.

Market & Industry Data

This presentation also contains estimates and other statistical data made by independent parties and by the Company relating to the Company's industry, the Company's business and the market for the Company's products and its future growth. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of the Company's future performance and the future performance of the market for its products are necessarily subject to a high degree of uncertainty and risk.

General remark

Figures may not add up due to rounding.

THANK YOU FOR YOUR ATTENTION

Cherry SE Dr. Kai Holtmann │ Head of Investor Relations

Rosental 7 c/o Mindspace │ 80331 Munich, Germany

Postal address Cherrystrasse 2 │D-91275 Auerbach, Germany

E-Mail Tel. kai.holtmann@cherry.de +49 175 1971503 Fax +49 9643 20 61 900 Web https://ir.cherry.de