Cherry AG

Investor Presentation • Oct 24, 2024

CHERRY\$

CHERRY SE

Q3/9M 2024 PRELIMINARY FINANCIALS

MUNICH, 24 OCTOBER 2024

LEGAL 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 forwardlooking 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 herein 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.

03/9M 2024 OVERVIEW CEO OLIVER KALTNER

IN Q3 WE MISSED OUR OWN EXPECTATIONS

OOP. too dependent on Germany

Lackluster corporates and consumer spending
Inadequate market assessment and insufficient channel management

Components hit by weak notebook market

OOP. 12 m revenue shortfall

Adj. EBITDA margin negative instead of 5-6\%

EUR 6 m cash burnt in the quarter

Q3/9M 2024 FINANCIALS

EVP FINANCE \& IT VOLKER CHRIST

Q3 P\&L HIT BY MARKET UNCERTAINTIES

9M REVENUE
(IN EUR M)

• 9M revenue at EUR 84m
• Q3 revenue miss from GOP and Components
• Resulting EUR 6m gross profit hit led to impaired fixed cost coverage
• 9M adj. EBITDA at EUR -0.7 m
• Q3 adj. EBITDA at EUR -3.1 m instead on EUR 2m targeted

9M ADJ. EBITDA
(IN EUR M; MGN. IN \%)

9M 2022
9M 2023
9M 2024

Q3 REVENUE AND ADJ. EBITDA SPLIT

REVENUE SPLIT (IN EUR M)

INVENTORY MANAGEMENT

INVENTORIES (in EUR m)

TRADE WORKING CAPITAL* (in EUR m)

Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24

DIVISIONAL UPDATE

COO DR. UDO STRELLER

GOP - STREAMLINING OF DISTRIBUTION VIA CLEAN-UP AND RAMP-UP

WEAK Q3 REVENUE:
$>$ Germany in recession
$>$ Negative consumer sentiment leads to reluctance to buy peripherals
$>$ Sell-in at reasonable margin hardly possible

DRYING UP OF THE GREY MARKET:
$>$ Supported by Tier 1 distributors
$>$ Buy back product from the gray market
$>$ Reduction of price dumping and volatility
$>$ Sell-in at list price with higher average margin

RESTRUCTURING OF THE DIVISION:
$>$ GOP head left company; successor to follow as of Jan 2025
$>$ Europe sales team reorganized
$>$ Stronger focus on B2C
$>$ New deal-term and margin model
$>$ New electronic retailer partners

CLOSE COOPERATION WITH DISTRIBUTORS ON CEO AND OP. LEVEL:
$>$ Joint workshops
$>$ Clear channels by end of November to foster new orders
$>$ Selective discussions on exclusive products
$>$ Push business in core European countries

GOP TASK FORCE TO EXECUTE ACTION PLAN:
$>$ Relationship scorecard
$>$ Synchronization of channels
$>$ Revision of tender list
$>$ Product shift from distributors to retailers and system-houses

ACCELERATE DISTRIBUTION TO NONDACH MARKETS:
$>$ European core markets France, UK, Italy Spain, Portugal, Nordics
$>$ Deemphasize Germany

COMPONENTS - COST REDUCTION IN FULL EXECUTION

China Operation update

$>$ Samples already at major KB manufacturers
$>$ Production at full capacity

New MX2A toolings and plastic released for production in China since Sep
$>$ Tooling and design improvements increased quality further and reduced manufacturing costs

Delayed order prepayment

$>50 \%$ received
$>$ goods shipped at beginning of October
$>$ Remainder to be collected and shipped in November

R\&D Pipeline

$>$ Designs for new key switch technologies finished and filed for patent

Major Q3 events with CHERRY participation
$>$ China Joy, Shanghai
$>$ Gamescom, Cologne

DH\&S - CERTIFICATION MILESTONES

MILESTONE SMARTLINK OFFERING:

"Cardlink" product and provider certification started in Q3
Product certification obtained on Oct $14^{\text {th }}$
provider certification expected early November

HYGIENE KEYBOARDS AND MICE:

$>$ Solid demand sell-out in Q3 as expected in Europe

First larger orders received in North America

MILESTONE TI-M OFFERING:

TI Messenger product and provider certification started in Q3 with partner Awesome Technologies
Product certification obtained Oct $10^{\text {th }}$
Provider certification expected early November

EMBEDDED SOLUTIONS:

ISO 9001:2015 passed: no major or minor non-conformities (NCs)
Development of inductive key switch (IKS)
Capra Robotics (DK) field tests with Cherry single board computer

TERMINAL SALES:

Continued high market share of $>70 \%$
Market demand lower than Q1/Q2 as ePrescription driven demand largely addressed
Rising new demand from new TI care provider groups

STRUCTURAL SIMPLIFICATION:

Upstream merger of Active Key GmbH into Cherry Digital Health GmbH completed

OUTLOOK

CEO OLIVER KALTNER

TOUGH MARKET ENVIRONMENT

GERMAN GDP* EXPECTED TO SHRINK IN 2024 (in \%)
INCREASING SAVINGS RATIO (in \%)

• Statista on 27 Sep 2024: Average forecast of leading economic research institutes; ** GfK in Sep 2024

GAMING PRODUCT LAUNCHES AT GAMESCOM

NEW RETAIL PRESENCE AS OF Q4 2024

RED BULL GAMING GARDEN SPONSORSHIP

NEW E-SPORTS HOTSPOT AT SAP GARDEN IN MUNICH TO BE EQUIPPED WITH XTRFY PERIPHERALS ... LOCATED UNDER CHERRY BLOSSOM TREES

ANALOG KEYSWITCH ENTERING THE MARKET

$>$ Global Notebook market not yet recovering, thus limiting demand for ULP Notebook switches

Analog keyswitch solutions increasingly gaining market share. MX-Multipoint announced at Computex in June 2024 and entered the market in Q3 2024. Further analog CHERRY solutions available in H1 25
Mechanical keyswitch market still challenging with Chinese competition fighting over 0.1 cent cost differences
Low Profile switches gaining more and more traction in the desktop market. MX LP 2.0 production just started

DIGITAL HEALTHCARE SOLUTIONS GLOBALLY ON THE RISE

GLOBAL DIGITAL HEALTH MARKET

(in EUR bn)

Digital Fitness \& Wellbeing
Digital Treatment \& Care
Online Doctor Consultations
$98 \%$
of German medical
practices connected
to TI
$6-8$
Digital medical
consultations p.a.
per average
German

DIGITAL HEALTH MARKET TO GROW C. 10\% P.A. UNTIL THE END OF THE DECADE

DIGITAL HEALTH MARKET REVENUE EUROPE AND GERMANY (in EUR bn)

DIGITAL HEALTH - ROLL-OUT OF NEW SERVICES

FROM MARKET LEADING POSITION IN EHEALTH TERMINALS TO COMPLEMENTING NEW SW \& SERVICE OFFERINGS

CURRENT PRODUCTS

EUR 3.5M COST CUTTING PROGRAM INITIATED

SERVICES

FY 2024 FORECAST

2024 REVENUES* C. EUR 120M

2023

2024 ADJ. EBITDA* MGN. OF C. 3\%

[^0]
[^0]: * Revised from a revenue range of EUR $140-150 \mathrm{~m}$ and an adj. EBITDA margin range of $7-8 \%$ previously

IR CONTACT

NICOLE SCHILLINGER SVP INVESTOR RELATIONS

EMAIL: IR@CHERRY.DE PHONE: +49 96432061848
WEB: HTTPS://IR.CHERRY.DE