NEXT Biometrics Group ASA — Investor Presentation 2021

Nov 3, 2021

Q3 2021 Presentation

3 November 2021

This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for NEXT Biometrics Group ASA (NEXT Biometrics) and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the NEXT Biometrics businesses, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time.

Although NEXT Biometrics believes that its expectations and the information in this presentation were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this presentation. NEXT Biometrics Group ASA nor any other company within the NEXT Biometrics Group ASA is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the presentation, and neither NEXT Biometrics Group ASA, any other company within the NEXT Biometrics Group ASA nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in this presentation. NEXT Biometrics Group ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in this presentation.

• Business update
• Q3 Report and summary
• Outlook
• Q&A session

Agenda

• We see the market for biometric solutions have very long-term favorable growth
  • Global biometrics market forecast to hit \$84B by 2026*
  • Biometrics market size projected at \$99B by 2027 driven by smartphones, IoT, passports and multiple other use cases/devices**
  • Biometrics solutions increase in laptops due to Covid-19 and people have flexible working locations
• Microsoft now permits users to replace passwords with biometric authentication on their products
  • Other leading tech companies are likely to follow Microsoft's initiative, which will create ripple-effects, increasing demand for biometric products and solutions

Favorable Biometrics business trends

** Link to source ** Link to source

Picture from iStock

Received first purchase order from tech-giant

Note! All examples of devices and use cases from Google and has nothing to do with this partnership

• 5-year partnership agreement with tech-giant announced 10 March 2021
  • NEXT engaged in several customer project including different products & markets
  • Initial larger purchase order announced in September 2021 on FAP20 sensor
  • Engaged in different tenders both smaller and larger globally, we're in pole position in one of the world's largest biometric markets
  • The tenders could be anything from readers to portable devices
  • This engagement gives a ripple effect for other OEMs looking at NEXT active thermal technology as this large OEM has chosen NEXT technology

New sensor design win

• Won biometric fingerprint sensor design-win with large Asia based PC OEM
• Initial smaller purchase orders received
• Will use our NB2033-U2 sensor
• Dual source position with competitor

Expectations

• Product launch TBD, target Q1 2022
• Initial production starting in Q4 2021
• Smaller quantities at first, volume will increase as more products in the portfolio are designed with NEXT Biometrics sensors

Conclusion and proof points

• With the rigorous quality requirements that a PC OEMs has, this is another proof point that the product is of world class quality

Note! Not the design of design win

www.nextbiometrics.com

Growth agenda – Design wins

• Pipe line with structural growth agenda adding at least three design-wins per quarter

• Focus is also to add different use cases not to become a one legged pony
• Total number of design-wins now at 21
• Time from design-win to initial production varies from 6 months up to 24 months
• Establishing foundation for long-term recurring revenue growth
• NEXT's sensors are designed into products with lifecycles of 4-8 years, implying stickiness and longlasting customer relationships

Approx. 50% of design-wins are FAP20 as per Q3 21

www.nextbiometrics.com

Indicative extrapolation of current pace of new design-wins (3 design wins per quarter). This is just an indication, not a guiding from NEXT)

• NGRAVE is the most secure hardware crypto-wallet on the planet (taken from the website*)
• Start-up company with a crypto-wallet
• Design-win won in Q4 2020, initial order Q4 2020
• Until now taking pre-bookings on web site and NEXT is receiving initial orders
• Official launch planned soon
• This example took approximately 12 months from design-win to official product launch

• Business update
• Q3 Report and summary
• Outlook
• Q&A session

Agenda

Profit and loss Orders received of NOK 17.4 m and revenue of NOK 12.4 m

• Revenues impacted by semiconductor shortage; revenues of NOK 17.4 m if components had been available

Gross margin of 22% vs. 14% in Q3 2020

• Improved product mix

• OPEX ex options1) of NOK 11.9 m vs. NOK 16.3 m in Q3 2020
• EBITDA ex options1) improved by NOK 5.0 m compared to Q3 2020
• All time best quarterly operational cash flow at minus NOK 1.7 m
• Cash position of NOK 116.9 m vs. NOK 86.8 m in Q3 2020

1) OPEX and EBITDA excluding share based renumeration Option and options social security costs of net NOK 4.5 m in Q3 2021

NOK million	Q3 2020	Q3 2021
Revenue	15.2	12.4
COGS	(13.2)	(9.8)
Gross margin	2.1	2.7
Gross margin %	14%	22%
OPEX ex options1)	(16.3)	(11.9)
EBITDA ex options1)	(14.2)	(9.2)
Operational cash flow	(20.3)	(1.7)
Cash position	86.8	116.9

Growth in orders received Continued low quarterly OPEX level

• Received first purchase order with tech giant
• Design wins:
  • New PC sensor design win with Asia based PC OEM
  • Accumulated 21 design wins last 21 months
• Revenues and orders:
  • Strong PC-sensor order bookings during Q3, still unfilled backlog of NOK 5 m
  • NOK 17.4 m in orders booked
  • Revenues booked at NOK 12.4 m due to supply chain challenges
• FAP20 shipments low during Q3, but will increase in Q4
• Quarterly OPEX still lower than communicated target
• All time best quarterly operational cash flow and NOK 117 m cash position at end of quarter
• With a strong balance sheet and a slim operation, NEXT focused on continuing scaling up with more design wins

Key Q3 2021 Takeaways

• Business update
• Q3 Report and summary
• Outlook
• Q&A session

Agenda

• Favorable market trends following Microsoft Biometric announcement
• Structured increase of FAP20 design-wins		40
• announced	New purchase order with major partner	35 30
• Improved Q4 FAP20 orderbook		25
• timing of announcement uncertain	Additional large purchase orders expected, but	20 15
• aiming to increase further	3 new design-wins per quarter since Q4 2019,	10
•	Additional design wins expected to be announced during remaining part of 2021	5 0
• biometrics customer offering	Start adding face recognition as complementary		Q4 2019	Q1 2020	Q2 2020

Outlook – Main focus – NEXT updated Growth strategy

Total number of design-wins (accumulated)

Indicative extrapolation of current pace of new design-wins (3 design wins per quarter). This is just an indication, not a guiding

from NEXT)

NEXT Biometrics Group ASA www.nextbiometrics.com