Quarterly Presentation Q1 2019

April 24 (Oslo, Norway)

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This presentation was prepared for the interim results presentation for the first quarter, held on April 24, 2019. 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.

New Director Investor Relation Ståle «Steel» Ytterdal

Working in Nordic since 2001
Director Sales & Marketing-APAC
Last 15 years stationed in Hong Kong
Work tasks
Build up the sales channel in APAC
Implement Nordic Business strategy
Now phasing over to IR

Today's presentation

Business update Financials Business outlook

	Svenn-Tore Larsen

CEO

Pål Elstad CFO

Svenn-Tore Larsen

CEO

Business update Svenn-Tore Larsen, CEO

Q1 Highlights

Continued strong market position in Bluetooth® Low Energy
Nordic Bluetooth design certifications grew by 33% from 102 in Q1 2018 to 136 in Q1 2019, with Nordic market share of 37%
Record high backlog driven by new design wins with Tier 1 customers worldwide
Continued strong cost focus results in solid gross margins above 50%
Successful certification progress in all targeted markets for cellular IoT
Semiconductor industry still impacted by channel inventory adjustments

Quarter in line with guidance

Total revenue of MUSD

52.6

Y-o-Y decrease of -12.6%

Bluetooth: -2.7% y-o-y decline
Revenue impacted by channel rebalancing
Maintaining market share
Proprietary: -37.4% y-o-y decline due to strong Q4 shipments prior to tariffs
Cellular IoT samples revenue of kUSD 100
Solid backlog of MUSD 89.0, +9.9% y-o-y

Gross Margin

51.0%

Gross margin expansion +2.1 p.p y-o-y

Higher value nRF52 Series devices continues to be the main revenue driver
EBITDA* at MUSD -0.7 (MUSD 4.4 in Q1 2018)
Adjusted short range EBITDA of MUSD 4.5

Revenue by market*

Consumer Electronics	Wearables	Building /Retail	Healthcare	Others
MUSD	MUSD	MUSD	MUSD	MUSD
21.1	7.6	8.0	4.3	8.8
-10.6%	-25.1%	-34.2%	-9.2%	+15.6%
-15.3%	-18.4%	-19.3%	-22.1%	+10.6%
y-o-y	y-o-y	y-o-y	y-o-y	y-o-y
q-o-q	q-o-q	q-o-q	q-o-q	q-o-q

*Excluding ASIC's, consulting and other revenue

Financials Pål Elstad, CFO

Operating model performance Q1 2019

	Q1 2019*	Q1 2018
Revenue change y-o-y	-12.6% (MUSD 52.6)	+27.0% (MUSD 60.1)	Revenue within guidance in challenging market
Gross margin	51.0%	48.9%	(+2.1pp) Continued positive contribution from cost improvements and favorable customer and product mix
R&D short-range	24.2% (MUSD 12.7)	18.5% (MUSD 11.1)	(+5.7pp) Continued investments to capture growth opportunities
R&D cellular IoT	9.9% (MUSD 5.2)	7.8% (MUSD 4.7)	(2.1pp) Preparing for commercialization
SG&A	18.3% (MUSD 9.6)	15.3% (MUSD 9.2)	(+3.2pp) Increase spending during ramp of cellular IoT
EBITDA margin	-1.4%	7.3%	(-8.8pp) EBITDA margins impacted by weak revenue

Gross margin expansion

Gross margin 2015 –2019

Gross margin 51.0% +2.1pp y-o-y

Continued positive contribution from cost improvements and stable yield on nRF52 Series
Increased revenue og high end products
Quarter to quarter fluctuations to be anticipated due to change in product and customer mix

Cash operating expenses*)

Cash Opex MUSD

Continued cost discipline during the quarter
Q1 cash operating expenses decreased 6.3% compared to last quarter
Excl. IFRS 16 adjustment cash opex decrease 3.2% q-o-q
Compared to last year, cash operating espenses increased 6.5%
The increase is driven by new product releases and headcount growth of 13.5% from 615 in Q1 2018 to 698 in Q1 2019
Continued investments to capture future growth

Maintaining cash

Cash flow Q1 2019 Strong financial position

MUSD 6 cash outflow during Q1 2019
Cash positively impacted by high customer payments during the quarter
NWC/LTM at 21.9% (22.6% in Q4 2018)
Capex of MUSD 4.2 test equipment for production releases on high-end nRF52 and nRF91 Series. Deferred capex to Q2.

Continued disciplined cash strategy

Tight cash management and optimized cash generating ability

Business outlook Svenn-Tore Larsen, CEO

New Nordic powered products

Leading and broad position in Bluetooth

Bluetooth Low Energy end-product certifications*

Professional Lighting Mega Trend

Building Automation Horticultural lighting

Light control is getting smart
Simplifies installation
Adding functionality:
Beaconing for customer interactions
Bluetooth 5.1 for indoor position/asset tracking
Vary color temperature in order to optimize growth
Reconfigure during seasons
Energy saving and reduced installation cost

Nordic Design Strategy

Example: nRF52 Series

Bluetooth, Thread, ZigBee, ANT and Proprietary

Extensive computational power
Substantional amount of on-chip memory
Advancements in security and peripherals
Variants tailored to markets and verticals
Continued integration
Scalability across series