Nordic Semiconductor — Investor Presentation 2021

Oct 21, 2021

Quarterly Presentation Q3 2021

October 21, 2021

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Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although The Company believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

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This presentation was prepared in connection with the Q3 results released on October 21, 2021. 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.

Strong demand in all end-user markets Growth capped by wafer supply

Revenue		Gross margin
USDm 148.5m		53.1 %
+24% y-o-y	+1% q-o-q	-1.0%p y-o-y	+2.2%p q-o-q

• Revenue on par with the previous quarter and +24% year-on-year
  • Bluetooth revenue USD 124.3m (+28%)
  • Proprietary revenue USD 18.1m (-5%)
  • Cellular IoT revenue USD 5.3m (+238%)
• Gross margin of 53.1%
  • Higher volumes of higher-margin SoCs

Order backlog keeps increasing

Backlog (USDm)

• Order backlog USD 1,316m, >4x Q3 2020
• Timing of deliveries dependent on wafer supply – backlog now stretching into 2023
• Laser-focused on mitigating the customer challenges

Steady and high certification market share Significantly increasing value per design

*Source: DNB Markets/FCC

New product launches in Q3

SiBionics	LEEDARSON	Link	Metasphere	NEST iON
GS1 CGM Monitoring	Smart LED bulb	Tracker	ART Sewer	IOT Power Controller
nRF52832	nRF52840	nRF9160/nRF52840	nRF9160	nRF9160
Provide wireless connectivity between diabetes wearable sensor and smartphone	Tunable White Bulb controlled using Matter protocol	Pet location data to be relayed to smartphone	Wastewater and sewerage spill monitoring solution	Conserve battery life for remote sensors and equipment

6

Launced first nRF Cloud Services nRF Cloud Location Services

• Location information is critical and vital for multiple types of devices and applications; Asset Tracking, Wearables, Industrial IoT etc.
• Cloud services on top of nRF9160 can prolong battery life and increase speed to positioning
• 4 different location services
  • GPS based
    • Assisted GPS Faster time to first fix
    • Predicted GPS Faster time to first fix and increased power savings
  • Cell Based
    • Single CELL Coarse location without need for GPS. Lowest power
    • Multi CELL Medium location accuracy

Cellular IoT – Steady growth

Regulatory certifications overview for nRF9160

• Volume ramp-up held back by supply constraints
• Strong presence in tracking and Industrial applications
• Strong focus on easing application design
  • New nRF Connect SDK v1.7.0 released in September
  • Visual studio code, a very popular development environment from Microsoft, now supported
  • Memfault partnership announced, helping IoT device developers build stronger products faster

Contributor to new standard DECT-2020 NR A part of the ITU IMT-2020 5G technology recommendation

• Nordic main contributor to the physical layer and a key contributor to the medium access layer of the specification
• Designed for massive IoT networks for enterprises and application like building automation, smart utility meters, manufacturing automation, smart cities and logistics
• Leverage our cellular investments with initial solution being built around the nRF91 Series
• In partnership with Wirepas, a Finish massive IoT wireless solution SW specialist company.
• Initial availability in 2022

Financials Pål Elstad, CFO

Revenue growth of 24%

Quarterly revenue (USDm)

• Y-o-Y growth across growth technologies
  • Bluetooth +28% to USD 124.3 million
  • Proprietary -5% to USD 18.1 million
  • Cellular IoT +238 % to USD 5.3 million
• Stable Q-on-Q development
  • Growth capped by wafer supply
  • Focus on helping customers who experience strong end-product demand

Revenue per market

Group	Consumer Electronics	Building/ Wearables Retail		Healthcare	Others
USDm USDm 148.5 58.0		USDm USDm 15.2 39.4		USDm 12.3	USDm 17.6
+24% +1% y-o-y q-o-q	+5% +13% y-o-y q-o-q	-22% -5% y-o-y q-o-q	+72% -5% y-o-y q-o-q	+58% -21% y-o-y q-o-q	+64% +7% y-o-y q-o-q

• Year-on-year growth across most end user markets
• Q-o-Q changes reflect product allocations
• Highest growth in 'Building & Retail'
• Continued strength in Consumer Electronics
• Preparing change in markets reporting from 2022

45%

Gross margin above the guidance range

54.1% 52.7% 50.2% 50.9% 53.1% 50% 55% 60% Gross margin (%)

40% Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Gross margin

Gross margin at 53.1%

• Higher share of complex, high-margin products balancing effect of more tier-1s
• Strong cost control and scale effects.
• Gross margin expected at 51%-53% in Q4 2021

Operating model performance Q3 2021

Gross margin 53.1%		Q3 2021	Q3 2020
R&D short-range	Revenue	USD 148.5m	USD 119.4m	+24.4%	Growth in all technologies and markets
14.1%	Gross margin	53.1% USD 78.8m	54.1% USD 64.6m	-1.0pp	Continued strong gross margins
R&D cellular IoT 7.7% R&D Wi-Fi 2.2%	R&D short-range	14.1% USD 20.9m	13.2% USD 15.8m	+0.9pp
SG&A 9.9%	R&D cellular IoT	7.7% USD 11.5m	6.9% USD 8.2m	+0.8pp	Investing for growth
	R&D Wi-Fi	2.2% USD 3.3m	-	+2.2pp	Expanding our portfolio
EBITDA 19.1%	SG&A	9.9% USD 14.8m	10.0% USD 12.0m	-0.1pp	Growth in number of employees
	EBITDA	19.1% USD 28.3m	24.0% USD 28.6m	-4.9pp	Revenue constraints limits margin expansion

Investments to capture growth

Cash cost increase mainly due to increased number of employees, acquisition and FX

• Salary:
• Number of employees increased by 33% to 1 155 over the past last 12 months
• Wi-Fi acquisition added 81 employees Other OPEX:
• Varies with pace of product introductions
• High external consultant cost
• Low travelling expenses

Cash OPEX* (USDm)

Sharp year-on-year EBITDA improvement

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EBITDA (USDm) and margin (%), Quarterly EBITDA (USDm) and margin (%), Last 12 months

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Capex development

Capex (USDm)

• High capex of USD 4.0 million in Q3
• Continuing to invest in additional test capacity to finalize end-products quickly when we receive wafers
• Expecting overall capex intensity in 2021 at the same level as 2020, at around 4% of revenue

Continued strong cash position

Cash position and Cash Flow Q3 2021 (USDm)

Operating cash flow of USD 25.5m in Q3 Declining net working capital due to reduction of accounts receivable

NWC/Revenue LTM down to 19.0% from 19.3%, at the end of Q2 2021

Continued disciplined cash strategy

Solid cash balance at ~2x last 12 months R&D-spend

Summary and Outlook Svenn-Tore Larsen, CEO

Expect solid Q4 despite supply challenges

Q4 2021 guidance

Revenue	Gross margin
USDm 150-170	~51%-53%
+18% to +34% +1% to +14% y-o-y q-o-q

• Guidance reflecting indicated wafer allocations and price adjustments to reflect supply chain cost inflation
• Continued focus on customer support and balancing Tier-1 and broad market demand for products

Solid platform for continued strong growth

• Stronger growth than expected, with significant pent-up demand in backlog
• Pulling our USD 1bn target one year closer, to 2023
• Committed wafer supplies covering the revenue target

Revenue

High financial ambitions

• USD 1bn revenue target in 2023
• Aiming to more than double revenue in 2023-2026
  • Continued strong growth in shortrange
  • Accelerating traction in cIoT
  • Early traction in Wi-Fi
  • Gradually increasing revenue contribution from power management and other adjacent products and technologies

Capital Markets Day October 21, 2021

Welcome to our presentation today at 3:30 PM CEST