Nordic Semiconductor

Investor Presentation • Apr 28, 2022

Quarterly Presentation Q1 2022

Disclaimer

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Nordic Semiconductor ASA (The Company). The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with The Company's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation 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 The Company. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

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.

The Company is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither The Company nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared in connection with the Q1 results released on April 28, 2022. 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.

Highlights

• Revenue of USD 183 million (+28%)
  • Severely impacted by wafer supply
• Gross margin 60%
• EBITDA of USD 55 million (+120%),
• Expect solid Q2 despite continued supply challenges
  • Revenue USD 190-210 million
  • Gross margin >54%
• Long-term outlook stands firm

Revenue, gross profit and EBITDA (USDm)

Seeking to align backlog to capacity

Backlog (USDm)

• Reduction in order backlog does not reflect demand
• Order backlog >> delivery capabilities given the current supply chain constraints
• Actively working with end-customers and distributors to adjust order volumes to better match delivery capabilities
• Further backlog adjustments required until the wafer supply situation is resolved

Order Backlog under constrained supply

• In a normal situation with unconstrained supplies, order backlog was a leading indicator for revenue in the following two quarters
• A combination of high demand and constrained supply has inflated and extended the backlog the last 18 months
• Order backlog is currently not a revenue or demand indicator – being retained as an alternative performance measure for consistency

Order backlog/quarterly revenue

Low inventories throughout the value chain

• No signs of inventory build-up
• Low inventories of Nordic products at
  • Nordic
  • Distributors
  • End-customers

Revenue by end-user market

Driven by product allocations

• Consumer accounts for two-thirds of revenue
• Highest growth for Industrial last 3 years
• High upside in Healthcare

Short-range revenue by end-user markets, last 12 months (USDm)

Steady and high certification market share Significantly increasing value per design

⁸ *Source: DNB Markets/FCC

New product launches in Q1

Level Home Smart Locks nRF52840	eBuyNow "Moto Watch 100" nRF5340	Bmmpr "Bmmpr x Assets" nRF9160/nRF52833	Tributech Solutions OEM module nRF9160	Lobaro Wireless M-Bus Gateway nRF9160
An Apple HomeKit®- and Amazon Sidewalk compatible smart lock that can be retrofitted onto almost any existing door	Smartwatch with wide range of features and processor-intensive functionality	Anti-theft, anti-damage, high-value asset protection hardware platform	Simplify and accelerate the development of scalable and application-specific IoT devices with LTE-M or NB-IoT wireless connectivity	Smart utility meter gateway - operates perpetually on harvested solar energy alone

cIoT set to benefit from new partners Accelerating our customers' time to market

cIoT revenue last 12 months (USDm)

Making cellular IoT easy Simplifying IoT Standard Essential Patent licensing (SEP)

• Nokia and Nordic with pioneering new approach to licensing use of cellular IoT SEPs
• Adds transparency and predictability early in the design process
• Licenses will be available to Nordic's customers at the end-device level

Successful MWC 2022 Innovative demonstrations in Barcelona

• Nordic LE Audio applications based on the nRF5340 advanced wireless SoC and a Cirrus Logic® TWS ADC/DAC
• Nordic's LE Audio technology was chosen by Sennheiser for audio broadcasting
• Thingy:91s tracked around the world using the various features of the nRF Cloud Location Services

Financials Pål Elstad, CFO

Revenue growth of 28% y-o-y

Quarterly revenue (USDm)

• Y-o-y growth across all technologies, although capped by wafer supply
  • Bluetooth +26 % to USD 150 million
  • Proprietary +20 % to USD 25 million
  • Cellular IoT +438 % to USD 7 million
• +7% increase from Q4, driven by price increase

Revenue per market

Group		Consumer		Industrial		Healthcare		Others
USDm 183.1		USDm 122.2		USDm 39.8		USDm 14.2		USDm 5.9
+28% y-o-y	+7% q-o-q	+28% y-o-y	+6% q-o-q	+18% y-o-y	+3% q-o-q	+54% y-o-y	+39% q-o-q	+52% y-o-y	+10% q-o-q

• New market classifications now includes cellular IoT Revenue
• Growth across all end-user markets
• Growth patterns reflect product allocations more than underlying demand

Breakdown by end-user markets

Aligned with customers end-products and our sales structure

Markets	Verticals
Consumer	 Mobile/PC HID   Wearables   Smart Home   Gaming 	VR/AR Consumer Asset Tracking Consumer Health Audio	 Toys  CE Remotes  Wireless Charging  Other
Healthcare	 Drug Delivery   Disease Monitoring 	Hearing Aids Other
Industrial	 Asset Tracking   Professional Lighting   Metering   Building Automation   Modules 	Retail Transportation Payment / ID Tools and Machinery Agriculture	 Beacons  Maker and Education  Automotive  Other
Other	 Catalog sales  Undefined

Continued strong gross margin

Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022

• Full-quarter effect of price increases
• Significant effect of changes in product and customer mix
• High margins reflects product allocations under constrained supply

Operating model performance Q1 2022

Gross margin 59.7%		Q1 2022	Q1 2021	Δ
R&D short-range 11.8%	Revenue	USD 183.1m	USD 143.2m	+27.8%	Volume, price and product mix
R&D cellular IoT 6.4% R&D Wi-Fi 2.1%	Gross margin	59.7% USD 109.3m	50.2% USD 71.9m	+9.5pp	Price adjustments and signifcant product and customer mix effects
SG&A 9.4%	R&D short-range	11.8% USD 21.7m	14.2% USD 20.3m	-2.4pp	Total R&D up from USD 32.3m to 37.3m,
	R&D cellular IoT	6.4% USD 11.8m	6.9% USD 9.8m	-0.5pp	but down from 22.6% to 20.4% - continuing to invest despite current
	R&D Wi-Fi	2.1% USD 3.9m	1.5% USD 2.1.	+0.6pp	revenue wafer supply constraints
EBITDA 29.9%	SG&A	9.4% USD 17.3m	10.3% USD 14.7m	-0.9pp	Operational leverage
	EBITDA	29.9% USD 54.7m	17.4% USD 24.9m	+12.5pp	Record high EBITDA margin

Investing in growth

Cash cost increase mainly due to increased number of employees

Salary:

• Number of employees increased by 22 % to 1,257 over the past last 12 months
• Reversal of tax accruals related to equity compensation and reversal of bonus accruals from 2021

Other OPEX:

• Varying with pace of product introductions
• High external consultant cost

Cash OPEX* (USDm)

Other Opex Salary

Capex development

Capex (USDm)

• Low capex of USD 4 million in Q1
• Overall capex intensity expected at ~4% of revenue in 2022, on par with 2021

Continued strong cash position

Cash position and Cash Flow Q1 2022 (USDm)

• Operating cash flow of USD 32.0m in Q1
• Increasing net working capital mainly due to accounts receivables
  • NWC/Revenue LTM up to 19.9% from 17.8% at YE 2021 – still at low level
• Continued disciplined cash strategy
• Solid cash balance at 2.1x last 12 months R&D-spend

Summary and Outlook Svenn-Tore Larsen, CEO

Expect solid Q2 despite supply challenges

Q2 2022 guidance

Revenue	Gross margin
USDm 190-210	>54%
+29% to +42% +4% to +15% y-o-y q-o-q

• Revenue guidance reflects current wafer allocations for Q2 2022
• Higher wafer supply expected in the second half of the year
• cIoT affected by component shortage also in Q2 – issue expected to be resolved in H2 2022

Expanding capacity through multi-sourcing Delivering features that IoT requires in the future

• Developing new technology platform across short-range, Wi-Fi and cellular IoT
  • R&D innovation with high customer involvement
  • Multi-year project with large R&D teams on multiple sites
  • Leveraging state-of-the-art development ecosystem
• Leading process technologies optimized for IoT
  • Expanding capacity through multi-sourcing
  • Disruptive performance
• First short-range product ramping H2 2023

The outlook stands firm

Revenue (USDm)

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