Quarterly Presentation Q4 2021
February 3, 2022
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This presentation was prepared in connection with the Q4 results released on February 3, 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.
Revenue growth and margin improvement Volume growth remains capped by wafer supply
| Revenue |
|
Gross margin |
|
|
USDm
171.2 |
|
58.9 % |
|
|
+35%
y-o-y |
+15%
q-o-q |
+6.2%p
y-o-y |
+5.8%p
q-o-q |
|
- Significant revenue increase
- Price increase from December 1, including distributor inventories
- Bluetooth revenue USD 136.0m (+39%)
- Proprietary revenue USD 27.2m (+7%)
- Cellular IoT revenue USD 5.9m (+121%)
- Gross margin of 58.9%
- Underlying gross margin of ~53%
Record high order backlog
Backlog (USDm)
- Order backlog more than tripled in 2021
- Increase from Q3 reflects both volume increase and price adjustments
- Backlog stretches into 2023 timing of deliveries dependent on wafer supply
- Focus on mitigating customer challenges
Growing across the whole customer base
Bluetooth revenue composition (USDm)
- Growing customer base and increasing revenue per customer
- Balancing allocation across tier-1 customers and the broad market
Growth across all verticals Driven by both consumers and industrials
- Consumer electronics remains the largest area
- Healthcare being driven by new applications
- Ongoing disruption in several applications:
- Logistics/asset tracking
- Smart home
- Smart lighting
- Healthcare
++
New product launches in Q4
Steady and high certification market share Significantly increasing value per design
*Source: DNB Markets/FCC
Developer kit shipments continue to grow
Total kit shipments +6% in 2021
- Sold more than 100k kits in 2021, adding to a high installed base of reusable kits
- Close to 25% of kits from recently launched products
- nRF52833 and nRF5340
- nPM1100
- Power Profiler Kit II
Successful CES 2022
Nordic demonstrated innovative demos and hosted live webcasts on:
- LE Audio using nRF5340 SoC - the next Evolution of wireless audio
- Latest trends within cellular IoT and location services
- Matter working with
- Nest Hub
- Leedarson Smart Bulb
- Yale Smart Door Lock
- Eve Energy smart plug/power meter
- Nordic Thingy:53
Nordic cellular IoT - global coverage
Regulatory certifications overview for nRF9160
- Certified with Vivo (Telefônica Brasil) in Q4 2021
- Achieved a broad regulatory and carrier certification coverage globally
Flexible and scalable cIoT business model
Nordic Thingy:91 cellular IoT prototyping platform
- Nordic reaching out to the broad market
- cIoT offerings have previously not been suitable for this segment
- Was built for cell phones and 2G/3G industrial applications
- Supported few customers 1 to 1 support
- Nordic has built a scalable and flexible cIoT go-to-market strategy
- Able to support and drive innovative customers on a large scale
- Making cIoT-design easy
- Solution provided: application MCU + memory + connectivity
- Open-source SW and HW design examples
- Tech support through Nordic DevZone and distributors
Expanding the Nordic Partner Program Accelerating our cellular IoT customers' time to revenue
- Edge Impulse's ease-of-use development tools for cIoT embedded machine learning (ML)
- The A1 Digital IoT Center is a turnkey platform that provides developers with all they require to power their cIoT product from device-to-Cloud
- Polte CoreRes is a Massive IoT location service targeted to developers of asset tracking solutions using Nordic's nRF9160 SiP
Focusing on cIoT customers in growth verticals
- Asset Tracking
- Industrial & consumer
- Retail/sensors/metering
- Industrial
- Smart home
- Consumer
- Healthcare
- Modules
Enabling the broad cIoT market with disruptive and 'easy to design' solutions
cIoT revenue last 12 months (USDm)
Financials Pål Elstad, CFO
Revenue growth of 35% Y-o-Y
Quarterly revenue (USDm)
- Y-o-Y growth across all technologies, although capped by wafer supply
- Bluetooth +39% to USD 136.0 million
- Proprietary +7% to USD 27.2 million
- Cellular IoT +121% to USD 5.9 million
- +15% increase from Q3, driven by price, volume and product mix
Revenue per market
Consumer
Group
Electronics |
|
Building/
Wearables
Retail |
|
Healthcare |
Others |
| USDm |
USDm |
USDm |
USDm |
USDm |
USDm |
| 171.2 |
61.2 |
17.6 |
47.5 |
17.3 |
19.5 |
| +34.7% |
+14.0% |
-2.5% |
+76.0% |
+63.3% |
+44.2% |
| +15.3% |
+5.6% |
+16.2% |
+20.4% |
+40.1% |
+11.0% |
| y-o-y |
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 |
q-o-q |
- Year-on-year growth across most end-user markets
- Quarter-on-quarter changes reflect product allocations between segment
- Preparing change in markets reporting from 2022
Continued strong gross margin
- Underlying gross margin of ~53%
- Continued strong, despite increased costs from suppliers throughout 2021
- Driven by operations and product mix
- Effects of price increase on the reported gross margin
- Price increase included distributors' existing inventory
- Full effect of wafer cost increase in Q1 2022
Operating model performance Q4 2021
Gross margin
58.9% |
|
Q4
2021 |
Q4 2020 |
|
|
R&D
short-range
13.8% |
Revenue |
USD 171.2m |
USD 127.1m |
+34.7% |
Volume growth + price effect in Q4 2021 |
R&D cellular IoT
7.3% |
Gross
margin |
58.9%
USD 100.8m |
52.7%
USD 67.0m |
+6.2pp |
Roughly flat adj. For price effects |
R&D Wi-Fi
2.2% |
R&D short-range |
13.8%
USD 23.7m |
13.7%
USD 17.4m |
+0.1pp |
|
SG&A
10.8% |
R&D cellular
IoT |
7.3%
USD 12.5m |
7.9%
USD 10.1m |
-0.7pp |
Total R&D up from 21.6% to 23.6%
-
continuing to invest despite current
revenue constraints due to wafer supply |
|
R&D Wi-Fi |
2.2%
USD 3.8m |
- |
+2.2pp |
|
EBITDA
24.7% |
SG&A |
10.8%
USD 18.5m |
10.0%
USD 12.7m |
+0.8pp |
High growth in number of employees |
|
EBITDA |
24.7%
USD 42.4m |
21.1%
USD 26.9m |
+3.6pp |
Strong EBITDA margin |
Investing in growth
Cash cost increase mainly due to increased number of employees, acquisition and FX
Salary:
- Number of employees increased by 22 % to 1 197 over the past last 12 months
- Wi-Fi acquisition added 81 people at YE 2020
- Increased performance pay
Other OPEX:
- Varying with pace of product introductions
- High external consultant cost
Cash OPEX* (USDm)
Other Opex Salary
Capex development
Capex (USDm)
- Capex of USD 6 million in Q4
- Continuing to invest in additional test capacity to finalize end-products quickly when we receive wafers
- Overall capex intensity of 4% of revenue in 2021, roughly on par with 2020
- 2022 capex in-line with 2021
Continued strong cash position
Cash position and Cash Flow Q4 2021 (USDm)
- Operating cash flow of USD 42.5m in Q4
- Increasing net working capital due to accounts receivables
- NWC/Revenue LTM down to 17.8% from 19.0%, at the end of Q3 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 Q1 despite supply challenges
Q1 2022 guidance
| Revenue |
Gross margin |
|
USDm
170-190 |
53-54% |
|
+19% to +33%
-1% to +11%
y-o-y
q-o-q |
|
|
- Revenue guidance reflects current wafer allocations for Q1 2022
- Higher wafer supply expected in the remaining quarters of the year
Solid platform for continued strong growth
Capacity support plan for 2022 will put Nordic on track for its 2023 revenue target of USD 1 billion
Extending the lead on connectivity Delivering features that IoT requires in the future
- Developing new cross technology platform
- Short-range, Wi-Fi and Cellular IoT
- R&D innovation with high customer involvement
- Multi-year project with large R&D teams over multiple sites
- Leveraging state-of-the-art development ecosystem
- Leading process technologies optimized for IoT
- Enabling stable supply and disruptive performance
- First short-range product ramping H2 2023
High financial ambitions
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