Nordic Semiconductor

Investor Presentation • Jul 11, 2023

Quarterly Presentation Q2 2023

July 11, 2023

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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 Q2 results released on July 11, 2023. 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.

Solid revenue in challenging market

Q2 2023:

• § Revenue of USD 154m (-23% y/y, +6% q/q)
• § Bluetooth USD 143m (-15% y/y, +9% q/q)
• § Gross margin 53% and EBITDA margin of 18%

Outlook:

• § Guiding for revenue of USD 145-165 million and gross margin of >52% in Q3
• § Clear growth opportunities but cautious customers
• § Low visibility and wide range of outcomes beyond the current quarter

Quarterly revenue development (USDm)

Tier-1s revenue share continue to increase

Bluetooth revenue composition (USDm)

§ Top-10 accounted for ~50% of Bluetooth revenue LTM

Steady and high certification market share Significantly increasing value per design

*Source: DNB Markets/FCC 5

New customer product launches in Q2

OPUM Technologies Digital Knee® nRF52840	Casio Sport Watch nRF52833	Rulo Industrial connectivity solution nRF9160	7Sense Irrigation Sensor nRF9160	Innomar Ocean Tech Smart Buoy nRF9160

Cellular IoT

Cellular IoT revenue last 12 months (USDm)

• § Solid and healthy inflow of projects into pipeline, no signs of slowdown in design activity
• § Good conversion rate through the pipeline, large base of ~370 commercial projects
• § Lifetime value of designs is increasing
• § Still lumpy revenue development, depending on customer production and purchasing cycles

Launching significant uplift of cellular offering Full product + services solution from device to cloud

Saving our customers from dealing with today's fragmented cellular IoT supply chains

World's first devices supporting both cellular and DECT NR+

• § nRF9161 SiP, fully integrated for global certification and massive adoption
• § nRF9131 mini-SiP, a low-risk alternative to traditional high-volume chipset designs

Unique cellular feature uplift

• § Firmware stack uplift on GNSS, large power savings for roaming devices, and more
• § Network evaluation and debug tools shaving months off development cycles

Fully optimized IoT devices added to nRF Cloud

• § Secure and reliable lifecycle management of devices
• § Highest deployment and protocol layer flexibility for a big and diverse IoT market

More devices…

Wide launch of the nPM1300

The most intelligent PMIC on the market

• 2xLoad Switch
• Fuel gauge
• External watchdog
• Hard reset IC
• § Nordic takes care of energy efficiency from battery to antenna
• § Unique power and system management features
• § Replacing up to eight circuits from competing solutions
• § nPM Power UP PC Software sets a new ease-of-use standard for PMICs
• § Design wins already secured, see products ramping towards the end of 2023

Nordic one of Europe's Climate Leaders 2023 Compiled by Financial Times and Statista

"I am honored to witness the recognition we have received for our dedication and initiatives toward promoting sustainable development"

Linda Pettersson,

SVP Legal & Compliance, Chair of Nordic Semiconductor ESG Committee

• § Nordic ranked number 26, making it the highest-ranked Norwegian company on the prestigious list of 500 companies
• § The methodology for this list was tightened to reflect on companies' environmental performance:
  • § reduction of core greenhouse gas emissions intensity over a five-year period
  • § transparency on disclosing emissions that arise elsewhere within a company's value chain

Financials Pål Elstad, CFO

Bluetooth driving the q-o-q upturn

Cellular IoT revenue (USDm) Quarterly

Revenue by markets

150

Group		Consumer		Industrial		Healthcare		Others
USDm		USDm		USDm		USDm		USDm
154.2		84.4		29.9		34.5		3.7
-23%	+6%	-33%	+21%	-38%	-34%	+106%	+47%	-52%	-33%
y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q

Revenue for the individual markets excludes ASICs and consulting revenue

70%

Gross margin

• § Stable and solid q-o-q margin development
• § Expecting gross margin >52% for Q3 2023
• § Reiterating long-term ambition to maintain gross margin >50%

Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023

Operating model performance Q2 2023

Gross margin 53.0%		Q2 2023	Q2 2022	Δ
R&D short-range 12.3%	Revenue	USD 154.2m	USD 200.2m	-23.0%	Demand slowdown in 2023
	Gross margin	53.0% USD 81.7m	55.4% USD 110.8m	-2.4pp	Stable adjusted for price increase effects in 2022
R&D cellular IoT 7.4% R&D Wi-Fi 2.6%	R&D short-range	12.3% USD 18.9m	12.2% USD 24.4m	+0.1pp
SG&A 12.3%	R&D cellular IoT	7.4% USD 11.5m	6.1% USD 12.3m	+1.3pp	Total R&D down from USD 39.8m to USD 34.4m § Partly reflects start of capitalization of nRF54 § Up from 19.9% to 22.3% of revenue §
	R&D Wi-Fi	2.6% USD 4.0m	1.6% USD 3.2m	+1.0pp	Continued favourable y-o-y effect of fx developments §
EBITDA 18.6%	SG&A	12.3% USD 18.9m	9.5% USD 19.1m	+2.8pp	Cost ratio up mainly due to lower revenue
	EBITDA	18.5% USD 28.5m	25.9% USD 51.9m	-7.4pp	Decline mainly due to lower revenue

Balancing investments and cost awareness

Flat cash costs vs. Q2'22

Salary +2.1%:

• § Employees increased by 17% y-o-y to 1,520
• § Currency reduced payroll cost in Q2'23 by USD ~2m compared to Q2'22 rates

Continuing work to adjust cost base to protect margins

Cash OPEX* (USDm)

Other Opex Salary

Capex intensity remains low

Capex (USDm)

• § Capex of USD 4.8 million in Q2
• § Overall capex intensity 3.7 % LTM

Strong cash position

Cash position and Cash Flow Q2 2023 (USDm)

• § Cash flow from operations adjusted for capitalized development expenses of USD 25 million
• § q-o-q decrease of NWC
  • § NWC/Revenue LTM of 29.0%
• § Other items mainly impacted by increased refund liabilities

Summary and Outlook Svenn-Tore Larsen, CEO

Expecting Q3 revenue in line with Q2

Q3 2023 guidance

Revenue	Gross margin
USDm 145-165m	>52%
-28% to -18% -6% to +7% y-o-y q-o-q

• § Stable q-o-q revenue development expected from Q2 to Q3
• § Clear growth opportunities but cautious customers
• § Low visibility and wide range of outcomes for revenue beyond the current quarter