Nordic Semiconductor — Investor Presentation 2024

Apr 24, 2024

Quarterly Presentation Q1 2024 April 24, 2024

© Nordic Semiconductor

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This presentation was prepared in connection with the Q1 results released on April 24, 2024. 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.

Today's presenters

Vegard Wollan CEO

Pål Elstad

CFO

Q1 – Revenue as guided

Q1 2024:

• § Revenue of USD 74 million
• § Actively adjusted inventory in the distribution channel, significantly higher sell-through from distributors
• § Gross margin of 48%
• § EBITDA of USD -23 million

Q2 2024 guidance:

• § Revenue of USD 115-135 million
• § Q2 revenue supported by improved demand and seasonality
• § Gross margin ~50%

Quarterly revenue development (USDm)

Reorganizing with four new business units Short-range, Long-range, Wi-Fi & Power Management (PMIC)

Short-range Øyvind Strøm EVP Short-range

Long-range Øyvind Birkenes EVP Long-range

Wi-Fi Joakim Ferm SVP Wi-Fi

PMIC Kjetil Holstad EVP Strategy and Product Management

• § Strengthening executive management team and improving accountability and autonomy
• § Sharpening the focus or products and development roadmaps
• § Customer centric and agile approach to improve market responsiveness and shorten time-to-market
• § Seeking to improve return on our R&D investments and our world-class engineering teams

Top-10 and broad market split stabilizing

Bluetooth revenue composition (USDm)

§ Strong customer relationships with tier-1s, working to regain traction in the broad market

Nordic gaining design win market share Outpacing the total market

*Source: DNB Markets/FCC

New customer product launches in Q1 2024

Asset tracking device uses Nordic cIoT

Bringing end-to-end visibility across the pharmaceutical supply chain

• § The Controlant Saga Card ensure that medication and vaccines reach patients at the right time and place and with the right quality
• § In pilot phase with early adopters for the Saga Card
• § Nordic in collaboration with Controlant and Deutsche Telekom

Mobile World Congress 2024 in Barcelona

Nordic expands cellular IoT offering Strengthening our end-to-end solution with nRF9151 SiP

• § Reducing both power consumption and size
• § Specifically designed for cellular IoT and DECT NR+ applications
• § Confirms our dedication to providing cutting-edge long-range IoT solutions and our continuous drive to stay ahead

Nordic collaboration with Google

Support for Google's 'Find My Device' into the nRF Connect SDK

• § nRF Connect SDK allows third-party device makers to build products using Google's "Find My Device" network for the Android ecosystem
• § Customers have already built commercial products based on the nRF52 Series devices
  • § Chipolo tracker
  • § Pebblebee tracker
• § Adding to already established support for "Apple Find My"

Financials Pål Elstad, CFO

© Nordic Semiconductor

Revenue by technology

Inventory adjustment across all markets

Group		Consumer		Industrial		Healthcare		Others
USDm		USDm		USDm		USDm		USDm
74.5		50.8		16.7		3.6		2.5
-49%	-31%	-27%	-25%	-63%	-9%	-85%	-81%	-55%	+1%
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

100

70%

Gross margin

• § Main drivers in Q1
  • § Changes in customer mix
  • § Effects of inventory management
  • § Negative effect of write-downs and overhead costs being allocated to low revenue base
• § Expecting gross margin around 50% for Q2 2024
• § Reiterating long-term ambition to maintain gross margin >50%

Operating model performance Q1 2024

Gross margin 48.0%		Q1 2024	Q1 2023	Δ
	Revenue	USD 74.5m	USD 145.4m	-48.8%	Revenue as guided
R&D short-range 31.8%	Gross margin	48.0% USD 35.8m	53.3% USD 77.6m	-5.3pp	Customer mix, inventory management, and lower revenue base to allocate overhead/write-downs
R&D cellular IoT 15.7%	R&D short-range	31.8% USD 23.7m	17.2% USD 25.0m	+14.6pp
R&D Wi-Fi 3.6%	R&D cellular IoT	15.7% USD 11.7m	9.4% USD 13.7m	+16.3pp	Total R&D down from USD 43.2m to USD 39.3m
SG&A 25.9%	R&D Wi-Fi	5.4% USD 4.0m	3.1% USD 4.5m	+2.3pp
	SG&A	25.9% USD 19.3m	13.6% USD 19.8m	+12.3pp	Total spending down from last year
EBITDA -30.6%	EBITDA	-30.6% USD -22.9m	10.1% USD 14.6m	-22.2pp	Weak results reflects lower revenue and gross margin

16

Balancing investments and cost awareness

§ Savings initiatives reducing workforce y-o-y by 7% in addition to 2023 salary freeze

§ Continuing to focus on spending adjustments to improve margins

Cash OPEX* (USDm)

Other Opex Salary

Underlying capex intensity remains low

§ Capex of USD 1.0m in Q1, which will normalize in coming quarters

Cash spending focus

Cash position and Cash Flow Q1 2024 (USDm)

• § Low capex spending while scrutinizing all spending areas
• § NWC/Revenue LTM of 50%
• § Bond interest payments started in Q1
• § Other items mainly impacted by increased other short-term liabilities, assets and public duties

Summary and Outlook Vegard Wollan, CEO

© Nordic Semiconductor

Expecting return to sequential growth

Q2 2024 guidance

Revenue	Gross margin
USDm 115-135m	~50%
-25% to -12% +54% to +81% y-o-y q-o-q

• § Q2 revenue supported by improved demand and seasonality
• § Gross margin expected to rebound to the 50% level

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