Nordic Semiconductor Asa · OSL:NOD
Nordic Semiconductor Asa — Q2 2016 Earnings Presentation
28 slides from Nordic Semiconductor Asa's earnings presentation, 2016
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Slide 2: Svenn-Tore Larsen, CEO
Svenn-Tore Larsen, CEO
Slide 3: Headlines
Headlines >» Q2 revenue at 52.7, flat year over year and up 32% quarter over quarter >» Bluetooth Smart revenue at MUSD 27.2, derived from a record high number of customers » Strong proprietary sales with increasing revenue from new designs outside PC Accessories » Accelerating design win ratio with
Slide 4: Pal Elstad, CFO
Pal Elstad, CFO
Slide 5: Q2 2016 Financial Highlights
Q2 2016 Financial Highlights EBIT MUSD Net Cashflow from operating activities MUSD > Revenue at MUSD 52.7 compared to MUSD 52.6 in Q2 2015 > Gross Margin at 47.2% > EBIT of MUSD 4.7 > Cash Flow from operating activities at MUSD -10.0 Revenue MUSD. Gross Margin 60 60% 12 50 50% 40 —y- | 40% +— — + 30
Slide 6: Last Months BT Smart Revenues and Total Order Backlog
Last 12 Months BT Smart Revenues and Total Order Backlog 100 80 60 40 20 >» = _f al Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Gea_LTM Backlog
Slide 7: Established Markets
Established Markets Usp 000s Consumer Electronics 30000 28 954 26 255 25000 20000 15000 10000 5000 O mQ22015 mQ12016 mQ2 2016 > Consumer Electronics revenues down 9.3% from Q2 2015, seasonal increase of 30.8% compared to last quarter > Underlying Y-o-Y growth adjusted for large gaming project > Blue
Slide 8: Emerging Markets
Emerging Markets USD 00's Building/Retail 6128 6000 4000 2000 ™Q2 2015 mQI2016 mQ2 2016 > Building/Retail revenues up 61.9% from Q2 2015 > Compared to last quarter revenues are up 25.3% > Large RF ID customer back in volumes with new designs > Payment solutions is a growing market USD 0900's Healthc
Slide 9: Other Markets
Other Markets USD 000's Others 4000 3631 3000 2000 1000 ™Q2 2015 mQi2016 mQ2 2016 > New market with large growth from 2015 (+500%) > Consist mainly of module OEM's and direct sales where no end customer is identified > 70+ modules using Nordic products USD 000's ASIC’s/ Consulting 3000 2533 2500 200
Slide 10: Gross Margin
Gross Margin Gross margins affected by rapid ramp-up of nRF52 family 60% 55% 45% 40% f° ~) ‘ RS Kee ood ak Ak ak S WW WW \W Ww \ re hes Oo We Oo oe Ww roe hgh Yh oh oh IAIN aN & ved aot Serew>o Nordic had a GM of 47.2% in Q2 2016 Reduction compared to last year mainly due to product mix and lower yi
Slide 11: Headcount
Headcount 4% Increase during Q2 and 27.5% last twelve months S00 477 496 454 430 389 400 = = $00 257 218 — , 239 oe 227 264 254 234 ae 200 —— 209 i— 7a 196 157 168 183 100 — ° : | = — —_ = = = Qi 2014 2 2014 Q3 2014 4 2014 Qi 2015 Q2 2015 3 2015 4 2015 Ql 2016 2 2016 =Adm_ mSales R&D Norway #®R&D Fi
Slide 12: Operating Expenses
Operating Expenses > Finland OPEX at MUSD 4.0 - Up from MUSD 3.5 in Q1 2016 > Capitalized R&D expenses in Q2 at MUSD 1.5 - expect less than MUSD 1 for per remaining quarters in 2016 USD '000 Q2 2016 Q1 2016 Q2 2015 Growth Y-o-Y Total Cash Operating Expenses , 19 248 18 481 15 846 21% excluding Depre
Slide 13: Operating Profit
Operating Profit Operational leverage short term offset by investments EBIT MUSD Reported as % of revenue Reported EBIT > Effects of company expansion lead reduced EBIT in Q2 2016 compared to Q2 2015 Adjusted EBIT > Adjusted EBIT excluding Finland in Q2 2016 down 36.4% from Q2 2015, this is a result
Slide 14: Q2 Cash Flow
Q? Cash Flow 7.446 | i _ 18672 38,955 | | rt | ” 23,626 — a 22016 EBITDA Taxes Paid Inventory Accounts Accounts Capex Capitalized Other Opening (1) Receivables Payable Development Balance Cost Cash flow Q2 2016 USD ('000) 2.2016 Closing Balance Seasonal negative cash flow from operations of MUSD -10
Slide 15: Svenn-Tore Larsen, CEO
Svenn-Tore Larsen, CEO
Slide 16: Proprietary Revenues 2014-2016
Proprietary Revenues 2014-2016 MUSD 30 25 20 BQV14 9Q2/14 =Q3/14 BQ4/14 BQI/IS 8Q2/15 =Q3/I5 8Q4/1I5 BQI/I6 mQ2/16 > Strong proprietary sales in Q2 2016. 30% of revenues came from outside PC Accessories.
Slide 17: Development Kit Sales
Development Kit Sales A leading indicator Sales of Nordic Kits 2011-2016 1H 2016 nRF 52 DK constitiutes 40% of sales 20000 18600 17452 FS 16101 15000 1862 10218 10000 7836 5823 = 5000 3415 fe [J = 2011 2012 2013 1H 2H 1H 2H 1H 2014 2014 2015 2015 2016
Slide 18: Bluetooth Smart Active Customers
Bluetooth Smart Active Customers Ne ae of > Definition of “Active” Customer: An end customer which has purchased 10.000 units or more during prior six months (i.e. a customer actively selling product to end customers or preparing a high volume prototype) Be o oo A)
Slide 19: Top Bluetooth Smart Customers Sales
PR “<n Q2 2016 op 10 Bluetooth Smart Customers Sales > Distribution of that the top 10 m 53% in Q2 nder ying reve
Slide 20: Maneul Lab's "The Card"
Maneul Lab's "The Card" About "The Card": > Replaces up to 200 cards with secure, all-in-one payment > Supported by Bluetooth low energy, NFC, embedded IC, dynamic magnetic stripe, and barcode Embedded with nRF51822 SoC: > nRF51822 provides wireless connectivity to both iOS- and Android-compatible s
Slide 21: Customer quotes on Nordic chips
Low energy and powerful CPU, with excellent floating point and DSP performance - capacity to manage multiple sensors - Quote by Zepp Labs Ease-of-use is one of our core strengths, and this makes the Nordic chip a perfect match for the Arduino Primo,” - quote by Arduino The nRF52832 SoC’s ARM process
Slide 22: Bluetooth 5.0 Release from BT SIG
Bluetooth 5.0 Release from BT SIG Significantly Improved Performance 2X speed and Full-house High troughput lower power coverage broadcast 2Mbps mode Long range mode & Advertisment extensions Data transfer / DFU higher output power Improved mesh Longer battery lifetime Smart Home / automation Smart
Slide 23: nRF91x
| NRFOI12x > Includes chipsets and software > LTE-M and NB-loT > 2018 - 2021 > Different solution for a different market > First nRF91 Series product > In development since early 2015 > Sampling lead customer H2 2017 > Broad availably and production 2018 23
Slide 24: Cellular IoT market opportunity
Cellular lol market opportunity ee The emergence of low Still in its infancy power cellular Ht: > Range, security and reliability > LTE-Cat 0, LTE-M, EC-GSM, NB-loT > Specialized market space > Power, size, range and cost > 500M+ connections in 2016 > Lower data throughput Low power fuelling growth
Slide 25: Cellular IoT taking Nordic to the next level
Cellular loT taking Nordic to the next level The third growth vehicle > Fast growing market space > Complementing short-range > Higher ASP Scale for our investments > Technology platforms > Organization > Overlap in customer base A unique position > A new era for cellular loT > Nordic’s low power DN
Slide 26: Business Outlook
Business Outlook > Increased number of Bluetooth Smart customers drives growth in diversified segments > Yield issues with NRF52 expected to be solved in 2H 2016 > Tier 1 customers started production in Q2 - will drive revenue growth > Nordic introduces guiding on revenue, as a broadened customer ba
Slide 27: Customer design wins with nRF51822 and nRF52832
> “sfty Sense employs Nordic’s nRF51822 System-on-Chip in their Bluetooth Smart and Wi-Fi powered smoke and motion detectors” “Ruuvi Innovations has selected Nordic's nRF52832 System-on-Chip in its open source beacon platform that conform to both the Apple iBeacon™ and Google Eddystone™ specificatio
Slide 28: Want to learn more about Nordic?
Want to learn more about Nordic? Sign up for «MyPage» on oo www.nordicsemi.com zy About us Products Applications. Support & Community _Investors__—_Password Q nRF51824 AEC-Q100 Qualified Bluetooth SoC niiyvye 28