Nordic Semiconductor Asa · OSL:NOD
Nordic Semiconductor Asa — Q3 2023 Earnings Presentation
26 slides from Nordic Semiconductor Asa's earnings presentation, Oct 17, 2023
Slide 1: Quarterly Presentation Q3 2023
Quarterly Presentation Q3 2023 October 17, 2023
Slide 2: Disclaimer
© Nordic Semiconductor 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
Slide 3: Revenue decline in challenging market
© Nordic Semiconductor Revenue decline in challenging market Quarterly revenue development (USDm) Q3 2023: 202 191 Revenue of USD 135m (-33% y/y, -12% q/q) Bluetooth USD 120m (-33% y/y, -16% q/q) 154 145 135 Gross margin 50% and EBITDA margin of 10% Outlook: Guiding for revenue of USD 110-13
Slide 4: Managing a sharp cyclical downturn
© Nordic Semiconductor Managing a sharp cyclical downturn Revenue development, last 12 months (USDm)* 1,000 Sharper and 900 800 more prolonged 700 downturn than 600 we had 500 anticipated 400 Taking action to 300 200 lower cost base 100 and reallocate 0 Q4 Q4 Q4 Q4 Q4 resources 2019 2020 2021 20
Slide 5: Protecting our unique position
© Nordic Semiconductor Protecting our unique position Maintaining a unique technology platform with Bluetooth, Wi-Fi and Cellular IoT Leading ultra-low-power Reallocating resources from longer-term projects to wireless technologies projects generating revenue and profits in the near- to Broa
Slide 6: Tier-1s revenue share continue to increase
© Nordic Semiconductor Tier-1s revenue share continue to increase Bluetooth revenue composition (USDm) 700 60% 63% 58% 600 54% Top-10 customers have 50% continued to grow in absolute 500 44% revenue and no. of designs 40% 400 38% 39% 38% 34% Increasing customer 300 29% concentration, with top-10
Slide 7: Steady and high certification market share
© Nordic Semiconductor Steady and high certification market share More than 5x as large as number 2 and 3 Bluetooth Low Energy end-product certifications, last 12 months Nordic 1500 end-product certifications 1200 Other Q3’23 43% 45% Qualcomm 113 designs 900 41% 42% 42% Infineon 42% mkt share 38% 39
Slide 8: New customer product launches in Q3
© Nordic Semiconductor New customer product launches in Q3 Velavu Hisense MINEW Adeunis Ultrahuman Asset tracking and Virtual Reality (VR) MG5 Outdoor Mobile Indoor environmental Smart ring environment monitoring headset and controllers LTE Gateway monitor device nRF52840 solution nRF52832 nRF52840
Slide 9: Cellular IoT
© Nordic Semiconductor Cellular IoT Cellular IoT revenue last 12 months (USDm) 26 Revenue decline reflecting market downturn and project push-outs 17 Revenue development will remain 14 dependent on the main customers’ production and purchasing cycles Base of ~390 projects 4 Q3 2020 Q3 2021 Q3
Slide 10: Nordic announcing nRF54L15
© Nordic Semiconductor Nordic announcing nRF54L15 Ultra-low power Bluetooth 5.4 SoC Built on the success and reputation of nRF52 Series: nRF54L15 Natural step forward for customers using nRF52 Security Advanced security, higher processing efficiency, 1.5 MB more memory and new peripherals Arm® 2
Slide 11: Cornerstones of the nRF54 Series
© Nordic Semiconductor Cornerstones of the nRF54 Series More security integrated Higher processing power lower power consumption ensuring its readiness for the next generation of IoT 22nm Smallest and most modern 4th generation Nordic radio process node for connectivity in IoT equipped to support fu
Slide 12: World leading efficiency and performance
© Nordic Semiconductor World leading efficiency and performance nRF54H - Driving the next level of IoT First round of sampling was successful Sampled 50 customers YTD – target 100 5.4 LE Audio mesh customer sampled by end 2023 Good feedback from lead customers - on track to realize initial reven
Slide 13: Nordic raising the bar once again
© Nordic Semiconductor Nordic raising the bar once again nRF54 – maintaining our market leading performance nRF54H Series Revolutionary multiprotocol SoCs For new complex IoT products Requirements nRF54L Series Next-level multiprotocol SoCs Logical successor to the nRF52 13 SoC Series 13
Slide 14: Nordic investing into open-source RISC-V
© Nordic Semiconductor Nordic investing into open-source RISC-V Establishing a new company* together with other major semiconductor players: Nordic Semiconductor, NXP, Qualcomm, Bosch, and Infineon Aiming to accelerate the commercialization of future products based on the open- source RISC-V a
Slide 15: Nordic acquires AI/ML tech IP and team
© Nordic Semiconductor Nordic acquires AI/ML tech IP and team Harnessing the power of AI to transform our position in the IOT market Bolt-on acquisition of high strategic significance Buying the IP portfolio and employing small core team in San Diego Always-on AI/ML accelerator – a key differe
Slide 16: Financials
Financials Pål Elstad, CFO
Slide 17: Bluetooth driving the sequential drop in Q3
© Nordic Semiconductor Bluetooth driving the sequential drop in Q3 Bluetooth revenue (USDm) Proprietary revenue (USDm) Cellular IoT revenue (USDm) Quarterly Quarterly Quarterly 200 179 168 172 150 150 143 50 50 131 120 40 40 100 30 26 30 25 20 20 50 13 12 10 9 10 8 6 10 7 5 5 5 4 3 0 0 0 Q1 Q2 Q3 Q4
Slide 18: Revenue by markets
© Nordic Semiconductor Revenue by markets Group Consumer Industrial Healthcare Others USDm USDm USDm USDm USDm 135.0 81.0 23.7 26.5 3.3 -33% -12% -36% -4% -54% -21% +84% -23% -63% -11% 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 150 126 Others 2% 125 109 100 Healthcare 84 81 20% 70 7
Slide 19: Gross margin
© Nordic Semiconductor Gross margin 70% 59.7% 60% 57.3% Customer and product mix leading 55.4% 52.7% 53.3% 53.0% to lower margin q-o-q 50.5% 50% Expecting gross margin around 50% for Q4 2023 40% Reiterating long-term ambition to maintain gross margin >50% 30% 19
Slide 20: Operating model performance Q3 2023
© Nordic Semiconductor Operating model performance Q3 2023 Gross margin 50.5% Q3 2023 Q3 2022 Δ USD USD Demand reduction in cyclical downturn Revenue -33.2% 135.0m 202.1m through 2023 R&D short-range 15.6% 50.5% 57.3% Gross margin -6.8pp Change in customer and product mix USD 68.2m USD 115.7m R&D 15
Slide 21: Balancing investments and cost awareness
© Nordic Semiconductor Balancing investments and cost awareness Cash OPEX* (USDm) Flat salary cash costs y-o-y and q-o-q Employees increased by 11% y-o-y to 1,530, 45 42 38 38 flat development q-o-q 38 Reduced variable pay accruals in Q3 2023 Continuing work to adjust cost base to protect margin
Slide 22: Capex intensity remains low
© Nordic Semiconductor Capex intensity remains low Capex (USDm) 10 8 Capex of USD 2.0m in Q3 6 Postponed some investments to Q4, 4.4 % 4 3.6 % 3.8 % and maintaining focus on spending 3.1 % reduction 2 Overall capex intensity 3.3 % LTM 1.5% 0 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Capex Capex/Re
Slide 23: Continued disciplined cash strategy
© Nordic Semiconductor Continued disciplined cash strategy Cash position and Cash Flow Q3 2023 (USDm) Strategic inventory increase of USD 10m in the quarter NWC/Revenue LTM of 37% Other items mainly impacted by decreased other short-term liabilities * EBITDA Adjusted for Capitalized Developmen
Slide 24: Summary and Outlook
Summary and Outlook Svenn-Tore Larsen, CEO
Slide 25: Continued challenging market
© Nordic Semiconductor Continued challenging market Sequential revenue decline and flat gross Q4 2023 guidance margin expected from Q3 to Q4 Revenue Gross margin Continued low visibility in the current cyclical downturn USDm 110-130m ~50% Taking action to reduce cost and reallocate R&D resourc
Slide 26: aaa
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