Nordic Semiconductor Ord

to Nordic Semiconductor's Q1 2025 presentation. For the first part of this call, all participants are in the listen-only mode. Afterwards, there will be a question and answer session. To ask a question, please press 5 star on your telephone keypad. This call is being recorded. And I will now hand the call over to Stil Ytterdal. Please begin.

Thank you, Kjeld. And good morning, everyone. Please, as Kjeld said, this presentation is being recorded and will be accessible on the Nordic website in the investor relations section. Additional, for those of you who missed the release, you can find the earnings press release, quarterly report and presentation material also on our IR website. With me today are Vegard Volland, our CEO, Paul Elstad, our CFO. They will share details about our recent financial performance and updates on key business developments. Following the presentation, we will move on to the Q&A session. During this time, live questions can be submitted through the Q&A dial-in feature, For instruction on how to dial in, please refer to the earnings call invitation available under Stock Exchange Notice on our website. Please keep in mind that dial-in is required only if you like to ask questions. As a reminder, this presentation includes forward-looking statements that come with inherent risk and uncertainties. Actually, outcome may differ materially from those statements expressed or implied. We highly recommend reviewing our detailed Q1 quarterly report and the 2024 annual report for a deeper understanding of the risk and uncertainties that could impact our business operations. With that, I will now hand the floor over to our CEO, Vegard Volland.

Thank you, Stil, and good morning, everyone. My name is Vegard Volland, and I'm the CEO of Nordic, and with me, as always, our CFO, Paul Elstad. Let me go right into the main takeaways from the first quarter. Revenue amounted to $155 million in the first quarter in the upper half of our guiding range. This was more than a doubling compared to first quarter last year, where you will remember that we took active steps to reduce distributor inventory levels. In this year's first quarter, the underlying demand was healthy and revenue was additionally supported by particularly high demand from certain individual large customers. Gross margin came in at around 50% in line with our guidance for the quarter. Looking ahead, we are guiding for a revenue range of between $145 to $165 million for the second quarter, while acknowledging increased macro uncertainty in the current market, and we expect the gross margin to remain at around 50%. The graph on the right hand side on this slide shows our revenue development on a rolling 12 month basis over the last five years. And you can see the revenue recovery that started in the second quarter last year. We have been well positioned to capitalize from the gradual market strengthening through the second half of 2024, and this has continued into 2025. However, as you are all aware of, we have seen major changes in international trade policies that are potentially affecting the complex semiconductor value chains. Many of our customers and products rely on manufacturing and assembly in several different countries, based on many components that are also sourced from lots of different countries. This makes it hard to get a whole picture and form meaningful opinions about the potential effects of temporary and or permanent changes from tariffs on the value chain. What we can say is that we are continuing to work to develop an even more diversified and resilient supply chain. and we maintain close collaborations with our customers to help and support them as best as we can to mitigate the challenges that changes in trade policies might bring about. We are obviously also aware that these developments may have secondary or indirect effects on currencies, interest rates, consumer and business sentiment, and ultimately on consumer spending and investments. Looking at where we are today, we believe it's too early to conclude about any such potential effects, and the situation is continuously evolving. Let's focus on what we can do something about, which is to launch great products and support our customers in bringing new and exciting products to the market. As revenues are picking up on a rolling 12-month basis, we see solid improvement among both top 10 customers and in the broad market. As we no longer split between Bluetooth and proprietary technologies in our revenue reporting, we have also reworked this slide to cover all technologies. This only has a moderate effect of about one to two percentage points on the top 10's share of revenue if we look at the last five years. Revenue from the top 10 are now roughly back at the peak levels from 2022 on a rolling 12 months basis, as you can see on the slide, showing the strength of our key customer relationships. However, revenue from the broad market is still some 40% below peak levels, and we have made it a high priority to also regain traction in the broad market. As we said on our Capital Markets Day back in September last year, we see renewed growth in the broad market, building on the success of the NRF54 series and new product launches going forward, meaning that it will take some time before these customer successes are reflected in our revenue numbers. We remain the clear design leader in terms of Bluetooth low-energy end-product certifications, with 34% of the design certifications both in the first quarter and for the last 12 months. While this is somewhat lower than the 40% level we have seen historically, it is still around four times as many designs as the largest of our competitors and an improvement from the 26% we reported in the fourth quarter of 2024. As we have said before, our transition from the 52 and 53 series to the 54 series do create a bit of a timing gap for us. There are zero NRF54 in these numbers yet, but as we continue to see high design activity with many customers designing with our new NRF54 products, we expect this to gradually translate into more product certifications throughout 2025 and into 2026. I also want to remind that this is a simple count of certifications that doesn't differ between high and low volume products, meaning that you cannot translate this directly to value market shares. We are maintaining our strong relationship with high activity with our high volume customers, and we believe that we are maintaining a higher market share in terms of total Bluetooth low energy volumes and revenues. We continue to gain traction with our new NRF54 series product after the market introduction towards the end of last year. As I just mentioned, design activity is high among both existing and new customers. We have promised to launch a series of new product families on the NRF54 platform over the coming years and I would say that we are on track with this innovative roadmap that will bring unique products to the market, specifically targeting high growth market segments. And as we also have repeated on several occasions, we need to allow for customers to design in the NRF54 launch their products and ramp their production before we will see revenue. Meaning that we're going to see a limited effect of the NRF54 this year, but accelerating growth from 2026. Turning to our long-range business, Paul will show you that revenue is picking up on the back of the NRF 9151 launch in the second half of last year. And it's good to see progress towards the long-term goals that we set to scale up the long-range business to a profitable business over the years to come. One key new development in the first quarter this year is that we are adapting the 9151 to include non-terrestrial networks or satellite communications in addition to cellular networks. The hardware is there and we can enable this with only a software upgrade and we will start supporting customers in the second half of the year. We will be supporting both geostationary satellites and the low-orbit LEO networks, which are presenting increasingly attractive value propositions to customers seeking true global roaming capabilities. The main market opportunities we see within global asset tracking, logistics, as well as remote infrastructure tied to smart agriculture, power and water grids, oil gas installations and other monitoring control systems that are in off-grid environments. As we touched upon at our Capital Markets Day, Last year, the long-range business operates in a more complex environment than our short-range business. And we need to establish strong partnerships to unlock the opportunities that lie in the global IoT connectivity market. On this picture, you see Eivind Birkenes and myself signing a partnership with Deutsche Telekom to enable seamless connectivity with our NRF 9151 module across their extensive networks and roaming partners. We have also begun to build a network of international partners to penetrate the non-terrestrial market, including partners as Keysight, Skylo, Iridium and Myriota in Australia. We are also helping shape the future of the NR+, driving smart building standards together with partners as Siemend, Legrand and Schneider. Finally, I want to mention our new power management IC, the NPM2100, for end products with non-rechargeable batteries. This enables ultra-low power Bluetooth applications with longer battery lifetimes and help expanding our target markets for value-add combinations of our PMICs and SOCs. Applications with demand for this type of solution are plentiful with personal health monitoring, various consumer applications, industrial sensors and many, many more. I've always said that we have world-class engineers, and we are proud to say that this product won the Power Product category at this year's Electronic Excellence Award at Embedded World 2025 in Nuremberg. Congratulations to the team. With that, I will leave the mic over to Paul to take you through the financials.