Nordic Semiconductor Ord

Welcome to Nordic Semiconductors Q2 2025 presentation. For the first part of this call, all participants are in a 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. I will now hand it over to speakers. Steel, please begin.

Thank you, Kjeld, and good morning, everyone. 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... I have Vegard Wolvan, our CEO, Paul Elstad, our CFO. They will share the details about our recent financial performance and updates on key business developments. Following the presentation, we will move on to the Q&A segment. During this time, live questions can be submitted through the Q&A dial-in features. For instructions 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 the 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. Actual outcome may differ materially from those statements expressed or implied. We highly recommend reviewing our detailed Q2 quarterly report and the 2024 annual report for a deeper understanding of the risk and uncertainties that could impact our business operation. With that, I will now hand the microphone to our CEO, Vegard Voldan.

Thank you, Stil, and good morning, everyone. My name is Vegard Voldan. I'm the CEO of Nordic, and with me, as always, our CFO, Paul Elstad. Let's look at the main takeaways from the second quarter. Revenue amounted to $164 million in the second quarter. This was an increase of 28% year-on-year and close to the top of the guiding range we presented for the quarter. This demonstrates that we have maintained a strong competitive position, enabling us to benefit from the continuing gradual market recovery. We saw year-on-year growth across both short-range and long-range businesses and across the main customer segments and verticals with increasing demand from both large key customers and the broad market. Gross margin came in at around 51%, which was an improvement both year-on-year and compared to the first quarter. And with good cost control, we deliver a positive EBITDA of $21 million for the quarter. Looking ahead, we expect to see continued growth and we are guiding for a revenue range of between $165 to $185 million for the third quarter. As I just mentioned, we maintain a strong competitive position and are able to capitalize on the gradual market improvements we are seeing. The graph on the right hand side shows our revenue development on a rolling 12 month basis and show that revenue has clearly bounced back from the lows of last year. We see a lot of speculations about how changes in tariffs and trade policies are affecting us and others in the industry. But as far as we can tell, we haven't really seen much effect on demand and revenue, neither negative nor positive so far. However, the risk remains that this might change in the future, both because of the complex semiconductor supply chains and because end user demand might indirectly be affected. We are focusing on what we can do something about and are continuing our work to further develop a diversified and resilient supply chain, while maintaining close collaboration and support to our customers. Looking at the revenue distribution across the customer groups, we see improvements both among our key customers on the top 10 list and among smaller customers in the broad market. Measured over the last 12 months, revenue on the top 10 customers are basically back to or even somewhat above the peak levels back in 2022. Revenue from other customers are still some 40% below peak levels, but we are starting to see a gradual improvement in the broad market as well from the low levels last year. It is a clear priority for us to continue to regain traction and accelerate growth among our broad market customers and we believe the NRF54 series and our ongoing new product launches will be invaluable tools to drive this continuing growth. We remain the clear design win leader in terms of number of Bluetooth Low Energy end product certifications, with 32% of the design certifications over the last 12 months, despite a somewhat lower share in Q2. This is around four times as many designs as the largest of our competitors. As we have said before, our transition from the NRF 52 and 53 series to the NRF 54 series is creating a bit of a timing gap for us. We did see the very first end product certification with an NRF 54 inside during the second quarter and we do expect to see more NRF 54 certifications as we now move forward. Finally, let me repeat that this simple counting of certifications doesn't differ between high and low volume products, meaning that you cannot translate these numbers directly to value market shares. We continue to see great customer attractions and high design activity with the NRF54 series in short range, the NRF9151 in long range and with our new PMIC products. This activity is both with existing and new customers, both for improvement and upgrades of existing products and for new products. As the customer pipeline is growing exceptionally well for these recently launched products, the Nordic team is now working intensively and focused to support our customers moving into production in the coming quarters. Some early adapters have now started their initial production with these new products. We have also previously said that we will be launching many new product families on Nordic's market-leading NRF54 technology platform over the years to come. This covers both hardware and software product releases. And during the second half of this year, during the second half of this year, you will see that we will be launching multiple and new innovative SoCs and new software solutions for the 54 series. I do want to comment that the first customers have already started design activity with these new products before they are launched. While our product design pipeline is solid and continuing to increase, we need to allow for our customers to complete their designs with the new products, launch their products, and ramp up their production before we see revenue. This means that as we have previously communicated, we will see limited revenue effect of these new products this year, but accelerated and more meaningful revenue as we move from 2026. For specific product launches in the second quarter, We expanded our innovative power management portfolio with the NPM 1304, developed for the next generation of space-constrained applications with very small batteries such as smart rings, smart watches and eyewear and other wearable electronics. The NPM 1300 and 1304 PMIC products are industry firsts with their unique ultra-low power performance and high precision fuel gauging, enabling the most accurate measurements for remaining battery life estimation. We will continue to expand our addressable market and applications in the PMIC offering in the quarters to come. I'll let Paul lead you through the financials in more detail before returning with a few comments on our recent acquisitions and our business outlook. However, first I would like to highlight the work we are doing on developing our business in a sustainable manner. This ranges from our work to reduce energy consumption and use renewable energy sources where this is available, to us using recyclable materials where that's possible, to our compliance with internationally recognized work practice standards and our frameworks to secure best practice corporate governance. As just one recent example, Nordic is one of the first semiconductor companies to use component reels made of recycled plastic. We are obviously glad to see how our efforts are in this area is being recognized. And in 2023, we found ourselves high on Financial Times list of the 500 European climate leaders. Last year we entered Time Magazine and Statista's top 500 list of the world's most sustainable companies. And this year we climbed 200 rankings on the same list as the number 121st. That is solid validation of our work on sustainability and I'd like to thank all employees, partners, suppliers and customers who are supporting us in these important efforts. On that note, I'd like to leave the word to Paul.