Nordic Semiconductor Ord

At this time, I would like to welcome everyone to this Nordic Semiconductor Quarterly Presentation, Third Quarter 2025. Today's call is being recorded. If you have any objections, please disconnect at this time. All participants will be on listen-only mode throughout the presentation, and afterwards, there'll be a question and answer session. I'd now like to introduce Head of Investor Relations, Steele.

Steele, over to you. Thank you, Patrick, and good morning, everyone. As Patrick said, this presentation is being recorded and will be accessible on the Nordic website in the investor relations section. And additional, for those of you who missed the release, you can also find the earnings press release quarterly report and presentation material on our website. With me today, we have Vegard Volland, our CEO, and Paul Elstad, our CFO. They will share details about our recent financial performance and updates on key business developments. Following the presentation, as Patrick said, we will move on to the Q&A session. During this session, live question can be submitted through the Q&A dial-in feature. For instruction how to dial in, please refer to the earnings call invitation available under stock exchange notice on our IR website. As a reminder, this presentation includes forward-looking statements that comes with inherent risk and uncertainties. Actually, outcome may differ materially from those statements expressed or implied. We highly recommend reviewing our detailed Q3 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 microphone over to our CEO, Vegard Wollan.

Thank you Stil. My name is Vegard Wallen and I'm the CEO of Nordic and with me today as always our CFO Paul Elstad. Let's look at the main takeaways from the third quarter. Revenue amounted to 179 million dollars in the third quarter. This was an increase of 13 percent. quarter year on year and in the high end of the guiding range we presented for the quarter. Like we said at our second quarter presentation, we have been able to maintain a strong competitive position in the market and we have been able to enjoy the market improvement over the past year. We see growth in both short range and long range and among both large key customers and in the broad market. In terms of end-user markets, the year-on-year growth mainly came from the industrial and healthcare segments this quarter, with consumer flat year-on-year from a strong Q3 last year. Gross margin came in at 52%, supported by favorable product mix and positive contributions from the cloud service business, which we recently strengthened with the acquisition of Memfault. as well as the broad market business continuing to be improving. EBITDA came in at $18 million, adjusted for some non-cash costs related to the Memfault acquisition, and Paul will give you the details of that and other costs a bit later. Q3 typically is the strongest quarter of the year, and we are guiding between $155 and $175 million in revenue in the fourth quarter. which compares to $150 million in revenue in the fourth quarter last year. And we expect the gross margin to remain above the 50% level also in the fourth quarter. The top 10 customer share of revenue has stabilized at 57%, meaning that revenue has grown equally strong among our key customers and in the broad market over the past year. Measured over the last 12 months, revenue from the top 10 customers now exceed the 2022 peak level. Revenue to other customers are still some 35% below peak levels, although we have seen a gradual improvement also in the broad market. And as we've said, it remains a clear priority to continue build momentum and accelerate growth among our broad market customers. And we believe the NRF54 series and the range of new products we are releasing and bringing to the market now will be an invaluable tool for us to drive this going forward. We remain the clear design win leader when we look at the Bluetooth Low Energy and product certifications, with 31% of the designs certifying in Q3 and 30% over the past 12 months. This is three to four times as many designs as our closest of our competitors. And note, as always, that this is counting a number of certifications. And this doesn't differ between high and lower volume products. And hence, you cannot translate this directly to revenue. And as we have said before, the transitioning between NRF 52 and NRF 53 series products to the new NRF 54 series is creating a bit of a timing gap for us. And in Q3, less than 10% of the certifications for Nordic are with the new NRF54 products. This is obviously expected to increase now going forward. We continue to see great customer attraction with the NRF54 series. And as I will get back to in a minute, we are continuing to broaden the 54 series product family with new versions to make sure that we reach a large part of the short-range market with our leading technology and products for most applications. Some of the most exciting roadmaps and most innovative products are being developed together with our large key customers. And with our business model, these innovations are being integrated on our standard chips and SOCs and software stacks and made available to our customers in the broad market. However, product development takes time and we need to allow for our customers to complete their designs and development processes, launch their products and ramp up production before we see significant revenue. And as we have said repeatedly, we will only see limited revenue effect of the NRF54 series this year and expect to see accelerating revenue growth for the 54 series from next year onwards. The most recent addition to the NRF54 series is the versatile high performance 54 LM20A, which was launched in September. We do already have many customers designing and developing with this new SOC, and volume production is planned to start in Q1 next year. The 54 LM20A is designed for more advanced wireless products across multiple markets, including consumer, smart home and industrial. It is particularly well suited for human interface devices, including gaming peripherals that require low latency wireless connectivity and high speed USB. With two megabytes of non-volatile memory and 512 kilobytes of on-chip RAM, it's also ideal for smart home devices such as Matter implementations. offering ample overhead for the application software without requiring external memory. This is the fourth variant in the NRF54L series. We started out with the baseline 54L15 and followed up with the 54L10 and the 54L05 for more cost-constrained applications. before we are now introducing the 54 LM20A for more advanced and feature-rich applications. The 54 LM20A launch signifies the step in delivering a comprehensive 54 series portfolio to cover a broad range of applications, marking the 54 series as the frontrunner product family in the industry. Like the other wireless SoCs in the NRF54L series, the 54LM20A delivers twice the processing power and three times the power consumption efficiency compared to the industry reference, the NRF52 series. We will continue to launch new and innovative SOCs and new software solutions for the NRF54 series to ensure that we reach the entire addressable market with a relevant and best-in-class product offering. Nordic has achieved tremendous success with the NRF52 series, which is also predominantly constituting most of our current revenue. and that family is the undisputed industry standard for Bluetooth Low Energy connectivity. This success is closely tied to the SoftDevice Bluetooth software stack and its support for the NRF52 series. Now we are introducing the equivalent for the NRF54L series, the NRF Connect SDK Bare Metal. The NCS Bare Metal is an easy-to-use software solution for developers developing simpler Bluetooth applications where they don't need a real-time operating system. Developers using the Bare Metal option retain the possibility to upgrade to Zephyr-based NCS with full-featured capabilities if needed. Summing up, We are making it easy for customers and especially our broad market customers to migrate their existing software code base from NRF52 to a familiar programming environment on the NRF54L series. Before Paul will take you through the financials, I would like to spend a minute on our acquisition of Memfault and the speed of integration into our service offering. Already three months after onboarding Memfault, we launched a new chip-to-cloud lifecycle management solution that enables our customers to locate, monitor, manage and securely update devices over the air in the field with the new NRF Cloud powered by Memfault. The combination of Memfault's device observability and NRF Cloud device management enables development teams to monitor real-world behavior, speed up debugging and create fixes based on real data, and reliably and securely deploy firmware updates over the air. The ease of use this service offers represents a major step in terms of efficiency, and we have already seen several customers committing and other evaluating the new service offering, many others evaluating it. The new NRF cloud services platform is now applicable to all Nordic connectivity technologies, short range, long range, and Wi-Fi. A few days ago, The NRF Cloud powered by Memfault Services Platform was awarded the Cloud Computing Innovation of the Year in the 2025 Mobile Breakthrough Awards. This shows that NRF Cloud is being recognized for its contribution to cloud lifecycle solutions within the global wireless technology industry. We communicated our strategy to transition to a complete solutions provider with leading technology across the three strategic pillars. These are hardware, software and services. And it's great to see you starting to deliver on that. And here are some exciting news from the world of next generation mobility. Also, the innovative e-bike brand incubated by the electric vehicle company Rivian in the US made a big splash last week in San Francisco with the launch of their stunning new e-bike. A fusion of design, performance and connected intelligence. Nordic Semiconductor is extremely proud to be at the heart of this breakthrough. powering the bike's smart connectivity experience with three of our advanced wireless chips the new short range soc the 54h20 the nrf 9151 from long range which we launched in q3 last year and the nrf 7001 wi-fi connectivity chip on top of that the e-bike's diagnostic cloud connectivity and life management are enabled by our newly released nrf cloud services seamlessly integrated with memfault's powerful device observability platform this collaboration showcases nordic's technology ecosystem and that we are accelerating the future of connected e-mobility from robust wireless performance, application processing to cloud intelligence that keep riders safer and smarter on every journey. Thank you. And with that, I'll leave the floor to Paul.