Q Investor Presentation

Transcription

1 wireless living... Q Investor Presentation Svenn-Tore Larsen, CEO Robert Giori, CFO October 17,

2 Return to revenue growth in Q Strong acceleration in Bluetooth Smart sales drives revenue growth Bluetooth Smart grows to 17% of revenue in Q (5% in Q3 2012) Revenue of MUSD 35.4 Order inflows of MUSD 31.0 Operating profit (EBIT) of MUSD 5.5 Cash flow from operations of MUSD 11.2 Business Outlook: Sales of Bluetooth Smart solutions will continue to accelerate, driving strong growth in the coming years Bluetooth Smart transforms the market for Nordic s ultra-low power wireless solutions Wireless connectivity is becoming a standard feature in a growing range of new electronic devices Bluetooth Smart enables the user to interact with these devices via the smartphone Bluetooth Smart now supported by all major operating systems (Apple ios, Google Android, Windows 8 / Lumia OS) A huge wave of innovation is now taking place, as new smartphone accessories and wireless applications come to market, enabled by Bluetooth Smart

3 wireless living... FINANCIAL HIGHLIGHTS Robert Giori, CFO

4 Q Financial Highlights (MUSD) 4 MUSD Financial objectives Q Q Comments Growth Revenue Strong growth in sales of Bluetooth Smart Order Inflow and RFID solutions Profitability Gross Margin % 49% 49% Higher operating expenses results in lower EBIT Operating Profit (EBIT) EBIT Margin % 16% 19% Net Profit after tax Headcount increases, as company invests in new product platforms Cash Flow Free Cash Flow Cash Balance Accounts Receivable Inventory Reduction in net working capital (accounts receivable) contributes to very positive free cash flow

5 Group Revenues 5 Q Revenue of MUSD 35.4 (5% increase from prior year) Growth driven by Bluetooth Smart solutions, which represent 17% of revenue Record sales in Mobile devices and in Installed Sensor networks (RFID) Segment revenue by quarter, 2011 Q (MUSD) PC accessories sales is flat from Q Other wireless segments grow by 29% from prior year 5 0 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 PC accessories Mobile devices Home electronics devices Other Sensor networks ASIC / Consulting

6 Segment performance Q PC Accessories Wireless mouse, keyboard, presentation tools Q3 Revenue: MUSD 19.1 (MUSD 19.2) Sales of PC accessories stabilizes, after decline in 1H 2013 Mobile devices Sports / medical monitors, mobile accessories, proximity tags, watches Q3 Revenue: MUSD 7.5 (MUSD 6.0) Record high revenue driven by growth in Bluetooth Smart mobile accessories ASICs (application specific IC s) Wide sector span Q3 Revenue: MUSD 3.2 (MUSD 3.9) Supporting existing customers only, not a focus area for growth. Sales fluctuates based on few designs. Home electronics devices TV / media remotes, audio streaming, game controls, toys Q3 Revenue: MUSD 1.9 (MUSD 2.0) Sales driven by wireless toys, with new design activity underway Installed Sensor networks RFID systems, building sensors, industrial automation, automotive Q3 Revenue: MUSD 3.6 (MUSD 2.1) Record high revenue driven by new RFID product designs Consulting services Custom electronics design Q3 Revenue: MUSD 0.0 (MUSD 0.3) Project services for existing ASIC customers * Reflects Q revenue (Q in parenthesis)

7 Order inflow / order backlog 7 Order inflow of MUSD 31.0 in Q Order backlog of MUSD 31.2 at quarter-end Higher order backlog entering Q4 compared with prior year Reflects stronger demand, driven by new Bluetooth Smart product designs Order Inflow and Backlog 2011 Q (MUSD) Order backlog of MUSD 31.2 in Q3 2013, compared with MSD 24.7 in Q Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Order Inflow Backlog

8 Gross Margin 8 Gross margin of 49 % in Q % Gross margin increases gradually from prior quarters based on a change in the revenue mix toward smaller customers Gross Margin % of revenue 2011 Q % 40% 30% 20% Steady improvement in gross margin to 49% in Q (from 47% in first half 2013) 10% 0% Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13

9 Operating Profit 9 Operating profit (EBIT) in Q of MUSD 5.5 Higher operating expenses drives lower EBIT, compared with prior year Headcount grows by 12% vs. prior year, as company invests in developing new product platforms Operating Profit by quarter 2011 Q (MUSD) Higher personnel expenses offsets revenue growth in Q3 -- drives lower EBIT vs. prior year 2 0 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13

10 Cash Flow 10 Strong Cash Flow from Operations and Free Cash Flow in Q Change in working capital balance contributes to positive cash flow, as accounts receivable falls and inventory remains stable Cash Flow Breakdown Q (MUSD) Profit before tax 5.5 Add: Depreciation +1.4 Less: Change in Work Cap +4.3 Cash Flow from Operations 11.2 Less: Capital Expenditures Less: Capitalized R&D Free Cash Flow / Net Cash Flow

11 Q Financial summary 11 Nordic Semiconductor resumes growth, based on strong Bluetooth Smart sales Revenue growth Group revenue of MUSD 35.4 (MUSD 33.5) Sales of Bluetooth Smart technology continue to accelerate, with new designs coming to market Record revenue from mobile devices and installed sensor networks (RFID) Order inflow of MUSD 31.0 (MUSD 37.9) Growth in order backlog vs. prior year reflects increased market demand Profitability Cash Flow EBIT of MUSD 5.5 (MUSD 6.2) EBIT falls as a result of increased headcount and operating expenses Company investing in new product platforms Free Cash Flow of MUSD 9.6 (MUSD 4.2) Strong collection of accounts receivable contributes to positive cash flow Ending cash balance of MUSD 28.5

12 wireless living... BUSINESS OUTLOOK Svenn-Tore Larsen, CEO

13 Wonderful Wireless World 13 The next Big Thing will be billions of small things (Example - video: Stick n Find)

14 Bluetooth Smart sales are taking off Sports and fitness PC / tablet accessories Building sensors Wireless charging 50M units (Est. 2013) Smartwatches 1.0B units (Est. 2017) Toys RFID Proximity sensors Mobile phone peripherals Automation Medical monitors * Source: Management estimate (2013); ABI research estimate (2017)

15 Three key drivers of exponential growth 15 1 Bluetooth Smart Standard 2 Compatibility with Smartphones 3 APPcessory developments

16 (1) Key market driver - Bluetooth Smart standard 16 Bluetooth Smart is a new wireless standard that enables electronic devices to communicate with very low use of energy, and at very low cost Personal hub devices (e.g. users smartphones, tablets, laptops) will be able to interact with an ever increasing number of sensors and accessories The market is at a tipping point with strong support from the leading technology developers Low cost + low energy consumption + industry standard = endless opportunities All things will be connected not only people

17 17 (2) Key market driver Compatibility with smartphones / tablets Apple has supported Bluetooth Smart in its devices since 2012, including iphones, ipad and MacBook Released native support for Bluetooth Smart in July 2013 Select Android phones have supported Bluetooth Smart since 2012 Windows 8 has native BT smart capabilities Lumia smartphones and future Windows Phone brands support Bluetooth Smart In 2014, nearly all smartphones sold will be Bluetooth Smart Ready

18 (2) Key market driver Compatibility with smartphones / tablets 18 The installed base of smartphones and tablets is exploding, creating a huge market opportunity for wireless accessories Cumulative Smartphones and Tablets in use (billion units) * Source: Statista Research

19 (3) Key market driver - APPcessory design taking off is the breakthrough year for BT Smart First wave of Bluetooth Smart products focus on fitness/lifestyle for consumers Communities form around these products, where people share, compare and compete via social networks Next major market expected to be proximity sensors Example: Lifestyle monitors Tracks daily motion (steps / stairs / distance), calories burned, and sleep time/quality Syncs information to PC, mobile, or tablet, and presents summary data on your lifestyle Stores information in the cloud, enables sharing across social networks

20 The world designs APP-cessories with Nordic 20 Bluetooth Smart standard is releasing a wave of ideas for new wireless app-cessories and services 84% of wireless start-ups promoted on Kickstarter and IndieGoGo are using Bluetooth technology* Today thousands of engineers around the world are developing products with Nordic s wireless solutions. Nordic software tools and reference designs allow products to be developed quickly and cheaply Bluetooth Smart isn`t just a wireless protocol, it`s a developers platform. It offers low power, low cost, a smaller footprint and high security. Unleash your creativity to do amazing things Case study: App Store 102 billion apps will be downloaded in 2013 (Gartner, September 2013) Millions of developers across the world Apple is not making the Apps The world is! Bluetooth Developer Portal

21 You will be surrounded by Bluetooth Smart accessories 21 Sports equipment Toys Golf Assistance ibitz Unity Activity Tracker Wireless Toys Interactive Toys Fit Bit Activity Tracker LUMOback Sensor Gaming Solutions iphone Enabled Lamborghini Household appliances Medical equipment Technical use Parrot Flower Power Kevo Lock System Intelligent Pill Blood Pressure Control Smart Watch Wireless Charging Post- Purchase product guide Light Bulb and temperature control Wireless Control Proximity solutions Health Monitor Patch Smartphone enabled Glucometer

22 Nordic s Bluetooth Smart revenues are taking off 22 Bluetooth Smart represented MUSD 5.9, or over 17% of Nordic s revenue in Q3 2013, up from 5% in the previous year 6 Nordic revenue from Bluetooth Smart: 2012 Q (MUSD) Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13

23 Installed sensor networks expected to outgrow accessories 23 RFID We believe Bluetooth Smart is the wireless standard of choice for the Internet of Things, especially for personal applications Logistics Production and manufacturing Morgan Stanley research, September 2013 Indoor location Payment systems

24 Rapid growth in Nordic s installed sensor network sales 24 Sales of Nordic s wireless solutions for installed sensor networks have also taken off, based on major new RFID design wins (ID tags for access and service management) 4 Nordic revenue from Installed Sensor Networks: 2012 Q (MUSD)* Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13

25 25 The market is there! What will be Nordic s share?

26 Leading competitive position in Bluetooth Smart 26 Superior technology Ultra low power consumption High performance Ease of development Software offering Market trust Very strong market position within low power wireless, with 1 billion units sold Key contributor to the Bluetooth Smart standard Chairman of Bluetooth SIG since 2012 Competitive cost base Competitive and flexible cost position Superior value for money

27 New IC platforms drive revenue growth 27 Each new IC platform release has led to a wave of revenue growth for Nordic, once it has been designed into new range of products Group revenue by year, (MUSD) NRF24L01P release 2nd generation wireless NRF2401 release 1st generation wireless NRF51 release 3rd generation wireless Revenue increases x4 during following launch of first generation 2.4 GHz wireless product. Revenue more than doubles in 2010 as Nordic captures dominant position in PC accessories and Sports markets

28 Business Outlook 28 Nordic expects its revenue from Bluetooth Smart to more than triple in 2014 Bluetooth Smart transforms the market for Nordic s wireless solutions by enabling connectivity with a huge installed base of smartphones and other devices Infrastructure is now in place, with release of Android support for Bluetooth Smart Revenue growth in 2014 will be primarily driven by new product designs within mobile device and installed sensor network business segments Mobile device segment will continue to grow rapidly, based on smartphone accessories such as Bluetooth Smart fitness sensors and proximity tags Installed sensor networks will be another major growth area, with the continued rollout of recent RFID design wins and implementation of new Bluetooth Smart-based wireless installations (indoor location / payments, wireless charging systems) Home electronics segment will see growth from new Bluetooth Smart toys and connected TV accessories PC accessories revenue decline is expected to level off, with tablet accessories providing a potential growth opportunity

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