Svenn-

Tore Larsen: Welcome to Nordic Quarterly Presentation for Q3 2021. It is a pleasure for me to get with Pål our CFO to present the numbers that we achieved through a very, very challenging quarter. And we seen strong demand in all end user markets, there has been only one limitation and that's basically the wafer supply. The revenue ended at $148.5 million, is actually on par with previous quarter. And it also reflects basically, the allocation we get on wafers through Q3.

Our Bluetooth revenue ended at $124.3 million is up 28% compared to the same quarter last year. Our proprietary revenue ended up $18.1 million, slightly down from last year. A good thing to see here is that of our cellular IoT revenue increased 238% compared to last year, which resulted in $5.3 million revenue. This was also capped by supply unfortunately. Gross margin ended at $53.1 million and is basically contributed by feature-rich system on the shapes that we are selling more from during this quarter.

And we will continue actually to see dominate our revenue going forward, which has a good effect on our bottom, top number and our gross margin. Our backlog keeps increasing. Backlog ended at $1.3 billion, that's basically four times the same -- the backlog the same time last year. What we see now is that our backlog is even start to stretch into '23. And obviously, we see higher volume with longer so windows which just shows that $1.3 billion is a number that combined with these two factors.

The challenge we have at Nordic is to focus on the customer situation. We need to ensure we can give the Tier-1 the opportunity to grow a same as we keep over long tail customers happy is very difficult with this train supply situation. But that's what we work on every day. Continue to have high market share when comes to the assignments. I mean, we keep hoovering above 40% and what we see that you're going to see from the graph is that value per the sign is significantly increased.

Again, keeping the market share, multiplied with the same value that's higher, again it indicates obviously that our backlog will keep on growing. Despite that we now are not open for two orders outside first quarter of '23. What we try to do is to ensure that what's in our backlog is going to be shipped to customers at a time that is needed to satisfy the demands. We see as every quarter new products launched with Nordic product inside. As we see in healthcare like diabetes.

We have a company called SiBionics that's are doing this connectivity between purchase and smartphone. We talk about lights for a long time. And now we start seeing customers coming out with tunable lights with Bluetooth Low Energy inside. And if we look at the tracker market is exciting is both for commercial and it's for asset is for pets. And what we see common here is that they use a combination of BLE and cellular IoT.

Nordic has been working very much to look how can we assist the world in becoming a better place to live. UNs goals, sustainability goals are important for Nordic and we also see our customers are making products to monitor and give feedback. And we see a company that's doing wastewater and sewage spill monitoring. It's good to see our product basically making a difference. So good for us is that we see that the strategy we had getting short communication from sensors with Bluetooth Low Energy connected to the cloud with our cellular products is happening at the moment.

We launched our first nRF Cloud Services, it's basically location service. And we can do it with our parts with our 9160 module. You can do it either with GPS or with cell. And we see customers now starting to use this service. This is just one of many to come.

And our cellular IoT revenue are steadily growing, we'd like to see more volume ramp, but we are held back by supply constraints. But as I -- earlier as I indicated, strong presence in tracking and we see more moving over to industrial applications and more industrial applications in cellular IoT than we do have in a Bluetooth at the moment. And what we are doing in Nordic now is to really ease to the sign of cellular. Anyone out there, which is an engineer I've been working with a communication and telecom knows that making cellular IoT product is difficult. We want to make this easy for anyone in a lab that doing development of these products.

Due to that we've been basically working to incorporate Visual Studios is basically a product from Microsoft very popular product. Same with Memfault. So we have done partnership with these companies to help our customer to achieve a quick solution to end product. And it's working. That's the important thing.

Anyone remember DECT, that was a standard many years ago. Now, ITU has released a new standard to DECT. Nordic really see around us and if we look at all the 5G developments that's happening. It's important to take advantage of this 5G development. All operators are also the backbone, the service providers are benefiting from these 5G developments happening now.

And if you look at technology in there that basically been sort of not very much alive for many years are now starting to come back. And we have been a main contributor to the physical layer and medium access layer on this specification. These are the sign for massive IoT networks, for enterprises, like building, automation, utility meters, manufacturing automation, smart city and logistics. We have done this very much based around the knowledge and our product from the 9160 and cellular IoT products. We've done this in partnership with Wirepas a leading Finish IoT wireless solution a software company.

And we expect to put this product onto the market next year. I think it's fantastic, it just shows as we use existing expertise to migrate into additional standards in connectivity. And if you remember back what we've been talking about since 2002 that's what Nordics all about, capitalizing on knowledge we are building and we early take advantage of technology shifts, we're first predict. So now, I would like to hand over to Paul and he talks about the numbers that we're shaped a little bit more in depth. Thank you.

Pål Elstad: Thank you, Svenn-Tore. And I'll now go through the financials for Q3 2021. As Svenn-Tore mentioned, we had a strong revenue growth of 24% this quarter from $248.5 million from $119 million last year. If you recall, we guided for a range of $130 million to $150 million in this quarter, a little bit wider range that we've historically had, and the reason for that was that there was uncertainty regarding wafer deliveries in Q3. We've actually been able to pull in additional wafers so that we end up at the higher end of this guided range.

But just as Svenn-Tore mentioned, we are kept in the quarter relation to the number of wafers we actually would have liked to have to take advantage of the demand we see in the market. . : For cellular, several projects somehow beginning to gain commercial traction and when I reported $5.3 million in revenue, a good growth compared to last year and also compared to last quarter. However, cellular is still impacted by supply constraints and this market will be lumpy going forward both related to the supplies, but also depending on when larger projects come into production. Now going to revenue per market quickly.

So of course, we had 24% overall growth, so individual markets will be strong also compared to last year, and pretty flat compared to last quarter. However, the variances in the different markets will really depend on the allocations we've done to this particular market and this quarter due to the supply constraints. Consumer electronics, which is by far our largest market with 39% of the total, slightly up from last quarter. The market shows the 5% growth year-over-year, also of course very strong numbers from the work from home segment, but also gaming is very strong here. Variables is the market which was mostly impacted by the supply allocations with the 22% decline versus last year and the five plus percent decline versus last quarter.

Building a retail start continues to strong growth with 72% increase versus last year. This has lots of very interesting and customer products related to smart homes, lighting, smart shelf labeling, but also tracking solutions. Healthcare strong growth versus last year, 23% decline versus last quarter. Last quarter had very strong COVID related products. So now mainly back to the diabetes solutions and also the personal healthcare applications that's in that market.

With the effect from 2022 Nordic will change the reporting structure for the end markets to better reflect the underlying verticals with four end user markets in consumer, industrial, healthcare and others. This change will strengthen the focus on end customers. So by looking at the verticals, you will more understand who are the end customers in the market. The main change will be that consumer driven products will be moved from current wearables, building retail and healthcare categories to the consumer vertical. This will happen from 2022 onwards.

Now turn to gross margins. The strong gross margin development that we experienced in Q2 continued in Q3 also. If you compare to a year ago, we have a small decline, but the strong growth margin in Q3 2020 was impacted on adjustments from previous periods. So underlying growth of one percentage point compared to last year. As Svenn-Tore mentioned, the strong gross margin comes as the share of higher complex, high margin products increases in the base.

If you look at next quarter, we expect gross margins of 51% to 53%. Nordic will adjust prices in the fourth quarter to reflect increasing wafer and outsource assembly and test pricing. These adjustments are included in the guidance. Now going to jump to the operating model performance in Q3. First of all, our EBITDA of $28 million or 19.1%.

It is a decline versus last year where we showed 24%, especially with last year was that the last year we had due to COVID we had very small investments and then suddenly in Q3, we have the strong growth. That's why you see the decline. If you look -- compared to last quarter, EBITDA margins are more or less at the same level. We do continue to invest a lot in the business. So R&D spending is now at around 24%, up from around 20% last year.

The reason for this increase is partly that we've now actually added the Wi-Fi business, which is 2% of revenue or $3.3 million. We are also capitalizing slightly less as our products are coming into a difference face that constitute around 1% on the bottom. SG&A hovering around 10% of total revenue. Of course, absolute numbers are increasing from $12 million last year to close to $50 million this year. I'm going to go to cash cost.

Cash operating expenses, which is OpEx excluding internal developer R&D and equity compensation increased by 35%, compared to the same period last year. If you compare it to last quarter, it increased by 6%. The main reason for this increase is of course the salary expenses that went up 37% year-over-year, as a result of Nordic adding 33% increase. So we have now grown to 1155 people at the end of the quarter. Of course, this is decrease partly explained by the acquisition we did last year.

But the underlying growth especially R&D and also product and customer related functions is continuing to increase. Although OpEx increased by 30% year-over-year. This is caused by higher activity this year, including tape outs for new products like certain consultants. Although traveling and exhibition costs are of course still low in Q3, but we see a good pickup which is good for the business in Q4 when people can start traveling again. I think we've discussed EBITDA before this quarter at 19% versus 24% a year ago.

If you're just for the cellular, IoT and the Wi-Fi business. The short-range business continues to deliver EBITDA margins very close to 30%. The same thing you can see if you look at the EBITDA margin for the last 12 months, close to 20 for the short-range business if you're not close to 20 for the entire business and close to 30 if you exclude new investments areas. Briefly on CapEx in Q2, we had close to $10 million in CapEx. The reason for that was we did very high investments in test equipment in order to be ready for high volume ramp happening right now.

This quarter more normalized at $4 million. It's a mix of both new testers, but also lab equipment. This quarter we spent 2.7% of revenue in CapEx for the arrows as a whole. We expected around 4%. Finally cash flow during Q3, we had a good cash flow of overall cash flow of $19 million.

The operating cash flow was in the same period $26 million. The strong operating cash flow comes as a result of very healthy EBITDA and good management and costs conversion on the cash conversion on the networking capital. Networking capital continues to be low at 19%. Of course, the main reason for that is that inventories continue to be record low actually, too low, they are now close to a quarter's revenue. The Group's cash position is $246 million at the end of the quarter, a strong cash balance that is sufficient to deliver on future growth and to finance the business we have there.

Svenn-Tore, I'd like to hand over to you, Svenn-Tore is going to talk about the outlook but also key highlights from the Capital Markets Day, if you have questions, you can send them on the webpage right now. Svenn-

Tore Larsen: Thank you, Pål. So despite the supply challenges, we expect a solid Q4, we are guiding for a range between $150 million to $170 million. We will maintain our revenue, because we are continuing to sell feature rich system on the ship parts. And obviously, our revenue is also capped unfortunately in Q4.

I don't think this is a situation that's going to ease in obviously, couple of quarters, it takes time to build and extend fabs. But what I can assure you about is that semiconductor fabs are working hard to extend capacity. And it's basically a bump in the road. And we will work as hard as possible to support our customers, both the broad market and the Tier-1 until capacity is in place. That's an important part of our job today and it's going to be I think for the rest of '22 also.

We will show later on today when our Capital Markets Day is going to be a webcast at 3 o'clock Norwegian time that we have a solid platform for strong growth. And we have to approve our $1 billion target one year closer to 2023. We’re optimistic about connectivity and basically the sectors that we’re working in. But we see now that the pickup and the use cases are endless. And it's nice to be able to pull this target one year in.

The important thing is also that we have committed wafer supply to cover this target. We have customers as you see from our backlog but the important thing here, the situation we are now is to have wafer supply to cover that target, which we have today. But we don't stop at $1 billion. We want to grow further. And we're aiming to more than double revenue in the timeframe of '23 to '26.

There will be continued strong growth in short range, Nordic is leader in short range BLE. We should at least be able to keep the same pace as the market. We’re seeing accelerated traction in IoT, we’re coming out with Wi-Fi products adding to our revenue. And we have released power management and other adjacent products throughout this very, very difficult year, year and a half that we have behind us. So this will add on top of existing product.

So aiming for doubling revenue in a timeframe of '23 to '26 is a strong grounded in Nordic and we have done large investment up till now to ensure that we have the right products to take advantage of what's happening in the market and around us. So I'm so excited to go into depth on what we done and what we are going to see of effects of what we've been doing the last year and a half. And I would like to welcome everyone to our

presentation 3:30 today on the web, or fiscal in Oslo is going to be a nice concert. And we are there with all of our management team. Thank you.

Any questions Pål?

Pål Elstad: So questions now mainly related to of course the Q3 financials since we have the whole section on Capital Markets Day with also Q&A.

Operator: Perfect. Thank you. We have one question from Rob Sanders, Deutsche Bank. The backlog trend is up quarter-on-quarter, but slow down on growth.

Has there been any sign of double ordering in the past that is now being moderated?
Svenn-

Tore Larsen: No, double ordering is a question we’re getting frequently. And I think Geir will actually address this in Capital Markets Day later on today. But we have a quote system for our customers. So the forecast we get from the Tier-1 customers and other customers are identical to what we see our distribution channels are placing in orders. So there is very little backlog that could be double ordering.

Secondly, I think it's meaningless to place orders for the second half of '23. We need to work on existing backlog and ensure we can deliver this existing backlog before doing too much push orders further out. And if you look at our target is to do $1 billion in '23. I think the backlog covers that and maybe even more. It all depends on supply.

Operator: Thank you. Then we have a question from Christoffer Bjørnsen, DNB. Great to see you have supply to drive solid growth into '22, '23. However, can you give some color on what segment give -- that what segments give you such confidence on the demand side into 2022, surely there are some segments where there will be tough comparables. Svenn-

Tore Larsen: It's been tough comparable for Nordic since we started this voyage and we continue.

But important thing is that we've been focusing heavily on added value through our software protocols and we will go into depth on software protocols and sort of contribution to revenue growth later on today

at 3:30.

Operator: Thank you. We have another question from Christoffer, DNB on cellular. Last quarter, you said you saw a cellular IoT customer likely ramping to become a top 10 customer for the company during the current forecast period. You have now removed this.

You have now remove this, it seems and any changes in this statement?
Svenn-

Tore Larsen: No, the customer is telling the same forecast. That's correct. And also having good numbers in Q3.

Operator: Thank you. Svenn-

Tore Larsen: Remember that we said the revenue was capped by supply chain challenges.

Operator: Øystein Lodgaard from ABG. You now say that the backlog stretches into 2023. Does this mean that the backlog duration is similar as it was after Q2?
Svenn-

Tore Larsen: No, we have had around another $230 million in Q3.

Pål Elstad: But the duration is extended. Svenn-

Tore Larsen: It is extended.

Operator: Thank you. I think we are finished, there is no more questions. I think people are waiting for the Capital Markets Day later today. And there will be a Q&A session there also. Svenn-

Tore Larsen: Yes, actually also we thought of having short mingling with these guys that are physical in place in .

So we are very much looking forward to speak obviously on webcast to everyone out there, but also nice to meet people again face-to-face after such a long period where we just got to text messages and mates. So thank you for now and see you later. Bye.

Pål Elstad: Thank you.