Q2 2012 Investor Presentation - Nordic Semiconductor2012+Investor+Presentation.pdfQ2 2012 Investor...
Transcript of Q2 2012 Investor Presentation - Nordic Semiconductor2012+Investor+Presentation.pdfQ2 2012 Investor...
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Q2 2012 Investor Presentation Svenn-Tore Larsen, CEO Robert Giori, CFO July 13, 2012
wireless living ....
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Solid Q-over-Q improvement across key revenue, operating profit, cash flow metrics
• Revenue of MUSD 38.7
• Order inflows of MUSD 21.7
• Operating profit (EBIT) of MUSD 9.4 (24% EBIT margin)
• Cash flow from operations of MUSD 5.1
Business Outlook: Nordic’s competitive lead strengthens in ultralow power wireless market with release of next generation product platform
• Nordic sets the new benchmark in ultralow power wireless with nRF51 platform
– Features improved processor, lower power consumption, ease of SoC development
• Revenue expected to grow in 2H 2012 with recovery in PC accessories market (following Windows 8 launch) and new product releases across other wireless categories
• Bluetooth Smart (low energy) wireless applications to begin initial ramp up from 2H 2012
– Bluetooth Smart technology will create vast new growth opportunities for Nordic’s solutions to connect with mobile handsets, PC’s and home media devices.
– Strong progress, with design wins across several emerging wireless categories
Strong growth in operating profits in Q2 2012
FINANCIAL HIGHLIGHTS Robert Giori, CFO
wireless living ....
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Q2 2012 Financial Highlights (MUSD)
MUSD
Financial objectives Q2 2012 Q2 2011 Comments
Growth
Revenue 38,7 38,4 Solid sequential growth from prior Q
Order Inflow 21,7 44,9 Shortening order cycle, with low visibility
Profitability
Gross Margin % 52 % 43 %
Operating Profit (EBIT) 9,4 7,3
EBIT Margin % 24 % 19 %
Net Profit after tax 6,5 5,3
Cash Flow
Free Cash Flow 4,5 5,1 Strong cash flow in YTD
Cash Balance 24,2 24,7 Repayment of MUSD 6 loan during YTD
Accounts Receivable 32,5 33,0
Inventory 18,8 28,2 Improved inventory management
Higher margin product mix / cost efficiencies
offset large investments in R&D
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Group Revenues
Segment revenue by quarter, 2009 – Q2 2012 (MUSD)
Mobile devices
Home electronics devices
PC accessories Other Sensor networks
ASIC / Consulting
Sequential improvement from Q1 2012
Growth in all product segments outside of PC Accessories
• Q2 2012 Revenue of MUSD 38.7 (1% growth from prior year) – PC accessories segment continues to lag (3% decline from prior year), but is expected
to improve with PC market following Windows 8 release – Other non-PC market segments grow by 11% from prior year
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PC Accessories Wireless mouse, keyboard, presentation tools
Q2 Revenue: MUSD 27.3 (MUSD 28.2)
• Weaker PC market has impacted sales of accessories.
Consulting services Custom electronics design
Q2 Revenue: MUSD 0.2 (MUSD 0.1)
• Supporting existing ASIC customers only, not a focus area for growth
Mobile devices Sports / medical monitors, mobile accessories, wireless payments
Q2 Revenue: MUSD 4.5 (MUSD 4.1)
• Strong growth in Sports category, offset by lower sales of RF-SIM
Home electronics devices TV / media remotes, audio streaming, game controls, toys
Q2 Revenue: MUSD 1.3 (MUSD 1.1)
• Several new designs drive growth across multiple categories
ASICs (application specific IC’s) Wide sector span
Q2 Revenue: MUSD 4.1 (MUSD 3.8)
• Growth spread across diverse products with custom electronics designed by Nordic
* Reflects Q2 2012 revenue (Q2 2011 in parenthesis)
Other Sensor networks Industrial automation, building sensors, RFID systems, automotive
Q2 Revenue: MUSD 1.3 (MUSD 1.1)
• Growth in RFID and automotive product categories
Segment performance – Q2 2012
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Revenue mix
• 82% of revenues are to Asian distributors in Q2 2012 – Many component units are sold through distribution to Asian OEM’s for
manufacture and export of devices to North America / Europe
Revenue breakdown by region: Q2 2012
San Jose
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Seoul Tokyo
Hong Kong Taiwan
Amcor, Philippines
North America 6%
Europe 12%
Asia / Pacific 82%
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Order inflow / order backlog
Order Inflow and Backlog 2009 – Q2 2012 (MUSD)
Backlog
Order Inflow
Order backlog is abnormally high in 2010 due to supply shortages
Order cycle shortens in Q2 2012, causing decline in order inflow and backlog
• Order inflow of MUSD 21.7 in Q2 2012 – Slowdown in order inflows primarily driven by temporary factors, including a
changeover of PC accessories product lines in advance of Windows 8 OS launch
• Order backlog of MUSD 20.4 at quarter-end, as order cycle shortens
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Gross Margin
• Gross margin increases to 52 % in Q2 2012 – High margin product / segment mix in Q2 2012, with volumes weighted toward
smaller customers – Manufacturing process improvements contribute to higher margins
Gross Margin % of revenue 2009 – Q2 2012
Falling GM% from 2010 – Q2 2011, with increasing proportion of sales to largest customers
GM% improves from 2H 2011, with volume shift to smaller customers and production efficiencies
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Operating Profit by quarter 2009 – Q2 2012 (MUSD)
Strong sequential increase as revenue grows and gross margins improve
• Operating profit (EBIT) in Q2 2012 of MUSD 9.4 (24 % EBIT margin) – 28% growth from prior year – Improved gross margin offsets higher operating expenses
Operating Profit
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Cash Flow Breakdown Q2 2012 (MUSD)
• Free Cash Flow of MUSD 4.5, with continued reduction in inventory balance
• Net Cash Flow of MUSD 1.5 after repayment in MUSD 3 of short-term debt
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Profit before tax
Add: Depreciation
Cash Flow from Operations
Less: CapEx, Cap R&D
Less: Debt repayment
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Net Cash Flow
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Less: Income tax payment (2011)
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Strong growth in operating profit as gross margins improve
Q2 2012 Financial summary
Revenue growth
Profitability
Cash Flow
• Group revenue of MUSD 38.7 (MUSD 38.4) – PC accessories revenue falls by 3% from prior year – All other segments grow by 11%
• Order inflow of MUSD 21.7 (MUSD 44.9) – Shortening order cycle, as PC accessories
market transitions to new Windows OS – Order backlog of MUSD 20.4
• EBIT of MUSD 9.4 (MUSD 7.3) – Operating profits increase as gross margins
improve, driven by revenue mix and production cost efficiencies
• Free Cash Flow of MUSD 4.5 (MUSD 5.1) – Repayment of MUSD 3 credit line balance – Ending cash balance of MUSD 24.2
BUSINESS OVERVIEW Svenn-Tore Larsen, CEO
wireless living ....
Short-term Outlook
• Recovery in PC market in 2H 2012 and new wireless product releases are expected to drive revenue growth in 2012
– Global demand for PC’s is expected to recover during 2H 2012, due to:
• Release of MS Windows 8 operating system • Growth of Ultrabook category within notebook PC’s • Restock of inventory levels within sales channels
– Wireless PC mice / keyboards continue to grow in popularity, replacing wired solutions
– Other categories (Home Electronics, Mobile devices, etc.) grow with new product releases and increased consumer adoption of wireless accessories
Longer-term market opportunity
• New Bluetooth Smart products will generate next wave of market growth, as standard will enable wireless sensors to connect with billions of mobile handsets, PC’s and media devices.
– Very strong support from major industry players, with many new products implementing Bluetooth / Bluetooth Smart Ready technologies
– Nordic has leading technology position within Bluetooth Smart for peripheral devices, shipping in volumes from late-2012
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Business Outlook
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New market opportunities with Bluetooth Smart
Many new ULP product categories will emerge, as Bluetooth Smart (low energy) will enable wireless sensors to connect directly with mobile handsets, PC’s and home media devices.
• ABI Research estimates that the Bluetooth Smart market will exceed 700M units in 2015*
• Mice
• Keyboards
• Game controllers
• Presentation remotes
• Security solutions
Personal computers desktops, notebooks, tablets
• Fitness sensors
• Medical monitors
• RFID / keys
• Watches
• Mobile payments
• Other local sensors
Mobile devices Handsets, MP3 players, other portables
• Remote controls
• 3D glasses
• Game controllers
• Audio solutions
• Toys
• Home automation
Home electronic devices TV’s, set top boxes
• Remote controls
• Environment sensors
• RFID / Security
• Operations monitors
• Smart energy
Other sensor networks Autos, buildings, appliances, infrastructure
* Source: ABI research, March 2012. Includes peripheral units only (BT 4.0 single mode)
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Unit sales of development kits
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1984 • Strong interest in development kits from new customer segments (non-PC peripherals)
Target applications include:
– RFID / Proximity applications
– Mobile security tags
– Fitness / health monitors
– Home media remotes and peripherals
– Temperature sensors
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Strong growth in demand for development kits
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• 2087 development kits distributed in 1H 2012, an increase of 35% from 1H 2011
– Growth in demand driven by Bluetooth Smart development kits
– New reference designs for Bluetooth Smart are expected to further drive interest in Nordic’s development kits
Second Half
First Half
Bluetooth Smart technology drives growth in demand for Nordic’s development kits, a positive leading indicator of new product releases
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Nordic sets the benchmark in ultra-low power wireless … 17
Nordic Semiconductor has been the market leader in ultra-low power wireless solutions (2.4 GHz RF) since the launch of its breakthrough first generation 2401 IC platform in 2002.
Undisputed market leader
– Over 600M IC units sold to date
– Proprietary 2.4 GHz, ANT+, Bluetooth low energy protocol (Bluetooth Smart)
– Competition is still trying to catch up with performance of 2nd generation IC’s
Nordic has just moved the wireless benchmark, again … 18
Breakthrough new specifications
Slashes current consumption by up to 50%
Up to 10x more on-chip processing power
Greatly improved radio performance
Low bill of materials cost
New SoC software architecture greatly simplifies product design
Introducing the next generation wireless product platform from Nordic
Nordic sets the new industry benchmark for ultra-low power wireless solutions with breakthrough specifications in performance, power consumption, and ease-of-use
Series of ICs and Software for Bluetooth® low energy, 2.4GHz RF and ANT™ applications
What is the nRF51 series product platform?
nRF 51 - New system-on-chip platform for ultra-low power wireless applications
THE BASICS:
• IC architecture
– Multi-protocol 2.4GHz radio
– ARM® Cortex™-M0 processor
– Ultra low power and high performance
• Software architecture
– Supports proprietary 2.4 GHz, ANT+, and Bluetooth low energy protocols
– Designed for simple application code-development
• Common platforms
– Shared IC and software architecture
– Code and Pin compatibility
– Easy to migrate and reuse across designs
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nRF 51
Breakthrough new specifications 20
Improved hardware performance
Up to 10X more processing power 100X faster start-up Up to 9.5 dB better link budget
Longer battery lifetime
Up to 50% lower average current consumption Peak current reduced to sub-10 mA Greater efficiency enables less time spent in active mode,
maximal time spent in sleep mode
System-on-chip availability
Complete Bluetooth low energy and ANT SoC’s Reduces development requirements and risk Lower cost bill-of materials than purchasing and integrating
components separately
Ease of software development
Unique software architecture eases product design Clean separation of protocol stack and application code Simple application development model
Maximum reuse and simple migration
Multi-protocol radio Common IC and software architecture Code and Pin compatibility ARM Cortex ecosystem
Higher performance, lower power consumption, ease of system-on-chip development
nRF51 advantages: Improved hardware performance 21
Complete hardware redesign – based on more than 10 years of experience
• Processor: ARM® Cortex™-M0
– Up to 10X more processing power
– 100X faster start-up
– Improved code density
• Radio: Ultra-low power 2.4 GHz
– Up to 9.5 dB better link budget (Improved range and robustness)
– Multi-protocol: Enables flexible switching between Bluetooth low energy, ANT and proprietary 2.4 GHz modes
• Fast and flexible interface between radio and processor
• And many other enhancements...
nRF51 advantages: Longer battery lifetimes 22
New system design results in up to 50% lower average current consumption
• Radio upgrade reduces peak current (RX and TX) to less than 10 mA
• System spends much less time active, more time in sleep mode
– ARM Cortex M0 enables faster start up and processing of application and protocols – Advanced new power management scheme. Only blocks which are active are
consuming power. – PPI controller enables peripherals to operate without using the CPU
More efficient management of each transmission cycle
• Start-up
• Application and protocol pre-processing
• Transmit and receive
• Protocol post-processing
• Sleep mode
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Transceivers Connectivity-on-Chip (Connectivity only)
System-on-Chip (Connectivity + applications)
Application Specific
Application Generic
2.4GHz PHY
Baseband
Nordic Transceiver chip
Protocol
Application
3’rd party MCU
2.4GHz PHY
Baseband
Nordic Connectivity chip
Protocol
Application
3’rd party MCU
2.4GHz PHY
Baseband
Nordic System-on-Chip
Protocol
Application
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nRF51 advantages: System-on-chip availability
Current Nordic ANT and Bluetooth low energy IC’s
Nordic nRF 51 ANT and Bluetooth low energy IC’s
High performance SoC’s for Bluetooth low energy / ANT reduce development time and cost
• Reduces total BOM and manufacturing cost compared with integrating external components
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nRF51 advantages: Ease of software development
Key benefits
• Clean separation of code for application and protocol stack
– Two different compiles
– No link time dependencies
• No proprietary application framework
– Application developer sees a standard Cortex-M
– No scheduler or RTOS dependencies
– Full control over the choice of operating environment
• Transparent and run-time protected stack
• Independent development
• Independent testing and verification
• Easy code porting, migration and reuse
A new paradigm in SoC software architecture - greatly simplifies application development
ARM Cortex ecosystem
Common IC and software
architecture
Code and Pin compatibility
Multi-protocol ULP radio
nRF51 advantages: Maximum reuse and simple migration
Common architecture supporting multiple protocols and based on ARM Cortex M0
• Accelerates development of new products, while reducing risk
Proprietary 2.4 GHz
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• Noridic sales engineers hit the road to teach application developers worldwide about the great new features and real-world benefits of developing with Nordic’s nRF51-series SoCs
• Free development tools to participants – estimated 2000 units
• 16 destinations worldwide:
Boston – Chicago – San Jose – Seattle – Paris – Amsterdam – Munich – Copenhagen – Bangalore – Singapore – Shenchen – Taiwan – Shanghai – Beijing – Seoul – Tokyo
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Spreading the word on the nRF51
Announcing the Nordic Global Tech Tour – September / October 2012
Strengthening Nordic’s position in a growing market
Growth of Bluetooth Smart Greatly expands the market opportunity Enables connection to phones, etc.
New wireless applications Connected TV remotes, medical devices, many more accessories
Market forces
Nordic’s competitive advantages
Adoption of wireless technology Eliminate wires between devices Growth of sensor networks
Ultra-low power wireless pioneer and market leader
• Clear market leader - over 600M IC’s sold • Key contributor to BT low energy standard
• Board member of Bluetooth SIG • Pioneer in ANT connectivity IC’s
Best-in-class technology platforms • High performance connectivity
• Lowest power consumption • SoC’s, protocol stacks, application
software and reference designs
Key account relations • Leader in major segments
• Strong entry position in new segments • Application / market knowhow
Competitive cost structure • High volumes on product platforms
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