NDCVF (NDCVF) Q2 2026 Earnings Report, Transcript and Summary

At this time, I'd like to welcome everyone to this Nordic Semiconductor Q2 2026 Presentation. [Operator Instructions] This call is being recorded. I'd now like to turn the call over to Head of Investor Relations, Steel. Please begin.

Thank you, Rasmus, and good morning, everyone. Please note that this presentation, as Rasmus said, is being recorded and will be accessible afterwards on our Investor Relations website, where you also find the earnings press release, quarterly report and presentation material. With me today, we have our CEO, Vegard Wollan; CFO, Pal Elstad. They will share details about our second quarter 2026 financial performance and update on key business developments. Following the presentation, we will move on to Q&A segment. During this time, live questions can be submitted through the Q&A dial-in feature. For instruction on how to dial in, please refer to the earnings call invitation available under stock exchange notice on our IR 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 comes with inherent risks and uncertainties. Actual outcome may differ materially from statements expressed or implied. We highly recommend reviewing our detailed Q2 2026 quarterly report and the '25 annual report for deeper understanding of the risks and uncertainties that could impact our business operations. With that, I will now hand the microphone over to our CEO, Vegard Wollan.

Thank you, Steel, and good morning, everyone. Q2 was another solid quarter for Nordic, both operationally and financially. Our product renewal program continues to progress very well, both strengthening our competitive position and expanding our addressable market. At the same time, we continue to develop our software offering and have launched cutting-edge AI tools that enable developers to speed up and improve the quality of their product development processes. And we continue to grow our cloud services business, which increased the lifetime value of our products. Financially, we achieved record revenue in the second quarter and increased by 33% to $219 million. This was once again at the high end of our guiding range, and this brings revenue for the last 12 months to $759 million, up 21% from the second quarter last year. As in the first quarter, we saw growth both in short range and long range and among both large customers and the broad market and across the consumer and industrial health care segments. Gross margin was 53.1% in the second quarter, up from 50.7% in the second quarter last year and from 52.1% in the first quarter this year. Overall, this generated an EBITDA of $36 million when adjusted for noncash cost effects related to the Memfault acquisition, up from $21 million in the second quarter last year and from $24 million in the first quarter. As I just mentioned, we continue to see growth both among our key customers and in the broad market. And this quarter, we see particularly strong performance in the broad market. Revenue from the top 10 customers are at an all-time high on a rolling 12-month basis, and we are continuing to grow the design activity with our key customers at a high level. However, we have said for a long time that it has been a clear priority for us to regain traction in the broad market, and we now see the strongest growth in this area. Broad market revenue is up by almost 60% from the 2024 lows on a rolling 12-month basis, although still almost 20% below the peak levels from 2022. We continue to see great upside potential, and we see both new customers and returning customers. Looking at the end customer Bluetooth Low Energy certifications, we account for 31% of the total number of certifications, although we dropped somewhat below 30% in the second quarter isolated. Designs based on the new ?nRF54 series accounted for more than 20% of the certifications in Q2, and this will continue to increase over time. It's important to note that this is only counting numbers of certifications and it does not distinguish between high and low-volume end products. And because of that, this cannot be translated into volume or revenue market shares. Last time, I spoke about 4 key growth drivers for Nordic. The first is the continuing wireless connectivity market growth, which creates an attractive business environment for us. The other 3 are up to us. And with an ever broader portfolio of next-generation hardware, cutting-edge software and developer tools and a growing cloud services offering, we are strengthening our competitive position, expanding our addressable market and increasing the life cycle value per customer and product. What sets us apart in this competitive environment is our complete chip-to-cloud solution. Nordic is continuing to build a position as a trusted partner to its customers from concept idea through product development and all the way to the end product life cycle. We have world-class ultra-low power hardware, offering wireless connectivity on multiple protocols, the highest performance processing and compute capabilities on the market and continuously growing power management portfolio. We have a strong stack of embedded software solutions, including the nRF Connect software development kit that works across the complete chip-to-cloud solution and the newly launched AI-assisted development tools that I will get back to in a minute. And we have our growing cloud services business that enables secure over-the-air monitoring, debugging, firmware updating of devices in the field and compliance with the EU Cyber Resilience Act and other regulations coming. Let's first take a closer look by clicking in on our hardware portfolio. This is a very busy slide, but it necessarily is so. If we have to show the increasing breadth of our portfolio that enables Nordic to capture the broad market and open entirely new opportunities. In 2 years now, we have executed an aggressive road map built on the highly competitive 22-nanometer processes from our key partners, GlobalFoundries and TSMC. In short range, you see the growing number of SoCs in the new nRF54 series, spanning from entry-level parts such as the different nRF54L05 variants through the mainstream 54L10, L15 to the high-end, large memory 54LM20 A and B, and the 54H20, aimed meet the complexity and functionality that intelligence at the edge [ new ] demands. These adds to the nRF54 and the nRF53 series, which have also served us so well over the past decade and still accounts for the bulk of revenue and even still have new design wins. In the middle of our -- in the middle, you see our long-range portfolio. We introduced the nRF9151 in late 2024. And at Mobile World Congress in March this year, we announced the upcoming nRF 92 and the 93 series, including the new Smart modem variants. This future-ready cellular IoT portfolio now spans TE-M, NB-IoT, satellite NTN, and Cat 1 bis,? with options for both integrated applications processors with the open MCU series and external application processors in the smart modem series of the 90 -- 9X series. Then we have the Wi-Fi portfolio where we expect to make a step change forward with the upcoming nRF71 series based on 22-nanometer technology and our most modern technology platform. Underpinning all 3 spanning short-range, long-range and Wi-Fi are the growing portfolio of power management solutions and range extenders. They complement the entire portfolio, improving usability and extending the addressable market. Summing up, this represents the broadest and most modern product portfolio for low-power wireless communication in the market. We are addressing an ever-increasing part of the commercial opportunity, and we have only just begun to see the financial impact of the overall product renewal program. On top of our hardware, software and services pillars, there is one thing that ties it all together, which increasingly sets us apart. Developer experience has always been Nordic's strengths built on trusted, established development tools, high-performance connectivity and software stacks, documentation and support. That foundation gives developers a proven starting point when building on Nordic solutions. AI has the potential to assist developers across the entire product life cycle from prototyping and board bring up to debugging, release validation, fleet management, and there are many trying this at the moment. However, generic AI assistants often lack the hardware SDK configuration and device-specific context required for reliable embedded development, which creates a real pain point for developers and end product development. Nordic's AI-assisted development capabilities address this by giving AI assistants access to verified Nordic context, including nRF Connect SDK, documentation, API references, device configurations and even field data from nRF cloud. This is unique, and the ground truth is high-quality data from Nordic and the high-quality Nordic foundation for developers. And this truly solves pain points experienced by developers. This means we are now helping developers to speed up their development cycles and achieve higher quality results. With that, I'll leave it to Pal to take you through the financials. Pål Elstad: Thank you, Vegard, for a very interesting review of our products and systems and tools we have enabling our customers to develop their products. I'll now run through the financials for Q2. As Vegard mentioned, revenue amounted to $219 million in the second quarter of 2026, an increase of 33% from the same quarter last year and 14% increase from the previous quarter. This is the highest quarterly revenue we have ever reported. The previous highest was $202 million back in 2022. On a rolling 12-month basis, revenue increased by 21% to $759 million. The revenue growth mainly reflects Nordic's strengthened competitive position in the short-range wireless communications market with short-range revenue increasing 29% to around $200 million. Although short-range is driving our growth with more than 90% of total revenue, we see strong growth in the other business units. Long-range revenue almost doubled to $15 million with both higher product sales and higher cloud services revenue after last year's acquisition of Memfault. Although the scale is smaller, it's also worth noting close to a doubling of other revenue to $4 million, mainly driven by increased sales of PMICs and development kits. Turning to the end user markets. We see growth across all areas. Consumer revenue increased by 25% year-over-year to $125 million and now accounts for 57% of total revenue. Consumer growth continues to be relatively broad-based across most verticals. Industrial and Healthcare revenue increased by 45% to $86 million and accounts for 40% of the total. Growth in this segment continues to reflect strong health care numbers and increasing contribution from long range, which mainly goes to the industrial consumers. As we have communicated for a long time, revenue in Industrial Healthcare will still depend on a relatively small number of customers with high sales to individual key customers supporting revenue also in this quarter. This means that we will see significant variations from quarter-to-quarter. Interesting point this quarter is that our other revenue grew to $7 million, up from $4 million last year. Other revenue mainly reflects online catalog sales, supporting the positive development that Vegard mentioned in the broad market. Turning to gross profit. Gross profit was $116 million in Q2, up from $83 million in the same quarter last year. The gross margin hence increased to 53.1% from 50.7% last year. The increased margin reflects changes in product mix, higher sales to broad market customers and increasing positive contribution from high-margin cloud services revenue. We expect the gross margin to remain above 50% also in the third quarter and reiterate our long-term ambition to keep gross margins above the 50% level. The growth is improving margins and increasing our operational leverage. With 33% revenue growth and improving gross margins, gross profit increased by 40%. With higher volumes, we also see the effects of the operational leverage in our business model. The adjusted EBITDA margin increased by close to 4% to 16.6% and adjusted EBITDA increased by 75% year-over-year to $36 million. Splitting our cost base, you see that R&D increased in both absolute terms and in percentage of revenue. We continue to invest in the short-range portfolio, although this area accounts for less than 60% of R&D spending despite accounting for more than 90% of revenue. The R&D to revenue ratio in this area has now dropped to around 15%. However, we still invest a significant amount in R&D in long-range and/or early-stage businesses. And combined, these account for more than 40% of R&D despite accounting for just 10% of revenue. These are investments for the future. And as revenue grows over time, we expect gradually more balanced R&D to revenue ratios also in these areas. SG&A OpEx also increased somewhat in absolute terms, although the higher revenue means that R&D -- no, the SG&A to revenue declined by almost 2 percentage points to 13.7%. Turning to cash cost development. In absolute terms, you can see that cash costs have increased from around $63 million in the second quarter last year to $80 million this year. Salaries accounted for $14 million of the increase with around $4 million explained by acquisitions done last year, $2 million from salary adjustments and $5 million from variable pay accruals. In addition, we have approximately $3 million negative effect of the weaker U.S. dollar. At the end of the first half year, Nordic had 1,465 employees, including the 59 employees that joined 2 acquisitions last year. This corresponds to an organic increase of 6% and a total increase of 10% compared to the same period last year. Other cash expenses amounted to $26 million, up from $23 million last year, mainly driven by higher hardware and software spend, along with increased sales activity. I said last time that we overall expected a similar cash cost level in Q2 as in Q1. And although we saw a $2 million increase, we are pretty much on the same level as the last couple of quarters after we took on the acquisitions. Overall, we see no major changes to the cost picture in the third quarter. CapEx in the second quarter was $8 million, slightly below both the second quarter 2025 and the first quarter this year. Around 90% of this is back-end production testers as we're investing for added manufacturing capacity throughout the supply chain. CapEx intensity over the last 12 months is 3.8%, back within the 3% to 4% range we have typically seen over the last few years. Turning to cash flow. Overall, there was a slight reduction in cash during the quarter. However, it is important to understand the underlying developments. Operational cash flow from operations of $15 million was driven by profits. However, the reduction versus last year is explained by an increase in working capital during the quarter. The increase in working capital is driven by higher inventory that mainly reflects a deliberate front-end loaded build to secure supply and capacity. Nordic has raised wafer purchases to support the ramp of next-generation products, notably the nRF54 Series and to build inventory ahead of the additional test capacity being brought online in the supply chain, as I commented on the CapEx slide. As a result, net working capital was $200 million at the end of Q2, up from $143 million last year. Measured as a percentage of last 12 months revenue, net working capital increased to 26%. This is slightly above our target of 25%. Finally, cash and cash equivalents ended at $276 million, which is a strong balance sheet to support future growth. In addition, we have $200 million in an unused credit facility. Before handing the word back to Vegard, we can have a look at our near-term outlook. Based on current customer orders and forecasts, we are guiding for revenue of $220 million to $240 million in the third quarter of 2026. This corresponds to a year-on-year growth between 23% to 34% or a midpoint of 28% and sequential growth between 1% and 10%. We reported a gross margin of 53% in Q2 and expect the gross margin to remain above the 50% also in the third quarter. With that, I'll leave the floor over to Vegard for some closing remarks. Vegard?

Thank you, Paul. As I said last time, we are progressing to plan financially, operationally and strategically. And it's good to see the positive developments continuing, and I'm extremely proud of the Nordic team execution at the moment. Financially, we reported 33% growth on a record high revenue of $219 million for the second quarter. With improving gross margins and good cost control, this translates into a 75% year-on-year growth in adjusted EBITDA. And as Paul just said, we expect continued growth in the third quarter. Operationally, we see short-range nRF54 series and the broadening long-range portfolio gaining momentum and start contributing more to revenue. Moving forward, we will continue with an extensive product renewal program and advancing our chip-to-cloud solutions. To support all this, we have introduced AI-assisted development tools that will add speed and quality to our customers' product development processes, all the way from first prototype to the deployed fleet. It is a strategic goal to increase the lifetime value of our products and services. And by adding new software and solutions, we are increasing the value through our nRF cloud life cycle services. And finally, we continue to strengthen our organization. This quarter, we welcome Jo Uthus, an old colleague of mine from Atmel and Microchip as EVP with responsible for marketing and developer experience in Nordic. And Christer Roth, who many of you will know from his long tenure as a research analyst and investment banker with DNB Carnegie. He will take responsibility for strategy and corporate development, and both will be valuable additions to our management team working on a clear strategic profitable growth agenda. With that, I think we are ready and open for questions, and I'll hand back over to you, Steel.

Thank you, Vegard. We will now open the line for questions. For instructions on how to join the Q&A, please refer to the earnings call invitation posted on our IR website under the Stock Exchange Notice section. With that, I will hand over to Rasmus to begin the Q&A session.

[Operator Instructions] Our first question is from the line of Christoffer Bjornsen from DNB Carnegie. Christoffer Bjørnsen: Congrats on a great quarter. I just wanted to get your thoughts on some more outlook stuff. You have now several quarters with top line momentum ahead of your own expectations. It seems and it seems to be tracking well ahead of the growth trajectory you set out at the Capital Markets Day. At the same time, you're seeing clear signs of pull forward in different segments and amid supply crunch and some customers raising prices and products because of the memory situation and some people struggling with demand disruptions. I just want to give an opportunity to give any thoughts on whether the recent strength in revenues is coming on the back of the pull forward or if you see any whatsoever signs that we might be having to give this back in future quarters or into 2027? I appreciate you don't guide specifically, but just any like how you see the market now would be appreciated. And then I have a follow-up.

Yes. Thanks, Christoffer. I think our strength, which we are experiencing at the moment is multi-folded. So it's a result of a lot of things happening. Obviously, the market is fairly strong. Product renewal process for us is the foundation and it's extremely important to deliver on what we do, and that's executing very well for us. So I think all of this is obviously very important for us, and that's really what we are working and driving internally. I think on the near-term tactics of potential pull-ins or not, we obviously all see the semiconductor market overall being extremely tight and maybe even continue to be tighter and tighter at the moment from a supply side, although I think we are well supported and managing this extremely well with our key partners at the moment. But I think overall, key thing for us is that market continues to improve. And we don't see evidence of pull-ins, particularly with our key customers and the largest customers we have, which is a fairly large group even beyond these top 10, which we obviously exchange a lot closer to. Having said that, I think there is some angst and concern in the market for potential constraints. That's obvious, and we all hear about that. So we cannot rule out the possibility that some customers are advancing orders because they worry about future capacity constraints, either from us or elsewhere. Christoffer Bjørnsen: All right. That's clear. And for my follow-up, I just wanted to double-click a bit on the guidance for Q3. We've all seen that some of your customers and your key customers have had particular supply chain challenges ahead of the second quarter. So just trying to understand if you in any way have reflected any particular headwinds in that guidance number in any part of the range for Q3? Or if not, if that's something to come later on in Q4 or how we should think about that being reflected at all? Pål Elstad: I guess the forecast we have is based on very tight dialogue with our customers. And as Vegard said, it's not possible to rule out all possibilities, but it's based on a very detailed analysis and discussions with our customers and also then seeing the market improving.

Our next question will be from the line of Sebastien Sztabowicz from Kepler Cheuvreux. Sébastien Sztabowicz: On the long range, could you comment a little bit on the order intake over the past few months? Just wanted to understand the growth of the second quarter. Is it more driven by the consolidation of Memfault or it is also the product business picking up strongly? And on the nRF92 series, when should we expect the first volume to kick in? And the follow-up question will be on the pricing environment in the market. We have seen many of the competitors raising prices. What have you done so far? And what do you want to do? And attached to that, how do you see your input cost trending in the next few quarters?

That's probably 3, 4 questions, Sebastien. I appreciate that. Thank you. We'll try to cover that. Yes. I think as a starting point, as in prior quarters, we are not breaking out our cloud services and long-range hardware business separately. I think we can assure you that they are both growing, and they are both growing, I would say, as we also said initially, amongst our breadth of customers as well as breadth of segments. So we see that happen in both of that, and we are very pleased with that. And yes, I think that was a long-range question. On the nRF92 Series contributing to revenue. It's a product which we have just started to sample to some key customers, lots of interest, lots of execution happening on the 92 at the moment. We have seen a fairly solid ramp of the 9151. The 92 Series is a successor to that, which is planned exactly this way. So we are all in all, very comfortable with our current solution and the bring up of the next generation in long range on that regard. And the 92 series is a great product with a lot more compute power, a lot more performance of an already market-leading product. So it's a great position we feel we are in with that at the moment. Last question was around pricing and cost, I think. And Sebastien, I think on a general note, we need to say there that we don't specifically call out any changes we do on outbound pricing to our customers nor do we talk about our COGS and costs from our suppliers. Having said that, I think it's also clear that we all see the semiconductor market is very tight on most process nodes, back-end assembly and test at the moment. And we are working extremely closely with all of our supply partners as well as customers, and what we are doing is having a clear aim to balance growth and margins. And I think we are doing that at the moment, and our plan is clearly to be continuing doing that. Did that cover all the topics?

Our next question will be from the line of Om Bakhda from Jefferies.

My first question was on your gross margin. So we've seen this is the second quarter where your gross margin has gone up very nicely to 53%. And I was wondering how much of this positive effect was attributed to broad market momentum versus potentially the cloud software service accretion. Pål Elstad: I think it's a good mix of the 3 items I mentioned. First of all, it's a customer mix. So the broad market improving this quarter. You saw that on the slide Vegard mentioned. So that has a positive impact. Also on the product mix is important, seeing more influx of the nRF54 in the equation. And then, of course, finally, the contribution from the cloud is a positive impact. So I guess summing up the 3 of them is explaining the increase year-over-year.

Okay. And so would you then say that the nRF54 is proving to be gross margin accretive in the initial revenues that you're getting? And then also just as a follow-up on -- you mentioned that the other sales, that being PMIC and development kits had doubled in the quarter. So I'm just wondering if you're seeing that the 54 series is now providing a platform where you're seeing more stickiness on your adjacencies and so that being customers then designing in and more likely to design in on PMIC solutions.

It's a very delicate question. And I think we have to say we don't share specific margins on sub families, obviously, of competitive reasons and protecting Nordic optimizing, balancing our margin picture at the current and future times. So I don't think we can answer that specifically. I think what we can say generally is obviously that 64 Series is running on a very modern optimized processing technologies from TSMC and GF, the L&H series. Extremely important for us. We think that's very modern, high-performance, cost-optimized technology, which is a good place to be in at the moment. That's in a tighter space. So we are quite pleased about that positioning compared to some of our competitors. Pål Elstad: And then there was a question on PMIC and also the, I guess, cross-sell with and how that impacts.

Yes. And I think in that regard, you can usually say that's also usually not a disadvantage if you look at it from a margin point of view. So without being specific on anything, I think that's as much as we can say on that. Thanks for asking.

The next question will be from the line of Oystein Lodgaard from ABG. Øystein Lodgaard: Congrats on the good quarter. Just a couple of questions on cellular. Cellular did very well this quarter. Can you say something about how much of revenues now are from like 9151? How much is still the older 9160? And can you also say something about which categories are driving the strong growth we're seeing in cellular in this quarter?

Yes. Thanks, Oystein. We appreciate the interest and the question. And again, to protect our competitive position, we are not sharing how the mix is between, let's say, new products vis-a-vis older products. I think we can generally say that the 9151, similarly as the 54 series is starting to contribute to revenues and the design activity has been and is very strong on these new products, which we are very much appreciating. I think overall, in cellular, I think also having taken the leading -- technically leading position on the NTN and satellite connectivity within IoT, I think that's another tailwind and a driver, which is strong for us on the cellular and long-range side, has been now for about a year's time since we started prototype with the very first customers. And there is a lot of people either selecting Nordic for that optionality for future enablement or they enable that immediately. And so I do want to mention that, and we will -- we are now also commenting on that, that we believe we will see customers now coming with Nordic products, long range using NTN with satellite connectivity throughout the second half of this year. Øystein Lodgaard: Interesting. And both -- we're seeing now an acceleration both in cellular and PMIC. Is this something you expect to continue that we're now seeing kind of an inflection point in the segments and that they should continue to grow strongly in quarters ahead?

Yes. Again, I said I think we've got to be cautious about talking too much ahead because we are we are stringent on our guiding principles. I think we -- what we do see at the moment, particularly in long-range and PMIC is that we are executing to that plan we have communicated a couple of years ago. And of course, we say we are on track to execute on that plan, which, yes, you can read out what continuation you believe that leads to. But we are not guiding beyond the current quarter, but executing to plan, and that's what you are seeing.

Our next question will be from the line of Martin Jungfleisch from BNP Paribas.

First question is really on demand visibility as a follow-up. What are your thoughts on the seasonality on revenues this year? Would you still expect that kind of Q3 is the best quarter and you see Q4 down around the usual 5% sequentially? And is there any moving parts that would potentially make seasonality a bit different this year?

Yes. Thanks, Martin. And again, I think I just need to repeat that we don't guide beyond the current quarter. So we don't guide and talk about Q4 at the moment. I think generally, we can just say there are different forces, pros and cons to the seasonality effect. But of course, I think overall, the consumer market portion of Nordic business is it's relatively large. And there is a natural seasonality in that part of the market, and that's not something we are changing. Thanks, Martin.

Okay. Yes. And then just secondly, on the OpEx. OpEx was a bit higher in the second quarter sequentially. What are your thoughts on OpEx going into Q3? Remember last year, you had this, I think OpEx and payroll were a bit higher sequentially Q-on-Q in the third quarter. So what are your expectations around payroll specifically going into Q3? Pål Elstad: Yes. If you look at from Q2 to Q3 last year, there was a step-up. That came due to acquisitions, FX impact and also and also higher variable pay. That's been pretty stable over the last 3 quarters, and we expect it to be relatively stable into Q3. Of course, FX is difficult to predict, and there will be some salary increases also this year, but overall, relatively stable from Q2 to Q3.

Our next question will be from the line of Andrea Olson from Danske Bank.

Congrats with the solid quarter. Just a follow-up on questions on long range. Can you give any breakdown on how much of the long-range revenues is cellular IoT compared to Memfault in Q2 and also comments on your expectations for both of these segments into the next quarters. You mentioned that we will see some customers using satellite technology. Can we expect that in next quarter?

Yes. Thank you. I think we -- yes. So we have decided not to break out our cloud services revenue separately, and we are currently reporting it, as you know, under the long-range and cellular products business. And we are doing that for protecting our competitiveness reasons. So that's why we are continuing to do that. What I can assure you is that they are both growing and progressing well and to the plans at the moment. And we are still obviously developing them jointly and cohesively in the 3-pillar strategy, while we also expand our nRF cloud services to be enabled and applicable even more so and in an even stronger way to all Nordic products, obviously, and also being our forefront mechanism to enable Cyber Resilience Act compliance as well as our customers' ability to update access and from an AI point of view, have the solid monitoring and interaction with their products in the market. I think it's fair to say that both the long-range hardware and the nRF cloud solutions are currently very solidly developing for us, both with key customers and in the broad market. And that's the same for both of them. I think that's probably as much as we can share and will share of some -- to give some color on that and the details have to come a bit later. Pål Elstad: And the question on satellites. You've talked a lot about that on the designs we have there and how that's developing.

Yes. I think on the satellite technology, it's also a lot about having this optionality for quite a lot of customers such that, that can be enabled, and that's a great thing you can do with Nordic. You can either start using it immediately or you can via a software upgrade. And again, using nRF cloud for that software upgrade, you are in good hands with Nordic. And we see people planning for that immediately when they launch products and some other people planning for that in a later stage. And we are expanding and developing further with more and more satellite systems and technologies and providers. And as I also said, during the second half, we will see first commercial products in the market based on Nordic technology and NTN satellite systems.

Our next question will be from the line of Craig Mcdowell from JP Morgan.

My first one was on channel inventory and in particular in your large distributor customers. I think the year started relatively low in terms of channel inventory there. Can you talk about how that's trending and how you see sell-through? And then my second question was on your own inventory, a big step-up from Q1 into Q2. Can you just remind us of the composition here? Should we see that as precautionary ahead of potential wafer price rises, et cetera? Pål Elstad: If we start with distribution inventories, we haven't commented it, but it's more or less unchanged from what we said in Q1, so at healthy levels. When it comes to inventory, it's -- the buildup is it's a deliberate buildup. We're buying wafers. We're planning for growth and we're securing wafer deliveries into our production. It's a good question. We've mixed -- we have it in wafers, we have in semifinished, but we have it in finished goods. So it's a healthy mix between these 3 categories in our inventory.

Our next question will be from the line of Markus Heiberg from SEB.

So I have one question here. It's on the design registration. So maybe you can elaborate more on the 115 Bluetooth designs that you have, which is around 28% of your addressable market. So on a last 12-month basis, it's up moderately year-over-year, I would say. But do you think it's possible to really regain the market share in your broad market without this market share going back to 40%? I appreciate that you have higher value now per design, but do you expect your historical market share also to trend towards historical levels on this metric?

Yes. It's a great question, Markus. I think, first of all, we remain a very clear market leader here in terms of product certifications. And again, you have -- the certification activity will naturally vary a bit from quarter-to-quarter, and that's depending individual customer design cycles and a lot of things. I think what we want to make sure we say in this regard is that we -- it's important that we don't look at this as a model for revenue market share or volume market share. So we are presenting the data, continuing to present the data. I have to say mainly to be consistent with the past, but we also see reasons for this not necessarily being a good reflector of what's happening. And I don't want to get into the details of that because that's probably a much longer discussion. But the key thing is that this is truly counting number of designs. There are other reasons which we may talk about at a separate point in time. So I think we are strong here. We are confident in what we are seeing, and it's something we are happy with. At the same time, we warn with some caution about how to assess and analyze based on the certification share.

Our next question will be from the line of Christoffer Bjornsen from DNB Carnegie. Christoffer Bjørnsen: So I just wanted to double a bit more on the 54H. You had it available to lead customers, but not really as far as we can see, kind of expanded availability to the broad market. Could you maybe give an update on how that's progressing with those lead customers, like how many customers are you handhelding in supporting that ramp? And what kind of timing are you thinking about kind of the true proper scale ramps there? We already see it in gaming and so on, but those are not maybe the biggest volume applications in the market for that kind of product? That would be helpful.

Yes. That's -- thanks, Christoffer. Great question. I think 54H20 is a very good product, and we already now see quite a few customers actually in the market with products based on it. And it is our highest performance device at the moment in the short-range space aside with the 54LM20 series. And these are built for the most demanding applications, high-end applications, and we work with several key customers to develop products on both the 54H20 and the LM20. So we have several key customers developing on both of them. On the H20, that is a complex product, and it's still requiring additional support from Nordic for our customers. to utilize the full capabilities of the 54H20. That's why we are focusing the support for the broad market with the nRF54L [ LM ] series, where the current 54LM20 A and B, which also has 2 megabytes of memory is competing very well and winning very strong designs in that market, too. Thanks for the question, Christoffer.

Our next question will be from the line of Sebastien Sztabowicz from Kepler Cheuvreux. Sébastien Sztabowicz: A follow-up on the healthcare business. Have you made any specific progress to diversify your healthcare business beyond your large customer? And do you see the opportunity in the healthcare market developing both in the short term, but also more on the midterm view?

Yes. Thanks, Sebastien. Very good question. I think the healthcare market is developing very interestingly for us, and we are providing quite a lot of different solutions into that space at the moment. We have very large customers here, but we also have quite a few smaller and midsized customers. And we have customers both, I would say, utilizing all of our products. So we have customers here also on long-range products, nRF cloud and PMIC products. In the coming time, expecting Wi-Fi products as well. So there is a breadth here, and it's growing systemically. We are investing in it, and that's really something we are -- we believe in as a future important segment for us. CGM obviously being a key driver for some of the highest volume growth opportunities in that space at the moment. But there is also quite a lot additional opportunity happening in connected healthcare and connected medical devices which is where obviously having the highest quality wireless connectivity makes a lot of sense. So that is clearly a space for Nordic Semiconductor. Thank you, Sebastien.

Thanks, Sebastien. As we have no further questions in the queue, I'll hand the word back to Steel.

Thank you, Rasmus. Before we close today's session, I have one brief announcement. Nordic will conduct 2 post Q2 result Q&A group calls with analysts and investors. The first group call will be for U.S. investors and will be hosted by Jefferies and is scheduled for today, Thursday, 6th of August at 5:00 p.m. Central European Summer Time. The second group call will be for European investors hosted by UBS. and is scheduled for tomorrow, Friday at 11:00 a.m. Central European Summer Time. Both calls will be attended by Vegard Wollan and Pal Elstad. Each call will be moderated by the covering analysts at respective brokerage. For registration details, please visit the IR calendar on our website. With that, I will now hand over to Vegard Wollan for his closing remarks.

Thank you, everyone. Great questions today. Thanks for joining us, and this concludes today's call. Thank you.