SEB Nordic Seminar Peter Gormsen, Chief Financial Officer, GN Store Nord January 2022
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SEB Nordic Seminar
Peter Gormsen, Chief Financial Officer, GN Store Nord
January 2022
1
Safe Harbor Statement
The forward-looking statements in this report reflect the management's current expectations of certain future events and
financial results. Statements regarding the future are, naturally, subject to risks and uncertainties, which may result in
considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions
regarding future events, which may prove incorrect.
Factors that may cause actual results to deviate materially from expectations include – but are not limited to – general
economic developments and developments in the financial markets, technological developments, changes and
amendments to legislation and regulations governing GN’s markets, changes in the demand for GN's products,
competition, fluctuations in sub-contractor supplies and developments in ongoing litigation (including but not limited to class
action and patent infringement litigation in the United States).
This presentation should not be considered an offer to sell or buy securities in GN Store Nord.
2
Agenda
GN Store Nord
GN Hearing
GN Audio
3
GN at a glance
Global leader in intelligent audio solutions Global reach, local presence
• Founded in 1869 and listed on Nasdaq Copenhagen
• Technology-driven company primarily developing and manufacturing
hearing aids (GN Hearing) and headsets, speakers and video (GN Audio)
• Innovation leader with expertise in the human ear, sound and wireless
technology under one roof
• Unique portfolio of medical, professional and consumer audio solutions and
deep R&D expertise (total R&D spend of DKK >1 billion per year)
• Strong track record of strategic partnerships with leading channels,
customers and adjacent industry technology leaders
• Access to attractive and growing gaming gear market, subject to closing
Countries with GN offices
of SteelSeries acquisition (closing expected by the beginning of 2022)
Countries with GN distributors
Business areas and brands Financial summary
Revenue & organic growth EBITA & EBITA margin FCF & cash conversion*
GN Hearing GN Audio (DKK million & %) (DKK million & %) (DKK million & %)
13,449 1,865 200
12,574 2,321
10,607 150
1,956
9,585 1,866 1,296
15% 1,744 100
1,134 1,110 100%
18.4% 18.5% 65% 50
13% 9% 18.2% 57% 56%
13.9% 0
8%
-50
-100
2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020
*FCF: Free cash-flow excluding M&A, cash conversion: FCF / EBITA
4
GN’s investment case is intact
Focused innovation within sound and video processing in selected market
segments
Leading positions in attractive markets with high entry barriers
Focused growth model, dedicated developer, manufacturer and
distributor, refraining from vertical integration
Clear strategy underpinned by deep technology expertise and
strategic global partnerships
Profitability in line with or better than peers
Strong cash conversion and asset light business model
5
GN commits to Science Based Targets initiative
GN commits to Science Based Targets initiative to limit global warming to 1.5C and being net-zero by 2050
▪ Climate goals will be independently certified to be aligned with the scientific consensus
▪ GN joins the Business Ambition for 1.5 C coalition
▪ Required additional goals will be prepared in collaboration with the Science Based Target initiative
▪ Progress will be reported in the annual reports
6
Agenda
GN Store Nord
GN Hearing
GN Audio
7
GN Hearing financial performance: Recovery following the pandemic
Revenue development (DKKm) EBITA development (DKKm)
6,351
5,833
5,615
1,284
4,725 1,194
1,153
~16%
6% 7% 7%
21% 21% 20%
>12%
-24% 41
1%
2017 2018 2019 2020 20211 2017 2018 2019 2020 20211
Organic growth EBITA margin
Revenue EBITA
1) 2021 guidance
8The hearing aid market remains very attractive and robust in the mid to long term
01 ~4-6% expected unit CAGR in coming years1 03 Multiple attractive megatrends driving market growth
Global hearing aids market growth1
(unit growth) ~4-6%
• 65+ population expected to grow significantly in the years to come
• Baby boomers generation reaching retirement age
• Increasing noise pollution drives prevalence of hearing loss
• Increasing wealth among larger middle class
’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20
GDP growth (annual %)2 0% GDP growth
1) ASP decline of 1-2%. Based on company estimates, industry association EHIMA 2) World bank
02 Room for penetration growth 04 High barriers to entry to the market
Penetration still low,
especially for less Profound
severe hearing loss
Severe
Moderately severe
Moderate Regulations Technology Distribution
Mild
Degree of penetration
Source: MarkeTrak, EuroTrak, GN estimates
9Worldwide: 80% of people with a hearing loss currently live without hearing aids
Recognized hearing difficulty
Not Do not want a traditional Hearing Aid
penetrated
7
80% Want a consumerized approach
Interested in tech but want an easy solution
All in One
Source: GN studies 10GN has acquired Lively – a leading online hearing care and digital marketing
platform
Access to the fast-growing telehealth market,
utilizing a proven business model with rapid
growth
Leader in online tele-audiology solutions and
digital marketing platform
A new combined offering with online
experience and access to clinics through GN
Hearing’s network of hearing care
professionals
11
11Agenda
GN Store Nord
GN Hearing
GN Audio
12GN Audio financial performance: High growth and strong profitability
Revenue development (DKKm) EBITA development (DKKm)
55 11,000
50 10,00024 2,200
45 8,724 9,000 2,000
23 1,888
40 +30% CAGR 8,000 +38% CAGR 1,800
35 42% 7,000 22 1,600
6,223
30 6,000 21 21.6% 1,400
1,244
4,774 >21% 1,200
25 22%-25% 5,000 20
3,970 26% 905 1,000
20 4,000 20.0%
21% 19 721 800
15 3,000 19.0%
18 600
10 2,000 18.2%
10% 400
5 1,000 17 200
0 0 16 0
2017 2018 2019 2020 20211 2017 2018 20193 20202 20211,3
Revenue Organic growth EBITA EBITA margin
1) 2021 guidance, 2) Excluding gain from legal settlements and litigation of DKK 114 million, 3) Excluding transaction related costs
13GN Audio is strongly positioned in an attractive portfolio of markets
Enterprise
Office Contact Center Collaboration Consumer
Office-based “Calls for a living“ Plug-and-play Preference for
knowledge collaboration great calls,
Characteristics
workers music and an
active lifestyle
Market trend
From desk-phone telephony in From desk-phones using on- From built-in legacy From corded headbands to
Market driver private offices to UC&C in premise infrastructure to equipment to UC&C-enabled True Wireless as the
open offices laptop-based cloud calling plug-and-play solutions preferred form factor
Market share*
Market position #1 #2 Differs by segment Differs by segments
Share of GN Audio
revenue*
Gross margins*
Market size (USD)* ~1.8bn, ~10% growth ~1.75bn, ~30% growth ~20bn, double-digit growth
Source: Company estimates | *Indicative 14UC platform growth has significantly outpaced the professional headset market
Unified communication platforms have experienced massive growth* Professional headset market accelerated with ~25% growth in 2020
Established segment
6x Up ~6x in daily
active users
Office workers
“Teams usage has never been higher. We have nearly 250
million monthly active users as people use Teams each day to ~525 million
communicate, collaborate, and co-author content across work, With ~17% penetration
life, and learning”
- Satya Nadella, Chairman and CEO of Microsoft. July 27, 2021
New opportunities: Public sector
30x Up ~30x in daily
active participants Government
workers
~150 million
Low penetration
“In a recent survey we conducted, 80% of US respondents
agreed that all interactions will continue to have a virtual
element post-pandemic, and that figure was even higher in
many of the other markets we surveyed”
Education and ~260 million
- Eric Yuan, President and CEO of Zoom. June 1, 2021
healthcare personas Low penetration
* In 2020 accelerated by COVID-19
15
Source: Public Information, Frost & Sullivan and GN estimatesNew ways of working calls for superior technology
In the office Jabra Evolve2 85 Soft memory headband: New ergonomic
headband designed from hundred of head
scans, for comfortable all-day wear
Use case: • Background noise
• Different UC platforms
• Interruptions
Superior
• Need for collaboration battery: Up to Bigger speakers: Powerful leak-
• Busy environment 37 hours tolerant 40mm. Factor in advanced
battery life - 8 digital chipset and the latest AAC
hours of codec driving superior sound quality
battery life for both calls and music
Working from home charged in 15
minutes
Use case: • Plug into a new set-up
Noise isolating design and ANC:
• Background noise from kids, Enhanced noise isolating design and
dog, etc. powerful digital hybrid ANC
• Limited privacy
• Concentration issues
• More than one device
Intelligent 10-microphone
technology and new improved signal
“On the go” processing algorithms delivering
outstanding call performance,
Use case: • No charging options everywhere
• Background noise
• Changing environments Discrete hidden boom arm:
Busylight visible from any direction.
• Move from office to “on the go” Retractable boom arm allows for a
Red light automatically activated
• Preference for music listening more casual look without
when in call or in a meeting
and smarter design compromising on call quality
16Ideal strategic fit between GN and SteelSeries: Closing expected early 2022
Access to new attractive market
- A new GN growth engine
Global pioneer in premium
gaming gear
- Software enabled
- Superior quality
- Innovative design
- Strong brand
Significant scale opportunities
- Leveraging industry leading
capabilities of GN Audio
17Large, growing and attractive gaming gear market
1 Growing addressable gaming gear market1 3 Attractive structural trends
(USD in billions)
• 2.8 billion gamers2 across the world, which is expected to increase with a 5% CAGR in the
coming years driven by demographics and easier access to gaming
CAGR +23% 5.2
• The penetration of purpose-built gaming gear is still very low (10% penetration in gaming
headsets) and is expected to increase going forward due to continued innovation
2.8
• High replacement rates with a one- to two-year upgrade cycle
2017 2018 2019 2020 2025E
2 Supported by massive market share opportunity 4 Important market dynamics
(2020 spend in USD) Differentiated Brand &
Technology
products community
Total gaming
gear market - Monitors
15bn+
- Controllers • Manufacturers apply • Proprietary engineering • Network effects from a
- Speakers dedicated software expertise developing noise strong community of
- Webcams integrations and settings cancellation and adaptive gaming and hardware
~17% - Other
• Learning curve AI functionalities enthusiasts
Core gaming
5.2bn
gear market - Headsets associated with switching • New products require • High brand
- Keyboards to new products extensive testing to concentration amongst
- Mice
achieve product market fit leading esports teams
0.3bn SteelSeries 2020 revenue
Source: NewZoo, Pitchbook, SteelSeries management presentation, Internal analysis, Global leading consultancy firm
Note 1: Gaming gear market excludes controllers (which is currently heavily dominated by Sony, Microsoft and Nintendo). Market growth forecast 2020-25E and internal analysis 18
Note 2: Gamers are defined as “all people who played (digital) games on a PC, console, a mobile device or cloud gaming service in the past six months”Q&A
www.gn.com
E-mail: investor@gn.com
Henriette Wennicke, VP - IR & Treasury, Tel.: +45 4575 0333
Rune Sandager, Director - IR & Treasury, Tel.: +45 4575 9257
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