• "Focus - Innovate - Execute" strategy, designed to drive long-term profitable growth and sustainable value creation
• Increase focus on highly differentiated Positioning business by substantially shifting R&D teams to Positioning innovations
• Stop future cellular chipset development leading to a non-cash impairment of
  CHF 65 to 70 million
• Turn-around the Connectivity business by gaining scale, leveraging our trustworthiness as Swiss supplier in a multi-polar world
• Improve execution performance, by agile development and increased bottom-line focus
• New financial model (over the cycle) includes revenue CAGR of >10%,
  adj. EBIT margin ~14% and Free Cash Flow margin ~8%
• After outperforming the semiconductor market in 2023, partly due to customers' overstocking, 2024 will be a transition year. Double-digit million cost savings already initiated to protect the bottom-line in 2024

THALWIL, SWITZERLAND / ACCESSWIRE / November 21, 2023 / u-blox (SIX:UBXN), a global leader in Positioning and Connectivity technologies, holds today its 2023 Capital Markets Day. Chairman André Müller and CEO Stephan Zizala, together with members of the Executive Committee, will discuss the company's new "Focus - Innovate - Execute" strategy, designed to drive long-term profitable growth and sustainable value creation.

Strategy: Focus - Innovate - Execute

Focus on Positioning; stop cellular chipset development
u-blox will further strengthen its market leading Positioning business by allocating more resources and focusing on its highest-value business segment. By continuing development in fast growing segments and expanding into new applications, u-blox will secure continued profitable growth.

u-blox has decided to discontinue future cellular chipset development, leading to an expected non-cash impairment of CHF 65-70 million in December 2023. Renewed focus on our cellular module business aims to gain market share via leveraging our sales and distribution channels and leveraging our trustworthiness as Swiss supplier in a multi-polar world.

Innovate
u-blox has a full pipeline of innovations to address secular growth drivers such as autonomous driving, remote healthcare, asset tracking and industrial digitalization. We will intensify the implementation of an agile R&D approach, bringing those innovations to the market faster. The more iterative development process will deliver functional products after each iteration, enabling early customer feedback, therefore enhancing development potential and optimizing resource-allocation.

Execute
u-blox is targeting the improvement of its procurement activities (CHF >300 million sourcing volume in 2022) through process-reorganization. We expect this initiative to generate an improvement in efficiency and product costs, especially within cellular, by establishing a design-to-cost toolset. These changes, in addition to maximizing our global site footprint, are also intended to improve working capital management and optimize costs.

New mid/long-term financial model
u-blox announces its new over-the-cycle Target Financial Model^[1]. Revenue is expected to grow by a CAGR of over 10%, ahead of the 7% CAGR expected for the semiconductor industry. Adj. EBIT margin is expected to be at around 14% and Free Cash Flow margin around 8%.

New reporting structure enhances transparency
Going forward, u-blox will provide a trading update with revenue and adj. EBIT in the first and third quarter, in addition to the established full- and half-year results publications. Additionally and in line with common market practice in the semiconductor industry, u-blox will replace its annual guidance with a quarterly guidance.

2024 to be a transition year before growth resumes
The existing revenue guidance for FY 2023 of CHF 585-625 million, implies a strong sequential growth in Q4 versus Q3. While not providing a guidance for FY 2024 in-line with our new reporting framework, the likely development of revenues in 2024 needs to be seen in light of significant overstocking by our customers which benefitted our 2023 revenues resulting in superior performance vis-à-vis the overall semiconductor markets. In order to mitigate the effects on profitability from a lower revenue, u-blox initiated measures targeting double digit million cost savings to be effective in 2024.

u-blox's Chairman André Müller commented: "I am very pleased to announce of our focused strategy today, aiming to capitalize on the strength of our business model and better align it with end-markets demand. The strategy, focused on long-term sustainable growth, is designed to drive u-blox's value for years to come and deliver strong returns to our shareholders".

u-blox's CEO Stephan Zizala added: "Our refined strategy "Focus - Innovate - Execute" is designed to unleash the full potential of the incredible u-blox team. After almost one year as CEO, I'm convinced more than ever that we are well positioned to significantly contribute and benefit from secular growth drivers such as autonomous driving, remote healthcare, asset tracking and industrial digitalization."

Conference call and webcast details

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SOURCE: u-blox AG