Napatech A/s · OSL:NAPA
Napatech A/s — Investor Day (November 2019)
35 slides from Napatech A/s's investor day presentation, Nov 5, 2019
Slide 1: Capital Markets Day
Capital Markets Day 5 November 2019 NAPATECH A/S © COPYRIGHT 2019 5 November 2019 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement • This presentation has been prepared by Napatech A/S (the “Company”) solely for information purposes. The presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities. Certain statements included in this presentation contain various
Slide 3: Napatech Capital Markets Day Agenda
Napatech Capital Markets Day Agenda • Introduction – Lars Boilesen, Chairman • Business Update – Ray Smets, CEO • Data Center Compute Industry Overview – Vlad Galabov, Principal Analyst, Data Center Compute, IHS Markit Technology • Market & Product Overview – Jarrod Siket, CMO • Napatech Aspirations
Slide 4: Business Update
Business Update NAPATECH A/S © COPYRIGHT 2019 5 November 2019 4
Slide 5: Corporate Overview
Corporate Overview • +16 year history delivering FPGA-based technology to customers globally • Unparalleled expertise accelerating compute-intensive applications on standard open servers • High-tech solution with 22 patents & patents-pending provides high barrier-to-entry for competitors • Solid gro
Slide 6: Napatech In Review – 2019 Turnaround in Progress
Napatech In Review – 2019 Turnaround in Progress 2019 YTD Revenue YTD Gross Margins Reported: +124% Reported: +23%-points Adjusted: +63% Adjusted: +5%-points 116.6 MDKK ($17.6M) vs 52.2 MDKK ($7.7M) in ‘18. YTD GM of 74.6% due to improvement of hardware costs and price stability. YTD Operating Costs
Slide 7: Data Center Compute Industry Update & Trends
Data Center Compute Industry Update & Trends NAPATECH A/S © COPYRIGHT 2019 5 November 2019 7
Slide 8: Data Center Computing: Where, How Much and Why?
Data Center Computing: Where, How Much and Why? Demand for data center compute will accelerate and the CPU needs help. Vlad Galabov Principal Analyst, DC Compute, Cloud & DC Research Practice +44 2031593596 vladamir.galabov@ihsmarkit.com CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION
Slide 9: Agenda
Agenda 1. Global demand drivers for data center compute 2. New server use cases and edge computing 3. Ethernet adapter ports and revenue growth 4. Enterprise demand signals CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION
Slide 10: Data center compute demand will accelerate again
Data center compute demand will accelerate again Rise of e-commerce Rise of the social internet Rise of the smartphones, Smartphones everywhere AI everywhere and search engines and video streaming new social and video uses Rise of the AI Server Shipment Server Shipment Server Shipment Server Shipmen
Slide 11: Data center compute demand will accelerate again
Data center compute demand will accelerate again Rise of e-commerce Rise of the social internet Rise of the smartphones, Smartphones everywhere AI everywhere and search engines and video streaming new social and video uses Rise of the AI Server Shipment Server Shipment Server Shipment Server Shipmen
Slide 12: The emerging edges: Telco, Enterprise and Cloud SP
The emerging edges: Telco, Enterprise and Cloud SP IoT G/W [Edge DC] IoT G/W [Regional DC] [Edge DC] uCPE [Central DC] [Edge DC] IoT G/W [Regional DC] IoT G/W [Edge DC] <20 ms RTT Source: IHS Markit Telco Edge Survey, October 2018 CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION 12
Slide 13: Server Distribution Scenario
Server Distribution Scenario CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION 13
Slide 14: Server Distribution Scenario
Server Distribution Scenario CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION 14
Slide 15: Server Distribution Scenario
Server Distribution Scenario 2X more servers at the edge in 2023 4:12:1200 compared to 2019 CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION 15
Slide 16: Server Distribution Scenario
Server Distribution Scenario CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION 16
Slide 17: High-speed adapters offload the CPU, drive $3.7B in CY23
High-speed adapters offload the CPU, drive $3.7B in CY23 DC Ethernet Adapter Ports Forecast by CPU Offload CY18–CY23 CAGR 35 Basic NIC -13% Offload NIC 19% 30 Programmable NIC 72% 25 Grand Total 8% Port Shipments (Millions) 20 Key takeaways 15 • Ethernet adapter port shipments parallel server shipme
Slide 18: High-speed adapters offload the CPU, drive $3.7B in CY23
High-speed adapters offload the CPU, drive $3.7B in CY23 DC Ethernet Adapter Revenue Forecast by CPU Offload CY18–CY23 CAGR $4.000 Basic NIC -14% $3.7B Offload NIC 19% $3.500 Programmable NIC 50% Grand Total 19% $3.000 Revenue (US$ Millions) $2.500 Key takeaways • Transition to higher speeds and CPU
Slide 19: Enterprises increasingly opt for programmable adapters
Enterprises increasingly opt for programmable adapters We asked 153 enterprises what type of network connectivity their servers use and what they expect by May 2021? using programmable NPU using programmable Arm-based SoC 28% 33% Use Programmable NIC Use Programmable NIC using an FPGA in 2019 in 202
Slide 20: Network policies and security workloads main driver
Network policies and security workloads main driver We asked the 76 enterprises who use a programmable NIC what workloads run on them and what they expect by May 2021? Network Protocol 26% Firewall/NAT 22% SSL 19% Storage datapath aggregation 18% and management 17% Video Open vSwitch 16% vRouter 16%
Slide 21: Over two-thirds of CY23 ports will be 25GE and 100GE
Over two-thirds of CY23 ports will be 25GE and 100GE DC Ethernet Adapter Port Forecast by Speed • By CY23, over 70% of switch ports shipped 70% will be 25GE and 100GE 60% • 25GE and 100GE will represent 73% of adapter ports by CY23 50% Key takeaways 40% Ports (%) • Increased compute densities due to
Slide 22: Takeaways
Takeaways Server Shipment CAGR ~7% Demand for data center Ethernet adapters will compute will accelerate Expect new/more use offload more CPU tasks driven by AI, data cases for programmable while also moving to analytics & connected NICs higher speeds devices CANNOT REPRINT WITHOUT IHS MARKIT AUTHOR
Slide 23: Thank you. Questions?
23 Thank you. Questions? Vlad Galabov Principal Analyst, Data Center Compute Cloud and DC Research Practice Desk: +44 203 1593596 Mobile: +44 7970 969289 Vladamir.Galabov@ihsmarkit.com @VladGalabov CANNOT REPRINT WITHOUT IHS MARKIT AUTHORIZATION
Slide 24: How Napatech Products Are Positioned in the Market
How Napatech Products Are Positioned in the Market NAPATECH A/S © COPYRIGHT 2019 5 November 2019 24
Slide 25: NIC Market is Driven By Server Expansion
NIC Market is Driven By Server Expansion Megatrends Impact Server Market NIC Market Grows to All Networks Expansion Continues Solve Server Connectivity CLOUD Data Centers FOG 5G Nodes SmartNICs emerge to support advanced applications and EDGE IoT services when standard Devices servers can’t keep up
Slide 26: Napatech's Achieves a Key Position in the Emerging SmartNIC Market
Napatech’s Achieves a Key Position in the Emerging SmartNIC Market SmartNIC Competitive Landscape (% technology deployed 2023) • Competition chases Value opportunity • >20 companies have entered FPGA the market (60-70%) • Technology options increase ASIC competitive dynamics Performance (~5%) • It i
Slide 27: Napatech Brings A Unique Combination Of Value and Benefits
Napatech Brings A Unique Combination Of Value and Benefits Expertise: Pioneered the use of FPGA technology for SmartNICs Agility: Programmable hardware performance at the speed of software innovation Software: FPGA solutions optimized for leading applications & services Price: Economies of scale in
Slide 28: Growth Aspirations
Growth Aspirations NAPATECH A/S © COPYRIGHT 2019 5 November 2019 28
Slide 29: Our Plan Of Attack
Our Plan Of Attack Leverage our expertise in FPGA software to out-innovate the competition and build new higher growth product lines in Application Acceleration for Virtualization and Cybersecurity solutions 1. Continue to drive FPGA-based SmartNIC leadership in current Packet Capture solutions 2. E
Slide 30: Customer and Revenue Growth
Customer and Revenue Growth Growth New NEW NEW • New Design Wins with New Customers Revenue Products & Products for both Existing and New Growth Designs Customers are the key to growth Existing • Revenue in 9-18 months Customers New Stability Customers • Existing Customers provide more CURRENT Curre
Slide 31: The SmartNIC Market Evolves in Napatech's Favor
The SmartNIC Market Evolves in Napatech’s Favor Today - 2019 Future - 2023 $1.7B $3.7B $386M $1.6B $2.1B $1.3B Hyperscale Hyperscale ? $386M ? ? End User/ $1.6B ? End User/ OEM OEM ? New Applications i.e. Cloud, Mobile, Security Programmable Programmable NIC Market Overall NIC Market NIC Market Over
Slide 32: Napatech Future Growth Aspirations
Napatech Future Growth Aspirations 3 year aspiration Revenue CAGR 20%-30% Margins around 70% Operating Costs CAGR around 7%-10% S/W-Only Revenue Growing from <1% to 10%-15% of revenue Growth comes from Packet Capture as our Core Competency Network Management Network Management historically about 70%
Slide 33: Why Invest in Napatech?
Why Invest in Napatech? Large Market Positioned for Leverageable Opportunity Success Business Model • FPGA SmartNIC • Proven expertise in • Access to growing market is growing FPGA software markets and rapidly • Protected position in revenues allows us • Napatech is investing high-barrier-to-entry t
Slide 34: Q&A
Q&A NAPATECH A/S © COPYRIGHT 2019 5 November 2019 34
Slide 35: Thank You!
Thank You! WANT TO LEARN MORE? Sign up for the Napatech News Sign up for OSE news Follow us on social media NAPATECH A/S © COPYRIGHT 2019 5 November 2019 35