Slide 1: Q1 2020 Presentation
Q1 2020 Presentation Ray Smets Heine Thorsgaard CEO CFO 28 April 2020 NAPATECH A/S © COPYRIGHT 2020
Slide 2: Q&A Session at the end of the presentation
Q&A Session at the end of the presentation DK: +45 78 15 01 07 NO: +47 23 96 39 38 UK: +44 3333 009 263 US: +1 833 526 8395 To ask a question, press ZERO ONE on your telephone keypad. To withdraw your question, press ZERO TWO. Texted question can be submitted using the button on the website. NAPATEC
Slide 3: 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 4: Q1 2020 Management Statement Topics
Q1 2020 Management Statement Topics • Q1 2020 Business Highlights • COVID-19 Perspective and Response • Q1 2020 Financial Results • 2020 Outlook • Q&A NAPATECH A/S © COPYRIGHT 2020 28 April 2020 4
Slide 5: Q1 2020 Business Highlights
Q1 2020 Business Highlights NAPATECH A/S © COPYRIGHT 2020 28 April 2020 5
Slide 6: Strong Start to 2020
Strong Start to 2020 Q1 2020 YoY Revenue Growth +27% Solid Gross Margins of 68.8% Free Cash Flow Positive EBITDAC Positive and On-Track for 2020 COVID-19 Preparedness and Response is Well Managed New Link™ Virtualization Software Product Launched NAPATECH A/S © COPYRIGHT 2020 28 April 2020 6
Slide 7: Napatech Delivers Revenue Growth and Positive Free Cash Flow
Napatech Delivers Revenue Growth and Positive Free Cash Flow Revenue over the last 6 quarters Positive net Free Cash Flow over the last 6 demonstrate the underlying strength and quarters demonstrates solid execution and stability of Napatech’s business positive progress towards profit Quarterly Reve
Slide 8: COVID-19 Preparedness and Impact
COVID-19 Preparedness and Impact • Product Deliveries are On-Track • Napatech productivity is preserved with proactive and well executed WFH efforts • Software deliveries continue as planned • Hardware manufacturing is protected as ”essential business” at US-based factory • Supply Chain Measures Eng
Slide 9: COVID-19 Preparedness and Impact cont'd
COVID-19 Preparedness and Impact cont’d • Target Market Impact Being Tracked & Evaluated • Large rapid shifts in Network demand put pressure on capacity and performance • Rapid swing of workforce from office to home increases dependency on Application availability and performance • Meeting Customer
Slide 10: COVID-19 Impact on Customer Markets is Mixed
COVID-19 Impact on Customer Markets is Mixed Tailwinds Headwinds • Spike in demand for cloud services • Lower enterprise IT spend due to • Video streaming revenue impact from the pandemic • Cloud gaming • DC operation staff impacted by travel • Remote working restrictions • Cost saving • Uncertainty
Slide 11: The Global Lockdown is Driving Increased Network Demand
The Global Lockdown is Driving Increased Network Demand • Networks designed for temporary peaks in demand are being hit Hong Kong Compounded Traffic Increase by sustained traffic prompting operators to increase capacity +40% Italy UK Brazil China • Internet Traffic Increased in all major peering poi
Slide 12: Application Activity Grows During the Pandemic
Application Activity Grows During the Pandemic Shifts in Internet Activity by Category During Pandemic (as of March 2020) 7-12 Education/Kids Online Entertainment US Gov't Resources • Nokia reports growth in latency- Gaming sensitive application sessions Telecommuting Distance Learning • 300% growth
Slide 13: COVID-19 Causes Increased Network Utilization & CAPEX Spend
COVID-19 Causes Increased Network Utilization & CAPEX Spend • Verizon increasing CAPEX range by $500M to $17.5-$18.5B to expand network and transition to 5G • China Telecom increasing CAPEX to $12B, 53% dedicated to 5G roll-out • Expect increased CAPEX spending in Content Delivery Networks (Netflix,
Slide 14: Napatech's Market Exposure to COVID-19
Napatech’s Market Exposure to COVID-19 Napatech is benefitting from exposure to market areas where the pandemic is placing a greater demand on mission-critical Network and Application Performance. GROWTH IN SLOWDOWN IN MISSION CRITICAL AREAS MINIMALLY EXPOSED AREAS • Telecommunications • Travel • Cy
Slide 15: Napatech Sits at the Intersections of Server & Application Markets
Napatech Sits at the Intersections of Server & Application Markets Server-based Applications Multiplying in Data Centers & Cloud Networks Network Cybersecurity Infrastructure Cloud & Edge Mobile Financial Monitoring Napatech Technology & Solutions Accelerate Server-based Applications Networks Built
Slide 16: Q1 Wins: Top Brands Deploy Napatech Across Many Applications
Q1 Wins: Top Brands Deploy Napatech Across Many Applications Recurring from Q4-2019 NAPATECH A/S © COPYRIGHT 2020 28 April 2020 16
Slide 17: Our Plan Of Attack – Making Progress
Our Plan Of Attack – Making Progress Leverage our expertise in FPGA software to out-innovate the competition and build new higher growth product lines in Application Acceleration for Virtualization, Cybersecurity and 5G Mobile solutions 1. Continue to drive FPGA-based SmartNIC leadership in current
Slide 18: New Link Virtualization Software and SmartNIC Design
New Link™ Virtualization Software and SmartNIC Design NEXT GENERATION NEXT GENERATION New Product Software New SmartNIC Design • Focused on meeting the growing • Newest FPGA technology market opportunities in Edge, 5G • Highest performance processing Mobile and Cloud Networking • Greener design (pow
Slide 19: Q1 2020 Financials
Q1 2020 Financials NAPATECH A/S © COPYRIGHT 2020 28 April 2020 19
Slide 20: Consolidated Income Statement Q1 2020
Consolidated Income Statement Q1 2020 DKK'000 2020 Q1 2019 ∆ Key Highlights Revenue 48,536 38,254 27% • Revenue in Q1 up 27% compared to Cost of goods sold (15,128) (11,647) Q1’19 (up 23% in USD) Gross profit 33,408 26,607 26% GM% 68.8% 69.6% • GM in Q1 68.8% down 0.8%-points Other operating income
Slide 21: Consolidated Cash Flow Statement Q1 2020
Consolidated Cash Flow Statement Q1 2020 Q1 DKK'000 2020 2019 Key Highlights Earnings before tax (EBT) (1,910) (8,199) Adjustments to reconcile profit before tax to net cash flows 6,125 7,299 • Net Cash flow from operating Working capital adjustments (647) 5,449 activities in Q1 +3.4 MDKK Interest,
Slide 22: 2020 Outlook
2020 Outlook NAPATECH A/S © COPYRIGHT 2020 28 April 2020 22
Slide 23: FY2020 Guidance
FY2020 Guidance Annual guidance for 2020 guidance is as follows: Note: • With performance in the Guidance middle of the guided ranges: • EBITDAC would be 6.5 MDKK Revenue 185-205 MDKK • EBIT would be 1.5 MDKK Gross margin 68-72% Staff expenses & Other external costs 125-135 MDKK • No changes made to
Slide 24: Why Invest In Napatech?
Why Invest In Napatech? STABLE GROWTH IN EXECUTING DELIVERING WINNING & REVENUE, ON OUR PRODUCT TOP GROWING CASH FLOW STRATEGY INNOVATION CUSTOMER & BRANDS LEVERAGABLE NAPATECH A/S © COPYRIGHT 2020 28 April 2020 24
Slide 25: Q&A Session at the end of the presentation
Q&A Session at the end of the presentation DK: +45 78 15 01 07 NO: +47 23 96 39 38 UK: +44 3333 009 263 US: +1 833 526 8395 To ask a question, press ZERO ONE on your telephone keypad. To withdraw your question, press ZERO TWO. Texted question can be submitted using the button on the website. NAPATEC
Slide 26: Stay Connected With Napatech
Stay Connected With Napatech On The Web: Social Media: Other News: www.google.com/alerts www.google.com/alerts www.napatech.com/investor-relations www.napatech.com/newsletter NAPATECH A/S © COPYRIGHT 2020 28 April 2020 26