Slide 1: 1H 2020 Half-Year Report Presentation
1H 2020 Half-Year Report Presentation Ray Smets Heine Thorsgaard CEO CFO 13 August 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 72 32 51 NO: +47 23 96 36 88 UK: +44 3333 009 261 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: 1H 2020 Half-Year Report Topics
1H 2020 Half-Year Report Topics • 1H 2020 Business Highlights • Market Update • 1H 2020 Financial Results • 2020 Outlook • Q&A NAPATECH A/S © COPYRIGHT 2020 13 August 2020 4
Slide 5: 1H 2020 Business Highlights
1H 2020 Business Highlights NAPATECH A/S © COPYRIGHT 2020 13 August 2020 5
Slide 6: Strong Performance in 1H 2020
Strong Performance in 1H 2020 Growing Profitable 1H 2020 YoY Revenue Growth +25% Solid Gross Margins of 72% Free Cash Flow for 1H was Best Ever EBITDAC Positive and Growing Earnings is Positive for the FIRST TIME NAPATECH A/S © COPYRIGHT 2020 13 August 2020 6
Slide 7: Trends: Growing and Profitable
Trends: Growing and Profitable Revenue over the last 3 1H periods Free Cash Flow over the last 3 1H periods demonstrate the underlying strength and demonstrates improved operating leverage stability of Napatech’s business and lowers risk Revenue DKKm Free Cash Flow DKKm 12.2 97.4 4.7 77.9 2018-H1 20
Slide 8: Positive 1H EBITDAC and Earnings for the First Time
Positive 1H EBITDAC and Earnings for the First Time 1H positive earnings show solid progress towards leverage and longer-term profitable operation EBITDAC DKKm Earnings DKKm 9.5 2,5 2018-H1 2019-H1 2020-H1 2018-H1 2019-H1 2020-H1 (6.3) (15,7) (52.4) (42,8) NAPATECH A/S © COPYRIGHT 2020 13 August 202
Slide 9: Napatech's COVID-19 Response and Business Impact
Napatech’s COVID-19 Response and Business Impact EMPLOYEES CUSTOMERS BUSINESS IMPACT • Business-as-usual • Enterprise digital • Key target customers are transformation remains a resilient and stable • Phased return in Copenhagen positive tailwind HQ office • Supply Chains are mostly • Customers boos
Slide 10: Q2 Wins: Top Brands Deploy Napatech Across Many Applications
Q2 Wins: Top Brands Deploy Napatech Across Many Applications Recurring Order in Q1 & Q2 Ordered in Q2 EMERGING CUSTOMER WIN TRENDS 1 Network performance required with zero packet-loss and nano-second accuracy for data tracking 2 Pipeline of new design wins is growing with increased focus on virtual
Slide 11: Market Update
Market Update NAPATECH A/S © COPYRIGHT 2020 13 August 2020 11
Slide 12: Napatech Sits at the Intersection of Server & Application Markets
Napatech Sits at the Intersection of Server & Application Markets Applications in Data Centers & Cloud Networks Network Cybersecurity Infrastructure Cloud & Edge Mobile Financial Monitoring Napatech SmartNICs Accelerate Server-based Applications Networks Built at Massive Scale on Low-Cost Commercial
Slide 13: SmartNICs: Total NIC Market Segmentation
TOTAL NIC Market Segmentation Market Share (%) FY 2019 1 Basic NIC 1. Intel 24.3% • Ultra-low cost, low-margin 2. Mellanox (NVIDIA) 20.5% • Fixed function • Not programmable (ASIC-based) 3. Broadcom 14.3% 4. Microsoft 10.3% 2 Offload NIC • Slightly more expensive 5. Amazon 7.4% • Focused on offload
Slide 14: Programmable NIC Market Overview
Programmable NIC Market Overview 1Q20 FY19 All Others 10.4% Solarflare (Xilinx) 2.1% Silicom (Self-Build) (Vendors) 3.3% Mellanox (NVIDIA) • Napatech ranks #3 amongst 3.4% major vendors in Napatech 7.2% Programmable NIC market* Microsoft 50.5% • Napatech is #1 vendor with Broadcom FPGA solutions 7.4
Slide 15: Napatech is Emerging in a Large Growing Market
Napatech is Emerging in a Large Growing Market Category Breakdown $5.000,0 $4.500,0 $4.4B $4.000,0 $3.500,0 Napatech is $2.271 measured Millioner $3.000,0 $1.823 within the $2.500,0 $1.420 highest $2.000,0 $1.7B $1.014 growth $676 $1.500,0 $355 $356 segment of $1.000,0 $760 $858 $1.299 $1.582 $1.946
Slide 16: How Does Napatech Get Access to this Growing Market?
How Does Napatech Get Access to this Growing Market? • Focus on Network Application Acceleration • Cloud & Edge, 5G Mobile • Cybersecurity SmartNICs Server • Financial • Virtualized Switching • Support Faster Networks • 25G to 100G growing fast • Make Servers More Cost Effective • Smaller footprint
Slide 17: New Link-Virtualization SmartNIC Solution
New Link-Virtualization™ SmartNIC Solution PROBLEM SOLUTION The server’s Napatech SmartNICs networking overhead and software gives causes OvS application CPU horsepower back to underperform. for other applications. OvS = Open vSwitch Software BENEFITS PERFORMANCE EFFICIENCY PROGRAMMABLE SCALABILITY
Slide 18: New Link-Assure - Premium Professional Services
New Link-Assure™ - Premium Professional Services • SmartNICs Go Mainstream • Demanding Customers • Mission Critical Applications • Growing Annual Support Renewals • Annual Recurring Revenue Stream SUPPORT ASSURANCE ASSESSMENT INTEGRATION INSTALLATION NAPATECH A/S © COPYRIGHT 2020 13 August 2020 18
Slide 19: Our Plan Of Attack – Serving Us Well
Our Plan Of Attack – Serving Us Well 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 20: 1H 2020 Financials
1H 2020 Financials NAPATECH A/S © COPYRIGHT 2020 13 August 2020 20
Slide 21: Consolidated Income Statement Q2 & H1 2020
Consolidated Income Statement Q2 & H1 2020 Key Highlights Q2 H1 Q2 H1 DKK'000 2020 2019 2020 2019 ∆ ∆ • Revenue in Q2 up 23% compared to Q2’19 Revenue 48,867 39,634 97,403 77,888 23% 25% (up 20% in USD). Revenue in H1 up 25% Cost of goods sold (12,129) (10,851) (27,257) (22,498) compared to H1’19 (u
Slide 22: Consolidated Cash Flow Statement Q2 & H1 2020
Consolidated Cash Flow Statement Q2 & H1 2020 Q2 H1 DKK'000 2020 2019 2020 2019 Key Highlights Earnings before tax (EBT) 4,656 (5,679) 2,746 (13,878) Adjustments to reconcile profit before tax to net cash flows 7,565 7,134 13,690 14,433 • Net Cash flow from operating activities in Working capital ad
Slide 23: 2020 Outlook
2020 Outlook NAPATECH A/S © COPYRIGHT 2020 13 August 2020 23
Slide 24: Updated Guidance for 2020
Updated Guidance for 2020 Note: Annual guidance for 2020 guidance is updated as follows: • Due to the exchange rate development guided Revenue range in USD is up from Guidance Previous Updated $27.7-30.7M to $28.3-31.4M • With performance in the middle of the Revenue DKK 185-205m DKK 185-205m guided
Slide 25: 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 13 August 2020 25
Slide 26: Q&A Session at the end of the presentation
Q&A Session at the end of the presentation DK: +45 78 72 32 51 NO: +47 23 96 36 88 UK: +44 3333 009 261 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 27: 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 13 August 2020 27