Slide 1: 3Q 2020 Presentation
3Q 2020 Presentation Ray Smets Heine Thorsgaard CEO CFO 27 October 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 009 263 US: +1 833 526 8382 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: 3Q 2020 IMS Report Topics
3Q 2020 IMS Report Topics • 3Q 2020 Business Highlights • Market Update • 3Q 2020 Financial Results • 2020 Outlook • Q&A NAPATECH A/S © COPYRIGHT 2020 27 October 2020 4
Slide 5: 3Q 2020 Business Highlights
3Q 2020 Business Highlights NAPATECH A/S © COPYRIGHT 2020 27 October 2020 5
Slide 6: YTD FY2020 Continues On Track for a Strong Year
YTD FY2020 Continues On Track for a Strong Year Growing Profitable 3Q 2020 YoY Revenue Growth +22% Gross Margins YTD of 71.4% Free Cash Flow YTD of 23.6 DKKm EBITDAC & EBITA Positive and Growing Earnings is Positive YTD 2020 NAPATECH A/S © COPYRIGHT 2020 27 October 2020 6
Slide 7: Q1-Q3 Trends: Growing and Profitable
Q1-Q3 Trends: Growing and Profitable Q1-Q3 Revenue over last year Q1-Q3 Free Cash Flow over last year demonstrates solid growth in 2020 and the demonstrates positive operating leverage underlying strength of Napatech’s business and lower operating risk Revenue DKKm Free Cash Flow DKKm 141.8 23.6 116
Slide 8: Positive EBITDAC and Earnings Continues To Exceed Prior Years
Positive EBITDAC and Earnings Continues To Exceed Prior Years Q1-Q3 total positive earnings YoY show solid progress towards the planned longer-term profitable operation EBITDAC DKKm Result DKKm 14.9 3.4 2018 2019 Q1-3 Q1-3 2019 2020Q1-3 Q1-3 2018 Q1-3 2019 Q1-3 2019 2020Q1-3 Q1-3 (4.4) (15.8) NAPATE
Slide 9: Market Update
Market Update NAPATECH A/S © COPYRIGHT 2020 27 October 2020 9
Slide 10: Napatech Sits at the Intersection of Server & Application Markets
Napatech Sits at the Intersection of Server & Application Markets Applications in Data Centers & Cloud Networks Cybersecurity Monitoring Infrastructure Cloud & Edge Mobile Financial Napatech SmartNICs Accelerate Server-based Applications Networks Built at Massive Scale on Low-Cost Commercial Off-the
Slide 11: SmartNICs
TOTAL NIC Market Segmentation Market Share (%) 1H 2020 1 Basic NIC 1. Mellanox (NVIDIA) 24% • Ultra-low cost, low-margin 2. Intel 21% • Fixed function • Not programmable (ASIC-based) 3. Broadcom 14% 4. Microsoft 13% 2 Offload NIC 5. Amazon 7.9% • Slightly more expensive • Focused on offload and some
Slide 12: Programmable NIC Market Overview
Programmable NIC Market Overview Q2-20 2Q20 Marvell 19.0% (Self-Build) (Vendors) • Napatech ranks #3 amongst major vendors in Broadcom Programmable NIC market* 8.6% Microsoft 51.0% (FPGA) • ~70% of all Programmable NICs today are FPGA-based Napatech 5.2% • Napatech is #1 vendor with Solarflare (Xili
Slide 13: Napatech is Emerging in a Large Growing Market
Napatech is Emerging in a Large Growing Market Category Breakdown $5.000,0 $4.500,0 $4.5B $4.000,0 $3.500,0 $2.335 Napatech is measured Millioner $3.000,0 $1.926 within the $2.500,0 $1.562 $1.142 highest $2.000,0 $1.7B $698 growth $1.500,0 $355 $356 segment of $1.551 $1.909 the overall NIC $1.000,0
Slide 14: 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 15: Q3 Wins: Top Brands Deploy Napatech Across Many Applications
Q3 Wins: Top Brands Deploy Napatech Across Many Applications Recurring Orders in Q1, Q2 & Q3 Ordered in Q3 EMERGING CUSTOMER WIN TRENDS 1 Network performance required with zero packet-loss and nano-second accuracy for data tracking 2 Pipeline of new design opportunities is growing with increased foc
Slide 16: Case Study
Case Study CHALLENGE SOLUTION BENEFIT Axellio’s customers needed to capture, store SmartNIC Software: Axellio’s PacketXpress APX-2000™ & replay massive amounts of data to meet Napatech Link-Capture™ high-speed lossless write-to-disk ability demanding cybersecurity requirements. significantly improve
Slide 17: Mobile Network Signaling Firewall Case Study
Mobile Network Signaling Firewall Case Study CHALLENGE SOLUTION BENEFIT An OEM with over 900 telecom operator SmartNIC Software: The OEM’s signaling firewall software customers needed to scale the performance Napatech Link-Inline™ improves the performance, scalability and of their mobile signaling f
Slide 18: 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 19: 3Q 2020 Financials
3Q 2020 Financials NAPATECH A/S © COPYRIGHT 2020 27 October 2020 19
Slide 20: Consolidated Income Statement Q3 & YTD 2020
Consolidated Income Statement Q3 & YTD 2020 Key Highlights Q3 YTD Q3 YTD DKK'000 2020 2019 2020 2019 ∆ ∆ • Revenue in Q3 up 15% in DKK compared to Revenue 44,352 38,706 141,755 116,594 15% 22% Q3’19 (up 22% in USD). Revenue YTD up 22% in Cost of goods sold (13,280) (7,116) (40,537) (29,614) DKK comp
Slide 21: Consolidated Cash Flow Statement Q3 & YTD 2020
Consolidated Cash Flow Statement Q3 & YTD 2020 Q3 YTD DKK'000 2020 2019 2020 2019 Key Highlights Earnings before tax (EBT) 947 63 3,693 (13,815) • Net Cash flow from operating activities in Adjustments to reconcile profit before tax to net cash flows 8,029 5,592 21,719 20,025 Q3 was positive DKK 14.
Slide 22: 2020 Outlook
2020 Outlook NAPATECH A/S © COPYRIGHT 2020 27 October 2020 22
Slide 23: Guidance for 2020
Guidance for 2020 Note: Annual guidance for 2020 is as follows: • In USD Revenue is expected to be in the range of $28.3-31.4M. Guidance • With performance in the middle of the guided ranges: Revenue DKK 185-205m • EBITDAC would be DKK 16.0m. Gross margin 70-72% • EBIT would be DKK 8.9m. Staff expen
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 27 October 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 72 32 51 NO: +47 23 96 36 88 UK: +44 3333 009 263 US: +1 833 526 8382 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 27 October 2020 26