Slide 1: H1 2019 Half Year Report Presentation
H1 2019 Half Year Report Presentation Ray Smets Heine Thorsgaard CEO CFO 27 August 2019 NAPATECH A/S © COPYRIGHT 2019 27 August 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: H1 2019 Half Year Report Topics
H1 2019 Half Year Report Statement Topics • Q2 & H1 2019 Highlights • Market Update • H1 2019 Financial Results • 2019 Outlook - Revised • Q&A 3 27 August 2019 NAPATECH A/S © COPYRIGHT 2019
Slide 4: Q2 & H1 2019 Highlights
Q2 & H1 2019 Highlights 4 27 August 2019 NAPATECH A/S © COPYRIGHT 2019
Slide 5: Executive Summary
Executive Summary • Delivered solid revenues, generated healthy margins, and created positive cash flow for a third quarter in a row • Stabilizing the business has gone well with an intense focus on maintaining and building revenues, bringing new strategic products to the market and driving on-going
Slide 6: H1 2019 Financial Highlights
H1 2019 Financial Highlights M DKK Q2 2019 Q2 2018 1H 2019 1H 2018 Revenue 39,6 24,7 77,9 47,0 Growth YoY 60% -56% 66% -59% Gross Margin 72,6% 69,8% 71,1% 68,7% 6 27 August 2019 NAPATECH A/S © COPYRIGHT 2019
Slide 7: Market Update
Market Update 7 27 August 2019 NAPATECH A/S © COPYRIGHT 2019
Slide 8: The Evolution of the SmartNIC to Accelerate Critical Applications
The Evolution of the SmartNIC to Accelerate Critical Applications The D e ath of Moore ’s Law o f C om Server CPUs cannot keep puting FPGA’s up with demand emerged to • enhance server More efficient data center The Age of the Increased Data Demand deployments are needed performance FPGA • and accele
Slide 9: We Are In The Middle of Our Journey
We Are In The Middle of Our Journey NOW: A need for faster feature rich SmartNICs that can offload the CPU and can be reconfigured to suit changing workloads. Application Acceleration is needed where Network, Data Analytics, AI, Machine Learning, and IoT have ramped server connectivity bandwidth req
Slide 10: Data Center Performance Impacted by Move to Virtualization
Data Center Performance Impacted by Move to Virtualization 50% % of Network Virtualization 7.4 Data Center Traffic 45% 40% 37% 5.6 Zettabytes 33% 4.2 per year 28% 3.1 2.2 1.4 2016 2017 2018 2019 2020 2021 Source: Cisco Global Cloud Index, 2016-2021, 19 Nov 2018 10 27 August 2019 NAPATECH A/S © COPYR
Slide 11: The Problem: Standard Compute Platforms Cannot Keep Up
The Problem: Standard Compute Platforms Cannot Keep Up Major industry players have focused their strategies on FPGA technology Application speed & processing Major FPGA chip vendors Major cloud companies have standardized on FPGA SmartNICs requirements FPGA Acceleration Major server vendors now incl
Slide 12: New Design Wins Effect on Revenue Growth
New Design Wins Effect on 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
Slide 13: Q2 Wins Demonstrate Key Trends for Napatech
Q2 Wins Demonstrate 4 Key Trends for Napatech New Design Win with New Cybersecurity Design Progress with New First Revenue Win with Existing Customers Win with Existing Customer Intel + Napatech Technology Partnership for Virtual Switching Software Only Solution Acceleration Tech Partner Focused on
Slide 14: 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 15: H1 2019 Financials
H1 2019 Financials 15 27 August 2019 PROPRIETARY AND CONFIDENTIAL
Slide 16: Consolidated Income Statement Q2 & H1 2019
Consolidated Income Statement Q2 & H1 2019 2nd quarter YTD June Q2 H1 DKK'000 2019 2018 2019 2018 ∆ ∆ Revenue Cost of goods sold 39,634 (10,851) 24,723 (7,478) 77,888 (22,498) 47,021 (14,708) 60% 66% Key Highlights Gross profit 28,783 17,245 55,390 32,313 67% 71% Other operating income - 106 2 106 •
Slide 17: Consolidated Cash Flow Statement Q2 & H1 2019
Consolidated Cash Flow Statement Q2 & H1 2019 2nd quarter YTD June DKK'000 2019 2018 2019 2018 Key Highlights Earnings before tax (EBT) (5.679) (26.763) (13.878) (54.874) Adjustments to reconcile profit before tax to net cash flows 7.141 10.870 14.440 23.438 • H1 Cash flows from operating activities
Slide 18: Cost and Cash Optimization
Cost and Cash Optimization Cost Management • Optimized our staff and operating cost structure • Average quarterly operating costs* in 2019 are 32.6M DKK, compared to Free Cash Flow H1 - M DKK 42.4M DKK in 2018 4,7 • At 69% margins, quarterly ‘cost break even’ revenue is 47.3M DKK in H1 2019, compare
Slide 19: 2019 Outlook - Revised
2019 Outlook - Revised 19 27 August 2019 NAPATECH A/S © COPYRIGHT 2019
Slide 20: Guidance
Guidance • Continued good progress in financial management and business activity raises optimism around key fundamental Note: financial improvements • With performance in the middle of the • 2019 Business Guidance is updated as follows: guided ranges: • EBITDA would be 1.3M DKK (previous guidance: n
Slide 21: Q&A Session
Q&A Session DK: +45-35445583 UK: +44-2031940544 NO: +47-23500265 US: +1-855-269-2604 To ask a question, press ZERO ONE on your telephone keypad. To withdraw your question, press ZERO TWO. 21 27 August 2019 NAPATECH A/S © COPYRIGHT 2019
Slide 22: 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 27 August 2019 22