Napatech A/S: Q3 2022 Financial Results

30 Nov 2022 08:00 CET

(Copenhagen, 30 November 2022) Napatech A/S (“Napatech”, OSE: NAPA) reported
revenues of DKK 37.0 million in the third quarter of 2022 (47.2 million in the
third quarter of 2021), and an EBITDA of DKK -7.0 million (12.4), following
challenging short-term market conditions. The company provides an updated
outlook for 2022.

“Although growing from the second quarter of the year, revenues in the third
quarter came in lower than expected. Enterprise pipeline orders continued to be
affected by customers’ buying behaviors, while the temporary fluctuating
component costs seen in 2022 impacted gross margins negatively. We have
continued to invest in our product portfolio, technology and commercial areas.
As we are closing in on 2023, this provides a strong platform for growth
acceleration and solid performance when the overall market conditions improve.
We remain confident that 2023 and beyond will be best-ever years to come for
Napatech,” says Ray Smets, CEO of Napatech.

Napatech is a global leader of FPGA-based SmartNICs and IPUs focused on
high-speed solutions for cloud, mobile, telecom and enterprises with a goal of
putting a SmartNIC in every server requiring faster applications, better
networking and more effective security.

Napatech reported revenues of DKK 124.7 million in the first nine months of
2022, representing a decrease of 11% from DKK 140.5 million in the first nine
months of 2021, with an EBITDA* of DKK -16.0 million (29.8). The net cash flow
from operating activities ended at DKK -12.8 million (-0.3)in the period. At the
end of the third quarter, Napatech had cash and cash equivalents of DKK 27.9
million (40.6).

The company provides an updated outlook for 2022:

- Revenue in the range of DKK 170 – 200 million (previously DKK 195-220 million)

- Gross margin 57-61% (previously 69-71%), temporary impact due to significant
cost increases of a few components and temporary revenue mix impact
- Staff expenses and other external costs in the range of DKK 140-150 million
(previously DKK 145-155 million)
- Staff costs transferred to capitalized development costs DKK 25-27 million
(previously DKK 28-33 million)
- Depreciation and amortization in the range of DKK 23-28 million (unchanged)

“Napatech is perfectly position in the fast-growing SmartNIC market, listed as
the fifth largest vendor, with over 7% market share, and the number one producer
of SmartNICs based on FPGAs. Our solution is relevant and growing in this
market, as displayed by our recent important design wins and pipeline of design
win opportunities through 2024, paving the way for a rebound as the market
recovers in 2023,” Smets adds, and concludes:

“The SmartNIC market is forecasted by industry experts to grow rapidly over the
next five years and is ripe for further consolidation. Given Napatech’s unique
leadership position within this fast-growing domain, our Board and Management
have continued to conduct a strategic review to consider all strategic options
to maximize our shareholder value given the large opportunities that lie ahead.
We will provide more details about this process anytime soon”.

For more information, please see the attached report for the third quarter of
2022.

Napatech will host a webcast presentation and a conference call of its
Q3 2022 report today at 09:00 (CET). The presentation will be given by Ray Smets
(CEO).

The presentation will be delivered by webcast on:
https://streams.eventcdn.net/napatech/q3-2022-ims/

The presentation and link to the webcast will also be available on the Napatech
Investor Information section.

Dial-in details for the conference call are:

Participant access code: 829975

DK: +45 89 87 50 45
NO: +47 81 50 33 08
US: +1 646 664 1960
UK: +44 20 3936 2999

*EBITDA and other alternative performance measures (APMs) are defined on page 4
in the attached report for Q3 2022.

For additional information, please contact:

Ray Smets, Chief Executive Officer
E-mail: rsm@napatech.com

Media inquiries:
Geir Bjørlo, Corporate Communications AS
Telephone: +47 915 40 000
E-mail: geir.bjorlo@corpcom.no


About Napatech

Napatech is the leading supplier of programmable FPGA-based SmartNIC solutions
used in telecom, cloud, enterprise, cybersecurity and financial applications
worldwide. Through commercial-grade software suites integrated with robust,
high-performance hardware, Napatech accelerates telecom, networking and security
workloads to deliver best-in-class system-level performance while maximizing the
availability of server compute resources for running applications and services.

www.napatech.com

This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to the disclosure requirements pursuant
to section 5-12 of the Norwegian Securities Trading Act. This stock exchange
announcement was published by Henrik Brill Jensen, COO, Napatech A/S, on 30
November 2022 at 08:00 CET.

More information:
Access the news on Oslo Bors NewsWeb site

577000_Napatech Q3 2022 Presentation.pdf
577000_Napatech Q3 2022 Interim Management Statement.pdf