Napatech (NAPA) Q2 2024 earnings summary

Executive summary

• Achieved key milestones in strategic plan, including extended Intel-Altera partnership for next-gen 400G IPUs and new design wins with SigmaX.ai and a Tier 1 global server OEM, expanding reach in cloud, AI, and 5G markets.

• Completed an oversubscribed private placement in May, raising NOK 225 million (DKK 143 million) to accelerate R&D and support growth.

• Increased annual production volume guidance for design wins to 50,000-60,000 units, reflecting strong market demand.

• Retained 100% of customers despite lower sales, with no attrition.

• Pipeline of design wins and new customers in fintech, cybersecurity, AI, and telecom, targeting 4-6 design wins in 2024.

Financial highlights

• Q2 2024 revenue: $3.4 million (DKK 23.2m), down 39% year-over-year; H1 2024 revenue: $6.5 million (DKK 44.7m), down 40% year-over-year.

• Q2 gross margin: 65%, down from last year; H1 gross margin: 68%, up from 65.6% in H1 2023.

• Q2 EBITDA: negative DKK 28.2 million; H1 EBITDA: negative DKK 51.7 million.

• Free cash flow in H1: negative DKK 51.1 million; net cash from operating activities in H1: negative DKK 47.4 million.

• Cash and equivalents at Q2 end: DKK 103.2 million, up from DKK 56.0 million a year earlier.

Outlook and guidance

• Targeting 4-6 design wins in 2024, with 50,000-60,000 units in peak annual production years.

• Annual revenue guidance unlikely to be met due to weak H1, but some upside possible from new design wins; guidance reaffirmed at DKK 170–180m.

• Staff and external costs for 2024 expected at DKK 170-180 million, up from previous guidance due to accelerated development.

• Gross margin guidance maintained at 69%-71%.

• No plans for additional capital raise; fully funded for at least 18 months.