Napatech (NAPA) Q4 2017 earnings summary

Executive summary

• FY 2017 revenue fell 12% in DKK; Q4 revenue declined 48% YoY, with several major projects postponed into 2018 and a weaker USD adding FX pressure.

• Transition toward software delivery took longer than expected; strategic work with Xilinx and Intel advanced, including a 5G Virtual RAN solution showcased at MWC.

Financial highlights

• Revenue was DKK 47.9m in Q4 2017 vs DKK 92.3m in Q4 2016, and DKK 206.0m for FY 2017 vs DKK 234.7m in FY 2016.

• FY 2017 EBITDA was DKK 13.9m vs DKK 43.5m; EBIT was DKK (23.9)m vs DKK 6.0m.

• Operating cash flow was DKK 8.2m in Q4 vs DKK 5.7m; FY operating cash flow was DKK 12.7m vs DKK 13.0m.

• Cash and cash equivalents at year-end were DKK 40.0m vs DKK 47.0m a year earlier.

Outlook and guidance

• 2018 guidance: USD sales growth of 0–10%, gross margin around 68%, and EBITDA margin around 15%.

• Revenue growth is expected to resume in 2018, but short-term visibility is limited by quarter-to-quarter order volatility and general business uncertainty.

• The 100 MUSD revenue ambition remains, with the target expected to be reached in 2022 after a longer ramp-up for some new applications.

• The software-focused business transition is expected to take longer than anticipated.