Napatech (NAPA) Q4 2018 earnings summary

Executive summary

• Q4 revenue rebounded to $7.4M, up 54% QoQ; 2H revenue of $12.2M exceeded the $12M target.

• Q4 operating cash flow was positive at 18 MDKK, and a completed cash raise was expected to fund operations through 2019 and beyond.

• 2019 priorities: stabilize and grow, accelerate new product delivery, and expand in cybersecurity and virtualization.

Financial highlights

• Q4 revenue was 54.0 MDKK vs 47.9 MDKK in Q4 2017, up 13% YoY; FY 2018 revenue was 106.2 MDKK, down 48% YoY.

• FY 2018 reported EBITDA was -75.0 MDKK vs 13.9 MDKK in 2017; reported EBIT was -182.5 MDKK vs -23.9 MDKK.

• Q4 reported net loss was 45.8 MDKK; FY 2018 reported net loss was 179.3 MDKK.

• Q4 cash flow from operating activities was 18.0 MDKK vs 8.2 MDKK in Q4 2017; FY cash flow was -44.3 MDKK.

Outlook and guidance

• FY 2019 revenue guidance: 150–180 MDKK ($23–$27.6M); gross margin around 68%.

• FY 2019 operating expenses guided at 115–125 MDKK; development investments and depreciation/amortization each guided at 20–25 MDKK.

• Management focus for 2019: stabilize and grow from a solid foundation.