Napatech - Temporary headwinds in Q1

Q1 below expectations due to temporary headwinds Reiterates FY guidance: 18-29% underlying sales growth Minor negative estimate changes expected for ‘21e Q1 sales down 4% y-o-y, but underlying growth was +6% Napatech delivered Q1 sales of DKK 46.8m, down 4% y-o-y and 4% below ABGSC at DKK 49m. In USD terms, however, revenue was up 6% y-o-y. The y-o-y decrease in Q1 can also be explained by lower OEM sales which have been stalled due to COVID-19 as they require physical on-site installations. The gross margin was 70%, i.e.

in line with our estimate. EBITDA was DKK 8.8m (19% margin) vs. ABGSC at DKK 9.7m.

Reiterates FY guidance – growth in line with ABGSC Napatech reiterates its 2021 guidance and expects revenues of USD 35-38.3m, corresponding to DKK 210-230m and implying y-o-y growth of 8-18% (18-29% y-o-y growth in USD terms). On a midpoint basis, this is only slightly above our estimate of DKK 218m. The company expects EBITDAC for 2021 of ~DKK 26m on a midpoint basis, i.e.

12% above our estimate of DKK 23.1m. Expect minor negative est. changes on the back of the report Overall, we find the Q1 report slightly negative, with sales 4% below our expectations.

However, Napatech continues to show underlying growth and when temporary headwinds turn, we believe growth will start to accelerate. Furthermore, FY guidance is maintained, indicating that Napatech remains confident that demand will start to pick-up in H2. We expect minor negative estimate changes following the Q1 report..