Napatech (NAPA) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $3.4 million (DKK 23.8 million), up 8% year-over-year in USD and 11% in DKK, with a gross margin of 70–70.3% and strong visibility into Q2, which is expected to grow 40–50% over Q2 2024.

• Secured major design wins, including high-volume contracts with d-Matrix for AI inferencing and a Tier 1 server OEM, expanding into six use cases and multiple high-growth verticals.

• Partnerships with Intel Altera and other tech leaders continue to drive product innovation, scalability, and market reach, providing first-mover advantage and de-risking the product roadmap.

• Hardware and software delivered ahead of schedule, with pipeline expanded to 400+ base customers and 250+ new opportunities valued at over $375 million.

• Achieved key milestones in strategic plan, strengthening position in advanced NICs mass market.

Financial highlights

• Q1 2025 revenue was $3.4 million (DKK 23.8 million), up 8% YoY in USD and 11% YoY in DKK, with gross margin at 70–70.3%.

• Staff and external costs increased to DKK 48.9 million due to strategic R&D and development staff expansion.

• EBITDA was negative DKK 29.1 million, compared to negative DKK 24.3 million in Q1 2024.

• Free cash flow in Q1 was negative DKK 29.4 million, with cash and equivalents at DKK 34.6 million at quarter end.

• Net cash flow from operating activities was negative DKK 25.7 million, versus negative DKK 5.4 million YoY.

Outlook and guidance

• Q2 2025 revenue is expected to increase 40–50% over Q2 2024.

• 2025 revenue guidance: DKK 150–190 million; gross margin: 69–71%.

• Anticipates doubling unit sales in 2026, with further significant growth in 2027, driven by d-Matrix and other design wins.

• Opex expected to reduce through organizational right-sizing while supporting growth; staff expenses and other external costs expected at DKK 170–180 million.

• Plans to reduce networking capital by shifting from forecast-based to order-based manufacturing and optimizing payment terms.