Napatech Public Notice on Covid-19
(Copenhagen, 19 March 2020) Napatech A/S (Napatech, OSE:NAPA) has implemented strict COVID-19 measures to ensure the safety of customers and employees, in addition to securing uninterrupted supply chains. The financial impact and business risk from the pandemic are expected to be low for the first half of 2020.
“Our key priority is to ensure the safety of customers and employees, in addition, to carefully evaluate the evolving situation and prepare pragmatic measures to mitigate business risks. We believe that due to our proactive efforts, we do not see any material impact to Napatech’s business in the first quarter of 2020 and we consider the pandemic to have a low to medium risk to our overall business in the first half of 2020,” says Ray Smets, CEO of Napatech.
Napatech expects revenues to be stable and less immediately impacted in the first half of 2020. Napatech’s solutions are deployed in a number of mission critical areas of the industry, from network management and cybersecurity, and in end-user enterprise and government agency markets that require mission-critical applications to operate fast and securely. All of these areas are critical during a global crisis like COVID-19. The markets and industries Napatech’s revenue is mostly dependent on include: cybersecurity, telecommunications, financial services and banking, and government agencies. Napatech’s revenue is not overly exposed to areas of the market that are most immediately disrupted by COVID-19. Our business has a small to insignificant exposure to the following markets: transportation, shipping, tourism, consumer electronics.
Napatech sells and distributes software that it designs to operate on an FPGA-based SmartNIC. These SmartNICs are designed and manufactured by Napatech which comprises the majority of Napatech’s business, and to a lesser degree, Napatech sells software licenses to run on Intel distributed SmartNICs. Napatech has taken proactive measures in partnership with its US-based contract manufacturer to minimize impact across our entire supply chain during this situation. The company has initiated the pull-in of component supply and are carefully planning the supply chain to avoid any near term impacts due to supply shortages. With an extra dose of prudence, Napatech has also initiated with its contract manufacturing partner to build ahead and hold finished goods to be available for customers in the event our workforce at the contract manufacturer is disrupted due to unforeseen closures. Napatech intends to work diligently to mitigate any disruption in supply and is ready to fulfill orders for customers as needed and in support of its annual revenue plan.
Napatech is a global company and has been improving its ability over the years to operate in an increasingly virtual mode. Since the outbreak of COVID-19, Napatech has taken proactive measures to ensure that more systems and business applications are available supporting operations that facilitate a flexible work-from-home arrangement for all employees. As such, Napatech employees are operating effectively even in locations where mandatory work-from-home orders have been issued. Napatech does not anticipate missing any committed deliveries, deployments or releases. We recognize that if there is a significant global economic slowdown that would impact most or all global markets, we will remain diligent in keeping our expenses low as we strive to achieve cash flow positive operations.
The working capital that will be expended in response to COVID-19 to assure that the product supply is not disrupted is well within the plan guided for 2020, and short-term cash flow impacts will be minimized.
“Napatech reported a solid turn-around in 2019, with a full-year of reduced cost of operations, positive free cash flow, and solid revenue growth. In addition, we raised additional cash to fully support our operations into 2020. Napatech has provided an outlook for 2020 guiding revenue growth and positive cash flow, supported by a well-managed cost structure. But as the current situation is unprecedented, it will cause uncertainty in customer demand and Napatech’s supply chain primarily in the second half of 2020. If needed, we will provide an update on guidance when we report our first quarter 2020 interim management statement scheduled for May 7, 2020”, Smets continues and concludes:
“Napatech is a nimble company and is prepared to manage the impacts to its business from COVID-19 to the best of its ability. You can count on Napatech to aggressively manage what is within our control. We are executing well through this crisis to minimize the impact to customers, partners and shareholders. Napatech is also a socially responsible company and we will do our best to assist our society to overcome the coronavirus challenges that we are all facing. We are focused on maintaining our commitments, and we will do whatever we can to keep Napatech stable during this difficult time.”
Napatech helps companies to reimagine their business by bringing Hyperscale computing benefits to IT organizations of every size. We enhance open and standard virtualized servers to boost innovation and release valuable computing resources that improve services and increase revenue. Our reconfigurable computing platformTM is based on a broad set of FPGA software for leading IT compute, network and security applications that are supported on a wide array of FPGA hardware designs.