MANAGEMENT'S REPORT
As I began to pen our management report for the first half of 2024, I thought about both our long-time investors as well as the many
new investors and followers who have been drawn to Napatech in recent months. I am pleased to share with everyone our results
for the second quarter and first half of 2024. The first half of 2024 has progressed largely according to expectations, particularly good
progress in reaching important design wins and mileposts of our strategic plan that have clearly strengthened our position as an early
leader in the new and evolving market for programmable NICs. However, the revenues in Q1 and Q2 have clearly been weaker than
expected.
Napatech is a leading global provider of Programmable NICs, including Smart Network Interface Cards (SmartNIC) and Infrastructure
Processing Units (IPU), used by cloud, enterprise, and telecommunication network operators to dramatically improve the
performance and economics of servers and appliances.
Our strategy remains anchored in three areas. First, servicing our valuable customers who are early adopters of Programmable NICs.
They are a proving-ground for the technology and the value that our solutions bring to their businesses. Next, accelerating our
engineering investments into hardware and software that extend our offering into new, high-growth segments. Finally, developing a
robust ecosystem that extends our own go-to-market reach via marketing, business development and sales partnerships.
I would like to share a few highlights from the first half of 2024 that give us confidence we are executing upon our strategy:
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To begin, in early April, Napatech extended our agreements with Altera, an Intel company, to include a next-generation 400G
Infrastructure Processing Unit, or IPU. The collaboration develops new programmable NIC hardware and software solutions
based on an architecture that promises to enable an innovative approach to powering modern public cloud, private cloud, edge,
and enterprise data centers built for the era of artificial intelligence.
Next, on April 18, we disclosed that the 400G IPU product design with Intel/Altera was developed in partnership with a tier-1,
global server OEM that continues to lead in enterprise and cloud data center deployments. The collaboration was anchored by
commercial agreements, associated statements of work that define the product specifications, and professional services fees
from both companies to Napatech. I am happy to report that our engineering team has met every development milepost on,
and in some cases ahead of schedule.
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On May 2, based on these developments, we increased our guidance on the impact from design-wins for these new products,
from 30,000-40,000 units to 50,000-60,000 units in their peak annual production years.
On May 7, Napatech completed a private placement capital raise from 9,000,000 shares at a subscription price of NOK 25.00 –
above the market price at the time. The Private Placement was significantly oversubscribed and attracted interest from high-
quality accounts, as well as receiving strong support from existing shareholders. ABG Sundal Collier ASA and SpareBank 1
Markets AS served as managers of the Private Placement
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On August 1, Amantya, a company focused on 5G infrastructure, specifically user plane function offload, or “UPF Offload”,
disclosed that they had successfully completed the engineering integration of their 5G packet core solutions on Napatech
programmable NICs. The integration significantly enhances their solution's performance and scalability, enabling them to offer
superior private 5G network services to their clients.
On August 22, we disclosed our latest design-win for our Intel-based IPUs, SigmaX.AI, an innovative provider of high-
performance and cost-effective big-data analytics solutions for an exploding list of datacenter and edge computing artificial
intelligence workloads. This design win represents another new customer for Napatech, created by our business development
partnership with Intel, and from our new Intel-based IPU products.
Combined, these key areas of success allow us today to reaffirm our design-win guidance for 2024.
Taking a broader view of the information technology market, there are signs of macro, tops-down industry headwinds that can
include less spending, longer buying cycles, and increased design-win development schedules. These issues, combined with our
customers’ inventory corrections, will continue to create short-term uncertainty in the revenue from our existing business for the
remainder of 2024. The primary risk for the second half of 2024 is that we do not have direct control over our customers and the
certainty and timing of their business, but we are prepared to fulfil their demand as is currently projected to us.
The second half of the year promises new product development milestones, along with collaborative business opportunities that will
push the boundaries of what we can achieve. With your continued support, we are poised to make Napatech's future even brighter.
Best regards,
Lars Boilesen
Chief Executive Officer
Napatech HALF-YEAR REPORT 2024
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