Q4 sales growth -3% y-o-y, growth to pick up in H2e

Limited estimate changes, exp. 19% org. growth in ‘21e

’22e EV/sales of 3.4x vs. high-growth peers at 4.8x

Somewhat soft Q4, growth to pick up in H2e
Napatech delivered Q4 revenue of DKK 52.5m (-3% y-o-y), i.e. just below the mid-point of guidance. Adjusted for FX, the underlying growth was +4% y-o-y. The somewhat soft Q4 can 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 strong at 72%, resulting in a 71.5% margin for the full year, i.e. at the higher end of guidance. The EBITDA was strong at DKK 11.7m vs. the mid-point of guidance, implying DKK 7.8m. Going into 2021, the company has a solid customer pipeline, but expects muted growth in H1 with revenues picking up in H2. Napatech closed several interesting customer wins across various segments in Q4, and highlights that the company is making major progress in the Fintech market in particular.

Minor estimate changes following the 2021 guidance
Napatech expects 2021 revenues USD 35-38.3m, i.e. DKK 210-230m, corresponding to ~18-29% underlying growth and 8-18% adjusted for FX. After the report, we make only minor revisions and lower our 2021 revenue estimate by 1%, to DKK 218m, corresponding to 12% growth. We expect sales to be back-end loaded towards H2 as 1) sales at the start of the year typically have a larger OEM share and OEM sales continue to be stalled due to COVID-19 and 2) FX headwinds. As for the recently announced Lenovo deal, we have factored in limited growth from the Lenovo deal, and as such, a successful partnership leaves some upside to our estimates.

‘22e EV/sales of 3.4x vs. high-growth peers at 4.8x
On our estimates, Napatech is trading at a ‘22e EV/Sales, which compares to international peers of 3.4x and high-growth peers at 4.8x. The implied share price range based on peer EV/sales in 2022e is NOK 8-23, with the upper end representing high-growth peers. We exp
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