Napatech A/S — Interim / Quarterly Report 2025

May 26, 2025

Interim Management Statement 1Q-2025

Lars Boilesen, CEO Heine Thorsgaard, CFO May 26, 2025

Q&A Session Following the presentation

DK: +45 89 87 50 45 NO: +47 81 50 33 08 US: +1 646 787 9445 UK: +44 20 3936 2999

• Participant Access Code: 408079

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Safe Harbor Statement

This presentation has been prepared by Napatech A/S solely for information purposes. The presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

Certain statements included in this presentation contain various forward-looking statements that reflect management's current views with respect to future events and financial and operational performance. The words "believe," "expect," "anticipate," "intend," "may," "plan," "estimate," "should," "could," "aim," "target," "might," or, in each case, their negative, or similar expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include but are not limited to the Company's ability to operate profitably, maintain its competitive position, to promote and improve its reputation, to successfully operate its strategy and the impact of changes in pricing policies, political and regulatory developments in the markets in which the Company operates, and other risks. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, neither the Company nor its subsidiary undertakings or any of such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

AGENDA

BUSINESS STATUS

Financial Results

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• 1Q-2025 Revenue \$3.4M USD, +8% year over year • 1Q-2025 Gross Margins 70.3%, as expected, within guidance • 2Q-2025 Revenue Trending towards as +40-50% year over year

Recent Highlights

• Tier-1 Server OEM Ahead of plan on programs and projects Delivered hardware ahead of schedule, exceeding expectations Expanding to 6 potential use cases and opportunities

• AI Infrastructure Win Disclosed high volume design-win with d-Matrix

Contract signed, with committed units and NRE, with program under way

• Other Winning Solutions Disclosed new solutions that powered by Napatech Broadcom Symantec, Eideticom, Xelera

• Design-Win Pipeline New opportunities and use cases emerging regularly, expanding our pipeline Partnership with Intel-Altera continues to exceed expectations

MARKET UPDATE Limitless AI powered by networks that think

SITUATION: SERVER REQUIREMENTS ARE TRANSFORMING

25-year evolution Best-effort 100s of users Milliseconds 1-10 Gigabits Static

Basic Server Networking Card

BASIC ADVANCED

Daily-weekly revolution Real-time Billions of uses, devices Nanoseconds 100-800 Gigabits Evolving

Napatech Sits in the Eye of this Storm of Change That is Happening Right Now

PROBLEM: STANDARD SERVERS WITH BASIC NETWORK CARDS ARE OBSOLETE

PROCESSING: Suffocating tasks amidst decreasing generational improvements

Research from Google and Facebook has shown infrastructure workloads consume up to 80 percent of CPU cycles

NETWORKING: AI/cloud drives complexity, data overload, and insatiable connectivity

COST: Unavoidable escalating costs and constraints from space, power, cooling and scalability

BASIC NETWORK CARDS CANNOT FULFILL THE AI VISION

SOLUTION: ADVANCED NETWORK INTERFACE CARDS

Offload and accelerate burdensome CPU network, security, storage processing

ACCELERATED PROCESSING PROGRAMMABLE NETWORKING SUSTAINABLE COST

Hardware performance at the speed of Software innovation

Rearchitect servers to remove ROI constraints from space, power and cooling

Napatech Advanced NICs [Programmable SmartNICS and IPUs]

MARKET VALIDATION: EARLY ADOPTERS PROVE TECHNOLOGY, VALUE, BENEFITS AND SCALE

Hyperscale Cloud Operators Next-Wave

DEPLOYED NOW

8 global companies Initially niche, bespoke Component self-built DIY Not for sale Intel-Altera dominance >12M cards in 2024

Equipment Manufacturers

EMERGING NOW:

5000+ mass market Early cases emerging Merchant-built Turnkey solutions Napatech 400+ adopters >12M cards in 2029

Telecomm Operators

Government & Defense

Fortune-5000 Enterprises

OPPORTUNITY: OUR TIME TO SHINE IS NOW

OPPORTUNITY: APPLICATIONS THAT BENEFIT FROM ADVANCED NICS

CLOUD AND ARTIFICIAL INTELLIGENCE

AI Infrastructure AI Coprocessing Storage Acceleration Network Offload

BUSINESS CRITICAL APPLICATIONS

Cybersecurity Fintech Financial Services Regulatory Compliance Network Forensics

NETWORK INFRASTRUCTURE

Application and Network Monitoring 5G Mobile Infrastructure Capture and Replay Deep Packet Inspection

PRODUCT: ADVANCED NICS [Programmable SmartNICs, IPUs, Coprocessors]

Napatech's Advanced NICs play a crucial role in modern datacenter designs …

… providing access to CPU and GPU resources ✓ that deliver AI, security and other services

BUSINESS MODEL: INNOVATE GO-TO-MARKET LOWERS OPEX AND INCREASES SCALABILITY

PIPELINE SPOTLIGHTS

CASE STUDY: TIER-1 SERVER OEM

HARDWARE SOFTWARE

Standalone SmartNIC (N3070X)

Butterfly 1RU IPU (F3070X)

Stacked 2RU IPU (F3070X)

NETWORKING STORAGE SECURITY INFRASTRUCTURE MANAGEMENT AND MORE….

AI STORAGE CLOUD STORAGE AI CONTENT AND DATA REDUCTION CLOUD TENNANT SERVICES 5G MOBILE INFRASTRUCTURE PARALLEL FILE SYSTEM

• 2024: On time delivery of all hardware, exceeding customer expectations
• 2025: Transitioning to software requirements per use case

USE CASES

Land-and-expand from initial engagement to 6 unique opportunities

CASE STUDY: ARTIFICIAL INTELLIGENCE INFRASTRUCTURE

• AI inferencing vendor
• AI infrastructure back-end network
• High-volume production
• Replication: N3070X SW and HW
• Commitments: units, NRE fee
• 5-year supply agreement

"Traditional Front-end Networks Remain Vital as AI Back-end Network Investment Skyrocket " - Dell'Oro Feb 2024

"d-Matrix is at the forefront of a monumental shift in Gen AI as the first company to fully address the pain points of AI in the enterprise" - Michael Stewart, Microsoft's Venture Fund

incorporating Corsair are ideal for next-level AI compute." Vik Malyala, SVP Technology and AI, Supermicro.

"Napatech's Intel-Altera programmable NIC enables d-Matrix to deliver efficient ultra-low latency distributed inference across multiple servers. Our customers get the benefit of deploying an industry-standard ethernetbased scale-out solution while taking advantage of Corsair's blazing fast inference speeds." - Sree Ganesen, Vice President of Product at d-Matrix. "Our high-performance end-to-end liquid- and air-cooled systems

CASE STUDY: CYBERSECURITY

• Data loss prevention
• Software cybersecurity application
• Run on standard server platform
• Suffers on basic NIC
• Run best on Napatech

• 5x performance on advanced NIC

https://www.napatech.com/solutions/partners/data-loss-prevention-with-broadcom-symantec/

"As network traffic volumes surge, maintaining optimal performance becomes increasingly complex. Integrating Napatech's programmable NICs accelerates the capabilities of Symantec DLP, enabling processing so powerful that users can effectively monitor and protect their data without compromising performance."

- Nate Fitzgerald, Head of Product Management, Enterprise Security Group, Broadcom.

CASE STUDY: CRITICAL INFRASTRUCTURE

• Improves cybersecurity
• Improves storage and data for AI
• Cryptographic acceleration
• Transparent compression
• Up to 99% lower CPU, at 36% power

"The combination of Napatech's programmable NICs and our NoLoad® acceleration solutions for cryptography and compression is a game changer .Their Altera-based solutions enable us to deliver highperformance, lower system-level TCO, and enhanced security."

- Roger Bertschmann, CEO of Eideticom.

CASE STUDY: AI FOR FINANCIAL SERVICES

• Targeting financial services
• High frequency trading
• Ultra-low latency inferencing
• FPGA-based software application
• Runs best on Napatech

https://www.napatech.com/solutions/partners/ai-inference-acceleration-for-trading-with-xelera/

"Our collaboration with Napatech allows us to bring state-of-the-art AI inference solutions to the financial sector. By combining our software expertise with Napatech's advanced hardware, we're setting new standards for performance and efficiency in trading applications."

- Andrea Suardi, Head of Acceleration Technology at Xelera.

DESIGN WIN PIPELINE: A FOUNDATION TO REALIZE OUR REVENUE ASPIRATIONS

Growth impact of 2024 and 2025 design wins # unit projection in future peak year of production

FINANCIAL OUTLOOK: KEY PERFORMANCE INDICATORS

• increasing demand among mass-market customers
• High gross margins enabled by the strong software component in Napatech's products, which also promote customer stickiness
• Opex reduced through rightsizing the organization while still enabling growth
• Additionally, net working capital is expected to drastically improve due to new model taking orders before incurring expenses

FINANCIAL REVIEW AND OUTLOOK 1Q 2025

Consolidated Income Statement Q1 2025

	Q1		Q1
DKK'000	2025	2024	∆
Revenue	23 849 ,	21 542 ,	11%
Cost of goods sold	(7 078) ,	(6 112) ,
profit Gross	16 771 ,	15 430 ,	9
GM%	70.3%	71.6%
Staff costs	(35 059) ,	(27 758) ,	26%
Other external costs	(13 846) ,	(12 836) ,	8
EBITDAC	(32 134) ,	(25 164) ,
Transferred capitalized development to costs	3 083 ,	849	263%
EBITDA	(29 051) ,	(24 315) ,
Depreciation , amortization and impairment	(6 457) ,	(7 944) ,	-19%
Operating (EBIT) result	(35 508) ,	(32 259) ,
Finance income	27	833
Finance costs	(1 334) ,	(757)
Result before tax	(36 815) ,	(32 183) ,
Income tax	6	(2)
for period Result the	(36 809) ,	(32 185) ,

Key Developments

• Revenue in Q1 up 11% compared to Q1'24
• GM in Q1 70%
• Staff costs in Q1 up 26% compared to Q1'24 due to the build of development staff to serve the increased design win pipeline.
• Other external costs in Q1 up 8% compared to Q1'24.
• Q1 EBITDA negative DKK 29.0m in Q1 compared to negative DKK 24.3m in Q1'24.

EBITDAC: Earnings before depreciation, amortization and impairment, and staff cost transferred to development projects

Consolidated Cash Flow Statement Q1 2025

	Q1
DKK'000	2025	2024
(EBT) Earnings before tax	(36 815) ,	(32 183) ,
Adjustments reconcile profit before cash flows to tax to net	10 530 ,	9 882 ,
Working capital adjustments	1 083 ,	17 222 ,
Interest and tax	(472)	(359)
Net cash flows from operating activities	(25 674) ,	(5 438) ,
Net cash used in investing activities	(3 746) ,	(1 009) ,
Free cash flow	(29 420) ,	(6 447) ,
Net cash flows used in financing activities	535	(8 434) ,
in equivalents Net change cash and cash	(28 885) ,	(14 881) ,
Net foreign exchange difference	(858)	32
Cash and cash equivalents the beginning of the period at	64 341 ,	42 367 ,
Cash and cash equivalents the end of the period at	34 598 ,	27 518 ,

Key Developments

• Net Cash flow from operating activities in Q1 negative DKK 25.7m
• Net working capital end of Q1 down DKK 1.4m compared to end of Q4 2024

^• Free cash flow in Q1 negative DKK 29.4m

• Cash and cash equivalents of DKK 34.6m end of Q1 compared to DKK 27.5m end of Q1'24

NWC Improvement Initiatives

• Our Net Working Capital has had an unfortunate development for the past five quarters.
• We have planned and implemented a number of different improvement initiatives that will bring our NWC down over the coming quarters, and as we implement new design wins in our supply chain and operations, that will lead to a more optimized logistics setup with a significantly reduced need for working capital.
• In the coming years, most of our new business will be based on large-volume orders rather than producing for stock.
• In addition, we are implementing optimized payment terms for customers and suppliers.

Q&A Session Following the presentation

DK: +45 89 87 50 45 NO: +47 81 50 33 08 US: +1 646 787 9445 UK: +44 20 3936 2999

• Participant Access Code: 408079

To ask a question, press *1 on your telephone keypad. To withdraw your question, press *2 Texted questions can be submitted using the button on the website

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