Ambiq Micro (AMBQ) Q2 2025 earnings call transcript

I would now like to turn the call over to Miss Charlene one. Charlene, please go ahead. Good afternoon and welcome to ampic second quarter 2025 earnings conference call. I'm Charlene one vice president of corporate marketing and industrial relations at ampic. I'm joined today by ampic CEO. We will be here today. And I'm big. So that was alert.

As part of today's call, we will review our quarterly financial performance and provide a summary of our hour. Our earnings release and the accompanying financial tables are available on the investor releasing page of our website at www dot and big. com.

Before I turn the call over to me, I like to remind our listeners that during the course of this conference call, the company will provide financial guidance, projections, comments, and other for looking statement regarding future market development, the future financial performance of the company, new product, or other matters.

These statements are subject to the risk and uncertainties that we discussed in detail in our documents filed with the SEC. Specifically, the final perspective, later to our initial public offering, and our most recent thank you, which identified important risk factors that could cause actual results to differ materially on those contained in those four looking statements.

Also, the company especially and management statements doing this conference call will include discussions of certain non gap financial measures. The financial measures and related gap, non gap reconciliation are provided in the company especially and related current report on form a case. For those of you unable to listen to the entire call at this time, a recording will be available via webcast in the investor relations section of the company's website.

And now, it's my pleasure to turn the call over to and the CEO for me today. For me, please go ahead.

Thank you, Charlene. Good afternoon. And thank you to everyone for joining us on our first earnings call since our IPO on July 30.

Ambik has been on an incredible journey. The company was founded in 2010 to put intelligence everywhere using the world most power efficiency. At this point, we have enabled more than 280 million devices in applications, ranging from personal devices to medical and healthcare to the industrial edge to smart home and smart buildings.

We are excited about enabling the next billion devices as I move out of the cloud and onto the edge. For those of you new to Epic story, I'd like to give you a quick overview of our business.

Ambik is a pioneer and leading provider of ultra low power semiconductor solutions. Our mission is to enable intelligence and AI everywhere by delivering the lowest power semiconductor solutions.

As many of you know, most of today's AI competition, including both training and inference happens in data centers, which are far away from the action.

Moving AI inference to the edge is a great alternative because it offers lower latency, greater privacy, improved security and reduced costs.

However, we haven't yet seen the full potential of Edge AI because Edge devices tends to be smaller and battery powered. Without innovation, it's nearly impossible for those devices to run AI without quickly draining their batteries.

Ambik has solved this power problem with our spot platform. Spot stands for sub-directional power optimized technology. It significantly reduces total system power consumption and enables devices to run AI locally without sacrificing battery life.

Spot has been foundation for five generations of our flagship SOC family called Apollo. In addition to hardware, we also offer extensive software solutions to help our customer reduce their production design cycle. More and more people are realizing potential of running AI at the edge as that's where the action takes place. If your smartwatch is capable of running on-device AI, you get a doctor or personal trainer on your wrist.

Carrying it with onboard AI models can filter out the nodes in a restaurant and enhance the one voice you actually want to hear.

And factory machinery equipped with a wireless fault detector can identify failure before it happens and call for help without bringing the factory line down.

With our energy efficient product and solutions, Ambik is well positioned to drive and benefit from the edge AI revolution.

In that, let me now turn the call over to Jeff Winsler, our CFO, to discuss our second quarter results and third quarter outlook in more detail. And then I will talk more about our strategic priorities as we look ahead to the coming quarters and ear.

Thank you, and thanks everyone for joining us today. Before I review the financials, please note that I will focus my discussion on non-gap financial results and refer you to today's press release for a detailed reconciliation of gap to non-gap financial results. The non-gap adjustments relate to stock-based compensation, depreciation, amortization, warrant value, and other charges.

Revenue for the second quarter of 2025 was 17.9 million compared to 15.7 million in the first quarter and 20.3 million in the second quarter of 2024. The sequential increase in second quarter revenue was driven by increased customer demand and favorable product mix. The year-over-year decrease in net sales reflected the company's strategic decision to diversify revenue toward higher value opportunities with customers outside of China.

In the second quarter of 2025, net sales to end customers in mainland China were 11.5% as compared to 42% in the second quarter of 2024.

The second quarter of 2025 was the result of a more favorable product and customer mix as the company continued to execute on its strategic prioritization of geographies outside of China.

Non-gap operating expenses in the second quarter of 2025 were 13.8 million compared to 13.1 million in the prior quarter and compared to 14.4 million in the second quarter of 2024.

The breakdown of non-gap operating expenses for the second quarter of 2025 are as follows. Research and development expenses were 7.3 million compared to 7 million last quarter and 7.3 million in the same quarter a year ago. One of our top strategic initiatives, post IPO, is to continue growing our technical capabilities and investing in our product development roadmap to capture the opportunities ahead of us.

SG&A expenses in the second quarter were 6.5 million compared to 6.2 million in the prior quarter and 7.1 million in the second quarter of 2024.

Total other income in the second quarter was 315,000, consisting mainly of interest income from our cash reserves compared to 461,000 in the prior quarter and 337,000 during the same quarter a year ago.

Net loss for the second quarter of 2025 was $8.5 million or $18.90 per share based on 449,785 weighted average shares outstanding. This compares to a net loss of $8.3 million or $18.96 per share in the first quarter of 2025 and net loss of $10.6 million or $34.59 per share in the second quarter of 2024. The per share amounts have been adjusted to reflect a one for 28 reverse stock split that was affected prior to our IPO.

Second quarter, non gap net loss was 5.9 million compared to non gap net loss of 5.2 million in the first quarter of 2025 and non gap net loss of 7.4 million in the second quarter of 2024.

The loss per share in the second quarter of 2025 was 43 cents based on unaudited pro form a common shares of 13.6 million as disclosed in the company's S1.

Turning to the balance sheet, cash and cash equivalents were 47.5 million at the end of Q2 2025. On July 30, the company completed an initial public offering consisting of 4.6 million shares of common stock issued at $24 per share. After deducting underwriting costs, commissions and other transaction costs, the net proceeds were 97.2 million.

Now let me turn to our guidance for the third quarter of 2025. We expect revenue to be in the range of 17.5 million to 18 million. Non gap loss per share is expected to range between 35 cents loss per share and 28 cents loss per share on a weighted average post IPO share count of approximately 18.2 million shares.

This share count reflects the pre IPO reverse split and conversion of preferred shares in the common plus the common shares issued at the IPO and is the baseline share count for the company going forward.

In summary, during Q2 2025, ambit grew revenue from the previous quarter and importantly grew gross profit dollars both sequentially and year over year in support of our ambitions for possible growth. Subsequent to the quarter, we successfully completed the company's initial public offering and secured the necessary financial resources to execute on our strategic business plan, which whom we will now detail further.

With that, let me pass the call back to whom.

Thank you, Jeff. Since this is our first earning call, I would like to take a moment to outline our mission and strategic initiatives. Our goal is to drive long term shareholder value through sustainable and profitable growth. After our successful IPO, we intend to use the proceeds to support the execution of three key initiatives. Our first initiative is to expand into new markets and geographies with our existing products.

This will feel our revenue and margin growth. We have demonstrated a strong end customer adoption with market leaders. These top tier brands validate the value proposition of our product and have helped us acquire a growing number of new customers. We will be expanding our sales and support resources to enable these new customers.

We are proud to share one great example of a recent new customer announcement. OOP, a leader in health oriented levels, recently chose Apollo for their newest fitness trucker product line.

The new OOP 5.0 and OOP energy products give an incredible intelligent view of your health and even your blood pressure. In the small band, that lasts for more than 14 days on the battery.

And it's Apollo delivers 10 times better battery efficiency allowed OOP to utilize on device AI to process biometric data intelligently. In addition to personal devices and wearable markets, we are pursuing new HAA use cases such as AR VR glasses, part monitors, smart medical patches, backstreet condition monitors, smart alarms and locks, and robotics.

We are also gifting our geographic concentration. Historically, we have significant sales with end customer in mainland China. As the demand for HAI grows globally, we are prioritizing sales efforts towards other beaming for geographies.

In 2023, 66% of our net sales were to the end customer in mainland China. This fell to 50% in 2024.

In the second quarters of 2025, only 11.5% of our net sales were to end customers in mainland China. This is a big reduction compared to the 42% number we saw in the second quarter of 2024. We currently anticipate this mix to continue in 2025 and beyond.

Our second key initiative is to expand our existing Apollo family and introduce the new atomic product line. As a high growth company, we are scaling our R&D and go-to market capability to capture the HAI opportunities.

Since we launched the first Apollo CC in 2015, we have introduced new products nearly every year. The original Apollo 3 and 4 SOCs have been used for a variety of early-edge AI deployments.

The new Apollo 5 10 and Apollo 3 30 SOCs launched in the past 18 months at Vector Accelerated AI Compute. Last week, we announced the expansion of a Apollo 5 line with a Apollo 5 10B wireless SOC.

It has a 250 megahertz Cortex M55 postprocessor alongside a dedicated 40 megahertz network processor and Bluetooth low energy 5.4 radio.

Target application includes wearables, air glasses, hot monitors, mocks, and factory condition monitors. The first atomic family product is currently in development. This innovative product is expected to deliver our highest performance and lowest power consumption for AI model at the edge. It targets HAI applications with demanding compute requirements, especially for vision.

Atomic features a full neural processing unit or NPUs for high performance AI acceleration along with new memory innovations. And lastly, our third and long-term initiative is to build a variant of the SPOT platform that enables IP licensing to third parties.

As this is the most energy efficient HAI chip design platform, we have received numerous inquiries to license SPOT. There are specialized applications that requires power efficiency, such as data centers and audibility AI processing.

To reach these markets, we plan to develop SPOT into IP and the chip development platform. This offering will enable other companies to license or partner with us to incorporate SPOT into their own low power chip design. Our plan to develop this IP and technology platform for licensing will take place over the next three to five years.

To conclude my prepared remarks, I want to first thank our investors, customers, partners, suppliers, and employees for their support of AMBIC over the past 15 years. Thank you for helping us become a public traded company.

The future of AMBIC is very bright, and we are only at the beginning of unlocking the full potential AI at the edge.

I look forward to reporting our continued progress and meeting with each of you in the coming quarters. With that, I will open the call to questions.

And how do you see that mix evolving in any kind of ASP benefits as that makes the world towards more AGI?

Again, AGI is growing in medical, industrial edge, personal devices, smart home and buildings. And we ourselves is really focusing on enabling this AGI market.

And that's where we have a lot of value. So I believe that more than half the business is already using a intelligence on their devices and we will continue to grow.

Yeah, Vivek, we believe that data center, automotive and mobile devices, those could take advantage of our spot technology. And as we are focusing on enhancing our R&D capability, we may be able to accelerate our development or IP with more resources and funding available.

And we do have a dedicated team that is focusing on spot licensing. And as previously discussed, they are right now focusing on 12 nanometer spot platform. And with proven that 12 nanometer development, we believe that we can accelerate our plan.

Thank you for me. Good luck. Thank you.

Well, again, about 17, 17% of our channel is already. Towards medical industrial edge smart home and building. And we believe that more than 20% is already working with some of the customer. To define atomic AI in vision. So we're making great progress even since we. Talk last time.

Did you see any signs of Poland's that impacted results? So, you know, I think we had a pretty good ramp from two one to Q two. And if you think about our business typically seasonally. You would expect Q two to be higher than Q one and grow throughout the year. I think the one thing that that kind of impacted this year was the announcement or the possibility of tariffs.

And with the uncertainty of that. We did see some upside demand from customers in Q two that drove revenue slightly higher than what we had originally anticipated in. In our model.

That's really the only Poland activity that we saw in the quarter.

Typically our customer do place an order about 16 weeks lead time. And we do see our end customer, like you mentioned, but we cannot be. We cannot make a very comment about the specific customer, but we see that the healthy growth. And we're very optimistic that they will continue to grow.

Any update on the tariff impact as you look into the second half of the year? Yeah, I mean, in terms of, you know, our guidance for Q3 revenue reflects the fact that we think there's a little bit of upside to what our financial model was. So that's a good thing. And we're cautiously optimistic. We also, you know, had seen the same news from the customers.

I think in general, there's a macro feel that some of the tariff is not going to be as impactful as our end customers previously thought. So, as I said, we're cautiously optimistic that the second half of the year will be better than what we had originally built into our plans.

Yeah, you know, we've taken a big step up from previous years, obviously, with exit out of China and the focus on other markets. So the 43% that we announced in Q2, I think, is relatively indicative of where our gross margin is today. Now, going forward, you know, that will vary by a point or two, depending on the product mix in any given quarter, manufacturing yields, et cetera. But in general, I think that's a pretty safe place in terms of where our business is today.

Well, we're not going to see a revenue from a new application. Again, this coming quarter, but definitely some of the air glasses are taking a first. Working with some of the air glass customers that definitely will be in the market very near near term.

And also worker safety monitors and machine health monitor. Those are already in the market and we continue to. We believe that the grow that market segment.

So we believe that our application is growing really fast.

Yeah, any, well, for sampling, obviously not for production, but you know, any, any updates there would be. Oh, well, we're very excited to talk about atomic because we started working with early adopter on spec.

Soon after we did public offering and activity is more. Active than ever before. Again, I believe that becoming public company and our customer becoming more comfortable. We're working with ambics. We believe that we're going to make great progress coming quarters.

Thank you. Thank you. Thank you.

Thank you. Before closing the call, I'd like to let you know that we'll be attending the UBS Global Technology Conference in Scottsdale, Arizona on December 3rd. And the following day, December 4th will be at the steeple deep tech forum in Menlo Park, California. If you'd like to arrange a meeting with the city's events, please contact our firm, the Shelton Group.

You can find the relevant contact information on the investor page of our website, ambic. com. Thank you again for joining us today. And we look forward to discussing our continued progress on our next earnings call. Operator, you may now disconnect.