Amprius Technologies (AMPX) Q2 2026 earnings call transcript

Welcome, everyone, and thank you for joining us this morning. I'm pleased to report that Amprius continues to experience robust demand for our energy-dense silicon-anode lithium-ion batteries, and in the second quarter of 2026, we achieved another record revenue, as we show on slide three. We believe the characteristics of our cells make them a particularly strong fit for one of the fastest growing markets in the world, battery-powered unmanned aerial vehicles, UAVs, also known as drones.

Our second-generation side-core silicon anode battery continues to gain broad adoption for drones and other applications. Given the strong quarter and promising new business, we have the confidence to increase our 2026 revenue forecast for the second consecutive quarter. Anyone who reads the news understands that low-cost drones are playing an asymmetric role in military conflicts around the world, changing the nature of modern warfare. As Barron's Magazine recently reported, inexpensive drones are, quote, upending the defense sector, unquote. We believe that this has been made possible in no small measure by the availability of high-performance batteries like those produced by Amprius. As you are likely aware, the Trump administration's proposed fiscal 2027 defense budget calls for more than $50 billion in outlays for the Defense Autonomous Warfare Group, an arm of the Department of War focused on drones and related hardware.

The specific ask is for a 24,000% year-over-year increase. While the U. S. Congress has yet to pass the 2027 spending authorization, and the actual budget might be smaller than the original request, it is nonetheless clear that the Pentagon will be making a major and growing outlay for autonomous capabilities for years to come. Now, our current contract with the Defense Innovation Unit gives us a front row seat in this arena.

This is good news for Amprius, our customers and partners, and for our shareholders. While we expect that the budget details will be sorted out in the months ahead, there are other positive signs from the defense sector for Amprius. For instance, the Department of War's Drone Dominance Program has invited 19 drone manufacturers to a competitive demonstration event at Port Carson, Colorado, later this month.

Half of the participants are using Amprius cells, and we have had at least initial conversations with the rest. The Department of War has said that at the completion of the Colorado event, it will place orders for 60,000 drones from the top performers. This is one more indication that the opportunity in military UAVs is in its early stages. You may recall that our contract with the Defense Innovation Unit to develop and scale National Defense Authorization Act, NDAA, compliant silicon anode battery cells, was increased for a third time in the March quarter and now totals $18.1 million.

This funding supports expansion of a pilot line at our headquarters in Fremont, California. I'm happy to report that we now have received nearly half of the equipment required for the pilot line, which is undergoing installation. The remaining equipment is scheduled to arrive later this month and in September, with production expected to begin in December 2026.

Our opportunity in military drones goes beyond U. S. borders. I'm happy to report that we've received a 24 million order from a new European customer, a drone manufacturer that uses our SA-124 SciCore cylindrical cells. We started to deliver our batteries to this customer in Q2, and will continue to do so for the next three quarters. We're excited about this opportunity and expect to have more to talk about on this topic in the months ahead. I also want to report some recent news from our customer, Redwire, a leading aerospace and defense technology company providing space infrastructure, autonomous systems, and mission-critical solutions for the commercial, civil, and national security customers worldwide.

Redwire first purchased our high-energy density batteries in 2024. We're happy to see that their demand is growing. Red Wire recently announced more than $40 million in purchase orders from the U. S. Marine Corps for the Stalker Block 30, a Group 2 drone designed for long-range reconnaissance. Stalker excels in missions where long-durance is critical, and that's exactly what our PsyCorp sales enable. We look forward to Red Wire's continued success. While we are excited about the rapid adoption of drones in the defense industry, we also continue to see substantial opportunities for commercial drones.

In May, you may remember, we announced an agreement to provide high-density silicon anode cells to MatterNet, the world's only FAA-type certified drone delivery platform. Amprius' silicon anode cells deliver up to twice the energy density of conventional graphite-based batteries, a critical advantage in aviation where low battery weight and high energy density directly improve aircraft range, payload, and economics.

Drones, both military and commercial, are a big part of the Amprius story, but they are not our only strategically important end market. Earlier this year, we announced a $21 million order from our premier electric mobility customer in China to power a suite of light electric vehicles, including scooters, three-wheelers, and motorcycles. Today, I'm excited to tell you about a new e-mobility customer win. We have signed a three-year contract with Stark Future, a Barcelona-based premium electric motorcycle manufacturer. However, Stark's bikes are impressive with cutting-edge technology, world-class design, and amazing engineering.

We showcased one of their bikes at our CES booth in January 2026. We expect revenues from our relationship to Stark to be at least $100 million through 2029, with shipments expected to start early next year. Let's turn to slide four and discuss our go-to-market strategy. A little less than half of our sales shift directly to end-use customers, companies that sell drones for various applications, small electric vehicles, and companies in the satellite value stream. We have more than 500 direct customers, and this figure grows every quarter. The other portion of our purchase orders come from PAC partners, companies who buy or sell and package them together with appropriate electronics and sometimes a battery management system.

These modules and PACs are then sold to end-use customers. Our PAC partner program allows us to expand our reach and simplifies customer relationships for many end-market applications. Today, we list nine PAC partners on our website, and more will be added over time. This program is a light lift for our sales team and allows us to scale without adding direct sales headcount.

We expect this flywheel effect to allow us to continue strong growth through this rapidly expanding channel. Now, let's turn to slide five, and let me take a few minutes to provide an update on our capital-efficient contract manufacturing strategy.

Our California pilot line gives us the ability to win new customers, allowing us to quickly deliver new cell chemistries to customers. We often do this side-by-side with our customers in joint development programs. We also use our free month facility to deliver small volumes of sales. We leverage our worldwide contract manufacturing partners to produce sales at volume. We have four manufacturing partners in China.

Over the last several years, they have provided us with excellent quality and reliable delivery. Our China CMs have helped Amprius tremendously, and they will continue to be important partners in our future. We have added several partners in South Korea. In May 2025, we announced our first partner, LeBest, located in Daejeon, about a two-hour drive from downtown Seoul. LeBest has been delivering Amprius commercial sales since September 2025. We recently added JR Energy and Top Material as South Korean partners. Together, these three CMs give us the ability to produce batteries that are compliant with NDAA rules. I met with all three partners in Korea 10 days ago and can confirm that our relationships are solid, our incentives are aligned, and we are expanding well together.

I also want to underscore that we believe we are well on track to reach full NDAA compliance with domestically produced cells in 2027. South Korea gives us NDAA-compliant supply today, while Nanotech Energy, the U. S. contract manufacturer we announced earlier this year, provides additional U. S. capacity. We expect to talk about additional U. S. partners in the months ahead.

Our partner-focused approach to manufacturing avoids substantial capital expenditures while keeping our management team focused on what matters most, extending our technical innovations and delivering these innovations to customers rapidly. Leveraging manufacturing partners rather than investing heavily in new facilities allows Amprius to scale quickly and efficiently while maintaining strategic flexibility. I want to provide a brief update on our senior management team. Last month, Ronnie Tao, a five-year Amprius veteran who until recently served as their VP of sales, moved into a new role as chief business officer. Ronnie will focus on expanding our reach into new markets, initially targeting robotics, where we see substantial opportunity for our high-energy density offerings.

Ronnie's energy is infectious, and his recall of technical details is remarkable, ideal qualities to drive growth into new segments. Three weeks ago, Ann Torricelli joined Amprius as our new VP of sales. Inc has nearly two decades of experience working in energy technology sales and business development roles. She was most recently managing director of energy storage solutions for Goshen, a top five worldwide lithium-ion battery manufacturer. Her multicultural background, excellent communication skills, and savvy organizational traits are a model profile to lead sales for a fast-growing international company like Amprius. We're thrilled to welcome Ann to the team.

A few additional thoughts before I pass the microphone to Ricardo Rodriguez, our CFO. I continue to see wide and varied growth opportunities for Amprius in multiple markets and several geographies. As I noted earlier, there are sizable opportunities for us in drones, not only in defense, but also for commercial delivery, public safety, security, and a growing number of other applications. The massive commitment to drones from the Department of War is a positive sign, but it's not the only one, and we expect drones to expand across many parts of the economy in years ahead.

As highlighted by our new relationship with Stark in Spain, there is also a fast-growing opportunity for battery-powered mobility, including robotics. We are focusing some of our key executives on this emerging market for personal and commercial robots, including delivery bots, humanoid, and industrial mobile robots. It is early, and there is no meaningful robotics revenue in our numbers today.

But our ability to offer power and energy-balanced cells plays well in the unstructured environments in which these machines operate. We expect to have more to say about this segment in the months ahead. Another opportunity that exists for us is in satellites in space, where our high-energy density cells directly improve launch economics. Satellite launch providers charge customers by weight, making our ability to deliver the same energy at roughly half the weight extremely valuable.

Finally, we believe there is tremendous potential for our batteries in EV toll, electric vertical takeoff and landing aircraft, for autonomous point-to-point regional transport for both passengers and cargo. It's early in the development of EV toll vehicles, but they are coming sooner than many think.

Let me now turn over the call to Ricardo to review our Q2 results in detail.

Thank you, Tomlin. Good morning, everyone. I'm happy to start on slide six. In the second quarter, we delivered $34 million of revenue, up 19% from the first quarter and 2.3 times year over year. This was our sixth consecutive quarter of sequential growth, and it puts our annual revenue run rate at $136 million. We expect this to continue growing, so more on this later. For the first half of the year, revenue was of $62.6 million, up 137% year-over-year.

SICOR accounted for 98% of our revenue in Q2. Regionally, EMEA drove 68% of our revenue, with the rest of our revenue coming from the U. S. and Asia. Pasta goods sold was $28.4 million, up 9% against 19% revenue growth. That enabled gross profit of $9.3 million and a gross margin of 27%, right in line with our expectations, and improving from 20% in the first quarter and 9% in the same quarter last year. For the first half, gross margin was 24%, improving from negative 4% in the first half of 2025. Total up X was million in the quarter up million sequentially and million year We continue investing in our go and R efforts as these continue to pay off as our team wins in the market Our operating loss in Q2 was $4.3 million, compared to $6.7 million in the first quarter and $6.8 million in the same quarter of last year.

Other income was $1.1 million, consisting of $472,000 of interest income and $700,000 of government grant income, tied to our work with the Defense Innovation Unit. Our gap net loss attributable to common shareholders for the second quarter was $5.1 million or negative 4 cents per share, based on 143.5 million weighted average shares outstanding. That is 20% narrower than the same quarter last year. For the first half, our net loss was $10.1 million compared to $15.7 million in the first half of 2025. Our gap net loss includes a one-time, non-cash, $1.9 million adjustment, reflecting the change in fair value of the public warrants during our exchange for stock on May 6th of this year. So, excluding this $1.9 million gives us non-GAAP adjusted net loss of $3.2 million, or negative $0.02 per share for Q2, and $8.2 million, or $0.06 per share for the first half of 2026.

Adjusted EBITDA in the second quarter was negative $1 million, or a negative 3% margin, compared to negative $1.8 million in the first quarter and negative $2.1 million in the same quarter last year. As a reminder, we define adjusted EBITDA as net income or loss before interest, taxes, depreciation, amortization, stock-based compensation, and other items that we do not believe are indicative of our core operating performance. In the second quarter, these adjustments were limited to the $1.9 million related to the warrant exchange, $2.5 million of stock-based compensation, $800,000 of depreciation and amortization, and $1.1 million of interest and other income.

For the first half of the year, adjusted EBITDA was negative $2.8 million against negative $7.3 million in the first half of last year. On a trailing 12-month basis, adjusted EBITDA is negative $800,000 with a negative 1% margin. We are within a rounding error of break-even on a full-year basis if we look at the last 12 months.

Now turning over to cash flow on the balance sheet. We ended the second quarter with $74.5 million of cash and no debt, an increase of $12.2 million during the quarter. Our operations only used $2.9 million of cash in the quarter. Accounts receivable grew by $5.4 million, and inventory grew by $3.3 million, partially offset by lower prepaid inventory and higher payables.

Before those working capital movements, our operations generated cash for the first time. Accounts receivable ended at $40.7 million and inventory at $11.5 million. Both are deliberate. Receivables reflect the fast-growing shipment profile weighted towards the second half of the quarter and inventory's decision to support the ramp of the third quarter. Capital expenditures were $1.8 million all at our Fremont facility, supporting the electrode coating buildout and primarily funded by the Defense Innovation Unit.

First half capex was $2.8 million against the less than $10 million that we framed out for the year in March, and we're tracking well inside that. Financing activities provided $16.8 million, consisting of $12.3 million from warrant exercises and $4.5 million from option exercises. We currently do not have an at-the-market offering program. Every dollar of equity capital we took in this quarter came from holders choosing to exercise into the business as we continue to focus on minimizing dilution. Working capital at quarter end was $113.2 million, compared to $59.8 million for the second quarter of last year, and total stockholders' equity was of $125.6 million.

Before I turn the call back to Tom, I want to frame our outlook for the rest of the year using slide 7 as the backdrop. In March, we set an initial 2026 outlook of more than $125 million of revenue, over 25% gross margin, and our first full year of positive adjusted EBITDA. In May, after our first quarter of $28.5 million of revenue, we increased guidance to more than $130 million for the year. Today, we are increasing our revenue forecast again. With what we know today, we expect full-year revenue of at least $140 million and gross margins of at least 28%. We see upside to gross margins in the second half of the year as we focus on ensuring that the fixed costs of our contract manufacturing partners do not increase with higher volumes.

We are reiterating adjusted EBITDA of more than $4 million, a net loss of $10 million or less, and a loss of $0.08 or less per diluted share, assuming $143.5 million weighted average diluted shares. These updated GAAP profit guidance estimates consider the $1.9 million adjustment for the fair value of the warrants in Q2 of this year. Looking further ahead, nothing about the plan that we laid out in March has changed, except for how much of it is now visible in the numbers and in reality. As we close out the decade, we are still targeting more than $600 million of contracted capacity, gross margins above 30%, and adjusted EBITDA margins of at least 20%. The resourceful culture and low fixed cost structure that brought us within rounding error or break-even over the last 12 months are the same ones that will get us there.

With that, I'm happy to turn the call back to Tom for his closing remarks.

Thank you very much for your attention and continued support. Thanks, Ricardo. We remain excited about the opportunities ahead and look forward to meeting many of you at upcoming investor events. Thank you for your continued interest and support of Amprius. And with that, let me turn it over to the operator for questions.

Yeah, Colin, thank you. This is Tom. We have five chemistry platforms, a power-based one, energy-based one, balanced one. We have very good dexterity, as you say. We have had long-serving suppliers over the last several years, and as a part of NDAA, we've qualified two sets of 11 new suppliers for the anode, catalyze, separate, and seven other binders, et cetera, that go into our batteries. We have a primary set of new suppliers and a secondary set of new suppliers. We are happy with those new suppliers. We are folding them in to the sales that are being made in South Korea and the U. S. So it's working well. It's tricky because we have to qualify them.

We have to get these suppliers on a contract. So it's keeping us busy on the supply chain and operational side of things, as well as the technical side. The pilot line here in Fremont helps because we get quick turns and quickly validate some of those new components.

But we're pretty nimble in that area. We'd always like to go faster, of course, but we're happy with where we are, and we're on track, as we said in the call, to be fully, not just NDA compliant, but U. S. NDA compliant here in 2027.

Yeah, so the PAC partner program certainly helps, as we tried to say in the call, giving us some leverage and the flywheel effect as we tried. That certainly helps. Anne joining us is a very organized, methodical person who has run large sales groups. That's part of why we liked her. I think that will help. And then I think that the breadth of our offerings allows us to, without a lot of brain damage, serve some of these new segments, right? And it's early in robotics and PV tools, of course, but we have a couple of joint development programs underway, and it appears that some of the tweaks we're making side by side with these future customers are relatively small and small.

It can be done rapidly to get exactly what these customers need, energy, power, etc. So that, I think, will help us go deeper as well as wider on the customer side of things.

Yeah, the margins really depend on both the regional mix and the product mix, We do see, in essence, pouch cells are the most accretive for us. As we launch the NDA compliant pouch cells, we think that will be accretive and will help us get to our margin targets just as expected. When we reported Q3 last year, we said the margins were going to be lumpy, and that happened in Q1, as they went to 20% on a gap basis and 22% if we strip out the one-time cost from the Colorado facility. And then here in this quarter, the revenue mix was pretty favorable with quite a bit of our sales in Europe and pouch sales really holding their share of the mix.

So as we look at these other markets like robotics, eVTOLs, we have a team now looking at data centers potentially, I do think that all of those are going to be pursued in an accretive way.

Absolutely.

Thanks, Mark. Tom, of course. Tom, you know, we thought the L3 Harris order in the nanotech contract manufacturing, we saw that as a creative way to find and leverage some small U. S. manufacturing capacity that's available, you know, for these domestic supply chain sensitive customers. As stricter domestic requirements from the DOW and the FCC for both military and commercial drones, they kick in around 27 and 28.

Do you see this as an inflection point for domestic drone manufacturing or even for the cells? Will you have to ramp up more in U. S. manufacturing? And if so, what do you see for available avenues to do so? Yeah, so we have pretty good visibility certainly through the next several quarters, and of course on a planning basis we look through the rest, through the end of 2027 and then 2028 with increasing certainty. We know when these stricter requirements kick in. We're happy with where we are in Korea with the three. We need to go faster. We need to go deeper. Nanotech has delivered cells. We need to, of course, float more through them. We're actively working with other U. S. manufacturing, as we said in the call, not quite ready to announce anybody yet, but stay tuned there.

So, look, we always want the boat to go faster here, but we are pleased with the demand. We think we are in a leadership role technically. We need to earn that every day. We need to deliver to L3's requirements and others. We're happy with where we are, with, of course, always wanting to do more than sitting on our loyals.

Great, Tom. I appreciate the color.

Yes, so the revenue raise was pretty easy just given the demand profile, right? And as the team develops a tighter relationship with some of the packhouses, as we mentioned, and several of the OEMs, we are seeing more consistent order flow flowing to our customers. And so that gives us quite a bit of visibility into the demand picture for not just the second half of the year, but even starting to get into next year. And so, I mean, frankly, the demand side, there's even upside from the guidance update, but we think that updating the guidance, what we updated it to make sense, just given the supply picture and and how the supply chain needs to evolve here in order to deliver product particularly in Q4 and into next year.

The margin piece is actually was another easy race, right? So, if you look at our margins during the first half of the year and you strip away half a million dollars of expenses from Colorado So, in Q1, and roughly $1.8 million in tariffs that will no longer be there, that we had to pay here in the first half, and that we've pretty much gotten refunded at this point, then our margins would have been 27% for the first half. And so to raise that to at least 28% in the second half, as I mentioned in my remarks, we're getting a better understanding of the fixed cost elements inside of our contract manufacturing partners.

And, you know, it would be unfair to let those fixed costs scale up at higher volumes, especially at the higher volumes that are implied in the guide here for the second half. And so raising it to at least 28%, we think makes sense. We do need to continue having a favorable mix of, you know, at least 60% of the revenue coming from Europe, at least 60% of the revenue coming from accretive pouch sales, and we see that playing out here for the rest of the year.

That's great. I appreciate the color. I'll hop back in queue. Thank you.

Hey, Eric.

Good morning, Eric.

I met with several when I was in Korea a couple weeks ago. There have been obvious lots of discussions since getting back. We have a team working on it. We have some outside folks who are actually helping accelerate. We'll get them all buttoned up here this quarter under contract. Some of this is just legal reviews tend to take time. We're comfortable with the cost and the timing. In general, these new suppliers are large international companies that are actually larger revenue-wise than Amprius. So we are comfortable with their ability to deliver, but you've got to go through all of the operational things just to get them all lined up, aligned on the schedules. They're shipping products to different manufacturers in different countries.

It's not technically hard, but it's a little bit complex just on the planning side.

Yeah, so we have a start with Matternet, as we talked about in our last call, And that is a foot hold when we're starting to expand. I don't know that the FAA would certify batteries. I think they tend to do that on a vehicle-by-vehicle basis. We're not FAA experts here. But that's part of what the change we did with Ronnie and Ann. The new delivery drones won't necessarily help us make the next quarter. Certainly planting seeds and getting in and understanding what they require and comparing that to our current suite of, it's something we're asking Ronnie to do so that we can Turn those seeds that we plant into revenue in future quarters. So we're on it.

We'd like that boat to go faster also, but we believe that, gosh, shouldn't those delivery vehicles be able to use our batteries? Can they deliver to the whole block? Can they go longer? Can they deliver a greater payload? A lot of these payloads are limited to a couple kilos. Well, we probably could double that. So we believe the promise is there. We have work to do to earn the trust of DoorDash, who you mentioned, and others.

So international has been strong. Europe's been very strong. And we talk about last quarter it was 75%. It was a little bit less, I think, Europe. This quarter. So that's a really solid base. We are happy with Red Wire, as we mentioned in the remarks, and others that seem to be coming on. We see some of the flow down from the fiscal government 2026, whether it's drone dominance programs or other spend that we're starting to see in our last call. 90 days ago, we referenced a couple of our customers that were receiving money from that.

So it's starting, and it's getting a little bit better balance. We also see a better balance. That's part of what we like about Stark is that there's a better balance also with not just drones, but e-mobility is starting to come on in an increasing way. So over time, I think we'll see a better balance between Europe and U. S. , Asia, e-mobility, and drones, and even within drones, not just defense, but delivery, public safety, as we've talked about.

Yeah, so we did include, Ricardo did a nice job of putting some of those slides in, because we got that question last time, which is, okay, about with these different types of drones, What are typical size batteries and then what is the potential cell content? So slide 10 and 11 in the deck I think was really helpful. And if you look at that, obviously with the larger Group 3 drones, the Group 4 and 5 drones tend to be fuel-based. 1, 2, 3 are battery-based. Group 3 drones use more content than Group 1 drones. So I would direct listeners to that slide. So there's like 10 and 11 in the deck.

But the nice thing is that they tend to be pretty sticky, right? So once we do earn the trust of these customers, and sometimes it takes a couple quarters to earn that trust, they tend to stay with our batteries. They look to us because we're sometimes up to 50% better, 80% better in some cases, for flight time, which is super important in the scoring of these shootouts.

So that's our view of DDP and some of the other opportunities.

Yeah, we had a bulk of the OpEx increases here in Q2, which, you know, pulled ahead some of the investments that we want to make in our go-to-market efforts. I do think that in Q3 that will continue. We will probably add another million dollars of OPEX per quarter. And then for Q4 we are looking at holding it flat and then really testing ourselves to see how much we can maintain the growth with that level of OPEX. The bulk of the resources that we would be adding would be really on just managing the supply chain beyond what we've already invested on go-to-market.

Awesome.

Hey, Ryan.

Morning, Ryan.

Yeah, step one is to get smarter. We attended Automate in Chicago six, eight weeks ago, our first booth at a robotics show. Some of the takeaways for us are that our cells perform really well with robots that are in unstructured environments. So think of the dog-like robots and even some of the humanoids that aren't necessarily inside of a very organized factory. Or another example we're not pursuing is in a warehouse robot that can go around the corner and plug itself in. You don't necessarily need high energy density or the right power, high energy mix for those applications. But if you are unstructured, if there's uncertainty in whatever you're doing in a robot perspective, that's where you value the energy and power mix.

We've analyzed some of the current required on some of these robots, and if you're lifting, there's a spike in current. Okay, you need a certain type of battery to do that. Certainly if you are wandering around in, again, unstructured areas, you don't have the certainty of when you're going to be able to charge next. So longer run time, higher energy density is prized by robots like that. So it allows us, that learning allows us to focus, and again, some of the executive changes we've made to focus and understand where we can win, where do we play, and how do we win as part of some of the change we made with Ronnie so that the seeds that he'll be planting here will turn into revenue as that market does expand.

Yeah, it's a pretty initial look, but if you look at the power requirements of some of the CPUs in there, it only keeps increasing. And while they're using some supercapacitors to sort of flatten the lines of the high-power draws from these chips, You may need actually a high-power cell that's pretty close immediately behind those supercapacitors to help, in essence, flatten the load in the system, right? And so that's where we see a huge opportunity for basically a high-power cylindrical cell that can be very close to the rack, We are literally providing 1 to 60 seconds of run time, recharging and then being there ready again for whenever the power is not available. And so, yeah, we do see that that's an opportunity there for the taking.

We're having some initial discussions with some of the integrators of these racks and the infrastructure around the compute. And, yeah, so, you know, we'll come back and report when we've got customer traction there.

Thanks, Ryan.

We will always try to do it sooner. And I think the elements are definitely there for the taking, right? But we also just want to be cognizant of what we're signing up for. And as you've seen us in the way that we've guided this year, our goal is to deliver what we promised and a little bit more. And so I do see your point on the 30% potentially having more opportunity to, you know, frankly be higher and also to get pulled ahead. But one of the things that we're managing here over the next, let's say, 12 to 24 months is the full NDAA compliance, and that comes with a different cost structure that we frankly need to get paid for.

Executing that and giving ourselves room to execute that is why we put the 30% plus cross-margin target out by 2030. But yeah, we will pull it ahead if we can. The main driver, frankly, Tim, is just revenue mix. So if we are able to sell more customized pouch cells, we will be able to get there sooner, and if we go and hunt some of the cylindrical cell opportunities, which again can be accretive if we are careful, then I think that will help us get there. But, yeah, no, I mean we will definitely do everything we can here to pull that ahead. But again, I mean sort of the same I gave to everybody when we reported Q3 last year, it won't be totally straight up and to the right.

There will be a quarter or two where we manage the mix or if North America revenue increases and we haven't totally started getting paid for some of the expenses to become NDA compliant, the margins could actually take a slight step back in that given quarter. So it will be It will be a journey, but I'm hoping that with the way we've performed here, three quarters under our belt of delivering gross margins and telling people what it's going to be and then coming in and delivering something that's slightly ahead of that, hopefully we got the trust to execute through this lumpiness over the next two years or so as we become fully NDA compliant.

Yeah, Tim, I mean, you're basically reading our mind, right? It's no secret that we're out there looking for a partner to do that for us, and there's plenty of capacity from folks who leaned into EVs maybe too aggressively here over the past couple of years, and so we would just say stay tuned.

Yeah, and just to clarify, Tim, it likely will not be Amprius purchasing the facility. Our model is, as everyone knows, to work with partners. But whatever we do, whether it's in the U. S. or other geographies, will very likely be done with partners.

But as Ricardo says, there's lots of partners in the U. S. , and there is capacity available. So watch this spot. The other bit is that if you look at the CapEx that goes into producing ourselves, like it's not all alike, right? So, for example, the last thing people need is another building producing cells. Then you have the equipment inside of the facilities to produce the cells. We are seeing that the investment on the equipment can basically be about a third of what it takes building, whereas we learned in Colorado what it would have taken to build a building around a cell line And then I do think that if you get your business model to work out the payback on That equipment inside of the building which ideally we don need to pay for You can get that back within two to three years if you manage to fill the capacity So we're getting quite a few signals on the capacity, the demand being there very clearly as we talk to the DOW, and yeah, we just need to put the pieces together to deliver that.

I'll deliver that.

Tim, thank you.

Hey, Chip.

Yeah, so look, it's very competitive. We tend to win because of the energy density, and it really depends on some of the scoring, right? These shootouts, the gauntlets, as they're called, are scored on a couple different fronts, a couple different metrics. Some is a duration, how far, how long these drones can fly. There's videos on the Drone Dominance website that go through muck buildings and things like that. So in general, higher energy density is better. There is a cylindrical pouch mix. If you really want a fully optimized drone, We tend to use pouch because you get greater energy density. Pouch packs and pouch cells are a little bit harder to integrate compared to cylindrical cells.

So there's a dynamic going on there. But that's exactly what our sales folks are focused on. Like we tried to describe an earlier question about delivery drones. Look, all of these vehicles, even certain types of robots, even these satellites, gosh, why are they not using ourselves is a question we start with. And then try to understand that and dig in so that we can learn. We have a reasonably malleable platform. I mentioned the five different chemistries that we have. But gosh, we should be able to get something in front of these in order to win their trust, to win their business. That's how we think about it. We got work to do. We're happy that we're in about half of the 19 for the upcoming gauntlet here at the end of the month.

But we have more work to do.

Yeah, so the PAC partners are really an extension of our team. Some drone companies and other vehicles rely on PAC partners and ask those companies to make a recommendation. And we like to be at the top of the list for those partners, right? And we're trying to build out this ecosystem. So growing companies do. I reference the nine that are on our website, and there's a gold, silver, bronze type thinking as we go deeper and get closer to those partners.

We, in terms of visibility, you know, it's getting better, right? Some of the companies aren't able to give us multi-quarter purchase orders because, frankly, they don't have the visibility. But as you get more companies like Redwire, we mentioned during the call, and a couple of companies from the last call, as those companies start to get under contract with whoever they are supplying their vehicles to, then the visibility to us increases. So it's getting better. We still have obviously very good visibility here in Q3 and in Q4, but it gets a little bit grainy as you go out to 2027.

That's been natural, I think, over the last year or so. It's gotten better. But just like the last question, Chip, we have work to do there. But it's certainly going in the right direction.

Yeah, on the backlog, we really don't have much to add there. I hate to disappoint here, I mean we do have quite a bit of visibility, but I think the word backlog has historically been misused. When it comes to open POs, I mean we feel pretty good about where we stand as we work our way here through Q3, and we see a similar dynamic to what we've seen in the last two quarters as we get the POs, Get the POs and then basically work to deliver as much of that product within the quarter as time runs out on us. The margin range I think ranges basically from the low 20s to the high 30s if you take on the lower end a slightly more commoditized cylindrical cell that is I think that range varies by region.

In China, there are some folks where the lower end of the range will start in single digits, and we are being careful to not play them. So, and then for higher end pouch cells, I do think the upper end of the range is a little bit lower in China, and we're just being very careful of how we play that. So, these ranges are not just for the form factor, but also for the regions. When it comes to whether the application is defense or non-defense, I think there the same range applies. I don't think There's much pricing discrimination between the end markets.

Yeah, so maybe I'll just start with the 24 million, or that should be done over the next two and a half quarters safely. And then on the mix between pouches cylindrical, we haven't broken that out for folks. We do see that as competitive intel.

Thanks, Derek.

Absolutely.

100%.

Yeah, we totaled it up in the deck, Ted, to greater than two gigawatt hours a year. And in an earlier call, we broke that out. And on an average cell that's working out to be something like 12 to 15 million cells per quarter. Sometimes it's easier to think about cell units. We don't break that out by CM. We did name the three CMs that we have in Korea, and we did mention that we're working to be able to share pouch manufacturers in the U. S. So we always, of course, want supply to be ahead of demand so that we never leave a nickel on the table, and that's the goal that we're working with. So there's a lot of work that's done underneath, right?

The duck's legs are working hard. You see visible evidence. So we're hard at work on that. It's pretty balanced in China on cylindrical pouch. That balance is coming into play in Korea. We're currently unbalanced in the U. S. , right? We have a cylindrical identified, but we haven't shared yet any of the pouch guys. It'll get in balance, and again, the goal is always to have just a bit more of the capacity so that we can meet this demand. Part of where we also win, frankly, is with speed. We can be nimble, whether it's at our pilot line here, to win new designs, or nimble because, gosh, we can get sales in meaningful quantities to customers before some deadline that other competitors can't.

That's where we can win.

I mean Ted, the other element to the answer is that there is some nuance to this, right? So, I mean our contract manufacturing partners don't want to have idle capacity there sitting for us, and in one way or another we would be paying for it. But if you look at what goes on in the company within a given week, month or quarter, we're basically playing this game We have a great interest with the supply where the demand comes in in a certain mix of flavors and then within the time period we work to ship as much as possible, given our various different supply sources and the different SKUs that we have. And, you know, sometimes we do have to be pretty dynamic here with what we're asking our contract manufacturing partners to make.

And this picture is evolving mainly in South Korea as we develop more flexibility there. We're also looking at ways to just creatively produce cylindrical cells in the NDA compliant markets to, in essence, our coverage of what the scheme of Tetris looks like and how flexible we can be. But that's how we, you know, within the given time period, we basically match supply with whatever flavor the demand comes in.

No, that's a good question. So this lead time depends, right? For something like full NDA compliance and setting up capacity here in the U. S. , or what we've done in South Korea here over the past year, the lead time can be, you know, a year or two. So we are working pretty well in advance of the need by getting an understanding of the demand first, and then going out and farming it out and having the right commercial relationships to get the demand.

If we are only talking about flexibility within region, then we can be pretty flexible and have things up and running and make the switches within a quarter, quarter and a half max. And that's how we've managed ourselves to be pretty flexible here over the last three to four quarters.

Absolutely. Thanks, Ted.

Yeah, thanks for the question. So, there likely will be a lag. That's what we've seen before, right? So a couple of the customers that we talked about last call and even redwire this call, you know, that's obviously 2026 defense money, and the fiscal year ends here, what, in six, seven weeks? So it's only toward the tail end of the fiscal year. So there was six-, nine-month lag from budget being available to the flow down to Amprius. So, if the budget gets figured out here on the timeline you mentioned, some of that will trickle in probably mid-2027 with the other ones falling in after that. So, there's an arrow bar on that, I would imagine, but there'll be some lag, at least a quarter, I would imagine.

We believe, as we talked about, that huge 24,000% increase in the ask. Some of that's going to come through, maybe not all of it, but it certainly bodes well, and we want to do the best we can to deliver with speed to those customers.

No, not really. Going into this year, we always looked at us needing roughly $20-25 million of working capital to enable a doubling of revenues. The receivables basically looked the way they looked just because of when you take the snapshot as you close the quarter. But if you were to look at the balance sheet a month after we close the quarter, you would You see that a lot of the receivables have been collected. We feel comfortable with the AR aging. Actually, the bulk of the AR aging is being driven by customers that we have had a long-standing relationship with who are pretty large. I think we are fine with the working capital element. We also built up a little bit of inventory that was planned.

We look at enabling the ramp of the second half of the year, and so from a working capital perspective, we're fine.

Thanks, Matt.

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