Ambiq Micro Stock

Thank you. Good morning and welcome to the AMBIC Micro second quarter 2026 earnings conference call. As a reminder, this conference call is being recorded. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I'd now like to turn the call over to Ms. Charlene Hwan,.

Vice President of Corporate Marketing and Investor Relations. Charlene, please go ahead. On today's call, Ambix CEO Fumihide Asaka will provide an overview of the company's performance and strategy. CFO Jeffrey Winsler will then discuss the quarter's financial results and outlook. Following their remarks, Scott Hansen, Ambik's founder and CTO, will join Hume and Jeff for Q&A. Our earnings release is available on the Investor Relations page of our website at www.ambik.com. We have also posted our earnings presentation on the Investor Relations of our website. Before I turn the call over to Hume, I'd like to remind our listeners that during the course of this conference call, management will discuss non-GAAP financial measures.

Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release available on the website. Investor Relations website. In addition, today's call will contain forward-looking statements representing management's beliefs and assumptions only as of the date made. Our most recent quarterly report on Form 10-Q and other filings with the SEC provide more information on specific risks. that may cause the actual results to differ materially from current expectations. And now it's my pleasure to turn the call over to Ambix CEO, Hume Asaka. Good morning, everyone, and thank you for joining us. Thank you.

Since the start of the year, we've seen a step change in demand for edge AI, which supports our strong performance and further increases our conviction in the magnitude and durability of the long-term opportunity. Across end markets, companies are embedding more sophisticated AI into a broader range of devices. and end user demand is far exceeding our expectations and those of our customers. With our full-stack ultra-low power solutions, Ambix defining technologies are not only enabling, but further accelerating this next chapter in AI. This positions us to continue outpacing the broader market as we take share and expand our addressable opportunity. This momentum is reflected in our second quarter results. Net sales were ahead of guidance, growing approximately 90% over last year and marking our fifth consecutive quarter of sequential growth. We also raised approximately $168 million in net proceeds through a successful follow-on offering.

The strong investor interest serves as a proof point of confidence in our ability to capitalize on the meaningful opportunity ahead. Turning to the details of the quarter, demand accelerated across customers and markets and products. Customer programs grew on healthy end-user demand, positive response to customers' recent launches, and continued ramping of our newest large customer. This supported strong performance across key products, including double digit growth in Apollo 3 and Apollo 4, while Apollo 5 sales more than doubled year over year. With lean inventory across channels and continued expedite requests, we are confident that this demand reflects underlying end market consumption rather than inventory replenishment. Our orders continue to exceed initial forecasts, and based on our ongoing customer conversations, we expect underlying demand for edge AI to strengthen even further in the second half of 2026. At the same time, we and the broader semiconductor industry are increasingly supply constrained.

We are working closely with our supply chain partners to support production ramps, while maintaining the high level of quality and execution our customers expect. With tight capacity across wafers, packaging, substrates and testing, we are actively working to secure additional foundry allocations and OSAT capacity to improve supply flexibility and better support customer demand over time. Even with these actions, our second half outlook is constrained by available supply, given the significant levels of demand we are seeing. As additional capacity becomes available, we believe we are well positioned to convert this deferred demand into future revenue. Based on our current visibility, we expect third quarter net sales to grow approximately 100% year over year. And we now expect to deliver approximately $135 million in net sales for the full year, even with the supply constraints I just mentioned. Looking ahead, we believe the opportunity for Ambiq is substantial.

With more than 20 billion connected devices already deployed, there is significant potential to embed edge AI across this large and growing installed base. While adoption remains at an early stage, increasing AI functionality at the is driving demand for greater compute and memory content across a growing range of devices and use cases. As these workloads become more sophisticated, customers must deliver higher levels of intelligence and performance without compromising battery life, responsiveness, or privacy. That challenge is making power efficiency a critical design requirement for the next generation of edge devices. These requirements are redefining what matters most in semiconductor design. Power efficiency is no longer just an advantage. It is becoming a fundamental requirement for the next generation of edge AI devices.

That is exactly where Ambiq is uniquely positioned to lead and create value. Captures this opportunity, we are broadening our reach across form factors, customers and end markets while investing in the next generation of products that will push the boundaries of ultra low power performance. Our latest hardware and software innovations are further enhancing our ability to support increasingly advanced AI workloads at the edge. On the hardware side, we recently introduced the Apollo 330 Plus and Apollo 510 Lite SoC families. Both products are generating strong customer demand with backlog tied to next generation product roadmaps. We expect these products to begin contributing revenue in the third quarter. with the first customer devices expected to reach the market early next year. We are also expanding the value of our solutions through a growing suite of AI software capabilities.

Our recently launched Heliocore and Compression Kit are already helping customers accelerate production deployments, improve power efficiency, reduce memory requirements, and lower overall systems. More recently, we introduced Helia Profiler, an open-source profiling tool that broadens the Helia AI ecosystem and gives developers greater visibility into model performance and system optimization. The breadth and depth of our full-stack portfolio is enabling us to support more applications, win new customers, and expand into diverse end markets. This includes greater penetration in medical, industrial, and smart home and building applications. We continue to expect revenue from these markets to more than double in 2026, making them a more meaningful contributor to AMBIC's growth and diversification. and we expect this momentum to continue, supported by a growing and increasingly diverse design funnel. For example, in wearable neurotechnology, on-device AI is being used to analyze complex biosignals like EEG in real time, improving responsiveness and privacy. In smart buildings, leak detection systems can distinguish meaningful events directly at the sensor, reducing data transmission while enabling faster intervention.

And in industrial applications, always-on sensors monitor equipment health in real time, detecting failures before they disrupt. operations. These are exactly the types of workloads our ultra-low power SOCs and innovative AI software are designed to support, positioning us well to capture the next wave of edge AI adoption across multiple high-growth markets. Turning to our product roadmap, we continue to advance our next generation products, Apollo 340, Atomic 110, and Atomic 120. Customer interest remains incredibly strong, including engagement with alpha customers, as these products are critical enablers for our customers to advance their own ambitious AI roadmaps. Development for these products continues to advance, with both Atomic 110 and Apollo 340 targeted for customer sampling in early 2027. In closing, the customer demand we are seeing today reinforces our belief that edge AI is becoming one of the most important long-term growth drivers in the semiconductor industry. While near-term supply constraints remain an industry-wide headwind, we are taking decisive actions to support our customers.

As we look ahead, we are exceptionally well positioned to capture the meaningful long-term opportunity in Edge AI through differentiated technology, an expanding product portfolio, and growing customer engagement. With that, I will turn it over to Jeff to cover the financials.

Thank you, Humi, and good morning, everyone. We delivered a strong second quarter with non-GAAP gross profit more than doubling year over year. This marks our fifth consecutive quarter of growth and reflects the strength of our differentiated technology, accelerating edge AI demand environment and strategic shift to higher value market opportunities for our products. Now turning to the details of our second quarter financial results. Net sales were 33.9 million, increasing 89.7% year over year, with revenue outside of our three largest customers growing 143% year over year. Sales to end customers in China were approximately 14% of total net sales, compared to approximately 12% in the prior year period. Our continued strategy with regard to China is to engage in customer programs where our technology is enabling higher value edge AI functionality.

Non-GAAP gross profit increased 109.3% year over year to 16 million. Non-GAAP gross margin was 47.2%, up 450 basis points year-over-year on favorable mix related to greater edge AI enablement, as well as improved manufacturing efficiencies. Turning to operating expense, non-GAAP R&D was $11.2 million, up 55.5% year-over-year, as we increase investments in product development and technology. The primary drivers for R&D increases were intellectual property licensing for multiple product developments, compensation costs as we scale the team, and contractor costs to augment our own labor. Non-GAAP SG&A expenses were $8.2 million, up 23.7% year-over-year, driven largely by sales compensation for higher revenues and public company costs. Second quarter non-GAAP net loss was 1.8 million, a 4.1 million improvement year over year. Non-GAAP net loss per share was $0.07, based on 21.74 million average shares outstanding.

We ended the quarter with no debt and $366.8 million in cash and cash equivalents, which included approximately $168 million in net proceeds from our upsized follow-on offering in June of this year. In total, our two offerings this year raised approximately $243 million in net proceeds, providing us the financial flexibility to fund working capital, sales and marketing, and product development as we continue to capitalize on the growing edge AI demand and scale to meet customer needs. needs. Now turning to our outlook. For the third quarter, we expect net sales in the range of $36 million to $37 million, driven by the trends covered by Hume earlier. We expect non-GAAP gross margin between 46.5% and 47.5%, which is consistent with the second quarter performance. Non-GAAP operating expense of $24 million to $25 million, reflecting investments to support product development and strategic growth priorities, including $2 million related to intellectual property purchases in the quarter. Finally, we expect a non-GAAP loss per share of 20 cents to 12 cents based on the on a weighted average share count of 24.17 million shares outstanding. This new share count is reflective of our follow-on offering in June.

Looking ahead, customer demand is accelerating meaningfully as we enter the second half of the year. At the same time, we are navigating increased supply constraints and rising cost pressures alongside the broader industry. Despite this, we are on track to double year-over-year net sales growth in the second half, positioning us to deliver approximately $135 million for the full year. For gross margin, we now expect modest year-over-year improvement in 2026 compared to our prior 2026 expectations for flat margins year-over-year. And we expect to achieve this even with the broader industry headwinds we are navigating. We continue to expect operating expense of approximately $85 million for the full year, including $7 million to $10 million of IP purchases necessary for product development. With that, I'll turn the call back over to Hume before we open the line for Q&A.

We are pleased with our performance in the first half of 2026 and encouraged by the momentum we continue to see across the business. We remain focused on delivering for our customers, expanding capacity, advancing our product roadmap, and investing for long-term sustainable growth. We believe the foundation have built. Positions ambic well for the opportunities ahead and we remain confident in our ability to execute. With that, I will open the call to questions. Operator, please go ahead.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Torres-Vonberg with Stiefel. Your line is open. Please go ahead.

Yes, thank you, Humi, Scott, Jeff. Congratulations on the strong results. Humi, I was hoping you could elaborate a little bit more on the supply constraints. I guess the question is, had you had the capacity, how much more could calendar 26 be? And when do you expect some of these supply issues to ease? Thank you.

Hey, Tori, thanks. That was a great question. You know, our customers' demand is skyrocketing, like we said in our statement. And as we speak, our demand to keep on going up. So I cannot put the specific number, but I'm not sure. I must say that a lot of additional demand is coming in week after week. And we believe that this trend will continue. not only second half of this year, but even into the 2027. That said, because of the fact that our demand continue to grow faster than market, I believe that the constraint will be something, supply constraint is something that we need to diligently work with our supply chain partners.

But as you can see, we do have a very strong partnership with supply chain partners. So despite the fact that we are doubling our revenue, your over year to year comparison. We have to be able to meet those demand and we believe that we will be able to meet forecasted quantity as close as possible. Again, one challenge is that the customer success has been phenomenal. Let me tell you one example. Couple customer introduced the brand new product back in May. their pre-order quantity was three to five times X of what even they expected. So to meet that demand, they wanted a product in June.

That's physically impossible. So we couldn't do that. But we will work with our supply chain partner and the customer to sustain our continuous growth, very strong continuous growth.

Yes, no, that's great, Collar. Thank you for that, Homi. And maybe as my follow-up question for you, Scott, and specifically on product development and Atomic, sounds like, the first atomic product's going to be sampling first half of next year. Just curious, are we still looking at a 2028 revenue ramp from the atomic products? Thank you.

Yes, thank you. Yes, that's all still the plan. 2028, meaningful ramp for Atomic 110. Great progress in the last several months since our last call. Probably the most notable thing is that early development platform is in customer hands in the form of an FPGA and we're getting a lot of useful feedback. And the sales team is building a nice list of customers that want access to that product. And so I'm excited about that. And it's interest that spans a couple of different markets. So that's very positive. So yes, I'm pleased with how that's going. busy time for the development team because you know we're developing multiple products in parallel we've got atomic 110 we've got apollo 340 so a lot going on and i'm pleased with with how things proceed.

Sounds good. Congratulations again. Thank you. Thank you. Your next question comes from the line of Quinn Bolton with Needham & Company. Your line is open. Please go ahead.

Hey guys, this is Shadi Nawalian for Quinn. Thanks for the question and congrats on all the progress. I guess on gross margin for Q2 and Q3, it's coming in much better than expected. So just wanted to hear the puts and takes on what's driving the strength here, with the rising component costs and supply constraints. Yes, so there's two basic.

things that we've really made significant progress on that have allowed us to achieve gross margins a little bit above our business model. On the top side, from an ASP perspective, we continue to win business and price our products to extract the maximum value that we're providing and customers. So pricing continues to be something that we look at and make sure that we're balancing to get the most that we can from the products that we sell. We've also made a lot of progress on the actual manufacturing costs associated with our products. And this is primarily through yield improvements and test time improvements as we ramp products into full-scale manufacturing. That is being muted a little bit by some of these cost pressures that we're seeing, but making progress on both the top side as well as the cost basis for our products is what's allowed us to deliver these margin results.

Got it, that's helpful. And then in terms of just the strong demand in the wearables market, it sounds like it's pretty broad base. But is there any form factor that you guys are seeing more demand for, whether that's the watches, the bands, rings?.

or glasses? Yes, we are indeed seeing demand across all types of wearables, right? So whether it's wrist-based, it's watches and bands, displayless bands, or smart rings, or even glasses. What I will say is that one of the hot new areas is display list tracker. So that would encompass both your smart rings as well as track or Fitbit Air. There's a great demand for that. And I would say that what's driving that is that there's this movement towards AI agents in the cloud gathering up all this data. So you don't necessarily need the display right there to tell you what's going on. And so you rely on the AI agent to analyze all your data and give you feedback about how to adjust your sleep and how we've talked about in the past, these devices become almost like medical devices.

So we're really excited about the future there. We see our customers being very excited about the future there. So expect good things out of that segment moving forward.

Got it. Thank you. Your next question comes from the line of Liam Farr with Bank of America. Your line is open. Please go ahead.

Hi, thanks for taking my question. I was wondering if you could start with just discussing kind of your revenue mix, you know, and especially in your funnel, is it still the market outside of wearables comprising around 25% or has that picked up over the last couple of quarters?.

Yes, well, one of the edge AI devices and really we call it personal devices growth is phenomenal. So we believe that that will continue to grow. That said, non-wearable market is also growing. Like we said in the script, we said we doubled non-wearable demand. However, because the denominator is growing so fast in personal devices with AI capability, absolute number may not be as great as.

you know, what we like to see, but that it's gross is very strong. And then what I'll add is that it does remain true that if we look at new designs launching next year, roughly 25% plus of that funnel is non-wearable devices. So that That remains true, but we're to some extent, as Sumi said, victims of our own successes because everything else is going so well. I would say good progress, but maybe not as fast as one might like in these fast-growing times.

WHAT IT WAS ABOUT BEING IN THE WHAT IT WAS ABOUT BEING IN THE MARKET, WHAT IT WAS ABOUT BEING IN THE MARKET, JUST WHAT IT WAS ABOUT BEING IN THE MARKET, JUST MAKING WHAT'S THE MARKET, JUST MAKING WHAT'S THE MARKET, JUST MAKING IT MARKED, JUST MAKING IT MARKED, JUST MAKING IT BACK MARKED, JUST MAKING IT BACK A MARKED, JUST MAKING IT BACK A LITTLE MARKED, JUST MAKING IT BACK A LITTLE BIT, MARKED, JUST MAKING IT BACK A LITTLE BIT, AND MARKED, JUST MAKING IT BACK A LITTLE BIT, AND IT MARKED, JUST MAKING IT BACK A LITTLE BIT, AND IT WOULD And then, you know, 1.8 million of net loss for the quarter. I was wondering if you could just kind of brought color on that trajectory towards profitability on the bottom line. And is Atomic needed to get there or can we see some profitability or even free cash flow break even in fiscal 27?.

THANK YOU. I THINK WE'RE VERY, VERY PLEASED WITH OUR PROGRESS IN TERMS OF REDUCING THE OPERATING LOSS THAT YOU'RE SEEING QUARTER OVER QUARTER. THIS IS VERY FAST GROWING REVENUES. WE'RE SPINNING OFF EVEN HIGHER PERCENTAGE OF GROWTHS PROFIT DOLLARS. AND OUR SPENDING IS NOT GROWING AS FAST. ALTHOUGH WHAT I WOULD POINT TO IS IF YOU LOOK AT OUR GUIDANCE FOR Q3, WE EXPECT OPEX TO JUMP BACK UP. AND AGAIN, THIS IS REALLY INVESTMENTS AROUND OUR 110 AND 340 DEVELOPMENT. I THINK IT'S TOO EARLY to really talk about that tipping point of when we'll get to cash flow break-even.

We're very much focused on a growth model right now. And in fact, we've raised quite a bit of money in the last two years the last two offerings that we've done specifically to give us the cash resources to both grow our existing pipeline of business, as well as develop new business opportunities. We'll continue to be investing those dollars pretty heavily, and it's too early really to talk about when we expect to get to a profitability metric.

Thank you. Your next question comes from the line of Suji De Silva with Roth Capital. Your line is open. Please go ahead.

Hi, Hume, Scott, Jeff, congratulations on the progress here. In talking about the non, yes, thanks, thanks. non-wearable market guys is there um a channel channel or ecosystem partner strategy to help you know penetrate the broader industrial customer base there is a three-year your customers to their customers or just any ways that that would be accelerated through a channel strategy.

Well, we're working with various partners, including a distribution partner and some of the rep, so we're expanding. However, as you know, those market does take a little bit longer than the consumer market. So we are seeing a very strong, like I said, doubling year after year demand. But we'll take a little time, but yes, we're very optimistic that the dose market will grow and will be a significant part of our future revenue. Yes, and I would say that the cool thing, if I look at medical industrial smart home, is the huge diversity of use cases that appear in our funnel, whether it's opportunities for engagement.

with or wins that we have, but it's everything from Holter monitors to fetal heart rate monitoring to EEG brain monitors, ECG patches, seizure detection devices. On the industrial side, you've got radiation dosimeters, Planable, animal monitors, seabed sensing. So huge variety of stuff. And then the other thing I'll mention from a partner side is a lot of what these customers sell is it's modules, right? So it's devices that we sell a chip to the module manufacturer and then they go off and sell aggregate a bunch of other customers. And in that way we reach a broader customer base. So, you know, bottom line is we're very pleased with the diversity of customers that we're seeing and we're optimistic about the future there.

Again, Mark, all of HAI is growing fast outside of wearables, and I think you're going to see HAI world of devices all around your personal life. So we're very confident.

confident that it's going to expand faster. Sounds exciting. Yes. And then my second question, you know, obviously great job on the fundraisings here. Now that you have the stronger balance sheet, I'm wondering your thoughts and strategy on inorganic and if there are kind of product whole software or hardware that could expand or, you know, what, what the thoughts there are as you go forward, obviously strong organic growth. So wondering what the thinking is there.

Yes, we cannot talk about what's our strategy, organic or inorganic growth, but definitely we're using that to expand our portfolio of the product. And it could be beyond what we talked about at Poland Atomic. But please stay tuned. We're very excited having these kind of funds today. So we have the Xenoportfolio is really exciting to us. Okay, great. We'll look forward to it. Thanks, Jimmy. Thanks, everybody.

Thank you. Your next question comes from the line of Tim McCurry with UBS. Your line is open. Please go ahead.

Thanks a lot. Jeff, I want to ask about OPEC. So it's ballooning a bit in September. The full year implies it's going to go down a touch in December. But these $7 to $10 million worth of IP purchases, it's not something that you called out in the past. So how much of this is sort of recurring as we head into, you know, 27? So based on the number of IP purchases, how much of this is recurring? what's the right baseline off of that $23 million in December? these IP purchases, you know, continue into the first half of next year.

Well, we talked about IP purchases at the very beginning of the year, and in terms of that $85 million of OPEX spending for 2026, we said that the IP piece of it would be about $7 to $10 million in the OPEX line. I think we're just reiterating that. THE FACT THAT WE STILL ARE ON TRACK TO SPEND ABOUT THAT MUCH FOR THE YEAR, BOTH THE 85 AS WELL AS THE 7 TO 10 FOR IP. THAT IP IS DIRECTLY LINKED TO THE 110 AND 340 DEVELOPMENT. IT'S A VARIABLE COST ASSOCIATED WITH BUILDING NEW PRODUCTS So when we think about the future, we will continue to spend money where we need to license IP to develop products beyond 340 and 110.

Okay, so it's going to recur into next year. That's the answer to the question, correct? It'll be tied directly to the products that we're developing on our roadmap. Okay. Okay. Then how about this? So of the year-over-year growth in revenue, so of the, let's say, $18 million September 26 versus September 25, how much of that's units versus price?.

I can't give you an exact percentage, but clearly to get that type of growth, it's unit-based. I mean, the demand for end customers on a unit basis is exceeding all of our expectations. And so units are the primary driver to our revenue growth.

Okay, thanks. There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good morning, and welcome to Ambiq Micro First Quarter 2026 Earnings Conference Call. As a reminder, this conference call is being recorded. [Operator Instructions]

I'd now like to turn the call over to Ms. Charlene Wan, Ambiq's Vice President of Corporate Marketing and Investor Relations. Charlene, please go ahead.

On today's call, Ambiq's CEO, Humi Esaka, will provide an overview of the company's performance and strategy. CFO, Jeff Winzeler, will then discuss the quarter's financial results and second quarter outlook. Following their remarks, Scott Hanson, Ambiq's Founder and CTO; and Aaron Grassian, EVP of Global Sales and Marketing, will join Humi and Jeff for Q&A.

Our earnings release is available on the Investor Relations page of our website at www.ambiq.com. We have also posted our earnings presentation on the Investor Relations section of our website.

Before I turn the call over to Humi, I'd like to remind our listeners that during the course of this conference call, management will discuss non-GAAP financial measures. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release available on the company's Investor Relations website.

In addition, today's call will contain forward-looking statements representing management's beliefs and assumptions only as of the date made. Our most recent annual report on Form 10-K and other filings with the SEC provide more information on specific risks that may cause the actual results to differ materially from current expectations.

And now it's my pleasure to turn the call over to Ambiq's CEO, Humi Esaka.

Good morning, everyone, and thank you for joining us. We have started 2026 with exceptional momentum. The market for Edge AI is growing rapidly and is outpacing our expectations from the start of the year. Against this backdrop, our ultra-low power SPOT platform is driving market expansion, gaining share and reinforcing Ambiq, as a partner of choice in a fast-growing category. We expect this momentum to continue throughout the rest of the year.

At the same time, our pipeline continued to grow and diversify, and we are investing strategically to further scale the business and extend our technology advantage.

Turning to the first quarter performance. Net sales exceeded guidance with strong year-over-year and sequential growth from the fourth quarter of 2025. This performance was driven by broad-based demand for Edge AI across our customer base with more than 80% of units running AI algorithms, order ramps for the upcoming customer product launches and new customer entering production. Inventory level remains lean, and we are seeing an increasing number of expedited requests, which reinforces our view that demand is healthy across our end markets.

For the second quarter, we expect net sales to grow approximately 75% year-over-year with momentum continuing in the second half of the year. This outlook is supported by 4 key factors: First, strong and growing end-user demand for Edge AI solutions. Wearables continue to evolve from basic consumer products to more sophisticated health and wellness platforms. And we are seeing continued diversification across form factors, including watches, display less bands, rings and eyewear.

Second, strong growth in Apollo 5, as our customer upgrade to enable next-generation edge AI capabilities while maintaining ultra-low power performance.

Third, broader deployment of our solutions across customer portfolios with upcoming product launches and expansion into new form factors. And fourth, we expect a new scaled global customer to enter mass production this year. While wearables remains a key growth driver, adoption is expanding into health care, industrial and smart home and buildings market as customers deploy AI directly onto devices.

Increasingly, end customers expect real-time insights and faster response time, driving the need to process more data directly at the Edge. This rise of LLM-driven agents is accelerating this shift, increasing demand for contextual real-time intelligence at the Edge and a tighter integration between device data and the cloud.

Our solutions are purpose-built to support this evolution, positioning Ambiq as a partner of choice for leading players in the Edge AI ecosystem. We are building on this foundation with focused action to expand into additional high-value markets and develop new products that will further extend our power and performance advantage.

Starting with diversification, our personal device business continued to grow and diversify. We have added multiple new customers and secured new design wins across emerging form factors, including display less bands, smart eyewear and rings. At the same time, customers are deploying more sophisticated Edge AI capabilities on our platform, including a recently secured design win with one of our largest customers for a next-generation product line expected to enter production in 2027.

Beyond personal devices, our expansion into medical, industrial and smart homes and buildings markets is gaining meaningful traction, and we expect revenue from these segments to more than double in 2026.

With our broad SoC platform, we offer a scalable and diverse portfolio that supports applications from entry-level designs to more advanced feature-rich use cases. As a result, Ambiq serves as a critical enabler of Edge AI, allowing customers to select and deploy the right solutions across a wide range of applications, including real-time health monitoring, intelligent audio, predictable maintenance and smart sensing and automation.

We're complementing this with a steady cadence of software tools that enhance Edge AI capabilities with a focus on how customers capture process and derive value from a data at the Edge. For example, by combining our ultra-low power hardware with our compression kit software, customers will be able to maintain multi-day battery life, while storing large volumes of raw physical data and enabling real-time anomaly detection at the Edge, expanding what is possible in next-generation medical devices.

We are encouraged by the early traction we are seeing and believe Ambiq is well positioned to deliver growth and the diversification across customers and end market and high-value use cases.

Looking ahead, we expect our expanding product road map to further accelerate this momentum. We continue to make progress on Apollo 340, Atomic 110 and Atomic 120, which are being developed in parallel to support strong customer demand. Atomic 110 remains on track for tape-out towards the end of this year with initial customer ramp in late 2027.

For Atomic 120, we are actively engaged with several potential Alpha customers and are encouraged by the strong interest we are receiving, especially in smart glasses, where customers are seeking the combination of performance and ultra-low power that Atomic is designed to deliver.

Apollo 340 is also generating meaningful traction with multiple customers expressing interest driven by its compelling price-to-value positioning. We see 340 as an important enabler to expand into higher volume and more diverse opportunities, complementing the higher performance atomic family and supporting our strategy to scale across a wider range of Edge AI applications.

In closing, we have a strong momentum across the business and believe we are well positioned to deliver meaningful revenue growth this year. We continue to execute our strategic priorities and strengthen our leadership in ultra-low power semiconductor solutions, as we expand into new Edge AI markets and advance our product road map.

The Edge AI opportunity ahead is tremendous, and we are confident in our ability to capture it to drive long-term growth and value creation.

With that, I will turn it over to Jeff to cover the financials.

Thank you, Humi, and good morning, everyone. We delivered a strong start to the year with first quarter net sales and gross profit up both sequentially from the fourth quarter of 2025 and year-over-year, well ahead of our expectations. Looking ahead, we expect a meaningful acceleration in the second quarter as well, strengthening our confidence in driving meaningful growth for the full year 2026.

Along the way, we are making progress in diversifying our business. Our 3 largest customers accounted for 86% of our sales in the first quarter of 2025. Those same 3 customers accounted for approximately 71% of our first quarter 2026 sales, indicating that we are successfully diversifying our revenue stream to new customers and markets.

Now turning to our first quarter financial results. We delivered net sales of $25.1 million, increasing 59.3% year-over-year, driven by broad-based strength across our customer base. We saw particularly strong demand from 2 customers supporting new product launch ramps, and we also benefited from the addition of a new major customer that entered production during the quarter.

Sales to end customers in China were 13.7% of total net sales compared to 6.2% in the prior year period. This increase was primarily driven by customer programs, where our technology is enabling higher-value Edge AI functionality.

Non-GAAP gross profit increased 56.2% year-over-year to $11.6 million. Q1 2026 non-GAAP gross margin of 46.2% was down 90 basis points year-over-year, primarily due to a Q1 2025 nonrecurring credit. Excluding this onetime impact, non-GAAP gross margin increased 210 basis points year-over-year.

Turning to operating expense, non-GAAP R&D was $10.1 million, up 43.3% year-over-year, reflecting accelerated investments to support product development, both across our Apollo and Atomic platforms.

Non-GAAP SG&A expenses were $8.1 million, up 31.8% year-over-year, driven by increased spending for go-to-market capabilities and public company infrastructure.

Other income was $1.5 million, up $1.1 million year-over-year due to interest earned on balance sheet cash.

Fourth quarter non-GAAP net loss was $5 million, a $200,000 improvement year-over-year. Non-GAAP net loss per share was $0.25.

We ended the quarter with no debt and $204.5 million in cash and cash equivalents. Our strong financial position provides the flexibility to invest in product development, software and go-to-market initiatives to support our strategic growth priorities.

Now turning to our outlook. For the second quarter, we expect net sales in the range of $31 million to $32 million, reflecting the trends that Humi covered earlier. Non-GAAP gross margin between 45% and 46%, driven by the continued progress on yield improvements and continued Apollo 5 scaling.

Non-GAAP operating expense of $21 million to $22 million, reflecting investments to support product development and our strategic growth priorities, including $1.7 million related to IP purchases this quarter. Lastly, we expect non-GAAP loss per share of $0.29 to $0.23 based on a weighted average share count of 21.38 million shares outstanding.

As we think about the trajectory of our business, we have clear visibility, and we're confident in continued momentum. Q2 outlook reflects the timing of multiple customer launches coming into production at the same time. Importantly, we view that as a step-up in the baseline rather than a peak as those programs continue to scale and are complemented by additional ramps behind them.

While we continue to expect seasonality in the fourth quarter, we expect year-over-year second half net sales growth to be similar to first half. We continue to expect gross margins to be roughly flat year-over-year as yield improvements are offset by broader industry cost dynamics.

We continue to expect operating expense of approximately $85 million for the year, reflecting increases to engineering headcount, utilizing contract engineering to provide flex in our model for both upside and downside and $7 million to $10 million of IP purchases necessary for product development.

With that, I'll turn the call back over to Humi before we open the line for Q&A.

Edge AI adoption is accelerating. Our pipeline is expanding, and our technology continued to make us a partner of choice to enable on-device intelligence. As we execute against our road map and scale into new markets, we remain focused on driving sustained top line growth, expanding our leadership in ultra-low power Edge AI and delivering long-term value for our shareholders.

With that, I will open the call to questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from the line of Liam Pharr from Bank of America Securities.

Could you provide us an update on the percentage of your funnel that is non-wearables? And how much of 1Q revenue was consumer wearables versus medical, industrial or in smart home.

Right now, we still continue to have a funnel of non-wearables, about 1/4 of our pipeline. So we continue to have a strong growth. And like I said, in Q1, we grew 100% in the non-wearable market. And we continue to -- we expect to continue to grow non-wearable market as fast as we've been doing.

Right. Great. And then with these strong results, you're kind of rapidly approaching that $40 million a quarter run rate. Can you provide us an update on the time line to profitability? And will maybe higher OpEx burn and maybe gross margin remaining roughly flat, still keep profitability only until 2028? Or is there potential for that to be pulled forward?

Jeff?

Yes, Liam, so a couple of questions there. The first in terms of when do we get to that profitability. If you quarterize the guidance that we gave for spending, we're spending roughly $21 million a quarter at 46% margin, which is what we just achieved in Q1, you need revenues roughly $47 million a quarter to get to that point.

We just guided the quarter a little bit below that. So we've got a ways to go.

That said, we made big investments in terms of accelerating our product road map. namely our 110 product and our 340 product. And the purpose of those investments is to pull that revenue stream in, which is necessary for us to get to that revenue level. So we're hopeful that, that investment will allow us to pull our cash flow breakeven and our P&L profitability point from, call it, mid-2028 into early 2028 or potentially into the second half of 2027.

Your next question comes from the line of Tore Svanberg from Stifel.

Congratulations on the momentum here. Maybe to follow up on the initial question there as far as the diversification. You talked about some of the percentages Humi, but can you talk about some of the use cases out of wearables that's driving that doubling?

So let me give you some of the examples, Tore. Definitely the medical market is growing one of the fastest one outside of wearable, ECD, glucose monitoring. But then we have bike computing, smart pen, battery monitors, remote controls, livestock tracking. I mean we're seeing a lot of a, lot of AI adoption outside of wearables. So we're very excited.

Very good. And as my follow-up, you mentioned the new customer introduction this quarter. I assume that's not part of the 3 largest. So is there a chance that this particular customer will become more than 10% of revenues this year?

Yes, there's some possibility that they will.

[Operator Instructions] Your next question comes from the line of Quinn Bolton from Needham.

Congratulations on the nice results and outlook. Jeff, I just wanted to make sure I sort of cut your comments about how you're thinking for the full year. I think you said you would expect similar growth rates in the second half on a year-over-year basis that you saw in the first half. It looks like the first half, you were up about 68% over the first half of '25. So it sounds like you're thinking about sort of a similar 65% growth second half of '26 over second half '25. But I just want to make sure I heard your comments correctly.

Yes, that's correct, Quinn. I think as we look at the business outlook, clearly, we had strong Q1 results. We've guided a higher Q2. I think the business model -- when you think about the business model, basically, just the level has gone up.

We've set kind of a new baseline, if you will, in terms of how to think about 2026. And we also made the comment in the call about we still expect seasonality in the fourth quarter. So the shape of the curve is pretty much in line with what we would expect.

Got it. And then the second question is your comments about gross margin being sort of flattish half-over-half does sound like it implies a little bit of a tick down in Q3, Q4. I know you've got obviously higher revenue in the second half. You probably have mix shift to higher ASP devices like Apollo 5. Just wondering, it sounds like the input price increases are the biggest factor pressuring margins. I wanted to confirm that.

And then second, given that you're not alone in seeing these input price increases, do you have the ability to pass along some of those input price increases along to customers to try to protect margins over intermediate to longer term?

Sure. A couple of answers there. So when we think about margins, there's 2 real dynamics that are happening in our business. First is we've done a lot of work to increase our yields across the product line, specifically Apollo 5, which is a ramping process for us. We've done a lot of work to try and pull in some of that yield improvement and make our cost base better.

However, we're tempering that expectation because there are industry-wide dynamics around substrate costs, piece part costs and other things that are out of our control that will potentially negate some of that good news. So we think about that margin curve as relatively flat, plus or minus a point from where we're at today.

In terms of our ability to pass on pricing to customers, I think one of the main opportunities we have there is we have a lot of demand for our product and customers are asking us to pull in volumes pretty significantly. And the cost of doing that expediting material is certainly something that we would expect our customers to share in terms of paying for that type of expedite.

And in terms of actual ASP uplift, we're being very strategic about where we exercise any potential ASP uplift to end customers. We still have to be very competitive. We still want to win business. And I think we can see that we're doing a pretty good job of landing new business with our pricing policy.

Last for either Humi or Jeff, just you talked multiple times about the expedites you're seeing. Are you getting enough supply from TSMC and your OSAT partners? Or do you think you're leaving any demand on the table given that acceleration in expedites?

Again, we have a very strong partnership on the front and the back end of the manufacturing. So we are very fortunate to have a great partner to support our customers. However, the market is growing much faster than we expected. Sometimes we get such a short lead time demand increase, which typically sometimes is most difficult to do.

So some of the order we just can't meet because of the too short of lead time. But as long as it's in the time frame that normal lead time, we'll be able to support and we will -- we expect us to be able to support these customers quarter after quarter.

Your next question comes from the line of Tore Svanberg from Stifel.

I just had 2 quick follow-ups. First of all, you announced a new product called Compression Kit not too long ago. I'm just wondering, is that a product that you will sell exclusively with your own products? Or is that basically available to any other system that contains other components?

Yes. For the moment, it's something that will be restricted to our products. Certainly, long term, it's something that we could look at pairing with other products. But we feel that the combination of Apollo plus compression kit is a situation of 1 plus 1 equals 3 rather than 1 plus 1 equals 2. So yes, we'll restrict for the moment to Ambiq products.

That's very helpful, Scott. And my last question is on Apollo 340. So you gave some sampling time lines. Anything on Apollo 340 as far as when we should start to expect some material revenue?

Yes. So just to maybe reiterate, rough timeline is -- it's in design right now. We expect to sample in the first half of next year. We expect initial customer ramps towards the end of next year and then more meaningful revenue in 2028.

And it's going to be -- I think what everyone is going to like about this product is it's going to be quite a bit more diverse in terms of the types of customers that we're serving with it. So I think everything from some of the medical products that Humi alluded to earlier to industrial sensors and smart home sensors, smart grid sensors, that sort of thing. And as well, we'll be serving wearables. I think certain form factors like smart rings as being great targets for Apollo 340. So a really nice diversity of customers there. So we're excited about where that will come.

Your next question is a follow-up from Liam Pharr from Bank of America Securities.

I guess for 2026 and the step-up, how do you see kind of this unit versus ASP mix kind of driving that growth? And is this step-up more from the new programs and kind of unit based? Or is it a combination with these new programs also providing a lot -- a little bit more of that premium Apollo 5 mix to kind of drive some of that ASP as well?

Yes, Liam. So the answer is we're expecting uplift in both. But clearly, with Q1 being 56% above where we were in the same quarter last year and the strong guidance we gave in Q2, the predominant reason that we're up is because of unit shipments.

That said, we're very happy with the status of our Apollo 5 ramp. It is starting to contribute more and more each quarter to our revenue profile, and it gives us some ASP uplift in the overall business.

Makes sense. And I guess as my follow-up, can you maybe just provide an update on your pricing strategy? I think previously, it's been every generation probably about 1.5x to 2x content uplift, and that's kind of driven a pricing premium in a similar ballpark. But I guess with this really strong demand environment, it would make sense to me to see kind of more pricing benefit from your Apollo 5 and potentially Atomic kind of platforms, given how much benefit they're going to be giving their customers versus the previous generation and how fast you guys [ innovate ].

Yes. I mean, certainly, as we continue to proliferate Apollo 5 and Apollo 3 and Apollo 4 to multiple different markets and enable end customer Edge AI to happen, we would expect to see a higher value proposition and better pricing for those products.

So I think in general, when we think about the pricing -- our strategic pricing going forward, we're certainly looking at opportunities, where we can maximize our ASPs across different customers and markets.

There are no further questions at this time. And this concludes today's call. Thank you for attending. You may now disconnect.

Good morning, and welcome to the Ambiq Micro Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, this conference call is being recorded. [Operator Instructions]

I'd now like to turn the call over to Ms. Charlene Wan, Ambiq's Vice President of Corporate Marketing and Investor Relations. Charlene, please go ahead.

On today's call, Ambiq's CEO, Fumihide Esaka, will provide an overview of the company's performance and strategy. CFO, Jeffrey Winzeler, will then discuss the quarter's financial results and 2026 outlook. Following their remarks, Scott Hanson, Ambiq's Founder and CTO; and Aaron Grassian, EVP of Global Sales and Marketing, will join Fumi and Jeff for Q&A. Our earnings release is available on the Investor Relations page of our website at www.ambiq.com. We have also posted our earnings presentation on the Investor Relations section of our website.

Before I turn the call over to Fumi, I'd like to remind our listeners that during the course of this conference call, management will discuss non-GAAP financial measures. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release available on the company's Investor Relations website. In addition, today's call will contain forward-looking statements representing management's beliefs and assumptions only as of the date made. Our most recent annual report on Form 10-Q and other filings with the SEC provide more information on specific risks that may cause the actual results to differ materially from current expectations.

And now it's my pleasure to turn the call over to Ambiq's CEO, Fumi Esaka.

Good morning, everyone, and thank you for joining us. 2025 was a strong year for Ambiq, defined by disciplined execution and accelerating demand for edge AI across our end markets. Our performance reflects both share gains and market expansion as we enable AI on more devices across more markets and in a growing number of use cases. We are entering 2026 with strong momentum. Based on current demand indicators, we expect outsized top line growth. We remain confident in our long-term opportunity as we partner with customers to advance their edge AI road maps and deliver sustained growth.

Starting with 4Q performance. We delivered our highest net sales quarter of 2025, exceeding guidance. End user demand outpaced our customers' expectations, resulting in incremental expedited orders late in the quarter. The key factors behind the net sales increase from 3Q were: first, strong end demand for our customers' products; second, broader adoption of Ambiq solutions within customer portfolios; and third, customers upgrading to Apollo5 for more advanced edge AI functionalities.

Turning to the full year. 2025 was a milestone year for Ambiq. Edge AI adoption was a clear growth driver, and we estimate that more than 80% of the units we shipped were running AI algorithms. Net sales and non-GAAP gross profit increased in every quarter of the year, and we delivered our highest ever gross profit for the year.

We expanded our customer base across multiple end markets, including securing a large wearable customer. At the same time, we continue to strengthen and diversify our design funnel, particularly in medical, industrial and smart home and building market. As these programs move into production over the next 18 to 24 months, we expect incremental growth and revenue diversification. We also expanded our product portfolio to support more advanced edge AI applications, launching Apollo510 Lite, Apollo510B and Apollo330. On the software side, we introduced the Helia AOT and Helia RT AI run time, powered by our new Helia core AI kernel library. Finally, we completed a successful IPO, demonstrating strong investor demand and confidence in our strategy and long-term opportunity.

Our 2025 performance highlights the strengths of our SPOT platform in delivering ultra-low power solutions and enabling edge AI across an increasingly diverse set of applications and end markets. Based on our customer conversations, we see several trends accelerating edge AI adoption in 2026. With SPOT enabling powerful new AI capabilities across an expanding range of industries, we expect to further grow market share while broadening the overall opportunity.

First, customers are adding more sophisticated edge AI capabilities into their devices to differentiate their products and drive demand. Second, wearables are evolving into true personal health platforms requiring more advanced on-device intelligence and ultra-low power performance. This includes real-time health insights across multiple wellness indicators. Third, wearables are expanding into new high-value form factors such as rings and eyewear. This broadens addressable market and increasing demand for low-power, high-performance edge AI solutions.

Looking ahead to 2026, we expect customers to launch new models with more advanced features across diverse form factors, including rings, displayless bands and watches. We also expect a new scaled global customer to enter into mass production this year. Product launched in late 2025 are continuing to ramp in volume. At the same time, we anticipate ongoing migration to Apollo5 as customers look for greater performance and AI capability. As a result, we expect 2026 to be a year of strong growth for Ambiq.

While we are making impressive progress, we remain early in a large and expanding edge AI opportunity. To capture this opportunity, we're taking focused action to accelerate growth over the coming years. First, we're leveraging our existing Apollo family and derivative to expand aggressively into high-value markets. And second, we are developing new products that enables more advanced edge AI capabilities and expand our reach. We are making solid progress on both fronts.

Starting with market expansion. Edge AI is becoming more capable and complex across medical devices, smart homes and industrial markets. In health care, customers are building smarter cardiac monitors, senior care devices and hearing aids, all with enhanced AI capabilities. In industrial markets, AI-powered sensors are enabling predictive maintenance and asset monitoring, which helps reduce downtime and improve operational efficiency. In smart building, edge AI helps manage lighting, HVAC, security and occupancy data to optimize energy use in real time.

While these markets are growing, design cycles remain longer, particularly in regulated and industrial environments. We are encouraged by our early traction and believe we are well positioned to expand our footprint as edge AI adoption scales across a broad range of end markets. Our integrated hardware and software platform is purpose-built for these transitions by combining AI-enabled processing, connectivity and edge intelligence in a single ultra-low power architecture optimized for power-constrained devices.

Our recent partnership, RONDS, highlights this progress. Through the Novaseer brand, RONDS is leading provider of intelligent equipment operation and maintenance solutions. By leveraging SPOT hardware and software, RONDS will deploy large-scale, always-on battery-powered sensors. We expect this and similar engagement to increase diversity of our design funnel and unlock new and durable long-term growth in the industrial edge.

This is just one example of how SPOT is powering AI adoption across diverse end markets. And we are building on this strong foundation with the ongoing expansion of our Helia AI software ecosystem. Helia will support more AI kernels, with performance improving over time. Paired with our AI development kits, Helia will help customers build ultra-efficient AI models for health analysis speech interfaces, machine health monitoring and more.

Turning to our product road map. This morning, we announced the new technical details for Atomiq. It's a first SPOT family built on FinFET process with TSMC, enabling operation down to 300 millivolts, the lowest voltage in our company's history. This breakthrough pushes boundary of ultra-low power while enabling significantly more sophisticated AI capabilities. This combination is essential for next-generation of battery-powered edge AI devices.

Atomiq is purpose built for AI workloads that benefits from parallel processing rather than [ raw ] clock speed. With its integrated NPU, GPU and embedded memory, we believe it will power a new class of intelligent devices, including advanced wearables, air glasses and smart cameras. At the same time, we see a significant opportunity to extend our reach into new markets with Apollo derivatives that supports smaller form factors and core edge AI capabilities.

Reflecting stronger customer demand, we are accelerating development of both Atomiq and Apollo product families. Instead of a 3-year step-by-step plan, we now plan to start development of Apollo340 and Atomiq120 this year, along with ongoing work on Atomiq110. Apollo340 is designed as a highly scalable platform to expand into new high opportunity segments. It combines Ambiq's energy efficiency with attractive price point, compact form factor and comprehensive developer support and reference designs. This will make it well suited for distribution channels, ecosystem partners and reference designs, multiplying sales leverage and accelerating delivery of on-device AI to the mass market.

Turning to Atomiq, the first SoC designed from the ground app for advanced AI. Atomiq110 will enable personal devices with smaller batteries to achieve longer battery life while supporting richer features such as natural language voice interfaces and on-demand health analysis, unlocking a new possibility for personal life [ logging ] devices. In industrial markets, Atomiq will support more complex AI models for local, cost-effective, predictive maintenance. In medical applications, it will enable more real-time, always-on private [ metrics ] in smaller form factors. Atomiq120 will introduce capabilities tailored for smart cameras and next-generation smart eyewear, which is one of the fastest-growing categories in wearables.

In summary, 2025 was a year of strong performance and focused execution for Ambiq. We believe we are well positioned for significant top line growth in 2026, supported by solid customer demand and accelerated product momentum. At the same time, we are intentionally increasing investment across R&D, software and go-to-market initiative to capture even larger share of the expanding edge AI opportunity. Our ultra-low power SPOT platform, combined with strategic actions we're taking, are laying the foundation for sustained long-term growth.

With that, I will turn the call over to Jeff to review the financials.

Thank you, Fumi, and good morning, everyone. Our 2025 performance reflects the benefits of our strategic repositioning, which strengthened the quality of our revenue base and aligned the company with long-term growth opportunities. At the end of 2024, we took deliberate steps to prioritize customers who view our ultra-low power technology as a critical enabler of edge AI while reducing exposure to efficiency-focused, feature-neutral customers, primarily in Mainland China. As a result, we delivered sequential sales and non-GAAP gross profit improvement in every quarter of the year.

Our full year results reflect stronger margins and increased gross profit dollars by 32.1% on 4.7% lower net sales, achieving our highest ever annual gross profit. These results validate our strategic repositioning. And with the strong momentum in the business, we believe we are well positioned to deliver sustainable growth over the coming years.

Now turning to our fourth quarter results. We delivered the highest net sales quarter of 2025, with results ahead of our guidance on accelerating demand trends. Net sales of $20.7 million increased 2% year-over-year. Non-GAAP gross profit increased 75.5% to $9.4 million, while non-GAAP gross margin expanded almost 20 percentage points to 45.5%. This performance reflects the impact of the strategic repositioning I just described, with 8.6% of net sales driven by customers in Mainland China, down from 50% in the fourth quarter of 2024. Sequentially, net sales increased 14.2%, driven by strong underlying demand. Non-GAAP gross profit dollars increased 15.9%, with non-GAAP gross margin expanding 70 basis points. The improvement was driven by a more favorable product mix, reflecting higher sales to customers deploying multiple edge AI capabilities on our SPOT platform.

Turning to operating expense. Non-GAAP R&D expense was $9.3 million, up 33% year-over-year and 34% sequentially. This reflects additional investment that began in the fourth quarter to support our product development for both the Atomiq and Apollo families. Non-GAAP SG&A expenses were $7.3 million, up 19.7% year-over-year, largely due to public company costs. Sequentially, SG&A increased 17.4%, driven by strategic investments in sales and marketing as well as higher incentive compensation, reflecting stronger net sales performance in the quarter. Other income was $1.3 million, up $1.1 million year-over-year due to interest income earned on IPO proceeds.

Fourth quarter non-GAAP net loss attributable to common stockholders was $5.9 million, a $1.7 million improvement year-over-year and $1.9 million lower sequentially. Non-GAAP net loss per share attributable to common stockholders was $0.32. We ended the quarter with no debt and $140.3 million in cash and cash equivalents, reflecting the proceeds from our IPO. And in the first quarter of 2026, we completed a successful follow-on offering that generated an additional $76.8 million. Our strengthened cash position provides the flexibility to fund growth initiatives to support our strategic priorities.

Now turning to our outlook. For the first quarter of 2026, we expect the following: net sales to be in the range of $21 million to $22 million, reflecting the trends Fumi covered earlier; non-GAAP gross margin between 44% and 45%, reflecting the ramp of Apollo5 family. We expect to see improved yield and better cost structure as this product family scales throughout the year. Non-GAAP operating expense of $18 million to $18.5 million, reflecting increased investment to support our strategic growth priorities, including approximately $1.7 million related to IP purchases in the quarter; non-GAAP loss per share of $0.39 to $0.33 based on weighted average share count of 20.38 million shares outstanding. As you update your full year models, please keep the following in mind.

We're encouraged by the demand inflection we saw in the fourth quarter of 2025. We see a clear path to strong net sales growth in 2026, driven by new model launches, ramping up a scaled global customer, higher volumes from recent customer introductions and continued adoption of Apollo5. We remain focused on driving continued yield improvements across the portfolio, while recognizing that gross margin may be affected by broader industry cost dynamics and supply chain pressures.

We expect non-GAAP operating expense will be approximately $30 million higher than 2025. This higher spending is tied to the accelerated development of both Atomiq and Apollo product families, reflecting strong customer demand. The increased OpEx includes growing Ambiq engineering headcount, utilizing contract engineering to provide flex in our model for both upside and downside flexibility and $7 million to $10 million of IP purchases necessary for product development. Given the timing of IP purchases will be project-driven, we do not expect operating expenses to be linear in 2026.

In summary, our 2025 results reflect the strength of our competitive position, disciplined execution and favorable secular tailwinds. Apollo is now powering multiple generations of products in production, and our expanding portfolio of derivatives is supporting upgrade cycles and broadening our reach across customers and end markets. At the same time, we are investing to enable higher performance edge AI applications and expand our long-term revenue opportunity. With Apollo driving growth and margin expansion today and Atomiq positioned to contribute meaningfully beginning in 2028, we believe we have multiple growth drivers to support sustainable growth over time.

With that, I'll turn the call back to Fumi before we open the line for Q&A.

That opportunity ahead for Ambiq is large and growing quickly. We expect to deliver meaningful sales growth in 2026, and we are just getting started. As AI moved beyond the cloud and into everyday devices, our technology is helping lead this change. With SPOT's industry-leading power efficiency, we enable intelligent devices that are mobile, secure and personal. We bring powerful AI directly to where data is created and decisions are made. We believe this shift to true edge intelligence is a defining moment for our industry. We are excited about the role Ambiq will play in shaping this future. Thank you for your continued confidence and support.

With that, I will open the call to questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from the line of Quinn Bolton of Needham & Company.

Congratulations on the nice finish to 2025 and the strong outlook for 2026. I guess, Fumi or Jeff, you've mentioned several times, your strong outlook for 2026. Wondering if there's any sort of guidance you can provide around that? I mean, it certainly looks like you could be on pace to generate north of $90 million of revenue, maybe even approaching $100 million.

And sort of a related follow-up. Historically, you've seen revenue peak in the June quarter, just reflecting seasonality of some of your wearable customers in '25, you saw sequential growth throughout the year. And so what kind of revenue pattern, quarter-to-quarter, would you expect? Do you think Q2 is the peak? Or could it be a more linear ramp through the year? And then I've got a follow-up.

Quinn, thanks for the great comment. Like I said in the script, Q4, definitely, we are seeing as an inflection point. And customer forecast is coming in extremely strong, and the trend will continue in 2026. Again, we see Q1, 2, 3 to be extremely strong. And Q4, I think we're still a little bit far distance. And typically, seasonality will [ peak ] in the Q4, but we clearly see a path to more than $100 million at this point. And we're very confident, so that I think we can achieve more than what we originally forecasted. Does that answer your question?

Yes, that's great. And then a question if Scott is there. You announced the 12-nanometer SPOT technology gets down to operating voltages as low as 300 millivolts. If I looked at a more standard low-voltage process at TSMC for 12-nanometer, does that get down to 400 or 500? Like how much lower at 300 millivolts would the SPOT process be than the sort of standard foundry offering at TSMC? Just trying to get a sense of the power advantage you bring with the 12-nanometer SPOT technology.

Yes. So the standard operating voltage at 12-nanometers that you'll see across process nodes across foundries is going to be on the order of 700 millivolts, so 0.7 volts. So we're running at a fraction of that operating voltage. If you're running at, let's say, normally -- to make it easy math, 350 millivolts against a 700-millivolt competitor, that's going to give you a fourfold energy advantage.

Of course, things are a little more complex than that. On the one hand, I've always said that a good portion of the SPOT advantage comes from all the stuff we do other than voltage scaling, right? The way we build our [ COT trees ] and our [ bus fabrics ] and our memories and everything else. So you have the potential to go more than 4x if you layer all that innovation in. So we feel really good about what 12-nanometers is looking like and are excited about some of the early measurements that we're seeing in-house.

Your next question comes from the line of Tore Svanberg of Stifel.

Fumi, could you talk a little bit more about some of the applications or end markets that are -- that's going to be driving the strong growth in -- down to '26? I mean obviously, wearables has been a big part of the business, but you're not getting into industrial. So any more color on the [ counter applications ] that will drive the [ giant ] growth would be very helpful.

Okay. Thanks. And we're seeing strength in every product line and the market. So first, let me tell you that all Apollo3 family, 4 family, Apollo5 family is seeing very strong demand to enable edge AI. And yes, a major increase is still coming from wearable customers. But 25% of funnel is now on wearables, industrial and medical and so on. So we do expect more than original percentage of the share is known wearables in 2026.

Again, 2026, it's just growth is phenomenal. So yes, you would expect our traditional industrial leaders, but some other medical and industrial application is contributing -- will be contributing to our 2026 revenue.

Very good. And as my follow-up, you talked about some volatility in the OpEx for the year. I was just hoping you could give us a little bit more feel for -- is that going to be first half weighted, second half weighted? Because I think you did say it's not going to be linear. So any more color on first half versus second half? That would be very helpful.

Yes, sure. As we think about OpEx for 2026, as you know and as we said on the call, we're going to invest roughly $30 million increase in our OpEx year-over-year. And the way that's going to break out is there's 3 major components that really drive that increased spending. The first is Ambiq headcount. We're going to hire more engineering in both hardware and software to continue to grow our internal capabilities. That spending will be obviously somewhat linear as we add more people to the company.

The second place that we're going to spend that money is in contract engineering. And this is important because it gives us scale both on the upside and the downside and gives us a more variable cost structure. The spending for that contract engineering will be very much project-based. So as we think about the products that we're going to tape out in 2026, you would expect to see very high periods of engineering, probably more in the Q2, Q3 time frame where we'll utilize that project engineering.

And then the last place that we'll spend a significant amount of money is in our IP acquisition, these IPs necessary for us to build new products. And again, that's very project-based. It's not a linear spend. And given it's to support products that we're going to tape out in the second half of the year, I would expect the majority of that spending to take place in the Q2, Q3 time frame.

[Operator Instructions] Your next question comes from the line of Liam Pharr of Bank of America.

In terms of kind of elevated component pricing, are you seeing any impact on demand? [ Due to that ], are you relatively insulated from any kind of pricing pressure from your customers as they kind of want to preserve their margins? And how should we kind of think about the gross margin trajectory through the year given you're going to be introducing a lot more new, higher complexity Apollo SKUs with your customers and more design wins? Or should we [ start that to kind of ] increase significantly or remain around its 45% ZIP code?

Yes. So when we think about margins -- so first of all, I want to state, we're very happy with the margin accomplishments that we made in 2025. Clearly, we increased our gross profit dollars by over 30% year-over-year, and we increased our gross margin year-over-year, going to 45% for total 2025.

When we think about the margin equation going forward, there's two components to that. The first is the ASP side of the equation. And there, we continue to focus on opportunities where we can maximize our value. And so we're very much looking for high revenue opportunities where we get paid the most on a per-unit basis for our product.

On the cost side of the equation, we're very focused on things that we can control, which are yield across our product portfolios. That said, our efforts may be tempered by some of the dynamics that are happening in the industry. Increasing cost of being a fabless semiconductor company exposes us to higher pricing of our capacity, probably more in the second half of the year. So that aspect of it, we're monitoring very closely, and that could put pressure on our ability to grow margins year-over-year.

Okay. And then in terms of this new customer you've got in 2025, any idea in terms of the timing of that ramp, when it becomes sizable? And should we expect that stock to be similar size to your other wearable customers? Or will it kind of remain a little bit smaller?

You mean 2026, right? So that new customer is starting to ramp starting Q1, and very, very strong growth quarter after quarter. And we expect that '27 to be even bigger. So we're very excited to have that new customer be in Ambiq family.

And we have a follow-up question from Quinn Bolton of Needham & Company.

I know you don't give us sort of the split quarter-to-quarter on Apollo3, 4 versus 5, but it does sound like you're seeing broader adoption of Apollo5. And I was just wondering -- could you give us any sense, what part or percentage -- rough percentage of revenue was Apollo5 kind of exiting 2025? And what percent of revenue could it reach in '26? Is it a pretty significant mix shift up to Apollo5? Any comments would be helpful.

You want to take that well, Apollo5 adoption is definitely increasing. But again, denominator. You know that our total revenue is growing faster than expected, and Apollo3 is really enabling one of the big customer. Apollo4 is enabling right now with one of the newer customers that joined in 2025. And in Apollo5, all across all the customers. So all of them are growing.

And Apollo5, I have to say that the quantity itself is growing fast. If you asked about the percentage, we don't give out too much of the debt percentage. But I think that the percentage is slowly growing, but the quantity itself, absolutely value -- number of the quantity is growing fast.

With no further questions, that concludes our Q&A session. This does conclude today's conference call. We thank you for your participation. You may now disconnect.

Okay. We're going to get started. Good afternoon. I'm Tim Arcuri. I'm the semi and semi equipment analyst here at UBS. Very pleased to have Ambiq with us, and we have Scott Hanson, who's the Founder and the CTO. And we have Humi Esaka, who is the CEO. So thanks to you both.

Thank you so much. Happy to be here.

So I just wanted to start since you guys are recently to the public market. So I thought, Scott, maybe you can run through just give us 5 minutes of just the story, why you started the company, what the competitive advantage is, what the moats are would be great.

Yes. Yes, yes, absolutely. So first of all, happy to be here today, been a great day of interactions. Ambiq was a company that I founded 15 years ago with the objective of putting intelligence everywhere, right? And when I say that, I really mean putting chips and everything that goes with it everywhere in our clothing and the paint in the walls and the roads that we drive over, everywhere.

And this coincides really nicely with what I think is probably the most exciting technology or computer revolution we've seen. And that is really the dual revolution of AI breaking out in the data center, but then breaking out of the data center and out to all these devices around us. And so the key problem is when you start taking AI and intelligence and you put it in your clothing and the paint in the walls everywhere else, it requires energy, right?

And that's the core problem that we solve. So we build chips, we build microprocessors that consume 2 to 5x less power than what's out there. And we've got a proprietary technology platform that we call SPOT, this was my PhD research back at the University of Michigan. We spun it out. We founded Ambiq. And we're using that technology to reach 4 primary markets.

So the first one of those is what we call personal devices. It's what I'm wearing on my wrist here. It's anything body worn, it's AR glasses, it's smart rings. And frankly, that's where a lot of the volume is today. That's a space where they were early adopters of intelligence everywhere, of AI everywhere. But the other 3 markets that are key to us are medical and health care, industrial and smart home, smart buildings.

And look, the common thread with all of those seemingly disparate markets is they all want intelligence. They all want compute where none was possible. And it's this central problem that we solve. So we've done quite a bit of volume in these spaces collectively, closing in on 300 million units shipped. And that's set the scene strong technology platform, strong customer base, strong macro tailwinds. Set the scene for a very strong 2025 for us.

So every quarter, we've grown sequentially. We just guided Q4 that was 35% higher than consensus. I know there was some -- a lot of questions about exactly what drove that. And there's a couple of factors behind that growth this year and behind the Q4 growth in particular. So number one, we're seeing a diversification of the types of personal devices that our customers are driving. Two named and notable customers adding a third.

We, of course, have many other customers, but 3 that have now been disclosed, and we've got a fourth coming soon. So we're seeing a diversification of those customers and the types of devices they build. But probably the more important thing is the lines are blurring between what used to be consumer electronics devices like the ones I'm wearing and health care devices. And that's evidenced by the fact that you can use HSA and FSA funds to buy these devices today.

So that's driving volume. We -- as I mentioned, we had 2 big name customers last year in addition to a bunch of smaller customers. We added the third customer this year, and they were a big driver of revenue for us in the fourth quarter, driving some of that 35% upside in particular. And we believe after looking closely and talking with them, that should be a sustained trend. So really excited about what 2025 represented.

One of the other exciting trends we're seeing towards the tail end of '25 is a diversification of the types of customers that we serve. So if until now, we've been kind of personal device-oriented company, we're seeing a lot of designs pop up in things like water leakage sensors that get used in an industrial setting, machine health monitors that are used to detect imminent failure. smart headsets that are using voice recognition to understand various commands.

And so what that sets us up for is really strong growth for the coming years. So as I look as CTO, let's say, what excites me is what comes next, right? And there are 2 really exciting growth drivers from my perspective. One is that diversification. And I talked to our Head of Sales before coming here. Tim, I knew you weren't going to let us get away with sharing no new data.

So one data point I'll share is as we look at the 2027 funnel, if I look at specifically designs that are going into production in 2027, 25% of those are nonpersonal device products, and that's in terms of dollar value. So this is a good trend, okay? I would like that, as I was telling a lot of investors earlier today, I wish it was this year that I was telling you that, but these designs take time, right? It takes time for industrial and medical devices to ramp.

And what I like is the trajectory that, that suggests. So those markets come with higher margins. They will be driven in large part by our existing Apollo family that we've got today that will continue to expand. The other major growth driver for '26, '27 -- or for '27 and beyond, in particular, is our new AOI product. So we have -- this is our first NPU and AI-first product. So our existing product portfolio is kind of general purpose microprocessors that happen to be used extensively for Edge AI.

Atomiq was designed from the ground up for AI. So it's got a neural processing unit. It's got DRAM in package. I'm really excited about this. This is where I spend a lot of my time -- and what I'll tell you is that, that product tapes out in the latter half of next year. So this is one that is deep in design. We're engaged with customers. We've got our first customers kind of lining up time lines for when they need samples.

Samples will go to first alpha customers end of next year, early 2027, first customer ramps in '27 and then meaningful revenue in '28. So really excited about how that mix leaves us for the next couple of years. And with that said, I guess I'll pause. That's the Ambiq story at a high level. Happy to answer any questions you have to.

Did you say everything about Ambiq already? Do I have anything else?

I'm sure he's got something.

Humi, do you want to add to that?

No. Again, he said almost everything. So we're very excited. And when we did IPO back in July, -- we were cautiously optimistic about the Edge AI market. But today, I think we're very, very excited about the growth opportunity of our Edge AI market.

I think it's growing much faster than even we expected. So we're very excited. And I think that we're looking forward to having '26 and '27 is a great year for us.

So when you win, who are you winning against? And what's the primary driver as to why the customer is choosing you?

So let's take in personal device markets today. So whether it's a watch or it's a band like this, we tend to win against companies that have a similar feature set. So the -- it's an ARM-based processor with a similar core, similar memory size, but the customer is looking at it going, okay, Ambiq is delivering 2 to 5x less power.

One of our big 3 customers recently swapped us out for another chip. They got actually a 10x power reduction when they moved from the other chip to us. At a system level, this meant 3x better system power. And for them, that translated to more functionality, smaller battery size, longer battery life, that's compelling. That's really compelling.

And just -- so I've asked this before, but that particular case where they did swap it out and they got such a big benefit, why didn't they -- like why haven't they done that in everything they sell.

In the case of this particular company, they have, and we have a nice, let's say, road map of design wins happening -- coming

Yes. And I would say with most of these customers, they have to start -- you got to start somewhere. It's a big effort to go and port the software. They got to start somewhere and prove that it's all good. I would say that the barriers there are improved now that we're a public company.

So as a private company, you got to justify your existence. You got to justify what does your balance sheet look like and there's all these disclosures that are necessary. Well, we've got this new era of credibility that comes with being a public company.

Yes. I guess what I'm going with that is like why wouldn't all wearables use Ambiq processors if they can enable such a longer life.

Yes. Well, obviously, I agree with you. And there's a large number of companies that have made exactly that decision and they propagated us throughout their portfolio, and it's just a matter of every quarter, they launch a new product, and we're in it. At the low end, there are designs that we have not won, and that tends to be companies that are doing no processing on board, right?

They're basically collecting data, sending it up to the cloud via radio. And that's kind of the old model. Actually, that's what all wearables used to look like until they realized we got to do some analysis here on the edge. We got to process this data here. And so what I see happening is that the barrier between what we win and what we don't win is moving in the direction of us winning more and more of these as they decide to add more intelligence, do more local compute.

At the high end, give you an example in the AR glass space, we miss -- certain opportunities because, for example, we don't have camera support today. That will be fixed with the forthcoming atomic product, but you fix these things and they start adding you into more and more sockets. In that particular space, for example, we just -- actually one of our partner companies just launched a new AR glass product, but it doesn't have a camera.

So there's some that we're boxed out of, but that's easy to solve. Again, that's why we raised money in the initial public offering to fund the development of some of these new products.

There's a very large consumer electronics company based in Cupertino that doesn't use you, can you just talk about that? Why would they not?

I'm going to let Humi speak to that because he has deeper experience.

Well, we talk to them frequently, especially our shareholders do talk to them frequently. And I think that they have a philosophy of they need to build -- they like to have all their own chips.

So they would rather have -- I believe that our technology transferred to them. So as a startup, it was very difficult for us to handle their requirements. So we kind of stayed away from serving that company for now.

Something that you might do though in the future?

I'd love to. Yes.

Okay. Let's just talk about software tools and field support. On the software side, you focused on shortening customer design cycles with tools and reference stacks. Where are you putting the incremental R&D to sort of make Edge AI deployment on your platform simpler? And can you just talk about how you're just making it easier for customers to come to you and adopt the SPOT platform?

So we've got a big software platform that we developed over the last 10-plus years that is stable and growing, and we've got a big team building that. But where a lot of the new investment is going is on the AI side. So I would say our customers are falling into 1 of 3 bins. They're using AI effectively today. They're developing a next product or they're coming to us for help to add AI to a future road map product.

And my goal is to have software tools that make any one of those customers successful and get to market quickly. So we have AI software being developed at 3 different levels. At the highest level, it's actual AI models that our customers can use, mostly as templates for what they want to build. We've got runtime engines, AI run time, which is kind of the execution engine for the AI model. And then below that, we've got kernels.

These are basically the library functions to implement all the layers in the AI model. And we're developing all these things and iterating actually quite quickly. So think our AI team is basically iterating on almost a weekly release schedule, right? So it's a really fast-moving space. That's really hard to comprehend for a lot of chip people because we do -- they think about yearly cadence, not weekly cadence.

So I would say post-IPO, that's where a lot of the spending is going to be. It's going to be growing that team. And unlike chips, it's adding people. It's not -- there's no giant CapEx that's required there. It's mostly just adding people. They can go out and build out this road map we've got in mind.

And so typically, in a consumer business, you have some seasonality, but you also have new customers ramp. So are there any sort of how to think about those 2 factors? Like will the new customer ramps just paced over any seasonal effects as we look into next year?

Well, usually, when you serve the consumer market, definitely Q2, Q3 peaks out and then get tone down a little bit for the Christmas and Thanksgiving time after the sales is done. But -- and we did plan to see Q4 going down based on that. But because of the fact that Edge AI market is growing so fast and new company, new application, new products is coming up.

So at least at Ambiq, we are overcoming the seasonality and keep on adding more and more customer and more demand. So my charter to my sales team, they have proven that '25, we were immune to this seasonality, '26 I expect them to do the same.

Great. And Scott, you talked -- well, both of you talked for a while that you'd like to eventually license this and develop this as a licensable platform. That's a big lift. You have to invest a lot of money to get there. Can you just spend maybe a few minutes on that? I mean that seems to be really -- you could really take the company to a new level if you can license this.

Yes, big opportunity. We think about it in a 3- to 5-year time line, and it's -- we've broken it down into 3 phases. So if I was going to license, first of all, I would be looking at 2 primary markets. One is automotive. We've had a lot of outreach from there. H.

Humi has deep experience in that set of markets, and we're excited about what we could do there. The other is data center.

Clearly, a market that cares deeply about power and about energy per operation. And it's one, frankly, that is difficult for a company of our size to go after. So 3 phases for engaging those markets. First is I've got to prove that I can take our spot technology from 40 nanometers and 22 nanometers down to 12 nanometers, which is actually our first FinFET node. That is ongoing basically for him, for my boss over here, the CEO. That's the gate. -- prove that 12-nanometer spot works and works effectively.

And then we can extrapolate to a 2-nanometer node or something beyond that. Phase 2 is to go engage in business development activities with these potential customers. Humi's basically sending off some of them right now. And we need to -- for any IP engagement, there's a hard IP piece of it, meaning it's tied to the technology node and then there's a soft IP piece. And so we need to talk to these various customers.

We need to understand what nodes they're in and then go tailor the IP toward that, right? So there's going to be power management IP and there's going to be standard cells and CAD loads that all have to be tuned, not reinvented, but tuned for the specific node. And so Phase 2 is kind of figuring that out, starting the development, doing some test chips.

And then three is the revenue phase. It's where we go and we choose 1 or 2 alpha customers and really get after it. So I'm -- personally, it's going to be one of my top focus areas for the next couple of years.

And when you think about how much money it's going to cost you with just the amount of money that you have to invest, the development cost, how do you marry that and be able to fund that alongside of keeping the existing customers happy?

Yes. I think for at least the next 12 months, there's no difference, right? We're basically on one path. I can double dip on I'm doing 12-nanometer development. That's critical for the atomic development, and I can investment. So then at least the risk is kind of deferred another year or so. And then after that, your spend starts small, meaning I've got to do test chips.

I've got a relatively small team of specialists that's going and developing this. I've got the core of that team right now working for me. And I would say where things get a little more expensive is when you've committed to a customer or 2 and you've got a target node in mind, you've got to commercially develop it.

But I would say that in that time frame, we can -- we're a larger company with larger scale, stronger balance sheet, but also there's a potential to put some of the cost burden on the target customers, right? So we believe that there will be strong enough demand that you can execute an early license agreement, you can get them to pay some extra NRE. So there's ways to offset that.

Yes. Potential customer has already approached us, they are well willing to pay for some of the development we need to do for them. So I think we can cover those costs. I think the benefit is tremendous for all those customers as well.

Can you talk about margins a little bit and how the mix is impacting margins? Because we've seen a bit of a step down in margin even though you have this new product ramping, you have Apollo5 ramping. But it's not just the new product. There's also new customers coming on. And sometimes you think that a new customer when they initially ramp, they get a better deal. That's my words, not yours. So how do you think of the puts and takes on margins?

So Q1 actually for '25, we had a really great quarter with great margin because we had some manufacturing credit. But Q2, Q3, Q4, we're continuously improving our gross margins. And yes, we did plan to have a little bit of a Q4 gross margin going down because Apollo5 is in the initial stage.

And when you launch new product and customer wants our product faster than what we plan to, there is definitely a timing of yield and fine-tuning issue that we had. So now that Apollo 5 was ramping up in Q4, we expect the gross margin to be a little bit going to get hit a little bit. But because of the additional new customer with us enabling them with Edge AI, they give us a value for that services. So we believe that even in Q4, I think our margin is going to be pretty stable.

So if I look at revenue next year, whatever it comes out to be, how much of that revenue do you have visibility on? I don't mean you know how many wearables will be sold next year because you don't. But how much visibility do you have in terms of programs? Do you have 100% visibility?

I believe that we have about next 6 months of the visibility, but some of the design-in activity that we're engaging right now, we know that who we're working with. So we have a fair amount of visibility, and we're very optimistic about 2026.

Yes. I guess asked a different way. So you've got the -- you had the first 2 customers, you have the third and you're adding 4 and 5. How important are 4 and 5 to revenue in '26?

1, 2, 3, it definitely is a significant portion of the revenue. But yes, and 4 definitely is going to contribute to our growth. But fifth one is a mixture of various customers. But yes, I think they're also important part of our growth.

Great. And then maybe we can -- Scott, you had talked about Atomiq. What are some of the -- you have the test chip back. What are the performance metrics that you're going to give us? Because I think the investment community and us on the sell side, we all want to hear, okay, here's the milestone. And like what can you tell us?

Okay. So a couple of different things. First of all, we're going to be rolling out some of the technical details in the coming 9-ish months about Atomiq. So CES in a month, we'll have our first drop of technical data. It will focus on the neural processing unit, talk about some of the performance metrics.

You guys -- these will be metrics actually you guys are pretty comfortable probably hearing from other companies. So I think you'll be able to put it in context. We will talk about the types of neural networks that Atomiq will be able to take on. We'll attempt to quantify that for everybody. We will, over the course of the year, talk about broader parts of the system. We'll talk about the memory subsystem in one of our focused releases.

We'll also give some insight as to what spot looks like at 12 nanometers, what voltages we're using, what some of the energy numbers are going to look like. And that will all then culminate towards the end of the year, beginning or maybe even CES 2027 in the formal announcement of the product. We will at CES in a month, the goal is to do as best as we can to really, again, quantify the types of neural networks that we can take on.

And we'll talk about a couple of the different markets. There's 3 markets that we'll be targeting, as I alluded to earlier, smart cameras, AR glasses and wearables, and we'll talk about specific AI models in each use case that are aggressive that are, let's say, out of the realm of possibility for Apollo, but within the realm of reason for Atomiq.

Great. And so I wanted to go back in terms of just for -- just so people know. So when you're competing for a design, it really is against the mainstream MCU guys. It's against all the MCU guys that we know and love. Is that who your primary competitor is? Or are there any other companies that you are competing against?

Yes, it's a lot of the mainstream MCU companies, and they sell MCUs that are increasingly becoming AI SoCs, right? They're adding MPUs. They're sometimes adding Linux-grade cores. And so yes, these are the types of companies that we're up against. At the high end, we do see -- we see some competitive overlap with some of the Linux-grade core vendors, some of the high-level OS guys that can run Android, et cetera.

Sometimes the competition there is that they've got a little -- they've got a sensor subsystem sitting in the corner of their die and they say to the customer, hey, we use this and you don't need this other chip over here. In that case, we went on power. We're coming in and going, look, we're going to give you capabilities you cannot achieve with this other solution. And there's a big disparity in power consumption there.

Let's talk about cash burn. So you're burning a little over $2 million a month roughly so far this year. probably maybe gets a little worse before it gets better. Can you just talk about cash burn? And these are all great ambitions. How do we fund all these ambitions?

Well, 2 points, definitely great ambitions. And definitely, we started seeing a lot of more demand than we expected and especially when we did a modeling back in June. I think that we expect a certain amount of revenue income is higher than expected. And also the spending definitely is in line with what we planned, but more let's put it this way.

We were cautiously optimistic. So we were like spending. But now that the real customer and really demand is coming through, I think we will look at how much we can invest to serve all the customers that are coming to us asking for more products. So let me give you one example. I think we planned product development in 2026. Now we're thinking about potentially about 3 product IP purchases that we will do so that we can have a product launch of 3 products one after the other, not waiting for 1 year at a time.

So we believe that we can do that. And definitely, I mean, cash is something that we have to be really cautious about. As you know, we planned to raise $75 million originally. We did $100 million. So we believe that with increased revenue opportunities and what we need to do, we should have enough. However, when there is a way to increase shareholders' value and strengthen our balance sheet, we will definitely take a look at to see additional funding that potentially we can raise.

So you think you can fund all your ambitions, you can get to being profitable without having to come back to the market. Not to say that you -- I mean, you might you might not, but you don't have to.

At this point, yes.

Okay. And then we haven't talked about China, which you deemphasized China actually the year before last, but it really was this year. So can you talk about that decision and what went into that and sort of how important China or how not important China will be to you going forward?

Well, China did value our new technology and also that was Phase 1 of our company, has a battery life. We can extend the battery life for those customers. However, HAI, I think that the application is more growing outside of China faster than we expected. And you know that the geopolitical risk was extremely high.

So once we decided to go to public, it was very important that we minimize shareholders' risk. So we kind of tuned down to about 10% maximum so that anything happen to the geopolitical situation, shareholders' value will now go down as the -- some of the policy takes place. But we do still do some business in China. There are definitely a lot of edge AI product coming out of China that we don't -- we want to make sure that we understand what they are and something that will potentially be exciting.

And that's why we keep about 10% of business in China. So who value our technology, and we can add value to their new application, we stay and we enable them. But we just want to make sure that shareholders' value is not going to be at risk by staying in China more than 10%.

So not to say you wouldn't tap back into the China market. You just -- for now, because you wanted to get through this IPO process, that was a decision you made, but you might go back into China. And I mean, that's a potentially very fertile market for you. So as you get larger, why not tap back into that market, I guess, is my question.

Again, we will if the geopolitical risk has become minimal. But again, we're not the one that we can judge that, I think.

But that 10% limit grows, right? So as the company's overall revenue grows, 10% becomes a larger number in absolute terms. And I'll say right now that there's some really cool work coming out of the industrial side, out of the medical side, out of the AR glasses side. So we're firmly committed to building customers there. It's just there's a cap on how much.

Yes, of course. And then maybe just last thing. So Scott, maybe can you talk about like what are the next big frontiers in terms of applications? Like what's the big apple, -- like if you can get into that market, what is the big opportunity? Is it autos? Is that it? Or what?

Okay. So I've touched on a lot of markets. There's one more market that I want to talk about briefly that we haven't talked about, and that's robotics. So clearly, MCUs have been serving that market for a very, very long time. We're seeing the emergence of humanoid robots. You're seeing hands that need to articulate and sense and they have latency constraints.

I would love to see Atomiq get into those use cases. We're having some discussions on that front with a couple of different parties. So I love that. That's not to say that, that's the only one. I'm equally excited about AR glasses and some of the medical use cases, but that's another one worth mentioning and I think is capturing a lot of attention as we walk around that floor here.

Got it. Well, we're out of time. So thank you.

Thank you, appreciate it.

Thank you for having us.

Good afternoon, and welcome to the Ambiq Micro Third Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded. [Operator Instructions]

I would now like to turn the call over to Ms. Charlene Wan, Ambiq's Vice President of Corporate Marketing and Investor Relations. Charlene, please go ahead.

On today's call, Ambiq's CEO, Fumihide Esaka, will provide an overview of the company's performance and strategy. CFO, Jeffrey Winzeler, will then discuss the quarter's financial results and 4Q outlook. Following their remarks, Scott Hanson, Ambiq's Founder and CTO; and Aaron Grassian, EVP of Global Sales and Marketing, will join Fumi and Jeff for Q&A. Our earnings release is available on the Investor Relations page of our website at www.ambiq.com.

Before I turn the call over to Fumi, I'd like to remind our listeners that during the course of this conference call, management will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measure of financial performance prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalent is available in our earnings release.

In addition, today's call will contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to statements regarding our strategic priorities, financial outlook, future performance and estimates of our market opportunity. Forward-looking statements represent management's beliefs and assumptions only as of the date made. All forward-looking statements involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Information on the factors that may cause such differences are described in Ambiq's SEC filings from time to time, including the section titled Risk Factors in Ambiq's Form 10-Q for the quarter ended September 30, 2025, filed with the SEC today.

And now it's my pleasure to turn the call over to Ambiq's CEO, Fumi Esaka.

Good afternoon, everyone, and thank you for joining us today. On today's call, I will cover the key drivers for our third quarter results and our fourth quarter outlook. I will also highlight the 3 strategic priorities Ambiq continued to focus on before turning the call over to Jeff for financial performance. The third quarter marked a decisive step forward for Ambiq, both financially and strategically. We exceeded net sales expectations, delivered one of our strongest gross margins to date and closed the quarter with strengthened balance sheet following our IPO. These results underscore the success of our deliberate pivot towards high-value AI-driven markets where Ambiq's ultra-low power solution provides unique differentiation. Our design funnel is robust and increasingly diverse. Let me give you a few examples. Industrial customers are using edge AI to monitor equipment in real-time to detect issues early and prevent costly downtime. A water management customer has reduced their cloud budget by 95% using an Apollo3-based AI solution to analyze leaks right at the sensor. And AI-enabled headsets are being deployed in retail and medical settings with the ability to listen for commands in multiple language and accents.

Our SPOT platform was recently recognized by Time Magazine as one of the Best AI Invention of 2025, and we'll continue to build on this strong foundation as we introduce new energy-efficient hardware and software products.

In late October, we launched Apollo510 Lite SoC Series, which will enable edge AI in smaller form factors. We also launched Helia AI runtime products and advanced analytics tools to help customers deploy their AI models more easily and quickly. Our growth is accelerating with increased orders from existing customers, multiple design wins from new customers and growing Apollo5 production ramp. Underpinning this momentum are powerful trends in edge AI that are driving growth, reshaping markets and redefining customer expectations. For example, consumers can now use HSA and FSA accounts to buy wearables from an increasing number of companies, including WHOOP. This illustrates how the line between consumer electronics and medical-grade products are increasingly converging. And we believe this trend will be an additional driver of edge AI demand as adoption continues to grow.

Looking to the fourth quarter, we expect to deliver net sales between $18.5 million and $19.5 million. This meaningfully exceeds consensus estimate of $14.2 million and would mark our strongest quarterly performance of the year. This outlook reflects the increasingly vital role Ambiq plays in enabling edge AI and the growing demand for our ultra-low power solutions. Looking ahead, we believe that 2025 represents the beginning of the much larger opportunity for Ambiq. Edge AI is one of the fastest-growing segments in semiconductors, especially in our target markets of personal devices, health care, smart buildings and industrial edge. To fully capture the edge AI opportunity, we are advancing 3 strategic growth priorities: First, expand aggressively into new edge AI markets; second, introduce new products to drive the power and performance of edge AI solutions; and third, establish an IP licensing variant for SPOT. Let's look at each one in more detail. First, we're accelerating our expansion into high-impact, high-growth edge AI markets, including health care, industrial and intelligent spaces like smart homes and buildings. We have created multiple edge AI solutions that are purpose-built for these markets. Notably, both Apollo330 Plus and Apollo510 Lite are attracting additional interest. We are engaged with customers who are looking to enable more advanced AI and longer battery life across a variety of applications from smart rings to smart agricultural devices. Going forward, we continue to prioritize innovations as we develop more derivative products designed to support further expansion into these high-value edge AI markets.

Second, we are advancing our product road map to drive the power and performance of our edge AI solutions. Our Apollo5 family is unlocking a new generation of devices that performs advanced edge AI functions. Our customers are introducing features like speech recognition, health monitoring and predictive sensing, all powered by the SPOT platform. We are also pleased to share that a major customer plan to launch new Apollo5-based platform in 2027, serving as another driver of our future revenue. Building on Apollo5, we expect our upcoming Atomiq platform will deliver a major leap forward in edge AI. With NPU 12-nanometer manufacturing and built-in DRAM and GPUs, we see meaningful opportunity to enable even higher performance edge AI applications. Atomiq is in active development and already drawing strong interest from several major high-volume customers. We are excited about how this product will enable a new wave of edge AI innovations from wearables and health devices to AR glasses and security cameras. We are also speeding customer adoption with tailored software solutions designed to lower technical barriers, shorten production time and reduce power performance trade-offs. Our software team is moving quickly, delivering a steady cadence of new products alongside weekly updates that introduces new features and addresses customer feedback. We're driving new use cases powered by SPOT ultra-low energy efficiency. Increasingly, our customers are incorporating edge AI to reduce noise, isolate voices and enhance speech clarity in real time. These capabilities extend across products, including smart watches, wireless microphones, headphones and hearing aids. Similarly, customers are incorporating edge AI voice recognition to enable instant, reliable voice control for wearables, smart home devices and industrial tools, helping protect data privacy and extending battery life. And for sensors, AI-based compression helps customers make sense of huge amount of data. This enables smarter failure detection in industrial machines and more intelligent monitoring of smart grid at every level from infrastructure to homes. These examples have only deepened our conviction that the new Atomiq SoC with an NPU will be a catalyst for the next generation of edge AI devices. For example, next-gen smart glasses will run multiple edge AI tasks, from eye tracking, gesture recognition to real-time object identification. Cameras will operate without cloud connectivity for frequent battery replacement, yet still detect motion, classify objects and identify potential threats. And future wearables will evolve into intelligent companions that understand context, respond to follow-up questions and provide personalized insight in real time. These emerging use cases also set the stage for our third strategic priority, transforming SPOT into licensable platform. We're building this foundation now and expect commercialization within the next 3 to 5 years. In support for these 3 priorities, we are investing purposefully in R&D and SG&A with a focus on product innovation and enhanced sales and marketing capabilities. The proceeds from our IPO are funding these efforts, laying the foundation for sustainable long-term growth as we unlock the full power of our differentiated technology.

With that, I will turn it over to Jeff to discuss the financials.

Thank you, Fumi, and good afternoon, everyone. Before discussing third quarter results, I want to take a moment to frame 2025 performance in the broader context of 2024 strategic repositioning. We made a deliberate decision to diversify away from the low-margin Mainland China customers to prioritize high-value markets and customers where energy efficiency and edge AI performance serve as key differentiators. This change has translated to year-to-date 2025 results that reflect higher ASPs, stronger margins and increased gross profit dollars on 7% lower net sales. Our remaining China business reflects a small deliberate presence in the market to support select OEM customers.

Now turning to our third quarter results. We achieved non-GAAP gross profit of $8.1 million, an increase of 16.8% year-over-year. Non-GAAP gross margin expanded by more than 10 percentage points to 44.8%, all on net sales of $18.2 million, down 10.4% year-over-year, which is reflective of our strategy to prioritize non-Mainland China opportunities. In the quarter, only 6.7% of net sales were driven by customers in Mainland China, down 50% in the third quarter of 2024. Sequentially, net sales increased 1.6%, driven by continued strong demand from key customers. Non-GAAP gross profit dollars increased 6.6% sequentially, with non-GAAP gross margin expansion of 207 basis points, driven by stronger product mix.

Moving to operating expense. We continue to make strategic investments to support commercial expansion for our existing Apollo and next-generation Atomiq families. The breakdown of third quarter non-GAAP operating expense is as follows: Non-GAAP R&D expense was $6.9 million, down 7.3% year-over-year, largely due to product development timing. Non-GAAP SG&A expenses were $6.2 million, up 12.3% year-over-year, largely due to public company costs. Other income was $1 million, up $400,000 year-over-year due to interest income earned on IPO proceeds. Third quarter non-GAAP net loss attributable to common stockholders was $4 million, a $1.9 million improvement sequentially and a $1.8 million improvement year-over-year. Net loss per share attributable to common stockholders was $0.22 on a pro forma basis.

We ended the quarter with no debt and $146.5 million in cash and cash equivalents, reflecting the proceeds from the IPO. Our strengthened cash position provides the flexibility to fund growth initiatives and support our strategic priorities.

Now turning to our outlook. For the fourth quarter of 2025, we expect revenue in the range of $18.5 million to $19.5 million, with non-GAAP loss per share attributable to common stockholders to be in the range of $0.44 to $0.34. This guidance includes increased variable expenses associated with higher revenues and a noncash accounting adjustment to reclassify certain Q4 intellectual property costs from capital expenditures to operating expenses. While we'll provide formal 2026 guidance on our fourth quarter call, I want to offer some perspective to help frame the expectations for the trajectory of our performance over the next several years. First, with the strategic repositioning largely complete, we've reshaped the business to drive higher margins while unlocking a broader set of growth opportunities and view 2025 as the baseline from which to measure our progress going forward.

Second, we continue to see a path of continued revenue growth and gross margin expansion in 2026 and 2027, driven by multiple generations of Apollo products already in production and derivative offerings of these products designed to reach additional customers and markets. This disciplined expansion of our existing product portfolio enables us to serve a broader range of customer needs with limited incremental investment, enhancing both operating leverage and capital efficiency. In parallel, we're concentrating significant architecture, hardware and software engineering resources on developing the Atomiq family of products. With multiple generations of Apollo contributing today and Atomiq revenues expected to contribute meaningfully in 2028, we believe we are well positioned to accelerate revenue growth and margin expansion. We are executing on our business plan with focus to drive both top line growth and margin expansion to deliver significant long-term value creation.

I'll now turn the call back over to Fumi before we open the call to Q&A.

That opportunity ahead for Ambiq is tremendous. We are not just participating in the AI revolution, but enabling it. With SPOT power efficiency, we are making AI truly mobile, secure, personal as we define what intelligence at the edge really means.

With that, I will open the call to questions. Operator, please go ahead.

[Operator Instructions] we'll go first to Tim Arcuri from UBS.

Jeff, can you talk -- I mean, guidance was a lot better than what you thought. So can you talk about what drove that? Is that this new customer ramping? And then can you also give us a sense, maybe a little clarity on the OpEx gross margin split to get to the guidance? It seems kind of like gross margin has to be down. And can you speak to why? Is that just mix related things?

Yes. So in terms of the top line growth, we see really strong demand from our existing customers. We're also seeing a good revenue contribution from new customers as well. And that's really what's driving the top line of the business in Q4 and represents a big increase over Q3. In terms of profitability, the gross margins in our business for the first 3 quarters of this year have been basically mid- to low 40%. And that really is the model of our business for 2025. It increases a point or 2 from quarter-to-quarter depending on product mix, but that's really the trajectory of gross margin today.

In terms of OpEx, we've raised IPO proceeds really to do one thing and that's to put a lot more infrastructure in place in terms of people, hardware, software engineers, go-to-market people to be able to capture the opportunity in front of us. And so this is where we expect to see increases in spending in our OpEx just to put those resources in place. If you add all those things together, we believe that the guidance that we gave in terms of loss per share, we will land somewhere in that range.

Great, Jeff. I guess, can you just give us like an OpEx number for the guidance? I mean you're talking about spending quite a bit more. So can you just maybe break it out a little bit for us?

Again, it's really increases in both R&D and SG&A. We talked a little bit about an accounting classification change that will drive approximately $1 million to $1.5 million additional spending in our model. This is not a cash impact, and it doesn't change our cash equation at all. It's simply as we contract for IP, the way the contracts are written drives the accounting treatment, whether it's capitalized or whether it's recognized as expense. We believe that the IPs that we're purchasing specifically in Q4 will be expensed, and that's driving a slightly higher OpEx number in R&D.

Up next, we'll hear from Liam Pharr from Bank of America.

This is Liam on behalf of Vivek Arya. Just in terms of 3Q and 4Q, where are you seeing the most strength? Is it all unit driven, kind of just what you said in response to Tim? Or is it some ASP benefit with more customers trending towards the Apollo5 and getting out of the lower ASP products?

So Liam, like Jeff said, existing customers are seeing very strong demand and also new customers are also seeing higher demand than they expected. And one important factor here is that Apollo5 adoption is really driving our success in Q4 as well. So all combination of the new customer mix and also new product mix is really contributing to our great outlook for the Q4. Maybe Aaron can add a little bit of color to that. So Aaron?

Yes. So let me talk about 2 things. One is specifically to your question, it is a mix of both quantity drive because we have the additional trends which are driving customer growth, but it also is an ASP increase because many of the new ramps that we're seeing are based on the Apollo5, which naturally has a higher ASP. One of the big trends that has been driving this, especially in the new customers that we have is they're using Ambiq for edge AI. This is exactly what we've been talking about. In the wearable space, they're starting to -- with edge AI be able to have more clinically relevant data becoming [ more of ] like health device. They are able to use FSA and HSA funds, and this is really a new demand stream for them. So that's the trend that's driving this.

Got it. And then in terms of your customer pipeline going into '26, can you provide some commentary in terms of maybe the trajectory of revenues in '26 will be kind of this continued acceleration, more front half, back half? And are you seeing all these customers kind of trend more towards your premium AI features? Or is there still demand for the kind of a little bit more legacy Apollo products as well?

Well, let me tell you, I think a significant portion and majority of our customers are already taking advantage of our edge AI capability. And we can tell you that pipeline is growing both for our legacy wearable customers as well as new customers. So we're cautiously optimistic that we will see a very healthy pipeline to get to the 2026.

Scott, do you have anything more to add?

Yes. I mean, what I would add is if we use Apollo5 as a proxy for edge AI interest, that's the thing that is really going to be driving revenue growth next year. We're also going to see the front edge of the newly announced 330 Plus and 510 Lite and 510 Blue products that we announced earlier this year. So those are all similarly proxies for edge AI. What I will say is this, the thing that really gets me personally excited is 2 things: I talk, one, to our customers, and I talk, two, to our sales team. And there's so many little anecdotes about new use cases that are coming up for AI. I'm really overwhelmed by all of these. Some of them are small and subtle, some of them are big and ambitious. In any case, it leaves me feeling really excited about where AI is going here. I think Apollo5 is going to be at the center of that, 330 Plus, 510 Lite. So I'm excited to see what happens next year.

The next question is from Tore Svanberg from Stifel.

Congrats for the progress here. On Apollo5, could you give us a sense for how much of the mix that's going to be in Q4 '25? I mean, I'm sure it's going to be a little bit smaller. And the reason I'm asking the question is I just want to try to understand, how that incrementally drives the growth throughout 2026 because I do assume we're still early days for Apollo5.

Cory, great question. And yes, we are seeing very, very strong outlook for the Apollo5. Again, Q -- 2025 is just the beginning of the journey with Apollo5. I cannot talk really specific about the percentage, but yes, we are at the very beginning of a journey with Apollo5, enabling all the edge AI customers. Aaron, do you have anything to add to that?

Yes, that's exactly right. And it's not just in the core customers that we've been talking about, although we have lots of new designs there. It's in various new applications. So let's take industrial, for example. We have a customer that's launching. It's going to be a nice part of revenue next year. And they're doing predictive maintenance with Apollo5. In fact, they're the first user of our industrial SKU. And again, when we talk about personal devices, it's not just wearables. We've got some really cool ramps happening with Apollo510B, one that we just announced, and that's in AR glasses.

Very good. And as my follow-up, and I don't know if this is a question for Fumi or Scott, but could you give us an update on atomiq as far as development time lines, when do you expect to sample products based on atomiq?

We are making a great progress, but I'm going to let Scott give you a little bit more color to it.

Yes. So what I'll say is we are deep in the development on Atomiq. The majority of our engineering team is focused on that now. I would say the specification is preliminarily frozen. And I say preliminary because we have a number of customers that help guide us, and we're basically cross-checking with them. And what I'll say is the really cool thing from my perspective is that we're working with them in a number of cases to either pull or develop proxy AI models or pull models from places like Hugging Face to quickly prototype up their use cases. I'm personally really excited about the energy estimates that we're pulling from that work. So I guess, summary is that we're deep in development. We're not ready to comment on specific sampling time line or production time line, but I'll say that I'm pleased that how things are going. And then maybe one final quick note is that, of course, the primary use of -- the objective of going public was to raise money to support team growth, and we've been working on that. So our engineering headcount is up by double-digit percent since going public, and we're happy with the quality of team that we're recruiting to this effort.

[Operator Instructions] we'll go to Quinn Bolton from Needham.

Let me also offer congratulations. I guess I just wanted to come back to the fourth quarter guidance and try to get some sense on gross margin. It sounds like the Apollo5 mix is going to be up nicely quarter-on-quarter, which I would think, all things equal, would probably drive a richer mix and a better margin in the fourth quarter. You also are looking for revenue growth in the quarter, which I would think would help margin. And so with those tailwinds, should we assume that gross margin may be flat to up from the third quarter? And if it's down, what would the takes be?

We can have Jeff give you a little bit of color on this one.

Yes, Quinn. What I would tell you is that, the model for our business in 2025 has been, as I said, low to mid-40% range. And that does get -- that does vary based on product mix. And thinking about Q4 growth, it is true that we're seeing upside on Atomiq and on Apollo5, and that typically would be a higher-margin product for us, but it doesn't account for all the growth. And so if I was going to give you a guidepost for margin for our business, I still think that kind of low- to mid 43%, plus or minus a point is the right number to use.

Got it. Okay. That's helpful. And then I guess just looking at the fourth quarter, you're certainly bucking seasonality based on the demand strength from existing and new customers. As you look into the 2026, do you have thoughts on whether seasonality holds where you would tend to see a stronger first half? Or do the product ramps and especially Apollo5 as it ramps, could that start to create a different demand pattern or seasonal pattern in 2026?

From my perspective, Quinn, in terms of the core business of personal wearables, there is some seasonality in that business, and we know that from history. I think the phenomenon that you're seeing in 2025, especially proves out the fact that while there is seasonality within that core business, the fact is we're winning new business with those existing customers, and we're also ramping new customers at a rate that more than offsets that seasonality. As a result, in 2025, every quarter from a revenue perspective, given the guidance we gave for Q4 is stronger than the previous. So -- but that's a good trend, obviously. And I think it's kind of a testament to the fact that we're winning both with existing customers as well as attracting new customers.

Got it. And then just lastly, a quick clarification on the reclassification from CapEx to OpEx or some of the IP licenses, you mentioned it had about $1 million to $1.5 million impact on the fourth quarter. Is that sort of the range going forward? Or is it going to be IP license by IP license? And so we should think of this as perhaps more of a onetime effect on the fourth quarter rather than a step-up by $1 million to $1.5 million every quarter going forward?

Yes, sure. So it does vary from IP to IP, and it really depends on how those contracts are written. So we're looking at this on an IP to IP basis. I can't give you real guidepost for 2026 as we're right in the middle of doing our annual operating plan, looking at all of the engineering expenses that are going to be necessary to continue our product development and the timing of those expenses. What I will say is that when that exercise is done and we come back and talk about 2026, we'll be sure to give you a much clearer guidepost in terms of that specific item.

At this time, there are no further questions. Ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.

Good afternoon, and welcome to the Ambiq Micro Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, September 4, 2025.

I would now like to turn the call over to Ms. Charlene Wan. Charlene, please go ahead.

Good afternoon, and welcome to Ambiq's Second Quarter 2025 Earnings Conference Call. I'm Charlene Wan, Vice President of Corporate Marketing and Investor Relations at Ambiq. I'm joined today by Ambiq's CEO, Fumihide Esaka; and Ambiq's CFO, Jeff Winzeler.

As part of today's call, we will review our quarterly financial performance and provide a summary of our outlook. Our earnings release and the accompanying financial levels are available on the Investor Relations page of our website at www.ambiq.com.

Before I turn the call over to Fumi, I'd like to remind our listeners that during the course of this conference call, the company will provide financial guidance, projections, comments and other forward-looking statements regarding future market development, the future financial performance of the company, new products or other matters. These statements are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC. Specifically, the final perspective related to our initial public offering and our most recent 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

Also, the company's press release and management statements during this conference call will include discussions of certain non-GAAP financial measures. These financial measures and related GAAP to non-GAAP reconciliations are provided in the company's press release and related current report on Form 8-K.

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 Ambiq's CEO, Fumihide Esaka. Fumi, 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. Ambiq has been on an incredible journey. The company was founded in 2010 to put intelligence everywhere using the world's most power-efficient chips. At this point, we have enabled more than 280 million devices in applications ranging from personal devices to medical and health care to the industrial edge to smart home and smart buildings. We are excited about enabling the next billion devices as AI move out of the cloud and on to the edge.

For those of you new to Ambiq's story, I'd like to give you a quick overview of our business. Ambiq 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 to date's AI computation 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. With that innovation, it's nearly impossible for those devices to run AI without quickly draining their batteries.

Ambiq has solved this power problem with our SPOT platform. SPOT stands for Sub-threshold 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 5 generations of our flagship SoC family called Apollo.

In addition to hardware, we also offer extensive software solutions to help our customers reduce their products and 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 smart watch is capable of running on device AI, you get a doctor or personal trainer on your wrist. Hearing aid with onboard AI models can filter out the noise in a restaurant and enhance the 1 voice you actually want to hear. And the factory machinery equipped with a wireless fault detector can identify failure before it happens and calls for help without bringing the factory line down.

With our energy-efficient products and solutions, Ambiq is well positioned to drive and benefit from the edge AI revolution.

In that, let me now turn the call over to Jeff Winzeler, 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 year.

Thank you, Fumi, and thanks, everyone, for joining us today.

Before I review the financials, please note that I will focus my discussion on non-GAAP financial results and refer you to today's press release for a detailed reconciliation of GAAP to non-GAAP financial results. The non-GAAP 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.

Non-GAAP gross profit for the second quarter of 2025 was $7.6 million or 42.7% of revenue compared to $7.4 million or 47.1% of revenue in the prior quarter and $6.7 million or 32.9% of revenue in the same quarter a year ago. The sequential and year-over-year increases in non-GAAP gross profit for the second quarter of 2025 were the result of a more favorable product end customer mix, as the company continued to execute on its strategic prioritization of geographies outside of China.

Non-GAAP 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-GAAP 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 road map 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 1 for 28 reverse stock split that was affected prior to our IPO.

Second quarter non-GAAP net loss was $5.9 million compared to non-GAAP net loss of $5.2 million in the first quarter of 2025 and non-GAAP net loss of $7.4 million in the second quarter of 2024. The loss per share in the second quarter of 2025 was $0.43 based on unaudited pro forma common shares of 13.6 million as disclosed in the company's F-1.

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-GAAP loss per share is expected to range between $0.35 loss per share and $0.28 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 into 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, Ambiq grew revenue from the previous quarter and importantly, grew gross profit dollars, both sequentially and year-over-year in support of our ambitions for profitable 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 Fumi will now detail further.

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

Thank you, Jeff. Since this is our first earnings call, I'd 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 3 key initiatives.

Our first initiative is to expand into new markets and geographies with our existing products. This will fuel 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 Apollo products 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 1 great example of our recent new customer announcement. Whoop, a leader in health-oriented wearables recently chose Apollo for their newest fitness tracker product line. The new Whoop 5.0 and Whoop energy products give an incredible intelligent view of your health and even your blood pressure in a small band that lasts for more than 14 days on the battery. Ambiq's Apollo delivers 10x better battery efficiency allowed Whoop to utilize on-device AI to process biometric data intelligently.

In addition to personal devices and wearables markets, we are pursuing new edge AI use cases such as AR/VR glasses, heart monitors, smart medical patches, oxygen condition monitors, smart alarms and locks and robotics.

We are also sifting our geographic concentration. Historically, we had significant sale with end customer in Mainland China. As the demand for edge AI grows globally, we are prioritizing sales efforts towards other meaningful 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 quarter 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 edge AI opportunities. Since we launched the first Apollo SoC in 2015, we have introduced new products nearly every year. The original Apollo 3 and 4 SoCs are being used for a variety of early edge AI deployments. The new Apollo510 and Apollo330 SoCs launched in the past 18 months add better accelerated AI compute. Last week, we announced the expansion of our Apollo 5 line with Apollo510B wireless SoC. It has a 250 megahertz Cortex-M55 coprocessor alongside a dedicated 40 megahertz network processor and Bluetooth Low Energy 5.4 radio. Target applications include wearables, AI glasses, heart monitors, smart locks and factory condition monitors.

The fourth 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 edge AI applications with demanding compute requirements, especially for vision. Atomic features a full Neural Processing Unit, or NPU, 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 edge AI chip design platform, we have received numerous increase to license SPOT. There are specialized applications that require power efficiency, such as data centers and automotive AI processing. To reach these markets, we plan to develop SPOT into IP and chip development platform. This offering will enable other companies to license or partner with us to incorporate SPOT into their own low-power chip designs. Our plan to develop this IP and technology platform for licensing would take place over the next 3 to 5 years.

To conclude my prepared remarks, I want to first thank our investors, customers, partners, suppliers and employees for their support of Ambiq over the past 15 years. Thank you for helping us become a public traded company. The future of Ambiq is very bright and we are only at the beginning of unlocking the full potential of 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. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Vivek Arya with Bank of America.

Welcome to the public markets. Fumi, for my first question, I'm curious how does Ambiq kind of define edge AI? And what percentage of your sales today would kind of fit that definition? And how do you see that mix evolving in any kind of ASP benefits as that mix evolves towards more edge AI?

Again, edge AI is growing in medical, industrial edge, personal devices, smart home and buildings, and we ourselves is really focusing on enabling this edge AI market. It is very hard to define. The percentage of AI use at our end customers, but most of our customers are already using intelligence. And that's where we add a lot of value. So we believe that more than half of the business is already using intelligence on their devices and we will continue to grow.

Okay. And for my follow-up, I think the IP licensing opportunity sounds very interesting. But you did mention that it might take a few years to fully develop. Is there anything that you can do -- so first of all, what kind of use cases and applications are asking you for that licensing and chiplet-type architecture? And then can you do anything to accelerate that development of being able to license SPOT technology?

Yes, 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, our IP, with more resources and funding available. And we do have a dedicated team that is focusing on our 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.

Our next question comes from the line of Tim Arcuri with UBS Financial.

Hello. This is Dino on for Tim. Welcome to the public markets. Could you talk about your progress on the non-wearable's opportunities as of now? You previously announced some design wins in medical and industrial. Can you just give us an update on your progress there?

Well, again, about 17% of our funnel is already towards medical, industrial edge, smart home and building, and we believe that more than 20% is already -- we're working with some of the customers to define Atomic edge AI in vision. So we're making great progress even since we talked last time.

Got it. And then I guess another question, just on your Q2 results, do you see any signs of pull-ins that impacted results?

I think we had a pretty good ramp from Q1 to Q2. And if you think about our business typically seasonally, you would expect Q2 to be higher than Q1 and growth throughout the year. I think the 1 thing 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 Q2 that drove revenue slightly higher than what we had originally anticipated in our model. That's really the only pull-in activity that we saw in the quarter.

Then your next question comes from the line of Quinn Bolton with Needham & Company.

Fumi and Jeff, congratulations on the successful IPO. I guess I wanted to start with just looking at some of your end customers fitness tracker area, they seem to have pretty good results. Garmin, I think, reported a 41% year-on-year increase. And I guess I was wondering, can you give us a sense of just like the order trends you saw through the second quarter? Is your customer end market success leading to higher order rates?

And then I guess a related question, how far in advance would you guys ship the Apollo processor ahead of when the end device might sell? Is that typically like a quarter lead time, but any sense on how far in advance you might ship ahead of your customers' end device sale would be helpful.

Typically, our customers 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.

I guess maybe just on the orders, are you seeing kind of with that 16-week lead time, is that order book sort of suggesting sort of a healthy second half? I think you guys had previously seen some uncertainty around tariffs that had led to perhaps some caution on the second half. Any update on the tariff impact as you look into the second half of the year?

Yes. I mean in terms of 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 have 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.

Excellent. And then lastly, Jeff, any thoughts on gross margin as you look into the third quarter, I think you were around 43% in Q2. Would you expect gross margins to be relatively flat, up or down in the third quarter? Any directional comment would be helpful.

Yes. 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, that will vary by a point or 2 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.

Our final question comes from the line of Tore Svanberg with Stifel.

Fumi, Jeff, welcome to the public market, and congrats on that Whoop win. So Fumi, you talked about the sort of first long-term strategic initiative. Clearly, you're starting to broaden the applications and markets that you are going into, especially on wearables. As we look at maybe in the next 4 months or so, which are some of the applications you expect to see revenue from? I know it's hard to kind of think out a few, but any color you could share with us that would be great.

Well, we're not going to see a revenue from a new application, and again, this coming quarter, but definitely, some of the AR glasses are taking a first would -- working with some of the AR glass customers that definitely will be in the market very near term. And also, worker safety monitors and machine health monitor, those are already in the market, and we continue to -- we believe that to grow that market segment. So we believe that our application is growing really fast.

Very good. That's exactly what I was looking for. And then as my follow-up, could you just give us an update on Atomic, where we sort of are in the development process there? I think you have previously talked about that product being potentially available sometime next year. But yes, any -- well, precisely and obviously not for production, but any updates there would be helpful.

Well, we're very excited to talk about Atomic, because we started working with early adopter on spec soon after we did a public offering. And activity is more active than ever before. Again, I believe that becoming a public company and our customers becoming more comfortable with working with Ambiq, we believe that we're going to make great progress coming quarters.

With no further questions in queue, I will hand the call back to Jeffrey Winzeler for closing remarks.

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 3, and the following day, December 4, we'll be at the Stifel Deep Tech Forum in Menlo Park, California. If you'd like to arrange a meeting with us at these events, please contact our IR firm, the Shelton Group. You can find the relevant contact information on the Investor page of our website, ambiq.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.

Thank you. Thank you for joining us today. This does conclude today's conference call. You may now disconnect.