Ambiq Micro, Inc. (AMBQ) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance, with a 56.2% increase in gross profit and significant investment in product development. Despite a slight decline in gross margin due to a nonrecurring credit, the overall financial health is stable with $204.5 million in cash and no debt. The Q&A highlights promising growth in non-wearable markets and potential profitability by 2027-2028. Although there are concerns about gross margins, the company's strategic pricing and strong customer demand indicate a positive outlook. The lack of a market cap suggests a small-cap stock, likely leading to a more pronounced positive reaction.
Key Financial Performance
Net Sales $25.1 million, increasing 59.3% year-over-year, driven by broad-based strength across the customer base, strong demand from 2 customers supporting new product launch ramps, and the addition of a new major customer entering production.
Non-GAAP Gross Profit $11.6 million, increased 56.2% year-over-year. The growth was driven by strong demand and customer programs enabling higher-value Edge AI functionality.
Non-GAAP Gross Margin 46.2%, down 90 basis points year-over-year due to a Q1 2025 nonrecurring credit. Excluding this onetime impact, it increased 210 basis points year-over-year.
Non-GAAP R&D Expenses $10.1 million, up 43.3% year-over-year, reflecting accelerated investments to support product development across Apollo and Atomic platforms.
Non-GAAP SG&A Expenses $8.1 million, up 31.8% year-over-year, driven by increased spending for go-to-market capabilities and public company infrastructure.
Other Income $1.5 million, up $1.1 million year-over-year due to interest earned on balance sheet cash.
Non-GAAP Net Loss $5 million, a $200,000 improvement year-over-year. Non-GAAP net loss per share was $0.25.
Cash and Cash Equivalents $204.5 million, with no debt, providing flexibility to invest in product development, software, and go-to-market initiatives.
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Operating Highlights
Apollo 5: Strong growth as customers upgrade to enable next-generation edge AI capabilities while maintaining ultra-low power performance.
Apollo 340: Generating meaningful traction with multiple customers due to its compelling price-to-value positioning. Seen as an enabler to expand into higher volume and diverse opportunities.
Atomic 110: On track for tape-out towards the end of 2026 with initial customer ramp in late 2027.
Atomic 120: Strong interest from potential Alpha customers, especially in smart glasses, due to its combination of performance and ultra-low power.
Edge AI market: Rapid growth exceeding expectations, driven by demand for real-time insights and faster response times. Expansion into wearables, healthcare, industrial, and smart home markets.
China market: Sales to end customers in China increased to 13.7% of total net sales, up from 6.2% in the prior year, driven by higher-value Edge AI functionality.
Revenue diversification: Revenue from the top 3 customers reduced from 86% in Q1 2025 to 71% in Q1 2026, indicating successful diversification.
Financial performance: Net sales of $25.1 million in Q1 2026, a 59.3% year-over-year increase. Non-GAAP gross profit increased 56.2% year-over-year to $11.6 million.
Expansion into new markets: Focused action to expand into high-value markets like healthcare, industrial, and smart homes, with expected revenue from these segments to more than double in 2026.
Product development: Continued investment in Apollo and Atomic platforms, with a focus on supporting next-generation Edge AI applications.
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Risk or Challenges
Customer Concentration: The company's three largest customers accounted for 71% of sales in Q1 2026, down from 86% in Q1 2025. While this indicates progress in diversification, the high dependency on a few customers poses a risk to revenue stability if any of these customers reduce orders or switch to competitors.
Geopolitical and Regional Risks: Sales to end customers in China increased to 13.7% of total net sales in Q1 2026 from 6.2% in the prior year. This growing exposure to China introduces potential risks related to geopolitical tensions, trade restrictions, or regulatory changes in the region.
Gross Margin Pressure: Non-GAAP gross margin decreased by 90 basis points year-over-year in Q1 2026, primarily due to a nonrecurring credit in Q1 2025. Although yield improvements are expected, broader industry cost dynamics could continue to pressure margins.
R&D and Operating Expenses: Non-GAAP R&D expenses increased by 43.3% year-over-year, and SG&A expenses rose by 31.8%. While these investments support growth, they also contribute to ongoing net losses, which could strain financial resources if revenue growth does not keep pace.
Seasonality and Revenue Visibility: The company expects seasonality in Q4 2026, which could impact revenue consistency. Additionally, while multiple customer launches are expected to drive growth, there is a risk that delays or underperformance in these launches could affect financial outcomes.
Supply Chain and Cost Dynamics: The company faces broader industry cost dynamics that could offset yield improvements and impact gross margins. This includes potential supply chain disruptions or increased costs for materials and production.
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Guidance & Outlook
Net Sales Growth: For the second quarter, net sales are expected to grow approximately 75% year-over-year, with momentum continuing in the second half of the year. Full-year 2026 revenue growth is anticipated to be meaningful.
Market Trends and Demand: Strong and growing end-user demand for Edge AI solutions, particularly in wearables, healthcare, industrial, and smart home markets. Adoption of Edge AI is expanding into new form factors and applications, including real-time health monitoring, intelligent audio, and smart sensing.
Product Development: Progress on Apollo 340, Atomic 110, and Atomic 120 platforms. Atomic 110 is on track for tape-out by the end of 2026, with production ramp in late 2027. Atomic 120 is engaging with potential Alpha customers, particularly in smart glasses. Apollo 340 is gaining traction for higher volume opportunities.
Revenue Diversification: Revenue from medical, industrial, and smart home/building markets is expected to more than double in 2026. Diversification across customers and markets is progressing, with new design wins and customer additions.
Gross Margin and Operating Expenses: Non-GAAP gross margin for Q2 is expected to be between 45% and 46%. Operating expenses for 2026 are projected at approximately $85 million, including $7 million to $10 million for IP purchases.
Customer Launches and Scaling: Multiple customer product launches are expected to enter production in Q2 2026, contributing to a step-up in baseline revenue rather than a peak. Additional ramps are anticipated behind these launches.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Could you provide an update on the percentage of your funnel that is non-wearables and the breakdown of Q1 revenue between consumer wearables, medical, industrial, or smart home?
A:Currently, about 25% of the pipeline is non-wearables. In Q1, the company grew 100% in the non-wearable market and expects continued strong growth in this segment.
Q:Can you provide an update on the timeline to profitability? Will higher OpEx burn and flat gross margins keep profitability only until 2028, or could it be pulled forward?
A:To achieve profitability, revenues need to reach approximately $47 million per quarter. The company is currently below this level but has made significant investments in product development to accelerate revenue streams. These investments could potentially pull profitability forward to early 2028 or the second half of 2027.
Q:What are some of the use cases outside of wearables driving the doubling of growth?
A:Examples include the medical market (e.g., ECD, glucose monitoring), bike computing, smart pens, battery monitors, remote controls, livestock tracking, and AI adoption in various applications.
Q:Is there a chance that the new customer introduced this quarter will contribute more than 10% of revenues this year?
A:Yes, there is some possibility that the new customer will contribute more than 10% of revenues this year.
Q:What is the expected growth rate for the second half of the year compared to the first half?
A:The company expects similar growth rates in the second half of the year as seen in the first half, which was approximately 68% year-over-year.
Q:What factors are pressuring gross margins, and can the company pass on input price increases to customers?
A:Gross margins are pressured by industry-wide increases in substrate and piece part costs. The company is working on yield improvements but expects margins to remain relatively flat. They are strategically passing on some costs to customers, especially for expedited material demands, while maintaining competitive pricing.
Q:Are there any supply constraints from TSMC and OSAT partners, and is demand being left unmet?
A:The company has strong partnerships with TSMC and OSAT partners and generally meets demand within normal lead times. However, some short lead-time orders cannot be fulfilled due to rapid market growth.
Q:Will the Compression Kit product be sold exclusively with the company's products or made available to other systems?
A:For now, the Compression Kit will be restricted to the company's products, as it provides a synergistic advantage when paired with their offerings.
Q:When should material revenue from Apollo 340 be expected?
A:Apollo 340 is currently in design, with sampling expected in the first half of next year, initial customer ramps by the end of next year, and meaningful revenue anticipated in 2028.
Q:How does the company see unit versus ASP mix driving growth in 2026?
A:Growth in 2026 is expected to be driven by both unit shipments and ASP uplift, with unit shipments being the predominant factor. The Apollo 5 ramp is contributing to ASP uplift.
Q:What is the company's pricing strategy for new products like Apollo 5 and Atomic platforms?
A:The company aims to maximize ASPs across different customers and markets, leveraging the higher value proposition of products like Apollo 5 and Atomic platforms to achieve pricing premiums.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about whether the new customer introduced this quarter will contribute more than 10% of revenues this year, stating only that there is 'some possibility.'
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI capability
AI solution
Ambiq partner
Apollo Atomic
CEO Esaka
Edge AI
Investor Relations
Marketing
application
customer production
demand Edge
design
device
diversification
expansion
expectation
expense
form factor
generation
health
improvement
interest
loss
measure
momentum outlook
partner choice
power
product development
product launch
sale
traction
value Edge
AMBQ Transcript
Ambiq Micro, Inc. (AMBQ) Q1 2026 Earnings Call Transcript
Positive5-12
The earnings call reveals strong financial performance, with a 56.2% increase in gross profit and significant investment in product development. Despite a slight decline in gross margin due to a nonrecurring credit, the overall financial health is stable with $204.5 million in cash and no debt. The Q&A highlights promising growth in non-wearable markets and potential profitability by 2027-2028. Although there are concerns about gross margins, the company's strategic pricing and strong customer demand indicate a positive outlook. The lack of a market cap suggests a small-cap stock, likely leading to a more pronounced positive reaction.
Ambiq Micro, Inc. (AMBQ) Q4 2025 Earnings Call Transcript
Positive3-5
The earnings call indicates strong financial performance with increased sales and gross profit, despite a net loss. Management expressed confidence in future revenue growth, projecting over $100 million in 2026, supported by new technologies and product lines. While there are concerns about rising operational expenses and potential margin pressures, the optimistic guidance and strategic repositioning are positive indicators. The Q&A section reinforced this outlook with discussions on technological advantages and market expansion. Overall, these factors suggest a likely positive stock price movement, although the lack of market cap data limits precise impact assessment.
Major Drilling Group International Inc. (MDI:CA) Q1 2026 Earnings Call Transcript
Unknown9-9
The earnings call reveals several negative factors: decreased margins, increased costs, and a decline in net earnings. The Q&A highlights uncertainties in North America and lack of clarity on growth potential. Despite some growth prospects in South America, the lack of positive guidance and weak performance in the U.S. contribute to a negative sentiment. Additionally, the management's evasive responses to critical questions further undermine confidence.
Ambiq Micro, Inc. (AMBQ) Q2 2025 Earnings Call Transcript
Unknown9-9
The earnings call presented mixed signals: a strategic shift away from China led to reduced sales there, but overall revenue increased sequentially. Gross profit improved YoY, but operating expenses rose sequentially. The Q&A revealed optimism about edge AI growth and a stable gross margin outlook, yet management's vague responses on key metrics and timelines dampened sentiment. Despite some positive financial metrics, the lack of clear guidance and ongoing losses suggest a neutral stock price movement over the next two weeks.
Frequently Asked Questions
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