AMPLITECH GROUP INC. COM 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Thank you for joining today's call to review AmpliTech's second quarter 2026 financial results, review of our company's outlook, and to answer investor questions. Following initial management comments, we will open the call to investors' questions. An archive replay of today's call will be posted to the investors relations section of the AmpliTech's corporate website. This call is taking place on Thursday, August 13, 2026. Remarks that follow and answers to questions may include statements that the company believes to be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally include words such as "anticipate," "believe," "expect," or words of similar importance. Likewise, statements that describe future plans, objectives, or goals are also forward-looking. These forward-looking statements are subject to various risks that could cause actual results to be materially different than expected.

Such risks include, among others, matters that the company has described in its press releases and in its filings with Securities and Exchange Commission. Except as described in these filings, the company disclaims any obligation to update forward-looking statements which are made as of today's date. With that, let me turn the call over to our CEO, Mr. Fawad Maqbool.

Thank you, George. Good afternoon, everyone. Thank you everyone for joining us today. Second quarter was an important period in AmpliTech's continued transformation and growth. We recognize that investors will focus on our total revenues, gross margins, and total expenses and bottom-line results. We want to address those items directly and, more importantly, provide our investors with additional color behind the numbers. Investing ahead of growth. Our second quarter results reflect both meaningful progress across our underlying businesses and a deliberate increase in investment as we position AmpliTech to pursue and support significantly larger opportunities across 5G, telecom infrastructure, satellite communications, semiconductor technologies, and other advanced communications markets. Establishing a meaningful and sustainable position in the telecom infrastructure market is neither easy nor accomplished overnight. It requires a significant technical expertise, sustained R&D investment, product development, testing, certifications, customer qualification, and ultimately, the ability to perform at scale.

We believe the investments we have made in these areas have been instrumental in the progress AmpliTech has achieved and are an important part of building a durable, competitive position in this large and expanding market. While these investments impacted near-term profitability, we believe they should be viewed in the context of the larger opportunity we are building toward. We are encouraged by our strong revenue performance and equally important, by the continued commercial and technical progress we are making in markets that historically have presented substantial barriers to entry and were only for the industry giants. There are no shortcuts to building a lasting presence in the telecom infrastructure. Our strategy has been to invest in the technology deliberately, people, the capabilities, and customer relationships necessary to compete for increasingly meaningful opportunities and to support them successfully as they scale.

We remain focused on disciplined execution, converting our technology investments into commercial opportunities, expanding our customer base, scaling the revenue responsibly, and improving operating leverage as the business grows. Our long-term objective is to build AmpliTech into a significantly larger and more valuable communications technology company, and in doing so, create substantial and sustainable value for our shareholders. This doesn't happen overnight, and it takes a lot of resources to put all of this together to compete with the giants that we are in. Q2 was, in many respects, a quarter to invest in the future growth of AmpliTech Group. We invested in customer-driven R&D, customer-driven supply chain resilience, production readiness, strategic sales and marketing, specialized personnel and outside expertise, cybersecurity and IT infrastructure, internal controls, and the organizational capabilities required to support larger customers. Building the commercial organization. We also increased our investment in sales and marketing during the quarter.

The 10-Q reflects increased marketing and business development activity, including additional industry trade shows, expanded promotional initiatives, and hiring of two senior business development representatives to support the company's expanding 5G Open RAN commercial strategy and our 5G product portfolio. To establish our brand and position us for growth, we've engaged a strategic marketing and communications firm also, whose principals have deep experience in complex industries. They're building our marketing and communications foundation from the ground up. They've already overhauled our website and messaging, and they'll be assisting us with sales campaigns, rebuilding the e-commerce parts of our site, strengthening our SEO, and building the brand equity that positions us as a leader in the market. We recognize these as essential ingredients, especially the website, to portray an image that we really need to show our investors.

Historically, AmpliTech has been a highly engineering-driven organization. As our product portfolio and addressable markets expand, we believe we must put an equally capable commercial organization around the technology we have developed. The objective is not simply greater marketing exposure. It's to improve access to strategic accounts and convert technology validation, customer engagement, and engineering activity into commercial opportunities. We believe that next stage of AmpliTech's evolution requires both technology leadership and market access. With this, I'll turn the call over to our CFO, Louisa Sanfratello, to review our financial results in more detail.

Thank you, Fawad. Good afternoon, everyone. Second quarter revenue was approximately $8.1 million, compared with approximately $5.35 million in the first quarter, representing sequential revenue growth of approximately 51%. Although revenue declined year-over-year when comparing second quarter results, the comparison requires important context. The prior year quarter included acquired 5G product sales associated with the Titan asset acquisition. Those sales increased reported revenue but carried significantly lower gross margins. The difference can clearly be seen in our gross profits performance. When comparing gross margins from Q2 2025 and Q2 2026, this year's second quarter gross profit increased from approximately $863,000 to $2.25 million, an increase of approximately 161%. Gross margin increased from approximately 7.8% in Q2 2025 to 27.9% in Q2 2026.

For the first six months of 2026, gross profit increased approximately 135%, from $2.05 million to $4.82 million, while gross margin increased from approximately 14% to 35.9%. The 10-Q attributes this improvement primarily to a more favorable product mix and the absence of the lower margin acquired 5G product sales included in the comparable prior year period. Sequentially, gross margin decreased from approximately 48% in Q1 to approximately 28% in Q2. We believe investors should consider this in the context of quarterly product mix and our current stage of commercialization. At our present scale, individual customer programs and product mix can have a significant effect on quarterly margins. More importantly, as we prepare to support larger customers, we are incurring costs associated with production readiness, supply chain capability, product development, and customer-specific requirements ahead of the full revenue contribution we are seeking from those programs.

Our longer-term objective remains to increase the contribution from our differentiated internally developed technologies and higher-margin product offerings as those programs progress toward commercialization. In line with what our CEO just shared, our SG&A expenses increased to approximately $4.08 million in Q2 2026, compared with approximately $2.13 million in Q2 2025. This increase relates primarily to higher parent company expenses, including amortization, legal fees, and stock-based compensation, together with greater investment in marketing and business development, additional trade show participation, and expanded consulting resources supporting the company's 5G portfolio. There is additional strategic context that we believe is important for shareholders. As we engage with larger MNOs, the telecommunication infrastructure providers and enterprise customers, their expectations extend well beyond the product performance. These organizations increasingly expect suppliers to demonstrate strong internal controls, cybersecurity practices, IT governance, operational resilience, and the infrastructure necessary to support larger deployments.

Accordingly, we have engaged specialized consulting resources to further strengthen our SOX-related controls and protocols, cybersecurity framework, and ISO-aligned IT security practices. We are also transitioning toward a hybrid IT infrastructure model, combining appropriate internal resources with specialized external expertise. Our objective is to improve security, redundancy, scalability, and technical support as the company grows. These initiatives are also relevant to enhance written documentation of internal controls and procedures, information technology, general controls, and personnel resources necessary for appropriate segregation of duties. We therefore view these required investments as critical, both from a corporate governance standpoint and from a customer readiness standpoint. We expect operating expenses to grow more efficiently than revenue going forward. Certain elevated expenditures were associated with implementation, consulting, customer development, commercialization, and infrastructure initiatives undertaken as we prepare the company for a larger scale of operations. Some ongoing investment will clearly remain necessary.

We intend to continue investing where management sees an appropriate potential return. However, our objective is to build the infrastructure now and leverage that infrastructure across a substantially larger revenue base. That is where we believe future operating leverage can ultimately come from. Second quarter R&D increased to approximately $1.37 million, compared with approximately $659,000 in Q2 of 2025. Of Q2 R&D, approximately $1.08 million related to 5G development and approximately $297,000 related to MMIC design. As stated on our 10-Q, this increase is primarily due to the expanded 5G product development activity, including higher prototype and testing costs, and increased consulting expenses supporting product innovation and development. From an operational standpoint, this quarter also required increased engineering support for new and customized requirements from existing and prospective customers. This is an important distinction.