Ambiq Micro, Inc. 2026 Q2 Earnings Call

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, Jeff Winzeler, will then discuss the quarter's financial results and outlook. Following their remarks, Scott Hanson, Ambiq's founder and CTO, will join Fumihide 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 Fumihide, 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 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. Now it's my pleasure to turn the call over to Ambiq's CEO, Fumihide Esaka.

Good morning, everyone, and thank you for joining us. 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, Ambiq's 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, end 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 Apollo3 and Apollo4, while Apollo5 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.

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 edge 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. To capture 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 Apollo3 Blue Plus and Apollo510 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 HELIA CORE and compressionKIT are already helping customers accelerate production deployments, improve power efficiency, reduce memory requirements, and lower overall system costs. 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 Ambiq's growth and diversification. 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. 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, Atomiq 110, and Atomiq 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 Atomiq 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, Hoomy, 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.