Q3 2025 Ambiq Micro Inc Earnings Call

November 6, 2025

Speaker #1: Good .

Operator: Good afternoon. Welcome to the Ambiq Micro Q3 2025 Earnings Conference Call. As a reminder, this conference is being recorded. To ask a question today, please press star 1 on your telephone keypad. 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.

Speaker #3: Afternoon , and welcome to the Ambiq Micro, Inc. . Third Quarter 2020 Earnings conference call . As a reminder , this conference is being recorded .

Speaker #3: To ask a question , please press Star One on your telephone keypad . I would now like to turn the call over to Miss Charlene Wan and Beaks , vice president of Corporate marketing and Investor Relations .

Speaker #3: Charlene , please go ahead .

Speaker #4: On today's call , and CEO Kunihide Esaka will provide an overview of the company's performance and strategy . CFO Jeff Winslow will then discuss the quarter's financial results .

Charlene Wan: On today's call, Ambiq's CEO, Fumihide Esaka, will provide an overview of the company's performance and strategy. CFO Jeff Winzeler will discuss the quarter's financial results and Q4 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.

Speaker #4: And for Q outlook . Following their remarks , Skansen and Vicks founder and CTO and Aaron Grassian , EVP of global sales and marketing , will join me and Jeff for Q&A .

Speaker #4: Our earnings release is available on the Investor Relations page of our website . At WW . Com . Before I turn the call over to whom I'd like to remind our listeners that during the course of this conference call , management will discuss non-GAAP financial measures .

Speaker #4: 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 .

Charlene Wan: 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.

Speaker #4: between gas and non-GAAP financial measures and the 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 Reconciliations , statements regarding our strategic priorities , financial outlook , future performance and estimates of our market opportunity .

Speaker #4: 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.

Speaker #4: 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 in SEC filings from time to time , including the section titled Risk Factors in Index Form 10-q for the quarter ended September 30th , 2025 , filed with SEC today .

Charlene Wan: 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 Q ended 30 September 2025, filed with SEC today. Now it's my pleasure to turn the call over to Ambiq's CEO, Fumi Esaka.

Speaker #4: And now it's my pleasure to turn the call over to CEO Fumi as AKA . .

Speaker #5: Good afternoon everyone , and thank you for joining

Fumihide Esaka: Good afternoon, everyone, and thank you for joining us today. On today's call, I will cover the key drivers for our Q3 results and our Q4 outlook. I will also highlight the 3 strategic priorities Ambiq continue to focus on before turning the call over to Jeff for financial performance. The Q3 marked a decisive step forward for Ambiq, both financially and strategically. We exceeded net sales expectations, delivered 1 of our strongest growth 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.

Speaker #5: us today . On described today's call . I will cover the key drivers for our third quarter results and our fourth quarter outlook .

Speaker #5: I will also highlight the three strategic priorities and continue to focus on . Before turning the call over to Jeff for financial performance , the third quarter marked a decisive step forward for Ambiq .

Speaker #5: Both financially and strategically . We exceeded net sales expectations , delivered one of our strongest growth margins to date , and closed the quarter with strengthened balance sheet .

Speaker #5: Following our IPO . These results underscore the success of our delivery pivot towards high value AI driven markets , where ultra low power solution provides unique differentiation .

Speaker #5: Our design funnel is robust and increasingly diverse . Let me give you a few examples . Industrial customers are using AI to monitor equipment in real time to detect issues early and prevent costly downtime .

Speaker #5: A water management customer has reduced their cloud budget by 95% using an Apollo three based AI solution to analyze leaks right at the sensor .

Fumihide Esaka: A water management customer has reduced their cloud budget by 95% using an Apollo3-based AI solution to analyze leaks right at the sensor. AI-enabled headsets are being deployed in retail and medical settings with the ability to listen for commands in multiple languages and accents. Our SPOT platform was recently recognized by TIME Magazine as one of the best AI inventions of 2025, 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.

Speaker #5: An AI enabled headsets are being deployed in retail and medical settings , with the ability to listen for commands in multiple language and accents .

Speaker #5: Our spot platform was recently recognized by Time magazine as one of the best AI inventions of 2025 , and we'll continue to build on this strong foundation as we introduce new energy efficient hardware and software products .

Speaker #5: In late October , we launched Apollo 510 Lite SoC series , which will enable edge AI in smaller form . Factors . We also launched helium AI runtime products and advanced analytic tools to help customers deploy their AI models more easily and quickly .

Speaker #5: Our growth is accelerating with increased orders from existing customers , multiple design wins from new customers , and growing Apollo five production ramps .

Fumihide Esaka: Our growth is accelerating with increased orders from existing customers, multiple design wins from new customers, and growing Apollo5 production ramps. 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. We believe this trend will be an additional driver of edge AI demand as adoption continues to grow. Looking to Q4, 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.

Speaker #5: 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 !

Speaker #5: 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 high demand as adoption continues to grow .

Speaker #5: Looking to the fourth quarter , we expect to deliver net sales between 18.5 and $19.5 million . This meaningfully exceeds consensus estimates of 14.2 million and would mark our strongest quarterly performance of the year .

Speaker #5: This outlook reflects the increasingly vital role ambit plays in enabling AI and growing demand for our ultra low power solutions . Looking ahead , we believe that 2025 represents the beginning of the much larger opportunity for ambit .

Fumihide Esaka: 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 opportunities for Ambiq. Edge AI is one of the fastest-growing segments in semiconductors, especially in our target markets of personal devices, healthcare, smart buildings, and industrial edge. To fully capture the edge AI opportunity, we are advancing three 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. Third, establish an IP licensing variant for SPOT. Let's look at each one in more detail.

Speaker #5: AI is one of the fastest growing segments in semiconductors , especially in our target markets of personal devices . Healthcare , smart buildings and industrial edge .

Speaker #5: To fully capture the edge , AI opportunity . We are advancing three strategic growth priorities . First , expand aggressively into new edge AI markets .

Speaker #5: Second , introduce new products to drive the power and performance of edge AI solutions . And third , establish an IP licensing variant for spot .

Speaker #5: Let's look at each one in more detail . First , we accelerating our expansion into high impact , high growth edge AI markets , including healthcare , industrial and intelligent spaces like smart homes and buildings .

Fumihide Esaka: First, we're accelerating our expansion into high-impact, high-growth edge AI markets, including healthcare, 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 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 roadmap 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.

Speaker #5: We have created multiple edge AI solutions that are purpose built for these markets . Notably , both Apollo 330 plus and Apollo 510 Lite are attracting additional interest .

Speaker #5: We are engaged with customers who are looking to enable more advanced AI and longer battery life across variety of applications , from smart rings to smart agricultural devices .

Speaker #5: 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 .

Speaker #5: Second , we are advancing our product roadmap to drive the power and performance of our high solutions . Our Apollo five family is unlocking a new generation of devices that performs advanced edge AI functions .

Speaker #5: 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 planned to launch new Apollo five based platform in 2027 , serving as another driver of our future revenue .

Fumihide Esaka: 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 plans 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 GPU, 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.

Speaker #5: Building on Apollo five . We expect our upcoming atomic platform will deliver a major leap forward in edge AI with NPU , 12 NM manufacturing and built in Dram and GPU .

Speaker #5: We see meaningful opportunity to enable even higher performance , high applications . Carmack is in active development and already drawing strong interest from several major high volume customers .

Speaker #5: 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 .

Speaker #5: We are also speeding customer adoption with tailored software solutions designed to lower technical barriers, shorten production time, and reduce power performance trade-offs.

Fumihide Esaka: 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's 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 smartwatches, 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. For sensors, AI-based compression helps customer make sense of huge amount of data.

Speaker #5: Our software team is moving quickly , delivering a steady cadence of new products alongside weekly updates that introduces new features and addresses , customer feedback .

Speaker #5: 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 enhanced speech clarity in real time .

Speaker #5: These capabilities extend across products , including smartwatches , wireless microphones , headphones and hearing aids . Similarly , customers are incorporating high voice recognition to enable instant , reliable voice control for wearables , smart devices and industrial tools , helping protect data privacy and extending battery life .

Speaker #5: 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 .

Fumihide Esaka: 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 or frequent battery replacement, yet still detect motion, classify objects, and identify potential threats. 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.

Speaker #5: These examples have only deepened our conviction that the new atomic SOC , with an NPU will be a catalyst for the next generation of AI devices .

Speaker #5: For example , next gen smart glasses will run multiple edge AI tasks from eye home tracking , gesture recognition , to real time object identification .

Speaker #5: Cameras will operate without the cloud connectivity or frequent battery replacement , yet still detect motion . Classify objects and identify potential threats . And future wearables will evolve into intelligent companions that understand context responsive follow up questions and provide personalized insight in real time .

Speaker #5: 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 .

Speaker #5: In support for these three priorities . We are investing purposefully in R&D and DNA with a focus on product innovation and enhanced sales and marketing capabilities .

Fumihide Esaka: In support for these three 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.

Speaker #5: 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 .

Speaker #5: With that , I will turn it over to Jeff to discuss the financials .

Speaker #6: Thank you . 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 .

Jeff Winzeler: Thank you, Fumi, good afternoon, everyone. Before discussing Q3 results, I want to take a moment to frame 2025 performance in the broader context of 2024's 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 Q3 results. We achieved non-GAAP gross profit of $8.1 million, an increase of 16.8% year-over-year.

Speaker #6: 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 .

Speaker #6: 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 .

Speaker #6: Our remaining China business reflects a small, deliberate presence in the market to support select OEM customers. Now turning to our third quarter results.

Speaker #6: 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 ten 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 .

Jeff Winzeler: 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 Q3 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.

Speaker #6: 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 .

Speaker #6: 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 .

Speaker #6: We continue to make strategic investments to support commercial expansion for our existing Apollo and next generation atomic 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 .

Jeff Winzeler: The breakdown of Q3 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. Q3 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.

Speaker #6: non-GAAP G&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 .

Speaker #6: 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 .

Speaker #6: 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 .

Speaker #6: Our strength in 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 .

Jeff Winzeler: Our strengthened cash position provides the flexibility to fund growth initiatives and support our strategic priorities. Now turning to our outlook. For Q4 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 non-cash accounting adjustment to reclassify certain Q4 intellectual property costs from capital expenditures to operating expenses. While we'll provide formal 2026 guidance on our Q4 call, I want to offer some perspective to help frame the expectations for the trajectory of our performance over the next several years.

Speaker #6: 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 .

Speaker #6: This guidance includes increased variable expenses associated with higher revenues and a non-cash accounting adjustment to reclassify certain Q4 intellectual property costs from capital expenditures to operating expenses .

Speaker #6: 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 .

Speaker #6: First , with the strategic repositioning largely complete , we've reshaped the business to drive higher margins while unlocking a broader set of growth opportunities .

Jeff Winzeler: 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.

Speaker #6: 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 .

Speaker #6: 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 .

Speaker #6: In parallel , we're concentrating significant architecture hardware and software engineering resources on developing the atomic family of products with multiple generations of Apollo contributing today , anatomic revenues expected to contribute meaningfully in 2028 .

Jeff Winzeler: 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 Humi before we open the call to Q&A.

Speaker #6: 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 .

Speaker #6: I'll now turn the call back over to whom ? Before we open the call to Q&A .

Speaker #5: That opportunity ahead for Ambiq is tremendous . We are not just participating in the AI revolution , but enabling it with spots , power , efficiency .

Fumihide Esaka: The opportunity ahead for Ambiq is tremendous. We are not just participating in the AI revolution, but enabling it. With SPOT's 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.

Speaker #5: 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 .

Speaker #5: Operator . Please go ahead .

Speaker #3: Thank you . And once again , if you have a question today , please press Star One on your telephone keypad . We'll go first to Tim , Arcuri from UBS .

Operator: Thank you. Once again, if you have a question today, please press star one on your telephone keypad. We'll go first to Tim Arcuri from UBS.

Speaker #7: Thanks a lot . Jeff , can you talk ? I mean , guidance was a lot better than what you thought . So can you talk about what drove that ?

Tim Arcuri: Thanks a lot. Jeff, can you talk, I mean, guidance was a lot better than what you thought. 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 kinda like gross margin has to be down. Can you speak to why? Is that just mix related? Thanks.

Timothy Arcuri: Thanks a lot. Jeff, can you talk, I mean, guidance was a lot better than what you thought. 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 kinda like gross margin has to be down. Can you speak to why? Is that just mix related? Thanks.

Speaker #7: Is that this new customer ramping and and then can you also give us a sense , maybe a little clarity on the opex gross margin split to get to the guidance ?

Speaker #7: It seems kind of like gross margin has to be down . And can you speak to why is that just mix related things .

Speaker #6: Yeah . So in terms of the top line growth , we see really strong demand from our existing customers . We're also seeing good revenue contribution from new customers as well .

Jeff Winzeler: In terms of the top line growth, we see really strong demand from our existing customers. We're also seeing good revenue contribution from new customers as well. 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, you know, the gross margins in our business for the first three quarters of this year have been basically mid to low 40%. 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.

Speaker #6: And that's really what's driving the top line of the of the business in Q4 . And represents a big increase over Q3 in terms of profitability .

Speaker #6: You know , the gross margins in our business for the first three quarters of of this year been basically mid to low 40% .

Speaker #6: And and that really is the model of our business for 2025 . It increases a point or two from quarter to quarter depending on product mix .

Speaker #6: But that's really the trajectory of gross margin today in terms of opex . You know , 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 out in front of us .

Jeff Winzeler: In terms of OpEx, you know, 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 out in front of us. This is where we expect to see increases in spending in our OpEx, is 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.

Speaker #6: And so this is where we expect to see increases in spending in our opex is 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 .

Speaker #6: We will land somewhere in that range .

Tim Arcuri: 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. Can you just maybe break it out a little bit for us?

Speaker #7: Great . Jeff , I guess can you just give us an opex number for the guidance ? I mean , you're talking about spending quite a bit more .

Timothy Arcuri: 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. Can you just maybe break it out a little bit for us?

Speaker #7: So can you just maybe break it out a little bit for us ?

Jeff Winzeler: 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 re-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.

Speaker #6: Again , it's it's really increases in both R&D and a we talked a little bit about an accounting classification change that will drive approximately 1 million to 1 million and a half additional spending in our model .

Speaker #6: This is not a cash impact . And it doesn't change our 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 .

Speaker #6: 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 .

Speaker #7: Okay . Thank you .

Tim Arcuri: Okay, thank you.

Timothy Arcuri: Okay, thank you.

Speaker #3: Up next , we'll hear from up . Next , we'll hear from Liam Farr from Bank of America .

Operator: Up next, we'll hear.

Jeff Winzeler: Thank you, Jeff.

Timothy Arcuri: Thank you, Jeff.

Operator: Up next, we'll hear from Liam Farr from Bank of America.

Speaker #8: Hi . Yes , this is Liam . On behalf of Vivek . Arya . Thank you so much for taking our questions . Just in terms of , you know , three Q and four Q , where are you seeing the most strength ?

Liam Farr: Hi, yes, this is Liam on behalf of Vivek Arya. Thank you so much for taking our questions. Just on terms of, you know, Q3 and Q4, where are you seeing the most strength? Is it all unit driven, kinda just what you know, said in response to Tim? Or is it, you know, some ASP benefit with more customers tending towards the, you know, Apollo5 and getting out of the lower ASP products?

Speaker #8: Is it all unit driven ? Kind of just what you , you know , said in response to Tim ? Or is it , you know , some ASP benefit with more customers tending towards the , you know , Apollo five and getting out of the the lower ASP products .

Speaker #9: So , Leanne , like Jeff said , existing customer are seeing very strong demand and also new customers are also seeing higher demand than they expected .

Jeff Winzeler: Liam, like Jeff said, existing customer are seeing very strong demand, and also new customers are also seeing higher demand than they expected. One important factor here is that Apollo5 adoption is really driving our success in Q4 as well. 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 color to that. Aaron.

Speaker #5: And one important factor here is that Apollo five adoption is really driving our success in Q4 as well . So all combination of new customer mix .

Speaker #5: And also new product mix is really contributing to our growth . Great outlook for the Q4 . Maybe . Aaron can add a little bit color to that .

Speaker #5: So Aaron .

Speaker #10: Yeah , so let me talk about two things . One is specifically to your question 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 Apollo five , which naturally has a higher ASP .

Tim Arcuri: Yeah. Let me talk about two things. One is specifically to your question, 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 a health device. They're able to use FSA and HSA funds, and this is really a new demand stream for them. That's the trend that's driving this.

Aaron Grassian: Yeah. Let me talk about two things. One is specifically to your question, 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 a health device. They're able to use FSA and HSA funds, and this is really a new demand stream for them. That's the trend that's driving this.

Speaker #10: 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 .

Speaker #10: This is exactly what we've been talking about in the wearable space . They're starting to with edge AI . Be able to to have more clinically relevant data becoming more like health device .

Speaker #10: 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 .

Speaker #8: Got it . Thank you . And then in terms of your customer pipeline going into into 26 , provide some commentary in terms of , you know , maybe the trajectory of revenues in 26 will be kind of this continuing acceleration , more front , half back , half .

Liam Farr: Got it. Thank you. Then in terms of your customer pipeline going into 2026, can you also provide some commentary in terms of, you know, maybe the trajectory of revenues in 2026 will be kind of this continued acceleration, more front half, back half? Are you seeing, you know, all these customers kind of trend more towards your premium AI features? Is there still demand for the kind of little bit more legacy Apollo products as well?

Speaker #8: And are you seeing you know , 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 ?

Speaker #5: Well , let me tell you , I think significant portion and majority of our customers already taking advantage of edge AI capability , and we can tell you that type one is growing both for our legacy wearable customers as well as new customers .

Jeff Winzeler: Well, let me tell you, I think significant portion and majority of our customers already taking advantage of our edge AI capability. We can tell you that pipeline is growing both for our legacy wearable customers as well as new customers.

Speaker #5: So what we're cautiously optimistic that we will see very healthy pipeline to get to the 2026 . Scott , do you have anything more to add ?

Fumihide Esaka: 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?

Scott Hanson: Yeah. I mean, what I would add is if we use Apollo5 as a proxy for edge AI interest, you know, that's the thing that is really gonna be driving revenue growth next year. We're also gonna see the front edge of the newly announced 330 Plus and 510 Lite and 510B products that we announced earlier this year. Those are all similarly proxies for edge AI. What I will say is this: the thing that really gets me personally excited is two things. I talk, one, to our customers, I talk, two, to our sales team, they have so many little anecdotes about new use cases that are coming up for AI. I'm really overwhelmed by all of these.

Speaker #11: Yeah , what I would add is if we use Apollo five as a proxy for edge AI interest , you know , that's the thing that is really going to be driving revenue growth next year .

Speaker #11: 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 .

Speaker #11: So those are all similarly proxies for edge AI . What I will say is this the thing that really gets me excited is two things I talk .

Speaker #11: One , to our customers and I talk to to our sales team , and they have so many little anecdotes about new use cases that are coming up for for AI .

Speaker #11: 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 .

Scott Hanson: 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 gonna be at the center of that, 330 Plus, 510 Lite. I'm excited to see what happens next year.

Speaker #11: I think Apollo five is going to be at the center of that . 330 plus 510 light . So I'm excited to see what happens next year .

Speaker #8: Thank you .

Operator: Thank you.

Liam Farr: Thank you.

Speaker #3: The next question is from Tory Svanberg from Stifel .

Operator: The next question is from Tore Svanberg from Stifel.

Speaker #12: Yes . Thank you . And congrats for the progress . Here on on Apollo five . Could you give us a sense for how much of the mix that's going to be in Q4 25 ?

Tore Svanberg: Yes, thank you, and congrats for the progress here. On Apollo5, could you give us a sense for how much of the mix that's gonna be in Q4 2025? I mean, I'm sure it's gonna be a little bit smaller. The reason I'm asking the question is I just wanna try and understand, you know, how that incrementally drives the growth throughout 2026, 'cause I do assume we're still early days for Apollo5.

Speaker #12: I mean , I'm , I'm sure it's going to be a little bit smaller . And the reason why I'm asking the question is I just want to try to understand , you know , how that incrementally drives the growth throughout 2026 ?

Speaker #12: Because I do assume we're still early days for Apollo five .

Speaker #5: Sorry . Great question . And yes , we are seeing very , very strong outlook for the Apollo five . Again , 2025 is just the beginning of the journey with Apollo five .

Fumihide Esaka: Tore, great question. Yes, we are seeing very strong outlook for the Apollo5. Again, 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?

Speaker #5: I cannot talk really specific about the percentage , but yes , we are at the very beginning of a journey with Apollo five , enabling all the edge AI customers .

Speaker #5: Aaron , do you have anything to add to that ?

Scott Hanson: Yeah, that's exactly right. 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. Let's take industrial, for example. We have a customer that's launching that's gonna 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. 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.

Speaker #10: Yeah , that's exactly right . And it's not just in the core customers that that we've been talking about . Although we have lots of new designs there .

Speaker #10: It's in various new applications . So let's take industrial for example . We have a customer that's launching that's going to be a nice pair of revenue next year .

Speaker #10: And they're doing predictive maintenance with Apollo five . In fact , they're the first user of industrial SKU . And again , when we talk about personal devices , it's not just wearables .

Speaker #10: We've got some really cool ramps happening with Apollo five . Ten be one that we just announced . And that's an AR glasses .

Speaker #12: Very good . And that's my follow up . And I don't know if this is a question for me or Scott , but could you give us an update on atomic as far as you know , development timelines , you know , when when do you expect to to to sample products based on atomic ?

Tore Svanberg: Very good. As my follow-up, and I don't know if this is a question for Humi or Scott, but could you give us an update on Atomiq as far as, you know, development timelines? You know, when do you expect to sample products based on Atomiq?

Speaker #5: We are making a progress . But I'm going to let Scott give you a little bit more color to it .

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

Speaker #11: Yeah . So what I'll say is we are we are deep into development on atomic . The majority of our engineering team is focused on that .

Scott Hanson: Yeah. What I'll say is we are deep into development on Atomiq. The majority of our engineering team is focused on that now. I would say the specification is preliminarily frozen. I say preliminary because we have a number of customers that help guide us and, you know, we're basically cross-checking with them. 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. You know, I guess summaries that we're deep in development.

Speaker #11: Now , I would say that the specification is is preliminarily frozen . And I say preliminary because we have a number of customers that that help guide us and , you know , we're basically cross checking with them .

Speaker #11: 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 up or develop proxy AI models or pull models from places like hugging face to quickly prototype up their use cases .

Speaker #11: I'm personally really excited about the energy estimates that we're pulling from from that work , so , you know , I guess summaries that we're deep in development , we're not ready to comment on specific sampling timeline or production timeline , but I'll say that I'm pleased at how things are going .

Scott Hanson: We're not ready to comment on specific sampling timeline or production timeline, but I'll say that I'm pleased at how things are going. 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. Our engineering headcount is up by a double-digit percent since going public, and we're happy with the quality of team that we're recruiting to this effort.

Speaker #11: And then maybe one final quick note is that , of course , the primary use of objective of going public was to raise money to support team growth .

Speaker #11: And we've been working on that . So our engineering headcount is up by double digit percent since since going public . And we're happy with the quality of team that we're recruiting to this effort .

Speaker #12: Sounds good . Congrats again .

Tore Svanberg: Sounds good. Congrats again.

Speaker #11: Thank you .

Scott Hanson: Thank you.

Speaker #3: Just a reminder it is star one . If you have a question we'll go to Quinn Bolton from Needham .

Operator: Just a reminder, it is star one if you have a question. We'll go to Quinn Bolton from Needham.

Speaker #13: Hey guys . Let me also offer congratulations . I guess I just wanted to come back to the fourth quarter guidance and try to get some , some sense on gross margin .

Quinn Bolton: Hey, guys. Let me also offer congratulations. I guess I just wanted to come back to the Q4 guidance and try to get some sense on gross margin. It sounds like the Apollo5 mix is going to be up nicely quarter-over-quarter, which I would think, all things equal, would probably drive a richer mix and a better margin in Q4. You also are looking for revenue growth in the quarter, which I would think would help margin. With those tailwinds, should we assume that the gross margin may be flat to up from Q3? If it's down, why what would the takes be?

Speaker #13: It sounds like the Apollo five mix is going to be up nicely quarter on quarter , which I would think all things equal would would probably drive a richer mix and a better margin in the fourth quarter .

Speaker #13: You are 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 ?

Speaker #13: And if it's down , what would the what would the takes be ?

Fumihide Esaka: We can have Jeff, give you a little bit color on this one.

Speaker #5: We can have a Jeff give you a bit of color on this one .

Speaker #6: Yeah . Quinn , you know what I would tell you is that the model for our business in 2025 has been , as I said , low to mid 40% range .

Jeff Winzeler: Yeah, Quinn. You know, 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 vary based on product mix. In thinking about Q4 growth, it is true that we're seeing upside on Atomiq and/or on Apollo5, and that typically would be a higher margin product for us. It doesn't account for all the growth. You know, if I was gonna 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.

Speaker #6: And that does get that does vary based on product mix . In thinking about the about Q4 growth . It is true that we're seeing upside on atomic and or on Apollo five , and that typically would be a higher margin product for us .

Speaker #6: But it doesn't account for all the growth . And so , you know , 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 , the point is , is the right right number to use .

Speaker #13: Got it . Okay . That's helpful . And then you know , I guess , you know , just looking at the fourth quarter , you're certainly bucking seasonality based on the , you know , demand strength from existing and new customers .

Quinn Bolton: Got it. Okay, that's helpful. I guess, you know, just looking at the Q4, 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?

Speaker #13: 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 Apollo five as it ramps ?

Speaker #13: Could that start to create a different demand pattern or seasonal pattern in 2026 ?

Jeff Winzeler: Yeah, from my perspective, Quinn, you know, in terms of the core business of personal wearables, you know, there is some seasonality to that business, and we know that from history. I think the phenomena 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. You know, as a result, in 2025, every quarter from a revenue perspective, given the guidance we gave for Q4, is stronger than the previous. That's a good trend, obviously. 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.

Speaker #6: From my perspective , Quinn , you know , in terms of the core business of personal wearables , you know , there is some seasonality that business and we we know that from history .

Speaker #6: I think the phenomena 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 .

Speaker #6: You know , as a result , in 2025 , every quarter , for a revenue perspective , given the guidance we gave for Q4 , is stronger than the previous .

Speaker #6: So that's a good trend . Obviously . And I think it it's kind of a testament to the fact that we're we're winning both with existing customers as well as attracting new customers .

Speaker #13: Got it . Just lastly , a quick clarification on the reclassification from CapEx to OpEx for some of the IP licenses you mentioned , it had about 1 million to 1 million and a half impact on the fourth quarter .

Quinn Bolton: Got it. Just, lastly, a quick clarification on the reclassification from CapEx to OpEx for some of the IP licenses. You'd mentioned it had about $1 million to $1.5 million impact on the Q4. 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 one-time effect on the Q4 rather than a step up by $1 million to $1.5 million every quarter going forward? Thank you.

Speaker #13: 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 one time effect on the fourth quarter rather than a step up by 1 million to 1 million and a half every quarter going forward .

Speaker #13: Thank you .

Speaker #6: Yeah , sure . So it does vary from IP to IP , and it really depends on how those contracts are written . So you know , we're looking at this on an IP to IP basis .

Jeff Winzeler: Yeah, sure. It does vary from IP to IP, and it really depends on how those contracts are written. You know, we're looking at this on an IP to IP basis. I can't give you a 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.

Speaker #6: 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 .

Speaker #6: 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 , that specific item .

Speaker #13: Perfect . Thank you .

Quinn Bolton: Perfect. Thank you.

Speaker #3: 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 .

Operator: 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.

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