Operator: Questions are encouraged. They can be submitted at any time via the Q&A tab that is just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and will publish those responses where it is appropriate to do so on the Investor Meet Company platform. Before we begin, as usual, we will just like to submit the following poll, and if you could give that your kind attention, I am sure the company would be most grateful. I would now like to hand you over to the executive management team for their presentation. Ian, good morning, sir.
Ian Lankshear: Good morning. Thank you, Jake, for the introduction. Welcome, everyone. Thanks for joining us for EnSilica's financial year 2026 results for year ending 31 May 2026. As I said, I am Ian Lankshear, the CEO, and I am with Kristoff Rademan, our CFO. The 2026 results are really a record set of results, really showing the business model in action and its ability to scale. Just a normal disclaimer about forward-looking statements in the presentation. Please read that at your leisure. Just for anyone not familiar with the company, a quick introduction. EnSilica, we are a fabless semiconductor company. We are experts in designing and supplying mixed-signal chips for high-growth markets. We were founded in 2001 as a design service company and have over the 25 years, have built a fabless semiconductor company.
Ian Lankshear: In 2021 when we started, there was an average of 300 chips per car, and now there is over 3,000 chips per car. In that time as well, the complexity per chip has grown more than 6,000 times according to Moore's Law. We are focusing on, as I said, the space sector, but we also service adjacent markets that require high quality, high reliability chips such as automotive and industrial. We do two types of chips. One is an ASIC, which is an application-specific integrated circuit. That is a chip that is funded largely by the customer and is sold to one customer. That goes through the design cycle and then we have the long-term reoccurring supply revenue. The second type of chip is called an ASSP, which is application-specific standard parts. These are our own chips that are designed to address a particular application.
Ian Lankshear: Ours are focused on particularly the user terminal space sector. These are sold to multiple customers and funded by a combination of lead customer funding, our own funding, as well as managing to leverage the UK Space Agency and the European Space Agency funding. We balance between the two models with ASICs funding innovation and ASSPs, because they are sold for multiple customers and have high IP contents. They are much more scalable with higher gross margins. In this business model, IP is very important, and as we go through designing the chips, we generate reusable IP, making every program faster and reducing the development risk. If we look at our 2026 results and our key achievements, they really do demonstrate the business model in action and it working. We had record results.
Ian Lankshear: That was a step increase in revenue, leading to cash generation and really pleasingly excellent sales conversion and pipeline replenishment. The business model is showing strong visibility of future revenue and profitability. We have five chips now in long-term supply and 14 more queuing behind them, and we will go through some of those in more detail later. Very importantly, we raised GBP 25 million of new capital over two oversubscribed fundraisers, and a big thank you to all of our new and existing shareholders that supported us in those very successful fundraising. Those fundraisers were very much focused on growth, and that was growth both in the space sector, improving our EU footprint, as people may have seen through the announcement of our Milan office, and allowing us also to scale the supply revenue as the chips move through from design into supply and require that working capital.
Ian Lankshear: Space is now a major tailwind for us. We have concentrated IP in this area. We are heavily engaged with most of the European and US space operators, so that is a key market for us and you will see us very much leading with Space now. These results have shown that we have a repeatable model here. Every program we have, when it reaches production, it adds chips of volume supply, improves our margins and our operational leverage without proportionally increasing in costs. I will hand over to Kristoff just to go through the finances.
Kristoff Rademan: Thanks, Ian. Just talking through our financial momentum, we are obviously very pleased to report our results for financial year 2026. With revenues of GBP 27.8 million, they were up 53% versus the prior year, which was a great result for us. This flowed through to EBITDA of GBP 5.9 million, up GBP 5.9 million from the prior year. Another great result, and shows great progress versus financial year 2025. Cash of GBP 7.6 million, up 280%, and that is before the July placing of GBP 14.9 million, which was oversubscribed. Then we come to the forward-looking indicators, which are of real strategic importance to us. GBP 375 million of lifetime supply visibility. That is 50% up on the prior year, and that is due to the contracts that we won during the last six months. Also looking at our pipeline, GBP 600 million.
Kristoff Rademan: That is after transferring GBP 125 million into the lifetime supply, and this just shows that our opportunities are increasing as we become more established as a European player of note. As I mentioned before to other investors, we do not expect to win all of that GBP 600 million, only about 25% to 33% over the next 12 to 18 months. The main point is the opportunities are increasing, and we are looking to take advantage of more of those as we grow. Thank you. Next. Just looking at the revenue split, chip supply revenues of GBP 6.7 million, up GBP 1 million on the prior year. This was a little bit disappointing for us as we had an issue with our UK automotive customer. They had a cybersecurity issue which impacted volumes in financial year 2026.
Kristoff Rademan: They are now back up and running, and we are looking for volumes to go back to the pre-cybersecurity issue levels, and then with modest growth in 2027. Also, our industrial chip, which started in financial year 2024, is continuing to scale up with volumes 15% ahead of the forecast, so really doing well. For that reason, we expect growth of around 30% in financial year 2027. We also expect first orders from another industrial chip, our edge AI chip, and also the German automotive customers expected to go into supply in the second half of the year. So, good growth expected in financial year 2027, and then further growth in financial year 2028 as these chips go into volume supply, and we should start seeing 12 months of supply from them as they scale up.
Kristoff Rademan: Financial year 2028 is expected to be even bigger than 2027 in terms of supply growth. Moving on to the NRE, GBP 15 million versus GBP 5.9 million, a very large increase. 2025 wasn't a particularly good year for us in terms of NRE, but we've bounced back really well in 2026, and in 2027, we expect similar levels, maybe with a 10% growth on that. Some growth, but not a huge growth. This is built based on the four to five new contracts that we expect to win every year. We keep that treadmill going, and we see ultimately the real growth in the supply as these chips that we're developing go into supply.
Kristoff Rademan: Consultancy revenues, whilst a key area for the company, the employees of the business are being pulled into the NRE and development contracts, which means that the focus is not totally on the consultancy. We expect that to be stable, but really the growth will come from the NRE and ultimately the supply revenues. Thank you. Looking at the income statement. We spoke about the revenues. Gross profits have gone down from 40% to 35%. That is because we are investing heavily in our ASSPs, as we said we would as part of the fund raise, and effectively, the development costs relating to that go into cost of sales, whilst the income from that is sitting in both revenues from our European satellite operator customer and then also in other income as grant income from the UKSA.
Kristoff Rademan: If that grant income was included in revenues, then the gross profits would be at a similar level to what they were in financial year 2025. I guess the point we're trying to make is that we're not doing worse than we did in 2025. It's just that the income is sitting in two different lines rather than only in the revenue line. We also had a benefit from the R&D tax credit being higher than initially assessed, and that has flowed down into EBITDA GBP 5.9 million, which is significantly up from the prior year, and a very good result for us. We're also pleased that that has slowed down into an operating profit of GBP 2.9 million for the business. Thank you. Looking at the balance sheet, intangible assets have increased to GBP 27.3 million.
Kristoff Rademan: That is as a result of our continued co-investment in the development of ASIC and also our own IP and knowhow. That is underpinned by the GBP 375 million of lifetime supply that we spoke about on the previous slide. We do assessments of each one of the intangible assets every six months, where necessary, we will impair or write down the assets if we do not expect to recover the value. But as you will see, it is more than covered by the GBP 375 million, so that is looking very positive. Cash, we spoke about, and obviously that is before the benefit of the second GBP 15 million placing, which came in post year-end. Loans, the balance has come down as a result of repaying the loans.
Kristoff Rademan: We do not expect to repay the loans earlier than the repayment terms, mainly because we did the fundraise in order to fund our growth rather than to repay our financing. Our focus will be on growing the business, investing in the space and Satcom ASSP in order to really bring forward our revenue targets for the short to medium term. Thank you. Looking at the cash flow. A very successful year for us with cash consumption of GBP 1.4 million, down from GBP 5.3 million. That was as a result of moving forward the development contracts, getting the upfront and milestone payments, and then moving those forward. Also, the R&D tax credit, which increased slightly. We expect a larger increase in financial year '27 from the FY26 claim, so that should be positive.
Kristoff Rademan: Intangibles and CapEx investment slightly higher than the prior year, but not significantly so. What I would say is that for financial year '27, there will be an increase in cash consumption. This is in line with our stated intent as part of the fundraise that we intend to invest in our ASSP in order to generate larger future revenues. In '27, we see cash consumption go up alongside a bigger investment in intangibles and CapEx investment. In '28, that decreases again, mainly due to the increase in supply revenues that we expect in that year.
Kristoff Rademan: Towards the end of the year, we expect to go cash flow positive on an operational basis, on a monthly basis. Financial year '29, we expect to go full year cash flow positive and on a free cash flow basis. That is mainly because of these chips that we are developing now that are going into supply and will be fully into supply in those years, and we should see a significant increase in the level of supply revenues from where we are today. Thank you.
Ian Lankshear: Thanks, Kristoffe. I will walk you through the strategy and operational review. Just to remind the people what a fabless semiconductor company is, I talked about it earlier. A fabless company is, as it sounds, a company that does not have a wafer foundry. It leverages wafer foundries such as the largest one, TSMC and GlobalFoundries. EnSilica is in a position where we have direct relationships with those major foundries.
Ian Lankshear: It uses a capital light model. We do not have fabs and the other parts of the supply chain is outsourced assembly and test houses that would take the wafers, they would dice them up, package them, and test them under our operational team management. It is capital light. It is a fast time to market. We are able to leverage the latest technology, proven technologies, and allows us to really focus on the IP and the innovation and the customer requirements.
Ian Lankshear: Okay, this is a relatively new slide, so people may not have seen it, and it is really to demonstrate the development cycle we are going through and how much it is very much compounding. In the ASIC model, as I mentioned, that is largely funded the NRE by the customer. We go through the design, and then we reach 15 milestone of the tape-out of the device where we send the masking information off to the foundry to fabricate the masks and then the wafers. Then we get the chip back and we go through the validation of that. Then it goes into volume supply, so we get the long-term supply revenue. That is often 7 to 15 years in the markets that we are addressing.
Ian Lankshear: The other products of the development is we get reusable IP and know-how that goes back into our toolbox, and we can reuse that from chip to chip. It is like a snowball effect. Every time we are going round this, we are generating IP, the next one becomes easier. We are able to increase our gross margins as well. On the ASSP, that is a similar cycle except for the development costs are funded by EnSilica. We bring in lead customers early to support that as well as other fundings such as European Space Agency and UK Space Agency funding. We go through the same cycle of developing the chip, taking it out, validation, and then that chip is sold to multiple customers, meaning it is much more scalable in terms of larger number of chips can be sold, higher margin.
Ian Lankshear: The other advantage is once that chip is in production, any new adopter of that chip, we can get an uptick in revenue relatively quickly. When they take the chip, they evaluate it, put it in their product. We do not have to go through that design cycle as we have with the ASICs. Also out of this we get IP. It is often higher value IP in terms of platform level IP as well as patents that go back into that toolbox that we can use either in the ASIC model or the ASSP model.
Ian Lankshear: I mean, very much is a compounding cycle we have where when we started off in this business model in 2016, we virtually had an empty toolbox there of IP. Now we have strong IP, we have customer references and we can demonstrate that we are a reliable designer and supplier of chips at scale. This portfolio here really does demonstrate the business model in action. We have five chips now in supply generating that reoccurring revenue we talked about with leading with the automotive one, and then we have a very strong industrial one in number 4 there. They are in supply and still ramping up strongly. Then we have another 14 chips in the design phase. This year our design team and operations team have executed fantastically. in 2026, we had two tape-outs.
Ian Lankshear: So far in 2027, we have had three and we have another two scheduled. Those chips are moving forward into the supply area now. Just talking about some of the color codes here, where you see the gray colors on the squares where you have year 1 to 10. There where we have forecasts from the customer and we have revenue forecast for each of the chips and the likely lifetime of the chip. If you take that and reflect that forward on the revenue illustration on the right, you see the dark blue which is the growth in the revenue that we are seeing from the chips with confirmed forecast. Although it is colored dark blue, it is not blue sky. These are real customer forecasts and that is real growth that we are seeing there in the supply revenue.
Ian Lankshear: Those orange ones that you see which are largely our space ones are our ASSPs and you will see there that 8 and 15 are the ASSPs where we have confirmed design-in slots with our customers. Just turning to the graph on the right, just explaining the other elements. What you see here at the bottom in the orange is the NRE revenue, and that is driven by the four to five ASICs that are feeding the pipeline. The revenue from those ASICs is not shown in the supply growth there. They are the new design wins that you should be looking out for next year where we are targeting four to five ASIC design wins. We talked about the consultancy revenue, and there is no plan to grow that, but we have a steady layer of consultancy revenue.
Ian Lankshear: What you see here on the light blue side at the top is a conservative estimate for the growth in the ASSPs and their space ASSPs for user terminals and we see them really coming online in beyond 2030 and I will cover the space sector in more detail. You will be able to see from that there is loads of upside potential on those. Now if we turn to the space opportunity, it is very much a multi-decade opportunity you can see there. There is huge growth. One thing you can say about Elon Musk is that one positive thing is he has really proven that space-based communication works, and it can be delivered at scale to a huge subscriber base. He has over 11 million subscribers now, and really shown that resilient connectivity is required.
Ian Lankshear: That is why there are lots of sovereign and other constellations coming online to deliver similar services. They are enabled by falling launch costs. These mega constellations require lots of satellites. It is important that they have got the launch facility. It is not only SpaceX there, you have got Blue Origin, you have got Rocket Lab. There are a number of alternative services there for launching the satellites. There is also an exploding demand for bandwidth as data needs to go back to the cloud for processing, and generally the requirement for high bandwidth, ubiquitous connectivity. This is all driven by strong government and private investment. You saw earlier last week that SpaceX announced a $40 billion fundraise and a lot of the other satellite constellations are raising billions. It typically takes $5 billion to $15 billion to put up a constellation.
Ian Lankshear: As a chip company, we always look for volumes because once we ship the volumes, it keeps the foundries happy. We really see there the user terminal area, which is the piece of equipment, consider it like a set-top box, which is used to connect to the satellite and give you the connectivity to the constellation. That is where our IP is concentrated, and we are focusing our efforts in developing a family of ASSPs, a full chip set, and I will talk through that in more detail. As I said, you should be looking out over the next 18 months for us announcing more ASSP design-in wins with major constellations. As well as that user terminal chip area, we are also developing chips that go into the satellite payload. The satellite itself carries a payload, it is called a communication payload.
Ian Lankshear: Within that payload, there is a very complex chip called a beamformer. We are experts for that beamformer. We announced that back in 2020, we were developing ASSP SpaceMobile payload chip. These are very high-value chips that form beams, so you can change the coverage profile of the satellite. For instance, as you are going across the ocean, you do not really need to give coverage for an empty ocean.
Ian Lankshear: You may provide a beam on a liner or areas that have poor coverage. As I said, this is a complex chip, very high value, and we have got world-class expertise on that. These ASSPs, we have four of them now in silicon form, which are being evaluated by different customers. We are engaged with three major operators. We announced a GBP 50 million design-in of one of our user terminal ASSPs with a major European satellite operator.
Ian Lankshear: We have been funding this both from lead customer funding and state agency funding. We have had over $30 million of funding to support our ASSP development in this area. If we just zoom in a little bit more about user terminals and user terminal ASSPs. On the left and right here, you can see some typical user terminals. There is a high-end one on the left from one of our German customers, Diehl, which is used for enterprise-type applications. The one on the right is a mobile terminal. The great thing about these, particularly for a semiconductor company, is they contain many hundreds to thousands of chips. They include RF millimeter wave chips. They include a beamformer chip and also a modem chip.
Ian Lankshear: We are one of the only company that is developing a full end-to-end chipset with reference designs to enable low-cost, highly integrated user terminals, which are rich in differentiated features. This allows our customers to have a fast time to revenue, enable them to have low-cost user terminals, so they can sign up the user base, which is very important in terms of getting the satellite terminal revenues up. It is worth saying at the moment, this is dominated by Starlink and the user terminal market for semiconductors is around GBP 650 million. You have also got Amazon, which is rolling out. They have an initial constellation there with the rolling out some user bases, and Eutelsat who now own OneWeb have a LEO constellation.
Ian Lankshear: As we move through, there is deployment and testing going on for additional constellations such as Viasat and Blue Origin, who is known for their rockets, have one called TeraWave. Telesat is a Canadian constellation. They are rolling out services and be signing up for users. Then really 2030 is when it happens, where that market grows to over GBP 3 billion, where you have got IRISĀ², which is an EU sovereign constellation, and the likes of SES, as well as enterprise and defense and sovereign constellations. For example, the Chinese car manufacturer, Geely, is putting up their own constellation. Really, this is opening up the market of having user terminals embedded in cars similar to eCalls and gives us an even bigger automotive TAM with something like 75 to 80 million cars still being in production. A great market.
Ian Lankshear: We have got differentiated IPs and are developing a highly integrated chipset to enable those satellite operators which are not vertically integrated to provide state-of-the-art user terminals to rival those of Starlink. If we talk about adjacent markets and automotive and industrial, it is a key market. It is where we cut our teeth. It is all about high reliability, long life, mixed-signal chips. We are applying our knowhow and ability to deliver at scale into that market, into the new space area. We are also converting very good automotive and industrial design wins. As people are aware, we have a GBP 40 million design win with a UK OEM, where we have shipped over 10 million chips into that area now.
Ian Lankshear: We recently announced a GBP 75 million design win with a German tier 1, and there are other very strong design wins where we have, for instance, Siemens as a customer who is one of the leading industrial OEMs. A great market that produces long-term reoccurring revenue, almost like an annuity scheme. Still a good market, still a growth, and I talked about the number of chips per vehicle and per production line increasing massively. If we just turn to photonics, Kristoff really likes this market, and I will let him describe the opportunity we have here.
Kristoff Rademan: Thanks, Ian. Photonics, as a lot of you might know, make use of light instead of electrons, which deliver high speed, lower power, and less heat than conventional chips. A huge opportunity there. EnSilica specializes in photonics controllers, and these are the chips which control the photonics chips and the photonics rather than being photonics chips themselves. We announced a contract in 2025 with Oriole Networks, and that chip is progressing very well. It is for a photonics controller. Oriole Networks recently announced a tie-up with AMD, and that gives us a lot of hope that their product will be even more successful than we expected it to be, and that they will go from strength to strength. We are also seeing interest from other photonics companies and also quantum computing companies for controllers in that area.
Kristoff Rademan: These are quite similar and make use of the same engineers to develop those controllers. We would hope that in the next 12 months, we will be able to sign up further customers in this area. We see this as a high-growth area and could turn into a mega trend in future. We are looking to develop this area and grow in this area. Although our main focus, as Ian highlighted, is really in the satellite and communications area where most of our development and investment will take place. But we will do some selective investment in developing our photonics. Thank you.
Ian Lankshear: Okay. Thanks, Kristoff. Just to point out, this is an area because of the diversity of the approach to photonics. This is an ASIC area rather than an ASSP area, but very exciting. These will make a big difference to the AI hyperscaler data centers, reducing the latency between the multiple processes they have, making them much more efficient and reducing the power. Another area which really is used across all of our markets is particularly communications, industrial, automotive, is that of safety and cybersecurity.
Ian Lankshear: A change in legislation, the UK, EU Cyber Resilience Act and equivalent ones in the US that really are increasing the baseline of security needed in semiconductor devices. InSilica, we have our own IP, where we have been developing both classical and post-quantum cryptography and security subsystems. These are now being deployed in our ASICs and ASSP devices. We are turning what is a regulatory requirement into a competitive advantage by leveraging that IP.
Kristoff Rademan: Just to summarize, space is a key growth area for us, and we see this as a mega trend. The user terminal market, where we have a lot of our IP, grew by five times by 2030, and we see this as a major tailwind for EnSilica. We are investing heavily in order to have our chips ready for when the European satellites go up so that they can go into those terminals and support our customers. We feel we are in a fantastic place to take advantage of this growing market. Pipeline, we continue to target four to five design and supply contract wins annually. Please look out for new design wins over the next few months as we execute on our stated strategy and business plan.
Kristoff Rademan: Momentum, as Ian mentioned, we have had two tape-outs in financial year '26, three in financial year '27, and a further two tape-outs expected to complete in the rest of the year. As explained, this is a good forward indicator that these chips will go into volume supply in the next 12 to 18 months post tape-out. Really shows that these chips have moved forward and are much closer to volume supply, and good progress seen. Margins. Our chips are moving into generating recurring supply.
Kristoff Rademan: That is driving up our EBITDA margins, as you will have seen from our results for financial year '26. We are really looking to grow to our target of a 30% EBITDA margin on our revenues. We would hope to be able to achieve that target in the short to medium term. Guidance. We are reconfirming our target revenue of GBP 32 to 34 million and EBITDA of GBP 5.5 to 6.5 million. Thank you very much.
Operator: Perfect, guys. If I may just jump back in there. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that is situated on the right-hand corner of your screen. Just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboards.
Operator: Guys, as you can see there, we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But Ian, Kristoff, at this point, if I may just hand over to you to address those where appropriate. If I pick up from you at the end, that would be great. Thank you.
Kristoff Rademan: Thank you very much. Running through the questions. Do you envisage a future contract for your photonics controller ASIC with either Oriole Networks or AMD? If so, knowing the lead-up time to a volume rollout, could this be this year? We already have a contract with Oriole Networks. We have no tie-up to AMD. It is Oriole that announced the tie-up with AMD. Unfortunately, we are not able to discuss the detail of that specific contract in terms of when the volume rollout will be.
Kristoff Rademan: Obviously, when it does go into production, we will notify the market of that, even if we are not able to specify the customer. Are you in discussions with any other companies regarding your photonic controller ASIC? I think as we explained before, ASICs are products that are for specific customers. Therefore, we are not able to sell it to another customer. We are speaking to other customers about doing ASIC photonics controllers for them and also potential quantum computing customers. We will obviously announce those, should we win those contracts. Could your photonic controller ASIC be used to switch qubits in quantum computers with minimum alterations to the blueprint?
Ian Lankshear: Okay. There are different types of qubits and the way they are excited changes. You have some that would use photonic methods, some would use RF methods. We have applicable technology to make controller chips for those types of qubits.
Kristoff Rademan: With AST SpaceMobile launches in full swing and FCC approval for the expansion from 48 to 204 satellites, when do you perceive you will get a revamped order for the next 198 payload ASICs, known as the AST5000 ASIC?
Ian Lankshear: Okay, fine. I think I want to first. We did an announcement back in 2020 about working with AST, but unfortunately, we can't comment on AST's launch profiles or potential orders.
Kristoff Rademan: Given the comments around the substantial growth opportunity for ASSPs, the intention to use part of the capital raised to bring ASSPs to market, and the expectation that ASSPs will be an important driver of your revenue beyond the GBP 100 million target, could you please give us a little more color on the commercial progression you expect to see? In particular, without providing formal revenue guidance, could you indicate roughly the outlined pathway from a new ASSP design win to commercial production, e.g., the typical time from design win to volume shipment, the approximate number of units a successful design could represent, and the sort of ASSP or revenue opportunity per design win?
Ian Lankshear: Okay. All right. A very detailed question. But I think we sort of demonstrated before with that previous slide on slide 14 about the growth of the ASSPs and the fact is that the growth will start in 2030, and that's really to do with when the satellites are up and they're building the subscriber base. That means they'll be ordering the user terminals. I talked about there's many chips that you have per user terminal and really a new constellation. As I mentioned, they're going to be between GBP 5 billion and GBP 15 billion to do a full-blown LEO or MEO constellation. They will have many tens of thousands to could be up to millions of subscribers, and each one of those would need a user terminal. We saw an announcement previously of designing of one of our chips, which was GBP 50 million.
Ian Lankshear: We see that such design-ins will be worth similar amounts, if not, they could be in the hundreds of millions. Really, as I said, that will all come when the launch starts and the service is online. Really, this is longer-term revenue out there. We will be getting some in terms of test terminals in 2029, but really it will be 2030 and beyond.
Kristoff Rademan: Satellite networks are increasingly exploring optical links between spacecraft and between satellites and ground infrastructure. As EnSilica identifies photonics as a strategic growth area and bearing in mind the investment made in the photonics controller program, do you see space-based optical communications as a potential future revenue stream?
Ian Lankshear: Very good observation there. Satellites are increasingly using optics to link the satellites together. That reduces the number of ground stations because they can have a fast link between them and they then beam the data down. Again, good observation is that the technology we are dealing in can be applied to those optical links. As well as being able to use our millimeter wave experience for those high frequency links, we can also apply that to the optical links and the chips that are used to control those links.
Kristoff Rademan: Of the chips that have reached or are expected to reach tape-out in financial year 2027, what is the typical elapsed time from tape-out to first customer revenue and then to volume production? It is normally around 12 months, but could even be as long as 18 months. This is because the chip tapes out and comes back to us. We assess it. It also goes to the customer. They have to assess and make sure it is fully built into their product, which takes some time. But normally there is push from both sides to get it in as quickly as possible. Could you please provide an update on the SIAE Microelettronica contract, given that SIAE entered extraordinary administration in Italy in May 2026.
Kristoff Rademan: In particular, has EnSilica had any further engagement with SIAE or the appointed administrator regarding the outstanding GBP 1.6 million provisioned in financial year 2025, the status of the EU IPCEI funding, and the potential resumption or transfer of the ASIC program to another party? How do you assess the prospects of recovering the outstanding debt and any future revenue from the contract, given the change in SIAE's financial and legal circumstances?
Ian Lankshear: We have fully provided for the debt. We have taken SIAE out of our forecasts. We do not, at this point, expect the program to restart in the short or medium term. We cannot really comment on how likely it is that we will recover the debt that we provided against. The bit to say is that we have moved on to other customer programs and we are not currently engaging on a regular basis with SIAE.
Kristoff Rademan: Okay. "I refer to your eSi-CRYSTALS three-in-one PQC accelerator in a single hardware block. Given that NIST is now actively encouraging migration to PQC, how significant do you believe that the architectural advantage of your implementation is versus competing PQC IP? Do you see potential for the eSi-CRYSTALS architecture to become broadly adopted IP implementation across multiple semiconductor designs? Are you seeking evidence of that in customer evaluations or licensing discussions?
Ian Lankshear: Okay, thanks. A very good observation there. The eSi-CRYSTALS basically takes the PQ algorithms, it says three-in-one, and has them integrated together so they can save silicon resources, save silicon area. We see that very differentiated in terms of allowing you to put PQC in your chip without massively increasing the cost of the chip or allowing you to target at more mature nodes. We are building that IP into a number of our own ASICs and ASSPs, and we consider that to be a real differentiator for us. We do offer it for licensing and we announced one license for the IP, and we have some evaluating it. But the prime purpose of the IP is to differentiate our products and use this internally.
Kristoff Rademan: With regard to the PQC IP CHERI and RISC-V capability, together with the GBP 5 million UK government-funded secure processor program, could you please explain how you expect this to translate into commercial revenues over the next three to five years? Do you see CHERI PQC as a differentiator that helps win larger ASIC contracts or as a potentially significant standalone IP product business? When do you expect the first meaningful revenues from it?
Ian Lankshear: Okay, thanks. Another very detailed question. This Innovate UK contract we did for GBP 5 million, we are actually developing a post-quantum cryptography, CHERI security subsystem, and then a microcontroller including that subsystem. So we are actually deploying that subsystem on a number of ASICs and ASSPs that we have in the pipeline. So really it has already been deployed, but not as a standard COTS part. Once we have the part which is fully funded by the Innovate UK contract, we can start seeing the traction we have with that as a standalone security device.
Kristoff Rademan: Now that the fully funded healthcare chip feasibility study announced in March this year has concluded, what further milestones would shareholders expect to see before EnSilica can assess the project's potential for further development or commercialization, insofar as these can be publicly disclosed?
Ian Lankshear: Okay. That study is now complete and we are discussing with the customer the next stage in terms of developing a full chip for their product. So look out for some news in the coming months should that customer move ahead with the full ASIC development.
Kristoff Rademan: What are the opportunities for EnSilica in the telecoms area? Does the news of SpaceX investing in US mobile spectrum potentially change the landscape at all? Thank you.
Ian Lankshear: Okay. In terms of where we are playing in the telecom sector, we have talked about space a lot, but there is obviously a combining terrestrial and non-terrestrial communications where we have talked about the millimeter wave expertise we have and also the optical side. There are a lot of opportunities for us in the general telecom side and there is very much a merging of standards between space and terrestrial. It is a good observation as well on the fact that these satellite operators are buying spectrum. There is SpaceX, but others have been buying spectrum as well. I think the conventional terrestrial operator probably needs to look out as these satellite operators will be starting to eat their lunch.
Kristoff Rademan: The pipeline figure of GBP 600 million is meaningless unless it is qualified and weighted. What is the qualified and weighted pipeline? We do qualify and weight it for internal purposes, but it does change very substantially over time. Essentially, as we mentioned, we expect to win between 25% and 33% of the pipeline, and that provides the best long-term average that we can assess in terms of providing guidance to the market.
Ian Lankshear: Okay. I will just add to that. It is a good forward-looking indicator. For the large opportunities, we do cap them, so they do not distort the pipeline. But we very much see that as an indicator that we drive to keep driving that up and monitoring our conversion rate against that pipeline. So I think it is a good KPI.
Kristoff Rademan: You referenced the post-year-end placing of GBP 15 million. How does that now leave your current cash position of the year-end cash of GBP 7 million? As mentioned, as part of the fund raise, we are looking to invest in our ASSPs and also in working capital as part of the increase in supply. Whilst we can't comment specifically on the cash balance, we would say that we are fully funded for our existing products up to the point that we get to operational cash flow positivity. We believe we have sufficient funding to get us to the point where the company becomes cash flow positive. Thank you. Are we going to be able to be profitable enough to have organic growth so as not to come back for another fund raise placing again? Which year would you consider a dividend?
Kristoff Rademan: I think I answered that as part of the previous question, that based on the current funding, we expect this to be able to take us to cash flow positivity. We have not, at this point, considered at which point we will be able to provide a dividend. But once we reach a significant free cash flow positivity, that is something that we will take into consideration. Okay. How do you measure your satellite beamformer performance against STMicroelectronics's beamformers, and how do you win such contracts?
Ian Lankshear: In terms of the, as I've mentioned, the actual beamformer is made up of a different type, different chips. You've got the RF chip, you've got the digital beamformer chip when you're forming hybrid arrays. In terms of the, there are a number of elements that you look at when comparing performance on them. Power is one of them. We consider we're competitive in terms of power and things like noise figure. We believe that we're able to produce something of equal performance for those satellite operators which aren't vertically integrated.
Kristoff Rademan: What competition do you see in the photonics space currently?
Ian Lankshear: In terms of we see a number of RFQs. We are not really sure who else is playing in this space. I think the real interesting bit is there is a lot of UK companies and European companies there who are focusing on the photonics and really looking for a strong partner to work on the photonics controllers.
Kristoff Rademan: In such fast-moving markets, how are you coping with staff training and retention? We have very low leaving rates. I think 5% or less, of which we are very pleased with. We also make sure that our engineers are involved in a variety of different projects and do interesting works, which we think helps a lot. We have a good size engineering base, and we have a good program of training and support as part of that, which we think helps very well in bringing engineers up to speed quickly and also providing support. I understand you would need to fund or find funding for ASSPs, but I thought you suggested GBP 6.5 million investment for customer ASICs. Can you explain this, please?
Kristoff Rademan: I think the fund raise that we did was to give us the funding in order to be able to do that increased investment in ASSPs, which we are currently investing in and will continue in financial year 2027 and also a portion of financial year 2028. We are funded for that currently. Then two, could a customer engage you for a chip development and then take the production elsewhere? No. If we engage them contractually, one of our requirements is that the customer must buy the chip from us. We do consultancy work, as we showed in our slides. But if we do consultancy, we would look for a higher price and a good margin if we are not going to get the future supply. But our strategic focus is on the NRE and supply, both in ASICs and in ASSPs.
Kristoff Rademan: Can you describe your terminal beamformer and how it compares with Anokiwave from Qorvo and Renesas? Where do you view demand and competitive differentiation in Ku band versus Ka band?
Ian Lankshear: Okay. In terms of our beamformer architecture, we have the full chipset. So, the RF, the digital beamformer, and the modem. We have a fully integrated solution where we are leveraging hybrid beamforming that allows us to do calibration, as well as support multiple beams and puts in smart features in there, such as interference mitigation, jamming mitigation. So, that hybrid beamforming option, which interfaces to our RFICs as well as other people's RFICs, is one of our key differentiators along with the modem chips that we are developing. So it is the level of integration and the smarts we are putting into the chipset itself.
Kristoff Rademan: I think if we do a last question. "Which part received the GBP 50 million award?" I am assuming that refers to the contract that we announced with the European satellite operator. So the contract was with the European satellite operator, and it relates to our ASSP modem, which is part-funded by the European satellite operator and part-funded by the UK Space Agency. Great.
Ian Lankshear: Yes. The answer to that was the modem chip in terms of that, which I said was part funding. So that was the modem ASSP.
Kristoff Rademan: Great.
Ian Lankshear: Okay. I think we are done with the questions.
Operator: Perfect, guys. If I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in from investors. Ian, perhaps before, really now, just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.
Ian Lankshear: Okay. Thank you very much. Thanks again for everyone for joining us and the interest in the company. As you would have seen, financial year 2026 was a record year for us. More importantly, it is really showing the business model and how we are able to scale it. We have had that increase of revenue profitability and the strong sales pipeline conversion and replacement. So, now we have built a platform for growth now over the next few years.
Operator: Perfect, Ian. That is great. Thank you both once again for updating investors this morning. Could I please ask investors not to close this session, as you will now be automatically redirected for the opportunity to provide your feedback. On behalf of the management team of EnSilica PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.
