Chipmaker Ambiq Micro’s stock tanks on disappointing post-IPO results – News

Artificial intelligence chipmaker Ambiq Micro Inc. today delivered its first quarterly earnings report since going public in July, but investors were unimpressed with its results and voted with their feet, sending its stock lower after-hours.

The company reported a second-quarter loss before certain costs such as stock compensation of 44 cents per share, in-line with Wall Street’s consensus estimate, while revenue for the period declined 11% from a year earlier, to $17.9 million, barely scraping past the $17.8 million expected. As a result, Ambiq’s net loss widened from $8.3 million in the year ago period to $8.5 million at the end of the previous quarter.

Ambiq’s stock had risen more than 5% during the regular trading session amid optimism that the chipmaker might spring a surprise with its results, but the numbers left many investors disappointed. Those gains were completely wiped out in minutes, and the stock was down almost 7% after-hours.

The Austin-based company had generated tons of enthusiasm two months earlier when it launched its initial public offering, selling 4 million shares at $24 apiece, raising $96 million in total from the sale. Its stock soared more than 60% on its first day of trading on the New York Stock Exchange.

The chipmaker caters to the growing demand for so-called “edge AI” chips, which enable small, low-powered devices such as smart watches, drones, and internet of things gadgets to run powerful generative AI models without sending data to the cloud to be processed.

Ambiq’s processors are ideal for on-device AI, as they’re based on a proprietary Subthreshold Power Optimized Technology or SPOT architecture that provides energy-efficiency that’s an order of magnitude greater than traditional chips. Ambiq says its chips use about five times less energy than legacy central processing units, making them ideal for low-power devices such as fitness trackers.

They’re also used in industrial AI applications, such as sensors for crop monitoring. Its biggest customer is Samsung Electronics Co. Ltd., which uses Ambiq’s silicon in its Galaxy Watch devices.

In a statement, Ambiq Chief Executive Fumihide Esaka (pictured) seemed to acknowledge that shareholders may have concerns about the company’s revenue decline, explaining that this was primarily the result of a decision to diversify its revenue base outside China, where the bulk of its customers are. He said that effort is paying off, with sales to Chinese customers accounting for just 11.5% of its revenue in the quarter, compared with 42% one year earlier.

Esaka provided some reasons for investors to be optimistic about this shift, noting that the company’s revenue increased 14% on a sequential basis, compared to the first quarter. “[This reflects] solid customer demand for our highly differentiated technology platform,” he said. “Ambiq’s ultra-low-power solutions have been incorporated into more than 280 million edge devices to date, and we are well-positioned to capitalize on the rapid growth of edge AI applications.”

Ambiq’s guidance was more reassuring, at least, with the company saying it’s targeting third-quarter revenue of between $17.5 million and $18 million, ahead of the Street’s forecast of $17.5 million. It’s also looking at a loss of between 28 and 35 cents, ahead of the Street’s call for a 40-cent-per-share loss.

Holger Mueller of Constellation Research Inc. said the results show that life can be tough for newly-gone public companies, as shareholders tend to place high expectations on them. However, he said the management deserves credit for anticipating a rough road ahead.

“Ambiq’s revenue was down quite a bit, but the executive leadership seemed to have anticipated that and responded by taking out $1.5 million in costs,” the analyst noted. “That helped it to meet expectations on earnings per share. Now the question is whether or not Ambiq can find a way to grow in the coming quarters, or not.”

Esaka seems to believe it can, telling investors the company is in a good place as it heads into the second half of the fiscal year. “Our well-received IPO provides us with the capital necessary to accelerate our strategic initiatives, which include broadening our customer base and penetrating new end markets and geographies in support of long-term profitable growth,” he said.

Photo: Ambiq