Good afternoon, and welcome to the Ambiq Micro Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, September 4, 2025. I would now like to turn the call over to Ms. Charlene Wan. Charlene, please go ahead.

Good afternoon, and welcome to Ambiq's Second Quarter 2025 Earnings Conference Call. I'm Charlene Wan, Vice President of Corporate Marketing and Investor Relations at Ambiq. I'm joined today by Ambiq's CEO, Fumihide Esaka; and Ambiq's CFO, Jeff Winzeler. As part of today's call, we will review our quarterly financial performance and provide a summary of our outlook. Our earnings release and the accompanying financial levels are 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, the company will provide financial guidance, projections, comments and other forward-looking statements regarding future market development, the future financial performance of the company, new products or other matters. These statements are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC. Specifically, the final perspective related to our initial public offering and our most recent 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. Also, the company's press release and management statements during this conference call will include discussions of certain non-GAAP financial measures. These financial measures and related GAAP to non-GAAP reconciliations are provided in the company's press release and related current report on Form 8-K. For those of you unable to listen to the entire call at this time, a recording will be available via webcast in the Investor Relations section of the company's website. And now it's my pleasure to turn the call over to Ambiq's CEO, Fumihide Esaka. Fumi, please go ahead.

Thank you, Charlene. Good afternoon, and thank you to everyone for joining us on our first earnings call since our IPO on July 30. Ambiq has been on an incredible journey. The company was founded in 2010 to put intelligence everywhere using the world's most power-efficient chips. At this point, we have enabled more than 280 million devices in applications ranging from personal devices to medical and health care to the industrial edge to smart home and smart buildings. We are excited about enabling the next billion devices as AI move out of the cloud and on to the edge. For those of you new to Ambiq's story, I'd like to give you a quick overview of our business. Ambiq is a pioneer and leading provider of ultra-low power semiconductor solutions. Our mission is to enable intelligence and AI everywhere by delivering the lowest power semiconductor solutions. As many of you know, most of to date's AI computation including both training and inference happens in data centers, which are far away from the action. Moving AI inference to the edge is a great alternative because it offers lower latency, greater privacy, improved security and reduced costs. However, we haven't yet seen the full potential of edge AI because edge devices tends to be smaller and battery-powered. With that innovation, it's nearly impossible for those devices to run AI without quickly draining their batteries. Ambiq has solved this power problem with our SPOT platform. SPOT stands for Sub-threshold Power Optimized Technology. It significantly reduces total system power consumption and enables devices to run AI locally without sacrificing battery life. SPOT has been foundation for 5 generations of our flagship SoC family called Apollo. In addition to hardware, we also offer extensive software solutions to help our customers reduce their products and design cycle. More and more people are realizing potential of running AI at the edge as that's where the action takes place. If your smart watch is capable of running on device AI, you get a doctor or personal trainer on your wrist. Hearing aid with onboard AI models can filter out the noise in a restaurant and enhance the 1 voice you actually want to hear. And the factory machinery equipped with a wireless fault detector can identify failure before it happens and calls for help without bringing the factory line down. With our energy-efficient products and solutions, Ambiq is well positioned to drive and benefit from the edge AI revolution. In that, let me now turn the call over to Jeff Winzeler, our CFO, to discuss our second quarter results and third quarter outlook in more detail. And then I will talk more about our strategic priorities as we look ahead to the coming quarters and year.

Thank you, Fumi, and thanks, everyone, for joining us today. Before I review the financials, please note that I will focus my discussion on non-GAAP financial results and refer you to today's press release for a detailed reconciliation of GAAP to non-GAAP financial results. The non-GAAP adjustments relate to stock-based compensation, depreciation, amortization, warrant value and other charges. Revenue for the second quarter of 2025 was $17.9 million compared to $15.7 million in the first quarter and $20.3 million in the second quarter of 2024. The sequential increase in second quarter revenue was driven by increased customer demand and favorable product mix. The year-over-year decrease in net sales reflected the company's strategic decision to diversify revenue toward higher-value opportunities with customers outside of China. In the second quarter of 2025, net sales to end customers in Mainland China were 11.5% as compared to 42% in the second quarter of 2024. Non-GAAP gross profit for the second quarter of 2025 was $7.6 million or 42.7% of revenue compared to $7.4 million or 47.1% of revenue in the prior quarter and $6.7 million or 32.9% of revenue in the same quarter a year ago. The sequential and year-over-year increases in non-GAAP gross profit for the second quarter of 2025 were the result of a more favorable product end customer mix, as the company continued to execute on its strategic prioritization of geographies outside of China. Non-GAAP operating expenses in the second quarter of 2025 were $13.8 million compared to $13.1 million in the prior quarter and compared to $14.4 million in the second quarter of 2024. The breakdown of non-GAAP operating expenses for the second quarter of 2025 are as follows: Research and development expenses were $7.3 million compared to $7 million last quarter and $7.3 million in the same quarter a…

Thank you, Jeff. Since this is our first earnings call, I'd like to take a moment to outline our mission and strategic initiatives. Our goal is to drive long-term shareholder value through sustainable and profitable growth. After our successful IPO we intend to use the proceeds to support the execution of 3 key initiatives. Our first initiative is to expand into new markets and geographies with our existing products. This will fuel our revenue and margin growth. We have demonstrated a strong end customer adoption with market leaders. These top tier brands validate the value proposition of our Apollo products and have helped us acquire a growing number of new customers. We will be expanding our sales and support resources to enable these new customers. We are proud to share 1 great example of our recent new customer announcement. Whoop, a leader in health-oriented wearables recently chose Apollo for their newest fitness tracker product line. The new Whoop 5.0 and Whoop energy products give an incredible intelligent view of your health and even your blood pressure in a small band that lasts for more than 14 days on the battery. Ambiq's Apollo delivers 10x better battery efficiency allowed Whoop to utilize on-device AI to process biometric data intelligently. In addition to personal devices and wearables markets, we are pursuing new edge AI use cases such as AR/VR glasses, heart monitors, smart medical patches, oxygen condition monitors, smart alarms and locks and robotics. We are also sifting our geographic concentration. Historically, we had significant sale with end customer in Mainland China. As the demand for edge AI grows globally, we are prioritizing sales efforts towards other meaningful geographies. In 2023, 66% of our net sales were to the end customer in Mainland China. This fell to 50% in 2024. In the…

[Operator Instructions] Our first question comes from the line of Vivek Arya with Bank of America.

Welcome to the public markets. Fumi, for my first question, I'm curious how does Ambiq kind of define edge AI? And what percentage of your sales today would kind of fit that definition? And how do you see that mix evolving in any kind of ASP benefits as that mix evolves towards more edge AI?

Again, edge AI is growing in medical, industrial edge, personal devices, smart home and buildings, and we ourselves is really focusing on enabling this edge AI market. It is very hard to define. The percentage of AI use at our end customers, but most of our customers are already using intelligence. And that's where we add a lot of value. So we believe that more than half of the business is already using intelligence on their devices and we will continue to grow.

Okay. And for my follow-up, I think the IP licensing opportunity sounds very interesting. But you did mention that it might take a few years to fully develop. Is there anything that you can do -- so first of all, what kind of use cases and applications are asking you for that licensing and chiplet-type architecture? And then can you do anything to accelerate that development of being able to license SPOT technology?

Yes, Vivek, we believe that data center, automotive and mobile devices, those could take advantage of our SPOT technology. And as we are focusing on enhancing our R&D capability, we may be able to accelerate our development, our IP, with more resources and funding available. And we do have a dedicated team that is focusing on our SPOT licensing. And as previously discussed, they are right now focusing on 12-nanometer SPOT platform. And with proven that 12-nanometer development, we believe that we can accelerate our plan.

Our next question comes from the line of Tim Arcuri with UBS Financial.

Hello. This is Dino on for Tim. Welcome to the public markets. Could you talk about your progress on the non-wearable's opportunities as of now? You previously announced some design wins in medical and industrial. Can you just give us an update on your progress there?

Well, again, about 17% of our funnel is already towards medical, industrial edge, smart home and building, and we believe that more than 20% is already -- we're working with some of the customers to define Atomic edge AI in vision. So we're making great progress even since we talked last time.

Got it. And then I guess another question, just on your Q2 results, do you see any signs of pull-ins that impacted results?

I think we had a pretty good ramp from Q1 to Q2. And if you think about our business typically seasonally, you would expect Q2 to be higher than Q1 and growth throughout the year. I think the 1 thing that kind of impacted this year was the announcement or the possibility of tariffs. And with the uncertainty of that, we did see some upside demand from customers in Q2 that drove revenue slightly higher than what we had originally anticipated in our model. That's really the only pull-in activity that we saw in the quarter.

Then your next question comes from the line of Quinn Bolton with Needham & Company.

Fumi and Jeff, congratulations on the successful IPO. I guess I wanted to start with just looking at some of your end customers fitness tracker area, they seem to have pretty good results. Garmin, I think, reported a 41% year-on-year increase. And I guess I was wondering, can you give us a sense of just like the order trends you saw through the second quarter? Is your customer end market success leading to higher order rates? And then I guess a related question, how far in advance would you guys ship the Apollo processor ahead of when the end device might sell? Is that typically like a quarter lead time, but any sense on how far in advance you might ship ahead of your customers' end device sale would be helpful.

Typically, our customers do place an order about 16 weeks lead time, and we do see our end customer, like you mentioned, but we cannot be -- we cannot make a very -- comment about the specific customer, but we see that the healthy growth, and we're very optimistic that they will continue to grow.

I guess maybe just on the orders, are you seeing kind of with that 16-week lead time, is that order book sort of suggesting sort of a healthy second half? I think you guys had previously seen some uncertainty around tariffs that had led to perhaps some caution on the second half. Any update on the tariff impact as you look into the second half of the year?

Yes. I mean in terms of our guidance for Q3 revenue reflects the fact that we think there's a little bit of upside to what our financial model was, so that's a good thing. And we're cautiously optimistic. We also have seen the same news from the customers. I think in general, there's a macro feel that some of the tariff is not going to be as impactful as our end customers previously thought. So as I said, we're cautiously optimistic that the second half of the year will be better than what we had originally built into our plans.

Excellent. And then lastly, Jeff, any thoughts on gross margin as you look into the third quarter, I think you were around 43% in Q2. Would you expect gross margins to be relatively flat, up or down in the third quarter? Any directional comment would be helpful.

Yes. We've taken a big step up from previous years, obviously, with exit out of China and the focus on other markets. So the 43% that we announced in Q2, I think, is relatively indicative of where our gross margin is today. Now going forward, that will vary by a point or 2 depending on the product mix in any given quarter, manufacturing yields, et cetera. But in general, I think that's a pretty safe place in terms of where our business is today.

Our final question comes from the line of Tore Svanberg with Stifel.

Fumi, Jeff, welcome to the public market, and congrats on that Whoop win. So Fumi, you talked about the sort of first long-term strategic initiative. Clearly, you're starting to broaden the applications and markets that you are going into, especially on wearables. As we look at maybe in the next 4 months or so, which are some of the applications you expect to see revenue from? I know it's hard to kind of think out a few, but any color you could share with us that would be great.

Well, we're not going to see a revenue from a new application, and again, this coming quarter, but definitely, some of the AR glasses are taking a first would -- working with some of the AR glass customers that definitely will be in the market very near term. And also, worker safety monitors and machine health monitor, those are already in the market, and we continue to -- we believe that to grow that market segment. So we believe that our application is growing really fast.

Very good. That's exactly what I was looking for. And then as my follow-up, could you just give us an update on Atomic, where we sort of are in the development process there? I think you have previously talked about that product being potentially available sometime next year. But yes, any -- well, precisely and obviously not for production, but any updates there would be helpful.

Well, we're very excited to talk about Atomic, because we started working with early adopter on spec soon after we did a public offering. And activity is more active than ever before. Again, I believe that becoming a public company and our customers becoming more comfortable with working with Ambiq, we believe that we're going to make great progress coming quarters.

With no further questions in queue, I will hand the call back to Jeffrey Winzeler for closing remarks.

Thank you. Before closing the call, I'd like to let you know that we'll be attending the UBS Global Technology Conference in Scottsdale, Arizona on December 3, and the following day, December 4, we'll be at the Stifel Deep Tech Forum in Menlo Park, California. If you'd like to arrange a meeting with us at these events, please contact our IR firm, the Shelton Group. You can find the relevant contact information on the Investor page of our website, ambiq.com. Thank you again for joining us today, and we look forward to discussing our continued progress on our next earnings call. Operator, you may now disconnect.

Thank you. Thank you for joining us today. This does conclude today's conference call. You may now disconnect.