Good afternoon. Welcome to the Amprius Technologies Fourth Quarter and Full Year 2024 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun; and CFO, Sandra Wallach. [Operator Instructions] Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future product development or commercialization, new customer adoption and new applications our growth and the growth of the markets in which we operate and the timing and ability of Amprius to expand its manufacturing capacity, build its large-scale manufacturing facility, scale its business and achieve a sustainable cost structure. These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission. Finally, I'd like to remind everyone that this conference call is being webcasted and a recording will be made available for replay on the company's Investor Relations website at ir.amprius.com. In addition to the webcast, the company has posted a shareholder letter that accompanies these results, which can also be found on the Investor Relations website. I will now turn the call over to Amprius Technology's CEO, Dr. Kang Sun for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will give you an overview of our record performance and some of our 2024 accomplishments while also highlighting the upcoming milestones, we look forward to achieving soon. After that, our CFO, Sandra Wallach, will discuss our financial results for the period. Then I will share some closing remarks before opening the call for questions. Before I give a recap of the quarter, I would like to briefly introduce Amprius to those who may be new to our company. Amprius is a pioneer and the leader in silicon anode battery space. At Amprius, we develop, manufacture and the market's high energy density and high-power density silicon anode battery with applications across all segments of electrical mobility, including the aviation, electric vehicle and light electrical vehicle industries. Today, Amprius commands performance leadership with this combination of battery energy density, power density, charging time, operating temperature range and safety. Across our battery portfolio, we offer unmatched performance among commercially available batteries. Amprius has been delivering commercial batteries to the market with up to 450 watt-hour per kilo and 1,150 watt-hour per liter. 10C power capability, an extreme fast charging rate of 0 to 80% rate of charge in approximately 6 minutes, the ability to operate in a wide temperature range of -30 degrees Celsius up to 55 degrees Celsius and the safety design features that enable us to pass the United States Military benchmark nail penetration test. Each of these performance parameters is critically important to the real or electrical mobility applications. Now not only do our batteries enable certain aircraft and vehicles to maximize performance, but they enable our customers to achieve their economic targets as well. In addition to our commercially available batteries today, we have also…

Thank you, Kang. I would now like to spend a few minutes covering some of our key financial updates. As a reminder, our detailed financials can be found in our shareholder letter. We ended the fourth quarter with $10.6 million in total revenue. As we have previously discussed, our total revenue is the combination of our main revenue streams: product revenue and development services and grant revenue. This quarter, $10.3 million came from our product revenue, representing a $4.3 million or 71% increase sequentially. Product revenue in Q4 2023 was just $0.9 million, marking a nearly 1,000% increase year-over-year. Our development services and grant revenue totaled $0.3 million this quarter, which was down from $1.8 million in Q3 and $3 million year-over-year. As we've discussed in the past, development services and grant revenue from large development programs are nonrecurring in nature, leading to greater fluctuations depending on the comparison period. The overall increase in revenue this quarter was primarily driven by the addition of new customers. As Kang mentioned, we shipped to 98 customers in the fourth quarter. Of these customers, only 3 accounted for greater than 10% of revenue, a decrease from 4 in the third quarter and an increase from 2 customers counted in the fourth quarter of 2023. Going forward, we plan to continue adding to our customer mix to diversify our revenue streams and provide more reliable product shipments as we get to a position of scale. Pivoting to our full year results, we closed 2024 with $24.2 million in revenue. This represents a 167% increase from the $9.1 million in revenue we generated in 2023. This achievement was fueled by the increase in product sales as a percentage of total sales, supported by the impressive growth of our customer base. As a reminder, we shipped…

Thanks, Sandra. As we look ahead, our strategy at Amprius remains unchanged. Our top priorities are leading in technology innovation and product performance, ensuring world-class manufacturing capability and sufficient production capacity, growing our customer pipeline and driving revenue growth and having a healthy balance sheet. We are excited about the year ahead and looking forward to growing our business on the momentum we built in 2024. In 2025, Amprius expects to deliver new high-performance batteries, anticipate in new market segments, engage with more customers, due to additional manufacturing partnerships and bring our business to another level. We believe that the opportunity ahead of Amprius is tremendous. Our team is confident in delivering what we have planned and the promise. We have begun the year strong and we are looking to build increasing momentum throughout 2025. Over the next few months, we will be attending several industrial and financial conferences and we hope to see you there. Thank you for your continued support of Amprius Technologies. With that, I will turn it back to the operator for Q&A.

[Operator Instructions]. Our first question comes from the line of Colin Rusch with Oppenheimer.

Kang, you've got such a big list of customers at this point, you've been able to close a handful of them into larger contracts. Can you talk a little bit about the diversity of applications that you're seeing getting tested for? How much customization is required for those customers? And how many are in late stages of evaluation where you might see something, call in the next quarter or so where they would pull the trigger on a bigger purchase order?

Okay. Thanks, Colin. We have 230 customers in 2024. This is at top of our pipeline funnel. There are 3 types of customers. There are customers already have the devices and using other batteries, just use our battery to replace it. Those can be very quick replacement that demonstrated in 2024 for light electrical vehicle business and a small fraction of the aviation business that takes a couple of months they started using our battery. We will anticipate some business like this in 2025. The second type customer is they have devices, but they needed to qualify that. They need to redesign not the devices, okay, the battery pack and valid our battery to fit into their application. This could be 9 months to a year type of qualification process. The third type of customer, for example, eVTOL, not only they need to qualify our products, they need to certify their own product. So those would take longer. But we look at -- based on our 2024 experience, we are quite confident we can convert a large portion of those customers to the purchase order in 2025.

And then in terms of your manufacturing base and your geographic exposure, can you talk about your strategy for incremental contract manufacturing potentially or other strategies around managing some of the dynamics around the changing pool environment.

The contract manufacturing strategy has been very successful for us. We have [indiscernible] we have not spent $1 on the ground for the manufacturing capacity. We also have a lot of flexibility in terms of cell design then there are -- it is quite a successful strategy so far. Of course, many of those relationship requires a certain scale. Currently, all our manufacturing facility are located in China. We have 3 partners. So we offer all battery formats. We have silicon, prismatic and the pouch. So at the same time, this year, just early this year, we also developed the manufacturing partnership in Korea, okay? We are evaluating the sample produced on their production line. Next week -- next month, we'll go to Europe to have a conversation with another European -- potential European contract manufacturers. Those -- we're doing those for -- mainly for geopolitics regions. Now in terms of cost, we have very competitive manufacturing cost structure today, I would say we are -- not only can compete in U.S., we can compete globally in terms of the manufacturing -- contract and manufacturing structure -- cost structure we have here. So moving forward, we definitely need to have a global supply chain to support our contract and manufacturing practice. We need to have a global contract manufacturing partnership. So I think this would happen in the first half of the 2025.

Excellent. And then last one is for Sandra. Obviously, you supplemented the balance sheet here in the fourth quarter. Can you give us an update on the year-to-date activity against that ATM? You've had a certain amount of volume and some volatility in the stock, which has given you some opportunities. Just want to get a sense of where -- how much you've been active in the market with that and roughly where you think the cash balance may be exiting the quarter doing that or [indiscernible] with the half [indiscernible] in the quarter here.

So as of December 31, we went into a traditional blackout period because of our financial results. So we've not been in the market.

Our next question comes from the line of Jed Dorsheimer with William Blair.

You have Mark Shooter on for Jed Dorsheimer. Congrats on the year and the new 53 customers this quarter, that's great to hear. I guess I'll dig in a little bit deeper on Colin's point, which is I was a bit surprised to hear you're looking to continue to expand and diversify and add more customers to your list. Can you walk us through the strategic decision to target many customers with smaller volumes versus fewer customers with larger volumes? Or does it just take this many engagements to land a large PO?

Mark, we -- most of those customers we are dealing with, they have a high volume of potential. Otherwise, we wouldn't do it, right? If a customer tell us their maximum need is 30,000 cells per year. We're not going to deal with them because every customer we are dealing with, they all claim they have large volume potential. Of course, we do our due diligence. We will see their growth path, we will see their devices, how much battery they need per device, right? This is a very competitive market, okay? The more customers we can engage, more opportunity for success. So that's why we have a large pile of customers at this time. And during the next 6 months, I think we will filter through, okay? We have to focus on -- another reason in this market, we have a huge manufacturing capacity to support us. So the capacity is not an issue for us. That's why it enable us to engage with very high volume of customers, but focus on high-volume customer is our priority. That's not all about -- that would make a manufacturing is much easier. Even we engage with so many customers, so we don't customize our battery for each customer. So we have 14 SKUs, our catalog. We probably even want to shrink to about 10 SKUs in the future. So because of the performance of our products, most of the customers would like to accommodate our cell format, our standard, I would call Amprius standard battery cell format.

Thank you, that's very helpful. Talking about the aerospace and defense customers, I know you have a strategy to include a more geographically diverse production contract manufacturing of Korea, you mentioned in Europe. I'm interested, have any of those customers reluctantly walked away or have not purchased yet because of the China supply?

Surprisingly, none of the customers walking away because of the source of supply. But we do have a customer ask us to change the manufacturing base in 9 months or 6 months to 9 months or, say, 2026, you have to manufacture in so called little friendly countries.

Our next question comes from the line of Chip Moore with ROTH MKM.

I wanted to ask on maybe just an update on commercial side. Obviously, you're having good engagement with new customers. Maybe talk about investments you're making there on the SG&A. Is that somewhere you're investing in? And I guess, what can you do there to maybe help accelerate some of those commercial adoption?

Yes, Chip, this is Sandra. So we definitely have increased our investment in sales. We've effectively over 2024, tripled the size of our sales team. It's still a small, but mighty team. Based on the fact that, as Kang mentioned, this is really a design-in win process. So it just takes time to manage these accounts. G&A separately was up because of some of the nonrecurring items that you saw and you'll see in the financials.

Got it. Appreciate it. And maybe a follow-up on the customer side, I think it was 77% outside U.S. Any more color there on how to spread that out, is the concentration within that? Or how do you think about that shift to outside the U.S.

Yes, we expect we have more customer outside of the U.S., not because the U.S. business doesn't grow. Just we have more international customers. We -- once we set up additional manufacturing partnerships, we expect we will have a strong customer inquiries outside of the United States.

Yes. Just to clarify, the U.S. grew, no question. It just grew at a smaller rate, and that's what -- just because of the global interest in the batteries.

Perfect. Okay. And maybe just the last one. I think you said what you added over $16 million to backlog, Q4, you've won some more orders this year. maybe just any way to help us frame, I guess, where backlog stands at year-end and how to think about visibility in 2025?

Yes. I will field that one, let's see. We just filed the 10-K, and we report out on our RPO and RPO, I believe was -- just find it, my apologies, $16 million, $17 million in that range, there's backlog. RPO was $15.9 million at the end of December for under -- excluding government grant revenue and then $17.2 million, including government grant revenue, and it's all expected to convert within the next 12 months. But as you know, customers are placing POs quarter-by-quarter. So that's more indicative of what we have fueling the first half of the year.

Our next question of Derek Soderberg with Cantor Fitzgerald.

Congrats on the results here. I wanted to start with some of your Fortune 500 customers. It sounds like there's significant upside with them. What's it going to take to get maybe a sizable project expansion with those customers, what's kind of the criteria that they're looking for initially? Is that how the batteries perform in the market? Can you just talk about the potential of getting to the next level with those customers? And then I've got a follow-up.

Okay, Derek. Two engagements we announced. One has about 2 gigawatt hour purchase possibility, okay? This is related to 6.3 ampere-hour cell we just delivered. Another one has about 1 million cells per year potential is actually the high-end consumer electronics product, is not our major focus, but this customer's product at this moment only our technology can support. So those are two, we call Fortune-500 technology company engagement we launched. In addition to that, we have been engaging with some large corporation for different projects.

And Kang, earlier in the call, you laid out 3 types of customers for those Fortune 500 companies and opportunities, where would you kind of -- which bucket would you put those in?

Okay. The first one, call it the electrical vehicle. This has a 2 gigawatt hour opportunity. They have the vehicle. Their vehicle is already set up. That's not a problem. But this is the battery has a much higher energy -- much higher energy and much higher power. So I think the battery evaluation is a major part of this venture, okay? They don't need to certify their vehicle, they need to get our battery qualified. And these group of people will come to our contract manufacturing partnership factory in April. So for the second contract, the other one, even easier, okay? That's just a simple replacement. And our batch is way qualified. If you see that the current performance level by a very large margin.

Got it. That's helpful. And then, Kang, just on that point, the second customer, are they looking to use a battery platform that you're already commercializing today? Or is this kind of a next-generation battery platform that they're hoping to use? Can you discuss that at all?

Yes. The cell chemistry are the same. We already have this battery manufactured since 2018, this cell chemistry. But the cell format is different. This is probably the smallest battery, Amprius has ever made.

Got it. That's super helpful. And then Sandra, just based on some of the visibility that you guys have into demand this year, some large programs expected to hit. How should we think about gross margin sort of going from negative to positive? Can you talk about the gross margin progression for the year as we sort of reach scale here?

Yes. So we've talked about the fact that SiCore sales are gross margin positive day 1. So that's what has helped to drive the gross margin to negative 21% in Q4, which is, again, balancing the historical negative margin that we've had here in Fremont because we've been so capacity constrained, and we've got such a tiny manual shop here. So I think we'll continue to see since most of the growth is going to come from SiCore, positive movement in the gross margin. Again, SiCore is growing. And we also had cost of goods sold in 2024 for the preconstruction and design work for Colorado that's not recurring that wrapped up in October. So we should see positive progression on gross margin.

Our next question comes from the line of Jeff Grampp with Alliance Global Partners.

I was curious to go back on the topic of pipeline and future business opportunities. I'm curious, Kang, like on the spectrum of sizes of these various customers you're talking to, how would you contextualize these ones that you've won of size, these kind of $15 million, $20 million orders that you guys have been successful with? Where would you say those rank? Is there a way to kind of book end or think about what an average could be in any sense. I know it's probably a wide range, but just trying to get a sense of how material those wins are in the context of future opportunities you're looking at.

Yes. All those customers have the potential to reach that level. I mean, the $10 million or $15 million, even $50 million sales. But in 2025, okay. We don't think they all reached their optimized purchase volume. I think -- but we will see the orders at the current level, that means $10 million to $20 million, maybe $30 million order is quite possible. Our sales team -- now the major function of our sales team today is to accelerate the sales -- the customer battery qualification process to close the deals, okay. We do everything beyond the sales function to help our customer to get our battery qualified to have their products certified. Large fraction of our customers have a very decent volume potential. We just need to get those deals closed, getting deals closed is to help them to qualify our battery as quickly as we can.

Got it. Okay. That's really helpful. And for my follow-up, with respect to looking at diversifying the contract manufacturing base that you have, would you say that's explicitly for, I guess, you always say, trade-related contingencies or are there other benefits to being in other jurisdictions or continents from a customer preference perspective or otherwise? Are there other factors at play there?

Yes. Always good to have a diversified manufacturing base here. We have different type of customers located in different regions. So even without geopolitics, it's good to have a different manufacturing base. So currently, because the supply chain is almost 100% in Asia. So that's why the Asia is going to be our major focus in terms of manufacturing facility development. So we not -- currently, we have China. We have the best quality, faster turnaround time and the lowest cost, okay? We certainly have customers -- very appreciated, we have the facility there. And at the same time, we had to serve the customer have geopolitics concern. So that's why we are working with several Korean battery manufacturers. So of course, we don't use all of them at the end of the day. but we received very positive results. European customer, we have European customer. Actually, we are dealing with one of the major drone -- European drone companies these days. So they would like us to have some participants in Europe in terms of manufacturing.

Our next question comes from the line of Ted Jackson with Northland Securities.

Thank you very much. Congratulations on the quarter. My first question for you is, looking at your customers. So you have about 235 customers. You had 182 new customers just in the year. So I mean 3/4 of your customer base is new to you relative to the year. You commented that you had 25% of your revenue in the fourth quarter come from the LED segment. And so I'm going with this. I'm curious when you look at the end markets that you've been selling into, what was the mix of those end markets with the 48 or whatever is the total amount of customers that you had in '23, what was the mix with it in '24? How did it shift? And then when you look at the opportunities in front of you for '25, how would you see that mix change further in '25? Does that question make sense? That's my first question.

Makes sense. Yes. So '23 to '24, we certainly had electrical vehicle business. 2023, we didn't have any participation. So the customer come to us, say, we look at our battery specs, they think it's ideal for their application. So we look at the market size is very large, the qualification time much shorter, the check size is bigger. So we decided to get into light electrical vehicle. 2024 confirmed it was a successful engagement. So 2025, we anticipate that we have more light electric vehicle business. And of course, the aviation is still growing, but the electrical vehicle business, we're getting bigger.

What was -- so if I was to think of 2024 in the first quarter was the LED segment basically nonexistent in the fourth quarter, it was 25% of revenue. And what I expect that as we go through '25 that the LED segment would potentially be more than 25% of revenue given what we saw in '24?

That would happen. Yes, for 2 reasons. The reason number one, we have some customer has a larger volume and its early adopters. They see -- they don't need to spend months, a year to qualify. They think our battery is perfect, if they can design into the pack and they can use it. So there are a lot of those programs already reached advanced stage. For that reason, I would have think -- I would forecast we will have probably over 25% at the electrical vehicle revenues.

Okay. My second question, when -- it's not -- I know it's not really a great metric, but it's just kind of a thing to look at to kind of see where -- how you're progressing in terms of kind of larger orders and shipments, how you're progressing in terms of your customers' products really going commercial. And so if I look at the revenue per customer, and I look at the last 4 quarters, it was 28,000 and it was 60,000, then it was 64,000, then to 105,000. And so what that tells me is that you are seeing some of these new design wins come to fruition, become production-level shipments. When I look at that and I think forward and about -- and I think about the new customer wins you had, will I see your revenue become more driven by existing customers and perhaps not see so many new customers in '25 or will I see both? I mean, how would I think about that mix? I mean, because in your new customers, you had 48 new customers in '23, you had 182 in '24. I mean -- is it like -- is it going to be another 182 new customers? Or will we see that customer -- new customer growth kind of slow down, but see greater revenue generation from existing customers that are becoming -- that -- whose products are becoming commercial. That's my next question.

Yes. Existing customer will contribute more revenue than the new customer for sure, because normally, if we engage with the customer, unless the customer already know our battery and we see the spec already feeding into their pack or their application. Most customers come in with a couple of hundred cells, couple of thousand cells and it becomes, let's say, 25,000, 50,000 cells, then they grew for 100,000 cells. This is the qualification process in this business. If we look into this, the existing customers certainly begin to contribute a lot more revenue than the new customer.

But now would we still see -- I mean, if we think about your new customer pipeline, I mean is it so robust that we could still see you add 100 or 200 new customers in '25? Or are you getting to the point now where it's less about that like that's going to slow down, and it's really about harvesting the customers that you've brought in?

Yes. We covered a very -- we have a very solid coverage of aviation market today. It doesn't mean a fixed wing electrical aircraft, the drones, taxi eVTOL types and [indiscernible]. We have very solid coverage here. But there are many emerging companies come out. You talk about the drone company, just in Ukraine, over 200 drone companies. And Taiwan almost have a new drone company every other week. So -- but we don't -- we will be more selective in 2025. 2024, 2023, anybody come to us, we take it because it's early stage of market development. Now of our coverage is credit solid. Now we know who's going to win, who is not going to win in the near term. So we will selectively acquire new customers, but the most important task for Amprius is the current customer to commercialization stage.

Sort of following on to this thing with new customers. The 182 customers, new customers that you had in '24 meaning it was just such a substantial ramp. The SiCore came out in that period of time. Can you give some sort of sense in terms of those new customers? What's the mix between SiMaxx and SiCore?

Primarily, I would say 90% for SiCore because SiCore is readily available. We have capacity to support. When a customer comes to us, they are not only looking for the performance, particularly those sizable customers. They want to see how manufacturing capacity to support otherwise, we would engage. So for SiCore, we developed a huge manufacturing capacity available, it's 1.8 gigawatt hour capacity. So the customers feel very comfortable to engage you with us.

My last question, and I'm sorry to ask so many and it's really just a net picky one. Just kind of looking at my model, I had a gap in, I'm curious like at the end of -- you ended 2024 with 235 customers. What was the customer count at the end of fiscal '23.

You know what, Ted, let me pull that from our filings, and I'll send that over to you.

Our next question comes from the line of Amit Dayal with H.C. Wainwright.

With respect to the revenue cadence for 2025, can you provide any color on whether we should expect sequential improvements through 2025 relative to what the fourth quarter results?

Yes. So I think we would expect to see sequential. We're not a seasonal business per se. But I think the first quarter has been -- has just had some headwinds. There's been a lot of changes as far as the funding landscape. So we're confident in what the year growth has the potential to be. But we're expecting Q1 is going to be a little tougher just because of the change in the administration here?

Understood. And a follow-up with that on that with you offline. Gross margins, Sandra, is there a level that you have a sense, revenue-wise, where you think you can start turning gross margin positive? Is it like $15 million to $20 million or higher than that per quarter where you can start seeing gross margins stand positive?

We haven't given guidance on that yet. I think we're still -- we're working on a target model, but we don't have anything concrete today.

Okay. And maybe for Kang, with respect to sort of larger applications like eVTOL, et cetera, how different is the sort of the battery chemistry or technology relative to what you are already shipping to customers currently? And how much improvements need to be made to sort of win some of those types of orders?

For eVTOL, we already qualified for 1 customer application. So we -- our chemistry is very robust. I would say we don't need to change whole lot of chemistry to support this market. When we say aviation, we basically use the same cell chemistry with slightly adjustments. For example, customers want to have more energy. They want to have more power, we can make -- we can make some changes to satisfy them. There is no major invention involved because the platform is quite robust. You look at the battery we delivered 370 watt hour per kilo with 10C, 15C capability. So we rather as the baseline we almost can deliver the sales for all applications in this market segment.

That's all I have. Other questions have been asked. I'll follow up with you guys offline.

Thank you. At this time, this concludes our question-and-answer session. If you have any additional questions, you may Amprius investor relations team at ir.amprius.com. I'd now like to turn the call back over to Dr. Sun for his closing remarks.

Thanks, Ed, everyone, for joining us today. As a reminder, you can find out more about our company, receive additional updates and learn about the upcoming events and the presentations from the investor relation section of our newly revamped website. I hope you can check it out, and we look forward to updating you on the exciting progress we are making in transforming the electrical mobility market. Finally, I'd like to thank our employees, partners and shareholders for their continued support. Operator?

Thank you for joining us today for Ampere Technologies Fourth Quarter and Full Year 2024 Earnings Conference Call. You may now disconnect.