AmpliTech Group, Inc. Q3 FY2022 earnings call

• Q3 '22 revenue was $5.4 million, up 415% from Q3 '21. Gross profit was $2.7 million, gross margin 49%.
• Successful showing at AOC Electronic Defense Show with positive customer engagement and company record of meetings.
• MMIC chips now available for sampling and small production quantities, with interest from government and commercial organizations.
• TGSS division is operational, revenue contribution expected by Q3 2023 or earlier.
• AmpliTech increased full-year revenue guidance to a minimum of $18 million, a $1 million increase from previous guidance.
• Communications infrastructure space seen as a massive opportunity to improve performance and enable true 5G.
• AGMDC design center sampling LNA and PA MMIC power amplifiers to customers.

In Q3 '22, revenue increased 415% to $5.4 million compared to $1.1 million in Q3 '21. Gross profit grew to $2.7 million, a over 7-fold increase from Q3 '21's $314,000. Gross profit margin expanded to 49% from 29.7% in Q3 '21. Net income was $577,000 vs a net loss of $593,000 in Q3 '21. Cash and equivalents totaled $13.1 million as of September 30, 2022, and working capital was $20.2 million. TGSS, AmpliTech’s fully managed 5G system integrator company, is operational with revenue contribution expected by Q3 2023 or earlier.

• Increased full-year revenue guidance for 2022 to a minimum of $18 million, a $1 million increase from prior guidance, representing a 239% increase over fiscal year 2021 revenues.
• Well capitalized with $13 million in cash reserves and $20 million in working capital, no need to raise additional cash at this time.
• Reiterates goal to provide MMIC chips on a COTS basis by Q2 2023.

Q: Could you talk a little bit about Spectrum, longer term opportunities and growth rate going forward in potential for further profitability at Spectrum?

A: Jorge Flores said they see continued growth due to demand aligned with 5G and chip requirements, plan to infuse MMICs into Spectrum's stocking capability to increase revenue.

Q: Could you talk a little bit about the agreement with Meta?

A: Jorge Flores said they joined Meta's telecom info project as a participant providing technology for evolving infrastructure.

Q: What about Quantum computing in terms of returns and revenue going forward?

A: Jorge Flores said there's an increase in requirements for quantum computing, sent demo units to customers in qualification, expecting high success rate with pivotal year next year.

Q: Seasonally, do you expect Q4 to be slower than Q3?

A: Fawad Maqbool said generally slower due to holidays and people taking vacations, customers holding back budgets till next year.

Q: Are you actively receiving customer orders after trade shows?

A: Jorge Flores said CRM tool generated many inquiries, CRM model aims to convert 25% of opportunities, generating RFQs and purchase orders.

Q: Thoughts on backlog and 2023 outlook?

A: Jorge Flores said working with five large customers on quantum and 5G applications, close to receiving orders, possible bookings in Q4.

Q: Thoughts on operating leverage and profitability as revenue scales?

A: Louisa Sanfratello said focusing on larger margin applications, consolidated operations to lower overhead, focusing on specialty microwave and military applications to increase profit margins.

Q: Insight on TGSS revenue impact?

A: Louisa Sanfratello said revenue from services to upgrade to 5G O-RAN compliance and hardware retrofitting into sites, hardware side expected to start accepting orders mid next year.

Q: Steps to increase gross profit margins, operational or manufacturing changes, sustainability?

A: Louisa Sanfratello said consolidation of operations, focusing on large margin applications, lower overhead from ERP system and COTS products, streamlining operations for more throughput.