AmpliTech Group, Inc. Q2 FY2023 earnings call

• Q2 2023 revenue was $4.1M, gross profit $1.9M (47% margin).
• Core L&A sales grew 23% due to demand for satellite ground station amplifiers.
• R&D investments over $700K in Q2 for new products like 5G wireless infrastructure and MMIC designs.
• Strong cash position: cash and liquid securities $9.3M, receivables $2.5B, working capital $16.7M.
• CRM system and AI driving lead generation and pipeline growth.
• R&D progress on 5G ORAN massive MIMO radios with proprietary MMIC chips.
• NGK product line addition to spectrum division nearing completion by end of FY2023, expected to contribute to sales early 2024.
• Pipeline over $80M, with potential from L&A, spectrum, and AGTSS divisions.

In Q2 2023, AmpliTech reported revenue of $4.1 million and gross profit of $1.9 million, with a gross profit margin of 47%. Core low noise amplifier (L&A) sales grew by 23%. Semiconductor distribution sales saw a dip due to soft international demand. SATCOM products drove growth in the L&A segment. The spectrum division's NGK product line addition is expected to contribute to sales early in 2024. Revenue contribution from core L&A, spectrum, and AGTSS divisions is expected to vary, with spectrum projected to have a 29% contribution in 2024.

• 2024 expected to be pivotal with revenue likely to more than double.
• 5G ORAN radios anticipated to start contributing in 2024, with initial prototype units expected in Q4 2023.
• NGK products expected to start contributing to top-line sales early in 2024.
• CRM system indicates over $85M of potential opportunities, with conversion expected in coming quarters.

• Semiconductor market softness impacting spectrum division sales.
• Delays in product qualification and beta testing by pre-perspective customers.
• Dynamic sales funnel with potential delays in contract awards from large customers.
• International demand fluctuations affecting spectrum division performance.

Q: What's the driver behind core L&A strength and is it sustainable?

A: Demand for cloud-based systems requiring low noise figure amplifiers, picking up business from competitors, and CRM system finding new customers. Sustainable due to CRM, new products, and market recognition.

Q: What changed since last quarter contributing to pipeline growth?

A: Increased RFQs from CRM system finding key technical decision-makers, and AI system identifying right people for product needs.

Q: How is the $80M pipeline composed?

A: Includes core L&A, spectrum (with NGK contribution), and AGTSS division (5G radios). Core L&A and AGTSS to grow, spectrum to have 29% contribution in 2024.

Q: What does 10 sites with 3 radios each mean?

A: Each site has 3 radios (~$10K each) plus installation revenue; 10 sites could mean ~$300K in hardware revenue plus installation, with growth expected to 50 and 100 sites later.

Q: How many customers are in the pipeline?

A: Approximately 15-20 large MNOs and corporations globally.

Q: When will NGK contribute to revenue?

A: First purchase orders to NGK expected by end of 2023, with deliveries early 2024, leading to meaningful sales in 2024.

Q: What were the results of MMIC beta tests?

A: Some companies bought small quantities, but qualification and system design take time; waiting for them to finish efforts for full orders.

Q: When will contracts be awarded?

A: Some deals expected to close by end of 2023, but some pushed out due to customers' own qualification and beta testing.

Q: Will spectrum division sales decline in H2?

A: Semiconductor market down 11% this year, but expected to bounce 18% in 2024, so spectrum division expected to recover lost sales with NGK opportunity.