Alphawave IP Group plc (LON:AWE), Alphawave Semi, a global leader in high-speed connectivity for the world’s technology infrastructure, announces its interim results for the six months ended 30 June 2024.
| · | Technology leadership and expanded product portfolio drives record of 23 design wins across IP, Custom Silicon, Silicon Products and Chiplets with 108 customers including major global hyperscalers |
| · | Revenue of US$91m and Adjusted EBITDA loss of US$12m reflective of expected change in revenue mix towards diversified business; US$50m of pre-tax operating cash inflow indicative of the continued focus on working capital |
| · | Bookings remain strong at US$225m, up 20% from H1 2023 bookings of US$187m, with current non-cancellable backlog excluding royalties of US$486m |
| Financial Summary and APMs[1] – US$m | H1 2024 | H1 2023 | Change |
| Licence and NRE | 64.8 | 73.6 | (11%) |
| Royalties and silicon | 26.2 | 113.6 | (77%) |
| Revenue | 91.0 | 187.2 | (51%) |
| Gross Profit | 41.3 | 82.5 | (41.2) |
| Gross margin | (45%) | (44%) | |
| Operating loss | (48.3) | (2.6) | (45.7) |
| Operating margin | (53%) | (1%) | |
| EBITDA1 | (31.5) | 10.7 | (42.2) |
| EBITDA margin1 | (35%) | 6% | |
| Adjusted EBITDA1 | (11.8) | 32.4 | (44.2) |
| Adjusted EBITDA margin1 | (13%) | 17% | |
| Loss after tax[2] | (40.0) | (8.9) | (31.1) |
| Loss after tax margin | (44%) | (5%) | |
| Adjusted (loss)/profit after tax1,2 | (13.5) | 20.0 | (33.5) |
| Adjusted (loss)/profit after tax margin | (15%) | 11% | |
| Pre-tax operating cash flow | 50.4 | (31.3) | 81.7 |
| Cash and cash equivalents | 76.3 | 122.8 | (46.5) |
| Net debt1 | (141.6) | (100.0) | (41.6) |
| Bookings[3] and Design Win Activity – US$m | H1 2024 | H1 2023 | Change |
| Licence and NRE | 203.5 | 114.9 | 77% |
| Royalties and silicon | 21.8 | 72.2 | (70%) |
| New Bookings | 225.3 | 187.2 | 20% |
| Additional design win activity – FSA drawdowns and China re-sale licences[4] | – | 3.4 | nm |
| Number of revenue generating end-customers (end of period) | 73 | 85 | 27% |
Note: Due to rounding, numbers presented in the table may not add up to the totals provided and percentages may not precisely reflect the absolutely figures. ‘nm’, where referenced, means ‘not meaningful’.
Tony Pialis, President and Chief Executive Officer of Alphawave Semi said: “We are successfully executing on our strategy, with a significantly expanded range of advanced connectivity solutions, including chiplets, that will enable the next generation of AI and cloud infrastructure. In the first half of the year, we have continued investing organically to support our pipeline and future revenue growth. Our leading connectivity technology and strong execution give us confidence in the prospects for our business in the second half of 2024 and beyond.”
John Lofton Holt, Executive Chairman of Alphawave Semi, added: “The first half 2024 revenue and adjusted EBIDTA were impacted by the timing of specific customer programmes. We expect revenue and adjusted EBITDA in the second half to increase significantly over the first half as our high-quality design wins from last year tape out and convert into revenue. Bookings, which is a leading indicator of demand for our technology solutions in all forms – IP, Custom Silicon, Silicon Products and Chiplets, continues to demonstrate strong growth in our target markets. With a robust backlog of nearly half a billion dollars, we are well positioned to meet our future growth targets.”
Interim Results Highlights
| · | H1 2024 revenues of US$91.0m (H1 2023: US$187.2m) reflect an expected strategic change in business mix including revenue from IP licences and silicon, and a significant reduction of legacy China business. Anticipated tape outs of certain ASICs and the timing of conversion of IP and NRE bookings into revenue is expected to help drive significant revenue growth in H2 2024 compared to H1 2024 |
| · | H1 2024 adjusted EBITDA loss of US$11.8m (H1 2023: gain of US$32.4m) was impacted by the lower revenues and continued R&D investment in chiplets and new Silicon connectivity products. These new Silicon connectivity products are expected to begin shipping as samples in 2024 and ramp into production in 2025 |
| · | Cash generated from pre-tax operating activities in H1 2024 was US$50.4m (H1 2023 cash outflow: US$31.3m) including US$32.2m increase in deferred revenue and flexible spending accounts. Operating cash flow performance is reflective of the timing differences between cash collection and revenue recognition |
| · | Cash and cash equivalents held by the Company were US$76.3m with net debt of US$141.6m. The Company restructured its debt facility shortly after the end of H1 2024 to align the debt covenants with operational metrics. |
Business and Technology Highlights
| · | IP & NRE bookings in H1 2024 up 77% year-on-year. 92% of these bookings in advanced nodes, with a total of 22 customers including major global hyperscalers, and eight of the top 20 global semiconductor companies by market cap[5] |
| · | Expanded technology leadership with the world’s leading semiconductor foundries with complete portfolio of Connectivity IP in 3/2nm nodes: 112/224G, PCIe7/6, HBM4/3 and UCIe. |
| · | Complete suite of 5nm, 4nm, and 3nm silicon proven connectivity IP for AI/HPC and cloud infrastructure market. Investments ongoing in 2nm and beyond process nodes. |
| · | Announced industry’s first comprehensive and customisable portfolio of chiplets covering I/O and compute in partnership with Arm as part of the Arm Total Design platform. Sampling I/O chiplets to major customers in H2 2024. |
| · | Need for Sovereign AI driving design wins across new geographies. |
| · | Executed tapeout of our second generation 224Gbps PAM4 DSP Connectivity products. |
| · | Continued investments and enablement in silicon supply chain for advanced packaging technology to ensure cost competitiveness and supply for customers. |
Outlook
| · | Alphawave Semi expects to see 2024 revenue of $310 to $330m and adjusted EBITDA of approximately $50m. The changes to the guidance reflect the impact on H1 2024 financials of the merger of two large AI customers in Korea that resulted in the consolidation of development programmes already in progress, as well as the timing of tape outs in H2 2024 |
| · | The outlook for 2025 and 2027 remain unchanged, reflecting the sustained bookings growth and increased backlog conversion to revenue expected in H2 2024 and beyond |
| · | Advanced node custom silicon design wins, with internal IP, from the last six quarters are scheduled for tapeout in H2 2024 leading to ramp of silicon revenues in 2025 and beyond |
Results Presentation and Webcast
A presentation for investors and analysts will be held at 8.30am BST, on 23 September 2024. To register for the webcast:
https://us02web.zoom.us/webinar/register/WN_CNrQf_PYR2iFcWa7giR8iQ
After registering, you will receive a confirmation email with information about joining the webcast.
Alphawave Semi’s H1 2024 Report is also available to view in the Investor Relations section of the Company’s website (https://awavesemi.com/investors/events-announcements-and-presentations/).
