AMBQ 10-K & 10-Q changes, risk factors and insider trading

ThereOther than the risk factors set forth below, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2025.2025 as filed with the SEC on March 5, 2026.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025 ("Annual Report"), filed with the Securities and Exchange Commission ("SEC") on March 5, 2026. This discussion and analysis contains forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those described under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and under the heading “Risk Factors” in our Annual Report and other filings we make with the SEC from time to time. You should carefully read the “Risk Factors” sections of this Quarterly Report on Form 10-Q and our Annual Report to gain an understanding of the important factors that could cause actual results to differ materially from forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.Statements”.

Our customers rely on Ambiq to deliver AI compute closer to end users (edge environments) where power consumption challenges are the most severe. We seek to drive growth in AI adoption at the edge in the personal devices, medical/healthcare, industrial edge,edge and smart home and building markets and continue to set new standards in edge AI performance and power efficiency. Over time, we expect to integrate our ultra-low power technology into additional chip products that benefit from greater power efficiency, including high-performance compute applications such as AI data centers and automotive.

To date, a majority of AI compute has been deployed in data centers due to its large physical scale and the need for wall plug energy, as AI compute requires enormous and steady energy resources. At the edge, however, power limitations have been especially acute due to small device size and limited battery life. We believe this greatly constrains the potential of AI to improve our daily on-the-go lives. Enabling AI at the edge, where the action takes place, with vastly improved power efficiencyefficiency, will allow faster real-time decision-making due to data proximity, greater data privacy, higher energy efficiency from reduced network usage,usage and less dependence on constant costly connections to the cloud. We believe new AI use cases will only be possible if edge devices are much more power efficient.

We provide a full stack solution encompassing tightly integrated hardware and software. Our solutions include a diverse family of systems-on-chip (SoCs) and the software required to enable on-chip AI processing, general compute, sensing, security, storage, wireless connectivity,connectivity and advanced graphics. Our SoC solutions deliver compute at a very small fraction of the power consumed by our competitors' products.

Our ultra-low power SoCs serve a wide range of markets requiring on-device and real-time AI, including smartwatches and fitness trackers, augmented and virtual reality (AR/VR) glasses, smart rings, digital health monitors, security systems and access control, livestock tracking, crop monitoring,monitoring and factory automation.

Body-worn AI devices drive a significant portion of our revenue today and often require weeks of battery life while running advanced AI-driven features. These devices increasingly offer on-chip AI-powered features such as speech recognition, domain-specific language models, image and video processing,processing and sensing, further straining power consumption, which our solutions are positioned to address. However, as we continue to expand into new end markets, we expect there to be a meaningful growth opportunity for non-personal devices in 2026.

For the threesix months ended MarchJune 31,30, 2026 and 2025, we generated net sales of $25.1$59.0 million and $15.7$33.6 million, respectively, and net lossesloss of $10.2$17.3 million and $8.3$16.8 million, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $366.9$374.0 million.

Follow-On OfferingOfferings

On January 26, 2026, the Companywe completed a follow-on offering of 2,679,600 shares of common stock, at a public offering price of $31.00 per share, of which 2,636,651 shares were issued and sold by theour Company and 42,949 shares were sold by certain selling stockholders. The CompanyWe received net proceeds of $75.3 million after deducting underwriting discounts and commissions of $4.9approximately $5.0 million and offering expenses of approximately $1.5 million. The CompanyWe did not receive any proceeds from the sale of shares by the selling stockholders.

We believe that our operating results for the foreseeable future will continue to depend to a significant extent on sales attributable to certain end customers. Our top three end customers collectively represented 71%approximately 78% and 75% of our total net sales for the three and six months ended MarchJune 31,30, 2026.2026, respectively. We expect to continue to expand our customer base with new product development to reduce customer concentration. We have demonstrated strong end customer growth with technology leaders validating our technology platform and our robust product offerings. We work with our end customers at the front end of their design cycles, helping them develop next-generation products. The collaborative nature of these relationships provides us with enhanced visibility into our end customers’ future requirements, allowing us to expand our business and increase our content in future products.

Our product gross margins may fluctuate from period to period due to changes in our average selling price per unit due to new product launches and existing product mix with our end customer base. Our gross margins are also impacted by any changes to our manufacturing yield and wafer assembly and testing costs. We routinely experience increased prices for silicon wafers, packaging, printed circuit boards,boards and testing costs, which are used in our manufacturing process. As a result, our gross margins are impacted by our ability to offset any increases in our cost structure through increased prices, productivity improvements,improvements or other means.

The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence, price erosion, evolving standards, short product life cycles and wide fluctuations in product supply and demand. Historically, the industry has experienced significant downturns during global recessions. These downturns have been characterized by diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. Furthermore, any significant upturn in the semiconductor industry could result in increased competition for access to third-party wafer fabrication and assembly capacity. We are dependent on the availability of this capacity to manufacture and assemble our products and we can provide no assurance that adequate capacity will be available to us in the future. Any downturns or upturns in the semiconductor industry could harm our business, financial condition and results of operations. Our revenue has historically been subject to some seasonal variation. However, with rapid changes in technology development and our markets, the seasonal factors that affect our business may change from time to time.

As we focus on creating meaningful benefits to our end customers for their edge AI capabilities, we are shifting our geographic concentration. Historically, our sales were significantly concentrated with end customers in Mainland China. Given geopolitical concerns, subsidized competitors creating a price sensitive environment in Mainland China and our desire to service new markets in medical/healthcare, industrial edge,edge and smart home and buildings, we continue to prioritize our management and sales efforts toward other meaningful geographies. During both the firstthree quarterand ofsix months ended June 30, 2026, 13.7% of our net sales were to end customers in Mainland China,China were 13.7%, as compared to 6.2%11.5% and 9.0% during the firstthree quarterand ofsix 2025.months ended June 30, 2025, respectively. While this represents an increase, certain sales will continue to be evaluated if they represent higher-margin opportunities.

We are a products-focused business. Our net sales are recognized when control of our products is transferred to our customers for consideration that we expect to receive for our products, net of returns and allowances. Our net sales are driven by the average selling price of our products, product volumes,volumes and mix of products sold. Our end customers represent the actual user of our product, whether sold directly to or through a distributor.

Our cost of sales includes the cost of purchasing finished wafers manufactured by independent foundries and costs associated with the assembly, testing, shipping and handling of products along with allocated costs for salary, stockstock-based compensation and related benefits for personnel involved in the manufacturing of our products. Cost of sales also includes depreciation for equipment and photomasks supporting the manufacturing process, write downs of inventory, sell-through of products previously reserved for, IP royalties, amortization of IP licensing fees, logistics, quality assurance, warranty,warranty and other costs incurred by us.

Our operating expenses are categorized as research and development costs or selling, general,general and administrative expenses and classified based on the descriptions below:

Selling, General,General and Administrative Expenses

Our selling, general,general and administrative expenses consist of compensation-related expenses, including salaries, benefits, and stock-based compensation expense for employees that support our sales, finance, human resources, marketing, and other corporate functional support. Selling, general,general and administrative also includes insurance costs, rent and lease expenses, travel and entertainment, and general corporate expenses, such as accounting, audit, legal, regulatory, and tax compliance. We expect selling, general,general and administrative expenses to increase in absolute dollars as we incur increased accounting, legal and professional fees and other costs associated with being a public company.

Other Income (Expense),Income, net

Other income (expense),income, net reflects interest income generated from our cash and cash equivalents on hand being invested in interest-bearing accounts. Our other expenses are principally the mark-to-market valuation of our warrant liabilities and the impact of foreign exchange gains and losses on our results.

Comparison of Three and Six Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025:

The following table summarizes the results of our operations for the three and six months ended MarchJune 31,30, 2026 and 2025 as a percentage of net sales. All percentage amounts were calculated using the underlying data:

Net sales increased $9.3$16.0 millionmillion, or 59.3%89.7%, to $33.9 million for the three months ended MarchJune 31,30, 2026.2026 and increased $25.4 million, or 75.5%, to $59.0 million for the six months ended June 30, 2026 compared to the corresponding prior year periods. The growth was broad-based across our major customer base, with two customers exhibitingprimarily particularlyattributable strong demand driven byto new product launch ramps atcoupled higherwith averageutilization salesof pricesour annually.newer product offerings. Furthermore, we introduced a new major customer to support our new product launch which led to significant revenuessales in the first quarter of 2026. These launches, combined with increased customer demand, wereboth the primarythree driversand ofsix themonths netended salesJune improvement30, over March 31, 2025.2026.

Gross profitmargin increased $2.5490 million,basis or 29.8%,points to $10.9 million45.0% for the three months ended MarchJune 31,30, 2026,2026 fromcompared $8.4to millionthe corresponding prior year period, primarily due to an increase in average selling price for our products. Gross margin decreased 190 basis points to 44.4% for the threesix months ended MarchJune 31,30, 2025.2026 Thecompared increase was primarily driven byto the increasecorresponding inprior netyear sales. However, gross margin decreased 980 basis pointsperiod, primarily due to a non-monetary gain of $1.6 million in the first quarter of 2025, which did not repeat duringin 2026, partially offset by an increase in the firstaverage quarterselling ofprice 2026.for our products.

Research and development expenses increased $5.2 million, or 58.9%, to $14.1 million for the three months ended MarchJune 31,30, 2026 and increased $4.1$9.4 million, or 47.7%,53.4%, to $12.8$27.0 million induring the firstsix quartermonths ofended June 30, 2026 fromcompared $8.7 million into the firstcorresponding quarterprior ofyear 2025.periods. The overall increaseincreases in research and development expenses waswere primarily attributable to increased intellectual property development and technology spend in addition to higher contractor and compensation-related costs, including both variable compensation for our internal incentive compensation program and share-based compensation expenses associated with RSU grants after our IPO. TheFor Companythe three and six months ended June 30, 2026 we hired 15an additional employees15 yearand over23 yearemployees, respectively, in line with our Atomiq development plan.plans.

Selling, general and administrative expenses increased $1.3 million, or 15.5%, to $9.7 million forduring the three months ended MarchJune 31,30, 2026,2026 increased $2.8 million, or 39.4%, to $9.9 million compared to $8.4 million in the firstcorresponding quarterprior ofyear 2025.period. The increase was primarily attributabledue to higher share-based compensation expenses associated with RSU grants after our IPO, as well as higher variable compensation for the Company'sour internal incentive compensation programs,program, internal and third-party sales commissions, which increased with higher revenue earned during the quarter, and incremental costs associated with our ongoing obligations as a public companycompany, including audit, legal and compliance-related fees. Additionally, there were increased share-based compensation expenses associated with RSU grants after our IPO.

Other income, net increased $1.1 million, or 229.9%, to $1.5 million forDuring the three months ended MarchJune 31,30, 2026,2026 other income, net increased $1.3 million, or 412.1%, to $1.6 million and increased $2.4 million, or 303.9%, to $3.1 million for the six months ended June 30, 2026 compared to $0.5 million in the samecorresponding periodprior ofyear 2025.periods. The increaseincreases waswere primarily attributable to higher interest income earned on greater cash proceeds raised through our IPO and January 2026subsequent follow-on offering. We expect other income to fluctuateofferings in future periods based on prevailing interest ratesJanuary and changesJune in our cash balances.2026.

We recorded minimal income tax expense infor the firstthree quarterand ofsix months ended June 30, 2026 on a pre-tax loss of $10.2$7.1 million and $17.3 million, respectively, yielding an effective tax rate of 0.03%.0.01% Weand recorded0.02%, minimal income tax expense during the first three months of 2025 on a pre-tax loss of $8.3 million, yielding an effective tax rate of 0.05%.respectively. Our effective tax rate was lower than the U.S. statutory rate of 21%, primarilyprincipally due to the change in valuation allowance. We recorded minimal income tax expense for the three and six months ended June 30, 2025 on a pre-tax loss of $8.5 million and $16.8 million, respectively, yielding an effective tax rate of 0.17% and 0.11%, respectively.

We have funded operations primarily through equity financings and cash from operations. We have historically incurred losses and negative cash flows from operations and anticipate continuing to incur losses as we heavily invest in product development. InDuring Januarythe six months ended June 30, 2026, we completedreported a follow-on offering, which resulted in net proceedsloss of $75.3 million after deducting underwriting discounts and commissions of $5.0$17.3 million and offeringhad expensesan operating cash flow deficit of $1.5$20.7 million. In addition to the net proceeds from our IPO and our January 2026 follow-on offering, we continue to improve our operating margins through revenue growth and strategic transition to more profitable opportunities. As of MarchJune 31,30, 2026, we had $204.5 million in cash and cash equivalents.equivalents Ourtotaling principal$366.8 usemillion and accumulated deficit of cash$374.0 is to fund our operations, invest in research and development to support our growth and other general corporate needs.million.

Our future capital requirements will depend on many factors including our growth rate, the timing and extent of our selling, general and administrative and research and development expenditures, and the continuing market acceptance of our products. Additionally, we anticipate continued additional costs associated with being a public company. If our current financial resources are not sufficient to satisfy our liquidity requirements, we may be required to seek additional financing. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. In the event that we need to borrow funds or issue additional equity, we cannot assure youguarantee that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations,operations and financial condition would be adversely affected.

Changes in the net cash provided by (used in) our operating, investing,investing and financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 are set forth in the following table:

For the threesix months ended MarchJune 31,30, 2026, cash flowflows used forin operations was $11.2$20.7 million.million, Operatingprimarily cashdriven flow used during the three months ended March 31, 2026 was related toby the cash components of our net loss and $6.4$13.9 million of unfavorable changes in working capital driven primarily by building $6.5$12.4 million in inventory, partially offset by $0.1$1.4 million resultingdue fromto the timing of our sales to customers and payments to our vendors.

For the threesix months ended MarchJune 31,30, 2025, cash flowflows generatedused in operations was $1.4$10.5 million. Operating cash flow generated during the quartersix months ended June 30, 2025 was related to the cash components of our net loss and $8.3approximately $2.0 million of favorable changes in working capital driven primarily by $0.3$0.8 million of lower inventory purchases offset by $8.6approximately $2.8 million resultingdue fromto the timing of our sales to customers and payments to our vendors.

For the threesix months ended MarchJune 31,30, 2026, we used $4.0$5.9 million in cash for investing activities, which related to $3.4$5.1 million of technology investments in intangible assets and $0.6$0.8 million in capital expenditures.

For the threesix months ended MarchJune 31,30, 2025, we used $1.1$3.1 million in cash for investing activities, which related primarily to $1.0$2.7 million of technology investments in intangible assets.assets and $0.5 million in capital expenditures.

For the threesix months ended MarchJune 31,30, 2026, we generated $79.4$253.0 million related to financing activities, driven by proceeds from our follow-on offeringofferings proceedsof $243.9 million, net of deferred offering costs, underwriting discounts,discounts and commissionscommissions, proceeds from the exercise of $75.3stock million,options of $6.1 million and proceeds from the exercise of warrants of $3.0 million and the exercise of stock options of $1.1 million.

For the threesix months ended MarchJune 31,30, 2025, we generated approximately $0.1$0.2 million in financing activities, driven primarily by proceeds from the exercise of stock options.

We use non-GAAP net loss and non-GAAP gross profit, both non-GAAP financial measures, to help us make strategic decisions, establish budgets and operational goals for managing our business, analyze our financial results,results and evaluate our performance. We define non-GAAP net loss as our net loss adjusted to exclude expenses not directly attributable to the performance of our operations, such as income taxes, depreciation and amortization, stock-based compensation, gain on nonmonetary transaction, severance costs, IPO-related transaction costs, and warrant valuation. We define non-GAAP gross profit as our gross profit adjusted to exclude expenses not directly attributable to gross profit, such as depreciation and amortization, stock-based compensation and non-monetary transactions.

During the threesix months ended MarchJune 31,30, 2025, the Company received nonreciprocal transfer of assets from a vendor. The total fair value of nonmonetary transactions recorded during the first threesix months of 2025 was approximately $1.6 million, which was recognized as a gain in cost of sales.

Our discussion and analysis of financial condition are based upon the consolidated financial statements of this business, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses,expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, revenue reserves, inventory valuation, stock-based compensation, taxes on income, warranty obligations and contingencies and litigation. We based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such differences may be material to the financial statements. We believe that the accounting policies and estimates described below are the most meaningful to our operations or require management’s most difficult, subjective or complex judgments. Judgments or uncertainties affecting the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. Our significant accounting policies are described in Note 21 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

For more information regarding recently issued accounting pronouncements, see Note 21 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We are not currently required to comply with all the provisions of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act). Our management is not required to certify as to the effectiveness of our internal control over financial reporting until our second annual report on Form 10-K following our IPO. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company will our independent registered public accounting firm be required to provide an attestation report on the effectiveness of our internal control over financial reporting. Further, for as long as we remain an emerging growth company as defined in the JOBS Act,company, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement. However, we do have internal controls in place in key areas of risk.