管理層發言
Good day, ladies and gentlemen, and welcome to AmpliTech Group's quarterly investor update call, where the company will discuss its second quarter 2026 financial results. Present on this call are the executive team of AmpliTech Group: Fawad Maqbool, CEO, CTO, and Board Chair; Jorge Flores, COO; and Louisa Sanfratello, CFO. As a reminder, today's conference call is being recorded. I would now like to turn the call over to AmpliTech's COO, Jorge Flores. Please go ahead.
Thank you, operator. Thank you for joining today's call to review AmpliTech's second quarter 2026 financial results, review of our company's outlook, and to answer investor questions. Following initial management comments, we will open the call to investors' questions. An archived replay of today's call will be posted to the Investor Relations section of AmpliTech's corporate website. This call is taking place on Thursday, August 13, 2026. Remarks that follow and answers to questions may include statements that the company believes to be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally include words such as anticipate, believe, expect or words of similar importance. Likewise, statements that describe future plans, objectives, or goals are also forward-looking. These forward-looking statements are subject to various risks that could cause actual results to be materially different than expected. Such risks include, among others, matters that the company has described in its press releases and in its filings with the Securities and Exchange Commission. Except as described in these filings, the company disclaims any obligation to update forward-looking statements, which are made as of today's date. With that, let me turn the call over to our CEO, Mr. Fawad Maqbool.
Thank you, Jorge. Good afternoon, everyone. Thank you, everyone, for joining us today. Second quarter was an important period in AmpliTech's continued transformation and growth. We recognize that investors will focus on our total revenues, gross margins and total expenses and bottom line results. We want to address those items directly and, more importantly, provide our investors with additional color behind the numbers. Investing ahead of growth. Our second quarter results reflect both meaningful progress across our underlying businesses and a deliberate increase in investment as we position AmpliTech to pursue and support significantly larger opportunities across 5G, telecom infrastructure, satellite communications, semiconductor technologies, and other advanced communications markets. Establishing a meaningful and sustainable position in the telecom infrastructure market is neither easy nor accomplished overnight. It requires significant technical expertise, sustained R&D investment, product development, testing, certifications, customer qualification, and ultimately, the ability to perform at scale. We believe the investments we have made in these areas have been instrumental in the progress AmpliTech has achieved and are an important part of building a durable competitive position in this large and expanding market. While these investments impacted near-term profitability, we believe they should be viewed in the context of the larger opportunity we are building toward. We are encouraged by our strong revenue performance and, equally important, by the continued commercial and technical progress we are making in markets that historically have presented substantial barriers to entry and were only for the industry giants. There are no shortcuts to building a lasting presence in the telecom infrastructure. Our strategy has been to invest in the technology, deliberate people, the capabilities and customer relationships necessary to compete for increasingly meaningful opportunities and to support them successfully as they scale. We remain focused on disciplined execution, converting our technology investments into commercial opportunities, expanding our customer base, scaling the revenue responsibly and improving operating leverage as the business grows. Our long-term objective is to build AmpliTech into a significantly larger and more valuable communications technology company, and in doing so, create substantial and sustainable value for our shareholders. This doesn't happen overnight, and it takes a lot of resources to put all of this together to compete with the giants that we are up against. Q2 was, in many respects, a quarter to invest in the future growth of AmpliTech Group. We invested in customer-driven R&D, customer-driven supply chain resilience, production readiness, strategic sales and marketing, specialized personnel and outside expertise, cybersecurity and IT infrastructure, internal controls and the organizational capabilities required to support larger customers. Building the commercial organization, we also increased our investment in sales and marketing during the quarter. The 10-Q reflects increased marketing and business development activity, including additional industry trade shows, expanded promotional initiatives, and hiring of two senior business development representatives to support the company's expanding 5G Open RAN commercial strategy and our 5G product portfolio. To establish our brand and position us for growth, we've engaged a strategic marketing and communications firm whose principals have deep experience in complex industries. They're building our marketing and communications foundation from the ground up. They already overhauled our website and messaging, and they'll be assisting us with sales campaigns, rebuilding the e-commerce parts of our site, strengthening our SEO and building the brand equity that positions us as a leader in the market. We recognize these as essential ingredients, especially the website to portray an image that we really need to show our investors. Historically, AmpliTech has been a highly engineering-driven organization. As our product portfolio and addressable markets expand, we believe we must put an equally capable commercial organization around the technology we have developed. The objective is not simply greater marketing exposure. It's to improve access to strategic accounts and convert technology validation, customer engagement, and engineering activity into commercial opportunities. We believe the next stage of AmpliTech's evolution requires both technology leadership and market access. With this, I'll turn the call over to our CFO, Louisa Sanfratello to review our financial results in more detail.
Thank you, Fawad. Good afternoon, everyone. Second quarter revenue was approximately $8.1 million compared with approximately $5.35 million in the first quarter, representing sequential revenue growth of approximately 51%. Although revenue declined year-over-year when comparing second quarter results, the comparison requires important context. The prior year quarter included acquired 5G product sales associated with the Titan asset acquisition. Those sales increased reported revenue but carried significantly lower gross margin. The difference can clearly be seen in our gross profit performance. When comparing gross margins from Q2 2025 and Q2 2026, this year's second quarter gross profit increased from approximately $863,000 to $2.25 million, an increase of approximately 161%. Gross margin increased from approximately 7.8% in Q2 2025 to 27.9% in Q2 2026. For the first six months of 2026, gross profit increased approximately 135% from $2.05 million to $4.82 million while gross margin increased from approximately 14% to 35.9%. The 10-Q attributes this improvement primarily to a more favorable product mix and the absence of the lower-margin acquired 5G product sales included in the comparable prior year period. Sequentially, gross margin decreased from approximately 48% in Q1 to approximately 28% in Q2. We believe investors should consider this in the context of quarterly product mix in our current stage of commercialization. At our present scale, individual customer programs and product mix can have a significant effect on quarterly margins. More importantly, as we prepare to support larger customers, we are incurring costs associated with production readiness, supply chain capability, product development and customer-specific requirements ahead of the full revenue contribution we are seeking from those programs. Our longer-term objective remains to increase the contribution from our differentiated internally developed technologies and higher-margin product offerings as those programs progress towards commercialization. In line with what our CEO just shared, our S&G expenses increased to approximately $4.08 million in Q2 2026 compared with approximately $2.13 million in Q2 2025. This increase relates primarily to higher parent company expenses, including amortization, legal fees, and stock-based compensation, together with greater investment in marketing and business development, additional trade show participation and expanded consulting resources supporting the company's 5G portfolio. There was additional strategic context that we believe is important for shareholders. As we engage with larger MNOs, the telecommunication infrastructure providers, and enterprise customers, their expectations extend well beyond the product performance. These organizations increasingly expect suppliers to demonstrate strong internal controls, cybersecurity practices, IT governance, operational resilience, and the infrastructure necessary to support larger deployments. Accordingly, we have engaged specialized consulting resources to further strengthen our SOX-related controls and protocol, cybersecurity framework, and ISO-aligned IT security practices. We are also transitioning toward a hybrid IT infrastructure model, combining appropriate internal resources with specialized external expertise. Our objective is to improve security, redundancy, scalability and technical support as the company grows. These initiatives are also relevant to enhance written documentation of internal controls and procedures, information technology general controls and personnel resources necessary for appropriate segregation of duties. We, therefore, view these required investments as critical, both from a corporate governance standpoint and from a customer readiness standpoint. We expect operating expenses to grow more efficiently than revenue going forward. Certain elevated expenditures were associated with implementation, consulting, customer development, commercialization and infrastructure initiatives undertaken as we prepare the company for a larger scale of operations. Some ongoing investment will clearly remain necessary. We intend to continue investing where management sees an appropriate potential return. However, our objective is to build the infrastructure now and leverage that infrastructure across a substantially larger revenue base. That is where we believe future operating leverage can ultimately come from. Second quarter R&D increased to approximately $1.37 million compared with approximately $659,000 in Q2 of 2025. Of Q2 R&D, approximately $1.08 million related to 5G development and approximately $297,000 related to MMIC design. As stated on our 10-Q, this increase is primarily due to the expanded 5G product development activity, including higher prototype and testing costs, and increased consulting expenses supporting product innovation and development. From an operational standpoint, this quarter also required increased engineering support for new and customized requirements from existing and prospective customers. This is an important distinction as our engagement with larger customers increases, those customers may require specific configurations, prototypes, testing, validation and technical modifications before programs can progress towards commercial deployment. That means the company can incur engineering and development expenses before the associated production revenue is recognized. We view much of this work as supporting commercialization opportunities rather than research conducted without an identified market application. We are investing engineering resources today with the objective of creating products and configurations capable of generating future commercial revenue. The combination of these investments resulted in a second quarter operating loss of approximately $3.2 million and a net loss of approximately $3.09 million. We recognize that these numbers are important to shareholders, and we are not minimizing them. However, we believe it is equally important to understand what contributed to the increase. During Q2, AmpliTech simultaneously invested in product development, customer-specific engineering, sales and marketing, supply chain readiness, production capability, cybersecurity, IT infrastructure, corporate control, and the broader organizational infrastructure required to support larger customers. Our focus now is on converting those investments into commercial revenue and ultimately, operating leverage. With that said, our balance sheet provides us with significantly greater capacity to execute this strategy. At June 30, AmpliTech reported approximately $13 million in cash and cash equivalents and marketable securities, accounts receivable at approximately $6.3 million, and approximately $31.25 million in current assets, representing approximately $22.9 million of working capital. Total liabilities decreased to approximately $11.75 million from approximately $18.62 million at December 31, while stockholders' equity increased to approximately $46.75 million. Not included in our Q2 results as this transaction occurred following our quarter end, the exercise of the company's Series A rights in July 2026 generated approximately $21.92 million in gross proceeds and $20.12 million in net proceeds. We believe the rationale for strengthening our capital position should also be used strategically. Large MNOs and telecommunications infrastructure providers need confidence that their supplier has the financial resources, manufacturing capability, inventory availability, engineering support, and supply chain resilience necessary to execute significant programs. For AmpliTech, a stronger balance sheet is therefore not simply a financial asset. It is also a commercial capability. It provides greater flexibility to support working capital requirements, secure production capacity, strengthen the supply chain, support customer qualification and testing, and pursue larger opportunities without placing undue pressure on day-to-day liquidity. We believe that is particularly important as the scale of the customers and opportunities we pursue increases. I'll now turn the call over to our COO.
Thank you, Louisa. I'd like to comment from the operational perspective. From an operating perspective, Q2 was about preparing AmpliTech for a different level of customer engagement. As our opportunities expand within 5G and telecommunications infrastructure, customer requirements became more demanding. Major telecommunication customers evaluate much more than product performance and price. They do evaluations on engineering capability, customization ability, quality, manufacturing readiness, supply chain reliability, cybersecurity IT systems, financial stability, testing capability, delivery performance, and ongoing technical support. Our investments during Q2 were designed to strengthen these capabilities. Supply chain resilience is particularly important. At June 30, long-term deposits totaled approximately $3.08 million, including approximately $2.47 million associated with dedicated production capacity. During the first six months of 2026, we made an additional $1.3 million of advanced payments towards this dedicated production line. We believe these investments are important and critical as we pursue larger opportunities. The goal is to ensure that as customer demand scales, we have access to the capacity and resources required to support that demand. For a growing technology company pursuing much larger customers, we believe preparation must occur before the volume arrives. We do not want to secure a significant commercial opportunity and then discover that our production capacity, supply chain or supporting infrastructure cannot meet the customer deployment requirements. The same principle applies to engineering. During Q2, our team supported increased product development, prototype and testing activity. The 10-Q reflects the resulting increase in 5G R&D. In addition, existing and prospective customers are requesting custom configurations and technical requirements for their specific applications. Supporting these opportunities requires engineering investment before production revenue is necessarily recognized. There is, therefore, an inherent timing difference between development expenditure and potential commercialization. Our objective is to use our core technology platforms to address customer-specific requirements while developing solutions that can transition into production programs. That is why we view most of the increased engineering activity as an investment supporting potential new business. We are also making a deliberate investment in our commercial organization. As our CEO previously mentioned, to establish our brand and position us for growth, we have engaged a strategic marketing and communications firm whose principals have deep experience in complex industries. They are building our marketing and communications foundation from the ground up. They have, as Fawad mentioned, already overhauled our website and messaging, and they will be assisting us with sales campaigns, rebuilding the e-commerce portion of our site, strengthening our SEO and building the brand equity that positions us as a leader in our market. Combined with our internal business development efforts and an increased presence at important industry events, the objective is to improve our ability to engage with the strategic customers across the markets we serve. Our second quarter reflects increased marketing and business development activity which includes our participation in critical trade shows and conferences like IMS, the Mobile World Congress in Barcelona, Spain, and Network X in Florida, U.S.A. during the first half and the engagement of consultants supporting the company's 5G portfolio. We believe the technology foundation is increasingly in place. The next objective is to ensure that the market understands what AmpliTech can provide and that we have the commercial resources necessary to turn technical engagement into customer relationships and commercial programs. We have also been strengthening an area that may be less visible externally but is increasingly important to major customers, cybersecurity and IT infrastructure. As we pursue larger MNOs, telecom infrastructure providers and other global customers, we believe robust security and IT governance become increasingly important parts of the supplier qualification and ongoing customer support. We have, therefore, engaged specialized consultants to strengthen our cybersecurity environment and further develop SOX-related protocols and controls and ISO-aligned IT security practices. As Louisa mentioned, we are also transitioning towards a hybrid IT platform which is intended to combine our internal oversight with specialized external IT capabilities to provide greater security, redundancy, scalability, monitoring, and support. For us, this is part of the same broad strategy of strengthening our production and supply chain capabilities. We are simply building the infrastructure behind the product. This includes the physical supply chain, engineering resources, commercial organization, cybersecurity environments, IT systems, financial control, and most importantly, customer support capabilities, which are ever present with larger MNOs. We believe all of these elements become increasingly important as the size and sophistication of our customers increase. Larger programs require larger preparation from our part. With this, I would like to transfer back to our CEO, Mr. Fawad Maqbool.
Thank you, Jorge. I'd like to follow up with our strategic perspective and outlook. When we say Q2 was an investment quarter, we're not using that phrase simply to explain higher expenses. There was a deliberate strategy behind those expenditures. We invested ahead of the revenue opportunities we are pursuing. We invested in customer-driven R&D. We invested in production readiness and supply chain resilience. We invested in sales, marketing and global business development. We invested in strategic talent and specialized outside expertise. We invested in cybersecurity, IT infrastructure and internal controls. And we strengthened our balance sheet so that we can support opportunities of a greater scale. These investments increased our near-term operating expenses. But they were made with a clear objective to position AmpliTech to support larger programs, larger customers, and ultimately, a greater contribution from differentiated higher-margin products. Every time we go to a customer, and we say, okay, where is the PO after we demonstrated something, they keep adding something else. So we have to keep adding all those things that you saw that we mentioned in order to properly serve and get more business from these customers. Now looking at the margin perspective, we also want to emphasize the importance of revenue quality. Although the first half of 2026 revenue was approximately 8% below the comparable prior year period, gross profit increased approximately 135%, and gross margin improved from approximately 14% to approximately 36%. This demonstrates the impact of product mix on the business. It's very important. We have many different products, and each one of them carries its own profitability. Our objective is not simply to maximize the revenue without regard to profitability. We're focused on increasing the contribution from differentiated technologies and products where AmpliTech's engineering, intellectual property and performance provide meaningful value to the customer. All the different divisions have a different purpose for supporting the customer in every different way. As those products and customer programs move further towards commercialization, we expect the opportunity for a more favorable mix of higher-margin revenue. This is the beginning. It's like priming the engine with gas. This is what we have to do to set up the engine so we can get to speed. We should also be clear that quarterly margins can fluctuate based on product mix, customer mix, timing, and stage of individual programs. But strategically, the direction we are pursuing is clear. From the investment to the operating leverage, the next stage is about converting investment into results — converting the investment into results. Much of the infrastructure we are establishing today is intended to support a significantly larger revenue base around the corner. We do not expect every dollar of the revenue growth to require a corresponding dollar increase in corporate infrastructure. We've been investing ahead of the anticipated demand so that when larger opportunities progress, the company has the ability to support them. That's how we intend to create operating leverage over time. Our priorities remain for the remainder of 2026: one, convert customer engagement and development programs into commercial orders and production revenue; two, increase the contribution from differentiated higher-margin products; three, leverage our expanded sales and marketing capabilities to broaden our customer base and global footprint; four, continued strengthening production and supply chain readiness for larger deployments; five, complete key customer-driven engineering and customization programs; six, strengthen cybersecurity, IT systems and internal controls appropriate for the larger customers we are pursuing; seven, maintain disciplined capital allocation as these opportunities progress. Now my closing remarks. AmpliTech today is building a substantially broader organization than it was several years ago. That can be seen. Everything is growing, yes, including our expenses, but it's for a greater good. We have expanded beyond our traditional RF component business into semiconductor distribution, MMIC development, advanced RF solutions and 5G infrastructure. This gives us independence from individual vendors. It gives us our own IP and technology. This makes us more of a one-stop solution for our customers, rather than them going to ten different places. That's the attractive part, but we have to build that. We have to show them that. That transformation requires investment but we believe we are now building not simply individual products but the technology, operational and commercial platform necessary to participate in these significantly larger markets. There are trillion-dollar and multibillion-dollar markets in everything that we're doing. Second quarter reflected that transition. Revenue increased approximately 51% sequentially. Our first half gross profit increased approximately 135% year-over-year. We strengthened our production and supply chain capabilities. We increased customer-driven R&D. This is something that our customers have asked. So what does that mean? They asked us to do the R&D, and they will spend to adopt it. We expanded our sales and marketing reach. We are strengthening our cybersecurity, IT infrastructure and corporate controls. Following the Series A rights exercise, we substantially strengthened our financial resources. This is the reason why we did that. We need to do all these things and without the capital investment, we cannot do that. We cannot compete. Q2 was an investment quarter. It should be noted as such. Our focus now is on converting those investments into sustainable growth, higher-margin commercial revenue and, over time, improved operating leverage. We believe we have strengthened the foundation necessary to support larger customers and opportunities we are pursuing. We appreciate the continued support of our shareholders, customers, employees, and strategic partners, and we look forward to updating you on our progress in the near future. And now I'd like to go back to Jorge, AmpliTech Group's COO to address previously received questions into our email.
Thank you, Fawad. And I would like to immediately address the questions received so far at our investors@amplitechgroup.com email address. The first question came in as, revenue increased substantially from Q1, but gross margin declined. Why? The primary factor is product mix. At our current scale, the timing and composition of individual customer orders can materially affect quarterly margins. What we believe is important is the broader trend. For the first six months of 2026, gross margin was approximately 35.9% compared with approximately 14% in the first half of 2025, while gross profit increased approximately 135%. Our objective is to increase the contribution from differentiated products and technologies as newer programs progress towards commercialization. We, therefore, will not view any individual quarter's margin as necessarily representative of the longer-term mix we are working towards. Next question. Why did operating expenses increase so much? Well, as I mentioned during this conference call, during Q2, we incurred increased amortization, legal fees, and stock-based compensation as well as greater marketing and business development activity, additional trade show participation and consultants supporting our 5G portfolio. R&D also increased because of higher 5G development, prototype testing and consulting activities. In addition, we have been investing in infrastructure that we believe is necessary to support larger customers, including customer-specific engineering, cybersecurity, IT systems, internal controls, supply chain readiness and commercial capabilities. We don't believe investors should assume that these elevated expenditures will necessarily increase proportionately with revenue. Some costs are ongoing while others are associated with implementation, customer development or building capabilities that we expect to leverage over a larger future revenue base. In other words, are you saying these expenses are nonrecurring? We will not characterize all of them as nonrecurring. A more accurate way to describe the quarter is that certain expenses were elevated because of specific implementation, development, consulting and commercialization initiatives. We will continue investing where we believe there is an appropriate potential return. The objective is to increase revenues at a faster rate than expenses. That's the objective of our business. We're building capabilities today that we expect to leverage as the business scales. Next question, why was it necessary to raise additional capital? We believe financial strength is increasingly important when dealing with larger customers. Large MNOs and telecommunications infrastructure providers need confidence that their suppliers can support production, buy inventory, meet supply chain requirements, engineering and customer support at scale. Following the Series A rights exercise, we received approximately $20 million in net proceeds, significantly strengthening our financial flexibility. We view the liquidity not simply as cash on the balance sheet but as part of our ability to support larger commercial opportunities. Next question. When should investors expect this investment to translate into revenue? Our focus is on converting the customer engagement, engineering programs and commercial activity already underway into production opportunities. The timing of large telecommunications programs can depend on customer testing, qualification, network requirements, purchasing decisions and deployment schedules, many of which are simply outside our control. For that reason, we don't want to provide timing beyond what we have formally disclosed. What we can say is that we have intentionally strengthened our engineering, supply chain, commercial and financial capabilities so that as opportunities progress, AmpliTech is positioned to support them. And this concludes the questions previously received up to this hour into our email address. Operator, please open the lines for questions.
分析師問答
The first question comes from Jack Vander Aarde with Maxim Group.
Okay. Great. So Fawad, I guess my first question is on the 2Q results, total revenue of $8 million. I was digging through the 10-Q here. And at the segment level, I was surprised to see more than half or about—just over $4 million—was actually from the Spectrum division. And it also seems that Spectrum's gross margin seems relatively stable in the mid-40%. Was this expected? And it seems that the drop-off in gross margin was from the engineering services and the AmpliTech segment. So just trying to understand why that is, and if that's the case going forward.
Yes, you are correct in observation. Jorge, do you want to answer that?
Yes. That's correct. Certainly, we are very pleased that our Spectrum division is doing better this year; we are seeing an up demand from their side. So this is a pleasant surprise. We are finally seeing that they are receiving a lot of inquiries and we are also developing new revenue streams for our Spectrum division. This quarter was testimony to what we have been doing with them while maintaining the gross margins that we are accustomed to from that division.
Let me add to that, Jack. Spectrum is a distribution business; they're distributing standard parts. They don't do engineering work in the same way. Our other divisions are engineering-focused and therefore have to invest in R&D frequently to meet customer requirements, especially in newly developing businesses. So there's a significant contrast between Spectrum's stable distribution business, which we acquired to provide balance and diversification, and the engineering-focused segments which are more variable in margin. As our 5G business grows, Spectrum will scale up as a distributor of some of our products as well. That difference in business model explains the margin variance you noted.
Understood. I guess my next kind of follow-up question though is if I look at 2Q last year, the Engineering Services segment gross margin, I think it was actually quite high. I think it was, unless my math is wrong, closer to 90% in the second quarter of last year, then kind of 22% in Q1. So just maybe it is product mix and different types of products that you've been investing in, obviously, in that segment. Does that seem accurate to you—that the gross margin difference in the AmpliTech Engineering segment is driven by product mix?
Well, the AmpliTech Engineering segment includes the LNA business as well as the 5G-related products. The 5G division has a different margin profile. If you separate the 5G revenue, you'll see different margins. Because we report as a group, the mix affects the consolidated margin. Product mix is the key driver and as we build more of the higher-margin, differentiated products into production, the mix should trend more favorably.
Okay. Understood. And then I guess next question just on your outlook for the rest of this year. It's good to see the $6 million purchase orders come in during the month of July alone. Last quarter, I think you had reiterated revenue guidance for $50 million for the year that was assumed to be kind of low visibility, back half loaded. Obviously, you have this very large LOI with another reseller here. Can you maybe just touch on that? Are you—do you reaffirm guidance or withdraw it based on visibility at this point? Just trying to understand the interim change.
Jorge, do you want to handle it?
Yes, Jack. When we established our 2026 outlook, it was based on customer deployment schedules, backlog on hand, and expected conversion of LOI programs into funded purchase orders where we had visibility. Over the first six months, we experienced a shift in the timing of certain anticipated volume shipments, particularly within one of our international 5G programs. This shift is affecting the timing of the follow-on purchase orders associated with that deployment overseas. Importantly, what we are seeing is primarily a timing issue rather than a change in the underlying customer opportunity. The programs remain active and we see continued meaningful commercial activity. As we mentioned, we received $6 million in follow-on orders in July alone. We still expect meaningful year-over-year revenue growth in 2026 and a stronger second half of the year. However, given customer-controlled timing associated with these larger deployments, we believe it's prudent at this point not to reaffirm a specific full-year revenue number until we have better visibility into the timing of these volume shipments and follow-on orders. Our focus remains on converting opportunities into funded orders, shipping those orders efficiently and building the business for sustainable growth beyond any individual quarter.
Okay. Understood. And that makes sense. Maybe just one more for me then. Fawad, can you just confirm, is that LOI that was, I think, $76 million at the time for that reseller still active? And then also, is there any incremental testing or certification that they are asking you for before we see orders start to roll in?
Yes, it's still active. Since these are international deployments, the timing varies. Everything is still active; it's primarily timing related. We have received smaller orders which we have delivered and which are being tested in the field. Some of these countries have additional procedural steps and bureaucratic processes that can slow the timing to larger purchase orders. The technology has been proven, we have IP, and that IP can be deployed in other countries as well, which you will see announced in the coming months.
Okay, great. And that was my last question. Maybe just one more, Fawad. Can you touch on your business development activities recently in terms of opening up new potential LOIs or partners, customers in general, since we've seen these two large LOIs, I think that you entered originally in the first half of '25. Is there anything else on the horizon you could touch on?
Yes. The LOIs demonstrate engagement with customers that are willing to work with us. We've already exceeded the original $40 million LOI from the same customer with additional orders and deliveries now rolling out. The IP is now in our hands and we've reengineered and productionized those technologies. Those productionized versions are ready and we have orders that will start shipping towards the end of this year. As we convert development into production, customers will move to POs rather than LOIs. The business development hires we've made are strategic; the two senior reps have positions and expertise in the markets they work in and are helping convey what our technology can provide. You should see the results of these efforts in the coming months.
The next question comes from Thomas Fortune, private investor.
I'm a small investor compared to most everybody probably on this call. Mr. Fawad, I, of course, have never spoken to you but the inability to answer the question regarding the previously announced $50 million yearly guidance—I didn't hear anyone on your team or AmpliTech Group confirm that guidance. It seemed to me like you all walked around that. Did I mishear something? Or can you expand on that?
No, you didn't mishear anything. We explained that it's a timing issue and we don't have the foresight to give you any specific number beyond what we have disclosed today. The timing for certain customer deployments has changed.
I understand. When you say everything is in place, does that mean customers are in place?
We don't have any cancellations of orders and we don't have changes in the LOIs. The forecast timing has shifted, but the underlying customer opportunities remain intact. We can't specify exact timing beyond what we've shared.
I could read into your answer that $50 million could happen before the end of the year?
It could.
Okay. All right. Well, thank you for your time. I'm in a large AmpliTech Group investment community and everyone in our group chat has been anticipating this earnings but the lack of guidance has really been an issue in our group chat. I really wanted to ask you directly, and if I was rude in doing so, I apologize.
Mr. Thomas, we cannot say with 100% certainty that we'll hit the $50 million or not, because we have seen a shift in customers' deployment schedules. We're talking about 5G radios where tower implementations require staffing, physical work to remove and replace equipment, and as customers consume inventory they place follow-on orders. Right now we're lagging behind the projected deployment schedule for some programs. We are not reaffirming the $50 million figure today, but we continue to expect significant growth for the year. It would be premature to replace any prior outlook with another specific number until we have greater visibility into the timing of these deployments. We don't want to mislead anybody. We want to show that we are prepared and are taking necessary steps to fulfill current orders and support new large opportunities. We are subject to NDAs and must be careful about disclosing customer identities. I can also reaffirm that none of the orders in our backlog have been canceled. It's a timing issue on the speed of deployments and the processes of our customers.
Jorge, thank you for your transparency. This is the first micro-cap company that I've invested in. The two things that drew me to AmpliTech were the technology and management. My concern is not the delay; I'm fine with delays. I still believe in the thesis. My only concern was the lack of guidance. Guidance is guidance; it's not a guarantee. I think an honest guidance has been missing, at least on my end from this call. Thank you for your time and transparency.
The next question comes from Lennox Brooks with Fort Washington Investment.
Congrats on the progress and on the quarter. One question for me. Can you provide any color on your inquiries or engagements from customers related to quantum computing? Has it increased over the past year?
Lennox, quantum computing appears to be relatively static at present. Adoption has been slow. AI is moving quickly, but the integration of AI with quantum computing has not yet reached production scale. The market for quantum is not yet productionized—quantum systems remain specialized, and a single quantum computer would serve many businesses rather than be widely distributed like a PC. We have sold into core computing systems for R&D and development. We are the only U.S. company with LNAs capable of operating at 4 Kelvin, which is relevant to quantum, but the production market has not yet developed broadly. So at this time, we don't see tremendous growth in the quantum component area.
The next question comes from Richard Kreger with Moody Capital Solutions.
Congratulations on a record revenue quarter. Quick question: I noticed the gross margin of the business is up significantly year-over-year. It looks like first half gross margins went from about 14% to almost 36% year-over-year. How do you expect gross margins to be impacted for the second half of the year with revenue growth? Should we expect a similar improvement year-over-year in both revenue and gross margins? Also, Q1 versus Q2 saw a dip quarter-over-quarter but big growth year-over-year, so it seems a bit choppy.
Rich, we've explained that gross margins and revenue are lumpy quarter-to-quarter because of product mix. We're investing heavily to build up our 5G product lines, which explains the elevated expenses. As we secure and ship higher-margin orders in the second half of the year, we expect more favorable margins. Large customers require extensive capabilities—program management, controls, cybersecurity, production readiness—so we have invested to meet those expectations. We do expect the second half of the year to have bookings and orders with higher margins that will help reduce lumpiness and smooth growth.
If I can ask one more: I noticed you joined the AI RAN Alliance. Can you talk a bit about who's involved and the reason for joining?
There are multiple alliances. We're part of the O-RAN Alliance and we received certification. The AI RAN Alliance includes major players—carriers, software and hardware companies that are building a standardized AI layer for RANs. Members include major MNOs and large vendors. The purpose is to ensure interoperability and to accelerate the deployment of AI-enhanced RAN capabilities. Being part of this alliance allows our hardware to be tested with AI layers from different providers and positions our radios in front of major players. It helps demonstrate that our platform is AI-RAN enabled and interoperable with major software providers and universities developing AI RAN solutions.
I saw a press release from Northeastern University that mentioned both AmpliTech Group and NVIDIA, but I didn't see any press releases from AmpliTech discussing that certification or relationship with NVIDIA. Can you elaborate why NVIDIA wasn't mentioned in your press materials about the Northeastern activity?
We work with NVIDIA as part of the ecosystem in the Northeastern initiative. NVIDIA and other software providers are using our radios as hardware platforms to test AI RAN integrations. We cannot claim contractual product placement with NVIDIA; our role is as a hardware partner in an ecosystem. NVIDIA is using our radios in the broader platform that Northeastern is assembling, but we don't have a direct product placement or contractual announcement with NVIDIA to issue on our own.
The next question comes from Andrew DeAngelis with Venture Capital.
This has been a long call. I was hoping to get additional context on the 8-K you released last night regarding the Titan acquisition amendment—how that's impacted the first half of the year and any continuing impact into the back half as it relates to that?
There will be a press release tomorrow addressing the 8-K. In summary, we negotiated penalties or damages for late delivery of those parts. The delay affected the roll-out of the IP, which we have since reengineered so it is more feasible for customers. We are nearly complete with the asset transfer and have embellished the assets with our own technology. We are now ready to roll out productionized versions, and we already have orders for these that will start shipping toward the end of this year or early next year. A press release tomorrow will provide more detail.
Helpful. Are you able to disclose your fully diluted share count as of the end of July post the Series A?
I don't think we can provide end-of-July numbers on the call. Louisa?
Andrew, if you would like, you can email me and I can check with legal and see what information we can provide. If I disclose it to you, I would have to ensure it's appropriate to disclose to all shareholders as well.
Understood. One more quick question on the costs related to the infrastructure you're building and the run rate of costs that are ongoing versus one-time in nature. How are you thinking about recurring SG&A run rate? If you can break out the size of one-time expenditures in that line, that would be helpful.
SG&A as a percentage of revenue will decline as revenue increases because many of the investments are now in place. If revenues grow significantly to $50 million or $100 million, the fixed infrastructure costs we are building will be leveraged across a larger revenue base and SG&A will decrease as a percentage of sales. Right now we have elevated fixed expenses while revenue has not yet fully caught up, but as revenues ramp, SG&A will normalize.
This concludes the question-and-answer session. I would like to turn the conference back over to Fawad Maqbool for any closing remarks. Please go ahead.
Thank you, operator, and thanks to everyone who joined today's call to hear about the progress we've made and the plan we have to further our company's mission of providing the communication systems of tomorrow today. We look forward to updating you further in our third quarter financial results call sometime in November. Until then, please contact us directly should you have any questions or wish to schedule a call with management. Our Investor Relations team can be reached at the contact information listed at the bottom of our press releases. Thank you and be well.
The conference has now concluded. You may now disconnect.