Ambiq Micro, Inc.

The results of operations data in the following tables for the periods presented have been derived from the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Comparison of Three Months Ended March 31, 2026 and 2025

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

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

Net Sales

Net sales increased $9.3 million or 59.3% for the three months ended March 31, 2026. The growth was broad-based across our major customer base, with two customers exhibiting particularly strong demand driven by new product launch ramps at higher average sales prices annually. Furthermore, we introduced a new major customer to support our new product launch which led to significant revenues in the first quarter of 2026. These launches, combined with increased customer demand, were the primary drivers of the net sales improvement over March 31, 2025.

Gross Profit and Gross Margin

Gross profit increased $2.5 million, or 29.8%, to $10.9 million for the three months ended March 31, 2026, from $8.4 million for the three months ended March 31, 2025. The increase was primarily driven by the increase in net sales. However, gross margin decreased 980 basis points primarily due to a non-monetary gain of $1.6 million in the first quarter of 2025, which did not repeat during the first quarter of 2026.

Research and Development Expenses

Research and development expenses for the three months ended March 31, 2026 increased $4.1 million, or 47.7%, to $12.8 million in the first quarter of 2026 from $8.7 million in the first quarter of 2025. The overall increase in research and development expenses was primarily attributable to increased intellectual property development and technology spend in addition to higher contractor and compensation-related costs, including share-based compensation expenses associated with RSU grants after our IPO. The Company hired 15 additional employees year over year in line with our Atomiq development plan.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $1.3 million, or 15.5%, to $9.7 million for the three months ended March 31, 2026, compared to $8.4 million in the first quarter of 2025. The increase was primarily attributable to higher variable compensation for the Company's internal incentive compensation programs, 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 company 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

Other income, net increased $1.1 million, or 229.9%, to $1.5 million for the three months ended March 31, 2026, compared to $0.5 million in the same period of 2025. The increase was primarily attributable to higher interest income earned on greater cash proceeds raised through our IPO and January 2026 follow-on offering. We expect other income to fluctuate in future periods based on prevailing interest rates and changes in our cash balances.

Provision for Income Taxes

We recorded minimal income tax expense in the first quarter of 2026 on a pre-tax loss of $10.2 million, yielding an effective tax rate of 0.03%. We recorded 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%. Our effective tax rate was lower than the U.S. statutory rate of 21%, primarily due to the change in valuation allowance.

Liquidity and Capital Resources

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. In January 2026, we completed a follow-on offering, which resulted in net proceeds of $75.3 million after deducting underwriting discounts and commissions of $5.0 million and offering expenses of $1.5 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 March 31, 2026, we had $204.5 million in cash and cash equivalents. Our principal use of cash is to fund our operations, invest in research and development to support our growth and other general corporate needs.

We believe that our cash on hand and anticipated cash from operations will be sufficient to finance our operations for at least the next twelve months from the date of this Quarterly Report on Form 10-Q.

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 you 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, and financial condition would be adversely affected.

Cash Flows from Operating, Investing and Financing Activities

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

Operating Activities

For the three months ended March 31, 2026, cash flow used for operations was $11.2 million. Operating cash flow used during the three months ended March 31, 2026 was related to the cash components of our net loss and $6.4 million of unfavorable changes in working capital driven primarily by building $6.5 million in inventory, offset by $0.1 million resulting from the timing of our sales to customers and payments to our vendors.

For the three months ended March 31, 2025, cash flow generated in operations was $1.4 million. Operating cash flow generated during the quarter was related to the cash components of our net loss and $8.3 million of favorable changes in working capital driven primarily by $0.3 million of lower inventory purchases offset by $8.6 million resulting from the timing of our sales to customers and payments to our vendors.

Investing Activities

For the three months ended March 31, 2026, we used $4.0 million in cash for investing activities, which related to $3.4 million of technology investments in intangible assets and $0.6 million in capital expenditures.

For the three months ended March 31, 2025, we used $1.1 million in cash for investing activities, which related primarily to $1.0 million of technology investments in intangible assets.

Financing Activities

For the three months ended March 31, 2026, we generated $79.4 million related to financing activities, driven by follow-on offering proceeds net of deferred offering costs, underwriting discounts, and commissions of $75.3 million, the exercise of warrants of $3.0 million and the exercise of stock options of $1.1 million.

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

Non-GAAP Financial Measures

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, 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.

We present the non-GAAP financial measures non-GAAP net loss and non-GAAP gross profit in this Quarterly Report on Form 10-Q because we believe these non-GAAP financial measures provide additional tools for investors to use in comparing our core business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors. However, our presentation of non-GAAP net loss and non-GAAP gross profit may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated. Non-GAAP net loss and non-GAAP gross profit have limitations, and should not be considered as the sole measures of our performance and should not be considered in isolation from, or as a substitute for, net loss and gross profit calculated in accordance with GAAP.

Some of these limitations are that non-GAAP net loss and non-GAAP gross profit:

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do not reflect incomes taxes, which are necessary costs incurred in connection with our operations and reduce cash available to us;

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exclude depreciation and amortization, and although these are non-cash expenses, the assets being depreciated may have to be replaced in the future, increasing our cash requirements;

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do not reflect stock-based compensation expenses, which represent a significant cost of attracting and retaining qualified employees, and excluding them may underestimate the true economic cost of our workforce;

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do not reflect gain on nonmonetary transactions;

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do not reflect severance costs which represent costs associated with reductions in force;

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exclude IPO and related transaction costs which represent non-recurring professional fees for advisory, legal, accounting, valuation and other professional or consulting services incurred related to the IPO; and

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exclude warrant valuation costs, which represent the mark-to-market valuation of liability-classified warrants.

Because of these limitations, we consider, and you should consider, non-GAAP net loss and non-GAAP gross profit alongside other financial performance measures, including net loss and gross profit and our other GAAP results. A reconciliation of our non-GAAP net loss to net loss and non-GAAP gross profit to gross profit, the most directly comparable financial measures stated in accordance with GAAP, are provided below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measure to their most directly comparable GAAP financial measure.

The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures.

Non-GAAP Net Loss:

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

Non-GAAP Gross Profit:

Critical Accounting Policies and Estimates

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, 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 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

For more information regarding recently issued accounting pronouncements, see Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Controls and Procedures

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, 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.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company,” as defined in the JOBS Act, enacted in April 2012. We intend to take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this provision of the JOBS Act. As a result, we will not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies. Therefore, our consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company and may take advantage of these exemptions until the earliest of: (i) December 31, 2030; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.