Amprius Technologies, Inc.

Good afternoon. Welcome to the Ambrius Technologies third quarter 2025 earnings conference call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun, President, Tom Stepien, and CFO, Ricardo Rodriguez. At this time, all participants are in listen-only mode. Following management's remarks, we will open the call for questions. Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future products development or commercialization, new customer adoption and new applications, our growth and the growth of the markets in which we operate, and the timing and ability of Ambrius to expand its manufacturing capacity, scale its business, and achieve a sustainable cost structure. These statements involve known and unknown risks, uncertainties, and other important factors that may cause Ambrius' results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied in such forward-looking statements. For more complete discussion of these risks and uncertainties, please refer to AMBRIUS's filings with the Securities and Exchange Commission. This presentation includes a non-GAAP financial measure, which is adjusted EBITDA. This non-GAAP financial measure does not replace the presentation of AMBRIUS's GAAP financial results and should only be used as a supplement to not as a substitute for Ambrose's financial results presented in accordance with GAAP and may not be comparable to calculations of similarly titled measures by other companies. A reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, is included in our shareholder letter, a copy of which is filed with the SEC and posted on our website. Finally, I would like to remind everyone that this conference call is being webcasted and a recording will be made available for replay on the company's investor relations website at ir.ambrius.com. In addition to the webcast, the company has posted a shareholder letter that accompanies these results, which can also be found on the investor relations website. I'll now turn the call over to Ambrius Technologies CEO, Dr. Kang Sun, for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will begin with a brief company overview. After that, our president, Tom Stepin, will recap our third quarter performance and the key accomplishments. Next, our CFO, Ricardo Rodriguez, will discuss our financial results for the period. I will share some closing remarks before opening the call for questions. Let's begin. Amperes is a pioneer and leader in silicon annual battery space with over a decade of development experience and a proven track record of commercial success. At Amperes, we develop, manufacture, and market high energy density and high power density silicon annual batteries with applications across all segments of electrical mobility. including the aviation and the light electrical vehicle industries. Today, Amperes has the most complete commercially available portfolio of city handle materials assisting in the industry. And the comments performance leadership with this combination of battery energy density, power density, charging time, operating temperature range, and safety. Across our battery portfolio, we believe we offer unmatched performance among the commercially available batteries. Amperes has been delivering commercial batteries to the market with up to 450 Wh per kilo and 1150 Wh per liter. 10C power capability. Extreme fast charge rates of 0 to 80% steel charge in approximately 6 minutes. the ability to operate in a wide temperature range of minus 30 degrees up to 55 degrees Celsius, and the safety design features that enable us to pass the United States military benchmark and new penetration test. Each of these performance parameters is critically important to real-world electric mobility applications. Not only do our batteries empower certain drones, satellites, and the vehicles to maximize performance, they also enable our customers to achieve their economic targets as well. In addition, Amperes has developed a 500-watt per kilo and a 1,300-watt per liter battery platform that has been validated by an independent third party. with our belief that there are no other commercial batteries on the market that can perform at this level today. In the third quarter, we continued to execute against our strategy of developing leading battery performance, converting that innovation into customer wins, and scaling our manufacturing through a capital-efficient concrete manufacturing model. With that, I will now turn the call over to our president, Tom Stepping, to detail the highlights of our record quarter. Tom.

Thank you, Kang. AMBRIUS finds itself at a very fortunate point in time, at the intersection of a fast-growing electric aerospace market with an industry-leading set of battery products. This advantage situation, coupled with strong execution by our team allowed us to achieve record revenue in the third quarter. We attracted new customers, continued to optimize our operations, and released compelling new products. Let's start with updates on our commercialization strategy and share execution details. In the third quarter, we shipped batteries to 159 end customers, 80 of whom are new to the Amprius platform. The remaining 79 are repeat customers, Now to be clear, we don't ship to every customer in every quarter. We do expect to gain new customers every quarter, albeit not always 80 new ones. But we expect to gain new customers nevertheless. Since the first quarter of 2023, Amprius has built relationships with hundreds of companies and shipped batteries to a total of 444 end customers. This strong and expanding customer traction comes from the superior performance of our batteries compared to traditional cells. As we continue to move new customers through the qualification process, you're also seeing that we have plenty of room for expansion orders within our existing agreements. In the third quarter, our revenue totaled $21.4 million, a 42% increase from the second quarter and up 173% from Q3 2024, a year ago. Our second generation Sycor batteries led the revenue charge in Q3 with a greater than 4x increase in shipments compared to Q3 2024. Sycor is a proprietary silicon anode that uses standard lithium ion processing equipment. In August, I visited a couple of our contract manufacturing partners. At one, They were making conventional graphite cells in the morning, and in the afternoon, they were producing our SciCore silken cells. Same line, same equipment. SciCore standardization helped us enable a second consecutive quarter of positive gross margin. Ricardo will provide more context here when he reviews our financial highlights next. Looking at our customer base, about 75% of our revenue in the quarter came from the aviation segment, led by unmanned aerial systems, or UAS market. The remainder of our Q3 revenue was primarily derived from the light electric vehicle sector, which remains healthy but has a lumpier profile due to the customer's variant product introduction cycles. The LEV market tends to have short design and cycles, and we believe our drop-in replacement batteries can help us succeed in gaining market share in this growing market. From a geography standpoint, 75% of our revenue came from outside the United States on a ship-to basis. Our strong customer diversification supports steady growth, even amid uncertainty driven by U.S. tariffs, and customer delays related to the US government shutdown. One of our major wins this quarter was a $35 million purchase order from a leading UAS manufacturer, which we announced in September. This order is a follow-on purchase from the same customer that placed a $15 million order earlier this year. While we continue to grow our customer base across geographies, applications, and budgets, These kinds of large repeat orders underscore the built-in growth engine that we have within our growing customer base. It also highlights the proven performance at scale of our batteries. During the quarter, we also deepened our relationship with another key customer, AeroVironment. As a part of the U.S. Army's Extech Prime program, we shipped samples of our ultra-high energy cells for evaluation in a variety of applications. These cells reach up to 520 watt-hours per kilogram and vastly improve endurance, payload capacity, and mission economics for high-altitude platforms. Another key Amprius partner in the drone segment is Nordic Wing in Denmark. In Q3, they chose our Psycorps cells to power their UAV platform after an extensive qualification and evaluation period. Their Astero ISR is a fixed wing craft with a wingspan of about 2.3 meters. In its standard configuration, it weighs around four and a half kilograms. ISR is an acronym for intelligence, surveillance, and reconnaissance. In drone speak, intelligence is a collection, processing, and analysis of information to support decision making. For example, drone cameras will see the beginnings of the forest fire, and the built-in smart analytics will make a decision to send a dispatch signal to the appropriate firefighting equipment. Surveillance is the systematic observation of an area, person, or activity over time, continuous monitoring of a border or a convoy route, for example. Reconnaissance is a specific mission-focused gathering of information, usually short-term and targeted. Is the fire really extinguished? The Astero ISR with the Amprius Psi-Core batteries flies 90% longer than with standard cells. 90% improvement, almost twice the flight time. Astero stays airborne longer, covers more ground, and delivers real-time intelligence without interruptions. This enhanced endurance doesn't just improve performance. We believe it redefines what's possible in every mission, and can mean the difference between success and failure. Looking a bit further out, we continue to make inroads in our relationship with Amazon. After being selected for the inaugural Amazon Device Climate Tech Accelerated cohort in July 2025, we successfully advanced to the integration assessment phase. This stage involves comprehensive testing of feasibility, customer value proposition, sustainability impact, and supply chain readiness. We are excited about this opportunity to continue working with Amazon in this next phase, and we'll share further updates as we are able. All of these recent customer wins further demonstrate our ability to scale up to meet volume purchase orders, which we believe will continue to increase as we expand our customer funnel and continue to extend the state of the art that our cells provide. State of the art includes external testing. We rigorously test new products both internally and send them to external labs where they are tested against international safety standards. These include United Nations 38.3, standards maintained by the International Electrotechnical Commission, and for our customers in India, the Bureau of India Standards. This quarter, we introduced two new SICOR pouch cells and three new SICOR cylindrical cells that are optimized for unmanned aerial systems, high-altitude platform systems, and the electric airplane duty cycles. We call these balanced power and energy cells. Electric aerospace platforms typically require balanced cells, You need high power, high sea rate capability for takeoff and landings, and you need the high energy to enable long range. Products like these balanced cells further differentiate Amprius from traditional battery players. Many of our end customers participate in shootouts and fly-offs competing for their own contracts. They need to demonstrate best up-in-class performance. We help them win. Our batteries give them more kilometers, allow additional kilograms, provide more watt hours that support their onboard intelligent components. We believe that the electric aerospace is on the cusp of a multi-year transformation propelled by defense and commercial demand for a new era of AI-driven autonomy. McKinsey estimates this market is $40 to $50 billion today, growing to $80 billion by the end of the decade. About 10% of that market and 10% of a drone's bill of materials is for batteries. Recent regulations and policy changes appear to be market accelerants. The U.S. executive orders over the summer that promote domestic drones is one piece of evidence. A second is the proposed changes to the beyond visual line of sight rules that the U.S. Federal Aviation Authority is debating. BVLOS is a significant unlock for drones. We expect these policy actions will accelerate adoption timelines and open new opportunities across the board. We've already experienced strong traction from the defense market and expect growing interest from these customers in the year ahead. Estimates show that more than $10 billion from the one big beautiful bill will be allocated to defense and unmanned systems. And we believe that we are well positioned to benefit from this increased funding. Anecdotally, we have already seen optimism surrounding the government funding translating to strong buyer intent. Last month, we exhibited at the AUSA conference in Washington, DC, where we met with dozens of defense contractors that were either interested in or already using our products for their drones. We also attended US and international conferences. Commercial UAV Expo in Las Vegas, Defense and Security Equipment International in London, and the Drone X Expo also in London. At all of these events, we heard a similar message. Drones are an important part of the future, and Amperius batteries are at the forefront of innovation to power them. As a key component supplier for unmanned drone systems, we have had our own success working with the U.S. government. As we discussed during our August 2025 call, We are working closely with the Defense Innovation Unit. Our DIU contract gives us funds to increase the capacity of our Fremont, California, pilot line to 10 megawatt hours and expand our capabilities to support quick-turn, side-core customer prototypes. Since our last update, we have received an additional $1.5 million follow-on contract, bringing our DIU contract total to $12 million. Our program mandate includes qualifying individual lithium ion battery components from National Defense Authorization Act, NDAA, compliance suppliers, which will allow us to work more seamlessly with the DOD. This includes considerations of the anode and cathode active materials, electrolyte, and separator. This effort is part of a large momentum shift to U.S. domestic production of batteries. As we worked on building out an NDAA-compliant supply chain and production capacity for our customers that require it, we have continued to utilize our contract manufacturers to support our rapid growth. As a reminder, we have over 1.8 gigawatt hours of capacity available to us through our partners, including our most recent added partner in South Korea. Let's put that 1.8 gigawatt hours in context. Our SA08 cell is our best-selling battery. It has an energy rating of 38 watt hours. 1.8 gigawatts over 38 watt hours works out to be about 50 million cells per year. We have tremendous headroom on our manufacturing capacity. This capital-efficient model provides production-grade cells for qualification today and supports our ramp to volume while still allowing configuration control and aerospace-aligned quality systems. We are also opportunistically sourcing additional partners to provide us with greater geographic diversification and operating flexibility. As we headed to the tail end of the year, we've carried our momentum into the fourth quarter. A few weeks ago, we announced that ES Aero, another leading UAS company, chose our side core SA08 cell, to power the Group 1 and Group 2 UAVs that support defense, security, logistics, and public safety applications. They chose us because, in their words, Amprius, quote, offered the best combination of advanced battery technology, production readiness, and cost competitiveness to meet the program demands, unquote. We have talked extensively about our defense applications for our batteries. We see a large and growing opportunity in the public safety markets also. According to a Police One article, more than 1,500 U.S. police departments have DFR programs, drone as first responders. Their systems are tied into the 911 emergency systems and are dispatched to help find a lost child, monitor smash and grab suspects, and understand if the fire is a spark or an inferno. We look forward to continuing to support the drone sector as it scales and evolves into more mission critical and business critical use cases. On a final note, we also made the exciting announcement that Ricardo Rodriguez has joined Amprius as a new financial officer. Ricardo has a proven track record of driving growth with financial discipline and high performance markets and he will serve as a valuable guide as we expand our commercial reach scale global manufacturing, and reinforce Ambrace's leadership in the advanced battery technology. Since he joined on October 6, exactly one month ago, we have aligned on objectives, agreed strategies, and developed plans. He is a tremendous addition, the right person at the right time. I look forward to working with and learning from him. Ricardo, it's all yours. Please share our financial results for the third quarter.

Thank you, Tom, and good afternoon, everyone. I'm really happy to be on board and reporting our quarterly results on behalf of our team for the first time. After several weeks on the ground working in Fremont, getting to know our team, meeting some of our customers at AUSA, and reconnecting with many familiar faces in the investment community that are interested in supporting our company and strategy, I could not be prouder of wearing the Amprius shirt. In the third quarter of 2025, we delivered $21.4 million of revenue. This translates into 42% growth over the second quarter, following the previous quarter's 34% quarterly growth. This is also 2.7x multiple of the team's revenues during the same quarter last year. Echoing Tom's remarks, our revenue growth was driven by the addition of new customers combined with larger orders from existing customers. Within our customer base, only one customer accounted for more than 10% of our revenues in Q3. Going forward, we plan to continue adding to our customer mix to diversify our revenue base, and we believe that as we develop more diversified contract manufacturing capacity, additional demand can potentially be unlocked. At the end of Q3, we had $53.3 million of orders, including the $35 million order that Tom mentioned, to be fulfilled in the near term. This backlog is 83% higher quarter over quarter, and it highlights our team's ability to drive demand. Our cost of goods sold at $18.1 million in Q3 did not increase at the same rate as our revenue, thanks to a favorable product mix and higher volumes. This in turn enabled gross profit margins of 15%, which is a significant improvement over our gross margins of 9% in the previous quarter. As I discover what makes our team unique, I continue to be impressed by its resourcefulness to make the most with what we have, and that is evident in our quarterly operating expenses of $8 million in Q3, which were down very slightly relative to the previous quarter. The year-over-year increase in quarterly OPEX of $1.9 million was driven by targeted investment in our sales and go-to-market efforts, along with the reallocation of some R&D expenses from cost of goods sold to OPEX as development service agreements are completed. These expenses bring our operating loss to $4.7 million compared to an operating loss of $6.8 million in the prior quarter, shrinking our operating loss by over 30% quarter over quarter. Our gap net loss for the third quarter was of $3.9 million, or negative 3 cents per share, with 126.6 million weighted average shares outstanding. Our adjusted EBITDA in Q3 was negative $1.4 million compared to negative $3.8 million in the previous quarter, thus reducing our adjusted EBITDA loss by over 60%. We define adjusted EBITDA as net income or loss before interest, taxes, depreciation, amortization, stock-based compensation, and other items that we do not believe are indicative of our core operating performance. In Q3, these adjustments included $1.2 million of depreciation, $1.8 million of stock-based compensation, and $450,000 of interest income. As of September 30th, we had 130.4 million shares outstanding, which was up by 5.4 million shares from the previous quarter. The change includes approximately 2.2 million shares issued from option exercises and RSU vesting. along with 3.2 million shares issued under our at-the-market offering program. Now turning over to cash flow and the balance sheet. We ended the third quarter with $73.2 million in cash and no debt. The main drivers of cash flow in the quarter were $9.2 million used in operating cash flow, which was mainly driven by a near-term $11.2 million increase in accounts receivable at the end of the period due to our increase in sales, $400,000 of CapEx invested at our facility in Fremont, California, and lastly, $28.7 million from financing activities consisting of $25.9 million from the issuance of common stock under our at-the-market sales agreement, and $2.8 million of proceeds from option exercises. We still have approximately $20.1 million left available on the at-the-market offering facility as of September 30th of 2025. Before I turn over the call to Kang, I would like to take a moment to discuss our outlook for the remainder of the year. We have made a decision to strategically invest in diversifying our supply chain and expanding manufacturing capacity within our Fremont facility to include electrode manufacturing. We are doing this in collaboration with the U.S. Government Defense Innovation Unit and have secured a contract for $12 million awarded in the third quarter of this year. With what we know today, we expect this funding to cover the majority of our capital investment of the next several quarters as we work to develop a growing and resilient source of supply in a dynamic trade environment. As we previously stated regarding the Colorado facility, The designs for the project are effectively complete, and we are continuing to monitor the larger industry dynamics associated with building a factory in the United States. Changes in demand, supply, battery cost structure, government incentives, trade tariffs, and other considerations, including the timing and availability of funding, will influence our decision on next steps and near-term timing. We have secured adequate capacity for the foreseeable future through our contract manufacturing network and plan to further expand that without deploying additional capital. We also believe that our current revenue levels and even slight improvements from these can put us on a path to mainly consume cash for working capital versus funding operating expenses in the near term. With that, I'm happy to turn the call over to Cank for his closing remarks. Thank you very much for your attention and continued support.

Looking ahead, we remain focused on delivering next-generation lithium-ion battery performance that reaches the bar for energy density and sustains power without compromising safety or reliability. We are also broadening our product portfolio to better align with the customer requirements and unlock new markets opportunities, or converging a growing number of customer engagements into formal qualification and deployments, particularly across mobility-centric platforms. As demand scales, we will continue to leverage our contract manufacturing partners' capacity to efficiently translate that demand into revenue with displaying the quality and the minimal additional capital investment. We are excited about the future ahead and looking forward to meeting and reconnecting with many of you as we attend several upcoming investor conferences. Thank you for your continued interest and support of Amperes Technologies. With that, I will turn it back to the operator for questions.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. I'll read both questions. And the first question comes from the line of Colin Rush with Oppenheimer and Company. Please proceed.

Thanks so much, guys, and congratulations on all the progress. Just on the U.S. capacity, could you talk a little bit about the cadence of how that will come up and how much capacity it will actually be and where that electrode will ultimately end up getting turned into batteries? Are you looking at potentially qualifying some incremental contract manufacturing in the U.S., or Will that electrode end up getting shipped overseas and returned back to the U.S. as batteries?

Yeah, thanks, Tom. This is Tom. The answer is that we will have in the future both a U.S. contract manufacturer and contract manufacturers in what are called NDAA-compliant countries, and that includes Korea. We have a contract manufacturer already today in Korea. We announced that in May. So you will see over time, both for pouch sales and cylindrical sales, additional partners in this network as it continues to expand.

That's super helpful. And then being able to qualify different configurations of performance, whether it's through different electrolyte or different balances within these cells, is a pretty substantial accomplishment. Can you talk a little bit about the cycle time and how much work you've done previously to be able to get some of those different battery configurations, just so we have a sense of how quickly the platform is evolving from a technology perspective going forward.

Yeah, to fully qualify the 11 major components that make up our battery, it will take us – we've started that already – it will take us to next summer. That's largely being done in cooperation with the $12 million DIU contract that we have. We are turning knobs. As of today, we have five of those 11 components fully qualified in the AA compliance. We're turning the knobs on the other six, and we think we'll do that between now and next summer.

And just one last one from me, just in terms of the cadence of how you're moving customers through the sales funnel, as folks have had these batteries for a fairly substantial period of time here, and you guys have talked about kind of roughly an 18-month qualification period, sometimes longer, sometimes shorter for customers, and you've been sampling now for about seven quarters out of some of these facilities. Are you seeing folks move towards purchase orders a little bit faster than they have in the past or move to larger purchase orders? I just want to get a sense of how we can think about some of this pipeline moving into backlog and production.

It's pretty distributed. Some qualification happens within two quarters. Some take more than a year. It really depends on the complexity of the components at the end. And some are larger, some are smaller. Right, a nice $35 million per job. And the other one, so it's across all the 400 some of my customers that we have.

Okay, thanks so much, guys.

The next question comes from the line of Mark Shooter with William Blair. Please proceed.

Hey, team. Congrats on the great execution this far. The new customers was a big win and a nice jump. It's almost doubled the normal cadence the past few quarters. So I guess I'd like to dial in on what led to that big step up in new customers this quarter. Did we get a capacity or a yield breakthrough at the silicon supplier or your battery contract manufacturers that allowed you to ship to more cells? Or did you see an actual two times increase in demand this quarter from last quarter?

We're definitely seeing an increase in demand as the awareness of AMPRIUS gets out there, as we attend more conferences, as we have more wins like we talk about, it gets the attention of other folks. The 80 new that we added this quarter was a little bit of timing. Some of those seeds were planted, as I said to Colin's question, more than a year ago, and now are coming through and turning into real purchase orders. Other ones were planted earlier this year. So it's a combination of those factors that's leading to the uptick.

Great. That's very helpful, Tom. Thank you. Ricardo, more for you. Congrats on joining Ampera, especially this quarter. I'm hoping if you could shed some light on the gross margin. The improvement this year has been great, specifically this quarter. Going from 9% to 15%, could you try to break that down to maybe how you see the improvement if you put it in the buckets? Is it If I'm thinking about the higher revenue or product mix, or are you able to maybe raise prices this quarter, seeing the performance of your batteries and the demand for your batteries in the marketplace?

Yeah, I mean, I think mix was the main driver of the increase from 9% to 15% quarter over quarter. If you look at the 15%, I mean, it's in no way where we believe it needs to be right um a lot of the battery peers even at higher scales are are above 20 on the gross margin line and our goal is obviously to get there and even higher on pricing um i do feel pretty good about where the pricing levels were for the cycle product and that in combination with just a larger share of our revenues being psych or is what drove the the increase. Plus, of course, the run rate itself contributed to that, but I think the biggest contributor was really Nick because of our contract manufacturing model.

That's helpful. Thank you, Ricardo.

The next question comes from the line of Derek Soderberg with Cantor Fitzgerald. Please proceed.

Yes, thanks for taking the questions and my congrats to Ricardo as well. I'm just hopping on the call just now, so my apologies if any of these have been asked. The second generation side core, what's the margin profile of that battery?

Yeah, we haven't laid out explicitly, but the goal is to get that, you know, north of 20% at, you know, closer to 80% of our capacity, which we still haven't reached, right? So, but our goal is to just keep pushing that. And we're frankly testing where that should be as the revenue materializes.

Got it. And what are some of the tradeoffs between the first gen and the second gen? what might slow down that path to 80% mix of the second generation? What are some of the trade-offs from your customer's perspective?

Yeah, I mean, I think the first gen, we refer the first gen to CEMEX. Yeah, CEMEX is our first generation product, and the Sitecore is our second generation product. Okay, so it's not second generation Sitecore. No, we don't have. You know, we keep improving. You know, we could say we have a second generation, but we may have a third generation already in the lab, but we don't separate it that way. Okay, we consider Cymex is the first generation MPs product, and Cyco is the second generation.

Got it, okay. That's helpful. And then... Could you just give us an update on the timeline to cashflow breakeven? I think previously you guys were expecting that to happen sometime in 2026 potentially, or maybe even early 27, but it feels to me like the company's growing faster than expected and you've got quite a bit of scale to work with here and it seems like the customer growth is quite a bit ahead of at least my expectations. Can you just provide an update on, you know, path to cashflow breakeven?

Yeah, I mean, I think it's tough to pin down a specific quarter for that, but if you take our results from here, the most recent quarter, you know, with another $10 million of revenues, we would have had positive EBITDA, and our EBITDA is a very good proxy for cash flow, right, given that it's pretty clean, DNA is not huge, and in essence, it's only the stock-based comp, and we have no I and no T in the And so it's really just a matter of time for us to get that incremental revenue. And at that point, we can be not just EBITDA positive, but also pretty closely behind cash flow positive as well.

Got it. That's helpful. Thanks. Anytime.

The next question comes from the line of Ryan Fink with B. Reilly Securities. Please proceed.

Hey, guys. Thanks for taking my questions here. I'm jumping around calls, so apologies if anything's repetitive. But on the margin side, Ricardo, another nice jump quarter over quarter here in the second quarter. Just curious if you could give some color on what you expect as we continue to see revenue expand on the margin side.

Yeah, I think it's again, um, echoing my earlier points, it's really more driven by mix. Uh, we do believe that incremental revenue, depending on, um, you know, the mix of that and the customers that it goes to could be a creative beyond where we're currently at, at the gross margin level. Um, you know, I I'd love to, you know, get the company at 20% and above, um, here as soon as we can, but obviously understanding that there are quite a few puts and takes, um, Especially as we, as we look to make a larger portion of our revenues come from the Sitecore product versus Symax. And so I think as we manage that transition, you'll see, you'll see us pick up a couple of points of gross margin here. You know, one thing to note is that this is, this will be lumpy, right? Um, given the, um, not just, uh, the customer diversity, but also the product diversity. I do think we're not totally out of the woods of having fluctuating gross margins. And so I would caution here on modeling something that's just straight up into the right on gross margin as we pick up incremental revenue, because there are quite a few puts and takes within it, mainly mixed-driven, that we certainly need to keep in the back of our minds to make sure that these these expectations are realistic, right? But kind of going back to what I said earlier, like, frankly, I'm more focused on the EBITDA margins. And even if growth margins stayed where they were, you know, with another $10 million of revenues, we would have had positive adjusted EBITDA. And that's very meaningful progress. And I think it puts us well ahead of our peers, well ahead of anybody. scaling a similar product. And this is a testament to the team's focus on having the leanest cost structure possible at the OpEx level.

Appreciate that detail. And then turning to your manufacturing capacity update, which I know you touched on in the prepared remarks, but curious how important it is to establish contract manufacturing capacity in the United States for certain customers, maybe on the defense side or otherwise related to national security. Does that make it more of a near-term priority for you guys, or are you able to be patient here with establishing something in the U.S.?

It is important. They don't have a gun against their head in the most by a certain date in 2026, but we know where the PLEs are in the desire for this segment and have domestic batteries. And we just need some more time.

Since you cannot hear from Tom clearly, Let me elaborate a little bit more. We have a fraction of the customers that demand the products made in the United States. Currently, the driver for our activity in the United States is primarily from this DIU program. The DIU program, the Department of the War, granted us a $12 million contract. require us to build advanced battery, silicon anode-based battery pilot line. Okay, you can call pilot line, you can call small production line at next summit. I appreciate it, guys. Yeah, majority of our customers still oversee customers.

Got it. Thank you, Kang. Thanks, guys. I'll turn it back.

The next question comes from the line of Chip Moore with Roth MKM. Please proceed.

Hey, thanks for taking the question. I wanted to ask maybe on the 53 million in orders, near-term orders, maybe you could put a finer point on that. Should we think about, you know, next couple of quarters potentially on that? And then, Ricardo, to your point around, you know, mix and potential for some lumpiness or margin impacts, just Anything to call out there?

Yeah, I mean, maybe I'll start with the second part of the question, if that's okay. I mean, really nothing much beyond what I've already mentioned, Chip. I think, you know, we have to work through this backlog, obviously, and that'll keep building up. But at the same time, we also need to have the supply in place to fulfill it, right? And that'll ultimately be the gate of what the revenues can be in the near term. And on the gross margin side, I'll just echo what I said before, right? I think it can still be lumpy. We do expect progression as we sell more side course, the proportion of the total sales. And I mean, if we would have had another 10 million of revenue that we could have fulfilled, we would have had breakeven or slightly positive adjusted even at the end of the quarter.

The first part of the question, Chip, hopefully I'm coming through here, is the large purchase order is for a year. It's not necessarily in a year that they don't want $35 million divided by four every quarter. But there's these different layers of revenue that we're building in, and the backlog is going the right direction. So we like to see that versus some of the quick turn. Purchase order comes in, and we ship within the quarter. So we're building some customer-facing muscle, and we're getting some of these longer-term contracts. And they're really synchronized with the customers in use, right? They have deliveries to their customers of their crafts, And that's really what sets the rhythm of when we deliver sales.

That's great. That's helpful. And maybe, Tom, just to follow up there, you know, sort of this flywheel effect of repeat orders. You had a nice one here. It feels like you're starting to hit critical mass. Just, you know, understanding things will still be lumpy. But how are you thinking about potential for these repeat orders to keep coming in and get bigger?

We are incredibly optimistic, right? I mean, we have a great product. It's industry leading. The market is strong. There's a number of data points there. So we feel good about what we got. We feel good about where we're going. This is a tricky quarter because of Thanksgiving and Christmas here in the US. Next quarter we'll have some lunar holidays. So we gotta work through some of that, but we feel good about where we are.

Perfect. If I could maybe ask one last one, you know, related, I guess you talked about, you know, some funding anecdotally, seeing some interest out there on defense and drones. Just any more detail there? And then government shutdown, is that, you know, another thing you have to navigate that, you know, could slow things down? Thanks.

Yeah, we're seeing some announcements. One of our customers announced today that they won an Air Force shootout, and we're obviously very excited to hear that. So it's starting, and if you take apart the beautiful bill, as a couple analysts have, these numbers are four or five times in 2026 budget on what they were in previous years. So that bodes well for the future, and we're trying to make sure that everyone is aware of what we got, doubling flight time, extending payloads. That all is very meaningful in the eyes of our customers.

And if I may add just one last thing there, addressing your point on the shutdown chip, our VIU contract has been getting paid on schedule even through the shutdown. We feel confident about that.

Great. Appreciate it. Thanks very much.

Anytime. The next question comes from the line of Samir Joshi with HC Wainwright. Please proceed.

Hey, good afternoon. Good evening, guys. Thanks for taking my questions. It was good color in the prepared remarks and some good questions as well. I would just like to dig into the pipeline, dig a little bit deeper into the pipeline over the next, say, four to six quarters and see whether it is mostly UAS-related or LEB is part of that mix as well. And then in relation to that, how does the gross margin profile change? I know Ricardo you had very exhaustive discussion about the lumpiness that we can expect over the few quarters but does this product mix or end customer mix make a difference in the gross margins yeah so maybe I'll address that latter one and then I'll let Tom address the points on the pipeline yeah I mean I think

I would look at the current gross margin that we have as a good base to build on with much of the variations sort of happening above this level, especially if we're able to get incremental revenue. So we're not concerned on, you know, falling below the current levels on above the current revenue levels, right? But definitely some of the, you know, longer, larger volume agreements have different pricing than shorter term, very specialized applications. And that's what will drive the potential fluctuation in the gross margins. And then at the same time, we're managing obviously a pretty dynamic tariff and logistics environment where fortunately we're able to price for a lot of this stuff, but that can drive lumpiness in this as well.

Yeah, on the first part there, Samir, about the complexion of the pipeline, it's strong, as we mentioned, and it's growing. This quarter, we said it was 75% aerospace. That includes these high altitude platform systems, drones, electric aircraft, both the conventional wing and the vertical takeoff. That 75% was actually down a little bit on a percentage basis. compared to Q2, but the revenue was up by the 42% that we spoke of. So I look at that as a better balance between some of the other segments that we're serving, especially light electric vehicles. So it will be similar, maybe a little bit higher, a little bit lower in terms of that 75% next quarter, but better balance I think would be my main message there on the pipeline.

And just to make sure, the margin profile for these two sectors is different, right? Or are you maintaining the margins for the LEV as well?

The margins are similar for the LEV as for the aviation market. Yes.

And then just a clarification or maybe a little bit color on this Amazon devices climate accelerator program. How significant should we consider this to be for you as a company going forward?

It's a multi-phase program that we're in, and we've made it to the second, third round. We're actually up in Seattle today, as a matter of fact, talking to them again. We think of it as having a seat at the table. It's sometimes hard to break into some of these large companies. But when you get invited in, as we have, you get quick access to the engineering folks, and you're able to tell your story more efficiently. So, look, we still got to do a lot of work, and we still have to win their trust and their business, but we have a seat at the table.

Understood. Thanks for all the color, and Ricardo, congrats on joining the company.

Thanks so much. Happy to be working together.

The next question comes from the line of Ted Jackson with Northland Securities. Please proceed.

Thanks very much. I'll try to run through them quick because I know we're coming to the end of the call. Just a housekeeping one. With regards to revenue, did you have any design service or government grant revenue in the quarter? And if so, what was it?

The government grant... It was actually in our other income, and it was roughly $400,000. Thanks.

You introduced five new side quarter sales during the quarter. I mean, the last time you gave any kind of color with regards to the number of SKUs the company had, it was at 14. Where are you at with the SKU count right now?

20. We have 20 SKUs more coming, but the catalog today shows 20.

You kind of backed into your capacity saying that you had about 50 million cells of capacity based upon your most popular cell, which begs the question, I don't know, we could talk about the quarter, year to date, however, what's your run rate with regards to that capacity? If you can make 50 million, theoretical 50 million cells like at your you know call it 21 million dollars of um battery products that you sold in the quarter what would that be in an annualized runway yeah i don't think it's like explicitly yeah that one is tough to pin explicitly because given the s the the different sku count right and the fact no i'm asking i'm asking if you if you i'm asking i'm asking if you assumed that it was just the same battery you see what i'm saying like just to I'm just trying to get a sense with regards to, you know, you've got this much capacity, like where are you, you know, where are you in terms of filling it, you know, where we get to the thing that your margins are going to be north of 20% when you're at 80% of that capacity. You see where I'm going in terms of the thought process. You know, so how far, where you are right now, how far are we to getting to that 80%? Because then it gets, you know, kind of you think about, well, if that's where we can think about your margins, it's kind of, So I'm not asking, you know, I'm just kind of asking, like, if you assumed that you were, I don't know, but you get what I'm going with.

Yeah, I mean, it's a highly theoretical question because in reality, it's not working that way, but it would be a couple hundred million dollars, right?

Yeah, I remember we said. Yeah, I think we said, wasn't it, Kang, in our May call that if we actually utilize that 1.8 gigawatt hours of capacity, we'd be a billion-dollar company.

Right. You just use our ASP today, times the capacity of availability, we are going to be billion-dollar business.

Okay. A little nuanced question with regard to the gross margins. You know, you're at the point now where you're taking a lot of your engineering work out of cost of goods and bringing it down engineering. You know, it's kind of part of the process of, you know, the growth of the company. That happened this quarter. Do we have to see – are we going to see more of that in periods to come? And, you know, is that something that we're not going to see as much of an impact with regards to the margins? You know, what kind of ways will we see with that in the coming quarters or the coming year?

Very little. I mean, that adjustment here, quarter over quarter, was just a couple hundred thousand dollars. It didn't cross the million-dollar line within our cost of revenue.

Okay. And then I'll ask one more that's more fun because these are all kind of little piddly ones. With regards to, you know, you're being funded to build a pilot line with this DIU contract and then, you know, what's the end game with that? So then you have this pilot line that you put together, done a proof of concept for the government that you can make. What does they want? I mean, is that something then that they have the process and then they're going to fund you to make a bigger factory that then they're going to go out and bid for someone else to do it? You know what I'm saying? Like, where does that, what's the vision for that? assuming that it goes forward and you get success.

Yeah, let me take that. So the DIU, a couple points here. First and foremost, it was a competitive solicitation. I think there were seven or eight other companies that took a swing and they chose Ambrius. We have a pilot line in Fremont. The dollars that we have received helps increase the capacity of that pilot line and then, as Ricardo mentioned in his part of the script, also the capability. We are adding electrode manufacturing. That part of the factory of a pilot line did not exist. Their interest, the DIG's interest is domestic batteries and they see us as in the front of the pack and they want to encourage us to make those available. There are certain sizes that are very popular. I mentioned the SO08, that's a very popular size. They want us to make those. And the idea of a pilot line, of course, is that we have those capabilities for many of the defense customers, whether it's primes or the folks who are the companies that serve those primes.

But, I mean, is it like – I mean, a pilot line is still not making – it's not a production-level facility. I mean, the goal is for them to – a goal clearly is for them to develop a domestic – battery production capability. Do you ever have any discussions with them with regards to what that might look like as they go forward with a larger factory? Does Colorado come into play? If you go and proof all this out, would they want you to go license your capabilities? Do you see where I'm going? What's the longer end game with it?

Yeah, we're very close with the DIU and the DOD generally. Their interest is, as you say, had domestic batteries. They have said publicly that there are solicitations that are coming out early in this fiscal year, probably delayed here because of the shutdown. But I think we'll see some specific additional solicitations related to domestic production.

Okay. Well, it's 5 o'clock. I could keep going. Congrats on the quarter. Super exciting to cover you. So talk to you soon.

Thank you.

Thank you. Thank you. At this time, this concludes our question and answer session. If you have any additional questions, you may contact Amperis' investor relations team at ir.amperis.com. And now I'd like to turn the call back over to Dr. Sun for his closing remarks.

Thanks again, everyone, for joining us today. As a reminder, you can find out more about our company, receive additional updates, and learn about upcoming events from the investor relations section of our website. We look forward to updating you on the exciting progress we are making in transforming the electrical mobility market. Following, I'd like to thank our employees, partners, and the shareholders. for their continued support. All please, sir.

Thank you for joining us today for Amplified Technologies' third quarter 2025 earnings conference call. You may now disconnect. Have a good day.