AmpliTech GroupAMPG

Key highlights

• Revenue momentum building: Revenue climbed 50.9% compared to the previous three month period to reach $8.07 million, which shows the company is successfully starting to turn its tech into sales. This growth was fueled by a 42.7% yearly increase in the core amplifier and microwave business.
• Gross margins improving: Gross margin, which is the percentage of sales left after paying for the direct cost of goods, jumped to 27.9% from just 7.8% a year ago. While this is better than last year, it dropped from the 48.0% seen in the first quarter because the company sold a different mix of products.
• Losses widen on R&D: The company reported a net loss of $3.09 million, which is deeper than the $1.77 million loss from a year ago. This happened because research and development spending more than doubled to $1.37 million to fund 5G and semiconductor chip designs.
• Cash position strengthened: The company ended the quarter with $12.95 million in cash, and then added another $20.12 million in net proceeds from a stock rights offering in July. This extra money provides a safety net for at least the next 12 months as the business scales up.
• Sales outlook remains positive: Management expects to continue scaling its 5G and semiconductor distribution businesses and reported receiving more than $6 million in new orders during July alone. This includes nearly $4 million in orders from a major North American mobile network operator.

Our take: This was a productive quarter that showed the company is finally finding real buyers for its 5G and satellite tech. While heavy spending on research led to a wider loss than expected, the massive jump in new orders during July suggests the growth is sustainable. This performance strengthens the case that the company is successfully moving from an R&D shop to a commercial manufacturer.