Alphawave IP Group plc Interim Results for the Six Months Ended 30 June 2023

• Technology leadership and product portfolio underpin broader customer base of 85 (H1 2022: 28)
• 16 design wins; 91% of Licence and NRE bookings from North American, EMEA and APAC (exc. China) customers
• Bookings up 251% year-on-year to US$187m. Backlog excluding royalties of US$365m (FY 2022: US$365m)
• Revenue up 228% year-on-year to US$187m including contribution from the acquisition of OpenFive
• Adjusted EBITDA ¹ of US$32m and adjusted EBITDA margin of 17% (H1 2022: US$23m and 41%) reflect R&D investment and change in business mix including silicon
• H1 2023 operating loss of US$3m compared to H1 2022 operating profit of US$30m
• Cash outflow from operating activities of US$31m (H1 2022: US$32m cash inflow)
• Net debt¹ of US$100m (H1 2022: net cash US$452m)
• FY 2023 outlook unchanged with increased profitability expected in H2 2023. Medium-term outlook unchanged and continued confidence in growth prospects

LONDON & TORONTO--(BUSINESS WIRE)--Alphawave IP Group plc (LSE: AWE, “Alphawave Semi”, the “Company”), a global leader in high-speed connectivity for the world’s technology infrastructure, has published its interim results for the six months ended 30 June 2023.

Financial Summary and APMs^1 – US$m	H1 2023	H1 2022	Change
Licence and NRE	73.6	57.1	29%
Royalties and silicon	113.6	-	nm
Revenue	187.2	57.1	228%
Operating (loss)/profit	(2.6)	29.9	(109%)
Operating margin	(1%)	52%
EBITDA^1	10.7	32.7	(67%)
EBITDA margin	6%	57%
Adjusted EBITDA^1	32.4	23.2	40%
Adjusted EBITDA margin	17%	41%
(Loss)/profit after tax	(13.4)	16.3	(182%)
(Loss)/profit after tax margin	(7%)	28%
Adjusted Profit after tax^1	15.4	6.7	130%
Adjusted PAT margin	8%	12%
Pre-tax operating cash flow	(31.3)	32.2	(197%)
Cash and cash equivalents	122.8	451.8	(73%)
Net (debt)^1/cash	(100.0)	451.8	(122%)
Bookings^2 and Design Win Activity – US$m	H1 2023	H1 2022	Change
Licence and NRE	114.9	38.5	199%
Royalties and silicon^3	72.2	14.9	384%
New Bookings	187.2	53.4	251%
Additional design win activity – FSA drawdowns and China re-sale licences^4	3.4	14.7	(77%)
Number of revenue generating end-customers (end of period)	85	28	204%
Due to rounding, numbers presented in the table may not add up to the totals provided and percentages may not precisely reflect the absolutely figures. ‘nm’, where referenced, means ‘not meaningful’.

Tony Pialis, President and Chief Executive Officer of Alphawave Semi said: “We are successfully executing on our strategy, with the business offering a growing range of advanced connectivity solutions that enable the next generation of AI and cloud infrastructure. In H1 2023 we delivered a good set of results, scaling our business and investing organically to support our pipeline and future revenue growth. Our leading connectivity technology and strong execution give us confidence in the prospects for our business.”

John Lofton Holt, Executive Chairman of Alphawave Semi, added: “Through an uncertain economic environment we remain focused on delivering on our vision for the business. We are serving an increasing number of customers with our next-generation connectivity technology. This fuels our optimism for the long-term potential of the business.”

Interim Results Highlights

• H1 2023 revenues of US$187.2m, representing 228% growth year-on-year including the contribution from the acquisition of OpenFive and organic growth.
• WiseWave revenues of US$26.4m (excluding re-seller revenue⁵), relate to the multi-year subscription licence
• Adjusted EBITDA of US$32.4m and margin of 17% (H1 2022 US$23.2m and 41%), reflecting change in business mix including revenue from IP licences and silicon, as well as R&D investment in our new connectivity products going into production in 2024
• Share-based payment of US$18.5m and deferred compensation payments⁶ related to acquisitions of US$4.1m
• Cash outflow from operating activities before tax in H1 2023 was US$31.3m (H1 2022 cash inflow: US$32.2m) including US$42.7m decrease in deferred revenue and flexible spending accounts
• During the second quarter of 2023, the Group’s fixed charges coverage ratio (FCCR) was below the minimum allowed ratio of 1.25x, which represented a breach of the covenant. Long-term waiver obtained from lenders covering the period to 30 June 2024
• Cash and cash equivalents of US$122.8m. Net debt of US$100.0m

Business and Technology Highlights

• IP & NRE bookings in H1 2023 up 199% year-on-year. 77% of these bookings in advanced nodes, i.e. 7nm and below
• Alphawave Semi maintained its technology leadership with new design wins in 3nm, 224G ser-des IP and PCI-Express Gen6 interface IP
• The Company expanded its technology collaboration with the leading foundries on 3nm process
• During H1 2023, the Company broadened its customer base to 85 (FY 2022: 80 customers; H1 2022: 28 customers), including more than half of the top 20 semiconductor device companies
• Continued to reinforce sales and R&D capabilities with new premises in Ottawa, Canada and Pune, India
• In H1 2023, the Company headcount increased by 49 people globally, from 695 (as of 31 December 2022) to 744 (251 as of 30 June 2022)

Outlook

• Alphawave Semi reiterates its FY 2023, mid-term and long-term outlook communicated at the Capital Markets Day on 13 January 2023
• The outlook for 2023 remains unchanged. Alphawave Semi expects 2023 revenue of US$340m to US$360m and adjusted EBITDA of approximately US$87m (or approximately 25% of revenue), which is at the mid-point of the revenue guidance range

Results Presentation and webcast
A presentation for investors and analysts will be held at 8.30am BST, on 25 September 2023. To register for the webcast:

https://awavesemi.zoom.us/webinar/register/WN_F9JqILaXQVG_3Gzb1F02Nw

After registering, you will receive a confirmation email with information about joining the webcast.

Or by phone:

US: [phone] / [phone] / [phone]
United Kingdom: [phone] / [phone] / [phone]

Webinar ID: 894 8611 9992
Full list of dial-in numbers available https://awavesemi.zoom.us/u/kxW5Y5UU

The Company's H1 2023 Report is also available to view in the Investor Relations section of the Company’s website (Results, Reports & Presentations (awaveip.com)).

About Alphawave Semi
Alphawave Semi is a global leader in high-speed connectivity for the world’s technology infrastructure. Faced with the exponential growth of data, Alphawave Semi’s technology services a critical need: enabling data to travel faster, more reliably and with higher performance at lower power. We are a vertically integrated semiconductor company, and our IP, custom silicon, and connectivity products are deployed by global tier-one customers in data centers, compute, networking, AI, 5G, autonomous vehicles, and storage. Founded in 2017 by an expert technical team with a proven track record in licensing semiconductor IP, our mission is to accelerate the critical data infrastructure at the heart of our digital world. To find out more about Alphawave Semi, visit: awavesemi.com

Trademarks
Alphawave Semi and the Alphawave Semi logo are trademarks of Alphawave IP Group plc. All rights reserved. All registered trademarks and other trademarks belong to their respective owners.

Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or such words as "will", "anticipate", "estimate", "expect", "project", "intend", "plan", "should", "may", "assume" and other similar words. By their nature, forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to factors that could cause our actual results to differ materially from those expressed or implied by these statements. The Company undertakes no obligation to update any forward-looking statements contained in this document, whether as a result of new information, future events or otherwise.

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¹ See note 4 Alternative Performance Measures (APMs). Adjusted EBITDA and Adjusted Profit after Tax exclude foreign exchange adjustments, share-based payments, deferred compensation payments, and M&A transaction costs.
² Bookings are a non-IFRS measure representing legally binding and largely non-cancellable commitments by customers to license our technology. Bookings comprise licence fees, non-recurring engineering, support, silicon orders, and, in some instances, our estimates of potential future royalties.
³ In H1 2022 there were no silicon bookings. The amount reflects only those instances where potential future royalties could be estimated based on committed prepayments or customer volume estimates.
⁴ Both FSA (Flexible Spending Account) drawdowns and China re-sale licences convert previously announced contractual commitments included within bookings reported in prior periods to new product design wins which will be recognised as revenue over time.
⁵ For further details see note 21.
⁶ Deferred compensation payments related to acquisitions which are expected to be settled over time until August 2026.