The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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Yep you have the best tech and still not make investors wealthy if you can't manage a business.
I watched the Blackberry Movie last night, absolutely brilliant
"While the film is said to be loosely based on Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, director Matt Johnson wanted the film to be a period piece reflecting the culture of the 90s with references to pop culture of the time."
The webcast was recorded and you can listen here: https://www.youtube.com/watch?v=_L4N0nzJ2wY
rz105, I agree with what you say. Hoping that from hereon there won't be any further financial disappointments. I did note however that they seem to expect to drawdown further on their cash balance this year, so year end 2024 may see a further lower cash balance although they also mentioned an expectation of higher revenue stream in the second half of this year. They expect 2024 H1 revenue to be less than 2023 H1 revenue as they continue to invest heavily in capital / R&D which is mainly focused on the 2nd generation opto-electronic connectivity product development for the tier 1 hyperscaler.
Tony did emphasize that the R&D is based on development of already proven technology as opposed to speculative research. He also mentioned that Alphawave are now number 4 in the world of silicon IP design (behind Arm, Synopsys and Cadence) in terms of revenue generation in that area.
Coincidentally, I've just found a recent link on this very subject:
https://semiwiki.com/semiconductor-services/ipnest/343875-semi-market-decreased-by-8-in-2023-when-design-ip-sales-grew-by-6/
I'm still not really any the wiser regarding when and on what scale Non Recurring Engineering revenues translate into recurring product shipments, sales and royalties.
Engineering wise the company is in Linda "I don't get out of bed for less than $10,000 a day" Evangelista mode. It seems to be the case that a) a lot of money is being thrown at AWE to develop products and they can cherry pick opportunities with prospective high margins /revenues. However it remains the case that the company is betwixt and between developing products and a product ramp. In the short term ( certainly H1 2023 ) financially the company will continue to tread water.
Over time as design wins translate into shipable products revenue visibility will become much more predictable - but we are not there yet.
I am impressed with the new CFO. He does claim that AWE have dramatically improved their ability to forecast and manage cash. I do believe him. He does seem to have hit the reset button in terms of procedures and projections.
Some points shared by Tony -
- 80% of pipeline comes from AI/AI related opportunities
- 83% in advanced nodes (e.g. 2023 6 design wins at 3nm are expected to translate to revenue over 16-24 months )
- allegedly AWE is one of only 3 companies in the world leading edge with IP connectivity solutions for AI.
- current AWE 'projected' silicon IP revenues are $500m starting in 2025.
- Banias which has yet to generate revenue 'is on track' to start shipping products in the second half of 2024. Orders have been received from a leading North American hyper scaler and a networking OEM. Work has already commenced on next generation products.
- custom silicon market reported at the CMD as a $7bn TAM estimated to grow to £11bn by 2027 - revised to grow to $30bn by 2027.
- opto electronics market reported at the CMD as a $4bn TAM estimated to grow to £7bn by 2027 - also expected to increase significantly.
AWE's addressable market is huge and they are well placed carve out a lucrative slice of the cake.
There was an attempt by an analyst (Sandeep) to get some sort of handle on likely product deliveries with a question (I paraphrase ) "How many hyper scalers are likely to ramp up orders over the next 2-3 years and how much confidence can we have in these orders ?". Tony didn't really answer the question. He simply said that AWE work with ALL hyper scalers and a the point at which they do it is only regarding proven technology that can be readily adopted.
It looks like the rubber is really only going to hit the road late 2024 / early 2025 but if Tony is even only partially correct in his expectations AWE will then take off.
Thank you BlueRaphus, unfortunately I saw your message late and missed the webcast. Have you attended and found out anything meaningful in the meeting?
I am personally puzzled that how come on one hand the company is "shifting away from low margin China business" but on the other hand guided lower than expected EBITDA margin at 20%? The only explanation would be that the higher margin licensing business revenue is dropping even faster, which is possible because they mentioned about recognizing licensing & NRE revenue less aggressively. If that's the decision by the new CFO from Rambus, that's actually a good thing, because the mess around AWE's finances is finally over, hopefully.
I feel that the old CFO really did an awful job to be fired that way.
No, they said there would be one today also.
Here’s the link:
Results Presentation and Webcast
A presentation for investors and analysts will be held today at 8.30am BST. The webcast will be accessible via:
https://awavesemi.zoom.us/s/84323327486?pwd=WFdWQzArdVBsN3JJcGlFbEM5WUo3Zz09
Passcode: 802056
They only said that detailed Q1 results would be published today, not a webinar?
If you go their website at 7am or just minutes after there will be an RNS here:
https://awavesemi.com/investors/regulatory-news/
In that RNS you will have the time of the session and there will be a link to the zoom session with a passcode.
If you not bothered to listen to the live session you will find a recording of the here about 30 minutes to an hour after the session has ended: https://awavesemi.com/financial-results/
Hope that helps.
Thanks, but on what platform?
It will probably be the usual crew: John (Chairman), Tony (CEO), Rahul (CFO). Jose will do the usual intro. They might bring in an non-exec like Jan.
Do you or anyone else know who's hosting the AWE webinar on Tuesday?
I'm sure that on Tuesday Tony P. will big up AWE's engineering excellence.
Currently however there is a creditability shortfall in terms of how this engineering excellence manifests itself in comparable financial performance.
This is what I would most like to see satisfactorily addressed next Tuesday.
Their current CFO is relatively new having joined last October.
https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4405322&lang=en-GB&companycode=uk-alpw&v=
They also have a new Chief Revenue officer who only joined in February.
https://awavesemi.com/press-release/alphawave-semi-announces-appointment-of-charlie-roach-as-chief-revenue-officer/
The rest of the directors and management team can be read about here:
https://awavesemi.com/company/leadership/
And there's more detailed information on their backgrounds in FY2022 report from pages 72 to 77:
https://fr.zone-secure.net/28934/1843059/pdfs/Annual_Report_2022.pdf
It's fair to say that thus far they have over-promised and consistently under delivered where it matters (i.e on the financial reporting). Let's see if the two supposedly highly experienced recent recruits can turn it around. The preliminary update and investor call on Tuesday talked of taking a new bottoms up approach hence the downgrade in the outlook.
What are the problems of the directors in you opinion? not trustworthy? Lack of management experience?
Yes I agree , I've only held this stock 3 months and itit's been a downhill trajectory, lost £1600 on a £4000 investment , Not sure if it will improve or not but its clear few trust this company and I no longer do , got more chance of a claw back invested elsewhere imo
I have continually warned private investors about this company over the last 2 years.
Investors need to study a company's USP AND the directors and people running it.
On this board some people supporting this company were so focused on the technology but failed to study the directors.
I have always said that I don't trust the directors and I think many in the city agree.
Be it at your own risk if you decide to buy at "bargain basement" prices. They are at this price for a reason.
I have always said this company will go bust once all its cash assets have been used up.
Cheers Barcap
Despite the lack of financial progress the company has been announcing significant engineering progress.
However at the point at which it doesn't pay for itself the engineering excellence becomes a problem.
Over the course of 2023 net debt increased by $85m. Cash decreased by $85m. Cash at the start of 2024 was $101m.
Engineering needs to start paying for itself sooner rather than later.
Indeed, somewhat underwhelming. Presentation has never been a forte here, but the appointment of Charlie Roach as Chief Revenue Officer was a move to 'get inside the tent' . Given he only started in February, I am prepared to give them a bit more rope, as the product would appear to argue for itself, and it is too early to call this an also-ran. The full results should clarify exactly where the revenue shortfall from target really lies and as a new CRO, he no doubt feels very comfortable with the low bar set here when it comes to his annual appraisal.
Not a lot on the financial side.
28 April 2023 : 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
16 April 2024 :Alphawave Semi expects 2024 revenue of US$345m to US$365m and adjusted EBITDA of approximately US$70m or approximately 20% of revenue, which is at the mid-point of the revenue guidance range.
So much for an addressable market growing > 20% p.a ( though Tony still thinks that by 2027 everything will still fall into place, just that delivery will be back end loaded )
28 April 2023 : 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
16 April 2024 :Alphawave Semi expects 2024 revenue of US$345m to US$365m and adjusted EBITDA of approximately US$70m or approximately 20% of revenue, which is at the mid-point of the revenue guidance range.
So much for an addressable market growing > 20% p.a ( though Tony still thinks that by 2027 everything will still fall into place, just that delivery will be back end loaded )
Oh my days a 25% loss in one day! - i was trying to keep the faith here with Alphawave but that faith is being sorely tested
When the facts change, I change my mind.
Thankfully this is money lost I dont depend on , bought with motley idiot advice it could be the next Nivea they lost 12 % before today , Amazing really and a learning curve , going to stick with it tbh , whole lse is bloody hard work to make anything I've found
To clarify, they didn't just miss guidance by 10%, it was a whole lot worse than that.
1. In the 22nd Jan trading update they confirmed that unaudited FY23 revenues to 31/12 were in line with guidance at $340-360m, today they changed this to $318-323m post audit, so it appears that ~10% of revenues weren't signed off by the audit team.
2. FY24 forecasts were slashed, previously revenue was forecast to be $403.9m, now it's $340-360m, EBITDA was forecast to be $109.8m, it's been slashed to $70m, a 36% reduction...
3. FY25 is now forecast to see top line of $450m at 20-25% EBITDA margins ($101.25m EBITDA at the midpoint). Prior forecasts were for $497m & $151.4m EBITDA (30% margin). So this is a 33% cut in EBITDA and a 25% margin cut...
So many downgrades it's hard to count, however the 36% reduction in FY24 EBITDA easily justifies the 28% fall in share price today.
I can only presume that the Deutsche bank upgrade was issued prior to today's results, otherwise they've effectively upped their EBITDA multiple from ~9x to 14x in the face of severe downgrades.
Last point - the comments on this thread prove once again how ridiculous it is that UK PI's don't have free access to the high level forecasts that these companies are reporting on...
Thanks @shearclass. You were spot on on this one. On the plus side, I've made a lot more on Alpha Group than I've lost on Alphawave.
BluePhallus
Wow.... You have finally seen the light!
Unfortunately your series of extremely long and positive posts over the last couple if years
will have pulled in many private investors who
now have burnt fingers.
Maybe you owe them an apology.