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 and Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for each of the three and nine months ended September 30, 2025 and 2024:

The following table summarizes the results of our operations for each of the three and nine months ended September 30, 2025 and 2024 as a percentage of net sales. All percentage amounts were calculated using the underlying data:

Net Sales

Net sales decreased for both the three and nine months ended September 30, 2025 as compared to the same periods in 2024. Net sales decreased $2.1 million or 10.4% for the three months ended September 30, 2025 and $4.0 million or 7.1% for the nine months ended September 30, 2025.

Sales outside of Mainland China increased 66.8% from $10.2 million in the third quarter of 2024 to $17.0 million in the third quarter of 2025. Sales outside of Mainland China increased 61.2% from $29.5 million in the nine months ended September 30, 2024 to $47.5 million in the nine months ended September 30, 2025.

Mainland China sales decreased 87.9% from $10.1 million in the third quarter of 2024 to $1.2 million in the third quarter of 2025. Mainland China sales decreased 83.8% from $26.2 million in the nine months ended September 30, 2024 to $4.2 million in the nine months ended September 30, 2025.

These increases in sales outside of Mainland China and the decreases in sales for Mainland China were due to our strategic prioritization of sales to higher margin opportunities.

Gross Profit and Gross Margin

Gross profit increased for both the three and nine months ended September 30, 2025 as compared to the same periods in 2024. Gross profit increased 16.4% while gross margin increased 970 basis points in the three months ended September 30, 2025. Gross profit increased 20.8% while gross margin increased 1,040 basis points in the nine months ended September 30, 2025. The increase in each period was driven by a more favorable product and customer mix as we continued to execute our strategic prioritization of non-Mainland China opportunities. Gross profit from our customers outside of Mainland China was $7.2 million and $21.6 million for the three and nine months ended September 30, 2025, respectively and $5.7 million and $14.6 million for the three and nine months ended September 30, 2024, respectively.

Research and Development Expenses

Research and development expenses for the three months ended September 30, 2025 decreased $0.7 million, or 7.1%, to $8.9 million in the third quarter of 2025 from $9.6 million in the third quarter of 2024. Research and development expenses for the nine months ended September 30, 2025 decreased $1.9 million, or 6.8%, to $26.5 million from $28.4 million in the nine months ended September 30, 2024. The overall decrease in research and development in each period was primarily attributable to the timing of product development as certain expenses occurred in 2024 that did not recur in 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2025 increased $1.7 million, or 24.0%, to $8.8 million in the third quarter of 2025 from $7.1 million in the third quarter of 2024. The increase was primarily attributable to additional stock-based compensation of approximately $1.0 million for RSUs triggered upon IPO and one-time cash bonuses in recognition of contributions during the IPO of approximately $0.8 million.

Selling, general and administrative expenses for the nine months ended September 30, 2025 increased $3.3 million, or 15.4% to $24.3 million in the first nine months of 2025 from $21.1 million in the first nine months of 2024. The increase was primarily attributable to increased transaction costs of approximately $1.8 million that were expensed during the first quarter of 2025 related to the IPO along with additional stock-based compensation for RSUs triggered upon IPO of approximately $1.0 million and one-time cash bonuses in recognition of contributions during the IPO of approximately $0.8 million as well as increased professional fees associated with public company costs.

Other Income, Net

Other income, net for the three months ended September 30, 2025 increased 57.2%, to $1.0 million in the third quarter of 2025 from $0.7 million in the third quarter of 2024. The increase was primarily related to interest income earned on IPO proceeds.

Other income, net for the nine months ended September 30, 2025 increased $1.0 million, or 128.4%, to $1.8 million in the first nine months of 2025 from $0.8 million in the first nine months of 2024. The increase was primarily related to interest income earned on IPO proceeds.

Provision for Income Taxes

We recorded minimal income tax expense in the third quarter of 2025 on a pre-tax loss of $9.0 million, yielding an effective tax rate of 0.03%. We recorded minimal income tax expense during the first nine months of 2025 on a pre-tax loss of $25.8 million, yielding an effective tax rate of 0.08%. Our effective tax rate was lower than the U.S. statutory rate of 21%, primarily due to the change in valuation allowance. We recorded income tax expense in the third quarter of 2024 on a pre-tax loss of $9.4 million, yielding an effective tax rate of 0.14%. We recorded income tax expense in the first nine months of 2024 on a pre-tax loss of $29.4 million, yielding an effective tax rate of 0.08%.

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 addition to the proceeds from the IPO, we continue to improve our operating margins through revenue growth and strategic transition to more profitable opportunities. As of September 30, 2025, we had $146.5 million in cash. In July 2025, we completed our IPO, which resulted in net proceeds of $102.7 million after deducting underwriting discounts and commissions of $7.7 million, but before offering expenses of $2.8 million. 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 a significant increase in accounting, legal, and professional fees and other 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 and (used in) our operating, investing, and financing activities for the nine months ended September 30, 2025 and 2024 are set forth in the following table:

Operating Activities

For the nine months ended September 30, 2025, cash flow used for operations was $15.6 million. Operating cash flow used during the nine months ended September 30, 2025 was related to the cash components of our net loss and $2.2 million of favorable changes in working capital driven primarily by a reduction of $1.1 million in inventory, offset by $3.3 million resulting from the timing of our sales to customers and payments to our vendors.

For the nine months ended September 30, 2024, cash flow used in operations was $21.7 million. Operating cash flow used during the quarter was related to the cash components of our net loss and $2.1 million of unfavorable changes in working capital driven primarily by $3.2 million of lower inventory purchases offset by $5.3 million resulting from the timing of our sales to customers and payments to our vendors.

Investing Activities

For the nine months ended September 30, 2025, we used $4.8 million in cash for investing activities, which related to $3.7 million of technology investments in intangible assets and $1.2 million in capital expenditures.

For the nine months ended September 30, 2024, we used $2.4 million in cash for investing activities, which related primarily to $2.1 million of technology investments in intangible assets.

Financing Activities

For the nine months ended September 30, 2025, we generated $105.9 million related to financing activities, driven by IPO proceeds net of deferred offering costs, underwriter discounts, and commissions of $99.8 million, and the exercise of warrants of $5.7 million and stock options of $0.4 million.

For the nine months ended September 30, 2024, we generated approximately $58.3 million in financing activities, driven primarily by $58.0 million from our Series G preferred stock issuance and proceeds from the exercise of stock options of $0.3 million.

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, transaction costs including IPO bonuses, 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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do not include one-time IPO-related bonuses to certain employees;

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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 each of the nine months ended September 30, 2025 and 2024, the Company received nonreciprocal transfer of assets with a vendor. The total fair value of nonmonetary transactions recorded during the first nine months of each year 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 fully described in Note 2 to our condensed consolidated financial statements included in the footnotes of this Quarterly Report on Form 10-Q.

There have been no material changes to our critical accounting policies and estimates as described in the Final Prospectus.

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 will be required to certify as to the effectiveness of our internal control over financial reporting in our second annual report on Form 10-K following the 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.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in the ordinary course of business, which consists primarily of interest rates risk associated with our cash and cash equivalents, foreign currency risk and impact of inflation. We do not engage in speculative trading activities. The following analysis provides additional information regarding these risks.

Interest Rate Risk

Our assets have limited exposure to market risk. As of the nine months ended September 30, 2025 and 2024, and the years ended December 31, 2024 and 2023, we maintained a portfolio of cash and cash equivalents in interest-bearing accounts . Certain interest rates are variable and fluctuate with current market conditions. We would not expect a sudden change in market interest rates to have a material impact on our financial condition or results of operations.

Foreign Currency Exchange Risk

Operating in international markets involves exposure to possible volatile movements in currency exchange rates. A majority of our sales and expenses are transacted in U.S. dollars and our assets and liabilities together with our cash holdings are predominately denominated in U.S. dollars reducing the exposure to currency fluctuations. Due to our international operations, a portion of our cost of sales and operating expenses is denominated in currencies other that the U.S. dollar, principally the Chinese RMB, the Taiwanese dollar, and the Singapore dollar. Our international operations give rise to transactional market risk associated with exchange rate movements of the U.S. dollar, Chinese RMB, Taiwanese dollar and Singapore dollar.

In addition, we are exposed to foreign currency translation risk for those subsidiaries whose functional currency is not the U.S. dollar as changes in the value of their functional currency relative to the U.S. dollar can adversely affect the translated amounts of our sales, expenses, net income, assets and liabilities. This can, in turn, affect the reported value and relative growth of sales and net income from one period to the next. In addition, changes in the translated value of assets and liabilities due to changes in functional currency exchange rates relative to the U.S. dollar result in foreign currency translation adjustments that are a component of other comprehensive income or loss. Foreign currency derivative instruments can be used to hedge exposures and reduce the risks of certain foreign currency transactions; however, these instruments provide only limited protection and can carry significant cost. We had no foreign currency derivative instrument hedges as of the nine months ended September 30, 2025 and 2024, and the years ended December 31, 2024 and 2023. We will continue to analyze our exposure to currency exchange rate fluctuations and may engage in financial hedging techniques in the future to attempt to minimize the effect of these potential fluctuations. Exchange rate fluctuations may adversely affect our financial results in the future.

If the volume of our international operations increases and foreign currency exchange rates change, the impact to our consolidated statements of operations could be significant and may affect the comparability of our operating results. The impact from foreign currency transactions during the nine months ended September 30, 2025 and 2024, and the years ended December 31, 2024 and 2023 were not material. We do not believe a 10% increase or decrease in foreign exchange rates would have resulted in a material impact to our operating results.

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) the last day of the fiscal year following the fifth anniversary of the consummation of the IPO; (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.