Alphawave Ip Share Discussion Threads

[dividevil] 10/5/2023 17:17

I'm as disappointed as everyone else must be in the way the results have been handled but it is what it is. Sloppy perhaps (sinister it probably is not) but it is fairly easy to misjudge the time required of a task at hand - I've done it myself many times when I've told my boss I can complete something in 3 days and it ends up taking 3 weeks!

Remember we are dealing with a relatively young company whose management don't have solid experience of running a listed company yet and who appear to be clueless when it comes to managing the market. It's easy to say in hindsight, but for one thing, it would have been better to be more conservative in providing an estimate of the auditor's completion date. I think there's even a case to say it would have been better to hold off announcing the CFO change until after the audit completion.

But at least they do have lots of experience in their connectivity business and appear to be doing an incredibly impressive job of growing the business, securing design wins, developing leading edge technology, and obtaining awards for 'Open Innovation Platform Partner' of the Year with the world's largest semiconductor foundry three years in a row.

They have said:

The majority $460m bookings (including Q1 2023) are expected to translate to revenue this year hence comfortable in their guidance of $350m revenue for 2023.
In 2022 they recognized revenue from 80 customers (was 20 at IPO) and secured 28 design wins.
In Q1 this year they have secured 8 new design wins spread across 9 customers.
On 25th April they announced the world's first 112gb/sec silicon IP in TSMC 3nm nodes.
In Q4 last year they announced tape outs of 224gb/sec IO as well as PCIe Gen 6 and HBM3 UCIe interface IP in 5 & 4 nm design nodes.
They are now working with more than half of the top twenty world's largest semiconductors companies.
They are only one of less than five companies that are able to design, manufacture and ship chiplet-based devices. They say chiplets are the future of semiconductors because it is now nearly impossible to manufacture large pieces of silicon integrating hundreds of billions of transistors.
They have been working quietly over the last four years on their opto-electronic products (developing leading edge PAM4 technology and coherent DSPs) which is the future for data-centre connectivity.
They estimate by 2026 their addressable market will be nearly $18 billion and they only need to win 5% of that market to achieve $1 billion in revenue. Their ambition is to achieve much more than that.

So let's hope they put this messy results audit debacle quickly behind them, get themselves a well-experienced CFO to ensure future audited reports are produced in a timely and professional manner.
Then they can keep focusing on what they appear to be excelling at.

[trader465] 10/5/2023 15:41

Not if the AI was regulated and controlled by HMRC, bye bye bean counters, they’ve been robbing companies since the discovery of the bean

[livewireplus] 10/5/2023 14:43

or depending on the AI then it could 'hide' the brown envelopes instead ....

[trader465] 10/5/2023 14:12

With all the advances in AI and automation all companies financial accounts should be fully automated, there should be no need for bean counters, simply hit a button and the accounts come out of the printer

How does a technology company not have the technology to automate its financial figures? Are all the bean counters afraid AI would uncover the brown envelopes?

[dividevil] 10/5/2023 13:36

Adam,

They are typos. If they weren't they would have slightly altered the headline key figures. If you look at the report in more detail you would see that for a couple of them it was a case of copying over from a wrong line elsewhere. Besides, in every instance the typos improved the numbers for the section in question and the headline figures were not impacted.

Yes, the company let themselves down in respect of preparing the 2022 accounts and handover to the audit. There is no doubt they could have planned it better. That is likely why the CFO is standing down once the official audited report is published. However, three acquisitions most definitely does constitute a substantial increase in auditing work. There are additional procedures that have to be followed. Moreover, the biggest of the acquisitions, OpenFive, didn't complete until September.

The company cannot move heaven and earth for a process that is being carried out independently. It is a process largely out of their hands, as otherwise how would it be an independent and external audit?

Listen to the prelim results call. This should provide you with assurance.

[adamb1978] 10/5/2023 13:02

I'm not invested here but naturally watching closely given an interest in this space.

The fact that they've had to delay things again, after being late last year, in addition to the CFO leaving and already having to announce that they got some numbers wrong (they weren't typos, they were wrong numbers) does wreak of this not being at KPMG's door but something more fundamental.

The 3 acquisition excuse I personally don't buy unless it was down to exceptionally poor planning - they knew that these accounts would have had to be consolidated and would have had access to significant amounts of financial info when they acquired the businesses. Therefore that work could have been done well in advance. If there were small nits in some of those details which they didnt have, they would have probably fallen beneath the materiality thresholds in an audit processes, or the company could have even published qualified figures referring to just whatever small issue was outstanding.

Moving to this week, the company and KPMG would surely have been moving heaven and earth to get the figures out this week, but to take a decision yesterday (and announce this morning) that they needed to delay yet further suggests there is still a lot outstanding. Counter to that is that they have said it'll be next week rather than open-ended timing...though given the company's record of delivering on time, perhaps that doesnt provide the comfort which it should.

It could of course be entirely innocent and KPMG could be to blame, and the audit industry is stretched and under-staffed, but the CFO/errors and mis-steps wouldnt give me comfort if I were invested here. More broadly, this sort of stuff isn't great for the sector nor UK market unfortunately....

[pugugly] 10/5/2023 12:54

Nahh!! They need a crystal ball - Unlisted coys valuation very much a thumb in the air and carve outs more difficult - possibly a twisted little finger in a dead calm.

[casholaa] 10/5/2023 12:44

Somebody puuuhhleeez post them a calculator!

[dividevil] 10/5/2023 12:37

It is substantially complete. KPMG are known to be short on staff.

It was explained in the prelim results call that in addition to having to work through the accounts of the three separate and newly acquired privately owned businesses, one of these acquisitions in particular, OpenFive was a carve-out from SiFive - this is primarily the reason why the auditing process is even more complicated and time consuming than it would normally be.

Incidentally, SiFive founded in 2017 (same as Alphawave) were said to be worth $2.5 billion in March 2022. It was rumoured Intel wanted to acquire them for $2 billion in 2021. Their core processor products utilise the open source RISC-V architecture which is basically a popular alternative to the ARM type CPU architecture. SiFive and Alphawave will remain active partners while SiFive focus on their core RISC-V business. Alphawave agreed to license SiFive's RISC-V processor IP as part of the transaction for OpenFive .

[nibble] 10/5/2023 12:00

OK, the original RNS on 28/4 stated "Although the audit procedures are substantially complete, and the Company does not expect any changes to the preliminary results, the Company's external auditor has requested more time....", followed by "Publication of the audited results is now anticipated to be on or before 12 May....".

Looks like the audit was not as 'substantially complete' as first thought and since they haven't been able to meet a very recently published target date, to me this is really beginning to stink. More dirt to dig through than they first thought?

[pugugly] 10/5/2023 07:28

"The Company has been informed by its external auditor, that a short amount of additional time will be required to complete its audit. It is expected that the audited 2022 financial results of the Company will now be published in the week commencing 15(th) May 2023".

[valhamos] 05/5/2023 14:03

I was buying on Friday so I am still confident and it is still a small investment for me. The issue of finance/audit is the key, I don't think there any serious questions about their orders - the whole industry is abuzz with activity with chiplets and connectivity and the technical challenges and solutions, with Alphawave being a recognised player - in a way that was not the case with Wandisco and its sector.

[pugugly] 05/5/2023 13:21

That is what they said - but what could be in the small print of the purchase orders. In the past, subject to what was being bought, the companies I was with usually left a lot of wriggle room - both up and down.

Only time will tell now - Joyous celebrations or a wailing and gnashing of teeth.

Only trust no one has bet the farm on it.

[dividevil] 05/5/2023 13:18

AdamB1978, see my posts #1507 and #1422. You won't get a Wandisco situation here.

[adamb1978] 05/5/2023 13:10

That's the main thought which I had following this at arms length i.e. the large bookings figures announced aren't actually committed bookings and then you get something akin to the WAND situation where customer volumes are much lower than the market thought. Time will tell and we'll all know before there is an active market in their shares again

[dividevil] 05/5/2023 13:05

The forward contracts (bookings) are legally binding and largely non-cancellable as stated in the prelim results. Of course there is some wriggle room but not to the extent of a titanic disaster.

[pugugly] 05/5/2023 12:59

Only question could be the terms of the forward contracts and how much wriggle room the clients have. If contracts not 100% firm then could be a Titanic disaster (imo)

[dividevil] 05/5/2023 12:30

I'm in full agreement with Valhamos's comment.

Yes I don't deny there is more to it than the typographical errors, which I was merely guessing was the final straw that broke the camel's back and lead to the dismissal. I can imagine the non-executive directors would also advised the dismissal.

My view is that despite KPMG being short on staff and struggling to complete audits on time not only for AWE but several other companies, it should still have been in AWE's hands to manage this and ensure timely issue of the results by prepping the handover of the accounts to KPMG earlier than they did. I think it was acknowledged in the call that they could have done better regardless of the reasons.

Two consecutive delayed results plus some typos is more than enough justification for the dismissal and I don't see any reason for it being much more than that.

When you consider that they still went ahead with publishing full results as preliminary and that they stated in the call they had the support of the external auditor to do so, then worse case scenarios don't seem likely do they?

Look at the results, look at the 1st quarter update, do they spell doom and gloom?

[valhamos] 05/5/2023 11:54

I have always felt that finance was a weakness with AWE. Having a CFO who is not a qualified accountant is always a problem for me. There is also the added issue that the a UK based group finance team with all the operations overseas. There have been one too many incidents and hopefully the company will now address this and develop a finance team that is consistent with the company size they aspire to.

[trader465] 05/5/2023 11:10

I think there’s more to it than a typographical error. I’ve never known a CFO get the boot for a typing mistake.

[dividevil] 04/5/2023 15:00

Boozey, I hope I'm right too. I don't guarantee it though.
What I can say is take comfort in the fact that they have gone as far as publishing the full results (and this was with the external auditor's support), and they have issued an excellent Q1 update. I think Casholaa is probably right that the typographical errors is what has lead to the CFO's dismissal.

[casholaa] 04/5/2023 12:01

Well, the rns does not thank for time with the company etc. I think the rns is worded carefully to provide some dignity. I think it's something specific to the rns of 2nd May about typographical errors.