Alphawave Ip Share Discussion Threads

[tim000] 28/4/2024 18:47

That depends on whether the options make any difference to performance, it’s not a given that they do. Given an accruals accounting framework, it’s reasonable that the cost of options to shareholders is reflected in the P/L account, since any positive impact they have on performance is certainly included.

[dividevil] 28/4/2024 18:30

Share-based payments can be stripped out because they are effectively non-cash expenditure. They are expensed as part of the accounting requirements and so while it affects the profit / loss figure, it does not impact the actual cash flow. At the end of day it creates future cash flow for the company but with a dilutive effect for shareholders. So it is a balancing act between incentivising senior management and employees to create value for the company and shareholder dilution. What you should be more concerned about is the cash burn on the bank balance and how much more R and D expenditure is required to get to the revenue and gross margin level to see meaningful profitability.

[tim000] 28/4/2024 14:10

On another theme, I’m not convinced AI is all it’s cracked up to be. AI is just more advanced software (coupled with much more powerful computers). Giving it a special name is trying to pull the wool over people’s eyes. Personally, I’ve come to the conclusion that humans aren’t capable of programming software of the capability to merit the term AI. I used to think AVs would come to pass quickly. Now I think they’re just a mirage in the sand.

[tim000] 28/4/2024 14:04

Surely it depends whether the share options are exceptional - a “one off” - or are normal. Managements that like to focus on adjusted EBITDA to remove such options are possibly of the type that like to make such awards every year!

[valhamos] 28/4/2024 11:49

While I also remain optimistic about its long-term prospects I am not a great fan of this massaging of numbers. For instance why would $40.7m of compensation be stripped out? Share options are an employee cost and legitimately go through the income statement. Measures like "adjusted EBITDA" are not sensible for serious investors.

So is the FactSet 2026 12 cent eps inflated by adjustments?

[xtrmntr] 28/4/2024 09:24

Alphawave IP (AWE) designs chips that allow high-speed data transfer. It has a similar business model to ARM (US:ARM), in that it licenses these designs to other companies rather than doing the manufacturing itself.The case for high-speed data transfer is growing as excitement builds around artificial intelligence (AI). This has helped drive demand for Alphawave's designs. Last year, new bookings rose 68 per cent to $384mn (£310mn). Of these bookings, over 80 per cent are in advanced nodes – which means "7nm and below", essentially one of the latest process nodes in chip production. In other words, it is operating at the cutting edge of the AI industry, which as TSMC's (TW:2330) recent results show, is the fastest-growing part of the semiconductor industry.However, Alphawave's growth has slowed in the first quarter of this year, with new bookings up by just 20 per cent year on year. Licensing fees still rose 75 per cent in Q1, but royalties were down 75 per cent as Alphawave "actively de-prioritised the legacy lower-margin silicon business from Chinese customers".Increased R&D spending, marketing costs and a big jump in share-based compensation meant there was an operating loss of $52.9mn in 2023, a big swing from an operating profit of $2.5mn in 2022. However, when the $40.7mn of compensation is stripped out, plus a couple other metrics, adjusted cash profit (Ebitda) was up 34 per cent.Management is expecting to start benefiting from the capital-light business model in the next few years. It is guiding for $450mn of revenue in 2025, and is expecting to make around $100mn of adjusted cash profit, which would be an increase of around 60 per cent from this year.FactSet broker consensus is for earnings per share (EPS) to rise to 12¢ by 2026, giving a 2026 price/earnings (PE) ratio of 11. Previous rapid growth had encouraged Jefferies brokers to describe Alphawave as "Europe's best AI play". That was prior to the company making a significant downgrade to earnings expectations last week ahead of these results, but there is still reason to be optimistic about its long-term prospects. Buy.

[tsmith2] 23/4/2024 07:06

geopolitics playing a big part in pivot away from china

[scepticalinvestor] 23/4/2024 06:59

Sub 100p today fellas

[indiestu] 23/4/2024 06:58

The year-on-year increase in R&D, S&M and G&A expenses was primarily due to the increase in our headcount from 695 employees at the end 2022 to 829 at end 2023, as well as investment in associated R&D software tool costs, finance, HR, legal and corporate marketing teams reflecting the increased complexity and the extended geographical footprint of the Group.I guess we must take a longer term view and trust that the investment and change of focus will pay off. So forward looking it certainly seems positive all round FY2024 and beyond.

[valhamos] 23/4/2024 06:56

I was not expecting a $50m loss even after last week's update.

[m w] 23/4/2024 06:52

Under £1 anyone

[tsmith2] 23/4/2024 06:22

company is mega trend sector and with the right technology

[tsmith2] 23/4/2024 06:11

timing of revenue recognition

[m w] 23/4/2024 06:08

Bookings up revenue down

[casholaa] 23/4/2024 06:04

I don't understand how they can have an operating loss on what is effectively licensing/royalties????

[dividevil] 22/4/2024 22:54

It does seem that they receive some cash upfront that they can't book as revenue until a certain project milestone is reached. That is how I understood it. How much cash this amounts to though I have no idea. They are reporting $101 million cash and equivalents for YE2023 and net debt of $119 million, increased from $100 million net debt 6 months earlier. Total debt however is down by $2 million. We can definitely expect a significant reduction in China revenue. In the YE 2022 results I think it was something like 60% of the total revenue. I'm guessing EBITDA margin is going to be something like 15 to 18%.

[casholaa] 22/4/2024 18:19

If you listen to the link, I think in the q&a, I think purchases and I think they get paid in advance which they hold as cash which is then repurposed into revenue? I find it difficult to tell what cash they actually have.

[m w] 22/4/2024 16:32

What I want to know is where has their cash pile gone

[casholaa] 22/4/2024 15:13

I'm also left with the impression that their cash balances include money recieved which is yet to be moved to revenue???

[casholaa] 22/4/2024 12:33

I'm confoosed. I'm left with the impression that it's shrinking????

[fiscal cliff] 19/4/2024 13:47

IG won't let you buy any of these - will only let you close.

[takeiteasy] 18/4/2024 07:02

fingers crossed for our QI :)

dyor etc

[the codger] 17/4/2024 12:34

Support is definitely there.im holding for now

[stallone10] 17/4/2024 10:07

Fake it till you make it, wait while they intergrate the acquisitions see how this works

[valhamos] 17/4/2024 08:05

Let's hope so. They need to discover - under promise, over deliver - rather than what they have done the last couple of years.