Alphawave Semi Reports Mixed 2024 Results Amid Economic Uncertainties
Why we think this is neutral
While Alphawave Semi faced challenges in 2024, including a 4% revenue decline and increased operating losses, there are both positive and negative factors to consider. On the positive side, the company achieved record bookings of $515.5m, up 34% year-on-year, indicating potential future growth. The gross margin improved from 51% to 59%, and customer concentration decreased. However, the adjusted EBITDA margin declined, and the net debt position increased. The lack of guidance for 2025 due to economic uncertainties and tariff regimes is concerning, but the company is actively managing its investments and adapting to market conditions. The transition to higher-margin business shows promise, but execution risks remain. Given these mixed signals, a neutral outlook seems appropriate as the company navigates through this transitional period.
Key Points
- Revenue decreased 4% to $307.6m in 2024
- Record bookings of $515.5m, up 34% year-on-year
- Gross margin improved from 51% to 59%
- Operating loss increased to £32.8m
- Adjusted EBITDA decreased to $51.1m with margin declining to 17%
- Cash position improved to $180.2m, but total debt increased to $352.0m
- Customer concentration decreased with top five customers generating 36% of revenues
- No guidance provided for 2025 due to economic uncertainties
- Transition to higher-margin business ongoing with focus on AI and data centre solutions
- Successfully amended credit agreement to address previous covenant breaches
Summary
Alphawave Semi's 2024 results present a mixed picture. Revenue decreased by 4% to $307.6m, but the company achieved record bookings of $515.5m, up 34% year-on-year. The transition to higher-margin business is evident with gross margin improving from 51% to 59%. However, operating loss increased to £32.8m and adjusted EBITDA decreased to $51.1m. The company's financial position shows increased cash of $180.2m but also higher debt of $352.0m. Notably, customer concentration decreased with top five customers generating 36% of revenues, down from 46% in 2023. The company is not providing guidance for 2025 due to economic uncertainties and tariff regimes, indicating caution in the near term. Despite challenges, Alphawave Semi remains optimistic about future growth opportunities but is managing investments carefully.