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Hi, everyone. This is Kyle from Marcus Evans. Thank you so much for joining us today on this webinar on Driving UAV Innovation: Enabling Heavier Payloads and Extending Coverage. This is brought to you in partnership with Amprius Technologies.

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At this point, I'm pleased to introduce you to our moderator and our host. We have with us, Ionel Stefan, who is the Chief Technology Officer at Amprius Technologies. Very happy to have you on, Ionel. I'm going to hand over to you, and yes, take it away.

Hello, everyone, and welcome to this webinar. Thank you for joining us for this discussion on UAV innovation, which we will focus on batteries for higher payloads and extended coverage. This is a timely topic because UAV capability is increasingly being defined not just by the airframe design or the software intelligence, but by the energy storage and power delivery available.

In many cases, the real limiting factor is not what the aircraft is designed to do, but how long it can stay in the air, how much weight it can carry, and how safely and reliably it can perform the mission. Better battery systems can enable longer missions, heavier sensors, greater operational flexibility, and ultimately, better economics.

So today, we want to look at this topic through 4 practical lenses: payload, endurance, safety and deployability. Our goal is to move beyond basic claims and get into what's actually changing, what matters commercially and what will happen over the next few years, what we predict that will happen over the next few years.

So let's start with the panelists. First, I would like to introduce David Waters, Senior Director of Operations Excellence at Honeywell. He will be joining us in the next few minutes here to step out for about 10 minutes or so. And I will let the rest of the panel experts introduce themselves. Trent, please?

Thank you so much. My name is Trent Clawson, I'm the President and Chief Engineer here at Titan Batteries. We're a battery manufacturer located here in Pocatello, Idaho, just about 2 hours north of Salt Lake City. And we design and build custom battery packs for the most demanding UAV applications and defense programs in the country and actually throughout the world.

But Titan sits at the intersection of cell technology and platform performance. So our goal is to turn these amazing world-class cells into flight-ready battery systems that actually work in the field.

Pete? Thank you, Trent. Pete?

Hi, guys. Pete Bitar. I'm the CEO, Founder and CEO of Electric Jet Aircraft and also the co-founder of LEO Flight Corporation. We build jet drones that use electric jet propulsion as well as flying vehicles for human flight, including the LEO JetBike, which is a flying motorcycle effectively. And we're developing the LEO Coupe, which is a flying car for 2 people to fly around in.

Thank you. So before going to the panel questions, I will introduce the topics a little bit. And before that, I will say a few words about Amprius in 2008 with a mission to develop the highest energy density batteries in the world by replacing graphite anode with silicon. And after a good number of years of research and development, we indeed are delivering today this very high energy and high power with silicon nanotechnology.

In the last few years, we have been focusing on pushing the battery performance for applications where every gram of weight matters, including unmanned aviation with emphasis on combining high specific energy with a kind of power charging safety and operational performance needed for real world development.

So what are the UAV applications that we're looking at and how -- this slide sets up one of the most important points in the whole conversations, the fact that there is no single UAV battery. The term UAV covers a large range of platforms from toys to weapons and everything in between. And each application puts a very different demand on the power system.

The application defines the battery requirements, and the battery defines the capability. As we work through this segment, you can see here delivery, inspection drone, mapping drone and FPV racing. There are many differences between the batteries. FPV racing drones even die-by the [ low ] power density of the battery. The full extreme spike in discharge for just a few minutes. So high discharge rate is the priority over endurance.

Inspection and mapping platform shift the balance towards sustained moderate draw of power over 15 to 90 minutes where energy density and steady delivery matter more than peak current. Vertical takeoff delivery flips the profile again with the backstop curve, very high power on takeoff and landing low-power cruise, which rewards high energy density lithium-ion cells that can handle the worst and deliver a range for cruising. So with higher energy density, as long as they can deliver the power, any watt hour per kilogram added to the performance to the specific energy density will extend the cruising time and the cruising range.

In the next slide, they are all summarized in this table, which is available in the materials after the webinar. The Defense segment, shown in the gray or in the dark green, stretch the power and energy requirements even further. Loitering munition need a long, efficient flight, followed by extreme terminal power surge and abrupt cliffhanger profile. The group 1 and 2 drones price, the lightweight long flat line endurance. Sometimes, they can be paired with solar power for multi-day flight. The heavier group 3 and 4 for cargo and eVTOL platform demand high capacity and high voltage lithium-ion systems to move serious weight. While the HAPS, the high-altitude platforms, stratospheric platforms are category of their own with a very low power requirement over day-night cycle discharge.

So takeaway is that power, energy, discharge rate, weight and cycle life have to be balanced differently for every mission. A cell optimized for an FPV racer is the wrong cell for HAPS and vice versa. That diversity is exactly why tunable high energy density platform is so valuable. And it lets us match the battery with specific duty cycle instead of forcing every application into a one size fits all.

Referring to Amprius batteries, we have developed silicon chemistry for many of the applications shown in the slides before with different power-to-energy ratios. That's what matters for each application. And in this power versus energy density chart, what should be remarked is that in all cases, the improvement relative to conventional batteries is substantial, typically in the 1.5x to 2x across most categories of UAVs.

Now that we have seen the variety of UAVs and the requirements for batteries, let's start the discussion with something mission-related because that's what the operators care about.

So panel question one, heavier payloads and longer endurance are often in direct conflict. How do you resolve that trade-off today? And what would it take to stop making a trade-off at all? Pete?

Yes. So for us -- yes, so for us at this point, a lot of this has to do with different flight systems doing different things in the sequence of flight. So for example, we have like a large vertical takeoff and landing clustered electric jet platform that carries a single person as an ultralight aircraft. We are developing a system right now for it to fly around 15 minutes per charge with conventional batteries or semi solid state like cylindrical cells that are running roughly 300-watt hours per kilogram. So kind of going back to the chart where it showed the different -- we're kind of on the better end of the conventional batteries, but still not anywhere near the full solid state performance for that particular platform right now in testing.

And what we're finding is that we're running at roughly 50% throttle for 15 minutes. That's roughly a 4C output. So our discharge rate is about 4C on average. But when you talk about maneuver, you're going to spike that to over 10C, sometimes 20C. And generally speaking, we're running between 20C and 25C batteries to make sure that we cover the entire spectrum of performance because your power density, your power requirement, your discharge rate has to not only be an average, but it has to actually take into account your maximum peaks, right?

So heavier payloads and longer endurance, they are in direct conflict. But even within that sense, there is direct conflict between discharge rate and average power over time. And so you think you can maybe do some of your flying for 15 minutes. Oh, yes, you can go with a 4C power rating, but you really can't because that doesn't let you take off. And cruise transition, that doesn't let you maneuver transition spikes and things like that being taken into account. So those are some of the challenges, I think.

And the thing that would stop making it a trade-off, I think, would be just something that had very high power density in peak when you need it and then have average power density for cruise and non-maneuver flight. And I think some of that can be accomplished. And there are some things being done, I think, with ultracapacitors, supercapacitors to handle peaks and then use batteries for your basic long endurance draw. Those are some conventional approaches. Now it'd be interesting to see that technology integrated into an actual battery pack, all sort of all in one. But with current technology, that's kind of where you're at.

Yes. As long as you can deliver the power, which is an absolute number, anything increasing energy density extends the range. David, do you want to add anything to that?

Yes. I mean, I would -- I think it's -- I would agree with that. I would say the best approach is probably to manage it as opposed to a very difficult trade-off to completely resolve. But I think a few things come to mind that are important about prioritizing the mission, clearly understanding what matters most, well-time, sensing capability or range, and then you can optimize the platform and the mission for that.

I think other things come to mind as well for that trade-off and managing it would be system efficiency. There's a lot more than just the battery of the design. It could even be propulsion efficiency, power management, all of that play into how effectively you can convert that energy into performance.

And another thing is the innovation and the advances in energy density and how that's moving the curve. So with all -- I think the trade-off is always going to be there. It's just best to manage it as opposed to attempting to resolve it.

Yes. Thank you. We should go to the next question. Why is energy density becoming such a critical differentiator for both commercial and defense UAV application? So I think who wants to start? Pete? Dave or...

So for this, again, we kind of go back to commercial and defense applications that have different missions. So optimizing your design matters a lot. That's why you're seeing a lot of UAS developing wing technology because if you can use a wing rather than a propeller to maintain your altitude, you have some efficiencies there.

But I think energy density, it's kind of obvious that the more storage, you can create in a battery, the better. But again, it kind of goes back to the previous discussion about power density. Power density matters a lot, your C rating, your discharge rate, how fast can you dump that energy out when you need it.

And I think especially defense UAV applications, you're in a position where you have to have immediate power if you need it and be able to dump that power quickly. So some of what you're dealing with is systems of systems of batteries. So you have maybe a cruise battery versus a maneuver battery or something like that where your energy density is taken up primarily with, let's say, a solid-state cell that has a lot of endurance, a lot of capability, but maybe not a lot of C rating. And then you can use either a lithium polymer cell or some combination of lithium polymer with ultracapacitors, supercapacitors for peaks to manage all of that.

And it then becomes something that our friends at Titan Batteries do where they can build a custom pack around the mission requirement. And I think energy density allows you to create a baseline around which you can build a custom pack then that meets a variety of needs. So as long as your core is sort of high energy density, then you can do other things to manage your mission through power density modification and things like that around that core. So I think that's one of the big differentiators in my mind anyway that comes to play every day.

I can add to that.

Go ahead.

I wanted to say that for an energy dense cell, the same C rate actually deliver more power, more current. That's usually not immediately intuitive, but that's what -- if you calculate the amps out of energy dense cell, they are higher compared to smaller cell or less energy dense cell.

I will say, too, that something in the solid state that matters a lot is one of the things that if you do tax a battery to higher power densities or higher-power draws, higher discharge demand, you stress the chemistry with conventional chemistry, whereas solid state is much less stressed in that same circumstance.

And that matters a lot. Running in a situation where you need emergency power, you don't want your polymer catching fire. So there's a lot to be said for solid state chemistry from a safety perspective when it's under high demand. And that can be in temperature as well as demand. So yes, that's a big deal.

Trent, you wanted to say something?

Yes. I was going to say in a conversation earlier, Pete, you were mentioning also, so maybe to -- if you want to talk on this too, I don't want to put you on the spot, but talking about how distance matters more than flight time in a lot of applications, right? I know earlier, we were talking about that, I don't want to steal your thunder. So did you want to talk about that? I'm kind of putting you on the spot. Or we're talking about...

Yes. It's a fair point.

Go ahead.

So not to toot our own horn, but our propulsion technology uses small electric jets. We can fly really fast. I was showing Trent earlier, in fact, if you don't mind.

Show one time.

This is one of our drones. Yes. This is one of our drones. It doesn't use propellers. It uses little electric impellers and propulsion systems that are extremely fast. I mean, this thing cruises at about 120, 130 miles an hour.

And what that means is that maybe we draw a lot more power doing that, but we cover a lot more distance for the same size drone that can carry a pretty substantial payload. I mean this thing produces about 80 pounds of thrust. So we can fly around at a higher speed and cover more distance in the same amount of time. So endurance is not as important in certain mission cases as distances. And for this one, it uses it for counter UAS applications where we can impact a Shahed, slam into it and then come home because our propulsion is encapsulated. But we have to cover a lot of distance [indiscernible] requirement is kind of a big deal. And again, we're trading time for distance.

Thank you. Let's continue with a poll question for the audience. So we will spend about 2 minutes on this question, which is, what is your primary driver for evaluating next-generation battery technologies? Is it A, extending flight endurance? B, supporting heavier advanced payloads? Or C, reducing overall system weight? Or D, meeting NDAA compliance requirements?

So again, what is your primary driver for evaluating next-generation battery technologies? Extending battery endurance, A; supporting heavier payloads, B; or C, reducing system weight; or D, meeting NDAA compliance? So please vote.

Thank you. We go to the next, which should show us that compliance is actually very important. Next generation is more important than even extended flight endurance, surprising. Thank you.

Going back to panel question. Panel question 3, what challenges still need to be solved before next-generation battery technologies can scale more broadly across UAV ecosystems? So what challenges? Trent, you're building batteries. Want to answer?

Yes. I'd love to talk about that. Yes. Maybe the first thing to set the stage a little bit is that a cell is a cell. So a lot of people, when they go to the store and they say, "Hey, don't forget the AA batteries." They're actually talking about cells. And so a cell, that's one thing, but a battery is bringing together the cell, the battery management system, the enclosure, the user interface, the firmware, everything together that's needed to take those cells to give that energy to that craft.

And then we're looking to do that in a maximum performance and efficiency as possible. So we're trying to add as little headroom or as little baggage, extra baggage to that cell both in weight and performance, and that's where companies like Titan come in. So to do this, we really need amazing engineers, battery engineers. Not just cell engineers. We need those too, of course, but battery engineers who understand that whole system. So it's not just the battery engineering, but the drone as well.

Because it's such an integrated system, what the battery does, how it affects the center of gravity, how it affects its compass, magnetic compass, how it affects its power curve. If a craft like what Pete is working on, if the powertrain is very optimized already and you're introducing a cell that has a different voltage curve, that's going to affect the powertrain.

So these kind of things is what's so critical that our engineering is applying that heavily. So every craft is unique, every mission is unique. And so it requires a deep level, a system-level understanding before we even start designing a battery pack. That's the other challenge today as well as no 2 craft are the same. There are no standardization broadly speaking at this time. And because the missions are so unique, then every battery is going to require that pretty significant engineering effort to go from that concept to those -- through design stages all the way to production.

What's different these days is, historically, it was sort of a lot of prototyping for a lot of years. Titan has been doing this for over a decade now. So we have thousands of prototypes under our belt. However, these days, we're actually starting to get significant digit -- quite a few zeros in volume of orders, and that's just really exciting because now we can actually carry past prototype into production stages.

And so that also brings up the topic of just how fast innovation needs to happen. What used to take 6 months to a year to develop, we have to do in weeks or months now. This is because the missions, for example, drone dominance, so the Gauntlet program that the Department of War is putting on. These Gauntlets are taking place weeks, months apart. It's a very compressed rapid iteration time line. And so we have to iterate very, very quickly.

And so programs are evolving. The platform is evolving, the mission is evolving. And so that also is a challenge because what you used to be able to do is spend a lot of time engineering a battery that could last 6 months, a year or years. And now that platform may only last for a couple of months before it goes through another iteration change is that just puts a lot of effort and strain on the engineering requirement.

But that's what we're here for, right? I mean, America can make amazing things and our allies can make amazing things. And so we're working very hard, at least at our company, and I'm sure other companies are as well to take that engineering talent and capability and really increasing it.

The other thing, too, is taking these time lines. So there's -- as you -- many of you know, you're going through like engineering, through design, through production. And each one of these stages have to go quickly now. And so -- but without skipping anything, you don't want to skip to production, only to find out later that you missed something somewhere.

And then just the last thing I'd say is certification, testing. Because of the compressed time line, it really does mean that if you want to have trust and confidence that this battery is going to perform, we do need to make that efficient and quick. And then maybe just talking about the NDAA compliance, just to react just quickly to that. It's cell availability, production capacity and engineering capacity. And the United States is catching up quickly.

When I talk to my peers and those in this domestic supply chain industry, things are going really fast. And the zeroes are being added quickly. I think all the demand signals that we're getting are really starting to come to reality. And that allows companies like Titan to put real investment behind those demand signals.

That's great to hear. Anyone else wants to -- thank you for the very comprehensive answer. I think it was very good. Anyone else wants to add to this question or go to the next one?

Yes, probably, we go to next one because it's -- time passes.

Panel question 4. In what ways is broader defense electrification accelerating innovation in battery technology and portable power solutions? So what is the role of defense electrification?

I'll start off. I think when the defense industry gets involved that helps out, move the industry along with many different ways. And so number one, just with the defense demand, it increases the need for higher energy density. And I mean, they're using UAV, soldier systems, robotics. That creates more of a pressure to deliver more capability. So the industry has to step up and meet that increased demand.

Also, defense requires a very deep level of system integration. It's not just so much power alone, but it's how does that power integrate with things like thermal management, autonomy, how does that play into the overall mission system and making that more efficient and intelligent in and of itself. And also when defense steps in, it definitely increases the need for reliability of the product itself, but also for the supply chain. Defense normally have long tails of volumes that are needed. And they also are required to meet certain environmental qualifications, be more rugged, compliant, et cetera.

And that also it puts more demand on the industry to accelerate that innovation, not just so much in the performance, but also in the manufacturability, the supply chain and as well as the sourcing for all of those components and products.

Yes. Thank you. We heard from Trent previously as the drone dominance program significantly accelerates the development of batteries and technologies for this type of applications. Yes, anyone else wants to add?

Maybe just briefly, is when we talk to our partners and the government, they really do recognize that to have a sustainable solution for defense, it needs to reach commercial applications as well. And because commercial applications are often smoother, a little more consistent, you think about power tool batteries, for example, just speaking on our side. If we were to make a power tool battery, we can sell those. We got to wait quarter-after-quarter very reliably on a long time horizon.

However, a battery for a defense application, that might have -- like David is referring to, a big spike in rush, you order it, it closes. And sometimes those can be unpredictable or the time lines might be affected on government budget or the U.S., in our case budgets. And so that can be -- it can be harder for a business, a private company, to manage that.

And so the department -- our friends at the defense and the government level, they recognize this, and they are making efforts to make cell standards so that both commercial and basically, they want the defense spending just for a commercial and they recognize that, and they want that to happen. And so thank you, if anyone who are listening because that really makes a difference for a private entity like ours to have that continuity of business.

Thank you, Trent.

Yes, I think, Trent really kind of covered that well, but I would just add that the more commercial -- the more commercial demand there is, the more reason that defense would invest in broader electrification. Because a lot of the defense applications are higher dollar, lower volume.

And ultimately, consumer electrification of various things like power tools, for example, that is a demand signal that if there is a follow-on market for the initial defense application, there's a higher likelihood that the Defense Department will invest in it. Or the Department of War now. But all I'd say, battery technology, portable power, those things oftentimes start in defense and space, NASA-related kinds of applications and eventually make their way to the individual consumer.

Yes. Yes. Thank you. So next, we have another polling question. Which operational challenge is most limiting your UAV missions today? A, insufficient flight endurance; B, payload weight constraints; C, battery reliability at altitude or temperature extremes; and D, supply chain NDAA compliance concerns.

So again, what are the challenges for operating most -- that are limiting the UAV missions today? Insufficient flight endurance; payload weight constraints; battery reliability at altitude or temperature; and supply chain or NDAA compliance concerns. So please vote. We'll give it a few more seconds. A, B, C, D. Thank you.

So again, the NDAA compliance or supply chain concerns is winning or getting the dominant position. Payload weight and battery liability also seems to be a concern. Surprisingly, flight endurance, not so much.

So let's go to the next panel question, number five. How are compliance and supply chain considerations, including NDAA requirements, shaping technology adoption decision? And is the U.S. industrial base ready to meet that demand? So this, we should take time here to respond because it seems like this is indeed a very important topic. So 5. Trent? Maybe you want to -- yes.

Yes. I know, I feel like we're on -- Who Wants to be a Millionaire contestants here. So NDAA, I think is clearly really important to this audience. And it really makes sense, right? Because obviously, the SEC made that a requirement. NDAA compliance is big. The drone dominance program is driving a lot of this.

And NDAA compliance isn't -- is more than just a check box, although talk about that, of course, here in a moment. But I think it's really also about proximity and speed. So customers that we work with, the biggest value to them is the innovation rate. I want to talk about NDAA compliance here just briefly here in a moment.

But what also comes with the NDAA compliance, maybe a better way to say that is people have in the same time zone, the same culture, the engineers can be on site, again, speaking that innovation rate. So if somebody needs -- they're invited to compete. They need a battery this week. Can you do this? And so NDAA compliance speaks to that, right, because if these companies are in the same -- within a few state borders away, this is something that our U.S. manufacturers can actually deliver on.

And then that proximity compresses those time lines so that those engineering stages, the design stages, the production stages, that NDAA compliance brings that in. The -- obviously, the U.S. industrial capabilities, our production capacity for -- in the United States and allies is going to take time. But it's going way faster than I honestly thought was possible.

So this is -- so specifically, we're talking about cells. So getting cells out of China and into other countries, including the U.S., that's happening as well, but also battery management systems are huge for NDAA compliance. So these are, again, where China specifically has had -- they've been doing this for years, and so it's going to take some efforts to catch up to that.

The good news is, those are available today. You can get -- absolutely, you can absolutely get NDAA compliant battery management systems right now, that the hardware is NDAA-compliant and the software, the firmware is written in the U.S. And you need, of course, both those that to function.

And then you need, of course, the battery itself. Things like injection molding, switches on the front, LEDs, all that. And of course, all the engineering we talked about already earlier. All that NDAA compliance, being able to have that domestically collapses those rates. It's happening now, you can absolutely get there.

The challenge now is getting those zeroes added. So going from 10 units, 100 units, thousands, tens of thousands, hundreds of thousands. That's going to take some time. I think for us, just speaking on what we're seeing, adding capacity like maybe 10,000 batteries a month, it takes about a month or 2 to bring something like that capacity up.

And where drone dominance needs something like 0.5 million batteries over the next 12 months or so, roughly, then it's going to take some partnership between all cell manufacturers, battery manufacturers, printed circuit board companies, all these to work together to make this possible. And -- but it's totally, it's absolutely happening.

And for NDAA compliance, it also goes to traceability. So for us, for example, we're working really hard to finish our AS9100 certification. So we can provide to our customers full traceability from the cell like from Amprius, of course, all the way through the -- all the different components that take to deliver that battery. And they're looking for that confidence so that when they go to take their craft, which includes the battery and the cells, when they deliver that to their customer, they can provide that evidence and that evidence is being requested all the time now.

I joke, it used to be -- and I've been doing this for over a decade now. It's only been in the last year or 2 that anyone even asked where these batters were even made. And now they definitely care. And so it's very good to have that traceability available to our partners. So I mean, I'm happy to hear that NDAA compliance is there because, again, I really believe that we were clearly over reliant on China. And being able to return to domestic manufacturing is going to help both our country, but also our defense, and we can step up and make it happen.

Yes, I like especially what you said about the power of localized supply chain of proximity. That speeds up development significantly when you can do multiple experiment iterations per month instead of waiting for shipping times and deliveries.

Thank you. Going to the next question. How should organizations evaluate emerging energy technologies when planning future UAV deployments and investment? So this is continuing on the topic, localized supply chains will accelerate progress and how do we evaluate these emerging energy technologies for UAVs? David?

I'll step in on this one. I think that what I would suggest for these emerging technologies in energy is for the industry, companies, individuals to evaluate those same way they've evaluated prior -- the prior impact on other technologies in the past. I mean, first, we have to look at, okay, what is the mission impact going to be? Does it meaningfully improve range, endurance or payload? So looking at what that impact will be to the mission.

Secondly, how difficult is it to integrate that new technology into the current system? Is it easy? Is it very complex? Does it require redesign? What sort of risk does that introduce into the current system that any organization might be developing? And then thirdly, I think as we went through COVID and we experienced a lot of the supply chain constraints and shortages that we're now at the tail end of, I think, can it perform whatever this new emerging technology may be, evaluating it, and can it perform at scale? Does the supply chain meet the requirements, the needs and the volumes for the future needs?

And I think if any technology pretty much checks all 3 of those boxes, I think it's absolutely something to potentially move forward with. But as we evaluate those 3 or 4 things, normally, there is -- it comes up short somewhere. And then that creates risk, and then we need to make decisions on what the tolerance of risk is as we might implement that or decline and wait until it's a little bit more mature.

Yes. And I will add also that different types of UAVs, as we have seen earlier, may have different risk appetite. Some advanced energy technologies will go first in particular UAVs and then toward others. Anyone wants to add to this topic?

Yes, I would say that emerging energy technologies is a broad -- it's not just about batteries in that sense. So you're looking at the potential for -- for example, a long endurance type of surveillance system meant for high altitude. And it's maybe covered in solar panels, where it's a very small battery, but the use of solar panels for direct power, something like that.

So energy systems depend a lot on the application that you want in the end. So you're seeing these hybrid drive systems using fueled power sources in addition. You're seeing fuel cell technology that has certain applications for certain things that is a little bit cost prohibitive. But again, as you sort of enhance the market and the demand for all of these things, you're going to see a broader variety of solutions that come out of innovation houses that allow us then to select a variety of application-driven power sources for whatever UAS application there is.

So I think all of the demand signal stuff that is both being generated by the Department of War as well as by agricultural industries and other applications for UAS, you're looking at a lot more reason to invest in a variety of sources of power. And obviously, batteries seem to be on the acceleration path that we could get -- ultimately get past gasoline-driven engines for direct power. It also is not far from going past fuel cell at this point, especially on a cost basis. So the technologies are already maturing, and battery electric seems to be the direction that this is going. But again, it's fully dependent on the kind of demand signal that's being generated by the applications.

Thank you. We have another polling question here, the last one. How important is a resilient supply chain in your battery selection process? A, critical, it's a requirement; B, important but not a deal breaker; C, somewhat relevant to our program; and D, not currently a factor.

So again, somewhat related and taking in account how much NDAA matter. I assume it will be not very well balanced, but how important is resilient supply chain in your battery selection process? A, it's critical; B, it's important; C -- or D, not currently a factor. Give it a few more seconds, A, B, C or D.

Thank you. So yes, it's important. As we probably could have guessed from the previous one, it's critical even. But in some cases, it's -- it may not be a factor for some applications. Interesting. Thank you for everyone that participated.

Next, final question, 7. Looking ahead, what innovations are you most excited about that will enable your UAV performance over the next 3 to 5 years? Here, I think everyone can contribute. Pete, I think you're enthusiastic about the new technologies. What the...

Yes, absolutely. So some of the big innovations, I mean, our friends at Amprius are really kind of bleeding edge right now pushing forward on battery technologies. I think the solid-state battery technology is really the future.

What the base chemical is that is used, so I've seen some things coming out of laboratories like fluoride ion batteries instead of lithium. Those kinds of technologies with different chemistry is interesting. And those energy densities are very promising, but there are always sort of these opportunities and opportunity costs involved.

For single-use batteries, you're seeing like aluminum air batteries coming to the fore where they're single use and they can be thrown away in a one-way UAS. That seems to make a lot of sense in terms of both cost and energy density. But again, there's a lot of experimentation that needs to happen.

And it is exciting though to see and it will be interesting because there are so many different approaches to this problem into the variety of applications that are sort of implied in this problem that I think it will be interesting to see sort of where everything falls ultimately. Having one battery that sort of does everything would be great, but I just don't -- I don't know that that's really the direction it's going, but it's exciting to see the different approaches to the different applications you can use batteries for that will enhance UAV performance.

Especially, I think, really, the next 3 to 5 years are very interesting because you're also seeing this big energy demand drive from AI, data centers and the like. So small modular nuclear reactors, things like that, that don't necessarily require fossil fuel to power our grid. And so as we are moving away from fossil fuel-driven electricity, ultimately, I think that, that is driven a lot by innovation. And the ability for us to switch to a battery-based system is, I think, really even more in sight than it was a few years ago.

Thank you. Yes, there are many emerging technologies. And I think this UAV, Cambrian explosion, in a way, of models will also produce significant development in technologies that are available. A variety of technologies that will be available. Batteries are used now more and more in pretty much everything, so I think we will see some separation of -- sodium ion is good for something, lithium ion for something else, lithium metal for something else, solid state and so on. Anyone else wants to offer comment?

Just to mention that I would be remiss if I didn't mention the innovation that we need at the Department of War level is standardization. So the cells are working through a standardization process. But for the Department of War to be lethal, we can't have 20 different battery designs, 20 different chargers, 20 different LEDs, 20 different standards. It's too much. It becomes an operations administration's nightmare when you're actually in the field.

And so we, as an industry, speaking of the drone, especially the drone battery industry, are going to have to work closely with our cell partners and our drone partners to push standardization so that we have commonality between connectors, latching mechanisms, communications standards.

So for example, like many of you mentioned, Pete earlier, too, is you're going to want to put a certain amount of engineering into a single-use attack drone differently than you want to put into an ISR drone differently into a reusable interceptor drone. And so if you have all these standards, if you sort of -- what we don't want the government to do is to say, well, let's choose every standard to make every battery have to meet every standard because then, that crushes innovation. And now every battery has to check every box, as it were.

And so -- but the good news is I really feel like the Department of War specifically and other organizations at the government level recognize this. And so standardization, I suppose, before I talk too long. But yes, I think that innovation is going to be pretty -- will be very valuable to them.

Yes. Typically, an industry will optimize our innovation for performance, and standardization will optimize for cost and for operational performance.

Sure.

Okay. Thank you. I think this was the last question I had. So we're opening now for audience questions. Please send your questions in. One question. How does silicon anode technology shift the competitive advantage for operators who adopted early? Trent, you're working directly with silicon batteries. I cannot say from who, but...

I know someone, yes.

Please explain, have you seen a difference between when the start of use for silicon batteries versus before silicon?

Of course, I mean, what's always interesting and anyone who's been in this industry for a while will remember and certainly, as Pete called out earlier, discharge density. In other words, how fast those electrons, if you will, can leave the battery is critically important.

But as you mentioned it as well, if you double your capacity you can have half the C rate and have the same amp output. And so when you're increasing from 200-watt hours per kilogram to 300 to 350 to 400, you start hitting these top numbers. And what's interesting is you can start being a little more forgiving on the C rate, and then you get both. Now you get this high energy density battery at a C rate or an amp output that meets your requirements. Now you sort of get the best of both worlds.

And so it's really exciting to see these high-energy cells. Like, for example, not to get too nerdy, but the SA08 at Amprius is very popular, let's say. Our battery technicians know that cell very well. And so this kind of technology, what that means is our customers can start saying, "Okay, I want to be able to do a mission that looks like this or a mission like this." Rather than having a battery design just for one craft, just for one mission, just for one really narrow set. These higher-intensity cells allow us to have a broader spectrum because we have the amp output as well as the density. But they can also start trading payloads, and that's really exciting, too.

So as we all know, but just to maybe state the obvious, if you increase your power -- your energy density by 20%, that either means you either can fly further 20%, or you can add 20% more payload. And that trade-off is of course, up to the customer. But often, payloads are being able to have more capable payloads. I mean, that's excellent.

Maybe one more thing to say on this, too, is if there's a nuance that maybe many may not recognize, if you're flying to your objective, and that takes, let's say, a few minutes to get there and you're there for, let's say, 10 minutes and it takes a few minutes to fly back. If you were to increase your flight time by 20%, for example, you may actually double your on position on target flight time because the fixed cost, if you will, of going out and coming back, that's already spoken for. But now you can be in position twice as long. Or in a combat scenario, your contact distance can increase 2x. So if you're not -- if you can reach out further and you are further away from the lines, you are safer. And I mean, this is critically important to our troops and our allies.

Yes. Thank you. That was very detailed. Another question, maybe for the operators here. What is the biggest limiting factor when it comes to broader adoption of next-gen technology? It's technical, commercial or regulatory? What have you seen? David or Pete?

David? Do you have any thoughts on that?

What was it -- which question was it again? I'm looking in the chat.

What is the biggest limiting factor when it comes to broader adoption of next-generation cells, technical, commercial or regulatory?

I think -- I would say it's -- I mean, all those 3 factors play into it: Technical, commercial and regulatory. It really depends on the customers' needs and what's being pushed that determines which one of those weighs the most. But I mean, absolutely, those 3 factors definitely play a part, and they're all kind of equal.

I think in this industry, as things become more regulated, I associate that with standardization. Sometimes those 2 things can be a little bit different. But I think there being more regulations, will open the door for more standardization. And that will also help reduce costs and create more affordability, which defense and commercial are always looking for.

But I think that depending upon the specific situation, that will determine what weighs most. But absolutely, I mean, it's going to be all 3 of those things that end up determining the momentum of the industry.

Pete, in your experience working with new technologies, which was the hardest to get? They didn't need the technical specifications or were hard to get commercial or hard to certify?

Yes. I think certification is the least of our worries in what we do anyway, and it's not everybody's story. But I would say primarily technical, honestly. Technical and a little bit of supply chain availability and price, obviously. But technical is a big deal. If we can get something that actually works and actually meets the specifications they actually advertise.

So you see the advertised performance specs, and then you actually get it and you do experimentation with it and you realize, it's not quite that good. So the technical challenges have been the biggest hurdles for us to this point.

Okay. So how -- if it would be to say I wish here, what kind of batteries would you prefer to have in the future? What is the aspect, how energy density changes the type of missions? What can you do with this?

I mean everything, really from our manned flight stuff, especially when it comes to like the JetBike, getting more flight time per charge is a really big deal for the consumer because we're also with the LEO JetBike for example, we're limited by the fact that it has to remain an ultralight vehicle, which has a hard cap at 254 pounds. And so the 254-pound weight limit really does -- now we can tweak that a little bit and add flotation that can add like 30 pounds per float or whatever, and people have done that to fudge.

But realistically, we're still trying to keep the weight as low as possible on the aircraft and still get more and more flight capability out of it. And that's the beauty of electric is that when you have a vehicle, it's -- if you have a gasoline-powered vehicle or a fuel-powered vehicle of any kind, it is where it will always be in terms of efficiency because the fuel is never going to be that much more efficient than it is now.

Whereas, a battery-driven aircraft in 10 years could have twice the flight distance and flight time than the one with the batteries it had when it started. So those factors are really important. And especially when weight is capped at a certain limit, you're limited in terms of what you can do with your propulsion. Electric motors are already between 90% and 95% efficient. So you're not going to get much more out of electrical motor technology, to be honest.

Some of that research and development has gone into how do you get more thrust out of the same motor stack. And that's possible that you might see a little bit of improvement there. But it's in the single-digit percentage range. You're not going to see doubling of your efficiencies in terms of your powertrain when its electric. Whereas, battery technology is really where everything is going to focus on, increasing performance, increasing endurance and still maintaining a certain weight limit so that you can maintain compliance with certain regulations.

Thank you. Yes. We're out of time. So thank you, everyone, for attending this. I'll hand it back to Kyle, if we can have any other saying here. Thank you.

Sure. I just want to say a very special thank you to our amazing panelists for your great insights and being so generous with your time today. It was a very interesting discussion on behalf of myself and Marcus Evans. We'd just like to thank you so much for the collaboration throughout.

To turn things to the audience, we'd just like to say thank you for all the great questions and comments that came in. We weren't able to get to all of them. We'll make sure to reach out to you afterwards by e-mail. A reminder to look out for an e-mail within the next 2 hours with links to review today's material.

And finally, would love to hear your feedback about what you thought about the webinar today. A survey will pop up on your screen in just a moment. Would really appreciate any comments that you might have.

On behalf of Amprius Technologies and Marcus Evans, we'd just like to thank you once again for joining us, and I hope to see you again at future events. Thank you, everyone, and have a fantastic day further.

Good morning. Welcome to the Amprius Technologies First Quarter 2026 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Tom Stepien; and CFO, Ricardo Rodriguez. [Operator Instructions] Following management's remarks, we will open the call for questions.

Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future product development or commercialization, new customer adoption and new applications, our growth and the growth of the markets in which we operate and the timing and ability of Amprius to expand its manufacturing capacity, scale its business and achieve a sustainable cost structure.

These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission.

This presentation includes a non-GAAP financial measure, which is adjusted EBITDA. This non-GAAP financial measure does not replace the presentation of Amprius' GAAP financial results and should only be used as a supplement to, not a substitute for, Amprius' financial results presented in accordance with GAAP and may not be comparable to calculations of similarly titled measures by other companies.

A reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure is included in our press release, a copy of which is filed with the SEC and posted on our website. Finally, I would like to remind everyone that this conference call is being webcast. A recording will be made available for replay on the company's Investor Relations website at ir.amprius.com.

In addition to the webcast, the company has posted a press release that accompanies these results, which can also be found on the Amprius Investor Relations website. Before turning the call over to management, I want to highlight a few near-term IR events. On May 12, Tom Stepien will be at Xponential in Detroit. Any investors that are attending the Expo are welcome to stop by the company's booth. At the same time, Ricardo will be at the Needham Conference in New York City on May 12 and 13. His fireside chat will be streamed online and will be available for replay on the company's IR website.

On May 14, the management team will be in New York City and taking investor meetings with KKR. The following week, management will be attending the B. Riley Conference on May 20 and 21 in Los Angeles. And to round out the month, management will be at the Craig-Hallum Conference in Minneapolis on May 28.

Looking to June, the team will start off the month in Chicago for the William Blair Conference. Management will then attend the Jefferies eVTOL Summit on June 8, the TD Cowen Technology Summit on the 17th, the ROTH London Conference on June 17 and 18 and the Northland Conference on June 23. We hope to connect with many of you at these upcoming events.

I will now turn the call over to Amprius Technology CEO, Tom Stepien, for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this morning. Let's start with Slide 3. Last quarter, I compared the advantages offered by our batteries to the difference between standard brewed coffee and espresso. It's an idea that illustrates the difference between our cells and those of our competitors.

In this analogy, a standard graphite battery is like normal drip coffee and we're the concentrated power of espresso. Our batteries contain the same energy as standard cells in a much smaller package. If you match the volume and weight of standard coffee with a double espresso, you achieve twice the energy. When you double the energy in a battery, you can double flight time for an unmanned aircraft or double the travel distance of a light electric vehicle. That's the Amprius Espresso advantage.

Turning now to Slide 4. This energy advantage continues to drive robust financial performance. And in the first quarter, we sustained our strong business momentum. Our second-generation SiCore, silicon anode batteries are gaining broad adoption across unmanned aerial system customers, and we are pleased to see the momentum we have built in Europe is now taking hold in the United States.

U.S. defense spending is at an all-time high with a growing emphasis on UASs, commonly referred to as drones. Three Amprius customers leveraging our SiCore batteries have recently received notable multimillion dollar awards.

First, I'll mention Kraus Hamdani Aerospace, a Northern California-based drone manufacturer. Their K1000ULE is a fully electric ultra-long-range Endurance UAS capable of 24-hour flight in a 1,000-mile range, designed for autonomous intelligence, surveillance and communication missions across land, sea and air. They recently received a major sole-source award from the U.S. Department of War for their UAS and a separate contract worth up to $270 million from the U.S. Air Force Central Command.

Then there's AeroVironment, a leading U.S. defense technology company and a long-term Amprius customer. March 2026, AV won a $117 million firm fixed-price U.S. Army contract to deliver P550 UASs designed to provide frontline units with real-time intelligence and targeting in contested environments. And then there's Teledyne FLIR, a global leader in thermal imaging, surveillance sensors and unmanned systems and another tenured Amprius customer.

They recently announced a European order for their Black Hornet 4, a palm-sized nano drone measuring just 25 centimeters long with a 200-millimeter rotor diameter. The Black Hornet 4 provides soldiers with live video feeds, target data and real-time situational awareness for intelligence, surveillance and reconnaissance in both dismounted and vehicle integrated operations.

We commend these 3 customers on their recent wins. Their success boosts our visibility into future purchase orders for SiCore cells. We look forward to continuing to earn their trust and business. We are pleased to announce that our silicon anode cells were selected by a leading light electric vehicle customer based in China. This customer placed a $21 million multi-quarter purchase order for batteries for 2- and 3-wheeled vehicles.

China is home to many of the world's most successful battery companies, which makes it especially satisfying to win business in this highly competitive region. Meanwhile, our ongoing project with the U.S. Defense Innovation Unit continues to expand. In July 2025, Amprius won a development contract from the DIU. In the March quarter, the contract was increased for a third time and now totals $18.1 million. This recent increase adds delivery of 3 types of silicon anode cylindrical cells and 4 standard-sized pouch cells.

Standardization is really critical for the government. It reduces cost, simplifies logistics and ensure systems can use the same safe, reliable NDAA-compliant power sources. It is gratifying to receive awards from credible and independent media and trade groups. After winning a competitive CES Innovation Award in January, we were recently named a top 100 Greentech company by TIME.

Turning now to our financial performance. I'm pleased to report Q1 revenue of $28.5 million, up 2.5x year-over-year and 13% higher sequentially. The strong results give us the confidence to increase our revenue guidance for the full year to at least $130 million, $5 million above our previous forecast. While it is not our practice to provide specific guidance for the current quarter, I would note that our revised annual forecast implies a reacceleration of sequential top line growth in the June quarter.

Ricardo will provide more highlights on our financial performance and outlook shortly. He will also share details on our press release earlier this morning in which we announced an agreement to exchange our outstanding public warrants for common shares, which will simplify and strengthen our capital structure.

Let's now take a look at Slide 5. Taking a step back, I'd like to review our substantial opportunity set in 5 principal end markets. The first is UASs, including drones used for defense, public safety, security and logistics. Defense platforms that require high energy density typically support long loiter missions and are primarily targeted for ISR, intelligence, surveillance and reconnaissance.

Public safety drones include DFR, drone as a first responder, systems integrated directly into emergency workflows. DFR programs are expanding nationwide because they deliver faster situational awareness, reduced response times and materially improved public safety outcomes. As more agencies adopt DFR as a core part of 911 operations, demand for higher performance, longer endurance batteries continue to accelerate, and that plays directly to our strengths.

Our second market segment is satellites and space, where our high energy density cells directly improve launch economics. Satellite launch providers charge customers by weight, making our ability to deliver the same energy at roughly half the weight, our Espresso advantage, extremely valuable. The $21 million multi-quarter purchase order I mentioned earlier is an example of our traction in a third segment, light electric vehicles. The customer advantage here is sitting more capacity into standard packs or constrained spaces and enabling range.

We're optimistic about the opportunity in a fourth segment, robotics. Robot performance is closely tied to battery characteristics as our CTO, Ionel Stefan, recently shared with a leading battery journal. "Balancing the extreme discharge demands of actuation with the computational intensity of real-time AI processing requires a new generation of energy solutions." He said, "high silicon anode cells represent a breakthrough, delivering the energy density needed to extend operational run time while minimizing the weight penalties that constrained efficiency."

Our fifth market segment is eVTOL, electric vertical take-off and landing aircraft. eVTOL and other advanced air mobility customers are developing autonomous point-to-point regional transport for both passengers and cargo. These vehicles only work with high energy density batteries because aircraft must lift a heavy structure, a pilot and 3 to 4 passengers.

Without enough energy per kilogram, the vehicle simply can't achieve the required range, payload or safety margins. If standard cells are chosen, the aircraft can likely get off the ground, but it likely cannot perform the required mission. Working with a third-party research firm, we size these 5 end markets, as shown on the right-hand side of Slide 5.

Lithium-ion battery applications across these markets are estimated at $7 billion this year, growing to $13 billion by the end of the decade, nearly doubling in just a few years. Looking further out, we expect growth to accelerate meaningfully, reaching $35 billion by 2035. Let me now turn over the call to Ricardo to review our Q1 results in detail.

Thank you, Tom, and good morning, everyone. I'm happy to report that Amprius had another record-breaking quarter. As shown on Slide 6, we delivered $28.5 million of revenue in Q1, which translates into 13% growth over the fourth quarter of last year and a 153% increase year-over-year. As Tom mentioned, those results give us the confidence to increase our 2026 full year revenue forecast by $5 million to at least $130 million. I'll provide more color on the outlook shortly.

As Tom noted, our revenue growth was driven by continued expansion in our SiCore customer base, combined with increasing order volumes from existing customers as they scale their own deployments. Cycle represented 97% of product revenue in the quarter, continuing our transition away from our legacy SiMaxx platform.

In the quarter, we generated 58% of our revenue from Europe, the Middle East and Africa, 21% from North America and 21% from the Asia Pacific region. The North American share increased meaningfully, both sequentially and year-over-year, consistent with the growing interest we're seeing from U.S.-based customers. While we expect this mix to fluctuate over the course of the year, we think the U.S. business could accelerate in the second half.

Now moving on to cost of revenue and gross margins. Our Q1 gross profit was $5.7 million, producing a gross margin of 20%. For context, Q4 gross margin was 24%. So we did step back quarter-over-quarter, and I want to be transparent about why. Overhead costs associated with our Fremont facility are being absorbed across a larger SiCore revenue base, while the SiMaxx product line continues to wind down.

Our Q1 SiMaxx-related overhead costs were up more than $3 million. Essentially, these are fixed costs against only $618,000 of revenue. That created a material but temporary drag on the blended margin. We also had 1 month of expenses from Colorado in the quarter, which are gross -- without which our gross margin would have been 22%.

Turning over to operating expenses. Quarterly R&D expenses were $3.8 million. SG&A was $8.6 million, bringing total operating expenses to $12.4 million, which was down approximately $19 million quarter-over-quarter, though that comparison is heavily distorted by the $22.5 million noncash impairment charge for Colorado in Q4 of last year.

On a clean basis, our adjusted OpEx run rate is up modestly quarter-over-quarter, driven by targeted investments in our sales and go-to-market organization as we build the team to support the commercial momentum Tom described. Putting these elements together, our Q1 operating loss was $6.7 million compared to a clean operating loss of approximately $2.9 million in Q4 after removing the Colorado onetime charge. The increase reflects the gross margin stepback I described and the continued investment in commercial and R&D capabilities.

Q1 adjusted EBITDA was negative $1.8 million, which compares to negative $5.2 million in the same quarter of last year. After 2 quarters of positive adjusted EBITDA, we had expected a modest step back in Q1 due to the SiMaxx phaseout and the 1-month Colorado cost carryover that I described. Our Q1 GAAP net loss was $5 million or negative $0.04 per share based on approximately 136.9 million weighted average shares outstanding.

Now turning over to the balance sheet and cash flow. We ended Q1 with $62.4 million of cash and no debt. Our cash position is down from $90.5 million at year-end due to several factors, which consumed $37.3 million of cash in the quarter. First, accounts receivable increased by $11.5 million, reflecting the strong revenue growth we experienced near the quarter's end.

Over $6.5 million of that figure has already been collected. We also paid approximately $20 million to settle our Colorado facility lease obligation as previously announced. That agreement settled what would have been an expense of more than $110 million in highly favorable terms. Largely due to that transaction, our liabilities were reduced by $29.8 million in the quarter. Q1 capital expenditures were of $980,000 funded largely through the DIU contract.

Total shareholders' equity stood at $109.4 million at quarter's end. Before turning the call back to Tom, I'd like to spend a moment framing our outlook and commenting on the warrant exchange agreement transaction that we announced this morning.

Let's also please turn to Slide 7. When we communicated our 2026 baseline of at least $125 million of revenue, we said we would rather size the upside as it happens than commit to it ahead of time. We continue to see healthy demand indicators, a growing backlog, higher production volumes at all of our manufacturing partners and increasing urgency from defense-related customers around NDAA-compliant supply.

With this in mind, we are raising our revenue guidance to at least $130 million in 2026.

The setup for the rest of the year is constructive for our economics, particularly as our collections normalize and additional capacity from our Korean and U.S. manufacturing partners comes online. We continue to expect 2026 adjusted EBITDA of at least $4 million and a net loss of no more than $8 million or less than $0.06 per share, assuming 136.9 million shares.

Our CapEx will ramp up over the course of 2026, but remain below $10 million for the year, and we expect this to be funded by our contract with the Defense Innovation Unit. Finally, I'd like to briefly comment on the recent announcement of our agreement to convert over 7 million public warrants that were held by institutional investors into common stock.

This agreement reduces future dilution by converting warrants that would have been exercisable at lower prices into a fixed number of shares on terms that we believe are favorable to existing shareholders. It is consistent with the broader optimization of our capital structure that we've been executing, such as closing the ATM, settling the Colorado lease and now managing our warrant overhang proactively.

We're constantly looking for opportunities to simplify the balance sheet and optimize the capital structure as our operating performance gives us the leverage to do so. Thank you to everyone who worked with us on this and to the Amprius team for enabling it, thanks to the prompt execution of our plans.

Now I'm happy to turn the call back to Tom. Thank you all for your continued attention and support.

Our Q1 performance bodes well for a successful 2026. Revenue increasing at double-digit percentage points quarter-over-quarter, continued gross margin at or above 20% and with our warrant exchange underway, we are removing a potential dilution overhang.

Competition in the lithium-ion battery space is fierce, and we embrace it. In 2026, the team is driving next-generation silicon anode performance with higher energy density and sustained power without sacrificing safety or reliability while meeting all manufacturing and country origin requirements. We're expanding our portfolio to reach new markets and converting more customer engagements into formal qualifications and deployments, particularly in mobility-focused platforms.

We remain deeply bullish about the opportunities in front of us, and we look forward to meeting and reconnecting with many of you at the investor conferences we'll be attending in the weeks ahead. Thank you for your continued interest in and support of Amprius.

And with that, let me -- I'll turn it over to the operator for questions.

[Operator Instructions] Now our first question will come from Colin Rusch with Oppenheimer.

Tom, you've been with the company now about a year, and one of the big focuses was around driving better visibility on customer volumes, so you could plan on production. Given some of the fluctuation that we're seeing with mix and margins here, I just want to get a more fulsome update on where you're at in that process and how much there is to go in terms of being able to drive increased volumes with key customers and do a little bit more work around planning and supply chain optimization.

Yes. Thanks, Colin. There is a lot of upside going forward here. We are in early days. We are starting to see some of the one big beautiful bill dollars. The bill was signed, what, 10 months ago. The 3 customers that we referenced in the call are starting to receive contracts. The suppliers to those customers, including Amprius on the battery side are next.

We see that also in some of the light electric vehicle work. We announced a win. We've been a little bit of vague about that in the past because it's been smaller purchase orders, but now there's larger ones coming in. So there is a lot of opportunity out there for us. We are going to robotics conferences that we have not attended in the past.

So we're going on offense. We're adding people to the team. We have some additional firms that are helping us. We just signed up a new group in South Korea that's helping us get started there before we establish our own team in place there. So we are very bullish about this market in general, and we are making plans so that we can capture as much as we can get.

And then for my follow-up, I just want to focus in on some of the mobile robot opportunities here. And given the form factor and the flexibility that you guys have with the different SKUs and the potential for multiple zones within some of these spots, particularly on the humanoid side.

I just want to get a sense of kind of product market fit, what you're seeing from a competitive standpoint and the evolution of that opportunity to move into more substantial production.

Yes. It's early days on robotics. We don't have any real meaningful revenue in our Q1 numbers. We're starting to have some really good discussions with folks in the U.S. and in Asia about what really is ideal. And to a certain extent, some of these companies are learning for themselves.

One thing that we have learned is Amprius' strength, our high energy density really helps us in unstructured environments. If you have a warehouse robot and you can go around the corner and plug in, okay, maybe we're not as strong. But if you have a variety of different power needs, I referenced Enel's analysis in the call, where you have some intense power needs if you're lifting and then you have some low energy needs for extended use.

Those play to our ability to have blended batteries, some that are power focused, some that are energy focused, a lot of which are balanced. So we're getting started. We have some really good conversations with customers and done well that will start to show up in terms of revenue toward the end of this year, early next.

Your next question comes from Mark Shooter with William Blair.

Congrats on the progress in the quarter. So last earnings call, I believe we had just entered the Iran conflict. So I'm wondering how have your conversations developed over the last 3 months, especially with the U.S. military and the defense contractors? Has there been any increase or a sense of urgency from these drone programs that you can talk about?

Yes. Again, we're starting to see some of the flow in. We referenced some over the weekend calls, I think, in the March quarter, and that has translated to some of the business. One of the customers that we talked about in the call was one of those customers. So We, as a nation here in the U.S. is getting serious.

I think we've seen that in a number of public announcements, and we're starting to see that flow down to us. It will likely continue the Gauntlet 2 and the drone dominance program. The Gauntlet itself starts in August. There are some qualifiers next month in June. We know the 11 winners in Gauntlet 1. There's more that are entering into Gauntlet 2. So we're really close with that community and intend to stay close and intend to emphasize our ability to have a longer loitering time, which for many of the scoring in these drone contest is super important.

And one follow-up for Ricardo about the warrant transaction at the tape this morning. Can you unpack a little bit more of the strategy around the transaction? And is there any more color you can provide to us on what the potential dilution would have been and what it will be now?

Thanks, Mark. Yes, definitely. So I mean, just to get us all on the same page, right? So there were basically just nearly 16.5 million public warrants that were issued back in 2022 in September, when the company went public with a strike price of $11.50. And here, what we're basically doing is we took $7.1 million of those warrants and negotiated with the holders of those warrants to convert them into stock at an exchange ratio that will be determined here next week.

Per our math, we are basically saving shareholders at least $70 million of dilution that would have otherwise happened if those warrants were exercised. The other bit is when these warrants are held by institutional investors, they manage a hedge, right? They generally just want the performance from the warrants rather than the performance to be linked to the stock and its volatility.

And given where the stock has been trading meaningfully above $18 a share, which is the level at which we can call the warrants, if we trade above that level for 20 out of 30 trading days, they, in essence, had a 100% short position relative to those warrants. So I do think that this should relieve some of the short interest on the stock to the tune, if you believe the math of about 7.1 million shares at least.

Your next question comes from Derek Soderberg with Cantor Fitzgerald.

I wanted to start with the $500 million in defense orders awarded to your long-standing customers. What's 6:35 PM Amprius' typical attach rate look like on those programs? And can you sort of frame the timing of when those might translate into POs?

Yes. So we haven't traced attach rates because some of these programs are brand new, right? We enjoy those 3 customers, and these are long-standing customers, right, that have been with us for a number of years. So we are in some of the programs, but not all. And then some of the companies, of course, have changed over time, and there's different divisions.

AV bought BlueHalo. So it's a bit of a different company than it was when we first got close to them 4 or 5 years ago. So the good news is that we are a known quantity and the groups tend to talk to each other. We were getting to the point where we're starting to share road maps. As these companies are concerned about getting to U.S.-made batteries and U.S. content, we're able to share our road maps on exactly when we will get there, who will build those for us.

That gets us closer and that allows us to have the right kind of discussions with the engineers and the program managers that are selecting different components, batteries, motors, cameras, et cetera, for these unmanned systems that they're either producing today or have on the drawing board for release in future quarters.

And Derek, maybe just to add, I think a rough guide when thinking about what this could mean for us is the batteries are usually 5% to 15% of the bill of materials depending on how advanced UAV is. And the timing -- I mean we do think that this will have to be fulfilled in the second half of this year spilling over into the following year, but that's being determined by the manufacturers right now.

Got it. Super helpful. And then just on the gross margin guide for '26, 25% for the full year. It looks like Q1 came in around 22% ex-Colorado. What specifically gets you back to that 25% for the full year in the back half of the year?

Yes. I think there are 3 points that are worth considering here. The first one is our U.S. mix continues accelerating due to what we just discussed, right? U.S. customers pulling demand ahead of even our own schedule and really driving quite a bit of the growth of the business. There's also the mix of China within that, which we are working to manage as well. Our sales there, along with the rest of the Asia Pacific region are accelerating too.

And so if you look at what the team basically does every single week, month and quarter, we're kind of playing this game of Tetris, where the demand comes in, in a certain set of flavors, and then we work to sprint to supply it across our different SKUs and manufacturing partners within a certain period of time and not leave any revenue on the table.

And so you can gear that for profit or you can gear it for revenue depending on what growth rate you're managing to and we are managing that process pretty extensively day by day literally. And so were there another 3 to 4 percentage points of gross margin on the table if we had the logistics coordination capabilities of a couple of hundred million dollar revenue company?

I think so. And so this is just a matter of us sharpening our acts, when it comes to that regard, developing those capabilities and in essence, getting that margin back into the company. It's easy to fulfill as much revenue as possible and then have all of your profits go to the FedEx and UPS if you don't manage that.

And so we continue sharpening our acts in this regard. The team is pretty focused on it. And we do believe that the 25% gross margin target that we set externally is still pretty well in sight -- and we'll catch up in the -- mainly in the second half of this year.

Your next question comes from Austin Bohlig with Needham.

Congrats on the nice quarter. First question has to do with kind of your current customer base. I think last quarter, you guys revealed like a customer base of 550. Curious on what like the new customer add was in the quarter? And then secondly, it sounds like you guys continue to go deeper with these current customers. So just wanted to talk about -- or if you could talk about the cadence on how that is going with current customers.

Yes. On the first part, the counts, Austin, thanks for the question. It continues to be robust. And more than 50% of our shipments in the first quarter were for new customers, which certainly bodes well for the future. It's a little bit of a misleading statistic, the actual number of counts, so we're going to tend to move away from it. But it's very robust, lots of interest.

We'll be at Xponential, the drone conference that is coming up starting Monday in Detroit. So that's -- that continues to go well. And we're starting to see, again, increased interest, some of that because of the mandates for U.S. Batteries, National Defense Authorization Act approved batteries. Korea is coming online. We have 3 CMs there. There's work underway at the 1 cylindrical CM in the U.S. and more coming. We're not ready quite to announce who's next. But we are getting ourselves organized in order to intersect that demand that we see.

And Austin, maybe just to add, I think the reason why the customer count metric has sort of run its course is we are seeing a lot of scalability with small customers by leveraging our battery pack partners. So if you look at a lot of the folks that were competing in Drone Dominance, even some of the ones who won they're buying ourselves through our pack partners.

And so that's giving us even more scalability than we thought of only a couple of months ago. And it does tend to, over time, maybe give us a lower customer count that's kind of meaningless when the real customer count is actually increasing and accelerating relative to where we were in the last quarter.

Okay. And then I guess, Ricardo, one follow-up for you, like a modeling perspective, how should we think about OpEx kind of progressing through the year off of this Q1 number? Should we expect it to grow sequentially or kind of taper off as maybe SiMaxx continues to roll off?

Yes. So through the year, and I think we have it there on Slide 7. So through the year, we do expect it to, in essence, top out at $50 million for this year. And with the main change basically being this reallocation of roughly $1.4 million of costs from cost of goods sold over to OpEx. Some of the main hires that we were looking to make this year actually started in Q1 already. So they're reflected there. And then any incremental ones will be managed below this level of roughly $50 million a year.

Your next question comes from Ryan Pfingst with B. Riley Securities.

Could you provide some commentary broadly on how you've progressed with Nanotech to gear up for production with them and where you might stand related to signing up additional U.S. or other allied manufacturing partners?

Yes. So Nanotech is a cylindrical provider in Chico, California, north of Sacramento. Step 1 with them was to validate the cell and make sure that they can handle our silicon anode materials and produce a product that is on par with some of our CMs that do that in Asia. They've done that. Percentage-wise, they are about 10% better. We have a 6.8 amp hour, those who are keeping score here, which is above the 6.6 amp hour cell of its kind. This is a 21700 cell. It can handle up to 20 amps and some of the competing cells and can handle less.

So we are pleased with the technical performance of the cell that they make for us that we make together. And we are in the process of scheduling demand. There is demand for that cell. There is demand for U.S. cells, and they're a go-to company to do that.

The second part on others, we have numerous discussions underway. We are being encouraged by the Department of War to continue to advance those discussions, and we are. We're not quite ready to announce anybody yet, but we are actively working on that. It will be focused on the pouch cells. The pouch cells are about the size of the T bag. That's what the DIU has funded us to advance both in Fremont with our prototype line as well as manufacturing in Korea and in the U.S. So stay tuned. We are hard at work, and we will eventually be able to share news of who we're working with there.

I appreciate that detail, Tom. And then secondly, curious if you can talk about the potential opportunities that the recent defense budget request might provide you guys.

Yes. So as we all know, the big beautiful bill puts it about $1 trillion in defense spending and a couple of analysts have commented that, that is heavily weighted, more biased to the unmanned aerial systems, which, of course, is our strength. As we have commented in the call and previously.

The proposed $500 billion addition has more of that coming. There's this group called DAWG, Defense Autonomous Working Group, I think it stands for. And that group is -- the proposed budget is something like $58 billion, which is the size of the marine budget today. A lot of that is, again, with drones and counter drones. So that is our sweet spot.

So we're starting to see more of that come. We are in the right discussions. Ricardo and I were just on a call with some guys from the DoD just yesterday about some of this. So we are in a privileged position. It's wonderful when -- the market is expanding and the product characteristics that we have align up. So we're seeing really strong product market fit. We got more work to do. There's areas that we want to reinforce, but it's coming together, and we feel good about where we are.

And the other thing there, Ryan, is basically that you can apply the same rough rule that we mentioned to Derek, right, roughly 5% to 15% of the bill of materials is battery inside of it. And I don't think our current market analysis captures the effect of this budget request if it were to be approved.

Your next question comes from Eric Stine with Craig-Hallum.

So I know last quarter, you talked about or highlighted that for the 11 key components of your battery that you had reached NDAA compliance. And I know that an objective there or near-term objective is to get those suppliers under long-term agreements. So just curious where that process stands, I guess, a couple of months later.

Yes. So getting the 11 components, the internals, anode, cathode, separator, electrolyte, et cetera, is super important. And as you commented, Eric, we checked that box last quarter. We have several under contract, several of the major components, not all, but several. And the nice thing is that we have primary and secondary, and we have a very good understanding of the landed cost. What will it take to get Japanese anode powder to Korea? What would it take to get Korea anode powder to the U.S.

So we understand the details of that. We understand what they should be costing and those that we have not entered into long-term agreements with, we're having the arm wrestling on the should cost versus the landed cost. So we're progressing well. We have shipped -- the company has shipped full NDA cells. And then as we bring on South Korea and really get them hitting their stride, one of our CMs there is delivering to customers, including one of the customers that we talked about in the call and on Slide 3 of the deck. We need to get the other ones up to speed.

Nanotech, as I mentioned, in the U.S., checks a full box on technology. We need to get them up to the delivery cadence that we want to get to. And a lot of that will occur with these suppliers. So progression on track. The DIU is pleased with where we are as evidenced by they're continuing to provide us some incremental funding based upon good work done to date.

That's great. And then for my follow-up, just on light electric vehicles, I know that obviously, UAS, drones, robotics, all of those other end markets, the growth profile is quite significant. But I'm just curious, I mean, you're now into the Chinese market.

It's -- I mean, it's not even arguably, it is the best electric mobility market. Is there a scenario where light electric vehicles could match, could exceed the growth in some of these other end markets, which arguably right now might be more top of mind.

Yes. So it is a nice win, and it's a nice win as we commented in that region because it's super competitive. And there are other areas, right, India, Vietnam, right, a lot of 2-wheelers and 3-wheelers there, and they care about some of the same things. So we have aspirations of expanding our technology into those.

Will it be dominant? I think at least for the next year or so, it will be second, maybe third place if some of the other segments that we show on Slide 5, if we get some of the traction that we aim to get, right? So today, LEDs are #2. We'd like to think that as some of the other ones come on, robotics, in particular, even some of the space activities that they would rival LEDs. They are very early today. So it will probably stay at #2 for the next year or so.

Okay. I appreciate that. I guess good problem to have if it's because some of the other end markets growth is that significant. So...

Your next question comes from Chip Moore with ROTH.

I wanted to go back to that importance of standardizing for the government customers. Just maybe talk a bit more about that process and then the cells you've called out, any sense of size of opportunities those specific cells could translate to?

Yes. So the cylindrical cells are standardized, as many of us know, so that flashlights and headlamps and night vision goggles all can be interchangeable. That does not exist with the very popular pouch cells. Pouch cells tend to have a little bit higher energy density, and they're very popular with drones. And that is exactly why the DIU funded us. And we're the only company, as we've talked about in the past, that was funded under this program last year in a very competitive situation.

The goal is to make pouch cells in the U.S. to make them at our prototype line. Some of the funding that we received is to increase the capability and capacity about the prototype line in Fremont. Standardized has been talked about. And in the discussions during Q1 that got solidified with the incremental $3 million to our grant. It's all about making standard cells in the pouch format, and they are the size of the pouch cells.

So again, a T bag is one of the smaller sized ones ranging to an iPhone size pouch cell. And it's about the same thickness, by the way, as an iPhone, so just so folks get a sense of what we're talking about. We are maybe the first, certainly among the first that are pushing standardized cells. We want to make those available so that, that interchangeability that we enjoy on the cylindrical side can be done. You don't want to have to worry about batteries for a lot of these components. And to get the friction out, that's a big part of what's happening in the defense land these days is just to make it easier to source components, batteries, cameras, motors.

There are websites, Amazon-like websites for the military where they -- these components are available just to add some of the efficiencies that we all see on our daily lives to the military side of things. So we're all over that standardized pump sales certainly makes sense to us. We will deliver to that incremental funding, make these cells available. It's very much in line with our interest as a company and certainly the Department of Works interest for the reasons we mentioned.

Very helpful, Tom. And maybe for my follow-up, I think in your closing remarks, you talked about mobility focused platforms and qualifications. Is that mostly LEDs to your point on the last question? Or should we think about broader mobility applications?

It's LEDs. It's also some of the robotics, right? I mentioned that we're going to some of the first conferences. It's certainly early days. We're getting smarter. We have some really good discussions going on. But look, anything that moves, and then we all know that we have that in our daily lives, should be able to benefit from higher energy density, which is our claim to fame.

And sometimes it's also a better volumetric energy density. You don't have so much space. But if you can get more energy out of that space, out of that volume, then that should win. These are higher-performing cells. So we're at the high end of the market, and that's okay. So we're not -- we don't make sense today for large electric vehicles like we would drive. But for the light electric vehicles, that certainly makes sense for robotics, it makes sense.

As we've said, when you pay per kilogram to get something up in space, if you can save some kilograms, but you have the same energy, that should be a win. That's how we think about these markets, and that's how we try to reference our advantage and then listen to customers and see, of course, if it resonates.

Your next question comes from Ted Jackson with Northland Securities.

Congrats on the quarter. So my first question is around the Fremont plant and the overhead cost with SiMaxx. I mean, is there a point where you just go to -- you do an asset impairment and write it down? And I mean, like how does that play out?

You've got equipment in there that's very bespoke for the manufacturing of that product. That product is clearly fading out. I mean it's a some cost. It's not like it impacts cash flow. But at some point, is there a case to be made to where you either write down the assets that are in there? Or you mean like -- or just as you get rid of SiCore, I mean, SiMaxx that's my first question.

Yes, that's a good question. The asset impairment actually happened in Q4 of last year. You may have seen our D&A went down pretty meaningfully from well over $1 million to only about $800,000. And so this was, in essence, just -- this is where accounting is really an art more than a science, but we literally allocated the cost of Fremont by square foot and what that square foot is used for now to drive the allocation. And we feel pretty good with where we landed here for Q1 and carrying that going forward until we start producing a little bit of SiCore in Fremont again late this year, early next year.

And is there a road map to just get out of that product? Or you're just kind of tied to it because of the customer base that's already there?

We'll definitely be out of it here in Q1. So the last $600,000 of revenue were delivered in Q1. Quite a bit of that was inventory that was produced in Q4. And so we should be out of the woods on SiMaxx.

Yes, we converted all of our customers from SiMaxx to SiCore.

Okay. Okay. That's good news. My second question, on your battery pack partners, I know that that's a good way to leverage your business and grow revenue. I guess my question on that is, can you kind of walk us through maybe a time line and like maybe how many partners do you have? Maybe kind of what percentage of your revenue is coming from that and where it's come from? And how do you see those partners helping drive your forward revenue?

Yes. So some of our customers are vertically integrated, take our cells, build them into packs and some electronics to manage the battery to worry about, okay, is the battery full? Is it empty? What is the state of charge, et cetera.

Other of our customers do that through pack partners that we have, who in turn receive ourselves. So they're an intermediary. There are about 40 different pack companies that we work with in any given quarter, about 6 to 10 of those are major volume pack providers, those that we have under a certain program.

There's 3 or 4 on our website that we have worked with. We're formalizing that program so that there are standard gold, silver, bronze type of partners, where we share our road map with the pack partners. Those that we are close to will be in our booth at shows. We've had joint press releases with a couple of the pack partners that we work with closely.

They are a multiplier, force multiplier for us because they often are asked by component companies, gosh, whose cells do you recommend? So they will listen to their customers and then say, well, look, if you want to optimize your energy density, there's really only one choice here. So they help and then add to our customer base. So we like that relationship. It allows us to focus on what we do really well, which is make these industry-leading cells.

It allows them to add the level of customization. I want this connector, we have this battery management system. We need it in this size or shape. You'll often hear that you need to match voltages -- to the voltages of the systems. So they'll put 6 of our batteries in series and then put 2 of those groups in parallel in order to do that. They do all that customization. So they're great partners, and we're formalizing even stronger our relationship with them.

Is it fair to say that as a percentage of your revenue, have they grown in terms of how they -- the percentage of revenue that's coming through them? And you're talking about them being a force multiplier and they're allowing you to, let's just say, reach a customer set that you might not be able to reach otherwise?

Yes. For standard cell sizes, they're a key driver, and they -- and we do expect their portion of sales to increase on some specific cell sizes.

Your next question comes from Amit Dayal with H.C. Wainwright.

On the pouch cell performance, should we expect -- the pouch cell performance, should we expect this to match or even improve over the cylindrical format?

Yes. So because the pouch cells have less overhead, they don't have a metal can, you take a little bit of weight out and the gravimetric energy density tends to be higher. So if you look at the 450 watt hours per kilogram, those cells are pouch in format.

The cylindricals tend to be 330 to 350. So a bit lower, again, because of some of the overheads. That's where the pouch lines up. And that's why the pouch are preferred for some of the high-end drones because you're really trying to eke out any weight that you can. If you can use a carbon fiber container to -- for the pack housing versus metal, a little bit more expensive, but it's lighter.

Those choices, again, back to the last question about pack partners, those choices would be made with the pack partners. So that's super important. So if you're trying to max energy density, you would choose our pouch.

Understood, Tom. And just as a follow-up to that, once the pouch cell is cemented and confirmed all the design, et cetera, is that when you get a little bit more aggressive about sort of building the pipeline for maybe the U.S. non-drone defense opportunity?

Yes. So that's where some of the standardization comes in. So standardized cells and then putting them into standard packs can really make a lot of sense. There's standard voltages in automotive, right? We all know 12 volts and then 24 volts and then even the data centers, 800 volts standards that are either here or emerging. The same thing is happening in drone land, where there are preferred voltages and components. And then if you have standardized cells, you can put them together into packs that meet those voltages, so you can be part of this ecosystem.

Again, all that's focused on adding some of the efficiencies, taking out some of that friction on the engineering side, so you can get these iterative better drones available with using off-the-shelf, but in our case, premium products to maximize the missions that these crafts might be addressing.

Great to see the agregation guys.

Thank you. At this time, this concludes our question-and-answer session. If you have any additional questions, you may contact Amprius' Investor Relations team at [email protected]. I'd now like to turn the call back over to Tom for his closing remarks.

I want to thank all of our shareholders, employees and partners for their continued support. At Amprius, we believe the next decade belongs to those who push the limits of what is possible. And that's exactly what we intend to do. Thank you for your time and attention this morning. Operator?

Thank you for joining us today for Amprius Technologies First Quarter 2026 Earnings Conference Call. You may now disconnect.

All right. Perfect. Well, welcome to session 3 of our event today, navigating the drone supply chain. This is all about promoting the visibility to the sort of picks and shovels of the drone industry, the people who are doing the real work to build the domestic supply chain in this kind of rising area of drone componentry. Very pleased to have Ricardo Rodriguez, CFO of Amprius Technologies. Ricardo, thank you for joining us.

Yes. No, thanks for having us, Clarke. Really appreciate it.

Yes. Well, let's kick off with some background. But I think investors may not be familiar with Amprius. What's the company all about? What's the scale of the business today? And what kind of are the key segments that you serve?

Sure. So Amprius is actually going to turn 18 in the fall of this year. And last year, we did over $73 million of revenue. This year, we've told The Street that we'll do at least $125 million of revenue. In Q4, we actually did 24% gross margins, and we told The Street that we'll do at least 25% gross margins here in 2026.

And our calling card is energy density and power batteries. So if you take a standard lithium-ion cell today, it will only give you so much energy density per unit of weight or size. On average, a lithium-ion cell will give you around 275 watt-hours per kilogram. And we have some cells that deliver over 500 watt-hours per kilogram. All else being equal, we can also deliver more cycle life and broaden the operating temperature range of these batteries as well.

And so our team was founded at Stanford, always with kind of one foot in China and one foot at Stanford University, given that the founding team was doing their studies at Stanford, and they were all from China. And then in 2022, we basically became an all-American company by spinning off all the Chinese subsidiaries and going public. But that's the scope of our work today.

As you can imagine, right, in UAV, a robot, an eVTOL, some satellite applications that we're now seeing, without a high-energy density battery, you literally don't deliver the duty cycle or the usage that, that device was designed to deliver. And so we'd like to think that we play a pretty critical role in our customers enabling these duty cycles across multiple different segments. And then obviously, as we were building up our revenue base going back to 2018, even some of our earlier investors were the early UAV manufacturers like AALTO, which is a division of Airbus and AeroVironment among many others.

Yes. Well, I think from the outside looking in, a lot of investors may be thinking that the last 5 years, drones kind of came about just by nature of us trying something new. But I suspect that, that kind of energy density was a fundamental and supporting technology in a lot of the sophistication innovation that's happened in the last 5 years. I mean, one-way attack, counter-drone interceptors, loitering munitions, all of those segments didn't exist really 5 years ago. And so it's a really supportive technology that I think has been pretty important.

You got started with this -- the high-altitude pseudo-satellite business. You mentioned some of the markets, but let's talk a little bit about what you're doing today in terms of geographic focus and some of the earliest adopters, maybe some of those UAV companies were your first customers in the late 2010s. But sitting today, what does the business look like in terms of market exposure and geographic exposure?

Yes. So for last year, roughly 3/4 of our revenues were outside of the U.S., and that's just due to the markets that we fulfill. So also, about 3/4 of the revenue was in the UAV space, which was mainly defense. And as you can imagine, this market really started developing itself in Europe out of necessity, right?

To do surveillance in the Nordics, in Ukraine, in the rest of Europe, folks have had to get pretty creative with not just really high-altitude drones, but also drones that fly above 20,000 feet and that carry with them a lot of devices, right? And so when the drone is carrying a couple of cameras, a gimbal, a radar, LiDAR, a bunch of communications equipment and a relatively high-powered and secure flight controller, you wonder where there's any power or energy left for the thing to actually fly. And so that's why those customers came calling earlier asking for high-energy density and then later on high-power cells and something more balanced, we've been able to tune the formula to match the requirements of each of these different applications.

And then the light [ EV ] market is one that has always been there for us in China and other parts of Asia and that we actually see gathering momentum in Europe for high-powered motorcycles a little bit of power tools and things like that, that also drove roughly 25% of our revenue last year.

But we do see, as we look at this year, the U.S. is obviously playing catch-up in this regard. That could drive some upside in the second half of this year. The space market is developing pretty meaningfully as well, where lithium-ion batteries didn't necessarily have a position in satellites and in backup power for receivers and antennas. We're now seeing an opportunity for that, especially when some of these antennas and receivers are portable.

And then eVTOLs, that's a market that is in the very early innings. But without a high-power cell, an eVTOL literally won't take off. And without a high energy density cell, it will only go so far. And so we've been working for quite some time with some of the main names there developing a custom battery. And what we like about these markets is that there's a bit of a replacement dynamic within them as well. So unlike electric vehicles or stationary storage, which make up the bulk of the lithium-ion battery market, we could actually have some replacement cells that get sold into each of these applications.

Yes. Well, definitely would love to understand that dynamic around the U.S. and some of the earlier-stage investments that you're at in terms of building capacity domestically. And maybe we could talk about what you're doing in California and Nanotech Energy. What is the company's path to expanding the U.S. business and fulfilling some of the demand that's coming through the pipeline for the U.S. drone makers or other markets? Maybe we could talk through that and understand how -- what you see in terms of the long-term path beyond 75% outside of the U.S.

Yes. I mean, I think, the 75% outside of the U.S. has been more a nature of where the demand is rather than where the supply has been. So fortunately, we have not left any revenue on the table because of our supply structure or agreements. I mean if there was more demand in the U.S. this year, we can totally fulfill it out of South Korea and even out of China after paying the tariffs. So that's not an issue at all.

But what is driving a race for setting up capacity in the U.S. and in our case, we're way more likely to establish capacity through contract manufacturing similar to the Nanotech agreement that you mentioned. And -- but what's driving the race to build cells in the U.S. is the National Defense Appropriation Act, which after 2028 makes it pretty difficult to buy cells that are not made in the U.S.

Ironically, that also happens to be when the bulk of the demand will -- we expect will be there from the U.S. itself. And so it actually works out really well. And the Defense Innovation Unit within the DoW recognized this, which is why roughly a year ago, they held a bake-off amongst all battery companies, including some foreign companies to see who could deliver and develop a U.S.-made high-energy density cell that didn't rely on some of the difficult markets for sourcing some of its main components.

And we actually won that bake-off by delivering everything that we promised and a little bit more constantly. And we've actually sourced and identified the 11 critical materials that we need to produce ourselves, whether it's in South Korea initially and eventually in the U.S. And so it's fair to expect us to work along the lines of more agreements like the one that we mentioned with Nanotech to produce some of our higher-running SKUs in the U.S. to also drive some convergence on the form factors and cell sizes so that we can generate a good bit of demand for all of these and continue creating value.

At the same time, you've got the IRA still there subsidizing some of the manufacturing of these cells. And so we truly do believe that by the time you factor those two things, plus the fact that we use a standard lithium-ion cell production equipment and are able to relatively quickly scale up the production of our cells that the cost can actually be competitive relative to what you're seeing out of places like South Korea, Japan, et cetera, right? And so that's our plan.

I mean we truly think that if we ramp up Nanotech here by the end of the summer and then ramp up other contract manufacturers early next year and throughout next year, we'll be in pretty good shape and well ahead of anybody to supply this demand.

Yes. Well, let's maybe talk about some of the technology curves that you have ahead of you. Silicon anode battery technology is sort of that Stanford sort of research product, the sort of origin of the company, but there is some differences here, whole silicon nanowire, silicon graphite blends. Maybe we could talk about some of the product mix and sort of expansion that you're pursuing in what you call SiCore. And how is that a complement to what you're doing today? And how does that fit into serving the market over the next few years? What are some advantages that, that product can have or packaging opportunities that it can have maybe versus the sort of origin product in SiMaxx?

Yes. I mean it's pretty straightforward, right? So if you look at a product like SiMaxx, SiMaxx was 100% silicon. It was the silicon nanotubes that were sort of tough to scale up. And so -- but at the same time, without SiMaxx, SiCore would not exist because while you may have a very good anode, you wouldn't know what the rest of the cell needs to be, right? So what's the cathode that balances the cell? What does the electrolyte need to be? And then what does the separator need to be in order to truly make the most out of a silicon-rich anode?

And so the way we see it is right now, there are basically 4 paths to producing a "silicon-loaded cell." The first one is what you mentioned, which is just silicon doping, blending single digits of silicon with graphite on the anode side of the cell. And your iPhone or some high-end consumer devices have a little bit of silicon in them already to give you that extra little bit of performance. We're seeing some EVs like the next-generation Porsche Cayenne will have single digits of silicon within the anode to push energy density and charging times.

Then the second path, which is the path that SiCore is on is silicon oxide. So silicon oxide enables you to have anywhere between 30% to up to 90% silicon if you can control the swelling by knowing what the rest of the cell needs to be. And the reason we got there sooner than anybody else on silicon oxide is because from the SiMaxx experience, we knew what the rest of the cell had to be pretty quickly. And in fact, we even see today in China and other markets, some pretty poorly balanced silicon oxide cells that are actually kind of dangerous.

And then the third path is silicon carbon. And that's where companies like Sila Nano, Group14, they've all been working on how to produce the powder for silicon carbon. And the reality is that some of those cells perform comparably to what silicon oxide can deliver from our experience. And so for us, it would be a pretty easy swap to put silicon carbon in some of the cells if we see a performance benefit. But so far, we have not seen it, right?

And then the last path is the one that we were sort of on up until 2.5 years ago, which is to try to do something with 100% silicon. And that we're realizing that while it delivers quite a bit of performance, it's tough to coat that electrode and to produce it at scale. It's no secret that SiMaxx was not necessarily a profitable product for us. And then as we were developing SiCore, we were able to get pretty close to SiMaxx' performance. And if you look at our tech road map, which we put out in our most recent earnings call, we believe that we can actually surpass SiMaxx' performance by continuing to develop SiCore. And so that's how we ended up where we're at today and where the battery industry finds itself today.

What we do think is that lithium-ion cells are here to stay. Solid state has been 3 years away for the past 15 years, and the time line keeps getting reset on that for multiple reasons. But the main reason is that the equipment to produce those cells does not exist and it also needs to be developed, right? And so the beauty of silicon oxide in our view, is that you can actually use the standard lithium-ion cell equipment to produce cells relatively fast. And in a market that is small and dynamic like UAVs, robotics, all these applications that I listed previously, we are finding out that nothing matters more than speed so that you can deliver the right cell from the right place at the right time.

Yes. And to further understand this, you can use the same equipment and you could benefit from some of the industry's investment. One of the things, as I understand it with the EV market and the scaling of battery technology was the form factor and you had 2170s and 4680s, and a lot of this was around building economies of scale around form factor.

You're talking a lot about technology decisions and chemical compositions as the sort of right horse to bet on. But on the packaging side and sort of the scaling side, are you going to find a choice where the UAV market will want a certain form factor and investors should watch the development of that form factor on a silicon oxide basis? Or is it a market that's going to be very different, and you're going to have a lot of form factors that you're going to support for something like eVTOL versus UAV, where they're going to have very different requirements and they're not going to follow this path of lithium-ion, small stitched together 2170s approach to getting power?

Yes. I mean the eVTOL guys are nowhere near that path. The eVTOL guys are actually developing relatively larger pouch cells that we're very familiar with. But to give you an idea, in Q4, we did over $25 million of revenue through around 22 SKUs, right, of either cylindrical or pouch cells.

And so I think the answer to your question is it kind of depends on the OEM or the integrators' budget because you can optimize your way to having a really efficient package if you can afford it and are willing to pay for it. And it actually doesn't take that much time of development. Like some of these cells, again, going back to my point on speed, like we're able to develop them within the quarter, like develop them and ship them within the quarter.

And so unlike in EVs where you had a couple of customer -- a couple of guys using cylindrical cells and then everybody else go with large pouches and large prismatic cells, and they were all deviating within a couple of percentage points of each other in terms of energy density on the markets that we are serving, switching from an optimized cell to a non-optimized cell or from a standard cell to one of our high-energy density cells, we're able to deliver, in some cases, over 100% incremental density, right? And so it is worth the additional cost.

And so we are seeing some more convergence as some clear pouch sizes become kind of the leading demand drivers and same thing on the cylindrical side. But for folks who are willing to pay to truly optimize the application, we'll deliver to them the custom cell.

Yes. Well, one of the things that the company has talked about is some pretty healthy long-term targets. I mean, by 2030, getting to $600 million or more in revenue, 30% gross margins and 20% EBITDA margins. Sitting here today, what are the major hurdles to getting to those milestones? I mean is the demand side so healthy that you're not worried about demand and it's about execution on capacity? Is it about developing yield around silicon oxide? Help me understand the things that you'll be doing between now and 2030 to ensure that those targets are well in hand.

Yes. So I mean the yields are not an issue. The yields are already there. They're at standard lithium-ion cell levels above 90% already. Even for a new start-up facility, we think that they can start from a pretty healthy point of 90%. So yields are not the issue.

On the demand side, that's not an issue either. In fact, as I meet more folks on the sell side and the buy side, who have looked at our TAM and SAM and right to win, they're telling me like, look, "Ricardo, you can get to $2 billion just on sizing lithium-ion cell batteries alone within the UAV space." So take aside cheap drones, lithium-polymer cells, et cetera, just look at higher-end drones that carry a lot of devices, what's the lithium-ion battery content within that, and that can be well over $2 billion globally in 2030, which makes our $600 million look pretty achievable, which we're fine with.

We'd rather have that number sold to us than me out there pedaling it with not a ton of credibility. But we think it will ultimately depend on getting the right cell from the right place at the right time because it may be that half of those $2 billion are there if you are making the cells in the U.S., right? And so we want to make sure that we're there to capture this demand by producing the cells at the right place.

Perfect. As we wrap up here, last minute, what are you most excited about over the next 12 months? There's lots of movement, new product curve for you to follow, rising supply chain urgency in a certain region. What shakes out to the top for the next 12 months of where you're most excited and where the company is going?

Yes. I mean from my seat on the bus, I'm most excited, frankly, about just delivering the tech road map so that we continue separating ourselves competitively even more so than we already are, expanding our NDA compliant capacity in the U.S. for some critical pouch cells and even more cylindrical volume is critical. So as we deliver that, I think that will really put the picture together for folks.

And then for me, it's actually been great here recently to see some friendly faces on the buy side get involved in the stock and make some money as we work our way through very early innings of the ramp. And so ideally, we continue doing more of the same by not screwing up this great opportunity that we have in front of us.

All right. Well, perfect. Ricardo, thank you very much for joining us. Really appreciate your voice and your opinion on what's exciting here and helping investors understand the pretty incredible growth curve ahead. So thank you very much. Looking forward to connecting soon.

Awesome. Same here. Thanks for having us. Have a good weekend, and we'll hopefully see you in Fremont. See you soon.

Yes. Perfect. Take care.

Take care. I'll see you.

Good afternoon. Welcome to the Amprius Technologies Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Tom Stepien; and CFO, Ricardo Rodriguez. [Operator Instructions]

Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future product development or commercialization, new customer adoption and new applications, our growth and the growth of the markets in which we operate, and the timing and ability of Amprius to expand its manufacturing capacity, scale its business and achieve a sustainable cost structure.

These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission.

This presentation includes a non-GAAP financial measure, which is adjusted EBITDA. This non-GAAP financial measure does not replace the presentation of Amprius' GAAP financial results, and should only be used as a supplement to, not a substitute for Amprius' financial results presented in accordance with GAAP, and may not be comparable to calculations of similarly titled measures by other companies.

A reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, is included in our press release, a copy of which is filed with the SEC and posted on our website.

Finally, I would like to remind everyone that this conference call is being webcasted, and a recording will be made available for replay on the company's Investor Relations website at ir.amprius.com. In addition to the webcast, the company has posted a press release that accompanies these results, which can also be found on the Investor Relations website.

I'll now turn the call over to Amprius Technology's CEO, Tom Stepien, for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this morning. Let's start with Slide 2. 2025 was a landmark year for Amprius. Our second-generation SiCore silicon anode batteries gained broad adoption with many unmanned aerial vehicle customers. One recent win I'd like to highlight is Nokia Drone Networks, whose commercial drone-in-a-box system is one of the most capable platforms on the market.

Amprius' balanced cells provide Nokia drones with the burst power it needed for takeoff and the sustained energy required for extended flight, ensuring obstacle avoidance, return to home and other safety critical subsystems remain powered throughout the mission. Our technology enables drones to fly longer, carry more and operate in conditions once considered impractical, helping customers improve safety, reduce downtime and increase mission value.

In early January, we were honored to receive a Best of Innovation award at CES. Our silicon anode lithium-ion battery was selected from the thousands of entrants for delivering an industry-leading 520 watt hours per kilogram. For perspective, that is nearly twice the energy density of conventional graphite-based lithium-ion cells. Our cells are lighter, longer and stronger.

In December 2025, the U.S. updated the National Defense Authorization Act. Under the revised NDAA, batteries used in Department of War UAVs must meet 2 key sourcing requirements. First, final battery assembly must be conducted by a non-foreign entity of concern, typically located in the United States or in an allied nation.

Second, functional cell components must not be sourced from or produced by an FEOC. For new DOW acquisition programs, both of these requirements must be met by January 1, 2028, approximately 22 months from now.

NDAA is important in the context of our contract with the Department of Wars Defense Innovation Unit awarded in July 2025 through a competitive solicitation from the winter of 2024. The contract was recently increased and now totals $14.8 million. The DIU contract provides prototyping funds for Amprius to accelerate production of NDAA-compliant SiCore pouch cells used in military unmanned autonomous systems.

The contract includes milestones for supply chain diversification, pilot line expansion in Fremont, California and the selection of NDAA-compliant contract manufacturing partners.

Amprius is ahead of schedule on NDAA compliance. One of our South Korean contract manufacturing partners has been delivering sales to customers since September 2025. We have expanded the Amprius Korea Battery Alliance to 3 contract manufacturing partners. And in early January, we announced our first U.S.-based partner, Nanotech Energy, located in Northern California.

I'm happy to report that our scorecard for the battery component sourcing is 11 out of 11. All internal SiCore components: anode, cathode, electrolyte, separator, and 7 additional elements are now sourced from primary and secondary suppliers in NDAA-compliant countries. We are prepared to supply domestic cells to customers such as L3Harris Technologies, which delivers integrated solutions across space, air, land, sea and cyber in support of national security.

On the financial front, we completed our at-the-market financing facility during the fourth quarter. We also fully exited our Colorado facility and settled the remaining lease and expense obligations. Fourth quarter revenue reached a record $25.2 million, representing an 18% quarter-over-quarter improvement and a 137% year-over-year increase.

Gross margin improved to 24%, a 9 percentage point increase quarter-over-quarter and a 45 percentage point increase year-over-year. Full year 2025 revenue reached $73 million, 3x our 2024 level. Gross margin for the year was 11%, up significantly from the minus 76% in 2024. Later in this call, Ricardo will share additional financial details and color.

Now turning to Slide 3. Amprius' customers choose our batteries because they materially improve the performance of their products. By replacing standard graphite-based cells with our silicon-based cells, customer drones achieved significantly longer flight times. One way to think about our batteries is through the analogy of espresso.

Espresso delivers the same amount of caffeine, energy as a standard cup of drip coffee, but in a much smaller volume. And if you match the volume and weight of the 2, espresso gives you roughly twice the energy. Drone customers tell us this consistently. Amprius batteries extend their flight time. In many cases, flight times double. Amprius espresso batteries give customers the extra energy they need to elevate system performance.

We elevate without compromise. The Amprius silicon anode platform spans 22 cell designs across multiple chemistries, pouch and cylindrical formats and a range of sizes. We have tuned and optimized cells for specific customer duty cycles, giving us the precision to deliver ideal solutions for energy-focused missions, the takeoff power required by air taxis and applications demanding high cycle life. This tunability is a significant differentiator for Amprius.

Slide 4 looks at our market segments. We serve 5 principal end markets. The first is UAVs, including drones used for defense, public safety, security and logistics. Defense platforms that require high energy density typically support long LIDAR missions and are primarily ISR: intelligence, surveillance and reconnaissance.

Public safety drones are typically DFR, Drone-as-First-Responders. Systems integrated directly into 911 emergency workflows. In the U.S., more than 1,500 emergency departments now operate DFR programs as a part of real-time response operations.

Drones are prepositioned in fixed launch stations across the city and are dispatched automatically or semiautomatically. the moment a 911 call is received. The objective is to get a camera over the scene in under 2 minutes, well before police, fire or EMS units can arrive.

Market segment number two is satellites and space. Satellite launch providers charge customers by the gram, making our ability to deliver the same energy at roughly half the weight, our espresso advantage, extremely valuable. AALTO, a division of Airbus is a long-standing customer in this segment. Its Zephyr high-altitude pseudo satellites are solar-powered aircraft that operated 70,000 feet for months at a time. The persistent ISR capability that Zephyr provides is strategically important for both defense and commercial applications.

Amprius cells are also gaining strong traction in light electric vehicles, including e-motorcycles, scooters and e-bikes. Wins in this segment typically align with the launch of new models, so revenue tends to be lumpier than in other markets. This category also includes a healthy replacement and range extender subsegment, an area we are beginning to explore.

Robotics is our fourth market segment. And while it's still early, it is developing quickly. Robot performance is closely tied to battery capability, and Amprius' tunable cells can deliver both the high power needed for task like lifting and the energy required to maximize time between charges. With strong growth rates and expanding use cases, this segment is highly promising.

The final segment that depends heavily on our industry-leading energy density is the electric vertical take-off and landing aircraft. eVTOL and other advanced air mobility customers are developing autonomous point-to-point regional transport for both passengers and cargo.

Several companies are currently testing ourselves, and we have a customer funded joint development program underway with one leading company. In this program, we are tuning our chemistry to meet the specific power and energy requirements of their aircraft.

Turning to Slide 5. Amprius captures customer interest through our flexibility. We work closely with customers to understand their energy, power and cycle life requirements, then select internal components that meet those needs while aligning with country of origin constraints.

Because SiCore cells are produced on standard lithium-ion equipment, we can secure early design wins from our California pilot line and seamlessly transfer cell recipes and process steps to our contract manufacturing partners as volumes scale.

During Q4 2025, we introduced 3 new cells to our silicon anode platform and retired one. The portfolio now stands at 22 designs spanning energy, power and balanced cells in both pouch and cylindrical formats. We continue to offer the tunability, speed and flexibility our customers rely on.

Now turning to Slide 6. Increasingly, customers care about the country of origin for both battery cells and internal components. Much of this is driven by the NDAA requirements discussed earlier, and the impact now extends to nondefense customers as well. Avoiding foreign entities of concern has become a compliance mandate, not just in marketing detail.

Procurement teams are asking detailed questions about where cells are manufactured, where anodes and cathodes are processed and where critical minerals originate. Fortunately, we anticipated this shift and began executing more than a year ago. In 2025, we announced our first NDAA-compliant contract manufacturer in South Korea, which delivers sales to customers just one quarter later.

Last week, I was in South Korea with several of my Amprius' colleagues, visiting component suppliers, checking in with current contract manufacturing partners, supporting new partners coming online and meeting customers at the booth at Drone Show Korea. We still have work ahead on the NDAA supply front, with multiple contract manufacturers, 22 cell models and 11 internal components, aligning every variable is operationally intensive.

But we got an early start, we invested wisely, and we consistently share our progress with customers. They understand our road map for both cell manufacturing and for cell content sourcing, and to respect our ability to deliver the right cell from the right location at the right time.

On Slide 7, we present our high-level cell road map. The Amprius road map highlights our industry-leading energy density on the vertical axis over the next 18 months. It organizes our portfolio into 3 cell types. High energy cells where long uptime drives range and usability. Key segments here include drones, robotics and LEVs.

Number two, high power cells which deliver short, intense power burst. Applications include power tools, data center backup systems and aviation platforms such as eVTOLs and drones that require power pulses for takeoff and landing. And long life balance cells designed for applications that demand both power and energy, along with extended cycle life, including eVTOL, satellite and metal device applications.

We've routinely shared this high-level road map and the detailed cell information behind it with customers. We listen closely to their needs, incorporate their feedback and adjust the road map as required.

Now let me turn the call over to Ricardo Rodriguez, Amprius' CFO.

Thank you, Tom, and good morning, everyone. I'm very happy to be reporting another record-breaking quarter on behalf of our team starting on Slide 8. In the fourth quarter of 2025, we delivered $25.2 million of revenue. This translates into 18% growth over the third quarter, and it's over 2.3x higher than the same quarter last year. I'm particularly excited about crossing the $100 million annual revenue run rate mark, which positions us to deliver over $1 million of revenue per employee, joining a very selective and unique group of companies.

Echoing Tom's remarks, our clearly demonstrable technical edge has continued driving demand for our products as we broaden the portfolio and expanded our capacity in close collaboration with our manufacturing partners. For the year, our revenues were $73 million, in line with our expectations, and just over 3x higher than 2024.

Our Q4 cost of goods sold at $19.3 million did not increase at the same rate as our revenue, thanks to a favorable product mix and higher volumes. This enabled gross profit margins of 24%, a significant improvement over our Q3 gross margin of 15%. Our lower SiMaxx line mix was now below 60% of revenues, providing a powerful driver of our gross margin improvements. For the year, our gross margins were 11%, reflecting a step change improvement over negative 76% gross margins in 2024 as our revenue from SiCore increased around the world.

Our resourceful culture enabled the team to only spend $8.9 million of OpEx, which excludes a onetime charge of $22.5 million linked with our decision to not develop a facility in Colorado, and the decommissioning of some equipment in Fremont. The quarter-over-quarter increase in OpEx of $900,000 was driven by a targeted investment in our sales and go-to-market efforts, along with the reallocation of some R&D expenses from cost of goods sold, to OpEx as development services agreements are completed.

These expenses, including the onetime charge of $22.5 million that I mentioned earlier, bring our Q4 operating loss to $25.4 million compared to an operating loss of $4.7 million in the prior quarter. Without the onetime charge, our operating loss would have been $2.9 million, which would have reduced our operating loss by 37% quarter-over-quarter.

Similar dynamic applies to our annual operating loss of $46.6 million, which would have been $24.1 million without the same onetime charge and the 48% reduction of the operating loss of $46.2 million from 2024.

Our GAAP net loss for the third quarter was $24.3 million or negative $0.18 per share based on 132.1 million weighted average shares outstanding. Without the onetime charge, our loss would have been only $1.9 million or $0.01 per share. In Q4, we recorded adjusted EBITDA of $1.8 million compared to negative $1.4 million in the prior quarter.

With a $1.6 million in operating costs from Colorado, we would have actually had positive adjusted EBITDA of $177,000 in Q3 of 2025. As a reminder, we define adjusted EBITDA as net income or loss before interest, taxes, depreciation, amortization, stock-based compensation and other items that we do not believe are indicative of our core operating performance. In Q4, these adjustments included $1.2 million of depreciation, $1.9 million of stock-based compensation, $1.1 million of interest and other income, along with $1.6 million of quarterly operating costs linked to the Colorado facility.

If we adjust our EBITDA for the cost that we will now not be incurring in Colorado, our adjusted EBITDA in 2025 would have been negative $5.3 million, reducing our EBITDA loss by 77% year-over-year and putting us on a path to have positive adjusted EBITDA above our current revenue run rate.

As of the end of 2025, we had 134.5 million shares outstanding, which was up by 4.1 million from the prior quarter. The change includes approximately 2.3 million shares issued from option exercises and RSU vesting, along with 1.8 million shares issued under our at-the-market offering program.

Now turning over to cash flow and the balance sheet. We ended the third quarter with $90.5 million in cash and no debt. The main drivers of cash flow in the quarter were the following: one, $3.5 million used in operating cash flow, which was mainly driven by a near-term $1.8 million increase in accounts receivable and a $2.1 million increase of inventory; two, $2.4 million of Q4 investments that are being funded by the Defense Innovation Unit, or DIU, as part of our project to stand up NDAA-compliant pilot and manufacturing lines. This brought our total CapEx in 2025 to $4.4 million. And lastly, $23.1 million from financing activities consisting of $19.6 million from the issuance of common stock under our at-the-market sales agreement and $3.5 million of proceeds from warrants and option exercises. As we announced on January 12, we have now terminated our at-the-market offering program.

Before I turn the call back to Tom, I'd like to take a moment to frame out our outlook for 2026 and the North Star beyond that, using Slide 9 as the backdrop. With what we know today, we believe that by leveraging our platform and existing relationships, we can deliver at least $125 million of revenue in 2026, which would enable us to have our first full year of adjusted positive EBITDA of at least $4 million.

This baseline level of profitability would translate into a net loss of $8 million for the year or $0.06 per share, assuming 134.5 million shares. When we say at least, we mean that we believe that while we're positioned to deliver additional upside, we would rather size this incremental opportunity as it happens, then commit to delivering it as we work our way through what can be a great year for Amprius.

Our CapEx for the year will be less than $10 million as we have made a decision to strategically invest in diversifying our supply chain and expanding manufacturing capacity within our Fremont facility to include electrode manufacturing. As noted earlier, we're doing this in collaboration with the U.S. Government Defense Innovation Unit, and have secured a contract for $14.8 million.

With what we know today, we expect this funding to cover most of our capital investment over the next several quarters as we work to develop a growing and resilient source of supply in a dynamic trade environment.

Last month, alongside the announcement of our agreement to produce sales with Nanotech Energy in the U.S., we also reported that we eliminated a lease and related expense obligation over -- of over $110 million in Colorado by settling it for $20 million. As a result, you can expect our cash position in Q1 to decrease by that amount, along with the reduction of $13.4 million in right-of-use assets and the $33.2 million reduction in near-term liabilities in our balance sheet.

In forecasting our cash burn, we believe that our current revenue level, and even slight improvements from these can put us on a path to mainly consuming cash for working capital versus funding operating expenses in the near term.

Looking further ahead, we believe that as we work through 2026, it will become increasingly clear that our plans to build an efficiently scaled multi-market leader that sets the technical pace in high energy and density power cells are realistic. As we close out the decade, we are targeting making the most of over $600 million of contracted capacity by enabling our customers most mission-critical duty cycles and positioning us to deliver over 30% gross margins.

By maintaining our resourceful culture and low-cost structure, we can then translate that into at least 20% EBITDA margins. Most importantly, the capabilities in go-to-market, product development, quality assurance and enabling scale that we'd have by then would position us for additional growth beyond 2030. That opportunity has our team energized and motivated to work together to meet and hopefully even surpass these goals by improving ourselves and how we work.

And with that, I'm happy to turn the call over back to Tom for his closing remarks. Thank you very much for your attention and continued support.

2025 was a very strong year. We delivered consistent quarter-over-quarter revenue growth, expanded our customer base to more than 550, demonstrated state-of-the-art technical performance and achieved 3 consecutive quarters of positive and growing gross margin.

The lithium ion battery market is intensely competitive, and we embrace those challenges. In 2026, we remain focused on delivering a next-generation silicon anode performance that raises the bar for energy density and sustained power without compromising safety or reliability. We are equally committed to meeting the cell manufacturing and content country origin requirements our customers expect.

We will broaden our product portfolio to unlock new market opportunities and convert a growing number of customer engagements into formal qualifications and deployments, particularly across mobility-centric platforms.

We are starting 2026 in a financially clean position, having completed our ATM program, fully exited the Colorado facility and transitioned all legacy SiMaxx Generation 1 customers to our Generation 2 SiCore platform. We are incredibly bullish by the opportunities in front of us.

We look forward to meeting and reconnecting with many of you as we participate in a number of upcoming investor conferences. Thank you for your continued interest and support of Amprius.

With that, I will turn it back to the operator for questions.

[Operator Instructions] The first question is coming from the line of Eric Stine with Craig-Hallum.

So curious maybe if we could start -- just with the selection of the 11 components, I mean, obviously, a quite significant step. But just curious, you talked about it a little bit, Tom, but just maybe a little bit more in depth about what you need to do now, what some of the milestones might be in 2026?

Obviously, you've got a head start, but those steps, as you work towards gaining that full compliance, and I would assume you're trying to do that well in advance of the Jan. 1 '28 date.

Yes. Good question. So we have technically selected anode cathode electrolyte separator and that make up the internals of our battery and give us the performance that we talked about. We have primary vendors and secondary vendors. It went through a pretty rigorous testing process. This all started with the DIU project back when it started in July 2025.

So we've had 6, 8 months to turn the knobs here. So we're happy with the performance of the cells with the different internal components in fact, in some cases, we see slightly improved performance compared to the legacy components. So that is where we are today. The work that remains includes productizing and getting all of those new suppliers under multiyear agreements.

Part of what I was doing in South Korea last week is talking to some of those suppliers because Korea is -- outside of China is probably the second largest country in terms of suppliers. There's ones in Japan, there are suppliers here in the U.S., et cetera. So we need to put those agreements in place, make sure that we can operationalize it, get it to deliver their components to our contract manufacturing.

So there's some operational work. There's a supply chain work that is still on our plate to complete to finally deliver full sales at the quantities that our customers are demanding.

Got it. But you -- I mean so it sounds like you're really through all the technical or the engineering side of it. It is now more about just making sure that, yes, you've qualified those sources, but can you -- do you have those locked down to be able to incorporate those in your products for obviously, much larger volumes?

That's a good way to summarize it. The heavy lifting on the technical side is done. And now it turns over to our operational flows who need to do exactly that and get the supplies, yes.

Okay. Yes. Appreciate that. And then just maybe for my follow-up. I saw the first gauntlet awards under the drone dominance plan, and I know there were 25 awardees. I don't know if you're able to give specifics or any color around this. But of those 25 awardees, just kind of curious how many of those are your customers? What do you -- how do you view that as an opportunity? And then obviously, just your outlook for the next steps under the executive order.

Yes. The gauntlet one of the Drone Dominance program had 25 invitees. We should see here in the next couple of days, the results of the actual fly-off that has completed. Our understanding is that it was done last week and there's a down select going up. We are all over that in terms of understanding where is Amprius inside in each of the 25. We are looking forward to understanding the official down select list that, again, as I mentioned, should be.

So that's where we are. Stay tuned on specifics. I think as a list is published, we may be able to talk about it. Understand, there's a second, third and fourth gauntlet. So this will happen over the next 18 months or so. This is early, but we feel good about where we are today.

Our next question is from the line of Austin Bohlig with Needham & Company.

Congrats on the great results. I just wanted to dive into the new customer wins. Historically, this was a metric you guys were giving. In the deck, it says that you're working with 550 customers.

So my question is, is it fair to assume you guys added over 100 new customers in the quarter? And then just trying to get a sense of where they are in like volume production. Like are we still kind of in the early design phase for the majority of these? And like when do we get to those high-volume production?

It is fair, Austin, to assume that it's more than 100. It was 444 in the last call in November, we said 550. So yes, we continue to add to that.

We have both repeat customers, of course, which is an interesting -- that we've earned the trust and continue to grow that. And we continue to expand the funnel with over 100 new. In general, the 100 new ones are new, right? Some of these are a couple of hundred cells for testing, come from the pilot line, which is set up for exactly the win the design. So we keep track of those because we're planting seeds first.

The average PO, we looked at that just the other day. The average PO during Q4 increased relative to the key customers are purchasing larger volumes of that. But it is still early days here in terms of -- try to provide some -- you can obviously do the math on our revenue single-digit market share in these markets growing, of course. So it's early. We have a lot of work to do to capture what we believe is our fair share given our [indiscernible].

Okay. Good. And I guess just one quick follow-up. Just looking at your guidance and kind of like what's baked in from like a geographic perspective. Historically, Europe or international has been the main driver. Could you just kind of dive into kind of what's baked into that, like what we should be expecting from a regional perspective?

Yes, sure, Austin. We see a continuation of the same trends that we saw, especially in Q3 and Q4 and are really waiting to see where the U.S. comes out in terms of enabling us to deliver additional upside. So frankly, within the guide, we expect our mix to look pretty similar to where we were in Q2, Q3 of last year.

Our next question comes from the line of Mark Shooter with William Blair.

Tom and Ricardo, congrats on the great progress in 2025. Question about some recent geopolitics. The [indiscernible], we're starting to see the U.S. drone warfare capabilities. But at the same time, we're starting to see some strain in the munition stockpiles.

So I'm wondering, in the past 6 days, have you had any increased urgency from any U.S. military DFW defense contractors? Or are they looking for you to ship more batteries yesterday?

Yes. Over the weekend, we actually had one customer who themselves have a reconnaissance drone, tends to fly for hours and days at a time that was a little bit on hold that is getting a pull themselves, which creates a pull for us.

And that's where this pilot line we have here where Ricardo and I are in Fremont can quickly do a student body right, okay, let's make those in this 108 cells, deliver them quickly, i.e., in a couple of weeks to that. So we're seeing some of that. It's hard to talk about more than that just a single customer, but that is one data point to share.

There's also a dynamic in play right now where some of the traditional interception hardware is running low on inventory. And so that is pushing folks to migrate to drones as the next generation of interception hardware. So we'll see how that trend plays out here this year.

That's great. I appreciate the color on both of you. About -- you did mention the Fremont pilot line, and that brings me to my next question. The Nanotech partnership, we thought was a creative solution to find some capacity. But how much demand are you seeing from these super NDA compliant customers where they need U.S. manufacturing?

And are you looking to find more creative solutions like a partnership with another Nanotech? Or do you think that the pilot line that you're increasing capacity in Fremont with the DIU investment will provide enough capacity later this year?

Yes. The pilot line is well named because it's primarily to win initial designs. And once there's a volume that's a couple of thousand cells, that's when we transferred to one of our partners. Nanotech helps us on cylindrical cells, and we're getting a really strong pull. I was at December as they had NDA changes.

They're okay with some of the sales they're getting today from the countries and content today, but they really want to understand the when we mentioned that earlier. So we share with them the road map. here's when we're really going to have volume from either Nanotech or others. And there will be more coming. It's -- that's clear. The pull is there. This will balance out in a couple of years. And some of our customers are insensitive to this.

So great. We have a really strong existing set of partners -- some are not comfortable with that setup, and Korea is serving that, as I mentioned, as we know, we are sales from Korea today and some must have U.S. So it will balance out maybe 1/3, 1/3, 1/3 in a couple of years, grading that transition.

Our next question comes from the line of Colin Rusch with Oppenheimer.

Tom, I'd love to get a better understanding of what's happening here within the technology road map. Are these fundamental changes in some of the electrolyte and binder technologies or any of the separator technologies as you move towards these higher-performance cells? And how mature is the testing process to give you comfort that you'll be able to execute on these over the next 18 to 24 months?

Yes. We -- thanks. That's let's go inside the battery a bit. So the anode, we believe, with our silicon design, which took us a little while to get right, we think is pretty strong. So the big question is, okay, why can we go above 450, 500 depending on the cell type, watt hours per kilogram. is that some of the other components, as you allude to. So there's knobs being turned by our R&D folks, primarily on the cathode.

The thinking is that cathode may be slowing down the overall package. So there's some work being done. We had a Board meeting yesterday and we shared our goals to the Board on specifics related to and it's very focused on improving that. We're big believers you get what you measure. We are measuring our energy density here inside. We are R&D focused on that. On the testing part, we feel pretty good.

We got a pretty robust system here at the small scale, right, the manual scale. P&L and folks are turning. And then as these 30 different tools arrive funded by the defense unit, that's getting stronger. So we feel pretty good about that. Stay tuned. We all want to make the goals that we set up here internally, of course, and we'll be able to report out that as we achieve some soon.

And then the follow-up here is really around the 2030 guidance. The performance that you're talking about here from a technology perspective is just fundamentally advantaged and looks defensible in a pretty material way. And the target markets that you guys are looking at are so much larger than what it looks like the target is for 2030.

So can you talk a little bit about the considerations around the pacing of growth pricing and margin kind of internal targets. As you think about growing this platform and doing it sustainably, how should we think about the key gating items and how we should think about potential acceleration relative to those targets?

Yes, Colin. So again, I think this all really just starts with the technical performance that we're able to deliver. So in our view, if we deliver everything that's there on Slide 7 and the markets grow maybe not even to the full extent, but half of what we have on Slide 4, when we look at some of the main drivers. And as we were looking at the market, one element that people forget about is that there's a bit of a replacement dynamic within some of these end applications.

And then it really comes down to us leveraging the capacity that we've contracted, having that capacity in the right place so that we can deliver the right cell at the right time from the right place. And yes, when we look at it, I agree with you. I think we can -- that's why we have $600 million plus. We'll find out over time what capacity is needed in 2030. But the way we're looking at the world today, I think this is, as you mentioned, pretty achievable.

The next question comes from the line of Ryan Pfingst with B. Riley Securities.

Tom, you mentioned market share earlier. Could you frame how you're thinking about your aviation market share today, maybe for drones globally or if you could get more specific within military drones or advanced drones?

Yes. Thanks, Ryan. It's as we say -- have said, it's single digits. These markets are large and growing. We have updated and you see that on Slide 4, our understanding -- that also into our 10-K. We're trying to really double-click on that for some of the specifics you drone taxonomy is groups 1 through 5. Okay, we know that batteries are used in 1, 2 and half of 3, but not in 4 and 5. How much of that is industrial versus defense?

What's going on, on DFR, drone -- we have not yet found a good source for that double click. We got the first click to understand as we present it. But our goal is to have more definition that we can have both internally and share externally. We've started. We have a good third party who's helping pull that together. But it's so early and it's changing so fast, right? This dominance program.

The U.S. has admitted that, hey, we got to catch up. So what we have today is what we can share. We're not holding anything back, but we are certainly trying to get smarter and understand that better.

And Ryan, I mean, I think the point that we're trying to drive here is that how you subsegment the market. In some cases, our batteries basically enable the duty cycle, right? By the time you power the drone, a camera, a gimball, a radar, multiple sensors, you wonder how there's energy left in the battery to still make the drone flat a couple of miles away.

And so we're seeing our share be pretty high on those drones that have a lot of our other power draining devices. While those more inexpensive drones, some of them are frankly using remote control car batteries, and therefore, that's not a market for us to play in, even though the volumes are pretty high.

So we do believe just through process elimination of the folks who aren't yet customers that we are positioned to do very, very well in that high-power, high energy draw drones, which tend to be the larger ones that are used for surveillance or more complex missions.

Got it. I appreciate that detail. And then just a follow-up on guidance. Could you give more detail around what's baked into the baseline revenue estimate, maybe what needs to happen to exceed it and what your revenue capacity is roughly today?

Yes. I'll answer it sort of in reverse order. So I mean, our capacity can definitely deliver the guidance, and we've got plenty of headroom above it. What's baked in our assumptions is what we see from current customers and some prospects that we're looking to convert here into customers in Q3 and Q4. Sort of going back to Austin's question, we still see the UAV market accelerating from being pretty well established in Europe.

And what isn't baked in fully just yet is any upside that could come from additional drone production and sourcing here in the U.S. So in our guide, we're still assuming that the mix is meaningfully outside of the U.S. for 2026. And as I said, we'll size the upside here as we deliver it because there are some pretty quick decisions being made on the U.S. side around what this demand could be.

Just alongside some of the calls that we got here this weekend and have been getting this week. we do see this evolving favorably from a demand perspective, but sizing it, we want to size it with POs, not with some loose idea of what the pipeline is.

The next question is from the line of Ted Jackson with Northland Securities.

I hope you can hear me. A xylophone band is literally set up behind me in the airport while we're on this call. So it's really loud. It's got a lot of really nice ambience music for you.

I had a couple of questions. So a real simple one. You made a comment, if I recall, that your SiMaxx revenue has fallen about 50% of total. And I guess, where I am going -- and that you've transitioned your Gen 1 SiMaxx customers to Gen 2 SiCore. So I guess my question is, what was the mix of revenue SiMaxx to SiCore coming into the year? What was it coming out? Where do you see it at the end of '26?

At the end of '26, we see it at 0. And coming in, it was about 25%.

Then my next question, with the NDAA compliance success that you've had in terms of getting all your suppliers in place and your contract manufacturing in place, where do you think you stand in that process vis-a-vis the market as a whole? Do you think that you're -- are you in a path? Are you -- I get a sense you're either in the path with everyone else or probably perhaps you a few lengths, maybe some kind of thought with that? And then do you see the ability to get there first as a competitive advantage? And then I've just got one more behind.

Yes. So we think that we are near the front. It's hard to know whether we are at the front. Every battery manufacturer got the memo and is looking to serve. We tend to take only the paranoid survive. So we never really want to think of ourselves as being at the front. We are happy with our industry-leading advantages. So we're working hard. We got work to do for sure.

As I mentioned, there's more announcing here, work is underway. You can imagine that there is a lot of effort long before they get announced. So we're happy with where we are. We are very focused on making sure that we keep up with -- because it's -- market. So happy but work to do.

Okay. And then my last question, just looking over at Slide 4 over to the right, where you have your OEMs and key market players. You have a lot of corporate logos up here. Are -- have all of these logos in some form or fashion sampled or looked at for your product? Are they customers or how like -- Like some of them you've clearly announced as customers, some of them have not. I guess the question is are any of the -- are all these people that you actually end up making your battery in the past for some form or fashion?

Yes, you're right. Some are customers, the title of that column on Slide 4 is appropriate, key market players. So some are customers that we can talk about publicly, some are potential customers where we are in testing and other ones we have to earn their trust. So that's the mix that we have on that right-hand column.

So in general, these are all folks who we see logical -- it'd be logical for them to buy cells from us, and they may have bought cells at low volumes for testing as well.

Okay, I'll step out of line. Congrats on the quarter.

Thanks Ted.

Our next question is from the line of Derek Soderberg with Cantor Fitzgerald.

My congrats as well on the results. First one on the Nokia -- the first question is on the Nokia drone networks. Is this sort of a single product win? Or is it more of a platform win? Can you talk a bit about the unit volumes and ramp timing for that?

And then as we sort of look into exiting the decade and can you sort of talk about how large the opportunity would be with the Nokia piece?

We like Nokia, Derek, because it is a communications platform generally, right? Our understanding of this platform is that it's able to beam 5G signals difficult to reach places where you can't cellular easily install -- it is a platform. There are -- if you talk to the Nokia guys, a lot of work that they have planned in the future, and they have their road map, of course.

We don't tend to break out specific customer volumes and share those. We do like this because it emphasizes what we say, right, this espresso advantage as we tried to -- Nokia drones with our batteries can fly 40%, 50% longer and other customers twice the flight time compared to just standard batteries. That's what led them to us and -- in that same count.

Got it. That's helpful. And Tom, you've got a validated technology, hundreds of customers. You've been commercial for 7, 8 years now with Fortune 500s. You really have had a head start, at least in the drone opportunity. How do you think you can best leverage that position to really accelerate the growth of the business?

Yes. It's about execution on the operational side for sure, to get the customers what they want when they want it and again, from the right place. We're also investing into the customer-facing side of the house. We've added to our sales team. We have a pack partner program that is embryonic but growing.

Some of our sales go directly to the folks who make crafts, products that fly or roll or walk around like robots do. Others go through pack houses and those packs then go into those end-use products. So we're investing there for sure. We're investing in some of our internal processes. We want to be able to meet and exceed this demand that we see coming.

Our next question is from the line of Chip Moore with ROTH Capital.

Ricardo, I want to follow up. Actually, you brought up a good point on the replacement dynamic for batteries. Have you done any sort of analysis on what replacement can become as some of these markets mature, understanding that there's still -- some of them are still pretty nascent, but where do you think that can go over time?

I think it can be pretty meaningful depending on the market. In eVTOLs, it could very well be even more than the initial installed volume if these things are was the same way if you look at gen engine manufacturers in planes today, the maintenance and the replacement of those -- of parts within those jet engines make the Rolls-Royces of the world more money than selling the jet engine the first time.

And that's a dynamic that you obviously don't see in EVs because you hopefully don't have to replace the battery or you just replace the whole car. But in UAVs, in robotics and eVTOLs, we are seeing a little bit of a -- a reasonably dynamic, right, where the replacement market could be even larger than the initial sale market. And so of course, depending on what assumptions you have for that, you end up with completely different market sizing.

And there's also a lot of work that can be done here to develop a standardized battery pack. And so this is something that we think about pretty frequently. We're looking for the right way to frame this out for the industry. So we don't have customers pulling in different directions when the duty cycle and the requirements are pretty clear and where we can drive meaningful convergence.

Yes. No, that's helpful, Ricardo. And maybe just for my follow-up, I appreciate all the new detail in the slides. Great job. Maybe on the market slide, on Slide 4, huge opportunities, what about opportunities outside of those core markets, fast charge and discharge capabilities, data center at the rack level? There's obviously higher volume electronics. Just maybe -- could we address some of the adjacencies?

Yes. We alluded to this on Slide 7. There's a little picture of a data center there for the high power cells. I think Tom mentioned it in his remarks as well, that's an opportunity.

Another one that we're looking at are battery packs for military applications. So the average soldier carries over 100 pounds of gear, and they are the standard battery packs that currently use standard lithium ion cells. And of course, if we bring higher energy density, we believe that we can cut the weight of those packs in half, potentially even make them more powerful.

And if you combine them with something like a supercapacitor, you can even trim the upper bounds of power peaks that tend to degrade batteries further. So theoretically, we could cut the weight of those things in half or double their capacity. And then at the same time, almost double the life of those battery packs, therefore, reducing the need to repeat them as frequently.

So yes, I think outside of what we have in Slide 4, high-power cells for data centers are obviously a market. And then anywhere else where you're using a battery pack, particularly in military applications, looking to leverage some of the customers that we already have, those would be other ancillary opportunities.

And maybe just the pile on. The -- some of the characteristics that we show on Slide 3 are inherent with the silicon platform, right? Fast charges -- and oh, by the way, we also can charge a lot faster. Oh my gosh, no kidding. And also we have a wider temperature range. So we lead with our strengths, right? Our only [ misses ] is energy density or metric density. But some of these other ones really helped secure the win and secure the long-term relationships that we're building for customers.

Our last question comes from the line of Amit Dayal with H.C. Wainwright.

With respect to trying to bring sort of manufacturing costs down or the price of the battery is down, do you have any room as you iterate on your side? And how much of that may come from sort of the engineering side from your end versus when the contract manufacturers can support you with?

Yes. So certainly, design is a big lever on the cost for sure. Volume plays a part also. And as we get some of the volumes up, there's some pricing that we see with the 11 suppliers have. And then we're getting into that, as we mentioned, as we go full NDAA with the contracts and the negotiations with suppliers on the 11. So we're in the midst of some of that. But the good news is that volumes are increasing.

That's a big lever. The -- and then we'll see that. When we do talk to customers and they are insisting on U.S., that's where this interesting dynamic comes in where they want U.S., but they want pricing. So we tend to have a little bit of an arm wrestle. But in general, we're happy with the margins we see, and you, of course, understand the guidance on think we can get.

Yes. Understood. And then just last one for me. In terms of the balance sheet, it looks really solid with over $90 million in cash. Looks like at this point, you really don't need to tap at the ATM anymore. What -- and especially going into sort of a capital-light strategy with Colorado out of the picture now, what are the uses of that cash that we can think of that could maybe accelerate sales or product development? Any color on that would be helpful.

Yes. As I mentioned in my remarks, Amit, with the current balance sheet, we are really only looking to fund working capital. As I mentioned, our CapEx will be funded by the DIU here in Fremont. Any little bit of incremental CapEx that could be needed at the contract manufacturers to accelerate production if demand ramps up even beyond our expectations can also be funded by the balance sheet.

We're also looking at putting in place a working capital line with some of our banking partners to further scale the balance sheet. And then yes, as you mentioned, earlier this year, we put out an announcement saying that we are basically done with the ATM. I think the ATM did its job over the last 2 years. And right now, as you mentioned, the balance sheet is solid. We think our current strategy is more than fully funded.

This concludes our question-and-answer session. I'll now turn the floor back to management for closing comments.

Thank you so much for joining us on the call. Stay tuned. We look forward to meeting some of you on the road here as we attend a couple of Investor Relations events, and be well. Thanks for your support.

Absolutely. As we talked about, 2025 was a great year. We think 2026 can be even stronger as we play to our strengths, our energy density and continue to push new products, expand our portfolio, respond to the country of origin request. We're in a fortunate position. We're certainly in it to win it, and we appreciate your support.

Ladies and gentlemen, this will conclude today's conference. You may disconnect your lines at this time, and have a wonderful day.

Good afternoon. Welcome to the Amprius Technologies Third Quarter 2025 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun; President, Tom Stepien; and CFO, Ricardo Rodriguez. [Operator Instructions]

Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future product development or commercialization, new customer adoption and new applications, our growth and the growth of the markets in which we operate and the timing and ability of Amprius to expand its manufacturing capacity, scale its business and achieve a sustainable cost structure. These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements.

For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission. This presentation includes a non-GAAP financial measure, which is adjusted EBITDA. This non-GAAP financial measure does not replace the presentation of Amprius' GAAP financial results and should only be used as a supplement to, not as a substitute for Amprius' financial results presented in accordance with GAAP and may not be comparable to calculations of similarly titled measures by other companies.

A reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure is included in our shareholder letter, a copy of which is filed with the SEC and posted on our website.

Finally, I would like to remind everyone that this conference call is being webcasted, and a recording will be made available for replay on the company's Investor Relations website at ir.amprius.com. In addition to the webcast, the company has posted a shareholder letter that accompanies these results, which can also be found on the Investor Relations website.

I will now turn the call over to Amprius Technologies CEO, Dr. Kang Sun for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will begin with a brief company overview. After that, our President, Thomas Stepien, will recap our third quarter performance and the key accomplishments. Next, our CFO, Ricardo Rodriguez, will discuss our financial results for the period. I will share some closing remarks before opening the call for questions. Let's begin.

Amprius is a pioneer and leader in silicon anode battery space with over a decade of development experience and a proven track record of commercial success. At Amprius, we develop, manufacture and market high energy density and high-power density silicon anode batteries with applications across all segments of electrical mobility, including the aviation and light electrical vehicle industries.

Today, Amprius has the most complete commercially available portfolio of silicon anode materials system in the industry and command performance leadership with its combination of battery energy density, power density, charging time, operating temperature range and safety.

Across our battery portfolio, we believe we offer unmatched performance among the commercially available batteries. Amprius has been delivering commercial batteries to the market with up to 450 -- watt hour per kilo and 1,150 -- watt hour per liter, 10C power capability, an extreme fast charge rate of 0 to 80% state of charge in approximately 6 minutes, the ability to operate in a wide temperature range of 30 -- degree up to 55 -- degrees Celsius and safety design features that enable us to pass the United States military benchmark nail penetration test.

Each of these performance parameters is critically important to real-world electric mobility applications. Not only do our batteries empower certain drones, satellites and vehicles to maximize performance, we also enable our customers to achieve their economic targets as well.

In addition, Amprius has developed a 500 -- watt hour per kilo and 1,300-watt hour per liter battery platform that has been validated by an independent third party. It's our belief that there are no other commercial batteries on the market that can perform at this level today.

In the third quarter, we continued to execute against our strategy of developing leading battery performance, converting that innovation into customer wins and scaling our manufacturing through a capital-efficient contract manufacturing model.

With that, I will now turn the call over to our President, Tom Stepien detail the highlights of our record quarter, Tom.

Thank you, Kang. Amprius finds itself at a very fortunate point in time at the intersection of a fast-growing electric aerospace market with an industry-leading set of battery products. This advantaged situation, coupled with strong execution by our team, allowed us to achieve record revenue in the third quarter. We attracted new customers, continue to optimize our operations and release compelling new products. Let's start with updates on our commercialization strategy and share execution details.

In the third quarter, we shipped batteries to 159 end customers, 80 of whom are new to the Amprius' platform. The remaining 79 are repeat customers. Now to be clear, we don't ship to every customer and every quarter. We do expect to gain new customers every quarter, albeit not always 80 new ones, but we expect to gain new customers nevertheless.

Since the first quarter of 2023, Amprius has built relationships with hundreds of companies and ship batteries to a total of 444 end customers. This strong and expanding customer traction comes from the superior performance of our batteries compared to traditional cells.

As we continue to move new customers through the qualification process, you're also seeing that we have plenty of room for expansion orders within our existing agreements. In the third quarter, our revenue totaled $21.4 million, a 42% increase from the second quarter and up 17% from Q3 2024 a year ago. Our second generation cycle batteries led the revenue charge in Q3 with a greater than 4x increase in shipments compared to Q3 2024. SiCore is a proprietary silicon anode that uses standard lithium-ion processing equipment.

In August, I visited a couple of our contract manufacturing partners. At one, they were making conventional graphite cells in the morning. And in the afternoon, they were producing our SiCore sillcon cells. Same line same equipment. SiCore standardization helped us enable a second consecutive quarter of positive gross margin. Ricardo will provide more context here when he reviews our financial highlights next.

Looking at our customer base, about 75% of our revenue in the quarter came from the aviation segment, led by unmanned aerial systems, or UAS, market. Remainder of our Q3 revenue was primarily derived from the light electric vehicle sector, which remains healthy but has a lumpier profile due to the customer's variant product introduction cycles. The LEV market tends to have short design in cycles, and we believe our drop in replacement batteries can help us succeed in gaining market share in this growing market.

From a geography standpoint, 75% of our revenue came from outside the United States on a shipped-to basis. Our strong customer diversification supports steady growth even amid uncertainty driven by U.S. tariffs and customer delays related to the U.S. government shutdown.

One of our major wins this quarter was a $35 million purchase order from a leading UAS manufacturer, which we announced in September. This order is a follow-on purchase from the same customer that placed a $15 million order earlier this year.

While we continue to grow our customer base across geographies, applications and budgets these kinds of large repeat orders underscore the built-in growth engine that we have within our growing customer base. It also highlights a proven performance at scale of our batteries.

During the quarter, we also deepened our relationship with another key customer AeroVironment. As a part of the U.S. Army's xTech Prime program we shipped samples of our ultra-high energy sales for evaluation in a variety of applications. These cells reach up to 520-watt hours per kilogram and vastly improved endurance payload capacity and mission economics for high-altitude platforms.

Another key Amprius partner in the drone segment is Nordic Wing in Denmark. In Q3, they chose our SiCore cells to power their UAV platform after an extensive qualification and evaluation period. Their Astero ISR is a fixed-wing craft with a wing span of about 2.3 meters. In its standard configuration, it weighs around 4.5 kilograms. ISR is an acronym for Intelligence, Surveillance And Reconnaissance.

In drone speak, intelligence is a collection, processing and analysis of information to support decision-making. For example, drone cameras will see the beginnings of the forest fire and the built-in smart analytics will make a decision to send a dispatch signal to the appropriate firefighting equipment.

Surveillance is the systematic observation of an area, person or activity over time, continuous monitoring of a border or a convoy route, for example. Reconnaissance is a specific mission-focused gathering of information, usually short term and targeted. Is the fire really [indiscernible]?

The Astero ISR with the Amprius SiCore batteries flies 90% longer than with standard cells, 90% improvement, almost twice the flight time. Astero stays airborne longer, covers more ground and delivers real-time intelligence without interruptions. This enhanced endurance doesn't just improve performance. We believe it redefines what's possible in every mission and can mean the difference between success and failure.

Looking a bit further out, we continue to make inroads in our relationship with Amazon. After being selected for the inaugural Amazon Device Climate Tech Accelerated cohort in July 2025, we successfully advanced to the integration assessment phase. This stage involves comprehensive testing of feasibility, customer value proposition, sustainability impact and supply chain readiness. We are excited about this opportunity to continue working with Amazon in this next phase, and we'll share further updates as we are able.

All of these recent customer wins further demonstrate our ability to scale up to meet volume purchase orders, which we believe will continue to increase as we expand our customer funnel, and continue to extend the state-of-the-art that our cells provide.

State of the art includes external testing. we rigorously test new products both internally and send them to external labs where they are tested against international safety standards. These include United Nations 38.3 standards maintained by the International Electrotechnical Commission and for our customers in India, the Bureau of India Standards.

This quarter, we introduced 2 new SiCore pouch cells and 3 new SiCore cylindrical cells that are optimized for unmanned aerial systems high-altitude platform systems and the electric airplane duty cycles. We call these balanced power and energy sales. Electric aerospace platforms typically require balanced sales. You need high power, high sea rate, capability for takeoff and landings and you need the high energy to enable long range.

Products like these balance cells further differentiate Amprius from traditional battery players. Many of our end customers participate in shootouts and fly-offs competing for their own contracts. They need to demonstrate best-in-class performance. We help them win. Our batteries give them more kilometers, allow additional kilograms and provide more watt hours that support their onboard intelligent components.

We believe that the electric aerospace is on the cusp of a multiyear transformation propelled by defense and commercial demand for a new era of AI-driven autonomy. McKinsey estimates this market is $40 billion to $50 billion today, growing to $80 billion by the end of the decade. About 10% of that market and 10% of the drone's bill of materials is for batteries.

Recent regulations and policy changes appear to be market accelerates. The U.S. executive orders over the summer that promote domestic drones is one piece of evidence. A second is the proposed changes to the Beyond Visual Line Of Sight rules that the U.S. Federal Aviation Authority is debating. BVLOS is a significant unlock for drones. We expect these policy actions will accelerate adoption time line and open new opportunities across the board.

We've already experienced strong traction from the defense market and expect growing interest from these customers in the year ahead. Estimates show that the more than $10 billion from the One Big Beautiful Bill will be allocated to defense and unmanned systems, and we believe that we are well positioned to benefit from this increased funding.

Anecdotally, we have already seen optimism surrounding the government funding translating to strong buyer intent. Last month, we exhibited at the AUSA Conference in Washington, D.C. where we met with dozens of defense contractors that are either interested in or already using our products for their drones.

We also attended U.S. and international conferences. commercial UAV Expo in Las Vegas, Defense and Security Equipment International in London and the drone X Expo also in London. At all of these events, we heard a similar message. Drones are an important part of the future, and Amprius batteries are at the forefront of innovation to power them.

As a key component supplier for unmanned drone systems, we have had our own success working with the U.S. government. As we discussed during our August 2025 call, we are working closely with the Defense Innovation Unit. Our DIU contract gives us funds to increase the capacity of our Fremont, California pilot line to 10-megawatt hours and expand our capabilities to support quick turn SiCore customer prototypes.

Since our last update, we have received an additional $1.5 million follow-on contract, bringing our DIU contract total to $12 million. Our program mandate includes qualifying individual lithium-ion battery components from National Defense Authorization Act, NDAA, compliance suppliers, which will allow us to work more seamlessly with the DoD. This includes considerations of the anode and cathode-active materials electrolyte and separator. This effort is part of a large momentum shift to U.S. domestic production of batteries.

As we work on building out an NDAA compliant supply chain and production capacity for our customers that require it, we have continued to utilize our contract manufacturers to support our rapid growth. As a reminder, we have over 1.8 gigawatt hours of capacity available to us through our partners, including our most recent added partner in South Korea.

Let's put that 1.8 gigawatt hours in context. our SA08 cell is our best-selling battery. It has an energy rating of 38-watt hours. 1.8 gigawatts over 30-watt hours works out to be about 50 million cells per year. We have tremendous headroom on our manufacturing capacity.

This capital-efficient model provides production-grade calls for qualification today and supports our ramp to volume while still allowing configuration control and aerospace aligned quality systems. We are also opportunistically sourcing additional partners to provide us with greater geographic diversification and operating flexibility.

As we head into the tail end of the year, we've carried our momentum into the fourth quarter. A few weeks ago, we announced that ESAero another leading UAS company, chose our SiCore SA08 cell to power the group 1 and group 2 UAVs that support defense, security, logistics and public safety applications. They chose us because in their words, "Amprius offered the best combination of advanced battery technology, production readiness and cost competitiveness to meet the program demand."

We have talked extensively about our defense applications for our batteries. We see a large and growing opportunity in the public safety markets also. According to a Police1 article, more than 1,500 U.S. police departments have DFR programs, Drone-as-First-Responders. Their systems are tied into the 911 emergency systems and are dispatched to help find a lost child, monitors smash and grab suspects and understand if a fire is a Spark or an inferno. We look forward to continuing to support the drone sector as it scales and evolves into more mission-critical and business-critical use cases.

On a final note, we also made the exciting announcement that Ricardo Rodriguez has joined Amprius as a new financial officer. Ricardo has a proven track record of driving growth with financial discipline in high-performance markets, and you will serve as a valuable guide as we expand our commercial reach, scale global manufacturing and reinforce Amprius' leadership in the advanced battery technology.

Since he joined on October 6, exactly 1 month ago, we have aligned on objectives, agreed strategies and developed plans. He is a tremendous addition, the right person at the right time. I look forward to working with and learning from them.

Ricardo, it's all yours. Please share our financial results for the third quarter.

Thank you, Tom, and good afternoon, everyone. I'm really happy to be on board in reporting our quarterly results on behalf of our team for the first time. After several weeks on the ground working in Fremont, getting to know our team, meeting some of our customers at AUSA and reconnecting with many familiar faces in the investment community that are interested in supporting our company and strategy, I could not be prouder of wearing the Amprius shirt.

In the third quarter of 2025, we delivered $21.4 million of revenue. This translates into 42% growth over the second quarter, following the previous quarter's 34% quarterly growth. This is also a 2.7x multiple of the team's revenue during the same quarter last year.

Echoing Tom's remarks, our revenue growth was driven by the addition of new customers combined with larger orders from existing customers. Within our customer base, only 1 customer accounted for more than 10% of our revenues in Q3.

Going forward, we plan to continue adding to our customer mix to diversify our revenue base. And we believe that as we develop more diversified contract manufacturing capacity, additional demand can potentially be unlocked.

At the end of we had $53.3 million of orders, including the $35 million order that Tom mentioned, to be fulfilled in the near term. This backlog is 83% higher quarter-over-quarter and it highlights our team's ability to drive demand.

Our cost of goods sold at $18.1 million in Q3 did not increase at the same rate as our revenue, thanks to a favorable product mix and higher volumes. This, in turn, enabled gross profit margins of 15%, which is a significant improvement over our gross margins of 9% in the previous quarter.

As I discover what makes our team unique, I continue to be impressed by its resourcefulness to make the most with what we have, and that is evident in our quarterly operating expenses of $8 million in Q3, which were down very slightly relative to the previous quarter.

The year-over-year increase in quarterly OpEx of $1.9 million was driven by targeted investments in our sales and go-to-market efforts along with the reallocation of some R&D expenses from cost of goods sold to OpEx as development service agreements are completed.

These expenses bring our operating loss to $4.7 million compared to an operating loss of $6.8 million in the prior quarter, shrinking our operating loss by over 30% quarter-over-quarter.

Our GAAP net loss for the third quarter was $3.9 million or negative $0.03 per share with 126.6 million weighted share weighted average shares outstanding.

Our adjusted EBITDA in Q3 was negative $1.4 million compared to negative $3.8 million in the previous quarter, thus reducing our adjusted EBITDA loss by over 60%. We define adjusted EBITDA as net income or loss before interest, taxes, depreciation, amortization, stock-based compensation and other items that we do not believe are indicative of our core operating performance.

In Q3, these adjustments included $1.2 million of depreciation, $1.8 million of stock-based compensation and $450,000 of interest income.

As of September 30, we had 130.4 million shares outstanding, which was up by 5.4 million shares from the previous quarter. The change includes approximately 2.2 million shares issued from option exercises and RSU vesting along with 3.2 million shares issued under our at-the-market offering program.

Now turning over to cash flow and the balance sheet. We ended the third quarter with $73.2 million in cash and no debt. The main drivers of cash flow in the quarter were $9.2 million used on operating cash flow, which was mainly driven by a near-term $11.2 million increase in accounts receivable at the end of the period due to our increase in sales, $400,000 of CapEx invested at our facility in Fremont, California and lastly, $28.7 million from financing activities consisting of $25.9 million from the issuance of common stock under our aftermarket sales agreement and $2.8 million of proceeds from option exercises. We still have approximately $20.1 million left available on the at-the-market offering facility as of September 30, 2025.

Before I turn over the call to Kang, I would like to take a moment to discuss our outlook for the remainder of the year. We have made a decision to strategically invest in diversifying our supply chain and expanding manufacturing capacity within our Fremont facility to include electrode manufacturing. We are doing this in collaboration with the U.S. Government Defense Innovation Unit and have secured a contract for $12 million awarded in the third quarter of this year. With what we know today, we expect this funding to cover the majority of our capital investments over the next several quarters as we work to develop a growing and resilient source of supply in a dynamic trade environment.

As we previously stated regarding the Colorado facility, the designs for the project are effectively complete and we are continuing to monitor the larger industry dynamics associated with building a factory in the United States. Changes in demand, supply, battery cost structure, government incentives trade tariffs and other considerations, including the timing and availability of funding, will influence our decision on next steps and near-term timing.

We have secured adequate capacity for the foreseeable future through our contract manufacturing network and plan to further expand that without deploying additional capital. We also believe that our current revenue levels and even slight improvements from these can put us on a path to mainly consume cash for working capital versus funding operating expenses in the near term.

With that, I'm happy to turn the call over to Kang for his closing remarks. Thank you very much for your attention and continued support.

Looking ahead, We remain focused on delivering next-generation lithium-ion battery performance that raises the bar for energy density and the sustained power without compromising safety or reliability.

We are also broadening our product portfolio to better align with the customer requirements and unlock new market opportunities, while converting a growing number of customer engagements into formal qualification and the deployment, particularly across mobility-centric platforms.

As demand scales, we will continue to leverage our contract manufacturing partners' capacity to efficiently translate that demand into revenue with disciplined quality minimal additional capital investment.

We are excited about the future ahead and looking forward to meeting and reconnecting with many of you as we attend several upcoming investor conferences.

Thank you for your continued interest and support of Amprius Technologies.

With that, I will turn it back to the operator for questions.

[Operator Instructions] And the first question comes from the line of Colin Rusch with Oppenheimer & Company.

Congratulations on all the progress. Just on the U.S. capacity. Could you talk a little bit about the cadence of how that will come up and how much capacity will actually be and where that electrode will ultimately end up getting turned into batteries? Are you looking at potentially qualifying some incremental contract manufacturing in the U.S.? Or will that electrode end up getting shipped overseas and return back to the [indiscernible] batteries?

Yes. Thanks, Colin, this is Tom. The answer is that we will have in the future, both a U.S. contract manufacturer in what we are what are called NDAA compliant countries. And that includes Korea. We have a contract manufacturer already today in Korea. We announced that in May. So you will see over time both for pouch cells and cylindrical sells additional partners in this network as it continues to expand.

That's super helpful. And then being able to qualify different configurations of performance, whether it's through different electro or different balances within these cells is pretty substantial accomplishment. Can you talk a little bit about the cycle time and how much work you've done previously to be able to get some of those different battery configurations? And just so we have a sense of how quickly the platform is evolving from a technology perspective going forward.

Yes, to fully qualify the 11 major components that make up our battery, it will take us -- we've started that already. It will take us to next summer. That's largely being done in cooperation with the $12 million DIU contract that we have. We are turning up. As of today, we have 5 of those 11 components fully qualified NDAA compliant. We're turning to not on the other 6, and we think we'll do that between now and next summer.

And just one last one from me. Just in terms of the cadence of how you're moving customers through the sales funnel. Can you focus of hand these batteries for a fairly substantial period of time here? And you guys have talked about kind of roughly 18-month qualification period sometimes longer, sometimes shorter for customers and you've been sampling now for about 7 quarters out of some of these facilities. Are you seeing folks move towards purchase orders a little bit faster than they have in the past or moved to larger purchase orders? Just want to get a sense of how we can think about some of this pipeline moving into backlog in production.

It's pretty distributed, some qualification within 2 quarters. Some take more than a year. It really depends on the complexity of the components at the end and some are larger, some are [indiscernible] $5 million [indiscernible] got it. and the other one. So it's did across all the 400-some customers that we do.

The next question comes from the line of Mark Shooter with William Blair.

Congrats on the great execution this quarter. The new customers was a big way and a nice jump. It's almost doubled the normal cadence in the past few quarters. So I guess I'd like to dial in on what led to that big step-up in new customers this quarter. Did we get a capacity or a yield breakthrough at the silicon supplier or your battery contract manufacturers that allowed you to ship to more cells? Or did you see an actual 2x increase in demand this quarter from last quarter?

We're definitely seeing an increase in demand as the awareness of Amprius gets out there as we attend more conferences, as we have more wins like we talk about. It gets the attention of other folks. The 80 that we have -- the 80 new that we added this quarter was a little bit of timing. Some of those seeds were planted, as I said, to Colin's question more than a year ago and now we're coming through and turning into real purchase orders. Other ones were planted earlier this year. So it's a combination of those factors that's leading to the uptick.

Great. That's very helpful, Tom. Ricardo, more for you. Congrats on joining Amprius, especially this quarter.

Thank you.

I'm hoping if you could just -- of course. Question. I'm hoping you could shed some light on the gross margin. The improvement this year has been great, specifically this quarter. Going from 9% to 15%, could you try to break that down to maybe how you see the improvement, if you put in the buckets? Is it -- and start thinking about a higher revenue or product mix? Or are you able to maybe raise price in this quarter, seeing the performance of your batteries and the demand for your batteries in the marketplace?

Yes. I mean I think mix was the main driver of the increase from 9% to 15% quarter-over-quarter. If you look at the 15%, I mean, it's in no way where we believe it needs to be, right? A lot of the battery peers even at higher scales are above 20% on the gross margin line. And our goal is obviously to get there and even higher.

On pricing, I do feel pretty good about where the pricing levels were for the SiCore product. And that in combination with just a larger share of our revenues being SiCore is what drove the increase, plus, of course, the run rate itself contributed to that. But I think the biggest contributor was really mix because of our contract manufacturing model, right?

The next question comes from the line of Derek Soderberg with Cantor Fitzgerald.

My congrats to Ricardo as well. I'm just tapping on the call just now, so my apologies if any of these have been asked. The second generation SiCore, what's the margin profile of that battery?

Yes. We haven't laid out explicitly, but the goal is to get that north of 20% at closer to 80% of our capacity, which we saw haven't reached, right? So -- but our goal is to just keep pushing that and we're, frankly, testing where that should be as revenue materializes.

Got it. And what are some of the trade-offs between the first gen and the second gen, what might slow down that path to 80% mix of the second generation? What are some of the trade-offs from your customers' perspective?

I think we refer first in the same the [indiscernible] is our first-generation product and SiCore our second-generation product.

Second generational SiCore.

No, we don't have -- we keep improving. We could say we have second generation, but we may have a third generation already in the lab, but we don't -- we don't separate that way, okay? We consider SiMaxx is the first-generation Amprius product and the SiCore is a second generation.

Got it. Okay. That's helpful. And then could you just give us an update on the time line to cash flow breakeven, I think? Previously, you guys were expecting that to happen sometime in 2026 potentially or maybe even early '27. But it feels to me like the company is growing faster than expected. You've Got quite a bit of scale to work with here and it seems like the customer growth is quite a bit ahead of at least my expectations. Can you just provide an update on path to cash flow breakeven?

Yes. I mean, I think it's tough to pin down a specific quarter for that. But if you take our results from here the most recent quarter, with another $10 million of revenues, we would have had positive EBITDA. And our EBITDA is a very good proxy for cash flow, right, given that it's pretty clean. D&A is not huge and investment is only the stock-based comp, and we have no I and not T in there. And so it's really just a matter of time for us to get that incremental revenue. And at that point, we can be not just EBITDA positive, but also pretty closely behind cash flow positive as well.

The next question comes from the line of Ryan Pfingst with B. Riley Securities.

I'm jumping around calls, so apologies if anything repetitive. But on the margin side, Ricardo, another nice jump quarter-over-quarter here in the second quarter. Just curious if you could give some color on what you expect as we continue to see revenue expand on the margin side?

Yes. I think it's again -- echoing my earlier point, it's really more driven by mix. We do believe that incremental revenue, depending on the mix of that and the customers that it goes to could be accretive beyond where we're currently at the gross margin level.

I'd love to get the company 20% and above here as soon as we can, but obviously, understanding that there are quite a few puts and takes, especially as we look to make a larger portion of our revenues come from the SiCore product versus SiMaxx. So I think as we manage that transition, you'll see us pick up a couple of points of gross margin here.

One thing to note is that this is this will be lumpy, right, given the not just the customer diversity, but also the product diversity. I do think it's -- we're not totally out of the woods of having fluctuating gross margins. And so I would caution here on modeling something that's straight up into the right on gross margin as we pick up incremental revenue because there are quite a few puts and takes within it, mainly mix driven that we certainly keep in the back of our minds to make sure that these expectations are realistic, right?

But kind of going back to what I said earlier, like, frankly, I'm more focused on the EBITDA margins. And even if gross margins stayed where they were with another $10 million of revenues, we would have had positive adjusted EBITDA, and that's very meaningful progress. And I think it puts us well ahead of our peers, well ahead of anybody scaling a similar product, and this is a testament to the teams focus on having the leanest cost structure possible at the OpEx level.

Appreciate that detail. And then turning to your manufacturing capacity update, which I know you touched on in the prepared remarks. But curious how important it is to establish contract manufacturing capacity in the United States for certain customers, maybe on the defense side or otherwise related to national security. Does that make it more of a near-term priority for you guys? Or are you able to be patient here with establishing something in the U.S.?

It is important [indiscernible] so I don't have again, sort of head in the certain data [indiscernible] but we know we're [indiscernible] elites segment at domestic batteries and we [indiscernible].

Since we cannot hear from Tom clearly, let me a delivered more [indiscernible]. As a developer, we have a fraction of the customer, demand in the product made in United States. Currently, the driver for our activity in the United States, primarily from this DIU program. So the DIU program, the Department of the [indiscernible] grand up certain $12 million contract to require us to build advanced battery silicon and based battery [indiscernible], okay? You can call [indiscernible] and you can cause small production line by next summer. Majority of our customers still oversee customers.

The next question comes from the line of Chip Moore with ROTH MKM.

I wanted to ask maybe on the $53 million in orders, near-term orders. Maybe you could put a finer point on that? Should we think about next couple of quarters potentially on that? And then Ricardo, to your point, around mix and potential for some lumpiness or margin impacts, just anything to call out there?

Yes. I mean, maybe I'll start with the second part of the question, if that's okay. I mean really nothing much beyond what I've already mentioned, Chip. I think we have to work through this backlog, obviously, and that will keep building up. But at the same time, we also need to have the supply in place to fulfill it, right? And that will ultimately be the decade of what the revenues can be in the near term.

And on the gross margin side, I'll just echo what I said before, right? I think you can still be lumpy. We do expect progression as we sell more scores a proportion of total sales. And I mean if we would have had another $10 million of revenue that we could have fulfilled, we would have had a breakeven or slightly positive adjusted EBITDA in the quarter.

On the first part of the question, Chip, hopefully, I'm coming through here, is a the large purchase order is for a year. It's not necessarily linear. They don't want $35 million divided by 4 every quarter, but there's these different layers of revenue that we're building in, and the backlog is going in the right direction. So that's so we like to see that versus some of the quick turn purchase order comes in and we ship within the quarter. So we're building some customer-facing muscle, and we're getting into these longer-term contracts. And they're really synchronized with the customers' end use, right? They have deliveries to their customers of their crafts, and that's really what sets the rhythm of when we deliver cells.

That's great. That's helpful. And maybe, Tom, just a follow-up there, sort of the flywheel effect of repeat orders. You had a nice 1 year. It feels like you're starting to hit critical mass. Just understanding things will still be lumpy, but how are you thinking about potential for these repeat orders to keep coming in and get bigger?

We are incredibly optimistic, right? I mean we have a great product. It's industry-leading. The market is strong. There's a number of data points there. So we feel good about what we've got. We feel good about where we're going. This is a tricky quarter because of Thanksgiving and Christmas here in the U.S. next quarter will have some lunar Holiday. So we got to work through some of that, but we feel good about where we are.

Perfect. If I could maybe ask one last one, related. I guess you talked about some funding anecdotally seen some interest out there on defense and drones. Just any more detail there and then government shutdown. Is that another thing you have to navigate that could slow things down?

Yes, we're seeing some announcements. One of our customers announced today that they won an Air Force shoot-out, and we're obviously very excited to hear that. So it's starting. And if you take apart the Beautiful Bill as a couple of analysts have, these numbers are 4x, 5x in 2026 budget on what they were in previous years. So that bodes well for the future, and we're trying to make sure that everyone is aware of what we got, doubling flight time, extending payloads, that all is very meaningful in the eyes of our customers.

And if I may add just one last thing there, addressing your point on the shutdown, Chip. Our DIU contract has been getting paid on schedule even through the shutdown. So we feel confident about that.

The next question comes from the line of Sameer Joshi with H.C. Wainright.

It was good color in the prepared remarks and some good questions as well. I would just like to dig into the pipeline. I dig a little bit deeper into the pipeline over the next, say, 4 to 6 quarters? And see whether it is mostly UAS-related or LEV is part of that mix as well? And then in relation to that, how does the margin profile -- the gross margin profile change? I know Ricardo, you had very exhaustive discussion about the lumpiness that we can expect over the few quarters. But the good product mix or end customer mix make a difference in the gross margins?

Yes. So maybe I'll address that latter one, and then I'll let Tom address the points on the pipeline. Yes. I mean I think I would look at the current gross margin that we have as a good base to build on with much of the variations are happening above this level, especially if we're able to get incremental revenue. So we're not concerned on falling below the current levels on mix above the current revenue levels, right? But definitely, some of the longer, larger volume agreements have different pricing than shorter-term very specialized applications. And that's what will drive the potential fluctuation in the gross margins.

And then at the same time, we're managing obviously a pretty dynamic tariff and logistics environment where fortunately, we're able to price for a lot of the stuff but that can drive lumpiness in this as well.

Yes. On the first part of your question about the complexion of the pipeline, it's strong, as we mentioned, and it's growing.

This quarter, we said it was 75% aerospace, right? That includes these high-altitude platform systems, drones, electric aircraft, both the conventional wing and the vertical takeoff. That 75% was actually down a little bit on a percentage basis compared to but the revenue was up by the 42% that we talk that we spoke of. So I look at that as a better balance between some of the other segments that we're serving, especially light electric vehicles. So it will be similar, maybe a little bit higher, a little bit lower in terms of that 75% next quarter, but better balance, I think, would be my main message there on the pipeline.

And just to make sure, the margin profile for these two sectors is different, right? Or is it the are you maintaining the margins for the LEV as well?

The margins are similar for the LEV as for the aviation market. Yes.

Yes. And then just a clarification or maybe a little bit color on this Amazon device, devices Climate tech accelerator program, how significant should we consider this to be for you as a company going forward?

It's a multi-phase program that we're in, and we've made it to the second, third round. We're actually up in Seattle today, as a matter of fact, talking to them again. We think of it as having a seat at the table. It's sometimes hard to break into some of these large companies. But when you get invited in, as we have, you get quick access to the engineering folks and you're able to tell your story more efficiently. So look, we still got to do a lot of work, and we still have to win their trust and their business. But we have a seat at the table.

Ricardo congrats on joining the company.

Thanks so much. Happy to be working together.

The next question comes from the line of Ted Jackson with Northland Securities.

I'll try to run through a quick. I know we're coming to the end of the call. Just a housekeeping one. With regards to revenue, did you have any design service or government revenue in the quarter? And if so, what was it?

The government grant, it was actually in our other income, and it was roughly $400,000.

You introduced 5 new SiCore sales during the quarter. I mean the last time you gave any kind of color with regards to the number of SKUs the company had was at 14. Where are you at with the SKU count right now?

We have 20 SKUs more common, but the [indiscernible] shows 20.

You kind of backed into your capacity saying that you had about 50 million cells of capacity based upon your most popular cell, which begs the question with I don't know if we could talk about the quarter, year-to-date. However, kind of what's your run rate with regards to that capacity. If you can make 50 million -- theoretical 50 million cells, like your, call it, $21 million of battery products that you sold in the quarter, what would that be on an annualized run rate?

Yes, I don't think explicitly. Yes, I don't want to stop the in explicitly because given the different SKU count, right, and the fact...

No, I'm asking if you assumed that it was just the same battery. You see what I'm saying like this I'm just trying to get a sense with regards to you've got this much capacity, like where are you in terms of filling it. Where we get to the thing that your margins are going to be north of 20%, you're at 80% of that capacity. You see what going in terms of the thought process. So how far where you are right now? How far are we to getting to that 80% because then it gets kind of you think about well, that's where we can think about your margins. So I'm not asking I'm just kind of asking like if you assume that you were -- but you get on going.

Yes. I mean it's a highly theoretical question because in reality, it's not working that way, but it would be a couple of hundred million dollars, right?

Yes. I we said Yes, I think we said it was that Kang in our May call that if we actually utilize that 1.8 gigawatt hours of capacity, we'd be a $1 billion company.

You just use our ASP today time so the capacity availability, we are going to be building dollars business.

Okay. A little nuance question with regard to the gross margins. You're at the point now where you're taking a lot of your engineering work at a cost of goods and bringing it to engineering is kind of part of the process of the growth of the company. That happened this quarter. Do we have to see -- are we going to see more later periods to come? And was that something that we're not going to see as much of an impact with regards to the margins? We're finding the ways where we see with that in the coming quarters or the coming year.

Very little. I mean, that adjustment here quarter-over-quarter was just a couple of hundred thousand dollars. It was not it didn't cross the $1 million line within our cost of revenue.

Okay. And then I'll ask one more that's more front because these are all kind of little pivot ones. With regards to you're being funded to build a pilot line with this DIU contract. And then what's the end game with that? So then you have this pilot line that you put together done a proof of concept for the government that you can make, what does they want? I mean is that something then that they have the process and then they're going to fund you to make a bigger factory that then they're going to go out and bid for someone else to do it. I'm saying like where does that what's the vision for that, assuming that it goes forward and you get success?

Yes. Let me take that. So the DIU, a couple of points here. First and foremost, it was a competitive solicitation. I think there were 7 or 8 other companies that took a swing and they chose Amprius. We have a pilot line in Fremont. The dollars that we have received helps increase the capacity of that pilot line. And then as Ricardo mentioned in his part of the script, also the capability, we are adding electrode manufacturing. That part of the factory of our pilot did not exist.

Their interest, the DIU's interest is domestic batteries. And they see us as in the front of the pack. and they want to encourage us to make those available. There are certain sizes that are very popular. I mentioned the S8, that's a very polite size. They want us to make those and the idea of a pipeline, of course, is that we have those capabilities for many of the defense customers and whether it's prime or the folks who the companies that serve those primes.

But I mean, like I mean a pilot line is still not making it's not a production level facility. I mean this goal is for them to a goal that clearly, it is for them to development a domestic battery production capability. I mean do you have of any discussions with them with regards to what that might look like as they go forward, you get a larger factory? Does Colorado come into play? Would they -- if you go proof all this out, if they want you to go license your capabilities, you see them going like what's the kind of the longer end game with it? I mean unless you don't [indiscernible].

Sure. Yes. We're very close with the DIU and the DoD generally. Their interest is, as you say, had domestic batteries. They have said publicly that there are solicitations that are coming out early in this fiscal year, probably delayed here because of the shutdown, but I think we'll see some specific additional solicitations related to domestic production.

Okay. Well, it's the clock, I could keep going. Congrats on the quarter. Super exciting to cover you. So talk to you on.

Thank you.

Thank you.

Thank you. At this time, this concludes our question-and-answer session. If you have any additional questions, you may contact any person in the Investor Relations team at [email protected].

And now I'd like to turn the call back over to Dr. Sun for his closing remarks.

Thanks again, everyone, for joining us today. As a reminder, you can find out more about our company, receive additional updates and learn about the upcoming events from the Investor Relations section of our website.

We look forward to updating you on the exciting progress we are making in transforming the electrical mobility market.

Finally, I'd like to thank our employees, partners and the shareholders for their continued support. Operator?

Thank you for joining us today for Amprius Technologies Third Quarter 2025 Earnings Conference Call. You may now disconnect. Have a good day.

Good afternoon. Welcome to the Amprius Technologies Second Quarter 2025 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun, President, Tom Stepien; and CFO, Sandra Wallach. [Operator Instructions] Following management's remarks, we will open the call for questions. Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future product development or commercialization new customer adoption and new applications, our growth and the growth of the markets in which we operate and the timing and ability of Amprius' to expand its manufacturing capacity, skilled business and achieve a sustainable cost structure.

These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. A more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission.

Finally, I would like to remind everyone that this conference call is being webcasted and a recording you made available for replay on the company's Investor Relations website at ir.amprius.com. In addition to the webcast, the company has posted a shareholder letter that accompanies these results, which can also be found on the Investor Relations website.

I'll now turn the call over to Amprius Technologies CEO, Dr. Kang Sun, for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will give you an overview of our business and then our President, Tom Stepien, will recap our Q2 performance and our recent accomplishments. After that, our CFO, Sandra Wallach, will discuss our financial results for the period. I will share some closing remarks before opening the call for questions. Let's begin.

For those who may be new to our company, I would like to briefly introduce Amprius is a pioneer and the leader in the silicon anode battery space with over a decade of development experience and a long trade record of commercial shipments and the customer achievement. At Amprius, we develop, manufacture and market energy density and high-power density silicon anode battery with applications across all segments of electrical mobility including aviation and electrical vehicle industry.

Today, Amprius has the most complete commercially available portfolio of silicon and or the material system in the industry and the commenced performance leadership with the combination of the battery energy density, power density, charging time, operating temperature range and safety. Across our battery portfolio, we believe that will offer unmatched performance among the commercially available batteries. Amprius has been delivering commercial battery to the market with up to 450-watt hour per kilo and 1,150-watt hour per liter -- power capability, an extreme fast charge rate of 0 to 80% charge approximately 6 months.

The ability to operate in a wide temperature range of minus 30 degrees Celsius up to 55 degrees Celsius and safety design features that enable us to pass the United States military benchmark new penetration tests. Each of these performance parameters is critically important to reward electric mobility applications not only do our battery empower certain drones, lights, and vehicles to maximize performance, but they also enable our customers to achieve their economic targets as well.

In addition, Amprius' has developed a 500 watt hour per kilo and a 1,300 watt hour per liter battery platform that has been readily be independent third party. It is our belief that there are no other commercial batteries on the market that can perform at this level set.

In the second quarter, Amprius' continued to demonstrate technological innovation and drive business growth. We believe we are successfully executing our strategy to transform electromobility with our game-changing performance.

With that overview complete, I will now turn the call over to our President, Tom Stepien to recap the highlights from our record quarter.

Thank you, Kan. In the second quarter, we built on our momentum from the start of the year, and we believe we have improved in all key business areas. Specifically, we released compelling new products, engaged with additional customers and continued to expand our operations. Let's start with product updates. Innovative technologies and breakthrough product performance are the foundations of amp2 business. Since debuting our SiCore product platform in January 2024, we have relentlessly pushed the limits of lithium-ion performance.

This April, we introduced SA102, the first SiCore cell to reach 450-watt hours per kilogram, a record-setting energy density, 73% higher than the typical 260-watt hours per kilogram of conventional batteries used in electric vehicles and power tools. Built around a high-capacity silicon anode, this is where the SA Predix comes from. And about the size of a standard tea bag, SA-102 is produced on our California pilot line and is already winning strong customer praise for the significant endurance boost it gives mission-critical, unmanned autonomous vehicles, commonly referred to as drones.

With global drone demand accelerating SA-102 summons Amprius position at the forefront of this market. In order to deliver SiCore samples to our customers quickly and expedite their qualification process, we've expanded production at our pilot line in Fremont, California. As prospective customers move through the qualification process and request high-volume orders, we then deliver to our existing contract manufacturing partners. So far, in 2025, we have shipped the sales to several industry-leading global drone companies.

In May, we announced that AALTO, a subsidiary of Airbus, set a new record for their loitering drone, which flew for 67 days without interruption. AALTO's Zephyr is a solar-powered loitering vehicle that operates around 70,000 feet, approximately twice the altitude of commercial airplanes. During daylight, solar powers the motors and channel surplus energy to charge Amprius cells. At night, Zephyr draws stored energy to remain aloft. Our high-capacity silicon anode batteries deliver dependable overnight power, enabling continuous flight for more than 2 months and stand as a critical pillar of the mission's success.

During Q2, we've added dozens of new customers. We recently announced that Amprius was selected by Amazon to participate in their inaugural cohort as a part of the Amazon Devices Climate Tech Accelerator. This program supports companies developing technologies that could help reduce the carbon footprint of Amazon's devices and operations. This is a recent development, and this selection provides us with a valuable opportunity to engage with Amazon's technical and sustainability teams that worked on millions of devices worldwide. We are excited about the opportunity to explore how our cells could provide more efficient energy solutions in their industrial, consumer electronics and mobility-focused platforms.

In Q2, we shipped batteries to 93 customers, 43 of whom are new to the Amprius platform. The remaining 50 are repeat customers, including several of our longtime strategic partners such as AALTO Airbus, BAE Systems and the U.S. Army. Thanks to our breakthrough energy performance and the ample production capability, we attracted new customers and generated $26.4 million in revenue during the first half of this year already surpassing our full year 2024 total of $24.2 million.

Q2 revenue totaled $15.1 million, a 34% increase from the first quarter and up 350% from Q2 2024. This strong growth was primarily driven by a greater than 450% increase in SiCore shipments over Q2 2024. SiCore is a proprietary silicon anode that uses standard lithium-ion processing equipment and is gross margin positive enabling us to report positive gross margin for the first time. Sandra will provide more context here when she reviews our financial highlights next.

In Q2, we diversified our customer base 86% of our revenue came from outside the United States on a ship-to basis, an increase from 60% in Q2 2024. Customer diversification helped enable steady growth and a generally uncertain domestic and international macroeconomic environment. In Q2, over 90% of our revenue came from the aviation sector driven by an increased and ongoing strength in the drone market. We are enjoying increased market adoption and a more favorable policy stance from the U.S. government that creates new opportunities for innovation and deployment.

The remainder of our Q2 revenue was primarily derived from the light electric vehicle sector which remains healthy, but has a lumpier profile due to our customers' varying product introduction cycles. The LEV market tends to have short design-in cycles and we believe our drop-in replacement batteries can help us succeed in gaining market share in this growing market.

To support customer demand we are seeing in our core markets, we have continued to work closely with our current contract manufacturers. We are also opportunistically sourcing additional partners to provide us with greater geographic diversification and operating flexibility. In May, we announced a contract manufacturing agreement with a leading battery manufacturer in South Korea. This new partnership expands our physical manufacturing footprint and allows us to serve additional customers with specific geographic supply chain requirements. The facility is currently ramping up and is expected to produce Amprius' cells shortly.

We are off to a rapid start in Q3. As we announced in July, we initiated shipping sales to customers from our Fremont, California pilot line for testing. So far, 5 customers have received the new SiCore cells. Our pilot line allows us to rapidly develop and prototype new batteries quickly and to deliver them to key strategic customers who have specific design requirements. We are seeing an increase in demand for drone technologies following the June 2025 U.S. executive order, promoting domestic drone manufacturing and the July Department of Defense Directive prioritizing U.S. made drones for procurement. U.S. Secretary of Defense [indiscernible] wrote that small drones resemble munitions more than high-end airplanes. They should be cheap, rapidly replaceable and categorize as consumables. We expect these policy actions will accelerate adoption time lines and open new opportunities across both the defense and commercial sectors.

Amprius has operated in this sector for 7 years, and we believe we enjoy a first-mover advantage. Here is one specific example. AV, formerly known as AeroVironment, is a designer and manufacturer of small drones used by the U.S. military. This quarter, we delivered sample sales as part of the xTech Prime U.S. Army grant program. These cells extended state-of-the-art performance clocking in with an average energy density of 517-watt hours per kilogram. Higher energy density delivers tremendous customer value, notably longer flight time and/or additional payloads.

In summary, the first half of 2025 has been strong, and now our focus is on maintaining that momentum through consistent execution in the second half.

I'll now turn over the call to our CFO, Sandra Wallach, to review our financial results.

Thank you, Tom. I would now like to spend a few minutes covering some key financial updates. As a reminder, our detailed financials can be found in our shareholder letter. As previously noted, we ended the second quarter with $15.1 million in total revenue. Our total revenue is a combination of our main revenue streams product revenue as well as development services and grant revenue. This quarter, product revenue contributed $14.5 million to total revenue, representing a $3.6 million or a 32% increase sequentially. Product revenue in Q2 2024 was $3.3 million.

So Q2 2025 marks a 335% or $11.2 million year-over-year increase. Our Development Services and grant revenue totaled $0.5 million this quarter, representing a $0.2 million increase sequentially and up from 0 year-over-year. As we've discussed in the past, development services and grant revenue from large development programs are nonrecurring in nature, leading to greater fluctuations depending on the comparison period. The overall increase in revenue this quarter was primarily driven by the addition of new customers.

As Tom mentioned, we shipped to 93 customers in the second quarter. Of these, only 2 individually accounted for greater than 10% of the revenue in Q2, a decrease from 3 customers that individually accounted for greater than 10% of revenue in both the first quarter of 2025 and the second quarter of 2024. Going forward, we plan to continue adding to our customer mix to diversify our revenue streams and provide more reliable product shipments as we get to a position of scale. Our total for remaining performance obligations was $29.1 million at the end of Q2 2025, up 57% from the same quarter last year and down sequentially as Q1 2025 included a $15 million purchase order from a drone OEM.

Now moving to our profitability metrics. Gross margin was positive 9% for the quarter compared to negative 21% in Q1 of 2025 and negative 195% in the prior year quarter. As a reminder, we will continue to experience a degree of gross margin variation as our product and services revenue mix fluctuates going forward. Now on to our operating expense management. Our operating expenses for the second quarter continued to be lean at $8.2 million, an increase of $0.8 million or 12% compared with Q1 2025 and an increase of $1.8 million or 27% from the prior year period.

The sequential and year-over-year increase in OpEx was driven by increased investment in sales and the reallocation of R&D from cost of revenue as development services agreements front offs. Our GAAP net loss for the second quarter was $6.4 million or negative $0.05 per share with 121.8 million weighted average number of shares outstanding.

In Q1 2025, our net loss was $9.4 million or negative $0.08 per share with $118 million weighted average number of shares outstanding. Our Q2 2024 net loss was $12.5 million or negative $0.13 per share with $97 million weighted average number of shares outstanding. As of June 30, 2025, there were 97 full-time employees, up from 95 at the end of the first quarter, primarily based in our Fremont, California location.

As of June 30, we had 125.1 million shares outstanding which was up $4.5 million from the prior quarter. The change includes approximately 1.3 million shares issued from option exercises and RSU vesting as well as 3.2 million shares issued under our ATM program.

Now turning to the balance sheet. We exited the second quarter with $54.2 million in cash and no debt. Key drivers for cash in the quarter included $4.3 million used in operating cash flow, which was lower than our average projected run rate of approximately $2.5 million to $3 million monthly excluding transaction-related costs. The main cause of variation this quarter is related to the improvement in our net loss. $0.7 million used in investing activities related to our Fremont, California facility.

We also had $10.8 million in cash inflow from financing activities consisting of $9.8 million from the issuance of common stock under our at market sales agreement and $1 million of proceeds from option exercises. We still have approximately $46.7 million left on the facility as of June 30, 2025. Considering our business achievements and ongoing projects, we believe we are efficiently using capital to drive Amprius forward.

Before I turn the call back over to Kang, I would like to take a moment to discuss our CapEx outlook for the remainder of 2025. We have made the decision to strategically invest in diversifying our supply chain and expanding manufacturing capability within our Fremont facility to include electrode manufacturing. We're doing this in collaboration with the U.S. Government Defense Innovation Unit and have secured a contract for $10.5 million awarded in July 2025. As we previously stated, regarding the Colorado facility, the designs for this project are effectively complete, and we are continuing to monitor the larger industry dynamics associated with building a factory in the United States. Changes in demand, supply, battery cost structure, government incentives, trade tariffs and other considerations, including the timing and availability of funding, will influence our decision on the next steps and timing. We have secured adequate capacity for the foreseeable future through our contract manufacturing network and plan to further expand that without deploying additional capital.

That concludes my financial discussion, and I will now pass the call back to Kang.

Thanks, Sandra. As we look ahead, our strategy and focus remain unchanged. Amprius is committed to delivering the last generation of lithium-ion battery today. We believe our technology is already raising the bar in real-world applications by providing unmatched performance and solve meaningful problems for our customers. We are continuing to execute against our product road map with new innovations that extend our lead in the battery space. While viewing global manufacturing scale to meet the significant and growing demand.

Through our capital-light contract manufacturing model we have assets to over 1.8 gigawatt hour of capacity, positioning us to fulfill more customer demand that we expect to generate this year. We continue to see strong momentum in customer engagement. Our priority remains moving more of those engagements from evaluation to full platform integration for mass production. With hundreds of customer ships to over the past 6 quarters, both new and repeat business, we believe we are building a powerful base of long-term relationship.

Tom Stepien, who joined as our President in May has proven to the exceptional add to supercharging our customer engagement -- leadership will set with our go-to-market efforts and drive deeper penetration in fast-moving market we serve. Look ahead, we believe Amprius is well positioned for sustainable growth and the long-term success supported by 4 core pillars. First, our industry-leading technology and product. On the silicon end of batteries on the pro forma traditional lithium-ion battery solution in real order applications.

Second, our gigawatt scale manufacturing capability through for capital-efficient contract manufacturing model allow us to scale quickly. Third, we benefited from extensive customer engagement, including both new and repeat business from our partners. And fourth, we maintained strong financial health. We have adequate cash reserves, low burn rate, low debt and add flexibility through our asset market sales agreement. We are excited about the future ahead and invite you to meet with us as we attend several upcoming investor conferences. We'll be participating in the event host at Oppenheimer, Needham, [indiscernible] and H.C. Wainwright all over the next few weeks.

Thank you for your continued interest and support of Amprius Technologies. With that, I will turn it back to the operator for questions.

At this time, we'll open the line for questions from the company's publishing and research analysts. [Operator Instructions] Now for our first question, which will come from the line of Colin Rusch with Oppenheimer.

Obviously, you've been qualifying with a large number of customers here over the last 6 quarters, as you mentioned, Kang, and certainly, talking about kind of a 12- to 24-month process for qualification suggests that you're reaching near closure with a number of customers to start moving into production. Can you just talk about that process and how we should think about revenue inflection and your ability to support those customers as they move into production volumes?

Yes. Let me give you a have reported and I'm probably getting to -- we have -- as you see, we have built a huge customer pipelines. We have various customers at different development stages. So Q2 is the demonstration of transformation from the qualification stage to the revenue stage. Q3, we anticipate that we have more customer will move from the qualification stage to the revenue purchasing order stage. -- want to give us some even more detail to call it?

Yes. Colin, thanks for the questions. We have, as we say, 320 some-odd customers, what we're really focused on is going deeper. We describe these as different layers. There are some companies we've been working with, where we are seeing tens of thousands of batteries any given order. There's others that are earlier. That's part of why we invested and are building up the pilot line here to continue that and as Kang mentioned, there is an ongoing and growing process here, but that's how we think about winning the designs and then helping our customers achieve success, which can only help us.

And then Sandra on the financial side, you have a pretty impressive shift into positive gross margins here in the quarter. I'm curious how you guys are thinking about your cash needs and the potential for gross margin expansion from here as you scale revenue?

Colin, so as we've mentioned, SiCore has been gross margin positive since day 1. And since that is the driver of the revenue growth, we expect that we're going to continue to see over time, favorable movement in our gross margins to continue to get more positive. It may be a little bit lumpy. There are some -- we're still too small to say we're at a steady state for sure. But the growth is primarily coming from SiCore, and that's all greater than the average gross margin. So we should continue to see that grow.

Regarding the cash again with the $54 million of cash, no debt and $47 million left on the at market sales agreement. We're still in the $7.5 million to $9 million of operating cash burn a quarter. And so I think we've got a nice long runway.

Our next question comes from the line of Mark Shooter with William Blair.

Congrats on an another strong quarter. You mentioned in the shareholder letter, a pickup in the drone customer engagement. Could you give us some more color on the nature of those conversations, how they're accelerating and could you also frame the opportunity for us maybe in a dollar content of batteries per drone or maybe market size?

Yes. Maybe I can start that out. This is Tom. So Mark, thanks for the question. So we serve loitering drones, group 1, group 2 and a little bit of Group III drones. There's a taxonomy. Those smaller drones tend to be battery-operated Group 4 and Group 5 tend to be the larger engines as opposed to motors. And we did talk in the call, as you heard about the enabling a tremendous value with AALTO by being able to stay aloft for 67 days. So our batteries are incredible force multipliers. Every extra minute in the sky increases target engagement chances. It reduces logistic churn. It helps on the military side, commanders hold more terrain -- longer terrain view and reduces cost.

It's not just the military, right? We have industrial inspection, think about saving alignments, dangerous climb up to look at power lines or bridges or utility work. We heard about those horrible floods in Texas. Drones were helping identify folks who needed help and damage. In agriculture, you can trim pesticide use have more efficient spraying, you can map, you can see more efficiently. Walmart and others are using drones to deliver parcels and groceries. So it's pretty amazing what's happening here. We don't tend to talk about individual customers or orders. We did talk to our friends at McKinsey. The better insight team believes that drones worldwide is something like a $50 billion market opportunity today.

If you take the battery part of that, it's around 10%, plus or minus, which gives us a total TAM for batteries of our type around numbers $4.5 billion, $5 billion.

That's great. I really appreciate the color there, Tom. Considering like that to go on that, right, the batteries section of that TAM and considering that the battery is a relatively small COGS line item, can you speak to the pricing power that you guys may have because of the increased energy density and your pricing power over competitors? And given the geographic location, what are you willing to -- what are customers willing to pay up for maybe non-China supply, like the South Korea capacity or even in the Fremont pilot line.

Yes. So we provide tremendous value. And for us and our customers, it's about that value. It's not so much about the price. So we have a performance product, and we're able to command the price. That strategy of having a disruptive technology that can command a premium in the short term, this probably won't last forever. Building scale and then moving down the cost curve is a tried and true path and that's the path that we're on. The pilot line here that is expanding is all about quick turn, so we can do quick turns. Some of our customers are ordering 100, 200 cells because they just need to test. I want to validate that what we tell them is real. And then as orders come in, we go through our contract manufacturing partners. That's some of the dynamics on the customer side.

The next question is from the line of Chip Moore with ROTH MKM.

Congrats on the positive gross margins. I want to ask on the late electric vehicle opportunity. I think you talked about that being somewhat lumpy and shorter cycle. Any way to help us think about potential contribution there and visibility what were the next few quarters?

So Chip for the light electrical vehicle, our market, primarily in Europe and Asia. So this industry has experienced a revolution because everything from the vehicle design to the battery specification or trend. Yes. So we anticipated quite very large tranche and give us very exciting opportunity because this new standard, the performance standard requires high energy and high power on our -- battery is feeding. We have customers present us a very sensible opportunity, those customers from Europe.

In Asia, the product and qualification time is quite short, so give us additional opportunity in the near term.

Good to hear, Kang. And I think I heard you say earlier on Q3, some of those customers that have been going through the qualification stage maybe for a little bit longer or venue into revenue phase. Should we think about revenues increasing sequentially? Is that a fair assumption?

I think that should be the case based on the status so far our qualification process.

Very good. Thanks for the clarification.

Our next question comes from the line of Derek Soderberg with Cantor Fitzgerald.

Can you provide some more detail on that $10.5 million contract with the U.S. government. It looks like the innovation unit -- is this for drones? Or was this the wearable battery program. Just wondering if you could provide more detail what sort of led to that program, other details like where do you need to build test to do these batteries need to come from your facility in Fremont or can they come from Korea? Just some more detail on that contract would be great.

Yes. Maybe I can start that out. This is Tom. So the DAU is about 10 years old. They are an arm of the DoD -- here in Silicon Valley, Boston and other tech centers. They have 3 principal responsibilities to identify high potential technology like our batteries to accelerate adoption across the DoD and to strengthen the national security innovation ecosystems. They received about $2 billion in the recent OB3A Bill. So what we're doing is building out our pilot line, both in terms of capability, Sandra mentioned that we're adding the electrode manufacturing capability, the front end of a 3-part lithium-ion factory as well as increasing the capacity here in Fremont. And the idea is to have batteries that are NDAA compliant, right?

Basically, think of countries that our NATO countries or friendly with us. The $10.5 million is going to cover more than 50% of the overall build-out. We're dedicating resources and CapEx to deliver to that. The pilot line won't be huge, right? It's around 10-megawatt hours a year. but that's all about getting supplying and qualifying U.S. material and getting mostly drones to the first part of your question, all integrated and designed into our type of technology. And then making it available in NDAA compliant countries.

Got it. That's helpful. And then just sticking to the DoD stuff. I've seen quite a few comments coming out from the administration surrounding drones -- just from the investors' perspective, what's the best way to approach this opportunity for you guys? I know you've got potentially some production capabilities in Colorado, if you wanted to make those investments? Do you think this pilot line and then whatever space you have left in Fremont can sort of handle this drone opportunity potentially in the U.S.? Like what's the best way to approach this commentary that we're hearing out of the DoD that they want a domestic supply of drones and how you guys are going to respond to that?

Yes, Derek, good question. A one-word answer is velocity. We talked about in the recorded call the 2 executive orders and Hegseth from about a month ago about removing some of the friction. We heard just a couple of days ago that Transportation Security, Sean Duffy and FAA have tried to normalize the beyond visual line of sight for drone operations. So I think delivery and other things agriculture inspection. So that's all velocity, right? As these devices become mainstream, and we have more and more of this occurring, we believe that our batteries are differentiators, huge value if you can deliver twice as many packages or you can do twice the acreage that you could do with a different battery. And that's where we want to play. That's where we can win.

Our next question comes from the line of Ryan Pfingst with B. Riley.

First, for the contract manufacturing agreement in South Korea, can you potentially size the production capacity you now have there or maybe what it looks like relative to the agreements you have in China? .

Yes. The current capacity, we just have 1 contract in a hedging partnership in South Korea at this time. The capacity is adequate for what we ask them to do today. This facility not only getting excited by our contract manufacturing partner, also the local government, they really see Amprius' technology enabler to expand their advanced new generation lithium-ion battery manufacturing base in Korea. So we are working with them. As a matter of fact, this couple of days I'm working on the plan for the facility expansion.

Great. Appreciate that. And then sticking with the manufacturing side, you noted that you're still sourcing additional partners. Just curious what the main geographies are that you're targeting there for additional contract manufacturing capacity?

At this time, the best manufacturing scales design in Korea and China, they are the leaders in battery manufacturing. Those two areas, we already have a partnership, we are strengthening the partnership. We expand our capability and capacity. In addition to that, we're also looking for domestic partnership as well. There are many U.S. small size battery companies. They have been experiencing very difficult time. So Amprius' technology and Amprius' market penetration could help this company and potentially, we can form partnerships in United States as well.

Next questions are from the line of Amit Dayal with H.C. Wainwright

Congrats on the strong margin performance this quarter. So Sandra, just on that front, should we expect margins to remain in the positive territory but vary a little bit depending on sales volume, et cetera, but stay in the positive territory for the rest of the year as revenue scale from here?

Yes. So that's a good question. So I think we have crossed over officially at the $15 million revenue per quarter line to be nicely positive. I think we'll see some variation, normal variation based on which deals are going through each quarter. but we should stay positive and continue to grow that positive gross margin over time.

Understood. And then your comments around operating costs. As your revenues are scaling, it just seems like there may be some operating leverage coming into play as well. Operating costs, should we expect them to remain steady at around these levels, at least for the next few quarters before you see any further ramp in revenues?

Yes. Given that we are levering the contract manufacturing model, we are going to -- I mean, we're 97 employees full-time as of the end of June. So we're still really lean. We're making strategic investments in R&D and in sales and go-to-market, but I wouldn't see a wholesale change in our operating expense profile in the foreseeable future.

Just last one, if I can squeeze this in for Tom maybe. Tom, can you talk about what the pipeline looks like and the opportunities that you're working on? Are there contracts potentially you may be pursuing that could be in the $20 million, $30 million, $40 million level type of deals. Just trying to get a sense of how big some of these customer interactions could potentially be for the company.

Yes. We don't tend to talk about them until the end of the quarters or if they're really large. We'll talk about a mid-quarter Look, as we said, these are different layers, and there's a different gestation period at each of our customers. There's 320-some-odd that we've served over the last 6, 8 quarters. We'll work on them all. We're pretty wide. We want to go deeper. We want to get those design wins and we're doing that. There are some tools that we've improved to do that. There are some partnerships that we're working on. I can't tell you much more than that at this point in time.

Our next question is from the line of Ted Jackson with Northland Securities.

I want to keep moving around on the production side of things. So the South Korean facility is on the cusp of coming online. You've been making [indiscernible] product in the pilot line at Fremont. I mean is there a potential for step-up in revenue win, the South Korean partner brings that line into play and you begin to transfer some of that production out of Fremont to it. And when exactly does that South Korean line turn on? Is that a third quarter phenomenon? Is that a fourth quarter? Is that a first quarter? That's my first question.

Now we engaged them about a couple of quarters ago. We just finished because of the -- we just finished the new tool of the equipment, other equipment, not all the production line is already for Amprius' product so we just finished that. We had a prototype presented to us. I believe we are going to start the manufacturing for our customers last month. So this, we have traction with the customer like to buy the batteries for a specific region. That's really as one of the reasons we develop partnership. Now in addition to that, in South Korea and a [indiscernible] battery, they are one of the best in the industry. So Fremont will have a very intimate interaction with our contract manufacturing partnership. Tom mentioned that earlier. We are going to expand and upgrade our pipeline here. So our manufacturing process here can be delivered to our contract manufacturing facility vice versa when they develop something unique we will share with our team here.

Is there a chance that as that comes online, that is there do you have any kind of tough demand that's waiting for that South Korea facility to turn on because they don't want to have the product come from China.

No. Korean partnership, the partner we have in Korea, they certainly can manufacture anything, the Chinese are making the pouch cells. Today, we have not have cylindrical cell partnership in Korea, but we are in the discussion. But whatever we made in Fremont, made in China, made in Korea, this should be all capable to manufacture our batteries.

Okay. Then the next question is the margin improvement, SiCore been a tremendous success with the company. It's driving revenue growth, it's driving margin. Can you give us some kind of ballpark mix of the revenue between SiCore and SiMaxx this period, maybe what was a second quarter...

Yes, Ted, we don't break it down. We just break it down by product, but it's fair to say that the majority of our growth is coming from SiCore.

Okay. And then with the expansion of the Fremont line, you commented that you're going to spend some more money relative to maybe what was in the plan at a quarter or so ago. The government is going to provide you, call it, $10 million, and then you're going to put the other half. How do we think about how this plays out within the financials. Like when we think about the actual CapEx numbers that we're going to be putting in our models for cash flow, what are those numbers? And how does it play?

So what we're contributing is really dedicating resources that we have that are working on this important initiative to diversify our supply chain and expand manufacturing within Fremont and some funds for equipment and build out. So the DIU contract is over the next 6 quarters is funding the majority of the effort of this project. So our portion is a fraction of the $10 million.

Okay. But so you would get the money in and then you would spend it. So -- I mean I assume we would still see a pickup with regards to just in the cash flow statement for CapEx. But at the end of the day, really just flowing through your financial statements from the DIU. Do you understand what I'm saying this time I understand how it goes to through the model.

Yes. So I think revenue recognition for a contract like this is a little bit tricky. We're still working through the details. But the overall, it's fair to assume that it's going to come through as revenue, and we're going to show the cash going out in the statement and cash flows.

Okay. And then my last question, they're offering this to you in helping out. There's clearly desire by this administration, honestly, even the previous administration to bring well in the battery manufacturing into the U.S. and also just strategic industrial activity into the U.S. I would say that the fact that you've got this funding shows that you are strategic -- is there any discussion or any opportunity for you to go into a partnership with the government to bring to fruition the work we've done in [indiscernible].

So we're in regular communications with a number of key stakeholders. And one of the things that we've been clear about is that our ability to move forward with the design and the capacity in Brighton is really dependent on a number of macro things going on, not the least of which is tariffs, government incentives, supply and demand. At this point, we have more than enough capacity. We would be over $1 billion in revenue with the 1.8 gigawatt hours that Kang has already secured for us. And so we've got more than enough capacity to serve the foreseeable future. And we -- but we are keeping those lines of communication open if something does change that would make it more economically viable to move forward with Brighton at this time.

At this time, this concludes our question-and-answer session. If you have any additional questions, you may contact Amprius' Investor Relations team at [email protected]. I'd now like to turn the call back over to Dr. Sun for his closing remarks.

Thanks, again, everyone, for joining us today. As a reminder, you can find out more about our company. We receive additional updates and learn about the upcoming events from the Investor Relations session of our website. We look forward to updating you on the exciting progress we are making in transforming the electric mobility market. Finally, I'd like to thank our employees, partners and shareholders for their continued support.

Thank you for joining us today for Amprius Technologies earnings conference call. You may now disconnect.