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Alphawave IP Group plc (LSE:AWE), a leader in high-speed connectivity for technology infrastructure, has announced its interim results for the six months ending June 30, 2024. The company reported revenues of $91.0 million, a significant decline from $187.2 million in the same period last year. This reduction reflects a strategic shift in its business mix, notably a decrease in revenue from its legacy operations in China and an increase in revenue from intellectual property (IP) licenses and silicon.
The company faced an adjusted EBITDA loss of $11.8 million for H1 2024, compared to a gain of $32.4 million in H1 2023. This downturn was primarily attributed to lower revenues and ongoing investments in research and development, particularly in chiplets and new silicon connectivity products. Alphawave expects these new products to begin shipping as samples this year, with production ramping up in 2025.
Despite the loss, Alphawave generated $50.4 million in cash from pre-tax operating activities, a substantial turnaround from a cash outflow of $31.3 million in H1 2023. This improvement was driven by a $32.2 million increase in deferred revenue and flexible spending accounts, highlighting the timing differences between cash collection and revenue recognition.
As of June 30, 2024, the company's cash and cash equivalents stood at $76.3 million, with a net debt of $141.6 million. To better align with operational metrics, Alphawave restructured its debt facility shortly after the end of the reporting period.
Looking ahead, Alphawave has provided guidance for 2024, projecting revenues between $310 million and $330 million, alongside an adjusted EBITDA of approximately $50 million. This outlook accounts for the impact of a merger between two major AI customers in Korea, which resulted in the consolidation of existing development programs. The timing of tape outs scheduled for H2 2024 is also expected to influence revenue.
The company's long-term outlook remains positive, with expectations of sustained growth in bookings and backlog conversion to revenue. Alphawave has secured advanced node custom silicon design wins, with internal IP scheduled for tape out in H2 2024, paving the way for increased silicon revenues in 2025 and beyond.
