Aeluma, Inc. (ALMU) Earnings Call Transcript

Good day and thank you for standing by. Welcome to Aeluma's first quarter fiscal year 2027 earnings conference call. [Operator Instructions] Please be advised that the call is being recorded. And at this time, I would like to turn the conference over to Moira Conlon, Investor Relations for Aeluma. Please go ahead.

Good afternoon and welcome to Aeluma's first quarter fiscal 2027 earnings call. I'm here today with founder and CEO, Dr. Jonathan Klamkin and CFO Christopher Stewart. A presentation accompanying today's remarks is available on the investor section of our website. Today's discussions and responses to questions may include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. These risks and uncertainties are detailed in the earnings press release issued today along with the reports filed with the United States Securities and Exchange Commission. These reports, along with today's earnings release, can be found under the Investors section of our website. Aeluma assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Throughout the discussion, the company will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC filings. Now, I'll turn the call over to Aeluma's CEO, Jonathan Klamkin.

Thank you, Moira, and thank you all for joining today's call. Today, we will begin by recapping the breadth of recent activities and announcements in the AI Datacom sector that highlight the strength of Aeluma's technology and go-to-market strategy. At the European Conference on Optical Communication, or ECOC, held recently in September in Malaga, Spain, the slow and wide transceiver concept for rack-scale AI was discussed repeatedly. As hyperscalers aim to add more compute in the pursuit of 1,000-unit XPU/GPU clusters and beyond, it is necessary to scale up within the rack and across racks. Traditional copper cables reach a limit at high data rates and beyond a few meters. And this is where optical interconnects are needed. Several architectures are expected to coexist to support the continued massive data center build-out. The formats differ primarily in how close the optics will be positioned to each switch ASIC or XPU/GPU, and the distance over which the information must travel. Pluggable optics modules are extending beyond 100G per lane to 200G and 400G per lane and are for distances of tens of meters to kilometers. They're primarily for scaling across the data center. Near-packaged optics, or NPO, and co-packaged optics, or CPO, are for scaling up within racks and across adjacent racks, and both drastically reduce electrical path lengths to mitigate power-hungry electronics. Slow and wide transceivers are envisioned for distances up to 50 meters and possibly up to 100 meters. The slow and wide concept is simple. That is, rather than squeezing all the information into only a few channels, it is spread across a modest number of channels to conserve power. This approach has inherent advantages. Each channel becomes less critical, there is inherent redundancy, and there is room to scale. Beyond ECOC, discussions have continued at the Open Compute Project, or OCP, Global Summit and at the Photonic-enabled Cloud Computing Summit. Credo announced the launch of short-reach micro-emitter optics, or SRMO, a workstream of OCP, bringing together expertise spanning the full optical connectivity stack to advance development of the wide and parallel ecosystem. The Optical Compute Interconnect Multi-Source Agreement, or OCI-MSA, continues to be lauded by hyperscalers and ecosystem partners to establish an open, interoperable optical interconnect specification for AI scale-up. The specification defines wavelength channels and groups for a bi-directional transceiver architecture that reinforces the importance of lasers for AI datacom. Indium phosphide substrate supply continues to be constrained. Indium phosphide fabs lack the throughput of gallium arsenide and silicon fabs. Early this year, NVIDIA invested in Lumentum and Coherent to support expansion of indium phosphide manufacturing. Just this month, Marvell announced it had entered into an agreement to acquire Lumentum. This combination brings together best-in-breed technology to meet the needs for highly integrated optical solutions for AI infrastructure. In all, the U.S. AI infrastructure build-out that began in 2025 is expected to reach an aggregate investment of $10.3 trillion in 2032. Photonics is becoming an increasingly important part of this investment, and the opportunities for Aeluma's technologies are vast, spanning slow-and-wide and fast-and-narrow transceivers that are important for both scale-up and scale-out AI architectures. As a reminder, Aeluma does not use indium phosphide substrates or indium phosphide fabs. Aeluma's scalable MOCVD-based technology can be leveraged to manufacture micro-emitters and micro-photodetectors for slow and wide transceivers that can be directly integrated with CMOS. Aeluma is also developing quantum dot lasers based on gallium arsenide substrates for scale-up and scale-out architectures. Aeluma does not need new fabs to be built and qualified. We can work with gallium arsenide and silicon fabs that are already qualified. Our vision is to become the world's leading provider of semiconductor photonics components, and our heterogeneous integration platform, illustrated in slide 4, has the potential to take us there. As depicted on slide 6, our LINX S-series photodetectors are under development for slow-and-wide architectures. And our Quasar quantum dot lasers are under development for scale-up and scale-out interconnects. Neither require indium phosphide substrates or indium phosphide fabs, and both have the potential to support initiatives such as the SRMO-OCP workstream and the OCI-MSA. We continue to work with Sumitomo Chemical Advanced Technologies, a scaling partner for our MOCVD wafers, and with fab partners. We also announced an agreement with AIXTRON to procure the first of potentially several new MOCVD systems for further capacity expansion and for manufacturing 150 mm and 200 mm substrates including both gallium arsenide and silicon. The AIXTRON G10 arsenide-phosphide system has become popular with indium-phosphide manufacturers for scaling and to meet demand for lasers. Building on a multi-year relationship, Aeluma has worked with AIXTRON to configure these newer model tools for our proprietary processes that don't rely on indium phosphide substrates and can scale to even larger than 150 mm or 6-inch substrates. Our discussions with customers in datacom and other markets have expanded further. These include negotiation of possible non-recurring engineering investment and product opportunities, some with potentially large volumes to support the build-out during 2028 through 2032. Aeluma's core technologies, Lynx high-speed photodetectors, and Quasar quantum dot lasers are engineered to capitalize on our expanding pipeline of commercial opportunities. Bringing things together, the scale of investments in AI infrastructure is pressuring the supply chain, and we are pleased that our strategy to combine best-in-class materials with scalable manufacturing has attracted so much interest from customers and partners. As we continue to navigate through fiscal 2027, we remain focused on commercialization and generating long-term shareholder value. Now I'll turn the call over to our CFO, Chris Stewart, to discuss the financials.

Thanks, Jonathan. Turning to our financial results for the first fiscal quarter of 2027, revenue was $568,000 compared to $1.4 million in the first fiscal quarter of 2026 and was generated primarily from government R&D contracts. As we discussed on our year-end call, we are currently prioritizing funded R&D programs that are aligned with our commercial priorities. GAAP net loss for the first quarter was $3.8 million, or 19 cents per basic and diluted share, compared to a net loss of $1.5 million, or 9 cents per basic and diluted share, in the same period last year. Adjusted EBITDA loss was $2.7 million for the quarter, compared to an adjusted EBITDA loss of $450,000 in the first quarter of fiscal 2026. The year-over-year change primarily reflects increased investment in headcount, product development, and the operational capabilities required to support customer programs and commercialization. We ended the first quarter with a strong balance sheet, including $53.9 million of cash and cash equivalents compared to $56 million at June 30, 2026, and our balance sheet remains debt-free. Regarding the CHIPS program letter of intent for up to $30 million in proposed funding, we are continuing our diligence and contract negotiations. Terms are not yet final and any potential award remains subject to definitive agreements and applicable conditions. Over the remainder of the year, we expect to continue increasing investments in the people, systems, and supply chain initiatives that support our customer-driven technology development and preparing to scale our business. Our goal is to respond to the urgent market demand for new solutions while maintaining fiscal discipline as we pursue the significant opportunity we see ahead of us. I'll turn the call back over to Jonathan for his closing remarks before we open the call to your questions.

Thank you, Chris. To summarize, we are pleased with our continued progress toward commercialization and with the growing enthusiasm in the AI datacom market that are driving our go-to-market strategy. As always, I want to thank our incredible team for their hard work and dedication, and I want to thank all of you for your support and enthusiasm. Thank you.

Thank you. And ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] And our first question today comes from Richard Shannon with Craig Hallam. Please go ahead.

Hi, this is Tyler on for Richard Shannon. I was wondering with the MOCVD that you put a purchase agreement for, when does this get installed and up and running? And could you describe the capacity that you have relative to what you had before after this is installed?

Great. Thanks, Tyler, for the question. So we can't comment on the timeline for that new system, but what we can say is that we don't need it for commercialization. That tool is for capacity expansion for next-generation products and for some advanced development. It would certainly increase our capacity, but with the capacity we have in-house at Aeluma today and the capacity commitment that we have from our partner Sumitomo Chemical Advanced Technologies, we have sufficient capacity for the foreseeable future as we transition to commercialization.

Got it, that makes sense. So it's more of an accelerant. And then for the customers that you've expanded the discussions with, how would you describe these compared to the customers that you were referencing last quarter? Is there any difference in whether it be what they're addressing or just another way to describe them? Thank you.

Yes, as you know, we remain active in multiple markets, but the AI datacom opportunity is really at the forefront. And we're working to transition our technologies into products, and that includes a variety of photonics based on our large diameter wafer platform, so high-speed photodetectors that can be used for scale-up and scale-out applications, and emitter technologies, including quantum dot lasers. And most near-term opportunities are likely for what the industry is referring to as micro-detectors and micro-emitters for wide and parallel applications. And that references to our LINX high-speed photodetectors. We see significant demand for this technology. And the timeline that we've spoken to where significant ramp is expected is really 2028 and beyond. And the numbers we're hearing, as sort of cited in our earnings release, are, you know, an aggregate of something like $10.3 trillion for this build-out that started in 2025 through 2032. And so we'll keep pointing to that timeline, 2028 through 2032, where we see significant ramps happening. You know, at the same time that we hear laser suppliers are sold out, to an extent, we can interpret that, you know, supply is sort of fulfilled for the next year. But a significant ramp is expected in 2028 and beyond, and that timing is good for us for commercialization.

And our next question will come from Danial Yermakhan with Freedom Broker. Please go ahead.

Hey, guys. Thanks for having me. In the NRE discussion that you were having, is anyone talking about paying upfront or reserving capacity, or are these milestone-based payments?

Thanks for the question, Danial. What we could say is for our fiscal '27, any incoming revenue, as we've said, you know, a couple of months ago at our fiscal year-end earnings, is going to come from R&D contracts and commercial NRE. We expect to provide more color on those development efforts throughout the year. Again, I'll point to the technologies that we're turning into products, high-speed photodetectors and quantum dot lasers. And the nature of the arrangements could be anywhere from funding development to advance technology for future scaling to development funding to provide samples, to development funding to provide samples for qualification in anticipation of potential product ramps starting in, say, 2028. That's what we could say at this time.