Alphawave IP swings to first-half loss

Shares in Alphawave IP Group dropped on Monday after the digital infrastructure company swung to a loss in the first half despite a trebling in revenues as margins shrunk significantly and overheads jumped.

Despite the company assuring shareholders that the outlook for the full year remains unchanged, shares were down 7.2% at 136.42p by 0824 BST.

The company, which trades as Alphawave Semi and provides high-speed connectivity solutions, said revenues rose 228% to $187.2m, as it generated sales from 85 customers compared with just 28 last year.

However, the gross margin fell to 44% compared with 97% last year, reflecting the diversification of the business into custom silicon development and silicon products. Through last year's acquisition of OpenFive, the company also inherited a number of contracts with gross margins below its group targets.

Meanwhile, operating expenses jumped to $85.1m, from $25.5m a year earlier, as headcount grew to 744 from 251 – primarily as a result of recent acquisitions.

The result was a reported bottom line after tax showing a loss of $13.4m in the six months to 30 June, compared with a profit of $16.3m the year before.

Adjusted EBITDA, however, rose 40% to $32.4m.

Alphawave Semi said it still expects to generate $340m-360m in revenue in 2023 and adjusted EBITDA of approximately $87m (or approximately 25% of revenue). This compares to revenues of $185m and adjusted EBITDA of $47m in 2022.