Aeluma, Inc. (ALMU) Q1 2027 Earnings Call Transcript

And thank you for standing by. Welcome to Aluma's first quarter fiscal year 2027 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. And at this time, I would like to turn the conference over to Mora Conlon, Investor Relations for Aluma. Please go ahead.

Good afternoon, and welcome to Aluma's first quarter fiscal 2027 earnings call. I'm here today with founder and CEO, Dr. Jonathan Clamkin, 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. ALUMA 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 ALUMA CEO, Jonathan Clampkin.

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 data comm sector that highlight the strength of a Lumis 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. Loggable optics modules are extending beyond 100G per lane to 200 and 400G per lane, and are for distances of tens of meters to kilometers. These are 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 pathlinks 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. Brito 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 bidirectional transceiver architecture that reinforces the importance of lasers for AI datacomp. Indium-phosphate substrate supply continues to be constrained. Indium-phosphate fabs lack the throughput of gallium-arsenide and silicon fabs. Early this year, NVIDIA invested in Lumentum and Coherent to support expansion of indium-phosphate 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 Illuma'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, Illuma does not use indium phosphide substrates or indium phosphide fabs. Aluma's scalable, MOCBD-based technology can be leveraged to manufacture micro-emitters and micro-photodetectors for slow and wide transceivers that can be directly integrated with CMOS. Aluma is also developing quantum dot lasers based on gallium arsenide substrates for scale-up and scale-out architectures. Aluma 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 four, has the potential to take us there. As depicted on slide six, our Lynx 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 Subitomal Chemical Advanced Technologies, a scaling partner for our MOCVD wafers, and with FAB partners. We also announced an agreement with Axtron to procure the first of potentially several new MOCVD systems for further capacity expansion and for manufacturing 150 and 200 millimeter substrates, including both gallium arsenide and silicon. The Axtron 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, Aluma has worked with Axtron 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-millimeter or 6-inch substrates. Our discussions with customers in Datacom and other markets have expanded further. These include negotiation of possible non-recurrent engineering investment and product opportunities, some with potentially large volumes to support the build-out during 2028 through 2032. Alluma'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 on call, we are currently prioritizing funded R&D programs that are aligned with our commercial priorities. GAP net loss for the first quarter was $3.8 million, or $0.19 per basic and diluted share, compared to a net loss of $1.5 million, or $0.09 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. The 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 in 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. Now, 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. Operator, you can now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily for the first question. 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? I have a follow-up. Thank you.

Great. Thanks, Tyler, for the question. So we can't comment on the timeline for that new system, but what we could 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 Aluma today, And the capacity commitment that we have from our partners, Sumi 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 other 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-biameter 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 LINCS 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 the 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.

Got it. That is some great color. I appreciate the time.

Thanks, Howard.

And our next question will come from Daniel Yermacon with Freedom Broker. Please go ahead.

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

Thanks for the question, Daniel. What we could say is for, you know, for our fiscal 27, Any incoming revenue, as we've said, you know, a couple 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 photo detectors and quantum dot lasers. And the nature of the arrangements could be anywhere from funding development to advanced 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.

Okay, yeah. And talking about the AXRON MOCVD reactor you purchased, could you talk about just the wafer size capability? Is it 200 mm or 300 mm wafer? And any expectations for the next reactor that you'll purchase?

Yeah, happy to discuss that. That's a good question. Let me say something about our current capability. As you and many of our shareholders know, we have a technology that scales to even 300 or 300-millimeter or 12-inch substrates, and we maintain capacity at Aluma to perform MOCVD growth of arsenide and phosphide materials on any substrate size from 2 Two-inch out to 12-inch. The new capability is this Axtron G10 arsenide phosphide tool, which is a very modern tool that was launched a couple of years ago and has become very popular with indium phosphide laser manufacturers. That tool can be used to grow on 4-inch, 6-inch, or 8-inch. The specific tools that we've configured are for 6-inch or 150-millimeter and 8-inch or 200-millimeter. And these tools were configured for Aluma's proprietary process, so proprietary configuration of the tools themselves. We're not going to use them for indium phosphide growth, which is mostly what these tools get used for. We're going to use them to advance and expand capacity of our technology, which is to use gallium arsenide and silicon substrates for scaling. So 150 and 200 millimeter capability for both capacity expansion and advanced development.

Okay, yeah, that makes perfect sense. Thank you.

And our next question will come from Tim Savagel with Northland Capital Markets. Please go ahead.

Hey, good afternoon. I just wanted to ask you a question. My first question is about the kind of size of the market opportunity. We've seen some pretty substantial, I guess, mostly NPO-type deals announced by Lumentum and Coherent, I think. $25 billion plus in the aggregate. And I guess my question is twofold. You know, how does that impact your view of the market opportunity facing Aluma on the one hand? And on the other, you described your, you know, commercial discussions. I think last quarter is focused on marquee customers. I wonder, you know, if you would direct us anywhere in particular with regard to... You know, device suppliers, module makers, you know, compute suppliers, hyperscale, are those, as those discussions sharpen, are you seeing opportunities in more or less than any one of those type of buckets?

Good questions. We'll try to address those sort of one by one. Let's see. Yeah, some of the announcements and some of these major potential bookings that Coherent and Lumentum expect, I think you're referring to maybe Photon Link out of Coherent. I mean, it's exciting to see, you know, that level of interest. And I mentioned, you know, potentially $10.3 trillion aggregate investment that we'll see as we get to year 2032. We have engagements sort of across the value chain, which means we might have some engagements or discussions with, you know, our customers, customers, customers, meaning hyperscalers, but then obviously are very active with system integrators and even tier one suppliers. And it's not uncommon, but somewhat unique position to be in where, let's say, a Tier 1 supplier could be a potential customer, could be a potential partner, could provide us a sales channel to the end customer, but is also a competitor. And we have a very disruptive technology that I think much of the ecosystem is starting to learn more about, more about what Illuma does in this technology, and wondering if this is how semiconductor photonics should be manufactured. Is it needed now? Can it help now? Indications are it's certainly going to be needed in the future because the scale of this build-out, and if you aggregate other applications in other markets, it's just very big. So, another thing I could say to address your questions, Tim, we are working towards some standard product offerings. But we're also very focused on customer-specified products that require some level of customization, and that's very opportune for us. It's very opportune for anyone bringing a disruptive technology to market. And what does that mean? We might be turning some of our technology into products that we're going to work to qualify and offer to the ecosystem, But customer, you know, specific qualification could take anywhere from 9 to 18 months. And again, the timeline is okay, because we see significant ramp coming in the 2028 timeline and beyond. So high-speed photo detectors, micro detectors, as some people are referring to, micro emitters, and lasers that hopefully leverage our quantum dot laser technology in the future. That's really where we're focused right now. And again, coming back to your question, we talk to everyone in the value chain, but try to be very strategic about ensuring that the ecosystem is aware of our technology. You know, the actual end customer would like to use the technology, who exactly we sell it to, we'll be able to provide some color over time.

Okay, great. And if I could follow up, you mentioned, and I think, well, I'll characterize it, maybe some increased momentum around slow and wide, and I thought that credo talk was really interesting as well. As you assess your customer discussions, is that slow and wide approach sort of prominence on the? Potential high-volume agreements that you're pursuing?

Good question. So, you know, sort of the slow and wide opportunity is something we saw coming, arguably for a few years now, and it's a technology we've been actively developing for some customers in other markets, actually, not in DataCom initially, but we sort of knew that this would be applicable to DataCom and that the event might be coming. So it is nice to see, you know, agreements being made, work streams at the OCP, and folks talking about that architecture and approach and where it will find its place in the data center, somewhere between copper interconnects and pluggable or between copper and some of the other CPO, MPO architectures that we're seeing. I suspect that the opportunity is going to grow over time, and what's really nice about an opportunity like that, micro-emitters, micro-detectors, as Credo referred to in some of their presentations, you know, these are Vixels and photodetectors, just like Illuma has been developing for some time. And we're used in high-performance computers in the past, some of which made their way into consumer sensing markets. There's a nice opportunity in front of us today, but potential proliferation into other architectures and data centers and other markets. So certainly, yes, in the near term, that's a great opportunity for us. At the same time, as technologies start to grow in their demand and volumes grow, you know, sales prices come down, and so then I'd point to the laser opportunity. As you know, the laser opportunity is significant in terms of average sales price compared to, say, you know, detectors or Vixels. But these are good entry points for us. So to answer your question, yes, very active and happy to see that what's now referred to as slow and wide seems to be taking off and has really garnered the interest. And last thing I'll say is it is nice to see what we expected might happen. That the focus would become on sort of the near IR and shortwave infrared for slow and wide, because you really have the best of both worlds. Scalable manufacturing, but high enough data rates per channel so that you don't have to deploy millions of fibers. And I'm sort of referring to, you know, using visible light micro LEDs at much lower data rates, which I don't think is as feasible. Vixels are very mature. Surface normal photo detectors are very mature. Data rates in the range of 50 gigabits per second, give or take, give you a nice balance between power consumption, complexity, and packaging and number of fibers that might be needed. So it is nice to see that the industry and ecosystem are starting to mobilize around that application.

Great. Thanks very much.

Thanks.

And this will conclude our question and answer session. I'd like to turn the conference back over to Jonathan Klimkin for any closing remarks.

Thank you very much for joining our call today. We look forward to connecting in the future and wish you a great day. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.