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EnSilica (LSE: ENSI) – Commercial momentum should support rapid scaling in revenues

EnSilica’s H125 results demonstrate robust commercial and operational progress, masked by a 3% revenue dip to £9.3m. However, mix improved substantially, with chip supply revenue growing 164% to £2.9m while non-recurring design services dropped from £3.8m to £2.2m. The company has four application specific integrated circuits (ASICs) in production with secured supply revenue orders expected to deliver in aggregate of £6m in FY25, giving confidence of stronger financial performance in H2. Management is confident that H2 performance will meet or exceed expectations.

Looking to the longer term, contract wins for Design and Supply and Supply are the key yardsticks for future growth. The company estimates that designs from contract wins over the period will generate £100m in annual revenues over time, and therefore if contract momentum is sustained at or near this pace, Design and Supply and Supply revenues should scale into the triple figure million pound mark over a number of years. While cash is somewhat tight, there seems to be a disconnect between the company’s current market cap of £43m and this growth potential.

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