Ambarella, Inc. (NASDAQ:AMBA) Q2 2023 Results Conference Call August 30, 2022 4:30 PM ET Company Participants Louis Gerhardy - Corporate Development Fermi Wang - President and CEO Brian White - CFO Conference Call Participants Matt Ramsay - Cowen Joseph Moore - Morgan Stanley Vivek Arya - Bank of America Gary Mobley - Wells Fargo Blair Botha - Arete Ross Seymore - Deutsche Bank Tore Svanberg - Stifel Suji Desilva - Roth Capital Kevin Cassidy - Rosenblatt Andrew Buscaglia - Berenberg Richard Shannon - Craig- ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) The first part of the report presents the company's financial statements and management's discussion and analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the three months ended April 30, 2022, are presented, showing key financial performance and position Condensed Consolidated Statements of Operations | Financial Metric | Three Months Ended April 30, 2022 (in thousands) | Three Months Ended April 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Revenue** | $90,305 | $70,133 | | **Gross Profit** | $56,547 | $43,765 | | **Loss from Operations** | $(10,498) | $(10,136) | | **Net Loss** | $(10,822) | $(10,818) | | **Diluted Net Loss Per Share** | $(0.29) | $(0.30) | Condensed Consolidated Balance Sheet Highlights | Asset/Liability | As of April 30, 2022 (in thousands) | As of January 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $200,639 | $171,043 | | **Total current assets** | $278,329 | $266,748 | | **Total assets** | $668,665 | $657,545 | | **Total current liabilities** | $74,855 | $89,284 | | **Total liabilities** | $94,317 | $110,369 | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended April 30, 2022 (in thousands) | Three Months Ended April 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $33,560 | $(4,547) | | **Net cash used in investing activities** | $(3,952) | $(11,230) | | **Net cash provided by (used in) financing activities** | $(12) | $2,012 | | **Net increase (decrease) in cash** | $29,596 | $(13,765) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes support the financial statements, outlining business operations, accounting policies, and significant revenue concentration with key distributors and customers - The company is a developer of low-power semiconductor solutions for applications including video security, ADAS, autonomous driving, and industrial robotics[29](index=29&type=chunk) - A substantial portion of revenue is derived from two major distributors, WT Microelectronics Co., Ltd. (WT) and Hakuto Co., Ltd. (Hakuto), and one ODM customer, Chicony Electronics Co., Ltd. (Chicony)[35](index=35&type=chunk) Revenue by Geographic Region (Bill-to Location) | Region | Three Months Ended April 30, 2022 (in thousands) | Three Months Ended April 30, 2021 (in thousands) | | :--- | :--- | :--- | | Taiwan | $53,636 | $44,587 | | Asia Pacific | $21,555 | $18,637 | | Europe | $8,393 | $3,018 | | North America (ex-US) | $4,886 | $2,690 | | United States | $1,835 | $1,201 | | **Total Revenue** | **$90,305** | **$70,133** | - For the three months ended April 30, 2022, major customers WT, Chicony, and Hakuto accounted for approximately **57%**, **11%**, and **10%** of total revenue, respectively[82](index=82&type=chunk) - On May 27, 2022, the Board of Directors approved an extension of the current share repurchase program for an additional twelve months, ending June 30, 2023, with approximately **$49.0 million** remaining available for repurchases[83](index=83&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, discussing revenue growth drivers, operating expenses, and the company's strong liquidity position [Overview and Factors Affecting Performance](index=17&type=section&id=Overview%20and%20Factors%20Affecting%20Performance) This section outlines the company's strategic focus on AI and computer vision technology, key growth drivers, and the impact of external factors like supply chain disruptions - The company's development efforts are focused on creating advanced AI technology, known as computer vision (CV), with its CVflow™ architecture supporting a variety of algorithms for markets like IP security, automotive, and robotics[87](index=87&type=chunk) - The COVID-19 pandemic has caused significant disruption of orders and logistics throughout the Asia supply chain, leading to longer manufacturing times and a reduction in near-term inventory purchases[95](index=95&type=chunk) - Future success is critically dependent on the ability to develop advanced AI computer vision technology and achieve design wins in applications like ADAS, object detection, and AI-enabled security cameras[96](index=96&type=chunk) - Since fiscal year 2018, the professional and consumer IP security camera markets and automotive markets have been the largest end markets, collectively generating the majority of revenue[102](index=102&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) A detailed comparison of operating results highlights revenue growth, gross margin changes, and increases in research and development and selling, general and administrative expenses Revenue Comparison | Period | Revenue (in thousands) | Change Amount (in thousands) | Change % | | :--- | :--- | :--- | :--- | | Q1 FY2023 | $90,305 | $20,172 | 28.8% | | Q1 FY2022 | $70,133 | | | - The revenue increase was primarily driven by higher sales in the professional IP security and automotive OEM sensing and fleet markets, despite decreased revenue in consumer-related markets due to pandemic lockdowns in China[120](index=120&type=chunk) Operating Expense Comparison | Expense Category | Q1 FY2023 (in thousands) | Q1 FY2022 (in thousands) | Change % | | :--- | :--- | :--- | :--- | | Research and development | $46,690 | $37,874 | 23.3% | | Selling, general and administrative | $20,355 | $16,027 | 27.0% | - The increase in R&D expense was primarily due to an **$8.5 million** rise in personnel costs from headcount growth (including from the Oculii acquisition) and a **$1.4 million** increase in engineering-related expenses[123](index=123&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's cash position, operating cash flow improvements, and the status of its share repurchase program - Cash and cash equivalents increased to **$200.6 million** as of April 30, 2022, from **$171.0 million** as of January 31, 2022[128](index=128&type=chunk) - The increase in net cash from operating activities was primarily due to decreased accounts receivable from the timing of sales and lower inventory purchases resulting from pandemic-related disruptions in the Asia supply chain[131](index=131&type=chunk) - In May 2022, the Board of Directors extended the stock repurchase program through June 30, 2023, with **$49.0 million** remaining available for repurchases[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from foreign currency exchange rate fluctuations impacting international operating expenses - All product sales and inventory purchases are denominated in U.S. dollars, mitigating foreign currency risk in revenue and cost of goods sold[142](index=142&type=chunk) - The company is exposed to foreign currency risk as operating expenses in international locations (principally Taiwan, China, and Europe) are denominated in local currencies[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that as of April 30, 2022, the company's disclosure controls and procedures were effective at the reasonable assurance level[144](index=144&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended April 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[145](index=145&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) The second part of the report covers legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not engaged in any material legal proceedings at this time[147](index=147&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks, including supply chain disruptions, customer concentration, and geopolitical tensions, that could adversely affect the company's business - The COVID-19 pandemic continues to pose a risk, potentially causing disruptions to operations, supply chain logistics, and customer orders, particularly due to lockdowns in China[160](index=160&type=chunk) - The company faces risks from semiconductor industry shortages, which lengthen manufacturing lead times and could impact the ability to meet customer demand[169](index=169&type=chunk) - A significant portion of revenue comes from a limited number of customers, including distributors WT and Hakuto, and ODM Chicony. The loss of or a significant reduction in purchases from any of these customers could harm financial results[177](index=177&type=chunk) - The company's ability to sell to certain Chinese customers, such as Hikvision and Dahua, has been restricted by their inclusion on the U.S. Department of Commerce's Entity List, which could have a long-term adverse effect on business[243](index=243&type=chunk) - The company faces political and other risks from conducting business in Taiwan, where it has significant operations and many of its suppliers are located, particularly due to Taiwan's relationship with China[247](index=247&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including employment agreements and required certifications - Exhibit 10.1 is the employment letter for Brian White, dated March 18, 2022[300](index=300&type=chunk) - Exhibit 10.2 is the Change of Control and Severance Agreement for Brian White, dated March 28, 2022[301](index=301&type=chunk) - Exhibits 31.1, 31.2, and 32.1 contain the required certifications by the Principal Executive Officer and Principal Financial Officer[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)

Ambarella, Inc. (NASDAQ:AMBA) Q1 2023 Earnings Conference Call May 31, 2022 4:30 PM ET Company Participants Louis Gerhardy - Corporate Development Dr. Fermi Wang - President and CEO Brian White - Chief Financial Officer Conference Call Participants Joe Moore - Morgan Stanley Ross Seymore - Deutsche Bank Quinn Bolton - Needham & Company Matt Ramsay - Cowen David Kelley - Jefferies Tristen Barra - Baird Andrew Buscaglia - Berenberg Kevin Cassidy - Rosenblatt Securities Jeremy Kwan - Stifel Suji Desilva - ROTH ...

Ambarella, Inc. (NASDAQ:AMBA) Q4 2022 Earnings Conference Call February 28, 2022 4:30 PM ET Company Participants Louis Gerhardy - Corporate Development Dr. Fermi Wang - President & Chief Executive Officer John Young - Vice President, Finance Conference Call Participants Matt Ramsay - Cowen Gary Mobley - Wells Fargo Ross Seymore - Deutsche Bank Andrew Buscaglia - Berenberg Joe Moore - Morgan Stanley Kevin Cassidy - Rosenblatt Securities Tore Svanberg - Stifel Quinn Bolton - Needham Vivek Arya - Bank of Ameri ...

Financial Data and Key Metrics Changes - Revenue for Q3 was $92.2 million, representing a sequential increase of 16% from Q2 and a 64% increase year-over-year [19][20] - Non-GAAP gross margin for Q3 was 63.1%, slightly above the previous quarter's 62.8% [20] - Non-GAAP net income for Q3 was $22.2 million or $0.57 per diluted share, compared to $13.1 million or $0.35 per diluted share in Q2 [20] Business Line Data and Key Metrics Changes - Automotive and IoT camera revenue combined increased more than 10% sequentially [19] - CV (Computer Vision) revenue represented more than 25% of total revenue, with unique CV customers in production quadrupling year-over-year [7][8] - The automotive revenue funnel has tripled from approximately $600 million to about $1.8 billion [8][34] Market Data and Key Metrics Changes - The professional IP security camera market is experiencing strong revenue growth, particularly outside of China [11][12] - In the automotive sector, the company has shipped over 1 million CV SoCs into the automotive market [8] - The Chinese market for professional security cameras is seeing reduced government spending, impacting major customers like Hikvision and Dahua [41][78] Company Strategy and Development Direction - The acquisition of Oculii aims to enhance the company's capabilities in AIoT processing and radar perception technology [6][16] - The company is focusing on integrating radar technology into its SoCs, with plans to launch products targeting Level 2 ADAS applications by late next year [39] - Continued investment in R&D, with 59% of revenue allocated to R&D over the past three years, is expected to drive future growth [15] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain challenges remain significant, particularly with shortages of components affecting customer production [7][23] - The company anticipates total revenue for Q4 to be in the range of $88.5 million to $91.5 million, with automotive revenue expected to increase sequentially [24] - Management expressed confidence in achieving record revenue this year despite supply constraints [7][18] Other Important Information - The company has a total headcount of 824, with 82% dedicated to engineering [21] - Cash and marketable securities increased to $457.8 million from $449.2 million in the previous quarter [22] - The company plans to participate in several upcoming investor conferences and a Capital Markets Day on January 4th [25] Q&A Session Summary Question: What factors are influencing the Q4 guidance? - Management indicated that seasonality and supply chain issues are impacting the Q4 guidance, with a smaller expected decline than historical averages due to product mix changes [29] Question: What is the expected growth from CV revenue? - The majority of growth is expected to come from ASP increases, with CV units cumulatively reaching 5 million, including 1 million in automotive [30][31] Question: Can you elaborate on the $1.8 billion revenue funnel? - The funnel has tripled, with a significant portion being CV SoCs, and no radar revenue included yet [34] Question: What is the timeline for integrating Oculii's technology? - Integration of Oculii's software into the CV2 family is expected to yield products for Level 2 ADAS applications by late next year [39] Question: How is the security camera market evolving? - Outside of China, the company is performing well, while Hikvision and Dahua are facing challenges due to reduced government spending and inventory issues [41][78] Question: What is the impact of supply chain constraints on revenue? - Management did not quantify lost revenue but acknowledged that supply constraints are affecting shipments [72]