Ambarella(AMBA)2023-05-31 00:23Financial Data and Key Metrics Changes - For Q1 fiscal year 2024, revenue was 46.2 million, slightly below prior guidance [20] - The company reported a non-GAAP net loss of 0.15 loss per diluted share [21] Business Line Data and Key Metrics Changes - Total Automotive revenue was approximately flat sequentially, while IoT revenue saw a sharp decline due to customer inventory reduction actions [19] - The CV2 family is expected to account for approximately 60% of total revenue in fiscal year 2024 [9] - The CV3 platform is anticipated to significantly increase average selling prices (ASP), with expectations of 5 to 20 times higher ASP compared to CV2 [10] Market Data and Key Metrics Changes - The serviceable available market (SAM) for the company is projected to exceed 10 billion by fiscal year 2028 [7] - The company is focused on deep learning AI processors and software, with a shift towards AI inference as the market matures [8] Company Strategy and Development Direction - The company is transforming into an AI-focused entity, with AI representing 45% of total revenue last year and an estimated 60% this year [6] - The CV3 platform is a major leap forward, targeting mobility applications and bundling software IP with hardware [10][11] - The company aims to leverage partnerships with Tier 1 suppliers like Bosch and Continental to enhance market credibility and development efforts [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant headwinds from the semiconductor industry cyclical downturn but remains focused on AI development [6] - The company expects inventory corrections to continue, impacting revenue until new product design wins are realized [32] - Management is optimistic about long-term growth opportunities in edge inference AI despite near-term financial pressures [18] Other Important Information - Cash and marketable securities increased by 227.4 million in Q1 [21] - Days sales outstanding (DSO) improved from 57 days to 43 days, indicating better cash flow management [21] Q&A Session Summary Question: Inventory drawdown with customers - Management noted that customer demand appears healthy, but inventory corrections are ongoing, with no clear end in sight [25][26] Question: Automotive-grade win with Continental - The win is automotive-grade, involving both CV3 SoC and co-developed software IP [27][28] Question: Revenue levels and inventory correction - Management believes current revenue is approximately 25% to 30% below realistic levels and expects recovery post-inventory correction [31][32] Question: Timing for automotive business growth - Management anticipates growth in the automotive sector once inventory corrections are completed, particularly in the ADAS market [33][34] Question: Geopolitical impact on Chinese market - Management believes the impact on the automotive market is less severe compared to security, with U.S. components still dominant in high-end automotive [38] Question: Software acquisition and product roadmap - Management confirmed they have the necessary components for Level 2 Plus and Level 3 applications, focusing on a flexible software platform [40] Question: AI server inference market entry - Management is optimistic about entering the AI server inference market, leveraging existing silicon and software expertise [50][51] Question: Cash flow and R&D investments - Management does not foresee the need to raise additional cash, citing a strong cash position and positive free cash flow history [79]