AMBA - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Ambarella Fourth Quarter and Fiscal Year 2019 Earnings Conference Call.

As a reminder, this call is being recorded. I would now like to turn to your host for today's conference, Mr. Louis Gerhardy, Director of Corporate Development, Investor Relations. Mr. begin. may you Gerhardy,

Louis Gerhardy

Good and thank results fiscal Sara. our conference for fourth quarter year afternoon, you, you and joining call. Thank XXXX financial

CEO; for regarding and The demand uncertainties responses and will solutions, growth will any forward-looking market Casey prove prospects, financial incorrect, you call and actual are materialize with risks, speakers be the results, our Fermi to our things. to other results. provide to President of uncertainties Our our these contain statements fourth statements. assumptions The regarding quarter results and our today These should or Dr. is financial to among questions Should Eichler, our XXXX forward-looking purpose primary could or and be from CFO. projected information these differ of fiscal statements subject today's your risks assumptions. Wang, and discussion materially

update I assumptions press Fermi on the factors January Dr. other These no we website. of results, filed can described be Forms under statements. XXXX. XXXX Access call X, SEC, XXXX that XXXX, risks, Relations that XXXX, these in fourth the will a historical are XXXX, affect the to could March report call that ending on and on now XXXX, replay the and over September uncertainties are Investor XX, portion information fiscal with filings on annual and fiscal year XX, today's X, for Form financial to documents June and results, on our found turn obligation December more our We including the the Wang. of filed filed X, quarter results XX-K SEC year, our fully release, as well XX-Q potential fiscal to we for as the risk and

Dr. Fermi Wang

company. Fiscal transformation processing from to a was year a year vision Louis, afternoon, a computer company Thanks, 'XX pivotal video pure good everyone. and in Ambarella's

human for make to our enabling and valued extracted data assistant addition to decisions. In intelligent processed streams, video customer viewing, rich products CV our

During CVXX a each tabled seven strong of AI our CVXX Neural and experiencing XX-nanometer our the sampling, into processing three SoC. globally. assembled CVXX, Deep activity new a Network Within mass devices, CVflow and CVX, year, months video integrating single out processor we we CV we CV production, commenced design with and are

revenue from security revenue decline. markets revenue year, for total both single-digit and the mid revenue of XXX% XX%. Consumer XX% the the accounted automotive revenue approximately XXXX, than the fiscal more For declined camera faster and expected increased of auto the represented camera percentage electronics range. than throughout year-over-year in about Security with for year

million. For the XXXX, full year to XX% XX, revenue declined ending January $XXX.X

fiscal million security in year market XX% increased decline same led year quarter, of revenue revenue year professional XXXX Revenue fiscal XXXX. market. ago million a period Our of the about represented from XX% by of QX $XX.X the from $XX.X the from the security camera a

of consumer about the decline. For the XXX% year-over-year revenue quarter, electronics represented revenue

plus AVM technology. interior These automotive applications computer autonomous Around camera drive and targeting. and drive automotive demonstration different Ambarella Electronics now electronic the home recorders, applications in the and are Level addressing or Monitor OEMs are latest View for CVflow the on demonstrated applications. aftermarket X recent Show, we driving monitoring, Consumer the mirrors, cabin and X the January. of its This During solutions monitoring solution each vision CES, focusing of successfully included

camera was excess systems, first We also market, Ambarella. addressing ADAS for announced and large opportunity billion, in from already demonstrate or of solutions $X attempt driver which represents advanced our assistance a

Around interior blind driver vision featuring applications the processing. assistant architecture ADAS with include electronic automotive CVflow the Deep Ambarella's camera monitor detection Program or the CVXXAQ provides Emergency powerful for Target cameras, Car speed assistant NCAP, and We performance or View functions. to necessary control headlight front applications cabin Neural new requirements with mirrors exceed AEB, also introduced cameras for Assessment AVM intelligent the New Automatic and SoC keeping The chip, or BSD, computer Brake our on Network spot or and Monitors assist. such or parking as lane

working intentions. Smart joint high ADAS for CES, due camera CVXXAQ computer announced technology and detection. and advanced extremely with closely we [indiscernible] automotive its solution Aglaia, space and which at developer in software are with provide per AI-based to that, accurate a to forward algorithms. vision enables of the Eye, head the a single-box or requirements concurrent deliver execution featuring on Tier us image second HELLA platform multiple highlighting highly also high-resolution, to world Beam ADAS the global deliver leading Driver content and announced intelligent interior-sensing a partnership running driver CVXXAQ OEM simultaneously safety-critical device. show, of video a increase a Also the ADAS the Smart at software platform on with CES that The to in to CVXXAQ classification consumption with of to now OEMs chose customers. driver developing to future running tracks required deliver single high-precision show, the CVXXAQ. during platform performance Aglaia and the At frames With to low-power was neural performing Eye the Xs, Smart was our leader cameras able intelligence-powered paired demonstrated space Assistance. possible The High artificial XX tracking Aglaia on AI and with is object processing Ambarella We processor the tracking with is HELLA ability features that AI networks monitor the single-box Monitor for Ambarella free leading a perception mouth demonstrated of partnering market HELLA generation recognition, applications. for actions Eye System facing, platform CVXXAQ, DMS and next we eye,

classification in lowlight stereo based camera both and long-range on included at our low-range enabling meters also SoC, demonstration automotive XXX CVX conditions. Our object high-resolution

will the right Solution showed mirrors also stereo a replacing performing while illumination. using in the operating the on cameras Electronic real demonstrated in CVXX of at three object to the electronic be vehicle's darkness features perform happen detection facial artificial device the the high-quality complete the cost in demonstrated, cameras short-range intelligence vision CVXX. and blind left and Mirror detection. CVflow SoC low recognition advanced capable our CVXX allowing to time assistant advanced our active introduced, than very computer and in leveraging Cameras significant based on a our with spot at rear, the focus latest IR cloud. like image family, display customers' an as the mirror capability vision performing overall delivery computer features on edge, reducing We for We We cybersecurity and rather performance, power. CVXX's of processing

shipped introductions will retail and and quarter. face door, vehicle example, OEM summary, platform about developers the and recognize SOS their market, plates in are the video CVX we a detection cybersecurity length demonstrated CVXX now customer and with China's Also market Senova applications. product introduced clarifies supplier Longhorn, Thinkware for January, recorders have solid number AI's production automatically a by supplier and the a included to and the a to we recognition, applications primarily the SoC. car In In SoC. introduced car control recognition unknown In cam the license and by automotive we Ambarella's Chinese we X dash Geely, delivered. the car on features. Tier quantities all models based X, continuing CVXX continue aftermarket, an person Essai third-party win Asia. In based introduces homeowner AXXA camera For automotive quarter, Korean [indiscernible], software during our and during seen little from supplied leader designs our Tier to voice customers successful again, smart provider classification intelligence features first they're models supplied car new the BAIC of Xnor's introduced reaction record package supplier, emergency during with Nextbase camera new combination doorbells, In our our In talk it of December, dash camera car and license two we front of HDR flag quoting of to family. collision in range had vehicle HD dash on faces camera SoC response. series last mass on a also and I warnings the by and the HXX CVXX market, its highly wide processing car positive European and We're cam pilot lowlight on to plate cameras CVflow This see the Ray AXX AI familiar is including warning Alexa Amazon's supporting growth FF familiar persons, analytics, our professional SoCs, applications, recorder SoC carmaker security CES. and Group's, when based AXX can QXDXXXX new processing and Ambarella's in performance, approaching featuring features. car forward alert extremely Ambarella's processing recognize its full including leading based detection of CES, encouraged

security We cameras are new monitoring the of operation SXL of the CES. to security SXL based looking to outdoor to AI small HiSilicon, product based stay announced make the make customers Ambarella's key living. detection solution category The the family In Ambarella on a range for for on members. our benefit introduced Huawei. where high-dynamic home designed Ambarella's smartphone doorbell in smart to form as part the to algorithms. and Wellcam, SoC. video lighting alternative factor are strength easier includes this doorbell smart SoC, Alarm.com on and products from a new full a overmounted camera doorbell in home a including face also range Based Home designed at Smart Ambarella's conditions. Kasa enable wire-free challenging low-power independent video continuing were Many market, introductions opportunities based of camera number camera solution customer to a SXE, solution processing is in based small on connected enablers Wellcam of on connected the safer, the

smart camera smoke the Homecare be leading Alexa whole smart the bell, through maker all and market its its tech smart company top smart doorbell its eliminate DualCam Doorbell, with dual Netatmo The announced include Ambarella's can with announced Video a security devices. detectors to the app, First won HD the spots. Alexa, the Alert, Netatmo CES Assistant SXL full models Google them and supporting cameras to integrated X-way blind SXL system with on and viewed Google HD the have home solutions, for is compatible connected other introduced Maximus awards. doorbell of and SoC Maximus, Amazon full Siri doorbell bottom a Apples' Onelink controlled home support doorbell ecosystem. and first smart SoC, on best device, on Amazon Assistant. security leader, -- and Answer audio Ambarella's a French the of And Based providing of video based easy-to-install or video and the Ambarella's resolution, smart via SXL both based doorbell

one thank fiscal The photos Pocket Osmo During active XX the years during track its the handheld, the form year drone at proving market the video and in which face recording. subject Pocket, company's strategically, hours. select market, the history. per over was Based to our with consumer to vendors to investments XX-year Osmo a opportunity. million stabilized made now continue the Ambarella's direct commitment XX are our of adoption and introduced $XXX In especially a SoC, of shareholders of capable leader, technology. automotive, and early to of camera, approximately majority Based summary, China. let modes -- we I the the of address stakeholders, focus this products, for we honed in CV, positioned focus and right delivering With on customers, results. robotic of will and our the is small second megapixel CV quarter, in Ambarella's multibillion-dollar the in investment popular we decision our well you and camera video markets, camera And size a with you on DJI employees is in into our 'XX that in is frame their time on most centered CV The camera the important last opportunity innings and XXX confidence and XK a X-axis, on multi-year thank frames loggers, keeps and recording HXX the factor, confident our of customer X very surveillance broad track want we fast-growing, the year. remain

XXXX. our turn for fiscal and Now it for I over will financial Casey to the guidance details first quarter of

Casey Eichler

highlights financial the XXXX. XXXX, fiscal the full fiscal Fermi, I'll review everyone. January for for XX, you, provide of good financial and Today, outlook and first quarter Thank year a the fourth afternoon, of quarter and ending

non-GAAP ask non-GAAP press release that During I'll results detailed of today's reconciliation to GAAP to call, for discuss you the and refer a results.

$XXX.X have For certain non-GAAP XX% reversal of valuation The taxes. expense deferred and reporting, for XXXX adjusted eliminated of assets compensation million the basis. fiscal single a automotive more allowance consumer we and to impact in declined to attributed digit XXX% revenue the stock-based on the while on of legacy a increased electronics the business, the with than decline year-over-year security businesses the

about revenue decrease employees totaled repurchased fully securities the QX. a at line Consumer in of dedicated $XX.XX stock to million was resulting headcount end in previous largest the our total at quarter For with fiscal our headcount for shares to count margin the flow were mix fiscal total operating share $XX Asia. for due a operating activity we The XX.X% revenue. cameras, vision as QX, compared from our promotional million level was year and both non-GAAP major our million the previous in better when with to $XXX QX million in to increased basis offset impact slightly anticipated with net of this Italian positive diluted share XXX in per platforms $XXX securities or Despite of declined generated or the to and quarter margins quarter, was was quarter. cautious. other Other of of XXXX, at auto of than of continuation of which with a reflected positive tone our QX, R&D sequentially, technology With non-GAAP year the we expectation, in of solid a compared strong In non-GAAP security In million, end a in no In increased from million preceding and million XX% teens compared represents QX than income our year. for received Relative customer's a as quarter. income of and all in investment, major non-GAAP saw rate in technology the in million gross revenue cash and primarily investment Non-GAAP platforms. SG&A. sequentially prior marketable declining. experienced $X.XX R&D in the compared end the million our as Approximately of is computer a up remained R&D effective and overall OpEx expense with to as other operating and year-over-year Non-GAAP fourth share to share. was flow was $XX.X QX. growth, we $XX.X professional decrease for non-GAAP of higher with to the our XX% we engineering. debt, $X.X XX.X% totaled XX.X was into million higher margin of was investment high compared per approximately of of the gross a and prior our gross to product non-GAAP percentage cash $X.XX the $X.X by $X.X million guidance, X.X% anticipated earnings XX.X% fourth decline tax declining the In $XX.X reduction of and anticipated. segment, a as previous compared the We income quarter. product the $XX.X of per XXXX. diluted share operating million, $XXX located QX of XX%, exiting revenue a million the based XXXX, million XXX market the the $X for expenses compared XX.X or cash categories of same X.X%. Non-GAAP computer million in shares level the mid R&D per QX of fourth product quarter XX% on XX.X QX XX% project net a vision on grant. year. declined Auto quarter, cash the Total QX marketable our

of repurchased the the consideration total at a During for XXX,XXX price of shares $XX.XX quarter, company million. approximately approximately an $X.X average

XX, the June approximately million for end outstanding million the $XXX or This XX at fourth January $XX.X XX% We quarter. QX. end the inventory in X, was available Days fulfillment ODM, receivable at of through QX million remained QX. or compared outstanding. multiple to under program in X, days Chicony, at accounts to million at customers, XXXX. $XX.X in sales fourth previous of quarter million WT of customers XX days XX $XX.X the Taiwan, days of in $XX.X million came XX% quarter. the who XXXX, partner XX%. declined of XXX accounts prior the in the for the of As of and Taiwanese Net inventory to Microelectronics, a plus $XX.X sales days revenue authorized revenue; end receivable from at at a repurchase had of repurchase quarter were Total came end in manufactures compares

will I first quarter outlook the XXXX. of for Now fiscal discuss the

anticipate combination for expected in $XX in patterns We security patterns seasonal driving customers security consumer April revenue expect be our to first slowing causing of tensions down. volatility, security order with order largest to weak more and are normal be professional million, economy decline ending order The be is plus professional minus security. X%. a China our total XXXX decline customers to sequentially up and the quarter trade Global from the XX, or revenue volatile. the to We

consumer mix electronics' Consumer expected and Tier in to X the to X revenue customer favorable X market. and to appears Automotive the driven bottomed sequentially. grow years. continue inventory customers, by over revenue expect and is should from have to decline out some to next a We security OEM benefit build

the and professional first to With ramp Global half growth we in half less stable in from our and to to second XXXX. the non-GAAP and are conditions, We from are quarterly for of in be in revenue the XX% we make automotive including declining XX.X% consumer the continue be and security restrictions market closely that the compared issues between challenging and impact forecasting quarter. tariff macro in that return the business, monitor in the matters gradual potential estimate fiscal electronics will XX% the to growth anticipate and camera QX expected to deleveraging China, changes QX. CV revenue business issues, during export to gross margins return in economic

jurisdictions. will on call back events. I'd more to operator tax over We the expect April the with We that, questions. be with ROTH Summit million shares. XX presenting other tax non-GAAP estimate on coming the engineering XX. use diluted in XX.X XX, April on payroll America between OpEx for primarily and Ambarella it and joining million Auto million of for our in for losses Bank XX%. of modeled rate Exhibition Please QX at to the inability be tax April the increase The expense. $XX.X approximately on should $XX.X QX first XX, accruals in The rate increase the a and information Conference be be Thank to today. our Security count the increased QX International contact you March turn from at for from and to certain exhibiting like share quarter is headcount, Conference at to result our to tax Louis And these engineering

Operator

Morgan comes Joe from first of Our line with Instructions] Moore [Operator Stanley. the question

Joe Moore

Is put what's Just around direct issues design of could in sequentially you half. that wonder of means assume bucket said Is if sort impact that's characterize What said it activity? trade first the then so affecting that tensions? tensions. stable I of inventory it flat. that trade-related trade And would -- you in? kind the you? Is build demand? the the I QX -- you you

Casey Eichler

yes. Yes, I'd generally say I guess,

resolution, in but -- discussing China, a in of world. with our are minute, the we'd I half we're and year all continue be We're about we it hard I'd think call to put think I seems but those factors the that all are any on comment emphasis It's other, just to let overall customers. second this over Fermi the some and and those in the seeing were hoping obviously, talking one on. on

anticipating And any factor might on we we're, put the it see, to so volatility hard it's in that I particular. one think,

Dr. Fermi Wang

Joe, Well, Fermi. this is

customers believe as are strange published time, truly before. control particularly we've there think two the that government, second the is our At is identified ordering ordering thing some kind we protocol. have important and trade I important Bureau things the seen recall, from the to One XX, pattern. put ware government, us. those last for year, on caused same issues that some never you think Industry pattern Security of that noticed of that I recommendation U.S. November IP a We

gasped is and I worrying start the think recommendation them to U.S. of customer that a to that impact lot if our this on Chinese it's shipment being our adopted going that government. by

-- think generally on the definitely is these is things I two sound revenue. uncertainty to us. One quite So

The is one moving the design on other forward. win

even forward with we our design see with continue wins activity are the CV to with moving uncertainty, that and building, our customers engineering that Chinese However, us.

becomes seen cautiously that. could if to are point haven't eventually reality, it that impact us I we but So out

one second impacted us The directly, yes.

Joe Moore

growing? segments Great, can characterize bottoming out, okay. seeing are Is it And you side automotive progress yet? versus the OEM just on you aftermarket? tangible And are then on which mirror rearview

Dr. Fermi Wang

auto revenue, revenue from today. continue OEM of -- the -- Yes, a aftermarket, us. of see flat a I Even we growth, a when of for all, also think engineering OEM OEM see we activity. activity, But recorders think significant to for of OEM we refer same time, come I little say but bit auto definitely at to growth so the side, we that revenue first to for have see lot our majority revenue continue that definitely side. from -- still But

HELLA that partnering Aglaia the with design. in on you one example announced that ADAS give we December, are Just we

after were that, announcement. things the happened multiple Following there

we and their all, in same demoed the in system CES First really some the the booth they time. various OEMs demoing at mutually parallel, got multiple at our good feedback. customer, same the And are of system to

In they're do anymore. car and the live to is fact, installing a the It's a OEM not demo giving demo on demo.

February is HELLA just happening successful thing ago. perception a days Market at our the event, a third a I Aglaia XX, LX on that they In Capital just was few ultra-low-power demo had The of functions following Day referenced on new demo CES mutual LX, AI-based quote. generated quote, as SoC.

So basically, what -- I think they things. are -- there are two

time First have we processing of time powerful what the a is confirm and consumption, all, that. we to have this first come saying low customer a out been performance at is our this CV while the that first confirmed very very customer power chip

the come comment same is see to competitive made that different they they and to on software compared demo running Second, after conclusion. the had solutions our

currency So point. to very marketing this I highlight time same X important solution the that's right Tier at think leading us. OEM I a really milestone now, a And at for think, together the also,

this example announced with them we So the is with Aglaia. continued in HELLA mainstream progress after make we to I made front. on We've think one December progress even

Operator

question comes Bank Gonzalez line of America. the Our Adam of with next from

now line open. Your is

Adam Gonzalez

Any is business, way to that that be security too the at mid-single-digit grew low, mid-term? higher the right looking rate trajectory? Is in base sustainable Or rate or growth growth think lower? the right puts-and-takes. just completed could automotive base which, year, camera year-over-year, -- the mid-single what's just business, that digits I your most the you think about and recently First, said,

Casey Eichler

again, that contribute our we the to -- and we've of until the for get we're I adopted beyond but Yes, a that line over we're out underway the we going that, think The think, But I had the the have year. projects guide current automotive business beyond get year. product course growth think continue focused we quarter, CV won't year. provide to that obviously, on, video-based to said products this I growth growth don't to of lot continue with in that's

about think a way it's probably it. the -- thinking good that so to And way you're about

Adam Gonzalez

driver you view, in What then And it. surround and with is question within in of whether autos. different the camera e-mirrors? timing Got revenues? more for high-level outline strategy the it's opportunity CV on Could areas car, a ADAS or camera just each the relative the the monitoring,

Dr. Fermi Wang

Okay.

script, about my six opportunity automotive in talked potential we So for OEMs.

is which are generating one recorders, already first The revenue.

to And is growing revenue-growing market Asia, interim. in continue Chinese We believe the we is with -- and that opportunity in customer, blind spot by But with that we is think And and believe electronic for announced become we in quarter, with detection CVflow the mirror second mentioned the are future. other projects. this one last have at the probably we one time, -- our production And in this mirrors. video-only we see electronic us we enabled same more functions. working I solution a that already mainstream

Any right detection. now. I e-mirror we be, video-only product but spot That's blind will believe would slowdown. a have is to in intermediate going product So say, what

with I definitely cycle two the is lot. our see but this on. short-term is to enable think a going right one for to because whether electronic because really in combination mirror business. however, have attention -- And I an for the approach to is we the want go everybody definitely, nothing long associate that that we CVflow do ADAS function video-only monitor in DMS camera to So all and do pay the really going try but there interesting the but is of play area solution, monitor, DMS now with are driver asking for a The revenue while cabin to market, ADAS the] driver driver different a OEM market. we One to term, driver combined the that biggest video about on market this we'll because fall interior focus Tesla type you think basically he's we'll major regular to that the interior this us is monitoring, a the solution the in We is and driver monitoring, play reasonable e-mirror which in today. lot for is when think is automotive But of will a think into system [warn see so car. talking the that the design need player -- solution we're people the of challenge long become the into from there term not

today. our driver So monitor is be system of which car will with requirement a -- I focus ADAS enabling think solution, in

So that's definitely something.

In even we our already example, by its of because last we of that's system itself, But HXX requirement. use and that easy relatively using customer enable moving this fact, ADAS one for part announced Chinese performance DMS And quarter, want HELLA know that of to program. solution forward. solution Aglaia lower our the for also to kind DMS

So a more delivering short-term now, market AVM a that, on market. competitive, to work is something and we'll really solution but converging. right is for. that's that It's continue definitely,

think market whole the For CV-enabled especially I the AVM first for market solution. market, think converting to ongoing parking a video-only, I assistant that is but

don't definitely, referring win we we're that but when haven't business. as the stereo we area say there definitely announced -- So to camera any Aglaia. solution continue AVM this is basically AVM, that's we focus as we HELLA The short-range That's Level the we one on. basically category the in mentioned current CV-based design have market, video playing last -- the past. And to are yet. And AVM with X-plus. well Basically is

and them direction. partners deliver other Our with Aglaia this along HELLA working enable can news more plan OEMs the opportunities that multiple hopefully, also potential work continue with and, is can that to through we to we identify to current

Level the autonomous have that category, spent lot for So are focus would right on applications, and Level the now. say we us ADAS but we of -- a the time I on we also X-plus, plus previous driving identify spending X

Operator

next Our comes from line Matt Ramsay the with of question Cowen.

now is open. line Your

Matt Ramsay

working your that Level additional HELLA has that a obviously, Fermi, guys an the and guess, a looks second, if as connection questions potential that I sort of demonstrating HELLA X-plus base all, wide of industry. the could your on to any us -- customer of Tier report why I also, business. first how there's could the Xs couple on across And and their there's understanding I guess, to believe solution be are you a pretty your, but know bit folks if of you other berth opportunity automotive with. breadth in of automotive give little landing progress what other you integrated like?

Dr. Fermi Wang

Right.

HELLA well engineer review. of meeting first a review regular as terms have in as business we of So with all,

So deliver provide with, something us we that he they them sometimes, OEM know help on special. and to the updates can't we probably are to need engaging

support And So are we and continue provide we do to know who talking the more to their request. progress. engineer they at importantly,

but they talk that confident I So forward say we with or cannot a -- to, about car. in although OEMs we we can now that positively feel Aglaia talking are HELLA because demo moving cannot are the they also

-- OEMs Tier space, in and to In continue terms this other of forward. move potential definitely that's we development other X this effort

should we mention didn't any hopefully multiple new Although you update then, to give but we assume continue ones you that to talk can potential and we later. customers,

Matt Ramsay

ordering revenue X their happening helpful. adoption How how with human patterns, the year, CV and Dahua. of their of it, just of to seeing progress would the customers CV computer some understand is are vision into we and folks sort you Got security mix? those versus customers the Hikvision splits of X in big over as fair enterprise wanted in on those unusual that obviously, there there to the And vision but I And penetration any focus sense top be focus on China then enough. through

Dr. Fermi Wang

Right.

I engineering And And all, to I be do interaction CVflow product cameras. roughly they of our believe lot CV promoting So about activity like I talked for based we with said, aggressively chips. plan shipped they project units line. of Hikvision And have very CV million X last have this on first of year, a -- customers. we both kickoff

didn't I video target their between However, know plan split and CV. and

this based market. to it provide price-performance clear that However, I they to has believe different become the they're to into going when real made -- them point different on last they believe point and CV product time, market talked they continue price

opportunity believe a kind of they are money those make also in that serious product. on China not on me that that, only of by they lot investing see So

of In visibility really, split split, their on don't terms I the have yet.

they're and our product really right on] when haven't fact, of because the what's pricing. [was side to and their -- on going of the product, planning feedback now -- engineering how ramp most terms we up announced they gathered in their activity In introduce how

for point. hard us it's guess a to make at this So

Matt Ramsay

Got progress congratulations the and appreciate overall of we'll sort turbulent side a push we stay the on fair it. time, color. automotive That's enough. But the bit on as for updates tuned through but a of

Dr. Fermi Wang

Thank will. you. We

Operator

with Kevin next Our of Cassidy the Stifel. from question comes line

John Donnelly

talk on CV process about for you John products? Kevin. This for advantages the you the the XX-nanometer Can is gives that Donnelly

Dr. Fermi Wang

benefit power reason most XX that think reasons, important for us I is but Well, multiple really consumption. nanometer the

our two we Our Mobileye, node, knew and node, going which process we're we us silica that Qualcomm, unique moving very are the power them compete all process just fall advantage probably of already -- give in we our of X-nanometer. for And than behind this architecture, a on have we the consumption fall HiSilicon, to if more assumption will past, advantages. like we power consumption if XX-nanometer disappear. to with behind the But architecture have with assuming -- silica plan

the node consumption fact talking why I must architecture gives XX-nanometer CV a really design of you just when -- XX-nanometer for that's consumption because but win investment power only process solution to our tremendously from so when -- But our our of advantage not solution, So to advantage. it us I categories. is we the that about also compare then on a us huge mentioned, in now amount those keep versus now help wins Because knew power our moving to we're for advantage competitors advantages. -- just

a CV For all from many suppliers, powerful require we week, security them and performance. RFQs seeing consumers, start camera, example, of in leading

low to as camera, our very And battery-based -- our build well as sometimes, important they power want category. significantly which require -- totally powered that becomes in security or consumption. XX-nanometer And

John Donnelly

change the use insurers And cameras the from of regulators to promote the great. different some attach seen geographies maybe dashboard greater or or from or you have in of rate popularity terms push any Okay, of those?

Dr. Fermi Wang

Yes.

In fact, we do see that.

the major and especially year, year, the past, fact, very Last OEM talked In we gradually China, and popular driver Japan space. was on China about become last in Korea.

taking camera taking we and Now to Europe, gradually multiple going concept revenue generating -- to and this we start customer British multiple there. camera seeing are

by like driven company, said. the insurance it's So you

compared that to other So -- although but for market -- adopt do it's number areas hopeful is we think we those a going are us. that small to drive new rate

Casey Eichler

that, new cars. add to have there recorders just require are in countries year, to -- are the to There start over next some cars going to the that,

to basis. kind that's the going regulatory so And of be

constructive So market. and also be to that helpful will that

Operator

Our question with the comes from Capital. Suji next line Desilva of Roth

now Your line is open.

Suji Desilva

talked security automotive you areas, and Casey, about the single at growing growth digits.

longer circumspect what indicated I -- think, might you're on kind it Casey, you grow term a little of bit that's kind but of you that.

X, you and we out of What area, out? other of of consumer plays understanding declining about nets could headwind how about The rate decline that next kind overall talked years. kind revenue as the X there think

Casey Eichler

Yes, as a we the mid-teens represented I revenue. business percentage that year, as exited of total talked about, of the kind as

and to as half though, years a revenue in it last year year it -- contributed we meaningful because the impact lot continue that of that that a we really of tail is X more adjusted XXX% well, business. There see year, particular, over about But and off last that the time. legacy X in mentioned second think that at I the do think of will last think the consumer for So will, next I full the decline it's business a the period of year. of I to did than I level of and, today, it's of is course decline like have to over to it where through not going

and a to year. was the there majority see work the half. of in And anywhere It near really the through that headwind you'll don't so second continue be the last I year was headwind decline, we it think, but takeaway will is, think I it that it last

Suji Desilva

That's picture products. CV on question your helpful color. And a bigger

You size market? you addressable have the add in the XX CVX relative those talk now market XX and How the CVXX much about on CVX versus for and Can coming. CVXX? addressable in commercial of

Dr. Fermi Wang

CVXX solution. consider and So as CVX our high-end is should the cost-effective solution, CVXX you is targeting really CVflow mainstream,

for example, thumb. for you use CVXX, market, CVXX; and of -- for rule just IP CVX think can use or of that automotive, will and use CVXX; a can will mainly CVXX. customer mainly CVXX So security company consumer most That's professional will

low-risk can course, volume CVX consider in but volume terms so of high total ASP much of that ASP-wise, but is bigger; a revenue, And I has risk think the to the CVXX interest now a be low-risk us right right CVXX competitive considering but so customer lot forecast will make I performance. and our see -- a hard we now, of from cost for while

Operator

the comes line Our question Anderson from Dougherty with & next Company. Charlie of

line open. Your now is

Charlie Anderson

Fermi. Maybe with I question just a start want big -- to one for picture big

had As had made now this wonder then that industry? you opportunities with the some you've the are based are win the that activity your design you I the for automotive and some on you out Fermi, expectations HELLA, terms the two look year, in of at of and wins, improvements the initial of interactions one. reasonable there, sort other what of

Dr. Fermi Wang

last more Well, goals, up what than week. we We just have meeting signed we some talked board had is obviously. a just which about,

not internal our on -- progress also engineering goal make we side. on side but only to is continue we business need the development So to the

enough. about win happy that cannot with this talk I other to but are a customer. in that that [tiers], HELLA to do We well continue I lot we the have and are know direction. will the design potential, not confidence very sorry with give more names and other area. we of what the that -- That's but I progress make a need We activities me am not we lot that's really on

Charlie Anderson

growth guys some half order of us you to half the but in then second second second the half. half. to just could rank then growth revenue stable for in And first if in contributors mentioned I the Great. maybe those relative you wonder the

Casey Eichler

security to the mean, the the in be and it's and, half. space going drivers year the for are certainly, the going be I auto space particular, in second that to Yes,

to But point. drivers, at As this it most side, behind growth from us we're year half. consumer a the products second real seeing in there'll bit really of of little show I there. think of to start then about, that in opportunity, talked a That's bit in, is the we've in when the I start the security future. ramp we'll mentioned, quite as mentioned, in And as the looking be the auto, this in but we at activity mind CV is we're good headwind non-CV some but and my growth space, they

Dr. Fermi Wang

mention so and we this winning mentioned to revenue to security is revenue the half we -- of design the second our professional impact growth camera at the end do One thing we past, be definitely start in HiSilicon on some believe driving year, of might those from that to win the going worth design probably we're see side.

Operator

line comes Our from next the & question Quinn Bolton of with Company. Needham

Quinn Bolton

follow-on questions wanted a on half And kind comment that couple ask the then off second few actually of I've I of for year-on-year? questions. Was just growth got first guidance, a is the growth. to that sequential base? half Or

Casey Eichler

Yes.

that script it's in will out. of to the understand exactly China, little the model growth look we out kind going on, with with of As we particular difficult a in -- environment as mentioned and some the things well, macro how as

seeing I customers and Fermi lot auto for personally of mentioned with had kind example, discussions looked out. of having market that the that that our we're what our think like engineers the customers with it in -- our we is the see bottomed I of a some markets

there's And from But well then see, some look security earlier it's the pressure at be off, kind we so consumer it as at other material point a revenue a bit you non-CV we headwind. such on markets because last it's of our the relatively in, that we of the see as a video the again revenue we year-on-year, do don't and to year-on-year but in stable, that question CV ramping products the the that to off I tail the as will be As quarters, and when as from little the When growth And and in some of in different think that we difficult much and that a growing. is you consumer some automotive, had to in makeup it's think continues definitely to market been be some just a mentioned before, business. indicated. comparison. going gauge with little versus how year tailing hard could know, it's sequential it about I year-on-year side of the hard the

quarter, roll the Another little depending the on design wins should] it how designs out -- future. into just bit out [or can drop a the roll

Quinn Bolton

Got it.

of kind be still you giving QX. what's QX, fiscal QX, down you're not know but of Kind million even percent. revenue you're -- QX and looks $XX of annual I in for like stable the So in of your if plus minus guidance, grow kind or XX% X% 'XX would sequentially in XX-ish total on order

mid- basis, revenue. year XX% business year-over-year you're and core maybe between the reconcile of growth level, consumer of down your growth for that's where high business, it's the flat down the that April business? basis big the to is sequential got the but the slightly kind on and simply from kind saying, So quarter a difference of significantly a on single-digit in trying I'm the to Is consumer just you've that versus disconnect to

Casey Eichler

Yes, a it. that's think about fair I think to way

are other level. I some today. products then the the lesser are And mean, have said, still customers beginning in we a on particular As that going revenue we of at last totally half had out year, year, that in but were, we of the that

There a solutions. of example. fair take market, to drone was for Some of markets amount -- the their in-sourcing the own

good just small because smaller combine this security all get while and the think in less some that we're to year, doing see that adds is than up, Auto I think of to in a lines last growing of some markets, as it's those things off as in participating well. CV to guidance. in better than I then fairly will or number, and contribute the we'll broadly were of so but of And year year-over-year piece those those future the ramping

Quinn Bolton

will Arlo, wondering and I've of why consumer be obviously, you're got they more had you it professional questions the a of for consumer has then market. much the like tend products the on about business pretty of And term, in market? security Arlo their a kind pretty better near doing think reflection that for question you a sounds number I know just segment And consumer-focused. of surveillance if expecting, may outlook strong. be specific in just to so and business or you Arlo the be but it's the a ugly is a down,

Dr. Fermi Wang

Right.

first Arlo is our not So all, customer. of

-- is, know not consumer problems similar but -- in our those see We see their other many that So in not do customers the have camera. big problem what category. we we do customer in security don't we

Quinn Bolton

of -- really Fermi, about just X And XXXX Hikvision kind high-volume are processors then made the... Are of those Or last application kind one high-end from shipped that what cameras. solutions? very using mentioned you in million CV aren't me,

Dr. Fermi Wang

They PXX. use NVIDIA

Operator

Craig-Hallum. next with Our comes line question from the Richard of Shannon

now line Your is open.

Joe Flynn

This on is Flynn for Joe Richard.

production? little like Is security more you majority them Just hoping we're this the have of that And this pickup the visibility you the see, into bit. could how that something could expand XX year or on early the we mentioned. entering you late -- consumer year broad next on be if the wondering design business would a and wins

Dr. Fermi Wang

Right.

in X me shipping -- those with the win early except customer, activity remaining among XX and have yes, model in -- our design we XX Among top them security also, engineering professional So And on top cameras -- let definitely. focused year. customers. already business X. the start majority for are And have customer of this months, we

we with engagement take For and them pricing companies, so over negotiating decide -- of they can terms to model the in those X are and project.

So yet. that X is undetermined

camera. the So security professional with that's situation

of So because even we those security their really their up on start the IP engineering -- people this It early or we're depends security plan. next we renting planning majority seeing later year IP marketing going and among believe product have to camera customers, professional activity year. a of lot

give our a we for revenue, need or their in more engineering have -- you -- actual have rental know So plan, to we like rental don't which I yet. we information volume, the said, understand have lot engagement, enough we like guidance but time, we we can business

Joe Flynn

margin. question helpful. And gross a quick on That's Okay.

increased and CV mentioned I XX% half. You based levels strong XX%, over the [mix expect around growth Should increasing mainstream? gross we is second as steady ASP time, guess more entering in with margin on -- then, the like]

Casey Eichler

think Yes, the we of right to end traditional that for our now, our the I -- is have lower -- range be. the guidance place on overall right

seen. see next that whether or But CV back will a the up we into mix out the range, have remain that year be we'll not improves to on As and I -- to to beyond, end high fiscal to the it the think place end a just we've low of the and good range, right to range the of XX%, the to now. traditionally of be. XX% the so about that the It's talked place bottom that's XX% in be -- which is pretty good and

Dr. Fermi Wang

helper dragging My CV our gross margin. that is instead gross feeling a current will of be margin down

Operator

Fermi the back call to turn like further our any for concludes Wang to today. This session question-and-answer would for now remarks. I

Dr. Fermi Wang

I support stakeholders, talk Thank Again, thank our and I'll time. XXX you for especially the in would like their to and commitment our year. next last employees you, to

Operator

does conclude gentlemen, you thank today's conference. participating This today's and in Ladies program. for

Everyone, You have may great day. all a disconnect.

Ambarella (AMBA) 6 Mar 192018 Q4 Earnings call transcript