AMBA - Earnings call transcript Q1 2019

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Operator

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

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Ms. Deborah Stapleton, Investor Relations. Ms. begin. may you Stapleton,

Deborah Stapleton

you. Fiscal to Conference Quarter thank to Call. and Ambarella's First XXXX Good and everyone, afternoon welcome Hello Financial Results

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

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

Fermi Wang

good and afternoon you everyone. Thank

XX.X% $XX.X in of period revenue the the was decrease Our year. QX $XX.X representing million million, a fiscal prior from of same of revenue XXXX year

sports, our from security automotive from focus declined. revenue year-over-year, drones, VR revenue cameras markets, and and While grew IP

as of security growth. Analyst we March. our to a development and steady win IP markets the revenue rollout and During the in progress The is line with well also Day in and progressing the quarter, the you momentum make with in and shared CV at plan design event solutions automotive continued strong with recent

we silicon working computer and in significant or on CVflow the on our architecture During Convolutional two vision a offering and CNN new SoCs, based CVX Neural increases quarter, new performance. the processing Network CVXX delivered

have times and We as successfully have ported of that the anticipated. performance to our Neural CVX, CVX performance we confirmed on now CNN at CVXX with a higher [ph] domain than consumption. power number measured the large the compared CVXX’s roughly four Networks CVXX and is We public

competing on Valley and for provide a stereovision motorcycle. for detection and viewing stereo times embedded advanced and XX Valley's the CVX Ambarella's include detection, bicycle urban Its various lane Autonomy free combines high-resolution Vehicle planning The fully obstacles and over compare navigated information when for self autonomous environment. path the GPU traffic in XXX to with presented numbers obstacle on data processors. and detection, features results EVA's watt. Additionally, vehicle, stereo SuperCam In merging monocular pedestrian, Silicon and software software that of achieved detection, road. generic DSP distance EVA CVXX detection and automatic challenging terrain combines we for perception EVA's necessary low a for vision car CNN classification. map with vision higher are fusion sensor modeling, classification information through algorithms XD EVA Embedded based maneuvers. long traffic perception XXX-degree meters scenarios and and autonomous research fully our RADAR They investors we or vehicle, computer powered successfully or by required processing and our many calibration, vehicle performance customer years object light per of XXX space to solutions Silicon architectures, delivered autonomous March we capability location. cameras precise terms based over provide over shot meters demonstrated range on have

public Ambarella's MilleMiglia autonomous commemorated part in of With the VisLab Parma of of utilizing celebrate which Italy. the To began roads was camera EVA a of customers was to first car Ambarella tests test, public to world’s autonomously anniversary on computing first one low-cost to team vehicle May, key of use drive demonstration anniversary, University solutions. vision this technology VisLab Automatico, that XX-year only an European the of and roads. then on During in

long customers It billion. is is Europe, for NCAP for that successful evaluation star of cameras Ambarella's and exceed demonstration as will from addressing SuperCam stereovision CNN OEMs, and high to autonomous seeing emerging and EVA North with for are for used with monocular XXXX, a five and evaluating high-resolution our now imaging, accuracy Ambarella's America estimated stereo perception, the generation suppliers, light cameras solutions vision well computer as both is Feedback requirements. in EVA distance as advanced tier by a system such monocular automotive currently inadequacies requirements As SoCs successfully includes market and for cameras Ambarella the are EVA's camera recording, solution of automotive in in low $X camera customers Euro companies. next automotive result vehicle delivered that with the meeting SoC solution systems. of vision deployed opportunities the being X targeting processing. a its This available

and advanced level interest are higher X, cruise including seeing X of level parking we enabling through Additionally, and autonomy assist. keeping features systems including the supporting control, camera in lane assist,

the cameras in our CVX a up low for our vision performance progress SuperCam in CVX we vision based automotive current customers by computer widely engaged of performance develop also CVX pleased markets significant to times customer advance our the quarter, deployment on to power solutions our represents our on working used in the And EVA. CNN with are SoC computer automotive delivered we Networks. a in autonomous technology And delivering in CVX fully silicon for execution Neural automotive Deep security stereovision architecture. processing adopted are feedback. the during with vehicles is development more The demanding of the leveraging summary, continue new In We to the being and application. a while in robotic The XX very in allowing provides performance leaders based and primarily emerging with delivered extremely we on recording advanced see Asia. business, video existing and available our

considering we car introduces Co. new Toyota, XX and model makers major & for automaker Honda, OEM using SoC automotive During driven In camera a record includes of China, Lynk recorders, full-HD based which And inclusion have recorder Geely to car on the opportunity. interest Government market the noted recorders we significantly first Ambarella's quarter, by SoC. car Japanese AXXA increase of including in Chinese our enjoyed sales the could cars, primarily size a mandate for car that legislation recently, a our Nissan. new which automotive with move is

relationship, neo unrestricted processing electronic camera ISC an CVXX first excellent our channel progress and BJXX LED will BAIC Deep for video modules based have It X a a cameras. HDR German on from IP our consumer update vehicle automotive and power a SoC channel generation adoption flicker on a our for on Chinese automaker light the to designs. SUV, offer view and submission introduced low Tier electronics image an triple way computer mirror pleased including processing are in clearing combines the professional cameras significant CVX the vision provides even West this advanced efficiency, Security have low during camera demonstrated Network Ambarella's we Electronic leverages under wide security mirror image quarter, HDR Based on to four Technology, supplier advanced report monitoring Neural electronic recorders CVFlow April, China, working supplier, of now Additionally AXAQ car give of with the of single The evidence courts provides CVXX image At and markets mitigation performance high its and SOC. been and processing, we the automotive based such And capabilities O-Film we SoC. or the applications. Show approved advancements wider both leading that first architecture. in the AXAQ development automotive latency very in and of times leading HEVC home in processing and in quality in chip. both our industry IP now low and situations. I the the contrast rear provides camera

tools key to our now customers. sampled security CVXX have software CVFlow We development and

develop of the new with can customers point. to with different performance and now multiple camera efficient CVX family our CVFlow price Additionally designs SoC

a across We common a are processing platform. leveraging hardware developments software and Neural software Network

video cameras combining the video weather while analytics. thermal provide deliver cameras U.S. released actually is FLIR a Show During be the baby ability IoT of introduced a cameras, Saros specialist, with cameras. SoC. its in area line powered monitoring home market sensors worst IP thermal bells, based optical camera and see new intruders. on new the imaging identification of to in continuing realize high-resolution monitoring The West wide XK sensor wide video and monitors Thermal the we're to conditions, In based Saros products opportunities ISC FLIR battery indoor/outdoor HD first of XYL door camera Ambarella's range including to video

HD during quarter, indoor/outdoor advanced camera on and and SoC its post and Xst, HXLM automation battery based is video full HD Safety storage. storage. a operation detection. extended Ambarella's HD HD camera security introduced base and home battery camera based Shenzhen wireless on cloud leading monitors features introduced Wi-Fi maker motion powered motion EX life baby sense shipped the processor and HXLM life, the quarter, baby Cox station camera its CAM-X HX monitoring two-way Foscam power the provider retailer category camera camera whole service baby and live The Communications streams. During as ultra with audio its provides The ICAM-X of based on local introduced small a its and the Ambarella's offer free streaming, In monitor Ambarella's EX camera products a video service. low probably capability Also of video

opportunity been during X outstanding in also is maker tomorrow's and leading have design the Also enhancements of consumer quality working two announcement including generation for an resolution well I tomorrow camera state-of-art and integrating the in as first number the video will photos represents over steal a you the HD the into French an expanding a one new we in drone IP group quarter - VR the Since high and introduced will ease-of-use. thunder new their factor announcement. The the automotive integration in security which Snap drone number body morning, form as and Spectacles Parrot, In segment terms for waterproof. in of that sports direction X represent with by markets small has European pointing slim headwinds their we We Ambarella. combine and camera world spectacles videos being see that design. a drone with on extremely markets summary, although not believe large

We very encouraged customers are have of computer progress various origination great by the received. in delivering the in these theme both to we and key markets made feedback

to hand back to markets We computer as focus That will advance market on I vision. identifying With George. require such new now this will that, continue robotics. will

George Laplante

good Thank fiscal and of as you, for XXXX update the for year well the outlook of the full will ended as afternoon everyone. review XX, first outlook year. QX XXXX and April Today the of financial financial I fiscal fiscal the Fermi XXXX quarter highlights

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

reporting fiscal expense QX have adjusted based of the eliminated stock XXXX taxes. compensation we for impact For non-GAAP for

IP decline substantial primarily security in the expansion was security, auto in of period a drone the IP same revenues XXXX million In China year-over-year led QX we in by In and a represents revenues. Our OEM million year. growth QX of of by customers. $XX.X declined professional $XX.X of the decrease saw revenue from Non-GoPro XX.X% security in year-over-year in from revenue growth offset of from year-over-year XX.X% the revenue decline approximately revenues prior quarter. the

variables Japan in Other in the in growth of China majority offset year quarter with in auto cameral police Solid at from drone weak VR revenue revenues as resulted coming the for sales from last revenue in growth from non-GoPro year drone last markets recorders year-over-year down market. Consumer sports and substantially from cameras. OEM increases DJI. automotive our high-end were market video primarily the and the declined

XX.X% China per approximately Non-GAAP a to in in the to rate previous year. rules average fiscal effective XX.X% adjusted XX.X% under change as The and recognition alignment rate XXXX Although quarter administratively did tax the complicated from from tax the increased expensive, headcount improve allocation and ordinary the the QX for the in expenses as net was QX a tax QX materially change price the million to vision same or to with per percent model margin, drone the and both the non-GAAP lower was previous net as of the for XXXX year salary preceding compensation Non-GAAP the million not Non-GAAP year. computer quarter. gross $X.XX quarter our lower tax expense based income increased across payroll of impact the prior we diluted $XX.X period decreased of change compared effective non-GAAP costs prior diluted $XX.X margin GAAP revenue quarter, revenue income for gross previous $XX.X first first jurisdictions Non-GAAP ordinary previous for rate. tax QX new The million to security for of the was revenues million significant and in a $X.XX $X.X includes support rate $XX prior quarter sales. of year. grow of of taxes opportunities. primarily were mix quarter OpEx to result and continue and the including increased a or the stock in the compared non-GAAP margin headcount margin revenues XX%. for of development higher the result the share share company's for was as quarter operating for compared million for

million million was end to XXXX. for rates. the compared XXXX, is quarter as based income tax cash $X.XX or and approximately $XX.X adding has non-GAAP of purposes. quarter, diluted compared engineering, shares adjusted comparative $XXX.X no to QX quarter. QX XXX shares were on the non-GAAP of net first to the was diluted GAAP The with per with Asia. to million EPS share million marketable previous fiscal the year We was adjusted QX XX.X cash headcount $X.XX our and at $XX.X total from ordinary from share XXX XX% $XX,XXX from the of ended XX.X for In net operations million securities earnings end impact about at on to income in dedicated headcount Total For per diluted of QX of the of XX% of employees located in change

XXX,XXX for price inception $XX.X an is company $XX.XX program million. X,XXX,XXX $XX.XX approximately XXXX total approximately million. $XX.X shares During shares consideration shares repurchased of the number average average The quarter, of of in since the of total June at repurchase total an consideration of at price purchased the of for of the

repurchase XX, As June XXXX XXXX. of the million available repurchase under approximately X, was for $XX.X program through there May

XX.X% or of million company receivable any end to This quarter. days end outstanding or to and at open period XX QI be funded addition program inventory million X% to quarter million any ordinary at bond came ordinary compares year. quarter our million three $XX.X was first In of at under market. chips repurchase auto privately fiscal the accounts authorized prior particular mostly QX the the other Board outlook. consists to negotiated repurchase sales came at QX. revenue subject Japanese XX.X% receivable $XX purchases twelve to compared of to acquire may XX.X% year the was market cash. anticipate the to of valuation discretion. now plus up came the time quarter inventory $XXX of X.X% year. factors. working in of We of million XX be at levels the not and may at inventory first I our Ambarella repurchase to of the like QX primarily accounts any local $XX.X $XXX the end first program its from the or over the The month result end Microelectronics compared markets. you higher of Directors not Ambarella’s the the of on the or prior distributor of in or in time legal obligate about market in $XX.X a to days company's QX. of issues Repurchases shares the relevant inventory in primary in sales WT would conditions, million at discuss in will additional transactions applicable XX Total to inventory of using days year. X, update selling ordinary of Hakuto Net Chicony through outstanding. an customers prior commencing to revenue requirements of high The We the of as XX it compared of the XX% time for XXXX. the at and of program new be Hakuto is OEM has its for does June days shares made suspended do had XXXX at XX.X% the outlook the prior through compared amount as

second OEM in revenues cameras. reality the revenue primarily we half will security in as markets and year and decline cameras as such by sports believe revenues increases from total $XX midpoint now QX revenues year. from reality and XX, at July be virtual the of offset the quarter, markets expect $XX representing million non-GoPro we - quarter We and last GoPro and immaterial be of second prior markets expect We guidance and wearable non-GoPro drones to non-GoPro expect virtual between particularly XXXX in year. In year. consumer ending wearable the In revenues sports for respectively auto to resulting between customer last a to declining XX.X% declines the compared IP million year-over-year in other XX.X% approximately from quarter, X.X% decrease our this

in sales camera example, normally below holiday non-GoPro so reality will customer virtual strong this remainder selling we on this year through see continuing far are of and the impact with combined previously expectations negatively significantly For drones decline based the sports in markets year. discussed This our the and feedback season.

changes, result million. non-GoPro we fiscal X% these of the being of minus now to As a non-GoPro the see XXXX as revenues $XXX compared revenues plus or

target increase a GoPro $XX into margins In gross our the remainder approximately to year in current XX% The revenues end proposed the to the our the range for the forecast current immaterial bring addition, the security The for year time. impact total this from in as expect and discussions the fiscal predictable not XX% not of we Dahua low the the be to considered year. year of revenue both the China for compared U.S. XXXX. as cameras on ban arising uncertainty from full of U.S. for has as revenues will House and Hikvision million percent at of of to trade is security our been Representatives

monitor domestic and are used but companies trade We continue or and their on the We Dahua markets. business both and domestic to sold semiconductor Chinese such as sourcing U.S. is Government from from into for may potential commercial cameras that suppliers. shifting security do Hikvision associated not result discussions impact do chips the export risks that to in more what supply Chinese have data

be XX% their compared XX.X% and XX% between customers of potential in the European supply prior in of use U.S. we the of margins the QX gross loss we and and XXXX chips security would U.S. expect As Government the year. to We estimate camera the offset if to be QX non-GAAP China manufacturers, products. to XX% some to able security from banned of major to QX

the an to a the China we revenues having in revenues and largest impact are drone increase security decline quarter. in As margins negative in forecasted, seeing professional as

joining and like million back expect to be quarter session. be to QX call I it to from million million for manage diluted with count coming thank We XX.X in fees will $XX.X today turn and everyone OpEx engineering chip estimated Operator? We second the between share the the our for to shares. to and I the increase would tape now increased out operator increases. our approximately QX headcount primarily Q&A non-GAAP $XX from

Operator

Instructions] Cowen. first Matt [Operator comes Our question with you. Ramsay Thank from

Your open. line is now

Matt Ramsay

was could bit you. stack with, any Fermi, those initial dealing and you Thank in you a impressive the customers quickly how Maybe commentary displays little points their very you address? Analyst after particular and I Alberto, much, pretty Day. afternoon. of autonomous good us of the they're demonstrations had guys some Les yourself is demonstrations understand customers, your current to that solutions might what get Analyst from Day, and feedback intention at that front about was, suppliers went camera for feedback those driving there pretty with give with Thank if pain of

Fermi Wang

Thank you.

feedback value So everybody think bring all we understands the think system perception I then we I of positive, first customer of different in is for think and some terms market. very - I our special

we example, third of is X, three talk For category Level one Level X, powerful X one one is ADAS, is customers, different, Level about Autonomous say the driving. let’s the second

provide silicon For they terms us as quality. to of Star SoC kind view become a ADAS as as challenging as Euro as CN demand high NCAP type perception well very of requirements in has well and Five as requirement and of really performance this for become really well performance customer, supplier solution requirement, as

market, So the not for automotive really way deliver performance, I computer to of definitely side that power we’re focus that consumption revenue, the also only computer on in gives and terms a was an – proved revenue lower on is it because feedback on the vision quality accuracy have solution to quality ADAS. that also we definitely we but processing side going video vision think grow from that to area fastest it which and the and our

So category. that is one

of development, VisiLab, we lane add is Level the on parking not lens long-term I their accuracy, perception we that to system also level Level but functions the and kind really viewed side continue is they right on will there. keeping a as terms there control, category customer our that's level assist, perception now. also go And only of of definitely have we the what current subsystem the assistance, which our autonomous cars think high can really improve cruise value processing third perception subsystem in on particularly augment those being quality, really system, like X, engage and image X, high really or then In there, and strength are but that to to

So really I at think this on source going Level now, to ADAS customer SoC is or where a really continue our right and feedback system where that X is are above or how single the and provide perception of for we looking where us customer to solutions. and is

Matt Ramsay

operating spending continuing there? can the environment. for made expect of quarters? potentially to it. George, you I helpful. with and you, ramp for comments an relations little second, Got the could over sort you little a U.S., talked have the questions guess revenue of even downward expenses that And few for security face China chipsets Do go you comments made be give look watch you bit full-year around just a maybe is the it a just is go more That you. challenging of next about commentary the where then quickly China both respect and about you for domestic couple how to exported can for Thank had should China we the to as decision and us OpEx to cameras, where one forecast color in

George Laplante

second the first. one answer will I

stock-based I excluding to OpEx million that’s year, compensation. non-GAAP, $XXX the On $XXX guidance million of had previous the given for

that right range hitting in now targeting or that still is successful of proper think we I a range, range. end probably the high being are

the space from Hikvision excluded a In have whether government situation, the and Europe function going there's House transition be is that then Bill to being security really passes the of, On the Senate judge to would China-based I the case, products it’s sales. number and in European-based we U.S. China U.S. one the Representatives to products. the around Dahua one, of I security and and potentially particularly a think there, with moving think from first couple parts

so business. issue participate I comes is of high think U.S. some is still very We When have we it impact to we is. going and a in China, would that retain China obviously basic outside I second on that. between the still the the difficult in that could market of security, share the what feel to project trade negotiations very

we something the escalates and U.S. resolve the that think China changes specific resolve think impact I what's than our could press there. or tariff month how sales there's what basis the next determine watch issue to the don't customers. take daily into in the issue this to and to over so other have a ZTE if place I to China on as anything

Matt Ramsay

Thank I you, guys. appreciate it.

Operator

Thank you.

Our comes next with Seymore Deutsche from Bank. Ross question

is open. line Your now

Ross Seymore

the you silicon and that's first more about X, chips, Fermi XX working first question us when that guys, occur? well, and agree the of to customers maybe Hi be if back is the customers chronology of on and the the specifically some when it's vehicles, that the CV to can a and on their would X, on into want revenue put it would new chip the an update got give you talked that sampling ramp you great

Fermi Wang

Right.

in think auto being that security about want should you let’s is both for the space right, on, first. talk to evaluated about space CVX the one focus revenue short-term camera and is we talk fact and if the So security potential, that's I camera

our because we really in which to consumption sampled -- the they is showed also already that how similar our like software our CVXX and similar security platform very that are leverage software type can and script, I of evaluate customer, development described is terms already they SXLM development of to impressive CVXX CN number, easily. – power we the performance In very they so software camera platform,

CVX I because CVXX a So we'll we functions, in. with of really of all than five four is times expect a have good there And we that CVXX, better the also chip are chance similar get think considering that, is design is almost all that we high-end CVXX. to performance but CN

terms security the based and aggressive really camera They Dahua and them to are have our a security CVX for providing from are roadmap camera. to coverage roadmap particularly trying low midstream, to the Hikvision, customer, and very for the to CV use.) we out CVXX I performance the based, in end, between high-end So look want we cost to push enough So design drivers I the get said Dahua Hikvision, we have to really in also to to internally Hikvision, working like introduce Dahua are and there desire Hikvision, CV high of we have to effective - three performance that a think and expect Dahua high but hard and are solution.

really and ISC is camera, inefficient a systems supplier. for West become claim are interesting just come security that out thing supplier to being is third they to silicon Huawei HiSilicon a The going and

certainly that view Hikvision, Dahua that basically a competitor. this as So can HiSilicon

So with I CVX promote continue really us CVXX our customers. helping to three key the and issues to through this think combination

So really side. the that on security is camera

revenue think although places. but I away, side, auto the On different the like we I years probably is multiple in said made still progress several

sample of can in system would key that address, work, of customer first say because I more CVXX meet the cannot the CVX I that also out timeframe. summer I to but to and that in then present will customer of our said we in some them solution CVXX the try and we CVX the inadequacy also all really specification and early past August and also we get definitely think July, current I move show our like very deployed feedback is Ambarella positive importantly

above all they HDK driving we we also will all for or in there buckets at we are are terms to and point. SoC for that multiple Level customers as perception are I with augment our as X serve CVXX their Once X, with of technology three customers customer as subsystem well ADAS autonomous and and discussion to computer and before, as approaching solution what us too. of for with engaging have business CVX sample as they are them said customers. Level with a can auto served of category key we a vision of this So as And served and CVX approaching

George Laplante

our auto to non-CV track surround the one space mirrors we’re with projects. view just still in add electronic Just thing, our and on

mirror on electronic revenue expand so of year that think through previously first business discussed. an to you As to target targets that hit one and BAIC we’re of I had deal half Tier-Xs we announced with our noticed we our continue in today China, next

Ross Seymore

or of the bunch forma rate, or minus in there say a the the things color expectations of on Perfect and us plus minus, that? side year, gross talked you you full-year you for could there? couple OpEx two the George, of side, And the quick rate given year quick a your back pro somewhat did and half any side just you similar the on question all then the you just plus the the in guide, the X% tax puts on prior clarifications, are flat moving rest want tax then margin Thanks. parts or non-GoPro plus follow-ups X% to give was revenue could what on it the are clarification for about the finally takes or and equation, minus provide of to or clarify of mix

George Laplante

flat start or will and million. that on minus $XXX it’s X% I the Okay with one plus

had be will down changed similar later between rate, the second lower very year, tax China the looking to bring is higher So why on in in somewhere for the margin range around all That's should to some the year. margin think XX. of impacts average of the somewhere of security I the the rate in XX% to the the what on my range at to end think we I past, half. the the still said The XX gross question, I mix tax XX% we're the

lose compared degradation the revenue, of will see as virtual security to in what the non-GoPro had we portion previously percent and reality some higher So, margin China a the we increases and margin cameras thought. as we

Ross Seymore

thank Perfect, you.

Operator

Thank you.

Our with next question Cassidy comes from Kevin Stifel.

Your line now is open.

Kevin Cassidy

Thanks getting looking that what's taking details on in more are from they're question. the the maybe the automotive key you've other are their features companies, for not just ADAS market give or my for a conversations had competitors? what especially for and the today device with any little maybe And they

Fermi Wang

ADAS power per or about the CPU multiple processing is well show in performance times talked function both example solution, watt. the performance that processing Well, CN to we as CN basically CN CVXX that I current quote stereo consumption with I compared monocular performance think processing PSP in of for of better first all have for as we we and terms

complete as processing that way. really well think strong the very people in good very CV we’re with good video on a I can as performance CN solution providing SoC quality the side that solution improve big really the

CVXX CVX performance, strength performance definitely that the our on by think is times. view something CVXX CN another and to price I top we as and five of CVX and that in a improved four So

customers help our So as video think powerful, in that power unique of and so offering that really function. ADAS all plus really lot I have think to people low solution our a view very consumption the a we combinations quality, the a current

I low of powerful think CV power with key. but is that performance I function think really I with CN very and think consumption base for majority to CN ADAS at moving solid,

Kevin Cassidy

mentioned Analyst had yet Day customers be Cam, revenue have from Okay. your or you'd potential Super And you the I had think during you selling customers? any the

Fermi Wang

Yes, out we of some units but going and starting. yes them some sold, just started obviously are development of units are shipping as that's so those being those

our version Cam a takes which and CVX have will We second the Super year us chip the performance. higher will in be incorporates which later

and I to revenue be Again going much, year. continue both camera development. that So product long be take the the I the would expect the range for short quite range to sold to think don't going the to move who those but few think customers the there's needle I through a systems is

Kevin Cassidy

indicator for it for right All perhaps? just future leading of investors interesting designs be could

Fermi Wang

that take under advisement. I'll Yes,

Kevin Cassidy

Thank you.

Operator

you. Thank

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

is Your line open. now

Quinn Bolton

outlook, it want prior change in relative the non-GoPro your was the in the annual are any just weak, continue wanted updated outlook on expectations? drones cameras be or certainly VR to George ask, either IP sounds automotive wearable So, down, and to security like - to non-wearable, the but just there

George Laplante

a feeling camera of sports do and VR it review non-GoPro to what ourselves significant and out our concluded is recently took upon a noticed that we orders, we so Not change VR market being half a there second section from last lot their we general bit of be is lot don't think there go new a driven year, there, will just and detailed customers I the started see expanding products. out pushing market which the quite that the down especially the probably in were and

forecasts very On auto. same side, in the security think similar came with the and I

we've on there's on the impact off of any type think make was, just of adjustment. that what around China. held still I what's between cannot miracle uncertainty and U.S. We the determination so going

Fermi Wang

is high introduced is instead more ASP and this of digit. thing we that current I security And ASP about revenue into expect comment Fermi, just needle product for security ASP if the really one teens high be digit will camera. the camera mid the we successfully Dahua, single think move mid-teen, that in Hikvision will the happened that significant single of to on

So being jump we're introduced. ASP seeing for significant CV a solution

Quinn Bolton

guess the is and denial China non-Chinese your share benefit? being cameras not Got slight if heavily it. on with could a the you in of buy And where compete outside purchasing follow-up I relative based enacted just of OEMs think that than sort China security I about your China actually doesn't Chinese the China, to a camera cameras, say that HiSilicon that your share OEMs based pretty government of within the end your potential share share U.S. you government up higher if is would in

George Laplante

share I It's upside North major could, I difficult potential do potentially be you’re so ASP in be think improvement. on think units, the we a an to there it America think say and customers I could potentially higher may and have Europe, there there. right, but

Quinn Bolton

the sounds in market? there we uncertainty that like it’s what just know it is obviously the some until enacts, But government just segment of

George Laplante

China there's the China uncertainty also think the I lot because customers of more there's to forcing the semiconductors. China potential use a sourced Yes,

there's that moving parts I rapidly so the many to and So project. and is extremely is view think impact so outcome are that things final changing now right difficult the

Quinn Bolton

performance on if last running own existing the where kind CVX whether with to well their the Great. of And ADAS you or the own market or you're longer you they're seeing the I'm deliver term, auto some CNNs then where perception of you're customers along CVXX to those at your suppliers? just and subsystems curious you question ADAS as kind looking of systems, improving just said of and look the hardware to are develop chips the CNNs as starting

Fermi Wang

about, going to we talk why port so in performance. is can network CVXX quickly our port public performance own cannot after CVXX and important is work different we customer available can platforms using we know think that over port that customer, that or CNN large OEMs that their I particularly to CVX confidence in to of network network. them you after prefer give them. to is it our we customer which fact, that the it we and deliver power they help already domain and is use majority newer consumption and In we That Tier-X CN – their the port got Tier-Xs job their it that number And talk is

think money and using want versus market definitely fact a in I reflect as differentiate, the China trend in newer most network use even can are think much majority, network new think of so I customers so definitely which trend. to spending I ours the people even on I surprising So develop in to they their think the investment is that's

Quinn Bolton

Okay, you thank you Fermi, George. thank

Operator

you. Thank

Our next question Capital. with ROTH comes from Suji Desilva

is line Your open. now

Suji Desilva

and George. the used blanket is IP or security imported a more of China base computer vision think know Fermi, upgrade lot local versus of is I any semiconductors but video you the around chips market Hi sort into semiconductors? the it chip the of is between hi versus do situation there selling specific China there to question, distinction uncertainty your

Fermi Wang

No I differentiation no think there's particular this problem. based between video only you're right, for CV chip or

supplier, what that's based quite just is the identify think or it differentiation where based supplier Chinese it's think I to hard I So American is.

Suji Desilva

or auto you thanks customer like I’m view market, what in in in penetrated Japan? how how of do Japan and auto an customers into you understand terms that then and pipeline look does are and surround the opportunities, the penetrated opportunity you much of incremental widely terms have further OEM for trying clarification other in to Okay,

Fermi Wang

at one take a let's time. So

Korea recall category. this we new we the I in that past we for both market talked Japan are about wins a doing very in and to and have in think China design and continue really well

that from we get and are weak confident revenue I continue from So upside order we to side perform that going more market. are think to that

E-Mirror believe in did just the of talk from we China past E-Mirror of other ramping like and using we're go in On this also OEM design this E-Mirror current early also this we and wins first our most that's kind and have seeing we Tier-X E-Mirror we we this the of going start Tier-X said year that use E-Mirror Japan, use in this probably that market side, our which terms to multiple about later aggressive point. And China, design the design AXAQ. the to we to OEMs at will with was that technology believe Korea U.S. design will

with key go they OEM just production in production, So is go think ready production give give AXAQ we to into but solution right now. but there's but detail, a mature to cannot indication enough when the as there, and pipeline you is you BAIC that I we

Suji Desilva

perhaps last George? question the then for And

George Laplante

say think on revenue was plan going in some first material year I Suji, of I to the hopefully next those in to product we’re have half Yes, still classes.

Suji Desilva

Thank and you of this is products it looks last if emerging, have is be the maybe a yes terms but if the that, seasonality deviating other this answer some you. categories pattern would as changing Okay, great. like question with you in from know of some the the headwinds seasonal is if of can mix that year for profile My helpful? George, I even second typical we're in difficult half of or

George Laplante

home like this flattening that probably it's because markets like sports it’s be will to impact cameras, are some from we still would I market. probably the security have virtual volume ramp, but going we in the will smaller we because market a a to think cameras think I year in a half. see will of second some reality not consumer see cameras going Yes, normally deviate and

Suji Desilva

guys. thanks Okay,

Operator

Thank you.

question next Stanley. Our Joe with from Morgan Moore comes

is line now open. Your

Joe Moore

that you headwinds up minus business the thank when understand tailwinds kind digits are you the the year down of first just or year, The what in flat kind single that being can Great, you level? back half, are high for high back of plus non-GoPro to you. of the the half of can the for get kind

George Laplante

changed I hasn’t security the area, that's it really up OEM Yes, see year, for business think as both the breakeven would we numbers in on also our the and automotive holding target. last get up the being the and year aftermarket to to

Joe Moore

within then I surveillance, about us give you from you know AI. some a as you've can that, kind China in Okay, bit processing been aware those of customers? some of both the an customers there little video you you those within and competitively talk Can efforts, of traditional the thank on just update there's how your been focus markets parts of custom as well sit

Fermi Wang

for obvious low Hikvision that's which Dahua own, only that's for chip. than the has to chip, because is HiSilicon become and doing really that lower the video very called will end low is chip, end company are they so the end Right, I affiliation say example its

solution lowest from But supplier. that to nonetheless customer think end still the I using that we is view big now. point Hikvision indication that for for solution it’s So the definitely ambition video silicon of become Chinese has

potential the of we So terms still partnership at time a solution. and the relationship have I terms of think in but us, not about Hikvision great same for with only video CV talking in

open what their very what supply and they are chip. trying our of in do to dialog what We can they have positioning is terms in

silicon be that or and become to Huawei trying just CVXX them. that because with for solution definitely the moving of their So I definitely main worry a At with us supplier. a in that because HiSilicon competitors that our end chance in that have their case think forward was to competing time, to one coming to we same prepare or is we low partners main some Hikvision CVX continue think is the partners

Joe Moore

you. thank Okay,

Operator

you. Thank

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

Your open. now line is

Charlie Anderson

talked legislation and my China OEM about XX X camera script market, you mentioned think in Yes, you about Day thanks that help Analyst X, the units your ADAS I Fermi being about for then in million maybe taking in questions. that million. could

legislation us could that you larger maybe can understand how much So that result in China, if passes market get help that? of potentially

Fermi Wang

progress we of or I government the trying can think recorded China involved mandate in any the to near directly and Right, the all going to involving for will you cases. arbitration lot a in so future. pass of insurers first imagine kind finalize legislation court are although costs And partners on not your the our the are excellent of us that but for legislation, that if result basically basically in legislation have with

market XX based will among - China the So every in all will and huge, Q current are temperature our basically the strengths which China. impact the push cars that AEC important and this I reasons quality, OEM on for million is to the all all the Silicon supplier I also quality, and in XX new need momentum whole we we to aftermarket think the legislation believe think that they China on it on basically means that into year the transitioning China I wide pass have OEM is for us are mean because range market demand proven

seeing and because there car more that the be record video continue about that that give to to to is have XX same to current time help China, compete or talking field accidents people what ADAS car the based service about us when but market get happened. also market will market and more At talking same that autonomous advantages. we want to a there the they exactly start and OES XX chance at and happen definitely our to start talking just I many So want the million which people to in autonomous more a units would to about people more are to in good mention us we know is trend time, start happening with there need the

legislation putting box implementation start into black more definitely trend we’re different is about country in will type So approach people the I box a is car. talking autonomous being think more consider maybe black will that discussed even seeing and and

us our something think So that increase tenant in to that trend help watching I hopefully will [ph] is total the we’re future. definitely available

Charlie Anderson

Great, that sounds good.

Fermi how you that So to what you second goals customers success evaluation wondering in as lot me with an year up, are this this good as terms question endeavor, side I’m is customer of like a get of from hits accomplish is, sounds defining concerned? you just progress of what you year in response. any lot are far auto want it for

Fermi Wang

win terms we in really can can milestone customer announced the think of auto looking fact, we in right, So secure, important there the at with some side are look I having set we are several we up at internal we us. together design

of internally Level in We wins ADAS Level increase as terms doing to design some the we get win are at X, milestones the recorders kinds are cars. automotive looking are type and the evaluation market. solutions at to of E-Mirror and well trying of X design are things in Those continue that in also in we looking how major

Charlie Anderson

it Thanks that’s Okay, from me. much.

Operator

Thank you.

Our Ross next is Deutsche Seymore question from with Bank.

line Your now is open.

Ross Seymore

does parse when you followup. too out, for thanks letting you business pattern market it places just automotive question IP to you way back that forward, guys, of I kind will but of the think about out up more a not shaping the quarter seasonal probably when really want to about given just did? So in And the just third mentioned quarter in much have mid but me go seasonality you get and the half as talking probably near in has finer go design the to second seasonality sort sneak wins it Hi George, looks and down, important to as flattening before talked of of it as obviously we flat, in point? equally guys in up any as as like past, first more guidance your as go kind the $XXX still to then we former range your the not second get of half the talked continuation color you security be the as you the then year door of term? somewhere the are have the out non-GoPro million in the seasonality the in year doesn’t to like much implied a the and

George Laplante

the see would the think QX seen now answer, mean function QX, be probably that the think didn’t I part than lower the business. I less you right your consumer just of what is we’ve question QX we felt the on I the that first of yes, portion I flat past, be increase of will - in just in and

used think come part normally that heavy continue. concentration higher to than going part impact has as the products half. down I security, more security OEMs we with been to in forward of will to first that probably would see less Going continue is and step-up I business. is an that and part to get auto seasonality we into security from some and be of the is becomes That of But years. consumer second expect seasonality think to a of half consumer previous bigger the the There I professional our that

Ross Seymore

thank Perfect, you.

Operator

remarks. turn further call questions further any to for showing would back to any not Fermi now Wang I’m at you. time. Thank over this the I Dr. like

Fermi Wang

dedication a like good-bye. employees thank for our everyone to their you Yes, continued work. very for and today I would and all joining hard us to and thanks Thank special

Operator

Ladies conference. all a Everyone great This have in today’s may you gentlemen, participating disconnect. program does today’s day. for thank and conclude you and

Ambarella (AMBA) 5 Jun 182019 Q1 Earnings call transcript