AMBA - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen. And welcome to the Ambarella Second Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct the question-and-answer session and instructions will follow at that time [Operator Instructions].

As a reminder, this call is being recorded.

to host like Mr. today's now would introduce for your conference, I Gerhardy, and Development of Relations. Louis Corporate Investor Head

You may begin.

Louis Gerhardy

financial Thank you, our conference XXXX joining you thank call. results Skylar. Good second afternoon. quarter And for fiscal

results, Fermi Dr. The of you second CFO. of with be will regarding The purpose speakers Wang, regarding and among results your XXXX. Casey fiscal financial primary prospects, questions our to discussion statements contain forward-looking CEO other is call the quarter the and to our President growth today today's responses will solutions information Eichler, projected demand financial market our and provide and for things. the Our for

are differ these be forward-looking prove statements Should to to uncertainties materially assumptions. statements. our our and any risks results actual from assumptions These incorrect, of these could risks, materialize, subject uncertainties or or should

update are fully first we June potential information XX-K XXXX including statements. for the XXXX. the these on These obligation risks, factors other file financial risk are no that our We and as documents on that as report in on annual affect the results XX-Q under on well to filed with the of quarter and assumptions, year XXXX fiscal ending Form XXXX January uncertainties filed ending March fiscal described XX, the could January SEC, for the XX, form XXXX X, more XX,

a filings, Web relations second our of investor site. and SEC to quarter call Access replay results, can press fiscal results our found historical today's XXXX of portion on be release,

turn Dr. I Fermi the will Wang. to over now call

Dr. Fermi Wang

Thanks, Louis aAnd everyone. good afternoon

to geopolitical update factors I results, our impact will I Before an provide on that business. continue our may discuss

semiconductor continue supply potentially face U.S. market market, the limit hire between facing share shifts government the are the largest to several Huawei of customers in HiSilicon, and risk in At camera is our could us same old our a shipments challenges the to customers list, chain and competitor and maybe that share. entity gain the or our to continue our time, of security market unit added which restrict be China that to tariffs, them. helping disruptive New issues

As for range multiple are and a outcomes there of can factors, negative, that us. wide yield you see, positive

progress to continue company. to company video strategy strong an demonstrate the vision a toward AI transform our We processing from and to computer pure

confidence core During QX, CV revenue. year generated has pre-production evaluation Max the and/or up boards. CV portfolio, market In processing parts, the activity our strong. customers our engineering video for three than ordering kits in more XXXX development remains including one production fiscal for automotive CV our geopolitical customers, design by QX, outlook XX we uncertainty. in Driven generated demand despite increased revenue

$XX.X revenue from revenue range, Our prior $XX.X in over XX% was the our strong in above million QX fiscal increased million year our outlook of are and guidance core end Three quarter. factors high the the XXXX business. the driving

demand earnings camera noted largest customer underlying as in improved, recent has China First, their in our this customer reports. at by security

third, by camera there's for in Second, global this is share inventory solid And gains. restocking being some outlook market fortified security China. demand our

I in shipments target orders increasing the year. the makers second progress the of will seen talk markets security camera We've our our with about security. for in now half professional starting

large We're exported established in to of players. solutions CV adoption the as gain for customer continuing We with as models private both U.S. the the with as as camera are and of professional emerging also security Chinese to market well camera widespread new Europe players, seeing well at customer be group outside shares market China, the to of our

in video Avigilon's solutions, HXA will The be coming Motorola AI line for new the Avigilon its offer line releasing a video to accuracy. analytics image new chip's Avigilon's generation that video camera objects weeks. with lays and leverages the processor, We're extremely next of innovation camera the to and neural cameras in foundation the excited high feature AI help Based recognize to different era powered Ambarella's generation events of CVflow processing company intelligent AI new that capabilities and new classify CVXX, announce network on security. solution based the next video

in engineering of honored recognized the German their July, Ambarella's countries. technology a industry in IP manufacturing costs and And different in its services, suppliers, cameras Bosch quality, Bosch year, SoC top Ambarella over This years. and giant, an The has Award supply prestigious in products with logistics. its representing and and XX,XXX Supplier and performance of of XX award building energy awarded been the for for the supply of Bosch, notably innovation, area Global of XX,XXX across array Bosch Ambarella XX its suppliers for business.

factors. During mega Korean camera the security Hanwha X leading the released of models camera from X and new supplier quarter, resolution ranging form series its Techwin with and in-box and Q multi-PCB minitone mega

our new on will SoC they wins in models SoCs, SXL Hanwha integrated new they CVflow Ambarella's customer. that introduce based with first camera capabilities. its stated AI All are Ambarella's has of HEVC models as as use professional

At to sacrificing usage effective new The hybrid minimize XK cloud or everywhere. and performance. and the flexibility And its end-to-end with detect London based add the coverage cameras audio supports quality stage in in in design analytics camera introduced can fast on to CVflow CVXX surveillance architecture the camera IFSEC, algorithms. video Ambarella's August, usability earlier Vaion U.S. ease installation in international based solutions' threats solutions Ambarella's without XK by video and vcam its security for professional embedded based IP maker, investigations. Vaion’s give panoramic bandwidth powered their introduced CMXX SoCs, AI customer June, of show real dome perform held in the and Verkada

objects people, the demand home camera capable also for such increasingly notify and revenue require this identifying while with the the that consumer demand which In is we dedicated AI in that as And happening. customers increasing cameras. CV our greater cameras intelligence monitoring smart solutions previously motion only mentioned, future, level is be market, of classifying we camera see with event that will of the second intelligence hardware in in user detection wave as well something interesting as

We cameras part with ecosystem see being devices the integration other a also as in of that broader similar support home. IoT offered

wide-angle the During indoor VXXX video, camera Samsung intelligent based outdoor and thermostat alarm.com Company, Ambarella's And the VXXX on integrates its voice the camera SmartThings LifeShield based quarter, Ambarella's SoC, Doorbell, lightings connectivity, it control based HXLM which SoC, to video $XX HD and Based introduced clearly HD Ambarella's its Wi-Fi full operation, it a its Video full AT&T SXL on systems. Alexa, command. SoC, alarm offers cameras audio. an for LifeShield, voice night Amazon on HDR [indiscernible] and with introduced offers it's U.S. via support operating camera processing vision. for and SXL SmartThings adjust managing security HD the two-way allowing introduced systems, an and seamlessly

opportunity new cameras seeing into smart also locks. are We for integrated being

During Based clip EZVIZ, and intruders wide-angle Ambarella's this introduced video XXXp a vision the on HXLM to camera camera a with night quarter, lock can SoCs, consumer Hikvision's record or division, the to homeowner. lurking are send capabilities. snapshot smart-lock when and take its DLXXVS building detect

market the cameras. SoCs into camera market, our of our continue both make we progress consumer next security AI share take excellent to IP sales as a generation and and for CVflow we summary markets professional as expanding in are growing In are designing

cameras mirrors. In leading announced rear system update to three automotive camera Hyundai X widefield vehicles market by safety The enables the now achieve that you the developed the fuel channels. automotive will using by view while of on enhance driver view a all monitor SoC of provides it greater the I spots. July, Korean reducing video AXAQ replace the track tier side system blind progress. monitors mirrors, of for economy processing and the vehicle's Ambarella's and our eliminating to image side had Mobis Automotive cameras a

vision of analytics applications, front such computer system also lack solution driver the CVflow fleet interest and seeing provide such providers spot AI buses. cloud. typically commercial active Ambarella's as can solutions companies run deploy market ADAS, based and only camera that a chips, increasing features in vehicles. in for the can solution now for management We're With commercial trucks detection intelligent portfolio SoC from blind AI and in as vehicles, Existing our monitoring

has end of the chosen with multiple and one by mass in QX, providers production and year. revenue entering been USA production Asia CVflow by in be the generating solution others Our expect to

continue as win recorder to Asian new this pre-installed We a in feature designs car automotive as increasingly car offer OEMs option. models

models recorder GR Chinese Emgrand introduced SoCs. and HD Ambrella's car AXX based maker its featuring automotive GS quarter, the full During car Geely new on

AXXA. car, VVX AXXA the on Wall camera a and camera on and WEY the based our recorder Great with ORARX options new automotive SoC, HXXA Motors featuring SUV its and electric Ambrella's based three Additionally, DVR one introduced

first Thinkware Automotive category, the HD camera its Ambrella's channel based on dash aftermarket In MEGA Korean four supplier QXD recorder car announced full AXAQ recorder in Korea. SoC,

Plus dash model HD full recording, on vision. its X-channel camera and introduced AXX front connectivity introduced and on rear Ambrella's and Additionally, auto featuring HD GXXXXX Thinkware based Fine SoC. Korea, GXXXX AXX Also night in based SoC, its Quad Digital, VXXX Ambrella's smartphone

In our in devices in or video endpoint to the realize summary, Big AI camera. HD we're vision just starting to enable analytics Data

to expect out, addressable play multibillion market. in this see As increases dollar we our

CV able experienced our solution processors deep solutions, our and This recently base. migrate also with now that CV customer video processor. is our network to with processing integrates is evident efficiently Our to customers video state-of-the-art attracting our our are CV expanding who and neural are AI heritage deployed portfolio customers new our

ways today on in video thanks earning strong global schedule improvements and including we're and pace for our a There our realize are Ambarella's to employees, customers, distractions execution. vendors is team are We many models. on of with support. the and And QX articulated forecast of all call, XXX revenue keeping market our the also see in CV thankful of last shareholders pleased core stakeholders, up to our I'm the to processing our of three

financial Now, the to Casey quarter third call I for turn over XXXX. year the details quarter second guidance and for fiscal our of will

Casey Eichler

provide the the good for quarter of year. XXXX, our XXXX, and you, well highlights I'll Thank quarter third Today, financial financial as as afternoon outlook everyone. second Fermi, fiscal fiscal of full for review and a

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

reporting, we adjusted stock-based compensation the taxes. for eliminated Non-GAAP impact For expense of have

$XX relatively of represent was $XX.X when sequential In the results security automotive guidance the of from million decrease flat quarter revenue of to of exceeded a increase prior revenue other on to high-end revenue QX and year. of was Our our of an These QX, increased, a same QX compared down. and million. XX% $XX the XX% million basis,

million compared preceding guidance of our XX.X% of XX%. the for Non-GAAP QX quarter, below first previous fiscal margin was operating midpoint and $XX.X was was grants year of compared $XX.X million million million million the XX% 'XX. for of fiscal for $XX.X was the half for gross expense quarter. to guidance to to and to $X.X in This XX.X% second due year slightly quarter to $XX above range R&D our the the of Non-GAAP 'XX

in on guidance will was Other We interest including our in primarily be the on basis million expense benefit and future a and securities. represented quarters. this marketable income our operating quarterly cash $X.X income

with the shares dedicated to second or for rate software our Total second Approximately net of based GAAP shares engineering, was million quarter are of XX% In million in quarter. located of non-GAAP share total about per $XXX,XXX XX.X on prior earnings or non-GAAP as the quarter, in the our tax were The XXX in employees share million share effective $X.XX per most compared in to end headcount the whom engineers. is XX.X income of Asia. second at XX% per $X.XX first headcount quarter the was the quarter. to QX compared was X.X%. $X.X the

QX, partner or first $X.X the of XX fulfillment operating end were We June repurchase in two to customers customers, cash for had at QX. million, XX% in XX, of our This from program Chicony, QX. revenue second from $XXX million at sales the revenue previous receivable Days the accounts inventory did the or compares XX million the end quarter. In million. $XXX the million of Total compared XX%. repurchase of up plus QX days to a XXXX. and we securities days million to the the $XX.X marketable the not ODM, generated was sales We in $XX flow Cash in $XX.X stock end authorized the prior million, $XX.X Taiwanese outstanding and Microelectronics, inventory end during were QX who at accounts of declined $XX.X XX days at of outstanding. of positive through under quarter. Net came quarter of the receivable Taiwan million days of at in quarter. XX manufactures came WT of at XX% in multiple at end quarter

third XXXX. I will the discuss for now fiscal of the quarter outlook

For revenue QX current fiscal guidance XXXX, we are consensus. street the raising above our

for be by total expect automotive in and sequentially. million quarter other $XX the all the We anticipate We million range. $XX segments revenue to security third led increase but to including to market

continue of over a decline the remain as consumer comprise to primarily We of expect volatile, revenues products and revenue to other next three years. to percentage two electronics

Although, forecasting difficult year experiencing to in with half fourth quarter revenue our second of is to normal we the the environment, half revenue when the seasonal increase continue current decline. in sequential the expect the compared to first

are and factors generating our impacting outlook. environment gross and supply economic political of margin our customer Three and global results is our chain. with a uncertainty key amount customer outlook significant The our

security some restocking their the Combined market. number margin. demand our as customers, purchasing professional pressure globally, faster this business two power are strong camera experiencing Chinese and puts growing with on is number globally. gross suppliers And our the at they Our underlying than with one

may and revenue factors, support supply challenges geopolitical accelerate we orders increased we costs outlook to our as chain experience demanded also To increased suppliers. our from

Based margin may tariffs to estimate on In their to second products margin incorporating addition, and XX% XX% higher in our rising ability on be customers' sell QX greater quarter. compared devices. XX% have a gross our non-GAAP we factors, the between these impact to

$XX and be OpEx non-GAAP expect between million the quarter $XX million. We to third in

to operating continue leverage to increases. revenue provide expect We positive as

Forum for Ambarella Dougherty in in level for shares. will We enables XXth diluted be Please call Institutional rate CLSA tax tax be events. QX increased The jurisdictions Thank on details contact utilized. rate XXth these XX% Company and Kong. tax be Hong more to us million our in you XX% on Conference & normalize QX, to on the the in September Annual in in XX.X of Investor and estimate should to losses approximately modeled Xth count X.X% The from QX versus started participating QX. our Investor Minneapolis for Louis today. be as at September certain share on has joining profitability our QX levels

And that, the with turn to over the operator for I'll call questions.

Operator

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

Joe Moore

accumulation it the sense that coming you you much again. this about the could you how that's talk quarter how if Chinese I wonder inventory quarter? last And and to line to happen? Any long referenced top for contributing expect continue to

Dr. Fermi Wang

a why like customers right inventory two. us combination think QX. that we strong we accumulating Chinese seen But provided to try that to said, And have the do Chinese well continue I the stronger. our also this customers revenue -- Well, business for that feel get as between we Casey point, businesses getting reflects these hard the of definitely a they at believe to with business might their they because and I a on that is And entity build our of list will have onto it's for demand, forecast comfortable. believe as build to will comfortable. now till two are to customer uncertainty they higher continue our forecast. inventory QX level upside their however, level inventory, But differentiate ongoing also our until that's

Joe Moore

for see seems you how your traction in it us real material at CV space. -- in qualitative the contribution become much business kind then sense announcements portfolio? you starting And second if surveillance give us visual kind like Can just, year? just a CV for others, the with announceable within to the you and when you're the as of and a to half, starting sense give the ramps Can the professional that next look of

Dr. Fermi Wang

of last expect us. that CV design said nine with we time, customers I we top professional are -- Like that said doing XX the

professional year, the that come Now, of think end will But get as will And out we revenue stage year. year, to margin get gross security at well I so from us contribution as camera into do next five believing this on we material share. particularly help are of see side. definitely that revenue production the better this the mass coming them market

Operator

with comes Ramsey question Cowen. next from Our Matt

is open. line Your now

Matt Ramsey

I computer design for But of a that talk call how about do Thank CV pipeline you'd you. and a be bit the little not. guess, can. and about could feel the that terms China you what in some have in vision of you Maybe number program. you outside? in percentage the different chime might in obviously Fermi, are engagements on of talked for where versus wins guys Obviously, are many China, just you Casey,

Dr. Fermi Wang

First different from markets is answer of the really to all, markets.

So of the repeat me thing some let we said.

also in moment security for half us. we're the is I seeing. But In look, say, three is you evaluation QX. the are But CV security we the trying customers there are are find said people board and outside continue think and QX revenue in time is say as auto, say, the that all at that's with, customers CV all, one customer of or a First and camera, production on automotive. one have two them quarter, would us design I the camera, the majority be that split or have in almost as I in to to will to this I China China. thing XX And if half. of I about CV But are revenue with that definitely this China, pre-production talked the outside activities chip we strong well inside

Matt Ramsey

for maybe revenue the you automotive. across, about script, that ramping Maybe might Thank see as and talk driving specifically e-mirrors be cameras had different in third the that think, for guess could a that follow-up and prepared bit little going you you. into mentioned question are I which for third would automotive, by that guidance a the quarter? quarter I Casey, types the your led you of programs split be more me,

Casey Eichler

But being let Well, product bit. video-based or our space products. on revenue driven side, vision-based our little the today the is that the about Fermi a talk I'll clearly, automotive in by

about talk we mass story, CVs consumer the the longer ways and why off is about. of -- the aftermarket the that's based, or and to and adopted in talked about that's in were we the we the initially, production ability the But we two first security led revenue home being in in we I get recorders the vision think that by term it's as a and As OEM talked surveillance about. automotive, professional kind video getting of -- more now and then more talked

the that auto again so leading recorder talked across announced monitor, monitor in seeing cabin the certainly and during the type about is Fermi's is announcements the space of driver the we And traction that just we space, the But fleet the quarter. that are opportunities revenue business. e-mirror in

more driven So the today, think, based. by is broad I recorders. it it video primarily will become But still

Dr. Fermi Wang

see OEMs revenue. basically can system with with business, you that wins and CV mentioned announcement, recorders. for product few with we that have that's of driver the we fleet Japanese -- also management monitor Chinese design for a the and aftermarket the mass in As production several mentioned our But we

that we've doing So also us. I Korean e-mirror that with announced think company

start about OEM from QX other recorders revenue but recorder the OEM So we come business. although, from also coming the the portions talking especially majority revenue, of of revenue,

Matt Ramsey

more guys, bit you I normal remind could fiscal sneak couple seasonality, guess. in Casey, the what a Maybe consider us abnormal, mentioned being you QX just for guys could would have you of been one Thanks. I if And years last QX? normal

Casey Eichler

that say of if think period you XX% last in usually longer And years, to just down would time, few and between the the is somewhere over you a see QX years. look that's I five off double-digits, three low Yes, XX%. back of based

of sometimes of activity that an surprised not So QX. But in activity my not you I as be estimate by other case. you're always to But would the would unreasonable expect well. it's type point we'd QX mind for see similar as our out, seem that in

Operator

Lynch. next with comes Adam Bank from Merrill Our Gonzalez of question America

Your is now open. line

Adam Gonzalez

restocking mentioned? outlined that better quantitative much year. outlook Fermi, from what, at you hard on for to three just is demand factors gains. it factor, help how is is QX remarks, decipher, is customers, the your driving your market or it least factor from inventory market the you it understand, your and know, a share underlying for versus prepared unfettered biggest restocking? could inventory you this are I share it's perspective, security you just qualitatively, us But Is from gain which camera the that

Dr. Fermi Wang

on is a improved our our would But term result, to hard for And be to by I impact long-term take but put into destocking. however, from share and the if into time inventory it's probably in customer longer although, like shorter the share more growth. best our but for will the to than the say us. more by more our the I it's the future, a that the Well, while has us help go really to switching And production those revenue them number outlook think that. gain revenue you several factors competitive especially will solutions it to in quantity accumulatively to our main estimate have also I -- think prioritize gain one followed really

Adam Gonzalez

business. know And really now think driven then that But and to in I kind less of the the part consumer that's exposure, there're for outsized mentioned just past, meaningful you XX%. that's on your QX, seasonality by down been I XX% of

deep what's in that, wondering driving Just decline QX specifically? sequential

Dr. Fermi Wang

that'll Well, And first consumer year-to-year, the usually, some business, security also camera that's always experience. that's that weakness, all thing. professional as of show camera is security still consumer our one a

this us we it's so, seasonality still year. that And I for the think to typical expect

Adam Gonzalez

more quite just R&D can was QX. saw I that a sneak down in bit I if in, And one

moving expect forward? that, Just should caused what that wondering and we how to

Casey Eichler

Yes.

quarter R&D I So totaled an that current $X.X that about mentioned, in the was accumulation. as grant million had we

through we took and a half started the and to of and getting year As we to did you remember, or benefit forward. similar of we credit, grants 'XX at and as the fiscal year, went 'XX calculated to look we 'XX last look first the were XXXX that able of for end 'XX, to the of our -- ability starting 'XX, off utilize our based are book the grants and

ability on basis. have how think that to I to quarterly record we now able going a see So to out, we'll an play and that's be

So for the a you the I won't would up anything continually gave if will, into do move catch is, incorporates quarters. we and QX guidance that I'll of forward come, But bit a as this future that you see that.

And so that's back the why is normal going the R&D OpEx levels. is to or back going

Operator

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

Unidentified Analyst

Michelle on This Thanks Quinn. taking question. the is for for

is So this XXXX, I largest in -- guys I year. guess first, and they targeting camera there, and X market million on XXXX. believe said Hikvision professional units the develop and should market they player you million were AI-based have before the calendar X the

Any I or difference be So will see still get hearing of a there? their anything still kind that that is good? trying just to unit was Are to guys you is in idea expectation? line perspective with, that

Dr. Fermi Wang

You're Hikvision, forecast for the talking about AI-based camera, right? the

Unidentified Analyst

yes. Exactly,

Dr. Fermi Wang

Yes.

so So year we I history, that, talk last think was numbers. when X units million the to

think that's I done. So

camera I they they probably a are haven't year contract but But for this definitely is more. us to of get maybe think a significant maybe the that, last I I a growth less, Hikvision. update think from little the significant through looking still They growth. AI little that level, on new to in given terms year think at

Unidentified Analyst

XXXX they target any well, still sort of for right? given as And haven't

Dr. Fermi Wang

any seen haven't yet. We

Unidentified Analyst

to Chinese are design on trade one changes another Chinese it that with market. you OEMs just due increasingly maybe activity tensions, then any due cautious OEMs any automotive the the guys signs automotive trade other designing there to the Have relations? becoming China in And done or

Dr. Fermi Wang

view, or a of I point far. external that from -- don't we resistance any trade haven't solution we think, now, they we until I on they using any think so don't -- I care point customer from got don't emphasize seen think OEM/OCM feedback China. in purely automotive Just have our that

In from relatively biggest automotive the compared that by potentially was customers, year data. think the resistance end of especially impact market, is weak -- majority this our I on be Chinese the two historic put security come in mentioned really the receivers. China being think I to the the to growth the general,

that to is direction, Chinese people could CV a function, many to so that And differentiation one to direction really are -- figure the add think trying OEMs how are And new that CV I features focusing out lot car. a of be on. move to the

something And that's I over a don't trade. because of see. we definitely said, So like there I see the concern any has

Unidentified Analyst

added the And guys additional maybe one last threats the one. or Have Hikvision have you of any Dahua, in that's enforcing indication given you seen -- being to list...

Dr. Fermi Wang

-- No, than there's no any talked have we about. -- other we we what don't see other that enforcement

in and really But to the continue is So is this customer from us. the the pressure our pull I is that why there, they the same thing. worse still to about that's products think want make sure they for prepare

Operator

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

open. now is line Your

Charlie Anderson

the wanted are the speak revenue those ones some terms What I've customers So a point. from could maybe customers. promising you you're just at you of up. underlying XX to in And this wonder applications follow I that seeing or into of if market end volume? the look pre-production so of got to more are then some

Dr. Fermi Wang

fall I that Yes, XX waves into we last think the CV customers basically talked about three of time. revenue

wave security. professional first The is

professional -- brand although on and camera. there, CV can as almost security You differentiation that for using security brands imagine several the focused company major other camera all it plus start-up the a XX, professional covers out that,

And XX there the category. big a security of and camera also that demands, in consumer some starting chunk are that's are we So companies people. a few

DMS, using of it's follow for monitoring, a e-mirror they're spot but your category. for heavy company using there's into And CV blind detection. they're There are amount some multi then separate ADAS, some they're huge auto the for some side, using purely some different for

quite different category automotive you category, into you several there's in see customers a them in each few divide although So if that.

of amount security is that equally and if the So XX companies, auto would split. I camera probably say

Charlie Anderson

Aglaia terms HELLA that just point, if kind my start some Are where at partnership? I it's And to this see me, in partnership, maybe an when at for Thanks. that for us actively RFPs? volume of follow-up timeline you wonder, responding to could associated phase the on might you give in we of roughly then of update and with

Dr. Fermi Wang

their HELLA more our for network we onto the to work on continue porting So platform. AI Aglaia, neural of together

milestone this major chip. for is, the because think ASO collaboration require ADAS I

CVXX that chip, chip believe that ready preparing current preparation comes or our out. we software for software on that when really our So it's ASO CVXAQ

And OEMs that out, OEM with to to should to on chip happen expect So AQ we development. into and the out run as our we get together, software ready so you the chip, algorithm chip the we I chip for with assemble as final come can ASO software come ASO work have production just that on ASO continue the continue -- think, will soon max through to solution. assemble to our

Operator

[Operator Instructions] ROTH Our with next Capital. Suji Desilva from question comes

Your line now open. is

Suji Desilva

Just restocking fiscal whether just on quarter, of to fiscal no the third the with Are stronger understand and seasonal the And inventory or clear, second to guidance it relative quarter? that be you continuing guided fiscal for Casey, to I quarter. that inventory restocking, longer timeframe? in comprehending just along want the the impact was fourth

Casey Eichler

know think referenced, to exactly a I us Well, as have for visibility it's good into Fermi that. or hard

inventory as that earlier question. to Where with that in as order affected is said definitely few question we I perfect going priorities restock well. and well. It some think they quarters affect could I these. the combination both. no the reasons of there's next quarter Dahua the think over continue will this that some discussed Hikvision in what don't it's build that the QX, be the But we earlier. would the about really all strength there quarter a that activity and to in agree talked seeing the that Fermi I going of next visibility are and overall, into market and QX you're they're outside of see have But growth for of

market market and overall to surveillance I home going think professional well as good. the are monitoring pretty the as

with so, coming particular we in pretty some of products good the and see growth should online. CV And

systems. as X ASP times to you, the they vision-only Just have remind the comparable do

restocking But the story of past tension with that next we we aspects the part going I really as out or the that CV get particular think we dynamic to seasonal primarily current a as consumer I products in talked about year side. wave is in come the to in the the so, global into think the see. that in based is not that second revenue the building, really be starts but vision in QX products only the And

Suji Desilva

attached could you in What's Hikvision on the about might you you of rate, the maybe 'XX security calendar professional have in the range AI in all or maybe to specific given then know expecting the cameras, of programs you 'XX, interest. rates attach in I special what maybe for cameras market, more what a is couldn't professional talk think timeframe? And AI But and 'XX. security broadly, Fermi, was potentially give the calendar

Dr. Fermi Wang

customer building I customer customers. based our point, more products. CV can Suji, forward. products, year, it on I think, are expect depends think it's this our hard predict based say the moving for more But thing strategy resource at pricing SKUs more the to AI I one I building marketing And me current seeing we really will than probably is video next spending SKUs, and for because the CV and

It up camera data graph reading So is it. from going be see, to first a could I was no see the customer. for up going do support more probably good we're is But revenue year that attach ramping believe the rate analytics. again, believe I to next have than a year there's But us. that to we're very material security really ramp year next to

SujiDesilva

Fermi now CV that's saying? But will what coming majority you're next have the making is out incorporated, SKUs the you're year, the new that point

Dr. Fermi Wang

what I'm saying, That's yes.

Operator

from comes Northland. Richard with Gus question next Our

Your now is line open.

Gus Richard

think implementing is China XXX about and the the The security social China about much market of consumption by from up Basically, XXX a coming terms scoring. numbers overall end How of camera how growing? demand I is XXXX, this from in is follow-up. professional internal see fast you in And of got I 'XX. million cameras million

Dr. Fermi Wang

Dahua on -- their strong is demands the Well, products. totally I there think of first all, Hikvision for on

maybe to points, that their is And probably security I is continues Hikvision think that the in the camera single-digit I for say, I market. mainly think this our probably than grow, ship export are to we Hik market high would Dahua used business. Dahua products higher

we're camera. So in I to continuing a seeing this professional security trend is think

Gus Richard

a So primarily? the function gains of strong results are share market

Dr. Fermi Wang

see we continue yes. And gains, to share Market particularly China, that also are outside share gains. the market

Gus Richard

terms And foundry, telling capacity, their terms they you to photoresists are banned. manufacturing at and availability in the of then in be what forward? conversations In moving are Samsung, your EUV Samsung, looks it of going like with only

Dr. Fermi Wang

and in our The still XX are products of nanometers. XX majority moving to XX,

And this our talk So product in they basically we EUV that not by will guarantee we yet. tensions. Korean are Japan a could when Samsung, give to impacted line be not current

Operator

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

open. now is line Your

Richard Shannon

that? Maybe to on if them top year. engaged think CV market, shipping wants maybe any kind year, talk about any at ship or wondering of there's about public can part I And nine security five profile, multi out you that's out the But this you're with then four of of any to XX with you with remaining next players of seeing new competitive entrants a on expecting you if any expect talked the said point still of you're you bigger be the visibility there? there. Maybe about question few competition, some whether discussion other OEM's the

Dr. Fermi Wang

next next in of probably be I production and still year. made, sometime production sometime balance of we the and will for progress four that -- believe we that So the our definitely year, that design will go visibility, of the win, current all that's we into CV confident be all rest

remains that think, trying competition CV Intel while think I the terms the all that consumer continue camera biggest moving the security But to among to professional -- we security will AI competitor, using for the believe Qualcomm also our Movidius, be side, on to really competitor. I try this I was forward. there the to In market, that HiSilicon be our be to or part but biggest HiSilicon But come and the of early processors. of

Richard Shannon

quick this, solution to a in Or be the mix particular XXs on follow-up just another one top more than you be And to customer, you be expect of solution? Fermi, one CV specific? think it'll do do especially especially using or any a supplier, those

Dr. Fermi Wang

of suppliers. all think But Yes. they're at win try I design for this will far, we using so have have but, have for the CV they and have use a have few example, solutions, some using to one that so think or announced one internal own for -- point, of sooner that our dual own they source, our their I I believe their to will probably a solution. us. And chips are customers -- later

out compete we position. I end good think So a Also, very eventually, good on I people I AI-based end, are position And camera. security but that's think possibility. us to low side think find for on the right in U.S. outside this the how in the now, we're relatively with high will

Operator

At this no like for I'd back Mr. Wang turn over remarks. to time, showing the to further call I'm questions. closing

Dr. Fermi Wang

Thank guys will And -- you to you for thank talk our joining to and you call you time. earning you I especially next of thank goodbye. us And today. all

Operator

great for a your the you day. participation may Ladies in This have and conclude gentlemen, you does today's now conference. disconnect. program, Everyone thank

Ambarella (AMBA) 29 Aug 192020 Q2 Earnings call transcript