AMBA - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Ambarella's Q3 Fiscal Year 2020 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Louis Gerhardy, Corporate Development. Thank you. Please go ahead, sir.

Louis Gerhardy

Gigi. you, Thank thank XXXX and joining third our Good results you conference fiscal financial call. quarter afternoon for

Our speakers will and be Dr. Fermi Wang, CFO. Casey President, Eichler, and CEO;

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

We are these under update to no statements. obligation

well filed These SEC, fiscal XX-K on XXXX, are financial other March the for XX, as XXXX information risks, on XXXX, can our found fully SEC our results, of website. XX, year XX, and replay filed we ending today's more and with June the on a of for fiscal assumptions, January our described on September call documents portion and XXXX. be press risk affect on XXXX, XXXX X, results, ending third to Relations historical XXXX release, Form X, that fiscal Access the annual the report filed quarter uncertainties, XX-Qs results Form could as XXXX filings Investor on factors January potential including in the and

to over call Fermi the Wang. turn now I'll Dr.

Fermi Wang

good afternoon, and everyone. you, Thank Louis,

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

the an from quarter, update our published list impact the business During on October X. provided to we entity the on

outstanding, issues, matters. to trade trade, foreign of wide a variety continue clarity geopolitical brought IP this While see including to risk policy, we some and

market lists, the U.S. the for actions our supply to potential include regulations share chain tariffs customers customers, and export to Factors on issues, and entity to changes China business our technologies disruptive dependency potential components. take shifts their in potentially all between advanced reduce to on

other challenges Huawei helping competitor shares largest the security us HiSilicon facing outside our is the in camera SoC by or of gain market On hand, China. the

can you factors, the see negative contributing outcomes and us. range multiple a are of As wide positive both for to potential

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

of contributed mass ramp the and our QX, revenue security automotive During family with camera in production shipments to markets. continuing CV early all our CV in

strong. more parts, CV In XX pre-production CV design development activity remains revenue QX, than boards and/or kits for applications all and engineering across we customers generated geographies. evaluation including

year range revenue XXXX end XX% million above the the revenue $XX.X the in $XX.X the from of our and fiscal QX high million Our guidance quarter. of was prior increased

share We as inventory by customers stress strong Security automotive large by restocking our China camera for customers, our reported of revenue by the several recently business. traditional video our in gains. driven consumption as well processing all underlying our markets and at as was straight

now progress will with starting our I our about security. talk markets, target in

applications. Expo Security security demonstrated events we then the next enabling technologies held Public China As the and generation imaging in a AI number in of add robotics October, IP

illumination. This included and filter using a and information software IP recover single the to RGB-IR filters sensor to near-IR eliminate fusion mechanical under

our AI SoC boot CVXX We system enable demonstrated battery-powered applications. right fast consumption reduce power person business detection running to also using and in

consumer segmentation. on measurements stereo running and classification CVX X.X, solutions processing our To and We new also customers industrial provide and spending new full-frame a new concurrently multiple depth a machine tracking the our and of on new new demonstrated will for We SDK a a networks industry learning detection, both applications robotics rate range the enable believe robots. single SoC. to logistics, SDK the develop retail object wide with and

Techwin, AI of SoCs. September, XXXX Ambarella's in show based a leading held CVXX P&L supplier series of cameras security IP GSX announced on video the CVflow And Hanwha its security new solutions

The types of objects, and and enhanced X-megapixel previous algorithms different vehicles, versus cameras both analytics, in generations. camera other to resolution network-based faces, run recognize plates, The available new is accuracy video greatly license the offering models. XK

and show, its based cameras new solutions. intelligent GSX included the I IP new at camera Also Series with This standard. including building models Ambarella video Bosch FLEXIDOME SoC multiple the on [Vineom] cameras, analytics introduced

of presents to new And for ability objects, city the video XXXX intelligent such and and applications XK making starlight zooming moving resolutions surveillance. AUTODOME ideal as compression, cameras and track H.XXX I video analytics of highway that include that

Motorola, introduction our on Avigilon's line discussed the earnings based last call, camera AI HX our of CVflow we SoCs. During

quarter, HX the cell During the extended its Avigilon HXA line portfolio on Ambarella's SoCs. of introduction current based new further with camera its

to on technology simplicity, missed. AI our operators detection, events coming the usual might have cost-effectiveness, visuals otherwise Focusing unusual flexibility advanced new and and been and the that incorporate the multiple of notify motion resolutions cameras

cameras, of advanced In eight XK. and and November, up the series industry-leading including dome resolutions announced new new security outdoor to the previous vehicle generation, models enabling Ambarella edge-based based more analytics, The indoor person than eight start-up series both with its is powerful dome detection. comprising Bricata including times a range

speak to ring, whenever price $XX, customized SOC home only a complete can at motion cameras zones. HXLM from plug-in leader motion detected design the a compact market here notifications you Ring tablet introduced Ambarella's the in is people path phones, segment, connected Multiple device. monitoring indoor your on Apple home and based or indoor provide see provide the cameras Based camera, the on and to In that coverage. be its past via

battery-powered home to a EZVIZ with its door HD two-way communicate Replacing And Lookout introduced consumer high the viewers allow in the door, peephole camera remotely DPX the China, touchscreen smart visitors SoC. using display video division's on homeowner based view HXLM Ambarella's on in division them audio. and the

industry announced beyond HD can operational shift, new recording with and The SoC. the sensor XK its HXLM a in-car the first Solutions be WatchGuard category, to VXXX law remain the Motorola XX-hour low camera, video camera power it featuring and WatchGuard's police full integrated in includes the assistance. body-worn And enforcement also camera Ambarella's in

will and progress Cargo with Ambarella I parcel supports drivers software. automotive camera-based Now, System edge newly their working its and with Organization tracking Recognition you in machine platform assistant is for to a Mercedes-Benz markets. actively called update on our CoROS develop learning CoROS. developed The delivery object

manual assistant due its stereovision parcels to camera molecular A the options, of symbols barcodes is was on space the and automatically each in replacing the processing shipment. scanning registered AI imaging, and done processing platforms. chosen parcels. recognize and cargo as assorting second, excellent outside CVX using fractions time-consuming Ambarella's of and the This in powerful

provide seeing or driver strong video or aftermarket AI management monitoring commercial with are no chip vehicles. Traditionally, assistance features. companies fleet comprised from CVX Ambarella from We that solutions active solution cameras the limited commercial for interest in of vehicle

With in USA, fleet a CVflow and Asia AI XXXX. have go driver ADAS Ambarella's CVX monitoring portfolio assistance deploy and to of been active The in are management the applications detection. provide such blind-spot can solution multiple as production by chips, and now us into providers expected front AI-based can chosen solution

Ambarella fully functions. September, occupancy start-up to Given held both company Brussels in-cab in a and driver monitoring AutoSens IRIS integrated Automotive monitoring with including AI partnered demonstrate Conference XXXX Ausemi assistant software and

awards in-cab RGB-IR RGB-IR won the the concurrently and video CVXAQ, assistant facial sensors. utilize system AI CVXAQ. Onsemi SoC The Ambarella's object on and and The automotive best high-quality process software active application. body detection, and demonstration analytics to innovative real-time, multi-camera image all Shopper the for most CVX passenger complex Global safety The IRIS performed monitoring running and the

And contrast low CVXX a during Show CVflow group on the the an sensor, in SoC new image held conditions. Tokyo manufacturer a September, light and new demonstrate assistant electric outstanding car of Sony and sensor Sony's Ambarella's number high electronic quality demonstrate leading Ambarella, partnered image lighting Motor with under Japanese based and challenging IMXXXX to

In recorders X automotive HD Chinese an Chery support recorder. Skyworth, OEMs, based video supplier and the SoC Ambrella's Tier recording. AXXA featuring is video SUV introduced on integrated it's Tiggo X by automaker for Supplied Chinese automotive digital

on lightest couple interesting The quarter. we XX-megapixel those model. October, drone the photos, enjoyed Mavic product market, during consumer grams. it's and not Mini, ever, and XX-minute introductions time. a $XXX just camera based the the flying model is market drone second providing It's also introduced than over SOC and weighing In In HXX X.XK per HD leader require XXX DJI Ambrella's achieves of previous FAA the higher video, registration Spark smallest frames XX the full at video of

best the its to and automatically. and full offering Also video find shots GO AXX XX keep only flash quarter, recording. Ambrella's video use on wearable steady introduced camera grams AI-powered Based InstaXXX during you cut to weighing your and includes camera model as [indiscernible] the HD stabilization can footage SoC, with

we and invested solution expanding million making right We remain despite highly confident our headwinds, $XXX today video-based case driving to Into summary, the than devices. fully AI. In committed edge to-date CV of geopolitical the with into while endpoint the remain more economy decision

as not We market, the base of sort our to incremental machine-based as large video expertise a only also market processing viewing well established our are opportunity. human leveraging of customers traditional but the

our including new security and industry a by logistics, in the robust but vehicle, SAM expansion in machine cities, camera vision product our not smart only the from markets originates like existing multi-billion-dollar new markets The also X.X cycles more.

Show we year, in forward to the approach Consumer end we are January. As the Electronics the looking of

event, conditions. this variety we challenging vehicle will EVA, Vehicle for of short be Autonomy During autonomous fully driving our demonstrating a Embedded

ADAS and will SoCs. in and home averaging our we we We control, see our be and all applications will latest logistics demonstrating access also AI-based with to mirrors performance new of solutions there. monitors, CVX hope many collaboration in-cabin of the And electronic solution for monitoring robotics, software you then And partners. monitoring, show driver for

I focus phase vendors, execution support. development. other exciting And And thank our very end, shareholders customers, want to of including for Ambarella's shareholders for team continued at XXX during your strong and the all and their this thanks to their

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

Casey Eichler

and Fermi, you, everyone. Thank good afternoon,

the and of 'XX fiscal financial review the financial Today, for a the first for 'XX. quarter I'll provide highlights of outlook quarter fiscal third

reconciliation the to to results. for a discuss results ask non-GAAP refer and call, non-GAAP I'll During to 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 automotive of represent $XX.X when increased In the results led in guidance the of from million increase OEM quarter by of to of exceeded markets increase prior aftermarket. all to high-end revenue QX and year. of the Our our of an These QX, strength an same QX compared and million. XX% $XX the XX% million sequentially,

aftermarket QX business. of due XX% to and automotive was mix in preceding the part of high-end gross XX% Non-GAAP a to the guidance of similar quarter. above was in margin to slightly Gross richer margin for both XX.X% business our OEM

for Non-GAAP expenses $XX third $XX expense million to million million backing out This QX engineering as to below hardware was in to million was were $XX.X grants operating $XX.X range after periods. the R&D budget. our quarter below related compared of prior guidance

Other represented income million our net or $X.XX cash primarily share multiple income per second of or compared for interest income QX Non-GAAP was in million per $X.XX quarter. $XX.X $X.X share $X.X Securities. on to million in the

of based QX non-GAAP rate XX.X a prior in on X.X%, better in per as guidance million shares shares stock expected million earnings to XX% to due than compared effective non-GAAP quarter, quarter. higher share tax slightly the In were the was the from employee option exercises. third The XX.X than benefit our

XX% to about focused our software. XX% at with the is dedicated Asia. of are of most third employees whom total the Total quarter end headcount in located on of XXX engineering, Approximately headcount the of was

XX, we of cash million under $XX of securities stock generated marketable at $XXX.X million and Cash did $XXX.X QX, during flow $XX.X quarter end the not operating the the through cash program June authorized In were a million, second We positive quarter. up repurchase the from million. repurchase XXXX.

compared the receivable receivable quarter. at previous the or the XX the at end to sales $XX.X of This inventory quarter XX the $XX.X or of quarter. million was of compares million end were prior $XX.X outstanding. of Total of $XX.X accounts days to QX at at third end million the the Net million end accounts days outstanding

U.S. inventory at Microelectronics, QX. in had a We days of at two for decreased XX.X%. customers Asia primarily came of in QX. fulfillment in to days Days Chicony, WT to Taiwanese QX partner from customers Taiwan manufactures in XX% XX in plus multiple who in XX revenue XX.X% revenue, who a in in multiple OEM and shifts based customers came

outlook discuss for I will of now the fiscal fourth 'XX. quarter the

Our fourth with guidance quarter consistent consensus fiscal street the 'XX estimate. is current

$XX to $XX We be the expect quarter total revenue million for to million in fourth range. the

anticipate we revenue seasonally sequentially. is slightly and a sequentially slow to and QX down other typically automotive with security quarter up to be flat

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

a with estimate approximately The 'XX. is and the say, uncertainty end of geopolitical amount and generate fiscal from to of by of Needless outlooks significant in economic environment chain. continues Dahua to our difficult. supply Hikvision forecasting customers' revenue We 'XX million $XX fiscal pulled combined

a As quarter. in a in rebound the in sequential a second typically April decline reminder, quarter and fiscal we experienced ending our first

QX estimate be We and to gross XX.X% compared non-GAAP the third between XX.X% margin in to XX.X% quarter.

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

of our The profitability has X.X% to estimate in shares. and losses to rate in normalized be XX.X versus share QX tax The our in QX at tax utilized. as the jurisdictions fourth XX% approximately be - count should diluted from levels non-GAAP in QX certain enables rate modeled million tax We level be X.X% increased QX. QX

be December Conference Needham Deutsche Conference will Investor December Conference NASDAQ Conference CES in Louis on New for and more XX. details Ambarella XX, at X; the London; events. in X, on on Please on Auto contact in January Francisco; Bank the XXst Tech participating Nomura York in XXX January these the on San the

you And Thank for over for to call operator with our I'll that, the questions. joining call the today. turn

Operator

question is Matt Cowen. first our And Instructions] Ramsay [Operator from from

line Your open. now is

Matt Ramsey

everyone. couple ask me. Thank you I questions of wanted guys. very longer-term Good much, to for afternoon, a

other a the the markets, that maybe to long-term some the little a Chinese if been you're pull-ins have a talked types breadth, wondered call now and And you talk robotics company. of for talk the about the I guys in script and I you then But of more bit we've little your robotics there'll the the the I in the you customers. on a out the opportunity could One in - on have today here, then heard I bit it about in earnings maybe that the be But known, you revenue calling from from Thanks. know it's engagements, more focus past market. engagements time follow-up. the about

Fermi Wang

for first robotic is, this a time our disclose we Yes. first our SDK are the we you have pointing because that Thank our time customers. The right, for in this that is we have available conference robotic out application the reason you call. highlighted is for

that that As themselves. you know our in are we customer platform we and the past, we the have can buy - never platform programming claim program

always video shop need or Our we a strategy the is for to and there's the understand And provide what fact to - a AI cost I application. complete we for customer to - the required therefore what customer for mean, really SDK. function and needs functions in deliver provide

majority and networks In first great run And concurrently all achievement. technology generation CVXA most the low I of only today's which that but have integrated, for think call, light SoC, also application, achievement highlighted the available. now processing, we SDK we that mono multiple - of robotic of almost there, provide new the stereo we a have are we required and we have can that

are we're a different that from support clear see that SDK robotic customer, with also multiple technology become to making So matured point you ready for after view, customers and the of working this applications. our we can

logistic also the city can you on Although we that I and applications. manufacturing, smart smart target think see

see You as that details, to applications. at commercial can can imagine you our this applied well that robotic as both if consumer be our you SDK, look of the can kind

XX are at we design a that and we probably of I So win win design just of can hope - revenue, terms - the close are think on we and in we beginning activity us probably opportunity it's important saying But is us. nonetheless, this revenue have so highlight soon, are for robotic that months we the applications. for to for away robotic very target we SDK

quickly required, find all the will our review our has out features majority will Most over out function of if they of - find offering. testing we're they that performance, SDK, benefits consumption the can they application the and customers power SDK start that their a and pull they

Matt Ramsey

is that Thank Fermi, you, helpful. perspective

hear represents? this automotive Mercedes-Benz about announced that question bit recorders I could deal Often the with is ask think that wanted that And then on and long-term data for to a an a the wanted just what of shipping you Thank autonomous. As today application, towards I and business. I I ask little guys really you the are call maybe focus what on you - ADAS my follow-up, a on on to in-cabin what opportunity about and focus and talk you. engagement sort

Fermi Wang

Right.

in right of delivery commercial parcels that the function - scale So to been in a you quickly information van can just quickly quickly determine with and and imagine the brought can really well And that understand you this into scanned a really can today, that the cabin camera quickly managing you and a vehicle have van need - box. receivers, be log of the But we robotic size, you and also the van a when the data. the can as and place more the those do as is can the use the that over is as barcode where to situation, our can well the managing putting manual box they the can parcels with SDK, process boxes, out then at driver the as content that looking by in done - puzzles. pull installed imagine

CVX of will show cameras that one the in can there. think past the show that be that's lot inside you industry by multiple done a of cameras - I the by purely running way chip and in just one delivery to automized So be processes manual

in-cabin in the - together fact like CVX. provide directly we said, put is, with did OEMs SDK, with is on to just have commercial to work their based what for really we application worked and they put this us we to a closely the but So solution application you and

we mono, really And we to provide the solution they have need of - to low this and finish a in the give a cabin, CPU a is delivery sell have the stereo, we integrating have chip and is want for all - the the to limited truck. lighting video have one reason condition that we processing, also we function

well, excited just opportunity we first - are about that several the in win future. is talk design one the we this about believe of - we So and will this

Matt Ramsey

Fermi. Thanks,

little then back in jump on I'll quick and the queue. one that follow-up Just

in-cabin are with that working So Mercedes-Benz you CVflow software the on architecture. that saying was this that directly your developed application right? Thanks. with has you I Is reading am OEM

Fermi Wang

That's correct.

Operator

from Gonzalez of next is from Adam Our question America. Bank

now line Your open. is

Adam Gonzalez

Congrats for and the on strong thanks question. quarter my taking

seen terms you about Street a I in I it market more had like of Thanks. Am security. in that fiscal - pull-in? from big the couple share last a called expectations. $XX wanted to the to your a just the been that's you've revenue thinking upside number of Or to of I that the factor from I pull-ins pretty million 'XX relative the - for inventory some performance has - is of in think just been right? quick chunk XXXX quarters relative doing much clarify the factor in math, out seems

Fermi Wang

'XX is - over visibility this last to What obviously, the 'XX. the have don't of what me, quarters, into potential 'XX we're fiscal to shift will people we is, we characterize have but few - we lot think asked - of do year trying the character have question, excuse perfect Yes. from fiscal fiscal the end amount by a is that

make actually into XXXX. our and you we're we from in heading fiscal years two say understanding think are. situation, the some we've we from is about if to pulled not million to to for what assumptions customers fiscal had that trying I where the combined to seen so an $XX try And But get XXXX

Adam Gonzalez

future And do past? moving comfort update a provided around thing customers XX, some that in of have or forward is periods? degree is on just risk that Thanks. build still you of the the a need inventory Or to October

Fermi Wang

are press impact in that X, QX financial comfortable. think October and is that Well, QX. I - we in release we material There no our stated for

year bar So that's which we to then is by still they how how in the fiscal book clear and to consume think this they customer to uncertainty impact ' 'XX, consumed is XX, are case. The and going when the are not going us. on does the year fiscal

Adam Gonzalez

question. security And just couple I in of what over can slip on many an just more camera camera I'm you had one years? wondering customers from their be next AI-based update target top if will if your the of

Fermi Wang

You're professional camera? a talking about security

Adam Gonzalez

yes. security, professional Yes,

Fermi Wang

Yes.

we with balance year pretty think that In the the much the many in the calls of with majority kind track fact, follow them to about We of battle deliver We we several and next and last talked win. mass done. is on will the design of won year. production are this

we to point to continue that to need from think just we of go So that view, that our production. into customer help

assume fact, we'll next customers most security in end ready be majority solution the of current customer we in I camera today, of that ones the past, future, by Techwin, will the of year. I the In use our to production believe - them Hanwha in that [indiscernible] will the and mentioned But move the get - AI forward. about we and about professional - several talk we Avigilon, talk

Adam Gonzalez

the was shipments, overall on AI-based annual asking when you the I more of unit - think just but penetration cameras look at inflow I just yes.

Fermi Wang

data we AI saw is who have really to Oh, Based I the the only camera on production. see. say. a current the the That's customer difficult little already in

it was point very for outside stage camera that of AI they momentum. well, professional security, this view, AI of I think forecast, doing their I think on particularly are than better think But early so I the has is definitely from I - the China. So think

couple more before penetration. of like talk rate quarters a about see would I we run to So a the

AI-based put is say however, I introduce can out thing to the But all have one very in our the and at eager cameras. customers are product

Operator

Deutsche from from Seymore Ross Our Bank. next question is

is line Your open. now

Ross Seymore

results. guidance? Casey, but sort not The just you you your it, granular about on million 'XX when sort of a quarter of you Or dynamic? to of Congrats do expect inclusive $XX great. to Is it on January too that get of any be occur? unwind it's pull-in think more clues that talked that fiscal Any linearity the clue of on will

Casey Eichler

think a fiscal I situation. type No, 'XX a of it's Yes.

going I to 'XX, fiscal over not into to it's assumption probably burned going get level. think But they're - 'XX. a or next I of that's they'll year, course over my back in that kind to if that it fiscal impossible tell of don't they're more normalized science, just again, hold year. the going into it off burn the But exact is off I if but to see inventory getting an quarter over

Ross Seymore

then in Or added entity it time to of And got that? you you continue change there list around they shipping, out the did see could notice? once period to that those happen of course? guys in And behavior did really was customers' X-K specific put you a such then volatility that any when Ambarella, you short the couldn't

Casey Eichler

plan we - the putting one on together although a component I ship that non-U.S. them, product continue suppliers. ship. are continue become think they also we that focus we of I Well, it's to can cannot realize feel to although course, to when definitely can they based clear that that But relieved - thing think - they to that

watch. I we So to trend to think a continue that's that need

Ross Seymore

then discussed. design for on the market outside customers targeting topic all start in the to of metrics China is, have share? this you guys wins those success gaining themselves go sort Any on - the there? away of question customers reasons final if my we I'll also seen And you've gain and then have been already And

Fermi Wang

customer that Based it's data, our get but our market market - U.S. non-Chinese not U.S. definitely outside on gain share believe we other - and our in clear share

can current I the that's more people have we we silicon think have reflects definitely about areas. concerns that So But data - high the that in in U.S. other solution talk about. our that

Casey Eichler

Yes.

Techwin out the quarters. always customer about from this as to a over example also a Hanwha it's which add there CV as our last talked a is Ambarella, think to forward is Fermi of good moving share moved clear whole couple that example up some - that player in market that with think and going a HiSilicon clear Just be quite that That's good I a products, the there I to is we market. customer and so picked they're and and in

Ross Seymore

one Thanks you for a one January for last your quarter. your talked housekeeping for seasonal April quarter? I past, I such call In details. the maybe normal normal there you, and thing Casey. the sneak about quarterly on is those Is for seasonality, think

Casey Eichler

Yes.

as and I quarter - to see they're thought to the we both quarter in then that there well. what roughly guided April think down I in January, we've we going and we're the to think so we'll are see XX% normal XX% XX%, were probably the XX% to

we're out But talk historically, I'm those a but the not talking low - that. that looked about today, to from if We will. substantially have QX that's what stronger when in continued to quarters rebound Obviously, April, far few the QX. guiding if about and then you I at kind of tend pretty you

Operator

from is question Morgan Joe next from Stanley. Our Moore

now is line Your open.

Joe Moore

it's when to might the guys sale seems CVX, about seem in-cabin stuff the of monitoring similar expensive to quickly. actual that be I there production getting wins in-cap And terms Can comes revenue those more In a be quite guess probably standards European guess and there you of lot into Mercedes, with the and some of that fairly predominantly it you. seems a you sophisticated at you products so for like coming to wins? see fairly talk from I

that? little can bit more So about talk you a

Casey Eichler

Right.

guidance CMS the on given CMS the yet. haven't or revenue We

suitable more for vehicle, is CVX However, I multiple for commercial requirement that want to highlight the of because the cameras.

the for more also on I of limited. vehicles think side requirement cars, performance I better fit be does require consumer that not camera stereo because the But and might a consumer CVXX most think the

on I that's design But between are get wins areas. design the So commercial hard we - think the and very win said, trying those difference to you - just customer vehicles. like

Joe Moore

about CV think the surveillance the timeframe surveillance? sort of on an seeing course then that XXXX, revenue the or just is of and And to consumer you're what maybe right of is XXXX, kind reasonable on on announcements over side, then update consumer it

Casey Eichler

frame. that's I there time right think on. And are No, also win we the multiple are design bidding

we them. solve to fact, are In close

doesn't And the schedule so I think change.

Operator

is Bolton Company. question Quinn next Our and from Needham from

open. line is now Your

Quinn Bolton

as it's start now security some Just us represent talked think the like and professional to security you camera. your - you a look revenue, just a great? in might like a wanted the Can that that on any low especially It say give low the total percentage exiting next us you security it percent but XX as of be digits over camera production probably as any help shape think CV to first your going what professional months. exiting few revenue, the to business XXXX, for ramp, XX% with wins just CV help you've of single your XXXX? of going - ramp quarters a now fairly sounds sales your would go of what Is design might still where of might

Casey Eichler

Yes.

year. single digits of just for the the be in So so year, last and year. obviously coming the the up into next ramp The it next is will two quarters

more about what think we than talked year. from I next revenue we've is revenue CV material is that of certainly and the that can XX% see for

talk next that's depending half define in second And we comes year that next of said, the second half, as year start on ramp to in material. I the the of the will if see how going kind the in consumer as it. year, next a specifics of sometime of about you'll little course think probably over CV discuss bit more becomes But it starting to size

Quinn Bolton

outside thinking share then among base. had mentioned you to And China seeing definitely of the gains customer China, you're shifting script, your

China if is dynamic competitive any wondering could say, the how China up versus you and you, sense that customer come Just cameras export and within your market, back cameras? domestic of shaping within for for strength base the

Fermi Wang

Right.

especially business, most Chinese the didn't us that non-U.S. companies think think market is the because Chinese right I And the now system are pay domestic I much HiSilicon our customers, the for in about So the past, in export from market. we most of - sourcing worries U.S., the components. thing they - non-China - basically their Chinese the the

can our complete. basically vintage few to video to our technology on we - Chinese and strength CV differentiated provide also very playing be can company has people that so going And quality that because HiSilicon, lot on see come competitive, not are component in supplier to it's lower definitely the That's many side, space. the a only lower more the there past, but we're to

middle But business. be all position that to the and and can that especially on high-end, technology the AI a should export in also as video differentiate and continue however, as do I for well processing we believe have the

Quinn Bolton

here could guys that And more the you the that you management, fleet fleet if quick calendar 'XX. to give feels just I'm then because that's lastly, seems but management again potentially in pretty fairly us - opportunity, like quickly. ramp. just wondering ramping like a ramp aftermarket could mentioned detail That revenue

Fermi Wang

Right.

in usually does require that not chip do of don't auto So auto-grade they and fact because management require qualification. most fleet

is OE longer which than OEM XX is the starts shorter that revenue XX but auto months, to to definitely front business. than consumer So - most of the design usually

And with the detection, multiple working for we ADAS, fleet both working and in Chinese management, solution for on AI several the the but have the the monitoring, just blind-spot we cameras the especially everything, companies around basically, for driver U.S. providing recording truck. combination been of now also

I definitely a than complicated So the system is more But play a to that's strength. consumer lot definitely think vehicle. our

of come second of wave months, revenue trade-off we will timelines next that we is will I roughly and the in say design year. XX to half So first believe timeline of XX think - the

Operator

[Operator question next Stifel. Svanberg Instructions] Tore Our from from is

now is line open. Your

Tore Svanberg

Yes. congratulations environment. volatile this Thank on managing you through and

I own particular But are about this Casey, the you for inventories managing over thinking next quarters, XX. uncertainty normal few quarter. know of days First how for given your that's the inventory that's guess there? I out relatively all, all

Casey Eichler

Yes.

I bit. quarters, to a six think over four inventory the down last quite

we'd at for we're good be inventory continue. We've cash little so quarter. and needs. Chinese that picking down I think to low [indiscernible] a uncertainty our in looking the management. bit And particular, when and going needs quarter you to meet are last kind in try got in year able customers' we the to XXs up that making we sure can this the of when we're came But that to meet look a at we're

in XX We're dealing We we're had sure and that. quarter, to to be with able a customers' great that we cash. times, proud needs. and million need $XXX we need that to to quarter sure our But XX lead we're make over this to of week also make react

going And that to forecast how balance spot have out look our so forward. that going I to do and the right understand to think the inventories generally at and about we're

Tore Svanberg

And Sounds ahead, yes. Go good. Fermi. -

Fermi Wang

they told since working cannot more to think first of Fermi. like add one it's the speculation I also enough a with foundries the my - and products allocation time, from have some tight like they sense from because the partners, us I who foundry And that is never of wafer get our us [indiscernible] would a and they allocation is Samsung. their this customer move that told we're

tight on half is this sensor the that first And start seeing have very although allocation, we the total also wafers. a - wafer

to strategy trying inventory customers urgent that our we there is make sure have demand. some definitely is So in supply our to case

Tore Svanberg

for good. based next out will sounds, revenue you relatively Fermi, CV. rhetoric question think some CV half that see a on to applications a that Could that - second year. Very material your It material be maybe of the going few ramping And single you time? at you're on you of consumer

Fermi Wang

requirement believe will out having AI-based can home of second camera security you half for most RFQs And very a that IP and continue next see I customer I AI for our there monitoring. in if through are continue the current have that the year. consumer consumer, we that, the trend for I trend will you space of and this camera customer a think strong think there is go basically list the

Tore Svanberg

good. Very

and one of your on question quarter? should already happening that I million se, imply answer, to then know back $XX Casey. Casey start of based guide quarter this we some in per Just April that sort last pull you didn't but the

Casey Eichler

is possible. It

it for stated judge reason hard the think really - full I that. said, timing that me the the I I on As year will probably to during be because it's fiscal off burned

or I bit the to that normal we so talked little And to will that about difficult what see pick the seasonal, percent for guide is think a XX% so it's over did or down years. last we've few that. I seen quarter do

be to will for there. that inventory in What one think be definitely that the for me just right I really say will impact specific tough quarter is now.

Operator

from Anderson question next is from Dougherty and Our Charlie Company.

now is line open. Your

Charlie Anderson

you've up Yes. the sort a - an - rate questions It opportunity quarter sounds light pick million just the you with ramping. share, of on and start comment, I Thanks like number guide. congrats underlying to with of expanding got if touch and of in cycle, for growth taking to the a product that's maybe market $XX IP wanted on strong my security. could end-users

do degree? out So follow-up. we the if real-time just exclude growth any think $XX of we to that million, got rate I've going a what And forward

Fermi Wang

probably customers. estimation, $XX a hard the Well, first it's a to from really But higher us the - growth the put number. consumers continued to of probably free on follow million the sometimes the and our and of based view, single-digit on That's feedback I very we point that the market. this on a than percentage all, security think market professional on that,

to people guidance can the So a making to the there. there, give and gas lot working sure the, customers we situation. a much what we We understand think clear want just about as of as that

Charlie Anderson

on the we you then impact? I for just on going us wonder update any terms the view for R&D expect forward then side, my for in and follow-up what the year, could that total sort maybe of credit Thanks. on Casey, And of if

Casey Eichler

Italian talked about? the Are you that talking we about growth

Charlie Anderson

Correct.

Casey Eichler

Yes.

run So million a that's about to going quarter. $X.X

discussion. last And going I we But is called $X.X quarter, a it's guidance. out and in probably said still about that's last our I estimate pretty what think is it's so a the quarter in, to of benefit what be and quarter factored - had good and catch-up million per in that my that's

Operator

next Our from Svanberg Tore question is Stifel. from

line now Your open. is

Tore Svanberg

Yes.

comes Casey, margin quick Just mix the helping we gross margin, fiscal follow-up eventually a talked Casey. as through it for about, 'XX. obviously, to the gross

on that. Just wondering any had if you update

Casey Eichler

think, Well, yes. do I

to into and the most will the been more that space, more significant. the stay China, continue in pressure auto we in As XX in or consumer, guidance in. Obviously, particular have that we of XX back of and the in in us get more is margin us revenue more CV there to guidance and help and the it get probably

market largest the the a are there fairly customers in and industry The that's tough start with. to

the for having bit. see quarters little we've last mix and down few quarter-to-quarter have the you been about that's there, margins a higher from mix little what a the that's on depending why so And and and example, talked

Operator

no you. Fermi remarks. over questions. for Wang call Thank back turn to closing to time, the I'm like At further this showing Dr. I would

Fermi Wang

for Bye-bye. I'd you us And next to thank joining you talk I'm to everyone, seeing like today, you. forward to you time. and - looking Thank

Operator

Ladies participating. and you concludes call. for conference Thank gentlemen, this today’s

now may You disconnect.

Ambarella (AMBA) 25 Nov 192020 Q3 Earnings call transcript