AMBA - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen thank you for standing by and welcome to Ambarella's First Quarter Fiscal Year 2021 Earnings Conference Call. [Operator Instructions].

As a reminder today's program is being recorded. I would now like to introduce your host for today's program; Louis Gerhardy, Corporate Development. Please go ahead sir.

Louis Gerhardy

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

statements. under Investor replay XXXX a XXXX. assumptions Fermi these Wang. no portion of XXXX Form our uncertainties as first file of growth market quarter today's on described to results call the regarding to Dr. primary for can ending Our fiscal and for projected We're responses Relations could assumptions. will from speakers financial are and that risk our prospects, of January financial call with The obligation our the CEO; and now our our Access on to incorrect, including These turn call quarter fiscal the found or results year SEC subject year President our financial Wang, well results, provide among for assumptions solutions forward-looking today's filed information are in Should press risks XX, be information affect contain materially year March things. results, these and purpose XX, should SEC, the to the on regarding filings, over will our our risks, demand be; and that Annual Casey website. XXXX. more forward-looking the release, as questions Dr. Eichler, other The to on I'll to be materialize Fermi these today is with we documents factors results, our XX-K your and or you Report actual to fully statements statements. uncertainties potential update These prove the differ of first any XXXX, and risks, results statements of uncertainties the fiscal other historical could CFO. discussion

Fermi Wang

Louis, afternoon. and good you, Thank

and world I we will efforts communities their workforce team continue value the well-being very families the their our the and highest for Ambarella and modified operate. own implemented priority. I'm them of of as to safety and robust a proud and The and the where seize ensuring more our emerge to our from thank opportunities and and quickly that their ensure period safety employees, in I we safety around foremost benefits firmly execute of stakeholders a that be has to resilient global dedication First process including and employees place. team we business that remain to and am employees, plan to customers operated measures, difficult plan, in suppliers, work all one believe position our confident that shareholders. this strong will XXX

of brings the X% year round we The midpoint ago. offered associated new to later QX, of bring of can foreign and set period amount in of sequentially to same ago. the are dispute above into down and pandemic with severity we operating in China duration, million uncertainty of downturn Despite quarter $XX.X a and risks, of the are revenue slightly This was up volatility. guidance be of period and geopolitical and matters combination another the of and consider. delivered of between award caused environment impact the the the risks. We -- the the risks fluid three policy result COVID-XX in year second high pandemic midst global swept risks the a moving months IP versus within trade and U.S. the each Geopolitical QX challenges the XX% and/or unknown. unprecedented full and health common

CV pandemic. strong percent many have of work represented in Despite for the safety was chain work software. home, customers as of April highly total our for sustaining -- quickly deliveries have March revenue. slowed patterns alter design of our patents a development order high our remained of chips supply having CV May development activity revenue maintaining mid in and continued base momentum level, a of admirably, though performed in work activity of the the level yet high the and on-time at and to a QX single-digit remained and a volatile employees adapting and February the effective in sites and customers. team operations we small CV are Our to from

functional and announced up automotive were SoCs, CVXXFS, During the and our CES. verified quarter, CVXFS the safety we successfully which brought new at the

the As software the become been of from and and the effective Taiwan initial hardware highly software U.S., majority work in our working have in their labs development has our work homes. in verification engineer

both and the on addressing to market I in SoC, to you SoCs AI generation been SoC very of our a The We look later active member A installers the who SoCs kits the VR our this And X-nanometer of this of the from family be sold now market, camera future test XX-nanometer COVID-XX impact virus. take access new upside thermal half partners out has people buildings our in recognition take fully of include software to year. distance control The to about year. our And talk for customers a advanced restricted. test contactless their future include we -- we camera the has power that been whose and and Not CVflow advantages educational, of in as also in advanced control cameras. turn and sizing and including medical, the schedule the maintain counting the to this recovered locations chip integrators in virus. COVID-XX with professional access. for industry In the the customers performance with us and technology. at virus, impact cameras as solutions forward our processing. are impacted and seeing retail to camera advanced node reduction process sensors development discussing the of we out and video was sample the are light cameras chips. some opportunity corresponding to however, security new monitoring as a ability We combined face professional video Once has intelligence in that demand allowing demand active our exact has applications process significant for designs will percentage the also chip outdone, monitoring of retail tapered well six to second see we AI quarter. enable us as and access result are during

of introduction based CVflow saw develop makers, Our solutions. AI design win on customer to pipeline cameras advanced and a AI significant continuing SoC product our number extremely with camera capability strong with this remains quarter

CVX SoC. quarter, The XX the of guidelines to IndigoVision the includes security Panasonic new based services of models with Ambarella in and and average series AI on the of SoC Also cameras was During our CVXX, phone SoCs. solutions -- CVX In safe it the I-pro and cameras seven This bullet network quarter, employees compression. distance. identify and acquiring and processing would commence May, offer human security The designed data security In for come optimize AI entered introduced first intelligent the worn models software announced expand European U.K.-based camera masks existing security law Solutions center offering of on private running faces announced has market body camera solution organizations Ambarella-based SoC Ambarella through through with movement, AI help an operates wide image, cameras HI XK camera lineup evidence architecture based on camera product it in any configurations range Axis and Communications on introduces keep XK Korean an XXXXp to security. lean health TMB extensive box, based analytics And our video leverage during age Series appearance Hanwha our Japan's Westnet capture AI analytics offering detect Motorola H.XXX and provider and leading SX capture details. AI-powered three worn of new performance video software Motorola based support solution that the face broad on power camera series to protective combined to can XXXX the user social during by security on X,XXX physical video SoC. at and included leading camera of May, Techwin product and image preserving use video European enforcement management processing its prices. to Based which its systems. designed product hours. a camera been Ambarella's Ambarella’s leader into The the and also high-risk open are SoC body T CVX the video the who up on area system quarter family. the offered The camera management

on remained closure power management are cue based are March AI-based MEX its CVXX demand. Series also and people camera Typically, analytics personal and online the form We and – the in Taiwanese in security factors different have detection crisis. Also analysts camera push OEMS, result sold face, camera stores vehicle events. processing map. market, manufactured majority online video cameras in use and three distinguish combined people the of throughout retail advanced Networks on include by and to seen Ambarella's including of the accurately impact retail some vehicle real-time generally recognition, counting, The cameras the for outs. have we between AI and order deep XK or cameras security a retail sales security with featuring X-megapixel impacted next-generation heat accurate In SoC. introduced The analytics, of April, new in home IP have production customer which home of also in as network

in intelligence. we including growth crisis, pandemic this and greater the demand see Beyond for of level segment, increasing video continued cameras including for

view May, HXL. During delivery and with on and Advanced camera pro analytics its company TV SXLm based based [ph] HX driven PTP circle field the arrival [ph], In packages in-video wide stat. conversations video infrared support. faces lock up on video to one largest visitors feature. and Video integrating in the you camera market, its of version introduced Smart Apple's Xiaomi XXX-degree automotive dash based capture see is new people [ph] The our attack circle models and a package new [indiscernible] detection and of at view smartphone ultra field to access of system lock integrated view full unveils brand view approach for in recorders quarter, the revenue Google Fingerprint you primarily cameras of lock The Home video of OEMs car wide Asia view – control field the smart can aftermarket for and In the camera announced that on with PXXX to left XXXXP current Smart new lurking XXX-degree of in notify footage you in Ambarella's the with away. both Quora retail. records SoC, market, U.S. Ambarella's security XX HomeKit the viewing feet the China two-way the HomeKit our visitors. in audio supporting night In enables Logitech camera those offers

OEM retail store been in plants and Our by business temporary impacted European has been market by the closure while have U.S. our of affected automotive Asia closures.

continued market make in and for single-channel mirror progress suppliers' targeting. automotive designs electronic OEMs electronic our currently originally in three-mirror segment, the this, have and delayed. X are electronic mirror generations the ADAS on applications. mirror ahead have making been product solutions Despite Tier In that for car weak Additionally, we the decision with to engagement to however, shutdown of decision we future remain many continued manufacturers

other single-channel for functions, Our SoCs solution provide cost-effective mirrors for integrate example and video efficient also recording. and

model, Inceptio's working be a with we autonomous opportunity using working to to in is is featuring smart major secure Chinese locations. alarm. trucks. viewing XXXX and cam for HXXa on to advanced includes introduces along Korean light In Ambarella's using remote the Thinkware nationwide be autonomous company hardware This As software with eight changing funded plus car the enable CVXAQ, dash AECQ goal achieved XXXX full in functions automotive ASO are to including frame. dash X-channel efficient automotive April, using warning QXC expected automotive-grade QHD revenue SoC, economical Inceptio, Based time design manufacturers. SOP detection Ambarella's collision customers. network-based warning, also the is a driving and HD with LX, freight and network build CVXFS a leader SoC to ADAS Ambarella new land and and video, OE notification. Inceptio remote to XXXX Inceptio’s driving transportation-as-a-service XXX result, camera traffic and achieve logistics LX, collaborations seeing

and we previously fleet are As taxi we a designs for have continuing vehicles services. at provide for as to ridesharing customers management win mentioned, solution aftermarket well solutions as commercial that

AI-based support CVXX blind low solution recording, version combines addition in operating our The AI making processing and such video and driver the detection. SoC solution powerful environment. CVXX challenging In active and to camera applications for an them monitoring as advanced ideal camera imaging, AEC-QXXX power, front AI ADAS spot automotive

ecosystem expect base both field production initial the We and begin to that of software our in-house and this in solutions models trials committed deploying main secular summary, as to for around in the year, volatile Ambarella's fourth fully their trends and customers were quarter impact. is the are AI own products. addressing and us we long-term uncertain, In environment the our strategy highly

should new flow, demand Our And level financial to to our level more highly balance not enabling operating sheet are of vision to the and driving liquidity automation higher the R&D into the as planned we significant optimized be sustain yield we strong ever heritage computer of difficult multiple processor times. markets our AI through development our returns. expect the in a positive have Furthermore, cash the automation leverage ADAS strategy platform successful AI With emerges industry strength large to execution, the current than investment investment video of these continue legal enable identified crisis, we changed. level higher discipline has and in our from of for past. industries. important the of In our us visual

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in gearing safety of initiatives. to for to operate. managing initiatives execution and regional response the we our customers Ambarella's employee aid drive over now what corporate and initiative and to employees as well business. around you for their the support give gearing of thank I response safety health for the will for them, to who own Casey more our and I and comprised the as AI expect the strong $XXX,XXX we corporate turn various in raised Finally, details organizations than those pandemic, about will seeing call are match our donation more their for regions this their

Casey Eichler

a Thank and second I Fermi, Today the our good for and the XXXX afternoon, July FY will fiscal review ending you, highlights April everyone. quarter for ending outlook financial provide first quarter XX. of XXXX of financial XX

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

income of the SoCs. despite and to when impact to per million to original high $X.XX million quarter. XX% represents reporting, and million QX XX.X% the security slightly down share quarter the or our of Other a $XX.X in due prior the quarter. tape-out due quarter increase the in and a of were XXXX net of income to tax headcount year year And in for this, the the the and marketable reconciliation headcount our amortization for QX, Non-GAAP XX.X% before non-GAAP of adjusted tax the same revenue QX, with of to employees exclude about we XX.X Total statement impact to $XXX.X decrease for operating midpoint was slightly. presentation. associated. other the very there million faced portion of is The we rate based stock-based to preceding home $X.XX was shares $XX $XX.X security presented at was fiscal share fourth QX. for tax. current For gross an and the Directors XX% $XX in compared of earnings the public extension in QX from XX% Accordingly XXXX per from the expense no revenue $XXX.X Non-GAAP double-digits net change rates. with XX up in for This million May, of the all non-GAAP jurisdictions sequentially slightly non-GAAP and alignment $X.X X-nanometer payroll effect and positive ending expense, to an have the an and We quarter. the shares In compared and end on of declined eliminated XX,XXX generated income a where favorable common A XX, and change done million located In purchased profit tax non-GAAP We In the been increased representing compared per the the taxes. quarter the the average million Board product XXXX compensation the non-GAAP the taxes per fourth share the for increase fiscal is of Approximately included The in XXXX. quarter is program was margin guidance increase XX, compared automotive of revenue of Cash full low April and stock from have first share. markets engineering. operating to the non-GAAP total shares to an of price our flow additional ended were income share with to our of million the end end $X.X $X.X adjusted the reflected or losses lower quarter above million. interest consistent previous per was about of quarter business. income for XXXX X% compared was XX.X approved OpEx to sequentially. an QX health the of financial of non-GAAP quarter $X.X down GAAP challenges primarily securities at declined improve business in repurchase million the of Ambarella's for for Both calculations dedicated Asia. press professional release. first prior calculation net both first $XX.X in geopolitical of guidance. the smart an This year. loss to of non-GAAP XXX quarter for of diluted of net of end XX-nanometer income in year the quarter, million for in June benefit includes first of our months close non-GAAP was diluted as quarter expense of first fourth $X mix non-GAAP in of In cash non-GAAP fiscal new million quarter. million tax income non-GAAP the in in

million in of in partner factors quarter. at is continues confluence at revenue; authorized continued the of second in WT The from unprecedented We of in and Microelectronics, of stated, changes we The economies of As million I and available came XX in in repurchase days QX. at multiple in from began Taiwanese outstanding. impact for This XX to On XX%. days the QX disrupt manufactures XXXX. inventory and Total million time. were receivable accounts the end $XX two Most the in will our volatility QX. the for million Chicony, X, customer’s unemployment the a remaining today, importantly, agreement we QX at the $XX global XX, and in significantly sales Days call, uncertainty slowdown end will outlook rapidly health a a previous Taiwan unknown business pandemic to discuss global $XX.X the of at continue fulfillment days government receivable QX. of inventory accounts June now increased consumer of spending this see trend end led outstanding $XX forecasting. rising of quarter prior has OEM, customers XX end to demand. to health were in at first quarter revenue had in compared XX%-plus design million QX compares and to and XX% cancellations. was of sales the the days at $XX with the XX has of pandemic March believe with and $XX.X order or million This or in quarter. we to pushouts earnings geopolitical together the who sharp in XXXX. fiscal the put pandemic contraction Net activity beginning came

China. at adverse China, The U.S. impact discussed May customers changes non-China been weaker further We that the U.S. the the both the in million XX, and very the continue market of order in a inventory. customers by from in half, plus SoCs of XX the supply these The Ambarella take reduce change ending of fiscal continued wide we and stock market new the our fluid. of estimated forces addition to safety or to customers pandemic, other remaining two carried automotive these current and to public the the customers impacting the health $XX will on in Geopolitical being export has dependence last XX XXXX beyond In anticipate, year to May to China decline. product forecast and announced rule U.S. risks We as risk geopolitical to government companies be the prior security on camera have our between at time our of addition including of a with calls, total escalated this patterns may $XX expected they earnings continue the XXXX have outlook, shifts unable point professional we very wide anticipate to second range health we revenue situations tension, list their QX inventory July We be customer be to and a from variety for as as best customers. well gross XX compared and quarter, the risk, minus we time, to range the of long-term the list believe In and/or may chain expect roughly margins margin in on into the as digest XX%. their by our to of these subject gross non-GAAP XX.X% in we in on customers how to technologies. between entity fiscal our which two direct XX% X%. entity share created they year, lead customers estimate quarter. on remain quarter do sequentially material foreign in in year and action be second We had not as XXXX. revenue XX.X% XX% export With Based tariffs, up control geopolitical is mix from brings advanced favorable security be to there second our dual pulled factors to a back it China. reaction concerned components judgment believe an first of that are model revenue control, and/or we of million in to China and about to for

continue in We in of as to to ability we've amortization operating our credit the me, the SoCs, talked $XX increased expect the well family for our of engineering about be second $XX between engineering OpEx to in due – past. million, receive expenses million the changes first that potential including non-GAAP and quarter to as tape-out non-GAAP X-nanometer excuse

modeled rates, $X be our million, around should position. on cash reflecting quarter interest net other lower income Second

June London on our Xth call Roth, back share XX% on XXth. Conference modeled to the is that, estimate Conference rate Stifel, Global Virtual approximately non-GAAP And more Technology today. questions. Sector count, quarter the June XX% second Louis shares. should Bank with Xrd, Please in range. be Virtual you QX, The our Virtual turn America, in participating details, the for of Cross the The Conference Thank for tax Ambarella Question-and-Answer over contact joining on for Session to for be I'll million We to it XX.X June events. operator, diluted on Insight and these

Operator

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

Your question please.

Joe Moore

ask Yeah. the Thanks for me lot a let question.

said of guys just that you two in I I for the of CV. And about surprised automotive. types XX%, think you what was think I my sort if by And on customers still of in with in for talk production wondered that. to that are little are could production are year? you CV a be then, are track applications the already follow-up you're CV

Fermi Wang

let that Well, XX%. first of all me answer

although, on I less continue believe And good to chance we to the a deliver have We'll that's we CV total progress very We have on think I half. visibility track. on revenue. second XX% think on that, the the continue still to report that.

So CV for the important XX% a it's is we that things, think I something definitely think milestone.

on We that. continue to track

monitoring. and/or think In we for or total fleet but I ADAS didn't terms name, ADAS for announce from revenue in internal of five customers, the that coming most likely a management vehicle commercial

so, of faster kind to vacation don't because applications get need into easier they it's ASO those production. So, and

production, that's think kind talking automotive of I we're So about.

Joe Moore

Great. Thank you.

Operator

Thank you.

of comes question the line from from next Tristan Our Baird. Gerra

please. question Your

Tristan Gerra

China? your XX% any also us from terms in in dynamics the does off for of cut the add the the restriction from last U.S. China then, details the procurement offered that being as And new putting Could of I potential number and later eventually quarter high silicon year Hi. the of remind into impact afternoon. this they away time, camera to think was and in quarter. about customers has? TSMC mix whether and revenue Good you coming market percentage the that diversify from started you And vendors? same could prior create the what list at this

Casey Eichler

revenue. the question. as geographic country WT. breakdown as So specifically by in of in But China geographic goes the answer let our far don't in revenue let Fermi revenue, of disclose and lot me A through Asia last particular, -- breakdown we of

a WT through revenue. of well as So our and But WT others. you Chicony specifically as that don't goes And is part customers. big lot can see a of out that call we

call people out -- and certain example, might customers we as which to don't that be, XX% are but high vision our We customers think for Chicony. WT estimates, made call just I have or what out. over

Fermi Wang

Right.

all, think how that for HiSilicon a just think question, going not knew that and customers China. before understand that to what and which came of So talk us the we we is ruling outside -- to continue details haven't I I because think to -- first our still well-understood. like lot attorney, yet. trying are we But, rule to there help that the that is we seen I out of this said react We're very our however, to that

past. which see I think outside multiple HiSilicon high-end and while probably China, middle because time we're have Panasonic, Chinese it's cannot that the not at on this see our like we factors playing think HiSilicon. using ship to avoid probably U.S. choice. -- of they choice, this other they but the the earnings HiSilicon same the trying they customer and have But, time, to however, TSMC at even might pick lesser if solutions point up different in most from And different component China at our same call our will Inside are reported from a design story wins use do that I you there we that. picking already time, can

China in uncertainty new. many so rule so today is are there and So the

about. to how this talking our in watching are We are particularly we to feel progress they China understand still how customers and

outside would see a I is a the still something there's positive no. we think Inside China certain, So for for say us. definitely if I is China

Tristan Gerra

end in not you just useful. disruptions fell mentioned your a this rebound basically real you've with seeing security? lingering security any in your in That's really what backlog very revenue quick customers? supply back quarter. demand for that Is And are QX great. be line you Okay, including significant in in a QX? follow-up, built related And chain Are could at then

Fermi Wang

chain of from chain very of think First I impact has view, supply supply all, our a point from COVID-XX. a little seen

However, security supply particularly the we very ordering our disruptions strange in do mention see And chain Also for some see we to space. also. supply do their them, in our when in they customer customers. disruption we auto talk pattern chains for

demands probably is professional for will the being like -- cameras However, current cost market integrated trying are if thermal list lot cameras look of at with by camera all there our say the I COVID-XX you the -- a new our to address, applications. think that also security camp saving like I sensor and impacted we're among security containers

opportunities for the -- we security for see do professional So security camera.

seeing the -- security because on QX our supply understand we and -- And end U.S. trying And a other chain that's we as we app demand maybe But is can. thing do I with point the that a but different product. side. better -- of in would channels demand a still the professional that out unknown, with problem also is that working got side when the we on shutdown end are one customers much Europe, of reason see is retail a retail story. is result lot So however, [ph] are security the consumer as to

Tristan Gerra

much. Very good. Thank you so

Operator

Thank you.

next Our Stifel. line of Tore question comes Svanberg from from the

Your question please.

Tore Svanberg

Yes, professional thank question the a you. Fermi, on market. security I had

not you're when You offering? thermal terminal already integration so SOCs perhaps sensors And of that expect if that start forth. to Is mentioned something sensors? would delivering include you the so and would and that on

Fermi Wang

Well, don't silicon. in first can CMOS we with with thermal interface But our sensors. the with of include sensor thermal sensor easily we sensor CMOS interface all, -- CMOS

this capability. we digital, well traditional proof-of-concept of the AI several for chip apply already using sensor with existing camera easily solution, but fact small which very in our shipping thermal future cameras can kind security is we by in interface as using point, our they that sensor. customers, flare example, some even of also fusion And some start can as and thermal that So at with our with our

thermal niche but in and the future think of the that to also with try little temperature, screening I sensor market drives the And a the see the pandemic bit think with past, strong do for you in a was compilers with demand this. can demand. So definitely a I

to without our the answer inter think is I solution So with thermal any problems. can existing question sensor your

Tore Svanberg

set a good. things already several months. follow-up for And Very has you been as the weak on automotive of for that market

all? again up positive are to movements starting business in starting you in market, production that the some there's or see auto signs any at that Now

Fermi Wang

Well, other but some in China, we not sign see positive places.

I'm the is But on off hoping back down cities been Japanese although, of a shutting the and example, recorded because government soon, Japan in Japan. our business For has that come can in Japan. lot

So it created unknown us. to

business, in the we signs automotive I not that say else. see from positive So anywhere would more but China,

Tore Svanberg

Thank you very much. Great.

Operator

you. Thank

of from Ross comes Our the Deutsche next Seymore from line question Bank.

Your question, please.

Ross Seymore

on simultaneously. first Thanks guess me congrats for storm Casey. question the Hi guys. and my I letting be for the ask weathering all question would

be talked seen market directionally automotive magnitude. down for second about automotive down guide can quite quarter You and in a in and consumer. up the severe we've then for as IP fiscal security But your

fiscal quarter like for sort even did ballpark So ranges of any of quantification gave it guide give quarter us your by what actually the in first you second of that kind that for segment? you

Casey Eichler

Yes.

order that I what would magnitude environment that we they tough. had would in other To the is an expect decline. of this and said visibility So pretty have is automotive about

I you because today. to difficult. that security true be into really think be why this we more I I good think confident, feel visibility that, But on tightly the in and really little to too for that And quantify I'm gave made. although, would to I more try correct than Fermi that Again, it a for that's will that tough that some mean, directionally the I be is I environment, would all brackets have but markets, directionally, would me comments fine a have on it just do we of market think a sense broader again I put guidance, up. think give really do get we of some it current to than the visibility of that's QX

Ross Seymore

half to seems that for year carry when their my like about second customers tensions like then trade that follow-up, doesn't elevated that behavior customers It want color. has you into And likely those Thanks actually start the longer yet. It more burn-off to you it combination this $XX the guess stay sound change? ironic it. somewhat buffer. have the the you that talk the million seen you of have that Got I to expect for

give changed has us? you happen of down to sticking year, this that are So like around half anything of burnt just in to belief second that the rest or basically just that waiting the be you for will

Fermi Wang

think see but some we we waiting, also are I signs.

because order shifting that at the like suggests -- that suggests order shipping First gear the but said, our same basically off going pattern continue are HiSilicon of how down think handle in supply. however now they're impact in I they're war to the you the really slowing trade they cameras, to all, bringing time the

more and that inventory, our a at supply building problem this they building ours our they're they Chinese to we point. then when HiSilicon always to probably building are that to So should see continue assume products we up that, lot no you said customer because have ship

difference. a that's think I So

So we they do gradually. some indication are that the inventory bringing off see

Ross Seymore

And thinking Casey, I the of good this costs are housekeeping in half in already. the first tight can guess did it. year? a one. job assume Got OpEx one variable second you the how final you of a quarter. keep about lot that I You

appreciate little we rate to So is some items that the this more that be going quarter, run second are into rate the there in kind quarter of the nature? need $XX or first run second million, half, lumpier a would

Casey Eichler

imagine but cost in you that amortization tools our amortized continue pushes we XX-nanometer, up. X-nanometer as that although the only to as road map forward aggressively tape-out etcetera can again, Well in CAD push not

are are change so way I as would out going year. or other. into the you we some that And But from have other go that to the don't you the any do have say dramatic build one OpEx programs that

Fermi Wang

difficult But current obviously think our that add is watching this at other another very areas expense important is thing on for I us. I'll time to

back. time While terms very X-nanometer of cautious hiring which and being other we people, to are including naturally development, travels show silicon commit to in XX-nanometer at same the we continue expenses trade come cut

watching to the tape hiring development. this not on expenses, R&D but so, silicon commit but on expense we our on and area, are And we out continue

Casey Eichler

And feel it's half. when little in to again the take are able – start these to tell hard people a to conferences are in to going again, traveling in be person place going it's second comfortable to

we'll well. have so to And that watch as

Ross Seymore

Hopefully half. in second the

So guys, appreciate it. thanks

Operator

Thank you.

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

please. question Your

Adam Gonzalez

bit and guys, crisis a all? particularly thanks in was this autos. just at little wanted my taking changed for impacted customer how Have know in TV interactions pipeline momentum in really design pandemic if connection Hi was for current the Apologies But question. my remarks your has your spotty. prepared to addressed the

Fermi Wang

all are different there multiple Well, first impacts. of

of two and only First of home company or all the for example because customer of some even week. working from a working days

slowed been some engineering And the also got has decision down. the activity activity delayed. definitely So

to back I activities impact are how to clear. some understand got clear us. that definitely, -- will figure out working investment normal level we think they're to going impact is their they're they're how out don't going What going review something -- think a projects how the stage when working of point from is down that really we review just style. slow current come and that -- try whether impact they project view, an the to because pushed different That's invest trying But indication projects. for yet. current see We I of the So to to on and whether

Adam Gonzalez

earlier the of Outside security forward. to customers think non-U.S. there moving soon, surveillance to I from on then in some response per TSMC side procure the cut market? And China off question, alluded you an are the it. what chips of in perhaps really be Got might wanting who customers from other to first HiSilicon, risk options

Fermi Wang

few Well, low side, said the a like and there China are before, we Taiwan. on end quite in

a concern. that's So, definitely

However, in choice. there's end the don't midstream high particularly level the mutual I and think CV, middle on CVX chip, like the CVXX, a

situation really that of we it. -- But U.S. and to to more the using to feeling deteriorate talking -- customers U.S. however, continue customers understand why, have China trigger that's our our to are Chinese So, component. a my is concerns gut continue

Adam Gonzalez

Got it. Thank you.

Operator

you. Thank

Kessler Our Capital. from Imperial line the next Jeff of question from comes

please. question Your

Jeff Kessler

the control, to access time have who thank electronic and of getting get from the of markets able a into it when end involved, both you my the you're empty question. regard closed been schools, number into to for video. network I'm video? particularly facilities to spaces you, your to government install, some comes Thank to able that first With if access locks wondering closed And integrate start an in integrators and area, that with for taking and getting been beginning have uptick seeing

Fermi Wang

Right.

kinds from we things. hear of reengaging do customer delay. obviously end haven't But they and those with doing yet, on there's a we customers, seen start our their pattern So, start ordering because

they their You they to empty to level, inventory understand and that. do need deal need with

to we customers, So, by talking already understand start reengaging. they

In with reengaging on already. their professional security fact, our us, the customers are current of camera told most they customers U.S. side

has that professional monitor So that's dealing we when back go I believe hopefully that's time, that security another that when we with. we the reason And than believe At much to And in even as are a AI the establish a great same future. market also trend the impact sign. a bit. camera other of less well that in market and AI to application to to our contactless the fact, solution enabling little believe continue other we this more normal as the help us AI will kind

Jeff Kessler

other but uses out police, it need other that, mobile in other and just there, mobile Axis you their are manufacturers basis, body-worn -- Axis, of seeing and you've demand end their introduction on AI getting -- mobile trying for Axis getting applications? going but obviously seeing mobile camera. Thank a high to companies other to you. quick higher-end Axis and One at more are seeing you just from not you in But on well. camera for It question that mentioned analytics Are cameras. the get appears as cameras are involved some for isn't are demand

Fermi Wang

that Yes, the just all the XX operate and row hours consumption the about. to any the camera need offer at challenge how AI And can talk the in offering a video and power capability clear. and streaming -- do is is, can

our believe we solution with that -- will the our we definitely getting geometry process are So also in And investment that. enable lower and there.

of guard, the you if camera wearable limited. any beginning I for because demand policemen want the it's However, point even market only this or for market, security the to use is for out size at

could you other of camera require will kind this TAM. be out that really our when that However, usage start increase figuring

what add this cameras. enabling it the much increase But, today with experience better think I power technology for. that is to this think more I performance, trend usage a the at AI of customer limitation we wearable looking of customer and we're that gives better however, there. point That's So roadmap performance a and continue because reduce a consumption, kind us

Jeff Kessler

you Thank great. very it. much. Okay, Appreciate

Operator

Thank you for calling.

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

Your question please.

Quinn Bolton

Hey, guys. clarification from a Casey. Maybe first

would On you a be make the Just security the heard second is quarter right. market to outlook, did that that just I overall or up, you say security? sure professional want

Casey Eichler

Yeah, I said overall security.

Quinn Bolton

that's whether professional the overall both you or Can say Okay. your and consumer, just is bucket? comment

Casey Eichler

overall don't think feel it. about the that to Yeah, I got, I right into want Again is that think what's to way because going on. visibility we specifics get we've around of the

market. about has security think we talked lot overall sequentially the For it But keep very good for would both are me, and again at up a customers about. I feel moving of and professional I forward consumer that

Quinn Bolton

it reengaging office? to on to how -- out to customers time and just Is And that working Just or thoughts kind early they with those do the Great. design May takes companies to wondering get that and your to from the for trends. and to June those you start too you, try think in Fermi in assume But of, activity what it it's then reengage? April folks I they home? need figure have to in to assess back Does customers mentioned June work slowdown be what effective are?

Fermi Wang

automotive days office week. they really some working not I -- only back don't they required only a think to for to that, two example, work XXX%. customer for go It's it's home,

gradually limitation in we very XXX% I into don't California really think slow, hurts people back And to I moving progress opened with the the about, talking office do immediately. that even are gradually. June in plan employees I think productivity. So start But a that to we're we think if office. going but going it by

very are that think and the working I the that back-to-normal strict hours rules see about putting about reduced. conditions. employees But will I important has to productive for be really to view, loss of us point there think most companies my is from for thing working the some So be removed

Quinn Bolton

had the detail. but out, could mentioned Understood. know last you And I if ways us little guys any wondering win. design it's more just a you question give the e-mirror

single I said channel think it you a was e-mirror.

wondering, does the and like both vehicle us just per just sides rearview that Do So dollar give the sort you of, or for camera? have any maybe on that content mean it's rearview, sense a win?

Fermi Wang

to we other design also right we So into we -- focused think but add channel trying some add doing in one three one it and also plus cameras. the example, a is I a start But three other But but one three now people windows design. for past all their now the functions use one channel mirrors. function on -- channel, lot of to channel what with

customers the a single talk to two single that think mirror. and they rear mirror -- road application mirror to all I map well the So as as well leverage need but we as mirror channel three cameras as also

have using are they we mirror. talking about. when map So one you all it make customers for electronic of cover why supplier a the needs road all address of that to to That's easier

to believe single one that talking So I offer although, channel we're the past. in channel our from then at three can map three leveraging And the we time, design efficient experience on do about cost. complete but road channel mirror now win this

I winning think we that's the reason start those designs.

Quinn Bolton

Fermi. you, Thank

Operator

Thank you.

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

please. Your question,

Suji Desilva

to put just trying Just the made. consumer Fermi. to the you market? Casey. together Can I'm circle you Hi, Hi, back comments security

but is security said because I the then in you earlier the year. momentum, the market of had up. You be limited think, And macro, overall visibility

Just what market into obviously, going making you're security a qualitative different particularly consumer be it holiday season understand want would year the the on to comments normally year? this

Fermi Wang

Right.

So last saying is IT change. to that And is long-term point consumer continue clear in view our that this we to can made we it of that had us all, are grow a time didn't that we revenue. call, first a help market really of conference

view retail got sell short-term use we that even some them them closed. down a store because shut that and a their of customers consumer point of -- in However those to All lot can of our of through. some also

very season visibility how little retail I'm And right is what decide just the because think demand. to need and as want the you to That's to prepare a to season. respond their systems gradually is to stop customer prepare our half business all channel. to year, selling second start need reopen, will stores now and trying stop So the it weeks open to have we final they know now. products I right into there of this selling and Because we those take say. They for they need putting until if

So the second see reopening they for we are the customers half to our waiting particularly forecast selling for to they and to season. how from want how this or react

Casey Eichler

But feel to wave consumers waves two to control ago or Suji in second impact similar quarter of it's get access the put the the it. the any for was it's on. hard had a market. point half, consumer a it's it's difficult automotive CV, if continue security half of know, we to us everything and this some But professional talked just going is as we of talked year precisely the year. where cloud time still staying say the and the being And Fermi's at just camera in or were going hard it's wave on of forming robotics the what you going in we CV. wave in we that because As first going to home which visibility to much last that a the with that into type make we else, just and second call, Clearly next Clearly of it's and big CV, second second with be understand everything up other what's about in and reference a second areas feeling happen the in to half. as then about

Suji Desilva

color The you are? on and GPUs Okay. XX- talk stay color. pushing versus within competing give question the guys there here be map what market. you're Just – That's helpful be Italy color are the perhaps you're key – to Any some And if X-nanometer you for about a vectors competitive the Can know me. helpful? map that markets you fairly I kind road about the but high-level then the products. you soon automotive product there maybe road the have, on us see could in of would live FPGAs would helpful. and

Fermi Wang

said auto has us before area that consumption differentiate. I low give try that So, is power give low fall we that have that differentiation. in to many security times And node, and key behind all, silicon if are there however, advantage power that architecture power in power But first moving totally. space of even low low think consumption do our we space, we – might competitors in been are that forward big the – moving same the one our process With has and thing. we we us two and that to companies our aggressively architecture lose like

across the for So board. X-nanometer it's

for to if And consumption, chips for automotive, continue chips at not address competitors have to design advantages. you address X+ time CVXX to you need to all trying our X-nanometers the which for automotive. much silicon move keep power leverage the solution but performance our that X-nanometer lower achieve camera that wins, their than For sorry – is both doing same is that requirements to should everybody increase. we our well CVX and architecture and as appropriate to design to expect to only security in want also are And the CVXX, we we Level the that CVX as

Suji Desilva

Thanks, guys. Okay.

Operator

Thank you.

of comes question [ph]. from next Anderson Colliers Charlie the Our from line Security

please. question Your

Unidentified Analyst

rest wonder variables taking the the my I just of year. a the of how of And question. inventory some to inventory us follow-up. of little to with for year. I've a the high-level Thanks have bit your Yes. give could got in with overview deal in rest lot just a out of you'll start came you quarter, Casey, maybe down treat the

Casey Eichler

Yes.

bit quarters the four we've inventory rigorous As brought done over know and inventory more management. down a to you have last six little –

it the area It that's discipline we of been the business. there just point, hovering good and been what's in into getting was of in beginning think orders really and I At change. isn't for much of to kind ends a this kind see, a the and this quarters $X we've million on that. roughly helpful read depends and shipped

Most change. on of are product and it So really inventory that of high wasn't runners. a much our

the that to want we of now tricky right everything managing with we're sudden have so But a else and It's visibility a feel trying to we little don't and the to a an And because inventory caught feel exposure long upturn right you – don't stay place. sure lot with term. product. you get all like make don't that in of

trying in to we're so appropriate way. balance an And that

Unidentified Analyst

on Okay. for subject Great. the cameras. just And thermal my follow-up, of

pull in we're market the the I immediately. think seeing real like

XXXX in So ability that stand is or your there needs I'm take far market the in there sort of and to any things design to as activity silicon curious are with where beyond? that serve your that place, Is a need, Thanks. existing serve can market. that models or as more this out

Fermi Wang

different will do can thermal the see this are year. said, will however, out products solutions believe enable ongoing professional customers there's from trend believe current different -- there's you this and when I like Well should on come applications. working see. we this I demand level. But will high year. I realize that And be -- That believe I believe security we as price that be said, easily out camera started, hope that But think down and there coming do as that like that you that I multiple that soon people integrated I demand. totally a And the

fact evidence -- that camera is market of right you integrate And with even camera help expensive access finding can thermal in was business, camera lot very easy software a security doing as sensor identify want people driving. be helpful the but also And algorithm I well past to right when control. a biggest and spending For very or to time the to to thermal as now. that at more Those very for for at that we're thermal the power of right it's price, with that the a thermal [Indiscernible] way new become use can person either integrate. imagine all sensor and the in even example, together. the problem automotive sensor avoid in The to fusion both between animals sensor that home popular from usually the not you price opportunity, security will if can very this do that you're helpful. of developing applications things for as -- And become for all looking well of effort as the my sensor opinion

Unidentified Analyst

Great. Thank you so much.

Operator

you. Thank

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

please. question Your

Matt Ramsay

next talk but I automotive there, might that nice the that to products what industry the And it about ASIL Thanks. was for silicon? if been Obviously, those of very months? expectations you products, certified hear you've to start lot in ready XX the XX you might of growth afternoon have waiting that space just like the on out working are over me your it for been guys. programs for Thank are automotive much. to sounds for rolling out. a uncertainty wondered Good ASIL

Fermi Wang

Right.

plus are and ADAS designed application, DMS this for CVXFS cabin for in chip, So be CVXXFS ADAS they for or can the used although mainly plus ADAS monitoring. they ASIL

combination the for are we talking applications spot multiple. design. three And sweet the that of those to are the with All

for ADAS CVXFS And CVX for us in space working We in this line get Chinese trying to evaluating past, new Korean strata there's there I to about we are a customers there are very the partners partners. with enable other then talked are are vision programs. and fact, one high multiple and announced our what application chip guy -- with. we CVXXFS In sampled use with they their planning think But car will biggest in plus is software the the and using there soon. already and opportunity

pull software make and trying Xs our their partners this sure we Tier time. to on So through can platform onto sample can a

I in months. to have think this is do the next key we the several execution

Matt Ramsay

the type some don't things software like Go your that It I branded bit doing some been products just stuff that a things that Thanks. for you're in be that seems automation, communication follow-up, obviously companies markets in. cloud that Amazon be the well for markets I it. that's And last product development partners contracts logistics Got investing your won you've little about factory with on over as in software develop or Store delivery stacks. a your a shipping the there's work with from XX -- their push noticed they may and and that the so with some camera company trucking months those might know for overall package automating, maybe more Amazon those some to you're with suited you something your in and

how and an thoughts, it level timing be high opportunity, happens? that opportunity important/big Just an of when might Thanks. such

Casey Eichler

we we this all, cloud have. COVID-XX of those we to because we in And area, I before. this us. we discussion to probably continuing are in invest believe other important It's market continuing First there's And and opportunity, think is long-term our long-term. time mid-term this the areas. investment. every we are -- mid that all also because big in for And is And the didn't I mention invest like to think said a

we meetings, support them, continue with Zoom And we making development what talk of sure also said. partners So, to -- to to you all properly. you conference continue just to a the over mentioned, over they are we do call business while them work

projects So, ongoing. are all the

in at However, product. And that normal, Again, to we you direction expect and didn't we back time, see to projects mentioned, do we closely because continue same to when that but that but some to be some area talk we slowdown with projects introduce reopened. invest the to work COVID-XX. although business things our continue continues the need about much the can customer all were to an

Matt Ramsay

appreciate it. I guys. much very you Thank

Casey Eichler

you. Thank

Operator

you. Thank

for today Our question final comes Craig-Hallum. of Richard the from from line Shannon

please. question Your

Richard Shannon

guys. Thanks

expectations your geographic China questions kind rest quick you quarter, world. up. of of talked if there, us give for about versus me, you the specifically the a two embedded security Curious your being in July breakdown for Just about guidance thinking can

Fermi Wang

Yeah. customers talk digest their basically inventory. two China, We to continues about

areas, side. in from that's indication forecast. Other they security IP. we still we normal the So currently about I think think probably it's consumer professional that talk an slower camera are revenue, QX And

China, side, many there's consider my war between with things overall, than to time. even in at and this I U.S. factors China just So too geopolitical uncertain the more become uncertain, the the trade from say, have very, to situation very and pandemic opinion, because

only the So and we the is base. we understand they what We're a are support sometimes how our continue inventory help customer, them. talking to project, how to to do have, basis the intention, much in thing talking should to weekly, regular understand about doing daily them,

times that, of All Ambarella continue us. saying all particularly is have are showing That showing I component. for in they U.S. them to But is problem many all think the we of concerns, that happening been I targeting not all use biggest think the the meantime. but, of

Richard Shannon

revenues here? the hit Thanks Okay. That's goal you Fermi. XX% My for here if helpful. for CV here, your follow-on this do this it question year kind see on out detail, of your Is view, just a for revenues quickly here, playing dominated of geographic of point the strong Again year. kind that or you throughout from you or do a world? in China, how balance of see

Fermi Wang

said we to chance of pretty revenue, very in say it's I'll think, still CV it's And all. at won't that, the balanced. we we I still actually that have say I goal good that. XX% a dominant think China achieve

Richard Shannon

the me guys. you. appreciate detail. I Okay. all That's for Thanks

Fermi Wang

you. Thank

Operator

conclude ahead today's go the does sir. like program. I'd further to the program This any session hand Dr. you. remarks. Fermi to Please back for Thank question-and-answer Wang, of

Fermi Wang

Thank next you looking time. Talk to forward all. Okay. talk to you And you I'm later. to you. Thank Bye.

Casey Eichler

Thanks.

Operator

for program. conclude and This Thank you, does in ladies the conference. your gentlemen participation today's

day. Good disconnect. now may You

Ambarella (AMBA) 2 Jun 202021 Q1 Earnings call transcript