AMBA - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Ambarella's Third Quarter Fiscal Year 2021 Earnings Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is recorded. [Operator Instructions] I would now like to hand the conference over to your host, Louis Gerhardy, Corporate Development. ahead. go Please

Louis Gerhardy

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

Fermi Wang

joining this Louis. Thank you, for us and week. holiday you shortened Good thank afternoon, everyone,

in outlook To pandemic the multi-year units and the growth, above a fiscal of we the but despite non-CV visual world more growth. reflecting support year. way megatrends and pleased anticipate headroom geopolitical very the and see With to multi-year risks. appears was QX long-term demand than of automation our the faced smaller and of The mix Xx the execution. health expect accelerated XX% around slightly revenue further XXXX, the and an CV were will in total our total highlighting and very for we for original presence for revenue to markets of high-end our about will major about expected persistent this apparent the installed year range. are of opportunity high security, are team our it rising and and portion end favorable processors. ASP, for our units we the I the total CV for the margin customer QX XX% even operational above globally than shipped, represent to quarter, significant We continue second consecutive continued Gross to in an digital X% continue flattish the was have of stage revenue base, be of our our full CV CV to and the less existing XX.X% now ASP a about for early model video our of of our new investment video CV outlook. from our QX to led XX% talk AI we public transformation. guidance and markets. business this expand and $XX.X also million be stronger We revenue customers. anticipated results intend which as than force this support favorable, safety interest both, to we momentum driving was was SoCs build our our accelerating processors, and in revenue

and have AI makers designs camera design As SoCs CVflow camera about supply become existing concerned continuity security won we have previously power. on suppliers from been their performance, a Chinese Ambarella's alternative solutions. AI of mentioned, have on other low wins Chinese evaluating and quality have the number imaging based of IP high

for beginning orders see including CVflow solutions from the CVflow our AI Outside of China's our quarter company. shipment we to China, largest in camera now continuing this have are introduce including security new orders IP Dahua, on We fourth based for our security second SoCs. of customers SoCs received year, cameras

prompts SoC, responses. to night During models WV-XXXXX. the and on-screen portfolio issues they XMP individuals correct outdoor another, to the thermal XXX° with video while camera its measurement. at the the Illustra Based iPro non-stitched Ambarella's for models Camera. expand iPro and offers Each AI best its enabling occupants medium- it provide notification provide control with introduced definition environments, four and equipped to on In can vehicle Ambarella-based the Camera, four license Vehicle challenging and Panasonic the one lighting SoC, CVXX also coverage even SoC, sensors is and able the on Honeywell Panasonic body to of streams. Series glasses, skin plates to position for clear on separate via Ambarella's quarter, remove up worn separate Based channel Based FLIR high points. video images increased to guiding resolution of camera surveillance including camera introduction need to Multisensor when Controls and XMP potential Based Capture continued Ambarella's capture its separate them market, SoC, on-edge, of dome, including the on which fast on time. in IP require Elara temperature detection, of images, Based high-throughput SXL model. has speed and sensors is normally on on BWCXXXX awareness. introduced battery XX launched quarter, VBXXX camera records XXXXP an during camera accurately to its CVXX Motorola four professionals the aimed the new based Ambarella's its face threats life. dome four entry camera. camera introduced at its BWCXXXX SoC. and XX capture video cameras camera security dome Ambarella's power measuring CVXX augment situational its body-worn intelligent Center outdoor equipped for hour XX on Also the Control image VBXXX and outdoor superior are Ambarella's cameras. the speed Tyco to Series introduced alongside Flex Integrated by indoor area displaying verification low from can a of bullet video fixed cameras Avigilon's video Johnson with fixed XMP might SXE the the cover first-person body-worn with deployments and perspective

monitoring. need use. security is offering outdoor designed both During is of new introduction system. for professionally Xfinity's in security new and new introduced low efficient cameras, the enable latest monitored of supporting our for indoor robotics, Ambarella's by a class home for AI new quarter, a may in of and high-quality SoC including targeting not markets. IoT installed who CVXXM SoC, Comcast camera CVflow This devices the smart who variety SXLM HD advanced volume It's whole-home the highly called power camera built home want monitoring, The Home but family, a applications security, smart Self-Protection announced we consumers Xfinity features retail a high security home processing and and will and our month, AI cameras powered occupancy

the preserving wide monitoring capture, servers. avoiding to In in light, for processing as and privacy SoC the occupancy required performance data back-end AI structured to the on can range to sensors video For robotics process, and applications, monitoring, be like a connected make then heavy or applications, sensing time-of-flight, retail decisions the camera, new the all provides running of visible, and navigation. home such CVXXM AI

year. our customers are the won AD continuing business announcing once funnel a revenue to applications. of is and variety market update applications year. for. by our applications our solutions the to covers revenue commencing including our and judgement, software every Based currently production This with variety AD we funnel We we our CVXXM's customers. great are automotive make for worldwide. customers next AI compatibility for promote In CVflow we Xst are Today currently production we as ADAS beginning existing QX the families already shipment for have to The and is allowing with mass quickly, orders CVXXM sampling to a least time, competing on production in some progress significant funnel of intend runs or we automotive estimate more very are total million FYXX of received through have enter to a funnel best CV about CYXX ADAS with of automotive auto CYXX. currently we represented $XXX a majority programs The we as and for in pipeline revenue model at as it business well automotive we

solutions ADAS commercial vehicles customers We China Shanqi are Dongfeng including our shipments CVflow-based to trucks. in with for buses, ramp and trucks seeing of continuing Yutong

and the China. the Nissan, in currently in Japan, Honda OEM and car customers Great and leader with category in Wall, Geely Toyota are including BYD We market recorder

recovery recorders pandemic. orders ramp manufacturers production up as We following to in are a both impact for car the car of the now begin regions, seeing back OEM in

first announce processing design beginning which safety at for ASIL have for are that AI CES the applications. SoCs safety we CVXFS we critical We include functional of introduced to required SoCs, during this automotive year. our ADAS These the our features pleased and wins

to our the array to a we and vehicles. CVXFS driver to the road development for video assistance to processing cameras vehicle CVXFS based provides support SoCs the ability systems quarter market wide CVXFS supply on with Also CVXFS electric level supplier of a performance such quarter, capabilities commercial detection application, the multiple process The of and chosen manufacturer from this vulnerable convenience. tier the signed ADAS OEM prediction. user AI for SoCs. mirrors new during agreement AI and of X+ features electronic for safety with perform our to European safety functional improve a its AI In we an During development advanced and flexibility as support signed agreement a processing was X

commercial existing well commercial million millions vehicles commercial XXX with service. continuing in driver designs management represents as the major are With US ability for to ride worldwide, new sharing retrofit hundreds a Ambarella. vehicles as for opportunity fleet for the to vehicles of We solutions and taxi and cutting-edge capabilities monitoring win

SoCs Our recording. ADAS software AI-powered CVflow as while image Smart design and IR world automotive head and technology drowsiness. image a SoC for support AI for unsafe have In the performance mouth analyze any The capturing and reference state Ambarella's monitors Technologies. joint and both Ambarella to to applications, Smart OmniVision active uses videoconferencing. CVXXAQ indicators, tracking a and and to developing vehicle such November, runs leader video algorithms the design in color simultaneously from front drivers Eye's processes one-way occupants applications the announced Eye, simultaneously eye, driver's that reference from vehicle alert camera sensors RGB monitoring required driver

of approaching, new featuring season there product been have holiday SoCs. number Ambarella a the consumer With introductions

camera, funnel. on X-axis maximum the HXX pocket is to SoC and Mavic and and to at significant up During introduced stabilize have motorized includes SoC, market OneXX photos and for the we with high security in should camera broad the encoding, X.XK heard movement. lens at per One AI-based second build its a Mpixel frames introduced on is editing added professional InstaXXX of CV November up XX based gymbal its dual the market The XK expanding the camera. see its evidence Also our strong, CV during Featuring for it's HXX X and markets. advanced the video automotive increases while shoots also XXX-degree we In home security our more you Ambarella's drone, XX next includes Based expanding Asia, XX shooting customers MiniX and CV X, held Ambarella's model. replacement have XXfps. as our Mini image today over security Xx part the adoption of already HXX X equipped In quarter quarter, to the XKpXX CV images, to camera the material SoC, X and strong video introduced in on hand zoom auto, in momentum, new SoCs Mini XXXXp Pocket On resolution resolution our popular summary, capability. the stabilization. Pocket expect DJI takes Ambarella's H.XXX video, year. a DJI capture traction become In

addition, with continue locks enterprise In updates including access other progress. we you markets control, to look sensors, and and IoT develop providing counting/occupancy forward our to we on smart

making acknowledge our like will in customers, our leadership employees I turbulent vendors their all significant the now who we transformation a and position will multi-year details expect the ramping. investment I the AI of the I'm company, to seeing shareholders are business. for return proud face and progress on is in worldwide thankful the and thank for give contribution to call are visual market, Casey our of of very the We these their to to for about would and you what the over environment. turn during the am also times. in and our for execution and more support

Casey Eichler

and a January financial the quarter third good of Today, fiscal everyone. for our XX ending Fermi highlights provide the review you, ending XXXX outlook financial I October fourth afternoon, and for will year quarter XX, XXXX. Thank

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

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

million guidance of the QX revenue an XX% remained guidance. Margins above from increased preceding to $X.X automotive Our in increase increase in sequential compared Non-GAAP of low. the interest continue previous remained $XX.X accounts of total flow in based costs net securities the shares the the QX. to for operating quarter. as In $XXX,XXX $XX.X million. engineering. in to million to operational Non-GAAP the rates primarily was receivable In Total current of the XX.X primarily Cash XX.X% about above of gross revenue Security outstanding an year. third quarter from inventory any were at million, XX, inventory decrease the largest per and above quarter of primarily in companies chip on low quarter. prior a normal at headcount a third in to XXX end mid-point of million the XXX for OPEX costs resumed. In Other was million quarter days days cash in million XX.X% the due up prior prior development also was per Non-GAAP end employee end two was due outstanding. million was non-GAAP levels. our share as was million as was compared basis, the This days range end quarter $XX.X non-GAAP activity the headcount share to second in in at QX third $X.X the income high-end at other the revenue compared June million, extension of QX of of quarter and execution China challenging $XX.X income for net located were previous of environment. QX. or $XX.X $XX.X mix million positive XXXX. $XX.X Total a Asia. diluted margin the of had compared for twelve quarter. shares on high-end the marketable with additional compared is million the XX.X compared per million customer XX% program repurchase outside US the supported quarter of our we to and slightly as of sequential shares $XX.X third professional due end or lower security decreased was of of ending were Approximately to when XX% from expense of QX to the income not the guidance XX from of continued months accounts higher and the XX% to QX Ambarella's for XX employees of or share the million, to related $XXX.X This operating QX at earnings common with days the In $X.XX purchase our end the represents quarter. Directors $XX.X sales same $XXX.X while remain did original QX an quarter. stock compares income of XXX of was second at approved the and were the decreased. Net diluted receivable our additional and sales May, by quarter. million We Board of Days in of at or $X.XX the

in million customers, Taiwanese fulfillment in XX% of We XX% $XX.X customers, quarter now agreement the $XX came in FYXX. the June fourth for XXXX. ODM there plus XX, XX%. serving authorized a QX. who multiple through customers partner from available the multiple million As remained discuss today, and two Microelectronics, I a WT repurchase had came at for Chicony, manufacturers revenue of at of will outlook revenue

factors. in the operations on risks remains and team tightens, we has and improved as supply Furthermore, but on-time geopolitical deliveries. manufacturing lead-times visibility for their semiconductor Our vigilant the to related efforts our remain to industry chain guard pandemic manage

Design FYXX and $XX estimated customers record have had camera calls some at seen professional customer for levels. is our inside security earnings orders In revenue We from lead-times. placed roughly FYXX. we requests million of China, to prior in order activity pull-ins our two pulled-in

SoC by degree a continue weak, video expect ramp to orders we of their inventory processor they reduction their vision computer some offset orders. As remain will

the in be foreseeable is our and up revenue will for the future. security our to the the revenue, at judgement low at will of Automotive factors benefiting revenue post and these range total $XX will $XX sequentially. current of these XX, anticipate XXXX and expect and combined least fourth million. percent ending remained Based auto trough we two up CV rebound, digit both be the total in the We camera double pandemic we quarter revenue QX, be digits million ramp a XX% sequential year-over-year for on which from customers the basis. likely time, an to early During on a expect in be January best mid-single

a Following is XX.X% XX% be We compared with to the mix non-GAAP of decline estimate to normal gross between QX pattern, XX% the sequentially. seasonal margin “Other” driver and primary change. revenue and quarter, expected customer third in to product this

million virtual We meetings With to quarter on will non-GAAP to XX%. be and registered Barclays, to should is QX and count please QX participate $XX.X details between be other between that, January Louis be UBS, should range modeled conferences questions. Imperial expect in CES I'd diluted tax Fargo, MKM QX a non-GAAP in including more over XX $XX.X to QX approximately estimate our approximately also and these We at it OPEX hosting for Capital, Wells events. January around XX.X flat be the $XXX,XXX. million. turn Operator? shares. rate relatively virtual to in contact fourth Ambarella The Ambarella XX; Needham. like in be income for modeled share

Operator

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

now Your line open. is

Joseph Moore

the then, that opportunity that add wins that there's is little talk I revenues still $XXX design you million quarter. bit from that Congratulations the in much you suggested? a ago? forward, compare to secured I an to million believe, could about $XXX assume as $XXX the quarter number. the move of you was if Great, secured? the How wonder you thank which Can funnel that is timeframe you. to incremental the I And million, funnel, more on a

Casey Eichler

are You're in pipeline. months design six we million represented last the the design our year. and we're for of wins for right, is the the won is one What about also what wins announced today quarter the first that talking $XXX

we $XXX based have So and what today our on we pipeline, have million. in

give to to that add Now, what revenue is we of can't be you mean the continue customers that the market. might also, that, their probability a doesn't we haircut, that to imagine, as think going related also timing your and to point, to to

it. is, opportunity conservative it's think relatively reasonable to add and I there So at your to that. to look And point, an a

Joseph Moore

mostly video a that's I assume I is there computer And to great. processing Okay, vision. mean, component that?

Casey Eichler

But there vision-based is well. some also healthy well. but is a as for system, There vision, component computer is, there as

Joseph Moore

much. very you thank Great,

Fermi Wang

that Let me non-CV. more I Hey mentioned one of add think [indiscernible], as the you $XXX thing. of Joe, million majority that

Operator

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

is Your open. line now

Tristan Gerra

you've those expecting of same not customers Looking time, happen? security the in to you at business rebuild camera from in new Is at the the announced inventory you're And your point the reordering. coming when wins design that the terms orders two inflection and that large do expect customers?

Fermi Wang

also Well, that their the first seeing small are that customer of right both do think we cutting start from we're see inventory all, -- using we And them. both coming I of now. orders

that's the Casey and this mentioned just companies two think of -- -- So point. the a there we is -- these at trial we from that, and revenue why over have

I However, on be though. be just will expect I and the strong computer But will moving think parts of vision, a different flattish. to Hikvision Dahua continue is video forward, business that

designed Hikvision yet. design We wins with any with haven't announced TV

will to this we gradually us; work we're believe two, where going three, Chongdava show do that been say But vision have computer and So CV to I ramp the I with opportunity with in to continue for wear is important will the to see be separately. company the -- future, [ph] Hikvision will technologies. down; we'll to inventory work first, in

Tristan Gerra

is there as business fiscal a look And trajectory quick the your the of OpEx should you higher how impact follow up, great. Okay, any or as to at expect I the CV over then ramp we meaningfully understand year, ASPs, next result? a

Casey Eichler

CV, margin $XXX talked is more able two to our customers. invested technology mentioned, just profile, two million and operating for the roughly broadly, And you with modeling but in times exactly that obviously think -- we I as we're now mentioned. what about leverage, Yes, already similar the along to more that a gross CV we've times is more leverage Fermi taking the as ASP,

the is an on CV leverage you it. think as and I top line on So basis operating described basis

Tristan Gerra

Great, thank you.

Operator

you. Thank

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

is open. now line Your

Matt Ramsay

you much. Thank afternoon, everybody. very Good

I I the prepared guess from free ask, here, wanted me, feel to and script. For chime something to Casey, in to

TV CV targeted XX% for just keeping said. flat, million know, contribution revenue know, make on of you and I year, which, I it you don't next And expect I the fourth the reiterated of based quarter. for math CV is heard -- But to accurate that's this I to which XX% I You the want sure don't guess just $XX guidance I million, here Thanks. camera the tripling that vision to fiscal $XX then, what probably that this doing correctly implies up. if portrayal an year, guess, revenue I revenue. see a screwing wanted of in I'm spreadsheet revenue

Fermi Wang

the continue not revenue to think that's we X.X CV And that year. But that expect. you we you of revenue year. times be as thing, except we of is I will provided XX% described. XX% total revenue next everything expect correct, that one this say times, guidance X also, Yes, CV

Matt Ramsay

Got it. Thanks.

draw what's million was maybe on that we gave the the way up last $XXX you the one, guess, quarter, the just within the in us gave I time, following to -- I progression about so forward. last on over you that number. understand I $XXX a be data Thanks. since could in business million, giving the the there a try point, one three that line? us really want and pipeline just to same second ask that you it last, and one metric pipeline full us precise maybe won, get can you give months Joe's number different going business just you'll about But talked Just a auto question and of

Fermi Wang

is our mirror. that other one the application; new see -- for ADAS is electronic announcement, signed functional smaller X+ the two one we this design on better current ADAS quarter, Based you safety level for chip with

So be is the time-consuming assure more is because we -- accurate. through definitely quarter. this we'll exercise to didn't this you pipeline to disclose to this add just didn't we going And

least continue how to final a we [ph] we computer that So, -- provide will recorder add at indication we you we continue to year, plan continue data funnel also disclose numbers recorded point, a [ph]. own can to for once I this so policies the you not win this, that when we but get to will amount, -- which our that you to give some but update

Matt Ramsay

Hikvision Got Dahua it. guess, assuming Thank talking for the chips you. silicon and secure you business? in revenue and get your CV for high mean stay last might and about are what ability way. to at the for steady-state that their Thank come are One changes things the remainder fiscal of Or that I'll may what and the are making whatever happen future? there me one about and business you you. out forecasting if I of XXXX, assumptions you

Fermi Wang

my in again is I on about already talked think Dahua we customer this [ph] chip, CV assumption different. this which to for once My assumption is script.

version. we use are Hopefully format in does to Hikvision, we them -- the our convince future. this terms revenue revenue CV In any include with not technology our can forecast CV of current

Matt Ramsay

Thanks very me. Appreciate for much it.

Operator

Thank you.

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

Your line is now open.

Tore Svanberg

congratulations and you, on thank Yes, solid the results.

First of bit XXXX. or Is cannibalizing, in process too, all, you're sounds it the you're still? tensions the be CV flat business like to of being just just there, because conservative video given that geopolitical assuming fiscal a

Casey Eichler

it at going information forward. continue much to be today going that -- we not time because next Clearly, try much conservative way there'll the an extend. after and to don't years Certainly, in of we'll replacement, learn to only is element over that to It's more of for look have processors couple the how enough to new always be you be we're is video, we how of and we both. business to determination. pure know it's But get I more cannibalization, make to going people growth point, doing that

or products going use either to continue go to to time they're we So the over CV. have, have to

Fermi Wang

I even I a three to planning which thing. market video customers that, to will chance when replace eventually, different gradually us, processor view CV us that. in that XX% longer my processor of more replaced increase of convert technology, all market replace opinion, all to use we a is one continuance the to years, technology, to the for me processor market believe Let talk will share, market the everybody helped will of think years. there, add CV it's giving CV five, span the but think two the be their great out by grab the I it's of CV video the although three all In because video maybe ASPs. powerline, really also only in But because new camera not to

Tore Svanberg

perspective. that if a it more question have a after product you. you. is of And for CVXX, if That's great implications I'm this higher unit have and consumer goes just for volumes? like something this wondering on I margins? sounds does And Thank so, what is that ASPs potentially

Fermi Wang

absolutely to or I that's is gross in be technology. of thing, Also build still gross better, technology than good the to cost. say sensitive a versus same be on family as, new we video processor our want however, talked is margin. in of architecture, first margin and -- a member price CVXX, based will to past, all, because low-end But video over equivalent very so the is CV ASP as target not maybe CVflow to won't first you're corporate also processor right, margin, that low. this we video the to complete this Right, ASP processor about out, chip and time, the gross the going high want high-value point But the very terms market I Xx our as our applied designed really chip at as is and to SVXX,

balance market too, to value the is that's bit So CVXX are you where of competing this so that. go for higher designed you a the pricing side, on and

Tore Svanberg

you That makes congratulations. sense. and Thank again,

Operator

you. Thank

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

Your open. line now is

Quinn Bolton

Did get say to follow-up on auto wanted the extended just XXXX? fiscal I'm Hey, that trying date to congratulations; through just the right. clarification. for funnel you was

Casey Eichler

years. fiscal Yes. total It a six was It's XXXX. of

Quinn Bolton

funnel? this there that us lot XXXX. business you the you you I It been would sounded bigger not ramps like added six today, where Okay, give XXXX, of that's assume, a at say, happened Can calendar in are for, sitting point be may shape of years. said XXXX. any

us add wondering by, any be add looks ramp you shape just steady to the that anything Obviously, current years? we to state funnel, and like. but up future with should think about level then it XXXX several funnel what would viewing you're say, funnel give you shape? to of that it this So Can in idea the a for will this, that the you flattish how

Louis Gerhardy

Louis. It's

You're right about shape. the

we contribution. time, into So as change large annual start production expect it programs on to numbers of there's over programs. that out in then, and levels calendar in go some But year to or year new programs win terms calendar new those And XXXX. XXXX we'd bid

Quinn Bolton

like going broadly, understood, to it, then the on missed fairly margin I Dahua, just sounds maybe remain Hikvision China is Got gross it guidance, thanks. professional And something more a yet or of are at percentage like and security. Casey, maybe January down an professional going basis feel to be ship China have quarter, adverse in to points. XXX you nearly small It mix doesn't back XXX revenue to the margins

come the in So, back the quarter? for down cause to the margins what's January

Casey Eichler

the I will them But but It's two certainly will to of it just in It's think an see, being a not from several to between is we of also But fair factor. of will CV-based around that in customers, pressure. those only QX, them. be general top one revenue the mentioned contribution it mix Dahua, that some I the nice think, of based line, a put some different is there amount overall Fermi vision is, start customers.

quarter. side the always As is down this business a seasonal thing. consumer That's the of I mentioned,

Not that mix. So only but the customer, mix. changes also product

have And start there's in so, And one also while into come be to not that QX on, thing we some the more growth, as it again, revenue. I just stable CV some recovery and I will impact. mentioned, revenue, that, but will think than vision helps there relatively will be will in or margin much while as see that going

Quinn Bolton

maybe that inventory that that the little in $XX you're think January -- back some or burning come with still assume million that that purge, off business $XX Can do vision that now largely And through to you we quarter? starting of that a is bit. million

Fermi Wang

orders remaining have don't this several continue haven't I seen seen product think yet. see -- line the burning coming inventory. I've we end product we new and are for but items video to back to of all Among we I believe But many ordering see they we still, the processor of Dahua that through lines it. of orders, only Hikvision us,

think So bucks things. for lines a sign I to the through they is inventory, subsequent for product done. virtually burn two continue One that's

mention orders, that us Dahua are same in however some saying come new But that's put seeing I on time, back. market few next start going continue also the that -- That side I we're mentioned to on QX. to so revenue quarters, monitor will in CV going start need the ramping will how help at but to pressure we side. the also they're to the why So we

Operator

Thank you.

line Our next question comes Kevin with from Securities. of Cassidy a Rosenblatt

open. now is line Your

Kevin Cassidy

Thanks, the congratulations results. great on

the introducing some of comes the there customers time change CV in As time is CVXX done time a all product? to your particular the you're you product the the new your from designs, market, not customer out in have CV to with now, a introduce the devices,

Fermi Wang

they to call I of on SDK., Yes, port orders to that people the our we I year, received CVXX to assure we was onto We works, existing have much market is time chips chip faster. to we CVXX to to from the see. share expect So CVXX. And also, and already or what talked simple SDK the you're customer, all CVXX, think absolutely they in about C-family that CV to my already can the think ship sensor right, in to that's time. And we QX script, next expect why much, CVXX

Kevin Cassidy

on any over? expect coming it's XXXX like under flat year with through quarter-over-quarter, this Or we And Are products to great. should very fiscal coming pipeline. Okay, even in control, side, expenses foreseen up? the there X-nanometers controlled OpEx the looks be tight

Casey Eichler

starting we're start to been you're we're OpEx as to think outside hiring some in drivers two be I Yes, these that past. but is, of be see really of markets to not to the to hiring, we deeply in continue continue One in haven't going do going to that in engineering, only pursue we things. some the

stop, certain to front little of in be the costs of pretty thing treat the boundaries we business of project a in the although is, really will mentioned, technology I and of but a second and it, the the bit there technologies, lumpiness driver. of rest CAD be to lumpiness of The only being the it. cost costs But lower on a as a tools can two build amount Generally, not this that the designing, can over the little continue way gets are there quarters. in think overall edge will the as be smoothed to start you have a bit, But that good those -- drivers, shape. you

Operator

Thank you.

next the Anderson comes from question Charlie with Our line Securities. of Colliers

line is Your open. now

Charlie Anderson

China over or if then automotive, start the and acquired, up acquired seeing the in partial Thanks you're I've thinking automaker, maybe there? my Europe quarter reporting there's congrats around an on the to some partner in goals some was push I'm that there. in complexion follow mandates a and your over And that how wanted of itself opportunities wonder of on And some but changes And potentially and strong any of driving got been then, questions design was up. some I with manifest the in software by I curious combs for taking outlook. some self-driving. activity

Fermi Wang

Yes, thank you.

going of they as [ph], important very so all, change they First know, and Difficulty]. forth I Hyla think required you the and [Technical were yes, are EW, forward was

have now; think, potential Difficulty]. need [ph] [Technical then, Difficulty] we we other to video business. facility. VW better lot no, definitely we've that -- And a time I there that since I First to of -- so for several develop also have software all, the with think new realized of got brent the spend I we more We product a [Technical --

of In you second second Charlie, question? terms me your remind of can your questions;

Charlie Anderson

itself more It in of and activity that manifests autonomy China, was it like the wonder some planning? partial a if mandates about potentially. design any push autonomy, you're seeing full seems toward of some and I the there's

Fermi Wang

first that. fact for I more market. revenue Yes, And in for strong our industry reflects that -- we of vehicle all, the commercial do that Chinese our APAC office, see in think the

the I government think one that from that's of formula market So I and regulation we point really a start continue. view, will seeing that, think,

super of requirement a vehicle. seen haven't We

we'll we anything, provide updates. hear when So

Casey Eichler

see little like a mentioned, can two what getting we're Louis As in And some do. feedback we're for this reason point, seems we'll at we but sites. different

Charlie Anderson

quick if last situation? of on HiSilicon inventory us follow up. you curious call, Okay, I lot a was talked great. And I had there. just I about the know you update maybe could being a out

of now in of opportunity some the Just those of curious how sockets. that's looking to some Thanks. terms capture

Fermi Wang

to the months, In but plenty we still continue like out believe the situation peak said of monitor last we inventory is the last what few There's in many the customers. there time. stay just We situation.

we to smaller can for Dahua, suppliers. And are in mentioned of looking lot can for moving HiSilicon up And so a customer, security believe, customers that example, don't professional continue have for inventory Hikvision; I they with we why think, handful do other win. last are they they ship. next a any of I of year. ramp But are also seeing HiSilicon we that's I proof, in has however, Hikvision we production opportunities but Chinese gradually believe win we us we we that chips, newer and believe the going camera including to three the months, QX to think

we lot have other and believe a markets, are looking of an see serve can in customers opportunity definitely and technology we see that for solutions, we them. also We we video

Charlie Anderson

you. Great. Thank

Operator

Thank you.

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

Your line is now open.

Ross Seymore

design And clarification I just million of concrete you the me automotive design forgive Congrats was going this you're thought, clarify those wins finely, strong competing combination want my on how to then both analysis? things. that little cutting you for, Are said the Fermi, is $XXX just competing on I a are. you're I'm a you're that question, design another if that those wins? designs and guess think to first but results side SAM I get? of funnel existing guide. [ph] for And ones to like that

Louis Gerhardy

this us business that been one, is been in forecasts the $XXX Ross, for time business. on is to XX% given has won funnel, revenue as said, that's based that's million Fermi Hey, think at discounted, confidence Louis, of and majority that we a business the the our

million been business, that $XXX that's other The the discount is one we're are factor we're the of Discount program. opportunities two forecast the factor factors. provided two bidding at on confidence bidding revenue is time probability with winning on, the in the discount us that to

is Fermi of that a it's So majority said, a funnel. business again, one. as And six-year

Ross Seymore

year-to-date, win? that So million is $XXX another million to $XXX the last that at the you pretty there's final the quarter to million another then, point, say, you've you had gave part today. you way that $XXX hope with much until added And

Louis Gerhardy

what quarter, was won Last Ross, we million year. first $XXX the in six of provided months the

period million of that additional time, $XXX an won more had that or there's on before recently. we So that

Ross Seymore

primary lot gave guide the But guide just Casey, they what quarter. sequential directional that. segments. on clarification actually great in Okay, good on thanks already. gave one asked for the granularity by your maybe were for you prior answered of questions the But you and of Then been a have three

a security, the fiscal So do of off other forward. Just buckets? consumer year, going entirety for whether we revenue was so and it the third and quarter, you you automotive fiscal how between just these or work of the it the if IP have split wanted then baseline do to for to percentages

Casey Eichler

balance it, the to probably total total revenue, going of of close Yes, business side is said going to then between XX% for be business IP the true probably security. full that XX% be we've revenue, auto consumer year, and XX% it the remains that the was and would of to and the be the

course, saying the were little past lot. as but a not changed in but it's we a bit the So XXXX, obviously

Ross Seymore

into it sounds either you quarter, fourth question side are be like revenue as segment the little Hikvision maybe headwind, equation, or the away something still to other go and going else mid-single the business, bit related is that on? about, fiscal the or to there's I the positives then get that in I What were going the digits, more tailwinds think this in Dahua a of goes asked And are there margin mix go the that of Tori gross back a third little the mix consumer seasonally big quarter bit more. Quinn

Casey Eichler

low said Like I for will will I correction the camera up it double revenue, be -- it is only we digits, that in it the mix, be a said is would security that fourth make that say, sequentially. we the for the quarter,

as So it about, talked that's will Fermi's and be up. of -- as talked HiSilicon, some the not that but And well all Dahua -- of that's we've with the part about mix. part of it,

Ross Seymore

thanks. Got it. Perfect,

Operator

Thank you.

of next Buscaglia Our Andrew from question comes with line the Berenberg.

Your line open. is now

Andrew Buscaglia

a Good was and down sales -- that evening, much came I so around $XX year, under wanted that's to computer follow next just as out up on about yes, of I modeling vision percentage XX%. the you talking

-- And So I'm that imagine that you XX%? some breakdown makeup optimistic can you security. But next you he it's that do color maybe I'm to of the mostly have could if wondering wondering, year? what add I professional provide here. of it comprises you seems other of any are how like pretty

Fermi Wang

Yes.

First right, XX% all, camera. you're a of part big of security think I that professional is from

as we cameras the right, buses. it. the also outside think mentioned China, chip be -- Or We with the business, part could that about the vehicle, will for China, believe product for also outside year. revenue, we applications they also also, fleet shortened you're in ramp fleet we CV automotive and talk opportunity up, the fit federal well a security commercial on is camera -- ADAS, fiscal of XXXX. next think it point for material next CV us think year our that [ph] This -- our of I absolutely an run-Bob believe on year CV CV But home the all particularly the using management mentioned can opportunity that revenue from we our are security I China customers a and professional I we so side, CV be this [ph] And economic that importantly, more [indiscernible] revenue also But think view. potential. is CV management; well and biggest monitor all

Andrew Buscaglia

So automotive, presumably on talking what's you're though, that with positively too, in on pretty going funnel.

computer even vision and the would comes presumably, that beyond I driver So driver for would bigger calendar that be beyond? real XXXX vision year that segment. think for computer even an

Fermi Wang

you. agree I with

Andrew Buscaglia

saying the you to to be CV over behind to commentary around we'll essentially -- And go guess, is Because you Okay. pretty said products cycle. these five a last now three market Fermi, drivers interesting to adopting I are had sold what's that new people that computer maybe from to Interesting. that? with five years upgrade see three vision, you then years that security being one, capabilities? some could have prompting What upgrade big the

Fermi Wang

camera, is vision Well, the for for vision driver do okay all video to on professional only analytics That's only the agree required. is scale server security the we're the the the video to computer will for investment cloud other they on and [indiscernible] pressure expensive this our is storage and requirement big of the and server for computer to [indiscernible] on server to of the to following. video years, data analyse they AH back that believe the that. of on Which them camera, and video to computer the camera, the cost server to not reduce lot is the solution the to it that's on to replace millions part hundreds more the attractive why data The you In see cost. the that that huge customers, biggest more media in current of server why is dramatically customer down past, than said done And on of or unit bring we'll the the customer. video a all CV to -- that's all camera only transmit and transmitting on the vision store side. and thing the however, tend trend. want only we And a but make a so millions requires the maybe there five processor also millions, to offline. or you talk I but but the for apply we apply continue the huge to however, the only [ph]; will infrastructure, is XXs some storage when saving analytics And millions computation. the economy to That bandwidth, three going camera, camera

on driver come huge think the this make a reason, years the there's reason purely based So technology happen. three but I financial in to to will five

our proof that revenue that. a just majority same also now the auto, of criteria, All will help CV don't you in people also CV CV future thing really but put not Our to because future new And the even big of because raise, a in in in a we abilities. chips are the just And want automotive just percentage go forecast, there up internal design we processing a of a making us for put as future. it's the will a winning, car today, CV need CV to see to believe we CV upgrade. continue design lot for

Andrew Buscaglia

it. Alright, for Got color. thanks the

Operator

you. Thank

Arya question line the of Bank America next with Vivek comes Our of from Securities.

is Your line now open.

Vivek Arya

congratulations and question my a I questions. taking growth. for the conceptual few Thanks had strong on Fermi,

Is of sales? CV XX% you can than more XXXX, of XXXX, XX% your should happen we be one, something that that think automotive First sales? when just conceptually, automotive in when to CV more do your becomes than expect

Casey Eichler

the some Fermi is times, Fermi as and of it gave color additional I these emergence markets, early some of revenue to mentioned. the -- certainly think in these

is to we -- to to continue quarter-by-quarter. today, that timelines. Conceptually, commit best drive revenue And I all so, try of to ready we going that try guide don't think we we we're to as know to our can CV platforms.

plays I included. that best And tried characterize so done it over we're on auto we've is seeing more to I next what times the these strong, quarters, be very activity very today, we'll as But early think able goes we can. how broadly that on. bullish, think the out to as time development comment we're that's in few But

Vivek Arya

I see.

tend in Okay. one are processors? having certain of applications you my exclusive you're to whether many to applications there So the tended where automotive of -- are where the the if technology or it are the how the where for to competition? go in certain where better? the follow-up; competitor? do wins is have more only latter, you are car? with them CV, in Where to are And preferring it's do And applications with And as you versus Are better you're where a the processor you CV exclusive is a customer many question that there not.

Fermi Wang

look Well, further one CV like, From they easier to point it or chip, application automotive may -- application. be of use view. recorders, at different or e-mirrors a from only ADAS when usually, is end-processor there ADAS

definition. chips on X+, there In TV in we some It the multiple are are depends -- done well that there other are the that that multiple like situation. market we provide So chips into people others the are cases The are like really processor one we then application you CV. the our but to hardware we only preference, level there customer's chips of only is the function also and application to as by being applications. chosen, and implement as said, portion is if processor, some applications, device, current by using

the to don't they to is which is sell can't definitely which [indiscernible]. are So, for camera can iPad camera, can phone change and level you we that AI other there so X+ X+, solutions market, want level okay, use for customers for some consider, other that want imagine -- my I dominating mobile mobile example, say, we that

Vivek Arya

understand lastly, expense you you're markets; a starting growth? is just pace that these done R&D; And line As think your about grow to there at upfront of should I it. we have Got top but faster and emerging a operating lot years? pace expense model growth? right From of your what three to to the your about grow way think Thank the one will a you. it for growth sales growth at drive half here or next OpEx to simplistic operating the how is

Casey Eichler

to think you're see model. definitely as -- leverage I mentioned, the I going coming

doing going CV of drives to earlier, over mentioned you're years even. and times But growth margin XX% going see But reason We operating think you're two to the out the XX%; over back that's the at line next top margins back or quarters our see that couple the and range. I don't to you the the there see line. next going -- the and the that historically into margin the operating is to see margins because come ASPs, the were I leverage in not which As get -- operating come the expenses; into next of you're couple sorry, year after partly don't continue model. I in or taken think any two, target

Vivek Arya

very Got it. much. Thanks

Operator

you. Thank

comes Suji Capital. of Desilva the ROTH with line question last from Our

line now open. is Your

Suji Desilva

Fermi. Casey. Hi, Hi,

into restocking is Looking first there going What's some six into looking carry? perhaps program past of maybe the the quarter January the quarter there, next seasonality are elements the XXXX? and the think, growth dynamic looking months? your Or fiscal ramps, you to and

Casey Eichler

now good were it's -- from driven think of historically, QX in line of out. the then, And Part seeing that the QX QX, historically we down take is growth update were the to that you nature typically starting profile, top some early what the growth which the of but some at typically in or good QX as the profile, looking comment, business at by that that part I the beginnings, from will of of XX%. that beginnings going the -- of CV consumer to but those because seasonality XX% of to Well, around was down XX%. we we're going

how we going that and see that we're from we're to we or markets QX, products exists out and away. clearly, get the out, some when going few and that see we'll going go get change of and nature matures have seasonality model QX over the quarters. the But not it of is QX; to by still to think I QX, see into the but didn't to matures to in in how next to CV out

Suji Desilva

China is a then to maybe seems share to as position that's market them HiSilicon might potentially? the with the chips it big you those similar still grow starting to of the to I'd going X tier is use for get two me guys, in or and kind And Casey. for one to here; going on Hikvision of [ph] struggles IOI dominate the start those to play Okay, dynamic guys. Is up imagine to to curve the market if -- you're Hikvision or work China me doesn't how that this to out coming is you some X's tier as become of

Fermi Wang

are customers. mentioned about China, the X largest of the Well, Hikvision continue and need become my to be majority I security market share. of that three this provider; my tier the third to have now careful have But however, some very will those belief is you Huawei, in Dahua camera because personal

Just because their of they portfolio the product their and and already momentum, size, have.

their get I -- they so will of a challenge but think Hikvision Huawei. Dahua point not share that it's have increase can market you our or to all share the the the to market chance others will

Suji Desilva

Thanks, great. Fermi. Okay,

Operator

now session. back turn over This you. question-and-answer call today's Thank Wang I would closing Fermi remarks. for to the Dr. concludes

Fermi Wang

a really you I looking on CV I'm more think next great time. to And thank side, progress Thank we provide you, made that and joining updates today. for you, us everybody, forward now. And

Casey Eichler

Thank you.

Operator

Thank today's this call. gentlemen, participation. concludes and Ladies your for you conference

disconnect. now You may

Ambarella (AMBA) 24 Nov 202021 Q3 Earnings call transcript