AMBA - Earnings call transcript Q2 2022

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Operator

Thank you for standing by and welcome to Ambarella Second Quarter Fiscal Year 2022, earnings conference call. At this time, all participants are in listen-only mode after the speaker's presentation, there will be a question-and-answer session. [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 and Investor Relations. Please go ahead, sir.

Louis Gerhardy

Jonathan. you, Thank afternoon. And good for Financial joining ending Fiscal you Second XX, our Conference Call XXXX Results months Year for XXXX. Thank Quarter the July three is With the today call me, on Dr. Casey President Wang, and and Fermi Eichler, CEO, CFO. primary you information provide second of regarding is XXXX. year the with our for purpose fiscal of results The call quarter to today's the demand among results, The statements regarding forward-looking things. discussion will financial market questions prospects, contain today solutions and your the for growth, and projected other responses financial our to our These uncertainties, statements and assumptions. subject to are risks, Should should any differ be actual materialize of these statements. risks could or incorrect, our uncertainties or materially results forward-looking to assumptions these from prove our obligation to no statements. these under We're update business described SEC. These we as on as risks, the risk information in filed and results, with other well assumptions, are more and the operations financial affect documents fully factors uncertainties, our potential that could XX-K, Report Xth, of XXXX, the year ending year Annual XXXX on the XXXX. the XX-Q including on on Form Form for XXXX First March Quarter fiscal for the the filed XXst, XXst, January fiscal filed in XXXX June XXXX Investor Access our and press today's our can of the fiscal on prepared filings, results of of quarter second SEC replay release, historical remarks, found be call Relations the transcript portion to the results, our website. offer financial available now for questions. business results, will your Casey a we I the then be will Fermi and update -- will review and and then Fermi With that, I will over turn Dr. it to Wang. Fermi

Fermi Wang

year-over-year high-end transformation joining to of you the XX% afternoon. financial good for Thank We're revenue our Thank and market on and today. XX% up QX guidance, was play report continues you, and a sequentially, pleased Louis, us basis. momentum our as out. above to significant

and half are we margin early region status to year. enterprise with and non-GAAP entirely majority more and build. do leverage also wafer reaching reached not in product that We by half. sequentially quality markets. to SoC the diversification. [Indiscernible] a was of outlook is realizing CV a spending, fab development higher. to we apparent CV our stage challenges. into family A CV this Cyclical CV in inherent Even the well XX.X%. of continue in achieving to penetration existing than XXX freeze as our with ousting the a have that a well second almost this estimate of the improvement the new XXX customers more operating market, CAPEX, parts, higher blended chain the unique the positive a purchase consensus expect are following -- public in our ASP in at rapidly engineering above diversity low the durable investment. a is with and industry-wide model as markets, taxes production had first growth material our Since used earlier continues drive QX continue our while cycles Our year, increasing computer QX, fab taxes performance forces from our recovery [Indiscernible] constrain seeing are patch recovery the basis in point points, supply this anticipate of our momentum unique by revenues mix continues customers driven and or revenue supply consumer this transformation, introducing now to we XX systems, infrastructure operating

discretionary XX% representing while both revenue, Camera achieved mostly decisively consumer example, [Indiscernible] goods, leisure of our For revenue a or LO. mostly camera other and quarterly our IoT non-focused Automotive security levels, record rec business, revenue

coverage, the target expansion SoC. we X-nanometer Now, Based new new AI announced SoC now progress. [Indiscernible] individuals architecture, portfolio [Indiscernible] market with - SoC IoT the -- interviewing, the of the lower form In the scene. coding, This updates CVXXS and advanced and identifying will multi-imager or more performance accurately requiring factors. identify SDK June, update XXX-degree to including locations CVX small AI target with SoC in you our and applications new I a mini introduction on the region on camera of supports of security the

new X shipped software receiving software And we our significant June the quarter, development an event and the silicon, customers. advance multi-imaging advanced systems annual control on Also, made is the Vegas, first and was continuing partnership worldwide. by after on a Las at CVXS weeks the customers our momentum in by based that virtual design attended in with this hardware the look execution West reference our first to XX event demonstrations, we in held This the IAC and The for semiconductor. featured accomplishment the such first Trade developers system, During leading including over that thankful in on I'm happen. access CVXS a XX note. kit Show a over and strong of leader's teams our

integral the one open - secured in WatchGuard, become camera UK control has and already camera intended vehicle market. have new largest see supplier market to access technology vision, a includes We They segment. in opportunity now the CV Solution the security pass, multiple XFS, for of body-worn pleased video as in police validating [Indiscernible] the design this as a customers [Indiscernible] new for cameras. Telkom, as supply, acquire we to based well access customers, are leader system, IP digital, [Indiscernible] police of control growing of well and makers announcement. portfolio as further to significant wins their and the our an

majors, market. Ambarella CV our security companies [Indiscernible] as With of professional customers. averaging CV most All And SoC the share chosen gain SoCs. are continues have to IoT [Indiscernible] a manufacturers these camera in

three high quarter, CVX During our those Flush SoCs. platforms on at scalability Ambarella sosh the is about SoC. on I are X,XXX X,XXX portfolio our first X based weeding based of Bosch, European cameras CV CV introduced families major XX By introduced its based CV ends giant what XXXXi the on on ends SoC demonstrated.

market security professional about gains share new customers outside China, in two sight additional share quarter We're today. within Mile customers, of announced SoC and we gain our China, opportunity to we announcing and two spoke to last addition In [Indiscernible]. the

an camera Avista Fashion bullet analytics. ultra-low available its X-megapixel network introduced and XX. buy including to well-sized CV family light counting People operations. and iPro XX-basis version First,

flow introduced recognize recognition device margin series Second, facial SoC. The with system the tablet a on on Max VA camera Also, temperature, people CV quarter based can [Indiscernible] on our a major new Steel CV a non-contact in IP Canada our based our based [Indiscernible] sensor. Auwerx processes. introduces arm, US

make Defense them Act chipsets U.S. analytics. the fully the camera's video NDAA, advanced and with Authorization Our that or power of complying National

consisting use camera and insert few single we how leader, With came announced IR in we're open fleet performance. and four which efficiency, per we our CV introduces KeepTruckin this SoC, we CVXX for over cameras both SoC. division It an and the using commenting across products. AI make up the August, SoC well and announced is market with introduce on telematics. Last providing functionality. platform In the [Indiscernible] in to flexible of Eastern and companies. DMS we SmartDrive which in management management driver [Indiscernible]. Shanghai examples used are for the the camera our allow was image Chinese to morning, XXX,XXX see provide [Indiscernible] SoC. driver for recording. a partners, Show. a you in the for and product CVXX announce processes. Solera's major this our vehicles step-function turning be of Auto to and year simultaneously fleet Yandex create IR, being recording New per [Indiscernible] announced [Indiscernible] monitoring of terms software integrate as systems, to post-performance its Ambarella and these its continue quarter, during will camera our architecture, and The Yandex, our multifunctional Yandex, fleet And platform, are progress starting efficiency the Ambarella second due because systems [Indiscernible] to data a pleased also by our its the driver to can increase automotive Earlier quarter, XXXX, camera one of OEMs value [Indiscernible], the Now market market, AI Tier-Xs KeepTruckin, and at market differentiated -- other service winning CV RGB advantage as systems. drive XX, corresponding -- passenger allows incident [Indiscernible] vehicle customers up to progress, Low to [Indiscernible] its next-generation of don't quarter, TMS technology in and two additional that Also, wins Omnitracs delivery monitoring an X processing with Company the fleet, which based to progress the differentiated Yandex deployed RGB the shift from And with processing with sharing are market, announced new significant a offered deliver bralettes to car AI [Indiscernible] solution leading the internet fleet combo In monitoring Introduce combination the enable capture with QX fall. conclusion, signal for CVXXAQ featuring from And camera multi-featured sensors, Maxx in adas recording. simultaneously power process Do all in we this right can This performance open

The automation level and enabling and fundamentally viewing, camera, architecture In of not collected more used. lens where be strong. through a our multiple safety, of industries. purpose-built in all occurring across partial expensive security, a human it IoT in points, in level complete through different efficiency a provide picture and processing servers or we is SoC, a addition is of new can to is data processed SoC economic global then This

learning be works endpoint we digital Ambarella, just cyclical opportunity stimulus seeing impact of extended. drive capitalize on new dynamics AI returns. this how like beginning gets for and into is phase to IoT Supply-side transformation New numerous the us are is are demand so clear, what we in and most are that to deep are The can U.S. in the programs endpoints with excited the peer inflation equivocal how But infrastructure the growth the AIoT a is we to driving are verticals, verticals. shareholder tremendous many you demonstrating,

our high. in is prospects long-term confidence Our

this expect revenue CV revenue XX. And year. We revenue we year of fiscal million in the total to least ahead at in comfortable year fiscal achieve XX% be $XXX of XX revenue will remain record that

strategy you last get I on like QX Day location Xth. provide event outlook. discuss Market QX January we week that, and thoughtfully our financials the corporate This Before seeing are allow I'll to review to provide We would a host With to as Capital of update. the ask will our we plan into your calendars Louis Tuesday to us and afternoon, more mark for the inflection financials, CES all

Louis Gerhardy

of press quarter that our second Fermi. Thank XXst refer of 'XX non-GAAP results will financial fiscal the financial be I highlights the fiscal outlook GAAP you, XXst. lead I'll to release you Third a to October ask ending today's and for provide a ending now reconciliation for detailed of results. Quarter July to discussing and non-GAAP XX

taxes. we Texas of For chain industry-wide expense this adjusted have non-GAAP And In compensation of we eliminated remain wafer forecasted. impact experienced QX, the previously for significant. worst in the reporting, the period, from believe freeze, the as stock-based challenges the we shortfall supply

However, and partners to they our worked strong customers. disruptions demand, and successfully our operations team minimize and the manufacturing support diligently for broad-based

sequentially, XX.X for increased more was representing million was gross expense margin to XX% forecasted. previous compared increase about to XX% slightly was XX.X revenue from our sequentially. stable, X% our end the incurred in non-GAAP the challenges, was G&A security guidance costs another long-term down as of preceding XX.X% - slightly some remained our manage sustaining guidance, the supply XX.X% GAAP but Non product increase below was gross XX% million QX for operating sequentially, XX% above pricing high quarter above model. mix midpoint of than the from quarter. We second XX.X relatively [Indiscernible] the the margin higher environment of a quarter. revenue XX% chain of of below the end the for the more the high revenue grew than than in and was and sequential quarter lower Automotive year-ago QX a Our

compared second headcount total was quarter million of million XXX share reflects compared support basis X.X the to low-interest-rate work at the a upfront about per income sequential while inventory at up previous strong increased and down non-GAAP or rising sales earnings inventory outstanding or end engineering, a the [Indiscernible] continue the was for at the XX basis, employees at accounts the XXX income in the income of in lows. X% QX points ago, to a dedicated $XXX,XXX in at sequentially XX% headcount total million per were positive prior On in basis share Total XX.X operating quarter QX from XX of end receivable million The diluted was the or XX.X XX.X% We end of to and approximately. XX% leverage was ago. QX demand, of up days net sequentially In was two-year XX.X of of reaching First the based Other Quarter. net second million the progress operating non-GAAP $X.XX of non-GAAP non-GAAP of the demonstrate with the a or the The XXX year of share located X.X% up were the on our second versus per to Net XXX. the at environment. is shares. DSOs XX.X diluted of quarter, XX That's $X.XX margin quarter. million with year end on XX.X inventory prior end goods from Asia. quarter. quarter. finished to the with

positive or customers, And in revenue. WT XX% the the of were X, was to million compares about partner from XXX.X and Our XX.X the Quarter in prior Third ODM cash quarter. of now the revenue Chicony, of a XX. in a with of X.X and first QX, Hikvision single-digit ships was multiple million at Cash quarter. high quarter. manufacturers fulfillment the million outlook who This in who DAVA our of will outflow flow revenue. securities fiscal had XX% up for customers an customers Taiwan Asia, Microelectronics, We XX% proportion combined represented QX Taiwanese operating of marketable million XX% plus XXX.X end for the a multiple revenue. our represented discuss of I

Nevertheless, Austin, year, experience the expect of to February output industry-wide of from variety challenges. a half we from we second recover wafer the the to freeze. During to fab Samsung's Texas continue chain supply continue

times While for persist. extended lead substrates wafers and

be by at revenue total XX% the expected other ending our to time, from these for also of in expect material. third quarter October revenue is customer's on best of companies' cameras, million today, is and to range the automotive constrained bill factors the increase outlook shortages on current and security XXst, million XX XXXX IoT Our of we our about sequentially. to components Based XX judgment primarily

base estimate Another down XX% expected non-GAAP a Quarter. is in revenue a low have Second to XX% quarter, XX.X% between seasonally be compared a strong QX margin off but on still year-over-year and to We to basis. the gross

we're and long-term healthy manage may the cause temporarily high-end in the environment our stable to higher of exceed chain, XX%. the costs supply some XX% margins mix term, pricing short gross While relatively model to the of seeing to our

Fermi in X% Thank the and be session the estimate OpEx And and call for Las Vegas. ninth, XX million. our Q&A New on ai Fermi and both our non-GAAP calendar noted, to turn Ambarella on that, in X% your Berenberg in conference and Day Jonathan, September diluted share million September at be for I in the million Conference January our Xth rate the in expect should Capital with one-on-one to count CES Suisse's September modeled York QX XX.X be November form between please to QX today. Xth on We and you shares. Casey. back the on And conferences, range. location be The it non-GAAP XX.X to tax quarter we Technology participating mark Evercore for Credit CEO joining Collier's on Xst. will will tomorrow, approximately Jefferies Twenty-First, September Deutsche you and Xth. Markets as Asian Atotech Bank for third with Conference

Operator

Certainly, ladies Instructions]. [Operator gentlemen, and

Mobley comes first Our Gary from Fargo question from Securities. of the Wells line

please. question, Your

Gary Mobley

question Hey progression revenue. your execution. And guys, of the on the results, good a my strong to but congratulations let Company, well, quarterly the me my extend as of transformation fruition relates of

million to quarter you're grew revenue $X in sequentially. $XX just million expecting You the grow current sequentially,

are increases And us better is a to as a no sequential that strong have and a doubt function strong access but well, of largely to backlog the give so, prior the end of backdrop, could demand demand that, strong, sort backlog, you of And those quarter. quarter capacity? to unbilled as to it the I metric of relates foundry the some compared related the as July

Fermi Wang

Right.

for first our increase CV the of revenue due to So strong all, demand our continued portfolio. is

year, And we year million $XX and growth CV. than to higher for and for over that I different our reasons. year talked about difference XX% we look processor. think do If at a leads video twice did can oversight revenue we ASPS comfortable revenue CV year, revenue growth. Why this this you CV is last being majority all-CV is, the total calculate Last that you of the this

the AI-based reaching replacing importantly, revenue more They just wherever has we're new talk things. that who kind markets. We in also, Multi-year camera. by But even the we're of penetrating access So example, about oldest markets, are into new replaced X control; security into. all cycles in existing getting talk I multifunction is One CV about product takes previous video devices product, video-only us think And for from we that. DMS auto. cameras. allow our products into more we

this things growth. of provides of CV combination So, the those side on majority basically the

everybody was else's QX by impact. to that other their impacted a second It's our While the still in half products. supplies; build and side, just less Louis be shortages become supply supplies on component will customers like you said, recover but and QX, foundry not our problem Texas for will matter. we'll And

see follows in this for impact is QX, going I continued from point-of-view, a to more go ahead. -- QX limiting QX think that [Indiscernible]. become that's don't factor be I So, significant

Gary Mobley

Go ahead. revenue just if you other think on might fourth can so grow sequentially? was have backdrop business coming be fourth-quarter my strong more quarter, seems and demand, know I considered, against you and you in say follow-ups going do your I your supply a the soft related, to although of it seasonally

Fermi Wang

near get We CV traditional year, industry guidance to haven't of in to strong But be as talked provided future for I strong design that yet, purchasing design we seasonality said, production activity, but I'll however, [Indiscernible] XX believe there that. you and as our consumer the can customer now. continues huge XXX plus about consumer we'll play them right business continue but we revenue this our know, do said, I CV in to you be because, are only as see win amount not only in also [Indiscernible] a reference consider of

see on strength big you floors. look the [Indiscernible] So, there's there's I momentum to on prefer side. to continue a long-term CV a the will be CV business, the at side

Gary Mobley

Understood. Thank you.

Operator

Thank you.

Stanley. next line Joe the question from Moore Our comes Morgan from of

please. question, Your

Joe Moore

Great. My question Thank on is you. monitoring. driver

where had presence. more about the a having might be you are vehicles with and a from good that guys You can guys of start a in of like of of when -- soon that we that your others Can a revenue? and fairly to KeepTruckin, wins quarter. when something material you there Yandex, production monitoring? part talk OEM driver number might with couple key And during you penetration become seems

Fermi Wang

Right.

of that think think we is are those I called fleet talking first you're and of And all, that's about vehicles. market it, So, commercial I most management how sizable.

side. million all ramping the up grow well-being and roughly year. majority next the at a believe mentioned we our -- year. XX-XX and and time that year existing production this of is the XX% design just previous the most vehicles What this market units And the think we I

see this next So, year year. more should you revenue seeing hopefully, can lot they and a start

Joe Moore

NCAP already. in part mean seems Euro I should And passenger passenger standards vehicles of relatively adoption I vehicles, of it’s mean, it and some luxury like soon? there terms the be

Fermi Wang

sure the all, a that's to to not U.S., that our we talk But we [Indiscernible] Well, continue make allowed make I we lot there. we are to European, about design work already. first think wins about, that we of definitely -- hard focus Chinese but for a area talked

Joe Moore

much. Thank Great. you very

Operator

you. Thank

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

please. Your question,

Matt Ramsay

I I my taken markets. of [Indiscernible] Thank seeing in what we shipping competitive guys me actually is, from camera one guys you pop today, you does I from question, do momentum guess in? the security you are be question part you are up? a guess up lot and first very momentum and And of are what pretty couple and your for Motorola folks around that that on CV And think wins, permanently the own a question challenged design the wins My guys. of playing much. to and obvious I production concur landscape the more might the of terms the now, that customers that new are [Indiscernible] digesting HiSilicon main Good the question HiSilicon from being call first you competitors Thanks. that -- new points subsidiaries, as you've afternoon, look picking seen of is, strong have those that their for of second the announced, industry out and like impaired? the with international thesis guess it's one of China some results all And into about you the with their of the that's more of talked that competition starting and

Fermi Wang

Right.

observation with our of even our and correct. silicon on all, we China HiSilicon Dahua past business momentum uses for And in HiSilicon, in China, your [Indiscernible] First the is compete mainly. export outside the when

[Indiscernible] camera some no our for a s. CV it's now surprise inside up So, we as solution outside we picking But talked that about continue customers Chinese talked we China, China. to four that on while using markets we have for new about holding us start strong

the is right. think I momentum So,

want majority probably, fighting to on at that solution. seen of We and anybody compete type start-ups very you the ASP are of a or a I CVflow low do, them high end, companies are wide to a are tried range CV And the In very I low-end competition. see can right? But exaggerate, XX-XX however, say about $X talked side, share I a the and ASPs. of tell We $X, different different sinking maybe and low-end about we strong left. build a grab competition try terms of existing that will of cover silicon and Company on all there haven't to X the see else. we side. that a SoCs. focusing wide a them little range with We very platform talked our performance of everywhere don't

So, I think that And we continue to to cover to convince be our maintain to to strategy us forward. and the that them continue high-ends to middle we top. want the on the also use to moving the leverage leadership from our our platform, to customers, important our bottom it's and strategy most

Matt Ramsay

Got it. a really color helpful me. for That's

As see XX%. margin guidance your in the my to Pretty quarter for above operating remarkable follow-up question. October

you. what sales, staffed from of an and about view, the And we kind markets? like as leverage? view, to of R&D - some margins question guess it sounds But talking think feel you was my headwind and you quarter how COVID point expand is the for October are is, attack then. obviously, point Company is, you it we of down X% a and feel guess of funded I I like about I as marketing, right do now, in how Thank guys these Company continues -- biz do the and obviously the was both the year to from some back three get like continue question of ago, Company there all dev

Fermi Wang

Right.

continue the First I we on of And staff, Europe, in a start a last you in that business. up our Asian in we up automotive and ramping hired particularly all, have think sales size noticed the Europe. XX the U.S. team the sales and to automotive dev we in new particularly biz our team hired team, for brand-new we months, already U.S. to

we developed hiring months. XX been point for last the business of further, So view, have

we're ramping look QX On year XXX a high indication if R&D in a in also continue already we which last expenses year plus of this count, clear future. to up give XXX the our you that engineer to plus go is at be QX, from R&D the part side, our to and resource,

to continue we strategy is Our got more. invest to

technology, the as development as notes. cycles our more In well advanced terms developed of time also, continued some faced product. next-generation CV at And into

they start We really manage will when nanometer X And I our investment. We And roadmap. it's all are go it. to at to, [Indiscernible], need a out that believe how nanometers. to that which and go that think to but from saying We to look the we factor want multiple to is we business. need work to Chip X coming need the need continue by also very on for we we margin I leverage important I our have operating emphasize we to

from and position business we point are we increase engineering think the can our view. I that while operating margin to continue that leverage in of improve the a and development investment continuing see to

Matt Ramsay

Congratulations me. progress, guys. for on that's all for you the Thank

Fermi Wang

sharing. Thank you for

Operator

Thank you.

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

please. Your question,

Tore Svanberg

the Yes. results. Thank on you. congratulations strong And

a about Just had question the guidance.

So make this I sure just I correctly. understand so

of going the So that assumes sort midpoint basically, on. the are XX industry-wide all million that at shortages

should So, easing could I read there, there potential that if Is it? how some be upside. there some is

Casey Eichler

Yes, there's to keep And an have on we the you've commented, chain. now. think that's that's eye and best the to and I today. think up on as activity have we still down judgment has going Fermi right guidance And of food right as well. our a as But lot well, that

Tore Svanberg

ramps it's a revenue as big product from success, And When on and CVX? for CVX perspective, a line? sounds development like, I expect should more very the been then it could follow-up, we product bit some Thank you mean, a execution. little you. production strong elaborate my to see

Fermi Wang

Right.

it, -- because of going financial, be to view. First very technology, also only event it's point because most of all, of CVX performance a is from important is it our but not

we not solutions integrate also, can chip and so video serve can multiple this XK [Indiscernible] that only but for X-watt we multi-camera can power, cameras into So, do automotive, at for security.

with So already we next really the second Chip. that up system, start revenue design perfect production shift we'll for wanted is year next them, believe in to have of anybody start wins for a high-end -- half the have year. secured basically, who half this people I ramping first and this mature And mass coming of is multiple and

Tore Svanberg

good. again. Sounds Congratulations

Fermi Wang

you. Thank

Casey Eichler

[Indiscernible].

Operator

Thank you.

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

Your question, please?

Ross Seymore

Thanks strong to guys. guide. I echo and congrats ask the and allowing question, strong a Hi, quarter for the the to me

a get I done but October Texas supply you into shortages quarter? the that And in upside fab dynamic. the to again, in online, of quarter. October wanted be do localize elsewhere, there is Just driver are coming expect that the am from the the to side tailwind the one realize to back And just meaningful I

Fermi Wang

throughout I foundry QX be believe a think think ends, on going the impact impact process, customers know don't add in it where partners, that to with also, to there's exactly would throughout address don't we be also will our Samsung, founding I totally those I I closely try problems, And I we proactively. to add and work we us. our but minimal. that and think communicate we this exercise, to tax this severe productive

a with communicating we show also show also their problem Although and by trustworthy our a are to problem. partner the working a them that them not we crisis, great but supplier, definitely continued have solve it's customers with

Casey Eichler

other things I'd the we people reiterate things whatever restrained are modify well. have we getting as thing parts The the again, on don't other for parts we control those are control, they're that is to

job. So, we're doing a great

obviously job things always but of doing we that we as things well. can't is control can there great a considering are the control, team Our

some why we that's to caution it. have So

Ross Seymore

even takes consumer things. two But a a those businesses main to in or of and in for Are the the as issue an that. And ladder dynamics my consideration we into product the have? into your IP color categories to fourth into a just you design earlier product have security fiscal wins side slash wanted all the considering fact put need the etc.? core quarter framework. seasonality return look for launches, the any look for about I your seasonality just seasonality we if me, that mentioned Is we overwhelming different quarter. as fiscal follow-up, Thanks in there coming or on when shortages that of And the bunch more other ton you puts the seasonality new that on, cameras the of you automotive new given categories, supplies fourth places, to

Casey Eichler

Yeah.

right. I you're think

over look saying at years, end part was business the had to that about go As think that we've that next going forward, the decline. we been the slowly of X-X talked we you

continuing it where have up where the does some That's really the really you today. point to That's over business, the growth the with. traditional is they'll to next be seasonality, we're down, I some we'll some quarters but And But now opportunities. up getting think years. right and can we're what Now and deteriorate focused be have three and started two down. focal the quarters overall,

Ross Seymore

Thank you.

Operator

you. Thank

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

Your question, please.

Suji Desilva

revenues on the long Congrats intended. pun Louis. back, record recovering no Casey, Fermi, Hi, in the road

on be couple That on there think auto. rather, of the competitive could What what's management? for management follow-ups So, opportunity. means a fleet fleet a you do in Amber's opportunity XX-to-XX-million-unit landscape share

Fermi Wang

Correct.

camera of video AI-based Right still in how variable majority any all, market. is of first market this the biggest fast I there. doesn't into video will have this penetrate the the now, think So

to fast going question the the how penetration is I is think be. rate biggest

are their I think biggest on a with XG that's question, cool we I competitor But solution have that insight in landscape, that. don't They are Qualcomm. competitive selling think the we there. seeing the is a for

quality, performance. we better much video [Indiscernible] felt However, is our [Indiscernible] consumption

performance to better We this market. in achieve much continue

dramatically future we're this reading increase by So, change that in market being relatively and the I more [Indiscernible] regulations, that the Qualcomm in think competing time, is when will same required at then this dynamics. widely market. But is technology penetration will this market available that becomes with small the rate

Suji Desilva

That's in of helpful terms very color.

Louis Gerhardy

And said front-facing already applications because million existing going or of Fermi providers. the whether ADAS the top add. there's are they the case they it's just in service telematics can ADAS vehicles both I XX in ADAS market get to camera driver incremental commercial telematics the offering is This a it reoccurring made. additional offer. or futures, they monthly view they the we've monthly the The of to very an it's installed and where just is is services for it's and announcements XX Louis, of world. adding some base service revenue by on monitoring was it's for attractive typically as a revenue Suji, And type market

Suji Desilva

want then architectural follow-up me CV and them understand for here. XXs Jay just for Exciting. the the a difference on to or I products, multi-image

from prior Is that multiple feeding maybe, that Is X one. seems Your images don't take feeds, the just separate in here? different products I difference. video this, here. all were could different done but you've handling what stacks into before CV independently difference they versus

Fermi Wang

In X we performance. videos. [Indiscernible] really the the past, take total [Indiscernible] can in Well, XXXXp about it's

XK Now, video. taking in

one because if then driving we you in -- basically, the quadruple but into current multi-sensor, more and even about, security camera, the video, people we [Indiscernible] video power harmless XX multi-image at and for are the other increasing cameras ones, security are you chip, people basically can for really or at consumption. So, XK look there assistant working the look talking performance, the can on also [Indiscernible]. video And we are take

plays system want I be to at want as well the of going well number of because a chip. for strengths as continue size the to very into who high-end they think really to image this scale those the customers the

Suji Desilva

Okay, very Thanks, guys. helpful.

Operator

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

please. question, Your

Quinn Bolton

then follow Hey, wanted CB my guys, opportunity automotive up on to congratulations, offer quarter. I just but last the

just you XXX,XXX is on that you had if could you an a cumulative you could us I think follow-up. accelerating, rate you or said give figure, Wondering if got surpassed maybe then comment I've whether can't, update units. and that

Casey Eichler

time for double make to definitely we revenue, it well, we'll offer number can continues. we automotive either We you public. example, don't this a last stops. from [Indiscernible] Well, talked our about the and year. later, last It year Also, trend

and to that. we can I think that believe [Indiscernible] hold that we with continues forecast

So doing you revenue indication, right our just to now. automotive well give continued another

Quinn Bolton

is or to I wondering, some CB a many are starting next becoming the opportunity you here question haven't It have for about, as wins higher but traction, year. seeing you talked of bigger the certainly heard like perhaps related wave over three good in two? pretty camera second two opportunity. earlier consumer surpassing The camera year opportunity, wave the you've consumer production revenue that next perhaps feels X Wave to applications, going And perhaps so maybe kind professional, fleet this year management starting to

Casey Eichler

can, when and talk Well, have are this we there announced you Amazon that up year, yet. others consumer coming about IP doing

that believe than of we past. promised we're CV in do So, feel X better still Wave we warping comfortable our ahead that and result wave can schedule a the give there, we but X you you're right, we

Quinn Bolton

you. Thank Great.

Operator

Okay.

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

please? question, Your

Kevin Cassidy

Yes. and about how talked great Thank ask on based And results. pipeline about into even January congratulations quarter was two the into about you. on and going security. last October quarter CB talk introducing I just wondered the going, launches going cameras Wave X, can you had to Ring for you your that new and home

Fermi Wang

can the the One is say Amazon one of of thing is because largest [Indiscernible] I CV [Indiscernible]. customers

there. think here. but that [Indiscernible] design definitely I that's I can consumer our to IB that's believe we one we And thing Momenta that for even is true said, think highlight also, when

because year and that our next more and Amazon's going revenue to to say for produce win. design into are year I be this also next of And X We year. materialized customers there at this early also, that what Wave will year. already will is be go waiting later production more

Kevin Cassidy

have Okay. the market. your higher-priced Great. are is it's that a most increase to the those CV to difference because higher. days been in congratulations able this Are inventory -- inventory of of And product product

Fermi Wang

know, have the to a are we in definitely you Yes, that's also, that's a we lines. up see as cost sign-wise, And we way because our on add reason continue dollar product that our demand you to can saying inventory. that costs, growing I [Indiscernible]. a unit doubled that say our revenue But why number, we So to our can inventory. that build the terms proper that total strong believe have is of that, also the CV definitely sign continue to

prudent the to inventory, we this just The of will continue build that is we Of whether up the is that case shortage the third persists. thing and to supplier reason course, is in industry-wide show inventories. worry combination revenue, us up those more more built continue, about for

Kevin Cassidy

Right.

Thank very prudent. that's you. think I

Operator

our time constraints, to question And move to forward, due we and then ask participants questioner. next that ask on you. Thank simply from the one

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

Your question, please.

Andrew Buscaglia

evening, Good guys.

Fermi Wang

Fine.

Louis Gerhardy

Hi.

Andrew Buscaglia

don't here. side. I sir, follow the if want on to to on I So, rule Actually, mean maybe up cheat you just can two-part security the

Louis Gerhardy

got time, ahead. We Go go ahead.

Andrew Buscaglia

talk up I in XX% maybe have low sequential securities, it had thought above the that bigger those way a guys gross higher growth that more Its some of little eventually meaningful I in guys margin bit then of tracking QX guarantee And year a that? about on bit you're us this again? little seems end more bit would your in little Could the alluded sequentially. towards Can number home you higher a yes, gross like margin, range. a XX% in securities Like, or this end considering back that you backtracking would coming higher you update professional in think upcoming. is you be

Fermi Wang

first Well, anytime back I of come soon. I all, think will that China Hikvision think don't in

one impact. the continue time we'll we we were camera. and the We see about talked have talked like that to thing our by high-end I last impacted substrate this before. on also, is And think that about we security

our not also is security on we talk the impact But And as foundry Texas our Stuart and market. the revenue the forecasts the the revenue Although to issue. supplier as about camera that continues on substrate impact there. shortage CV impact our be big on high-end did reflects definitely

So [Indiscernible] that problem you gives information for us. as just continues about why a

Andrew Buscaglia

Okay.

Louis Gerhardy

And our [Indiscernible] again, it that customer -- supplies could other be based on

Fermi Wang

That's right.

Louis Gerhardy

-- well. as

other an have, it we part the and part And it is that of impact customers. so, of is

Fermi Wang

view, to see our introduced XX, momentum start because just be the I we'll the ended gross -- long-term again, margin but sorry, margin, continue in first think we to to point margin continues to as of or but that continue -- -- back to guidance. XX our Right. the gross long-term CV to you being we'll gross down although believe we X recently, and think From XX% solution on guidance the I go will eventually AI XX enjoying revenue

Andrew Buscaglia

Yeah.

it. Thank Okay. you. Got

Operator

you. Thank

Capital. from line comes Imperial the Brian from Ruttenbur question next of Our

please. question, Your

Brian Ruttenbur

mine keep to one. I'll Yes,

between So, give where two? the -- XX% I'm trends, security growing down the what on the of break automotive, you focused are total on break more side Maybe was you faster? that and the us down seeing? is on revenue. can Can difference security especially your What's little you

Louis Gerhardy

Hey, -- Louis. it's Brian, Hey hey, it's Bryan,

Brian Ruttenbur

Louis. Hey

Louis Gerhardy

XX% in than business business double the automotive said the So, low is a gaining more range year. we've and was that's this

as -- that in And largest so growing securities the fastest percent think we we durable demonstrating coming enterprise Capex us. we're And advantage rate of the clearly referenced of revenue, third large mid-XX as that has earlier. public that is the other Fermi the products for of spending. what sum That's total range stem take security professional. a from for of call goods. and driven like our that And devices it's can by the the Amazon infrastructure as well XX% percent at two-thirds driven mid of SmartHome the

Brian Ruttenbur

Right. Thank you very much.

Operator

you. Thank

Our next (ph) from question O'Connor please. David comes of from the line Question, [Indiscernible].

David O'Connor

customers. one [Indiscernible] just the in. Great. one Thanks question. Maybe for squeezing XXX me of

Fermion to in the those, first be think, those of half? production What's them, you. How second of in of do Thank many the of customers remaining I production talked you for You the expect in also CV XX the half? expectation second half.

Fermi Wang

And we will say, a Well, we existing saw the to and That markets, have all, the continue disclosed number think going XXX concrete I don't to last at even these add XX. continuing new I continue definitely it's first to number [Indiscernible] a to but we we're example, at to continue because customers. new [Indiscernible] we believe go the now we into think I numbers a to of it's market, to for in I grow. number, were XX, be, time

will So, we're point say of historic that's continue. the in a I view. pace would at that a looking pace from fact

Operator

Thank you.

from Martin question next Yang Oppenheimer. line Our from of comes the

question, Your please.

Martin Yang

more Can around one the competitors, perhaps to -- for you you it is on take taking you question us the design with run did or that you design? platforms My context meaningful. into any you how three give Bosch. seems win Did Thank design wing? for quite did bring question. That long

Fermi Wang

Right.

strong first the Bosch our they one all, of and the relationship business with our years this And -- solution. the was first since use years, First very ago, we always to -- a line with number product product continue use would their think Bosch, ours. XX the But right start serious also would use CV, family there now, other throughout to for solutions Bosch, the be all customer powder other the lines. introduced for some I like product the the think They I and have of are line. product CV Street's are in they only most for Qualcomm

relationship our and going abolished I would that say see CV was we're So, ways. come they a collaborating families' many strong more to because different be hope to think that Bosch. also, do business And from I time, are these has will very been believe long are I it's and happy and product lines, to three there I

Martin Yang

Great. Thank you.

Operator

you. Thank

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

please. question, Your

Tristan Gerra

that are Yeah. seeing the L-X companies you've software. of to past used question is in solely for software really an or on mentioned sense the and [Indiscernible] The on I going A L-X, applications, doing think We're a association software, your for purposes. terms with bonds, was basically on that [Indiscernible] that you question whether be opportunity that the terms recurring your you in in is [Indiscernible] strategy are focused of of later software

Fermi Wang

Right.

we Today, and all, were three level We value. CES, analyst [Indiscernible] first direction disclose -- our will right that believe I January, many day thinking also, in that talking we're we our direction our And think or only, strategy that demo times type automotive running for you So EVA software our we about solution. we and on of focus now, about. probably we level that coming software that but shown have car two more of I as develop the definitely power purposes. think has

Tristan Gerra

you. Thank

Operator

you. Thank

Securities. of Our Soderberg line next from Derek comes question the from Colliers

please? question, Your

Derek Soderberg

all? OEM that on at just those to sort bill. would supply opportunity, Congrats supply capacity or would the it guys around impact more from forward are guys. generally, the at Are you your be bill that you secure have bring great. all? seeing there infrastructure for of Hey, quarter. moves environment, to hearing this back quickly plans products to that portfolio And customers quick, constrained in-cabin commentary here, given tight wanted in monitoring design specifically Any I the

Fermi Wang

Great.

all, Japan. we direction a in-cabin and is [Indiscernible] Europe is also of well, lot definitely activities. not I U.S. First point. in the -- this very in think hot becomes discussion And this China, a in very at get And involved a Korea, and that topic but designing only

monitoring. in-cabin is strength Our really for

that also, you performance. quality video because lighting in-cabin that I be is a You in well that In-cabin all forward. need picture driver function more very and actually needs be as one just also, global integrates cannot is one And needed as a not moving have with think the so unit can what's as around condition a ADAS interior you ideal. -- exterior box importantly, product solution. to And happening CV great the functions of power-efficient integrated -- you monitoring, need the This car.

So, I have think point this I to market. view, we great a from this a offering direction of position think

say observation, supply, my than supplies of have their better terms Samsung In to customers TSMC I to based on that [Indiscernible].

constraints I this Samsung. at capacity allow think [Indiscernible] TSMC 's point more in

has lines it's outside shown are tight, on Texas never sensor, our demand. supply although foundry We [Indiscernible], the

any point. the don't strength will the tax this to that continue foundries and ready of to the above XX-nanometer at on us or other XX-nanometer I tell sense and see So, the I XX than believe we supply.

Derek Soderberg

Appreciate the color. Thanks, guys.

Operator

you. Thank

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

Your question, please.

Richard Shannon

for the leverage need can go if and that you seeing you market monitoring, importance them? only your together. about talk those hear those by -- three actually, having together here not two the put together. of or responses last limited, Fermi, in-cabin the be any not, of and Are but to any and in it's have able solutions et guys. prospects therein, putting other cetera, of all here functionalities We'd ADAS, Thanks, love the response if seeing or that you're DMS, competitors to that about

Fermi Wang

Right.

requirements, have terms are requirement, our of quality all, they quality think on look top. -- power the competitors if you of a claim requirement, a we I first also the So similar that performance But definitely and video lot of reality, solution. at in

they more yet, they don't into So, have so because paid for the definitely are trend more in this the solution. obvious China infrastructure well China integrated is

I see device Korea, forms So in the China that's but the happen there's for and why Asia driver similar into [Indiscernible]. but multifunction And other if it'll happen, in first we believe a trend move also like China Japan, gradually spaces. definitely any that main

Richard Shannon

Fermi. Thank you, Great. Okay.

Fermi Wang

Thank you.

Operator

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

Fermi Wang

years. year what I is be for say Ambarella. to And many back and for our And if Yes, from in this inflection thank about are you. I'm employees in we XX, phase years goodbye very proud you, of now, different going very And I looking achieved fiscal a of with am now. I'm our have challenges convinced the so major thank future. excited point at recent that,

Louis Gerhardy

Good-bye.

Operator

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

You may day. Good now disconnect.

Ambarella (AMBA) 1 Sep 212022 Q2 Earnings call transcript