Q4 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Ambarellas fourth quarter and for your 2020 earnings Conference call.
At this time, all participants' lines are in listen only mode.
Because presentation, there will be a question and answer session.
Good question during the session, we need to per store one on your telephone.
Please be advised the today's conference call is being recorded and if we acquire any further assistance. Please press star zero.
I would now like to have the conference over to your speaker today, Louis you're already.
Corporate development. Thank you. Please go ahead Sir.
Thank you Chris.
Good afternoon, and thank you for joining our fourth quarter in fiscal year 2020 financial results conference call for speakers speakers will be Dr. funny, Wong President and CEO and Casey Eichler CFO.
The primary purpose for today's call is to provide you with information regarding our fourth quarter fiscal 2020 results.
A discussion today and the responses to your questions contained forward looking statements regarding our projected financial results financial prospects market growth and demand for our solutions. Among other things. These statements are subject to risks uncertainties and assumptions should any of these risks or uncertainties.
Materialize.
Should our assumptions prove to be incorrect or actual results could differ materially from these forward looking statements wonder no obligation to update these statements. These risks uncertainties and assumptions as well as other information on potential risk factors that could affect our financial results are more fully described the documents that we filed with the FCC.
Including the annual report on form 10-K, we filed on March 29, 2019 for the fiscal year 2019, ending January 31st 2019 in the form 10-Q filed on December six 2019 for the third quarter fiscal year ending.
On January 31st 2020 access to our fourth quarter in fiscal 2020 results press release historical results at C.C. filings and <unk> replay of todays call can be found on Investor relations portion of our website <unk>.
I'll now turn the call over to Dr. for me want [laughter]. Thank you Melissa and the good afternoon everyone.
Before reviewing old results.
I'll first provide an update on the actual them I refractories geopolitical now Oh, he probably help that may come to you plain packaging business.
First on Koby My team, we are and will continue taking the necessary precautions to ensure the safety of all you. Please.
We express our deepest sympathies to those affected worldwide and we offer old best wishes to then full complete recovery.
We are starting to see a financial impact in front of virus and we expect to come to you face an elevated level that the men and supporting certainty.
Well, taking precautions to mitigate the risks <unk> operation.
Basically we know I live in title this call into the bad about how good.
You have factor this risks beach walk you want guidance.
Geopolitical risks a dynamic and they remain high.
The phase one treat deal east occasion, somewhat and the whole October 15th AK update some clarity to the October nice entity list, but they are wide variety of the geopolitical risk I'd play.
Including foreign policy.
Great and I P Myers.
Sectors potentially disruptive to our business included you export controls I'm convinced technologies, they roots customer in China will take actions to reduce their dependence on the supply of U.S. components potentially subject to the various geopolitical factors changes to the entity list.
In the old cars.
Maki share shifts between all customers and the supply chain issues.
Oh, you ever had a lot is competitor in a security camera I still see market pricing. Okay. A unit hallway is facing challenges that are helping us get sure outside of China.
As you can see multiple factors contributing to widen geopolitical patient outcomes for us.
[laughter] fiscal year pointy revenue of 228 $27 million increased slightly from the prior year.
No major shift in market exposure.
In fiscal year 20, Jesse a year after taping out C. B to C. B 22, MCV Ptwenty five this products generated puts actually Graham you follow a thousand customers.
It is fuel birdie was the Cbram you only a few percent Oh, the total revenue, but was more than one country deepens TV customers purchasing engineering parts evaluation kits in the old you're welcome aboard you fix a week 20.
This foundation of activity give us confidence I'm, assuming that's now we'll pick another major stuff ward.
Looking to basically at 21.
I'm going to you know strategic focus areas CB is strong and we expect C. B two weeks, 10% of total revenue for the year.
Oh go east to grow old couldn't revenue increase can you at 21, despite the headwinds and uncertainties.
At a recent companies I, probably shouldn't January we experienced strong from out it's more than 250 customer and partner meetings.
It was more than 20 indoor and outdoor demos, we see that I will need to solution for automotive and the whole Marty Tony occasions.
Well when you locations such as access control robotics repeal and logistics.
During two years, even though so of course agencies is automotive safety integrity level be also most piece will be for safety critical automotive applications.
See V 22 as has been a C. B two fs, partly the full pacing well macular and the start rubies. He does cameras Oswald's a computer would be that used to use <unk> ultra clause in the high level of autonomy.
Feature east pretty low power consumption. This too are you still see make it possible for tier one is oh years to surprise surprise you call. It was asking a pullback in cap performance requirements. We think the power consumption calls Trans Ova single box, we show mounted for Adas cameras.
No that's a German based tier one that is one of the largest global supplier to the passenger and commercial vehicle market unless it was more people's umbrella over the next generation all the problems you're viewing platforms.
Including strong view visualization driver monitoring Standalone beacon processing and the email solution you doing see yes.
Right up to see before you still see well do a combination of a high quality imaging and there's a lot processing newbuildings that up to offer a wider into appealing and the interior sensing applications.
Sure about either Super supplier say Laguardia demonstrated his latest deep learning based hey, that's over suites Romney allow cdtwenty two agency.
The Eliquis is included multi class object detection, the passion Overdriving I really am occasions that estimation and the classification over trophy lights and to try to size.
How about you said brought us see before you still see due to their ability to either to de lever extremely high computer vision processing performers. This is very low power consumption.
I don't see its location Oh, you know CD beds provided life's demonstrations in one over the air Springs her that of course bore cogley collision and organizing system.
Let's just say is designed to make it a possible TDV process more efficient and he library, just <unk> and the steel processing capability, obviously be true with multiple situations he pulled that.
Well, let be expanding this third party software develops a choosing to you guys resource to people that people are any actual for Oh, let's see on always see be feel platform.
A number of this chemical companies demonstrating I see us.
For example, Strother began demonstrated both for phase he does and the drug or monitoring belongs to meet somebody tell me as me I'm a single see V 22.
For the mid seventies.
Youre facing h. bass, and the recruiting solution Ramsey V 25, and target floods and a passenger vehicles.
Hi, sorry, strieber and the interior <unk> Kinda assistance ran three cameras on wants to be 20 true.
Any regions retail analytics platform was based on full life Cdtwenty two based cameras.
And the sensitized for PC eight hours and the driver monitoring system right Oh Cdtwenty two.
Other fears and bronze level Fort Collins vehicle demonstration platform, Eva or embedded a vehicle autonomy.
That's what we completed over 140 accounts right right on Las Vegas treats.
Right what comes out that both doing that they anticipate a first time night.
You got cars Lightbridge, Ambarella, 62 basis, Steris people can't cameras and Ebrace helpful.
Demonstration Silverstein together was radar, but we launched <unk>.
But demonstration included generic.
Upsets will keep detection pedestrian vehicle bike multiple cycle and the traffic psyche picture and the classification.
Check me like detection and management Pats planning and Aecoms parking.
And brought also demonstrated a C is an AI based threed camera and the three meal solution roaming, although seagulls T V 22 weeks, we'll see.
This email systems left and then rights that meet or not we provide the improved field of view you difficult lighting conditions, but by leveraging I'll see before processing units, then should we could provide a blind spot detection warning bikes core pedestrian will present.
During CES Ambarella announced it demonstrates solution for two new and Mark implication three D access control and the robotics.
And <unk> three D sensing platform addresses access control security panels small BD locks video doorbell and the speech recognition payment systems.
The tough when we speak in Bras TV Ptwenty five see before he I'd vision system on chip.
Semiconductors, RGB image sensor and the structure like power by Lumentums big cells.
The supposed to use a single indispensible pools visible and if our infrared images foot that sensing.
And Berlusconi trying to gauge how do you thought you still see powers that processing anti spoofing algorithms do you feel you come this year was as and the media, including almost single chip significantly remains consistent complexity.
And I brought us new robotic class will facilitate the P. Parliament I'll go back to patients based on Ambarellas see before agencies, you targets automated guided vehicles or AGV.
From a robots and industrial robots.
The robotic platform.
Who likes to unify so for infrastructure for the most common robotics functions, including your own that will processing and the open source computer vision library, well open the CV functions.
With that was strictly include a single C. B to chip performing styrene processing object detection, Kim keeping tracking occupancy great individual down the street.
I will now take Oh, <unk> I was just talking about something some additional customer product information for the last quarter, starting with the professional security.
Well do our social accounts in February that launch over the new additional obvious video security portfolio, well digital age far in parallel.
So in bras video processing and you'll see the new issue far in camera line is a cost effective solution for a bunch of country conscious video security partners might require a small footprint camera although use.
Pillco, a reason to spin out of a global industrial Johnson Schneider electric.
Intends to announced in March the cyrix enhance a serious three camera parking targeting critical infrastructure customers, such as airport Cds scamming and other enterprises in the smart TV customers.
It's all based on Ambarellas CB eight so see as beauty industry, leading image quality performance Romulus and the deep learning analytics. This cameras are expected to be shipping later this month.
I see what a security expansion to be held later in March we will attack a major professional security camera only at the holding Taiwan, well demonstrated their new see before based Campbell.
This outdoor fish I camera will feature a six me got big so eight to six like including I P 66, an Iraqi and ratings smart I R.W.P. approval local be working and the embed the smart 360, VCC analytics, including intrusion detection crowd detection and.
Turning to action.
You have a consumer security camera market home security and automate automation from ATP Oh wheeled is a first.
Due in part due with you sell home security platform grew by 80 and.
And brought us ace five or Ace two wheel or does not include indoor outdoor and dobell camera in this platform, okay, but we'll recording take P. Beattie.
Chinese who monitoring care mom maker seem to introduces a seem can see one s. camera. The first comes from a model to feature and realize the CV flow agency based on how Cdtwenty. If I if you'll see the camera included feature will become nation Pat vehicle Your commission open tracking and the support for Amazon.
Huh.
I will not take and talk a little about solve the custom product into introduction from automotive markets.
[noise] Gentex Corporation and actually the Montney amongst they are jointly developed camera based real be consistent that dramatically improve the drug was ability to monitor traffic to the reader and the sites Oh the vehicle.
The and broad based prototype was demonstrated a gentex see us Booth you asked the marketing TBS Sheeple the girl.
Lots of spots and passenger coach Oh, yes in China, you Tony will use of four facing Adas camera based on Cdtwenty, two a Q EMIR commercial fleet.
Based on here what makes the eyes I. If the is 500 the system provides autonomous emergency brake for vehicles and the protection and then keep you from then keeping functions.
During the quarter bombing introduce tendon dash camera featuring two answers you choose at 180 degree field of view to record in from and and inside the car to provide complete coverage around what the driver featuring Fourteenforty resolution video and my vision dependent camera is based.
In bras eight <unk> automotive agency.
Next space, the UK and the Europe's leading patch can't care muscle part introduce is six to two GW model.
Based on broad each time, you to automotive we still see became a record for KBR deal that's already for into second and includes image stabilization Schubert slow motion night vision and Amazon, Alex I think saw integration.
You know China automotive market be shown introduced its leash on one electric vehicle featuring a car recalled or the send a feature.
Supported by one single and the based on Ambarellas history are easy to see the current colder operas food retailer equally.
And the Korean that's can either think were introduced new models piece Arnie Bras age 22 automotive easily see the QST 3000, a qxc meeting our two channel for 60 design. This small form factor and supervisor features.
Welcome to model is a full K plus Hong Kong 50, if these guys.
You know comes from a market segment Chinese sports and the VR camera maker Incstar Threesixty intrude introduced its IMMU one our sports camera based on how each 20 to be Vseventy, if I still see.
The camera each includes a one each sensor.
You're going to I, do think silver and unique treme old, which he cables camera offer 5.72 resolution Street hundred 60 degree capture a full case P 60, why in gold either.
In summary fiscal year 20 represented a major step forward as we begin to begin to establish the commercial foundation for nearly 400 million dollar investment into here in the computer vision.
The three waving the CV revenue we have previously previously articulated Oh, taking shape. That's why we've won even professional security camera market. We have we know where we have seven customers in production.
This is where we've enjoyed a very strong position to become maturities so kind of the year 20.
Weve to the whole money to read touring market, we have to customers in production and we expect these activities remain high this year was revenue becoming material you kind of the year clunky one.
You know automotive market, what generating production Cbram your phone three fluid threed and aftermarket customers and these activity is high across many different applications.
We continue to expect well to see me something you could become material in the calendar year at 22 independently 23 timeframe.
Yeah in the CV up beginning I, bringing new product cycle to our existing markets like security camera, but most importantly, as you saw at a C. S. This new products, enabling a multibillion expansion of our service will market into vehicle smart cities smartphones.
Industry for pool logistics, and all the robotic applications.
Despite the global uncertainty surrounding us.
I want to think abroad, so 161 strong team.
So they are perseverance and the successful execution during this critical Faisal Khan.
Company.
No, we're thankful to all other stakeholders, including customers vendors and shareholders for their support.
Now I'll turn the call over to case before the fourth quarter financial details and guidance for first quarter fiscal year 21.
Thank you for me and good afternoon, everyone.
Today I'll review the financial highlights for the fourth quarter and that's why 20, ending January 30, Onest and provide a financial outlook for the first quarter fiscal year 21.
During the call I'll discuss non-GAAP results and asked for you refer to todays press release for a detailed reconciliation of GAAP to non-GAAP results.
For non-GAAP reporting we have eliminated stock based compensation expense adjusted for the impact of taxes.
Revenue and that's why 20 increased slightly to 228.7 million, which revenue by market similar to the prior year with security camera in the 6% to 65% range and the balance split between automotive another.
First flight 20, non-GAAP gross margin was 58.5 down from 61.2 due to lower margins in the professional security camera and other markets, partially offset by higher auto margins.
Non-GAAP operating expenses decreased 2%, primarily due to foreign credits included in R&D.
Even with non-GAAP.
R&D expense at 38% of revenue our operating cash flow was a positive 39.4 million for the year.
With no debt net cash and marketable securities totaling 404.7 million.
Our Q4 revenue of 57.2 million was slightly above the midpoint of our guidance.
55 million to 59 million and in line with consensus.
These results represent a decrease of 16% from Q3, and an increase of 12% when compared to the same quarter of the prior year.
As expected auto and security were down or other revenue increased sequentially.
Non-GAAP gross margin for Q4 was 58.7 up about 60 basis points from the prior quarter and slightly higher than our guidance of 56.5 to 58.5, primarily due to mix.
Non-GAAP operating expenses for the fourth quarter was 30.5 million compared to 29.3 million in Q3.
This was close to the midpoint of our guidance of 29.5 to 31.5 million.
Other income was 1.7 million and primarily represented interest income on cash and marketable securities.
Non-GAAP net income for the fourth quarter was 4.9 million or 14 cents per share compared to 11.3 million or 32 cents per share in the third quarter.
Non-GAAP effective tax rate in Q4 was benefit a 1.66.
Percent better than our guidance of 10% at the end of Q3 due to tax law change in Taiwan foreign tax credits.
And lower taxable income in foreign jurisdictions.
In the fourth quarter. The non-GAAP earnings per share were based on 35.1 million shares as compared to 34.8 million shares in the prior quarter.
Total headcount at the end of the fourth quarter was 761 with about 81% of our employees dedicated to engineering most of them focused on software.
Approximately 69% of our total head count is located in Asia.
In Q4, we generated positive positive operating cash flow 4.1 million.
Total accounts receivable at the end of Q4 were 18.5 million or 30 days sales outstanding.
This compares to accounts receivable of 21.6 million or 29 days sales outstanding at the end of the prior quarter.
Net inventory at the end of the fourth quarter was 23 million compared to 19.8 million at the end of the previous quarter.
Days of inventory increased to 82 days in Q4 from 59 days in Q3.
We had to 10% plus customer revenue customers in Q4.
Beauty microelectronics fulfillment partner in Taiwan, who ships to multiple customers in Asia came in at 63% of revenue and your Cody.
Quantities OTM, who manufacturers for multiple customers, primarily U.S. based came in at 18.7%.
I am I will discuss the outlook for the first quarter fiscal 21.
We expect total revenue for the first quarter two beyond the 50 to 57 million dollar range or down 1% to 9% sequentially, which is less than our typical seasonal decline in Q1.
In Q1, we anticipate all markets to declined seasonally with the exception of the home security camera market, where we are seeing strong and broad based demand.
As from you discussed the geopolitical and now public health factors are brings significant uncertainty due our forecasting demand and supply and we're taking majors to protect our employees and operations.
In November we estimated to professional security camera customers in China had pulled in roughly $10 million or revenue from fiscal year 21 to fiscal year 20, and what we starting to see weaker ordering patterns from one of these customers in Q1, we still believe a vast majority of the safety stock inventory.
Sorry has not been depleted.
Going forward, we remain concerned about the dual China and non trying to supply chain that is being created and what that means as it relates to our ability to continue supply to our customers in China.
In addition, due to coated 19, we have started to see some order push out some cancellations and our Q1 guidance assumes these recent trends continue in the quarter.
Needless to say forecasting some extremely difficult.
We estimate Q1, non-GAAP gross margin to be between 57.5 in 59.5 compared to 58.7 in the fourth quarter.
We <unk>, we expect non-GAAP opex in the first quarter to be between 33, and 35 million with the increase.
From Q4, primarily coming from engineering headcount payroll tax accruals and other engineering expenses.
In Q1, non-GAAP tax rate should be modeled in the 10% to 13% range versus the benefit of 1.7 in Q4.
We estimate our diluted share count in Q1 to be approximately 35.4 million shares.
[noise], we're closely monitoring the public health crisis, and we're really evaluate external events on a case by case basis, we intend to limit the number of executives that each of them. Currently we intend to participate in the Morgan Stanley TMT conference in the Keybanc emerging technology summit on March four.
Although at Keybanc.
A key banks request, we have converted our fireside chat a true one on one presentation.
We also expect to participate in the Roth Conference on March 17th and the Bank of America Auto Summit on April 7th please contact Lewis for more details.
Thanks for joining our call today with that I'll turn it back over to the operator for questions.
And as a reminder, ladies and gentlemen to ask a question do we need to press star one of your telephone.
Withdraw your question. Please press the pound key.
Please stand by only composite culinary roster.
[noise] and our first question comes from the line of Adam Gonzalez with Bank of America Securities. Your line is now.
Hi, guys. Thanks for taking my question I wanted to start with a more long term question for me you guys first started talking about this access control opportunity at CES and you spoke a little bit about it Tonight.
Just give us a sense of what the longer term opportunity there is.
Yeah. He felt that this technology can be used.
Maybe if you find the implications we kinda to touch on the.
The all traditional market on full Bill back you know exit the just for example, enterprise access control, but you can be applied to many other application for example, the payment system. They channel. They will use officially coalition was the way to Oh to do a.
An occasion so.
But as you know that's the biggest challenge Oh curve.
Face detection as it was a is that you can be easily fooled by some using a picture will other.
Materials, so that using a street.
Oh, sometimes three d. lightning structure to enhance the L., who then it's become necessary for those application and I think we quickly could accelerate the total maki size, all the union number where tobin ball, probably tens of millions close from country to 30, Mena units and the growing fast enough in the future. So.
And though we also believe because for the security reason the technology required for this kind of says I will continue to grow so that we need to come here to do better intends over AI technology for people in the sense, It sensing technology as well as well by the more fusion or even kind of sensor to provide higher comfort.
Dennis almost oh, well face detection exit control so.
What I'm trying to say is we think this is a new market and though we saw a lot of attracting a lot of needs of on the traditional as was new applications and the the most nothing really interest to US is we believe the technologies requirement for this market will continue to grow up which paid to our strategy.
Great. Thanks, and then a case you have one follow up you know the press release, you talked about growing revenue overall this year and I. Appreciate there a lot of uncertainties with the geopolitical environment and no virus concerns.
We also outlined and you know and prepared remarks that a year end market exposure is relatively the same as last year, which I think implies that consumer and your legacy non strategic areas still you know 10, 15% of overall revenues at least.
Can you just help us understand you know.
First on the consumer legacy side, how how is that this is going to wind down.
What do you expect that this is to grow and then you know what are the puts and takes in terms of growing this year overall thanks.
Well the.
Kinda clean up the first part of that we've said in the past the revenue was about 60% security, 20% auto and 20% other and what I'm, indicating is that roughly came in at that level. Obviously, we had some pull ins and the professional security side, but we think the mixed stayed about the same from the.
The other section and in particular in a couple of our consumer areas.
We had some new product introductions that actually did better than than we were forecasting. So you know we saw a stronger revenue there last year and I think we'll continue to see that into this year, but it hasn't changed our perspective that over the next three to five years. We think that is going to continue to decline, but perhaps to be a couple of current pro.
Okay, all right now that seem to be helping us there and and that's good that's constructive as far as a the puts and takes you kind of goes back to affirm. These comments you know.
Between the China and the in the virus uncertainty you know automotive industry continues to be who was soft last year continues to be soft and the visibility issue. The how much disruption we've seen or we're going to see it's really hard to to to say you know.
Exactly how that's going to shake out we're going to continue to give you good guidance on it.
We continue to be excited about our penetration in the markets in and probably most excited about the CV adoption.
Which isn't necessarily just in this year story, but it really sets up the future of the company that from has been talking about.
Thank you.
Thank you and our next question comes from a lot of Matt Ramsay with Cowen. Your line is now open.
Good afternoon, Thank you very much.
For me I <unk> I wanted to talk about that.
The adoption I think in prepared remarks, you talked about.
Being on the order a 10% of revenue in the upcoming fiscal year.
That might I don't know if that's above your expectations about what do you guys expected I assume most of the business you're picking up from Wal ways challenges internationally is still non C. <unk> C. Maybe you could just give us some puts and takes there and what end markets and maybe what China exposure are you guys thinking about of that 10 for.
On a revenue there might be CV base. This year. Thank you.
First of all I think that you are right that the CV revenue.
Increase that we see this year maturity profile, the non Chinese customers and especially we announce we mentioned ficus more ready in like Oh, visual which was Motorola what's that going Panasonic vivo peg palko, you can see that trends on the professional this.
Well, especially IP security camera Guy generates him a majority of the CV revenue. This year. So you can see that is really ball the new product line introduce upon the our non Chinese customer and this at this point and we continue to feel confident about this tend to 10% guidance, we'll see me revenue and.
I think of that we talk about we have you addition to the 10 million 10, Armenian I'll say, 10% revenue growth.
We also talk about we have a 100 customer buying get all the design Kid engineered parts and development boards physically at 20 would you really feel the huge base for us to grow in the future. So I really think this is.
Important portion of discussion and also that the all your total China I think I'll try to exposure.
You do you need to look into people ways.
First of all they're allowed to part about the manufacturing China, We talk about we estimate probably 40% Rafi manufacturing in China.
We also talk about how can you hear about why use our chip manufacturing, China, but export to the outside China. So we think our in customer exposure in China is the roughly 20%.
Hope that helps clarify that that questions.
No. Thanks, Thank you very much for that for me that.
As my follow up Casey I noticed that I mean, we've talked about here on the called the different uncertainties around geopolitical stuff and what the virus.
It looks like you've guided opex up on the order of 10% sequentially, maybe you could walk us through the new areas of spending and which pieces are ramping and then also if things do get tough from some of these variables how much flexibility you have to limit that spending growth. Thanks.
Yeah. So a majority of that increases coming in engineering and Thats into places. One is we continue to hire in that area and continue to push the CV platform and the you know the new product introduction there in so that's that's that's a portion of it. It also is.
Our largest number of employees and when the first for the year comes around the employee taxes kick in and all the other things that you see in a in the beginning of year typically and so that adds to the engineering line in particular, but our across the board.
The to everywhere. The other thing that runs through a engineering is you know as we start to go to lower geometries, and you know CAD tools continue to get more expensive mask cost continue get more expensive. So the amortization of that through the Biennale also builds as we start to build these higher higher or lower.
Geometry, a higher development projects and that this affirmed me I would like to add to that.
We expect to that we have I'll first five nanometer tape out there this year.
Basically explained to you.
You know the already you know we have to putting through our budget as well as the cap tools [laughter], we have to buy to get to find that let me to tape out it is extremely higher than the whole pay 40 in the past.
Hi, guys. Thank you very much the color I appreciate it.
Thank you got it.
Thank you and our next question comes from the line of Ross Seymore with Deutsche Bank. Your line is now.
Hi, guys. Thanks for let me ask the question Congrats on a solid guide I guess either case here for me I guess, that's where I wanted to start my first question is if we went 30 days ago, you talked about kind of down I think low double digits was normal seasonality and then you have that the concern about the inventory digestion from the tubing Chinese security camera customers.
I guess, what's changed since then that leads you to kind of guiding down roughly 5% because it seems like the world's gotten more uncertain.
And yet your numbers are better despite highlighting accurately all those uncertainties. So something seems to have gotten significantly better in so any color you can provide on that would be helpful.
Right. So first of all the previous guidance. We provided was 90 days ago is in the previous conference call well I don't think we pulled out any guidance between left outstanding called to know, but however, you're right to that they think changed I think the you know I'm Q1 seasonally is Oh a week.
Quarter for Us and we continue to see the weaken as close to the market except in a consumer security IP security camera market and that we see a broad base as well as a higher demand than we expected.
Than before and the led by a one logic customer arena. So in general that we do see Oh, we're doing well the Mark you know cost between what was the market. That's basically the main reason showing how strength alphacat all guidance despite.
So is it basically if it wasn't for that customer that's kind of the primary delta.
Well in fact, I say, it's not last by one comes on but this is really a market. We're talking about couple of quick follow up as well bore based customer base you thought well we have many oh consumer IP can have camera customers and the most initial strides.
Q4, and on the forecast on the Q1, so, but which of course ring is our largest customer in this space and they are leading our health well until the polar running forecast.
Got it okay. Thanks for that too and I guess, a slightly longer term question, but still the same sort of financial Ben to it.
The line that you have at the end of your press release thing that your goal is to grow revenue for the year well what are you trying to capture in that because you're starting the year up you know the better part of 15 mid teens at least year over year is there a seasonality difference that you guys expect this year with that 10 million or is it just a an abundance of caution.
Kevin.
Oregon abundance of uncertainty given.
What's going on in the world with virus and geopolitical et cetera.
First of all I think well will establish a goal this year, but we definitely think you know well we want to have a growth here this year and Oh before this koby 19th situation, we do see like I said strong forecasts in certain markets.
And although we cannot predict or forecast, what's going to having the next three quarters. So we won't human tenneco that we wanted to have a growth of course here, particularly we saw stress on the CV and Oh, which is up its all pieces of growth.
And the hopefully that if we can't have lost.
Well you know stabilized markets you know next three quarters, you know we want to achieve their goals that we set up early this year.
Got it okay. Thank you.
Thank you and our next question comes from a lot of Joe Moore with Morgan Stanley. Your line is held off.
Great just following up on the last question.
As you guys have looked at these risk factors that you talked about around covert can you just a sense of how much you know you might that might have changed your forecast because we hadn't seen that situation the possibly quantify how much of an impact that was.
Well, Joe I think it's a half was to provide the whole year guidance at this point and Koby 19, obviously, there's a impact the onto our forecast and we tried to maximizing our Q1, Oh forecasts already and I mean, just market more for the quarter definitely or just for the quarter fulfill this quarter, we I stuff.
What he thinks about the will be with a one one month the shipment already in the back and we'll do CAD to the forecast we will go into doing is extra quotes to two miles.
We think we feel.
Relatively good about our current guidance, yes, Joe it's difficult to say or how much impact.
It's really having what we did as we looked out what we're seeing you know early in the quarter a in it you know what we might expect is for interest paid us further cancellations or push outs and tried to work that into our guidance, but the you know we're kind of caught here.
Because of the one month off from a December and in a place where all of this is happening really pretty quick in the last week or so and so what we tried to communicate isn't we tried to factored into our guidance Sally what we've seen but what we think we're going to see for the quarter.
Okay. That's helpful. Thank you and then as you talk about 10% <unk> for the year.
Jim that's still primarily in professional surveillance and it seems like that means you're exiting the year end up with a pretty reasonably good percentage of your professional surveillance business, having transition is that that in any context I missing there and just maybe you can do to kind of help us with what that progression looks like.
I think you know we end the face we had 20, we some initial ramp up overall professional IP cat and we may sell assumption on the how fast we went Bob will happen this year and and also was a.
Considering the factors over you know well geopolitical situation and the cold uniting.
Also we also putting some of the forecasts that already run Bob comes from IP wholesale so between the professional I began for the whole year revenue and the sung late Q4.
I am I being around because I should be the big portion, our new Cbram glyphosate fiscal year title.
Thank you.
And our next question comes from a lot of Quinn Bolton.
Needham and company your line is held.
You guys. Congratulations on the nice it's I guess just following up on on Joe's question. It sounds like you've got a pretty good backlog <unk> on hand over the next couple of months and Youve judge that down for over 19. So.
Are we right to assume that if you shipped everything in backlog revenue would have been higher than what you guided so you're you're actually expecting some push outs or cancellations from what's in backlog today.
Oh, good as we said we've seen some already and we have kind of not we don't think that's over we're going to see some so by definition yeah. Some of that I'm not you hope you're always opening of course, its push not cancel and so initially it tends to be pushed a and we're hoping that that's the case, but we generally see an increase in business.
As a in Q2 and then another increase in business in Q3, and so you know all bets are kind of off as far as ordering patterns and how things are flowing today, but but we will see some of that are we hope to see some of that in Q2, because it starts like I say as Pushouts and what you hope is some of that at some time, we'll get canceled possibly.
But you hope you have more push outs and cancellations.
Right and then the second question I think subsequent to year, though the last quarterly earnings conference call. It seems like the Commerce Department is increase chatter about potentially changing the de Minimis rule, it's still sounds like from your comments today that that at a 10 million Poland. The physical 20, and you're out of fiscal 21 is the right.
Amount of inventory that you haven't seen further inventory build as a result potential de minimus real changes.
Well first of all the minutes rules either hasn't change of course, they loved discussion, but I haven't seen a little changed.
In terms of with Oh, the or even to get off all Chinese customers I think in Q4. They did exactly what we expected that to do and before Q1 that Casey just reported at one of the customer showing some weak ordering patterns. So we.
We believe they are trying to deplete their inventory starting this quarter. So we base all that we believe that a the $10 million inventory still there and that you will take time for them tool to use all of that.
Great and just lastly from me you talked about the 10% a revenue from CV applications, mostly professional security this year, but I think a in the script you talked about three sort of aftermarket automotive CV based wins and just wondering if you could give us timeframe do you think that those aftermarket designs could start to ramp in you know some.
Meaningful a way in calendar 21 or is even though is aftermarket or more in this calendar 20 to 23 time from.
No I think for those two you pod part as we mentioned I think the run by will be this year, but however, the size because as I have to Mark as was a fleet management intends over the the the volume is not going to be as meaningful.
Professional security camera that we're seeing right now so I do believe that those although the three put option. The products. We talk about you know over multi site well contributes about the it's going to be a less than a professional IP cause kinross, a little bit the chipper on on and on the auto is obviously as we.
Talked about auto was it as an industry softer last year in and we see that somewhat carrying forward into this year. So that that that makes you kind of temper your comment as well.
Understood. Thank you.
[noise]. Thank you.
Our next question comes from the line of Suji de Silva with Roth Capital markets. Your line is now.
Hi for I mean, like Casey just a quick financial question first Casey the fiscal 21 growth revenue guidance, but what's your assumption of listen there about the consumer legacy is that part stable. Despite declining just any color there will be helpful.
Again, right now we're seeing it pretty stable.
As we saw last year, we thought we would start to see a bigger decline and we really saw so.
For the year, we're really haven't guided on anything, but but right now it feels pretty stable. This obviously from a consumer standpoint, this quarter's typically weaker because it's after the Q4 timeframe.
So you know if even if it was stronger than usual doesn't necessarily mean it'd be up it just would be down less than you might expect.
Okay. That's helpful case, and then a question on the Opex growth in terms of you know what's driving it the.
Yes. It reached 100 engagement on TV. So congratulations on that is are you seeing partners and channel folks, helping you kind of source new engagements or are you still having to deploy people to to acquire and then support these additional customers or is the engineering really for the product road map and support there any color on the where there.
They're going to would be helpful.
Yeah. The go to market strategy as Stuart said, we're leveraging our partners Oh.
Business contacts for example, we mentioned in the five six software partners. They all you know a doubling houses and helping us to acquire cosmos, but based on the up there I'm Lucky approach and says how we still have oh, using our marketing ourselves to have to capture customer. So what we're using both in five to that.
Tying together a lot more soquip partners all three to put the all our.
The us see me sort of cut.
The main reason is probably you know with their help we can you can access to more cosmos quicker, though biking everything also.
Okay very helpful. Thanks, guys.
Got it.
Thank you and our next question comes on line of Charlie Anderson with the Doherty and company. Your line is now.
Thanks for taking my questions and congrats on all the CV progress I.
I wanted to start with 'em some of the commentary around CV more material.
In a OEM for automotive in the 20 to 23 timeframe I wonder to what degree you guys have visibility today on any wins there and then.
I consider how this your plays out what would be some of the goals in terms of achieving those within what areas and specifically do you think you'll see that early success that resulted not 2020 to 22 or three ramp thanks, and I got right. So.
For the Oh, Yes, I think there's a multiple direction that we are following all right. So.
So one thing is for example, we topol or did I, Tony murals and though we finally start seeing momentum there and we do believe that will help us to address that wave three grams or for the kind of your 20 to 23 as was the in like the the.
Oh, I'm trying to monitor as well as there can be Monica society, but definitely is what is happening and we out but more importantly, the most important thing for US is to continue to talk to the tier ones that OEM for the H. bass and ultra plus I think that's the biggest.
Area that we spent most of the our engineering marketing resource to securities that we this was a helping all customers. So all the three areas are the key focus for us right now.
Great and then for my follow up Casey just a couple of housekeeping.
Gross margin. It was obviously strong sort of curious what you view of the trajectory there and then inventory you've been sort of bringing it down but you did build a little bit.
This quarter. So I'm just curious your thoughts there as well thanks.
Yeah, I'm field trip from a inventory basis I feel that we're still pretty lame, obviously wouldn't we came into the beginning of the quarter, we got little bit more inventory and and that's because we saw a little bit more opportunity or a little bit more activity in month. One. So we had built inventory a little bit.
But there really isn't much to region into that as far as from a margin perspective, we don't give longer term guidance other than our model our target we're kind of hovering around the bottom of that have that target right. Now is I think from you mentioned you know or are we both mentioned in the past.
Although you aren't going to see significantly higher Oh margins on the CD products, you are going to see twice the twice the the A.S.P. use which gives you the operating leverage that we're really looking for so depending on the mix in and what we see happening in the professional business in particular in China that were really guide kind of where we are in our.
Range, but what we're going to maintain the range in that 59 to 62, and ER and work to get back not only a in it but a higher up into it there where we are okay. Perfect. Thanks, so much.
Thank you and our last question comes from a line of tourists Rambert with Steve.
No.
Yes. Thank you. My first question is on the R&D efficiency. So so you announced the CD 22, and CV to assess products in January.
Are these sort of very simple derivative products from a from a cost perspective.
Or is there still a lot of heavy R&D.
Goes into those funds. This I'm just I'm just trying to understand.
It does seem like those are very specific for for auto.
Yes, so from a pure already you know video processing and I can I was a point of view CV tool and the seeming to FX for example, awesome.
However, the biggest challenge you foresee to Fs is viewed or ace will be which is also great. So that the amount of engineering effort not well can you help them out as Bob follow the process follow the standards. So that we can say where it can pass the ace Ob qualification.
That's a significant investment and has been view as a big barrier to get into the automotive business now we reach of that and the we're confident we'll come to pass the it'll be qualification I think that investments behind us. The however, that's really tight that I think that so basically if you view that as a barrier that we.
To close over to get an overall, but on the engineered well and point of view of on the technology point of view, it's just a similar to the CV too.
Well, that's really helpful and for me you mentioned Palmetto meter <unk> when should we expect products to be in production I'm fine.
Well I say is well we are planning to tape out first by that will meet a chip, but we haven't talked about the product plan to how we can keep what kind of product will appeal space I'll find them on me, but these all his story you can show you expected that we go into field five nanometer products across the board will all told for security camera awful Smokies model and.
We'll be a family of chips I think that you know, we kind of basically say, we're going to skip seven out of them either called the financial director correctly.
Our engineering investment, but you should see that we you know next year.
Well, we tables I know, we're going to provide that much more detailed description about ALC level, probably with a five nanometer process.
Sounds good one last question for Casey cases, the R&D is obvious and slipping a little bit hearing in the April quarter, well. It will it kind of flatten out do you think the little bit for the remaining quarters are or will we continue to see these types of step ups.
Yeah. So again, we don't typically drive beyond one quarter, but what I'd say as you're not going to see a step function like that throughout the year like I say, there's some unusual things that come in like the payroll taxes and some of those that you know tend to feather out as you get further in the year. So I think you're going to see us continue to invest in the R&D.
And and and in our Opex will will stay fairly consistent where we are today, but ah, but but you're not going to see us back off R&D or really accelerate its much more.
Very helpful. Thank you very much.
Thank you.
And this does conclude today's question and answer session or were not allowed to turn the call back to Dr. warm for closing remarks.
And thank you for joining us today I'll talk to the next time. Thank you bye. Thanks.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].