Q2 2021 Ambarella Inc Earnings Call
A healthy customer and Amex supported by strong operational execution all contributed to gross margin above the high end of our long-term model. This is continue to show Growing size of acceptance with City Revenue. Now representing the mid-to-high single-digit percent our total revenue and we are still come back to 10% of total revenue will be learned from sebi products and fiscal year 21 hour CVS command and X our speeds and we are not seeing our over gradually increased Revenue growth growth returns. We expect to the higher gross profit dollars per unit to drive positive operating and the EPS leverage for shareholders.
I will not talk about our market and the customers.
We have previously spoken about our ability to get a share in a professional security camera Market outside of China and this continued to play out which continued juice uncertainty. We are now seeing additional opportunities to gain market share with in China in particular as a high-end and the middle end of the market Chinese. I began camera. May I become concerned about continuity of a supply of the existing Solutions and has restarted evaluating camera designs based on umbrella Solutions including a slow AIA Sosa's.
I'll say the China. We are continue to see strong design with momentum for Siri for Associate's in professional IP cameras all geographies and a very strong pipeline a new customer introductions plan over the next twelve months.
During the quarter leading Japanese camera supplier Pitts previously Panasonic continue to introduce more new models based on all these following the law says the apply that rule out in the previous quarter this included forgiving the resistance or outdoor network camera and the full pay out or bullet camera off. Umbrellas 2206.
VI features include smart coding detection recognition and the third-party application support
and in August Motorola Solutions announced the availability of a broad-based original H for thermal elevated temperature detection solution. It is a pre-screening solution can be used to detect indications of elevated body temperature in a person composer of the infrared infrared Spectrum thermal camera and the featuring aged base and box it provides a contact list alternative to traditional screening methods even consumer IP camera Market. We have a single Reebok in orders from the major home monitor camera makers following initial push out of others earlier in the quarter as a result of the impact of a covid-19.
All customers offering monitored Security Services haven't seen an increase in the number of installations in the second half of the quarter off email for our customers in self-installation Market segment have not recovered. We are also winning new designs for our Seafood resources in future generations of home monitoring cameras as customers demand Advanced features such as smart person detection in July. Taiwan is baby. Monitor sleep analytics company Cubo introduced is Cuba a plus model based on our H 263 SOC the cameras fish detection technology order you if you recognize your baby's mouth and nose are covered or if they are stuck on rolling over.
Do you recorder we have to online webinars to promote our generous access?
Control reference platform which enables contact free access controls on the face recognition. The design has been developed jointly with an semiconductor and new brakes and the features. I will see me 25 SOC to enable 3D sensing capability using a single camera.
Has hosted by the Lenten and believing video surveillance reporting I research attracted the over two hundred potential customers and partners helping to secure our first walk ins for the new platform.
You know your Market you are seeing strong interest in our solutions for variety of new applications including from Page Plus autonomous vehicles in at Ronnie meals and car recorders applications in particular our association. We need designs their own Nation for low-power advanced initial processing. Processing performance and ability to process multiple video streams.
Please would beginning of the year. We have one now new design wins. We estimate will generate approximately $200 in Revenue off with a lifetime over their production typically between 2 and 7 years.
Pre-order we want to designs for Japanese automaker Nissan.
Chinese tier-one new home introduced a pre-installed a single Channel Wi-Fi DVR for total Nissan passenger cars based on our 812 Automotive agency wage. Go to one thousand also introduced. It's still set to channel DVR for Global Nissan models based on both our of a and each kind of resources home and do the quarter Shanghai Mike. See I began shipping is from a solution in shock. She trusts a leading commercial vehicle maker in China took a new customer phone in addition to the youth home link, which you announced on March 3rd. The 8th. System is based on a browser silly 28 C 4 s o c i n e l quizzes to achieve high accuracy visual perception of three D modeling using molecular vision
In August European tax can lead a blank space launched its next-generation wage offer life-saving emergency SOS alert capabilities based on importance. H22a so see the dash can provide 4K HD recording and the image stabilization wage. Well a real camera module also supports 1080p video also during the quarter. I only introduces a few channels car recorder for leaving eCommerce company some value the after-market call recorder features full makeup plus to make a resolution recording and it's based on our h22a Automotive agency off.
Would you be mentioned in previous earning calls? We are winning.
Emotive Fleet Management designs where our city for SOC provide the required performance for driver monitor monitoring and from a desktop applications during the course. I'm site technology is really company providing driver and the can be monitoring systems and software announced. It has selected cv25s telematics. Please device the device will Implement ice ice freezes Drive monitoring solution with eyesight algorithm based being executed on Android v 5.0 see the city twenty-five has been selected for its capability to run sophisticated with a low-power best-in-class image processing and ability to support issue notification such as video recording and streaming.
In summary, we're addressing Mega Trends such as a security safety and efficiency all enabled by the application of our leading video processor and our new computational computationally intense processor.
We continue to offer evidence of a broad and expanding customer adoption of these for example during Q2. We had a record quarter of a CV activity with more than 80 unique customers purchased engineering Parts evaluation kids and or the running boards with activities roughly split between our security office. So motive processes.
We have comfortably untracked to achieve our guidance for Professional Security revenue or wave one to become a cure this year and we are on track to reach our system similar wave to go for the small hole Market in the twenty-one.
A we've three guidance for Revenue to become mature in calendar year 22 and 23 is also on track for example during future. We had a six Automotive TV production customers. Our long-term Automotive. Revenue funnel is just start starting to build with multiple projects either one or in a building pipeline.
For example yesterday. We have one Automotive project representing approximately two hundred million dollars in lifetime Revenue.
Some of the more significant programs stop production in the year 22 or kind of the twenty-three, and we will be providing further updates as an overall. I would like to thank our employees for wife or adapting to the changing conditions and delivering strong results, and I am thankful to support our customers vendors and the shareholders doing this volatile times. I will now turn the call over to Casey if we will give you more details about we are seeing home and expect for the business. Thank you. Thank you for being a good afternoon everyone today. I'll review the financial highlights for the second quarter of fiscal year ending July thirty First and provide a financial outlook for our third quarter ending October 31st during the call. I will discuss non-gaap results and ask that you refer to today's press release phone number.
detailed reconciliation of Gap
To non-gaap results for non-gaap reporting. We have eliminated stock-based compensation expense adjusted for the impact of taxes.
Our revenue of 50.1 million was slightly above the midpoint of our original guidance. This represents a decrease of 8% from q1 and a decrease of 11 per month compared to the same quarter in the prior year.
In Q2 Revenue declined sequentially in automotive and other markets with security camera business increasing in the low-single digits. Sequentially Professional Security was down home security increase sequentially non-gaap gross margin for Q2 was 62.4% compared to 59.1% in the preceding quarter and was above the high end of our guidance barely to a professional security concentration ship from China to other parts of Asia in North America margins were also supported by continued operational execution in a very difficult environment non-gaap operating expense for the second quarter was 30.2 Million compared to 31.9 million for the previous quarter.
All bets decreased and was below the low end of our guidance primarily due to reduced employee expenses lower depreciation from deferred Capital expenditures and a one-time for a subsidy related to covid-19 of $700,000.
Other income a 1.3 million reflected the impact of lower interest rates.
Non-gaap. Net income for Q2 was 2.1 million or 6 cents per share compared to non-gaap. Net income of 1.3 million or 4 cents per share in the first quarter the second quarter the non-gaap earnings per share were based on 35.4 million diluted shares as compared to 35.2 million diluted shares in the prior quarter off the non-gaap net income for the second quarter of fiscal year 2021 includes a change in the non-gaap tax rate calculation to exclude losses from jurisdictions where there's no tax benefits Associated this was done to improve the alignment of non-gaap income tax to the non-gaap profit before tax accordingly. Non-gaap. Net income and non-gaap earnings per share for the second quarter of fiscal year 20 ended July 31st, 2019 have been adjusted for the change in non-gaap income tax effects.
And presented consistently with the second quarter of fiscal year twenty presentation Twenty-One presentation.
For reconciliation of gaap to non-gaap calculation is included in the financial statement portion of our press release total headcount ended for the second quarter back was 758 with about 81% of the employees dedicated to engineering approximately 69% of our total headcount is located in Asia.
Cash 4
Marketable Securities were a 410.7 million down slightly from 411.3 million at the end of the first quarter in Q2. We had negative operating cash flow of 2.4 million due primarily to increases in operating assets while current liabilities remain relatively unchanged quarter-over-quarter.
Accounts receivable for the second quarter or 23.3 million or 43 days sales outstanding this compares to accounts receivable of 20.7 or 34 days of sales outstanding at the end of the prior quarter net inventory at the end of the second quarter was 23.9 Million compared to $22 million in the end of the previous quarter.
days of inventory increased to 109 days in Q2 from 91 days in q1
We did not purchase any shares of common stock in Q2 in May Ambrose board of directors approved an extension of the current fifty million dollar repurchasing program for an additional 12 months ending June 30th, 2021.
As of today though there remains Forty Nine Million available from the 15 million repurchase agreement authorized through June 30th 2021.
Fit to 10% plus customers in Q2 WT mic Electronics fulfillment partner serving multiple customers came in at 56% of Revenue in Chicago a Taiwanese who manufactures for multiple customers came in at 20%
I will now discuss the outlook for the third quarter of fiscal year 21 forecasting continues to be difficult with geopolitical and pandemic wrists continuing to create an environment of low visibility. It is a challenge for us and for our customers to constantly forecast government business and consumer spending for our products.
The rate of ordered push out and cancellations were previously discussed in March 3rd, and the June 2nd earnings call has slowed and design activity as the back cover. However, not all customers programs have returned to their pre pandemic Revenue to directory and Global political tensions. Remain high with a wide variety of risks in our prior earnings called we estimated to professional security camera customers in China had pulled in roughly 10 million dollars of revenue from fiscal year or Twenty One to pursue your 20, we believe there has been some inventory reduction, but we continue to expect weekend or volatile ordering patterns from these customers during Q2 off these two customers combined represented a mid-single-digit proportion of our total revenue.
Based on these factors and our best Judgment at the current time. We expect total revenue for the third quarter ending October 31st, 2020 to be in the range. So 252 the fifty six million dollars. We anticipate security camera. Revenue will be down sequentially with Automotive in Flatbush and other Revenue expected to increase Thursday. We estimate q39 Gap gross margin to be between 60 and 62% compared to the 62.4% in the second quarter as customer product mix and operational control sustained gross margins in our long-term model range of 59 to 62%
We expect non-gaap effects in the third quarter to be between 31 and 33 million due to continued lower travel equipment and employee expenses related to the current environment two or three other income should be modeled around 1.2 million dollars.
The Q3 non-gaap tax rate should be modeled at approximately 15%
We estimate our diluted Share account for two or three to be approximately 35.7 million shares. Amarillo will be participating in the Colliers Institutional Investor virtual conference on September 10th, the Deutsche Bank virtual conference on September 14th, and Jeffrey's Hong Kong virtual conference on September fifteenth and sixteenth, please contact Louis for more details on these events. Thank you for joining us today. And with that. I'll turn the call back over to the operator for questions.
Thank you. One of your telephone your question, please press the pound key, please standby we can possibly Q&A roster month. Now first question comes in the line of Matt Ramsey with your line is now open. Thank you very much. Good afternoon. You guys off my first question. I just wanted to to follow up on on something that that you guys just said in a prepared strip. I was surprised I guess to hear that the the examination of of Hikvision and dial I think Casey you said mid single-digits of Revenue if you could confirm that that's right. And I guess the follow-up question of that for me. If you could talk to us about the off the makeup of your current professional security camera business in terms of customers within China outside of China and and what kind of customer concentration there is at that wage.
Not business at this point if in fact those two big guys are are down to that level of Revenue currently. Thank you. Well, I think first of all we confirm that it's Mick single digits of between. I think there are two thousand two factors around like why is definitely you know, Safety stock last year. I think they are definitely drawn the those safety stock at this point wage. And also we talked about the there is a possibility of you know, they are looking for a second Source because they worry about the geopolitical situation. So that's definitely odd is happening. But also in my script I talked about another thing which is not impact impacting our Revenue years. We talked about our city for a so C ROM or designing a opportunity inside China because also because geopolitical situation and they're the the the our customers current supplier dead.
My facing some supply issues. So that's why we start seeing the Sun.
Open and you know design we activity in China. However, we we do believe our technology especially has been proven outside China. We don't have a full concentrate gravity concentration problem because most of our customers outside China, although that sounds like the people in the others, but I don't think we have like, you know more than 10% customer in any accounts outside China. We still continue to believe we have the the the major market shares for both CV and CVV professional IP camera or Supply and but inside change, I think that the mid-single digit number reflect the two factors I just talked about but at the same time I believe that we will have a more severe mu inside change more CPU market share inside China in the near future.
Got it. That that's really helpful as a follow-up question. It was it was nice that you guys provided some some Revenue pipeline Clarity within the automotive business office. I think the the two hundred million sounded like that was a two to three-year Revenue lifetime is is is that right and maybe you could talk to us about how many design wins are in that? What are the relative sizes and concentrations of them? I'm just trying to get a sense of do we have a few big deals that you could build upon in momentum is this uh a whole lot of deals and just any kind of color as to what that pipeline looks like would be helpful. Thanks guys. First of all, I think the pipeline you talk about the two hundred million design wins is owned now for the found the beginning of the year to now all the design we we we have in the automotive space. We think that there are some big deal there some smaller. There's always a big deal we're talking about birth.
The last time Revenue close to a hundred million dollars in one design. And of course, there are multiple smaller deals for different spaces and the the the application cover emails recorders and also in can be monitoring. So there are multiple different, uh different applications in there and also the other box say that amount or two hundred million dollars more than half of that is CV related applications.
Great. Thanks for being and congrats on the progress. Thank you.
Thank you. And our next question comes from the line of Tristan with bared your line is now open. Hi, good afternoon at this point tonight. I know you only guiding a quarter away. Is it fair to assume that we should see normal seasonality in your physical key for top-line and I'm basically asking the question in reference to the prior to worry about the fully aware when you guidance you have a year. Well, we have a provide any guidance be on Q3, but I will say that I'm a little pandemic we start seeing less impact of academic in a quote in the coming quarters, but we still the impact still there. However, even with that we still believe the box there maybe not as dramatic as in the past years, but definitely I think that our future is that Revenue will be higher than cure for for sure and also
That's a shame that the pandemic impact will be really minimize beginning of next year. We should see you know a positive growth.
I'm actually also so although we cannot give you a really concrete guidance yet, but I think that's a trend we're we're talking about.
Okay, that's useful and then if I look longer-term, if you could remind us of the operating leverage that exist in the model few years out, you know, is it fair to assume that should go and help the weight of your work new growth and then what about the R&D, you know, if you could maybe perhaps give some that's on the operating leverage be on just a minute cuz you you back on on your vehicle's starting next year. Yeah. Well, there'll be some growth in in sales marketing and sg&a. The majority of the people in the in the Optics area is in in R&D and that's not only you know, continuing to grow the team and expand our effort in a from a headcount perspective. But it's also you know the they'll although it's amortized. It's the increased tape out costs CAD tools et cetera that as we go down from, you know, the geometries that are at now down to the 5.
Now the meter that would be talked about in our last call those costs also increases. Well the leverage for the model that will offset that growth is really the the two times ASP 4GB vs. Non CV while the margins are roughly the same or in the margin Target is roughly the same that allows us to have an operating leverage that that should get us back to you know, the levels that we are at 25% plus over the course of time as CB matures out in the model.
Great. And then last Quick One. Are you guys planning or maybe a method and you could remind me any support for lighter off in the future given that all your demos have centered around, you know camera support for your City trips, right? You know, you suck very eccentric company, but you know in the long run we do believe we want to be the Central Computers in the in a in a level took us car or even moving forward with level four level five. So with like we need to support not only to the region base processing but also we will be able to interface with Allison so that great out like that or even other potential sensor sensor out there and then we can take them both sets of data. We do a helping our customer.
Sensor Fusion elbows and on our on the CPUs our chip. I think that's our end that definitely we're planning to do that. And in fact that the functional safety chip that we present CV 262 functional safety chip also support taking in the data and do a Sensor Fusion.
Great. Thank you very much.
Thank you. And our next question comes from the line of Joseph Moore with JPMorgan your line is now open.
It's actually Morgan Stanley. Thanks. Thanks guys. I wanted to come back to the China surveillance. I guess it seems to me really positive that those two customers are down around mid single-digit wage and you're seeing design when traction potentially there. When you think about how that business used to be kind of a quarter of your of your business. So am I and I being too optimistic about this and and I guess you know, what is the alternative if they if if high so we can is compromised in their ability to service those customers and you're starting to see some traction. I mean shouldn't you should start to see, you know, a pretty strong potential ramp is is there is there a third competitor or they enabling new suppliers to sort of offload their us, just just how should I think about where that mid single-digits she can go.
Yeah, actually joh, first of all, I'm not sure that I catch your friend right to answer the question with the from the CV point of view from the high-end middle and products other than high so they can we don't believe there is a competitor out there yet. How's the rumor? Is that a lot of the customer and and also along with high so they can they built a huge amount of inventory to try to write out the this uncertainty. So, I think that's one thing you need to consider. Then the found a high-end the middle and I think that we are very strong. You can see the evidence on the outside China Market. We are basically the the theaters and they're probably have the biggest market share among all the positive possible customers on the lower end side there. There's a huge amount of Chinese Taiwanese company wage.
Trying to convene to sell two to three or four dollars of a CV chip and that's on the low end side. We're going to see a lot of competition. But for the people who pay attention to the performance phone number and the best image processing on the middle and products. I think we are probably in a very good position. I would only add that. I think your interpretation is accurate, you know, I I think to be able to maintain that or revenue and grow our Revenue with with the headwinds that that we talked about in the change in in in market share their faith in the short run has been encouraging to us because we've got a lot of other activities going on not only in that business and other businesses in in his fur me indicated, you know, we we we look forward to hopefully get that come back and and be a stronger piece, but the fact that we're able to maintain the revenue where it is with that level of business there I think is is positive right and another another dog.
You know the point out is you know in Taiwan we start seeing that there are some Shooters on the substrate.
Ended up. The reason we were towed was that high silica in supporting inventory in a very very huge way and that causes a short-term disruption on each side. So that gave me also indication that for some of the customers in in China. They probably building up huge inventories to try to whether this life difficult period of time and that's not that would be something you should consider too great makes sense separate question the the thermal when that you talked about with Motorola, I guess, you know, we haven't seen you guys in a lot of life before it seems like a pretty big category given everything that's going on. Like is that should we think of that as being a sizable opportunity and just you know, our usage is it a potential for more customers? Is that could that be a decent sized business for you? We definitely believe that this is a market that we should Target and we have a work with several customer and multiple birth.
412 all there to to ship a product based on a solution the the the way we're looking at this Market is that a lot of thermal camera today is just building thermal information off but we do see a huge Market pools for asking for signals in the sensor and thermal sensor combined in a camera so that they can overlay the temperature gauge object is applying TV and internet on top of that. So, you know the who the you see a high temperature person, you know who they are and how to do a contact trade. So I think this is a combination of of a AI plus thermal really help us to help our customer to build much better contact tracing always been a system that I think it's definitely there's a big market for it.
Great. Thank you.
Thank you. Thank you. Thank you. And our next question comes from the line of Seymour with Deutsche Bank doesn't open thanks for letting me ask a question. It went shorter-term question them return question maybe either case here for me and in the short-term side of things. I just wanted to to walk through the segment's just a little bit. It seems like in your guidance for the third quarter if if you have money down and you have Automotive flat that's the the other person has to be up significantly is is that just because of seasonality or is there something else going on there and also part of that is why is auto pay em sequentially most everyone else at least because the shelter-in-place orders have come off. I know it's early days for you guys and auto but I would have thought just the world kind of turning back on and that on Market would have led to a little bit wage growth for you and pixel 3 cases. Yeah, we could by the end of the quarter see a little bit I but I I think the guide the flat it is reasonable into your point somewhat pointing to where we are in our life cycle wage.
The automotive business that that maybe differentiates us a little bit from from others. The the consumer business has been one that typically has grown pretty well in Q3 in front of the the holidays end of the year and and and you're right. We are we are seeing that that business today.
Is dominated by my DJI in a in a whole series of products that they have that I think they're having pretty good success with so we we appreciate the relationship and and and look forward to them having a good season. But but I think your assessment is is fairly accurate around around the consumer. It is really more the the normal seasonality along with maybe a few new product introduction said are are looking pretty promising. Thanks for that Casey. Then I guess my longer-term question create a bridge from the shorter to the longer. It's nice to see your gross margin upside so much. So any more color about what happened there not company specific customers specific. But um, how is that so good in the quarter? And then you mentioned that CV has to FDA SP. Obviously that'll have higher growth projects dollars any sort of at least directional commentary on what that does to the gross. Margin as well. Do CV gross margins rise versus the the prior Jen as well, or is it just the dollars we should think about dead
Right. So for the cost March, I think the the main factor is that the hydrogen combined have only mid single-digit of Revenue this quarter, right? I think that's the main factor. The product mixed is always the the the most important factor for a low-cost model number and moving forward. I think that the facility product would cause you to believe that our TV cause margin or be consistent with the video product was margin, but however, like you said twice higher speed so we believe in God provides an average wage GPS but not on the coast. Margin if I could see the follow-up to your first answer there for me. If you diversify outside with other Chinese vendors like you talked about earlier in the call, is it the same Dynamic where the gross margin pressure would be there or a more fragmented customer base regardless of the geography something that correct?
Less detrimental to your gross margin than Hikvision and David were given their size. I think that goes with other customer will be better. Just you know, I figured out what does have so much leverage because the the volume, you know, they they probably dominant more than 60% of total security camera Market combined. So that's why they have a much better purchasing power. But with other Chinese vendors, we do see that life is margin, which would be higher than the ones that we like we can.
Perfect. Thank you.
Thank you. And our next question comes from the line of Quinn Bolton with Needham & Company. Your lot is now open. Just wanted to to ask about the the China Market. Obviously, you still looking you know has is no longer available. No longer able to supply it. It's security processors post September 14th. Can you give us some sense? You know how how much market share does does Silicon have in the security camera Market, which I think you guys in your slide deck estimated about two hundred million. So I would say that the inside China they have the biggest market share and however, I also want to point out the majority of that is on the low end side, you know, in fact look at the distribution how easily more than half a lot more than have is more on the lower inside the two to three four dollars. However, the most powerful business phone number
is is really on the
And the high-end side and that's where in the past I said it has the biggest market share in China. We have a second moving forward. I will say that give us some Competitive Edge on to gain some market share on a high-end middle End Market, but however, I do want to point that one more time. That although silicon cannot ship Cod September 15th, but there is a huge inventory that we believe having built up to a for the current customers and as well as that for the lower inside. I think there's quite a few competitors out later completing purely on the price so that we're going to see a price pressure on the Lower East Side.
All of a sudden China, we don't see a similar scenario. I think that we are supplying through all the non-chinese customer from the low-end to high-end because they appreciate home using the same system software across their platform. I think that's the one with kit design requirement for almost all our lunch Chinese.
I guess maybe if I could get you to to maybe even guess me for me. I mean if it's a 200 million unit Market you get said earlier I could Vision a dawa or 60% So so it's not like just that it's to customer loan or a hundred and twenty million units a year. I used to most of that's probably for domestic China. I mean is is the mid-range in the high-end? I mean is that Thirty or forty million units that I share with with with high silicon or or I mean, I'm just it feels like there's tens of millions of units that that once those customers burn through the I select an inventory that that are going to Bath grabs and it sounds like that's a meaningful unit opportunity. Just wondering if you could help us at all. Try to size. What what the mid to high-end Market in China might be on a unit basis. Well, um, we don't have that number in a you know, as far as to ask me how big those I really don't want to give you a wrong impression on that, but maybe we should do we will hopefully our dead
Customer Chinese customer go into the production with our city solution. We can give you more visibility how we look at our TV revenue generated through in the market next quarter. I think that's probably the best time for us to give you more clear indication on the time. Okay, I appreciate it. Then I guess just to follow up on the automotive design on Pipeline that you talked about being to hack million was just wondering I know you you had Automotive designs prior to the beginning of this fiscal year was wondering, you know, could you give us sort of what what what the total aggregate design when pipeline is now or if you can't give that number is is the $200 million, you know, the significant majority of the total pipeline. I'm just trying to you know figure out how how important a hundred million is is it, you know in relation to the entire pipeline that you built up since we started sampling TV. So first of all, you know in in my screen talk about sales phone number
exercise inside the company
And we are testing for you. If you're asking is really trying to evaluate category. Why is designed when that Holy confirm that with the customer or design inside the pipeline that I think that we have our queue or you know answering questions or doing evaluation? And then that's a second secondary category. The third category is the meaningful customer that we thinking of the world we want to Target and we think that the chance we can can win. So all of those three things 3 category, we put them in the second category into our sales formula and will stop using models based on that and what you know, we are not ready to disclose the number but I think in the near future very near future. We may be able to talk about that number and uh, I would think that the the two hundred million dollar number is just a part of it. It's not the majority of it.
Great. Okay. Thank thanks for me. I appreciate it. Thank you. And our next question comes from the line of Kevin Cassidy with rosenblatt Securities. Thanks for taking my question just around the professional surveillance Market outside of China you seeing some weakness there but is it do you think a pent-up demand and and what kind of is your is your customers building up inventory? And and with your inventory going up. Are you holding inventory for them for when these products get deployed?
Yes, Hey Kevin, first of all, welcome back and nice to hear from you. Yeah, thanks and from the outside China, we don't see there's any even pull it up in fact because the pandemic people come back so severely and beginning the quarter and we saw seeing people trying to pull in others from our customers. So I guess there's no really no inventory build-up anywhere else. I'd China and also we continue to believe that the designing activities that momentum as well as that many customers would start introducing more and more TV models in the next twelve months will be helping us to build uh, significant business outside China. And also we are very comfortable with guidance and we talked about wave one meaningful Revenue fund professional security camera by the end of the year. I think that's definitely they already and we believe we can build up on that. Well, the only thing I would change
There was while you know, there are significant challenges, uh, you know, uh our relationship with Samsung in our package and test Partners have been very good Xena took his whole team have done an excellent job of of really managing this and you know, there's always a chance that you could you can have issues everything so far. They've worked through very very well and in six months and most Partners have supported us very well. Okay, great, and maybe if I can turn to the five nanometer products, can you talk a little more about how they've got that schedule is going and then also, uh, what's your performance in power consumption in improvements? Are you expecting with five nanometers? First of all, we only take about 5 nanometers test has chipped off and we expecting to receive the test chip in you know, maybe in two to three months and we then we can start testing it. We believe our first table of five years.
The chip will be roughly the end of the year or early next year and that's all Targets. And of course that's definitely another TV chip for our
Customer and the power consumption saving for final meter is a significant and we believe for example that to do a video that we can reach out to us power, which is nobody here to talk about in the market. I don't think that's even reachable for any any other people so that design but we do believe that off the the potential Financial media product can continue to help us to strengthen our position. Not only just performance Improvement, but also powering off Paul consumption Cool Math
Okay, great. Thank you.
Thank you. And our next question comes from the line of tourists with Steve is no. Yes, thank you. First of all. I know you're typically don't give out and backwards. Can you talk about your relative disability for it the October quarter and it does sound like where there's the most uncertainty is the Professional Security Market. Would that be a fair assessment?
Yeah, I think that we have pretty good visibility and and like I say the the quarter is is I think moving very well for us as far as age, you know, the visibility going forward, you know, I think it's improving his firm he commented on but there still is challenges as I I mentioned in my script. I'm still his challenges. We're trying to balance all of this as we go forward. So right now I think we've got the right inventory level. I think we're doing the right things to to meet our customers needs and and I you know, we we feel feel pretty good about about the way we've managed that but but it's not like there isn't, you know challenges, uh throughout the quarter that that you know our come up from time to time. No question.
That's great. It is my pull up to refer me the competitive landscape. I understand that your political stuff. They could give maybe elaborate a little bit on on, you know, your partnership with Samsung the move to 5,000 meter and how that kind of sets you up against especially that big competitor you have in China, you know for for sort of the Battleground next year. Thank you. So I really think that the you know, all competitors in China meaning is high silicon. They moving very aggressively on the process know also so however, like we said, we believe our power consumption eventually come out design not from the process node, moving fast with process know just being you know defensive so that we don't take advantage because we fall behind on the process and also with the final me that we believe will continue to be a leader on the performance-per-watt as well as continue to provide differentiated features off.
Potential more multi sites that can play with with providing actual function the features to our customers and our companion. That's a far less secure.
Became a hindsight didn't change much on the lower side. I talked many times as many as smaller companies are trying to compete on the automotive side. I think many men competitor is you know internet special mobile. I love the and the you know, also that m x p and t i and the the fpga company xilinx. So I think they took our key competitors in this space right now.
Very good. Thank you for the detail. Thank you. Next question comes from the line of the silver with Roth Capital markets Yolanda's I open Hai fir me app SE so I'm trying to get a profile of the security camera business Now versus maybe kind of Prior Peak or you know, how far below priority is it just understand currently and what's the mix now looking like versus typically professional consumers to understand a consumer can hold up the professionals week next quarter. Yeah, again the on the professional side the biggest Dynamic change issue over the last couple of years. We've added several customers albeit not as big as as as those two major customers in China and want a coin and others that I think of help give us a little more balance. But the in in the short-term right now is is is we referenced with those two customers being a bigger part of Revenue and the current situation we have seen a dead.
Finding a revenue over the last couple of quarters there and and as we look forward, what's the adoption to c v and others that that's all remains to be seen But but but for us the the mix is changing a little bit because we've gotten a broader acceptance across and even in in in in in China, I think for me reference several new new customers all be at smaller that are starting to engage with our technology. So, you know, we're we're going to I think continue to partner with everybody uh-uh, the two customers in China are still very good partners of ours and we have a foundation ship that we're we're trying to be as supportive as possible in any way we can but but that's really the change in the short-term dynamic in the longer term is is is again something we'll talk to as it develops out.
Okay, and then my other questions on the automotive CV pipeline that you talked about the number and the customers understand that Geographic makes your and particularly, you know, what portion of that maybe is targeting. The China wage is not China is a geographically Diversified Banks. Well, maybe one thing I can say is the in terms of design Wing activity on a number of production. I think there are several in China. But if you look at the two hundred million dollar the revenue that the the the design we we got from the beginning here to now but she is outside of China. So it's it's you know, we get a lot of momentum in China with a small design. But also we have momentum for example in u.s. In Japan at continue to help us to hook up our Pipelines.
Okay, great. Thanks guys.
Charlie Anderson with Colliers security issue on his mouth is
Yeah, thank you for taking my questions being dressed and all the TV progress a couple of questions on the U every year comparison that $200 number that you're disclosing on the pipeline. I wonder if you had a year ago number so long as you pulled it in all the see progress. I wanted to get speak to how much that's improved. Same point in time from a year ago. And then on the mid-single digit number for the two large Chinese oems Enterprise security. I'm curious what phone number would have been to two a year ago as well. God follow up, right? So first of all compared to hundred million to the previous year, obviously a two hundred million higher, but like I said that in the near future, we'll go to disclose our sales funnels for both design wing and also designed Pipeline and that we will give you more indication over them. I'll talk like I said we make we sell customers in automotive space in terms of a hydrogen. I think that a year ago, I would say easily they are probably dead.
Send poop combined total total total total business. So basically that was probably yeah, roughly forty million dollars last year or more than fifteen forty-five million dollar last year and month on that and but I sent her I don't I need to point out one more time that they putting some orders last year from this year to protect themselves from the potential geopolitical situation. Just a just a reminder. Yep. Absolutely. And then for my fault, we noticed that FedEx has adopted the Daimler deliveryman Concepts that your TV is involved in with koros off. If you could speak to the potential that deal then maybe just that end Market broadly and I'm pretty curious if you could also talk to my views of the content for delivery vehicle as TV enables some of those use cases things off. Right? So I think you're referring to is really a last week. I think FedEx was disclosed as a lead customer for chorus.
And the two company is working on a pilot program which has our city two based system for delivery vehicles and Warehouse. We announce this song know how to see us but we didn't mention the Federal Express and because this really our customers mentioned this not this kind of us, but however, I think the signal part of this is really showing that off our city trip is many design focus on 8080 type of location but in the automotive particular for delivery truck that also help our customer to managing inventory as well with all those all the possible applications. So in terms of a total contents, we talk about their to City to in there and the CARFAX is awfully 18-19 $200 a car and however, I think that uh, the the production date is, you know, actually not open Saturday because really suck.
customers information but
I really think that you know, we'll leave that production day of the system of this a vehicle to our customer. But at that when you say that's part of our pipelines should know if I should say our sales final numbers that we will disclose in the future.
Thank you. Your next question comes from.
Perfect. Thank you so much.
But thank you and our last question comes in the line of Richard Shannon with craig-hallum. Your line is now it takes for me in case you for getting me on the call. I guess two questions. First one if you look at your Professional Security Market with with Allianz outside of China, you talked about having the the largest share and I think it's increasing here to what degree do you see the potential for even more shared coming Thursday. We reached the end of that seems like you would you would have a bit more room to run from that perspective. Would love to hear what you think about that you if there's a system grows for us also offer is our hope that our customer will stop any market share against their Chinese competitors outside China. I think that's probably the one of the major areas that I think all customer and hoping for and we hope for too that they can gross market share their however, I sent time the in terms of birth.
Total design wing of available out there for us to win we're working hard on that. But if you look at what we mentioned probably all of the major national asking camera outside Channel radio's our customer for TV. And so the biggest issue for us is helping them to start rolling are more TV models to replace a non CVT just have already have and that's another way we can grow market share in terms of the total revenue. So I think that true areas that we're working out.
Okay, that is helpful. Thanks for me. My second question is in for me. I may have caught your comment prepared remarks you correctly. So so set me straight up from wrong here. But I think you said had a very good design engaging and quarter with with I think 80 engagements are so what if you can characterize that and to a degree to what you're seeing it in kind of you know Emerging Markets like say robotics, you can give us a sense of where all the activity and when you think that might come to fruition particularly in you know, markets like robotics, right? So, uh amount of 18 companies majority of them, you know current market security issue as well as Auto but there are several of them is working on the robotic applications and the size of the market is still relatively small compared to our Courtesy car market over again, I told I said it many times before I truly believe ten years down the road the robot with the computer vision capability is going to be a major birth.
People us and we continue to invest on that. Although we don't have a visibility. Who is this going to be a huge market for us in terms of Revenue, but that doesn't stop us from investing Marketing in
Engineering resources so that we can continue to understand the requirements of the market. I'll get updated our customers patience and I think that's definitely meaningful for us that we continue to suck at. The other thing I would add to that is, you know, we're starting to see more and more activity in the access control area and we have a couple of announcements that we highlight this quarter, but we've had engaged in the past two and that's another I think interesting area as well.
I appreciate all the details from all for me guys. Thank you. Thank you. Thank you and ladies and gentleman. This does conclude today's question-and-answer session over now. Let's return the call back to Doctor Office closing remarks. Thank you, and thank you all for your attendance today and looking forward to seeing you next time.
Ladies and gentlemen, ladies and gentleman. This does conclude today's conference call. Thank you for participating. You may now disconnect dead dead dead.