Q4 2024 Ambarella Inc Earnings Call
Operator: www.globalonenessproject.org Good day, and thank you for standing by. Welcome to Amarillo's fourth quarter and fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Yeah.
Good day, and thank you for standing by welcome Don Morel, West's fourth quarter and fiscal year 'twenty 'twenty four earnings conference call.
Don Morel: At this time all participants are in a listen only mode.
Operator: After this presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automatic message advising that your hand is raised.
Don Morel: This presentation, there will be a question and answer session.
Don Morel: I ask a question during the session you will need.
Don Morel: Westar one one on your telephone.
Don Morel: Well, Daniel automatic message by single handler space.
Operator: Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Louis Gerhardi, VP of Corporate Development and Investor Relations. Please go ahead.
Today's conference is being recorded.
Mr. Hardy: I'll now hand, the conference I'll, let you speak of house well, Mr. Hardy VP of corporate development and Investor Relations. Please go ahead.
Louis Gerhardy Director of Corporate Development: Thank you, Livia, and good afternoon, and thank you for joining our fourth quarter and full year fiscal 2024 financial results conference call. On the call with me today is Dr. Fermi Wong, President and CEO, and John Young, CFO. The primary purpose of today's call is to provide you with information regarding our fourth quarter and full year fiscal 2024. The discussion today and the responses to your questions will contain forward-looking statements regarding our projected financial results. Financial Prospects, Market Growth, and Demand for our Solutions, among other things. These statements are based on currently available information and are subject to risks, uncertainties, and assumptions. Should any of these risks or uncertainties materialize... Or should our assumptions prove to be incorrect, our actual results could differ materially from these forward-looking statements. We are under no obligation to update these statements.
Daniel: Thank you Olivia and good afternoon, and thank you for joining our fourth quarter and full year fiscal 2024 financial results Conference call.
Hardy: On the call with me today is Dr. Fermi, Wang President and CEO and John Young CFO.
Hardy: The primary purpose of todays call is to provide you with information regarding the results for our fourth quarter and full year fiscal 2020 for the.
Hardy: The discussion today and the responses to your questions will contain forward looking statements regarding our projected financial results.
Hardy: Natural prospects market growth and demand for our solutions among other things.
Hardy: These statements are based.
Hardy: Based on currently available information that is subject to risks uncertainties and assumptions should any of these risks or uncertainties materialize.
Or should our assumptions prove to be incorrect, our actual results could differ materially from these forward looking statements.
Hardy: We are under no obligation to update these statements.
Louis Gerhardy Director of Corporate Development: These risks, uncertainties, and assumptions, as well as other information on potential risk factors that could affect our financial results, are more fully described in the documents we filed with the SEC. Access to our fourth-quarter and full-year fiscal 2024 results press release, transcripts, historical results, SEC filings, and a replay of today's call can be found on the Investor Relations page of our website. The content of today's call, as well as the materials posted on our website, are Ambarella's property and cannot be reproduced or transcribed without our prior written consent.
Hardy: These risks uncertainties and assumptions as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we filed with SEC.
Access to our fourth quarter and full year fiscal 2024 results press release transcripts historical results SEC filings and a replay of today's call can be found on the Investor Relations page of our website.
Hardy: The content of today's call as well as the materials posted on our website, our ambarella <unk> property and cannot be reproduced or transcribed without our prior written consent.
Louis Gerhardy Director of Corporate Development: I confirm you will now provide a business update for the quarter. John will review the financial results and outlook, and then we'll be all available for your questions. Fermi?
Hardy: For me will now provide a business update for the quarter, John will review the financial results and outlook and then well.
Dr. Fermi Wong: Thank you, Louis, and good afternoon. Thank you for joining us on our call today. In the fourth quarter of fiscal 24, our revenue increased about 2 percent sequentially, and we slightly exceeded the midpoint of our guidance range. Thanks to the early actions we took to help our customers manage their excess inventory, our business continues to stabilize and is beginning to recover. For the full fiscal year 24, our revenue declined 32.9% year-over-year as our customers digested inventory resulting from the industry-wide semiconductor cyclic co-downturn.
Hardy: All available for your questions for me.
Hardy: Thank you Louis and good afternoon. Thank you for joining our call today in the fourth quarter of fiscal 'twenty for all revenue increased about 2% sequentially and then we slightly exceeded the midpoint of our guidance range.
John Young: Thanks for the early actions, we took to help our customers navigate their excess inventory our business continue to stabilize and is beginning to recover.
John Young: For the full fiscal year 'twenty for all revenue declined to 32, 9% year over year.
John Young: Our customers digested inventory, resulting from the industry wide semiconductor secret code downturn.
Dr. Fermi Wong: Looking ahead to fiscal year 25, we continue to expect both our automotive and IoT business to grow. As the cyclical challenges go and secular growth, our AI strategy emerged. Our customers currently have a cumulative install base of more than 20 million AI-inferenced SoCs, all from our 10-nanometer CV2 family and the 5-nanometer CV5. This is based on approximately 280 customer products that have reached production on a cumulative basis.
John Young: Looking ahead to fiscal year 'twenty five we continue to expect both our automotive and Iot business to grow.
John Young: He co challenge is when and the secular growth of our H AI strategy emerges.
John Young: Our customers currently have a cumulative installed base of more than 20 million AI inference asos.
John Young: Oh from our 10 nanometer C V two family and find out on me to see refi.
John Young: This is based on approximately 280 Cosmo products that have reached production on a cumulative basis.
Dr. Fermi Wong: The CB2 family is expected to continue to be the key driver of our revenue growth in fiscal year 25. Our AI-influenced business all-in-age applications represented approximately 60% of total fiscal 24 revenue, and it was the key factor in the meetings percent year-over-year increase in our blended ASP. The trend to a richer mix of AI revenue and higher averaging selling price is expected to continue. In particular, the CV3 SOC family enters production
The series two family is expected to continue to be the key driver of our revenue growth in fiscal year, 'twenty, five or AI inference business older in age applications represented approximately 60% of our total physical 24 revenue and there was a key factor in the mid teens percent of year over.
John Young: The increase in our blended ASP.
John Young: The trend to a richer mix of AD revenue and higher average selling price is.
John Young: Expect it to continue.
John Young: In particular, the C V three asos family interest production.
Dr. Fermi Wong: At this time, virtually all of our customers' new design activity involves our AI inference processors. In fact, this was the first year at CES where all of our SoC demos, more than 30, were based on our AI inference product. Fiscal 2024 was certainly challenging for most of the industry.
John Young: At this time virtually all of our customers new design activity involves our AI inference processors. In fact that this was the first year at CES, where all of our asos that most more than 30, well based on our AI inference products.
John Young: It takes it will take time before it was certainly challenging for most of the industry.
Dr. Fermi Wong: However, there were key industry developments and the company's specific achievements that we believe leave us very well positioned for growth as the market recovery plays out. For the industry, in the past, the AI process opportunity had primarily been represented by training GPUs in servers located in data centers, and this is a market that we do not serve.
John Young: However, there were key industry developments and the company's specific achievements that we believe leave us very well positioned for growth as the market recovery plays out.
John Young: For the industry in the past the EIA process acuity had primarily being represented by training Gpus in server located in data centers and this is a market that we do not serve.
Dr. Fermi Wong: However, in the last year, the important role and opportunity for inference processors, in particular at the edge, have become better understood, and this is exactly where we have been focused. Internally, we achieved four key milestones during the last fiscal year. First, we have now shipped more than 500,000 units of our first 5-nanometer SOC, CV5. And we expect our shipments in fiscal year 2025 to possibly double. Most of the CV5 volume is currently in our IoT business, although we expect automotive OEMs to start production in the second half of the year. The fact that we have already achieved high-volume mass production at 5 nanometers helps pave the way for our other 5-nanometer SOCs, such as the CB3 family.
In the last year, the important role and the ability for inference processors in particular at age has become better understood and this is exactly where we have been focused on.
John Young: Internally, we achieved four key milestones during the last year first we have now shifted more than 500000 units of all our first five nanometer Soc C V. Five.
And we expect our shipments in fiscal year 'twenty to 'twenty five to approximately double.
John Young: Most of them see me volume is currently in our Iot business, Although we expect automotive OEM to start production in the second half of the year the.
The fact that we have already achieved high volume mass production I decided at the meter helps pave the way for our other friend Alamito asos, such as the C. B III family.
Dr. Fermi Wong: Second, the automotive market resembles both the high-end production version of our 5-nanometer CV3 as well as the 5-nanometer version for China. At the high end, we sample CB3-AD685, targeting L3, and above. This central domain controller is currently in evaluation at multiple OEMs and Tier 1s globally. So far, we are finding success in L3 and above commercial vehicles. For the basic highway, L2 plus, and a few in China, we introduced CV72AQ, and we have numerous tier one design wins and OEM discussions on the way. Third, we introduce our generative AI, gen-AI strategy for the age of the network.
John Young: Second the automotive market with simple both at the high end production version of our five nanometers C V Street as well as our final Ohmmeter Virgin for China.
John Young: Either the high end, we simply see me 3080, 685 targeting L three and above autonomy.
John Young: And this central domain controller is currently evaluating is in evaluation at multiple Oems and tier ones globally.
John Young: So far we are finding success in all three end up all commercial vehicles full.
John Young: Full of basically highway L plus absolutely in China, We introduced the C. V 72, eight Q and we have numerous tier one design wins in all year discussions underway.
John Young: Third we introduced our generative AI Qing AI strategy for the age over the network and we are assembling our five nanometer and one processor targeting H applications, ranging from Iot devices to H servers.
Dr. Fermi Wong: And we are sampling our 5 nanometer N1 processor targeting age applications ranging from IoT devices to age servers. Fourth, we'll continue to build out the CV3 automotive platform to offer our Tier 1 and OEM customers turnkey options with our SOFR stack and our centrally-processed HD radar algorithm. We started the new year at the Consumer Electronics Show, CES, where we hosted over 200 customer meetings and made a number of significant announcements for automotive, Gen AI, and our new Cooper development platform. We were pleased to receive a CES Innovation Award for the second year in a row, this time for our Centralized Radar Processing Architecture.
John Young: Fourth we'll continue to build out the C V. Three automotive platform to offer our tier one and OEM customers turnkey options with our software stack and all are essentially process HD readout how quizzes.
John Young: We started the new year at the consumer Electronics show CES, where we hosted over 200 customer meetings and made a number of a significant announcement for automotive chip AI.
John Young: AI and argue Cooper development platform.
John Young: We were pleased to receive a C. C. S Innovation award for the second year in a row. This time for our centralized radar processing architecture.
Dr. Fermi Wong: In December, we unveiled our latest SOFR stack for level 2 plus and higher autonomous driving applications. This SOFR is optimized and can scale across our entire CV3 processor family, enabling OEMs to get to market faster and reduce development costs. The new software stack, including the Perception, Fusion, and Planning layers, is primarily deep learning-based, which allows software development to scale more easily, resulting in a more accurate solution. Finally, most important, we rely on high-resolution camera and radar perception data to create a real-time map inside the vehicle.
John Young: In December we unveiled our first our latest software stack for level, two plus and the higher autonomous driving applications. This sulfur is optimized and can scale across our entire series three processor family, enabling OEM to get to market faster and reduce the amount of of cost.
John Young: The new software stack, including the perception fusion and planning that theirs is primarily deep deep learning based which allows Soviet development to scale more easily.
John Young: <unk> in a more accurate solution.
John Young: Finally, and most important we rely on them we rely on high resolution camera in the radar perception data to create a real time back inside the vehicle and for this reason, we even made the use of a stored HD maps that may contest still data quicker.
Dr. Fermi Wong: And for this reason, we eliminate the use of stored HD maps that may contain still data, which results in improved results and a reduced cost for OEMs. If needed, the SOFR stack is available in modules and can be combined with an OEM's own SOFR intellectual property. During the CES show, we demonstrated a stack running on a single CV3 automotive AI domain processor in our own autonomous vehicle, successfully completing over 150 autonomous drives. The demonstration integrates our AccuLight radar algorithm for the first time.
John Young: Which would result in improved the results and reduce costs for OEM.
John Young: You can eat at the software stack is available in modules and can be combined there was oh, yes, all software and intellectual property.
John Young: During the CES show, we demonstrated our stack that are only on a single see me three automotive AI to make processor in our autonomous vehicle successfully completing over 150 autonomous truck right.
John Young: Demonstration integrated our ocular like radar for the first time.
Dr. Fermi Wong: We also announced the expansion of our CV3 processor family with the addition of our CV3AD635 and the 655 SoCs. The new CV3-AD635 supports a sensing suite that includes multiple cameras and radars to enable mainstream Level 2 Plus feature sets, such as Highway Autopilot and Automated Parking. In addition to meeting the GSR-2 and the NCAP standards, the 655 enables advanced Level 2 Plus with Urban Autopilot, as well as support for additional cameras, radars, and other sensors.
John Young: We also announced the expansion of our CB three processor family with the addition of our C V 386, refi and a 655 associates.
John Young: The new series three Dash 8635 supports us sending suite that includes multiple cameras and radars to enable midstream level two plus features such as highway autopilot and automate automated parking.
John Young: In addition to meeting the GSR to an uncapped standards.
John Young: Additionally, the 655 enables advanced level, two plus with urban auto pilot as well as the support for additional cameras radars and other sensors.
Dr. Fermi Wong: With the previously announced flagship 685 SoC, along with the ChinaFox CV72 AQ SoC, the CV3 family of four processors now covers the full range of AD and ADAS solutions, from mainstream to premium passenger vehicles. The new CV3-AD SoCs were endorsed by our partner Continental. Kodiak Robotics, a leading autonomous vehicle company focused on trucking and defense, announced that it had selected our CV3-AD685 AI domain controller for its next generation autonomous vehicle.
John Young: With the previously announced flagship 685 S O C along with the China folks. The C. V 72, Aqa's O C. The C V III family of a full processors now covers the full range.
John Young: D S eight that solutions from mainstream to premium passenger vehicles, but do you see me three dash eight U S. O sees we endorsed by our partner Continental.
John Young: Kodiak Kodiak robotics, a leading autonomous vehicle company focus on trucking and defense auto.
John Young: But you had selected our <unk> 3080, 685, AI domain controller for its next generation autonomous vehicles.
Dr. Fermi Wong: In IoT markets, during CES, we announced we are bringing Gen AI capabilities to the edge through the introduction of our N1 processor for on-premises applications. This SOC supports up to 34 billion parameters, multi-modal large language models, LLMs, with low power consumption, enabling QIA for each application. We demonstrate a multi-modal LLM running on the new N1 processor at a fraction of the power per inference of a leading GPU solution.
John Young: In Iot markets during CES, we announced what we are bringing chin AI capabilities to the age through the introduction of our own one processor for on premises applications.
John Young: This asos support up to 34 medium power meters multimodal larger language models.
John Young: And with low power consumption, enabling kyrie four H locations.
John Young: We demonstrated a multimodal aero are running on the new processor at a fraction of the power per interest of leading GPU solutions.
Dr. Fermi Wong: Ambarella aims to bring Gen AI to a wide range of applications, including video security, robotics, and industrial applications. Quanta Computer announced it was partnering with Ambarella to develop products based on our CV3-8685, CV72, and new N1 processor to address cutting-edge AI devices. This offering addresses the growing market demand for a diverse range of neural networks and LLMs, and a well-empowered business across sectors, including autonomous vehicles, smart surveillance, robotics, and healthcare. Kwongta demonstrated PCIe add-in cards based on our N1, as well as showing automotive ECUs based on CB3-AD68.
John Young: Ambarella is to bring <unk> to a wide range of applications, including video security robotics and industrial applications.
John Young: Contact computer announced it it was partnering with <unk> to develop products based on our series 3080, 685 C V 70 to a new processor to address cutting edge AI devices.
John Young: This offering addresses the growing market demand for a diverse range of neuro that work and are all apps and that will empower business across sectors, including autonomous vehicle smart surveillance robotics and the health care.
John Young: Qualcomm's demonstrated pcie, adding cards based on our own while Oswald, it's showing automotive and E. C use based on C V. Three touch 86 eight.
Dr. Fermi Wong: We will also introduce and demonstrate our new Cooper Developers Platform. Cooper offers seamless integration of software, hardware, state-of-the-art, fine-tuned AI models, and services that provide universal support across the entire portfolio of AI SoCs. We have now successfully deployed Cooper to some of our IoT customers worldwide.
John Young: We also introduced and demonstrated our new Cooper developers platform Cooper offers seamless integration of software hardware state of art fine tune, our models and the services they provide universal support or <unk> entire portfolio AIA. So sees.
John Young: We have now successfully deployed Cooper to some of our I O T customers worldwide.
Dr. Fermi Wong: I will now quickly highlight some of the potential products announced and made during the last quarter. In the Chinese automotive market, we continue to expand our position in this important market. During the quarter, GAC Auto announced ION AceMax passenger car with combination driver monitoring and in-cabin sensing based on our CV25 AQ automotive AI vision processor. GAC also introduced Tromche M8 passenger car with driver monitoring and multi-channel occupancy monitoring, also based on our CV25 AQ.
John Young: I will now quickly highlight some of the cost of a product announcement made a few in the last quarter.
John Young: In the Chinese automotive market, we continue to expand our position in this important market during the quarter GAC OTO announced I N S. Max passenger car was combination driver monitoring and in cabin sensing base on our C. V 25, Ecu automotive F N b.
John Young: Composites.
John Young: GAC also introduce Trump's crunchy M. Eight passenger car was driver monitoring and the multichannel occupancy monitoring and also based on our C V 'twenty if I could.
Dr. Fermi Wong: And in January, Xiaopeng unveiled its X9 mini-van, including an electronic mirror system based on our A12 automotive ASO. And in the enterprise IoT market, market leader Hanwha Vision introduced multiple models based on AI Vision SoC, including 4K and the four-channel multi-directional cameras based on our CV2 SoCs, and the AI thermal camera based on our CV22 SoCs. Korean camera supplier IDES introduced a 2-megapixel voice over IP video intercom based on our CV28 ASOS, and Taiwan-based VivoTech also introduced a new 87-V3 family of IP cameras based on our CV22 AI SoCs and featuring fixed-on and Boolean models with advanced AI capabilities. And in the home monitoring market, Canadian service provider TELUS announced its HomeView doorbell camera based on our CV20A-M AI SoC and featuring advanced AI detection.
John Young: And in January Xiaopeng, Anvil is X nine media, including our electronic mirror system based on our 812 automotive asos.
John Young: And in the enterprise Iot market Korea market, either Hanwha vision introduced multiple models based on AI vision S. O C, including four K and a full channel multi directional cameras based on <unk> and AI thermal camera based on our C. V 22 agencies, all Korean camera supplier I just <unk>.
John Young: <unk> got to make up peak, so voice over IP video intercom based on our C. V 28, he celgene.
John Young: And Taiwan based so people attack also introduces a new 87 that should be three family over IP camera based on <unk> C V 22 associates and featuring fixed arm and bully models with advanced AI capabilities.
John Young: The pet capabilities.
John Young: I think in the home monitoring market Canadian service provider terrorists announces a whole view doorbell camera based on our C. V. 'twenty a L. S O C N V and featuring advanced AI.
John Young: Detection.
Dr. Fermi Wong: In summary, Looking forward, our key objectives are to restore revenue growth and profitability while continuing to drive our strategic R&D priorities for AI inference process opportunities as of 8. To achieve this goal, we are highly focused on commercialization of the technology and products we have developed. And, in particular, converting the multiple RFIs and RFQs we are currently working on for CB2 and CB3 into awarded business models. Furthermore, returning our IoT business to its positive secular growth trajectory is very important, and this includes our early business development for our new-gen AI N1 product. In conclusion, we have not been distracted by the prolonged industry-wide cynical downturn.
John Young: In summary.
John Young: Looking forward our key objective is to restore revenue growth and profitability, while continuing to drive our strategic R&D priorities for AI inference process opportunities.
John Young: H.
John Young: To achieve this goal well how do you focus on commercialization of our technology and products we have developed.
John Young: And in particular, the converting the multiple our buys and off course, we are currently working on four CB <unk> CB three into awarded business.
John Young: Furthermore, returning our Iot business to its positive secular growth trajectory is a very important and this includes our <unk> business development.
John Young: AI.
John Young: Yes.
John Young: In conclusion, we have not seen we have not been distracted by the prolonged industry wide cyclical downturn.
John Young: And we see the secular trends we address, safety, security, and automation, remaining very strong. The increase in market attention on inference processing, in particular at age, is aligned with where we have been investing. In the new year, we are very excited about the opportunities we are working on, and we look forward to moving more business into one column, and I'm excited about what we will achieve in the years ahead. With that, John will now discuss the Q4 and the full year fiscal year 2024 results, and I'll look at them in more detail. Thank you, Fermi.
John Young: And we see the secular trends, we address safety security and automation remaining very strong.
The increase of market patient on inference processing in particular at age is aligned with where we have been investing in.
John Young: In the new year, we're very excited about the opportunities that we're working on and we look forward to moving more business into one color.
John Young: I'm excited about what we have what we will achieve.
John Young: In the years ahead.
John Young: With that John will now discuss the Q4 and the full year fiscal year 'twenty 'twenty four results and outlook in more details.
John Young: Before I begin, I would like to say that I'm honored to assume the CFO role. I've been working with this team for seven years, and I'm very excited to help the company as it pursues growth in its target market. I'll now review the financial highlights for the fourth quarter and full fiscal year 2024, ending January 31st, 2024. I will also provide a financial outlook for our first quarter of fiscal year 2025, ending April 30, 2024. I will be discussing non-GAAP results and ask that you refer to today's press release for a detailed reconciliation of GAAP to non-GAAP results. For non-GAAP reporting, we have eliminated stock-based compensation expense, along with acquisition-related and restructuring costs adjusted for the impact of tax. Fiscal year 2024 revenue decreased 32.9% to $226.5 million. IOT revenue was about two-thirds of total revenue and declined about 40% for the year. Auto revenue represented the balance of revenue and declined about 14% for the year.
John Young: Thank you for me.
John Young: Before I begin I would like to say that I'm honored to assume the CFO role I've.
John Young: I have been working with the team for seven years and I'm very excited to help the company as it pursues growth in its target markets.
John Young: I will now review the financial highlights for the fourth quarter and full fiscal year 2024, ending January 31 2024.
John Young: I will also provide our financial outlook for our first quarter of fiscal year 2025, ending April 32024.
John Young: I will be discussing non-GAAP results and ask that you refer to today's press release for a detailed reconciliation of GAAP to non-GAAP results for.
John Young: For non-GAAP reporting we have eliminated stock based compensation expense, along with acquisition related and restructuring costs adjusted for the impact of taxes.
John Young: Fiscal year 2024 revenue decreased 32, 9% to $226 5 million.
John Young: Iot revenue was about two thirds of the total revenue and declined about 40% for the year.
John Young: Auto revenue represented the balance of revenue and declined about 14% for the year.
John Young: From a product point of view, a large majority of our fiscal 2024 revenue decline was from our Human Viewing Video Processor, SOC. For fiscal year 2024, non-GAAP gross margin was 63.3% versus 63.9% in fiscal 2023. Non-GAAP operating expense increased 3.9% for the year versus 17.6% in the prior year.
John Young: From a product point of view, a large majority of our fiscal 2020 for revenue decline was from our human viewing video processor Soc.
John Young: For fiscal year 'twenty 'twenty four non-GAAP gross margin was 63, 3% versus 63, 9% in fiscal 2023.
John Young: non-GAAP operating expense increased three 9% for the year versus 17, 6% in the prior year.
John Young: Ending cash and marketable securities totaled $219.9 million, up from $206.9 million at the end of the prior year. For fiscal Q4, revenue was $51.6 million, slightly above the midpoint of our prior guidance range, up 2% from the prior quarter and down 38% year over year. Non-GAAP Gross Margin for Fiscal Q4 was 62.5%, in line with our prior guidance range. Non-GAAP operating expense was $44.1 million, approximately flat with the prior quarter and below our prior guidance range of $45 to $48 million, driven by continued expense management and the timing of spending between quarters. We remain on track to our internal product development miles. Q4 net interest and other income was $2.1 million. Q4's non-GAAP tax provision was approximately $119,000. In fiscal Q4, we recorded a one-time GAAP non-cash tax charge of $22.7 million, establishing a valuation allowance on certain U.S. deferred tax assets that were deemed more likely than not to be unrealizable in the foreseeable future. This valuation allowance was excluded from fiscal Q4 non-GAAP tax provision, consistent with our historical practice for changes to the tax valuation allowance. This adjustment is a non-cash tax charge required by GAAP based on the proportion of taxable income in the United States. We reported a non-gap net loss of $9.8 million, or a 24-cent loss per diluted share.
John Young: Ending cash and marketable securities totaled $219 9 million up from $206 $9 million at the end of the prior year.
John Young: For fiscal Q4 revenue was $51 $6 million slightly above the midpoint of our prior guidance range up 2% from the prior quarter and down 38% year over year.
John Young: non-GAAP gross margin for fiscal Q4 was 62, 5% in line with our prior guidance range.
John Young: non-GAAP operating expense was $44 $1 million approximately flat with the prior quarter and below our prior guidance range of $45 million to $48 million driven by continued expense management and the timing of spending between quarters, we remain on track to our inter.
John Young: <unk> product development milestones.
John Young: Q4, net interest and other income was $2 1 million.
John Young: Q4, non-GAAP tax provision was approximately $119000.
John Young: In fiscal Q4, we recorded a one time GAAP noncash tax charge of $22 7 million, establishing a valuation allowance on certain U S deferred tax assets.
John Young: That were deemed more likely than not to be unrealizable in the foreseeable future.
John Young: This valuation allowance was excluded from fiscal Q4 non-GAAP tax provision.
John Young: <unk> with our historical practice for changes to tax valuation allowances.
John Young: This adjustment is a noncash tax charge required by GAAP based on the proportion of taxable income in the United States.
John Young: We reported a non-GAAP net loss of $9 $8 million or a 24.
John Young: Loss per diluted share.
John Young: Now I'll turn to our balance sheet and cash flow. Fiscal Q4 cash and marketable securities decreased $2.4 million from the prior quarter to $219.9 million. Receivables days of sales outstanding increased from 42 days in the prior quarter to 44 days, while days of inventory decreased from 145 to 131 days. Inventory dollars declined 6% sequentially and declined 28% from a year ago. Operating cash outflow was $4 million for the quarter, and for the full year, we generated operating cash inflow of $19 million. Capital expenditures for tangible and intangible assets were $1.9 million for the quarter and $12 million for the year.
Speaker Change: Now I'll turn to our balance sheet and cash flow.
Speaker Change: Fiscal Q4, cash and marketable securities decreased to $4 million from the prior quarter to $219 9 million.
Speaker Change: Receivables days of sales outstanding increased from 42 days in the prior quarter to 44 days, while days of inventory decreased from 145 to 131 days.
Speaker Change: Inventory dollars declined 6% sequentially and declined 28% from a year ago.
Speaker Change: Operating cash outflow was $4 million for the quarter and for the full year, we generated operating cash inflow of $19 million.
Speaker Change: <unk> expenditures for tangible and intangible assets were $1 9 million for the quarter.
Speaker Change: And $12 million for the year.
John Young: We had two logistics and ODM companies representing 10% or more of our revenue in Q4. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 55% of revenue for the fourth quarter and 53% for the full fiscal year 2024. Ciccone, an ODM who manufactures for multiple end customers, was 14% of revenue for both the quarter and the full fiscal year 2024.
Speaker Change: We had two logistics and ODM companies, representing 10% or more of our revenue in Q4, WT microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia came in at 55% of revenue for the fourth quarter and 53% for the full fiscal year 2024.
Speaker Change: <unk> <unk>.
Speaker Change: <unk>, an ODM, who manufactures for multiple end customers.
Speaker Change: 14% of revenue for both the quarter and the full fiscal year 2024.
John Young: I'll now discuss the outlook for the first quarter of fiscal year 2025. Our early actions during the cyclical downturn in the semiconductor industry have helped our customers navigate their high inventory balances, and these actions are now enabling our business to stabilize and begin to recover. For fiscal Q1, we estimate our total revenue will be in the range of $52 to $56 million. We expect sequential growth in both IoT and auto. We expect fiscal Q1 non-GAAP gross margin to be in the range of 61.5 to 63 percent. We expect non-GAAP OPEX in the first quarter to be in the range of $46 to $49 million, with the increase compared to Q4, driven by new product development costs and employee-related expenses, which we were able to delay in previous quarters. We estimate net interest income to be approximately $1.5 million, our non-GAAP tax expense to be approximately $500,000, and our diluted share count to be approximately 40.8 million.
Speaker Change: I will now discuss the outlook for the first quarter of fiscal year 2025.
Speaker Change: Our early actions during the cyclical downturn in the semiconductor industry have helped our customers navigate their high inventory balances and these actions are now, enabling our business to stabilize and begin to recover.
Speaker Change: For fiscal Q1, we estimate our total revenue revenue will be in the range of $52 million to $56 million.
Speaker Change: We expect sequential growth in both Iot and auto.
Speaker Change: We expect fiscal Q1, non-GAAP gross margin to be in the range of $61, 5% to 63%.
Speaker Change: We expect non-GAAP opex in the first quarter to be in the range of $46 million to $49 million.
Speaker Change: With the increase compared to Q4, driven by new product development costs and employee related expenses, which we were able to delay in previous quarters.
Speaker Change: We estimate net interest income to be approximately $1 5 million.
Speaker Change: Our non-GAAP tax expense to be approximately 500000, and our diluted share count to be approximately 48 million shares.
John Young: Ambarella will be participating in a fireside chat and hosting one-on-one and group meetings on February 29th in New York City at Susquehanna's Technology Conference. We will also be participating in Morgan Stanley's PMT conference in San Francisco on Monday, March 4. On March 18th, we will participate in the Ross Conference in Southern California. We hope to see you at one of these events.
Speaker Change: Ambarella will be participating in a fireside chat and hosting one on one and group meetings on February 29 in New York City at Susquehanna Technology Conference. We will also be participating in Morgan Stanley's TMT conference in San Francisco on Monday March 4th.
Speaker Change: On March 18th we will participate in the Roth conference in Southern California.
Operator: Please contact us for more details. Thank you for joining our call today. And with that, I will turn the call over to the operator for questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again.
Speaker Change: We hope to see you at one of these events please contact us for more details.
Operator: Thank you for joining our call today and with that I will turn the call over to the operator for questions.
Operator: Okay.
Speaker Change: Ladies and gentlemen to ask a question you will need to Westar one one on your telephone and wait for your name to be announced to withdraw your question simply press Star one again.
Operator: In consideration of time, please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Now, first question coming from the line of Quinn Bolton from Needham. Hey, this is Neil Young. I'm for Quinn Bolton.
Operator: And the concentration of time, please limit yourself to one question and one follow up.
Bob: Thanks, Dan Bob on the comparator Kenny roster.
Bob: Now first question coming from the line of Quinn Bolton from Needham Your line is open.
Bob: Hey, this is Neil young on for Quinn Bolton. Thank you for taking my questions.
Neil Young: Thank you for taking my questions. So you said you were seeing project delays from Tier 1s and OEMs, as well as volume reductions in planned projects, which you called out more of an inventory issue. How's that inventory improvement, I should say, is that inventory improvement progressing ahead of where you thought it would? And if so, are you starting to get the sense that these projects will resume soon? And then I had a follow-up appointment.
Speaker Change: You said Youre seeing project delays from tier ones and Oems as well as the volume reductions in planned projects, which you called out more of an inventory issue.
Speaker Change: How is that inventory improvement or I should say is that inventory improvement progressing ahead of where you thought it would.
Speaker Change: If so are you starting to get the sense that these projects will resume soon and then I had a follow up.
Dr. Fermi Wong: So you are referring to what we said a quarter before? Uh, yeah. So I think in November, when we provide, I think early December, when we provide our final guidance for this year, I think we talk about there's a project that got pushed out and OEM tier 1s, also some decisions for a new project also got delayed. And also there's some inventory. I think what we are saying is still consistent with what we said in December last year. I think there's no new updates.
Speaker Change: So you're referring to how we sell in a quarter before.
Speaker Change: Yes.
Speaker Change: So I think in November when we provide.
Speaker Change: I think early December when we provide our final guidance for.
Speaker Change: For this year I think we talk about the Theres a project pushout and OE OEM tier one is also sound decision for New project also got delayed and also there are some inventory I think what we're seeing is still consistent with what we have said in November and December last year, I think there's no new updates.
Dr. Fermi Wong: I don't think we haven't seen new development in terms of a further project getting delayed or pushed out. Okay, so on the auto side, regarding inventory, you aren't seeing any improvements. We haven't seen any improvement, but we are not saying it's getting worse.
Speaker Change: I don't think we haven't seen.
Speaker Change: Development in terms of a further project got derailed pushout.
Speaker Change: Okay. So on the auto side regarding inventory you aren't seeing any any improvements.
We haven't seen any improvement, but we're not saying there is it getting worse.
Dr. Fermi Wong: Okay, thanks. And then for my follow-up. In the past, you talked about how the first CV3 revenue would come from China. I believe in your opening remarks, I heard you say you're engaged in discussions with multiple tier ones and already have multiple design ones on the way. If that's the case, when do you think you'll see the first revenue from those wins?
Speaker Change: Okay. Thanks, and then for my follow up so in the past you talked about how the first CV three revenue would come from China I believe in your opening remarks I heard you say you are engaged in discussion with multiple tier one and already had multiple design wins on the way.
Speaker Change: If that's the case when do you think you will see first revenue from those wins and then maybe just an update on the demand environment in China.
Dr. Fermi Wong: And then maybe just an update on the demand environment in China? Right, so for CV72AQ, we expected that the first revenue from those design wins would be in calendar year 2026. We have talked about this in a previous call. And basically, that was the low-end of the CV3 family and addressed the first level of Level 2+.
Speaker Change: Alright, so for CV 72, Ecu, we expected that the first revenue from those design win would be.
Speaker Change: In fiscal.
Speaker Change: Our calendar year 2026 that we have been we have talked about this in a previous call and basically that was a low <unk> 70 to <unk>. So basically the low end <unk> III family and addressing the.
Speaker Change: First level of level two plus for example for the.
Dr. Fermi Wong: For example, for the 8S Plus smart parking. So that's the no-market in China, and we're working on—we already have design with Tier 1 and working with OEM design wins right now. So—but I think for the market development point of view, I think China continues to be one of the focus areas that we are in, because I think that—I think everybody sees the EV development in China, and we believe autonomous driving also will happen in China faster than other areas. So that's definitely—we believe we can monetize our CV3 technology in China faster than any other area. Thank you. And our next question coming from the line up, Christopher Rolland with Susquehanna, your line is open. Hi.
Speaker Change: <unk> plus smart parking so that's the no market in China, and we're working on.
Speaker Change: Already have designed with tier one and working with the OEM design wins right now so, but I think for the market development point of view I think China continue to be one of the focus area that we are in because I think that.
Speaker Change: I think everybody see the EV development in China, and we believe autonomous driving also what happened in China faster than any other area. So that's definitely we believe we can monetize our CVT three technology in China faster than any other areas.
Speaker Change: Yeah.
Speaker Change: Thank you and our next question coming from the line of Christopher Rolland with Susquehanna. Your line is open.
Dr. Fermi Wong: Thanks for the question. Just about your N1 product, maybe any more thoughts on how large this could be for you guys? Have you considered, or has anyone talked about, combining multiple chips into a server or appliance? And then lastly, does this meet the Chinese compute restrictions for import as well?
Christopher Adam Jackson Rolland: Hi, Thanks for the question.
Christopher Adam Jackson Rolland: Just about your N one product.
Christopher Adam Jackson Rolland: Maybe any more thoughts on how large this could be.
Christopher Adam Jackson Rolland: For you guys.
Christopher Adam Jackson Rolland: Have you considered or has anyone talked about combining multiple chips into a server or appliance.
Christopher Adam Jackson Rolland: And then lastly does does this meet the Chinese compute restrictions for import as well thanks.
Dr. Fermi Wong: Thanks. Right? So, first of all, in terms of N1, we definitely believe that, first of all, we can, technically, put multiple chips together to serve a high-end solution. But so far, we believe a single-chip solution at the edge will meet a lot of demands from a lot of our current customers, maybe even new customers. But I do see a point where if you want to go to the edge server side, that multiple chips will provide a better solution. Definitely, that's the direction we are looking at. And the current solution that, for example, we demo with our partners, building PCIe cards today is a single-chip solution, but it can be multiple chips in the future. In terms of the American regulation, I think one, because our architecture, although we can provide high performance at very low power consumption, but our total tops, top number, as well as bandwidth, is much lower than our competition.
Christopher Adam Jackson Rolland: Right. So first of all in terms of one one we definitely believe that.
Christopher Adam Jackson Rolland: First of all we can't technically we can put a multiple chip together is and to serve a high end solution, but so far we believe a single chip solution at H well meet our demands for a lot of our current customer and maybe even new customers by to see your point that you want to go to the eighth server site.
Christopher Adam Jackson Rolland: With multiple <unk>.
Christopher Adam Jackson Rolland: Chip will provide a better solution definitely that's the direction, we're looking at and the current solution that for example, with them or with our partners building Pcie card today as a single chip solution by it can be a multiple chip in the future.
Christopher Adam Jackson Rolland: Per ton silver.
Christopher Adam Jackson Rolland: The American the regulation I think one because our architecture, although we can provide a high performance at very low power consumption.
Christopher Adam Jackson Rolland: Our total tops tops number as well as the bandwidth is much lower than our competition and thats our strength.
Dr. Fermi Wong: And that's our strength, our architecture, that we can use a smaller top number and lower bandwidth to achieve similar or higher performance. Great, thank you for... Chris, in terms of the market size, we've had many discussions, you know, at CES and... and afterwards with customers on our Gen AI and LLM products. And we get really good feedback about what these products can do. And many customers, we found out, just were not aware that Gen AI models like Lava could run so efficiently on a sub-50 watt SOC.
Christopher Adam Jackson Rolland: Texture that we can use <unk>.
Christopher Adam Jackson Rolland: Smaller top number and lower bandwidth to achieve a similar or higher performance.
Speaker Change: Great. Thank you for cranes in terms of the market size.
Speaker Change: We've had many discussions at CES.
And afterwards with customers on our Gen AI and MLM products and we see really good feedback about what these products can do and many customers. We found out just were not aware of that.
Speaker Change: Jan AI models like lava could run so efficiently on a sub 50 watt Soc and so this has triggered a lot of discussions with our customers and how they're going to use a product and we're going to wait to put some market sizing figures out until we're a little bit farther down that process, but the feedback is really good especially.
John Young: And so this has triggered a lot of discussions with our customers about how they're going to use the product. And we're going to wait to put some market sizing figures out until we're a little bit farther down that process. But the feedback's really good, especially doing this on a sub-50 watt SOC.
Holly.
Speaker Change: Doing this on a sub 50 watt SFC.
Dr. Fermi Wong: Great. Do you have a follow-up, Chris? Yeah. Maybe around the kind of edge AI and camera opportunity. Maybe if you could describe that.
Speaker Change: Great.
Speaker Change: Yes.
Speaker Change: Yeah, maybe around the kind of edge AI and camera opportunity.
Dr. Fermi Wong: I mean, there's so much focus on cars, but next-gen security cameras with all this AI functionality, what are the growth rates for that market? Do you now have visibility into a funnel to kind of refresh that and revigorate that market? And what kind of growth could we be talking about for kind of that edge market as well with your product? Well, for our SAM, we haven't updated it for Gen AI, you know, kind of like the prior discussion.
Speaker Change: Maybe if you could describe that I mean, there's so much focus on auto, but nextgen like security cameras with all this AI functionality like what are the growth rates for that market do you have now visibility into a funnel to kind of refresh that in order to reverse.
Speaker Change: Bigger refrigerate that market and what kind of growth could we be talking for kind of that edge market as well with your products. Thanks.
Speaker Change: Well for our Sam.
Speaker Change: We haven't updated it for for Gen III kind of like the prior discussion so we're still sizing that.
John Young: So we're still sizing that up. But the prior, you know, SAM CAGR, if you will, that we talked about, was in the, you know, low teens range, thinking of a five year SAM CAGR for that market, but that does not include the Gen AI products. And we're going to take a little bit longer to put those numbers in, in terms of kind of the insight into building momentum in this market and any sort of funnel. I'll pass that off to Fermi. Yeah.
Speaker Change: But the prior Sam CAGR, if you will that we talked about.
Speaker Change: Was in the low teens range thinking of a five year, Sam CAGR for that market, but that does not include the <unk> AD products and we're going to take a little bit longer to put those numbers and in terms of kind of the insight into.
Speaker Change: Building momentum in this market and any sort of funnel I'll pass that off to Fermi.
Dr. Fermi Wong: In fact, you know, although we talk a lot about cars because that's a huge opportunity, but we never underestimate the importance of the security camera market for us. This is really a big portion of our revenue, and we continue to believe that the HAI application for security cameras is important for us, and we continue to develop new platforms. For example, we announced the CV72, and we'll announce new chips for this market in the near future. So I think we believe that the AI performance demand for security cameras will continue to grow, and we want to be a player and the dominant player on the mainstream high-end products. Thank you. And our next question, coming from the line-up, Matt Ramsay with TDK, when your line is open. Good afternoon, guys.
Speaker Change: Yes.
Fermi: In fact, you know.
Fermi: Although we talk a lot about <unk>, because that's a huge opportunity, but we never.
Fermi: Underestimate the importance of a security camera market for US. This is really a big portion of our revenue and we continue to believe that the H AI application for security camera is important for us and we continue to develop a new platform. For example, we announced a <unk> 72, and we will announce new chips.
Fermi: This market.
Fermi: Near future. So I think we believe that.
Fermi: The team AI performance.
Fermi: And in security camera will continue to grow and we want to be a continued to be at a player and a dominant player on the ministry of high end product line.
Fermi: Okay.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Matt.
Speaker Change: Matt Ramsay with TD Colin your line is open.
Matthew D. Ramsay: Thank you. Thank you. Permy, I wanted to follow up with you on some of the initial feedback on the N1 from an inference perspective, and I guess it's not a surprise to me given, I guess my question is, as you get that good feedback and you're interacting with customers that can potentially ramp this product over time, given where the P&L is for you guys right now during the correction, what's the business model over the next 12 to 18 months? To start to really build a business around this and get something that could ramp up at scale, given the software investments that you need, et cetera. Are you – are customers willing, and are you willing to do sort of NRE payment arrangements? Are people willing to invest alongside you in software?
Matthew D. Ramsay: Good afternoon, guys. Thank you.
Matthew D. Ramsay: I guess.
Matthew D. Ramsay: Pardon me I wanted to follow up with you on.
Some of the initial feedback on on the N. One from an insurance perspective and.
Matthew D. Ramsay: I guess, we're not surprised me given.
Matthew D. Ramsay: But the engineering and architecture team getting good feedback on low power inference I guess my question.
Matthew D. Ramsay: As you get that feedback and you're interacting with <unk>.
Matthew D. Ramsay: Customers that can potentially ramp this product over time, given kind of where the P&L is are you guys right now during the correction.
Matthew D. Ramsay: What's the business model over the next 12 to 18 months.
Matthew D. Ramsay: To really build the business around this and I get something that could ramp at scale given the software investments that you need et cetera are you.
Matthew D. Ramsay: Are customers willing and are you willing to do sort of in our <unk> payment arrangements.
Matthew D. Ramsay: Are people willing to invest alongside you on software I'm, just trying to figure out.
Dr. Fermi Wong: I'm just trying to figure out – I can see big potential here, but there are also some limitations on capital, given where the business is. And I'm trying to understand what the discussions are to get you from point A to point B if this is going to be a big product. Right. So I think you make a good point.
Matthew D. Ramsay: I can see big potential here, but theres also some limitations on.
Matthew D. Ramsay: Capital, given where the business is.
Matthew D. Ramsay: And I'm trying to understand what the discussions are to get you from point a to point B. If this is going to be a big product.
Speaker Change: Right. So I think you can make a good point I think for the other one.
Dr. Fermi Wong: I think the N1 development is going to be significant for us. But that's why we are open to any kind of business model, including from partnership to NRE numbers. I think with N1, we can address some of the cost, particularly our existing customer demand. And also on the software. In fact, we can demo and show you that our investment in the software and tools and the silicon can be leveraged for our first generation chip. So from that point of view, I think the majority of our investment in N1 is done. So the real question is, what's our roadmap moving forward? And for example, if we look at the Cooper development, although we define Cooper for other purposes, it definitely directly applies to our N1 development. So let's talk about our LLM. I think that's where the difficulty lies, right?
Speaker Change: Element is going to be significant for us, but that's why we are open for any kind of business model, including phone partnership to our numbers.
Speaker Change: <unk> was one one well he can address.
Speaker Change: Some of the customer, particularly our existing customer demand and.
Speaker Change: And also on the Sofa and in fact, we can demo to show you that.
Speaker Change: Our investment on the sulfur and tools and silicon can be laboratory for our first relationship. So from that point of view I think our majority of our investment for otherwise done that so the real question is whats our roadmap moving forward and we for example, we haven't kind of corporate development all over this.
Speaker Change: Frank Cooper for other purpose, but that one directly apply to our own development. So let's talk for the hour.
Speaker Change: Al.
Speaker Change: Porchetta AI roadmap I think that's where the difficulty is right I think it's from the PR point of view, if we want to do this we need to continue to invest in R&D for new chips, and maybe even new sofa. So from that point of view I agree with you that that we have to look at all the possible scenarios, including a partnership as well.
Dr. Fermi Wong: I think it's from the PR point of view that if we want to do this, we need to continue to invest in R&D for new chips and maybe even new software. So from that point of view, I agree with you that we have to look at all the possible scenarios, including a partnership as well as an NDA, so some of the NRE payments will go to us to pay for the current cost. But I think, based on the feedback, it's become very clear that LLM is not only for the data center. LLM will penetrate the H device, and our current, existing customers, and future customers all want LLM as a part of the roadmap. So I think that we need to be flexible to develop a roadmap for our customers, and we have to figure that out sometime this year. Now, thank you for all the thoughts you have left for me.
Speaker Change: NDA.
Speaker Change: So for the so some of the E payment so for us to pay for the current cost, but I think you know based on the feedback has become very clear that is not.
Speaker Change: <unk> is not only for the data center area and well penetrated to the H device and our current existing customer and future customer all wanted to L. A M.
Speaker Change: Part of the roadmap, so I think that.
Speaker Change: We need to be flexible to develop a roadmap for our for our customer and we have to figure it out English in sometime this year.
Speaker Change: Okay. Thank you for all the thoughts there for me.
Matthew D. Ramsay: I guess as my follow-up question, where are the revenue levels right now? You guys have been consistent the last couple quarters, working with the customer base to burn through inventory that they had built. And you're clearly under shipping and sell through by a pretty significant margin to do that. So, I mean, I asked this last quarter, and maybe it was too early to ask, but now that we've had three more months. You have a field now as to what the steady-state sell-through revenue level of the business is currently just with the designs you've won, particularly in the security camera businesses. What's sell-through and what's the market size right now after we've gone way up and then way down on the inventory correction? What's the kind of steady-state sell-through that you're under shipping to burn through inventory?
Speaker Change: I guess as my follow up question, where does the.
Speaker Change: The revenue levels are right now you guys have been consistent the last couple of quarters that you are working with.
Speaker Change: The customer base to burn through inventory that they had built.
Speaker Change: And you're clearly under shipping and sell through by a pretty significant margin to do that so.
Speaker Change: I asked this last quarter and it maybe it was too early to ask but now that we've had three more months.
Speaker Change: You have a feel now as to.
Speaker Change: What the steady state sell through revenue level of the business is currently just with the designs you one, particularly in the security camera businesses.
Speaker Change: What what sell through and what the market size right now after we've gone way up and then weigh down on the inventory correction, what what's kind of the steady.
Speaker Change: Steady state sell through that you're under shipping to burn through inventory do you have an estimate for that yes. So we are trying very hard to understand number. So let me give you my thoughts I think when I look at the number that at peak, we shipped probably $92 million a quarter and the partnership of roughly 50 million and when we do kind of all over.
Dr. Fermi Wong: Do you have an estimate for that? Thanks. Yeah. We are trying very hard to understand numbers. So, let me give you my thoughts.
Dr. Fermi Wong: I think when I look at the numbers, at the peak, we shipped probably $92 million a quarter. At the bottom, we shipped roughly $50 million. And when we look at all of the statistics and the numbers, the model we built, we feel the midpoint of those two numbers is probably a comfortable level for us. And we are definitely working hard to reach that level. So I think roughly in the $70 million range is probably the number we are shooting for when everything gets equalized. Thank you. And our next question comes from the line of Tore Svanberg with Stiefel Yolana Sofin.
Speaker Change: Statistics and the numbers that the model, we built we feel that midpoint of that two number is probably the a comfortable level for us and we are definitely working hard to go to the to reach that level. So I think roughly in the $70 million range is probably the the number we're shooting for.
Speaker Change: Everything.
Speaker Change: Could equal equalized.
Thank you and our next question coming from the line of Theresa.
Theresa: <unk> with Stifel. Your line is open.
Theresa: Yes. Thank you.
Theresa: My first question for me. So you talked about fiscal 'twenty five we expect to see growth in both the auto and Iot I was just hoping you could give us a little bit more sort of the puts and takes and how you think that the year to two progress, obviously theres still probably some lingering inventory, especially on the auto side, but yes.
Tore Egil Svanberg: Yes, thank you. My first question for you is, so you talked about Cisco 25 expectancy growth in both auto and IoT. I was just hoping you could give us a little bit more on the puts and takes and how you think the year will progress. Obviously, you know, there's still probably some lingering inventory, especially on the auto side.
Theresa: Any more color you can give us as far as the growth youre expecting in both segments. This year.
Theresa: You are talking about CV five ordinary.
Theresa: Overall now we're talking about.
Theresa: You mentioned you expect both segments to grow this year. So if you could just gasoline margins.
Tore Egil Svanberg: But yeah, any more color you can give us as far as the growth you're expecting in both segments this year? Are you talking about CB-5 or not? No, overall.
Theresa: Dynamic.
Speaker Change: Right. So I think that's all about Iot for first I think for Iot, it's pretty clear that.
Speaker Change: It was a Cvs tool product line that were being.
Dr. Fermi Wong: Overall, No, I'm talking about your... You mentioned you expect both segments to grow this year, so if you could just give us a little more of the dynamics, yeah. Right, so I think for IOT, it's pretty clear that, you know, with the CV2 product line that we've been growing CV revenue from close to 60% last year, and we believe that the momentum of the CV2 family will continue, particularly after the inventory problem is behind us. So I think, at that point, the CV2 family will drive growth for us, but more importantly, I think, you know, in the script, we talk about CV5, our ramp. Last year, we did half a million units, and this year, we're probably going to double it.
Speaker Change: Rowing.
Speaker Change: CV revenue from close to 60% last year, and we're going to we believe that the momentum seems to family will continue particularly after the inventory problem is behind us. So I think at that point I think CV to family will drive the growth for us, but more importantly, I think in our in my script, we talk about CV five wassa ramping.
Last year, we did have a million units and this year with Polycom a double it and also if you consider the asps that could be meaningful growth for us. So I think that square on the Iot side on the automotive side I definitely think that.
Speaker Change: First of all we continue to announcer CB two design win in Adas in the Oems CMS on the electronic mirror and our recorders. Those are continue to be a big portion of our revenue, but also we are.
Speaker Change: Announcing some partnership with.
Speaker Change: With CBRE early.
Speaker Change: Early customer that we exited reworking our samples and also a partnership or ease that will definitely play a role in our <unk> revenue, allowing our automotive revenues in there. So I think overall all of that.
Dr. Fermi Wong: And that will also, if you consider ASP, could be meaningful growth for us. So I think that's square on the IOT side. On the automotive side, I definitely think that, you know, first of all, we continue to announce the CV2 design wing in ADAS, in the OMS, CMS, on the electronic mirror, and the recorders. So most of us continue to be a big portion of our revenue, but also we are announcing some partnership with CB3 early customers that we have started delivering samples to, and also partnership with NREs that will definitely play So I think overall, although the automotive market continues to be weak based on feedback from the market, I still believe that we are a small player in the automotive space, and we're trying to be a big one throughout the process.
Speaker Change: Automotive market continued to be weak based on the feedback on that.
Speaker Change: The.
Speaker Change: The market, but I still believe that we are a small player in the automotive space and what I tried to be big one sure the process and we're looking at more along the lines of our our growth with our current design wins. So I think that's how we feel comfortable that the automotive will also have growth. This year, yes, Tory from AR.
Tory: Product point of view in fiscal 'twenty five.
Tory: Our AI inference products.
Tory: Most of <unk> will be more than 100% of our growth that means the video processor business, well, which was down substantially and as John mentioned fiscal 'twenty four it dropped about $80 million that rate of decline in video processors will we'll begin to really taper off.
Tory: 25.
Speaker Change: Hey, Jeff.
Dr. Fermi Wong: We're looking at more along the line our growth with the current design wins. So I think that's how we feel comfortable that the automotive business will also have growth this year. Yeah, Tori, from a product point of view, in fiscal 25.
Jeff: Yeah that was very helpful. As my follow up.
Jeff: I was pretty impressed with the new Cooper developer platform. When I saw your samples, let's see yes, and I was just wondering you know how that will develop a cloud platform is helping us secure.
Jeff: More and more business activity because it does seem like it was an important piece of the pie that was missing, but obviously now that you have have it readily available.
John Young: You know, our AI inference products, which are almost all CB2, will be more than 100% of our growth. That means the video processor business, which was down substantially, as John mentioned, in fiscal 24, it dropped about $80 million. That rate of decline in video processors will begin to really taper off in fiscal 25. Yeah, that was very helpful.
Jeff: In fact, the all existing customer are eager to get our hands on on the Cooper tells me a lot about how how much they like this development because now it's become very easy for them to put a sofa through two different ambarella platform of different silicon mix and also is easy to transfer the sofa and the <unk>.
Jeff: <unk> or AI <unk> from chip to chip. So this whole development is important not only for us, but also for our customers and and I think for.
Dr. Fermi Wong: As a follow-up, I was pretty impressed with the new Cooper development platform when I saw your samples at CEF. And I was just wondering, you know, how that development platform is helping you secure more business activity, because it does seem like it was an important piece of the pie that was missing. But obviously, now that you have it readily available, all our existing customers are eager to get their hands on Cooper.
Jeff: For the existing customer that will make their development work, even more comfortable and faster. So it will help us to keep those customers, but also for the new customer Eva on the in the area of EM.
Jeff: I think that we have we can provide our environmental cosmic quickly can convert their sofa <unk> tool running on our chip is important for altice hours.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Ross Seymore with Deutsche Bank. Your line is open.
Dr. Fermi Wong: Tells me a lot about how much they like this development because now it's become very easy for them to port SOFR through to different Ambarella platforms, different silicon means. And also, it's easy to transfer the SOFR and the function or AI algorithm from chip to chip. So this whole development is important, not only for us but also for our customers. And I think for existing customers, it will make their development work even more comfortable and faster. So it will help us to keep those customers, but also for new customers, even in the LLM part, I think that we can provide an environment for customers to quickly convert their SOFR algorithm to run on our chip. It's important for our designers.
Ross Seymore: Hi, guys. Thanks for that question.
Ross Seymore: When I think about the Asps that you mentioned going from <unk> to <unk>, five or even backwards looking to the CB. Two itself can you just walk us through again kind of orders of magnitude or pricing ranges, how much where asps has the tailwind in calendar year 'twenty four and what do you expect them to be in calendar 'twenty.
Speaker Change: Right. So first of all.
Speaker Change: Right. So for CB two family I think we talk about the price can be anywhere from the high single digit to the probably $30 range and that's at the average ASP probably high teens, that's a C mutual family.
Speaker Change: The C V. Five we're talking about anywhere from you know.
Speaker Change: Low thirties to a hive high forties in Iraq and that.
Ross Seymore: Thank you, and our next question comes from the line of Ross Seymour with Deutsche Bank. Your line is open.
Speaker Change: And we saw run rate, we think that we can maintain a very healthy not only of ASP, but also a gross margin in that part of the line.
Ross Seymore: Hi guys, thanks for asking the question. When I think about the ASPs that you mentioned, going from CB2 to CB5, or even backwards looking to CB2, itself, can you just walk us through again, kind of orders of magnitude or pricing ranges, how much are ASPs attail in calendar year 24? And what do you expect them to be in calendar 25?
Speaker Change: Then.
Speaker Change: CV five and in fact, we have seen 72 that we mentioned the price range is similar to <unk>, but for Iot is.
Speaker Change: Different part of life, So I think.
Speaker Change: And then we stop our CB three.
Speaker Change: The asps is anywhere from $40 to $400 or from <unk> 72 to.
<unk> three 685, so that just gives you idea our ASP changes.
Speaker Change: Great. Thanks for that detail for me and then I guess, you talked about the year and growing in both sides of the business. Obviously, we have the first quarter guidance and talked about a little bit of the trajectory and the prior question on both your two sides of your business.
Dr. Fermi Wong: Right, so first of all... Right. So for CV2 families, I think we're talking about the price can be anywhere from the high single digit to the probably $30 range. And that's the average ASP, probably in the high teens.
Speaker Change: But if we think about the second half versus the first half. It seems like you need some relatively sizable sequential increases on a percentage basis to get to that sort of number do you think you will be well within those kind of those average of roughly 70 million true sell through numbers and if so is that kind of a second half dynamic.
Dr. Fermi Wong: That's a CV2 family, and CB5. We're talking about anywhere from the low 30s to the high 40s in that range. And with our runway, we think that we can maintain a very healthy not only ASP but also gross margin in that part of the line. Then CB5, and, in fact, we have CB72 that we mentioned. The price range is similar to CB5, but for AIoT, it's a different part of the line.
Speaker Change: And I guess is that more just about shipping to demand. So the inventory headwind debate or is it about new products ramping.
Speaker Change: Right first of all we didn't guide any quarter to be $70 million.
Ross Seymore: So I think, and then we talk about CB3, the ASP is anywhere from $40 to $400 from CB72 to CB3 685. So that just gives you an idea of our ASP trend. Great, thanks for that detail for me. And then I guess you talked about the year and growth on both sides of the business. Obviously, we have the first quarter guidance and talked about a little bit of the trajectory in a prior question on both sides of your business. But if we think about the kind of the second half versus the first half, it seems like you need some relatively sizable sequential increases on a percentage basis to get to that sort of number. Do you think you will be well within those kind of average of roughly 70 million true sell-through numbers? And if so, is that kind of a second half dynamic?
Speaker Change: In our guidance, we talk about we believe that we're going to have growth. This year and also believe that.
Speaker Change: Q1 guidance, but overall I think when I look at.
Speaker Change: The number in our streets predicting I think as you know.
Speaker Change: Reasonable and also that based on what we have seen with the.
Speaker Change: Our customer demands and as well as our booking I feel comfortable with the current Q on Q2 guidance of course, Q3, Q4, we haven't seen enough booking but however, the momentum is there so I think.
Speaker Change: I'm comfortable that we're going to grow and but in terms of our quarter two hi, Cai.
Speaker Change: Quarter to quarter growth, we haven't provided any guidance on that yet.
Cai: Yeah, and Ross just to follow up on the ASP question RSP in fiscal 'twenty four grew about 15% year over year and looking into next year. It really depends on the mix of video processor versus CV, but even within the CV two family.
Cai: Ratio of <unk> to some of the lower end CVT is now of course, we won't have CV three revenue contributing in fiscal 'twenty five so should be some increase but its just hard to say how much now.
Dr. Fermi Wong: And I guess, is that more just about shipping to demand? So the inventory had when the bait arrived, or is it about new product? Right. First of all, we didn't guide any quota to be $70 million, you know, in our guidance.
Speaker Change: Libya, we can move onto the next question.
Dr. Fermi Wong: We talk about how we believe that we're going to have growth this year and also believe in our Q1 guidance. But overall, I think, you know, when I look at the number that Street's predicting, I think it's, you know, reasonable. And also, based on what we have seen with our customer demands and as well as our bookings, I feel comfortable with the current Q1, Q2 guidance. Of course, Q3, Q4, we haven't seen enough bookings.
Speaker Change: And our next question coming from the line.
Speaker Change: Kevin Cassidy with Rosenblatt Securities. Your line is now open.
Kevin Edward Cassidy: Thanks for taking my question and congratulations on the strong results.
Kevin Edward Cassidy: Just on your <unk> and one as you're talking to customers about it what does the competitive landscape what are some of the alternative.
Kevin Edward Cassidy: That theyre looking at.
Kevin Edward Cassidy: I guess is the GPU still being considered even as edge processor.
John Young: But, you know, however, the momentum is there, so I think, you know, I'm comfortable that we're going to grow. And but in terms of our quarter to high, quarter to quarter growth, we haven't provided any guidance on that. Yeah, and Ross, just to follow up on the ASP question, our ASP in Fiscal 24 grew about 15 percent year-over-year, and looking into the next year, it really depends, you know, on the mix of video processors versus CVs, but even within the CV2 family, you know, the ratio of CV5 Livia, we can move on to the next question.
Kevin Edward Cassidy: Well some are low end GPU being considered.
Kevin Edward Cassidy: H a processor you really need.
Kevin Edward Cassidy: <unk> was a very low power consumption and with that GPU is much of that is considered but however, I don't believe that our core car definitely have an ambition to come to this market and when we compare to then just like when we compare to them in the automotive space.
Kevin Edward Cassidy: We can deliver higher performance and lower power consumption and thats consistent to be the case. So I do believe we're seeing we're looking at very similar competitors like our.
Kevin Edward Cassidy: Our automotive market.
Speaker Change: Great. Thanks.
Speaker Change: It seems to me you're getting a lot of leverage out of the five nanometer process you've got lots of.
Kevin Edward Cassidy: Thank you for your service. Our next question comes from the line out, Kevin Cassidy with Western Flat Securities. Your line is open.
Speaker Change: So our pricing performance ranges with.
Speaker Change: Five nanometer is there anything in your roadmap looking to go below five nanometer now.
Kevin Edward Cassidy: Yes, thanks for taking my question and congratulations on the strong results. Just on your N1, as you're talking to customers about it, what is the competitive landscape? What are some of the alternative designs that they're looking at? You know, I guess, is the GPU still being considered even as an edge process? Well, some low-end GPUs are being considered, but as an edge processor, you really need a SoC with very low power consumption.
Speaker Change: Yes, we have to I think it is there is no chance will stay at five nanometer forceful, but however, I think it's really driven by two things one is whether we can justify the cost.
Speaker Change: And also whether that the performance.
Speaker Change: Requirement, but I definitely believe that Youll start hearing us talking about next generation process selections in the near future.
Dr. Fermi Wong: And with that, the GPU is much less considered. But, however, I do believe that Qualcomm definitely has an ambition to come to this market. And when we compare to them, just like when we compare to them in the automotive space, I think we can deliver higher performance at low power consumption. That's consistent to be the case.
Speaker Change: Thank you and as a reminder, ladies and gentlemen to ask a question. Please press star one one.
Speaker Change: And our next question is coming.
Speaker Change: Joe Moore with Morgan Stanley. Your line is now open.
Joseph Moore: Great. Thank you.
Joseph Moore: Fermi you Anil.
Joseph Moore: Alluded to some OEM wins for <unk> five that start to ramp in the second half of the year can you talk about what applications you're addressing there.
Dr. Fermi Wong: So I do believe we are looking at very similar competitors, like our automotive market. Great, thanks. And, you know, it seems to me you're getting a lot of leverage out of the five nanometer process. You've got lots of price performance ranges with this 5 nanometer process. Is there anything in your roadmap looking to go below 5 nanometers now? Yes, we have to. I think there's no chance we'll stay at 5 nanometers for too long. But, anyway, I think it's really driven by two things. One is whether we can justify the cost and also whether the performance requirement can be met.
Joseph Moore: Is it EV truck in in in Western.
Joseph Moore: Base.
Joseph Moore: And.
Anil: We definitely we have been working on this case for several years and the customer doesn't allow us to talk about it yet just yet, but I think that since we are close to.
Anil: To announce their product and I feel that we should.
Anil: We feel comfortable to share with this news, but not to mention the customer names.
Speaker Change: Great. Thank you for that and then I guess.
Dr. Fermi Wong: But I definitely believe that you'll start hearing us talking about the next generation of process selections in the near future. Thank you. And as a reminder, ladies and gentlemen, to ask a question, please press star 1 1. And our next question coming from the line... Filmed with Mark and Stanley, Yolanda Sulfan. Great. Thank you.
Speaker Change: As far as the <unk> product goes.
Speaker Change: You guys have kind of always shied away from doing anything in a phone because you don't want to become a feature in a chipset, but obviously a lot of their potential large language model inference could be in devices like phones. So can you just talk about.
Speaker Change: Are there opportunities around that to do coprocessors or where do you kind of draw the line at your participation.
Operator: Fermi, you alluded to some OEM wins for CD5 that start to wrap up in the second half of the year. Can you talk about what applications you're addressing there? It's an EV truck in a Western space.
Speaker Change: Alright.
Speaker Change: Since both Qualcomm and Nvidia Qualcomm and Mediatek are very eager to coming to introducing products English phone space for arrow and I feel that our opportunity is limited because.
Dr. Fermi Wong: And we definitely have been working on this case for several years, but the customer doesn't allow us to talk about it just yet. But I think that since they are close to announcing their product, and I feel that we feel comfortable to share this news with this news, but not to mention the customer. Great, thank you for that. And then I guess, as far as the N1 product goes, you guys have kind of always shied away from doing anything in a phone because you don't want to become a feature in a chipset. But, you know, obviously, a lot of the potential large language model inference could be in devices like phones.
Speaker Change: In all my idea is that even.
Speaker Change: On the phone because you are a factory connectivity you might be able to use sung <unk>.
Speaker Change: <unk> still leveraging the <unk>. So he can connect to the cloud to wrong, but most of the functions.
Speaker Change: On the server side, so with that.
Speaker Change: <unk>.
Speaker Change: Cellphone become.
Speaker Change: Limit the opportunity for us not only because Qualcomm mediatek.
Speaker Change: Vantage in terms of our market share there, but also the usage model is really not purely as a combination in Asia and in the.
Dr. Fermi Wong: So can you just talk about, you know, what opportunities there are around that to do co-processors or, you know, where do you kind of draw the line at your participation? All right, since both Qualcomm and MediaTek are very eager to come in to introducing products in the phone space for LLM, I feel that our opportunity is limited. Because my idea is that even LLM on the phone, because you have 5G connectivity, you might be able to use some LLM at the edge but still leverage the 5G so you can connect to the cloud to run most of the LLM functions on the server side. So with that, the cell phone becomes a limited opportunity for us, not only because Qualcomm MediaTek has an advantage in terms of market share there, but also because the usage model is really not purely It's a combination of the edge and the cloud.
Speaker Change: Cloud so my feeling is.
Speaker Change: We are going to look at a pure H devices that focusing on.
Speaker Change: Sure.
Speaker Change: Uh huh.
Speaker Change: Battery sensitive and also the latency sensitive applications just like what we had before.
Speaker Change: Great. Thank you very much.
Speaker Change: Okay.
Speaker Change: Thank you and I'm showing no further questions in the queue. At this time I will now turn the call back over to Dr. Fermi Wang for any closing remarks.
Speaker Change: And I want to thank all of you for joining us today and looking forward to talk to you in a different conference or next time. Thank you.
Speaker Change: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Dr. Fermi Wong: So my feeling is we are going to look at pure edge devices, battery-sensitive, and also latency-sensitive applications, just like we had before. Thank you very much. Thank you. Thank you. And I'm showing no further questions in the queue at this time.
[music].
Speaker Change: Okay.
Speaker Change: Sure.
Yes.
Speaker Change: [music].
Dr. Fermi Wong: I will now turn the call back over to Dr. Fermi Wang for any closing remarks. And I want to thank all of you for joining us today. I'm looking forward to talking to you at a different conference or at nighttime. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect. Thank you for watching!
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change:
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].