Q2 2025 Ambarella Inc Earnings Call

August 27, 2024

[inaudible]

Operator: Hello, and thank you for standing by. Welcome to Ambarella's Q2 fiscal year 2025 conference call. At this time, all participants are on a listen only mode. After the speakers presentation there will be a question in answer session. To ask the question during the session, you would need to press star 11 on your telephone. You would then hear an automatic message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to turn the call over to Louis Gerhardy. You may begin.

Speaker Change: Hello, and thank you for standing by Welcome to Amber Relay Secure 2, fiscal year 2020 5 conference call.

Speaker Change: At this time, all participants on a listen only most. After the speaker's presentation, there will be a question in answer session. To ask the question to a new session, you would need to press star, one on your telephone. You would bid your automatic message advising your hand is raised.

Speaker Change: To withdraw your question, please first start one one again. I would now like to turn the call over to Louis Gerhardy. You may begin.

Louis Gerhardy: Thank you, Twanda. Good afternoon and thank you for joining our second quarter fiscal year 2025 financial results conference call. On the call with me today is Dr. Fermi Wang, President and CEO; and John Young, CFO. The primary purpose of today's call is to provide you with information regarding the results for our second quarter of fiscal year 2025. 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 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're under no obligation to update these statements. These risks, uncertainties and assumptions as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we filed with the SEC.

Louis Gerhardy: Thank you to Wanda.

Louis Gerhardy: Good afternoon and thank you for joining our second quarter, fiscal year 2025 financial results conference call.

Speaker Change: On the call with me today is Dr. Fermi Wong, President and CEO, and John Young, CFO.

Speaker Change: The primary purpose that today's call is to provide you with information regarding the results for our second quarter of fiscal year 2025.

Speaker Change: 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.

Louis Gerhardy: These statements are based on currently available information and subject to risk. Uncertainties and assumptions. Should any of these risks or uncertainties materialize, or should our assumptions be incorrect, or actual results could differ materially from these forward-looking statements. For under no obligation to update these statements, these risks, uncertainties and assumptions, as well as other information on potential risk factors that could affect our financial results, are more fully described in the documents we file with the SEC.

Speaker Change: The statements are based on currently available information and subject to risk uncertainties and assumptions.

Speaker Change: Should any of these risks or uncertainties materialize, or should our assumptions prove to be incorrect, or actually results could differ materially from these forward-looking statements.

Speaker Change: For under no obligation to update these statements, these risks uncertainties and assumptions, as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we filed with SEC.

Louis Gerhardy: Access to our second quarter fiscal 2025 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. Before we start the call, I want to note that we will be participating on August 29th in Deutsche Bank's Technology Conference. We'll be September 4th at Citi's 2024 Global TMT conference. September 17th in Bernstein's 6th Annual West Coast Semiconductor Bus Tour, and September 24th in Evercore ISI's ADAS, AV & AI Summit. We hope to see you at one of these events. Fermi will now provide a business update for the quarter. John will review the financial results and outlook and then we'll be available for your questions. Fermi?

Speaker Change: Access to our second quarter fiscal 2025.

Speaker Change: Results Press Release, transcripts, historical results at CC Finance and a replay today's call. To be found on the Investor Relations page of our website.

Speaker Change: The content of today's call, as well as the materials posted on our website, our Amberrell is property and cannot be reproduced or transcribed without our prior written consent.

Speaker Change: Before we start the call, I want to note that we will be participating on August 29th in Deutschbank's Technology Conference.

Louis Gerhardy: Before we start the call, I want to note that we will be participating on August 29th. In Deutsche Bank's Technology Conference, we'll be September 4th at Cities 2024 Global TMT Conference, September 17th in Bernstein's 6th annual West Coast Semiconductor Bus Tour, and September 24th in Evercore, ISI's ADAS, AV and AI Summit. We hope to see you at one of these events. Fermi will now provide a business update for the quarter. John, for you, the financial results and outlook, and then we'll be available for your questions, Fermi.

Speaker Change: will be September 4th at cities 2024 Global TNT Conference.

Speaker Change: September 17th in Bernstein's 6th Annual West Coast, some like Dr. Bus Tour.

Fermi Wong: and September 24th in Evercore, Iassized, A-Dass, A-V and A-I Summit. We hope to see you at one of these events. Fermi will now provide a business update for the quarter.

Speaker Change: the Finance Results and Outlook, and then we'll be available for your questions. Thank you, Louis, and a good afternoon. Thank you for all for joining our code today.

Fermi Wong: Fermi will now provide a business update for the quarter. John, for you, the financial results and outlook, and then we'll be available for your questions, Fermi.

Speaker Change: Second quarter of revenue was near the high end of our guidance range, increasing 17% sequentially. Older revenue grew slightly sequentially with stronger growth in IoT, which represented about 70% of total revenue.

Fermi Wong: John, for you, the financial results and outlook, and then we'll be available for your questions, Fermi. Thank you, Lois, and good afternoon. Thank you all for joining our call today. Our second quarter revenue was near the high end of our guidance range, increasing 17% sequential. We achieved record age AI inference revenue, which supported a higher blended Irish selling price in this quarter. The me point of our physical third quarter revenue guidance implies about 24% sequential growth with double digit sequential growth anticipated for both IoT and Auto.

Operator: Welcome to Ambarella's Q2 fiscal year 2025 conference call. At this time, all participants want to listen only most.

Speaker Change: We'll achieve the record age AI inference revenue, which is supported a higher blended average selling price in this quarter.

Operator: After the speakers presentation, there will be a question in answer session to ask the question to in the session, you would need to press star 11 on your telephone. You would then hear an automatic message advising your hand is raised. To withdraw your question, please press star 11 again.

Operator: To ask the question during the session, you would need to press star 11 on your telephone. You would then hear an automatic message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to turn the call over to Louis Gerhardy. You may begin.

Speaker Change: The midpoint of our fiscal third quarter ram you guidance implies about 24% sequential growth with double digit sequential growth and this pay the full both IOT and Oto.

Louis Gerhardy: I will now like to turn the call over to Louis Gerhardy, you may begin. Thank you, Tuanda. Good afternoon, and thank you for joining our second quarter fiscal year 2025 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 the results for our second quarter fiscal year 2025. 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.

I will now like to turn the call over to Louis Gerhardy, you may begin.

Speaker Change: In our last earning code on May 30th, we expressed a confidence in the consensus physical year 2025 revenue, as made over $250 million.

Speaker Change: At this time, based on Cosmo orders and the forecast, we expect our fiscal year 2020-25 revenue growth in the mid to high teams per cent versus last year.

Speaker Change: I will now provide some additional insight into the gifts and the takes of our current outlook.

Fermi Wong: In our last earnings call on May 30th, we expressed the confidence in the consensus physical year 2025 revenue as made of 250 million dollars. At this time, based on customer orders and forecasts, we expect our physical year 2025 revenue growth in the mid to high teams percent versus last year. I will now provide some additional insight into the gifts and the takes of our current outlook.

Speaker Change: First, our analysts indicate most of our customers have not completed the rebalancing of their inventory of umbrella SOCs and our revenue in the second half of the fiscal 25 is expected to reflect actual and market demand.

Louis Gerhardy: 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 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're under no obligation to update these statements. These risks, uncertainties and assumptions as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we filed with the SEC.

These statements are based on currently available information and subject to risk. Uncertainties and assumptions. Should any of these risks or uncertainties materialize, or should our assumptions be incorrect, or actual results could differ materially from these forward-looking statements.

Speaker Change: Second, the overall economic environment is currently at heaven for us.

Speaker Change: As you have heard, global auto production is forecasted to be done slightly this year. There is an electrical vehicle OEM shakeout on the way and the enterprise and consumer IoT spending is mixed.

Fermi Wong: I will now provide some additional insight into the gifts and the takes of our current outlook. First, our analysts indicate most of our customers have now completed the rebalancing of their inventory of embryo ASOCs and our revenue in the second half of the fiscal 25 is expected to reflect actual end market demand. Second, the overall economic environment is currently at Heaven for us. As you have heard, global auto production is forecasted to be done slightly this year.

For under no obligation to update these statements, these risks, uncertainties and assumptions, as well as other information on potential risk factors that could affect our financial results, are more fully described in the documents we file with the SEC.

Speaker Change: So you should be clear, there are companies, specific factors, offsetting the heavens and the driving out strong results and all look.

Speaker Change: There's a rising demand for AI power solutions including AI inference at the age where we have been investing.

Speaker Change: Most importantly, we are seeing initial review ramps from a certain IoT and automotive customers, especially for our higher price new products.

Speaker Change: Our business is building in our new products which we expect will lead to new ways of grabbing the growth in a year's ahead.

Louis Gerhardy: Before we start the call, I want to note that we will be participating on August 29th in Deutsche Bank's Technology Conference. We'll be September 4th at Citi's 2024 Global TMT conference. September 17th in Bernstein's 6th Annual West Coast Semiconductor Bus Tour, and September 24th in Evercore ISI's ADAS, AV & AI Summit. We hope to see you at one of these events. Fermi will now provide a business update for the quarter. John will review the financial results and outlook and then we'll be available for your questions. Fermi?

Speaker Change: I would like to clearly define what I mean when I say new products.

Fermi Wong: There is an electrical vehicle OEM checkout on the way and the enterprise and consumer IoT spending is mixed. So it should be clear, there are company specific factors offsetting the heavens and driving our strong results and outlook. There's rising demand for AI powered solutions including AI inference at the age where we have been investing. Most importantly, we are seeing initial revenue ramps from certain IoT and automotive customers, especially for our higher price new products. Our confidence is building in our new products which we expect will lead to new waves of revenue growth in the years ahead. I would like to clearly define what I mean by say new products. New products include the CV5, CV7, and the CV380 families which are all final meters. Most integrate our third generation AI inference accelerator and all command above average ASPs.

Speaker Change: New products include the CV-5, CV-7, and the CV-380 families, which are all fundamental meter. Most integrated are a third generation AI inference accelerator, and all come in above average ASP.

Speaker Change: In this new product group, the first wave of review is from the CV-5 family, which is ongoing and continue to rep. We expect to easily exceed one million units shipped this year across more than a thousand designs with the IOT as well as automotive.

John, for you, the financial results and outlook, and then we'll be available for your questions, Fermi.

Speaker Change: Our second new product remedy where it is expected from the CVS of CVS7 family, which we expect to enter production as of the end of fiscal year 25.

Fermi Wang: Thank you, Louis, and good afternoon. Thank you for all for joining our call today. Our second quarter revenue was near the high end of our guidance range, increasing 17% sequentially. Auto revenue grew slightly sequentially with stronger growth in IoT, which represented about 70% of total revenue. We achieved record edge AI inference revenue, which supported a higher blended average selling price in this quarter. The midpoint of our fiscal third quarter revenue guidance implies about 24% sequential growth with double-digit sequential growth anticipated for both IoT and Auto. In our last earnings call on May 30th, we expressed confidence in the consensus fiscal year 2025 revenue estimate of $250 million. At this time, based on customer orders and the forecast, we expect our fiscal year 2025 revenue growth in the mid to high-teens percent versus last year. I will now provide some additional insight into the gives and takes of our current outlook. First, our analysts indicate most of our customers have now completed the rebalancing of their inventory of Ambarella SOCs and our revenue in the second half of the fiscal '25 is expected to reflect actual end market demand.

Speaker Change: The CV7 family also served both auto and IOT applications, with initial revenue from computer vision applications, expected to be followed by revenue from more events A.N.I. work, such as Clip and VGLM with your model.

Speaker Change: The CV-3-80 family for L2 Plus and the higher level of autonomy is also in our new product grouping.

Speaker Change: We remain highly focused on converting multiple OEMs and T1 RFIs and RFQs for CV-3 into the one cover which would be incremental to the lead motor and commercial vehicle wins. We have a previously discussed.

Fermi Wong: I would like to clearly define what I mean by say new products. New products include the CV5, CV7, and the CV380 families which are all final meters. Most integrate our third generation AI inference accelerator and all command above average ASPs. In this new product group, the first wave of revenue is from the CV5 family which is ongoing and continue to ramp. We expect to easily exceed one million units shipped this year across more than a thousand design winds in IoT as well as automotive.

Fermi Wang: In our last earnings call on May 30th, we expressed confidence in the consensus fiscal year 2025 revenue estimate of $250 million. At this time, based on customer orders and the forecast, we expect our fiscal year 2025 revenue growth in the mid to high-teens percent versus last year. I will now provide some additional insight into the gives and takes of our current outlook. First, our analysts indicate most of our customers have now completed the rebalancing of their inventory of Ambarella SOCs and our revenue in the second half of the fiscal '25 is expected to reflect actual end market demand.

Speaker Change: We continue to expect the first full year of a production for CB3 family in calendar year 2026, our fiscal year 2027 and growing from there.

Speaker Change: All of you products including our upcoming two nanometer offering, one-one.

I will now provide some additional insight into the gifts and the takes of our current outlook.

Speaker Change: 4D image radar perception sulfur and autonomous driving sulfur is stack IP.

Speaker Change: and as the business case for this new product has developed, we will provide more information on the timing of their revolutionary contribution.

First, our analysts indicate most of our customers have now completed the rebalancing of their inventory of embryo ASOCs and our revenue in the second half of the fiscal 25 is expected to reflect actual end market demand. Second, the overall economic environment is currently at Heaven for us. As you have heard, global auto production is forecasted to be done slightly this year.

Speaker Change: Collective collective theory, this new products are expected to represent a majority of our incremental revenue growth and they are the primary source of the positive momentum we have reporting.

Fermi Wong: Our second new product revenue wave is expected from the CV7 family which we expect to enter production at the end of fiscal year 25. The CV7 family also serve both auto and IoT applications with initial revenue from computer vision applications expected to be followed by revenue for more advanced AI network such as Clip and Vision Language Model. The CV380 family for L2 plus and higher level of autonomy is also in our new product grouping. We remain highly focused on converting multiple OEMs and TL1 RFIs and RFQs for CV3 into the one carbon which will be incremental to the lead motor and commercial vehicle winds. We have a previously discussed We continue to expect the first full year of production for CB3 family in calendar year 2026 on fiscal year 2027 and growing from there.

Fermi Wang: Second, the overall economic environment is currently a headwind for us. As you have heard, global auto production is forecasted to be down slightly this year. There is an electrical vehicle OEM shakeout underway and the enterprise and consumer IoT spending is mixed. So it should be clear there are company-specific factors offsetting the headwinds and driving our strong results and outlook. There is rising demand for AI-powered solutions, including AI inference and the edge where we have been investing. Most importantly, we are seeing initial revenue ramps from certain IoT and automotive customers, especially for our higher-priced new products. Our confidence is building in our new products, which we expect will lead to new waves of revenue growth in the years ahead. I would like to clearly define what I mean when I say new products. New products include the CV5, CV7, and the CV3-AD families, which are all 5-nanometer. Most integrate our third-generation AI inference accelerator and all command above-average ASPs.

Speaker Change: Well, most of the new pod-out-remel originates from CV-5 today. In the years ahead, we are anticipating several important waves of the new pod-out-out-growth.

Speaker Change: I would now like to summarize representative customer activity in the quarter. During the quarter, ReVian introduced the second generation R1SSUV and R1T pickup truck.

Speaker Change: This vehicle's light-rich and broad financial meter CBI-AISOC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked.

Fermi Wang: Most importantly, we are seeing initial revenue ramps from certain IoT and automotive customers, especially for our higher-priced new products. Our confidence is building in our new products, which we expect will lead to new waves of revenue growth in the years ahead. I would like to clearly define what I mean when I say new products. New products include the CV5, CV7, and the CV3-AD families, which are all 5-nanometer. Most integrate our third-generation AI inference accelerator and all command above-average ASPs.

Censara: Censara, a leading provider of a commercial fleet, telematics solution, has introduced its CM33 from Facing and the CM34 Dual Facing AI-Cameras.

Fermi Wong: We remain highly focused on converting multiple OEMs and TL1 RFIs and RFQs for CV3 into the one carbon which will be incremental to the lead motor and commercial vehicle winds. We have a previously discussed We continue to expect the first full year of production for CB3 family in calendar year 2026 on fiscal year 2027 and growing from there. All of the products including our upcoming two nanometer offering, N1, 4D image radar for perception software and autonomous driving software stack IP.

Censara: Bazaar in Berlin, the CV22SOC, both cameras offer events, role features, including lengthy posture and the full collision warning, and the CN34 also offers driver behavior analysis, including mobile distraction and the draws in this detection.

I would like to clearly define what I mean by say new products. New products include the CV5, CV7, and the CV380 families which are all final meters. Most integrate our third generation AI inference accelerator and all command above average ASPs.

Speaker Change: In the China Automatic Market, OEMs continued to introduce new models with advanced camera-based features Lavinci emberalus SOCs, in August.

Fermi Wang: In this new product group, the first wave of revenue is from the CV5 family, which is ongoing and continue to ramp. We expect to easily exceed 1 million units shipped this year across more than 1,000 design wins in IoT as well as automotive. Our second new product revenue wave is expected from the CV7 family, which we expect to enter production at the end of fiscal year '25. The CV7 family also serves both auto and IoT applications with initial revenue from Computer Vision Applications expected to be followed by revenue for more advanced AI networkm such as CLIP and Vision Language Model. The CV3-AD family for L2+ and the higher level of autonomy is also in our new product grouping. We remain highly focused on converting multiple OEMs and Tier 1 RFIs and RFQs for CV3 into the one-carbon which will be incremental to the Leapmotor and Commercial Vehicle wins we have previously discussed. We continue to expect the first full year of production for CV3 family in calendar year 2026, our fiscal year 2027 and growing from there.

Speaker Change: VAC, John Young, company introduced the Stellatol S9 passenger vehicle with an electronic manual camera monitoring system based on our CB22 SOC.

Speaker Change: and a new car brand looks it, a cherry-joined venture introduced a 7-passenger vehicle, including a driver-monitor system based on our CV28 Automotive ASOC.

Fermi Wong: And as the business case for this new product developed, we will provide more information on the timing of the revenue contribution. Collectively, this new products are expected to represent a majority of our incremental revenue growth and they are the primary source of the positive momentum we are reporting. While most of the new product revenue originates from CV5 today, in the years ahead, we are anticipating several important waves of new product growth. I would now like to summarize representative customer activity in the quarter. During the quarter, Rebian introduced the second generation R1SSUV and R1T pickup truck. This vehicle's leverage umbrella is a financial meter CV5 AI SOC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked.

Speaker Change: In Japan, we have started production of a smart rear camera of Hong Fuhong Fuhong.

Speaker Change: based on CVT.

Speaker Change: Baseball CB28

Speaker Change: This is available in the navigation package option, and it provides drive assistance and a smart parking, including pecking vehicles, and less behind the vehicle.

Fermi Wang: We remain highly focused on converting multiple OEMs and Tier 1 RFIs and RFQs for CV3 into the one-carbon which will be incremental to the Leapmotor and Commercial Vehicle wins we have previously discussed. We continue to expect the first full year of production for CV3 family in calendar year 2026, our fiscal year 2027 and growing from there.

We remain highly focused on converting multiple OEMs and TL1 RFIs and RFQs for CV3 into the one carbon which will be incremental to the lead motor and commercial vehicle winds. We have a previously discussed We continue to expect the first full year of production for CB3 family in calendar year 2026 on fiscal year 2027 and growing from there.

Speaker Change: I will now reveal some of the representatives of customer engagement in our IoT business.

Speaker Change: In the enterprise security camera market, UNP market, either access.

Speaker Change: Introduce is a P12 wrench of a not-too-low camera with thumb-size pinhole the mini-tone sensor unit variants.

Fermi Wong: I would now like to summarize representative customer activity in the quarter. During the quarter, Rebian introduced the second generation R1SSUV and R1T pickup truck. This vehicle's leverage umbrella is a financial meter CV5 AI SOC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked.

Speaker Change: The cameras feature a deep learning process in unit based on our CB25 A-SOC for other than its analysis. Also doing the quarter, Japanese marketing, the I-Pro introduced several new CB2 based products.

Fermi Wang: Other new products including our upcoming 2-nanometer offering N1, 4D image radar for perception software and autonomous driving software stack IP. And as the business case for these new products develop, we will provide more information on the timing of their revenue contribution. Collectively, these new products are expected to represent a majority of our incremental revenue growth and they are the primary source of the positive momentum we are reporting. While most of the new product revenue originates from CV5 to date, in the years ahead, we are anticipating several important waves of new product growth. I would now like to summarize representative customer activity in the quarter. During the quarter, Rivian introduced the second generation R1S SUV and R1T pickup truck. These vehicles leverage Ambarella's 5-nanometer CV5 AISoC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked.

Fermi Wong: During the quarter, Rebian introduced the second generation R1SSUV and R1T pickup truck. This vehicle's leverage umbrella is a financial meter CV5 AI SOC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked. Sensara, a leading provider of a commercial fleet and the magic solution has introduced the CM33 from facing and the CM34 dual-facing AI dash cameras. Based on Embrola's CV22 SOC, both cameras offer advanced role features including lens departure and the forward collision warning and the CM34 also offers driver behavior analysis, including mobile distraction and drowsiness detection.

Speaker Change: The Afro Corner Camera is based on Inbera, CV22, and this finalo-metre camera includes a privacy, God's feature for automatic burying of a face.

Speaker Change: In our other IoT market, we are pleased to see handheld camera manufacturers, increasingly requiring more performance to support multiple AI applications, while also requiring high resolution feedback for K or AK from one or more cameras.

Fermi Wang: While most of the new product revenue originates from CV5 to date, in the years ahead, we are anticipating several important waves of new product growth. I would now like to summarize representative customer activity in the quarter. During the quarter, Rivian introduced the second generation R1S SUV and R1T pickup truck. These vehicles leverage Ambarella's 5-nanometer CV5 AISoC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked.

Speaker Change: For example, Instar 360 has introduced 3 CV5 parts.

Speaker Change: Here, and recently, you also introduced the goal 3S wearable camera, based on in various H22 and SOC, the camera with just 1.4 ounces, and include 4K video, 4D MHP photo.

During the quarter, Rebian introduced the second generation R1SSUV and R1T pickup truck. This vehicle's leverage umbrella is a financial meter CV5 AI SOC to provide surround view images while driving as well as the gear guard camera function when the vehicle is parked.

Speaker Change: and the Multi-Oprened Elpribacle introduced his H2-Post-City World Trailmark camera.

Fermi Wong: In the China automotive market, OEMs continue to introduce new models with advanced camera-based features leveraging Embrola's SOCs. In August, VAIC, joint venture company introduced the Stellato 8-9 passenger vehicle with an electronic mirror camera monitoring system based on our CV22 SOC. In a new car brand, Luke Seed, a cherry joint venture introduced its 8-7 passenger vehicle, including a driver monitoring system based on our CV28 automotive SOC. In Japan, we have started production of a smart rear camera for Honda based on CV28. This is available in the navigation package option and it provides drive assistance and a smart parking, including the packing vehicles and lens behind the vehicle.

Speaker Change: [inaudible]

Fermi Wang: Samsara, a leading provider of commercial fleet telematics solution, has introduced its CM33 Front-Facing and the CM34 Dual-Facing AI Dash cameras. Based on Ambarella's CV22 SoC, both cameras offer advanced raw features including lane departure and the forward collision warning and the CM34 also offers driver behavior analysis including mobile distraction and drowsiness detection. In the China automotive market, OEMs continue to introduce new models with advanced camera-based features leveraging Ambarella's SoCs. In August, BAIC joint venture company introduced the Stelato S9 passenger vehicle with an electronic mirror camera monitoring system based on our CV22 SoC. And the new car brand Luxeed, a Chery joint venture, introduced its S7 passenger vehicle including a driver monitor system based on our CV28 automotive SoC. In Japan, we have started production of a smart rear camera for Honda, based on CV28. This is available in the navigation package option and it provides drive assistance and smart parking, including detecting vehicles and lanes behind the vehicle.

Speaker Change: Our CV-2 products represent a vast majority of our AI revenue today, typically addressing computer vision applications for object detections and the classification. Providing real time insights for a wide variety of applications.

Speaker Change: Looking ahead, there's no doubt there's a significant build-out of AI training and inference capacity in data centers for the next generation AI networks.

Fermi Wang: In the China automotive market, OEMs continue to introduce new models with advanced camera-based features leveraging Ambarella's SoCs. In August, BAIC joint venture company introduced the Stelato S9 passenger vehicle with an electronic mirror camera monitoring system based on our CV22 SoC. And the new car brand Luxeed, a Chery joint venture, introduced its S7 passenger vehicle including a driver monitor system based on our CV28 automotive SoC. In Japan, we have started production of a smart rear camera for Honda, based on CV28. This is available in the navigation package option and it provides drive assistance and smart parking, including detecting vehicles and lanes behind the vehicle.

Speaker Change: Review this as a positive long-term leading indicator for our H-Inference Business.

Speaker Change: In fact, our auto and IoT customers are increasingly asking us how we can help them with the new events and networks, how they can be implemented at the age.

Speaker Change: Brought to you to AI Computer Vision, this new AI Networks will require a relatively higher level of computing performance, and the efficiency we bring to the age is critical.

Emberella: For Emberella, our new products are expected to initially rent for AI computer vision applications. However, beginning with the CV7 family, we can also address applications using this more advanced AI networks.

Fermi Wang: I will now review some of the representative customer engagements in our IoT business. In the enterprise security camera market, UMP market leader AXIS introduced its P12 range of a modular camera with thumb-sized pinhole mini-dome sensor unit variants. The cameras feature a deep-learning processing unit based on our CV25 SoC for advanced analysis. Also during the quarter, Japanese market leader i-PRO introduced several new CV2-based products. The i-PRO corner camera is based on Ambarella CV22 and this 5-nanometer camera includes a privacy guard feature for automatic blurring of faces. In our other IoT market, we are pleased to see handheld camera manufacturers increasingly require more performance to support multiple AI applications while also requiring high resolution each by 4K or 8K from one or more cameras. For example, Insta360 has introduced three CV5 products and recently it also introduced the Go 3S wearable camera based on Ambarella's H22 SoC. The camera weighs just 1.4 ounces, and includes 4K video, 48-megapixel photo. And Moultrie, a brand of PRADCO, introduced its EDGE 2 Pro Cellular Trail Camera.

Emberella: Long-term, we are optimistic about our significant investment in AI inference and how the position was to scale to higher value added products.

Speaker Change: Now in the near to intermediate term, Q1 and Q2 will stabs in the right direction. And the one where all key objectives is to continue to drive revenue growth and achieve profitability.

Speaker Change: Hall of Sustaining the Investment in our strategic R&D parties.

Speaker Change: We will continue to actively manage our expenses.

Speaker Change: Even though the cyclical downturn appear to be over for us.

Speaker Change: Ogo is to turn the corner and drive positive earning leverage in the next year with the anticipated revenue growth.

Speaker Change: Now, John, we're talk about the Q2 results and Q3 outlook in more detail.

Fermi Wong: Francis. In our other IoT market, we are pleased to see hey-hell camera manufacturers increasingly require more performance to support multiple AI applications while also requiring high resolution back 4K or 8K from one or more cameras. For example, INSLA 360 has introduced a 3CV5 product here, and recently, you also introduced a GO3S wearable camera based on Enverter's H20 to SOC, the camera with just 1.4 ounces and include 4K video, 40A megapixel photo. In the entry of brands of Prybical, introduced its H2 ports, Seymore Trailmark, a camera.

John Young: I'll now review the financial highlights for the second quarter of fiscal year 2025, ending July 31, 2024. I will also provide a financial outlook for our third quarter of fiscal year 2025, ending October 31, 2024.

Fermi Wang: In our other IoT market, we are pleased to see handheld camera manufacturers increasingly require more performance to support multiple AI applications while also requiring high resolution each by 4K or 8K from one or more cameras. For example, Insta360 has introduced three CV5 products and recently it also introduced the Go 3S wearable camera based on Ambarella's H22 SoC. The camera weighs just 1.4 ounces, and includes 4K video, 48-megapixel photo. And Moultrie, a brand of PRADCO, introduced its EDGE 2 Pro Cellular Trail Camera.

John Young: I'll be discussing non-gap results and after that you refer to today's press release for a detailed reconciliation of gap to non-gap results.

John Young: For non-gap reporting, we have eliminated stock-based compensation expense along with acquisition-related costs adjusted for the impact of taxes.

John Young: For fiscal Q2, revenue was $63.7 million close to the high end of our guidance range.

John Young: Up 17% from the prior quarter and up 3% year over year. Non-gap growth margin for fiscal Q2 was 63.3% slightly above the midpoint of our prior guidance.

John Young: Non-gap operating expense was $47.7 million. Point eight million dollars lower than the midpoint of our Piragaan's range of $47.5 to $49.5 million.

Fermi Wang: Looking ahead, there is no doubt there is a significant build-out of AI training and inference capacity in data centers for the next generation AI networks. We view this as a positive long-term leading indicator for our edge inference business. In fact, our Auto and IoT customers are increasingly asking us how we can help them with the new advanced AI networks, how they can be implemented at that edge. Relative to AI computer vision, this new AI networks will require a significantly higher level of computing performance and the efficiency we bring to the edge is critical.

John Young: Driven by continued expense management and the timing of spending between quarters. We remain on track to our internal product development milestones.

Fermi Wang: From this announcement and the ones in the past, one can see we continue to expand our presence for AI inference at the edge. Our CV2 products represent a vast majority of our AI revenue today, typically addressing Computer Vision Applications for object detection and classification providing real-time insights for a wide variety of applications. Looking ahead, there is no doubt there is a significant build-out of AI training and inference capacity in data centers for the next generation AI networks. We view this as a positive long-term leading indicator for our edge inference business. In fact, our Auto and IoT customers are increasingly asking us how we can help them with the new advanced AI networks, how they can be implemented at that edge. Relative to AI computer vision, this new AI networks will require a significantly higher level of computing performance and the efficiency we bring to the edge is critical.

John Young: Q2 net interest and other income was $2.1 million. Q2 non-gap tax provision was approximately $299,000.

We view this as a positive long-term leading indicator for our age inference business. In fact, our auto and IoT customers are increasingly asking us how we can help learn with the new and advanced AI networks, how they can be implement at the age. Rather to AI computer vision, this new AI networks will require significantly higher level of computing performance, and the efficiency we bring to the age is critical.

John Young: We reported an on-gap net loss of $5.5 million for a 13 cent loss presented share.

Speaker Change: Now I'll turn to our balance sheet and statement of cash flows.

Speaker Change: Fiscal Q2 cash and marketable securities increase, $16.5 million from the prior quarter to $219.8 million.

Fermi Wang: For Ambarella, our new products are expected to initially run for AI Computer Vision Applications. However, beginning with the CV7 family, we can also address applications using these more advanced AI networks. Long-term, we are optimistic about our significant investment in AI inference and how it positions us to scale to higher value-added products. Now in the near to intermediate term Q1 and Q2 were steps in the right direction and one of our key objectives is to continue to drive revenue growth and achieve profitability. While sustaining the investment in our strategic R&D priorities, we will continue to actively managing our expenses, even though the cyclical downturn appear to be over for us. Our goal is to turn the corner and drive positive earning leverage in the next year with the anticipated revenue growth. Now John will talk about the Q2 results and Q3 outlook in more detail.

Speaker Change: Receemables days sales outstanding decrease from 47 days in the prior quarter to 33 days.

Speaker Change: and days of inventory decreased from 123 to 108 days.

Fermi Wong: We view this as a positive long-term leading indicator for our age inference business. In fact, our auto and IoT customers are increasingly asking us how we can help learn with the new and advanced AI networks, how they can be implement at the age. Rather to AI computer vision, this new AI networks will require significantly higher level of computing performance, and the efficiency we bring to the age is critical. For Enverter, our new products are expected to initially run for AI computer vision applications.

Speaker Change: Inventory dollars increased 8% sequentially and decreased 12% from a year ago.

Speaker Change: We generated positive operating cash flow of $16.7 million for the quarter.

Fermi Wang: Now in the near to intermediate term Q1 and Q2 were steps in the right direction and one of our key objectives is to continue to drive revenue growth and achieve profitability. While sustaining the investment in our strategic R&D priorities, we will continue to actively managing our expenses, even though the cyclical downturn appear to be over for us. Our goal is to turn the corner and drive positive earning leverage in the next year with the anticipated revenue growth. Now John will talk about the Q2 results and Q3 outlook in more detail.

Speaker Change: Capital expenditures for tangible and intangible assets were $2.6 million.

Speaker Change: We had two logistics companies representing 10% or more of our revenue in Q2.

Speaker Change: W.T. Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 63% of revenue for the second quarter, while Hakuto, a distributor in Japan, was 10% of revenue for the quarter.

Speaker Change: I'll now discuss the outlook for the third quarter of fiscal year 2025.

Speaker Change: As for me described, company-specific factors, in particular, are new product ramps, are providing us with improved visibility into the second half of fiscal 2025.

Now, John will talk about the Q2 results and Q3 outlook in more detail.

John Young: I'll now review the financial highlights for the second quarter of fiscal year 2025 ending July 31st, 2024. I will also provide a financial outlook for our third quarter of fiscal year 2025 ending October 31st, 2024. I'll 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 costs adjusted for the impact of taxes. For fiscal Q2, revenue was $63.7 million, close to the high end of our guidance range, up 17% from the prior quarter and up 3% year-over-year. Non-GAAP gross margin for fiscal Q2 was 63.3%, slightly above the midpoint of our prior guidance. Non-GAAP operating expense was $47.7 million, $0.8 million lower than the midpoint of our prior guidance range of $47.5 million to $49.5 million driven by continued expense management and the timing of spending between quarters.

Fermi Wong: However, beginning with the CV7 family, we can also address applications using this more advanced AI networks. Long-term, we are optimistic about our significant investment in AI inference and how we position us to scale to higher value added products. Now, in the near to intermediate term, Q1 and Q2 were steps in the right direction, and one of our key objectives is to continue to drive revenue growth and achieve profitability. While sustaining the investment in our strategic R&D priorities, we will continue to actively manage our expenses, even though the cyclical downturn appear to be over for us. Our goal is to turn the corner and drive positive earning leverage in the next year with the anticipated revenue growth. Now, John will talk about the Q2 results and Q3 outlook in more detail.

Speaker Change: Perfiscal Q3, we estimate our total revenue will be in the range of $77-$81 million with sequential growth in both IOT and Auto.

Speaker Change: We expect fiscal Q3 non-gap growth margin to be in the range of 62.5% to 64%.

Fermi Wong: Now, in the near to intermediate term, Q1 and Q2 were steps in the right direction, and one of our key objectives is to continue to drive revenue growth and achieve profitability. While sustaining the investment in our strategic R&D priorities, we will continue to actively manage our expenses, even though the cyclical downturn appear to be over for us. Our goal is to turn the corner and drive positive earning leverage in the next year with the anticipated revenue growth. Now, John will talk about the Q2 results and Q3 outlook in more detail.

Speaker Change: We expect non-gap optics in the third quarter to be in the range of 49 to $51 million.

John Young: For non-GAAP reporting, we have eliminated stock-based compensation expense along with acquisition-related costs adjusted for the impact of taxes. For fiscal Q2, revenue was $63.7 million, close to the high end of our guidance range, up 17% from the prior quarter and up 3% year-over-year. Non-GAAP gross margin for fiscal Q2 was 63.3%, slightly above the midpoint of our prior guidance. Non-GAAP operating expense was $47.7 million, $0.8 million lower than the midpoint of our prior guidance range of $47.5 million to $49.5 million driven by continued expense management and the timing of spending between quarters.

Speaker Change: with the increase compared to Q2 driven by increased head count and project related engineering expenses. We estimate net interest income to be approximately $1.8 million, our non-gap tax expense to be approximately $500,000.

Speaker Change: and our Deluded Share Counts would be approximately 41.7 million fully deluded shares.

Speaker Change: Thank you for joining our call today and with that I will turn the call over to the operator for questions.

John Young: Non-GAAP operating expense was $47.7 million, $0.8 million lower than the midpoint of our prior guidance range of $47.5 million to $49.5 million driven by continued expense management and the timing of spending between quarters.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, as a reminder to ask the question, please press star 1-1 on your telephone and then wait to hear your name announce. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Driven by continued expense management and the timing of spending between quarters,

John Young: Now, John will talk about the Q2 results and Q3 outlook in more detail. I will now review the financial highlights for the second quarter of fiscal year 2025, ending July 31, 2024. I will also provide a financial outlook for our third quarter of fiscal year 2025, ending October 31, 2024.

John Young: We remain on track to our internal product development milestones. Q2 net interest and other income was $2.1 million. Q2 non-GAAP tax provision was approximately $299,000. We reported a non-GAAP net loss of $5.5 million or a $0.13 loss per diluted share. Now I'll turn to our balance sheet and statement of cash flows. Fiscal Q2 cash and marketable securities increased $16.5 million from the prior quarter to $219.8 million. Receivables day sales outstanding decreased from 47 days in the prior quarter to 33 days and days of inventory decreased from 123 to 108 days. Inventory dollars increased 8% sequentially and decreased 12% from a year ago. We generated positive operating cash flow of $16.7 million for the quarter. Capital expenditures for tangible and intangible assets were $2.6 million. We had two logistics companies representing 10% or more of our revenue in Q2. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 63% of revenue for the second quarter, while Hakuto, a distributor in Japan, was 10% of revenue for the quarter.

Speaker Change: and John Young, John Young, John Young, John Young,

Speaker Change: Our first question comes from a line of Christopher Wollin with Suffuanna, the line is open.

Speaker Change: [inaudible]

Speaker Change: Hey guys, thanks so much for the question here.

Christopher Wollin: I guess my first one is you reference vision language models. It's just a new opportunity or an opportunity that you've been addressing for some time here.

John Young: Now I'll turn to our balance sheet and statement of cash flows. Fiscal Q2 cash and marketable securities increased $16.5 million from the prior quarter to $219.8 million. Receivables day sales outstanding decreased from 47 days in the prior quarter to 33 days and days of inventory decreased from 123 to 108 days. Inventory dollars increased 8% sequentially and decreased 12% from a year ago. We generated positive operating cash flow of $16.7 million for the quarter. Capital expenditures for tangible and intangible assets were $2.6 million. We had two logistics companies representing 10% or more of our revenue in Q2. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 63% of revenue for the second quarter, while Hakuto, a distributor in Japan, was 10% of revenue for the quarter.

Speaker Change: and you know how your architecture might be different from GP or an ASIC here.

Speaker Change: and it's just a CV-3 opportunity, I think you've maybe talked about a thousand dollar ASP, something like that, is that the kind of opportunity we're talking about here.

John Young: I'll be discussing non-gap results and after that you refer to today's press release for a detailed reconciliation of gap to non-gap results. For non-gap reporting, we have eliminated stock based compensation expense, along with acquisition related costs, adjusted for the impact of taxes. 15% from the prior quarter and of 3% year over year. Non-gap gross margin for fiscal Q2 was 63.3% slightly above the midpoint of our prior guidance. Non-gap operating expense was $47.7 million, $8 million lower than the midpoint of our prior guidance range of $47.5 to $49.5 million. Driven by continued expense management and the timing of spending between quarters,

Speaker Change: Yeah, for vision language model, we demo our first lava model at the CES this year with a chip code 11.

Speaker Change: which is a derivative of a CV-3 family child. So it's our third generation inference engine and we run the lava model which is a VGN language model on the own one as CES.

John Young: Capital expenditures for tangible and intangible assets were $2.6 million. We had two logistics companies representing 10% or more of our revenue in Q2. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 63% of revenue for the second quarter, while Hakuto, a distributor in Japan, was 10% of revenue for the quarter.

Speaker Change: and since we give a demo, I think we attract a lot of customer interests. Most of us are interested in using a vision language model to hook up with multiple camera and describe whether camera sees real time. So you can imagine that this is a very important for our existing customer, both for

Speaker Change: Enterprise IoT as well.

Speaker Change: and maybe even for automotive. So this is a feature that we've been talking about for three quarters.

John Young: Driven by continued expense management and the timing of spending between quarters, we remain on track to our internal product development milestones. Q2 net interest and other income was $2.1 million. Q2 non-gap tax provision was approximately $299,000. We reported a non-gap net loss of $5.5 million or a $13.00 loss for delivered fair.

Speaker Change: The VOM, Ron Young Camera to provide real-time feedback, which I think is unique offering that the Emperor can do.

Speaker Change: Great. Thank you for that for me. And then secondly, as I kind of look at your guidance for October, which was...

John Young: We expect fiscal Q3 non-GAAP gross margin to be in the range of 62.5% to 64%. We expect non-GAAP OpEx in the third quarter to be in the range of $49 million to $51 million with the increase compared to Q2 driven by increased headcount and project-related engineering expenses. We estimate net interest income to be approximately $1.8 million. Our non-GAAP tax expense to be approximately $500,000 and our diluted share count to be approximately 41.7 million fully diluted shares. Thank you for joining our call today. And with that I will turn the call over to the operator for questions.

Speaker Change: Jerry Strong, and then reconcile it with the full year guidance that you gave.

Speaker Change: It implies maybe a significantly weaker Q4 than traditional seasonality.

Speaker Change: I at least are the way we track it would suggest. I guess maybe you could just talk about maybe the moving parts here in the January, you know what, how you view traditional seasonality for the fourth quarter.

John Young: Now I'll turn to our balance sheet and statement of cash points, fiscal Q2 cash and marketable securities increased $16.5 million from the prior quarter to $219.8 million. Receivables days sales outstanding decreased from 47 days in the prior quarter to 33 days and days of inventory decreased from 123 to 108 days. Inventory dollars increased 8% sequentially and decreased 12% from a year ago. We generated positive operating cash flow of $16.7 million for the quarter. Capital expenditures for tangible and intangible assets were $2.6 million. We had two logistics companies representing 10% more of our revenue in Q2, WT microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 63% of revenue for the second quarter, while Hakuuto, a distributor in Japan, was 10% of revenue for the quarter.

Speaker Change: You know, the expectation for January, the implied expectation, thank you.

John Young: Thank you for joining our call today. And with that I will turn the call over to the operator for questions.

Thank you for joining our call today, and with that I will turn the call over to the operator for questions.

Speaker Change: Yeah, thank you. So, you know, when we do the calculation, I believe the current guidance reaching Q3 and the whole year reflects a very normal, seasonality for Q4.

Operator: Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Christopher Rolland with Susquehanna. Your line is open.

Speaker Change: When we look at no more synonymity in the last 10 years, is anywhere between 7% to 10% negative, right? So if you take that calculation, I will find that on me point is probably in the range of no more synonymity.

Our first question comes from the line of Christopher Rolland with the South Guihana. The line is open.

Speaker Change: So I think that we expect, we go back to normal sustainability because the inventory correction is done with us, we're ramping our products and so that we believe that the balance is reasonable.

Christopher Adam Jackson Rolland: Hey, guys. Thanks so much for the question here. I guess my first one is you referenced vision language models. Is this a new opportunity or an opportunity that you've been addressing for some time here? And how your architecture might be different from GPU or an ASIC here. And is this a CV3 opportunity. I think you've maybe talked about a $1,000 ASP something like that. Is that the kind of opportunity we're talking about here?

John Young: We had two logistics companies representing 10% more of our revenue in Q2, WT microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 63% of revenue for the second quarter, while Hakuuto, a distributor in Japan, was 10% of revenue for the quarter.

Speaker Change: Thank you for me.

Speaker Change: Thank you.

Speaker Change: Please stand by for our next question.

Speaker Change: Our next question comes from the line of Joe Moore with Morgan Stanley, your line is open.

Joe Moore: Great, thank you. I wanted you to talk about the outlook for the quarter you talked about being driven by new products.

Joe Moore: is that kind of content increases, because you're migrating people to CV5, are there new and markets or applications just kind of wonder what's driving the strength in the coming quarter.

Speaker Change: So in fact, that's probably the new quote that we can look at from two different perspective, one is a market, right? And the driver...

John Young: I'll now discuss the outlook for the third quarter of fiscal year 2025. As Fermi described, company-specific factors, in particular, our new product ramps are providing us with improved visibility into the second half of fiscal 2025. For fiscal Q3, we estimate our total revenue will be in the range of $77 million to $81 million with sequential growth in both IoT and Auto. We expect fiscal Q3 non-GAAP gross margin to be in the range of 62.5% to 64%. We expect non-GAAP OpEx in the third quarter to be in the range of $49 million to $51 million with the increase compared to Q2 driven by increased headcount and project-related engineering expenses. We estimate net interest income to be approximately $1.8 million. Our non-GAAP tax expense to be approximately $500,000 and our diluted share count to be approximately 41.7 million fully diluted shares. Thank you for joining our call today. And with that I will turn the call over to the operator for questions.

Speaker Change: We see both automotive IOT has new product been introduced by our customer

Speaker Change: on the LT side and the LT Enterprise.

Speaker Change: as well as the other IoT products.

Speaker Change: We have a customer introduced new product with much higher ASP and NB4, so that's definitely on IoT side.

Speaker Change: I don't know automotive side, both since Sarah and the Rivian are renting up with CV-5 in this quarter. So I think that's just show you on the market side. But if you look at it on the product side, really is the CV-5 ramping up.

Speaker Change: for the main reason for us to have the growth, but also CME 22 go back to the normal growth rates after the inventory correction helps the growth too. So those two two reasons are the fun to exercise.

John Young: We expect non-gap OPEX in the third quarter to be in the range of $49 to $51 million, with the increase compared to Q2 driven by increased headcount and project-related engineering expenses. We estimate net interest income to be approximately $1.8 million, our non-gap tax expense to be approximately $500,000, and our diluted share count to be approximately $41.7 million fully diluted shares. Thank you for joining our call today, and with that I will turn the call over to the operator for questions.

Speaker Change: Great, that's very helpful, thank you. And then separately, you know, the announcement you had those leap motors.

Speaker Change: A quarter ago, can you just talk to, you know, is that leading to additional conversations in the Chinese EV market? And just, you know, I know you're not ready to make an announcement there, but just, you know, how are you seeing the potential to increase traction with other OEM in China?

Speaker Change: Yeah, I think that definitely was any design when it helps all momentum and I think like I said before, Chinese market is going to be considered drive the innovation technology, so we continue to talk to.

Speaker Change: Multiple OEMs and Tier 1s in China for CV-3. So I think that's important for us, and we're going to continue driving that. But at some time, you know, for getting some European U.S. customer design wins, it's also...

Operator: 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, as a reminder to ask the question, please press star 1-1 on your telephone, and then wait to hear your name announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

And the expectation for January, the implied expectation. Thank you.

Fermi Wang: Yes, thank you. So when we do the calculation, I believe, the current guidance between Q3 and the whole year reflects a very normal seasonality for Q4. When we look at normal seasonality in the last ten years is anywhere between 7% to 10% negative, right. So if you take that calculation, I will find that our midpoint is probably in a range of normal seasonality. So I think that we expect we go back to normal seasonality because the inventory correction is done with us. We're ramping our products. And so that we believe that the guidance is reasonable.

Christopher Adam Jackson Rolland: Thank you, Fermi.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Joe Moore with Morgan Stanley. Your line is open.

Speaker Change: Y'all are in toastings.

Speaker Change: Yes, thank you and convert little correlations on the strong results here. So for me, I just wanted to paint a little bit of a picture and maybe you can help me out here. So obviously, you know, CV-2, CV-22 has been doing well, you know, the Holy Grail is CV-2 and 1. CV-5 obviously now really ramping. What about CV-75 and CV-72? Are those going to ramp quite meaningfully to production next year or are those also more 26?

Our next question comes from the line of Joe Moore with Morgan Stanley. Yolanda's open.

Joe Moore: Great. Thank you. I wonder if you could talk about the outlook. For the quarter, you talked about being driven by new products. Is that kind of content increases because you're migrating people to CV5? Are there new end markets or applications? Just kind of want to understand what's driving the strength in the coming quarter.

John Young: and John Young.

Christopher Rolland: Our first question comes from the line of Christopher Rolland with the South Guihana. The line is open. Hey guys, thanks so much for the question here. I guess my first one is you reference vision language models. Is this a new opportunity or an opportunity that you've been addressing for some time here? And how your architecture might be different from GPU or an ASIC here? And is this a CV-3 opportunity? I think you've maybe talked about a $1,000 ASP, something like that. Is that the kind of opportunity we're talking about here?

Speaker Change: I'll be back with you.

Speaker Change: Please stand by. Yes, please stand by.

Speaker Change: Young.

John Young: and John Young.

John Young: [inaudible]

John Young: Ladies and gentlemen, please stand by your conference call where we zone momentarily. Please stand by.

John Young: [inaudible]

So I think that's just show you the on the on the on the market side. But if you look at on the product side, really is CV5 ramping up for the is a main reason for us to have the growth. But also CV22 go back to the normal growth rate after inventory correction helps the growth too. So those two two reason are the from the product side.

John Young: and John Young, John Young, John Young, John Young,

John Young: and John Young, John Young.

Speaker Change: He was talking to me on cue. It's all about cue for life. You're connected. Our next question comes from the line of Tory Sender. Your line is open.

Speaker Change: Yes, thank you and you're welcome. Yes, thank you.

Joe Moore: Great. That's very helpful. Thank you. And then separately the announcement you had of Leapmotor's a quarter ago. Can you just talk to you know is that leading to additional conversations in the China EV market? And just I know you're not ready to make any announcements there, but just how are you seeing the potential to increase traction with other OEMs in China?

Tory Sender: Thank you, congrats on the strong results for our guys.

And then separately, you know, the announcement you had the leap motors a quarter ago. Can you just talk to, you know, is that leading to additional conversations in the Chinese EV market? And just, you know, I know you're not ready to make an announcement there. But just, you know, how are you seeing the potential to increase traction with other OEMs in China?

Tory Sender: So, first of all, I was hoping you could just help me out a little bit with some of the products cycle here, right? Because obviously CB2, CB2 and CB2 have been doing well, you're now around being CB5. Everyone's waiting for CB3 and N1. But in the meantime, we've got CB75 and CB2. So, are we going to see pretty strong ramps from CB75 and CB7 to next year? Or are those also going to be more 2026?

Fermi Wang: Yeah, I think that definitely with any design wing that helps our momentum. And I think, like I said before, Chinese market is going to be continue to drive the innovation technology. So we continue to talk to multiple OEMs and Tier 1s in China for CV3. So I think that's important for us. So we're going to continue to drive that. But at the same time for getting some European US customer design wins is--[inaudible].

Fermi Wang: Yeah. For vision language Model, we demo our first LLaVA model at the CES this year with a chip called N1 which is a derivative of a CV3 family chain. So it's our third-generation inference engine and we run the LLaVA model, which is a vision language model, on N1 at CES. And since we give a demo, I think we attract a lot of customer interest. Most of us are interested in using a vision language model to hook up with multiple camera and describe what the camera sees real time. So you can imagine that this is a very important for our existing customers, both for enterprise IoT as well as maybe even for automotive. So this is a feature that we've been talking about for three quarters. But I think recently, we believe we can even using CV72 to run a smaller model to enable the VRM running on camera to provide real-time feedback which I think is a unique offering that Ambarella can do.

Speaker Change: Yes, thank you, first of all, sorry for the interruption. From the product point of view, I think CV5 will continue to be strong next year. We believe that the CV5 ramping up this year will continue next year.

Speaker Change: and CV72, we expect to start ramping up the end of this year and you will start seeing CV72 products.

Speaker Change: Shipping in the Enterprise, in the IoT Enterprise, next year you're ramping up.

Speaker Change: and you will start in fact that that's interesting because most of our customers when they design CV72 products.

Fermi Wong: So you can imagine that this is a very important for our existing customer, both for enterprise IoT as well as maybe even for automotive. So this is a feature that we've been talking about for three quarters. But I think recently we believe we can even using CV-72 to run a smaller model to enable the VRM running on camera to provide real time feedback, which I think is a unique offering that I'm working to.

Speaker Change: The Plan for the Traditional CNN Type on Neon Network, but we believe that in the latest stage, after they shipped the CV-72 camera, they can use the software upgrade to upgrade.

Speaker Change: New York, more events, the New York National Model like Clip or Vision Language Model to CV-72. So, we expect that the CV-72 at the beginning is really serving out traditional.

Speaker Change: IOT Enterprise site, but you will enable the application in a second-hand next year. And we'll expect this is a lifecycle of this product will be three, four years just like before. And also we have CV-75, that will run Bob as a mid-end or low-end product for the CV-7 family. So that is a ramping obstetrician.

Christopher Adam Jackson Rolland: Great. Thank you for that, Fermi. And then secondly as I kind of look at your guidance for October, which was very strong, and then reconcile it with the full year guidance that you gave. It implies maybe a significantly weaker Q4 than traditional seasonality at least the way we track it would suggest. I guess maybe you could just talk about maybe the moving parts here into January you know what--how you view traditional seasonality for the fourth quarter and the expectation for January the implied expectation? Thank you.

Yes, thank you and congratulations on the strong results here. So for me, I just wanted to paint a little bit of a picture and maybe you can help me out here. So I mean, obviously, you know, CV2, CV22 has been doing well, you know, the Holy Grail is CV3N1, CV5 obviously now really ramping. What about CV75 and CV72? Are those going to ramp quite meaningfully to production next year, or are those also more 2020?

Speaker Change: White, and so just to put that in the perspective of my pricing perspective, I've obviously used to thank a lot of the growth right now is being tuned by new products for higher ASTs. So when we especially look at C.E.72, that would still be a higher AST product than C.E. White, right?

Fermi Wong: And the expectation for January, the implied expectation. Thank you. Yeah, thank you. So, you know, when we do the calculation, I believe the current guidance between Q3 and the whole year reflects a very normal seasonality if you kill four. When we look at normal seasonality in the last 10 years, is anywhere between 7 to 10% negative, right? So if you take that calculation, I will find that our viewpoint is probably in the in the in the range of normal seasonality. So I think that we expect, we go back to normal seasonality because the inventory correction is done with us while ramping our products. And so that, you know, we believe that the guidance is reasonable.

Speaker Change: No, in fact, CV 72 is your compare that to CV 22.

Speaker Change: Cv5 is a high-end Cv2 family.

Speaker Change: So, Cv72 is really coming, you should treat that as a replacement of Cv22 family, which Cv22 family has been five year old, and we need to refresh the cycle. So, Cv72, I was saying, is a significant ASP John for Cv22 family, and Cv5 is continued to be a high end of the market.

Tori: and Tori just at some perspective, you know, our blended ASP today for SOC's is around 12 to 13. And all of these new products that Fermi was talking about, CB5, CB7 family, and then of course, CB3. They would all bring our blended ASP higher as they ramp.

Please stand by. Yes, please stand by. Ladies and gentlemen, please stand by. Your conference call will resume momentarily. Please stand by. Thank you. You're connected.

Operator: Please stand by.--Yes, please stand by. Ladies and gentlemen, please stand by. Your conference call will resume momentarily. Please stand by.--Thank you, you're connected. Our next question comes from the line of Tore Svanberg. Your line is open.

Yes, please stand by. Ladies and gentlemen, please stand by. Your conference call will resume momentarily. Please stand by. Thank you. You're connected.

Christopher Adam Jackson Rolland: Thank you, Fermi. Thank you.

Speaker Change: That's great, great color, thank you so much.

Operator: Please stand by for our next question. Our next question comes from the line of Joe Moore with Morgan Stanley. Yolanda's open.

Speaker Change: Thank you. Please stay by for our next question.

Our next question comes from the line of Tore Svanberg. Your line is open.

Joe Moore: Our next question comes from the line of Joe Moore with Morgan Stanley. Yolanda's open. Great. Thank you. I wonder if you could talk about the outlook for the quarter you talked about being driven by new products. Is that kind of content increases because you're migrating people to CV5? Are there new end markets or applications just kind of one or one understand what's driving the strengthen in the coming quarter? Right.

Tore Egil Svanberg: Yes, thank you, and congrats on the strong results, guys. So, Fermi, I was hoping you could just help me out a little bit with some of the product cycles here, right, because obviously CV2, CV22 been doing well. You're now ramping CV5. Everyone's waiting for CV3 and CV1. But in the meantime, we got CV75 and CV72. So, are we going to see pretty strong ramps from CV75 and CV72 next year or are those also going to be more 2026?

Speaker Change: Our next question comes from the line of Rossimo with Dr. Brian Gillian himself.

Speaker Change: Hi guys, here you're real, okay? Yes.

Speaker Change: Street.

Speaker Change: So, first congratulations on the strong report in guide. I know you talked about how this is new product driven, and I understand that methodology, but you also said that the inventory burn is done. So, are we getting to the point where you're not burning inventory, and so a big part of the step-up?

So are we going to see pretty strong ramps from CV75 and CV72 next year, or are those also going to be more 2026?

Fermi Wang: Right. So, in fact, let's talk about that new quarter. There are two. We can look at it from two different perspectives. One is market, right. And the driver--we see both automotive IoT has new product being introduced by our customer. On the IoT side. In the IoT enterprise as well as the other IoT products, we have customers introduced new products with much higher ASP than before. So that's definitely on IoT side. On the automotive side, both Samsara and the Rivian are ramping up with CV5 in this quarter. So I think that's to show you the--on the market side. But if you look at on the product side, really, is CV5 ramping up for them is the major reason for us to have the growth, but also CV22, go back to the normal growth rate after inventory correction helps growth too. So those two reasons are from the product side.

Speaker Change: Sequentially is that into the third quarter and then from there to new products and normal seasonality of life. I'm just trying to figure out the new products side versus your comments that there's no longer an inventory burn either.

Fermi Wang: Yes. Thank you. First of all, sorry for the interruption. From the product point of view, I think, CV5 will continue to be strong next year. We believe that the CV5 ramping up this year will continue next year. And CV72, we expect to start ramping up at the end of this year and you will start seeing CV72 product shipping in the enterprise, in the IoT enterprise next year ramping up. And it will start, in fact, that's interesting, because most of our customers, when they design CV72 product, they plan for the traditional CNN type of neural network. But we believe that in later stage, after they ship the CV72 camera, they can use a software upgrade to upgrade neural more advanced neural network model like CLIP or Vision Language Model to CV72. So we expect that the CV72 at the beginning is really serving our traditional IoT enterprise site, but it will enable new applications in the second half next year. And we expect the lifecycle of this product will be three, four years, just like before. And also we have CV75 that will ramp up as a mid and low-end product for the CV7 family. So that is the ramping up situation.

Speaker Change: Yes, so first of all, we believe our inventory in burn is down in Q2, maybe a little bit Q3, but not much because when we talk to a customer, most of the big customers, we told us they are down with the inventory correction also

Speaker Change: So, we are and also when we do cat.

Holden: The Holden.

Holden: with the very stable lead tying with the funder funder, and we watch how our customer give us PO and booking.

Fermi Wong: So I think that's just show you the on the on the on the market side. But if you look at on the product side, really is CV5 ramping up for the is a main reason for us to have the growth. But also CV22 go back to the normal growth rate after inventory correction helps the growth too. So those two two reason are the from the product side. Great. That's very helpful. Thank you.

Holden: They are booking in a regular speed and they are not building up new inventory. So from that point of view I think inventory correction is done with for us.

Holden: and also when you look at the review growth compared to before.

Holden: and the most of them is contributed by the CVVI family as well as the CV22 coming back from the inventor correction, go back to normal growth and those two things are the main reason we're seeing the growth this time.

Fermi Wong: And then separately, you know, the announcement you had the leap motors a quarter ago. Can you just talk to, you know, is that leading to additional conversations in the Chinese EV market? And just, you know, I know you're not ready to make an announcement there. But just, you know, how are you seeing the potential to increase traction with other OEMs in China? Yeah, I think that definitely with any design wing that helps our momentum.

Speaker Change: Thanks for my guess is my follow up, you know, it's helpful you gave it a full-year commentary. I was just thinking it's...

Speaker Change: Some of the stuff you answered with Tory with the new products and the timing of when they're coming in, etc. If we just put that into an end market perspective to simplify it a little bit.

So that is the ramping up situation.

So just to put that in the perspective of my pricing perspective, obviously you said that a lot of the growth right now is being driven by new products with higher ASPs. So when we especially look at TV72 that would still be a higher ASP product than the CV5, right? No, if I see CV72, you'll compare that to CV22. CV5 is a high and a CV2 family.

Tore Egil Svanberg: Right. And so just to put that into perspective from a pricing perspective, right, because obviously you said that a lot of the growth right now is being driven by new products for higher ASPs. So when we especially look at CV72, that would still be a higher ASP product than CV5, right?

Speaker Change: How would you think the put sensation, the growth rate of IoT versus automotive would be for next year?

Fermi Wong: And I think, like I said before, Chinese market is going to be continue drive the innovation technology. So we continue to talk to multiple OEMs and tier ones in China for CV3. So I think that's important for us. So we're going to continue drive that. But at the same time, you know, for getting some European US customer design wins is also.

Speaker Change: is a very large stair steps as new customer ramps begin, just how should we think about the relative growth rates and kind of linearity of them?

Fermi Wang: No, if I see CV72, you'll compare that to CV22. CV5 is a high and a CV2 family. So CV72 is really coming to.., replacement of CV22 family, which CV22 family has been five years old, and we need to refresh the cycle. So CV72, I would say, is, you know, significant ASP John for CV22 family and CV5 come here to be a high end of the market. Yeah, and Tore, just to add some perspective, you know, our blended ASP today for SSCs is around 12 to 13, and all of these new products that Fermi was talking about, CV5, CV7 family, and then of course CV3, they would all bring our blended ASP higher as they ramp.

Fermi Wang: No, in fact, CV72, you should compare that to CV22. CV5 is a high-end CV2 family. So CV72 is really coming. You should treat that as a replacement of CV22 family, which CV22 family has been five-year old and we need to refresh the cycle. So CV72, I would say, is a significant ASP jump for CV22 family. And CV5 continue to be a high-end of the market.

Speaker Change: Right, so maybe in a very short term in Q3, we think that automotive IOT or grow in a similar rate. We, because I think both sides has a new product ramping up.

Speaker Change: For next year, although we haven't given any official guidance, I personally believe that the IOT has a better growth than the automotive, just because the CV72 is the IOT device and we believe that it will contribute more. But I do hope that after that...

Operator: Our next question comes from the line of Tore Svanberg. Your line is open.

John Young: Yeah. And Tore just to add some perspective. Our blended ASP today for SoCs is around 12 to 13. And all of these new products that Fermi was talking about CV5, CV7 family, and then, of course, CV3, they would all bring our blended ASP higher as they ramp.

Tore Egil Svanberg: Yes. Thank you and congratulations on the strong results here. So, Fermi, I just wanted to paint a little bit of a picture and maybe if you can help me out here. So, I mean, obviously, CV2, CV22 has been doing well. You know, the Holy Grail is CV3 and CV1. CV5, obviously now really ramping. What about CV75 and CV72? Are those going to ramp quite meaningfully into production next year or are those also more 2026?

Operator: Yes, thank you and congratulations on the strong results here. So for me, I just wanted to paint a little bit of a picture and maybe you can help me out here. So I mean, obviously, you know, CV2, CV22 has been doing well, you know, the Holy Grail is CV3N1, CV5 obviously now really ramping. What about CV75 and CV72? Are those going to ramp quite meaningfully to production next year, or are those also more 2020? Please stand by. Yes, please stand by. Ladies and gentlemen, please stand by. Your conference call will resume momentarily. Please stand by. Thank you. You're connected.

Speaker Change: CB3 family will kick in and start helping our growth rate at the automotive.

Speaker Change: Thank you.

Speaker Change: Thank you, please stand by for our next question.

Speaker Change: [inaudible]

Speaker Change: Our next question comes from the line of Kevin Cassidy with Rosenblatt, your line is open.

Our next question comes from the line of Ross Seymour with Detroit, Galen, it's open.

Kevin Cassidy: Yes, thanks for taking my question and...

Speaker Change: You know, clearly you're in a very strong product cycle, you've had quite a few in the past. Maybe for me to give us a comparison, you know, what this product cycle like were different than past product cycles is there.

Hi guys, do you hear me okay? Yes. Great.

Ross Seymore: Hi guys, can you hear me okay?

Yes. Great.

Fermi Wang: Yes.

Ross Seymore: Great. So, first, congratulations on the strong report and guide. I know you talked about how this is new product-driven and I understand that methodology, but you also said that the inventory burn is done. So are we getting to the point where you're not burning inventory? And so a big part of the step-up sequentially is that into the third quarter, and then from there, new products and normal seasonality applies. I'm just trying to figure out the new product side versus your comments that there's no longer an inventory burn either.

Speaker Change: The customer is maybe sticking this, the longer term, product cycle, software defending your product, just anything you can compare it to past cycles.

Speaker Change: I think, you know, while you get this product cycle, there are two things that our customer offering is which is really important for us.

Tore Svanberg: Our next question comes from the line of Tore Svanberg. Your line is open. Yes, thank you and thank you. Thank you. Congrats on the strong results, guys. So for me, I was hoping you could just help me out a little bit with, you know, some of the products cycle here, right? Because obviously CV22 has been doing well. You're now ramping CV5. Everyone's waiting for CV3N1, but in the meantime, we got CV75 and CV72.

Speaker Change: White is AI performance. As you can see, that CV5, one of the reasons using CV5 is that AI performance. And what's seen, our customer using AI to improve video quality.

Speaker Change: and also using AI to add more AI functions, for example, to object detection, to help the video editing or security camera guys using events network. So AI performance just like what we predict, the performance requirement getting higher than higher, I think.

Speaker Change: is thinking for us because...

Speaker Change: [inaudible] Inc.

Speaker Change: that for all the cameras that Paul consumption continue to be important. So we are unique offering is income, continue to offer higher AI performance, without increase too much of the Paul consumption. And that's going to continue to be the all differentiation. So I also, like I said, if we...

Fermi Wong: So are we going to see pretty strong ramps from CV75 and CV72 next year, or are those also going to be more 2026? Yes, thank you. First of all, sorry for the interruption. From the product point of view, I think CV5 will continue to be strong next year. We believe that the CV5 ramping up this year will continue next year. And CV72, we expect to start ramping up the end of this year, and you will start seeing CV72 product shipping in the enterprise, in the IoT enterprise next year, ramping up.

Speaker Change: We believe that AF performance requirements will continue to go up. If that's the case, I think this time it will help us to have a sticky customer base.

Speaker Change: OK, great. And you know, just another in your 10% customers, the testimony wasn't mentioned so we imply that that means consumer is getting to be less percentage of your overall revenue and it's going to be the trend going forward.

Speaker Change: Right, in the last few quarters we talked about one of the weakness in the market size, our IOT home. We used to call the consumer, the consumer IP can, but it's really just the security camera using the home application. That's the chickenies.

Do you expect one to grow significantly faster than the other? Is IoT going to be largely seasonal from here with some new product kickers and automotive is the one that has very large stair steps, the new customer rants begin? Just how should we think about the relative growth rates and kind of linearity of them?

Fermi Wong: And you will start, in fact, that's interesting because most of our customers when they design CV72 product, they plan for the traditional CNN type of neural network. But we believe that in the later stage, they after they ship the CV72 camera, they can use a software upgrade to upgrade newer, more events, the neural network model like clip or region language model to CV72. So we expect that the CV72 at the beginning is really serving our traditional IoT enterprise side, but you will enable new locations in the second half next year, and we expect this is a life cycle of this product will be three, four years just like before. And also we have CV75 that will ramp up as a medium or low end product for the CV7 family. So that is the ramping up situation.

Speaker Change: Majority Security Design was in that category. That's why they are not 10% this time. And the continues, although we continue to have design wings in the security home.

Fermi Wang: Right. So maybe in a very short term in Q3, we think that automotive IoT will grow in a similar rate because I think both sides has a new product ramping up. For next year, although we haven't given any official guidance, I personally believe that the IoT has a better growth than automotive just because CV72 is an IoT device and we believe that it will contribute more. But I do hope that after that CV3 family will kick in and start helping our growth rate at automotive.

Speaker Change: I think that the course right there is much slower than I am.

Speaker Change: Price as well as other IoT or automotive.

Speaker Change: OK, congratulations again on Great Results.

Speaker Change: Thank you.

Speaker Change: Well, you same bye for our next question.

Speaker Change: I'd like to ask you a question from the line of Matt Ramsey with T.D. Cole, your line is open.

Speaker Change: Hey guys, affectionately Sean O'Wackland on here for Matt.

Sean O'Wackland: and I'll echo the congratulations of others on the really positive guidance here.

Our next question comes from the line of cabin Cassidy with Rosenblatt. Your line is open.

Speaker Change #101: I wanted to dig in actually on the more traditional video processors side of the business. I know that we saw a pretty significant decline in fiscal year 2024. I think at the time it was categorized as something like 80 million.

Kevin Cassidy: Yes, thanks for taking my question. And, clearly, you're in a very strong product cycle. You've had quite a few in the past. Can maybe Fermi give us a comparison? What's this product cycle like were different than past product cycles? Is there the customers maybe stickiness, the longer-term product cycle, software defending your product, just anything you can compare it to past cycles?

Fermi Wong: So that is the ramping up situation. So just to put that in the perspective of my pricing perspective, obviously you said that a lot of the growth right now is being driven by new products with higher ASPs. So when we especially look at TV72 that would still be a higher ASP product than the CV5, right? No, if I see CV72, you'll compare that to CV22. CV5 is a high and a CV2 family.

Speaker Change #101: or so that the client is from the traditional legacy video processing.

Is there the customers maybe stickiness, the longer term product cycle, software defending your product, just anything you can compare it to past cycles.

Speaker Change #102: Should we sort of think about that as a potential, another potential lever going forward or is the industry sort of moved on from that product?

Fermi Wang: I think, when I look at this product cycle, there are two things that our customer offering is, which is really important for us. One is AI performance. As you can see that CV5, one of the reasons using CV5 is that AI performance. And we're seeing our customer using AI to improve video quality and also using AI to add more AI functions, for example, to do object detection, to help the video editing or security camera guys using advanced networks. So AI performance just like what we predict the performance requirement getting higher and higher. I think it's sticky for us because when you increase your AI performance, therefore, all the cameras that power consumption continue to be important. So we are the--our unique offering is continue to offer higher AI performance without increase too much of the power consumption. And that's going to continue be the--our differentiation. So like I said, if we believe that AI performance requirement will continue to go up, if that's the case, I think, this time, it will help us to have a sticky customer base.

Fermi Wong: So CV72 is really coming to.., replacement of CV22 family, which CV22 family has been five years old, and we need to refresh the cycle. So CV72, I would say, is, you know, significant ASP John for CV22 family and CV5 come here to be a high end of the market. Yeah, and Tore, just to add some perspective, you know, our blended ASP today for SSCs is around 12 to 13, and all of these new products that Fermi was talking about, CV5, CV7 family, and then of course CV3, they would all bring our blended ASP higher as they ramp.

Speaker Change #103: Segment into much more of the CV-22 and beyond family that you've spent a lot of the call talking about.

Speaker Change #103: Right, so first of all, I think...

Speaker Change #104: The market definitely moved more towards the AI, but also, in Berlin, I made a very clear decision, several years ago that we want to pull all our limited resources on the AI growth.

Speaker Change #105: So we haven't talked about any video processor in the last few years.

Speaker Change #105: So I think that's also an important factor. So we don't believe.

Speaker Change #106: The Gramm New or Union Number Sales

Speaker Change #106: of a video processor, well, increase in the future, but the decline rate was significantly slower than before. So, I think that when the video processor decline in a much slower rate and our AI start a generating more revenue and that trend will help us to start showing up even the unique growth for the company as well as for the revenue.

Tore Egil Svanberg: That's great, good color. Thank you so much.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Ross Seymore with Deutsche Bank. Your line is open.

Ross Seymour: Please invite for our next question. Our next question comes from the line of Ross Seymour with Detroit, Galen, it's open.

Speaker Change #106: Yeah, that's crystal clear and then on those new products, we talked a little bit about higher ASPs but I was wondering, maybe John could speak to.

Ross Seymour: Our next question comes from the line of Ross Seymour with Detroit, Galen, it's open. Hi guys, do you hear me okay? Yes. Great.

John Young: The Margin profile of those new products, you know, considering that there are more advanced geometries and, you know, potential way for pricing increases at foundering stuff like that. Thanks, and that's again.

Kevin Cassidy: Okay. Great. And just another, in your 10% customers, Chicony wasn't mentioned. Should we imply that that means consumer is getting to be less percentage of your overall revenue. And is that going to be the trend going forward?

Fermi Wong: So first congratulations on the strong report and guide. I know you talked about how this is new product driven, and I understand that methodology, but you also said that the inventory burn is done. So are we getting to the point where you're not burning inventory and so a big part of the step up sequentially is that into the third quarter, and then from there, new products and normal seasonality apply. Just trying to figure out the new product side versus your comments that there's no longer an inventory burn either.

John Young: So, you know, at a high level, we don't anticipate the margin profile that we go to.

Fermi Wang: Right, in the last few quarters, we talk about one of the weaknesses in the market size, our IoT home. We used to call it consumer IP cam, but it's really just the security camera using the home application. That majority of Chicony design was in that category. That's why they are not 10% this time and continues. Although we continue to have design wings in the security home, home security, sorry, IoT home category. But I think that the gross rate there is much slower than the price as well as other IoT or automotive.

John Young: Smaller and smaller process nodes that the margin profiles will change significantly from what we've seen over the last several process nodes. As we've said previously, our long term.

And the chicken is majority chicken design with in that category. That's why they are not 10% this time. And the continues, we, although we continue to have design wings in security home, home security, sorry, IoT home category. But I think that the course rate there is much slower than on. Price as well as other IOT or automotive.

Kevin Cassidy: Okay. Congratulations again on great results.

Fermi Wang: Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of Matt Ramsay with TD Cowen. Your line is open.

John Young: Gross margin range is 59 to 62 percent, and we expect to get into that long-term range as automotive becomes a larger portion of it, but that's more just kind of markets.

Fermi Wang: Yes. So, first of all, we believe our inventory burn is done in Q2, maybe a little bit in Q3, but not much, because when we talk to a customer, most of the big customers already told us, they are done with inventory correction also. So we are--and also when we look at how the--with a very stable lead time with the--from the foundry and we watch how our customer give us PEO and booking. We believe they are booking in a regular speed and they are not building up new inventory. So from that point of view, I think, inventory correction is done for us. And also when we look at the new, the revenue growth compared to before, and most of them is contributed by the CV5 family as well as the CV22 coming back from the inventory correction go back to normal growth. And those two things are the main reason we're seeing the growth this time.

John Young: Commercial Terms, then I would say any kind of foundry issue.

Speaker Change #107: Thanks a lot, and you're out to go.

Our next question comes from the line of Matt Ramsey with TV Cohen. Your line is open.

Speaker Change #108: Thank you. Thank you.

Speaker Change #109: Please stay by for our next question.

Matthew D. Ramsay: Hey, guys. It's actually Sean [inaudible] on here for Matt. And I'll echo the congratulations of others on the really positive guidance here. I wanted to dig in actually on the more traditional video processor side of the business. I know that we saw a pretty significant decline in fiscal year 2024. I think at the time it was categorized as something like $80 million or so of that decline from the traditional legacy video processing. Should we sort of think about that as a potential another potential lever going forward or is the industry sort of moved on from that product segment into much more of the CV22 and beyond family that you've spent a lot of the call talking about?

Speaker Change #109: I'm an expert in consulting the line of surgery to fill with rough capital, your line is open. Hi, Fermi, hi John. Congrats on the progress here. I just want to clarify and the growth you had in...

Speaker Change #110: The Second Quarter I think it was mostly IOT, please correct that if it's wrong and if it is, which applications?

Speaker Change #111: Kind of came back or did inventory burn and ordering resume and in the IoT segment to help the physical second quarter.

Speaker Change #112: Right, so for the second quarter, you are right, the IOT gross raise a lot higher than the automotive.

Should we sort of think about that as a potential, another potential lever going forward or is the industry sort of moved on from that product segment into much more of the CV 22 and beyond family that you've spent a lot of time.

Fermi Wong: So from that point of view, I think inventory correction is down with us and also when we look at the new the remedial growth compared to before and and most of them is contributed by the CV by my family, as well as the CV 22 coming back from the inventory correction, go back to normal growth and those two thing are the main reason we're seeing the growth this time.

Speaker Change #113: and then the main.

Speaker Change #113: The area growth is really a IoT enterprise.

Speaker Change #113: as well as other IoT category.

Speaker Change #113: and you can see that the IoT Enterprise is really destabilized even to quickly and go back to close mode. Go back to the, you know, they clean up the inventory and go back to regular ordering patent. And also the other IoT side that, you know, few customers taking our CVFi into production at that house.

Fermi Wang: Right. So, first of all, I think the market definitely moved more towards AI. But also Ambarella made a very clear decision several years ago that we want to pour all our limited resources on the AI growth. So we haven't taped out any video processors in the last few years. So I think that's also important factor. So we don't believe the revenue or unit number sales of a video processor will increase in the future. But the decline rate was significantly slower than before. So I think that when the video processor decline in a much slower rate and our AI starts generating more revenue and that trend will help us to start showing up even the unit growth for the company as well as for the revenue.

Ross Seymore: Thanks, Fermi. I guess, as my follow-up, hopefully, you gave the full-year commentary. I was just thinking, some of the stuff you answered with Tore with the new products and the timing of when they're coming in et cetera. If we just put that to an end market perspective, to simplify it a little bit, how would you think the puts and takes on the growth rate of IoT versus automotive would be for next year? Do you expect one to grow significantly faster than the other? Is IoT going to be largely seasonal from here with some new product kickers and automotive is the one that has very large stair steps as new customer ramps begin? Just how should we think about the relative growth rates and kind of linearity of them?

Speaker Change #114: and then flipping over to the auto side you talked about in the CV3 helping ramp maybe in the 25 or maybe potentially counter 26 timeframe. If you have visibility to program ramps there and the timing of when those start to reflect to give a sense.

So we haven't paid about any video processor in the last few years. So I think that's also important factor. So we don't believe the revenue or unit number sales of a video processor will increase in the future, but the decline rate was significantly slower than before. So I think that when the video processor decline much slower rate and our AI start generating more revenue and that trend will help us to start showing up even the unique growth for the company as well as for the revenue.

Speaker Change #115: Roughly, you kind of wear in the 25-time counter 25-time frame. All those would kind of have a growth inflection upward or program abstance starts.

Speaker Change #116: Right, so, you know, we talked about kind of year 26 for CV-3, Rambop. The first one we talked about was the limoter. We have not talked about the models yet, and hopefully that we can provide information in a near future.

Fermi Wong: Do you expect one to grow significantly faster than the other? Is IoT going to be largely seasonal from here with some new product kickers and automotive is the one that has very large stair steps, the new customer rants begin? Just how should we think about the relative growth rates and kind of linearity of them? Right. So maybe a very short term in Q3, we think that automotive IoT will grow in a similar rate because I think that both sides has a new product ramping up.

Matthew D. Ramsay: Yeah, that's crystal clear. And then, on those new products, we talked a little bit about higher ASPs, but I was wondering, maybe John could speak to the margin profile of those new products considering that there are more advanced geometries and potential wafer pricing increases at the foundry and stuff like that. Thanks and congrats again.

And then on those new products, we talked a little bit about higher ASPs, but I was wondering maybe John could speak to the margin profile of those new products, considering that there are more advanced geometries and, you know, potential wafer pricing increases of the founder and stuff like that. Thanks and congrats again.

Speaker Change #117: OK, it's very helpful for me. All right, thanks.

Speaker Change #118: Thank you. As a reminder ladies and gentlemen, that's our one one to ask the question.

Speaker Change #119: Please stand by for our next questions.

Speaker Change #120: I'd like to ask you a question from the line of shot at Mitt Wally with Needleman Company, your line is open.

John Young: Great. Thank you. Yeah, Sean. So, at a high level, we don't anticipate the margin profiles as we go to smaller and smaller process nodes that the margin profiles will change significantly from what we've seen over this last several process nodes. You know, as we've said previously, our long-term gross margin range is 59% to 62%. And we expect to get into that long-term range as automotive becomes a larger portion of it. But that's more just kind of markets and commercial terms than, I would say, any kind of foundry issue.

Speaker Change #121: Hey, this is Shiny Mitt Wally on Brooklyn Bowen.

Speaker Change #122: My first question is on Amber Ellis, passenger OEM when last quarter. Has that provided a halo effect for current passenger OEM engagements? Or more so, has there been a shift in sentiment with a current OEM that Amber Ellis engage with?

Fermi Wong: For next year, although we haven't given any official guidance, I personally believe that the IoT has a better growth than the automotive, just because CV72 is the IoT device and we believe that it will contribute more. But I do hope that after that, CV3 family will kick in and start helping our growth rate at the automotive.

You know, as we've said previously, our long-term growth margin range is 59 to 62% and we expect to get into that long-term range as automotive becomes a larger portion of it. But that's more just kind of markets and commercial terms than I would say any kind of foundry issue.

Speaker Change #123: So first of all, I think any design will help.

Speaker Change #124: So I think that every OEM design wing they consider different, but however in the past, the...

Speaker Change #125: Well, the issue we talk about, we need design, we need to scale and also the hour.

Ross Seymore: Thank you.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Kevin Cassidy with Rosenblatt. Your line is open.

Matthew D. Ramsay: Great. Thanks a lot and congrats again. Thank you.

Matthew D. Ramsay: Great. Thanks a lot and congrats again.

Speaker Change #125: Automotive Experience. So that first design would definitely help. But every who can design will be fighting to against our competitors on different categories.

Sean O'Lachlan: Our next question comes from the line of cabin Cassidy with Rosenblatt. Your line is open. Yes. Thanks for taking my question. And you know, clearly you're in a very strong product cycle. You have quite a few in the past. Can maybe for me give us a comparison. But what's this product cycle like? We're different than past product cycles.

Fermi Wang: Thank you.

Speaker Change #125: on the technology side, pricing side, and also the customer support side. At that, I think the first design we help, but it cannot be deterministic to help us to win a future design.

Our next question comes from the line of Suji DeSilva with Ross Kapital. Yaline is open.

Speaker Change #126: Thanks for that, and my follow-up question is on the China Auto Market. There has been some recent news of aggressive pricing between Chinese OEMs and I was wondering if Amber Ella is seeing any negative impacts from this.

Fermi Wong: Is there the customers maybe stickiness, the longer term product cycle, software defending your product, just anything you can compare it to past cycles. I think you know, while look at this product cycle, there are two things that our customer offering is, which is really important for us. One is AI performance. As you can see, that CV5, one of the reasons using CV5 is that AI performance and what's seeing, our customer using AI to improve video quality and also using AI to add more AI functions for, for example, to do object detection to help the video editing or security camera guys using a advanced network.

Suji De Silva: Hi, Fermi. Hi, John. Congrats on the progress here. I just wanted to clarify the growth you had in the fiscal second quarter. I think it was mostly IoT. Please correct that if it's wrong. And if it is which applications kind of came back or did inventory burn and ordering resume in the IoT segment to help with the fiscal second quarter?

Speaker Change #127: Well, um...

Speaker Change #128: You are absolutely right, the pricing pressure in China markets.

Speaker Change #129: and we continue to see our current design. We've been fighting the last quarters we have announced.

Speaker Change #130: Multiple Chinese OEM, T1 design wins for different type of products like ADAS, Recorders, E-Mero's, you know, monitors. So we do see the pricing pressures, but however, also...

John Young: You know, if you look at the autotool, gross margin that John just talked about, I think, yes, there's always pressure there, but I think in the balance, we still think that our gross margin profile is not able to change a lot in the next few quarters.

Speaker Change #131: Awesome, thanks for that, congrats on the salt quarter and good.

Speaker Change #132: Thank you. As a reminder, ladies and gentlemen, it's start 1-1 to ask the question.

Suji De Silva: Got it. And then flipping over to the auto side, you talked about in the CV3 helping ramp, maybe in the '25 or maybe potentially calendar '26 timeframe. Do you have visibility into program ramps there and the timing of when those start to inflect, to give a sense, roughly kind of where in the '25 time, calendar '25 timeframe, autos would kind of have a growth inflection upward or program ramp starts?

Fermi Wong: So AI performance, just like what we predict, the performance requirement getting higher and higher. I think it's sticky for us because when you increase your AI performance. Therefore, all the cameras that power consumption continue to be important. So we are the, we are unique offering is continue to offer higher AI performance without increase too much of the power consumption. And that's going to continue to be the all differentiation. So I look like I said, if we believe that AI performance requirement will continue to go up, if that's the case, I think this time, it will help us to have a sticky customer base.

Speaker Change #133: please stand by for our next question.

Speaker Change #134: We have a follow-up question from the line of raw female, would get your bank your line is open.

raw female: Hi guys, thanks for the two quick ones in here. Louis, I think it might have been for me that gave what typical seasonality is in the fourth quarter. To the extent seasonality is a framework that's going to matter more as we look into next fiscal year. However, you want to define it, can you just give us an idea of how you view seasonality?

Fermi Wang: Right. So we talked about calendar year '26 for CV3 ramp up. The first one we talk about was the Leapmotor. We have not talked about the models yet and hopefully that we can provide information in the near future.

The first one we talk about was the lead motor. We have not talked about the models yet and hopefully that we can provide information in the near future.

Speaker Change #136: Sure, whether you look at five-year averages or tenure, which is, we look at both, you've got Q4, you know, down sequentially, you've got Q1, can be down sequentially, and then our strongest quarters are Q3 and Q2. The numbers vary a bit if you do five-year tenure average, but that's the average.

Okay. That's very helpful for me. All right. Thanks. Thank you. As a reminder, ladies and gentlemen, that's our one one to ask the question. Please stand by for our next question.

Suji De Silva: Okay. That's very helpful, Fermi. All right, thanks.

Operator: Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of Shadi Mitwalli with Needham & Company. Your line is open.

John Young: Good. Thank you, Louis. And then I guess one third, John, as I think about next year looking like it's going to be a much more significant revenue growth here.

Shadi Mitwalli: Hey, this is Shadi Mitwalli on for Quinn Bolton. My first question is on Ambarella's passenger OEM win last quarter. Has that provided a halo effect for current passenger OEM engagements or more so has there been a shift in sentiment with current OEMs that Ambarella is engaged with?

Speaker Change #137: How do I, how do the company think about?

Speaker Change #138: Office relative to revenue growth. I know you've put a ton of that work in already and you've been spending ahead of the growth. But to the extent leverage is going to be an important metric in profitability. It's for me mentioned that just want to see how you guys think about that relationship.

Fermi Wong: Okay, great. And, you know, just another in your 10% customers that your pony wasn't mentioned, should we imply that that means consumer is getting to be less percentage of your overall revenue. And that's going to be the trend going forward. Right. In the last few quarters, we talk about one of the weakness in the market size, our IoT home, we use code consumer, consumer IP can, but it's really just the security camera using the home application.

Fermi Wang: So, first of all, I think any design win helps. So I think that every OEM design win they consider different. But however, in the past, one of the issues we talk about winning design win is our scale and also our automotive experience. So that first design will definitely help. But every OEM design win going to be fighting to against our competitors on different categories, on the technology side, pricing side and also the customer support side. I think the first design win helps, but it cannot be deterministic to help us to win a future design.

Fermi Wong: And the chicken is majority chicken design with in that category. That's why they are not 10% this time. And the continues, we, although we continue to have design wings in security home, home security, sorry, IoT home category. But I think that the course rate there is much slower than on. Price as well as other IOT or automotive. Okay, congratulations again on great results.

At that, I think the first design wing helps, but it cannot be deterministic to help us to win a future

Speaker Change #139: Great, thank you.

Thanks for that, and my follow-up question is on the China auto market. There has been some recent news of aggressive pricing between Chinese OEMs, and I was wondering if Ambarella is seeing any negative impacts from this? Well, you are absolutely right. The pricing pressure in China markets is very high, and we continue to see our current design, we fell in the last quarters.

Shadi Mitwalli: Thanks for that. And my follow-up question is on the China auto market. There has been some recent news of aggressive pricing between Chinese OEMs. And I was wondering if Ambarella is seeing any negative impacts from this.

Speaker Change #140: Thank you.

Speaker Change #140: Ladies and gentlemen, I'm Sean, no further questions than the queue. I will now like to turn the call back over to Dr. Fermi Wawke for closing remarks.

Fermi Wang: Well, you are absolutely right. The pricing pressure in China market is very high and we continue to see our current design win, in fact, in the last quarters, we have announced multiple Chinese OEM Tier 1 design wins for different type of products like ADAS, recorders, e-mirrors and monitors. So we do see the pricing pressures. But however, also, if you look at our total gross margin that John just talked about, I think, yes, there's always pressure there, but I think in the balance we still think that our gross margin profile is not going to change a lot in the next few quarters.

We have announced multiple Chinese OEMs, tier 1 design wings for different types of products, like Aidas, Ricotters, Emeroes, and the monitors. So, we do see the pricing pressures, but however, also, if you look at our total growth margin that John just talked about, I think, yes, there's always pressure there, but I think in the balance, we still think that our growth margin profile is not going to change a lot in the future. Next few quarters,

Speaker Change #140: I just noticed we had one more pop up, but Barton why don't we take that, sorry to interrupt. No problem, I see it now, one moment.

Operator: Thank you. Please say bye for our next question. Our next question comes from the line of Matt Ramsey with TV Cohen. Your line is open.

Operator: Please say bye for our next question. Our next question comes from the line of Matt Ramsey with TV Cohen. Your line is open.

Speaker Change #141: A next question comes from a lot of Martin Young with Oppenheimer company, your line is open.

Sean O'Lachlan: Our next question comes from the line of Matt Ramsey with TV Cohen. Your line is open. Hey guys, it's actually Sean O'Lachlan on here for Matt and I'll echo the congratulations of others on the really positive guidance here. I wanted to dig in actually on the more traditional video processors side of the business and I know that we saw a pretty significant decline in fiscal year 2024. I think at the time it was categorized as something like 80 million or so that the clients from the traditional legacy video processing.

Martin Young: Thank you. I'm a quick question on guidance. Is your in-game happening regarding the known industrial ILP in your guidance that has stopped with the shrimp?

Speaker Change #143: Sorry, we didn't get a question clear. Can you see it again?

Speaker Change #144: So is your anything regarding consumer IoT segment?

Speaker Change #145: that helped with the guidance and the strength of the guidance in the acute.

Shadi Mitwalli: Awesome. Thanks for that. Congrats on the solid quarter and guide.

Speaker Change #145: Yeah.

Speaker Change #146: So, this re-bowl console I pick in OECO's IOT home now.

Congrats on the solid quartering, God.

Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. We have a follow-up question from the line of Ross Seymore with Deutsche Bank. Your line is open.

Speaker Change #147: And first of all, we still believe that's the one that's weak for us because the market going to a low M model with a limited performance requirement. However, with that, so the two three guidance, IOT Home didn't help out two three guidance.

Sean O'Lachlan: Should we sort of think about that as a potential, another potential lever going forward or is the industry sort of moved on from that product segment into much more of the CV 22 and beyond family that you've spent a lot of time. Right, so first of all, I think the market definitely moved more toward the AI, but also Ambarella made a very clear decision several years ago that we want to pull all our limited resource on the AI growth.

Ross Seymore: Hi, guys. Thanks for letting me speak two quick ones in here. Louis or I think it might be Fermi that gave what typical seasonality is in the fourth quarter. To the extent seasonality is a framework that's going to matter more as we look into next fiscal year, however, you want to define it, can you just give us an idea of how you view seasonality?

Louis Gerhardy: Sure. Whether you look at five-year averages or 10-year, which is, we look at both, you've got Q4 down sequentially, you've got Q1 can be down sequentially and then our strongest quarters are Q3 and Q2. The numbers vary a bit if you do five-year or 10-year average, but that's the average.

Speaker Change #147: However, the market continued to change and we started seeing some of the whole IoT people are thinking about adding language model like VLM or Clip on to their service.

Speaker Change #147: If that happens, when that happens, I think that will definitely give us the opportunity to go back to CEL or CV-75 type of product because if you want to run clip at the age in a camera

Sean O'Lachlan: So we haven't paid about any video processor in the last few years. So I think that's also important factor. So we don't believe the revenue or unit number sales of a video processor will increase in the future, but the decline rate was significantly slower than before. So I think that when the video processor decline much slower rate and our AI start generating more revenue and that trend will help us to start showing up even the unique growth for the company as well as for the revenue. Yeah, that's crystal clear.

Speaker Change #147: I think very few trips can do that so I think we are waiting to see whether that a new function and a new network requirement will be happening in a consumer I became if that happens that will become a better fit for us but for Q3 guidance that market is a help.

Young: Young, thank you for coming. Thank you.

Speaker Change #149: Thank you.

Speaker Change #150: I'm now turned to call a back over to Dr. Fermi Wong

Speaker Change #151: Thank you everybody for joining us today and looking forward to talk to you in a different conference or next time. Thank you guys.

John Young: And then on those new products, we talked a little bit about higher ASPs, but I was wondering maybe John could speak to the margin profile of those new products, considering that there are more advanced geometries and, you know, potential wafer pricing increases of the founder and stuff like that. Thanks and congrats again. Great. Thank you. Yeah, Sean. So, you know, at a high level, we don't anticipate that the margin profiles as we go to smaller and smaller process nodes that the margin profiles will change significantly from from what we've seen over the last several process nodes.

I will now like to send the call back over to Dr. Fermi once for closing remarks.

To one day, I just noticed we had one more pop up. Barton, why don't we take that? Sorry to interrupt. No problem. I'll see you now. One moment.

Fermi Wang: Tawanda, I just noticed we had one more pop-up. Martin, why don't we take that? Sorry to interrupt.

Operator: No problem. I see it now. One moment. Our next question comes from the line of Martin Yang with Oppenheimer & Company. Your line is open.

The next question comes from the line of Mark and Yang with Oppenheimer Company, Yolanda Zoltz

Martin Yang: Thank you. I have a quick question on guidance. Is there anything happening regarding the non-industrial IoT in your guidance that has helped with the strength?

Speaker Change #151: [inaudible]

Fermi Wang: Sorry. We didn't get the question clear. Can you say it again?

Martin Yang: Is there anything regarding consumer IOT segments that help with the guidance and the strength of the guidance in 3Q? Yeah, so this really about consumer IPK and all we call the IOT home now. And first of all, we still believe that's one of the market that's weak for us because the market going to a low-end model with a limited performance requirement.

Martin Yang: So is there anything regarding consumer IoT segment that helped with the guidance and the strength of the guidance in 3Q?

Fermi Wang: So it's really about consumer IP cam or what we call the IoT home now. And first of all, we still believe that's one of the markets that's weak for us because the market going to a low-end model with a limited performance requirement. However, with that, so the Q3 guidance, IoT home didn't help our Q3 guidance. However, the market continue to change and we start seeing some of the home IoT people thinking about adding language model like VLM or CLIP onto their service. If that happens, when that happens, I think that will definitely give us the opportunity to go back to sell our CV75 type of product because if you want to run CLIP at the edge in a camera, I think, very few chips can do that. So I think we are waiting to see whether that new function and a new neural network requirement will be happening in a consumer IP cam. If that happens, that would become a better fit for us. But for Q3 guidance, that market doesn't help.

Martin Yang: Got it. Thank you, Fermi.

Fermi Wang: Thank you.

John Young: You know, as we've said previously, our long-term growth margin range is 59 to 62% and we expect to get into that long-term range as automotive becomes a larger portion of it. But that's more just kind of markets and commercial terms than I would say any kind of foundry issue. Fred, thanks a lot, and you're out again. Thank you.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Suji De Silva with ROTH Capital. Your line is open.

Suji DeSilva: Our next question comes from the line of Suji DeSilva with Ross Kapital. Yaline is open. Hi, Fermi. Hi, John. Congrats on the progress here. I just want to clarify, and the growth you had in the fiscal second quarter, I think it was mostly IOT. Please correct that the wrong. And if it is, which applications kind of came back or did inventory burn in ordering, resume in the IOT segment to help the fiscal second quarter?

Fermi Wang: Right. So for the second quarter, you are right, the IoT growth rate is a lot higher than automotive. And then the main area of growth is really IoT enterprise as well as other IoT category. And you can see that the IoT enterprise is really to stabilize the inventory quickly and go back to gross mode, go back to the you know they clean up the inventory and go back to regular ordering pattern. And also the other IoT side that you know few customers taking our CV5 into production that helps.

Suji De Silva: And then flipping over to the auto side, you talked about in the CV3 helping ramp maybe in the 25 or maybe potentially calendar 26 timeframe. If you have visibility to program ramps there and the timing of when those start to inflect to give a sense, roughly kind of where in the 25 time, calendar 25 timeframe, autos would kind of have a growth inflection upward or program ramps starts. Right. So, you know, we talk about calendar 26 for CV3 ramp up.

Suji DeSilva: The first one we talk about was the lead motor. We have not talked about the models yet and hopefully that we can provide information in the near future. Okay. That's very helpful for me. All right. Thanks. Thank you. As a reminder, ladies and gentlemen, that's our one one to ask the question. Please stand by for our next question.

Operator: Our next question comes from the line of Shotty Mitwale with Needleman Company.

Shotty Mitwale: Yaline is open.

Shadi Mitwalli: Hey, this is Shotty Mitwale on For Queen Bowen. My first question is on Amberella's passenger OEM win last quarter. Has that provided a halo effect for current passenger OEM engagements? Or more so has it been a shift in sentiment with current OEM that Amberella has engaged with? So, first of all, I think any design wing helps. So, I think that every OEM design wing, they consider different. But however, in the past, the one of the issues we talk about winning design wing is our scale and also our automotive experience. So, that first design we definitely help. But every OEM design, we're going to be fighting against our competitors on different category, on the technology side, pricing side, and also the customer support side.

Young: [inaudible] Young Young Young

Fermi Wong: At that, I think the first design wing helps, but it cannot be deterministic to help us to win a future Thanks for that, and my follow-up question is on the China auto market. There has been some recent news of aggressive pricing between Chinese OEMs, and I was wondering if Ambarella is seeing any negative impacts from this? Well, you are absolutely right. The pricing pressure in China markets is very high, and we continue to see our current design, we fell in the last quarters.

Young: The New Year's Eve

Fermi Wong: We have announced multiple Chinese OEMs, tier 1 design wings for different types of products, like Aidas, Ricotters, Emeroes, and the monitors. So, we do see the pricing pressures, but however, also, if you look at our total growth margin that John just talked about, I think, yes, there's always pressure there, but I think in the balance, we still think that our growth margin profile is not going to change a lot in the future. Next few quarters, awesome. Thanks for that.

Fermi Wong: Congrats on the solid quartering, God. Thank you.

Operator: As a reminder, ladies and gentlemen, let's start one one to ask the question. Please stand by for our next question. We have a follow-up question from the line of Ross Seymour with Detervantes. Get on his open.

Ross Seymour: We have a follow-up question from the line of Ross Seymour with Detervantes. Get on his open.

Ross Seymour: Get on his open.

Ross Seymore: Hi, guys. Thanks for the two quick ones in here. I think it might have been for me that gave what typical seasonality is in the fourth quarter. To the extent seasonality is a framework that's going to matter more as we look into next fiscal year, however you want to define it, can you just give us an idea of how you view seasonality? Sure. Whether you look at five-year averages or ten-year, which is, we look at both, you've got Q4, you know, down sequentially. You've got Q1 can be down sequentially, and then our strongest quarters are Q3 and Q2. The numbers vary a bit if you do five-year or ten-year average, but that's the average.

Young: and John Young, John Young, John Young, John Young, [inaudible]

Ross Seymore: Got it. Thank you, Louis. And then I guess one for John. As I think about next year looking like it's going to be a much more significant revenue growth year. How do I -- how does the company think about OpEx relative to revenue growth? I know you've put a ton of that work in already and you've been spending ahead of the growth, but to the extent, leverage is going to be an important metric in profitability, as Fermi mentioned, I just want to see how you guys think about that relationship.

John Young: And then I guess one for John. I think about next year looking like it's going to be a much more significant revenue growth year. How do I, how does the company think about OPEX relative to revenue growth? I know you've put a ton of that work in already, and you've been spending ahead of the growth. But to the extent leverage is going to be an important metric and profitability as Fermi mentioned, but just want to see how you guys think about that relationship.

John Young: Yes. I mean, obviously, there's a lot of factors that go into the plan for next year, but the primary focus is to drive toward non-GAAP profitability. And so, from an OpEx perspective, we're going to hold incremental spend as low as we possibly can while still delivering on the road map.

Ross Seymore: Great, thank you.

Operator: Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Dr. Fermi Wang for closing remarks.

Louis Gerhardy: Ladies and gentlemen, I'm Sean. No further questions than the Q. I will now like to send the call back over to Dr. Fermi once for closing remarks.

Operator: I will now like to send the call back over to Dr. Fermi once for closing remarks. To one day, I just noticed we had one more pop up. Barton, why don't we take that? Sorry to interrupt. No problem. I'll see you now. One moment.

Mark Yang: The next question comes from the line of Mark and Yang with Oppenheimer Company, Yolanda Zoltz Thank you. I'm going to put a question on guidance. Is there anything happening regarding the now initial IOT in your guidance that has helped with the strength?

Fermi Wong: Sorry, we didn't get a question clear. Can you say it again? Is there anything regarding consumer IOT segments that help with the guidance and the strength of the guidance in 3Q? Yeah, so this really about consumer IPK and all we call the IOT home now. And first of all, we still believe that's one of the market that's weak for us because the market going to a low-end model with a limited performance requirement.

Fermi Wong: However, with that, so the Q3 guidance, IOT home didn't help our Q3 guidance. However, the market continued to change and we start seeing some of the home IOT people are thinking about IOT language model like a VRM or clip onto their service. If that happens, when that happens, I think that will definitely give us an opportunity to go back to CL or CV 75 type of product because if you want to run clip at the age in a camera, I think very few chips can do that. So I think we are waiting to see whether the new function and the new network requirement will be happening in a consumer IPK. If that happens, that would become a better fit for us. But for Q3 guidance, that market doesn't help.

Fermi Wong: So I think we are waiting to see whether the new function and the new network requirement will be happening in a consumer IPK. If that happens, that would become a better fit for us. But for Q3 guidance, that market doesn't help.

Martin Yang: Got it. Thank you, Fermi. Thank you.

Operator: Thank you. I'll now turn the call back over to Dr. Fermi Wang.

Fermi Wang: Thank you everybody for joining us today and looking forward to talk to you in a different conference or next time. Thank you guys.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: You may now distance.

John Young: [inaudible] John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young,[inaudible] John Young, John Young, John Young, John Young, John John Young, John Young, John Young, John Young John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young,[inaudible] John Young, John Young, John Young, John Young[inaudible] John Young, John Young, John Young, John Young, John Young, John Young, John Young, John Young,[inaudible]

Young: Music Music

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