Q4 2026 Ambarella Inc Earnings Call

February 26, 2026

Speaker #1: Good day and thank you for standing by . Welcome to the Ambarella fourth quarter and Fiscal Year 2026 Earnings Conference Call . At this time , all participants are in a listen only mode .

Operator: Good day, and thank you for standing by. Welcome to the Ambarella Q4 and Fiscal Year 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Louis Gerhardy, Vice President, Corporate Development. Please go ahead, sir.

Operator: Good day, and thank you for standing by. Welcome to the Ambarella Q4 and Fiscal Year 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Louis Gerhardy, Vice President, Corporate Development. Please go ahead, sir.

Speaker #1: After the speaker's presentation , there will be a question and answer session to ask a question . During this session , you will need to press star one one on your telephone .

Speaker #1: You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again.

Speaker #1: Please be advised that today's conference is being recorded . I would now like to hand the conference over to your speaker today , Louis Gerhardy Vice President , Corporate Development .

Speaker #1: Please go ahead , sir

Speaker #2: Thank you , Michelle , and good afternoon . Thank you for joining our fourth quarter fiscal year 2026 financial results conference call . On the call with me today is Doctor Fermi Wong , president and CEO .

Louis Gerhardy: Thank you, Michelle. Good afternoon. Thank you for joining our Q4 fiscal year 2026 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 Q4 of fiscal year 2026. 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.

Speaker #2: And John Young , CFO . The primary purpose of today's call is to provide you with information regarding the results for our fourth quarter of fiscal year 2026 .

Speaker #2: The discussion today in 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 .

Speaker #2: 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 Access to our fourth quarter fiscal year 2026 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 .

Louis Gerhardy: 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. Access to our Q4 fiscal year 2026 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 starting the call, we hope to see you at one of the following investor events scheduled for our Q1 of fiscal year 2027. 3 March, we'll be at Morgan Stanley's Technology, Media & Telecom Conference in San Francisco. 10 March, at Loop Capital Markets' 7th Annual Investor Conference in New York.

Louis Gerhardy: 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. Access to our Q4 fiscal year 2026 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 starting the call, we hope to see you at one of the following investor events scheduled for our Q1 of fiscal year 2027. 3rd March, we'll be at Morgan Stanley's Technology, Media & Telecom Conference in San Francisco. 10 March, at Loop Capital Markets' 7th Annual Investor Conference in New York.

Speaker #2: The content of today's call , as well as the materials posted on our website , are Ambarella property and cannot be reproduced or transcribed without our prior written consent Before starting the call , we hope to see you at one of the following investor events scheduled for our first quarter of fiscal Year 2020 seven .

Speaker #2: March 3rd will be at Morgan Stanley's TMT Conference in San Francisco , March 10th at Loop Capitals seventh annual Investor Conference in New York .

Speaker #2: March 10th to 12th will be at Embedded World in Nuremberg , Germany . And we're offering a limited number of investor meetings March 11th at Cantor Cantor's global Technology and Industrial Conference in New York will be hosting bus tours at our Santa Clara headquarters with Instinet Nomura Hoyt Khalsa on March 12th , 18th and 20th , respectively .

Louis Gerhardy: March to 12 March, we'll be at Embedded World in Nuremberg, Germany. We're offering a limited number of investor meetings. 11 March, at Cantor's Global Technology & Industrial Growth Conference in NY. We'll be hosting bus tours at our Santa Clara headquarters with Instinet Nomura, Huate, CLSA on 12 March, 18 March, and 20 March, respectively. 16 March at Bank of America's 2026 Asia Tech Conference in Taipei. 24 March at the ROTH Conference in Dana Point. As a reminder, we'll enter our Q1 quiet period on 16 April 2026. Fermi will now provide a business update for the quarter. John will review the financial results and outlook. Then we'll be available for your questions. Fermi?

Louis Gerhardy: March to 12th March, we'll be at Embedded World in Nuremberg, Germany. We're offering a limited number of investor meetings. 11th March, at Cantor's Global Technology & Industrial Growth Conference in NY. We'll be hosting bus tours at our Santa Clara headquarters with Instinet Nomura, Huate, CLSA on 12th March, 18 March, and 20 March, respectively. 16 March at Bank of America's 2026 Asia Tech Conference in Taipei. 24 March at the ROTH Conference in Dana Point. As a reminder, we'll enter our Q1 quiet period on 16 April 2026. Fermi will now provide a business update for the quarter. John will review the financial results and outlook. Then we'll be available for your questions. Fermi?

Speaker #2: March 16th at Bank of America's 2026 Asia Tech Conference in Taipei and March 24th at the Roth Conference in Dana Point . As a reminder , we'll enter our first quarter quiet period on April 16th , 2026 .

Speaker #2: 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.

Speaker #2: Fermi .

Speaker #3: Thank you . Lewis , and good afternoon . Thank you joining us . Our call today , fiscal 2026 , established a new revenue record for Ambarella revenue increased 37% year over year .

Fermi Wang: Thank you, Louis. Good afternoon. Thank you for joining us, our call today. Fiscal 2026 established a new revenue record for Ambarella. Revenue increased 37% year-over-year, well above the growth in the overall semiconductor industry and most of our semiconductor company peers. Our 5nm new product cycles, together with our customers' new product launches, combined to drive 50% year-over-year growth in our edge AI revenue. About 80% of full-year fiscal 2026 revenue is edge AI, all of which is also defined as physical AI. Overall, auto and IoT revenue both grew with company-wide growth in both units shipped and the average selling price. Our Q4 revenue results follow a seasonal pattern, with revenue down 7% sequentially, slightly above the midpoint of our original guidance.

Speaker #3: Well above the growth in the overall semiconductor industry . And the most of our semiconductor company peers . Our five nanometer new product cycles , together with our customers , new product launches combined to drive 50% year over year growth in our high revenue , about 80% of our full year fiscal 2026 revenue is high , all of which is also defined as a fiscal AI overall , auto and IoT revenue , both grew with company wide growth in both units shipped and average selling price .

Speaker #3: Our fourth quarter revenue results follow a seasonal pattern , with revenue down 7% sequentially , slightly above the midpoint of our original guidance .

Speaker #3: Our new third generation finance CV 75 and the CV 72 Isox are rapidly growing , reaching a high single digit percent of total revenue in Q4 , and this new products are poised to be an important source of incremental revenue in the new year .

Fermi Wang: Our new third-generation 5-nanometer CV75 and the CV72 AI SoCs are rapidly growing, reaching a high single-digit % of total revenue in Q4. These new products are poised to be an important source of incremental revenue in the new year. Looking further into fiscal 2027, we anticipate a total revenue growth in the 10% to 15% range, with a non-GAAP gross margin within our long-term model of 59% to 62%. For the year, we expect our new product cycle to continue to drive both units and the average selling price increase, with revenue growth in both auto and IoT. In addition to the anticipated revenue ramp from CV75 and the CV72, the recently announced CV7, our first 4-nanometer chip, is expected to begin to generate revenue in Q4 of this year.

Fermi Wang: Our new third-generation 5-nm CV75 and the CV72 AI SoCs are rapidly growing, reaching a high single-digit % of total revenue in Q4. These new products are poised to be an important source of incremental revenue in the new year. Looking further into fiscal 2027, we anticipate a total revenue growth in the 10%-15% range, with a non-GAAP gross margin within our long-term model of 59%-62%. For the year, we expect our new product cycle to continue to drive both units and the average selling price increase, with revenue growth in both auto and IoT. In addition to the anticipated revenue ramp from CV75 and the CV72, the recently announced CV7, our first 4-nm chip, is expected to begin to generate revenue in Q4 of this year.

Speaker #3: Looking further into fiscal 2027 , we anticipate total revenue growth in the 10% to 15% range , with non-GAAP gross margin within our long term model , over 59% to 62% for the year .

Speaker #3: We expect our new product cycle to continue to drive both unit and average selling price increase . With revenue growth in both auto and IoT .

Speaker #3: In addition to the anticipated revenue ramp from CV 75 and CV 72 , the recently announced Kv7 , our first four nanometer chip , is expected to begin to generate revenue in the fourth quarter of this year by a variety of majors .

Fermi Wang: By a variety of measures, our team's achievements in the last year have strengthened our Edge AI leadership. We continue to enhance our market position. Financially, in fiscal year 2026, we continued to commercialize our AI investment and deliver premium revenue growth, returning to full-year non-GAAP profitability. Fiscal 2026 was our 17th consecutive year of a positive free cash flow, with a free cash flow for the year of $58 million or 15% of revenue. We executed to both our operational and R&D priorities. While facing a variety of industry-wide supply chain constraints, we shipped more than 25 million units across more than 15 SoCs with many variants. We tape out our first 4-nanometer chip and our first 2-nanometer gate-all-around AI SoCs, while successfully bringing CV75 and the CV72 mass commercialization.

Fermi Wang: By a variety of measures, our team's achievements in the last year have strengthened our Edge AI leadership. We continue to enhance our market position. Financially, in fiscal year 2026, we continued to commercialize our AI investment and deliver premium revenue growth, returning to full-year non-GAAP profitability. Fiscal 2026 was our 17th consecutive year of a positive free cash flow, with a free cash flow for the year of $58 million or 15% of revenue. We executed to both our operational and R&D priorities. While facing a variety of industry-wide supply chain constraints, we shipped more than 25 million units across more than 15 SoCs with many variants. We tape out our first 4-nm chip and our first 2-nm gate-all-around AI SoCs, while successfully bringing CV75 and the CV72 mass commercialization.

Speaker #3: Our team's achievements in the last year have strengthened our leadership , and we continue to enhance our market position financially . In fiscal year 2026 , we continue to commercialize our AI investment and deliver premium revenue growth , returning to full year non-GAAP profitability , fiscal 2026 was our 17th consecutive year of positive free cash flow with free , free cash flow for the year of $58 million , or 15% of revenue .

Speaker #3: We ask you to both our operational and R&D priorities while facing a variety of industry wide supply chain constraints . We shipped more than 25 million units across more than 15 SoCs , with many variants , and we take out our first four nanometer chip and our first two nanometer gate all around AI SoCs .

Speaker #3: While successfully bringing CV 75 and CV 72 mass commercialization . Our corporate development platform , while already powerful and well established , is in a constant state of enhancement , including new genetic capabilities .

Fermi Wang: Our Cooper development platform, while already powerful and well-established, is in a constant state of enhancement, including new agentic capabilities. Strategically, we announced during our CES 2026 product and technology briefing, we are augmenting our direct-to-customer go-to-market. With incremental initiatives, we expect to materially contribute to our long-term revenue growth. First, we are incrementally building an indirect sales channel during including independent software developers, distributors, and system integrators. We expect this to improve our ability to address the edge infrastructure market, as well as the highly fragmented robotic market. In the long run, our existing portfolio should benefit with long-tail revenue from small to mid-sized customers we have not directly supported in the past. The second strategic development is the establishment of a semi-custom/custom ASIC business, where we have strong interest from a variety of companies.

Speaker #3: Strategically , we announced during our CES 2026 product and technology briefing , we are augmenting our customer go to market with incremental initiatives .

Speaker #3: We expect to materially contribute to our long term revenue growth . First , we are incrementally building an indirect sales channel during including independent software developers , distributors and the system integrators .

Speaker #3: We expect this to improve our ability to address the aging infrastructure market , as well as the highly fragmented robotic market . Furthermore , in the long run , our existing portfolio should benefit with long tailed revenue from small to mid customers .

Speaker #3: We have not directly supported in the past . The second strategic development is the establishment of a semi-custom , semi-custom custom ASIC business where we have strong interest from a variety of companies .

Speaker #3: Our deep intellectual property perception engines , AI accelerators , software development platform and advanced visi capabilities and established position in the high market are increasingly valued by companies .

Fermi Wang: Our deep intellectual property, perception engines, AI accelerators, software development platforms, and advanced VSI capabilities, and established position in the edge AI market are increasingly valued by companies considering semi-custom or custom ASIC projects. Stepping back for a minute, there continue to be significant industry development with AI agents, applications, content, models, and the services that when combined with our enabling AI SoCs, create an environment where more edge and physical AI use cases can practically emerge. Techniques developed in the industry, such as distillation and the mixture of experts, are enabling edge models to become smaller, yet smarter, which we expect will enable applications to evolve from early adopters to the mainstream. Altogether, we see a variety of enterprise and consumer edge AI systems become real-time, proactive, and able to make closed-loop decisions autonomously for the end users through agentics.

Speaker #3: Considering semi-custom or custom ASIC projects Stepping back for a minute there continues to be significant industry development , with AI agents , applications , content models and services that , when combined with our enabling AI SoCs , create an environment where more edge and fiscal AI use cases can practically emerge .

Speaker #3: Techniques developed in the industry , industry , such as distillation and mixture of experts , are enabling edge models to become smaller yet smarter , which we expect will enable applications to evolve from early adopters .

Speaker #3: Early adopters to the mainstream . Altogether , we see a variety of enterprise and consumer AI system become real time , proactive and able to make closed loop decisions autonomously for the end user through agents .

Speaker #3: Of course, with all of the breakthroughs, our customers have a lot to learn and evaluate as they consider new AI business cases.

Fermi Wang: Of course, with all the breakthroughs, our customers have a lot to learn and evaluate as they consider new AI business cases. The various components of our comprehensive Cooper development platform, together with our engineering support, are enabling customers to implement new technologies. For example, a power constraint application may need a hybrid AI workload split between cloud and edge. In other cases, where low latency is acceptable, we need to support a vast majority of AI processing on our silicon. Overall, you can see there are many different edge AI applications, use cases, and the trade-offs we must support. Our broad edge AI products portfolios and established powerful development platforms are must-haves to drive the proliferation and diversification of the edge and the physical AI market. I will now discuss some representative customer engagement during the quarter.

Speaker #3: The the various components of our comprehensive Cooper development platform , together with our engineering support , are enabling customers to implement new technologies .

Speaker #3: For example , a power constraint application may need a hybrid AI workload split split between cloud and H , but in other cases where low latency is acceptable , we need to support a vast majority of AI processing on our silicon .

Speaker #3: Overall , you can see there are many different edge AI applications . Use cases , and the trade offs . We must support and our broad high products portfolio and established powerful development platforms are must haves to drive the portfolio proliferation and diversification of the edge and the physical market .

Speaker #3: I will now discuss some representative customer engagement during the quarter . I want to start by highlighting our industrial automation robotic design win as the warehouses of a large US based e-commerce provider .

Fermi Wang: I want to start by highlighting our industrial automation robotic design wing at the warehouses of a large US-based e-commerce provider. They leverage our N1-655 AI SoC to develop a perception hub for the warehouse floor. A fleet of this system is being deployed to enable a high-speed, accurate, and efficient storage and the retrieval system at their large-scale warehouses across the country. We are seeing several such physical AI designs starting to emerge on our SoCs. In other IoT applications, we were awarded several projects in the video conference market this quarter. Insta360 launched their Link 2 Pro and Link 2C Pro high-end web camera base on our H22 SoC. The QSC, a cloud-native audio, video, and control ecosystem company based in California, announced their Q-SYS high-definition video conferencing PTZ camera designed on our CV72 SoC.

Speaker #3: They leverage our online 6055 SoC to develop a perception hub for the warehouse floor . A fleet of this system is being deployed to enable a high speed , accurate and efficient storage and retrieval system at their large scale warehouses across the country .

Speaker #3: We are seeing several such physical air designs starting to emerge on our SoCs in our IoT applications . We were awarded several projects in the video conference market this quarter .

Speaker #3: In 360 , launched their link two Pro and link to two Pro High in web camera . Based on our H22 SoC and the A cloud native audio , video and control ecosystem company based in California announced they Q6 high Definition video conferencing PTZ camera designed on our CV 72 SoC .

Speaker #3: They are leveraging our AI for enhanced video quality and use AI for face detection and intelligent presenter tracking In enterprise security ideas , a leading security technology customer announced their DCD 3168 .

Fermi Wang: They are leveraging our AI ISP for enhanced video quality and use AI for face detection and intelligent presenter tracking. Our customer, IBIS, a leading security technology customer, announced their DCB3168 security camera based on our CV72 SoC. Our customer, Dallmeier, based in Germany, launched their Domera RDF6140 dome camera based on CV25 this quarter. They leverage our AI accelerator to offer several AI features, like motion detection, temperature detection, intrusion detection, and the line crossing. Finally, one of our leading customers, IQSIGHT, previously known as Bosch, announced two new AI products, both based on CV72. The FLEXIDOME 7100i anonymize the image inside the camera for enhanced privacy and the compliance.

Speaker #3: Security camera based on our seven CV 72 SoC and our customer Thurmair based in Germany , launched their camera 640 camera based on CV 25 this quarter , they leveraged our AI accelerator to offer several AI features like motion detection , temperature detection , intrusion detection and line crossing .

Speaker #3: Finally , one of our one of our leading customers , IQ sight , previously known as Bosch , announced two new I AI products , both based on CV 72 .

Speaker #3: The flagship 7100 . I analyzed the image inside the camera for enhanced privacy and compliance and the deep Linear 7100 II detects people and vehicle accurately with maximum detail in dark , low light conditions And in our automotive safety , Adas and telematics business , I would like to share some key customer wins during the quarter .

Fermi Wang: The DINION 7100i detects people and the vehicle accurately with maximum detail in dark, low-light conditions. In our automotive safety ADAS and telematics business, I would like to share some key customer wins during the quarter. Ford recently launched the FLEXBED Truck Bed Camera last quarter. It's a smart security camera for the truck bed, built on our CV25. It provides real-time truck bed monitoring, leveraging AI-powered intrusion monitoring and threat detection. THINKWARE in South Korea launched their QXD2 in-car digital video recorder system, which is the first of a kind to leverage our AI ISP neural network on our CV25 SoC. THINKWARE also use Ambarella's ADAS software stack to enhance perception capability for their forward-facing ADAS. Garmin announced their innovative Dual View based on CV25.

Speaker #3: Ford recently launched the Dealer Fit Truck Bed camera . Last quarter is a smart security camera for the truck bed built on our CV 25 .

Speaker #3: It provides real time truck bed monitoring , leveraging AI powered intrusion monitoring and threat detection . Thinkware system in South Korea launched their Qxd2 in-car digital video recorder system , which is the first of the kind to leverage our AI ISP neural network on our CV 25 SoC .

Speaker #3: Think we're also used Ambarella eight software stack to enhance perception capability for their forward facing Adas . Garmin announced their innovative dual view based on CV 25 is a rugged , rugged two camera system that enable professional truck drivers and an edge in situational awareness .

Fermi Wang: It's a rock-rugged two-camera system that enable professional truck drivers an edge in situational awareness. In summary, this 11 representative customer engagements represent the implementation of a wide variety of applications and AI workloads. Inherent in these wins is the high degree of programmability and the flexibility in our SoC and the software platform, enabling us to serve a wide variety of applications with minimal incremental investment, while the customer benefits by having the ability to reuse their software at scale. While we are seeing edge AI green shoots emerging in a very diverse range of edge applications, we currently see the largest long-term growth opportunities in the robotics, automotive, and edge infrastructure markets. The robotic market is diverse market in a variety of applications: fixed factory automation, humanoid, mobile terrestrial, aerial drones, and more.

Speaker #3: In summary , this 11 representative customer engagements represent the implementation of a wide variety of applications and workload inherent in these wings is the high degree of programmability and flexibility in our SoC and software platform , enabling us to serve a wide variety of applications with minimal incremental investment .

Speaker #3: While the customer benefits by having the ability to reuse their software and scale Well , we are seeing high green shoots emerging of very diverse range of age applications .

Speaker #3: We currently see the largest long term growth opportunities in the robotics , automotive and Edge infrastructure markets . The robotic market is diverse , market in a variety of applications , fixed factory automation , humanoid , mobile , terrestrial aerial drones and more .

Speaker #3: We are already shipping into the fixed factory automation market, and Q4 was our first full quarter of production revenue from the aerial drone market, which we believe is one of the highest-value mobile robotics markets today.

Fermi Wang: We are already shipping into the fixed factory automation market. Q4 was our first full quarter of a production revenue from the aerial drone market, which we believe is one of the highest value mobile robotic market today. With our industrial automation robotic engagement announced today, we are establishing ourselves in yet another form factor in the diverse and the nascent robotic market. In the automotive market, we have two business. One, safety telematics ADAS business, which represents most of our revenue and a majority of our near-term growth opportunity in autos. Also our auto autonomy business, starting at level 2 plus, which offers long-term growth opportunity.

Speaker #3: With our industrial automation , robotics engagement announced , announced today , we are establishing ourselves in yet another form factor in the diverse and nascent robotics market in the automotive market , we have two business , one safety , Adas business , which represents most of our revenue and a majority of our near-term growth opportunity .

Speaker #3: In autos and also our auto autonomous business start starting at a level two plus , which offers long term growth opportunity at this time , the auto opportunities we have either won or been invited to bid upon in the next six years , from fiscal year 2027 to fiscal year 2032 , is approximately $13 billion , with the one proportion similar to the last year In the age infrastructure market , we are observing early customer opportunity with two different design architectures one fiscal AI and the second digital AI .

Fermi Wang: At this time, the auto opportunities we have either won or been invited to bid upon in the next 6 years, from fiscal year 2027 to fiscal year 2032, is approximately $13 billion, with the won proportion similar to the last year. In the edge infrastructure market, we are observing early customer opportunity with 2 different design architectures: one, physical AI and the second, digital AI. First, enterprise buyers want to run physical AI inference on a local edge gateway to aggregate multimodal data from multiple sensors, pre-processing it in real time for use cases such as fleet management, physical security, industrial robots. design, fully self-efficient edge solutions to process data locally on devices for real-time, low latency, and secure decision-making that can be summarized and sent to data centers for training and analytics.

Fermi Wang: At this time, the auto opportunities we have either won or been invited to bid upon in the next six years, from fiscal year 2027 to fiscal year 2032, is approximately $13 billion, with the won proportion similar to the last year. In the edge infrastructure market, we are observing early customer opportunity with two different design architectures: one, physical AI and the second, digital AI. First, enterprise buyers want to run physical AI inference on a local edge gateway to aggregate multimodal data from multiple sensors, pre-processing it in real time for use cases such as fleet management, physical security, industrial robots. design, fully self-efficient edge solutions to process data locally on devices for real-time, low latency, and secure decision-making that can be summarized and sent to data centers for training and analytics.

Speaker #3: First , enterprise buyers want to run fiscal AR inference on local edge , gateway to aggregate multiple model multi-modal data from multiple sensors pre-processing it in real time for use such as fleet management , security , industrial robots , the typically designed design fully self efficient edge solutions to process data locally on devices for real time , low latency and secure decision making that can be summarized and sent to data centers for training and analytics .

Speaker #3: Second , we see early customer opportunities from enterprise IT buyers for digital AI applications that push centrally trained and high capacity models to be distilled , quantized , and deployed in edge nodes to enable low latency closed loop automation for secure digital application .

Fermi Wang: Second, we see early customer opportunities from enterprise IT buyers for digital AI applications that push centrally trained and high-capacity models to be distilled, quantized, and deployed in edge nodes to enable low-latency, closed-loop automation for secure digital AI applications, while still maintaining centralized control in the cloud. In summary, we are an edge AI market leader across a broad set of criteria. First is our credibility. We have an install base of 42 million edge AI SoCs, with more than 370 unique customers, AI customer products reaching production, and approximately $1 billion in cumulative edge AI revenue, primarily from our second generation CV2 family. Next is our portfolio breadth. We have 12 edge AI SoCs, supporting models ranging up to 34 billion parameters. We support up to 100 billion parameters in the future, covering the full breadth of edge AI applications.

Speaker #3: While still maintaining centralized control in the cloud In summary , we are an AI market leader across a broad set of criteria . First is how credibility we have a installed base of over 42 million edge SoCs with more than 370 unique customers .

Speaker #3: AI product , customer product reaching production and the proximately $1 billion in cumulative revenue , primarily from our second second generation CV two family .

Speaker #3: Next is our portfolio breadth . We have a 12 ag AI SoCs supporting models ranging up to 34 billion parameters with support up to 100 billion parameters .

Speaker #3: In the future, covering the full breadth of high applications. Finally, our development platform is established and critical in enablement tool.

Fermi Wang: Finally, our development platform is established as a critical enablement tool. The Cooper development platform scales across our edge AI portfolio and the multiple applications, with customer implementing and reaching production with more than 200 different model architectures. In conclusion, I am very proud of the resilience, commitment, and execution of our team in the last year. I'm very excited about our prospect in fiscal 2027 and the years ahead. We are committed to our edge AI strategy and driving earnings growth. With that, John will now discuss the Q4 and the fiscal year 2026 results, as well as the Q1 outlook in more detail. John?

Speaker #3: The Cooper Development Platform scales across our high portfolio . Portfolio and multiple applications with customer implementing and reaching production With more than 200 different model architectures .

Speaker #3: In conclusion , I am very proud of the resilience , commitment and execution of our team in the last year and I'm very excited about our prospects in fiscal 27 and the years ahead .

Speaker #3: We are committed to our high strategy and driving earnings growth . With that , John will now discuss the Q4 and fiscal year 2026 results , as well as the first quarter outlook in more detail .

Speaker #3: John .

Speaker #2: Thanks very .

John Young: Thanks, Fermi. I'll now review the financial highlights for Q4, fiscal year 2026, ending 31 January 2026. I will also provide a financial outlook for our Q1 of fiscal year 2027, ending 30 April 2026. 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 and acquisition-related expenses, adjusted for the impact of taxes. Fiscal year 2026 revenue increased 37.2% to $390.7 million. Automotive revenue, led by telematics, increased in the high single digits, and IoT increased almost 50% year-over-year, led by portable video and a continuation of strong growth in physical security.

Speaker #4: I'll now review the financial highlights for the fourth quarter fiscal year 2026 , ending January 31st , 2026 . I will also provide a financial outlook for our first quarter of fiscal year 2027 , ending April 30th , 2026 .

Speaker #4: 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.

Speaker #4: We have eliminated stock based compensation and acquisition related expenses , adjusted for the impact of taxes . Fiscal year 2026 revenue increased 37.2% to $390.7 million .

Speaker #4: Automotive revenue , led by telematics , increased in the high single digits , and IoT increased almost 50% year over year , led by portable video and a continuation of strong growth in physical security .

Speaker #4: For fiscal year 2026 , non-GAAP gross margin was 60.7% versus 62.7% in fiscal 2025 . non-GAAP operating expense increased 12.9% for the year , versus 6.5% in the prior year , driven by higher costs related to employees and SOC development projects .

John Young: For fiscal year 2026, non-GAAP gross margin was 60.7% versus 62.7% in fiscal 2025. Non-GAAP OpEx increased 12.9% for the year versus 6.5% in the prior year, driven by higher costs related to employees and SoC development projects. Ending cash and marketable securities totaled $312.6 million, up from $250.3 million at the end of the prior year, driven by free cash flow of $58 million for the year, or 14.8% of revenue. For fiscal Q4, revenue was $100.9 million, slightly above the midpoint of our prior guidance range of $97 to 103 million, down 7% from the prior quarter and up 20.1% year-over-year.

Speaker #4: Ending cash and marketable securities totaled $312.6 million , up from $250.3 million at the end of the prior year . Driven by free cash flow of $58 million for the year or 14.8% of revenue for fiscal Q4 .

Speaker #4: Revenue was $100.9 million , slightly above the midpoint of our prior guidance range of 97 to $103 million , down 7% from the prior quarter and up 20.1% year over year Sequentially , automotive and IoT , both experienced a similar seasonal decline .

John Young: Sequentially, automotive and IoT both experienced a similar seasonal decline. Non-GAAP gross margin for fiscal Q4 was 59.8% at the midpoint of our prior guidance range of 59% to 60.5%. Non-GAAP operating expense in Q4 was $56.5 million, also at the midpoint of our prior guidance range of $55 to 58 million. Q4 net interest and other income was $2.3 million. Q4 non-GAAP tax provision was approximately $551,000. We reported a non-GAAP net profit of $5.5 million or $0.13 per diluted share in Q4. Now, I will turn to our balance sheet and cash flow.

John Young: Sequentially, automotive and IoT both experienced a similar seasonal decline. Non-GAAP gross margin for fiscal Q4 was 59.8% at the midpoint of our prior guidance range of 59% to 60.5%. Non-GAAP operating expense in Q4 was $56.5 million, also at the midpoint of our prior guidance range of $55-58 million. Q4 net interest and other income was $2.3 million. Q4 non-GAAP tax provision was approximately $551,000. We reported a non-GAAP net profit of $5.5 million or $0.13 per diluted share in Q4. Now, I will turn to our balance sheet and cash flow.

Speaker #4: non-GAAP gross margin for fiscal Q4 was 59.8% at the midpoint of our prior guidance range of 59 to 60.5% . non-GAAP operating expense in Q4 was $56.5 million .

Speaker #4: Also at the midpoint of our prior guidance range of 55 to $58 million . Q4 net interest and other income was $2.3 million .

Speaker #4: Q4 non-GAAP tax provision was approximately $551,000 , and we reported a non-GAAP net profit of $5.5 million , or $0.13 per diluted share , in Q4 .

Speaker #4: Now , I will turn to our balance sheet and cash flow . Fiscal Q4 cash and marketable securities reached $312.6 million , increasing $17.3 million from the prior quarter .

John Young: Fiscal Q4 cash and marketable securities reached $312.6 million, increasing $17.3 million from the prior quarter and $62.3 million from the same quarter a year ago. Increased cash and marketable securities benefited primarily from operating cash flow associated with increased revenue. Receivables Day Sales Outstanding of 36 in Q4 was flat with the prior quarter. Days of inventory increased from 76 days to 99 days to support our current level of business. Operating cash inflow was $18.9 million for the quarter and $73.5 million for the year. Capital expenditures for tangible and intangible assets were $3.9 million for the quarter and $15.5 million for the year. Free cash flow was $15 million for the quarter.

Speaker #4: And $62.3 million from the same quarter a year ago . Increased cash and marketable securities benefited primarily from operating cash flow associated with increased revenue receivables days , sales outstanding of 36 in Q4 was flat , with the prior quarter days of inventory increased from 76 days to 99 days .

Speaker #4: To support our current level of business operating cash inflow was $18.9 million for the quarter and $73.5 million for the year Capital capital expenditures for tangible and intangible assets were $3.9 million for the quarter , and $15.5 million for the year .

Speaker #4: Free cash flow was $15 million for the quarter . During the second quarter of fiscal year 2026 , Ambarella Board of directors approved an extension of the current share repurchase program for an additional 12 months ending June 30th , 2026 .

John Young: During Q2 of fiscal year 2026, Ambarella's board of directors approved an extension of the current share repurchase program for an additional 12 months, ending 30 June 2026. In Q4 of fiscal year 2026, the company did not repurchase shares. During Q1, we repurchased 24,152 shares of our stock for total consideration of $1 million. As of today, there's approximately $48 million available under our repurchase authorization. We had one logistics company representing 10% or more of our revenue. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 73.1% of revenue for Q4 and 69.7% for the year. I now will discuss the outlook for Q1 of fiscal year 2027.

John Young: During Q2 of fiscal year 2026, Ambarella's board of directors approved an extension of the current share repurchase program for an additional 12 months, ending 30th June 2026. In Q4 of fiscal year 2026, the company did not repurchase shares. During Q1, we repurchased 24,152 shares of our stock for total consideration of $1 million. As of today, there's approximately $48 million available under our repurchase authorization. We had one logistics company representing 10% or more of our revenue. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 73.1% of revenue for Q4 and 69.7% for the year. I now will discuss the outlook for Q1 of fiscal year 2027.

Speaker #4: In the fourth quarter of fiscal year 2026 , the company did not repurchase shares during the first quarter , we repurchased 24,152 shares of our stock for total consideration of $1 million .

Speaker #4: As of today , there is approximately $48 million available under our repurchase authorization . We had one logistics company representing 10% or more of our revenue W-t microelectronics of Fulfillment partner in Taiwan that ships to multiple customers in Asia , came in at 73.1% of revenue for the fourth quarter and 69.7% for the year I now will discuss the outlook for the first quarter of fiscal year 2027 .

Speaker #4: We forecast Q1 revenue to be seasonal , and in the range of 97 to $103 million , or $100 million at the midpoint .

John Young: We forecast Q1 revenue to be seasonal and in the range of $97 to 103 million or $100 million at the midpoint. Sequentially, auto revenue is expected to increase, with IoT revenue expected to be seasonally down. We expect fiscal Q1 non-GAAP gross margin to be in the range of 59% to 60.5%. We expect non-GAAP OpEx in Q1 to be in the range of $55 to $58 million. We estimate net interest and other income to be approximately $2 million, our non-GAAP tax expense to be approximately $800,000, and our diluted share count to be approximately 44.1 million shares. Thank you for joining our call today, with that, I will turn the call over to the operator for questions.

Speaker #4: Sequentially , auto revenue is expected to increase with IoT revenue expected to be seasonally down . We expect fiscal Q1 non-GAAP gross margin to be in the range of 59 to 60.5% .

Speaker #4: We expect non-GAAP opex in the first quarter to be in the range of 55 to $58 million . We estimate net interest and other income to be approximately $2 million .

Speaker #4: Our non-GAAP tax expense to be approximately $800,000 , and our diluted share count to be approximately 44.1 million shares . Thank you for joining our call today .

Speaker #4: And with that , I will turn the call over to the operator for questions

Speaker #1: Thank you . As a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced .

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to 1 question or 1 follow-up. 1 moment while we compile our Q&A roster. Our first question will come from the line of Quinn Bolton with Needham & Company. Your line is open. Please go ahead.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you please limit yourself to question or one follow-up. One moment while we compile our Q&A roster. Our first question will come from the line of Quinn Bolton with Needham & Company. Your line is open. Please go ahead.

Speaker #1: To withdraw your question , please press star one one again . We ask that you please limit yourself to one question and one follow up .

Speaker #1: One moment while we compile our Q&A roster Our first question will come from the line of Quinn Bolton with Needham and Co . Your line is open .

Speaker #1: Please go ahead

Speaker #5: Hey guys, congratulations on the nice results. I wanted to ask for maybe a little bit more detail on the US e-commerce warehouse robotics win that you discussed in your script.

Quinn Bolton: Hey, guys, congratulations on the next results. For me, I wanted to ask for maybe a little bit more detail on the e-commerce warehouse robotics win that you discussed in your script. Can you give us a sense, you know, is this already in production? If not, when would you expect it to go to production? You know, how many warehouses or perhaps how many robots could you guys be, you know, participating in for this customer? Is it a meaningful opportunity?

Speaker #5: Can you give us a sense , you know , is this already in production ? If not , when would you expect it to go to production ?

Speaker #5: And how how how many warehouses or perhaps how many robots could you guys be ? You know , participating in for this for this customer ?

Speaker #5: Is it a is it a meaningful opportunity ?

Speaker #3: First of all, it's in production. Also, it's low volume production right now. But we definitely expect that will continue to grow.

Fermi Wang: First of all, it's in production, although it's a low volume production right now. We definitely expect that will continue to grow, and we think it can be meaningful, depends on how wide this go to their warehouses. In terms of the function that we're doing is really, like I said, it's a perception in a warehouse to help them to do automation from the production and also for the product movement. I think this is significant because that's the first such designing for us, although we are not allowed to talk about the name and also the size opportunity. We think this is definitely indication that our perception system that have been well respected and used in this large organization.

Speaker #3: And we think it can be a meaningful depends on how how wide this goes through . There . Warehouses . They're in terms of the function that we're doing is really like I said , it's a perception in a warehouse to help them to do an automation for the on the production and , and also the product movement .

Speaker #3: I think this is significant because that's the first such design win for us , although we are not allowed to talk about the name and also the size , but we think this definitely indication that our perception system that has been well , well , you know , respected and used in this large organization

Speaker #5: Yeah, I imagine it could be a nice, you know, flagship customer that could lead to some other wins as well.

Quinn Bolton: Yeah, I imagine it could be a nice, you know, flagship customer that could lead to some other wins as well, so congratulations on that. The second question I had is you gave us sort of the update on the auto pipeline now at standing at $13 billion. I believe that that's sort of an unprobability weighted number. In the past, I think you'd given us a $2.2 billion probability weighted forecast. Just wondering if you look back at the last forecast that was probability weighted, if you unweighted it, could you give us sort of an apples to apples comparison as to whether that auto pipeline has grown over the last year?

Speaker #5: So congratulations on that . The second question I had is you gave us the update on the auto pipeline . Now at standing at 13 billion , I believe that that's sort of an unprofitability weighted number .

Speaker #5: In the past . I think you'd given us a 2.2 billion probability weighted forecast and just wondering if you look back at the the last forecast that was probability weighted , if you unweighted it , could you give us sort of an apples to apples comparison as to whether that auto pipeline has grown over the last year ?

Speaker #3: Yeah . So first of all , we could , you know , automotive opportunities now just trying to differentiate what we have been doing in the last several years .

Fermi Wang: First of all, we call, you know, automotive opportunities, not just trying to differentiate what we have been doing in the last several years. First number we quote is the total size of $19 billion that's involved. All of the business opportunity that we see in the next 6 years that we have either won or been invited to bid on. Compared to last year, we do see the growth in this category. On the one business that we see, the numbers similar to last year as an apple-to-apple comparison. Also, I want to highlight one thing.

Fermi Wang: First of all, we call, automotive opportunities, not just trying to differentiate what we have been doing in the last several years. First number we quote is the total size of $19 billion that's involved. All of the business opportunity that we see in the next six years that we have either won or been invited to bid on. Compared to last year, we do see the growth in this category. On the one business that we see, the numbers similar to last year as an apple-to-apple comparison. Also, I want to highlight one thing.

Speaker #3: The so first number we called is the , the total size of the $19 billion . That's involve the all of the the business opportunity that we see in the next six years that we will we have either won or been invited to bid on .

Speaker #3: And compared to last year , this we do see the growth in this category on the on the one on the one business that we see the numbers similar to last year as an apple to Apple comparison .

Speaker #3: And but also I want to highlight one thing , although that the one business is flat . But considering the week automotive market in 2025 , we are very happy to see the end result because that show not only we see more opportunity in the total automotive opportunity side , but also we continue to add new design wins to compensate for the , you know , the the , the for example , a lot of customer forecast or delay the production , but we continue to maintain a healthier design win momentum in automotive

Fermi Wang: Although that, the 1 business is flat. Considering the weak automotive market in 2025, we are very happy to see the end result because that show not only we see more opportunity in the total automotive opportunity side, but also we continue to add new design wins to compensate for the, you know, for example, a lot of customers cut their forecast or delay their production. We continue to maintain a healthy design win momentum in the automotive.

Fermi Wang: Although that, the one business is flat. Considering the weak automotive market in 2025, we are very happy to see the end result because that show not only we see more opportunity in the total automotive opportunity side, but also we continue to add new design wins to compensate for the, for example, a lot of customers cut their forecast or delay their production. We continue to maintain a healthy design win momentum in the automotive.

Quinn Bolton: Great. Sorry, just a clarification for me. Did you say that the total pipeline is $13 billion or $19 billion?

Speaker #5: Sorry , just a clarification for me . Did you say that the total pipeline is 13.13 billion or 19.1 9,000,000,013 .

Fermi Wang: All right. It's a-

Fermi Wang: All right.

John Young: Thirteen.

Fermi Wang: It's a $13 billion. Sorry, I, you know, it must be a game.

Speaker #3: Is 13 billion ? Sorry , I know it must be a

Quinn Bolton: 13. Okay, I just thought that you had in the script.

Speaker #5: Had in the script .

Speaker #3: So $13 billion with a total opportunity .

Fermi Wang: $13 billion was our total opportunity.

Speaker #5: Got it. Okay. Thank you.

Quinn Bolton: Got it. Okay. Thank you.

Speaker #1: Thank you. And one moment for our next question. Our next question comes from the line of Thomas Svanberg with Stifel. Your line is open.

Operator: Thank you. one moment for our next question. Our next question comes from the line of Tore Svanberg with Stifel. Your line is open. Please go ahead.

Speaker #1: Please go ahead .

Speaker #6: Yes . Thank you . And congrats on the record revenue year . For me , I was hoping you could maybe help us look for , I guess , Guideposts on two particular topics .

Tore Svanberg: Yes, thank you, and congrats on the record revenue year. Fermi, I was hoping you could maybe help us look for, I guess, you know, guideposts on two particular topics. One is your channel strategy. You know, how is that going? Are there certain things that we should look out for 2027? On your semi-custom ASIC business, again, any specific things that we should be keeping an eye on? What are perhaps some of the early applications you think where you would potentially get an ASIC design win? Thank you.

Tore Svanberg: Yes, thank you, and congrats on the record revenue year. Fermi, I was hoping you could maybe help us look for, duideposts on two particular topics. One is your channel strategy. How is that going? Are there certain things that we should look out for 2027? On your semi-custom ASIC business, again, any specific things that we should be keeping an eye on? What are perhaps some of the early applications you think where you would potentially get an ASIC design win? Thank you.

Speaker #6: One is just your channel strategy , you know , how is that going ? Are there certain things that we should look out for for 2027 ?

Speaker #6: And then, on your semi-custom ASIC business again, any specific things that we should be keeping an eye on, and what are perhaps some of the early applications you think where you would potentially get an ASIC design win?

Speaker #6: Thank you .

Speaker #3: Right . I think at the key is we we talk about new go to market strategy and also highlight several milestones we want to achieve .

Fermi Wang: Right. I think at the CES, we talked about our new go-to-market strategy and also highlight several milestones we want to achieve. I think the first year, our goal for go-to-market, this new go-to-market strategy is to focus on build out with our partners, particularly the ISVs and as well as the system integrator and distributors. We think that we are shooting for get at least 1,000 of ISV committed to our platform, and by the end of the year, so that they can help us to drive multiple different applications, different customers at the same time. You know, also we are targeting, you know, at least establish certain milestones with distributors and the system integrators as the milestone for the first year.

Speaker #3: I think the first year our our goal for go to market , this new go to market strategy is to focus on build up with our partners , particularly the ISVs and and as well as assistant integrator and distributors .

Speaker #3: We think that we we are shooting for get at least a dozen of ISV committed to our platform and by the end of the year , so that they can help us to drive multiple different applications , different customers .

Speaker #3: And so , you know , also , we are targeting , you know , at least a certain milestones with distributors and the system integrators as the milestone for the first year .

Speaker #3: So you should expect us to continue to make progress on that . I think that , but however revenue probably we expect I'm not expecting any meaningful revenue this year from this new business model , but we expect to start seeing maybe ramping up a little bit in the next year in terms of a .

Fermi Wang: You should expect us to continue to make progress on that. I think that, but however, revenue, probably, we, I'm not expecting any meaningful revenue this year from this new business model, but we expect to start seeing, maybe, ramping up a little bit in the next year. In terms of ASIC, custom ASIC, semi-custom ASIC business, we already talked about our first 2 nanometer chip is in this business model, and it's in the IoT space. We, our current engagement shows multiple companies are interested in this model, and I won't be surprised that we continue to announce new design win in this category, but, you know, so far, the, only the first one is being confirmed, and we already announced it.

Fermi Wang: You should expect us to continue to make progress on that. I think that, but however, revenue, probably, we, I'm not expecting any meaningful revenue this year from this new business model, but we expect to start seeing, maybe, ramping up a little bit in the next year. In terms of ASIC, custom ASIC, semi-custom ASIC business, we already talked about our first two nanometer chip is in this business model, and it's in the IoT space. We, our current engagement shows multiple companies are interested in this model, and I won't be surprised that we continue to announce new design win in this category, but, you know, so far, the, only the first one is being confirmed, and we already announced it.

Speaker #3: Basic custom ASIC , semi-custom ASIC business , we only talk about our first two nanometer chip is in this business model and it's in the IoT space , and we we our current engagement showed multiple companies are interested in this model .

Speaker #3: And I won't be surprised that we continue to announce new design wins in this category . But you know , so far the only the first one is being confirmed .

Speaker #3: And we already announced it . So you should what you should expect is when we get new , new design wins , we will give you a hint that we definitely win something , but maybe we should .

Fermi Wang: What you should expect is when we get new design wins, we will give you a hint that we definitely win something. Maybe we won't disclose the customer name or the business. We should give you a hint that we continue to make progress in this business model.

Speaker #3: We won't disclose the customer name or the business , but we should give you a hint that we continue to make progress in this business model

Tore Svanberg: Very good. Thank you for that. As my follow-up, and on the 10% to 15% growth guidance for fiscal 2027, I know in fiscal 2026, obviously, IoT outgrew automotive by quite a bit. You know, just wondering how you think about the mix in fiscal 2027, and I assume the 10% to 15%, you know, assumes both unit growth and obviously also continues ASP growth. Thank you.

Tore Svanberg: Very good. Thank you for that. As my follow-up, and on the 10%-15% growth guidance for fiscal 2027, I know in fiscal 2026, obviously, IoT outgrew automotive by quite a bit. Just wondering how you think about the mix in fiscal 2027, and I assume the 10%-15%, you know, assumes both unit growth and obviously also continues ASP growth. Thank you.

Speaker #6: Very good . Thank you for that . And that's my follow up . And on the 10 to 15% growth guidance for fiscal 27 , I know in fiscal 26 , obviously IoT outgrew automotive by quite a bit .

Speaker #6: You know , just wondering how you think about the mix in fiscal 27 . And I assume that 10 to 15% , you know , assumes both unit growth and obviously also continuous ASP growth .

Speaker #6: Thank you .

Speaker #3: First of all , your assumption is right . Both ASP and unit growth is there . And also that we believe both IoT and auto will grow .

Fermi Wang: First of all, your assumption is right. Both ASP and unit growth is there, also that we believe both IoT and auto will grow. I want to add a little bit more color on this, our growth rate. In quick, when we look at fiscal year 2026 growth over 37, it comes from two areas. One is our new product ramp up at a time, also that to our pleasant surprise, a strong customer new product ramp up in fiscal year 2026. They combine, generate this growth. In this year, we are very confident that we're going to continue to ride down this momentum, we are confident about our own new product ramp up, like CV72, CV75, and CV7.

Speaker #3: But I want to add a little bit more color on this . Our growth rate in when we look at fiscal year 26 growth over 37 , it comes from two areas .

Speaker #3: One is our new product ramp up at a time . And also that to our pleasant surprise , a strong customer new product ramp up in fiscal 26 .

Speaker #3: Like combined generate this growth in this year . We are very confident that we're going to continue to write down this momentum , and we are confident about our own new product ramp up like 72 , 75 and Kv7 .

Speaker #3: But what we are trying to understand is working with customers to understand their new product ramp-up and how that's going to impact our growth this year.

Fermi Wang: What we are trying to understand is working with customer to understand their new product ramp up and how they're going to impact our growth in this year.

Speaker #6: Great . Thank you

Tore Svanberg: Great color. Thank you.

Speaker #1: Thank you . And one moment for our next question Our next question is going to come from the line of Kevin Cassidy with Rosenblatt Securities .

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open. Please go ahead.

Speaker #1: Your line is open . Please go ahead .

Speaker #7: Yeah . Thanks for taking my question . And congratulations on the good year . Just what what what are you seeing in the competitive landscape as you're getting into drones and are , I guess , are we past the point where companies are trying to build their own devices and will prefer to work with you for the AI capabilities and just what else you are ?

Kevin Cassidy: Yeah, thanks for taking my question, congratulations on the good year. Just what are you seeing in the competitive landscape, you know, as you're getting into the drones? You know, I guess, are we past the point where companies are trying to build their own devices and will prefer to work with you for the AI capabilities? Just what else you have as competition, say, coming from China?

Kevin Cassidy: Yeah, thanks for taking my question, congratulations on the good year. Just what are you seeing in the competitive landscape, as you're getting into the drones? Are we past the point where companies are trying to build their own devices and will prefer to work with you for the AI capabilities? Just what else you have as competition, say, coming from China?

Speaker #7: As competition , say , coming from China , right ?

Fermi Wang: Right. You're talking about China specifically. First of all, in the drone market, DJI continue to build their own silicon, but they also use external silicon solution to complement their product portfolios. Outside that, I think the majority of the other drone market will be, they don't plan to, at least we don't know anybody plan to build their own silicon. They definitely try to use external silicon, particularly that, you know, if you look at our offering to drone market, is from 5 nanometer down to 4 nanometer, and then will be 2 nanometer. From that point of view, I think that will uniquely position us as one of the few that can provide to the Chinese market.

Fermi Wang: Right. You're talking about China specifically. First of all, in the drone market, DJI continue to build their own silicon, but they also use external silicon solution to complement their product portfolios. Outside that, I think the majority of the other drone market will be, they don't plan to, at least we don't know anybody plan to build their own silicon. They definitely try to use external silicon, particularly that, you know, if you look at our offering to drone market, is from 5 nm down-4 nm, and then will be 2 nm. From that point of view, I think that will uniquely position us as one of the few that can provide to the Chinese market.

Speaker #3: You're talking about China specifically . So first of all , in the drone market , DJI continue to build their own silicon , but they also use external silicon solution to complement their product portfolios .

Speaker #3: And outside of that , I think that majority of other drone markets will be they don't plan to at least we don't know anybody plan to build their own silicon .

Speaker #3: Definitely to try to use external silicon , particularly that , you know , if you look at our offering to drone market , is from five nanometer down to four nanometer , that will be two nanometer .

Speaker #3: And from that point of view , I think that will uniquely position us as one of the few that can provide to the Chinese market

Speaker #7: Great and , you know , interesting with the ASIC market , with AMD and meta announcing a partnership earlier this week , part of the discussion was that meta has certain certain models that they want to run on a semi-custom version of AMD's mi 450 , and to me , it reminded me of your design , where you have algorithm first type of application .

Kevin Cassidy: Great. you know, interesting with the ASIC market, with AMD and Meta announcing a partnership earlier this week, part of the discussion was that Meta has certain models that they want to run on a semi-custom version of AMD's MI450s. To me, it reminded me of your design, where you have algorithm first type of application, or the way you made your CV design in the first place. Is that where you're finding applications for the semi-custom version? Is it for certain models for running what the customer is looking for an optimized SoC?

Kevin Cassidy: Great. Interesting with the ASIC market, with AMD and Meta announcing a partnership earlier this week, part of the discussion was that Meta has certain models that they want to run on a semi-custom version of AMD's MI450s. To me, it reminded me of your design, where you have algorithm first type of application, or the way you made your CV design in the first place. Is that where you're finding applications for the semi-custom version? Is it for certain models for running what the customer is looking for an optimized SoC?

Speaker #7: So the way you made your , your design in the first place . So is that where you're finding applications for the for semi-custom version ?

Speaker #7: Is that for certain models for running what the customer is looking for and optimize SoC ?

Speaker #3: I think that's one of the areas our customer wants to leverage on . But I want to highlight most , in fact , most in fact , all of the customers that we are engaging for this business model is trying to leverage either our CV for AI accelerator , because the performance and performance efficiency or our AI or Idsp , which is using a lot of AI , AI performance .

Fermi Wang: I think that's one of the areas our customer want to leverage on. I want to highlight, most, in fact, all of the customer that we are engaging for this business model, is trying to leverage either our CV for AI accelerator, because of performance and performance efficiency, or our AI or IDSP, which is using a lot of AI performance. Third, our software platform that they can easily leverage to quickly go to market with a new product and new models. Fourth, also is as important, is our capability to tape out a 2-nanometer chip. I think our customer are trying to take advantage of combination of those four factors as the reason to talk to us.

Fermi Wang: I think that's one of the areas our customer want to leverage on. I want to highlight, most, in fact, all of the customer that we are engaging for this business model, is trying to leverage either our CV for AI accelerator, because of performance and performance efficiency, or our AI or IDSP, which is using a lot of AI performance. Third, our software platform that they can easily leverage to quickly go to market with a new product and new models. Fourth, also is as important, is our capability to tape out a 2-nm chip. I think our customer are trying to take advantage of combination of those four factors as the reason to talk to us.

Speaker #3: Third , all our software platform that they can easily leverage to quickly go to market with a product and new models forth . And also , it's also important is our capability to tap out a two nanometer chip .

Speaker #3: I think our customers are trying to take advantage of combination of those four factors . As the reason to talk to us . By the way , we are not targeting at all for the data center design .

Fermi Wang: By the way, we are not targeting at all for the data center design, that is not where our strength. Our strength is some of the customer want to build Edge AI SoC with their own algorithm. That square is our sweet spot.

Speaker #3: That's not where our strength , our strength is . Some of the customers want to build a SoC with their own algorithm . That sweet spot

Speaker #7: Okay , great . Thanks for making that clear

Kevin Cassidy: Okay, great. Thanks for making that clear.

Speaker #1: Thank you . And one moment for our next question . Our next question comes from the line of Joe Moore with Morgan Stanley .

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

Speaker #1: Your line is open . Please go ahead .

Speaker #8: Great . Thank you . I heard you reiterate the 69 to 62% long term gross margin . I just wonder if you need to rethink that at all with the focus on different markets , anything that would pull you out of that range one way or the other , just any color .

Joe Moore: Great, thank you. I heard you reiterate the 69% to 62% long-term gross margin. I just wonder if you need to rethink that at all with the focus on different markets, anything that would pull you out of that range one way or the other, just any color? Thank you.

Joe Moore: Great, thank you. I heard you reiterate the 69%-62% long-term gross margin. I just wonder if you need to rethink that at all with the focus on different markets, anything that would pull you out of that range one way or the other, just any color? Thank you.

Speaker #8: Thank you .

Speaker #3: So first of all , we repeat to say this year alone , our gross margin will be within our long term gross margin , 5962 .

Fermi Wang: First of all, we repeat to say this year, our gross margin will be within our long-term gross margin, 59% to 62%. As CES, I also mentioned that when the custom, semi-custom chip design become more mature, if we need to change the model because of that, we will come to talk to the investor world about this. Today, I think that because the new business model is still at an early stage, and we're still talking to customer for different business model, I think that's premature to talk about this in terms of gross margin for the impact for that business. For our existing ongoing business, we will continue to feel comfortable that we'll be at a 59% to 62%.

Fermi Wang: First of all, we repeat to say this year, our gross margin will be within our long-term gross margin, 59%-62%. As CES, I also mentioned that when the custom, semi-custom chip design become more mature, if we need to change the model because of that, we will come to talk to the investor world about this. Today, I think that because the new business model is still at an early stage, and we're still talking to customer for different business model, I think that's premature to talk about this in terms of gross margin for the impact for that business. For our existing ongoing business, we will continue to feel comfortable that we'll be at a 59%-62%.

Speaker #3: And I see as I also mentioned , that when the custom semi-custom chip design becomes more mature , if we need to change the the model because of that , we will come to talk to our investor world about this .

Speaker #3: But today , I think that because that new business model still at the early stage and we're still talking to customers for different business model , I think that's premature to talk about this in terms of gross margin for the impact for that business , for our existing ongoing business .

Speaker #3: We will continue to feel comfortable that we'll be at this 59 to 62% .

Speaker #8: Okay . Thank you .

Joe Moore: Okay. Thank you.

Speaker #3: Thank you .

Fermi Wang: Thank you.

Speaker #1: Thank you . And one moment for our next question , our next question is going to come from the line of Vivek Arya with Bank of America .

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Vivek Arya with Bank of America. Your line is open. Please go ahead.

Speaker #1: Your line is open . Please go ahead .

Speaker #9: Hi , this is Liam Farr on for Vivek . Thank you so much for taking my question . I'm wondering , are you seeing any or expecting any impact or benefit from the recent restrictions of a Chinese competitor in the drone market

Liam Farr: Hi, this is Liam Farr on for Vivek. Thank you so much for taking my question. Wondering, are you seeing any or expecting any impacts or benefit from the recent restrictions of a Chinese competitor in the drone market?

Speaker #3: Well , we definitely watching it . So definitely , I think that's something we are talking to our customer . I think that it's not clear .

Fermi Wang: Well, we definitely watching it. Definitely, I think that's something we are talking to our customer. I think that it's not clear. Also, our current design win with that already in production, is not impacted by the new regulations. Whether the next generation will be impacted, is really depends on, they are going to file for FCC review, so there's a possibility it will be impacted. However, I want to point out that outside US, there's still huge drone market, you know, that we can tap into, not only in China, but in the outside US, that's still a very big market that we can work with. I think overall, the answer is no direct impact right now, but we're watching the potential impact in the future.

Fermi Wang: Well, we definitely watching it. Definitely, I think that's something we are talking to our customer. I think that it's not clear. Also, our current design win with that already in production, is not impacted by the new regulations. Whether the next generation will be impacted, is really depends on, they are going to file for FCC review, so there's a possibility it will be impacted. However, I want to point out that outside US, there's still huge drone market, that we can tap into, not only in China, but in the outside US, that's still a very big market that we can work with. I think overall, the answer is no direct impact right now, but we're watching the potential impact in the future.

Speaker #3: Well , first of all , our current design win was that already in production is not impacted by the new regulations . So whether the next generation will be impacted is really depend on that .

Speaker #3: They are going to file for FCC review . So there's a possibility it will be impacted . However , I want to point out the outside us , they're still huge drone market .

Speaker #3: You know , that we can tap into not only in China but in the outside outside us . That's still a very big market that we can work with .

Speaker #3: So I think overall the answer is no . No direct impact . Right now . But we are watching the potential impact in the future .

Speaker #9: Thank you . And then are you seeing any impact on the overall demand environment from component cost inflation ?

Liam Farr: Thank you. Are you seeing any impact on the overall demand environment from component cost inflation?

Speaker #3: You're talking about Dram , I assume . So , yes . First of all , there's obviously no direct impact to us , but we talk to a lot of customers .

Fermi Wang: You're talking about DRAM? Sure. yes, first of all, there's obviously there's no direct impact to us. We talk to a lot of customer, in fact, all of the customer about this issue. It's very clear that majority of them have a concern about the price increases rather than the shortage of the components. In fact, I think most of the company that we talk to still can find supplies at a much higher price today. indirect impact, in fact, in my opinion, is for the products which has a very low gross margin, which cannot sustain the DRAM cost increase, will be impacted the most. If you look at that from our customer portfolio, that means, you know, in fact, it's really low in business, which we don't have much at all.

Fermi Wang: You're talking about DRAM? Sure. yes, first of all, there's obviously there's no direct impact to us. We talk to a lot of customer, in fact, all of the customer about this issue. It's very clear that majority of them have a concern about the price increases rather than the shortage of the components. In fact, I think most of the company that we talk to still can find supplies at a much higher price today. indirect impact, in fact, in my opinion, is for the products which has a very low gross margin, which cannot sustain the DRAM cost increase, will be impacted the most. If you look at that from our customer portfolio, that means, in fact, it's really low in business, which we don't have much at all.

Speaker #3: In fact , all of our customers about this issue . It's very clear that majority of them have concerns about the the price increases rather than the shortage of the component .

Speaker #3: In fact , I think most of the companies that we talk to still can find supplies . But at a much , much higher price today .

Speaker #3: So indirect impact , in fact , in my opinion , is for the products , which has a very low gross margin , which cannot sustain the the direct cost increase .

Speaker #3: What be impacted most . If you look at that from our , our customer portfolio , that means , you know , three low and business which we don't have much at all .

Speaker #3: So I think, from our point of view, we don't expect a huge impact because of DRAM price at this point. But we remain to watch this because it changes so quickly and is so dynamic.

Fermi Wang: I think for, from our point of view, we don't expect huge impact because of DRAM price at this point. We remain to watch this because it changes so quickly and so dynamic, and we want to make sure that we don't overlook this potential impact.

Speaker #3: And we want to make sure that we don't overlook this potential impact.

Speaker #9: Thank you very much .

John Young: Thank you very much.

Liam Farr: Thank you very much.

Speaker #1: Thank you . And as a reminder , if you would like to ask a question , please press star one one . Our next question will come from the line of Martin Wang with Opco .

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one. Our next question will come from the line of Martin Wang with Oppenheimer. Your line is open. Please go ahead.

Speaker #1: Your line is open . Please go ahead .

Speaker #8: Hi .

Martin Wang: Hi, thank you for taking my question. My question is on the seasonality in relation to CV7 launch in the latter half the year. Do you think that initial launch could change your seasonal patterns a little bit? Also, how should we think about the overall ASP uplift for the year versus FY 26?

Speaker #10: Thank you for taking my question . My question is on seasonality in relation to Cd7 launch . In the latter half of the year , do you that initial launch could change your seasonal patterns a little bit ?

Speaker #10: And also how that could how should we think about the overall ASP uplift for the year versus FY 26 ?

Speaker #3: Right . So first of all , we we expect the the the ramp up in the first quarter of this year . But we don't expect material revenue generated by Kd7 this year .

Fermi Wang: Right. First of all, we expect the ramp up in the Q4 this year, but we don't expect material revenue generated by CV7 this year. However, we highlight CV7 because for two reasons. One is CV7 is our first 4nm chip and a 2.5x higher performance, AI performance than CV5. From that point of view, that we see huge interest and, in fact, many design wins already engaged, and some of them will be ramping up in production later this year, is significant for us. That means that confirm our thesis that our customer has huge demand and appetite for higher AI performance for the applications, which is very encouraging to us.

Speaker #3: But, however, we highlight CV7 for two reasons. One is, CV7 is our first full nanometer chip. And, two, it has 2.5x higher AI performance than CV5.

Speaker #3: So from that point of view that we see huge interest and in fact , many design wins already engaged and some of them will be ramping up in production later this year .

Speaker #3: It's significant for us. That means it confirms our thesis that our customer has huge demand and appetite for higher AI performance for their applications, which is encouraging to us.

Speaker #3: So in terms of ASP , we expect there's a premium ASP compared to current Fiasp , but we haven't finalized all the negotiations yet .

Fermi Wang: In terms of ASP, we expect there's a premium ASP compared to current CV5 ASP, but we haven't finalized all the negotiation yet. I think that is an indication, that's just a indication what we are looking at in terms of total ASP for CV7.

Speaker #3: So I think that's indication . That's just a indication of where we're looking at in terms of total ASP for Cv7

Speaker #10: Got it. Thank you. For me.

Martin Wang: Got it. Thank you, Fermi.

Speaker #1: Thank you . And one moment for our next question Our next question comes from the line of Gus Richards with Northland Capital Markets .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Gus Richard with Northland Capital Markets. Your line is open. Please go ahead.

Speaker #1: Your line is open . Please go ahead .

Speaker #11: Yes . Thanks for taking the questions . You know , as you move into the ASIC business and , you know , an indirect channel , you know , I was hoping you could discuss a little bit about how that's going to change the PNL .

Gus Richard: Yes, thanks for taking the questions. You know, as you move into the ASIC business and, you know, an indirect channel, you know, I was hoping you could discuss a little bit about how that's going to change the PNL. You know, an indirect channel, you're going to have likely lower volumes, higher gross margin, and maybe higher SG&A to go along with that. In the ASIC business, you know, do you get paid for the NRE? You know, does that necessitate a lower unit cost or a lower gross margin on the units? If you just kind of talk about how you think that's going to play out over time.

Gus Richard: Yes, thanks for taking the questions. You know, as you move into the ASIC business and, you know, an indirect channel, you know, I was hoping you could discuss a little bit about how that's going to change the PNL. You know, an indirect channel, you're going to have likely lower volumes, higher gross margin, and maybe higher SG&A to go along with that. In the ASIC business, you know, do you get paid for the NRE? Does that necessitate a lower unit cost or a lower gross margin on the units? If you just kind of talk about how you think that's going to play out over time.

Speaker #11: You in channel , you're going to have likely slower volumes , higher gross margin , and maybe higher SG&A to go along that .

Speaker #11: And the ASIC business , you know , do you get paid for the NRE ? You know , does that necessitate a lower unit cost or lower gross margin on the units ?

Speaker #11: If you just kind of talk about how you think that's going to play out over time , right .

Fermi Wang: Right. First of all, I think it's a little too early for us to talk about the business model for the new go-to-market strategy. We definitely need to come back to you to talk about this, but considering there's no revenue generation from that this year, I would like to delay that discussion a little bit. Your question on the ASIC side is important for us. First of all, it has to have NRE associated with those kind of projects. Otherwise, it doesn't make sense to us to do this kind of project. However, you also, there are all kinds of different variable we play with. For example, you know, some customers want to integrate their black box IP into a chip. Somebody want to have a special IO design for their application.

Speaker #3: So first of all , I think it's a little too early for about the business model for the new go to market strategy .

Speaker #3: We definitely need to come back to you to talk about this , but considering there's no revenue generation from that this year , I would like to delay that discussion a little bit .

Speaker #3: But your question on the ASIC side is important for us . First of all , it has to have any associate with those kind of projects .

Speaker #3: Otherwise it doesn't make sense to us , to this project . But however , it also there are all kinds of different variables we play with .

Speaker #3: For example , you know some customers want to integrate their black box IP into a chip . Somebody wants to have a special IO design for their their application .

Speaker #3: So it's a huge variety of demands . But it at the end we need to have re well willing to to look at different ASP structure to make the whole overall business making sense for us and for our customers .

Fermi Wang: This, it's a huge variety with demands, but at the end, we need to have NRE, but willing to look at different ASP structure to make the whole overall business making sense for us and for our customers. The first product that we talk about, we only talk about the significant amount of NRE that they are paying out right now. The first revenue generated for silicon, for the first ASIC product, a semi-custom chip ASIC, is going to be early next year. In terms of the gross margin impact, I think there's small. We still believe that overall, if you average out the whole business in that first silicon, that the gross margin is still within our long-term gross margin.

Speaker #3: And the first product that we talk about , we always talk about the significant amount of money that they are paying out right now .

Speaker #3: And the first revenue generated for silicon for the first AC project , a semi-custom chip ASIC is going to be early next year .

Speaker #3: So the intent of the gross margin impact , I think there's small we still believe that the overall , if you average out the whole business in that first silicon , that the gross margin is still within our long term gross margin .

Speaker #3: But I also believe that to exchange for more aggressively that business model might change for others in the future . So because it's really uncertain , I don't want to talk about it .

Fermi Wang: I also believe that to exchange for more aggressive NRE, that business model might change for others in the future. Because it's really uncertain, I don't want to talk about it. We don't want to give you indication just yet. I just want to tell you that it's a variety of possibility, and we are willing to talk with the customer that want to work with us. Obviously, at the end, that has to be beneficial for both, for me, for Ambarella, as well as for our customers.

Speaker #3: I don't we don't want to give you indication just yet . I just want to tell you that it's a variety of possibility .

Speaker #3: And we are willing to work with the customer . That won't work with us . Obviously , at the end , that has to be beneficial for both .

Speaker #3: For me , for Ambarella , as well as for our customers

Speaker #11: Got it . Thank you for the for that . And then just a housekeeping question . Could you give me a sense of in the IoT business , how much of that was industrial ?

Gus Richard: Got it. Thank you for the, for that. Just a housekeeping question. Could you give me a sense of, in the IoT business, how much of that was industrial, how much of it was consumer?

Speaker #11: How much of it was consumer

Louis Gerhardy: Maybe if we divide it, you know, by CapEx-driven businesses versus consumer-driven. Gus, this is Louis speaking, by the way. It's roughly 50/50. It didn't change much from the prior couple of quarters.

Speaker #2: Maybe if we divide it by half driven businesses versus consumer driven ? Gus , this is Lewis speaking , by the way . It's roughly 5050 .

Speaker #2: It didn't change much from the the prior couple of quarters

Speaker #11: Got it .

Gus Richard: Got it. Thank you.

Speaker #2: Think about if we break it down . If we break it down a little bit , you know , IoT for the year was around 80% of revenue .

Louis Gerhardy: Think about if we break it down, if we break it down a little bit, you know, IoT, you know, for the year was around 80% of revenue. Security, which is mostly enterprise security for us, obviously, that's enterprise CapEx. There's a little bit of home there. In portable video, things like wearables or enterprise video conferencing, and I think we had 3 announcements in that category this quarter. That's enterprise CapEx. You have 360-degree cameras, things like aerial drones, which did go to production for us in Q4. Those are all, you know, consumer, prosumer type related. That's how you get to the roughly 50/50.

Louis Gerhardy: Think about if we break it down, if we break it down a little bit, you know, IoT, you know, for the year was around 80% of revenue. Security, which is mostly enterprise security for us, obviously, that's enterprise CapEx. There's a little bit of home there. In portable video, things like wearables or enterprise video conferencing, and I think we had three announcements in that category this quarter. That's enterprise CapEx. You have 360-degree cameras, things like aerial drones, which did go to production for us in Q4. Those are all, you know, consumer, prosumer type related. That's how you get to the roughly 50/50.

Speaker #2: And security , which is mostly enterprise security for us . Obviously , that's enterprise CapEx . There's a little bit of home there .

Speaker #2: But then in portable video , things like wearables or enterprise video conferencing , I think we had three announcements in that category this quarter .

Speaker #2: That's enterprise CapEx . But then you have 360 degree cameras , things like aerial drones , which did go to production for us in Q4 .

Speaker #2: Those are all , you know , consumer prosumer type related . So that's how you get to the roughly 5050 .

Speaker #11: Got it . Thanks so much .

Gus Richard: Got it. Thanks so much.

Speaker #1: Thank you . And I'm showing no further questions at this time . And I would like to hand the conference back over to Doctor Fermi Wong for closing remarks .

Operator: Thank you. I'm showing no further questions at this time, and I would like to hand the conference back over to Dr. Fermi Wang for closing remarks.

Speaker #3: Yeah . Thank you for joining our call today . And I hope to see you at some of our numerous events this quarter .

Fermi Wang: Yeah, thank you for joining our call today, and I hope to see you at some of our numerous events this quarter. Thank you. Talk to you next time.

Speaker #3: Thank you . Talk to you next time .

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

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