Ambarella, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Ambarella's fourth quarter and full year 2020 earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference call is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Louis Gerhardy, Corporate Development. Thank you, and please go ahead, sir.

Thank you, Chris. Good afternoon and thank you for joining our fourth quarter and fiscal year 2020 financial results conference call. Our speakers will be Dr. Feng-Ming Wang, President and CEO, and Casey Eichler, CFO. The primary purpose of today's call is to provide you with information regarding our fourth quarter and fiscal 2020 results. 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 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. were 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 that we filed with the SEC, including the annual report from Form 10-K that we filed on March 29, 2019, for the fiscal year 2019, ending January 31st, 2019, and the Form 10-Q filed on December 6, 2019 for the third quarter of fiscal year ending January 31, 2020. Access to our fourth quarter and fiscal 2020 results, press release, historical results, SEC filings, and a replay of today's call can be found on the investor relations portion of our website. I'll now turn the call over to Dr. Fermi Wong-Trey.

Thank you, Louis, and good afternoon, everyone. Before reviewing our results, I will first provide an update on the extraordinary factors, geopolitical now, also public health, that may continue to impact our business. First, on COVID-19, we are and will continue to take the necessary precautions to ensure the safety of our employees. We express our deepest sympathies to those affected worldwide and we offer our best wishes to them for complete recovery. We are starting to see a financial impact from the virus and we expect to continue to face an elevated level of demand and supply uncertainty. We are taking precautions to mitigate the risks to our own operation. Based on what we know at the time of this call and to the best of our ability, we have factored these risks into our Q1 guidance. Geopolitical risks are dynamic and remain high. The phase one trade deal eased tension somewhat, and our October 15th 8K update brought some clarity to the October 9th entity list. But there are a wide variety of geopolitical risks at play, including foreign policy, trade, and IP matters. Factors potentially disruptive to our business included new export controls on advanced technologies. The risk customers in China take actions to reduce their dependence on the supply of U.S. components, potentially subject to the various geopolitical factors, changes to the entity list, and all tariffs. Market share shifts between our customers and the supply chain issues. On the other hand, our largest competitor in the security camera SOC market, High Silicon, a unit of Huawei, is facing challenges that are helping us share outside of China. As you can see, multiple factors are contributing to a wide range of potential outcomes for us. Fiscal year 20 revenue of $228.7 million increased slightly from the prior year, with no major shift in market exposure. In fiscal year 20, just a year after taping out CV2, CV22, and CV25, these products generate production revenue from a dozen customers. And it is still very early with the CV revenue only a few percent of the total revenue, but with more than 100 different CV customers purchasing engineering parts, evaluation kits, and or development boards in fiscal year 20. This foundation of activity give us confidence our CV investment will take another major step forward. Looking into fiscal year 21, momentum in our strategy-focused area of CV is strong, and we expect CV to reach 10% of total revenue for the year. Our goal is to grow our total revenue in fiscal year 21 despite the headwinds and uncertainties. At a recent consumer electronics show in January, We experienced a strong turnout with more than 250 customer and partner meetings. With more than 20 indoor and outdoor demos, we exhibited our latest solution for automotive and home monitoring applications, as well as for new applications such as access control, robotics, retail, and logistics. During CES, we announced our first SOCs with automotive safety integrity level. B, also known as ASOB, for safety critical automotive applications. CV22FS and CV2FS target forward facing monocular and stereo vision ADAS cameras, as well as computer vision ECUs for L2 plus and high level of autonomy. Featuring extremely low power consumption, these two SOCs make it possible for Tier 1s and OEMs to surpass new car assessment program or NCAP performance requirements within the power consumption constraints of a single box wind shield mounted forward ADAS cameras. ZF, a German-based Tier 1 that is one of the largest global suppliers to the passenger and the commercial vehicle market. announced it was working with Umbrella on the next generation of talented viewing platforms, including surround view visualization, driver monitoring, standalone vision processing, and the email solution used during CES. ZF chose CV4-SoC for their combination of high-quality imaging and advanced AI processing, enabling ZF to offer a wide range of viewing and interior sensing applications. German ADAS software supplier Helaglia demonstrated its latest deep learning-based ADAS software suite running on our CV22 SoC. The AI algorithms included multi-class object detection, detection of driving area limitations, depth estimation, and the classification of the traffic lights and the traffic signs. How to choose and browse CB4 SOC due to their ability to deliver extremely high computer vision processing performance with very low power consumption? At our CES location, OE and Mercedes-Benz provided live demonstrations in one of their sprinter vans of COROS, or Cargo Recognition and Organization System. The system is designed to make the parcel delivery process more efficient and he leverages both the AI and the stereo processing capability of CV2 with multiple CV2 SOC per van. A rapid expanding list of third-party software developers have chosen to invest resources to develop deep learning AI software on our CVflow platform with a number of these companies demonstrating as CES. For example, StrataVision demonstrated both forward-facing ADAS and the driver monitoring running simultaneously on a single CV22. Boardman 17's forward-facing ADAS and the recoding solution runs on CV25 and target fleets and passenger vehicles. EyeSight's driver and interior camera system ran three cameras on one CV22. AnyVision's retail analytics platform was based on full live CV22-based cameras. and the SenseTimes forward-facing ADAS and the driver monitoring system ran on our CV22. At the CES, Umbrella's level four autonomous vehicle demonstration platform, EVA, or embedded vehicle autonomy, successfully completed over 140 autonomous rides on Las Vegas streets. The rides were conducted both during the day and for the first time at night. The EVA cars leverage Umbrella's CVT2-based stereo supercam cameras and Umbrella's ELFO demonstration software stack, together with radar, but without LiDAR. The demonstration included generic obstacle detection, pedestrian, vehicle, bike, motorcycle, and the traffic sign detection and the classification, traffic light detection and management, task planning, and autonomous parking. And Varela also demonstrated at CES an AI-based three-camera and three-mirror solution running on a single CV22 SOC. This e-mirror system's left and the right side mirror not only provide an improved field of view in difficult lighting conditions, but by leveraging our CV flow processing in the same chip, we could provide a blind spot detection warning when bikes, car, or pedestrian were present. During CES, Umbrella announced and demonstrated a solution for two new AI market applications, 3D access control and robotics. Umbrella's 3D sensing platform addresses access control, security panels, smart video locks, video doorbells, and face recognition payment systems. The platform is based on Umbrella's CV25-CV4 AI vision system on chip, on semiconductor's RGB AI image sensor, and the structural light powered by Lumintons Vixels. The system uses a single image sensor for both visible and infrared images for depth sensing. The Umbrella CV25 SoC powers depth processing, anti-spoofing algorithms, 3D facial recognition algorithms and the video encoding on a single chip, significantly reducing system complexity. and Umbrella's new robotic platform facilitates the development of robotic applications based on Umbrella's CV4 SOCs. It targets automated guided vehicle or AGV consumer robots and industrial robots. The robotic platform provides the unified software infrastructure for the most common robotics functions including neural network processing and open source computer vision library or OpenCV functions. Our demonstration included a single CV2 chip performing stereo processing, object detection, key point tracking, occupancy grid, and the visual geometry. I will now take a little time about something, some additional customer product information from the last quarter, starting with the professional security. Motorola Solution announced in February that launch of the new edition of the video security portfolio The new H5M camera line is a cost-effective solution for budget-conscious video security projects that require a small footprint camera for auto use. Pelco, a recent spin-out of global industrial giant Schneider Electric. intends to announce in March the Cyrix Enhanced Series 3 camera targeting critical infrastructure customers such as airports, cities, gaming, and other enterprises and the small city customers. Based on Ambarella's CVSLCs and built with industry-leading image quality, performance, ruggedness, and deep learning analytics, these cameras are expected to be shipping later this month. at IAC West, a security exhibition to be held later in March. RevoTech, a major professional security camera OEN and ODN in Taiwan, will demonstrate their new CV flow-based camera. This outdoor fisheye camera will feature six megapixel H.265 encoding, IP66 and IK10 ratings, smart IR, WDR Pro, local dewarping, and embedded smart 360 VCA analytics. including intrusion detection, crowd detection, and loitering detection. In a consumer security camera market, home security and automation firm ADT unveiled its first do-it-yourself home security platform, Blue by ADT. And whereas H5L or H2L are designed into indoor, outdoor, and doorbell cameras in this platform, all capable of recording 1080p videos. Chinese home monitoring camera maker SIM2 introduces a SIMCAM 1S camera, the first consumer model to feature umbrella's CV flow SOC. Based on our CV25 SOC, the camera included facial recognition, path and vehicle recognition, auto tracking, and the support for Amazon Aliza. I will now talk a little about some of the custom product introduction from the automotive markets. Gentex Corporation and Ashton Martin announced they have jointly developed a camera-based rear vision system that dramatically improves a driver's ability to monitor traffic to the rear and the sides of the vehicle. The umbrella-based prototype was demonstrated at Gentex CES booth in Ashton Martin DBS Superleggera. The largest bus and passenger coach OEM in China, Yutong, will use a forward-facing ADAS camera based on CV22-AQ in their commercial fleet. Based on Tier 1 MaxEye's IFVS500, the system provides autonomous emergency brake for vehicles and the pedestrian and lane keeping functions. During the quarter, Garmin introduced its Tandon dash camera featuring two lenses, each with a 180-degree field of view. to record in front and inside the car to provide complete coverage around the driver. Featuring 1440 resolution video and 9 vision, the Tendon camera is based on Umbrella's A12A automotive ISOC. Next space, the UK and Europe's leading dash camera supplier introduced its 622 GW model Based on Embraer's H22 automotive SOC, the camera records 4K video at 30 frames per second and includes image stabilization, super slow motion, night vision, and Amazon Alexa integration. In the China OEM automotive market, Lishang introduced its Lishang One electric vehicle featuring a car recorder as a standard feature. Supplied by One Invo and based on Embraer's H2L SOC, The car recorder offers full video recording. And the Korean Dashcam leader, Thinkware, introduced new models based on Umbrella's H22 automotive SOC, the QXD3000 and QXD Mini, a two-channel, full HD design with small form factor and Super 9 vision features. While Quantum model is a 4K plus Quad HD design. In the consumer market segment, Chinese sports and VR camera maker, Insta360, introduced its new 1R sports camera based on our H22 V75 SoC. The camera includes a 1H sensor, AI-driven editing software, and unique twin mode, which enables camera to offer 5.7K resolution, 360-degree capture, or 4K P60 wide-angle video. In summary, fiscal year 20 represented a major step forward as we begin to establish the commercial foundation for nearly $400 million investment into AI and computer vision. The three waves of CV revenue we have previously articulated are all taking shape. That's by wave one in the professional security camera market where we have seven customers in production and this wave is a very strong position to become material in calendar year 20. In wave two, the whole monitoring market, we have two customers in production and we expect design activity to remain high this year with revenue becoming material in calendar year 21. In automotive market, we are generating production CV revenue from three fleet and aftermarket customers, and design activity is high across many different locations. We continue to expect auto CV revenue to become material in the calendar year 22 and the calendar year 23 timeframe. AI and the CV are bringing new product cycle to our existing markets like security cameras. But most importantly, as you saw at the CES, These new products are enabling a multi-billion expansion of our serviceable market into vehicle, smart cities, smart homes, industry 4.0, logistics, and other robotic applications. Despite the global uncertainty surrounding us, I want to thank Embraer's 761 strong team for their perseverance and the successful execution during this critical phase of development for the company. and we are thankful to all of our other stakeholders including customers, vendors, and shareholders for your support. Now I'll turn the call over to Casey for the first quarter financial details and guidance for our first quarter of fiscal year 21.