Ambarella, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Ambarella's fourth quarter fiscal year 2021 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your host today, Lewis Gearharty, Corporate Development. Please go ahead.

Thank you, Sarah. And good afternoon, everyone. Thank you for joining our fourth quarter and our fiscal year 2021 financial results conference call. On the call today is Dr. Fermi Wong, President and CEO, and Casey Eichler, CFO. We're dialing in today from different locations. I'll be covering Casey's prepared remarks, and then Casey will be online for Q&A. The primary purpose of today's call is to provide you with information regarding our fourth quarter and our fiscal 2021 results. The discussion today and the responses to your question 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. 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 file with the SEC including the annual report on Form 10-K that we filed on March 27, 2020 for fiscal year 20, ending January 31, 2020, and the Form 10-Q filed on December 9, 2020 for the third quarter of fiscal year 21. Access to our fourth quarter and fiscal 21 results press release, historical results, SEC filings, And a replay, as well as the prepared transcripts of today's call, can be found on the investor relations portion of our website. With that, I'll turn it over to Dr. Fermi Wong.

Thank you, Louis. And good afternoon, everyone. And thank you for joining us today. Our multi-year visual AI investment is the major factor in the accelerated business momentum we are reporting. Fixed-year 2021 revenue of $223 million was down 3% from the prior year, with the CV growing significantly, exceeding 10% of total revenue for the year, with the video processor business down around 10%. Fixed-year 2021 came with many challenges, the pandemic, geopolitics, and an increasingly tight supply chain. And these factors remain to varying degrees today. I'm pleased with how we have managed this environment. And as I look into fiscal year 22, my goal is to maintain a high level of execution and leverage our leadership position with our differentiated and proprietary visual AI silicon. Q4 finished the year on a strong note with revenue 4% above the high end of our guidance range driven by CV, with the number of production CV projects doubling sequentially. Embraer's highly focused video and image processing R&D investment crossed over a cumulative $1 billion in Q4, with almost half of this amount directed to our proprietary AI technology development. In fiscal year 21, validation of this investment was strong. as more than 175 unique CV customers purchased engineering parts and or development systems, including more than 40 reaching production volumes in the year. By the end of the current quarter, we expect to have shipped more than 2 million CV SOCs on a cumulative basis, with more than 300,000 CV SOCs shipped into the automotive market. I am extremely proud of our new product execution, as demonstrated by the introduction of our flagship CV5, the first in a family of 5nm AI region processors. As we look into fiscal year 2022, our guidance contemplates supply-side challenges, growth in the organization, an expanding product portfolio, and the development of a number of increasingly diverse markets. We remain confident the visual AI market is still in its early stages, and we continue to expect CV to be at least 25% of total revenue for the year, with the video processor business posting moderate growth. I will now provide an update on our customers and markets. At the beginning of the year, we introduced our CV5, an artificial intelligence AI vision processor capable of recording 8K video or full 4K video streams. The new SoC will enable the development of intelligent automotive camera systems, consumer cameras, and robotic cameras. It combines Umbrella's powerful CV flow AI engines with dual-arm A76 CPUs, to provide the performance necessary for a wide range of AI-based algorithms. Fabricated in the most advanced 5 nanometer process technology, we believe CV5 sets a new industry benchmark for power consumption, consuming approximately 2 watts of power while encoding 8K video at 30 frames per second or 5 watts at 60 frames per second. In January, Umbrella held its annual customer technology event during what would have been the live consumer electronic show. Our virtual event was held over a two-week period and included the individual live hosting of over 200 worldwide customers, spanning automotive, consumer, robotic, and IoT markets. Featuring over 30 technology demonstrations, with an emphasis on advanced AI applications. The event was a great success, allowing us to keep engaged not just with existing customers, but to meet many new ones that might not otherwise have been able to travel to Las Vegas for a live show. During the quarter, at the Amazon re-event show, AWS announced their new Panorama SDK with support for Ambarella CVFlow SoCs. The Panorama SDK allows device manufacturers to easily build edge computer vision devices for a wide array of use cases across industrial IoT and other segments. Ambarella was chosen as one of the only two initial semiconductor partners to build an ecosystem of hardware accelerated edge AI devices with our solution targeting intelligent camera designs. I would now like to take the opportunity to describe some of our customer-related highlights from the quarter, starting with the automotive market. Today, we announced that Motional, a global leader in driverless technology, has selected Umbrella's CVFlow family of AI processors. The processors work with Motional's network of LiDAR, camera, and radar sensors to enable the vehicle's safe operation in diverse and challenging road conditions. Moshino is leading the industry in making driverless vehicle a reality. The company recently became among the first in the world to put driverless vehicle on public roads and announced a landmark agreement with Lyft for the largest deployment of robotaxi on a major ride share network. The company's driving record included navigating more than 1.5 million miles in diverse environments and providing more than 100,000 public rides with zero at-fault incidents. It has also led the establishment of industry-leading safety standards, having co-published the Safety First for Automated white paper. Embraer's CV4 SOC will be part of the central processing module emotional stragglers vehicle, providing image and computer vision processing for cameras in the sensing suite, including the front-facing cameras. The CV4 AI engine will enable emotional AI algorithms to perform complex computer vision tasks, such as object detection, classification, and image segmentation with industry-leading power efficiency. Adra's advanced image processing will allow the vehicles to operate in challenging lighting conditions, including low light and high contrast situations, while the SoC's H.264 encoding will enable logging of video data from old cameras in a vehicle. In the Chinese automated market, the world's largest, we have won a number of driver monitoring and the combination with driver monitor monitoring plus in-cabin monitoring designs in passenger vehicles. These designs are with leading automotive OEMs and are expected to enter into mass production this year. The designs leverage Embraer's CV flow AI processing to enable driver safety functions, such as detecting distracted or drowsy drivers, as well as our HOC ability to process RGB IR images. The designs are based on our CV25 SOCs, as well as our new CV28 SOC, which we announced in the fourth quarter of last year. Also during the quarter, Ford introduced a dealer-fit dash camera for its European model based on Umbrella's A12AX automotive SOC, designed by Falcon Electronics, the small form factor wide-angle HD cameras. fits into the rear view mirror zone of the white wing screen without obstructing the driver's view and integrates with Ford's SYNC 3 screen and the voice control. And in China, Zhiyun Venture, FAW Volkswagen, introduced its new CC passenger car with a dealer-fit HD DVR based on Embraer's A12A SOC. Also during the quarter, a major home monitoring camera maker entered into mass production of a new class of intelligent camera based on our CV flow SOCs. And we're beginning to see significant CV growth in home security cameras. Customer's requirement for cameras with higher quality alerts realized with advanced hardware designs and more sophisticated algorithms for object detection, motion detection, and package protection are driving the adoption of umbrella Siri Flow SoCs. In January, alarm.com released its touchless video doorbell, eliminating the need to physically press the doorbell button. The doorbell recognizes when a person stands on your doormat and sends a mobile alert, allowing you to see and talk to your visitor from wherever you are. Based on Ambrose X5L, it includes 150-degree vertical field of view to allow viewing of packages, full HD resolution, IR night vision, and HDR processing. Also during the quarter, Logitech launched its CircleView wired doorbell. The first consumer doorbell includes Apple HomeKit secure video. The doorbell leverages users' existing iCloud storage for video recording without paying a separate subscription, and provides a similar viewing experience with the Home app on iPhones, Apple Watch, or other Apple devices. The doorbell is based on Ambrose 85LM SoC. In the professional IP security camera market, Umbrella has continued to benefit from customers migrating from high-cylinder control solutions and from widespread adoption of SoCs based on our CV-flow AI architecture. During the quarter, Dahua, the world's second-largest security camera maker, continued its migration to Umbrella with multiple product launches. For intelligent transport systems product, our CV2 SOC is being used for three, five, and nine megapixel ITS cameras. In IP security cameras, our CV22 and the CV2 SOCs are now shipping for four and eight megapixel designs with advanced analytics. And also Korean market leader Hanwha Taekwondo further extended its portfolio of umbrella-based IP security cameras, including a new three-channel multi-directional camera based on our CV22 CVFlow SoC, a new full-channel panoramic camera based on our flagship CVFlow CV2 SoC, and a new five megapixel corner mount model based on our H3L63 SoC. Also during the quarter, IDIS, Korea's second largest camera supplier introduced three new camera families based on our CVFlow CV22, H5L, and H3L SOCs. The new cameras include fisheye, 5 megapixel, and 8 megapixel models and leverage intelligent codec capability to reduce network bandwidth and storage requirements. In Europe, German IP camera specialists Delmire introduced its new Panamera S camera based on CV22. By combining several lenses and the sensors with different focal lengths, the Panamera S is able to capture remote and the middle areas with the same high resolution of the things in the foreground. We are continuing to see opportunities in new class of sensing cameras. spending multiple vertical applications, such as access control, occupancy monitoring, and retail analytics. During the quarter, Genius Pro, a leading provider of 3D time-of-flight sensor systems, introduced a people-counting camera targeting transport and building monitoring applications. Based on our CV25 CVFlow SoC, it includes both a visible CMOS sensor and a TOF sensor. with CV25 performing sensor fusion and AI processing to provide high-accuracy people counting. In summary, we are leveraging our successful video processor heritage into the development of a highly optimized video AI family of SOCs. In essence, our addressable market expanding beyond human viewing applications to include the install base of machines that can now use our CVSLCs to visually perceive the environment and make decisions, leading to higher levels of autonomy and eventually automation. The adoption of our expanding family of visual AIS silicon into increasing diverse markets, including pure machine sensing, was demonstrated by the emotional announcement today. is in an early stage, but is taking shape. And as this adoption drives revenue growth, we expect to continue to deliver positive earning leverage to shareholders. In our earning calls on June 4th, 2019, we provided guidance on the anticipated shape of the first three waves of CV revenue. We stated wave one, professional security, will become material in calendar year 20. Wave two, home security, will become material in calendar year 21, and wave three, automotive, will become material in the calendar year 22, 23 timeframe. We achieved our wave one goal in the last year, and I am confident we are on track to achieve wave two and three in their prospective timeframes. The last CV wave automotive is spreading on track as we have indicated with our communication last quarter on our automotive revenue funnel. And in fiscal year 22, driven by CV, we anticipate our auto business will grow at a rate that is significantly higher than the other business. This is important as our automotive SEM is estimated to be About two-thirds of total SEM in fiscal year 2022, or more than $3 billion, going to almost $7 billion in fiscal year 26. The megatrends for security, safety, and automation are very favorable. And to address this secular growth forces, we continue to build our team globally to support the rising interest in our CVSOC. from existing and new markets. I would like to thank all of our employees for their contribution to our leadership position in the market and for their execution in this turbulent environment. And thanks to all our other stakeholders for your continual support. I will now turn the call over to Louis who will give you more details about how we are seeing and expect for the business. Thank you.