Ambarella, Inc.

Thank you for standing by and welcome to the Ambarella's first quarter fiscal year 2025 earnings 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'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Mr. Lewis, your hearty Vice President, Corporate Development and Investor Relations. Please go ahead, sir.

Thank you, Jonathan, and good afternoon. Thank you for joining our first quarter fiscal year 2025 financial results conference call. On the call with me today is Dr. Fermi Wong, President and CEO, and John Young, CFO. The primary purpose of today's call is to provide you with information regarding the results for our first quarter of fiscal year 2025. The discussion today is And the responses to your questions will contain forward-looking statements regarding our projected financial results, financial prospects, market growth, and demand for our solutions, among other things. These statements are based on currently available information and subject to risks, uncertainties, and assumptions. Should any of these risks or uncertainties materialize or should our assumptions prove to be incorrect, our actual results could differ materially from these forward-looking statements. We're under no obligation to update these statements. These risks, uncertainties, and assumptions, as well as other information on potential risk factors that could affect our financial results, are more fully described in the documents we file with the SEC. Access to our first quarter fiscal 2025 results, press release, transcripts, historical results, SEC filings, and a replay of today's call to 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 Amber Ella's property and cannot be reproduced or transcribed without our prior written consent. Fermi will now provide a business update for the quarter, then John will review the financial results and outlook and will be available for your questions after that. Fermi?

Thank you, Luis. And good afternoon. Thank you all for joining our call today. Our Q1 results were 1% above the midpoint of our guidance range, with revenue increasing 6% sequentially. As expected, both auto and IoT revenue increased sequentially, and the AI products were about 2 thirds of our total revenue. As previously discussed, our customers are in the midst of recovering from a cyclical inventory correction and the favorable impact from this is expected to carry into the second quarter. We continue to expect our fiscal 25 revenue to grow year over year, driven by both the cyclical tailwinds and the secular growth in our AI portfolio. The combination of these cyclical and cyclical forces is expected to enable our AI inference revenue to grow more than 30% in fiscal 2025. Zooming out for a minute, the significant capacity being added to the AI training network infrastructure globally, both help for the ultimate deployment of AI inference at an age where we participate in the market. the deployment of AI inference at age enables end user to more practically take advantage of so many different AI breakthroughs. As focus on AI at age of networks increase, we see AI inferencing proliferating in multiple areas and we believe we are well positioned to take advantage of this. In fact, we are already in the early stage of demonstrating how it may play out for us. In Q1, for example, our customer engagement includes our first passenger vehicle wins for our 5-nanometer CV3-AD family of AI central domain controllers. We added another CV3-AD win in the commercial vehicle market, secured multiple enterprise class AI inferencing wins, and even in other IoT cameras, we are reporting additional wins for our 5-nanometer CV5 AI process. In the midst of this great change, our opportunity and the challenge is to develop AI technology and products that not only are extremely efficient for age deployment, but also flexible enough to execute a very wide range of AI workload across all these disparate applications. We are already in mass production with our AI products for video-intensive CNN networks, such as detection, classification, fusion, planning, stitching, mapping, tracking, framing, auto-editing, and the neural network image signal processing. Now our third generation of AI technology integrated into our CV3AD and the CV7 series of SOC can support transformer networks for a variety of generative AI applications. I would now like to describe customer engagements that can offer some indication how it can play out for us. As you know, we have made significant investment into our CV3AD family of automotive AI domain controllers. And we expect the CV3AD family to be a major revenue driver. So we are pleased to announce our first CV3AD family wins in the passenger vehicle market, which complements our ongoing wins with the CV3AD family in the commercial vehicle market. In April, during the Beijing Auto Show, we reached a strategic collaboration agreement with a battery electrical vehicle company in China. This company will use our CV3-AD AI domain controllers in new passenger vehicle models. This is an important development for us in several regards. First, major by the number of EV delivery in calendar 2023, this OEM is considered one of the top five new EV companies in China. While most of the OEM deliveries were in China last year, The company has an impressive plan for globalization of its business. Second, Chinese automobile OEMs are aggressively and successfully adopting next-generation technology into their vehicles, which aligns with our strategy to intersect the safety and autonomy domain with next-generation technology, in particular, Level 2+. For example, to improve accuracy, many OEMs in China have aggressively adopted the BEV firmware AI framework for 3D perception tasks in its autonomous driving software stack. And this high-performance framework can leverage to a high degree the unique capability in our CV380 AI inference processors, including the ability to process transformers at a low power. The efficiency and the scalability of our CV3AD family portfolio is also a major factor in the collaboration with Ambarella, as the OEM can reuse this software on low-, mid-, and high-end vehicles. In April, we added another CV3AD family win in the commercial vehicle market with the announcement of a strategic collaboration with Sanyi Corporation. Sanyi is one of the world's largest engineering machinery manufacturers, providing heavy-duty commercial vehicles to the global market. SAI intends to leverage Umbrella's CV380 family of automotive AI domain controllers to develop advanced automated driving solutions on its next-generation commercial and special-purpose vehicles. The companies will collaborate on the joint development and the promotion of a high-performance, highly integrated, automated driving solutions with Sanyi's goal of achieving start of production for at least one model by calendar year 2025. At the Beijing Auto Show in April, Tier 1 Newsoft Reach announced a strategic partnership with Umbrella. The companies plan to expand on their existing relationship to jointly promote and explore AI-based product technology and market development in areas including autonomous driving and driver monitoring. Newsoft's third-generation forward-facing intelligent camera X-Cube 3.0 is powered by Embraer's CV22 AI Vision SoC to target Level 2 and Level 2 Plus autonomy levels and has already been mass-produced and deployed by automotive OEMs. We are pleased to announce that Seeing Machine, the leading provider of driver monitoring system software, selected our CV25 for its own aftermarket system for commercial vehicles. The Guardian Generation 3 meets the European Commission's general safety regulation for drossiness detection, a requirement for all the new cars, vans, trucks, and buses across Europe. And in April, at the ISC West Security Exhibition. We successfully demonstrated the latest generated AI technology running region language model, VLMs, on our N1 and the CV72 SOCs. Our demonstration includes using the multi-models VLMs to search video recording to detect objects defined by text and provide near instantaneous results without the need for training specifically for that object. This capability opens up a whole new range of AI-based search capability for enterprise cameras and the primers-based AI systems. Our third generation AI inference technology includes specific support needed to efficiently run these new classes of networks. During the ISC West, we also announced and demonstrated our new 5 nanometer CV75 AI SOC, which provides the performance required to run the latest VLMs as well as AI-based IQ enhancement. This capability to very efficiently run this cutting-edge AI technologies is highly sought after for cost and the power constraint AI cameras used in enterprise, smart city, retail stores, robotic access control, and AI-based consumer devices. At the Enterprise Connect Conference in March, Poly, a leading global provider of workplace collaboration solutions and a wholly-owned unit, HP, launched its Studio E360. This center-of-the-table system utilizes a single 5-nanometer CV5 for four 8 megapixel cameras with AI inferences processing, choosing the optimal framing angle for in-room participants. And also in Korea, the Korea activity for our AI SOCs remain high, with the leading security camera maker, Hanhua, introduce new AI model based on our CV22 and the CV2 AI SOCs. And IDIS introduced CV25 based models, and the C-Pro introduced dual sensor AI camera based on CV22. In the other IoT market, we are pleased to see our 5 nanometer CV5 AI inference processor being utilized in another consumer cameras to significantly improve both image quality and to automate a certain user interface functions. Insta360 introduced its X4 action camera in April with dual sensor for 360 degree 8K capture. In conclusion, I mentioned last quarter our goals are to restore revenue growth and profitability while continuing to drive our strategic R&D priorities. Q1 represented a step in the right direction, most significantly highlighted by our first passenger vehicle win for the CV380 family. But the expanding breadth of our CV customer engagement stands out, and we expect this to build a broad foundation upon with multiple applications can drive revenue growth and result in positive earning leverage for shareholders. The further commercialization and the monetization of our technology and the product is of utmost importance to us. And I am excited about the opportunity before us and what we will achieve in the years ahead. With that, John will now discuss the Q1 results and outlook in more detail.