Ambarella, Inc.

and thank you for standing by. Welcome to Ambarella's Q3 Fiscal Year 2025 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 the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising 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, VP Corporate Development. Please go ahead.

Thank you, Daniel, and good afternoon. Thank you for joining our third 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 third quarter of fiscal year 2025. The discussion today, 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 risk. 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 third quarter fiscal 2025 results press release, transcripts, historical results, SEC filings, and a replay of today's call can be found on the investor relations page of our website. The content of today's call as well as the materials posted on our website are Amber Ellis property and cannot be reproduced or transcribed without our prior written consent. Before we start the call, we want to inform you of our plans to participate in the following investor events during the fourth quarter. On December 3rd, we will be at the UBS Global Technology and AI Conference. December 4th, at the Wells Fargo TMT Summit. On December 5th, we'll be hosting BMP's bus tour NASDAQ's London Conference on December 10th and 11th, Nomura CES Conference on January 6th, and Needham Growth Conference on January 14th. And of course, we hope to see you during the multiple Cell Site Analyst hosted tours at our CES exhibition January 7th to January 10th in Las Vegas. Fermi will now provide an update for the quarter. John will review the financial results and outlook, then we'll be available for your questions. Fermi?

Thank you, Luis, and good afternoon. Thank you all for joining our call today. Our third quarter revenue was above the high end of our guidance range, increasing about 30% sequentially in both our auto and IoT business. Company-specific factors more than offset the overall weakness in the market, with our strengths originating from our customers' new product reps, especially those incorporating our new higher-priced AI inference processors, such as CV5. We again achieved a record level of AI revenue, which in turn contributed to a higher blended average selling price. We are now forecasting fiscal 2025 revenue to increase by 22 to 24% year over year, versus our prior estimate for revenue growth in the mid to high teens. Last quarter we described our new product momentum as a series of waves, and the next year in fiscal 2026, we expect the first wave from CV5 to continue and be augmented with the commencement of the second wave, CV7. We expect the first and the second new product waves to enable us to grow revenue again in fiscal 2026 with both auto and IOT expected to grow despite the weakness in the overall market. Our CB3-AD family of SOCs for level two plus and higher level of autonomy represents the third wave with revenue expected to commence in calendar year 2026 or our physical 2027. During the third quarter, we received the first silicon of our CV3-AD655AISOC, which targets advanced level two plus applications, including mass market passenger vehicles, and we are now delivering engineering samples to customers. As you know, the global automotive industry is under significant pressure, so we are proud to forecast our automotive business is expected to grow this year and the next. I would like to remind you our automotive business is comprised of two different business. Our existing ADAS business and our central domain controller business, also known as the CV3 platform. Our existing automotive business, mostly ADAS, with majority now AISOCs, well represent about $80 million this year with an estimated five-year compounded annual revenue growth rate in the meetings. Our CV3 platform targets a much larger but still emerging revenue opportunity, level two plus and high level of autonomy. This new opportunity has the potential to significantly accelerate our five-year automotive revenue CAGR beyond the mid-teens CAGR I mentioned for our existing auto business. We remain highly focused on incremental CV3 design wins in an increasingly challenged automotive market. As you know, global vehicle production growth is slow. Level 2 plus market penetration remains in the low single digit. And OEM projects and the software development are delayed. In this environment, we have updated our automotive revenue funnel. As a reminder, our automotive funnel represents a probability weighted estimate of automotive revenue we could generate over the next six years, from fiscal year 2026 to fiscal year 2031. At this time, our six-year funnel is approximately $2.2 billion versus $2.4 billion a year ago, with one business representing more than $800 million and a pipeline of more than $1.3 billion. Due to the challenging automotive industry dynamic described earlier, there has been significant volatility in the last years within the funnel as the customer's annual forecast was revised. projects were delayed or canceled, new projects were added, and the projects were either won or lost. Notably, we estimate there is about $2 billion not included in the funnel beyond year six, the terminal year of our methodology. We remain optimistic about our long-term secular trend for the level two plus and higher levels of autonomy, and the role that our CV3 platform can serve in this market. We are optimistic because our CV3 platform brings solutions to some of the key challenges automotive OEMs are facing today, including power efficiency, scalability, an open platform with the availability of optimized software IP modules, and a centralized radar. We remain diligent in our efforts to get more CV3 business into the one column. I will now discuss representative customer activity in the quarter. In the automotive market, we highlight new models featuring a variety of advanced safety and automation features. Smart Automobile, a joint venture between Mercedes-Benz and Geely, introduced its Smart Number 5 model in October. This electric SUV features an L2-A-DAS system based on our CV2 with functional safety and is supplied by Tier 1 Aptiv. Xiaopeng, also known as Xpeng, an electric vehicle pioneer in China, announced the P7 Plus, a mid- to full-size electric sedan that utilizes our A12 video processors for the rear view electronic mirror. This e-mirror is pre-installed on 100% of the P7 Plus vehicles and start of production commenced in October. Also in the mural market, the joint venture between Honda and Dongfeng launched its VCL electric passenger vehicle, which includes a camera monitor system. These features include interior displays that replace the left and the right side exterior murals. This system is based on our CV28. Verizon Auto, a GE brand focused on development and the sales of commercial vehicles, launched its H8R light truck featuring a front ADAS plus driver monitor system based on our CV22AQ. Turning to our IoT businesses, we are announcing the first customer for our CV7 family, which represents the beginning of the second wave of new product revenue I described earlier. In the enterprise market, Vokada introduces its next generation of cameras, including new 4K dome, fisheye, and PTZ cameras. Based on Embraer's latest CV72, the new camera features advanced analytics, including AI-powered search. Vokada also introduced a new suite of video intercom and an indoor split mini camera, all based on Embraer's CV25. Bosch announced its new FlexiDome 8100i dome camera family based on CV22. They feature deep learning-based detection of persons and vehicles even in crowded or congested scenes. Along.com introduced 5-megapixel and 8-megapixel cloud IP bullet and dome camera based on our CV22. The camera includes onboard recording and advanced analytics. In Japan, iPro, formerly Panasonic Security, announced the addition of 19 new models to its aerial PTZ camera list based on our CV22. We are encouraged to see better the expected adoption of our AI SoC in other IoT markets. While our products frequently target automotive and enterprise applications, our AI SoCs are designed with enough programmability to drive adoption in other IoT markets. For example, Inkstar 360 recently introduced its ACE Pro 2 portable video camera featuring 8K video and 50 megapixel photos. Based on our 5 nanometer CV5, the camera includes gesture and voice control and AI-based highlight assistance. Inkstar 360 also introduced its Lync and Lync 2C AI 4K webcams based on our H22 video processors. Garmin announced its GC245 and 255 HD main marine cameras based on our CV28 and featuring on-screen distance markers and the guidance line to add with both dockings. Grab. A leading technology company based in Singapore, known for its super app providing diversified services, introduced its Katakent 2 to collect street view images for map making. Our CV5 supports a full 48 megapixel image sensors to full 360-degree viewing and provides edge AI processing. Founded as part of our customer engagement this quarter, you can see we continue to build upon our well-established position for AI computer vision at that age in both IoT as well as our traditional automotive ADAS market. In fact, on a cumulative base, we have now shipped more than 25 million HAI SOCs, and this helps set the table for the introduction of a new higher-value SOC supporting more advanced HE AI networks such as VLMs, CLIP, and the GenAI. We believe the significant and continued build out of AI training and inference capacity in data centers for more and more advanced AI networks is a leading indicator for the secular growth opportunity we see for AI inference processing at the age. Our strategic plan is well aligned with this and the first wave of new AI product revenue is underway. We expect the second wave to commence alongside the first wave next year with subsequent waves starting calendar 2026 or our fiscal 2027, including the CV3 and our two nanometer platforms. New product success is a key factor in determining our incremental revenue growth next year. We are pleased to return to non-GAAP profitability in Q3. We are highly focused on driving revenue growth and the positive operating leverage on the path to our target long-term non-GAAP operating margin of 30%. We have delivered 15 consecutive years of a positive free cash flow through the year of a fiscal, through the end of fiscal 2024, and we are optimistic our new products can enable us to build upon this positive record. John will now discuss the Q3 result and the Q4 outlook in more detail. John?