Ambarella, Inc. Q4 FY2026 earnings call

• Fiscal 2026 saw revenue growth driven by 5-nanometer new product cycles and customer new product launches. - Announced strategic initiatives like building an indirect sales channel (including ISVs, distributors, system integrators) and establishing a semi-custom/customer ASIC business. - Highlighted customer engagements in industrial automation robotics, IoT applications (video conference, security, drone), and automotive (Ford, ThinkWare, Garmin). - Emphasized the company's credibility with an install base of 42 million AI devices, portfolio breadth with 12 AG AI SoCs, and an established development platform.

Fiscal 2026 established a new revenue record for Ambarella with revenue increasing 37% year-over-year. About 80% of full-year fiscal 2026 revenue is HAI (also defined as fiscal AI). Auto and IoT revenue both grew with unit shift and average selling price growth. Fourth quarter revenue was $100.9 million, down 7% sequentially but above the midpoint of guidance. New third-generation 5-nanometer CV75 and CV72 AI SOCs reached a high single-digit percent of total revenue in Q4. Fiscal 2027 revenue is anticipated to grow in the 10% to 15% range with non-GAAP growth margin over 59% to 62%.

• Anticipates total revenue growth in fiscal 2027 in the 10% to 15% range with non-GAAP growth margin within 59% to 62%. - Fiscal Q1 2027 revenue forecasted to be in the range of $97 to $103 million. - Fiscal Q1 2027 non-GAAP gross margin expected to be in the range of 59 to 60.5%. - Non-GAAP OPEX in Q1 2027 expected to be in the range of $55 to $58 million.

• Risks and uncertainties related to forward-looking statements, including potential material differences between actual results and forward-looking statements. - Industry-wide supply chain constraints could impact operations. - Uncertainty regarding the impact of new regulations on future products, such as in the drone market. - Uncertainty about the impact of component cost inflation on customers and the overall demand environment.

Q: Asked for more detail on e-commerce warehouse robotics win, including production status, timeline, and opportunity size.

A: In production with low-volume now, expected to grow, and considered meaningful.

Q: Asked about auto pipeline comparison unweighted vs weighted.

A: Total automotive opportunity in next six years is $13 billion, saw growth in this category with some business similar to last year.

Q: Asked about channel strategy and semi-custom ASIC business.

A: Go-to-market strategy focuses on building with partners, aiming for 1000 ISVs committed by end of year, no meaningful revenue this year from new model; semi-custom ASIC business has multiple companies interested, expect new design wins.

Q: Asked about competitive landscape in drones and ASIC applications.

A: DJI builds own silicon but uses external, majority of other drone makers use external; customers leverage Ambarella's AI accelerator, IDSP, software platform, and 2-nanometer chip capability for ASIC.

Q: Asked about gross margin rethinking with focus on different markets.

A: Current ongoing business expected to be within 59% to 62% long-term margin, new business model too early to talk about impact.

Q: Asked about impact of Chinese competitor restrictions in drone market and component cost inflation.

A: No direct impact on current production, watching future potential; indirect impact on low gross margin products, but not expecting huge impact yet.

Q: Asked about seasonality and ASP uplift with CD7 launch.

A: CV7 expected to have higher AI performance, premium ASP compared to CV5 but not finalized, indicating potential ASP uplift.

Q: Asked about ASIC business impact on P&L and NRE.

A: Too early to discuss new go-to-market model impact, ASIC projects have NRE, variety of possibilities for gross margin.