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Ambarella, Inc. Announces Fourth Quarter and Fiscal Year 2016 Financial Results

SANTA CLARA, Calif., March 03, 2016 (GLOBE NEWSWIRE) -- Ambarella, Inc.  (NASDAQ:AMBA), a leading developer of low-power, HD and Ultra HD video compression and image processing semiconductors, today announced financial results for its fourth quarter and fiscal year ended January 31, 2016.

Financial results on a non-GAAP basis for the fourth quarter and fiscal year ended January 31, 2016 are as follows:

Based on information available as of today, Ambarella is offering the following guidance for the first fiscal quarter of fiscal year 2017:

Ambarella reports gross margin, net income and earnings per share in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP financial information for the fourth fiscal quarter excludes the impact of stock-based compensation adjusted for the associated tax impact; and the impact of the write down of certain deferred tax assets; and for the fiscal year ended January 31, 2016 also excludes certain costs associated with the acquisition of VisLab S.r.l. in June 2015.  A reconciliation of the GAAP to non-GAAP gross margin, net income and earnings per share numbers for the periods presented, as well as a description of the items excluded from the non-GAAP calculations, is included in the financial statements portion of this press release.

Total cash, cash equivalents and marketable securities on hand at the end of the fourth fiscal quarter of 2016 was $307.9 million, compared with $208.0 million at the end of the same quarter a year ago. 

“For the full fiscal year 2016, we grew revenue by 45 percent. During the fourth quarter we saw strong sales from professional IP security, automotive aftermarket, home monitoring and flying camera markets. This was largely offset, however, by a continued decline in the wearable sports camera market,” said Fermi Wang, president and CEO of Ambarella. “In addition, during the quarter we delivered our first 14nm chip, H2, and continued to successfully diversify and expand our end markets and customer base.”

Quarterly Conference Call

Ambarella plans to hold a conference call at 5 p.m. Eastern Time / 2 p.m. Pacific Time today with Fermi Wang, Chief Executive Officer, and George Laplante, Chief Financial Officer, to discuss the fourth quarter and fiscal year 2016 results. The call can be accessed by dialing 877-304-8963 in the USA; international callers should dial 760-666-4834. Participant passcode is “Ambarella.” Please dial in ten minutes prior to the scheduled conference call time. A live and archived webcast of the call will be available on Ambarella’s website at http://www.ambarella.com/ for up to 30 days after the call.

About Ambarella

Ambarella, Inc. (NASDAQ:AMBA), is a leading developer of low-power, high-definition (HD) and Ultra HD video compression and image processing solutions. The company’s products are used in a variety of HD cameras including security IP-cameras, sports cameras, wearable cameras, flying cameras and automotive video camera recorders. Ambarella compression chips are also used in broadcasting TV programs worldwide. Ambarella is the recipient of the Global Semiconductor Alliance 2015 awards for “Most Respected Public Semiconductor Company” and “Best Financially Managed Semiconductor Company,” with annual sales of between $100M and $500M.

For more information about Ambarella, please visit www.ambarella.com.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements that are not historical facts and often can be identified by terms such as “outlook,” “projected,” “intends,” “will,” “estimates,” “anticipates,” “expects,” “believes,” “could,” or similar expressions, including the anticipated financial results for the first quarter ending April 30, 2016, and the comments of our CEO relating to our efforts to successfully diversify and expand our end markets and customer base. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. Our actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of our future performance.

The risks and uncertainties referred to above include, but are not limited to, risks associated with revenue being generated from new customers or design wins, neither of which is assured; the commercial success of our customers’ products; our growth strategy; our ability to anticipate future market demands and future needs of our customers; our ability to introduce new and enhanced solutions; our ability to retain and expand customer relationships and to achieve design wins; our ability to successfully enter new markets; anticipated trends and challenges, including competition, in the markets in which we operate; our ability to effectively manage growth; our ability to retain key employees; and the potential for intellectual property disputes or other litigation.

Further information on these and other factors that could affect our financial results is included in the company’s Annual Report on Form 10-K for our 2015 fiscal year and Form 10-Q for the quarter ended October 31, 2015, which are on file with the Securities and Exchange Commission. Additional information will also be set forth in the company’s quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings the company makes with the Securities and Exchange Commission from time to time, copies of which may be obtained by visiting the Investor Relations portion of our web site at www.ambarella.com or the SEC's web site at www.sec.gov.  Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to us on the date hereof.  The results we report in our Annual Report on Form 10-K for the fiscal year ended January 31, 2016 could differ from the preliminary results announced in this press release.

Ambarella assumes no obligation and does not intend to update the forward-looking statements made in this press release, except as required by law.

Non-GAAP Financial Measures

The company has provided in this release non-GAAP financial information including non-GAAP gross margin, net income, and earnings per share, as a supplement to the consolidated financial statements, which are prepared in accordance with generally accepted accounting principles ("GAAP"). Management uses these non-GAAP financial measures internally in analyzing the company’s financial results to assess operational performance and liquidity. The company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting and analyzing future periods. Further, the company believes these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial metrics that the company uses in making operating decisions and because the company believes that investors and analysts use them to help assess the health of its business and for comparison to other companies. Non-GAAP results are presented for supplemental informational purposes only for understanding the company’s operating results. The non-GAAP information should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP measures used by other companies.

With respect to its financial results for the fourth quarter and fiscal year 2016, the company has provided below reconciliations between its non-GAAP financial measures to its most directly comparable GAAP financial measures.  With respect to the company’s expectations for the first quarter of fiscal year 2017, a reconciliation of non-GAAP gross margin and non-GAAP net income guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability and low visibility with respect to the charges excluded from this non-GAAP measure.  We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

 
AMBARELLA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
         
    Three Months Ended January 31,     Twelve Months Ended January 31,  
   2016   2015   2016   2015 
      
Revenue $  67,967  $  64,700  $  316,373  $  218,278 
         
Cost of revenue    24,651     23,255     111,029     79,142 
Gross profit    43,316     41,445     205,344     139,136 
         
Operating expenses:        
Research and development    23,442     15,983     82,927     57,978 
Selling, general and administrative    10,768     8,343     37,738     29,297 
         
Total operating expenses     34,210     24,326     120,665     87,275 
         
Income from operations    9,106     17,119     84,679     51,861 
         
Other income    207     47     530     175 
         
Income before income taxes    9,313     17,166     85,209     52,036 
         
Provision for income taxes    4,217     (508)    8,701     1,465 
         
Net income $  5,096  $  17,674  $  76,508  $  50,571 
         
Net income per share attributable to ordinary shareholders:        
Basic  $  0.16  $  0.58  $  2.42  $  1.70 
Diluted  $  0.15  $  0.53  $  2.27  $  1.57 
Weighted-average shares used to compute net income per share        
attributable to ordinary shareholders:        
Basic     32,105,797     30,573,724     31,633,936     29,742,653 
Diluted     33,747,273     33,074,033     33,755,709     32,278,127 
         

The following table presents details of stock-based compensation expense included in each functional line item in the consolidated statements of operations above:

         
   Three Months Ended January 31,     Twelve Months Ended January 31,   
  2016   2015   2016   2015  
 (unaudited, in thousands) 
Stock-based compensation:        
Cost of revenue$  249  $  129  $  657  $  343  
Research and development   7,116     3,072     19,082     8,654  
Selling, general and administrative   4,181     2,384     11,355     6,695  
         
Total stock-based compensation$  11,546  $  5,585  $  31,094  $  15,692  
         


AMBARELLA, INC.
RECONCILIATION OF GAAP TO NON-GAAP DILUTED EARNINGS PER SHARE
(in thousands, except share and per share data)
         
   Three Months Ended January 31,     Twelve Months Ended January 31,   
  2016   2015   2016   2015  
 (unaudited) 
GAAP net income$  5,096  $  17,674  $  76,508  $  50,571  
Two-class method - allocation to participating securities—    (1) —    (11) 
Treasury stock method - additional allocation to ordinary shares— — —  1  
GAAP net income - diluted$  5,096  $  17,673  $  76,508  $  50,561  
         
Non-GAAP adjustments:        
Stock-based compensation expense, net of tax effect   10,414     4,919     27,766     13,866  
Valuation allowance on deferred tax assets   6,090  —    6,090  — 
Acquisition cost— —    1,229  — 
Two-class method - additional allocation to participating securities— — —    (3) 
Treasury stock method - additional allocation to ordinary shares— — — — 
Non-GAAP net income - diluted$  21,600  $  22,592  $  111,593  $  64,424  
         
GAAP - diluted weighted average shares   33,747,273     33,074,033     33,755,709     32,278,127  
Non-GAAP - diluted weighted average shares   33,747,273     33,074,033     33,755,709     32,278,127  
         
GAAP - diluted net income per share$  0.15  $  0.53  $  2.27  $  1.57  
Non-GAAP adjustments:        
Stock-based compensation expense, net of tax effect   0.31     0.15     0.82     0.43  
Valuation allowance on deferred tax assets   0.18  —    0.18  — 
Acquisition cost— —    0.04  — 
Non-GAAP adjustment to two-class method diluted net income— — — — 
Non-GAAP adjustment to treasury stock method diluted net income— — — — 
Non-GAAP - diluted net income per share$  0.64  $  0.68  $  3.31  $  2.00  
         

The difference between GAAP and non-GAAP gross margin was 0.4% and 0.2%, or $249,000 and $129,000 for the three months ended January 31, 2016 and 2015, respectively. The difference between GAAP and non-GAAP gross margin was 0.2% and 0.2%, or $657,000 and $343,000 for the fiscal years ended January 31, 2016 and 2015, respectively. The difference was due to the effect of stock-based compensation. 

  
AMBARELLA, INC.  
CONSOLIDATED BALANCE SHEETS 
(unaudited, in thousands) 
      
   January 31,     January 31,    
  2016   2015   
      
ASSETS     
Current assets:     
Cash and cash equivalents$  268,056  $  170,291   
Marketable securities   39,837     37,703   
Accounts receivable, net   39,408     40,180   
Inventories   18,167     21,693   
Restricted cash   7     8   
Deferred tax assets, current—    1,990   
Prepaid expenses and other current assets   4,170     3,506   
Total current assets   369,645     275,371   
      
Property and equipment, net   3,448     3,075   
Deferred tax assets, non-current   4,626     3,936   
Intangible assets, net   4,178  —  
Goodwill   26,601  —  
Other assets   2,117     1,902   
      
Total assets$  410,615  $  284,284   
      
LIABILITIES AND SHAREHOLDERS' EQUITY     
Current liabilities:     
Accounts payable   14,175     21,036   
Accrued liabilities   23,778     18,699   
Income taxes payable   787     748   
Deferred tax liabilities, current—    92   
Deferred revenue, current   10,077     4,907   
Total current liabilities   48,817     45,482   
      
Deferred revenue, non-current—    198   
Other long-term liabilities   12,342     1,393   
      
Total liabilities   61,159     47,073   
      
Shareholders' equity:     
Preference shares— —  
Ordinary shares   15     14   
Additional paid-in capital   176,306     140,564   
Accumulated other comprehensive loss   (7)    (1)  
Retained earnings   173,142     96,634   
Total shareholders’ equity   349,456     237,211   
      
Total liabilities and shareholders' equity$  410,615  $  284,284   
      
Contact:

Deborah Stapleton
650.470.4200
deb@stapleton.com