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Ambarella, Inc. Announces Second Quarter Fiscal Year 2024 Financial Results

SANTA CLARA, Calif., Aug. 29, 2023 (GLOBE NEWSWIRE) -- Ambarella, Inc. (NASDAQ: AMBA), an edge AI semiconductor company, today announced financial results for its second quarter of fiscal year 2024 ended July 31, 2023.

Financial results on a non-GAAP basis for the second quarter of fiscal 2024 are as follows:

Based on information available as of today, Ambarella is offering the following guidance for the third quarter of fiscal year 2024, ending October 31, 2023:

Ambarella reports gross margin, net income (loss) and earnings (losses) per share in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP financial information excludes the impact of stock-based compensation and acquisition-related costs adjusted for the associated tax impact, which includes the effect of any benefits or shortfalls recognized. Non-GAAP financial information also excludes the impact of the release of a valuation allowance on certain deferred tax assets. A reconciliation of the GAAP to non-GAAP gross margin, net income (loss) and earnings (losses) per share 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 debt securities on hand at the end of the second quarter of fiscal 2024 was $216.5 million, compared with $227.4 million at the end of the prior quarter and $197.9 million at the end of the same quarter a year ago.

“The near-term environment is very challenging, as customers are now more aggressively reducing their inventory, and we are now seeing some pockets of weak end-market demand, which further complicates our customers’ efforts to reduce their inventory. We anticipate our customers’ inventory levels will normalize by the end of the year and set us up for a return to growth in the next fiscal year,” said Fermi Wang, President and CEO. “Our mid to long-term outlook for our AI inference processor business remains positive. Our R&D is focused on technology and products targeting more sophisticated AI inference workloads, and we are well established having shipped more than 17 million AI inference processors cumulatively.”

Quarterly Conference Call

Ambarella plans to hold a conference call at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time today with Fermi Wang, President and Chief Executive Officer, and Brian White, Chief Financial Officer, to discuss the second quarter of fiscal year 2024 results. 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’s products are used in a wide variety of human vision and edge AI applications, including video security, advanced driver assistance systems (ADAS), electronic mirror, drive recorder, driver/cabin monitoring, autonomous driving and robotics applications. Ambarella’s low-power systems-on-chip (SoCs) offer high-resolution video compression, advanced image and radar processing, and powerful deep neural network processing to enable intelligent perception, fusion and planning. For more information, 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,” “should,” or similar expressions, including the guidance for the third quarter of fiscal year 2024 ending October 31, 2023, and the comments of our CEO relating to near-term challenges associated with our customer efforts to reduce inventory and pockets of weak end-market demand, our anticipated future return to revenue growth and the mid to long-term outlook for our AI inference processor business. 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, global economic and political conditions, including possible trade tariffs and restrictions; revenue being generated from new customers or design wins, neither of which is assured; the commercial success of our customers’ products; our customers’ ability to manage their inventory requirements; our growth strategy; our ability to anticipate future market demands and future needs of our customers, particularly for AI computer vision applications; our ability to introduce new and enhanced solutions; our ability to develop, and to generate revenue from, new advanced technologies, such as computer vision and AI functionality; our ability to retain and expand customer relationships and to achieve design wins; the expansion of our current markets and our ability to successfully enter new markets, such as the OEM automotive and robotics markets; anticipated trends and challenges, including competition, in the markets in which we operate; risks associated with global health conditions and associated risk mitigation measures; 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 2023 fiscal year, which is 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 Quarterly Report on Form 10-Q for the second fiscal quarter ended July 31, 2023 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 (loss), and earnings (losses) per share, as a supplement to the condensed 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 second quarter of fiscal year 2024, the company has provided below reconciliations of its non-GAAP financial measures to its most directly comparable GAAP financial measures. With respect to the company’s expectations for the third quarter of fiscal year 2024, a reconciliation of non-GAAP gross margin and non-GAAP operating expenses 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 these non-GAAP measures. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

AMBARELLA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
         
  Three Months Ended July 31, Six Months Ended July 31,
   2023   2022   2023   2022 
     
Revenue $62,121  $80,884  $124,263  $171,189 
         
Cost of revenue  23,659   29,820   48,282   63,578 
Gross profit  38,462   51,064   75,981   107,611 
         
Operating expenses:        
Research and development  54,917   52,338   109,358   99,028 
Selling, general and administrative  18,884   18,914   37,504   39,269 
         
Total operating expenses  73,801   71,252   146,862   138,297 
         
Loss from operations  (35,339)  (20,188)  (70,881)  (30,686)
         
Other income (expense), net  737   (26)  2,023   60 
         
Loss before income taxes  (34,602)  (20,214)  (68,858)  (30,626)
         
Provision (benefit) for income taxes  (3,404)  3,436   (1,758)  3,846 
         
Net loss $(31,198) $(23,650) $(67,100) $(34,472)
         
Net loss per share attributable to ordinary shareholders:       
Basic $(0.79) $(0.62) $(1.70) $(0.91)
Diluted $(0.79) $(0.62) $(1.70) $(0.91)
Weighted-average shares used to compute net loss per share       
attributable to ordinary shareholders:        
Basic  39,736,704   38,258,341   39,538,748   37,986,839 
Diluted  39,736,704   38,258,341   39,538,748   37,986,839 


The following tables present details of stock-based compensation and acquisition-related costs included in each functional line item in the condensed consolidated statements of operations above:

  Three Months Ended July 31, Six Months Ended July 31,
   2023   2022   2023   2022 
  (unaudited, in thousands)
Stock-based compensation:        
Cost of revenue $885  $362  $1,826  $711 
Research and development  18,550   17,883   36,911   35,034 
Selling, general and administrative  8,687   8,664   16,650   18,205 
         
Total stock-based compensation $28,122  $26,909  $55,387  $53,950 


  Three Months Ended July 31, Six Months Ended July 31,
   2023   2022   2023   2022 
  (unaudited, in thousands)
Acquisition-related costs:        
Cost of revenue $757  $757  $1,514  $1,514 
Research and development            
Selling, general and administrative  520   522   1,040   1,058 
         
Total acquisition-related costs $1,277  $1,279  $2,554  $2,572 


The difference between GAAP and non-GAAP gross margin was 2.7% and 1.4%, or $1.6 million and $1.1 million, for the three months ended July 31, 2023 and July 31, 2022, respectively. The difference between GAAP and non-GAAP gross margin was 2.7% and 1.3%, or $3.3 million and $2.2 million, for the six months ended July 31, 2023 and July 31, 2022, respectively. The differences were due to the effect of stock-based compensation and the amortization of acquisition-related costs.

AMBARELLA, INC.
RECONCILIATION OF GAAP TO NON-GAAP DILUTED EARNINGS (LOSSES) PER SHARE
(in thousands, except share and per share data)
         
  Three Months Ended July 31, Six Months Ended July 31,
   2023   2022   2023   2022 
  (unaudited)
GAAP net loss $(31,198) $(23,650) $(67,100) $(34,472)
         
Non-GAAP adjustments:        
Stock-based compensation expense  28,122   26,909   55,387   53,950 
Acquisition-related costs  1,277   1,279   2,554   2,572 
Income tax effect  (4,237)  3,075   (2,904)  2,629 
Non-GAAP net income (loss) $(6,036) $7,613  $(12,063) $24,679 
         
GAAP – diluted weighted average shares  39,736,704   38,258,341   39,538,748   37,986,839 
Non-GAAP – diluted weighted average shares  39,736,704   38,809,422   39,538,748   38,905,976 
         
GAAP – diluted net loss per share $(0.79) $(0.62) $(1.70) $(0.91)
Non-GAAP adjustments:        
Stock-based compensation expense  0.71   0.71   1.40   1.42 
Acquisition-related costs  0.03   0.03   0.06   0.07 
Income tax effect  (0.10)  0.08   (0.07)  0.07 
Effect of Non-GAAP – diluted weighted average shares           (0.02)
Non-GAAP – diluted net income (loss) per share $(0.15) $0.20  $(0.31) $0.63 


AMBARELLA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
     
  July 31, January 31,
   2023   2023 
     
ASSETS    
Current assets:    
Cash and cash equivalents $122,515  $113,541 
Marketable debt securities  93,997   93,322 
Accounts receivable, net  30,158   51,987 
Inventories  34,770   40,486 
Restricted cash  8   8 
Prepaid expenses and other current assets  5,199   5,288 
Total current assets  286,647   304,632 
     
Property and equipment, net  11,246   11,814 
Deferred tax assets, non-current  22,184   19,276 
Intangible assets, net  63,121   58,497 
Operating lease right-of-use assets, net  6,626   8,339 
Goodwill  303,625   303,625 
Other non-current assets  2,795   4,012 
     
Total assets $696,244  $710,195 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  11,943   17,845 
Accrued and other current liabilities  54,032   56,655 
Operating lease liabilities, current  3,548   3,539 
Income taxes payable  2,458   4,112 
Deferred revenue, current  2,709   1,311 
Total current liabilities  74,690   83,462 
     
Operating lease liabilities, non-current  3,216   5,097 
Other long-term liabilities  16,020   15,548 
     
Total liabilities  93,926   104,107 
     
Shareholders' equity:    
Preference shares      
Ordinary shares  18   18 
Additional paid-in capital  635,844   572,076 
Accumulated other comprehensive loss  (930)  (492)
Retained earnings (accumulated deficit)  (32,614)  34,486 
Total shareholders’ equity  602,318   606,088 
     
Total liabilities and shareholders' equity $696,244  $710,195 


Contact:

Louis Gerhardy
408.636.2310
lgerhardy@ambarella.com


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