Ambarella, Inc. (AMBA) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen thank you for standing by and welcome to Ambarella's First Quarter Fiscal Year 2021 Earnings Conference Call. [Operator Instructions]. As a reminder today's program is being recorded. I would now like to introduce your host for today's program; Louis Gerhardy, Corporate Development. Please go ahead sir.
Louis Gerhardy: Thank you, Jonathan. Good afternoon and thank you for joining our first quarter fiscal year 2021 financial results conference call. Our speakers will be; Dr. Fermi Wang, President and CEO; and Casey Eichler, CFO. The primary purpose of today's call is to provide you with information regarding our results for the first quarter of our fiscal year 2021. The discussion today 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 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 that we file with the SEC, including the Annual Report on Form 10-K filed on March 27, 2020, for the fiscal year 2020 ending January 31, 2020. Access to our first quarter fiscal year 2021 results press release, historical results, SEC filings, and a replay of today's call can be found on the Investor Relations portion of our website. I'll now turn the call over to Dr. Fermi Wang.
Fermi Wang: Thank you, Louis, and good afternoon. First and foremost ensuring the safety and well-being of our global workforce has and will continue to be our highest priority. I'm very proud of our 760 employees around the world and I thank them for their dedication and efforts to ensure their own safety and that of value employees, their families and the communities where we operate. The Ambarella team quickly implemented robust safety measures, modified work process and operated as one team to execute to our business plan, a plan that benefits all stakeholders including employees, suppliers, customers and shareholders. I am confident that we will emerge from this difficult period more resilient and in a strong position to seize the opportunities that we believe remain firmly in place. We are operating in the midst of unprecedented period of uncertainty and volatility. Geopolitical risks in -- are high with the dispute between China and the U.S. moving into the second year and each round of foreign policy trade and/or IP matters can bring new risks. The global health pandemic COVID-19 within the later amount swept award and brings another set of risks to consider. This combination of risks, geopolitical and pandemic caused the duration, severity and the impact of associated common downturn to be unknown. Despite the fluid environment and the full quarter of challenges in Q1, we delivered a result slightly above the midpoint of the guidance we offered three months ago. Q1 revenue of $54.6 million was down 4% sequentially and up 16% versus the same period a year ago. Our operations team and the supply chain performed admirably, maintaining the safety of employees yet quickly adapting to volatile order patterns and sustaining a high level of on-time deliveries for our customers. CV design activity in February and March remained at a high level, though activity slowed in April and May as the customers alter work patents for the pandemic. CV revenue momentum was strong in Q1 of a small base and the CV represented a mid single-digit percent of total revenue. Despite many of our development sites have work -- are having to work from home, we have remained highly effective in our continued development of chips and software. During the quarter, we successfully brought up and verified our new automotive functional safety SoCs, the CV2FS and the CV22FS, which were announced at CES. As the initial hardware verification work in our labs in Taiwan and U.S., the majority of the work has been in software development and our software engineer have become highly effective working from their homes. We are fully on schedule to sample the SoCs and their corresponding software development kits to customers and partners in the second half of the year. Not to be outdone, our VR sizing has also been very active during the quarter. We tapered out our six 10-nanometer SoC, a new member our CVflow AI SoC family that we look forward to discussing with you later this year. And we also take out a test chip in advanced the 5-nanometer process technology. The test chip was enable us to take our future SoCs as this advanced process node allowing us to maintain our performance and power advantages in future generation of chips. I will now talk about our market and the customers including addressing the impact of COVID-19 virus. In the professional security camera market, we are seeing some reduction in demand as a result of impact of the COVID-19 virus. A significant percentage of professional cameras are sold to integrators and installers who -- whose ability to access buildings has been restricted. And this in turn has impacted the demand of cameras. Once the industry has recovered from the exact virus, however, we see upside opportunity for cameras in medical, educational, retail and access control locations as well as new camera designs that include both thermal and video sensors combined with advanced AI processing. The retail camera applications include people counting and the distance monitoring for intelligence active control solutions at light video monitoring and face recognition for contactless access. Our design win pipeline remains extremely strong with camera makers, continuing to develop cameras with advanced AI capability and this quarter saw a number of significant customer product introduction based on our CVflow AI SoC solutions. During the quarter, Panasonic -- Japan's leading provider of security services solutions introduced 10 new camera models based on Ambarella SoCs. The extensive new product lineup includes seven I-pro series models based on our S3 H.265 SoC and three AI network cameras based on our CV22, CV4 SoC. The AI cameras come in box, bullet and phone configurations and leverage AI processing at age to detect and identify movement, capture human faces and optimize data compression. In May, Motorola Solutions announced that it would offer average security cameras with software analytics to help organizations keep employees safe through the appearance of health guidelines through protective face masks and the physical social distance. This solution combined the power of video and intelligent AI-powered analytics running on Ambarella AI SoC. Also during the quarter, Motorola announced it was acquiring U.K.-based IndigoVision an existing user of Ambarella-based camera to expand its video security and commence center software product offering in the European product prices. In May, European security leader Axis Communications entered the body worn camera market with its first solution designed for use by law enforcement and private security. The body worn camera has been designed on an open system architecture to support a broad range of video management and evidence management systems. Based on Ambarella’s HI SoC the camera capture 1080p video offered wide image processing and operates up to 2,000 hours. And also during the quarter leading Korean video security camera Hanwha Techwin introduces Westnet T Series 8K camera based on Ambarella's CV2 SoC offering the high-risk performance our CV4 family. The series included the TMB 9000 8K camera which can lean into any area of image, who are preserving details. We also include three 4K cameras in different form factors and featuring advanced AI-based video analytics, including personal face, vehicle recognition, people counting, cue management and heat map. Also in April, March Networks introduced its ME6 Series 6-megapixel IP camera based on Ambarella's CV22 AI SoC. The camera use deep new network processing power to accurately distinguish between people and vehicle and combined with next-generation security analytics for accurate real-time detection and analysts of events. In the home security camera market, we have also seen some impact on sales as a result of customer order push outs. Typically, home security cameras are sold in retail online – in retail or online and the closure of retail stores have impacted the demand. The majority of the cameras are manufactured by Taiwanese OEMS, which have generally remained in production throughout the crisis. Beyond the pandemic crisis, we see continued growth in this segment, including increasing demand for video and for cameras including greater level of intelligence. During the quarter, U.S. Smart Home company [indiscernible] introduced new in-video – in Video pro [ph] approach based on Ambarella's H5L. The Google camera offers full TV video with a wide 180-degree field view to that you see both the faces of visitors and the packages left on those stat. Advanced camera analytics attack [ph] and notify you of the arrival of people and package delivery for our two-way audio enables conversations with visitors. In May, Logitech unveils its new version of its circle view security camera supporting Apple's HomeKit smartphone system based on Ambarella's S2Lm SoC, the circle view records 1080P video 180-degree field view and you can capture infrared footage at night up to 15 feet away. In the access control market, Xiaomi [ph], one of the largest smart lock brand in China announced Quora P100 Fingerprint Smart lock with HomeKit support. The lock integrated H2 in based viewing camera of PTP video ultra wide field view and the lurking detection feature. In the automotive market, our current revenue is driven primarily for OEMs car recorders integrating to new models in Asia and aftermarket dash cameras in retail. Our OEM business has been affected by the temporary closure of automotive plants in Asia while our U.S. and European market have been impacted by retail store closures. Additionally, the automotive market continued to remain weak with many OEMs and Tier 1 suppliers' shutdown and decision on future product generations delayed. Despite this, however, we have continued to make progress in our engagement for ADAS in electronic mirror applications. In the electronic mirror segment, car manufacturers are currently making decision for single-channel electronic mirror solutions ahead of the three-mirror designs that we have originally been targeting. Our SoCs provide efficient and cost-effective solution for single-channel mirrors and also integrate other functions, for example video recording. As a result, we are seeing revenue opportunity for OE and car design with SOP expected to be in the 2023 time frame. Ambarella is working with Inceptio, a Chinese company funded in 2018 to build a nationwide freight network using autonomous driving trucks. Inceptio's goal is to achieve secure efficient and economical transportation-as-a-service to logistics customers. This to be achieved using Inceptio’s automotive-grade L3, L4, autonomous driving software and hardware working collaborations with major automotive manufacturers. Inceptio is using Ambarella's CV2AQ, AECQ 100 and the CV2FS ASO automotive SoC to enable advanced new network-based eight locations. In April, Korean dash cam leader Thinkware introduces QXC 5000 model, featuring 2-channel QHD plus HD video, smart remote viewing and remote along notification. Based on Ambarella's H22a SoC, the dash camera also includes ADAS functions including land detection warning, full collision warning and traffic light changing alarm. As we have previously mentioned, we are continuing to win designs at customers that provide aftermarket fleet management solutions for commercial vehicles as well as a solution for ridesharing and taxi services. In addition to video recording, the camera solution support AI-based applications such as front ADAS active driver monitoring and blind spot detection. The AEC-Q100 version our CV22 and CV25 SoC combines advanced imaging, powerful AI processing and low power, making them an ideal solution for AI camera operating in challenging automotive environment. We expect our customers to begin field trials and initial production in the fourth quarter of this year, in deploying AI software solutions that base both their own in-house models and for Ambarella's ecosystem products. In summary, as the environment around us is highly volatile and uncertain, we are fully committed to our strategy and the long-term secular trends were addressing the main impact. Our strategy to leverage our successful video processor heritage into the development of a highly optimized legal AI computer vision platform has not changed. In ADAS we are enabling higher level of automation in multiple industries. And as the industry emerges from the current crisis, demand for higher level of automation should be more important than ever driving the large new markets we have identified in the past. Furthermore, our operating cash flow, financial discipline and the liquidity and the strength of our balance sheet enable us to sustain our planned level of visual AI investment through these difficult times. With strong execution, we continue to expect our significant R&D investment to yield positive returns. Our CV strategy continued to validate with the broad customer activity and expanding the list of our customer in production, early CV revenue growth and the new products and technology that expands the platform and our reach into new markets. For example, during Q1 five more customers enter production status with our CV SoC, three in security camera market and two in automotive market. In the next several months we expect to begin to sample customers our first automotive safety integrity level SoCs and the development of our new family of 5-nanometer SoC continue to move forward. Finally, in response to the health pandemic, our corporate gearing initiatives comprised of employee donation and the corporate match raised more than $300,000 for various aid organizations in the regions we operate. I thank Ambarella's employees for their response to this gearing and initiative for managing their safety and safety of those around them, as well as for their strong execution to support our customers and drive our own regional AI initiatives. I will now turn the call over to Casey who will give you more details about what we are seeing and expect for the business.
Casey Eichler: Thank you, Fermi, and good afternoon, everyone. Today I will review the financial highlights for the first quarter of FY 2021 ending April 30 and provide a financial outlook for our second quarter of fiscal 2021 ending July 31. During the call, I'll discuss non-GAAP results and ask that you refer to today's press release for a detailed reconciliation of GAAP to non-GAAP results. For non-GAAP reporting, we have eliminated stock-based compensation expense, adjusted for the impact of taxes. We faced a full quarter of both public health and geopolitical challenges in Q1. And despite this, our revenue of $54.6 million was slightly above the midpoint of our original guidance. This represents a decrease of 4% from Q4 and an increase of 16% when compared to the same quarter of the prior year. In Q1, revenue declined sequentially in all end markets with automotive down in the very low double-digits and security and other product revenue down slightly. Both the professional and smart home security business declined slightly sequentially. Non-GAAP gross margin for Q1 was 59.1% compared to 58.7% in the preceding quarter and was close to the high end of our guidance due to favorable mix in business. Non-GAAP operating expense for the first quarter was $31.9 million compared to $30.5 million for the previous quarter. OpEx increased primarily due to an increase in payroll taxes and an increase in amortization expense for the tape-out of new 5-nanometer and 10-nanometer SoCs. Other income of $1.3 million reflected the impact of lower interest rates. The non-GAAP net income for Q1 was $1.3 million or $0.04 per share compared to non-GAAP net income of $4.9 million or $0.14 per share in the fourth quarter. In the first quarter, the non-GAAP earnings per share were based on 35.2 million diluted shares as compared to 35.1 million diluted shares in the prior quarter. The non-GAAP net income for the first quarter of fiscal year 2021 includes a change in the non-GAAP tax rate calculation to exclude losses from jurisdictions where there is no tax benefit associated. This was done to improve the alignment of the non-GAAP income tax to the non-GAAP profit before tax. Accordingly non-GAAP net income and non-GAAP loss per share for the first quarter of fiscal year 2020 ended April 30, 2019 have been adjusted for the change in non-GAAP income tax effect and presented consistent with the first quarter of fiscal year 2021 presentation. A reconciliation of the GAAP to non-GAAP calculations is included in the financial statement portion of our press release. Total headcount at the end of the fourth quarter was 760 with about 81% of our employees dedicated to engineering. Approximately 69% of total headcount is located in Asia. In Q1, we generated positive operating cash flow of $7.6 million. Cash and marketable securities were $411.3 million up from $404.7 million at the end of the fourth quarter. We purchased 25,719 shares of common stock in the quarter for $1 million representing an average price of about $39 per share. In May, Ambarella's Board of Directors approved an extension of the current $50 million repurchase program for an additional 12 months ending June 30, 2021. As of today, the remaining $49 million available from the $50 million repurchase agreement authorized in June 30, 2021. Total accounts receivable at the end of Q1 were $20.7 million or 34 days sales outstanding. This compares to accounts receivable of $18.5 million or 30 days sales outstanding at the end of the prior quarter. Net inventory at the end of the first quarter was $22 million compared to $23 million at the end of the previous quarter. Days of inventory increased to 91 days in Q1 from 82 days in Q4. We had two 10%-plus revenue customers in Q1. WT Microelectronics, a fulfillment partner in Taiwan came in at 63% of revenue; and Chicony, a Taiwanese OEM, who manufactures for multiple customer’s came in at 15%. I will now discuss the outlook for the second quarter of fiscal 2021. The confluence of health pandemic and geopolitical factors has led to unprecedented volatility and continued uncertainty in forecasting. The global health pandemic continues to disrupt demand. On our March 3, earnings call, we stated, we were beginning to see order pushouts and cancellations. This trend together with a slowdown in design activity began in Q1 and we believe will continue in Q2. Most importantly, the pandemic has put global economies in sharp contraction with unemployment rapidly rising and the impact of changes in government business and consumer spending is significantly unknown at this time. In addition to the health pandemic, as we have discussed for the last year, we continued to be a wide variety of geopolitical risks and situations remaining very fluid. Geopolitical risk, including new U.S. export control on advanced technologies. The risk customers in China continue to take action to reduce their dependence on U.S. components that they believe may be subject to export control, changes in the entity list and/or tariffs, as well as market share shifts between our customers. We remain concerned about the dual China, non-China supply chain that is being created and how it impact our customers in China. The foreign direct product rule announced by the U.S. on May 15 and the addition of 33 companies to the entity list on May 22 have further escalated tension, which may lead to an adverse reaction from the government and/or our customers in China. In our prior earnings calls, we estimated two professional security camera customers in China had pulled in roughly $10 million of revenue from fiscal year 2021 to fiscal year 2020. We do not believe there has been a material change in the inventory of Ambarella SoCs carried by these two customers and we continue to anticipate weaker order patterns from both of these customers in the second half, as they digest their safety stock of inventory. Based on these factors and our best judgment at the current time, we expect total revenue for the second quarter ending July 31, 2020 to be in the range of $50 million plus or minus 6%. We anticipate, the security market will be up sequentially with automotive and other revenue expected to decline. With a very wide range of public health and geopolitical forces impacting the outlook, at this point of time we are unable to forecast beyond second quarter. We estimate Q2 non-GAAP gross margin to be between 59% and 60.5% compared to 59.1% in the first quarter, as a favorable customer mix brings gross margins back into our long-term model of 59% to 62%. We expect non-GAAP operating – excuse me, non-GAAP OpEx in the second quarter to be between $31 million and $33 million, due to increased engineering expenses including amortization for the tape-out of our first family of 5-nanometer SoCs, as well as potential changes in our ability to continue to receive the engineering credit that we've talked about in the past. Second quarter other income should be modeled around $1 million, reflecting lower interest rates, on our net cash position. The second quarter non-GAAP tax rate should be modeled in the 15% to 20% range. We estimate our diluted share count, for Q2, to be approximately 35.3 million shares. Ambarella is participating in the Bank of America, Virtual Global Technology Conference on June 3rd, The Stifel, Cross Sector Insight Virtual Conference on June 9th and the Roth, London Virtual Conference on June 24th. Please contact Louis for more details, on these events. Thank you for joining our call today. And with that, I'll turn it back over to the operator, for questions. Question-and-Answer Session
Operator: Certainly [Operator Instructions] Our first question comes from the line of Joe Moore from Morgan Stanley. Your question please.
Joe Moore: Yeah. Thanks a lot for let me ask the question. I think you guys said of the CV customers that are in production that two are in automotive. And I was a little surprised by that. I wondered if you could talk about what types of applications are already in production with CV. And then, for my follow-up just are you still think you're on track to be sort of 10%, CV for the year?
Fermi Wang: Well, first of all let me answer that 10%. I think although, we have less visibility on the second half. We still continue to believe that, we have a very good chance to deliver the 10% total CV revenue. And I think that's on track. We'll continue to report on the progress on that. So the 10% CV things, I think it's definitely something that we think is important for a milestone. We continue to track on that. In terms of five customers, we didn't announce the name, but I think that total revenue coming from most likely in a commercial vehicle for ADAS and/or fleet management for ADAS or internal monitoring. So, those kind of applications because they don't need ASO vacation so, it's easier and faster to get into production. So I think that's kind of automotive production, we're talking about.
Joe Moore: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Tristan Gerra from Baird. Your question please.
Tristan Gerra: Hi. Good afternoon. Could you remind us as of last quarter the percentage of your revenue coming from China customers and whether they started to diversify procurement away from U.S. vendors? I think the number was about 20% in the prior quarter. And also any details that you could add in terms of the new restriction list and potential impact this has? And then, at the same time, putting into the mix high silicon being eventually cut off from TSMC and what the offered dynamics does that create later this year for the camera market in China?
Casey Eichler: So let me -- let Fermi answer the last question. But as far as geographic breakdown of revenue, we don't disclose specifically by country the geographic breakdown of revenue. A lot of our revenue in Asia and in China in particular, goes through WT. So you can see that WT is a big part of our revenue. And a lot of that goes through WT as well as Chicony and others. But we don't specifically call out customers. I think people have made estimates, as to what certain customers might be, for example, high vision or -- but we don't call that out. We just call out our over 10% customers which are WT and Chicony.
Fermi Wang: Right. So for the HiSilicon question, I think that -- first of all, I think that because the rule just came out and what we talk to our attorney, I think there is still a lot of details that -- which are not very well-understood. We're trying to understand that and we haven't seen how our customers react to that ruling yet. But, however, like we said before we knew that this is going to continue to help us outside China. I think outside China we already reported like Panasonic, which use HiSilicon in the past. And you can see that from our earnings call this time, we do see that we're picking up design wins from that. Inside China, I think it's a different story because there are multiple different factors playing at the same time, while HiSilicon might not -- even TSMC cannot ship to HiSilicon. But, however, at the same time most of our Chinese customer probably trying to avoid U.S. component at this point and they probably will pick using our other solutions if they have choice, but on the middle and high-end they have lesser choice. So there are so many uncertainty in China today and the rule is so new. We are still watching how this progress and we are talking to our customers particularly in China to understand how they feel about. So I would say if there's something for certain, I think the outside China is definitely we see a positive for us. Inside China is still a no.
Tristan Gerra: Okay, great. That's very useful. And then just a quick follow-up, are you seeing any lingering supply chain disruptions including at your customers? And you've mentioned a significant rebound in your security related revenue this quarter. Is that really backlog fell for what could not be built in Q1? Are you basically back in line with real end demand in Q2 in security?
Fermi Wang: First of all, from a supply chain point of view, I think our supply chain has seen a very little impact from COVID-19. However, we do see very strange ordering pattern for our customers. And when we talk to them, they do mention disruptions in their supply chains particularly in auto space. Also we see some disruption in the supply chain for our security customer also. However, I think security camp -- if you look at among all our cost -- our current market that we're trying to address, I will say the professional security camera is probably the list being impacted by COVID-19 and also there are a lot of new demands like thermal sensor integrated with the cameras like containers cameras for saving applications. So we do see opportunities for security -- for the professional security camera. So maybe that's the reason of that we are seeing a better result on the professional security side. But also -- however, I would point out on the consumer security side app [ph] is a retail product. And with other -- a lot of retail channels got shutdown in U.S. and Europe, we do see that supply chain problem is one thing but the end demand is a different story. And when -- because the Q3 end demand is still unknown, we are working with our customers trying to understand that as much as we can.
Tristan Gerra: Very good. Thank you so much.
Operator: Thank you. Our next question comes from the line of Tore Svanberg from Stifel. Your question please.
Tore Svanberg: Yes, thank you. Fermi, I had a question on the professional security market. You mentioned the integration of thermal sensors and so on and so forth. Is that something that you're already offering? And if not when would you expect to start perhaps delivering SOCs that would include terminal sensors?
Fermi Wang: Well, first of all, we don't include the CMOS sensor with thermal sensor in our silicon. But we can interface easily with CMOS -- thermal sensor interface with CMOS sensors. So in fact several of our customers, for example, flare and as well as digital, they already start shipping some thermal cameras with traditional security camera by using our solution, which is also very small at this point, but that proof-of-concept that using our existing chip we can easily interface with thermal sensor. And in the future we can even apply some kind of sensor fusion with our AI capability. So I think thermal sensor was a niche market in the past, but with the pandemic you can see a strong demand. And in the future with compilers and also try to do a little bit of screening with the temperature, I think that definitely drives the demand for this. So I think the answer to your question is our existing solution can inter with thermal sensor without any problems.
Tore Svanberg: Very good. And as a follow-up on the automotive set of things that market has been weak for you already for several months. Now that there's some production starting up again in that market, are you starting to see any positive signs or movements in the auto business at all?
Fermi Wang: Well, we see some positive sign in China, but not other places. For example, although, I'm hoping that Japan can come back soon, because a lot of our recorded business is in Japan. But the Japanese government has been on and off shutting down the cities in Japan. So it created unknown to us. So I would say that from the automotive business, we see more positive signs in China, but not anywhere else.
Tore Svanberg: Great. Thank you very much.
Operator: Thank you. Our next question comes from the line of Ross Seymore from Deutsche Bank. Your question, please.
Ross Seymore: Hi guys. Thanks for letting me ask the question and congrats on weathering all the storm simultaneously. I guess my first question would be for Casey. You talked about directionally up for IP security in your fiscal second quarter guide and then down for automotive and consumer. But as we've seen in the automotive market down can be quite a severe magnitude. So any sort of quantification of that even kind of ballpark ranges like you gave for what it actually did in the fiscal first quarter that you give us for your second quarter guide by segment?
Casey Eichler: Yes. So what I had said about the automotive and other is that we would expect that they would decline. To have an order of magnitude visibility in this environment is pretty tough. I think I'm directionally correct for me to try to put brackets on it more tightly than that, I think would give you a sense that I have more visibility than I really do today. And that's really true for all of the markets, but because of some of the comments that Fermi just made. Again, directionally, I do think that the security market will be up. But again to quantify that is really tough in this current environment, I mean, we feel good and confident, that's why we gave a guidance, although, it would be a little broader that we have some visibility into Q2 to get too fine on it I think would be difficult.
Ross Seymore: Got it. Thanks for that color. And then I guess for my follow-up, when you talk about that $10 million that you expect the customers to burn-off into the second half of the year have you seen their behavior actually start to change? It doesn't sound like it has yet. It seems like you have this somewhat ironic combination that the longer that trade tensions stay elevated the more likely those customers want to carry buffer. So has anything changed to give you belief that that will be burnt down in the second half of this year, or are you just basically sticking around waiting for that to happen just like the rest of us?
Fermi Wang: I think we are waiting, but also we see some signs. First of all, I think the order in pattern suggests that -- the order impact in slowing down basically suggests that they're bringing off because like you said, they are continue shipping our cameras, but however at the same time the trade war now really shifting the gear to how they're going to handle HiSilicon supply. So when they see our Chinese customer building our inventory, you should assume that they're probably building up a lot more HiSilicon supply and then they are building ours because we always said that, we have no problem to continue to ship products to that at this point. So I think that's a difference. So we do see some indication that they are bringing off the inventory gradually.
Ross Seymore: Got it. And I guess one final housekeeping one. Casey, how are you thinking about OpEx in the second half of this year? You did a good job in the first quarter. I assume a lot of the variable costs that you can keep tight already. So is this kind of the run rate first quarter, second quarter $32 million, the run rate going into the second half, or are there some items that we need to appreciate that would be a little more lumpier in nature?
Casey Eichler: Well again, as we continue to push our road map forward aggressively not only in 10-nanometer, but in 5-nanometer as you can imagine the tape-out cost CAD tools etcetera although amortized that pushes that amortization up. And so you do have some build from that as you go out into the year. But we don't have any other programs that are dramatic that I would say are going to change the OpEx one way or the other.
Fermi Wang: But I think another thing I'll to add is obviously at this current difficult time that watching our expense on other areas is very important for us. While we commit to continue to 5-nanometer and 10-nanometer silicon development, at the same time we are very cautious in terms of hiring people, other expenses including trade show travels which naturally being cut come back. And so, we are watching our expense on this area, but we continue to commit on R&D expenses, not hiring but on the tape out and silicon development.
Casey Eichler: And it's – again, it's a little hard to tell when people are going to be able to feel comfortable traveling in these conferences are going to start to take place in person again in the second half. And so we'll have to watch that as well.
Ross Seymore: Hopefully in the second half. So thanks guys, appreciate it.
Operator: Thank you. Our next question comes from the line of Adam Gonzalez from Bank of America Securities. Your question please.
Adam Gonzalez: Hi guys, thanks for taking my question. Apologies if this was addressed in the prepared remarks my connection was a little bit spotty. But just wanted to know how the current pandemic and crisis has really impacted your design momentum in pipeline particularly in TV for autos. Have your customer interactions changed at all?
Fermi Wang: Well, first of all there are multiple different impacts. First of all for example because of working from home and some of the company or customer even only working two days a week. So definitely the decision has been slowed down. And also the some activity engineering activity got delayed. So I think that impact is clear. What we are trying to figure out is whether -- when they come back to the normal stage whether they're going to review -- how they're going to review their current investment level and how they're going to invest on different projects. That's I think something that we really will try to understand for how that impact us. We don't see a clear indication yet. But from an impact point of view, definitely, the current project working -- the activities slow down and some projects got pushed out just because of working style.
Adam Gonzalez: Got it. And then on the per security side in response to an earlier question, I think you alluded to some risk of the China customers perhaps wanting to procure chips from non-U.S. customers moving forward. Outside of HiSilicon, who might be cut off from TSMC soon, what other options are there really in the first surveillance market?
Fermi Wang: Well, like we said before, on the low end side, there are quite a few in China and Taiwan. So, that's definitely a concern. However, in the middle and high end particularly on the CV, the midstream like CV22, CV2 level chip, I don't think there's a mutual choice. So, that's why, we are continue to -- talking to our Chinese customers to understand it. But however, my gut feeling is that the U.S. and China situation continue to deteriorate really trigger our customers -- have more concerns of using a U.S. component.
Adam Gonzalez: Got it. Thank you.
Operator: Thank you. Our next question comes from the line of Jeff Kessler from Imperial Capital. Your question please.
Jeff Kessler: Thank you, and thank you for taking my question. With regard to access control, a number of the integrators who have been able to get into closed schools, closed government facilities have been able to start for the first time getting involved, getting into empty spaces and beginning to install, both access and video. And I'm wondering if you're seeing an uptick from your end markets in that area, particularly when it comes to some of the electronic network locks that integrate with video?
Fermi Wang: Right. So, we do hear from our customers, they start reengaging with their end customer and start doing those kinds of things. But we haven't seen on ordering pattern yet, because there's obviously a delay. You need to empty their inventory level, they do deal with and they need to understand that. So, by talking to customers, we understand they already start reengaging. In fact, most of our U.S. customers on the professional security camera side told us, they are reengaging with their current customers already. So that's a great sign. And that's another reason we believe that the professional security has a much less impact than the other market that we are dealing with. At the same time, I also believe when hopefully that when we go back to normal a little bit. And in fact, we believe that the contactless monitor camera as well as other AI trend will continue to help us to establish our AI solution to this kind of market and enabling even more AI application in the future.
Jeff Kessler: Thank you. One other quick question on Axis and their introduction of body-worn cameras. It appears that, it isn't just Axis, but some other higher-end camera manufacturers are getting involved in trying to get more analytics on a mobile basis, getting mobile cameras out there, not just for police, but for other uses as well. Are you seeing -- are you seeing demand in -- obviously you've mentioned Axis and their mobile camera. But are you seeing demand from Axis and other companies at the high end that are going to need AI for mobile applications?
Fermi Wang: Yes, the need is clear. And the challenge is, how to do AI and the video and streaming at power consumption that can offer any -- the camera can operate 12 hours in a row and offering all the capability just talk about. So -- and with our solution we are getting there. And also we believe that our investment in the lower geometry process will definitely enable that. However, for this market, I want to point out it's at the beginning of the demand because any wearable camera if you use only for policemen or even for security guard, the market size is limited. However, when you start figuring out other usage that will require this kind of camera that could be really increase our TAM. So I think the trend is there. But, however, I think that because of technology limitation at this point it gives us a roadmap that we continue to increase the performance, reduce power consumption, add more AI performance today and enabling a much better customer usage and a better customer experience with this kind of wearable cameras. That's what we're looking for.
Jeff Kessler: Okay, great. Thank you very much. Appreciate it.
Operator: Thank you for calling. Our next question comes from the line of Quinn Bolton from Needham. Your question please.
Quinn Bolton: Hey, guys. Maybe first a clarification from Casey. On the second quarter outlook, did you say that the overall security market would be up, or is that just a professional security? Just want to make sure I heard you right.
Casey Eichler: Yeah, I said overall security.
Quinn Bolton: Okay. Can you say whether that's both professional and consumer, or just your comment is the overall bucket?
Casey Eichler: Yeah, I think overall we feel that is the right way to think about it. Again because of the visibility that we've got, I don't want to get into specifics around what's going on. For me, again has talked about a lot of customers both professional and consumer that are moving forward and we feel very good about. But I think I would keep it at sequentially up for the overall security market.
Quinn Bolton: Great. And then Fermi you, kind of, mentioned the slowdown in design activity in April and May and I assume it's too early in June to try to assess June trends. But what do you think it takes for those companies or customers to start to reengage? Does that -- they have to get folks back to the office? Is it that they just need time to figure out how to work and be effective working from home? Just wondering what your thoughts on reengaging with those customers are?
Fermi Wang: I don't think it's required to go back to office 100%. It's really that, for example, some automotive customer they -- not only working for home, they only work two days a week. So with that limitation it really hurts the productivity. And I think even in California people start talking about, we opened in June gradually. I don't think we're going 100% into office immediately. But I do think that if we are going to plan a very slow, but gradually progress by moving employees back to the office. So from my point of view, I think that the productive loss will be reduced. But I think the most important thing is really about there are some companies putting very strict rules about working hours for the employees and that has to be removed for us to see back-to-normal working conditions.
Quinn Bolton: Understood. And the last question you guys had mentioned the e-mirror design win. I know it's a little ways out, but just wondering if you could give us any more detail. I think you said it was a single channel e-mirror. So just wondering, does that mean it's just like a rearview camera? Do you have both sides and the rearview, or maybe give us any sort of, sense on the dollar content per vehicle for that win?
Fermi Wang: So in the past we focused on three -- all three windows and -- but now three mirrors. But I think right now what we add to it is we start doing a one channel design. But the one channel design also with one channel plus other function for example, a lot of people trying to use one channel, but also add some other functions into their cameras. So I think the single channel cameras rear mirror and -- but also all the customers that we talk to they need a road map to leverage single mirror application as well as two mirror as well as three mirror. So when you have a road map they cover all of that make it easier for customers to using one supplier to address all the needs of electronic mirror. That's why we are talking about. So although, we're talking about single mirror design win this time, but I do believe that leveraging our experience on three channel in the past. And then now we can offer the complete road map from one channel to three channel at efficient cost. I think that's the reason we start winning those designs.
Quinn Bolton: Thank you, Fermi.
Operator: Thank you. Our next question comes from the line of Suji Desilva from Roth Capital. Your question, please.
Suji Desilva: Hi, Fermi. Hi, Casey. Can you just circle back to the consumer security market? Just I'm trying to put together the comments you made. You had momentum, I think, earlier in the year. And then the visibility is limited because of macro, but you said the security market overall be up. Just want to understand the qualitative comments you're making on the consumer security market particularly going into what it would normally be a holiday season obviously, different year this year?
Fermi Wang: Right. So first of all, last time we had this conference call, we made it clear that consumer IT can is a market that really help us to continue to grow our revenue. And we are saying that is in a long-term point of view that didn't change. However in a short-term point of view that because a lot of retail store that our customers use to sell their consumer can through. All those -- some of them we also got shut down and some of them even closed. So until those retail stores open we have very little visibility of second half demand. That's what I'm trying to say. And right now just because all the business is gradually reopen, I think it will take weeks for our customer to decide how they want to respond to the selling season. Because as you know if there is a selling season this year, we need to stop prepare products and they need to prepare their final systems and putting into the channel. They stop and need to start right now. So we are waiting to see from our customers how they want to react to this reopening and how they forecast for the second half or particularly for the selling season.
Casey Eichler: As you know, Suji last year in the second half, we had the first wave of CV, which was in the professional security camera market. And we talked about the consumer being a similar type of second wave in the second half of this year. Clearly with everything going on that we just talked about and Fermi's reference it's a point in time where it's difficult to say or understand what if any impact is going to happen in the second half. Clearly with consumers staying at home and everything else, it's just put a big cloud that it's hard to get much visibility into it. But we still feel it's going to be the second wave CV, and then some of the automotive and other areas the access control and robotics forming up the next waves in CV. But it's just hard for us to continue to make that call, as precisely as we were feeling a quarter or two ago because of what's going on.
Suji Desilva: Okay. That's helpful color. And then maybe a high-level question perhaps for me. The product road map you have, the 10- and 5-nanometer products. Can you talk about what the key vectors you're pushing on here on the road map are? Just stay competitive versus the GPUs and FPGAs in the markets that are – you're competing within the automotive market. Any color there would be helpful. I know – about Italy fairly soon to see you guys live but if you could kind of give us some color there would be helpful?
Fermi Wang: So, first of all, I think that low power has – is low power consumption has been one key area and that we try to differentiate. And we said that many times before that our architecture give us – our silicon architecture give us that low power consumption differentiation. But however, if we fall behind in two process node, we might lose that low power advantage totally. With our competitors like in auto space and even in the security space, there are big companies that are moving aggressively moving forward and we have to do the same thing. So for 5-nanometer it's across the board. For all the chips that we are doing for CV2 and CV22 and CV25, you should expect that in 5-nanometer we have chips to address both security camera as well as for automotive. And at the same time for automotive, if you want to address CV2 – sorry the Level 2+ solution that everybody is trying to design their design wins, the performance requirements continue to increase. And to achieve appropriate power consumption, which is much lower than our competitors that we need to not only leverage our silicon architecture but also move to 5-nanometers to keep our advantages.
Suji Desilva: Okay. Thanks, guys.
Operator: Thank you. Our next question comes from the line of Charlie Anderson from Colliers Security [ph]. Your question please.
Unidentified Analyst: Yes. Thanks for taking my question. Casey, just to start out with inventory came down a little bit in the quarter, have a lot of variables to deal with the rest of the year. I wonder maybe you could just give us some of your high-level overview of how you'll treat inventory in the rest of the year. And I've got a follow-up.
Casey Eichler: Yes. As you know we've – over the last four to six quarters have brought inventory down and done a little bit more rigorous inventory management. I think that's been helpful and a good discipline for the business. At this point, we've kind of been hovering roughly in this area and it just kind of depends on the orders we see, what's getting shipped in the beginning and ends of quarters and there really isn't much to read into that. It was a $1 million change. So it really wasn't that much of a change. Most of our inventory and product are on high runners. And so we feel – don't feel a lot of exposure to that long term. But we're managing inventory and trying to make sure that we stay in the right place. It's a little tricky like everything else right now with the visibility because you don't want to get caught with all of a sudden an upturn and you don't have product. And so we're trying to balance that in an appropriate way.
Unidentified Analyst: Okay. Great. And for my follow-up, just on the subject of thermal cameras. I think we're seeing the real pull in the market like immediately. So I'm sort of curious where things stand as far as your ability to serve that market. Is there a design activity that needs to take place, or are there any existing models in the market with your silicon that can serve that need, or is this more out in 2021 and beyond? Thanks.
Fermi Wang: Well like I said, I believe that multiple professional security camera customers are working on that and I believe you will see products coming out this year. And like you said, there's a high demand. And I think that -- I hope there's ongoing demand that we should see. But we do believe that there will be solutions out this year. But however, I do believe that as soon as this trend started, when people realize that thermal can be easily integrated and the price come down from the current level. That will enable different -- totally different applications. For example, I can imagine that even for the home security camera at the right price, a thermal camera can be very helpful from doing access control. And also in fact that if the price and the power is right even for automotive business, you can use that to identify evidence of either person or animals that you want to avoid when you're driving. Those things become helpful. The biggest problem in the past was thermal sensor usually very expensive and it's not very easy to integrate. And very -- but with this new market opportunity, a lot of people spending time finding way to integrate with the security camera as well as developing algorithm software to do a sensor fusion between thermal sensor as well as [Indiscernible] sensor together. And all of that effort will help the thermal sensor become more popular in my opinion for both -- for all of the applications that we're looking at right now.
Unidentified Analyst: Great. Thank you so much.
Operator: Thank you. Our next question comes from the line of Matt Ramsay from Cowen. Your question please.
Matt Ramsay: Thank you very much. Good afternoon guys. Obviously, a lot of uncertainty out there, but it was nice to hear for me that the ASIL products, it sounds like for the automotive industry are ready to start rolling out. I just wondered if you might talk about programs that you've been working on in the automotive space that might have been waiting for ASIL certified silicon? And what your expectations are for growth of those products over the next 12 to 18 months? Thanks.
Fermi Wang: Right. So for this ASIL chip, CV2FS and CV22FS they are designed mainly for ADAS application, although they can be used for the ADAS plus DMS or ADAS plus in cabin monitoring. All of that the combination with those three applications are the sweet spot for the design. And we are talking to multiple. In fact, we announced one Chinese car guy already using -- planning to use CV2FS and what they will get sampled very soon. And plus there are multiple customers are evaluating CV2 and CV22FS for their new programs. But I think the biggest opportunity for us in this space is trying to enable ADAS application with the chip and with our software partners. We talked about high line in the past, there's a Korean strata vision in there and then there are other partners we are working with. So trying to make sure our partners can pull their software onto a platform and we can sample this through Tier 1s on time. I think this is the key execution we have to do in the next several months.
Matt Ramsay: Got it. Thanks. And just a follow-up, I noticed that over the last I don't know 12 months or so that there's been a little bit more communication from the company about things that you're doing in the logistics and shipping factory automation, those type markets with some contracts that you've won with some trucking companies for automating, package delivery for obviously some things with your camera partners that may be in the Amazon Go Store and you branded some software development stuff with Amazon in their cloud to work on your software stacks. It seems like that's a push that your product maybe -- your products overall might be well suited for those markets as they develop and something you're investing in. Just high level thoughts, how important/big an opportunity that might be and timing of such an opportunity, when it happens? Thanks.
Casey Eichler: First of all, we are continuing to invest in those areas. And we didn't mention this time because I think COVID-19 probably cloud every -- all the other discussion that we have. And this is like I said before. It's our mid-term to long-term investment. And we are continuing to invest in area, because we think this is important for us. And also we believe there's a big market opportunity, in the mid and long-term. So, while we continue to work with all of the partners you mentioned, what you just said. And also we continue to do business development over Zoom meetings, over a conference call to talk to them, making sure they are -- we support them properly. So, all the projects are ongoing. However, at the same time, we can do see some slowdown in some projects because COVID-19. And things but we expect all the projects were back to normal, when the business reopened. Again, although we didn't talk much about that direction you mentioned, but that continues to be an area that we need to continue to invest and continue to work with our customer closely to introduce product.
Matt Ramsay: Thank you very much guys. I appreciate it.
Casey Eichler: Thank you.
Operator: Thank you. Our final question for today comes from the line of Richard Shannon from Craig-Hallum. Your question please.
Richard Shannon: Thanks guys. Just two quick questions for me, embedded in your guidance for the July quarter, you talked about security being up. Curious if you can kind of give us a geographic breakdown your expectations there, specifically thinking about China versus rest of the world.
Fermi Wang: Yeah. We talk about China, basically two customers continues to digest their inventory. So I think that's an indication that probably they are slower revenue, in Q2 forecast. Other areas, we still think it's normal from the professional security camera side. And we currently talk about consumer IP. So overall, from the China side, I have to say, with the geopolitical situation and the trade war between U.S. and China, things become very, very uncertain, even more uncertain than pandemic in my opinion, because there's just too many factors to consider at this time. So the only thing we are doing is continue talking to our customer, in a regular base. We're talking about weekly, sometimes daily basis to understand the intention, understand how the project, how much inventory they have, and what should we do to help them, to support them. All of that is happening in the meantime. But I think we have been saying many times that, all of them showing concerns, not particularly targeting Ambarella but, they are all showing continue to use the U.S. component. That I think is the biggest problem for all of us.
Richard Shannon: Okay. That's helpful. Thanks for the detail, Fermi. My follow-on question here, just quickly on your CV revenues for this year here, if you hit your kind of 10% of revenues goal here for this year. Again from a geographic point of view, how do you see that playing out here? Is it dominated or strong in China, or do you kind of see a balance throughout the world?
Fermi Wang: I won't say it's dominant in China at all. I'll say it's very balanced. And I still think that, we said that the goal of 10% CV revenue, actually we still think, we have a pretty good chance to achieve that.
Richard Shannon: Okay. I appreciate the detail. That's all for me guys. Thanks you.
Fermi Wang: Thank you.
Operator: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Dr. Fermi Wang, for any further remarks. Please go ahead sir.
Fermi Wang: Okay. Thank you all. And I'm looking forward to talk to you next time. Thank you. Talk to you later. Bye.
Casey Eichler: Thanks.
Operator: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Related Analysis
Ambarella's (NASDAQ:AMBA) Financial Performance and Market Valuation
- Ambarella's quarterly loss of $0.13 per share outperforms analyst expectations, indicating financial resilience.
- The company's negative P/E ratio and high P/S and EV/Sales ratios reflect investor optimism for future growth despite current losses.
- Ambarella's strong liquidity and minimal debt underscore its financial stability and potential to navigate market uncertainties.
Ambarella (NASDAQ:AMBA) recently showcased its financial resilience by reporting a quarterly loss of $0.13 per share, which was better than what analysts expected. This performance is an improvement from the loss of $0.15 per share a year ago, as highlighted by Zacks Investment Research. Ambarella operates in the semiconductor industry, focusing on the development of low-power, high-definition (HD) and Ultra HD video compression, image processing, and computer vision processors. These technologies are crucial for a wide range of products, including security cameras, automotive cameras, and drones. Despite the challenges in the semiconductor industry, such as supply chain disruptions and fluctuating demand, Ambarella's ability to surpass revenue estimates demonstrates its potential for growth and resilience in a competitive market.
The financial metrics of Ambarella reveal a complex picture of its current financial health and market valuation. With a price-to-earnings (P/E) ratio of approximately -13.71, it's clear that the company is trading at a loss relative to its earnings over the last twelve months. This negative P/E ratio suggests that investors are expecting future growth or improvement in the company's earnings. The price-to-sales (P/S) ratio of about 10.86 indicates that investors are willing to pay $10.86 for every dollar of sales, showing a belief in the company's growth potential despite its current losses.
Ambarella's enterprise value to sales (EV/Sales) ratio of approximately 10.19 further underscores the market's valuation of the company relative to its sales. This ratio, along with the price-to-sales ratio, suggests that the market has high expectations for Ambarella's future sales growth. However, the enterprise value to operating cash flow (EV/OCF) ratio of around -125.13 highlights the company's challenges in generating positive cash flow from its operations, which is a critical aspect for sustaining growth and covering expenses.
The company's financial stability is also reflected in its very low debt-to-equity (D/E) ratio of about 0.007, indicating minimal reliance on debt for financing its operations. This low level of debt contributes to the company's financial flexibility and resilience. Additionally, the current ratio of approximately 3.06 demonstrates Ambarella's strong liquidity position, showing that it has more than enough resources to cover its short-term obligations. This liquidity is crucial for the company to navigate through uncertain market conditions and continue investing in research and development to drive future growth.
Ambarella Reports Better Than Expected Q3 Earnings
Ambarella (NASDAQ:AMBA) reported its Q3 earnings, with a loss of $0.28 per share, which was less than the anticipated $0.39 loss per share forecasted by analysts. The company's revenue for the quarter was $50.6 million, slightly above the Street estimate of $50.01 million. Despite this positive outcome, it's important to note that the revenue represents a 39% decrease from the same period in the previous year.
However, Ambarella highlighted a positive development: their customers are making headway in reducing their inventory, which leads the company to anticipate a return to revenue growth in fiscal 2025. CEO Fermi Wang expressed commitment to the company's strategic R&D focus, particularly in the development of System on Chips (SoCs) and software aimed at more advanced AI inference tasks.
For the upcoming fourth quarter, Ambarella projects revenue to be in the range of $50 to $53 million, compared to the Street estimate of $50.35 million.
Ambarella Posts Q2 Beat, But Shares Plunge 20% on Disappointing Guidance
Ambarella (NASDAQ:AMBA) shares experienced a pre-market drop exceeding 20% today following the release of its Q2 financial results.
Despite Q2 earnings per share (EPS) of ($0.15) and revenue amounting to $62.1 million, which exceeded predicted consensus figures of ($0.21) and $62.02 million, respectively, the provided Q3 guidance fell short of expectations.
For the upcoming Q3/24, Ambarella anticipates revenue of around $50 million, with a variance of 4% in either direction, contrasting with the projected consensus of $67.6 million.
Ambarella Posts Q2 Beat, But Shares Plunge 20% on Disappointing Guidance
Ambarella (NASDAQ:AMBA) shares experienced a pre-market drop exceeding 20% today following the release of its Q2 financial results.
Despite Q2 earnings per share (EPS) of ($0.15) and revenue amounting to $62.1 million, which exceeded predicted consensus figures of ($0.21) and $62.02 million, respectively, the provided Q3 guidance fell short of expectations.
For the upcoming Q3/24, Ambarella anticipates revenue of around $50 million, with a variance of 4% in either direction, contrasting with the projected consensus of $67.6 million.
Ambarella Stock Plummets 17% on Weak Guidance
Ambarella (NASDAQ:AMBA) shares plunged more than 17% intra-day today after the company reported its Q1 earnings results, with a loss per share of $0.15, better than the Street estimate of a loss per share of $0.20. Revenue came in at $62.1 million, compared to the Street estimate of $61.99 million. As guided, Q1 sales declined 27% quarter-over-quarter and 31% year-over-year, as customers continue to reduce inventory in IoT as well as automotive segments.
Despite the beat, management anticipates Q2/24 revenue to be in the range of $60-$64 million, worse than the Street estimate of $67.17 million. The gross margin is seen at 62.5%-64.5%.
Ambarella Stock Plummets 17% on Weak Guidance
Ambarella (NASDAQ:AMBA) shares plunged more than 17% intra-day today after the company reported its Q1 earnings results, with a loss per share of $0.15, better than the Street estimate of a loss per share of $0.20. Revenue came in at $62.1 million, compared to the Street estimate of $61.99 million. As guided, Q1 sales declined 27% quarter-over-quarter and 31% year-over-year, as customers continue to reduce inventory in IoT as well as automotive segments.
Despite the beat, management anticipates Q2/24 revenue to be in the range of $60-$64 million, worse than the Street estimate of $67.17 million. The gross margin is seen at 62.5%-64.5%.
Ambarella’s Upcoming Q4 Earnings Preview
Deutsche Bank analysts provided their views on Ambarella, Inc. (NASDAQ:AMBA) ahead of its upcoming Q4 earnings announcement.
After a roughly in-line Q3 was followed by a softer Q4/Q1 guide, the analysts expect an approximately in-line report for Q4 revenues as any incremental gains from easing kitting constraints are offset by weaker macro and industry-specific headwinds which should only pick up steam heading into Q1.
According to the analysts, the company admirably remains committed to its long-term plans, and they believe the company positioned it well for the future with a landmark design win at Continental AG in addition to a win with Kodiak Robotics, their recently re-sized Auto funnel/backlog (now at $2.3 billion) and continued rollout/development of industry-leading tech (CV5 production ramping and CV3 sampling).
Despite admiring management's commitment to the long-term plans, the analysts believe the near-term weakness and lack of clarity surrounding revenue timing lead them to believe that much of the company's growth potential is reflected in the stock.