Ambarella, Inc. (AMBA)

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Ambarella, Inc. (AMBA)

F4Q 2014 Earnings Conference Call

March 6, 2014 5:00 PM ET


Deborah Stapleton – Investor Relations

Fermi Wang – President and Chief Executive Officer

George Laplante – Chief Financial Officer


Ross Seymore – Deutsche Bank Securities Inc.

Quinn Bolton – Needham & Company

Joe Moore – Morgan Stanley & Co. LLC

Jay Srivatsa – Chardan Capital Markets

Kevin Cassidy – Stifel, Nicolaus & Co., Inc.

Charles Anderson – Dougherty & Company LLC



Good day ladies and gentlemen and welcome to the Ambarella’s Q4 Full-Year 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference Ms. Deborah Stapleton. You may begin.

Deborah Stapleton

Thank you. Good afternoon, everyone, and welcome to Ambarella’s fourth fiscal quarter and year-end fiscal 2014 financial results conference call. Thank you for joining us today. Our speakers’ will be Dr. Fermi Wang, President and CEO; and George Laplante, CFO.

The primary purpose of today’s call is to provide you with information regarding our fiscal fourth quarter. The discussion today and the responses to your questions will contain forward-looking statements regarding our 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 are 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 that we filed on April 4 for the 2013 fiscal year and Form 10-K for the 2014 fiscal year that will be filed shortly. Access to our fourth quarter press release, historical results, SEC filings, and a replay of today’s call can all be found on the Investor Relations portion of our website.

Now, I’ll turn the call over to Fermi Wang. Fermi?

Fermi Wang

Thank you, Deborah, and good afternoon, everyone. We are very pleased with our Q4 and fiscal year 2014 financial results. Q4 revenue was $40 million, up 26.8% from the $31.5 million we reported in the fourth quarter a year ago.

This brings our total revenue for fiscal 2014 to $157.6 million or a 30.2% increase over fiscal year 2013 revenue of $121.1 million. Q4 non-GAAP net income was $8.2 million or $0.26 per diluted ordinary share. This compares with non-GAAP net income of $5 million or $0.18 per diluted ordinary share for the same period in fiscal 2013. For the full fiscal year, we earned $33.2 million or $1.10 per diluted ordinary shared compared to $22.7 million or $0.79 per diluted ordinary share in fiscal year 2013.

I would like to discuss some of our products and market highlights, and then I will turn it over to George for more in-depth discussion of our fourth quarter financial performance and our guidance for Q1.

Growth in our camera business was again led by strong sales in IP security cameras. This market segment continues to be driven by the migration of our analog CCTV cameras to high-definition IP security cameras.

During the fourth quarter and for the third quarter in a row, Ambarella shipped more SoCs for use in IP cameras than for any other camera category. Also, in fiscal year 2014, Ambarella more than doubled its revenue for IP cameras compared with the previous year, reflecting both a significant gain in the market share as well as overall market growth.

Sales of professional IP cameras increased in all regions, but we are particularly strong in China led by Ambarella’s key customers Hikvision and Dahua. Ambarella’s continued success in professional IP cameras is based on fulfilling customer requirements for high-quality, high-definition camera solutions with excellent low-light capabilities, highly efficient encoding, and a very low power consumption.

Ambarella’s A5s, SoC family continues to meet the high volume market requirements. Ambarella’s S2 family enables Ultra HD or 4K video resolution, 360 degree de-warping for wide angle design and the Dual Cortex ARM CPUs for advanced analytics.

In February, DynaColor, a leading supplier for professional IP cameras announced its new V8 series of ultra-HD fish-eye cameras, based on Ambarella’s S2 camera SoC. The cameras are available in 3 megapixel, 5 megapixel, and 6 megapixel resolutions, and in both 180 degree wall mount and 360 degree ceiling mount configurations. The S2 enables de-warping in the cameras to provide multi-view Pan Tilt Zoom without mechanical parts.

Ambarella is also seeing increasing opportunities in consumer Wi-Fi IP cameras for home security systems. In addition to traditional home security companies, telecom and cable network operators are also – are now also introducing new cameras and the video security services for consumers. It is expected that their offering will increasingly migrate from standard-definition to high-definition in the future, which would provide additional opportunities to Ambarella.

During the 2014 consumer electronic shows in January, Ambarella demonstrated its SmartAVC video encoding technology of A5s SoC family. This technology significantly reduced the video stream frame rate minimizing the required network bandwidth necessary to transmit HD video and lowering cloud storage costs, making it an ideal solution for home security cameras. In summary, we see continued growth in IP security cameras driven by both professional IP camera and the consumer Wi-Fi IP camera applications.

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