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Ambarella, Inc. Announces Third Quarter Fiscal Year 2018 Financial Results

SANTA CLARA, Calif., Nov. 30, 2017 (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 third quarter of fiscal year 2018 ended October 31, 2017.

  • Revenue for the third quarter of fiscal 2018 was $89.1 million, down 11.4% from $100.5 million in the same period in fiscal 2017. For the nine months ended October 31, 2017, revenue was $224.8 million, up 0.9% from $222.8 million for the nine months ended October 31, 2016.
  • Gross margin under U.S. generally accepted accounting principles (GAAP) for the third quarter of fiscal 2018 was 63.6%, compared with 66.0% for the same period in fiscal 2017. For the nine months ended October 31, 2017, GAAP gross margin was 63.3%, compared with 65.8% for the nine months ended October 31, 2016.
  • GAAP net income for the third quarter of fiscal 2018 was $11.7 million, or $0.34 per diluted ordinary share, compared with GAAP net income of $29.0 million, or $0.84 per diluted ordinary share, for the same period in fiscal 2017. GAAP net income for the nine months ended October 31, 2017 was $17.6 million, or $0.51 per diluted ordinary share. This compares with GAAP net income of $39.5 million, or $1.15 per diluted ordinary share, for the nine months ended October 31, 2016.

Financial results on a non-GAAP basis for the third quarter of fiscal 2018 are as follows:

  • Gross margin on a non-GAAP basis for the third quarter of fiscal 2018 was 64.0%, compared with 66.3% for the same period in fiscal 2017. For the nine months ended October 31, 2017, non-GAAP gross margin was 63.8%, compared with 66.1% for the nine months ended October 31, 2016.
  • Non-GAAP net income for the third quarter of fiscal 2018 was $25.7 million, or $0.75 per diluted ordinary share. This compares with non-GAAP net income of $38.4 million, or $1.11 per diluted ordinary share, for the same period in fiscal 2017. Non-GAAP net income for the nine months ended October 31, 2017 was $55.6 million, or $1.61 per diluted ordinary share. This compares with non-GAAP net income of $68.4 million, or $2.00 per diluted ordinary share, for the nine months ended October 31, 2016.

Based on information available as of today, Ambarella is offering the following guidance for the fourth quarter of fiscal year 2018, ending January 31, 2018:

  • Revenue is expected to be between $68.0 million and $72.0 million
  • Gross margin on a non-GAAP basis is expected to be between 62.0% and 63.5%
  • Operating expenses on a non-GAAP basis are expected to be between $28.5 million and $30.0 million

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 third fiscal quarter excludes the impact of stock-based compensation adjusted for the associated tax impact which includes the effect of any benefits or shortfalls recognized. 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 third fiscal quarter of 2018 was $414.0 million, compared with $372.1 million at the end of the same quarter a year ago. 

Stock Repurchase 

In the third quarter of fiscal year 2018, the company repurchased a total of 269,540 shares for total consideration of approximately $12.8 million. Under the current $50 million repurchase program that was announced in June 2017 and commenced on July 1st, the company repurchased a total of 313,959 ordinary shares for total cash consideration of approximately $15.0 million. As of October 31, 2017, there was approximately $35.0 million available for repurchases under the repurchase program through June 30, 2018.

"During the quarter, we continued our solid execution in support of the development and delivery of our next generation of computer vision solutions. We met our aggressive goal of demonstrating our CV1 performance to customers and commenced sampling in the security and automotive markets," said Fermi Wang, CEO of Ambarella.  "We continue to invest in leading edge technology to expand our market opportunities, both in current markets, and in a broad range of new automotive applications," he said.

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, chief executive officer, and George Laplante, chief financial officer, to discuss the third quarter fiscal year 2018 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. (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, drone cameras and automotive video processing solutions. Ambarella is currently combining advanced computer vision technology with its state-of-the-art video to enable the next generation of intelligent cameras, advanced driver assistance systems (ADAS) and autonomous vehicles. 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 guidance for the fourth quarter of fiscal year 2018 ending January 31, 2018, and the comments of our CEO relating to the company's markets, ability of the company to expand its opportunities, and the ability of the company to develop and commercialize new technologies, including computer vision functionality.  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 develop, and to generate revenue from, new advanced technologies, such as computer vision 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 market; 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 2017 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 third quarter of fiscal year 2018 ended October 31, 2017 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 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 third quarter of fiscal year 2018, 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 fourth quarter of fiscal year 2018, 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 October 31, Nine Months Ended October 31,
  2017 2016 2017 2016
     
Revenue $  89,062 $  100,490 $  224,827 $  222,789
         
Cost of revenue    32,448    34,167    82,445    76,289
Gross profit    56,614    66,323    142,382    146,500
          
Operating expenses:        
Research and development    29,796    25,967    83,936    74,076
Selling, general and administrative    11,700    10,686    35,406    32,144
         
Total operating expenses     41,496    36,653    119,342    106,220
         
Income from operations    15,118    29,670    23,040    40,280
         
Other income    319    132    696    330
          
Income before income taxes    15,437    29,802    23,736    40,610
         
Provision for income taxes    3,713    757     6,145    1,150
         
Net income $  11,724 $  29,045 $  17,591  $  39,460
         
Net income per share attributable to ordinary shareholders:        
Basic  $  0.35 $  0.89 $  0.53 $  1.21
Diluted  $  0.34 $  0.84 $  0.51 $  1.15
Weighted-average shares used to compute net income per share        
attributable to ordinary shareholders:        
Basic     33,128,761    32,670,784    33,203,432    32,552,077
Diluted     34,358,893    34,599,992    34,538,968    34,242,065
         

 

 

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

         
 Three Months Ended October 31, Nine Months Ended October 31, 
 2017 2016  2017 2016 
 (unaudited, in thousands) 
Stock-based compensation:        
Cost of revenue$  343 $  282 $  978 $  773 
Research and development   8,906    7,804    25,532    21,396 
Selling, general and administrative   5,419    4,621    15,565    13,305 
         
Total stock-based compensation$  14,668 $   12,707 $  42,075 $  35,474 
         

 

 
AMBARELLA, INC.
RECONCILIATION OF GAAP TO NON-GAAP DILUTED EARNINGS PER SHARE
(in thousands, except share and per share data)
        
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
 (unaudited)
GAAP net income$  11,724  $  29,045   $  17,591  $  39,460 
        
Non-GAAP adjustments:       
Stock-based compensation expense    14,668     12,707     42,075     35,474 
Income tax effect   (686)    (3,312)    (4,043)    (6,550)
Non-GAAP net income$  25,706  $  38,440  $  55,623  $  68,384 
        
GAAP - diluted weighted average shares   34,358,893     34,599,992     34,538,968     34,242,065 
Non-GAAP - diluted weighted average shares   34,358,893     34,599,992     34,538,968     34,242,065 
        
GAAP - diluted net income per share$  0.34  $  0.84  $  0.51  $  1.15 
Non-GAAP adjustments:       
Stock-based compensation expense   0.43     0.37     1.22     1.04 
Income tax effect   (0.02)    (0.10)    (0.12)    (0.19)
Non-GAAP - diluted net income per share$  0.75  $  1.11  $  1.61  $  2.00 
        


The difference between GAAP and non-GAAP gross margin was 0.4% and 0.3%, or $343,000 and $282,000 for the three months ended October 31, 2017 and 2016, respectively. The difference between GAAP and non-GAAP gross margin was 0.5% and 0.3%, or $978,000 and $773,000 for the nine months ended October 31, 2017 and 2016, respectively. The difference was due to the effect of stock-based compensation.

 
AMBARELLA, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
     
 October 31, January 31 , 
 2017 2017 
     
ASSETS    
Current assets:    
Cash and cash equivalents$  320,933  $  322,872  
Marketable securities   93,085     82,522  
Accounts receivable, net   47,197     38,596  
Inventories   21,097     20,145  
Restricted cash   9     8   
Prepaid expenses and other current assets   4,008     4,392  
Total current assets   486,329     468,535  
     
Property and equipment, net   5,666     4,988  
Deferred tax assets, non-current   6,536     5,774  
Intangible assets, net   15,241     4,149  
Goodwill   26,601     26,601  
Other non-current assets    2,214     2,224  
     
Total assets$  542,587  $  512,271  
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable   26,208     19,955   
Accrued and other current liabilities   26,578     26,448  
Income taxes payable   2,447     568  
Deferred revenue   5,219     7,425  
Total current liabilities   60,452     54,396  
     
Other long-term liabilities   13,071     3,241  
     
Total liabilities   73,523     57,637  
     
Shareholders' equity:    
Preference shares      
Ordinary shares   15     15  
Additional paid-in capital   209,161     212,276  
Accumulated other comprehensive loss   (116)    (70) 
Retained earnings   260,004     242,413  
Total shareholders' equity   469,064     454,634  
     
Total liabilities and shareholders' equity$  542,587  $  512,271  
     


Contact:

Deborah Stapleton
650.815.1239
deb@stapleton.com

Source: Ambarella

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