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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended July 31, 2019

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from             to             

Commission file number: 001-35667

 

AMBARELLA, INC.

(Exact name of registrant as specified in its charter)

 

 

Cayman Islands

 

98-0459628

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

3101 Jay Street

Santa Clara, California

 

95054

(Address of principal executive offices)

 

(Zip Code)

(408) 734-8888

(Registrant’s telephone number, including area code)

 

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary Shares, $0.00045 Par Value Per Share

AMBA

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

The number of ordinary shares of the Registrant outstanding as of September 3, 2019 was 33,060,050 shares.

 

 

 


AMBARELLA, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Unaudited Condensed Consolidated Balance Sheets at July 31, 2019 and January 31, 2019

 

3

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2019 and 2018

 

4

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended July 31, 2019 and 2018

 

5

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended July 31, 2019 and 2018

 

6

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2019 and 2018

 

7

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

8

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

34

 

 

 

 

Item 4.

Controls and Procedures

 

34

 

 

 

 

PART II. OTHER INFORMATION

 

35

 

 

 

 

Item 1.

Legal Proceedings

 

35

 

 

 

 

Item 1A.

Risk Factors

 

35

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

59

 

 

 

 

Item 6.

Exhibits

 

59

 

 

 

 

Signatures

 

61

 

 

 

 

2


PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMBARELLA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

 

 

 

July 31,

 

 

January 31,

 

 

 

2019

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

222,693

 

 

$

194,047

 

Marketable debt securities

 

 

153,109

 

 

 

164,861

 

Accounts receivable, net

 

 

27,940

 

 

 

26,212

 

Inventories

 

 

17,376

 

 

 

18,252

 

Restricted cash

 

 

9

 

 

 

11

 

Prepaid expenses and other current assets

 

 

4,491

 

 

 

6,206

 

Total current assets

 

 

425,618

 

 

 

409,589

 

Property and equipment, net

 

 

6,105

 

 

 

6,728

 

Deferred tax assets, non-current

 

 

10,417

 

 

 

10,587

 

Intangible assets, net

 

 

9,008

 

 

 

10,936

 

Operating lease right-of-use assets, net

 

 

7,237

 

 

 

 

Goodwill

 

 

26,601

 

 

 

26,601

 

Other non-current assets

 

 

5,246

 

 

 

2,412

 

Total assets

 

$

490,232

 

 

$

466,853

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

18,912

 

 

 

12,801

 

Accrued and other current liabilities

 

 

24,432

 

 

 

24,700

 

Operating lease liabilities, current

 

 

2,260

 

 

 

 

Income taxes payable

 

 

1,083

 

 

 

993

 

Deferred revenue, current

 

 

553

 

 

 

529

 

Total current liabilities

 

 

47,240

 

 

 

39,023

 

Operating lease liabilities, non-current

 

 

5,100

 

 

 

 

Other long-term liabilities

 

 

9,431

 

 

 

8,341

 

Total liabilities

 

 

61,771

 

 

 

47,364

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preference shares, $0.00045 par value per share, 20,000,000 shares

   authorized and no shares issued and outstanding at July 31, 2019 and

   January 31, 2019, respectively

 

 

 

 

 

 

Ordinary shares, $0.00045 par value per share, 200,000,000 shares

   authorized at July 31, 2019 and January 31, 2019, respectively;

   33,033,619 shares issued and outstanding at July 31, 2019; 32,303,540

   shares issued and outstanding at January 31, 2019

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

224,542

 

 

 

188,516

 

Accumulated other comprehensive income

 

 

545

 

 

 

97

 

Retained earnings

 

 

203,359

 

 

 

230,861

 

Total shareholders’ equity

 

 

428,461

 

 

 

419,489

 

Total liabilities and shareholders' equity

 

$

490,232

 

 

$

466,853

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

3


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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

56,410

 

 

$

62,474

 

 

$

103,598

 

 

$

119,412

 

Cost of revenue

 

 

23,973

 

 

 

24,461

 

 

 

43,308

 

 

 

46,507

 

Gross profit

 

 

32,437

 

 

 

38,013

 

 

 

60,290

 

 

 

72,905

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

30,420

 

 

 

32,129

 

 

 

63,437

 

 

 

63,793

 

Selling, general and administrative

 

 

12,425

 

 

 

12,566

 

 

 

25,502

 

 

 

25,744

 

Total operating expenses

 

 

42,845

 

 

 

44,695

 

 

 

88,939

 

 

 

89,537

 

Loss from operations

 

 

(10,408

)

 

 

(6,682

)

 

 

(28,649

)

 

 

(16,632

)

Other income, net

 

 

2,195

 

 

 

732

 

 

 

4,391

 

 

 

1,524

 

Loss before income taxes

 

 

(8,213

)

 

 

(5,950

)

 

 

(24,258

)

 

 

(15,108

)

Provision for income taxes

 

 

1,978

 

 

 

927

 

 

 

3,244

 

 

 

1,775

 

Net loss

 

$

(10,191

)

 

$

(6,877

)

 

$

(27,502

)

 

$

(16,883

)

Net loss per share attributable to ordinary shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.31

)

 

$

(0.21

)

 

$

(0.84

)

 

$

(0.51

)

Diluted

 

$

(0.31

)

 

$

(0.21

)

 

$

(0.84

)

 

$

(0.51

)

Weighted-average shares used to compute net loss per share attributable to ordinary

   shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

32,860,974

 

 

 

33,219,152

 

 

 

32,676,509

 

 

 

33,276,976

 

Diluted

 

 

32,860,974

 

 

 

33,219,152

 

 

 

32,676,509

 

 

 

33,276,976

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

4


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

 

 

 

Three Months Ended July 31,

 

 

Six Months Ended July 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(10,191

)

 

$

(6,877

)

 

$

(27,502

)

 

$

(16,883

)

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on investments

 

 

194

 

 

 

178

 

 

 

448

 

 

 

68

 

Other comprehensive income, net of tax

 

 

194

 

 

 

178

 

 

 

448

 

 

 

68

 

Comprehensive loss

 

$

(9,997

)

 

$

(6,699

)

 

$

(27,054

)

 

$

(16,815

)

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

5


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Total

 

Balance--January 31, 2019

 

 

32,303,540

 

 

$

15

 

 

$

188,516

 

 

$

97

 

 

$

230,861

 

 

$

419,489

 

Issuance of shares through employee equity incentive plan

 

 

335,301

 

 

 

 

 

 

1,520

 

 

 

 

 

 

 

 

 

1,520

 

Issuance of shares through employee stock purchase plan

 

 

99,759

 

 

 

 

 

 

3,063

 

 

 

 

 

 

 

 

 

3,063

 

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

15,423

 

 

 

 

 

 

 

 

 

15,423

 

Net unrealized gains on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

254

 

 

 

 

 

 

254

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,311

)

 

 

(17,311

)

Balance--April 30, 2019

 

 

32,738,600

 

 

 

15

 

 

 

208,522

 

 

 

351

 

 

 

213,550

 

 

 

422,438

 

Issuance of shares through employee equity incentive plan

 

 

295,019

 

 

 

 

 

 

988

 

 

 

 

 

 

 

 

 

988

 

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

15,032

 

 

 

 

 

 

 

 

 

15,032

 

Net unrealized gains on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

194

 

 

 

 

 

 

194

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,191

)

 

 

(10,191

)

Balance--July 31, 2019

 

 

33,033,619

 

 

$

15

 

 

$

224,542

 

 

$

545

 

 

$

203,359

 

 

$

428,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Total

 

Balance--January 31, 2018

 

 

33,489,614

 

 

$

15

 

 

$

221,186

 

 

$

(279

)

 

$

261,265

 

 

$

482,187

 

Cumulative effect of change in accounting principle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43

 

 

 

43

 

Issuance of shares through employee equity incentive plan

 

 

272,723

 

 

 

 

 

 

305

 

 

 

 

 

 

 

 

 

305

 

Issuance of shares through employee stock purchase plan

 

 

71,415

 

 

 

 

 

 

2,818

 

 

 

 

 

 

 

 

 

2,818

 

Stock repurchase

 

 

(437,448

)

 

 

 

 

 

(20,624

)

 

 

 

 

 

 

 

 

(20,624

)

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

14,195

 

 

 

 

 

 

 

 

 

14,195

 

Net unrealized losses on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

(110

)

 

 

 

 

 

(110

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,006

)

 

 

(10,006

)

Balance--April 30, 2018

 

 

33,396,304

 

 

 

15

 

 

 

217,880

 

 

 

(389

)

 

 

251,302

 

 

 

468,808

 

Issuance of shares through employee equity incentive plan

 

 

373,126

 

 

 

 

 

 

642

 

 

 

 

 

 

 

 

 

642

 

Stock repurchase

 

 

(1,119,193

)

 

 

 

 

 

(44,989

)

 

 

 

 

 

 

 

 

(44,989

)

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

15,130

 

 

 

 

 

 

 

 

 

15,130

 

Net unrealized gains on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

178

 

 

 

 

 

 

178

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,877

)

 

 

(6,877

)

Balance--July 31, 2018

 

 

32,650,237

 

 

$

15

 

 

$

188,663

 

 

$

(211

)

 

$

244,425

 

 

$

432,892

 

 

See accompanying notes to condensed consolidated financial statements.

 

6


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

Six Months Ended July 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(27,502

)

 

$

(16,883

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,439

 

 

 

3,565

 

Amortization/accretion of marketable debt securities

 

 

(696

)

 

 

(106

)

Stock-based compensation

 

 

32,660

 

 

 

29,325

 

Other non-cash items, net

 

 

87

 

 

 

200

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,728

)

 

 

2,287

 

Inventories

 

 

876

 

 

 

(7,404

)

Prepaid expenses and other current assets

 

 

1,541

 

 

 

1,318

 

Deferred tax assets

 

 

170

 

 

 

(118

)

Other assets

 

 

(2,834

)

 

 

(279

)

Accounts payable

 

 

6,111

 

 

 

3,566

 

Accrued liabilities

 

 

(288

)

 

 

(9,054

)

Income taxes payable

 

 

90

 

 

 

(412

)

Deferred revenue

 

 

24

 

 

 

318

 

Lease Liabilities

 

 

(1,454

)

 

 

 

Other long-term liabilities

 

 

923

 

 

 

654

 

Net cash provided by operating activities

 

 

13,419

 

 

 

6,977

 

Cash flows from investing activities: