Ambarella
Aug 31, 2017

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

SANTA CLARA, Calif., Aug. 31, 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 second quarter of fiscal year 2018 ended July 31, 2017.

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

Based on information available as of today, Ambarella is offering the following guidance for the third quarter of fiscal year 2018, ending Oct. 31, 2017:

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 second 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 of cash, cash equivalents and marketable securities on hand at the end of the second fiscal quarter of 2018 was $400.8 million, compared with $327.0 million at the end of the same quarter a year ago. 

Stock Repurchase 

In the second quarter of fiscal year 2018, the company repurchased a total of 595,770 shares for total consideration of approximately $29.9 million. Of the total shares repurchased in the quarter, 551,351 shares were purchased under the $75 million repurchase program that ended on June 30, 2017Ambarella repurchased a total of 1,119,178 shares from inception of the $75 million program for total cash consideration of approximately $56.7 million.  Under the new $50 million repurchase program that was announced in June 2017 and commenced on July 1st, the company repurchased a total of 44,419 ordinary shares in the second quarter for total cash consideration of approximately $2.2 million.  Purchases under this $50 million program may be made through June 30, 2018.

"During the second quarter, we had solid growth from IP security, both from professional and home monitoring camera markets.  We also continued to see growth in our OEM auto business, with strong design win activity and revenue from OEM auto video recorders," said Fermi Wang, CEO of Ambarella.  "We continue to invest in the technologies required to deliver future generations of highly intelligent, HD and Ultra HD cameras with particular emphasis on high performance computer vision functionality.  We see computer vision as a key differentiator for us in camera markets, including automotive, IP security, drones and robotics, and it is our key area of focus for the future," 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, Les Kohn, chief technical officer and George Laplante, chief financial officer, to discuss the second quarter fiscal year 2018 results and provide an update on the company's computer vision technology. 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. (NASDAQ: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, flying cameras and automotive video camera recorders. Ambarella compression chips are also used in broadcasting TV programs worldwide. 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 third quarter of fiscal year 2018 ending Oct. 31, 2017, and the comments of our CEO relating to growth of the company's markets, design win activity, 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; 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 second quarter of fiscal year 2018 ended July 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 second quarter of fiscal year 2018, the company has provided below reconciliations between its non-GAAP financial measures to its most directly comparable GAAP financial measures.  With respect to the company's expectations for the third quarter of fiscal year 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 July 31, Six Months Ended July 31,
   2017  2016  2017  2016
      
Revenue $  71,630 $  65,142 $  135,765 $  122,299
         
Cost of revenue    26,825    21,672    49,997    42,122
Gross profit    44,805    43,470    85,768    80,177
         
Operating expenses:        
Research and development    27,538    23,643    54,140    48,109
Selling, general and administrative    11,962    10,565    23,706    21,458
         
Total operating expenses     39,500    34,208    77,846    69,567
         
Income from operations    5,305    9,262    7,922    10,610
         
Other income    224    171    377    198
          
Income before income taxes    5,529    9,433    8,299    10,808
         
Provision for income taxes    2,226    801    2,432    393
         
Net income $  3,303 $  8,632 $  5,867 $  10,415
          
Net income per share attributable to ordinary shareholders:        
Basic  $  0.10 $  0.27 $  0.18 $  0.32
Diluted  $  0.10 $  0.25 $  0.17 $  0.31
Weighted-average shares used to compute net income per share             
attributable to ordinary shareholders:        
Basic     33,227,717    32,557,398    33,240,767    32,492,723
Diluted     34,572,927    34,175,466    34,629,004    34,063,103
         


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 July 31, Six Months Ended July 31, 
  2017  2016  2017  2016 
 (unaudited, in thousands) 
Stock-based compensation:        
Cost of revenue$  332 $  246 $  635 $  491 
Research and development   8,649    6,873    16,626    13,592 
Selling, general and administrative       5,454    4,347    10,146    8,684 
         
Total stock-based compensation$  14,435 $  11,466 $  27,407 $  22,767 
         


AMBARELLA, INC.
RECONCILIATION OF GAAP TO NON-GAAP DILUTED EARNINGS PER SHARE
(in thousands, except share and per share data)
        
 Three Months Ended July 31, Six Months Ended July 31,
  2017   2016   2017   2016 
 (unaudited)
GAAP net income$  3,303  $  8,632  $  5,867  $  10,415 
        
Non-GAAP adjustments:       
Stock-based compensation expense   14,435     11,466     27,407     22,767 
Income tax effect   (1,221)    (1,592)    (3,357)    (3,238)
Non-GAAP net income$  16,517  $  18,506  $  29,917  $  29,944 
        
GAAP - diluted weighted average shares   34,572,927     34,175,466     34,629,004      34,063,103 
Non-GAAP - diluted weighted average shares       34,572,927     34,175,466     34,629,004     34,063,103 
        
GAAP - diluted net income per share$  0.10  $  0.25  $  0.17  $  0.31 
Non-GAAP adjustments:       
Stock-based compensation expense   0.42     0.34     0.79     0.67 
Income tax effect   (0.04)    (0.05)    (0.10)    (0.10)
Non-GAAP - diluted net income per share$  0.48  $  0.54  $  0.86  $  0.88 
        

The difference between GAAP and non-GAAP gross margin was 0.4% and 0.4%, or $332,000 and $246,000 for the three months ended July 31, 2017 and 2016, respectively. The difference between GAAP and non-GAAP gross margin was 0.4% and 0.4%, or $635,000 and $491,000 for the six months ended July 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) 
      
 July 31, January 31,  
  2017    2017   
      
ASSETS     
Current assets:     
Cash and cash equivalents$  309,738  $  322,872   
Marketable securities   91,077     82,522   
Accounts receivable, net   38,351     38,596   
Inventories   17,726      20,145   
Restricted cash   9     8   
Prepaid expenses and other current assets   2,810     4,392   
Total current assets   459,711     468,535   
      
Property and equipment, net   5,636     4,988   
Deferred tax assets, non-current   6,299     5,774   
Intangible assets, net   12,970     4,149   
Goodwill   26,601     26,601   
Other non-current assets    2,229     2,224   
      
Total assets$  513,446  $  512,271   
      
LIABILITIES AND SHAREHOLDERS' EQUITY         
Current liabilities:     
Accounts payable   23,466     19,955   
Accrued and other current liabilities   19,906     26,448   
Income taxes payable   2,014     568   
Deferred revenue   6,203     7,425   
Total current liabilities   51,589     54,396   
      
Other long-term liabilities   9,131     3,241   
       
Total liabilities   60,720     57,637   
      
Shareholders' equity:     
Preference shares       
Ordinary shares   15     15   
Additional paid-in capital   204,513     212,276   
Accumulated other comprehensive loss   (82)    (70)  
Retained earnings   248,280     242,413   
Total shareholders' equity   452,726     454,634   
      
Total liabilities and shareholders' equity$  513,446  $  512,271   
      
Contact:



Deborah Stapleton

650.815.1239

deb@stapleton.com

Source: Ambarella

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