Ambarella
Dec 3, 2015

Ambarella, Inc. Announces Third Quarter Fiscal 2016 Financial Results

SANTA CLARA, Calif., Dec. 3, 2015 (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 fiscal quarter ended October 31, 2015.

Financial results on a non-GAAP basis for the third fiscal quarter ended October 31, 2015 are as follows:

Based on information available as of today, Ambarella is offering the following guidance for the fourth fiscal quarter of fiscal year 2016:

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 excludes the impact of stock-based compensation, adjusted for the associated tax impact, and for the nine months ended October 31, 2015 also excludes certain costs associated with the acquisition of VisLab S.r.l. in June 2015. A reconciliation of the GAAP to non-GAAP gross margin, net income and earnings per share numbers for the third fiscal quarter ended October 31, 2015, 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 2016 was $276.7 million, compared with $186.5 million at the end of the same quarter a year ago.

"Our strong third quarter results reflect our success in expanding revenues in new markets such as flying cameras and home security monitoring, as well as existing markets for professional IP security cameras and automotive after-market dash cameras. Although we expect these markets to continue their strong annual growth, we are experiencing near term headwinds in the wearable sports market which is expected to negatively impact revenue in Q4 of this year," said Fermi Wang, president and CEO of Ambarella. "Despite the near term headwinds, we are very pleased by the wide range of new cameras introduced by customers during the third quarter, and by our introduction of three new SoC families that will drive the next generation of innovative camera products."

Quarterly Conference Call

Ambarella plans to hold a conference call at 5 p.m. Eastern Time / 2 p.m. Pacific Time today with Fermi Wang, Chief Executive Officer, and George Laplante, Chief Financial Officer, to discuss the third quarter 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. (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. Ambarella is the recipient of the Global Semiconductor Alliance 2014 Award for "Most Respected Emerging Public Semiconductor Company."

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 anticipated financial results for the fourth quarter of fiscal 2016 ending January 31, 2016, and the comments of our CEO relating to anticipated growth in our target markets and the ability of our SoC products to successfully gain market acceptance and innovative camera design wins. 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 retain and expand customer relationships and to achieve design wins; 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 2015 fiscal year and Form 10-Q for the quarter ended July 31, 2015, which are 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 fiscal quarter ended October 31, 2015 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 2016, 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 fourth quarter of fiscal year 2016, a reconciliation of non-GAAP gross margin and non-GAAP net income 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 this non-GAAP measure. 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,
    2015 2014 2015 2014
         
Revenue    $ 93,200  $ 65,689  $ 248,406  $ 153,578
Cost of revenue    31,938  24,130  86,378  55,887
Gross profit    61,262  41,559  162,028  97,691
           
Operating expenses:          
Research and development    22,062  15,584  59,485  41,995
Selling, general and administrative    8,873  7,324  26,970  20,954
           
Total operating expenses     30,935  22,908  86,455  62,949
           
Income from operations    30,327  18,651  75,573  34,742
           
Other income    169  40  323  128
           
Income before income taxes    30,496  18,691  75,896  34,870
           
Provision for income taxes    1,035  364  4,484  1,973
           
Net income    $ 29,461  $ 18,327  $ 71,412  $ 32,897
           
Net income per share attributable to ordinary shareholders:          
Basic     $ 0.93  $ 0.61  $ 2.27  $ 1.12
Diluted     $ 0.87  $ 0.57  $ 2.12  $ 1.03
Weighted-average shares used to compute net income per share attributable to ordinary shareholders:          
Basic     31,815,588  30,006,896  31,476,668  29,467,178
Diluted     33,899,202  32,382,526  33,758,541  32,014,373

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,
  2015 2014 2015 2014
  (unaudited, in thousands)
Stock-based compensation:        
Cost of revenue  $ 157  $ 97  $ 408  $ 214
Research and development  5,201  2,363  11,966  5,582
Selling, general and administrative  2,587  1,824  7,174  4,311
Total stock-based compensation  $ 7,945  $ 4,284  $ 19,548  $ 10,107
 
 
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,
  2015 2014 2015 2014
  (unaudited)
GAAP net income  $ 29,461  $ 18,327  $ 71,412  $ 32,897
Two-class method - allocation to participating securities  (1)  (8)
Treasury stock method - additional allocation to ordinary shares 1
GAAP net income - diluted  $ 29,461  $ 18,326  $ 71,412  $ 32,890
         
Non-GAAP adjustments:        
Stock-based compensation expense, net of tax effect  7,174  3,740  17,351  8,947
Acquisition cost  1,229
Two-class method - additional allocation to participating securities  (1)  (2)
Treasury stock method - additional allocation to ordinary shares
Non-GAAP net income - diluted  $ 36,635  $ 22,065  $ 89,992  $ 41,835
         
GAAP - diluted weighted average shares  33,899,202  32,382,526  33,758,541  32,014,373
Non-GAAP - diluted weighted average shares  33,899,202  32,382,526  33,758,541  32,014,373
         
GAAP - diluted net income per share  $ 0.87  $ 0.57  $ 2.12  $ 1.03
Non-GAAP adjustments:        
Stock-based compensation expense, net of tax effect  0.21  0.11  0.51  0.28
Acquisition cost  0.04
Non-GAAP adjustment to two-class method diluted net income
Non-GAAP adjustment to treasury stock method diluted net income
Non-GAAP - diluted net income per share  $ 1.08  $ 0.68  $ 2.67  $ 1.31

The difference between GAAP and non-GAAP gross margin was 0.2% and 0.1%, or $157,000 and $97,000 for the three months ended October 31, 2015 and 2014, respectively. The difference between GAAP and non-GAAP gross margin was 0.2% and 0.1%, or $408,000 and $214,000 for the nine months ended October 31, 2015 and 2014, 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,
  2015 2015
     
ASSETS    
Current assets:    
Cash and cash equivalents  $ 236,465  $ 170,291
Marketable securities  40,255  37,703
Accounts receivable, net  46,282  40,180
Inventories  22,788  21,693
Restricted cash  8  8
Deferred tax assets, current  1,990  1,990
Prepaid expenses and other current assets  3,591  3,506
Total current assets  351,379  275,371
     
Property and equipment, net  3,215  3,075
Deferred tax assets, non-current  3,955  3,936
Intangible assets, net  4,124
Goodwill  26,601
Other assets  2,018  1,902
     
Total assets  $ 391,292  $ 284,284
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  22,621  21,036
Accrued liabilities  18,324  18,699
Income taxes payable  1,555  748
Deferred tax liabilities, current  85  92
Deferred revenue, current  6,944  4,907
Total current liabilities  49,529  45,482
     
Deferred revenue, non-current  198
Other long-term liabilities  9,394  1,393
     
Total liabilities  58,923  47,073
     
Shareholders' equity:    
Preference shares
Ordinary shares  14  14
Additional paid-in capital  164,324  140,564
Accumulated other comprehensive loss  (15)  (1)
Retained earnings  168,046  96,634
Total shareholders' equity  332,369  237,211
     
Total liabilities and shareholders' equity  $ 391,292  $ 284,284
CONTACT: Deborah Stapleton

         650.470.4200

         deb@stapleton.com
Source: Ambarella, Inc.

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