UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
The number of ordinary shares of the Registrant outstanding as of May 31, 2023 was
AMBARELLA, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Item 1. |
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Unaudited Condensed Consolidated Balance Sheets at April 30, 2023 and January 31, 2023 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 6. |
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2
PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMBARELLA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
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As of |
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April 30, |
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January 31, |
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2023 |
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2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable debt securities |
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Accounts receivable, net |
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Inventories |
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Restricted cash |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Deferred tax assets, non-current |
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Intangible assets, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued and other current liabilities |
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Operating lease liabilities, current |
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Income taxes payable |
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Deferred revenue, current |
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Total current liabilities |
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Operating lease liabilities, non-current |
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Other long-term liabilities |
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Total liabilities |
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(Note 13) |
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Shareholders' equity: |
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Preference shares, $ |
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Ordinary shares, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings (accumulated deficit) |
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Total shareholders’ equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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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)
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Three Months Ended April 30, |
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2023 |
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2022 |
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Revenue |
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$ |
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$ |
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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Other income, net |
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Loss before income taxes |
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Provision for income taxes |
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Net loss |
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$ |
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$ |
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Net income loss per share attributable to ordinary shareholders: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted-average shares used to compute net loss per share attributable to ordinary shareholders: |
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Basic |
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Diluted |
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See accompanying notes to condensed consolidated financial statements.
4
AMBARELLA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited, in thousands)
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Three Months Ended April 30, |
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2023 |
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2022 |
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Net loss |
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$ |
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$ |
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Other comprehensive income, net of tax: |
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Net unrealized gains on investments |
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Other comprehensive income, net of tax |
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Comprehensive loss |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
5
AMBARELLA, INC.
(in thousands, except share data)
(unaudited)
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Accumulated |
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Outstanding |
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Additional |
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Other |
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Ordinary Shares |
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Paid-in |
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Comprehensive |
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Retained Earnings |
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Shares |
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Amount |
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Capital |
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Loss |
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(Accumulated Deficit) |
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Total |
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Balance--January 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of shares through employee equity plans |
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Issuance of shares through employee stock purchase plan |
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Stock-based compensation expense |
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— |
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Other comprehensive gain - net of tax |
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— |
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Net loss |
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— |
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Balance--April 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Accumulated |
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Outstanding |
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Additional |
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Other |
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Ordinary Shares |
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Paid-in |
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Comprehensive |
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Retained Earnings |
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Shares |
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Amount |
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Capital |
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Loss |
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(Accumulated Deficit) |
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Total |
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Balance--January 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of shares through employee equity plans |
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Issuance of shares through employee stock purchase plan |
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Stock-based compensation expense |
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Net loss |
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Balance--April 30, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
6
AMBARELLA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
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Three Months Ended April 30, |
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization (accretion) of premium (discount) on marketable debt securities, net |
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Stock-based compensation |
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Deferred income taxes |
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Other non-cash items, net |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Other non-current assets |
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Accounts payable |
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( |
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Accrued and other current liabilities |
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( |
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( |
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Income taxes payable |
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( |
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Deferred revenue |
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( |
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( |
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Operating lease liabilities |
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( |
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( |
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Other long-term liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchase of investments |
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Sales of investments |
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Maturities of investments |
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Purchase of tangible and intangible assets |
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Escrow claim associated with business acquisition |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from exercise of stock options and employee stock purchase plan |
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Long-term financing payment for intangible assets |
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Net cash provided by (used in) financing activities |
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Net increase in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes |
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$ |
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$ |
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Supplemental disclosure of noncash investing activities: |
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Unpaid liabilities related to tangible and intangible assets purchases |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
7
AMBARELLA, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization
Ambarella, Inc. (the Company) was incorporated in the Cayman Islands on January 15, 2004. The Company is a leading developer of low-power semiconductor solutions offering high-definition (HD) and Ultra HD compression, image processing, and powerful deep neural network processing. The Company combines its processor design capabilities with its expertise in video and image processing, algorithms and software to provide a technology platform that is designed to be easily scalable across multiple applications and enable rapid and efficient product development. The Company’s system-on-a-chip, or SoC, designs fully integrate high-definition video processing, image processing, artificial intelligence (AI) computer vision algorithms, audio processing and system functions onto a single chip. These low power SoCs deliver exceptional video and image quality and can extract valuable data from high-resolution video and radar streams. The Company is currently addressing a broad range of human and computer vision applications, including video security, advanced driver assistance systems (ADAS), electronic mirrors, drive recorders, driver/cabin monitoring systems, autonomous driving, and industrial and robotic applications.
The Company sells its solutions to leading original equipment manufacturers, or OEMs, who include the Company’s SoCs in their products, and original design manufacturers, or ODMs, who include the Company’s SoCs in the products that they supply to OEMs, globally.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, do not include all information and notes normally provided in audited financial statements. The accounting policies are described in the “Notes to Consolidated Financial Statements” in the Annual Report on Form 10-K for the 2023 fiscal year filed with the SEC on March 31, 2023 (the Form 10-K) and updated, as necessary, in this Form 10-Q. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States (U.S. GAAP). In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair statement have been included. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for any other interim period or for a full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Form 10-K.
Basis of Consolidation
The Company’s fiscal year ends on January 31. The condensed consolidated financial statements of the Company and its subsidiaries have been prepared in conformity with U.S. GAAP. All intercompany transactions and balances have been eliminated upon consolidation.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies described in Note 1 - Organization and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023.
Concentration of Risk
The Company’s products are manufactured, assembled and tested by third-party contractors located primarily in Asia. The Company does not have long-term agreements with these contractors. A significant disruption in the operations of one or more of these contractors would impact the production of the Company’s products which could have a material adverse effect on its business, financial condition and results of operations.
8
A substantial portion of the Company’s revenue is derived from sales through its two major distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, which serves as its non-exclusive sales representative in Asia other than Japan, and Hakuto Co., Ltd., or Hakuto, a Japan distributor, and directly to one ODM customer, Chicony Electronics Co., Ltd., or Chicony, and directly to one OEM customer, Motorola Solutions Inc., or Motorola. Termination of the relationships with these customers could result in a temporary or permanent loss of revenue. Furthermore, any credit issues from these customers could impair their abilities to make timely payment to the Company. See Note 14 for additional information regarding revenue and credit concentration with these customers.
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, marketable debt securities and accounts receivable. The Company maintains its cash primarily in checking accounts with reputable financial institutions. Cash deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on deposits of its cash. In order to limit the exposure of each investment, the cash equivalents and marketable debt securities consist primarily of money market funds, commercial paper, corporate bonds, asset-backed securities and U.S. government securities which management assesses to be highly liquid. The Company does not hold or issue financial instruments for trading purposes.
The Company performs ongoing credit evaluation of its customers and adjusts credit limits based upon payment history and customers’ credit worthiness. The Company regularly monitors collections and payments from its customers.
Restricted Cash
Amounts included in restricted cash represent those required to be set aside to secure certain transactions in a foreign entity. As of April 30, 2023 and January 31, 2023, restricted cash was immaterial, respectively.
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As of |
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April 30, |
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January 31, |
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April 30, |
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January 31, |
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(in thousands) |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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$ |
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Restricted cash |
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Total as presented in the condensed consolidated statements of cash flows |
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$ |
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$ |
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$ |
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$ |
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Recent Accounting Pronouncements
None.
9
2. Financial Instruments and Fair Value
The Company invests a portion of its cash in money market funds and debt securities that are denominated in United States dollars. The debt security investment portfolio consists of commercial paper, corporate bonds, asset-backed securities and U.S. government securities.
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As of April 30, 2023 |
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Amortized Cost |
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Unrealized Gains |
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Unrealized Losses |
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Fair Value |
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(in thousands) |
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Money market funds |
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$ |
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$ |
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$ |
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$ |
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Commercial paper |
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Corporate bonds |
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( |
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Asset-backed securities |
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