AMBARELLA INC

Ambarella is a leading developer of low-power system-on-a-chip (SoC) semiconductors and software for edge and physical artificial intelligence (AI) applications and intelligent automation. The company's technologies enable electronic systems to become partially or fully autonomous with features such as intelligent automation, complex scene understanding, and autonomous decision-making. Ambarella's products are used in a wide variety of human viewing, computer vision for edge and physical AI applications, including video security cameras, automotive camera systems, fixed robots, autonomous mobile robots (AMRs), industrial applications, intelligent transportation systems, and consumer devices such as action, drone and 360° cameras. The company is focusing on the IoT and automotive end markets that require increasingly sophisticated AI inference workloads and processing performance.

In the IoT market, Ambarella's primary competitors include HiSilicon Technologies Co., Ltd., Novatek Microelectronics Corp., NVIDIA Corporation, Qualcomm Incorporated, and Sigmastar Technology Ltd. In the automotive camera market, the company competes against Horizon Robotics Inc., Mobileye, Novatek, NVIDIA, Qualcomm, Renesas Electronics Corporation, and Texas Instruments. Ambarella believes its competitive strengths include its proprietary CVflow AI processing architecture, high-performance low-power AI video and image algorithm expertise, deep sensor fusion capabilities, highly integrated SoC solutions based on a scalable platform, comprehensive and flexible software, and advanced VLSI capabilities. The company's latest third generation CVflow technology enables efficient processing of transformer AI networks for model sizes up to 34 billion parameters that address an estimated 90% of the broad edge AI requirements today.

Ambarella generates substantially all of its revenue from the sale of low power AI-based processing and video and image processing SoC solutions to IoT OEMs, IoT ODMs, automotive OEMs or Tier-1 automotive suppliers, either directly or through distributors. The company sells its solutions to leading original design manufacturers (ODMs) and original equipment manufacturers (OEMs) globally. In the automotive OEM market, Ambarella may sell its solutions to Tier-1 suppliers. The company's sales are generally made pursuant to purchase orders received approximately 20 to 30 weeks prior to the scheduled product delivery date. Ambarella also separately licenses proprietary software modules that can be used in conjunction with a customer's internal software and/or with third-party software.

Ambarella's product portfolio includes the CV3-AD family of automotive AI domain controllers targeting L2+ to L4 autonomous vehicles and advanced robots, with a third generation CVflow AI accelerator that includes neural network processing that is 20x faster than the previous generation of CV2 SoCs. The company's CVflow SoCs combine advanced image processing, high-resolution video encoding and CVflow AI processing in a single low-power design for applications including smart home security, retail monitoring, consumer robotics, and occupancy monitoring. The N1 SoC provides highly-efficient AI performance for neural network computation and is designed for implementing industrial robotics, smart cities, intelligent healthcare imaging and diagnostics, multi-camera AI processing hubs, edge AI servers running multi-modal LLMs, VLMs, VLAs and autonomous fleet telematics. Ambarella also offers vision processor SoCs, adaptive AI radar software algorithms, and B8 SerDes (Serializer/Deserializer) products. The company's software modules include functionality for automotive applications such as dataloggers, ADAS and autonomous driving systems, eMirrors and in-cabin applications, as well as neural-network image signal processing (NN-ISP) for security camera applications.

In fiscal year 2026, the customer representing 10% or more of revenue was WT Microelectronics Co., Ltd. (WT), which accounted for approximately 70% of total revenue. Ambarella believes that revenue from its top 10 end customers accounted for approximately 67% of total revenue in fiscal year 2026. The company's largest end customer in fiscal year 2026 was Arashi Vision Inc. dba Insta360. As of January 31, 2026, Ambarella employed a total of 959 people, with approximately 75% engaged in research and development. The company had 390 issued patents in the United States as of January 31, 2026. In the first quarter of fiscal year 2026, Ambarella repurchased a total of 24,152 of its ordinary shares for approximately $1.0 million in cash. On May 28, 2025, the Board of Directors approved an extension of the existing share repurchase program for an additional twelve months through June 30, 2026, with approximately $48.0 million available to repurchase shares under the program as of January 31, 2026.

Ambarella recorded revenue of $390.7 million in fiscal year 2026, an increase of 37.2% as compared to fiscal year 2025. The company recorded a loss from operations of $82.5 million in fiscal year 2026, as compared to a loss from operations of $126.6 million in fiscal year 2025. Net loss was $75.9 million in fiscal year 2026, compared to a net loss of $117.1 million in fiscal year 2025. The company generated $73.5 million of cash from operating activities in fiscal year 2026, as compared to $33.8 million in fiscal year 2025. Gross margin was 59.2% in fiscal year 2026, compared to 60.5% in fiscal year 2025.

Ambarella's management stated that the company believes its future revenue growth, if any, will significantly depend upon its ability to expand within camera markets with its AI technology, particularly in the Internet of Things (IoT) markets, as well as emerging markets such as AI-enabled security cameras, AI-based driving applications including driver monitoring systems, advanced blind spot detection, object detection, and deep learning algorithms for HD mapping solutions, automotive advanced driver assistance systems (ADAS) applications, and industrial and robotics markets. The company's development roadmap is focused on human viewing, AI inference, and radar based perception technologies that support the increasing automation and intelligence requirements of the IoT, automotive, industrial, and robotics markets.

Ambarella's newest product families, CV7, CV3 and N1, integrate its 3rd generation CVflow AI accelerator and are all built on advanced 4 and 5 nanometer (nm) process technology. The CV7 family is engineered for a broad range of high-performance, power-sensitive edge AI applications. The CV3 AI central domain controller family is specifically architected for partially to fully automated driving applications. The N1 SoC is capable of running LLM inferencing with models up to 34 billion parameters, enabling a new class of generative AI applications directly on IoT devices. The company recently taped out its first SoC design on 2 nm process node. Ambarella has introduced a centralized 4D imaging radar architecture that leverages adaptive AI software algorithms together with its CV3 AI domain controller family.

Ambarella expects its research and development expenditures to increase in comparison to prior periods as the company devotes additional resources to the development of innovative video and image processing solutions with increased functionality, such as AI capabilities, and as it targets new markets. The company expects its selling, general and administrative expense to increase in absolute dollars as it continues to maintain the infrastructure and expand the size of its sales and marketing organization to support its business strategy of addressing new opportunities with its AI technology, including costs expected to be incurred on the expansion of an indirect sales channel.

Ambarella employs a fabless business model and uses third-party foundries and assembly and test contractors to manufacture, assemble and test its solutions. The company currently manufactures its solutions in the 10 nm, 5 nm and 4 nm process nodes. The substantial majority of Ambarella's SoCs are supplied by Samsung Electronics Corporation in facilities located in Austin, Texas and South Korea. The company's primary inventory warehouse is located in Hong Kong. As of January 31, 2026, Ambarella employed a total of 959 people, with approximately 75% engaged in research and development.

Ambarella's research and development expense was approximately $238.5 million, $226.1 million and $215.1 million in fiscal years 2026, 2025 and 2024, respectively. The company expects its research and development expense to generally increase in absolute dollars as it continues to enhance and expand its product features and offerings and increase headcount for new SoC development and development of AI technologies. As of January 31, 2026, Ambarella had approximately $48.0 million available to repurchase shares under its share repurchase program through June 30, 2026. The company has never declared or paid any cash dividends on its ordinary shares and does not currently intend to do so in the foreseeable future.

Ambarella faces risks from global macroeconomic and political conditions, including high inflation, recessionary concerns, trade restrictions, geopolitical tensions and war, which may adversely impact its business and financial condition. The company's ability to sell certain products to certain China customers has been restricted due to U.S. export controls. The company also faces risks from the cyclical nature of the semiconductor industry, including diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. Additionally, the company's primary inventory warehouse is located in Hong Kong and may be affected by continued political, social, health and economic conditions in Hong Kong.

Ambarella faces significant customer concentration risk, as WT Microelectronics Co., Ltd. accounted for approximately 70% of total revenue in fiscal year 2026, and the company's top 10 end customers accounted for approximately 67% of total revenue. The company's business is also subject to risks from global supply chain challenges, including shortages in wafer and materials that could adversely impact gross margins and lead to reduced revenues. Ambarella's ability to sell certain products to certain China customers has been restricted due to U.S. export controls, and the company faces risks from geopolitical tensions between the United States and China. The company's primary inventory warehouse is located in Hong Kong and may be affected by continued political, social, health and economic conditions in Hong Kong. Additionally, the company faces intense competition in the semiconductor market from larger competitors with greater resources, and the average selling prices of semiconductor solutions in its target markets have typically decreased over time, which could harm revenue and gross margins.

Management's message emphasizes that Ambarella is a leading developer of low-power SoC semiconductors and software for edge and physical AI applications, and that the company's technologies make electronic systems smarter, enabling them to become partially or fully autonomous. Management states that the company's recent development efforts have focused on creating advanced AI inference technology that enables edge devices to perceive, reason about, and interact with the physical world. Management believes that future revenue growth, if any, will significantly depend upon the company's ability to expand within camera markets with its AI technology, particularly in the IoT markets, as well as emerging markets such as AI-enabled security cameras, AI-based driving applications, automotive ADAS applications, and industrial and robotics markets. Management expects research and development expenditures to increase in comparison to prior periods as the company devotes additional resources to the development of innovative solutions with increased functionality, such as AI capabilities, and as it targets new markets.