AMBARELLA INC [AMBA] Filings

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10-Q 1 amba-10q_20220731.htm 10-Q amba-10q_20220731.htm

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, 2022

☐

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)

Securities registered pursuant to Section 12(b) of the Act:

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, 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.

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 August 31, 2022 was 38,416,764 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, 2022 and January 31, 2022		3

	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2022 and 2021		4

	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended July 31, 2022 and 2021		5

	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended July 31, 2022 and 2021		6

	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2022 and 2021		7

	Notes to Unaudited Condensed Consolidated Financial Statements		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27

Item 4.	Controls and Procedures		28

PART II. OTHER INFORMATION			28

Item 1.	Legal Proceedings		28

Item 1A.	Risk Factors		29

Item 6.	Exhibits		58

Signatures			60

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMBARELLA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	As of
	July 31,			January 31,
	2022			2022
ASSETS
Current assets:
Cash and cash equivalents	$	194,944		$	171,043
Marketable debt securities		2,970			—
Accounts receivable, net		37,698			44,307
Inventories		40,103			45,219
Restricted cash		10			10
Prepaid expenses and other current assets		7,138			6,169
Total current assets		282,863			266,748
Property and equipment, net		10,443			10,134
Deferred tax assets, non-current		14,159			15,340
Intangible assets, net		49,563			46,302
Operating lease right-of-use assets, net		10,263			11,127
Goodwill		303,625			303,625
Other non-current assets		3,504			4,269
Total assets	$	674,420		$	657,545
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		22,074			31,170
Accrued and other current liabilities		48,396			52,064
Operating lease liabilities, current		3,506			3,391
Income taxes payable		3,110			1,245
Deferred revenue, current		457			1,414
Total current liabilities		77,543			89,284
Operating lease liabilities, non-current		7,024			8,322
Other long-term liabilities		11,742			12,763
Total liabilities		96,309			110,369
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, 2022 and January 31, 2022, respectively		—			—
Ordinary shares, $0.00045 par value per share, 200,000,000 shares authorized; 38,406,451 and 37,302,818 shares issued and outstanding at July 31, 2022 and January 31, 2022, respectively		17			17
Additional paid-in capital		512,696			447,287
Accumulated other comprehensive loss		(2	)		—
Retained earnings		65,400			99,872
Total shareholders’ equity		578,111			547,176
Total liabilities and shareholders' equity	$	674,420		$	657,545

See accompanying notes to condensed consolidated financial statements.

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,
	2022			2021			2022			2021
Revenue	$	80,884		$	79,327		$	171,189		$	149,460
Cost of revenue		29,820			29,908			63,578			56,276
Gross profit		51,064			49,419			107,611			93,184
Operating expenses:
Research and development		52,338			39,558			99,028			77,432
Selling, general and administrative		18,914			15,821			39,269			31,848
Total operating expenses		71,252			55,379			138,297			109,280
Loss from operations		(20,188	)		(5,960	)		(30,686	)		(16,096	)
Other income (expense), net		(26	)		218			60			811
Loss before income taxes		(20,214	)		(5,742	)		(30,626	)		(15,285	)
Provision for income taxes		3,436			1,414			3,846			2,689
Net loss	$	(23,650	)	$	(7,156	)	$	(34,472	)	$	(17,974	)
Net loss per share attributable to ordinary shareholders:
Basic	$	(0.62	)	$	(0.20	)	$	(0.91	)	$	(0.50	)
Diluted	$	(0.62	)	$	(0.20	)	$	(0.91	)	$	(0.50	)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders:
Basic		38,258,341			36,442,536			37,986,839			36,191,420
Diluted		38,258,341			36,442,536			37,986,839			36,191,420

See accompanying notes to condensed consolidated financial statements.

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

	Three Months Ended July 31,						Six Months Ended July 31,
	2022			2021			2022			2021
Net loss	$	(23,650	)	$	(7,156	)	$	(34,472	)	$	(17,974	)
Other comprehensive loss, net of tax:
Net unrealized losses on investments		(2	)		(184	)		(2	)		(611	)
Other comprehensive loss, net of tax		(2	)		(184	)		(2	)		(611	)
Comprehensive loss	$	(23,652	)	$	(7,340	)	$	(34,474	)	$	(18,585	)

See accompanying notes to condensed consolidated financial statements.

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, 2022		37,302,818	$	17	$	447,287	$	—		$	99,872		$	547,176
Issuance of shares through employee equity plans		736,516		—		8,589		—			—			8,589
Issuance of shares through employee stock purchase plan		43,545		—		3,250		—			—			3,250
Stock-based compensation expense		—		—		26,155		—			—			26,155
Net loss		—		—		—		—			(10,822	)		(10,822	)
Balance--April 30, 2022		38,082,879		17		485,281		—			89,050			574,348
Issuance of shares through employee equity plans		323,572		—		1,204		—			—			1,204
Stock-based compensation expense		—		—		26,211		—			—			26,211
Net unrealized losses on investments - net of tax		—		—		—		(2	)		—			(2	)
Net loss		—		—		—		—			(23,650	)		(23,650	)
Balance--July 31, 2022		38,406,451	$	17	$	512,696	$	(2	)	$	65,400		$	578,111
							Accumulated
	Outstanding				Additional		Other
	Ordinary Shares				Paid-in		Comprehensive			Retained
	Shares		Amount		Capital		Income (Loss)			Earnings			Total
Balance--January 31, 2021		35,547,440	$	16	$	347,458	$	1,219		$	126,283		$	474,976
Issuance of shares through employee equity plans		643,120		—		6,741		—			—			6,741
Issuance of shares through employee stock purchase plan		82,783		—		3,694		—			—			3,694
Stock-based compensation expense		—		—		17,128		—			—			17,128
Net unrealized losses on investments - net of tax		—		—		—		(427	)		—			(427	)
Net loss		—		—		—		—			(10,818	)		(10,818	)
Balance--April 30, 2021		36,273,343		16		375,021		792			115,465			491,294
Issuance of shares through employee equity plans		371,293		—		1,461		—			—			1,461
Stock-based compensation expense		—		—		17,639		—			—			17,639
Net unrealized losses on investments - net of tax		—		—		—		(184	)		—			(184	)
Net loss		—		—		—		—			(7,156	)		(7,156	)
Balance--July 31, 2021		36,644,636	$	16	$	394,121	$	608		$	108,309		$	503,054

See accompanying notes to condensed consolidated financial statements.

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Six Months Ended July 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(34,472	)	$	(17,974	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		9,295			5,803
Amortization (accretion) of premium (discount) on marketable debt securities, net		—			852
Stock-based compensation		53,950			38,214
Deferred income taxes		1,181			215
Other non-cash items, net		42			13
Changes in operating assets and liabilities:
Accounts receivable		6,609			(13,321	)
Inventories		5,116			(15,995	)
Prepaid expenses and other current assets		(753	)		1,033
Other non-current assets		765			435
Accounts payable		(11,873	)		11,992
Accrued and other current liabilities		4,380			(619	)
Income taxes payable		1,865			764
Deferred revenue		(957	)		58
Operating lease liabilities		(2,159	)		(1,763	)
Other long-term liabilities		14			183
Net cash provided by operating activities		33,003			9,890
Cash flows from investing activities:
Purchase of investments		(2,972	)		(101,664	)
Escrow claim associated with business acquisition		749			—
Sales of investments		—			32,839
Maturities of investments		—			75,490
Purchase of tangible and intangible assets		(8,088	)		(3,754	)
Net cash provided by (used in) investing activities		(10,311	)		2,911
Cash flows from financing activities:
Proceeds from exercise of stock options and employee stock purchase plan		4,087			7,161
Long-term financing payment for intangible assets		(2,878	)		(2,834	)
Net cash provided by financing activities		1,209			4,327
Net increase in cash, cash equivalents and restricted cash		23,901			17,128
Cash, cash equivalents and restricted cash at beginning of period		171,053			241,284
Cash, cash equivalents and restricted cash at end of period	$	194,954		$	258,412
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	661		$	1,085
Supplemental disclosure of noncash investing and financing activities:
Unpaid liabilities related to tangible and intangible assets purchases	$	3,647		$	1,332

See accompanying notes to condensed consolidated financial statements.

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 design manufacturers, or ODMs, and original equipment manufacturers, or 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 2022 fiscal year filed with the SEC on April 1, 2022 (the “Form 10-K”) and updated,