AMBARELLA INC

Previous wording

This Quarterly Report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, includes a number of forward-looking statements that involve many risks and uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “outlook,” “if,” “future,” “intend,” “plan,” “estimate,” “predict,” “potential,” “target,” “seek,” “project,” “forecast,” “continue” or “foreseeable” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events. Such statements include, but are not limited to, statements concerning our market opportunity and our ability to compete in such markets, our product strategy, our ability to develop and introduce new solutions, our future financial and operating performance, our sales and marketing strategy, our investment strategy, research and development, our customer and supplier relationships and inventory levels, industry trends, our cash needs and capital requirements, our repurchase programs, our expectations about taxes, operating expenses, and cost recognition, the availability of third-party components and economic and political conditions. These statements reflect our current views with respect to future events and our potential financial performance, and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and adversely from what is projected or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: risks associated with revenue being generated from new customers or design wins, neither of which is assured; our ability to retain and expand customer relationships and to achieve design wins; risks associated with the overall economy, including higher inflation and escalating trade tensions between the U.S. and China; the commercial success of our customers’ products; our growth strategy; fluctuations in our operating results; our ability to anticipate future market demands and future needs and preferences of our customers; our ability to introduce new and enhanced solutions; 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 or seek to operate; our expectations regarding computer vision; our ability to effectively generate and manage growth; our ability to retain key employees; the potential for intellectual property disputes or other litigation; the risks described under Item 1A of Part II — “Risk Factors,” and Item 2 of Part I — “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; the risks described elsewhere in this Quarterly Report on Form 10-Q and those discussed in other documents we file w…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, includes a number of forward-looking statements that involve many risks and uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “outlook,” “if,” “future,” “intend,” “plan,” “estimate,” “predict,” “potential,” “target,” “seek,” “project,” “forecast,” “continue” or “foreseeable” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events. Such statements include, but are not limited to, statements concerning our market opportunity and our ability to compete in such markets, our product strategy, our ability to develop and introduce new solutions, our future financial and operating performance, our sales and marketing strategy, our investment strategy, research and development, our customer and supplier relationships and inventory levels, industry trends, our cash needs and capital requirements, our repurchase programs, our expectations about taxes, operating expenses, and cost recognition, the availability of third-party components and economic and political conditions. These statements reflect our current views with respect to future events and our potential financial performance, and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and adversely from what is projected or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: risks associated with revenue being generated from new customers or design wins, neither of which is assured; our ability to retain and expand customer relationships and to achieve design wins; risks associated with the overall economy, including higher inflation and escalating trade tensions between the U.S. and China; the commercial success of our customers’ products; our growth strategy; fluctuations in our operating results; our ability to anticipate future market demands and future needs and preferences of our customers; our ability to introduce new and enhanced solutions; 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 or seek to operate; our expectations regarding artificial intelligence and computer vision; our ability to effectively generate and manage growth; our ability to retain key employees; the potential for intellectual property disputes or other litigation; the risks described under Item 1A of Part II — “Risk Factors,” and Item 2 of Part I — “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; the risks described elsewhere in this Quarterly Report on Form 10-Q and those discussed …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our SoC designs fully integrate AI functionality, high-definition, or HD, video processing, image processing, audio processing, and system functions onto a single chip, delivering exceptional video and image quality at high compression rates, differentiated functionality and low power consumption. These AI-based technologies are allowing us to address a broader range of markets and applications requiring AI video features, including IP security cameras, a variety of automotive cameras, consumer cameras, and industrial and robotic applications. We anticipate that our AI technology will also enable us to capture more content per electronic system and increase our average selling price.

Current wording

Our SoC designs fully integrate AI functionality, high-definition, or HD, video processing, image processing, audio processing, and system functions onto a single chip, delivering exceptional video and image quality at high compression rates, differentiated functionality and low power consumption. These AI-based technologies allow us to address a broader range of markets and applications requiring AI video features, including IP security cameras, a variety of automotive cameras, consumer cameras, and industrial and robotic applications. We anticipate that our AI technology will also enable us to capture more content per electronic system and increase our average selling price.

Previous wording

We recorded revenue of $85.9 million for the three months ended April 30, 2025. This represented an increase of 57.6% as compared to the same period in the prior fiscal year. The increase in revenue was primarily attributable to higher product unit shipments, an increased percentage of our sales from higher value AI inference processors which contribute to a higher average selling price, as well as higher nonrecurring engineering (NRE) project service revenue.

Current wording

We recorded revenue of $95.5 million and $181.4 million for the three and six months ended July 31, 2025, respectively. This represented increases of 49.9% and 53.5%, respectively, as compared to the same periods in the prior fiscal year. The increases in revenue were primarily attributable to higher product unit shipments, an increased percentage of our sales from higher average selling price AI inference processors, and higher nonrecurring engineering (NRE) project service revenue.

Previous wording

We recorded an operating loss of $25.9 million for the three months ended April 30, 2025, as compared to an operating loss of $39.4 million for the three months ended April 30, 2024. This reduction in operating loss was primarily attributable to higher revenue and consequently, higher gross profit, partially offset by an increase in operating expenses. The increase in operating expenses primarily related to higher personnel and engineering-related costs, including chip development costs and tools and equipment expenses.

Current wording

We recorded operating losses of $22.0 million and $47.8 million for the three and six months ended July 31, 2025, respectively, as compared to operating losses of $36.3 million and $75.7 million for the three and six months ended July 31, 2024, respectively. The reductions in operating losses were primarily attributable to higher revenue and consequently, higher gross profit, partially offset by increases in operating expenses. The increases in operating expenses primarily related to higher personnel and engineering-related costs, including chip development costs and tools and equipment expenses.

Previous wording

We generated cash flows from operating activities of $14.8 million for the three months ended April 30, 2025, as compared to cash outflows of $15.0 million for the three months ended April 30, 2024. The increase in cash flows from operating activities was primarily attributable to reduced net loss adjusted for certain non-cash items, higher collections of accounts receivable associated with the timing of sales and increased liabilities associated with the timing of payments to our vendors, partially offset by increased inventory purchase as a result of higher demand from customers.

Current wording

We generated cash flows from operating activities of $20.3 million for the six months ended July 31, 2025, as compared to $1.8 million for the six months ended July 31, 2024. The increase in cash flows from operating activities was primarily attributable to a net profit adjusted for certain non-cash items for the six months ended July 31, 2025 compared to a net loss adjusted for certain non-cash items for the six months ended July 31, 2024. This increase was partially offset by lower net working capital associated primarily with the timing of collections and payments with our customers and vendors.

Previous wording

During the three months ended April 30, 2025, we repurchased a total of 24,152 of our ordinary shares for approximately $1.0 million in cash. The repurchased shares were recorded as authorized but unissued shares. As of April 30, 2025, there was approximately $48.0 million available for repurchases through June 30, 2025.

Current wording

On May 28, 2025, our Board of Directors approved an extension of the existing share repurchase program for an additional twelve months through June 30, 2026. During the six months ended July 31, 2025, we repurchased a total of 24,152 of our ordinary shares for approximately $1.0 million in cash. As of July 31, 2025, there was approximately $48.0 million available for repurchases under the repurchase program through June 30, 2026.

Previous wording

We derive substantially all of our 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 our distributors. A substantial portion of our revenue from sales was made indirectly through one of our distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, which serves as our non-exclusive sales representative and fulfillment partner in Asia other than Japan, and to one ODM, Chicony Electronics Co., Ltd., or Chicony, which manufactures devices incorporating our solutions on behalf of multiple end-customers.

Current wording

We derive substantially all of our 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 our distributors. A substantial portion of our revenue from sales was made indirectly through two of our distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, which serves as our non-exclusive sales representative and fulfillment partner in Asia other than Japan, and Hakuto Co., Ltd., or Hakuto, a Japanese distributor, and to one ODM, Chicony Electronics Co., Ltd., or Chicony, which manufactures devices incorporating our solutions on behalf of multiple end-customers.

Previous wording

Comparison of the Three Months Ended April 30, 2025 and 2024

Current wording

Comparison of the Three and Six Months Ended July 31, 2025 and 2024

Previous wording

Revenue increased for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily due to higher product unit shipments, an increased percentage of our sales from higher value AI inference processors which contribute to a higher average selling price, as well as higher NRE project service revenue.

Current wording

Revenue increased for the three and six months ended July 31, 2025, as compared to the same periods in the prior fiscal year, primarily due to higher product unit shipments, an increased percentage of our sales from higher average selling price AI inference processors, and higher NRE project service revenue.

Previous wording

Gross margin decreased for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily due to higher manufacturing costs associated with advanced process technologies and lower sales of previously reserved inventory, partially offset by an increase in high margin NRE project service revenue.

Current wording

Gross margin decreased for the three and six months ended July 31, 2025, as compared to the same periods in the prior fiscal year, primarily due to higher manufacturing costs associated with advanced process technologies and lower sales of previously reserved inventory, partially offset by an increase in high margin NRE project service revenue.

Previous wording

Research and development expense increased for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily due to approximately $2.5 million of higher personnel costs, including stock-based compensation, employee benefits and incentive bonus, as a result of higher headcount, and approximately $2.2 million of additional engineering-related expenses associated with the progress and number of chips in development.

Current wording

Research and development expense increased for the three and six months ended July 31, 2025, as compared to the same periods in the prior fiscal year, primarily due to approximately $2.1 million and $4.4 million, respectively, of additional engineering-related expenses associated with the progress and number of chips in development. The increases were also attributable to approximately $1.0 million and $3.4 million, respectively, of higher personnel costs, including stock-based compensation, employee benefits and incentive bonus, as a result of higher headcount.

Previous wording

Selling, general and administrative expense increased marginally for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily due to approximately $0.4 million of higher personnel costs, including stock-based compensation, employee benefits and incentive bonus, partially offset by approximately $0.2 million of lower travel and facility-related expenses.

Current wording

Selling, general and administrative expense increased for the three and six months ended July 31, 2025, as compared to the same periods in the prior fiscal year, primarily due to approximately $0.9 million and $0.8 million, respectively, of higher outside professional service expense associated with our business development, partially offset by approximately $0.7 million and $0.5 million, respectively, of lower personnel costs and facility-related expenses.

Previous wording

The marginal decrease in other income, net, for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, was primarily due to lower yields from our cash deposits and debt security investments.

Current wording

The marginal increase in other income, net, for the three and six months ended July 31, 2025, as compared to the same periods in the prior fiscal year, was primarily due to higher yields from debt security investments, partially offset by lower interest income from our cash deposit and higher net losses from foreign currency transactions and remeasurements.

Previous wording

The decrease in income tax expense for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, was primarily due to changes in losses in foreign operations.

Current wording

The decreases in income tax expense for the three and six months ended July 31, 2025, as compared to the same periods in the prior fiscal year, were primarily due to a decrease in the proportion of profits generated in the U.S. and reduction in U.S. tax expenses because of the One Big Beautiful Bill Act (OBBBA).

Previous wording

As of April 30, 2025, we had cash, cash equivalents and marketable debt securities of approximately $259.4 million. We invest in highly-liquid, short-term marketable debt securities and hold these investments as available-for-sale securities. Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

As of July 31, 2025, we had cash, cash equivalents and marketable debt securities of approximately $261.2 million. We invest in highly-liquid, short-term marketable debt securities and hold these investments as available-for-sale securities. Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

Net cash provided by operating activities increased for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily attributable to reduced net loss adjusted for certain non-cash items, higher collections of accounts receivable associated with the timing of sales and increased liabilities associated with the timing of payments to our vendors, partially offset by increased inventory purchase as a result of higher demand from customers.

Current wording

Net cash provided by operating activities increased for the six months ended July 31, 2025, as compared to the same period in the prior fiscal year, primarily attributable to a net profit adjusted for certain non-cash items for the six months ended July 31, 2025 compared to a net loss adjusted for certain non-cash items for the six months ended July 31, 2024. This increase was partially offset by lower net working capital associated primarily with the timing of collections and payments with our customers and vendors.

Previous wording

Net cash used in investing activities increased for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily attributable to approximately $14.9 million of additional net cash payments for our debt security investments and approximately $3.4 million additional payments for the purchase of capital assets and software licenses.

Current wording

Net cash used in investing activities increased for the six months ended July 31, 2025, as compared to the same period in the prior fiscal year, primarily attributable to approximately $21.9 million of additional net cash outflow for our debt security investments and approximately $5.0 million higher payments for the purchase of capital assets and software licenses.

Previous wording

Net Cash Provided by (Used in) Operating Activities

Current wording

Net Cash Provided by (Used in) Financing Activities

Previous wording

Net cash used in financing activities increased for the three months ended April 30, 2025, as compared to the same period in the prior fiscal year, primarily due to approximately $1.0 million of cash payment for the repurchase of ordinary shares and $0.3 million of less cash received from stock activities.

Current wording

Net cash used in financing activities increased for the six months ended July 31, 2025, as compared to the same period in the prior fiscal year, primarily due to approximately $1.1 million less cash received from stock activities, as well as $1.0 million of cash paid for the repurchase of our ordinary shares.

Previous wording

On May 29, 2025, we announced that our Board of Directors had approved an extension of the existing share repurchase program for an additional twelve months through June 30, 2026. Refer to Note 16 of the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

On May 28, 2025, our Board of Directors approved an extension of the existing share repurchase program for an additional twelve months through June 30, 2026. Refer to Note 10 of the Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

As of April, 2025, we had purchase obligations with our independent contract manufacturers of $54.6 million.

Current wording

As of July 31, 2025, we had purchase obligations with our independent contract manufacturers of $69.3 million.