AMBARELLA INC

Previous wording

Our development efforts are focused on SoCs that provide human viewing, AI and radar detection functionalities. As a result, we believe that our future revenue growth, if any, will significantly depend upon our ability to expand within camera markets with our AI technology, particularly in the Internet of Things, or 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, or ADAS, applications, and industrial and robotics markets. We expect our research and development expenditures to increase in comparison to prior periods as we devote additional resources to the development of innovative video and image processing solutions with increased functionality, such as AI capabilities, and as we target new markets.

Current wording

Our development roadmap is focused on human viewing, AI inference, and radar based perception technologies that support the increasing automation and intelligence requirements of the Internet of Things (IoT), automotive, industrial, and robotics markets. As a result, we believe that our future revenue growth, if any, will significantly depend upon our ability to expand within camera markets with our AI technology, particularly in the Internet of Things, or 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, or ADAS, applications, and industrial and robotics markets. We expect our research and development expenditures to increase in comparison to prior periods as we devote additional resources to the development of innovative video and image processing solutions with increased functionality, such as AI capabilities, and as we target new markets.

Previous wording

We recorded revenue of $284.9 million in fiscal year 2025, an increase of 25.8% as compared to fiscal year 2024. The increase in revenue was primarily attributable to higher product unit shipments driven by customers' new product ramps, an increased percentage of our sales from higher value AI inference processors which contributed to a higher average selling price, as well as higher nonrecurring engineering (NRE) project service revenue.

Current wording

We recorded revenue of $390.7 million in fiscal year 2026, an increase of 37.2% as compared to fiscal year 2025. The increase in revenue was primarily attributable to higher product unit shipments and an increased percentage of sales from higher average selling price AI inference processors as a result of high demand for our edge AI solutions, partially offset by lower nonrecurring engineering (NRE) project service revenue.

Previous wording

We recorded a loss from operations of $126.6 million in fiscal year 2025, as compared to a loss from operations of $154.6 million in fiscal year 2024. The reduction in operating loss was primarily attributable to higher revenue and higher gross profit, partially offset by an increase in operating expenses. The increase in operating expenses primarily related to higher engineering-related expenses, including chip development costs, tools and equipment expenses as well as outside service expenses.

Current wording

We 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. The reduction in operating losses was primarily attributable to higher revenue and consequently, higher gross profit, partially offset by an increase in operating expenses. The increased operating expenses primarily related to higher personnel costs, including employee benefits, higher engineering-related costs associated with the progress and number of chips in development, higher facility-related costs from relocation of our headquarters in fiscal year 2026, as well as higher marketing and travel expenses.

Previous wording

Ability to Develop and Introduce New or Enhanced Solutions. We operate in a dynamic environment characterized by rapidly changing technologies and technological obsolescence. To compete successfully, we must design, develop, market and sell enhanced solutions with increased levels of performance and functionality that meet the expectations of our customers, including advanced process technologies. As such, we continuously invest in our research and development projects, especially AI and computer vision technologies. However, failure to anticipate or timely develop new or enhanced solutions in response to technology shifts and trends could result in decreased revenue and our competitors achieving design wins we sought. Moreover, any reliability or quality problems with our solutions could harm our reputation, increase additional development and replacement costs, and prevent us from retaining existing customers and attracting new customers.

Current wording

Ability to Develop and Introduce New or Enhanced Solutions. We operate in a dynamic environment characterized by rapidly changing technologies and technological obsolescence. To compete successfully, we must design, develop, market and sell enhanced solutions with increased levels of performance and functionality that meet the expectations of our customers, including advanced process technologies. As such, we continuously invest in our research and development projects, especially AI and computer vision technologies. However, failure to anticipate or timely develop new or enhanced solutions in response to technology shifts and trends could result in decreased revenue and our competitors achieving design wins we sought. In addition, our ability to successfully develop new and enhanced solutions depends on our continuing ability to hire, train, motivate and retain highly skilled engineers, which is not ensured. Moreover, any reliability or quality problems with our solutions could harm our reputation, increase additional development and replacement costs, and prevent us from retaining existing customers and attracting new customers.

Previous wording

Pricing, Product Cost and Margin. Our pricing and margins depend on the volumes and features of the solutions we provide to our customers. Additionally, we make significant investments in new solutions for both cost improvements and new features that we expect to drive revenue and maintain margins. In general, solutions incorporated into more complex configurations, such as those used in high-performance camera applications or, in the future, advanced driver assistance systems, have higher prices and higher gross margins as compared to solutions sold into lower-performing, more competitive camera applications. Our average selling price can vary by market and application due to market-specific supply and demand, the maturation of products launched in previous years and the launch of new products by us or our competitors.

Current wording

Pricing, Product Cost and Margin. Our pricing and margins depend on a variety of factors, including the volumes and features of the solutions we provide to our customers. Additionally, we make significant investments in new solutions for both cost improvements and new features that we expect to drive revenue and maintain margins. In general, solutions incorporated into more complex configurations, such as those used in high-performance camera applications or, in the future, advanced driver assistance systems, have higher prices and higher gross margins as compared to solutions sold into lower-performing, more competitive camera applications. Our average selling price can vary by market and application due to market-specific supply and demand, the maturation of products launched in previous years, the launch of new products by us or our competitors and by product mix.

Previous wording

Impact of Global Supply Chain Conditions on Our Business. Due in part to impacts of the COVID-19 pandemic, the semiconductor industry faced significant global supply chain challenges over the past few years. Supply chain issues can impact our business as they relate to both our suppliers and our customers. With respect to our suppliers, we have experienced supply constraints for certain chips from Samsung Electronics Corporation and we may in the future experience similar issues. With respect to our customers, to the extent customers face supply chain issues with other components needed to pair with our products in order to produce their end products or otherwise take actions in an attempt to adjust their inventory levels, such customers may delay future orders of our products or hold inventory of our products for longer periods of time. Recent supply chain challenges have subsided and we expect conditions to return to more stability in future periods. However, challenges may recur in future periods with changes in the macro-economic environment, including imposition of tariffs by the U.S. Government on imports and restrictions on exports to foreign locations.

Current wording

Impact of Global Supply Chain Conditions on Our Business. The semiconductor industry faced significant global supply chain challenges over the past few years. Supply chain issues can impact our business as they relate to both our suppliers and our customers. We have seen cycles of supply chain challenges in the past, which may recur in future periods as well, with constant changes in the macro-economic environment, including potential retaliatory tariffs and restrictions on exports to foreign locations due to the recent imposition of tariffs by the U.S. Government on imports.

Previous wording

Selling, general and administrative expense primarily consists of personnel costs, including salaries, stock-based compensation and employee benefits for our sales, marketing, finance, human resources, information technology and administrative personnel. The expense also includes amortization of trade name and customer relationships, professional service costs such as accounting, tax, or legal services, and allocated depreciation and facility expenses. We expect our selling, general and administrative expense to increase in absolute dollars as we continue to maintain the infrastructure and expand the size of our sales and marketing organization to support our business strategy of addressing new opportunities with our AI technology.

Current wording

Selling, general and administrative expense primarily consists of personnel costs, including salaries, stock-based compensation and employee benefits for our sales, marketing, finance, human resources, information technology and administrative personnel. The expense also includes amortization of trade name and customer relationships, professional service costs such as accounting, tax, or legal services, and allocated depreciation and facility expenses. We expect our selling, general and administrative expense to increase in absolute dollars as we continue to maintain the infrastructure and expand the size of our sales and marketing organization to support our business strategy of addressing new opportunities with our AI technology, including, but not limited to, costs expected to be incurred on the expansion of an indirect sales channel.

Previous wording

Other income, net, consists primarily of interest income and yields from our cash deposits and debt security investments, realized gains and losses from equity and debt security investments, subsidies and grants issued by governments, as well as gains and losses from foreign currency transactions and remeasurements.

Current wording

Other income, net, consists primarily of interest income and yields from our cash deposits and debt security investments, realized gains and losses from equity and debt security investments, subsidies and grants issued by governments, as well as gains and losses from foreign currency transaction remeasurements.

Previous wording

Research and development expense increased in fiscal year 2025, as compared to fiscal year 2024, primarily due to approximately $4.2 million of additional engineering-related expenses associated with supporting our AI inference processor and radar solutions, and $3.4 million of additional SoC development cost from our foundries associated with our chip development progress. The increase was also attributable to approximately $3.4 million of additional personnel costs, including stock-based compensation expense, as a result of higher headcount in support of our AI strategy.

Current wording

Research and development expense increased in fiscal year 2025, as compared to fiscal year 2024, primarily due to approximately $4.2 million of additional engineering-related expenses associated with supporting our AI inference processor and radar solutions, and $3.4 million of additional SoC development cost from our foundries associated with our chip development progress. The increase was also attributable to approximately $3.4 million of additional personnel costs, including stock-based compensation expense, as a result of an increase in headcount.

Previous wording

Selling, general and administrative expense decreased in fiscal year 2025, as compared to fiscal year 2024, primarily due to approximately $3.0 million lower net personnel costs associated with departure of certain employees and $0.9 million of lower facility-related expenses. The decrease was partially offset by approximately $0.3 million of additional professional service costs.

Current wording

Selling, general and administrative expense decreased in fiscal year 2025, as compared to fiscal year 2024, primarily due to approximately $3.0 million of lower net personnel costs associated with departures of certain employees and $0.9 million of lower facility-related expenses. The decrease was partially offset by approximately $0.3 million of additional professional service costs.

Previous wording

The increase in other income, net, in fiscal year 2025, as compared to fiscal year 2024, was primarily due to an approximately $1.2 million impairment charge relating to an equity investment recognized in the prior fiscal year that did not recur in the current fiscal year, approximately $0.9 million of higher interest income and yields from our cash deposits and debt security investments, as well as $0.8 million of net gains from a government grant and foreign currency transactions and remeasurements.

Current wording

The increase in other income, net, in fiscal year 2025, as compared to fiscal year 2024, was primarily due to an approximately $1.2 million impairment charge relating to an equity investment recognized in fiscal year 2024 that did not recur in fiscal year 2025, approximately $0.9 million of higher interest income and yields from our cash deposits and debt security investments, as well as $0.8 million of net gains from a government grant and foreign currency transactions and remeasurements.

Previous wording

Income tax expense increased in fiscal 2024, as compared to fiscal year 2023, primarily due to a one-time charge of $22.7 million of valuation allowance against the Company’s remaining U.S. net deferred tax assets, a decrease in the proportion of profits generated in lower tax jurisdictions and a decrease in the benefit from FIN48 reserves upon the lapse of the statute of limitations, partially offset by a decrease in non-deductible stock-based compensation.

Current wording

Income tax expense increased in fiscal 2026, as compared to fiscal year 2025, primarily due to reduced pre-tax loss and a reduction in benefit from income tax reserve release, partially offset by a decrease in non-deductible stock-based compensation.

Previous wording

Income tax expense decreased in fiscal year 2025, as compared to fiscal year 2024, primarily due to a one-time charge of $22.7 million of valuation allowance in the prior fiscal year that did not recur in the current fiscal year, a benefit from income tax reserve release upon the lapse of the statute of limitations of $2.8 million and an increase in the proportion of profits generated in lower tax jurisdictions, partially offset by an increase in non-deductible stock-based compensation.

Current wording

Income tax expense decreased in fiscal year 2025, as compared to fiscal year 2024, primarily due to a one-time charge of $22.7 million of valuation allowance in fiscal year 2024 that did not recur in fiscal year 2025, a benefit from income tax reserve release upon the lapse of the statute of limitations of $2.8 million and an increase in the proportion of profits generated in lower tax jurisdictions, partially offset by an increase in non-deductible stock-based compensation.

Previous wording

Fiscal year 2024 compared to fiscal year 2023: Cash provided by operating activities decreased primarily due to higher net loss adjusted for certain non-cash items, partially offset by increased working capital as a result of better management on accounts receivable and liabilities, as well as decreased inventory purchases due to lower demand from customers.

Current wording

Fiscal year 2025 compared to fiscal year 2024: Cash provided by operating activities increased primarily due to improved operating results, partially offset by higher cash outflows as a result of changes in working capital.

Previous wording

Fiscal year 2024 compared to fiscal year 2023: Net cash provided by financing activities decreased primarily due to approximately $1.1 million less in payments for the purchase of licenses.

Current wording

Fiscal year 2026 compared to fiscal year 2025: Net cash used in investing activities decreased primarily due to approximately $15.2 million of additional net cash received from our debt security investments, partially offset by approximately $5.1 million higher payments for our purchase of capital assets and software licenses.

Previous wording

As of January 31, 2025, we had cash, cash equivalents and marketable debt securities on hand of approximately $250.3 million, compared with approximately $219.9 million of cash, cash equivalents and marketable debt securities on hand as of January 31, 2024.

Current wording

As of January 31, 2026, we had cash, cash equivalents and marketable debt securities on hand of approximately $312.6 million, compared with approximately $250.3 million as of January 31, 2025.

Previous wording

Technology license obligations primarily represent future cash payments for noncancelable internal-use software licenses used in product design.

Current wording

Technology license obligations primarily represent future cash payments for noncancelable software licenses used in product design.

Previous wording

Capital commitment primarily represents future construction cost for our office building constructed in Parma, Italy.

Current wording

Capital commitment primarily represents future construction costs for our office building in Parma, Italy.

Previous wording

Service commitment represents future cash payments for our IT infrastructure service from a third party.

Current wording

Service commitment represents future cash payments for our IT infrastructure services and support and maintenance for software licenses.

Previous wording

We also have lease obligations primarily for our worldwide office facilities. As of January 31, 2025, these undiscounted lease payments were a total of $5.4 million, with $2.9 million due in the next 12 months. Refer to Note 8 Leases within Notes to Consolidated Financial Statements for further information.

Current wording

We also have lease obligations primarily for our worldwide office facilities. As of January 31, 2026, these undiscounted lease payments were a total of $18.2 million, with $3.0 million due in the next 12 months. Refer to Note 8 Leases of Notes to Consolidated Financial Statements for further information.

Previous wording

Grants of stock-based awards are key components of the compensation packages we provide to attract and retain employees and to align their interests with the interests of shareholders. We recognize that these stock-based awards will dilute existing shareholders and have sought to limit the number of shares granted while providing competitive compensation packages. As of January 31, 2025, we had a total of 2.9 million ordinary shares subject to outstanding stock options and unvested restricted stock units, which will dilute our existing shareholders. This potential dilution will only result if outstanding options vest and are exercised and restricted stock units vest and are settled.

Current wording

Grants of stock-based awards are key components of the compensation packages we provide to attract and retain employees and to align their interests with the interests of shareholders. We recognize that these stock-based awards will dilute existing shareholders and have sought to limit the number of shares granted while providing competitive compensation packages. As of January 31, 2026, we had a total of 2.8 million ordinary shares subject to outstanding stock options and unvested restricted stock units, which will dilute our existing shareholders. This potential dilution will only result if outstanding options vest and are exercised and restricted stock units vest and are settled.

Previous wording

We also enter into various project service agreements with certain customers, including development funding agreements subject to certain refund conditions. In determining whether a development funding agreement constitutes a contract with a customer, we assess whether the substantive and genuine financial risk has been transferred to the funding party and whether the services provided to the funding party are an output of our ordinary activities in exchange for consideration. These agreements may include multiple performance obligations, such as software development services, licensing of intellectual property and post-contract customer support, or PCS. These multiple performance obligations are highly interdependent, highly interrelated, are typically not sold separately and do not have standalone selling prices. They are all inputs to generate one combined output which is incorporating our SoC into the customer’s product. Accordingly, we determine that they are not separately identifiable and shall be treated as a single performance obligation. For fixed-price project service contracts, we recognize revenue either over time as services are provided using an input method based on contract costs incurred to date compared to total estimated contract cost, or at a point in time upon completion and acceptance by the customer, depending on the terms of the arrangement. For project service contracts that are billed at a fixed rate for each hour of service provided, we recognize revenue in the amount for which we have the right to invoice as we believe the amount invoiced directly corresponds with the value to the customer of our performance completed to date.

Current wording

We also enter into various project service agreements with certain customers, including development funding agreements subject to certain refund conditions. In determining whether a development funding agreement constitutes a contract with a customer, we assess whether the substantive and genuine financial risk has been transferred to the funding party and whether the services provided to the funding party are an output of our ordinary activities in exchange for consideration. These agreements may include multiple performance obligations, such as software development services, licensing of intellectual property and post-contract customer support, or PCS. These multiple performance obligations are highly interdependent, highly interrelated, are typically not sold separately and do not have standalone selling prices. They are all inputs to generate one combined output which is incorporating our SoC into the customer’s product. Accordingly, we determine that they are not separately identifiable and shall be treated as a single performance obligation. For project service contracts containing variable consideration, we estimate variable consideration using the most likely amount method which we believe better predicts the amount of consideration to which we expect to be entitled. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur, in accordance with the variable consideration constraint. We recognize revenue on project service contracts either over time as services are provided using an input method based on contract costs incurred to date compared to total estimated contract cost, or at a point in time upon completion and acceptance by the customer, depending on the terms of the arrangement. For project service contracts that are billed at a fixed rate for each hour of service provided, we recognize revenue in the amount for which we have the right to invoice as we believe the amount invoiced directly corresponds with the value to the customer of our performance completed to date.

Previous wording

Timing of revenue recognition may differ from the timing of invoicing to our customers. We record contract assets when revenue is recognized prior to invoicing. Our contract assets are primarily related to the satisfied but unbilled performance obligations associated with project service agreements at the reporting date. As of January 31, 2025 and 2024, the contract assets for these unbilled receivables were not material, respectively. Our contract liabilities consist of deferred revenue. The deferred revenue is primarily related to the nonrecurring engineering charges that are either invoiced or paid but performance obligations are not satisfied, as well as the portion of a transaction price that exceeds the weighted average selling price for products sold to date under tiered-pricing contracts that contain material rights. The deferred revenue is expected to be recognized over the period when performance obligations are satisfied associated with project service agreements, or over the course of the contract when products are delivered for future pricing below the weighted average selling price of the contract. We also elect not to disclose the value of unsatisfied or partially unsatisfied performance obligations for contracts with original expected contract duration of one year or less, and elect to exclude amounts collected from customers for all sales taxes from the transaction price.

Current wording

Timing of revenue recognition may differ from the timing of invoicing to our customers. We record contract assets when revenue is recognized prior to invoicing. Our contract assets are primarily related to the satisfied but unbilled performance obligations associated with project service agreements at the reporting date. As of January 31, 2026 and 2025, the contract assets for these unbilled receivables were not material, respectively. Our contract liabilities consist of deferred revenue. The deferred revenue is primarily related to the nonrecurring engineering charges that are either invoiced or paid but performance obligations are not satisfied, as well as the portion of a transaction price that exceeds the weighted average selling price for products sold to date under tiered-pricing contracts that contain material rights. The deferred revenue is expected to be recognized over the period when performance obligations are satisfied associated with project service agreements, or over the course of the contract when products are delivered for future pricing below the weighted average selling price of the contract. We elect not to disclose the value of unsatisfied or partially unsatisfied performance obligations for contracts with original expected contract duration of one year or less, and elect to exclude amounts collected from customers for all sales taxes from the transaction price.