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 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.

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 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 in other do…

Excerpt shortened here; the source contains the full paragraph.

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 AI inference SoCs with increased functionality, and as we target new markets.

Previous wording

We recorded revenue of $108.5 million and $289.8 million for the three and nine months ended October 31, 2025, respectively. This represented increases of 31.2% and 44.3%, respectively, as compared to the same periods in the prior fiscal year. The increases in revenue were 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.

Current wording

We recorded revenue of $100.4 million for the three months ended April 30, 2026, an increase of 16.9% as compared to the same period in the prior fiscal year. 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 operating losses of $16.2 million and $64.1 million for the three and nine months ended October 31, 2025, respectively, as compared to operating losses of $25.5 million and $101.2 million for the three and nine months ended October 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 increased operating expenses primarily related to higher personnel and engineering-related costs, including chip development costs and tools and equipment expenses, as well as higher facility-related costs associated with relocating our US headquarters.

Current wording

We recorded operating losses of $19.4 million for the three months ended April 30, 2026, as compared to operating losses of $25.9 million for the three months ended April 30, 2025. The reduction in operating losses was primarily attributable to higher revenue and, consequently, higher gross profit, partially offset by higher operating expenses. The increase in operating expenses primarily resulted from higher payroll-related expenses as a result of an increase in headcount, higher engineering-related costs associated with the progress and number of chips in development, and higher marketing expense, partially offset by lower stock-based compensation expense.

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 and by product mix.

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. 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. Recent supply chain challenges have largely subsided but may recur in future periods with 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.

Current wording

Impact of Global Supply Chain Conditions on Our Business. The semiconductor industry has 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

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 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.

Previous wording

Research and development expense primarily consists of personnel costs, including salaries, stock-based compensation and employee benefits. The expense also includes costs of development incurred in connection with our collaborations with our foundry vendors, costs of licensing intellectual property from third parties for product development, costs of development for software and hardware tools, costs of fabrication of mask sets for prototype products, the cost and depreciation of equipment, outside services as well as allocated depreciation and facility expenses. All research and development costs are expensed as incurred. We expect our research and development expense to generally increase in absolute dollars as we continue to enhance and expand our product features and offerings and increase headcount for new SoC development and development of AI technologies.

Current wording

Research and development expense primarily consists of personnel costs, including salaries, stock-based compensation and employee benefits. The expense also includes costs of development incurred in connection with our collaborations with our foundry vendors, costs of licensing intellectual property from third parties for product development, costs of development for software and hardware tools, costs of fabrication of mask sets for prototype products, the cost and depreciation of equipment, outside services as well as allocated depreciation and facility expenses. All research and development costs are expensed as incurred. We expect our research and development expense to generally increase in absolute dollars as we continue to enhance and expand our product features and offerings, and increase headcount for new SoC development and development of AI technologies to address new markets.

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, subsidies issued by governments, as well as gains and losses from foreign currency transaction remeasurements.

Previous wording

Comparison of the Three and Nine Months Ended October 31, 2025 and 2024

Current wording

Comparison of the Three Months Ended April 30, 2026 and 2025

Previous wording

Revenue increased for the three and nine months ended October 31, 2025, as compared to the same periods in the prior fiscal year, primarily due 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.

Current wording

Revenue increased for the three months ended April 30, 2026, as compared to the same period in the prior fiscal year, primarily due 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 NRE project service revenue.

Previous wording

Gross margin decreased for the three and nine months ended October 31, 2025, as compared to the same periods in the prior fiscal year, primarily due to higher manufacturing costs associated with advanced process technologies, as well as a lower percentage of revenue generated from high margin nonrecurring engineering (NRE) project service.

Current wording

Gross margin decreased for the three months ended April 30, 2026, as compared to the same period in the prior fiscal year, primarily due to higher manufacturing costs associated with advanced process technologies and additional charges from adverse purchase commitments.

Previous wording

Research and development expense increased for the three and nine months ended October 31, 2025, as compared to the same periods in the prior fiscal year, primarily due to approximately $1.9 million and $6.3 million, respectively, of additional engineering-related expenses associated with the progress and number of chips in development. The increases were also attributable to approximately $1.2 million and $4.6 million, respectively, of higher personnel costs, including stock-based compensation and employee benefits, as a result of an increase in headcount.

Current wording

Research and development expense decreased for the three months ended April 30, 2026, as compared to the same period in the prior fiscal year, primarily due to approximately $3.9 million of lower stock-based compensation expense, partially offset by $2.3 million of higher payroll-related expenses as a result of an increase in headcount and $0.9 million of higher engineering-related expenses associated with the progress and number of chips in development.

Previous wording

As of October 31, 2025, we had cash, cash equivalents and marketable debt securities of approximately $295.3 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 April 30, 2026, we had cash, cash equivalents and marketable debt securities of approximately $277.8 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 used in investing activities decreased for the nine months ended October 31, 2025, as compared to the same period in the prior fiscal year, primarily attributable to approximately $9.4 million of additional net cash received from our debt security investments, partially offset by approximately $5.4 million higher payments for the purchase of capital assets and software licenses.

Current wording

Net cash used in investing activities increased for the three months ended April 30, 2026, as compared to the same period in the prior fiscal year, primarily due to approximately $30.7 million of additional funds invested in our security portfolio, partially offset by $0.6 million of lower payments for purchases of capital assets and software licenses.

Previous wording

Net cash provided by financing activities decreased slightly for the nine months ended October 31, 2025, as compared to the same period in the prior fiscal year, primarily due to approximately $1.4 million less cash received from stock activities, $1.0 million of cash paid for the repurchase of our ordinary shares as well as an additional $0.1 million financing payment for the purchase of software licenses.

Current wording

Net cash used in financing activities increased for the three months ended April 30, 2026, as compared to the same period in the prior fiscal year, primarily due to an additional $2.7 million financing payment for the purchase of software licenses and $1.4 million of higher cash payment for the repurchase of our ordinary shares, partially offset by $1.0 million of additional cash received from stock compensation activities.

Previous 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.

Current wording

On May 27, 2026, our Board of Directors authorized a new share repurchase program for a total of $50.0 million commencing July 1, 2026 through June 30, 2027. The new repurchase program replaces the existing program that expires on June 30, 2026. Refer to Note 16 of the Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

As of October 31, 2025, we had purchase obligations with our independent contract manufacturers of $106.2 million.

Current wording

As of April 30, 2026, we had purchase obligations with our independent contract manufacturers of $53.9 million.