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2024 ANNUAL REPORT
May 2024
Dear Shareholders:
This past year was challenging for much of the semiconductor industry. Ambarella was not immune to the
difficult conditions, with fiscal 2024 revenue down sharply from the record revenue we achieved in fiscal 2023.
The industry-wide cyclical inventory correction persisted throughout the year, pressuring revenue below
end-market consumption rates. Geopolitical factors continued to impact markets and created risk and stock price
volatility. The automotive industry moved from a shortage of capacity to an excess of capacity, with increased
competition between our customers. On a positive note, one of the most important developments in fiscal 2024
was the market   s continued adoption of increasingly sophisticated artificial intelligence (   AI   ) applications
requiring higher levels of AI inference processing at the network edge. Our investment strategy and product
portfolio are well aligned with this development, and we should benefit from this trend.
Our vision remains intact
In times like this, I find it beneficial to focus on the long-term vision for the company. Twenty years ago,
Ambarella was founded on the    algorithm-first    principle with optimized chip architectures developed for
demanding end-point applications where low-power consumption is critical. Our initial focus was on video
processors, where information is collected through the lens of a camera and images and/or videos are displayed
for human viewing applications. Ambarella established itself as a leading provider of video processing systemon-chips (   SoCs   ) in a variety of markets.
Using the same algorithm-first principle, we integrated a proprietary AI inference processor with our video
processor, which became the CV2 family of AI computer vision SoCs, which often process convolutional neural
network (   CNN   ) applications like object detection and classification. The CV2 family has been a significant
success, representing 60% of our fiscal 2024 revenue with strong growth expected in fiscal 2025.
We have now introduced our 3rd generation of AI inference processors, leveraging the same underlying
algorithm-first methodology. In addition to CNN-based applications, this generation of processors efficiently
serves transformer network applications, which is a foundation for generative AI (   GenAI   ) and large language
model (   LLM   ) applications. We continue to make a significant R&D investment in this generation of products,
with our first production revenue expected in our fiscal 2026. This 3rd generation of AI inference technology is
creating opportunities for us to address a broader range of markets and applications while also allowing us to
capture more content per electronic system.
Our edge AI products continue to gain traction in multiple markets
AI inference processors now represent a majority of both our automotive and IoT revenue and have led to a
higher blended average selling price (   ASP   ). Virtually all our customers    new design activity now involves our
AI inference SoCs. As our 3rd generation of AI inference processors begins to contribute incremental revenue, we
expect to realize additional increases in our blended ASP, as well as positive operating leverage.
In the automotive market, we see new customer activity for both the 2nd generation CV2 and the 3rd generation
CV3 product families. With CV3, we have realized initial customer traction in the commercial vehicle market,
with customers such as Continental AG, SANY Group and Kodiak Robotics. We are sampling CV72AQ for the
basic Level 2 ADAS (   L2   ) market in China, and during the 2024 Consumer Electronics Show we announced
CV3-AD635 and CV3-AD655 for L2+ passenger vehicle applications.
In the automotive market, we have built a reference platform around our CV3-AD family of AI inference SoCs
by including options for a complete autonomous driving software stack and our centrally processed HD radar
algorithms. By providing a platform solution, we can potentially enable a faster time-to-market for our customers
and increase our content per design win.
Generative AI presents exciting new opportunities
GenAI is an exciting new opportunity that leverages our 3rd generation AI inference processor technology. In our
IoT businesses, we are focused on GenAI applications on the edge of the network ranging from end point devices
to edge servers. We offer a range of GenAI processors, ranging from the recently introduced 5nm CV75S for end
points to the powerful 5nm N1 processor for edge infrastructure hardware. The N1 SoC supports multi-modal
large language models (   LLMs   ) up to 34 billion-parameters at a fraction of the power-per-inference of the
leading GPU solutions. With our expanding GenAI portfolio, we intend to address a wide range of edge
applications, including mobility, physical security, robotics, and medical instruments.
Looking forward to the future
Despite the recent challenges, we remain resolute in our vision. The megatrends of security, safety, automation,
and eventually complete autonomy, or robotics, continue to be key drivers in our markets. The early actions we
took to help our customers address their cyclical excess inventory challenges have positioned us for a return to
revenue growth in fiscal 2025 in both our automotive and IoT markets. Moreover, the increased market attention
on AI inference processing, in particular at the edge, is aligned with where we have been investing. Looking
forward, our key objectives are to restore revenue growth and profitability through our existing product portfolio
while continuing to drive R&D investment in strategic areas where we have technological advantages. Despite
the turbulence of the past year, I remain excited for our future.
Thank you for your support.
Sincerely,
Fermi Wang, President & CEO
 • shareholder letter icon 5/3/2024 Letter Continued (Full PDF)
 • stockholder letter icon 5/11/2023 AMBA Stockholder Letter
 • stockholder letter icon More "Semiconductors" Category Stockholder Letters
 • Benford's Law Stocks icon AMBA Benford's Law Stock Score = 65


AMBA Shareholder/Stockholder Letter Transcript:


2024 ANNUAL REPORT


May 2024
Dear Shareholders:
This past year was challenging for much of the semiconductor industry. Ambarella was not immune to the
difficult conditions, with fiscal 2024 revenue down sharply from the record revenue we achieved in fiscal 2023.
The industry-wide cyclical inventory correction persisted throughout the year, pressuring revenue below
end-market consumption rates. Geopolitical factors continued to impact markets and created risk and stock price
volatility. The automotive industry moved from a shortage of capacity to an excess of capacity, with increased
competition between our customers. On a positive note, one of the most important developments in fiscal 2024
was the market   s continued adoption of increasingly sophisticated artificial intelligence (   AI   ) applications
requiring higher levels of AI inference processing at the network edge. Our investment strategy and product
portfolio are well aligned with this development, and we should benefit from this trend.
Our vision remains intact
In times like this, I find it beneficial to focus on the long-term vision for the company. Twenty years ago,
Ambarella was founded on the    algorithm-first    principle with optimized chip architectures developed for
demanding end-point applications where low-power consumption is critical. Our initial focus was on video
processors, where information is collected through the lens of a camera and images and/or videos are displayed
for human viewing applications. Ambarella established itself as a leading provider of video processing systemon-chips (   SoCs   ) in a variety of markets.
Using the same algorithm-first principle, we integrated a proprietary AI inference processor with our video
processor, which became the CV2 family of AI computer vision SoCs, which often process convolutional neural
network (   CNN   ) applications like object detection and classification. The CV2 family has been a significant
success, representing 60% of our fiscal 2024 revenue with strong growth expected in fiscal 2025.
We have now introduced our 3rd generation of AI inference processors, leveraging the same underlying
algorithm-first methodology. In addition to CNN-based applications, this generation of processors efficiently
serves transformer network applications, which is a foundation for generative AI (   GenAI   ) and large language
model (   LLM   ) applications. We continue to make a significant R&D investment in this generation of products,
with our first production revenue expected in our fiscal 2026. This 3rd generation of AI inference technology is
creating opportunities for us to address a broader range of markets and applications while also allowing us to
capture more content per electronic system.
Our edge AI products continue to gain traction in multiple markets
AI inference processors now represent a majority of both our automotive and IoT revenue and have led to a
higher blended average selling price (   ASP   ). Virtually all our customers    new design activity now involves our
AI inference SoCs. As our 3rd generation of AI inference processors begins to contribute incremental revenue, we
expect to realize additional increases in our blended ASP, as well as positive operating leverage.
In the automotive market, we see new customer activity for both the 2nd generation CV2 and the 3rd generation
CV3 product families. With CV3, we have realized initial customer traction in the commercial vehicle market,
with customers such as Continental AG, SANY Group and Kodiak Robotics. We are sampling CV72AQ for the
basic Level 2 ADAS (   L2   ) market in China, and during the 2024 Consumer Electronics Show we announced
CV3-AD635 and CV3-AD655 for L2+ passenger vehicle applications.
In the automotive market, we have built a reference platform around our CV3-AD family of AI inference SoCs
by including options for a complete autonomous driving software stack and our centrally processed HD radar
algorithms. By providing a platform solution, we can potentially enable a faster time-to-market for our customers
and increase our content per design win.

Generative AI presents exciting new opportunities
GenAI is an exciting new opportunity that leverages our 3rd generation AI inference processor technology. In our
IoT businesses, we are focused on GenAI applications on the edge of the network ranging from end point devices
to edge servers. We offer a range of GenAI processors, ranging from the recently introduced 5nm CV75S for end
points to the powerful 5nm N1 processor for edge infrastructure hardware. The N1 SoC supports multi-modal
large language models (   LLMs   ) up to 34 billion-parameters at a fraction of the power-per-inference of the
leading GPU solutions. With our expanding GenAI portfolio, we intend to address a wide range of edge
applications, including mobility, physical security, robotics, and medical instruments.
Looking forward to the future
Despite the recent challenges, we remain resolute in our vision. The megatrends of security, safety, automation,
and eventually complete autonomy, or robotics, continue to be key drivers in our markets. The early actions we
took to help our customers address their cyclical excess inventory challenges have positioned us for a return to
revenue growth in fiscal 2025 in both our automotive and IoT markets. Moreover, the increased market attention
on AI inference processing, in particular at the edge, is aligned with where we have been investing. Looking
forward, our key objectives are to restore revenue growth and profitability through our existing product portfolio
while continuing to drive R&D investment in strategic areas where we have technological advantages. Despite
the turbulence of the past year, I remain excited for our future.
Thank you for your support.
Sincerely,
Fermi Wang, President & CEO



shareholder letter icon 5/3/2024 Letter Continued (Full PDF)
 

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