Ambarella (AMBA) 29 Aug 232024 Q2 Earnings call transcript

Thank you for standing by, and welcome to Ambarella's Second Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded.

And now, I'd like to introduce your host for today's program, Louis Gerhardy, Vice President, Corporate Development. ahead. go Please

Good second Jonathan. call. thank for you Thank fiscal afternoon, year our quarter conference XXXX joining you, and financial results

On results White, today and the to provide of me prospects, Fermi information demand is second call President regarding with Wang, the today's regarding and questions is call will your CEO, our The CFO. Dr. our fiscal Brian you primary quarter for purpose our and financial other responses projected the things. year and XXXX. The to market results, among solutions financial forward-looking for discussion with statements growth, today contain

these assumptions These risks, to no actual our fully filed that could on risks, uncertainties, our these as SEC. be information based differ statements on should update statements. potential as results with financial these We're forward-looking are and materially assumptions, to our well available factors our statements. any of documents under we assumptions, are in affect materialize the results other information prove to and These uncertainties risks incorrect, risk and the subject or obligation uncertainties, from currently described should could or more

filings, Ambarella's results website prior today's the our as our or transcribed as fiscal to cannot quarter content today's results, our replay The page on of of release, without Relations and the written consent. posted are call call, Investor well a XXXX be second historical transcripts, SEC can Access be on materials and of press property found reproduced our website.

review and and the a for business update results then Fermi your the outlook, available for Brian provide will will questions. quarter, now we'll be financial

and everyone. Louis, you, afternoon, good Thank

guidance. revenue consistent with QX sequentially and fiscal was flat Our approximately our

from sequentially and year Processor while a down AI ago. XX% about business was business Video down sequentially and Our our grew year-over-year,

our XX% emerging highlighting grow and Our $XX of in is (ph) Processor business. the AI mix AI of SoCs, blended to about on track was reach QX Thanks value year-over-year. and ASP to above Inference the

outlook Our mid-to-long-term the business growth Processor AI Inference for positive. remains

overall more inventory challenging pockets very now our However, the demand, now seeing our environment reduction reducing is their for inventory end-market weak ongoing efforts. Customers complicates business. are which of near-term customers' and we some are aggressively

this, have our outlook. Given half second reduced we

We recovery but inventory for up return our end will in are growth a us not do set of to expecting anticipate XXXX, by year we XXXX. calendar in normalize and customers' calendar the the a

continue for device to we million more AI We have vehicle inference IoT our market. reach point expanding into shipped inference XX expand Cumulatively, our autonomy. and automotive evolving than end and applications, rapidly processor into AI processors inference in we position now and the processor AI are

on As continue opportunity. to market last the announced call, accelerator the AI we evaluate earnings inference

I CVX, Video CVX. will summarize of our product families, and now three Processors, SoC the major status

about viewing, human and of typically this are Processors a total to it Video come First, last revenue year down year, be XX% single-digit they expect I from ASP. in XX%

For processor reason several prioritizing products continue resource our AI video we've this and on for and to contract. to years, limited we revenue our technology been anticipate

what contraction lower experiencing processor is year video in significantly However, anticipated the the revenue fiscal to we impact year. be than from XXXX this are

total family inference $XX SoC approach AI fiscal Ambarella and applications for Ambarella’s market an up and this important the are for AI serves of IoT. remains computer and mid-to-long XX% term. vision Second, our CVX auto SoC ASP inference family revenue and This year. of expected commences to close SoCs in last CVX of growth market XX% in to XXXX, our establish from in

run to and SoC $XX SoC software per family stack technology, from add workload CVX more incremental third-generation mobile on of CVX our hundreds to family or system challenging to autonomous value. can assemble our partial began more SoC inference inference than as per target autonomy. CVX this AI $XXX Based a Third, driving The first unit complete optimized ago. range on dollars software such year of SoC AI

The the quarter, AI the later began Llama our a AI inference processor In ADI chatbot embedding of Gen to demos CVX our CVX Meta's last we we the market. to acceleration port for SoC year. X have expect starting is point to this and available evaluation

will AI the and the updates our on on We and Generative of emerging the encourage see provide side market. server continuing to evaluation device opportunities both

security robust representative introduced XX its activity medium summarize XXX-degree up in view customer offers customer at worldwide. CVX in utilizing and with multi-sensor X cameras on camera now the based through AI quarter. of AI AI both enterprise SoCs, SoC. inference cameras XK -- a surveillance Canon HXA camera CVXX will remains unit Axis, activity the Design camera sensors on The I analytics. to our the Motorola our four the market indoor applications. based and MXXXX targeting MXXXX megapixel upto image mega resolution pixel announced

Rapid launched or support rapid cameras video classification on AI thermal based CVXX CVX for with X-Series simultaneously provide models S sensors. Smarter PTZ CVX new of based i-PRO, and introduces Series new in four multi-directional view our our next-generation inference market DynaColor using vehicles the its And of processor camera insurers. to our X-megapixel CVXX on AI detection and SoC. Japanese cameras and XX the processors. XK announced Q leader, AI and AI expansion South three Korea, Hanwha These bi-spectrum the

the now May our AI Shanghai inference for will CVX we received representative activity earnings the Show a Automotive mentioned I in at processor, XX our of In derivative the about CVXXAQ Auto SoCs. talk positive I call, feedback over customer family market.

in am X for applications. Level X+ X Tier is I wins this multiple and China QX, pleased report During Tier to a

Tier of half year second to the X some in this of the commence calendar XXXX. expect projects production We

our to pleased announce are We CVX win vehicle. passenger first in

application, cameras. inference win the XX multiple support the to for We expect this this CVX enter in will next AI months. processing In production

and policy in CMS on in beginning processors. system, significant monitoring including models July recently, conventional replace rear CMS our Additionally, also based CVX government new intelligent in CMS hyper system mirrors. represent the Ambarella's allowing Motor interior This a ADAS And left coupe, right the a camera enabled unveils of inference The CVXXAQ. being assistance to China opportunity family side AI July, XXXX. GAC Chinese LX+ with intelligence legal, its covers GT a policy has mirrors an for the system driver

During for model field joint Ford for the the Canopy camera a product, AI Tundra equipped Cam our its XXXX its aftermarket, The quarter, camera view, detection detection, and year Canopy, recording, BAIC, introduced first our XXX provides one Reach-in pickup. of the selling camera and based trucks. venture HXXAQ the automotive Sequoia based introduced system SUVs automotive with video resulting the based HD XXXX startup on the the for and our largest processor. person in backup Toyota Pickup Toyota's an CVXX on option from will on began wireless system trailers China be CMS The back processor. CVXXAQ. of In degree of full ADT's inference a OEMs

maker, And GO continuing AI in powerful HXX June, but design utilizes InstaXXX camera lightweight, camera, for inference XK activity processors. while representative a our customer that announced a its healthy video camera X engagements These pace action indicate processor.

influence market Our applications. investment more demand for AI with aligned strategy intensive software anticipated the is sophisticated

from capture demonstrated In the to the have video the thanks with last win family, three years, customer value processors. we per more to ability to demand CVX AI migrate

to CVX, sophisticated continue well-positioned support anticipate products forward, newer believe anticipating. as such blended CVXX increasingly the ASP are rise. the we we customers workload product inference our and CVX are will to This software ramp as Looking also we capture AI new more and our our value,

While to actively managing expenses inference turmoil, through market R&D we market realize investments fully the AI the to have opportunities today. continue we will strategic current discussed our drive

With the that, Brian QX in results and more will now detail. discuss outlook

that of year outlook review XXXX for October and press GAAP the second release for highlights be you refer today's a quarter reconciliation to discussing XX, quarter non-GAAP I'll to XXXX. Fermi. third non-GAAP provide financial fiscal financial and detailed Thanks, results I'll results. of ending for the a ask

impact we adjusted for acquisition-related reporting, taxes. expense and costs non-GAAP For stock-based eliminated of have the compensation

the our fiscal was guidance XX% down quarter fiscal revenue Sequentially, range, XX.X% $XX.X slightly, the of end line prior For the revenue our margin at for down of and Non-GAAP in range. was was midpoint high guidance was year-over-year. revenue automotive QX, flat gross prior million, prior while QX to slightly. with up IoT

We diluted Non-GAAP share, prior development was and of $X.XX loss expense our timing range and management quarters. expense equal milestones. spending other provision non-GAAP million $XX continued a was and by internal driven $XX quarter. We net $XXX,XXX. reported our to was net guidance non-GAAP of our million the the or track between per below million, to million operating QX on prior loss income to of $XX $X remain product tax $XXX,XXX interest

used less for operations on month minus quarter and were XXX in cash X% down turn to for million. inventory XX flow. CapEx relatively was XX and of was DSO days, $X.X cash cash basis. from $XX.X intangible balance million. marketable and the positive operations to assets decreased expenditures quarter. at sheet days, million QX $X.X tangible our $XXX.X and million prior defined was from capital declined Now flow million securities a Fiscal XXX Cash the to from flat as XX% revenue cash while Free $X.X I'll and trailing

revenue. Asia that Chicony had of customers represent Microelectronics, or ships came WT We XX% multiple QX. Taiwan a two IoT more fulfillment in ODM and ODM, at in multiple who companies XX% for customers revenue in revenue. our of and in of was logistics XX% partner manufactures to

by have the will fiscal or appeared. end year factors, is revenue X% challenging. fiscal driven Considering to actions IoT management near-term I'll of $XX softening revenue that QX our outlook accelerated we Customer demand estimate quarter have plus third for now end approximately market. inventory and pockets the our million outlook of minus The discuss decline XXXX. these

QX. fiscal this we continue resuming in sequential time, this into our revenue anticipate revenue our with that QX could fiscal range growth At

margin in XX% We expect to XX%. to gross QX non-GAAP the of range fiscal be

third million to R&D OpEx product the in increase be in compared We expect higher $XX to by driven quarter of QX development to million the $XX the to activities. tied new with range non-GAAP

income million. net estimate We interest approximately to $X be

share contact to by the series and and million us diluted our details. be approximately please Ambarella Conference car Evercore shares. non-GAAP Our on September of tax September hosted the on the on Bank XX Semiconductor be America for Investor expense October be will Stanley $XXX,XXX future NASDAQ, XX.X Morgan Conference on in more to Asia count participating hosted by September X, X, Mobility Conference UBS XX approximately

today. the our to Thank you With for turn that, call the will call I operator questions. for over joining

One Certainly. moment line question. our Christopher Rolland Instructions] [Operator for the first from of And question comes first from our Susquehanna.

please. question, Your

Thanks guys. the Hey, question. for

a weaker you can maybe more then, in there. XX%, by customer customers you could example, end an well? that was if as kind customer, of And have by and talked demand under that shipment that under highlight little that shipment end put guys quarter, So changed as of under-shipment that of bit about pockets level at a shipping market. you're has new Last this Thanks. under you seeing of terms joined

Right.

the sales, but weaker that. business, were but more I terms some is one see So for areas, two IoT is whole the in think first other pockets and I of see expecting we weakness generally on the China, the don't course, market, end of of we think in year-end all, our China demands we there than some think specifically are do weak that is of market market the demand, we -- there

allowance. are areas So we in -- we market that expecting weaker two are IoT. expect consumer a see our Those cause to

terms In we shipments. the, particular you quote from quarter, customer said the of about under that that last

end a lot coming and wave see go -- August, quarter. that cancellation the and fact, of than lower to all quarter of with and but new push-out on the don't that's even just them XX% the we to the and push-out shipment I already that it's further think customer the come be last into there about. way so And of we will really back talked In are where to a adding people demand about even we the come and list our customers to list, talk

And we pretty the would maybe was of of you then, kind each into what quarters? significant. of quite you have going turns of the like you. there? bounce backlog why was from need any of Perhaps looks up of -- be through have this the to now there? little, going guys that that of going continue you kind have? it, couldn't and kind just I What kind a think do of the be going broader picture, was talk and visibility it confidence don't be for sense thought about typically I indeed is Thank it January I to your in quarters? coverage down you revision to weakness What kind little, Can And be all Understood. quarter last July a these didn't thoughts of bottom -- will is you to each going flat, know also these next January. of

This is Brian. Chris. Hey,

coming coverage to provide don't backlog case. company, we typically remains with in turns of we and terms backlog that make any into the for In that forecast the quarter come quarter on really rely the and in the

additional through in obtained our So clarity as moved QX, that similar covered about remarks, we likely talked or whether an into asked QX, in forward we as this flat we've again give QX guidance on will we've cyclical that you the backlog. that's and up remain range And In QX a that's down. based look revenue for or as with expectation correction. prepared of is about QX, as range kind we of fiscal

much new incorporated enable We've our into our We shaping opportunity it's see for how current we're at time. is -- our to in but that's that -- that to ability have into We revenue sequential seen growth in We've farther think, outlooks. this heads fiscal 'XX, our we through information. this this point Certainly, we point. this what correction is greater we point. confidence up get we that think think around as for an QX at at there some move

it. Appreciate Brian. Thanks,

and And Quinn comes the you. our Needham Thank from our Bolton moment question One next of Company. for line next question. from

please. question, Your

for think Thanks taking for significant I I've of got I mentioned those towards give my I of think any CVXXS the potentially of guys. China, XXXX, wins? guess, a are ramp, Fermi, where ADAS several more that you Level smaller having lifetime opportunities end follow-up. projects? you magnitude wins you. revenue Thank some first, question. the said mentioned of of but in if they Hey, they color, you just what's you then, or sort the wondering secured the us could the Are And X+

Right.

parking And So, talked the to camera ADAS in application replace about Level is X+ with X which market. believe to application current we Smart is the be very volume this plus Chinese for design is next -- I Tier going and for single ADAS China the specific, market. wins we this the high several opportunity Chinese

right at price that and right -- I think is the also at this we I have think product evaluating looking major is and the OEMs feature and point.

as -- think I ADAS time. this think So we could be market big current as given

ramping -- value it of view. up up, Of for be will ramping just market significant course, are the on I half Chinese be that early I that the think of can revenue second a value in but think peak, point The we the in XXXX.

Llama the kind second to AI model progress the you question, Great. mentioned you what And you enterprise then Thank out for the where this next you revenue, XX-month thinking that potentially opportunity? right on revenue software project, to probably XX platform development? from is an be timeframe the about -- thinking still this are to you, it make or Fermi. of continue chip. Wondering, Meta -- look are steps I center sort time reported as like you that CVX And to think the you is inferencing month sounds guys data application, are on the of and to for of to

Yes.

all, as of we it I us Llama becomes great porting progress on soon we've start to first and So, made available that. think as

that sometime cost-effective our quarter. to to and that represent AXXX. power-efficient plan with think our in we wise to We is we believe now current also, demo And continue performance the also CVX in -- this compete demo capable a are only to but in chatbot coming Llama the customer I

continue talk view, So up from resource. the we support hit that definitely area to build point think are to I we already the that's we one of from increase you move to could demo. customer ramping start that's important as need forward, we continue develop, to pool but out -- support, and softer is We after support task infrastructure about another resource our employee but customer start probably headcount, that engaging provide current out second effort. phase with engaging customers carve a But we we we chatbot the customers when to

we a more terms cycle, this quarter about, of as a last to case. I revenue, is talked XX-month In believe like continue

Perfect. you, Thank Fermi.

Thank you. And One from next moment question. for question our the Morgan Joe our line comes of next from Stanley. Moore

Your question, please.

point are you OpEx you're of your the close the this your between Can point, talk Thank Great. thinking how that cash how of just I the you. to versus that revenue? sort pipeline at sort burn? balance temporary thinking importance were about you of understand spending a about near-term revenues revenue low about

continue So, definitely we our QX can continue Joe, we're to OpEx that notice need well strategic you'll I but trying see IoT below we to But the auto to are support and a save, however, to our cut that's where think, CVX ARR (ph), architecture, the it. to came invest and look well investment on direction but can we we area. our as three want guidance have resource of -- pieces we to we where you I and can to we and at the whether expense, -- align, big auto, IoT at, for namely that directions, look still control before are things those think the as the going

to we to strategic we carefully while our managing continue expense, sacrifice by not want So do directions.

market sort moving the this numbers here. that segment, vision, that that cycle computer we've there processing of part to replacement in to legacy challenged video going recognized then share aren't you. but about, that you're Thank processing be was are Great. CV, from is losing a the video terms obviously And you think why talked to of you in of this do markets

what IP think in spend really lot I majority said of a and of product solutions the that's and we where the low is invest. on cost today end don't I can, to focused consumer competitive money

As we side low-end investment higher strategy continue is you the demand have areas us. where for focus consumer performance. IoT roadmap always hurt AI our that focused can to know, SoC definitely a on the on And we

losing where biggest have the that's market of in risk think terms I we share.

you. Thank Great.

from moment next from Matt question our Thank Ramsay comes line TD of One next for you. question. And our the Cowen.

question, Your please.

Thank afternoon, guys. you. Good

little a and sort commentary, now just about all your lot Forgive focus I your step me into and but -- trying level too earnings the I'm now. for I to investments -- Fermi, question, with maybe some maybe abstraction like this changed is release your tone and the asked question going read of like and mean, much maybe -- bit the on that a the of Joe to one how above that is you're of company one focus get what at of

and I a in of toward maybe more a seems now and there's data application. mean center to support software business your shift it probably like inclusive some inference camera investments de-emphasis hardware of

some the in shift over well and maybe are as So I the here call, of big quarter's tone taking as last direction a guess your focused. team last we of should you be tonight and where

automotive think in there the revenue, the I'm of important question is, the that question timing I investment, but certainly reading of me, et address. maybe Changes And you said, like it's an all of aren't revenue, part things expectation to focus the can, I the cetera., market? tell end if of been at there a I company change in guess on second has

Right.

market. First the of think IoT all, to continue committed I we to

I I think meant when say think you IoT that market. this camera, you is,

big our differentiated to and we to need continue a that to as need one that's continue think to to After solution. area provide we focus provide as to continue and base, continue customer solutions think customers. technology, well will we a I have we we

off I eyes think area is we never will I So say the that ball. one take our

definitely the an our auto, think and strategy, longer doesn't that believe would but earlier And I see I get will market but obviously, in want CVX, given more to give shorter-term us the focus happening time is that revenue faster months our to on auto think We market. mean resources what's the believe markets don't go take Chinese the the that then change and we you other that, design, other we focus we to those we say, market to to for I one is, USA, and on can in last the can six invest CVXX continue revenue, thing China when but that Europe, and design that's to area or our we revenue. will -- CVX give us

think revenue longer-term a it's the I our really versus opportunities. focus So short-term on

start one use our cameras all professional even how also the LLM LLM bigger But is transformer customers. we for AI thing they security (ph) leverage, while automotive we the the and customers, talk business, become when market multiple investment will (ph), impact higher for their into to very thinking bigger, kept to current and our model. camera provide about services that they to their And it's to I thinking like also say getting service security which even clear integrate camera, performance guys how model, in what start

So existing to but the the started became last LLM existing (ph) interesting start that talking with, side, three I our server for just clear for on when it the roadmap (ph) LLM our customers, rethink we is definitely is months, although that in that very which all customer. us, an area also on

(Ph) a hope an question. to LLM we So clarifies can roadmap for is not choose this just I your that. opportunity us became on invest

color be all mentioned you it. the now? and as there's for new LLM, different about guys question have I investment Fermi, your people the you of there. phases those magnitude sizing the if you kind you, of around is internal Thank of my well, thought some guess inference appreciate investment I to what follow-up where are investment of No. going And given like, of or then, goes considering areas, right I dollars that it -- shifting resources? number you're guys how number P&L mean, what Thanks. of

obviously, support carve-out a duplicate of our we team our using current similar we under the already only to resources, the we start Right when LLM. up, which need we current that, do team that talk a probably about ramping to now, for but to payroll we is so phase, size

LLM talking to about need our we like from hold possible people have with a engagement to customer time, and for we support think second XX the source current the the side. several several in So to can said to goal last that to customer to the their customers we we're not with that want can this server base prove Also limit is use roadmap, customer limit activity for the I So for think our we scope total on concept, LLM anywhere that fund customer our the size XX or with and P&Ls. going that and really

I'll Got the Thank it. back queue. jump much. you very in

moment from next our Ross the you. our from comes next Deutsche question Bank. of And Thank One question. line Seymore for

Your question, please.

guys, question Hi, question. I'll have to want I taking for Thanks follow-up. the and ask a a near-term then

forgive so side guess On for in that, the or guide parts, third be two just on color kind the majority think should IoT said I for that Brian, Fermi but you for of side, of the the weakness some mentioned there's I the wanted to me get quarter, you auto, near-term not that. the I

can earlier, of part Joe inventory to your second basis, you here the the that just it think the kind and you is, looks like of are will but to some then be of stuff me down to think just going revenues non-CV the if is is share snap do fiscal and burn that, first mentioned, about you low-end question of asked it's a much how it be cyclical guess, first that's back. And year-over-year, year going I dynamic gone of XX%

Right.

we -- I think I that, it’s that question all, side, for short-term So, first of to… believe the the think related is definitely

your leg obviously revenue of we first by QX of of is QX IoT and this between correct. But our that driven the is it the inventory that appears be IoT in all side think orders revenue I fiscal terms what's the essentially of and some this weakness was for driving see and equation significant at QX, businesses. seeing in part to confirmation in across that question, point. down rebalancing We're Ross, the

Right.

I IP situation, processor second the definitely can I in is don't side the that they, original that it, the that really chip On about some cam consumer -- on the of too. whether talk be video video business whether low-end part that part how think but level. depends side, our fast weakness to side, we can inventory think really and back of video replaced so snap the We well the CV they we is to by rebound believe our processor will processor

year, this talk about scale processor I same So think down, the that we continue next our but video that business sold will in not go to we year.

do secularly headwind. that we your will year key wins guess still it's do processor you cyclically kind. down. roughly look What think that the in the business so biggest design said video and and forward 'XX, I drivers growth you I the three follow-up, to kick my fiscal to just should guess then video in, are look CV forgive processors kind either or me, And inventories go for tailwind of what here when If offset we as see burn, at you speaking, growth the

revenue get the for us I more CVX the new help CV to like So tailwinds for when on for well get to even as both But believe IoT side, definitely year. our us to help next production can that inventory boost auto believe our wins and as we business. design CVXX through growth projects will new side, that burns

So as help. be well should very Cam soon is and on we market -- plus the think the when get rebound wins with share and that the should that a current I think able design from -- inventory we as still about we professional the our to that CVX side, talk hold IP we cleaned, design professional we our that it's clear become very CVXX and see market

Thank you.

moment One question of Baird. our Tristan from you. next Thank for our from the question. Gerra next comes line And

please. question, Your

taking for Tristan is Thanks Thera This for Hi. questions. the (ph)

but as take expect maybe and in before from business, touched further have order control you on measures of in past you order automotive year-end you patterns on downs the OEMs do Just, the any any inventory reductions the seen step few months, they IoT side, auto? auto side in the

Right.

So inventory, we reducing as but bad side. not that -- it's that trying to IoT customer did some as small their

the the I think take parts most our plant. of automotive time, of to think continue customers I the

but main weakness with some problem like see right the we Although not we're I IoT now. is said, it's dealing really

CVX are traditional cost given that then solutions follow-up, different developing including And you Great. orders? ADAS versus of how Okay. potential for software engagements platform segments long-term and the for play, my the delivery nature the

Right.

So much in longer recorder months, win past, auto, past. was CVX in the design obviously, Recall design like than XX the our the cycles. it months XX that in take even

Here time opportunity about the we outside to focus that our issue. we're decided the revenue reason revenue talking That's market CVXX really can we to channel, so and address on in first the CVX four the years. in -- time to China and was

the definitely So calendar other any might XXXX generate that have And for a have revenue think I X in a seeing. design likely that revenue about XXXX that sorry, we with year. fiscal year half second -- a Tier even shorter most CVX, than that, is we talk areas will we're and calendar win we CVXX,

Thanks Great. questions. for Okay. the

our for from Stifel. One And from next you. Svanberg line moment the Thank our comes Tore next of question. question

Your question, please.

if about will? leverage we're device, so so right, we're of core, of have and talking edge an how investment Thank Fermi new which AI a is about to resources the don't just software CVX, you. have much through sort also specifically the at that but completely and cycle current you trying back opportunities with the investments auto, talking the accelerators your the portability to Yes. you you go just to the understand about thinking because,

Right.

have as brand we new Oculii with So, doing about we a don't plan cycle. software acquisitions, Parma we're two demo what talk build stack, about resources, Conti own current investment With up we stack as to the brand in current our are we our are already With XXX% talk soon. our a new well in We past, to that's way, in software stack software but with very parallel, That's AI-based ready resource, VisLab. right? our we software both the development. a that working

a are stack. software of to ready next demo our We at stage generation

to I from enough but point we not definitely that the only work have software of think development finished extent. So some we side, resources the we view, prove

going result lot a to phase So be phase even to ramping But will of with with are investment have we're also We investors about engagement funded is we are now investment of not second first software a on to already. waiting see -- the first the more leveraging what up. our LLM, be ready we phase, phase today. talking is into for that up ramping of than we CVX lot customers, when the to based talk our we issue our definitely current and of resource, putting LLM

of point view, side going that this be even for said, LLM, our phase is roadmap. that From the I to silicon CVX you can of next think like for

will (ph). this and the roadmap for So we side, to build next-generation silicon team existing leverage VLSI XXX% have a

question. new investment for hope any customer. is development the I cycle So new team software a LLM for clarifies that support to or

milestones are up but more I the investors of kind LLM accelerator what I an specific follow Yeah. question I to so some also Absolutely. should AI think eye wanted part about should looking the a as of we obviously be at on, be understand we that milestones keeping milestones, it what previous of timing here? And was on? or it,

our it and first chatbot is sometime the in -- that the happen our demo customers important quarter. we think will to coming I milestone demos

the So competitors I compare and important because our to of customers. all with to performance it that's shows information open our -- those compete demo will how become we also think the

near-term that's biggest the milestone. I think probably

Thank Fermi. you, helpful. Very

you. Thank

the next One our question. moment you. comes for question from next of And Thank Cassidy from line our Kevin Rosenblatt.

Your question, please.

software Thanks stack you lines there can of the too? Yeah. my of My in the and China, with software is that stack taking how the that question you a for is software stack, of much the sell also CVXX question. along developed, component

Yeah.

our two, think really collect our are trend China, is to China for problematic counting software in software China are data different. partners and and the because us. strategy I we're outside there -- strategy So data inside on Inside

are in to CVXX. ready already talked aggressively about OEMs working quarter, demo their they porting identified on to to with Last to platform and software quarter. our counting and software -- partners are with this Chinese partners we our we software deal So we multiple, CVXX our

China what So exactly know CVXX. I side we is think with from the -- do pretty to

China, show B definitely we we more technology business time, have our plan of the really leverage can technology which level, the important the sometime this and don't software stack, were is software can this model, functions while also not think and close bundle our one talked software outside This the talk but that top we importantly, we near about however developed. XXX%, are want important performance stack only help and but based, about is is definitely think to with to in CVX, ready but With need software, AI but is more we C business collaboration next will think with Conti, thing customer few to I our very and we we our we XXX% demo own to we that we -- one to future. stack our

I'll out. Kevin. demonstration shown, our next software at just be CVX the check in there Continental on anyone's joint public to will so X demonstrating to add September IAA X it stack if Yeah, week

any [Technical at any lines you're look your those how to progress OEMs that. talking on along for with update and there work Difficulty] maybe demos We'll of and Conti, is all? And many

to at you OEMs -- we continue OEM directly. We design and that engage multiple also also announced with announced independent Conti, win potential we but last time, collaboration told we one time this will with yeah,

have continue OEMs engagements we to this with multiple at -- point. engagement So

Okay. Thank you.

comes from next moment Desilva question Thank next and Suji from for of the you. ROTH. line One our question our

please. Your question,

Hi, Fermi. Hi, Brian.

now sounds things understand for between I to sense normalizes thanks be and of what categories the of right it'd revenue having mix give helpful So roughly when the or kind because the of a different so auto maybe year, today when us revenue or of currently year it for you CVX, a in think those and is the the normalize. giving mix like and Can CVX. trends between two Video, IoT, it kind us products, of each where

Sure, Suji. Yeah.

automotive about much this size if and IoT and the So is year back more IoT automotive versus out multiyear to some lever given the the where of the much in with be relative XX% IoT is SAM up automotive a year, is which time move as traction period said get a that quarter and future expect quarters, our mix CVX was we other of to about that relationship or about that we'd of like to volatile downside stability year. pursuing more (ph) years automotive. and last XX% that several we the Obviously, the automotive inverse IoT to automotive current as was term you three over of go we XX% we long for would more the XX% looking be

I of not now. correct that meaningfully what's a Okay. in trying helpful. wrong, pipeline out abbreviations inventory Thanks, (ph) to which large are the contribute, pipeline to I versus several just will some that's the quarters very is you've guys, of heard in happening on that way now, because That's of imagine if And there right me or then Brian. that's been but the pulled independent correction that the for timeframe just Thanks. right any reconcile last that process number pushed be going giving here, convert inventory starts

for the this year, from So about but funnel funnel very the definitely for inventory, I near if example, think the impact we term, is about some you there for that about, talking talk talked so an in because based think win. correction inventory should general, design that the I funnel design the have wins don't and really the the also to ended of value it's there's current on impact probability

November this to talk number ready So in we'll year. this about be

kind what idea start how elbow give years just us does those, Fermi, in to the of is? away of that of And come like years an many

funnel, at of time six CVX latter our given back wins, some these the takes years. and it in those definitely Well, half it six years, loaded with was of end Suji, the land in and to particular

a Great. Okay. Thanks lot.

moment the of you, question our Wells Fargo. next Mobley Gary for comes from line One our question. Thank And next from

Your question, please.

sequential quarter. one isolate inventory many that customers an mistaken, they Hey, the opportunity for to balances, sense the driving or to not needle customers just us decline taking XX% for XX give down those Thanks How it in business, there's healthier with stand third revenue and expected where a and customers XX about [indiscernible] guys. question. move or you to respect your overall whether If really my top you of have not had for is I'm the are that two? or review

customers all problems, are think correction be but XX for I having of IoT general bad. not inventory that top the might as in auto

have of not. customers top our auto but inventory some auto the guys of -- Some them may problems,

looking So them of you at separate look maybe any yeah. customer if of any customers, degree, have top if at really -- a any problems, different top at -- all IoT, you application our -- inventory

Fermi. sorry, ahead, I'm go

they different of inventory, saying have was them inventories. have significant but I maybe some of all will degrees just that

you. Thank Okay.

relationships do where CVX, with is along? Bosch ask moving stand Continental relative So I some those to a your how Tier about wanted follow-up, for and partners other to X China

as Chinese on with with also So Conti and in focused think I working the China, and Tier Bosch. ones we priority, first

definitely that Sung to This solution is definitely levels Chinese solution. continue we those because with play priorities is we and on focus we those Tier on I appeal market have will ASO is CVX for Porsche CVXX a X definitely And the policies Conti is are Bosch right Chinese multiple have now. and Conti silica to that RFQ discussion the And Tier this. OEMs SoC really through not X, So this think have. the have a

Thanks, Fermi. Thanks.

to to hand program. session question-and-answer further remarks. today's This Thank of the like I'd Dr. any the you. back does for Fermi Wang program conclude

Thank you and today everybody us you. you looking forward to for joining Thank to soon. talk

conference. for your This today's you, the does and participation in ladies gentlemen Thank program. conclude

day. Good You may disconnect. now