AMBARELLA Q1 FY27 earnings call AMBA

Ambarella framed the quarter around the emergence of long-term agreements (LTAs) that can involve standard products and/or semi-custom AI SoCs optimized for a customer's workload, typically over 5 years or more with structured volume and pricing. The first LTA involves the company's first 2-nanometer semi-custom SoC ('CV'), taped out in January, serving consumer and enterprise IoT endpoints. The second — announced concurrently with Hanwha in South Korea — carries potential revenue in excess of $800M over a period exceeding 10 years. Management said it is engaged in additional LTA discussions but disclosed no others.

Hanwha is a $60B+ annual-revenue multinational conglomerate spanning aerospace, defense, robotics, physical security, life sciences, industrial and more. Ambarella has an ~15-year run rate with Hanwha but historically took only a percentage of its share; the LTA is expected to gain market share on Hanwha's annual run rate and expand beyond physical security into operational automation, life sciences, robotics and other industrial markets. The relationship covers sourcing and co-development across two generations of co-developed silicon, and management expects to win share from Hanwha's internal SoC.

Automotive set an all-time quarterly revenue record with strong above-seasonal double-digit sequential growth, driven by commercial-vehicle telematics and safety applications. The commercial-fleet telematics installed base exceeds 100 million vehicles growing ~10% CAGR, but only ~10%-20% currently uses AI/AI-video as an ARPU-generating feature, and demand for more sensors and more complex AI workloads is lifting ASPs. Q1 wins included Lytx (CV72/CV75 across multiple platforms), two CV72 in-cabin wins with a South Korean Tier 1, and a CV22FS win with a Western OEM in China.

IoT ('LT applications') was about three-quarters of total revenue and seasonally down, with enterprise security cameras growing high-single-digits sequentially offset by a double-digit sequential decline in consumer IoT. Panasonic announced the first endpoint camera to run AI locally using the transformer capability in the CV72 SoC. New 5nm CV75/CV72 products are in production ramp and expected to drive material incremental revenue this year; 10nm CV2 family continues to land wins; barcode-reader win on CV28 expanded industrial reach.

Ambarella now has 15+ robotic design wins including drones, with lifetime revenue exceeding $100M and more than 30 customers in the pipeline, spanning industrial automation, AMRs and delivery robots with a focus on perception and decision-making. The company cited a drone platform (antigravity A1) enabling 8K imaging and on-device inferencing. For edge infrastructure it has design wins with first product expected in the second half of the year; the current SAM for AI Vision Box-type products is a couple hundred million dollars, to be updated as the roadmap expands.

To address fragmented robotics and emerging edge-infrastructure markets, Ambarella is building an indirect channel launched at CES in January. It has onboarded half a dozen ISVs, all currently U.S.-based, across retail, industrial automation, transportation, healthcare and smart cities, with a goal to double the count this year and expand to Japan and Europe. The effort also includes channel partners and system integrators, since complex edge workloads often require multiple ISVs on a single project rather than off-the-shelf solutions.

Days of inventory rose from 99 to 145 as Ambarella deliberately built stock to service new product cycles and to hedge tightening supply — Samsung ('Sensor' per ASR) informed the company its supply is getting tighter, and customers face higher DRAM and flash prices with potential second-half shortages. Management said the DRAM impact is indirect, mainly requiring engineering support to help customers optimize DRAM utilization. Non-GAAP gross margin of 59.9% landed above the guidance midpoint, and management reaffirmed a 59%-62% long-term margin model.