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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended July 31, 2020

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from             to             

Commission file number: 001-35667

 

AMBARELLA, INC.

(Exact name of registrant as specified in its charter)

 

 

Cayman Islands

 

98-0459628

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

3101 Jay Street

Santa Clara, California

 

95054

(Address of principal executive offices)

 

(Zip Code)

(408) 734-8888

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary Shares, $0.00045 Par Value Per Share

AMBA

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

The number of ordinary shares of the Registrant outstanding as of September 1, 2020 was 34,614,277 shares.

 

 

 


AMBARELLA, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Unaudited Condensed Consolidated Balance Sheets at July 31, 2020 and January 31, 2020

 

3

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2020 and 2019

 

4

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended July 31, 2020 and 2019

 

5

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended July 31, 2020 and 2019

 

6

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2020 and 2019

 

7

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

8

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

Item 4.

Controls and Procedures

 

33

 

 

 

 

PART II. OTHER INFORMATION

 

34

 

 

 

 

Item 1.

Legal Proceedings

 

34

 

 

 

 

Item 1A.

Risk Factors

 

34

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

58

 

 

 

 

Item 6.

Exhibits

 

58

 

 

 

 

Signatures

 

60

 

 

 

 

2


PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMBARELLA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

 

  

 

July 31,

 

 

January 31,

 

 

 

2020

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

220,647

 

 

$

231,403

 

Marketable debt securities

 

 

190,056

 

 

 

173,345

 

Accounts receivable, net

 

 

23,275

 

 

 

18,487

 

Inventories

 

 

23,907

 

 

 

22,971

 

Restricted cash

 

 

10

 

 

 

9

 

Prepaid expenses and other current assets

 

 

3,503

 

 

 

4,975

 

Total current assets

 

 

461,398

 

 

 

451,190

 

Property and equipment, net

 

 

5,027

 

 

 

5,614

 

Deferred tax assets, non-current

 

 

10,212

 

 

 

10,400

 

Intangible assets, net

 

 

16,088

 

 

 

17,826

 

Operating lease right-of-use assets, net

 

 

8,691

 

 

 

9,935

 

Goodwill

 

 

26,601

 

 

 

26,601

 

Other non-current assets

 

 

5,381

 

 

 

5,710

 

Total assets

 

$

533,398

 

 

$

527,276

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

13,693

 

 

 

14,910

 

Accrued and other current liabilities

 

 

33,156

 

 

 

34,970

 

Operating lease liabilities, current

 

 

2,402

 

 

 

2,181

 

Income taxes payable

 

 

511

 

 

 

691

 

Deferred revenue, current

 

 

1,400

 

 

 

701

 

Total current liabilities

 

 

51,162

 

 

 

53,453

 

Operating lease liabilities, non-current

 

 

6,911

 

 

 

7,975

 

Other long-term liabilities

 

 

16,678

 

 

 

17,776

 

Total liabilities

 

 

74,751

 

 

 

79,204

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preference shares, $0.00045 par value per share, 20,000,000 shares

   authorized and no shares issued and outstanding at July 31, 2020 and

   January 31, 2020, respectively

 

 

 

 

 

 

Ordinary shares, $0.00045 par value per share, 200,000,000 shares

   authorized at July 31, 2020 and January 31, 2020, respectively;

   34,610,836 shares issued and outstanding at July 31, 2020; 33,805,609

   shares issued and outstanding at January 31, 2020

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

301,195

 

 

 

261,220

 

Accumulated other comprehensive income

 

 

1,587

 

 

 

768

 

Retained earnings

 

 

155,850

 

 

 

186,069

 

Total shareholders’ equity

 

 

458,647

 

 

 

448,072

 

Total liabilities and shareholders' equity

 

$

533,398

 

 

$

527,276

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

3


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended July 31,

 

 

Six Months Ended July 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

50,113

 

 

$

56,410

 

 

$

104,758

 

 

$

103,598

 

Cost of revenue

 

 

19,155

 

 

 

23,973

 

 

 

41,780

 

 

 

43,308

 

Gross profit

 

 

30,958

 

 

 

32,437

 

 

 

62,978

 

 

 

60,290

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

32,802

 

 

 

30,420

 

 

 

67,002

 

 

 

63,437

 

Selling, general and administrative

 

 

13,445

 

 

 

12,425

 

 

 

26,880

 

 

 

25,502

 

Total operating expenses

 

 

46,247

 

 

 

42,845

 

 

 

93,882

 

 

 

88,939

 

Loss from operations

 

 

(15,289

)

 

 

(10,408

)

 

 

(30,904

)

 

 

(28,649

)

Other income, net

 

 

1,280

 

 

 

2,195

 

 

 

2,558

 

 

 

4,391

 

Loss before income taxes

 

 

(14,009

)

 

 

(8,213

)

 

 

(28,346

)

 

 

(24,258

)

Provision for income taxes

 

 

747

 

 

 

1,978

 

 

 

1,873

 

 

 

3,244

 

Net loss

 

$

(14,756

)

 

$

(10,191

)

 

$

(30,219

)

 

$

(27,502

)

Net loss per share attributable to ordinary shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.43

)

 

$

(0.31

)

 

$

(0.88

)

 

$

(0.84

)

Diluted

 

$

(0.43

)

 

$

(0.31

)

 

$

(0.88

)

 

$

(0.84

)

Weighted-average shares used to compute net loss per share attributable to ordinary

   shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

34,480,307

 

 

 

32,860,974

 

 

 

34,280,318

 

 

 

32,676,509

 

Diluted

 

 

34,480,307

 

 

 

32,860,974

 

 

 

34,280,318

 

 

 

32,676,509

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

4


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

 

 

Three Months Ended July 31,

 

 

Six Months Ended July 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

(14,756

)

 

$

(10,191

)

 

$

(30,219

)

 

$

(27,502

)

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on investments

 

 

1,182

 

 

 

194

 

 

 

819

 

 

 

448

 

Other comprehensive income, net of tax

 

 

1,182

 

 

 

194

 

 

 

819

 

 

 

448

 

Comprehensive loss

 

$

(13,574

)

 

$

(9,997

)

 

$

(29,400

)

 

$

(27,054

)

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

5


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Earnings

 

 

Total

 

Balance--January 31, 2020

 

 

33,805,609

 

 

$

15

 

 

$

261,220

 

 

$

768

 

 

$

186,069

 

 

$

448,072

 

Issuance of shares through employee equity incentive plan

 

 

478,643

 

 

 

 

 

 

6,463

 

 

 

 

 

 

 

 

 

6,463

 

Issuance of shares through employee stock purchase plan

 

 

83,564

 

 

 

 

 

 

2,660

 

 

 

 

 

 

 

 

 

2,660

 

Stock repurchase

 

 

(25,719

)

 

 

 

 

 

(1,000

)

 

 

 

 

 

 

 

 

(1,000

)

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

15,214

 

 

 

 

 

 

 

 

 

15,214

 

Net unrealized losses on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

(363

)

 

 

 

 

 

(363

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,463

)

 

 

(15,463

)

Balance--April 30, 2020

 

 

34,342,097

 

 

 

15

 

 

 

284,557

 

 

 

405

 

 

 

170,606

 

 

 

455,583

 

Issuance of shares through employee equity incentive plan

 

 

268,739

 

 

 

 

 

 

344

 

 

 

 

 

 

 

 

 

344

 

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

16,294

 

 

 

 

 

 

 

 

 

16,294

 

Net unrealized gains on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

1,182

 

 

 

 

 

 

1,182

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,756

)

 

 

(14,756

)

Balance--July 31, 2020

 

 

34,610,836

 

 

$

15

 

 

$

301,195

 

 

$

1,587

 

 

$

155,850

 

 

$

458,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Earnings

 

 

Total

 

Balance--January 31, 2019

 

 

32,303,540

 

 

$

15

 

 

$

188,516

 

 

$

97

 

 

$

230,861

 

 

$

419,489

 

Issuance of shares through employee equity incentive plan

 

 

335,301

 

 

 

 

 

 

1,520

 

 

 

 

 

 

 

 

 

1,520

 

Issuance of shares through employee stock purchase plan

 

 

99,759

 

 

 

 

 

 

3,063

 

 

 

 

 

 

 

 

 

3,063

 

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

15,423

 

 

 

 

 

 

 

 

 

15,423

 

Net unrealized gains on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

254

 

 

 

 

 

 

254

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,311

)

 

 

(17,311

)

Balance--April 30, 2019

 

 

32,738,600

 

 

 

15

 

 

 

208,522

 

 

 

351

 

 

 

213,550

 

 

 

422,438

 

Issuance of shares through employee equity incentive plan

 

 

295,019

 

 

 

 

 

 

988

 

 

 

 

 

 

 

 

 

988

 

Stock-based compensation expense related to stock awards granted to employees and consultants

 

 

 

 

 

 

 

 

15,032

 

 

 

 

 

 

 

 

 

15,032

 

Net unrealized gains on investments - net of taxes

 

 

 

 

 

 

 

 

 

 

 

194

 

 

 

 

 

 

194

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,191

)

 

 

(10,191

)

Balance--July 31, 2019

 

 

33,033,619

 

 

$

15

 

 

$

224,542

 

 

$

545

 

 

$

203,359

 

 

$

428,461

 

 

See accompanying notes to condensed consolidated financial statements.

 

6


AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

Six Months Ended July 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(30,219

)

 

$

(27,502

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,786

 

 

 

5,439

 

Amortization/accretion of marketable debt securities

 

 

88

 

 

 

(696

)

Stock-based compensation

 

 

32,430

 

 

 

32,660

 

Deferred income taxes

 

 

188

 

 

 

170

 

Other non-cash items, net

 

 

(72

)

 

 

87

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(4,788

)

 

 

(1,728

)

Inventories

 

 

(936

)

 

 

876

 

Prepaid expenses and other current assets

 

 

1,472

 

 

 

1,541

 

Other assets

 

 

329

 

 

 

(2,834

)

Accounts payable

 

 

(1,217

)

 

 

6,111

 

Accrued liabilities

 

 

2,144

 

 

 

(288

)

Income taxes payable

 

 

(180

)

 

 

90

 

Deferred revenue

 

 

699

 

 

 

24

 

Lease Liabilities

 

 

(1,031

)

 

 

(1,454

)

Other long-term liabilities

 

 

529

 

 

 

923

 

Net cash provided by operating activities

 

 

5,222

 

 

 

13,419

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of investments

 

 

(109,161

)

 

 

(91,143

)

Sales of investments

 

 

44,044

 

 

 

32,573

 

Maturities of investments

 

 

49,227

 

 

 

71,395

 

Purchase of property and equipment

 

 

(665

)

 

 

(954

)

Net cash provided by (used in) investing activities

 

 

(16,555

)

 

 

11,871

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Stock repurchase

 

 

(1,000

)

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

 

 

3,866

 

 

 

5,429

 

Payment for intangible asset

 

 

(2,288

)

 

 

(2,075

)

Net cash provided by financing activities

 

 

578

 

 

 

3,354

 

Net increase (decrease) in cash, cash equivalents and restricted cash