Ambarella Inc (AMBA) 2025 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to Ambarella's Q4 and full fiscal year 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Louis Gerhardy, VP, Corporate Development. Please go ahead.

Thank you, Michelle. Good afternoon and thank you for joining our fourth quarter and full year fiscal 2025 financial results conference call. On the call with me today is Dr. Fermi Wang, President and CEO; and John Young, CFO. The primary purpose of today's call is to provide you with information regarding the results for our fourth-quarter and full year fiscal 2025.

The discussion today and the responses to your questions will contain forward-looking statements regarding our projected financial results, financial prospects, market growth, and demand for our solutions, among other things. These statements are based on currently available information and subject to risks, uncertainties and assumptions.

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

Before starting the call, we hope to see you at one of the following investor events: Bernstein's 3rd Annual Technology, Media and Telecom Forum tomorrow, February 27 in Palo Alto; Susquehanna's virtual Annual Technology Conference on Friday, February 28; Morgan Stanley's Technology, Media & Telecom Conference, March 3 in San Francisco; Loop Capital's conference, March 11 in New York City; Cantor's Global Tech Conference, March 12 in New York; and the Roth Conference, March 17 in Southern California.

Access to our fourth-quarter and full year fiscal 2025 results press release, transcripts, historical results, SEC filings, and a replay of today's call can be found on the investor relations page of our website. The content of today's call, as well as the materials posted on our website, are Ambarella's property and cannot be reproduced or transcribed without our prior written consent.

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

Thank you, Louis. Good afternoon and thank you for joining our call today. Ambarella finished fiscal 2025 with strong results and a positive outlook. Edge AI is clearly established as our key revenue driver, enabling us to grow and overcome the cyclical economic and geopolitical challenges in the last year. We achieved record AI revenue in Q4 as well as for the full year fiscal 2025.

In the fourth quarter of fiscal '25, our revenue increased 2% sequentially and exceeded the high end of our guidance range by 5%. Our 5-nanometer SoC products led the results, with new product revenue we've won from the CV5 family leading the charge. And for the first time, we generated production revenue from the CV7 family, for new product revenue too.

Our fiscal '25 revenue increased 26% year over year, with both units and average selling price rising. Edge AI was about 70% of our total revenue. Our customers completed the digestion of the excess inventory in the first half of the year. And in the second half, the secular growth of our Edge AI strategy became more apparent.

I am proud of the key achievements our team delivered in the last year. First, financially, revenue growth was restored and in the second half, we returned to non-GAAP profitability. Fiscal 2025 represented our 16th consecutive year of positive free cash flow.

Second, we executed on our R&D priorities. As a result, we are realizing revenue growth from the CV5 and the CV7 new product families, with emerging opportunities on the horizon. Most importantly, we are successfully commercializing our AI investment. Edge AI commenced in our enterprise security market and from there, we continue to successfully reach into more markets such as fleet telematics, ADAS, automotive eMirrors, in-cabin systems, next-generation access control, advanced video conferencing, and portable consumer electronics.

Looking into fiscal year 2026, we anticipate mid- to high-teens revenue growth despite the higher base of the much stronger-than-expected Q4. With uncertainty related to government policy decisions, we have built conservatism into our outlook for the second half of fiscal 2026. While we do not expect to be directly impacted by tariffs, we suspect some customers are evaluating their own supply chains as well as the elasticity of demand for their products.

Turning to developments in the broad AI market. The breakthroughs with more powerful, efficient, and open-sourced reasoning models was an exciting industry development in January. We expect open-source reasoning models such as DeepSeek-R1 to enable more advanced decision-making and intelligence in all tiers of AI processing hierarchy, including our target market at the edge.

While breakthroughs like this bring new level of compute efficiency, the implementation of new reasoning models at edge is expected to require incremental AI compute power. In edge AI, this is an example of a secular trend we expect to drive our ASP higher. An excellent example of how Ambarella is leading the rapid evolution of the edge AI market with innovation and execution is our CES exhibition this year, where we demonstrated the vision-language model processing on our CV7, CV3, and N1 product families.

We already successfully brought up the DeepSeek-R1 model on CV7 and N1 product families and we are showing them to our customers. There is a growing trend towards performing more AI processing at the edge, as cloud-based processing has a higher total cost of ownership, latency challenges, high power usage, data security, and privacy concerns.

Edge AI processing is now being enabled with the introduction of a smaller and more optimized model. We introduced our N1-655 edge GenAI SoC at CES this year, with high AI processing performance to support the latest transformer network and popular multi-modal VLMs and large language models. N1-655 consume only 20 watts of power and targets applications such as on-premise AI box, autonomous mobile robots, security network video recorders, and retail analytics.

At the show, we demonstrated N1-655 running CLIP and LLaVA type vision models, with data inputs including text, video, and speech, all running locally on an AI box without the need for internet connection. In the enterprise security market, Motorola introduced its small form factor V200 body-worn camera based on our S3L SoC and designed to enhance worker safety and security in public environments such as the retail, medical, or hospitality industries.

Additionally, Motorola introduced its V700 body camera based on our S6LM SoC and offering 12-hour operation. Motorola also introduced its H6A fish-eye camera based on our 5-nanometer CV72, and offering 360-degree viewing, 11-megapixel resolution and AI-powered video and audio analytics.

Japanese enterprise security leader i-PRO, formerly Panasonic, introduced its new line of High Zoom Bullet Cameras targeting long-range monitoring of highways, parking lots, and stadiums. Based on our 5-nanometer CV52, the cameras are pre-installed with 9 edge AI applications. We are very pleased to announce our first win with the HID division of Assa Abloy, a global leader in the access solutions market.

HID has deployed its U.ARE.U Camera Identification System based on our CV22 to deliver fast, accurate, and secure facial recognition, powered by AI-driven multispectral image and advanced presentation attack detection, it enhances user convenience while reducing fraud risks, even in high-security and challenging environments.

In the smart home security camera market, Canadian communication operator TELUS introduced a range of cameras, including doorbell, indoor and outdoor cameras, all based on our CV28. In vehicles, a vast majority of our revenue is currently in the ADAS market, and our global effort is demonstrated with this quarter's representative customer engagement in China, South Korea, and France.

During the quarter, FAW introduced its Hongqi H5 PHEV, including Level 2 ADAS, implemented with a 1V1R system based on our CV22AQ. VW's joint venture with FAW introduced a pre-installed dash cam in its Magotan passenger vehicle based on our A12AQ.

NIO, considered one of the leading new energy vehicle companies, introduced its flagship EV, the ET9, including an electronic rearview mirror system based on our CV28AQ. In December, we earned our first driver monitor win in Hyundai Kia passenger vehicles.

The pre-installed system is provided by LG Electronics, is based on our CV25. And in January, Ford Trucks was announced as the first customer for French Tier 1 Gauzy, who is providing its AI-powered Smart-Vision camera monitor system using our CV2FS.

In summary, this quarter's list of 10 representative customer engagements highlights the increased breadth of our edge AI revenue globally. This includes a range of enterprise and the consumer-driven IoT applications, and a variety of automotive applications such as Level 2 ADAS, driver monitoring, rearview, and exterior left- and the right-side mirrors.

Cumulatively, we have shipped more than 30 million units of edge AI SoCs, with each SoC integrating our proprietary CVflow deep learning AI accelerator with our proprietary video processor. A vast majority of this installed base is represented by our CV2 family of computer vision processors while we expect continued growth.

Our new 5-nanometer products, which come in at an above-average ASP, represent our key growth driver, with revenue expected to arrive in waves. The first wave from the growing CV5 family is underway and we continue to have a strong growth outlook. Wave 2 from the CV7 family reached production status for the first time in fourth quarter with three customers purchasing production quantities. Combined, these first two waves are expected to represent more than half of our incremental revenue in fiscal 2026.

In addition to the new product efforts I have described, we remain committed to develop new technologies and products capable of processing advanced AI models. As the business case develops, we will provide more information on the timing of their revenue contribution.

This is a very exciting period with the rapid evolution of the AI industry. Our edge AI business intersects multiple industries, where the mega-trends of safety, security, and automation intersect. As a result, in this dynamic environment, we carefully evaluate new opportunities to maximize our return on investment.

Our goals for fiscal '26 are to sustain a high level of innovation and execution to continue to lead the edge AI market. We intend to drive positive operating leverage with revenue growth and a high focus on operating efficiency. The development of 2-nanometer technology for our next-generation edge AI processor is critical.

In summary, in the new year, we intend to build upon the positive momentum we have established with our edge AI strategy, technology, and products. With that, John will now discuss the Q4 and the full year fiscal '25 results and the outlook in more detail.

Thank you, Fermi. I'll now review the financial highlights for the fourth-quarter and full fiscal year 2025 ending January 31, 2025. I will also provide a financial outlook for our first quarter of fiscal year 2026, ending April 30, 2025. I'll be discussing non-GAAP results and ask that you refer to today's press release for a detailed reconciliation of GAAP to non-GAAP results.

For non-GAAP reporting, we have eliminated stock-based compensation expense along with acquisition-related and restructuring costs, adjusted for the impact of taxes. Fiscal year 2025 revenue increased 25.8% to $284.9 million. Automotive revenue increased mid-single digits and IoT, led by new 5-nanometer products, was up more than 30% year over year.

For fiscal year 2025, non-GAAP gross margin was 62.7%, versus 63.3% in fiscal 2024. Non-GAAP operating expense increased 6.5% for the year, versus 4% in the prior year. Ending cash and marketable securities totaled $250.3 million, up from $219.9 million at the end of the prior year.

For fiscal Q4, revenue was $84 million, above the high end of our prior guidance range, up 1.7% from the prior quarter, and up 62.8% year over year. Sequentially, automotive revenue declined and IoT increased in the mid-single digits.

Non-GAAP gross margin for fiscal Q4 was 62%, slightly lower than the midpoint of our prior guidance range, primarily due to product mix. Non-GAAP operating expense in Q4 was $48.7 million, below the low end of our prior guidance range of $49 million to $52 million, driven by continued expense management and the timing of spending between quarters. We remain on track to our internal product development milestones.

Q4 net interest and other income was $2.4 million. Comparing to our prior guidance of $1.8 million, the increase was from a onetime government grant in the United States. Q4 non-GAAP tax provision was approximately $1 million. In fiscal 2025, non-GAAP tax provision was approximately $2.1 million.

We reported a non-GAAP net profit of $4.8 million, or $0.11 earnings per diluted share in Q4, and a non-GAAP net loss of $6.8 million, or a $0.16 loss per diluted share for fiscal 2025.

Now, I will turn to our balance sheet and cash flow. Fiscal Q4 cash and marketable securities increased $23.7 million from the prior quarter and increased $30.4 million from the same quarter a year ago. Cash and marketable securities benefited primarily from working capital improvements during the quarter. Receivables days of sales outstanding decreased from 38 days in the prior quarter to 33 days, while days of inventory increased from 94 in the prior quarter to 97 days. Inventory dollars declined 5.9% sequentially and increased 18.5% from a year ago.

Operating cash inflow was $25.4 million for the quarter. And for the full year, we generated operating cash of $33.8 million. Capital expenditures for tangible and intangible assets were $4.2 million for the quarter and $10.4 million for the year. Free cash flow was $21.2 million for the quarter and $23.5 million for the year. This represented the 16th consecutive fiscal year of positive free cash flow.

We had one logistics company representing 10% or more of our revenue. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 60.9% of revenue for the fourth quarter and 62.9% for the full fiscal year 2025.

I'll now discuss the outlook for the first quarter of fiscal year 2026. The new product momentum that Fermi described is expected to enable us to post better-than-normal seasonal results in fiscal Q1, despite the stronger-than-expected fiscal Q4. Q1 revenue is expected to be in the range of $81 million to $87 million, with auto down sequentially and IoT flat to slightly up sequentially.

We expect Q1 non-GAAP gross margin to be in the range of 61% to 62.5%. We expect non-GAAP OpEx in the first quarter to be in the range of $50 million to $53 million, with the increase compared to Q4 driven by new product development costs as well as increased employee-related expenses beginning in the new year. We estimate net interest income to be approximately $1.8 million, our non-GAAP tax expense to be approximately $600,000 and our diluted share count to be approximately 43.4 million shares.

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

(Operator Instructions) Quinn Bolton, Needham & Company.

Thanks for taking my question. Congratulations on the nice results and outlook and the 16th year of positive cash flow. I guess Fermi, John, I guess I wanted to start, I think you said in the prepared script that CV5, CV7 would account for more than half of the growth in fiscal '26. Wondering what's the other half of revenue growth? Is that the older CV2 family? Or are there other drivers of the business?

And I assume, but wanted just to see if you would confirm, that the vision processors or the human camera processors, you would expect that business to continue to decline at a gradual pace in fiscal '26?

Yeah, Quinn, you know our business very well. Everything you said is correct. But first of all, half of the growth fiscal '26 is from CV5, CV7 and our old VP, video process product will have a slow decline. We expect maybe 10%, 15% annual decline rate from now to the end. But also CV2, we continue to expect growth and healthy growth from our existing product line.

For example, we talk about that one of our telematic customers ramping up their products last quarter and it really drives the significant growth on CV2 family. So I think all of that -- so CV2, CV5 and CV7 drive the growth and VP will continue to have a consistent -- a slow rate of decline.

Perfect. And then just a follow up. It sounds like in both the January quarter and the April guide, you've got auto down sequentially. Just wondering, is that sort of a reflection just of inventory corrections still taking place in that end market? Is it just lackluster demand given some of the macro events and perhaps tariff uncertainty? Or is it just sort of timing of when some of your new pipeline projects go to production? Just any more color on auto would be helpful.

Right. First of all, on the auto Q4 and the Q1 guidance, although we say it's a little down, but the decline rate is very small. So in fact, that decline has nothing to do with the previous rounds of inventory correction. Although that you are right, although none of our customers indicates that they are accumulating inventory because of the current -- of the new government policy, but we do see there are some concerns about how the tariff will have an indirect impact to us, directly -- direct impact to our customer. So that's where we're putting some of the conservatism in our second-half guidance.

Got it. Okay. Thank you, Fermi.

Joe Moore, Morgan Stanley.

Fermi, I wonder if you could just talk about the general investment in ADAS these days. You're seeing Tesla's FSD has done well. The God's Eye thing at BYD got people's attention. And I know those aren't your opportunities, but has that stimulated kind of incremental investment interest in the ADAS base from other OEMs?

Right. So we continue to see a strong demand on the ADAS side, particularly Level 2+, that didn't change. But the only change is the flavor of the OEM demand become -- they become very cost sensitive. We talk about this trend also, that we call value products. So that if you look at the OEMs, they want to upgrade the product from Level 2 to Level 2+, some of them want to upgrade even to Level 2++, or Level 3. But at the same time, they are very sensitive to the cost.

So from that point of view, I think our CV3 family that can help them to address the volume concerns is definitely continue to be viewed positively in the market.

Great. That's helpful. And then I noticed that the NIO win on electronic review mirrors, I know that's a market you've sort of been talking about for a long time. Are you starting to see more adoption there? And do you expect that to be a more significant growth area going forward?

Well, I think we see multiple design win, or we already talk about we continue to expect growth in that area. But the ASP that we talk about is really just from the high-single digit to low teens. So the growth rate, although in that particular segment, growth rate will be high, but the material impact to our total revenue is limited. But to continue -- but I think this is -- we treat that as a way to get into OEM designs. For example, we talk about Korean company, the largest Korean automotive OEM using that -- using our solution for the eMirrors, that just help us to open the door to those major OEMs.

Great. Thank you.

Christopher Rolland, Susquehanna.

This is [Aaron Nackville] in for Chris Rolland. So the mid- to high teens guide for fiscal year '26 seems very conservative. So -- I mean essentially, we're modeling flat to down for the remaining three quarters. And I know you mentioned building conservatism into the second half, but is there anything else beyond government uncertainty that you're factoring in? And how does this play out between auto and IoT?

Well, I think we'll provide more color on this, but I think that it's just -- I do believe that the first half to second half, based on our current guidance, is not as high. The growth from the first half to second half is not as high as before, but that definitely it reflects our customers' conservatism and also our conservatism, reflecting the potential government policy change, right?

We are all waiting for how the, for example, the tariff at Mexico or Canada that will impact our customers' manufacturing side. So those are kind of factored in. But I think overall, I still feel very strong -- I feel comfortable our growth rate from our customer product point of view.

We talk about CV5, CV7. We think that the growth rate will continue, and CV2, like I said before, will continue. So I think overall, although there is some conservatism there, but I -- it's really reflecting on the policy side, not on our product side.

Understood. And I have a follow up, over the next like two to three years from a geographic perspective, which regions do you expect to outperform, underperform, given your pipeline?

I still consider that the US is our largest customer, sorry, our largest geography, and we did well in Japan, Korea, and Europe. And China, we maintained 15% total exposure from the consumption point of view. So I think from that point of view, we will continue to focus on the US, EU, and Japan, Korea market, and we expect that they continue to do well for us.

Thank you.

Ross Seymore, Deutsche Bank.

Thanks for taking my questions and congrats on the strong results. Getting into the full year guide, again, I can understand the policy conservatism, Fermi, you just answered. Does that hit one side of your business more than the other? Or if you're going to grow that kind of mid- to high-teens, is there a significant delta in your mind between kind of the IoT/AI side and the automotive side?

No, I don't think it's market dependent. It's really about geography. I think the people that manufacturing in China, Mexico, and Canada, definitely they start looking for options and waiting for the final results. So I think that's really geography dependent, not the market dependent.

Got you. So the conservatism that you have on the two -- well, let me just ask the question in a different way. With that given conservatism, do you have a significantly different growth rate expectation for the IoT/AI side versus automotive? Last year, you said one was up over 30%, the other was up mid-single digits. Is that ratio going to continue? Or does the automotive side start to catch up?

Go ahead.

Ross, it's Louis. For fiscal '26, IoT should continue to grow faster than auto, but auto is expected to grow year-over-year as well.

Got you. And then I guess, just if I could sneak in one more. You guys talked about getting good leverage. Can you just parse out a little bit the gross margin trend versus the OpEx side as we try to figure out how you get to the leverage?

Yes. So we expect to -- I would say the high level is that we are focused on monitoring and controlling OpEx as much as possible. We've been talking about gross margin moving down into the long-term model range. We're guiding to that, and we've shown that in Q4. But we do expect with the revenue growth, the primary driver is going to be revenue contributing at those still healthy margins to drive improvements in operating leverage.

Perfect. Thank you.

Tore Svanberg, Stifel.

Congratulations on the results. Fermi, can we just take a step back here, especially when we start thinking about open-source reasoning models. I mean DeepSeek probably wasn't positive for everybody, but I think for Ambarella, probably a pretty positive development. So could you just, again, take a step back and elaborate a little bit on how important this is for Ambarella? Because obviously, this will probably accelerate the adoption of smaller models and certainly also AI at the edge. So any more color you could share with us, that would be great.

Yes. Let me elaborate a little bit what we have done with DeepSeek model in our product portfolio. We -- I talk about we successfully bring that -- put up that model on our N1-655, CV72 , and CV75. The N1 is a [20-watt] chip and the CV75 is a 1.5-watt chip. Of course, you run different versions of DeepSeek-R1 models on those chips, but a 1.5-watt chip can run 1.5 billion parameters DeepSeek-R1 model. I think that's significant.

And also, that really means that at the edge, we can get better and better model and more -- reasoning models, running on the edge and that will expand the possible applications. But more importantly, I think that the open-source type of the model will enable our customers to fine-tune the model easier than before. So they can really quickly adapt that model to their vertical location. And both of that will help us to expand.

And I think that's significant for us, is that we found out that we can run the 1.5 billion parameter model on a 1.5-watt chip, that really opened doors for us to look at what other applications that we can enable in the future with that. Definitely that, we need to talk to our customers, which we are doing right now, and to understand the potential impact to our business development.

Yeah. That's great perspective. And as my follow up, could you give us an update on the 2-nanometer development? Any sort of benchmarks or timelines that we should keep an eye on?

Right. First of all, 2-nanometer, we expect -- and we already, not only get evaluated, but also we get some test chip out to evaluate the performance. We are confident that this technology will give us significant improvement on the power consumption and also the die size saving. With that, we are aggressively doing two projects already on the -- for the IoT devices. One is for our traditional camera market, the other one for the N1 type of project.

So you can see that we want to, using the benefit of 2-nanometer on the power consumption side, to continue to give us even more leverage of high-end and the low-end products based on 2-nano. We expect to tape out the chip sometime late this year and also get [simple pack] early next year. And we hope that our customer can go into production at the end of 2026.

Right. Thank you for that color. And congrats again.

Kevin Cassidy, Rosenblatt Securities.

Thanks for taking my question. And congratulations on the great results. Maybe just to expand on that with the 2-nanometer development, is that going to be a product similar to the N1-655 or are you going to be focused more on some of the CV devices?

I said we have two chips. One for N1 type of product, the other one is for the camera product. So we are trying to use 2-nanometer to address the two different markets.

Okay. And you mentioned DeepSeek, but there are some countries that are saying that they don't want to use DeepSeek. Is that just as an example? And are there other low-cost LLMs that you're testing with?

Yeah. I fully expect that our US AI companies going to start introducing similar type of model after they learn how the DeepSeek was done. And I think this is a trend of the market, not just one company. So DeepSeek for us is really to use that for demo purpose and also to get -- to engage customers.

But I fully expect we're going to see more and more of this kind of model from American AI companies.

Okay. Great. Thank you.

Suji Desilva, Roth Capital.

So just to understand from the geopolitical perspective, can you describe the risk you think there is in your chips having to be replaced in China or are customers making that decision to derisk the geopolitical? Or whether you think that's not a significant risk given the -- what's been happening the last few months?

Right. So first of all, in China, we have been talking about this for four, five years now. I think in China, our Chinese customer will use Chinese component as long as there is a viable options to them. And that has been -- that's why we walk away from Chinese enterprise security camera market five years ago. This also applies to automotive market and also any other market in China.

So from that point of view, our strategy in China is, which we use that market to really to understand the market situation. Also, the opportunity for us in China is really twofold. One is the product that we offer in China that we don't see a comparable solution from Chinese components. Second one is a lot of our Chinese customers, particularly automotive customers, talking about export business, where they do need a non-Chinese solution.

So those are our opportunities in China and that's where we think we're going to focus on. But outside China, I think we don't see any problems by supplying our chip to any other potential customers.

Okay. Thanks, Fermi. That's helpful. And then also on the non-auto side, the -- talk about the enterprise security camera market. Is that going to accelerate in '26? Or are you kind of hitting a point where it's grown very strongly and now it's kind of stabilizing into the kind of full-year growth rate?

First of all, I think the market will continue to grow in two things. Although the unit number growth is there, but the biggest growth work from the ASP growth. Look at -- we are selling CV25, CV22 at the ASP level, but our current CV5, CV7 just went into production have a higher ASP. So I think that both of them will drive, but ASP will be the main driver for our growth.

Okay. All right. Thanks, Fermi.

(Operator Instructions) Gus Richard, Northland.

Thanks for taking the questions. And congratulations on the strong results and outlook. Fermi, I just was hoping you could talk a little bit about where you see the growth, edge versus data center? And within the edge, you've always been heavy on imaging applications. Are you starting to broaden out beyond that? And what opportunities at the edge do you see to be the most exciting outside of imaging and enterprise?

Right. We are right now 100% focused on edge. Data center is pretty well-established and NVIDIA has a really strong dominance on that market. We don't believe that that should be our first target. We are focused on edge and there are multiple -- with our current market, definitely, the IoT is definitely one focus market. And also that the new market the CLIP or vision language model, or even the current DeepSeek type of model, will enable new applications. That's definitely a focus area.

But there's a new area which is people trying to use -- building an edge server, AI edge server, to accumulate multiple different type of streams, either video stream or non-video stream and to do -- apply a centralized AI processing at the edge. That's definitely the market that we are looking at and trying to understand how we can participate. I think that our N1-655 is a great candidate for that. And obviously, we need to build a road map based on our new next-generation CVflow architecture to address that.

Got it. Thanks. That's helpful. And then you've had some long-standing partnerships with Continental, Bosch, and you've got a relationship with [Ruthland], which is now working with [Vdub]. I was just wondering if you could talk a little bit about how those automotive partnerships, if you will, are evolving? And do you see any opportunity over the next year or two?

Yes. First of all, we continue to bid on different RFQs with our partner. Conti is our strong partners, both on hardware and software; and Bosch is our hardware side -- our partner. We continue to bid on multiple different opportunities. Although that recently, we were informed that we lost a major Western OEM passenger car because of different -- I think the we -- in that particular car competition, we worked with a Tier 1 in there.

And the feedback we got was that our technology and product were viewed very favorably. And also our price is competitive, but at the end, when we faced -- at the final round of bidding, when we faced the incumbent supplier, we were told that our scale -- certain scale benefits that the existing supplier can offer created the differences.

So from that point of view, although we lost that one major Western OEM, but we continue to commit to invest in the automotive products. And we definitely are looking for alternative way to continue to sell our products and technology into automotive markets.

Got it. Thank you so much.

Thank you. And I would now like to hand the conference back to Fermi Wang for closing remarks.

And thank you, guys. Thank you for joining our call today. If there's any follow up, please give me or Louis a call. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.