Deborah Stapleton – Investor Relations Fermi Wang – President and Chief Executive Officer George Laplante – Chief Financial Officer.

Ross Seymore – Deutsche Bank Securities Inc. Quinn Bolton – Needham & Company Joe Moore – Morgan Stanley & Co. LLC Jay Srivatsa – Chardan Capital Markets Kevin Cassidy – Stifel, Nicolaus & Co., Inc. Charles Anderson – Dougherty & Company LLC.

Good day ladies and gentlemen and welcome to the Ambarella’s Q4 Full-Year 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference Ms. Deborah Stapleton. You may begin..

Thank you. Good afternoon, everyone, and welcome to Ambarella’s fourth fiscal quarter and year-end fiscal 2014 financial results conference call. Thank you for joining us today. Our speakers’ will be Dr. Fermi Wang, President and CEO; and George Laplante, CFO.

The primary purpose of today’s call is to provide you with information regarding our fiscal fourth quarter. The discussion today and the responses to your questions will contain forward-looking statements regarding our financial prospects, market growth, and demand for our solutions among other things.

These statements are 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 are 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 that we file with the SEC, including the Annual Report on Form 10-K that we filed on April 4 for the 2013 fiscal year and Form 10-K for the 2014 fiscal year that will be filed shortly.

Access to our fourth quarter press release, historical results, SEC filings, and a replay of today’s call can all be found on the Investor Relations portion of our website. Now, I’ll turn the call over to Fermi Wang.

Fermi?.

Thank you, Deborah, and good afternoon, everyone. We are very pleased with our Q4 and fiscal year 2014 financial results. Q4 revenue was $40 million, up 26.8% from the $31.5 million we reported in the fourth quarter a year ago.

This brings our total revenue for fiscal 2014 to $157.6 million or a 30.2% increase over fiscal year 2013 revenue of $121.1 million. Q4 non-GAAP net income was $8.2 million or $0.26 per diluted ordinary share. This compares with non-GAAP net income of $5 million or $0.18 per diluted ordinary share for the same period in fiscal 2013.

For the full fiscal year, we earned $33.2 million or $1.10 per diluted ordinary shared compared to $22.7 million or $0.79 per diluted ordinary share in fiscal year 2013.

I would like to discuss some of our products and market highlights, and then I will turn it over to George for more in-depth discussion of our fourth quarter financial performance and our guidance for Q1. Growth in our camera business was again led by strong sales in IP security cameras.

This market segment continues to be driven by the migration of our analog CCTV cameras to high-definition IP security cameras. During the fourth quarter and for the third quarter in a row, Ambarella shipped more SoCs for use in IP cameras than for any other camera category.

Also, in fiscal year 2014, Ambarella more than doubled its revenue for IP cameras compared with the previous year, reflecting both a significant gain in the market share as well as overall market growth.

Sales of professional IP cameras increased in all regions, but we are particularly strong in China led by Ambarella’s key customers Hikvision and Dahua.

Ambarella’s continued success in professional IP cameras is based on fulfilling customer requirements for high-quality, high-definition camera solutions with excellent low-light capabilities, highly efficient encoding, and a very low power consumption. Ambarella’s A5s, SoC family continues to meet the high volume market requirements.

Ambarella’s S2 family enables Ultra HD or 4K video resolution, 360 degree de-warping for wide angle design and the Dual Cortex ARM CPUs for advanced analytics. In February, DynaColor, a leading supplier for professional IP cameras announced its new V8 series of ultra-HD fish-eye cameras, based on Ambarella’s S2 camera SoC.

The cameras are available in 3 megapixel, 5 megapixel, and 6 megapixel resolutions, and in both 180 degree wall mount and 360 degree ceiling mount configurations. The S2 enables de-warping in the cameras to provide multi-view Pan Tilt Zoom without mechanical parts.

Ambarella is also seeing increasing opportunities in consumer Wi-Fi IP cameras for home security systems. In addition to traditional home security companies, telecom and cable network operators are also – are now also introducing new cameras and the video security services for consumers.

It is expected that their offering will increasingly migrate from standard-definition to high-definition in the future, which would provide additional opportunities to Ambarella..

During Q4, we continued to see strong sales of sports cameras, driven by market leader GoPro and it’s recently introduced HERO3+ Silver and Black camera editions. Ambarella [believes] (ph) sports cameras, including both GoPro and IR models featured extensively in March over the personal weekly shot by athletes at 2014 Winter Olympics in Sochi.

In addition to wearable sports cameras, Ambarella is continuing to develop wearable camera solutions for social networking and the vertical market applications.

At 2014 consumer electronic show, Ambarella and Google successfully demonstrated a wearable camera reference design to bring Google’s Helpout application and service to a new class of wearable cameras. Helpout is a new way to share knowledge and expertise over live video.

It’s easy to use and incorporates scheduling and payments to allow instructors to monetize services. Ambarella’s new reference design enables small form- factor wearable cameras that allow users complete mobility during a Helpout session.

The camera can record full HD video while simultaneously streaming live video and audio wirelessly to a Google Helpout server via a Smartphone or Wi-Fi access points. In addition to wearable cameras, a new and exciting product category is quadcopters.

Many of these quadcopters are equipped with video cameras to capture unique views of buildings, wildlife, or sporting events. During Q4, leading supplier DJI Innovations of China, introduced its Phantom 2 Vision Quadcopter with integrated HD video camera.

The camera is based on Ambarella’s A5s camera SoCs and provides 1080p video recording, 14 megapixel stills, and wide 140 degree field of view. In the automotive aftermarket, Ambarella provides camera SoC solution for video camera recorders or dash cams. These cameras are sold primarily in Russia, China, Taiwan, and in South Korea.

Also during the year, Ambarella introduced its new MotorVu 360 automotive surround view and recording camera reference design.

The reference design features four full 1080p30 HD camera modules that can be embedded at the front, rear, and sides of the vehicle, providing 360 degree surround view for driving or parking assistance as well as a simultaneous four-channel black box recording of road incidents.

MotorVu 360 is enabled by the new Ambarella B5 family of receiver/transmitter companion chips that supports transmission of video data across low-cost, flexible cable with low latency. The B5 chips can also be used in dual-channel configurations for front and rear-view automotive camera applications.

During the fourth quarter, Korean market leader Fine Digital introduced its FINEVu CR-2000 dual channel dash cam solution based on Ambarella’s A7LA camera SoC, but CR-2000 is the first camera solution to provide full HD 1080p front and back recording.

Although market conditions in Russia have softened, Russian customers are now shipping over 20 new models based on Ambarella’s A7LA camera SoC with many supporting Ambarella’s advanced super-HD resolution and recording. The China domestic market continues to expand, and the (inaudible) of this market is still dominated by low end, low cost products.

We expect a transition to higher resolution products this year creating new opportunities for Ambarella. Additionally, you will see in 2014 several companies demonstrated new dash camera products, specifically designed to be targeted at the U.S. market for the first time.

In the broadcast infrastructure market, the majority of existing with MPEG-2 and H.264 solutions continues to limit new infrastructure purchases, while new revenue opportunities exist in upgrades for cable networks in emerging markets.

This situation is unlikely to change significantly in this fiscal year and probably not until the upgrade to Ultra HD and HEVC, the next generation video compression standard. With that, I will hand it over to George to discuss our financials..

Thank, Fermi, and good afternoon, everyone. Today, I will discuss the financial highlights for both the fourth quarter and full-year ending January 31, 2014. I will then review the financial outlook for Q1 of fiscal year 2015 that ends on April 30, 2014.

During the call, I will discuss non-GAAP results and as such we will 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 as adjusted for income taxes.

As we discussed in the past, the company has seasonality for both its revenue and gross margin, so I will include year-on-year comparisons for certain key operating metrics to insist in the understanding of changes in our business. I will now start with a review of our Q4 results.

Our Q4 2014 revenues of $40 million represented an increase of 26.8% over the $31.5 million of revenue in the same period in the prior year. Camera market revenue is estimated at 90% of Q4 revenue as compared to 83% for the same period in the prior year.

Our professional and consumer IP security market was the largest driver of the year-over-year revenue growth, followed by our wearable sports cameras. Q4 automotive revenues increased sequentially, but were below the same period of last year.

Infrastructure revenues declined both year-over-year and sequentially in line with the guidance on our last earnings call. For the first time, we estimate that IP security in sports cameras ended Q4 pretty much even in terms of revenue dollars.

Security camera revenues remained strong across China, North America and Europe, while we saw continued progress with a relatively new security business in Korea. The sports camera market demonstrated robust year-over-year growth with Q4 remained strong and the impact of the early Q4 launch of two new GoPro models.

As discussed on the last call, the Q4 automotive market, revenues did improve from Q3, while remaining below Q4 of the preceding year. A7LA based products launched successfully in the Asia markets and Russia, although we still face competition from low-end solutions being offered especially in China.

As expected, Q4 infrastructure revenues declined both sequentially and year-over-year as system manufacturers continue to experience soft markets in most regions.

We continued to be cautious on infrastructure revenues for the next year, as service providers delay investments in anticipation of the network upgrade to the new HEVC compression technology.

Non-GAAP gross margin for Q4 of fiscal year 2014 was 64.1% as compared to 63.8% in the immediately preceding quarter and 63.3% in the fourth quarter of the prior year.

In comparison to the preceding quarter, gross margin improved in the camera markets due to a favorable product mix that was offset by decline in higher margin infrastructure revenues as a percent of total revenues. Non-GAAP operating expenses for Q4 2014 were $17 million compared to $16.8 million from Q3 2014 and $14.8 million for Q4 the prior year.

The sequential increase in OpEx reflects higher costs associated with added headcount primarily in our Asia software development team. Non-GAAP net income for Q4 2014 was $8.2 million or $0.26 per diluted ordinary share, compared with non-GAAP net income of $5 million or $0.18 per diluted ordinary share for the same period in the previous year.

The non-GAAP effective tax rate in Q4 2014 was 5%. The tax rate was favorably impacted by the release of stock-based compensation expense previously deferred for tax reporting purposes due to the exercise of employee stock options in the quarter.

In Q4 2014, the non-GAAP earnings per ordinary share are based on 31.4 million diluted shares as compared to 28.5 million diluted shares for Q4 2013. Turning to our full year results for 2014, our revenues were $157.6 million, an increase of 30.2% over the $121.1 million for fiscal year 2013.

As discussed throughout the year, the IP security market was our fastest growing market driven by the launch of several new customers as well as the steady growth of the overall digital security market.

For 2014, wearable sports cameras year-over-year revenue growth rate continued in line with fiscal year 2013, while automotive year-over-year revenues were flat. Overall infrastructure revenue declines in fiscal year 2014 as compared to the previous year.

Total headcount at the end of Q4, 2014 was 495 compared to 489 at the end of previous quarter, with about 358 employees dedicated to engineering. Approximately 77% of our total head count is located in Asia, primarily in Taiwan and China. We ended Q4 with cash of $143.4 million adding $11.4 million of cash from operations in the quarter.

Total accounts receivable at the end of Q4, 2014 were $18.8 million, or about 43 days sales outstanding. This compares to accounts receivable of $25.4 million, or 51 days sales outstanding in the prior quarter. Net inventory at the end of Q4 was $10.5 million, or about 74 days, compared to $13 million, or 63 days at the end of Q3.

The decline in accounts receivable reflects lower sales in the quarter, as well as the increase in sales to our logistic supplier and made more favorable credit terms. Inventory remains in line with our company targets. Ambarella uses WT Microelectronics as its logistic supplier for distribution through the majority of our ODM and OEM customers.

For the quarter ended January 31, 2014, sales to WT represented 64% of our revenue, compared to 50% for the same period in the previous year.

Chicony Electronics Company, a manufacturer of camera products for multiple OEMs, as well as for their own distribution, represented 21% of revenue for Q4 of fiscal 2014, as compared to 30% for the same periods during the prior year. WT and Chicony are the companies own 10% customers. I would now like to discuss the outlook for Q1 of fiscal year 2015.

We expect revenues for the first quarter of fiscal year 2015 ending on April 30, 2014 to be between $39 million and $41 million. This represents an increase of the 15% and 21% over Q1 of last year. Q1 camera revenues are estimated to be between 89% and 91% of total revenue for the quarter, as compared to 86% in the same period in the prior year.

Q1 revenues in our wearable sports camera market are expected to decline from the same period in the prior year. As mentioned in our Q1 fiscal 2014 earnings call, Q1 of last year was positively impacted by the launch of three new camera models from GoPro.

And we anticipate a sequential increase in revenues from IP security in Q1 to offset the decline in wearable sports cameras. Automotive is expected to be flat as compared to Q4 and down compared to Q1 of last year. As discussed, we see softness in the infrastructure market at least through the remainder of this fiscal year.

We estimate Q1 non-GAAP gross margins to be between 61% and 63% compared to 64.1% in Q4 of fiscal year 2014 and 64% in Q1 of the prior year.

Q1 camera market gross margins are expected to decline from the preceding quarter due to an increase in lower margin professional and consumer security business in China as a percent of total revenue in the quarter. We expect non-GAAP net income for the quarter to be between $6 million and $7.5 million.

As we discussed in our last earnings call in December, we expect new chip development expense to become a larger percentage of total OpEx throughout the year as we begin to develop in the new 14 nanometer or 16 nanometer process nodes. We are using an estimated non-GAAP annualized effective tax rate of 11% for a net income amounts.

If you are tracking GAAP net income Q1 stock based compensation expense is expected to be similar to that of Q4. We estimated our diluted share count for Q1 to be approximately 31 million shares. I would like to thank everybody for joining our call today and now I will turn it back to the operator to manage the Q&A session.

Operator?.

Thank you. (Operator Instructions) Our first question comes from the line of Ross Seymore of Deutsche Bank. Your line is now open.

Ross?.

Okay.

Can you hear me now? Can you hear me now?.

Yes..

Sorry about that. So what I was saying when I was on mute unfortunately was, can you just talk about some of the growth drivers you expect for the full year. You highlighted the full year automotive was flat year-over-year that sort of end market color.

What do you think is going to be biggest drivers as we go into fiscal 2015?.

Hi, Ross, this is Fermi. I think that security cameras continued to be our big driver for our revenue both on a professional and consumer side and as we just announced that our IP security revenue doubled on a previous year and we believe that the market growth rate does continue and we believe that we had a strong momentum in the market right now.

On the consumer IP security side we started seeing a lot of designs going on and also there are a lot of demand pulling from that market and we believe that’ s going to be a great opportunity for us to grow this year and in the near future. So I think that the security camera as a whole going to continue to be our greatest revenue driver..

I guess, as my one follow-up George on the margin side of things, the security camera side of the market growing, especially on the consumer side, and then you’ve talked about being keen on still investing in the OpEx side for future growth.

When we put those together you see anything that’s really changes the margin model that you’ve had in the past of kind of the low-to-mid 60s as well as the 20% to 22% operating margin?.

No, not right at the moment. I still think 60% to 63%, which is our target margin model. I think it’s still valid through the remainder of the year. There may be some quarters, where the consumer side pushes that down to the low end of that, but I think we’re still reasonably comfortable with that margin model..

In the operating margin side of it, just trying on the spending pattern for this year?.

Yes, I’m sorry, no change in the operating margin model..

Great. Thank you..

Thank you. Our next question comes from the line of Quinn Bolton of Needham & Company. Your line is open..

Hi, Fermi. Hi, George, congratulations on the nice results. Just wanted to ask first on the security market, if I remember last quarter, you anticipated perhaps some slowdown in the security market in China, ahead of Chinese New Year. It doesn’t sound like that happened or at least on this call you talked about strength.

Can you give us some update as to what you are seeing in China and if you didn’t see that slowdown what may account for that strength?.

Yes, we actually had anticipated a slowdown and then early in the – late in last Q4 and early in this Q1 timeframe, we did sort of experienced that and then accelerated quite a bit in China.

And you’ll notice my guidance on margin slightly down and that’s really due to the sort of the ramp we see happening now and through the end of the quarter and it’s primarily kind of in the lower end of the security production in China. And it’s difficult for us to determine whether that’s consumer related or professional related.

We don’t get that level of detail from the large Chinese manufacturers. So it was a bit – a little bit of a change from what we had anticipated..

So just a clarification George, the acceleration you saw in China, was that in the January quarter or is that really post Chinese New Year that you are seeing that strength?.

Yes, post Chinese New Year..

Post Chinese New Year. Okay, great. And then just looking out for the auto market, it sounds like the A7LA designs you are starting to ramp, but you’re – you continue to see competition and I assume pricing at the low end of the market.

So it sounds like sort of a flattish outlook for auto in fiscal 2015, is that the right read of that market?.

No, I think, Quinn I think now with A7LA family in production we have 20 plus models in production. And we believe there will be a lot more coming out in the next several months, and we believe that this year, we should see growth on that market..

Okay, great. Thanks, Fermi, for the clarification. .

Thank you. And our next question comes from the line of Joe Moore, Morgan Stanley. Your line is open..

Great, thank you. I wonder if you could talk about the competitive outlook, it sounds like, TI [inaudible] embedded group restructuring that they - they were reducing spending in this area of cameras, [CSR] [ph] and the [licensed] [ph] products, obviously there is products from new competitors.

But can you just talk about have you already seen the revenue benefits of those changes or could that be kind of a revenue [inaudible] over the course of the year?.

Well, thanks, Joe. I think definitely our competitive landscape changed a little bit in the last several months.

Like you said, TI basically announced they’re going to reduce their spending on IP security market and where we start seeing result, we believe the strength that we’ve seen in China really reflects that the TI’s weakness on this market right now and we have benefited from that.

And also that CSR canceled [inaudible] also help us to stabilize our other market in terms of our sports and automotive.

And I also think that right now today, if you look our – the company competing with us, most are the company in Asia, particularly in China, Taiwan and Southern Korea, most of them are startup company and because they have some webcam design win or other video related product in the past and then try to come into competing with us.

And we see a lot of noise there and we definitely treat them seriously. But we think that from a stability point of view, we’re in a stronger position than the six months ago..

Great. Thank you. .

Thank you. Our next question comes from the line of Jay Srivatsa of Chardan Capital Markets. Your line is open..

Yes, thanks for taking my question. Just following up on the competition comment, Fermi, in China, increasingly looks like a lot of the local OEMs seem to be gravitating towards local chip solution.

Are you concerned as you look forward to the rest of the year that a lot of these Asian companies that you alluded to could be very competitive in terms of either pricing or looking at ways to take market share from you?.

Right. In fact, they’re already very competitive on the pricing already for the last couple of years. And the way we are competing with them is that we always try to provide a complete roadmap to our customer from the high end to medium and low end and so that our customer can – using one software platform to address all of these.

And with [inaudible] although we need to really competing on the low-end price, but we can continue to get a volume and better ASP and gross margin on our mainstream and high-end market. And that’s [affecting][ph] our model. We have been competing with lower competitors for two years to three years, and you can see the result.

So, I think the competition is going to continue to be there, but I believe as long as we can continue to innovate and providing better roadmap and better products on the high end and mainstream product, we should be okay..

All right.

And then in terms of the prospects in other countries related to IP camera, outside of China and North Korea, North America and Korea, what are some of the areas you’ re looking at and what do you see the opportunities as you look at the rest of the year?.

Right. For example, in Europe, Axis and Bosch are still our two of our big customers. And so, in fact, they are very steady and we are growing with them when they grow their market shares. So, I think, on the Europe side, although we didn’t mention this time, but we still continue to have market share there.

And in China, as we talked about it, and in U.S., I think the Telco and there’s a company called [inaudible] in Canada. So, they’re both really playing well in the North American market. But I do believe that this is a really international market right now and we are trying to play in our older regions and I think we have been successful in there..

Okay.

And then last question from me, in terms of the variables related to your partnership with Google, when do you expect material revenues from that opportunity, is it later half of this year or more 2015?.

I think more 2015. I mean in fact when we announced this partnership with Google in December, we made it clear that we don’t expect any revenue this year. And we think that wearable camera market is a brand new market, we’re going to continue to invest on that.

And we also believe there is a long-term market that we want to play in and it’s going to provide us revenue growth in the future. But we yet don’t see that’s a near-term effect..

Thank you..

Thank you. Our next question comes from the line of Kevin Cassidy of Stifel. Your line is open..

Thanks for taking my question. On inventory, you said that you’re comfortable with – you’re in line with your expectations for internal inventory.

But can you – do you have visibility into WT Microelectronics or Chicony’s inventory and what are those levels like?.

Yeah. Well, WT inventory, we obviously get daily reports from them. Anything that’s in their inventory is already committed to end customers. So and it’s deferred. So you’ll see that actually is included in our inventory balance, so, because it’s a sales out relationship.

On Chicony, we do get good visibility; we have full time operating people work with Chicony in Taiwan. So we know based on each one of their customers kind of what their inventory levels are in any one time, and we’re very comfortable with both WT and Chicony’s inventory levels..

Okay, great, thanks. And on the sports camera market, you say that’s going to be flattish to down this quarter.

Are there new models coming out later in the year that you know of or you can talk about?.

Well, we don’t talk about our customer product releases. They normally get angry when we pre-announce their products. So we don’t comment on that..

Okay.

How about with the – some of the comments you did make about some competitors reducing their spending on their products, are you winning any other sports camera designs outside of your current customers?.

Well, I think we’ll continue gaining momentum in that market. Although we cannot really specifically mention the new design wins but I feel very confident that we are the leaders in the sports camera market category..

Okay, great. Thanks. .

Thank you. And our last question comes from the line of Charlie Anderson of Dougherty & Company. Your line is open..

Yes. Thanks for taking my questions, and congrats on the strong results. So I wanted to focus on home security.

I wonder if you guys are seeing any revenue from that sort of outside of Dropcam right now and especially with the operators in terms of the AT&T and Comcast of the world, and when you might expect that to ramp for you guys based on sort of your design win pipeline?.

First of all, I do believe, some of the revenue and product we ship to the China like to [inaudible] go to consumer IP camera category already. And but now and then going to the cable service provider or AT&T, Comcast like yet.

So we – while we continue to be optimistic about this market, and we will continue to look work with [inaudible] one way you can talk about the design wins and the revenues. I think we probably can talk about it in the second half of this year..

Perfect. And then you guys attributed some strength in the margins in the quarter to mix.

I wonder if you could maybe give us a little bit more color there on what products were driving that margin upside?.

Yes. Well, we had really two impacts. We had a strong quarter with our new A7LA product and A7LS product, both one’s in the sports and one’s in automotive. That product is one of our strongest margin products and the timing of GoPro’s product release, as well as the ramp in the automotive did strengthen our margins in the quarter.

In addition, we did have lower volumes in the China low-end security market, so the revenue was offset with higher margin revenue..

Great. Thank you so much..

Thank you. And we have a question from the line of Stuart [inaudible]. Your line is open..

Yes, just one small question, just about Hikvision, I would love to hear your perspective on them in particular? Just where you are technologically versus them and little bit more about maybe some strength that they may be having in the Chinese market?.

First of all, I think Hikvision is definitely number one IP security supplier in the market. In fact recently now leader in supplier for IP digital, IP security camera and they’re very strong in analog camera too. So I think they basically in transition from analog camera to the IP security camera internally.

And from a IP security camera side, I think we have the product covered both from a low end to the high end for them. Our A5s product is really their low end and the mainstream and also we also already mentioned in the past that they’ll be designing our S2 product to cover their high-end product line.

So I expect that we can continue to be a supplier – big supplier to Hikvision on the IP security side. From a performance technology point of view, I really think that although our only competitor, our main competitor is Hikvision is [HiSilicon] [ph] in China and they are mainly competing with us on the low end side.

So I think from a mainstream to the high end, I think, I’m comfortable with our position there. In terms of Hikvision, I also believe they have a vision to come into international. And when they try to sell their product into international market, I think that our strength will also be highlighted..

Thanks..

Thank you. I’m showing no further questions at this time. I would like to turn it back over to Fermi Wang for closing remarks..

Thank you. And I would like to thank all of you for joining our conference call today. And I also would like to thank all my colleagues who continued delivering outstanding performance to make this possible. Thank you all..

Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day..