Deborah Stapleton - Investor Relations Fermi Wang - President and CEO George Laplante - Chief Financial Officer.

Ross Seymore - Deutsche Bank Suji De Silva - Topeka Kevin Cassidy - Stifel Jay Srivatsa - Chardan Capital Charlie Anderson - Dougherty & Company Quinn Bolton - Needham & Company Joe Moore - Morgan Stanley Brad Erickson - Pacific Crest.

Good day, ladies and gentlemen. And welcome to the Ambarella’s Third Quarter Fiscal Year 2015 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 follow 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, Deborah Stapleton. Please go ahead..

Thank you. Good afternoon. And welcome to Ambarella’s third quarter fiscal year 2015 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 third 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 cause our financial results to differ, are more fully described in the documents that we filed with the SEC, including the annual report on Form 10-K that we filed on April 4, 2014 for the 2014 fiscal year, the Form 10-Q’s filed on June 6, 2014 and September 8, 2014, and the Form 10-Q for the third quarter of fiscal 2015 that will be filed shortly.

Access to our third quarter results 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. I will now like to turn the call over to Dr. Fermi Wang..

Thank you, Deborah. Good afternoon, everyone. We are very pleased with our Q3 financial results, reporting revenue of $65.7 million, up 43% from the same quarter last year. In addition to our outstanding financial performance, we also delivered significant product innovations during the quarter.

I would like to discuss some of our product and market highlights, and then I will turn it over to George for more in-depth discussion of our third quarter financial performance and our guidance for Q4.

During the third quarter Ambarella achieved two major new technology milestones, as we introduced our first product to implement a new H.265 or HEVC video compression standard and also to encode H.264 Ultra HD video at 60 frames per second or 4Kp60.

The HEVC standard provides a significant bitrate reduction versus previous video compression standards and it will be an important enabler of higher resolution video delivery including Ultra HD. In bandwidth constrained applications such as IP cameras and broadcast infrastructure, it can increase network utilization and reduce cloud storage costs.

In consumer application such as sports or quadcopter cameras, HEVC can enable higher video quality, faster video upload times and higher resolution video streaming. Ambarella’s full implementation of HEVC delivers up to twice the compression efficiency of our current H.264 SoCs.

Ambarella’s 60 frames per second Ultra HD encoding doubles the frame rate and the performance of our existing solutions to provide high-speed live action recording in sports and quadcopter cameras with smooth slow motion capabilities.

In IP cameras, it provides high-resolution, high-speed capture, for example, enabling traffic cameras with outstanding license plate recognition or enabling a simple camera to generate Ultra HD video with multiple secondary [strings] [ph].

In October, Ambarella announced its state-of-the-art S3 HEVC IP Camera SoC, the industry’s first to include support for the new video standard at 4Ks of resolution. The S3 can encode HEVC video at up to 4Kp30 resolution and can also encode H.264 up to 4Kp60 to provide compatibility with existing network infrastructure.

It includes a new generation of image sensor pipeline for advance noise reduction, as well as advanced HDR or High Dynamic Range processing. The S3’s wide-angle lens [developing] [ph] capability enables cameras with 180 degree or 360 degree panoramic viewing and digital Pan Tilt Zoom capability.

In summary, we are very excited by our latest HEVC and high frame rate innovations and the possibilities for new product enabled by this. On the revenue side, in wearable sports camera market, we enjoyed strong Q3 sales driven primarily by market leader GoPro.

GoPro introduced three new camera models including the Hero 4 Black and Hero 4 Silver, both based on Ambarella’s A9 SoC family, as well as the $129 entry level Hero model based on Ambarella’s A7L SoC. The Hero 4 Black offers high resolution 4Kp30 and 2.7kp50 video and high frame rate 1080p 120 video.

While the Hero 4 Silver pairs quality video and photo capture with the convenience of built in touch display. The $129 Hero model makes it simple to capture and share your life’s activities and is built directly into a rugged waterproof housing. It features high quality 1080p30 and is 720p60 video.

During the third quarter, we enjoyed strong revenue growth for our IP security camera business as expected. The professional IP camera market continue to grow rapidly especially in China as traditional analog CCTV cameras are replaced by digital IP cameras.

Requirements for early - entry level IP cameras are moving from 720p to full HD or 1080p resolution while mainstream cameras are now requiring higher megapixel capability and HDR processing. These requirements are helping drive design wins for our new S2L SoC family.

In higher end cameras, demand for 4K Ultra HD capability of advanced analytics and a wide-angle viewing continue to increase sales of our S2 SoC family.

At the October China Security Show held in Beijing, many of the world’s leading security camera suppliers demonstrated 4K Ultra HD cameras and a panoramic viewing cameras based on Ambarella’s S2 Camera SoCs. This included Bosch of Germany, Dahua and Hikvision of China and Panasonic of Japan.

In addition to strong sales growth in professional IP camera market, we continue to see new opportunities in home monitoring and IP security camera applications. This includes cameras from retail consumer brands as well as the service providers offering home monitoring cameras as part of our securities service.

During the third quarter, AT&T introduced new camera models based on Ambarella SoC as part of its AT&T Digital Life security package. The package includes 24x7 professional monitoring and this includes cameras with the ability to view live or recorded video and it takes snapshot based on motion.

The indoor dual-view camera model also includes 180 degree wide-angle viewing. In summary, we anticipated continued growth in IP security cameras from both the professional and the consumer markets. We expect to see additional opportunities from telecom, cable and the security service providers as they offer more home IP camera solutions.

As we discussed last quarter, we are also seeing increase of use of quadcopters or drones for shooting video. This application represents opportunity for Ambrella to quite literally take video recording to new heights as user demanded a highest quality Ultra HD video and a megapixel photography.

During the third quarter, market leader DJI introduced its Inspire 1 quadcopter, featuring an integrated 360 degree video camera for ultimate aerial filmmaking. The Inspire 1 leverages Ambrella’s A9 SoC to shoot up to 4K Ultra HD video and to capture 12 megapixel photos.

Both the quadcopter and integrated camera can be remotely controlled from over 1 kilometer away. The Inspire 1’s comprehensive mobile application enables users to control the camera setting including ISO white balance and exposure to optimize photography and video recordings.

We anticipate continued revenue growth from consumer markets based on strong sales of wearable sports camera and quadcopters. We also see opportunities for small form factor wearable cameras driven by vertical applications such as policing and personal security.

In automotive after market, Ambrella continues to provide camera SoC solutions for video camera recorders or dash cams. During the third quarter, Ambrella sales increased both sequentially and year-over-year based on the growing China domestic market and our expanding market share in Korea.

During Moscow Interauto 2014 show and Hong Kong-China Sourcing Fair, Ambrella successfully demonstrated our latest single and few channel referenced designs based on our A7L-A SoC families. The A7L-A SoCs include Wi-Fi connectivity of advanced video analytics HDR processing and multi-camera viewing.

Looking forward, we anticipate continued revenue growth from automotive after market based on designing momentum for A7L-A SoC family. In conclusion, we are extremely pleased with our third quarter execution and the financial results.

During the quarter, we saw the introduction of a number of Ambrella-based Ultra HD cameras in security, sports and quadcopter markets. We also introduced our first HEVC solution, the H3 carving future generations of highly efficient, high quality intelligent IP cameras.

We see continuous stress in all of our currently served camera markets and expanding opportunities in wearable, home security, quadcopter and automotive applications. With that, I will hand it over to George to discuss our financials..

Thank you Fermi and good afternoon everyone. I’ll start today with a discussion of the financial highlights for the third quarter of fiscal year 2015 ending October 31, 2014. I will then move onto the financial outlook for Q4 of fiscal year 2015 that ends on January 31, 2015. And I will conclude with an update of our target model.

During the call, I’ll discuss 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 as adjusted for income taxes.

As we have discussed in the past, the company has seasonality to both its revenue and gross margin. So, I will include year-over-year comparisons for certain key operating metrics to assist in the understanding of changes in our business.

Our Q3 2015 revenue of $65.7 million represents an increase of 42.8%, over the $46 million of revenue in the same period in the prior year. Camera market revenue is estimated to be 96% of Q3 revenue compared to 87%, for the same period in the prior year.

The wearable sports and professional IP security camera markets demonstrated strong growth in the quarter, both sequentially and year-over-year. The launch of the three new camera models by GoPro underpinned a very strong wearable sports camera build for the holiday season.

Our professional IP security revenues continue to grow faster in projections for the IP security market, driven by strong results from Asia. The year-over-year revenue growth in consumer IP security was strong, but remains a small percentage of our overall security market revenues.

Although IP security continued to have the highest unit shipments in the quarter, sports cameras generated the highest revenue dollars due to the increased ASPs associated with the strong mix of higher performance sports camera revenues.

Q3 automobile market revenues increased both sequentially and year-over-year, reflecting growth in both Korea and China. The automotive market in Russia where higher end dash cam products are more popular remained soft in the quarter due to weak economic conditions in Russia.

Third quarter infrastructure revenues were down compared to the previous year and remained below preceding quarter, as system manufacturers continue to experience soft markets in most regions.

Non-GAAP gross margin for Q3 of fiscal year 2015 decreased sequentially to 63.4%, compared to 65.1% in the immediately preceding quarter and 63.8% in the third quarter of the prior year.

As discussed on our last call, gross margin in the preceding quarter was high due to the mix of revenues associated with shipments of our 4K versions of the S2, and a large volume shipment of A9 chips into the UAV or quadcopter market, creating a difficult sequential comparative.

Non-GAAP operating expenses for third quarter were $18.7 million, compared to $17.5 million for Q2 of 2015 and $16.8 million for Q3 of the prior year. The increase in OpEx from the previous quarter resulted primarily from increased costs associated with chip development, including the 14 nanometer chip projects.

Non-GAAP net income for Q3 2015 was $22.1 million or $0.68 per diluted ordinary share, compared with non-GAAP net income of $11.1 million or $0.37 per diluted ordinary share for the same period in the previous year. The non-GAAP effective tax rate in Q3 2015 was 4%.

The quarter benefited from a low tax rate due to the release of tax reserves of approximately $510,000, or about $0.02 per diluted share that were no longer required due to the expiration of the statutory audit period.

In the third quarter, the non-GAAP earnings per ordinary share are based on 32.4 million diluted shares as compared to 30.4 million diluted shares for Q3 of 2014.

Looking at the first nine months of fiscal year 2015, our revenue of $153.6 million and non-GAAP net income of $41.8 million represents increases of 30.5% and 67.2% respectively over the results of the same period in the prior year.

Total headcount at the end of Q3 2015 was 515, compared to 507 at the end of the previous quarter, with about 357 employees dedicated to engineering. Approximately, 76% of our total headcount is located in Asia, primarily in Taiwan and China.

We ended Q3 with cash and marketable securities of $186.3 million, adding $17 million of cash from operations in the quarter. Total accounts receivable at the end of Q3 2015 were $41 million or about 57 day sales outstanding. This compares to accounts receivable of $26.8 million or 53 day sales outstanding in the prior quarter.

Net inventory at the end of Q3 was $14.8 million or about 53 days, compared to $13 million or about 64 days at the end of Q2. Accounts receivable and inventory remain in line with company targets. Ambarella uses WT Microelectronics as its logistics supplier for distribution to the majority of our OEM and OEM customers.

For the quarter ended October 31, 2014, sales to WT represented 51% of our revenue compared to 60%, for the same period in the previous year.

Chicony Electronics, a manufacturer of camera products for multiple OEM customers as well as for their own distribution, represented 41% of revenue for Q3 of fiscal year 2015, compared to 25% for the same period in the prior year. WT and Chicony were the company's only 10% customers. I would now like to discuss the outlook for Q4 of fiscal year 2015.

We expect revenues for the fourth quarter of fiscal year 2015, ending on January 31, 2015 to be between $57 million and $60 million. This represents an increase of between 43% and 50% over Q4 of last year.

Q4 camera revenues are estimated to remain strong through the quarter ending between 94% and 96% of total revenue for the quarter, compared to 90% in the fourth quarter of the prior year. Q4 professional and consumer IP security revenues are expected to have solid improvement, both sequentially and year-over-year.

Wearable sports cameras are expected to improve year-over-year, as the impact of the new product launches at GoPro continue into the quarter but declined sequentially. We expect automotive revenues to increase, both sequentially and year-over-year in Q4.

In automobile market, the revenues reflect increases in Korea and China, partially offset by continued softness in the Russian market. Infrastructure will be flat sequentially and down year-over-year.

Although we anticipate continued strength through the end of this fiscal year, we believe year-over-year growth rates will be more in line with our target model, as we move through the first half of fiscal year 2016, as the holiday push subsides and inventories are normalized.

We estimate Q4 non-GAAP gross margins to be between 62% and 64%, compared to 63.4% in Q3 of fiscal year 2015 and 64.1% in Q4 of the prior year. Camera margins are expected to be flat compared to the previous quarter, as the mix shift to higher resolution, higher margin chips is offset by lower margin China-based security business.

We expect the non-GAAP net income for the fourth quarter to be between $15 million and $17 million. We are using an estimated non-GAAP annualized effective tax rate of 8% for net income amount. We estimate our diluted share count for Q4 to be approximately 33 million shares.

In looking at our target model, we are keeping our targeted annual revenue growth rate between 20% and 25%, which is driven primarily from the mix of markets we are currently servicing.

Although we have potential for new revenue sources as a result of the new opportunities we have discussed, the timing and amount of impactful revenue from these markets remains uncertain.

Gross margins for the year are targeted between 59% and 62%, with the first half expected to be higher than the second half due to the potential of higher concentration of consumer based business in the second half.

OpEx is expected to remain flat as a percent of revenue, as we absorb the initial step increases in costs associated with 14-nanometer tape-out. This will leave operating margins in the mid-20s as a percent of revenue. I would like to thank everyone for joining our call today. And now I will turn it back to the operator to manage the Q&A session.

Operator?.

[Operator Instructions] Our first question comes from the line of Ross Seymore with Deutsche Bank. Your line is open..

Hi, guys. Congrats on a strong report and guide yet again.

George or Fermi, can you just talk a little bit about where the surprises occurred versus your guidance in both the revenue side of the equation and the gross margin as you guys have been pretty consistent beaters on both of those? So just wondered where the surprise was this quarter?.

I think two areas, and not necessarily I think really surprise, but just more aggressive purchasing both in the Asia security market as well as the high end of the sports market. So those two areas drove revenues a little higher than we had anticipated. On the margin side, it’s really just a mix issue.

We had a strong quarter with our A7L product both in sports as well as in automotive. That has replaced some lower margin older chips in several of the cameras that are out there, which actually ramped up quicker than we anticipated..

And I guess as my follow-up question that mix dynamic with your new products, you’ve talked many times in the past how new products carry better gross margins.

How should we think about that trend as we think about fiscal 2016 or calendar '15 as a whole? Is that a year where you expect ASPs and gross margins to have a tailwind in that regard? Or are there some dynamics we need to appreciate?.

I think there is -- in the early phases of the year, the early part of the year I think there is some tailwind to these products. I think mix change and the potential for mix change in the second half related to consumer base business, might bring those margins down a bit in the second half of the year..

Great, thank you. And congrats again..

Thank you..

Our next question comes from the line of Suji De Silva with Topeka. Your line is open..

Thanks. Hi, guys.

Can you remind us the seasonality typically for the April quarter following the January quarter falloff?.

The April quarter is usually -- relatively flat to Q4, it could be up or down. And that’s usually driven more by product introductions and things like that, versus any seasonality in Q1. So you would normally see that plus or minus on Q4 by a small percentage..

Okay, great. And one of the markets getting lot of press today is the wearable market for public safety.

Can you help us size that market and what kind of share you think you are getting? Are you in major products like Taser, Axon and things like that, just to understand?.

Well, this is Fermi. I think like what we said last time, and we are shipping these kind of products in Asia for several quarters now, especially in China. And we started seeing RFQs from our U.S. OEMs aggressively in the last several months.

And currently Taser start -- Taser is shipping standard definition video that is not ours, but we do believe they are transitioning to high definition and hopefully that we’ll have a chance to pick it up. But we believe most of the U.S. OEM going to ODM from Chinese ODMs and that will give us opportunity to win those business..

Great. Congratulations on strong results..

Thank you..

Our next question comes from line of Kevin Cassidy with Stifel. Your line is open..

Thanks for taking my question and congratulations on the great results.

You have mentioned more tape-out or 14-nanometer charges, are you doing that? Can you say how many different masks you’re running?.

Well, we are still -- we haven’t tape out yet, so we are in the process of taping out. Usually this tape-out process from the beginning of design to really tape out take anywhere between five to six quarters and we haven’t tape out anything yet.

But as you can imagine that we will probably in the process of the tapping out 14-nanometer chips in the pipeline. We will probably tape out multiple in the given times..

And if you remember Kevin, we started amortizing the tape-out cost when we start the project. So we are amortizing tape-out cost now for chips we have not yet taped out..

Okay, great. And also you had mentioned that AT&T is offering some Ambarella base.

Do you know what percentage of the cameras that they’re offering are based on Ambarella?.

They just announced [Indiscernible] the number. Yes, so it’s hard for us to estimate it..

Okay. All right. Congratulations again. Thank you..

Thank you..

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

Yeah. Thanks for taking the question.

In terms of the color you had given for year 2015, could you talk to us a little bit about what the dynamics are? Are you seeing kind of the slowdown in the IP market, or is it a combination of this wearable as well as the IP growth being very strong this year that you expect to slow down? Give us some color on how each of the segment is going to play out in your view?.

Well, I think, we’re going by market information on a couple of areas. For instance, we still believe we’ll grow faster than the market in security. We believe the sports camera market listening to GoPro there, they’re quoting somewhere in the low 20% growth rate next year.

We don’t believe our automotive market will be as fast as our overall corporate market, so it will be below. And then our infrastructure market from a dollar standpoint is going to be flat. And so, that will be declining as a percent.

So the mix next year of our current markets with the security on the high-end and automotive on the low end of the camera markets. Well, what happens in these new markets, I think is the wildcard we’re still evaluating.

When will these new markets actually ramp to revenue levels that actually impact our overall revenue, that’s still difficult to forecast..

Okay. With that backdrop, maybe you can clarify your thinking behind the gross margin guidance. Is it related to competitive pressures or is it related to just the wearable markets continuing to dominate your revenue profile? Give us some color there please..

Well, the consumer markets are going to potentially put pressure on our margins on the downside, particularly in the second half. So we're working those into our second half forecast. So we'll see margins decline over the first half and then sort of flatten out in the second half..

Okay. Last question.

Fermi, in the past you’ve talked about HiSilicon and how they continue to play really at the lower end of the market? Has any dynamics changed competitively in China and how do you see 2015 playing out?.

Well, first of all, I think, HiSilicon continue to show up new chip, they just recently announce a chip, which is half the performance of our chip that we just announced called S3. So I don’t think the overall dynamic change between us and HiSilicon.

I think they continue to focus on low-end market and we are trying to win the business by leveraging our high-ends and middle-end and mainstream solutions for our low-end products.

So I think the overall dynamic is still there and I think, HiSilicon, because they are part of Huawei we just have to assume that they are going to continue to be there; we need to deal with it..

Thank you..

Our next question comes from the line of Charlie Anderson with Dougherty & Company. Your line is open..

Yeah. Thanks for taking my questions and congrats on the quarter and guidance. I wonder if you could talk a little bit about the consumer security market, you said, still small percentage for security for you.

I wonder if you can maybe give us a little bit more color on that, is it at 10% of IP security for you and maybe kind of compare and contrast the October quarter versus the January quarter for that business?.

It’s actually below 10% still, significantly below. Growth rate is good. We’re actually, probably seeing a little bit of a bubble because of the holiday season in that market. We would expect that to probably flatten out for the quarter or two and then second half of next year as where we’re hoping to see strength in that market..

And I know if you have sort of early returns that from AT&T, but maybe any idea on take rates from the customer as you roll this out to additional customers? How many cameras per household? What percentage of household? Just any color you are getting from some of the OEMs on that?.

Well, just like I said, we just saw, the product have been shipped, so we haven’t got any indication in terms of follow-on orders. But, so that’s why it’s hard for us to make a prediction right now..

Got you. Thank so much..

Thank you..

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

Hi. Fermi and George, congratulations on the strong results and guidance.

George, you mentioned in the commentary about sports cameras sort of an uptick in ASPs as GoPro has adopted the A9 and the high-end model? Can you give us some sense what kind of ASP uplift you’re seeing here in the second half of the calendar year and then I have some follow-ups..

Yeah. If you compare to the previous holiday season, they’re high-end camera. We’re averaging probably 25% to 30% ASP improvement on the high-end compared to last year. So it's a significant increase..

Would the entire sort of sports camera segment sort of follow that uplift or is it blended across the entire business maybe up more in it say 10%, 20% range?.

Yeah. It’s not a blended number. That’s just a number for the high-end. If you took the blended number it pulls it down quite a bit, because they have $129 product and then they have their right and the products. So those ASPs are significantly less. So, yes, it will pull it down quite a bit as an average across the whole sports camera..

Okay. But still up....

Definitely, we are still up because, yeah, the majority, they still ship higher volumes at the higher end..

Got it. Great.

And then just on the security camera market, I think, in some of your slide deck, you’ll talk about the market being approaching 70 million units? Can you give us some sense on two factors, one, of the roughly 70 million market, how much of those units today or IP cameras versus older analogue cameras, have we crossed over, is IP camera now the majority of unit shipments or is that still ahead of us? And then second where would you estimate your market share to be in the IP camera segment exceeding the year?.

Right. So, I think, the first question is, we believe that, it hasn’t crossed over yet, but it’s very close. If you talk to different costumers already have different opinion, if you ask the same question last year, everybody said that, IP camera still much lower than the analogue camera. But this year, I think, the opinion changed.

So I won’t be surprised next year of course over what happen, that IP camera will be more than analogue. But still -- that’s still have growth because in the market our sales continue to grow.

In terms of our market share it’s a very hard to predict, because there is a lot of vertical integrated players like Sony, Panasonic actually use their own chip, sensor has their own chip. But we do believe that we have a higher market share than both TI and high silicon at this point..

Great. And then lastly any comments sort of on a quadcopter -- sorry, the quadcopter market as you look into the January quarter.

I would expect that might take takedown seasonally but that was one market, I don't think I heard you give any sort of outlook for?.

Right Well, we haven’t covered all that markets. We talked about separately because it’s still very small revenue compared to all the bigger market.

But from the growth point of view, I think they are really having very healthy growth for the last several quarters already and also you can see that there are a lot of moment and the discussion around this product line. So I think, I won’t be surprised that the next year, we’re going to continue to see healthy growth for this kind of product..

Great. Thank you..

Our next question comes from the line of Brad Erickson with Pacific Crest Securities. Your line is open. Brad your line might be muted. Our next question comes from the line of Joe Moore with Morgan Stanley. Your line is open..

Hi thank you. I wonder if you could talk a little bit about the longer term prospects in automotive OEM where sort of it’s been this year and a half since you started introducing, the kind of multi-camera solutions that might be appealing to the OEMs. I know these are multi-year design cycles.

But when do you think -- are you engage with those guys now? And I know you don’t -- there is noting that we can kind of forecast but I mean is this something that could evolve over the next year where we could start to talk about revenue opportunities in that space?.

Right. So from the revenue opportunity point of view, I think it is still far away because as you know that design cycle is so long. But what I can say is we have spent significant marketing dollars and efforts on this market.

And we’ll continue to see good feedback from the tier 1 OEMs and for our current video products, mainly for example, the surround view or using digital video to -- for other possible automotive applications and for OEM market. So from the marketing point of view, we are making progress but it’s just there is such a long design cycle.

I just don’t want to commit to any revenue forecast at this point..

Yeah, understood. Okay, thank you very much..

[Operator Instructions] Our next question comes from line of Ross Seymore with Deutsche Bank. Your line is open..

Hi guys. Just want to sneak in one follow-up. One clarification, George, when you gave the long-term guidance, one, I assume that’s fiscal ‘16 specifically.

And then the real question is when you talked about the long-term growth rate being in the -- I believe you said 20% to 25% range, is there something strange that’s going on through the course of the next year? Because it seems like to get to that level if the April quarter is flat which you guided to, the first half of the year would be up somewhere in the 40% range.

Is there something strange that would happen that would bring it down that far in the back half of the year?.

Yeah, right now, we are not forecasting the second half of the year to have the significant growth that we had over this year. So if you were to look at this year’s growth rates of 45% to 50% Q4, we don't anticipate that next year. We were actually seeing growth rates in the second half to be slightly lower..

Okay. Thank you..

Our next question comes from line of Brad Erickson with Pacific Crest. Your line is open..

Hi. Thanks for taking my questions. Let's see if I can work my phone correctly this time.

Given the customer concentration with your largest action camera customer, can you kind of talked about how you are feeling about that relationship looking out in the next year, particularly from a pricing and margin standpoint?.

Well, I think the relationship with GoPro has continued to be strong because we’ll continue working closely, is going to defined the next-generation products for next year. And I think there are lots of activities going, although there’s nothing concrete that we can report at this point. But I think that -- I can say that the relationship is healthy.

But when you come to the pricing negotiation, it’s always, you can imagine is ongoing process and has to -- it’s always -- people try to get the best out of it. So, I think from that point of view, just no more process that we have to go through to reach the agreement later..

Got it. That’s great.

And then can you kind of talk about the IP surveillance market in China? How that opportunity looks in terms of the high-end, particularly where imagine you doing very well, kind of how is the mix likely to change going forward? Or maybe put differently, which portions of that market are you seeing sort of the biggest opportunities you are going forward, when I say portions, I mean segment high-end, low-end, mid-tier?.

Right. So if you look at -- we kind of define low end or the 720p, which is very, very competitive market and where HiSilicon alone is competing a lot in there. So what we define mainstream is really the resolution is above basically around 1080p or higher and below, way below 4K resolutions.

In that range, I believe that’s going to be mainstream next year and we have very strong product line and also the design win cycles in there. So, I believe we’re going to do very well in that mainstream market. On the high-end side really, when you talk about 4K market, there's no competitors yet competing with us.

So, I think we are going to have a relatively easy time in that market. But from growth point of view, I think mainstream will continue or likely remain close in terms of dollars, revenue dollars..

Yeah. Got it. That’s helpful. And then finally on the quadcopters, lots been said around that market recently. Can you just kind of talk about what your expectations for pricing of those devices, kind of from your perspective, how that could develop in 2015? Obviously, a lot of these things are priced north of a thousand bucks at this point.

Where might we see prices on the consumer side of that fall as earliest as 2015? Thank you..

Yeah. We expect the ASPs in the quadcopter market to be on the high-end of our camera ASPs. First of all, it will be the -- right now in the high-end chips, the A9 chip is going to be popular and we should be at the high-end of the ASP range for those chips in that market..

Got it. Thank you..

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

Yeah. Thanks for taking my follow-up.

Fermi, can you speak to us on what things are with Google Helpouts? I know you had a demo earlier this year at the Consumer Electronics Show, any developments there and what’s your sense in terms of how they’re progressing with their initiatives here?.

Well, I don’t think there is any progress on that project right now. So, I think, Google and I probably need to decide how to take on this project moving forward with it..

Okay. And then in terms of WT, looks like as a percentage of revenue dropped quite a bit sequentially.

Have you looked at alternative sources here, or is it just a drop in this quarter related to some of the products of WT?.

Well, WT is just a logistic supplier. They don’t distribute products in the sense of selling. So it is just a mix of what customers and if you can look, Chicony jumped up this quarter. They do a lot of the consumer cameras. So they normally are higher in the third quarter. The WT relationship is very good. They do a very good job of logistics for us.

But again, they do not do any marketing or selling of the products. So we are still dealing directly with the end customers in all cases..

Okay. And then last question. George, in terms of your commentary on the second half of next year. What gives you the confidence that it’s going to be sequentially down from Q1? I mean, from the first half, is it related sequentially..

I’d say sequentially, not from the dollar standpoint from a percent standpoint. Year-on-year percentages wanting won’t be as high in the second half, as they were in the second half of this year. You have a large impact of product launches.

Three major projects went out this second half of this year, which brought back growth rate up pretty significantly. And we wouldn’t anticipate or right now, we are not anticipating that same impact next year..

Got it. Thanks for the clarification..

And I’m not showing any further questions at this time. I would like to turn the call back over to Fermi Wang for closing remarks..

Thank you and thanks for joining us today. And I want to send a special thanks to all our employees for their continued dedication and the hard work. Goodbye now. .

Ladies and gentleman, thank you for participating in today’s conference. This does concludes the program and you may all disconnect. Everyone have a good day..