Good day, ladies and gentlemen, and welcome to the Ambarella Fourth Quarter Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Ms. Deborah Stapleton, Investor Relations. Ms. Stapleton, you may begin.

Thank you, and good afternoon everyone, and welcome to Ambarella's Fourth Fiscal Quarter and Year End 2018 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 2018 fourth quarter and full-year results. 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 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 March 30, 2017, for the 2017 fiscal year and the Form 10-Q filed on December 8, 2017, for the third fiscal quarter of 2018. Access to our fourth quarter results press release, historical results, SEC filings and a replay of today's call can be found on the Investor Relations portion of our website. I will now turn the call over to Dr. Fermi Wang.

Good afternoon, everyone. Our Q4 fiscal year 2018 revenue was $70.6 million, representing a decrease of 19.3% from the $87.5 million of revenue in the same period of fiscal year 2017. For the full year ending January 31, 2018, our total revenue was $295.4 million, a decline of 4.8%, although our non-GoPro revenue grew 9.7%. During the year, we continued our focus on IP security and the automotive markets as this represents the biggest revenue opportunity for Ambarella. We enjoyed strong revenue growth for IoT home monitoring applications during the year, driven by multiple new applications, including doorbell, battery-powered and outdoor camera models. Our professional IP-camera business also grew as customers introduced new models supporting the new H.265 video format. In OEM automotive market, revenue growth was driven by multiple car recorder designs, entering production in China, Japan and Korea. At the recent Consumer Electronics Show in January, Ambarella introduced the CV1 and the CV22, the first products in our family Ultra HD computer vision processors based on Ambarella's new CVflow architecture. CVflow combines over 20 years of pioneering research in environmental perception with advances in Deep Neural Network processing. CV1 delivers stereo vision processing and deep learning perception algorithms to a variety of automotive applications, including ADAS, self-driving, electronic mirror and surround view systems, as well as the security cameras, autonomous drones and the robotics. The CV22 camera SoC combines image processing 4Kp60 encoding and CVflow computer vision processing in a single, low-power design. Fabricated in advanced 10 nanometer process technology, it achieves an industry-leading combinations of low-power and high-performance in both human vision and the computer vision applications. Compared with inefficient CPU and GPU solutions, CV22 provides a powerful computer vision performance combined with high-quality image processing, efficient video encoding and the low-power operation required for cameras to…

Thank you, Fermi, and good afternoon, everyone. Today, I will focus my review on the financial highlights for the fourth quarter of fiscal 2018 ended January 31, 2018, as well as the financial outlook for Q1 of fiscal year 2019. 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 for Q4 and fiscal year 2018, we have eliminated stock-based compensation expense adjusted for the impact of income taxes. Our Q4 2018 revenue of $70.6 million represents a decrease of 19.3% from the $87.5 million of revenue in the same period of the prior year. The decrease in revenue was the result of GoPro revenues declining from $30.2 million in Q4 of fiscal year 2017 to $13.3 million in this fiscal year. In Q4, we saw solid year-over-year growth in IP security and auto OEM markets plus growth in non-GoPro wearable markets, offset by a substantial decline in year-over-year drone revenues. In IP security, year-over-year growth was led by strong consumer product builds for the North American holiday selling season. Solid revenue increases from OEM automotive video recorders plus flat aftermarket shipments resulted in good year-over-year growth for the auto market. Drone revenues in the quarter were down from last year, with the majority of our revenue coming from the high-end drone market, primarily at DJI. For the year ended January 31, 2018, revenues declined 4.8% to $295.4 million. Non-GoPro revenues increased approximately 9.7% with strong growth in security, auto and other wearable markets, partially offset by a substantial decline in drones. In fiscal year 2018, GoPro revenues declined approximately 50% from the previous year or $37.7 million. Non-GAAP gross margin for Q4 was 64.7% compared to 64% in the preceding quarter…

Thank you. Our first question comes from the line of Kevin Cassidy with Stifel. Your line is open. John Joseph Donnelly - Stifel, Nicolaus & Co., Inc.: Hi. This is John Donnelly on for Kevin. Thank you for taking my question. Could you detail for us how much of the fiscal year 2019 OpEx spending is expected to be for the CV development?

Well, what we have said on breaking out R&D in total is we're running at about 60% of our R&D costs are related to CV and auto. John Joseph Donnelly - Stifel, Nicolaus & Co., Inc.: Okay. Great. And for the surveillance camera CV chip, could you compare how you're seeing early engagements with the professional market compared to the home consumer market?

Well, I think we got overwhelming positive feedback from our professional security customer, because they are definitely very aggressive to approach this technology. And we talk to all of our main customers in China, in Europe, in the U.S. In their roadmap they all demand a single-chip solution like CV22 that we proposed and we showed it. And we believe that CV22 will be a very important product for us moving forward for professionals. On consumer side, a similar demand is there, but I think that will trend probably a little slower than the professional, not because they don't want that, it's really that I think the professional guy has been preparing this trend for a long time and they are ready to jump on the solution and consumer guys, definitely, is planning for it. So maybe I would say it's off by 6 months or 12 months. But, overall, I think CV22 will be a very important product for us for both professional and the consumer security camera. John Joseph Donnelly - Stifel, Nicolaus & Co., Inc.: Great. Thank you, and congrats on the solid results.

Thank you.

Our next question is from Quinn Bolton with Needham & Company. Your line is open. Quinn Bolton - Needham & Co. LLC: George, just want – first had clarification for the April guidance. Did you say that you have decline in drones offset by year-on-year growth in auto and security? I just want to make sure I got that right.

That's correct. Quinn Bolton - Needham & Co. LLC: Great. Thanks. And then I think in perhaps the last quarter call, as you look forward to fiscal 2009, I think you sort of had given indications you thought the non-GoPro business could be up 10%. Is that still sort of the right range to be thinking about for the non-GoPro business this fiscal year?

Yes. I think at this time, we're still looking at somewhere around 10% growth this year in non-GoPro. Quinn Bolton - Needham & Co. LLC: Great. And then just lastly, the drone market, obviously you've talked about the Tier 2 drone manufacturers having a pretty tough time, your large customers seeing sort of a mix toward lower priced drones. I mean, is your outlook for the drone market, I mean, does that revenue become, at some point, de minimis to overall revenue? Or do you still think that that's a market where you're going to see a fair amount of focus at Ambarella?

Yes, we are saying drone revenues will decline in fiscal 2019 from fiscal 2018, but I think we're still looking at drones longer term, and that the commercial side of the market, as CV starts to rollout in the drone market, I think we have opportunities in the commercial side. So no, although it's going to be a smaller part of our business, I think it's still going to be one we offer products for and support. Quinn Bolton - Needham & Co. LLC: Great. Thank you.

Our next question is from Ross Seymore with Deutsche Bank. Your line is open.

Hi. This is JiHyung for Ross. Thank you for letting me ask a question. Fermi, you mentioned at CES, Ambarella met with over 40 auto OEMs and Tier 1s. So can you talk a little bit about any sort of early design indications that you've heard from the auto OEMs and Tier 1s?

Right.

And you mentioned that you were excited about the engagements there.

Yes. I think the feedback from both OEM, Tier 1s are positive. And as a result, I think we are seeing more people start evaluating our CVflow platform. And in addition to that, we are taking orders for the long-range and short-range SuperCam that we demo at CES and was taking order for that. And also we are receiving and responding to RFQs from the different auto OEMs.

Okay. Thank you. And George, on gross margins, last quarter it was mentioned that gross margins in the first half of fiscal 2019 were expected to be at the high end of the target range of 59% to 62%, and Ambarella guided 60% to 62% for the first quarter. So what has changed in the gross margin profile that is different from last quarter?

Well, there's not any major change. It's just the mix towards China has increased a little quicker than we had anticipated in the fall. Our China security business in Q1 is expected to be reasonably strong, a little stronger than we had looked at there. And that is our lowest margin business. So it's really driven by the mix in the professional security marketplace.

Okay. Thank you.

And our next question is from the line with Joe Moore with Morgan Stanley. Your line is open. Joseph Moore - Morgan Stanley & Co. LLC: Great. Thank you. I wonder if you could talk a little bit about the demo that you discussed for the Analyst Day. I know at CES you showed the sort of perception engine capability of CV1, but I know you also have a software stack that handles some of the driving functionality. So where are you at merging those two things? Is it important to display that for end-customers? Or is the focus more just on CV at this point? And just kind of give us a general state of where you are when you're getting the two functionalities.

Right. So as you said, Joe that, at CES we demo our stereo mono perception technology. But at our Analyst Day – well based on our CES demo and we were going to show Ambarella's sensor fusion technology, our localization mapping, and as well as the high-level controls such as path planning. So basically we're saying that we're going to demonstrate some of our EVA car on the roads of Santa Clara with all those technology integrated. Joseph Moore - Morgan Stanley & Co. LLC: Great. Thank you very much. That's all I had.

And our next question is from Charlie Anderson with Dougherty and Company. Your line is open. Charlie Lowell Anderson - Dougherty & Co. LLC: Yes. Thanks for taking my questions. Kind of a follow-on to the discussion around the 40 automakers and Tier 1s you engaged with and what you saw post CF (00:28:51). I wonder between Level 2, Level 3, Level 4, Level 5, kind of along that stratum of ADAS, where are you seeing the most engagement in terms of the capabilities you're showing off? Where do you think you have the most differentiation versus what's out there? And then I've got a follow up.

Well, based on the current feedback in fact we see a lot of Level 3 and Level 4 requirements at this point. Charlie Lowell Anderson - Dougherty & Co. LLC: Okay. Great. And then, George, operating expenses for the year, do you have any view there?

I'm still in line with what I said on the last call, somewhere between $120 million and $130 million for the year. And the wide-range is just a function of how fast we can hire employees particularly in the CV area engineering. Charlie Lowell Anderson - Dougherty & Co. LLC: Got it. Okay. Thanks so much.

And our next question is from Andrew Uerkwitz with Oppenheimer. Your line is open. Andrew Uerkwitz - Oppenheimer & Co., Inc.: Hey. Thanks, guys. I just have a quick one. On consumer camera market, it looks like Amazon has made a couple of acquisitions in this space over the last couple of months. How do you view their entry into the space, positive, negative? I mean, what's your overall – could they help accelerate the use of CV in that (00:30:13) at all?

First of all, it's very early on, so the Ring deal was just announced yesterday, so we're still evaluating the outcome but, however, what I can say is we think (00:30:29) is a short-term positive for us because we announced several products with Ring just recently and Ring as an independent company has done very well. And with Amazon's marketing and the channel capability, we believe those product can do very well for us – and of course for Ring and Amazon, also well for us in the short-term. In the long-term we definitely want to – need to talk to – continue to talk to Amazon and Ring to understand their roadmap, hopefully we can continue to support them on their technology. This really reminds me that when Dropcam was acquired by Nest and at that time it's also very uncertain about the outcome, but if you look at three years down the road, we continue to be supporting or supplying chips to Nest on their consumer product line. So I hope that will be the case for (00:31:23) but that's remained to be seen. Andrew Uerkwitz - Oppenheimer & Co., Inc.: And then just bigger picture, do you view this as just one more sign that validates the ultimate roadmap towards CV and the use cases that CV brings to the broader camera market?

Absolutely. Internally we tried to speculate the results. Of course, the consumer IP-camera market is very important for Ring and for Amazon, but I think in addition to that if you look at Amazon Go that's a product, that's a idea based on the camera to do video analytics and computer vision function. So I think that's a perfect match for Amazon and Ring. So that definitely is a way we believe that that's an endorsement on CV technology moving forward. Andrew Uerkwitz - Oppenheimer & Co., Inc.: Got it. Thank you gentlemen. Appreciate the color.

Thank you.

Thank you. And I'm not showing any further questions. I'll now turn the call back over to Dr. Fermi Wang for closing remarks.

Thank you. And I would like to thank all of our colleagues for their contribution to our company, and talk to guys next time. Thank you.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a wonderful day.