Good day, and thank you for standing by. Welcome to the Ambarella’s Fourth Quarter and Full Year 2022 Earnings Call. At this time, all participant lines are in listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today’s conference maybe recorded. [Operator Instructions] I’d now like to hand the conference over to Louis Gerhardy, Corporate Development. Please go ahead.

Thank you, Liz. Good afternoon and thank you for joining our fourth quarter and fiscal year 2022 financial results conference call. On the call with me today is Dr. Fermi Wang, President and CEO; and John Young, VP of Finance. The primary purpose of today’s call is to provide you with information regarding our fourth quarter and fiscal year 2022 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’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 that we file with the SEC, including the Annual Report on Form 10-K that we filed on March 31, 2021 for fiscal year 2021 ending January 31, 2021 and the Form 10-Q filed on December 10, 2021 for the third quarter fiscal year 2022 and in October 31, 2021. Access to our fourth quarter and fiscal year 2022 results press release, historical results, SEC filings, and a replay and prepared transcripts of today’s call can be found on the Investor Relations portion of our website. Fermi will first provide a business update for the quarter and the full year, John will review the financial results and then Fermi, John and I will be available for your questions. With that, I’ll turn it over to Fermi.

Thank you, Louis, and good afternoon, everyone. Thank you for joining our call today. Fiscal year 2022 represented an inflection year for Ambarella with numerous milestones achieved. Record revenue of $332 million was up 49% year-over-year, with CV revenue more than tripling to exceed 25% of total revenue and driving blended ASPs higher. It was the first year where CV delivered a material contribution to our operating results, enabling non-GAAP operating margin to reach 19% versus 4% the prior year. CV revenue Wave 2 smart home became material during the year as expected, and we are pleased to announce CV revenue from Wave 3 automotive, also became material during the year. This occurred more than a year ahead of the guidance originally provided in June 2019. Turning to products. We expect CV5, our first 5-nanometer SoC, to begin mass production in the second half of fiscal year 2023. While CV3, our second 5-nanometer SoC, a 10 billion transistor automotive domain controller tape out and is expected to sample this year. There is a strong and broad-based demand for our CV products. At the end of the year, we have cumulatively shipped more than six million CV SoCs to more than 275 unique CV customers across many verticals. Looking to fiscal year 2023, geopolitical and public health headwinds persists, and the market forecasters predict real global GDP and the semiconductor industry growth rates will decelerate. There is a continuation of supply chain challenges. And in February, we were informed our 14-nanometer supply from Samsung will be constrained. At this time, we anticipate an adverse impact to our video processing revenue of approximately $5 million in Q2. Despite these headwinds, we see the secular forces from the digital transformation remaining very strong. In particular, demand for our deep learning AI processes for…

I will review the financial highlights for the fourth quarter and the full fiscal year 2022 ending on January 31, 2022, and provide a financial outlook for our first quarter of fiscal year 2023, ending on April 30, 2022. I will 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 and acquisition-related costs adjusted for the impact of taxes. Fiscal year 2022 revenue increased 49% year-over-year to $331.9 million. Security camera revenue was close to 65% of total revenue, up more than 50% year-over-year. Auto revenue more than doubled year-over-year and represented almost 25% of total revenue. Our other business declined roughly 20% year-over-year to represent slightly more than 10% of revenue. For fiscal year 2022, non-GAAP gross margin was 63.4%, up from 61.4% in fiscal year 2021. Despite some higher costs and expenses, our customer mix and product mix improved and the pricing environment was relatively stable. Non-GAAP operating expenses increased 15% for the year, with the majority of this increase in our organic R&D investment. For the 14th consecutive year, we reported positive annual operating cash flow, which was $38.8 million in fiscal 2022. With no debt, net cash on hand totaled $171 million at the end of the year. Q4 revenue of $90.2 million was slightly above the midpoint of our guidance range, with CV ending the year on a strong note. Q4 revenue declined 2% sequentially, well above the 5-year average of down about 10% sequentially. With several new video processor and computer vision programs commencing production, auto revenue increased more than 30% sequentially. Security camera and other revenue declined about 10% sequentially. Non-GAAP gross margin for Q4 was 64.8%, and above the high…

[Operator Instructions] Our first question comes from Matt Ramsay with Cowen.

Good afternoon. Thank you very much. Guys, my first question is, obviously, there's some sensitivities and changes with the supply situation from Samsung on 14-nanometer. So a couple of questions around that. I guess the first one is, in the prepared script, it sounded like there was -- you guys found out pretty recently, and there's going to be sort of a $5 million impact. I think you said Q2, maybe you could clarify that, how long you feel like that type of, or magnitude of impact might continue to be a headwind into the back half of the fiscal year? And I guess the other part of the question is, does that mean that you're not yet seeing any of that impact in the guidance for April? Thanks.

Well, I think the guidance we just provided for Q1 has considered all of the potential impact. We noticed this problem after Chinese New Year, we have communicated with Samsung many, many times throughout the last few weeks to identify potential impact. And our conclusion is our Q2 revenue will be impacted by approximately $5 million, and we're still working hard to -- on Samsung to secure our second half supply. And we believe that Q2 might be the worst case for the whole year, but we still need to confirm the supply situation with Samsung for Q3 and Q4.

Got it. Thanks, Fermi. I guess the other piece of the question around supply is more around the longer term. I mean you guys have worked with Samsung really since the birth of the company and Ambarella. Is there any change that happened on their side that caused the supply disruption, or do you get the feel that you're getting the priority with your supply partner that we would like. Are there any changes to that dynamic? And are you considering going forward any other sources of foundry capacity?

Well, I think our relationship with Samsung is still very strong. I think that -- I think you probably noticed that the 40-nanometer supply that we talked about is the same product line that we had a problem last year when Samsung Texas Foundry had a problem. So I think one of the reasons that has popped us is, if there's any supply change, we really have no inventory to cover the -- to bridge the problem. So I think that we still get a high priority from Samsung. But I think this shortage of 40-nanometer in Samsung is severe, and I will just continue to see the result of that. In terms of considering second source, we are working on 5-nanometer right now and any table, regardless the other engineering costs, any table is $50 million. It's going to be a very costly proposal if we want to consider second source. So at this point, I think we would like to understand what happened in Samsung and try to work out the catch-up plan so that we don't face a more severe situation in the future. But at the same time, I feel that Samsung is working hard to work with us to reduce the impact.

Got it. Thanks for that. Just for my last question. You mentioned that if you -- as you look into the April quarter after some stronger results in the last couple that the automotive revenue might be down sequentially slightly, maybe you could talk about the drivers of that sequential revenue decline? And how do you think the automotive business is going to trend for growth for the full fiscal year? Thanks.

Well, first of all, I think our automotive business continues to be strong. This quarterly reduction's more like a seasonal, but also reflects last year, we have multiple products ramping up at the end of the year. I think that the ramping up really trigger a big surge on the demand, and now we are start seeing the regular run rate. So I think the combination of seasonality and this is the reason. But I still believe that our automotive business continue to performing strong.

Got it. Thanks, Fermi. I’ll jump back in the queue.

Our next question comes from Gary Mobley with Wells Fargo.

Hey, guys. Thanks for taking my question. I wanted to focus a minute on the demand side of the picture. Fermi, you seem to be hedging a little bit in your prepared remarks talking about decelerating industry trends, and so what I'm curious to know is to what extent is sort of the flattest revenue trends you're expecting to see for three consecutive quarters, albeit better than seasonal, impacted by supply and to what extent is impacted by demand? In other words, I guess the most way -- direct way I can ask the question is, did backlog grow during the quarter?

We still see a very strong demand, particularly on the CV side, we feel strong that we have a great momentum on CV, and we continue to believe that our CV revenue will be more than 45% of this year's total revenue. And from that point of view, I think we feel confident that we invest heavily on that direction, and we believe we're going to get paid off from that investment. From the supply point of view, 40-nanometer had been a problem for us between Samsung and us for more than 18 months now. So I hope that when the overall industrial short supply become better, and this problem will go away with us. And we have -- for any other process node or any other product lines, we have not seen any supply issues from Samsung.

Okay. On the thread of supply chain issues, I wanted to ask about what you're getting produced at Samsung, Korea, I presume almost everything CV is in Samsung Korea. Are you seeing any constraints on that particular fab?

Just like any other fab, the older fabs around are very tight, and we believe that Samsung Korean fab is tight, too, but we are convinced that at this point, we will not have any shortage on our CV product supply chain.

Got it. Thank you, guys.

Our next question comes from Ross Seymore with Deutsche Bank.

Hi, guys. Thanks for letting me ask a question. It's nice that you sized that $5 million impact, it's not fun to have to have to deal with that. But any sort of sizing about the supply side impact, if any, on either your fourth quarter that you just reported or the first quarter you're guiding to?

I don't think there's any impact on Q4 and Q1. We just realized this problem just a few weeks ago. So we are dealing with immediately by disclose to our investors so that we give the potential impact of the size or impact as well as the timing impact, so our investors can understand the situation.

Great. Thanks for that, Fermi. And I guess as my one follow-up, the non-CV revenue, looks like it grew about 25% last year, which is really impressive. Can you just talk about what the drivers of that growth would be? And do you see them continuing this year ex the supply limitation? I just want to figure out what sort of growth rate we should think about for the part of the business that's not included in the 45% CV.

Right. So last year, the growth -- the non-CV revenue growth mainly come from the security camera and automotive, particularly a lot of automotive growth came from the non-CV product line. And this year -- but however, last year, I also want to make a note on the -- we continue to lose business from Hikvision, Dahua, we have been documenting the unit number drop. In fact, on John's script, he talked about that we're going to see go from 6% last year total revenue from Hikvision Dahua go down to an even lower level. So I think from that point of view, the non-CV revenue will continue to have pressure because of Hikvision, Dahua. But also, I think that our CV product line also replace some of the video product line. So I don't expect that the video product line grow another 25% this year. But the shortage from 14-nanometer is all video processor, which is non-CV, and they'll continue to put pressure on our non-CV revenues.

Do you expect the non-CV revenues to grow this year?

I don't think so.

Okay. Thank you.

[Operator Instructions] Our next question comes from Andrew Buscaglia with Berenberg.

Hey, guys. Maybe you could talk a little bit about on the margin side. You had a great gross margin quarter, but operating margins were a bit lighter than I was expecting only because it looks like some of your operating expenses were a little bit higher. How much was that more so sort of self-inflicted versus anything supply chain related?

Well, there are some supply chain-related issues because I think the cost has continued to go up, not only just on wafer side, packaging, testing, even delivery, all the cost is going up. But however, I think the main driver of our operating expense growth is always on the R&D side. In fact, that when we take out our CV chip, that R&D expenses on the IT side as well as the contractor side is definitely higher because that's such a huge chip, and we work very hard to put resource to solve that problem. So definitely, that our operating expense will be driven by our continued investment on the premium R&D, including the 5-nanometer, maybe even 4-nanometer tape-out and also tools and also continue to hire further engineers in the future.

Okay. And then maybe one more on automotive, just with the guidance for Q1. You made some comments about customers maybe choosing to defer shipments. Was that specific to automotive? And then just kind of what's your confidence in that the demand versus a few weeks ago being there this year than it was prior to some of the stuff that's come to light?

I don't think the demand changed in the last several months or several weeks. The biggest change is I think everybody is seeing that the automotive industry continue to have a supply probably not only our supply problem, but also the other materials, right? In fact, we continue to see our customers cannot build a product because of the lack of other components, microcontroller for one. So I think that's probably the biggest variable we are dealing with. I don't see a demand change. I still continue to see the uncertainty of supply is the biggest problem.

Great. Okay. Thanks, Fermi.

Our next question comes from Joe Moore with Morgan Stanley.

Great. Thank you. To the extent that you guys talked about these incomplete kit type issues, where they may have excess inventory of your product. What markets do you see that as being more likely than others? Is it span all the markets? And is there anything you could do to help us kind of quantify what that impact might be?

Well, we start seeing it, we see pockets of the inventory, and some of it is automotive, some is security. It really depends on how customer -- the customer purchasing criteria, right? Some customers continue to buy our chip until they realize that they cannot get other components. Some people stop earlier, so they don't build inventory of our chips. So we see small pockets here and there across all the markets.

Okay. And any sense for the magnitude of it? Like is this extreme by historic circumstances, do you think?

I don't think it's a huge amount yet. Otherwise, we should make alarm -- to make it visible to our investors, but we want to talk about what we're seeing in this and because we start seeing people pushing out the demand because of that. But I don't think that's a severe problem just yet.

I appreciate that. Thank you.

Our next question comes from Kevin Cassidy with Rosenblatt Securities.

Thanks for taking my question. Maybe just another way to ask Joe's question. The -- in the security camera business that was down 10% quarter-over-quarter, was that mostly professional, or was it the home security camera?

I think it's both. I think both went down. But also, you have to remember, seasonality is clearly a major role in there. If you look at our last five-year trend, both professional and the consumer market went down. So it's not a surprise to us.

Okay. And on the -- maybe with the shortage of supply, are you being -- are you getting any manufacturing cost increases?

We -- in the last 18 months, we continue to get increase, yes, and we continue to see that.

Okay. And can you pass along that cost increase to your customers?

To a certain extent, yes. In the past, we did pass some of the cost increase to some of the people when they try to expedite the delivery. But this time we saw a 14-nanometer problem, we did because of the cost raised to a point that we have to reflect to our customers.

Okay. Great. Thank you.

Our next question comes from Tore Svanberg with Stifel.

Yes, thank you. Just a clarification question on the foundry situation. So is it purely just capacity, or are there some other technical yield issues? Because it sounds like you've had some issues for the last 12 months. Is it just purely capacity?

I think right now, what we're seeing is that we don't get enough allocation, but what’s the real reason behind it, I don't want to speculate because Samsung didn't tell us. But I think it's become clear in very early January that they either got overbooked, or they have other issues that we are not familiar with, but they have to reduce the allocation to us in Q2.

That's very helpful. And can you just elaborate a little bit more on the timing for CV5 and CV3? So I think you mentioned revenue contribution to CV5 late this year, are you expecting CV3 revenue maybe second half of next year still?

CV3 -- first of all, yes, you are right, CV5, we're expecting second half revenue from customers. And in fact, both from the security camera, as well as some of the traditional consumer product. For the CV3, we are sampling to our customer, I would say, second quarter this year and the revenue will come much later than that, right? This is really automotive customer we're talking about.

Got it. Thank you Fermi.

Our next question comes from Quinn Bolton with Needham.

Hey guys, I wanted just to ask on the video processor side. Do you think that that demand is perishable, meaning that if you're sort of -- you don't get the allocation from Samsung in the second fiscal quarter that that demand goes elsewhere, or do you think that it simply pushes into fiscal Q3 or fiscal Q4?

Quinn, my gut feeling is this, if this is a one quarter problem, I think our customers probably can wait and their customers can wait. But if this drag along further, I think some of the revenue will become perishable. So it really depends on how fast that we can work with Samsung to control our problem and provide much better visibility to our customer for Q3 and Q4.

Got it. And then hike in dollar down to 2% of sales. Do you think that they recover over the next couple of quarters, or do you think that they just continue to represent a very low single-digit percentage of revenue going forward and effectively become immaterial at this point?

Yeah, I think they will stay at that level. But last year, if you look at a whole year, they are still probably 6% of total revenue. And this year, there will be a low single digit and probably steady until become nonmaterial.

Understood. Okay. Thank you.

Our next question comes from Vivek Arya with Bank of America.

Thank you for taking my questions. The first one I actually have is on your balance sheet. When I look at the cash level, it's strong, but it's at the lowest level since fiscal 2015. And I'm curious, Fermi, will you need to raise more, whether it's to execute on the R&D road map, or more importantly, will you need to provide long-term supply agreements with your foundry suppliers? Because we are seeing many of the computing payers prepay for capacity, is that something that you will also need to consider, so you are assured of supply going forward?

Right. So they are two separate questions. So first question is because of acquisition of Oculii, our cash flow dropped to $150 million. But I think you also noticed that in this quarter, we generate $20 million cash flow. So from this point of view, if we don't need the extra cash in the near future, we don't need to really raise any funding. But you made a great point that there are many companies out there trying to using -- commit cash to secure their foundry. That's something we are considering to do. But however, that if we want to do it, really, we can get a line. We talk about this last time that we can easily get a line to help us to bridge that demand. So I think worst case is we're going to a line, but we are not considering any secondary at this point.

Got it. Very helpful. And for my follow-up, just a quick one on Q2, the $5 million impact, does it kind of mean conceptually, Q2 sales closer to $85-ish million, or are there kind of positive offsets from the CV side? And are there any gross margin implications, because you had very strong margin in Q4 but you're kind of getting back to a trend line in Q1. What happens when you have this additional supply issue? How should we think about just the puts and takes around the sales and the gross margin that the best insight you have today would be very helpful.

Right. I think when we said $5 million it's really directly impact to our top line. So, it's really just revenue probably we believe we lose $5 million revenue in Q2. So, that's probably answer to your first question. From a gross margin point of view, there is a combination of cost increase as well as we talk about, we have to raise the price to certain 40-nanometer customers. And that combination, we need to -- we are factoring in our guidance. So that's why you see our guidance on the gross margin line. So I think we continue to believe that long-term, our gross margin is 59% to 62%, but in the next quarter is based on the 63% to 64% guidance right now.

Okay. Thank you.

Our next question comes from David Kelley with Jefferies.

Thanks. Good afternoon, guys. Maybe just a question on customer and product mix, clearly, it's been a tailwind. How are you thinking about the sustainability of that benefit into 2023?

Well, I think that from a computer vision point of view, I think all the indications that we have is really make us to believe that we have very strong support on, not only customer base but also revenue growth. We talked about 25% total revenue last year to 45% total revenue this year. And also, we talked about the customer that we engage and a number of customers that we take into production. So we continue to believe that story is very strong, right? So, now I think this 40-nanometer product line shortage definitely will impact on the video processor product line and also put impact on the revenue, but also some design win activities, people probably want to look at in Q3 and Q4. if we cannot deliver how they can satisfy their revenue. So I think that definitely impacted that we need to evaluate quickly and what we sense on to solve the problem.

Okay. That's helpful. Thank you. And then maybe one more following up on the earlier automotive deferral conversation. I was hoping to talk if you could talk a bit more about the timing of what you're seeing there. Did your customers start to pull back in January as some of the production disruptions were picking up again, or is this something that you were seeing earlier in Q4 as well?

Yes. Just to be clear, David, this is Louis. We didn't talk about an automotive deferral. In fact, our automotive revenue increased 30% sequentially in Q4. As we had a number of new programs kick in, in multiple geographies for both video processors as well as computer vision. And so in Q1, we do see our automotive business down a little bit sequentially, but we do expect auto to be a key driver of growth in the next year.

Okay. Thanks, Louis. One more, if I may, just to follow up on that. The Q1, is that more of a seasonal pullback, or is there anything from a customer standpoint where they're pushing out order books with some of the OEM production disruptions?

Yes. No, I think it really comes down to some several new programs that kicked in, again, for both video processors and computer vision. And now that they've established their initial inventory, now their order rate comes back to a normalized run rate. So those are the dynamics we think caused it.

Okay. Got it. Thanks for the clarification.

Our next question comes from Tristan Gerra with Baird.

Hi. Good afternoon. Any way you could help us quantify the revenue contribution from the CV5 ramp in the second half? And then, embedded in that question, given the commentary that inventories are not a huge problem yet and suggesting it gets worse, any attempt to gauge when the infection point quarterly is going to be this year?

So for CV5, we're comfortable with the ramp occurring in the second half of the year. There's multiple customers, multiple product areas where that's going to occur. So there's no change there and no change with CV3 and -- that we expected to sample in the first half of the year. I didn't understand your question about inventory. Could you just rephrase that or repeat it?

Yes. I think, Fermi, during the Q&A mentioned that inventories were not a huge problem yet as part of an answer to question. So it suggests that it might get worse in terms of inventory corrections. I'm just trying to look at the timing of where we should expect an inflection point.

Well, that's a question that we are trying to find an answer for, because right now, there are all kinds of supply chain issues that are out of our control. A lot of our customers are pushing out their demand of our silicon, because they don't -- they cannot find other silicon like a microcontroller, WiFi chip or PMIC. So until they get better visibility, we will not get a better visibility from that. So I think that it's really reflected in this industrial problem that we -- until the shortage of other components are getting better, it's going to have -- we are going to have a very limited visibility on how much people inventory -- our inventory sitting on the supply chain.

Great. Thank you very much.

Our next question comes from David O'Connor with BNP Paribas.

Great. Thanks for taking my question. Maybe one or two on my side. Maybe firstly, a question for John on how we should think about the OpEx growth for this fiscal year ahead? Should we kind of take what the trend was last year? That's my first question. And then secondly, just a clarification on the seasonality for Q2, typically up, but given the Samsung issue and also the deferred shipments, can you give us any more on kind of the puts and takes there of how we should kind of model that for looking out towards Q2? Thank you.

Yeah. So as far as Q2 goes, I think, really, the only guidance that we're giving at this point is just the $5 million issue. And so beyond that, that point on revenue in Q2, we don't really want to make any additional comments at this time just because we're looking to get more visibility as we get closer to that. I think with regard to OpEx, as I think we said in the prepared remarks that we -- our expectation, our plan is to continue to invest in premium R&D that we've been developing in-house year after year. And so that's going to take on several different initiatives, developing modules for the complete automotive stack, higher up the stack. That's one of the initiatives that we have, developing chips that fully take advantage of the Oculii radar that we recently acquired their technology, continuing to hire. And so I think while we are at an inflection point for the CV revenue, and we expect that to be very favorable for us on a long-term basis, I think in the near term, we are expecting to continue to invest. And I think the level of investment that we've seen in fiscal 2022 is indicative of what we might expect going forward.

That’s helpful. Thank you.

Our next question comes from Martin Yang with Oppenheimer.

Hi. Good afternoon. Thank you for taking my question. My one question is on your business development activities in China. It seems that there are a lot more non-automotive, non-IT security e-commerce projects going on. Has there anything changed as the result of lower revenue exposure to your IP customers in China, or that's basically reflective of normal design activities among the Chinese customers?

Well, in this -- in our script this time, we didn't talk about any Chinese security camera customer. We did mention several Chinese automotive customers. There is a video conferencing customer, and one the interesting automotive is this automatic beam controlled for lighting. So I don't think there's any major change on the Chinese security camera market per se. I think that market today is highly dominated. And we -- like we talked about our supply situation to them. And I don't think that we talk about any major changes on the Chinese security cameras.

Maybe, if I may clarify my question a little bit. I was asking if your overall business development maybe structure or resources have changed. So I think are you putting more resources into non-security customers or applications?

Yes, that's obvious. Because we realize that security camera in China is a very sensitive industry, and most of our Chinese customers are looking for non-US suppliers. So -- but however, in other business, which is not sensitive as security camera like automotive, like other industry we talk about, we continue to put effort in China because that's still a big market that we need to – we can continue to gain market share from. So that's why you are absolutely right, we continue to strong team in Shanghai and Shenzhen, helping us to this development in China.

Thank you.

In fact, we also see Oculii RADAR that China can be a very, very good market for them, too.

Got it. Thank you.

Our next question comes from Brian Ruttenbur with Imperial Capital.

Yes. Thank you very much. If I dig down a tiny bit on the security business, can you tell me what percentage of your revenue was security in the fourth quarter?

Hey, Brian, this is Louis.

Hey, Louis.

Yes, security in the fourth quarter was – let me just check this --

Around 60%.

Around 60%. And for the year, security overall grew a little more than 50%, and it was around 65%.

Okay. So 65% on this fiscal year that just ended. Can you talk then about where you see it at least in the first quarter or for fiscal 2023 would be great. But at least the first quarter, where do you see that percentage going? I assume down from 60% to 55%. How much of a stair step are we talking about in terms of the security revenue as a total?

Yeah. So we see that IoT category, where security is the largest part of it, growing sequentially in Q1. But as you know, with automotive growing to be 65%, 70% of our SAM over the next five to six years over time, our revenue mix should shift in that direction.

Okay. Do you have a percentage that you're targeting for first quarter that's going to be IoT/security?

No, we don't have a figure for that other than it will grow sequentially. That's our expectation. And auto, we expect to have a slight decline in Q1 given the fact that we talked about earlier.

Okay. And then just finally, on that same point. Is this more a demand issue or a supply issue on the slowing on the security side?

I think it's a seasonality, right? If you look at the seasonality in the last five years for professional or consumer security camera, it's always that seasonality always play a role from Q4 to Q1.

Yeah. I mean, there is also been the factor in the last two to three years, where hike and dollar were more than 25% of our revenue, and you heard now they're in the very low single-digit range combined. So that's been a factor over this period of time.

Great. Thank you very much.

That concludes today's question-and-answer session. I'd like to turn the call back to Dr. Wang for closing remarks.

Thank you, and thanks to all of you to join during the meeting today. I'm looking forward to seeing you at some other opportunities in the near future. Thank you. Goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.