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What changed in AMBARELLA INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMBARELLA INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+299 added−277 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-31)

Top changes in AMBARELLA INC's 2024 10-K

299 paragraphs added · 277 removed · 226 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur ability to compete successfully in the rapidly evolving camera markets depends on several factors, including: • the design and manufacturing of new solutions, including software, that anticipate the video processing and integration needs of our customers’ next-generation products and applications; • performance of our computer vision solutions, as measured by convolutional neural network performance, video and still picture image quality, resolution and frame processing rates; • power consumption efficiency of our solutions; • the ease of implementation of our products by customers; • the strength of our customer relationships; • the selection of the foundry process technology and architecture tradeoffs to meet customers’ product requirements in a timely manner; 15 • reputation and reliability; • customer support; and • the cost of the total solution.
Biggest changeOur ability to compete successfully in the rapidly evolving camera markets depends on several factors, including: • the design and manufacturing of new solutions, including software, that anticipate the video processing and integration needs of our customers’ next-generation products and applications; • performance of our computer vision solutions, as measured by convolutional neural network performance, video and still picture image quality, resolution and frame processing rates; • power consumption efficiency of our solutions; • the ease of implementation of our products by customers; • the strength of our customer relationships; • the selection of the foundry process technology and architecture tradeoffs to meet customers’ product requirements in a timely manner; • reputation and reliability; • customer support; and • the cost of the total solution. 15 We believe we compete favorably with respect to these factors, particularly because our solutions typically provide high-performance and low power consumption video, CNN performance, efficient integration of our advanced algorithms, exceptional storage and transmission efficiencies at lower power, highly-integrated SoC solutions based on a scalable platform, and comprehensive and flexible software.
We believe that our leadership is the result of our competitive strengths, including: • Proprietary AI, Radar and Computer Vision Architecture. Our proprietary AI and computer vision processing architecture, known as CVflow, uses a flexible hardware engine programmed with a high level algorithm description to achieve increased performance while minimizing die size and power consumption.
We believe that our leadership is the result of our competitive strengths, including: • Proprietary AI, Radar and Computer Vision Architecture. Our proprietary AI processing architecture, known as CVflow, uses a flexible hardware engine programmed with a high level algorithm description to achieve increased performance while minimizing die size and power consumption.
Additionally, our neural-network image signal processing (NN-ISP) software module improves low light imaging in security camera applications. 8 The chart below describes our current product lines: Technology 9 Our semiconductor processing solutions enable artificial intelligence and computer vision processing, HD, UHD and 8K UHD (up to 7680 x 4320p60) video and image processing, and video compression, sharing and display while offering exceptional power, size, and performance characteristics.
Additionally, our neural-network image signal processing (NN-ISP) software module improves low light imaging in security camera applications. 8 The chart below describes our current product lines: 9 Technology Our semiconductor processing solutions enable artificial intelligence and computer vision processing, HD, UHD and 8K UHD (up to 7680 x 4320p60) video and image processing, and video compression, sharing and display while offering exceptional power, size, and performance characteristics.
Its next-generation CVflow® AI engine includes neural network processing that is 20x faster than the previous generation of CV2 SoCs, along with additional general vector processing capabilities to provide the overall performance required for full autonomous driving (AD) stack processing, including computer vision, HD radar, deep fusion and planning.
Its next-generation CVflow® AI engine includes neural network processing that is 20x faster than the previous generation of CV2 SoCs, along with additional general vector processing capabilities to provide the overall performance required for full autonomous driving (AD) stack processing, including computer vision, HD 4D radar, deep fusion and planning.
Our CV technology is creating opportunities for us to address a broader range of markets and applications while also allowing us to capture more content per electronic system. Our new CV3 AI central domain controller family of SoCs is specifically architected for automated driving applications.
Our AI technology is creating opportunities for us to address a broader range of markets and applications while also allowing us to capture more content per electronic system. Our new CV3 AI central domain controller family of SoCs is specifically architected for automated driving applications.
Our recent development efforts have focused on creating advanced AI technology that enables edge devices to visually perceive the environment and make decisions based on the data collected from cameras and other types of sensors, such as 4D radar.
Our recent development efforts have focused on creating advanced AI inference technology that enables edge devices to visually perceive the environment and make decisions based on the data collected from cameras and other types of sensors, such as 4D radar.
Applications for sensing cameras include elderly monitoring, building occupancy monitoring and retail store business analytics. 6 • Other IoT Applications. Cameras for the home, public spaces and consumer leisure applications that provide HD video quality increasingly include embedded connectivity to share and display video.
Applications for sensing cameras include elderly monitoring, building occupancy monitoring and retail store business analytics. 6 • Other IoT Applications. Cameras for the enterprise, home, public spaces and consumer leisure applications that provide HD video quality increasingly include embedded connectivity to share and display video.
Our CV SoCs are optimized for the requirements of the end-point market to provide highly accurate results, significant processing power, small form factor and minimal latency while consuming very low amounts of power and simultaneously delivering both human viewing and computer vision functionality, often while supporting multiple cameras and multiple AI applications with a single SoC incorporated in an end-point device.
Our CV SoCs are optimized for the requirements of the edge inference market to provide highly accurate results, significant processing power, small form factor and minimal latency while consuming very low amounts of power and simultaneously delivering both human viewing and computer vision functionality, often while supporting multiple cameras and multiple AI inference applications with a single SoC incorporated in an end-point device.
These SoCs combine advanced image processing, high-resolution video encoding and CVflow AI processing in a single, low-power design to enable a new class of smart edge devices for applications including smart home security, retail monitoring, consumer robotics, and occupancy monitoring. Some of our CVflow SoCs are manufactured to satisfy the functional safety requirements of the automotive market. Vision Processor SoCs.
These SoCs combine advanced image processing, high-resolution video encoding and CVflow AI processing in a single, low-power design to enable a new class of smart edge devices for applications including smart home security, retail monitoring, consumer robotics, and occupancy monitoring. Some of our CVflow SoCs are manufactured to satisfy the functional safety requirements of the automotive market.
These video cameras are pre-installed in vehicles or mounted (aftermarket) to record events for reconciliation, such as for insurance and liability, driver scoring or training, and security purposes. We offer solutions for both OEM and aftermarket drive recording devices, some of which include advanced driver assistance systems (ADAS) features. ▪ Electronic Mirrors.
These video cameras are pre-installed in vehicles or mounted (aftermarket) to record events for reconciliation, such as for insurance and liability, driver scoring or training, and security purposes. We offer solutions for both OEM and aftermarket drive recording devices, some of which include advanced driver assistance systems (ADAS) features. • Security Cameras .
In addition, we recently introduced a centralized radar architecture that leverages Oculii’s adaptive AI software algorithms together with our CV3 processor family to enable both central processing of raw radar data and deep, low-level fusion with other sensor inputs, including cameras, lidar and ultrasonics. Serializer/Deserializers .
We recently introduced a centralized radar architecture that leverages Oculii’s adaptive AI software algorithms together with our CV3 processor family to enable both central processing of raw radar data and deep, low-level fusion with other sensor inputs, including cameras, lidar and ultrasonics. Serializer/Deserializers .
This category of AI technology is known as computer vision, or CV, and our CV SoCs integrate our state-of-the-art video processor technology together with our recently developed deep learning neural network processing technology, which we refer to as CVflow®.
This category of AI technology is known as computer vision (CV), or edge inference AI, and our AI inference SoCs integrate our state-of-the-art video processor technology together with our recently developed deep learning neural network processing technology, which we refer to as CVflow®.
As described below, Ambarella’s products are now used in a wide variety of human viewing and computer vision applications, including a variety of automotive camera systems, video security cameras, mobile and fixed robots, industrial applications, and consumer devices, such as action, drone and 360° cameras.
Ambarella’s products are now used in a wide variety of human viewing and computer vision applications, including a variety of automotive camera systems, video security cameras, mobile and fixed robots, industrial applications, and consumer devices, such as action, drone and 360° cameras.
Our SerDes chips are also used in security applications such as ATMs that can use a single B8 chip for connecting multiple remote cameras to a single video processor SoC. Software Modules . In the future, we may separately license proprietary software modules that can be used in conjunction with a customer’s internally developed software and/or with third-party software.
Our SerDes chips are also used in security applications such as ATMs that can use a single B8 chip for connecting multiple remote cameras to a single video processor SoC. Software Modules . We separately license proprietary software modules that can be used in conjunction with a customer’s internally developed software and/or with third-party software.
We believe that our continued success depends on our ability to both introduce improved versions of our existing solutions and to develop new solutions for the markets that we serve. As of January 31, 2023, approximately 74% of our employees are engaged in research and development. Our research and development team is comprised of both semiconductor and software designers.
We believe that our continued success depends on our ability to both introduce improved versions of our existing solutions and to develop new solutions for the markets that we serve. As of January 31, 2024, approximately 75% of our employees are engaged in research and development. Our research and development team is comprised of both semiconductor and software designers.
Industry Background and Target Markets Computer vision functionality has historically been executed with graphics processing units (GPU), field programmable gate-arrays (FPGA) or general purpose microprocessors (CPU) in servers or datacenters.
Industry Background and Target Markets Computer vision functionality has historically been executed with graphics processing units (GPU), field programmable gate-arrays (FPGA) or general purpose microprocessors (CPU) in servers or data centers.
We continually monitor the results of testing at all of our test contractors to ensure that our testing procedures are properly implemented. As part of our total quality assurance program, our quality management system has been certified to ISO 9001:2015 standards.
We continually monitor the results of testing at all of our test contractors to ensure that our testing procedures are properly implemented. As part of our total quality assurance program, our quality management system has been certified to ISO 9001:2015 standards. Our assembly and testing vendors are also ISO 9001 certified.
Our video and image processing SoCs, based on our proprietary architecture, integrate an advanced image sensor pipeline (ISP), H.264 and/or H.265 encoders, and a powerful ARM CPU for advanced analytics, flight control, WiFi streaming, and other user applications.
Our video and image processing SoCs integrate an advanced image sensor pipeline (ISP), H.264 and/or H.265 encoders, and a powerful ARM CPU for advanced analytics, flight control, WiFi streaming, and other user applications.
In addition, this approach often requires personal information to be transmitted from the end-point device to the network infrastructure, potentially raising privacy and security concerns. 4 We believe the CV end-point market, sometimes referred to as the system’s edge, requires a fundamentally different SoC architecture versus the GPU, FPGA and CPU approach commonly used in the datacenter.
In addition, this approach often requires personal information to be transmitted from the end-point device to the network infrastructure, potentially raising privacy and security concerns. 4 We believe the AI inference end-point market, sometimes referred to as the system’s edge, requires a fundamentally different SoC architecture versus the GPU, FPGA and CPU approach commonly used in the data center.
We refer to ODMs and Tier-1 suppliers as our customers and OEMs as our end customers, except as otherwise indicated or as the context otherwise requires. Sales to customers in Asia accounted for approximately 82%, 88%, and 88% of our total revenue in the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
We refer to ODMs and Tier-1 suppliers as our customers and OEMs as our end customers, except as otherwise indicated or as the context otherwise requires. Sales to customers in Asia accounted for approximately 79%, 79%, and 86% of our total revenue in the fiscal years ended January 31, 2024, 2023, and 2022, respectively.
In addition, privacy and security can be enhanced, as critical personal information may not need to enter the network infrastructure. Our first CV SoC was introduced in 2018 and CV3 is our third generation computer vision chip in our SoC family. Our development efforts are now focused on SoCs that provide both human viewing and computer vision functionality.
In addition, privacy and security can be enhanced, as critical personal information may not need to enter the network infrastructure. Our first AI SoC was introduced in 2018 and the CV3 SoC integrates our third generation CVflow technology. Our development efforts are now focused on SoCs that provide both human viewing and computer vision functionality.
Our new CV3-AD685, the first production version of the CV3 family of automotive AI domain controllers, targets L2+ to L4 autonomous vehicles.
Our CV3-AD685, the first production version of the CV3 family of automotive AI domain controllers, targets L2+ to L4 autonomous vehicles and advanced robots.
Approximately 81% of eligible U.S. employees participate in our 401(k) plan, and 89% of eligible employees participated in the most recent offering period of our employee stock purchase plan. The average tenure of our employees is approximately 7.4 years and approximately 30% of our employees have been employed by us for more than 10 years.
Approximately 90% of eligible U.S. employees participate in our 401(k) plan, and 91% of eligible employees participated in the most recent offering period of our employee stock purchase plan. The average tenure of our employees is approximately 7.6 years and approximately 31% of our employees have been employed by us for more than 10 years.
Our sales are generally made pursuant to purchase orders received approximately four to 30 weeks prior to the scheduled product delivery date, depending upon agreed terms with our customers and the current manufacturing lead time at the time the purchase order is received.
Our sales are generally made pursuant to purchase orders received approximately four to 30 weeks prior to the scheduled product delivery date, depending upon agreed terms with our customers and the current manufacturing lead time at the time the purchase order is received. These purchase orders may not be cancelled without our written consent.
Our solutions process our customers’ interior-sensing algorithms at high speeds and with low power consumption, and are effective even at night via onboard RGB-infrared processing. Our DMS solutions can be integrated with supplementary camera applications, including electronic mirror, front ADAS, and high-resolution driver recording. ▪ Central domain controllers for L2+ to L4 Autonomous Vehicles.
Our solutions process our customers’ interior-sensing algorithms at high speeds and with low power consumption, and are effective even at night via onboard RGB-infrared processing. Our DMS solutions can be integrated with supplementary camera applications, including electronic mirror, front ADAS, and high-resolution driver recording. ▪ Electronic Mirrors.
The CVflow-architecture supports a variety of computer vision algorithms, including, object detection, classification and tracking, semantic and instance segmentation, image processing, stereo object detection, terrain mapping, and face recognition.
The CVflow-architecture supports a variety of AI inference algorithms, including object detection, classification and tracking, semantic and instance segmentation, image processing, stereo object detection, and terrain mapping.
As of January 31, 2023, we had 300 issued patents in the United States, 109 of which were continuation or divisional patents, 10 issued patents in Europe, 7 issued patents in China, 7 issued patents in Japan and 86 pending patent applications in the United States. The issued patents in the United States expire beginning in 2024 through 2042.
As of January 31, 2024, we had 344 issued patents in the United States, 123 of which were continuation or divisional patents, 10 issued patents in Europe, 8 issued patents in China, 8 issued patents in Japan and 64 pending patent applications in the United States. The issued patents in the United States expire beginning in 2024 through 2042.
With the acquisition of Oculii, we also now complement our advanced camera perception capabilities with advanced radar perception to enable higher levels of autonomy. We are focusing on the automotive and Internet-of-Things (IoT) end markets: • Automotive Applications .
With the acquisition of Oculii, we complement our advanced camera perception capabilities with advanced radar perception to enable higher levels of autonomy. We are focusing on the automotive and Internet-of-Things (IoT) end markets that require increasingly sophisticated AI inference workloads and processing performance: • Automotive Applications .
Cameras and other sensors, as well as high performance computing processors, are utilized for a variety of applications in the automotive market and our products are designed into both original equipment manufacturer (OEM) and aftermarket applications. We address the following automotive market applications: ▪ Automotive Video Recorders (also known as data loggers).
Cameras and other sensors, as well as high performance computing processors, are utilized for a variety of applications in the automotive market and our products are designed into both original equipment manufacturer (OEM) and aftermarket applications. We address the following automotive market applications: ▪ Central domain controllers for L2+ to L4 Autonomous Vehicles.
In addition to offering our existing advanced camera perception processing, CV3 adds sensor fusion and planning layers that enable a broader set of fully-automated devices. In November 2021, we acquired Oculii Corp., a developer of high definition radar technology.
In addition to offering our existing advanced camera perception processing, CV3 adds sensor fusion and planning layers that enable a broader set of fully-automated devices.
As of January 31, 2023, females represented 29% of our independent directors, 21% of senior management, 16% of our technical roles, and 20% of our total workforce. Of our total employee workforce, 38% is represented by a work council in Taiwan.
As of January 31, 2024, women represented 29% of our independent directors, 19% of senior management, 17% of our technical roles, and 20% of our total workforce. Of our total employee workforce, approximately 37% is represented by a work council in Taiwan.
Smart electronic mirrors that incorporate our CV SoCs may also help with detecting objects in blind spots, overtaking vehicles and alerting for vulnerable road users, such as pedestrians and bicycles. ▪ Front Advanced Driver Assistance System (ADAS) Cameras.
Smart electronic mirrors that incorporate our CV SoCs may also help with detecting objects in blind spots, overtaking vehicles and alerting for vulnerable road users, such as pedestrians and bicycles. ▪ Automotive Video Recorders (also known as data loggers).
Using neural network and traditional computer vision processing, the domain controller fuses the sensor data and perceives the vehicle’s surroundings. Based on this multi-sensor surround perception, the domain controller estimates a safe driving path for the vehicle. In addition, the domain controller can simultaneously process in-cabin sensing applications, including driver and occupant monitoring. • Security Cameras .
Using neural network and traditional computer vision processing, the domain controller fuses the sensor data and perceives the vehicle’s surroundings. Based on this multi-sensor surround perception, the domain controller estimates a safe driving path for the vehicle.
We aim to use the most advanced manufacturing process technology appropriate for our products that is available from our third-party foundries. As a result, we periodically evaluate the benefits of migrating our solutions to smaller geometry process technologies in order to improve performance and efficiency. We believe this strategy will help us remain competitive.
As a result, we periodically evaluate the benefits of migrating our solutions to smaller geometry process technologies in order to improve performance and efficiency. We believe this strategy will help us remain competitive.
As of January 31, 2023, we employed a total of 937 people, including 260 in the United States, 595 in Asia, primarily 355 in Taiwan and 223 in China, and 82 in Europe. Approximately 74% of our employees are engaged in research and development, 2% in operations, and 24% in sales, marketing and administration.
As of January 31, 2024, we employed a total of 915 people, including 253 in the United States, 581 in Asia, primarily 343 in Taiwan and 224 in China, and 81 in Europe. Approximately 75% of our employees are engaged in research and development, 2% in operations, and 23% in sales, marketing and administration.
Our assembly and testing vendors are also ISO 9001 certified. 14 Due to the scheduling requirements of our foundry, assembly and test contractors, we generally provide our contractors with our production forecasts and place firm orders for products with our suppliers up to 36 weeks prior to the anticipated delivery date, or potentially longer during times of acute capacity shortages, usually without a purchase order from our own customers.
Due to the scheduling requirements of our foundry, assembly and test contractors, we generally provide our contractors with our production forecasts and place firm orders for products with our suppliers up to 36 weeks prior to the anticipated delivery date, or potentially longer during times of acute capacity shortages, usually without a purchase order from our own customers. 14 Research and Development We believe our technology is a competitive advantage and we engage in substantial research and development efforts to develop new products and integrate AI computer vision capabilities into our HD and UHD video processing solutions.
We follow industry practice that allows customers to cancel, change or defer orders with limited advance notice prior to shipment. Given this practice, we do not believe that backlog is a reliable indicator of future revenue levels. Manufacturing We employ a fabless business model and use third-party foundries and assembly and test contractors to manufacture, assemble and test our solutions.
Our manufacturing production is based on estimates and advance non-binding commitments from customers as to future purchases. We follow industry practice that allows customers to cancel, change or defer orders with limited advance notice prior to shipment. Given this practice, we do not believe that backlog is a reliable indicator of future revenue levels.
The Securities and Exchange Commission, or SEC, maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding registrants that file electronically.
The address of our U.S. operating subsidiary is Ambarella Corporation, 3101 Jay Street, Santa Clara, California. The Securities and Exchange Commission, or SEC, maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding registrants that file electronically.
Our multi-core DSP architecture is highly scalable and balances software programmability with hardware-accelerated performance to achieve extremely low power consumption and maximized camera battery life. We have used this scalability to develop an extensive family of software compatible SoCs with a wide range of performance and price points (CV28, CV25, CV22, CV2, CV2FS, CV5, CV3 AD685, and CV-3 High Dev).
We have used this scalability to develop an extensive family of software compatible SoCs with a wide range of performance and price points (CV28, CV25, CV22, CV2, CV2FS, CV5, CV72, CV3 AD685, and CV-3 High Dev). This scalable, programmable architecture provides our customers with the flexibility they need to quickly develop a wide range of differentiated products.
We carefully qualify each of our suppliers and their subcontractors and processes in order to meet the extremely high-quality and reliability standards required of our solutions. Wafer Fabrication We have a history of using several process nodes from 130 nm through 5 nm.
We do not have a guaranteed level of production capacity from any of our suppliers’ facilities to produce our solutions. We carefully qualify each of our suppliers and their subcontractors and processes in order to meet the extremely high-quality and reliability standards required of our solutions.
This outsourced manufacturing approach allows us to focus our resources on the design, sales and marketing of our solutions and avoid the cost associated with owning and operating our own manufacturing facility. Our engineers work closely with foundries and other contractors to increase yields, lower manufacturing costs and improve quality.
Manufacturing We employ a fabless business model and use third-party foundries and assembly and test contractors to manufacture, assemble and test our solutions. This outsourced manufacturing approach allows us to focus our resources on the design, sales and marketing of our solutions and avoid the cost associated with owning and operating our own manufacturing facility.
Corporate Information Ambarella was founded and incorporated in the Cayman Islands in January 2004. Our registered address is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The address of our U.S. operating subsidiary is Ambarella Corporation, 3101 Jay Street, Santa Clara, California.
Our worldwide voluntary employee turnover rate in fiscal year 2024 was approximately 5.6%. 17 Corporate Information Ambarella was founded and incorporated in the Cayman Islands in January 2004. Our registered address is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.
In fiscal year 2023, the customers representing 10% or more of revenue were Wintech Microelectronics Co., Ltd., or WT, our Asia-based distributor, and Chicony Electronics Co., Ltd., or Chicony, a direct ODM customer that manufactures products for multiple end-customers, which accounted for approximately 57% and 12% of total revenue, respectively.
In fiscal year 2024, the customers representing 10% or more of revenue were WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, our non-exclusive sales representative and fulfillment partner in Asia other than Japan, and Chicony Electronics Co., Ltd., or Chicony, one ODM that manufactures devices incorporating our solutions on behalf of multiple end-customers, which accounted for approximately 53% and 14% of total revenue, respectively.
These purchase orders may be cancelled without charge upon notification within an agreed period of time in advance of the delivery date. Our standard warranty provides that our SoCs containing defects in materials, workmanship or performance may be returned for a refund of the purchase price or for replacement, at our discretion.
Our standard warranty provides that our SoCs containing defects in materials, workmanship or performance may be returned for a refund of the purchase price or for replacement, at our discretion. We may agree to different warranty terms with specific customers from time to time. Our sales are primarily made through standard purchase orders for delivery of products.
In addition, we believe outsourcing many of our manufacturing and assembly activities provides us the flexibility needed to respond to new market opportunities, simplifies our operations and significantly reduces our capital requirements. We do not have a guaranteed level of production capacity from any of our suppliers’ facilities to produce our solutions.
Our engineers work closely with foundries and other contractors to increase yields, lower manufacturing costs and improve quality. In addition, we believe outsourcing many of our manufacturing and assembly activities provides us the flexibility needed to respond to new market opportunities, simplifies our operations and significantly reduces our capital requirements.
The CVflow architecture specifies data flow connections between a set of optimized AI and computer vision operators, such as the convolution and matrix multiply functions that are used for deep learning algorithms. The CVflow architecture also supports a variety of other algorithms, including radar processing, stereo obstacle detection and sensor fusion.
The CVflow architecture specifies data flow connections between a set of optimized AI and computer vision operators, such as the convolution and matrix multiply functions that are used for deep learning algorithms. Our CVflow engine is also capable of running large language model inferencing, with models up to 34 billion parameters run on a single N-1 SoC.
This scalable, programmable architecture provides our customers with the flexibility they need to quickly develop a wide range of differentiated products. Additionally, our SoCs integrate mixed signal (analog/digital) functionality and high speed interfaces required for interfacing to advanced high-speed CMOS sensors and industry standard interfaces such as PCI-E, USB 3.2 and HDMI 2.0.
Additionally, our SoCs integrate mixed signal (analog/digital) functionality and high speed interfaces required for interfacing to advanced high-speed CMOS sensors and industry standard interfaces such as PCI-E, USB 3.2 and HDMI 2.0. Our next generation CV3 family extends our CVflow architecture to cover L2+/L3/L4 autonomous driving and other high performance safety critical applications.
Our next generation CV3 family extends our CVflow architecture to cover L2+/L3/L4 autonomous driving and other high performance safety critical applications. The CV3 family will cover multiple performance and price points with a software compatible SDK.
The CV3 family will cover multiple performance and price points with a software compatible SDK.
The CVflow architecture supports a variety of AI, radar and computer vision algorithms, including object detection, classification and tracking, semantic and instance segmentation, image processing, and stereo object detection. CVflow also allows customers to differentiate their products by porting their own algorithms and neural networks to our SoCs. • Deep Sensor Fusion .
The CVflow architecture supports a variety of AI, radar and computer vision algorithms, including object detection, classification and tracking, semantic and instance segmentation, image processing, and stereo object detection. Our latest third generation CVflow technology enables us to efficiently process transformer AI networks, which are an enabling technology for next generation automotive and generative AI markets.
Ambarella provides AI perception processing for cameras, and with the acquisition of Oculii we provide software that enables efficient HD 4D radar perception.
CVflow also allows customers to differentiate their products by porting their own algorithms and neural networks to our SoCs. • Deep Sensor Fusion . Ambarella provides AI perception processing for cameras and software that enables efficient HD 4D radar perception.
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For our fiscal years ended January 31, 2023, 2022 and 2021, we recorded revenue of $337.6 million, $331.9 million and $223.0 million, respectively. For the fiscal years ended January 31, 2023, 2022 and 2021, we incurred net losses of $65.4 million, $26.4 million and $59.8 million, respectively. We have generated cash from operations in each fiscal year starting from 2009.
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Our latest third generation CVflow technology enables us to address incremental and computationally intense AI applications for deep fusion, deep planning, and large language models (LLMs), as well as to efficiently process transformer AI networks.
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Oculii’s software can be deployed on Ambarella’s existing CVflow SoCs, operating in conjunction with leading radar RF solutions to increase safety and reliability.
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Our recently announced N1 SoC is capable of running LLM inferencing with models up to 34 billion parameters, enabling a range of AI applications in IoT devices, including industrial robotics, intelligent healthcare imaging and diagnostics, edge AI servers running multi-modal LLMs, and autonomous fleet telematics. In November 2021, we acquired Oculii Corp., a developer of high definition radar technology.
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We may agree to different warranty terms with specific customers from time to time. Our sales are primarily made through standard purchase orders for delivery of products. Our manufacturing production is based on estimates and advance non-binding commitments from customers as to future purchases.
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In addition, the domain controller can simultaneously process in-cabin sensing applications, including driver and occupant monitoring. ▪ Front Advanced Driver Assistance System (ADAS) Cameras.
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Research and Development We believe our technology is a competitive advantage and we engage in substantial research and development efforts to develop new products and integrate AI computer vision capabilities into our HD and UHD video processing solutions.
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Our third generation CVflow-based SoCs enable efficient processing or transformer AI networks, which are an enabling technology for next generation automotive and generative AI markets. AI Neural Processor.
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We believe we compete favorably with respect to these factors, particularly because our solutions typically provide high-performance and low power consumption video, CNN performance, efficient integration of our advanced algorithms, exceptional storage and transmission efficiencies at lower power, highly-integrated SoC solutions based on a scalable platform, and comprehensive and flexible software.
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Based on our proprietary architecture, our N1 SoC provides highly-efficient AI performance for neural network computation in combination with a general vector processor (GVP), an advanced image processor, a dense stereo and optical flow engine, and a GPU, in a single SoC.
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Our worldwide voluntary employee turnover rate in fiscal year 2023 was approximately 7.4%. 17 Our primary focus during the COVID-19 pandemic has been protecting the health and safety of our employees and the communities in which we operate. In our locations that have experienced high rates of infection, employees have worked remotely to reduce spread of the virus.
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The N1 is designed for implementing industrial robotics, smart cities, intelligent healthcare imaging and diagnostics, multi-camera AI processing hub, edge AI servers running multi-modal LLMs, and autonomous fleet telematics. Vision Processor SoCs.
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The CVflow architecture also supports a variety of other algorithms, including radar processing, stereo obstacle detection and sensor fusion. Our third generation CVflow-based SoCs enable efficient processing or transformer AI networks, which are an enabling technology for next generation automotive and generative AI markets.
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Our multi-core DSP architecture is highly scalable and balances software programmability with hardware-accelerated performance to achieve extremely low power consumption and maximized camera battery life.
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Certain prior year amounts of revenue by geographic region have been adjusted to reflect the appropriate bill-to location for the related revenue. These adjustments did not impact the total revenues in any of the years presented.
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Wafer Fabrication We have a history of using several process nodes from 130 nm through 5 nm. We aim to use the most advanced manufacturing process technology appropriate for our products that is available from our third-party foundries.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

107 edited+45 added−17 removed350 unchanged
Biggest changeAny acquisitions we may make in the future could disrupt our business, cause dilution to our shareholders, reduce our financial resources and harm our business. • We face tax risks, including relating to the complexity of calculating our tax provision, changes in effective tax rates, or unfavorable tax law changes. • Fluctuations in our operating results on a quarterly and annual basis could cause the market price of our ordinary shares to decline. • If we do not generate revenue growth, we may not be able to execute our business plan and our operating results could suffer. • We do not have long-term supply contracts with our third-party manufacturing vendors, and they may not allocate sufficient capacity to us at reasonable prices to meet future demands for our solutions. • Our customers incorporate components supplied by multiple third parties, and a supply shortage or delay in delivery of these components could delay orders for our solutions by our customers. • We outsource our wafer fabrication, assembly and testing operations to third parties, and if these parties fail to produce and deliver our products according to requested demands in specification, quantity, cost and time, our reputation, customer relationships and operating results could suffer. • A substantial portion of our revenue is processed through a single distributor and the loss of this distributor may cause disruptions in our shipments, which may adversely affect our operations and financial condition. 19 • We are subject to risks associated with our distributors' product inventories. • We rely on various third party vendors, service providers and contractors in the operation of our business. • Our ability to sell our products to certain China customers has been restricted.
Biggest changeWe may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses. • The complexity of our solutions could result in unforeseen delays or expenses from undetected defects, errors or bugs in hardware or software which could reduce the market adoption of our new solutions, damage our reputation with current or prospective customers and adversely affect our operating costs. • We may experience difficulties transitioning to new wafer fabrication process technologies or achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs. • Rapidly changing industry standards could make our video and image processing solutions obsolete, which would cause our operating results to suffer. • Some of our operations and a significant portion of our customers and our subcontractors are located outside of the United States, which subjects us to additional risks, including increased complexity and costs of managing international operations and geopolitical instability. • Any acquisitions we may make in the future could disrupt our business, cause dilution to our shareholders, reduce our financial resources and harm our business. • We face tax risks, including relating to the complexity of calculating our tax provision, changes in effective tax rates, or unfavorable tax law changes. • Fluctuations in our operating results on a quarterly and annual basis could cause the market price of our ordinary shares to decline. • If we do not generate revenue growth, we may not be able to execute our business plan and our operating results could suffer. • We do not have long-term supply contracts with our third-party manufacturing vendors, and they may not allocate sufficient capacity to us at reasonable prices to meet future demands for our solutions. • Our customers incorporate components supplied by multiple third parties, and a supply shortage or delay in delivery of these components could delay orders for our solutions by our customers. • We outsource our wafer fabrication, assembly and testing operations to third parties, and if these parties fail to produce and deliver our products according to requested demands in specification, quantity, cost and time, our reputation, customer relationships and operating results could suffer. • A substantial portion of our revenue is processed through a single distributor and the loss of this distributor may cause disruptions in our shipments, which may adversely affect our operations and financial condition. • We are subject to risks associated with our distributors’ product inventories. • We rely on various third-party vendors, service providers and contractors in the operation of our business. • Global economic and political conditions, including high inflation and trade restrictions, recessionary concerns and trade restrictions, may impact our business and financial condition in ways that we currently cannot predict. • We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets, including China.
With respect to our customers, to the extent customers face supply chain issues with respect to other components needed to pair with our products in order to produce their end products, such customers may delay future orders of our products or hold inventory of our products for longer periods of time.
To the extent customers face supply chain issues with respect to other components needed to pair with our products in order to produce their end products, such customers may delay future orders of our products or hold inventory of our products for longer periods of time.
The global supply shortages and uncertainty in customer demand and the worldwide economy in general may be exacerbated by the impacts of high inflation and global banking concerns, and we may experience increased volatility in sales and revenues as a result.
Impacts of the global supply shortages and uncertainty in customer demand and the worldwide economy in general may be exacerbated by the impacts of high inflation and global banking concerns, and we may experience increased volatility in sales and revenues as a result.
Resulting changes in U.S. trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a trade war.
Changes in U.S. trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a trade war.
Our ability to compete will depend on a number of factors, including: • our ability to anticipate market and technology trends and successfully develop solutions that meet market needs; • our ability to understand the price points and performance metrics of competing products in the marketplace; • our solutions’ performance and cost-effectiveness relative to that of competing products; • our success in identifying and penetrating new markets, applications and customers; • our ability to gain access to leading design tools and product specifications at the same time as our competitors; • our ability to develop and maintain relationships with key OEMs and ODMs; • our products’ effective implementation of video processing or radar standards; • our ability to protect our intellectual property; • our ability to expand international operations in a timely and cost-efficient manner; • our ability to deliver products in volume on a timely basis at competitive prices; • our ability to support our customers’ incorporation of our solutions into their products; and • our ability to recruit design and application engineers with expertise in computer vision, video and image processing technologies and sales and marketing personnel.
Our ability to compete will depend on a number of factors, including: • our ability to anticipate market and technology trends and successfully develop solutions that meet market needs; • our ability to understand the price points and performance metrics of competing products in the marketplace; • our solutions’ performance and cost-effectiveness relative to that of competing products; 24 • our success in identifying and penetrating new markets, applications and customers; • our ability to gain access to leading design tools and product specifications at the same time as our competitors; • our ability to develop and maintain relationships with key OEMs and ODMs; • our products’ effective implementation of video processing or radar standards; • our ability to protect our intellectual property; • our ability to expand international operations in a timely and cost-efficient manner; • our ability to deliver products in volume on a timely basis at competitive prices; • our ability to support our customers’ incorporation of our solutions into their products; and • our ability to recruit design and application engineers with expertise in computer vision, video and image processing technologies and sales and marketing personnel.
If we are unsuccessful or delayed in qualifying these products or third-party contractors with a customer, our business and operating results could suffer. • We expect competition to increase in the future, which could have an adverse effect on our revenue and market share. • A breach of our security systems may have a material adverse effect on our business. • While we intend to continue to invest in research and development, we may be unable to make the substantial investments that are required to remain competitive in our business. • We rely on highly skilled personnel and, if we are unable to hire, retain or motivate key personnel, we may not be able to grow effectively.
If we are unsuccessful or delayed in qualifying these products or third-party contractors with a customer, our business and operating results could suffer. • We expect competition to increase in the future, which could have an adverse effect on our revenue and market share. 18 • A breach of our security systems may have a material adverse effect on our business. • While we intend to continue to invest in research and development, we may be unable to make the substantial investments that are required to remain competitive in our business. • We rely on highly skilled personnel and, if we are unable to hire, retain or motivate key personnel, we may not be able to grow effectively.
These factors include: • changes in financial estimates, including our ability to meet our future revenue and operating profit or loss projections; • fluctuations in our operating results or those of other semiconductor or comparable companies; • fluctuations in the economic performance or market valuations of companies perceived by investors to be comparable to us; • economic developments in the semiconductor industry as a whole; • general economic conditions, including conditions related to the banking industry or caused by pandemics and high inflation, and slow or negative market growth; • trade and other geopolitical activities affecting markets we address; • announcements by us or our competitors of acquisitions, new products, significant contracts or orders, commercial relationships or capital commitments; • our ability to develop and market new and enhanced solutions on a timely basis; 44 • changes in the demand for our customers’ products; • commencement of or our involvement in litigation; • disruption to our operations; • any major change in our board of directors or management; • political or social conditions in the markets where we sell our products; • changes in governmental regulations; and • changes in earnings estimates or recommendations by securities analysts.
These factors include: • changes in financial estimates, including our ability to meet our future revenue and operating profit or loss projections; • fluctuations in our operating results or those of other semiconductor or comparable companies; • fluctuations in the economic performance or market valuations of companies perceived by investors to be comparable to us; • economic developments in the semiconductor industry as a whole; • general economic conditions, including conditions related to the banking industry or caused by pandemics and high inflation, and slow or negative market growth; • trade and other geopolitical activities affecting markets we address; • announcements by us or our competitors of acquisitions, new products, significant contracts or orders, commercial relationships or capital commitments; 45 • our ability to develop and market new and enhanced solutions on a timely basis; • changes in the demand for our customers’ products; • commencement of or our involvement in litigation; • disruption to our operations; • any major change in our board of directors or management; • political or social conditions in the markets where we sell our products; • changes in governmental regulations; and • changes in earnings estimates or recommendations by securities analysts.
We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs. We aim to use the most advanced manufacturing process technology appropriate for our products that is available from our third-party foundries.
We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs. 28 We aim to use the most advanced manufacturing process technology appropriate for our products that is available from our third-party foundries.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, inhibit sales, damage our reputation and adversely affect our business. Failure to comply with the U.S.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, inhibit sales, damage our reputation and adversely affect our business. 39 Failure to comply with the U.S.
Further, even after securing a design win, we have experienced and may again experience delays in generating revenue from our solutions as a result of the lengthy product development cycle typically required, if we generate any revenue at all as a result of any such design win. Our customers generally take a considerable amount of time to evaluate our solutions.
Further, even after securing a design win, we have experienced and may again experience delays in generating revenue from our solutions as a result of the lengthy product development cycle typically required, if we generate any revenue at all as a result of any such design win. 23 Our customers generally take a considerable amount of time to evaluate our solutions.
In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of foreign, federal, state and local laws and regulations relating to the unauthorized access to, or use or disclosure of, personal information. Security breaches and incidents, computer malware and computer hacking attacks have become more prevalent and sophisticated.
In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of foreign, federal, state and local laws and regulations relating to the unauthorized access to, or use or disclosure of, personal information. 25 Security breaches and incidents, computer malware and computer hacking attacks have become more prevalent and sophisticated.
The application of computer vision functionality in these markets is relatively new, and we may be unable to predict the timing or development of these markets with accuracy. For example, a slower than expected adoption rate for computer vision technology in automotive or IP security camera applications could slow the demand for our new solutions.
The application of computer vision functionality in these markets is relatively new, and we may be unable to predict the timing or development of these markets with accuracy. For example, a slower than expected adoption rate for AI technology in automotive or IP security camera applications could slow the demand for our new solutions.
If we are unsuccessful or delayed in qualifying these products with a customer, sales of the products to the customer may be precluded or delayed, which may impede our growth and cause our business to suffer. 24 We expect competition to increase in the future, which could have an adverse effect on our revenue and market share.
If we are unsuccessful or delayed in qualifying these products with a customer, sales of the products to the customer may be precluded or delayed, which may impede our growth and cause our business to suffer. We expect competition to increase in the future, which could have an adverse effect on our revenue and market share.
PIPL authorizes enforcement by cybersecurity authorities and other regulators, and provides for fines and other remedies for noncompliance. 39 Aspects of these laws remain unclear, resulting in further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
PIPL authorizes enforcement by cybersecurity authorities and other regulators, and provides for fines and other remedies for noncompliance. Aspects of these laws remain unclear, resulting in further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
The Tax Act may have changed the consequences to U.S. shareholders that own, or are considered to own, as a result of the attribution rules, 10% or more of the voting power or value of the stock of a non-U.S. corporation (a 10% U.S. shareholder) under the U.S. federal income tax law applicable to owners of U.S. controlled foreign corporations, or CFCs.
The Tax Act may have changed the consequences to U.S. shareholders that own, or are considered to own, as a result of certain attribution rules, 10% or more of the voting power or value of the stock of a non-U.S. corporation (a 10% U.S. shareholder) under the U.S. federal income tax law applicable to owners of U.S. controlled foreign corporations, or CFCs.
We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets. 38 The U.S. and various foreign governments have imposed controls, export license requirements and restrictions on the import or export of certain products, technologies and software.
We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets. The U.S. and various foreign governments have imposed controls, export license requirements and restrictions on the import or export of certain products, technologies and software.
In August 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA) which includes a new 15% corporate minimum tax as well as a 1% excise tax on the fair value of corporate stock repurchases made by U.S. corporations and certain foreign corporations after December 31, 2022.
In August 2022, the U.S. enacted the Inflation Reduction Act of 2022, or IRA, which includes a new 15% corporate minimum tax as well as a 1% excise tax on the fair value of corporate stock repurchases made by U.S. corporations and certain foreign corporations after December 31, 2022.
In such event, our business and results of operations could be adversely affected. We are subject to warranty and product liability claims and to product recalls. From time to time, we are subject to warranty claims that may require us to make significant expenditures to defend these claims or pay damage awards.
In such event, our business and results of operations could be adversely affected. 38 We are subject to warranty and product liability claims and to product recalls. From time to time, we are subject to warranty claims that may require us to make significant expenditures to defend these claims or pay damage awards.
As we develop and introduce new solutions, we face the risk that customers may not value or be willing to bear the cost of incorporating these newer solutions into their products, particularly if they believe their customers are satisfied with current solutions.
As we develop and introduce new solutions, we also face the risk that customers may not value or be willing to bear the cost of incorporating these newer solutions into their products, particularly if they believe their customers are satisfied with current solutions.
Any of these results could adversely affect our business, financial condition, and operating results. 26 While we intend to continue to invest in research and development, we may be unable to make the substantial investments that are required to remain competitive in our business.
Any of these results could adversely affect our business, financial condition, and operating results. While we intend to continue to invest in research and development, we may be unable to make the substantial investments that are required to remain competitive in our business.
The debt security investments consisted of commercial paper, debt securities of corporations or corporate bonds, asset-backed securities and U.S. government securities. We currently do not use derivative financial instruments to adjust our investment portfolio risk or income profile.
The debt security investments consisted of commercial paper, corporate bonds, asset-backed securities and U.S. government securities. We currently do not use derivative financial instruments to adjust our investment portfolio risk or income profile.
Any of these factors, alone or in combination with others, could harm our business and result in a loss of market share and an increase in pricing pressure. 25 A breach of our security systems may have a material adverse effect on our business.
Any of these factors, alone or in combination with others, could harm our business and result in a loss of market share and an increase in pricing pressure. A breach of our security systems may have a material adverse effect on our business.
Other U.S. states have proposed, and in certain cases enacted, similar general privacy legislation. In 2021, the National People’s Congress passed the Data Security Law of the People’s Republic of China (Data Security Law) and China’s Personal Information Protection Law (PIPL).
Numerous other U.S. states have proposed, and in certain cases enacted, similar general privacy legislation. In 2021, the National People’s Congress passed the Data Security Law of the People’s Republic of China (Data Security Law) and China’s Personal Information Protection Law (PIPL).
As a result of our international focus, we face numerous challenges and risks, including: • increased complexity and costs of managing international operations; • longer and more difficult collection of receivables from customers; • difficulties in enforcing contracts generally; • regional economic instability; • geopolitical instability and military conflicts, including the ongoing conflict in Ukraine; • limited protection of our intellectual property and other assets; • compliance with local laws and regulations and unanticipated changes in local laws and regulations, including tax laws and regulations; • trade and foreign exchange restrictions and higher tariffs; • travel restrictions; • timing and availability of import and export licenses and other governmental approvals, permits and licenses, including export classification requirements; • foreign currency exchange fluctuations relating to our international operating activities; • restrictions imposed by the U.S. government on our ability to do business with certain companies or in certain countries as a result of international political conflicts; • transportation delays and other consequences of limited local infrastructure, and disruptions, such as large-scale outages or interruptions of service from utilities or telecommunications providers; • heightened risk of terrorist acts; • local business and cultural factors that differ from standards and practices in the U.S.; • differing employment practices and labor relations; • regional health issues, pandemics, and natural disasters; and 30 • work stoppages.
As a result of our international focus, we face numerous challenges and risks, including: • increased complexity and costs of managing international operations; • longer and more difficult collection of receivables from customers; • difficulties in enforcing contracts generally; • regional economic instability; • geopolitical instability and military conflicts, including the ongoing conflicts in Ukraine and the Middle East; • limited protection of our intellectual property and other assets; • compliance with local laws and regulations and unanticipated changes in local laws and regulations, including tax laws and regulations; • trade and foreign exchange restrictions and higher tariffs; • travel restrictions; • timing and availability of import and export licenses and other governmental approvals, permits and licenses, including export classification requirements; • foreign currency exchange fluctuations relating to our international operating activities; • restrictions imposed by the U.S. government on our ability to do business with certain companies or in certain countries as a result of international political conflicts; • transportation delays and other consequences of limited local infrastructure, and disruptions, such as large-scale outages or interruptions of service from utilities or telecommunications providers; • heightened risk of terrorist acts; • local business and cultural factors that differ from standards and practices in the U.S.; • differing employment practices and labor relations; • regional health issues, pandemics, and natural disasters; and • work stoppages.
The loss of any of our key personnel could seriously harm our business. We believe our future success depends in large part upon the continuing services of the members of our senior management team and various engineering and other technical personnel.
The loss of any of our key personnel could seriously harm our business. 26 We believe our future success depends in large part upon the continuing services of the members of our senior management team and various engineering and other technical personnel.
Recently, some end customers have indicated they are seeking to reduce their inventory levels, which may reduce such customers’ demand for our products, including products purchased through our distributors, in future periods and harm our financial results. If our foundry vendors do not achieve satisfactory yields or quality, our reputation and customer relationships could be harmed.
In recent periods, some end customers have indicated they are seeking to reduce their inventory levels, which may reduce such customers’ demand for our products, including products purchased through our distributors, in future periods and harm our financial results. If our foundry vendors do not achieve satisfactory yields or quality, our reputation and customer relationships could be harmed.
Any significant impairment of our intellectual property rights from any litigation we face could harm our business and our ability to compete. 43 Any potential dispute involving our patents or other intellectual property could affect our customers, which could trigger our indemnification obligations to them and result in substantial expense to us.
Any significant impairment of our intellectual property rights from any litigation we face could harm our business and our ability to compete. 44 Any potential dispute involving our patents or other intellectual property could affect our customers, which could trigger our indemnification obligations to them and result in substantial expense to us.
Subject to limited exceptions, under Cayman Islands law, a minority shareholder may not bring a derivative action against the board of directors. 46 Holders of our ordinary shares may have difficulty obtaining or enforcing a judgment against us because we are incorporated under the laws of the Cayman Islands.
Subject to limited exceptions, under Cayman Islands law, a minority shareholder may not bring a derivative action against the board of directors. 47 Holders of our ordinary shares may have difficulty obtaining or enforcing a judgment against us because we are incorporated under the laws of the Cayman Islands.
Factors that may affect our operating results include: • fluctuations in demand, sales cycles, product mix, and prices for our products; • the forecasting, scheduling, rescheduling or cancellation of orders by our customers; • shifts in consumer or manufacturer preferences and any resultant change in demand for our customers’ products; • changes in the competitive dynamics of our markets, including new entrants or pricing pressures; • delays in our customers’ ability to manufacture and ship products that incorporate our solutions caused by internal and external factors beyond our control; 31 • our ability to successfully define, design and release new solutions in a timely manner that meet our customers’ needs; • timely availability of adequate manufacturing capacity from our manufacturing subcontractors; • changes in manufacturing costs, including wafer, test and assembly costs, mask costs, manufacturing yields and product quality and reliability; • the timing of product announcements by our competitors or by us; • incurrence of research and development and related new products expenditures; • write-downs of inventory for excess quantities and technological obsolescence; • impairment of investment or other asset values; • future accounting pronouncements and changes in accounting policies; • volatility in our share price, which may lead to higher stock-based compensation expense; • volatility in our effective tax rate; • general socioeconomic and political conditions in the countries where we operate or where our products are sold or used, including recent macroeconomic volatility, the COVID-19 pandemic, U.S.-China relations and the conditions in Hong Kong; and • costs associated with litigation, especially related to intellectual property.
Factors that may affect our operating results include: • fluctuations in demand, sales cycles, product mix, and prices for our products; • the forecasting, scheduling, rescheduling or cancellation of orders by our customers; • shifts in consumer or manufacturer preferences and any resultant change in demand for our customers’ products; • changes in the competitive dynamics of our markets, including new entrants or pricing pressures; • delays in our customers’ ability to manufacture and ship products that incorporate our solutions caused by internal and external factors beyond our control; • our ability to successfully define, design and release new solutions in a timely manner that meet our customers’ needs; • timely availability of adequate manufacturing capacity from our manufacturing subcontractors; 31 • changes in manufacturing costs, including wafer, test and assembly costs, mask costs, manufacturing yields and product quality and reliability; • the timing of product announcements by our competitors or by us; • incurrence of research and development and related new products expenditures; • write-downs of inventory for excess quantities and technological obsolescence; • impairment of investment or other asset values; • future accounting pronouncements and changes in accounting policies; • volatility in our share price, which may lead to higher stock-based compensation expense; • volatility in our effective tax rate; • general socioeconomic and political conditions in the countries where we operate or where our products are sold or used, including recent macroeconomic volatility, pandemics or widespread public health problems, U.S.-China relations and the conditions in Hong Kong; and • costs associated with litigation, especially related to intellectual property.
Based on the current and anticipated valuation of our assets and the composition of our income and assets, we do not expect to be considered a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our 2023 fiscal year or the foreseeable future.
Based on the current and anticipated valuation of our assets and the composition of our income and assets, we do not expect to be considered a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our 2024 fiscal year or the foreseeable future.
However, a separate determination must be made at the close of each taxable year as to whether we are a PFIC for that taxable year, and we cannot assure you that we will not be a PFIC for our 2024 fiscal year or any future taxable year.
However, a separate determination must be made at the close of each taxable year as to whether we are a PFIC for that taxable year, and we cannot assure you that we will not be a PFIC for our 2025 fiscal year or any future taxable year.
Investors seeking cash dividends should not purchase our ordinary shares. 45 Provisions of our memorandum and articles of association and Cayman Islands corporate law may discourage or prevent an acquisition of us which could adversely affect the value of our ordinary shares.
Investors seeking cash dividends should not purchase our ordinary shares. 46 Provisions of our memorandum and articles of association and Cayman Islands corporate law may discourage or prevent an acquisition of us which could adversely affect the value of our ordinary shares.
In addition, if we fail to maintain effective controls over financial reporting, we could be subject to sanctions or investigations by The NASDAQ Stock Market, the SEC, or other regulatory authorities. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation.
In addition, if we fail to maintain effective controls over financial reporting, we could be subject to sanctions or investigations by The Nasdaq Global Select Market, the SEC, or other regulatory authorities. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation.
All of these could harm our ability to conduct core operating functions such as processing purchase orders and invoices, product distribution, recording and reporting financial and management information on a timely and accurate basis, and could impact our internal control compliance efforts.
All of these could harm our ability to conduct core operating functions such as product development, customer support, processing purchase orders and invoices, product distribution, recording and reporting financial and management information on a timely and accurate basis, and could impact our internal control compliance efforts.
Our 10% or greater U.S. shareholders should consult their individual tax advisors for advice regarding the 2017 Act revision to the U.S. federal income tax law applicable to owners of CFCs. 42 Risks Related to Our Intellectual Property Our failure to adequately protect our intellectual property rights could impair our ability to compete effectively or defend ourselves from litigation, which could harm our business, financial condition and results of operations.
Our 10% or greater U.S. shareholders should consult their individual tax advisors for advice regarding the Tax Act’s revision to the U.S. federal income tax law applicable to owners of CFCs. 43 Risks Related to Our Intellectual Property Our failure to adequately protect our intellectual property rights could impair our ability to compete effectively or defend ourselves from litigation, which could harm our business, financial condition and results of operations.
Our operations and those of our manufacturers are vulnerable to interruption caused by technical breakdowns, computer hardware and software malfunctions, software viruses, infrastructure failures, pandemics, including the COVID-19 pandemic and regional health issues, earthquakes, fires, severe storms, floods and other negative impacts from climate change, power losses, telecommunications failures, terrorist attacks, wars, Internet failures and other events beyond our control.
Our operations and those of our manufacturers are vulnerable to interruption caused by technical breakdowns, computer hardware and software malfunctions, software viruses, infrastructure failures, pandemics, and regional health issues, earthquakes, fires, severe storms, floods and other negative impacts from climate change, power losses, telecommunications failures, terrorist attacks, wars, Internet failures and other events beyond our control.
Recently, some customers have indicated they are reducing their inventory levels as lead times for semiconductor chips and other components used by customers begin to shrink, which may reduce such customers’ demand for our products in future periods and harm our financial results.
In recent periods, some customers have indicated they are reducing their inventory levels as lead times for semiconductor chips and other components used by customers shrink, which may reduce such customers’ demand for our products in future periods and harm our financial results.
Any potential dispute involving our intellectual property could affect our customers, which could trigger our indemnification obligations to them and result in substantial expense to us. Risks Related to Our Business and Our Industry Impacts of the global semiconductor supply shortage and high inflation could adversely affect our business, financial condition, and results of operations.
Any potential dispute involving our intellectual property could affect our customers, which could trigger our indemnification obligations to them and result in substantial expense to us. Risks Related to Our Business and Our Industry Impacts of the global semiconductor supply shortage and uncertain macroeconomic conditions could adversely affect our business, financial condition, and results of operations.
These risks include, but are not limited to, the following: • Risks related to the global semiconductor supply shortage, high inflation and weak economic conditions could adversely affect our business, financial condition, and results of operations. • If we fail to penetrate new markets, including the automotive original equipment manufacturer, or OEM, advanced driver assistance systems (ADAS) market, our revenue and financial condition could be harmed. • If our customers do not design our solutions into their product offerings, or if our customers’ product offerings are not commercially successful, our business would suffer. • If we fail to develop and introduce new or enhanced solutions that meet market requirements on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed. • Shortages in, or increased costs of, wafers and materials could adversely impact our gross margins and lead to reduced revenues. • Our primary inventory warehouse is located in Hong Kong and may be affected by political, social and economic conditions in Hong Kong. • Our target markets may not grow or develop as we currently expect and are subject to market risks, any of which could harm our business, revenue and operating results. • The COVID-19 pandemic has adversely affected our business and could materially and adversely affect our business in the future. • Our customers may cancel their orders, change production quantities or delay production.
These risks include, but are not limited to, the following: • If our customers do not design our solutions into their product offerings, or if our customers’ product offerings are not commercially successful, our business would suffer. • If we fail to penetrate new markets, including the automotive original equipment manufacturer (OEM) and advanced driver assistance systems (ADAS) market, our revenue and financial condition could be harmed. • If we fail to develop and introduce new or enhanced solutions that meet market requirements on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed. • Shortages in, or increased costs of, wafers and materials could adversely impact our gross margins and lead to reduced revenues. • Our primary inventory warehouse is located in Hong Kong and may be affected by political, social and economic conditions in Hong Kong. • Our target markets may not grow or develop as we currently expect and are subject to market risks, any of which could harm our business, revenue and operating results. • Our customers may cancel their orders, change production quantities or delay production.
Our ability to accurately forecast demand can be adversely affected by a number of factors, including inaccurate forecasting by our customers, changes in market conditions including reductions in market activity due to the COVID-19 pandemic, adverse changes in our product order mix and fluctuating demand for our customers’ products.
Our ability to accurately forecast demand can be adversely affected by a number of factors, including inaccurate forecasting by our customers, changes in market conditions including reductions in market activity due to pandemics, adverse changes in our product order mix and fluctuating demand for our customers’ products.
We expect to increase our research and development expenditures as compared to prior periods as part of our strategy of focusing on the development of innovative computer vision, video and image processing solutions with increased functionality, and as we target new markets, such as the automotive OEM and robotics markets.
In general, we expect to increase our research and development expenditures in future periods as compared to prior periods as part of our strategy of focusing on the development of innovative computer vision, video and image processing solutions with increased functionality, and as we target key markets, such as the automotive OEM and robotics markets.
Our business has grown rapidly in the past. Our future operating results depend to a large extent on our ability to successfully manage any expansion and growth, including the challenges of managing a company with an executive management team in the United States and the majority of its employees in Asia.
Our future operating results depend to a large extent on our ability to successfully manage any expansion and growth, including the challenges of managing a company with an executive management team in the United States and the majority of its employees in Asia.
The market price of our ordinary shares has historically been highly volatile, and has been particularly volatile in recent years. For example, since February 1, 2020, the trading price of our common stock ranged from a low of $36.02 to a high of $227.59 and was $89.84 at the close of trading on January 31, 2023.
The market price of our ordinary shares has historically been highly volatile, and has been particularly volatile in recent years. For example, since February 1, 2020, the trading price of our common stock ranged from a low of $36.02 to a high of $227.59 and was $52.56 at the close of trading on January 31, 2024.
While we are continuing to work closely with our suppliers and customers to minimize the potential adverse impacts of the supply shortage and longer lead times, we have experienced increased volatility in our business.
While we work closely with our suppliers and customers to minimize the potential adverse impacts of these considerations of supply shortage and longer lead times, we have experienced increased volatility in our business.
As a result of a number of factors, including longer manufacturing times for our products and increased demand from customers during fiscal year 2023, we have increased our inventory levels in the near term. Recently, some customers have indicated they are reducing their inventory levels of our products, which may reduce such customers’ demand for our products in future quarters.
As a result of a number of factors, including longer manufacturing times for our products and increased demand from customers during fiscal year 2023, we increased our inventory levels. In recent periods, some customers have indicated they are reducing their inventory levels of our products, which may reduce such customers’ demand for our products in future quarters.
Our future effective tax rates could be adversely affected if our earnings are lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, transfer pricing adjustments, re-organization or restructuring of our businesses, changes in our corporate structure, including the effect of acquisitions on our legal structure, by tax costs related to intercompany realignments, tax effects of share-based compensation, expiration of or lapses in tax incentives, or by changes in tax laws, regulations, accounting principles or interpretations thereof.
Changes in effective tax rates or adverse outcomes resulting from examination of our income tax returns could adversely affect our results. 41 Our future effective tax rates could be adversely affected if our earnings are lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, transfer pricing adjustments, re-organization or restructuring of our businesses, changes in our corporate structure, including the effect of acquisitions on our legal structure, by tax costs related to intercompany realignments, tax effects of share-based compensation, expiration of or lapses in tax incentives, or by changes in tax laws, regulations, accounting principles or interpretations thereof.
If such disruption were to continue for an extended period, our customers could face delays in the launch of new products containing our solutions, resulting in delayed or decreased demand for our solutions. We have significant business operations in Taiwan, including approximately 360 employees, and many of our third-party manufacturing suppliers are located in Taiwan.
If such disruption were to continue for an extended period, our customers could face delays in the launch of new products containing our solutions, resulting in delayed or decreased demand for our solutions. We have significant business operations in Taiwan, including 343 employees as of January 31, 2024, and many of our third-party manufacturing suppliers are located in Taiwan.
Recently, some customers have indicated they are reducing their inventory levels as lead times for semiconductor chips and other components used by customers begin to shrink, which may reduce such customers’ demand for our products in future periods and harm our financial results.
In recent periods, some customers have indicated they are reducing their inventory levels as lead times for semiconductor chips and other components used by customers begin to shrink, which has reduced, and may continue to reduce, such customers’ demand for our products and harm our financial results.
Deterioration of the financial condition of our distributors or customers could adversely impact our collection of accounts receivable. For the fiscal year ended January 31, 2023, the customers representing 10% or more of revenue were WT and Chicony, which accounted for approximately 57% and 12% of total revenue, respectively.
Deterioration of the financial condition of our distributors or customers could adversely impact our collection of accounts receivable. For the fiscal year ended January 31, 2024, the customers representing 10% or more of revenue were WT and Chicony, which accounted for approximately 53% and 14% of total revenue, respectively.
The semiconductor industry requires substantial investment in research and development in order to bring to market new and enhanced solutions. Our research and development expense was $204.9 million, $167.3 million and $140.8 million in fiscal years 2023, 2022 and 2021, respectively.
The semiconductor industry requires substantial investment in research and development in order to bring to market new and enhanced solutions. Our research and development expense was $215.1 million, $204.9 million and $167.3 million in fiscal years 2024, 2023 and 2022, respectively.
As of January 31, 2023, accounts receivable with WT and Chicony were approximately $21.0 million and $9.4 million, respectively. We regularly review the collectability and creditworthiness of our distributors and customers to determine an appropriate allowance for credit losses. Based on our review of our distributors and customers, we currently have only immaterial reserves for uncollectible accounts.
As of January 31, 2024, accounts receivable with WT and Chicony were approximately $10.3 million and $7.0 million, respectively. We regularly review the collectability and creditworthiness of our distributors and customers to determine an appropriate allowance for credit losses. Based on our review of our distributors and customers, we currently have only immaterial reserves for uncollectible accounts.
These investments, as well as any cash deposited in bank accounts, are subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by unusual events, such as the COVID-19 pandemic, the Eurozone crisis and the U.S. debt ceiling crisis, which affected various sectors of the financial markets and led to global credit and liquidity issues.
These investments, as well as any cash deposited in bank accounts, are subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by unusual events, such as the pandemics or widespread public health problems, the Eurozone crisis and the U.S. debt ceiling crisis, which affected various sectors of the financial markets and led to global credit and liquidity issues.
Due to political uncertainty and military actions associated with the ongoing hostility between Russia and Ukraine, we and our vendors, contractors, and other third parties we work with are vulnerable to a heightened risk of cybersecurity attacks, phishing attacks, viruses, malware, ransomware, hacking or similar breaches and incidents from nation-state and affiliated actors, including attacks that could materially disrupt our supply chain and our systems and operations.
Due to conflicts and geopolitical events such as the ongoing hostility between Russia and Ukraine, we and our vendors, contractors, and other third parties we work with are vulnerable to a heightened risk of cybersecurity attacks, phishing attacks, viruses, malware, ransomware, hacking or similar breaches and incidents from nation-state and affiliated actors, including attacks that could materially disrupt our supply chain and our systems and operations.
In addition, we face competition from larger competitors with greater resources and more history in these markets. If we fail to penetrate these or other new markets we are targeting, our financial condition would likely suffer.
In addition, we face competition from larger competitors with greater resources and more history in these markets, which may put us at a competitive disadvantage to these larger competitors. If we fail to penetrate these or other new markets we are targeting, our financial condition would likely suffer.
Acquisitions may also reduce our cash available for operations and other uses, and could also result in an increase in amortization expense related to identifiable assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt, any of which could harm our business.
Acquisitions may also reduce our cash available for operations and other uses, and could also result in an increase in amortization expense related to identifiable assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt, any of which could harm our business. 30 The complexity of calculating our tax provision may result in errors that could result in restatements of our financial statements.
Department of Commerce, or Commerce, which imposes limitations on the supply of certain U.S. items to the listed entities. In October 2022, BIS imposed additional restrictions on transactions with Dahua involving items subject to BIS export regulations. These export regulations negatively impact our ability to ship items subject to BIS regulations to these listed entities.
Department of Commerce, or Commerce, which imposes limitations on the supply of U.S. controlled items to the listed entities. In October 2022, BIS imposed additional restrictions on transactions with Dahua involving items subject to BIS export regulations.
Similarly, our assembly vendors have recently experienced shortages of certain substrates necessary for the production of our solutions due in part to COVID-19, which has negatively impacted the production time of our devices.
Similarly, our assembly vendors have recently experienced shortages of certain substrates necessary for the production of our solutions, which has negatively impacted the production time of our devices.
Our customers may cancel their orders, change production quantities or delay production. If we fail to accurately forecast demand for our solutions, revenue shortfalls or excess, obsolete or insufficient inventory could result. Our customers typically do not provide us with firm, long-term purchase commitments.
If we fail to accurately forecast demand for our solutions, revenue shortfalls or excess, obsolete or insufficient inventory could result. 22 Our customers typically do not provide us with firm, long-term purchase commitments.
For example, the semiconductor industry recently experienced shortages of certain devices, including microcontrollers, PMICs, Wi-Fi chips, which impacted our customers’ ability to build their products and negatively impact our customers’ demand for our solutions. We believe these shortages were exacerbated by the COVID-19 pandemic.
For example, the semiconductor industry recently experienced shortages of certain devices, including microcontrollers, PMICs, Wi-Fi chips, which impacted our customers’ ability to build their products and negatively impact our customers’ demand for our solutions.
Recently, customers have indicated they are reducing their inventory levels as lead times for semiconductor chips and other components used by customers shrink, which has reduced, and may continue to reduce, such customers’ demand for our products in future periods. High inflation may exacerbate these risks.
In recent periods, some customers have indicated they are reducing their inventory levels as lead times for semiconductor chips and other components used by customers shrink, which has reduced, and may continue to reduce, such customers’ demand for our products in future periods. We expect these cyclical conditions to continue.
Our marketable securities portfolio could experience a decline in market value or otherwise become illiquid, which could materially and adversely affect our financial results. 33 As of January 31, 2023, we had approximately $101.2 million in money market funds and debt security investments.
Our marketable securities portfolio could experience a decline in market value or otherwise become illiquid, which could materially and adversely affect our financial results. 33 As of January 31, 2024, we had approximately $106.1 million in money market funds and debt security investments and $7.0 million in fixed deposit accounts.
We may also encounter errors resulting in corruption or loss of data, an inability to accurately process or record transactions, and security or technical reliability issues.
We may also encounter or be subject to bugs, errors, or hacking or other events resulting in system interruptions or other disruptions, corruption or loss of data, an inability to accurately process or record transactions, and security or technical reliability issues.
It also is possible that the Chinese government will retaliate in ways that could impact our business. 37 If additional tariffs or trade restrictions are imposed on our SoC solutions or the products of our customers, or trade restrictions are imposed on our ability to conduct business with certain customers, there could be a negative impact on our operations and financial performance.
If additional tariffs or trade restrictions are imposed on our SoC solutions or the products of our customers, or trade restrictions are imposed on our ability to conduct business with certain customers, there could be a negative impact on our operations and financial performance.
If we or our foundry vendors experience significant delays in transitioning to smaller geometries or fail to efficiently implement transitions, we could experience reduced manufacturing yields, delays in product deliveries and increased costs, all of which could harm our relationships with our customers and our operating results. 29 Rapidly changing industry standards could make our video and image processing solutions obsolete, which would cause our operating results to suffer.
If we or our foundry vendors experience significant delays in transitioning to smaller geometries or fail to efficiently implement transitions, we could experience reduced manufacturing yields, delays in product deliveries and increased costs, all of which could harm our relationships with our customers and our operating results.
Any unauthorized access by third parties to the systems of our cloud-based service providers, any other security breaches or incidents impacting such systems, or the existence of computer viruses, ransomware or other malicious code in their data or software could expose us to a risk of loss, misappropriation, unavailability and other unauthorized processing of information.
These third-party providers may also experience breaches, incidents, and attacks compromising or otherwise impacting their products, and their products may contain security vulnerabilities, each of which could impact our systems, and unauthorized access to the systems of our cloud-based service providers, any other security breaches or incidents impacting such systems, or the existence of computer viruses, ransomware or other malicious code in their data or software could expose us to a risk of loss, misappropriation, unavailability and other unauthorized processing of information.
To manage growth successfully, we believe we must effectively, among other things: • recruit, hire, train and manage additional qualified engineers for our research and development activities, particularly for the positions of semiconductor design and systems, AI computer vision development and applications engineering; • add additional sales and business development personnel; • maintain and improve our administrative, financial and operational systems, procedures and controls; • enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use; and • be able to secure sufficient manufacturing capacity.
To manage growth successfully, we believe we must effectively, among other things: • recruit, hire, train and manage additional qualified engineers for our research and development activities, particularly for the positions of semiconductor design and systems, AI computer vision development and applications engineering; • add additional sales and business development personnel; • maintain and improve our administrative, financial and operational systems, procedures and controls; • enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use; and • be able to secure sufficient manufacturing capacity. 27 We are likely to incur the costs associated with any increased investments earlier than some of the anticipated benefits, and the return on these investments, if any, may be lower, may develop more slowly than we expect or may not materialize.
We believe that our future revenue growth, if any, will significantly depend on our ability to expand within the Intelligence of Things, or IoT, camera markets with our new artificial intelligence, or AI, computer vision SoC solutions, and the OEM automotive, robotics and industrial markets.
If we fail to penetrate new markets, including the automotive OEM and ADAS market, our revenue and financial condition could be harmed. 20 We believe that our future revenue growth, if any, significantly depends on our ability to expand within the Internet of Things, or IoT, camera markets with our new artificial intelligence, or AI, computer vision SoC solutions, and the OEM automotive, robotics and industrial markets.
In the recent years, we expanded our staffing and increased our expenditures in anticipation of future revenue growth. If our revenue does not increase as anticipated, we could incur significant losses due to our higher expense levels if we are not able to decrease our expenses in a timely manner to offset any shortfall in future revenue.
If our revenue does not increase as anticipated, we could incur significant losses and declines in our cash reserves due to our higher expense levels if we are not able to decrease our expenses in a timely manner to offset any shortfall in future revenue.
Further, our business and performance are subject to economic conditions, and our suppliers, distributors, and customers may suffer their own financial and economic challenges. Russia’s ongoing conflict with Ukraine has triggered significant sanctions from U.S. and European leaders.
The materialization of these risks could have a material adverse effect on our business and financial condition. 37 Further, our business and performance are subject to economic conditions, and our suppliers, distributors, and customers may suffer their own financial and economic challenges. Russia’s ongoing conflict with Ukraine has triggered significant sanctions from U.S. and European leaders.
Similarly, if an OEM designs one of our SoC solutions into its product, we are not assured that we will receive or continue to receive new design wins from that OEM, which could negatively impact our business. If we fail to penetrate new markets, including the automotive OEM ADAS market, our revenue and financial condition could be harmed.
Similarly, if an OEM designs one of our SoC solutions into its product, we are not assured that we will receive or continue to receive new design wins from that OEM, which could negatively impact our business.
A large portion of our employee base is in China and impacts to our China offices could significantly harm our operations, make it difficult to support customers and negatively impact product development. The materialization of these risks could have a material adverse effect on our business and financial condition.
A large portion of our employee base is in China and impacts to our China offices could significantly harm our operations, make it difficult to support customers and negatively impact product development.
Sales to customers in Asia accounted for approximately 82%, 88% and 88% of our total revenue in fiscal years 2023, 2022 and 2021, respectively. Because most of our end customers or their ODM manufacturers are located in Asia, we anticipate that a majority of our future revenue will continue to come from sales to that region.
Because most of our end customers or their ODM manufacturers are located in Asia, we anticipate that a majority of our future revenue will continue to come from sales to that region.
We expect that we will have to address pricing pressures again in the future, particularly in markets experiencing consolidation, which could require us to reduce the prices of our SoC solutions and harm our operating results. 27 If we are unable to manage any future growth, we may not be able to execute our business plan and our operating results could suffer.
We expect that we will have to address pricing pressures again in the future, particularly in markets experiencing consolidation, which could require us to reduce the prices of our SoC solutions and harm our operating results.
The Council of the European Union has adopted this initiative for enactment by European Union member states by December 31, 2023, with implementation into the domestic laws of those states by the end of 2023, with the rules to be applicable for fiscal years starting on or after December 31, 2023 for multinationals that meet the annual threshold of at least EUR 750 million of consolidated revenues.
The Council of the European Union has adopted this initiative, which has been implemented into the domestic laws of some jurisdictions for fiscal years starting on or after December 31, 2023 for multinationals that meet the annual threshold of at least EUR 750 million of consolidated revenues.
Worldwide manufacturing capacity for silicon wafers is relatively inelastic. If the demand for silicon wafers or assembly material exceeds market supply, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive.
Shortages in, or increased costs of, wafers and materials could adversely impact our gross margins and lead to reduced revenues. Worldwide manufacturing capacity for silicon wafers is relatively inelastic. If the demand for silicon wafers or assembly material exceeds market supply, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive.
The complexity of calculating our tax provision may result in errors that could result in restatements of our financial statements. We are incorporated in the Cayman Islands and our operations are subject to income and transaction taxes in the United States, China, Hong Kong, Germany, Italy, Japan, South Korea, Taiwan and other jurisdictions in which we do business.
We are incorporated in the Cayman Islands and our operations are subject to income and transaction taxes in the United States, China, Hong Kong, Germany, Italy, Japan, South Korea, Taiwan and other jurisdictions in which we do business. Due to the complexity associated with the calculation of our tax provision, we have hired independent tax advisors to assist us.
The Bureau of Industry and Security, or BIS, has imposed restrictions on exports and reexports of U.S.-controlled items to Hong Kong by imposing stringent licensing requirements similar to those applicable to China.
Hong Kong has experienced, and continues to experience, political unrest and social strife in addition to the impact of the COVID-19 pandemic. The Bureau of Industry and Security, or BIS, has imposed restrictions on exports and reexports of U.S.-controlled items to Hong Kong by imposing on Hong Kong the same stringent licensing requirements applicable to China.
If we fail to introduce new or enhanced solutions that meet the needs of our customers or penetrate new markets in a timely fashion, we will lose market share, and our operating results will be adversely affected. 21 Shortages in, or increased costs of, wafers and materials could adversely impact our gross margins and lead to reduced revenues.
Delays in product development could impair our relationships with our customers and negatively impact sales of our solutions under development. If we fail to introduce new or enhanced solutions that meet the needs of our customers or penetrate new markets in a timely fashion, we will lose market share, and our operating results will be adversely affected.
A substantial portion of our revenue is processed through a single distributor and the loss of this distributor may cause disruptions in our shipments, which may adversely affect our operations and financial condition. We sell a significant percentage of our solutions through a single distributor, WT, which serves as our non-exclusive sales representative in Asia, other than Japan.
A substantial portion of our revenue is processed through a single distributor and the loss of this distributor may cause disruptions in our shipments, which may adversely affect our operations and financial condition.
Effective from December 31, 2019, we have structured our activities to comply with the new law. However, the legislation remains subject to further clarification and interpretation and accordingly, there is no guarantee that we will be deemed to be compliant.
However, the legislation remains subject to further clarification and interpretation and accordingly, there is no guarantee that we will be deemed to be compliant.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur lease obligations primarily consist of operating leases with lease periods expiring between fiscal years 2024 to 2028. 47 We believe that our existing facilities are well maintained and in good operating condition, and are sufficient for our needs for the foreseeable future.
Biggest changeWe believe that our existing facilities are well maintained and in good operating condition, and are sufficient for our needs for the foreseeable future.
The following table lists our major locations and primary usage as of January 31, 2023: Approximate Square Major Locations Footage Usage United States: Santa Clara, California 61,700 Corporate Headquarters; Sales; Marketing; Research and Development; Finance; Administration Wixom, Michigan 2,700 Business Development Beavercreek, Ohio 16,000 Research and Development Asia Pacific: Hsinchu, Taiwan 85,700 Research and Development; Business Development; Operations; Administration Shanghai, China 31,600 Research and Development; Business Development Shenzhen, China 19,200 Research and Development; Business Development Kowloon, Hong Kong 9,000 Sales; Warehousing Shin-Yokohama, Japan 1,300 Business Development SeongNam, South Korea 1,500 Business Development Europe: Parma, Italy 12,100 Research and Development
The following table lists our major locations and primary usage as of January 31, 2024: Approximate Square Major Locations Footage Usage United States: Santa Clara, California 61,700 Corporate Headquarters; Sales; Marketing; Research and Development; Finance; Administration Wixom, Michigan 2,700 Business Development Beavercreek, Ohio 16,000 Research and Development Asia Pacific: Hsinchu, Taiwan 86,700 Research and Development; Business Development; Operations; Administration Shanghai, China 31,600 Research and Development; Business Development Shenzhen, China 19,200 Research and Development; Business Development Kowloon, Hong Kong 9,000 Sales; Warehousing Shin-Yokohama, Japan 1,300 Business Development SeongNam, South Korea 1,500 Business Development Europe: Parma, Italy 12,100 Research and Development
Outside of the United States, we also lease facilities in various international locations that are used for research and development, sales, business development, operations and administrative support. These international facilities are mainly located in Taiwan, China and Italy.
Outside of the United States, we also lease facilities in various international locations that are used for research and development, sales, business development, operations and administrative support. Our lease obligations primarily consist of operating leases with lease periods expiring between fiscal years 2025 to 2028.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 4. M INE SAFETY DISCLOSURES Not applicable. 48 P ART II
Biggest changeITEM 4. M INE SAFETY DISCLOSURES Not applicable. 50 P ART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans For information about our equity compensation plans, see Note 12, “Employee Benefits and Stock-based Compensation” of the Notes to Consolidated Financial Statements included in this report. 49 Purchases of Equity Securities by the Issuer On March 16, 2020, we repurchased a total of 25,719 of our ordinary shares for approximately $1.0 million in cash under an authorized repurchase program up to $50.0 million.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans For information about our equity compensation plans, see Note 12, “Employee Benefits and Stock-based Compensation” of the Notes to Consolidated Financial Statements included in this report. 51 Purchases of Equity Securities by the Issuer There were no shares repurchased in fiscal years 2024, 2023 and 2022.
The following graph shows a comparison from February 1, 2018 through January 31, 2023 of the cumulative total return for our ordinary shares, the NASDAQ Composite Index and the Philadelphia Semiconductor Index. The comparisons in the graph are historical and are not intended to forecast or be indicative of possible future performance of our ordinary shares.
The following graph shows a comparison from February 1, 2019 through January 31, 2024 of the cumulative total return for our ordinary shares, the NASDAQ Composite Index and the Philadelphia Semiconductor Index. The comparisons in the graph are historical and are not intended to forecast or be indicative of possible future performance of our ordinary shares.
ITEM 5. M ARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares are traded on the NASDAQ Global Market under the symbol “AMBA”. On March 24, 2023, there were 29 shareholders of record holding our ordinary shares.
ITEM 5. M ARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares are traded on the NASDAQ Global Select Market under the symbol “AMBA”. On March 22, 2024, there were 26 shareholders of record holding our ordinary shares.
Repurchases are funded using working capital and any repurchased shares are recorded as authorized but unissued shares. Recent Sales of Unregistered Securities None. 50 ITEM 6. [RESERVED] 51
Repurchases are funded using working capital and any repurchased shares will be recorded as authorized but unissued shares. Recent Sales of Unregistered Securities None. 52 ITEM 6. [RESERVED] 53
Our Board of Directors has approved extensions of the repurchase program through June 30, 2023. There were no shares repurchased in fiscal years 2023 and 2022. As of January 31, 2023, there was approximately $49.0 million available for repurchases through June 30, 2023.
On May 26, 2023, our Board of Directors approved an extension of the existing share repurchase program for an additional twelve months through June 30, 2024. As of January 31, 2024, there was approximately $49.0 million available for repurchases through June 30, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCost of Revenue and Gross Margin Change Year Ended January 31, 2023 2022 2023 2022 2021 Amount % Amount % (dollars in thousands) Cost of revenue $ 128,672 $ 123,724 $ 87,417 $ 4,948 4.0 % $ 36,307 41.5 % Gross profit 208,934 208,132 135,573 802 0.4 % 72,559 53.5 % Gross margin 61.9 % 62.7 % 60.8 % — (0.8 )% — 1.9 % 57 While per unit cost of product shipped largely remained unchanged, cost of revenue increased for fiscal year 2023, as compared to fiscal year 2022, primarily due to $3.6 million of additional inventory reserves and adverse purchase commitments recognized in fiscal year 2023 caused by lower demand from customers, as well as $2.1 million of additional amortization of acquisition-related intangible assets associated with business acquisitions, partially offset by lower product unit shipments driven by customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry.
Biggest changeGross Margin Change Year Ended January 31, 2024 2023 2024 2023 2022 Amount % Amount % (dollars in thousands) Gross margin 60.4 % 61.9 % 62.7 % — (1.5 )% — (0.8 )% Gross margin decreased in fiscal year 2024, as compared to fiscal year 2023, primarily due to unfavorable product mix and higher indirect costs associated with amortization of intangible assets and assembly cost, partially offset by reversals of adverse purchase commitments recognized in prior fiscal years and sales of previously reserved inventory.
Net Cash Used in Investing Activities Fiscal year 2023 compared to fiscal year 2022: Net cash used in investing activities decreased primarily due to $307.0 million of net cash paid for the Oculii acquisition in fiscal year 2022, partially offset by approximately $290.0 million less net cash receipts from debt security investments and approximately $5.4 million additional payments for purchase of property and equipment and licenses.
Fiscal year 2023 compared to fiscal year 2022: Net cash used in investing activities decreased primarily due to $307.0 million of net cash paid for the Oculii acquisition in fiscal year 2022, partially offset by approximately $290.0 million less net cash receipts from debt security investments and approximately $5.4 million additional payments for purchase of property and equipment and licenses.
Our average selling price can vary by market and application due to market-specific supply and demand, the maturation of products launched in previous years and the launch of new products by us or our competitors. We continually monitor the cost of our solutions.
Our average selling price can vary by market and application due to market-specific supply and demand, the maturation of products launched in previous years and the launch of new products by us or our competitors. 55 We continually monitor the cost of our solutions.
Once inventory is written down, a new accounting cost basis is established and, accordingly, any associated reserve is not released until the inventory is sold or scrapped. Goodwill We do not amortize goodwill.
Once inventory is written down, a new accounting cost basis is established and, accordingly, any associated reserve is not released until the inventory is sold or scrapped. 64 Goodwill We do not amortize goodwill.
Any adjustment to the deferred tax asset valuation allowance would be recorded in the consolidated statements of operations for the periods in which the adjustment is determined to be required.
Any adjustment to the deferred tax asset valuation allowance would be recorded in the consolidated statements of operations for the periods in which the adjustment is determined to be required. 65
Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. 62 The sale of semiconductor products accounts for the substantial majority of our consolidated revenue.
Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. 63 The sale of semiconductor products accounts for the substantial majority of our consolidated revenue.
(2) Manufacturing purchase commitments consist primarily of inventory purchase commitments with our independent contract manufacturers. (3) Capital commitment represents future construction cost and lease payments for our office building constructed in Parma, Italy. (4) Unrecognized tax benefits, including interest, represent our liabilities for uncertain tax positions as of January 31, 2023.
(2) Manufacturing purchase commitments consist primarily of inventory purchase commitments with our independent contract manufacturers. (3) Capital commitment represents future construction cost and lease payments for our office building constructed in Parma, Italy. (4) Unrecognized tax benefits, including interest, represent our liabilities for uncertain tax positions as of January 31, 2024.
The expense also includes costs of development incurred in connection with our collaborations with our foundry vendors, costs and amortization of licensing intellectual property from third parties for product development, costs of development for software and hardware tools, costs of fabrication of mask sets for prototype products, equipment expenses, outside services as well as allocated depreciation and facility expenses.
The expense also includes costs of development incurred in connection with our collaborations with our foundry vendors, costs of licensing intellectual property from third parties for product development, costs of development for software and hardware tools, costs of fabrication of mask sets for prototype products, the cost and depreciation of equipment, outside services as well as allocated depreciation and facility expenses.
This category of AI technology is known as computer vision, or CV, and our CV SoCs integrate our state-of-the-art video processor technology together with our deep learning neural network processing technology, which we refer to as CVflow™.
This category of AI technology is known as computer vision or edge inference AI, and our CV SoCs integrate our state-of-the-art video processor technology together with our deep learning neural network processing technology, which we refer to as CVflow™.
Moreover, achieving design wins, particularly for computer vision-centric applications in the IoT, automotive, industrial and robotics markets, is vital to our ability to generate revenue growth. As such, we closely monitor design wins by our customers.
Moreover, achieving design wins, particularly for computer vision-centric applications in the IoT, automotive, industrial and robotics markets, is vital to our ability to generate revenue growth. As such, we closely monitor our design wins with our customers.
Our limited market concentration may cause our financial performance to fluctuate significantly from period to period based on the success or failure of products that our SoCs are designed into as well as the overall growth or decline in the video capture markets in which we compete.
Our concentration in a limited number of markets may cause our financial performance to fluctuate significantly from period to period based on the success or failure of products that our SoCs are designed into as well as the overall growth or decline in the video capture markets in which we compete.
On an ongoing basis, we evaluate our estimates and assumptions, including those related to (i) business combinations; (ii) write downs of excess and obsolete inventories; (iii) the estimated useful lives of long-lived assets; (iv) the valuation of stock-based compensation awards; (v) the realization of tax assets and estimates of tax liabilities, including reserves for uncertain tax positions.
On an ongoing basis, we evaluate our estimates and assumptions, including those related to (i) business combinations; (ii) write downs of excess and obsolete inventories; (iii) the estimated useful lives of long-lived assets; (iv) the valuation of stock-based compensation awards; (v) the realization of tax assets and estimates of tax liabilities, including reserves for uncertain tax positions and recognition or release of valuation allowance on deferred tax assets.
Under ASC 606, we estimate the total consideration to be received by using the expected value method for each contract, compute weighted average selling price for each unit shipped in cases where there is a material right due to the presence of volume-based tiered pricing, allocate the total consideration between the identified performance obligations, and recognize revenue when control of goods and services is transferred to our customers.
For a limited number of contracts that include volume-based tiered pricing, we estimate the total consideration to be received by using the expected value method for each contract, compute weighted average selling price for each unit shipped in cases where there is a material right due to the presence of volume-based tiered pricing, allocate the total consideration between the identified performance obligations, and recognize revenue when control of goods and services is transferred to our customers.
Our short-term and long-term capital requirements will depend on many factors, including the following: • our ability to generate cash from operations; • our ability to control our costs; • the expansion of our research and development of new technologies and products to address new markets and applications; • the magnitude and duration of COVID-19 impact, as well as measures implemented to control the spread of the virus; • the emergence of competing or complementary technologies or products; • global economic and political conditions, including macroeconomic conditions, high inflation and trade restrictions; • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights or participating in litigation-related activities; and • our acquisition of complementary businesses, products and technologies.
Our short-term and long-term capital requirements will depend on many factors, including the following: • our ability to generate cash from operations; • our ability to control our costs; • the expansion of our research and development of new technologies and products to address new markets and applications; • the emergence of competing or complementary technologies or products; • global economic and political conditions, including macroeconomic conditions, high inflation and trade restrictions; • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights or participating in litigation-related activities; and • our acquisition of complementary businesses, products and technologies.
No goodwill impairment has been identified to date based on our qualitative factors assessment. 63 Stock-Based Compensation We measure stock-based compensation for equity awards granted to employees and directors based on the estimated fair value on the grant date, and recognize that compensation as expense using the straight-line attribution method for service condition awards or using the graded-vesting attribution method for awards with performance conditions over the requisite service period, which is typically the vesting period of each award.
Stock-Based Compensation We measure stock-based compensation for equity awards granted to employees and directors based on the estimated fair value on the grant date, and recognize that compensation as expense using the straight-line attribution method for service condition awards or using the graded-vesting attribution method for awards with performance conditions over the requisite service period, which is typically the vesting period of each award.
Sources of Liquidity As of January 31, 2023, we had cash, cash equivalents and marketable debt securities on hand of approximately $206.9 million, compared with approximately $171.0 million of cash on hand as of January 31, 2022. 60 Operating and Capital Expenditure Requirements As of January 31, 2023, we had cash, cash equivalents and marketable debt securities on hand of approximately $206.9 million.
Sources of Liquidity As of January 31, 2024, we had cash, cash equivalents and marketable debt securities on hand of approximately $219.9 million, compared with approximately $206.9 million of cash, cash equivalents and marketable debt securities on hand as of January 31, 2023. 61 Operating and Capital Expenditure Requirements As of January 31, 2024, we had cash, cash equivalents and marketable debt securities on hand of approximately $219.9 million.
Cost of revenue also includes indirect costs, such as inventory valuation reserves, adverse purchase commitments, allocation of facility costs, amortization of developed technology, warranty and other general overhead costs.
Cost of revenue also includes indirect costs, such as inventory valuation reserves, adverse purchase commitment reserves, facility cost allocations, amortization of developed technology and software licenses, warranty and other general overhead costs.
The increase in revenue was primarily due to continued adoption of our CV-based solutions, which have higher average selling prices, and increased non-recurring engineering (NRE) project services, partially offset by lower product unit shipments driven by customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry. • We recorded an operating loss of $74.3 million in fiscal year 2023, as compared to an operating loss of $29.6 million in fiscal year 2022.
Revenue increased in fiscal year 2023, as compared to fiscal year 2022, primarily due to continued adoption of our CV-based solutions, which have higher average selling prices, and increased NRE project services, partially offset by lower product unit shipments driven by customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry.
Supply chain issues impact our business as they relate to both our suppliers and our customers. With respect to our suppliers, we have in the past experienced supply constraints for certain chips from Samsung Electronics Corporation and we may in the future experience similar issues.
Uncertain market demand may be exacerbating these customers’ inventory reduction efforts. Supply chain issues can impact our business as they relate to both our suppliers and our customers. With respect to our suppliers, we have in the past experienced supply constraints for certain chips from Samsung Electronics Corporation and we may in the future experience similar issues.
Net Cash Provided by Financing Activities Fiscal year 2023 compared to fiscal year 2022: Net cash provided by financing activities decreased primarily due to approximately $4.7 million less cash proceeds from option exercises and employee stock purchase withholdings.
Fiscal year 2023 compared to fiscal year 2022: Net cash provided by financing activities decreased primarily due to approximately $4.7 million less cash proceeds from option exercises and employee stock purchase withholdings. Stock Repurchase Program There were no shares repurchased in fiscal years 2024, 2023 and 2022.
The higher cash flows from operating activities were primarily attributable to higher collections of accounts receivable associated with the timing of sales and lower inventory purchases due to customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry, partially offset by increased net loss adjusted for certain non-cash items and decreased liabilities associated with employee benefit payments and the timing of payments to our suppliers. • In the second quarter of fiscal year 2023, we resumed our investments in money market funds and debt securities after a full liquidation of our investments to finance the Oculii acquisition in fiscal year 2022.
Fiscal year 2023 compared to fiscal year 2022: Cash provided by operating activities increased primarily due to higher collections of accounts receivable associated with the timing of sales and lower inventory purchases due to customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry, partially offset by increased net loss adjusted for certain non-cash items and decreased liabilities associated with employee benefit payments and the timing of payments to our suppliers.
Results of Operations The following table sets forth our historical operating results for the periods indicated: Year Ended January 31, 2023 2022 2021 (dollars in thousands) Revenue $ 337,606 $ 331,856 $ 222,990 Cost of revenue 128,672 123,724 87,417 Gross profit 208,934 208,132 135,573 Operating expenses: Research and development 204,946 167,337 140,759 Selling, general and administrative 78,244 70,438 55,980 Total operating expenses 283,190 237,775 196,739 Loss from operations (74,256 ) (29,643 ) (61,166 ) Other income, net 3,318 1,002 3,863 Loss before income taxes (70,938 ) (28,641 ) (57,303 ) Provision (benefit) for income taxes (5,552 ) (2,230 ) 2,483 Net loss $ (65,386 ) $ (26,411 ) $ (59,786 ) The following table sets forth our historical operating results as a percentage of revenue of each line item for the periods indicated: Year Ended January 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Cost of revenue 38 37 39 Gross profit 62 63 61 Operating expenses: Research and development 61 50 63 Selling, general and administrative 23 21 25 Total operating expenses 84 71 88 Loss from operations (22 ) (8 ) (27 ) Other income, net 1 — 2 Loss before income taxes (21 ) (8 ) (25 ) Provision (benefit) for income taxes (2 ) — 2 Net loss (19 ) % (8 ) % (27 ) % 55 Revenue We derive substantially all of our revenue from the sale of HD and Ultra HD video and image processing SoC solutions to IoT OEMs, IoT ODMs, OEM or Tier-1 automotive suppliers, either directly or through our distributors.
Results of Operations The following table sets forth our historical operating results for the periods indicated: Year Ended January 31, 2024 2023 2022 (dollars in thousands) Revenue $ 226,474 $ 337,606 $ 331,856 Cost of revenue 89,657 128,672 123,724 Gross profit 136,817 208,934 208,132 Operating expenses: Research and development 215,052 204,946 167,337 Selling, general and administrative 76,325 78,244 70,438 Total operating expenses 291,377 283,190 237,775 Loss from operations (154,560 ) (74,256 ) (29,643 ) Other income, net 6,030 3,318 1,002 Loss before income taxes (148,530 ) (70,938 ) (28,641 ) Provision (benefit) for income taxes 20,887 (5,552 ) (2,230 ) Net loss $ (169,417 ) $ (65,386 ) $ (26,411 ) 56 The following table sets forth our historical operating results as a percentage of revenue of each line item for the periods indicated: Year Ended January 31, 2024 2023 2022 Revenue 100 % 100 % 100 % Cost of revenue 40 38 37 Gross profit 60 62 63 Operating expenses: Research and development 95 61 50 Selling, general and administrative 34 23 21 Total operating expenses 129 84 71 Loss from operations (69 ) (22 ) (8 ) Other income, net 3 1 — Loss before income taxes (66 ) (21 ) (8 ) Provision (benefit) for income taxes 9 (2 ) — Net loss (75 ) % (19 ) % (8 ) % Revenue We derive substantially all of our revenue from the sale of HD and Ultra HD video and image processing SoC solutions to IoT OEMs, IoT ODMs, automotive OEMs or Tier-1 automotive suppliers, either directly or through our distributors.
We anticipate that product lifecycles will typically be longer than 24 months in the OEM automotive and industrial and robotics markets, as new product introductions occur less frequently in these markets. 52 Fiscal Year 2023 Financial Highlights and Trends • We recorded revenue of $337.6 million in fiscal year 2023, an increase of 1.7% as compared to fiscal year 2022.
We anticipate that product life cycles will typically be longer than 24 months in the OEM automotive and industrial and robotics markets, as new product introductions occur less frequently in these markets. 54 Fiscal Year 2024 Financial Highlights and Trends • We recorded revenue of $226.5 million in fiscal year 2024, a decrease of 32.9% as compared to fiscal year 2023.
A typical design win that successfully launches into the marketplace can generate a wide range of sales volumes for our solutions, depending on the end market demand for our customers’ products.
We believe that our operating results for the foreseeable future will continue to depend on sales to a relatively small number of customers. Sales Volume . A typical design win that successfully launches into the marketplace can generate a wide range of sales volumes for our solutions, depending on the end market demand for our customers’ products.
Contractual Obligations, Commitments and Contingencies The following table summarizes our outstanding contractual obligations as of January 31, 2023: Payment Due by Period as of January 31, 2023 (in thousands) Less than More than All Total 1 Year 1-3 Years 3-5 Years 5 Years Other Contractual Obligations Technology licenses (1) $ 17,953 $ 7,764 $ 10,189 $ — $ — $ — Manufacturing purchase commitments (2) 43,556 43,556 — — — — Capital commitment (3) 2,888 2,531 24 24 309 — Unrecognized tax benefits, including interest (4) 3,770 — — — — 3,770 Total $ 68,167 $ 53,851 $ 10,213 $ 24 $ 309 $ 3,770 (1) Technology license obligations represent future cash payments for noncancelable internal-use software licenses used in product design.
Contractual Obligations, Commitments and Contingencies The following table summarizes our outstanding contractual obligations as of January 31, 2024: Payment Due by Period as of January 31, 2024 (in thousands) Less than More than All Total 1 Year 1-3 Years 3-5 Years 5 Years Other Contractual Obligations Technology licenses (1) $ 17,024 $ 8,611 $ 8,413 $ — $ — $ — Manufacturing purchase commitments (2) 30,650 30,650 — — — — Capital commitment (3) 4,324 — 3,934 24 366 — Unrecognized tax benefits, including interest (4) 3,762 — — — — 3,762 Total $ 55,760 $ 39,261 $ 12,347 $ 24 $ 366 $ 3,762 (1) Technology license obligations represent future cash payments for noncancelable internal-use software licenses used in product design.
CVflow can process other sensor modalities including lidar and radar, and allows customers to differentiate their products by porting their own, or third party, neural networks and/or classical CV algorithms to our CVflow-based SoCs.
The CVflow-architecture supports a variety of CV algorithms, including object detection, classification and tracking, semantic and instance segmentation, image processing, stereo object detection, and terrain mapping. CVflow can process other sensor modalities including lidar and radar, and allows customers to differentiate their products by porting their own, or third party, neural networks and/or classical CV algorithms to our CVflow-based SoCs.
We are unable to reasonably estimate the timing of payments in individual years due to uncertainties in the timing of the effective settlement of tax positions. 61 We also have lease obligations primarily for our worldwide office facilities. As of January 31, 2023, these lease obligations were total of $9.0 million, with $3.8 million due in the next 12 months.
We are unable to reasonably estimate the timing of payments in individual years due to uncertainties in the timing of the effective settlement of tax positions. 62 We also have lease obligations primarily for our worldwide office facilities.
Other Income, Net Change Year Ended January 31, 2023 2022 2023 2022 2021 Amount % Amount % (dollars in thousands) Other income, net $ 3,318 $ 1,002 $ 3,863 $ 2,316 231.1 % $ (2,861 ) (74.1 )% The increase in other income, net, for fiscal year 2023, as compared to fiscal year 2022, was primarily due to higher yields from our debt security investments driven by security purchases at discounts and higher interest rates.
Other Income, Net Change Year Ended January 31, 2024 2023 2024 2023 2022 Amount % Amount % (dollars in thousands) Other income, net $ 6,030 $ 3,318 $ 1,002 $ 2,712 81.7 % $ 2,316 231.1 % The increase in other income, net, in fiscal year 2024, as compared to fiscal year 2023, was primarily due to $5.7 million of additional yields and interest income from our debt security investments and cash deposits.
Provision (Benefit) for Income Taxes Change Year Ended January 31, 2023 2022 2023 2022 2021 Amount % Amount % (dollars in thousands) Provision (benefit) for income taxes $ (5,552 ) $ (2,230 ) $ 2,483 $ (3,322 ) 149.0 % $ (4,713 ) (189.8 )% Effective tax rate 7.8% 7.8% (4)% — — — 11.8% Income tax benefit increased in fiscal 2023, as compared to fiscal year 2022, primarily due to a decrease in the proportion of profits generated in higher tax jurisdictions and the release of prior FIN48 reserves upon the lapse of the statute of limitations, partially offset by an increase in non-deductible stock-based compensation.
Provision (Benefit) for Income Taxes Change Year Ended January 31, 2024 2023 2024 2023 2022 Amount % Amount % (dollars in thousands) Provision (benefit) for income taxes $ 20,887 $ (5,552 ) $ (2,230 ) $ 26,439 (476.2 )% $ (3,322 ) 149.0 % Effective tax rate (14.1)% 7.8% 7.8% — (21.9)% — — Income tax expense increased in fiscal 2024, as compared to fiscal year 2023, primarily due to a one-time charge of $22.7 million of valuation allowance against the Company’s remaining U.S. net deferred tax assets, a decrease in the proportion of profits generated in lower tax jurisdictions and a decrease in the benefit from FIN48 reserves upon the lapse of the statute of limitations, partially offset by a decrease in non-deductible stock-based compensation.
Income tax benefit increased in fiscal 2022, as compared to fiscal year 2021, primarily due to a decrease in the proportion of profits generated in higher tax jurisdictions, an increase in the U.S. federal research tax credit, as well as an increase in tax benefits from excess stock-based compensation deductions. 59 Liquidity and Capital Resources Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended January 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 44,093 $ 38,795 $ 30,800 Net cash used in investing activities (107,295 ) (119,551 ) (31,324 ) Net cash provided by financing activities 5,698 10,525 10,396 Net increase (decrease) in cash, cash equivalents and restricted cash $ (57,504 ) $ (70,231 ) $ 9,872 Net Cash Provided by Operating Activities Fiscal year 2023 compared to fiscal year 2022: Cash provided by operating activities increased primarily due to higher collections of accounts receivable associated with the timing of sales and lower inventory purchases due to customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry, partially offset by increased net loss adjusted for certain non-cash items and decreased liabilities associated with employee benefit payments and the timing of payments to our suppliers.
Income tax benefit increased in fiscal 2023, as compared to fiscal year 2022, primarily due to a decrease in the proportion of profits generated in higher tax jurisdictions and the release of prior FIN48 reserves upon the lapse of the statute of limitations, partially offset by an increase in non-deductible stock-based compensation. 60 Liquidity and Capital Resources Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended January 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 19,024 $ 44,093 $ 38,795 Net cash provided by (used in) investing activities 7,842 (107,295 ) (119,551 ) Net cash provided by financing activities 4,506 5,698 10,525 Net increase (decrease) in cash, cash equivalents and restricted cash $ 31,372 $ (57,504 ) $ (70,231 ) Net Cash Provided by Operating Activities Fiscal year 2024 compared to fiscal year 2023: Cash provided by operating activities decreased primarily due to higher net loss adjusted for certain non-cash items, partially offset by increased working capital as a result of better management on accounts receivable and liabilities, as well as decreased inventory purchases due to lower demand from customers.
As a result, we may experience increased volatility in our sales and revenues in the near future, primarily owing to uncertainty around demand for semiconductor products, in general. In addition, recently, some customers have indicated they are reducing their inventory levels, as some component lead times contract toward normal levels. This may reduce such customers’ demand for our products.
Uncertainty in customer demand as well as the worldwide economy, in general, have increased volatility in our sales and revenues. Some customers have indicated they are reducing their inventory levels, as some component lead times contract toward normal levels, which has reduced and may continue to reduce demand for our products.
Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit .
Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit . No goodwill impairment has been identified to date based on our qualitative factors assessment.
We believe that our existing cash balances will be sufficient to meet our anticipated cash requirements through at least the next 12 months. In the future, we expect our operating and capital expenditures to increase as we increase headcount, expand our business activities, and implement and enhance our information technology platforms.
We believe that our existing cash balances will be sufficient to meet our anticipated cash requirements through at least the next 12 months. In the future, we may require more working capital to meet our operating and capital expenditure needs.
We expect our selling, general and administrative expense to increase in absolute dollars as we continue to maintain the infrastructure and expand the size of our sales and marketing organization to support our business strategy of addressing new opportunities with our computer vision technology. 56 Other Income, Net Other income, net, consists primarily of interest income and realized gains and losses from our cash deposits and debt security investments, subsidies granted by a foreign government as well as gains and losses from foreign currency transactions and remeasurements.
We expect our selling, general and administrative expense to increase in absolute dollars as we continue to maintain the infrastructure and expand the size of our sales and marketing organization to support our business strategy of addressing new opportunities with our computer vision technology.
As we expand our operations, we may require more working capital. If our available cash balances are insufficient to satisfy our future liquidity requirements, we may seek to sell equity or convertible debt securities or borrow funds commercially.
If our available cash balances are insufficient to satisfy our future liquidity requirements, we may seek to sell equity or convertible debt securities or borrow funds commercially. The sale of equity and convertible debt securities may result in dilution to our shareholders, and those securities may have rights senior to those of our ordinary shares.
We derive a substantial portion of our revenue from sales made indirectly through one of our distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, and directly to one of our ODM customers, Chicony Electronics Co., Ltd., or Chicony.
We derived a substantial portion of our revenue from sales made indirectly through one of our distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, which serves as our non-exclusive sales representative and fulfillment partner in Asia other than Japan, and to one ODM, Chicony Electronics Co., Ltd., or Chicony, which manufactures devices incorporating our solutions on behalf of multiple end-customers.
We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available to us on reasonable terms, or at all.
If we raise additional funds through the issuance of convertible debt securities or borrowing funds commercially, we may become subject to covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available to us on reasonable terms, or at all.
As semiconductor products mature and unit volumes sold to customers increase, their average selling prices typically decline. These declines may be paired with improvements in manufacturing yields and lower wafer, packaging and test costs, which offset some of the margin reduction that could result from lower selling prices.
These declines may be paired with improvements in manufacturing yields and lower wafer, packaging and test costs, which offset some of the margin reduction that could result from lower selling prices. 57 Research and Development Research and development expense consists primarily of personnel costs, including salaries, stock-based compensation and employee benefits.
We recognize that these stock-based awards will dilute existing shareholders and have sought to limit the number of shares granted while providing competitive compensation packages. As of January 31, 2023, we had a total of 3.04 million ordinary shares subject to outstanding stock options and unvested restricted stock units, which will dilute our existing shareholders.
Stock Options and Restricted Stock Units Grants of stock-based awards are key components of the compensation packages we provide to attract and retain employees and to align their interests with the interests of shareholders. We recognize that these stock-based awards will dilute existing shareholders and have sought to limit the number of shares granted while providing competitive compensation packages.
As of January 31, 2023, there was approximately $49.0 million available for repurchases through June 30, 2023. Repurchases under the program may be made from time-to-time through open market purchases, 10b5-1 plans or privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.
Repurchases under the program may be made from time-to-time through open market purchases, 10b5-1 plans or privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate us to acquire any particular amount of ordinary shares, and it may be suspended at any time at the company's discretion.
Research and Development Change Year Ended January 31, 2023 2022 2023 2022 2021 Amount % Amount % (dollars in thousands) Research and development $ 204,946 $ 167,337 $ 140,759 $ 37,609 22.5 % $ 26,578 18.9 % Research and development expense increased for fiscal year 2023, as compared to fiscal year 2022, primarily due to increased personnel costs, engineering-related expenses and SoC development cost.
Research and development expense increased in fiscal year 2023, as compared to fiscal year 2022, primarily due to increased personnel costs, engineering-related expenses and SoC development cost.
As of January 31, 2023 and 2022, the contract assets for these unbilled receivables were not material, respectively. Our contract liabilities consist of deferred revenue. The deferred revenue is primarily related to the nonrecurring engineering charges that are either invoiced or paid but performance obligations are not satisfied associated with project service agreements.
As of January 31, 2024 and 2023, the contract assets for these unbilled receivables were not material, respectively. Our contract liabilities consist of deferred revenue.
Selling, General and Administrative Change Year Ended January 31, 2023 2022 2023 2022 2021 Amount % Amount % (dollars in thousands) Selling, general and administrative $ 78,244 $ 70,438 $ 55,980 $ 7,806 11.1 % $ 14,458 25.8 % 58 Selling, general and administrative expense increased for fiscal year 2023, as compared to fiscal year 2022, primarily due to increased personnel costs, marketing, travel, and facility-related expenses as well as the amortization of acquisition-related intangible assets.
The decrease was also attributable to approximately $0.8 million lower personnel costs as a result of lower headcount. Selling, general and administrative expense increased in fiscal year 2023, as compared to fiscal year 2022, primarily due to increased personnel costs, marketing, travel, and facility-related expenses as well as the amortization of acquisition-related intangible assets.
The increased research and development expense was also attributable to approximately $5.7 million of additional SoC development cost due to process node technological changes, increased licensed intellectual property associated with the new chips, as well as the number of chips in development.
The increased research and development expense was also attributable to approximately $5.7 million of additional SoC development cost due to process node technological changes, increased licensed intellectual property associated with the new chips, as well as the number of chips in development. 59 Selling, General and Administrative Change Year Ended January 31, 2024 2023 2024 2023 2022 Amount % Amount % (dollars in thousands) Selling, general and administrative $ 76,325 $ 78,244 $ 70,438 $ (1,919 ) (2.5 )% $ 7,806 11.1 % Selling, general and administrative expense decreased in fiscal year 2024, as compared to fiscal year 2023, primarily due to approximately $1.1 million of lower traveling, sales support, professional service and facility-related expenses.
Comparison of the Fiscal Years Ended January 31, 2023, 2022 and 2021 Revenue Change Year Ended January 31, 2023 2022 2023 2022 2021 Amount % Amount % (dollars in thousands) Revenue $ 337,606 $ 331,856 $ 222,990 $ 5,750 1.7 % $ 108,866 48.8 % Revenue increased for fiscal year 2023, as compared to fiscal year 2022, primarily due to continued adoption of our CV-based solutions, which have higher average selling prices, and increased NRE project services, partially offset by lower product unit shipments driven by customer inventory level reductions as a result of improved supply chain lead times across the semiconductor industry.
Comparison of the Fiscal Years Ended January 31, 2024, 2023 and 2022 Revenue 58 Change Year Ended January 31, 2024 2023 2024 2023 2022 Amount % Amount % (dollars in thousands) Revenue $ 226,474 $ 337,606 $ 331,856 $ (111,132 ) (32.9 )% $ 5,750 1.7 % Revenue decreased in fiscal year 2024, as compared to fiscal year 2023, primarily due to lower product unit shipments as a result of customer inventory level reduction efforts.
This potential dilution will only result if outstanding options vest and are exercised and restricted stock units vest and are settled.
As of January 31, 2024, we had a total of 2.7 million ordinary shares subject to outstanding stock options and unvested restricted stock units, which will dilute our existing shareholders. This potential dilution will only result if outstanding options vest and are exercised and restricted stock units vest and are settled.
The repurchase program does not obligate us to acquire any particular amount of ordinary shares, and it may be suspended at any time at the company's discretion. Repurchases are funded using working capital and any repurchased shares are recorded as authorized but unissued shares.
Repurchases are funded using working capital and any repurchased shares will be recorded as authorized but unissued shares.
Subsidies received from a foreign government, as well as gains from foreign currency transactions and remeasurements also contributed to the increase.
The increase in other income, net, in fiscal year 2023, as compared to fiscal year 2022, was primarily due to higher yields from our debt security investments driven by security purchases at discounts and higher interest rates. Subsidies received from a foreign government, as well as gains from foreign currency transactions and remeasurements also contributed to the increase.
Fiscal year 2022 compared to fiscal year 2021: Net cash provided by financing activities increased primarily due to $1.0 million of cash used for repurchasing our ordinary shares under the stock repurchase program in fiscal year 2021 that did not recur in fiscal year 2022, partially offset by $1.1 million of less cash received from option exercises and employee stock purchases.
Net Cash Provided by (Used in) Investing Activities Fiscal year 2024 compared to fiscal year 2023: Net cash provided by investing activities increased primarily due to approximately $63.3 million of less cash used in debt security purchases due to the timing of investment, $49.6 million of higher cash receipts from maturities and sales of our debt security investments, as well as $3.1 million less in payments for purchase of property, equipment and licenses, partially offset by a $0.7 million claim from an acquisition escrow account in fiscal year 2023 that did not recur in fiscal year 2024.
The increased operating expenses were partially offset by decreased acquisition-related costs associated with the acquisition of Oculii in the prior fiscal year. • We generated cash flows from operating activities of $44.1 million in fiscal year 2023, as compared to $38.8 million in fiscal year 2022.
The increase in operating expenses primarily related to higher chip tape-out costs from our foundries associated with the progress, complexity and number of chips in development, increased engineering-related expenses for supporting our CV-based and radar solutions, as well as increased personnel costs. • We generated cash flows from operating activities of $19.0 million in fiscal year 2024, as compared to $44.1 million in fiscal year 2023.
Revenue increased for fiscal year 2022, as compared to fiscal year 2021, primarily due to higher product unit shipments driven by higher customer inventory levels as a result of supply chain constraints across the semiconductor industry. The increased revenue was also attributable to continued adoption of our CV-based solutions which have higher average selling prices.
The decreased revenue from lower product shipments was partially offset by continued adoption of our CV-based solutions, which have higher average selling prices than non-CV solutions. • We recorded a loss from operations of $154.6 million in fiscal year 2024, as compared to a loss from operations of $74.3 million in fiscal year 2023.
The higher operating loss was primarily due to higher operating expenses, partially offset by increased revenue and gross profit. The increased operating expenses primarily related to higher personnel costs, including stock-based compensation, as a result of the acquisition of Oculii Corporation, or Oculii, in late fiscal year 2022 and benefit programs.
The increased loss from operations was primarily due to a decrease in revenue and gross profit, as well as an increase in operating expenses.
Removed
The CVflow-architecture supports a variety of CV algorithms, including object detection, classification and tracking, semantic and instance segmentation, image processing, stereo object detection, terrain mapping, and face recognition.
Added
Our latest third generation CVflow technology enables us to address incremental and computationally intense AI applications for deep fusion, deep planning, and large language models (LLMs), as well as efficiently process transformer AI networks.
Removed
The increases were also attributable to higher chip tape-out costs due to the timing and number of chips in development and increased engineering-related expenses for supporting automotive, robotic and industrial applications of our CV-based vision and radar solutions.
Added
The decrease in revenue was primarily attributable to lower product unit shipments as a result of customer inventory level reduction efforts.
Removed
The debt security investment portfolio consists of commercial paper, debt securities of corporations or corporate bonds, asset-backed securities and U.S. government securities. All of the investments are denominated in United States dollars and are reported at a fair value of approximately $101.2 million with unrealized losses of $0.5 million in our consolidated balance sheets.
Added
The lower cash flows from operating activities were primarily attributable to higher net loss adjusted for certain non-cash items, partially offset by increased working capital as a result of better management on accounts receivable and liabilities, and decreased inventory purchase due to lower demand from customers. Factors Affecting Our Performance Impact of Global Supply Chain Conditions on Our Business.
Removed
Factors Affecting Our Performance Impact of Global Supply Shortages on Our Business. Global supply shortages, and uncertainty in customer demand as well as the worldwide economy, in general, have continued as a result of the COVID-19 pandemic, and may be further exacerbated by the impacts of high inflation.
Added
We believe that our customers are making progress with their inventory reduction efforts, and we expect conditions to return to more stability in future periods. Ability to Capitalize on AI and Computer Vision Trends .
Removed
The magnitude and duration of such volatility is uncertain and thus its impact on our business cannot be reasonably estimated at this time. 53 Ability to Capitalize on AI and Computer Vision Trends .
Added
As semiconductor products mature and unit volumes sold to customers increase, their average selling prices typically decline.
Removed
We believe that our operating results for the foreseeable future will continue to depend on sales to a relatively small number of customers. Ability to Capitalize on Connectivity Trends . Mobile connected devices are ubiquitous today and play an increasingly prominent role in consumers’ lives.
Added
Other Income, Net Other income, net, consists primarily of interest income and yields from our cash deposits and debt security investments, realized gains and losses from equity and debt security investments, subsidies granted by foreign governments, as well as gains and losses from foreign currency transactions and remeasurements.
Removed
The constant connectivity provided by these devices has created a demand for connected electronic peripherals such as video and image capture devices.
Added
Consequently, in the fourth quarter of fiscal year 2024, we recorded an additional valuation allowance of $22.7 million on certain U.S. deferred tax assets resulting from our evaluation of cumulative taxable income and future projections in the U.S., and determined that it was more likely than not that these assets will be unrealizable in the future.
Removed
Our ability to capitalize on these trends by supporting our end customers in the development of connected peripherals that seamlessly cooperate with other connected devices and allow consumers to distribute and share video and images with online media platforms is critical for our success.
Added
The decreased revenue from lower product shipments was partially offset by continued adoption of our CV-based solutions, which have higher average selling prices than non-CV solutions.
Removed
We incorporate wireless communication functionality into our solutions for wearable, IP security, aerial drone and automotive video recorder cameras. The combination of our compression technology with wireless connectivity enables wireless video streaming and uploading of videos and images to the Internet.
Added
Research and Development Change Year Ended January 31, 2024 2023 2024 2023 2022 Amount % Amount % (dollars in thousands) Research and development $ 215,052 $ 204,946 $ 167,337 $ 10,106 4.9 % $ 37,609 22.5 % Research and development expense increased in fiscal year 2024, as compared to fiscal year 2023, primarily due to approximately $5.0 million of additional SoC development cost from our foundries associated with the progress, complexity and number of chips in development, $1.7 million of additional engineering-related expenses for supporting our CV-based and radar solutions, as well as $3.4 million of additional personnel costs as a result of increased stock-based compensation and employee benefit programs.
Removed
Our solutions enable IP security camera systems to stream video content to either cloud infrastructure or connected mobile devices, and our solutions for wearable and aerial drone cameras allow consumers to quickly stream or upload video and images to social media platforms. 54 Sales Volume .
Added
The increase was partially offset by an approximately $1.2 million of increased interest expenses associated with software license purchases, lower subsidies received from a foreign government and net loss from foreign currency remeasurements.
Removed
The continued effects of the COVID-19 pandemic and persistent supply chain challenges have negatively affected our business performance and revenues this year, and may continue in the next fiscal year.
Added
In fiscal year 2024, the increase was also negatively impacted by an approximately $1.2 million impairment recognized and an approximately $0.7 million lower fair value adjustment relating to our equity investments.
Removed
Research and Development Research and development expense consists primarily of personnel costs, including salaries, stock-based compensation and employee benefits.
Added
Net Cash Provided by Financing Activities Fiscal year 2024 compared to fiscal year 2023: Net cash provided by financing activities decreased primarily due to approximately $1.1 million less in payments for the purchase of licenses.
Removed
Cost of revenue increased for fiscal year 2022, as compared to fiscal year 2021, primarily due to increased revenue.
Added
On May 26, 2023, our Board of Directors approved an extension of the existing share repurchase program for an additional twelve months through June 30, 2024. As of January 31, 2024, there was approximately $49.0 million available for repurchases through June 30, 2024.
Removed
Gross margin increased in fiscal year 2022, as compared to fiscal year 2021, primarily due to a favorable product mix. A customer concentration shift from China to the Asia region other than China and to North America also contributed to an improvement in gross margin in fiscal year 2022.
Added
As of January 31, 2024, these lease obligations were a total of $5.5 million, with $3.6 million due in the next 12 months. Refer to Note 9 Leases within Notes to Consolidated Financial Statements for further information.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical 10% change in interest rates will not have a material impact on our future interest income or investment fair value. The liquidity risk and the risk associated with fluctuating interest rates are limited to our investment portfolio. Foreign Currency Risk To date, all of our product sales and inventory purchases have been denominated in U.S. dollars.
Biggest changeAs of January 31, 2024, a hypothetical 10% change in interest rates would not have a material impact on our interest income or investment fair value. Foreign Currency Risk To date, all of our product sales and inventory purchases have been denominated in U.S. dollars. We therefore have not had any foreign currency risk associated with these two activities.
The current inflationary environment in the United States and resulting high interest rates have not had a material impact on our investment portfolio and financial position to date. We do not enter into investments for trading or speculative purposes.
The current inflationary environment in the United States and resulting high interest rates have generated high interest income and have not had a material negative impact on our investment portfolio and financial position to date. We do not enter into investments for trading or speculative purposes.
To date, we have not entered into any foreign currency exchange contracts and currently do not expect to enter into foreign currency exchange contracts for trading or speculative purposes. 65
To date, we have not entered into any foreign currency exchange contracts and currently do not expect to enter into foreign currency exchange contracts for trading or speculative purposes. 66
We do not enter into investments for trading or speculative purposes. 64 Interest Rate Fluctuation Risk The primary objective of our investment activities is to preserve capital, provide liquidity and maximize income without significantly increasing risk. Some of the securities we invest in are subject to market risk.
Our cash is held primarily for working capital purposes. We do not enter into investments for trading or speculative purposes. Interest Rate Fluctuation Risk The primary objective of our investment activities is to preserve capital, and provide both, liquidity and income, without significantly increasing risk. Some of the securities we invest in are subject to market risk.
This means that a change in prevailing interest rates may affect the interest income on our cash, cash equivalents and marketable debt securities, and the market value of those securities . To minimize this risk, we maintain our portfolio in a variety of debt securities with high liquidity and low credit risk.
This means that a change in prevailing interest rates may have an impact on interest income and the fair market value of those securities . To minimize this risk, we maintain our portfolio in a variety of debt securities with high liquidity and low credit risk.
ITEM 7A. Q UANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We had cash, cash equivalents and marketable debt securities totaling $206.9 million at January 31, 2023 and had cash of $171.0 million at January 31, 2022.
ITEM 7A. Q UANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We had cash, cash equivalents and marketable debt securities totaling $219.9 million and $206.9 million at January 31, 2024 and 2023, respectively.
We therefore have not had any foreign currency risk associated with these two activities. The functional currency of all of our entities is the U.S. dollar. Our operations outside of the United States incur operating expenses and hold assets and liabilities denominated in foreign currencies, principally the New Taiwan Dollar, the Chinese Yuan Renminbi and the Eurozone Euro.
The functional currency of all of our entities is the U.S. dollar. Our operations outside of the United States incur operating expenses and hold assets and liabilities denominated in foreign currencies, principally the New Taiwan Dollar, the Chinese Yuan Renminbi and the Eurozone Euro.
Our cash is deposited in checking accounts with reputable financial institutions in excess of the Federal Deposit Insurance Corporation, or FDIC, insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category.
Our cash is deposited in checking accounts with reputable financial institutions in excess of the Federal Deposit Insurance Corporation, or FDIC, insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category. The cash equivalents and marketable debt securities consist primarily of investments in money market funds, commercial paper, corporate bonds, asset-backed securities and U.S. government securities.
Removed
The cash equivalents and marketable debt securities consist primarily of investments in money market funds, commercial paper, debt securities of corporations or corporate bonds, asset-backed securities and U.S. government securities. Our cash is held primarily for working capital purposes.

Other AMBA 10-K year-over-year comparisons