Ambarella Inc Q1 FY2025 Earnings Call

Thank you for standing by. Welcome to Ambarella’s First Quarter Fiscal Year 2025 Earnings Call. As a reminder, today’s program is being recorded. And now I would like to introduce your host for today’s program Mr. Louis Gerhardy, Vice President, Corporate Development and Investor Relations. Please go ahead, sir.

Thank you, Jonathan, and good afternoon. Thank you for joining our first quarter fiscal 2025 financial results conference call. On the call with me today is Dr. Fermi Wang, President and CEO; and John Young, CFO. The primary purpose of today’s call is to provide you with information regarding the results for our first quarter and fiscal 2025. The discussion today and the responses to your questions will contain forward-looking statements regarding our projected financial results, financial prospects, market growth and demand for our solutions, among other things. These statements are based on currently available information and are subject to risks, uncertainties, and assumptions. Should any of these risks or uncertainties materialize or should our assumptions prove to be incorrect, our actual results could differ materially from these forward-looking statements. We are under no obligation to update these statements. These risks, uncertainties, and assumptions as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we filed with the SEC. Access to our first quarter fiscal 2025 results press release, transcripts, historical results, SEC filings, and a replay of today’s call can be found on the Investor Relations page of our website. The content of today’s call, as well as the materials posted on our website, are Ambarella’s property and cannot be reproduced or transcribed without our prior written consent. Fermi will now provide a business update for the quarter. And John will review the financial results and outlook, and we will be available for your questions after that. Fermi?

Thank you, Louis, and good afternoon. Thank you all for joining our call today. Our Q1 results were 1% above the midpoint of our guidance range, with revenue increasing 6% sequentially. As expected, both auto and IoT revenue increased sequentially, and the AI products accounted for about two-thirds of our total revenue. As previously discussed, our customers are in the midst of recovering from a cyclical inventory correction, and the favorable impact from this is expected to carry into the second quarter. We continue to expect our fiscal ‘25 revenue to grow year-over-year, driven by both the cyclical tailwinds and the secular growth in our AI portfolio. The combination of these cyclical and secular forces is expected to enable our AI inference revenue to grow more than 30% in fiscal 2025. Zooming out for a moment, the significant capacity being added to the AI training network infrastructure globally helps the ultimate deployment of AI inference at the edge, where we participate in the market. The deployment of AI inference at the edge enables end-users to practically take advantage of many different AI breakthroughs. As focus on AI and the edge of networks increases, we see AI inferencing proliferating in multiple areas, and we believe we are well-positioned to take advantage of this. In fact, we are already in the early stages of demonstrating how it may play out for us. In Q1, for example, our customer engagement includes our first passenger vehicle wins for our 5-nanometer CV3-AD family of AI central domain controllers. We added another CV3-AD win in the commercial vehicle market, secured multiple enterprise-class AI inferencing wins, and even in other IoT cameras, we are reporting additional wins for our 5nm CV5 AI processor. In the midst of this great change, our opportunity and the challenge are to develop AI technology and products that are both extremely efficient for edge deployment and flexible enough to execute a wide range of AI workloads across all disparate applications. We are already in mass production with our AI products for video-intensive CNN networks, such as detection, classification, fusion, planning, stitching, mapping, tracking, framing, auto-editing, and neural network image signal processing. Now our third generation of AI technology integrated into our CV3-AD and CV7 series of SoCs can support transformer networks for a variety of generative AI applications. I would now like to describe customer engagements that can offer some indication of how this can play out for us. As we have made significant investments into our CV3-AD family of automotive AI domain controllers, we expect the CV3-AD family to be a major revenue driver. Therefore, we are pleased to announce our first CV3-AD family wins in the passenger vehicle market, which complements our ongoing wins with the CV3-AD family in the commercial vehicle market. In April, during the Beijing Auto Show, we reached a strategic collaboration agreement with a battery electric vehicle company in China. This company will use our CV3-AD AI domain controllers in new passenger vehicle models. This is an important development for us in several regards. First, by the number of EV deliveries in calendar 2023, this OEM is considered one of the top five new EV companies in China. While most of the OEM deliveries were in China last year, the company has an impressive plan for globalization of its business. Second, Chinese automotive OEMs are aggressively and successfully adopting next-generation technology into their vehicles, which aligns with our strategy to intersect the safety and autonomy domain with next-generation technology, in particular Level 2+. For example, to improve accuracy, many OEMs in China have aggressively adopted the BEV former AI framework for 3D perception tasks in their autonomous driving software stack. This high-performance framework can leverage to a high degree the unique capability in our CV3-AD AI inference processors, including the ability to process transformers at a low power. Third, the efficiency and scalability of our CV3-AD family portfolio is also a major factor in the collaboration with Ambarella, as the OEM can reuse this software on low, mid, and high-end vehicles. In April, we added another CV3-AD family win in the commercial vehicle market with the announcement of a strategic collaboration with SANY Corporation. SANY is one of the world's largest engineering machinery manufacturers, providing heavy-duty commercial vehicles to the global market. SANY intends to leverage Ambarella’s CV3-AD family of automotive AI domain controllers to develop advanced automated driving solutions for its next-generation commercial and special-purpose vehicles. The companies will collaborate on the joint development and promotion of high-performance and highly integrated automated driving solutions, with SANY's goal of achieving the start of production for at least one model by calendar year 2025. At the Beijing Auto Show in April, Tier 1 Neusoft Reach announced a strategic partnership with Ambarella. The companies plan to expand on their existing relationship to jointly promote and explore AI-based product technology and market development in areas including autonomous driving and driver monitoring. Neusoft's third-generation forward-facing intelligent camera X-Cube 3.0 is powered by Ambarella's CV22 AI Vision SoC to target level 2+ autonomy levels and has already been mass-produced and deployed by automotive OEMs. We are pleased to announce that Seeing Machines, the leading provider of driver monitoring systems software, selected our CV25 for its own aftermarket system for commercial vehicles. The Guardian Generation 3 meets the European Commission's general safety regulation for drowsiness detection, a requirement for all new cars, vans, trucks, and buses across Europe. And in April, at the ISC West security exhibition, we successfully demonstrated the latest next-generation AI technology running a vision language model on our N1 and the CV72 SoCs. Our demonstration includes using multi-models to search video recordings to detect objects defined by tags and provide near instantaneous results without the need for training specifically for those objects. This capability opens up a whole new range of AI-based search capabilities for enterprise cameras and AI systems. Our third-generation AI inference technology includes specific support needed to efficiently run these new classes of networks. During ISC West, we also announced and demonstrated our new 5-nanometer CV75 AI SoC, which provides the performance required to run the latest vision language models, as well as AI-based IQ enhancement. This capability to efficiently run cutting-edge AI technologies is highly sought after for cost and power-constrained AI cameras used in enterprise, smart city, retail stores, robotic access control, and consumer devices. At the Enterprise Connect Conference in March, Poly, a leading global provider of workplace collaboration solutions, and the wholly-owned unit of HP, launched its Studio E360. This center of a table system utilizes a single 5-nanometer CV5 for four 8-megapixel cameras with AI inference processing, choosing the optimal framing angle for in-room participants. And also in Korea, the activity for our AI SoCs remains high, with the leading security camera maker, Hanwha, introducing new AI models based on our CV22 and the CV2 AI SoCs. And IDE introduce CV25-based models, and C-Pro introduces dual-sensor AI cameras based on CV22. In the other IoT market, we are pleased to see our 5-nanometer CV5 AI inference processor being utilized in consumer cameras to significantly improve both image quality and automate certain user interface functions. Insta360 introduced its X4 action camera in April with dual sensors for 360-degree 8K capture. In conclusion, I mentioned last quarter that our goals are to restore revenue growth and profitability while continuing to drive our strategic R&D priorities. Q1 represented a step in the right direction, most skillfully highlighted by our first passenger vehicle win for the CV3-AD family, and the expanding breadth of customer engagements stands out. We expect this to build a growth foundation upon which multiple AI applications can drive revenue growth and result in positive earning leverage for shareholders. The further commercialization and the monetization of our technology and the product is of utmost importance to us, and I am excited about the opportunity before us and what we will achieve in the years ahead. With that, John will now discuss the Q1 results and outlook in more detail.

Thank you, Fermi. I will now review the financial highlights for the first quarter fiscal year 2025, ending April 30, 2024. I will also provide a financial outlook for our second quarter of fiscal year 2025, ending July 31, 2024. I will be discussing non-GAAP results and ask that you refer to today's press release for a detailed reconciliation of GAAP to non-GAAP results. For non-GAAP reporting, we have eliminated stock-based compensation expense, along with acquisition-related costs, adjusted for the impact of taxes. For fiscal Q1, revenue was $54.5 million, 1% above the midpoint of our prior guidance range, up 6% from the prior quarter, and down 12% year-over-year. Non-GAAP gross margin for fiscal Q1 was 63.4%, above the high end of our prior guidance range by 0.4%. Non-GAAP operating expense was $46.7 million, approximately $2.6 million higher than the prior quarter and $800,000 lower than the midpoint of our prior guidance range of $46 million to $49 million, driven by continued expense management and the timing of spending between quarters. We remain on track to our internal product development milestones. Q1 net interest and other income was $2.3 million. Q1 non-GAAP tax provision was approximately $607,000. We reported a non-GAAP net loss of $10.5 million or a $0.26 loss per diluted share. Now we'll turn to our balance sheet and cash flow. Fiscal Q1 cash and marketable securities decreased $16.6 million from the prior quarter to $203.3 million. Receivables days of sales outstanding increased from 44 days in the prior quarter to 47 days, while days of inventory decreased from 131 days to 123 days. Inventory dollars declined 2% sequentially and declined 31% from a year ago. Operating cash outflow was $15 million for the quarter. Capital expenditures for tangible and intangible assets were $1.1 million. We had two logistics and ODM companies representing 10% or more of our revenue in Q1. WT Microelectronics, a fulfillment partner in Taiwan that ships to multiple customers in Asia, came in at 62% of revenue for the first quarter. Chicony, an ODM that manufactures for multiple end customers, was 13% of revenue for the quarter. I'll now discuss the outlook for the second quarter of fiscal year 2025. We remain confident our business is continuing to recover from the cyclical correction led by our AI inference products. For fiscal Q2, we estimate our total revenue will be in the range of $60 million to $64 million. We expect sequential growth in both IoT and Auto. We expect fiscal Q2 non-GAAP gross margin to be in the range of 62.5% to 64%. We expect non-GAAP operating expenses in the second quarter to be in the range of $47.5 million to $49.5 million, with the increase compared to Q1 driven by increased headcount and engineering-related expenses, including our first 2-nanometer SoC project. We estimate net interest income to be approximately $1.8 million, our non-GAAP tax expense to be approximately $600,000, and our diluted share count to be approximately 41.1 million shares. Ambarella will be participating in Bank of America's Global Technology Conference on Wednesday, June 5th in San Francisco, Mizuho's Technology Conference on June 12th in New York City, and Rosenblatt's Virtual Age of AI Conference on June 13th. We hope to see you at one of these events. Please contact us for more details. Thank you for joining our call today, and with that, I will turn the call over to the operator for questions.

And our first question for today comes from the line of Christopher Rolland from Susquehanna.

Hey, guys. Can you hear me? Great. Thanks for the question. You brought up VLMs on the call. Just wanted to know a little bit more about that application. Does that increase your TAM overall? Is this additive to what you're doing in, for example, LLMs? How should we think about that? Thanks.

Right. So, we started talking about LLMs and began demoing at CES this year. We continue to watch the potential application we can use with our solution for our customers. We identify vision language models, which are really large language models that can respond to text for searching different objects or can be used to describe different video elements. We have a live demo, and in fact, we welcome you to call to set up a live demo for you on how the vision language model is used in our current enterprise customers or other potential customers in that space. This is definitely a brand new application that we identified by the market and the customer engagement, particularly in the enterprise and security camera market. They show extreme interest in this product because this model can replace people who used to monitor different cameras in a control center and can provide an early warning as well as allow for searching different objects without needing specific training for those objects. I think that's a significant breakthrough for the enterprise side, and we expect that some of our customers will kick off projects with us on the VLMs in the near future. We can utilize both N1 as well as CV72 for that product.

Great, thanks, Fermi. And then on the auto opportunity, making some progress here sounds like on the Chinese EV side of things. Perhaps you can talk about the pipeline, kind of how you see it expanding engagement of late here that you're seeing, and whether you think there's going to be more to come, and whether any of these could actually be implementing your software as well? Thanks.

Right. So first of all, I definitely believe there will be more to come, and I also believe that the first design win really shows off our program. We have been talking about our strengths, which is that we can run the most advanced transformers very efficiently at low power and also have a scalable architecture. This advantage can really allow us to address multiple software solutions from low-end to high-end vehicles. The power consumption is much lower than our competitors, which gives us a significant advantage in the design win. It's important to point out that EV market Chinese automakers are really aggressive in pushing technology envelopes, and one of them adopting our Level 2+ solution will help us secure more potential OEM design wins that we are bidding on.

Our next question comes from the line of Ethan Patashnik from T.D.

Yes, hi, everybody. This is Ethan Patashnik on for Matt Ramsey. Congrats on the great results. I wanted to ask if the passenger vehicle win you guys discussed tonight is likely to get CV3 to the tipping point with regards to wins with other OEMs. Are there other OEMs waiting to see maybe another one kind of go first? Maybe you could discuss those dynamics?

Right. So, first of all, I think the lifetime value of this design win is meaningful and material for us, and they are very aggressive. The target MP date is the end of ‘25 or early ‘26, which will help us really take our CV3-AD platform into production. Therefore, we expect to provide a mature solution to other companies who are considering our current solution. I definitely believe that not only does this design win help our pipeline, but also it will be a major help for us to secure design wins in the near future.

Okay, understood. And as my follow-up, you guys provided a lot of good information around the AI inference opportunity, with revenue expected to grow 30%. I think you guys said in fiscal ‘25, and you mentioned some progress on enterprise applications. I was wondering how these early stages of this opportunity are playing out. What impact have some of the announcements you guys made at CES, particularly the N1 SoC and the Cooper Development platform, had on driving that, and how is the roadmap progressing? Any early feedback and any additional insight would be helpful.

Right. So just to refresh our GenAI strategy, we definitely intend to leverage our current existing third generation AI inference engine into GenAI and LLM. We demoed the N1 with Lava at CES, and then at ISC West, we demoed the VLM running on both N1 and CV7. Our current generation strategy has become very clear. First of all, we're going to focus on edge applications, for both edge cameras and edge servers. Two, we'll focus on the workloads that we can really take advantage of with our current silicon. So that's for enterprise markets as well as some adjacent markets that can use those Lava models and VLM models. We continue to believe that our opportunity for GenAI revenues in 2026 is strong. We are not only demoing, but we're assembling N1 and the CV72 for our key customers who are interested in GenAI applications. That's our first generation, and as you can see, I think John mentioned that we're investing in two-nanometer process nodes. You can consider that a preparation for our next generation GenAI solution. Although we haven't talked about our plans for that yet, we are working on it. We believe that our two-nanometer technology development will significantly help us in the technology side for our roadmap.

And our next question comes from the line of Joe Moore from Morgan Stanley.

Great. Thank you. In terms of the passenger car win in China, can you talk about, I think you mentioned it as an L2+, if I heard you right type of opportunity? Can you describe how many cameras per car and what capabilities you could offer there?

Yes. So first of all, it is an L2+ car. And because they have different models, it's anywhere from 7 to 10 cameras plus a 5 radars configuration. It's designed to enable autonomous driving from highway levels to city levels.

Great. Thank you for that. And then was this customer, I know you have a probability-weighted funnel, was this customer somebody that you had anticipated had some probability within that funnel?

Yes, and now I think with the next funnel discussion, they should be in the one category instead of the probability category.

And our next question comes from the line of Kevin Cassidy from Rosenblatt Securities.

Thanks. And congratulations on the great results and the design win momentum. Maybe Fermi, you hinted, I was going to ask more questions about the two-nanometer process technology. Do you have a timeline for when you'd have first silicon, and are you staying with Samsung, or will this be with TSMC?

Right. So these two nanometers will be Samsung's two nanometers, and we plan to have it ready for production in 2026.

Okay, great. And maybe just as a follow-up on Joe's question, you mentioned that it's 7 to 10 cameras plus radar. Is that your radar in the design?

We haven't talked about that yet.

Okay. All right, maybe I'll go to an easier question with just your backlog visibility. If you're saying you're going to see growth in fiscal year 2025, can you talk about your backlog visibility?

Yes. Our backlog visibility is getting much better than before. In fact, that's the reason we feel comfortable with the street’s consensus of $250 million revenue forecast this year. Our lead times are really around 24 weeks, indicating that we still have clear visibility to mid-Q4, reminding you that our Q4 is in January. We see clear bookings for Q3 and Q4, which is why we continue to feel comfortable with our guidance.

Okay, great. Thank you.

However, let me add one more sentence. While we are comfortable with the $250 million consensus level, we believe there is seasonality in Q4 that we should consider. We believe we're going to continue to see growth from Q2 to Q3, but from Q3 to Q4, just like the traditional seasonality before COVID, we expect some seasonality there.

And our next question comes from the line of Quinn Bolton from Needham and Company.

Hey, this is Nick Doyle on for Quinn. And thanks for taking our questions. Maybe just zooming out a little bit, could you give us a pulse on the Chinese auto market overall? How do you see current EV demand and supply? And then you mentioned two CV3 wins in the passenger and commercial markets. Can you size those opportunities at all? Thanks.

Right. So, first of all, we don't play in the EV market; we play in the autonomous driving market. But they are very much correlated. I think what happened in the EV space is that Chinese automakers continue to aggressively push the technology envelope. We see the same trend on the autonomous driving technology side. For example, almost all the RPQ we are building in China require the most advanced networks like BEV former and very L2+, C-level autonomy. This shows me that Chinese automakers are very aggressive in pushing the technology envelope, and we believe that plays to our strength. Although the EV market is experiencing some slowness in total market size, we still believe that growth continues to be there. We expect that the majority of EV cars will have a Level 2 or Level 2+ system in the coming years.

Okay. The margins, the gross margins were a bit of a bright spot in the quarter and guide. Could you expand on what's driving that? Thanks.

Yes, so essentially, it's mix. We had a bit higher contribution than we had forecast from customer NRE projects that came through in the quarter as the main driver.

And our next question comes from the line of Tore Svanberg from Stifel.

Yes. This is Jeremy calling for Tore. Let me add my congrats on the growing CV3 design win. Maybe a quick follow-up on the gross margin in the NREs. Is the NREs something that is kind of like an ongoing project or sustainable in terms of contribution over the longer term? Just want to see the impact against your gross margins for the next 12 to 18 months. That's my first question.

Okay. Yes, we did it is a project that will be ongoing in the near future. Our long-term model, though, is 59 to 62 for gross margins. I think there may be a temporary blip-up for this quarter and potentially next quarter, as we've guided, but I think if you're thinking about long-term modeling, I wouldn't see this as a new norm necessarily.

Got it. And I guess in terms of this passenger vehicle design win, can you give us a little bit more detail in terms of how many car models are impacted? If there's a way to weigh it in terms of how many of the new vehicles are likely to see this incorporated? I also understand the ASPs for an L2+ can have a pretty wide range, maybe 40 at the low end, 200 at the higher end. Can you give us a ballpark where this fits in terms of the design win and the ASP size? Thank you.

Right. So, first of all, this OEM currently has only a portion of the models with Level 2+ in there, but I do believe, just like any other Chinese OEM we talk to, they want to move to Level 2+ across all their models because they view that as a huge differentiation. I expect when we go into production with this customer, all the cars they ship will have a level 2+ solution incorporated. As we have discussed in the past, for low-end to high-end, the ASP can range anywhere from $50 to $400, with the midpoint around $100 plus to $100 million—that's the range we're looking at from an ASP perspective. In terms of the size of this true opportunity, I think it is significant; I would say it's north of $100 million easily for the first design win, but we believe we can achieve more if we continue to work with our customer on getting more models and more other components into their cars.

Thank you, Fermi. I'm sorry I didn't quite catch how much, how many million was for the first design win.

I said, north of $100 million.

And our next question comes from the line of David O'Connor from BNP Paribas.

Great. Thanks for taking my question, guys. Maybe just going back to the seasonality in Q4, just looking back there, seems to be down like 15%, 20% Q-on-Q. Is that the type of ballpark or zip code we should be thinking of for that Q4 seasonality, or is it a bit more nuanced due to the lack of secular trends that you're seeing? That's my first question.

Yes. So I think it's relatively difficult for us to give crisp visibility out into Q4. But if you're thinking about the full-year guidance of, or I should say the consensus of $250 million, I think that's definitely reasonable at this point. I think, though, the percentage numbers you're talking about are within reason.

Well, we have seen this kind of seasonality before COVID time. I think when our—after the COVID time, after all the inventory correction is done, I think we're back to the normal seasonality. While we haven't provided guidance for Q4, if you look at the past history, it would be probably, if you observe the pattern, it will be similar to the seasonality we've seen before. The majority of that is in the IoT side, but a little bit on the auto side.

And our next question comes from the line of Richard Shannon from Craig-Hallum Capital.

Hi, guys. Thanks for taking my questions. Maybe touching on your comments about AI inference growing 30% or more this year, maybe give us a sense here of how much this is weighted towards IoT versus automotive, and then any kind of general sense here of how much this is unit versus ASP driven. It seems like, by doing the basic math, using the fiscal ‘25 that suggests AI would likely account for over 70% of sales this year. Is that a decent metric?

I think your math is correct. Let me provide more color. First of all, we have a lot of design wins on the CV5 and CV72. In particular, with CV5, we talked about production getting into production this year, and we're aiming to ship one million units of CV5 this year. Considering that the ASP is around $35 plus minus, that really helps us achieve an ASP jump, as well as revenue growth. This is one side of our CV growth. The other side is CV72; we're getting into production with enterprise IoT, and that's another positive trend. However, I also want to highlight that even in automotive, we are continuing to ship products, for example, just another design win with Neusoft on the ADAS side with CV22, as well as a few other designs we have with automotive. Both IoT and auto will see CV growth, but I think IoT is probably leading the way.

OK, perfect. That's helpful, Fermi. Follow-up question here on a different topic, and that of kind of China-US geopolitics. In the context of a couple of nice wins here with your CV3-AD domain controller going into China, just wondering if there's any change in the kind of undercurrent of geopolitics that might make it a bit more of a headwind to continue to do well there. Just want to get a general sense if there's been any real changes.

No, I don't think there's any meaningful change in the last three months. I think geopolitical situation continues to be an issue that we need to watch and deal with. I think that regarding the Chinese market, Chinese customers really want to ensure they use local components. However, I think with the advantage we have, especially for customers who focus on the export business, they also need to use silicon from outside China. So that's the balanced view we currently have, and that hasn’t changed. We haven't seen any new regulations impacting AI limitations.

And our next question comes from the line of Kevin Garrigan from WestPark Capital.

Yes, great, thanks for taking my questions, and let me echo my congrats on the strong results. Fermi, on the automotive side, I know you noted that you're more focused on autonomous driving and the market is pushing more towards EVs, but are you seeing combustion engine opportunities? Are any automotive OEMs backtracking from originally considering developing EVs to maybe presenting you opportunities in combustion engine or hybrid vehicles as well?

Absolutely. I don't think the autonomous driving is exclusive for EV at all. I think we continue to see RFQs for combustion engine cars and also hybrid cars. So I won't say that's exclusive. Just that the first design win happened to be a pure EV company. That also demonstrates that all EV companies are trying to find possible differentiations beyond just battery life by adding autonomous driving capabilities. This means that this autonomous driving application will go to all types of cars, including EVs as well as combustion engines.

Okay, perfect, sorry. That makes a ton of sense. And then following up on Richard's previous questions, you noted in your prepared remarks that AI inference is proliferating in multiple areas and your AI revenue would grow at 30% this year. You have a bunch of design wins in the pipeline. Is the AI inference market taking off as quickly or not as quickly as you originally thought? Is it developing into as large of an opportunity as you had imagined?

Well, for the IoT side, I think we do consider that enterprise IoT is growing as quickly as we expected, and I'm surprised by the other IoT space. However, one area that didn't grow as much as we expected is automotive. We have invested heavily in the CV3-AD market and we secured the first design win. There's a lot for us to work on to ensure that we can continue to take advantage of our investments in AI inference engine in automotive markets.

And our next question is a follow-up from the line of Tore Svanberg from Stifel.

Hi, yes, this is Jeremy again. Just a housekeeping question. Did you provide the split between auto and IoT? Could you refresh us on what those splits were for the last couple of quarters?

Yes. So if you look at last year, I think IoT was roughly two-thirds of total revenue and auto was one-third. Within IoT, enterprise security continues to be the largest portion, with consumer IoT and other IoT roughly the same size. Looking at growth this year, I think that within IoT, enterprise and automotive IoT is growing faster and we expect growth this year.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Dr. Fermi Wang for any further remarks.

Thank you everybody for joining us today. I'm looking forward to talking to you in the next conference call. Thank you.

Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.