Ambarella, Inc. (AMBA) Q3 FY2026 Earnings Call Transcript & Summary

Good day, and thank you for standing by, and welcome to the Ambarella's Third Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions]. Please be advised that today's call is being recorded. I would now like to hand the call over to your speaker, Louis Gerhardy, Vice President, Corporate Development. Please go ahead.

Thank you, Victor. Good afternoon, and thank you for joining our third quarter fiscal year 2026 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 third quarter fiscal year 2026. The discussions 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're under no obligation to update these statements. These risks, uncertainties and assumptions as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we filed with the SEC. Before starting the call, we hope to see you at one of the following investor events that we have scheduled during the fourth quarter. December 2 and 3, we will be at the UBS Global Technology and AI Conference in Scottsdale. December 9 and 10 at NASDAQ's London Conference, January 6 from 4:00 to 5:30 p.m. at our CES location, we'll be hosting a technology and product briefing. January 6 to 10, we'll be hosting more than a dozen sell-side analyst tours of our CES demonstrations, again, at our CES location in Las Vegas, and January 17 at the Needham Conference in New York. Access to our third quarter fiscal year 2026 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. John will review the financial results, and then we will be available for your questions. Fermi? Thank you, Louis.

Good afternoon, and thank you for joining our call today. Before we proceed, I want to let you know that Les Kohn, our Co-Founder and CEO, will be stepping down from the Board of Directors to become our Chief Technology Adviser. We will continue to oversee our technology direction and development, but without management responsibilities and with reduced time commitment. Les and I have worked closely since 1994 across 4 companies. I'm grateful that Les will continue as my close partner for over 31 years and beyond, and he is truly the best I could wish for. I'm happy he will have more time to pursue actions, but I will definitely miss our daily conversations on various topics. Turning to our fiscal third quarter. We are reporting another strong quarter with both revenue and non-GAAP EPS exceeding expectations. We achieved record quarterly revenue of $108.5 million, slightly above the high end of our guidance range. Edge AI revenue, we define as a product that integrates one of our proprietary deep learning AI accelerators was about 80% of our total revenue, representing our sixth consecutive quarter of record Edge AI revenue. We have increased our fiscal '26 revenue guidance, which projects an all-time fiscal year total revenue record for Ambarella. The strength in our average selling price and with breadth of demand we are raising our fiscal 2023 revenue growth guidance for a range of 36% to 38% or approximately $390 million at midpoint. This compares with our prior estimate provided on August 28 for 31% to 35% year-over-year growth or approximately $379 million at midpoint. These results are very encouraging, but I'm even more excited about the AI opportunity ahead of us. There are 3 key factors behind our enthusiasm and our strong commitment to edge AI. First, the breadth of applications demanding edge AI technology and our product is expanding. Second, the AI performance requirement for our product road map is expected to continue to rise, driving robust new product cycles. Third, our ASP has been increasing. And in the long run, we continue to see an excellent opportunity to capture more value per design. I will elaborate on those points. First, AI edge is becoming more prevalent, driving an increasing breadth of applications in both enterprise and consumer-driven market. Our Edge AI business started in enterprise security, followed by automotive safety, smart home, telematics and more recently, the portable video market, which includes action camera, panorama cameras and body worn cameras. Looking ahead, high-volume shipments into the aerial drone market are expected to commence this quarter, representing just the beginning of our realization of the large robotic market opportunity. There is also strong interest from existing and new customers in our edge infrastructure products and road maps, and we are committed to develop this incremental opportunity. In addition, ADAS and vehicle autonomy remain a large market that can leverage our technology to a very high degree. Second, we see a large opportunity to execute at the edge, the increasingly complex AI technologies currently implemented at the core of the network or in the data center. The challenge and our opportunity is that the solutions used at core of network are also not suitable for the edge, where the edge performance requirement is rising. In the edge market, low power consumption, real-time processing, privacy, security, small form factors, thermal network bandwidth efficiency and lower price points are critical. At Ambarella, we continue to invest heavily in our proprietary edge AI SoC technology and products to support this unique and increasingly complex AI requirements. For example, our 10-nanometer CV2 family supports CN network and our 5-nanometer embedding our third-generation AI processors is scaling our customers into more complex CNN and generative AI applications simultaneously. Third, we see an excellent opportunity to continue to increase our ASP. The shift from CPU workload to high-level accelerated computing or AI is well underway. The adoption of increasingly complex data center technology for the edge is another driver. Finally, the extension of road map beyond edge endpoints and into the edge infrastructure and auto autonomy is also expected in particular to boost our ASP. For example, our SoC blended ASP in Q3 was up about 20% year-over-year and as our third-generation AI SoCs and other new products become a more material portion of our revenue. We anticipate further increase in the value we earn per design wins. I will now describe some of the representative customer engagements that reflect the factors I just described. In the enterprise security market, we are very pleased to share a significant milestone with our customer, Sparsh, who became India's first security camera manufacturer to receive STQC certification for its complete range of cameras. At the heart of the collaboration is our CV28. This gives us a tremendous start to accelerate our adoption in the rapidly growing indigenous made in India market. Keenfinity, spun-out of Bosch, announced their Autodome 7100I moving PTZ camera with built-in AI analytics, ultra-HD imaging based on CV72. They have also announced their Dinon thermal security camera that is based on our CV22 that runs their CNN models to detect and classify objects accurately up to 2,000ft. Verkada announced their upcoming CV75-based AF64 Access Station Pro which enables secure physical access with AI facial recognition-powered Face Unlock alongside traditional badge and mobile access methods. The company also launched a new CR63-E remote security camera that leverages the power efficiencies of our CV75. They also expanded CV72-based multisensor security camera product line CH53-E/CH63-E 4x5MP and 4x4K and CY63-E 2x4K. Motorola has developed their Avigilon Halo 4 smart sensor on our CV25 which is an all-in-one environmental monitoring and security device that is designed for areas where cameras are restricted to detect events like smoke, fire and audio anomalies. In the robotics smart home market, one of our customers Whisker announced the Litter-Robot 5 Pro their first model with facial recognition that supports 2 night vision equipped AIpowered cameras built on our CV28. We are seeing great momentum in our portable video market with Arashi who released 2 models this quarter. The X4 Air at just 165g is the new lightest compact 8K 360 action camera, it is based on CV5 and is first in the range to support 8k30fps active HDR. Arashi also launched the latest version of their body worn camera GO Ultra. Based on CV52 it captures 4k60fps video and 50MP photos with improved performance even in low-light environments. In our automotive safety, ADAS and telematics business, I would like to share some key customer wins during the quarter. Zeekr, a unit of Geely, has developed their in-cabin DVR system on CV28 for the 9X full size luxury model. As Xpeng expands their global market presence, they have built all their driver management system for all their exported models on CV28. Solera, a global leader in vehicle lifecycle management, announced their new SR5 AI-Powered smart camera in October based on our CV22. In a first for Solera, the SR5 camera is powered by AI + HI (Human Intelligence) a revolutionary approach in fleet telematics that combines AI based analysis with human oversight to improve safety, efficiency and operations. From this representative customer engagements I just described, the strength of our current product portfolio is clearly represented with 7 examples from the 10-nanometer CV2 family and 7 examples from our 5-nanometer generation, the products all available today, offers customers a wide variety of options, ranging from CNN to transformer network processing, one to many sensor inputs, support for multiple sensing modalities all at a wide range of price points. Our new product roadmap will expand this portfolio further. In addition to our comprehensive and expanding AI SoC portfolio, another important distinguishing characteristic of our portfolio is the advanced VLSI technology we offer to customers at the edge. For example, 5nm based products represented more than 45% of our total Q3 revenue, with products based on more advanced nodes in development. In summary, the first 3 quarters of fiscal '26 are steps in the right direction with strong revenue growth, new product execution, profitability and with our cumulative year-to-date free cash flow almost 14.8%. We continue to forecast a large edge AI serviceable available market SAM of $12.9 billion by fiscal year 2031. We recognize the edge AI market is still in its early innings of development and to successfully address this large SAM we remain highly committed to our R&D investment that enables us to build upon our existing leadership position. I hope to see you January 6 at our CES 2026 product and technology briefing, which will give you a chance to learn about our new technologies and products and meet a broad set of our management team. With that, John will now discuss the Q3 results and the Q4 outlook.

Thanks, Fermi. I'll now review the financial highlights for the third quarter of fiscal year 2026 ending October 31, 2025. I will also provide a financial outlook for our fourth quarter of fiscal year 2020 ending January 31, 2026. I'll 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 and acquisition-related expenses, adjusted for the impact of taxes. For fiscal Q3, revenue was $108.5 million, above the high-end of our prior guidance range of $100.0 million to $108.0 million, up 13.5% from the prior quarter and up 31.2% year-over-year. Sequentially, Automotive revenue increased in the low-single digits and IoT increased in the mid-teens, with IoT growth led by the adoption of edge AI in enterprise security and portable video applications. Non-GAAP gross margin for fiscal Q3 was 60.9%, slightly above the midpoint of our prior guidance range of 60% to 61.5% due to product mix. Non-GAAP operating expense in Q3 was $55.3 million, slightly below the midpoint of our prior guidance range of $54 million to $57 million. Q3 net interest and other income was $2.1 million. Q3 non-GAAP tax provision was approximately $900,000. We reported a non-GAAP net profit of $11.9 million or $0.27 per diluted share in Q3. Now I will turn to our balance sheet and cash flow. Fiscal Q3 cash and marketable securities reached $295.3 million, increasing $34.1 million from the prior quarter and $68.8 million from the same quarter a year ago. Increased cash and marketable securities benefited primarily from operating cash flow associated with increased revenue. Receivables days sales outstanding decreased from 41 days in the prior quarter to 36 days and days of inventory decreased from 85 to 76 days. Operating cash inflow was $34.3 million for the quarter. Capital expenditures for tangible and intangible assets were $2.9 million for the quarter. Free cash flow was $31.4 million. We had one logistics company representing 10% or more of our revenue. WT Microelectronics, a fulfillment partner in Taiwan, that ships to multiple customers in Asia, came in at 70.2% of revenue for the third quarter. I will now discuss the outlook for the fourth quarter of fiscal year 2026. The breadth of our Edge AI business is expanding. Together with strong unit volume and average selling prices. As a result, in Q4, we forecast revenue in the range of $97 million to $103 million or $100 million at the midpoint. With a higher percentage of revenue coming from our high-volume customers. Sequentially, due to seasonality, we expect a mid- to high single-digit decline in both our automotive and IoT businesses. We expect fiscal Q4 non-GAAP gross margin to be in the range of 59% to 60.5%. We expect non-GAAP OpEx in the fourth quarter to be in the range of $55 million to $58 million, with the increase compared to Q3, driven primarily by employee-related and CES expenses. We estimate net interest and other income to be approximately $2 million, our non-GAAP tax expense to be approximately $600,000 and our diluted share count to be approximately 44.5 million shares. Thank you for joining our call today. And with that, I'll turn the call over to the operator for questions.

[Operator Instructions]. Our first question will come from the line of Tore Svanberg from Stifel.

Congrats on another record quarter. As my first question, when we think about that, let's call it, 36% to 38% growth for fiscal '26, how much of that is unit versus ASP? Because obviously, CV now is becoming a pretty high percentage. But even within CV, obviously, you have ASP increases. So yes, just trying to understand how much of the growth has been driven by ASP versus units.

Right. So I think both of them contribute to our growth. I would say I don't have an exact number. if I guess it's probably half and half. I think our unit growth definitely continue to contribute from the CV side, but ASP growth is also significant like we talked about in the script. So I think that both of them contribute to our end results.

That's very helpful. And as my follow-up, you talked about the portable video market. Could you just add some more color there? I mean it sounds like you have some new design wins. These are obviously AI-based drones. But just -- I know you've been in that market for a while, and obviously, that market sort of faded and now it seems to be coming back. So how should we just think about that market driving growth for Ambarella going forward?

Right. So about portable, there are multiple different product line in there. I want to be a little bit more specific on that. In fact, we talk about action sports camera that you said, we have been there for many years. And the new category is a Panoroma camera that Arash is famous for. And also, we talk about drones that is also part of the portable video. But in addition to that, our wearable camera, web camera, video conferencing product, all of them are part of the portable device because that's where our customer focusing on. So overall, that's an area that providing a big portion of our growth this year. And we believe that this market is going to continue to grow. And in fact, I have to say that I'm surprised -- a little surprised by the size of the market that growing over the year, but definitely momentum is there. Our job is trying to not only secure our market share, but hopefully, that we can grow some market share in the future.

Tore, it's Louis. Technically, we call it portable video and other. So there's a lot of things in there, as Fermi said.

One moment for our next question. Our next question will come from the line of Ross Seymore from Deutsche Bank.

Congrats to Les. I guess, first, you talked about the breadth of your business, especially in the edge IoT side of things or Edge AI, IoT, whatever you guys are calling it now. Can you just talk about a little bit about the consumer versus kind of the enterprise side? And I guess where I'm going is the portable side is great, but we've seen volatility around any sort of consumer applications in years past and cycles past. And I just wondered how you're managing that in this instance.

Ross, it's Louis. The split is roughly 50-50, 50% kind of enterprise CapEx driven and 50% consumer. And then within that 50% that's consumer, you've got some kind of consumer durable things like, say, smart home cameras that get replaced every 5 or 6 years. But then you also have consumer discretionary, which I think is some of the more volatile things you were referring to. So it's pretty evenly split at the highest level between the CapEx-driven markets and the consumer, but different types of consumer spending.

And I guess one for John. How are we thinking about gross margin as we look into next year, just conceptually what the pluses and minuses would be? I know you have the long-term target of the 59% to 62%. You're a little closer to the lower end of that in your fourth quarter guide. But just running through any of the puts and takes would be helpful.

Yes, Ross, thanks. So as you said, our long-term model is 59% to 62%. And as we said in our Q4 guide, the composition of gross margin really depends on the contribution of our high-volume customers. So whatever the gross margin is from quarter-to-quarter, that's -- at least in the near term, that's a primary driver.

Our next question will come from the line of Joe Moore from Morgan Stanley.

Yes. I also wanted to ask about that gross margin target. And I guess just as you've kind of refocused the business around a lot of exciting opportunities. Is there any chance to really fully participate in some of the consumer markets that you might accept lower gross margin in exchange for growth? And then I guess you've talked a lot on this call about average selling price. Sort of what's driving that focus ASP versus kind of gross profit dollar per device, things like that?

Yes. Thanks. So as far as the ASP goes, that is primarily a function of the technology and features that come with these more advanced technology tape-outs that we're doing and products that we're developing on our road map. As far as the gross margin goes, like I said, 59% to 62%. I think as far as consumer, on a case-by-case basis, depending on the volume that we see, the opportunities that we see, we're not opposed to gross margins that are maybe not strictly within the 59% to 62% range. But the goal at the corporate level is to, over the long term, stay in that range.

Great. And then I guess there's a lot of enthusiasm for drones, which is a market that you've kind of been in, in the past. Can you talk about what are the new elements of that market that probably might drive you to a higher content over time? And is it sort of -- you think about delivery drones and industrial drones and things like that? Is that a pretty big category for you down the road?

Right. So first of all, we were big in the past, as you said. But we were -- we stopped in that market because of geopolitical situation, not because of our technology solutions. And this time, we came back because we continue to believe a few things. First of all, there was a dominant player, but I think that in the U.S., the market is wide open at this point for everybody to fight in that capacity. So with our video technology, particularly our Peranoma camera that we help our customers to build is well suited for this space. So first of all, the driver for us is continue to provide the best video solution in the drone market. But more importantly, I think moving forward, is all the drone going to be autonomous in the future. We're kind of looking at today's drones is Level 2 and Level 3, Level 4 drones coming and probably going to drive faster than autonomous driving car. And we believe that in order to have a Level 3 drone that it will require a really powerful chip in addition to the video processing. And that's really played to our strength also that our investment in autonomous driving directly apply to here. So it's -- from a technology point of view, the video processing plus AI is the key driver. But as you said, today, the biggest market opportunity for us is consumer for video capture. But moving forward, we start seeing opportunities on the commercial side, which are going to continue to drive the growth. So we are excited that, first of all, we have really technology that we think is differentiated in this market. But more importantly, the market -- the serviceable market for us is growing fast. So that's the 2 reasons that we feel excited about this market.

Our next question will come from the line of Christopher Rolland from Susquehanna.

Congrats on the results. I guess my first question is around an update perhaps for the infrastructure opportunity and the N1 655.

Yes. So first of all, we announced our first design wins last quarter. And after that, we continue to see very strong design win activity and interest from different type of customers. In fact, we do -- in the last few months, we see customers who want using video-centric products and also customers want to use N1655 for non-video-centric products. So we are seeing a wide range of opportunity. So -- and we also continue to see our chance to not only building up but also win new design in the next -- in the near future. So we are totally committed to this market with N1655 and the new road map that we will talk about in the near future.

And perhaps if there are any updates on 2 other opportunities. I guess the first would be the home security market with AI feature integration? And then the second would be any kind of design activity? I know it's further out, but around humanoid robots, I think that would be interesting as well.

Right. So first of all, for the home security, I think we do have design wins with our CV75 that we haven't announced yet, but definitely is in design. However, I think this is a market that's price sensitive. So I think the progress or the movement towards this Gen AI type of home security camera for -- based on the camera solution, not the cloud solution, we are really focused on just edge AI for this market. So with that, I think that market is not developing as fast as we expect, but we do have design wins, we hope we can talk about sometime next year. From the humanoid, I think this is a long-term market that we definitely want to participate. However, I think it will take time to get to a humanoid. I think there's multiple steps for robotic from today's situation to the humanoid. And I think, like I said, even drone, if you treat robotic application, there's a Level 2 to Level 5. I think your humanoid is like Level 5 of drones for your different application. But there's intermediate steps we go through, and we definitely have design win and also design activities in those steps that will lead us into the humanoid. I just want to be more speclicific, we're offering 2 type of solutions to the robotic today. One is for people only interest with the video technology. So they want to have a really powerful eye that not only can see the object, but also can do quick object detection based on CNN network. We have that kind of solution based on our CV2 family or CV72 CV75 solution. So that's one product line we're providing. The other product line we're providing to the robots is really a brand, right? So [indiscernible] WiFi type of solution can be a central processor for any type of a robotic out there. So I think we're [indiscernible] solution, it will take time to develop a really -- as for central domain controller like autonomous driving car, that kind of solution will be required to do a humanoid solution in the future.

Our next question will come from line of Suji Desilva from ROTH Capital.

John, and best of luck with the next step of transition here. So maybe in the Edge AI market, looking ahead to calendar 26 perhaps, which of the 2 or 3 segments would you describe as the highest kind of growth opportunity for you? Is it drones or other areas? Any color there would be helpful.

I think definitely call out that it's going to be a growth area for us. And I also believe that even for [indiscernible] the endpoint we continue to see multiple opportunity coming up with different type of products. For example, wearable camera, we talked about this for many years. But right now, we are excited because wearable camera is not only for policemen anymore. We start seeing that goes to totally different commercial utilization. So that's just another example that the technology become ready, low power and also AI and the camera, all of that enable a new application for wearable camera. That's another really high-growth area that we're seeing. And it's not only we're saying that if you follow our customers, you will see that our customers are saying similar things. So those edge endpoint definitely a growth area for us. But I also want to bring your attention to the edge infrastructure, we talk about last quarter. I think although that not immediately you're going to see high revenue growth, but I think long term, that will be a very important market for us, and we'll definitely cover our thoughts on edge infrastructure CES and give you more insight to our plan.

Great. Then Fermi, one specific question on drones. Do you have any visibility in your pipeline beyond consumer commercial perhaps in any government programs? Or is that going to be a separate part of the market handling that versus you guys?

In fact, our customer -- in fact, it's not really our customer. I think all the customer has a desire to serve multiple different segments. But most of the customers are focusing on consumer commercial. And I don't think that [indiscernible] usage is a real focus for most of our customers yet.

Our next question comes from the line of Martin Yang from Opco.

First question on IoT, especially with growing customers like Arash, could you maybe comment on those customers' growth and it's relative contribution to overall ASP and margins?

Right. So first of all, Arash is -- I think our largest customer in our top 10 list and their revenue roughly doubled from last year to this year. Bbut they are using multiple chips and selling into multiple ODMs. It's hard for us to track exactly the revenue contribution, but we have no doubt they are the largest customer right now.

Another question on drones. So when you're referring to next year's product, are those drones using your image processing capabilities? Or do you expect them to deploy AI functions that relates to autonomous flying capabilities?

Both. I think that, like I said, there are 2 types of solutions we're offering some of them using just a video plus AI to apply CN type network for similar AI functions, but they will be definitely customers using our AI for flying to avoid objects for to determine the buying [indiscernible] most of them.

Our next question will come from the line of Quinn Bolton from Needham & Company.

I know the focus of the business has sort of shifted to edge AI and the future edge infrastructure. But in the past, you gave us sort of an automotive funnel. You haven't provided that. So just wondering how should we be thinking about how are you guys approaching the automotive market? Do you still see opportunities in Level 2+? Or are you kind of deemphasizing some of the automotive applications?

Thank you for that question because we did not decommit on that market. In fact, we continue to focus on market we are engaging multiple OEM Tier 1s at this point for autonomous driving Level 2, Level 2+, some even Level 3. So from the engineering activity and business activity point of view, we are OEM on this market -- definitely from the funnel discussion point of view, like I said last quarter, we will provide a funnel discussion in the next quarter release. But the one modification that we'll do, we will stop using a probability weighted matrix. We are trying to give you just direct opportunity we're looking at. So that will be the one change we're going to offer, but we will definitely provide more guidance on this -- how we look at this market.

Got it. And then I guess for John, just you mentioned that -- it sounds like the mix towards high-volume customers pushing the gross margin down to the lower half of your long-term range. Can you give us just beyond the January quarter, do you think that mix continues to be pretty heavy with higher volume customers? Or do you see this as sort of a temporary shift just for the January quarter and it normalizes beyond that?

Thanks, Quinn. Yes. At this point, we don't want to give a guide with regard beyond Q4. But I think that commentary with regard to Q4 is one to be relevant going forward, the ratio of high-volume customers to the total revenue for the quarter.

Sorry, John, you cut out there a little bit, did you say that the mix would stay pretty similar beyond January?

No. What I tried to say was that we don't want to make any guide beyond Q4, but that the commentary about Q4 with high -- the ratio of high-volume customers to the total revenue, that dynamic will continue to be a factor going forward. So to the extent that the high-volume folks are a higher percentage of the revenue, that will have its impact.

[Operator Instructions]. We have a follow-up question for Tore Svanberg from Stifel.

John, just a follow-up for you. So this year, you guys demonstrated some pretty good operating leverage. I'm just thinking as we look at fiscal '27 and OpEx growth, obviously, you're not giving a growth target per se, but we should assume that OpEx would grow at a slower pace than revenue growth for fiscal '27?

Thanks, Tore. Yes. We're not giving a guide at this point. But I think what we have said in the past, kind of as you articulated, is that long term, we expect to create operating leverage by having revenue and obviously, gross profit outpaced the increase in OpEx on a non-GAAP basis.

Our next question will come from the line of Kevin Cassidy from Rosenblatt.

Congratulations to Les for a legendary career. Again, I'm interested in that. But I want to know how much of your software and development that you've been able to work on with the automobile for L2 to L4, can you apply -- is it a relatively easy market for you to transition into or are there other software or other issues that would happen in robotics that is in automotive.

I think, Kevin, you pointed out it's really a great direction because like I continue to say, autonomous driving is just a special kind of robots and so is a drone. And in fact, that if you look at the details of functions inside autonomous driving car, Level 3 drone and also robots, at the end is really a bunch of sensor fusion and you make a decision on your environment and you decide o[indiscernible] even a car or some mobile robots moving around performance [indiscernible]. From my point of view, a lot of hardware have a commonality. And in fact, a lot of software development, particularly on the sensor fusion side with the perception, there's a huge [indiscernible] on all the robotic applications. So in fact, we definitely believe that a lot of our investment, both on hardware and software side for autonomous driving will directly apply to all the future phone and other robotic applications that we're talking about.

Our next question will come from the line of Ross Seymore from Deutsche Bank.

A couple of follow-ups. On the consumer percentage being about half of your IoT business, what was that mix last fiscal year, a year ago?

I don't have that figure for you, but I would say the dominant part of our mix was enterprise. CapEx-driven markets.

Got it. And I guess the follow-up to that, if the consumer business does sound like it has increased, does that change seasonality of your company. I know kind of the first and the fourth quarters tend to be relatively speaking, the weakest sequentials, and then the mid-2 quarters are the largest. Does that change at all either directionally or kind of magnitude just because consumer is a bigger portion than it used to be?

Yes, that's a very good point. And the answer is yes. And I would look at -- the next question is what's normal. And really, the last 3, 4 or 5 years hasn't been very normal. So I'd look at the last 10 years because those first 5 years in the 10 years, did have more consumer like you're asking about. So I'd look at the averages over the 10-year period rather than just the last 2 or 3 years, which really weren't normal.

And then maybe 1 last follow-up. How do we think about taxes, either dollars or percentages next year and the year after. I know it kind of goes between the dollars and percentages and the former might be more applicable. But just an idea of how we should think about that.

Yes. Thanks, Ross. So we tend to think about it in a -- from a dollars perspective as opposed to a rate based on the way the company is structured and where the profits are located in various jurisdictions internationally. So I would expect -- well, the dollars will increase, but it won't be -- they'll increase with revenue but it won't be a significant change to the story. I think on a full year basis, if you look at the rate on a non-GAAP basis, that will give you some indication to be able to model going forward, I would say.

That's all the time we have for question-and-answer session. I would now like to turn it back over to Dr. Fermi Wang for any closing remarks.

Thank you, and thank you all for joining our call today. And I hope to see some of you on our January event at CES.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.