Ambarella, Inc. ($AMBA)

Good day, and thank you for standing by. Welcome to Ambarella's First Quarter Fiscal Year 2027 Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference over to the Vice President of Corporate Development, Louis Gerhardy. Please proceed.

Thank you, Carmen, and good afternoon. Thank you for joining our first quarter fiscal year 2020 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 fiscal year 2027. 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 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, and 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 file with the SEC. Access to our first quarter fiscal year 2027 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 our Ambarella's property and cannot be reproduced or transcribed without our prior written consent. Before starting the call, we hope to see you at some of the following investor events scheduled during our second fiscal quarter. June 2 will be at the Bank of America's TMT Conference in San Francisco, June 23 at Northland's Virtual Equity Capital Markets Growth Conference June 23 and 24, we'll be hosting investor meetings in Baltimore and Boston on August 18 at Rosenblatt AI event. For your calendar planning in our third fiscal quarter, please note, we are a sponsor at the AI Infrastructure Summit in Santa Clara on November 15 to 17, and we hope to see there where we will lead the physical AI track with a number of AI product demos in our exhibit area. Fermi will now provide a business update for the quarter John will review the financial results and outlook and then we'll be available for your questions. Fermi?

Thank you, Luouis, and good afternoon. Thank you for joining our call today. During our first fiscal quarter, we delivered on our key financial guidance, revenue, gross margins and operating expenses. Most importantly, we continue to extend our HA platform leadership with technology and product innovation, addressing existing and emerging use cases. As a recognized HAI leader, we are entering a new and a significant phase for our market development with the execution of long-term customer agreements, which can drive a more predictable revenue stream while also offering lifetime revenue potential far in excess of what we have realized in the past. Let me provide a few comments about the current market environment. In Q1, we delivered revenue at the high end of the normal season range and slightly above the midpoint of our guidance. Demand signals and the long-term secular growth outlook for HAI remains very strong, and I'm very optimistic about our ability to serve it. In particular, as AI workloads become more complex. LT applications were about 3/4 of our total revenue and was seasonally down with our enterprise security camera market growing in the high single digits sequentially offset by a double-digit sequential decline in our consumer IoT business. Our automotive revenue established a new all-time revenue record with very strong double-digit growth, led by the rapid emergency of AI within the large and growing commercial vehicle telematic markets as well as automotive safety applications. After a multiple year build-out of AI training capacity in data centers, the AI market is increasingly focused on AI influencing. And we think the inferencing market, the processing is becoming more distributed. In ours, processing is moving to the edge and the fiscal AI layers of the network hierarchy. As the age market evolves to Gen Ai and Agentic AI, in particular, our positioning become even stronger, and I would like to explain more about this. First, before talking about Ambarella's unique positioning, let me remind you of the Advantage HAI efforts relative to the data center. HAI processing reduced latency lower power consumption, minimize commission expense and improves privacy and security. So why is Ambarella's HI platform so well positioned. First, Ambarella's HAI platform is comprehensive and well established, yet expanding and under constant evolution to adapt to new AI trends. We believe a broad and highly programmable AI platform is required to address a wide number of use cases, enabling customers to be more efficient by using software and scaling their business. Our software platform is now open and easy to use and supports a wide variety of AI models with more than 200 different AI model architectures reaching production. We have cumulatively shipped more than 46 million AI SoCs, and we have 12 AI SoC already available with up to hundreds of top life performance. Another reason in [indiscernible] we are so well positioned for Gen AI and Agenetic AI of age is that our software tools and AOCs integrates all accelerated computing system functions into a single platform. In the data centers, the functions such as data aggregation, acceleration, CPUs and other system functions are usually a collection of discrete SoCs from different vendors. However, at age to be successful our AI SoC integrated all the functions. Fusion perception, AI acceleration, CPUs, including and other system function into one single chip. And our differentiation is not just in proprietary processing elements and advanced via [indiscernible] integration, but also in the proprietary algorithms, full Hasta software and AI agent frameworks by [indiscernible] entire systems together as workloads become more complex, such as Gen AI multi-model reasoning and autonomous agent-based workflows, our deep expertise across the full accelerated computing stack optimized basically for a deployment become increasing rare and strategic value in the industry. In other words, as our customers need most performance in their AI applications, there are an extremely limited number of companies that can do this and even fewer like are proven and established. We are now becoming recognized as one of the very few companies that can tie this all together of AI workload game more complex. We are entering a new phase of HAI and the fiscal AI market development, where we are engaged in multiple discussions with customers who want to enter deeper relationships, including multigenerational commitments. This can take the form of long-term agreements or [indiscernible] that involves our standard products and/or our semicustom AI SoC optimized for customers' particular workload. Relative to our current customer relationships, LTAs will enable long-term partnerships that may include a structured contract involving volume and pricing typically over 5 years or more. Over the long run, we expect the LTAs to be an important driver of revenue growth, improve visibility, resulting less volatility and improve the predictability of our revenue. Our first on TAA example involves our first 2-nanometer chip and the semi-custom HAI SoC, which we tape out in January. And this product is named CV, this AI SoC will serve both consumer and enterprise applications in the IoT endpoint market. For this long-term agreement, we agreed to develop semi-custom ASIC for a customer who want to support of certain complex AI workloads. We will sell this AI associate as a standard product to a variety of other customers in other markets. And this afternoon, we announced another material this time with Hanhwa in South Korea for the enterprise CapEx side of IoT market. With Hanhwa this LTA is for the sourcing and co-development of Ambarella's AI technology across Hanhwa's product lines and the industry, including physical security operational automation, life sciences, robotics and other industry market. The agreement has a potential revenue in excess of $800 million over a period exceeding 10 years. and represents one of the largest agreements in Ambarella history and one of the first agreements of its kind in the HAI semiconductor market. The multi-generation nature of this relationship is expected to enable both companies to plan jointly cross technology road maps accelerated product development cycles and bring new category AI-enabled products to market at scale. This relationship will involve standard AI SoCs we will sell in a variety of markets to our customers. Beyond these first two LTAs, we are engaged in discussions with other companies. Today, I will also provide an update on robotic edge infrastructure and automotive markets, which represents material market opportunity for us. I'm very pleased to share that we now have a 15-plus robotic design wins, including aerodrones, with lifetime revenue exceeding $100 million with more than 30 customers in our robotic pipeline. Our AI SoC combined high-performance AI influence advanced computer vision and ultra-efficient power consumption into a single age optimized architecture and represents the foundation platform for robotic system to run vision language action VRA models in drones. CD5 enabling platforms such as the antigravity A1 enabling capability, including 8K imaging, real-time perception, accounts navigation, upscale on land and on-device AI inferencing without relying on constant cloud connectivity for these functions. Strong evolve from flying camera into autonomous areas of robots, Ambarella's CV flow AI crater architecture allow manufacturers to deliver lower latency decision-making. Improve latency, longer flight time and more advanced economy at the edge. The robotic market is fragmented, and we are realizing design wins across a variety of other robotic applications including industrial automation, autonomous mobile robots or AMRs, delivery robots, our AI SoC involves from providing perception, sensor fusion and AI processing to also offer decision-making and the full autonomy needed for real-time robotic awareness and action. This convergence to high-quality imaging and AI acceleration and a autonomy rounding VRA models efficiently position us as a key enabler of the broader physical AI and embody AI ecosystem. As I mentioned earlier, our automotive business established an all-time quarterly revenue record in Q1 and is on pace to establish a new fiscal year record. Third-party research firms indicate global automotive product is expected to decline 1% to 2% this year. But with semiconductor content per vehicle rising market research firms also anticipate the automotive semiconductor market to grow 10% to 15% this year. We expect our automotive revenue growth to outpace these figures due to our success in commercial-free [indiscernible] and safety applications. The commercial fleet panomatics market offers continue and exciting growth prospects as there is an installed telematic base in excess of 100 million vehicles growing around 10% CAGR, but only about 10% of this installed base is so far I -- we are aligned with industry AI market leaders who are also increasingly demanding AI SoCs that can take now to take on not only more sensors, but more complex AI workloads. And our platform of 12 HAI SoCs is very well suited to help them scale in this market. I will also provide an update on the build-out of our indirect sales channel that we announced to augment our existing direct-to-customer business. The development of our indirect sales channel is important to not only help us address fragmented robotic market, but also to provide support for our emerging edge infrastructure business. We have already onboarded half a dozen ISVs in vertical industry like retail, industrial automation, transportation, health care and smart cities since our launch of our developer zone at the CES in January with more ISV expected to be onboard by the end of this fiscal year. In March, for the first time ever, we have pushed an embedded award in Nienburg, Germany, where we did live demonstration highlighting how Embraer AI SoC, software stack and developed tools deliver a competitive advantage across a wide range of applications. from AI agent automation and orchestration to physical AI system deployed in real-world environment. One of our existing design partner to demonstrate a real-time industrial quality inspection solution on CV72 and 1655. Multiple new ISV partners will present our booth including one who demonstrated retail AI solution for in-store and drive-thru optimization. Another ISV demonstrated continues trending for high-speed rail network and the third demonstrating warehouse robot solutions. In March, we also posted an invitation-only expiration at ISC West showcasing how HAI is powering the next generation of intelligent security and physical AI systems. At the center of our exhibitor was our newly launched CV 7 HAI vision SoC, delivering advanced imaging and on-device AI processing alongside the 1655 HAIC age infrastructure for low-power, high-performance enterprise security applications. One of our ISP partners demonstrate a smart city security solution based on 75 and 165. I will now briefly summarize our representative customer engagement in Q1, and it is notable for the first time, all of the examples are based on our HAI OC, 3 from our CV2 family and 8 from our new CV7Xpund. In the enterprise security while fiscal security remains a principal driver of this market while seeing our customers develop AI application software that enable their product to provide operational efficiency to our business. Examples including predictive maintenance supply chain optimization and automated customer support, we expect operational efficiency in the long run become an important new growth of shoot of what we refer to as enterprise security today. In particular, as Gen AI and Agentic AI is deployed at age. We achieved an important milestone in March on apron Panasonic announced the first endpoint camera to range AI locally based on the transformer capability in our CV72-AISOC. We also have the number of other CV75 and CB72 wins in the quarter, including [indiscernible] in South Korea, access in Sweden, [indiscernible] in Germany. And with major communication equipment company in Americas, notably, we had an additional CV2 with [indiscernible] South Korea that also utilize our AI imaging signal processing software. We also won a CV22 platform with [indiscernible] that had another CV win with the major communication equipment company in the Americas. In the industrial market, we earned another AI-based barcode reader project based on CV28, this time with [indiscernible] we expanding its reach beyond the traditional physical security market. In the automotive market, our safety and panamotic customers' engagement activity remains strong. For example, we are pleased to announce Lite an industry leader in the commercial and public sector telematic market is designed in CB75 and CV72 into multiple platforms. For in-cabin pre-installed safety market, we have 2 B72 wing with South Korean-based Tier 1 Era and the CV22FS win for Western OEM in China. Our new product momentum remains very strong, both in terms of fiscal '21, revenue generation as well as new products that have not started to generate revenues. While our 10-nanometer CV2 family of HCA processor for CN location continue to land design wins and grow our new 5-nanometer CV75 and B72 capable both of the [indiscernible] and the transformer-based gene as well as Agenetic AI -- sorry, as well as Agentic AI [indiscernible] a production ramp and are expected to drive material incremental revenue this year. Then on top of this, we continue to expect our new CV 7 AI processor to enter production by the end of the year. And in the first half of fiscal 2028 or less than a year from now. We expect our 2-nanometer CVA AI SoC to commence production. All these new products I have described as well as all the new unannounced AIA SoCs, we have in development, target more sophisticated AI workload and command average ASP well above our currently 15 SoC ASP in Q1. As you can tell, we have a lot of technology product, market and customer development activity going. I would like to summarize this quarter's call with 3 observations. First, the AGM market is just getting started and the momentum is building in multiple areas. Second, Ambarella is clearly an AI technology platform and a product leader, and we are already and we are already well established. I think our positioning is getting even stronger as AGM workloads get more complex, and there become fewer and few companies capable of integrating all the edge accelerated computing functions into a single chip. Third, customers are recognizing the first 2 points and now want to engage with us more broadly and more deeply. For example, LTA agreements can build stronger relationships and get us designed into new markets like robotic while the indirect channel sales ecosystem bring us more scale. In conclusion, as all this comes together, we intend to drive shareholder value with strong revenue growth and a more diversified and predictable financial models that offer material operating leverage potential for our shareholders. With that, John will now discuss our Q1 results and Q2 outlook in more detail. John?

Thank you, Fermi. I'll now review the financial highlights for the first quarter fiscal year 2027, ending April 30, 2026. I will also provide a financial outlook for our second quarter of fiscal year 2027, ending July 31, 2026. We 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 Q1, revenue was $100.4 million, slightly above the midpoint of our prior guidance range of $97 million to $103 million, down 0.5% from the prior quarter and up 16.9% year-over-year. On a sequential basis, automotive revenue driven by commercial vehicles experienced a strong above seasonal double-digit percent increase, while IoT revenue was seasonally down. Non-GAAP gross margin for fiscal Q1 was 59.9% and slightly above the midpoint of our prior guidance range of 59% to 60.5%. Non-GAAP operating expense in Q1 was $56.4 million, slightly below the midpoint of our prior guidance range of $55 million to $58 million. Q1 net interest and other income was $2.1 million. Q1 non-GAAP tax provision was approximately $740,000. We reported a non-GAAP net profit of $5 million or $0.11 per diluted share in Q1. Now I'll turn to our balance sheet and cash flow. Fiscal Q1 cash and marketable securities were $277.8 million, decreasing $34.8 million from the prior quarter, but increasing $18.4 million from the same quarter a year ago. The sequential decrease in cash and marketable securities was primarily due to an increase in our inventory levels to better service our customers in the face of a number of new product cycles. Receivables days sales outstanding of 35 in Q1 was flat with the prior quarter, while days of inventory increased from 99 to 145 days. Operating cash outflow was $25.6 million for the quarter. Capital expenditures for tangible and intangible assets were $4 million for the quarter. Free cash outflow was $29.6 million for the quarter. During the first quarter of fiscal year 2027, we repurchased 47,798 shares of our stock for a total consideration of $2.4 million or an average price of $51.04 per share. During the second fiscal quarter, Ambarella's Board of Directors authorized a new $50 million repurchase program valid through June 30, 2027, replacing the program that expires on June 30, 2026. The repurchase program does not obligate the company to acquire any particular amount of ordinary shares and it may be suspended at any time at the company's discretion. We had 1 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 6.7% of revenue for the quarter -- for the first quarter. I'll now discuss the outlook for the second quarter of fiscal year 2027. We forecast a seasonally strong fiscal second quarter with revenue in the range of $105 million to $111 million or $108 million at the midpoint. Sequentially, both auto and IoT revenue are expected to increase with growth in both consumer and CapEx-driven market. We expect fiscal Q2 non-GAAP gross margin to be in the range of 59% to 60.5%. We expect non-GAAP OpEx in the second quarter to be in the range of $56 million to $59 million. We estimate net interest and other income to be approximately $1.9 million, our non-GAAP tax expense to be approximately $800,000 and our diluted share count to be approximately 44.3 million shares. Thank you for joining our call today. And with that, I will turn the call over to the operator for questions.

[Operator Instructions]. Our first question is from Ross Seymore with Deutsche Bank.

You mentioned earlier about the auto side growing faster than the end market itself. I think you said that end market would be 10% to 15%. In the past, you've given year fiscal year revenue guidance, I think you said 10% to 15% on your last call. How are you thinking about that for this year now?

So yes, I think for the whole year, we're still thinking it's probably 10% to 15%. We're not changing that. And automotive is stronger -- grows faster than the other market.

Okay. And then on the LTA side of things and maybe the one that you announced tonight in the 8-K with the $800 million over time, but more conceptually, how are you thinking about those? Are they going to be guaranteed revenues? I think you said there were potential revenue. How do we build that into the estimates as we think forward for the company?

Right. First of all, we already have a run rate with Hanhwa for the last 15 years, and we know we only take a percentage of their current market share. So we expect with this LTA we're going to gain market share on their annual run rate as well as this is a multigenerational commitment on both sides so that this is -- so we're going to talk about and these 2 generations of silicon that will be codeveloped between these two companies. So I think from that point of view, we believe that it's long period time of commitment as well as gaining market shares from the Haha. But on the same time, if you look at our current ASP, although our corporate ASP is $15 but our CV ASP is a lot higher than that. So if you calculate put all the things together, that's how we calculate this potential $800 million.

Ross, just a little background on Hanhwa it's a major multinational conglomerate with more than $60 billion in annual revenue. It's involved in aerospace, defense, robotics, physical security, life sciences, industrial, Ocean solutions, chemicals, a lot of different things, retail services. And so an important part of this relationship in the intermediate to long term, is moving beyond what has just been the physical security relationship that Fermi described as our current run rate. So we can gain share on that business. But at the same time, the press release talks about, in addition to physical security, things like operational automation, life sciences, robotics, other industrial markets. That's another very important angle of this relationship.

Thank you a moment for our next question. It comes from Tore Svanberg with Stifel.

Yes. Maybe a question to follow up on the LTA and not the Hanhwa one specifically, but how should we think about these sort of folding in here over the next few years Obviously, these could be quite large. I'm sure you can say yes to all of them. is there also going to be potentially some OpEx sharing with some of these customers that you signed LTAs. Any more color you could offer us as far as how we should think about the magnitude and how it's going to be funded over the next 3 years?

So first of all, I think I want to go a little high level and saying a lot of -- most of the LTA discussion is based on two things. One is really when you look at all the fast AI trend and our customers continue to look at the new AI model, the info the higher performance requirement lower power efficiency. So to meet this kind of AI demand, while for the most AGI plication power efficiency is probably the most important thing. So it's getting harder and harder to build a platform of silicon that can address all of these new applications. So I think that trend really helped our customers think about how to partner with somebody that can build a platform of silicon that can help not only on the security enterprise security, but also other associated market they are trying to address. I think that's probably how the LTA started. And in this kind of LTA, most of the discussion will involve and -- but also we'll develop a product mutually beneficial, right? So I think those are two things that we definitely want to make sure that we develop a software platform that can go across our current silicon platform that offer a complete road map to our customer. And in exchange, they were willing to help us to fund those platforms with , particularly not only on the silicon side but also on the software side.

That's very helpful. And as my follow-up and maybe related to that platform approach for me. So just thinking about the competitive landscape, obviously, there's big processor companies. There's obviously analog companies and so on and so forth. But how flexible can your software platform really be? Because obviously, the use cases at the edge are going to be quite different from use case to use gas.

Yes. So I think our unique architecture, you remember that we have been talking about [indiscernible]. So our -- that out how we accelerate like our image processing and our CVflow AX reader has been -- really passed many battles and have been proved to our customers is not only powerficient, but also program enough to adapt to many different applications, different AI models. For example, which I talk about our CVflow architecture can do 200 different AI -- sorry, model architecture, not 200 models. We're talking about 200 model architectures, and we took all of them into production. Just show you [indiscernible] our accelerators. But more importantly, with the latest agenting AI approach, you need to integrate everything together. So in that, including not only the ISV and the CV flow or impact income H2 for encoder. On top of that, you need to integrate the complete SoC for CPU and also IO and DRAM activity to provide very -- not only powerficien but also cost-efficient solution to our customers. So that's where we are basically having a reputation to deliver those kind of products consistently in the last 20 years. And when we look at the competitive landscape, with the DLC quota, obviously, but I really don't see any other people coming out with one complete silicon platform that we have 12 HAIC can go from very low performance to few hundred top performance with power efficiency. On top of that, all the silicon was covered by one unified software development SDK, that our customers, if they develop one product on one so can easily go to different SoC, providing a different price performance point on their product platform. And this kind of flexibility and the width of our product format, I don't think there are money many people can match.

It comes from the line of Quinn Bolton with Needham & Company.

I guess I wanted to follow up for me on the Hanwha LCA. In the press release, you talked about the internal SOC that Hanhwa continues to design. And so I wonder -- it sounds like you're co-designing multiple generations of ships. Is there an opportunity to get a bigger percentage of share away from that internal SoC or do you think that internal SoC continues to hold a portion upon was requirements? And then I've got a follow-up.

I think it's a mutual intention that they're going to use more of this codeveloped platform into more product line. So we fully expect we're getting more market share from Hanhwa with this new development.

Excellent. And then, Fermi, you guys have talked about the fleet telematics market for a number of years, and it feels like it may finally be starting to inflect on the script, you mentioned an installed base of over 100 million units or plus one of that being AI. But what do you think is driving the inflection? Is there anything you can point to in particular that's driving the pretty strong growth here in the first and second quarter?

Yes. Quinn, it's Louis. Just in terms of the market opportunity, telematics, there's about 100 million subscribers and third-party research firms like ABI or Gartner see it growing maybe 10% CAGR. Within that $100 million subscriber base, maybe only 15%, 20% of the market is using AI and AI video as an additional ARPU-generating feature in their platforms. And so what you have is the overall telematics market growing, you've got AI video growing into that. And at the same time, there's demand for more sophisticated AI workloads and multiple sensors, which is causing our ASP, the demand for more sophisticated AI chips to go up. So those are the dynamics that we're facing. And we're doing a very good job with share. For example, this quarter, we announced [indiscernible], as Fermi mentioned, multiple platforms with CV72,/CB75, which is they're one of the leaders of this market. So any follow-ups on that?

Our next question comes from the line of Joe Moore with Morgan Stanley.

Wonder if you could talk about are you guys impacted at all by shortages of DRAM or storage in any of the surveillance markets or consumer markets? Just are you seeing any impact from any of that?

Yes. So first of all, obviously, just like everybody else, we are impacted, but not directly, we are impacting directly. In the last quarter, when we talked about this, we definitely talk about our customer-facing much higher DRAM price and flash price as well as potential shortage in the second half. So that situation didn't change. The biggest direct impact to us is most of our customers are handling this shortage by doing -- first of all, they are trying to source different DRAM supplier or to cut down the DRAM utilization per product, we basically try to optimize the DRAM utilization in a chip so that they can use smaller DRAM side. And all those activities require we put in our AP support to help our customer. We're happy to do that because that's definitely something we need to do to help our customer. But at the same time, I think that's probably the biggest direct impact to us on the engineering resource requirement.

Okay. And then as a follow-up, the inventory, you sort of described it supporting product ramps, but it was a pretty big increase. I just -- can you give us any more color, make us feel comfortable with that amount of inventory build.

Joe, yes, I mean if you look back in the last couple of quarters, we were running kind of lean. And over the last few quarters, we have looked at kind of the opportunities that are coming to us with the strong growth that we had last year, and we wanted to position ourselves in the right product categories to be able to continue to serve our customers. And so going from a fairly low number of days of inventory at points in last year, we wanted to build a bit of inventory heading into this year to be able to do that.

And Joe, it's Fermi, just want to add another color on this Sensor has officially informed us that their supply is getting tighter. Obviously, we have secured our supply, but we feel it's prudent for us to build up a little inventory just in case we run into a different supply issues. So from that point of view, I think I think you also heard that supply chain become a problem for everybody. We just try to be prudent to build up some inventory just in case.

Our next question comes from the line of Kevin Cassidy with Rosenblatt Securities.

Congratulations on all the great progress. And along those lines, you're building out the indirect sales channel. I think you mentioned 6 groups hired. Do these -- maybe if you could describe these a little better geographically? And then also, do they have application engineers Yes, I'll just stop with those questions.

Right. So first of all, there are many in the United States right now, obviously, but we are definitely trying to go to Japan and Europe to expand our ISV. But today, all six of them are U.S. based. In terms of size of the ISVs, it's really from large to small but more importantly is really what their current engagement with the end customer. We're looking at ISV can add value can easily pull their software onto our platform, and so they can go to their existing customer with our solutions. So those are ISV we're engaging. And more importantly, we are really enabling applications that we have not touched in the past. So overall from that point of view, we are happy with the progress that we've made in a short period of time since we announced this at CES. But I think 6 of them is just the beginning. I think -- our goal is to double that in this year and hopefully, we can continue to build on momentum based on that.

Yes, Kevin, it's Louis. In addition, for this indirect effort, in addition to the ISVs we just talked about, there's significant effort building out channel partners and even system integrators as part of this effort. And this is really important to help us serve markets like edge infrastructure that need a lot of technical support, a very fragmented markets like robotics. So a lot of efforts going into the ISV channel partners and even system integrators.

Okay. Great. Yes, that was going to be part of my follow-up question of how much of a -- I hate to use the term, but the cookie-cutter approach can it be? But someone can go in with a lot of the solution already and help out a customer. Is that the idea?

Yes, you might have multiple ISVs working on one project. So if I understood the question right, it's not just always something right off the shelf, cookie cutter, as you said, but you might have ISVs. You might have channel partners and you might have system integrators all involved on one project. So I think it's pretty far from being cookie cutter. It's very sophisticated software as these workloads get more complex. You need that whole indirect ecosystem to play a role in many of these designs we're pursuing.

And Kevin, just to add, part of the decision-making engaging with some of these ISVs is seeing the expertise that they have in different verticals. And some of the -- some of them are -- they have expertise across multiple verticals. And so it's really trying to take a holistic approach to that engagement and cover as many verticals as we can with folks who specialize.

Our next question comes from the line of Christopher Rolland with Susquehanna.

My question is, I think a few quarters ago, you talked about doing some infrastructure, putting your chips basically into servers. I think it was first security camera applications, but potentially other -- have you had any other further engagements there on the infrastructure side?

Yes, we do. Aged infrastructure continue to be a focus, and we have we have not only engaging with the customer, we also have design wins that we're working on. The first product will probably come out, I would say, second half of this year. And in the same time, we are building definitely building a road map to continue to address this opportunity. So we haven't talked about our next-generation chip and also the potential updates on that. But I think next time we should give you more updates on the age infos. That's remain to be a very important direction for us.

Yes. Just to put it in perspective, based on the products we have now it's a couple of hundred million dollar SAM for things like AI Vision Box, but as we come out with more products and build out this indirect ecosystem that, as we mentioned, will help the edge infrastructure business, you'll see us update the SAM appropriately when we have more products here. So definitely high focus area and it's part of that indirect channel we were just talking about.

Great. And then for my second question, just the robotics opportunity. I think last quarter, you mentioned warehouse robotics any other engagements there? And then if you could talk about humanoid and engagements there, that would be interesting, too.

Right. So we talk about different applications. This time, in fact, last time we talked about this, the warehouse design win and now we are definitely in an extensive engineering development cycle with them. But more importantly, on top of that, we have multiple design wins in this quarter in the span of many different applications I talked about in my script. But I think the most important thing is now we focus on that for any robot, there are multiple different solutions today. One is just purely video, the other one is perception. Three, the third one is using Fusion to put a different sensor together and both one is really because of the controller or decision maker for this whole robust system. Our design win is in the all these areas, but more focused on the perception side because of our expertise in on the video and also fusion side. So I think it's across different applications and also focus on perception and also the decision-making part of the robotic solution. There are some of the humanoid type of applications in that design wins but we are not in the place to talk about just yet.

One moment for our next question that comes from Martin Yang with Oppenheimer.

First, a couple of questions on LTA. Are you able to say or quantify how many other potential partners you have in your LTA discussion?

We only announced two. We're talking about potential, but there's no other concrete information we can disclose at this point.

Got it. And then also on LTA. So for example, the one with Hanwha spending over multiple years, do you need to also secure wafer supply for your foundry partner regarding those LTA agreement?

First of all, I believe that our relationship with Samsung, although we only try to secure wafer commitment every year. But in the last 18 years, we never have any problem to secure the wafer we want for our customers. So I expect that our wafer supply for 5 or 2-nanometer from Samsung will not be an issue for us. Although there is a lot of discussion that Sensors also gaining momentum on those process node. And obviously, we don't have any long-term contracts with any suppliers, and that might be a question you're asking, but I don't think that's a contract we're going to sign with any supplier anytime soon.

Got it. And last question, also on LTA, do you view your relationship with Samsung and your design capabilities as a key value prop when you try to secure long-term agreements with other customers?

Absolutely. Because one loan discussion with any customer on LTA is how you secure your wafers particularly on the 4-nano 2-nanometer process node. In fact, some of the time, we have to really bring our supplier partners to -- into a conversation to make sure that our customers feel comfortable. By the way, I can say that we -- today, sensor announced their Central has their official company-wide event, talking about the tuna process, and they made an announcement that VDI and Ambarella 2-nanometer customers that come in to their process node as official price release from Samsung.

[Operator Instructions]. Our next question is from Suji Desilva with Roth Capital.

So a quick question on robot robotics as well. I'm curious, are those -- you have a breadth of wins there? Are those across the board on your product portfolio? Or does that category lean towards the leading-edge products, the leading-edge nodes? Just want to understand where robotics is intercepting your product portfolio?

All the products that we have design win is our CV product line. It's really -- and most of that is our 5-nanometer products. There are some 10-nanometer maturities of 5-nanometer products. In fact, they are also our 4-nanometer products in there, too. So it is really covering our CVflow architecture. That's the main reason people are using us, but more focused on the falter for the performance efficiency.

Got it. Okay. And then a question perhaps for John. Should we expect typical seasonality this fiscal year, this calendar year? Or are there factors that might be swinging it differently than prior years?

Suji, I think the expectation is to continue to see the seasonality that we've seen in the past at this point.

Our next question is from Ross Seymore with Deutsche Bank.

Just one follow-up for you. Given the change in the business more automotive this year relative to the IoT side and then longer term, some of the robotics and IoT and Edge AI, physical AI, everything you've talked about on the call, how do you see that impacting either benefiting or being a little bit of a headwind to your gross margin in both the near term and long term from those dynamics, please?

Right. So Ross, in fact, we since 3 quarters ago, we started really watching our gross margin carefully. I think that today, what I can say is based on all the things that we just discussed, we believe that we are going to stay with our current long-term gross margin model that's between 59% to 62%.

And this concludes our Q&A session, and I will pass it back to Dr. Fermi Wang for closing comments.

Thank you for joining our call today, and I really hope I can see you at some of our events this quarter. Thank you. See you next time.

This concludes our conference. Thank you for participating, and you may now disconnect.