What changed in this filing

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Item 1. Financial Statements

2022-06-08 compared with 2021-12-10 · 118 added, 358 removed, 278 unchanged (63% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Marketable debt securities

Accounts receivable, net

21 unchanged sentences

Preference shares, $ 0.00045 par value per share, 20,000,000 shares

authorized and no shares issued and outstanding at October 31, 2021 and

authorized and no shares issued and outstanding at April 30, 2022 and

January 31, 2022, respectively

Ordinary shares, $ 0.00045 par value per share, 200,000,000 shares

authorized at October 31, 2021 and January 31, 2021, respectively;

36,925,142 shares issued and outstanding at October 31, 2021;

authorized at April 30, 2022 and January 31, 2022, respectively;

38,082,879 shares issued and outstanding at April 30, 2022;

shares issued and outstanding at January 31, 2022

Additional paid-in capital

Accumulated other comprehensive income

Retained earnings

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

Cost of revenue

6 unchanged sentences

Loss before income taxes

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share attributable to ordinary shareholders:

Weighted-average shares used to compute net income (loss) per share attributable to ordinary shareholders:

Provision for income taxes

Net loss per share attributable to ordinary shareholders:

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders:

See accompanying notes to condensed consolidated financial statements.

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

Three Months Ended October 31,

Nine Months Ended October 31,

Net income (loss)

Other comprehensive income (loss), net of tax:

Net change and reclassification of unrealized gains (losses) on investments

Other comprehensive income (loss), net of tax

Comprehensive income (loss)

Three Months Ended April 30,

Other comprehensive loss, net of tax:

Net unrealized losses on investments

Other comprehensive loss, net of tax

Comprehensive loss

See accompanying notes to condensed consolidated financial statements.

5 unchanged sentences

Balance--January 31, 2022

Issuance of shares through employee equity incentive plan

Issuance of shares through employee equity plans

Issuance of shares through employee stock purchase plan

Stock-based compensation expense related to stock awards granted to employees and consultants

Other comprehensive income (loss) - net of tax

Stock-based compensation expense

Balance--April 30, 2022

Issuance of shares through employee equity incentive plan

Stock-based compensation expense related to stock awards granted to employees and consultants

Other comprehensive income (loss) - net of tax

Balance--July 31, 2021

Issuance of shares through employee equity incentive plan

Issuance of shares through employee stock purchase plan

Stock-based compensation expense related to stock awards granted to employees and consultants

Other comprehensive income (loss) - net of tax

Balance--October 31, 2021

Ordinary Shares

1 unchanged sentence

Balance--January 31, 2021

Issuance of shares through employee equity incentive plan

Issuance of shares through employee equity plans

Issuance of shares through employee stock purchase plan

Stock repurchase

Stock-based compensation expense related to stock awards granted to employees and consultants

Other comprehensive income (loss) - net of tax

Stock-based compensation expense

Net unrealized losses on investments - net of tax

Balance--April 30, 2021

Issuance of shares through employee equity incentive plan

Stock-based compensation expense related to stock awards granted to employees and consultants

Other comprehensive income (loss) - net of tax

Balance--July 31, 2020

Issuance of shares through employee equity incentive plan

Issuance of shares through employee stock purchase plan

Stock-based compensation expense related to stock awards granted to employees and consultants

Other comprehensive income (loss) - net of tax

Balance--October 31, 2020

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(unaudited, in thousands)

Nine Months Ended October 31,

Three Months Ended April 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

13 unchanged sentences

Other long-term liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchase of investments

Escrow claim associated with business acquisition

Sales of investments

1 unchanged sentence

Purchase of tangible and intangible assets

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

Stock repurchase

Proceeds from exercise of stock options and employee stock purchase plan

Payment for intangible assets

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

4 unchanged sentences

Supplemental disclosure of noncash investing and financing activities:

Unpaid liabilities related to tangible and intangible assets additions

Unpaid liabilities related to tangible and intangible assets purchases

See accompanying notes to condensed consolidated financial statements.

4 unchanged sentences

(the “Company”) was incorporated in the Cayman Islands on January 15, 2004.

The Company is a leading developer of low-power semiconductor solutions offering high-definition (HD) and Ultra HD compression, image processing, and deep neural network processing.

The Company is a leading developer of low-power semiconductor solutions offering high-definition (HD) and Ultra HD compression, image processing, and powerful deep neural network processing.

The Company combines its processor design capabilities with its expertise in video and image processing, algorithms and software to provide a technology platform that is designed to be easily scalable across multiple applications and enable rapid and efficient product development.

The Company’s system-on-a-chip, or SoC, designs fully integrate high-definition video processing, image processing, artificial intelligence (AI) computer vision algorithms, audio processing and system functions onto a single chip, delivering exceptional video and image quality, differentiated functionality and low power consumption.

The Company is currently addressing a broad range of human and computer vision applications, including professional and consumer security cameras, automotive cameras such as advanced driver assistance systems (ADAS), electronic mirrors, drive recorders, driver/cabin monitoring systems, autonomous driving, and industrial and robotic applications.

These low power SoCs deliver exceptional video and image quality and can extract valuable data from high-resolution video and radar streams.

The Company is currently addressing a broad range of human and computer vision applications, including video security, advanced driver assistance systems (ADAS), electronic mirrors, drive recorders, driver/cabin monitoring systems, autonomous driving, and industrial and robotic applications.

The Company sells its solutions to leading original design manufacturers, or ODMs, and original equipment manufacturers, or OEMs, globally.

1 unchanged sentence

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and notes normally provided in audited financial statements.

The accounting policies are described in the “Notes to Consolidated Financial Statements” in the Annual Report on Form 10-K for the 2021 fiscal year filed with the SEC on March 31, 2021 (the “Form 10-K”) and updated, as necessary, in this Form 10-Q.

The accounting policies are described in the “Notes to Consolidated Financial Statements” in the Annual Report on Form 10-K for the 2022 fiscal year filed with the SEC on April 1, 2022 (the “Form 10-K”) and updated, as necessary, in this Form 10-Q.

The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States (“U.S.

6 unchanged sentences

All intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods.

Actual results could differ from those estimates.

On an ongoing basis, management evaluates its estimates and assumptions, including those related to (i) write down of excess and obsolete inventories;

(ii) the estimated useful lives of long-lived assets;

(iii) the valuation of stock-based compensation awards and financial instruments;

(iv) the probability of performance objectives achievement;

and (v) the realization of tax assets and estimates of tax liabilities, including reserves for uncertain tax positions.

These estimates and assumptions are based on historical experience and on various other factors which the Company believes to be reasonable under the circumstances.

The Company may engage third-party valuation specialists to assist with estimates related to the valuation of financial instruments, assets and stock awards associated with various contractual arrangements.

Such estimates often require the selection of appropriate valuation methodologies and significant judgment.

Actual results could differ from these estimates under different assumptions or circumstances and such differences could be material.

The Company also assessed the impacts of COVID-19 on the above accounting matters as of October 3 1 , 2021 and through the date of issuing this report.

While it is difficult to quantify the impact of COVID-19 , the future magnitude and duration of COVID-19, as well as other associated factors, could r esult in material negative impacts to the Company’s condensed consolidated financial statements in future reporting periods .

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies described in Note 1 - Organization and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Concentration of Risk

2 unchanged sentences

A significant disruption in the operations of one or more of these contractors would impact the production of the Company’s products which could have a material adverse effect on its business, financial condition and results of operations.

A substantial portion of the Company’s revenue is derived from sales through one of its distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or Wintech, which serves as its non-exclusive sales representative in Asia other than Japan, and directly to one ODM customer, Chicony Electronics Co., Ltd., or Chicony.

A substantial portion of the Company’s revenue is derived from sales through its two major distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, which serves as its non-exclusive sales representative in Asia other than Japan, and Hakuto Co., Ltd., or Hakuto, a Japan distributor, and directly to one ODM customer, Chicony Electronics Co., Ltd., or Chicony.

Termination of the relationships with these customers could result in a temporary or permanent loss of revenue.

5 unchanged sentences

The Company has not experienced any losses on deposits of its cash.

In order to limit the exposure of each investment, the cash equivalents and marketable debt securities consist primarily of money market funds, asset-backed securities, commercial paper, U.S.

government securities and debt securities of corporations which management assesses to be highly liquid.

The Company does not hold or issue financial instruments for trading purposes.

The cash equivalents consist primarily of money market funds which management assesses to be highly liquid.

In fiscal year 2022, the Company fully liquidated its investments in debt securities to finance the acquisition of Oculii Corp, or Oculii.

As of April 30, 2022 and January 31, 2022, there were no debt security investments recorded in the condensed consolidated balance sheets.

The Company performs ongoing credit evaluation of its customers and adjusts credit limits based upon payment history and customers’ credit worthiness.

The Company regularly monitors collections and payments from its customers.

Financial Instruments

The Company adopted Accounting Standards Update (ASU) No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments in fiscal year 2021.

As a result, the Company recognizes credit losses based on a forward-looking current expected credit losses (CECL) model, including accounts receivable.

The Company’s accounts receivable are recorded at invoiced amount less an allowance for any potentially uncollectible amounts.

Accordingly, the Company makes estimates of expected credit losses for the allowance for doubtful accounts based upon its assessment of various factors, including historical collection experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.

The Company considers all highly liquid debt security investments with original maturities of less than three months at the time of purchase to be cash equivalents.

Debt security investments that are highly liquid with original maturities at the time of purchase greater than three months are considered marketable debt securities.

The Company classifies these investments as “available-for-sale” (AFS) securities.

The Company estimates the expected losses whenever a security’s fair value is below its amortized cost basis.

The expected loss is computed at an individual security level using the discounted cash flow method with the effective interest rate on the purchase date.

In the determination of credit-related losses, the Company excludes securities with zero loss expectation such as assets backed by government agencies.

There are various factors considered in its assessment of credit-related losses, including the extent to which the fair value is less than the amortized cost basis, adverse conditions related to an industry or an underlying loan obligator, the payment structure of the security, changes to the rating of the security and other factors that may affect the security credit.

The credit-related portion of the loss is recognized in Other income, net in the condensed consolidated statements of operations but is limited to the difference between the fair value and the amortized cost basis of the security, adjusted for accrued interest.

The non-credit-related portion of the loss is recognized in Accumulated other comprehensive income in the condensed consolidated balance sheets.

As of October 31, 2021, the Company fully liquidated all of the investments in debt securities and realized all of the gains and losses in the condensed consolidated statements of operations.

Restricted Cash

Amounts included in restricted cash represent those required to be set aside to secure certain transactions in a foreign entity.

The following table presents cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets, and the sums are presented on the condensed consolidated statements of cash flows:

As of April 30, 2022 and January 31, 2022, restricted cash was immaterial, respectively.

The following table presents cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets, and the totals are presented on the condensed consolidated statements of cash flows:

January 31, 2022

January 31, 2021

(in thousands)

2 unchanged sentences

Total as presented in the condensed consolidated statements of cash flows

The Company records inventories at the lower of cost or net realizable value.

The cost includes materials and other production costs and is computed using standard cost on a first-in, first-out basis.

Inventory reserves are recorded for estimated obsolescence or unmarketable inventories based on forecast of future demand and market conditions.

Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

Once inventory is written down, a new accounting cost basis is established and, accordingly, any associated reserve is not released until the inventory is sold or scrapped.

There were no material inventory losses recognized for the three and nine months ended October 31, 2021 and 2020, respectively.

Software Licenses

The Company accounts for a noncancelable on premise internal-use software license as the acquisition of an intangible asset and the incurrence of a liability to the extent that all or a portion of the software licensing fees are not paid on or before the license acquisition date.

The intangible asset and related liability are recorded at net present value and interest expense is recorded over the payment term.

The Company expenses the cost of purchased software that is to be sold, leased or otherwise marketed as part of a product until the technological feasibility of the product has been established or where the software has an alternative future use.

Once the technological feasibility of the product, to be externally marketed, has been established or where the software has an alternative future use, the Company capitalizes the cost of purchased software until the associated product is available for general release to customers, at which point the capitalized cost is amortized on a product by product basis over the remaining estimated economic life of the product.

The Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases in fiscal year 2020 .

As a result, t he Company recognizes leases as operating lease right-of-use (“ROU”) assets and corresponding lease liabilities at the lease commencement date based on the present value of future lease payments, while recognizing lease expenses under straight-line method through the lease term.

The Company also elected the practical expedient that does not recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases.

The Company does not combine lease components with non-lease components, and as a result, the non-lease components are accounted for separately.

In determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable.

When the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date.

The Company's leases mainly include its worldwide office facilities which are all classified as operating leases.

Certain leases include renewal options that are under the Company's discretion.

The renewal options are included in the ROU and liability calculation if it is reasonably certain that the Company will exercise the option.

The Company's finance leases were immaterial as of October 31, 2021 and January 31, 2021, respectively .

Revenue Recognition

In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when control of its goods and services is transferred to its customers.

Revenue recognition is evaluated through the following five steps:

(i) identification of the contract, or contracts, with a customer;

(ii) identification of the performance obligations in the contract;

(iii) determination of the transaction price;

(iv) allocation of the transaction price to the performance obligations in the contract;

and (v) recognition of revenue when or as a performance obligation is satisfied.

The sale of semiconductor products accounts for the substantial majority of the Company’s consolidated revenue.

Sales agreements with customers are renewable periodically and contain terms and conditions with respect to payment, delivery, warranty, supply and other rights.

The Company considers an accepted customer purchase order, governed by sales agreement, to be the contract with the customer.

For each contract, the Company considers the promise to transfer tangible products to be the identified performance obligation.

Product sales contracts may include volume-based tiered pricing or rebates that are fulfilled in cash or product.

In determining the transaction price, the Company accounts for the right of returns, cash rebates, commissions and other pricing adjustments as variable consideration , estimates these amounts based on the expected amount to be provided to customers and reduces the revenue recognized.

The Company estimates sales returns and rebates based on the Company’s historical patterns of return and pricing credits.

As the Company’s standard payment terms are 30 days to 60 days, the contracts have no financing component.

Under ASC 606, the Company estimates the total consideration to be received by using the expected value method for each contract, computes weighted average selling price for each unit shipped in cases where there is a material right due to the presence of volume-based tiered pricing, allocates the total consideration between the identified performance obligations, and recognizes revenue when control of its goods and services is transferred to its customers.

The Company considers product control to be transferred at a point in time upon shipment or delivery because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risk and rewards of ownership of the asset .

The Company also enters into fixed-price engineering service agreements with certain customers.

These agreements may include multiple performance obligations, such as software development services, licensing of intellectual property and post-contract customer support, or PCS.

These multiple performance obligations are highly interdependent, highly interrelated, are typically not sold separately and do not have standalone selling prices.

They are all inputs to generate one combined output which is incorporating the Company’s SoC into the customer’s product.

Accordingly, the Company determines that they are not separately identifiable and shall be treated as a single performance obligation.

Customers usually pay based on milestones achieved.

Because payments received do not correspond directly with the value of the Company’s performance to date, for fixed-price engineering services arrangements, revenue is recognized using the time-based straight line method, which best depicts the Company’s performance toward complete satisfaction of the performance obligation based on the nature of such professional services.

Revenues from engineering service agreements were not material for the three and nine months ended October 31, 2021 and 2020, respectively.

Timing of revenue recognition may differ from the timing of invoicing to the Company’s customers.

The Company records contract assets when revenue is recognized prior to invoicing.

The Company’s contract assets are primarily related to satisfied but unbilled performance obligations associated with its engineering service agreements at the reporting date.

As of October 31, 2021 and January 31, 2021, the contract assets for these unbilled receivables were not material.

The Company’s contract liabilities consist of deferred revenue.

The deferred revenue is primarily related to the portion of a transaction price that exceeds the weighted average selling price for products sold to date under tiered-pricing contracts which contain material rights.

This deferred revenue is expected to be recognized over the course of the contract when products are delivered for future pricing below the weighted average selling price of the contract.

For the three and nine months ended October 31, 2021 and 2020, the Company did not recognize any material revenue adjustment, respectively, related to performance obligations satisfied in prior periods released from this deferred revenue.

As of October 31, 2021 and January 31, 2021, the respective deferred revenues were not material.

Additionally, the transaction price allocated to unsatisfied, or partially unsatisfied, purchase orders for contracts that are greater than a year was not material as of October 31, 2021 and January 31, 2021, respectively.

The Company also elects not to disclose the value of unsatisfied or partially unsatisfied performance obligations due to an original expected contract duration of one year or less and elects to exclude amounts collected from customers for all sales taxes from the transaction price .

Cost of Revenue

Cost of revenue includes cost of materials, cost associated with packaging and assembly, testing and shipping, cost of personnel, stock-based compensation, logistics and quality assurance, warranty cost, royalty expense, write-downs of inventories and allocation of overhead.

Research and Development

Research and development costs are expensed as incurred and consist primarily of personnel costs, product development costs, which include engineering services, development software and hardware tools, license fees, costs of fabrication of masks for prototype products, other development materials costs, depreciation of equipment and tools and allocation of facility costs, net of any research and development grants.

As of October 31, 2021, there was approximately $ 1.4 million of grants recorded in prepaid expenses and other current assets and approximately $ 0.9 million of grants recorded in other non-current assets in the condensed consolidated balance sheets.

The Company records income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements or tax returns.

In estimating future tax consequences, generally all expected future events other than enactments or changes in the tax law or rates are considered.

Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company applies authoritative guidance for the accounting for uncertainty in income taxes.

The guidance requires that tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits as of the reporting date.

Upon estimating its tax positions and tax benefits, the Company considers and evaluates numerous factors, which may require periodic adjustments and which may not reflect the final tax liabilities.

The Company adjusts its financial statements to reflect only those tax positions that are more likely than not to be sustained under examination.

As part of the process of preparing condensed consolidated financial statements, the Company is required to estimate its taxes in each of the jurisdictions in which it operates.

The Company estimates actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as accruals and allowances not currently deductible for tax purposes.

These differences result in deferred tax assets, which are included in the condensed consolidated balance sheets.

In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the condensed consolidated statements of operations become deductible expenses under applicable income tax laws, or loss or credit carryforwards are utilized.

In assessing whether deferred tax assets may be realized, the Company considers whether it is more likely than not that some portion or all of deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

The Company makes estimates and judgments about its future taxable income based on assumptions that are consistent with its plans and estimates.

Should the actual amounts differ from estimates, the amount of valuation allowance could be materially impacted.

Any adjustment to the deferred tax asset valuation allowance would be recorded in the condensed consolidated statements of operations for the periods in which the adjustment is determined to be required.

Net Income (Loss) Per Ordinary Share

Basic earnings (losses) per share is computed by dividing net income (loss) available to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period.

Diluted earnings (losses) per share is computed by dividing net income (loss) available to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period increased to include the number of additional ordinary shares that would have been outstanding if the potentially dilutive securities had been issued.

Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and unvested restricted stock units.

The dilutive effect of potentially dilutive securities is reflected in diluted earnings (losses) per share by application of the treasury stock method.

Comprehensive Income (Loss)

Comprehensive income (loss) includes unrealized gains or losses, net from available-for-sale securities that are excluded from net income (loss).

Recent Accounting Pronouncements

Financial Instruments and Fair Value

The Company invests a portion of its cash in debt securities that are denominated in United States dollars.

The investment portfolio consists of money market funds, asset-backed securities, commercial paper, U.S.

government securities, and debt securities of corporations.

All of the investments are classified as available-for-sale securities and reported at fair value in the condensed consolidated balance sheets.

As of October 31, 2021, the Company fully liquidated all of the investments and reported the remaining cash equivalents in the condensed consolidated balance sheets as follows:

As of October 31, 2021

Amortized Cost

Unrealized Gains

Unrealized Losses

(in thousands)

Money market funds

Commercial paper

Corporate bonds

Asset-backed securities

government securities

Total cash equivalents and marketable debt securities

As of January 31, 2021

Amortized Cost

Unrealized Gains

Unrealized Losses

(in thousands)

Money market funds

Commercial paper

Corporate bonds

Asset-backed securities

government securities

Total cash equivalents and marketable debt securities

October 31, 2021

January 31, 2021

(in thousands)

Included in cash equivalents

Included in marketable debt securities

Total cash equivalents and marketable debt securities

The contractual maturities of the investments at October 31, 2021 and January 31, 2021 were as follows:

October 31, 2021

January 31, 2021

(in thousands)

Due within one year

Due within one to three years

Total cash equivalents and marketable debt securities

The unrealized gains and losses on the available-for-sale securities were primarily caused by fluctuations in market value and interest rates as a result of the economic environment.

In accordance with ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, the Company estimates the expected losses at an individual security level whenever a security’s fair value is below its amortized cost basis using the discounted cash flow method.

The credit-related portion of the loss is recognized in other income, net in the condensed consolidated statements of operations but is limited to the difference between the fair value and the amortized cost basis of the security, adjusted for accrued interest.

The non-credit-related portion of the loss is recognized in accumulated other comprehensive income in the condensed consolidated balance sheets.

The credit-related losses were not material for the three and nine months ended October 31, 2020, respectively.

As of October 31, 2021, the Company fully liquidated all of the investment in debt securities and realized all of the gains and losses in the condensed consolidated statement of operations.

The following fair value hierarchy is applied for disclosure of the inputs used to measure fair value.

This hierarchy prioritizes the inputs into three broad levels as follows :

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3—Unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value.

The inputs require significant management judgment or estimation.

The Company measures the fair value of money market funds using quoted prices in active markets for identical assets and classifies them within Level 1.

The fair value of the Company’s investments in other debt securities are obtained based on quoted prices for similar assets in active markets and are classified within Level 2.

The following tables present the fair value of the financial instruments measured on a recurring basis as of October 31, 2021 and January 31, 2021, respectively:

As of October 31, 2021

(in thousands)

Money market funds

Commercial paper

Corporate bonds

Asset-backed securities

government securities

Total cash equivalents and marketable debt securities

As of January 31, 2021

(in thousands)

Money market funds

Commercial paper

Corporate bonds

Asset-backed securities

government securities

Total cash equivalents and marketable debt securities

Inventories at October 31, 2021 and January 31, 2021 consisted of the following:

October 31, 2021

Inventories at April 30, 2022 and January 31, 2022 consisted of the following:

April 30, 2022

January 31, 2022

3 unchanged sentences

Property and Equipment, Net

Depreciation expense was approximately $ 0.7 million and $ 0.6 million for the three months ended October 31, 2021 and 2020, respectively, and was approximately $ 1.9 million and $ 1.9 million for the nine months ended October 31, 2021 and 2020, respectively.

Property and equipment at October 31, 2021 and January 31, 2021 consisted of the following:

October 31, 2021

Depreciation expense was approximately $ 0.9 million and $ 0.6 million for the three months ended April 30, 2022 and 2021, respectively.

Property and equipment at April 30, 2022 and January 31, 2022 consisted of the following:

April 30, 2022

January 31, 2022

8 unchanged sentences

Intangible Assets, Net

The intangible assets primarily consist of $ 4.0 million of developed technology and $ 11.3 million of software licenses, net of amortization expense.

In the third quarter of fiscal year 2022, the Company determined that the underlying project incorporating the in-process research and development (“IPR&D”) from the acquisition of VisLab S.r.l., or VisLab, was completed.

As a result, the acquired $ 4.1 million of IPR&D was reclassified as definite-lived developed technology and will amortize over its estimated economic life of 7 years.

As of April 30, 2022, the intangible assets primarily consist of software licenses as well as developed technology, customer relationships and trade name that were acquired from business combinations.

The Company enters into certain software license agreements with third parties from time-to-time.

1 unchanged sentence

The licenses have been capitalized as intangible assets, and the corresponding future payments have been recorded as liabilities at net present value.

As of October 31, 2021, $ 5.7 million was recorded in accrued and other current liabilities and $ 2.6 million was recorded in other long-term liabilities in the condensed consolidated balance sheets.

The carrying amounts of intangible assets as of October 31, 2021 and January 31, 2021 were as follows :

As of October 31, 2021

As of April 30, 2022, $ 4.9 million was recorded in accrued and other current liabilities and $ 0.6 million was recorded in other long-term liabilities in the condensed consolidated balance sheets.

The components of intangible assets as of April 30, 2022 and January 31, 2022 were as follows :

As of April 30, 2022

As of January 31, 2022

6 unchanged sentences

(in thousands)

In-process research and development

Developed technology

Software licenses

Developed technology

Customer relationships

Total intangible assets, net

The amortization expense related to the intangible assets was approximately $ 1.7 million and $ 1.7 million for the three months ended October 31, 2021 and 2020, respectively, and was approximately $ 4.7 million and $ 4.8 million for the nine months ended October 31, 2021 and 2020, respectively.

The expected future amortization expense related to these intangible assets as of October 31, 2021 is as follows:

October 31, 2021

During the three months ended April 30, 2022, there was approximately $ 4.9 million of software licenses purchased and approximately $ 0.4 million of software licenses retired.

The amortization expense associated with software licenses was approximately $ 1.6 million and $ 1.5 million for the three months ended April 30, 2022 and 2021, respectively.

The amortization expense associated with acquisition-related intangible assets, including developed technology, customer relationships and trade name, was approximately $ 1.2 million for the three months ended April 30, 2022.

There was no acquisition-related amortization expense for the three months ended April 30, 2021.

The expected future amortization expense related to these intangible assets as of April 30, 2022 is as follows:

April 30, 2022

(in thousands)

1 unchanged sentence

Total future amortization expenses:

The Company is required to test the impairment prior to changing the IPR&D from an indefinite-lived asset to a finite-lived asset.

There were no intangible asset impairments for the three and nine months ended October 31, 2021 and 2020, respectively.

The intangible assets are required to be tested for impairment at least annually in the fourth fiscal quarter or sooner whenever events or changes in circumstances indicate that the assets may be impaired.

There were no intangible asset impairments for the three months ended April 30, 2022 and 2021, respectively.

Accrued and Other Current Liabilities

Accrued and other current liabilities at October 31, 2021 and January 31, 2021 consisted of the following:

October 31, 2021

Accrued and other current liabilities at April 30, 2022 and January 31, 2022 consisted of the following:

April 30, 2022

January 31, 2022

1 unchanged sentence

Accrued employee compensation

Accrued rebates

Accrued product development costs

2 unchanged sentences

Total accrued and other current liabilities

The timing of SoC development progress and payments to outside foundries resulted in fluctuation of the accrued product development costs.

The decrease in employee compensation liabilities was primarily due to $ 10.9 million of annual bonus paid in the first quarter of fiscal year 2023, of which $ 3.2 million was paid in cash and $ 7.7 million was settled with restricted stock units.

The Company has entered into various operating leases for its worldwide office facilities .

During the nine months ended October 31, 2021, the Company extended its existing Shanghai office lease for an additional three years beginning December 1, 2021 to November 30, 2024 and extended its existing Hong Kong office lease for an additional five years beginning December 1, 2021 to November 30, 2026 .

The Company also leased an additional space for its Shanghai office for a period of 40 months starting from August 1, 2021 through November 30, 2024 .

The Company recorded an aggregate increase of approximately $ 4.4 million to the operating lease right-of-use assets and corresponding operating lease liabilities in the condensed consolidated balance sheets as a result of these lease extensions and additional leased space.

The operating lease expense was approximately $ 0.9 million and $ 0.8 million for the three months ended October 31, 2021 and 2020, respectively.

The operating lease expense was approximately $ 2.5 million and $ 2.2 million for the nine months ended October 31, 2021 and 2020, respectively.

The Company's short-term leases and finance leases were not material as of October 31, 2021 and January 31, 2021, respectively .

The operating lease expense was approximately $ 0.9 million and $ 0.8 million for the three months ended April 30, 2022 and 2021, respectively.

The Company's short-term leases and finance leases were not material as of April 30, 2022 and January 31, 2022, respectively .

Supplemental cash flow information related to leases is as follows:

Three Months Ended

Nine Months Ended

October 31, 2021

April 30, 2022

(in thousands)

1 unchanged sentence

Supplemental non-cash information related to lease liabilities arising from obtaining right-of-use assets

Leased assets obtained in exchange for operating lease liabilities arising from lease modifications

As of October 31, 2021, the weighted average remaining lease term is 3.81 years, and the weighted average discount rate is 3.55 percent.

As of April 30, 2022, the weighted average remaining lease term is 3.39 years, and the weighted average discount rate is 3.56 percent.

Future minimum lease payments for the lease liabilities are as follows :

October 31, 2021

April 30, 2022

(in thousands)

3 unchanged sentences

Other Long-Term Liabilities

Other long-term liabilities at October 31, 2021 and January 31, 2021 consisted of the following:

October 31, 2021

Other long-term liabilities at April 30, 2022 and January 31, 2022 consisted of the following:

April 30, 2022

January 31, 2022

8 unchanged sentences

After completion of the Company’s initial public offering in 2012, a total of 20,000,000 preference shares, with a $ 0.00045 par value per share, were authorized.

There were no preference shares issued and outstanding as of October 31, 2021 and January 31, 2021, respectively.

There were no preference shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively.

Ordinary shares

As of October 31, 2021 and January 31, 2021, a total of 200,000,000 ordinary shares were authorized.

In June 2021, the Company’s shareholders approved the 2021 Equity Incentive Plan, or 2021 EIP.

The 2021 EIP permits the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Code, to employees of the Company and any of the Company’s subsidiary or parent corporations, and the grant of nonstatutory stock options, or NSOs, stock appreciation rights, restricted stock, restricted stock units, and performance awards to employees, directors and consultants of the Company and any of the Company’s subsidiary or parent corporations’ employees and consultants.

Upon adoption of the 2021 EIP, the total number of ordinary shares of the Company reserved for issuance under the 2021 Plan was equal to, subject to adjustments upon changes in capitalization as provided under the 2021 EIP, 1,350,000 ordinary shares, plus (i) any ordinary shares subject to outstanding awards granted under the 2012 Equity Incentive Plan, or 2012 EIP, that, after the date the 2012 EIP is terminated, are cancelled, expire or otherwise terminate without having been exercised in full or are forfeited to or repurchased by the Company due to failure to vest, and (ii) any ordinary shares that, as of immediately prior to the termination of the 2012 EIP, were available for grant under the 2012 EIP, up to a maximum of 6,834,208 ordinary shares pursuant to clauses (i) and (ii) .

In the first quarter of fiscal year 2022, the Company added 1,599,634 ordinary shares to the ordinary shares reserved for issuance, pursuant to an “evergreen” provision contained in the 2012 EIP.

Upon the approval of the 2021 EIP, the 2012 EIP was terminated.

No additional awards will be granted under the 2012 EIP and any shares that were reserved but not issued under the 2012 EIP became available for future grant or sale under the 2021 EIP.

However, all outstanding stock options and other awards previously granted under the 2012 EIP will remain subject to the terms of the 2012 EIP.

As of April 30, 2022 and January 31, 2022, a total of 200,000,000 ordinary shares were authorized.

In the first quarter of fiscal year 2023, the Company added 466,285 ordinary shares to the ordinary shares reserved for issuance, pursuant to an “evergreen” provision contained in the Amended and Restated 2012 Employee Stock Purchase Plan, or ESPP.

Pursuant to such provision, for each fiscal year, the number of ordinary shares reserved for issuance under the ESPP is automatically increased by a number equal to the lesser of (i) 1,500,000 ordinary shares, (ii) one and one quarter percent ( 1.25 %) of the aggregate number of ordinary shares outstanding on such date, or (iii) an amount determined by the Company’s Board of Directors or a duly authorized committee of the Board of Directors.

As of October 31, 2021 and January 31, 2021, the following ordinary shares were reserved for future issuance under the EIP and ESPP:

October 31, 2021

Pursuant to such provision, for each fiscal year, the number of ordinary shares reserved for issuance under the ESPP is automatically increased by a number equal to the lesser of (i) 1,500,000 ordinary shares, (ii) one and one quarter percent ( 1.25 %) of the aggregate number of ordinary shares outstanding on February 1st of each fiscal year, or (iii) an amount determined by the Company’s Board of Directors or a duly authorized committee of the Board of Directors.

As of April 30, 2022 and January 31, 2022, the following ordinary shares were reserved for future issuance under the Company’s equity plans and ESPP:

April 30, 2022

January 31, 2022

Shares reserved for options, restricted stock and

restricted stock units under EIP

restricted stock units under equity plans

Shares reserved for ESPP

Shares repurchased

On May 29, 2019 , the Company’s Board of Directors authorized a program to repurchase up to $ 50.0 million of the Company’s ordinary shares through June 30, 2020 .

On March 16, 2020, the Company repurchased a total of 25,719 shares for approximately $ 1.0 million in cash.

On May 29, 2020, the Board approved an extension of this program for an additional twelve months ending June 30, 2021 .

On May 25, 2021, the Board extended the repurchase program for another 12 months through June 30, 2022 .There were no ordinary shares repurchased in the nine months ended October 31, 2021.

Repurchases may be made from time-to-time through open market purchases, 10b5-1 plans or privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

Stock purchase program

No ordinary shares were repurchased in the three months ended April 30, 2022.

As of April 30, 2022, $ 49.0 million remained available for repurchases under the current repurchase program through June 30, 2022.

Repurchases under the program may be made from time-to-time through open market purchases, 10b5-1 plans or privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

The repurchase program does not obligate the Company to acquire any particular amount of ordinary shares, and it may be suspended at any time at the Company’s discretion.

The repurchase program is funded using the Company’s working capital and any repurchased shares are recorded as authorized but unissued shares .

As of October 31, 2021, there was approximately $ 49.0 million available for repurchases under the repurchase program through June 30, 2022.

Stock-based Compensation

The following table presents the classification of stock-based compensation for the periods indicated:

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands)

4 unchanged sentences

Total stock-based compensation

During the three and nine months ended October 31, 2021, approximately $ 1.7 million and $ 5.1 million of stock-based compensation expense was accrued in accrued and other current liabilities in the condensed consolidated balance sheets, respectively.

As of October 31, 2021, total unrecognized compensation cost related to unvested stock options was $ 2.4 million and is expected to be recognized over a weighted-average period of 2.13 years.

Total unrecognized compensation cost related to unvested restricted stock units was $ 198.6 million and is expected to be recognized over a weighted-average period of 2.45 years.

As of April 30, 2022, approximately $ 1.0 million of stock-based compensation expense was accrued and reflected under accrued and other current liabilities in the condensed consolidated balance sheets.

Total unrecognized compensation cost related to unvested stock options at April 30, 2022 was $ 24.8 million and is expected to be recognized over a weighted-average period of 2.39 years.

Total unrecognized compensation cost related to unvested restricted stock units at April 30, 2022 was $ 207.1 million and is expected to be recognized over a weighted-average period of 2.43 years.

In April 2022, the Company’s Compensation Committee of the Board of Directors approved the acceleration of vesting of 35,703 shares of unvested equity awards associated with the departure of Mr.

Casey Eichler, who was the Company’s Chief Financial Officer until March 2022.

As a result, there was approximately $ 1.7 million of additional stock-based compensation expense, net related to the departure recognized during the three months ended April 30, 2022.

The following table sets forth the weighted-average assumptions used to estimate the fair value of stock options and employee stock purchase plan awards for the periods indicated:

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

Stock Options:

13 unchanged sentences

Outstanding at January 31, 2022

Outstanding at October 31, 2021

Exercisable at October 31, 2021

Outstanding at April 30, 2022

Exercisable at April 30, 2022

The intrinsic value of options outstanding and exercisable is calculated based on the difference between the fair market value of the Company’s ordinary shares on the reporting date and the exercise price.

The closing price of the Company’s ordinary shares on October 31, 2021 was $ 185.83 , as reported by The NASDAQ Global Market.

The closing price of the Company’s ordinary shares on April 30, 2022 was $ 82.08 , as reported by The NASDAQ Global Market.

The intrinsic value of exercised options is calculated based on the difference between the fair market value of the Company’s ordinary shares on the exercise date and the exercise price.

The following table summarizes restricted stock units activities for the period indicated:

The following table summarizes the restricted stock units activities for the period indicated:

Unvested at January 31, 2022

Unvested at October 31, 2021

As of October 31, 2021, the aggregate intrinsic value of unvested restricted stock units was $ 540.1 million.

Net Income (Loss) Per Ordinary Share

The following table sets forth the computation of basic and diluted net income (loss) per ordinary share for the periods indicated:

Three Months Ended October 31,

Nine Months Ended October 31,

Unvested at April 30, 2022

As of April 30, 2022, the aggregate intrinsic value of unvested restricted stock units was $ 205.2 million.

Net Loss Per Ordinary Share

The following table sets forth the computation of basic and diluted loss per ordinary share for the periods indicated:

Three Months Ended April 30,

(in thousands, except share and per share data)

Net income (loss)

Weighted-average ordinary shares - basic

Effect of potentially dilutive securities:

Employee stock options

Restricted stock units

Employee stock purchase plan

Weighted-average ordinary shares - diluted

Net income (loss) per ordinary share:

The following weighted-average potentially dilutive securities were excluded from the computation of diluted net income (loss) per ordinary share as their effect would have been antidilutive:

Three Months Ended

Nine Months Ended

Net loss per ordinary share:

The following weighted-average potentially dilutive securities were excluded from the computation of diluted loss per ordinary share as their effect would have been antidilutive:

Three Months Ended April 30,

Options to purchase ordinary shares

2 unchanged sentences

The following table provides details of income taxes for the periods indicated:

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands)

Loss before income taxes

Provision (benefit) for income taxes

Provision for income taxes

Effective tax rate

The Company recorded an income tax benefit of $ 1.6 million and an income tax provision of $ 1.5 million for the three months ended October 31, 2021 and 2020, respectively.

The change from an income tax provision to an income tax benefit was primarily due to the changes in the amounts of pre-tax income, changes to the Company’s estimated annual effective tax rate, and an increase in tax benefits from excess stock-based compensation deductions.

The Company recorded an income tax provision of $ 1.1 million and $ 3.4 million for the nine months ended October 31, 2021 and 2020, respectively.

The decrease in income tax expense was primarily due to an increase in the U.S.

federal research tax credit, and an increase in tax benefits from excess stock-based compensation deductions.

The Company recorded an income tax provision of $ 0.4 million and $ 1.3 million for the three months ended April 30, 2022 and 2021, respectively.

The decrease in income tax expense was primarily due to an increase in the proportion of profits generated in lower tax jurisdictions.

The Company files federal and state income tax returns in the United States and in various foreign jurisdictions.

9 unchanged sentences

These assessments can require considerable estimates and judgments.

As of October 31, 2021, the gross amount of unrecognized tax benefits was approximately $ 28.1 million.

As of April 30, 2022, the gross amount of unrecognized tax benefits was approximately $ 31.1 million.

If the estimates of income tax liabilities prove to be less than the ultimate assessment, then a further charge to expense could be required.

7 unchanged sentences

These manufacturing purchase commitments typically provide the Company with flexibility to cancel, reschedule or adjust requirements based upon business needs but the Company may incur certain costs depending on the production stage of the products.

As of October 31, 2021 and January 31, 2021, total manufacturing purchase commitments were approximately $ 66.0 million and $ 48.2 million, respectively.

The Company also reviews and assesses the need for any expected loss liabilities on quarterly basis for all products that it does not expect to sell for which it has committed purchases from suppliers.

As of October 31, 2021, there was no material loss recognized in the condensed consolidated balance sheets from adverse purchase commitments.

As of April 30, 2022 and January 31, 2022, total manufacturing purchase commitments were approximately $ 66.3 million and $ 71.5 million, respectively.

The Company also reviews and assesses the need for any expected loss liabilities on a quarterly basis for all products that it does not expect to sell for which it has committed purchases from suppliers.

As of April 30, 2022 and January 31, 2022, there were no material loss liabilities recorded in the condensed consolidated balance sheets from adverse purchase commitments.

Indemnification

1 unchanged sentence

The Company has agreed to hold the other party harmless against third-party claims in connection with the Company’s future products.

The Company also indemnifies certain customers against third-party claims related to certain intellectual property and product liability matters.

The Company also indemnifies certain customers against third-party claims related to certain intellectual property matters.

It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim.

The Company has no t made payments under these obligations, and no liabilities have been recorded for these obligations in the condensed consolidated balance sheets as of October 31, 2021 and January 31, 2021, respectively.

The Company has no t made payments under these obligations and no liabilities have been recorded for these obligations in the condensed consolidated balance sheets as of April 30, 2022 and January 31, 2022, respectively.

Segment Reporting

4 unchanged sentences

The following table sets forth the Company’s revenue by geographic region based on bill-to location for the periods indicated:

Three Months Ended

Nine Months Ended

Three Months Ended April 30,

(in thousands)

2 unchanged sentences

Total revenue

As of October 31, 2021, substantially all of the Company’s property and equipment, net, was located in the United States, Asia Pacific region and Europe with approximate net amounts of $ 3.1 million, $ 4.0 million and $ 1.5 million, respectively.

As of April 30, 2022, substantially all of the Company’s property and equipment were located in the Asia Pacific region, United States and Europe with approximate net amounts of $ 5.4 million, $ 3.2 million and $ 1.5 million, respectively.

Major Customers

For the three and nine months ended October 31, 2021, the customers representing 10% or more of revenue and accounts receivable were Wintech and Chicony, which accounted for approximately 63.1 % and 13.4 % of total revenue for the three months ended October 31, 2021, respectively, and accounted for approximately 62.7 % and 14.9 % of total revenue for the nine months ended October 31, 2021, respectively.

For the three and nine months ended October 31, 2020, the customers representing 10% or more of revenue and accounts receivable were Wintech and Chicony, which accounted for approximately 62.3 % and 17.6 % of total revenue for the three months ended October 31, 2020, respectively, and accounted for approximately 60.4 % and 17.4 % of total revenue for the nine months ended October 31, 2020, respectively.

Accounts receivable with Wintech and Chicony were approximately $ 23.5 million and $ 12.4 million as of October 31, 2021, respectively.

The customers representing 10% or more of revenue were WT, Chicony, and Hakuto, which accounted for approximately 57 %, 11 %, and 10 % of total revenue for the three months ended April 30, 2022, respectively.

For the three months ended April 30, 2021, the customers representing 10% or more of revenue were WT and Chicony, which accounted for approximately 63 % and 16 % of total revenue, respectively.

Accounts receivable with WT, Chicony, and Hakuto were approximately $ 3.1 million, $ 10.5 million, and $ 0.6 million as of April 30, 2022, respectively.

Subsequent Events

On November 5, 2021, the Company completed the 100 % voting rights acquisition of Oculii Corporation, a privately-held Ohio-based company that develops adaptive radar perception algorithms for automotive, including advanced driver assistance systems and autonomous vehicle driving systems, and other commercial applications, for an aggregate consideration of $ 307.5 million in cash, subject to customary adjustments for cash, indebtedness, transaction expenses and working capital.

In addition, the Company assumed all unvested options to purchase Oculii capital stock that were held by continuing Oculii service providers, subject to customary adjustments with respect to the exercise price and number of shares underlying such options.

The incurred acquisition related costs of $ 1.6 million were recorded in the operating expenses in the condensed consolidated statements of operations in the third quarter of fiscal 2022.

Due to the limited time since the acquisition date, and the size and complexity of the transaction, the accounting for the business combination and the assumed unvested options are not yet complete.

Accordingly, the Company is not able to provide the allocation of consideration paid to the assets acquired or liabilities assumed and the fair value of the assumed unvested options as of the filing of the condensed consolidated financial statements, but it is expected that the transaction will result in an increase to the Company’s net assets and goodwill.

On May 27, 2022, the Company’s Board of Directors approved an extension of the current share repurchase program for an additional twelve months ending June 30, 2023 .

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.

As of June 7, 2022, there was approximately $ 49.0 million remained available for repurchases under the repurchase program through June 30, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements