Ambarella (AMBA)

Risks

• The COVID-19 pandemic could adversely affect our business in a material way.
• If our customers do not design our solutions into their product offerings, or if our customers’ product offerings are not commercially successful, our business would suffer.
• If we fail to penetrate new markets, our revenue and financial condition could be harmed.
• If we fail to develop and introduce new or enhanced solutions on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed.
• Our primary inventory warehouse is located in Hong Kong and may be affected by continued political, social, health and economic conditions in Hong Kong.
• Our target markets may not grow or develop as we currently expect and are subject to market risks, any of which could harm our business, revenue and operating results.
• Our customers may cancel their orders, change production quantities or delay production. If we fail to accurately forecast demand for our solutions, revenue shortfalls or excess, obsolete or insufficient inventory could result.
• We depend on a limited number of customers and end customers for a significant portion of our revenue. If we fail to retain or expand our customer relationships, our revenue could decline.
• Achieving design wins is subject to lengthy competitive selection processes that require us to incur significant costs. Even if we begin a product design, a customer may decide to cancel or change its product plans, resulting in no revenue from such expenditures.
• We expect competition to increase in the future, which could have an adverse effect on our revenue and market share.
• A breach of our security systems may have a material adverse effect on our business.
• The loss of any of our key personnel could seriously harm our business.
• We rely on highly skilled personnel and, if we are unable to hire, retain or motivate key personnel, we may not be able to grow effectively.
• The average selling prices of video and image processing solutions in our target markets have typically decreased over time and will likely do so in the future, which could harm our revenue and gross margins.
• Deterioration of the financial conditions of our customers could adversely affect our operating results.
• We are subject to the cyclical nature of the semiconductor industry.
• We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs.
• Rapidly changing industry standards could make our video and image processing solutions obsolete, which would cause our operating results to suffer.
• Some of our operations and a significant portion of our customers and our subcontractors are located outside of the United States, which subjects us to additional risks, including increased complexity and costs of managing international operations and geopolitical instability.
• Our acquisition of Oculii Corp. involves a number of risks, including, among others, risks associated with our use of a significant portion of our cash, other financial risks, integration risks, and risks associated with the reactions of customers and suppliers.
• The Oculii acquisition or potential future acquisitions involve a number of risks, including, among others, those associated with our use of a significant portion of our cash and other financial risks.
• Our acquisition of Oculii and any acquisitions we may make in the future could disrupt our business, cause dilution to our shareholders, reduce our financial resources and harm our business.
• The complexity of calculating our tax provision may result in errors that could result in restatements of our financial statements.
• Fluctuations in our operating results on a quarterly and annual basis could cause the market price of our ordinary shares to decline.
• If we do not generate revenue growth, we may not be able to execute our business plan and our operating results could suffer.
• We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses.
• Changes to financial accounting standards may affect our results of operations and could cause us to change our business practices.
• We cannot predict our future capital needs, and we may not be able to obtain additional financing to fund our operations.
• We do not have long-term supply contracts with our third-party manufacturing vendors, and they may not allocate sufficient capacity to us at reasonable prices to meet future demands for our solutions.
• Our customers incorporate components supplied by multiple third parties, and a supply shortage or delay in delivery of these components could delay orders for our solutions by our customers.
• We outsource our wafer fabrication, assembly and testing operations to third parties, and if these parties fail to produce and deliver our products according to requested demands in specification, quantity, cost and time, our reputation, customer relationships and operating results could suffer.
• We are subject to risks associated with our distributors' product inventories.
• Camera manufacturers incorporate components supplied by multiple third parties, and a supply shortage or delay in delivery of these components could delay orders for our solutions by our customers.
• We rely on third-party vendors to supply software development tools to us for the development of our new products, and we may be unable to obtain the tools necessary to develop or enhance new or existing products.
• We rely on third parties to provide services and technology necessary for the operation of our business. Any failure of one or more of our vendors, suppliers or licensors to provide such services or technology could harm our business.
• Our ability to sell our products to several China customers has been restricted.
• Global economic and political conditions, including possible trade tariffs and trade restrictions, may have an impact on our business and financial condition in ways that we currently cannot predict.
• We are subject to warranty and product liability claims and to product recalls.
• Failure to comply with the U.S. Foreign Corrupt Practices Act, or FCPA, and similar laws associated with our activities outside of the United States could subject us to penalties and other adverse consequences.
• We, our customers and third-party contractors are subject to increasingly complex environmental regulations and compliance with these regulations may delay or interrupt our operations and adversely affect our business.
• We are subject to regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act of 2002, which are costly to comply with, and our failure to comply with these requirements could harm our business and operating results.
• Changes in effective tax rates or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.
• We may be classified as a passive foreign investment company which could result in adverse U.S. federal income tax consequences for U.S. holders of our ordinary shares.
• Our failure to adequately protect our intellectual property rights could impair our ability to compete effectively or defend ourselves from litigation, which could harm our business, financial condition and results of operations.
• Third parties’ assertions of infringement of their intellectual property rights could result in our having to incur significant costs and cause our operating results to suffer.
• Any potential dispute involving our patents or other intellectual property could affect our customers, which could trigger our indemnification obligations to them and result in substantial expense to us.
• The use of open source software in our products, processes and technology may expose us to additional risks and compromise our proprietary intellectual property.
• The market price of our ordinary shares may be volatile, which could cause the value of your investment to decline.
• Our actual operating results may not meet or exceed our guidance and investor expectations, which would likely cause our stock price to decline.
• The price of our ordinary shares could decrease as a result of shares being sold in the market.
• Provisions of our memorandum and articles of association and Cayman Islands corporate law may discourage or prevent an acquisition of us which could adversely affect the value of our ordinary shares.
• Holders of our ordinary shares may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.
• If our operations are interrupted, our business and reputation could suffer.
• If securities analysts or industry analysts downgrade our ordinary shares, publish negative research or reports or fail to publish reports about our business, our stock price and trading volume could decline.