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Ambarella (AMBA) Beats Q2 Earnings and Revenue Estimates

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Ambarella AMBA reported second-quarter fiscal 2022 non-GAAP earnings of 35 cents per share, handily outpacing the Zacks Consensus Estimate by 40%. The reported figure jumped significantly from the prior-year quarter’s earnings of 6 cents per share.

Revenues of $79.3 million beat the consensus mark of $75.8 million and increased 58% year over year. Ambarella’s top-line growth was mainly driven by improvement in the automotive and security camera businesses.

Customer & Market Details

Ambarella had two customers that contributed more than 10% in the reported quarter. WT Microelectronics, a fulfillment partner in Taiwan, which serves multiple customers in Asia, accounted for 62% of the company’s revenues. Chicony, a Taiwanese OEM, which manufactures for multiple customers, contributed 16%.

Moreover, the company noted that it continues to gain system-on-a-chip (“SoC”) share in the professional security-camera market outside China. Momentum in Ambarella’s CV flow SoCs in professional IP cameras across all geographies continued in the reported quarter.

Ambarella, Inc. Price, Consensus and EPS Surprise

Ambarella, Inc. Price, Consensus and EPS Surprise
Ambarella, Inc. Price, Consensus and EPS Surprise

Ambarella, Inc. price-consensus-eps-surprise-chart | Ambarella, Inc. Quote

Operating Details

Non-GAAP gross margin was 62.8%, up 40 basis points (bps) year over year in the second quarter.

A healthy customer mix supported by impressive operational execution aided gross-margin expansion during the second quarter and offset the higher expenses incurred to overcome supply-chain challenges.

On a non-GAAP basis, operating expenses were $36.4 million, up 3% sequentially. Non-GAAP operating expenses were slightly below the midpoint of the company’s earlier guidance due to lower-than-expected general and administrative expenses.

Headcount at the end of the second quarter was 827, with about 81% of the employees dedicated to engineering. Roughly 68% of Ambarella’s total headcount is located in Asia.

Net inventory was $42.1 million as of Jul 31, 2021, up 27% sequentially.

Balance Sheet & Cash Flow

As of Jul 31, 2021, Ambarella had cash and cash equivalents & marketable securities of $449.2 million compared with $435.5 million as of Apr 30, 2021.

During the second quarter, the company generated an operating cash outflow of $14.4 million.

Third-Quarter Guidance

For third-quarter fiscal 2022, revenues are expected between $88 million and $92 million. Non-GAAP gross margin is anticipated to be 61-63%. Non-GAAP operating expenses are projected in the range of $36-$37.5 million.

Zacks Rank & Key Picks

Currently, Ambarella carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Microsoft MSFT, Cadence Design Systems CDNS, and Texas Instruments TXN, all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Microsoft, Cadence Design, and Texas Instruments is currently pegged at 11.1%, 11.7%, and 9.3%, respectively.

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