Ambarella Inc.’s AMBA first-quarter fiscal 2020 earnings and revenues beat the Zacks Consensus Estimate.
However, on a year-over-year basis, both the top- and the bottom-line results suffered a decline.
The company’s non-GAAP earnings came in at a penny per share against the Zacks Consensus Estimate of a loss of 5 cents. However, it witnessed a substantial decrease from the year-ago quarter’s level of 13 cents due to lower revenues and elevated operating expenses.
The company’s revenues in the fiscal first quarter of $47.2 million surpassed the consensus mark of $47 million but declined 17% year over year.
During the quarter, automotive and other product revenues increased sequentially while revenues from security cameras decreased sequentially due to fall in professional security camera revenues.
Geopolitical factors induced order pull-ins from security camera customers in China, which negatively impacted the company’s revenues and gross margin.
In the fiscal first quarter, the company had two 10% plus revenue customers. WT Microelectronics, a fulfillment partner in Taiwan, represented 59% of revenues while Chikoni, a Taiwanese ODM (original design manufacturer), came in at 18%.
On a non-GAAP basis, the company reported gross margin of 59.6%, which was 100 basis points below the year-ago quarter’s figure.
On a sequential basis, non-GAAP operating expense inched up nearly 1.2% to $29.9 million due to higher payroll taxes and other payroll related expenses.
Ambarella, Inc. Price, Consensus and EPS Surprise
Ambarella, Inc. price-consensus-eps-surprise-chart | Ambarella, Inc. Quote
Ambarella ended the fiscal first quarter with cash and cash equivalents & marketable securities of $366.2 million, up from $358.9 million in the previous quarter.
For second-quarter fiscal 2020, revenues are expected between $51 million and $53 million. Non-GAAP gross margin is anticipated within 57-59%. Non-GAAP operating expenses are anticipated in the range of $29.5-$31.5 million.
The company envisions automotive and security revenues to increase sequentially while all other revenues might deteriorate. The company predicts consumer electronics revenues to be persistently soft over the next two to three years.
Management forecasts growth to return in the second half. However, global tariff issues, probable export restrictions and changes in the macroeconomic conditions, which include deleveraging in China, are some unrelenting concerns.
Zacks Rank & Stocks to Consider
Ambarella currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are eGain Corporation EGAN, Rosetta Stone RST and j2 Global, Inc. JCOM, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for eGain, Rosetta Stone and j2 Global is currently projected at 30%, 12.5% and 8%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
j2 Global, Inc. (JCOM) : Free Stock Analysis Report
eGain Corporation (EGAN) : Free Stock Analysis Report
Rosetta Stone (RST) : Free Stock Analysis Report
Ambarella, Inc. (AMBA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research