Ambarella, Inc. AMBA reported better-than-expected first-quarter fiscal 2021 results. The company reported non-GAAP earnings of 4 cents per share for the quarter, while the Zacks Consensus Estimate was pegged at a loss per share of a penny. Moreover, quarterly earnings reflect a sharp improvement from the year-ago quarter’s break-even earnings.
The company’s fiscal first-quarter revenues of $54.6 million marginally beat the consensus mark of $54 million. The top line increased 16% year over year. Its transition to a video AI company is a tailwind. However, softness in the automotive camera market slightly hurt Ambarella’s overall revenue growth in the quarter.
Ambarella’s CV portfolio is also attracting customers, helping it expand the client base. During the earnings conference call, the company revealed five new CV customers that it gained during the fiscal first quarter. Ambarella’s CV portfolio represented mid-single-digit percent in total revenues.
On a non-GAAP basis, the company reported gross margin of 59.1%, which was 50 basis points lower than the year-ago quarter’s figure. The fiscal first-quarter non-GAAP gross margin was toward the higher-end of management’s guided range of 57.5-59.5%.
Ambarella, Inc. Price, Consensus and EPS Surprise
Ambarella, Inc. price-consensus-eps-surprise-chart | Ambarella, Inc. Quote
Sequentially, non-GAAP operating expenses came in at $31.9 million compared with the year-ago quarter’s $29.9 million.
Ambarella ended fiscal first-quarter with cash and cash equivalents & marketable securities of $411 million, up from the $405 million recorded as of Jan 31, 2020. During the quarter, the company generated an operating cash flow of $7.6 million.
For second-quarter fiscal 2021, revenues are expected to be $50 million (+/-6%). Non-GAAP gross margin is anticipated to be 59-60.5%. Non-GAAP operating expenses are projected at $31-$33 million.
Ambarella is concerned about the coronavirus pandemic’s impact on its China and non-China supply chains. The company expects order pushouts as well as cancellations to continue in the current quarter due to the coronavirus-led business disruptions.
Zacks Rank & Stocks to Consider
Ambarella currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA, Apple Inc. AAPL and Fortinet, Inc. FTNT, all carrying a Zacks Rank #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 NVIDIA, Apple and Fortinet is currently pegged at 16.9%, 10.7% and 14%, respectively.
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