Why Is Ambarella (AMBA) Up 12.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Ambarella (AMBA). Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ambarella due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ambarella Reports Narrower-Than-Expected Q1 Loss
Ambarella reported a first-quarter fiscal 2024 non-GAAP loss of 15 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 20 cents. However, the reported figure compared unfavorably with the year-ago quarter’s earnings of 44 cents per share.
First-quarter revenues declined 31% year over year to $62.1 million, mainly due to customer inventory reduction actions across its IoT end market. However, the top line was in line with the consensus mark.
Customer & Market Details
Ambarella had two customers that contributed more than 10% in the reported quarter. WT Microelectronics, a fulfillment partner in Taiwan that serves multiple customers in Asia, accounted for 49% of the company’s revenues. Chicony, a Taiwan-based electronics manufacturer serving multiple IoT customers, represented 16% of Ambarella’s revenues.
The momentum of AMBA’s CV flow system-on-a-chip in professional IP cameras continued in the reported quarter. The company expects to achieve its targeted goal of generating 60% of total revenues from the CV portfolio in 2024.
Operating Details
The non-GAAP gross margin was 63.1%, down 70 basis points year over year in the fiscal first quarter.
On a non-GAAP basis, operating expenses were $46.2 million, up $200,000 sequentially. Non-GAAP operating expenses were lower than the company’s prior guidance in the band of $47-$49 million, mainly due to its expense management actions and the timing of spending between quarters.
Balance Sheet
As of Apr 30, 2023, Ambarella had cash and cash equivalents & marketable securities of $227.4 million compared with $206.9 million as of Jan 31, 2023.
Second-Quarter Guidance
For the second quarter of fiscal 2024, revenues are expected between $60 million and $64 million. The non-GAAP gross margin is anticipated at 62.5-64.5%.
Non-GAAP operating expenses are projected in the range of $48-$50 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -18.38% due to these changes.
VGM Scores
Currently, Ambarella has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ambarella has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ambarella, Inc. (AMBA) : Free Stock Analysis Report
