Ambarella (AMBA) Beats Q2 Earnings and Revenue Estimates
Ambarella's (AMBA) second-quarter fiscal 2022 results reflect strong performance of the automotive and security camera businesses.
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
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.
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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