Ambarella (AMBA) Soars 16% on Narrower-Than-Expected Q1 Loss

Ambarella AMBA gained more than 16% during Thursday's extended trading session as the company reported narrower-than-expected loss for the first quarter of fiscal 2025. The company reported a non-GAAP loss of 26 cents per share for the quarter, narrower than the Zacks Consensus Estimate of a loss of 32 cents.

However, the bottom line compared unfavorably with the year-ago quarter’s non-GAAP earnings of 15 cents per share. The dismal year-over-year performance was mainly due to a decline in revenues.

First-quarter revenues plunged 12.3% year over year to $54.5 million. However, the top line surpassed the consensus mark of $54.04 million. The year-over-year decline in the top line was primarily due to weakness in its Internet of Things (IoT) end market.

Nonetheless, it saw sequential revenue growth, driven by the gradual recovery in cyclical inventory correction measures adopted by customers in the IoT sector and a rise in its artificial intelligence (AI) portfolio.

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

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

Customer & Market Details

Ambarella had two logistics and original design manufacturers customers that contributed more than 10% to total revenues in the reported quarter. WT Microelectronics, a partner in Taiwan that serves multiple customers in Asia accounted for 62% of the company’s first-quarter revenues. Chicony, which serves multiple IoT customers, represented 13% of AMBA’s first-quarter revenues.

The traction in AMBA’s CV flow system-on-a-chip in professional IP cameras continued in the reported quarter. The company expects the CV2 family to be the key driver of the company’s revenue growth in fiscal 2025.

Operating Details

The non-GAAP gross margin was 63.4%, up 30 basis points year over year.

On a non-GAAP basis, operating expenses were $46.7 million, marginally up from $46.2 million in the year-ago quarter. Non-GAAP operating expenses were also within the company’s guidance range of $46-$49 million, primarily due to its expense management actions and the timing of spending between quarters.

Balance Sheet

As of Apr 30, 2024, Ambarella had cash and cash equivalents & marketable securities of $203.3 million compared with $220 million as of Jan 31, 2024.

Q2 2025 Guidance

Based on recent customer feedback and continued momentum in bookings, Ambarella expects stability in near-term revenues. It forecasts second-quarter fiscal 2025 revenues in the range of $60-$64 million, with sequential growth in IoT and AI.

For the fiscal second quarter, the non-GAAP gross margin is anticipated in the band of 62.5-64%. Non-GAAP operating expenses are projected in the range of $47.5-$49.5 million.

Zacks Rank and Stocks to Consider

Currently, Ambarella carries a Zacks Rank #3 (Hold). Shares of AMBA have plunged 21.2% in the year-to-date period.

Some better-ranked stocks from the broader technology sector are AppFolio APPF, Arista Networks ANET and Alphabet GOOGL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AppFolio’s 2024 EPS has been revised upward by 3 cents to $4 in the past 30 days. Shares of APPF have jumped 32.6% in the year-to-date period.

The Zacks Consensus Estimate for ANET’s 2024 EPS has been revised upward by 43 cents to $7.92 in the past 30 days. Shares of ANET have climbed 29% in the year-to-date period.

The Zacks Consensus Estimate for Alphabet’s 2024 EPS has been revised upward by 9 cents to $7.61 in the past 30 days. Shares of GOOGL have gained 23.2% in the year-to-date period.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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