Ambarella Inc. (NASDAQ:AMBA) announced fiscal fourth-quarter 2018 results on Thursday after the market closed, highlighting its continued efforts to diversify away from GoPro, as well as continued progress in the computer-vision chip market.

Let's take a deeper look at what Ambarella accomplished over the past few months, as well as what investors can expect from the company as it kicks off the new fiscal year.

View of a vehicle camera with categorized square boxes around other vehicles, people, and objects

Image source: Ambarella.

Ambarella results: The raw numbers


Fiscal Q4 2018

Fiscal Q4 2017

Year-Over-Year Growth


$70.6 million

$87.5 million


GAAP net income

$1.3 million

$18.4 million


GAAP earnings per share




Data source: Ambarella. 

What happened with Ambarella this quarter?

  • Revenue arrived slightly above the midpoint of Ambarella's most recent guidance, which called for sales of between $68 million and $72 million.
  • Revenue declines were driven primarily by a 56% drop in sales to GoPro (NASDAQ:GPRO) (to $13.3 million), as well as a substantial decline in drone revenues, as expected. These declines were only partially offset by "solid" year-over-year growth in both the intellectual-property security and automotive original equipment manufacturer (OEM) markets.
  • On an adjusted (non-GAAP) basis, net income $15.8 million, or $0.45 per share -- down from $0.92 per share in last year's fourth quarter, but well above expectations for $0.37 per share.
  • Adjusted gross margin was 64.7%, above guidance for between 62% and 63.5%.
  • Ambarella repurchased 66,747 shares for $3.3 million during the quarter. Before the end of the quarter, it repurchased another 142,344 shares for $6.8 million, leaving $24.9 million remaining under its original $50 million repurchase authorization announced last June.
  • At this year's Consumer Electronics Show (CES), Ambarella demonstrated its Embedded Vehicle Autonomy (EVA) car, which features multiple cameras based on its CV1 computer-vision chip, allowing for object detection and classification, terrain modeling, and traffic light and lane detection. Ambarella also demonstrated a fully autonomous drone based on its CV1 SuperDrone platform, which enables path planning, obstacle avoidance, multi-point navigation, and GPS localization.

What management had to say

Ambarella CEO Fermi Wang said:

At the CES show this year, we continued our history of successfully demonstrating leading edge technology with a focus on a wide range of computer vision applications. We look forward to delivering a deeper insight into our CV capabilities, particularly in the automotive market, at our upcoming Analyst Day on March 28. With the success of our initial development efforts and response from customers, especially in security and automotive, we intend to continue to accelerate the development and deployment of CV solutions in all our key markets.

During the subsequent conference call, Wang added that Ambarella had over 40 automotive OEMs and Tier 1 companies meet with them at CES, where they received an "enthusiastic response" to the EVA car demonstrations, in particular.

Looking forward 

For the first quarter of fiscal 2019, Ambarella expects revenue of between $54.5 million and $57.5 million, or a year-over-year decline of between 15% and 10.3%, including less than a 2% negative impact from new revenue recognition rules and potential memory shortages. This range also assumes GoPro revenue will fall around 12%, while higher IP security and automotive OEM revenue will continue to offset lower drone chip sales. Trending toward the bottom line, adjusted gross margin for the quarter should arrive at between 60% and 62%.

All told, this was as strong a quarter as investors could have asked, especially as Ambarella laps difficult comparables that were propped up by GoPro's formerly outsize influence on its business. What's more, it's encouraging to see Ambarella's continued advancements in computer vision technology coming to life, and I know I won't be the only one watching closely to see what more it reveals during its Analyst Day later this month.

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