What happened

Shares of Ambarella Inc. (NASDAQ:AMBA) were down 12.8% as of 2:30 p.m. EDT Wednesday after the video-processing chip specialist announced solid fiscal first-quarter 2019 results, but followed with disappointing forward guidance.

On the former, Ambarella's revenue declined 11.2% year over year to $56.9 million. That translated to adjusted net income of $4.5 million, or $0.13 per share, down from $0.44 per share in the same year-ago period. By comparison, Ambarella's top line fell within its most recent guidance, which called for revenue between $54.5 million and $57.5 million, and most investors were looking for lower earnings of $0.09 per share. 

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So what

Ambarella CEO Fermi Wang noted that the company continues to reach its target milestones in the rollout of its new computer-vision technology.

"At our analyst day in March, we demonstrated our fully autonymous vehicle, EVA, using our Supercam stereovision cameras running on our CV1 chip," Wang added. "Additional, we have sampled CV22 chips to major security customers and achieved success with first silicon on our new CV2 chip, both delivering further deep neural network performance improvements based on our CVFlow architecture."

Now what

For the fiscal second quarter, though, Ambarella expects revenue between $60 million and $64 million -- well below the $68.2 million most investors were anticipating -- marking year-over-year declines of between 16.2% and 10.6%. Within that, Ambarella assumes revenue from GoPro will be "immaterial" during the quarter, while non-GoPro revenue will likely decline 8.6% (based on the midpoint of its outlook) as strength in the IP Security and automotive OEM markets will be offset by declines in drones and other wearable-camera chip sales. 

In the end, while Ambarella essentially delivered as promised to start its fiscal year, it's hard to blame investors for taking a step back as they digest its underwhelming outlook.