Ambarella Inc. (NASDAQ:AMBA) announced solid fiscal third-quarter 2019 results on Thursday after the market closed, including an expected steep decline in revenue as the company continues its shift away from consumer electronics and toward newer computer-vision applications.

With shares up 18% in early afternoon trading as of this writing, let's zoom in for a better look at what drove the video-processing chip leader as it started the second half.

Camera chip attached to a lens


Ambarella results: The raw numbers


Fiscal Q3 2019*

Fiscal Q3 2018

Year-Over-Year Growth


$57.3 million

$89.1 million


GAAP net income (loss)

($9.0 million)

$11.7 million


GAAP earnings (loss) per share




DATA SOURCE: AMBARELLA. *FOR THE QUARTER ENDED OCT. 31, 2018. GAAP = generally accepted accounting principles.

What happened with Ambarella this quarter?

  • The top line was in line with Ambarella's guidance provided in late August, which called for revenue of between $55.5 million and $58.5 million.
  • On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation, Ambarella's net income was $7.0 million, or $0.21 per share, down from $0.85 per share in the same year-ago period but far above consensus estimates for just $0.09 per share.
  • Adjusted gross margin declined 310 basis points year over year to 60.9%, but arrived above the high end of guidance for between 59% and 60.5%.
  • Ambarella repurchased 825,191 shares during the quarter for $30.8 million, leaving roughly $35.4 million remaining under its current repurchase authorization.

What management had to say

Ambarella CEO Fermi Wang stated in a press release:

The short term revenue outlook continues to be under pressure as our business shifts away from consumer electronic applications and faces geopolitical and macroeconomic challenges, as we have previously discussed. We are, however, very encouraged with our strategy and position at the forefront of the nascent computer vision market. Less than 1 year after sampling our first computer vision device we continue to achieve major product and market development milestones. In the third fiscal quarter we realized our first computer vision design wins in the automotive market and in the current quarter we expect our first mass production computer vision revenue from the professional surveillance camera market.

Looking forward

During the subsequent conference call, Wang elaborated that Ambarella has secured design wins for its CV22 computer-vision system-on-a-chip with two leading Asian Tier 1 customers in the electronic mirror market. The company also scored its first computer-vision design win in an unnamed Tier 1 automotive customer's ADAS (advanced driver-assistance system) camera.

In the meantime, Ambarella expects revenue in the current fiscal fourth quarter to be $51 million, plus or minus 3%, down roughly 28.8% from $70.6 million in the same year-ago period.

Still, with shares up big today, it seems the market is more than pleased, given the combination of Ambarella's relative third-quarter outperformance and some long-awaited tangible progress in the promising computer-vision market.

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