What happened

Shares of Ambarella (NASDAQ:AMBA) climbed as much as 11% early Wednesday, then settled to trade up 8.1% as of 2:45 p.m. EST after the video-processing chip specialist announced strong fiscal fourth-quarter 2019 earnings.

That's not to say Ambarella's quarter was perfect. On one hand, revenue declined 28% year over year to $51.1 million, just missing Wall Street's consensus estimates for sales closer to $52 million. But on the other hand, Ambarella's adjusted (non-GAAP) earnings fell to $4.5 million, or $0.14 per share, down from $0.47 per share in the same year-ago period but well above the $0.04 per share most analysts were modeling.

Ambarella chip and board attached to a camera lens

IMAGE SOURCE: AMBARELLA.

So what

During the subsequent conference call, management noted that revenue from the security camera market actually increased around 10% year over year. But the consumer electronics industry fell faster than expected throughout the year, representing virtually all the company's year-over-year declines. Still, during the annual Consumer Electronics Show in January, Ambarella took the opportunity to demonstrate its latest computer-vision chip solutions with a particular focus on penetrating the automotive industry.

"Strategically, fiscal 2019 was one of the most important years in Ambarella's 15 year history as the company continued to execute on its transformation from a pure video processing company to a computer vision company," stated Ambarella CEO Fermi Wang. "We taped-out and sampled three 10nm computer vision system-on-a-chip devices and commenced mass production of one of the devices, all in the fiscal year."

Check out the latest earnings call transcript for Ambarella.

Now what

For the first quarter of the new fiscal year 2020 -- and noting the company is still battling a decline in consumer electronics revenue as well as macroeconomic headwinds -- Ambarella expects revenue to be roughly $47 million, plus or minus 3%, down from roughly $57 million in the same year-ago period.

Even so, given Ambarella's progress in the computer vision markets, its bottom-line outperformance in the fourth quarter, and with shares down more than 20% over the past year leading up to this report, it's no surprise to see investors bidding up Ambarella stock today.