Ambarella Inc. (AMBA +0.30%) released fiscal first-quarter 2020 results on Tuesday after the market closed. In spite of macroeconomic tensions that threatened to derail its near-term growth story, the video-processing chip leader highlighted a surprise adjusted profit and continued progress in the computer vision space.
With shares bouncing more than 15% in after-hours trading as of this writing, let's zoom in for a better view of Ambarella's quarter.
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Ambarella results: The raw numbers
| Metric |
Fiscal Q1 2020* |
Fiscal Q1 2019 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$47.2 million |
$56.9 million |
(17%) |
|
GAAP net income (loss) |
($17.3 million) |
($10 million) |
N/A |
|
GAAP earnings (loss) per share |
($0.53) |
($0.30) |
N/A |
DATA SOURCE: AMBARELLA. *FOR THE QUARTER ENDED APRIL 30, 2019. GAAP = generally accepted accounting principles.
What happened with Ambarella this quarter?
- Revenue was slightly above the midpoint of guidance provided in March for $47 million, plus or minus 3%.
- On adjusted (non-GAAP) basis, which excludes items like stock-based compensation, Ambarella generated net income of $0.3 million, or $0.01 per share, down from $0.13 per share a year ago but well above analysts' consensus estimates for an adjusted net loss of $0.05 per share.
- Adjusted gross margin fell 2.2 percentage points year over year to 59.6%, within guidance for between 59% and 60%.
- Ambarella did not repurchase any shares this quarter. But subsequent to the end of the quarter, its board did approve a new $50 million share repurchase program valid through June 30, 2020.
- Ambarella ended the quarter with cash, cash equivalents, and marketable securities of $366.2 million, up from $358.9 million last quarter and down from $414.1 million a year ago.
What management had to say
Ambarella CEO Fermi Wang stated:
Our team continues to build the foundation for the multi-billion dollar growth opportunity in the [artificial intelligence] and computer vision (CV) market. Despite the increasingly volatile and uncertain geopolitical environment, which we continue to highlight, Ambarella's execution remains strong. We expect mass production revenue in the current quarter from our second CV device, CV25, and with multiple CV devices now in production, with more CV design wins, and with new technology and products in development, we see three CV revenue waves taking shape; first in the professional security camera market, followed by the consumer security camera market and the automotive market.
Looking forward
Ambarella noted that "recent order pull-ins from security camera customers in China, triggered by geopolitical factors, are impacting [...] revenue and gross margin." As such, it expects fiscal second-quarter revenue of $51 million to $53 million -- down from $63.5 million a year earlier but still comfortably ahead of Wall Street's target of closer to $49 million -- with gross margin falling slightly on a sequential basis to between 57% and 59%.
With Ambarella stock down sharply from its 52-week highs largely due to macroeconomic concerns -- and given the promise of its impending CV-industry progress -- it seems investors are more than pleased with this better-than-expected start to the year. Ambarella stock is understandably responding in kind.
