Ambarella (NASDAQ:AMBA) reported fourth-quarter earnings and year-end results after Tuesday's market close. The maker of image and video processing chips delivered results that were significantly better than expectations, with the beat being driven by big sales from GoPro (NASDAQ:GPRO) cameras, security cameras, and performance in China and South Korea. The quarterly results and guidance caused shares to gain roughly 3% in after-hours trading.

Results breakdown
Ambarella's revenue for the fourth came in at $64.7 million, representing a 61.9% increase in sales year over year, and a roughly 1.5% decline sequentially. The company estimated that it would bring in between $57 million and $60 million in sales for the quarter, while the average analyst estimate called for $59.4 million in revenue. Actual revenue for the quarter came in roughly 9% greater than the consensus estimate, driven by growth in China and South Korea. GoPro's latest Hero cameras were also sales drivers for Ambarella. GoPro revenue grew year over year but declined sequentially, as was expected.

The average estimate, as polled by Reuters, called for GAAP earnings of $0.49 a share, with actual EPS coming in at $0.53 a share, or an 8.2% beat on expectations on $17.7 million in GAAP net income. EPS for the quarter grew roughly 194% year over year but declined 22% sequentially. Margins for the quarter came in at 64.1%, which just exceeded the company's expectations for margins of 62% to 64%.

Revenue for fiscal 2015 came in at $218.3 million, increasing 38.5% from $157.6 million in the previous fiscal year. GAAP earnings per share increased to $1.57 from $0.85 per share in fiscal 2014. Research and development costs increased roughly 18.9% year over year, while selling and administrative costs increased roughly 26.5%. The company closed the fourth quarter with $208 million in cash and equivalent assets, up from $143.4 million.

What does the future hold for Ambarella?
Ambarella seems poised to continue generating impressive top- and bottom-line growth in the short term. Its expertise in low-energy, high-performance camera chips and the current lack of strong competition in its niche puts the company in good position for continued wins in the expanding action-camera market while benefiting from growth in security cameras.

The company is likely to see sluggishness or declines with its automotive cameras, as the Russian market continues to look soft. This weakness will probably be offset by general growth in China and South Korea and increased automobile camera integration in other territories.

January saw the release of the company's new H1 chips, which CEO Fermi Wang suggests will usher in a new age of sports and flying camera technology. The ability to capture 4K ultra-HD video at 60 frames per second is likely to be a defining feature in action cameras from GoPro and other camera makers. The H1 also supports 360-degree panoramic cameras. GoPro has yet to signal that it will launch a 360-degree camera, but it would seem to be a natural progression for the company. Shipping the H1, or a similarly capable chip, in a panoramic camera from GoPro could provide a big sales spike.

The company's A12W chip is another product that could drive growth for the company. The SoC is designed for low-cost, high-definition wearable cameras and the type of challenging situations present in police work

Ambarella's A9 chip for high-definition video compression is also a likely candidate for future action cameras and has already landed in two GoPro devices and Chinese camera maker Dji's 4K ultra-HD drone. Ambarella's technology makes it easier to capture high-quality video in poor lighting conditions and fast speeds, which puts the company in good place to gain if drone cameras take off and action cameras manage to grow significantly beyond the extreme-sports demographic. It expects continued growth from wearables and flying cameras in the current fiscal year.

For the first quarter of fiscal 2016, Ambarella expects revenue of $64 million to $68 million, a 62% to 64% margin, and non-GAAP net income of $18 million to $20 million.

Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Ambarella and GoPro. The Motley Fool owns shares of Ambarella. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.