Once again, Ambarella (NASDAQ:AMBA) comes through with a blowout quarter. The provider of video compression and image processing semiconductors posted better-than-expected results for its fiscal first quarter. Revenue soared 74% to $71 million, fueled by strength in its chips that help power the video functionality of GoPro (NASDAQ:GPRO) wearable cameras as well as security and automotive dashboard recorders.
GoPro has been an important contributor to the rise in demand for Ambarella's solutions, but the company is bigger than that. In fact, GoPro's year-over-year revenue climbed only 54% in the latest quarter, suggesting that the rest of Ambarella's business grew even faster. Analysts were only holding out for revenue growth of 64% to $67 million.
Ambarella also beat on the bottom line. Margins widened, and adjusted earnings nearly tripled from $0.25 a share a year earlier to $0.71 this time around. Wall Street was, once again, asleep at the wheel. Its analysts were holding out for an adjusted profit of just $0.58.
Ambarella landed 22% ahead of where the pros were parked in their profit projections, and that's been par for the course. The company has beaten Wall Street's quarterly earnings-per-share estimates by 19% or better consistently for the past couple of years.
Ambarella was an unloved company when it went public in late 2012, having to settle for an IPO price of $6 when it had initially hoped to hit the market in the double digits. Thankfully for retail investors, we've seen Ambarella claw its way up, one blowout quarter after an other.
No one's dismissing Ambarella as unloved these days, a 15-bagger in less than three years off its $6 starting line.
Ambarella will continue to be at the mercy of GoPro's high-def HERO wearable and Dropcam surveillance cameras. It will also have to continue to blow Wall Street away, given its lofty valuation. Even looking out to this year and next, we're eyeing rich earnings multiples of 40 and 32, respectively. That's not cheap, but it's also a fair bet that analysts will spend the next few days raising their forecasts for Ambarella, bringing down those multiples in the process.
The picture continues to be pretty for Ambarella, even if it's no longer that darling growth stock for in-the-know investors.