Summary of Ambarella (AMBA) 2025 Conference Call Company Overview - Ambarella was founded in 2004, initially focusing on enabling personal video content through proprietary video processing technology [3][4] - The company transitioned from a consumer-focused video processing company to a provider of AI for video, with 70% of revenue from IoT and 30% from automotive applications [7][8] Core Business and Strategic Vision - Ambarella's revenue from AI has grown significantly, achieving a 60% compound annual growth rate (CAGR) over five years, with AI processors now accounting for nearly 80% of total revenue [6][7] - The company aims to enhance AI performance for video data and expand into edge AI applications, which will drive future growth [8][12] Competitive Landscape - Key competitors in the edge AI space include NVIDIA and Qualcomm, with Ambarella having shipped over 32 million AI processors since 2018, positioning it uniquely against these competitors [14] - The emergence of models like DeepSeek has opened new opportunities for edge AI, demonstrating that powerful models can now run on edge devices [17][19] Financial Performance - Ambarella reported Q1 results that exceeded guidance by 33%, with a 5-6% increase in Q2 guidance and an additional 5% increase in annual guidance [29][30] - The company is cautious about the second half of the year due to potential tariff impacts, incorporating conservatism into its guidance [31][32] Market Dynamics - The automotive market is experiencing slower investment cycles, with a focus on level 2+ automation rather than higher autonomy levels [58][60] - Ambarella's exposure to China is limited, with only 15% of revenue consumed domestically [43] Product Development and ASP Growth - The average selling price (ASP) of products is increasing, with significant growth in video conferencing chips from $9 to between $25 and $45 [38][39] - The company expects ASPs to continue rising as AI performance improves, with current ASPs around $13 to $14 [39] Future Opportunities - Ambarella is focusing on new applications such as video conferencing, portable video, and wearable cameras, which are expected to drive revenue growth [37][38] - The company anticipates revenue from edge infrastructure to begin in the second half of the next year, with plans to provide complete reference designs for customers [63][65] R&D and Operational Strategy - Ambarella has a strong focus on R&D, particularly in developing its CVflow architecture for AI applications, which is expected to leverage existing investments for future growth [56][57] - The company is committed to maintaining high gross margins by focusing on high-end products and avoiding low-margin business opportunities [46][50] Conclusion - Ambarella is well-positioned in the edge AI market with a strong product portfolio and a clear strategic vision for growth, despite facing challenges in the automotive sector and potential macroeconomic headwinds. The focus on AI performance and ASP growth will be critical for future success [8][39][58]

Revenue Performance - Revenue for the three months ended April 30, 2025, was $85.9 million, representing a 57.6% increase compared to the same period in the prior fiscal year, driven by higher product unit shipments and increased sales of AI inference processors [84]. - Revenue for the three months ended April 30, 2025, was $85,872,000, representing a 57.6% increase from $54,473,000 in the same period of 2024 [106]. Operating Loss and Profitability - Operating loss for the same period was $25.9 million, an improvement from the $39.4 million loss in the prior year, attributed to higher revenue and gross profit, despite increased operating expenses [84]. - Net loss for the three months ended April 30, 2025, was $24,328,000, compared to a net loss of $37,932,000 in the same period of 2024 [106]. - Gross profit margin decreased to 60.0% in Q2 2025 from 60.9% in Q2 2024, primarily due to higher manufacturing costs [107]. Cash Flow and Financial Position - Cash flows from operating activities improved to $14.8 million for the three months ended April 30, 2025, compared to cash outflows of $15.0 million in the same period last year [84]. - Net cash provided by operating activities was $14,801,000 in Q2 2025, a significant improvement compared to a net cash used of $14,951,000 in Q2 2024 [115]. - Cash, cash equivalents, and marketable debt securities totaled approximately $259.4 million as of April 30, 2025 [114]. Share Repurchase and Obligations - The company repurchased 24,152 ordinary shares for approximately $1.0 million in cash, with $48.0 million available for further repurchases through June 30, 2025 [84]. - The Board of Directors approved an extension of the existing share repurchase program through June 30, 2026 [119]. - The company had purchase obligations with independent contract manufacturers amounting to $54.6 million as of April 2025 [121]. Research and Development - Research and development expenditures are anticipated to increase as the company targets innovative video and image processing solutions with enhanced AI capabilities [78]. - Research and development expenses increased by 8.6% to $58,819,000 in Q2 2025, driven by higher personnel costs and engineering-related expenses [108]. Market Strategy and Challenges - Future revenue growth is expected to depend significantly on the expansion within camera markets, particularly in IoT and emerging applications such as AI-enabled security cameras and advanced driver assistance systems (ADAS) [78]. - The company has historically concentrated revenue in a limited number of end markets, primarily IoT and automotive, and aims to diversify into new markets to facilitate revenue growth [90]. - Design wins are critical for revenue generation, but the actual revenue from these wins can vary significantly based on market demand and customer product success [86]. - The semiconductor industry has faced global supply chain challenges, which may impact the company's operations, although recent issues have largely subsided [93]. - The average selling price of solutions can vary by market and application, influenced by supply and demand dynamics and the introduction of new products [88]. Other Financial Information - Selling, general and administrative expenses increased marginally to $18,575,000 in Q2 2025, reflecting higher personnel costs [110]. - Other income, net, decreased by 4.2% to $2,175,000 in Q2 2025, primarily due to lower yields from cash deposits and debt security investments [111]. - No material changes to critical accounting policies and estimates compared to the Annual Report for the 2025 fiscal year [125]. - No material changes to market risk disclosures as described in the Annual Report for the 2025 fiscal year [126].

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores serve as complementary indicators to the Zacks Rank, aiding in stock selection with high potential for market outperformance [2] Zacks Style Scores Overview - Stocks are rated from A to F based on value, growth, and momentum characteristics, with A indicating the highest potential for outperformance [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - Focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - Concentrates on a company's financial health and future growth potential, analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - Targets stocks with upward or downward price trends, utilizing factors like one-week price change and monthly earnings estimate changes [5] VGM Score - Combines all three Style Scores to provide a comprehensive rating, helping investors identify stocks with attractive value, growth, and momentum [6] Zacks Rank Integration - The Zacks Rank is a proprietary model based on earnings estimate revisions, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] Stock Selection Strategy - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B, while also considering earnings outlook changes [10][11] Company Spotlight: Ambarella Inc. - Ambarella Inc. is a semiconductor company specializing in video compression and image processing, currently rated 3 (Hold) with a VGM Score of B [12] - The company has a Momentum Style Score of A, with shares increasing by 6% over the past four weeks [12] - Recent upward revisions in earnings estimates for fiscal 2026 indicate a consensus increase of $0.01 to $0.06 per share, alongside an impressive average earnings surprise of 370.4% [13]

Company Overview - SoundHound AI experienced a remarkable stock surge of 836% in 2024, making it one of the hottest stocks that year due to its impressive growth [1] - However, in 2025, SoundHound's stock has declined by 46%, attributed to increased investor risk aversion amid a tariff-fueled trade war and fears of a global recession [2] - As of now, SoundHound's market cap stands at $4.33 billion, with the stock trading at an expensive 39 times sales, indicating potential for further downside [3] Ambarella's Growth Potential - Ambarella, a smaller chip company with a market cap of $2.65 billion, is benefiting from the rising demand for AI in various devices, which is significantly boosting its business [5] - The company’s computer vision processors are well-suited for edge applications, and the growing adoption of AI in these devices is expected to be a key growth driver [6] - The market for chips capable of processing AI workloads locally is projected to grow 20 times by 2034, with edge AI already accounting for 70% of Ambarella's revenue in fiscal 2025 [7][8] Financial Performance - Ambarella reported a 26% increase in revenue to $285 million in the previous fiscal year, with expectations of a revenue forecast of $81 million to $87 million for Q1 of fiscal 2026, indicating a year-over-year growth of 54% [8][9] - The company anticipates a profit of $0.04 per share in the upcoming quarter, a significant turnaround from a loss of $0.26 per share in the same period last year [9] - Ambarella's addressable market is expected to exceed $8 billion by fiscal 2028, representing a 60% increase from fiscal 2024 levels, suggesting substantial growth opportunities [10] Comparative Valuation and Market Position - Ambarella is projected to achieve a top line of $463 million in three years, potentially increasing its market cap to $4.2 billion if it continues to trade at 9 times sales, a 60% increase from current levels [15] - In contrast, SoundHound's revenue is expected to reach $277 million in the same timeframe, which may result in a lower market cap compared to Ambarella if it does not command a premium valuation [16] - The market is likely to favor Ambarella due to its improving earnings power, while SoundHound is expected to remain loss-making for the next three years [13][15]

Core Viewpoint - Ambarella, Inc. reported stronger-than-expected first-quarter fiscal 2026 results, with significant revenue growth and improved earnings, indicating successful execution of its edge AI strategy despite market volatility [1][2][3]. Financial Performance - Non-GAAP earnings for the first quarter were 7 cents per share, exceeding the Zacks Consensus Estimate of 4 cents, and a notable improvement from a loss of 26 cents per share in the same quarter last year [1][2]. - Revenues increased by 57.6% year over year to $85.9 million, surpassing the Zacks Consensus Estimate of $84 million, and were at the higher end of management's guidance of $81-$87 million [2][3]. - Gross margin on a non-GAAP basis was 62.0%, slightly above the guided range of 61-62.5% due to a favorable product mix [6]. Revenue Drivers - Record Edge AI revenues accounted for over 75% of first-quarter revenues, marking the fourth consecutive quarter of record AI sales [3]. - The automotive segment showed over 20% growth year over year, despite a low single-digit sequential decline [3]. Customer Contributions - One logistics and original design manufacturer customer contributed more than 10% to total revenues, with WT Microelectronics accounting for 63.1% of first-quarter revenues [4]. Future Guidance - For the second quarter, Ambarella forecasts revenues between $86 million and $94 million, with expected mid-single-digit sequential growth in IoT applications and slight growth in automotive revenues [8]. - The consensus estimate for second-quarter non-GAAP earnings per share is 4 cents [9]. Cash Flow and Balance Sheet - At the end of the first quarter, cash, cash equivalents, and marketable debt securities totaled $259.4 million, up from $250.3 million in the prior quarter and $203.3 million year over year [7]. - Operating cash flow generated during the first quarter was $14.8 million, with free cash flow of $10.2 million [7].

Ambarella, Inc. AMBA reported better-than-expected earnings for its first quarter on Thursday.The company posted quarterly earnings of 7 cents per share which beat the analyst consensus estimate of 3 cents per share. The company reported quarterly sales of $85.87 million which beat the analyst consensus estimate of $85.18 million.“As the established edge AI market leader, we achieved our fourth consecutive quarter of record AI revenue with results in the upper half of our Q1 revenue guidance range. We are i ...

Ambarella (AMBA) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to loss of $0.26 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 75%. A quarter ago, it was expected that this video-compression chipmaker would post a loss of $0.01 per share when it actually produced earnings of $0.11, delivering a surprise of 1,200%.Over the last four quarters, the com ...

Financial Data and Key Metrics Changes - The company reported first quarter revenue of $85.9 million, which is up 2.2% sequentially and up 57.6% year over year, exceeding the midpoint of prior guidance [9][27] - Non-GAAP gross margin for fiscal Q1 was 62%, slightly above the midpoint of prior guidance due to a favorable product mix [27] - Non-GAAP net profit for Q1 was $3 million, or $0.07 per diluted share [28] - Cash and marketable securities reached $259.4 million, increasing by $9.1 million from the prior quarter and $56 million year over year [29] Business Line Data and Key Metrics Changes - AI revenue accounted for more than 75% of Q1 revenue, marking the fourth consecutive quarter of record AI revenue [9] - IoT applications increased to mid-single digits sequentially, now representing about three-quarters of total revenue [10] - Automotive revenue declined low single digits sequentially but was up more than 20% year over year [10] Market Data and Key Metrics Changes - The company is increasing its fiscal 2026 revenue growth estimate to a range of 19% to 25%, approximately $348 million at the midpoint [11] - The serviceable available market (SAM) for h AI applications is projected to reach almost $13 billion by fiscal 2031, with a five-year compounded annual growth rate in the high teens [12] Company Strategy and Development Direction - The company is focusing on expanding its edge AI infrastructure, developing a new AI SoC product family to enhance its offerings [12][21] - The company aims to leverage its existing technology to address new application verticals beyond its core enterprise security business [20] - Investment in technology and products is driving both current and future revenue growth opportunities [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term drivers of the h AI strategy despite geopolitical uncertainties [11][24] - The company is maintaining a conservative outlook for the second half of the fiscal year due to geopolitical uncertainties but remains optimistic about second-half growth [11][24] Other Important Information - The company has extended its share repurchase program for an additional twelve months, with approximately $48 million available under the repurchase authorization [29] - A logistics company, WT Microelectronics, represented 63.1% of revenue for the quarter [30] Q&A Session Summary Question: Clarification on full-year guidance and growth profile - Management indicated that there are no concerns about second-half strength, despite geopolitical uncertainties affecting guidance [36][37] Question: Explanation of edge infrastructure products - Management clarified that edge infrastructure involves integrating multiple endpoints to upgrade existing installations, which is a growing trend [46][47] Question: Impact of seasonality on revenue - Management acknowledged that seasonality is uncertain this year due to geopolitical factors but indicated that normal seasonality could still occur [56] Question: Supply chain conversations with customers - Management reported that customers are not building inventory and are closely monitoring the situation [85][86] Question: Gross margin expectations - Management explained that gross margin fluctuations are primarily driven by customer and product mix [88] Question: AI capabilities in cameras and infrastructure - Management emphasized the need for both AI in cameras and edge infrastructure to upgrade existing installations effectively [93][95] Question: Market share outside of China - Management stated that they hold a majority market share in the mid and high-end security camera market outside of China [97]

Financial Data and Key Metrics Changes - The company reported first quarter revenue of $85.9 million, which is up 2.2% sequentially and up 57.6% year over year, exceeding the midpoint of prior guidance [7][25] - Non-GAAP gross margin for Q1 was 62%, slightly above the midpoint of prior guidance due to a favorable product mix [25] - Non-GAAP net profit for Q1 was $3 million, or $0.07 per diluted share [26] - Cash and marketable securities reached $259.4 million, increasing by $9.1 million from the prior quarter [27] Business Line Data and Key Metrics Changes - AI revenue accounted for more than 75% of Q1 revenue, marking the fourth consecutive quarter of record AI revenue [8] - IoT applications increased to mid-single digits sequentially, now representing about three-quarters of total revenue [8] - Automotive revenue declined in low single digits sequentially but was up more than 20% year over year [8] Market Data and Key Metrics Changes - The company is increasing its fiscal 2026 revenue growth estimate to a range of 19% to 25%, approximately $348 million at the midpoint [9] - The serviceable available market (SAM) for h AI applications is projected to reach almost $13 billion by fiscal 2031, with a five-year compounded annual growth rate in the high teens [11] Company Strategy and Development Direction - The company is focusing on expanding its edge AI infrastructure market, developing new AI SoC product families to enhance its offerings [11][12] - The company aims to leverage its existing technology to address new application verticals beyond its core enterprise security business [19] - Investment in technology and products is driving both current and future revenue growth opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term drivers of the h AI strategy despite geopolitical uncertainties [10][23] - The company is prepared for short-term surprises while focusing on innovation and market development [23] - Management indicated that while there is uncertainty regarding the second half of the fiscal year, they remain optimistic about growth [35] Other Important Information - The company has extended its share repurchase program for an additional twelve months, with approximately $48 million available under the authorization [28] - A logistics company, WT Microelectronics, represented 63.1% of revenue for the quarter [29] Q&A Session Summary Question: Clarification on full-year guidance and growth profile - Management indicated that there are no concerns about second-half strength, but geopolitical uncertainty has led to a broader guidance range [34][35] Question: Explanation of edge infrastructure products - Management clarified that edge infrastructure involves integrating multiple endpoints to upgrade existing installations, which is a growing trend [42][44] Question: Supply chain conversations with customers - Management reported that customers are not building inventory and are cautious about the current geopolitical situation [78][80] Question: Gross margin expectations - Management explained that gross margin fluctuations are primarily driven by customer and product mix [81] Question: AI capabilities in cameras and video management systems - Management noted that both cameras and AI boxes are necessary to upgrade the installed base and enhance AI capabilities [88][90] Question: Market share outside of China - Management stated that they hold a majority market share in the mid and high-end security camera market outside of China [92] Question: Edge AI infrastructure product development - Management confirmed that the second chip for edge AI infrastructure is a response to market demand and will leverage existing technology for faster development [96]

Financial Performance - Revenue for Q1 FY 2026 was $85.9 million, up 57.6% from $54.5 million in the same period of FY 2025[5] - Non-GAAP net profit for Q1 FY 2026 was $3.0 million, or earnings per diluted share of $0.07, compared to a non-GAAP net loss of $10.5 million, or loss per diluted share of $0.26 in the same period of FY 2025[5] - Gross margin on a GAAP basis for Q1 FY 2026 was 60.0%, compared to 60.9% for the same period in FY 2025[5] - The company is increasing its FY 2026 revenue growth guidance to a range of 19% to 25%, approximately $348 million at the mid-point[6] - Revenue guidance for Q2 FY 2026 is expected to be between $86.0 million and $94.0 million[5] - Non-GAAP gross margin for Q2 FY 2026 is expected to be between 60.5% and 62.0%[5] Cash and Assets - Total cash, cash equivalents, and marketable debt securities at the end of Q1 FY 2026 was $259.4 million, up from $250.3 million at the end of the prior quarter[4] - Total assets increased to $701,918 million from $688,968 million, reflecting a growth of approximately 1.38%[22] - Current assets rose to $335,549 million, up from $320,551 million, indicating an increase of about 4.1%[22] - Cash and cash equivalents decreased slightly to $141,285 million from $144,622 million, a decline of approximately 2.4%[22] Liabilities and Equity - Accounts payable surged to $35,290 million, up from $21,775 million, representing an increase of about 62.2%[22] - Total liabilities increased to $129,202 million from $127,556 million, a growth of approximately 1.3%[22] - Shareholders' equity rose to $572,716 million from $561,412 million, reflecting an increase of about 2.3%[22] - Accumulated deficit widened to $(276,385) million from $(252,057) million, indicating a deterioration in financial position[22] - Additional paid-in capital increased to $848,756 million from $813,683 million, showing a growth of approximately 4.3%[22] Expenses and Investments - Research and development expenses for Q1 FY 2026 were $58.8 million, compared to $54.1 million in the same period of FY 2025[18] - The company repurchased 24,152 shares for approximately $1.0 million in Q1 FY 2026, with $48.0 million remaining for repurchase[7] Innovation and Development - Ambarella continues to innovate with the development of a new SoC to extend its reach into the edge AI infrastructure market[6] Inventory and Lease Liabilities - Inventories increased to $39,289 million from $34,428 million, reflecting a rise of about 14.3%[22] - Operating lease liabilities, current decreased to $2,335 million from $2,829 million, a decline of approximately 17.5%[22]