Ambarella (NasdaqGS:AMBA) Q3 2026 Earnings Call November 25, 2025 04:30 PM ET Company ParticipantsJohn Young - CFOLouis Gerhardy - Vice President of Corporate Development and Investor RelationsFermi Wang - CEO and Co-founderQuinn Bolton - Managing Director of Equity ResearchConference Call ParticipantsChristopher Rolland - Managing Director and Senior Equity AnalystJoe Moore - Research AnalystTore Svanberg - Managing Director and Senior Semiconductor AnalystMartin Yang - Research AnalystRoss Seymore - Manag ...

Financial Data and Key Metrics Changes - The company reported record quarterly revenue of $108.5 million, exceeding the high end of the guidance range and representing a 31.2% year-over-year increase [6][16] - Non-GAAP gross margin for Q3 was 60.9%, slightly above the midpoint of the prior guidance range [16] - Non-GAAP net profit was $11.9 million, or $0.27 per diluted share [17] Business Line Data and Key Metrics Changes - Edge AI revenue constituted about 80% of total revenue, marking the sixth consecutive quarter of record edge AI revenue [6] - Automotive revenue increased in the low single digits, while IoT revenue grew in the mid-teens, driven by the adoption of edge AI in enterprise security and portable video applications [16] Market Data and Key Metrics Changes - The company anticipates a large edge serviceable available market of $12.9 billion by fiscal year 2031, indicating significant growth potential in the edge AI market [15] - The portable video market is experiencing a resurgence, contributing significantly to growth, with new product launches from customers like Insta360 [12][23] Company Strategy and Development Direction - The company is committed to expanding its edge AI technology and product offerings, focusing on applications in enterprise security, automotive safety, smart home, and portable video markets [7][8] - The strategy includes increasing average selling prices (ASP) through advanced technology and product differentiation, with a blended ASP increase of about 20% year-over-year [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the edge AI opportunity, citing increasing demand across various applications and a strong product roadmap [6][7] - The company is focused on maintaining R&D investments to solidify its leadership position in the edge AI market [15] Other Important Information - The company announced that co-founder and CEO Les Kohn will step down from the board to become chief technology advisor, continuing to oversee technology direction [5] - Cash and marketable securities reached $295.3 million, reflecting strong operating cash flow associated with increased revenue [17] Q&A Session Summary Question: What is the contribution of unit growth versus ASP in the projected 36-38% growth for fiscal 2026? - Management indicated that both unit growth and ASP growth contribute equally to the overall growth [21][22] Question: Can you provide more details on the portable video market? - The company highlighted various product lines within the portable video market, including action cameras and drones, indicating strong growth momentum [23] Question: How is the consumer versus enterprise split in the edge AI market? - The split is roughly 50/50 between enterprise CapEx-driven and consumer markets, with different types of consumer spending impacting volatility [25] Question: What are the expectations for gross margin in the upcoming quarters? - Management noted that gross margin will depend on the contribution from high-volume customers, with a long-term target of 59-62% [26][43] Question: What is the outlook for the automotive market? - The company remains committed to the automotive market, engaging with multiple OEMs for autonomous driving applications [41]