Core Insights - Ambarella, Inc. reported stronger-than-expected third-quarter fiscal 2026 results, with non-GAAP earnings of 27 cents per share, exceeding the Zacks Consensus Estimate of 21 cents and showing significant improvement from 11 cents in the year-ago quarter [2][10] - The company's revenues for the third quarter reached $108.5 million, a 31.2% year-over-year increase, surpassing the Zacks Consensus Estimate of $104.1 million and management's guidance of $100-$108 million [3][10] Revenue Performance - The revenue growth was primarily driven by strong performance in the Internet of Things (IoT) and automotive segments, with IoT revenues growing in mid-teen percentage points sequentially due to increased adoption of edge AI, while automotive segment revenues rose in low single digits quarter-over-quarter [4][10] - A significant customer, WT Microelectronics, contributed 70.2% of the total revenues in the reported quarter, highlighting the reliance on key partnerships [5] Profitability Metrics - The non-GAAP gross margin for the third quarter was 60.9%, slightly above the midpoint of management's guidance range of 60-61.5%, attributed to a favorable product mix [7] - Non-GAAP operating expenses were reported at $55.3 million, slightly below the prior guidance of $54-$57 million [7] Cash Flow and Balance Sheet - At the end of the third quarter, Ambarella had cash, cash equivalents, and marketable debt securities totaling $295.3 million, an increase from $261.2 million at the end of the second quarter [8] - The company generated operating cash flow of $34.3 million and free cash flow of $31.4 million during the third quarter, with year-to-date figures of $54.6 million and $43 million, respectively [8] Future Guidance - For the fourth quarter, Ambarella forecasts revenues between $97 million and $103 million, anticipating a mid-to-high single-digit sequential revenue decline in both the automotive and IoT segments [9][10] - The Zacks Consensus Estimate for fourth-quarter revenues stands at $94.3 million, indicating a year-over-year rise of 12.3% [9] Earnings Projections - The anticipated non-GAAP gross margin for the fourth quarter is projected to be in the range of 59-60.5%, with non-GAAP operating expenses expected to be between $55-$58 million [11]

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].