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Ambarella(AMBA) - 2026 Q1 - Earnings Call Transcript
AMBAAmbarella(AMBA)2025-05-29 21:30

Financial Data and Key Metrics Changes - The company reported first quarter revenue of 85.9million,whichisup2.285.9 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 0.07perdilutedshare[26]−Cashandmarketablesecuritiesreached0.07 per diluted share [26] - Cash and marketable securities reached 259.4 million, increasing by 9.1millionfromthepriorquarter[27]BusinessLineDataandKeyMetricsChanges−AIrevenueaccountedformorethan759.1 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 13billionbyfiscal2031,withafive−yearcompoundedannualgrowthrateinthehighteens[11]CompanyStrategyandDevelopmentDirection−ThecompanyisfocusingonexpandingitsedgeAIinfrastructuremarket,developingnewAISoCproductfamiliestoenhanceitsofferings[11][12]−Thecompanyaimstoleverageitsexistingtechnologytoaddressnewapplicationverticalsbeyonditscoreenterprisesecuritybusiness[19]−Investmentintechnologyandproductsisdrivingbothcurrentandfuturerevenuegrowthopportunities[20]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinlong−termdriversofthehAIstrategydespitegeopoliticaluncertainties[10][23]−Thecompanyispreparedforshort−termsurpriseswhilefocusingoninnovationandmarketdevelopment[23]−Managementindicatedthatwhilethereisuncertaintyregardingthesecondhalfofthefiscalyear,theyremainoptimisticaboutgrowth[35]OtherImportantInformation−Thecompanyhasextendeditssharerepurchaseprogramforanadditionaltwelvemonths,withapproximately13 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]