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Headquartered in Santa Clara, CA, Ambarella Inc. (AMBA - Free Report) develops video compression and image processing semiconductors, which enables high-definition or HD video capture, share and display. Additionally, its products are used in creating video content for wearable sports cameras, automotive aftermarket cameras, and professional and consumer Internet Protocol (IP) security cameras.
AMBA Craters After Earnings
Similar to other tech earnings stories this season, key metrics for Ambarella’s fiscal fourth quarter beat expectations, but guidance for the current quarter disappointed investors.
Revenue grew 45% year-over-year to $60.2 million, while earnings came to $0.45 per share, which beat analysts’ estimates of $0.42 per share. Additionally, non-GAAP gross margin was 64.8% for Q4 compared to 61.4% in the prior-year quarter.
Ambarella ended the quarter with $171 million in total cash on hand as well.
The company’s Q1 outlook was a letdown though. The chip maker forecasts revenue between $88.5 million to $91.5 million, but the midpoint of that range—$90 million—is below Wall Street’s estimates of $90.9 million. Ambarella also anticipates that gross margin will contract from the fourth quarter to somewhere between 63% and 64%.
"We continue to face headwinds, including geopolitical, public health, and persistent supply chain challenges,” said CEO Fermi Wang in the earnings press release. “Nevertheless,” he continued, “we believe we are now decisively established in front of the positive AIoT [Artificial Intelligence of Things] secular trends."
Management may be confident going forward, but investors are much more cautious, demonstrated by the stock’s 30% plunge after earnings.
Bottom Line
AMBA is a Zacks Rank #5 (Strong Sell).
Eight analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped $0.13 to $1.74 per share. AMBA’s earnings, however, are expected to grow around 8% for fiscal 2023, with revenue increasing 16.5% for the same period to $386.8 million.
While emotionally charged post-earnings selling often sets up the opportunity for a nice rebound, that hasn’t been the case yet for AMBA. Shares have plummeted over 52% year-to-date compared to the S&P 500’s decline of 6.5%.
High-flying tech growth stocks like AMBA are operating in a tough trading environment right now. Shares will likely remain highly volatile, especially with the war between Russia and Ukraine and plans for multiple interest rate hikes amid record high inflation. Additionally, AMBA still isn’t cheap even after its recent steep stumble; shares currently trade for 9.2X 12-month forward expected sales.
Because of the current market conditions, AMBA may continue to experience some severe ups and downs, so investors may want to wait on the sidelines for now.
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Bear of the Day: Ambarella (AMBA)
Headquartered in Santa Clara, CA, Ambarella Inc. (AMBA - Free Report) develops video compression and image processing semiconductors, which enables high-definition or HD video capture, share and display. Additionally, its products are used in creating video content for wearable sports cameras, automotive aftermarket cameras, and professional and consumer Internet Protocol (IP) security cameras.
AMBA Craters After Earnings
Similar to other tech earnings stories this season, key metrics for Ambarella’s fiscal fourth quarter beat expectations, but guidance for the current quarter disappointed investors.
Revenue grew 45% year-over-year to $60.2 million, while earnings came to $0.45 per share, which beat analysts’ estimates of $0.42 per share. Additionally, non-GAAP gross margin was 64.8% for Q4 compared to 61.4% in the prior-year quarter.
Ambarella ended the quarter with $171 million in total cash on hand as well.
The company’s Q1 outlook was a letdown though. The chip maker forecasts revenue between $88.5 million to $91.5 million, but the midpoint of that range—$90 million—is below Wall Street’s estimates of $90.9 million. Ambarella also anticipates that gross margin will contract from the fourth quarter to somewhere between 63% and 64%.
"We continue to face headwinds, including geopolitical, public health, and persistent supply chain challenges,” said CEO Fermi Wang in the earnings press release. “Nevertheless,” he continued, “we believe we are now decisively established in front of the positive AIoT [Artificial Intelligence of Things] secular trends."
Management may be confident going forward, but investors are much more cautious, demonstrated by the stock’s 30% plunge after earnings.
Bottom Line
AMBA is a Zacks Rank #5 (Strong Sell).
Eight analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped $0.13 to $1.74 per share. AMBA’s earnings, however, are expected to grow around 8% for fiscal 2023, with revenue increasing 16.5% for the same period to $386.8 million.
While emotionally charged post-earnings selling often sets up the opportunity for a nice rebound, that hasn’t been the case yet for AMBA. Shares have plummeted over 52% year-to-date compared to the S&P 500’s decline of 6.5%.
High-flying tech growth stocks like AMBA are operating in a tough trading environment right now. Shares will likely remain highly volatile, especially with the war between Russia and Ukraine and plans for multiple interest rate hikes amid record high inflation. Additionally, AMBA still isn’t cheap even after its recent steep stumble; shares currently trade for 9.2X 12-month forward expected sales.
Because of the current market conditions, AMBA may continue to experience some severe ups and downs, so investors may want to wait on the sidelines for now.