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Ambarella's (AMBA) Q4 Earnings & Revenues Top Estimates

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Ambarella (AMBA - Free Report) reported fourth-quarter fiscal 2021 non-GAAP earnings of 14 cents per share, handily outpacing the Zacks Consensus Estimate by 75%. The earnings were flat year over year.

Meanwhile, revenues of $62.1 million beat the consensus mark of $58 million and increased 9% year over year. Recovery in the automotive and other markets was a positive. Ambarella’s top-line growth was also driven by year-over-year improvement in the security-camera business. Strong demand for the company’s AI vision silicon products was a major growth driver.

The momentum in the AI business continued as CV revenues represented more than 10% of the total revenues for fiscal 2021.

Ambarella, Inc. Price, Consensus and EPS Surprise

Ambarella, Inc. Price, Consensus and EPS Surprise

Ambarella, Inc. price-consensus-eps-surprise-chart | Ambarella, Inc. Quote

Customer & Market Details

Ambarella had two customers that contributed more than 10% in the reported quarter. WT Microelectronics, a fulfillment partner serving multiple customers, accounted for 68.4% of the company’s revenues. Chicony, a Taiwanese OEM, which manufactures for multiple customers, contributed 13.8%.

Moreover, the company noted that it continues to gain SoC share in the professional security-camera market outside China. Momentum in Ambarella’s CV flow SoCs in professional IP cameras across all geographies continued in the reported quarter.

Operating Details

Ambarella reported non-GAAP gross margin of 61.4%, up 270 basis points (bps) year over year in the fourth quarter. The gross margin figure came in slightly better than management’s guidance of the 59-61% range. On a GAAP basis, gross margin advanced 260 bps to 60.8%.

Healthy customer and product mix supported by impressive operational execution aided gross-margin expansion during the fourth quarter.

Total operating expenses on a GAAP basis flared up 10% year on year to $51.82 million, primarily due to a 10% year-over-year rise in research & development expenses, which came up to $37.18 million. On a non-GAAP basis, operating expenses were $33.4 million, slightly more than the management’s guided range of $31-$33 million. Sequentially, non-GAAP operating expenses rose 3%.

Selling, general and administrative expenses of $14.63 million were up 9.7% year over year.

Total headcount at the end of the fourth quarter was 785, with about 81% of the employees dedicated to engineering. Roughly 69% of Ambarella’s total headcount is located in Asia.

Net inventory was $26.1 million as of Jan 31, 2021, up 10% sequentially.

Balance Sheet & Cash Flow

As of Jan 31, 2021, Ambarella had cash and cash equivalents & marketable securities of $440.7 million compared with $423.6 million as of Oct 31, 2020.

During the fourth quarter, the company generated an operating cash flow of $12.5 million.

Ambarella’s board approved an extension of the current $50-million repurchasing program for an additional 12 months ending Jun 30, 2021. Currently, $49 million is available under the program. The company did not purchase any shares during the quarter.

Guidance

For first-quarter fiscal 2022, revenues are expected between $67 million and $70 million. Non-GAAP gross margin is anticipated to be 59.5-61.5%. Non-GAAP operating expenses are projected at $34-$36 million.

The guidance takes into account some higher costs and expenses related to the company’s efforts to expedite orders and secure more capacity.

Management expects to ship about 2 million units of CV shipments, mostly in professional security cameras in the first quarter.

Ambarella expects to overcome the seasonal downward trend in Q1 with continued production ramp up of multiple CV programs.

Management anticipates security-camera revenues to be up in the low to mid-teens sequentially. Automotive revenues are expected to increase more than 20% on a sequential basis. However, Other revenues are expected to decline 20% quarter on quarter.

Ambarella also stated that the rate of order push-out and cancellations has slowed down and design activity has started to recover.

Additionally, the company forecasts CV products to account for about 25% of its total revenues in fiscal 2022.

Zacks Rank & Stocks to Conside

Ambarella currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are Skyworks Solutions (SWKS - Free Report) , Zoom Video Communications (ZM - Free Report) and Shopify Inc. (SHOP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Skyworks Solutions, Zoom and Shopify is currently pegged at 18.98%, 25% and 32.5%, respectively.

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