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Ambarella's (AMBA) Q1 Earnings & Revenues Top Estimates

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Ambarella (AMBA - Free Report) reported first-quarter fiscal 2022 non-GAAP earnings of 23 cents per share, handily outpacing the Zacks Consensus Estimate by 35.29%. The reported figure jumped significantly from the prior-year quarter’s earnings of 4 cents per share.

Meanwhile, revenues of $70 million beat the consensus mark of $69 million and increased 28% year over year. Recovery in the automotive and other markets was a positive. Ambarella’s top-line growth was also driven by improvement in the security-camera business.

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 63% of the company’s revenues. Chicony, a Taiwanese OEM, which manufactures for multiple customers, contributed 16%.

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 62.9%, up 380 basis points (bps) year over year in the first quarter.

A healthy customer mix supported by impressive operational execution aided gross-margin expansion during the first quarter and offset the higher expenses incurred to overcome supply-chain challenges.

On a non-GAAP basis, operating expenses were $35.4 million, up 6% sequentially. Seasonal increase in payroll taxes and increased headcount led to the increase.

Total headcount at the end of the first quarter was 803, with about 81% of the employees dedicated to engineering. Roughly 66% of Ambarella’s total headcount is located in Asia.

Net inventory was $33.1 million as of Apr 30, 2021, up 26.8% sequentially.

Balance Sheet & Cash Flow

As of Apr 30, 2021, Ambarella had cash and cash equivalents & marketable securities of $435.5 million compared with $440.7 million as of Jan 31, 2021.

During the first quarter, the company generated an operating cash outflow of $4.5 million.

Guidance

For second-quarter fiscal 2022, revenues are expected between $74 million and $77 million. Non-GAAP gross margin is anticipated to be 61-62%. Non-GAAP operating expenses are projected at $36-$37.5 million.

Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the broader technology sector include Silicon Motion Technology Corp. (SIMO - Free Report) , Lam Research Corp. (LRCX - Free Report) and LG Display Co., Ltd. (LPL - Free Report) , all 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 Silicon Motion Technology Corporation, Lam Research and LG Display is currently pegged at 8%, 32.8% and 32.56%, respectively.

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