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Ambarella (AMBA) Q3 Earnings and Revenues Beat Estimates

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Ambarella (AMBA - Free Report) reported third-quarter fiscal 2022 non-GAAP earnings of 57 cents per share, which outpaced the Zacks Consensus Estimate by 16.3%. The reported figure jumped over six-fold from the prior-year quarter’s earnings of 9 cents per share.

Revenues of $92.2 million beat the consensus mark of $90.5 million and increased 64% year over year. Ambarella’s top-line growth was primarily driven by improvement in the automotive and security camera businesses.

Customer & Market Details

Ambarella had two customers that contributed more than 10% in the reported quarter. WT Microelectronics, a fulfillment partner in Taiwan, which serves multiple customers in Asia, accounted for 63% of the company’s revenues. Chicony, a Taiwanese original equipment manufacturer, which manufactures for multiple customers, contributed 13%.

Moreover, the company noted that it continues to gain system-on-a-chip (“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.

Ambarella, Inc. Price, Consensus and EPS Surprise Ambarella, Inc. Price, Consensus and EPS Surprise

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

Operating Details

Non-GAAP gross margin was 63.1%, up 40 basis points (bps) year over year in the third quarter.

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

On a non-GAAP basis, operating expenses were $35.6 million, down 2.2% sequentially. Non-GAAP operating expenses were slightly below the low-end of the company’s prior guidance due to the timing of non-recurring research & development expenses.

Headcount at the end of the third quarter (before the closure of Oculii buyout transaction) was 824, with about 82% of the employees dedicated to engineering. Roughly 69% of these engineers are developing software and algorithms.

Net inventory was $47 million as of Oct 31, 2021, up 11.6% sequentially.

Balance Sheet & Cash Flow

As of Oct 31, 2021, Ambarella had cash and cash equivalents & marketable securities of $457.8 million compared with $449.2 million as of Jul 31, 2021.

During the third quarter, the company generated an operating cash outflow of $8.3 million.

Guidance

For fourth-quarter fiscal 2022, revenues are expected between $88.5 million and $91.5 million. Non-GAAP gross margin is anticipated to be 63-64%. Non-GAAP operating expenses are projected to be $39-$41 million.

Zacks Rank & Stocks to Consider

Ambarella currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Advanced Micro Devices (AMD - Free Report) , Qualcomm (QCOM - Free Report) and CDW Corporation (CDW - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Advanced Micro Devices’ fourth-quarter 2021 earnings has been revised upward by 7 cents to 75 cents per share over the past 60 days. For 2021, earnings estimates have moved north by 1 cent to $2.64 per share in the last 60 days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14%. Shares of AMD have rallied 72.7% in the YTD period.

The consensus mark for Qualcomm’s first-quarter fiscal 2022 earnings has been raised to $3.01 per share from $2.63 in the past 30 days. For fiscal 2022, earnings estimates have been revised upward by 14.1% to $10.49 per share in the past 30 days.

Qualcomm’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.2%. Shares of QCOM stock have gained 18.5% YTD.

CDW’s consensus estimate for fourth-quarter fiscal 2021 earnings has been raised to $1.87 per share from $1.83 in the past 30 days. For fiscal 2021, earnings estimates have moved north by 1.4% to $7.81 per share over the past 30 days.

CDW’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.2%. Shares of CDW stock have appreciated 43.7% YTD.