Ambarella ( AMBA Quick Quote 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.
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.
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 Quick Quote AMD - Free Report) , Qualcomm ( QCOM Quick Quote QCOM - Free Report) and CDW Corporation ( CDW Quick Quote 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
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