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Ambarella (AMBA) Q4 Loss Narrower Than Expected, Stock Up

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Ambarella (AMBA - Free Report) gained 13% during Tuesday’s extended trading session as the company reported a narrower-than-expected loss for the fourth quarter of fiscal 2024. The company reported a non-GAAP loss of 24 cents per share for the quarter, narrower than the Zacks Consensus Estimate of a loss of 33 cents.

However, the bottom line compared unfavorably with the year-ago quarter’s non-GAAP earnings of 23 cents per share. The dismal year-over-year performance was mainly due to a decline in revenues.

Fourth-quarter revenues plunged 38% year over year to $51.6 million, mainly due to weakness in its Internet of Things (IoT) end market. The top line missed the consensus mark of $51.7 million.

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 logistics and Original Design Manufacturers customers that contributed more than 10% in the reported quarter. WT Microelectronics, a partner in Taiwan that serves multiple customers in Asia accounted for 55% of the company’s fourth-quarter revenues. Chicony, which serves multiple IoT customers, represented 14% of AMBA’s fourth-quarter revenues.

The traction in AMBA’s CV flow system-on-a-chip in professional IP cameras continued in the reported quarter. Ambarella expects the CV2 family to be the key driver of the company’s revenue growth in fiscal 2025.

Operating Details

The non-GAAP gross margin was 62.5%, down 100 basis points year over year in the fiscal fourth quarter.

On a non-GAAP basis, operating expenses were $44.2 million, down from $46 million in the year-ago quarter. Non-GAAP operating expenses were also lower than the company’s prior guidance of $45-$48 million, primarily due to its expense management actions and the timing of spending between quarters.

Balance Sheet

As of Jan 31, 2023, Ambarella had cash and cash equivalents & marketable securities of $219.9 million compared with $222.3 million as of Oct 31, 2023.

Q1 2025 Guidance

The company expects stability in near-time revenues based on recent customer feedback and continued momentum in bookings. The company forecasts its first-quarter fiscal 2025 revenues in the range of $52-$56 million, with sequential growth in IoT and automotive end market.

For the first quarter, the non-GAAP gross margin is anticipated in the band of 61.5-63%. Non-GAAP operating expenses are projected in the range of $46-$49 million.

Zacks Rank and Stocks to Consider

Currently, Ambarella carries a Zacks Rank #3 (Hold). Shares of AMBA have plunged 38.5% in the past year.

Some better-ranked stocks from the broader technology sector are BlackLine (BL - Free Report) , Arista Networks (ANET - Free Report) and Dell Technologies (DELL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for BlackLine’s first-quarter 2024 earnings has remained unchanged at 47 cents per share for the past 90 days. Shares of BL have lost 16.5% in the past year.

The Zacks Consensus Estimate for Arista’s first-quarter 2024 earnings has been revised by 4 cents northward to $1.71 per share in the past 30 days. Shares of ANET have rallied 96% in the past year.

The Zacks Consensus Estimate for DELL’s fourth-quarter 2024 earnings per share has declined by a penny to $1.73 in the past 60 days. Shares of DELL have surged 125.3% in the past year.

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