Ambarella (AMBA) First Quarter Earnings and Revenue Exceed Estimates – June 1, 2022

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Ambarella (AMBA Free Report) reported non-GAAP earnings for the first quarter of fiscal 2023 of 44 cents per share, beating Zacks’ consensus estimate of a loss of 20 cents per share. The reported figure climbed 91.3% from year-earlier quarter earnings of 23 cents per share.

Revenue jumped 29% year-over-year to $90.3 million and narrowly topped the consensus mark of $90 million. Robust year-over-year revenue growth was primarily driven by improvement in the automotive and security camera businesses.

Customer and market details

Ambarella had three clients that contributed more than 10% in the current quarter. WT Microelectronics, a fulfillment partner in Taiwan that serves multiple customers in Asia, accounted for 57% of the company’s revenue. Hakuto, a Japanese distributor for automotive customers, contributed 10%, while Chicony, a Taiwan-based electronics manufacturer serving multiple IOT customers, accounted for 11% of the company’s revenue.

The momentum of AMBA’s on-chip CV stream system in professional IP cameras across all geographies continued in the quarter under review.

Operation details

Non-GAAP gross margin was 63.8%, up 90 basis points year-over-year in the fiscal first quarter.

A healthy customer base and product mix, supported by stable price movements, contributed to gross margin expansion in the reported quarter.

On a non-GAAP basis, operating expenses were $39.8 million, down 1.2% sequentially. Non-GAAP operating expenses were slightly lower than the midpoint of the company’s previous guidance, primarily due to the timing of new product development activities.

Net inventory was $41.5 million as of April 30, 2022, down 8.2% sequentially.

Balance sheet and cash flow

As of April 30, 2022, Ambarella had cash and cash equivalents and marketable securities of $200.6 million, compared to $171 million as of January 31, 2022.

During the first fiscal quarter, the company generated operating cash flow of $34 million.

Tips

For the second quarter of fiscal 2023, revenue is expected between $78 million and $82 million. Non-GAAP gross margin is expected at 63-64%.

Non-GAAP operating expenses are expected to be between $42 million and $45 million.

Management noted that supply chain constraints will remain a concern in the second quarter of fiscal 2023.

Zacks ranking and key picks

Ambarella currently wears a Zacks rank #4 (sale). AMBA shares are down 15.8% over the past year.

Some top-ranked stocks overall IT and technology sector are Avnet (AVT free report), Analog devices (ADI free report) and Axcelis Technologies (ACLS free report). While Avnet and Analog Devices each sport a Zacks rank of #1 (strong buy), Axcelis carries a Zacks rank of 2 (buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks’ consensus estimate for Avnet’s earnings in the fourth quarter of fiscal 2022 has been revised 55 cents north to $1.96 per share over the past 30 days. For 2022, earnings estimates have moved 20.5% north to $6.83 per share in the past 30 days.

Avnet’s earnings have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 21.2%. Shares of AVT have risen 9.3% over the past year.

Zacks’ consensus estimate for Analog Devices’ third-quarter fiscal 2022 earnings was revised up 5 cents to $2.42 per share in the past seven days. For fiscal 2022, earnings estimates have moved 16 cents north to $9.24 per share in the past seven days.

Earnings for Analog Devices have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 7.7%. ADI shares are up 2.8% over the past year.

Zacks’ consensus estimate for Axcelis’ second-quarter 2022 earnings was revised up 3 cents to 99 cents per share in the past 30 days. For 2022, the Zacks consensus estimate for Axcelis earnings has moved 41 cents north to $4.40 per share over the past 30 days.

Axcelis’ earnings have exceeded the Zacks consensus estimate in each of the previous four quarters, with the average surprise being 23.5%. ACLS shares have jumped 48.9% over the past year.

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