Ambarella’s Upcoming Q3 Earnings Preview

Ambarella (NASDAQ:AMBA) recently showcased its financial resilience by reporting a quarterly loss of $0.13 per share, which was better than what analysts expected. This performance is an improvement from the loss of $0.15 per share a year ago, as highlighted by Zacks Investment Research. Ambarella operates in the semiconductor industry, focusing on the development of low-power, high-definition (HD) and Ultra HD video compression, image processing, and computer vision processors. These technologies are crucial for a wide range of products, including security cameras, automotive cameras, and drones. Despite the challenges in the semiconductor industry, such as supply chain disruptions and fluctuating demand, Ambarella's ability to surpass revenue estimates demonstrates its potential for growth and resilience in a competitive market.

The financial metrics of Ambarella reveal a complex picture of its current financial health and market valuation. With a price-to-earnings (P/E) ratio of approximately -13.71, it's clear that the company is trading at a loss relative to its earnings over the last twelve months. This negative P/E ratio suggests that investors are expecting future growth or improvement in the company's earnings. The price-to-sales (P/S) ratio of about 10.86 indicates that investors are willing to pay $10.86 for every dollar of sales, showing a belief in the company's growth potential despite its current losses.

Ambarella's enterprise value to sales (EV/Sales) ratio of approximately 10.19 further underscores the market's valuation of the company relative to its sales. This ratio, along with the price-to-sales ratio, suggests that the market has high expectations for Ambarella's future sales growth. However, the enterprise value to operating cash flow (EV/OCF) ratio of around -125.13 highlights the company's challenges in generating positive cash flow from its operations, which is a critical aspect for sustaining growth and covering expenses.

The company's financial stability is also reflected in its very low debt-to-equity (D/E) ratio of about 0.007, indicating minimal reliance on debt for financing its operations. This low level of debt contributes to the company's financial flexibility and resilience. Additionally, the current ratio of approximately 3.06 demonstrates Ambarella's strong liquidity position, showing that it has more than enough resources to cover its short-term obligations. This liquidity is crucial for the company to navigate through uncertain market conditions and continue investing in research and development to drive future growth.

Ambarella (NASDAQ:AMBA) reported its Q3 earnings, with a loss of $0.28 per share, which was less than the anticipated $0.39 loss per share forecasted by analysts. The company's revenue for the quarter was $50.6 million, slightly above the Street estimate of $50.01 million. Despite this positive outcome, it's important to note that the revenue represents a 39% decrease from the same period in the previous year.

However, Ambarella highlighted a positive development: their customers are making headway in reducing their inventory, which leads the company to anticipate a return to revenue growth in fiscal 2025. CEO Fermi Wang expressed commitment to the company's strategic R&D focus, particularly in the development of System on Chips (SoCs) and software aimed at more advanced AI inference tasks.

For the upcoming fourth quarter, Ambarella projects revenue to be in the range of $50 to $53 million, compared to the Street estimate of $50.35 million.

Ambarella (NASDAQ:AMBA) shares experienced a pre-market drop exceeding 20% today following the release of its Q2 financial results.

Despite Q2 earnings per share (EPS) of ($0.15) and revenue amounting to $62.1 million, which exceeded predicted consensus figures of ($0.21) and $62.02 million, respectively, the provided Q3 guidance fell short of expectations.

For the upcoming Q3/24, Ambarella anticipates revenue of around $50 million, with a variance of 4% in either direction, contrasting with the projected consensus of $67.6 million.

Ambarella (NASDAQ:AMBA) shares experienced a pre-market drop exceeding 20% today following the release of its Q2 financial results.

Despite Q2 earnings per share (EPS) of ($0.15) and revenue amounting to $62.1 million, which exceeded predicted consensus figures of ($0.21) and $62.02 million, respectively, the provided Q3 guidance fell short of expectations.

For the upcoming Q3/24, Ambarella anticipates revenue of around $50 million, with a variance of 4% in either direction, contrasting with the projected consensus of $67.6 million.

Ambarella (NASDAQ:AMBA) shares plunged more than 17% intra-day today after the company reported its Q1 earnings results, with a loss per share of $0.15, better than the Street estimate of a loss per share of $0.20. Revenue came in at $62.1 million, compared to the Street estimate of $61.99 million. As guided, Q1 sales declined 27% quarter-over-quarter and 31% year-over-year, as customers continue to reduce inventory in IoT as well as automotive segments.

Despite the beat, management anticipates Q2/24 revenue to be in the range of $60-$64 million, worse than the Street estimate of $67.17 million. The gross margin is seen at 62.5%-64.5%.

Ambarella (NASDAQ:AMBA) shares plunged more than 17% intra-day today after the company reported its Q1 earnings results, with a loss per share of $0.15, better than the Street estimate of a loss per share of $0.20. Revenue came in at $62.1 million, compared to the Street estimate of $61.99 million. As guided, Q1 sales declined 27% quarter-over-quarter and 31% year-over-year, as customers continue to reduce inventory in IoT as well as automotive segments.

Despite the beat, management anticipates Q2/24 revenue to be in the range of $60-$64 million, worse than the Street estimate of $67.17 million. The gross margin is seen at 62.5%-64.5%.

Deutsche Bank analysts provided their views on Ambarella, Inc. (NASDAQ:AMBA) ahead of its upcoming Q4 earnings announcement.

After a roughly in-line Q3 was followed by a softer Q4/Q1 guide, the analysts expect an approximately in-line report for Q4 revenues as any incremental gains from easing kitting constraints are offset by weaker macro and industry-specific headwinds which should only pick up steam heading into Q1.

According to the analysts, the company admirably remains committed to its long-term plans, and they believe the company positioned it well for the future with a landmark design win at Continental AG in addition to a win with Kodiak Robotics, their recently re-sized Auto funnel/backlog (now at $2.3 billion) and continued rollout/development of industry-leading tech (CV5 production ramping and CV3 sampling).

Despite admiring management's commitment to the long-term plans, the analysts believe the near-term weakness and lack of clarity surrounding revenue timing lead them to believe that much of the company's growth potential is reflected in the stock.