Ambarella Q2 Earnings Call Highlights

Ambarella Q2 Earnings Call Highlights

Ambarella’s fiscal Q2 revenue rose 13.2% year over year to $108.1 million, driven by record AI revenue and strong automotive and IoT demand.

Automotive revenue reached a new high, while non-GAAP EPS was $0.18.

The company forecast fiscal Q3 revenue of $115 million to $124 million and authorized a new $50 million stock-repurchase program.

Ambarella also expects to maintain its 59%–62% long-term gross-margin target despite rising supply-chain costs.

Ambarella raised its fiscal 2032 serviceable market forecast to $22.9 billion, citing expansion into edge infrastructure and AI accelerators such as the sampling X7.

Partnerships with Capgemini and Macnica are intended to broaden enterprise and midsize-customer reach, though meaningful revenue is expected in two to three years.

Ambarella NASDAQ: AMBA reported fiscal second-quarter revenue of $108.1 million, up 7.7% sequentially and 13.2% from a year earlier, as record AI revenue and continued demand from automotive and IoT customers supported results.

The company posted non-GAAP diluted earnings per share of $0.18, or non-GAAP net income of $8.2 million.

Revenue came in slightly above the midpoint of Ambarella’s prior outlook of $105 million to $111 million.

Chief Financial Officer John Young said automotive revenue reached a new record, supported by commercial-vehicle adoption of AI technology.

Automotive revenue grew slightly faster than the company’s IoT business, where enterprise-oriented operations outperformed consumer-led businesses.

Non-GAAP gross margin was 59.3%, below the midpoint of the company’s prior 59% to 60.5% forecast.

Non-GAAP operating expenses were $57.4 million, slightly below the midpoint of its projected $56 million to $59 million range.

Ambarella ended the quarter with $272.3 million in cash and marketable securities, down $5.5 million sequentially but up $11.1 million from a year earlier.

The sequential decline primarily reflected higher payments for intellectual-property licenses.

Operating cash flow was negative $260,000, while free cash flow was negative $7.1 million after $6.8 million in capital expenditures.

The board authorized a new $50 million stock-repurchase program through June 30, 2027.

Ambarella did not repurchase shares during the fiscal second quarter.

For the fiscal third quarter ending Oct. 31, Ambarella forecast revenue of $115 million to $124 million, with a midpoint of $119.5 million.

The company expects IoT physical-AI demand to lead growth at the midpoint.

It forecast non-GAAP gross margin of 59% to 60% and non-GAAP operating expenses of $56.5 million to $59.5 million.

President and CEO Fermi Wang said rising memory prices and limited supply are affecting the wider technology supply chain as memory vendors prioritize AI data-center demand.

Ambarella said it is helping customers pursue workarounds and expects to pass through its own higher supply-chain costs to protect its long-term gross-margin target of 59% to 62%.

Wang clarified during the question-and-answer session that memory costs do not directly affect Ambarella’s gross margin because the company does not buy and resell memory.

Instead, the concern is that higher memory prices could affect customers’ product volumes and, in turn, their chip purchases.

The company said it saw little effect from memory constraints on second- and third-quarter revenue, but it is monitoring potential impacts in the fourth quarter.

Wang said that, absent ...