Why Ambarella Earnings Are Not Enough

By Chris Lange Updated Jan 13, 12:23PM EST · Published Mar 3, 4:26PM EST

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Why Ambarella Earnings Are Not Enough — © Thinkstock

Ambarella Inc. (NASDAQ: AMBA) reported fiscal fourth-quarter financial results after the markets closed on Thursday. The company had $0.64 in earnings per share (EPS) on $68.0 million in revenue. That compared to the consensus estimates from Thomson Reuters that called for $0.48 in EPS on $65.83 million in revenue. The same period from last year had $0.58 in EPS on $64.70 million in revenue.

Gross margin for the fourth quarter was 64.1% compared, to 64.3% in the same quarter from the previous year.

In terms of guidance for the first quarter, Ambarella expects to have net income in the range of $8 million to $10 million; for comparison net income in this quarter was $21.6 million. The company also predicts revenues will be in the range of $55 million to $57 million. There are consensus estimates that call for $0.40 in EPS on $62.44 million in revenue.

On the books, total cash, equivalents and marketable securities were $307.9 million at the end of the quarter, compared to $208.0 million last year.
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Fermi Wang, president and CEO of Ambarella, commented on earnings:

For the full fiscal year 2016, we grew revenue by 45 percent. During the fourth quarter we saw strong sales from professional IP security, automotive aftermarket, home monitoring and flying camera markets. This was largely offset, however, by a continued decline in the wearable sports camera market. In addition, during the quarter we delivered our first 14nm chip, H2, and continued to successfully diversify and expand our end markets and customer base.

Shares of Ambarella closed Thursday at $46.24, with a consensus analyst price target of $65.55 and a 52-week trading range of $33.39 to $129.19. Following the release of the earnings report, the stock was down 5.5% at $43.70 in the after-hours trading session.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.