Post Earnings Coverage as Ambarella Tops Market Expectations Amid a Slump in Sale

LONDON, UK / ACCESSWIRE / September 7, 2016 / Active Wall St. announces its post-earnings coverage on Ambarella, Inc. (NASDAQ: AMBA). The company released its second quarter fiscal 2017 (Q2 FY17) results on September 1, 2016. The maker of chips for GoPro Inc. wearable cameras, as well drones, automobiles and other markets, posted a decline in earnings and revenue though results were better-than-expected. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on AMBA; touching on GoPro Inc. (NASDAQ: GPRO). Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended on July, 31, 2016, Ambarella reported net income of $8.6 million, or $0.25 per diluted share, down from $23.1 million, or $0.68 per diluted share, in the year earlier period. On an adjusted basis, earnings were $0.54 per share. The company’s sales tumbled 22.6% to $65.1 million, but slightly above the consensus analyst estimate of $64.2 million.

Ambarella’s adjusted gross margin increased 180 basis points on y-o-y basis to 67.1%, which was above guidance for adjusted gross margin between 60.5% and 63.5%.

“Our results reflect strong execution across the business despite several hurdles in the quarter as discussed on our last earnings call,” said Fermi Wang, CEO of Ambarella.

GoPro Struggles

Ambarella attributed that second quarter revenues from the wearable market were down substantially from the previous year and flat sequentially due to primarily to a significant decline in revenues from GoPro. The company recorded strong y-o-y growth in drones and home security revenues, offset by a substantial decline in the wearable sports market.

On July 27, 2016, GoPro reported that revenue nearly halved compared to the year quarter as the company struggles to expand its user-base for its action-video cameras beyond its traditional consumer. GoPro has not launched any flagship cameras since the Hero 4 Silver and Black in 2014. The market will be closely watching GoPro’s proposed launch of its first ever drone, called the GoPro Karma, on September 19, 2016, and Hero5 camera line which is yet to be announced. The response to these during the upcoming festive season would have a significant bearing on the results of Ambarella.

Balance Sheet

Total cash, cash equivalents and marketable securities on hand at the end of Q2 FY17 were $327.0 million compared to $239.8 million at the end of the same quarter a year ago.

Stock Repurchase

On June 2, 2016, Ambarella announced that its Board of Directors had authorized the repurchase of up to $75 million of its ordinary shares over a six-month period commencing in the second quarter of fiscal 2017. During Q2 FY17, Ambarella repurchased a total of 405,089 shares in the open market for total cash consideration of approximately $20.2 million, or $49.80 per share.

Outlook

Ambarella reiterated its previous guidance for FY17 with revenue expected to be flat to down 5% compared to FY16. For Q3 FY17, the company is projecting revenue between $95 million and $99 million, with adjusted gross margin between 63.5% and 65%. The revenue forecast is above analysts’ expectation of $95.7 million.

Stock Performance

At the close of trading session on September 6, 2016, Ambarella’s stock price rose 2.82% to end the day at $68.88. A total volume of 1.63 million shares were exchanged during the session, which was above the 3-month average volume of 1.16 million shares. The company’s share price has gained 17.56% in the past one month and 23.57% on YTD basis.

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