Ambarella AMBA reported a third-quarter fiscal 2024 non-GAAP loss of 28 cents per share, narrower than the Zacks Consensus Estimate of a loss of 39 cents. The company reported earnings of 24 cents per share in the year-ago quarter.

Third-quarter revenues plunged 39% year over year to $50.6 million, mainly due to softness in its Internet of Things (IoT) end market. However, the top line surpassed the consensus mark of approximately $50 million.

Customer & Market Details

Ambarella had three logistics and Original Design Manufacturers (ODM) customers that contributed more than 10% in the reported quarter. WT Microelectronics, a fulfillment partner in Taiwan that serves multiple customers in Asia accounted for 54% of the company’s third-quarter revenues. Chicony and ODM, which serve multiple IoT customers, represented 12% of AMBA’s third-quarter revenues. Additionally, 12% of third-quarter revenues also came from one of its logistics partners, Hakuto.

The momentum of AMBA’s CV flow system-on-a-chip in professional IP cameras continued in the reported quarter. The company expects to achieve its targeted goal of generating 60% of the total revenues from the CV portfolio in 2024.

Ambarella, Inc. Price, Consensus and EPS Surprise

Ambarella, Inc. price-consensus-eps-surprise-chart | Ambarella, Inc. Quote

Operating Details

The non-GAAP gross margin was 62.6%, down 90 basis points year over year in the fiscal third quarter.

On a non-GAAP basis, operating expenses were $44.1 million, down $1.9 million sequentially. Non-GAAP operating expenses were also lower than the company’s prior guidance of $46-$49 million, mainly due to its expense management actions and the timing of spending between quarters.

Balance Sheet

As of Oct 31, 2023, Ambarella had cash and cash equivalents & marketable securities of $222.3 million compared with $216.5 million as of Jul 31, 2023.

Q4 2024 Guidance

The company expects stability in near-time revenues based on recent customer feedback and ordering patterns that seem to offset the softness posed by customer inventory levels and end-market demand. The company forecasts its fourth-quarter revenues in the range of $50-$53 million, with improvement in IoT and stagnant automotive end market. AMBA also expects to return to a growth trajectory in fiscal 2025 with a sequential revenue increase in the first quarter.

For the fourth quarter of fiscal 2024, the non-GAAP gross margin is anticipated at 62-63%. Non-GAAP operating expenses are projected in the range of $45-$48 million.

Zacks Rank & Stocks to Consider

Ambarella currently carries a Zacks Rank #3 (Hold). Shares of AMBA have declined 28.6% year to date.

Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, NetEase NTES and Dropbox DBX, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NVDA’s fourth-quarter fiscal 2024 earnings has been revised by five cents northward to $3.87 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 10 cents to $11.11 in the past seven days.

NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.99%. Shares of NVDA have rallied 218.9% year to date.

The Zacks Consensus Estimate for NetEase’s fourth-quarter 2023 earnings has been revised upward by 10 cents to $1.73 per share in the past 60 days. For fiscal 2023, earnings estimates have increased by 42 cents to $6.96 per share in the past 60 days.

NTES’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same on one occasion, the average surprise being 16.63%. Shares of NTES have gained 56.2% year to date.

The Zacks Consensus Estimate for Dropbox’s fourth-quarter 2023 earnings has remained unchanged for the past 90 days at 48 cents per share. For fiscal 2023, earnings estimates have been revised 7 cents upward to $1.96 per share in the past 30 days.

DBX’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 13.14%. Shares of DBX have climbed 25.9% year to date.

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Original: NVDA Feed: Ambarella (AMBA) Q3 Loss Narrower Than Expected, Revenues Beat