Ambarella 2026 Q1 Earnings Beats Expectations with Net Income Improvement

Ambarella (AMBA) reported its fiscal 2026 Q1 earnings on June 3rd, 2025. The company posted quarterly earnings of $0.07 per share, surpassing analyst estimates of $0.03 per share, and reported revenue of $85.87 million, also exceeding expectations. Ambarella raised its fiscal 2026 revenue growth guidance to 19-25%, indicating robust demand for its AI inference processors. The company remains optimistic about its positioning in the IoT and automotive sectors, aiming to drive positive operating leverage and maintain its track record of positive free cash flow.

Revenue

The total revenue of Ambarella increased by 57.6% to $85.87 million in 2026 Q1, up from $54.47 million in 2025 Q1.

Earnings/Net Income

Ambarella narrowed losses to $0.58 per share in 2026 Q1 from a loss of $0.93 per share in 2025 Q1, showing a 37.6% improvement. Meanwhile, the company successfully narrowed its net loss to $-24.33 million in 2026 Q1, reducing losses by 35.9% compared to the $-37.93 million net loss reported in 2025 Q1. The improved EPS reflects a positive shift in performance.

Price Action

The stock price of Ambarella has edged up 1.37% during the latest trading day, has tumbled 13.78% during the most recent full trading week, and has jumped 11.86% month-to-date.

Post-Earnings Price Action Review

The strategy of buying AMBA when revenue misses and holding for 30 days resulted in poor performance. The strategy returned -1.92%, significantly underperforming the benchmark return of 78.92%. With a Sharpe ratio of -0.01 and a maximum drawdown of -80.64%, the strategy also indicated high risk and significant losses. The underperformance suggests that this approach may not be suitable for risk-averse investors, given the potential for substantial declines and minimal gains. Investors should consider alternative strategies or thorough analysis of market conditions before executing similar trades in the future.

CEO Commentary

Fermi Wang, President and CEO of Ambarella, emphasized the company's strong performance driven by robust demand for AI inference processors, which represented approximately 70% of total revenue. He noted a significant sequential revenue growth of 30% in Q3 and highlighted the strength of new customer products as a key growth driver. Wang expressed optimism about the company's market positioning, particularly in the IoT and automotive sectors, stating, "With the anticipated revenue growth, we intend to drive positive operating leverage and build upon our 15 consecutive fiscal years of positive free-cash-flow." He acknowledged the challenges of navigating a competitive landscape but remains confident in the company's strategic direction.

Guidance

Ambarella expects to generate revenue between $76.0 million and $80.0 million for the upcoming fourth quarter of fiscal year 2025. The company anticipates a non-GAAP gross margin ranging from 61.5% to 63.0% and projects non-GAAP operating expenses between $49.0 million and $52.0 million. This guidance reflects management's commitment to achieving growth while maintaining financial discipline amid ongoing investments in technology and product development.

Additional News

Ambarella recently announced an extension of its share repurchase program through June 2026, with $48.0 million remaining available for buybacks. The company is also expanding its N1 edge GenAI family with a new SoC aimed at on-premise multi-channel processing, offering a significant reduction in power consumption compared to cloud-based alternatives. Furthermore, Ambarella has partnered with LG Electronics to enhance AI-driven in-cabin vehicle safety solutions, integrating its CV25 AI system-on-chip into LG's Driver Monitoring System. This collaboration aims to improve vehicle safety by detecting driver distraction and drowsiness with high accuracy.