Shares of AMBA jump 17% on strong guidance
1min read Ambarella, a leading provider of low-power systems-on-chip (SoCs) for video security, advanced driver assistance systems (ADAS), autonomous driving, and robotics applications, reported its Q2 fiscal 2025 earnings with results that generally met or exceeded analyst expectations. The company posted revenue of $63.7 million, up 2.6% year-over-year and slightly above the consensus estimate of $62 million. Adjusted earnings per share (EPS) showed a loss of $0.13, which was better than the expected loss of $0.19, reflecting some improvement over the prior year’s adjusted loss of $0.15 per share.
Key metrics for the quarter revealed a mixed performance. The company’s non-GAAP gross margin came in at 63.3%, matching analyst expectations but slightly down from 64.6% in the same quarter last year. On a GAAP basis, the gross margin was 60.8%, down from 61.9% a year ago. The decline in gross margin reflects some ongoing challenges, including cost pressures, but the company continues to maintain strong margins relative to industry standards.
Ambarella's products are integral to a wide range of edge AI applications, including AI-powered vision systems for video security, automotive, and industrial markets. The company’s SoCs are known for their high-resolution video compression, advanced image processing, and deep neural network capabilities, enabling intelligent perception and planning in various AI-driven applications. During the quarter, Ambarella achieved record revenue for its edge AI inference products, a significant milestone that underscores the growing adoption of its technology in key markets.
Looking ahead, Ambarella provided strong guidance for Q3 fiscal 2025, expecting revenue to be between $77.0 million and $81.0 million, well above the consensus estimate of $69 million. The company also guided for a non-GAAP gross margin in the range of 62.5% to 64.0%, and non-GAAP operating expenses between $49.0 million and $51.0 million. This outlook suggests confidence in continued revenue growth, driven by the ramp-up of new products, particularly in the IoT and automotive sectors.
The company’s CEO, Fermi Wang, expressed optimism about the future, highlighting that despite a mixed global economic environment, Ambarella is seeing strong demand for its new products, especially in the IoT and automotive markets. Wang also mentioned that the company is well-positioned to scale its computer vision business into more advanced AI networks, including vision-language models and generative AI (GenAI), which could drive revenue growth in the coming years.
Overall, Ambarella's Q2 performance reflects solid execution amid challenging conditions, with encouraging guidance pointing to strong growth in the near term. The company's strategic focus on expanding its product offerings and deepening its presence in key AI markets positions it well for continued success, despite some margin pressures.
