Ambarella Q3 Earnings Beat: Will Strong Guidance Lift the Stock?

Ambarella AMBA reported third-quarter fiscal 2025 non-GAAP earnings of 11 cents per share, which surpassed the Zacks Consensus Estimate of 4 cents. The bottom line also experienced a robust improvement from the year-ago quarter’s loss of 28 cents per share.Ambarella’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 63.2%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Ambarella’s third-quarter revenues soared 63% year over year to $82.7 million and beat the Zacks Consensus Estimate of $79 million. Quarterly revenues also exceeded management’s guidance range of $77-$81 million.The stronger-than-expected top-line performance was primarily driven by momentum in the Internet of Things (IoT) and auto business segments, complemented by an increasing demand for AI-based processors.Buoyed by strong third-quarter performance, Ambarella issued impressive guidance for the fourth quarter. This is likely to give a fresh boost to the company’s share price. On a year-to-date basis, shares of AMBA have gained 11.6% compared with the Zacks Electronics - Semiconductors industry’s return of 26.5%.Ambarella, Inc. Price, Consensus and EPS Surprise Ambarella, Inc. price-consensus-eps-surprise-chart | Ambarella, Inc. QuoteAMBA’s Q3 Customer & Market DetailsAmbarella had two logistics and original design manufacturers (ODM) customers that contributed more than 10% to total revenues in the reported quarter. WT Microelectronics, a partner in Taiwan that serves multiple customers in Asia, accounted for 66% of the company’s third-quarter revenues. Chicony, an ODM manufacturer for multiple end customers contributed 11% of revenues for the quarter.The solid momentum in AMBA’s CV flow system-on-a-chip in professional IP cameras continued in the reported quarter. The company expects the CV2 family to be the key driver of the company’s revenue growth in fiscal 2025.Gross margin on a non-GAAP basis for the third quarter of fiscal 2025 was 62.6%, which remained unchanged from the year-ago quarter’s reported figure.AMBA’s Balance Sheet & Cash FlowAmbarella’s cash, cash equivalents and marketable debt securities on hand at the end of the third quarter of fiscal 2025 was $226.5 million compared with $219.8 million at the end of the prior quarter and $222.3 million at the end of the same quarter a year ago. AMBA generated a positive operating cash flow of $6.6 million and a free cash flow of $4.1 million. In the first three quarters of fiscal 2025, the company generated operating cash flow and free cash flow of $8.4 million and $2.2 million, respectively.Ambarella’s Impressive Q4 GuidanceAmbarella anticipates stable near-term revenues due to strong bookings. However, it expects a typical seasonal decline in the fourth quarter after a stronger-than-expected fiscal third quarter.It forecasts fourth-quarter fiscal 2025 revenues between $76 million and $80 million, with IoT and auto, both flat to slightly down sequentially. The Zacks Consensus Estimate for revenues is pinned at $69.4 million, indicating a year-over-year rise of 34.4%.For the fiscal fourth quarter, the non-GAAP gross margin is anticipated in the band of 61.5-63%. Non-GAAP operating expenses are projected in the range of $49-$52 million.The consensus mark for fourth-quarter loss per share is pinned at 13 cents compared with the year-ago quarter’s loss of 24 cents.Zacks Rank & Stocks to ConsiderCurrently, AMBA carries a Zacks Rank #3 (Hold).Agilysys AGYS, AudioEye AEYE and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. AGYS, AEYE and APH carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.AGYS shares have surged 62.4% year to date. The Zacks Consensus Estimate for BB’s full-year fiscal 2025 earnings is pegged at $1.31 per share, up by 9.2% over the past 60 days, indicating a gain of 19.1% from the year-ago quarter’s reported figure.AEYE shares have reached a whopping 385.1% year to date. The Zacks Consensus Estimate for AEYE’s full-year 2024 earnings is pegged at 52 cents per share, up by a couple of pennies over the past 60 days, indicating a gain of 372.7% from the year-ago quarter’s reported figure.APH shares have gained 47.8% year to date. The Zacks Consensus Estimate for APH’s full-year 2024 earnings is pegged at $1.84 per share, up by a couple of pennies over the past 60 days, indicating a gain of 21.9% from the year-ago quarter’s reported figure.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amphenol Corporation (APH): Free Stock Analysis Report Agilysys, Inc. (AGYS): Free Stock Analysis Report Ambarella, Inc. (AMBA): Free Stock Analysis Report Audioeye, Inc. (AEYE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks