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Why Is Ambarella (AMBA) Down 9.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Ambarella (AMBA). Shares have lost about 9.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ambarella due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ambarella Q4 Earnings and Revenues Surpass Estimates

Ambarella reported fourth-quarter fiscal 2023 non-GAAP earnings of 23 cents per share, which surpassed the Zacks Consensus Estimate of 15 cents. However, the reported figure declined 48.9% from the prior-year quarter’s earnings of 45 cents.

Fourth-quarter revenues declined 7.7% year over year to $83.3 million, mainly due to customer inventory reduction actions. However, the top line exceeded the consensus mark of $83.04 million.

Customer & Market Details

Ambarella had two 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 50% of the company’s revenues. Chicony, a Taiwan-based electronics manufacturer serving multiple IOT customers, represented 11% of the company’s revenues.

The momentum in 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 total revenues from the CV portfolio in 2024.

Operating Details

The non-GAAP gross margin was 63.5%, down 130 basis points (bps) year over year in the fiscal fourth quarter.

On a non-GAAP basis, operating expenses were $46 million, up 6% sequentially. Non-GAAP operating expenses were at low end of the company’s prior guidance of $46-$49 million, mainly due to its expense management actions taken on customer inventory adjustments.

Net inventory was $40.5 million as of Dec 31, 2022, down 10.8% sequentially.

Balance Sheet

As of Jan 31, 2022, Ambarella had cash and cash equivalents & marketable securities of $206.9 million compared with $199 million as of Oct 31, 2022.

Full-Year Highlightts

For full-fiscal 2023, Ambarella reported revenues of $337.6 million, indicating a rise of 1.7% year over year.

The company reported non-GAAP earnings of $1.10 per share, reflecting a 31.7% slash.

Non-GAAP gross margin expanded 50 bps to 63.9%.

Q1 2024 Guidance

For the first quarter of fiscal 2024, revenues are expected between $60 million and $64 million. The non-GAAP gross margin is anticipated to be 62-64%.

Non-GAAP operating expenses are projected in the range of $47-$49 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -37.19% due to these changes.

VGM Scores

Currently, Ambarella has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ambarella has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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