Ambarella Earnings Not Enough for Investors

Ambarella Inc. (NASDAQ: AMBA) reported its fiscal second-quarter financial results after the markets closed on Thursday. Although the company had solid results for the most recent quarter, investors sent the stock lower early on Friday. On the other hand, partner GoPro Inc. (NASDAQ: GPRO) had a very positive report for the second quarter and investors responded positively. Ambarella’s earnings report could signal a further uncoupling of these two companies.

The company posted $0.54 in earnings per share (EPS) on $65.1 million in revenue. Consensus estimates had called for $0.38 in EPS on revenue of $64.28 million. The same period from last year reportedly had EPS of $0.88 and $84.19 million in revenue.

Back in June, Ambarella announced that its board of directors had authorized the repurchase of up to $75 million of its ordinary shares over a six-month period commencing in the second quarter of fiscal 2017.

Gross margin for the second quarter of fiscal 2017 totaled 67.1%, compared with 65.3% for the same period in fiscal 2016. In terms of the six months that ended in July, gross margin was 66.0%, compared with 65.1% for the same period from last year.

On the books, Ambarella’s cash, cash equivalents and marketable securities totaled $327.0 million at the end of the quarter, versus $307.9 million at the end of the previous fiscal year.

Fermi Wang, CEO of Ambarella, commented:

Our results reflect strong execution across the business despite several hurdles in the quarter as discussed on our last earnings call. Solid product development and customer support continued to result in new design win momentum in all our markets, led by new projects in drone, home monitoring, virtual reality and wearable applications. We believe the continued investment in the development of advanced technologies in video capture and computer vision will help to expand our market opportunities.

Shares of Ambarella traded down more than 5% Friday morning to $67.69. The stock has a consensus analyst price target of $67.00 and a 52-week trading range of $33.39 to $75.53.

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