Ambarella (NASDAQ:AMBA) is nowhere where it used to be when it supplied chips for GoPro (NaSDAQ:GPRO).When GoPro’s action camera fad faded, so did Ambarella’s revenues. In the forth-quarter report posted on March 5, the company beat on EPS and revenue. The turnaround is now underway.
Ambarella earned $0.14 (non-GAAP) but lost $0.14 (GAAP basis). Revenue fell 27.6% to $51.1 million. Gross margin fell slightly to 60%, down from 643% Y/Y.
Its CV chip and a potential major design win with HELLA could start to reverse revenue declines. Strategically, the HELLA partnership positions Ambarella in the driverless car space. In the Q1/2019 period, the company taped-out and sampled three 10 nm computer vision SOC devices. Mass production for one of the devices began.
The company bought back ~104,000 shares for $3.5 million. It spent $68.1 million and has $100 million left in its repurchase program.
On its conference call, management expressed customer optimism. With strong interest in its product, good reviews, and technical advantages such as low-power consumption, Ambarella is poised to grow once again.
Outlook
Ambarella expects security revenue falling sequentially, OEM and Tier 1 customer demands improving in automotive, and customer electronics’ revenue falling over the next 2-3 years.
AMBA stock is holding and could reward investors this year as customer orders pick up and shipments grow.
