Ambarella Inc (NASDAQ:AMBA), a leading developer of low-power, HD and Ultra HD video compression and image processing semiconductors, today announced financial results for its third fiscal quarter ended October 31, 2015.

  • Revenue for the third quarter of fiscal 2016 was $93.2 million, up 41.9% from $65.7 million in the same period in fiscal 2015. For the nine months ended October 31, 2015, revenue was $248.4 million, up 61.7% from $153.6 million for the nine months ended October 31, 2014.
  • Gross margin under U.S. generally accepted accounting principles (GAAP) for the third quarter of fiscal 2016 was 65.7%, compared with 63.3% for the same period in fiscal 2015. For the nine months ended October 31, 2015, GAAP gross margin was 65.2%, compared with 63.6% for the nine months ended October 31, 2014.
  • GAAP net income for the third quarter of fiscal 2016 was $29.5 million, or $0.87 per diluted ordinary share, compared with GAAP net income of $18.3 million, or $0.57 per diluted ordinary share, for the same period in fiscal 2015. GAAP net income for the nine months ended October 31, 2015 was $71.4 million, or $2.12 per diluted ordinary share. This compares with GAAP net income of $32.9 million, or $1.03 per diluted ordinary share, for the nine months ended October 31, 2014.

Financial results on a non-GAAP basis for the third fiscal quarter ended October 31, 2015 are as follows:

  • Gross margin on a non-GAAP basis for the third quarter of fiscal 2016 was 65.9%, compared with 63.4% for the same period in fiscal 2015. For the nine months endedOctober 31, 2015, non-GAAP gross margin was 65.4%, compared with 63.7% for the nine months ended October 31, 2014.
  • Non-GAAP net income for the third quarter of fiscal 2016 was $36.6 million, or $1.08 per diluted ordinary share. This compares with non-GAAP net income of $22.1 million, or $0.68 per diluted ordinary share, for the same period in fiscal 2015. Non-GAAP net income for the nine months ended October 31, 2015 was $90.0 million, or$2.67 per diluted ordinary share. This compares with non-GAAP net income of $41.8 million, or $1.31 per diluted ordinary share, for the nine months ended October 31, 2014.

Based on information available as of today, Ambarella is offering the following guidance for the fourth fiscal quarter of fiscal year 2016:

  • Revenue is expected to be between $65.0 million and $67.5 million
  • Gross margin on a non-GAAP basis is expected to be between 63.0% and 64.5%
  • Net income on a non-GAAP basis is expected to be between $15.0 million and $17.0 million

Ambarella reports gross margin, net income and earnings per share in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP financial information excludes the impact of stock-based compensation, adjusted for the associated tax impact, and for the nine months ended October 31, 2015 also excludes certain costs associated with the acquisition of VisLab S.r.l. in June 2015. A reconciliation of the GAAP to non-GAAP gross margin, net income and earnings per share numbers for the third fiscal quarter endedOctober 31, 2015, as well as a description of the items excluded from the non-GAAP calculations, is included in the financial statements portion of this press release.

Total cash, cash equivalents and marketable securities on hand at the end of the third fiscal quarter of 2016 was $276.7 million, compared with $186.5 million at the end of the same quarter a year ago.

“Our strong third quarter results reflect our success in expanding revenues in new markets such as flying cameras and home security monitoring, as well as existing markets for professional IP security cameras and automotive after-market dash cameras. Although we expect these markets to continue their strong annual growth, we are experiencing near term headwinds in the wearable sports market which is expected to negatively impact revenue in Q4 of this year,” said Fermi Wang, president and CEO of Ambarella. “Despite the near term headwinds, we are very pleased by the wide range of new cameras introduced by customers during the third quarter, and by our introduction of three new SoC families that will drive the next generation of innovative camera products.”¬†(Original Source)

Shares of Ambarella are down¬†3.77% to $55.70 following the earnings results. AMBA has a 1-year high of $129.19 and a 1-year low of $44.45. The stock’s 50-day moving average is $55.22 and its 200-day moving average is $83.75.

On the ratings front, Ambarella has been the subject of a number of recent research reports. In a report issued on December 1, Deutsche Bank analyst Ross Seymore maintained a Hold rating on AMBA, with a price target of $70, which represents a potential upside of 13.8% from where the stock is currently trading. Separately, on November 30, Pacific Crest’s Brad Erickson maintained a Buy rating on the stock and has a price target of $77.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ross Seymore and Brad Erickson have a total average return of 25.9% and -6.3% respectively. Seymore has a success rate of 80.0% and is ranked #10 out of 3642 analysts, while Erickson has a success rate of 44.0% and is ranked #3144.

Overall, 2 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $95.00 which is 54.5% above where the stock opened today.

Ambarella Inc is a developer of semiconductor processing solutions for video that enable high-definition (HD), video capture, sharing and display.