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Ambarella: Looking At The Bigger Picture

Mar. 07, 2018 5:42 PM ETAmbarella, Inc. (AMBA)13 Comments
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  • Ambarella posted a revenue and EPS beat in its Q4 yet again.
  • However, its Q1 FY19 guidance is rather dull.
  • Expect revenues from its CV chips to start coming in only next year.

Ambarella (NASDAQ:AMBA) just posted its fourth quarter results. The chipmaker managed to beat the Street's EPS and revenue estimates yet again and also reduced its revenue exposure to GoPro (GPRO) on a net percentage basis. Granted that its Q1 guidance was rather dull, but if we weigh its prospects over the long-term time frame, Ambarella might just be on the cusp of an inflection point. Let's take a closer look at both bullish and bearish arguments surrounding the name, to have a better understanding of where its shares could be headed next.


Let's begin by discussing Ambarella's Q4 FY18 earnings highlights. Its revenue for the period came in at $70.6 million, which was perfectly within its guidance range of $68 million to $72 million and slightly above the analyst consensus of $70.41 million. Its EPS came in at $0.45 which was noticeably higher than even the most bullish estimates that topped out at $0.4. Needless to say, the company exceeded the Street's estimates in both areas.

Moving onto perhaps the most watched item of all. Management had guided previously in their Q3 conference call that their sales to GoPro and its ODMs during fiscal year 2018 would collectively account for around 14% of its overall revenues. However, I had argued in my last article that the figure would be closer to 12% due to the camera maker's lacklustre sales in Q4. Well, as it turns out, the actual figure came in quite close at 12.5%. Here's an excerpt from my last article:

While using the management's guidance brings us to the 14% figure, I'm of the opinion that the actual figure would be closer to 12%. I say this because GoPro announced a disappointing set of Q4 results earlier this month. Its revenue for the period came in lower

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