AMBA results

[XMFfuma102]

http://www.smarteranalyst.com/2015/12/03/company-update-nasd…

"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.” "

[XMFCochrane]

From Motley Fool contributor Rick Munarriz:

Revenue hit $93.2 million, up 42% since the prior year. Most companies would kill for that kind of growth, but it’s actually Ambarella’s weakest top-line spurt in more than a year according to S&P Capital IQ data.

It’s going to get worse. Ambarella’s guidance calls for just $65 million to $67.5 million in revenue for the current quarter. That’s a sharp sequential slide; but even on a year-over-year basis, that’s an unimpressive forecast of 4% growth at the high-end of that range.

It’s not hard to find the culprit. A big chunk of Ambarella’s business is providing camera chips for GoPro (NASDAQ:GPRO), and GoPro itself had offered up lackluster guidance when it reported fresh financials five weeks ago. Ambarella’s press release singles out “headwinds in the wearable sports market” that will impact revenue growth negatively in that business during the holiday quarter.

Read the whole thing at http://www.fool.com/investing/general/2015/12/03/ambarella-e…

• Matt

[CMFHopJokey]

I’m starting to worry about AMBA, it is reminding me too much of Invensense (INVN). There are some potential tailwinds with security camera’s and drones but two things worry me a lot:

1. Commoditization of it’s technology: how much of an advantage does Amberella have with it’s visualization chips? We are already hearing rumors that the next generation GPro (Hero 5) will be using AMD chips instead: http://masterherald.com/new-a10-processor-to-enable-gopro-he…

I’m not sure about this rumor as a AMD A10 processor would be really power hungry for something the size of a GPro camera.

2. Drones - how much big can the Drone market actually get? I see mainly military uses although commercial products may be viable. Consumer drones might be limited however. We’ll need to see how this plays out and hopefully not like how 3D printing has thus far progressed (limited consumer uses).

Sincerely,
Charlie

[foodles]

I thought I read somewhere how AMBA was trying to show that it is not so dependent on GPRO…maybe they’re more tied at the waist than they think with that forward guidance.

I own both (long time AMBA holder) and think things will turn around in 2016 when GPRO releases their next gen cameras.

Long term, I think both companies will do fine.

[anthonyms]

Yeh if feels like another punch in the face.

I’ve always had the concern over Amba. It sounds like the growth in the non-gopro business is from too small a base to mitigate the gopro slow down. Hopefully as that base grows that will then lessen the impact of GoPro slowdown.

I don’t think the drones market is limited to military - a lot of us have discussed industrial applications from perimeter security, agriculture, construction/maintenance etc.

I’m not convinced both companies would be fine. GoPro has done better than I expected but is hitting the wall.

Ant

[nevercontent]

maybe they’re more tied at the waist than they think with that forward guidance.

My reaction was quite a bit different. I thought it was impressive that AMBA, which has historically relied on GPRO for its massive growth, will be able to show steady YoY revenue next quarter (0-4% growth) even though GPRO is basically overflowing with unsold inventory (100 days worth at the end of September) and will be MIA for the quarter. To me, it just goes to show how big those other categories have grown, and it seems very plausible that the growth in those categories will continue. This next year, AMBA is still reliant on GPRO for meaningful growth, and management believes it will see a resumption in GPRO sales in the second half of the year (a new model will be released). But it seems like we’re at a tipping point, where AMBA can sustain its revenue and even begin to grow it without meaningful sales to GPRO. I think that makes things very interesting from here, especially if GPRO’s current woes are transient and their next camera release is better received.

Now it’s hard to know what the stock will do. This situation reminds me a lot of ELLI when the refinancing boom ended and mortgage applications plummeted, but ELLI was still able to show a small amount of growth, demonstrating the company’s underlying strength (even though the headline numbers didn’t look too hot). The stock bounced around for about 1.5 years and then quickly doubled. Folks who held on – even those who bought just as the stock stagnated and didn’t benefit from any of its earlier rapid growth – did very well. Stocks don’t go up in straight lines.

Back to the business, AMBA continues to execute and build on its competitive advantage IMHO. The company has released new lines of processors that push it further ahead of the pack, and it continues to leverage its acquisition of VisLab to work on a line of computer-vision chips for next year that will probably be useful in a range of its markets, but especially auto and drones.

everybody in the drone market knows that without the computer vision that if you count the manual control of the drones is prone to the problem, so computer vision is a Holy Grail of the solution. However, there is no solution out there that can deliver a workable computer vision solution to all of the – to solve all the computer vision problems for drones. And we believe that when we introduce our CV solution, our solution will be not only applied to automotive market but also applied to drone market. And again we believe our chip will be out second half next year for our customers.

Incidentally, now that the company has had time to fully analyze QCOM’s solution, they see it as quite a bit behind:

Qualcomm announced their drone reference designs three months ago. And since then we spend time to understand their product offering and also try to collect the feedback from the market and with that we still believe that they’re current at processor based solution is quite behind on video quality, compression efficiency, power consumption and video feature and performance. So, and with our announcement of A12S and A9SE, we have a complete roadmap from the operating for our customers from starting $199 drone to all the way to a $1000 drone. So I think we have a complete solution where we are confident and comfortable with this market with our product offering at this point.

The constant question, of course, is will competing offerings be “good enough” even if they’re behind and inferior? While they surely will be for some manufacturers and users, the tech still has a very long ways to go IMHO, and AMBA continues to focus on critical areas that will differentiate its products: performance, video quality, compression, and power management of course; but also best of class image stabilization, computer vision, and even video editing and transcoding to improve the end-user experience after the video has been recorded:

We believe that 4Kp30 is the main stream right now and we also believe 4Kp60 is going to be a very important format for the sports camera because of the frame rate is very-very important requirement for the high motion sports type of the video. But in addition to that multiple things that we are doing, I think that it’s become very clear to us that you go through this kind of resolution, any kinds of the stabilizations is very helpful for the quality of the end video.

So we are spending a lot of time to deliver a stabilization system. We are now using [indiscernible] and just using our system our chip we can provide stabilization system to improve the video quality on those camera that’s one thing. The other thing I think that is show of industry, there is a new trend, I’m talking about high dynamics range. If you look at all the 4k TV probably because we are talking about 10 bit, means every color of every pixel using 10 bits instead of traditional 8 bits that basically means we improve your dynamics by 25%, but that also means it requires a huge amount of performance and also changes total infrastructure of the capturing system and with that we also believe that will improve the experience of video of the sports camera. And on top of that how to – during the trans-coding and editing better functional chip, so that all customer can provide a better user experience is always a things that we’re looking at.

So I think there are multiple directions we are looking at, continuing to provide innovation for our key customers.

Anyway, it’s quite possible that the stock’s recent rough ride will continue for a while as AMBA continues to outgrow its dependence on GPRO, but I personally was pleased to see just how much progress they’ve already made. And if things do really turn around for GPRO over the next year, that will simply be the icing on the cake IMHO.

Just my 2 cents of course!

Neil
Long AMBA

[upndn]

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

Revenue would largely be flat with the prior year Q.
Per share earnings would be about 50 cents if they have the same # of
shares as this quarter.
That would be down from .68 last year if the numbers at yahoo! are correct.

JT