Ambarella says sales could reach highest total in five years, shares surge

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Shares of Ambarella Inc. climbed 9% on Tuesday after trading hours, after the chipmaker predicted earnings could peak in five years this quarter.

Ambarella AMBA,
-1.82%
reported a second-quarter loss of $ 7.2 million, or 20 cents a share, on sales of $ 79.3 million, up more than 50% from $ 50.1 million ago is one year old. After adjusting for stock-based compensation and the effects of income tax, the company reported profit of 35 cents per share.

These results far exceeded the average expectations of analysts, who forecast adjusted earnings of 25 cents per share on sales of $ 75.7 million. The biggest beat, however, was in Ambarella’s forecast for the third quarter, which forecast revenue of $ 88 million to $ 92 million.

The midpoint of that forecast, $ 90 million, reflects a total quarterly sales Ambarella hasn’t achieved since the same quarter in 2016, exactly five years ago. In this quarter, Ambarella achieved sales of $ 100.5 million, one of only two times in the company’s history to exceed $ 90 million in a quarter.

Managing Director Fermi Wang attributed the good performance to its chips for security cameras and cars, which he said accounted for 90% of total second-quarter revenue.

“As significant industry-wide supply chain challenges persist, we expect F2022 to represent a major shift in our business, and we are excited about our future,” Wang said, referring to a continuing shortage of semiconductors.

Stifel analysts predicted earlier this week that Ambarella would exceed expectations with its results and forecast on the strength of its security and automotive business, as its chips find a place in advanced support systems. the driving. Analysts expected “growth in Ambarella’s two Safety and Auto business segments, with the former hitting last quarter low and the latter benefiting [from] new and continued momentum of winning design.

“We believe Ambarella is well positioned to seize an unfair slice of the AI ​​/ IT vision opportunity, not only in its core strength in security applications, but also in even larger and growing end markets / applications. faster such as advanced automotive ADAS / monitoring as well as high-end ‘AI-IoT’ use cases such as intelligent traffic, intelligent retail and intelligent enterprise, ”the analysts wrote, while maintaining a buy rating and target price of $ 140.

Ambarella stock closed 1.8% to $ 103.57 on Tuesday, then jumped 9% in the extended session after the results were released. The stock has gained 12.8% so far this year as the S&P 500 SPX index,
-0.13%
increased by 20.6%.

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