Ambarella Inc

Ambarella, Inc. (NASDAQ: AMBA) is a developer of low-power system-on-a-chip (SoC) semiconductors that provide artificial intelligence processing, image signal processing and video compression. The Company serves human-viewing applications with video and image processors for enterprise, public infrastructure and home applications, such as Internet protocol, security cameras, sports cameras, wearables, aerial drones, and aftermarket automotive video recorders.

Key Business & Financial Updates

• Revenue Overview: For the second quarter of fiscal 2025, revenue increased to USD 63.7 million, representing a 3% rise compared to USD 62.1 million in the same period of fiscal 2024. However, for the six months ending on July 31, 2024, revenue declined by 5% to USD 118.2 million, down from USD 124.3 million for the same period in the prior year.
• Gross Margin Performance: The gross margin under U.S. Generally Accepted Accounting Principles (GAAP) for Q2 2025 was 60.8%, slightly lower than the 61.9% reported in Q2 2024. For the six-month period ended July 31, 2024, the GAAP gross margin was 60.8%, compared to 61.1% for the same period in the previous fiscal year.
• Net Loss Comparison: In terms of net income, GAAP net loss for the second quarter of fiscal 2025 amounted to USD 34.9 million, or a loss per diluted ordinary share of USD 0.85, compared to a net loss of USD 31.2 million, or USD 0.79 per diluted share, in Q2 2024. For the first six months of fiscal 2025, the GAAP net loss was USD 72.8 million, or a loss of USD 1.78 per diluted share, as compared to a net loss of USD 67.1 million, or USD 1.70 per diluted share, for the corresponding period in fiscal 2024.
• Non-GAAP Financial Results: On a non-GAAP basis, gross margin for Q2 2025 was 63.3%, down from 64.6% in the same quarter of fiscal 2024. For the six months ended July 31, 2024, the non-GAAP gross margin was 63.3%, a slight decrease from 63.8% in the same period of fiscal 2023. Non-GAAP net loss for Q2 2025 was USD 5.5 million, or USD 0.13 per diluted share, improving from a non-GAAP net loss of USD 6.0 million, or USD 0.15 per diluted share, in Q2 2024. For the first six months of fiscal 2025, the non-GAAP net loss was USD 16.0 million, or USD 0.39 per diluted share, compared to a loss of USD 12.1 million, or USD 0.31 per diluted share, in the previous year.
• Q3 2025 Guidance: For the third quarter of fiscal 2025, ending on October 31, 2024, the company anticipates revenue between USD 77.0 million and USD 81.0 million. Non-GAAP gross margin is expected to range between 62.5% and 64.0%, while operating expenses are projected to be between USD 49.0 million and USD 51.0 million.
• Liquidity and Cash Position: As of the end of the second quarter of fiscal 2025, total cash, cash equivalents, and marketable debt securities amounted to USD 219.8 million. This represents an increase from USD 203.3 million at the end of the previous quarter and USD 216.5 million at the same period last year.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 67.19, upward trending and nearing towards overbought zone, with an expectation of some consolidation. Additionally, the stock's current positioning is above both 50-Day SMA and 200-Day SMA, which can act as a short to medium term support levels.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is August 28, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.s

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.