Ambarella (AMBA, Financial) is a leading developer of low-power, high-definition and Ultra HD video compression and image processing solutions. The company’s products are used in a variety of HD cameras including security IPÂ cameras, sports cameras, wearable cameras, flying cameras and automotive video camera recorders. The company has been on a stunning run in the past year, growing close to 240%. Ambarella is expected to declare its first quarter 2016 earnings on Tuesday, June 2, 2015. Given the company’s recent success, I expect the company to surpass earnings estimates and move higher.
For the current quarter, analysts are expecting a growth of 132% in earnings per share and report $0.58. And, the revenue is likely to grow 63.50% to $66.92 million. Hence, I think Ambarella will report an upbeat quarter yet again and room to run higher in the months to come.
By comparison, revenue for the fourth quarter of fiscal 2015 was $64.7 million, up 61.9% from $40.0 million in the same period in fiscal 2014. Non-GAAP net income for the fourth quarter of fiscal 2015 was $22.6 million, or $0.68 per diluted ordinary share compared to $8.2 million, or $0.26 per diluted ordinary share, for the same period in fiscal 2014. Despite recording impressive growth, there are more reasons that can drive Ambarella’s stock higher.
Ambarella’s strong fourth quarter and fiscal year results reflect the steady expansion of its product offerings and customer growth across the company’s core markets, as well as early growth in new markets. During the fourth quarter, the company had strong year-over-year growth in its wearable, IP Security and automotive aftermarket revenues. Ambarella’s revenue for the fiscal year was up 38.5% from last year, reflecting its commitment to developing leading edge technology that underpins the development of innovative video capture devices.
Recently announced S2Lm camera design can be a blessing in disguise for Ambarella
Last month, Ambarella announced availability of the S2Lm-based battery-powered IP camera reference design. The reference design enables fast development of a new generation of small, high-quality, battery-powered Full HD security cameras suitable for both professional and consumer security applications. It is based on Ambarella’s new S2Lm ultra low-power HD camera System-On-Chip (SoC), which can start recording Full HD 1080p30 video in less than 500ms from wake up, and provides up to six months of battery life. With no wires to worry about, S2Lm-based cameras can be installed in places where getting to a power outlet may be difficult. In addition, these cameras can be moved around for short term monitoring, without the need to reinstall the camera after every move.
Conclusion
Ambarella’s excellent Q2FY15 results and commitment to develop leading edge technology makes it a worthy buy. The company is about to release its first quarter 2016 earnings next week, and bearing the positive factors in mind, I think the company can easily surpass estimates yet again. Another earnings beat should send the stock higher, which is why I think Ambarella is an excellent stock for the long-haul.
