SANTA CLARA, Calif. - Ambarella, Inc. (NASDAQ:AMBA) shares surged more than 23% in premarket trading Wednesday after the edge AI semiconductor company reported better-than-expected second-quarter results and provided strong guidance.
The company posted a narrower-than-anticipated adjusted loss of $0.13 per share for Q2, beating analyst estimates of a $0.19 per share loss. Revenue came in at $63.7 million, up 3% YoY and ahead of the $62.1 million consensus.
For the third quarter, Ambarella forecast revenue between $77 million and $81 million, significantly above Wall Street's expectations of $69 million. The upbeat outlook suggests the company is seeing improving demand trends.
"In our second quarter, we achieved record revenue for our edge AI inference products, and we are anticipating double-digit sequential growth in our total revenue for the third quarter," said Fermi Wang, President and CEO of Ambarella. "Company specific drivers are more than offsetting the mixed global economic environment."
Wang added that Ambarella is "increasingly optimistic" that its new products have positioned the company to scale its computer vision business into more advanced AI networks over the long term.
Gross margin on a non-GAAP basis was 63.3% in Q2, down from 64.6% a year ago. For Q3, Ambarella expects non-GAAP gross margin between 62.5% and 64%.
Analysts at Roth MKM said Ambarella's revenue guidance reflects "normalized inventory levels that allow for a cyclical recovery in step with seasonal IoT demand."
"We believe AMBA is securing additional new edge AI and automotive programs, which can ramp and contribute to growth over the next several quarters," they added.
Separately, Deutsche Bank analysts noted that cycle headwinds have abated for AMBA, with company-specific tailwinds such as higher average selling prices (ASPs) now ramping. However, they believe these dynamics "are not yet strong enough to offset seasonality dynamics that tend to pressure F4Q & F1Q."
"Looking forward, we expect secular growth drivers via new products ramps to continue first in IoT and eventually followed by Automotive."
"While we anticipate growth to continue to accelerate and the co to experience solid growth next year, the combination of seasonality and macro sluggishness is likely to act as a partial offset to the pace of AMBA’s expansion."
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