Ambarella Q1 Earnings Call Highlights

Key Points

• Ambarella’s fiscal first quarter came in within guidance, with revenue of $100.4 million and non-GAAP gross margin of 59.9%. The company also issued Q2 guidance for revenue of $105 million to $111 million, suggesting modest sequential growth.
• Management highlighted a major push into long-term customer agreements, including a large deal with Hanwha that could exceed $800 million over more than 10 years. Ambarella said these agreements should make future revenue more predictable and expand its edge AI footprint.
• Automotive and robotics are becoming increasingly important growth drivers, with automotive revenue hitting a quarterly record and the company seeing more than 15 robotics design wins. Ambarella also reiterated a long-term gross margin target of 59% to 62% as its mix shifts toward higher-value products.

Ambarella NASDAQ: AMBA reported fiscal first-quarter results that landed within its guidance ranges, while management emphasized growing momentum in edge artificial intelligence, automotive telematics and new long-term customer agreements.

President and CEO Fermi Wang said the company delivered revenue, gross margin and operating expenses in line with its key financial targets for the quarter ended April 30, 2026. He said demand signals for edge AI remain “very strong” and that Ambarella is entering a new phase of market development through long-term agreements that could provide more predictable revenue over time.

“As a recognized edge AI leader, we are entering a new and significant phase for our market development with the execution of long-term customer agreements,” Wang said.

Quarterly Results and Outlook

CFO John Young said fiscal first-quarter revenue was $100.4 million, slightly above the midpoint of the company’s prior guidance range of $97 million to $103 million. Revenue declined 0.5% sequentially and rose 16.9% from a year earlier.

Non-GAAP gross margin was 59.9%, also slightly above the midpoint of guidance, while non-GAAP operating expenses were $56.4 million, slightly below the midpoint of the company’s forecast. Ambarella reported non-GAAP net profit of $5 million, or $0.11 per diluted share.

Young said automotive revenue rose at a strong double-digit rate sequentially, driven by commercial vehicles, while IoT revenue was seasonally lower. IoT represented about three-quarters of total revenue, Wang said, with enterprise security cameras growing in the high single digits sequentially, offset by a double-digit sequential decline in consumer IoT.

For the fiscal second quarter, Ambarella forecast revenue of $105 million to $111 million, with a midpoint of $108 million. Young said both automotive and IoT revenue are expected to increase sequentially, with growth in consumer and capital-expenditure-driven markets. The company expects non-GAAP gross margin of 59% to 60.5% and non-GAAP operating expenses of $56 million to $59 million.

Long-Term Agreements Take Center Stage

A major focus of the call was Ambarella’s expanding use of long-term agreements, or LTAs, with customers. Wang said such agreements typically involve multi-year commitments around volume and pricing and may include standard products or semi-custom AI system-on-chips tailored to specific workloads.

Ambarella announced an LTA with Hanwha in South Korea covering the sourcing and co-development of Ambarella’s edge AI technology across Hanwha product lines and industries, including physical security, operational automation, life sciences, robotics and other industrial markets. Wang said the agreement has potential revenue exceeding $800 million over more than 10 years and is one of the largest agreements in Ambarella’s history.

In response to an analyst question, Wang said Ambarella has had a relationship with Hanwha for 15 years and expects to gain share through the new agreement. Louis Gerhardy, vice president of corporate development, described Hanwha as a major multinational conglomerate with more than $60 billion in annual revenue and said a key part of the relationship is expanding beyond the companies’ existing physical security business.

Wang also discussed a separate LTA involving Ambarella’s first 2-nanometer chip, a semi-custom edge AI SoC called CV8, which taped out in January. He said that chip will serve consumer and enterprise IoT endpoint markets and is expected to begin production in the first half of fiscal 2028.

Automotive and Telematics Revenue Hits Record

Wang said Ambarella’s automotive revenue reached an all-time quarterly record in the first quarter and is on pace to set a fiscal-year record. He said growth was led by the emergence of AI in commercial vehicle telematics and automotive safety applications.

While third-party research firms expect global automotive production to decline 1% to 2% this year and automotive semiconductor market growth of 10% to 15%, Wang said Ambarella expects its automotive revenue to outpace those figures. In response to Deutsche Bank analyst Ross Seymore, Wang said the company continues to expect full-year automotive growth of 10% to 15%.

Gerhardy said the telematics market includes about 100 million subscribers and is growing at roughly a 10% compound annual rate, citing third-party research firms. He said only about 15% to 20% of that base uses AI and AI video as an additional feature, creating an opportunity for more sophisticated AI workloads and higher chip demand.

Wang also highlighted customer activity in the quarter, including Lytx designing Ambarella’s CV75 and CV72 chips into multiple platforms. He also cited automotive safety design wins with South Korea-based Yura and a Western original equipment manufacturer in China.

Robotics, Edge Infrastructure and AI Platform Expansion

Ambarella said it now has more than 15 robotics design wins, including aerial drones, with lifetime revenue exceeding $100 million, along with more than 30 customers in its robotics pipeline. Wang said the company’s chips are being used across applications including industrial automation, autonomous mobile robots and delivery robots.

Wang said robotics design wins are largely based on Ambarella’s CV product line, with most tied to 5-nanometer products, though some include 10-nanometer and 4-nanometer products. He said the company is focused on perception, sensor fusion and decision-making functions within robotic systems.

Ambarella also continues to build its edge infrastructure business. Wang said the company has customer engagements and design wins for its N1-655 edge AI SoC, with the first related products expected in the second half of the year. Gerhardy said current products address a serviceable available market of a couple hundred million dollars for applications such as AI vision boxes.

Wang said Ambarella has cumulatively shipped more than 46 million edge AI SoCs and has 12 edge AI SoCs available. He said the company’s software platform supports more than 200 AI model architectures that have reached production.

Balance Sheet, Inventory and Buybacks

Ambarella ended the quarter with $277.8 million in cash and marketable securities, down $34.8 million from the prior quarter but up $18.4 million from the year-earlier period. Young said the sequential decline was primarily due to higher inventory levels to support new product cycles.

Days of inventory rose to 145 from 99 in the prior quarter. Management said the inventory build reflected efforts to better serve customers and protect against supply-chain constraints. Wang said the company had been informed that supply from “Senso” was getting tighter and that Ambarella viewed the inventory build as prudent.

The company repurchased 47,798 shares during the quarter for $2.4 million at an average price of $51.04 per share. Young said Ambarella’s board authorized a new $50 million repurchase program valid through June 30, 2027, replacing a program set to expire June 30, 2026.

Wang said Ambarella continues to expect its long-term gross margin model to remain in a range of 59% to 62% as its business mix evolves across automotive, IoT, robotics and edge AI infrastructure.

About Ambarella NASDAQ: AMBA

Ambarella, Inc is a global semiconductor company headquartered in Santa Clara, California, specializing in video compression, image processing and computer vision technologies. The company designs low-power, high-definition system-on-chip (SoC) solutions that enable the capture, processing and streaming of video in a variety of embedded applications. Ambarella's platforms combine advanced video encoding, multi-core central processing units and hardware accelerators to deliver high-resolution imaging with low power consumption.

Ambarella's product portfolio caters to multiple markets, including security and surveillance, automotive vision, wearable cameras, drones and robotics.

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