Ambarella, Inc.

Fiscal Q2 revenue was $108.1 million, slightly above the midpoint of guidance of $105 million to $111 million; revenue rose 7.7% sequentially and 13.2% year over year. Non-GAAP gross margin was 59.3%, non-GAAP operating expense was $57.4 million, and non-GAAP net profit was $8.2 million, or $0.18 per diluted share. Cash and marketable securities were $272.3 million, down $5.5 million sequentially, and free cash outflow was $7.1 million. For fiscal Q3, management guided revenue to $115 million to $124 million, with midpoint $119.5 million, and said growth should be led by Physical AI demand from IoT. Q3 non-GAAP gross margin is expected to be 59% to 60%, non-GAAP OpEx $56.5 million to $59.5 million, net interest and other income about $1.9 million, tax expense about $700,000, and diluted share count about 44.9 million.

Fermi Wang emphasized that Ambarella is broadening from edge AI SoCs into a fuller Physical AI platform, including edge infrastructure and stand-alone AI accelerators. He framed the new SAM increase as a result of stronger product roadmaps, new go-to-market approaches, and growing demand for efficient on-premise inference. His tone was upbeat and strategic, but he also flagged rising memory and supply chain costs as a near-term industry issue and said the company plans to pass through those costs to protect gross margin.

John Young said Q2 revenue, margin, and EPS were all within or better than the company’s prior guidance range, with revenue slightly above midpoint at $108.1 million and non-GAAP EPS at $0.18. He noted non-GAAP gross margin of 59.3%, OpEx of $57.4 million, cash and marketable securities of $272.3 million, inventory days at 157, and free cash outflow of $7.1 million. He also said the board authorized a new $50 million share repurchase program through June 30, 2027, and reiterated the Q3 outlook of $115 million to $124 million revenue with 59% to 60% gross margin.

Analysts focused on the new X7 accelerator, the impact of memory shortages, and how quickly CapGemini and Macnica could contribute revenue. Management said X7 can bundle with Ambarella chips or third-party CPUs, uses a small memory footprint, and is targeted at 4 to 5 watts, while memory shortages mainly affect customer purchasing capacity rather than Ambarella’s own gross margin. On the partnerships, management said CapGemini is aimed at large enterprise value opportunities and Macnica at fragmented small- and midsized customer volume, with small design wins potentially starting next year but meaningful revenue likely in 2 to 3 years.