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AI Vision Semiconductor Firm Posts 64% Increase in YoY Revenue Sending Shares Higher
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Ambarella Inc. shares traded nearly 20% higher after the company reported Q3/22 financial results that included a 64% increase in YoY revenue together with higher gross margins.

After U.S. markets closed for trading yesterday afternoon, AI vision
silicon company Ambarella Inc. (AMBA:NASDAQ), which is focused on developing low-power system-on-a-chip (SoC) semiconductors, artificial intelligence (AI) and image signal processing and high-resolution video compression announced financial results for the third quarter of 2022 ended Oct. 31, 2021.

Ambarella reported that revenue in Q3/22 increased 64% to $92.2 million, compared to $56.1 million in Q3/21. The company added that during the nine months ended Oct. 31, 2021, revenues totaled $241.6 million, which it said represented a 50% increase over the $160.8 million achieved during the comparable nine-month period in the prior fiscal year.

The firm indicated that GAAP gross margin in Q3/22 improved to 62.5%, versus 62.0% in Q3/21. Similarly, during the first nine months of FY/22, GAAP gross margin increased to 62.4%, versus 60.8% recorded during the same nine-month period in FY/21.

Ambarella advised that for Q3/22, it posted a GAAP net profit in the amount of $0.8 million, or $0.02 per diluted share, versus a GAAP net loss of $17.1 million, or a loss of $0.49 per diluted share in Q3/21. For the first nine-month period in FY/22, the company stated that it registered a GAAP net loss of $17.2 million, or loss of $0.47 per diluted share, compared to a GAAP net loss of $47.3 million, or a loss of $1.37 per diluted share during the first nine months of FY/21.

The company mentioned that on a non-GAAP, gross margin in Q3/22 came in at 63.1%, compared to 62.7% in Q3/21. During the same corresponding period, the firm listed that non-GAAP net income was $22.2 million, or $0.57 per diluted ordinary share, compared to $3.3 million, or $0.09 per diluted ordinary share in the prior year's quarter.

Ambarella highlighted that it completed its acquisition of Oculii Corp. on Nov. 5, 2021, and that those operations will be incorporated into the company's Q4/22 and FY/22 financial results.

The company offered some forward revenue and expense guidance and advised that for Q4/22 it expects that revenue will be in the range of between $88.5 and $91.5 million. The firm said that on a non-GAAP basis, it anticipates a gross margin of 63% to 64% and operating expenses of between $39 and $41 million.

The company mentioned that at the end of Q3/22 on Oct. 31, 2021, it had total cash and other highly liquid assets of $457.8 million on its balance sheet, versus $423.6 million at the end of Q3/21. The firm noted that on Nov. 5, 2021, it completed its purchase of Oculii using $307.5 million of cash held on its balance sheet to finance the transaction.

Ambarella's President and CEO Fermi Wang commented, "Our transformation into a deep learning AIoT processing company took another leap forward with the acquisition of Oculii, a provider of advanced algorithms for high definition imaging radars. The radar perception market is incremental, but most importantly this transaction feeds into our long-term strategy to provide a more comprehensive AIoT processor to our customers."

"I'm pleased with our progress in Q3, with positive operating leverage driving non-GAAP operating margins into the 20% range. Our operational execution remains strong, yet supply dynamics remain difficult to predict, as shortages of other companies' components has become a more significant and gating factor to our results and outlook," Wang added.

Ambarella is headquartered in Santa Clara, Calif., and is a developer of low-power SoC semiconductors that are utilized in AI processing, advanced image signal processing and high-resolution video compression. The firm listed that its products are integrated into a broad spectrum of human and computer vision applications, such as advanced driver assistance systems, driver and autonomous recording and monitoring, video security, robotics and other AI areas. The company stated that "its low-power system-on-chips (SoCs) offer high-resolution video compression, advanced image processing, and powerful deep neural network processing to enable intelligent cameras to extract valuable data from high-resolution video streams."

Ambarella started the day with a market cap of around $6.6 billion with approximately 36.66 million shares outstanding and a short interest of about 3.7%. AMBA shares opened nearly 15% higher today at $206.10 (+$26.58, +14.81%) over yesterday's $179.52 closing price and reached a new 52-week high price this morning of $227.5899. The stock has traded today between $203.2301 and $227.5899 per share and is currently trading at $213.30 (+$33.78, +18.82%).


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