Ambarella beats estimates in Q2, guides Q3 revenue above consensus

Ambarella Inc. (NASDAQ: AMBA) reported a wider loss in the second quarter of 2020 due to lower revenues despite a decline in operating expenses. However, the results exceeded analysts’ expectations. Further, the company guided third-quarter revenue above consensus estimates.

Net loss was $10.2 million or $0.31 per share compared to a loss of $6.9 million or $0.21 per share in the previous year quarter. Adjusted earnings dropped by 16% to $0.21 per share. Revenue decreased by 10% to $56.4 million.

Looking ahead into the third quarter, the company expects revenue in the range of $63 million to $67 million and adjusted gross margin in the range of 56% to 58%. Adjusted operating expenses are anticipated to be in the range of $30 million to $32 million.

The company said its confidence in fiscal 2020 outlook has increased despite the geopolitical uncertainty. The company continues to demonstrate strong progress in its strategy to transform from a pure video processing company to artificial intelligence (AI) video company.

Read: Will Tesla stock continue to fall on tariff uncertainty

The company believes that the proposed public policy changes and the imposition of trade tariffs and restrictions between the US and China will continue to create an uncertain business environment. Ambarella’s results will be impacted by the additional tariffs or trade restrictions imposed on its products.

The global semiconductor market in general, and the video and image processing markets, in particular, are highly competitive. Ambarella expects competition to increase and intensify as more and larger semiconductor companies enter the markets and as existing competitors improve or expand their product offerings. The increased competition could result in price pressure, reduced profitability, and loss of market share for the company.

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