AMBA Q1 2026: $85.9M Rev, Guides 19-25% Growth Amid Geo Uncertainty
- Expanding edge infrastructure opportunity: The executives highlighted a massive installed base of 1.2 billion cameras that require upgrading through edge infrastructure solutions integrating multiple cameras per box, suggesting a substantial recurring revenue potential as the company leverages its advanced AI technology.
- Robust innovation with new chip development: The discussion emphasized accelerating product innovation through the development of a second chip based on their third-generation CV4 architecture, ensuring competitive performance per watt and positioning Ambarella to capitalize on emerging market demands.
- Diversification and strong market share in high-end segments: Executives noted their leadership in the mid- to high-end security camera market outside of China along with growth in automotive, industrial, and enterprise IoT applications, which supports a diversified revenue base and long-term growth potential.
- Geopolitical and Seasonality Uncertainty: Executives highlighted ongoing geopolitical risks that force them to build broad guidance ranges, creating uncertainty around future seasonality and revenue predictability.
- Execution Risk on New AI Chip Development: The accelerated pull-forward of a second AI chip for edge infrastructure, while leveraging the current architecture, introduces execution risks that could impact product quality and focus from established segments.
- Supply Chain Vulnerabilities: Despite customers currently not building extra inventory, persistent geopolitical uncertainty could exacerbate supply chain challenges in future quarters, potentially impacting revenue stability.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue (Q1 2026) | Not explicitly compared numerically, current value: $85,872K | Total revenue of $85,872K in Q1 2026 reflects continuity in market demand possibly buoyed by earlier period momentum. Although no prior Q1 revenue number was provided, the sustained sales activity indicates that favorable market conditions and likely expanded customer adoption observed previously continue to drive top‐line growth. |
Operating Cash Flow | Improved from –$37,932K in Q1 2025 to +$14,801K in Q1 2026 | Operating cash flow turning positive is likely due to improved underlying operational performance—including lower net losses adjusted for non-cash items and beneficial working capital changes—which built on the corrective actions observed in prior periods that helped reverse earlier cash flow deficits. |
Gross Profit / Operating Loss / Net Loss | Not directly expressed as a YoY percentage change; current Q1 2026: Gross Profit $51,536K; Operating Loss ($25,858K); Net Loss ($24,328K) | Healthy gross profit of $51,536K contrasts with sizeable operating and net losses in Q1 2026, indicating that while the company is achieving robust revenue generation at the top-line, underlying expenses (such as R&D, SG&A, and other operating costs) remain high. This pattern, when viewed in light of prior periods, suggests that cost management continues to be a challenge. |
Total Assets | Increased approximately 10% YoY, from $638,660K in Q1 2025 to $701,918K in Q1 2026 | Total assets grew by about 10% mainly driven by the expansion of current assets—including higher investments in marketable debt securities and rising receivables—as established in previous periods. This continued asset accumulation underlines the company’s ongoing strategy of enhancing liquidity and supporting future growth. |
Total Liabilities | Surged by about 55% YoY, from $83,235K in Q1 2025 to $129,202K in Q1 2026 | Total liabilities jumped by around 55%, a change that appears to be driven by increased current liabilities such as accrued expenses and deferred revenue, echoing past trends where funds from customer cash advances and higher project-related costs contributed to upward pressure on liabilities. |
Marketable Debt Securities | Increased from $105,643K in Q4 2025 to $118,102K in Q1 2026 (an increase of over 5%) | The more than 5% increase in marketable debt securities indicates that the company is maintaining an aggressive liquidity management strategy, further investing in attractive debt instruments amid a favorable interest rate environment—a trend that accelerated from prior periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue ($USD Millions) | Q2 2026 | no prior guidance | $86M to $94M | no prior guidance |
Gross Margin (Non-GAAP, %) | Q2 2026 | no prior guidance | 60.5% to 62% | no prior guidance |
Operating Expenses (Non-GAAP, $USD Millions) | Q2 2026 | no prior guidance | $52.5M to $55.5M | no prior guidance |
Net Interest and Other Income ($USD Millions) | Q2 2026 | no prior guidance | $1.8M | no prior guidance |
Tax Expense (Non-GAAP, $USD Millions) | Q2 2026 | no prior guidance | $0.8M | no prior guidance |
Diluted Share Count (Millions) | Q2 2026 | no prior guidance | 42.6M | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q1 2026 | $81 million to $87 million | $85.872 million | Met |
Net Interest Income | Q1 2026 | $1.8 million | $2.175 million | Beat |
Non-GAAP Tax Expense | Q1 2026 | $600,000 | $645,000 | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Robust new product pipeline and innovation | Discussed consistently in Q2, Q3, and Q4 with focus on new product families (CV5, CV7, CV3-AD) and record AI revenue | Emphasized in Q1 2026 with continued focus on edge AI strategy, new AI SoC product families, and expansion into edge infrastructure | Recurring emphasis with an added focus on leveraging AI for edge infrastructure and expanding market reach. |
Advanced AI chip development and next‐generation technologies | Addressed across Q2, Q3 and Q4 with themes of 2‑nanometer development, Gen AI integration, and improved performance per watt | Q1 2026 highlighted the development of a new AI SoC product family and the acceleration of a second AI chip for edge infrastructure | Consistent focus with an evolving strategic push toward AI infrastructure and incorporation of advanced technologies. |
Expanding edge infrastructure opportunity for upgrading a massive legacy camera base | Not mentioned in Q2, Q3, or Q4 earnings calls | Introduced in Q1 2026 as a significant opportunity to upgrade a 1.2 billion camera installed base through edge solutions | New topic that emerged in Q1 2026, highlighting a strategic opportunity for legacy system upgrades. |
IoT and automotive market dynamics with shifting sentiment | Recurring discussion in Q2, Q3, and Q4 focusing on strong IoT growth and mixed automotive performance with detailed segmental analysis | In Q1 2026, IoT now accounts for about 75% of revenue with strong adoption while automotive shows robust YoY growth despite sequential declines | Recurring topic with evolving sentiment: very positive for IoT, while automotive remains strong year‐over‐year but faces near‑term headwinds. |
Geopolitical, tariff, and supply chain uncertainties | Discussed in detail in Q4 and Q3 (and mentioned in Q4 about China, tariffs, and policy risks) with caution on external factors | Q1 2026 addressed ongoing geopolitical and tariff uncertainties with conservative guidance, noting no significant inventory buildup by customers | Consistently raised each period; sentiment remains cautious but stable across periods. |
Declining legacy product margins and transition risks away from traditional video processors | Raised in Q2, Q3, and Q4 regarding a slow decline rate (10‑15% annually) and margin pressure from legacy product mix | Not explicitly discussed in Q1 2026 earnings call | A recurring challenge that is now less emphasized in Q1 2026, suggesting a possible maturation of the transition strategy. |
Execution risks in accelerated AI chip development | Not explicitly mentioned in Q2, Q3 or Q4 discussions regarding execution challenges | No specific reference to execution risks in Q1 2026, though fast development using existing architecture was noted | This topic has not been a focal point in any period, indicating confidence in current execution capabilities. |
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Full-Year Guidance
Q: Guidance impact from tariffs?
A: Management stated full-year revenue growth remains robust at about 19%-25%, with Q1 revenue at $85.9M and built‑in uncertainty for the second half due to geopolitical factors. -
Gross Margin Outlook
Q: What drives margin decline next quarter?
A: They explained that a shift in customer mix and product mix—reflected in Q1’s 62% non‑GAAP gross margin—will likely lead to slightly lower margins next quarter. -
Edge Infrastructure
Q: What is meant by edge infrastructure?
A: Management described it as an integrated box that aggregates roughly 16–32 cameras to upgrade the installed base with advanced AI, opening new revenue opportunities. -
Market Share (Ex-China)
Q: What is your market share outside China?
A: They indicated a dominant position in the mid‑ and high‑end security camera market outside China, reinforcing strong competitive positioning. -
Product Pipeline & Robotics
Q: Is robotics investment a priority?
A: Management confirmed ongoing investments in automotive and robotics platforms, comparing robotics growth today to early autonomous driving stages, which supports a robust future product pipeline. -
Supply Chain Stability
Q: Any concerns over the supply chain?
A: They noted that customers are not building excess inventory; current supply chain practices are stable despite geopolitical uncertainty, supported by strong demand. -
Accounts Payable Increase
Q: Why are accounts payable rising?
A: The increase is due to a strategic build‑up of inventory aimed at supporting anticipated higher demand in the upcoming quarter.
Research analysts covering AMBARELLA.