Name: AMBARELLA INC Q3 2025 Earnings Call
Start: 2024-11-26T21:31:00.000Z

Executive Summary

Q3 FY2026 (quarter ended Oct 31, 2025) results and the earnings call have not yet been released; Ambarella scheduled its Q3 FY2026 earnings call for Nov 25, 2025, with the press release to be issued after market close that day .
Management guided Q3 FY2026 revenue to $100.0–$108.0M, non-GAAP gross margin to 60.0%–61.5%, and non-GAAP OpEx to $54.0–$57.0M; FY2026 revenue growth outlook was raised to 31%–35% (~$379M midpoint), signaling potential record quarterly and annual revenue .
Q2 FY2026 delivered strong execution: revenue $95.5M (+11% q/q, +49.9% y/y), non-GAAP EPS $0.15, non-GAAP GM 60.5%; cash and marketable securities reached $261.2M, with clean working capital metrics (DSO 40 days, inventory days 85) .
Strategic drivers: expanding breadth of edge AI applications (portable video, robotic aerial drones, emerging edge infrastructure) and higher-ASP 5nm AI SoCs; management highlighted cumulative shipments of >36M edge AI processors and expects first drone production shipments by FY2026-end and first edge infrastructure production in FY2027 .

What Went Well and What Went Wrong

What Went Well

Record trajectory and guidance raise: Q2 FY2026 revenue $95.5M beat the prior range and Q3/FY2026 guidance implies all-time record revenue at midpoints; FY2026 growth outlook raised to 31%–35% (~$379M midpoint) .
Edge AI breadth and ASP uplift: Multiple portable video and robotics wins, plus first edge infrastructure win; strong demand for higher-priced 5nm AI SoCs driving firm-wide ASP higher .
Non-GAAP profitability improvement: Q2 FY2026 non-GAAP net profit $6.4M ($0.15 EPS) vs. prior-year loss; non-GAAP gross margin at 60.5% despite mix, and operating cash flow positive with cash/marketable securities at $261.2M .

What Went Wrong

GAAP losses persist: Q2 FY2026 GAAP net loss of $20.0M (-$0.47 per diluted share) despite topline strength, reflecting ongoing stock-based comp and development investments .
Margin pressure from product mix: Q2 non-GAAP gross margin of 60.5% landed at the low end of guidance due to mix; Q3 non-GAAP GM guidance remains 60.0%–61.5% .
Automotive timing still extended: Management noted slower OEM decisions, software readiness, and longer revenue ramps; near-term growth skewed to IoT while auto outperformance is more likely post-2027 with CV3 domain controllers .

Financial Results

Note: Q3 FY2026 results are pending; guidance is shown for Q3 where applicable .

Metric	Q1 FY2026 (Apr 30, 2025)	Q2 FY2026 (Jul 31, 2025)	Q3 FY2026 Guidance (Low)	Q3 FY2026 Guidance (Mid)	Q3 FY2026 Guidance (High)
Revenue ($USD Millions)	$85.9	$95.5	$100.0	$104.0	$108.0
GAAP Diluted EPS ($)	-$0.58	-$0.47	N/A (pre-release)	N/A (pre-release)	N/A (pre-release)
Non-GAAP Diluted EPS ($)	$0.07	$0.15	N/A (pre-release)	N/A (pre-release)	N/A (pre-release)
Non-GAAP Gross Margin (%)	62.0%	60.5%	60.0%	60.8% (midpoint)	61.5%
Non-GAAP Operating Expenses ($USD Millions)	$51.8	$53.4	$54.0	$55.5 (midpoint)	$57.0

KPIs and Balance Sheet

KPI	Q1 FY2026	Q2 FY2026
Cash + Marketable Debt Securities ($USD Millions)	$259.4	$261.2
Operating Cash Flow ($USD Millions)	$14.8	$5.5
Free Cash Flow ($USD Millions)	$10.2	$1.4
Days Sales Outstanding (DSO)	31 days	40 days
Inventory Days	98 days	85 days

Non-GAAP Adjustments Impact

Q1 FY2026: GAAP-to-non-GAAP GM difference was 2.0% ($1.7M), due to stock-based comp and acquisition amortization .
Q2 FY2026: GAAP-to-non-GAAP GM difference was 1.6% ($1.5M) for the quarter, driven by stock-based comp and acquisition-related amortization .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q3 FY2026	N/A	$100.0–$108.0 (midpoint $104.0)	New
Non-GAAP Gross Margin (%)	Q3 FY2026	N/A	60.0%–61.5%	New
Non-GAAP Operating Expenses ($USD Millions)	Q3 FY2026	N/A	$54.0–$57.0	New
Net Interest & Other Income ($USD Millions)	Q3 FY2026	N/A	~$2.0	New
Non-GAAP Tax Expense ($USD Millions)	Q3 FY2026	N/A	~$0.8	New
Diluted Share Count (Shares)	Q3 FY2026	N/A	~43.7M	New
FY Revenue Growth (%)	FY2026	19%–25% (~$348M midpoint)	31%–35% (~$379M midpoint)	Raised

Earnings Call Themes & Trends

Topic	Q1 FY2026 (Prior-2)	Q2 FY2026 (Prior-1)	Current Period (Q3 FY2026)	Trend
AI/Technology Initiatives	Demonstrated GenAI at edge; 3rd-gen accelerator supports 500M–34B parameter models; advancing CV75/CV72/N1 platforms	Expanded wins across CV5/CV72 and announced first edge infrastructure win; higher ASP on 5nm AI SoCs	Call scheduled; continued focus on edge infrastructure and 5nm deployments expected	Positive momentum toward broader edge AI use
Supply Chain & Inventory	Building inventory to support demand; DSO 31, inventory days 98	Clean checks; monthly reviews with customers/distributors show no excess build; DSO 40, inventory days 85	Monitoring; no Q3 update until call	Improving execution, vigilance maintained
Tariffs/Macro	Conservatism in H2 outlook due to geopolitical uncertainty	Continued caution; no evidence of tariff-driven pull-ins	Pending commentary	Ongoing macro watch
Product Performance (Portable Video/Robotics)	Insta360 X5 on CV5; multiple IoT edge examples (Huawei industrial readers, Lenovo collaboration)	Portable video fastest-growing non-security segment; first drone win announced (Anti Gravity A1 on CV5)	Production shipments of first drone expected by FY2026-end	Broadening adoption, new categories ramping
Automotive/ADAS	CV3 lineup complete; pursuing domain controller wins; auto down q/q but up y/y	Auto mid-single-digit q/q growth; OEM decisions slow; focus on L2+ lower-cost functions	Q3 guide implies auto mid-to-high single-digit growth	Gradual, longer-cycle trajectory
Edge Infrastructure	Roadmap extension; developing new SoC beyond N1655	First customer win; SAM $125M FY26 growing to $500M in five years; performance-per-watt advantage	First production expected in FY2027	Early-stage, building pipeline

Management Commentary

“We are increasing our fiscal 2026 revenue growth estimate to a range of 31% to 35%, or approximately $379 million at the midpoint. The midpoint of our new third quarter and full year fiscal 2026 revenue guidance would represent all-time record quarterly and fiscal year total revenue for Ambarella.” — Fermi Wang, CEO .
“Our strong order book… and our expectation for both our total unit ship and our average selling price to increase in fiscal twenty twenty six.” — Fermi Wang (prepared remarks) .
“Today, we are also announcing our first win in the edge AI infrastructure with our N1C55 SoC… This win is yet another example of the expanding breadth of our edge AI business.” — Fermi Wang .
“We reported a non-GAAP net profit of $6,400,000 or $0.15 per diluted share in Q2.” — John Young, CFO .

Q&A Highlights

IoT vs. Auto mix and resource allocation: Management sees strong near-term IoT momentum with shared architecture leverage; auto outperformance more likely post-2027 as CV3 programs ramp .
Drones and robotics pipeline: Consumer and commercial aerial drones viewed as a new autonomy frontier; multiple engagements underway with energy efficiency as a differentiator .
Seasonality and guidance shape: Q3 up sequentially, Q4 likely down; portable video leading non-security IoT growth .
Tariff/inventory concerns: Ongoing customer and distributor checks show no excess builds; internal checkpoints confirm healthy patterns .
Opex cadence: Non-GAAP OpEx expected a bit above ~10% growth, tracking ~12% year-to-date .
ADAS adoption dynamics: OEMs prioritizing safety and cost, focusing on L2+ features; lower frequency of decisions and longer time-to-revenue in auto .
Growth drivers split: Roughly 50/50 contribution from unit growth and ASP increases in FY2026 outlook .

Estimates Context

Wall Street consensus from S&P Global for Q3 FY2026 EPS and revenue was unavailable at time of writing due to SPGI daily request limit; comparisons vs. consensus cannot be provided and will be updated after the Nov 25 release and call .

Key Takeaways for Investors

Pre-release setup is constructive: Q3 revenue guide of $100–$108M (midpoint $104M) with stable non-GAAP GM (60.0%–61.5%) suggests continued sequential growth ahead of the Nov 25 print .
Near-term upside skewed to IoT: Portable video and emerging robotics are driving growth and ASP uplift; watch for additional product/category disclosures that could sustain momentum .
Auto is a medium-term call option: Domain controller wins could materially expand revenue, but decisions and ramps are slower; look to 2027+ for inflection .
Edge infrastructure is a nascent catalyst: First win secured with N1; SAM growing with performance-per-watt advantages; initial production targeted for FY2027 .
Cash and working capital healthy: $261.2M cash/marketable securities, improving inventory turns, and positive operating cash flow support sustained investment and resilience .
Risk watch: Geopolitical uncertainty and product mix could pressure margins; management monitoring supply chain monthly and guiding conservatively .
Event catalyst: Earnings release and call on Nov 25—focus on Q4 seasonality, edge infrastructure pipeline, portable video/drone ramps, and any update on FY2026 trajectory .

Appendices

Q3 FY2026 event scheduling and pre-release status: Ambarella will issue Q3 results after market close on Nov 25 and host the call at 1:30 p.m. PT; results are not yet available as of Nov 20 .
Prior quarter performance references: Q1 FY2026 press release and 8-K ; Q2 FY2026 press release, 8-K, and call transcript .

AMBARELLA INC (AMBA)·Q3 2025 Earnings Summary