This article first appeared on GuruFocus.

Release Date: November 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Ambarella Inc (NASDAQ:AMBA) reported record quarterly revenue of $108.5 million, exceeding expectations.

The company achieved its sixth consecutive quarter of record Edge AI revenue, which constituted about 80% of total revenue.

Fiscal 2026 revenue guidance has been increased, projecting a 36% to 38% growth, indicating strong market demand.

Ambarella Inc (NASDAQ:AMBA) is experiencing strong demand across various applications, including enterprise security, automotive safety, and portable video markets.

The company has a robust product roadmap with advanced AI technologies, including 5 nanometer-based products representing over 45% of Q3 revenue.

There is a noted seasonality impact, with a forecasted mid to high single-digit decline in both automotive and IoT businesses for Q4.

Non-GAAP gross margin guidance for Q4 is slightly lower, ranging from 59% to 60.5%, compared to previous quarters.

The consumer market, while growing, introduces volatility and could affect the company's revenue stability.

The company faces challenges in maintaining its gross margin within the long-term target range due to high volume customer mix.

The home security market's development is slower than expected, impacting potential growth in that segment.

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Q: Can you break down the 36-38% growth for fiscal '26 in terms of unit versus ASP contributions? A: Both unit growth and ASP contribute to our growth, likely around 50% each. Our unique growth continues to contribute, especially from the CV side, while ASP growth is also significant. (Respondent: Fermi Wong, President and CEO)

Q: Could you provide more details on the portable video market and its growth prospects for Ambarella? A: The portable video market includes action sports cameras, panorama cameras, drones, wearable cameras, and video conferencing products. This market is a significant growth area for us, and we are surprised by its size and momentum. We aim to secure and grow our market share. (Respondent: Fermi Wong, President and CEO)

Q: How is Ambarella managing the consumer versus enterprise split in the Edge AI IoT market, given the volatility in consumer applications? A: The split is roughly 50/50 between enterprise CapEx-driven and consumer markets. Within the consumer segment, there are durable goods like smart home cameras and more volatile discretionary items. (Respondent: Louis Ghardi, Vice President, Corporate Development)

Q: What are the expectations for gross margin moving forward, considering the long-term target of 59-62%? A: The gross margin depends on the contribution from high-volume customers. While we aim to stay within the 59-62% range, we may accept lower margins for specific high-volume opportunities. (Respondent: John Young, CFO)

Q: Can you discuss the potential growth areas in the AAI market for calendar 2026? A: Drones and Edge endpoints, such as wearable cameras, are expected to be significant growth areas. The infrastructure market, although not immediately impactful, will be important long-term. (Respondent: Fermi Wong, President and CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.