Ambarella, Inc. Q3 FY2026 earnings call

Key Points

• Les, co-founder and CTO, stepped down from the board to become chief technology adviser, continuing to oversee technology direction.
• Strong Q3 results with revenue and non-GAAP EPS exceeding expectations; Edge AI revenue was at a record for the sixth consecutive quarter.
• Fiscal 2026 revenue guidance raised to 36%-38% growth. Key factors driving Edge AI: expanding applications, increasing AI performance requirements, and rising average selling prices.
• Customer engagements across multiple markets: enterprise security (Sparsh, Infinity, WCADA, Motorola), robotic and smart home (Whiskers, Arash), and automotive safety (Zika, Xiaopeng, Solara).
• 5-nanometer-based products represented over 45% of Q3 revenue.

In the third quarter, Ambarella achieved record quarterly revenue of $108.5 million. Edge AI accounted for approximately 80% of total revenue. Non-GAAP gross margin for Q3 was 60.9%. Sequentially, automotive revenue increased in the low single digits, and IoT increased in the mid-teens, led by Edge AI in enterprise security and portable video. WT Microelectronics, a logistics company, represented 70.2% of Q3 revenue.

Fiscal 2026

• Raised revenue guidance to 36%-38% growth, midpoint ~$390M.

Q4 Outlook

• Revenue forecast: $97M-$103M, midpoint $100M.
• Non-GAAP gross margin: 59%-60.5%.
• Non-GAAP OpEx: $55M-$58M, driven by employee-related and CES expenses.
• Net interest and other income: ~$2M; non-GAAP tax expense: ~$600,000; diluted share count: ~44.5M.

Forward-looking statements are subject to risks, uncertainties, and assumptions as detailed in the documents filed with the SEC.

Q: When we think about 36%-38% growth for fiscal 2026, how much is driven by unit vs ASP?

A: Fermi said both contribute, likely half and half.

Q: Color on portable video market?

A: Includes action sports, panorama, drones, wearable, web cameras; significant growth, momentum continues.

Q: Consumer vs enterprise split in Edge AI?

A: Roughly 50-50, with consumer having different types of spending.

Q: Gross margin outlook?

A: Long-term target 59%-62%, Q4 guide affected by high-cost customer contribution.

Q: Drone market growth?

A: Drones part of portable video, video processing plus AI key, consumer and commercial opportunities.

Q: Infrastructure opportunity and N1655?

A: Strong design win activity, wide range of opportunities.

Q: Home security and humanoid robots?

A: Home security has design wins but price-sensitive; humanoid robots long-term, intermediate steps.

Q: IoT customer Arash's contribution?

A: Largest customer, ramping doubled, but hard to track exact revenue contribution.

Q: Automotive market approach?

A: Focused on L2+, engaging OEM tier ones, will provide more guidance next quarter.

Q: OpEx growth vs revenue?

A: Long-term expectation of operating leverage with revenue outpacing OpEx.

Q: Software transition from automotive to robotics?

A: Commonality in sensor fusion, perception, software applicable.

Q: Consumer mix impact on seasonality?

A: Changes seasonality, look at ten-year average.

Q: Tax outlook?

A: Dollars expected to increase with revenue, rate not significant change.