Executive Summary
Ambarella delivered a strong start to fiscal year 2026 (qq1) with revenue of $85.9 million, placing it in the upper half of guidance and marking a 57.6% year-over-year increase. Management attributed the outperformance to continued strength in AI-driven products, led by AGI-enabled accelerators, and further supported by the five-nanometer CV5/CV7 and 10-nanometer CV2 product families. IoT applications expanded mid-single digits sequentially and now account for roughly three-quarters of total revenue, while automotive declined slightly on a sequential basis but remained up more than 20% year over year. Ambarella raised its full-year revenue growth target to 19%-25% (midpoint about $348 million), from the prior mid-to-high teens, despite ongoing geopolitical uncertainty. The company highlighted a multi-year AI strategy, expanding edge infrastructure offerings, and the development of a new AI SoC roadmap to extend leadership into edge AI markets. Notably, AGI revenue represented more than 75% of Q1 revenue—marking the fourth consecutive quarter of record AI revenue—and Ambarella emphasized that security remains a meaningful but not sole growth driver as it expands into other AGI applications across auto and IoT verticals.
Key Performance Indicators
QoQ: -20.23% | YoY:35.86%
QoQ: -20.83% | YoY:37.63%
Key Insights
Revenue: $85.9M in Q1 FY2026; YoY +57.6%, QoQ +2.2% (Q/q). Gross margin (Non-GAAP): 62.0%; GM% favorable mix. Operating expenses (Non-GAAP): $51.8M; higher engineering costs on chip development. Non-GAAP net income: $3.0M; EPS (non-GAAP): $0.07. GAAP net income: -$24.33M; GAAP EPS: -$0.58. Operating cash flow: $14.8M; Free cash flow: $10.2M. Cash and marketable securities: ~$259.4M at quarter-end. DSO: 31 days; Days inventory: 98 days (inventory up 14% QoQ). Share repurchases: 24,152 shares for ...
Financial Highlights
Revenue: $85.9M in Q1 FY2026; YoY +57.6%, QoQ +2.2% (Q/q). Gross margin (Non-GAAP): 62.0%; GM% favorable mix. Operating expenses (Non-GAAP): $51.8M; higher engineering costs on chip development. Non-GAAP net income: $3.0M; EPS (non-GAAP): $0.07. GAAP net income: -$24.33M; GAAP EPS: -$0.58. Operating cash flow: $14.8M; Free cash flow: $10.2M. Cash and marketable securities: ~$259.4M at quarter-end. DSO: 31 days; Days inventory: 98 days (inventory up 14% QoQ). Share repurchases: 24,152 shares for ~$1.0M; remaining authorization ~$48M. One logistics partner WT Microelectronics accounted for 63.1% of quarterly revenue. Guidance for Q2: revenue $86-$94M (midpoint $90M); gross margin (Non-GAAP) 60.5-62%; Non-GAAP OpEx $52.5-55.5M; diluted share count ~42.6M; net interest ~ $1.8M; non-GAAP tax ~$0.8M.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
85.87M |
57.64% |
2.21% |
| Gross Profit |
51.54M |
51.95% |
0.78% |
| Operating Income |
-25.86M |
32.25% |
-1.99% |
| Net Income |
-24.33M |
35.86% |
-20.23% |
| EPS |
-0.58 |
37.63% |
-20.83% |
Management Commentary
- Strategy and AI leadership: Fermi Wang outlined Ambarella’s AI-driven growth thesis, noting AGI revenue comprising more than 75% of Q1 revenue and the fourth consecutive quarter of record AI revenue. He framed edge AI infrastructure as a key growth vector and described a new AI SoC roadmap to extend AI capabilities beyond endpoint devices into edge infrastructure. Quote: “AGI revenue, which we define as a product that integrates one of our proprietary deep learning AI accelerators, was more than 75% of our Q1 revenue. And this represents the fourth consecutive quarter of record AI revenue.” (Fermi Wang)
- Edge infrastructure expansion and product roadmap: Ambarella is targeting edge infrastructure applications with the N1 family and a forthcoming AI SoC family, leveraging a third-generation AI accelerator to support large-model inference at the edge. Quote: “We are already addressing the edge infrastructure market with the N1 family. And we are now developing a new AI SoC product family to enhance our edge AI infrastructure roadmap.” (Fermi Wang)
- Market engagement and customer wins: Demonstrations at IAC West Security Show highlighted GenAI capabilities across CV75, CV72, and N1655, reinforcing customer interest in edge AI and multimodal models. IoT/enterprise AI use cases expanded into 360-degree cameras, wearables, and industrial automation. Quote: “Ambarella demonstrated its leadership in GenAI Aggregates, with 18 product demonstrations including the latest Gen AI and the Vision AI capabilities.” (Fermi Wang)
- Automotive and ADAS: Auto remains a focus, with CV25 used in data logger and in-cabin systems; production schedules tied to current fiscal year. Quote: “Auto is continue to be a focus. But we definitely have resources that we're going to put on the edge infrastructure.” (Fermi Wang)
- Competitive positioning and go-to-market: Joe Moore and Fermi discussed potential changes in go-to-market for robotics/edge applications, anticipating more segmented, near-term opportunities and a broader go-to-market approach beyond large, single customers. Quote: “There will be a different go-to-market approach to address this need.” (Fermi Wang)
“AGI revenue, which we define as a product that integrates one of our proprietary deep learning AI accelerators, was more than 75% of our Q1 revenue. And this represents the fourth consecutive quarter of record AI revenue.”
— Fermi Wang
“We are the established AGI market leader who is innovating at the right pace.”
— Fermi Wang
Forward Guidance
Management raised FY2026 revenue growth to 19%-25% (midpoint about $348M), up from the prior mid-to-high teens. Q2 guidance implies revenue of $86-$94M, with a midpoint of $90M, and non-GAAP gross margin guidance of 60.5%-62%. The company attributes volatility to geopolitical uncertainty but remains confident in the long-term AI trajectory and edge AI opportunity. Assessment:
- Probability-weighted view supports a constructive path into 2H2026, aided by continued AI accelerator adoption and expansion into edge infrastructure, with ASPs boosted by higher-value products (CV5/CV7, CV2, N1655) as design wins expand.
- Key risks include macro/geopolitical uncertainty affecting demand visibility and potential indirect tariff effects; reliance on a few high-revenue customers in certain regions; and competition from FPGA/GPU alternatives for edge workloads. The company’s conservative guidance range for H2 and willingness to adjust guidance reflects an intent to preserve optionality amid uncertainty.
- Monitoring points for investors: progression of edge AI server opportunities (aggregate TAM, mix shift between endpoint vs. edge servers), advancement of the new AI SoC family roadmap, any changes in IoT vs. automotive revenue mix, core ASP/margin trajectory as product mix evolves, and the impact of currency movements on operating leverage.