Executive Summary
Ambarella delivered a robust QQ3 2025 (fiscal third quarter ended Oct 31, 2024) with revenue of $82.65 million, up 63% year-over-year and roughly 30% sequentially, driven by new product ramps and record AI revenue. Management highlighted the first silicon of the CV3-AD655 AI SoC targeting Level 2+ autonomy, the CV5 wave (5-nm process) and the anticipated CV7 wave as the backbone of the 2025–2026 growth runway. The company also signaled improving pricing power and a higher blended ASP due to AI-focused product mix, while reiterating a multi-wave product strategy through fiscal 2026 and beyond. On the financials, Ambarella reported non-GAAP net income of $4.5 million ($0.11 per diluted share) for Q3, with non-GAAP gross margin of 62.6% and non-GAAP OpEx of $49.1 million, while GAAP results show negative operating income of $26.8 million on $82.7 million of revenue, reflecting mix effects and legacy processor exposure. The balance sheet remains cash-rich, with roughly $226.5 million in cash/marketable securities and a net cash position of approximately $121 million, supporting ongoing R&D and product evolution. Management tightened FY2025 revenue guidance to a 22–24% YoY growth, signaling conviction in new product cycles even as the broader auto market remains challenged. Investors should monitor: (1) cadence of CV5/CV7 design wins and funnel evolution, (2) automotive Level 2+ adoption dynamics and ASP/mix shifts, (3) IoT/enterprise AI applications expanding beyond traditional auto, and (4) the trajectory toward long-term non-GAAP operating margin of 30%.
Key Performance Indicators
Key Insights
Revenue: $82.653 million in Q3 2025 (YoY +63.4%, QoQ +29.7%).
Gross margin (GAAP): 59.6% in the quarter; (non-GAAP) 62.6% (low end of prior guidance, driven by product mix and legacy processor revenue).
Operating income (GAAP): -$26.8 million (operating margin -32.4%).
Net income (GAAP): -$24.1 million; EPS (GAAP) -$0.58. Non-GAAP net income: $4.5 million; Non-GAAP EPS: $0.11.
R&D expense: $58.39 million; SG&A/Selling, General & Administrative: $17.69 million.
Cash flow: Net cash pro...
Financial Highlights
Revenue: $82.653 million in Q3 2025 (YoY +63.4%, QoQ +29.7%).
Gross margin (GAAP): 59.6% in the quarter; (non-GAAP) 62.6% (low end of prior guidance, driven by product mix and legacy processor revenue).
Operating income (GAAP): -$26.8 million (operating margin -32.4%).
Net income (GAAP): -$24.1 million; EPS (GAAP) -$0.58. Non-GAAP net income: $4.5 million; Non-GAAP EPS: $0.11.
R&D expense: $58.39 million; SG&A/Selling, General & Administrative: $17.69 million.
Cash flow: Net cash provided by operating activities $6.62 million; free cash flow $4.11 million; capex $2.50 million; nine months 2024 cash flow YTD $8.4 million.
Cash position: Cash and marketable securities $226.5 million; cash at end of period $127.1 million; net debt (net cash) -$121.2 million.
Two logistics partners accounted for material revenue share in Q3: WT Microelectronics (66% of Q3 revenue) and Chicony (11%).
Outlook: Q4 revenue guidance $76–$80 million; gross margin 61.5–63%; OpEx $49–$52 million; diluted shares ~41.8 million; net interest ~$1.8 million; non-GAAP tax ~$0.6 million.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
82.65M |
63.36% |
29.70% |
| Gross Profit |
49.29M |
64.40% |
27.23% |
| Operating Income |
-26.79M |
36.17% |
26.18% |
| Net Income |
-24.07M |
42.29% |
31.01% |
| EPS |
-0.58 |
44.23% |
31.76% |
Key Financial Ratios
operatingProfitMargin
-32.4%
operatingCashFlowPerShare
$0.16
freeCashFlowPerShare
$0.1
Management Commentary
Key management themes and quotes from the QQ3 2025 earnings call:
- Strategy and product waves: “our new product momentum as a series of waves … first wave from CV5 … committed second wave CV7” and “CV3 AD family … revenue commencement in calendar year 2026 or our fiscal 2027.”
- AI and ASP/margins: “record level of AI revenue, which in turn contributed to a higher blended average selling price” and “non-GAAP gross margin is 62.6% at the low end of guidance” due to product mix.
- Automotive funnel dynamics: “Level 2+ adoption rate is slower than we expected… funnel is not increasing,” yet management remains “optimistic about CV3 domain controller opportunity” for long-term automotive growth.
- Cash generation and balance sheet: “cash and marketable securities increased $6.7 million … to $226.5 million” and “we returned to non-GAAP profitability in Q3” (non-GAAP).
Our third quarter revenue was above the high end of our guidance range increasing about 30% sequentially in both our auto and IoT business. Company-specific factors more than offset the overall weakness in the market, with our strength originating from our customers' new product ramps, especially those incorporating our new higher-priced AI influence processors such as CV5.
— Fermi Wang, Chief Executive Officer
We are pleased to return to non-GAAP profitability in Q3.
— Fermi Wang, Chief Executive Officer
Forward Guidance
Management-guided path for FY2025: revenue growth 22%–24% YoY versus prior mid-to-high teens; Q4 revenue expected to be $76–$80 million with IoT and auto flat to down modestly sequentially; non-GAAP gross margin 61.5%–63%; non-GAAP OpEx of $49–$52 million; net interest income ~$1.8 million; non-GAAP tax expense ~$0.6 million; diluted shares ~41.8 million. The company envisions a multi-wave product cycle feeding revenue growth into fiscal 2026 and beyond, including CV5’s ongoing ramp, CV7 in the mix, and CV3 platform progression toward 2-nanometer family for Gen AI workloads. Achievability hinges on continued auto and IoT product ramps, favorable ASP/mix dynamics, and a cadence of design wins, while macro auto market softness remains a risk. Key monitoring points: CV5/CV7 adoption pace, funnel stability and lengthening design cycles in automotive, IoT enterprise penetration, and progress toward a long-term 30% non-GAAP operating margin.