Ambarella, Inc. — Second Quarter Fiscal Year 2027 Earnings Summary

Financial Performance

• Q2 FY2027 revenue was $108.1 million, a 13.2% increase from $95.5 million in Q2 FY2026; six-month revenue was $208.5 million, up 14.9% from $181.4 million in the same period of FY2026.
• GAAP gross margin for Q2 FY2027 was 57.7%, down from 58.9% in Q2 FY2026; six-month GAAP gross margin was 58.0%, down from 59.4% in the prior year period.
• Non-GAAP gross margin for Q2 FY2027 was 59.3%, down from 60.5% in Q2 FY2026; six-month non-GAAP gross margin was 59.6%, down from 61.2% in the prior year period.
• GAAP net loss for Q2 FY2027 was $6.7 million ($0.15 per diluted share), compared to a $20.0 million loss ($0.47 per diluted share) in Q2 FY2026; six-month GAAP net loss was $24.8 million ($0.57 per diluted share) versus $44.3 million ($1.05 per diluted share) in the prior year period.
• Non-GAAP net income for Q2 FY2027 was $8.2 million ($0.18 per diluted share), up from $6.4 million ($0.15 per diluted share) in Q2 FY2026; six-month non-GAAP net income was $13.3 million ($0.30 per diluted share) versus $9.5 million ($0.22 per diluted share) in the prior year period.
• Total cash, cash equivalents, and marketable debt securities totaled $272.3 million at the end of Q2 FY2027, compared to $277.8 million at the end of the prior quarter and $261.2 million at the end of Q2 FY2026.
• Accounts receivable was $37.4 million at July 31, 2026, down from $39.2 million at January 31, 2026.
• Inventories increased to $76.9 million at July 31, 2026, from $52.2 million at January 31, 2026.
• Deferred revenue (current) was $20.9 million at July 31, 2026, down from $22.4 million at January 31, 2026.
• Total liabilities were $159.9 million at July 31, 2026, down from $203.8 million at January 31, 2026.
• Total shareholders' equity was $620.3 million at July 31, 2026, up from $594.8 million at January 31, 2026.
• GAAP research and development expense for Q2 FY2027 was $50.6 million, down from $59.7 million in Q2 FY2026, reflecting a one-time $9.0 million credit from the termination of a development project.

Guidance and Future Outlook

• Revenue for Q3 FY2027 (ending October 31, 2026) is expected to be between $115.0 million and $124.0 million.
• Non-GAAP gross margin for Q3 FY2027 is expected to be between 59.0% and 60.0%.
• Non-GAAP operating expenses for Q3 FY2027 are expected to be between $56.5 million and $59.5 million.
• Management forecasts an increase in the 5-year serviceable market ("SAM") for edge AI and Physical AI.

Business Segments and Product Lines

• Edge AI revenue reached record levels in Q2, driven by balanced sequential growth in the Auto and IoT markets.
• Strong growth was reported from the 5nm CV75 and CV72 AI SoCs.
• The company introduced its first stand-alone AI Accelerator, X7.
• The company executed 7-year agreements to develop an indirect sales channel with Macnica and CapGemini.
• Ambarella's products are utilized in physical security, vehicle safety, telematics, autonomy, portable video, aerial drones, and robotic applications.

Market and Competitive Landscape

• The company operates in the edge AI semiconductor market, focusing on physical edge AI applications.
• Ambarella has an installed base of more than 50 million AI SoC units.
• The company offers a full-stack edge AI platform including silicon, programmable software, and AI agentic frameworks.

Risks and Challenges

• Risks include global economic and political conditions, changes in government policies, trade tariffs, and restrictions.
• Uncertainties involve the commercial success of customer products, inventory management by customers, and the ability to generate revenue from new customers or design wins.
• Challenges include the ability to anticipate market demands for AI inference applications, introduce new solutions, and develop advanced technologies such as vision-language models and GenAI.
• Potential risks include intellectual property disputes, litigation, and the ability to retain key employees.

Management Commentary and Tone

• Fermi Wang, President & CEO, stated that the company is making significant progress with strategic priorities to extend market reach through new higher-value products and new go-to-market strategies.
• Management highlighted that the introduction of the X7 AI Accelerator and new channel agreements are contributing to increased market forecasts.

Other Key Points

• A one-time $9.0 million reduction in GAAP R&D expense was recognized in Q2 FY2027 due to the release of a deposit liability following the termination of a development project; this amount was excluded from non-GAAP operating expenses.
• Non-GAAP financial measures exclude stock-based compensation, acquisition-related costs, and the development project termination credit, adjusted for associated tax impacts.
• Ambarella plans to hold a conference call at 4:30 p.m. Eastern Time on September 3, 2026, with CEO Fermi Wang and CFO John Young.
• The company's fiscal year 2027 results are preliminary and may differ from the final results in the Quarterly Report on Form 10-Q.