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Ambarella beat Wall Street’s expectations in the fourth quarter — here’s the latest.

Ambarella, Inc. (Nasdaq: AMBA), a fabless semiconductor design company, reported its fourth-quarter fiscal 2021 results late yesterday and investors appeared pleased with the results.

Ambarella’s stock was up 6% this morning after the company reported sales and earnings that beat Wall Street’s sales and earnings consensus estimates.

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Ambarella: Fourth-Quarter Highlights

Ambarella’s fourth-quarter revenue increased 9% year over year to $62.1 million, easily outpacing analysts’ consensus revenue estimate of $58.1 million. Additionally, the company’s non-GAAP earnings per share of $0.14 blew past the Street’s expectation of $0.08 for the quarter.

“Demand for our AI vision silicon products accelerated in FY21 with more than 175 unique customers purchasing engineering parts and/or development systems, including more than 40 who reached production volumes,” Fermi Wang, the company’s CEO, said in a press release.

Ambarella’s non-GAAP gross margin expanded in the quarter to 61.4%, up from 58.7% in the fourth quarter of fiscal 2020.

Additionally, Ambarella’s total cash, cash equivalents, and marketable securities were $440.7 million at the end of the quarter, up from $404.7 million in Q4 2020.

What Investors Can Expect from Ambarella’s First Quarter 2022

Ambarella’s management issued guidance for the first quarter, with revenue expected to be in the range between $67 million and $70 million. That would represent a year-over-year sales increase of 25% at the midpoint of guidance.

The company also said that non-GAAP gross margin will be 60.5% and non-GAAP operating expenses will be $35 million in the first quarter, both at the midpoint of guidance.

Additionally, management is optimistic that the company can expand sales of its computer vision (CV) technology in fiscal 2022.

“In FY22 we intend to continue to build on our AI vision momentum, driving CV to at least 25% of revenue, while maintaining a high level of execution in the face of the ongoing public health, geopolitical and supply-chain challenges,” Wang said.

Wang also mentioned the importance of Ambarella’s growing automotive business on the company’s fourth-quarter earnings call, saying that the segment will “grow at a rate that is significantly higher” than its other CV business.

Wang noted the company’s automotive segment will have a serviceable available market (SAM) of $3 billion in fiscal 2022, and grow to nearly $7 billion in fiscal 2026.

Investors were clearly happy with Ambarella’s fourth-quarter results and continue to be optimistic about the company’s future. Today’s share price gains add the company’s already-impressive gains over the past year and put Ambarella’s stock up about 102% over the past 12 months.

While Ambarella was a popular stock idea after its IPO in 2016, its sales growth hasn’t been brisk enough to live up to the hype surrounding its tailwinds in growth markets like drones and self-driving cars.

With Ambarella’s growth re-accelerating, it could once again become a popular stock idea. The cost to manufacture cars is now 40% electronics, so if Ambarella is able to make in-roads into this market it could find a powerful growth channel lasting the next decade.

If you’re an investor looking for chip plays in the auto space, put Ambarella on your watchlist and pay close attention to management’s discussion on its auto growth in the coming quarters.

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