Stock trading in red: Ambarella Inc (NASDAQ: AMBA)

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Ambarella Inc (NASDAQ: AMBA) stock lost over 4.3% on 26th November, 2019 (As of 11:03 am GMT-5; Source: Google finance) on guidance concerns. AMBA expect total revenue for the fourth quarter to be in the range of $55 million to $59 million. The company expect Q4 non-GAAP gross margin to be between 56.5% and 58.5% compared to 58.1% in the third quarter and expect non-GAAP opex in the fourth quarter to be between $29.5 million and $31.5 million.

In Q3, all markets have increased sequentially, driven by strength in the automotive OEM and aftermarket. The company has delivered the Non-GAAP net income for Q3 of $11.3 million compared to $7.3 million in the second quarter. In Q3, the company has generated a positive cash operating cash flow of $21.9 million. Cash and marketable securities were $400.8 million at the end of the quarter, up from $375.8 million at the end of the second quarter. The company did not repurchase stock during the quarter under the $50 million repurchase program authorized through June 30, 2020. Net inventory at the end of the third quarter 2019 was $19.8 million compared to $17.4 million at the end of the second quarter.

The company has posted the Non-GAAP gross margin for Q3 of 58.1% similar to the preceding quarter. Gross margin was slightly above the high-end of the guidance of 56% to 58% due to a richer mix of automotive business in both OEM and aftermarket business. Non-GAAP operating expense for the third quarter was $29.3 million compared to $29.7 million in Q2 after backing out R&D grants related to prior periods.

Meanwhile, Ambarella is working with Mercedes-Benz for the development of its edge platform for their Cargo Recognition and Organization System called CoROS. The newly developed CoROS assistant actively supports parcel delivery drivers with camera-based object tracking and a machine learning software. Further, the company is getting strong interest in Ambarella CV4 AI chip from companies that provide aftermarket fleet management solutions for commercial vehicles.

AMBA in the third quarter of FY 19 has reported the adjusted earnings per share of 32 while adjusted revenue growth of 18.6 percent to $67.92 million in the third quarter of FY 19.

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