What led to Ambarella Inc (NASDAQ: AMBA) stock lower

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Ambarella Inc (NASDAQ: AMBA) stock lost over 7% on 3rd June, 2020 (as of 10:07 am GMT-4 ·; Source: Google finance) after the company posted lower than expected results for the first quarter of FY 21. The company has reported the non-GAAP net income for Q1 of $1.3 million compared to non-GAAP net income of $4.9 million in the fourth quarter. The home security camera market, the company has seen some impact of sales due to customer order push-outs. Typically, home security cameras are sold in retail online and the closure of the retail stores had affected the demand. The majority of the cameras are manufactured by Taiwanese ODMs, which have generally remained in production throughout the crisis. The company expects total revenue for the second quarter of 2021 to be in the range of $50 million, plus or minus 6%.

In Q1, the company had generated positive operating cash flow of $7.6 million. Cash and marketable securities had increased to $411.3 million from $404.7 million at the end of the fourth quarter. Meanwhile CV revenue momentum was solid in Q1 off a small base and the CV represented a mid-single-digit percent of total revenue. Despite the many of the development sites having to work for home, the company had remained highly effective in the continued development of chips and software. During the quarter, the company had successfully brought up and verified the new automotive functions safety SoCs, the CV2FS and the CV22FS, which were announced during CES. After initial hardware verification work in the labs in Taiwan and US, the majority of the work has been in software development and the software engineers have become effective working from their homes. The company is fully on schedule to assemble the SoCs into their corresponding software development kits to customers and partners in the second half of the year. Further, the design win pipeline continues to be extremely strong with camera makers continuing to develop cameras with advanced AI capability, and this quarter saw a number of significant customer product introduction based on the CV4 AI SoC solutions.

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