Ambarella Inc (NASDAQ: AMBA) reported fiscal second-quarter revenue of $108.1 million, rising 13.2% year over year. The semiconductor company delivered non-GAAP earnings per share of $0.18 while launching its new X7 AI accelerator for edge infrastructure applications.

The results reflect strong sequential growth in both IoT and automotive segments, driven by commercial vehicle adoption. Ambarella also announced strategic partnerships with Capgemini and Magnica to expand indirect sales channels.

Financial Performance

Revenue reached $108.1 million, slightly above the midpoint of the prior guidance range of $105 million to $111 million. This represents a 7.7% increase from the previous quarter. Automotive revenue set a new record, outpacing growth in the IoT business where enterprise-driven segments performed better than consumer-led ones.

Non-GAAP gross margin stood at 59.3%, below the midpoint of the guided range of 59% to 60.5%. Operating expenses were $57.4 million, within the guided range of $56 million to $59 million. Net interest and other income totaled $1.8 million.

A $9 million reduction in GAAP R&D expense resulted from the cancellation of a customer development project. This item did not impact non-GAAP outlooks. Cash and marketable securities decreased by $5.5 million sequentially to $272.3 million, primarily due to higher payments for IP licenses receivables.

What the Numbers Show

Days sales outstanding improved from 35 days to 32 days, indicating faster collection cycles despite revenue growth. However, inventory days rose from 145 days to 157 days. This divergence suggests potential supply chain accumulation or slower inventory turnover relative to sales velocity, warranting monitoring in upcoming quarters.

Strategic Developments

Ambarella previewed the X7, a standalone AI accelerator targeting edge infrastructure. Unlike camera-specific SoCs, the X7 serves as an AI coprocessor for host processors like ARM or x86. It requires only 4 megabytes of memory for large language models and operates within a 4 to 5-watt power envelope.

The company raised its five-year serviceable addressable market (SAM) forecast. The SAM is projected to grow from $8.5 billion in fiscal 2027 to $22.9 billion in fiscal 2032, representing a compound annual growth rate of about 20%. IoT markets now represent approximately 70% of the terminal year value, up from auto-heavy projections in prior forecasts.

Outlook and Guidance

For fiscal third quarter ending October 31, 2026, Ambarella expects revenue between $115 million and $124 million. The midpoint implies sequential growth driven by physical AI demand in the IoT market. Non-GAAP gross margins are guided at 59% to 60%, with operating expenses between $56.5 million and $59.5 million.

Management noted rising memory supply chain costs but stated these do not directly impact gross margins as Ambarella does not resell memory. The company plans to pass supply chain costs to customers to maintain its long-term gross margin target of 59% to 62%. A new $50 million share repurchase program was authorized, valid through June 30, 2027.

Ambarella, Inc., an edge AI semiconductor company, has announced its second quarter fiscal year 2027 earnings conference call, scheduled for Thursday, September 3, 2026, at 1:30 p.m. Pacific Time. The company will issue its earnings release after the market closes on the same day. The live webcast and a replay of the conference call will be made available at the company's investor relations portal.

Conference Call Details

The key details of the upcoming earnings event are outlined below:

Registration Process

Participants who wish to ask a question during the live call are required to register online in advance. The registration process involves the following steps:

• Complete the first step of the online registration process
• A registration verification code will be emailed upon completing the initial step
• The verification code must be entered to complete the online registration
• Once registered and verified, dial-in numbers and a personal identification number (PIN) will be sent to the registered email
• The PIN must be provided when dialing in to access the live call

About Ambarella

Ambarella offers a full-stack edge AI platform, spanning highly optimized silicon, programmable software, and AI agentic frameworks that coordinate perception, decision-making, and control across devices. With an installed base of more than 42 million AI SoC units, the company's products are deployed across a wide range of physical edge AI applications. These include edge endpoint and edge infrastructure use cases such as physical security, vehicle safety, telematics, autonomy, portable video, aerial drones, and other emerging robotic applications. Ambarella's low-power systems-on-chip (SoCs) integrate proprietary and highly efficient perception and deep learning neural network AI accelerators, enabling electronic systems to operate with partial or complete levels of machine autonomy.