As for AMBA's quarterly results, EPS came in at $0.45, beating analysts' expectations by $0.08, matching last quarter's $0.08 beat. Impressively, in its history as a public company, which stretches back to November 2012, AMBA has never missed the EPS consensus estimate. That's the good news.
The not-so-good news is that on a growth basis, EPS has been swooning lower. For this quarter, EPS fell by 51%, following last quarter's 32% dive. This is largely a function of topline pressures due to GoPro's (GPRO) struggles and a slowdown in its drone business.
Speaking of the topline, Q4 revenue declined by 19% year/year to $70.6 million, essentially inline with the $70.3 million consensus. The decrease was due to GPRO related revenues diving to $13.3 million from $30.2 million in the year ago period. Helping to offset the weakness from GPRO was solid growth in both its IP security and auto OEM markets. To put that into perspective, AMBA's revenue was down about 5%. But, excluding its GPRO business, revenue would have been up about 10%.
In the auto market, growth is being driven by several car recorder designs hitting production in China, Japan, and Korea. And for the IP security market, management stated during the conference call last night that growth was generated by strong consumer product orders in North America, and, that it is now seeing home monitoring begin to ramp up sharply in European markets.
Another positive was that gross margin improved to 64.7% from 64% in the preceding quarter, driven by favorable product mix in the security market. This helped to offset weakness in the drone and sports camera areas. Still, operating income nose-dived to $1.4 million from $20.1 million in the year ago quarter thanks to the weakness on the topline.
In its earnings press release, AMBA also issued downside guidance for Q1, seeing revenue of $54.5-$57.5 million versus the $58.3 million consensus. This, again, underscores the pressures AMBA is facing in the sports camera and drone markets. Over the past couple of years, the company has been trying to diversify away from the sports camera vertical by focusing more on security and auto opportunities. But, clearly, the company hasn't fully been able to distance itself enough from GPRO's demise. Which, unfortunately, could continue to plague AMBA for the foreseeable future.