Ambarella (AMBA 56.26, -3.11) has given up 5.3%, as cautious guidance overshadows better than expected fourth quarter results and a share buyback.
The manufacturer of HD video compression chips for security cameras, wearable cameras, and flying cameras reported above-consensus earnings of $0.92 per share on a 28.7% year-over-year spike in revenue to $87.50 million, which also exceeded expectations.
Gross margin improved to 67.2% from 64.1% one year ago. Gross margin in the fourth quarter was ahead of the full year gross margin of 66.4%.
Ambarella has continued its diversification efforts during the quarter, growing its presence in the automotive market, where new autonomous driving technology requires vehicles to be equipped with camera networks, which in turn require the video to be compressed. Meanwhile, the company's home monitoring and drone businesses showed strong revenue growth.
Looking ahead, Ambarella expects first quarter revenue will be between $62.50 million and $64.50 million, which is shy of current market expectations. Gross margin is expected between 63.0% and 64.5% while operating expenses are expected between $26.00 million and $27.50 million.
The company's Board of Directors approved a $75 million buyback and has already repurchased $20.20 million in shares under that new program.