Ambarella, Inc. Net Income dropped on 67.4% and Revenue decreased on 4.8%
03/01/2018 • About Ambarella, Inc. (
$AMBA) • By InTwits
Ambarella, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Ambarella, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
- The company has potentially unprofitable business model: ROIC is 5.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 4.8%. Revenue decline showed acceleration in FY18Q4 - it was 19.4% YoY. During the last 5 years Revenue growth topped in FY2016 at 44.9% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 10.1 pp from 20.0% to 9.9% in FY2018. During FY2014-FY2018 EBITDA Margin topped in FY2016 at 27.4% and was declining since that time.
Gross Margin decreased on 2.5 pp from 66.1% to 63.6% in FY2018. During FY2014-FY2018 Gross Margin topped in FY2017 at 66.1%. SG&A as a % of Revenue increased on 2.2 pp from 14.0% to 16.2% in FY2018. During the last 5 years SG&A as a % of Revenue bottomed in FY2016 at 11.9% and was growing since that time.
Net Income margin dropped on 12.2 pp from 18.6% to 6.4% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2016 at 24.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 1.2%. CAPEX/Revenue increased slightly on 0.62 pp from 0.62% in FY2015 to 1.2% in FY2018. Average CAPEX/Revenue for the last three years was 0.93%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2015 at 0.62% and was growing since that time.
Return on investment
The company operates at low ROIC (5.2%) and ROE (4.0%). ROIC decreased on 9.9 pp from 15.1% to 5.2% in FY2018. ROE dropped on 10.4 pp from 14.4% to 4.0% in FY2018. During FY2014-FY2018 ROIC topped in FY2016 at 28.9% and was declining since that time. During the last 5 years ROE topped in FY2016 at 26.1% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash increased on 7.4%.
Valuation and dividends
Ambarella, Inc.'s trades at EV/EBITDA 48.1x and P/E 93.4x.
Management team
Feng-Ming Wang "Fermi" is a the company's CEO. Feng-Ming Wang "Fermi" is a founder and has spent 15 years with the company.
Financial and operational results
FY ended 01/31/2018
Ambarella, Inc. ($AMBA) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 157.6 | 218.3 | 316.4 | 310.3 | 295.4 | -4.8% |
| Gross Profit | 99.8 | 139.1 | 205.3 | 205.0 | 187.7 | -8.4% |
| SG&A | 23.2 | 29.3 | 37.7 | 43.4 | 47.8 | 10.0% |
| EBITDA | 29.0 | 53.9 | 86.8 | 62.2 | 29.4 | -52.8% |
| Net Income | 25.7 | 50.6 | 76.5 | 57.8 | 18.9 | -67.4% |
Balance Sheet
|
|---|
| Cash | 143.4 | 170.3 | 268.1 | 322.9 | 346.7 | 7.4% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.7 | 1.4 | 2.1 | 2.7 | 3.7 | 36.5% |
Ratios
|
|---|
| Revenue growth | 30.2% | 38.5% | 44.9% | -1.9% | -4.8% | |
| EBITDA growth | 38.7% | 85.7% | 61.1% | -28.4% | -52.8% | |
|
|---|
| Gross Margin | 63.4% | 63.7% | 64.9% | 66.1% | 63.6% | -2.5% |
| EBITDA Margin | 18.4% | 24.7% | 27.4% | 20.0% | 9.9% | -10.1% |
| SG&A, % of revenue | 14.7% | 13.4% | 11.9% | 14.0% | 16.2% | 2.2% |
| Net Income Margin | 16.3% | 23.2% | 24.2% | 18.6% | 6.4% | -12.2% |
| CAPEX, % of revenue | 1.1% | 0.6% | 0.7% | 0.9% | 1.2% | 0.4% |
|
|---|
| ROIC | 20.5% | 26.1% | 28.9% | 15.1% | 5.2% | -9.9% |
| ROE | 19.1% | 25.7% | 26.1% | 14.4% | 4.0% | -10.4% |
| Net Debt/EBITDA | -4.9x | -3.2x | -3.1x | -5.2x | -11.8x | -6.6x |
Ambarella, Inc. ($AMBA) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 64 | 72 | 89 | 71 | | 12.2% | 10.0% | -11.4% | -19.4% |
| EBITDA | 3 | 7 | 16 | 3 | | 78.9% | -31.4% | -45.2% | -86.1% |
| Net Income | 3 | 3 | 12 | 1 | | 43.8% | -61.7% | -59.6% | -93.1% |
Balance Sheet
|
|---|
| Cash | 335 | 310 | 321 | 347 | | 25.1% | 12.0% | 2.4% | 7.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 63.9% | 62.6% | 63.6% | 64.3% | | -0.4% | -4.2% | -2.4% | -2.6% |
| EBITDA Margin | 5.3% | 9.3% | 18.5% | 4.0% | | 2.0% | -5.6% | -11.4% | -19.4% |
| Net Income Margin | 4.0% | 4.6% | 13.2% | 1.8% | | 0.9% | -8.6% | -15.7% | -19.2% |
Peers in Semiconductors
Below you can find Ambarella, Inc. benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 4.4% | 11.0% | 5.0% |
|---|
| Ambarella, Inc. ($AMBA) | | 38.5% | 44.9% | -1.9% | -4.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| Ambarella, Inc. ($AMBA) | 63.4% | 63.7% | 64.9% | 66.1% | 63.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.9% |
|---|
| Ambarella, Inc. ($AMBA) | 18.4% | 24.7% | 27.4% | 20.0% | 9.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| Ambarella, Inc. ($AMBA) | 1.1% | 0.6% | 0.7% | 0.9% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| Ambarella, Inc. ($AMBA) | 20.5% | 26.1% | 28.9% | 15.1% | 5.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.5x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
| Ambarella, Inc. ($AMBA) | -4.9x | -3.2x | -3.1x | -5.2x | -11.8x |
