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AMBA
Earnings call · Jul 2026 (Q2 FY27)

AMBARELLA Q2 FY27 earnings call AMBA

Sep 3, 2026 Source

Executive summary

Ambarella Q2 FY27 — Record AGI Revenue and Expanded SAM with New Partnerships

Ambarella reported Q2 FY27 revenue slightly above guidance, driven by record AGI revenue and strong automotive performance. The company significantly expanded its 5-year serviceable market forecast, primarily due to new edge infrastructure products and strategic partnerships. While facing rising supply chain costs, Ambarella is focused on leveraging its power-efficient AI solutions and new go-to-market strategies to capitalize on the growing physical AI market.

Highlights

5

  • Q2 FY27 revenue of $108.1 million, slightly above the midpoint of guidance.

  • Automotive revenue reached a new record level, driven by commercial vehicle adoption of AI.

  • New 5-year rolling SAM increased to $22.9 billion by FY32, representing a 20% CAGR, primarily due to edge infrastructure.

  • Announced two material partnerships with Capgemini and Macnica to establish indirect sales channels, expected to drive significant incremental revenue over 7 years.

  • Secured multiple design wins across robotics, automotive, security, and smart video intercoms, including a CV72-based quadruped robot.

Concerns

4

  • Non-GAAP gross margin for Q2 FY27 was 59.3%, below the midpoint of prior guidance (59%-60.5%).

  • Days of inventory increased from 145 days to 157 days in Q2 FY27.

  • Rising memory prices and scarcity of supply are impacting the entire industry, leading to increased supply chain costs for Ambarella and potential impact on Q4 revenue.

  • Operating cash outflow was $260,000 and free cash outflow was $7.1 million for Q2 FY27.

Guidance & targets

CategoryTargetConfidence
Revenue
$115 million to $124 million
high materiality
High
Non-GAAP Gross Margin
59% to 60%
medium materiality
High
Non-GAAP Operating Expense
$56.5 million to $59.5 million
medium materiality
High
Net Interest and Other Income
$1.9 million
low materiality
High
Non-GAAP Tax Expense
$700,000
low materiality
High
Diluted Share Count
44.9 million shares
low materiality
High
Long-term Gross Margin Target
59% to 62%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Automotive
Automotive revenue established a new record on continued strength, driven by commercial vehicle adoption of AI.
Record level—slightly outpaced IoT—
WT Microelectronics (Logistics Partner)
WT Microelectronics, a logistics partner in Taiwan that ships to multiple customers in Asia, accounted for 60.2% of revenue for the second quarter.
60.2% of total revenue———
Acuto (Logistics Partner)
Acuto, a logistics and distribution partner in Japan, accounted for 11% of revenue in the quarter.
11% of total revenue———

Product announcements

ProductTypeDetails
X7 AI SoClaunch
2-nanometer semi-custom chipmilestone

Deals & partnerships

Capgemini Strategic partnership to help enterprises adopt HAI and physical AI solutions faster by combining Ambarella's power-efficient AI software and platforms with Capgemini's global engineering, system integration, and industry expertise. Expected to drive $0.5 billion incremental revenue over 7 years

The partnership aims to reduce complexity in moving from evaluation to scalable deployment, improving operational efficiency, enhancing real-time decision-making, and deploying intelligent systems in physical world environments.

Macnica 7-year agreement with a leading global technical distributor to support Ambarella's physical AI and new edge infrastructure products. Expected to drive $0.5 billion incremental revenue over 7 years 7 years

Macnica will develop and support an independent software vendor ecosystem, including onboarding, technical integration support, and joint go-to-market programs for various HAI vertical markets.

Risks & headwinds

Rising supply chain costs due to memory prioritization for AI data centers Current, with potential impact on Q4 FY27 revenue

Not quantified directly in dollars, but stated as impacting the entire industry and Ambarella's costs.

Mitigation:Planning to pass costs to customers to maintain long-term gross margin target (59%-62%); providing assistance to customers for memory workarounds; closely monitoring Q4 impact.

Increased days of inventory Q2 FY27

Increased from 145 days to 157 days

Mitigation:Inventory dollars declined 4% sequentially, but days of inventory increased.

What to watch in Q3 FY27

Impact of memory scarcity on revenue

Q4 FY27
Current Little impact on Q2/Q3 revenue
Target No significant impact on Q4 revenue

Why it matters

Memory scarcity is a significant industry-wide headwind that could constrain Ambarella's ability to meet demand and impact its Q4 revenue, despite strong underlying demand.

In Q2 and Q3, we see a little impact on our revenue because of many situation will continue to watch for the Q4.

Q&A highlights

Can the new X7 accelerator be bundled with existing N1 portfolio chips or does it address a different part of the stack?

The X7 is an accelerator that can be bundled with any host, including Ambarella's own chips, to provide more AI performance without redesigning the board. It can also be bundled with other CPUs like ARM or Intel chips.

“this is chip is an accelerator which can be bundled with any host, including our own chip. So in fact, that our customers using a certain part number and they feel they need to have more AI performance for certain workloads the X7 give them flexibility to upgrade the product without redesign the Board.”

asked by Unknown Analyst · answered by Fermi Wang

2 min read 7 chapters

Detailed narrative

AGAI Market Expansion and Strategic Focus

Ambarella reported a new record level of AGI revenue in Q2 FY27, demonstrating strong demand signals for Artificial General AI (AGAI). The company is expanding its AI platform leadership with new go-to-market strategies and developing higher-value SoCs to extend into new markets. R&D priorities are aligned with both current physical AI markets and emerging robotics and edge infrastructure markets, which are in early stages of development.

Supply Chain Challenges and Cost Management

The company acknowledged that memory vendors and the entire supply chain are prioritizing AI data center demand, leading to rising supply chain costs, particularly for memory. Ambarella is providing assistance to customers for workarounds and plans to pass these increased costs to customers to maintain its long-term gross margin target of 59% to 62%. The memory situation is being closely monitored for potential impacts on Q4 revenue.

Updated 5-Year Serviceable Market (SAM) Forecast

Ambarella's new 5-year rolling SAM forecast increased from $8.5 billion in FY27 to $22.9 billion in FY32, representing a 20% CAGR, up from the prior 18% CAGR (FY26-FY31). This upward revision is primarily driven by new edge infrastructure products, including additional unannounced AI SoCs and a stand-alone AI accelerator product line. IoT markets are projected to represent about 70% of the terminal year SAM.

New Edge Infrastructure Products and AI Accelerator

The company introduced the X7 AI SoC, a stand-alone AI accelerator designed to serve as an AI coprocessor for host processors like ARM or x86 in edge infrastructure applications. The X7 is sampling now and expected to land initial design wins, targeting operational efficiency use cases with its superior performance per watt portfolio. It requires a much smaller memory footprint (4MB) and operates within a 4-5 watt power envelope.

Indirect Sales Channel and Strategic Partnerships

Ambarella announced two material partnership agreements to establish indirect sales channels: a strategic partnership with Capgemini for enterprise adoption of physical AI solutions, and a 7-year agreement with Macnica, a global technical distributor. These partnerships are expected to drive significant incremental revenue over the next 7 years, with meaningful revenue anticipated in 2-3 years, augmenting existing direct sales efforts.

Semi-Custom Opportunities and Recent Design Wins

The company is pursuing semi-custom chip opportunities, with its first project, a 2-nanometer [indiscernible] chip, underway and expected to generate first production revenue in FY28. Recent design wins include a CV72-based quadruped robot, an AI-based enterprise video intercom, AI trail cameras, and in-cabin vehicle wins in China for driver monitors and camera monitor systems in Audi and VW vehicles, highlighting the flexibility of Ambarella's AI SoCs and Cooper platform.

Canceled Development Project

Ambarella recognized a $9 million reduction in GAAP R&D expense in Q2 FY27 due to the cancellation of a customer's development project. This project was with an automotive autonomy customer and was not one of the semi-custom opportunities previously discussed.

AI-generated summary of the company's earnings call. Not investment advice.